Jeff Jessee was interviewed by Bill Schneider and Karen Brewster on December 1, 2010 at Elmer E. Rasmuson Library on the University of Alaska Fairbanks campus.
Return to part one of this interview.
Click to section:
Section 1: The Mental Health Trust's role in developing a skilled, professional workforce in the field of mental health services.
Section 2: The need for safe and affordable housing for beneficiaries, and some of the problems that beneficiaries face with the current housing program.
Section 3: Setting up a model housing program in Alaska based upon what the Gates Foundation did in Washington with their Sound Families program.
Section 4: The challenges in providing housing for the chronic alcoholic population and controversy over requiring sobriety before housing or housing first and then dealing with other issues.
Section 5: The Mental Health Trust helping to establish a Housing First project in Anchorage based upon a successful program in Seattle, and how this type of program works well for their beneficiaries.
Section 6: Working to reduce the out of state population of children in residential psychiatric treatment programs and establishing the Bring the Kids Home Initiative.
Section 7: The Mental Health Trust investing in infrastructure of the Bring the Kids Home Initiative, and encouraging the Alaska State Legislature to invest in in-state mental health services.
Section 8: Success of the Mental Health Trust partnering with the Alaska State Legislature to support improved in-state services, using the example of helping new group homes with start-up costs.
Section 9: Changes in the mental health system for helping children.
Section 10: The uneasy relationship between the Mental Health Trust and the Alaska State Legislature, and the balance of funding that the Trust manages and uses to support programs.
Section 11: Evaluation of the Mental Health Trust by beneficiaries, and their understanding of the difference between the Trust and state programs.
Section 12: Some challenges facing the Mental Health Trust where they have not accomplished as much as they would have liked, for example helping beneficiaries within the corrections system.
Section 13: Explanation of some details of the therapeutic courts.
Section 14: The importance of foundations engaging and partnering with government for sustainable funding of programs, and how the Mental Health Trust is a unique model.
BILL SCHNEIDER: And we were just talking about the therapeutic courts. And there were some other things about the Trust that we were --
JEFF JESSEE: And we talked about beneficiary projects. And then another area that the trustees decided to focus on is workforce development. It's a huge issue across all beneficiary groups, workforce development. Even if we had unlimited resources, we don't have the skilled workers in the state to provide the services that our beneficiaries need. And so the ability of agencies to expand their capacity is limited by their access to a qualified and available workforce.
So we partnered with the University of Alaska, Department of Labor, and other entities to develop a more focused effort around not only training and educating people about the opportunities of a career in our system of care, but also assisting agencies in recruitment and retention. So, for example, we run ads on TV showing people who have worked in the field and how rewarding they have found it, and -- and tried to encourage people to -- to be interested in this area. In fact, one of them has a returning veteran who came back from Iraq, left the service and went into this field, and talks about how satisfying that is. We are working right now on loan repayment programs so that we can create incentives that agencies can offer to professionals to get them to accept employment, you know, these kinds of strategies to try to improve our access to a qualified workforce. Section 2:
Another area that we've worked very hard on is housing. Again, like workforce, housing crosses all of our beneficiary groups. No matter what your -- your mental health disability, if you don't have safe, affordable, permanent housing, then you're not going to be successful. And in fact, many of our beneficiaries, even if they get housing, they need support in order to maintain that housing. And what we discovered as we looked into this is that this was a systemic problem, and it works kind of like this.
The people that develop housing, the housing developers and the housing funders, like Alaska Housing Finance Corporation, by and large don't know much about support services for beneficiaries. And so they can build the building and build the housing, but if they put our beneficiaries in and they are not provided any supports, then they often lose that housing, either because nobody's helping them manage their funds so they can pay the rent; they have poor refusal skills, and so their buddies all come over and create a problem, and the beneficiary gets evicted. I mean, all kinds of various problems can occur.
In addition, even if they get, say, a housing voucher, which is basically a ticket that you get from AHFC that helps pay part of your rent, the normal system is you have to take that around to landlords and try to find a landlord that will accept this as payment for your rent. Well, first of all, our beneficiaries aren't really very good at that. I mean, that takes kind of some skills to sort out, well, where do I go and how do I approach this landlord, and -- you know. And, of course, then, the landlords may notice that you have a disability, and suddenly, they don't have a vacancy. And -- and so that's an issue. Section 3:
On the service side, if you look at, say, our behavioral health centers or our senior centers, or whatever, well, they understand support services, but they don't know much about a housing development. They are not developers, they are not in the housing building business, so a lot of our work has been to bring these two groups more together so that they are working with each other. And let me just give you one example.
AHFC had a program for a number of years, a Special Needs Housing Grants, call them SNHG [SNUG], SNHG grants. And it provided what you would expect from AHFC, which is basically capital money to build housing. And very few of our beneficiary service agencies ever applied for the money. And the reason was that if all they got was the capital money, then they couldn't figure out how to pay the operating costs of the housing, keep the lights on, keep the heat on, and they couldn't figure out how to pay for the support services because just having the housing didn't generate any income, and a lot of those services are Medicaid billable. And so we started looking around and saying, well, who -- who has addressed this issue before? I mean, you're probably hearing this as a common theme. We don't come up with too many spontaneously brilliant ideas. Most stuff we steal from somebody. And so we started asking around and we found out that the Gates Foundation in Seattle had invested $70 million over 10 years in a program called Sound Families. And it was designed to deal with this exact problem. It was designed to connect what we call the three legs of the stool: the capital money, the operating funds, and the support service funding. And so what we did, and again, this comes back to the ability of the Trust to spend money without a legislative appropriation, we gathered a group of folks from Alaska that came from the service provider end, from AHFC, from the housing developers, and we got them all and we went down to Seattle. And the Gates Foundation was just incredibly helpful in setting up a two-day housing tour. And we met with the head of the Seattle housing agency, we went to Olympia and met with the legislators that had championed partnering with the Gates Foundation on this initiative, we learned from them what their challenges had been and how they worked around them, and -- and basically, were able to start to formulate a vision of how one could, again, connect these things all together. Of course, now, the challenge was how are we going to get the legislature to support this? I mean, you know, this is bigger than the Trust. I mean, when you get into housing, you're talking serious money.
And it was going to be, you know, hard for us to be the prime mover on this, although we did fund several initial pilot projects, again, to establish that this was a doable, effective strategy. Well, when we started to go to the legislature, what we did is we called the Gates Foundation and the -- the program director that we'd been working with, his name was David Wertheimer, and we asked him if he would come to Juneau and present to the legislature what their success had been in Seattle with this model of housing, this supported housing model. And it was very interesting, because the Gates Foundation is like many foundations in that they tend not to want to get involved in anything that looks political, for all kinds of reasons, and it actually took David quite awhile to convince the hierarchy there to allow him to come to Juneau. And we had to reassure them that we were not wanting him to come to lobby or convince in any way, it's what I called the -- just the facts, ma'am, just the facts. The sort of Dragnet approach. And David came and it was very powerful testimony. Even though generally Alaskans don't really care how they do it Outside, when you get somebody from a foundation that has spent $70 million on something, and they figured out what works and what doesn't, and they are explaining this to the legislature, they pay attention. And so now, in addition to our funds and the normal AHFC funds, the legislature has now committed several million dollars a year in additional funding to put this supported housing package together. And now, this current year, whereas before, remember, we could hardly give away SNHG funding, this last year we had 16 applications for the money, far more demand than we could ever fund, because now the housers are starting to understand how to put these packages together in a way that works. Section 4:
Now, of course, one of our most challenging populations to house are people who are long-term chronic alcoholics. This is your classic sort of street person. Chronic homelessness, chronic alcohol addiction, you know, many of those folks have been through treatment eight, nine, ten times, and -- and we don't know why we aren't able to help them get into recovery, but the fact is, they've been through every recovery program that we've developed and it just isn't working. And they are at great personal risk.
And what few people understand is they are also extremely expensive because they intersect the non-mental health service system in many, many ways. For example, they get all their healthcare at the ER. And they are in the ER pretty often. If they are found on the street and they are -- you know, have medical needs, after detox, they often end up in the ER. If they fall down or pass out in a doorway, the fire department and the police department have to respond as if it might be a crime. I mean, if you see somebody lying in a doorway and you call 911, they don't know that it's somebody who is passed out from alcohol, it could be a murder, and so the police respond, the fire department responds, you know, it's a tremendous cost. In fact, there was a famous article in the New York -- New Yorker called Million-Dollar Murray. And they followed one chronic street inebriate over 10 years, and it cost the public system a million dollars for him to be a public inebriate. And so there's this huge cost. But now once you start talking about housing people, the gold standard in substance abuse treatment for many, many years has been abstinence. Abstinence is the gold standard. And there has been a lot of controversy around the concept of harm reduction. You know, if we can't get somebody sober, can we at least get them safe, can we get them housed, can we get them off the streets, and out of these services, and -- and hopefully, at least, reduce or manage their drinking, if we can't get them into sobriety. Well, that's pretty controversial. A lot of people feel like, well, you're just enabling these folks. You know, if they -- it goes all the way back to societal attitudes and biases around alcoholism, and seeing it as a choice as opposed to a disease. And so when we started looking at these beneficiaries, and of course, for us, we're very concerned because, you know, they are at great risk, and in fact, they are often dying on the street. And again, we did the same thing, we started looking around to, well, who has -- you know, who has approached this. And -- and this is a movement that's now sweeping through the country, it's called Housing First, and -- and the concept is what we used to do is tell people that if you want housing, first you have to get sober. And as soon as you get sober, we'll give you housing. Didn't work for this population. And so then they decided, well, why don't we flip this. Why don't we give them housing first, and then see if we can't manage some of these other problems. And it turns out that's phenomenally successful. In fact, what doesn't get a lot of press attention is that some major metropolitan areas in this country have dramatically reduced their street population by providing housing first. In some places, 30 to 40 percent reductions. And we're talking New York City, Los Angeles, Denver. You know, this is -- this is definitely a proven technology. But, getting the first project to happen in Alaska presented some real challenges. Section 5:
And so one of the things, again, that the Trust was able to do is we gathered together some politicians, some housers, AHFC, and we found a project, again, in Seattle called 1811 East Lake that had developed a Housing First project, and had rigorously evaluated the results, and -- and had really turned the political tide in Seattle around on this concept. And we contacted them and they were gracious enough to host a team from Alaska to go down and actually look at how that operated. And what was great about that is that what we were able to do is, for example, there was an assemblyman from Anchorage, Dan Coffey, and he was quite the skeptic about this approach, and he was able to talk to peers on the Seattle Assembly who were politically pretty similar to his views and able to have them explain to him how they hadn't given this thing much chance either when it started, and by gosh, now that they see what the results are, this thing is good. The police chief went, and yeah, it's great to listen to the social workers tell you what a great program this is, but he wanted to talk to the cops. And what he found out from the police in Seattle is, hey, we used to be rousting these guys all the time, we used to be -- you know, petty street crime, we used to deal with them all the time, we would get these calls about them being in doorways, we knew them all. We knew them all. And now, we don't see these guys at all anymore. Because they are housed. So from a police standpoint, this is awesome. And so by bringing that back, we were able to get the first major Housing First project finally approved by Planning and Zoning in Anchorage over considerable neighborhood opposition. And we're confident that when that project gets implemented, that we're going to make good on our commitments to that community, that neighborhood, that this is going to improve their situation, not make it worse. BILL SCHNEIDER: What are the additional services you have to provide in order to make that work?
JEFF JESSEE: Well, for example, you need to provide more on-site medical care. So many of these people are medically compromised, they've got lots of health issues. But you're able now to do it as part of a more cost-effective process of providing medical care than waiting until they are in crisis and they are in the ER and they have an expensive hospitalization. So that's one area.
