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Board adopts policy formalizing $27M–$34M behavioral health reserve and use guidelines
Summary
The board approved a reserve fund policy for Fund 270 (Oregon Health Plan behavioral health reserves) formalizing a target reserve (90 days / 25% of operating budget), permitted uses and treatment of interest; staff reported a current balance of about $29 million projected to reach $34 million this fiscal year.
Deschutes County commissioners approved a proposed reserve fund policy for Fund 270, the Oregon Health Plan behavioral health reserves, adopting formal guidelines on target balances, permissible uses and treatment of interest earned.
Policy highlights: County staff said the policy formalizes an operating reserve target of at least 90 days (about 25% of operating budget) and clarifies that Fund 270 and Fund 274 appropriations are considered together for contingency purposes. The policy states reserve funds are intended for one-time expenditures, unforeseen revenue shortfalls, capital improvements and infrastructure purchases outside the capital improvement plan.
Balance and use: "As of today, it's about $29,000,000. I project that it will end this fiscal year at about $34,000,000," Cheryl Smallman, business officer for Health Services, told the board. Staff said annual interest on the reserve is roughly $750,000 and that interest is returned to Fund 270 and used in the same manner as program funds (Medicaid/CCBHC-related services).
Why it matters: Commissioners noted that the reserves have allowed the county to plug gaps and expand services under Certified Community Behavioral Health Clinic (CCBHC) funding. Janice Gersow, director of Health Services, described ongoing and proposed uses including replacement of County General Fund for coverage gaps, purchases of adult foster homes for supportive housing, and participation in planning for a 16-bed secure residential treatment facility that would double regional capacity.
Board action: A motion to approve the reserve fund policy for Fund 270 carried on a recorded vote. Commissioners discussed using the policy to provide a clearer framework during annual budget discussions and to prioritize capital investments, such as clinic space in La Pine and secure or youth treatment facilities.
Context: Staff said the county became a CCBHC grantee in 2017 and that the program expanded services and required broader supports (primary care co-location, peer support, case management for housing, etc.). The policy was developed with finance and reviewed by legal; staff emphasized the policy does not remove budget committee or board review requirements for significant expenditures.
Next steps: The policy will be part of the annual budget process; staff will continue to evaluate capital and program uses in coordination with finance and potential grant opportunities.
