Millions in state and county tax dollars have been funneled to Evergreen Foundation, a mental health nonprofit serving the seven western counties. Yet it operates without public oversight.

The board of Smoky Mountain Center, a state mental health agency for the western counties, fears Evergreen has strayed from its mission and needs realignment.

“I don’t know that anybody ever envisioned a day that there would be such a disconnect between Smoky Mountain Center and Evergreen Foundation,” said Shelly Foreman, community relations coordinator for the center.

Evergreen, meanwhile, is resisting forays by Smoky Mountain Center to exert control over the nonprofit and its finances. Evergreen has even accused Smoky Mountain Center of a money grab.

“I cannot in good faith stand by and let [Smoky Mountain Center] raid the foundation,” said Hugh Moon, a member of the Smoky Mountain Center board. “It sounds to me like [Smoky Mountain Center] is saying we want your money.”

However, the money in Evergreen’s coffers was given to it by Smoky Mountain Center in the first place. Evergreen has $20 million — and nearly all of it stems from tax dollars earmarked by the state for Smoky Mountain Center.

“The funds came from the public purse and have always been intended for use on behalf of Smoky Mountain Center and its constituents,” said Brian Ingraham, director of Smoky Mountain Center.

Instead, Evergreen has enriched its own balance sheet, according to Smoky Mountain Center (see related article).

Now, Smoky Mountain Center wants Evergreen to come back under its auspices rather than operate independently.

County commissioners from all seven western counties have unanimously joined the call.

“We unanimously concluded that the money was public money, and it should have public oversight,” said Joe Cowan, a Jackson County commissioner.

Smoky Mountain Center wants control over who sits on the Evergreen’s nonprofit board, with the aim of stacking the board with many of its own members. But to do so, the current Evergreen board would essentially need to dissolve itself and agree to the new structure.

“All the other disagreements can be overcome if we can figure out a system of governance that both boards support,” said Ronnie Beale, board member of Smoky Mountain Center and chairman of the Macon County commissioners.

But that seems unlikely. Instead, it appears the boards of Evergreen and Smoky Mountain Center have reached a stalemate.

“I will never vote to dissolve. I would never support any governance other than the way we are going right now,” said Don Bunn, an Evergreen board member from Swain County. “I was offended by the accusation that we were not properly handling the money.”

A joint meeting between the two boards will be held this week. The last such meeting failed to reach a consensus.

The board of Smoky Mountain Center has indicated in a letter to Evergreen that it will pursue legal recourse if diplomacy fails.

Evergreen’s board may well test Smoky Mountain Center’s resolve to follow through with that threat.

Moon said it would be “blatantly inappropriate” for the foundation to be under the oversight of Smoky Mountain Center.

“I will do my best to ensure it remains a private nonprofit,” Moon said.

The nine-member Evergreen board meets only four times a year. Its meetings are not open to the public, nor are its finances. That troubles Don Barrier, a board member of Smoky Mountain Center from Caldwell County.

“I do believe it is public money and deserves public oversight,” Barrier said in the last joint meeting between the boards.

Barrier said he is uncomfortable with a private organization — one with no obligation to disclose its activities — holding the purse strings to millions in public dollars.

Barrier also takes issue with the board appointing its own members. Known as a self-perpetuating board, existing members handpick who will join their ranks when someone steps down. There is no limit to how many years a board member can stay on.

That’s not how oversight of public money typically works, Barrier said.

“That is a point of disagreement,” said John Bauknight, an Evergreen board member from Cashiers.

Bauknight challenged the extent to which Evergreen’s assets can be traced to Smoky Mountain Center. Evergreen’s coffers have grown significantly in the past decade due to “real sharp investments,” Bauknight said.

“When public money is invested, then the interest generated is still public money,” Barrier countered.

Evergreen board members contested the notion that Tom McDevitt, the director of Evergreen, said any money given to Evergreen ceased to be public funds the minute they were given to the nonprofit.

Ingraham disagreed.

“The funds transferred from Smoky to Evergreen did not lose their identity as public funds,” Ingraham said.

Ron Yowell, a member of the Evergreen board, said the critical question is whether the funds are still considered public after being transferred to a private entity.

“Once that’s decided, answers can be found to all of these things,” Yowell said. “Until that fundamental question is answered, I don’t think we can resolve much of anything.”

Communication breakdown

Evergreen has grown increasingly estranged from Smoky Mountain Center over the past two years. Historically, the director of Smoky Mountain Center also served as the director of Evergreen. The dual roles worked well for three decades.

But two years ago, Tom McDevitt stepped down as the director of Smoky Mountain Center amid controversy. His departure from Smoky Mountain Center was less than amicable, yet the Evergreen board voted to keep him at the helm of the nonprofit. Relations between the two have since been strained.

“We all agreed there has probably been a disconnect,” Beale said.

For example, the director of the Smoky Mountain Center should be an integral player in handing out grants, Beale said.

“Nobody knows what the counties need more than the director,” Beale said.

It’s Smoky Mountain Center’s responsibility to know where there are gaps in mental health and substance abuse services, thus making it suited to know what grants are needed most.

“Why wouldn’t you want the organization involved that is recognized as the locus of control over planning and system development?” Ingraham said.

McDevitt said he, too, envisioned Smoky Mountain Center staff involved in ranking grants that come in to Evergreen.

“Evergreen had every intention of working hand and glove with Smoky Mountain Center, but when there isn’t a vehicle to sit down and talk with them and get feedback and do planning, we had no choice but to do it autonomously,” McDevitt said.

Evergreen board members say that communication is a two-way street. Evergreen invited a member of Smoky Mountain Center’s board to sit in on their meetings, but no one ever took them up on the offer.

