Lawmakers object to state contract with mental health agency that is leaving retirement system

jbrammer@herald-leader.comJuly 8, 2014 

The Kentucky State Capitol building in Frankfort.

SAM RICHE — Lexington Herald-Leader Buy Photo

FRANKFORT — A committee of lawmakers objected Tuesday to renewing a state contract with Seven Counties Services, a community mental-health center in the Louisville area that has won court approval to pull out of the state's troubled retirement system.

Seven Counties Services, which has 32,000 clients, said the decision "risks harming hundreds of vulnerable and at-risk children in our region."

Some members of the legislature's Government Contract Review Committee said the state should not do business with the center after it left the retirement system with $90 million in unfunded pension liabilities.

"Why give contracts to Seven Counties? That is wrong, wrong. They left us $90 million in pension obligations. That is a wrong process," said Rep. Brent Yonts, D-Greenville.

"It does seem wrong-headed," said committee chairwoman Sara Beth Gregory, R-Monticello.

The panel voted 6-0 to not approve a nearly $3.7 million, two-year contract with Seven Counties to provide a family-services program in Jefferson County for the state Cabinet for Health and Family Services. One member cast a "pass" vote.

The vote does not nullify the contract. Instead, the contract now goes back to the state finance secretary to determine whether to revise it, cancel it or keep it in effect.

Under the contract, Seven Counties provides in-home counselors to troubled families with the aim of keeping children at home.

Jill Midkiff, a spokeswoman for the state Cabinet for Health and Family Services, said the contract is "aimed at preventing the separation of children from their families and enhancing reunification when children are removed from their homes."

She said the cabinet is reviewing its options "and will work aggressively to avoid any disruption in the delivery of these services to these children and their families."

The board and management of Seven Counties Services "are shocked that the state is discontinuing a critical program that serves more than 300 families," said spokeswoman Gwen Cooper.

She said Seven Counties has held the contract for more than 25 years.

"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 committee should "reverse this unfortunate and destructive decision," she said.

The contract review committee also considered a $1.22 million, one-year contract with Seven Counties to provide independent living services for disabled persons. Four lawmakers voted against that contract, but five votes are needed on the eight-member panel to disapprove a contract

"We need to make a strong statement of objection," said Rep. Brad Montell, R-Shelbyville.

Sen. Christian McDaniel, R-Latonia, said he believes other providers could be found to provide the services.

The committee did approve several similar contracts for other mental-health providers.

Lawmakers were upset by Seven Counties' decision to seek bankruptcy protection and withdraw from the Kentucky Retirement Systems, which has more than $17 billion in unfunded liabilities.

The state claims Seven Counties is responsible for $90 million of that debt, but the mental-health agency disagrees.

Seven Counties filed for bankruptcy last year, citing the high costs of pensions, and a federal judge approved its plan to leave the pension system in May.

The Kentucky Retirement Systems board of trustees voted last month to appeal the judge's decision.

Jack Brammer: (502) 227-1198. Twitter: @BGPolitics. Blog:

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