Rock County will end a decades-old exclusive service agreement with Southwest Mental Health Center in Luverne at the end of the year.
Commissioners unanimously voted Aug. 16 to seek additional third-party counseling services after the agency requested $500,000 more from Rock County to cover budget shortfalls.
“We can’t afford a half million dollars,” said Stan Williamson, who serves on the County Board’s mental health committee with commissioner Greg Burger.
Southwest Mental Health Center Inc. is a private, non-profit agency, (an Avera affiliate) licensed by the Minnesota Department of Human Services. It was established in 1959 by Cottonwood, Jackson, Nobles, Pipestone and Rock counties and until recently had locations in each of those counties.
Burger, Williamson and representatives from the other four county boards met this summer with SWMH director Luke Comeau who proposed the five counties contribute a collective $3 million to the agency’s 2023 budget.
Rock County’s portion of that would require an 8-percent levy increase for taxes payable in 2023, and Williamson said that is too much to ask of local taxpayers.
Together Rock and Pipestone counties already contribute just over $400,000 annually to the mental health center for services.
The money goes through Southwest Health and Human Services, whose personnel refer the counties’ eligible individuals and families for private counseling services through an agreement that’s been in place since the mental health service began in 1959.
With Rock County’s contract ending Dec. 31, commissioners and Health and Human Services will develop a network of local third-party counseling services.
These services will need to accept payment through state and federal medical assistance programs. Southwest Mental Health Services may be included in the network.
Per the agreement, Rock County should get back its initial investment in SWMH of about $30,000. However, the organization has $4 million in reserves, and it’s unclear if member counties have rights to those funds.
Commissioners urged Comeau at a July 19 information session to consider using some of the mental health agency’s reserves to bolster the 2023 budget instead of asking for more money from counties.
At the most recent mental health meeting attended by Burger and Williamson, agency officials agreed to use $600,000 from the reserves, while still asking the counties to contribute $3 million to the 2023 budget.
‘A perfect storm’ led to budget shortfall
Comeau outlined the organization’s revenues and expenditures for the past 10 years and showed positive budget balances until 2017.
Revenues ranged from $5.3 million in 2010 to a high of $7.8 million in 2020. Expenses ranged from $4.9 million in 2010 to a high of $8 million in 2020.
“We could see a problem coming,” said Comeau, who became executive director of the Luverne center in February 2020.
“My predecessor was trying to put some ideas together to lessen expenses against the agency. So even with that we were not keeping up where the agency should be — whether that was marketing, different expenses within the agency — we tried to throttle back as much as we could.”
Expenses dropped to $7 million in 2021 when revenue also fell to $6.7 million.
Client numbers using the local mental health service also dropped.
As of June, the agency was serving 257 Rock County clients, and a total of 3,127 clients were served within the five counties.
Rock County’s clients received (when combined with Pipestone County’s 197 clients) 5,378 hours of service in 2021, down from 7,273 hours in 2020 and 8,745 hours in 2019.
Comeau said three things contributed to the agency’s revenues lagging behind expenses.
In 2017 legislators reduced reimbursement rates for medical assistance insurance, resulting in payments being less than actual billed expenses. Sixty-percent of the Luverne center’s clients are on medical assistance.
Comeau also said the agency lost 30 employees due to what he said was
“job burn-out” and to leave for other career opportunities within the Avera Behavioral Health Network, which Luverne became an affiliate in 1999.
Another reason for budget woes, Comeau said, is that attempts to receive coronavirus aid were unsuccessful due to the lack of legislative action.
Considering Comeau’s explanation for budget woes, Burger said, “In my perspective, it ended up being a perfect storm.”
Use of reserves encouraged
For the future, the Luverne agency is looking to change its designation status with the state while increasing starting salaries to entice potential employees to work locally.
Comeau said he applied for a federal grant to transition the agency from a Rule 29-designated organization to a certified community behavioral health clinic (CCBHS).
The new distinction would allow the local agency to receive higher medical insurance reimbursement rates. The grant awards occur this fall.
Rock County commissioners, at the July 19 meeting, encouraged Comeau to look at using the agency’s reserves to move forward with the CCBHS designation and fill empty positions before asking counties for $3 million in program money for 2023.
“You have that $4 million fallback position to get to where you want to be and — when you get to a better revenue position — you may not need as much money to hold the budget together,” Commissioner Burger said.
“The reserve was put away for a ‘rainy day.’ Well, it has been raining for a couple of years here.”