Budget Hearings & Outcomes

Document Sub 2 Joint Sub 1 Child Care and Development – Actions

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” SUBCOMMITTEES NO. 2 EDUCATION FINANCE COMMITTEE MARCH 14 , 2012 A S S E M B L Y B U D G E T C O M M I T T E E 1 ACTION TAKEN JOINT HEARING ASSEMBLY BUDGET SUBCOMMITTEE NO. 2 ON EDUCATION FINANCE & ASSEMBLY BUDGET SUBCOMMITTEE NO. 1 ON HEALTH & HUMAN SERVICES Assembly Member Susan Bonilla, Chair Assembly Member Holly Mitchell, Chair WEDNESDAY, MARCH 14, 2012 STATE CAPITOL, ROOM 4202 1:30 PM 2012-13 CHILD CARE & DEVELOPMENT PROGRAMS Open Issues: The Subcommittee will defer any budget solutions in this area to after the May Revision when we have a clearer understanding of the fiscal challenges faced by the State. (Issues 1-3) Action #1 AYEs: Bonilla, Brownley, and Swanson; NO: Berryhill and Nestande Reduce the increased spending proposed by the Governor of $35 million for counties and reject the proposal to move child care programs currently administered by the Department of Education, including the federally funded programs. (Issues 4-6) Action #2 AYEs: Bonilla, Brownley, and Swanson; NO: Berryhill and Nestande Conform to the February 29th actions of Subcommittee No. 1 that interact with Child Care. ”

spreadsheet Sub 2 Child Care and Development SB – joint with sub 1

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” S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E AGENDA JOINT HE ARING ASSEMBLY BUDGET SUBCOMMITTEE NO. 2 ON EDUCATION FINANCE & ASSEMBLY BUDGET SUBCOMMITTEE NO. 1 ON HEALTH & HUMAN SERVICES Assembly Member Susan Bonilla, Chair Assembly Member Holly Mitchell, Chair WEDNESDAY, MARCH 14, 2012 1:30 pm- STATE CAPITOL, ROOM 4202 OVERVIEW OF THE GOVERNOR’S 2012-13 CHILD CARE & DEVELOPMENT PROGRAMS I. OPENING REMARKS ASSEMBLYMEMBER SUSAN BONILLA, CHAIR ASSEMBLYMEMBER HOLLY MITCHELL, CHAIR II. BUDGET PERSPECTIVE TOM TORLAKSON, SUPERINTENDENT OF PUBLIC INSTRUCTION III. GOVERNOR’S 2012-13 BUDGET PROPOSALS: CHILD CARE & DEVELOPMENT PROGRAMS SARA SWAN, DEPARTMENT OF FINANCE PETE CERVINKA AND STAN CAGLE, DEPARTMENT OF SOCIAL SERVICES RACHEL EHLERS, LEGISLATIVE ANALYST’S OFFICE ERIN GABEL, DEPARTMENT OF EDUCATION IV. EARLY LEARNING & CARE EXPERTS LYNN KAROLY, SENIOR ECONOMIST, RAND CORPORATION MARCY WHITEBOOK, DIRECTOR\/SENIOR RESEARCHER, CENTER FOR THE STUDY OF CHILD CARE EMPLOYMENT (CSCCE) INSTITUTE FOR RESEARCH ON LABOR & EMPLOYMENT (ILRE), UNIVERSITY OF CALIFORNIA AT BERKELEY V. CHILD CARE & DEVELOPMENT STAKEHOLDERS MICHAEL OLENICK, CEO OF CHILD CARE RESOURCE CENTER FRITZI GRAGG, PROGRAM DIRECTOR FOR CHILD DEVELOPMENT CENTERS\/ CONTINUING DEVELOPMENT INC. (CDI\/CDC) PARENT VI. PUBLIC COMMENT S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 1 BACKGROUND BACKGROUND & HISTORY OF CHILD CARE & DEVELOPMENT PROGRAMS 2 ITEMS TO BE HEARD Issue 1 GOVERNOR’S PROPOSAL: REDUCING ELIGIBILITY BY IMPOSING LIMITING DEFINITIONS OF WORK REQUIREMENTS 7 Issue 2 GOVERNOR’S PROPOSAL: LOWERING FAMILIES’ INCOME ELIGIBILITY THRESHOLD 10 Issue 3 GOVERNOR’S PROPOSAL: REDUCING MAXIMUM PROVIDER RATES 11 Issue 4 GOVERNOR’S PROPOSAL: RESTRUCTURING THE CHILD CARE SYSTEM 15 Issue 5 GOVERNOR’S PROPOSAL: CHANGING THE STRUCTURE OF THE STATE PRESCHOOL PROGRAMS 19 Issue 6 GOVERNOR’S PROPOSAL: SHIFT ADMINISTRATION OF FEDERALLY FUNDED PROGRAMS 22 S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 2 BACKGROUND 6110 DEPARTMENT OF EDUCATION CHILD CARE & DEVELOPMENT PROGRAMS This issue is informational only to provide the Subcommittee with a synopsis of the Child Care & Development Program. BACKGROUND: Under current law, the state makes subsidized child care services available to: 1) families on public assistance and participating in work or job readiness programs; 2) families transitioning off public assistance programs; and, 3) other families with exceptional financial need. The CalWORKs Child Care Program. Child care services provided within the California Work Opportunity and Responsibility to Kids (CalWORKs) program are administered by both the California Department of Social Services (DSS) and the California Department of Education (CDE); depending upon the \u2015stage\u2016 of public assistance or transition the family is in. CalWORKs Stage 1 child care services are administered by the DSS for families currently receiving public assistance, while Stages 2 and 3 are administered by the CDE. Families receiving CalWORKs Stage 2 child care services are either (1) receiving a cash public assistance payment (and are deemed \u2015stabilized\u2016), or (2) in a two-year transitional period after leaving cash assistance. Child care for this population is an entitlement for twenty-four months under current law. The state allows counties flexibility in determining whether a CalWORKs family has been \u2015stabilized\u2016 for purposes of assigning the family to either Stage 1 or Stage 2 child care. Depending on the county, some families may be transitioned to Stage 2 within the first six months of their time on aid, while in other counties a family may stay in Stage 1 until they leave aid entirely, depending on their success at addressing barriers to employment and becoming employed. If a family is receiving CalWORKs Stage 3 child care services, they have exhausted their two-year Stage 2 entitlement. The availability of Stage 3 care is contingent upon the amount of funding appropriated for the program in the annual Budget Act. There is also a small amount of funding allocated to the Community College Districts to support subsidized child care for students. This includes funding for the following programs: \uf0b7 CalWORKs Stage 2: $9.2 million for subsidized child care for children of CalWORKs recipients. This program is proposed to be part of the Governor’s categorical reform and would no longer be restricted for this purpose. \uf0b7 Cooperative Agencies Resources for Education (CARE): $9.3 million to provide students with supplemental support services designed to assist low-income single parents to succeed in college. Child care is one of many supports funded by this program. This program is proposed to be part of the Governor’s categorical reform and would no longer be restricted for this purpose. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 3 \uf0b7 Child Care Tax Bailout: $3.3 million for districts meeting specific criteria, to provide assistance for child care. This program was included in the categorical flex item adopted in the 2009-10 budget, but there have been no changes to this program since that time. This program is proposed to be part of the Governor’s categorical reform and would no longer be restricted for this purpose. Non-CalWORKs Child Care Programs (General Child Care, Migrant and Severely Handicapped Programs). In addition to CalWORKs Stage 2 and 3, CDE administers general and targeted child care programs to serve non-CalWORKs, low-income children at little or no cost to the family. The base eligibility criterion for these programs is family income at or below 70 percent of State Median Income (SMI) relative to family size. Because the number of eligible low-income families exceeds available child care slots, waiting lists for this care are common and prior to current year cuts were estimated to include approximately 200,000 children. As of 2011-12, both CalWORKs and non-CalWORKs programs are funded with a combination of non- Proposition 98 General Fund and federal Child Care & Development Fund monies, with the exception of part-day\/part-year State Preschool Program which continues to be funded from within Proposition 98. The California State Preschool Program. CDE also administers the early childhood education programs for children ages three to five years old from low income families. Part-day\/part-year preschool is the only program that does not require that parents be working or engaged in some other qualifying activity, and families can exceed the State Median cap by ten percent. About one-third of children attending this program are supported by funding redirected from the General Child Care (GCC) budget, in order to fund full-day\/full-year care. California Child Care Programs Funded Enrollment Program 2010-11 Enrollment 2011-12 Enrollment 2012-13 Estimated Enrollment CalWORKs Stage 1 51,236 44,294 60,313 Stage 2 a 59,980 64,724 – Stage 3 a 55,145 22,383 – Community Colleges (Stage 2) 1,279 1,289 1,372 Subtotals 167,640 132,690 61,685 Non-CalWORKs General Child Care 86,169 73,418 52,809 Alternative Payment Programs a 38,777 32,052 82,834 Migrant & Severely Handicapped Programs 7,561 6,654 6,318 Subtotals 132,507 112,124 141,961 State Preschool (part-day\/part year) 116,847 99,334 90,580 TOTALS – ALL PROGRAMS 416,994 344,148 294,226 a In 2012-13, the Governor proposes to consolidate the Stage 2, Stage 3 and Alternative Payment Program into one block grant. Source: DOF S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 4 The Reimbursement Process. Child care providers are paid through either (1) direct contracts with CDE or (2) vouchers through the Alternative Payment Program. \uf0b7 Direct Contractors receive funding from the state at a Standard Reimbursement Rate, which pays for a fixed number of child care \u2015slots.\u2016 These are mostly licensed child care centers but also include some licensed family child care homes (FCCH). These caretakers provide an educational component that is developmentally, culturally, and linguistically appropriate for the children served. These centers and FCCH also provide nutrition education, parent education, staff development, and referrals for health and social services programs. \uf0b7 Alternative Payment Programs (APs) act as an intermediary between CDE, the child care provider, and the family, to provide care through vouchers. Vouchers provide funding for a specific child to obtain care in a licensed child care center, licensed family day care home, or license-exempt care (kith and kin). With a voucher, the family has the choice of which type of care to utilize. Vouchers reimburse care providers based on the market rates charged by private providers in their region. RECENT REDUCTIONS MADE TO CHILD CARE PROGRAMS In recent years, the state has made significant reductions to the Child Care & Development programs and operations. Since 2008-09, overall funding for the CCD system has dropped by about one- quarter. In the past three years, the state has: \uf0b7 Eliminated funding for approximately 20 percent of slots. \uf0b7 Reduced maximum payment rates for license-exempt providers from 90 percent to 60 percent of licensed rates. \uf0b7 Lowered income eligibility thresholds from 75 percent to 70 percent of state median income (SMI). \uf0b7 Eliminated the Latchkey after school program. \uf0b7 Reduced administrative allowances for AP agencies. \uf0b7 Reduced reserve balances for Title 5 centers. \uf0b7 Eliminated the State’s Centralized Eligibility List. \uf0b7 Reduced or eliminated several of the State’s quality improvement projects. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 5 OVERVIEW OF THE GOVERNOR’S 2012- 13 BUDGET PROPOSALS As shown in the top part of the figure below, the Governor proposes to spend a total of $1.6 billion for child care programs in 2012-13 a reduction of $391 million, or 19 percent, compared to the current year. Total State funding would decrease by $468 million, offset by $77 million in federal funds. Because the 2011-12 Budget Act shifted State support for all of Child Care & Development programs other than the State Preschool Program from Proposition 98 to non-Proposition 98 General Fund monies, the figure below displays funding levels for part-day preschool separately at the bottom of the figure. Child Care and Development Budget Summary (Dollars in Millions) 2010 11 2011 12 Revised a 2012 13 Proposed Change From 2011 12 Amount Percent Child Care Expenditures CalWORKs child care Stage 1 $486 $429 $482 $54 13% Stage 2 458 442 292 b 151 34 Stage 3 288 152 121 b 30 20 Subtotals ($1,232) ($1,023) ($895) ( $127) ( 12%) Non CalWORKs child care General Child Care c $785 $675 $470 $205 30% Alternative Payment 271 213 158 b 55 26 Other child care 28 30 26 4 13 Subtotals ($1,083) ($918) ($654) ( $264) ( 29%) Support programs $100 $76 $76 \u2014 \u2014 Totals $2,415 $2,017 $1,626 $391 19% Funding State General Fund Proposition 98 $856 \u2014 \u2014 \u2014 \u2014 Non Proposition 98 29 $1,069 $609 $460 43% Other state funds 350 8 \u2014 8 \u2014 Federal funds CCDF 602 533 548 15 3 TANF 467 406 468 62 15 ARRA 110 \u2014 \u2014 \u2014 \u2014 Part Day State Preschool Expenditures d $397 $368 $310 $58 16% a Includes midyear trigger reductions totaling $23 million across all programs. Also includes $8 million midyear augmentation to Stage 3. b Governor’s proposal would combine funding for Stage 2, Stage 3, and Alternative Payment into one program. c Funding totals include about $400 million used for the California State Preschool Program. d All funding for part day preschool program is from Proposition 98. CCDF = Child Care and Development Fund; TANF = Temporary Assistance for Needy Families; and ARRA = American Recovery and Reinvestment Act. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 6 Summary of the Governor’s Proposed Reductions. The chart below highlights the Governor’s specific changes to the child care budget, which is discussed in further detail in the agenda. These proposals would lead to a combined $391 million in savings and over 63,000 fewer slots. About 75 percent of the savings results from the stricter work eligibility requirements. The chart below also shows a $35 million augmentation for County Welfare Departments (CWDs) to ramp up their activities in anticipation of the proposed restructuring. Governor’s Proposed Reductions to Child Care Programs (In Millions) Funding County \”ramp up\” for child care restructuring $35 Limit eligibility to families by narrowing definition or work 294 Reduce reimbursement rates for centers that contract with CDEa 68 Reduce income eligibility ceiling to 200 percent of federal poverty levela 44 Reduce maximum reimbursement rates for child care vouchers 17 Technical\/caseload\/adjustments 4 Total $391 a Governor’s proposal also includes Proposition 98 reductions to part day preschool program, not shown here. Specifically, proposal assumes $58 million savings ($34 million for lower reimbursement rates and $24 million for income eligibility change). CDE = California Department of Education. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 7 ITEMS TO BE HEARD ISSUE 1: GOVERNOR’S 2012-13 PROPOSAL: REDUCING ELIGIBLITY BY IMPOSING LIMITING DEFINITIONS OF WORK REQUIREMENTS The issue for the Subcommittee to consider is the Governor’s budget proposal to reduce families’ eligibility for child-care services based on imposing of a limited definition of work acceptable activities. PANELISTS \uf0b7 Department of Finance \uf0b7 Legislative Analyst’s Office \uf0b7 Department of Education WORK REQUIREMENTS Families Currently Qualify for Subsidized Care for Various Reasons. Under current law, with the exception of part-day\/part-year preschool programs, families generally must meet two criteria to be eligible for subsidized child care. They must display \”need\” for care and earn less than 70 percent of the State Median Income (SMI). As long as families meet these requirements, their children can continue to receive services until they turn 13 years of age. Most families over 90 percent of current child care cases need care because parents are engaged in work, vocational training, or pursuing an education. Parents who are employed may receive child care benefits for the hours they are working, with no set hourly requirements or time limits. Parents engaged in vocational training or attending school can receive benefits for up to six years, provided they pass at least half of their courses or maintain a 2.0 grade point average. Additionally, about 6 percent of parents currently receive subsidized child care benefits because they are medically incapacitated, seeking a job, or seeking permanent housing. In each of these latter two categories, a parent may receive child care benefits for up to 60 days per year. The remaining caseload is made up of children under the care of child protective services. Federal Law Requires States to Meet Work Participation Rate (WPR). Federal law generally requires states to ensure that at least 50 percent of able-bodied Temporary Assistance for Needy Families (TANF) recipients participate in certain categories of work activities for a specified number of hours or face a penalty of a portion of their block grant. States can, however, reduce or eliminate penalties by disputing them, demonstrating reasonable cause or extraordinary circumstances, or planning for corrective compliance. It is also important to note that Federal formulas for calculating a state’s WPR do not give credit if families partially meet requirements. For example, a single-parent family with a work requirement of 30 hours in which the parent is working 25 hours per week is not counted as participating at all. According to the County Welfare Directors Association in 2009, data showed that 65 percent of adults the state required to work were participating, including 50 percent of work-required families who had employment earnings. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 8 Federal & State WPR Differ in Two Ways. The figure below shows how California’s statutory work requirements differ in two notable ways from federal work requirements. 1. Allowable Activities: Federal and State law designate specific activities as \u2015core\u2016 and \u2015non- core.\u2016 Although Federal and State core activities generally are the same, some state non-core activities are less restrictive than the federally allowable activities. The State currently allows any type of higher education (not limited to vocational education) typically up to 24 months, which is an allowable activity for the Federal government only up to12 months. Another activity that under current State law has a less restrictive time-limit is for mental health, substance abuse, and domestic violence treatment. 2. Required Hours: California requires all single parents to participate in work activities for 32 hours a week whereas Federal law requires 20 hours for single parents with children under six and 30 hours for single parents with older children. For two parents, Federal law requires 30 hours of core work activities whereas the State requires only 20 hours. Comparison of Federal and Current State Work Requirements Number of Hours Required Per Week Family Type Federal State Total Hours Core Hours Total Hours Core Hours Single parent with child under six 20 20 32 20 Single parent with older children 30 20 32 20 Two parent a 35 30 35 20 Allowable Activities Core Non Core Federal and State Federal State o Unsubsidized employment. o Subsidized employment. o Work experience. o Community service. o Vocational education (up to 12 months). o On the job training. o Job search and job readiness training (six weeks per year, can include mental health and substance abuse treatment). o Providing child care to a community service program participant. o Job skills training directly related to employment. o Education directly related to employment. o Satisfactory attendance at a secondary school or course leading to a certificate of GED. o All activities listed under federal. b o Mental health, substance abuse, and domestic abuse services beyond six weeks. o Any higher education (typically up to 24 months). b o Other activities necessary to assist in obtaining employment. a Must participate in a combined total of 35 hours.\u2028 b These activities can count toward core hours in some circumstances. Source: LAO S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 9 Governor’s Budget Proposal. The Governor proposes to institute minimum hourly work requirements and restrict the kinds of activities that qualify parents for subsidized care, generally consistent with the changes proposed for CalWORKs. Specifically, single parent families with older children would have to work at least 30 hours of subsidized or unsubsidized employment each week. This requirement would be higher for two-parent households (35 hours) and lower for single parents with young children (20 hours). These new eligibility standards would apply to both CalWORKs participants and other low-income families receiving subsidized child care. The Administration estimates these changes would eliminate child care eligibility for about 46,000 children from families whose parents work fewer hours or are engaged in other activities which is about one-fifth of the state’s current child care caseload and yield savings of $294 million. As of April 2013, this change would eliminate services for 109,000 families. A notable effect is on the roughly 31,000 children currently receiving subsidized child care while their parents are engaged in training or attending educational programs. Under the Governor’s proposal, these families would have to make other child care arrangements (and assume any associated costs) or elect to stop going to school\/training and instead find a job in order to maintain child care eligibility. Families working fewer than the required number of hours also would be affected by the proposed changes, though the administration estimates that most currently employed parents already are meeting the new minimum work requirement. The Governor’s proposal would have a significant impact on low-income families not meeting the stricter work requirements because in addition to losing child care services they also would have significantly lower grants. LAO COMMENTS The LAO believes that the Administration has overstated their number of children who would lose eligibility based on the proposed changes, as well as the estimated savings. Specifically, since the Administration has clarified that the roughly 7,000 children under the care of CPS or living with an incapacitated caretaker would retain current eligibility; no savings should be scored associated with these populations. Accordingly, the LAO estimates that the Governor’s proposed changes would only eliminate about 39,000 child-care slots and yield about $250 million in savings. The LAO provides a modified recommendation if the Legislature wishes to continue supporting low- income families furthering their education, it could consider adopting a modified version of the Governor’s proposal. The state could continue to provide child care to low-income parents engaged in training or education, but for a more limited period of time. Instead of the current six years (or indefinitely for parents using campus-based Title 5 child care centers), the state could limit child care eligibility based on educational activities to two years. This would allow parents a limited-term opportunity to pursue non-work activities that might make them more employable in the long run, while at the same time prioritizing limited resources for those who currently are working. Because the state does not currently collect precise information on length of time in care, estimating how many families this would affect or the associated savings is difficult. Based on available data, the LAO estimates the change could yield roughly $50 million in savings. To implement this change, the state would have to start keeping track of each family’s duration of and reason for care. A fiscal estimate of this new administrative mandate would be needed to ascertain the cost of impact. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 10 ISSUE 2: GOVERNOR’S 2012-13 PROPOSAL: LOWERING FAMILIES’ INCOME ELIGIBILITY THRESHOLD The issue for the Subcommittee to consider is the Governor’s proposal to lower the income eligibility threshold to be eligible for subsidized child care services. PANELISTS \uf0b7 Department of Finance \uf0b7 Legislative Analyst’s Office \uf0b7 Department of Education BACKGROUND Current Eligibility Income Thresholds. Currently, families eligible for the state’s Child Care & Development programs can earn up to 70 percent of the state median income (SMI). Note: the income ceiling was reduced from 75 percent to 70 percent of the state median income as part of the budget solutions for 2011-12, which generated $28.5 million in both Proposition 98 General Fund and Non-Proposition 98 General Fund savings. Governor’s Budget Proposal. The Governor proposes to lower this income eligibility threshold to 200 percent of the Federal Poverty Level (FPL), or about 62 percent of the SMI. After accounting for the reduced caseload from the stricter work participation requirements, the Governor estimates that changing income ceilings would terminate child-care eligibility for about 8,400 children currently being served in the Child Care & Development Programs. This proposal would eliminate the funding associated with these slots, reducing $44 million in Non-Proposition 98 General Fund support. The Governor would also apply this change to Proposition 98 General Fund funded part-day preschool, saving an additional $24 million and eliminating an additional 7,300 pre-school slots. Impact on Eligibility. For a family of three, this would drop the maximum eligible monthly income from $3,518 to $3,090. This change is linked to the Governor’s attempt to improve the state’s Work Participation Rate (WPR) by bringing non-CalWORKs families receiving subsidized child-care into this proposed Work Incentive Nutritional Supplement (WINS) Plus Program. Under federal law, 200 percent of FPL is the maximum amount a family can earn to receive TANF-funded services. LAO COMMENTS Instead of Lowering Family Income Thresholds for State Preschool Programs, Eliminate Slots. The State already prioritizes enrollment in the State Preschool for the lowest income applicants, therefore, the Governor’s proposal to lower the income eligibility threshold to achieve savings is not necessary. That is, providers already are required to select first from the families furthest below the existing ceiling of 70 percent of the SMI. The LAO recommends if savings have to be generated, to instead, reduce the number of available slots in order to focus eligibility on an even narrower group of families. If the Legislature decides it has to reduce the State Preschool programs, it is recommended to simply reduce funding, thereby reducing the total number of spaces. Programs will then, per CDE regulations and directives, end services to the highest income families, while retaining the flexibility to close classes and reduce enrollment in ways that allows centers to remain in business. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 11 ISSUE 3: GOVERNOR’S 2012-13 PROPOSAL: REDUCING MAXIMUM PROVIDER RATES The issue for the Subcommittee to consider is the Governor’s proposal to reduce the maximum amount for licensed providers under both the voucher-based and direct contractor systems. PANELISTS \uf0b7 Department of Finance \uf0b7 Legislative Analyst’s Office \uf0b7 Department of Education BACKGROUND The State Has Two Types of Subsidized Child Care Systems. Currently, the State funds child care and development programs through two main mechanisms: the voucher-based system and the direct contract with providers. The Voucher Reimbursement System. The Department of Education (CDE) allocates funding to local Alternative Payment (AP) organizations or county welfare departments (CWDs) to issue vouchers to CalWORKs families in any of the three stages of child care programs. In addition, the State provides vouchers for non-CalWORKs working poor families through the Alternative Payment Program. In total, approximately 49 percent of the children in state-subsidized child care programs are served through a voucher system. Families may use vouchers in one of the three-settings: licensed centers, licensed family child care homes, and license-exempt care. The license programs must adhere to the requirements of the Title 22 of the California Code of Regulations and are often referred to as Title 22 programs. Voucher Providers Are Reimbursed Using the Regional Market Rate. Title 22 providers (Licensed providers) are reimbursed for services up to a maximum of the 85th percentile of the 2005 Regional Market Rate. License-exempt providers are reimbursed at a maximum of the 60 percent of what licensed providers receive in their region. The cost of child care in specific regions of the State is determined via the Regional Market Rate (RMR) survey of both the public and private child care providers. The RMR survey is conducted every two years. However, the State is not obligated to update or use the new RMR survey information. In 2011-12 Budget Act, the license-exempt providers’ rate was reduced from 80 percent to 60 percent of the 85th percentile of the RMR, as a means of reducing costs without impacting slots. The Direct Contractor System. For non-voucher child care and preschool, CDE contracts directly with over 700 different agencies through approximately 1,100 direct service contracts. These providers must adhere to the requirements of Title 5 of the California Code of Regulations and are generally referred to as Title 5 providers. Title 5 Providers Receive the Standard Reimbursement Rate. These providers are reimbursed at the Standard Reimbursement Rate (SRR). The SRR is adjusted for factors such as the age of the child or for special needs, but it is not adjusted for regional market differences. The current rate has not been adjusted in six years to account for inflation, staying at $34.38 per day per child for full-day S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 12 care (either full-day child care or part-day preschool\/part-day child care) and $21.22 per day per child for preschool only. There are Requirement Differences for the Two Systems. The figure below shows the major care types and associated regulations offered through CalWORKs\/Alternative Payment (AP) providers and SDE Contracts. From left to right, requirements to provide the specific type of child care become more difficult to meet and suggest a higher level of quality. Subsidized Child Care Providers Assuming All Preschool-Aged Children CalWORKs and AP Providers CDE Contractors Exempt Provider Title 22 Licensed FCCH Title 22 Licensed Centers Title 5 Child Care Including Preschool Provider\/Teacher Education & Training None None. Child Development Associate (CDA) Credential or 12 units in ECE\/CD. Child Development Teacher Permits (24 units of ECE\/CD plus 16 general education units). Provider Health & Safety Training Criminal Background check required (except relatives). Self certification of health and safety standards. 15 hours of health and safety training and finger printing. Staff and volunteers fingerprinted and subject to health and safety standards. Staff and volunteers fingerprinted and subject to health and safety standards. Required Ratios None. 1:6 adult-child ratio. 1:12 teacher- child ratio or 1 teacher and 1 aid for 15 children. 1:24 teacher-child ratio and 1:8 adult- child ratio. Accountability, Monitoring & Oversight None. Unannounced visits every five years or more frequently under special circumstances Unannounced visits every five years or more frequently under special circumstances On-site reviews every three years. Annual outcome reports, audits, and program information. FCCH = Family Child Care Home CalWORKs = California Work Opportunity & Responsibility to Kids AP = Alternative Payment Providers ECE\/CD = Early Childhood Education\/Child Development Source: LAO S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 13 GOVERNOR’S BUDGET PROPOSAL The Governor proposes to reduce the maximum amount the state will pay for licensed providers under both the voucher-based and direct contractor systems but maintain existing payments for caretakers who are not licensed by the state. Elimination of COLA. The Governor proposes $29.9 million in non-Proposition 98 General Fund savings and $11.7 million in Proposition 98 General Fund savings by eliminating the statutory COLA for capped non-CalWORKs child care programs. Reduction to the Voucher System. The Governor proposes to reduce rates to the 50th percentile of RMR using 2009 survey data. Due to the updated data, the effective reduction to rates would be between 12 percent and 14 percent, on average. The Governor proposes to generate $11.8 million in non-Proposition 98 General Fund savings and $5.3 million General Fund savings from Stage 1 in the Department of Social Services budget. \uf0b7 Example: In Los Angeles County, the proposal would drop the maximum daily voucher for a preschool-age child in full-time care from $43.27 to $37.79. According to the California Resource & Referral Network, LA County lost 18 percent of their licensed family child care homes due to financial constraints. License-Exempt Provider Rates Maintained at Current Levels. Because the maximum voucher payments for license-exempt providers were reduced in both 2010-11 and 2011-12, the Governor does not propose additional reductions for this category of caretaker. The proposed rates for these providers would shift from 60 percent of current licensed rates to 73 percent of the newly lowered licensed rates leaving actual dollar amounts essentially flat. Note: License-exempt providers were significantly reduced as part of the 2011-12 Budget Act, from 90 percent to 60 percent of licensed rated. \uf0b7 Example: In Los Angeles County, license-exempt providers receive about $481 per month for full-time monthly care for a child. Prior to the reduction to the 60 percent of licensed rate, a license-exempt provider would receive about $602 for the same services. Reduction of 10 percent to the State Reimbursement Rate (SRR) for Title 5 Centers. The Governor also would reduce the SRR by ten percent, dropping the Title 5 per-child rate for full-day services from $34.38 to $30.94 and the part-day preschool rate from $21.22 to $19.10. LAO COMMENTS The Standard Reimbursement Rate Reductions are Problematic. A year ago, the Legislature approved, as part of the March budget package, to reduce the Standard Reimbursement Rate by ten percent. Immediately, the Department of Education and Title 5 providers informed the Legislature of the detrimental impacts that would lead to the disruption and closure of many centers due to the requirements under Title 5 that prevent them from scaling back. This reduction was rescinded as part of the final 2011-12 Budget Act. The concerns still exist that many preschool providers have few options or levers for absorbing the Governor’s proposed ten percent reduction to the SRR, and might close or drop out of the State S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 14 program as a result. The State mandates, under Title 5 regulations, the adult-to-child ratios, and instructional day requirements for these centers. Combine that with local collective bargaining agreements which frequently are embedded within larger K-12 school district contract agreements and it means that providers have limited flexibility to generate local savings. Moreover, the state rate for these centers is already somewhat low in several areas in the State, the SRR currently is lower than the rates charged by the majority of other preschool providers in the county. While parents and providers working with the voucher system could respond to the proposed RMR reduction in a number of ways, the Title 5 centers receiving lower state reimbursements would have no choice but to reduce their operating budgets, or close completely. That is, state requirements around adult-to-child ratios and days of operation and, in many cases, school district collective bargaining agreements leave these centers little flexibility to accommodate such a reduction. State law also prevents Title 5 centers from continuing to charge existing rates and asking parents to make up the difference. Moreover, the state rate for these centers already is somewhat low in several areas in the state, the SRR currently is lower than the rates charged by the majority of other providers in the county. As a result of these factors, such a reduction could lead to many Title 5 centers closing, thereby reducing access to child care services. For all these reasons, it is recommended that the Legislature reject the proposed SRR rate reduction. Reductions to the Regional Market Rate is also Problematic. Provider rate reductions have been proposed by the Administration in prior years. During previous subcommittee hearings on this topic, child care providers testified that rate reductions could make it very difficult for licensed family child care providers and centers that accept families with subsidies (and are reimbursed through the voucher system) to stay in business and provide high quality services. The Regional Market Rate system was designed to ensure that subsidized families have equal access to child care services. However, about 75 percent of licensed family child care homes are at or above the current Regional Market Rate, which means low-income parents are paying a co-pay for the difference that is not covered by the voucher, and a family fee if they earn above 40 percent state median income (SMI). S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 15 ISSUE 4: GOVERNOR’S 2012-13 PROPOSAL: RESTRUCTURING THE CHILD CARE SYSTEM The issue for the Subcommittee to consider is the Governor’s proposal to restructure the delivery of child care services and administration of the programs from the Department of Education to the Department of Social Services. PANELISTS \uf0b7 Department of Finance \uf0b7 Legislative Analyst’s Office \uf0b7 Department of Education YEAR ONE OF RESTRUCTURE The Governor proposes major changes that would restructure the administration of the child care programs over two years. According to the Administration, the proposed changes are to focus the state’s subsidized child care programs on supporting work to maximize the number of child care slots available with limited resources. Consolidates Funding & Eliminates Distinctions but Retains Administration with CDE. The Governor proposes to begin restructuring the child care programs in 2012-13, by consolidating the CalWORKs Stage 2 and Stage 3 funding with non-CalWORKs AP funding into one voucher-based grant, and eliminating those programs’ distinctive purposes. This consolidated voucher-based grant program would continue in the budget year to be administered by the local Alternative Payment agencies. As under current law, County Welfare Departments (CWDs) would continue to administer child care for families just entering the CalWORKs program (comparable to the existing Stage 1 program), and CDE would continue to contract directly with Title 5 centers for non-CalWORKs care in the State Preschool Program, General Child Care, Migrant Program, and Severely Handicapped programs. Prioritization Requirements for Subsidized Services. First priority for vouchers would be for families whose children are recipients of child protective services, or at risk of being abused, neglected or exploited, and cash-aided families meeting revised narrower work requirements. Any remaining funding for vouchers would be prioritized for the lowest income eligible families. Cash- aided families that are currently enrolled in Stage 1 will continue to receive child care services. Eligible working poor families not participating in CalWORKs also could apply to an AP agency for subsidized child care vouchers and be served to the extent the agency still has funding available after accommodating cash-aided families. Any remaining funding for vouchers would be prioritized for the lowest income eligible families. New Eligibility Requirements for Subsidized Services. Eligibility for child care services would be contingent on families meeting the Governor’s narrower and stricter work and income requirements. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 16 The diagram below illustrates the changes proposed to the child care structure in 2012-13. CalWORKs Child Care Stage 1 (DSS): will continue to be administered by County Welfare Directors, subject to the new work participating requirements. Funding: $429 million in General Fund Child Care slots: 45,000 CalWORKs Child Care Stage 2 (CDE): CalWORKs families are transferred to Stage 2 when \u2015stable\u2016 and limited to two years after an adult stops receiving a CalWORKs cash grant. CalWORKs Child Care Stage 3 (CDE): is a capped program that provides an extension to families who have exhausted their time limit in Stage 2, and remain as long as it is otherwise eligible for child care. . Non-CalWORKs Alternative Payment Programs (CDE): provides low income families with vouchers for care in a licensed center, family child care home, or by a licensed-exempt provider. Non-CalWORKs Programs General Child Care\/Migrant & Severe Handicapped (CDE): programs that provide non-CalWORKs low- income families with child care services, some programs are targeted for specific populations of children. Funding: $496 million non-P98 General Fund Child Care slots: 59,127 Year 1 Child Care Restructure New Consolidated Block Grant (CDE): would provide vouchers to serve low- income families that met the new eligibility requirements with priority given to families whose children are recipients of child protective services, or at risk of being abused, neglected, or exploited, and cash-aided families. Funding: $571 million in General Fund Child Care slots: 82,834 slots *The New Consolidate Block Grant would receive $236 million LESS in General Fund and support 36,325 fewer slots. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 17 YEAR TWO OF RESTRUCTURE Beginning in 2013-14, the Governor would collapse all remaining child-care programs into one voucher-based program to be administered locally by CWDs. The proposal includes $35 million for CWDs in 2012-13 to begin preparing for this shift. The Administration asserts that the ramp up funds would go towards a three-month period of transition costs, based on workload distributed among the counties. However, it is unclear if this funding is meant solemnly for the one-time purchase of IT software and\/or initial process of hiring\/training staff to handle the workload of administrating all the child-care programs. The Legislature will need to consider if this is the appropriate time to initiate a new infrastructure that will need training on how the child care structure functions (i.e. administering families’ eligibility) at the expense of using those limited resources to fund as many child care slots. The state no longer would contract directly with AP agencies or Title 5 child-care centers. Local CWDs could choose to subcontract with AP agencies to administer child-care vouchers, as many do now for the CalWORKs Stage 1 program. The CDE would continue to administer the part-day\/part- year preschool program currently funded with Proposition 98 funds but no longer would oversee any other child care services including services for infant, toddlers, and other pre-kindergarten aged children. All child-care monies including both state General Fund and the federal child care block grant would be appropriated to DSS to allocate to local CWDs. What is possible from this shift, is that part- day\/part-year preschool programs would have a difficult time remaining in business if they are unable to fill the remaining slots with either voucher or private pay children, as families would be expected to go through CDE to become eligible for part-day\/part-year preschool services and then go through the county welfare department to attain eligibility for a limited voucher-based service. If there is not a high level of attention paid to maintaining seamless full-day\/full-year wrap around services between Title 5 centers and the new voucher-based program, the State could put at risk an already diminished preschool structure. Prioritization of Services. Families meetings work requirements and receiving cash assistance would continue to have first priority for receiving child care. New Overpayment & Sanction Proposal. The Governor’s proposal centers oversight and design of the child care system with the counties starting in 2013-14, and proposes legislation to change the mechanisms that counties and alternative payment programs use to identify and collect overpayments and to impose sanctions on providers and families that commit intentional program violations such as families receiving care for hours they are not eligible or providers receiving payment for hours in which they did not actually provide care. Any savings identified would be reinvested in child care slots. Further details are not available on how the Administration proposes to collect and redistribute any overpayment funding, as well as the kind of sanctions that will be imposed on providers and families or what factors lead to the proposals to change current laws and regulations that have been the subject of extensive legislative oversight. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 18 ISSUES TO CONSIDER Outstanding Issues Relating to Child Care Services for Non CalWORKs Families. The Administration had not yet released details as to how child care funding would be allocated to CWDs in the future. In particular, the Administration had not yet clarified whether the funding would be a part of the county single allocation or one or more separate grants restricted for child care services. The current system earmarks funding explicitly to provide subsidized child care to some non CalWORKs low income families through the General Child Care and Alternative Payment programs, although demand typically exceeds the number of funded slots. Depending on the specific funding structure for the new county based system, local funding constraints and competing priorities could result in even more limited access to care for non CalWORKs families. Specifically, \”first calls\” on single allocation funding would go not just to fund child care for families on cash assistance but also to employment support services and county administrative costs. CalWORKs Child Care Stage 1 (DSS) New Consolidated Block Grants (CDE) formerly the CalWORKs Stage 2 and 3, and Alternative Payment Provider Program. General Child Care, Migrant Program, and Severely Handicapped Program (CDE) Year 2 New Child Care Structure Consolidated Child Care Block Grant Program (DSS\/CWDs): will serve eligible families with priority given to families whose children are recipients of child protective services, or at risk of being abused, neglected, or exploited, and cash-aided families meeting work requirements, and other income eligible families meeting work requirements (if there is available funds). Counties would have authority to continue to contract with Alternative Payment agencies, as currently done by 27 counties with their Stage 1 program. The Department of Social Services (DSS) would oversee this consolidated program, including the federal Child Care Development Funds. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 19 ISSUE 5: GOVERNOR’S 2012-13 PROPOSAL: CHANGING THE STRUCTURE OF THE STATE’S PRESCHOOL PROGRAMS The issue for the Subcommittee to consider is the Governor’s 2012-13 budget proposals for the State Preschool Program (SPP) and General Child Care Program. PANELISTS \uf0b7 Department of Finance \uf0b7 Legislative Analyst’s Office \uf0b7 California Department of Education BACKGROUND The 2011-12 Budget Act. In 2011-12, the State budgeted $368 million in Proposition 98 funding to provide part-day\/part-year center based preschool services to low-income children. The State also budgeted $675 million for the General Child Care (GCC) program, to provide center-based child care services to low-income children from working families ages birth to 12 years of age and age 21 for children with exceptional needs. Both the State Preschool Program and General Child Care Program experienced significant reductions of about 7 percent and 14 percent, respectively, due to changes in family income eligibility from 75 percent of the State Median Income (SMI) to 70 percent, and an across the board reductions of 11 percent. These funding reductions led to the curtailment in funded enrollment for Preschool by 17,513 slots and General Child Care by 12,751 slots. Beginning in 2011-12, the Legislature also shifted the funding sources for GCC and all child care programs other than part-day preschool from Proposition 98 to non-Proposition 98 General Fund. Providers for both the part-day preschool and General Child Care receive funding through direct contracts with CDE. In addition to the reductions made in the budget, the State approved $5.9 million in additional across-the-board reductions to State Pre-school Program and $10.9 million in across the board reductions to General Child Care, as part of the budget trigger reductions, which took effect on January 1, 2012. PRESCHOOL & GENERAL CHILD CARE INTERACTION AB 2759 (Jones), Chapter 308, Statutes of 2008, allows local providers to merge monies from these two contracts to offer part-day\/part-year preschool programs or full-day\/full-year preschool programs for three- and four-year olds to best serve the needs of working families and local communities. While still budgeted as two programs and funded by two sources at the State level, these services are thought of as one SPP program at the local level. Data from CDE suggest that in 2011-12, local providers blended the Proposition 98 funds with about $400 million from the General Child Care (or about 60 percent of the total $685.9 million for General Child Care funding) to offer SPP services to approximately 145,000 low-income preschool age children. Of these, two-thirds were served in part- day programs and one-third in full-day programs. Programs also integrate federally funded Head Start funds with General Child Care and State Preschool programs. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 20 GOVERNOR’S BUDGET PROPOSAL In 2012-13, Governor Reduces Funds and Slots for the Preschool Programs, and Prioritizes Services to Displaced Children from the Elimination of the T.K. Program. As described under Issue 2 and Issue 3, the Governor proposes to reduce both these programs by reducing the maximum reimbursement rates for providers and imposing a lower income eligibility threshold. The Governor proposes additional trailer bill language to increase the eligibility for the part-day State Preschool program in order to cover four-year old children who are no longer eligible for Kindergarten due to the eligibility age rollback, but who turn five years old during the school year. The Governor’s proposal would give eligible five-year olds first priority for part-day State Preschool funding; however, the Governor does not provide additional funding for the program to cover a potential increase in workload. Therefore, other eligible, low-income three-year olds and\/or four-year olds would be displaced, as there is no funding redirection provided to accommodate the eligible five- year olds who would otherwise attend a Transitional Kindergarten. In 2013-14, Governor Proposes to Revert to Part-Day\/Part-Year Preschool Program. As part of his proposed changes for non-Proposition 98 funded child care, beginning in 2013-14, the Governor would eliminate the existing General Child Care program and shift the associated funding to a child care voucher system to be administered by county welfare departments. This would abolish the blended State Preschool Program and revert the State’s direct-funded center-based preschool program to only a Proposition 98 funded part-day\/part-year program for about 91,000 children (a reduction of roughly 54,000 compared to how many children were served in State Preschool Program in 2011-12). Preschool providers’ ability to serve additional children or offer full-day\/full-year services to meet the needs of working families would depend upon how many enrolled families could afford to pay out of pocket or obtain a state-subsidized voucher from the county welfare department. (Under the Governor’s proposal, low-income families not receiving CalWORKs cash assistance would have more limited access to these vouchers). ISSUES TO CONSIDER Governor’s Proposal for 2013-14 Ignores Reality of State’s Current Preschool Program. The Governor’s proposal for 2013-14 treats the Proposition 98 preschool budget item and General Child Care budget item as two separate programs preserving one and eliminating the other. However, in reality these funding sources have been supporting one uniform preschool program. By redirecting all General Child Care funding into vouchers, the Governor’s proposal would reduce the existing State Preschool program by roughly 40 percent. Moreover, the dismantling of the blended State Preschool Program would notably limit local providers’ ability to provide a full-day\/full-year preschool program, which is often the only way children from working low-income families are able to access services. The proposal to eliminate direct-contracting practices for existing General Child Care and Migrant Child Care centers would represent a more substantial departure from current practice. Many of these centers would continue to operate and serve subsidized families but be paid with vouchers rather than directly from the state. Presumably, switching to a solely voucher-based system means the state no longer would require these centers to follow existing Title 5 programmatic standards regarding classroom practices and activities, child assessments, and staff development. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 21 The Title 5 requirements would remain for State Preschool programs, which accounts 80 percent of all children attending Title 5 centers. As noted, however, the Governor’s proposal would shift the General Child Care funded portion of the full-day\/full-year State Preschool Program to the new voucher program. The State should Recognize the Interaction between State Preschool & General Child Care Programs. The LAO also recommends that the Legislature accurately reflect the existing State Preschool Program budget and align all funding for the program within Proposition 98. As part of this alignment, they recommend a comparable adjustment to the Proposition 98 minimum guarantee to avoid the need for a corresponding reduction to K-12 programs. Specifically, the LAO recommends the Legislature reduce non-Proposition 98 General Fund for General Child Care by $400 million (the amount of General Child Care spent for State Preschool Program services in 2011-12) and increase the Proposition 98 funding for preschool by a like amount. This would allow the State to make policy and budget decisions affecting preschool services for four year olds based on actual programmatic funding and caseload counts. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 22 ISSUE 6: GOVERNOR’S 2012-13 PROPOSAL: SHIFTING ADMINISTRATION OF FEDERALLY FUNDED PROGRAMS The issue for the Subcommittee to consider is the Governor’s proposal to shift administration of federally required programs and activities from the Department of Education (CDE) to the Department of Social Services (DSS). PANELISTS \uf0b7 Department of Finance \uf0b7 Legislative Analyst’s Office \uf0b7 California Department of Education BACKGROUND Federally Funded Quality Improvement Funds. As a condition of receiving federal child care block grant funding, the state must spend a certain amount on quality improvement activities. In 2011-12, the state is spending $72 million on 27 applicable projects, including professional development, stipends for child care providers that pursue additional education, and activities related to health and safety. Some of these projects (including the 60 Resource & Referral agencies operating across the state) are specified in the annual budget act, and some have been selected by CDE in consultation with stakeholders. Governor’s Budget Proposal. The Governor’s budget proposes to shift all program administration and funding including the federal child care grant to DSS beginning in 2013-14. DSS would then assume responsibility for reviewing and potentially revisiting the state’s approach to spending these quality improvement funds. During the transition in 2012-13, the Governor would have DSS and CDE jointly develop a spending plan, to be approved by the Department of Finance. Race to the Top Grant (RTTT). California recently attained a $53 million federal \u2015Race to the Top Early Learning Challenge Grant\u2016 to develop locally based quality rating systems for CCD programs. The CDE is the lead agency charged with administering this grant, which is to be expended over four years beginning in spring 2012. Governor’s Budget Proposal. The Governor’s proposal would shift responsibility for administering this grant to DSS beginning in 2013-14. At the moment, the Administration has not proposed to change the plan for using these funds. Any modification would likely require federal approval. The state also is in the middle of spending an $11 million federal American Recovery and Reinvestment Act grant received in 2010. Because federal guidelines require that this grant be fully expended by September 2013, these activities are not likely to be altered by the Governor’s proposed restructuring. S U B C O M M I T T E E N O . 2 O N E D U C A T I O N F I N A N C E & S U B C O M M I T T E E N O . 1 O N H E A L T H A N D H U M A N S E R V I C E S A S S E M B L Y B U D G E T C O M M I T T E E MARCH 14, 2012 23 ISSUE TO CONSIDER The Governor’s proposal, as currently articulated, does not provide for legislative oversight of the expenditures of these funds. The LAO recommends that the Legislature continue to take an active role in encouraging and overseeing activities that support a high-quality child care and early childhood education program. Furthermore, the LAO finds that many of the 27 quality improvement projects historically funded by CDE might be worthwhile, but not all have been rigorously evaluated. Therefore, the LAO recommends that the Legislature provide specific guidelines and priorities for the quality improvement activities that are outcome based. Additionally, through its appropriation authority, the LAO recommends that the Legislature monitor the activity and expenditures associated with the $53 million Race to the Top grant to ensure the projects are meeting intended outcomes. Regular reports to budget subcommittees could help identify issues, improve state oversight, and inform the Legislature as to how best to encourage local efforts to support quality programs. ”

