PRC may shut down residences

  • by Eric Burkett, Assistant Editor
  • Wednesday October 12, 2022
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The reception desk at PRC's South of Market headquarters. Photo: Courtesy Revel
The reception desk at PRC's South of Market headquarters. Photo: Courtesy Revel

A financial crisis at PRC Baker Places, a key behavioral health services and HIV/AIDS provider in San Francisco, has left clients housed in the organization's residential facilities fearful for their futures.

The organization announced October 3 in a letter from interim CEO Chuan Teng to city officials that it was unable to afford to maintain at least three residences, and would have to close them down. The only way out of the predicament was for the city to provide millions of dollars in emergency funding.

Without help Baker Places "will have no other choice than to immediately notify staff of layoffs, discontinue intakes, and wind-down operations," the letter stated.

PRC officials told the city they wanted to transfer residents from Acceptance Place, Ferguson Place, and Joe Healy Detox — three of the residences operated by the organization — to the Department of Public Health or some other provider, as the San Francisco Chronicle reported.

"As a result of financial hardship, Baker Places has made the difficult decision to transfer some residential programs back to DPH or other providers," stated PRC's spokesperson, Tasha Henneman, in a written statement to the Bay Area Reporter. "Baker Places has requested financial support from DPH to pay for anticipated shortfall in operational expenses over a 6-month transition period, which would allow for an orderly transition that ensures continuity of services and minimizes disruption to clients and staff."

Founded in 2016 with a merger of PRC — then known as Positive Resource Center — and Baker Places, which operates a collection of residential treatment and detox facilities, the organization has been struggling financially in recent months.

The letter, according to the Chronicle, said that Baker Places "was no longer able to support the operations of these programs due to years of financial hardship," and cited a loss of more than $4 million over the previous fiscal year.

"The year-over-year deficits have placed an untenable strain on the organization's cash position, and as a result, the organization does not have the ability to pay the upfront cost of operations and wait for reimbursement in four to six weeks' time," the letter continued.

That letter followed an earlier communication between Dr. Hillary Kunins, director of DPH's Behavioral Health Services and Mental Health SF program, and Brian Schneider, the president of PRC's board. Dated September 29, Kunins wrote that DPH "feels strongly that it is in the best interest of our clients, the public, and the Baker/PRC for the city to find alternate care providers," reported the San Francisco Standard.

In order to transfer Baker Places' clients to other providers, Kunins asked Schneider to consider a six-month transition period during which clients might be rehoused, and as the Standard story noted, "pointed to a prior emergency grant and other financial concessions by the city in recent months as sufficient to cover that transition period."

Gay Supervisor Matt Dorsey, whose District 6 includes PRC's headquarters, told the B.A.R. he "has every confidence" that the clients affected by PRC's financial problems will be taken care of, "and no one will end up on the street."

"Uncertainty isn't helpful" for those in recovery, he said, so continuity is of the utmost importance. Dorsey himself is in recovery, and has talked about his own past substance use issues.

Dorsey's counterpart, gay District 8 Supervisor Rafael Mandelman, echoed his confidence but added that, while PRC is asking for city help, it's not clear if it needs a supplemental cash infusion from the city.

"The PRC board did what a responsible board would do and sounded the alarm," said Mandelman, but "it remains unclear what the path forward is."

The city's nonprofits, which "are functioning as an extension of the city," are being asked to do more and more with less and less, he said and, while they haven't reached the existential crisis currently facing PRC, they have been saying they can't do their work on what the city pays them to do.

DPH did not return a request for comment from Kunins.

Clients left 'in the dark'

The ongoing instability has left some of Baker Places' clients frightened of an increasingly unsure future, one in which their carefully constructed sobriety may be at risk. The fear of homelessness hangs over their heads, said one resident.

"It's the threat of homelessness, and for those of us who experienced it first hand, this whole experience is triggering," said Baker Places Supported Living resident Justin, who requested his last name not be used.

Justin, a 41-year-old gay man, is currently in film school and in the midst of filming his first full-length documentary. About three and a half years sober, he struggled with methamphetamine addiction before Baker Places helped him get his life back together.

Now, he's a participant of Bakker Places, but not a resident at one of the programs it is trying to offload. It's allowed him to go to school, and by charging him only 30% of his meager income for rent, he's been able to take advantage of the stability the program offers, paying only about $150 a month.

In fact, most of the residents pay only about $200 per month, he said. "Where can we go?" he asked.

"To go from paying $150 to $600 a month, that's a 400% increase in my rent," he said. "And when food is already costing so much; we're all barely holding it together with the rising cost of gas and goods."

