FAIRBANKS - Budget problems will result in staffing cuts of about 20 personnel at Fairbanks’ primary mental health organization next week, as financially troubled Fairbanks Community Health Center overhauls its operations.
The cuts, which represent about a third of the employees at the center, will occur as the nonprofit organization heads toward bankruptcy. It’ll emerge from a short closure next week with a different name — Fairbanks Community Mental Health Services — and new oversight from the nonprofit organization that provides mental-health care in Anchorage.
The scope of the employee cuts was a surprise, said Interim Executive Director Jake Poole. But as auditors delved into the financial problems at the center, it become clear more aggressive action was necessary.
Poole, who was hired two weeks ago to lead the center during its transition, said the organization had burned through about 45 percent of its annual budget in the past three months. The Alaska Division of Behavioral Health reviewed and approved the budget plan.
“Even though we were being optimistic and thinking things were going to fall into place, things were worse than they thought,” Poole said.
Therapeutic services — which include regular and emergency sessions for local mental-health clients — won’t be affected by the cuts, Poole said. But some transition services for mental health clients, such as jobs at a coffee shop or the Alaska Rag Company, won’t be filled when the organization is reborn next week.
It’s still uncertain which jobs will be eliminated. Those decisions will be made by on Monday, when officials from Anchorage Community Mental Health Services will sift through employee applications and decide which positions should be filled.
Poole said it’s likely some of the jobs will be restored once the organization stabilizes under new leadership.
“That’s not a great thing, but at least it’s an opportunity,” he said.
The changes come after a catastrophic year for the health center. The self-insured organization, which is $1.2 million in debt, was hit by a pair of large medical claims and has struggled with a backlog of Medicaid reimbursements, board president Barbara Burch said last month. Executive director Kelly Shanklin abruptly resigned from her position on Aug. 26.
Members of the board of directors said they didn’t know how troubled the organization was until last month, when a financial review determined it only had enough funding to survive until mid-September. The first indication that the organization was in crisis came in May, when it almost failed to meet payroll, board members said.
A state audit is in progress to determine why the organization’s struggles weren’t more apparent.
The health center is preparing a Chapter 11 bankruptcy filing, which will allow it to restructure both the organization and its debt. No date has been set for the filing.
The center’s South Cushman Street facility will be closed until Wednesday as the organization shifts to new leadership. A community meeting will be held 5:30-7:30 p.m. Wednesday at 2830 South Cushman St. to discuss changes at the organization.
Contact staff writer Jeff Richardson at 459-7518. Follow him on Twitter: @FDNMbusiness.