Albemarle Mental Health Center Confirms Urgent Need for Mental Health Reform

The State Auditor found numerous administrative management failures on part of Center's Regional Board of Directors and Area Program Director

October 15, 2007

PASQUOTANK COUNTY NC NEWS -- In a September audit of the Albemarle Mental Health Center, the Office of the State Auditor found numerous administrative management failures on part of its Regional Board of Directors and Area Program Director. These failures most notable included, improper use of State and Federal funds, excessive salaries, the funding of a lobbyist, and internal control deficiencies. Furthermore, the Auditor found general failure on part of the Albemarle Mental Health Center's Board to exercise its responsibilities to monitor operations and ensure public funds are used in an effective and efficient manner.

State Auditor, Leslie Merritt made the following comments on the second in a series of audits of mental health entities:

"OSA's audit of the Albemarle Mental Health Center confirms that there is an urgent need for mental health reform. This audit clearly shows that not all taxpayer dollars are being used efficiently and effectively for the benefit of the intended recipients." "It is obvious that North Carolina's mental health safety net has been shredded, and now is the time for a bold policy move to provide sufficient care for North Carolinians in need of mental health services. OSA audits, consultant studies, and mental health advocacy groups have reached the same conclusion: reform as envisioned has not occurred and should be addressed by the General Assembly seeking the advice of all parties (State and local agencies, public and private service providers, mental health advocacy groups, and representatives of the affected population)."

In the performance report sent to Governor Easley, the State Auditor briefly summarized the following problems found to be taking place at Ablemarle Mental Health Center, and two statewide problems in the fiscal management procedures for LME network:

The Area Program Director's base salary of $282,663 is excessive when compared to mental health peers, other government officials, and local management entity (LME) operational measures.

The Special Assistant's base salary of $142,848 is excessive after reviewing her clerical track of employment, lack of documented participation in formal training programs, actual duties performed, and salary comparison to other administrative personnel in the mental health system.

The Center is incurring excessive wage costs related to the payment of employees' share of FICA taxes. The practice of the Center paying both employer and employee share began in 1979 and continues today. For the last three calendar years, the Center has expanded $1.5 million in this manner.

Problem areas were noted with the Center's contractual agreement for the provision of Area Program Director Services including:

• The contract between the Center's Board and its Area Program Director included overly favorable terms and conditions to the Contractor including: advanced payments for services performed; a $1000 monthly auto depreciation allowance in addition to reimbursement for travel costs at IRS mileage rate; and the annual payment of leave benefits similar to those provided to its employees.
• The Area Program Director's automobile depreciation allowance is a duplicative reimbursement as the IRS rate includes an auto depreciation component in its annual computation of the allowable reimbursement rate.
• An Administrative Law Judge determined that the Area Program Director's classification was an employee rater than a contractor.

We noted that the Center contracts for services that may be duplicative in nature as they may already be available, at little to no cost, though other State resources. Documentation to support activities performed was insufficient to adequately determine the extent of services performed. In addition, the Center incurred costs for some of these contractors and their spouses to attend the same training conferences as the Board attended.

The Center improperly used State and Federal funds to pay for the Area Program Director's salary, a violation of contract terms. In addition, State funds were used to fund the services of a lobbyist for the Center in violation of statutory requirements.

The Center's Board should have exercised more oversight in its responsibilities to monitor operations and ensure public funds are used in the most effective and efficient manner to fulfill the Center's mission.

We identified internal control deficiencies that relate to the responsibilities of the Center's Business Officer as well as with some of the Center policies and procedures relative to items under review.

We also identified two issues relative to State oversight of LME activities that may have contributed to the challenges to mental health reform. Issues noted were:

• There is need for statewide fiscal management procedures for LME network. The task should begin by establishing a comprehensive system necessary to carry-out financial management functions, manage financial operations, and to report financial results to internal and external parties.
• Monitoring activities by the Division of Mental Health, Development Disabilities and Substance Abuse Services need to be strengthened over LMEs. Reports received do not provide information at a level of detail that would allow for an appropriate review. It appears the Division has the statutory authority to perform those monitoring activities that deems necessary.

The mission of Albemarle Mental Health Center is to design, develop, implement, and improve the quality systems and services necessary to respond to the mental health, developmental disabilities and substance abuse healthcare needs of its consumers. The Albemarle Mental Health Center also claims to be committed to the management and delivery of necessary direct services that ensure its consumers have timely and quality care. Furthermore, the Albemarle Mental Health Center is an area mental health, developmental disabilities, and substance abuse authority and a local political subdivision of the State of North Carolina. Albemarle Mental Health Center is located in northeastern North Carolina and serve the ten-county area of Camden, Chowan, Currituck, Dare, Hyde, Martin, Pasquotank, Perquimans, Tyrrell, and Washington with direct service sites in each of these Counties.