1. The director of the department of mental health may for the benefit of the department or its facilities establish and operate or contract for the operation of centralized supply warehouses. Such warehouses may be department-wide or regional and may provide medical supplies, medicine and drugs, food, office, maintenance, or janitorial supplies, or other types of supplies used by the department. All costs related to the operation of such warehouses, except for the actual cost of supply commodities, shall be paid out of moneys appropriated to the department of any facility operated by the department.

2. There is hereby created in the state treasury for use by the department of mental health a fund to be known as “The Mental Health Central Supply Fund”. Moneys deposited in the fund shall be appropriated to the director of the department of mental health to be used for purchasing supply commodities, including the purchase price and related shipping and handling charges. The fund shall consist of moneys appropriated by the general assembly for starting the fund and moneys deposited pursuant to subsection 4 of this section. The provisions of section 33.080 notwithstanding, moneys in the fund shall not lapse, unless and then only to the extent to which the unencumbered balance at the close of any fiscal year exceeds one-sixth of the total amount appropriated, paid or transferred to the fund during such fiscal year.

3. Supply commodities shall be issued from the central warehouses to the director of the department of mental health and to facilities operated by such department. The director shall establish procedures for determining the amount to be charged for supply commodities issued from such warehouses. The amount charged shall be regulated to adjust actual costs for inventory obsolescence, spoilage, loss or other damage to commodities and for any cost adjustments including refunds and reimbursements received from supply vendors.

4. Charges for supply commodities issued shall be paid out of moneys appropriated to the department of mental health or facilities operated by such department. The director shall deposit moneys derived from such charges and any receipts from supply vendors, including refunds and reimbursements, in the state treasury to the credit of the mental health central supply fund.

5. The director of the department of mental health shall administer the fund and shall determine the amount of money to be maintained in the fund necessary for cash flow requirements. Amounts charged for supply commodities may be adjusted to regulate this fund balance.