The other is enforcing some really basic rules. You know, even if you're going to keep drinking, you can't drink in the public spaces. You know, you can't loiter around the building. You know, you can't bother the neighbors. And they are held to these conduct requirements, and people do get evicted, but a lot fewer than you would think, once they are able to actually access housing. And of course, there's -- you know, food preparation happens, and they are, you know, having access to meals and, you know, so it's a very cost-effective, as well as obviously humane way of trying to help people that are really at the very bottom and the most severely impaired because of their addiction.
So that's the housing area. Section 6:
Another area, and it's interesting how this came about, years ago Alaska had had an individualized system of care for adolescents with mental health issues, it was called the Alaska Youth Initiative. And for various reasons, it ended up being de-funded, and what started to happen in about the mid '90s, about when the Trust was created, is more and more Alaska kids were being sent Outside for residential psychiatric treatment. And the main reason for that was that we had virtually no continuum of care in place. Once you got to the point where you couldn't stay at home, there really was not much else for you to go to until you got to Utah or Texas. And so more and more of these kids started to get placed outside. And by 2004, this problem had gotten so big that we had over 430 kids in these out-of-state facilities, at a cost of over $40 million a year. And the trend was looking like it would continue unabated into the future because there was no effort to provide any kind of alternative service. And Governor Murkowski came into office and appointed Joel Gilbertson as commissioner, and they were concerned about this, both from a budgetary standpoint and from a quality of care standpoint. And the Governor asked us to come to a meeting in the Governor's conference room with the chief of staff, and asked us if we would work with the administration to address this issue. And so the Bring the Kids Home Initiative was created out of that. And so we used our formula for success, which was to start pulling together, once again, you know, pulling together the stakeholders, the providers, the families, the state bureaucrats from the different agencies, you know, and getting them all together and saying, all right, what would we have to create in Alaska in order to serve these kids. And this is a fascinating initiative because if you were starting a Bring the Kids Home or -- if you were starting a children's mental health system from scratch, well, where would you start? Well, the first thing you'd want to do is give as much support to the natural family as you could. And then if that didn't work, you would then try to find a out-of-home placement that was at least in that community so that you could continue to work with the family and eventually reunify the family. And if that didn't work, you would then move to a regional hub and possibly to Anchorage, and then only as a very last resort would you end up in Texas or Utah. Well, the problem with that is that if we approached the legislature and said, all right, here's the deal, if you invest $5 million, say, just arbitrary number, in these early intervention services for families, in eight years or so, trust us, these out-of-state numbers are going to come down, that is not getting funded because the legislature doesn't have that long-term horizon for a return on investment. And so what we needed to do was to, in the short run, drive down the number of kids that were out of state in order to demonstrate that we knew how to develop an effective continuum of care. Now, one thing that was interesting that the system was so out of control that if I thought my daughter needed to leave the house because her behavior is just unacceptable, and I came to you, my psychologist or psychiatrist and you agreed that she should be placed in a facility in Utah, then we would put her on a plane and take her to Utah and drop her off. Now, at this point, the state has no idea that this is happening. This is totally a private enterprise. Now, at the end of 30 days in Utah, my income is no longer deemed to her and she becomes Medicaid eligible, retroactive to the date she got there, okay, now what does that mean? Well, that means the first time the state finds out that my daughter is in a facility in Utah is when they get a bill for the first 30 days. Well, this isn't working for them, and so they then say, well, how do we know your daughter needed to go there? And so they send somebody to check it out. Well, now, this facility's had 30 days to develop a record establishing-wise -- surprise, surprise -- what my daughter needs happens to be exactly what they offer at a very high cost. And so the state now is on the hook with no way of getting back out of this because this is a totally unmonitored, unregulated process. So the very first year, the only thing we did was tell everyone we were going to start watching this. And the numbers went down. Just by telling them that now we were going to be reviewing every one of these out-of-state placements. And if we didn't tell the state we were doing this ahead of time, then they were going to refuse payment. And it's the same phenomenon -- and actually, this surprised us. I mean, we didn't really even expect to have this result, but it's very similar to what happens on a freeway. If people drive the freeway and they never see a police car, the average speed goes up. As soon as you put a police car on the road, you can just park it there, you don't have to give anybody a ticket, and the average speed comes down. Well, that's exactly what started to happen is now more and more people started to say, well, now, wait a minute, you know, the state's starting to watch this, so that was the first step, was at least to start to bend this curve a little bit, this increase. Section 7:
And then we started looking at, all right, we -- we want to start down here in the family and early intervention and prevention, but we've got all these kids out of state, we've got to start developing group homes, foster homes, you know, that can actually reduce those out-of-state placements. And for several years, we started investing in this. And again, this is too big for the Trust. The -- the -- what we're spending our money on is the initiative infrastructure, you know, paying for the work group to meet, you know, bringing up people who have experience in the field, and educating folks on what the options are, gathering data about who these kids are and what their needs are and what we need to do. Not unlike the Harborview project, in many ways. And what we said to the legislature is, look, you don't necessarily have to spend more money to do this, but you need to start taking the $40 million that you're spending out of state and start investing it in state in these services, so that we can have these kids served here, and by the way, not only serve them better, closer to home, in a more culturally relevant way, but create jobs in Alaska instead of creating jobs in Texas and Utah and Colorado, and in the end, you may or may not end up spending any more money, but you will have a more effective system of care in the state. This probably starts to sound familiar. It's helping the state understand how to get more bang for their buck by providing better services and managing this type of an initiative. So we started with over 430 kids out of state. We have just gone below a hundred. And so we're down to about 95 kids. Now, in the end, there will probably be a few that present such complex or challenging behaviors that there will probably always need to have some resource for out-of-state specialized care, but we think we can get that to a fairly irreducible minimum. And along the way, as we're driving down the big curve, we're also encouraging the legislature to invest in these earlier intervention strategies so that we don't even get to the point where kids need out-of-home services. Section 8:
BILL SCHNEIDER: So you were actually funding some of this transition or just providing the information and the statistics?
JEFF JESSEE: We funded some of the actual implementation, and a lot of times what we would do is let me just give you an example. Medicaid is still a main funder of these types of services. The problem is, Medicaid doesn't pay for certain things that may not be very expensive, but could be critical to the success of a -- of a plan, and let me give you an example. You've got a kid who is just struggling in school, and that's part of the whole dynamic at work that's creating mental health issues, behavior issues, all of that. And so you say, well, we've got to -- you know, we've got to find a way for this kid to be successful in school, or we're going to be fighting this for a long time. It deals with the self-esteem, self-confidence, and all of that. Well, what would you do. Well, boy, we really need to get him a tutor. I mean, if he had somebody that would sit down with him, you know, an hour or two a day, and help him get his homework done, you know, and -- and be successful in school, well, that would translate into lots of good things. Well, nobody pays for that. Nobody pays for a tutor. And so we created a pool of individualized services that agencies could apply and get a small grant to provide these little extras that can make the difference for some of these kids. And tutoring is one example. Buying hockey gear and signing a kid up for hockey so that now they've got something to work towards, you know, they've got something positive going on in their life. What we did on that is we split it with the legislature. We said, we're not sure how this is going to work, so tell you what, we'll split it with you. And let's see what we get as results as we go down the road. So again, we provided startup funding. Give you an example. You're going to start a group home. Okay. We need -- we needed a bunch of them, and agencies came and said, well, we can start a group home, and it's sustainable, but here's our problem. You can't open a group home for six kids and bring the staff in on the 1st of January along with six kids and say, here we are, you know, we're open for business, day one. First you've got to bring the staff on and you've got to train the staff. Then you've got to bring maybe one or two kids in and get that settled down, and then you can bring another couple of kids in, and it probably takes you six months from startup to full utilization. But now the funding is driven by the kids that are in the home. So how does the agency pay for this startup cost? Now, once they get to six months and they are -- they are fully operational, they are fine, they are sustainable, everything's good, because the business model works.
Well, that's where the Trust comes in. We provide that startup funding. So now, agencies that before couldn't help the state solve this problem, because they didn't see how they were going to be able to ramp up this capacity, now have access to a funding source that allows them to get the staff hired, you know, get the staff trained, gradually bring these kids in, now this works. And so that's been our role through that. And it's been very powerful in terms of the legislature. You know, as we've gone in every year and shown them how their out-of-state costs are coming down, they are reinvesting in the state, and we have turned this curve. And -- and it's one of the most successful -- you know, people say government can't do things. I mean, this is one of the most successful efforts that I've ever seen out of state government. I mean, this is a huge transformation. Section 9:
And now, as we sort of finish the initiative, you know, the idea is to finish things, not just perpetually work on them. Now we're looking at what can we do to solidify this new system of care so that when we stop working it, the problem doesn't just start back up again. And -- and the key to that are these early intervention services. And a key to that is partnering with the education system, because by and large, families with these issues are not self-reporters. You know, they -- these kids don't spring from the head of Zeus. You know, very often they are coming from very challenging family circumstances. There may be substance abuse in the family, maybe mental health issues, often poverty, broken families, you know, dysfunctional families, and if we can identify those situations earlier, then we can work with the whole family. In fact, one of the failures of the previous system is that by the time the kid left the home, the system responded as if the whole problem was the kid, and if we just fix this kid, everything would be good. Well, that never worked because you've -- you've fixed the kid, whatever you think that means, and you put them right back into the environment that they came from that had often a role in creating the problem to start with, and they are not going to be successful. And so now we're working with education trying to get them to help because they are probably our best early warning system. You know, these families are more likely to be identified early on because, you know, I did a lot of volunteering in my kids classrooms, and I'm no mental health professional, and I can tell you who the kids were in that classroom that were going to have trouble. I mean, it's not rocket science. But the problem is our old system waited and waited and waited until these kids got worse and worse and worse, and now they are getting expelled and suspended and things are really bad, and then they show up in the system. And -- and we're trying to solve a problem that was years in the making. And so that's the Bring the Kids Home Initiative. So these are the ways that we continue to work to improve the mental health system over time. BILL SCHNEIDER: Well, that's pretty impressive.
JEFF JESSEE: It's -- I think the trustees have just done an incredible job of managing these resources in a way that, you know, has truly been transforming in so many of our systems of care. Section 10:
BILL SCHNEIDER: What about the critics? Who are the critics and what are their claims?
JEFF JESSEE: Well, we do get pushed back from the legislature, and usually it's in the form of, A, you should be doing more to support our core expenses. So rather than using all your money to do these fancy things, you should be contributing more for the core operating parts of the program. So that's one that you hear. The other criticism that we get a fair amount from the legislature is, look, we can't afford this much success. You know, you guys go out there and you pilot these projects, and you sift out the ones that work from the ones that don't, and then you fund the ones that work for a certain number of years, and then you come in and expect us, the legislature, to pick up the costs of those programs. And it's getting too expensive. Because you're bringing too many successful projects to us.
And it's hard for them to actually articulate it this way, but it's like when you demonstrate that level of success and you bring in advocates who can use that information to support the need for funding, it's very difficult for us to say no. And as our income grew, and we went from $15 million a year to $25 million a year, and got better at what we were doing, the problem for us and the legislature was the request for them to take over funding in every year was getting to be substantial. BILL SCHNEIDER: So it really is a pretty uneasy relationship. It's been an effective relationship, but an uneasy relationship with the state government?
JEFF JESSEE: I think that's an excellent way to frame it. You're exactly right. They -- they love us when it's doing something they feel they needed to get done, and it frustrates them when we're asking them to do things that they are having trouble finding the money for. BILL SCHNEIDER: And that probably will get more exacerbated in the future.