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” SUBCOMMITTEE #3: Health & Human Services Chair, Senator Mark DeSaulnier Senator Elaine K. Alquist Senator Bill Emmerson February 3, 2011 9:30 AM or Upon Adjournment of Session Room 4203 (John L. Burton Hearing Room) Staf f : Agnes Lee (OSHPD, CDA, DOR) Jennifer Troia (DSS) Item Department 4140 Office of Statewide Health Planning & Development (OSHPD) 4170 Department of Aging (CDA) 5160 Department of Rehabilitation (DOR) 5180 Department of Social Services (DSS) PLEASE NOTE: Only the items contained in this agenda will be discussed at this hearing. Please see the Senate Daily File for dates and times of subsequent hearings. Issues will be discussed in the order noted in the Agenda unless otherwise directed by the Chair. Pursuant to the Americans with Disabilities Act, individuals who, because of a disability, need special assistance to attend or participate in a Senate Committee hearing, or in connection with other Senate services, may request assistance at the Senate Rules Committee, 1020 N Street, Suite 255 or by calling 916-324-9335. Requests should be made one week in advance whenever possible. Thank you. Subcommittee #3 February 3, 2011 Agenda (Vote-Only Items indicated by *) Item Department Page 4140 Office of Statewide Health Planning & Development 1. Healthcare Reform Healthcare Workforce Development* 6 2. CalREACH* . 7 3. Hospital Seismic Safety* .. 7 4. Healthcare Workforce Clearinghouse* .. 8 5. Deferment of General Fund Loan Repayment* 8 6. Song-Brown Program Funding* .. 9 4170 Department of Aging 1. Medicare Beneficiary Outreach and Assistance Program* ..4 2. Senior Community Service Employment Program* …4 3. New Freedom Transportation Grant* . 5 4. Long-Term Care Ombudsman Program* … 5 5. Proposal to Eliminate the Multipurpose Senior Services Program (MSSP) ..11 5160 Department of Rehabilitation 1. Electronic Records System* . 3 2. Partnership with the Department of Mental Health* ..3 5180 Department of Social Services Supplemental Security Income\/State Supplementary Program (SSI\/SSP) & the Disability Determination Services Division (DDSD) 1. Staffing Requests for the DDSD* … . . 10 2. Request for Funding to Relocate the Los Angeles Branch of the DDSD* ..10 3. Proposal to Reduce SSI\/SSP Grants to Individuals to the Federal Minimum 12 In-Home Supportive Services (IHSS) IHSS Overview .13 4. Proposal to Further Reduce Hours of IHSS Service Provided . 15 5. Proposal to Eliminate Domestic & Related IHSS Services For Specified Recipients 16 6. Proposal to Require Physician’s Certification to Qualify for IHSS Services………..17 7. Request for IHSS State Program Staff . .18 8. Request for IHSS Automation System State Staff ..20 9. Proposal to Eliminate Funding for IHSS Advisory Committees .21 Senate Budget & Fiscal Review 2 Subcommittee #3 February 3, 2011 Vote-Only Agenda 5160 Department of Rehabilitation (DOR) DOR Issue 1: Electronic Records System (ERS) Budget Issue: DOR requests, in a budget change proposal, an increase of $1.3 million in federal fund authority in 2011-12 to fund the fifth and final year activities of the ERS project. DOR indicates that staffing needs would be covered by existing DOR staff. There is no General Fund requested. Background: ERS is a commercial, off-the-shelf case management system. DOR intends to use ERS in place of its current case management system for the vocational rehabilitation services program, which is called the Field Computer System (FCS). According to the department, FCS is outdated and unable to integrate with recent software applications, such as Microsoft Word. DOR anticipates that ERS will improve the accessibility and efficiency of its vocational rehabilitation services. DOR received funding in 2010-11 for the ERS for system development, integration, data conversion, testing, and implementation. The budget change proposal requests expenditure authority for unspent federal funds that were dedicated to this project. The federal funds were not used due to project delays. DOR indicates that ERS will be fully implemented in summer 2011. Subcommittee Staff Comment & Recommendation: Staff recommends approval of the budget change proposal. DOR Issue 2: Department of Mental Health (DMH) Partnership Budget Issue: DOR requests, in a budget change proposal, a permanent augmentation of $216,000 from the Mental Health Services (MHS) fund and 1.0 permanent position (associate governmental program analyst). This would maintain the interagency agreement between the DOR and the DMH and allow DOR to leverage an additional $798,000 in federal funds related to vocational rehabilitation programs. There is no General Fund requested. Background: After the Mental Health Services Act (MHSA) was enacted in 2005, DOR and DMH entered into an interagency agreement for vocational rehabilitation services. The partnership was intended to implement the provisions of the MHSA that relate to assisting persons with severe psychiatric disabilities to obtain employment and necessary independent living skills. Since 2005-06, DOR began to receive MHS funds and positions for these activities on a limited term basis. Specifically, the DOR has assisted in the solicitation, identification, development, and design of cooperative programs and contractual agreements with county mental health and education agencies. DOR indicates there is an ongoing need to provide training and technical assistance to the cooperative programs. Senate Budget & Fiscal Review 3 Subcommittee #3 February 3, 2011 Subcommittee Staff Comment & Recommendation: Staff recommends denying the proposal without prejudice. Currently, the Governor’s budget proposal exceeds the administration cap for MHSA funds (see Subcommittee #3 hearing agenda for February 1, 2011 related to Department of Mental Health). Thus, further information is needed from the Department of Mental Health regarding the possible re-prioritization of the MHSA administrative funds. 4170 Department of Aging (CDA) CDA Issue 1: Medicare Beneficiary Outreach and Assistance Program Budget Issue: CDA requests, in a budget change proposal, an additional one-time federal funding authority of $1.1 million for local assistance and $17,000 for state operations in 2010-11 and $1.1 million for local assistance and $9,000 for state operations in 2011-12 to utilize federal funding for the Medicare Improvements for Patients and Providers Act (MIPPA) for Beneficiary Outreach and Assistance Program. There is no General Fund requested. Background: The federal government has awarded another two-year, non-competitive grant to CDA (MIPPA II grant). The purpose of the funding is to expand enrollment of California’s Medicare beneficiaries in the Prescription Drug Benefit Low Income Subsidy Program (LIS) and Medicare Savings Programs (MSP). Local Area Agencies on Aging (AAA), Health Insurance Counseling Programs (HICAP), and Aging and Disability Resource Centers are conducting the grant-funded work, which varies based on local need. CDA also received a two-year grant (MIPPA I) in 2009. CDA indicates that the performance goal for the MIPPA II grant is 10,834 applications and estimates that the grant will generate at least $400 million in prescription drug cost savings to Medicare beneficiaries throughout the state. Subcommittee Staff Comment & Recommendation: Staff recommends approval of the budget change proposal. CDA Issue 2: Senior Community Service Employment Program (SCSEP) Budget Issue: CDA requests, in a budget change proposal, $497,452 in additional ongoing federal expenditure authority due to an increase in the baseline level of grant funding for the SCSEP. There is no General Fund requested. Background: The SCSEP provides subsidized part-time community service training positions to low-income individuals age 55 and older with poor employment prospects. The Senate Budget & Fiscal Review 4 Subcommittee #3 February 3, 2011 program provides a variety of supportive services to participants including personal and job- related counseling, job training, and job referral. CDA administers the funds through 15 local Area Agencies on Aging (AAA). The additional federal funds would provide an additional 45 participant training slots. Subcommittee Staff Comment & Recommendation: Staff recommends approval of the budget change proposal. CDA Issue 3: New Freedom Transportation Grant Budget Issue: CDA requests, in a budget change proposal, increased reimbursement authority to spend $400,000 from the California Department of Transportation (Caltrans) to utilize a federal New Freedom Mobility Management grant. Specifically, CDA requests $100,000 for 2010-11 (through the Section 28.5 process), $200,000 for 2011-12, and $100,000 for 2012-13. In addition, CDA requests a 2-year limited-term staff services manager I position to implement the grant activities for the grant period. There is no General Fund requested. Background: CDA proposes to use this federal grant to work with the 33 local Area Agencies on Aging (AAA) to develop and implement a statewide strategy to fill the need of older adults and adults with disabilities for accessible transportation services and systems that enable them to remain in their communities in the least restrictive setting possible. According to CDA, the state-level position will assess each AAA’s capacity to apply for the New Freedom grants locally. The position will also work with CDA and AAA staff to establish both state and local level ongoing transportation expertise that can be sustainable in the future. Caltrans requires a detailed implementation plan that includes specific tasks and requires quarterly implementation reports to make sure the goals and objectives of the grant are on schedule. Subcommittee Staff Comment & Recommendation: Staff recommends approval of the budget change proposal. CDA Issue 4: Long-Term Care Ombudsman Program Budget Issue: CDA requests, in a budget change proposal, to shift funding for the Long- Term Care Ombudsman Program from the Federal Citations Penalties Account Special Deposit Fund to a combination of funding from the State Health Facilities Citation Penalties Account ($1.188 million) and the Skilled Nursing Facility Quality and Accountability Fund ($1.9 million). The CDA also proposes a statutory change to Health and Safety Code Section 1417.2 to specifically include funding the Long-Term Care Ombudsman Program as an allowable use of the State Health Facilities Citation Penalties Account . There is no General Fund requested. Senate Budget & Fiscal Review 5 Subcommittee #3 February 3, 2011 Background: The Office of the State Long-Term Care Ombudsman, which oversees 35 local Ombudsman programs, is located within CDA. These local Ombudsman offices and their approximately 1,000 certified volunteers identify, investigate, and seek to resolve complaints and concerns on behalf of approximately 296,000 residents of long-term care facilities, including Skilled Nursing Facilities (SNFs), Intermediate Care Facilities (ICFs), and Residential Care Facilities for the Elderly (RCFEs). Over the past several years, the budget has included short-term funding solutions for the program. In 2008-09, General Fund support for the program was eliminated. Since then, the program has received support on a short-term basis including Federal Citations Penalties Account Special Deposit Funds and some General Fund. CDA indicates that the budget proposal will provide a more stable funding source than the Federal Citations Penalties Account Special Deposit Fund. The program also receives about $3.3 million in federal funds for local assistance. The State Health Facilities Citation Penalties Account consists of moneys collected from civil penalties imposed on health facilities. The Skilled Nursing Facility Quality and Accountability Fund consists of moneys used to make certain payments to skilled nursing facilities. Subcommittee Staff Comment & Recommendation: Staff recommends approval of the budget change proposal and related statutory change. 4140 Office of Statewide Health Planning and Development (OSHPD) OSHPD Issue 1: Healthcare Reform Healthcare Workforce Development Budget Issue: OSHPD requests, in a budget change proposal, an increase of $256,000 in 2011-12 and $224,000 in 2012-13 from the California Health Data and Planning Fund (CHDPF) and $58,000 in federal funds in 2011-12 and 2012-13 to establish 4.0 two-year limitedterm positions to perform healthcare workforce development activities in response to the passage of federal healthcare reform. There is no General Fund requested. Background: According to OSHPD, its Healthcare Workforce Development Division supports healthcare accessibility through the promotion of a diverse and competent workforce while providing analysis of California’s healthcare infrastructure and coordinating healthcare workforce issues. OSHPD indicates that federal healthcare reform includes opportunities for health workforce planning and development efforts needed to meet the increased demand for healthcare services in California. OSHPD requests one position to facilitate a strategy for comprehensive health workforce planning and three positions to prepare applications for Health Professional Shortage Area, Medically Underserved Area, and Medically Underserved Population designation and enable the state to maximize opportunities to receive federal funding designed to increase access to healthcare. Senate Budget & Fiscal Review 6 Subcommittee #3 February 3, 2011 Subcommittee Staff Comment & Recommendation: Staff recommends approval of the budget change proposal. OSHPD Issue 2: CalREACH Budget Issue: OSHPD requests, in a budget change proposal, an increase of $322,000 from multiple special funds and 2.0 two-year limitedterm positions in 2011-12 and $834,000 and 0.5 permanent position in 2012-13 for the creation of the Responsive Electronic Application for California’s Healthcare (CalREACH) electronic application and monitoring system. There is no General Fund requested. Background: OSHPD indicates that the proposal will enable its Healthcare Workforce Development Division (HWDD) and the Health Professions Education Foundation to develop a technology solution that centralizes eligibility and allows applicants to submit applications for scholarships, loan repayments, and grants online. The system would also allow applicants and program staff the ability to manage and track applications and contracts. The foundation is a public nonprofit foundation housed in OSHPD that was statutorily created to increase access to health care in underserved communities by providing financial aid. In 2009-10, the HWDD and foundation received over 4,000 applications, made nearly 1,000 awards, and awarded over $18 million in funds. OSHPD currently processes these applications and monitors these funds manually. Subcommittee Staff Comment & Recommendation: Staff recommends approval of the budget change proposal. OSHPD Issue 3: Hospital Seismic Safety Budget Issue: OSHPD requests, in a budget change proposal, an increase of $337,000 in 2011-12 and $321,000 in 2012-13 from the Hospital Building Fund and 2.0 two-year limited- term positions to implement enacted legislation related to general acute care hospital requests for an extension to the seismic safety deadlines for retrofit or replacement of specific hospital buildings due to planning approval delays. There is no General Fund requested. Background: Current law requires that all general acute hospitals meet stringent seismic safety standards within specific timeframes. OSHPD is responsible for enforcing compliance of these standards and must approve all hospital construction required to achieve them. SB 608 (Chapter 623, Statutes of 2010), allows OSHPD to grant two separate extensions for hospitals to meet requirements due to local planning delays. According to OSHPD, the following hospitals (based on current information) may pursue SB 608 extensions: Senate Budget & Fiscal Review 7 Subcommittee #3 February 3, 2011 Tehachapi Hospital, Tehachapi Marin General Hospital, Greenbrae St. Jude Medical Center, Fullerton Stanford Hospital, Palo Alto Sutter Medical Center of Santa Rosa- Chanate, Santa Rosa Methodist Hospital of Southern California, Arcadia California Pacific Medical Center-California West, San Francisco St. Luke’s Hospital, San Francisco Subcommittee Staff Comment & Recommendation: Staff recommends approval of the budget change proposal. OSHPD Issue 4: Healthcare Workforce Clearinghouse Budget Issue: OSHPD requests, in a budget change proposal, an increase of $454,000 from the Health Data and Planning Fund and 1.0 position in 2011-12 and $77,000 in ongoing years to fund the development and administration costs associated with Year 3 of the Healthcare Workforce Clearinghouse program. There is no General Fund requested. Background: Current law authorized OSHPD to establish a clearinghouse designed to serve as a central repository of healthcare workforce and education data. The program is responsible for the collection, analysis, and distribution of information on the educational and employment trends for healthcare occupations in the state. In 2008-09, $389,000 and 3.5 positions were approved for clearinghouse administration costs. Subsequently, $1,499,000 and 9 positions for 2009-10 and $2,688,000 and 12 positions for 2010-11 were approved for clearinghouse project costs. OSHPD indicates that this budget change proposal would provide for costs for year 3 of the project, primarily to meet increased data and reporting requests resulting from federal healthcare reform. Subcommittee Staff Comment & Recommendation: Staff recommends approval of the budget change proposal. OSHPD Issue 5: Deferment of General Fund Loan Repayment Budget Issue: The Governor’s budget proposes to defer $32 million in General Fund loan repayments to two special funds within OSHPD. This includes a $20 million repayment to the Hospital Building Fund and $12 million repayment to the California Health Data and Planning Fund. As a result, the state would receive $32 million in GF relief during the 2011- 12 budget year. The proposal includes budget bill language to delay the repayment to the Hospital Building Fund. Background: In 2008-09, $20 million was loaned from the Hospital Building Fund to the General Fund. In 2010-11, the loan repayment date was extended to June 1, 2012. The Senate Budget & Fiscal Review 8 Subcommittee #3 February 3, 2011 budget proposes to now extend the loan repayment date to July 1, 2012. OSHPD indicates that the fund balance in the Hospital Building Fund can withstand the deferment of the loan repayment. In 2008-09, $12 million was loaned from the California Health Data and Planning Fund to the General Fund. There is no specified repayment date, although OSHPD anticipated receiving the $12 million loan repayment in 2011-12. OSHPD indicates that the fund balance in the California Health Data and Planning Fund can withstand deferment of the loan repayment from 2011-12 to 2012-13. Subcommittee Staff Comment & Recommendation: Staff recommends approval of the proposal to defer the General Fund loan repayment, including the proposed budget bill language. OSHPD Issue 6: Song-Brown Program Funding Budget Issue: The Governor’s budget proposes to fund 50 percent of the Song-Brown base program ($2.1 million) and 100 percent of the Song-Brown Registered Nurse Program ($2.9 million) from the General Fund. The remaining 50 percent of the Song-Brown base program is proposed to be funded from the California Health Data and Planning Fund. Background: The Song-Brown Program’s goal is to increase the number of family practice physicians, primary care physician assistants, family nurse practitioners, and registered nurses in areas of the state that are medically underserved (e.g., rural and low-income communities). Providers with Song-Brown training and education deliver primary care services through the University of California’s teaching hospitals, 61 percent of county facilities, and a number of community health centers. According to OSHPD, the California Health Data and Planning Fund (CHDPF) has an estimated fund balance of $8.4 million at the beginning of 2011-12. OSHPD indicates that the CHDPF can support the Song-Brown program by another $5 million without affecting current CHDPF activities, including budget change proposals for 2011-12. Subcommittee Staff Comment & Recommendation: Staff recommends denying the $5 million General Fund for the Song-Brown program and approving instead $5 million from the CHDPF to support the program. Senate Budget & Fiscal Review 9 Subcommittee #3 February 3, 2011 5180 Department of Social Services (DSS) DSS Issue 1: Staffing Requests for the Disability Determination Services Division (DDSD) Budget Issue: DSS requests, in a budget change proposal, $20.5 million (100 percent federal funds) to establish 245 new positions to process Social Security and SSI disability claims. The additional staff members would mainly be located in a new San Diego office and an expanded Roseville office. Background: Disability claims have recently been increasing nationwide by 12 to 14 percent, and the federal government expects this trend to continue for several more years. In 2008 in California, the DDSD processed 349,000 disability claims. That number jumped to 397,000 in 2009 and 412,000 in 2010. According to the Department, the requested positions are needed to keep pace with the growing workload associated with processing these applications for benefits and for conducting continuing disability reviews (CDRs). The Department also indicates that ten percent of CDRs result in decisions to discontinue SSA\/SSI benefits, which leads to GF cost avoidance (as a result of the SSP portion of SSI\/SSP benefits that would otherwise be paid). Subcommittee Staff Comment & Recommendation: Staff recommends approval of the requested positions, which are fully federally funded and which will assist the state’s population of individuals who are elderly, blind, or who have disabilities in promptly receiving benefits for which they are eligible. DSS Issue 2: Request for Funding to Relocate the Los Angeles (LA) Branch of the DDSD Budget Issue: The Department requests, in a budget change proposal, $540,000 ($270,000 GF) for annualized increased rent costs related to the relocation of the LA branch of the DDSD to a site that meets the state’s seismic criteria. The Department of General Services’ Real Estate Services office identified the need for this move. Background: Currently, the LA branch occupies approximately 20,866 square feet at a rental rate per square feet of $1.78. The projected rental rate for relocation to a similar- sized space that is seismically compliant at current market rates is $4.00 per square foot, resulting in $45,000 of increased lease costs per month beginning in 2011-12. One-time costs in the amount of $633,750 (redirected GF) have also been placed in an Architectural Revolving Fund for this relocation. The lease for the current office space expired on April 30, 2009; however, a soft-term lease extension was negotiated and lasts through April, 2012. The Department is in the process of looking for an alternative space and the relocation is projected for early in the 2011-12 budget year. Subcommittee Staff Comment & Recommendation: Staff recommends approval of the requested funds related to the relocation. Senate Budget & Fiscal Review 10 Subcommittee #3 February 3, 2011 Discussion Agenda 4170 Department of Aging (CDA) CDA Issue 5: Proposal to Eliminate the Multipurpose Senior Services Program (MSSP) Budget Issue: The budget proposes to eliminate the MSSP program for 2011-12 savings of $19.9 million GF. This would also result in the state losing $19.9 million in federal funds. Background: MSSP assists elderly Medi-Cal recipients to remain in their homes. Clients must be at least 65 years old and must be certified as eligible to enter a nursing home. The services that may be provided with MSSP funds include: Adult Day Care, Housing Assistance, Personal Care Assistance, Protective Supervision, Care Management, Respite, Transportation, Meal Services, and other Social and Communications Services. CDA oversees the operations of the MSSP program statewide and contracts with local entities that directly provide MSSP services. The program operates under a federal Medicaid Home and Community-Based, Long-Term Care Services Waiver. The program has 41 sites statewide and serves approximately 11,789 clients per month. In 2008-09, the budget reduced funding for the MSSP program. According to CDA, this resulted in MSSP sites serving 10 percent fewer clients, leaving slots vacant. LAO Comment: The LAO indicates that if the budget includes significant reductions to the In-Home Supportive Services (IHSS) program, the Legislature should consider maintaining the infrastructure of MSSP to continue assisting some of the highly impaired IHSS recipients who are also MSSP recipients. The LAO also recommends achieving savings in MSSP by reducing the budget by at least $5 million General Fund. The LAO recommends that the department begin negotiations with the federal government to reduce operational costs associated with MSSP. Subcommittee Staff Comment & Recommendation: Staff recommends holding this issue open. Questions for CDA: 1) What are the impacts to persons who would lose MSSP services? 2) Why doesn’t the budget include costs associated with an increase in nursing home costs? 3) Please explain what steps would be involved in closing down the MSSP sites. Question for LAO: 1) Please describe your recommended alternatives. Senate Budget & Fiscal Review 11 Subcommittee #3 February 3, 2011 5180 Department of Social Services (DSS) Supplemental Security Income\/State Supplementary Program (SSI\/SSP) DSS Issue 3: Proposal to Reduce SSI\/SSP Grants to Individuals to the Federal Minimum Budget Issue: The Governor’s budget proposes savings of $15 million GF in 2010-11 and $177 million GF in 2011-12 from reducing, effective June 1, 2011, the state’s participation in SSI\/SSP grants for individuals who are elderly, blind, or who have disabilities to the minimum required by federal law. Savings include those resulting from grant reductions in the Cash Assistance Program for Immigrants (CAPI) and California Veterans Cash Benefit programs, as those grant levels tie to the grants for SSI\/SSP. As in the past, approximately 108,000 Non-medical Out-of-Home Care, Restaurant Meal Allowance, and Title XIX Medical Facilities recipients are excluded from this reduction. Background & Anticipated Impacts: Based on 2010-11 caseload data, there are approximately one million individual recipients of SSI\/SSP (not including couples in which both individuals are recipients). As a result of the proposed grant reduction, the maximum grant most of these individual SSI\/SSP beneficiaries could receive would be reduced from $845 per month to $830 per month. At this grant level, individuals who receive the maximum grant and have no other income would have incomes equivalent to approximately 92 percent of the Federal Poverty Level (FPL). Approximately 8,500 recipients would become ineligible for the program. The applicable federal law that limits reductions states can make to SSP benefit levels without penalty is a maintenance-of-effort (MOE) requirement. If a state did reduce SSP benefits below its MOE, the state would lose all federal Medicaid funding. Recent grant changes: In the February, 2009 special session, a 2009 federal Cost of Living Adjustment (COLA) was rescinded effective May 1, 2009, and grants were reduced 2.3 percent ($20 for individuals and $35 for couples) effective July 1, 2009. Grants were then further reduced, effective October 1, 2009, by $5 for individuals and $82 for couples. After this change, couples’ maximum grants of $1,407 per month have been at the MOE floor (around 116 percent of FPL). Also, as a result of AB X4 8 (2009-10 budget trailer bill), no state SSP COLAs will be automatically granted. There was no federal COLA for the SSI portion of the grants in 2010. An estimated .2 percent federal COLA is, however, expected to take effect on January 1, 2012. Subcommittee Staff Comment & Recommendation: Staff recommends holding this issue open. Question for DSS: 1) Please briefly describe this proposal and its anticipated impacts. Senate Budget & Fiscal Review 12 Subcommittee #3 February 3, 2011 IHSS Overview For Background Purposes Background on IHSS: The IHSS program has its roots in a 50-year-old cash grants program for individuals who are blind, aged, or who have disabilities and a 30-year-old homemaker program that offered domestic help to recipients. With a 2010-11 budget of $5.4 billion ($1.2 billion GF), today’s IHSS program provides in-home personal care services to roughly 460,000 qualified individuals who are blind, aged (over 65), or who have disabilities. These individuals usually have income at or below the SSI\/SSP grant level ($845 per month for an individual as of October 2009) and assets, except their homes or cars, worth less than $2,000. County social workers determine eligibility for the program after conducting standardized in- home assessments and periodic reassessments. The assessment system relies on functional index rankings for a number of activities of daily living and weighted average scores of those rankings. Rankings range from 1 (independent, not served by the program) to 5 (cannot perform the task, with or without assistance). IHSS services can include tasks like meal preparation, feeding, bathing, paramedical care, and domestic services. The maximum number of monthly hours a beneficiary can receive is 283. On average, the state spends roughly $13,000 per year for each IHSS client’s services. IHSS services frequently assist program recipients to avoid or delay more expensive and less desirable institutionalizations. According to the LAO, the state spends an average of about $55,000 per year for each nursing home resident who uses Medi-Cal (based on 2006-07 figures). Recent Changes to the IHSS Program: The 2009-10 and 2010-11 budgets included multiple changes to the IHSS program that were estimated to save over $600 million GF. Some of these changes have, however, been enjoined by courts from taking effect and are still the subject of pending litigation. Statutory changes that are in effect include: Increases in out-of-pocket costs for consumers (made by eliminating what was called the share of cost buy-out ); Sweeping anti-fraud reforms, including new background checks and fingerprinting of providers, timesheet verifications, limited use of P.O. boxes for providers to receive checks, unannounced visits to ensure that services are being delivered, and additional funding for state and local fraud detection staffing; An across-the-board reduction of 3.6 percent in recipients’ authorized hours; Upon federal approval, enhanced federal funding for IHSS from establishing a sales tax on support services and the receipt of matching funds for the use of the revenues obtained pursuant to the tax. (IHSS providers will receive a supplementary payment that is equal to the portion of their gross receipts that is newly subject to taxation.); Senate Budget & Fiscal Review 13 Subcommittee #3 February 3, 2011 An expanded list of criminal record exclusions that prevent an individual from being an IHSS provider, except in certain circumstances when a recipient may provide informed consent; and Reductions in funding for Public Authorities that administer registries of qualified providers and provide other services. Changes to the IHSS program made in 2009-10 and 2010-11 that are not currently in effect include: A reduction – to $9.50 per hour plus $.60 per hour for health benefits – of the maximum level of IHSS provider wages in which the state will participate; and Elimination of eligibility, subject to applicable exemptions, for: o Domestic and related services provided to individuals with a functional index ranking below 4 for each service; and o All services for individuals with a functional index score below 2. The Governor’s 2011-12 Proposals: The Governor’s budget proposes to reduce IHSS expenditures by an additional $486 million GF. The major proposals include, effective July 1, 2011, a larger across-the-board reduction in hours of service for recipients, the elimination of specified services, and the requirement for a physician’s certification of need. These proposals are outlined in greater detail in the remainder of this agenda. It is important to note that the savings associated with each proposal is dependent on interactions with the other proposals; and each would therefore change in tandem with changes in another. Also, given that IHSS is paid for in part by federal Medicaid funding, changes in the program may also be subject to scrutiny by the federal government and\/or the courts based upon their compliance with federal Medicaid, as well as other state and federal disability-related, laws. Senate Budget & Fiscal Review 14 Subcommittee #3 February 3, 2011 DSS Issue 4: Proposal to Further Reduce Hours of IHSS Services Provided Budget Issue: The Governor’s budget proposes savings of $127.5 million GF in 2011-12 from reducing, effective July 1, 2011, the hours of IHSS services that recipients receive by an additional 8.4 percent. There would be a corresponding loss of $192 million in federal funds. Coupled with a 3.6 percent reduction already in effect for the budget year (which is made permanent as part of this proposal), the total ongoing reduction to recipients’ hours would equal 12 percent. These savings estimates account for related administrative, systems change, and other state operations costs. Background on Prior Reductions: As a part of the 2010-11 budget agreement, the Legislature and Governor reduced, effective until July 1, 2012, the hours of service available to each IHSS recipient by 3.6 percent (known as an across-the-board reduction). There were no specified exceptions to the reduction, although recipients retained any appeal rights that existed prior to the reduction. Recipients are able to direct how the reduction is applied to their authorized hours and types of services. A 12 percent reduction to the hours of service provided to IHSS recipients also took place earlier– in 1992-93. Recipients at the time were given an opportunity to apply for an IHSS care supplement if they believed they would be at serious risk of out-of-home placement due to the reduction or would not have the ability to summon emergency assistance. County social workers reviewed those requests for supplemental care. Anticipated Impacts of the Proposed Reduction: Building upon the policies underlying the 1992-93 reduction, the Governor’s current proposal includes a process for individuals to be granted exceptions from the policy–in whole or in part–if their applications for supplemental care are approved. The applications would be given to each recipient along with the notice of action (NOA) that informs them of the reduction policy. Recipients who apply within a specified time after that NOA would receive aid pending a determination of the outcome of their supplemental care request. Based in part on precedent from 1992-93, the Department estimates that 435,600 of the estimated 456,000 IHSS recipients in 2011-12 would experience reductions to their services as a result of this proposal. On average, those recipients would lose 6.7 hours of IHSS services per month. The Department anticipates that 5 percent of recipients would apply for supplemental care and have hours fully restored, while another 13 percent would apply and have their hours partially restored. Subcommittee Staff Comment & Recommendation: Staff recommends holding this issue open. Questions for DSS: 1) Please briefly summarize the impacts and implementation of the 3.6 percent reduction that is currently in effect and this proposal for an additional 8.4 percent reduction to individuals’ authorized hours. (Continued on next page) Senate Budget & Fiscal Review 15 Subcommittee #3 February 3, 2011 2) What are the proposed criteria and processes by which counties would determine whether or not to grant a supplemental care application? 3) What analysis has the Administration conducted to determine whether this reduction would comply with federal and state Medicaid and disability-related laws? DSS Issue 5: Proposal to Eliminate Domestic & Related Services for Specified IHSS Recipients Budget Issue: The Governor’s budget proposes $235 million GF savings from eliminating domestic and related IHSS services for recipients who live in shared living arrangements, and another $1.6 million GF savings for eliminating those services in cases where the recipient is a child under the age of 18 living with an able and available parent who is his or her IHSS provider. The savings estimates account for administration costs of $10.3 million ($3.6 million GF) associated with the policy changes, but do not include related automation costs. There would be corresponding losses of $351.7 million and $2.4 million in federal funds, respectively. Background: Domestic and related services include housework, meal preparation, meal clean-up, laundry, shopping, and errands. Currently, if IHSS recipients who share their homes with other individuals have some of these needs met in common by their households, the social worker who determines their eligibility for IHSS services can pro-rate or reduce the authorized hours of IHSS services related to those activities. According to the LAO, Washington State recently enacted a restriction on domestic and related services for individuals who lived with their IHSS providers. The state’s Supreme Court determined, however, that the policy violated federal requirements regarding the equal treatment of Medicaid beneficiaries. Anticipated Impacts: The Department estimates that approximately 300,000 individuals who live in shared environments and around 7,000 children who live with parents who are also their IHSS providers would be impacted by these proposals. Individuals in shared living arrangements who already had their services hours pro-rated to account for their housemates’ responsibilities would lose an average of 14 hours of domestic and related services per month. Those who live with others and have non-pro-rated hours today would lose an average of 17 hours of domestic and related services per month. The Department anticipates that around 145,000 impacted recipients will appeal the proposed reduction, and that 20 percent of those individuals will receive a full restoration of the services. According to the Department, approximately 48 percent of IHSS recipients live with their IHSS providers, and 62 percent of IHSS recipients have relatives who serve as an IHSS provider. Subcommittee Staff Comment & Recommendation: Staff recommends holding this issue open. Senate Budget & Fiscal Review 16 Subcommittee #3 February 3, 2011 Questions for DSS: 1. Please briefly describe the proposal. 2. How and when would the new policy be implemented for existing IHSS recipients? For new recipients? 3. What are the exceptions that would prevent some or all of an individual’s services from being eliminated and the process by which those exceptions would be evaluated and implemented? 4. What analysis has the Administration conducted to determine whether this reduction would comply with federal and state Medicaid and disability-related laws? DSS Issue 6: Proposal to Require Physician Certification to Qualify for IHSS Services Budget Issue: The Governor’s budget proposes $120.4 million GF savings from eliminating all services, effective July 1, 2011, for IHSS recipients who do not obtain a certificate from a physician (or other medical professional, as the Department determines is appropriate) verifying their need for IHSS services. These savings figures account for the Department’s estimate of the time it will take for social workers to process the receipt of the certificates, but do not include any associated automation costs or Medi-Cal costs. There would be a corresponding loss of $180.4 million in federal funds. Background & Anticipated Impacts: The Department estimates that around 10 percent or 42,000 current and new IHSS recipients would not obtain a physician’s certification and would therefore lose all IHSS services (an average of 65 hours per month after the impacts of the Governor’s other proposals are taken into account) in 2011-12. According to the LAO, a number of counties already choose to include information from physicians in their assessments of eligibility for the IHSS program. In those cases, however, the physician’s assessment of need is not a condition of eligibility, but rather one piece of information that is taken into consideration. The Department also indicates that a doctor’s prescription is already required within the IHSS program if individuals receive what are known as paramedical services, and that a form of medical certification is currently required for the category of services called protective supervision as well. Subcommittee Staff Comment & Recommendation: Staff recommends holding this issue open. Questions for DSS: 1) Please briefly describe the proposal and its anticipated impacts. (Continued on next page) Senate Budget & Fiscal Review 17 Subcommittee #3 February 3, 2011 2) What are medical professionals being asked to certify under this proposal? For example: a. Are they indicating that an individual would need out-of-home care immediately in the absence of IHSS services (versus that the individual would likely need such an acute level of care in the near future without those services)? b. Are they indicating that an individual needs each IHSS service that has been authorized by a social worker for that individual– or more generally that the individual may struggle to perform some activities of independent daily living? 3) What is the basis for assuming that 10 percent of IHSS recipients would not obtain a physician’s certification? And are those individuals assumed to be individuals with a particular level of need for assistance (e.g., the highest needs or lowest needs)? 4) How easy or difficult does the Administration anticipate that it will be for IHSS recipients to obtain appointments with physicians or other medical professionals if needed to meet this requirement? And at what costs to the Medi-Cal program? 5) What analysis has the Administration conducted to determine whether this reduction would comply with federal and state Medicaid and disability-related laws? DSS Issue 7: Request for IHSS State Program Staff Budget Issue: The Department requests, in a budget change proposal, $2.5 million ($1.2 million GF) for 23.5 new positions (9 permanent and the rest limited-term) and contract funding to implement recent budget-related changes to the IHSS program. Rationale for Requesting the 23.5 Positions: As described on page 13 of this agenda, the 2009-10 and 2010-11 budgets included major reforms to the IHSS program. In 2009- 10, the budget included 42 new, related state positions that were authorized for 2009-10 and 2010-11 (12 positions at DSS and 30 at the Department of Health Care Services). The Department requested an additional six anti-fraud\/program integrity positions related to the 2009-10 changes in 2010-11; however, that request was denied by the Legislature. No new DSS staff positions were previously requested or authorized in connection with the changes to the IHSS program included in the 2010-11 budget (i.e., a temporary 3.6 percent across- the-board reduction in service hours, new provider criminal background exclusions and notifications of consumers, and enhanced federal funding from an extension of the sales tax and corresponding supplemental provider payment to the provision of IHSS services). Senate Budget & Fiscal Review 18 Subcommittee #3 February 3, 2011 This request for additional staffing includes: 1. Two limited-term positions to assist with implementation of the 3.6 percent across- the-board reduction in hours; 2. Eight and a half limited-term positions to assist with implementation of new provider exclusion rules (including four legal staff); 3. Three permanent and four limited-term positions to assist with implementation of the new provider sales tax and supplemental payment policies; and 4. Six permanent positions to assist with implementation of new fingerprinting requirements. Additional Background on Fingerprinting of IHSS Consumers: Among the IHSS program changes made in 2009-10 were the requirements, beginning April 1, 2010, to fingerprint IHSS consumers and to include consumer and provider fingerprints on timesheets. Under AB X4 19 (Chapter 17, 4th Extraordinary Session, 2009), the fingerprinting of consumers must take place in prospective consumers’ homes at the time of their initial assessment for eligibility. Current consumers (approximately 460,000) were to be finger imaged at their next reassessment, conducted annually and also in the home. The statutes included exemptions for minors and those physically unable to provide fingerprints due to amputation. They do not require or specifically authorize a picture image to be taken of the consumer. Finally, the statutes require DSS to consult with county welfare departments to develop protocols to carry out these requirements. The Department reports that it conducted six pilots in 2010 to determine the viability of mobile imaging devices that could be used to fingerprint IHSS consumers. Also according to the Department, the Administration is awaiting a response from the federal government regarding the state’s Implementation Advance Planning Document that includes these policy changes. Last year, this Subcommittee voted to repeal the requirements for fingerprinting consumers and including fingerprints on timecards. However, the final 2010- 11 budget did not include that repeal, and the policies remain in statute. Subcommittee Staff Comment & Recommendation: Staff recommends: 1) Rejecting any positions that are requested in order to support implementation of fingerprinting IHSS consumers as a condition of eligibility and\/or including fingerprints on timecards; 2) Repealing the underlying statutory requirements for consumer fingerprinting and the inclusion of fingerprints on timecards; and 3) Rejecting without prejudice the remaining positions requested to assist with implementation of recent changes to the IHSS program. (Questions on next page) Senate Budget & Fiscal Review 19 Subcommittee #3 February 3, 2011 Questions for DSS: 1) The 3.6 percent across-the-board reduction is already in effect. What is the continuing workload associated with implementation that leads to this request? 2) What are the responsibilities of the 12 new staff authorized in the 2009-10 budget? Now that some of the previously enacted policies are underway, can those positions be used to fulfill some of the responsibilities described in this request? 3) What is the status of implementation for the recipient and timecard fingerprinting requirements? What are the total costs included in the budgets for DSS and the Office of System’s Integration related to those provisions? What savings does the Administration attribute directly to those provisions? 4) If some or all of the requested positions are not authorized, what would be the consequences for IHSS recipients and the program’s implementation and budget? DSS Issue 8: Request for IHSS Automation System State Staff Budget Issue: The Department requests, in a budget change proposal, $467,000 ($233,000 GF) for an additional one-year extension of four (out of eight) existing limited- term positions to support development of the Case Management Information Payrolling (CMIPS) II automation system. Background on CMIPS II & Rationale for Related Position Requests: CMIPS is the automated, statewide system that handles payroll functions for all IHSS providers. The current vendor (Electronic Data Systems, which is now Hewlett Packard) has operated the CMIPS system since its inception in 1979. The state has been in the process of procuring and developing a more modern CMIPS II system since 1997. According to the Department, the most recent delay in the project’s scheduled completion date was due to the changes to the IHSS program enacted in 2009-10 (again, see the IHSS Overview on page 13). The newest anticipated completion date is March, 2012. The Department indicates that the continuation of the requested positions is necessary to ensure continuity of knowledge and meet a heavy programmatic workload during the final phases of the system’s development. Subcommittee Staff Comment & Recommendation: Staff recommends rejecting these positions without prejudice. Questions for DSS: 1) Please briefly describe the need for the requested positions. 2) If some or all of the requested positions are not authorized, what would be the consequences for IHSS recipients and the program’s implementation and budget? Senate Budget & Fiscal Review 20 Subcommittee #3 February 3, 2011 Senate Budget & Fiscal Review 21 DSS Issue 9: Proposal to Eliminate Funding for IHSS Advisory Committees Budget Issue: The Governor’s budget proposes to eliminate, effective July 1, 2011, $1.6 million GF (all GF in the program) for local IHSS Advisory Committees. As a result, the Department indicates that the Advisory Committees would change from being mandated by the state to being discretionary at the local level. The Department also indicates that counties would be able to draw down federal matching funds if they are able and willing to fund the Advisory Committees at the local level. The total 2010-11 funding for the Advisory Committees includes $3.1 million ($1.6 million GF and $1.4 million federal funds). Background: Among other provisions, AB 1682 (Chapter 90, Statutes of 1999) requires counties to establish advisory committees that submit recommendations to their respective county boards of supervisors regarding the delivery of IHSS in their counties. SB 288 (Chapter 445, Statutes of 2000) also created specific requirements regarding the composition of the advisory committees (e.g., that a current or former IHSS consumer must be included). Subcommittee Staff Comment & Recommendation: Staff recommends holding this issue open. Questions for DSS and DOF: 1) Please briefly describe the proposal and its anticipated impacts. ”

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Reque Educa 1 , need special as ces, may request ests should be m ation ssistance to atten t assistance at th made one week Page Page 2 Page 5 Page 10 Page 12 Page 13 Page 14 Page 15 Page 16 nd he in 2 ISSUE 1: Child Development Budget Overview Speaker: \uf0b7 Rachel Ehlers, Legislative Analyst’s Office Issue. The issue before the Subcommittee is an overview of the Governor’s proposed budget for Department of Education child care. Please note that certain child care activities, such as CalWORKs Stage 1, are handled through the Department of Social Services budget and heard by Senate Budget Subcommittee 3. BACKGROUND Under current law, the state makes subsidized child care services available to: 1. Families on public assistance and participating in work or job readiness programs 2. Families transitioning off public assistance programs 3. Other families with exceptional financial need CalWORKs Child Care. Child care services provided within the California Work Opportunity and Responsibility to Kids (CalWORKs) program are administered by both the California Department of Social Services (DSS) and the California Department of Education (CDE), depending upon the stage of public assistance or transition the family is in. Stage 1 child care services are administered by the DSS for families currently receiving public assistance, while Stages 2 and 3 are administered by the CDE. Stage 2 Child Care. Families receiving Stage 2 child care services are either (1) receiving a cash public assistance payment (and are deemed stabilized ) or (2) in a two- year transitional period after leaving cash assistance. Child care for this population is an entitlement for twenty-four months under current law. The State allows counties flexibility in determining whether a CalWORKs family has been stabilized for purposes of assigning the family to either Stage 1 or Stage 2 child care. Depending on the county, some families may be transitioned to Stage 2 within the first six months of their time on aid, while in other counties a family may stay in Stage 1 until they leave aid entirely. Stage 3 Child Care. If a family is receiving Stage 3 child care services, they have exhausted their two-year Stage 2 entitlement. The availability of Stage 3 care is discretionary and contingent upon the amount of funding appropriated for the program in the annual Budget Act. Non-CalWORKs Child Care Programs. In addition to CalWORKs Stage 2 and 3, CDE administers general and targeted child care programs to serve non-CalWORKs low- income children at little or no cost to the family. The base eligibility criterion for these programs is family income at or below 75 percent of State Median Income (SMI) relative to family size. Because the number of eligible low-income families exceeds available child care slots, waiting lists for this care are common. 3 Child care providers are paid through either (1) direct contracts with CDE or (2) vouchers through the Alternative Payment Program. \uf0b7 Direct Contractors receive funding from the state at a Standard Reimbursement Rate (SRR), which pays for a fixed number of child care slots. These are mostly licensed child care centers but also include some licensed family child care homes (FCCH). These caretakers provide an educational component that is developmentally, culturally, and linguistically appropriate for the children served. These centers and FCCH also provide nutrition education, parent education, staff development, and referrals for health and social services programs. \uf0b7 Alternative Payment Programs (APs) act as an intermediary between CDE, the child care provider, and the family, to provide care through vouchers. Vouchers provide funding for a specific child to obtain care in a licensed child care center, licensed family day care home, or license-exempt care (kith and kin). With a voucher, the family has the choice of which type of care to utilize. Vouchers reimburse care providers based on the market rates charged by private providers in their region. BUDGET Governor’s Budget. The Governor proposes a total of $2.2 billion for Child Care and Development (CCD) programs in 2011 12, which is a reduction of $535 million, or 19 percent, compared to the current year. To achieve these savings, he proposes several significant changes to current policies, including reducing child care subsidies by 35 percent, lowering maximum family income eligibility from 75 percent to 60 percent of the state median income (SMI), and eliminating subsidized child care for 11- and 12-year olds. Offsetting these proposed savings is the Governor’s plan to partially restore the vetoed California Work Opportunity and Responsibility to Kids (CalWORKs) Stage 3 child care program, beginning April 1, 2011. Each of the Governor’s proposals will be discussed individually. Although the Governor’s budget would achieve $784 million in policy related savings and recognize an additional $106 million in technical and caseload savings, the net reduction across all child care programs is only $535 million. This is because the Governor’s package contains two notable augmentations: (1) $215 million in additional TANF funds to cover projected increases in Stage 1 caseload and (2) a net increase of $192 million to partially restore funding for the CalWORKs Stage 3 program. 4 Child Care and Development Budget Summary (Dollars in Millions) 2009 10 2010 11 Revised 2011 12 Proposed Change From 2010 11 Amount Percent Expenditures CalWORKs Child Care Stage 1 $547 $494 $611 $117 23.7% Stage 2a 485 440 255 186 42.2 Stage 3b 412 193 200 8 3.9 Subtotals ($1,445) ($1,127) ($1,066) ( $61) ( 5.4%) Non CalWORKs Child Care General child carec $797 $797 $480 $317 39.8% Other child carec 321 305 173 132 43.2 Subtotals ($1,118) ($1,103) ($654) ( $449) ( 40.7%) State Preschoolc $439 $439 $438 $1 0.2% Support programs 109 100 76 24 24.2 Totals $3,110 $2,768 $2,233 $535 19.3% Funding State General Fund Proposition 98 $1,836 $1,262 $1,087 $175 13.9% Non Proposition 98 29 29 29 \u2014 \u2014 Other state fundsd 66 290 \u2014 290 100.0 Federal funds CCDF 541 602 526 77e 12.7 TANF 528 475 592 117 24.6 ARRA 110 110 \u2014 110 100.0 a Includes $9 million for Stage 2 program run by the California Community Colleges. Does not reflect any reduction based on the $10.7 million the Governor proposes to sweep in 2010 11. b Does not include $52.6 million the administration has indicated setting aside pending legislation for CalWORKs Stage 3 in 2010 11. c For 2010 11 includes funding from local reserves. d Includes prior year Proposition 98 carryover and, in 2010 11, $6 million non Proposition 98 General Fund redirected from the Assembly’s budget and $83 million from local reserves. e Year to year decrease due mostly to the use of one time funds in 2010 11. CCDF = Child Care and Development Fund; TANF = Temporary Assistance for Needy Families; ARRA = American Recovery and Reinvestment Act. Source: Legislative Analyst’s Office 5 ISSUE 2: Reduction in Subsidy Levels Speakers: \uf0b7 Lynn Podesto, Department of Finance \uf0b7 Rachel Ehlers, Legislative Analyst’s Office \uf0b7 Camille Maben, California Department of Education \uf0b7 Sharon Taylor, California Department of Education \uf0b7 Erin Gabel, California Department of Education Issue. The issue before the Subcommittee is the Governor’s proposed 34.6 percent reduction to the child care subsidy levels (excluding preschool). Governor’s Proposal. The Governor’s Budget proposes to reduce the amount provided to all child development contractors, other than state preschool and CalWORKs Stage 1 contractors, by 34.6 percent, for a savings of $577 million. However, the Governor proposes not to allow contractors to absorb this reduction by serving fewer children. The Governor’s proposal includes new local flexibility in setting the subsidy rate in order to achieve the required savings. LAO Concerns. The LAO has raised concerns regarding how the Governor’s proposal would be implemented, including the inconsistency of not applying the reduction to CalWORKs Stage 1 or state preschool, and the new authority it provides to local agencies (many of which are not public agencies), to allocate the reduction in different ways across the state. In whatever approach it ultimately employs, the LAO recommends the Legislature apply reductions more consistently across programs and regions. PROPOSAL DETAILS Local Decision Making. The administration proposes to grant some local discretion as to how the 35 percent cut is applied across families. Specifically, the proposal grants new authority to local child care contractors, both Alternative Payment (AP) agencies and Title 5 centers, to apply a larger or smaller subsidy reduction to families of different income levels, as long as the reduction across all the families they serve totals 35 percent. The AP agencies typically serve as the intermediary between the California Department of Education (CDE) and local child care providers, passing along state payments to child care providers, but not typically providing child care services themselves. Title 5 centers have contracts with CDE to serve children directly. Decrease in Subsidy Level. The Governor’s proposal would decrease the average annual amount provided per child care slot in child care programs by $2,604 compared to current-year subsidy levels (from $7,841 to $5,237 annually). The Governor assumes that families would find a way to pay the difference between the amount their child care providers currently charge and the reduced state subsidy. This reduction is about $217 per month per child, which the low-income families would have to cover themselves. 6 IMPACT ON FAMILIES Families Possibly Impacted Differently. The proposed new local control would allow a contractor to reduce a very low-income family’s subsidy by only 20 percent, but reduce another low-income family’s subsidy–and increase their new copayment–by 50 percent. Alternatively, the agency could cut each of their families’ subsidies by 35 percent across- the-board without regard to income and expect each family to make up the difference through higher copayments. Impact on Families. Currently, families making below 40 percent of SMI (which for a family of three is about $2,010 a month) are not required to pay any fees. About two- thirds of the children served in the state’s child care programs are from such families. While the amount the state currently pays for a family’s child care services varies by county, age of child, and type of care, in many counties the reimbursement rate for a preschool-age child in full-time center-based care is roughly $650 a month. In this example, the Governor’s proposal would reduce the state payment by about $220 a month, meaning families making 40 percent of the SMI would have to dedicate more than 11 percent of their incomes to maintain current child care arrangements. For the over 160,000 families making below 40 percent of the SMI and those that live in high- cost counties where child care is more expensive than in this example, absorbing this drop in state support could be prohibitive. Reduction Likely Would Decrease Both Access to and Quality of Care. While some families and providers might be able to meet in the middle and accommodate the reduction through a combination of lower rates and higher copays, the magnitude of the cut still makes this implausible in most cases. If most families cannot afford significant new copays and most providers cannot afford to reduce their rates dramatically, most families would seek to accommodate the cut by looking for less expensive child care, including turning to a license-exempt provider. However, only about half of the children in the state’s child care system, those in the voucher-based CalWORKs stages and AP program, currently have the option of selecting a license-exempt provider. In such cases, there would likely be a diminution in the quality of care provided. LIKELY PROVIDER RESPONSE The LAO anticipates the following potential responses to this proposal: Licensed Providers Not Likely to Reduce Rates Dramatically. Assuming most families currently receiving subsidies could not afford to assume notably higher payments, the child care providers could choose to reduce their rates to make up for some or all of the lost state funding. However, many licensed child care providers would have few options for absorbing a revenue drop of the magnitude forced by the Governor’s budget reduction. Issues that restrict provider ability to reduce costs are: 1. State licensing regulations require that licensed providers maintain specific adult- to-child ratios, which currently limit their ability to reduce staff to save money. 2. For many centers, local collective bargaining agreements may further limit their ability to accommodate the reduction by lowering salaries. 7 3. State law forbids providers from charging private-pay clients a higher rate than subsidized families, which would prohibit them from recapturing the lost revenue from other families. 4. The Governor’s proposal would prohibit contractors from reducing the number of subsidized children served or hours of care offered. It is unreasonable to expect providers could maintain the exact same level of care for 35 percent less revenue and continue to stay in business. A more likely scenario is that licensed providers would opt not to lower rates so substantially, effectively resulting either in a shift away from subsidized clients to private clients or in closure. License-Exempt Providers Might Have an Easier Time Absorbing the Reduction. The shortage of licensed providers who would be affordable under the proposed drop in subsidies might lead to an increase in the number of families who opt for license-exempt care. License-exempt providers, who currently care for roughly 15 percent of all children in the state’s subsidized care system, might be able to absorb the drop in state subsidies more easily than licensed providers. Because these kith and kin providers typically care for their own family members in their own homes and do not have the administrative or overhead expenses of running a formal business or meeting licensing requirements, they might continue caring for children even at a lower subsidy rate. However, if the child care payment represents the license-exempt provider’s sole income, he or she likely also would struggle with a 35 percent reduction in pay and could opt instead to seek a higher salary in another vocation. Lower State Subsidy Would Limit the Pool of Providers From Which Families Could Afford to Choose. Currently, the state provides eligible families in the AP program and all three CalWORKs stages with a funding voucher sufficient to cover entirely the rate charged by about 65 percent of the licensed providers in their county. (Title 5 child care centers, which serve families in the General Child Care program, charge one statewide standardized reimbursement rate.) If the family chooses one of the 35 percent of providers that charge above the state reimbursement ceiling, then the parent must pay the difference. Thus, families seeking fully subsidized care likely would face greater competition for licensed slots, countering the Governor’s claim that his proposal maintains the same access to care. Current Regional Market Rate. The state’s maximum reimbursement rates were set at the 85th percentile of the regional market rates (RMR) in 2005, meaning they were supposed to be sufficient to provide subsidized clients access to 85 percent of the licensed child care providers in their county in that year. However, since state rates have not been updated in the intervening years and the amounts most providers charge have increased, a reasonable estimate is that the state’s rates are now effectively at about the 65th percentile of the RMR. While the data were not available to compare exactly how the Governor’s proposed reduction would lower the state reimbursement rate with respect to RMR data, the LAO thinks it would be well below the 50th percentile. That is, fewer than 50 percent of licensed child care providers currently charge at or below the Governor’s proposed level for state subsidies. 8 OTHER POTENTIAL OPTIONS Lower Regional Market Rate. Rather than eliminating 35 percent of the total subsidy, the Legislature may wish to consider a more modest decrease in the child care subsidy rates for both licensed and unlicensed providers. For example: \uf0b7 Reduce licensed provider reimbursement rate from 85th percentile to 75th percentile of the RMR: $19 million savings \uf0b7 Reduce license-exempt provider reimbursement rate from 80 percent to 70 percent of the licensed rate: $56 million savings Restrict Child Care for School-Age Children. Since school-age children are more able to attend after-school programs, the Legislature could consider restricting subsidies for school-age children to non-traditional hours of care and prioritizing these children for after-school programs. The LAO estimates that this option could create savings of $300 million. Apply Lower Income Ceiling to Preschool. The Governor’s budget proposal excludes preschool from the 60 percent SMI ceiling (keeping preschool at 75 percent of SMI). The Legislature may wish to consider lowering the income ceiling for state-subsidized preschool to 60 percent of SMI. The LAO estimates that this option could create savings of up to $60 million. Parent Fees. Currently, families making less than 40 percent SMI do not pay the daily parent fees (which increase with income). The Legislature may wish to lower the income ceiling at which parent fees become mandatory. The LAO estimates that this option could create savings of up to $30 million, depending on how the fee schedule is changed. Administration Funding. Currently, the APs are allowed 17.5 percent of their contracts for administration (which includes intake services of the families). If this percentage was reduced to 15 percent, the LAO estimates that this option could create savings of $15 million. Simplify State Regulations. The complexity of child care program rules creates problems for local child care providers. This complexity permeates every aspect of the child care system. For example, different programs have different eligibility rules and different rate structures. Providers that operate under more than one program also have to negotiate separate contracts for each program. They must also follow complex rules regarding allowable expenditures and attendance accounting, and collect detailed administrative information on these factors. Most of the child care-related positions in CDE are devoted to assisting contractors and implementing the cumbersome rules and requirements. Savings from this proposal are unknown. Combine Multiple Child Care Programs Into a Single Block-Grant for Locals. Instead of allocating funds for multiple child care programs, the state could divide funding between CalWORKs and all other child care. Then the funding for other child care could be provided to the locals as a block grant. This option relies on an increased 9 role for local decision making, such as that provided by the Governor’s proposal to have county offices of education take on a more active role in subsidized child care. Savings from this proposal are unknown. Simplify Access and Case Management for Families Seeking Child Care. The Legislature could consider aligning AP contracts to Resource and Referral Service Areas in order to increase access for families to AP services. One-Time Options Unlikely to Work. While past-year sweep funds were available in prior years for use in patching up child care funding, for 2011-12 these funds may not be available due to the aggressive use of such funds to restore vetoes in the 2010-11 budget and certain unexpected expenses within the Proposition 98 funded programs. Suggested Questions: 1. Are there unspent one-time funds that could be used to cover some of the 35 percent cut to subsidy levels? 2. What would be some of the potential ramifications of combining child care programs into a single local block-grant? 3. What would it take to simplify state regulations around child care? About how long would a review of state regulations take? What possible savings could be captured from such a simplification of process? 4. What would be the impact on APs of reducing the administrative funding amount to 15 percent? 5. In real dollar terms, what does this mean for a mother with two children? 10 ISSUE 3: Children Aged 11 and 12 Speakers: \uf0b7 Lynn Podesto, Department of Finance \uf0b7 Rachel Ehlers, Legislative Analyst’s Office \uf0b7 Camille Maben, California Department of Education \uf0b7 Sharon Taylor, California Department of Education \uf0b7 Erin Gabel, California Department of Education Issue. The issue before the Subcommittee is the Governor’s proposal to eliminate child care subsidies for 11- and 12-year-olds. Governor’s Proposal. The Governor’s budget proposes to eliminate child care subsidies for 11- and 12-year-olds, for savings of $93 million total ($59 million Proposition 98 General Fund and $34 million in federal funds). This proposal would eliminate 10,000 child care slots in CDE administered child care (plus additional slots in CalWORKs Stage 1 not included here). Care for Children Ages 11 and 12. Under CalWORKs, a child can receive child care services until his or her 13th birthday as long as the family’s income remains below the maximum allowable level. Nearly half of the children in this age group are receiving licensed-exempt care. The children aged 11 and 12 who are receiving care through licensed child care centers are more able to move to other child care alternatives, such as afterschool programs funded with ASES or 21st Century federal funds, because the afterschool programs take place during traditional hours of care. LAO Recommendation. The LAO thinks that the Governor’s proposal to lower the state’s age eligibility threshold and prioritize services for younger children merits consideration, perhaps in modified form, because there are more supervision options available for school-age children. California funds an extensive before and after school program in which slots could be prioritized for 11- and 12-year olds (and even younger school-age children) displaced from CDE child care programs. Specifically, the state annually spends almost $550 million on the After School Safety and Education (ASES) program and an additional $130 million in federal funds for the 21st Century Community Learning Centers. Many schools and communities also run a multitude of other locally based after-hours programs for school-age children. Taking better advantage of existing school-age care programs could allow the state to prioritize limited child care funds for infants and toddlers, for whom care typically is more costly and harder to find. While the LAO knows of no other state that sets its age limit for subsidized child care as low as age 10 (the LAO’s review suggests other states set maximum age at 12 or 13), there are no federal prohibitions against prioritizing services for younger children. Federal Requirements. The CDE has informed staff that federal regulations for the Child Development Block Grant (CDBG) require that subsidized care be made available 11 to all eligible children through the age of 12. Thus 11- and 12-year olds cannot be explicitly eliminated from the child care programs without California falling out of compliance with federal regulations. Staff Comment. California can still prioritize child care for children 10 and under without being out of compliance with federal regulations. Prioritizing care for younger children would in effect push older children out of subsidized care because the number of child care slots is restricted based on the amount of funding provided (except for Stage 2, which is an entitlement program). There are 3,446 11- and 12-year olds in Stage 2, who cost $19.6 million to serve. So excluding Stage 2 for the savings, prioritizing care for children 10 and under would provide savings of about $73.4 million. Suggested Questions: 1. Does this elimination only apply to CalWORKs kids? 2. What other care is available to children ages 11 and 12? 3. How many children ages 11 and 12 currently receiving child care subsidies receive center-based care? For those children currently not in center-based care, are after school programs a feasible option? 4. If children ages 11 and 12 are prioritized for after school programs, will other children currently in those programs lose their slots? 12 ISSUE 4: Reducing Income Eligibility Ceiling Speakers: \uf0b7 Lynn Podesto, Department of Finance \uf0b7 Rachel Ehlers, Legislative Analyst’s Office \uf0b7 Camille Maben, California Department of Education \uf0b7 Sharon Taylor, California Department of Education \uf0b7 Erin Gabel, California Department of Education Issue. The issue before the Subcommittee is the Governor’s proposal to reduce the income eligibility ceiling from 75 percent of State Median Income (SMI) to 60 percent of SMI. Governor’s Budget. The Governor proposes to reduce the income eligibility for subsidized child care programs, excluding preschool, from 75 percent of SMI to 60 percent of SMI. This proposal would create savings of $79 million in Proposition 98 funds. Impacted Population. The Governor’s proposed income eligibility ceiling reduction would disqualify 13,597 children from the State’s child care programs. The majority of these children are in General Child Care and in CalWORKs Stage 3 child care. LAO Recommendation. The LAO believes the Governor’s proposal to lower the income eligibility ceiling from 75 percent to 60 percent of SMI is reasonable, because it prioritizes service for the most needy families. Moreover, the LAO has reviewed other states’ eligibility policies for subsidized child care, and findings indicate the Governor’s proposed level would be more comparable to policies in other states. Like California, all states set maximum income eligibility thresholds for subsidized child care based on their SMI. The LAO’s review indicates that only 15 other states set maximum income eligibility at or above California’s current SMI threshold. In contrast, about half of all states set income ceilings at or below 60 percent of their SMI. The LAO questions the Governor’s policy of exempting state preschool from the proposed change to income eligibility. Besides leaving the income ceiling at 75 percent of SMI for state preschool, the Governor also does not propose changing current statute that allows these programs to enroll up to 10 percent of their caseload from families that make 15 percent more than 75 percent of SMI. In addition to the administrative complication that different eligibility ceilings would create for centers that run blended preschool and General Child Care programs for 3- and 4-year olds, preserving access to subsidized preschool for higher income families while lower income families remain on waiting lists does not prioritize service for the neediest children. The LAO estimates that including preschool in the income ceiling reduction could save the state an additional $60 million (for a total savings of $150 million from the reduction). Suggested Questions: 1. How many children would lose state subsidized child care if this lower income ceiling was extended to preschool? 13 ISSUE 5: Quality Improvement Activities Speakers: \uf0b7 Lynn Podesto, Department of Finance \uf0b7 Rachel Ehlers, Legislative Analyst’s Office \uf0b7 Camille Maben, California Department of Education \uf0b7 Sharon Taylor, California Department of Education \uf0b7 Erin Gabel, California Department of Education Issue. The issue before the Subcommittee is a reduction to quality improvement programs. Governor’s Proposal. The Governor’s Budget proposes to reduce federally funded quality improvement programs by $16 million. In 2010-11, the state spent $88 million in federal funds ($69 million in child care block grant monies and $19 million in ARRA funds) on about 40 different quality improvement programs. Due to the expiration of the ARRA grant, the Governor’s 2011-12 budget proposal reduces overall spending on quality improvement activities by $16 million. Under the proposal, CDE would decide which of the 18 quality activities, including the California Preschool Instructional Network, California Early Childhood Mentor Program, and support for young English language learners, would be reduced or eliminated. Quality Improvement Programs. As a condition of receiving federal child care block grant funds, the state must spend a certain amount on quality improvement activities. These activities typically include professional development, stipends for child care providers, and activities related to health and safety. LAO Recommendation. The Governor’s proposal not to backfill $16 million for quality improvement projects that were funded with ARRA funds seems reasonable given the $69 million that would remain for these activities under the Governor’s budget. Nonetheless, the LAO thinks the Legislature could improve upon the Governor’s proposal by coming up with its own list of quality projects to maintain, reduce, or eliminate. The LAO recommends taking a careful look at which quality initiatives are most effective, of highest priority, and complementary, then developing a package of initiatives strategically designed to work together in a concerted effort to improve the quality of the overall child care system. Staff Comment. Staff has requested a list of the quality improvement activities from the CDE. Some of these activities have spending mandated in state statute, so the department does not always have discretion over how much funding to provide for an activity. Staff will work with the department to develop a list that utilizes the $69 million in the most effective way possible, and provide that list for the Budget Committee for a vote at a later date. Suggested Questions: 1. Which quality improvement programs provide the most benefit for the child care programs? Has the effectiveness of these programs ever been examined? 14 ISSUE 6: Elimination of the Centralized Eligibility List Speakers: \uf0b7 Lynn Podesto, Department of Finance \uf0b7 Rachel Ehlers, Legislative Analyst’s Office \uf0b7 Camille Maben, California Department of Education \uf0b7 Sharon Taylor, California Department of Education \uf0b7 Erin Gabel, California Department of Education Issue. The issue before the Subcommittee is the elimination of the Centralized Eligibility List and the redirection of the savings to other child care activities. Governor’s Proposal. The Governor’s Budget proposes to eliminate funding for the CELs beginning in 2011-12 and to redirect the $7.9 million to child care programs to help offset other proposed reductions. Centralized Eligibility List Background. The Centralized Eligibility Lists (CELs) serve as master waiting lists for all eligible non-CalWORKs families in the county seeking subsidized child care. The lists rank families by income to help ensure the neediest families get first priority when providers have child care slots available. Since 2005-06, the state has provided a total of $7.9 million annually to the 58 counties to maintain countywide CELs. As of June 2010, there were almost 188,000 children on county CELs waiting for care. Impact on Families. The effect of the proposal would be that eligible families once again have to sign up on multiple waiting lists at multiple child care centers rather than in one centralized location, and providers with available slots would only consider families that had signed up on their individual lists. LAO Recommendation. The LAO recommends the Legislature adopt the Governor’s proposal to redirect $7.9 million from supporting the CELs to child care programs because it prioritizes direct services for children over administrative activities. While the county-based CELs help facilitate and streamline the registration and enrollment process for eligible families waiting for care, in this fiscal climate keeping children off the waiting lists is a more important state-level priority than tracking how many children are on the waiting lists. Suggested Questions: 1. Why was the centralized eligibility list created to begin with? What were the problems the CEL was intended to overcome and what problems will be solved by dismantling the list? 15 ISSUE 7: Stage 3 Child Care Speakers: \uf0b7 Lynn Podesto, Department of Finance \uf0b7 Rachel Ehlers, Legislative Analyst’s Office \uf0b7 Camille Maben, California Department of Education \uf0b7 Sharon Taylor, California Department of Education \uf0b7 Erin Gabel, California Department of Education Issue. The issue before the Subcommittee is the funding gap in CalWORKs Stage 3 child care. Governor’s Budget. Though the Governor’s Budget proposes to restore CalWORKs Stage 3 for the 2011-12 fiscal year, it provides funding for this partially-vetoed program only from April 2011 on. This leaves Stage 3 without funding for the months of January, February, and March. Beginning April 1, 2011, the Governor proposes to fund Stage 3 child care at a reduced level of $52.6 million. This is a lower level of funding because of the policy changes proposed by the Governor, including the 35 percent decrease in subsidy levels. Impact on Families. The Governor’s proposal to delay restoration of the CalWORKs Stage 3 program until April 1, 2011, raises questions as to how affected families will manage child care needs during the three-month gap in services. LAO Concerns. The LAO believes the Legislature should reconsider the priority of the CalWORKs Stage 3 program compared to other child care services. The justification for giving continued priority for child care to former CalWORKs participants over other working poor families, who may have lower incomes, is not particularly strong. While there may be a risk of former CalWORKs recipients going back on CalWORKs aid if they suddenly lose their child care, other working poor families are continually grappling with the same challenges, with the primary difference being they have not received cash assistance in the past. Moreover, the LAO has not been able to find an example of another state that guarantees child care to former welfare recipients for such an extended period of time. If the Legislature were to restore Stage 3 based instead on current law and provide sufficient funding to cover the January-through-June 2011 period, the LAO estimates it would cost roughly $135 million, or about $85 million more than the Governor has set aside. Staff Comment. The Legislature has always been very supportive of families receiving Stage 3 child care. If there are options for ensuring continuity of services for these at-risk families those should be explored. Suggested Questions: 1. Are there funds from prior years that could be directed to cover the gap in Stage 3 funding? 16 ISSUE 8: Stage 2 Caseload Speakers: \uf0b7 Lynn Podesto, Department of Finance \uf0b7 Rachel Ehlers, Legislative Analyst’s Office \uf0b7 Camille Maben, California Department of Education \uf0b7 Sharon Taylor, California Department of Education \uf0b7 Erin Gabel, California Department of Education Issue. The issue before the Subcommittee is a proposed current year (2010-11) sweep of Stage 2 funds. Governor’s Proposal. Based on the administration’s assessment of underlying demographics and caseload trends, the Governor also assumes the CalWORKs Stage 2 program will not need the full 2010 11 Budget Act appropriation. The Governor proposes to sweep $11 million from the program and use it for other Proposition 98 purposes in the current year. LAO Recommendation. The LAO recommends the Legislature reject the Governor’s proposal to sweep and reallocate $11 million from the current-year CalWORKs Stage 2 program. The LAO believes it is premature to assume savings will materialize in this program, particularly given the current-year veto of the Stage 3 program. Due to unused Stage 2 eligibility and some counties’ creative use of the CalWORKs Diversion program, the LAO believes several thousand former Stage 3 children have reentered Stage 2 care, hence increasing current-year Stage 2 caseload. Staff Comment. The department has informed staff that the latest caseload numbers indicated about 7,500 children transferred from Stage 3 to Stage 2, thus increasing the number of children in Stage 2. The department estimates that, without changes to eligibility policy, Stage 2 may be underfunded by as much as $12 million in the current year. ”

