$1.5-Million Deficit in Health Unit Projected

With at least one official placing the blame squarely on a failed agency reorganization, the Ventura County auditor-controller has been asked to investigate a ballooning deficit of the county’s mental health department.

“I wanted to provide this information to you immediately,” Health Care Agency Director Pierre Durand wrote in a Feb. 1 memo to Auditor-Controller Thomas Mahon. “The variance presents a serious financial issue warranting direct involvement by the auditor-controller.”

Mahon confirmed Wednesday that he and his staff are investigating the projected $1.5-million deficit and what may have caused it.

He added that he would remain impartial during the review process, although Board of Supervisors Chairwoman Susan Lacey’s husband, Ed, was Mahon’s campaign manager during his bid for reelection. Lacey was the architect behind the merging of the Behavioral Health Department and the Public Social Services Agency into the Human Services Agency.

“I was not involved with that [merger] project at all,” Mahon said. “I know what the three votes were and that’s it. . . . This is a routine part of my job.

“It appears there is a deficit problem,” he said. “Thankfully, [Durand] has pointed it out and we can see how serious it is, what caused it and what could be done to offset it.”

On April 7, supervisors voted to create the superagency to improve care of the mentally ill. But in November, the federal government warned the county that the merger violated Medicare and Medicaid billing rules. Consequently, the county dismantled the agency Dec. 21.

Since then, county officials have been trying to persuade federal authorities not to demand up to $15 million in reimbursements for money paid during the 259 days that the merged agency existed.

Supervisor Frank Schillo, a strong opponent of the merger, was quick to attribute the projected deficit to the merger. Before the two agencies were combined, the mental health department was able to keep costs lower than projected, he said.

“They had whittled down the deficit, now up pops $1.5 million,” Schillo said. “There’s going to be costs associated with a mismanaged merger.”

He applauded Durand for bringing the matter to Mahon’s attention before the midyear budget review scheduled Feb. 23. Durand, who years ago worked as a senior auditor for the county, oversaw the mental health department before the April action.

“It was the prudent thing for Pierre Durand to do,” Schillo said. “He’s saying, ‘Hey, look, I’ve got this department back now and it’s in the hole. I don’t know why it happened or how it happened, but at any rate there is a deficit.’ ”

Supervisor Kathy Long, who along with Lacey and Supervisor John Flynn voted in favor of merging the two agencies, attributed the projected deficit to state funding that the county has yet to receive.

“This doesn’t alarm me at all,” she said. “The state hasn’t paid their bills yet for our minor consent program. It’s more of a bookkeeping issue.”

Barbara Fitzgerald, who oversaw the Human Services Agency during the 259 days, said the deficit was expected.

Echoing Long, she said the county has not yet received state and federal funding for its minor consent program, which helps place children and juveniles in group homes. Additionally, that funding has been dramatically reduced, she said.

But Richard Clemence, a vociferous merger opponent and consultant for families of the mentally ill, doubted that the $1.5 million was related to a juvenile program.

“This is a Valentine’s present from Lacey and Long to the taxpayers of Ventura County,” he said. “It’s 1.5 million arrows straight through the heart.”