JEFF JESSEE: I think so, although, you know, a couple of things about this. One is it turns out that we generally have just the right amount of income. And I'd love to be able to say that back when we were figuring out the land and how much cash we were going to get that we had anticipated how this would work, how this relationship with the legislature would develop, and all of that, and that we carefully developed, you know, a plan that would fit right where it needed to be. We just lucked out. Because here's how it works. Again, we're 25 million on a $300 million mental health program, right? If we had less than we have, like, say, 5 million a year, we wouldn't get much done. I mean, you know, by the time you have your operating costs to run the -- the shop, you're not left with much resource to get much done. If we had 50 million a year or 60 million or a hundred million, the legislature would not be able to resist forcing us to devote a huge amount of that resource into the core services for the state. And they'd be right to do so. You know, because that -- the Trust is here to fund the program. And so by luck, frankly, well, and the wisdom of the trustees and how they set up the payout system, we found the sweet spot, you know, where it's -- it's enough to get stuff done, but it's not so much that the legislature is willing to reopen the Alaska Mental Health Lands Trust issue in order to get at, what, $10 million? 15 million? How much can they steal from us? Not enough to make a big dent in the budget, but enough to generate litigation and a lot of controversy and to what end?
But those are -- that will always be an uneasy alliance.
BILL SCHNEIDER: Yeah. Section 11:
BILL SCHNEIDER: If -- if you were a parent of a beneficiary and your -- the beneficiary was age over 30 or so, and had been involved with the Trust over the period of the Trust's history, what might some of your comments be? Would you -- how would you be evaluating the Trust?
JEFF JESSEE: Well, I think that -- that you would want to say, well, what sort of trajectory was my child and our family on? You know, where did we see things going in dealing with our child's disability, and then where are we today. And is that better than what we thought was going to be, and -- and if it is, did the Trust have any role to play in making that happen. BILL SCHNEIDER: Do -- do beneficiaries and their -- and their sponsors make a separation between the Trust and the state programs?
JEFF JESSEE: Oh, very definitely.
BILL SCHNEIDER: They do?
JEFF JESSEE: They do. And our -- the main reason that -- that they do is because the way our system is set up, again, we have only 7 trustees, and a staff of 14, and we have all of these varied beneficiary groups with their different needs and priorities, and the way that we sift out from that what needs to be done is that we have these four planning and advocacy boards that we partner with. The Mental Health Board, the Advisory Board on Alcohol and Drug Abuse, the Commission on Aging, and the Governor's Council on Disabilities and Special Education. And they are, in essence, our interface with the beneficiaries and their families because those organizations have as members family members, consumers, members of the public, and -- and they are the ones that are closer to the ground and -- and they bring recommendations to us, or to the trustees for what we should do, and what areas we should work in. And so to the extent that -- that those consumers or families understand how systemic initiatives get created by coming through those boards, then they are pretty clear that the Trust is trying to be responsive to what those priorities are. Section 12:
BILL SCHNEIDER: Karen?
KAREN BREWSTER: I was going to say, what are some of the challenges? You've talked about all these successes, have there been times where you've had failures and challenges?
JEFF JESSEE: Well, I think there are a lot of areas where we have not been able to achieve as much as we would like. One area is, again, we're still obviously working it, but disability justice. 42 percent of all inmates in the Department of Corrections are Trust beneficiaries. That's huge. And although the therapeutic courts have been effective, we have a program called Bridge Home that helps take beneficiaries coming out of corrections and transitioning them into the community, and it's been very effective. We have not been able to go to scale with these projects. And so the ones we have, have been proven to be effective, but we haven't been able to go to scale, and primarily that's because the order of magnitude of what it would take to go to scale is way beyond our means. And until we can convince the legislature that that type of investment is warranted, we won't get there. Now, this next year may present an opportunity because the legislature is going to run up hard and fast on what it costs to build and operate a large prison. They will be bringing a new prison on line, and they are going to be looking at many, many, many millions of dollars to house people in corrections. We believe we can, with our beneficiaries, we can do a better and cheaper in the community. But the legislature has to cross the Rubicon in terms of their thinking; and it's one thing to convince them on the scale of Bring the Kids Home where there's $40 million or Harborview where there's 5 or 6 million, it's another thing to start getting them moving on something that's hundreds of millions. And so I think that's one area that -- that we haven't been able to go as far as we would like. Section 13:
KAREN BREWSTER: The therapeutic courts you just mentioned I wanted to ask you about, how is it that some members of the population end up in therapeutic courts and some still end up in the mainstream criminal justice system?
JEFF JESSEE: Generally, when they are arrested and they end up in jail, the Department of Corrections knows them, because they've seen them before, and they do a screening and they start trying to identify those beneficiaries that they think, if they were to go through the Mental Health Court, that they would benefit from this approach. And then they provide that information to the rest of the team because the, you know, Public Defender and the District Attorney, you know, there has to be agreement that this is somebody that should be offered this alternative to normal prosecution and incarceration. And not -- you know, none of these programs are perfect. Not everyone is successful, but many, many are. KAREN BREWSTER: And the therapeutic court is only for misdemeanors; felony cases don't usually get recommended there?
JEFF JESSEE: For our beneficiaries, I believe there is a felony DUI court, which is not one of ours, so to speak, but yes, all of our therapeutic courts are -- are misdemeanors. If you're talking serious harmful behavior, then that's going to be handled differently. Section 14:
BILL SCHNEIDER: All right. Well, Jeff, thank you so much for taking the early flight up and --
JEFF JESSEE: My pleasure.
BILL SCHNEIDER: -- spending the time with us. I think you've given us a really thorough, interesting picture in terms of not only the mental health delivery system, but also how you've effectively worked with the legislature that might serve as a model for other groups, too. JEFF JESSEE: Well, that's one of the things, I'm on the board of Philanthropy Northwest, which is a philanthropy affinity group for the Pacific Northwest. And one of the -- one of the things that I've been working with other foundations on is encouraging more engagement with government. Traditionally, foundations have tended to want to give time-limited grants to get something going, and then the funding goes away, even if it proves very effective, but the heavy lifter and the sustainable funding has to come from government. And if you don't engage up front, there's very little likelihood that you're going to get much support when your money goes away. And -- and a lot of foundations are very gun-shy about directly engaging government, and one of the things I'm trying to promote is that, no, you should do more of that, more engagement, and more partnering because in the end, you know, legislators want good public policy, they want cost effective and efficient services, and by linking the venture capital of foundations and charitable organizations, it's a powerful partnership. KAREN BREWSTER: Has the model of the Mental Health Trust Authority been used in other places? It was sort of a first-time thing when it was established here, wasn't it?
JEFF JESSEE: Well, nothing exactly like it, but there are, for example, in some areas now housing trusts that in many ways operate somewhat like the Mental Health Trust. You know, so I think there are some similar type of organizations, but I think the Mental Health Trust is certainly unique, certainly in the -- in the sense of combining a land base with financial assets, being a state corporation that has the freedom to act like a private foundation, you're not going to find many of those. And we wouldn't have had this one if they hadn't stolen the land.
Jeff Jessee was interviewed by Bill Schneider and Karen Brewster on December 1, 2010 at Elmer E. Rasmuson Library on the University of Alaska Fairbanks campus. He is the Chief Executive Officer of the Alaska Mental Health Trust Authority. This is a continuation of an interview on November 30, 2009 where he talked about his early career and how he got involved with the mental health trust. In this interview, Jeff talks about the establishment and organization of the Alaska Mental Health Trust Authority (MHTA), and how it influences mental health programs in Alaska. He discusses MHTA's focus areas, examples of their accomplishments for positive change in delivery of mental health services, as well as mentioning challenges they face.
Part two of this interview.Jeff Jessee was also interviewed by Bill Schneider on November 30, 2009 in Fairbanks, Alaska.
Click to section:
Section 1: Setting up the financial structure behind funding the Mental Health Trust.
Section 2: Creation of the income reserve, and planning for the required annual payout.
Section 3: Combination of income from land with other Trust assets, and how to use Trust assets to influence mental health programs.
Section 4: The Mental Health Trust using its money to improve the mental health programs in Alaska, and the closure of Harborview Developmental Center in Valdez, Alaska as example of this.
Section 5: The Mental Health Trust's involvement with the closure of Harborview Developmental Center in Valdez, and leveraging their funds with the state's to transition to community based services.
Section 6: The Mental Health Trust's role in helping improve services for women with mental illness in the corrections system.
Section 7: The Mental Health Trust's role in establishing therapeutic courts.
Section 8: Evaluating the results of the programs funded by the Mental Health Trust, using the examples of the closure of Harborview Developmental Center and the mental health courts.
Section 9: Spread of the mental health court concept from Anchorage to the Matanuska-Susitna Valley, and eventually to other parts of Alaska.
Section 10: Five focus areas that the Mental Health Trust are working on, in particular the peer support programs where beneficiaries are helping each other and not having to be totally dependent on the professional mental health system.
Section 11: Consumer based support centers such as the Consumer Web in Anchorage.
BILL SCHNEIDER: Okay. Today is December 1st, 2010. I'm Bill Schneider, Karen Brewster is here with me, and we have the pleasure of doing the second in a series of interviews with Jeff Jessee. And appreciate you taking the time to do this.
JEFF JESSEE: My pleasure.
BILL SCHNEIDER: And the last time we talked, we were looking at the history of the issues coming up to, leading up to the establishment of the Trust, and your role as appointed as executive director. So let's pick up from there and move ahead with the development of the Trust and the successes and failures over the years.
