The Irene Stacy Community Mental Health Center is seeking bankruptcy protection after Butler County Human Services said it will end its contract with the center Dec. 31.

The center’s board on Tuesday made the decision to retain bankruptcy counsel and authorize bankruptcy proceedings.

The roughly $1 million county contract is about 70 percent of the center’s income. The center has 2,000 clients and 140 staff members.

Joe Hauser, executive director of the center, said, for all intents and purposes, the center will stop existing as it currently is Dec. 31 and will reopen Jan. 1 under new management. He said his goal is to create an easy transition for the center’s clients.

County Human Services director Joyce Ainsworth said she decided in October to revoke the contract because of the center’s ongoing financial issues, which she said made her concerned that the center could close down sometime, leaving its clients with nowhere to go.

According to a statement released by the county, the Human Services department is required to ensure that mandated services outlined in the MH/MR Act are provided to clients.

“To allay any concerns of current clients or family members, the Irene Stacy Center is legally bound to assure an appropriate transfer before they can stop services. As stated above, we will assure those services remain available to all that need them,” the statement said.

The statement said Human Services “has made special compensation for Irene Stacy’s management struggles for many years that was not offered to other agencies, such as backfilling losses and funding consultants to assist them.” It said the center’s deficit has been increasing and it has faced instability in management staff, and that discussions about making changes at the center never were followed through.

Brent Olean, president of the center board, said the county brought in two consultants this year to look at the agency due to its financial issues. He said the consultants gave their approval to the center.

Ainsworth said the opinions of the consultants were not clear cut, and she said she still had her concerns about the center’s long-term health.

“There’s no yes-or-no answer,” Ainsworth said.

She said that Southwestern Pennsylvania Human Services (SPHS) based in Washington County is the organization that is likely to get the contract. She said it has done work for county Human Services in the past.

According to the county’s statement, “Accepting help from SPHS was one of the recommendations made by the former as well as current Human Service director that was rejected by Irene Stacy. With this agency’s assistance, we have concrete plans on how to make a transition that would assist all parties involved but more importantly avoid any disruption of service to the consumers.”

As a condition of the contract, whoever gets it would have to open an office in Butler County.

Ainsworth said the county commissioners will have to vote on the contract.

Olean said without the county contract, Irene Stacy would not have the funds to continue operating as is.

Hauser said SPHS recently had a job fair where the center’s employees interviewed for jobs.

“We’re waiting to hear back,” Hauser said.

Over the years, he said the center dropped some programs — such as its adult and children partial hospitalization programs — but said it always has worked to make sure clients never noticed a change. Hauser said the center never got close to missing its payroll.

Andrew Menchyk, Irene Stacy solicitor, said that there typically are two types of bankruptcy. Chapter 11 involves reorganization to reduce debt — leaving an organization still operational. Chapter 7 involves liquidation to pay debt — which would close an organization.

He said he is not sure what type of bankruptcy the center might seek if it chooses to file.

“It’s a highly specialized area,” Menchyk said.

Ainsworth said her goal is to work with Irene Stacy and whoever the new contract holder is to make sure that none of the clients are left without services. She said none of those talks have taken place yet.

The center, founded in 1958 as the Mental Health Guidance Clinic, offers outpatient and residential mental health care. Olean said it is likely that Irene Stacy has had a contract with the county since its inception.