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A new report warns that funds belonging to the city’s mental health clients could be in danger of being lost, stolen or misused due to a lack of oversight by city officials. 

Nearly $280,000 is at risk of being abused, the report found.  

The average monthly Supple- 

mental Security Income for a mental health client is around $800. 

The report, issued to the Berkeley City Council by the city auditor’s office earlier this month, also indicates shoddy record-keeping and a failure of accountability in handling money. 

Fred Medrano, outgoing director of the city’s Department of Health Services, called the audit report a “good wake-up call.” 

“I think it does a good job of identifying the weaknesses in the city’s administration, which do exist,” Medrano said. “We spend so much time on directing our resources toward individual services that we sometimes overlook our infrastructure needs.” 

City Auditor Ann-Marie Hogan said that the city of Berkeley has a total of 90 sites where cash was being handled on a regular basis. 

The Berkeley Mental Health Adult Clinic at Martin Luther King Jr. Way and Dwight Way, which provides mental health prevention and intervention services to high-risk, severely mentally ill adults and their families, was one of several sites picked for a surprise cash audit. 

When city auditors Frank Marietti and Claudette Biemeret paid an unannounced visit to the clinic Aug. 29, 2008, to see whether client money was on par with records and reports, they were unable to complete the surprise cash count due to poor record-keeping methods. 

“Since there is no written procedure telling people how they can deal with the cash, it’s at risk of being stolen or lost,” Hogan said. “There is no proper procedure to protect the clients’ money and the city’s reputation. The managers need to clarify the procedures.” 

One of the glaring problems at the clinic, Hogan said, was that supervisors were storing clients’ cash or checks in the same folder as their confidential health records instead of in a locked safe. 

She added that case managers sometimes used their personal bank accounts to cash their clients’ checks and often forgot to provide receipts to family and friends who drop off cash at the clinic on behalf of clients. 

Another risky practice followed by case managers was loaning money to clients and then receiving SSI checks made payable to the case manager, an action Medrano “strongly discouraged.” 

“It’s all helter-skelter,” Hogan said. “When we do our audits we realize that government isn’t as businesslike as you would like it to be. Almost every audit we do, we find that management has not set clear guidelines or clear written procedures. It’s epidemic in the city. Sometimes when we do our audits we say things might go wrong, other times we say things have gone wrong.” 

A recent audit of the Berkeley Public Works Department showed how a scarcity in written procedures led to wasted staff time. 

The audit on the city’s mental health clinic, Hogan said, served more as a preventive measure, a caveat to help city staff get their act together. 

“It’s not a ‘shoot the wounded’ audit,” she said. “They have some procedures that don’t exist and some that haven’t been formalized—there have been no accusations yet, but anything can go wrong at any time. It takes only one accusation of theft, real or perceived, to damage the city’s reputation.” 

At the time of the audit, the Department of Health Services could not account for eight money bags used to store client funds. 

“We didn’t know whether the money was lost, stolen or misused,” Hogan said. 

Calls to city Mental Health Director Harvey Tureck were not returned by press time. 

A response from City Manager Phil Kamlarz, based on reports from Medrano, said the bags were later located and, except for the cash and checks kept for spending allowances, the rest was turned over to the Berkeley Food and Housing Project as part of its contract with the city to provide third-party administrative and fiscal services to certain clients referred by the mental health agency. 

Money bags are no longer being used to store clients’ checks and money. Since September 2008, the Mental Health Division has also discontinued the practice of allowing case managers to handle clients’ funds, except in the case of allowance checks issued through the county. 

Hogan agreed with Medrano about why the clinic was falling behind on supervision. 

“Sometimes it’s the culture, but sometimes people are so busy doing good that they don’t stop to think about all the risk,” she said. “They are just focused on providing the services they provide.” 

The audit also revealed that the Department of Public Health violated city policy when it signed a contract with the Berkeley Food and Housing Project without supervision from either the city manager or the city attorney. 

Hogan said that long delays in receiving requested information from the Department of Health Services, coupled with incomplete and conflicting accounts, prevented the auditor’s office from releasing the final report on time. 

“All the concerns raised in the audit are something we are aware of, and we will be implementing all their recommendations,” Medrano said. “I see this as an opportunity for the Mental Health Division. We expect to submit a full report to City Council in June.”