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” SUBCOMMITTEE #3: Health & Human Services Chair, Senator Mark Leno Senator Elaine K. Alquist Senator Roy Ashburn May 6, 2010 9:30 a.m. or Upon Adjournment of Session Room 4203 Committee Staf f : Jennifer Troia Item Department 0530 Office of Systems Integration 4140 Office of Statewide Health Planning & Development 4200 Department of Alcohol & Drug Programs 4170 Department of Aging 5160 Department of Rehabilitation 5175 Department of Child Support Services 5180 Department of Social Services (See Table of Contents on pages 2-3 for More Specific Listing of Issues.) Please note: The Committee will discuss only the items contained in this agenda at this hearing. Please see the Senate File for dates and times of subsequent hearings. The Committee will discuss the issues in the order noted in the agenda, unless otherwise directed by the Chair. Pursuant to the Americans with Disabilities Act, individuals who, because of a disability, need special assistance to attend or participate in a Senate Committee hearing, or in connection with other Senate services, may request assistance from the Senate Rules Committee, 1020 N Street, Suite 255 or by calling 916-651-1505. Requests should be made one week in advance whenever possible. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 2 of 27 Agenda (Vote-Only Items indicated by *) Item Department Page 0530 Office of Systems Integration, Health & Human Services Agency 1. Electronic Benefit Transfer (EBT) System*. 4 2. Case Management Information & Payroll Replacement System (CMIPS II) .14 3. Statewide Fingerprint Imaging System Proposed Use for In-Home Supportive Services (IHSS) 16 4140 Office of Statewide Health Planning & Development 1. Staffing for Health Care Data Requests* .. .5 2. Mental Health Loan Assumption Program* 6 3. Oversight of Hospital Seismic Safety Compliance .. .18 4170 Department of Aging 1. Senior Community Service Employment Program* ..7 4200 Department of Alcohol and Drug Programs 1. Women and Children’s Residential Treatment Programs 19 5160 Department of Rehabilitation 1. Traumatic Brain Injury (TBI) Program* 7 5175 Department of Child Support Services 1. Proposal for Administrative Process to Establish and Modify Orders 21 2. California Child Support Automation System (CCSAS) 26 5180 Department of Social Services 1. EBT System Position Request*.. ..4 2. Positions Related to Recent Legislation* .8 3. Promoting Safe and Stable Families – Proposed Trailer Bill Language (TBL)* . …8 4. Intensive Treatment Foster Care Provisions (SB 1380) – TBL for Proposed Suspension * .. ..9 5. Implementation of Federal Fostering Connections to Success & Increasing Adoptions Act (FCSA)* 9 6. Group Home Fiscal Audits Proposed TBL* 10 Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 3 of 27 7. Child Welfare Services (CWS)\/Web Project Staffing* .. .11 8. Fingerprint Licensing Fees for Caregivers Proposed TBL* 12 9. CalWORKs State and County Peer Reviews* .13 10. Conlan v. Shewry Positions and Budget Bill Language (BBL)* .13 Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 4 of 27 Vote-Only Agenda 0530 Office of Systems Integration, Health & Human Services Agency (OSI) 5180 Department of Social Services (DSS) OSI & DSS Issue 1: Electronic Benefit Transfer (EBT) Project Budget Issue: The overall budget for the EBT system in 2009-10, including project management, is $47.3 million ($27.0 million GF\/TANF). The Administration requests, in a Spring Finance Letter dated April 1, 2010, a decrease of $10.3 million ($2.4 million GF) in that same year to both the Department of Social Services Local Assistance budget and corresponding OSI spending authority. The proposed 2009-10 decrease is a result of cost reductions under a new contract. The Administration also requests a decrease of $20.9 million ($5.4 million GF) in DSS Local Assistance and a corresponding reduction of $19.7 million in OSI Spending Authority for 2010-11. The proposed 2010-11 decrease includes contract cost changes, as well as the expiration of limited-terms for staff and the completion of other transition-related tasks. The Governor’s budget for 2010-11 also proposes $177,000 ($66,000 GF) to extend, for another two years, two existing limited-term positions that support the EBT system at DSS. One position would continue to provide program support to the counties and the other to OSI. DSS has sought, and been granted authority for, extensions of these two limited-term positions six times since the EBT system was mandated in 1997. Background on EBT: The EBT system eliminates the need for coupons or checks to deliver Supplemental Nutrition Assistance Program (food stamps) and cash aid benefits. Instead, the EBT system provides benefits through automated teller machines (ATMs) and point-of-sale terminals (e.g., in grocery stores). The EBT system works by automating benefit authorization, delivery, redemption, and settlement processes through computers, plastic debit cards, and telecommunications technology. OSI provides state-level project management and oversight for the system. Changes in EBT Contract Costs: The proposed cost reductions in 2009-10 and 2010- 11 are due to the transition of EBT services to a new contract (from J. P. Morgan Electronic Financial Services, Inc. [JPMorgan EFS] to ACS State and Local Solutions, Inc. [ACS]). The lowered costs are reflective of decreased costs for EBT services nationwide since 2000, when California executed its first EBT contract with Citicorp (later taken over by JPMorgan EFS). They also reflect a change from an unbundled cost structure (with differing rates for food benefits only, cash benefits only, and combined food and cash benefits, along with various other costs for related services and equipment) to a bundled rate (e.g. eliminated some costs for related services and equipment and are bundled in the benefit costs). Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 5 of 27 Subcommittee Staff Comment & Recommendation: Staff recommends approving the requested budget decreases contained in the OSI request, as well as the proposed extension of the two limited-term positions at DSS. 4140 Office of Statewide Health Planning & Development OSHPD Issue 1: Staffing for Health Care Data Requests Budget Issue: OSHPD requests, in a Spring Finance Letter dated April 1, 2010, an increase of $144,000 in California Health Data and Planning Fund (CHDPF) expenditure authority and the authority to redirect two positions for a two-year limited term. This request is in response to an anticipated increase in workload resulting from the enactment of SBx5 2 (Chapter 1, Fifth Extraordinary Session, Statutes of 2010). SBx5 2 expanded the categories of entities that can request health data from OSHPD. Background: OSHPD collects confidential patient-level data from California licensed hospitals, emergency departments, and ambulatory surgery centers. State statute allows for the release of limited portions of this data to California hospitals, local public health officers and local public health departments, and specified federal public health agencies. All research requests for OSHPD’s confidential patient-level data must include a project protocol approved by the Committee for the Protection of Human Subjects (CPHS), thereby necessitating CPHS review of the requests. CPHS is housed within OSHPD and has federal and state mandates to protect the rights of human subjects involved in research. Prior to passage of SBx5 2, confidential patient-level data for research purposes could be shared, upon request, only with the University of California and similar non-profit education institutions. SBx5 2 unintentionally expanded access to health-related data to include non-profit entities in general. SBx5 2 was a bill intended to address education- related issues, and specifically the federal Race to the Top (RTTP) program. The bill seeks to facilitate educational data sharing in order to make California eligible for additional RTTP funding. One of the goals of the bill was to make educational data available to various non-profit entities that are likely to engage in research. In order to meet RTTP requirements, SBx5 2 requires CPHS to enter into an agreement with an Institutional Review Board (created by SBx5 2 to review requests for educational data). Subcommittee Staff Comment & Recommendation: The Legislature did not intend for the SBx5 2 changes related to education data to also impact patient-level health information. Staff therefore recommends rejecting the proposed resources and position authority for OSHPD to implement those unintended changes. Instead, staff recommends adopting place-holder trailer bill language to narrow the provision in SBx5 2 to its intended purpose. As a result, the statute would affect the accessibility of educational, and not health, data. This action would be consistent with action recently taken by the Assembly’s Subcommittee #1 on Health and Human Services. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 6 of 27 OSHPD Issue 2: Mental Health Loan Assumption Program Changes Budget Issue: OSHPD requests, in a Spring Finance Letter dated April 1, 2010, an increase of $2.5 million (Mental Health Services Fund) in 2010-11 and subsequent years to increase the amount available for Mental Health Loan Assumption Program (MHLAP) awards. The MHLAP awards grants to mental health practitioners working in hard to fill or retain positions within the public mental health system (as determined by County Mental Health Directors). The Mental Health Services Fund was created by Proposition 63 of 2004, the Mental Health Services Act (MHSA). The Department of Mental Health (DMH) estimates that MHSA expenditures will total $1.3 billion in 2009- 2010 and $1.6 billion in 2010-11. Background on MHSA and MHLAP: The MHSA imposes a one-percent income tax on personal income in excess of $1 million. The purpose of the Act is to expand mental health services to children, youth, adults and older adults who have severe mental illnesses or severe mental health disorders and whose service needs are not being met through other funding sources (i.e., funds are to supplement and not supplant existing resources). The MHSA also required development of a five-year plan to remedy the shortage of qualified mental health service providers by making loan forgiveness programs available to current and prospective employees in California’s public mental health system. As a result, DMH partnered with the County Mental Health Directors Association (CMHDA) and the Mental Health Services Oversight & Accountability Commission (MHSOAC) to develop a ten year expenditure plan that includes the MHLAP. The chart below shows the significant, still unmet, demand for the program: MHLAP (March 2009) Applications received 1,222 Applications awarded 288 Debt burden of applicants $56,544,823 Amount requested $15,460,101 Amount awarded $2,285,277 The requested funding would allow expansion from 288 to 600 MHLAP awards. The proposed resources would also allow for expansion of professionals eligible for MHLAP awards to include Licensed Professional Clinical Counselors (LPCC) and LPCC interns. Of the total request, $43,000 would support state operations. Subcommitee Staff Comment & Recommendation: Staff recommends approving the requested resources. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 7 of 27 4170 Department of Aging CDA Issue 1: Senior Community Service Employment Program Budget Issue: CDA requests, in a Spring Finance Letter dated April 1, 2010, one-time augmentations of federal fund authority totaling $848,000 in 2009-10 and $3,392,000 in 2010-11. The request is based on the receipt of federal funds from the United States Department of Labor (DOL). The current year authority has been requested through a Section 28 letter to the Joint Legislative Budget Committee. The requested funds would provide additional support for the existing Senior Community Service Employment Program (SCSEP) administered by the California Department of Aging (CDA) through the Area Agencies on Aging (AAAs) and must be expended by June 30, 2011. Background: SCSEP provides part-time, work-based training opportunities at local community service agencies for low-income older workers who have poor employment prospects. DOL has provided funding for an additional 434 participant slots statewide. Additional participant slots will be equitably distributed to the local SCSEP projects according to the CDA funding formula. With the requested authority, CDA would be able to carry over any unspent funds allocated to local entities in 2009-10 into 2010-11. The federal grant allows for this timing of fund usage. Subcommittee Staff Comment & Recommendation: Staff recommends approving the requested federal budget authority. 4700 Department of Rehabilitation (DOR) DOR Issue 1: Traumatic Brain Injury Program (TBI) Budget Issue: DOR requests, in a budget change proposal, an increase of $1.3 million ($1.2 million special funds from criminal and vehicular offense fines and $170,000 federal funds) and 2.0 positions to administer the TBI program. This request results from the passage of AB 398 (Monning, Chapter 439, Statutes of 2009), which transitions the TBI program from the Department of Mental Health (DMH) to DOR. Background: See the April 8, 2010 Agenda for more information. Subcommittee Staff Comment & Recommendation: Staff recommends approving one permanent position and one two-year limited-term position. This second limited- term position is in place of the permanent position requested by the department and previously approved by the Subcommittee on April 22, 2010. This updated action is consistent with action taken by the Assembly’s Budget Subcommittee #1. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 8 of 27 5180 Department of Social Services (DSS) DSS Issue 1: Positions Related to Recent Legislation Budget Issue: The Governor’s proposed budget for 2010-11 includes, in a budget change proposal, $200,000 ($169,000 GF) in temporary help resources to implement recent legislation, including AB 762 (Bonnie Lowenthal, Chapter 471, Statutes of 2009); SB 781 (Leno, Chapter 617, Statutes of 2009); and AB 1325 (Cook, Chapter 287, Statutes of 2009). Background: See the April 22, 2010 Agenda for more information. Subcommittee Staff Comment & Recommendation: Consistent with actions recently taken in Assembly Budget Subcommittee #1, staff recommends: 1. Rejecting the resources requested for AB 762 on the basis that the fiscal analysis on the bill from the administration indicated that the costs were negligible and absorbable by DSS. 2. Rejecting the resources requested for SB 781 on the basis that the workload is speculative and has not been substantiated to warrant new resources. 3. Approving the resources requested for AB 1325 for one year, in 2010-11, only. DSS Issue 2: Promoting Safe & Stable Families (PSSF) – Proposed Trailer Bill Language (TBL) Budget Issue: The Administration proposes TBL to conform state law to federal requirements, as created by the Omnibus Budget Reconciliation Act of 1993 (P.L. 103- 66) and most recently updated in the Child and Family Services Improvement Act of 2006 (P.L. 109-269). According to the Administration, these conforming policy changes have no 2010-11 fiscal impacts. The Department indicates, however, that the changes would alleviate a potential risk to federal Promoting Safe and Stable Families (PSSF) funding due to non-compliance by the state. Background: The Administration states that current state statute does not reflect the most recent federal requirements (last changed in 2006). Specifically, the proposed TBL would: 1) change the percentage of allowable state administrative costs from the original 15 percent to the current 10 percent; 2) change the programs’ service categories from an original two to the current four, and provide current definitions for each category; and 3) change the minimum percentage of spending in each category to the current requirement of 20 percent. The TBL would also make other non-substantive conforming changes, such as updating the program’s name throughout state law. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 9 of 27 Subcommittee Staff Comment & Recommendation: Staff recommends rejecting the proposed TBL, without prejudice as to its merits. An analysis of existing law and any related clarifications are more appropriate for consideration by the relevant Legislative Policy Committees. This recommendation is consistent with recent action by Assembly Budget Subcommittee #1. DSS Issue 3: Proposed Trailer Bill Language (TBL) to Suspend Intensive Treatment Foster Care (ITFC)-Related Provisions of SB 1380 Budget Issue: The Governor’s proposed budget for 2010-11 includes TBL to suspend implementation of statutes enacted by SB 1380 (Chapter 486, Statutes of 2008). Similar to the TBL proposed for two other child welfare issues heard by the Subcommittee on April 22, 2010, existing law would be implemented when the Department of Finance determines that sufficient state operations resources have been appropriated. Again, the effect would be to transfer Legislative authority to the Administration. Background on SB 1380 and ITFC: SB 1380 expanded eligibility and revised operational, reporting, and training requirements for the Intensive Treatment Foster Care (ITFC) program. ITFC was originally established in 1990 to ensure that foster children with emotional challenges could thrive in a family home with therapeutic services, rather than high-level and more expensive group homes. The Assembly Appropriations Committee analysis of SB 1380 indicated that the bill would result in net savings because foster children would be placed in less costly, less restrictive home settings, as opposed to more costly group home environments. Subcommittee Staff Comment and Recommendation: The Administration has indicated that it may be reconsidering whether to continue pursuing this TBL and\/or to amend its proposal. To be clear about the Legislature’s intent, staff recommends taking action to reject the proposal. DSS Issue 4: Implementation of Federal Fostering Connections to Success & Increasing Adoptions Act (FCSA) Budget Issue: DSS proposes, via TBL, to add specified costs of transporting a child to his or her school to those that are included in the definition of foster care maintenance payments, to amend statutes related to the placement of siblings in foster care, and to amend statutes governing adoption or foster care programs operated by Indian tribes. According to the Department, these changes are required for the state to conform to requirements of the federal FCSA (P.L. 110-351). Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 10 of 27 The 2009-10 budget includes $8.7 million ($2.2 million GF, for six months beginning in January 2010), and the Governor’s 2010-11 budget includes $17.4 million ($4.5 million GF), for costs associated with education-related transportation. Background: See April 22, 2010 agenda. Subcommittee Staff Comment & Recommendation: Staff recommends adopting placeholder trailer bill language to conform state law to the FCSA and related budget requests with respect to educational transportation costs, as well as sibling placements, and agreements with tribes or tribal entities. As appropriate and necessary, the recommended placeholder language may also include changes for federal conformity regarding the educational placements of children in foster care. DSS Issue 5: Group Home Financial Audits Proposed Trailer Bill Language (TBL) Budget Issue: DSS proposes TBL that would alter the statutorily required trigger for group home and foster family agency (FFA) financial audits. The audits are paid for by these service providers. However, the Governor’s budget assumes up to $300,000 GF savings in 2010-11 as a result of reduced staff workload for reviewing the audits as a result of this proposal. Background: The monthly rates paid to group homes and FFAs for each child under their care are established in state statute and must be consistent with federal requirements that they cover the costs of care and supervision. After a 10 percent reduction that took effect pursuant to ABx4 4 (Chapter 4, Fourth Extraordinary Session, 2009) in 2009, FFA rates range from $1,430 to $1,679 per child, per month. As the result of a recent federal district court order that increased rates paid to group homes, currently effective group home rates range from $2,085 to $8,835 per child, per month. As a condition of receiving these funds, organizations that operate group home and FFA programs must have financial audits conducted as required by federal and state laws. The proposed TBL would change the statutory trigger for an audit from when a threshold amount ($500,000) of federal funds is received to when those funds are expended. According to DSS, these changes would be consistent with federal audit statutes and requirements. The Department indicates that the proposed TBL would reduce the frequency of financial audits for a few facilities. Subcommittee Staff Comment & Recommendation: Staff recommends rejecting the proposed TBL, without prejudice as to its merits. An analysis of existing law and any related clarifications are more appropriate for consideration by the relevant Legislative Policy Committees. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 11 of 27 DSS Issue 6: Child Welfare Services\/Web (CWS\/Web) Project Budget Issue: To support the development of CWS\/Web, the Governor’s 2010-11 budget for DSS requests, in a budget change proposal, $436,000 ($199,000 GF) to: 1) establish one two-year limited-term position, 2) extend an existing managerial position for another two-year limited term, and 3) augment by $240,000 DSS contracts with county consultants. As the Committee discussed on March 18, 2010, the Governor’s budget for CWS\/Web project management by Office of Systems Integration (OSI) additionally requests $1.8 million ($827,000 GF) for 10 new positions. The 2009-10 budget for CWS\/Web is $7.1 million ($3.2 million GF). OSI estimates a total cost of $202.8 million ($91.9 million GF) between 2012 and 2014 to complete implementation of CWS\/Web and enter its maintenance and operations (M&O) phase. Background on CWS\/CMS and CWS\/Web: Please see the March 18, 2010 Agenda for more information. Stated Rationale for Additional Resources: The federal Department of Health and Human Services, Administration for Children and Families (ACF) has expressed concerns that the CWS\/Web project is significantly understaffed in terms of programmatic and technical resources. DSS currently has seven staff members to assist with its programmatic support for CWS\/Web planning. The Department anticipates that their workload will increase dramatically as the project advances into its design and implementation phases. The Department intends for one of the requested positions to be filled by an individual with knowledge of the adoptions process who can participate in the design, development, testing, training, and implementation activities of the adoptions component of the new CWS\/Web system. The request to extend authorization of the second position is for a manager to provide supervision to this individual, as well as three other staff members. Subcommittee Staff Comment & Recommendation: Consistent with the Subcommittee’s vote on March 18, 2010 regarding the requested resources for additional OSI staff to support CWS\/Web development, staff recommends holding this issue open pending May Revision. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 12 of 27 DSS Issue 7: Community Care Licensing (CCL) – Proposed TBL Related to Fingerprinting Fees Budget Issue: Since 2003-04, TBL has been enacted on an annual basis to suspend existing statute that prohibits DSS from charging a fee for fingerprint and criminal record checks conducted on behalf of applicants seeking a license to provide residential or day care for fewer than six children. According to DSS, failure to continue the suspension of this fee exemption would result in an annual cost to the state of $391,000 GF. Background: Individuals who seek to operate child and adult facilities, provide care to facility clients, or reside at a community care facility, undergo comprehensive background checks. The checks are intended to ensure that individuals with criminal histories are thoroughly evaluated and\/or investigated before they are allowed to have contact with clients. In particular, DSS requires a fingerprint-based background check from both the Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI). DOJ bills DSS $35 per applicant for obtaining this information. The background check for individuals associated with children’s facilities who serve six or fewer children also includes a check of the Child Abuse Central Index (CACI). The fee for the CACI check is an additional $15. DSS is statutorily prohibited from charging these fees to individuals who seek to provide residential or day care for six or fewer children. However, for the past several years, this statutory prohibition has been suspended; and these individuals have been required to pay for the checks. In 2010-11, DSS estimates that a total of 11,180 applications will fit into these categories. Given the ongoing fiscal challenges faced by the State, CDSS proposes to permanently eliminate the prohibition, rather than continue to pursue annual statutory changes. Subcommittee Staff Comment & Recommendation: Staff recommends adopting placeholder TBL to suspend the provisions prohibiting the charging of these fees for an additional one or two years, rather than permanently repealing the fee prohibition as proposed by the Administration. This action would be consistent with action recently taken by the Assembly’s Subcommittee #1 on Health and Human Services. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 13 of 27 DSS Issue 8: CalWORKs State and County Peer Reviews Budget Issue: DSS proposes to reduce 2009-10 funding for the state and county CalWORKs peer review process to $37,000 (TANF funds) and to de-fund the program entirely in 2010-11. The 2009-10 budget for the program was $221,000 (TANF) in local assistance funding for the counties. DSS also proposes trailer bill language to suspend the statutory requirement for the Department to implement the process statewide by July 2007 and to instead require its implementation only in the year for which a sufficient appropriation is made in the Budget Act. Background: See Agenda from March 18, 2010 for more information. Subcommittee Staff Comment & Recommendation: Staff recommends approving the proposed suspension of funding for the peer review process, but rejecting the Administration’s proposal to transfer Legislative authority to determine the sufficiency of program funding to the Department of Finance. Staff correspondingly recommends that the Subcommittee approve placeholder TBL that deletes the last sentence of the proposed TBL. DSS Issue 9: Conlan v. Shewry Positions and Proposed Budget Bill Language (BBL) Budget Issue: DSS requests, in a Budget Change Proposal, $113,000 ($56,000 GF) to establish one new position to review claims filed by IHSS recipients under the Conlan II court decisions. DSS also requests to permanently extend one limited-term manager position that would otherwise expire in June 2011 (at an annual cost of $128,000 [$64,000 General Fund]). If these requests are granted, the Conlan II unit at DSS would consist overall of one Staff Services Manager and three other permanent positions. DSS states that all of these positions are necessary to meet the provisions of the Conlan II court order. In 2009-10, the Legislature approved DSS’s request for the creation of one new position and extension of two additional positions, but rejected the request for a fourth position, to review recipients’ claims for reimbursement under Conlan II. Background on Conlan II and DSS Workload: See March 18, 2010 Agenda. Budget Bill Language (BBL) Related to Conlan Workload: The Administration also proposes to continue its authority, in BBL, to transfer local assistance funding that would otherwise be directed to counties to instead be used for state operations costs and administratively established positions associated with Conlan II workload. As in prior years, the Department of Finance would be required to notify the Legislature of any transfers pursuant to this section. To date, the Administration has used this authority once- to transfer $57,000 ($29,000 GF) for the administrative establishment of one position in 2007-08. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 14 of 27 Subcommittee Staff Comment & Recommendation: Staff recommends approving the requested positions and BBL. In future years, however, the Subcommittee may wish to revisit whether the authority granted to the Administration in the BBL continues to be necessary and consistent with the Legislature’s oversight of staffing for the workload associated with implementing these court decisions. Discussion Agenda 0530 Office of Systems Integration, Health & Human Services Agency (OSI) 5180 Department of Social Services (DSS) OSI & DSS Issue 1: Case Management, Information and Payrolling System Replacement Project (CMIPS II) Budget Issue: The total 2009-10 budget for CMIPS II is $117.8 million ($48 million GF), with $92.2 million in OSI spending authority. The Administration requests, in a Spring Finance Letter dated April 1, to reduce this funding by $17.8 million ($7.2 million GF) for DSS local assistance, with a corresponding reduction of $8.6 million in OSI spending authority. The Administration also requests to reduce the 2010-11 DSS local assistance budget by $49.5 million ($20.1 million GF), with a corresponding reduction of $49.5 million to OSI spending authority. According to OSI, these reductions reflect a schedule shift due to changes in the CMIPS II development strategy and the transition into the implementation phase of the project. The shift does not affect the total project budget, but rather redistributes costs over the remainder of the project. OSI also requests authority in 2010-11 for one two-year limited term CMIPS II position to support contract management and project administration activities. OSI proposes to fund this position from its existing budget, based on savings in Data Center costs. In particular, Storage Area Network costs have decreased, resulting in savings. There are currently 31 state staff (21 OSI staff and 10 CDSS staff) and 36 State Support contractor staff dedicated to the CMIPS II project. Background on CMIPS and CMIPS II: OSI provides project management services for automation projects of the Department of Social Services (DSS), including CMIPS. The existing CMIPS is a more than 20-year-old system that offers mainly payroll functions for providers in the In-Home Supportive Services (IHSS) program. CMIPS II is intended to be a web-based solution that integrates off-the-shelf products to perform IHSS case management, payroll, and timesheet processing, as well as reporting and data exchange functions. OSI has indicated that this new system will offer a number of benefits as compared with the existing system, including more timely updates of information; more easily accessible reports; increased work automation; and a greater ability to interface with other data systems. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 15 of 27 CMIPS II Project Delays: OSI currently anticipates that the design, development and implementation of CMIPS II will be completed in March 2012. This represents a 5- month delay from the anticipated completion date of September 2011 identified during the Subcommittee’s April 30, 2009 hearing. This delay, which is at least in part attributed to recent changes in the IHSS program, is in addition to a 3-month delay that occurred when the project started in July 2008. Procurement planning activities for CMIPS II originally began in fiscal year 1999-00. Procurement was then delayed due to funding reductions in 2003, program changes in 2004, and the efforts of OSI and DSS to ensure a competitive process. Final proposals from bidders were received in August 2006. The incumbent contractor, Electronic Data Systems (EDS), was the sole bidder. The contract award was supposed to be made on July 1, 2007, but negotiations took longer than anticipated. As a result, the contract was awarded to EDS in March 2008. Federal approval of the Implementation Advanced Planning document was also received in March 2008. Project initiation and planning began July 1, 2008. Subcommittee Staff Comment & Recommendation: Staff recommends approving the proposed reductions to the CMIPS II budget for 2009-10 and 2010-11. Staff also recommends holding open the requested position authority. Questions for OSI and DSS: 1) What accounts for the unusually long (i.e., 12-year-long) procurement and development processes for CMIPS II? Are there increased costs to the state that have resulted from this elongated process? 2) What are the foregone efficiencies in the administration of the IHSS program that have occurred as a result of these delays? What, if any, are the effects of the delays on IHSS staff, consumers, and providers? 3) Do the current design, development, and implementation of CMIPS II reflect up- to-date technologies (i.e. including advancements which have occurred since procurement planning began)? Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 16 of 27 OSI Issue 2: Statewide Fingerprint Imaging System (SFIS) Proposed Use for In-Home Supportive Services (IHSS) Program Budget Issue: The Governor’s budget for 2009-10 includes, in a Budget Change Proposal, an increase in OSI spending authority of $8.2 million ($4.4 million GF) for the use of SFIS to collect fingerprint images from In-Home Supportive Services (IHSS) recipients. These funds were already included in the DSS budget, but there was no conforming authority for SFIS or for OSI’s project management role. The Administration is awaiting a formal response from the federal government with respect to its willingness to financially participate in these proposed expenditures, and future, ongoing anticipated costs. The total SFIS budget for 2009-10 includes $20.1 million ($9.5 million GF). The administration also requests position authority for four new SFIS-related positions at OSI. Two of the positions would replace 1.5 contract staff who provide training coordination and application support for the use of SFIS in the CalWORKs, Supplemental Nutrition Assistance, and General Assistance\/General Relief programs. The state has contracted these duties out for the last decade. Funded as part of the $8.2 million mentioned above, the other two positions would support new sites and equipment to begin the use of SFIS for IHSS recipients. OSI currently has five permanent staff members assigned to SFIS and oversees six additional contract staff who work the equivalent of three full-time positions. Background on SFIS: SFIS is a statewide automated system that was created in response to the requirements of SB 1780 (Chapter 206, Statutes of 1996) for applicants and recipients of California Work Opportunity and Responsibility to Kids (CalWORKs) and Food Stamp program benefits to be fingerprint imaged as a condition of eligibility for those programs. OSI provides state-level project management and oversight for SFIS. The state recently entered into a new contract for its maintenance and operations for eight years from September 2009 until September 2017. The fingerprint images contained in SFIS are used to verify eligibility and to check for duplicate aid applications by one individual. The Administration states that the existence of these fingerprint requirements and of the SFIS system deter a significant amount of fraud. A 2003 audit by the Bureau of State Audits found that DSS implemented SFIS without determining the extent of duplicate-aid fraud throughout the State, and that Social Services did not implement SFIS in a manner that would allow it to collect key statewide data during its implementation of SFIS. The auditor was therefore unable to determine whether SFIS generates enough savings from deterring individuals from obtaining duplicate aid to cover the estimated $31 million the State has paid for SFIS or the estimated $11.4 million the State will likely pay each year to operate it Background on Fingerprinting of IHSS Consumers: See the Agenda from the October 28, 2009 Oversight Hearing of Recent Changes in the IHSS Program by the Assembly Budget Committee & Senate Budget Subcommittee #3 for a comprehensive list of the significant changes to the IHSS program made in the 2009-10 budget. Based Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 17 of 27 on the 2009-10 appropriation, the Administration estimated that taken together, these program integrity changes would result in an estimated $130 million GF savings at the enhanced Federal Medical Assistance Percentage (FMAP) provided under ARRA, or $162 million GF savings at the non-ARRA FMAP rate of 50 percent. Among these program changes made in 2009 was the requirement, beginning April 1, 2010, for finger imaging of IHSS consumers. Under the requirements of ABx4 19 (Chapter 17, 4th Extraordinary Session, 2009), this fingerprinting must take place in the new consumers’ homes at the time of their initial assessment for eligibility. Current consumers (460,000) were to be finger imaged at their next reassessment, conducted annually and also in the home. These statutes included exemptions for minors and those physically unable to provide fingerprints due to amputation. They do not require a picture image to be taken of the consumer. Finally, the statutes require DSS to consult with county welfare departments to develop protocols to carry out these requirements. The Administration is currently conducting pilots to test mobile fingerprint imaging devices that would allow for implementation of these requirements by gathering fingerprints and photo images in recipients’ homes, to later be uploaded into SFIS. DSS also intends to utilize social worker and consumer feedback gathered during the pilots to inform its policies and protocols for larger-scale implementation of the new fingerprinting requirements. Subcommittee Staff Comment & Recommendation: Staff recommends holding this issue open. Questions for OSI and DSS: 1) What efforts did the Administration undertake to measure the occurrence of duplicate aid fraud in the IHSS program prior to proposing the requirements for recipient fingerprinting? 2) On what did the Administration base its estimates for the costs and savings from implementing these fingerprint requirements? 3) Please provide a brief update on the recipient fingerprinting pilots, including: a. How the Administration engaged with the counties and with stakeholders in the development of protocols under which to conduct those pilots; b. What equipment is being utilized in those pilots; and c. The anticipated timeline for statewide implementation. 4) How and when does the Administration plan to source the equipment for obtaining recipients’ finger images? Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 18 of 27 4140 Office of Statewide Health Planning & Development (OSHPD) OSHPD Issue 1: Hospital Seismic Safety Compliance Oversight Budget Issue: The Governor’s proposed 2010-11 budget for OSHPD’s Facilities Development Division (FDD) includes $55.9 million in Hospital Building Fund spending authority. The main source of Hospital Building Fund revenue is fees paid by hospitals when applying for construction plan approval. Of the total FDD budget, $2.6 million is for the Seismic Retrofit Program. The Seismic Retrofit Program Unit reviews and approves the seismic evaluation reports and compliance plans, performs HAZUS reassessments and monitors hospital seismic compliance reporting. The remaining $53.4 million is primarily for plan review, construction observations, or other essential duties related to hospital seismic safety compliance projects (including structural and non-structural retrofits and replacement hospital buildings). Background on Hospital Seismic Safety Requirements: Following the 1971 San Fernando Valley earthquake, California enacted the Alfred E. Alquist Hospital Facility Seismic Safety Act of 1973 (Alquist Act), which mandated that all new hospital construction meet stringent seismic safety standards. In 1994, after the Northridge earthquake, the Legislature passed and the Governor signed SB 1953 (Alquist), which required OSHPD to establish earthquake performance categories for hospitals, and established a January 1, 2008 deadline by which general acute care hospitals must be retrofitted or replaced so they do not pose a risk of collapse in the event of an earthquake, and a January 1, 2030 deadline by which they must be capable of remaining operational following an earthquake. SB 1953 also allowed most hospitals to qualify for an extension of the January 1, 2008 deadline to January 1, 2013. According to the background paper from the Senate Health Committee’s informational hearing on March 3, 2010, many of the state’s 2,627 hospital buildings meet the January 1, 2013 deadline, are on track to meet it, or qualify for an extension; however, several hundred appear to not be on track to meet the deadline and are not eligible for extensions. These buildings, including many that are owned and operated by major health care systems and provide significant levels of hospital services, face the prospect of being taken out of service if they are not retrofitted or replaced by that time. Hospitals cite a variety of reasons for their inability to meet the deadlines for these buildings, the most prominent being declining patient revenues and difficulty accessing capital. Subcommitee Staff Comment & Recommendation: This is an informational and oversight-related item, and no action is required. Questions for OSHPD: 1) Please briefly update the Subcommittee on the implementation of SB 1953 and subsequent, related legislation. Specifically, how is OSHPD working to ensure that hospitals comply with safety and reporting requirements? Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 19 of 27 2) Why have some hospitals put these projects on hold, and how many may be at risk of not meeting the 2013 deadline at this point? 3) Based on hospitals’ reports to OSPHD, what types of services are currently provided in buildings that are not on track to meet the 2013 deadline? 4200 Department of Alcohol & Drug Programs (ADP) ADP Issue 1: Women and Children’s Residential Treatment Services Budget Issue: The Governor’s proposed budget for ADP in 2010-11 includes $11.2 million for perinatal (before and after childbirth) drug treatment services. Of these funds, $6.1 million ($2.5 million GF and $3.6 million federal funds) are for Drug Medi-Cal services provided to eligible Medi-Cal beneficiaries. The remaining $5.1 million (all GF) are set aside for designated Women and Children’s Residential Treatment Services programs (WCRTS). The proposed $5.1 million for WCRTS in 2010-11 includes a decrease of $663,000 when compared to the enacted 2009-10 budget. The decrease was precipitated by the closure of one of the original provider organizations. Background on WCRTS: WCRTS funds support designated programs that were created with federal grants which have since expired. According to ADP, 669 individuals currently receive treatment through these resources. Budget Bill Language (BBL) related to WCRTS from 2009-10 stated, Of the funds appropriated in this item, $5,767,000 shall be used to fund existing residential perinatal programs that were begun through the federal Center for Substance Abuse Treatment grants, but whose grants have since expired All of the funds allocated for programs shall be passed through those counties directly to the designated nine residential treatment programs in each county, respectively. (emphasis added) One of the original nine programs, in San Luis Obispo County, recently closed. When that provider ceased operating, the Department of Finance maintained funding for the other providers at historic levels and reduced the overall WCRTS funding. This action resulted in a reduction of perinatal treatment capacity statewide and in the sweeping of $663,000 as GF savings. Given the ambiguity of the budget language with respect to this circumstance, the Administration could alternatively have interpreted Legislative intent to maintain the overall funding base and instead increase the funding allocated to the remaining eight providers. Proposed 2010-11 BBL: The Governor’s budget proposes to amend the Budget Bill to reflect the reduced funding and to state that the WCRTS allocation shall now be passed through to \”the designated eight residential treatment programs. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 20 of 27 Subcommittee Staff Comment & Recommendation: Staff recommends adopting an amendment to Provision 2 of Item 4200-104-0001 of the 2010-11 Budget Bill to clarify the Legislature’s intent regarding overall WCRTS program funding by deleting the word eight . Staff also recommends that the 2010-11 appropriation be restored to the original 2009-10 allocation of $5.8 million for the remaining providers. This action would be consistent with action recently taken by the Assembly’s Budget Subcommittee #1. Questions for ADP and DOF: 1) How did the Administration determine its course of action with regard to overall WCRTS funding when one of the original nine providers closed? 2) What is the scope and capacity of treatment provided with WCRTS funding? How would that capacity change as a result of the proposed $663,000 reduction? Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 21 of 27 5175 Department of Child Support Services (DCSS) DCSS Issue 1: Proposal for Administrative Process to Establish and Modify Orders Budget Issue: DCSS proposes, in a Spring Finance Letter dated April 1, 2010, to overhaul the system for establishing and modifying child support orders in California. The proposed system would continue to include a combination of administrative and judicial procedures. However, as compared with the state’s current child support system, the proposed system would include more administrative procedures and less judicial involvement. The Administration estimates that this proposal would result in $3 million ($1 million GF) savings for January through July 2011, when DCSS would begin implementation with modifications of court orders. The Administration estimates that savings would grow to $17.1 million ($5.8 million GF) in 2011-12, when the changes would also apply to establishment of child support orders. The bulk of the anticipated long-term savings are based on anticipated reductions in costs for court contracts and the employment of attorneys by Local Child Support Agencies (LCSAs). DCSS states that the costs of automation changes required to implement this proposal would be absorbable within its existing automation budget. Overview of Child Support System: The primary purpose of California’s child support program is to secure child support payments from absent or non-custodial parents and for custodial parents and their children. Local Child Support Agencies (LCSAs) provide services such as locating absent parents; establishing paternity; obtaining, enforcing, and modifying child support orders; and collecting and distributing payments. When a family receiving child support also receives public assistance (in approximately 20 percent of cases), the LCSAs distribute the first $50 per month collected from the non- custodial parent to the custodial parent and child. Any additional support collected is deposited into the General Fund to partially offset state costs for public assistance. Child Support Procedures Nationwide: In accordance with federal law, states have considerable flexibility in designing the processes by which they establish and modify child support orders. Across the nation, there is a continuum from highly judicial (court forum, judge presides, attorneys involved) to highly administrative (executive-branch agency sets order with or without hearing, limited attorney involvement) systems. Along the continuum, most states have some form of a hybrid system. DCSS states that its proposal is most closely modeled after the system in Pennsylvania. One significant difference, however, is that Pennsylvania’s administrative process is administered by its judicial branch. The system in Texas also has a number of similarities to DCSS’s proposed system. Two major distinctions, however, are that Texas excludes a number of cases from its administrative process (i.e., cases involving domestic violence, foster care, minor parents, and interstate issues) and that Texas’s guidelines for establishing child support are less complex than California’s. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 22 of 27 California’s Existing Process for Establishing Support Orders: California currently has a judicially-based system for establishing child support orders, with administrative aspects. Court commissioners or family law judges have final authority to establish parentage and to decide on the amount of support to be paid. There are three common paths by which courts arrive at child support orders. The first includes cases in which the parties agree and stipulate to a child support order. In these cases, parents do not usually appear in court. According to data from a 2005 review by the Judicial Council, approximately 29 percent of cases were resolved this way at the time. If a parent does not respond after being served with notice, the court may enter (usually without a hearing) a default judgment based on statutory guidelines regarding the amount of child support to be paid. Default judgments are generally an undesirable result, as they are less likely to be based on a complete factual picture and less frequently adhered to by the child support obligor. In 2005, approximately 39 percent of orders in California were entered by default. The third path to a child support order involves a court hearing attended by the parties. Sometimes hearings occur in cases that are solely about child support. Other times, hearings also involve other family law issues (e.g., custody). According to DCSS, it takes approximately three months from the time a parent answers a notice that the other parent is seeking child support until a court hearing. At the hearing, an LCSA attorney represents the child support agency. The parents and LCSAs may appear by telephone, audiovisual, or other electronic means. Court commissioners, however, must be physically present in the county courthouse. In 2005, contested hearings occurred in approximately 32 percent of child support cases. California’s Existing Process for Modifying Court Orders: Current law allows an individual to request a review of his or her child support order if there has been a change in circumstances. Current law also requires LCSAs to mail notice to the parties, at least once every three years, informing them of the right to request that the LCSA review and, if appropriate, seek to modify the child support order. If modification is appropriate, the LCSA files paperwork with the court. Again, when both parties agree, the paperwork can include a stipulation and the parties may not have to appear in court. Proposed Process for Establishing and Modifying Orders: DCSS proposes to create a three-tier process to establish and modify child support orders. Tier 1: Office Conference held at the LCSA and administered by a caseworker. To start the process, the LCSA would file paperwork with the court and then schedule an office conference in approximately 30 calendar days. The LCSA would serve notice of the conference on the parties, along with a proposed order, no later than five calendar days beforehand. The conference itself would be administered by an LCSA caseworker with specialized mediation training. If parentage is at issue, the office conference would be a forum for making that determination (which could include the subpoena of evidence and witnesses and\/or consideration of genetic testing results). The parties could participate in person or by phone, and would be given an opportunity Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 23 of 27 to provide information about their income, expenses, and the amount of time they spend parenting. The rules of evidence that govern admissibility in court hearings (e.g., to establish authenticity of a document) would not apply. If the parties attend the conference and agree to the terms of support, the Conference Officer would generate a stipulation for the parties to sign immediately. The stipulation would be sent to the court for review and approval, along with a conference summary. If the order is approved, the LCSA would serve the parties by mail with a copy. If the parties do not appear, or appear but do not agree, the Conference Officer would generate a proposed order based on the information available at the time (or the assumption of minimum wage at 40 hours per week if no information is available). The proposed order and conference summary would be sent to the court for review, and would become an interim, enforceable order once the court approves and files it. The LCSA would mail the interim order to the parties. If neither requests a hearing within 20 calendar days, the interim order would become final. DCSS has stated that court review of interim orders in Tier 1 and Tier 2 should take around five minutes. As a result of its review, a court could approve an order or set the case for hearing. Tier 2: Administrative hearing held at the LCSA and administered by a State Attorney (upon request only). If either party requests a hearing within 20 days of mail service of the interim order, the LCSA would schedule an administrative hearing approximately 30 calendar days out. This hearing would be held at the LCSA or by telephone and presided over by a Hearing Officer (an attorney employed by the state with at least three years experience). The parties could also file a request for a hearing in court instead. The Hearing Officer would review evidence regarding income, expenses, and parenting timeshares and make findings regarding those issues. Again, court rules regarding evidence admissibility would not apply. The Hearing Officer would then prepare a stipulation or an interim order based on the information presented. The LCSA would send the agreement or the interim order to the court, along with a summary written by the Hearing Officer. Again, the order would be enforceable once reviewed and filed by the court. The LCSA would mail it to the parties, who would have 20 days to request a court hearing. Tier 3: Court hearing administered by a Commissioner or Family Law Judge (upon request of the parties or motion of the court). According to the Department, Tiers 1 and 2 of the proposal would offer an optional path outside the current judicial process to resolve disputes administratively, while reserving the right of the parties to utilize existing judicial processes if they wish to do so. Either party can request a hearing before a Court Commissioner or Family Law Judge at any stage. Following the issuance of an interim order, however, the parties have 20 days within which to make such a hearing request. As under the current system, an LCSA attorney would represent the agency at the hearing. The court would consider the issues anew ( de Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 24 of 27 novo ) and then issue an order. In another change from the current system, the court commissioners would be allowed to hold hearings from any physical court location in any county. They could also hear cases in person or by telephone, audiovisual or other electronic means. Prior Effort to Streamline Order Modifications: SB 1483 (Chapter 876, Statutes of 2006) established pilot projects to test an expedited child support order modification process. The bill required DCSS and the Judicial Council to conduct an evaluation of the effectiveness of the pilot project and report the results to the Governor and the Legislature by July 1, 2009. To date, the Legislature has not received this report. DCSS Arguments in Favor of this Proposal: The Administration argues that these changes would improve the timeliness of child support services and the efficiency and cost effectiveness of child support operations. According to DCSS, child support customers who participate in the current judicial system experience a lengthy (six to nine months on average), time-consuming process for establishing orders and obtaining support. DCSS intends for the proposed process to reduce the time involved in establishing or modifying orders to an average of sixty days. The Administration also states that the proposed process would encourage non-adversarial interactions and good working relationships between child support agencies and the parties early on in a case. For example, DCSS envisions that the office conference process would be more user friendly and accessible, as it would engage child support customers at the beginning of the process and encourage them to fully participate in all aspects of establishing or modifying child support orders. Arguments Raised in Opposition to this Proposal: A number of stakeholders have expressed concerns with the proposed changes. One repeated objection is that DCSS did not consult with or notify key stakeholders regarding this proposal, which includes sweeping and major changes to the child support system. Other concerns include: 1) That there are conflicts of interest in having the same administrative agency (that has related performance-based outcome measures upon which to improve) conduct the administrative process, represent the LCSA in court, and then enforce child support orders; 2) That the proposal inaccurately assumes that the courts are the source of current delays in the child support system; 3) That the projected cost-savings do not account for needed system and process costs associated with these large-scale changes, or adequately account for the resources it would take for a court to meaningfully review proposed orders; and 4) That the process creates a system where access to the courts is unequal, leading to unequal justice, particularly for the most low-income and otherwise vulnerable of clients and families. Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 25 of 27 Subcommittee Staff Comment and Recommendation: Staff recommends rejecting the Spring Finance Letter proposal, as it raises a number of critical, unanswered policy questions. Staff further recommends that the Department be directed to work collaboratively with stakeholders on any future proposals for changes to administrative and judicial processes that may result in better service to families and a more cost- effective child support system. Questions for DCSS and DOF: 1) What consultation took place with stakeholders in the development of this proposal? To what extent did the Department attempt to find areas of consensus on the changes needed to improve the child support system? 2) Please summarize the Department’s methodology for determining the anticipated savings included in the proposal. In particular, how large are the automation costs that the Department considers absorbable ? How did the Department project how many families or judicial officers would request court hearings? 3) How does DCSS envision that caseworkers will be trained to assess credibility and appropriately apply the law in cases where the parties disagree about the facts or contest parentage? What record will the parties have of the basis for caseworkers’ determinations in these disputes? 4) How do you anticipate that the proposed administrative process would apply in the kinds of circumstances that Texas exempts from its administrative process (i.e., cases involving domestic violence, foster care, minor parents, and interstate issues)? 5) What were the results of the SB 1483 pilots related to streamlined modification processes? Why hasn’t the Legislature received the required report on those outcomes? Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 26 of 27 DCSS Issue 2: California Child Support Automation System (CCSAS) Budget Issue: The Governor’s budget for 2010-11, in a Budget Change Proposal, requests $49.3 million ($16.8 million GF) as a technical adjustment to restore base funding for CCSAS. In 2009-10, these resources were provided through re- appropriations from prior years’ funding. The Governor’s budget also proposes a base increase of $8.2 million ($2.7 million GF) for project costs, including increases in maintenance and operations services, help desk support, and the costs of personal computer replacements in 2010-11. The Administration also proposes, in a Spring Finance Letter dated April 1, 2010, $14.1 million ($4.8 million GF) in 2010-11 for one-time costs associated with transitioning the Child Support Enforcement (CSE) system from vendor-provided services to in-house state services. The Finance Letter further requests authority to pursue a non-competitive bid with IBM for transition services. According to DCSS, the bid is non-competitive because the current system which will be transitioned is built entirely on IBM’s hardware and software platforms. Additionally, DCSS requests resources for one-time start-up costs for the new State Disbursement Unit (SDU) Service Provider beginning April 1, 2011. The Administration proposes to fund these Spring Finance Letter proposals with re-appropriated funds from 2006-07, 2007-08, and 2008-09. Background on CCSAS: The total budget for CCSAS (including project management, as well as maintenance and operations) in 2009-10 includes $118.9 million ($40.4 million GF) for the Child Support Enforcement (CSE) case and financial-management system and $22.7 million ($7.7 million GF) for SDU services (central processing for collecting and distributing child support payments). According to DCSS, anticipated total costs between 2003-04 and 2012-13 total $2.2 billion ($775.4 million GF) for the CSE and $239.2 million ($81.3 million GF) for the SDU. With federal certification completed in December 2008, the system is now funded with a 66 percent federal share. According to DCSS, the volume and scope of work, web-based architecture, and supporting technologies used by the CSE make it the largest and most complex U.S. public sector system of its kind. The Department is now focused on transitioning this system from a contractor’s data center to a state data center. This transition will be phased in over a 9 to 12-month period. DCSS also plans to transition its customer call center infrastructure from a contractor to the state by September 2010. By December 2011, DCSS plans to re-procure the SDU. Subcommittee Staff Comment & Recommendation: Staff recommends approving the technical adjustment proposed in the Budget Change Proposal to restore the base funding for CCSAS. Staff also recommends holding open the requested $8.2 million ($2.7 million GF) increase to the base funding. Finally, staff recommends approving the use of new funding of $4.8 million GF associated with the Spring Finance Letter, and sweeping all unspent DCSS re-appropriation funds. A net amount of approximately Subcommittee #3 May 6, 2010 Senate Budget and Fiscal Review Page 27 of 27 $1.8 million GF savings should result. Staff should be directed to work with DOF and LAO to operationalize this change and make appropriate changes to Budget Bill Language to conform to the action. Questions for DCSS: 1) Please briefly summarize the current status of CCSAS and the changes proposed in 2010-11. Please also summarize the need for the requested $8.2 million ($2.7 million) increase to the base funding. 2) What are the long-term savings to the state anticipated from the Spring Letter proposal to transition from a contractor-supported and hosted CSE system to a state-supported and hosted CSE system? ”

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May_5,_2010__Assembly_Sub._1_Aganda.doc

“Subcommittee No. 1 on Health and Human Services May 5, 2010 o Agenda Subcommittee No. 1 On Health and Human Services Assemblymember Dave Jones, Chair Wednesday, May 5, 2010 State Capitol, Room 4202 Upon Adjournment of G.O. Item Description Page Items to be Heard 5180 Department of Social Services Issue 1 In-Home Supportive Services Proposed Reductions 2 Issue 2 In-Home Supportive Services Oversight on Adopted Reductions 6 Issue 3 Supplemental Security Income\/State Supplementary Payment (SSI\/SSP) Program Proposed Further Grant Reduction 13 ITEMS TO BE HEARD 5180 Department of Social Services Issue 1: In-Home Supportive Services Proposed Reductions This section will discuss the major proposals being put forth by the Administration for 2010-11 related to the In-Home Supportive Services (IHSS) program. background 87% Service Elimination in IHSS (2010-11) The Governor’s budget proposes to eliminate, effective June 1, 2010, all services for recipients with a functional index (FI) score of less than 4. This cut would eliminate eligibility for 426,733 individuals (87 percent of the caseload) and is estimated to eliminate employment for 350,262 providers and county staff, for a total number of lives affected of 776,995. GF savings vary by whether the federal government extends enhanced ARRA Federal Medical Assistance Percentage (FMAP) rates (61.6 versus 50 percent) past December 31, 2010. During ARRA, program costs are shared 62\/25\/13 at Federal\/State\/County levels. If ARRA is extended, proposed 2010-11 GF savings are $651 million. The state would forego about $2.4 billion federal funds. If ARRA is not extended, GF savings would increase to $1.1 billion, while federal funds foregone would be approximately $1.7 billion. The Administration is relying on a favorable court decision or increased federal flexibility to allow implementation of this proposal. Expected Impact. According to the LAO, this proposal would likely lead to offsetting costs that more than outweigh potential savings. A recent study by Candace Howes, Ph. D. and published by the Institute for Women’s Policy Research and the Paraprofessional Healthcare Institute asserts that more than 65% of current IHSS consumers will move into nursing homes if the IHSS program were eliminated, at a significantly increased cost to taxpayers. The UCLA Center for Health Policy Research in a February 2010 report estimated that the vast majority of those with FI scores under 4.0 are severely disabled and suffer from cognitive impairments that make daily survival without assistance extremely difficult. UCLA also estimates that nursing homes and residential care facilities can absorb less than 10 percent of those who face losing their community-based benefits due to these cuts. IHSS Reduction in State Participation in Wages (2010-11) The Governor’s budget again proposes, effective June 1, 2010, to reduce the state’s participation in IHSS wages from the current ceiling of $12.10 per hour to a ceiling of the minimum wage of $8.00 per hour, plus $.60 in benefits costs. There are approximately 385,000 IHSS service providers providing services to 460,000 program recipients. IHSS providers organize and collectively bargain for wages and benefits on a county-by-county basis. As of October 1, 2009, IHSS wages were above $8.60\/hour in 45 California counties. In 24 counties, the wages were at or above $10.10\/hour. To the extent that counties continue to pay wages above $8.60, they would have to backfill decreased state funds. Expected Impact. Again, the Administration is relying on a favorable court decision or increased federal flexibility to allow implementation of this proposal. Budget bill provisions from February 2009 reduced the state’s contribution to participation in wages up to $9.50 per hour plus $.60 for benefits (for a total of $10.10), effective July 1, 2009. However, a federal district court issued a preliminary injunction against this reduction. The Administration is appealing in the 9th Circuit. Counties’ ability to make up the difference between a current wage level and that which would be required if the state reduced participation in wages is unknown. County resources being strained as they are across program areas, with furloughs, layoffs, and program downsizing, may not be able to bridge this difference. CONTEXT The Legislature adopted, as part of the 2009-10 Budget, several changes to services and eligibility that were initially estimated to result in General Fund savings of about $73 million in 2009 10. \u00b7 Reduction in Domestic and Related Care Services. The first reduction targets domestic and related care services to the most impaired IHSS recipients, limiting these services to consumers with FI Ranks in this service category above 4.0. An estimated 85,000 would have been affected by this reduction. \u00b7 Elimination of All Services for Consumers with FI Scores Under 2.0. This second reduction eliminates all IHSS services for those who are considered least impaired. An estimated 39,000 elderly and\/or disabled persons would have lost all services. For both of these reductions, the Legislature adopted exceptions for certain recipients who meet specified criteria, but authorized the Governor to waive these exemptions under specified conditions if they put federal IHSS funding at risk. Ultimately, the Governor cited these conditions in vetoing an additional $28.9 million from the final budget package. In total, the savings from these proposals are estimated to be about $102 million in 2009 10. The courts have halted both of these cuts and DSS will provide additional information regarding the litigation at the hearing. \u00b7 Wage Reduction Adopted in February 2009 Trigger Budget Agreement. In the February, 2009 budget package, the state reduced by $2 the level at which it will participate in paying in-home supportive services worker wages (from $12.10\/hour to $10.10\/hour). The courts have halted this reduction and DSS will provide additional information regarding the litigation at the hearing. Panelists \u00b7 DSS Please be prepared to address the following in your testimony: \u00b7 A brief description of each of the reduction proposals in IHSS, with an overview of the trigger proposal. \u00b7 A review of the current status of litigation, the success of which the administration is relying to make these proposals possible. The administration has been asked to provide a handout on this to the Subcommittee and to be prepared to walk through its content. \u00b7 Legislative Analyst’s Office \u00b7 Department of Finance Please provide a status of the receipt of federal funds received related to the Governor’s trigger proposal. \u00b7 Janie Whiteford, IHSS Coalition \u00b7 Mark Beckwith, IHSS Consumer, Advocate with Northern California ADAPT, and Member, Advisory Board of Alameda County IHSS Public Authority \u00b7 Deborah Doctor, Legislative Advocate, Disability Rights California \u00b7 Jovan Agee, United Domestic Workers of America \/ AFSCME \u00b7 Representative, SEIU California \u00b7 Nancy Schulz, Napa County Public Authority Manager \u00b7 Supervisor Shirey Zane, Sonoma County \u00b7 Frank Mecca, County Welfare Directors Association of California \u00b7 Public Comment Possible Questions \u00b7 How many IHSS consumers does the administration project would enter a nursing home if this cut is made in IHSS? What is the basis for that projection? \u00b7 How many in the caseload with an FI score below 4.0 suffer from cognitive impairments that would make them nursing home eligible in their current condition? \u00b7 What options exist for IHSS consumers and how are these affected by the administration’s proposed cuts in other areas and programs? Staff Recommendation: Staff recommends that these proposals be held open pending May Revision. Issue 2: In-Home Supportive Services Oversight on Adopted Program Reforms This section provides a review of implementation of various reforms adopted as part of the 2009-10 Budget for IHSS, summarizing issues and raising questions for the Administration. adopted reforms The 2009-10 Budget made vast and significant changes in the IHSS program, including expansion of anti-fraud\/program integrity activities. According to the Administration, these changes will cost $88.3 million ($34.2 million GF), discussed in more detail in the section below. The Administration arrives at an estimated $162 million GF savings by assuming a basic 10 percent of program costs. No further empirical basis for this assumption has been offered by the Administration. The changes, which included requirements for stakeholder collaboration in their implementation, were: \u00b7 Criminal background checks and appeals processes for IHSS providers; \u00b7 The requirement for providers to attend an orientation; \u00b7 Authorization to send targeted mailings to providers and recipients and to conduct unannounced home visits, pursuant to developed protocols and in targeted cases, when there is cause for concern about program integrity; \u00b7 Limits on the use of P.O. boxes by providers to receive paychecks; \u00b7 Training for social workers on fraud prevention; \u00b7 Notification to providers about their clients’ authorized hours and service levels; \u00b7 Fingerprinting of IHSS program recipients; and \u00b7 Changes to timesheets, including fingerprinting and certification after notice of possible criminal penalties for fraud. The 2009-10 Budget additionally required the Department to convene a stakeholder group to develop a report, by December 31, 2010, to evaluate quality assurance and fraud prevention and detection activities implemented from 2004 to the present. The stakeholder group is required to review annual error reports, information regarding referrals of suspected fraud and subsequent investigations (including cost-benefit information), and information regarding final convictions for fraud. The resulting report must also provide recommendations for early detection and for prevention of errors and fraud. costs of and requests for additional resources related to reforms Request for New Positions. DSS requests $528,000 ($264,000 GF) for six permanent positions to carry out IHSS-related anti-fraud and program integrity activities, and $500,000 ($264,000 GF) for a contract with California State University (CSUS) to assist in the development of a required report to the Legislature. The Department has administratively established these six new positions in 2009-10, and is now seeking 2010-11 authority to continue them permanently. These six positions would be on top of the 42 new IHSS anti-fraud positions authorized by the 2009-10 budget (12 positions at DSS in 2009-10 and 30 positions at DHCS across 2009-10 and 2010-11). Anti-Fraud Budget. The total budget for IHSS Quality Assurance and Anti-Fraud efforts by DSS and the Counties is $88.3 million ($34.2 million GF), with approximately $3.1 million ($1.6 million GF) for state operations and $85.1 million ($32.6 million GF) for local assistance. Of this total, $54.2 million ($21.9 million GF) were new funds in the 2009-10 budget, including $8.2 million ($4.4 million GF) for the costs of fingerprinting IHSS recipients. These figures do not include the additional costs of IHSS fraud investigations by DHCS, nor do they include the costs of fingerprinting for the Statewide Fingerprint Imaging System (SFIS), estimated now to be $10.5 million ($5.6 million GF) in 2009-10 and totaling $41.6 million ($21.6 million GF) over the eight-year life of the contract change order with the SFIS vendor. These changes were anticipated to take effect at varying points in time over 2009-10 and 2010-11. This Subcommittee has held, jointly with the Senate Budget Subcommittee, three oversight hearings to address major challenges in the implementation of these changes to date. Background information on these hearings is available at the Assembly Budget Committee website. Not including the requested positions and resources, DSS’s total state operations staff for IHSS Quality Assurance and Anti-Fraud efforts consists of 28 positions. Twelve of these positions are new as of 2009-10. According to DSS, all of these 12 new positions have been filled. Six of these 12 staff members are assigned to a variety of program integrity activities (e.g., developing protocols for home visits and targeted mailings, social worker fraud training and data collection). The other six are assigned to the new provider enrollment appeals process. Provider Enrollment Thus Far. As of April 21, 2010, there were 100,020 providers enrolled under the new enrollment procedures. Another 112,176 were in pending enrollment status. Finally, 206 had been denied eligibility to enroll in the program. Also according to DSS, the six additional staff requested in 2010-11 would focus on program changes related to the inclusion of provider and recipient fingerprint information on timesheets. This agenda recommends three issues for focus in this hearing: 1. The April 1, 2010 implementation of the fingerprinting requirement for IHSS recipients; 2. The July 1, 2010 date for provider enrollment under the reform-affected process; and, 3. Evaluation and assessment of anti-fraud and quality assurance efforts going forward. 1. April 1 fingerprinting As a result of the 2009-10 Budget package, beginning April 1, 2010, finger imaging is required for new consumers, to be conducted in their homes at the time of initial assessment. Current consumers (between 460,000 and 490,000) will be finger imaged at their next reassessment, conducted annually and also in the home, with exemptions for minors and those physically unable to provide fingerprints due to amputation. The statute does not in any place require a picture image to be taken of the consumer. The statute requires DSS to consult with stakeholders to develop protocols to carry out these requirements. To date, this formal consultation toward protocol development has not occurred. DSS has provided minimal information on its overall implementation plan for this new requirement. What DSS has provided is a Pilot timeline, showing generally when pilots are being conducted in five counties on use of ten finger imaging and photograph devices (five from each of two vendors), a notice to consumers on the voluntary nature of the Pilot, a consent form for IHSS recipients, and a recipient\/social worker questionnaire to assess the experience. Remaining questions for the Administration include: Pilot Project \u00b7 What collaboration with stakeholders was conducted prior to the pilots commencing? \u00b7 DSS originally estimated that the fingerprinting interaction could occur with the consumer within 90 seconds. Does DSS continue to view that as reasonable? \u00b7 DSS asserts the pilot tests with consumers are \”voluntary.\” How has this been communicated with consumers? When the government visits an elderly frail and\/or disabled individual applying for public benefits, does that constitute a duress-free environment where one can freely give consent? \u00b7 How were the protocols and forms used in the pilot vetted with stakeholders? \u00b7 How were the counties in the pilot selected? Are the counties receiving special resources for the pilot? \u00b7 How many social workers are being utilized for the pilot in each? \u00b7 What are the exact dates of the beginning and endings of the pilot? \u00b7 When is the evaluation for the pilots due? What are the key questions and indicators around the evaluation? $5,000 Cameras \u00b7 On what authority are you borrowing these devices? Under what arrangements or with what conditions were these loaned to the state? Is the state in a position to accept a gift of this kind? \u00b7 What are the two model devices being tested and how much does each one cost? \u00b7 Is a warranty provided on these? How long will they last? What are the expected repair or refresh costs for the cameras being considered? \u00b7 Through what process were the vendors being considered selected? \u00b7 How many cameras are expected to be purchased for statewide rollout? There are approximately 2,400 active IHSS caseworkers how will the cameras be managed among them properly? SFIS Readiness \u00b7 How did the administration and vendor arrive at its projected costs for the eight-year term of the changeover required by this, costing $41.6 million total? \u00b7 How might the cost figure fluctuate? How does the change order restrict additional refresh or inflationary costs? \u00b7 What is the spending authority in the current year for consumer fingerprinting? Is this for use of SFIS as it relates to IHSS? \u00b7 How many SFIS workstations are there? How long will it take to prepare them to be available for statewide implementation? \u00b7 Can information be processed prior to SFIS reprogramming? Is there a manual workaround being provided to the counties? Is this accounted for in your costs? \u00b7 How long will it take to reprogram SFIS in order to download information from the devices? What if there is a delay? Costs \u00b7 How much of your current year authority has been expended and under what cost categories? \u00b7 What are the General Fund costs of the administration’s proposal for finger imaging and picture-taking of consumers, counting for all costs, for current and budget years? \u00b7 What response has the state received from the federal government on its requests? Statewide Implementation \u00b7 What is the plan for stakeholder collaboration to formulate the April 1, 2010 protocols for implementation of the consumer finger imaging policy? \u00b7 What is the specific timeline and plan for draft and final instructions, mailers, bulletin board postings, etc. for implementation of this policy? \u00b7 How will exemptions per the statute be determined? What conditions and expectations are being built around issues of linguistic and cultural sensitivity? 2. Completion of Provider enrollment process It is estimated that approximately 385,000 providers who were enrolled prior to November 1, 2009 are required to undergo most of the same requirements that new providers are subject to by a deadline of June 30, 2010. These requirements include the criminal background check, completion of orientation at the time of enrollment for new providers, and signed acknowledgement of receipt of orientation materials for current providers. Remaining questions for the Administration include: \u00b7 What is the outlook and what are the challenges for meeting the requirements for current providers before the June deadline? \u00b7 What are the consequences for a current provider who has not met the requirements on July 1, 2010, the day after the deadline? \u00b7 What instructions will be provided to the counties in preparation for July 1, 2010 and on what timeline? \u00b7 What will happen to recipients’ access to services on July 1, 2010 if there is a huge backlog of current providers who have not yet been able to complete all of the requirements? 3. evaluation and assessment There are several areas in the IHSS reforms for which implementation has not yet begun or the implementation activities have not been shared with stakeholders. These include: \u00b7 The targeted mailing policy for providers and recipients; \u00b7 The unannounced home visit policy when there is cause for concern about program integrity; \u00b7 The policy limiting the use of P.O. boxes by providers to receive paychecks; \u00b7 Training for social workers on fraud prevention; \u00b7 Notification to providers about their clients’ authorized hours and service levels; and, \u00b7 Changes to timesheets, including fingerprinting and certification after notice of possible criminal penalties for fraud. There are many questions related to these proposal that have been outlined in prior agendas prepared for the three oversight hearings conducted in the Fall of 2009 and in January 2010. Some of the questions raised in those hearings that remain unanswered include: \u00b7 What is the plan for stakeholder collaboration, drafting, and approval of protocols for implementation of the home visit policy? \u00b7 What is the plan for stakeholder collaboration, drafting, and approval of protocols for the implementation of the targeted mailing policy? What is the specific timeframe for commencing targeted mailings? public authority administration Public Authority Administration. In 2009 10, the Governor proposed $23.3 million General Fund for support of the public authorities. The Legislature reduced General Fund support for public authority administration by $4.7 million. The Governor subsequently vetoed an additional $8.6 million, for a total reduction of about $13.3 million. The IHSS public authorities essentially represent the county in provider wage negotiations. Besides collective bargaining, the primary responsibilities of public authorities include (1) establishing a registry of IHSS providers who have met various qualification requirements; (2) investigating the background of potential providers; (3) establishing a system to refer IHSS providers to recipients; and, (4) providing training for providers and recipients. While the 2009-10 budget agreement included manifold new, substantial requirements for current IHSS providers, numbering 385,000, as well as new providers, this reduction was taken in one of the areas of system supports for the program. Panelists \u00b7 DSS Please be prepared to address the questions listed in the agenda for each of the sections identified. \u00b7 Legislative Analyst’s Office \u00b7 Department of Finance \u00b7 Janie Whiteford, IHSS Coalition \u00b7 Mark Beckwith, IHSS Consumer, Advocate with Northern California ADAPT, and Member, Advisory Board of Alameda County IHSS Public Authority \u00b7 Deborah Doctor, Legislative Advocate, Disability Rights California \u00b7 Jovan Agee, United Domestic Workers of America \/ AFSCME \u00b7 Representative, SEIU California \u00b7 Nancy Schulz, Napa County Public Authority Manager \u00b7 Supervisor Shirey Zane, Sonoma County \u00b7 Frank Mecca, County Welfare Directors Association of California \u00b7 Public Comment Staff Recommendation: Staff recommends consideration of the following actions (each recommendation may be taken as a separate motion): 1. Rejection of the Administration’s proposal for six new positions and holding open the request for $500,000 in authority to contract for support in developing the required report. This is consistent with action taken in the Senate. 2. Direction to the DSS to provide a plan answering the questions raised in the agenda around the April 1 Fingerprint Imaging of Recipients reform by May 14, 2010. 3. Direction to the DSS to provide an update to the Legislature at May 14, 2010 on the July 1, 2010 provider enrollment deadline, delineating a detailed timeline for county instructions regarding the CMIPS workaround and a narrative listing describing the changes being made or that have already been made in CMIPS relevant to the July 1 date. 4. Direction to the DSS to coordinate and conduct a stakeholder working group, including representatives from consumer and provider groups, to meet on a regularly scheduled basis (e.g. monthly) where the administration will describe its implementation efforts across the reforms and provide written updates to this effect, answer questions from stakeholders, and take feedback on issues of concern. DSS is instructed to look to the Department of Developmental Services for a current model on this type of stakeholder convening and process. 5. Adoption of placeholder trailer bill language to require the administration, led by the Health and Human Services Agency, to collaborate with stakeholders, including academia and social science experts in the field, to construct a cost-benefit model for analysis of anti-fraud reforms going forward and present a report on the considerations, costs, thresholds for fraud deterrence assumptions, and risks that should be assessed for (1) implementation of reform proposals in IHSS and (2) for future reform proposals in IHSS or other social service programs. This model needs to include all costs and benefits and specifically detail the basis for all assumptions, including the analytical basis for deterrence assumptions. This report shall be due to the Legislature by March 1, 2011. Reforms to be implemented that should be subject to this cost-benefit analysis include the unannounced home visits, timecard fingerprinting, and targeted mailing policies that have yet to be developed, fully analyzed for costs, or implemented. Issue 3: Supplemental Security Income\/State Supplementary Payment (SSI\/SSP) Program Proposed Further Grant Reduction Supplemental Security Income\/State Supplementary Payment (SSI\/SSP) grants are provided to aged, blind, and disabled recipients as a means of basic support for living expenses. In 2009, there were roughly 956,000 SSI\/SSP households in California, representing about 1.25 million recipients. General Fund appropriated for SSI\/SSP 2009-10 is $1.26 billion and total program funding is $5.5 billion. 2009-10 Reductions Federal COLA Rescinded May 2009. In the February, 2009 special session, a 2009 federal cost-of-living adjustment was rescinded effective May 1, 2009, and grants were reduced 2.3 percent ($20 for individuals and $35 for couples) effective July 1, 2009. October 1, 2010 Additional Reduction. This decrease meant that grants were further reduced, effective October 1, 2009, by $5 (0.6 percent) for individuals and $82 (5.5 percent) for couples. Couples’ maximum grants of $1,407 per month are now at the MOE floor (around 116 percent of FPL). The SSI portion of grants will not receive a 2010 federal COLA. An estimated 2 percent of the federal COLA will, however, take effect January, 2011. The state must pass those funds through to recipients. State SSP COLA Eliminated. As a result of the budget agreement last year, the state SSP COLA was eliminated permanently, and can only be enacted by a future change in statute. Reductive Effect for CAPI. Grants for individuals in the Cash Assistance Program for Immigrants (CAPI) declined alongside the SSI\/SSP reductions. CAPI payments are equivalent to SSI\/SSP payments, less $10 per month for individuals and $20 per month for couples. Governor’s Proposal The Governor’s budget proposes to reduce, effective June 1, 2010, SSI\/SSP grants to individual recipients. The proposed SSP grant would be set at the federally required MOE level of the 1983 payment standard. Savings include those resulting from grant reductions in the Cash Assistance Program for Immigrants and California Veterans Cash Benefit, as these grant levels tie to those for SSI\/SSP. Below Poverty Level Grants for Aged, Blind, and Disabled Individuals. Maximum grants for around one million aged, blind or disabled individual SSI\/SSP recipients would be reduced from $845 to $830 monthly (92 percent of Federal Poverty Level (FPL). Loss of Benefits for Thousands as a Result. 8,776 recipients would become ineligible, some of whom may seek services from DDS. MOE Considerations. The federal MOE limits reductions states can make to SSP benefit levels without penalty. If a state reduced SSP benefits below the MOE, it would lose federal Medi-Cal funding. Decline in Purchasing Power. Due to the suspension of numerous COLAs throughout the years, the purchasing power of SSI\/SSP has declined compared to what it would have been had it been adjusted per inflation. This is displayed in the chart below. SSI\/SSP GRANT HISTORY FOR INDIVIDUALS June 1990 Grant Adjusted for Inflation Actual Grant Jan-90 Jun-90 $630 $630 Jan-91 Jun-91 $659 $630 Jan-92 Jun-92 $695 $645 Jan-93 Jun-93 $708 $620 Jan-94 Jun-94 $725 $603 Jan-95 Jun-95 $737 $614 Jan-96 Jun-96 $748 $626 Jan-97 Jun-97 $752 $640 Jan-98 Jun-98 $771 $650 Jan-99 Jun-99 $793 $676 Jan-00 Jun-00 $812 $692 Jan-01 Jun-01 $836 $712 Jan-02 Jun-02 $880 $750 Jan-03 Jun-03 $913 $778 Jan-04 Jun-04 $945 $790 Jan-05 Jun-05 $971 $812 Jan-06 Jun-06 $1,010 $836 Jan-07 Jun-07 $1,048 $856 Jan-08 Jun-08 $1,087 $870 Jan-09 Jun-09 $1,144 $870 Jan-10 Jun-10* $1,162 $830 Jan-11 Jun-11* $1,195 $843 Elimination of cash-out In California, recipients of SSI\/SSP are not eligible for federal food stamp benefits. This is because California has opted to increase the SSP portion of the grant (by $10 monthly) rather than administer food stamps to SSI\/SSP recipients. This is known as the food stamp cash out policy. The Legislature has the option of reversing the cash out policy to allow SSI\/SSP recipients to apply for food stamps. Reversing the cash out would benefit some SSI\/SSP recipients by making them eligible for food stamps, while reducing food stamp benefits for others. Generally, those who would benefit from the reversal of the cash out would be those with lower income who live in households comprised only of SSI\/SSP recipients. The households most likely to experience a reduction in food stamp benefits would be in cases where SSI\/SSP recipients reside with other existing food stamp recipients whose total income tends to be higher. Staff Comment. There are critical, differing analyses on who would benefit and who would lose as a result of this potential policy shift. The Legislature would benefit from an examination of the potential net benefits of reversing the food stamp cash out policy. Panelists \u00b7 Department of Social Services \u00b7 Legislative Analyst’s Office \u00b7 Mike Herald, Western Center on Law and Poverty \u00b7 Department of Finance \u00b7 Public Comment Possible Questions \u00b7 What are the expectations for how SSI\/SSP individuals will grapple with a reduced grant? \u00b7 What is the general health status for SSI\/SSP recipients? Staff Recommendation: Staff recommends the following: 1. Holding open the grant reduction proposal for SSI\/SSP open pending May Revision. 2. Adopt placeholder trailer bill language to establish a working group of stakeholders, to include policy and budget staff of the Legislature, to evaluate the estimated effects of eliminating California’s SSI cash-out policy. [image: image1.png] 1 Assembly Budget Committee ”

