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Sarkauskas gets golden parachute

STORY BY MEG LAUGHLIN, (Week of January 24, 2013)
Photo: Kris Sarkauskas

Former board members of the Mental Health Association depleted the troubled agency’s reserve funds before they resigned from office, using over $85,000 of that money to give former CEO Kris Sarkauskas a golden parachute to ease her forced resignation.

Joe Smith, the new MHA board chairman, said last week that agency reserve funds dropped from $277,000 in June to $42,000 in December under Sarkauskas and MHA’s former board of directors, who resigned with Sarkauskas in December.

Smith called the dramatic depletion of funds “unfortunate.”

While he did not go into details of how the MHA’s operating funds were decimated, financial statements from funding agencies and IRS, collected by Vero Beach 32963, tell the story.

Over a six-month period, the nonprofit which offers vital mental health-care services to the county’s needy, spent about  $25,000 a month – close to $150,000. Over a third of that amount went for Sarkauskas’ monthly salary.

The expenses left about $127,000 in reserves for the remainder of the fiscal year which will end June 30, 2013. That meant that MHA would run out of money by April – unless the association’s board and CEO, who were replaced in December, figured out a way to get more money.

Instead, former board members dipped into the depleted reserves to give Sarkauskas, the beleaguered, former MHA president, an $85,000-plus severance package consisting of future salary, unpaid vacation and insurance benefits.

 In December, Sarkauskas and her board of directors were forced to resign by MHA financial backers – the Indian River County Hospital District, the United Way, the Robert F. and Eleonora W. McCabe Foundation and Indian River County – because of problems over hiring standards, lax attitudes about employee problems, inappropriate co-mingling of funds and operating at an increasing deficit.

Despite that track record, the last act of the former board was to approve Sarkauskas’ generous severance package, a move that pushed MHA further against the financial ropes.

“It was a perfectly fair package, approved by me as well as others,” said Bob Young, the former MHA board chairman.

But the severance deal left MHA with only $42,000, a precariously small amount for the nonprofit, considering its operating costs. 

Under the circumstances, shouldn’t the former board have considered what effect the severance package would have on MHA? After all, tens of thousands of people in management, who did nothing questionable in their jobs, have been laid off all over the country with little or no severance package. “All I can say is: You guys need to get off the negative questions,” said Young.

Last week, at a meeting of the Indian River County Hospital District, Smith characterized the new MHA board and administrators as “smart people in small groups intensively working on the problems.”

“We have more than 11 people standing on their tiptoes to do the best for MHA clients and colleagues,” said Smith.

The hospital district voted unanimously to restore funding to MHA, now that Sarkauskas and her board have been replaced. The other fundraisers have also indicated that they will restore funding.

In addition, the Department of Children and Families closed an investigation into how MHA was allocating funds.

Still, while the future of MHA looks brighter, the association is still operating at a loss because of the depletion of funds caused by former mismanagement and Sarkauskas’ severance package.

In response, board members announced they would consider “short-term emergency funding,” beyond what they have already pledged.

John Taylor, a member of the new MHA board, said that the new leadership of MHA is “myopically focused on a bright future for the nonprofit.”

“I’m hoping now that the hospital district has recommitted to MHA and other funders are following, the public will see that commitment and re-engage with philanthropy,” said Taylor.