Over the past two years, Evergreen has officially distanced itself from Smoky Mountain Center on paper. A new set of bylaws and new wording on its nonprofit tax filings have eliminated any reference to Smoky Mountain Center.

Historically, Evergreen’s tax filing listed its mission as “supporting Smoky Mountain Center.” But in 2009, the year McDevitt parted ways with Smoky Mountain Center, the wording was changed.

“[Evergreen] no longer characterizes itself as supporting Smoky Mountain Center,” said Jay Coward, the attorney for Smoky Mountain Center.

Beale said Evergreen appears to be moving away from what it was established to do.

But McDevitt said the changes more accurately reflect Evergreen’s mission today. In the past, Smoky Mountain Center was the primary conduit for all mental health services in the region.

But in recent years, the state has privatized mental health. Counselors and psycholoigsts are not longer employed by Smoky Mountain Center, but operate as private practices. The same goes for patient clinics once operated by Smoky Mountain Center.

Since Smoky Mountain Center is now solely an administrative arm, it made sense to have a more generic mission statement dedicate to supporting mental health services “and not specifically one government entity,” McDevitt said.

Evergreen has agreed to few concessions as a result of the prodding.

McDevitt said Evergreen will expand its board by three members. The seven western counties will take turns nominating people for those seats, but the Evergreen board will ultimately select the person.

McDevitt said Evergreen has already started doling out more in the form of grants. Evergreen will share its finances, and allow Ingraham to review grant applications that come in.

“We are not going to go back and jeopardize Evergreen to satisfy their control needs, but we will open up to generate public oversight,” McDevitt said. “I hope both sides will decide it is more important to concentrate on what we do rather than how it is done.”

Tom McDevitt, the former director of the Smoky Mountain Center for Mental Health who resigned amid scrutiny last fall, was barely out the door when he was tapped by the state to head up a mental health agency down east plagued by turmoil of its own.

The state’s move to replace one director who was fired for mismanagement with another director who resigned under suspicion of conflict of interest caused a public outcry, forcing the state to rethink its decision.

It was announced on Tuesday, Jan. 20, that Leza Wainwright, director of the state Division of Mental Health, had tapped McDevitt to head up the Albemarle Mental Health Center, based in Elizabeth City. The board of the Albemarle Center had asked the state to assume control of its agency following a period of gross mismanagement that culminated with the firing of agency director Charles Franklin.

Wainwright chose McDevitt, who resigned his position as leader of the Sylva-based Smoky Mountain Center in September following intense board scrutiny over some of his actions, including his pay, perks he provided for himself and his family, and heavy-handed leadership style. McDevitt continues to serve as the director of the Evergreen Foundation, the non-profit arm of the Smoky Mountain Center.

The Elizabeth City-based newspaper The Daily Advance wrote of McDevitt’s appointment last week, pointing out that McDevitt had resigned from his previous job after red flags were raised about his activities.

It wasn’t long before comments from readers began flooding the newspaper’s Web site. Many seemed appalled that the Albemarle agency had put its trust in the state, only to see the state replace one fired director with another who had resigned under scrutiny.

Meanwhile, officials associated with the Albemarle agency were struggling to understand the state’s decision to appoint McDevitt.

“One of the ironies is that Albemarle asked for the state to come in and give them a director because of the problems they were having with a director, and now you have this situation,” said Albemarle Mental Health Center’s board attorney John Morrison. “The state was aware we had similar issues — I wonder why they would send (McDevitt) here.”

Pasquotank County Commissioner Chairman Marshall Stevenson said he was “very concerned.”

“He’s got baggage — we don’t need somebody like that,” Stevenson said of McDevitt.

On Thursday, Jan. 22, two days after McDevitt’s appointment, McDevitt and Wainwright attended a meeting with the Albemarle agency’s board of directors. Before the meeting, Wainwright told The Daily Advance that she was aware of the controversies surrounding McDevitt when she tapped him as director, and that they were greatly exaggerated. Wainwright commended McDevitt’s handling of the Smoky Mountain Center’s finances and the changes he had implemented as its director.

But just one day later, Wainwright did an about-face and announced McDevitt would no longer be appointed as the director of the Albemarle agency. She told The Daily Advance that scrutiny over McDevitt’s alleged activities at the Smoky Mountain Center would make it difficult to cultivate much-needed trust at the Albemarle agency.

State questions McDevitt’s severance pay

Not only has McDevitt missed out on the appointment to head another mental health agency, but he could lose his generous severance package from the Smoky Mountain Center.

The N.C. Department of State Treasurer last month weighed in on McDevitt’s severance package, which is equivalent to a year’s salary. The hefty sum may not be legal under state statutes. Specifically, state statute bars one employee from getting benefits not afforded to everyone else within an agency.

The treasurer’s office investigated the severance pay based on complaints from the public. It consulted with attorneys from the UNC School of Government in the process, which pointed out case precedent as well as state statutes.

“It appears that the one year’s severance pay is not permitted,” the state treasurer’s office wrote in a letter to the Smoky Mountain Center’s board. The state instructed the board to review the matter with its attorney, Jay Coward. Coward has been in communication with the state over the issue, but the board has not yet discussed whether to revoke the severance, something that will likely take place at an upcoming meeting, according to Board Member Dana Jones.

The state will keep an eye on the matter to make sure the board resolves it, said Sara Lang, director of communications for the state treasurer’s office.

“Staff of the Local Government Commission must ensure that this issue has been thoroughly reviewed from a legal standpoint and that public funds are being spent in accordance with the law,” Lang said.