JEFF JESSEE: Okay. Well, you recall the asset framework of the Trust was a million acres of land that the Department of Natural Resources was going to manage with a separate office called the Trust Land Office, and then the $200 million would be invested by the Permanent Fund Corporation, and like a mutual fund, it would be a portion of their portfolio and we would receive our share of the profits or loss and pay our share of the expenses. So when the first original seven trustees met, their first task was to look at how this financial structure needed to be set up for the most effective use of these resources. And one thing they realized immediately is that if we simply took the annual income from the Permanent Fund and spent that, along with any income from the land, that we would experience wide fluctuations in available income. And the reason for that is some years the Permanent Fund does really, really well, and on $200 million, you might have $30 million in a given year. On other years, the Permanent Fund doesn't do quite so well. We've certainly seen that recently, and in fact, could even lose money. And that kind of big swing in income was clearly not conducive to any kind of thoughtful, strategic, long-term planning on the part of the trustees. So one of the original trustees was Phil Younker, Jr., from Fairbanks, and Phil is an investment advisor, and he started working with the other trustees to develop a framework that would provide a more reliable, consistent, steady source of income for the trustees to use to improve the mental health program. And what they decided to do was to develop what we call an endowment model. Most foundations are required by IRS rules to pay out at least a certain percentage of their asset value every year. It's called the payout. And that's what the trustees decided to do. They decided that, well, rather than just spend whatever income came from the Permanent Fund every year, they would pay out a percentage of what that value was, and that income would be added to the land income, and that's what the trustees would have to spend. Now, that part was good, except that the next issue they ran into is this is a perpetual trust. And so the trustees, unlike a normal foundation, the trustees cannot go into the principal, they can only spend the income. So their next dilemma was if you are spending this payout every year, percentage of your asset value, if there's no income, in other words, if the Permanent Fund doesn't make a profit that year, then where is this payout coming from, given that it can't come from the principal. So they realized they needed to have an income reserve that would allow them to make this payout in years where the Permanent Fund didn't generate any positive results. Section 2:
Now, so how much of a reserve do you need? Well, the trustees went and retained Callan & Associates, and Callan is an investment advisor firm that the Permanent Fund uses. And they asked Callan to advise them as to how large of a income reserve the trustees should create in order to be able to make the payout in a sustained negative return environment with the Permanent Fund. We weren't planning for 1929, but we wanted to be able to make it through most reasonable down-market scenarios. And in the end, Callan advised the trustees that about four times the annual payout would be a sufficient reserve to ensure that the trustees could continue to make the payout in a reasonably anticipated, sustained downturn in the market. Well, okay. That's well and good, but now how do you create that income reserve given that, at the very beginning, you don't have any extra income, you just have what the Permanent Fund earned the first year that the $200 million was in their possession. Well, this is where we got very fortunate because those very early years, '95, '96, '97, were very good years for the Permanent Fund, and so the trustees originally set the payout relatively low, at 3.25 percent. And the idea was that the income above that 3.25 percent would start to fill up this bucket of the income reserve. The other reason that the trustees felt that was a good strategy is that at the very beginning, we hadn't had any time to really develop a strategy, or even a philosophy or guiding principles around how we were going to spend this money. So having a lot at the very beginning wasn't really a big advantage until we built some of this infrastructure for the Trust. So those first several years, this reserve filled up relatively quickly to 400 percent of the payout. Well, then the trustees realized that, well, once the reserve is at 400 percent, then you can incrementally increase the payout. And so they raised the payout after, I believe, about three years, they raised the payout to 3.5 percent. Now, when you raise the payout a little bit, you then have to raise the reserve by four times that. And so the trustees have been progressively increasing the payout to where it's now 4.25 percent, which is probably fairly close to the sustainable payout to preserve the corpus over time. And the wisdom of this strategy and framework has been demonstrated two times. Once in the late '90s and early 2000s when the market had a decided low point, and our reserve actually went just below 200 percent. And then recently, in the major recession that we've experienced where the Trust lost nearly a hundred million dollars in value at the Permanent Fund, we were still able to make the payout from this reserve. So this framework is extremely robust and resilient, and has allowed the trustees to do long-term planning based upon a reliable income stream coming from primarily the Permanent Fund, and then it's added to again by the income from the Land Office. Section 3:
I should mention also that the two other factors in the management of the assets, one is that revenue from the land comes in two forms. If we lease a piece of property for a power line or parking lot, that lease is counted as income and is added to the payout and is spent the following year. If we sell a piece of Trust land, we're basically converting one form of principal into another form of principal. And so those proceeds go into the Permanent Fund and become part of the corpus or principal of the Trust.
And over the years, 16 or so years that the Land Office has been managing the land, they've actually contributed nearly $70 million in principal to our original 200 million. In addition to that, the trustees inflation proof the principal in order to protect future beneficiaries, to ensure that the Trust principal continues to maintain its buying power over time, as we make sure that we are not shortchanging future beneficiaries by focusing too much on current beneficiaries. So when all is said and done and you work the math, it means that in today, the Trust has a available income every year of about $25 million. At the time the trustees first started when the payout was lower and the Land Office wasn't even going full speed, even then they had about 15- or $16 million. So the question for the trustees at the outset was if this Trust is going to generate $15 million or so every year, then how would you best try to influence the mental health program. Because remember, the mental health program covers people in mental illness, people in developmental disabilities, chronic alcoholics, people with senility, Alzheimer's disease related dementia. If you looked at state government, and remember, we have a separate appropriation bill just for mental health, so if you looked at what the state spends in general funds for services for those populations, it comes to, back then, about $130 million in general funds. And today, it's probably in the range of $180 million a year. Now, if you add Medicaid on top of that state general fund amount, then the mental health program quickly goes over $300 million. So if you have $20 million, 15, 20, $25 million, how do you use those funds to impact a $300 million program? Well, obviously, one thing you would not want to do is simply go out and look at unmet need and say, well, there's not enough respite care, so let's give people grants to provide more respite care for seniors. The reason that would be a bad strategy is that that income going into ongoing direct services would then basically be stuck in those services in perpetuity. It would be very difficult to start ratcheting back on those services.
Plus, even at 15 to $25 million, you're not going to make a huge dent in unmet need for that amount of money. And if you needed a further rationale for not taking that approach, it would be that legislature would be likely to be tempted to simply reduce general fund appropriations in the same amount of the funds that the Trust put in, and so in the end, you not only would have trapped your money in these programs, but you would not have resulted in a net increase in services to the beneficiaries. Section 4:
So given that, the trustees developed a strategy that basically casts the Trust as a catalyst for change. And so the basic strategy is to use Trust income to improve the effectiveness and efficiency of the mental health program by leveraging our dollars in order to get systematic change that will create additional benefits to the beneficiaries over time. So, well, what does that mean? How do you how do you do that? Let's take one of our very first projects. Even before the Trust had been created, recreated, various entities had been working on trying to eventually close the Harborview Developmental Center in Valdez. If you remember, that was a institution that was actually bought originally, there was a motel in Valdez that was bought with the original cash that came from the Federal Government in the Enabling Act to build the original wing of API, Alaska Psychiatric Institute. And Governor Egan took a portion of that federal appropriation and bought a motel in Valdez and decided to put people with just developmental disabilities there from all over the state. Now, why would you pick Valdez? Well, because Governor Eagan was from Valdez, and this was actually one of the very first pork-barrel projects in Alaska's history as a state was using part of this earmark to buy this motel. Now, the motel was severely damaged during the earthquake, and so the state then rebuilt a concrete bunker-like institution in Valdez for this population. And at its high watermark, close to 175 Alaskans were institutionalized there, many from rural Alaska, many from Anchorage, all over the state. That was how we served primarily people with developmental disabilities. Now, over the years, as you got into the '70s and the '80s and there was a progressive movement towards deinstitutionalization, we started to develop community alternatives in the state, and we gradually whittled down the population of Harborview until by the time of the creation of the Trust, we had actually stopped admissions altogether, had a moratorium on admissions, and there were only about 80 residents left. Now, the problem for the state was that at a population of 80, a census of 80, the fixed costs of the institution are so large that the cost per resident per year was in excess of $160,000. And that's very expensive level of care, and in fact, a level of care that we no longer thought anybody with developmental disabilities had to have, that we believed that the state of technology, service technology in terms of home supports, foster homes, small group homes, that we could serve all of these people in the community. Section 5:
So the question was already being asked before the Trust was created, well, why doesn't the state just close Harborview? Now, one of the things in my prior life, when I worked for the Disability Law Center, I had gone back East and met with some of the lawyers that had conducted the early and major litigation on a national level around deinstitutionalization of people with developmental disabilities, and I remember going into a huge high rise in New York City and went to the umpty-umpth floor to this incredibly ornate law office, and met with one of the senior partners who had worked on those cases. And he talked a little bit about the litigation, and then I asked him, well, where are those people now? I mean, you got them released from the institution, where are they? And he said, well, he didn't know where they were. I mean, his job was just to get them deinstitutionalized. And I told him, I said, well, you know, I think I saw some of them on the way in, they are sleeping in a cardboard box on a heating grate in front of your office.
And that's when I realized that deinstitutionalization done poorly is no benefit to the residents that you're trying to help. And so the key to closing Harborview was to figure out how to develop these community alternatives so that people from Harborview could transition into the community rather than transition onto the streets. Now, the problem before the Trust for the legislature is if you want to close an institution that way, you have to essentially double fund for several years. You have to continue to pay for the institution and its fixed costs, while you also invest in community capacity, so that you can gradually move people from one to the other. Well, in the short-term funding horizon that generally grips the legislature, that was always a problem because it would require roughly $3 million a year for three years in extra funding in order to make this transition. And for probably five or six years before the founding of the Trust, the legislature was unwilling to make that investment. And of course, there were other forces at play that were not supportive of closing Harborview. The employees that worked there were weren't interested in losing their jobs. This was a very significant employer in Valdez. In addition, many of the parents of residents were concerned that their children had been living there for so long that removing them even into a setting that might be in some ways more normalizing could be very traumatic for them, and it was a very legitimate concern. And so all those factors had stalled this process of deinstitutionalization. Well, how does the Trust participate in this? Well, first of all, we, again, because we're able to spend Trust income without a legislative appropriation, we were able to fund some research into exactly who the remaining residents were, what their needs were, and what types of services they would need in the community so that we actually knew what these alternative services needed to be in order to protect and enhance the welfare of the residents. The next step was to go to the legislature and say, look, we want to assist you in closing this institution the right way. And it was an interesting initial revelation to not only legislators, but also to our beneficiaries and their families and advocates about how the Trust would operate because there was an immediate assumption that the Trust would want to invest in the state-of-the-art, normalized services, like group homes and foster homes and home supports and all that. Well, the trustees immediately realized, well, now, wait a minute, if we funded those services, then when the state closed the institution, they would just retain the savings and now we would be back to what we described before where the Trust income would be in these community services that we couldn't stop funding, and would just basically be lost to the trustees in future years to do other systematic work. So what we offered the state was that the Trust would actually pay to run Harborview for three years on the condition that the state would take the general funds they were spending there and invest them in these community services, and then at the end of three years, they would have transitioned their funding into the community, we would close the institution, the Trust would no longer have to pay to operate it, and we would go on to the next project. And from the state's perspective, this was great, because now they could make this transition correctly, programmatically, and it wouldn't cost them any more than they were already spending. And it worked.
Over three years, we were able to develop these services, and by the way, many of them were developed in Valdez because by then, for many of these residents, Valdez was their community of meaningful ties. And in fact, Valdez had been a very friendly environment and community for the residents, and so it didn't really make sense to have everybody leave Valdez, and that, of course, helped in terms of the employees realizing that they actually still could be employed, many of them, in serving this population. At the time, we became the second state in the nation with no institution for the developmentally disabled, and we did it the right way. So that was really our first experience with the power of the Trust, and how it could utilize its resources to assist the state in making systematic change and improvement in the state's mental health program. Section 6:
Let me give you another example. About the same time, we had started to get a lot of feedback from the Alaska Mental Health Board about the condition of women with serious mental illnesses in Corrections. And it was deplorable. Many of these women were so symptomatic that they were unable to be in the general population, and so they were segregated in 23-hour segregation cells. And many of them were water intoxicators. And water intoxication happens when you drink a lot of water, first it flushes out your electrolytes, and you get high, and if you keep doing it, you can die. In fact, just a couple of years ago, a woman died of water intoxication as part of a radio contest. And the Department of Corrections had a solution for water intoxication, and that was to cut off the water to their cells. And this was the Department of Corrections's approach to dealing with seriously mentally ill women in their facilities. And obviously, many people were quite disturbed by this. So we approached the co-chair of the House Finance Committee at the time, Eldon Mulder, who was also the subcommittee budget chair for the Department of Corrections. And we asked Representative Mulder if he would tour some of these facilities and see for himself what was happening with these inmates. And again, we had worked on this for about a year and a half before we approached Representative Mulder.
And he did, very graciously agreed to go look. And then Nelson Page, the chair of the board and I, went to meet with Representative Mulder. And we asked him what his impressions were after having looked at these conditions, and he was quite genuinely shocked at what he saw. He said, you know, I had no idea that we had inmates in such desperate conditions, and in such need of services. But gee, you know, what are we going to do here, because at the time, the House majority had committed to cutting $250 million out of the operating budget over several years, and so every department had a cap on what the subcommittee chairs could, you know, appropriate for their departments. And so Representative Mulder said, look, you know, this is a challenge here, plus, you know, I have to say, the Governor is Tony Knowles, a democrat, and a well-known profligate spender. And it's just not going to happen that the legislature is going to turn over some arbitrary amount of money to the Knowles Administration for this problem. He says, you know, we don't even know the scope of the problem. You know, we know it's there, but we don't know its dimensions, its scope, and Nelson reached in his briefcase and he pulled out a document he said, well, Representative Mulder, about a year and a half ago, the first thing we did is we commissioned a snapshot study of these women with chronic mental illnesses in Corrections to see just exactly what the scope of this problem was. And handed it to the representative. And again, the ability to do that comes from the ability of the trustees to spend Trust income without a legislative appropriation. The chances of the Department of Corrections ever getting money to do that kind of a study would be remote.
