Just over a year after a Denver auditor’s report found a nonprofit provider of services to the mentally and developmentally disabled residents of the City and County of Denver had mismanaged city funds, the picture is much better, City Council members were recently told.

Rocky Mountain Human Services, formerly called Denver Options, serves over 6,000 Colorado residents through case management and direct service programs. That includes children with developmental delays and disabilities, adults with cognitive and intellectual disabilities and military veterans in need of employment assistance, are homeless or in jeopardy of losing their homes.

The organization is designated by the state of Colorado as a “Community Centered Board” and a “single entry point” organization to manage services for children and adults with cognitive and developmental disabilities living in Denver.

In 2003, city and county voters approved an increase in Denver’s mill levy property to help serve city residents with intellectual and developmental disabilities. Approximately $11.5 million in 2015 and $14.5 million in 2016 was appropriated for the organization, a 2015 report by city Auditor Timothy O’Brien noted.

O’Brien found the Denver Human Services Department needed to more closely monitor its contract with the organization, which had not complied with several key provisions that had vague contract language. That led to mismanagement of taxpayer funds, including the use of Denver mill levy funds for people who lived outside city and county limits. Administrative costs for January 2014 through June 2015 exceeded a 15 percent ceiling, even though some administrative expenses were incorrectly classified as program expenses.

The financial issues faced by the organization led to the replacement of its leadership, and its poor financial condition had the potential to impede future service delivery to its clients, O’Brien’s report warned.

Jay Morein, chief operating office for the Denver Department of Human Services, told the Council’s Safety, Housing, Education and Homelessness Committee that since the 2015 audit, Rocky Mountain  and the department had agreed to seek Council approval to codify an ordinance into the municipal code limiting annual mill levy funding for administrative expenses to 15 percent.

All other items in the audit report were also addressed, Morein added, and the organization is subject to an ongoing audit to ensure its finances are sound. Rocky Mountain and the department are in the fifth and final year of a contract for services that expires at the end of the year, he said.

Morein noted the now-failed first iteration Republican health care plan in Congress had put at risk federal Medicaid funding that makes up the greatest share of  the organization’s annual budget.

“We will be looking at where that stands when we start working on the 2018 contract,” Morein said. “One thing we have thought about is asking the Council to establish a mill levy risk fund in case there is a drop in federal funds.”

The timetable for seeking proposals for the services Rocky Mountain provides will also be affected by any potential state legislation dealing with the developmentally impaired, he added.

“We hope we can have something to consider by early to late fall so we have a contract in place by the end of the year,” he said.

Rocky Mountain Executive Director Sheri Repinski said the organization had updated its service delivery model and practices since the 2015 audit, which led to “quite a bit of change.”

“We were not meeting taxpayer expectations and know we have to balance those expectations with our needs and be efficient administratively,” Repinski said. “Now, we have a totally different look in how we deliver our services. Before, there really wasn’t a good way to track our revenue streams because there are several, and the requirements we had to meet kept us from being flexible to meet each need as defined by the state system.”

Rocky Mountain Chief Financial Officer John Wetherington recalled last year’s report to the Council “had us talking about multi-million dollar losses and write-offs. This year’s audit shows a much better picture.”

In 2015, Rocky Mountain spent its full $11.5 million allocation of city mill levy funds, Wetherington said, about half for employee salary and benefits and half to external providers. For 2016, Wetherington noted that amount was down by $3.5 million due to much better efficiencies and a “modest” staff reduction.

“We’re also doing a better job of collecting money from other sources, so we’re having to use less of the mill levy money,” he said.

Wetherington said Rocky Mountain’s total budget is $38 million.

Repinski added the organization held stakeholder meetings in 2016 and increased opportunities for feedback from its customers through surveys, focus groups and individual meetings.

Last year, the organization served approximately 6,000 people with disabilities and at least some of the city mill levy funds, Repinski said.

“We still have a waiting list of about 500 for residential housing help,” she added.

All new services are limited to Denver residents, Repinski stated, and the organization is working with those who move outside the city and county to find alternative service providers.

Councilwoman Debbie Ortega said she appreciated the steps and improvements Rocky Mountain had taken since the 2015 audit.

“You addressed the issues and increased your outreach efforts,” Ortega added. “Councilman (Wayne) New and I were at many of the behind-the-scenes meetings on this, along with human services, and appreciate the effort.”