Some 25 to 50 employees of the Lexington-Fayette County Health Department could be laid off to offset a projected $1 million to $2 million deficit.
Health officials are also pulling financial support of a day program for Alzheimer's patients and a teen center but are working with other agencies to continue those services.
"I don't like it, but it is the hand we are dealt," said Health Commissioner Dr. Rice Leach, who took over the job in March.
Cuts in funding, especially involving the school nurse program and state Medicaid reimbursements, and increased expenses have hit the department hard, he said.
Leach said he couldn't talk specific numbers until he presents a budget to the Board of Health in June. But, he said, the department, which has 360 employees and a $28 million budget, is facing serious challenges.
"I'm sorry to tell you that we are going to lose people, and we are going to abolish a bunch of jobs. We can't guarantee anybody anything," he said.
The Bluegrass Aspendale Teen Center and the Center for Creative Living, a day program for elderly Alzheimer's patients, are the first programs to feel an impact.
Leach said the health department is working with other agencies that provide similar services to take over those efforts.
Negotiations are under way for another agency to take over the Center for Creative Living in its current location at the Senior Center off Nicholasville Road.
There is also discussion of expanding the long-established adult day program run by Best Friends at Lexington's Second Presbyterian Church, said Terri Shirk, president of the Southern Indiana and Kentucky Chapter of the American Alzheimer's Association.
The goal is not to interrupt services to the current clients, said Lois Davis, the Lexington department's manager of public health. Clients will continue to be served on a sliding scale fee based on income.
"I am not concerned that we are going to end up with elderly people with nowhere to go," Leach said.
It's unclear what will happen to the nine health department employees who work at the center.
Leach said the cuts to the two programs allow the health department to maintain legally mandated duties — such as restaurant inspections and emergency response — that are not performed by other agencies.
Budget woes are the latest in a series of problems faced by the department since the beginning of the year.
Health Commissioner Dr. Melinda Rowe and chief operating officer Rodger Amon resigned March 1 after a series of public meetings at which employees complained of mismanagement of funds, low morale and a hostile work environment.
The health department is also the focus of an ongoing investigation by the state Office of the Inspector General and the Kentucky Board of Pharmacy. Two employees have been reassigned.
Leach also has asked state Auditor Crit Luallen to examine the department's finances.
A federal review concerning an $11.7 million grant to build a new clinic to serve the department's mostly poor patients raised questions about how tax dollars are allocated to the department's Primary Care Center.
Leach said the money problems are an incentive to wrap up negotiations with Rowe, who continues to receive her $178,000 a year salary. Her paid leave was to last just a few days.
But Fayette County's health department is not the only one facing a money crunch.
Public Information Officer Christie Green of the Madison County Health Department said the number of registered nurses providing services in school health clinics will be reduced by four.
She said the cuts stem from a $200,000 loss related to preventive Medicaid reimbursement, which will require health departments to pay 20 percent of every dollar for Medicaid services, an expense that the state Department of Medicaid usually pays.
The federal government pays the other 80 percent, said Dr. Steve Davis, deputy commissioner for the Kentucky Department for Public Health.
Davis said it is uncommon that local departments are asked to pay the match; he said it has happened three times in roughly the past 20 years.
The Department for Public Health has a nearly $50 million contract with the Department of Medicaid to provide preventive services, Davis said. Local departments will have to contribute $10 million of that to keep the Medicaid program running.
Green said that no layoffs or reductions in other services are projected for the Madison County Health Department.
Paula Alexander, director of the Franklin County Health Department, said the department has not had to furlough or lay off employees.
"We've had what I refer to as serial budget cuts over the past two to three years while demand for our services has gone up — but the good news is we are able to meet those demands," Alexander said.
And Davis said that, in general, the number of people going solely to doctors' offices is increasing, thus reducing the need for as much preventive care in most health departments.
"More of our patients enrolled in Medicaid are finding medical homes," Davis said. "Therefore, the number of people who are knocking on the doors of health departments is declining."
He said local health departments are using reserve funds to stabilize their services.
"There is the potential for layoffs for some organizations, but it would be not accurate to put that on the shoulder of just the funding formula change," Davis said.
"Before the funding formula was even on the table, the health departments were seeing reductions in programs," Davis said.
Crystal Caudill, public health director for the Wedco District Health Department — which serves Harrison, Nicholas, Scott and Bourbon counties — does not project any layoffs. She said the department is expected to see some program cuts.