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She said the lack of proper treatment is causing more people who are mentally ill or who have a substance-abuse problem to be taken to hospital emergency rooms -- or jail. And they're rotating in and out of the state's psychiatric hospitals. On some days, state hospitals are so full that they are refusing to accept new patients.

Since 2001, at least 13 people committed suicide or overdosed on drugs less than a week after being discharged from state hospitals. Some died within hours.

In a case that grabbed headlines in May 2007, Stephen Ryan Gibson led state troopers on a 70-mile chase in a stolen car. The chase ended with his shooting death on Interstate 40 in Raleigh. Gibson, 23, had been sent to Dorothea Dix Hospital on an involuntary commitment order a month earlier.

Hospital officials decided outpatient care was enough and released him in less than two hours. Records show the adult admissions ward at Dix was at or over its capacity for much of that week.

Counties forced out

More than six years ago, the General Assembly voted overwhelmingly to tear down, then rebuild, the way the state treats mentally ill people, about 210,000 of whom seek state help each year.

The state set out to reduce the use of its four hospitals and shift treatment to communities. A study requested by legislators said part of the additional cost could be paid for with money saved by shrinking hospitals and staff.

Federal, state and local governments provide mental-health services to the poor. A little more than a third of the cost is borne by the state and local governments in North Carolina, the rest by federal taxpayers.

Before reform, mental-health services were provided at the local level by county and regional groups and the private providers who, in effect, worked for them.

After reform, counties were forced to get out of the treatment business. They formed local groups that were supposed to manage the providers.

But the state got the plan backward, forcing the counties to divest first.

"We were told to do it right away," said Yvonne Copeland, executive director of the N.C. Council of Community Programs, which represents the county entities.

Services at the local level started drying up with little or nothing to take their place, and the state eliminated more than 500 hospital beds. No one expected that it would take years to get approval for a new, supposedly improved package of community services from the federal government.

Federal approval of the new services didn't come until late December 2005. The state launched its new community services three months later, on March 20, 2006.

The Department of Health and Human Services had planned for years for that Monday in March, writing descriptions for the services it wanted, figuring out how much to pay and haggling with federal officials over the details.

Finally, on March 20, the state began offering an array of mostly new services to people suffering from mental illness or substance abuse. Seven of the services, including intensive in-home therapy for severely emotionally disturbed children, are most likely to keep people out of hospitals. Two other, more basic, services were known as community support.

And from that day to this, community support services have hemorrhaged money.

Stunning costs

In January 2005, the state told the federal government those two services, community support for children and community support for adults, would cost less than $5 million a month.

Now department officials say that estimate was flawed and should have been increased.

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