And Representative Mulder looked through the study, and he says, well, yeah, this is good, good information. This does tell us how many of them there are, and, you know, where they are and what their needs are. He says, but you know, we don't have a plan. If we just give Governor Knowles a bunch of money, we don't know what he's going to do with that money. You know, we don't even have a plan. And Nelson reached in his briefcase and pulled out another document and said, well, Representative Mulder, the next thing we did a year ago is we hired a planner, Mara Rabinowitz, by the way, former Chief Justice Rabinowitz's daughter who did an excellent job, and she worked with the Department of Corrections for a year to develop a good, solid plan for treating and housing these women in Corrections. And here it is. And Representative Mulder looked through the plan and he said, well, yeah, this looks pretty good, you know, we'll have a -- you know, a reorganized unit, we'll have some clinicians, we'll have a psychiatrist that can provide services, he says, yeah, this is -- this is good. And he gets to the end, and he hits himself on the forehead and he says $600,000 a year, $600,000 a year. I have a cap on my budget and I'm the co-chair of finance, if I break my cap, then all the other subcommittee chairs will feel free to break their caps, and our ability to meet our targets for the budget is out the window. I want to do something here, but I -- I don't see how this works. And Nelson said, well, Representative Mulder, we realize that you're facing these financial issues, and so here's our proposal. The Trust will pay 100 percent of these costs the first year. We'll pay two-thirds of those costs the second year, and we'll pay one-third of the costs in the third year. It's what I called the no money down, three easy payments, order before midnight tonight. And Representative Mulder had a napkin on his desk, and he says, well, wait a minute. He says, so over three years, that's $1.8 million in services, and you're going to pay 1.2 of that, and I don't have to put any money in this year at all, and I can plan to put three $200,000 increments in over the next three years in order to get this to happen. And Nelson looked at him and said, that's why you have the Mental Health Trust. And Representative Mulder sat there for a minute and he said, this is great. Deal. I mean, this is -- this is terrific. I get credit for doing this right away to solve this problem, I don't have to put any money in the budget in the short run, and I can be planful in how I readjust the department's budget over a number of years in order to fund this. And Representative Mulder was good to his word and, over the next four years, he put in each of those increments.
Now, as Nelson and I left Representative Mulder's office, Nelson looked at me and said, and gee, over 10 years, that's $6 million in services and we paid 1.2. Section 7:
So the leveraging of the Trust's long-term horizon against the legislature's relatively short-term thinking has enabled the Trust to make a number of major systemic improvements in the state's mental health program by assisting the legislature in getting from point A to point B. BILL SCHNEIDER: And did they pick up the full funding after the three years?
JEFF JESSEE: Absolutely. Absolutely. And again, realized that because the trustees control their income, once that service was in place, if when we reduced our funding by 200,000, expecting the legislature to pick it up, if they didn't pick it up, then the services would go away. And so they'd be back to the problem that they were trying to solve.
Now, the beauty of this is that this works even when they see it coming. And I'll give you one more example.
One of the things that the trustees pioneered fairly early are what we call therapeutic courts. One of the challenges for beneficiaries, particularly those with mental health issues, is that if they don't have the supports they need in the community, they often end up in a cyclical process of coming in and out of the criminal justice system, usually for relatively petty misdemeanors. Can be trespassing, defrauding an innkeeper, you know, eating a meal at a restaurant and walking out, going into a store and getting food off the shelf and walking out. And generally, the way the criminal justice system handles that is they would arrest the beneficiary, they would take them to jail, they would be there maybe a few days, maybe a month, they would end up in front of the judge. The judge would find them guilty and sentence them to time served, and they'd be released. Well, there are so many negative consequences of this. I mean, just being in jail is not a good place for our beneficiaries. In addition, those that had housing often lost their housing while they were in the Department of Corrections because if they were, say, on SSI, once they got into jail for 30 days, their SSI is cut off. KAREN BREWSTER: What's SSI.
JEFF JESSEE: Supplemental Security Income, which is basically a Social Security disability payment, which for many of these people, that was their -- basically, their only source of income. And so now when they are released, they are often in much worse shape than they were in when they got arrested the first time. And they start the cycle back over. And there was this tremendous churning of beneficiaries coming in and out of the criminal justice system with even the criminal justice participants, whether it's the DA, the judge, the Public Defender, Corrections, all of them recognizing that this makes no sense to just have these people coming through for these petty misdemeanors. So nationally, in Florida, a new movement had just started called Mental Health Courts. And the way they operate is that instead of going through the normal criminal justice system, if you're one of these people with, you know, misdemeanors that's coming back and over and over, and it's apparent that the cause is not inherently criminal behavior thinking, it's the mental health issues, that you would go into a court with a judge who was trained and familiar with these issues; that there would be a court coordinator that would be able to connect the defendant to community services; and over time, then we would get the beneficiary settled in the community in terms of housing, treatment, you know, integration activities in the community so they had something to do during the day, and get them stabilized in the community so they wouldn't have to come back over and over for these misdemeanors. And it was very effective in Florida. And in fact, a judge in Anchorage, Stephanie Rhodes, had really started a Mental Health Court without any resources, just because of her personal commitment to trying to do better by these beneficiaries. But of course, to sustain that does require resources. You need funding for the case management, funding for the housing supports, all of those sorts of things, in addition to the fact that these courts do consume more court resources because now you may have weekly, biweekly, or monthly hearings on everyone's case where the beneficiary comes in and has to explain to the judge how they are doing. And so now you've got a Public Defender time, and you've got prosecutor time, and they are already very busy, and they weren't all that excited about these therapeutic courts, initially. So when the Trust -- when -- when Judge Rhodes came to the Trust and said hey, this is something we need to do, I can't keep sustaining this just on my willpower alone, you know, we need some help. And so we started providing funding for this first Mental Health Court to make it sustainable. Section 8:
The other thing that we started doing with that is a rigorous evaluation of the results, which is also, by the way, one of the key initial guiding principles that the trustees set from the very beginning, which was we were going to be a results-driven, data-oriented foundation. In fact, I'll -- I'll tell you this brief story. Probably the very first meeting of the trustees, Phil Younker, Jr., who I just talked about, asked people in general in the room, well, okay, so we're going to spend the beneficiary's money. How are we going to know what we're getting for those investments? And I remember several providers in the room stood up and said, oh, we've got all kinds of data. We can tell you how many people we served, we can tell you how many units of service we delivered, and we can even tell you the cost per unit of service. And Phil thought about that and he says, you know, all that tells me is that you spent all the money. I know you're going to spend all the money. What I want to know is if it's an employment program, how many people got jobs and still had those jobs six months later or a year later? If it's a housing program, how many people got housing and kept that housing? If it's a treatment program, how many people's symptoms got better? And so taking that guidance from the trustees, in -- in all of our efforts, we rigorously evaluate the results. In fact, even in the Harborview example, we then commissioned a follow-up study after deinstitutionalization, and went and found all of these 80 people that had been placed in the community and evaluated their quality of life. And we found two very interesting things. One is it was true, for some medically challenged residents, it had been a traumatic experience. But what we also found is that for many others, they started to function at a level that no one ever believed could be possible by putting them in a supportive, naturalized environment. People started cooking, people started doing their laundry, doing more of their self-help skills, and these were profoundly impaired individuals.
We did the same thing with Mental Health Court. And were able to document the effectiveness of this approach to serving beneficiaries in a way different from the normal Corrections approach. In fact, I always encourage people to go and actually watch the Mental Health Court in action. It is a totally different type of environment. The first thing you notice is that the judge primarily doesn't talk to the lawyers, which is how a normal courtroom works. The judge talks directly to the client and the clients stand up and they tell the judge how they are doing. Now, their case manager is there, so there's sort of a check and balance on this, the case manager may provide some additional information and clarify what's going on, but the main dialogue is between the judge and the client. And the goal isn't to punish the person, it's to encourage them and give positive reinforcement to the efforts that they are making to get their lives together, to the extent that most of the Mental Health Court judges, if somebody's doing well, they will give them a round of applause, and everyone in the courtroom will give them a standing ovation. Judges have been known to come off the bench and give people hugs to congratulate them for what they've been able to do.
And the epitome of that is I was in the Mental Health Court one day, and this woman came in who had been homeless and in and out of Corrections and API for many, many years, she was very well known. And she was now eight months into this process, and she had a stable apartment, she had a part-time job, and she was getting treatment, staying on her meds, and she looked great. I mean, she just looked great. And Judge Rhodes told her, you know, you are just doing so well, you know, I don't think I need to see you next month. You know, I think we can wait two months, you know, and have you come back. And this woman was crestfallen. And she said, well -- well, judge, are you sure I can't come back next month? I mean, that's how powerful this different type of relationship can be for these beneficiaries. Section 9:
So we worked on, again, developing that model, getting the data for it, and then we started to share it with legislators. And one of the legislators that went to see the Mental Health Court was Senator Lyda Green from the Mat-Su Valley. And Senator Green is a fairly conservative legislator, not prone to be extremely supportive of a lot of additional social service funding, and -- but when she saw the Mental Health Court and heard from people in her district about how these folks in her district with mental illness were being cycled through the criminal justice system and the courts and the jails and recognized the cost to the state of all of that, she called us in and said, I want a Mental Health Court in my district. Now, how much money in general funds do I need -- because I know you guys you are running the -- paying for the Anchorage court, how much do I put in the budget to create a Mental Health Court in my district. And I said, well, Senator Green, we'd love to help you with this, but here's the deal. We're paying about $250,000 for the Anchorage Mental Health Court, but in the startup years, it's actually more expensive because there are additional sort of one-time costs in terms of sending people out for training and, you know, some of these other things that you have to pay for. And so it would probably cost about 325- to $350,000 to start a new court for the first few years. And so why don't we -- and there's another thing here. And that is that these therapeutic courts require a lot of people in the system to get onboard. You've got the DA, of course, has to be willing to have these charges handled this way, you need a judge, the Public Defender has to be good with this, the probation officers have to be good with it, you have to get the community providers that are supposed to provide these supports onboard, and that's not always easy to do. And so you need someone who is holding the money and can negotiate the partnership by telling, say, the District Attorney's Office, all right, all right, yes, there are a lot more hearings in a Mental Health Court, what do you need, a halftime attorney? Okay. Here's $50,000. You know. Okay. You know, Public Defender. You know, you're going to need a halftime attorney, here's your $50,000. And -- and negotiate people into this partnership. And so I said, so here's the thing, Senator, if you will just put general funds into the Anchorage court at $250,000, we will take $350,000 of Trust money and I will send my program officer, Steve Williams, out to the Valley and have him put this thing together for you. And it will save you money, and it will make it more likely to happen. And you know, I got along really well with Senator Green, and she smiled and she said, "Jeff, I wasn't born yesterday, I know exactly what you're going to do. You're going to be back in here in three years asking me to put money into the Palmer Mental Health Court, because you're going to try and take your Trust money out." And I said, "Absolutely. Absolutely I'm going to come back in three years. But I'll tell you the difference. When I come back in three years, I will have the data on how well that court works, and then you, as a legislator, can decide if those results are worth that amount of money. If you don't think it is, then you shouldn't fund it. But if you do, then now, instead of investing money on a hope that something will work, you can invest in something that you know is working." And it worked.
And so we're gradually leapfrogging these Mental Health Courts all around the state. BILL SCHNEIDER: Using the same strategy?
