* 1999-00 through 2001-02 reflect enacted appropriations.
* 2002-03 and 2003-04 reflect Executive recommended appropriations.

The Office of Mental Health (OMH) administers an extensive statewide mental health network, including community based mental health services, 17 State-operated psychiatric centers for adults, six State-operated psychiatric centers for children, three forensic psychiatric centers and two research institutes. The State-operated inpatient mental health system serves approximately 7,600 persons annually. Outpatient services are provided to an additional 37,000 patients each year. In addition to serving outpatients, OMH provides other community-based services, including community residences, residential care centers for adults and children, intensive and supportive case management, and supportive employment. There are more than 2,500 not-for-profit, municipal and proprietary mental health service providers in the community, meeting the needs of over 500,000 persons annually. All community-based providers are licensed by OMH. The Executive is requesting funding to support a workforce of 16,360 Full-Time-Equivalent (FTE) in State Fiscal Year (SFY) 2003-04, a decrease of 950 positions from SFY 2002-03 levels.

The Executive proposes downsizing the State operated system by eliminating 90 beds, closing four adult psychiatric centers (PC) and one children's PC and consolidating the two mental health research institutes. Three PC's are proposed for closure in SFY 2003-04, Elmira PC, Hutchings PC, and Mohawk Valley PC. Patients at these facilities would be transferred to other State facilities as follows: from Elmira PC to Rochester PC, from Hutchings PC to Mohawk Valley PC, and from Middletown PC to Rockland PC. The closures would be effective July 1, 2003. The three facilities currently employ 1,323 FTE staff. Of those, 361 would remain at the facility to continue providing outpatient services, 619 staff would transfer to the facilities receiving the relocated patients, and 343 positions would be eliminated. The closure of both Bronx adult and childrens psychiatric centers would be accomplished by July 1, 2005. The Executive also proposes to abolish the Nathan Kline Institute, which is located on the grounds of the Rockland PC, effective April 1, 2003, and to consolidate its functions with the New York Psychiatric Institute in Manhattan. As a result of the closure, 113 FTE positions would be eliminated.

The landmark Community Mental Health Reinvestment Act expired on September 30, 2001. A legislative proposal to create a new Reinvestment program to use bed-closure savings to strengthen base funding for voluntary agencies was vetoed by the Governor on December 20, 2002. The Governor's budget proposal for SFY 2003-04 includes Article VII legislation for a new Community Mental Health Support and Workforce Reinvestment Program to reinvest savings from State system downsizing into the community. However, the Executive proposes to delay the effective date of this legislation to April 1, 2004 and to utilize savings derived from bed and facility closures in SFY 2003-04 to fund the annualized cost of the Medicaid fee increases and cost of living adjustment (COLA) enacted in 2002.

For many years, certain State employees from State-operated psychiatric centers were out-stationed at community based programs through the Shared Staffing Program and Community Reinvestment Program in order to provide some relief to local governments for the impact of deinstitutionalization on local services. The Executive believes that newer mental health initiatives make it no longer necessary for State staff to remain at local agencies, thereby allowing these positions to be returned to the psychiatric centers where they originated. The Executive proposes compensating local agencies for the loss of the State funded positions through an increase in their rates of reimbursement, thus providing the agency with the resources to hire replacement staff. The State employee would have the option of returning to the psychiatric center or staying with the local agency as its employee. A total of 315 FTE positions would be affected.

The Executive proposes a new bed development initiative that would add 2,000 beds to the already existing pipeline over the next six years. In Phase I, a $65 million State appropriation would leverage another $52 million in local matching funds to pay for construction of 1,000 beds.

The Adult Care Facilities Workgroup, formed as a response to revelations about the inadequate and dangerous conditions existing at certain Adult Homes housing persons with mental illness, made recommendations for change in its recent report. The Executive has proposed that OMH, the Commission on Quality of Care for the Mentally Disabled (CQC), and the State Office for the Aging (SOFA), together with the Department of Health (DOH) as the lead agency because of its role as regulator of the Adult Homes, work cooperatively to implement the Workgroup's recommendations. The Office of Mental Health would be involved in oversight of the client assessment process, medication management and coordination of mental health services and other rehabilitation services.

This agency is found in the Health and Mental Hygiene appropriation bill.

