A FUNDING SHORTFALL
At the end of 2024, as final billings came in for client services rendered in fiscal year 2024, Community Mental Health of Ottawa County (CMHOC) became aware that funding allocations from the state and PIHP/regional oversight body, Lakeshore Regional Entity (LRE), would fall approximately $5M short of covering CMHOC mandated services. Kent County’s CMH entity, Network 180, also a member of the LRE, faced even larger shortfalls, with both counties experiencing significant increases in residential care and autism services expenses, as well as in other areas.
Dr. Michael Brashears was hired as CEO of CMHOC in the middle of 2024. He oversees an annual budget of approximately $70M. Following the identification of the FY2024 budget shortfall, Dr. Brashears worked for months to close the funding gap through advocacy with the state and the LRE.
In FY2024, MDHHS sent out $200 million less to the CMH system than was originally appropriated by the House, Senate, and Governor. After six months of advocacy, the state finally released $140 million of that $200 million for use across the state.
The close of FY2025 presented another local funding shortfall for CMHOC, although it was not as much of a surprise this year. The current funding gap is anticipated to be covered by the LRE reserves. At some point—perhaps another year or two—if Michigan’s PIHP structure and funding remained the same, those reserves would dry up. The total CMHOC budget for FY2026 is projected to be around $81M, including $8.6M in millage funds.
Similar MDHHS withholding of state appropriated CMH funds also happened in FY2025, with some released later. While the actual statewide appropriation by the legislature might be adequate (questionable given the dire financial straits of residential care providers), the distribution is not. We see CMHs underwater in West Michigan, with excess funds in other parts of the state. Michigan’s current funding distribution model is inadequate to ensure the needs of all communities around the state are met.
CMH finance is nothing like a home, business, or county budget. The provision of services to individuals in need is mandated by state statute. It is not optional. Yet here in West Michigan, a faulty funding model for these same mandated services is based on the number and type of Medicaid recipients in our county, rather than the actual demonstrated needs of residents.
RESIDENTIAL SERVICE RISKS & AUTISM INCREASE
Residential service providers are facing grave funding shortfalls in Ottawa County and West Michigan. Despite direct care staff being paid at ALICE level pay (Asset Limited, Income Constrained, Employed)—which can present challenges with staffing, a number of residential care facilities face budget shortfalls of $1M+ per year, requiring them to fundraise to stay financially afloat to care for the most needy among us. This is not sustainable—nor should it be necessary, and places the care and placement of those needing the highest level of care in our county at grave risk. As such, CMHOC is working to determine the true cost of residential care to stabilize care and ensure our local residential providers and placements continue. If these homes close and it is necessary to move clients, not only will clients will have their lives disrupted, but we will lose critical care infrastructure and CMHOC will end. up paying much higher residential rates than we currently pay regardless.
It is also important to note that one resident in need of complex residential services can potentially increase the $70M budget of CMH by $500K to $1M per year. As Ottawa County has traditionally provided excellent services, over time a number of families have moved to Ottawa County—from as far as out of state—to obtain excellent care for a loved one. While understandable on the part of families, due to the state’s funding model, the increase/move of high needs individuals into Ottawa County does not bring additional finances to CMHOC to provide for their additional needs. Oftentimes, such clients face lifelong conditions, and funding should follow the client.
Additionally, as autism rates continue to rise (legitimately, not due to Minnesota-type fraud), the services required for children with autism has risen—by approximately $1.4M in FY2024. Sadly, the need for autism services is expected to continue to rise.
PREDICTIVE BUDGETING AND ADVOCACY FOR TRUE FISCAL NEEDS
Utilizing new software, CMHOC is creating predictive modeling of the utilization of authorized care for clients. This new effort will enable more accurate budget predictions, encourage utilization of authorized care for each client, and provide a basis for fact-based advocacy at the state and PIHP level for appropriate funding for our county based on client needs. It is hoped the work done on residential care rates and budget modeling will be useful beyond Ottawa County.
While at first glance underutilized care may seem helpful to CMHOC’s budget, when care is authorized at appropriate levels but not accessed, underutilization of care can result in the need for more expensive emergency/hospitalization services and cost more in the long term, not to mention the detrimental effects on the lives of clients and their families.
There is much change and uncertainty in the CMH system as a whole right now. Michigan is in the process of reorganizing the PIHP level of oversight across the state, which could prove highly detrimental in some aspects, and potentially helpful in others, depending on how it rolls out and who is chosen to provide oversight. The matter is currently tied up in court and it is unknown what the full ramifications of these changes will be. Two potential concerns are; an off-the-top loss of as much as $500M for care statewide due to higher administrative costs, and local CMHs no longer being in a position to ensure a strong network of providers and services is available to their communities.
The county’s participation in a CCBHC federal grant/model program, which began in late 2021, presented some opportunities for additional care and funding, but not without financial risk. The benefits and risk of CCBHC continues to be evaluated.
At one time the county held the legal position that it was not responsible for any financial shortfalls of CMHOC, but it is uncertain that position holds at this time. Given the risks, county leadership (Corporate Counsel, County Administrator, Board Chair and Vice Chair) began exploring converting the County Department of CMHOC into a Community Mental Health Authority, with a possibility of completing such a process by October of 2026. The matter was recently brought to the full Board for consideration.
MOVING FORWARD THROUGH CHANGE
Ottawa County needs to have a stable Community Mental Health system which appropriately cares for those in need due to developmental disabilities, autism, mental illness, and substance use disorders. When individuals do not receive appropriate care, families suffer, and the criminal and family court systems, as well as the community as a whole, are burdened with the results.
I have confidence in the leadership of Dr. Brashears, who is a trusted expert in the field—both in regards to clinical services and his ability to analyze systems and implement needed change. I also have confidence in the CMHOC Board due to the depth of background of the individuals serving, as well as their ability to advocate for and work together to meet the needs of our people.
My hope is that should county leadership recommend and the Board of Commissioners decide to convert the CMHOC Department to an Authority, that it will work to ensure CMHOC has the resources and tools it needs to ensure a smooth transition to an Authority, and provide stability to the CMHOC staff and Board at a time of multiple unknowns and financial shortfalls throughout the entirety of the CMH system statewide.
People matter. How we care for the most vulnerable matters. As one constituent shared, CMH does some of the most important work in the county. For his family, that is absolutely true.