Audit: Oregon Health Authority mishandled hundreds of thousands in federal mental health money

Federal auditors have flagged problems in the Oregon Health Authority’s oversight of mental health grants, including the potential misappropriation of more than half a million dollars. 

Their review, obtained by the Capital Chronicle in a public records request, shows the agency has failed to adequately inform a federally-mandated advisory council where money for programs to help Oregon’s most vulnerable in communities across the state has gone. 

The grant program run by the Substance Abuse and Mental Health Services Administration, known as SAMHSA, provides a prime funding source for Oregon’s behavioral health and addiction services, giving the state $13 million in the last two years. 

The report found that the lack of oversight resulted in the health authority improperly awarding more than $570,000 in federal dollars toward the expansion and remodeling of a residential youth facility in Eugene. Using the money for major building improvements isn’t allowed under the federal mental health grant program, auditors said in their preliminary findings.

In interviews with the Capital Chronicle, council members said the findings in the federal review reflect a lack of communication between the state health authority and volunteers on the council over review of projects proposed by the health authority.

“OHA needs to step up and do what they’re required to do,” said Allyson Linfoot, a member of the authority’s advisory council. “SAMHSA needs to hold OHA accountable for making sure those things do happen.”

Usually, the work of the advisory council and the health authority in dispersing federal grants for mental health is an obscure part of state government and Oregon’s complex behavioral health system.

But the program pumps out millions in grants each year to mental health providers in every corner of Oregon. The money goes toward different mental health programs, including crisis programs and early intervention programs to treat youth and young adults 12 to 25 years old. Those programs have helped thousands of people access community mental health services in outpatient clinics who are uninsured or underinsured.

States apply for the money, and the federal Substance Abuse and Mental Health Services Administration doles out the grants. State agencies, working with advisory councils, award the money to different groups, usually nonprofit organizations and other providers that run social service and treatment programs. 

But the Oregon Health Authority failed to follow the rules in numerous areas, federal auditors said in an eight-page report. 

Audit findings 

The audit found three main problems with the health authority’s handling of the grants in an eight-page summary in March. They include:

  • Members of the advisory council did not have the opportunity to review the state’s application for mental health block grants.
  • During the pandemic, the Oregon Health Authority, which provides administrative support for the council, did not hold council meetings for two years, despite members requesting them. Federal officials called the state’s failure to hold meetings “ineffective” in their report.
  • The health authority signed off on an agreement to dedicate $574,228 towards the remodeling of  a psychiatric residential treatment facility in Eugene for children and youth run by the nonprofit Looking Glass Community Services. Funding construction or major facility improvements with the grants is not allowed.

Financial records obtained by the Capital Chronicle through a public records request show money was used to remodel bathrooms and put in new fire sprinklers, new windows, a security system, add other equipment and make other improvements. 

Looking Glass also spent the grant money to train staff to allow the facility to serve up to 20 youth instead of 12, an approved use of the money.

In an email, Oregon Health Authority spokesman Tim Heider said the agency is awaiting a final determination from the federal agency on whether the use of the money  was allowable. 

Heider said authority staff made the decision to fund the remodeling during the pandemic as many residential care facilities reduced capacity.

“OHA has been transparent and forthright with SAMHSA and has provided all related documentation,” Heider said.

Looking Glass will reimburse the state if necessary, Heider said. Looking Glass officials didn’t respond to emails and calls for comment.

In their report, federal officials said the state’s funding of the facility will get a more detailed examination and review.

Council members weigh in 

For council members, those findings are a symptom of a wider problem.

Kevin Fitts, a longtime mental health advocate and member of the volunteer council, told the Capital Chronicle he’s “alarmed” by the findings.

“How many checkpoints does this process have and how many people who have been educated and understand this process didn’t do their job?” Fitts said. “The checks and balances have failed here.”

Fitts said he’s concerned the review may only show part of the problem – not the full picture.

“There may be an awful lot of other issues around compliance and misappropriation we don’t know about because we haven’t had an audit of that,” Fitts said.

Fitts said the health authority needs to do a better job of keeping the council informed and showing it the records necessary to review expenditures of grant money.

Linfoot, another council member, agrees. For years, she said, the health authority treated the council’s work as a “rubber stamp,” rather than a process to get meaningful input.

The council, which has volunteers with full-time jobs, routinely didn’t get grant applications or documents with enough time to look them over, Linfoot said.

“We’ve complained about that for a very, very long time,” Linfoot said. “That was frustrating from that point of not being able to really have our voice heard and do things that we would hope would make services better for people.”

She also said she’s surprised the health authority granted money to the construction project.

“That was shocking that somebody didn’t say, ‘Hey, we’re not supposed to do that,” Linfoot said.

Heider, the OHA spokesman, said the agency has worked closely with the advisory council to address issues the federal agency flagged.

“We understand and acknowledge their disappointment,” Heider said in an email. “We’ve discussed these concerns. Regular meetings have resumed, and we are continuing to work toward our shared goal to provide the best available system of care and to improve the mental and behavioral health of all Oregonians.”

The Oregon Health Authority’s behavioral health director, Ebony Clarke, who started in February, notified the federal agency that the state intends to take a variety of steps to make the council and agency’s oversight more transparent. 

The state plans to conduct exit interviews with council members who leave, educate new members, and provide more communication and information to the council. 

“I am committed to preventing future pauses or interruptions in the planning council’s activities,” Clarke wrote in a March 16 letter.

Oregon Capital Chronicle is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Oregon Capital Chronicle maintains editorial independence. Contact Editor Lynne Terry for questions: [email protected]. Follow Oregon Capital Chronicle on Facebook and Twitter.

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Ben Botkin - Oregon Capital Chronicle

Ben Botkin covers justice, health and social services issues for the Oregon Capital Chronicle. He has been a reporter since 2003, when he drove from his Midwest locale to Idaho for his first journalism job. He has written extensively about politics and state agencies in Idaho, Nevada and Oregon. Most recently, he covered health care and the Oregon Legislature for The Lund Report. Botkin has won multiple journalism awards for his investigative and enterprise reporting, including on education, state budgets and criminal justice.