After a scathing audit, Denver asserts more control over Rocky Mountain Human Services

Denver City Council adopted an ordinance that puts caps on Rocky Mountain Human Services administrative spending and gives the city more control over how money is used going forward.
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A Denver City Council meeting. (Kevin J. Beaty/Denverite) city council; civic center; city and county building; politics; government; kevinjbeaty; denver; denverite; colorado;

In late 2015, City Auditor Tim O'Brien issued a blistering report on Rocky Mountain Human Services, the dedicated recipient of a mill levy's worth of tax money that goes for case management and services for people with disabilities. Too much money was going to overhead and employee perks, and more than $1 million a year that ostensibly was collected to get state matching funds could not be accounted for at all.

This week, the Denver City Council adopted an ordinance that puts caps on administrative spending and gives the city more control over how the money is used going forward.

Denver's Department of Human Services will also have flexibility to give that money to other providers. Parents of people with disabilities said that creates an opportunity to do more to improve quality of life and independence in the future.

How did we get here?

Denver has had a dedicated mill levy for services for people with intellectual and developmental disabilities since 1987, and in 2003, voters approved an initiative that raised the mill levy to one mill -- which today generates about $14 million -- with the money to go to the community centered board, Denver Options, as Rocky Mountain was known at the time.

The local money supplements Medicaid and other federal and state dollars that Rocky Mountain gets for case management and direct services.

The auditor's report found pretty serious misuse of those funds. Rocky Mountain had expanded well beyond the Denver area, but it was using Denver taxpayer money to cover some of those services, even as its financial situation became less sustainable. Rocky Mountain's CEO earned more than twice as much as other executives in similar roles, and his salary wasn't included in administrative costs. Even without executive salaries included, the administrative expenses were much higher than they should have been.

Perhaps most significantly, Rocky Mountain Human Services was collecting $1.34 million a year from Denver to get state matching funds, but the Colorado Department of Health Care Policy and Financing hadn't provided any match since 2007. No one seemed to know where that money actually went.

“Unfortunately, our audit found a pattern of abuse of taxpayer funds by RMHS,” the city auditor said in the summary of the audit findings. “Overall fiscal mismanagement was severe enough to result in the termination of the organization’s Chief Executive Officer and Chief Financial Officer.  When individuals with intellectual and developmental disabilities are not getting all the services they need to begin with, it is heartbreaking to see this level of improper expenditures by RMHS.”

The report spurred protests and legislation at the state Capitol requiring more financial disclosure for community centered boards, the entities like Rocky Mountain Human Services that get tax dollars, to provide case management services.

By all accounts, Rocky Mountain Human Services, whose contract is up at the end of this year, is running a much tighter ship these days under the leadership of Executive Director Shari Repinski and being more forthcoming with the city in its quarterly and annual reports. The city also has a full-time auditor working with Rocky Mountain to understand how its allocating its money.

Rocky Mountain Human Services could actually end the year with a few million dollars unspent, according to Jay Morein, chief operating officer of Denver Human Services. A major reason for that is that rising property values generated a lot more tax revenue for that same one mill -- $14.5 million in 2016 compared to just $11.3 million in 2015. However, the savings also reflect a more efficient operation, Morein said.

"The amount of unspent monies that will roll over primarily was driven by the increase in mill levy revenues, but they did also tighten up how they were spending," he said.

What does the new ordinance do?

It incorporates Initiative 100 from back in 2003 into the Denver Revised Municipal Code for the first time and makes several changes. Rather than dedicate the money to a particular entity, it directs the money to be deposited in the human services special revenue fund to be used to help people with intellectual and developmental disabilities and then describes several allowed uses of that fund.

  • The money can be used to contract with the community centered board, which has been Rocky Mountain Human Services for a couple decades now.
  • The money can be used to contract for services and supports with other entities that provide those services.
  • The money can be used to get state matching funds.
  • Administrative costs are capped at 15 percent.
  • Denver Department of Human Services can use up to 0.75 percent of the mill levy, about $125,000, for auditing and greater oversight of the program.

In addition to giving the city more control and oversight, these changes prepare Denver if or when Colorado comes into compliance with federal rules that require case management and direct services to be provided by different entities. Having the same entity provide both can create a conflict of interest, and most states now require separate contracts for case management and direct services.

Council members said the city needs to pay careful attention to how administrative services are defined to make sure semantics don't turn into new opportunities for misuse of funds. The ordinance also establishes residency requirements to ensure the money is spent on people who live here.

Right now, the city doesn't have any plans to contract with entities other than Rocky Mountain Human Services, but it could. And parents of people with disabilities -- some still young and others now grown -- told the City Council there are lots of ways that money could be well spent even as Rocky Mountain Human Services continues to provide case management services.

Maureen Welch, whose 9-year-old son has Down syndrome and receives services from Rocky Mountain, described the ways the money could be used to improve quality of life for people with disabilities, such as providing an aide so that a child can participate in a summer parks program with his peers or paying for a taxi or an Uber so a musician can hit up an open mic that isn't convenient to public transportation.

Councilwoman At-large Robin Kniech asked that Denver Human Services reach out directly to clients of Rocky Mountain Human Services and ask them what they'd like to see. Morein said that isn't something the city has done before, and his department will come up with a plan for how to collect that information.

Repinski said the agency is supportive of other agencies having access to money from the dedicated mill levy. Rocky Mountain is also working on ways to better serve their clients with that money, such as expanding access to respite care.

"We have new programs that we're developing all the time, and one of the primary goals is to make sure all providers have access to all funds," she said.

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