The Carlyle Care Center in downtown Spokane was once a dilapidated apartment building. Sheets hanging over some of the broken windows made it a place of despair, rather than welcome.

The Carlyle, home now to adults with severe mental illnesses, was renovated six years ago. The lobby is painted in trendy tones. The restored floors are mop-shine clean. Lists of activities for residents are tacked up on a wall. Doctors, nurses and psychiatrists visit the residents on a regular basis, often preventing the costly cycle of mental illness relapse.

Those who relapse end up on the streets or engaged in criminal activity. The county jail sometimes ends up housing them. Others land at Eastern Washington State Hospital.

The Carlyle has figured out a formula for maintaining stability: Provide a clean and welcoming dwelling for residents, then feed their bodies and spirits.

“They are proud of where they live,” said Carlyle developer Jim Delegans. “The people here are doing better than they ever have in their lives.”

The Carlyle, however, is going broke. The 138-bed care facility may be foreclosed upon later this month. The building carries $12.6 million in debt. The reasons for its financial failure are as complex as the mental health service system itself. But one reason is that the reimbursement rate Spokane County pays the Carlyle – $42 per day per resident – is inadequate.

The county says it can’t afford more. Yet when people with mental illness land in jail, it costs the county more than $90 a day. And if they end up at Eastern Washington State Hospital, taxpayers foot the $500 a day bill. Somewhere in this mess exists a common sense solution.

One partial solution is called co-funding, in which both the state and county contribute money to the problem. Some people with mental illnesses also have physical disabilities. A person with schizophrenia, for instance, might have diabetes. In a co-funding arrangement, the state’s Home and Community Services pays for the client’s medical needs, while the county pays for the client’s mental health needs. This results in a higher per day reimbursement rate to facilities, such as the Carlyle, that look after their residents’ physical and mental needs.

Pao Vue, regional administrator for Home and Community Services, is willing to work with the county’s mental health regional support network on co-funding, but he says little progress has been made so far because of recent high turnover at the network.

Many mental health clients won’t be eligible for co-funding, however. So another common sense approach must include rewarding, with adequate per diem money, what works best for the mentally ill. Jails were never meant to be mental hospitals. And the 1970s movement away from warehousing the mentally ill means mental hospitals should be viewed as an expensive and short-term solution.

It makes both social and fiscal sense to direct limited funds to the resources that are best suited, and most efficient, at meeting the needs of a fragile population. But that will happen only when state and local officials find the money for facilities like the Carlyle by shifting it from the institutions that otherwise would have to bear the load.

Society has come a long way in 30 years. People are finally recognizing that citizens with mental illness have a right to respect and dignity. The Carlyle, and other community based care facilities, are trying to provide that respect and dignity. The money should follow what works.