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“Subcommittee No. 1 on Health and Human Services May 3, 2010 ASSEMBLY BUDGET SUBCOMMITTEE NO. 1 ON HEALTH AND HUMAN SERVICES Assembly Member Dave Jones, Chair Monday, May 3, 2010 State Capitol, Room 127 1:30 pm Item Description Page 5180 Department of Social Services 41 Issue 1 Cash Assistance Program for Immigrants 41 Issue 2 California Food Assistance Program 44 Issue 3 Recent Noncitizen Entrants Program 46 5180 Department of Social Services Issue 1: Cash Assistance Program for Immigrants The Governor’s budget proposes to eliminate the Cash Assistance Program for Immigrants (CAPI), for General Fund savings in 2010-11 of $107.3 million. Under the Governor’s proposal, 10,886 CAPI recipients who are lawfully residing in the U.S. would thus lose this assistance in 2010-11. background California created CAPI in 1998 under Governor Wilson after federal law began excluding these individuals. CAPI provides basic living benefits to aged, blind, and disabled legal immigrants that are equivalent to Supplemental Security Income and\/or State Supplemental Payment (SSI\/SSP) program benefits, less $10 per individual and $20 per couple. SSI\/SSP grants for individuals were reduced to $845 per month and grants for couples are $1,407 per month (at the MOE floor) in the 2009-10 budget. For CAPI, individuals thus currently receive $835 and couples receive $1,387 at the highest level, if no other income is received by the household. Average grant levels are lower – $640.85 for the Base CAPI cases, based on actual expenditures through February 2009. CAPI recipients in the base program include the following immigrants: 1) those who entered the U.S. prior to August 22, 1996, and are not eligible for SSI\/SSP benefits solely due to their immigration status; and, 2) those who entered the U.S. on or after August 22, 1996, but meet special sponsor restrictions (have a sponsor who is disabled, deceased, or abusive). The extended CAPI caseload includes immigrants who entered the U.S. on or after August 22, 1996, who do not have a sponsor or have a sponsor who does not meet the sponsor restrictions of the base program. To be eligible for CAPI, individuals must successfully complete the application process, including the following: apply for SSI\/SSP; meet the income criteria (monthly income, after certain amounts are disregarded, cannot be greater than the maximum monthly CAPI benefit amount); and, meet the resource criteria (the resources a person may own cannot be greater than $2,000 for an individual or $3,000 for a couple). CAPI participants may be eligible for Medi-Cal, In-Home Supportive Services (IHSS) and\/or Food Stamp benefits. Federal Developments Advocates state that although progress has been gradual, recent developments should allow a significant number of CAPI recipients (refugees and other humanitarian immigrants) to secure two to three years of SSI, allowing the state to collect payments retroactive to October 2008 in many cases. In Fall 2008, Congress enacted a temporary extension of SSI benefits for most refugees and humanitarian immigrants who had reached the end of their eligibility period. This group had been eligible to receive benefits only during the first 7 years after obtaining the relevant status. The Social Security Administration (SSA) issued instructions for implementing the SSI Extension for Elderly and Disabled Refugees Act (P.L. 110-328). Humanitarian immigrants whose benefits ended due to this time limit may receive at least two additional years of benefits, retroactive to October 2008. Their benefits may continue for an additional year, until September 30, 2011, if they have a pending naturalization application or are waiting to be sworn in as a U.S. citizen. Humanitarian immigrants newly applying for SSI, or whose benefits have not yet expired, can receive SSI during the nine-year period since they were granted the relevant status, or if they have a pending naturalization application. SSI Advocacy \”Qualified immigrants who were in the US lawfully on August 22, 1996, and have a disability are eligible for SSI. Seniors who have been unable to prove that they have a disability may receive CAPI while pursuing their SSI claim. Until 1999, the Social Security Administration (SSA) did not have procedures for evaluating the disability of elderly applicants, since previously applicants over age 65 had been able to receive SSI based on their age. But since elderly immigrants who were in the US lawfully on 8\/22\/96 also needed to show disability, the SSA needed to develop procedures for evaluating disability for these older immigrants. The result is that the vast majority of qualified immigrants who were in the US lawfully on 8\/22\/96 are successful in moving to SSI, provided that they have assistance in making their application. LA County’s CAPI SSI Advocacy Program (SSIAP), which was implemented at the beginning of 2002, assists CAPI participants through the SSI application process and works with the Social Security Administration to expedite SSI approvals for CAPI participants. Under SSI disability standards for the elderly which were developed after CAPI was implemented, many elderly immigrants are considered disabled, thus making them eligible for federally-funded SSI instead of CAPI. When CAPI SSIAP began, 55% of all CAPI participants were aged 65+ and entered the U.S. prior to August 22, 1996. At that time, all of these participants were assisted in the SSI application process, with a better than 76% approval rate, which substantially reduced the State’s CAPI costs. CAPI SSIAP now includes all other potentially SSI-eligible CAPI participants. As of January 1, 2010, 9,448 SSI applications had been filed through L.A. County’s CAPI SSIAP of which 7,541(or 80%) have been approved for SSI. This includes 1,400 humanitarian immigrants who had been terminated from SSI due to the expiration of their seven-year eligibility period and whose SSI benefits were reinstated for at least two additional years (three years if they apply for citizenship) because of the passage of the federal SSI Extension for Elderly and Disabled Refugees Act, on September 30, 2008. Because of CAPI SSIAP, SSA has reimbursed over $22 million in CAPI benefit payments to the State, and the State has saved an estimated $51.7 million in annual CAPI benefit payments due to the 7,541 SSI approvals (based on the avoidance of 12 months of CAPI benefits for each CAPI recipient approved for SSI). Expected Impact Advocates state that vulnerable seniors and persons with disabilities will certainly face hunger or homelessness if CAPI is eliminated. Immediately following the passage of the 1996 welfare law, a number of immigrants who faced the loss of their SSI grant threatened to or committed suicide. Panelists \u00b7 Department of Social Services \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Vanessa Cajina, California Immigrant Policy Center \u00b7 Phil Ansell, Los Angeles County Department of Public Social Services \u00b7 Public Comment Possible Questions \u00b7 The majority of CAPI participants live independently and depend totally on their CAPI benefits. How many of these individuals would become homeless and unable to make ends meet if CAPI is eliminated? \u00b7 How many sponsored CAPI participants would be able to meet their basic needs if CAPI is eliminated? \u00b7 If CAPI is eliminated and these individuals transition to GR, how will they survive on the GR\/GA grant which is (approximately) one fourth of the CAPI payment and offered for only three months out of the year? \u00b7 Some of the CAPI participants reside in Non-Medical Out-of-Home Care facilities. If CAPI is eliminated, how will these individuals continue to live without this type of care? Staff Recommendation: Staff recommends holding the budget for CAPI open at this time. Issue 2: California Food Assistance Program The Governor’s budget proposes to eliminate the California Food Assistance Program (CFAP), for General Fund savings in 2010-11 of $56.2 million. Under the Governor’s proposal, 37,000 CFAP recipients who are lawfully residing in the U.S. would thus lose their food benefits in 2010-11. background The California Food Assistance Program was created in 1997 to mitigate the impact of federal food stamp rule changes on legal non-citizens. The program provides food assistance to legal immigrants over 18 and under 65 years of age who are otherwise eligible for food stamps, but for their citizenship status. Recipients must meet all other Food Stamp Program rules and requirements. The program’s benefits and administrative costs are entirely state-funded. Participation has changed as the federal government has restored benefits for many immigrants over time. The average monthly food benefit per person is $112. Caseload in this program has decreased, down from a high of 97,000 in 2002. Expected Impact A number of studies have examined the impact of the loss of food benefits on immigrants. When federal rules initially eliminated many non-citizen households from the Food Stamp Program, food insecurity rose substantially. States that provided food assistance to immigrants, such as California, were able to arrest and reverse this rise in food insecurity.\” Research has also found that non-citizens are not the only ones in the households affected by changes in food aid. Food insecurity among citizen children in the household also increases substantially. Thus the elimination could also be expected to negatively affect other household members, including kids, as the overall level of food resources available to the family would decrease. Also lost would be the economic activity generated by these food benefits. Generally, every $1 in food stamps generates $1.84 economic activity. Advocates state that mitigating the impact elimination of the program would be impossible. The emergency food system would be the likely, but impractical, mitigating agent. The emergency food system, despite its strengths, cannot fully provide the level of assistance nor the flexibility of food resources currently provided I CFAP. Food banks are already dealing with soaring demand. Panelists \u00b7 Department of Social Services \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Vanessa Cajina, California Immigrant Policy Center \u00b7 Elizabeth Gomez, Alameda County Community Food Bank \u00b7 Phil Ansell, Los Angeles County Department of Public Social Services \u00b7 Public Comment Possible Questions \u00b7 There has been an increase of 30% in the number of CFAP households, statewide, from July 2008 – December 2009 (4,751 CFAP households to 6,168 CFAP households). Are there other programs in place where these households are expected to go so they can eat? \u00b7 There has been an increase of 51% of federal Food Stamp households with a CFAP member from July 2008 – December 2009 (10,392 CFAP\/federal households to 15,682 CFAP\/federal households). Are there other programs in place where these households are expected to go so they can eat? \u00b7 How will cutting nutrition benefits to these needy households struggling to make ends meet assist them to eat and still pay for shelter and their other subsistence needs? Staff Recommendation: Staff recommends holding the budget for CFAP open at this time. Issue 3: Recent Noncitizen Entrants Program The Governor proposed to eliminate the Recent Noncitizen Entrants Program (RNE), affecting 24,000 individuals who depend on the program for basic assistance. If the TANF Emergency Contingency Fund (ECF) is extended, this proposal will result in $22.5 million General Fund savings and a loss of $36.3 million in federal funds. If the ECF is not extended past September 30, 2010, the proposal results in $47.6 million in General Fund savings in 2010-11, and the state would forego $11.1 million in federal funds. background The federal law that created TANF, PRWORA, excluded most legal immigrants entering the U.S. after the date of enactment (August 22, 1996) from receiving TANF program benefits for the first five years they are in the country. PRWORA does provide exceptions for certain noncitizens including refugees, asylees, veterans, and current military personnel. The CalWORKs program continued aid to certain groups of noncitizens that became ineligible with the implementation of PRWORA, including battered noncitizens, those Permanently Residing in the United States Under Color of Law, Legal Permanent Residents, Conditional Entrants, and Parolees. Under this proposal, approximately 24,000 recipients in approximately 9,500 cases will lose eligibility for CalWORKs assistance and associated employment services, including child care. Immigrants in the CalWORKs program must meet all other eligibility guidelines. The state receives credit for its maintenance of effort obligation by serving these low-income families with children. Expected Impact Advocates state that the proposed elimination of services places approximately 24,000 lawfully residing immigrant parents and children at risk of destitution. The Governor’s proposal ignores the consequences of eliminating a family’s source of income, child care, job training and education. CalWORKs provides these services to families with no other recourse. The denial of services to these 24,000 individuals will have ripple effects, when they cannot pay rent to landlords, child care providers will lose state payments, and local merchants will lose business from the direct stimulus that CalWORKs provides in communities. A surprisingly high portion of TANF participants are women and children fleeing domestic violence, who rely on the grant to secure safety and to survive apart from their abusers. According to a 2003 study from the California Institute for Mental Health, women in the CalWORKs program suffered domestic violence at a rate of over eighty percent. The immigrants targeted in the Governor’s cuts include qualified battered immigrants who have filed petitions under the Violence Against Women Act, persons paroled into the U.S. for humanitarian reasons, and lawful permanent residents who also may be domestic violence survivors. Lawful permanent residents with sponsors can receive assistance only if they show that they are either domestic violence survivors or would go hungry or homeless without assistance. These rules ensure that only the most vulnerably and needy families receive services. Elimination of the RNE and these essential services could prevent many from leaving a dangerous situation or otherwise place them and their children at risk. Panelists \u00b7 Department of Social Services \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Susan Bowyer, CalWORKs Client Advocate \u00b7 Vanessa Cajina, California Immigrant Policy Center \u00b7 Public Comment Possible Questions \u00b7 What are the options for participants under this elimination proposal? \u00b7 How many children are affected by this proposal? Staff Recommendation: Staff recommends holding the budget for RNE open at this time. assembly budget committee 8 ”

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“Subcommittee No. 1 on Health and Human Services May 26, 2010 Agenda Subcommittee No. 1 On Health and Human Services Assemblymember Dave Jones, Chair Wednesday, May 26, 2010 State Capitol, Room 4202 9:00 a.m. PART 2 Item Description Page Vote-Only Items 0530 Health and Human Services Agency Issue 1 Health Information Exchange and Federal Grant Award (Spring Finance Letter) 4 0530 Office of Systems Integration 5180 Department of Social Services Issue 1 Interim Statewide Automated Welfare System (ISAWS) 6 Issue 2 Child Welfare Services (CWS)\/Web Staffing 7 Issue 3 LEADER Replacement System (LRS) 8 Issue 4 Welfare Client Data System (CalWIN) 9 Issue 5 Statewide Fingerprinting Imaging System (SFIS) 10 4170 California Department of Aging Issue 1 Federal Grant for Chronic Disease Self-Management Program 12 Issue 2 Health Insurance Counseling and Advocacy Program (HICAP) 13 Issue 3 Proposed Shift of Funding for the Long-Term Care Ombudsman 14 4200 Department of Alcohol and Drug Programs Issue 1 Proposed Elimination of $18 million of Offender Treatment Program 16 Issue 2 Drug Medi-Cal Related ARRA Estimates 18 5170 State Independent Living Council Issue 1 Aging and Disability Resource Connection (ADRC) Federal Grant 19 5175 Department of Child Support Services Issue 1 Revision to Estimates of Federal Incentive Funding and State Disbursement Unit Costs 20 Issue 2 Revision to Estimate of ARRA Funds 22 5180 Department of Social Services Issue 1 Caseload Estimate Changes and Adjustments 23 Issue 2 Temporary Emergency Food Assistance Program (TEFAP) Fund Shift 26 Issue 3 Inter-County Transfer Process for Food Stamps 27 Issue 4 County Match Requirements for Food Stamps Administrative Costs 28 Issue 5 Kinship-Guardianship Assistance Payment Program (Kin-GAP)\/ Subsidized Relative Guardianship Proposal 29 Issue 6 Title IV-E Eligibility Training Proposal 30 Issue 7 Proposal to Continue Suspension of the Mutual Consent Confidential Intermediary Program for Sibling Contact (AB 2488) 31 Issue 8 Proposal to Continue Suspension of Placements of Children in Foster Care with Developmental Disabilities in For-Profit Group Homes (AB 1462) 32 Issue 9 Resources for Resource Family Approval Pilot (AB 340) 33 Issue 10 Group Home Financial Audit Reports TBL 35 Issue 11 Proposed CalWORKs Grant Reduction 36 Issue 12 Proposed Elimination of the CalWORKs Recent Non-Citizen Entrants Program 36 Issue 13 California Work Opportunities and Responsibility to Kids (CalWORKs) – Extension of authority for ARRA Funding 37 Issue 14 Governor’s January Proposals to Reduce IHSS 38 Issue 15 Request for $500,000 for Anti-Fraud and Program Integrity Report 39 Issue 16 IHSS May Revision Proposal 40 Issue 17 Local Augmentation in 2009-10 42 Issue 18 SSI\/SSP Proposed Grant Reduction for Individual Recipients 44 Issue 19 Cash Assistance Program for Immigrants & California Food Assistance Program 44 Issue 20 State Hearings – SFL on Videoconferencing 45 Items to be Heard 5175 Department of Child Support Services Issue 1 Clarification of Action Regarding Spring Finance Letter on Administrative Order Setting and Modification Process 46 5180 Department of Social Services Issue 1 Financing of CalWORKs Single Allocation 47 Issue 2 Spring Finance Letter Proposal for CCL Inspection & Fee Changes 48 Issue 3 Group Home Litigation and Related Proposals May Revise 49 Issue 4 Defense Appropriation Act Funding for Food Stamps Administration May Revise 52 VOTE-ONLY ITEMS 0530 Health and Human Services Agency Issue 1: Health Information Exchange and Federal Grant Award (Spring Finance Letter) The Subcommittee heard this issue at its April 21, 2010 hearing and approved the Spring Finance Letter. For 2010-11, the letter requested that Item 0530-017-3163 be added to the Budget Bill to appropriate $17,229,000 from the federally supported California Health Information Technology and Exchange Fund. The proposed funds will be used to contract for a Governance Entity that will implement a statewide collaborative process for expanding capacity for electronic health information exchange ($16.5 million), and to support 3.0 new limited-term positions, through the end of the grant period, and to fund 3.0 existing positions through this federal grant rather than through state reimbursements. California has been awarded a four-year $38.7 million federal Health and Human Services (HHS) grant, funded under the Health Information Technology for Economic and Clinical Health Act (the HITECH Act), which is part of the American Recovery and Reinvestment Act of 2009 (ARRA). This new Act authorizes HHS to enter into cooperative agreements with states in order to fund efforts to achieve widespread and sustainable health information exchange (HIE) within and among states through sharing of certified Electronic Health Records (EHRs). Staff Recommendation: The Senate took additional actions beyond the approval of the request and staff recommends concurrence on these actions, including: 1. Modification of the Administration’s proposed Budget Bill Language as follows: Nothwithstanding Section 28 any other provision of law, the Director of Finance may authorize expenditures from the California Health Information Technology and Exchange Fund for the Secretary of the California Health and Human Services in excess of the amount appropriated not sooner than 30 days after providing notification, including a comprehensive description of the request, in writing of the necessity therefore to the Chairpersons of the fiscal and policy committees of the Legislature and the Chairperson of the Joint Legislative Budget Committee, or not sooner than whatever lesser time the Chairperson of the Joint Legislative Budget Committee, or his or her designee, may in each instance determine. The modifications will maintain the Legislature’s fiscal appropriation and oversight authority and will require the CHHS Agency to provide information to both the fiscal and policy committees of the Legislature in the event of changes being considered through current-year adjustments. (i.e., The Section 28 process of the annual Budget Act provides for federal fund adjustments, as specified, through the Joint Legislative Budget Committee.) 2. Adoption of placeholder trailer bill language to address the following key aspects of this work: \u00b7 Providing a framework for the Operations Plan and Implementation Plan to delineate specific goals and milestones. \u00b7 Establishing specific reporting requirements of CHHS Agency for their progress in establishing the Health Information Exchange. \u00b7 Providing a framework regarding transparency of the process and conflict-of-interest to ensure public accountability, and transparency of public decisionmaking. \u00b7 Defining the membership of the rest of the governance Board. 0530 Office of Systems Integration 5180 Department of Social Services Issue 1: Interim Statewide Automated Welfare System (ISAWS) The Subcommittee heard the ISAWS budget as presented in the Governor’s budget on April 21, 2010 and held the item open pending any changes in the May Revision. OSI and DSS request, as part of the May Revision, to reduce the budget for ISAWS by $14.3 million in (DSS) Local Assistance funding, with a corresponding reduction of $12.2 million in OSI spending authority for project management (in Item 0530-001-9732). As a result, the budget for ISAWS in 2010-11 would include $9.6 million ($3.8 million GF). OSI also proposes a reduction of 16 positions dedicated to ISAWS in July 2010. The remaining eight staff would perform project close-out activities through December 2010. This request allows for the contingency that the final migration could be delayed for a maximum of five months. Staff Recommendation: Staff recommends approving the requested reductions in the 2010-11 budget pursuant to the request in the May Revision and the associated proposed staffing for ISAWS. This action conforms to action taken in the Senate. Issue 2: Child Welfare Services (CWS)\/Web Staffing The Subcommittee heard the CWS\/Web budget as presented in the Governor’s budget on April 21, 2010 and held the item open pending any changes in the May Revision. OSI requests $1.8 million ($827,000 GF) for ten new positions to support the continuing development of CWS\/Web, a replacement system for the existing CWS\/CMS. These ten positions would be in addition to 12 existing OSI positions and up to another six OSI-contract staff currently supporting this phase of the project. The 2009-10 budget for CWS\/Web is $7.1 million ($3.2 million GF). The Governor’s 2010-11 budget for DSS also requests, in a budget change proposal, $436,000 ($199,000 GF) to: 1) establish one two-year limited-term position, 2) extend an existing managerial position for another two-year limited term, and 3) augment by $240,000 DSS contracts with county consultants. Including the requested funds for OSI and DSS staff, the 2010-11 budget for the project would increase to $9.4 million ($4.3 million GF). OSI estimates a total cost of $202.8 million ($91.9 million GF) between 2012 and 2014 to complete the implementation of CWS\/Web and enter into its M&O phase. Staff Recommendation: Staff recommends approving the requested positions and contract funding. This action conforms to action taken in the Senate. Issue 3: LEADER Replacement System (LRS) The Subcommittee heard the LRS budget as presented in the Governor’s budget on April 21, 2010 and held the item open pending any changes in the May Revision. OSI requests an increase of $44.3 million as the planning phase of the LRS project ends and the design, development, and implementation phase begins. Including the proposed resources, the 2010-11 budget for LRS would be $45.6 million ($23.3 million GF\/TANF). This proposal also includes an additional six-month delay of the beginning of the system’s development (beyond a six-month delay enacted in the 2009-10 budget). The 2009-10 LRS project planning budget is $1.3 million ($671,000 GF\/TANF). OSI anticipates total average costs for LRS development and implementation of $102.2 million annually, for a total of $408.6 million over four years ($208.6 million GF\/TANF, $173.3 million federal funds and $26.7 million county funds) before reaching the M&O phase of the project after December 2014. Staff Recommendation: Staff recommends approving the requested 2010-11 funding for LRS. Staff also recommends that the Subcommittee continue to receive updates from OSI on the progress of negotiations and anticipated costs for the overall design, development, and implementation. This action conforms to action taken in the Senate. Issue 4: Welfare Client Data System (CalWIN) The Subcommittee heard the CalWIN budget as presented in the Governor’s budget on April 21, 2010 and held the item open pending any changes in the May Revision. OSI requests budget changes and technical adjustments resulting in an increase of CalWIN funding authority by $1.5 million for 2009-10 and $4.2 million for 2010-11. The total proposed 2010-11 budget for CalWIN is $74.3 million ($38.8 million GF\/TANF). Cal-WIN is the automation system that supports the Welfare Client Data System, one of four consortia within the Statewide Automated Welfare System (SAWS). CalWIN serves 18 counties with approximately 39 percent of the statewide caseload. The requested adjustments are a result of the following factors: \u00b7 As a result of negotiations with the CalWIN vendor in anticipation of contract extension, the price per case increased from $0.67 to $.75. This change accounts for $2.3 million of the requested increase in 2010-11. \u00b7 The caseload for the consortium’s counties is projected to grow more than previously anticipated (by 5.3 percent, rather than 3.5 percent in the budget year). This accounts for a $1.5 million increase in 2010-11. \u00b7 A higher amount of the 2009-10 budget cuts to the aggregate SAWS consortia system were originally allocated to CalWIN than is the case today. Another consortium, C-IV, instead experienced a greater reduction than was originally anticipated. This accounts for the $1.5 million adjustment in the current year. Staff Recommendation: Staff recommends approving the requested budget changes. This action conforms to action taken in the Senate. Issue 5: Statewide Fingerprinting Imaging System (SFIS) The total SFIS budget for 2009-10 includes $20.1 million ($9.5 million GF). As discussed on April 21, 2010, the Administration has requested position authority for two new state positions that would replace 1.5 contract staff currently providing training coordination and application support for the use of SFIS in the CalWORKs, Supplemental Nutrition Assistance (food stamps), and General Assistance\/General Relief programs. The state has contracted these particular duties out for a decade. SFIS is a statewide automated system that was created in response to SB 1780 (Chapter 206, Statutes of 1996) for applicants and recipients of California Work Opportunity and Responsibility to Kids (CalWORKs) and Food Stamp program benefits to be fingerprint imaged as a condition of eligibility for those programs. OSI provides state-level project management and oversight for SFIS. The fingerprint images contained in SFIS are used to verify eligibility and to check for duplicate aid applications by one individual. The Administration states that the existence of these fingerprint requirements and of the SFIS system deter an unquantifiable, but significant, amount of fraud. A 2003 audit by the Bureau of State Audits found that DSS implemented SFIS without determining the extent of duplicate-aid fraud throughout the State, and that Social Services did not implement SFIS in a manner that would allow it to collect key statewide data during its implementation of SFIS. The auditor was therefore unable to determine whether SFIS generates enough savings from deterring individuals from obtaining duplicate aid to cover the estimated $31 million the State has paid for SFIS or the estimated $11.4 million the State will likely pay each year to operate it Earlier this month, the United States Department of Agriculture sent a letter to the Director of DSS that again encouraged the state to reconsider the costs associated with finger imaging. The letter continued on to state that there are serious concerns that finger imaging may be a barrier to participation among many of the hard to reach eligible populations who wish to enroll in the food stamps program and that most states satisfy the requirement to establish a system to prevent duplicate participation by matching names with social security numbers, which is far less costly than finger imaging yet is equally effective at detecting duplicate participation. Other Mechanisms for Preventing Duplicate Aid Fraud: With the exceptions of Texas, Arizona, and the City (but not state) of New York, all other states prevent duplicate aid fraud without finger imaging. In California, other mechanisms for verifying the identities of prospective recipients and preventing duplicate aid fraud include: 1. A file clearance that is performed whenever an application is received for a public assistance program including Medi-Cal, CalWORKs, and Food Stamps; 2. A federally required match of the Income Eligibility Verification System (IEVS) for all applicants to the three programs; and 3. The existence of stringent work participation requirements and requirements for ongoing contacts with social workers in the CalWORKs program. The file clearance involves a check of county and state databases to determine whether an applicant already has an active case file or has previously been a recipient of one or more of the programs. As a result, old case file information can be updated (rather than creating the need for a new, potentially duplicate case file). This process also serves the purpose of flagging any applications received for persons who already have an active case, so that the county may follow up. The IEVS match involves a coordinated data exchange among various benefit programs using a standardized format for matching purposes. The databases used include, but are not limited to, information from the State Wage Information Collection Agency, Unemployment\/disability compensation information, benefits\/wage information from the Social Security Administration (SSA), Internal Revenue Service (IRS)\/Franchise Tax Board (FTB) unearned income data, Social Security number (SSN) verification information from SSA, and inter\/intra-county duplicate benefit matches. Counties use this information to determine eligibility and benefits levels. Staff Comment and Recommendation: The Subcommittee previously rejected staffing and funding requests connected to fingerprinting of In-Home Supportive Services (IHSS) recipients. Given the lack of evidence that SFIS saves the state more than it costs, staff recommends the following: \u00b7 That the Subcommittee further de-fund the remainder of the SFIS costs. Staff should be directed to work with the Administration to determine close-out costs and remaining GF savings for 2010-11. \u00b7 That the Subcommittee adopt placeholder trailer bill language to eliminate the requirements for finger imaging of CalWORKs and food stamp participants. \u00b7 Finally, consistent with this action, staff recommends rejecting the request to convert 1.5 contract staff to 2.0 permanent state staff. This action conforms to action taken in the Senate. 4170 California Department of Aging Issue 1: Federal Grant for Chronic Disease Self-Management Program CDA requests, in a May Revision Finance Letter, $620,000 (an increase of $594,000 in Item 4170-101-0890 for local assistance and a corresponding change in Item 4170-101-0001, as well as an increase of $26,000 for state operations in Item 4170-001-0890, with a corresponding change to Item 4170-001-0001) in 2010-11. The Department intends to request $380,000 ($354,000 Local Assistance and $26,000 State Operations) in 2011-12, for a total of $1.0 million in federal funding authority. These requests are based on the federal government’s award of American Recovery and Reinvestment Act (ARRA) stimulus grant funding for the state to implement new or to expand existing Chronic Disease Self-Management Programs (CDSMPs). CDA also requests budget bill language to allow unspent funds (in Item 4170-101-0890) from 2010-11 to be carried over and expended through March 30, 2012, if necessary. CDSMP is the most widely used patient empowerment program that works to engage persons with chronic conditions in behavioral changes that improve their health. Research has demonstrated that CDSMP participation leads to a reduction in emergency room visits and other acute care costs, while improving health outcomes. Local Area Agencies on Aging and health departments in Los Angeles, Napa\/Solano, Orange, San Diego, San Francisco and Sonoma counties will coordinate with community partners to offer CDSMP services under this grant. Target populations will include at least 3,000 ethnically diverse older adults with low-incomes, limited\/non-English speaking individuals, individuals who are eligible for Medi-Cal and\/or older veterans. Staff Recommendation: Staff recommends approving the requested federal funds authority and budget bill language. This action conforms to action taken in the Senate. Issue 2: Health Insurance Counseling and Advocacy Program (HICAP) CDA requests, in a May Revision Finance Letter, an increase of $567,000 in ongoing federal funding authority for Local Assistance costs associated with HICAP (reflected in changes to Item 4170-101-0890 and Item 4170-101-0001). The request results from an increase in the state’s basic HICAP grant from the federal Centers for Medicare and Medicaid Services (CMS). HICAP is the state’s equivalent of the federal State Health Insurance Assistance Program (SHIP), a Medicare counseling and education program that offers community education, individualized health insurance counseling, informal advocacy services, and legal referrals. There are over 4.3 million Medicare beneficiaries in California who are potential consumers of HICAP services. Twenty-four local HICAPs rely on staff, as well as paid volunteers, to carry out these activities. CDA also has a state HICAP office. Staff Recommendation: Staff recommends approving the requested increase in federal funds authority. This action conforms to action taken in the Senate. Issue 3: Proposed Shift of Funding for the Long-Term Care Ombudsman CDA proposes, in a May Revision Finance Letter, a one-time shift of $680,000 GF from the Department of Public Health (DPH) to CDA (reflected as an increase to Item 4170-101-0001 of $680,000 and a reduction to Item 4170-103-0942 of the same amount). The request results from a deficiency in funding from the Federal Citation Penalty Account (FCPA) that was anticipated to be used for base costs of the Ombudsman program. This proposal corresponds to a related proposal by DPH to concurrently reduce its GF appropriation to divert a portion of its GF transfer to the Licensing and Certification Special Fund to offset the FCPA deficiency. Total 2009-10 Local Assistance funding for the Ombudsman program is $5.8 million (no General Fund). Including this proposed shift of funding, the proposed 2010-11 Local Assistance budget for the program is $4.2 million ($680,000 General Fund). There are currently 147 paid staff members in the program statewide. The Office of the State Long-Term Care Ombudsman, which oversees 35 local Ombudsman programs, is located within CDA. These local Ombudsman offices and their approximately 1,000 certified volunteers identify, investigate, and seek to resolve complaints and concerns on behalf of approximately 296,000 residents of long-term care facilities, including Skilled Nursing Facilities (SNFs), Intermediate Care Facilities (ICFs), and Residential Care Facilities for the Elderly (RCFEs). Funding of the Long-Term Care Ombudsman: Historically, the Ombudsman program has been funded via federal funds and state GF. In 2003-04, the program also began receiving a $1.5 million appropriation from the Federal Health Facilities Citation Penalties Account (Penalties Account). DPH also receives funds from the Penalties Account to fund managers or receiverships that allow facilities to continue to operate pending corrections or closures. The Penalties Account is a special fund managed by DPH and funded by civil penalties paid by health care facilities to the federal Centers for Medicare and Medicaid Services (CMS). In 2008-09, state budget reductions eliminated all GF resources for the Ombudsman program, a total of $3.8 million (half of the program’s total funding at the time). As a result, approximately 40 percent of the total paid Ombudsman staff statewide lost their positions. In an effort to ameliorate these reductions and restore some positions in 2009-10, the Legislature passed and Governor signed AB 392 (Chapter 102, Statutes of 2009), which provided for an additional one-time appropriation of $1.6 million for local Ombudsman programs from the Penalties Account. Since that time, DPH has revised the fund condition statement for the Penalties Account to reflect a deficiency of $680,000. To make up for this deficiency in 2009-10 and reimburse local Ombudsman programs that have already provided services in anticipation of receiving the funds at issue, the Department of Finance has proposed, via a Section 28.5 letter, a transfer of $700,000 GF from DPH to CDA. To prevent additional cuts to the Ombudsman programs in 2010-11, this May Revision proposal would transfer $680,000 from DPH to CDA. Anticipated Consequences if this 2010-11 Proposal is Not Approved: If this fund shift is not approved and no other resources are identified to backfill the $680,000 in funding for Ombudsman programs, CDA states that local Ombudsman offices will terminate approximately 25 additional staff members, cut services, and reduce their hours of operation. The Department states that the Ombudsman program’s mission to advocate for and investigate complaints made by residents of long-term care facilities would be compromised. Staff Recommendation: Staff recommends approving the May Revise request for a 2010-11 shift of resources from DPH to CDA for the Ombudsman program. This action conforms to action taken in the Senate. 4200 Department of Alcohol and Drug Programs Issue 1: Proposed Elimination of $18 million of Offender Treatment Program The Governor proposes to reduce the Offender Treatment Program (OTP) by $18 million General Fund in 2010-11, removing all remaining GF for drug treatment programs for nonviolent, low-level drug offenders. Proposition 36 passed in 2000 and changed state law so that certain adult offenders who use or possess illegal drugs are sentenced to participate in drug treatment and supervision in the community rather than being sentenced to prison or jail, supervised on probation, or going without treatment. From 2001-02 until 2005-06, Proposition 36 also provided annual appropriations of $120 million GF for related substance abuse treatment programs. OTP was established by Chapter 75, Statutes of 2006 (AB 1808, Committee on Budget) to serve the same individuals as Proposition 36, but with some programmatic changes to improve treatment outcomes. To be eligible to receive OTP funding, counties are required to provide a ten percent local match to state funds and to meet specified eligibility requirements, including dedicated court calendars and the presence of drug courts that accept felony defendants. The funding history for Prop. 36 and OTP is displayed below. Again, although the programs operate separately, they essentially offered the same treatment options to clients, so they should be considered in tandem and part of the same treatment safety net for non-violent drug offenders. Fiscal Year Prop. 36 Funding (in millions) Offender Treatment Program Funding (in millions) Total Funding in Both Programs (in millions) 2000-01 $60 — $60 2001-02 $120 — $120 2002-03 $120 — $120 2003-04 $120 — $120 2004-05 $120 — $120 2005-06 $120 — $120 2006-07 $120 $25 $145 2007-08 $100 $20 $120 2008-09 $90 $18 $108 2009-10 $0 $18 $18 20010-11 $0 As Proposed by Gov — $0 $0 Staff Recommendation: Staff recommends rejecting the Governor’s proposal to eliminate all remaining General Fund ($18 million) for substance abuse treatment for nonviolent drug offenders in the Offender Treatment Program, restoring this amount in the 2010-11 budget. Issue 2: Drug Medi-Cal Related ARRA Estimates ADP requests, as part of the May Revision, to revise its estimates of the caseload and utilization of services in the Perinatal DMC and Regular DMC programs. In comparison with the Governor’s January budget proposal, the Department anticipates an additional 104 clients in the perinatal program and 9,724 in the Regular DMC program. As a result, the total Perinatal DMC caseload would include 8,916 individuals. The total Regular DMC caseload would include 277,400 individuals. (These changes would be reflected as an increase of $13,000 in Item 4200-102-0001 and of $14,000 in Reimbursements for Perinatal DMC, as well as an increase of $5.3 million in Item 4200-103-0001 and $5.7 million in Reimbursements for Regular DMC.) The total 2009-10 enacted budget for DMC was $194.8 million ($79.3 million GF) for local assistance and $7.8 million ($3.3 million GF) for state operations. These 2010-11 estimate changes assume that the increased Federal Medical Assistance Percentage (FMAP) of 61.6 percent that is available under the American Recovery and Reinvestment Act (ARRA) will be available through the state’s 2010-11 fiscal year. Due to the timing of DMC payments, ADP estimates that DMC services–as opposed to claims–would thus be eligible for enhanced FMAP until around three months prior to ARRA expiration. At this enhanced FMAP rate, the Department also estimates that the above caseload changes will result in an additional $632,000 in additional ARRA funds available to the Department. As a result, the Department requests, as part of the May Revision, to increase Item 4200-102-0001 by $2,000 and increase Item 4200-103-0001 by $630,000. The Department anticipates a corresponding GF decrease of the same total. Since 1980, the DMC program has provided medically necessary drug and alcohol-related treatment services to Medi-Cal beneficiaries who meet income eligibility requirements (up to 250 percent of the Federal Poverty Level (FPL)). Services include Outpatient Drug-Free, Naltrexone (medication used to treat alcohol or opiod dependence), Narcotic Treatment, and Day Care Rehabilitative and Residential Treatment for eligible pregnant and postpartum women. Staff Comment and Recommendation: The Subcommittee acted on May 19, 2010 to approve the caseload changes in ADP as reflected in the May Revise, so further action is not needed there. However, staff recommends action here to approve the requested changes to account for increased ARRA funds. The reflection of the corresponding GF impact will conform to actions taken regarding the proposed Control Section 8.65. 5170 State Independent Living Council Issue 1: Aging and Disability Resource Connection (ADRC) Federal Grant SILC requests, in a May Revision proposal, $169,000 federal funds authority to establish a seventh Aging and Disability Resource Connection site in California (reflected by the addition of Item 5170-001-0890). No state funds are requested, as the in-kind services of SILC and its contractors can meet federal matching requirements. SILC is requesting the remaining $30,000 of the total $199,000 grant in the state’s 2009-10 fiscal year through the Section 28.5 process. Contingent on the state’s performance in this first year of grant funding, additional funds of up to $540,000 may be granted by the federal Administration on Aging in future years. ADRC programs are community-based programs to assist individuals with disabilities, older adults, and caregivers as they learn about and gain access to long-term services and supports, ranging from in-home services to nursing facility care. The programs also serve as a resource to health and other professionals who provide services to these target populations. Staff Recommendation: Staff recommends approval of the requested 2010-11 federal funds authority. This action conforms to action taken in the Senate. 5175 Department of Child Support Services Issue 1: Revision to Estimates of Federal Incentive Funding and State Disbursement Unit Costs DCSS requests, as part of the May Revision, adjustments to reflect: 1) a projected reduction of $671,000 in federal performance-based incentive funds that the state will receive in 2010-11, and 2) expected growth in the volume of SDU transactions by 13.1 million transactions, at an additional cost of $6.3 million ($2.2 million GF and $4.2 million federal funds). The decrease in anticipated federal incentive funds also results in a $2.2 million GF cost to backfill the previously anticipated federal funds for local assistance. These adjustments would be reflected by a decrease of $621,000 to Schedule (1)(a) of Item 5175-101-0001, an increase by $6,348,000 of Schedule (1)(b) of Item 5175-101-0001, as well as an increase of $1,617,000 to Item 5175\u2011101\u20110890 and a corresponding change to Item 5175-101-0001. As part of the May Revision, there was also an additional reduction of $621,000 ($211,000 GF) to the Department’s overall budget. As discussed in the Subcommittee at its hearing on April 21, 2010, the federal government awards incentive funds to state child support programs based on specific performance measures, including paternity establishment, collections of child support, and overall cost effectiveness. In federal fiscal years 2009 and 2010, the total pool of incentive funds available to states is $504 million. DCSS previously estimated that California would receive incentive funds of $41.7 million in the state’s 2009-10 fiscal year and $40.4 million in 2010-11. As a result of better performance by other states, the Department is now revising the 2010-11 estimate downward to $38.2 million. Background on the SDU and California Child Support Automation System (CCSAS): The SDU is one of two components of CCSAS. With a total budget of $22.6 million ($7.7 million GF) in 2009-10 and a proposed budget of $26.3 million ($9.0 million GF) in 2010-11, the SDU provides central processing for collecting and distributing child support payments in the state. The SDU provider is paid on a per transaction (e.g., collection via credit card payment, disbursement via paper check) basis. As a result of a recent increase in the number of transactions, the Department now estimates an increased volume of SDU transactions in 2010-11. According to the Department, collections and disbursement transactions are influenced in part by the source of the collection. For example, the number of Unemployment Insurance Benefit (UIB) intercepts has increased significantly as the unemployment rate has increased. UIB intercepts are submitted electronically to the SDU on a bi-weekly basis (two to three times per month), whereas income withholdings for some of those non-custodial parents may have been submitted by their previous employer on a monthly basis. Thus, this shift from employment to unemployment can increase the number of collection and disbursement transactions, even though the amount of child support collected may decrease. Staff Recommendation: Staff recommends approving these estimate changes (which will also conform, as appropriate, to other actions taken). This action conforms to action taken in the Senate. Issue 2: Revision to Estimate of ARRA Funds DCSS requests, as part of the May Revision, to decrease by $1.9 million the anticipated ARRA stimulus funding available to the Department (reflected in Item 5175\u2011101\u20110890). The corresponding GF impact of this change is not reflected in the budget bill at this time because of the Administration’s proposed Control Section 8.65 of the budget bill. This proposed Control Section language would give the Department of Finance broad authority to adjust General Fund, Federal Trust Fund, and Reimbursement expenditures from Health and Human Services (HHS) programs impacted by ARRA. Among other changes, the federal Deficit Reduction Act of 2005 tightened the rules regarding federal financial participation (FFP) in child support expenditures by restricting the ability of states to use incentive funds in order to draw down additional federal matching funds. After its passage, California chose to backfill the loss of FFP on incentives with a combination of General Fund (GF) and matching FFP to hold local assistance funding levels steady. More recently, ARRA restored the ability of states to receive federal matching funds for their use of child support incentive funding. As a result, the Governor’s budget proposes to replace the prior State GF backfill with restored FFP. Specifically, given the anticipated incentive funding discussed in the prior agenda item, DCSS anticipates receiving $75.4 million in matching FFP and scoring $25.2 million GF savings. The proposed adjustment to arrive at that total is tied to the previously discussed changes in estimates of federal incentive funding the state will receive in the Budget Year. Staff Recommendation: Staff recommends approving the proposed reduction to Item 5180-101-0890 of the budget bill. The reflection of the corresponding GF impact will conform to actions taken regarding the proposed Control Section 8.65. This action conforms to action taken in the Senate. 5180 Department of Social Services Issue 1: Caseload Estimate Changes and Adjustments DSS proposes, as is customary during the May Revision, to update caseload estimates based on more recent trend data than was available at the time of the Governor’s January budget release. In particular, the May Revision proposes a net increase of $1.1 billion (increases to federal and other funds, with an offsetting decrease of $410.3 million GF) over the Governor’s budget due to caseload changes. The Subcommittee approved the caseload changes related to CalWORKs and IHSS at its May 19, 2010 hearing, however, these caseload changes are again reflected in this overall issue for the purposes of a comprehensive review of caseload. January and May estimates of the average monthly caseloads associated with a number of major programs in 2010-11 include: Program Governor’s Budget May Revision CalWORKs 605,542 cases 580,527 cases Kinship Guardianship Assistance Program (Kin-GAP) 14,670 cases 13,404 cases Child Welfare Services (including Title IV-E waiver counties) 145,834 cases 139,608 cases Foster Care (including Title IV-E waiver counties) 59,307 cases 55,599 cases Adoption Assistance Program 87,769 cases 86,855 cases Food Stamp Program 1,137,766 households 1,220,101 households Supplemental Security Income\/State Supplementary Payment (SSI\/SSP) 1,279,645 cases 1,266,112 cases In-Home Supportive Services (IHSS) 489,972 cases 466,292 cases To reflect corresponding changes in the programs’ budgets, DSS requests the following technical changes to the budget bill: Program Item Change Since Governor’s Budget CalWORKs \/ Kin-GAP 5180-101-0001 -$311,715,000 5180-101-0890 $451,869,000 Foster Care 5180-101-0001 -$2,922,000 5180-101-0890 -$24,237,000 5180-101-8004 $535,000 5180-141-0001 -$657,000 5180-141-0890 -$2,366,000 Adoption Assistance Program 5180-101-0001 $9,253,000 5180-101-0890 $5,701,000 Supplemental Security Income\/State Supplementary Payment (SSI\/SSP) 5180-111-0001 -$25,628,000 In-Home Supportive Services (IHSS) 5180-111-0001 -$67,749,000 5180-611-0995 $999,653,000 Child Welfare Services (CWS) 5180-151-0001 5180-151-0803 -$13,796,000 $186,000 5180-151-0890 -$3,280,000 5180-651-0995 $33,263,000 Other Assistance Payments 5180-101-0001 $1,127,000 5180-101-0122 $36,000 5180-101-0890 $1,232,000 5180-601-0995 $2,743,000 County Administration and Automation Projects 5180-141-0001 5180-141-0890 5180-641-0995 $1,191,000 $29,025,000 -$2,890,000 Title IV-E Waiver 5180-153-0001 5180-153-0890 $1,605,000 $11,202,000 Remaining DSS Programs 5180-151-0001 -$993,000 5180-151-0890 $9,487,000 5180-651-0995 $1,209,000 Among other changes, May Revision estimates also reflect the Administration’s rescission of the Governor’s earlier proposals to reduce the state’s participation in the wages of In-Home Supportive Services (IHSS) providers to minimum wage and to eliminate services for IHSS recipients with a functional index score of less than 4.0. These changes are reflected as increases of $271.8 million GF and $1.9 billion ($650.8 million GF), respectively. Similarly, the May Revision finance letter for DSS reflects erosions of savings associated with prior proposals that the Administration has rescinded or that did not take effect as anticipated (i.e., Proposition 10 funding shifts, redirections of county savings, and expanded eligibility for federal financial participation in foster care), updated estimates of federal stimulus funding, and technical adjustments, including budget bill language, to allow for carry-over funding for counties participating in a federal foster care waiver. Staff Recommendation: Staff recommends adopting these caseload and other estimate adjustments, which will conform as appropriate to other Subcommittee actions that have been or will be taken. This action includes a correction to a current year issue, Waiver Title XX FC 101 Impact of GH Rate Increase, to correct the technical error, accomplished by decreasing GF by $2.926 million and increasing federal funds by the corresponding amount. Issue 2: Temporary Emergency Food Assistance Program (TEFAP) Fund Shift DSS proposes, as part of the May Revision, to transfer federal expenditure authority for TEFAP from state operations to local assistance. The transfer is technical and is intended to help ensure timely reimbursement to local food banks and the California Foodlink for food commodity purchases and associated administrative costs. Under TEFAP, surplus agricultural commodities are distributed to California emergency feeding organizations. DSS expects to receive $9.6 million in 2010-11 for this 100 percent federally funded program. Staff Recommendation: Staff recommends approving this transfer of federal expenditure authority. This action conforms to action taken in the Senate. Issue 3: Inter-county Transfer Process for Food Stamps The May Revision proposes savings of $23,000 ($6,000 GF) and trailer bill language (TBL) to establish an ICT process for food stamps clients. For an estimated 586,000 clients who also receive CalWORKs benefits ( assistance food stamps ), the simplified ICT process would be effective January 1, 2011. For an estimated 1.2 million individuals who receive Medi-Cal, but not CalWORKs benefits, or no public assistance [ non-assistance food stamps (NAFS)], the ICT process would begin July 1, 2011. DSS estimates that 0.16 percent of all CalWORKs cases transfer to a different county in California in any given month, and that the same rate of transfer is likely to apply to assistance food stamp clients. DSS also estimates that approximately 3,800 Medi-Cal\/NAFS will transfer to another county in 2010-11. Currently, if a recipient of food stamps moves from one county to another within California, his or her benefits are terminated at the end of the month and he or she must then reapply in the new county of residence. This results in a delay or interruption in benefits, and in unnecessary administrative duplication. The CalWORKs and Medi-Cal programs already use an ICT process to prevent uninterrupted benefits for recipients of those programs who move to a different county. Pending Policy Bill: After its passage by a 13-0 vote out of the Assembly Appropriations Committee, AB 2018 (Skinner) is currently awaiting a vote on the Assembly floor. This bill appears to be the same as this May Revision proposal, except that the effective dates differ slightly (i.e. the bill begins an ICT process for all cases on January 1, 2011, rather than having some wait until July 1, 2011). Staff Comment and Recommendation: Given the currently pending policy bill seeks to address this same issue, staff recommends rejecting, without prejudice, the Inter-County Transfer process and related TBL that are proposed as part of the May Revise. This action conforms to action taken in the Senate. Issue 4: County Match Requirements for Food Stamps Administrative Costs The County Welfare Directors Association (CWDA) proposes trailer bill language (TBL) to allow counties, during 2010-11 and 2011-12, to draw down a portion of increasing food stamps administration funding without a county match above and beyond an existing Maintenance of Effort (MOE) requirement. Food stamps administrative costs are generally shared at a ratio of 50 percent federal funds, 35 percent GF, and 15 percent county funds. Apart from this county share, each county has a combined MOE for food stamps administration and CalWORKs that is tied to 1996-97 expenditure levels. Under this proposal, counties would be able to draw down up to 70 percent of the additional funding (50\/50 state\/federal funds) without being required to pay a match. Counties that can supply additional matching funds could draw down the remaining funds (50\/50 county\/federal funds). Staff Recommendation: Staff recommends adopting placeholder TBL to effectuate this proposal for a two-year time period. This action conforms to action taken in the Senate. Issue 5: Kinship-Guardianship Assistance Payment Program (Kin-GAP)\/ Subsidized Relative Guardianship Proposal The 2009-10 budget for Kin-GAP includes a total of $144.9 million ($110.5 million GF). The Governor’s budget for 2010-11 proposed trailer bill language (TBL) to allow the state, beginning October 1, 2010, to opt into newly available federal financial participation in the costs of a subsidized relative guardianship program that is similar to the state’s existing Kin-GAP program. However, Kin GAP is currently part of the state’s CalWORKs program; and its state and county expenditures count toward the MOE requirement imposed on the state as a condition of receiving federal Temporary Assistance to Needy Families (TANF) funds for the CalWORKs welfare-to-work program. The state’s Kin-GAP expenditures are also eligible for American Recovery and Reinvestment Act (ARRA) Emergency Contingency Fund (ECF) resources. Thus, the Administration has more recently confirmed that while ECF is in effect, the GF relief from continuing to include Kin-GAP in the TANF ECF calculation continues to be greater than the relief that would be achieved by implementing the federally subsidized guardianship program. As a result, the May Revision rescinds the January proposal to opt into the subsidized relative guardianship program as of October 1, 2010. As part of the May Revision, the Administration instead proposes new trailer bill language (TBL) to allow for implementation of the federally supported subsidized relative guardianship program contingent upon a declaration by the Director of DSS that no further TANF ECF resources are available. At the time this agenda was written, the specifics of that proposed language had not yet been provided. Staff Comment and Recommendation: Staff recommends adopting May Revision changes to reflect the Administration’s rescission of its prior proposal to implement a subsidized relative guardianship program as of October 1, 2010. Further, staff recommends rejecting the newly proposed concept for TBL. The conversion of Kin-GAP to a federally subsidized program that meets all of the newly enacted federal requirements involves a complex set of policy changes. If the state opts into this new federal program, those policy issues should be fully considered by the Legislature. This action conforms to action taken in the Senate. Issue 6: Title IV-E Eligibility Training Proposal DSS proposes, as part of the May Revision, an increase of $1.1 million ($500,000 GF) for consultant services to develop a website containing eligibility requirements for federal financial participation under Title IV-E of the Social Security Act (IV-E) and to develop training curricula for county welfare and probation department staff. According to the Department, these services would help the state better meet federal training requirements consistent with the state’s federal Program Improvement Plan and would help avoid potential federal funding disallowances in the future. About 71 percent of the state’s approximately 60,000 children in foster care are currently eligible for federal financial participation through Title IV-E in the costs of their care. To be eligible for IV-E benefits, children must come from families who meet the income tests that applied to the 1996 Aid to Families with Dependent Children (AFDC) program (which no longer exists). For children who are eligible for federal financial participation in the costs of foster care under Title IV-E, the ratio of federal\/non-federal foster care costs is determined by the state’s Federal Medical Assistance Percentage (FMAP). Non-federal foster care costs are shared at a ratio of 40\/60 by the state\/counties. As a result of this outdated and frozen standard, a decreasing number of children are eligible over time. Staff Comment and Recommendation: Less expensive and more feasible options are available to the department for the purposes of training and information provision, including the ability to post All County Letters to its website that provide instruction to counties with regard to IV-E eligibility and to use state staff resources for training and monitoring, in coordination with the counties (CWS and probation agencies). These modest efforts can address the PIP needs with no new General Fund pressure. For these reasons, staff recommends rejection of the requested resources. Issue 7: Proposal to Continue Suspension of the Mutual Consent Confidential Intermediary Program for Sibling Contact (AB 2488) DSS proposes savings of $3.0 million ($1.7 million GF) in avoided state operations and local assistance costs from continuing to suspend implementation of AB 2488 (Chapter 386, Statutes of 2006). The new suspension appears to be indefinite, although it continues to indicate the Legislature’s intent that counties already implementing the provisions added by AB 2488 shall continue to do so to the extent possible. AB 2488 created a confidential intermediary program intended to facilitate contact between siblings in the circumstance that at least one of them was adopted. In 2008-09, the Governor vetoed funding for implementation of AB 2488, stating that implementation of the program would be delayed for one year as a budget balancing reduction. The Legislature subsequently delayed program implementation to July 1, 2010 (except to the extent that counties already implementing its provisions continue to do so). Staff Comment and Recommendation: Notwithstanding the merits of fully implementing AB 2488, staff recommends approving trailer bill language for an additional one-year suspension of its provisions. As a result, Section 9205(i) of the Family Code would read: (i) Implementation of the amendments made to this Section by Chapter 386 of the Statutes of 2006 shall be delayed until July 1, 2011. It is the intent of the Legislature that counties that are already implementing some or all of the changes made to Section 9205 of the Family Code by Chapter 386 of the Statutes of 2006 shall continue to implement these provisions, to the extent possible. This action conforms to action taken in the Senate. Issue 8: Proposal to Continue Suspension of Placements of Children in Foster Care with Developmental Disabilities in For-Profit Group Homes (AB 1462) DSS proposes, in the May Revision, $99,000 ($63,000 GF) in cost avoidance from suspending state operations efforts related to implementation of AB 1462 (Chapter 64, Statutes of 2007). Specifically, the proposed trailer bill language (TBL) would suspend implementation of laws enacted by AB 1462 until sufficient state operations resources have been appropriated for its implementation to develop program procedures, policies and regulations, and to develop fiscal procedures, such as cost reporting and claiming. AB 1462 authorized the use of for-profit group homes for placement of children with developmental disabilities, under specific circumstances, and when a county could not find a non-profit group home with a program that could meet the child’s needs. As a result, counties would be able to draw down federal financial participation and by using county funds as the required match. No state General Fund resources could be used for placement into a for-profit facility. AB 1462 also limited foster care payments made to for-profit agencies to no more than five children per county at any one time. In addition, the placements cannot exceed a maximum of 12 cumulative months. The Department released an information notice regarding these changes in state law to county welfare and probation departments in January 2008. In 2008-09, the Legislature delayed implementation of AB 1462 until July 1, 2010 and denied a related budget change proposal requesting state operations resources for DSS. Staff Recommendation: Staff recommends rejecting the proposed TBL. This action conforms to action taken in the Senate. Issue 9: Resources for Resource Family Approval Pilot (AB 340) The Governor’s proposed budget for 2010-11 included trailer bill language (TBL) to suspend implementation of statutes enacted by AB 340 (Chapter 464, Statutes of 2007). Under the proposed TBL, existing law would have been implemented when the Department of Finance determines that sufficient state operations resources have been appropriated. On April 28, 2010, the Subcommittee voted to reject the proposed TBL, which would have transferred Legislative authority to determine the sufficiency of funding for the pilot program to the Administration. During that same hearing, the Subcommittee held open the budget for AB 340. Background on AB 340. The resource family approval pilot established by AB 340 requires a three-year pilot program in up to five counties to establish a single, comprehensive approval process for foster care and adoptive families. This pilot was intended to make the licensing process less cumbersome and to prevent unnecessary delays in finding permanent families for foster children. The current licensing process divides caregivers into relatives, foster family homes, and adoptive homes. All caregivers must meet the same health and safety standards, but the processes for each vary and can be duplicative. This pilot was also included in the state’s Program Improvement Plan in response to the 2002 federal review. The Assembly and Senate Appropriations Committees’ analyses of AB 340 estimated approximately $150,000 GF in the first year for state personnel costs to oversee development and implementation of this pilot (and in one analysis, additional funds for its final evaluation). These analyses also recognized that the pilot should lead to some offsetting savings. Local assistance funding of $717,000 ($242,000 GF) was appropriated in 2008-09. DSS also submitted a BCP requesting 4.0 limited-term state positions at a cost of $440,000 ($278,000 GF) to implement AB 340 in 2008-09; however, no state operations resources were included in the budget that year. DSS never allocated the 2008-09 local assistance that the Budget Act appropriated to the counties. In 2009-10, the Governor’s budget included $1.8 million ($786,000 GF) in local assistance funding for AB 340 implementation. As part of the 2009 May Revision, this 2009-10 funding for the program was suspended. Administration Actions. The administration has recently stated that its elimination of local assistance funding for AB 340 was warranted by a reference in the existing statute authorizing the program. Specifically, Section 16519.5 (q) of the Welfare and Institutions Code states that AB 340 shall be authorized to continue through the end of the 2010-11 fiscal year, or through the end of the third full fiscal year following the date that funds are made available for its implementation, whichever of these dates is later. According to the administration, because no funds had been appropriated for the state-level activities, the administration determined that no corresponding local pilot activities would take place. Staff Comment and Recommendation: It appears that the administration may have overstepped its bounds by assuming that the administration itself was authorized to determine the sufficiency of funding appropriated for this program (i.e., the very same authority the administration explicitly sought in the 2010-11 budget and that the Subcommittee recently rejected). Staff recommends that the Subcommittee restore, in 2010-11, local assistance funding for this program. Staff should be directed to work with the administration, Legislative Analyst’s Office (LAO), and County Welfare Directors Association (CWDA) to determine the amount of this restoration. In addition, to ensure appropriate implementation of the pilot, staff further recommends that the Subcommittee authorize some, but not all, of the previously requested limited-term positions at DSS. Specifically, limited-term state operations costs shall not exceed $150,000 GF annually. This action conforms to action taken in the Senate. Issue 10: Group Home Financial Audit Reports TBL DSS proposes TBL that would alter the statutorily required trigger for group home and foster family agency (FFA) financial audits. The audits are paid for by these service providers. However, the Governor’s budget assumes up to $300,000 GF savings in 2010-11 as a result of reduced staff workload for reviewing the audits as a result of this proposal. The monthly rates paid to group homes and FFAs for each child under their care are established in state statute and must be consistent with federal requirements that they cover the costs of care and supervision. After a 10 percent reduction that took effect pursuant to ABx4 4 (Chapter 4, Fourth Extraordinary Session, 2009) in 2009, FFA rates range from $1,430 to $1,679 per child, per month. As the result of a recent federal district court order that increased rates paid to group homes, currently effective group home rates range from $2,085 to $8,835 per child, per month. As a condition of receiving these funds, organizations that operate group home and FFA programs must have financial audits conducted as required by federal and state laws. The proposed TBL would change the statutory trigger for an audit from when a threshold amount ($500,000) of federal funds is received to when those funds are expended. According to DSS, these changes would be consistent with federal audit statutes and requirements. The Department indicates that the proposed TBL would reduce the frequency of financial audits for a few facilities. Staff Comment and Recommendation: An analysis of existing law and any related clarifications are more appropriate for consideration by the relevant Legislative Policy Committees. Therefore, staff recommends rejecting the proposed TBL, without prejudice as to its merits. This action conforms to action taken in the Senate. Issue 11: Proposed CalWORKs Grant Reduction The Governor proposes to further reduce CalWORKs grants by an additional $109 per month, or 15.7 percent, bringing the grant for basic living costs to $585 per month for a family of three. As updated by the May Revise, the proposal would become effective October 1, 2010. If the federal TANF Emergency Contingency Fund (ECF) under federal stimulus is extended through 2010-11, this proposal will save $81.5 million GF and forego $324.7 million in federal funds. This issue has been heard twice by the Subcommittee during the Subcommittee’s Toll on Californians of Adopted and Proposed Health and Human Services Cuts hearing on March 24, 2010 and at its April 28, 2010 hearing. Staff Comment and Recommendation: Staff recommends rejection of the Governor’s proposal as updated by the May Revision. Issue 12: Proposed Elimination of the CalWORKs Recent Non-Citizen Entrants (RNE) Program The Governor proposed to eliminate the RNE Program, affecting 24,000 individuals who depend on the program for basic assistance. The program was created in 1997 in response to federal welfare reform under Governor Wilson. If the TANF ECF is extended, this proposal will result in $16.2 million GF savings and a loss of $24.5 million in federal funds. This issue has been heard twice by the Subcommittee during the Subcommittee’s Toll on Californians of Adopted and Proposed Health and Human Services Cuts hearing on March 24, 2010 and at its May 3, 2010 hearing. Staff Recommendation: Staff recommends rejection of the Governor’s proposal as updated by the May Revision. Issue 13: California Work Opportunities and Responsibility to Kids (CalWORKs) – Extension of authority for ARRA Funding ABx4 4 (Chapter 4, Fourth Extraordinary Session, Statutes of 2009), a 2009-10 budget trailer bill, established authority for the state to implement the benefits of the Temporary Assistance to Needy Families (TANF) Emergency Contingency Fund (ECF) available under the American Recovery and Reinvestment Act (ARRA) of 2009. At both the state and federal level, TANF ECF is currently authorized through September 30, 2010. Since the passage of ABx4 4, however, there has been a national effort to extend federal authority for the program through at least federal fiscal year 2011. In order to allow for the likely extension of ECF, Section 10545.2 of the state’s Welfare & Institutions Code must be updated. This change would be consistent with assumptions in the Governor’s budget and May Revision regarding the extension of TANF ECF. In addition, under federal guidance issued in January 2010, states are encouraged to use ECF funds for subsidized employment for needy youth with low-incomes between the ages of 18 and 24. However, state law does not currently include all federally-eligible youth in this category as allowable recipients of ECF-funded programs. Staff Comment and Recommendation: 1. In order to continue TANF ECF in California if the federal government extends the program, staff recommends adopting the following amendments to Section 10545.2(a) of the Welfare & Institutions Code as budget trailer bill language: 10545.2(a) This chapter shall become inoperative on October 1, 2010, and as of January 1, 2011, upon the expiration of federal authority for the Emergency Contingency Fund, as provided in the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), or subsequent federal legislation that extends the Emergency Contingency Fund program, and on that date is repealed. 2. Staff also recommends adopting placeholder TBL to ensure that TANF ECF-funded subsidized employment programs in California can serve all categories of federally-allowable needy low-income youth between the ages of 18 and 24. Issue 14: Governor’s January Proposals to Reduce IHSS Proposed Reduction in State Participation in Provider Wages. The Governor’s January budget proposed to eliminate all services for recipients with a functional index (FI) score of less than 4. This cut would eliminate eligibility for 426,733 individuals (87 percent of the caseload). As updated by the May Revise, the proposal would become effective October 1, 2010. Proposed Limit of IHSS Services to Recipients with FI Score of 4.0 and Above. The Governor’s January budget proposed to reduce the state’s participation in IHSS wages from the current ceiling of $12.10 per hour to a ceiling of the minimum wage of $8.00 per hour, plus $.60 in benefits costs. There are approximately 385,000 IHSS service providers providing services to 460,000 program recipients. IHSS providers organize and collectively bargain for wages and benefits on a county-by-county basis. As updated by the May Revise, the proposal would become effective October 1, 2010. These issues have been heard twice by the Subcommittee during the Subcommittee’s Toll on Californians of Adopted and Proposed Health and Human Services Cuts hearing on March 24, 2010 and at its May 5, 2010 hearing. Staff Comment and Recommendation: The Subcommittee held these items open when they were heard previously. At May Revision, the Governor replaced these proposals with an unspecified proposal to cut $750 million ongoing from the IHSS. This May Revision proposal was rejected by the Subcommittee on May 19, 2010. For the purposes of clarity to the public, staff recommends explicit rejection of the Governor’s January proposals to reduce IHSS as updated by the May Revision. Issue 15: Request for $500,000 for Anti-Fraud and Program Integrity Report As part of the 2010-11 IHSS anti-fraud proposals discussed in prior agendas, including the agenda for the May 12, 2010 hearing, DSS proposes an increase of $500,000 ($264,000 GF) to contract with California State University (CSUS) to assist in the development of a required report to the Legislature. The report, as required by ABx4 4 (Chapter 4, Fourth Extraordinary Session, Statutes of 2009), must result from a stakeholder process and the collection and review of specified information regarding prevention and early detection of fraud, as well as referrals of suspected fraud and final convictions for fraud. As previously detailed, the Department did also receive funding and authority for 12 new IHSS program integrity\/anti-fraud positions in the 2009-10 budget. In addition, the Subcommittee acted on May 12, 2010 to repeal a narrow set of the larger requirements created in 2009-10 (i.e., those related to the fingerprinting of IHSS consumers and the inclusion of fingerprints on providers’ timesheets) that would no longer need to be implemented if that action becomes a part of the enacted 2010-11 budget. Staff Comment and Recommendation: Staff recommends approval of a reduced amount of funding for contractor assistance in the Department’s development of the required report. Specifically, staff recommends approval of a total of $150,000 from all funding sources (with the corresponding GF impact to be determined by the Administration, after consultation with Subcommittee staff). This action conforms to action taken in the Senate. Issue 16: IHSS May Revision Proposal At its May 19, 2010 hearing, the Subcommittee considered and rejected the Governor’s May Revise proposal to reduce the IHSS program by $637.1 million General Fund in 2010-11, growing to $750 million annually in 2011-12. The administration proposed achieving these savings through cost containment measures developed in consultation with stakeholders and presumed legislative enactment of these by July 1, 2010. Alongside this rejection, the Subcommittee took action (6-0 vote) to adopt placeholder trailer bill language to establish an inclusive, long-term, transparent IHSS Budget Advisory Workgroup to examine and address issues of cost containment and maximizing federal financial participation, with staff to work with Members and return to the Subcommittee with a more developed product to consider for vote-only. Staff returns with the following placeholder language draft for further consideration by the Subcommittee: Section XX is added to the Welfare and Institutions Code: Upon enactment of this section, the State Department of Social Services shall convene a Budget Advisory Workgroup for the In-Home Supportive Services (IHSS) program to consider options and develop proposals for maximizing federal financial participation, containing costs, and examining IHSS as part of the long-term care continuum. The Budget Advisory Workgroup shall include statewide organizations representing the interests of consumers, family members, service providers, county welfare directors and county public authorities, and statewide advocacy organizations, as well as policy and fiscal staff of the Legislature. Details on the meeting schedule, composition, and topics for the Budget Advisory Workgroup shall be publicly available on the department’s website. The department and Budget Advisory Workgroup shall provide information regarding a proposal to the Assembly Committee on Budget and the Senate Committee on Budget and Fiscal Review at least 30 days prior to a proposal or request for IHSS is formally submitted to the Legislature. This information shall include the methodology and cost benefit analysis of the proposal. Staff Comment and Recommendation: While smaller, exclusive meetings have been convened by the administration before the May Revision release and since then, it is unclear what the parameters and content of these discussions have been, and under what presumption of the administration’s ultimate goal in reducing the program by its caseload or provider network. In lieu of this administration-preferred strategy, staff recommends the following: 1. Adoption of the further-developed placeholder trailer bill language regarding the IHSS Budget Advisory Workgroup as included in the agenda. Additionally, toward the goal of seeking savings in the program in the 2010-11 year as part of the budget, and given the successful contemplation and application of provider fees elsewhere in the health and human services budgets, staff recommends: 2. Adoption of placeholder trailer bill language to institute a provider fee in IHSS to generate $150 million in program savings in 2010-11. This proposal shall be developed further and implemented through and with the IHSS Budget Advisory Workgroup. Issue 17: Local Augmentation in 2009-10 Of the $54.2 million ($21.9 million GF) in new funding for DSS and county IHSS anti-fraud\/program integrity efforts in 2009-10, $10 million GF was set aside for additional fraud prevention, detection, referral, and investigation at the local level. With matching federal and county funds, the total amount available statewide for those additional local efforts was $26.4 million. (For more information on overall IHSS anti-fraud\/program integrity efforts statewide, please see the May 5, 2010 Agenda.) The Governor’s 2010-11 budget proposes an additional $28.3 million ($10.0 million GF) to provide this augmentation again in the budget year. Budget Bill Language (BBL) Authorizing 2009-10 Augmentation. This augmentation was enacted by Section 576 of ABx4 1 (Chapter 1, Fourth Extraordinary Session, Statutes of 2009), which added Section 18.55(b), copied below, to the Budget Act of 2009: (b) The sum of $10,000,000 is hereby appropriated from the General Fund in augmentation of Schedule (2) of Item 5180-111-0001 of Section 2.00 of the Budget Act of 2009 for the purpose of fraud investigations and additional program integrity efforts related to the In-Home Supportive Services Program. The amount appropriated in this subdivision represents the total allowable to be claimed for these purposes within this section. The State Department of Social Services shall allocate funding based on a distribution method developed in consultation with the counties. Each county shall submit a plan to the department that includes the program integrity and fraud investigation activities that the county plans to pursue, and the department must approve the plan prior to distribution of the funds appropriated in this subdivision. Forty-five counties submitted plans for these additional fraud prevention and investigation funds. Those plans were developed by County Welfare Directors and District Attorneys’ (DAs) offices and reviewed by Boards of Supervisors and DSS. With some minor exceptions when federal or state funds are available, local District Attorneys’ offices are principally funded on a discretionary basis out of county General Funds. According to the California Department of Justice, approximately $1.2 billion total was spent on prosecution activities statewide (based on 2006-07 data). Other Anti-Fraud\/Program Integrity Measures in the 2009-10 Budget. In addition to these local funding augmentations and the recipient fingerprinting discussed in several of the Subcommittee hearings, as well as previously existing IHSS quality assurance efforts, the 2009-10 budget included the following IHSS reforms, with varying implementation dates: 1. Criminal background checks and appeals processes for IHSS providers; 2. The requirement for providers to attend an orientation; 3. Authorization to send targeted mailings to providers and recipients and to conduct unannounced home visits, pursuant to developed protocols and in targeted cases, when there is cause for concern about program integrity; 4. Limits on the use of P.O. boxes by providers to receive paychecks; 5. Training for social workers on fraud prevention; 6. Notification to providers about their clients’ authorized hours and service levels; and 7. Certifications on timesheets, after notice of possible criminal penalties for fraud. Staff Comment and Recommendation: The BBL quoted above included a one-time appropriation of funds for this local augmentation in 2009-10. Given the fiscal crisis facing the state and the lack of analysis regarding savings that can be expected to result from these expenditures, staff recommends rejecting the proposed funding to continue this one-time augmentation of local activities in 2010-11. This action conforms to action taken in the Senate. Issue 18: SSI\/SSP Proposed Grant Reduction for Individual Recipients The Governor’s budget proposes to reduce SSI\/SSP grants to individual recipients. The proposed SSP grant would be set at the federally required MOE level of the 1983 payment standard. Savings include those resulting from grant reductions in the Cash Assistance Program for Immigrants and California Veterans Cash Benefit, as these grant levels tie to those for SSI\/SSP. The May Revision updated the Governor’s proposal and made it effective October 1, 2010. This issue has been heard twice by the Subcommittee during the Subcommittee’s Toll on Californians of Adopted and Proposed Health and Human Services Cuts hearing on March 24, 2010 and at its May 5, 2010 hearing. Staff Recommendation: Staff recommends rejection of the Governor’s proposal to reduce SS\/SSP grants for individuals to the federal minimum. Issue 19: Cash Assistance Program for Immigrants & California Food Assistance Program The Governor’s budget proposes to eliminate the California Food Assistance Program (CFAP) and Cash Assistance Program for Immigrants (CAPI). CFAP and CAPI are state-funded programs that provide benefits to legal immigrants who do not qualify for federal food stamps and SSI\/SSP funding, respectively. California created CFAP and CAPI in 1997 and 1998 after federal law began excluding these individuals. Since that time, federal law has changed to re-include some, but not all, individuals originally covered under the state programs (e.g., non-citizens with disabilities for CFAP). The May Revision updated the Governor’s proposals and made the eliminations effective October 1, 2010. These proposals have been heard twice by the Subcommittee during the Subcommittee’s Toll on Californians of Adopted and Proposed Health and Human Services Cuts hearing on March 24, 2010 and at its May 3, 2010 hearing. Staff Recommendation: Staff recommends rejection of the Governor’s proposal to eliminate CAPI and CFAP. Issue 20: State Hearings – SFL on Videoconferencing The actions on this issue have been carried over from the May 12 hearing due to a logistical issue with votes at the hearing. Background on the issue is available on that agenda. Staff Recommendation: Due to the scope of the changes being proposed, the lack of detail in the proposal, and the questionability of proposing these changes in a budget context, staff recommends that the Subcommittee reject the State Hearings Spring Finance Letter on the basis that this proposal requires careful, thorough consideration through the policy process. In light of the increased demands for state hearings, assumed to be due in part to the programmatic changes adopted as part of the 2009-10 Budget and limited state resources, provide funding in 2010-11 for three additional ALJs ($450,000 total funds, approximately $215,500 GF), to assist with workload. This action conforms to action taken in the Senate. ITEMS TO BE HEARD 5175 Department of Child Support Services Issue 1: Clarification of Action Regarding Spring Finance Letter on Administrative Order Setting and Modification Process This Spring Finance Letter was heard by the Subcommittee on April 21, 2010 and was rejected due to the substantial policy questions and concerns that were raised a result of the proposal. The Subcommittee additionally took action to \”direct DCSS to meet with stakeholders as soon as possible toward consideration of a proposal involving the Early Intervention and stipulation-agreement approach included in Tier 1 of the proposal, and, if there are cost savings that maintain security, due process, and access to court channels, report back to the Subcommittee at May Revision on an alternative proposal in this vein.\” The DCSS requested authority to establish an administrative process for setting and modifying child support orders. As proposed, this administrative process would be in addition to the current judicial process and would be administered by DCSS and Local Child Support Agency (LCSA) staff. The Department proposed to redirect existing vacancies and associated resources to implement this change. DCSS has been meeting with stakeholders since the April 21, 2010 hearing, however a consensus product that satisfies the terms of the Subcommittee’s direction was not submitted with the May Revision. Panelists \u00b7 DCSS Please provide an overview and update on the stakeholder convenings, what issues have been discussed, what concerns have been raised, which continue to be outstanding, and how the proposal is changing as a result. \u00b7 DOF \u00b7 LAO (There will be no public comment on this item public comment was taken at the April 21, 2010 hearing on this issue.) Staff Recommendation: Given the lack of a consensus product at May Revision, staff recommends affirming the rejection of this proposal at this time (does not require a new action). Staff also recommends that the Subcommittee encourage the Department to continue working with stakeholders on a policy and\/or a future budget proposal. 5180 Department of Social Services Issue 1: Financing of CalWORKs Single Allocation The funding for counties to administer the program and provide services, called the \”single allocation,\” which totals about $1 billion, was cut dramatically by $420 million in 2009-10 and with an agreement to cut $375 million in 2010-11, summing to a two-year overall reduction of $795 million. The 2009-10 cut reduced welfare-to-work services by $162 million and child care services by $215 million. This reduction has been discussed during the Subcommittee’s Toll on Californians of Adopted and Proposed Health and Human Services Cuts hearing on March 24, 2010 and at its April 28, 2010 hearing on CalWORKs. Staff Recommendation: Staff recommends the following: \u00b7 Using revenues in the newly created Jobs and Economy Security Fund to fund CalWORKs employment services and child care at $1.5 billion, backing out TANF that was being applied for these purposes and using TANF funds for CalWORKs grants costs. Additionally, provide $300 million from the Jobs Fund to restore a healthy portion of the Single Allocation reduction that was reduced for 2010-11. \u00b7 As a result of the restoration of the Single Allocation, rescind the Subcommittee’s prior action on adoption of placeholder trailer bill to require DSS to report on the effects of the reduction with the release of the January 10, 2011 Governor’s Budget. \u00b7 Actions on CalWORKs Child Care will conform to actions taken in Subcommittee No. 2 on Education Finance. Issue 2: Spring Finance Letter Proposal for Community Care Licensing (CCL) Inspection & Fee Changes This Spring Finance Letter was heard by the Subcommittee on April 28, 2010 and the action taken was to hold the Letter open and \”direct the DSS to meet with stakeholders, inviting legislative staff and including those who have expressed concerns and opposition, for a thorough briefing on (1) the particulars of the assessment tool, (2) the proposed inspection protocol, and (3) the administration’s proposed trailer bill language prior to the May Revision and report back with an update to Subcommittee staff on the issues raised and how the proposal might change to address these.\” DSS\/CCL proposed, in a Spring Finance Letter and corresponding Trailer Bill and Budget Bill Language (TBL and BBL), to overhaul, effective January 1, 2011, statutory licensing inspection requirements. The Administration also proposes to raise facility application and annual fees by 10 percent. The BBL would allow the Department of Finance to reduce the GF authority for CCL commensurate with the amount of additional fee revenue that CCL receives (anticipated to be $1.4 million for six months of 2010-11 and $2.8 million annually thereafter). DSS has indicated that the costs for automation changes associated with this proposal would be absorbed as part of its ongoing system maintenance costs. DSS\/CCL has been meeting with stakeholders since the April 28 hearing, however a consensus product that satisfies the terms of the Subcommittee’s direction was not submitted with the May Revision. Panelists \u00b7 DSS\/CCL Please provide an overview and update on the stakeholder convenings, what issues have been discussed, what concerns have been raised, which continue to be outstanding, and how the proposal is changing as a result. \u00b7 DOF \u00b7 LAO (There will be no public comment on this item public comment was taken at the April 28, 2010 hearing on this issue.) Staff Comment and Recommendation: Staff recommends rejecting this proposal at this time. Although the Department’s approach to reprioritizing limited resources appears to be very promising and the need for more frequent licensing visits is urgent, the underlying details should be more fully considered by the policy committees of the Legislature or by the Budget Committee after stakeholders and the Department have had more time to work together regarding this overhauling of licensing procedures across multiple categories of facilities. Therefore, staff also recommends that the Subcommittee direct the Department to continue working with stakeholders on a policy and\/or a future budget proposal. Issue 3: Group Home Litigation and Related Proposals May Revise The monthly rates paid to group homes and foster family agencies (FFAs) for each child under their care are established in state statute and must be consistent with federal requirements that they cover the costs of care and supervision. In particular, group home rates are determined by a complex Rate Classification Level (RCL) system that has been in effect for 20 years and that attempts to measure the hours of care and supervision, social work, and mental health services provided to children, while allowing for weightings based on the experience and educational background of staff. The current RCL system does not measure or evaluate outcomes or the quality of services provided to children in group homes. Related to group home and foster family agency rates, the May Revision proposes: 1. $234.4 million ($69.6 million GF) in new costs to comply with a federal district court order in the California Alliance of Child and Family Services v. Cliff Allenby, which granted a rate increase to group homes based on the lack of COLAs applied to the current RCL system in recent years. As a result, the rates paid to group homes increased by approximately 32 percent, and now range from $2,085 to $8,835 per child, per month. 2. $34.1 million ($24.3 million GF) in eroded savings from a court injunction that halted a ten percent rate reduction which was adopted in 2009-10 for group homes. That rate reduction is now in effect for FFAs only. The resulting FFA rates range from $1,430 to $1,679 per child, per month. 3. $863,000 ($446,000 GF) in new costs for one new state operations position and funding for consultants, so that the Department can conduct a rate study and move toward a restructuring of the current group home rate-setting system. 4. Trailer bill language (TBL) that would impose a moratorium on group home applications. In the alternative, if the moratorium is not enacted, the Department again proposes to suspend the implementation of SB 1380 (Chapter 486, Statutes of 2008). Additional Background: According to data from the Child Welfare Services\/Case Management System (CWS\/CMS), the overall number of children in child-welfare supervised foster care has been steadily declining for a number of years (from 116,900 children in July 1999 to approximately 66,000 in October 2009). The number of children placed in group homes also declined during that time, from approximately 10,600 to around 7,000. According to DSS, the proposed temporary moratorium is not expected to affect the state’s ability to find placements for foster children, as there is currently an over-capacity of available group home beds. The Department states that as of February 2010, there were approximately 8,700 licensed group home beds available in California and approximately 6,000 children in group home placements. The Department also indicates that such a moratorium would allow DSS to redirect staff to work on policies and rate-setting for alternatives to group home placements. Absent the moratorium, DSS again proposes to suspend its implementation of SB 1380. SB 1380 was enacted to allow for expanded eligibility and revised operational, reporting, and training requirements for the Intensive Treatment Foster Care (ITFC) program. ITFC was originally established in 1990 to ensure that foster children with emotional challenges could thrive in a family home with therapeutic services, rather than high-level and more expensive group homes. The Assembly Appropriations Committee analysis of SB 1380 indicated that the bill would result in net savings because foster children would be placed in less costly, less restrictive home settings, as opposed to more costly group home environments. Panelists \u00b7 DSS Please provide an overview of the proposal. \u00b7 DOF \u00b7 LAO \u00b7 Public Comment Staff Comment and Recommendation: Staff recommends approving the revised estimates of increased group home rate-related costs and the erosion of savings from the prior rate reduction. Staff also recommends: 1. Adopting placeholder TBL to require DSS to establish a working group to develop revisions to the current system of setting reimbursement rates for group home providers. Any recommended changes in the group home rate-setting system must also consider the larger context for how the system can better incorporate a spectrum of placements and services that promote positive outcomes for children and families. These shall include addressing mental health and other critical services for children and youth, the provision of services in home-like settings, supporting families and relatives, and other quality improvement concepts. The working group shall include legislative policy and budget staff and stakeholders representative of foster youth, providers, children’s advocates, county welfare and probation staff, and workers. 2. Adopting placeholder TBL to enact a one-year moratorium on group home rate-setting activity that incorporates authority for the department to make exceptions to the moratorium, which may, as appropriate, be based on information provided by county placing agencies, including county welfare and probation agencies. The Department should also be required to provide feedback from the year of implementation for the Legislature’s review. 3. Rejecting TBL that would make implementation of SB 1380 contingent on any other provisions. 4. Approving the creation of the requested state operations position, but for a three-year limited-term; and 5. Approving $250,000 of the $750,000 in requested funding for consulting and contracts, including county consultants. Total GF impact would be determined by the Administration, after consultation with Subcommittee staff. This action conforms to action taken in the Senate. Issue 4: Defense Appropriation Act Funding for Food Stamps Administration May Revise The May Revision proposes $10.5 million GF savings (with corresponding reductions in federal and county funds) from the use of $30.0 million in newly available federal funds appropriated by the Department of Defense Appropriations Act of 2010 (P.L. 111-118). These new federal funds do not require a state match and must be used to supplement, not supplant, current state funds for the Supplemental Nutritional Assistance Program (still commonly referred to as food stamps in California). DSS proposes to use the funds for a portion of new administrative costs resulting from caseload growth in food stamps (specifically for non-assistance cases, or those in which recipients do not also receive CalWORKs). The overall enacted budget for food stamps administration in 2009-10 is $989.4 million ($418.4 million GF), while the May Revision for 2010-11 includes $1.2 billion ($492.1 million GF). Caseload Growth: The average monthly numbers of Californians receiving food stamps in recent and upcoming years (according to DSS’s annual estimates as of each prior November and not including CFAP recipients) are below. State Fiscal Year # of Households # of Individual Recipients 2007-08 850,346 2,138,702 2008-09 1,004,507 2,442,705 2009-10 1,337,016 3,213,770 2010-11 1,575,940 3,752,354 Roughly 32,000 additional individuals receive benefits in the state-funded California Food Assistance Program (CFAP). Panelists \u00b7 DSS Please provide an overview of the proposal. \u00b7 DOF \u00b7 LAO Staff Comment and Recommendation: Advocates have raised the issue of whether a portion of this funding should be used for other program efforts. Staff recommends reducing the GF savings of $10.5 million by $1 million, so reducing the GF savings associated with this proposal by $1 million, which would place the issue into Conference. 52 Assembly Budget Committee ”

