Bluegrass mental-health nonprofit flush with cash, despite cuts in public health; spends big on executive pay and lobbying

The new Eastern State Hospital being built in Lexington. The
Bluegrass Regional MH-MR Board runs the existing facility
and wants to run the new one. (Pablo Alcla, Herald-Leader)

Despite deep cuts in state public-health funding, the non-profit Bluegrass Regional Mental Health-Mental Retardation Board, which serves 17 counties in central Kentucky, is flush with cash, making some critics question whether it is transparent enough with its finances.

"In 2011, it reported having $33.7 million in cash reserves and similar assets — more money than 10 of the state's 13 other regional mental health boards had in their entire budgets," reports John Cheeves for the Lexington Herald-Leader.

The board spends freely in executive pay (four top executives collected nearly $2 million in 2010 for compensation), political lobbying (since 2008 it has spent nearly $500,000 to pay four lobbyists in Frankfort) and real estate (it bought a $295,000 home near Lake Cumberland for its senior management team to use when in Somerset).

"We have received some concerns regarding the Bluegrass board in the last few days, and we're going to be looking into those," state auditor spokeswoman Stephenie Steitzer told Cheves.

Scott Gould, who chairs the 25-member Bluegrass MH-MR Board, said "there has been no inappropriate practice or action taken by any board member, CEO or staff member."

But one former employee, Eleisha Kiefer, said the company cuts costs in unfair ways, saying there was a weekly lunch budget of $100 at a therapeutic rehabilitation program for about 20 mentally handicapped adults in Harrison County. "We had a lot of soup beans and corn bread," she said.

Gould disputed the allegation, saying there has "never, ever" been a weekly budget placed on client meals.

Mental health experts praise the work Bluegrass does. "I'd have to put them high up on the star chart in terms of what they provide their consumers and their family members," said Sheila Schuster, executive director of the Kentucky Mental Health Coalition. "It's one thing to deliver quality care, but I feel that Bluegrass goes the extra mile."

Though is it chiefly funded by the Cabinet for Health and Family Services, Bluegrass considers itself part of the private sector. Its executive pay reflects that approach. In 2010, its current and previous chief executive officers — who are married to each other —"took home more than $1 million in total compensation," Cheeves reports.

Comparatively, Howard Bracco, the recently retired CEO of the mental health board in Louisville, Seven Counties Services, made $179,868. "We had different cultures," Bracco said. "They operate on a business model, a corporate model, versus the social model. I think, frankly, they were better business people than many of us. They lobbied hard to win contracts, they fulfilled those contracts, and they've been very successful." (Read more)