State officials have reversed plans to cut more than $7 million in funding from mental health and addiction programs this fiscal year.

The cuts, made late last year in response to a budget shortfall, had led the nonprofit mental health and addiction service providers that contract with the state to make plans that included layoffs and reduced services. But Department of Mental Health and Addiction Services Commissioner Patricia Rehmer advised them this week to delay drastic budget-cutting measures.

Last month’s shooting of 20 children and six educators at Sandy Hook Elementary School has led state officials to reevaluate Connecticut’s mental health system. In light of that, “We really can’t afford to hit the service system” right now, Rehmer said.

The department is expected to find offsetting cuts elsewhere in its budget, although the commissioner said she’s not certain it will be possible to absorb it all.

Gov. Dannel P. Malloy’s administration cut $7.7 million from the agency’s budget in November as part of a plan to address a budget shortfall. The reductions included $1.25 million in grants for substance abuse services, $3.8 million in grants for mental health services, and $523,504 for employment opportunities.

Rehmer said this week that those three areas will no longer face any cuts. DMHAS and Malloy’s budget office have also agreed to reverse a portion of the $2.3 million cuts made in a deficit mitigation plan approved by legislators last month. Department officials are now working to restore the remaining cuts while finding savings to balance them.

DMHAS officials began talking with Malloy’s budget office about trying to offset the cuts before the Sandy Hook shooting. The decision to reverse some of the reductions was made this week.

Office of Policy and Management Secretary Benjamin Barnes, Malloy’s budget director, said he hoped the cuts that are made won’t affect service levels, although he cautioned that it might not be fully possible.

“We’re not certain about our ability to close the entire gap without adjusting service levels,” he said.

Leaders of agencies that contract with DMHAS said the restored funds were a relief — for now.

“We know that this is a temporary reprieve,” said Raymond J. Gorman, president and CEO of New Britain-based Community Mental Health Affiliates. His agency was expected to lose about $400,000 in DMHAS funding this fiscal year under the original cuts. Now it’s likely to lose closer to $93,000.

Gorman said he’s expecting to face more funding challenges in the next fiscal year’s budget, which already has a projected $1.1 billion shortfall. Malloy has made clear that most programs will be candidates for cuts, and Gorman said his agency has been unable to commit to filling staff vacancies, renovating residential facilities or buying new equipment because of the uncertainty about the upcoming budget.

Still, Gorman said his agency is more fortunate than many other organizations, including agencies that serve people covered through the state Department of Developmental Services. Those providers are facing significant job losses, he said.

Rushford, which provides mental health and substance abuse treatment, had been facing a loss of about $300,000. It’s now closer to $51,000, President and CEO Jeff Walter said.

“We’re breathing a sigh of relief that DMHAS has found a way to greatly reduce the impact in this current fiscal year,” he said.

Walter said the resulting cuts could still require reduced services, although it’s not yet clear.

“Our eye is more on next year, frankly,” he said. “Even if we get flat-funded next year, there will be service cuts because we’ve gone as far as we can go in tightening the belt.”

Are these budget changes a sign that mental health programs will fare better in next year’s budget? Or are they just a delay in dramatic cuts?

“I do think that there is a strong willingness on the part of this administration, including Secretary Barnes and the governor, to be very, very thoughtful at this point about the mental health system and the cuts,” Rehmer said.

Barnes noted that for all but the first six months of the next two-year budget cycle, the state will be “playing in an entirely different sandbox when it comes to paying for health care.”

That’s because, under the federal health reform law, the Medicaid program will be expanded in 2014 to cover significantly more poor adults, and for all the new recipients — and about 87,000 people the state currently covers — the federal government will pay the full cost. Other people who are currently uninsured will be covered by private insurance. And private insurance plans will be required to cover more of the costs of health care than many plans do now, potentially improving people’s access to services.

“A significant portion of DMHAS’ budget goes to support uncompensated behavioral health care and addiction services spending,” Barnes said. After next Jan. 1, he added, there will be dramatically less uncompensated care in the state, particularly among people served by DMHAS.

“That will allow us to continue to target our resources for the programs that are the most important,” he said.

Even if the agencies face cuts in the next fiscal year, Gorman said the current reprieve is meaningful because it will give the agencies time to plan.

“I appreciate the fact that the state held back on these cuts because it means we can continue to provide care,” he said. “But in five months, we’re not going to finish providing care for the people we’ve been providing care to for years. I’m not looking forward to what’s coming.”

Arielle Levin Becker covered health care for The Connecticut Mirror. She previously worked for The Hartford Courant, most recently as its health reporter, and has also covered small towns, courts and education in Connecticut and New Jersey. She was a finalist in 2009 for the prestigious Livingston Award for Young Journalists, a recipient of a Knight Science Journalism Fellowship and the third-place winner in 2013 for an in-depth piece on caregivers from the National Association of Health Journalists. She is a 2004 graduate of Yale University.

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