Weeks after setting aside more money than ever to care for North Carolina's mentally ill, the state is cutting $6 million used to help emotionally disturbed children so it can pay local administrative costs.

The money provides short-term care that keeps children out of group homes and helps parents who need advice on getting cooperation among social workers, school officials and other government agencies, said Connie Hawkins, executive director of the Exceptional Children's Assistance Center, based in Mecklenburg County.

"These kinds of silent cuts are just eroding the ability to do what we need to do," she said.

Legislators this summer approved an additional $80 million to treat mentally ill people and drug addicts, pay for housing for the disabled and expand community mental health services. It was the largest single-year increase for mental health programs since the state started overhauling the mental health system in 2001.

But the $6 million increase that was to go to severely emotionally disturbed children not eligible for Medicaid will be diverted. The state will spend $24.5 million instead of $30.5 million.

Community groups statewide are struggling to scale back plans to fit budgets that are suddenly smaller.

"It makes no sense," said Mark Sullivan, executive director of the Mental Health Association in Orange County. He said that the state knew it had to pay these administrative bills and should have devised a way to do it other than cutting money that was intended to help children.

Sullivan works with other agencies to develop programs for adolescent drug abusers, summer activities for emotionally disturbed children and other projects. Those plans are in question because of the cut.

"It's really frustrating for us who are working in the field," he said.

In Cleveland County, a planned support group for parents could be in jeopardy. Lori Oates, who works with the Cleveland community group, said she was surprised to learn of the budget cut so soon after cheering historic increases in the state's mental health budget.

"Where the heck did it go," Oates asked. "Why are we being cut?"

Beth Nelson, who heads children's mental health services in Wake County, said she had not heard about the cut.

State officials say they needed to find $18.9 million for local mental health offices because legislators ordered them to preserve certain services. Leza Wainwright, deputy director of the state Division of Mental Health, Developmental Disabilities and Substance Abuse Services, described the money being used to pay the offices as coming from "emergency reserves" and said no service will get less money than last year.

Offices, agency at odds

The budget cut is rooted in a dispute between local mental health offices and the state agency about how much should be spent on administrative work, such as coordinating who gets care where after business hours.

The state tried last year to cut local administrative expenses, but counties and local offices resisted. For the past two years, state officials used money from the Medicaid office to help cover the local administrative bill but could not take Medicaid money this year because of cuts in the Medicaid budget, Wainwright said. Legislators understood that the department would have to look for money in other accounts if it came up short, she said.

Rep. Verla Insko, a Chapel Hill Democrat who helped write the state mental health budget, said she didn't know that money for services would be cut.

"I was shocked," she said.

Legislators did not know, she said, that the division had money in accounts that it did not plan to spend.

"I didn't know they had money over there to pad their budget," Insko said.

The division expects administrative costs to drop as more local offices merge and as the state continues to rewrite its plans for mental health, Wainwright said. Local offices' administrative costs are based on the jobs they were doing in 2003 and 2004, she said, and their roles have changed. Money now being used for administration can go back to mental health services if office costs go down, she said.

"We hope this is not a recurring need," Wainwright said.