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“Subcommittee No. 1 on Health and Human Services May 26, 2010 ACTIONS TAKEN Subcommittee No. 1 On Health and Human Services Assemblymember Dave Jones, Chair (Members Present: Jones, Beall, Chesbro, De La Torre, Emmerson, and Nestande) Wednesday, May 26, 2010 State Capitol, Room 4202 9:00 a.m. PART 2 Item Description Vote-Only Items 0530 Health and Human Services Agency Issue 1 Health Information Exchange and Federal Grant Award (Spring Finance Letter) Action: 1. Modification of the Administration’s proposed Budget Bill Language as follows: Nothwithstanding Section 28 any other provision of law, the Director of Finance may authorize expenditures from the California Health Information Technology and Exchange Fund for the Secretary of the California Health and Human Services in excess of the amount appropriated not sooner than 30 days after providing notification, including a comprehensive description of the request, in writing of the necessity therefore to the Chairpersons of the fiscal and policy committees of the Legislature and the Chairperson of the Joint Legislative Budget Committee, or not sooner than whatever lesser time the Chairperson of the Joint Legislative Budget Committee, or his or her designee, may in each instance determine. 2. Adoption of placeholder trailer bill language to address the following key aspects of this work: \u00b7 Providing a framework for the Operations Plan and Implementation Plan to delineate specific goals and milestones. \u00b7 Establishing specific reporting requirements of CHHS Agency for their progress in establishing the Health Information Exchange. \u00b7 Providing a framework regarding transparency of the process and conflict-of-interest to ensure public accountability, and transparency of public decisionmaking. \u00b7 Defining the membership of the rest of the governance Board. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 This action conforms to action taken in the Senate. 0530 Office of Systems Integration 5180 Department of Social Services Issue 1 Interim Statewide Automated Welfare System (ISAWS) Action: Approval of the requested reductions in the 2010-11 budget pursuant to the request in the May Revision and the associated proposed staffing for ISAWS. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 2 Child Welfare Services (CWS)\/Web Staffing Action: Approval of the requested positions and contract funding. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 3 LEADER Replacement System (LRS) Action: Approval of the requested 2010-11 funding for LRS. The Subcommittee requested that it continue to receive updates from OSI on the progress of negotiations and anticipated costs for the overall design, development, and implementation. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 4 Welfare Client Data System (CalWIN) Action: Approval of the requested budget changes. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 5 Statewide Fingerprinting Imaging System (SFIS) Action: \u00b7 Defund the remainder of the SFIS costs. Direct staff to work with the Administration to determine close-out costs and remaining GF savings for 2010-11. \u00b7 Adoption of placeholder trailer bill language to eliminate the requirements for finger imaging of CalWORKs and food stamp participants. \u00b7 Finally, consistent with this action, reject the request to convert 1.5 contract staff to 2.0 permanent state staff. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 4170 California Department of Aging Issue 1 Federal Grant for Chronic Disease Self-Management Program Action: Approval of the requested federal funds authority and budget bill language. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 2 Health Insurance Counseling and Advocacy Program (HICAP) Action: Approval of the requested increase in federal funds authority. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 3 Proposed Shift of Funding for the Long-Term Care Ombudsman Action: Approval of the May Revise request for a 2010-11 shift of resources from DPH to CDA for the Ombudsman program. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 4200 Department of Alcohol and Drug Programs Issue 1 Proposed Elimination of $18 million of Offender Treatment Program Action: Rejection of the Governor’s proposal to eliminate all remaining General Fund ($18 million) for substance abuse treatment for nonviolent drug offenders in the Offender Treatment Program, restoring this amount in the 2010-11 budget. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 2 Drug Medi-Cal Related ARRA Estimates Action: Approval of the requested changes to account for increased ARRA funds. The reflection of the corresponding GF impact will conform to actions taken regarding the proposed Control Section 8.65. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 5170 State Independent Living Council Issue 1 Aging and Disability Resource Connection (ADRC) Federal Grant Action: Approval of the requested 2010-11 federal funds authority. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 5175 Department of Child Support Services Issue 1 Revision to Estimates of Federal Incentive Funding and State Disbursement Unit Costs Action: Approval of these estimate changes (which will also conform, as appropriate, to other actions taken). This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 2 Revision to Estimate of ARRA Funds Action: Approval of the proposed reduction to Item 5180-101-0890 of the budget bill. The reflection of the corresponding GF impact will conform to actions taken regarding the proposed Control Section 8.65. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 5180 Department of Social Services Issue 1 Caseload Estimate Changes and Adjustments Action: Approval of these caseload and other estimate adjustments, which will conform as appropriate to other Subcommittee actions that have been or will be taken. This action includes a correction to a current year issue, Waiver Title XX FC 101 Impact of GH Rate Increase, to correct the technical error, accomplished by decreasing GF by $2.926 million and increasing federal funds by the corresponding amount. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 2 Temporary Emergency Food Assistance Program (TEFAP) Fund Shift Action: Approval of this transfer of federal expenditure authority. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 3 Inter-County Transfer Process for Food Stamps Action: Rejection of without prejudice, the Inter-County Transfer process and related TBL that are proposed as part of the May Revise. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 4 County Match Requirements for Food Stamps Administrative Costs Action: Approval of placeholder TBL to effectuate this proposal for a two-year time period. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 5 Kinship-Guardianship Assistance Payment Program (Kin-GAP)\/ Subsidized Relative Guardianship Proposal Action: Approval of May Revision changes to reflect the Administration’s rescission of its prior proposal to implement a subsidized relative guardianship program as of October 1, 2010. Further, rejection of the newly proposed concept for TBL. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 6 Title IV-E Eligibility Training Proposal Action: Rejection of the requested resources. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 7 Proposal to Continue Suspension of the Mutual Consent Confidential Intermediary Program for Sibling Contact (AB 2488) Action: Approval of trailer bill language for an additional one-year suspension of its provisions. As a result, Section 9205(i) of the Family Code would read: (i) Implementation of the amendments made to this Section by Chapter 386 of the Statutes of 2006 shall be delayed until July 1, 2011. It is the intent of the Legislature that counties that are already implementing some or all of the changes made to Section 9205 of the Family Code by Chapter 386 of the Statutes of 2006 shall continue to implement these provisions, to the extent possible. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 8 Proposal to Continue Suspension of Placements of Children in Foster Care with Developmental Disabilities in For-Profit Group Homes (AB 1462) Action: Rejection of the proposed TBL. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 9 Resources for Resource Family Approval Pilot (AB 340) Action: Restore, in 2010-11, local assistance funding for this program. Direct staff to work with the administration, Legislative Analyst’s Office (LAO), and County Welfare Directors Association (CWDA) to determine the amount of this restoration. Subcommittee authorizes some, but not all, of the previously requested limited-term positions at DSS. Specifically, limited-term state operations costs shall not exceed $150,000 GF annually. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 10 Group Home Financial Audit Reports TBL Action: Rejection of the proposed TBL, without prejudice as to its merits. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 1 1 Issue 11 Proposed CalWORKs Grant Reduction Action: Rejection of the Governor’s proposal as updated by the May Revision. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 12 Proposed Elimination of the CalWORKs Recent Non-Citizen Entrants Program Action: Rejection of the Governor’s proposal as updated by the May Revision. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 13 California Work Opportunities and Responsibility to Kids (CalWORKs) – Extension of authority for ARRA Funding Action: 1. In order to continue TANF ECF in California if the federal government extends the program, adoption of the following amendments to Section 10545.2(a) of the Welfare & Institutions Code as budget trailer bill language: 10545.2(a) This chapter shall become inoperative on October 1, 2010, and as of January 1, 2011, upon the expiration of federal authority for the Emergency Contingency Fund, as provided in the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), or subsequent federal legislation that extends the Emergency Contingency Fund program, and on that date is repealed. 2. Approval of placeholder TBL to ensure that TANF ECF-funded subsidized employment programs in California can serve all categories of federally-allowable needy low-income youth between the ages of 18 and 24. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 14 Governor’s January Proposals to Reduce IHSS Action: Rejection of the Governor’s January proposals to reduce IHSS as updated by the May Revision. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 15 Request for $500,000 for Anti-Fraud and Program Integrity Report Action: Approval of a reduced amount of funding for contractor assistance in the Department’s development of the required report. Specifically, approval of a total of $150,000 from all funding sources (with the corresponding GF impact to be determined by the Administration, after consultation with Subcommittee staff). This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 16 IHSS May Revision Proposal Action: 1. Adoption of the further-developed placeholder trailer bill language regarding the IHSS Budget Advisory Workgroup as included in the agenda. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 2. Adoption of placeholder trailer bill language to institute a provider fee in IHSS to generate $150 million in program savings in 2010-11. This proposal shall be developed further and implemented through and with the IHSS Budget Advisory Workgroup. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 17 Local Augmentation in 2009-10 Action: Rejection of the proposed funding to continue this one-time augmentation of local activities in 2010-11. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 18 SSI\/SSP Proposed Grant Reduction for Individual Recipients Action: Rejection of the Governor’s proposal to reduce SS\/SSP grants for individuals to the federal minimum. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 19 Cash Assistance Program for Immigrants & California Food Assistance Program Action: Rejection of the Governor’s proposal to eliminate CAPI and CFAP. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 20 State Hearings – SFL on Videoconferencing Action: Rejection of the State Hearings Spring Finance Letter on the basis that this proposal requires careful, thorough consideration through the policy process. In light of the increased demands for state hearings, assumed to be due in part to the programmatic changes adopted as part of the 2009-10 Budget and limited state resources, provide funding in 2010-11 for three additional ALJs ($450,000 total funds, approximately $215,500 GF), to assist with workload. This action conforms to action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Items to be Heard 5175 Department of Child Support Services Issue 1 Clarification of Action Regarding Spring Finance Letter on Administrative Order Setting and Modification Process The Subcommittee had already acted to reject this proposal. 5180 Department of Social Services Issue 1 Financing of CalWORKs Single Allocation Action: \u00b7 Use revenues in the newly created Jobs and Economy Security Fund to fund CalWORKs employment services and child care at $1.5 billion, backing out TANF that was being applied for these purposes and using TANF funds for CalWORKs grants costs. Additionally, provide $300 million from the Jobs Fund to restore a healthy portion of the Single Allocation reduction that was reduced for 2010-11. \u00b7 As a result of the restoration of the Single Allocation, rescind the Subcommittee’s prior action on adoption of placeholder trailer bill to require DSS to report on the effects of the reduction with the release of the January 10, 2011 Governor’s Budget. \u00b7 Actions on CalWORKs Child Care will conform to actions taken in Subcommittee No. 2 on Education Finance. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 Issue 2 Spring Finance Letter Proposal for CCL Inspection & Fee Changes Action: Rejection of this proposal. The Subcommittee directed the Department to continue working with stakeholders on a policy and\/or a future budget proposal. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 Issue 3 Group Home Litigation and Related Proposals May Revise Action: 1. Approval of the revised estimates of increased group home rate-related costs and the erosion of savings from the prior rate reduction. Staff also recommends: Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 2. Approval of placeholder TBL to require DSS to establish a working group to develop revisions to the current system of setting reimbursement rates for group home providers. Any recommended changes in the group home rate-setting system must also consider the larger context for how the system can better incorporate a spectrum of placements and services that promote positive outcomes for children and families. These shall include addressing mental health and other critical services for children and youth, the provision of services in home-like settings, supporting families and relatives, and other quality improvement concepts. The working group shall include legislative policy and budget staff and stakeholders representative of foster youth, providers, children’s advocates, county welfare and probation staff, and workers. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 5 1 3. Approval of placeholder TBL to enact a one-year moratorium on group home rate-setting activity that incorporates authority for the department to make exceptions to the moratorium, which may, as appropriate, be based on information provided by county placing agencies, including county welfare and probation agencies. The Department should also be required to provide feedback from the year of implementation for the Legislature’s review. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 4. Rejection of TBL that would make implementation of SB 1380 contingent on any other provisions. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 2 5. Approval of the creation of the requested state operations position, but for a three-year limited-term; and Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 6. Approval of $250,000 of the $750,000 in requested funding for consulting and contracts, including county consultants. Total GF impact would be determined by the Administration, after consultation with Subcommittee staff. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 6 These actions conform to actions taken in the Senate. Issue 4 Defense Appropriation Act Funding for Food Stamps Administration May Revise Action: Reduction of the GF savings of $10.5 million by $1 million, so reducing the GF savings associated with this proposal by $1 million, which places the issue into Conference. Members Aye No Absent Not Voting Dave Jones (Chair) X Wesley Chesbro X Jim Beall X Hector De La Torre X Bill Emmerson X Brian Nestande X Total 4 1 1 1 Assembly Budget Committee ”

spreadsheet May 25, 2010, Senate Budget Committee Hearing Outcomes

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” ROBERT DUTTON Vice Chair ELAINE ALQUIST ROY ASHBURN DAVE COGDILL MARK DeSAULNIER TOM HARMAN ROBERT HUFF MARK LENO CAROL LIU ALAN LOWENTHAL GLORIA NEGRETE McLEOD ALEX PADILLA S. JOSEPH SIMITIAN RODERICK WRIGHT California State Senate COMMITTEE ON BUDGET AND FISCAL REVIEW ROOM 5019, STATE CAPITOL SACRAMENTO, CA 95814 SENATOR DENISE MORENO DUCHENY CHAIR STAFF DIRECTOR KEELY MARTIN BOSLER DEPUTY STAFF DIRECTOR BRIAN ANNIS CONSULTANTS BRIAN BROWN KIM CONNOR BRYAN EHLERS KRIS KUZMICH JENNIFER TROIA DIANE VAN MAREN SEIJA VIRTANEN COMMITTEE ASSISTANT GLENDA HIGGINS (916) 651-4103 FAX (916) 323-8386 May 25, 2010 Human Services Outcomes Department of Alcohol and Drug Programs 1. Rejected the Governor’s proposal to eliminate (with the exceptions of Perinatal and Minor Consent programs) Drug Medi-Cal services and requested additional information regarding cost containment options from the Legislative Analyst’s Office (LAO). (Vote: 10-2) 2. Rejected the Governor’s proposal to eliminate funding for the Offender Treatment Program (OTP). (10-2) Department of Social Services 1. Rejected the Governor’s proposal to eliminate the California Work Opportunities and Responsibility to Kids (CalWORKs) Program. (8-3) 2. Rejected the Governor’s proposal to reduce CalWORKs grants by 15.7 percent. (8-3) 3. Rejected the Governor’s proposal to eliminate the CalWORKs Recent Noncitizen Entrants Program (RNE). (8-3) SBFR 5.25.10 Human Services Outcomes 4. Rejected the Governor’s proposal to assume $637.1 million General Fund (GF) savings in the IHSS program in 2010-11. Instead, adopted Budget Bill Language to establish a savings target of at least 10 percent of the total GF that would otherwise be budgeted for the program (approximately $1.4 billion), with more specific proposals to be developed by the Administration in collaboration with stakeholders and presented to the Legislature for its consideration. (9-2) 5. Rejected the Governor’s proposal to reduce Supplemental Security Income\/State Supplementary Payment (SSI\/SSP) grants for individuals and adopted Budget Bill Language requiring the Administration to report back regarding the federal government’s response to the state’s request to reverse the food stamps cash-out for only those individuals who would receive a net benefit from such a policy change. (9-2) 6. Rejected the Governor’s proposals to eliminate the California Food Assistance Program (CFAP) and Cash Assistance Program for Immigrants (CAPI). (9-2) 7. Rejected (through conformity with other actions) the Governor’s proposal to redirect county savings from other proposed reductions to fund an increased county share of costs for Foster Care, Foster Care Administration, and the Adoption Assistance Program. (Vote N\/A conforming issue) ”

spreadsheet May 25, 2010, Senate Budget Committee Hearing

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” ROBERT DUTTON Vice Chair ELAINE ALQUIST ROY ASHBURN DAVE COGDILL MARK DeSAULNIER TOM HARMAN ROBERT HUFF MARK LENO CAROL LIU ALAN LOWENTHAL GLORIA NEGRETE McLEOD ALEX PADILLA S. JOSEPH SIMITIAN RODERICK WRIGHT California State Senate COMMITTEE ON BUDGET AND FISCAL REVIEW ROOM 5019, STATE CAPITOL SACRAMENTO, CA 95814 SENATOR DENISE MORENO DUCHENY CHAIR STAFF DIRECTOR KEELY MARTIN BOSLER DEPUTY STAFF DIRECTOR BRIAN ANNIS CONSULTANTS BRIAN BROWN KIM CONNOR BRYAN EHLERS KRIS KUZMICH JENNIFER TROIA DIANE VAN MAREN SEIJA VIRTANEN COMMITTEE ASSISTANT GLENDA HIGGINS (916) 651-4103 FAX (916) 323-8386 Agenda May 25, 2010 Room 4203 9:30 a.m. HUMAN SERVICES AND CHILDCARE Page 4200 Department of Alcohol and Drug Programs Elimination of Drug Medi-Cal Services, with the Exceptions of Perinatal and Minor Consent Programs…….. 1 Elimination of Funding for Offender Treatment Program………………………………………………………………………. 2 5180 Department of Social Services Elimination of CalWORKs………………………………………………………………………………………………………………… 3 CalWORKs Grant Reduction……………………………………………………………………………………………………………… 4 Elimination of CalWORKs Recent Noncitizen Entrants Program (RNE)…………………………………………………. 5 5180 Department of Social Services 6110 California Department of Education Child Care Issues only Eliminate General Fund for Child Care Programs and Shift CalWORKs Child Care to the Alternative Payment Program (Issue 326)……………………………………………………………………………………….. 6 Regional Market Rate (RMR) Reduction …………………………………………………………………………………………….. 7 Reduce Income Eligibility (Issue 323) ………………………………………………………………………………………………… 8 CalWORKs Stage 3 Reduction (Issue 323) ………………………………………………………………………………………….. 9 Adjust CalWORKs Child Care Caseload Funding (Issue 325) ……………………………………………………………….. 10 Negative COLA ……………………………………………………………………………………………………………………………….. 11 Proposed Plan to Recover Improper Payments from Child Care Programs (Issue 329) ……………………………… 12 5180 Department of Social Services (continued) In-Home Supportive Services Cost Containment ………………………………………………………………………………. 13 SSI\/SSP Grant Reduction ………………………………………………………………………………………………………………….. 14 Elimination of CA Food Assistance Program and Cash Assistance Program for Immigrants……………………… 15 Redirection of County Savings …………………………………………………………………………………………………………… 16 Shift of County Mental Health Realignment Funds to Child Welfare Services and to Food Stamp Admin…… 17 4440 Department of Mental Health Special Education Mental Health Services (AB 3632)…………………………………………………………………………… 18 RESOURCES AND TRANSPORTATION 3790 Department of Parks and Recreation Funding State Parks ………………………………………………………………………………………………………………………….. 19 2660 Department of Transportation Defer Transportation Loan Repayment ……………………………………………………………………………………………….. 20 New Transportation Loan from net new Fuel Swap revenue……………………………………………………………….. 21 2740 Department of Motor Vehicles Motor Vehicle Account Loan to General Fund …………………………………………………………………………………….. 22 4200 Department of Alcohol & Drug Programs (ADP) Governor’s Proposal 2010-11 ($ in thousands) Comments Item 4200———————————————————————————————————— ————-Page 1 Elimination of Drug Medi-Cal (DMC) Services, with the Exceptions of Perinatal and Minor Consent Programs The May Revision proposes, effective October 1, 2010, to eliminate DMC services for approximately 79 percent of individuals who would otherwise receive them. ADP estimates that the state will receive $258.8 million ($238.2 million for local assistance and $18.6 million for state operations) in federal Substance Abuse and Prevention Treatment (SAPT) block grant funding in 2010-11. Correspondingly, the federal government requires the state to spend $247.4 million to meet its Maintenance of Effort (MOE) requirement. The May Revision proposes $149.2 million GF, which falls $98.2 million short of the MOE. (Note: These figures could change if the enhanced Federal Medical Assistance Percentage [FMAP] available under ARRA is not extended through 2010- 11.) ADP will request a waiver from the federal government for any enacted MOE shortfall. If no waiver is granted, the state may lose one dollar of federal funding for every state dollar below the MOE. -53,400 Impacts. ADP estimates that the two DMC modalities proposed for elimination, the Narcotic Treatment Program (NTP) and the Outpatient Drug Free Program (ODF) would otherwise serve approximately 226,000 individuals in 2010-11. NTP generally uses methadone to stabilize and rehabilitate persons who are opiate-dependent. Services include intake, treatment planning, medical direction, body specimen screening, physician and nursing services related to substance abuse, medical psychotherapy, individual and\/or group counseling, and physical examinations and laboratory tests. ODF offers many similar treatment and supportive services to persons with substance abuse diagnoses. Perinatal DMC services that would remain offer treatment prior to, and for only two to three months after, child birthing. This proposal would likely result in other significant state costs that the May Revision does not account for (e.g., in corrections and child welfare). Advocates and providers also indicate that it would cause major closures in the provider network, making it very difficult to reinitiate services (including when federal health reforms begin to take effect). 4200 Department of Alcohol & Drug Programs (ADP) Governor’s Proposal 2010-11 ($ in thousands) Comments Item 4200———————————————————————————————————— ————-Page 2 Elimination of Funding for Offender Treatment Program (OTP) The Governor’s budget proposes to eliminate all GF for OTP, effective July 1, 2010. Any resulting loss of federal funds is again tied to the state’s overall SAPT MOE (see previous issue). The 2009-10 budget included $18 million GF, plus $45 million in one-time federal Edward Byrne Memorial Justice Assistance Grant (Byrne-JAG) funds for OTP. Counties have until April 2011 to expend those Byrne-JAG funds. -18,000 Relationship to Proposition 36. In recent years prior to 2009-10, the state funded diversion programs for drug offenders through the Substance Abuse and Crime Prevention Act (SACPA or Proposition 36) and OTP. In 2009-10, funding for Proposition 36 was eliminated. The Governor’s 2010-11 budget continues to provide no funding. The underlying laws sentencing certain offenders who use or possess drugs to treatment and community supervision rather than prison or jail are still in effect. According to a survey by the County Alcohol and Drug Program Administrators Association, far fewer individuals statewide are now receiving treatment than in previous years, individuals are receiving lower levels of care, and the wait to receive treatment is significantly longer. OTP was established in 2006 to serve the same individuals as Proposition 36; but to be eligible for OTP funding, counties have to provide $1 for each $9 of state funding received and meet requirements for dedicated court calendars and drug courts that accept felony defendants. Prior to elimination of SACPA funds, the University of California, Los Angeles conducted cost-benefit studies on the program. The most recent study concluded that $1 of Proposition 36 spending resulted in net savings to state and local governments of $2 to $4. More than 30,000 offenders annually entered treatment under Proposition 36. 5180 Department of Social Services Governor’s Proposal 2010-11 ($ in thousands) Comments Item 5180———————————————————————————————————— ————-Page 3 Elimination of CalWORKs The May Revise proposes to eliminate CalWORKs, effective October 1, 2010. If CalWORKs is eliminated, California would refuse $2.8 billion of its Temporary Assistance to Needy Families (TANF) block grant (growing to $3.7 billion annually) and would be ineligible for approximately $386.6 million (out of $498.2 million total) in ARRA’s Emergency Contingency Fund (ECF) that the state would otherwise receive for basic assistance costs. Estimated savings are net of $306.6 million GF backfills for non-CalWORKs programs that currently benefit from TANF funding. Estimates also assume the extension of ECF through the state’s 2010-11 fiscal year (which was included in President Obama’s proposed budget). Without such an extension, savings would grow to $1.6 billion. Finally, estimated savings are based on current law governing the CalWORKs programs (i.e., do not include other Governor’s budget proposals). -1,207,776 California has had some form of assistance for needy families with children since 1911. No other state has eliminated its TANF program. Impacts on Families and the Economy. The proposal would eliminate benefits to 580,000 families (including more than one million children) who receive temporary cash aid, as well as education, training, child care, and employment assistance. Dramatic increases in poverty and homelessness and costs in other state and local services (e.g., child welfare, foster care, and education programs) would likely result. Counties have previously estimated potential overall costs of $1.9 billion if all former CalWORKs recipients became eligible for local General Assistance programs (which generally have significantly lower grants and lack employment services). Counties have estimated a loss of roughly 140,000 private and public sector jobs statewide if CalWORKs is eliminated. In addition, local economies would lose spending by low-income CalWORKs families (who expend a greater share of their earnings locally than do higher income residents), child care providers, and employment services workers. 5180 Department of Social Services Governor’s Proposal 2010-11 ($ in thousands) Comments Item 5180———————————————————————————————————— ————-Page 4 CalWORKs Grant Reduction The Governor’s budget, as updated in the May Revise, proposes to reduce maximum CalWORKs grants by 15.7 percent, effective October 1, 2010. Grants are funded with a combination of TANF (federal block grant)\/state Maintenance of Effort (MOE) and County Funds (2.5 percent). ARRA Impacts. GF savings in 2010-11 vary by whether the federal government extends ARRA’s TANF Emergency Contingency Fund (ECF) past September 30, 2010. Under ECF, the state receives a 4:1 match. If ECF is extended, this proposal results in $81.5 million GF savings and the foregoing of $324.7 million federal funds in 2010-11. If ECF is not extended, GF savings from this proposal increase to $406.2 million in 2010-11 (with $157.4 million in TANF transfers to offset GF in the Student Aid Commission and Department of Developmental Services (DDS)). -81,500 Impacts. CalWORKs provides temporary cash assistance, education, training, and employment programs to families who are unable to meet basic needs (shelter, food, clothing) on their own. This proposal would impact 580,000 families (including more than one million children). In 8,400 cases, families would lose all CalWORKs assistance. The average monthly grant for a family of three in high- cost counties would be reduced from $694 to $585. The monthly grant was also $694 twenty years ago in 1989. After adjusting for housing costs, the current CalWORKs grant level is lower than grants in 20 other states. Under this proposal, maximum CalWORKs and food stamp grants would equal 73 percent of the Federal Poverty Level (FPL) in high-cost and 71 percent in low- cost counties (compared to 78 percent and 77 percent currently). Work Participation Rate (WPR). DSS estimates that this proposal will result in a 2.4 percent loss of our 2011 federal WPR. Our 2008 WPR was 25.1 percent (compared with the required 29.0 percent). 5180 Department of Social Services Governor’s Proposal 2010-11 ($ in thousands) Comments Item 5180———————————————————————————————————— ————-Page 5 Elimination of CalWORKs Recent Noncitizen Entrants Program (RNE) The Governor’s budget, as updated in the May Revise, proposes to eliminate RNE, effective October 1, 2010. Funding for the RNE Program is countable toward the state’s TANF MOE requirement. ARRA. GF savings in 2010-11 again vary by whether the federal government extends the ARRA Emergency Contingency Fund (ECF). If ECF is extended, this proposal would result in $16.2 million GF savings, and a loss of $24.5 million federal funds in 2010-11. If ECF is not extended, the proposal instead results in $40.6 million GF savings in 2010-11. These savings estimates assume the impact of the proposed 15.7 percent grant cut. -16,200 Eligibility for RNE. Since 1996, the federal government has excluded most legal immigrants entering the United States from receiving TANF benefits for their first five years in the country. Exemptions exist for certain immigrants, including refugees, veterans, and asylees. California has continued to aid noncitizens who became federally ineligible, including legal permanent residents, battered noncitizens, individuals permanently residing under color of law, conditional entrants, and immigration parolees (defined differently than in criminal justice contexts, this can mean a humanitarian visa, re-entering the US with permission, or release of an inmate). Impacts. Approximately 22,500 individuals would lose temporary cash assistance and education, training, and employment services. Some may apply for and receive a lower amount of assistance from county- funded General Assistance (GA). Counties also project that increased child welfare and foster care costs could result. 6110 California Department of Education Governor’s Proposal 2010-11 ($ in thousands) Comments Item 6110———————————————————————————————————— ————-Page 6 5180-001-0001 Department of Social Services 6110-196-0001 California Department of Education Eliminate General Fund for Child Care Programs and Shift CalWORKs Child Care to the Alternative Payment Program (Issue 326) The Governor proposes to eliminate General Fund from all subsidized child care programs with the exception of the State Preschool Program, effective July 1, 2010. Stage 1 would be eliminated on October 1, 2010. The Governor proposes to shift funding for CalWORKs child care into the Alternative Payment (AP) Program. The shift would include the federal funds in CalWORKs child care, including $414.3 million from Stage 2 and $272.3 million from Stage 3. Approximately $594 million in federal funds would remain available for slots for the neediest families, after the Governor’s other child care proposals are taken into account. -$1,193,656 in Prop 98 for Stage 2 and 3 -$492,700 in for Stage 1 $414,270 from Stage 2 to AP in federal funds $272,309 from Stage 3 to AP in federal funds Total number of children losing child care under the Governor’s proposal is about 225,000, compared to 2009-10. Stage 1: 51,236 Stage 2: 61,342 Stage 3: 38,165 General Child Care: 72,481 Only 77,550 child care slots would remain, all AP (not including preschool, which has 117,000 slots). The $492.7 million for Stage 1 child care includes GF and federal funds that are considered GF-fungible because of the block grant and Maintenance of Effort funding structure of the CalWORKs program. This total also includes the impact of a temporary $215.3 million reduction (the majority of a $376.8 million cut to the counties’ single allocation for CalWORKs child care and employment services) enacted as part of the 2009-10 budget. 6110 California Department of Education Governor’s Proposal 2010-11 ($ in thousands) Comments Item 6110———————————————————————————————————— ————-Page 7 Regional Market Rate (RMR) Reduction. The Governor’s budget proposes to reduce, effective July 1, 2010, the level at which the state reimburses child care providers. The trailer bill would reduce the regional market rate ceiling from 85 percent to 75 percent of the 2005 RMR survey for voucher-based programs. As a result, licensed providers would be reimbursed at no more than the 75th percentile of the 2005 RMR, instead of the current ceiling of the 85th percentile. The trailer bill would also reduce the reimbursement rate for license-exempt providers from 90 percent of the ceilings for licensed providers to 70 percent. The $77.1 million General Fund savings is comprised of: $12 million from Alternative Payment programs, $37 million from CalWORKs Stage 2, and $28.1 million from CalWORKs Stage 3. Since the RMR reduction was not adopted during the Special Session, there has been an erosion of savings of $36 million ($13 million from Stage 1). -$41,110 from Stage 1 -$54,725 in Prop 98 General Fund from Stage 2 & 3, and AP Total: -$95,835 $36,078 added back in due to erosion California offers subsidized child care to parents participating in CalWORKs (Stage 1); families transitioning off of aid (Stages 2 and 3); and others with exceptional need. DSS administers Stage 1; CDE administers Stages 2 and 3. Context. The Governor insists that no children would lose child care services as a result of this proposal. However, child care providers can only shrink their income so much before the payments are not covering their costs. There are over 64,000 child care providers who provide care for Stage 2 and Stage 3 children. Impact. Specific rate reductions would vary by provider and region. As an example, maximum rates for a preschool-age child in Los Angeles County would drop from $744 to $660 (or 11 percent) monthly for a child care center and $615 to $445 for a license-exempt provider. Stakeholders have historically testified that rate reductions would make it very difficult for providers to stay in business or continue to accept clients receiving subsidies, and thus for parents to access child care. 6110 California Department of Education Governor’s Proposal 2010-11 ($ in thousands) Comments Item 6110———————————————————————————————————— ————-Page 8 6110-196-0001 California Department of Education Reduce Income Eligibility (Issue 323) The Governor proposes to reduce the statutory income eligibility limit from 75 percent of the state median family income (SMI) to 60 percent for all subsidized child care programs except for the State Preschool Program. -$54,373 General Fund Reducing income eligibility would make about 14,855 children currently receiving services ineligible. 60 percent of SMI is $2,902\/month for a family of three. 75 percent of SMI is $3,628\/month for a family of three. (Using 2009-10 SMI of $4,837\/month) 6110 California Department of Education Governor’s Proposal 2010-11 ($ in thousands) Comments Item 6110———————————————————————————————————— ————-Page 9 6110-196-0001 California Department of Education CalWORKS Stage 3 Reduction (Issue 323) The Governor’s Special Session proposal was to reduce CalWORKs Stage 3 caseload by 18,000 children, for a savings of $123 million. The Governor’s May Revise proposes to backfill that reduction by $31.9 million, for a restoration of 5,417 children. -$123,000 $31,998 Total: -$91,002 from Prop 98 funds The revised Stage 3 targeted reduction would push out 12,583 children currently receiving services. 6110 California Department of Education Governor’s Proposal 2010-11 ($ in thousands) Comments Item 6110———————————————————————————————————— ———– Page 10 6110-196-0001 California Department of Education Adjust CalWORKs Child Care Caseload Funding (Issue 325) The Governor’s Budget reduced CalWORKs Stage 2 and Stage 3 by $13.8 million due to decreased case load. The Governor’s May Revise proposes to further lower funding for CalWORKs Stage 2 and Stage 3 due to decreased case load. -$13,800 from Prop 98 funds -$35,356 from Prop 98 funds Total: -$49,156 The Jan 10 funding reduction breaks down as follows: Stage 2: -$12.6 million Stage 3: -$1.2 million The MR funding reduction breaks down as follows: Stage 2: -$17.7 million Stage 3: -$17.65 million 6110 California Department of Education Governor’s Proposal 2010-11 ($ in thousands) Comments Item 6110———————————————————————————————————— ———– Page 11 6110-196-0001 California Department of Education Negative COLA The Governor’s January Budget proposed a -0.38 percent COLA for child care providers. The May Revise amends the COLA to -0.39 percent. -$5,900 from Prop 98 funds Child care providers have not received a positive COLA in the last two years. 6110 California Department of Education Governor’s Proposal 2010-11 ($ in thousands) Comments Item 6110———————————————————————————————————— ———– Page 12 6110-196-0001 California Department of Education Proposed Plan to Recover Improper Payments from Child Care Programs (Issue 329) The Governor proposes trailer bill language that would provide for contractual expectations for APs to prevent and correct errors in child care payments, and to collect overpayments from families that benefit from the errors. The Department of Education would have to report by March 1, 2011, on the implementation of the overpayment recovery plan. Trailer Bill Language $0 The Governor assumes no savings for the budget from this proposal. The families receiving child care would have to pay for the overpayments resulting from errors regardless of whether the overpayments are due to provider or recipient error or whether the error is intentional or inadvertent in nature. 5180 Department of Social Services Governor’s Proposal 2010-11 ($ in thousands) Comments Item 5180———————————————————————————————————— ———– Page 13 IHSS Cost Containment The May Revise proposes a $637.1 million GF reduction (growing to $750 million annually in 2011-12) to the IHSS program. Absent this reduction, the total proposed budget for IHSS would be $5.6 billion ($1.4 billion GF). The proposal would result in an approximately 45 percent reduction in state IHSS costs and the foregoing of roughly $1.1 billion in federal matching funds. The Administration intends to develop as yet unspecified plans for this cost containment in consultation with stakeholders and in time for a July 1, 2010 enactment. This proposal replaces proposals in the Governor’s budget to eliminate IHSS services for approximately 87 percent of recipients and reduce the state’s participation in IHSS providers’ wages to the minimum wage of $8.00 per hour, plus $.60 per hour for benefits. -637,100 Impacts. About 385,000 IHSS providers provide in- home care services (e.g., bathing, grooming, paramedical services) to about 466,000 qualified individuals who are blind, aged (over 65), or who have disabilities. IHSS recipients usually have incomes at or below the SSI\/SSP grant level ($845 per month for an individual as of October 2009) and assets, except homes or cars, worth less than $2,000. County social workers determine eligibility after conducting in-home assessments. No details regarding the impacts of the proposed reductions on recipients, providers, county and state staff, or other areas of the budget are available. 2009-10 Reductions. The 2009-10 budget made major program integrity-related changes to IHSS, which DSS anticipates will result in $130 million GF savings in 2010- 11. In addition, the 2009-10 budget: 1) reduced the ceiling for state participation in IHSS providers’ wages from $12.10 per hour to a total of $10.10 per hour, 2) eliminated eligibility for specified domestic and related services to about 85,000 individuals, and 3) eliminated eligibility for all services to about 39,000 individuals. The Administration is appealing federal court injunctions against these reductions to the 9th Circuit. 5180 Department of Social Services Governor’s Proposal 2010-11 ($ in thousands) Comments Item 5180———————————————————————————————————— ———– Page 14 SSI\/SSP Grant Reduction The Governor’s budget, as updated in the May Revise, proposes to reduce, effective October 1, 2010, Supplemental Security Income\/State Supplementary Payment (SSI\/SSP) grants to individual recipients. The proposed SSP grant would be set at the federally required Maintenance of Effort (MOE) level of the 1983 payment standard. Savings include those resulting from grant reductions in the Cash Assistance Program for Immigrants and California Veterans Cash Benefit, as these grant levels tie to those for SSI\/SSP. Approximately 109,000 Non-medical Out-of-Home Care, Restaurant Meal Allowance, and Title XIX Medical Facilities recipients are excluded from this reduction, as is traditional practice. -132,830 The federal MOE limits reductions states can make to SSP benefit levels. If a state reduces SSP benefits below its MOE, it loses all federal Medicaid funding. Impact. Maximum grants for around one million aged, blind or disabled individual SSI\/SSP recipients would be reduced from $845 to $830 monthly (92 percent of Federal Poverty Level (FPL)). 8,449 recipients would become ineligible, some of whom may seek services from DDS. Recent changes. In the February 2009 special session, a 2009 federal cost-of-living adjustment was rescinded effective May 1, 2009, and grants were reduced 2.3 percent (approximately $20 for individuals and $35 for couples) effective July 1, 2009. Grants were further reduced, effective October 1, 2009, by around $5 for individuals and $82 for couples. Couples’ maximum grants of $1,407 per month are now at the MOE floor (around 116 percent of FPL). Cost-of-Living Adjustments (COLAs). The SSI portion of grants will not receive a 2010 federal COLA. An estimated 2 percent federal COLA will, however, take effect in January, 2011. 5180 Department of Social Services Governor’s Proposal 2010-11 ($ in thousands) Comments Item 5180———————————————————————————————————— ———– Page 15 Elimination of CFAP and CAPI The Governor’s budget, as updated in the May Revise, proposes to eliminate the California Food Assistance Program (CFAP) and Cash Assistance Program for Immigrants (CAPI), effective October 1, 2010. CFAP -42,800 CAPI -73,640 CFAP and CAPI are state-funded programs that provide benefits to legal immigrants who do not qualify for federal food stamps and SSI\/SSP funding, respectively. California created CFAP and CAPI in 1997 and 1998 after federal law began excluding these individuals. Since that time, federal law has changed to re-include some, but not all, individuals originally covered under the state programs (e.g., non-citizens with disabilities for CFAP). CFAP Impact. CFAP provides food benefits to legal non-citizens over 18 and under 65 years of age. DSS estimates the average monthly number of 2009-10 recipients as 32,900 (12,800 households). The average monthly benefit is $113 per person. CAPI Impact. CAPI benefits are the equivalent of SSI\/SSP program benefits, less $10 per individual and $20 per couple. The average monthly number of CAPI recipients in 2009-10 is 9,029. Some CAPI recipients may become eligible for GA. 5180 Department of Social Services Governor’s Proposal 2010-11 ($ in thousands) Comments Item 5180———————————————————————————————————— ———– Page 16 Redirection of County Savings The Governor’s budget, as updated in the May Revise, proposes, effective October 1, 2010, to redirect county savings (i.e. funds the counties would no longer be obligated to spend for the specified purposes) from the above described IHSS and CalWORKs reductions, as well as the presumed extension of federal financial participation in social services programs under ARRA, to support a higher county share of costs for Foster Care, Foster Care Administration, and the Adoption Assistance Program (AAP). GF savings are from a resulting reduction in the state’s share of costs in those programs. -359,500 Comparison of sharing ratios. Nonfederal costs would become: Foster Care 20\/80 state\/county (instead of 40\/60) Foster Care Administration 48\/52 state\/county (instead of 70\/30) AAP 20\/80 state\/county (instead of 75\/25) Interaction with Prior Realignment. In 1991, the state realigned control and funding of several social services programs to local governments. Revenue from sales taxes and vehicle license fees was dedicated to the programs. This base funding has not, however, kept pace with costs. The 1991 statutes include a poison pill that makes realignment inoperative if it results in a reimbursable mandate of more than $1 million. Mandate Questions. Mandate laws include an exception for when local costs are fully offset by other savings. However, according to the LAO, it is very infrequently used and not well-established. The LAO also states that it is difficult to determine whether the Governor’s proposal would create a new reimbursable state mandate on counties. The caseload for each affected program varies significantly by county, so individual county’s savings and costs may not balance out. In addition, the amounts would vary each year. 5180 Department of Social Services Governor’s Proposal 2010-11 ($ in thousands) Comments Item 5180———————————————————————————————————— ———– Page 17 Shift of County Mental Health Realignment Funds to Child Welfare Services (CWS) and to Food Stamp Administration. The May Revise proposes to shift $602 million in existing Realignment funding used for mental health programs to offset GF costs for CWS and for food stamp administration by changing the sharing ratios for their non-federal costs. The new sharing ratios would be 20\/80 state\/county for CWS (instead of 70\/30) and 19\/81 state\/county for food stamp administration (instead of 70\/30). -602,000 This issue will be discussed during the upcoming Health hearing. DSS budget impacts will conform to actions taken during that hearing. 4440 Department of Mental Health Governor’s Proposal 2010-11 ($ in thousands) Comments Item 4440———————————————————————————————————— ———– Page 18 4440 Department of Mental Health Special Education Mental Health Services (AB 3632) The Governor’s January budget proposed $52 million in state General Funds for special education mental health services referred to as AB 3632 services in 2010-11. The Governor’s May Revise proposes to suspend the state AB 3632 mandate and to eliminate the $52 million, leaving no categorical funding in the Department of Mental Health (DMH) for AB 3632 services in 2010-11. In addition, the Governor does not propose to fund an additional $79.4 million in the Commission on State Mandates budget item, as a result of this suspension. The Governor continues at least $77.7 million in General Funds for the Department of Social Services to cover AB 3632 residential placement costs in 2010-11. The Governor also continues $69 million in federal special education funds for county AB 3632 services in the Department of Education (CDE) budget in 2010-11. -52,000 Federal special education law — first enacted in 1976 — requires states to provide special education and related services for pupils with disabilities to ensure the provision of a free and appropriate public education. AB 3632 enacted in 1984 shifted responsibility for mental health related services from the schools (CDE) to the counties (DMH), and created a reimbursable state mandate as a result. In addition to categorical funds for AB 3632 services, counties mental health agencies utilize Medi-Cal funds for eligible students and have also received some reimbursements through the state mandate claiming process. The Governor’s proposal to suspend the AB 3632 mandate would make K-12 schools responsible for these services. The Governor does not recognize this shift in the K-12 budget. 3790 Department of Parks and Recreation Governor’s Proposal 2010-11 ($ in thousands) Comments Item 3790———————————————————————————————————— ———– Page 19 3790-001-0001 Department of Parks and Recreation 3790-001-0392 Funding State Parks. The Governor’s Budget assumed approval of a new oil lease in state-controlled waters at Tranquillon Ridge (T-Ridge), and proposed to use the increased oil revenues to: (1) backfill $22 million in previous GF reductions to the Department of Parks and Recreation (Parks); and (2) supplant $118 million GF annually. This proposed total ($140 million) is consistent with Fiscal Year (FY) 08-09 Parks funding levels, and would avoid any major park closures. In the May Revise, the Governor abandons the T- Ridge proposal and instead proposes to fully fund Parks with $140 million GF. Last year, the Governor and Legislature agreed to a half-year reduction of $8 million in FY 09-10, and a full-year reduction of $16 million in FY 10-11. The Governor subsequently vetoed another $6 million in FY 09-10. Currently, 150 parks have reduced hours. 140,000 GF The May Revise reverses the cuts agreed to last year, and in so doing would foreclose on further Parks service reductions and\/or closures. If the Committee takes no action, Budget Bill Language (BBL) in the Governor’s Budget would still allow the Governor (via Department of Finance) to transfer up to $140 million GF to fully fund Parks. 2660 Department of Transportation Governor’s Proposal 2010-11 ($ in thousands) Comments Item 2660———————————————————————————————————— ———– Page 20 2660-401 Department of Transportation Defer Transportation Loan Repayment. In the May Revision, the Governor proposes to defer repayment of transportation loans made in 2008-09. The loans would be repaid in 2011-12 instead of 2010-11. This reduces General Fund costs by $247.4 million in 2010-11 ($230.6 million principal and $16.7 million interest). The 2008-09 loan included all the following special funds: State Highway Account ($200 million) Bicycle Transportation Fund ($6.0 million) Local Airport Loan Account ($7.5 million) Motor Vehicle Fuel Account ($8.0 million) Environmental Enhancement and Mitigation Fund ($4.4 million) Historic Property Maintenance Fund ($3.0 million) Pedestrian Safety Account ($1.7 million) -$230,615 (-$16,749 interest budgeted in item 9620) Pursuant to the Article XIX of the California Constitution, these loans must be repaid within three fiscal years from the date on which the loan was made in this case, the loans must be repaid no later than 2011-12. 2660 Department of Transportation Governor’s Proposal 2010-11 ($ in thousands) Comments Item 2660———————————————————————————————————— ———– Page 21 2660-011-0062 Department of Transportation New Transportation Loan from net new Fuel Swap revenue. In the May Revision, the Governor proposes to loan the net new 2010-11 highway revenue of $650 million from the Fuel Swap legislation (AB X8 6, AB X8 9, SB 70 all statutes of 2010) to the General Fund. The Fuel Swap generated new gasoline excise tax revenue to pay eligible general-obligation bond debt service, and to fully backfill highways and local street and road programs for lost Proposition 42 revenue. Net new revenue is generated beyond those first two purposes, which the legislation holds in reserve in 2010-11 (the $650 million) and allocates to highways and local roads (in 2011-12 and thereafter). The proposal includes budget language requiring repayment by June 30, 2013, with interest. -$650,000 This loan is protected by Article XIX of the Constitution and must be repaid within three fiscal years from the date on which the loan was made. Since the Fuel Swap held this $650 million in reserve, no projects have been programmed or designated for this revenue. 2740 Department of Motor Vehicles Governor’s Proposal 2010-11 ($ in thousands) Comments Item 2740———————————————————————————————————— ———– Page 22 2740-012-0044 Department of Motor Vehicles Motor Vehicle Account Loan to General Fund. In the May Revision, the Governor proposes a $250 million loan from the Motor Vehicle Account (MVA) to the General Fund. The $250 million loan amount is somewhat dependent on savings assumed in the employee compensation area from the Governor’s 5\/5\/5 proposal (five percent pay reduction, five percent staffing reduction, and five percent increase in employee retirement contributions). The proposal includes budget bill language directing early repayment if necessary to maintain the solvency of the fund. -$250,000 Pursuant to Article XIX of the California Constitution, this loan must be repaid within three fiscal years from the date on which the loan was made. If the Committee adopts this loan, it should be with the understanding that the employee compensation proposals will be acted on separately. If employee compensation savings do not occur at these levels, or the MVA otherwise faces pressure, the loans may have to be reduced or repaid at an earlier date. Note on separate MVA transfer: The Administration also proposes a $72 million MVA transfer to the General Fund. This action was taken in Sub 2 on April 15. To the extent there are any technical differences, the Sub 2 action should conform to the May Revision. May 25 2010 Agenda cover.pdf 4200.May 25.public 5180.child care.May 25.public 6110- Child Care – with reco.public 5180.May 25.public 4440. May 25.KC.public 3790.May 25.public 2660.May 25.public 2740.May 25.public ”

