SARATOGA SPRINGS — The Friendship Connection for people with mental illnesses has closed its doors.

The center, which was most recently at 5 Wells St. and years ago had a spot on Broadway before high rent forced it out, closed Thursday after parent organization Unlimited Potential lost $171,000 of its state funding from the 2008-09 budget.

One full-time program director and four part-time assistants lost their jobs.

The state Office of Mental Health passed down a $16.4 million spending cut in its “Aid to Localities” funding, which meant $135,783 less for Saratoga County this year, said spokeswoman Jill Daniels.

The county received $2.6 million in mental health funding this year.

“The county had no choice but where to assign the cuts, and then it was our decision where to implement the cuts,” said Brien Hollowood, executive director of Unlimited Potential.

Unlimited Potential gets a higher percentage of its funding from the state than some other organizations, Hollowood said.

Friendship Connection has been open since the 1980s, when it started as a drop-in social club, Hollowood said. It evolved into a more structured program where participants learned to cook and shop for themselves and went on day trips.

But it was still less structured than Unlimited Potential in the Grande Industrial Park, where the severely mentally ill learn job skills and about 200 people have “graduated” into the work force.

Unlimited Potential serves 130 people at its shop, while only 12 to 15 people attended the Friendship Connection each day, Hollowood said.

“It didn’t seem right to us to impact a program where 130 people are benefiting, so we made the decision to shut the Connection down,” he said.

Friendship Connection saw a dip in attendance after it moved off Broadway. The downtown location drew 40 to 50 people a day, Hollowood said.

It cost more than $200,000 a year to operate the Friendship Connection, with the largest expenses being rent, staffing and utilities, he said.

Some of the former participants live independently in their own apartments, others with family and some in subsidized housing, he said. Some have jobs and others don’t work.

Hollowood worries that this funding cut isn’t the last one his organization will see.

“We’ve heard from Gov. [David] Paterson that there are going to be more cuts coming,” he said. Any further cuts would cut into Unlimited Potential’s 30-year-old program.

“I guess I don’t understand where they think these people are going to learn the skills they’re going to need to be employed in the community,” Hollowood said.

“I understand that the state needs to make these budget cuts because of decisions that were made in past administrations. But they’re putting a lot of things at risk, including: Where are these folks going to go if they don’t have Unlimited Potential? You know where they’re going to go? They’re going to walk up and down Broadway,” he said.