Quick Take
After winning county funding this summer, Santa Cruz’s Mental Health Client Action Network abruptly closed, leaving unpaid staff in crisis as leaders cite financial turmoil, leadership struggles and stalled reimbursements.
The summer started out victorious for the Mental Health Client Action Network. Amid an austere climate for social safety net services, staff and clients of this community-run day center successfully lobbied Santa Cruz County lawmakers to rethink proposed budget cuts that would have ended the decades-old program.
In a painful budget year with few winners, MHCAN won and received more than half a million dollars in funding, which made the news last week that the organization had closed its doors all the more surprising.
MHCAN shuttered the week of Aug. 25, but two employees who say they were abruptly furloughed said they haven’t received a paycheck from the organization since July 15. A third employee, who was fired just before the closure, also said they had not been paid since mid-July. They told Lookout the hardships attached to the missed paychecks have become increasingly harsh.
MHCAN’s unique contribution to the community was as a peer-run refuge for people, often homeless, struggling with mental health challenges. Self-disclosing a mental illness is a pre-requisite for both clients and staff, which creates a trusting, judgment-free atmosphere that can be hard to come by in more formal social service settings. When budget cuts threatened MHCAN over the summer, staff and people familiar with the services warned it would take away the only place for clients and some staffers to get off the street, and would place this highly vulnerable population at greater risk. Employees who spoke to Lookout say that scenario is now playing out.
The furloughed employees, who, like all those employed by MHCAN, have faced challenges with mental health and/or homelessness, spoke on the condition of anonymity in order to protect their employment should the organization ever reopen. One of the employees said they recently experienced a stroke, and is now facing eviction from their Mid-County apartment.
The front door of MHCAN last Friday. Credit: Christopher Neely / Lookout Santa Cruz
“It’s been hard,” the employee said. “At first, we were like, we will give them time to figure it out, but they haven’t.”
The other furloughed employee lives in their car, has struggled to afford gasoline and did not have the resources to pay their most recent phone bill.
“We have no money,” they said. “We have to figure out how we’re going to eat every day. It’s affecting people’s health, their home, and their livelihood.”
Lookout has reached out to multiple board members and staffers since Friday, but each has declined to comment. MHCAN’s board chair, Danette Lawrence, confirmed to Lookout that she asked the board members “not to speak about this.” Lawrence, who is a volunteer, said she could “neither confirm nor deny any of these stories” from staff.
“I don’t have anything to say to employees, I don’t know what to say,” Lawrence said Monday. “I don’t know what’s going to happen with MHCAN.”
Lawrence said she spent the past few weeks “trying to figure out what’s going on.” She wouldn’t go into detail about what exactly the organization is facing, but painted a bleak picture.
“It’s really not good,” Lawrence said. “We’re going to need a full overhaul and to clean stuff up.”
District 3 County Supervisor Justin Cummings told Lookout on Friday that his office was shocked when it learned that MHCAN had closed its doors. He said the organization had run into financial trouble, and the board had voted to fire its executive director, Tyler Starkman.
According to documents provided to Lookout, the board voted to fire him a week before MHCAN shut its doors, citing “chronic absenteeism,” a lack of “organizational transparency” and failure to provide requested “invoices and financial documentation,” and a habitual delay in “timely payment of staff wages.”
According to the documents, Starkman’s firing came one day after he formally requested a 90-day medical leave to attend a detox program. He said he made this request only after receiving assurances from at least one board member that the directors would be supportive.
Starkman blamed the missed paychecks on county delays in reimbursing the organization’s costs, and onerous reporting requirements placed on the organization in 2024 following an audit — for fiscal years 2022-23 and 2023-24, which predate Starkman’s directorship — that showed inconsistencies between MHCAN’s actual expenses and the amount it was billing the county.
According to a letter from the county’s health services agency on July 15 — the last day employees say they received a paycheck — government officials were still unsatisfied with how MHCAN was reporting its expenses. The county said it would reimburse MHCAN expenses only that provided proper documentation, which had historically been lacking.
“Invoices submitted after MHCAN’s receipt of the audit report have not contained any supporting documentation for expenses as recommended in the 2024 audit,” the letter from Dr. Marni Sandoval, county behavioral health director, read. “This letter serves to officially inform your organization the county will only process payment for invoiced expenses that include sufficient supporting documentation to demonstrate the actual expense amount is the same as invoiced.”
In an email to Lookout, Starkman said these “inherited compliance obligations” put the organization on precarious financial footing that he worked to improve.
“These systemic issues were further compounded by” his firing, “which I feel was based upon my request to go to rehab,” Starkman said. “I worked extremely hard to complete my job duties and keep us contracted with the county and we did not close for one day while I was ED. I fear the board’s haste in terminating me without two weeks’ notice or proper transfer of knowledge will lead to more financial woes.”
Lawrence and Cummings said the organization would meet with city and county officials this week to provide more clarity on the challenges and find solutions for MHCAN to reopen its doors.
“Maybe after all of this MHCAN will be better and stronger than ever,” Lawrence said.
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