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States of despair

October 1, 2009
by Brian Albright
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Mental health agencies face deep cuts as state governments slash their budgets

When the National Association of State Mental Health Program Directors (NASMHPD) had their annual Commissioners Meeting in St. Louis this summer, the mood was grim. Almost every state mental health department is facing significant budget reductions in 2009-as high as 25% in some cases-and even steeper cuts could be coming over the next several years.

“We were not a happy bunch,” says NASMHPD President Virginia Trotter Betts. “Everybody was looking at everybody else's strategies to try and figure out what to do.”

Betts, who is the commissioner of Tennessee's Department of Mental Health & Developmental Disabilities, was looking for ideas, too. By summer 2010, her agency's budget will be 25% smaller. The state is dropping capacity at its regional mental health facilities by 126 beds, and other programs may be in jeopardy.

“Right now we're experiencing about a 5% cut in state mental health authority funds across the board,” says NASMHPD executive director Robert Glover. “In 2010, we're expecting to see another 8% or more in cuts, and by 2011 we'll have a seen a total reduction of 21%. We're looking at massive service cuts.”

A closer look at some states, as reported by affiliates of the National Council for Community Behavioral Healthcare, shows a more mixed picture and provides some hope for the future. But even with these glimmers of light, the situation couldn't happen at a worse time. The same economic forces that have decimated state budgets-joblessness, foreclosures, instability in the stock market-have created increased demand for behavioral health services just as many state agencies have been forced to scale back operations. (See sidebar, State Funding Snapshots.)

“We are starting to see increased waiting lists and reduction of services in some states,” says Mohini Venkatesh, director of federal and state policy at the national council. “Facilities are laying off staff or reducing hours, and that has a direct impact on the quality of care. I've been in this industry for 35 years, and this is the worst set of economic events I've seen.”

A Perfect Storm

Across the country, mental health agencies are facing immediate funding crises as their states make painful budget decisions.

Some county agencies in Pennsylvania found themselves without anticipated state funding as the governor and legislature wrangled over the state's budget this summer. Clinics servicing Chicago's mentally ill population have seen their budgets fall from $7 million in 2008 to $5 million this year, prompting protests outside the mayor's office. Patients and employees at the New Orleans Adolescent Hospital sued Louisiana governor Bobby Jindal over his decision to cut funding for that facility (the suit was thrown out in August, but they plan to appeal).

“There is no mental health or substance abuse authority that is not really worried, especially about how uninsured people are going to fare,” Betts says. “People are losing jobs faster than the states can find a program to put them on. How will they access mental health services? It's a perfect storm at a time when people are incredibly stressed about the loss of their homes and the loss of their jobs.”

In Nevada, which has been particularly hard hit by the housing crisis and slump in consumer spending, Harold Cook, administrator of the Division of Mental Health and Developmental Services, says his agency has lost $55 million funding since 2007, and more cuts are on the way in 2010 and 2011. While the initial cuts only involved capital improvement projects, in 2009 the state has closed three clinics, reduced funding for substance abuse prevention and treatment, eliminated positions, and instituted a hiring freeze.

Not every state is in crisis. A handful-Wyoming, Texas, West Virginia, Nebraska-aren't dealing with particularly large shortfalls. Montana and North Dakota, in fact, have budget surpluses, while Nebraska was able to enact a provider reimbursement rate increase. Agencies in those regions still face increasing demand, however. “There continue to be areas of need for increased funding,” Venkatesh says. “Demand for services for veterans and their families who may have co-occurring behavioral and physical health needs, for example, require increased funding that just hasn't existed in appropriate amounts. And many of the states that are in better fiscal shape are quite rural, and have specific service capacity needs that still have to be met.”

“I always let people know that having a budget surplus does not equate to any of that coming to the Department of Human Services,” says JoAnne Hoesel, director of the North Dakota Division of Mental Health and Substance Abuse Services. Nonetheless, the state's eight regional human service centers saw their budgets increase by $18 million this year, and some new initiatives are being funded. With a total population of just 650,000 people, the Roughrider State has a diversified economy and was not appreciably impacted by the collapse of the housing market.

That good fortune hasn't insulated North Dakota from the increased demand for services, though. Hoesel says that overall demand has increased approximately 4.5% since 2007, with the largest increase coming from those that receive both mental health and substance abuse services.

Bleak Outlook

With several states still haggling over their budgets, mental health agencies have begun lobbying to save what funding they can. Departments that have already seen steep budget cuts are trying their best to maintain critical services while finding ways to trim operational costs.