(SOMERSET, Ky.) -- Residents are being moved out of the state's largest facility for mentally retarded adults as Kentucky officials wait to receive word that federal funding will be cut off.

In a letter earlier this month, federal officials cited repeated instances of abuse and neglect at the Communities at Oakwood in Somerset and said they were moving toward cutting off $43 million in Medicaid funding. The money represents about 70 percent of Oakwood's budget.

The facility has about 254 remaining residents after about 40 were moved in recent months. Another 80 are expected to move soon.

Mark Birdwhistell, secretary of the Cabinet for Health and Family Services, said he views the letter from federal officials as an ultimatum. The cabinet runs Oakwood.

"I think it sends us a clear message that our efforts to remedy the ongoing problems are not working," Birdwhistell said.

Oakwood has been slapped with 22 Type A citations, the most serious, since January 2005, and state inspectors found "immediate and serious threats to the health and safety of clients" in a survey.

The most recent was issued Sunday, citing the case of a patient with a history of self-mutilation who cut himself 14 times with a nail. The citation concludes that the staff not only failed to routinely check his body and room for sharp objects, but lacked the training to deal with his dangerous behavior.

Denise Thomas is the sister and guardian of Mark Brown, one of the residents who was the victim of two alleged assaults by staff this year.

"I will get him out as soon as possible. He is not safe there," Thomas said.

The state now offers group homes and other private facilities $125,000 per resident for the first two years for residents at Oakwood or any of Kentucky's five other residential facilities for adults with mental retardation.

Birdwhistell said no one is being forced to move out of Oakwood now, but the state wants to find places in case Oakwood does lose federal funding.

"We are all about giving choices to these individuals and their families," he said.

The moving process takes several months, with evaluations, finding an alternative home and gradually giving the residents a chance to become comfortable in their new home.

Some family members are concerned that moving residents won't necessarily guarantee their safety.

"If Birdwhistell's going to throw them out (of Oakwood), he needs to place them under the same scrutiny as Oakwood," said Anne Montgomery, whose son moved from Oakwood to a community home in Somerset two years ago.

Others doubt anything could be worse than Oakwood.

"Given Oakwood's history, I don't think people would fare any worse in a community setting," said Daniel Dermitt, who wants to move his brother, Tim Cox, out of Oakwood. Cox was allegedly assaulted twice by Oakwood employees.

The federal Centers for Medicare and Medicaid Services decided last fall to terminate Oakwood's Medicaid contract, but agreed to keep funding the facility while the state appealed the decision. However, the centers also said they could strip federal funding from Oakwood at any time.

Oakwood faces a 30-day review expected to start Sept. 9 to determine if the facility can receive federal funding. Ahead of next month's review, Oakwood must submit plans for the immediate removal of serious threats to the health and safety of residents.

Given Oakwood's track record, some say it will be difficult for state officials to make a case for keeping Oakwood open.

"If this stuff's as serious as it sounds, I can't imagine how they'd be successful," said Steve Eidelman, a professor at the University of Delaware who studies services for the disabled. "The feds are not going to treat this lightly."

(Copyright 2006 by The Associated Press.  All Rights Reserved.)