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Archived
News and Projects Move from Institution to Community a Failure
But less than six months into the lease with Rep. Herschel Cleveland and his partners, the state wanted out. The deal was helping to sink the development center deeper into an already desperate budget crisis. Officials entered the lease believing the operation would take in at least $3,000 over its costs each month, but it instead ended up losing more than that amount every month.
Cleveland, a Democrat from Paris, is careful to point out that the deal wasn't his idea to begin with and that he fully disclosed his role from the beginning. On top of that, he said it was far from a financial boon for the business he shares with two partners, Booneville Assisted Living Center Inc.
The idea was to move a small group of mentally retarded residents out of Booneville Human Development Center, a state-run institution known locally as the "colony," into Cleveland's facility on Main Street. "Programmatically, it's been a complete success. It's been wonderful," said Mike McMillan, the Booneville Human Development Center's superintendent. "Financially, it's been a nightmare." The state will end its lease July 31, after losing about $80,000 and less than a year after entering what was intended to be a 10-year deal. Those who started out optimistic about the idea ended up blaming government regulations for choking the project despite its initial promise to improve the lives of residents of an aging state institution.
TRYING TO INTEGRATE
That historic isolation from the community is philosophically at odds with the U.S. Supreme Court's landmark Olmstead v. L.C. ruling in 1999. The ruling has led to efforts nationwide to move willing clients out of institutions and into group homes or other more integrated settings. That's how Booneville Assisted Living Center entered the picture. In response to the court decision and at the urging of higher-ups who were looking for new ideas, a committee of Human Development Center staff members came up with a plan to lease the Assisted Living Center as sort of a first step to introduce clients to a more independent setting in the community.
The notion actually came from the Human Development Center's nursing supervisor, who had heard that the assisted living center might be for sale.
Cleveland is one-third owner of the center, which is a modern, dorm-like facility with 26 beds in small apartments. He and his partners built it to house senior citizens who don't need the medical assistance of a nursing home but who do require some extra help with daily tasks. The Human Development Center staff contacted Cleveland about the idea of leasing the center, keeping the older folks there while moving in some development center clients whose families approved. They'd eat and interact with people outside their institutional setting, while maintaining staff and friends they were familiar with. Meanwhile, Booneville Human Development Center could show that it was moving forward in its compliance with the Olmstead decision. 'ON THE UP AND UP' "It was all on the up and up," McMillan said. "There was full disclosure to everyone."
Cleveland and his partners, Ronald L. Green and Thomas Newman, in 2000 were considering selling Booneville Assisted Living - one of four such centers they own in Arkansas. But they reconsidered when officials with the Human Development Center showed interest in a lease. The Human Development Center is one of Logan County's biggest employers, with more than 280 employees, and Cleveland said he wanted to help the operation.
He offered rent that he said was $2 per square foot below the going rate for state leases: $10,562.50 a month for the 13,000 square-foot facility.
Booneville Assisted Living would pay the utilities and upkeep. If the state wanted to end the 10-year lease early, it could do so with 30 days' notice.
"A fellow approached me and wanted to buy it, but the economy around here is so dependent on Booneville Human Development Center... our commitment was to do what we could, if anything, to help them in their compliance with Olmstead," Cleveland said. He went to the state Developmental Disabilities Board meeting and disclosed his role before the board approved the lease. He also told the Legislative Council, which approved the lease as well, about his role.
"I said, 'Hey, before y'all discuss this, I want you to know I'm in the House of Representatives, and I own a third of that.' And of course they knew," Cleveland said.
'A LITTLE BIT WRONG' It turns out the problem wasn't with who owned the building but with the financial premise of the living situation, mixing institutional clients with others. That complicated the money situation to the point that it became a drain on the main mission of Booneville Human Development Center.
That's because half of the center was supposed to be for the Assisted Living residents, senior citizens who needed a little more help. In state regulatory language, they're called "residential-care facility" beds.
The other side was for the Human Development Center clients, which under the regulations are designated as beds for an "intermediate care facility for the mentally retarded." It's not just a variation in name; the funding and care guidelines are different.