JEFF JESSEE: Using the same strategy. And helping to -- to get the critical mass of folks in the communities that are interested in this model familiar with it and comfortable with it and understanding how to do it, and then providing that upfront funding that allows them to actually get the service working. Section 10:
Now, of course, the trustees initially -- these are somewhat unconnected projects, you can kind of see that, you know. There's one over here with developmental disabilities, and well, here's something with Corrections, and here's the court system, and you know, there's several others that we could talk about. And the trustees started to think after about four or five years that this shotgun approach was probably not the most thoughtful and strategic; that it worked initially as we were sort of figuring out how this worked, and getting the infrastructure set up, and getting experience with the legislature and the executive branch, but in the long run, we probably needed to focus our efforts in some specific arenas and try to make major systemic change over time. And so they -- with the help of our advisory boards, they went through a process of ident -- identifying focus areas. And they came up with five focus areas. One was disability justice, which you've already seen a couple of examples in that arena. Another was what we call beneficiary projects. This is a very fascinating area. In the mental health system, the traditional mental health providers have not seen peer support as necessarily a key component of a system of care, which is different than, say, in substance abuse where peer support is basically one of our primary ways of working on substance abuse problems. AA is basically a peer support system of care, but mental health came up and developed through the medical model. And so they tended towards treatment by a professional, medication, that sort of approach, not really seeing the value of peer support. And yet, springing up all over Alaska were small pockets of people who experienced mental illness that were banding together to support each other, often somewhat at odds with the established mental health system because they found value in mutual support and understanding. But they were just people meeting. They had no organizational structure, they had no financial support, they were just doing this out of the goodness of their heart, and it was a constant struggle.
Now, nationally, again, there were examples where clubhouses, drop-in centers were being developed in different areas. And so the trustees wanted to work in that area, and what can we do to support these beneficiaries that want to help each other rather than have them just be dependent upon the traditional mental health service system. And so we started engaging those groups, and it was tough going for a while because the initial thought was, well, if they are going to get structured and have a sustainable situation, then, gee, are they all going to have to become 501(c)(3)s and become a nonprofit? Well, a lot of stuff comes with being a 501(c)(3). You know, you've got to have a board of directors, you've got to have bylaws, and you know, you have to manage your finances, you've got to file IRS forms. Gee, these people don't necessarily want to spend their time running a nonprofit, they are just trying to help each other. And yet, if you want to go to light speed, if you want to get funding, whether it's from the Trust or from the government or from private donations, you've got to have something for people to give it to. And so when we first started, and the trustees allocated about a million dollars for supporting these organizations, about 15 of them around the state, we spent another half a million just on technical assistance. I mean, that was the ratio we needed to have because these groups were so embryonic in terms of their ability to function as an organization. And then we also developed what we called kind of a menu approach, which is, well, if you want to become a 501(c)(3), which some of them did, and some of them could, with support, that's fine, but maybe others of you could fit under the umbrella of another organization, and share their resources in terms of financial accounting and, you know, that sort of thing. And so we started to give them a lot of choices in terms of just how organized they wanted to be. And now, we have evolved to the point where instead of 50 percent of the amount of grants that we give, technical support is a little less than 20 percent because they've made a tremendous amount of progress in terms of becoming structured and organized and, you know, really able to hold their own, even to the extent now that we are training and certifying beneficiaries as peer support specialists, and they will be able to bill Medicaid for the value of their services. And now they are being employed by mental health centers in order for the centers to be able now to provide this additional type of service to beneficiaries in their catchment area. So this is a huge advancement in terms of empowering beneficiaries to do their, you know -- to manage their own recovery and not feel like they are totally dependent upon the professional mental health system for all of their recovery needs. Section 11:
BILL SCHNEIDER: What do those centers look like?
JEFF JESSEE: They are --
BILL SCHNEIDER: Not physically, but in terms of how they function.
JEFF JESSEE: Well, they have board of directors that are made up primarily of consumers, but the boards, part of the technical assistance is helping them understand that, well, that's well and good, we want you to -- want to support you in being consumer driven, but you need somebody that understands finances on there, so getting a banker on would be good. Having a lawyer would be a good idea. And so now other members of the community are on those boards, and -- and they operate like a -- many of them like a 501(c)(3), they are a 501(c)(3). And they not only receive Trust funds, but now they have the ability to go out and seek other grants. Some of them have partnered with their local behavioral health center and they are actually an arm of the center. BILL SCHNEIDER: What do they actually do? Do they do counseling or do they have events, or --
JEFF JESSEE: They -- well, let me give you an example. In Anchorage there's a Consumer Web. And the Consumer Web is a sort of a clubhouse model, and it's got a location, a building, and if you're a mental health consumer and you walk in the door, you're greeted by now I think three or four paid employees who are themselves consumers in recovery. There's always a coffee pot on the stove, they have a bank of computer terminals, you can go online and surf the net, do a Facebook page. They have consumers that volunteer to do carving classes, drawing classes. I mean, many of our beneficiaries are incredibly talented, and so they share those talents with the other people that come to the clubhouse. They read books, they hang out, they chat, you know, it's a place, a safe place to go and have access to these other sorts of things. It's not a treatment program. Now, many of the clubhouses like the Consumer Web have peer support specialists onboard that could help consumers access services if somebody comes in and -- and, you know, the peer support specialist says, well, how are you doing, you know, gee, you know, do you have a place to live? Are you homeless? Well, yeah, I'm homeless. Well, do you know how to get on SSI? No. Well, here, let me help you figure that out. You know. Here's a housing agency that we can call with you. You know, here's how you might get employment training. You know, and help connect them to services. But again, it's not a treatment program.
BILL SCHNEIDER: Let's stop and change tape.
Section 1: Key players in the development of the Mental Health Trust Authority framework.
Section 2: His role in the settlement negotiations and how he ended up doing a lot of work on the legislative side of the process.
Section 3: Mentors in the Alaska State Senate that helped Jeff work through the legislative process to get the Mental Health Trust settlement passed.
Section 4: Acceptance and approval of the Mental Health Trust settlement bill, and disagreements between the attorneys over the final outcome.
Section 5: Success of the Mental Health Trust’s Land Office, and how he became the Chief Executive Officer of the Mental Health Trust Authority.
Section 6: Applying the model of the structure of the Mental Health Trust Authority to other state programs, such as education.
BILL SCHNEIDER: So this rather innovative structure and organization, who were some of the people behind it, the drivers that made that happen?
JEFF JESSEE: Well, different parts had different authors. The separate appropriation bill and the conference of integrated mental health plan, I think that goes all the way back to the work that Jim and David did early on with Arliss Sturgulewski in the senate Health, Education and Social Services Committee. That's where the programmatic pieces were incubated is going way back there.
As far as the asset pieces, Julian, of course, Julian Mason, was leading the discussions about the settlement. And I don't know if they were so much his ideas as sort of the obvious solutions to barriers to making this deal. For example, on the land, when the development community balked at the idea of a new entity, a new bureaucracy being created, well, that meant they wanted DNR to manage it. And so the issue there was just, you know, could DNR appropriately manage this land. And in fact, that would become a major dispute in the approval process. Jim and David were adamant that DNR could never properly manage this land under any scenario, and we were more confident if they were entitled to develop regulations that would be different than DNR's normal regulations, that yes, they could. The Permanent Fund was also sort of a no-brainer. Again, the legislature didn't want this unknown gang of seven coming out of nowhere to get their hands on $200 million. And so somebody else had to manage the money. Well, who do we know with the expertise and ability to manage very large sums of money? Hmm. Well, that's a small pool. That's the Permanent Fund Corporation. So those things kind of just fell out naturally as the settlement progressed. Section 2:
BILL SCHNEIDER: Good. Well, let's get back to your career, then.
JEFF JESSEE: Uh-hum.
BILL SCHNEIDER: You were actively involved in these negotiations.
JEFF JESSEE: Yeah, I was. And -- and in some ways, I had perhaps some of the best access to the legislature. And the reason for that is I was the only one of the four attorneys who was working for a salary and not being paid by the hour. And there was a fair amount of resentment, particularly of Jim and David, in the legislature for the fees that they were collecting. I mean, they were substantial because they were doing a lot of work and the state had been ordered to pay interim fees. So they were getting their fees paid, and there was a lot of talk in the legislature about, well, no wonder this case is going on so long. Now, I always felt that was pretty unfair because, you know, I never thought Jim and David were doing anything other than trying to resolve this as quickly as they could, but you heard that a lot in the legislature.
And even Philip, you know, was collecting interim fees and that came up. Well, I was making $50,000 a year. And so a lot of times they were more willing to talk to me than they were to talk to some of them. You know. And so that's a period of my career when I got more involved with the legislature. And -- and actually, interesting story was the director of the Resource Development Council at the time was Debbie Reinwand, and Debbie had been involved in sort of the Resource Development Council's urging the legislature to settle this case and clear this title and get development moving, and as this was all progressing, I was talking to Debbie saying, yeah, you know, I've got to do this legislative stuff, and you know, I don't really know how things work down there. She says, well, go talk to my dad. You know, Jerry Reinwand. He's like a big-deal lobbyist in Juneau.
And so I called Jerry Reinwand up and I said, you don't know me but I'm just this little nonprofit lawyer, but I'm in this big case and I've got to get this legislative stuff going, I have no idea how this works. And so Jerry said, yeah, come on down. And so I went over and Jerry took me around and explained how the game went, and what's on the surface and what's underneath, and you know, was a really valuable mentor to me. All, of course, at no charge.
BILL SCHNEIDER: Yeah, what was his investment in this? JEFF JESSEE: Well, Jerry, you know, had been involved sort of tangentially in this when he was the chief of staff for -- I think it was Hammond. Well, you'd have to check. But you know, Jerry Reinwand was chief of staff. And so he had kind of an interest in it. And I think a sensitivity to the beneficiaries. I think he thought it was a fundamental issue of fairness. Jerry Reinwand is a very principled person. I mean, yes, he's a lobbyist and he works for clients and he gets paid and he'll lobby for, you know, who will pay him, but I think he did have a soft spot for the beneficiaries, and his daughter had asked him to help me out. So, you know, he was very helpful. Section 3:
As ultimately was interestingly -- well, of course, one of the -- the most important legislative mentors I had was Jim Duncan, a Senator from Juneau who carried the mental health bill, settlement bill for many years, and was a leading force in getting the settlement approved. And in fact, in one of the, I think, little recognized acts of -- of statesmanship, he allowed the House Bill to be the final vehicle for the settlement, even though he had been primarily the bill carrier for many, many years and, by all rights, was entitled to have his bill be the vehicle. But just the way the politics were playing out, it needed to be the House Bill. And a number of us went to Jim and explained the situation -- of course, he -- he was pretty familiar with it -- and he did, he receded. Which, you know, acts of statesmanship often don't get the play that more selfish political actions do, but... And another important player in my relationship, I mean, Jim Duncan, I used to go in all the time and get advice from him. And then Senator Halford was very helpful to me, someone that I could go in and talk to and get advice from. In fact, I remember once, I don't remember what exactly was happening, but our bill was held up in a committee, and I went into Senator Halford and I said, I think it's a conspiracy. You know, I think these guys are doing this and these guys are doing that and the AG's doing this, and you know, I need to know how to, like, figure this conspiracy out. And I remember the Senator leaned back and he said, Jeff, you know what I've learned? He says, you know, sometimes when you think there's a conspiracy, simple incompetence can explain the evidence. And I remember thinking, huh. You know, that would fit these facts just as well as some sort of coordinated conspiratorial plan that all of these desperate people have pulled together. So he was very helpful. So in any event, I ended up doing a lot of the legislative work. Philip didn't like the political end of it as much. So I ended up -- and he didn't have the time. And I ended up working on this case pretty much full time. In fact, a big watershed for me was probably about two years after -- after I intervened, Philip actually came to me and said, Jeff, I bet you haven't thought of this, but you should quit Disability Law and take this case with you, and you'll retire in five years. And you know, I -- I remember at the time having a big discussion with my closest advisors about it, and decided, basically, I don't think I could live with that because, I mean, everyone would know that's the only reason I did it was for the money. And, not making the money was what was giving me the access. And we needed somebody that had the access to the legislators to keep working this issue. Section 4:
BILL SCHNEIDER: So then the bill passes?