State Operations

The Executive recommends All Funds State Operations appropriations of $1,114,126,000, a net decrease of $51,317,500 or 4.4 percent. The decrease is primarily the result of various cost-saving measures detailed below, offset by an increase in certain Special Revenue and Federal Funds. The General Fund decreases by $161,885,000 as programmatic cost savings are combined with an increase in Special Revenue Other offset funds of $95,403,000 from the Patient Income Account (PIA).

The decrease in State Operations funding is the net result of the following actions:

• an increase of $23,721,500 for workforce salary increases and pharmaceutical costs totaling $8,557,500; the creation of a $15,025,000 Special Revenue Fund for the transition of Shared Staff and Reinvestment positions, and small increases in other Special Revenue Funds totaling $139,000; and

• decreases totaling $75,039,000 from: $16,325,000 in savings from the transfer of 315 Shared Staff and Reinvestment Staff to local assistance funding; $13,981,000 from eliminating funded vacancies and limiting overtime, $11,963,000 in savings from eliminating salary enhancements for psychiatrists and nurses; $11,250,000 in savings from bed closures including annualization of SFY 2002-03 bed closures; $9,997,000 in savings from closure of the Elmira, Hutchings and Middletown adult psychiatric centers; $7,825,000 in savings from consolidation of the Nathan Kline Institute with the New York Psychiatric Institute; $1,400,000 in savings from the transfer of 20 multi-disabled inpatients to the care of the Office of Mental Retardation and Developmental Disabilities (OMRDD); $1,525,000 from elimination of 25 FTE Central Office positions, and $773,000 in savings from eliminating various community projects.

Aid To Localities

The Executive proposes an All Funds appropriation of $844,723,000, a net increase of $20,673,000, or 2.51 percent. The change results from the following actions:

• an increase of $15,491,000 for annualization of a three percent cost of living adjustment, $11,368,000, and a 10 percent Medicaid fee increase $4,123,000 granted in SFY 2002-03;

• an increase of $11,326,000 for local provider funding increases to offset the elimination of Shared Staff and Reinvestment Staff positions;

• a total increase of $6,650,000 for the following: $3,265,000 to restore funding to the Medication Grants Program and $3,385,000 for a children's Residential Treatment Facility (RTF) trend factor, 21 temporary beds at RTFs, and staffing enhancements related to the use of restraint and seclusion;

• an increase of $3,804,000 for the operational costs of NY/NY 2 initiative beds that will open in SFY 2003-04;

• an increase of $1,894,000 in federal support for the Community Mental Health Services Block Grant, $1,193,000, the Shelter Plus Care Grant, $700,000, and homeless housing grants, $1,000;

• a decrease of $12,670,000 from the following: $7,170,000 in savings from extending Medicaid coverage to community support programs and $5,500,000 from replacing Community Reinvestment State aid with federal Medicaid revenue through a Comprehensive Outpatient Services (COPS) add-on;

• a total decrease of $4,646,000 from the following: $1,400,000 in savings from eliminating Article 28 hospital Alternative Rate Methodology reimbursement; $2,400,000 in savings from local provider efficiencies and $846,000 in miscellaneous adjustments; and

• a decrease of $1,176,000 from the elimination of a legislative initiative.

Capital Projects

The Executive requests All Funds appropriations of $215,482,000, a net increase of $52,602,000 or 32.29 percent. The primary source of the increase is a request for $65,000,000 to fund Phase I of a new community bed development program. Localities would be required to provide matching funds for up to 80 percent of the appropriation. While the ultimate goal is to add 2,000 beds, Phase I would provide for 1,000 beds. The increase in funding for community-based beds is offset by a decrease in support for capital projects at State-operated facilities.

Article VII

The Executive proposes to:

• close the Nathan Kline Institute for Psychiatric Research and merge its functions with the New York Psychiatric Institute;
• authorize the closure of the Elmira, Hutchings, Middletown, and Bronx adult psychiatric centers and the Bronx Children's Psychiatric Center;
• establish the Community Mental Health Support and Workforce Reinvestment Program to reinvest savings from facility closures into community services;
• amend the Mental Hygiene Law to include consumers and family members on community service boards;
• appoint the Commissioner of Mental Health to be the sole appointing and removing authority for all Office of Mental Health employees. Currently, psychiatric center directors are the sole appointing and removing authority for their individual facilities; and
• extend through March 31, 2006 legislation that permits Article 28 hospitals to replace State grant funds for mental health services with federal Disproportionate Share payments.