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.

Federal stimulus money and additional Medicaid funding that arrived earlier this year allowed some states to reallocate funds and deliver a temporary reprieve to mental health agencies. But so far, the federal government has not offered up any specific support for mental health or substance abuse programs.

The American Recovery and Reinvestment Act (ARRA) of 2009 significantly did not provide specific relief for behavioral healthcare, although the added support for Medicaid did relieve pressure on state program funding in several states. And, short of earmarked Medicaid behavioral stimulus funding, Glover says, mental health agencies have turned to other agencies within their states for assistance. Six states are using vocational rehabilitation and recovery funds, and three have tapped Section 8 housing funds, for example.

In a typical scenario, the arrival of stimulus funds and a grass-roots lobbying effort in Tennessee convinced the state legislature to provide $5 million in non-recurring funds to the mental health division, so Betts and her staff were able to delay many cuts until 2010. Meanwhile, the Department of Mental Health and the state's Medicaid program, TennCare, are using reallocated funds to develop seven crisis stabilization units around the state, as well as five medically monitored crisis detox facilities.

TennCare, however, made changes in its funding methodologies that will negatively impact the department, says Betts, and there's no sign things will improve any time soon. “Our revenue picture looks bleak over the next few years. No one is projecting any kind of uptick that would make a difference for state programs.”

At the federal level, state and community agencies have been pushing Congress to provide new funding specifically for mental and behavioral health programs, but “how quickly this moves and whether or not there will be a significant increase will play out over the next few months,” says Kathryn Power, director of the Center for Mental Health Services at the Substance Abuse and Mental Health Services Administration (SAMHSA).

Power says that SAMHSA is helping states navigate the current budget crisis by offering information and support. “Although we can't move resources into the states outside of the appropriations process, we are making ourselves available in whatever way we can by providing technical assistance and advice,” she says, adding that none of SAMHSA's major programs will be negatively affected by the 2010 budget.

There is no question that the impact of these cuts will go beyond the immediate lack of services. As more patients are denied treatment and services, it will have a ripple effect in communities, criminal justice agencies and the general healthcare system. Without access to community behavioral healthcare centers, many of these patients could develop co-occurring physical health issues and wind up accessing more expensive emergency room or inpatient services.

In the meantime, state and county providers will have to find a way to make the necessary cuts without completely gutting the service delivery framework. Some National Council affiliates see reason for hope on this score. Meanwhile, says Betts, “We're trying to preserve basic services we need in mental health and substance abuse, and still leave enough of a skeleton so that when the economy turns around, the system can quickly recover. I'm just praying for wisdom.”

Brian Albright is a freelance writer.

Sidebar

More and more of less and less?

The story is the same all across the country. With unemployment up and home values and consumer spending down, almost every state in the nation is facing a budget shortfall. According to figures released in July by the National Conference of State Legislatures, the state budget gap for fiscal year 2009 was $113.2 billion and is expected to reach $142.6 billion in 2010. The cumulative state budget shortfall for FY 2008 through FY 2012 will be at least $348.2 billion.

That has forced massive cuts across all departments in most states, including mental and behavioral healthcare.

NASMHPD's Glover says that, of states that reported data:

• 80% have initiated hiring freezes,

• 60% have cut funding to community programs,

• 50% have cut services across the board,

• 45% have reduced the number of people served,

• 44% are cutting staff,

• 38% are closing state hospitals and wards, and,

• 38% have instituted employee furloughs to reduce payroll.

Sidebar

The State of State Funding

How is public funding for mental health and substance abuse care faring across the United States? Click on our interactive map to review the latest state information, developed by Behavioral Healthcare's editorial staff together with state affiliates of the National Council for Community Behavioral Healthcare.

It's is not too late to make sure your state is represented. Click here for the very short 3-question poll.

MORE ONLINE: For a snapshot of state by state budget changes, see our interactive US map at https://www.behavioral.net/statefundingmap.