JEFF JESSEE: The bill passes. The -- Jim and David, even though Jim had been, oh, incredibly helpful in selecting the land and in helping to shape the language of the final bill, he and David then opposed the settlement. And -- and their basis for that was that it was not an adequate asset side, that we had given away too much in order to get the power of the authority. And again, I think that that's a testimony to both Jim and David's commitment to the beneficiaries is that, when we were in the middle of negotiating this, they were instrumental in helping us get the best deal we could get. And we often used them as a foil to leverage concessions out of the state and others. But once they had helped us get the best bill we could get, then fundamentally, they still didn't agree it was a good settlement and opposed it as being not enough.
And significantly, Jim in particular, didn't believe DNR could ever manage this land properly. In fact, one of the more interesting side events, sideshows, if you will, about the hearing that we had on the approval of the settlement in front of the Superior Court here in Fairbanks, Meg Greene, was when Jim tried to qualify Greg Erickson as an expert in bureaucratic psychology and behavior, a little known specialty field. And Greg was going to testify that basically, no one that worked for DNR could ever really manage this land in the best interests of the beneficiaries. And there was quite an argument over whether he would be qualified in this area. And I'll never forget after a lengthy voir dire by Julian and Philip who tag-teamed Greg mercilessly, Judge Greene finally announced that whereas Alaska had a -- a very low standard to be qualified as an expert witness that she found that in this area Greg met that very low standard, and she would take his qualifications into consideration when she considered the weight to be given to his testimony. So that was a little touchy for a while getting the settlement approved. Section 5:
As it turns out, these pieces worked even better than we had hoped. The DNR piece, I think the Land Office has done a very good job of managing the land. I think even Jim would probably agree with that today.
And in fact, there was some unintended benefits that came out of that. One was that if you go into a DNR office and say you want to buy some gravel from the state, or you want to buy some timber for firewood or even a timber sale, you know, the state will tell you, oh, sure, we'll have to go through a public notice process and we'll have to consider other public uses and, you know, here in a year or two, we could probably get you a permit. But you know, there is this Trust Land Office, and they've got a million acres and they are much more nimble. So you may want to go talk to those guys.
So inadvertently, we ended up with this huge referral network where DNR offices all over the state were referring people to the trust. Still do -- in order to help people get access to resources. So it's actually worked out very well. But, of course, the big success is the -- is the program side. And so when the trustees got appointed, they had no staff, they had no office. And so I actually started acting as their staff, for all practical purposes. I mean, somebody had to draft bylaws and that sort of thing. And the way the original staffing pattern was set up, there were two positions. There was an executive director, a CEO; and an investment officer. Well, I had avoided studiously becoming the executive director of the Disability Law Center several times. My feeling was I always wanted to do the work, I didn't want to run the shop and, you know, order pencils and worry about the budget and, you know, I wanted to go out and do stuff.
And so when they started advertising for these positions, I actually applied for the investment officer job, even though I had very little, if any, background in that area. And of course, I had been working with the trustees for, you know, probably six months while they were getting organized. And I'll never forget, they asked me to interview for that job, and I went in and it was the worst hour of my life. I mean, they grilled me up one side and down the other. Well, how many portfolios of more than $100 million have you managed? And you know, what about this and what about that? And you know. Just basically making it very clear that I was totally unqualified for this position.
So at the end of that hour, I got up and I sort of was hangdog, and I was heading to the door, and Nelson Page was the chair. And as I got to the door he said, Jeff? And I said, yeah? And he says, so what are you doing for the next hour? And I said, well, I guess I'm going back to the office. He says, well, if you have another hour, we'd like you to stay and interview for the CEO position. And then I got it. And a very different interview. And it was a natural fit. I mean, they needed somebody that understood the settlement, you know, why things were set up the way they were; somebody who knew the beneficiaries, and understood the mental health program, and I was in the right place at the right time. Section 6:
BILL SCHNEIDER: Boy, there's a whole chapter here that -- that we haven't gotten to. What we've got has been really good, but then there's the whole period of, okay, as CEO, for the -- how many years?
JEFF JESSEE: Almost 15.
BILL SCHNEIDER: -- almost 15 years, there's probably been lots of issues and lots of successes and things that were a little different and things that we ought -- ought to record. And so I think we should probably stop at this point and I think we're going to have to do -- do more later.
JEFF JESSEE: That would be fine. BILL SCHNEIDER: Is that okay with you?
JEFF JESSEE: Oh, yeah, because the fun part of the story is yet to come.
BILL SCHNEIDER: Oh, okay. Well, we'll -- this has been fun so far.
JEFF JESSEE: No, I think that if we have a chance to talk about how the trustees figured out how to use this tool, and --
BILL SCHNEIDER: Yeah.
JEFF JESSEE: -- and what we've been able to do with it and the strategies we use, it's -- I mean, this framework is unique --
BILL SCHNEIDER: Right. JEFF JESSEE: -- but the use the trustees have put it to is just phenomenal. There's really nothing like it.
And you know, I really -- I know it's because I'm in this, but I think this type of a model is something that could be applied to public programs on a huge scale. I mean, I tried to get Tony Knowles, when he wanted to do an endowment for the public schools, you know, I talked to him and I said, Governor, you'll never get enough money, because I kind of understood this stuff now. You know, I said, you'll never get an endowment large enough to generate the $900 million you need for the foundation formula. And if you don't get enough to do that, it's just like the Mental Health Trust. If it only produces 400 million, then the legislature will just take that 400 million and reduce their appropriation, and you won't end up with any more money. I said, you'd be way smarter to take a much smaller amount of money, say, 3- or $400 million, which you could probably get, and set it up like the Mental Health Trust because now every dollar that education gets ends up having to go right into the classroom because they are always struggling to -- to meet basic needs. And there's no venture capital. I mean, everybody wants education to reform, but they don't give school districts any flexible funding to try reform. And I said, you know, if it produced 40- or $50 million a year, the way the Mental Health Trust would if you scaled it up a little, that could transform education. And you know, the only people that have kind of tried that are Gates, and the problem with the Gates Foundation is they have fallen victim to what a lot of foundations fall victim to is they would -- they are just going to tell them how to do it. You know, so you don't really get innovation from the field, you get alleged innovation from the funder. And when we get a chance to talk about it, that's one of the lessons that we learned and why, when we work on our focus areas, we do it through stakeholder work groups that basically have, through the trustees, the ability to create strategies to work on these problems and bring the kids home.
It's just one example of publicly driven effort that has been phenomenally successful. We're under 120 kids. BILL SCHNEIDER: And I think, too, the Harborview example that you gave.
JEFF JESSEE: Harborview, therapeutic courts. You know, I mean, it just goes on and on and on.
BILL SCHNEIDER: Well, we need to get into those with you.
JEFF JESSEE: Yeah. Well, that will be fun.
BILL SCHNEIDER: Ok. Thanks.
JEFF JESSEE: Yeah.
BILL SCHNEIDER: Thank you very much.
Section 1: Developing ideas for how to re-work settlement of the Mental Health Trust lawsuit, and involvement of Anchorage attorney, Julian Mason.
Section 2: Involvement of stakeholders in making decisions and negotiating details of the Mental Health Trust lands aspect of the settlement.
Section 3: How the Mental Health Trust Authority obtained its current office in Anchorage.
Section 4: Continuation of how the Mental Health Trust Authority obtained its current office in Anchorage, and disparate stakeholders working together to negotiate a settlement.
Section 5: Assessment, valuation and selection of the land for settlement of the Mental Health Trust lawsuit, and back and forth negotiating with the State of Alaska.
Section 6: Negotiating options for management of the Mental Health Trust lands and assets as part of the settlement, and developing the idea of the Mental Health Trust Authority framework.
Section 7: Integrating the Mental Health Trust Authority with the state’s existing mental health programs to produce a comprehensive mental health plan, and negotiating with the state legislature and administration over management of the programs and budgets.
BILL SCHNEIDER: So you guys were back in the game?
JEFF JESSEE: We were back in the game. And now we were in the front of the pack as opposed to the back of the pack. And so we started fleshing out some of these ideas that we had about how to maximize the benefit to the beneficiaries regardless of whether we ended up with a hundred percent recovery on the asset side. And a story I tell about that is that the issue was control; who was going to control the assets in the trust. Was it going to be the legislature or could we find some way of developing a substitute trustee that could have more control over whatever assets we got. And the story I tell, it's a true story, my daughter was just a little over 2, and a very bright child, and I took her to Carrs, and I showed her $20. And she knew $20 was a lot of money. And I said, Morgan, you can have this $20, but here's the deal. We're going to go through the store and I'm going to pick out $20 worth of things that I think would be really good for you, or you can have $2, but you can get anything you want with your $2. And at a little over 2, she asked me one question, anything? And I said, anything. And she had those $2, and we left with the biggest package of Skittles I've ever seen in my life. And at just over 2, she knew that $2 you controlled was way better than $20 that somebody else controlled. And that actually formed the basis for our approach to settlement, that it would be way worth it to give ground on the asset side if we could construct a framework in which a trustee would truly act with an undivided duty of loyalty to the beneficiaries. And so we took the beginning framework of the Trust Authority that Jim and David had worked on and put teeth into it, and -- and worked on that side of the equation, but the asset side was still tricky. You know, we couldn't just write off half a million acres. And then Harry did something that turned out to be, well, I think without a doubt, one of the best things that he did toward settlement is he hired an attorney named Julian Mason of Ashburn & Mason in Anchorage. And Julian was a very -- is and was a very well-known and respected attorney who had settled, negotiated and settled on behalf of the state some of the big oil tax royalty cases in the past, and definitely a heavy hitter. And so Harry brought Julian in, and said, here, I need you to work on settling this case with these guys. And Julian is one of the most incredible people I've ever met. First of all, he's just flat out brilliant. I mean, he's just brilliant. Second, he's totally unassuming and exceedingly polite and kind, and you know, even though I was still way out of my league, you know, Julian was -- always treated me with great respect. Section 2:
And Julian -- it doesn't seem like much now, but Julian had this sort of basic way of going about being a catalyst for settlement. He took a legal pad and he turned it sideways and he made a bunch of columns, and then he listed each of the stakeholder or interest groups or antagonists in this whole drama in each of the columns, and then he went around and interviewed them all. And said, well, what do you need out of a settlement for this to be a success for you? And you know, of course, the coal miners needed their leases cleared and the ability to lease additional coal lands. Local governments that had selected good trust land wanted good title to the lands that they had selected. Of course, the moms and pops, the people that had gotten little parcels needed to have their title cleared. The environmentalists were concerned about any additional environmental degradation or development of pristine areas, and they didn't want to see that happen. And of course, Philip and I needed to see that there was a way for the assets to be used on behalf of the beneficiaries. And so after he had sort of filled out this chart, he got us all together in a room and said, well, I guess this is how it has to work. There has to be some replacement land but not too much and not the wrong kind, and all of the existing leases and ownership has to be cleared of title, and you know, kind of goes down the list, and there has to be a trustee, a substitute trustee, and you know, let's get busy. And so we started negotiating with all of these folks, which was really the first time that the stakeholders had been that intimately involved in the negotiation process.
