Legislators revoke Seven Counties' contract, hint at state takeover in wake of bankruptcy ruling

07/08/2014 06:02 PM

A legislative committee on Tuesday sent a message to the Seven Counties Services by ending a contract the mental health center has with one of the state’s agencies.

The Government Contract Review committee voted not to approve a $3.7 million two -year contract for Seven Counties Services to provide in-home family services to 300 families through the Health Cabinet’s Department of Community Based Services.

“I don’t like to disapprove contracts…this is services that can be provided for something and this sends a signal that we’re not happy with an agency that contracts with the state that gave us a bill for $90 million and still tried to do state business,” said Rep. Brent Yonts, D-Greenville, referring to the mental health agency’s bid to escape the Kentucky Employee Retirement System.

As for the contract with the state, lawmakers suggested that the agencies like the Department for Community Based Services find other vendors. The other 14 mental health agencies in the state also provide similar services in other parts of the state.

In a statement the Seven Counties Services Board and management said they are “shocked” by the panel’s decision to not approve the contract.

“This decision risks harming hundreds of vulnerable and at risk children in our region,” Gwen Cooper, the vice president of external affairs for Seven Counties said in a statement. She added:

“The Committee’s abrupt and punitive decision will harm the most high risk children and will have a detrimental effect on the well-being of hundreds of families. The Family Preservation Program provides intensive in home and family services designed to keep families together and preserve home placements for children who are in crisis. The children served in this program have emotional and behavioral disabilities, and/or have been victims of abuse and neglect.”

The fate of the contract rests with the secretary of the Finance and Administration Cabinet. She has 30 days to revise the contract, cancel it or let it remain effective.

A judge ruled in the end of May the mental health center in the Louisville region could get bankruptcy protection, thus, allowing the agency to exit the Kentucky Employees Retirement System and leave the costs of the center’s retirees behind for the pension fund to cover. The Kentucky Retirement Systems board is appealing the ruling.

Leaders for Seven Counties have argued that the move was necessary because the center couldn’t afford the rising retirement contribution rates, which would eat up 40 percent of the payroll budget starting next month.

Yonts said during Tuesday’s meeting that he has deep reservations about the state continuing to do business with Seven Counties after the agency’s move to leave the Kentucky Employee Retirement System.

Through a letter sent to Gov. Steve Beshear, Yonts says the state should use an existing statute to appoint a “caretaker administration and change personnel and derecognize the board” at Seven Counties for leaving the pension system.

Terry Sebastian, the governor’s deputy communications director, told Pure Politics that Beshear is reviewing Yonts’ recommendations.

“The governor’s office did receive Rep. Yonts’ letter and we are reviewing the proposals in it. Like Rep. Yonts, the Governor continues to monitor the Seven Counties lawsuit and how the issues in this case are fundamental to the structure and financial viability of the system,” Sebastian said.

The legislative panel also narrowly approved a second contract between Seven Counties Services and the Department for Aging and Independent Living for $1.2 million in a one-year contract providing family preservation services.

Sen. Sara Beth Gregory, R-Monticello, told officials who attended the meeting that they and other agencies should look to “other options” for their contracts in the future rather than doing state business with Seven Counties.


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