The intermediate care facility beds are federally subsidized to the tune of about 73 percent, meaning of every $4 the Booneville Human Development Center spends to take care of those clients, the federal government reimburses the state almost $3. Not so with the residential care beds, which meant Booneville Human Development Center had to carefully keep track of exactly how much it spent on each operation so as not to run afoul of federal Medicaid regulations.
"When you've got the same staff taking care of it, you can see how it can become very complicated," said Julie Munsell, spokesman for the Arkansas Department of Human Services. Fred Ernst, operations director at the Human Development Center, said everyone knew going in that the expenses would have to be separated. However, estimates for revenue and expenses were "a little bit wrong," he said.
"We didn't have enough experience, I guess, because it was a brand-new thing," Ernst said. 'NOT ENOUGH SLACK' Jerry Berry, chief financial officer at the Human Services Department, said he and others warned the Developmental Disabilities Board that there could be problems financially. The projections lacked a good "businesslike plan" to look at true costs over a five-year period, he said.
"If we had to do it over again, we'd probably rework some things," Berry said.
That, coupled with very bad timing, sank the project. The lease started in September, and the first round of massive state budget cuts began in November. Booneville Human Development Center laid off 19 employees and cut services to the bare minimum.
Buildings were shut down and 54 employee positions remain unfilled. The pool used for therapy closed. Requests to place new residents at Booneville were denied.
Meanwhile, precious money from the center's general revenue was going to pay the loss accumulating each month at Booneville Assisted Living, created because there wasn't enough revenue coming in on the residential-care side. Without the federal match, it was like losing four times the money.
"There simply was not enough slack in our budget to carry us over the hump," Ernst said.
'THE BOTTOMLESS SWAMP' Ron Carmack, chairman of the state's Developmental Disabilities Board, said the lease has been "an exercise in frustration" but one that appears to have a satisfactory ending. That's because the clients who live at Booneville Assisted Living will likely get to stay, cared for by Bost Inc. of Fort Smith, which is negotiating to take over the lease on Aug. 1. Kent Jones, the executive director for Bost, said the private nonprofit is not "locked in" to the state's funding structure and so has more flexibility to make the lease work. If the residents become Bost clients, their expenses can be paid through the Medicaid community-based waiver program, which allows Medicaid funding to be used outside institutional settings, with clients' own families or in smaller, group homes.
"For some, it may be their living situation for the foreseeable future, for others, it's a step toward more independent living," Jones said.
David Fray, director of Developmental Disabilities Services for the state, said that was the idea when he first approached Booneville Human Development Center and encouraged the staff to come up with ways to comply with Olmstead.
He said he encouraged them to come up with ways to allow those residents who want to leave to do so.
"If we have people who want to leave, and who can benefit from leaving, we have an obligation to make that happen," Fray said. "If we don't make that happen, then we become a target." He said the idea to move residents to Booneville Assisted Living was good but that the financing was flawed.
Carmack blames confounding regulations for the financial trouble with Booneville Assisted Living.
"It appeared on the front end that it was going to work out, and it turned out it did not," he said.
"The answer to the question 'Why?' lies in the bottomless swamp of regulations and funding formulas."
Carmack said the center and the board were "plowing new ground," being innovative, coming up with new and better ways to help clients. The good news is it should work with Bost, Carmack said. "Apparently, it works over on their side of the fence, and it doesn't on ours," he said.
Carmack said the center still will accomplish its goal, which is allowing clients to move out of the institution and work on becoming part of the greater community.
"This piece of it, which is the only thing that really matters, is going to stay in place," he said. At a glance Booneville Human Development Center is a 174-bed state institution situated on a hill overlooking the small Logan County town. It's on the site of the state's former Tuberculosis Sanitorium, which opened in 1910. The development center houses adult residents, most of whom are diagnosed with severe or profound mental retardation. About 80 percent of the residents also suffer from mental illness.
The center is one of six in Arkansas of varying size, overseen by the Arkansas Department of Human Services and the state Developmental Disabilities Board.
The Human Development Center is pulling out of a lease with Booneville Assisted Living Center Inc. - owned in part by Rep. Herschel Cleveland, D-Paris - because the experimental program is losing money. Read More Archived News Stories AB896 General Human Interest Litigation State Budget
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