And so we sat down and we got to, well, let's say timber. We knew what -- we were losing a lot of timber, a lot of the big trees in Haines and areas like that, so we needed to get some timber back. You know, and of course, half of the land we could still get back. So we started with a half a million, we needed about another half a million acres of replacement land.
And so okay. The environmentalists came in and said, well, we don't want you to have any pristine timber, you know, old growth or, you know, stuff that hasn't been logged, so if you're going to get timber, get it where timber is already being harvested, Icy Cape, Thorne Bay. Well, that was good for us. You know, those areas already had log transfer facilities, they had roads. If you're going to go into the timber business, it's better to get timber lands near other timber activities. And so we were able to get some timber back. When it came to local governments, they wanted their selections honored, so they were told they had to kick something in. And so basically, each community said, all right, all right, you know, we don't want to give you this original trust land because, you know, we have something going on here, but here's this other piece of municipal land, we'll give you this. Section 3:
And in fact, there's a sidebar story, that's how the trust ended up with our office in Anchorage, by mistake, as it turned out. I don't know if you want to hear that story.
BILL SCHNEIDER: Yeah, sure. Sure.
JEFF JESSEE: Oh, this is a great story. So we're looking at all these maps, and there's this parcel in Anchorage that starts at Northern Lights and Bragaw, and there's a big empty lot, and then there's the Trust Authority building. Well, the Trust Authority building was originally built in the '80s by a consortium of five nonprofits: Campfire, Youth and Parent Network, a couple of other organizations. And again, in the roaring '80s, they had gone to Juneau and talked the legislature into giving them several million dollars to build this building for them to have their programs in; and then got the Municipality of Anchorage to give them a dollar a year lease for 25 years on this parcel, which included not only where the building was built, but also this vacant lot on the corner, which is a very valuable piece of property.
And so when -- and Jim was helping us with the land selections, you know, because, you know, now, we had sort of made up. BILL SCHNEIDER: Jim Gottstein?
JEFF JESSEE: Jim Gottstein. And so we looked at that parcel. And at first we were sort of saying, well, no, let's not take this because the -- you know, these nonprofits, you know, have this building, and the parcel wasn't subdivided. And we don't have time to subdivide it. You know, so, nah, let's not take it because, you know, they own the building and that won't work. Well, but then Anchorage didn't really want to give us anything else, and so we ended up coming back to it. And -- finally we decided that, well, no, why don't we go ahead and take it. We won't get the part the building's on, but later, you know, we'll subdivide it and then we'll have the corner parcel. And so we said, all right, all right, we'll take it. So it goes on the list. Well, long after the settlement was done, and the Trust Land Office came into existence, somebody went, at the Land Office, and read the lease that the municipality had given the Family Resource Center. And it turns out that under the terms of the lease, at the expiration of the lease, all the improvements returned to the ownership of the landowner, which apparently is a fairly common lease term. Well, that would have been okay if the muni still owned it because they would have given the Family Resource Center another dollar a year lease on the building and the land, but we were going to own it. And we couldn't do that because we had to get fair market value. Section 4:
Well, the problem was that, over the years, some of these agencies had either gone out of business or had moved to bigger quarters, and the survivors in the building, rather than bringing other agencies in to use that space since it was so cheap because all they were paying were operations and maintenance, they had just expanded. And so Campfire, for example, had a huge percentage of this building occupied. Well, they were going to have to pay fair market rent. Well, they couldn't afford it.
And they were very unhappy. In fact, I remember when the Land Office called and told me that, hey, by the way, you know, we're going to get ownership of this building. I remember going, oh, no. This is going to be a mess, a big mess. And it was. And because they thought they -- they had no idea this lease read like this; those agencies thought they owned the building. Well, they didn't own anything. And so we tried to help them as best we could and -- and it took a couple of years for them to kind of get used to the idea, but eventually -- and we helped them financially -- they had to move. And so we ended up with this building. The state -- we were in the Atwood Building in downtown Anchorage, and the state's a terrible landlord. And so finally, we decided that, rather than keep fighting the state for more space in the Atwood Building, we would just go to our building. So we accidently ended up with the Trust Authority Building. But that was an example of how we cobbled together all this replacement land. In fact, this group became known as the Unholy Alliance because you had the miners and the developers sitting down with Cliff Eames from the Center For the Environment and, you know, and then once we had kind of negotiated this package, then we were all selling it in the legislature. Section 5:
BILL SCHNEIDER: But you didn't have a background in lands. How did you do the assessment planning?
JEFF JESSEE: Well, that was really Jim's job, Jim Gottstein.
BILL SCHNEIDER: Yeah.
JEFF JESSEE: And he had a former Division of Lands director, Tom Hawkins, who had worked for Jim for a number of years on the land side of the settlement. And so they had a whole Land Office. And so we worked with them very collaboratively, and they pored over the different proposals for this parcel or that parcel, and checked out the record of title and uses and existing obligations and made sure that, you know, it was worth taking. Now, the -- the problem was, of course, we weren't getting back land of nearly the value of our original trust land, and as you know, in a rather controversial process, the total land million acres, original million acres had been valued at 2.2 billion. And so we weren't getting that value back, and so the idea was, well, we needed to get some cash in addition to the replacement land to help make up this difference. And I always thought that in these billion dollar cases and you were talking about hundreds of millions of dollars that that must be arrived at in some very scientific, thoughtful, data-driven sort of process. No. We said 400 million, the state said 50 million. We said 300 million, they said not a penny more than 100 million. We said 250 million or we're out of here. You know. They said 150 million is our last best offer. Everybody went away mad. We came back together a week later, I don't even know who it was, somebody said 200 million, and the other side said deal. Section 6:
And so now we have our million acres of replacement land. Well, a million acres total, half original and half replacement, and $200 million.
Now the question was, well, how was it going to be managed. And, well, we had this Trust Authority concept, but there wasn't an actual Trust Authority. And the legislature was pretty uncomfortable turning over management of these assets to an unknown, unproven entity, as were others.
I mean, the development community wasn't crazy about some new land manager springing up out of nowhere. And of course, $200 million in cash is a lot of money. And so the idea was, well, all right. What we'll do is the cash will be managed by the Permanent Fund Corporation. It will be like a mutual fund, it will be managed as part of their portfolio, and we'll pay our share of expenses and get our share of their profit or, most recently, loss. The land we managed by a separate unit within DNR called the Trust Land Office. They'll have their own set of regulations because you can't manage trust lands under the type of public interest balancing that DNR has to do for public lands, general public lands. And the trust will pay for the Land Office to manage the land. And then, of course, the key to all this was that the Trust Authority had to have the ability to oversee the management of these assets and to spend the income without a legislative appropriation, which was huge, and engendered a fair amount of resistance in the legislature because, after all, that's why they are there is to spend the money. And so this delegation was difficult for them to accept as part of the settlement.
But at this point, people were pretty desperate to resolve this case. And once the asset side had kind of gotten resolved, the land was an arrangement that everyone could live with because it wasn't contingent on something happening later. We had the list of every single parcel. So everybody knew what was going to go back into the trust and what wasn't. The cash was manageable as an appropriation. And so eventually, the legislature agreed to this overall framework. The one -- one of the exceptions was Senator Tim Kelly who passed away not too long ago, called me into his office one day as we were nearing the final phases of getting the settlement approved, and he says, I'm putting an amendment in here. And I said, well, what did you have in mind, Senator?
He says, well, yeah, I understand that this Trust Authority is going to spend this money on the mental health program, but you know -- without a legislative appropriation, but that's not going to work for their administrative budget. We're not giving some bureaucracy the ability to spend unlimited amounts of money on themselves before -- without any supervision or oversight. So I'm putting an amendment in here that the Trust Authority's administrative budget does require legislative approval. And at the time, I remember calling it the Briar Patch Amendment because that made a lot of sense to me. You never want a bureaucracy that can pay itself first. Now, had I known I would become the CEO, I might have been a little more concerned about this amendment, but it -- it made total sense. In fact, it still does today. And so with a few modifications like that, we were able to -- to get the settlement approved. And passed by the legislature. We had not yet gotten Court approval. Section 7:
BILL SCHNEIDER: What about the connection between Health and Social Services and the Mental Health Trust? Was there a provision in there for Mental Health -- Mental Health and Health and Social Services to work in conjunction, together?
JEFF JESSEE: In a couple of significant ways. One was that there was one thing Jim and David brought up in the course of the -- what I called the circle-the-wagons-and-shoot-inward phase when we were arguing over whom the beneficiaries were going to be, and that was that the state had fragmented these beneficiary groups and put them in different departments, in different divisions, and there were separate plans. And going back even to the Enabling Act language, the intent was to have a comprehensive and integrated mental health program. And so we wanted to go back to that concept. And so we did that in a couple of ways. One was we required Health and Social Services to develop a comprehensive integrated mental health program plan in conjunction with the Trust Authority. Now, that word "conjunction with" was critical because we had to find a word that basically no one really knew what it meant, but it conveyed some kind of a partnership. BILL SCHNEIDER: Tell us a story of how that word got used -- developed.
JEFF JESSEE: Well, for a while, they were saying, well, the Department of Health and Social Services is going to develop this plan. Well, that was unacceptable to us because the bureaucracy would serve its own interests over that of the beneficiaries and we weren't interested in that. Then we went through a phase where the Trust Authority was going to develop the plan. Well, that was unacceptable to Health and Social Services because, you know, they weren't willing to have some outside entity drive the department's priorities. And so we started saying, well, all right, it has to be some kind of a partnership, but someone needs to be in charge. And so we tried a whole bunch of different words. And I remember sitting down one day and writing out, well, in cooperation with, you know, with advice from, consultation with. I mean, went through all these things, and then finally we got to this "conjunction." And we said, well, what does that mean to do something in conjunction with someone? And everyone said, well, I don't know what that means. And we said, well, that's good because you didn't want to be nailed down very tightly to this. So that was the first thing planned. The other thing was the budget was all over the place. And so there was nowhere that you could get a look at the entire mental health budget at once. It was broken up into these little pieces and parts. And so we came up with the idea of a separate appropriation bill just for the mental health program. And there were two ideas behind that. One was it would give people a chance to see the entire mental health budget in one bill, both trust funding and general funds, and it would elevate -- in our hopes, it would elevate mental health to a status more like education and transportation and public safety. You know, it would be a big piece of the budget scenario and would be easier to advocate for. And so we created this separate appropriation bill with the planning process. And then we threw one more little wrinkle in there. And that was that the trustees would recommend to the Governor and the legislature not only what trust funds they could spend but also what they should spend out of the general fund because one thing the settlement made clear is that the settlement didn't obviate the state's responsibility to provide for the mental health program of the state. For one thing, we knew this trust with reduced assets was not going to generate enough money to fund all these services. And so we were very specific in the settlement that the trustees would make this recommendation, and that if the Governor or the legislature failed to follow those recommendations, then they would write the trustees a letter and explain why they didn't. And that has worked sometimes better and sometimes not over the years. It is an opportunity to have policy dialogue between the legislative and executive branch and the trust. You know, particularly in the case of the administration, the executive branch, they are often, and particularly under the current administration, pretty articulate and able to explain what their thinking is. The legislative letters tend to be a little less -- I don't know if I want to say coherent, but you know, I mean, that's a budget that was put together by 60 people, so there were probably 60 reasons why they did one thing over another thing. Now, there's no consequence for anything, I mean, and frankly, most of the reasons come down to we didn't have enough money, but anyway, it was a -- an attempt to -- to get that dialogue going back and forth between these branches of government and the trust. And as it turned out, the strategies the trustees used for administering the trust generated a lot of that policy discussion in any event.