From the desk of Steve Allen
OHA Behavioral Health director

Dear partners in Oregon’s behavioral health system,

As you know, Oregon acted swiftly to protect its citizens from the spread of COVID-19 by implementing essential physical distancing practices and closures. Thanks to these actions, Oregon’s incidence and mortality rate is the fourth lowest in the nation.

However, these closures have had a dramatic impact on Oregon’s economy, through lost wages and closed businesses, resulting in a significant drop in revenue for state government and the services it provides and supports. The Office of Economic Analysis predicts the impact could be as high as a loss of $3 billion in state resources during the current 2019-2021 biennium.

By law, the state may not spend more money than it brings in through revenue. Without legislative intervention, the only tool the Governor has to balance the budget is to reduce General Fund expenditures. To prepare for the anticipated loss of General Fund revenues, the Governor has directed all state agencies to propose budget reductions to cut their General Fund biennial appropriations by 8.5 percent. OHA will post its proposed budget reductions on its website tomorrow, May 12.

Because the budget reductions can only apply to programs and services supported by General Fund dollars, the proposed cuts would have a detrimental impact on Oregon’s behavioral health system, including Oregon State Hospital. Please know, these are not cuts OHA wants to make, nor cuts it believes are in the best interest of people we serve. We understand any cuts, should they come to pass, would be especially hard in the midst of the COVID-19 pandemic. We also acknowledge that cuts to general fund programs would disproportionately affect historically underserved communities.

It’s important to know that this exercise is just a starting place for budget discussions yet to come. The Governor will review the reductions and their impacts; however, OHA is a large part of the state’s budget, and we have to contribute our share to close the state’s funding gap.

Proposed behavioral health reductions

Included in the OHA proposal is a reduction in community behavioral health funding of $69 million. The proposed options start with the savings, reductions and revenues that had previously been identified, but not acted upon, during the short session, such as offsets due to marijuana increases and the federal mental health block grant.

The next proposed options include stopping all activity on new contracts. This means that any program or budgeted activity for which there is not a current active contract would be paused. The amounts of those contracts are considered in whole or part as reduction options. This would especially impact vital children’s behavioral health services, assertive community treatment and county financial assistance agreements.

OHA identified further options in programs funded wholly by General Fund, primarily in reductions to rental assistance and CHOICE contracts. This would mean more people would be unable to maintain safe housing, and Oregon State Hospital would have more difficulty discharging people due to reduced resources to prepare for transition and coordinate appropriate community services.

OHA’s proposal also includes cutting Medicaid funding by $64 million in general fund ($233 million total), which will have an impact on providers, coordinated care organizations (CCOs) and access to care for Oregon Health Plan members.

Anticipated impacts

Should they be implemented, these proposed cuts would have a devastating impact on Oregon’s behavioral health system and the people who depend on it. Oregon has one of the highest rates of mental illness, addiction and suicide in the country, and we have been ill-equipped to address the scope and scale of the behavioral health needs of children, adults and families even before the COVID-19 pandemic.

The proposed cuts are deep and span key services for many of Oregon’s most vulnerable people. The cuts include:

• Rolling back the landmark 2019 session investments in the children’s behavioral health system, including cuts to:
  • School based mental health and suicide prevention/postvention services.
  • Intensive in-home behavioral health treatment.
  • Crisis services for children and families (CATS program).
• Rolling back rate increases for addiction and mental health treatment that were designed to improve behavioral health worker recruitment and retention and encourage an increase in access to these much-needed services.
• Rolling back an expansion of Assertive Community Treatment, an evidence-based program that supports people with severe mental illness in their communities.
• Rolling back implementation of Project Nurture, which provides specialized care for new mothers with addictions, helping keep infants safe and reducing family separations.
• Reducing OHA’s ability to support people with serious mental illness with rental assistance and supports to prevent homelessness.
• Reducing critical transition support services, slowing discharges from psychiatric hospitals and thereby slowing admissions to hospital-level care.
• Reducing funding for Oregon’s county-based behavioral health “safety net” services.
• Reducing Medicaid-funded services for people on the Oregon Health Plan.

Proposed Oregon State Hospital reductions

Oregon State Hospital (OSH) had to propose options to reduce its General Fund by more than $42 million. For the exercise, OSH focused on preserving services and supports for patients that are required by law and regulation, including direct-care staff. The goal was to be able to achieve reductions by consolidating and restructuring the hospital to minimize patient and staff impact.

In general, the proposed options include potentially reducing the number of operating beds by up to 173 beds, eliminating services and programs not required by law or regulation, and consolidating other programs and services. The biggest impact would be to reduce the hospital’s ability to serve people who need hospital-level care throughout the state. The reduction in bed capacity at OSH would exacerbate the existing pressure for access and service across the behavioral health continuum, as well as a reduction in workforce.

In addition, patients would no longer have access to valuable programs and services that help them fully prepare for safe and successful community integration. This would likely increase length of stay and further exacerbate capacity issues.

What comes next

At this stage, it’s important to remember that this exercise is simply a proposal. No decisions have been made yet. The next step is for Governor Brown to review each agency’s reduction options and evaluate their impacts.

On May 20 the Office of Economic Analysis will release its quarterly revenue forecast showing the anticipated impact of the current economic downturn on the state General Fund and Lottery Funds revenues. This will be the first revenue forecast incorporating the unprecedented impact on Oregon businesses from COVID-19 and the corresponding unemployment claims being filed by Oregon workers. While we do not know the precise impacts of the forecast, we do know it will reflect a significant drop in state revenues.

There are a lot of things that may happen after the forecast comes out that could impact the budget. State leaders may call for a special legislative session, and the Legislature may decide to use other mechanisms than General Fund to balance the budget. At the same time, the U.S. government may take action to support states through the federal Coronavirus Relief Funds.

Again, these reductions are not set in stone. Once reduction targets are set, we will work in collaboration with our community partners, the Legislature and our other stakeholders to develop implementation plans that do the least harm while meeting our financial obligations.

I understand that, even as an exercise, this news is very troubling, and could not come at a worse time as people struggle daily with loss, uncertainty, isolation, and a wide range of economic and personal stress. I share your concerns. These proposed options would be devastating if implemented and are antithetical to everything we’ve been trying to build. In these uncertain times, we need each other more than ever. We need a strong behavioral health system more than ever. I will do my best to keep you informed of the budget process and to help preserve and strengthen our ability to support people with behavioral health needs. It will take all of us working together to ensure we have a system of services and supports that meets the needs of all Oregonians.

In gratitude,

Steve