funding-cuts-2WESTERN KENTUCKY (6/5/14) — The following announcement was recently released by the Pennyroyal Center of western Kentucky.

With nearly $1.2 million in state and federal funding cuts looming, the Pennyroyal Center is laying off 15 employees over its eight-county regional operation. Executive Director, David Ptaszek regretfully announced the measure to maintain services, "This is one of the most painful decisions I've ever had to make at the Center, but we had no other reasonable option to continue providing crucial mental health services to our region at a time when they are desperately needed."

The most recent cuts come on the heels of several years of decreased funding due to Medicaid Managed Care and soaring obligations to the state's ailing retirement system, where most Pennyroyal Center employees participate. Required contributions now hover at almost 40 percent of salary for each employee, and managed care has caused effective cuts between $400,000 and $500,000 over each of the last three years.

These cuts and increased expenses have forced one mental health center, Seven Counties, which serves the Louisville area, into bankruptcy. Faced with the same cuts and retirement obligations, the state's other mental health centers have been forced to respond much like the Pennyroyal Center.

Additional Background:

Effective July 1, 2014, the Pennyroyal Center has been notified that its contractual support from the Department for Behavioral Health, Developmental and Intellectual Disabilities, will be reduced by approximately $1.2 million dollars. The largest decrease in funding is a $916,000 reduction in Community Care dollars, which is the funding that has made it possible for the Pennyroyal Center to offer services on a reduced fee schedule. Even though reduced fee services for indigent or low income clients will not be supported with DBHDID funds, no person will be refused emergency care because of inability to pay.

Although, the Center does hope to increase its income somewhat during the next fiscal year because of the expanded access to third party insurance granted to members of our communities through the Affordable Care Act and the expansion of Medicaid ordered by Governor Steve Beshear, the expected loss of income remains in the $700,000 to $900,000 area for the coming year.

The announced decrease in funding for the coming year compounds the financial impact following several years of reduced income due to the advent of Medicaid managed care which has reduced the Pennyroyal Center income by $400,000 to $500,000 in each of the last three years. There is hope that there will be additional dollars awarded to the Center during the coming fiscal year to provide assistance with paying the Kentucky Employee Retirement System premium for employees, which will increase to 38.77 percent for each individual beginning on July 1, 2014. However, that dollar amount has not been established and will only pay for a portion of the retirement premium required.

In order to meet its responsibility in relation to the financial bottom line, the Center has been forced to lay off approximately 15 employees throughout the eight county region served by the Pennyroyal Center. There will also be a change in outpatient service delivery in the Princeton area, although the clinic site will remain open and services such as psychiatry and emergency services will continue to be provided.

Unfortunately, the Therapeutic Rehabilitation Programs which have been offered by the Center for many years in Madisonville and Hopkinsville are no longer financially viable and will terminate their operations as of June 27, 2014.

The phenomenon of significantly reduced funding availability is happening throughout the Commonwealth for Community Mental Health Centers such as the Pennyroyal Center, as evidenced by the recent filing for bankruptcy by the Seven Counties CMHC in Louisville, Kentucky. As David Ptaszek stated, the shortfalls which have affected the Center so dramatically including the effects of managed care, the opening of the provider network for client services and increasing state retirement costs to the lofty 38.77 percent of salaries, which will be effective this coming year, have driven the Center to take these significant steps to maintain its financial viability.

The Center has made efforts to improve access to outpatient services even in this time of severe budget reductions by providing open access at its clinics in Greenville, Madisonville and Hopkinsville. Persons calling in for services do not have to make an appointment well into the future unless they so desire, but can set up a time to walk into the local clinic for services. The Center’s Executive Director, David Ptaszek, has indicated that he hopes the adjustments which have been made will allow the Center to function during the next fiscal year in a financially stable manner while continuing to provide needed services for persons throughout the region.

The Pennyroyal Center is a CMHC which serves eight counties in western Kentucky including Caldwell, Crittenden, Christian, Hopkins, Lyon, Muhlenberg, Todd and Trigg. It has been in operation since 1967.

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