A preliminary audit of expenses last year at Timpanogos Community Mental Health Center says the center owes the state almost $2.4 million spent for unallowable costs, interim Director David Dangerfield reported Tuesday.

But he said the center cannot afford to pay back the state any money at this time and still operate a mental health facility."We anticipate the same for the 1986 and 1988 audits," he said. "It makes for real upsetting reading."

Dangerfield told the Timp Mental Health Authority board in its monthly meeting that the center's cash flow continues to suffer because of a state freeze on funding at the center.

"There won't be a mental health system down here" if the state continues to withhold money, he said. State mental health officials have said they will not make grant or contract payments to Timp Mental Health until the state audit is complete.

But the audit has taken longer than anticipated, and in the meantime the center is running out of money, Dangerfield said.

To remedy the situation, the Timp board agreed to ask the state for a $250,000 cash advance with the remainder of the state money being distributed over 11 months.

The board also will ask the state not to withhold payments from grants and contracts awarded to the center.

The cash budget for fiscal 1988-89 shows the center will be in the hole almost $100,000 every month if the state doesn't unfreeze funding.

On the 1987 preliminary audit, Dangerfield said Timp Mental Health officials will go through the report to determine what they consider allowable costs. Authority board members also will review the audit.

The board Tuesday approved the concept and general terms of an inpatient services contract with Utah Valley Regional Medical Center. Timp Mental Health will pay Utah Valley $400,000 a year.

David Lambert, acting attorney for Timp Mental Health, suggested the board make some minor changes. Other than that, the board had no qualms about the proposed contract.

Timp officials plan to present the hospital board with the draft this week to give the medical center the message that Timp is ready for remodeling to begin.

Dangerfield said Timp Mental Health hopes to move inpatient services into the hospital by Sept. 1. The hospital will provide an average of five beds or a maximum of 1,825 patient days per year for the center's non-funded patients, and will provide the center with an average of eight additional funded beds. Funded patients are those who are able to pay for services through Medicaid or private insurance.

All employees of the in-patient unit will be employees of the hospital, with the exception of a psychiatrist, a crisis unit director and a funding verifier.

"With the closure of the inpatient unit, we have not met a great amount of enthusiasm by the staff there, but we are doing everything we can to accommodate the staff in other programs," Dangerfield said.

Utah Valley Regional Medical Center also has agreed to consider qualified Timp Mental Health employees for positions at the inpatient unit.