StarVista to seek merger

Last month, StarVista informed employees of the most recent closures, stating that despite the team’s best efforts, it has “not been able to achieve the long-term sustainability” it needs, according to company emails, and would be pursuing a merger with a larger, unnamed nonprofit.

Just a few months prior, the company abruptly announced a two-day payroll delay, laid off 26 people, furloughed about 44 employees for nine days and announced it was closing a counseling center, which provides therapy for Medi-Cal beneficiaries.

Former Chief Financial Officer Mike Bilby, who joined the organization in November, said in a March meeting that for years, StarVista had short-term lines of credit to cover payroll, which is “incredibly scary” for an organization of that size, and in March, their “luck ran out,” according to an audio recording of the meeting obtained by the Daily Journal. On March 19, a company email stated the board had “determined that a leadership change is needed” and announced that CEO Sara Larios Mitchell was taking a leave of absence.

A recent email stated Bilby decided to leave the company, effective July 1.

In addition to the counseling center, as well as the most recent early childhood program and First Chance sobering station, the organization has also announced the closure of several other programs over the last couple years, including a detox center, women’s enrichment center and DUI programs.

Impact of closures

The 22-year-old First Chance program served as the county’s only sobering station that was a jail alternative for those arrested for driving under the influence. It was suspended in May and closed for good as of June 11, according to StarVista email last month.

The early childhood department shuttered June 30, which included staff layoffs.

That wasn’t the only DUI-related program to close in the county over the last couple years. StarVista had closed the county’s only 18-month DUI program — required for multiple offenders — which had also happened to be one of the few that offered classes in Spanish. Its Pacifica-based DUI program also closed earlier this year. There are now only two DUI-related programs in the county, which are only for first-time offenders.

Mitri Hanania, managing attorney at the San Mateo County Private Defender Program, said private defenders and their clients are increasingly having difficulty finding programs for their clients.

“They have so many people applying that they can’t take in everybody, so you get on a waitlist, and that's where the problems start to occur,” Hanania said. “Because if you’re not enrolled, you're not in compliance with the court and you are unable to reinstate your license to be able to drive.”

Concerns over program closures extend beyond DUI programs. Other treatment facilities have closed in the county over the last year, not just those run by StarVista but other nonprofits, including Caminar, which has closed at least several programs over the past year, including a 60-year-old crisis residential center and assisted outpatient treatment program, resulting in laying off about 10% of its workforce.

Some nonprofit have placed much of the blame on CalAIM, which was an overhaul of Medi-Cal, the state’s Medicaid system and changed the way providers are reimbursed for their services. Caminar CEO Mark Cloutier previously stated the behavioral health nonprofit is going to have to start investing more heavily in programs funded by private insurance companies, rather than Medi-Cal-based programs if more funding isn’t given.

Oversight

While acting CEO Shareen Leland has previously stated that CalAIM affected some of StarVista’s finances, many others believe the organization’s troubles are more attributable to shoddy financial oversight and mismanagement. Just a year and a half ago, StarVista’s former clinical director Clarise Blanchard was charged with embezzlement, accused of funneling about $700,000 worth of donations intended for StarVista to a personal account from around 2009 to 2022.

While District Attorney Steve Wagstaffe said he is not aware of other active embezzlement investigations with current leadership, sources familiar with the organization have said Blanchard’s embezzlement case speaks to the general lack of oversight from the board and were not surprised to learn about Mitchell’s abrupt leave in March.

“It’s a systemic issue,” one source previously said, adding the company’s financial practices are “very loose.”

Multiple director-level sources who have worked for StarVista said they noticed dubious line items that were budgeted into their programs’ contracts. They included a child and family program budget showing about $23,000 in expenses for rent and phones, despite staff working from schools and not receiving cellphones or having an office to work from, a source familiar with the program said. A similar instance happened with a foster youth program, another school-based program, that included similar types of line items for a program with only a few full-time staff, one source said.

Another former director never got a clear answer as to why their program contracts continued to include the same amount of rent – $50,000 — as a line item, even after it downsized its office and began to share it with several other programs. Other allocations, such as $30,000 for internet and phones, also raised red flags, given the relatively small department, a relative lack of reimbursement for any supplies and sharing basic resources, including laptops, she said.

“When I became a manager, I started seeing a lot of things that were off as far as budgets,” she said.

StarVista has not responded to requests for comment.

The abrupt notice of closure has also raised ethical concerns, another source said, noting staff were only given about eight working days to inform clients and help transition them to other organizations.

“It felt unrealistic and almost impossible,” she said. “There was no transition plan at all ... we had to come up with the resources for the transition ourselves.”

County involvement

Jei Africa, director of the county’s Department of Behavioral Health and Recovery Services, said the county assembled an ad hoc committee to figure out gaps in services as a result of the closures, some of which has been more seamless than others.

“The one that we are concerned about right now is the sobering station, which is really an important service,” Africa said. “The committee has been trying to explore with entities out there who would be interested in taking it over.”

The closures and seemingly abrupt financial issues also raise questions over how the county ensures the nonprofits it contracts out to for essential behavioral health programs are fiscally sound and can deliver critical services without major disruption.

County contracts stipulate providers must provide them with an audit report and financial statement each year,

“We don’t do that multiple times in a year,” Africa said. “It might be good to do it more regularly as part of our standard process but we do … look at the viability.”

StarVista’s 2023 financial report — the most recent one available on its website — did not raise alarm bells, though it mentioned that the audit does “not express an opinion on the effectiveness of StarVista’s internal control” and that “material weaknesses or significant deficiencies may exist that were not identified.”