A review of New River Behavioral Health (NRBH) minutes show the Board and Finance Committee met monthly from 2008 (to now). While the Board (commissioners from 5 counties of Alleghany, Ashe, Avery, Watauga, and Wilkes) attempts to place responsibility for the financial debacle on the CEO, CFO, and Smoky Mountain Center (none of which had voting power) the actual fault lies in the (NRBH) Board’s willful negligence.
Since 2008, they had 3 CFOs and 1 financial analyst present monthly the financial situation and possible courses of action. Obviously, the Board was given full disclosure, including audited financial statements. Within six months, they were warned of a projected $1.3 million operating loss and were given options to correct the shortfall. When does the staff become uncomfortable bringing bad news to a group that blatantly ignores it? The Board chose not to address the deficit. New River Service Authority (the new NRBH) began with $3.8 million less in funding than the previous provider; that is when the Board should have cut expenses. Instead, they initially gave the employees a 4 percent salary increase but later rescinded the raise. The financial statements consistently revealed operating losses: 2008 – ($1,966,208); 2009 – ($1,040,132); 2010 – ($765,705).
How did NRBH stay in business? In 2008, $3,518,763 was transferred from the previous provider. The operating losses came from these funds. When this transfer sum and additional funding dried up, they just kept spending and ignored fiscal reality. The minutes show that NRBH refused to reduce the number of employees, because that meant revenue losses. They forgot or ignored the truth that employees cost exceeded revenue generation. However, to stop the ‘hemorrhaging’ NRBH spread themselves thin by expanding the service area.
Yes, the staff is responsible for mismanaging claims processing and receivables. There may even be embezzlement. However, despite the receivable problems, this operation was doomed to fail. Was the Board, again, chosen commissioners from the 5 counties, running a Ponzi scheme? Did their plan catch up with them? Now, they are blaming everyone except themselves. Even more profoundly, who do they expect to pay for this failure? Of course, the taxpayers.
The Board struggled to maintain this socialized mental health system. However, it finally became more than their individual fund balances could potentially handle. They finally did what should have been done initially; that is, turned it over to a private provider. Ashe County’s Judy Poe is the first commissioner on record to call for a shut down; the other county board members went kicking and screaming. Now, Commissioner Poe needs to review the minutes herself. Also, as with any contract which places liability on a county, the county managers and finance directors should have been monitoring, and included with the county audits, the finances of this 5-county government organization. We expect the counties to collect on insurance bonds and personal liability before seriously considering dipping into the taxpayers’ funds. We expect far more accountability from those elected, staff, contracted auditors, and the Local Government Commission. Last, but certainly not least, we call for Rep. Jordan and Sen. Soucek to initiate a thorough state investigation and ratify real reform laws.