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Rochester — A year after it absorbed state and Medicaid funding cuts, Oakland County's mental health authority says it has no choice but to pass the reductions on to agencies that serve people with mental and developmental disabilities.

Last year, the Oakland County Community Mental Health Authority tapped into its financial reserves to deal with a $21 million deficit caused by the cuts in Medicaid and rising costs and demands for services. The authority says it also told its network of providers to tighten their belts.

And with the authority's new fiscal year starting next week, the reckoning has arrived.

"The budget cuts are here," said Christine Burk, a spokeswoman for the authority. "Really what we're asking of ourselves and our providers is to find efficiencies in the budget and try to have the least impact possible on those we serve."

However, some who have children with special needs in Oakland County are worried the cost-cutting is jeopardizing services. Some agencies that provide those services say they fear they'll be forced to close their doors.

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Many are expected to attend the mental health authority's board meeting at 6 p.m. today to voice their concerns. The meeting is at the agency's offices in Auburn Hills.

The authority's budget for the 2014-15 fiscal year includes $20 million in state aid cuts to the authority's general fund and $14 million in cuts from Medicaid.

Some of those cuts are being offset with federally distributed funds from the Healthy Michigan program.

Clarkston resident Deborah Rowe, 65, said she'll be at the meeting to tell the board the cuts to her 32-year-old daughter's program will devastate her family.

Rowe's daughter, Allison, is developmentally disabled and has been going to a program in Rochester called Starting Point for six years. There, she receives life skills training.

Starting Point officials said the cuts could mean the agency that funds its program will trim its allocation 29 percent, effectively shutting it down.

"She will not be able to go to this wonderful program," said Rowe. "The alternative would be to have her stay home and do nothing."

Rhonda Franks, Starting Point's director, said the cut will hit clients, families and workers at the facility.

"We would have to go barebones," she said. "We'd have to let staff go that are already making $9.19 an hour. It would impact the services here. We just found out about it (Thursday) and it's taking place Oct. 1."

Trickle down effect

General fund cuts from the state and reductions due to Medicaid are occurring across Michigan in the wake of changes to the health care system under the Affordable Care Act.

Under the law, Michigan opened Medicaid to nearly 500,000 additional residents and moved their health care costs — including mental health care costs — off the state's books and onto federal rolls.

In anticipation of those savings, the state trimmed mental health spending for the current fiscal year by about $75 million, and cut it further for the budget year that begins Oct. 1.

Oakland County's Community Mental Health Authority absorbed the $21 million in reductions during the last fiscal year, giving the seven core provider agencies time to cut positions, eliminate inefficiencies and adjust their budgets, Burk said.

Macomb County followed suit, absorbing a Medicaid cut of about $8.5 million, said John Kinch, executive director of the county's Community Mental Health agency.

For the next budget year, the agency is passing along a rate reduction of 5-7 percent to its provider network across the board, Kinch said.

It's also trying to decrease the use of in-patient services and has frozen hiring among administrative and nonunion staff.

Brooke Blackwell, spokeswoman for the Detroit Wayne Mental Health Authority, said last year's general fund took a $20 million cut from Medicaid changes.

Burk said some of the cuts to the Oakland authority's general fund were covered by switching to a federal program meant to help the uninsured or under-insured.

The authority manages a $300 million budget and serves 23,000 people through more than 300 service sites.

And since the authority doesn't want to deplete its unrestricted funds filling those gaps, the cuts must trickle down to providers, Burk said.

"It's good business sense to keep 60 days in reserve, in case," she said. "Currently (for fiscal year 2015) we have less than 30 days reserve to fund our system."

But Tom Kendziorski, executive director for The ARC of Oakland County, a nonprofit that serves people with developmental disabilities, questions that logic.

"We're not making widgets," he said. "It's not a business in that sense. It's mental health care. Holding back funds just in case we have a payless payday, that doesn't make sense."

Demand for services rises

It's an issue that isn't limited to Oakland County. Similar entities across Metro Detroit and the state are grappling with the same issue.

The funding squeeze comes as demand for services hasrisen. Statewide, the number of people served by Michigan's Community Mental Health System climbed from 184,708 in 2004 to 248,189 last year.

But the cuts and changes in Medicaid have hit Oakland, Macomb and Wayne counties the hardest, said Michael Vizena, director of the Michigan Association of Community Mental Health Boards. Based in Lansing, the association lobbies lawmakers for its members.

"If you look at the total number of people served, (Wayne, Oakland and Macomb) are three of the four largest counties in the state," he said.

"There are people with significant disorders across the state, but in terms of the quantity, the tri-county area has the biggest need."

Burk added nearly 60 percent of Michigan residents on Medicaid live in the Metro area.

Agencies that get funding through Oakland County's mental health authority and provide services to people with developmental disabilities are bracing for the worst.

For example, the Royal Oak-based Judson Center is telling clients' families it may have to shutter facilities because of the cuts.

Judson Center provides autism, child welfare, behavioral health and disability services to thousands through its facilities in five counties.

Cam Hosner, the nonprofit's president and CEO, said service providers like it have worked to either cut costs or keep them low, but the authority's decision will cause it and other agencies to flatline.

"We've tightened our belts, tightened them to the point that they're choking us now," he said.

"All of the belt-tightening has turned into a noose."

lrazzaq@detroitnews.com

(313) 222-2127

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