State to terminate a contract with mental health agency that left retirement system

jbrammer@herald-leader.comJuly 18, 2014 

FRANKFORT — Gov. Steve Beshear's administration decided Friday to terminate on Oct. 31 a $3.7 million contract with Seven Counties Services, a mental health agency in Louisville that has won court approval to pull out of the state's troubled retirement system.

A legislative committee voted this month to terminate the contract immediately, but state Finance and Administration Secretary Lori Flanery said the state needs time to select a new provider for a family-services program in Jefferson County.

The Government Contract Review Committee objected to renewing one of several contracts the state has with Seven Counties, citing concern about the agency's decision to leave the retirement system. Seven Counties Services, which has 32,000 clients in Louisville and surrounding areas, said at the time that the committee's action risked harming hundreds of vulnerable and at-risk children.

The panel voted 6-0 to not approve the contract. The vote did not nullify the contract, since the state finance secretary had the right to determine whether to revise it, cancel it or keep it in effect.

One of the committee co-chairs, Sen. Sara Beth Gregory, R-Monticello, said the state's decision shows respect for the committee's concerns without interrupting services for families and children. Another committee member, Rep. Brent Yonts, D-Greenville, called the state decision "a fair result."

Gwen Cooper, a spokeswoman for Seven Counties, could not be immediately reached for comment.

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

In a letter Thursday to Flanery, Beth Jurek, executive director of the state health cabinet's policy and budget office, asked Flanery to override the committee's decision. Jurek said the cabinet's Department for Community Based Services is notifying Seven Counties that it intends to cancel the contract on Oct. 31.

"DCBS will move with all due haste to execute a contract with an alternate provider," Jurek said. "However, in order to provide an orderly transition for the clients currently being served by Seven Counties, services by Seven Counties cannot cease immediately. DCBS will need a minimum of 100 days to transition the families and children currently being served by Seven Counties to the new provider."

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

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 were needed on the eight-member panel to disapprove a contract

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: (859) 231-1302. Twitter: @BGPolitics. Blog: Bluegrasspolitics.bloginky.com.

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