The anxiety in his voice as he spoke with a reporter about his situation was clearly evident, even over the phone. But there's anger, too. Anger at PRC for what he regards as the abuse of Baker Places' finances in order to keep PRC going. He said he feels that PRC has been siphoning money from Baker Places and pointed to the organization's multimillion-dollar move into its new South of Market headquarters as one example of how it has misused funds.

In 2019, PRC moved to its new location at 170 Ninth Street, a 25,000 square foot building constructed in 1934, and requiring "a head-to-toe renovation" according to a news release issued in June of that year. The total budget for the new space was $6 million, the B.A.R. previously reported, but the organization said it had, by that time, raised $5 million, and expected to raise $2 million more.

"These problems were not caused by the clients, and we're going to bear it the most," Justin said.

Middle-rung employees of Baker Places, the very employees to whom folks like Justin would turn for information, are getting no details from their higher-ups, either, said one case manager who asked to remain anonymous.

"The clients are completely in the dark," they told the B.A.R. in a phone interview.

Finances have been an issue for a while, the case manager said, and there has been an overall decline "in a lot of things."

"There's been a lot of issues with maintenance, basic things our clients need," they said. "There were issues with our maintenance crew and people have to wait two or three months. There have been rodent issues and, like, little basic things like something wrong in the bathroom. Things that affect our daily lives. Case managers have to push back... it's been really difficult to get things done."

Staffing, too, has been an issue, they said, explaining that Baker Places has been "[p]ersistently short-staffed with a full roster of clients. Counselors aren't able to work with clients one-on-one. Something is always happening."

As a case manager, they said, they're also responsible for the billing for each client and, particularly since just before July when PRC went to the San Francisco Board of Supervisors asking for an emergency $3.2 million bailout, "there's been a massive push for billing," they said. "It's clear they need money from the pressure they put on us to get the billing."

The case manager spoke highly of Baker Places' services, calling them "some of the best treatment options," particularly for a demographic that struggles to access quality treatment. And those treatments, they said, have led to some big successes such as clients, once homeless, who have gone on to law school or finished degrees. That's what makes Baker Places' current situation even more tragic, they said.

"It's just like, I don't know what is going to happen to them," they said of the clients. "Case managers will be OK, but they are the ones that matter the most. We're so worried about them."

Emergency funding

In July, the organization made an 11th-hour emergency funding request to the San Francisco Board of Supervisors, asking for $3.2 million, as the B.A.R. . The request infuriated some supervisors as they had approved only one month before a $65 million contract extension — double that of previous years — with Baker Places.

There had been no mention of the organization's financial concerns at that time, District 9 Supervisor Hillary Ronen noted. (Ronen did not respond to requests for comment for this article.)

While the board did give final approval for $800,000 for PRC and $450,000 for Baker Places to help the organizations meet payroll and to avoid displacing clients, that was nearly $2 million less than the original request.

The money was needed desperately, Kunins said at the time. The organization, because of that $3.2 million shortfall, was "at risk of insolvency," she told the board, and was at risk of insolvency.

The money PRC received helped with immediate cash concerns, said PRC's Henneman, "while the benefit of others cannot be realized as quickly to fully address the impact of year-over-year shortfalls that have resulted in an ever-widening gap between what programs cost and what contracts pay."

"The June 2022 emergency funding did not close the organization's cash shortfall from its last fiscal year ending June 30, 2022," Henneman stated. "Of the $3.2M request, $1.2M was received, resulting in a deficit of $2 million going into fiscal year 22-23."

In September, PRC CEO Brett Andrews, who had been with PRC since 2003, announced he was stepping down, and his position was immediately filled on an interim basis by Teng, the organization's recently promoted COO.

Teng inherited an organization that, in recent years, has been struggling with financial shortfalls. In 2020, according to IRS filings, PRC reported total revenues of $9,715,674, against total expenses of $10,431,124 resulting in a shortfall of $715,450. The organization reported another shortfall in 2019, as well, of $384,105. That followed years of positive balances. In 2020, Andrews' salary and benefits were listed at $293,230. Six other employees' salaries were cited in the document, ranging from $71,570 to $171,282, excluding benefits.

A separate 2020 990 for Baker Places, but using the same address as PRC, lists a budget of about $9 million, with $12 million in liabilities, resulting in a deficit of about $2.9 million. The Baker Places 990 lists five people with salaries over $100,000, including positions such as medical director and clinical director.

Baker Places and PRC merged in 2016, though it is apparently not finished, as the B.A.R. reported earlier this year.

Updated, 10/13/22: This article has been corrected to state that Justin is a participant in Baker Places Supported Living and is not a resident of Ferguson Place.

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