SF supes OK $1.25 million bailout of provider of mental health, addiction care

A leading San Francisco provider of treatment programs for substance abuse and mental health disorders that is in financial distress received a temporary lifeline from city supervisors to maintain services for more than 200 people and keep dozens of nonprofit workers employed.

PRC and Baker Places, two nonprofits in the process of merging, begged the Board of Supervisors to bail them out of a combined $3.2 million shortfall so they could continue running 215 treatment beds to provide detoxification, psychiatric care and other urgently needed help to some of the city’s most vulnerable residents.

Without the infusion of cash, the nonprofits said their programs might have had to shut their doors and more than 250 employees would have lost their jobs.

After excoriating the nonprofits and city health officials for keeping the board in the dark for far too long, supervisors voted unanimously to help PRC and Baker — providing $1.25 million, instead of plugging the full shortfall.

Supervisor Hillary Ronen proposed the lower dollar amount after consulting with the city Controller’s Office. The money can only be used for payroll and preventing the displacement of people who use the nonprofits’ treatment beds. Ronen said it should be enough funding until supervisors can revisit the issue in September, when they are expected to have more detailed information.

At their meeting, supervisors expressed dismay at the timing of the request, which arose just before they begin to vet Mayor London Breed’s proposed $14 billion budget in earnest. They were also unsatisfied with attempts by health officials and the nonprofits to explain how the shortfall arose in the first place.

“This is a complete systemic failure,” said Ronen said.

Ronen and Supervisor Aaron Peskin were both outraged that just last month, they had signed off on a five-year, $65 million contract extension with Baker Places — but neither the nonprofit nor the health department disclosed the financial concerns at the time.

“We doubled this contract without any knowledge that this was happening,” Ronen said.

In July 2021, PRC told the health department about a deficit in a key detox program it operates, officials said. The health department tried to help PRC and Baker Places improve their operations, but an analysis by the controller’s office confirmed a $3.2 million shortfall, bringing the programs to the brink of financial insolvency.

“The reasons for the financial distress are not fully understood,” said Dr. Hillary Kunins, the city’s behavioral health director.

The health department asked supervisors to let it award one-time grants to fill the shortfall, allowing the nonprofits to meet their payroll and lease obligations while they create a financial sustainability plan with input from a city-hired consultant.

PRC CEO Brett Andrews said the nonprofits’ payroll is about $750,000 every two weeks and, without supervisor’s help, they would not have enough funds available to pay workers starting July 6.

“This is government at its worst,” said Supervisor Ahsha Safaí. “There is a massive fiscal mismanagement that were being asked to bail out.”

JD Morris is a San Francisco Chronicle staff writer. Email: jd.morris@sfchronicle.com Twitter: @thejdmorris

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