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“Subcommittees No. 1 on Health and Human Services and No. 2 on Education Finance May 19, 2010 Agenda Subcommittee No. 1 on Health and Human Services and Subcommittee No. 2 on Education Finance Assemblymembers Dave Jones and Wilmer Amina Carter, Chairs Wednesday, May 19, 2010 State Capitol, Room 4202 1:00 p.m. Item Description Page Items to be Heard 6110-196 California Department of Education 2 Issue 1 Overview of the Governor’s Elimination Proposals of Child Care and Developmental Programs 2 5180 Department of Social Services 5 Issue 1 Governor’s Proposal to Eliminate CalWORKs 5 Issue 2 Governor’s Proposal for Reduction in In-Home Supportive Services Program 9 4200 Department of Alcohol and Drug Programs 11 Issue 1 Governor’s Proposal to Eliminate Drug Medi-Cal Except for Perinatal and Youth Services Programs 11 6110-196 California Department of Education Issue 1: overview of the governor’s elimination proposals of child care & development programs The issue before the Subcommittee is the Governor’s May Revision proposals to eliminate all General Fund support for the Child Care and Development Programs, except for State Pre-School. governor’s proposal The Governor’s May Revision proposes General Fund reductions and policy changes, listed below: Eliminates $1.2 billion, out of a $2.3 billion budget, in subsidized Child Care Services and CalWORKs Stage 2 and 3, except for State Preschool. This proposal would eliminate subsidized slots for approximately 174,000 children. The Administration proposes to use $594 million in federal funds for 78,000 slots. Eliminates $36 million in Child Care Support programs. This proposal would be in effect October 1, 2010. Lowers the Eligibility Ceiling from 75 percent to 60 percent of the State Median Income, a reduction of $54.4 million. Proposes trailer bill language to require the California Department of Education, County Welfare Departments, and Alternative Payment Programs to identify and recover payments made in error, due to fraud or overpayment, and impose sanctions on providers and families for high error rates or intentional violations. There are no cost-savings associated with this proposal. The Governor’s January Budget proposals, which had reduced Child Care & Development Programs by $316 million, are listed below: Proposes the reduction of reimbursement rate limits in voucher-based programs from 85th percentile of the market to the 75th percentile, and licensed-except providers’ reimbursement rate limits from 90 percent of the ceilings for licensed-family child care homes to 70 percent, based on the 2005 Regional Market Rate (RMR) survey. Total savings $132 million, of which $77.1 million would be from Proposition 98 General Fund. Proposes negative COLA of -0.38 percent, $5.9 million to programs. Essentially an unallocated reduction. And various adjustments and fund swaps that generate $55 million in savings. Proposes $123 million in reductions to CalWORKs Stage 3, or 18,000 children, because it is not an entitlement program. Background on child care & development programs Under current law, the state makes subsidized child care services available to: (1) families on public assistance and participating in work or job readiness programs; (2) families transitioning off public assistance programs; and, (3) other families with exceptional financial need. Program Estimate Enrollment (2009-10) Governor’s Proposal (2010-11) Description CalWORKs Child Care Recipients of CalWORKs assistance are eligible for subsidized child care. This care is administered in three stages. All CalWORKs providers are paid through a voucher reimbursement system based on regional market rate (RMR). Stage 1 66,316 – Stage 1 begins when a participant enters the CalWORKs grant program. Stage 1 is overseen by the Department of Social Services. Stage 2 63,004 – CalWORKs families are transferred into Stage 2 when the family is deemed to be stable. Participation in Stage 1 and\/or Stage 2 is limited to two years after the family stops receiving a CalWORKs grant. (A small portion of these programs are run through the California Community Colleges.) Stage 3 55,873 – A family may enter Stage 3 when it has exhausted its two-year limit in Stage 1 and\/or Stage 2 (referred to as timing out), and remain as long as they remain otherwise eligible for child care Non-CalWORKs Child Care Child care for children from low-income families ages birth through 12 years of age and older children with exceptional needs. General Child Care 86,169 13,685 Care provided in a licensed center or family child care home (FCCH). Providers paid through direct contract with California Department of Education (CDE) at standard statewide reimbursement rate. Alternative Payment Program 37,186 62,650 Care provided in licensed center, FCCH, or by license-exempt provider. Providers paid through voucher reimbursement system based on RMR. State Pre-School 116,832 116,832 Early childhood education programs for three- to five-year-old children from low-income families. Total Enrollment 435,560 193,167 Source: LAO Support Activities and Services. A small portion of total Proposition 98 and CCDF monies are used to fund programs that do not provide direct services to children but rather provide support services designed to improve program effectiveness. \u00b7 Some support programs are geared toward parents and providers. For example, resource and referral agencies provide information to parents and the community about child care available in the area and offer training to providers. \u00b7 Some support programs are geared more toward government planning. For example, the county based Local Planning Councils are responsible for assessing need, planning, and coordinating child care services within the county. \u00b7 The CDE also maintains a Centralized Eligibility (wait ) List. There are approximately 200,000 children on the waitlist for subsidized child care programs. \u00b7 Other support programs, collectively called Quality Programs, are intended to improve the quality and availability of child care. impacts on families and the economy The State currently administers a waitlist for eligible families to enroll for services. There are approximately 200,000 children on the Central Eligibility List. Under the Governor’s proposal, 174,000 slots would be eliminated. These families are low-income earners and would be at risk of losing employment without child care availability. The Subcommittee has already heard testimony that there are not sufficient child care providers, as many have been impacted by the mortgage crisis as well as high unemployment reduces how many children they service as parents can no longer afford care, lowering providers ability to sustain their businesses. It is estimated that approximately 62,000 providers would be impacted by these reductions. The CalWORKs families would be shifted to the AP Program on a space-available basis. However, the federal funds require a state match; the Governor proposes to use preschool General Fund as the match but it is not clear if these funds would qualify as an AP matching requirement. As the Subcommittee analyzes the CalWORKs and Child Care elimination proposals, it will need to take into account: 1) the impact to families left without services on October 1, 2010; 2) the impact to the economy and child care providers who will be impacted by the RMR reductions and contract eliminations; and, 3) the impact of potential federal funds loss to the State. 5180 Department of Social Services Issue 1: Governor’s Proposal to Eliminate CalWORKs The Governor proposes in the May Revision to eliminate the CalWORKs program effective October 1, 2010 for a savings of $1.2 billion General Fund. Eliminating CalWORKs would cause California to lose three-quarters ($2.8 billion) of the state’s federal TANF block grant in 2010-11 and to lose the state’s entire annual $3.7 billion TANF block grant every year thereafter. In addition, an estimated $1.8 billion in state and county funds would not be available to help low-income families with children in 2010-11. Moreover, California could lose more than $500 million in temporary federal Emergency Contingency Funds (ECF). Impact on Caseload. This proposal would terminate cash assistance and a range of intensive employment services for more than 1.4 million low-income children and adults in 600,000 families. More than three out of four recipients are children, or 77.9 percent, so more than 1 million children would be affected by this program elimination. CalWORKs provides temporary cash assistance, job training, education, child care, and employment programs to families who are unable to meet basic needs (i.e. shelter, food, and clothing) without this aid. As part of the CalWORKs elimination proposal, the May Revision provides General Fund of approximately $664 million for areas of the budget that had received federal Temporary Assistance for Needy Families (TANF) Block Grant funds and assisted with meeting California’s Maintenance of Effort (MOE) requirement. Without CalWORKs and the federal TANF Block Grant that funds the program and these other government services, General Fund is further required. Interaction with Prior Proposals. The Governor previously proposed reductions in CalWORKs, including a 15.7 percent grant reduction, elimination of the Recent Noncitizen Entrants Program, and reductions for reimbursement to Stage 1 Child Care providers. The costs of rejecting these proposals, assuming the extension of the ECF through 2010-11, is $89.4 million. The elimination proposal would have resulted in additional savings of $1.07 billion, so the required amount to reject the Governor’s previous reduction proposals and this elimination proposal is $1.2 billion. Detail on these previous proposals has been presented to and discussed by the Subcommittee at its March 24, 2010 hearing on the \”Toll on Californians of Adopted and Proposed Health and Human Services Cuts\” and the hearing on the major CalWORKs budget items on April 28, 2010. Effect of Program Elimination. California has had a welfare program in some form since the enactment of the Aid to Dependent Children program in 1911. Counties and advocates project that the elimination of CalWORKs could result in dramatic increases in unemployment, poverty, and homelessness among recipient families, as well as costs in other state and local services (e.g. the child welfare, foster care, and education systems). The Governor’s Budget forecasted an unemployment rate of 12 percent during 2010. According to the U.S. Census Bureau, California had an overall poverty rate of 13.3 percent of the state’s population in 2008. The poverty rate was higher, at 18.5 percent, for children under 18 years of age. Impact on the Economy. The lowest-income individuals and families spend a higher percentage of their income locally and immediately than do individuals with more disposable income. In addition to these effects on recipient families and their economic activities, as well as local governments, below are examples of others who would be directly impacted by elimination of CalWORKs: \u00b7 Employers who might otherwise avert layoffs or expand their workforce via up to 15,000 ECF-supported subsidized employment slots. \u00b7 Tens of thousands of local child care providers who provide child care to children whose care is subsidized by the CalWORKs program; and \u00b7 An estimated 14,000 county and 170 state employees who work within the state’s CalWORKs program. Additional Program Characteristics. The following are additional considerations regarding the program for the Subcommittee’s review to provide context for this proposal: \u00b7 Caseload Decline Prior to Recession. The number of families in CalWORKs dropped starting in the mid-1990s, but enrollment increased substantially after the recession began in 2007. \u00b7 Previous Reductions. The Legislature made significant cuts to CalWORKs in the February 2009 and July 2009 budget agreements, including a four percent grant reduction, the elimination of the state COLA, and cutting funding for employment services and child care by $375 million for two budget years (2009-10 and 2010-11). \u00b7 Grant Levels. The maximum monthly grant ($694) for a family of three in 2009-10 is at 45.5 percent of the federal poverty level. With Food Stamp benefits, this overall benefit level to 78.1 percent of the federal poverty level. To have the same purchasing power as the grant did in 1989-09, when it was the same amount as it is now of $694, it would have to rise to $1,316. The current grant level is lower than TANF grants in 20 states after adjusting for housing costs. \u00b7 Program Spending. Cash assistance has declined dramatically as a share of total welfare spending, while employment services and child care have increased. Welfare spending as a share of total spending in California has dropped by more than half since 1996-97. \u00b7 Californians in Poverty. 22.3 percent of Californians in poverty in 2008 received cash assistance. This percentage has steadily decreased since 1995. \u00b7 Unemployment. The number of unemployed and underemployed Californians more than doubled between January 2007 and January 2010. California’s annual jobless rate is projected to peak in 2010 and remain above 10 percent through 2012. \u00b7 Recent Increases. The number of families receiving CalWORKs cash assistance rose sharply in Federal Fiscal Year 2009, by 9.9 percent and is projected to continue to rise. Caseload Adjustments. DSS estimates in May Revision that CalWORKs caseload growth in the program has increased at a rate slower than estimated in the January budget. Specifically: \u00b7 Total Caseload In November 2009, DSS estimated that the average monthly caseload for 2009-10 would be 558,664, an increase of 10.6 percent from the previous fiscal year, and that the caseload for 2010-11 would be 605,542, an increase of 8.4 percent. In the May Revision, DSS estimates that the average monthly caseload for 2009-10 is 554,352, an increase of 9.8 percent from the previous fiscal year, and that the caseload will be 580,527 in 2010-11, an increase of 4.7 percent. \u00b7 All Other Families (Including Safety Net) In November 2009, DSS estimated that the average monthly caseload for 2009-10 would be 508,833, an increase of 9.8 percent from the previous fiscal year, and that the caseload for 2010-11 would be 549,179, an increase of 7.9 percent. In the May Revision, DSS estimates that the average monthly caseload for 2009-10 is 503,210, an increase of 8.5 percent from the previous fiscal year, and that the caseload will be 526,394 in 2010-11, an increase of 4.6 percent. \u00b7 Two-Parent Families In November 2009, DSS estimated that the average monthly caseload for 2009-10 would be 49,831, an increase of 20.4 percent from the previous fiscal year, and that the caseload for 2010-11 would be 56,362, an increase of 13.1 percent. In the May Revision, DSS estimates that the average monthly caseload for 2009-10 is 51,142, an increase of 23.6 percent from the previous fiscal year, and that the caseload will be 54,133 in 2010-11, an increase of 5.8 percent. Panelists \u00b7 Department of Social Services. Please present on the Governor’s May Revision proposal, including expected impacts for low-income families and children, effects on the economy, and the loss of federal funds. \u00b7 Department of Finance. \u00b7 Legislative Analysts Office \u00b7 Center for Labor Research and Education, University of California, Berkeley \u00b7 California Budget Project \u00b7 California Welfare Directors Association \u00b7 Western Center on Law and Poverty \u00b7 Public Comment Staff Recommendation Staff recommends that the Subcommittee accept the estimate changes for caseload in CalWORKs, reject the Governor’s May Revise elimination proposal (with direction to staff to work with the Department of Finance on the technical aspects of this), and hold open the remainder of the CalWORKs budget until the Subcommittee meets to close out items in its final hearings. Issue 2: Governor’s Proposal for Reduction in In-Home Supportive Services (IHSS) Program The Governor proposes in the May Revision to replace the Governor’s prior proposals to (1) eliminate IHSS services for anyone with a Functional Index Score below 4.0 and (2) reduce state participation in wages of IHSS workers to the state minimum wage with a proposal to achieve $637 million in 2010-11 ($750 million ongoing) in unspecified General Fund savings by July 1, 2010. The administration is proposing that this reduction be developed with stakeholder consultation and enactment of trailer bill prior to July 1. To date, the administration has not shared a process outline or proposed content for this stakeholder process, so the Legislature has very little information to understand or evaluate the proposal. background Fiscal Implications. Total program funds in IHSS include $5.6 billion, with $1.43 billion General Fund for 2010-11. The Governor had previously proposed the service reduction and decrease in state participation in wages, but these reductions have been enjoined by the courts and are not viable proposals in 2010-11. The $637 million reduction proposal for 2010-11 would leave $790 million General Fund in the program, bringing down the overall funding for the program from $5.6 billion to $3.5 billion, accounting for a loss of $1.14 billion in federal funds and $343 million in county funds. The Legislature adopted modified changes from what the Governor had proposed to achieve savings in the program as part of the 2009-10 Budget, most of which were halted as a result of the aforementioned court action. These included a reduction in state participation in wages from $12.10 per hour to $10.10, which was estimated to generate $98 million in General Fund savings in 2009-10. The service reductions adopted as part of the 2009-10 Budget in the July Package included a reduction to target domestic and related care services to the most impaired recipients and to eliminate all IHSS services for those with an FI score under 2.0. Together, the intended savings for these proposals was $73 million in 2009-10. Program Characteristics. The IHSS program provides in-home personal care and domestic services to approximately 466,000 qualified individuals who are blind, aged, or who have disabilities. These services, which include bowel and bladder care, bathing, grooming, paramedical services, housecleaning, meal preparation, laundry, grocery shopping, accompaniment to medical appointments, and protective supervision, allow recipients to stay in their homes and avoid institutionalization. Currently, there are approximately 385,000 IHSS individual providers statewide and 2,330 county and state staff who work in the program. Major program changes adopted as part of the 2009-10 Budget Package have been reviewed and discussed by the Subcommittee, namely in the May 5, 2010 hearing. These changes range from a new provider enrollment process, including criminal background checks and provider orientations, to enhanced program integrity measures like social worker trainings, the development of protocols for targeted mailings and unannounced home visits, and the fingerprinting of recipients and providers. This Subcommittee took action to repeal the fingerprinting requirements and the requirements for fingerprints on timesheets due to multiple, varied concerns, including high costs, associated with these requirements and their implementation. Caseload Adjustments. DSS estimates in May Revision that IHSS caseload growth in the program has increased at a rate slower than estimated in the January budget. Specifically, in November 2009, DSS estimated that the caseload for 2009-10 would average 460,041, an increase of 7.0 percent over the previous year, and that the caseload in 2010-11 would average 489,972, an increase of 6.5 percent. In the May Revision, DSS estimates that the average monthly caseload for 2009-10 is 439,147, an increase of 2.2 percent from the previous fiscal year, and that the caseload will be 466,292 in 2010-11, an increase of 6.2 percent. Panelists \u00b7 Department of Social Services. Please present on the Governor’s May Revision proposal, including the schedule, content, and anticipated outcome for the proposed stakeholder process. \u00b7 Department of Finance. \u00b7 Legislative Analysts Office \u00b7 Center for Labor Research and Education, University of California, Berkeley \u00b7 Public Comment Staff Recommendation: Staff recommends that the Subcommittee accept the estimate changes for caseload in IHSS, reject the Governor’s May Revise proposal, and adopt placeholder trailer bill language to establish an IHSS Budget Advisory Workgroup to tackle issues of cost containment and maximizing federal financial participation, beginning its work in the 2010-11 budget year. The IHSS budget will remain open until the Subcommittee closes down final issues in IHSS and across DSS programs in future hearings. 4200 Department of Alcohol and Drug Programs Issue 1: Governor’s Proposal to Eliminate Drug Medi-Cal Except for Perinatal and Youth Services Programs The Governor proposes in the May Revision to eliminate Drug Medi-Cal (DMC) programs with the exception of the Perinatal and Minor Consent programs, effective October 1, 2010, for a decrease of $53.4 million. This includes a reduction of $522,000 to reflect a reduction in the ADP state staffing associated with the elimination. ADP administers the Drug Medi-Cal Program, which provides substance abuse treatment services for beneficiaries of the Medi-Cal Program. ADP also allocates other funds to local governments and contract providers, including funds provided under the Substance Abuse and Crime Prevention Act, the 2000 initiative also known as Proposition 36. background Program Descriptions. The two DMC modalities proposed for elimination, the Narcotic Treatment Program (NTP) Regular and the Outpatient Drug Free (ODF) Regular, currently are expected to serve 226,193 individuals in 2010-11 (more detail is included in the table below). NTP is a DMC modality using methadone directed at stabilization and rehabilitation of persons who are opiate addicted and have substance abuse diagnoses. The program doesn’t include detoxification treatment. Services include intake, treatment planning, medical direction, body specimen screening, physician and nursing services related to substance abuse, medical psychotherapy, individual and\/or group counseling, admission physical examinations and laboratory tests, and medication services. ODF is a modality that is designed to stabilize and rehabilitate persons with substance abuse diagnoses in an outpatient setting. Services include admission physical examinations, intake, medical direction, medication services, body specimen screens, treatment and discharge planning, crisis intervention, collateral services, and group and individual counseling. Characteristics of DMC. The table on the following page was provided by the Department at the request of Subcommittee staff and displays the universe of DMC modalities, showing which are affected by the elimination proposal, what percentage of the caseload these account for, and the appropriation associated with this modality, both before and after the elimination proposal. Department of Alcohol and Drug Programs May Revise- Drug Medi-Cal Elimination Proposal Summary Modality Proposed for Elimina-tion? FY 2010-11 Caseload (Elimination Proposal) * FY 2010-11 Caseload (Pre-Elimination) % of Total Caseload (without elimination) FY 2010-11 GF Appropriation (Elimination Proposal)* FY 2010-11 GF Appropriation (Pre-Elimination Proposal) Narcotic Treatment Program (NTP) Regular* Yes 18,284 76,810 26.83% $10,648,186 $48,098,063 NTP Minor Consent No 326 326 0.11% $15,723 $15,723 Day Care Rehabilitative (EPSDT) No 21,470 21,470 7.50% $10,330,503 $10,330,503 Outpatient Drug Free (ODF) Regular* Yes 36,203 149,383 52.17% $4,489,706 $19,919,584 ODF Minor Consent No 29,411 29,411 10.27% $11,074,506 $11,074,506 NTP Perinatal No 1,708 1,708 0.60% $235,553 $235,553 DCR Perinatal No 1,084 1,084 0.38% $706,987 $706,987 ODF Perinatal No 4,524 4,524 1.58% $305,071 $305,071 Perinatal Residential No 1,600 1,600 0.56% $1,308,467 $1,308,467 TOTAL 114,610 286,316 100.00% $39,114,702 $91,994,457 * For modalities proposed to be eliminated, caseload and dollars assume one quarter of services. Prior Year Reduction and Impact. The 2009-10 Budget included an across-the-board 10 percent reduction in the rates paid to Drug Medi-Cal providers that is estimated to achieve $8.8 million in GF savings. \u00b7 Contraction of Service Network and Provider Closures. Providers have noted closure of sites and service reductions due to the ten percent reduction. They additionally note the diminishing county resources for treatment, which creates greater pressures and demand for private providers and their services. \u00b7 Fewer Treatment Slots to Fend Burgeoning Addiction Trends. Providers note new trends in oxycontin and opiate addictions among youth and in high-income neighborhoods. The availability of these drugs and movement into lower-income communities is creating a greater demand seen in Drug Medi-Cal. Advocates and providers assert that the elimination of these modalities would cause major closures in the provider network, increasing costs dramatically in other systems. Perinatal services are preserved in the proposal, however they are only available until the end of the month in which sixty days has passed since the birth of the child. After this period, the mother is no longer able to utilize the services and her child would not be eligible either unless the child qualifies under the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program. The Department indicates that, practically speaking, her child would need to be old enough to be a substance using youth that requires medically necessary treatment in order to utilize services under EPSDT. Therefore, the family unit would no longer be eligible for services post-partum but for a short window of approximately two months. Panelists \u00b7 Department of Alcohol and Drug Programs. Please present on the Governor’s May Revision proposal and discuss the implications this has for (1) impact on the current caseload, (2) post-partum services for the mother and child, (3) lost federal funds, and (4) California’s Maintenance of Effort requirement in ADP per federal rules. \u00b7 Department of Finance. \u00b7 Legislative Analysts Office \u00b7 Public Comment Staff Recommendation: Staff recommends that the Subcommittee accept the caseload changes in Drug Medi-Cal and reject the Governor’s proposal to eliminate DMC for the modalities affected by the proposal. 1 Assembly Budget Committee ”

pdf May 13, 2010, Senate Sub. #3 Meeting Outcomes

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” SUBCOMMITTEE #3: Health & Human Services Chair, Senator Mark Leno Senator Elaine K. Alquist Senator Roy Ashburn May 13, 2010 Human Services Outcomes (Agenda II) DSS Issue 1: Resource Family Approval Pilot (AB 340) Restored (2-1) (Ashburn no), in 2010-11, local assistance funding for this program. Staff was directed to work with the Administration, Legislative Analyst’s Office (LAO), and County Welfare Directors Association (CWDA) to determine the amount of this restoration. In addition, authorized some, but not all, of the previously requested limited-term positions at DSS. Specifically, limited-term state operations costs shall not exceed $150,000 GF annually. DSS Issue 2: In-Home Supportive Services (IHSS) Local Augmentations from 2009-10 Rejected (2-1) (Ashburn no) the proposed $28.3 million ($10.0 million GF) to continue the 2009-10 augmentation of local activities in 2010-11. DSS Issue 1: Proposed Changes to State Hearing Procedures and Penalties First, rejected (2-1) (Ashburn no) the proposed trailer bill language. Second, approved (3-0) approximately $450,000 total funds ($215,500 GF) (final amount to be determined after staff consultation with the Administration) for three additional ALJs to alleviate workload-related demands. ”

pdf May 13, 2010 Senate Sub.# 3 Hearing Agenda

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” SUBCOMMITTEE #3: Health & Human Services Chair, Senator Mark Leno Senator Elaine K. Alquist Senator Roy Ashburn May 13, 2010 9:30 a.m. or Upon Adjournment of Session Room 4203 Committee Staf f : Jennifer Troia Agenda II (Vote-Only Items indicated by *) Item Department Page 5180 Department of Social Services (DSS) 1. Resource Family Approval Pilot (AB 340)*. ..2 2. In-Home Supportive Services (IHSS) – Local Augmentations from 2009-10* .3 3. Spring Finance Letter – Proposed Changes to State Hearing Procedures and Penalties. …………………………………4 Please note: The Committee will discuss only the items contained in this agenda at this hearing. Please see the Senate File for dates and times of subsequent hearings. The Committee will discuss the issues in the order noted in the agenda, unless otherwise directed by the Chair. Pursuant to the Americans with Disabilities Act, individuals who, because of a disability, need special assistance to attend or participate in a Senate Committee hearing, or in connection with other Senate services, may request assistance from the Senate Rules Committee, 1020 N Street, Suite 255 or by calling 916-651-1505. Requests should be made one week in advance whenever possible. Subcommittee #3 May 13, 2010 Senate Budget and Fiscal Review Page 2 of 6 Vote-Only Agenda DSS Issue 1: Resource Family Approval Pilot (AB 340) Budget Issue: The Governor’s proposed budget for 2010-11 included trailer bill language (TBL) to suspend implementation of statutes enacted by AB 340 (Chapter 464, Statutes of 2007). Under the proposed TBL, existing law would have been implemented when the Department of Finance determines that sufficient state operations resources have been appropriated (emphasis added). On March 22, 2010, the Subcommittee voted (2-0) (Ashburn absent) to reject the proposed TBL, which would have transferred Legislative authority to determine the sufficiency of funding for the pilot program to the Administration. During that same hearing, the Subcommittee held open the budget for AB 340. Background on AB 340: The resource family approval pilot established by AB 340 requires a three-year pilot program in up to five counties to establish a single, comprehensive approval process for foster care and adoptive families. This pilot was intended to make the licensing process less cumbersome and to prevent unnecessary delays in finding permanent families for foster children. The current licensing process divides caregivers into relatives, foster family homes, and adoptive homes. All caregivers must meet the same health and safety standards, but the processes for each vary and can be duplicative. This pilot was also included in the state’s Program Improvement Plan in response to the 2002 federal review. The Assembly and Senate Appropriations Committees’ analyses of AB 340 estimated approximately $150,000 GF in the first year for state personnel costs to oversee development and implementation of this pilot (and in one analysis, additional funds for its final evaluation). These analyses also recognized that the pilot should lead to some offsetting savings. Local assistance funding of $717,000 ($242,000 GF) was appropriated in 2008-09. DSS also submitted a BCP requesting 4.0 limited-term state positions at a cost of $440,000 ($278,000 GF) to implement AB 340 in 2008-09; however, no state operations resources were included in the budget that year. DSS never allocated the 2008-09 local assistance that the Budget Act appropriated to the counties. In 2009-10, the Governor’s budget included $1.8 million ($786,000 GF) in local assistance funding for AB 340 implementation. As part of the 2009 May Revision, this 2009-10 funding for the program was suspended. Administration Actions: The Administration has recently stated that its elimination of local assistance funding for AB 340 was warranted by a reference in the existing statute authorizing the program. Specifically, Section 16519.5 (q) of the Welfare and Institutions Code states that AB 340 shall be authorized to continue through the end of the 2010-11 fiscal year, or through the end of the third full fiscal year following the date that funds are made available for its implementation, whichever of these dates is later (emphasis added). According to the Administration, because no funds had been Subcommittee #3 May 13, 2010 Senate Budget and Fiscal Review Page 3 of 6 appropriated for the state-level activities, the Administration determined that no corresponding local pilot activities would take place. Subcommittee Staff Comment and Recommendation: It appears that the Administration may have overstepped its bounds by assuming that the Administration itself was authorized to determine the sufficiency of funding appropriated for this program (i.e., the very same authority the Administration explicitly sought in the 2010-11 budget and that the Subcommittee recently rejected). Staff recommends that the Subcommittee restore, in 2010-11, local assistance funding for this program. Staff should be directed to work with the Administration, Legislative Analyst’s Office (LAO), and County Welfare Directors Association (CWDA) to determine the amount of this restoration. In addition, to ensure appropriate implementation of the pilot, staff further recommends that the Subcommittee authorize some, but not all, of the previously requested limited-term positions at DSS. Specifically, limited-term state operations costs shall not exceed $150,000 GF annually. DSS Issue 2: In-Home Supportive Services (IHSS) Local Augmentations from 2009-10 Budget Issue: Of the $54.2 million ($21.9 million GF) in new funding for DSS and county IHSS anti-fraud\/program integrity efforts in 2009-10, $10 million GF was set aside for additional fraud prevention, detection, referral, and investigation at the local level. With matching federal and county funds, the total amount available statewide for those additional local efforts was $26.4 million. (For more information on overall IHSS anti-fraud\/program integrity efforts statewide, please see the March 18, 2010 Agenda.) The Governor’s 2010-11 budget proposes an additional $28.3 million ($10.0 million GF) to provide this augmentation again in the budget year. Budget Bill Language (BBL) Authorizing 2009-10 Augmentation: This augmentation was enacted by Section 576 of ABx4 1 (Chapter 1, Fourth Extraordinary Session, Statutes of 2009), which added Section 18.55(b), copied below, to the Budget Act of 2009: (b) The sum of $10,000,000 is hereby appropriated from the General Fund in augmentation of Schedule (2) of Item 5180-111-0001 of Section 2.00 of the Budget Act of 2009 for the purpose of fraud investigations and additional program integrity efforts related to the In-Home Supportive Services Program. The amount appropriated in this subdivision represents the total allowable to be claimed for these purposes within this section. The State Department of Social Services shall allocate funding based on a distribution method developed in consultation with the counties. Each county shall submit a plan to the department that includes the program integrity and fraud investigation activities that the Subcommittee #3 May 13, 2010 Senate Budget and Fiscal Review Page 4 of 6 county plans to pursue, and the department must approve the plan prior to distribution of the funds appropriated in this subdivision. Background: As discussed at the hearing on May 6, 2010, forty-five counties submitted plans for these additional fraud prevention and investigation funds. Those plans were developed by County Welfare Directors and District Attorneys’ (DAs) offices and reviewed by Boards of Supervisors and DSS. With some minor exceptions when federal or state funds are available, local District Attorneys’ offices are principally funded on a discretionary basis out of county General Funds. According to the California Department of Justice, approximately $1.2 billion total was spent on prosecution activities statewide (based on 2006-07 data). Other Anti-Fraud\/Program Integrity Measures in the 2009-10 Budget: In addition to these local funding augmentations and the recipient fingerprinting discussed on May 6, 2010, as well as previously existing IHSS quality assurance efforts, the 2009-10 budget included the following IHSS reforms, with varying implementation dates: 1. Criminal background checks and appeals processes for IHSS providers; 2. The requirement for providers to attend an orientation; 3. Authorization to send targeted mailings to providers and recipients and to conduct unannounced home visits, pursuant to developed protocols and in targeted cases, when there is cause for concern about program integrity; 4. Limits on the use of P.O. boxes by providers to receive paychecks; 5. Training for social workers on fraud prevention; 6. Notification to providers about their clients’ authorized hours and service levels; and 7. Certifications on timesheets, after notice of possible criminal penalties for fraud. Subcommittee Staff Comment & Recommendation: The BBL quoted above included a one-time appropriation of funds for this local augmentation in 2009-10. Given the fiscal crisis facing the state and the lack of analysis regarding savings that can be expected to result from these expenditures, staff recommends rejecting the proposed funding to continue this one-time augmentation of local activities in 2010-11. Discussion Agenda DSS Issue 1: Proposed Changes to State Hearing Procedures and Penalties Budget Issue: DSS proposes, in a Spring Finance Letter dated April 1, 2010, two changes to the state hearings process. The first change would modify the existing Subcommittee #3 May 13, 2010 Senate Budget and Fiscal Review Page 5 of 6 structures for when the state pays penalties to benefit recipients whose state hearing decisions are not issued in a timely manner. The second would allow state hearings to be held by video conference, unless there is a finding of good cause for a face-to-face hearing. In the alternative, if these changes are not approved DSS seeks $1.4 million ($931,000 GF) in additional resources [$900,000 ($431,000 GF) for 6.0 new Administrative Law Judge (ALJ) positions and $500,000 GF for penalty costs]. Background on State Hearings and Penalties for Untimely Decisions: California provides due process to recipients of welfare-to-work, Supplemental Nutrition Assistance Program (food stamps), Medi-Cal, In-Home Supportive Services (IHSS) and Foster Care\/Adoption Assistance benefits through state hearings conducted by ALJs who work for DSS’s State Hearings Division. Federal mandates require that the state adjudicate these claims within 90 days for most programs, or 60 days for food stamps. Existing court orders (from King v. McMahon and Ball v. Swoap) require the state to pay a daily penalty to the claimant for each day over 60 or 90 days, as applicable, that an ALJ issues a written decision in a claimant’s favor. The penalty rate starts at a minimum of $5.00 per day. In each month that 95 percent of all decisions are not completed within 90 days, the daily penalty rate increases by $2.50. In each month that 95 percent of cases are timely decided, the rate decreased by $2.50. The penalties are paid with 100 percent GF, as no federal financial participation is available. In 2008-09, timeliness was 95.6 percent overall. The most recent information available indicated that the average timeliness rate for state hearings was 93.9 percent overall. The current daily penalty rates are $7.50 for CalWORKs, $5 for food stamps, $35 for Medi-Cal, and $5 for other non-CalWORKs. DSS paid $251,000 GF in penalties in 2008-09, and $192,000 GF from July 2009 through March 2010. DSS projects that penalty payments in the current year will likely exceed $500,000 GF. According to DSS, this increase in late decisions and resulting penalties is attributable to an increase in caseload without a corresponding increase in staff with which to adjudicate cases. For example, from 2005-06 to 2008-09, DSS indicates that there was a 23 percent increase in the number of hearing requests statewide (from 69,825 to 86,079) and a 26 percent increase in the number of hearings held. The Department also states that recent furloughs have placed additional strain on its state hearings capacity. Proposed Changes to Hearing and Penalty Procedures: DSS maintains four offices throughout the state. However, in some cases, ALJs still have to travel overnight for hearings. To minimize travel, ALJs have recently conducted approximately four percent of hearings by videoconference and another seven percent by telephone. To participate in a videoconference currently, the parties to the claim still appear at a county hearing facility. The claimants are currently given the option to have an in-person hearing. According to DSS, less than one percent of claimants given that choice to have a face- to-face hearing have exercised it under the current system. The Department now seeks to clarify the law to formalize its authority to continue use of video-conferencing to facilitate hearings. Under the proposal, claimants could continue to request a face-to- face hearing; however, the request would only be granted if they could show good Subcommittee #3 May 13, 2010 Senate Budget and Fiscal Review Page 6 of 6 cause for the ALJ’s physical presence. According to the Department, good cause would be defined in regulations, after consultation with advocates and counties. Under the proposal, the timeliness standard would also be codified and reduced from 95 to 90 percent. The proposal would additionally establish exemptions for when penalties do not apply. Specifically, there would be no penalties in cases: 1) that do not involve a question related to current benefits or services (approximately 60 percent of cases), 2) in which the person received benefits at or above the level they were entitled to receive pending the hearing decision, or 3) where the application of a recent change in state or federal law (within the last 12 months) is an issue in the case. Concerns Expressed by Advocates: Some advocates have expressed opposition to this proposal. Their main concerns center on the ways that they believe the proposal undermines and defeats due process. In addition, they raise questions about a number of changes included in the proposed trailer bill language e.g., the elimination of reporting requirements established by the courts. Subcommittee Staff Comment & Recommendation: Given the due process-related and other significant policy questions at issue in this Spring Finance Letter, staff recommends that the Subcommittee reject the proposed trailer bill language at this time. Staff does, however, recommend that the Subcommittee approve approximately $450,000 total funds ($215,500 GF) (final amount to be determined after consultation with the Administration) for three additional ALJs to alleviate workload-related demands. Questions for DSS: 1) Please briefly summarize the reasons for the recent increases in late decisions and corresponding penalties. How much of the increased delays is likely due to furloughs (which may be about to end)? 2) To what extent have you tracked the impact of hearings held by video conference on the timeliness of hearing decisions? To what extent have you sought advocates and participants’ feedback on these pilot activities? 3) How prepared would the Department be for the proposed, significant increase in the use of video conferencing? Does the state already have the necessary quantity of equipment and technical support? 4) What are the circumstances the Department might expect to constitute good cause for face-to-face hearings? How would participants know that they had the right to request those face-to-face hearings? ”

pdf May 12, 2010, Assembly Sub. #1 Meeting Outcomes

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“Subcommittee No. 1 on Health and Human Services May 12, 2010 Actions Taken Subcommittee No. 1 on Health and Human Services Assemblymember Dave Jones, Chair (Members: Beall, Chesbro [Chaired in place of Asm. Jones], De La Torre, Emmerson, and Nestande; Alternate: Blumenfield) Wednesday, May 12, 2010 State Capitol, Room 4202, 1:30 PM Item Actions Taken Vote-Only Items 5180 Department of Social Services Issue 1 In-Home Supportive Services Oversight on Adopted Reductions (Action Items Carried Over from May 5, 2010 Hearing) Action 1 – Provide for Inclusive Stakeholder Process for IHSS Program Changes. Aligning with prior requests, the Subcommittee provided formal direction to the DSS to coordinate and conduct a stakeholder working group, including representatives from consumer and provider groups, to meet on a regularly scheduled basis (e.g. monthly) where the administration will describe its implementation efforts across the IHSS recent program changes and provide written updates to this effect to the group and legislative staff, answer questions from stakeholders, and take feedback on issues of concern. DSS is asked to provide information on when these meetings are scheduled and which organizations or entities are included in each to legislative staff. DSS is asked to consider modeling this stakeholder process after its prior efforts in IHSS Quality Assurance over the years and to look to the Department of Developmental Services for a current model on this type of stakeholder convening and process. Members Aye No Absent Not Voting Dave Jones (Chair) X Chesbro X Beall X De La Torre X Emmerson X Nestande X Blumenfield (alternate) X Total 4 2 1 Action 2 Reject Requested Positions for DSS. Reject the Administration’s proposal for six new positions for IHSS Anti-Fraud and Program Integrity Mandates and hold open the request for $500,000 in authority to contract for support in developing the required report. This is consistent with action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Chesbro X Beall X De La Torre X Emmerson X Nestande X Blumenfield (alternate) X Total 5 2 Action 3 Require Cost-Benefit Analysis. Adopt placeholder trailer bill language to require the administration, led by the Health and Human Services Agency, to collaborate with stakeholders, including academia and social science experts in the field, to construct a cost-benefit model for analysis of anti-fraud program changes and report on the considerations, costs, thresholds for fraud deterrence assumptions, and risks that should be assessed for (1) implementation of anti-fraud activities in IHSS, before or when a request is made to the Legislature for any resources associated with design, soft roll-out, and\/or full implementation, and (2) for future proposals in IHSS or other social service programs at any point at which these come forward. This model shall include all costs and benefits and specifically detail the basis for all assumptions, including the analytical basis for deterrence assumptions. Program changes to be implemented that are subject to this cost-benefit analysis include the unannounced home visits and targeted mailing policies that have yet to be analyzed or designed. Members Aye No Absent Not Voting Dave Jones (Chair) X Chesbro X Beall X De La Torre X Emmerson X Nestande X Blumenfield (alternate) X Total 4 1 2 Issue 2 Supplemental Security Income\/State Supplementary Payment (SSI\/SSP) Program (Action Item Carried Over from May 5, 2010 Hearing) Action: Adopt Supplemental Report Language (SRL) to direct the Department of Social Services to convene a working group of stakeholders, to include policy and budget staff of the Legislature, to evaluate the estimated effects of eliminating California’s SSI cash-out policy. This direction is only valid if the following two conditions are met (1) the State receives a positive response from the USDA given its requests made in the April 1, 2010 letter from DSS Director John Wagner to the USDA and (2) the response allows for California to pursue a policy that has no deleterious impact on SSI\/SSP members in mixed households, thereby allowing for a partial cash-in for California SSI\/SSP recipients with only changes that benefit recipients, and a hold harmless policy for anyone who wouldn’t. Members Aye No Absent Not Voting Dave Jones (Chair) X Chesbro X Beall X De La Torre X Emmerson X Nestande X Blumenfield (alternate) X Total 5 2 Issue 3 BCP #2 Conlan v. Shewry Action: Approve the requested positions and BBL. In future years, however, the Subcommittee may wish to revisit whether the authority granted to the Administration in the BBL continues to be necessary and consistent with the Legislature’s oversight of staffing for the workload associated with implementing these court decisions. This is consistent with action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Chesbro X Beall X De La Torre X Emmerson X Nestande X Blumenfield (alternate) X Total 4 1 2 Issue 4 BCP #6 Unaccompanied Refugee Minor Program Support Position Action: Approve the proposed funding and position. This is consistent with action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Chesbro X Beall X De La Torre X Emmerson X Nestande X Blumenfield (alternate) X Total 4 2 1 Issue 5 DSS TBL #640 ITFC and MTFC Rates Action: Staff recommends taking action to reject the proposal. This is consistent with action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Chesbro X Beall X De La Torre X Emmerson X Nestande X Blumenfield (alternate) X Total 5 2 Issue 6 State\/County Peer Review Action: Approve the proposed suspension of funding for the peer review process for 2010-11 and adopting placeholder trailer bill language to effectuate this. This action rejects the Administration’s proposal to transfer Legislative authority to determine the sufficiency of program funding to the Department of Finance. This is consistent with action taken in the Senate. Members Aye No Absent Not Voting Dave Jones (Chair) X Chesbro X Beall X De La Torre X Emmerson X Nestande X Blumenfield (alternate) X Total 5 2 5180 Department of Social Services 0530 Office of Systems Integration Issue 1 IHSS Changes in SFIS Action: Reject the $8.2 million ($4.4 million GF) in OSI spending authority for 2009-10 and $5.65 million ($2.9 million GF) included in 2010-11, and any additional associated funding, for the purposes of fingerprinting IHSS recipients. Furthermore, sweep any funds in the DSS budget that have not yet been spent (or obligated for reimbursement). Adopt corresponding placeholder trailer bill language to repeal the statutory requirement for fingerprinting recipients and the requirement for fingerprints on timesheets (Sections 12305.73 and subdivision (c) of 12301.25 of the Welfare and Institutions Code, respectively). Hold open the requested conversion of contract authority to state staff for future action. This action conforms to the Senate action taken on May 6, 2010. Members Aye No Absent Not Voting Dave Jones (Chair) X Chesbro X Beall X De La Torre X Emmerson X Nestande X Blumenfield (alternate) X Total 5 2 Issue 2 DSS Spring Finance Letter State Hearings The Subcommittee took a vote to (1) reject the State Hearings Spring Finance Letter on the basis that this proposal requires careful, thorough consideration through the policy process and (2) provide funding in 2010-11 for three additional ALJs ($450,000 total funds, approximately $215,500 GF), to assist with workload. The vote was expunged for logistical reasons and the action will be set for Vote-Only at a future Sub. 1 hearing. Issue 3 BCP #3 CWS Web Project Consistent with the Subcommittee’s vote on April 21, 2010 regarding the requested resources for additional OSI staff to support CWS\/Web development, this issue was held open pending May Revision. Issue 4 DSS BCP #4 EBT System Ongoing Maintenance Action: Approve the requested budget decreases contained in the OSI request, as well as the proposed extension of the two limited-term positions at DSS. Adopt Supplemental Report Language requiring OSI and DSS to provide an update to the Legislature and to stakeholders, including CWDA, CSAC, WCLP, and the California Food Policy Advocates, on (1) efforts with the vendor to limit disruption in EBT benefit access, (2) communications with counties about any problems and resolutions as they arise, and (3) how consumers are being informed of issues and recourse when disruptions do occur. Members Aye No Absent Not Voting Dave Jones (Chair) X Chesbro X Beall X De La Torre X Emmerson X Nestande X Blumenfield (alternate) X Total 6 1 [image: image1.png] 1 Assembly Budget Committee ”

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“Subcommittee No. 1 on Health and Human Services May 12, 2010 Agenda Subcommittee No. 1 On Health and Human Services Assemblymember Dave Jones, Chair Wednesday, May 12, 2010 State Capitol, Room 4202 1:30 pm Item Description Page Vote-Only Items 4300 Department of Developmental Services Issue 1 Additional Resources to Increase Federal Funds Participation 2 Issue 2 Porterville New Main Kitchen Re-appropriation 3 5180 Department of Social Services Issue 1 In-Home Supportive Services Oversight on Adopted Reductions (Action Items Carried Over from May 5, 2010 Hearing) 4 Issue 2 Supplemental Security Income\/State Supplementary Payment (SSI\/SSP) Program (Action Item Carried Over from May 5, 2010 Hearing) 5 Issue 3 BCP #2 Conlan v. Shewry 6 Issue 4 BCP #6 Unaccompanied Refugee Minor Program Support Position 7 Issue 5 DSS TBL #640 ITFC and MTFC Rates 8 Issue 6 State\/County Peer Review 9 Items to be Heard 4300 Department of Developmental Services Issue 1 Deficiency Funding Request 10 Issue 2 Update on 2009-10 Budget Reductions 12 Attachment 1 Notification of Exemption 18 Attachment 2 ICF-DD Billing 19 5180 Department of Social Services 0530 Office of Systems Integration Issue 1 IHSS Changes in SFIS 21 Issue 2 DSS Spring Finance Letter State Hearings 23 Issue 3 BCP #3 CWS Web Project 25 Issue 4 DSS BCP #4 EBT System Ongoing Maintenance 26 VOTE-ONLY ITEMS 4300 Department of Developmental Services Issue 1: Additional Resources to Increase Federal Funds Participation The Governor’s Budget requests five two-year, limited-term position and the associated cost of $515,000 ($228,000 General Fund and $287,000 in reimbursement authority). background The Department of Developmental Services was required to make a $334 million reduction in 2009-10. As a part of the $334 million savings plan, the Department assumed a significant amount of additional Federal Financial Participation (FFP). This proposal would help the Department implement this proposal. The additional positions will help the Department capture $78.8 million Federal Financial Participation (FFP) in 2009-10 and $132.5 million in 2010-11. Of these new federal dollars, $64.6 million FFP and $117.1 million in 2010-11 are associated with: (1) Submission to the Centers for Medicare and Medicaid Services (CMS) of a 1915 (i) Medicaid State Plan Amendment (SPA). The SPA allows for federal funds for services to consumers who are Medi-Cal eligible, but are not on the existing Home and Community-Based Services (HCBS) Waiver; (2) Submission to CMS of a state plan amendment seeking federal participation in cost of the day and non-medical transportation services received by regional center consumers residing in Skilled Nursing Facilities (SNF’s), as well as day and transportation services of Intermediate Care Facilities Developmental Disabilities (ICF-DD) residents; and, (3) Working with DHCS and CMS to develop a payment process for providers receiving Medicaid dollars through the 1115 Medi-Cal waiver. staff comment The new waiver submission will help the state address consumers who are on Medi-Cal but are not eligible for the Home and Community Based Waiver because they do not meet the institutional level of care required for Waiver eligibility. Specifically, $64.6 million and $117.1 million in 2010-11 will maximize FFP for regional center consumer services. Early establishment of these positions was necessary in order for the Department to generate the required $64.6 million this current year. As a result, the Department administratively established the positions January 1, 2010 and redirected resources to fund current year costs. However, the Department is currently under furlough days and has no elasticity to absorb long-term cost. Therefore, the establishment of five two-year, limited-term positions as of July 1, 2010 is still necessary to ensure the success of the three SPA’s and ultimately, the 1915 (i). The Departments current vacancy rate is 8 percent, but due to the magnitude of the work to be accomplished, approval of this proposal is critical to obtain future federal funds, achieve a General Fund (GF) savings, reduce reliance on state general fund dollars in the delivery of services to individuals with developmental disabilities and make California the second state with an approved CMS 1915 (i). Staff Recommendation: Approve as budgeted. Issue 2: Porterville New Main Kitchen Re-appropriation The Department of Developmental Services (DDS), request re-appropriation of the budget authority from 2006 and 2008 to complete the Porterville New Main Kitchen Project. The request is a three year re-appropriation of $25.4 million to June 30, 2014 for the construction phase of the project. background In December of 2008, as a result of the state’s deteriorating cash position in the Pooled Money Investment Account (PMIA) the Administration issued Budget Letter 08-33, directing departments to suspend any projects that required cash disbursements from the PMIA loans. Funding for this project was originally approved in 2006 and 2008. In 2006, $19.9 million were appropriated and in 2008, $5.4 million were appropriated, for a total of $25.4 million. These funds are due to expire June 30, 2011 for the Porterville New Main Kitchen Project. staff comment Once bonds are sold in the fall, the DDS will be able to access the construction balance of the lease revenue bonds. Cost for the preliminary plans and working drawings for the project have already been incurred. The Department notes that the 2011 deadline may be sufficient, but it does not account for unforeseen delays in the bidding process, that may jeopardize funds if exceeded. The new expected completion date is estimated to be October 10, 2012. Staff Recommendation: Approve as budgeted. 5180 Department of Social Services Issue 1: In-Home Supportive Services Oversight on Adopted Program Changes This issue was heard at the Subcommittee’s May 5, 2010 hearing (please see that agenda for a complete narrative on the issue). In that hearing, program changes in IHSS that were adopted as part of the 2009-10 budget were discussed and questions were posed to the administration on various elements of implementation. The action items on this issue were carried forward to this hearing for consideration. In the absence of formal action last Wednesday, the Chair made requests for information and a follow-up document containing these questions was sent to the administration and shared with stakeholders. Staff Recommendation: Staff has revised the recommendation to reconcile with what was requested by the Chair in the prior hearing, and so the action items recommended for this hearing include the following (each recommendation may be taken as a separate motion): Recommendation 1 – Provide for Inclusive Stakeholder Process for IHSS Program Changes. Aligning with prior requests, provide formal direction to the DSS to coordinate and conduct a stakeholder working group, including representatives from consumer and provider groups, to meet on a regularly scheduled basis (e.g. monthly) where the administration will describe its implementation efforts across the IHSS recent program changes and provide written updates to this effect to the group and legislative staff, answer questions from stakeholders, and take feedback on issues of concern. DSS is asked to provide information on when these meetings are scheduled and which organizations or entities are included in each to legislative staff. DSS is asked to consider modeling this stakeholder process after its prior efforts in IHSS Quality Assurance over the years and to look to the Department of Developmental Services for a current model on this type of stakeholder convening and process. Recommendation 2 Reject Requested Positions for DSS Reject the Administration’s proposal for six new positions for IHSS Anti-Fraud and Program Integrity Mandates and hold open the request for $500,000 in authority to contract for support in developing the required report. This is consistent with action taken in the Senate. Recommendation 3 Require Cost-Benefit Analysis Adoption of placeholder trailer bill language to require the administration, led by the Health and Human Services Agency, to collaborate with stakeholders, including academia and social science experts in the field, to construct a cost-benefit model for analysis of anti-fraud program changes and report on the considerations, costs, thresholds for fraud deterrence assumptions, and risks that should be assessed for (1) implementation of anti-fraud activities in IHSS, before or when a request is made to the Legislature for any resources associated with design, soft roll-out, and\/or full implementation, and (2) for future proposals in IHSS or other social service programs at any point at which these come forward. This model shall include all costs and benefits and specifically detail the basis for all assumptions, including the analytical basis for deterrence assumptions. Program changes to be implemented that are subject to this cost-benefit analysis include the unannounced home visits and targeted mailing policies that have yet to be analyzed or designed. Issue 2: Supplemental Security Income\/State Supplementary Payment (SSI\/SSP) Program This issue was heard at the Subcommittee’s May 5, 2010 hearing (please see that agenda for a complete narrative on the issue). In that hearing, the proposed grant reduction for SSI\/SSP was discussed and was held open pending the May Revision. In that agenda, the SSI\/SSP cash-out policy was discussed. Recapping briefly, in California, recipients of SSI\/SSP are not eligible for federal food stamp benefits. This is because California has opted to increase the SSP portion of the grant (by $10 monthly) rather than administer food stamps to SSI\/SSP recipients. This is known as the food stamp cash out policy. The Legislature has the option of reversing the cash out policy to allow SSI\/SSP recipients to apply for food stamps. Reversing the cash out would benefit some SSI\/SSP recipients by making them eligible for food stamps, while reducing food stamp benefits for others. Generally, those who would benefit from the reversal of the cash out would be those with lower income who live in households comprised only of SSI\/SSP recipients. The households most likely to experience a reduction in food stamp benefits would be in cases where SSI\/SSP recipients reside with other existing food stamp recipients whose total income tends to be higher. Staff Recommendation: Staff has revised the recommendation from last week due to further discussion with stakeholder and staff now recommends: Adopt Supplemental Report Language (SRL) to direct the Department of Social Services to convene a working group of stakeholders, to include policy and budget staff of the Legislature, to evaluate the estimated effects of eliminating California’s SSI cash-out policy. This direction is only valid if the following two conditions are met (1) the State receives a positive response from the USDA given its requests made in the April 1, 2010 letter from DSS Director John Wagner to the USDA and (2) the response allows for California to pursue a policy that has no deleterious impact on SSI\/SSP members in mixed households, thereby allowing for a partial cash-in for California SSI\/SSP recipients with only changes that benefit recipients, and hold harmless policy for anyone who wouldn’t. Issue 3: BCP #2 Conlan v. Shewry DSS requests, in a Budget Change Proposal, $113,000 ($56,000 GF) to establish one new position to review claims filed by IHSS recipients under the Conlan II court decisions. DSS also requests to permanently extend one limited-term manager position that would otherwise expire in June 2011 (at an annual cost of $128,000 [$64,000 General Fund]). If these requests are granted, the Conlan II unit at DSS would consist overall of one Staff Services Manager and three other permanent positions. DSS states that all of these positions are necessary to meet the provisions of the Conlan II court order. In 2009-10, the Legislature approved DSS’s request for the creation of one new position and extension of two additional positions, but rejected the request for a fourth position, to review recipients’ claims for reimbursement under Conlan II. The Administration also proposes to continue its authority, in BBL, to transfer local assistance funding that would otherwise be directed to counties to instead be used for state operations costs and administratively established positions associated with Conlan II workload. As in prior years, the Department of Finance would be required to notify the Legislature of any transfers pursuant to this section. To date, the Administration has used this authority once- to transfer $57,000 ($29,000 GF) for the administrative establishment of one position in 2007-08. background Conlan II was a series of lawsuits that resulted in court decisions regarding the reimbursement of IHSS recipients for specified out-of-pocket, medically-necessary expenses they paid beginning in 1997. The court approved the state’s plan for implementing the decisions in 2006. Under this plan, there are two time periods for which recipients can claim expenses: 1) claims for services received between 1997 and November 16, 2006, which must have been filed by November 16, 2007, and 2) claims for services received after November 16, 2006, which must be submitted within one year of service receipt. According to DSS, as of January, 2009, the department was out-of-compliance with the 120-day processing timeframe required by the Conlan II court order. DSS has stated that the Conlan II cases have resulted in an increasing and permanent workload. In 2009, the Department estimated that the workload could include up to 400 claims per year. The Department now estimates that the annual total may be even higher. The Department estimates that most claims take 12 hours to review (with some taking up to 20 hours). Staff Recommendation: Staff recommends approving the requested positions and BBL. In future years, however, the Subcommittee may wish to revisit whether the authority granted to the Administration in the BBL continues to be necessary and consistent with the Legislature’s oversight of staffing for the workload associated with implementing these court decisions. This is consistent with action taken in the Senate. Issue 4: BCP #6 Unaccompanied Refugee Minor Program Support Position The Governor’s budget includes, in a budget change proposal, $102,000 (all federal funds) for the establishment of one new, permanent position to support the URM program within DSS’s Refugee Programs Bureau. background The URM program is administered by the federal Office of Refugee Resettlement (ORR) to provide child welfare and foster care services to refugee, asylee, and trafficked children who have come to the United States without parents or a close relative to care for them. ORR provides funding to DSS to contract with voluntary resettlement agencies in California. This request for expanded state operations staffing for the program is the result of: 1) an anticipated quadrupling in the number of children served (from 29 children in 2008-09 to 111 children in 2010-11), 2) the inclusion of additional youth who have been granted Special Immigrant Juvenile Status (unknown number at this point) as a result of the recent federal Trafficking Victims Protection Reauthorization Act of 2008, and 3) corrective actions required by ORR as a result of its review of the Northern California URM program. These corrective actions are focused on the need for the state to better develop placement sites, monitoring, and data collection policies and procedures. Staff Recommendation: Staff recommends approval of the proposed funding and position. This is consistent with action taken in the Senate. Issue 5: DSS TBL #640 ITFC and MTFC Rates The Governor’s proposed budget for 2010-11 includes TBL to suspend implementation of statutes enacted by SB 1380 (Chapter 486, Statutes of 2008). Similar to the TBL proposed for two other child welfare issues heard by the Subcommittee on April 28, 2010, existing law would be implemented when the Department of Finance determines that sufficient state operations resources have been appropriated. Again, the effect would be to transfer Legislative authority to the Administration. background SB 1380 expanded eligibility and revised operational, reporting, and training requirements for the Intensive Treatment Foster Care (ITFC) program. ITFC was originally established in 1990 to ensure that foster children with emotional challenges could thrive in a family home with therapeutic services, rather than high-level and more expensive group homes. The Assembly Appropriations Committee analysis of SB 1380 indicated that the bill would result in net savings because foster children would be placed in less costly, less restrictive home settings, as opposed to more costly group home environments. The Administration has indicated that it may be reconsidering whether to continue pursuing this TBL and\/or to amend its proposal. Staff Recommendation: Staff recommends taking action to reject the proposal. This is consistent with action taken in the Senate. Issue 6: State\/County Peer Review DSS proposes to reduce 2009-10 funding for the state and county CalWORKs peer review process to $37,000 (TANF funds) and to de-fund the program entirely in 2010-11. The 2009-10 budget for the program was $221,000 (TANF) in local assistance funding for the counties. DSS also proposes trailer bill language to suspend the statutory requirement for the Department to implement the process statewide by July 2007 and to instead require its implementation only in the year for which a sufficient appropriation is made in the Budget Act. background A 2006 budget trailer bill (AB 1808, Chapter 75, Statutes of 2006) required DSS to establish a state and county peer review process statewide by July 1, 2007. The purpose was to assist counties in implementing best practices and improving their performances in the CalWORKs program. Given the $221,000 appropriation for 2009-10, the Department anticipated that 18 peer reviews would be conducted. Under this proposal, three reviews would be conducted in 2009-10 and none would occur in 2010-11. Staff Recommendation: Staff recommends approving the proposed suspension of funding for the peer review process for 2010-11 and adopting placeholder trailer bill language to effectuate this. This action rejects the Administration’s proposal to transfer Legislative authority to determine the sufficiency of program funding to the Department of Finance. This is consistent with action taken in the Senate. ITEMS TO BE HEARD 4300 Department of Developmental Services The Department of Developmental Services (DDS) is responsible under the Lanterman Act for ensuring that more than 240,000 Californians with developmental disabilities receive the services and supports needed to live independent and productive lives. To be eligible for services, the disability must begin before the consumer’s 18th birthday; be expected to continue indefinitely; present a significant disability; and be attributable to certain medical conditions, such as, mental retardation, cerebral palsy, epilepsy or autism. Services are delivered through four state-operated developmental centers (Fairview, Lanterman, Porterville, and Sonoma) and two community facilities, and under contract with a statewide network of 21 nonprofit regional centers (RC’s). Approximately 99 percent of consumers live in the community and slightly more than one percent lives in a State-operated Developmental Centers. Issue 1: Deficiency Funding Request The Joint Legislative Budget Committee received notification of Receipt and Approval of a Deficiency Funding Request from the Department of Developmental Services. As a result of the outcome of Shaw v. Chiang litigation, DDS has a net deficiency of $131,137,000 (GF). background As proposed by the Governor, the Budget Act of 2009 (July) appropriated $138,275,000 in Public Transportation Account (PTA) funds, to backfill for General Fund support for regional center (RC) transportation services, which are an entitlement under the Lanterman Act. PTA funds derive primarily from sales taxes on gasoline and diesel fuels and its purpose of use is delineated in Section 14506 of the Government Code for expenditures. The Administration believed RC transportation needs were within the intended purpose. However, Shaw v. Chiang disallowed the use of PTA funds for this activity, as well as for other purposes. As a result, GF is required to maintain the program funding level. The Department was able to offset a net decrease of $7,138,000 GF through a fund shift resulting from the receipt of increased federal funds in the Early Start Part C programs, but a net deficiency of $131,137,000 GF still remains. staff comment The decision to use PTA funds was made by the Business and Transportation Commission, thus this is a technical issue. However, the DDS requests $131 GF due to re-estimated caseload and expenditures for the 2010-11 November estimate using updated data through May 2009. The General Fund backfill is necessary by June 30, 2010 or else the state would be in violation of the Lanterman Act and the \”Olmstead\” decision. Panelists \u00b7 DDS Please respond to the questions below. \u00b7 DOF \u00b7 LAO Questions: What is the importance of funding this deficiency? If funds are not appropriated by June 30, what may happen and how will the state be vulnerable to further litigation? Staff Recommendation: The Committee may wish to share their position on funding this deficiency with the Joint Legislative Budget Committee. Issue 2: Update on 2009-10 Implemented Budget Reductions The Budget Act of 2009 proposed a $334 million (GF) reduction, with a corresponding federal fund reduction. The Legislature restored $234 million (GF) of this amount in its February 2009 budget, thereby reducing the DDS expenditures by only $100 million (GF). As part of this February Action, the Legislature directed the DDS to convene a diverse \”workgroup\” to assist in developing a cost reductions and efficiencies plan. Fifteen proposals were identified through this process. However, the state’s fiscal status deteriorated and the Legislature was compelled by the Governor to reduce the DDS budget by another $234 million (GF). Ultimately, the DDS was instructed to make a $334 million reduction. In conjunction with the workgroup, the DDS implemented a total of 25 proposals to generate the desired savings. background The 25 implemented proposals are as follows: Proposal Description Anticipated Savings Update 1. Expanded Federal Funding (a) amending the 1915 (i) Medicaid plan, (b) adding services to existing waivers, (c) pursue the Department becoming an Organized Health Care Delivery System and (d) restricting regional centers from purchasing community care that does not qualify for federal Medicaid funds. $78.8 million General Funds Savings will be achieved. 2. Changes to Developmental Centers (a) Closure of Sierra Vista, (b) Delayed capital outlay, (c) transfer of 30 Porterville residents, (d) furloughs and (e)staff reductions $27.2 million General Funds Savings will be achieved. 3. Changes to Regional Center (RC) General Standars (a) Prohibit purchase of experimental treatments, therauputic services or devices, (b) require RC’s to use generic services when available, (c) Medical and dental services will not be purchased without denial from insurance, (d)use of least costly provider and (e) RC’s will provide consumers a summary of cost and services each year $45.9 million General Funds Savings will not be achieved, but it is difficult to tell which implementation is or is not on track. 4. Transportation Reform (a) Requires RC to pursue lower cost transportation services that can meet the consumer’s individual needs, including: public transportation and utilizing the familiy as the source of transportation. $16.9 million General Funds Savings will be achieved. 5. Uniform Holiday Schedule (a) This proposal standardized the holidays schedule for most day programs, look-alike day programs and work activity programs and (b) extended the number of holidays from 10 to 14 days. $16.3 million General Funds Savings will be achieved. 6. New Service for Seniors at Reduced Rates This proposal required most day programs, look-alike day programs and work activity programs to offer a senior component to their current program design. *This was an optional new service. $1 million General Funds Savings have not been achieved. 7. Custom Endeavors Option This proposal expanded (through day programs, look-alike day programs and work activity programs) options for consumers to gain employment, work experience through volunteerism, and\/or start their own business. *This option is provided to consumers through their Individual Program Plan (IPP). $12.7 million General Funds No savings have been achieved. (Only 11 participants have enrolled.) 8. In-Home Supportive Services (IHSS) Requires RC’s to use generic services such as IHSS by: (a) requiring providers to help consumers get IHSS within 5 days of moving into supported living and (b) paying providers the IHSS rate for IHSS type services, while the consumer is waiting for IHSS services. $1.3 million General Funds Savings will be achieved. 9. Supported Living Services (SLS) (a) RC’s will work with SLS providers on rates of payment no higher than the rate on July 1, 2008, (b) unless needed to implement the consumers IPP RC’s are not allowed to pay a consumer’s rent, and (c) as long as needs are met, the RC will attempt to have consumers who share a home use the same SLS provider. $6.9 million General Funds Savings will be achieved. 10. Utilization of Neighboorhood Preschools Supports a different service delivery model whereby families, can have their toddler’s attend local preschools with the RC’s also providing the necessary supports. $8.9 million General Funds Savings will be achieved. 11. Group Training for Parents on Behavioral Intervention Techniques Required RC’s to consider providing group training to parents in lieu of proving some or all of the in-home parent training component of the behavior intervention services. $6.4 million General Funds Savings will be achieved. 12. Behavioral Services Established RC to: (a) purchase Applied Behavior Analysis (ABA) or Intensive Behavior Intervention (IBI) services if the service provider uses evidence-based practices and the service promotes positive social behaviors; (b) in order to purchase ABA or IBI parents of children must participate as described in the intervention plan; (c) ABA or IBI may not be used for purposes of providing respite, day care, or school services, or solely as emergency crisis services; (d) RC’s will discontinue purchasing particular ABA or IBI when the consumer’s treatment goals are achieved; (e) ABA or IBI hours will be evaluated at least every 6 months. $19.3 million General Funds Savings will be partially achieved. 13. Early Start Eligibility Criteria Elimination of eligibility for \”at risk\” infants and toddlers age 24 months or greater who are ‘developmentally delayed’ or have a risk of a developmental delay. $15.5 million General Funds Savings will be achieved, but it may be due to population decreases. 14. Early Start Program Proposals (Prevention Program) Established a limited services program for those no longer eligible for Early Start. Services are restricted to case management, and information and referral to other agencies. RC’s are also not required to provide: child care, diapers, dentistry, access to an interpreter and translator, genetic counseling, music therapy, and respite hours. $19.5 million General Funds Savings will be achieved. 15. Early Start Use Private Insurance Required parents of children under 3 to ask their private insurance or health providers to cover medical services. $6.5 million General Funds Savings will be achieved. 16. Expansion of In-Home Respite Agency Worker Duties Allowed respite workers to assist consumers with colostomies\/ileostomies, catheters and gastronomies. $3.0 million General Funds Savings will not be achieved. No applications were received. 17. Parental Fee Program Established a monthly fee that varies by family size and income. $900,000 General Funds A $500,000 savings has been achieved. The Department notes that the state of the economy has impacted a family’s ability to pay. 18. Individual Choice Budget This proposal would implement the ICB, which would give consumers flexibility. It would save money in purchase of service expenditures. No savings until implemented This proposal has not been implemented. 19. Respite Program Temporary Service Standards The proposal limited out of home respite to a maximum of 21 days per year and in-home respite to a maximum of 90 hours per quarter (30 hours per month). It also prohibited the use of respite for Day Care services. *This proposal will be lifted upon certification of the Individual Choice Budget. $4.8 million General Funds Savings have been exceeded. 20. Temporary Suspended Services Temporarily suspended: (a) social\/recreational activities, (b) camping services, (c) educational services for minor, school-aged children, and (d) non-medical theraphies. $27.4 million General Funds Savings have not been fully realized. This may be due partially, because the proposal was implemented after the summer and the number of exemptions granted through the fair hearing process. 21. Quality Assurance Consolidation Combined quality assurance studies. $2.0 million General Funds Savings will be achieved. 22. Suspended Wellness and Physician Training Program Suspended training for consumers, families, providers and physicians. $1.3 million General Funds Savings will be achieved. 23. Eliminate Triennial Quality Assurance Review Eliminated funding for triennial reviews, but maintained quarterly consumer visits and an annual facility monitoring visit. $1.0 million General Funds Savings will be achieved. 24. Reduction in One Time Regional Center Funding Further reduced funding for RC’s. $3.5 million General Funds Savings will be achieved. 25. Additional Regional Center Operations Budget Savings This this was an additional reduction to the 3 percent reduction in Operations funding. $7.0 million General Funds Savings will be achieved. staff comment At the DDS Work Group meeting on April 19, 2010, the DDS provided an update on current year implementations. The conclusion was that some of the proposals yielded the savings intended, others did not, and some exceeded the intended savings. Up to date data is not available to the Department, therefore it has been difficult for the Department to determine the exact reason for outcomes. The Department notes that a decreasing birth rate and various other interrelated factors could be responsible, but notes that those solutions which were optional, did not achieved the estimated reduction. Overall, the pressing issues for the Committee to consider are the following: 1. Notification of Exemptions: Savings have been exceeded in Respite and in the area of Suspended Services, savings have not been achieved. Issues related to these areas include the process and consistency for notifying consumers of exemptions to these and other implemented reductions. In some cases, consumers have been verbally noticed by regional centers of termination of services and in other cases; consumers have not been informed of exemptions or the fair hearing process. Specifically, the Committee should consider clarification on what constitutes \”adequate notice.\” Adequate notice should inform the applicant, recipient, and authorized representative in writing of the action the agency proposes to take, whether the individual is eligible for an exemption waiver, exceptional funding, or other exceptions. It is recommended that the committee adopt placeholder trailer bill language, such as that proposed in attachment 1. 2. Intermediate Care Facilities-DD Billing Issue: In order for the Department to achieve the intended savings for the Expansion of Federal Funding, the approval of the Medicaid State Plan Amendment (SPA) requires Trailer Bill Language. Language provided by the DDS allows for payment of Intermediate Care Facilities for Transportation and Day Treatment Costs, modeled to the process of the Department of Health Care Services. The Department notes that the language has not been finalized. Please see attachment 2 for the most recent version. Panelists Please provide a high-level overview of the implemented proposals and fiscal outcome, but provide specific information on the highlighted proposals. For the highlighted proposals, please comment on why they were effective, why they were not effective and the impact to consumers. \u00b7 DDS Please direct your comments to the request above and respond to the questions below. \u00b7 DOF \u00b7 LAO \u00b7 Public Comment Questions: Please explain the proposed trailer bill language for the technical billing issue on the ICF-DD. (Attachment 2). Do you have updated language? Can the Department describe how exemptions are communicated to consumers and information about the fair hearing process is shared with consumers? Will the Department be on budget? Staff Recommendation: Adopt placeholder trailer bill language to clarify what constitutes notification of exemption and adopt in concept the necessary trailer bill language to resolve the ICF-DD billing issue. Attachment 1 Notification of Exceptions Section 4701 of the Welfare and Institutions Code is amended to read: 4701. \”Adequate notice\” means a written notice informing the applicant, recipient, and authorized representative of at least all of the following: (a) The action that the service agency proposes to take, including a statement of the basic facts upon which the service agency is relying, and whether or not the individual is eligible for an exemption, waiver, exceptional funding, or other exception to the action; (b) The reason or reasons for that action. (c) The effective date of that action. (d) The specific law, regulation, or policy supporting the action including any relevant exemption, waiver, exceptional funding, or other exception. Attachment 2 Intermediate Care Facilities Payment for Transportation and Day Treatment Costs Proposed Amendments Section 1. Section 4646.55 is added to the Welfare and Institutions Code to read: 4646.55 (a) Notwithstanding any other provision of law or regulation to the contrary and to the extent federal financial participation is available, effective July 1, 2007, the California Department of Developmental Services is hereby authorized to make supplemental payment to enrolled Medi-Cal providers that are licensed intermediate care facility\/developmentally disabled-habilitative, licensed intermediate care facility\/developmentally disabled-nursing or licensed intermediate care facility\/developmentally disabled for day treatment and transportation services provided pursuant to Sections 4646, 4646.5 and applicable regulations and 14132.95, to Medi-Cal beneficiaries residing in a licensed intermediate care facility\/developmentally disabled-habilitative, licensed intermediate care facility\/developmentally disabled-nursing or licensed intermediate care facility\/developmentally disabled. These payments shall be considered supplemental Medi-Cal payments to the enrolled Medi-Cal provider and paid accordingly (without a separate DDS contract). (b) Notwithstanding any other provision of law and to the extent federal financial participation is available, and in furtherance of this section and 14132.95, the Department shall amend the regional center contracts for the fiscal year 2007-08 to extend the contract liquidation period until June 30, 2011. The contract amendments and budget adjustments shall be exempt from the provisions of Article 1, (commencing with Section 4620) of Chapter 5 of Division 4.5 of the Welfare and Institutions Code. Section 2. Section 14132.925 is added to the Welfare and Institutions Code to read: (a) Notwithstanding any other provision of law or regulation to the contrary and to the extent federal financial participation is available, and in furtherance of Section 14105.06 and subdivisions (a) and (c) of Section 14132.92 effective July 1, 2007, a licensed intermediate care facility\/developmentally disabled-habilitative, a licensed intermediate care facility\/developmentally disabled-nursing or a licensed intermediate care facility\/developmentally disabled shall be responsible for providing day treatment and transportation services consistent with 14105.06 and subdivision (a) of Section 14132.92 that are selected and authorized through the individual program plan process pursuant to Sections 4646, 4646.5 and applicable regulations for each beneficiary receiving such services who resides in that licensed intermediate care facility\/developmentally disabled-habilitative, licensed intermediate care facility\/developmentally disabled-nursing or licensed intermediate care facility\/developmentally disabled. These services shall be arranged by the regional center pursuant to Sections 4646, 4646.5 and applicable regulations, and the licensed intermediate care facility\/developmentally disabled-habilitative, licensed intermediate care facility\/developmentally disabled-nursing or licensed intermediate care facility\/developmentally disabled, shall reimburse the regional center for the costs incurred in arranging for such services. Nothing herein shall authorize the licensed intermediate care facility\/developmentally disabled-habilitative, licensed intermediate care facility\/developmentally disabled-nursing or licensed intermediate care facility\/developmentally disabled to substitute day treatment or transportation services not selected and authorized through the individual program plan process pursuant to Sections 4646, 4646.5 and applicable regulations. (b) The State Department of Developmental Services shall be responsible for reimbursing a licensed intermediate care facility\/developmentally disabled-habilitative, licensed intermediate care facility\/developmentally disabled-nursing or licensed intermediate care facility\/developmentally disabled for the costs incurred pursuant to subdivision (a), (a reasonable coordination fee shall be provided method of payment TBD). This payment shall be a supplement to the Medi-Cal payment from the Department of Health Care Services described in 14105.06 and 14132.92. A licensed intermediate care facility\/developmentally disabled-habilitative, licensed intermediate care facility\/developmentally disabled-nursing or licensed intermediate care facility\/developmentally disabled may authorize the regional center to invoice the State Department of Developmental Services on its behalf for the services described in subdivision (a). The licensed intermediate care facility\/developmentally disabled-habilitative, licensed intermediate care facility\/developmentally disabled-nursing or licensed intermediate care facility\/developmentally disabled shall dispense payment to the regional center within 30 days of receipt of payment from the State Department of Developmental Services pursuant to instruction from the State Department of Developmental Services. Failure to pay the regional center within 30 days shall result in (TBD). (c) A licensed intermediate care facility\/developmentally disabled-habilitative, licensed intermediate care facility\/developmentally disabled-nursing or licensed intermediate care facility\/developmentally disabled shall report the costs incurred pursuant to subdivision (a) according to instruction from the Department of Health Care Services. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement this subdivision by means of a provider bulletin or similar instruction from the Department of Health Care Services. (d) If services meeting the conditions of subdivision (a) have been provided to a Medi-Cal beneficiary on or after July 1, 2007, and, notwithstanding Section 14115, an invoice for the day treatment and transportation services is submitted, the services shall be reimbursed. The department shall seek federal financial participation, including American Recovery and Reinvestment Act money, pursuant to a federally approved state plan amendment authorizing reimbursement for these services provided during that period. Upon approval of the amendment the payments made pursuant to this section shall be subject to the Quality Assurance fee provided for in Health and Safety Code Sections 1324 through 1324.14. If federal financial participation is not made available for that period, the services nonetheless shall be reimbursed from the General Fund by the Department of Developmental Services. (Note: This subsection is placeholder language that may need DHCS edits) Section 3. Due to a change in the availability of federal funding that addresses the ability of California to capture additional federal financial participation for day treatment and transportation services provided to a Medi-Cal beneficiary residing in a licensed intermediate care facility\/developmentally disabled-habilitative, a licensed intermediate care facility\/developmentally disabled-nursing or a licensed intermediate care facility\/developmental disability, as specified in Section 4646.55 and 14132.925, funds appropriated in Item 4300-101-0001, Budget Act of 2007 (Chapters 171 and 172, Statutes of 2007), shall be available for liquidation until June 30, 2011. 5180 Department of Social Services 0530 Office of Systems Integration Issue 1: IHSS Related Changes in SFIS This issue was considered at the April 21, 2010 Subcommittee hearing and was held open at that time. To recap, the Governor’s budget for 2009-10 includes, in a Budget Change Proposal, an increase in OSI spending authority of $8.2 million ($4.4 million GF) for the use of SFIS to collect fingerprint images from In-Home Supportive Services (IHSS) recipients. These funds were already included in the DSS budget, but there was no conforming authority for SFIS or for OSI’s project management role. The Administration is awaiting a formal response from the federal government with respect to its willingness to financially participate in these proposed expenditures, and future, ongoing anticipated costs. The total SFIS budget for 2009-10 includes $20.1 million ($9.5 million GF). The administration also requests position authority for four new SFIS-related positions at OSI. Two of the positions would replace 1.5 contract staff who provide training coordination and application support for the use of SFIS in the CalWORKs, Supplemental Nutrition Assistance, and General Assistance\/General Relief programs. The state has contracted these duties out for the last decade. Funded as part of the $8.2 million mentioned above, the other two positions would support new sites and equipment to begin the use of SFIS for IHSS recipients. OSI currently has five permanent staff members assigned to SFIS and oversees six additional contract staff who work the equivalent of three full-time positions. background SFIS is a statewide automated system that was created in response to the requirements of SB 1780 (Chapter 206, Statutes of 1996) for applicants and recipients of California Work Opportunity and Responsibility to Kids (CalWORKs) and Food Stamp program benefits to be fingerprint imaged as a condition of eligibility for those programs. OSI provides state-level project management and oversight for SFIS. The state recently entered into a new contract for its maintenance and operations for eight years from September 2009 until September 2017. The fingerprint images contained in SFIS are used to verify eligibility and to check for duplicate aid applications by one individual. The Administration states that the existence of the fingerprint requirements and of the SFIS system deter a significant amount of fraud. A 2003 audit by the Bureau of State Audits found that DSS implemented SFIS without determining the extent of duplicate-aid fraud throughout the State, and that Social Services did not implement SFIS in a manner that would allow it to collect key statewide data during its implementation of SFIS. The auditor was therefore unable to determine whether SFIS generates enough savings from deterring individuals from obtaining duplicate aid to cover the estimated $31 million the State has paid for SFIS or the estimated $11.4 million the State will likely pay each year to operate it This issue was discussed in the May 5, 2010 Subcommittee agenda in the context of all of the IHSS program changes adopted as part of the 2009-10 Budget agreement. Outstanding questions and areas of concern were outlined in the agenda and discussed in the hearing. Recipient Fingerprinting Requirements. Among these program changes made in 2009 was the requirement, beginning April 1, 2010, for finger imaging of IHSS consumers. Under the requirements of ABx4 19 (Chapter 17, 4th Extraordinary Session, 2009), this fingerprinting must take place in the new consumers’ homes at the time of their initial assessment for eligibility. Current consumers (460,000) were to be finger imaged at their next reassessment, conducted annually and also in the home. These statutes included exemptions for minors and those physically unable to provide fingerprints due to amputation. They do not require a picture image to be taken of the consumer. Finally, the statutes require DSS to consult with county welfare departments to develop protocols to carry out these requirements. As discussed in the aforementioned April 21 and May 5 hearings, the administration is currently conducting pilots to test mobile fingerprint imaging devices, each costing $5,000, that would allow for implementation of these requirements by gathering fingerprints and photo images in recipients’ homes, to later be uploaded into SFIS. DSS has stated that it intends to utilize social worker and consumer feedback gathered during the pilots to inform its policies and protocols for larger-scale implementation of the new fingerprinting requirements; however, the timelines, specifics, and costs of the ultimate roll-out are still unknown. Panelists \u00b7 DSS and OSI Please be prepared to address the following in your testimony: \u00b7 What efforts did the Administration undertake to measure the occurrence of duplicate aid fraud in the IHSS program prior to proposing the requirements for recipient fingerprinting? \u00b7 On what did the Administration base its estimates for the costs and savings from implementing these fingerprint requirements? \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment Staff Recommendation: Staff recommends rejection of the $8.2 million ($4.4 million GF) in OSI spending authority for 2009-10 and $5.65 million ($2.9 million GF) included in 2010-11, and any additional associated funding, for the purposes of fingerprinting IHSS recipients. Furthermore, sweep any funds in the DSS budget that have not yet been spent (or obligated for reimbursement). Adopt corresponding placeholder trailer bill language to repeal the statutory requirement for fingerprinting recipients and the requirement for fingerprints on timesheets (Sections 12305.73 and subdivision (c) of 12301.25 of the Welfare and Institutions Code, respectively). Hold open the requested conversion of contract authority to state staff for future action. This action conforms to the Senate action taken on May 6, 2010. Issue 2: DSS Spring Finance Letter State Hearings DSS is proposing, in an April 1 Finance Letter, statutory changes to \”modify the existing penalty structure for state hearings, providing more flexibility when there are sudden increases or decreases in caseload, and ensure that penalty payments are only provided to recipients who have gone without benefits while awaiting a state hearing\” and to \”allow all state hearing requests to be held by video conference, unless a finding of good cause is made to require face-to-face hearing.\” If the Legislature does not adopt these program changes, the administration seeks additional funding for unbudgeted penalty costs and personnel costs to travel to each county hearing location for face-to-face hearings, which DSS states that it is unable to absorb within its existing resources. background The State provides due process to recipients of California welfare benefits through state hearings conducted by DSS. These requirements are mandated by statute and regulations. The State Hearings Division (SHD) is required to provide full, impartial, and timely state hearings to recipients and applicants of various California public assistance programs who have disputes with their local county welfare departments or with a state program administering the benefit. The primary programs include CalWORKs, the Food Stamp program, Medi-Cal, In-Home Supportive Services, and Foster Care\/Adoption Assistance Program. Federal mandates require that all requests for hearings be adjudicated within 90 days of a recipient’s request, except Food Stamp cases which must be completed within the federally mandated timeframe of 60 days. Two court orders, King v. McMahon and Ball v. Swoap, impose financial penalties on DSS for failure to adjudicate 95 percent of all hearing decisions within the 60 to 90 day time frame. The daily penalty rate starts at $5.00 per day. Panelists \u00b7 DSS Please briefly outline the proposal and then address the questions listed below. \u00b7 Legislative Analyst’s Office \u00b7 Department of Finance \u00b7 Public Comment Possible Questions \u00b7 How much is each proposed change expected to save? What is the methodology for this? Does it account for the additional costs of videoconferencing and training? \u00b7 How is good cause defined? Who determines this? How does SHD and DSS ensure that this is a uniform standard? How is it evaluated? \u00b7 Has there been an increase in claims by either claimants or counties? If so, in which programs? \u00b7 Is there a relationship between the hearing limits requested by DSS and the actual cause of the increase in penalties? \u00b7 To what degree are the DSS proposals a result of the highly controversial changes made last year in CalWORKs, IHSS, Medi-Cal, child welfare, Healthy Families and other health and human service programs? \u00b7 If equipment and maintenance is not available, as well as the ALJs to go with it, could this proposal lead to extensive delays in getting hearings scheduled, and then started in a timely manner, leading to even higher penalty costs as well as an additional burden on the claimants? \u00b7 What percentage of the caseload are Aid Paid Pending? What ensure timely decisions in these cases under the proposal? Staff Recommendation: Due to the scope of the changes being proposed, the lack of detail in the proposal, and the questionability of proposing these changes in a budget context, staff recommends that the Subcommittee reject the State Hearings Spring Finance Letter on the basis that this proposal requires careful, thorough consideration through the policy process. In light of the increased demands for state hearings, assumed to be due in part to the programmatic changes adopted as part of the 2009-10 Budget and limited state resources, provide funding in 2010-11 for three additional ALJs ($450,000 total funds, approximately $215,500 GF), to assist with workload. Issue 3: BCP #3 CWS Web Project To support the development of CWS\/Web, the Governor’s 2010-11 budget for DSS requests, in a budget change proposal, $436,000 ($199,000 GF) to: 1) establish one two-year limited-term position, 2) extend an existing managerial position for another two-year limited term, and 3) augment by $240,000 DSS contracts with county consultants. As the Committee discussed on April 21, 2010, the Governor’s budget for CWS\/Web project management by Office of Systems Integration (OSI) additionally requests $1.8 million ($827,000 GF) for 10 new positions. The 2009-10 budget for CWS\/Web is $7.1 million ($3.2 million GF). OSI estimates a total cost of $202.8 million ($91.9 million GF) between 2012 and 2014 to complete implementation of CWS\/Web and enter its maintenance and operations (M&O) phase. background Stated Rationale for Additional Resources. The federal Department of Health and Human Services, Administration for Children and Families (ACF) has expressed concerns that the CWS\/Web project is significantly understaffed in terms of programmatic and technical resources. DSS currently has seven staff members to assist with its programmatic support for CWS\/Web planning. The Department anticipates that their workload will increase dramatically as the project advances into its design and implementation phases. The Department intends for one of the requested positions to be filled by an individual with knowledge of the adoptions process who can participate in the design, development, testing, training, and implementation activities of the adoptions component of the new CWS\/Web system. The request to extend authorization of the second position is for a manager to provide supervision to this individual, as well as three other staff members. Panelists \u00b7 DSS Please briefly describe the requested resources and related communications with ACF. \u00b7 Legislative Analyst’s Office \u00b7 Department of Finance \u00b7 Public Comment Staff Recommendation: Consistent with the Subcommittee’s vote on April 21, 2010 regarding the requested resources for additional OSI staff to support CWS\/Web development, staff recommends holding this issue open pending May Revision. Issue 4: DSS BCP #4 EBT System Ongoing Maintenance The overall budget for the EBT system in 2009-10, including project management, is $47.3 million ($27.0 million GF\/TANF). The Administration requests, in a Spring Finance Letter dated April 1, 2010, a decrease of $10.3 million ($2.4 million GF) in that same year to both the Department of Social Services Local Assistance budget and corresponding OSI spending authority. The proposed 2009-10 decrease is a result of cost reductions under a new contract. The Administration also requests a decrease of $20.9 million ($5.4 million GF) in DSS Local Assistance and a corresponding reduction of $19.7 million in OSI Spending Authority for 2010-11. The proposed 2010-11 decrease includes contract cost changes, as well as the expiration of limited-terms for staff and the completion of other transition-related tasks. The Governor’s budget for 2010-11 also proposes $177,000 ($66,000 GF) to extend, for another two years, two existing limited-term positions that support the EBT system at DSS. One position would continue to provide program support to the counties and the other to OSI. DSS has sought, and been granted authority for, extensions of these two limited-term positions six times since the EBT system was mandated in 1997. background The EBT system eliminates the need for coupons or checks to deliver Supplemental Nutrition Assistance Program (food stamps) and cash aid benefits. Instead, the EBT system provides benefits through automated teller machines (ATMs) and point-of-sale terminals (e.g., in grocery stores). The EBT system works by automating benefit authorization, delivery, redemption, and settlement processes through computers, plastic debit cards, and telecommunications technology. OSI provides state-level project management and oversight for the system. Changes in EBT Contract Costs: The proposed cost reductions in 2009-10 and 2010-11 are due to the transition of EBT services to a new contract (from J. P. Morgan Electronic Financial Services, Inc. [JPMorgan EFS] to ACS State and Local Solutions, Inc. [ACS]). The lowered costs are reflective of decreased costs for EBT services nationwide since 2000, when California executed its first EBT contract with Citicorp (later taken over by JPMorgan EFS). They also reflect a change from an unbundled cost structure (with differing rates for food benefits only, cash benefits only, and combined food and cash benefits, along with various other costs for related services and equipment) to a bundled rate (e.g. eliminated some costs for related services and equipment and are bundled in the benefit costs). Panelists \u00b7 DSS and OSI Please briefly outline the proposal and then address the questions listed below. \u00b7 Legislative Analyst’s Office \u00b7 Department of Finance \u00b7 Public Comment Possible Questions \u00b7 Have there been any system issues that have caused benefits to be denied to recipients? What are the problems due to? \u00b7 Is there a plan to fix and what is it? Is there a corrective action plan from the vendor, ACS? \u00b7 How many times did this problem or others occur in implementation? How many times has it occurred since the system change in September? \u00b7 Please walk through how a recipient could be affected if there is a system-related benefit denial at a grocery check-out. \u00b7 What communication and\/or contract changes have occurred with the vendor to ensure that disruptions in service are minimized? \u00b7 What communications occur with the county, banks, and grocery vendors on these issues? \u00b7 What communications occur with the recipients to inform them of the problems? How does the state and vendor ensure that recipients calling in distress receive the most up to date and relevant information? Staff Recommendation: Staff recommends approving the requested budget decreases contained in the OSI request, as well as the proposed extension of the two limited-term positions at DSS. Adopt Supplemental Report Language requiring OSI and DSS to provide an update to the Legislature and to stakeholders, including CWDA, CSAC, WCLP, and the California Food Policy Advocates, on (1) efforts with the vendor to limit disruption in EBT benefit access, (2) communications with counties about any problems and resolutions as they arise, and (3) how consumers are being informed of issues and recourse when disruptions do occur. [image: image1.png] 27 Assembly Budget Committee ”

