Bluegrass Regional Mental Health-Mental Retardation Board, the state-backed provider of mental health care in Central Kentucky, will give bonuses to all of its 2,300 employees this month and give pay raises to most of them in the fiscal year that begins July 1.
The non-profit's 25-member board of directors voted unanimously Thursday to cover the cost by withdrawing $2.51 million from its $31 million in cash reserves and similar assets. Bluegrass — the focus of recent Lexington Herald-Leader stories about its spending and subject of an impending state audit — has not given raises since at least January 2009.
The board of directors wanted to provide more money for employees, whose morale has been suffering, but lowering Bluegrass's reserves is "a great peril," chief executive officer Shannon Ware said. The non-profit needs adequate reserves in the event that its revenue — chiefly, state and Medicaid funding — is stalled for some reason, Ware said.
"This is not a long-term solution. We cannot do this again next year," Ware told the board at Bluegrass's Lexington headquarters.
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By June 30, employees at Bluegrass's outpatient locations around Central Kentucky and at Eastern State Hospital in Lexington and Bluegrass Oakwood in Somerset will get a one-time bonus of 3 percent of their base pay or $700, whichever is more. In fiscal 2013, employees except those at Oakwood will get a pay raise — 4 percent for those making $50,000 a year or less, which is the majority of them, and 3 percent for those making more than $50,000 a year.
Bluegrass cannot afford to give raises at Oakwood because the state Health and Family Services Cabinet continues to cut millions of dollars from the non-profit's management contract at that facility, Ware said.
The Herald-Leader has reported that Bluegrass spends plentifully on executive compensation, political lobbying and real estate while citing tight budgets to front-line employees, many of whom complain about low pay and austere working conditions. Bluegrass's annual revenue more than doubled during the past six years, to $176 million, as it expanded and won more state contracts.
The Herald-Leader also reported that Bluegrass employs Ware; her husband, Joseph Toy, who preceded her as CEO and remains as a paid consultant; and their son-in-law, Eric Crabtree, the director of information technology. In 2010, Ware and Toy together took home more than $1 million in total compensation, including their base pay, bonus pay and payouts from a deferred compensation plan for top Bluegrass executives.
Ware said Thursday that her stepdaughter, Lindsey Toy Crabtree, got a job with ARC Services soon after Bluegrass gave that company a contract to manage its employee self-insurance plan. But Ware said her stepdaughter does not get a commission from Bluegrass's account or own part of the company.
"There's no benefit to her, no financial benefit," Ware said.
In response to the newspaper stories, state Auditor Adam Edelen announced that he will examine Bluegrass' spending and governance. The auditors are expected to arrive next week, Ware said.
Members of the non-profit's volunteer board of directors said they have spent the two weeks since scrutiny began by traveling around Central Kentucky to speak with Bluegrass employees. Many are unhappy, board members said Thursday.
"Based on my conversations with employees and based on the calls I've received, we've got a bad morale problem which I think maybe the board didn't fully appreciate. I think this (the pay boost) will go a long way on that," said board member Anthony Wilhoit.
Some Bluegrass employees say the non-profit's drive for financial success has made the top executives comfortable at the expense of front-line care workers and their patients.
In an interview this week, Jack Beeler said he retired from Eastern State Hospital in March as a supervisor over food counter attendants. Food quality at the hospital often was poor, and serving sizes shrank over time, leaving some patients hungry, Beeler said.
"They didn't get enough food," Beeler said. "The way they served it — I was in charge of portioning it out, and on several occasions, the kitchen supervisor would tell us to use a smaller scoop, to cut back on the portions because we didn't have enough food."
On Thursday, Ware disputed Beeler's account. There has been no reduction in spending on patient food or serving size, she said.
"I have no idea where that's coming from," Ware said.