Dorothea Dix Hospital was home to Kathi Dunphy's 39-year-old daughter, Jacki, for six years. But a few months ago, Jacki started on a new medication for bipolar disorder that helped her reach her best emotional health in years, so her doctors decided she was well enough to leave.

But instead of going home, Jacki went to a Cary rest home, where most residents are frail and elderly.

The place is clean and the staff seems friendly, but Dunphy wonders how long her daughter will stay healthy there. Jacki is prone to depression and thoughts of suicide, and her health deteriorates without structure and daily activities.

"Last week, she said she'd give me $20 if I'd take her back" to Dix, Dunphy said.

Trading one institution for another was not what state leaders promised five years ago when they revamped how and where people are treated for mental illness.

People like Jacki -- The News & Observer agreed not to reveal her surname -- were supposed to be able to live in small groups or independently in their hometowns. They were supposed to have medical appointments, get job training, learn life skills, socialize -- all within their communities, outside of institutions.

Most everyone involved in the mental health system says those ideals are unmet. This year, however, there are signs that mental health care might finally get the significant funding that was promised. When state legislators return next week, mental health funding will be among the top issues.

Carmen Hooker Odom, state Health and Human Services secretary, acknowledges that transforming the state's mental health system has been difficult.

"To create that change, you have to go through the process of destroying the existing system," she said. "You don't have to be a psychiatrist to know that people do not like change."

Many people who are dismayed at how mental health reform has progressed agree in principle with its goal. The idea is to give people with brain disorders every chance to live full, productive lives amid family and friends.

"It's a good idea -- I totally embrace it," said Debra King, executive director of CASA, a Raleigh agency that manages affordable housing for people with mental illness. "But it's how you pull it off. I just can't figure out how we could have planned so long for things to have turned out so poorly."

Not a lucrative field

Five years into the reform process, the state still faces a desperate shortage of subsidized housing for the mentally ill. Patients released from state mental hospitals are frequently discharged to homeless shelters or, like Jacki, to adult care homes.

And despite predictions that free market forces would ensure an ample supply of mental health programs, many communities have not seen private businesses clamoring to set up new services.

It's not a lucrative field. Many patients live on disability income and are covered by Medicare and Medicaid, which typically pay less than market rates for care. Others are uninsured or covered by private insurance that strictly limits access to treatment and services.

Compounding matters, private businesses aiming to offer new programs didn't know what services the government would pay for, and at what rate. The state Medicaid program was expected to publish that information years ago; it came last month.

"Many providers didn't want to sign contracts, didn't want to step into this until they knew," said Janet Schanzenbach, interim executive director of the N.C. Council of Community Programs. The council represents local mental health agencies, which must line up community-based services and manage patient care.

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