pdf March 18, 2010 Senate Sub. #3 Hearing Outcomes

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” SUBCOMMITTEE #3: Health & Human Services Chair, Senator Mark Leno Senator Elaine K. Alquist Senator Roy Ashburn March 18, 2010 – Actions Taken (Committee Staff : Jennifer Troia) 0530 Health & Human Services Agency, Office of Systems Integration (OSI) & 5180 Department of Social Services (DSS) Interim Statewide Automated Welfare System (ISAWS) & ISAWS Migration Project Approved (2-0) (Ashburn absent) the proposed changes to the ISAWS Migration budget for 2010-11. Held open the 2010-11 funding for ISAWS open pending anticipated changes in the May Revision. CalWORKs Information Network System (CalWIN) Approved (2-0) (Ashburn absent) the proposed changes to the CalWIN budget. LEADER Consortium Replacement System (LRS) Held issue open. Child Welfare Services\/Web (CWS\/Web) Project Held issue open. 4140 Office of Statewide Health Planning Medical Information Reporting (MIRCal) System Approved (2-0) (Ashburn absent) the requested authority to convert funds for contract staff to three permanent state positions. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 2 of 3 Song-Brown Program Approved (2-0) (Ashburn absent) the proposal to continue to offset General Fund (GF) spending for the Song-Brown program. Vocational Nurse Education Fund (VNEF) Approved (2-0) (Ashburn absent) the request for additional VNEF special fund expenditure authority. 4170 Department of Aging (CDA) Medicare Beneficiary Outreach and Assistance Program Approved (2-0) (Ashburn absent) the request for federal funds authority to allow the state to draw down these grant funds. Federal Grant for Services to Families Impacted by Alzheimer’s Disease and Related Dementias Approved (2-0) (Ashburn absent) the request for federal funds authority to allow the state to draw down these grant funds. Implementation of Vetoed Funds for Community Based Services Programs (CBSP) No action taken. This Issue was included for oversight and informational purposes. Multi-Purpose Senior Services Program (MSSP) Rejected (2-0) (Ashburn absent) the proposal to transfer program funds to the Department of Health Care Services, but approved an alternative technical fix developed by DoF and the Departments of Aging and Health Care Services. The alternative technical fix would create a new program within CDA’s budget for Medi-Cal program funding and revise Provision 2 of Item 4170-101-0001 of the Budget Bill. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 3 of 3 5180 Department of Social Services (DSS) CalWORKs- Delay of Work Incentive Nutrition\/Pre-Assistance Employment Readiness (WINS\/PAERS) and Temporary Assistance Program (TAP) Approved (2-0) (Ashburn absent) the proposed delays of WINS\/PAERS and TAP, but rejected the proposed deletion of Section (g) PAERS language. CalWORKs State and County Peer Review Process Held issue open. Trigger Proposal to Eliminate the In-Home Supportive Services (IHSS) Program Rejected (2-0) (Ashburn absent) the proposal to authorize a trigger that would fully eliminate the IHSS program if the Department of Finance determined that the state would not receive $6.9 billion in new federal funds. Trigger Proposal to Eliminate CalWORKs Rejected (2-0) (Ashburn absent) the proposal to authorize a trigger that would fully eliminate the CalWORKs program if the Department of Finance determined that the state would not receive $6.9 billion in new federal funds. Trigger Proposal to Eliminate Transitional Housing Program Plus (THP+) for Former Foster Youth Rejected (2-0) (Ashburn absent) the proposal to authorize a trigger that would fully eliminate the THP+ program if the Department of Finance determined that the state would not receive $6.9 billion in new federal funds. IHSS Anti-Fraud \/ Program Integrity Rejected (2-0) (Ashburn absent) the Administration’s proposal for six new positions and held open the request for authority to contract for support in developing the required report. IHSS – Conlan II Claims Held issue open. ”

pdf March 18, 2010 Senate Sub. #3 Hearing Agenda

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” SUBCOMMITTEE #3: Health & Human Services Chair, Senator Mark Leno Senator Elaine K. Alquist Senator Roy Ashburn March 18, 2010 9:30 a.m. or Upon Adjournment of Session Room 4203 Committee Staf f : Jennifer Troia Item Department 0530 Health and Human Services Agency – Office of Systems Integration 4140 Office of Statewide Health Planning and Development 4170 Department of Aging 5180 Department of Social Services (See Table of Contents on page 2 for More Specific Listing of Issues.) Please note: The Committee will discuss only the items contained in this agenda at this hearing. Please see the Senate File for dates and times of subsequent hearings. The Committee will discuss the issues in the order noted in the agenda, unless otherwise directed by the Chair. Pursuant to the Americans with Disabilities Act, individuals who, because of a disability, need special assistance to attend or participate in a Senate Committee hearing, or in connection with other Senate services, may request assistance from the Senate Rules Committee, 1020 N Street, Suite 255 or by calling 916-324-9335. Requests should be made one week in advance whenever possible. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 2 of 30 Agenda (Vote-Only Items indicated by *) Item Department Page 0530 Health and Human Services Agency – Office of Systems Integration 1. Interim Statewide Automated Welfare System (ISAWS) & ISAWS Consortium Migration Project* ..3 2. CalWORKs Information Network (CalWIN)* 4 3. Overview of SAWS ..11 4. LEADER Consortium Replacement System (LRS) 12 5. Child Welfare Services (CWS)\/Web Project 14 4140 Office of Statewide Health Planning and Development 1. Medical Information Reporting (MIRCal) System* ..5 2. Song-Brown Program* .5 3. Vocational Nurse Education Fund* 6 4170 Department of Aging 1. Medicare Beneficiary Outreach and Assistance Program* 7 2. Federal Grant for Services to Families Impacted by Alzheimer’s Disease and Related Dementias* .8 3. Community Based Services Programs Update 16 4. Multi-Purpose Senior Services Program Budget Change Proposal .18 5180 Department of Social Services 1. CalWORKs- Work Incentive Nutrition (WINS) and Temporary Assistance Programs (TAP)* 9 2. CalWORKs State and County Peer Review Process* 10 3. Overview of Trigger Proposals 20 4. Trigger Proposals to Eliminate: a. In-Home Supportive Services Program (IHSS) ..21 b. California Work Opportunities and Responsibilities to Kids Program (CalWORKs) .23 c. Transitional Housing Program Plus (THP+) .25 5. IHSS – Anti-Fraud \/ Program Integrity Budget Change Proposal ..27 6. IHSS – Conlan v. Shewry Budget Change Proposal 30 Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 3 of 30 Vote-Only Agenda 0530 Health & Human Services Agency, Office of Systems Integration (OSI) & 5180 Department of Social Services (DSS) OSI & DSS Issue 1: Interim Statewide Automated Welfare System (ISAWS) & ISAWS Migration Project Budget Issue: OSI requests to reduce the budget for the ISAWS Migration project by $75.4 million ($45.2 million GF\/TANF) as a result of the completion of implementation activities. In 2009-10, Development and Implementation costs for the ISAWS Migration are budgeted to be $94.9 million, while Maintenance and Operations (M&O) costs are $11.0 million. By contrast, after the Migration is fully implemented in 2010-11, the Governor’s budget includes $11.4 million for Development and Implementation (a decrease of $83.5 million) and $19.1 million for M&O (an increase of $8.1 million). The Governor’s budget for 2010-11 also continues $23.9 million ($12.9 million GF\/TANF) in full-year funding for ISAWS. OSI has indicated, however, that the ISAWS budget for 2010-11 will be reduced in the May budget revision to instead include a significantly lower amount of closing costs and contingency funding in case of delays in the final stages of the Migration. Background on ISAWS: ISAWS is one of four consortia within the Statewide Automated Welfare System (SAWS), which is described on page 11 of this agenda. This Migration project is transitioning 35 ISAWS consortium counties to another SAWS consortium called C-IV. After the migration, C-IV will have 13,050 users and include information for approximately 28 percent of clients statewide (according to 2007-08 data). The ISAWS Migration planning phase occurred between July 2006 and June 2008. Implementation began in October 2008, with the actual transition going live in three waves during fiscal year 2009-10. The first of these waves took place in November 2009 and the last is scheduled to take place in June 2010. The Migration Project has provided two months of technical support after each of the waves that have happened to date. Subcommittee Staff Comment & Recommendation: Staff recommends approval of the proposed changes to the ISAWS Migration budget for 2010-11. Staff also recommends holding the 2010-11 funding for ISAWS open pending anticipated changes in the May Revision. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 4 of 30 OSI & DSS Issue 2: CalWORKs Information Network system (CalWIN) Budget Issue: OSI requests budget changes and technical adjustments resulting in an increase of CalWIN funding authority by $1.5 million for 2009-10 and $4.2 million for 2010-11. The total proposed 2010-11 budget for CalWIN is $74.3 million ($38.8 million GF\/TANF). Background: Cal-WIN is the automation system that supports the Welfare Client Data System, one of four consortia within the Statewide Automated Welfare System (SAWS). Again, an overview of SAWS is presented on page 11 of this agenda. CalWIN serves 18 counties with approximately 39 percent of the statewide caseload. The requested adjustments are a result of the following factors: \ufffd As a result of negotiations with the CalWIN vendor in anticipation of contract extension, the price per case increased from $0.67 to $.75. This change accounts for $2.3 million of the requested increase in 2010-11. \ufffd The caseload for the consortium’s counties is projected to grow more than previously anticipated (by 5.3 percent, rather than 3.5 percent in the budget year). This accounts for a $1.5 million increase in 2010-11. \ufffd A higher amount of the 2009-10 budget cuts to the aggregate SAWS consortia system were originally allocated to CalWIN than is the case today. Another consortium, C-IV, instead experienced a greater reduction than was originally anticipated. This accounts for the $1.5 million adjustment in the current year. Subcommittee Staff Comment & Recommendation: Staff recommends approval of the proposed budget increases for CalWIN. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 5 of 30 4140 Office of Statewide Health Planning With a total budget of $98.8 million ($126,000 GF) in 2009-10 and a proposed budget of $102.2 million ($75,000 GF) in 2010-11, OSHPD develops plans, policies and programs to assist healthcare systems in meeting Californians’ needs (e.g., by ensuring facility safety and investing in professional development). OSHPD Issue 1: Medical Information Reporting (MIRCal) System Budget Issue: OSHPD requests budget authority of $343,000 of California Health Data and Planning Special Funds (CHDPF) to transition some of the existing staffing for maintenance and enhancement of the Medical Information Reporting (MIRCal) system from contracted vendor services to three new, permanent state positions. The total CHDPF budget for 2009-10 is $26.2 million (all special fund from health facilities fees). The total MIRCal external contract budget for 2009-10 includes $482,200 of these funds. Background: OSHPD implemented the MIRCal system in 1998 to collect and disseminate data on patients discharged from California’s licensed hospitals, Emergency Departments, and Ambulatory Surgery Centers. Up to five contract staff at a time currently program and administer the system. OSHPD states that it struggles each year with the time it takes to procure and manage a vendor contract and that the state would benefit from a stronger knowledge base among its own staff. Subcommittee Staff Comments & Recommendation: Staff recommends approval of the requested authority to convert funds for contract staff to three permanent state positions. OSHPD Issue 2: Song-Brown Program OSHPD Budget Issue 2: OSHPD requests, for 2010-11, to continue funding the Song- Brown Program with special funds from the California Health Data and Planning Fund (CHDPF), instead of the GF. Total Song-Brown funding is $5 million ($4.7 million for local assistance and $349,000 for state operations). Again, the total CHDPF budget for 2009-10 is $26.2 million (all special fund from health facilities fees). Background: The Song-Brown Program’s goal is to increase the number of family practice physicians, primary care physician assistants, family nurse practitioners, and registered nurses in areas of the state that are medically underserved (e.g., rural and low-income communities). Providers with Song-Brown training and education deliver primary care services through the University of California’s teaching hospitals, 61 percent of county facilities, and a number of community health centers. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 6 of 30 Subcommittee Staff Comments & Recommendation: To continue to offset GF spending for the Song-Brown program, staff recommends approval of this proposal. OSHPD Issue 3: Vocational Nurse Education Fund Budget Issue: OSHPD requests an increase in Vocational Nurse Education Fund (VNEF) expenditure authority of $40,000 in 2010-11 and future years to fund additional scholarship and loan repayment awards. The total VNEF revenue is approximately $165,000 annually (all fee based). Background: The Vocational Nurse Education Program (VNEP) is one of the programs administered by the Health Professions Education Foundation, which is a non-profit foundation housed at OSHPD. The Legislature created the Foundation to encourage individuals from underrepresented communities to become health professionals. The Foundation’s programs are supported by grants, donations, licensing fees, and special funds. The VNEP, in particular, is supported by a $5 license renewal fee that OSHPD collects from the Board of Vocational Nursing and Psychiatric Technicians. Since its inception, VNEP has awarded 62 scholarships and loan repayments to vocational nurses who agree to work in medically underserved areas of the state for two years. The requested spending authority would allow OSHPD to fund approximately 10-14 additional scholarship and loan repayment awards. Subcommittee Staff Comments & Recommendation: Staff recommends approval of the request for $40,000 in VNEF expenditure authority. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 7 of 30 4170 Department of Aging (CDA) CDA Issue 1: Medicare Beneficiary Outreach and Assistance Program Budget Issue: CDA requests, in a budget change proposal, 2010-11 federal funding authority of $672,000 for the second year of its Medicare Improvements for Patients and Providers Act (MIPPA) Beneficiary Outreach and Assistance Program. The first half of the $1.3 million total grant was allocated for expenditure in 2009-10. No state matching funds are required. Background: The federal government has awarded a two-year, non-competitive grant to CDA. The purpose of the funding is to expand enrollment of California’s 4.4 million Medicare beneficiaries in the Prescription Drug Benefit Low Income Subsidy Program (LIS) and Medicare Savings Programs (MSP). Local Area Agencies on Aging (AAA), Health Insurance Counseling Programs (HICAP), and Aging and Disability Resource Centers are conducting the grant-funded work, which varies based on local need. The federal government requires states to submit quarterly data on the number of low- income subsidy applications by beneficiaries as a result of assistance from these organizations. From July 1, 2009 to January 28, 2010, 1,414 applications for California beneficiaries were submitted. This constitutes 22 percent of the state’s two-year goal of 6,475 applications. CDA states that it anticipates achieving the statewide performance benchmarks in time to secure second year funding. Subcommittee Staff Comment & Recommendation: So that the state will be able to draw down these grant funds from the federal government, staff recommends approval of $672,000 in related 2010-11 federal funds authority for CDA. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 8 of 30 CDA Issue 2: Federal Grant for Services to Families Impacted by Alzheimer’s Disease and Related Dementias Budget Issue: CDA requests, in a budget change proposal, federal funds authority of $332,000 (of which $17,000 is state operations and the rest is local assistance) in 2010- 11, $333,000 in 2011-12 ($17,000 for state operations), and $106,000 in 2012-13 ($4,000 for state operations). The requested authority for these fiscal years, plus additional funds the Department is seeking for the current fiscal year through a letter to the Joint Legislative Budget Committee, totals $996,132 that the federal Administration on Aging has awarded California under a three-year, competitive demonstration grant. Federal law requires state grantees to provide a match (cash or in-kind) of 25, 35, and 45 percent in the first, second, and third years of the grant period, respectively. According to CDA, California Alzheimer’s Association chapters have agreed to provide these required matches. The Department is not requesting any GF resources for that purpose. Background: The goal of the federal grant is to replicate an evidence-based supportive services program to assist caregivers of persons with dementia that was initially conducted in New York. The program in New York (called the New York University Caregiver Intervention) included individual and family counseling, as well as support groups and ad hoc telephone counseling, for caregiver spouses. These interventions resulted in substantially reduced or delayed nursing home placements (at an average annual cost of $65,000 nationally in 2006) for individuals with dementia. CDA estimates that 330 California families will directly benefit from the care consultation and referrals provided by Alzheimer’s Association chapters and community service organizations as a result of this grant funding. Subcommittee Staff Comment & Recommendation: To allow CDA to receive and utilize these federal grant funds, staff recommends approval of this proposal. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 9 of 30 DSS Issue 1: CalWORKs- Delay of Work Incentive Nutrition\/Pre- Assistance Employment Readiness (WINS\/PAERS) and Temporary Assistance Program (TAP) Budget Issue: DSS proposes, in trailer bill language, to delay implementation of WINS and TAP, two CalWORKs-related programs. The Department also proposes to eliminate PAERS requirements. The proposed delays would extend delays enacted last year in ABx4 4 (Chapter 4, Fourth Extraordinary Session, Statutes of 2009). The proposed changes in WINS implementation dates would also push back approximately $2 million GF costs for automation changes. After those automation changes in the first year, the department estimates costs (countable as Maintenance of Effort [MOE] for the federal Temporary Assistance for Needy Families [TANF] program) of $18 million in the second year of WINS and $28.4 million each year thereafter. If excess-MOE funds are available when it is implemented, TAP is effectively cost- neutral to the state because funds for the program ($220 million in recipient benefits and $5.3 million in automation expenses) are already included in the CalWORKs budget. GF resources that would otherwise be used to meet the MOE would instead be shifted to fund the solely-state funded TAP (which is not countable as MOE). Background on WINS and TAP: Under WINS, which was originally authorized in 2008 (AB 1279, Chapter 759, Statutes of 2008), the state would pay 100 percent of the costs of a $40 food assistance benefit paid to families receiving food stamps in which at least one parent or caretaker is work eligible (as defined in TANF) and meets work participation requirements. The related PAERS working group was created to explore options for offsetting a potential increase in the state’s CalWORKs caseload (and possible resulting decrease in its federal caseload reduction credit) resulting from WINS. As a result of the proposed delays, the Department would be prohibited from paying WINS benefits prior to October 1, 2012, with full implementation required by April 1, 2013 (instead of existing dates of October 1, 2011 and April 1, 2012). TAP was authorized in the 2006 human services trailer bill (AB 1808, Chapter 75, Statutes of 2006) as a voluntary program to provide cash aid and other benefits with solely state funding to a group of current and future CalWORKs recipients who are exempt from state work participation requirements (previously estimated to apply in 24,000 cases). TAP was intended to allow these recipients to receive the same assistance benefits through TAP as they would have under CalWORKs, but without any federal restrictions or requirements. As a result of TAP, California would improve its TANF work participation rate (WPR). To date, implementation complexities, largely due to challenges with child support automation, have prevented TAP from moving forward. As a result, trailer bill language has been adopted for three years to delay TAP implementation. This proposal would delay TAP implementation by an additional year, to begin no later than October 1, 2012. TANF Reauthorization: Congress must take action by September 30, 2010 to reauthorize the TANF block grant. It is important to note, however, that President Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 10 of 30 Obama’s February 1, 2010 budget proposed a one-year extension of TANF (which, if enacted, could result in a one-year delay of the larger reauthorization discussion that stakeholders previously anticipated would happen in 2010). Subcommittee Staff Comment and Recommendation: Given the potential changes on the horizon at the federal level, staff recommends that the Subcommittee approve the proposed delays of WINS\/PAERS and TAP. However, consistent with last year’s actions, staff recommends rejecting the proposed deletion of Section (g) PAERS language, as pre-assistance programs may be viable and important options for the state to explore before implementing WINS. DSS Issue 2: CalWORKs State and County Peer Review Process Budget Issue: DSS proposes to reduce 2009-10 funding for the state and county CalWORKs peer review process to $37,000 (TANF funds) and to de-fund the program entirely in 2010-11. The 2009-10 budget for the program was $221,000 (TANF) in local assistance funding for the counties. DSS also proposes trailer bill language to suspend the statutory requirement for the Department to implement the process statewide by July 2007 and to instead require its implementation only in the year for which a sufficient appropriation is made in the Budget Act. Background: A 2006 budget trailer bill (AB 1808, Chapter 75, Statutes of 2006) required DSS to establish a state and county peer review process statewide by July 1, 2007. The purpose was to assist counties in implementing best practices and improving their performances in the CalWORKs program. Given the $221,000 appropriation for 2009-10, the Department anticipated that 18 peer reviews would be conducted. Under this proposal, three reviews would be conducted in 2009-10 and none would occur in 2010-11. Subcommittee Staff Comments & Recommendation: Staff recommends holding this issue open. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 11 of 30 Discussion Agenda 0530 Health & Human Services Agency, Office of Systems Integration (OSI) & 5180 Department of Social Services (DSS) With a total budget of $251.9 million (OSI Fund, transfers from other mixed sources) in 2009-10 and a proposed budget of $271.6 million in 2010-11, OSI procures and manages automation projects for the Departments of Social Services and Employment Development. Overview of Statewide Automated Welfare System (SAWS) Overview of SAWS: The total 2009-10 maintenance & operations (M&O) budget for SAWS is $174.7 million ($93.5 million GF\/TANF). These figures include costs for each of the four consortia plus the Welfare Data Tracking and Implementation Project and the impact of a combined $11.6 million ($4.5 million GF) reduction that was part of the enacted budget. These figures do not include SAWS statewide project management or upgrade and replacement projects. As a point-in-time snapshot, those additional costs in 2009-10 were $113.7 million ($66.7 million GF\/TANF). OSI provides state-level project management and oversight for SAWS, which automates the eligibility, benefit, case management, and reporting processes for a variety of health and human services programs operated by the counties, including the CalWORKs welfare-to-work program, Food Stamps, Foster Care, Medi-Cal, Refugee Assistance, and County Medical Services. There are currently four SAWS consortia. After ISAWS finishes its migration into C-IV (anticipated to occur in June 2010, with some close-out funding for ISAWS remaining in 2010-11; see page 3), there will be three consortia systems that each contain information for roughly one-third of the statewide caseload. Plan for Centralized Eligibility: As proposed by the Governor, a 2009-10 trailer bill (ABx4 7, Chapter 7, Fourth Extraordinary Session, Statutes of 2009) required DSS and the Department of Health Care Services (DHCS), in consultation with stakeholders, to develop a comprehensive plan for a statewide eligibility and enrollment determination process for CalWORKs, Medi-Cal, and food stamps. The Departments are required to submit the plan to the Legislature at least 45 days prior to requesting an appropriation to fund activities associated with the plan. Subcommittee Staff Comment and Recommendation: This issue is included for informational purposes, and no action is recommended. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 12 of 30 OSI & DSS Issue 1: LEADER Consortium Replacement System (LRS) Budget Issue: OSI requests an increase of $44.3 million as the planning phase of the LRS project ends and the design, development and implementation phase begins. Including the proposed resources, the 2010-11 budget for LRS would be $45.6 million ($23.3 million GF\/TANF). This proposal also includes an additional six-month delay of the beginning of the system’s development (beyond a six-month delay enacted in the 2009-10 budget). The 2009-10 LRS project planning budget is $1.3 million ($671,000 GF\/TANF). OSI anticipates total average costs for LRS development and implementation of $102.2 million annually, for a total of $408.6 million over four years ($208.6 million GF\/TANF, $173.3 million federal funds and $26.7 million county funds) before reaching the M&O phase of the project after December 2014. Although the differing functionalities of the systems make direct comparison difficult, it is worth noting that OSI estimates higher annual operations costs for LRS than those for LEADER. Background on LEADER: With 2009-10 and 2010-11 M&O costs of $30.7 million ($15.7 million GF\/TANF) each fiscal year, LEADER is one of four consortia within SAWS. Los Angeles (LA) County entered into an agreement for Unisys to develop LEADER in 1995 and completed countywide implementation of the system in 2001. The system has been in its M&O phase since that time, with its latest Unisys contract scheduled to expire April 30, 2011. To accommodate the LRS schedule, OSI will seek approval to again extend that contract for four additional years through April 30, 2015. Background on LRS Project: The Legislature has appropriated a total of $5.3 million ($2.7 million GF\/TANF) between fiscal years (FY) 2005-06 and 2009-10 to support the planning process for a new system to replace LEADER. After the February 2009 budget agreement delayed LRS activities for six months, Los Angeles began negotiations for an LRS contract with a vendor in late 2009. Those negotiations are in progress and could result in lower cost estimates. OSI now expects to conclude planning activities at the end of 2010 and to begin design, development, and implementation of the LRS project in January 2011. OSI anticipates that the project could be completed in December 2014. LA County intends for LRS to replace not only LEADER, but also the Greater Avenues for Independence (GAIN) Employment and Reporting System (GEARS) for its welfare- to-work program, as well as its General Relief Opportunities for Work (GROW) system, and to contain options for other functionalities. GEARS is currently funded with $9.2 million TANF funds, while GROW is funded with $2 million county-only funds. Need for LRS: According to OSI and LA County, LEADER technology is outdated and cumbersome. LRS will streamline LA’s business practices, eliminate duplicative data entry, and minimize errors. OSI also indicates that LRS will expand clients and service providers’ ability to apply for benefits or report case changes online. In addition, LRS Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 13 of 30 will minimize the state’s dependency on one vendor’s proprietary hardware and software components to run LEADER. The federal government has previously expressed concerns about the state and county’s continued non-competitive use of the same vendor; and OSI has indicated that no other qualified vendors have been willing to enter a bid to operate the LEADER system. Subcommittee Staff Comment & Recommendation: Staff recommends holding this issue open. Question for OSI\/DSS: 1. Please briefly describe the functions of LEADER and GEARS today, and how those functions would change or be streamlined in LRS as you envision it. 2. What is the current status of negotiations with the LRS vendor? (E.g., When do you anticipate that you might have updated cost estimates for the system’s development and maintenance? What have you discussed with the vendor about upgrades or changes that may be required in the future?) Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 14 of 30 OSI & DSS Issue 2: Child Welfare Services\/Web (CWS\/Web) Project Budget Issue: OSI requests $1.8 million ($827,000 GF) for 10 new positions to support the continuing development of CWS\/Web, a replacement system for the existing CWS\/CMS. These 10 positions would be in addition to 12 existing OSI positions and up to another 6 OSI-contract staff currently supporting this phase of the project. The 2009-10 budget for CWS\/Web is $7.1 million ($3.2 million GF). Including the requested funds for OSI staff (and other staff requested by DSS), the 2010-11 budget for the project would increase to $9.4 million ($4.3 million GF). OSI estimates a total cost of $202.8 million ($91.9 million GF) between 2012 and 2014 to complete the implementation of CWS\/Web and enter into its M&O phase. Background on CWS\/CMS and CWS\/Web: California’s CWS system includes a variety of state-supervised, county-administered interventions designed to protect children. Major services consist of emergency response to reports of suspected abuse and neglect, family maintenance or reunification and foster care. CWS\/CMS is an automated system that provides case management capabilities for CWS agencies, including the ability to generate referrals, county documents, and case management and statistical reports. The total 2009-10 CWS\/CMS project budget is $83.3 million ($38 million GF). The CWS\/CMS system was implemented statewide in 1997, and OSI states that CWS\/Web is necessary because the CWS\/CMS technology is outdated. In addition, OSI and DSS state that the CWS\/Web system is needed to increase efficiency and to comply with federal system requirements (which are tied to federal funding). The CWS\/Web project is currently in a planning stage, preparing for a full implementation after development ends in 2014. When CWS\/Web is completed, the system will rely on a more modern, web-based technical architecture. Stated Rationale for Additional Resources: According to OSI, the amount and complexity of work related to the CWS\/Web Request for Proposal process is greater than initially anticipated. The requested positions would focus on database administration, security management, development, testing, training, quality assurance, operations and configuration management requirements. Without these resources, OSI states that the risk that the CWS\/Web would ultimately fail to be delivered on time, within budget and in accordance with established requirements would be significantly increased. Subcommittee Staff Comment & Recommendation: Staff recommends holding this issue open. (Questions on next page) Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 15 of 30 Questions for OSI\/DSS: 1. Please briefly explain the need for 10 additional staff at OSI to support the planning process for CWS\/Web. 2. How will these positions fit in with the project’s needs as it moves into development and implementation? Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 16 of 30 4170 Department of Aging (CDA) With a total budget of $209.7 million ($33 million GF) in 2009-10 and a proposed budget of $176.4 million ($12.3 million GF) in 2010-11, CDA administers programs that serve older adults, adults with disabilities, family caregivers, and residents in long-term care facilities. CDA Issue 1: Implementation of Vetoed Funds for Community Based Services Programs (CBSP) CBSP Update: As outlined below by program, the 2009-10 budget reduced or eliminated, as of October 1, 2009, GF spending for several CBSPs. Through his veto actions, the Governor then eliminated all of the remaining GF resources for these programs, as well as state and local administration funds, as of that same date (also shown below). Impact of 2009-10 Community Based Services Program Reductions * Note that these numbers reflected nine months of funding reductions because of anticipated time for programs to ramp-down. Linkages: Prior to the elimination of its funding, Linkages was expected to serve as a case management program for approximately 5,500 elderly and younger adults who had functional impairments and were at-risk of institutionalization. In May, 2008, the program waiting list included approximately 2,100 people. Alzheimer’s Day Care Resource Centers (ADCRC): Prior to the elimination of this funding, 57 ADCRCs received infrastructure support so that Adult Day Care and Day Health Care Centers could serve 3,200 individuals with dementia. Program Original 09-10 GF Allocation Legislative Action Governor Veto Total 09\/10 GF Reduction* Total 10\/11 Funding Alzheimer’s Day Care Resource Center 3,787,000 -1,200,000 -1,640,000 -2,840,000 0 Brown Bag 541,000 0 -405,000 -405,000 0 Linkages 7,935,000 -2,421,000 -3,958,000 -6,379,000 0 Respite 317,000 -238,000 0 -238,000 0 Senior Companion 317,000 -238,000 0 -238,000 0 Local Admin. for these CBSPs 935,000 -117,000 -157,000 -274,000 0 State Admin. for these CBSPs 211,000 0 -106,000 -106,000 0 Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 17 of 30 Brown Bag Program: Prior to the elimination of its funding, the Brown Bag program relied on the assistance of 3,900 volunteers and 600 sites to provide free surplus and donated fruits, vegetables, and other foods to 27,000 low-income seniors. The program’s $541,000 local assistance budget was supplemented by $13 million in local matching funds. Respite Purchase of Services (POS): Prior to the elimination of its funding, the Respite POS program provided temporary relief to caregivers of frail elderly or impaired adults who were at risk of institutionalization. Local Actions: Local Area Agencies on Aging (AAAs), which administered these programs in the past, have flexibility to continue these or similar programs if they can use federal Older Americans Act and\/or other funds. For the Linkages program, AAAs may also be eligible to continue receiving a limited amount of funding from local handicap parking fines. AAAs electing to continue programs similar to these CBSPs using non-state funds are not required to meet state standards for the programs. According to a CDA survey conducted in November 2009: \ufffd 25 AAAs planned to continue some form of ADCRC programs and eight discontinued the program. \ufffd 17 AAAs continued Brown Bag programs and seven discontinued them. \ufffd 17 continued Linkages programs and 16 discontinued them. \ufffd Seven continued Respite programs and 21 discontinued them. \ufffd Three continued Senior Companion programs and 12 discontinued them. Subcommittee Staff Comment & Recommendation: This Issue is included for oversight and informational purposes. Questions for CDA: 1. Please describe how the Department has implemented the Governor’s vetoes within these programs and how local agencies have responded to date. 2. What, if any, continuing oversight does the Department have over these programs to the extent that they are still operated locally? 3. What data does the Department have on how the programs’ former beneficiaries are faring today? Do you know how many clients were referred to other state programs that may provide similar services? How many may have entered institutional care in part because of the loss of these services? Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 18 of 30 CDA Issue 2: Multi-Purpose Senior Services Program (MSSP) Budget Issue: CDA requests, in a budget change proposal, the permanent transfer of $20.1 million GF for MSSP from CDA’s budget to the budget for the Department of Health Care Services (DHCS). The 2009-10 budget for MSSP state operations and local assistance included a total of $46.6 million ($18.6 million GF). CDA states that this technical change is necessary because the current division of funds for the program between CDA and the Department of Health Care Services (DHCS) makes its funding unclear to the general public and to legislative entities. In addition, CDA states that the funding split creates unnecessary duplication of work by CDA and DHCS (e.g., the preparation of budget requests). Background on MSSP: MSSP assists elderly Medi-Cal recipients to remain in their homes. Clients must be at least 65 years old and must be certified as eligible to enter a nursing home. The services that may be provided with MSSP funds include: Adult Day Care, Housing Assistance, Personal Care Assistance, Protective Supervision, Care Management, Respite, Transportation, Meal Services, and other Social and Communications Services. The program, which began in 1977 with eight sites, now has 41 sites and serves up to nearly 12,000 clients per month. CDA oversees the operations of the MSSP program statewide and contracts with local entities that directly provide MSSP services. As the single state agency authorized to administer the state’s Medicaid program, DHCS also has an integral role because the program operates under a federal Medicaid Home and Community-Based, Long-Term Care Services Waiver. In 2006, the Legislature transferred the resources at issue to the CDA budget to enhance the Legislature’s ability to oversee the program and to align the program’s GF funding with its management. Several other state programs that receive Medicaid funding are overseen by and also have resources budgeted under departments or agencies other than DHCS. Subcommittee Staff Comment & Recommendation: The continued alignment of the funding and management of MSSP under CDA will best meet the Legislature and public’s needs for information about and oversight of the program. Therefore, staff recommends rejecting this proposal. However, staff recommends adopting an alternative technical fix developed by DoF and the Departments. Under this alternative, a new program would be created within CDA’s budget for Medi-Cal program funding and Budget Bill Language (for Provision 2 of Item 4170-101-0001) would be revised to authorize the transfer of funds from that new program to DHCS. (Questions on next page) Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 19 of 30 Questions for CDA: 1. Please briefly explain the rationale for this request, including a description of CDA and DHCS’s respective roles in the operations of the MSSP program. 2. If the requested transfer of funds was approved, would CDA continue to provide the main programmatic oversight of MSSP programs? Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 20 of 30 5180 Department of Social Services (DSS) With a total budget of $20.7 billion ($8.7 billion GF) in 2009-10 and a proposed budget of $16.6 billion ($6.9 billion GF) in 2010-11, DSS is responsible for programs that provide aid, service, and protection to children and adults in need of assistance. The Department employs more than 4,000 individuals who oversee the administration of programs like SSI\/SSP, CalWORKs, IHSS, child welfare services, and the licensing of community care facilities. DSS Issue 1: Overview of Trigger Proposals Budget Issue: The Governor’s budget anticipates $6.9 billion of new federal funding across program areas, including health and human services, corrections, and education. If the Director of Finance determines that the federal government has failed to authorize the magnitude of additional funding that the Governor anticipates on or before July 15, 2010, then the Governor proposes to trigger the complete elimination of funding for the CalWORKs, In-Home Supportive Services (IHSS), and Transitional Housing Program Plus (THP+) human services programs, in addition to making other major expenditure reductions and initiating some revenue increases (the rest of which will be discussed during other hearings of the Committee or its relevant Subcommittees). According to the Administration’s estimates, if these three human services program trigger proposals took effect for 2010-11, the state would save a total of $2.4 billion GF and forego $4.8 billion federal funds as a result. Assuming the enactment of the three human services trigger proposals mentioned above, the Governor also proposes to trigger an additional redirection of county savings. This trigger proposal, which is in addition to the proposal for other redirections that the Committee discussed on February 2, 2010, would lower the state’s and raise the counties’ shares of non-federal costs for the Food Stamp program. According to the LAO, it is reasonable to assume the state will secure some new federal funding and flexibility, but the chances that the state will receive all of what the Governor seeks from Washington are almost non-existent The Legislature should assume that federal relief will be billions of dollars less than the Governor wants Subcommittee Staff Comments & Reccomendation: Comments and recommendations for all trigger proposals are consolidated on page 26. Questions for DOF and LAO: 1. Please briefly outline the Governor’s overall trigger proposal. 2. What is your current assessment of the likelihood that the state will (or will not) receive all $6.9 billion in new federal funds that the Governor is seeking? Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 21 of 30 DSS Issue 2: Trigger Proposal to Eliminate IHSS Program Budget Issue: The Governor’s trigger proposals include the complete elimination of the IHSS program, effective 90 days after notice from the Director of Finance that sufficient federal funds were not authorized. According to the Administration, if this trigger proposal took effect for nine months of 2010-11, the state would save $1.2 billion GF and forego $1.8 billion federal funds. These estimates assume that current laws governing the IHSS program are still in effect at the time the trigger is pulled (i.e. they do not include the impacts of other IHSS proposals that the Committee discussed on February 2, 2010). These GF savings are also net of $55 million GF costs (growing to $78 million for a full-year) for providing alternative services through the regional centers for the approximately 9 percent of IHSS recipients who have developmental disabilities. The foregone federal funds are predicated on extension through the state’s fiscal year of the enhanced Federal Medical Assistance Percentage (FMAP) rate for federal financial participation available for IHSS under ARRA. After expiration of the enhanced FMAP, the Administration estimates $1.8 billion GF savings and $2 billion foregone federal funds annually. The Administration has not accounted for any potential cost shifts from serving IHSS recipients who would no longer receive in-home supports in Skilled Nursing Facilities (SNFs). According to the LAO, however, if at least 32 percent of non-developmentally- disabled IHSS recipients would enter a SNF in the absence of IHSS (which the LAO states is very possible ), the proposed elimination of IHSS would result in GF costs, rather than savings. The LAO also estimates that the GF cost shift for replacing IHSS services with other services for recipients with developmental disabilities is significantly greater than the Administration’s estimate and would likely be higher than $300 million. Other 2010-11 Proposals Previously Heard by the Committee: In the absence of the trigger for the proposed elimination of IHSS being pulled, the Governor’s Budget proposes to eliminate services to approximately 87 percent of IHSS recipients and to reduce the state’s participation in IHSS providers’ wages to the state’s share of the minimum wage ($8 per hour plus $.60 for benefits). The Committee held a hearing on those proposals on February 2, 2010. Background on IHSS: The IHSS program has its roots in a 50-year-old cash grants program for individuals who are blind, aged, or who have disabilities and a 30-year-old homemaker program that offered domestic help to recipients. Today, the IHSS program provides in-home personal care services to roughly 460,000 qualified individuals who are blind, aged (over 65), or who have disabilities. These individuals usually have income at or below the SSI\/SSP grant level ($845 per month for an individual as of October 2009) and assets, except their homes or cars, worth less than $2,000. County social workers determine eligibility for the program after conducting in- home assessments. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 22 of 30 IHSS services can include tasks like meal preparation, feeding, bathing, paramedical care, and domestic services. On average, the state spends roughly $12,000 per year for IHSS services (although may also spend other funds for some services that a nursing home resident would not utilize). These services frequently assist program recipients to avoid or delay more expensive and less desirable institutionalizations. According to the LAO, the state spends an average of about $55,000 per year for each nursing home resident who uses Medi-Cal (based on 2006-07 figures). Impacts & Economic Consequences: This proposal would eliminate supportive services to all of the approximately 460,000 individuals who currently receive them through the IHSS program. For many individuals, the loss of these services could result in immediate need for more expensive institutional placements, such as SNFs. For others, such an institutional placement may occur faster than it would have if they had continued to receive supportive services. Some may remain in their homes and receive continued support from non-IHSS sources, and others may live with unmet needs that place them at risk. In addition, approximately 385,000 IHSS care providers would lose their IHSS employment. Many of these providers already live in low-income households. The Governor’s budget forecasted the state’s 2010 unemployment rate to be 12 percent. According to the LAO, job losses of this magnitude could increase that unemployment rate by more than 1 percent. In addition, the LAO estimates that about 60 percent of affected IHSS workers (or 231,000) may qualify for unemployment insurance benefits. Approximately 2,000 to 3,000 county and 80 state staff positions could also be eliminated. Questions for DSS or DoF: 1. When and how would you anticipate that the IHSS program would be ramped down in the event of the trigger being pulled? When and how would recipients and providers receive notice of the program’s elimination? 2. If this trigger proposal took effect, what impacts on IHSS recipients and providers would you anticipate? 3. How do you respond to the LAO’s analysis that it is very possible that there are a sufficient number of IHSS recipients who would enter a SNF in the absence of IHSS services (32 percent) to indicate that the program’s proposed elimination could in fact cost the state GF resources? 4. How do you respond to the LAO’s analysis that state cost shifts for serving individuals with developmental disabilities will be significantly higher ($300 million versus the $55 million the Administration estimated)? Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 23 of 30 DSS Issue 3: Trigger Proposal to Eliminate CalWORKs Budget Issue: The Governor’s trigger proposals also include complete elimination of the CalWORKs program, effective 90 days after notice from the Director of Finance that sufficient federal funds were not authorized. If this proposal took effect in 2010-11, the Administration estimates that the state would save $1.2 billion GF (growing to $2.3 billion GF annually) and forego $3 billion federal funds (growing to $3.8 billion TANF funds annually after the expiration of federal stimulus funds described below). These estimates assume that current laws governing the CalWORKs program are still in effect at the time the trigger is pulled (i.e., they do not include the impacts of other CalWORKs proposals that the Committee discussed on February 2, 2010). The estimated GF savings also rely on the assumption that the federal TANF Emergency Contingency Fund (ECF) from the American Recovery and Reinvestment Act (ARRA) (currently authorized through September 30, 2010) will be extended with respect to basic assistance costs through the state’s 2010-11 fiscal year. They are also net of $590.5 million GF to annually backfill funding for non-welfare programs that would otherwise have benefited from TANF resources. The federal funds foregone would include California’s entire Temporary Assistance to Needy Families (TANF) block grant. The state would also become ineligible for any benefits that would otherwise be available under ECF. During the period of ECF, the federal government pays 80 percent of the costs of certain welfare-to-work expenditures. Under current federal law, California could receive up to $1.8 billion total in ECF funds during federal fiscal years 2009 and 2010. Absent this trigger proposal and other proposed reductions in the Governor’s budget and assuming the extension of ECF, DSS estimates that the state would receive $742.5 million ECF funds in 2010-11. Other 2010-11 Proposals Previously Heard by the Committee: In the absence of the trigger for the proposed CalWORKs elimination being pulled, the Governor’s Budget proposes to reduce monthly grant payments to families by 15.7 percent, to reduce the level at which the state reimburses child care providers, and to eliminate the Recent Noncitizen Entrants program as of June 1, 2010. The Committee held a hearing on these proposals February 2, 2010. Background on CalWORKs: California has had a welfare program in some form since the enactment of the Aid to Dependent Children program in 1911. Today, CalWORKs provides not only temporary cash assistance, but also education, training, child care, and employment programs to families who are unable to meet basic needs (i.e. shelter, food, clothing) on their own. In 2009-10, the average monthly assistance grant for a family of three in high-cost counties is $694. The monthly grant was also $694 twenty years ago in 1989. The maximum allowable CalWORKs and food stamp grants are currently the equivalent of 78 percent of the Federal Poverty Level (FPL) in high-cost counties and 77 percent of FPL in low-cost counties. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 24 of 30 Impacts on Families, Counties and the Economy: This proposal would eliminate benefits to all of the 500,000 to 600,000 families (including more than 1 million children) who receive assistance from the program. Counties and advocates project that the elimination of CalWORKs could result in dramatic increases in unemployment, poverty and homelessness among recipient families, as well as costs in other state and local services (e.g. the child welfare, foster care, and education systems). Again, the Governor’s budget forecasted an unemployment rate of 12 percent during 2010. According to the U.S. Census Bureau, California had an overall poverty rate of 13.3 percent of the state’s population in 2008. The poverty rate was already even higher, at 18.5 percent, for children under 18 years of age. If the trigger proposal takes effect and the CalWORKs program is eliminated, former CalWORKs recipients may become eligible to apply for county-funded General Assistance (GA) programs for indigent families. As an example, the maximum GA grant in Los Angeles County (called General Relief) for a family of 3 is $450 per month. In some counties, GA offers lower-value vouchers and no cash assistance. The County Welfare Directors Association (CWDA) estimates the potential overall costs to counties if all former CalWORKs recipients could become eligible for GA as $1.9 billion. It is also well-established that the lowest-income individuals and families spend a higher percentage of their income locally and immediately than do individuals with more disposable income. In addition to these effects on recipient families and their economic activities, as well as local governments, below are examples of others who would be directly impacted by elimination of CalWORKs: \ufffd Employers who might otherwise avert layoffs or expand their workforce via up to 15,000 ECF-supported subsidized employment slots. \ufffd Tens of thousands of local child care providers who provide child care to children whose care is subsidized by the CalWORKs program; and \ufffd An estimated 14,000 county and 170 state employees who work within the state’s CalWORKs program. TANF Reauthorization: Congress must take action by September 30, 2010 to reauthorize the TANF block grant. It is important to note, however, that President Obama’s 2010 budget proposed a one-year extension of TANF (which, if enacted, could result in a one-year delay of the larger reauthorization discussion that stakeholders previously anticipated would happen in 2010). Questions for DSS: 1. When and how would you anticipate that the CalWORKs program would be ramped down in the event of the trigger being pulled? When and how would recipients and providers receive notice of the program’s elimination? (Continued on next page) Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 25 of 30 2. If this trigger proposal took effect, what would you anticipate would be the impacts on jobs and unemployment? On homelessness among families with children? On their rates of poverty? On other state services and costs? On the overall economy? 3. Are you aware of any other Governor or Legislature in the United States that has proposed the complete elimination of their TANF program? DSS Issue 4: Trigger Proposal to Eliminate Transitional Housing Program Plus (THP+) for Former Foster Youth Budget Issue: The Governor’s trigger proposals also include the elimination in 2010- 11 of all $35.9 million for the THP+ housing and supportive services program. The THP+ program is currently funded with 100 percent GF. The proposed elimination of funding would take effect immediately upon notice from the Director of Finance that sufficient federal funds were not authorized. (The estimate of $35.9 million GF savings assumes that such notice would occur on or before July 1, 2010.) Background on THP+: THP+ provides up to two years of transitional housing and supportive services to help former foster youth achieve self-sufficiency. There are approximately 1,400 young adults and 168 of their children living in THP+ placements in 52 California counties. Participants receive support from THP+ staff to work toward their county-approved self-sufficiency (e.g., employment or education- related) goals and may live alone or with roommates. The THP+ monthly rate is up to 70 percent of the county’s average group home grants for 16 to 18-year-old foster youth. The federal Fostering Connections to Success Act of 2009 (P.L. 110-351) opened the door for federal financial participation in the costs of foster care services and placements for youth between the ages of 18 and 21. However, THP+ is currently designed to serve foster youth who have emancipated from care (i.e., for whom a judge has terminated the state’s jurisdiction); thus, the program is not currently eligible for these federal funds. Impacts: It is well-documented that foster youth who emancipate from care without continued support at the age of 18 experience higher rates of arrest, incarceration, pregnancy, homelessness, unemployment and a lack of educational achievement (i.e., receipt of a high school diploma) than their peers. In a 2008 survey by the John Burton Foundation, the interviewed THP+ participants experienced a 19 percent gain in employment and a 13 percent increase in hourly wages, in addition to advances in education, health, and housing stability. Advocates state that many of the 1,400 youth and 168 children currently living in THP+ settings would face immediate homelessness if program funding was eliminated as of Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 26 of 30 July 1, 2010. In the longer term, the elimination of THP+ funding could also impinge on progress toward reducing the critical challenges faced by former foster youth and result in increases in other state costs (e.g., public assistance and corrections costs). Questions for DSS: 1. When and how would you anticipate that THP+ would be ramped down in the event of the trigger being pulled? When and how would THP+ providers and participants receive notice of the program’s elimination? 2. If this trigger proposal took effect, what would you anticipate would be the impacts on the former foster youth currently living in THP+ settings? On foster youth who emancipate from care in the future? On THP+ providers and staff? 3. What would you anticipate to be the effects on other state services and costs (e.g. public assistance, corrections)? Subcommittee Staff Comment & Recommendation on Human Services Trigger Proposals: Given the potential for significant state and local government cost shifts, negative impacts on the state’s economy and rate of unemployment, and devastating consequences to many of the state’s particularly vulnerable children and adults, staff recommends that the Subcommittee reject the Governor’s proposals to authorize a trigger for the outright eliminations of the IHSS, CalWORKs, and\/or THP+ Programs. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 27 of 30 DSS Issue 5: IHSS Anti-Fraud \/ Program Integrity Budget Issue: DSS requests $528,000 ($264,000 GF) for six permanent positions to carry out IHSS-related anti-fraud and program integrity activities, and $500,000 ($264,000 GF) for a contract with California State University (CSUS) to assist in the development of a required report to the Legislature. The Department has administratively established these six new positions in 2009-10, and is now seeking 2010-11 authority to continue them permanently. These six positions would be on top of the 42 new IHSS anti-fraud positions authorized by the 2009-10 budget (12 positions at DSS in 2009-10 and 30 positions at DHCS across 2009-10 and 2010-11). The total budget for IHSS Quality Assurance and Anti-Fraud efforts by DSS and the Counties is $88.3 million ($34.2 million GF), with approximately $3.1 million ($1.6 million GF) for state operations and $85.1 million ($32.6 million GF) for local assistance. Of this total, $54.2 million ($21.9 million GF) were new funds in the 2009-10 budget, including $8.2 million ($4.4 million GF) for the costs of fingerprinting IHSS recipients. These figures do not include the additional costs of IHSS fraud investigations by DHCS. Background on 2009-10 Program Integrity Provisions: The 2009-10 budget made vast and significant changes in the IHSS program, including expansion of anti-fraud\/ program integrity activities. (See the Agenda from the October 28, 2009 Oversight Hearing of Recent Changes in the IHSS Program by the Assembly Budget Committee & Senate Budget Subcommittee #3 for a more comprehensive list.) According to the Administration, these changes will result in an estimated $162 million GF savings. The changes, which included requirements for stakeholder collaboration in their implementation, were: 1. Criminal background checks and appeals processes for IHSS providers; 2. The requirement for providers to attend an orientation; 3. Authorization to send targeted mailings to providers and recipients and to conduct unannounced home visits, pursuant to developed protocols and in targeted cases, when there is cause for concern about program integrity; 4. Limits on the use of P.O. boxes by providers to receive paychecks; 5. Training for social workers on fraud prevention; 6. Notification to providers about their clients’ authorized hours and service levels; 7. Fingerprinting of IHSS program recipients; and 8. Changes to timesheets, including fingerprinting and certification after notice of possible criminal penalties for fraud. Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 28 of 30 These changes were anticipated to take effect at varying points in time over 2009-10 and 2010-11. This Subcommittee has held, jointly with the Assembly Budget Committee, two oversight hearings to address major challenges in the implementation of these changes to date. DSS State Operations Staff: Not including the requested positions and resources, DSS’s total state operations staff for IHSS Quality Assurance and Anti-Fraud efforts consists of 28 positions. Twelve of these positions are new as of 2009-10. According to DSS, all of these 12 new positions have been filled. Six of these 12 staff members are assigned to a variety of program integrity activities (e.g., developing protocols for home visits and targeted mailings, social worker fraud training and data collection). The other six are assigned to the new provider enrollment appeals process. As of early March, 2010, there were approximately 31,000 providers enrolled under the new enrollment procedures. Another 72,137 were in pending enrollment status. Finally, 117 had been denied eligibility to enroll in the program. Also as of early March, 14 of the 117 providers who were denied eligibility had appealed that determination. Also according to DSS, the six additional staff requested in 2010-11 would focus on program changes related to the inclusion of provider and recipient fingerprint information on timesheets. Background on Required Report: The 2009-10 budget additionally required the Department to convene a stakeholder group to develop a report, by December 31, 2010, to evaluate quality assurance and fraud prevention and detection activities implemented from 2004 to the present. The stakeholder group is required to review annual error reports, information regarding referrals of suspected fraud and subsequent investigations (including cost-benefit information), and information regarding final convictions for fraud. The resulting report must also provide recommendations for early detection and for prevention of errors and fraud. Subcommittee Staff Comment & Recommendation: Staff recommends rejecting the Administration’s proposal for six new positions and holding open the request for $500,000 in authority to contract for support in developing the required report. Questions for DSS: 1. How is the Department prioritizing the assignments of the 12 new staff authorized in 2009-10 to be dedicated to IHSS program integrity? How much of their work is one-time in nature? 2. What is the current workload for the six of these new staff (out of the 12 authorized in 2009-10) who are assigned to provider enrollment appeals? How many appeals have been filed to date? (Questions continue on next page) Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 29 of 30 3. Please briefly describe the current and anticipated functions of the six additional requested positions (on top of the 12 referenced above). 4. How did the Department fund its administrative establishment of these six positions in 2009-10? 5. How did the Department arrive at its estimate of $500,000 as the contract costs for support in providing the required report on anti-fraud efforts to date? Subcommittee #3 March 18, 2010 Senate Budget and Fiscal Review Page 30 of 30 DSS Issue 6: IHSS – Conlan II Claims Budget Issues: DSS requests, in a BCP, $113,000 ($56,000 GF) to establish one new position to review claims filed by IHSS recipients under the Conlan II court decisions. DSS also requests to permanently extend one limited-term manager position that would otherwise expire in June 2011 (at an annual cost of $128,000 [$64,000 General Fund]). If these requests are granted, the Conlan II unit at DSS would consist overall of one Staff Services Manager and three permanent AGPA positions. DSS states that all of these positions are necessary to meet the provisions of the Conlan II court order. In 2009-10, the Legislature approved DSS’s request for the creation of one new position and extension of two additional positions, but rejected the request for a fourth position, to review recipients’ claims for reimbursement under Conlan II. Background on Conlan II and DSS Workload: Conlan II was a series of lawsuits that resulted in court decisions regarding the reimbursement of IHSS recipients for specified out-of-pocket, medically-necessary expenses they paid beginning in 1997. The court approved the state’s plan for implementing the decisions in 2006. Under this plan, there are two time periods for which recipients can claim expenses: 1) claims for services received between 1997 and November 16, 2006, which must have been filed by November 16, 2007, and 2) claims for services received after November 16, 2006, which must be submitted within one year of service receipt. According to DSS, as of January, 2009, the department was out-of-compliance with the 120-day processing timeframe required by the Conlan II court order. DSS has stated that the Conlan II cases have resulted in an increasing and permanent workload. In 2009, the Department estimated that the workload could include up to 400 claims per year. The Department now estimates that the annual total may be even higher. The Department estimates that most claims take 12 hours to review (with some taking up to 20 hours). Subcommittee Staff Comment & Recommendation: Staff recommends holding this issue open. Questions for DSS: 1) Please briefly summarize the need for the requested staff, including the number and nature of the Conlan II claims that are currently awaiting processing by the department and the timeframe in which the department generally processes these claims. ”

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“Subcommittee No. 1 on Health and Human Services January 25, 2011 Agenda Subcommittee No. 1 On Health and Human Services Assemblymember Holly Mitchell, Chair Tuesday, January 25, 2011 State Capitol, Room 4202 1:00 p.m. Every effort will be made to accommodate all members of the public who wish to provide public testimony. However, due to the unusually short time-frame and the breadth of health and human services issues being considered, the chair will announce at the onset of each hearing how much time, and where in the agenda, public testimony will be allowed. Written testimony is strongly encouraged as the Subcommittee cannot guarantee there will be enough time for everyone to speak. Discussion Items Item Description Page 4170 California Department of Aging 3 Issue 1 Multipurpose Senior Services Program Elimination Proposal 4 Issue 2 BCP #1 – Increased Federal Funding Authority for the Senior Community Service Employment Program 5 Issue 3 BCP #2 New Freedom Transportation Grant Request 6 Issue 4 BCP #3 Federal Funding Authority for the MIPPA II Grant 7 Issue 5 BCP #4 Funding for the Long-Term Care Ombudsman Program 8 4265 Department of Public Health 10 Issue 1 ADAP Program Estimate 11 Issue 2 ADAP Cost Sharing Proposal 12 Issue 3 Public Health Emergency Surge Capacity 15 Issue 4 Budget Change Proposals 16 0530 Health and Human Services Agency 19 Issue 1 BCP #1 – Health Information Exchange – E-Health Privacy an Security Policy Development and Implementation 19 Issue 2 BCP #2 – Health Information Exchange Program Support 21 Issue 3 BCP #3 Aging and Disability Resource Connection Federal Grant Support 22 4140 Office of Statewide Health Planning & Development 24 Issue 1 Loan Repayment Deferrals 25 Issue 2 Song Brown Funding 25 Issue 3 Budget Change Proposals 26 4700 Department of Community Services and Development 28 Issue 1 Budget Bill Language on Use of Unspent Funds 29 5160 Department of Rehabilitation 30 Issue 1 BCP #1 Electronic Records System 32 Issue 2 BCP #2 DOR\/DMH Partnership 33 5175 Department of Child Support Services 34 Issue 1 Proposal on General Fund Offset from Local Child Support Agencies 36 Issue 2 BCP #1 California Child Support Automation System 38 Issue 3 Realignment Phase II Proposal 39 2400 Department of Managed Health Care 40 Issue 1 Budget Change Proposals 40 4120 Emergency medical Services Authority 41 Issue 1 Mobile Field Hospitals Proposed Reduction 42 Issue 2 Budget Change Proposal 43 DISCUSSION ITEMS 4170 California Department of Aging Budget Overview The California Department of Aging’s (CDA’s) mission is to promote the independence and well-being of older adults, adults with disabilities, and families through: \u00b7 Access to information and services to improve the quality of their lives; \u00b7 Opportunities for community involvement; \u00b7 Support to family members providing care; and \u00b7 Collaboration with other state and local agencies. As the designated State Unit on Aging, CDA administers Older Americans Act programs that provide a wide variety of community-based supportive services as well as congregate and home-delivered meals. It also administers the Health Insurance Counseling and Advocacy Program. The Department also contracts directly with agencies that operate the Multipurpose Senior Services Program, and certifies Adult Day Health Care centers for the Medi-Cal program. Fund Sources 2009-10 2010-11 2011-12 General Fund $32,217 $32,818 $15,132 State HICAP Fund 2,426 2,468 2,474 Federal Trust Fund 164,237 158,830 152,483 Special Deposit Fund 2,418 507 1,188 Reimbursements 8,258 8,582 8,801 Mental Health Services Fund 115 236 259 Skilled Nursing Facility Quality and Accountability Fund – 1,900 1,900 Total Funds $209,671 $205,341 $182,237 Issue 1: Multipurpose Senior Services Program Elimination Proposal The administration proposes to eliminate funding for the Multipurpose Senior Service Program (MSSP) for a General Fund savings of $19.9 million in 2011-12. The administration does not account for increased costs elsewhere on health programs as a result of this elimination. The Multipurpose Senior Services Program (MSSP) provides both social and health care case management services for frail elderly clients who wish to remain in their own homes and communities. The Program’s goal is to use available community services and resources to prevent or delay institutionalization of these frail clients. The services must be provided at a cost lower than that of a skilled nursing facility. The MSSP exists under a Medicaid (Medi-Cal in California) Home- and Community Based Services (HCBS) waiver approved by the federal Centers for Medicare and Medicaid Services (CMS). The current waiver extends from July 1, 2009 through June 30, 2014. The California Department of Aging (CDA) administers the MSSP under an interagency agreement (IA) with the Department of Health Care Services (DHCS). The CDA’s MSSP Branch oversees the programmatic, fiscal and service components of local MSSP site operations. Benefits. A team of health and social service professionals provide each client with a complete health and psychosocial assessment to determine needed services. The team then works with the client, their physician, family, and others to develop an individualized care plan. Services include, but are not limited to: case management; adult day social care; housing assistance; in-home chore and personal care services; respite services; transportation services; protective services; meal services; and special communication assistance. Eligibility. Eligibility extends to those currently eligible for Medi-Cal under a qualifying primary Medi-Cal aid code, age 65 or other, and certified or certifiable for placement in a nursing facility. Panelists \u00b7 CDA Please be prepared to address the following in your testimony: \u00b7 Please describe the proposal and the expected impact on those currently receiving services in MSSP. \u00b7 Why did the administration not consider and factor in the expected impact on nursing home costs to the state? \u00b7 How would implementation of this elimination proposal work in 2011-12? \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment Issue 2: BCP #1 Increased Federal Funding Authority for the Senior Community Service Employment Program (SCSEP) The CDA is requesting $497,452 in additional on-going federal expenditure authority due to an increase in the baseline level of grant funding for the SCSEP. These funds will be used to provide additional employment training slots for SCSEP participants in the 15 Area Agencies on Aging (AAA) with SCSEP contracts. CDA’s FY 2010-11 SCSEP grant award from the federal Department of Labor (DOL) is $10,242,758 and is effective July 1, 2010. This represents an increase of the aforementioned $497,452 over the FY 2009-10 SCSEP grant award of $9,745,306. Since the funding increase takes effect in FY 2010-11, a current year authority adjustment will be requested through the Section 28 process. The BCP seeks to adjust the CDA’s ongoing baseline authority to match the new funding level. The marginal increase in funding will be used for local assistance to serve an additional 45 SCSEP participants. This increase brings the number of participant training slots to 1,056. The DOL Employment Training Administration is the federal agency responsible for administering the SCSEP. CDA administers the SCSEP as the designated State Unit on Aging. The enabling legislation is Title V of the Older Americans Act (OAA). This program provides subsidized part-time community service training positions to low-income individuals age 55 and older with poor employment prospects. The DOL’s 2010 SCSEP regular grant included an increase in funds totaling $497,452. These funds will serve unemployed low-income older individuals through subsidized job placement and training in SCSEP. The Program delivers a variety of supportive services to participants including personal and job-related counseling, job training, and job referral. Panelists \u00b7 CDA Please briefly describe the BCP. \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment Issue 3: BCP #2 New Freedom Transportation Grant Request CDA has been awarded a $400,000 federal New Freedom Mobility Management grant from the California Department of Transportation (Caltrans). CDA will request initial reimbursement authority of $100,000 through the Section 28.5 process for FY 2010-11. CDA also proposes to hire for the grant period a limited-term Staff Services Manager I to implement the grant activities including coordination, training, and oversight. This BCP requests reimbursement authority of $200,000 for FY 2011-12 and $100,000 for FY 2012-13 for the remainder of the grant period. CDA and Caltrans will create an interagency agreement to spend the grant funds via reimbursement authority at CDA. CDA states that this grant will enable CDA and its network of 33 local AAAs to develop and implement a statewide strategy to fill the critical need of older adults and adults with disabilities for accessible transportation services and systems that enable them to remain in their communities in the least restrictive setting possible. Currently, older adults and adults with disabilities frequently do not have access to transportation that enabled them to access services and participate fully in work and community life. Consequently, older adults and adults with disabilities often are at unnecessary risk of costly health and institutional interventions arising from their inability to meet their basic living needs. CDA’s strategy will involve establishing local mobility management and coordination programs to increase older adults’ and adults with disabilities’ access to essential transportation services. Panelists \u00b7 CDA Please be prepared to address the following in your testimony: \u00b7 A brief description of the BCP, the state operations and any position authority effect, and any General Fund cost or pressure potential of the proposal. \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment Issue 4: BCP #3 Federal Funding Authority for the MIPPA II Grant The CDA requests additional one-time federal funding authority of $1.079 million for local assistance and $17,000 for state operations for FY 2010-11 and $1.087 million for local assistance and $9,000 for state operations for FY 2011-12 to utilize the funding awarded for the Medicare Improvements for Patients and Providers Act for Beneficiary Outreach and Assistance Program (MIPPA) grant as amended by the Patient Protection and Affordable Care Act of 2010. CDA states that there is no requirement of a General Fund match for this program. The goal of the MIPPA II grant is to expand Medicare beneficiary enrollment in the Prescription Drug Benefit Low Income Subsidy Program (LIS) and the Medicare Savings Program (MSP), to support rural outreach and enrollment efforts for Medicare and to provide education about Medicare preventive services. California’s performance goal for this second MIPPA grant is 10,834 applications, which CDA estimates will generate $400 million in prescription drug cost savings to Medicare beneficiaries throughout the state. MIPPA provides funds for beneficiary outreach and assistance to three entities within states to improve coordination and enrollment of beneficiaries eligible for the LIS and MSP. In California, the entities involved are the Area Agencies on Aging, the Health Insurance Counseling and Advocacy Program, and the Aging and Disability Resource Centers. Panelists \u00b7 CDA Please provide a brief description of the BCP and expected outcomes in 2011-12. \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment Issue 5: BCP #4 – Funding for the Long-Term Care Ombudsman Program CDA requests to shift its appropriation from the Federal Citations Penalties Account Special Deposit Fund (FHFCPA) to a combination of funding from the State Citations Penalties Account (SHFCPA) and the Skilled Nursing Facility Quality and Accountability Fund (QAF) to provide a stable state funding source for the Long-Term Care Ombudsman Program (LTCOP). This proposal requests to eliminate CDA’s $1.488 million appropriation from the FHFCPA (declining revenue has made the fund insolvent), appropriate $1.188 million from the SHFCPA, and consistent with legislative intent, make permanent the one-time $1.9 million appropriation from the QAF. These actions will result in the LTCOP receiving the same level of overall funding as was available in FY 2010-11 and provide a stable state funding source for the state mandated program requirements. In addition, the CDA requests an amendment to Health and Safety Code Section 1417.2 to specifically include funding the Long-Term Care Ombudsman Program as an allowable appropriation and use of the SHFCPA. In FY 2009-10 AB 392 (Feuer and Jones, Chapter 102, Statutes of 2009) appropriated an additional one-time allocation of $1.6 million from the FHFCPA to CDA for use in funding local LTCOPs. This was added to the existing base of $1.564 million from the FHFCPA and partially offset the previous General Fund reductions. Due to an unforeseen drop in revenue in the FHFCPA, the CDA entered into an Interagency Agreement with the Department of Public Health (DPH) to use General Fund to backfill a deficiency in the fund in order to maintain local services. For FY 2010-11, CDA and DPH submitted concurrent Finance Letter proposals to continue to backfill the deficiency in the FHFCPA with General Fund while a more stable funding solution was being pursued. SB 853 (Committee on Budget and Fiscal Review, Chapter 717, Statutes of 2010) added Section 14126.022 to the Welfare and Institutions Code, which provided a one-time $1.9 million appropriation for the LTCOP for FY 2010-11 from the Department of Health Care Services (DHCS) QAF. This backfilled one-time, $1.6 million from AB 392, which has ended. This combination of state funding enabled the LTCOPs to receive the same level of funding as in FY 2009-10. The following chart, provided by CDA displays the funding history for LTCOP and the request for 2011-12. LOCAL ASSISTANCE 2009-10 2010-11 2011-12 Federal Citations Penalties Account Funding 844 462 – AB 392 (Statutes of 2009) Federal Citations Penalties Account 1,600 – – General Fund (Department of Public Health (DPH) Interagency Agreement) 598 – – General Fund (DPH & CDA Finance Letters) – 680 – State Citations Penalties Account* – – 1,142 Quality & Accountability Fee** – 1,900 1,900 Total for Local Assistance 3,042 3,042 3,042 *State Citations Penalty Account funding is requested via CDA 2011\/12 BCP #4. **One-time 2010\/11 Quality and Accountability funding authority was provided via SB 853 (Statutes of 2010); On-going funding is requested via CDA 2011\/12 BCP #4. Panelists \u00b7 CDA Please be prepared to address the following in your testimony: \u00b7 A brief description of the BCP, the fund conditions of the fund sources that are proposed to contribute to the LTCOP, and whether this is a one-time or ongoing change in funding sources. \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment 4265 Department of Public Health bUDGET Overview The mission of the CDPH is dedicated to optimizing the health and well-being of all Californians. The CDPH achieves its mission through the following core activities: \u00b7 Promoting healthy lifestyles for individuals and families in their communities and workplaces; \u00b7 Preventing disease, disability, and premature death, and reducing or eliminating health disparities; \u00b7 Protecting the public from unhealthy and unsafe environments; \u00b7 Providing or ensuring access to quality, population-based health services; \u00b7 Preparing for and responding to public health emergencies; and \u00b7 Producing and disseminating data to inform and evaluate public health status, strategies, and programs. Proposed Budget The Governor’s proposed 2011-12 budget provides $3.535 billion for CDPH programs and services, an increase of 3.69% over the 2010-11 Budget Act. The increase in funding reflects changes in estimated expenditures to local assistance General Fund for the AIDS Drug Assistance Program and Federal Trust Fund for new Federal Affordable Care Act (health care reform) and supplemental ARRA Grants. Fund Source 2010-11 Enacted Budget 2010-11 Revised Budget 2011-12 Proposed Budget % Change from 2010-11 Enacted Budget General Fund $273,605,000 $204,779,000 $314,906,000 15.10% Federal Funds $1,781,622,000 $1,905,873,000 $1,936,985,000 8.72% Special Funds & Reimbursements $1,353,378,000 $1,243,823,000 $1,282,655,000 -5.23% Total Funds $3,408,605,000 $3,354,475,000 $3,534,546,000 3.69% Issue 1: ADAP Estimate ADAP provides HIV\/AIDS drugs for individuals who could not otherwise afford them (up to $50,000 annual income). Drugs on the ADAP formulary slow the progression of HIV disease, prevent and treat opportunistic infections, and treat the side effects of antiretroviral therapy. The following are the significant proposed changes and other issues affecting the estimate for the AIDS Drug Assistance Program (ADAP) in the current year and Governor’s proposed 2011-12 budget: \u00b7 Cost sharing proposal (discussed below) for General Fund Savings of $16.8 million; \u00b7 Projected increases in prescription drug costs; \u00b7 Projected increase in client caseload; and \u00b7 Underestimate of cost due to weaknesses in last year’s estimate methodology that have since been addressed by the Office of AIDS Reflecting these factors, the revised FY 2010-011 budget includes a General Fund increase of $22.1 million. However, the 2010-11 budget also includes an unanticipated savings of $76.3 million General Fund from a one-time increase in federal resources available through the Safety Net Care Pool via certified public expenditures. Hence, the current year budget has a net General Fund savings of $54.2 million. There may be General Fund savings in 2011-12 from CPEs used for Safety Net Care Pool funding, as in the current year, however this has not yet been finalized. In the budget year (2011-12), the proposed budget includes a General Fund appropriation of $163.857 million, a $92.417 million increase over the revised 2010-11 budget in response to the issues identified in the bullets above. The proposed ADAP Local Assistance budget is as follows on the next page: ADAP Local Assistance Budget Funding Source 2009-10 Actual 2010-11 Estimate 2011-12 Proposed General Fund $70,849,000 $71,440,000 $163,857,000 Federal Fund $92,927,000 $102,715,000 $97,632,000 Special Fund $250,246,000 $228,103,000 $257,007,000 Reimbursement $0 $76,277,000 TOTAL, ALL FUNDS $414,022,000 $478,535,000 $518,496,000 Pre-existing Condition Insurance Program: It is anticipated that some of the ADAP clients will qualify for, and choose to join, the new Pre-existing Condition Insurance Program created by federal health care reform and being operated by the Managed Risk Medical Insurance Board. At this time, it is not known how many will fall into this category and therefore projected savings in ADAP cannot be estimated. Issue 2: ADAP Cost Sharing Proposal Governor’s proposal. The Governor is proposing to increase cost sharing for ADAP clients, for projected General Fund Savings of $16.8 million. This Administration estimates this savings solely from revenue generated, and not as a result of the cost sharing serving as a deterrent to participation in the program. However, this savings estimate does not take into account new administrative costs associated with implementation of this new policy. Background. Currently, clients with income between 401 percent FPL ($43,430 for a single adult) and $50,000 have a share of cost. The amount each client with an annual income between 401% of FPL and $50,000 must pay is established annually at the time of enrollment\/recertification. The current cost sharing formula is based on twice the client’s individual income tax liability, minus any health insurance premiums paid by the individual. The final amount due can vary greatly depending on the client’s tax deductions, write-off’s, etc. that are used to reach their final income tax liability (based on their tax return). That amount is then split into 12 equal monthly payments, which are collected at the pharmacy at the time the client picks up his\/her meds. The payment is then credited and the amount the pharmacy bills the ADAP Pharmacy Benefits Manager is adjusted to account for this credit. If the client does not pick up medications in any given month or no longer uses ADAP during the year, those corresponding payments are never collected. The budget proposes to increase client share of cost in the program to the maximum allowable under federal law (Ryan White Program). Cost sharing would be as follows: Income Level Share of Cost Up to 100% FPL (54.6% of clients) None 101-200% FPL Up to 5% of gross income 201-300% FPL Up to 7% of gross income Over 300% FPL Up to 10% of gross income [image: image1.emf] CURRENT AND PROPOSED ANNUAL SOC FOR ADAP ONLY AND MEDI-CAL INCOME FPL CURRENT ANNUAL SOC CURRENT MONTHLY SOC PROPOSED SOC % PROPOSED ANNUAL SOC PROPOSED MONTHLY SOC $30,000 201-300% $0 $0 7% $2,100 $175 $40,000 301-400% $0 $0 10% $4,000 $333 $50,000 >401% $4,126 $344 10% $5,000 $417 CURRENT AND PROPOSED ANNUAL SOC FOR PRIVATE INSURANCE AND MEDICARE PART D INCOME FPL CURRENT ANNUAL SOC CURRENT MONTHLY SOC PROPOSED SOC % PROPOSED ANNUAL SOC PROPOSED MONTHLY SOC $30,000 201-300% $0 $0 6% $1,800 $150 $40,000 301-400% $0 $0 6% $2,400 $200 $50,000 >401% $4,126 $344 6% $3,000 $250 The proposal also indicates that cost sharing for clients with private insurance would be lowered. Clients with private insurance generate significant funding for the program as ADAP is permitted to collect full rebate on their prescriptions even though the program is only paying a co-pay for their drugs. The Administration states that although the proposal is still being fleshed out, they imagine that this would be operationalized similarly to the existing share of cost policy. They also state that additional details, potentially including trailer bill language, are forthcoming. Advocates’ Alternative Proposal HIV\/AIDS advocates argue that the share of cost being proposed is too high for these income levels, both in terms of financial burden for this population as well as related to federal Ryan White cost sharing limits. Many ADAP clients are required to pay a share of cost for other health programs, and the cumulative fiscal impact of this may be significant for them. Advocates have proposed the following alternative to the Administration’s proposal in order to achieve savings in the program without increasing client’s share of cost. The State’s CARE\/HIPP program pays the premiums for private insurance, when the premiums are cost-prohibitive for an individual. It is cost-effective for the state to pay the premiums, thereby keeping people insured, as compared to paying the full amount for the AIDS drugs that are required when an individual lacks any insurance. The HIPP program eligibility requires an individual to have a disability and advocates are suggesting that the State could save money by expanding HIPP eligibility criteria in order to allow more ADAP clients into it. They propose the following program changes: \u00b7 Elimination of the disability criteria; \u00b7 Increase the amount of time someone is allowed to use the program; \u00b7 Increase or eliminate monthly premium limits; \u00b7 Increase the income\/asset limits; \u00b7 Allow premium payment support to purchase policies available under the new federal risk pool ( PCIP ); and \u00b7 Centralize application and enrollment procedures. The Administration and Budget Committee staff just received this proposal within the past few days and are currently reviewing and analyzing its feasibility. Staff CommentS & QUESTIONS 1. What would the new administrative costs be of implementing the Governor’s cost-sharing proposal? 2. How would cost sharing be limited for people with insurance? Is this equitable, given that these individuals already have greater resources than those without private insurance? 3. Are you working with advocates to analyze and consider alternatives such as the one mentioned above? 4. Have you, or are you willing, to consider and develop another cost-sharing proposal that is less than the one proposed? If the cost sharing were reduced by 50 percent, would the revenue\/savings also be approximately cut in half? Issue 3: Public Health Emergency Surge Capacity Proposed Reduction In 2006-07, the state purchased a large supply of respirators, ventilators, and antivirals to be used in case of a natural disaster, act of terror or other public health emergency. In 2007-08, $8.5 million was re-appropriated for DPH specifically to store and maintain that stockpile. That re-appropriation expires in FY 10-11. The Governor proposes to not provide the DPH with new General Fund of $4.1 million that they would need to continue storing and maintaining the stockpile. Staff CommentS & QUESTIONS 1. How much will this diminish the state’s ability to respond and save lives in a public health emergency? 2. What alternatives and other resources does the state have to be able to respond to medical needs in a large-scale disaster? 3. Is this no longer needed? 4. Can the state use federal emergency preparedness grant funds to replace General Fund for this? Issue 4: Budget Change Proposals Department of Public Health Budget Change Proposals Positions Requested Cost Fund Source Description None $443,000 in 2011-12 & ongoing Lead Related Construction Fund No General Fund This will give CDPH the authority to use LRC funds to fund the LRC Program. LRC funds are revenue from fees charged to individuals seeking certification for work in lead-related construction fields. Historically, the LRC program was funded with General Fund, and with a loan from the Occupational Lead Poisoning Prevention Program in 2010-11. LRC Fee revenue was intended to fund this program. 2.0 limited term positions (11 months & 22 months) $1.8 million for August 2010 to April 2013 Federal funds (ARRA grant) No General Fund To give CDPH expenditure authority for a federal American Recovery and Reinvestment Act (ARRA) grant to collect Behavioral Risk Factor Surveillance System baseline and follow-up data from specified communities. Funding for 25% of existing full time Public Health Medical Officer and 2.3 new limited term positions $3.4 million for September 2010 to August 2014 Federal funds (Centers for Disease Control grant) No General Fund To give CDPH expenditure authority for a federal CDC grant to support the state’s California Lupus Surveillance Program (CLSP). The CLSP will contract with UCSF and will purchase data from Kaiser Permanente. None $240,173 for September 2010 to September 2012 Federal Affordable Care Act (CDC) grant No General Fund To give CDPH expenditure authority for this ACA\/CDC non-competitive grant to implement initiatives to reduce tobacco use among target populations including individuals affected by mental illness, substance abuse, and very low-income. Specifically, funds must be used to promote: use of quitlines, cessation services, and policies to counter and curtail tobacco marketing. None $1.2 million for October 2010 to September 2013 Federal CDC grant No General Fund To give CDPH expenditure authority for a CDC grant to reduce sodium intake through public health strategies. CDPH will work with Shasta County to reduce obesity and sodium consumption through advancement of policies that create healthier food environments. 4-year extension of 16.5 existing limited-term positions $2.1 million for June 2011 to June 2015 Safe Drinking Water Fund (Prop 84 of 2006) No General Fund To give CDPH expenditure authority to continue the existing 16.5 engineering, scientific, and administrative positions that implement the Proposition 84 program that provides grants to small public water systems to prevent groundwater contamination, infrastructure improvements, and emergencies. 3-year extension of 7.0 existing limited-term positions $1.1 million for June 2011 to June 2014 Water Security, Clean Drinking Water, Coastal and Beach Protection Fund (Prop 50 of 2002) No General Fund To give CDPH expenditure authority to continue the existing 7.0 positions that implement the Proposition 50 program that provides grants to public water systems for projects related to water security, reliance on the Colorado River, source water protection, and water quality monitoring. 2-year renewal of 5 existing limited-term positions and 3-year renewal of 3.5 existing limited-term positions $1.1 million Federal ARRA one-time grant for the Safe Drinking Water State Revolving Fund No General Fund To give CDPH expenditure authority to continue positions to implement this one-time ARRA grant to the state’s Drinking Water Program which: provides ongoing surveillance and inspection of public water systems, issues operational permits to the water systems, ensures water quality monitoring is conducted, and takes enforcement actions when violations occur. California received $159 million for this purpose. Renew 94.8 positions for an additional 2-year limited term and add 4.5 new limited term positions $12.3 million for 2011-12 and 2012-13 Federal public health emergency preparedness grants No General Fund To give CDPH expenditure authority to continue existing, and increase the number of, limited-term positions to continue implementing the Public Health Emergency Preparedness Cooperative Agreement and the Hospital Preparedness Program, both of which support ongoing workload to prepare for and manage public health emergencies. This funding began in the wake of September 11, 2001. According to CDPH, if the Legislature does not reauthorize these positions, California will lose these federal funds. 15.0 new 5-year limited term positions $2 million annually for 2011-2015 Federal health care reform grant (from the CDC) No General Fund To give CDPH expenditure authority and positions for a federal grant to assess and improve capacity of California’s state and local public health departments to use performance management and system redevelopment tools to improve public health policy development. 20.0 new permanent positions $2.3 million in 2011-12 and ongoing Federal Women, Infants and Children (WIC) funds No General Fund To give CDPH expenditure authority and positions to implement federal changes to the WIC program, primarily an expansion to the Breastfeeding Peer Counseling Program which received a 6-fold increase in funding. These positions also will respond to the increased activities association with the growth in vendors and the increased complexity of new federal regulations for payments and foods. 36.0 new 5-year limited-term positions $14.3 million ($4.1 in state operations, $10.2 million in local assistance) Federal health care reform (HRSA) grant No General Fund To give CDPH expenditure authority and positions to implement this Maternal, Infant and Early Childhood Home Visiting Program grant. These positions will administer a complex home visiting program for low-income or at-risk pregnant women and their infants throughout the state, and provide program management and evaluation. 2.0 new 3-year limited-term positions $2 million Federal health care reform grant No General Fund To give CDPH expenditure authority and positions to implement this grant to link an evidence-based Positive Youth Development case management intervention to school-based child care services for pregnant and parenting teens. This will enhance the capacity of the CDPH Adolescent Family Life Program and the California Department of Education’s California School Age Families Education (Cal-SAFE) Program. 5.0 new 5-year limited term positions $6.6 million Federal health care reform grant No General Fund To give CDPH expenditure authority and positions to implement the Personal Responsibility Education Program to educate adolescents on abstinence and contraception to prevent pregnancy and sexually transmitted infections, and provide adulthood preparation education. None $1 million Special funds from DHCS Skilled Nursing Facility Quality & Accountability Special Fund No General Fund To give CDPH reimbursement authority to contract with California’s Medicare Quality Improvement Organization, as approved in the 2010 Budget Trailer Bill. This will enable CDPH to implement the SNF Quality and Accountability System that accompanied the reauthorization of AB 1629 in last year’s trailer bill. CDPH will analyze facility data to assess quality of care in SNFs, and to thereby determine which facilities qualify to receive quality and accountability payments. None Repayment to General Fund of $600,000 Federal Health Facilities Citation Penalties Account No General Fund To give CDPH authority to repay the General Fund for costs incurred in 2009-10 when the cash reserve in the Federal Health Facilities Citation Penalties Account was insufficient to fund the Long-Term Care Ombudsman Program in the Department of Aging, thereby justifying a General Fund loan. The CDPH anticipates repayment over a 3-year period assuming sufficient cash reserves exist in the fund. The CDPH is also proposing funding the Ombudsman Program for 2011-12 with funds from the State Health Facilities Citation Penalties Account ($1.2 million) in combination with funds from the skilled nursing facility quality assurance fee revenue ($1.9 million), per last year’s Budget trailer bill. None $67,000 Special Funds from the Genetic Disease Testing Fund No General Fund To give CDPH expenditure authority to implement AB 2300 (Statutes of 2010) which gave the CDPH authority to issue temporary genetic counselor licenses to individuals who have met the educational requirements and are waiting to take the national certification exam. 0530 Health and Human Services Agency Issue 1: BCP #1 Health Information Exchange E-Health Privacy and Security Policy Development and Implementation California has been awarded a four-year $38.7 million federal Health and Human Services (HHS) grant, funded under the Health Information Technology for Economic and Clinical Health Act (HITECH Act), which is part of the American Recovery and Reinvestment Act of 2009 (ARRA). This Act authorized HHS to enter into cooperative agreements with states in order to fund efforts to achieve widespread and sustainable health information exchange (HIE) within and among states through sharing of certified Electronic Health Records (EHR). The four-year grant period is February 8, 2010 through February 7, 2014. The federal grant funds are being used to contract for a Governance Entity that will implement a statewide collaborative process for expanding capacity for electronic health information exchange to support 3.0 limited-term positions through the end of the grant period (two Associate Governmental Program Analyst, one Staff Counsel III) and to fund 3.0 existing positions currently working on the project through this federal grant rather than through state reimbursements (a Staff Services Manager I, a Staff Services Manager II, and a Senior Staff Counsel III). The extension of these three limited-term positions using the federal grant is the subject of this BCP. The administration states that these positions will allow CalOHI to secure resources to support its own standard setting process and still meet its statutory mission to lead and coordinate HIPAA implementation for all state entities. The state intends to successfully develop the following HIE services: electronic prescribing and refill requests, including prescription fill status\/medication fill history, electronic laboratory ordering and results delivery, clinical summary exchange for care coordination and patient engagement, electronic public health reporting (i.e. immunizations, notifiable laboratory results), electronic eligibility and claims submission, and public and population health and quality reporting. The expected outcomes of this project are that a critical mass of health care providers will participate in HIE facilitated by the state and will achieve meaningful use of EHRs as contemplated under the ARRA. Panelists \u00b7 HHS Representative Please be prepared to address the following in your testimony: \u00b7 A brief description of the BCP, the state operations and any position authority effect, and any General Fund cost or pressure potential of the proposal. \u00b7 Were the three positions that are the subject the BCP set to expire before 2011-12? Are the three positions currently filled? \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment Issue 2: BCP #2 Health Information Exchange Program Support The Office of Health Information Integrity within the Health and Human Services Agency is proposing to establish a two-year limited term Staff Service Analyst\/Associate Governmental Program Analyst position to support the Deputy Secretary’s operational activities coordinating and leading California electronic health information technology and exchange program. The Deputy Secretary for Health Information Technology (HIT) is California’s designated HIT leader. The Deputy Secretary also serves as the chief advisor to the Governor and Secretary on issues pertaining to health information exchange. As the state’s HIT leader, the Deputy Secretary is operationally responsible for the overall coordination with a large number of related for external federal and state initiatives impacting HIE such as California Cooperative Agreement for Health Information Exchange, Regional Extension Center grants, Medi-Cal HIT Incentive Program, Cal ERX, California Telehealth Network and HIT Workforce Development grant programs. Additionally, the Deputy Secretary coordinates strategic planning efforts with state departments that will be affected and impacted by the health information programs. Support for the Deputy Secretary’s work was previously achieved through a redirection of resources from the California Office of Health Information Integrity (CalOHII). However, due to its own program demands, CalOHII cannot continue to provide the support needed for the activities and efforts of the Deputy Secretary as the state’s HIT leader. Therefore, the administration is requesting this position to serve as an Executive Assistant and Analyst for the Deputy Secretary of HIT. The position will be funded by ARRA grant funds already included in CalOHII’s budget authority. Panelists \u00b7 HHS Representative Please be prepared to address the following in your testimony: \u00b7 A brief description of the BCP, the state operations and any position authority effect, and any General Fund cost or pressure potential of the proposal. \u00b7 Please provide more detail on the source of the funds and from what balance are these latent funds derived? How many more of the ARRA funds are not committed and available for uses that might include a General Fund offset? \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment Issue 3: BCP #3 Aging and Disability Resource Connection Federal Grant Support The Agency requests the extension of one limited-term Staff Services Manager II (SSM II) position to continue support and administration of two new federal grants focused on strengthening Aging and Disability Resource Connection (ADRC) services in California. The position will be supported by the following two federal grants: \u00b7 Grant #1: ADRC Evidence-Based Care Transitions. This 24-month federal grant award will expand the current ADRC hospital care transition programs to diverse and underserved communities at four ADRCs. The goal of the program is to reduce hospital readmission rates and to secure funding from partner hospitals for continuation of transition coach positions. Federal funds will support local ADRC care transitions coach staff, program evaluation, and CHHS program oversight staff over a two-year period. FY 2011-12 = $202,000 and FY 2012-13 = $15,000. (Total = $217,000) \u00b7 Grant #2: ADRC Options Counseling and Assistance Program. This 24-month federal grant award will be used to develop, pilot test, and evaluate a comprehensive set of Long-Term Options Counseling Standards with four local partner organizations and to establish uniform ADRC criteria and a designation process to enable continued ADRC expansion. Federal funds will support local partner participation, program evaluation, and Agency program staff. FY 2011-12 = $402,000 and FY 2012-13 = $66,000. (Total = $468,000) The California Community Choices Project, funded under a previous five-year grant from September 2006 to September 2011, funds the SSM II position at 100% FTE until September 30, 2011. From October 1, 2011 through September 30, 2012, the SSM II position will be funded under the new federal grant awards. The administration states that the requested 1.0 staff position is necessary to support and monitor project activities and contractors, and to meet federal grant reporting requirements. The SSM II reports to the Assistant Secretary for Long-Term Care, who reports to the Agency Undersecretary and Secretary. Panelists \u00b7 HHS Representative Please be prepared to address the following in your testimony: \u00b7 A brief description of the BCP, the state operations and any position authority effect, and any General Fund cost or pressure potential of the proposal. \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment 4140 Office of Statewide Health Planning & Development bUDGET Overview The Office of Statewide Health Planning and Development (OSHPD) develops policies, plans and programs to meet current and future health needs of the people of California by ensuring the ongoing safety of healthcare facilities, evaluating the ability of healthcare facilities to provide continued operation and necessary health services in the event of a disaster, and improving the overall delivery and accessibility of healthcare in the state. Fund Source Actual 2009-10 Estimated 2010-11 Proposed 2011-12 General Fund $64,000 $85,000 $5,096,000 Hospital Building Fund $47,582,000 $52,107,000 $55,264,000 California Health Data and Planning Fund $24,523,000 $27,808,000 $23,940,000 Registered Nurse Education Fund $1,989,000 $2,112,000 $2,220,000 Health Facility Construction Loan Insurance Fund $7,840,000 $4,673,000 $4,761,000 Health Professions Education Fund $1,366,000 $1,070,000 $1,060,000 Federal Trust Fund $1,662,000 $5,573,000 $1,418,000 Reimbursements $407,000 $2,009,000 $1,114,000 Mental Health Practitioner Education Fund $469,000 $517,000 $551,000 Vocational Nurse Education Fund $139,000 $222,000 $232,000 Mental Health Services Fund $3,373,000 $6,379,000 $6,395,000 Medically Underserved Account for Physicians, Health Professions Education Fund $1,578,000 $2,860,000 $2,300,000 TOTALS, ALL FUNDS $90,992,000 $105,415,000 $104,351,000 Issue 1: Loan Repayment Deferrals OSHPD is requesting approval to delay repayments of two loans to the General Fund: $20 million from the Hospital Building Fund and $12 million from the California Health Data and Planning Fund (CHDPF). These loans were approved in the Budget Act of 2008. The Budget Act required the Hospital Building Fund loan to be repaid by June 30, 2011, and specified no repayment date for the CHDPF loan. The proposed 2011-12 budget defers both loans by one month, in order to delay the repayment into the next fiscal year. The Hospital Building Fund’s projected fund balance at the end of 2011-12 is $133 million. The CHDPF’s projected fund balance at the end of 2011-12 is $13 million. Staff Recommendation: Approve the deferral of repayment of these two loans to the General Fund by one month. Issue 2: Song-Brown Funding Governor’s proposal. The 2011-12 Governor’s Budget proposes to fund 50% of the Song-Brown base program ($2.1 million) and 100% of the Song-Brown Registered Nurse Program ($2.9 million) from the General Fund. The remaining 50% of the Song-Brown base program is proposed to be funded from the California Health Data and Planning Fund (CHDPF). Background. The Song-Brown Program’s goal is to increase the number of family practice physicians, primary care physician assistants, family nurse practitioners, and registered nurses in areas of the state that are medically underserved (e.g., rural and low-income communities). Song-Brown funding goes to support professional health educational programs, such as family practice residency programs, that provide appropriate training opportunities to their students. Providers with Song-Brown training and education deliver primary care services through the University of California’s teaching hospitals, 61 percent of county facilities, and a number of community health centers. Approximately 60 percent of family practice physicians and registered nurses trained in Song-Brown funded programs choose to serve in underserved communities. Staff CommentS & QUESTIONS The CHDPF has a proposed fund balance of $8.4 million at the beginning of the 2011-12 fiscal year. The CHDPF can support the $5 million General Fund Song-Brown budget for 2011-12 without affecting current CHDPF activities, including BCPs currently in the 2011-12 Governor’s Budget. Below are projected revenues, expenditures and fund balances for the CHDPF assuming the Song-Brown program is funded 100% from the CHDPF in 2011-12: Dollars in Thousands 2010-11 2011-12 2012-13* Beginning Balance $8,675 $8,391 $7,660 Revenues 27,797 28,563 28,563 Expenditures 28,081 29,294 23,793 Fund Balance $8,391 $7,660 $12,430 *2012-13 expenditures adjusted for one-time costs reflected in 2011-12 BCPs. Does the Administration have concerns that replacing General Funds with Special Funds will negatively impact the use of CPEs related to the 1115 Waiver? Staff Recommendation: Deny the Governor’s proposal to fund the Song-Brown program with $5 million in General Funds and approve of funding $5 million in Special Funds from the CHDPF for this program. Issue 3: Budget Change Proposals OSHPD Budget Change Proposals Positions Requested Cost Fund Source Description 3.8 new 2-year limited-term positions $256,000 in 2011-12 & $224,000 in 2012-13. $58,000 in 2011-12 and 2012-13 in FF. California Health Data and Planning Fund (assessment on hospitals and skilled nursing facilities) & federal funds No General Fund To address increased workload in healthcare workforce development as a result of the federal Patient Protection and Affordable Care Act (ACA\/federal health care reform). These new federal dollars are designed to support expanded healthcare access in Health Professional Shortage Areas, Medically Underserved Areas, and Medically Underserved Populations. 2.0 new 2-year limited-term positions in 2011-12 and a permanent 0.5 position in 2012-13 $322,000 in 2011-12 & $834,000 in 2012-13 and $185,000 ongoing California Health Data and Planning Fund, Registered & Vocational Nurse Education Funds, Mental Health Practitioner Education Fund, & Medically Underserved Account for Physicians No General Fund To create the California Responsive Electronic Application for California’s Healthcare (CalREACH) electronic application and monitoring system, to centralize eligibility for many programs and create an on-line application system. CalREACH will be operated by the Health Profession Education Foundation, within OSHPD, which administers 13 scholarship and loan repayment programs to students who provide direct patient care in California’s medically underserved areas. The 2012-13 costs are primarily for a vendor contract to manage the CalREACH Program. 1.0 new permanent position $454,000 in 2011-12 & $77,000 ongoing California Health Data and Planning Fund No General Fund To develop and administer costs associated with the third year of the Healthcare Workforce Clearinghouse Program, a central repository of healthcare workforce and education data. The positions are needed to meet increased data and reporting requests resulting from the ACA. 2.0 new 2-year limited-term positions $337,000 in 2011-12 & $321,000 in 2012-13 Hospital Building Fund No General Fund To implement SB 608 (Statutes of 2010) to review general acute care hospital requests for an extension to the seismic safety deadlines due to local planning approval delays. The following hospitals have been identified as qualifying for this extension: \u00b7 Tehachapi Hospital, Tehachapi \u00b7 Marin General Hospital, Greenbrae \u00b7 St. Jude Medical Center, Fullerton \u00b7 Stanford Hospital, Palo Alto \u00b7 Sutter Medical Center of Santa Rosa Chanate, Santa Rosa \u00b7 Methodist Hospital of Southern California, Arcadia \u00b7 California Pacific Medical Center California West, San Francisco \u00b7 St. Luke’s Hospital, San Francisco 4700 Department of Community Services and Development Budget Overview The mission of the Department of Community Services and Development (CSD) is to administer and enhance energy assistance and community services programs that result in an improved quality of life for the poor. The objective of the Energy Programs is to assist low-income households in meeting their immediate and long-term home energy needs through financial assistance, energy conservation, and weatherization services. The Low-Income Home Energy Assistance Program (LIHEAP) provides financial assistance to eligible households to offset the costs of heating and\/or cooling dwellings, payments for weather-related or energy-related emergencies, and free weatherization services to improve the energy efficiency of homes. This program includes a leveraging incentive program in which supplementary LIHEAP funds can be obtained by LIHEAP grantees if non-federal leveraged home energy resources are used along with LIHEAP weatherization related services. The Federal Department of Energy Weatherization Assistance Program provides weatherization related services, while safeguarding the health and safety of the household. The Lead Hazard Control Program provides for the abatement of lead paint in low-income privately owned housing with young children The Community Services Block Grant Program is designed to provide a range of services to assist low-income people in attaining the skills, knowledge, and motivation necessary to achieve self-sufficiency. The program also provides low-income people with immediate life necessities such as food, shelter, and health care. In addition, services are provided to local communities for the revitalization of low-income communities, the reduction of poverty, and to help provider agencies to build capacity and develop linkages to other service providers. Fund Sources 2009-10 2010-11 2011-12 Federal Trust Fund $460,794 $406,921 $259,752 Reimbursements – 50 – Total Funds $460,794 $406,971 $259,752 Issue 1: Budget Bill Language on Use of Unspent Funds CSD has proposed budget bill language (BBL) allowing it to spend unexpended federal funds in the absence of review by the Legislature. In the interest of modest, appropriate oversight, the Legislative Analyst’s Office (LAO) was asked to provide a recommendation on notification language to include as part of the BBL. The LAO suggested the following: 4700-001-0890 (Provision 2) \u2014 Any unexpended federal funds from Item 4700-001-0890, Budget Act of 2010 (Ch. 712, Stats. 2010), shall be in augmentation of Item 4700-001-0890 of this act and not subject to the provisions of Section 28.00 The Department of Finance shall provide written notification of the augmentation to the Joint Legislative Budget Committee within 10 days from the date of the Department of Finance approval of the augmentation. The notification shall include: (a) the amount of the augmentation, (b) an identification of the purposes for which the funds will be used, and (c) an explanation of the reason the funds were not spent in 2010-11. This language would also apply to Provision 3 of Item 4700-101-0890. Panelists \u00b7 CSD Please briefly describe the proposed BBL. \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office Please briefly present on the notification language suggestion. \u00b7 Public Comment 5160 Department of Rehabilitation Budget Overview The California Department of Rehabilitation works in partnership with consumers and other stakeholders to provide services and advocacy resulting in employment, independent living and equality for individuals with disabilities. Vocational Rehabilitation Services. The Vocational Rehabilitation Services Program delivers vocational rehabilitation services to persons with disabilities through vocational rehabilitation professionals in district and branch offices located throughout the state. In addition, the Department has cooperative agreements with state and local agencies (education, mental health, and welfare) to provide unique and collaborative services to consumers. The Department operates under a federal Order of Selection process, which gives priority to persons with the most significant disabilities. The Department also provides comprehensive training and supervision to enable persons who are blind or visually impaired to support themselves in the operation of vending stands, snack bars, and cafeterias. Prevocational services are provided by the Orientation Center for the Blind to newly blind adults to prepare them for basic rehabilitation services. Persons with disabilities who are eligible for the Department’s vocational rehabilitation services may be provided a full range of services, including vocational assessment, assistive technology, vocational and educational training, job placement and independent living skills training to maximize their ability to live and work independently within their communities. The Department’s Community Resources Development Section works with public and private organizations to develop and improve community-based vocational rehabilitation services for the Department’s consumers. The Department sets standards, certifies Community Rehabilitation Programs and establishes fees for services provided to its consumers. Independent Living Services. The Department funds, administers and supports 29 non-profit independent living centers in communities located throughout California. Each independent living center provides services necessary to assist consumers to live independently and be productive in their communities. Core services consist of information and referral, peer counseling, benefits advocacy, independent living skills development, housing assistance, personal assistance services, and personal and systems change advocacy. The Department also administers and supports the Traumatic Brain Injury (TBI) Program. Seven service providers throughout California provide a coordinated post-acute care service model for persons with TBI, including supported living, community reintegration, and vocational supportive services, in coordination with consumers and their families. The Department also serves blind and deaf-blind persons through counselor-teacher services, purchase of reader services, and community-based projects to serve the elderly blind. Fund Sources 2009-10 2010-11 2011-12 General Fund $52,737 $54,068 $55,083 Traumatic Brain Injury Fund – 1,199 1,176 Vending Stand Fund 616 3,361 3,361 Federal Trust Fund 326,911 342,236 348,408 Reimbursements 5,490 7,900 7,900 Mental Health Services Fund 103 220 216 Total Funds $385,857 $408,984 $416,144 Issue 1: BCP #1 Electronic Records System (ERS) This BCP requests an increase of $1.3 million in Federal Fund authority in FY 2011-12 to fund the fifth and final year activities of the ERS project, to replace the Field Computer System (FCS), which include implementation and project close out. The ERS will replace the DOR Field Computer System and improve the accessibility, effectiveness, and efficiency of the VR Services Program for Californians with disabilities. For 2010-11, the DOR received approval and appropriation to continue the system development, integration, data conversion, and testing and implementation activities for the new ERS. This BCP represents a continuation of that same project. Identified staffing needs will be covered by existing DOR staff and no positions or personal funds are requested. The DOR states in its BCP that the FCS current inefficiencies with an ERS product that interfaces with assistive technologies, is based on IT industry standards, and provides the flexibility needed to ensure that the DOR can respond to changing business requirements. The DOR plans to purchase a maintenance contract with the ERS vendor to allow the system to be installed with the most recent updates in the solution and technical platforms. This will ensure the DOR does not fall into the same situation it faces today with antiquated technology that cannot be modified to support its needs. The administration states that the ERS project will be funded with one-time use federal carryover funds that were created by unspent federal funds in prior years’ budgets. The federal funds were unspent in the years when General Fund reductions occurred leaving unmatched federal dollars that are available for one-time projects. These federal funds have been identified in the State Plan under the Innovation and Expansion project requirement to fund the ERS project and cannot be used for other purposes. There are sufficient carryover funds available to support this project and no state funds are being requested. Panelists \u00b7 DOR Please be prepared to address the following in your testimony: \u00b7 A brief description of the BCP and whether the BCP is consistent with the expectations of the project or represent an unforeseen change in the project. \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment Issue 2: BCP #2 DOR\/Department of Mental Health (DMH) Partnership This BCP requests a permanent augmentation of $216,000 Mental Health Services (MHS) Fund and 1.0 permanent position. DOR states that this will maintain both the DOR\/DMH interagency agreement as well as leverage an additional $798,000 in Federal Vocational Rehabilitation (VR) funding for VR programs that have grown 103% since the Mental Health Services Act (MHSA) was enacted. DMH supports the proposal. The Mental Health Planning Council, an independent oversight entity that provides public input and policy guidance to the DMH, has recommended that mental health cooperative programs be established in every California County as an effective use of leveraged funds. If not for the DOR’s ability to leverage federal funds, only MHS funds would be available, this minimizing services that could be available to those who serve and support persons with severe psychiatric disabilities in obtaining employment opportunities and the necessary independent living skills. DCSS states that if the BCP is not approved, the DOR cannot draw down the $798,000 in federal funds which would otherwise be lost due to the lack of state matching funds and may result in an additional Maintenance of Effort penalty in 2012. The proposal allows for permanent benefit to the State through the funding of the Interagency Agreement, which leverages federal funds for DOR staff and training for local cooperative programs that provide VR services to consumers of the DOR. Panelists \u00b7 DOR Please be prepared to address the following in your testimony: \u00b7 A brief description of the BCP, the state operations and any position authority effect, and any General Fund cost or pressure potential of the proposal. \u00b7 A description of the training that the larger portion of the appropriation will be dedicated to and how use of the dollars will be evaluated. \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment 5175 Department of Child Support Services Budget Overview The mission of the California Child Support Program is to enhance the well-being of children and the self-sufficiency of families by providing professional services to locate parents, establish paternity, and establish and enforce orders for financial and medical support. The statewide Child Support Program operates on the vision that children can rely on their parents for the financial and medical support they need to be healthy and successful. The Child Support Program is committed to ensuring that California’s children are given every opportunity to obtain this support in a fair and consistent manner throughout the state. The Child Support Program is committed to providing the highest quality services and collection activities in the most efficient and effective manner. The Department of Child Support Services is the single state agency designated to administer the federal Title IV-D state plan. The Department is responsible for providing statewide leadership to ensure that all functions necessary to establish, collect, and distribute child support in California, including securing child and spousal support, medical support and determining paternity, are effectively and efficiently implemented. Eligibility for California’s funding under the Temporary Assistance to Needy Families (TANF) Block Grant is contingent upon continuously providing these federally required child support services. Furthermore, the Child Support Program operates using clearly delineated federal performance measures, with minimum standards prescribing acceptable performance levels necessary for receipt of federal incentive funding. The objective of the Child Support Program is to provide an effective system for encouraging and, when necessary, enforcing parental responsibilities by establishing paternity for children, establishing court orders for financial and medical support, and enforcing those orders. Child Support Administration. The Child Support Administration program is funded from federal and state funds. The Child Support Administration expenditures are comprised of local staff salaries and benefits, operating expenses and equipment, and electronic data processing maintenance and operation costs. The federal government funds 66 percent and the state funds 34 percent of the Child Support Program costs. In addition, the Child Support Program earns federal incentive funds based on the state’s performance in five federal performance measures. Child Support Automation. Federal law mandates that each state create a single statewide child support automation system that meets federal certification. There are two components of the statewide system. The first is the Child Support Enforcement (CSE) system and the second is the State Disbursement Unit (SDU). The CSE component contains tools to manage the accounts of child support recipients and to locate and intercept assets from non-custodial parents who are delinquent in their child support payments. The SDU provides services to collect child support payments from non-custodial parents and to disburse these payments to custodial parties. Fund Sources 2009-10 2010-11 2011-12 General Fund $287,833 $335,180 $328,298 Federal Trust Fund 519,686 616,522 502,979 Reimbursements 90 156 123 Child Support Collections Recovery Fund 200,413 146,984 206,873 Total Funds $1,008,022 $1,098,842 $1,038,273 Issue 1: Proposal on General Fund Offset from Local Child Support AgEncies The administration proposes to suspend the county share of child support collections in 2011-12, withholding $24.4 million from local child support agencies, allowing the entire non-federal portion of child support collections to benefit the General Fund. The Governor states that this would not reduce the revenue stabilization funding of $18.7 million ($6.4 million General Fund) that counties currently receive. The following chart displays how this redistribution is proposed for 2011-12. Child Support Program Collections 2009-10 Actuals 2010-11 Nov. Estimate 2011-12 Nov. Estimate Non-Assistance Collections (Payments to Families) $1,726,464 $1,703,856 $1,678,789 Assistance Collections (Payments to Governments) 503,100 513,493 523,103 Total Child Support Collections $2,229,564 $2,217,349 $2,201,892 State Share of Assistance Collections $211,797 $215,216 $243,559 Federal Share of Assistance Collections 208,997 212,370 216,267 County Share of Assistance Collections 23,574 23,955 0 Other Collections 58,732 61,952 63,277 Total Assistance Collections $503,100 $513,493 $523,103 Panelists \u00b7 DCSS Please be prepared to address the following in your testimony: \u00b7 A description of the proposal, whether it is a one-time or ongoing change, and an analysis of the expected impact on LCSAs. \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment Issue 2: BCP #1 California Child Support Automation System (CCSAS) This BCP requests resources for the continued management and operation of the CCSAS. The BCP requests a reduction of $19.3 million ($6.6 million GF) in Fiscal Year (FY) 2011-12, including a reduction of contract services funding to support 11.0 permanent positions for Help Desk Support. The requested FY 2011-12 budget decrease includes 1) expiration of the Business Partner (BP) contract; 2) a shift of the help desk services from contract to state staff; 3) increases in State project hardware\/software costs to support refresh needs; 4) full-year funding for Child Support Enforcement (CSE) maintenance and operations (M&O) services; 5) expiration of the one-time application hosting and migration services contract; 6) adjustments of various consultant contract; 7) increases to the department’s wide area network (WAN) costs to reflect actual needs; and 8) increases in the Local Technical Support for replacement of outdated equipment. DCSS states that approval of the funding reduction and the establishment of the new positions would properly align DCSS’ budget with the related CCSAS project documents, reduce state General Fund, allow current staff to focus on existing high priority workloads, allow state staff to take over help desk services currently performed by vendors, and continue supporting county and state users of the CSE system. Panelists \u00b7 DCSS Please be prepared to address the following in your testimony: \u00b7 A brief description of the BCP and whether the BCP is consistent with the expectations of the project or represent an unforeseen change in the project. \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment Issue 3: Realignment Phase II Proposal The administration has proposed the realignment of child support programs to the counties in Phase Two. Details beyond concept have not yet been provided to the Legislature. The Subcommittee is interested in a brief discussion on the questions, implications, and complexities of this proposal. Panelists \u00b7 DCSS Please be prepared to address the following in your testimony: \u00b7 How is realignment envisioned for child support and under what timeline? \u00b7 What are the associated risks and benefits of a realignment of these services? \u00b7 What role would the state play under realignment here? How would the maintenance, operation, and changes to CCSAS be affected? \u00b7 What are the implications of realignment for federal compliance? \u00b7 What has been the feedback of the LCSAs and other child support stakeholders on this conceptual proposal thus far? \u00b7 Department of Finance \u00b7 Legislative Analyst’s Office \u00b7 Public Comment 2400 Department of Managed Health Care BUDGET Overview The mission of the Department of Managed Health Care is to help California consumers resolve problems with their Health Maintenance Organizations (HMOs) and to ensure a better, more solvent and stable managed health care system through: \u00b7 Administration and enforcement of California’s HMO patient rights laws; \u00b7 Operating the 24-hour-a-day Help Center; and \u00b7 Licensing and overseeing all HMOs in the state. Fund Source Actual 2009-10 Estimated 2010-11 Proposed 2011-12 Federal Trust Fund – $1,000,000 – Managed Care Fund $37,720,000 $46,418,000 $51,202 Reimbursements $310,000 $1,145,000 $1,179,000 TOTAL, ALL FUNDS $38,030,000 $48,563,000 $52,381,000 Issue 1: Budget Change Proposals Department of Managed Health Care Budget Change Proposals Positions Requested Cost Fund Source Description 2.0 new permanent positions $1,024,000 in 2011-12 & $908,000 ongoing Increase in fees on managed care plans No General Fund To address new increased workload related to health plan rate increase review per the Patient Protection and Affordable Care Act and SB 1163 (Statutes of 2010). 13.0 new 2-year positions $1,776,000 in 2011-12 & $1,672,000 in 2012-13 Increase in fees on managed care plans No General Fund To address new increased workload attributable to federal health care reform, including positions in: Health Plan Oversight, the Help Center, and the Office of Legal Services. 4120 Emergency Medical Services Authority bUDGET Overview The EMSA is comprised of the following three divisions: Disaster Medical Services Division The Disaster Medical Services Division coordinates California’s medical response to disasters. It is the responsibility of this division to carry out the EMS Authority’s mandate to provide medical resources to local governments in support of their disaster response, and coordinate with the Governor’s Office of Emergency Services, Office of Homeland Security, California National Guard, California Department of Public Health, and other local, state, and federal agencies, private sector hospitals, ambulance companies and medical supply vendors to improve disaster preparedness and response. EMS Personnel Division The EMS Personnel Division oversees licensure and enforcement functions for California’s paramedics, personnel standards for pre-hospital emergency medical care personnel, trial studies involving pre-hospital emergency medical care personnel, first aid and CPR training programs for child day care providers and school bus drivers. EMS Systems Division The EMS Systems Division oversees EMS system development and implementation by the local EMS agencies, trauma care and other specialty care system planning and development, EMS for Children program, California’s Poison Control System, emergency medical dispatcher standards, EMS Data and Quality Improvement Programs, and EMS communication systems. Fund Source Actual 2009-10 Estimated 2010-11 Proposed 2011-12 General Fund $8,421,000 $8,406,000 $6,760,000 Emergency Medical Services Training Program Approval Fund $395,000 $361,000 $380,000 Emergency Medical Services Personnel Fund $1,402,000 $1,479,000 $1,598,000 Federal Trust Fund $1,883,000 $,2449,000 $2,518,000 Reimbursements $11,224,000 $14,465,000 $14,725,000 Emergency Medical Technician Certification Fund _ $1,390,000 $1,448,000 TOTALS, ALL FUNDS $23,325,000 $28,550,000 $27,429,000 Issue 1: Mobile Field Hospitals Proposed Reduction Governor’s proposal. The Governor proposes to eliminate $1.7 million in annual General Fund support for mobile field hospitals (MFH). Background. EMSA maintains three MFHs in the state, located in the central valley, coastal region and in Southern California. The MFHs consist of approximately 30,000 square feet of tents, hundreds of beds, and sufficient medical supplies to respond to a major disaster in the state, such as a major earthquake in a densely populated area. According to EMSA, to respond effectively to any major disaster it is likely that all three MFHs would be deployed. The 2006 Budget Act allocated $18 million in one-time funds for the purchase of the MFHs and $1.7 million in on-going General Fund funding for the staffing, maintenance, storage, and purchase of pharmaceutical drugs, annual training exercises, and required medical equipment for the MFHs. EMSA states that an integral part of the operational readiness, response and successful deployment of each MFH is a pharmaceutical drug cache, for which the original budgeted amount was $23,000. Two years ago, EMSA estimated the true cost of the cache to be $471,000, and therefore has requested the difference of $448,000 for the past two years. EMSA states that the original estimate of $23,000 was simply a very inaccurate under-estimate. Recognizing that the value of the MFHs is quite limited in the absence of sufficient pharmaceutical supplies, the Governor put forth requests in 2009 and 2010 to augment the MFH budget by $448,000 General Fund. The Legislature did not approve of these requests. This year, the Governor is proposing instead to eliminate the $1.7 million in on-going support for the MFHs. Staff CommentS & QUESTIONS 1. Will the mobile field hospitals be functional at all with the elimination of this on-going support? 2. Is it the Administration’s view that they are no longer needed or valuable, or simply that the state cannot afford their upkeep? 3. If the elimination of this funding renders the MFHs ineffective, will the state still be incurring on-going expenses related to them, such as for storage? Issue 2: Budget Change Proposal Emergency Medical Services Authority Budget Change Proposal Positions Requested Cost Fund Source Description 2-year extension of 2.0 existing positions $231,000 Federal hospital preparedness grant Continue implementation of California’s Emergency System for Advanced Registration of Volunteer Health Professionals (ESAR-VHP) a national system to provide volunteer health professionals necessary to meet patient care needs during a major disaster. 1 Assembly Budget Committee ”