Health and human services programs provide medical, dental, mental health, and social services to California’s most needy citizens. For the 2001-02 fiscal year, expenditures for all Health and Human Services Agency budgets total $62.3 billion in combined State and federal funds. This includes expenditures for approximately 42,300 personnel years.
Figure HHS-1 displays the allocation of funding by major program area, and Figure HHS-2 displays program caseloads.
Department of Health Services
The mission of the Department of Health Services (DHS) is to protect and improve the health of all Californians. To accomplish this, the DHS administers a broad range of public health programs and the California Medical Assistance Program—Medi-Cal. In 2001-02, the DHS budget totals $28.2 billion ($10 billion General Fund) and 5,531 personnel years. Funding for 2001-02 reflects a General Fund increase of $1 million compared to 2000 Budget Act funding levels.
The DHS administers a broad range of health programs which provide medical treatment to the State’s uninsured or underinsured populations. In addition, the DHS administers public health programs that strive to prevent and control chronic diseases such as Human Immunodeficiency Virus (HIV), Acquired Immune Deficiency Syndrome (AIDS), cancer, cardiovascular disease, and environmental and occupational diseases. Expenditures for all public health programs and state operations total $3.0 billion ($676.9 million General Fund) in 2001-02. This represents a decrease of $73.9 million, or 9.8 percent below General Fund expenditures in the 2000 Budget Act.
Tobacco Settlement Fund—The 1998 Master Tobacco Settlement requires tobacco companies to make payments to the states totaling an estimated $206 billion nationally through 2025. In 2001-02, the State expects to receive approximately $468 million. The Budget proposes to create the Tobacco Settlement Fund to target the State’s share of the tobacco settlement for expansion of health care services in California, particularly aimed at providing additional health care coverage for children and adults. Several of the following paragraphs reference the use of this funding for specific programs and/or program expansions. Refer to the "Health Care and Human Services—Tobacco Settlement Fund and Overall Health Care Expenditures" Section of this document for further detail.
HIV/AIDS Program—Continuing to respond to the changing and emerging needs associated with the AIDS epidemic, the Budget provides $270 million ($120.6 million General Fund) for HIV/AIDS prevention, education, care, and treatment programs. This includes an increase of $5.1 million for rising AIDS Drug Assistance Program demand and increased drug costs. The increase also provides full-year funding for the AIDS/HIV Resistance Testing Program begun in 2000-01. (See Figure HHS-3 for annual AIDS Drug Assistance Program expenditures.)
County Medical Services Program—The County Medical Services Program (CMSP) is a county-operated program that provides health care to medically indigent adults in 34 rural counties. County funds primarily support the program, although for a number of years, the State contributed $20.2 million General Fund and an allocation from the Cigarette and Tobacco Products Surtax Fund to assist counties in providing services. The 1999 and 2000 Budget Acts suspended the General Fund contribution for CMSP. The 2001-02 Budget proposes to make this change permanent because of substantial reserves in the local CMSP Fund Account, which are estimated to be nearly $132 million on June 30, 2001, and because of the availability of expanded health care coverage for California’s medically indigent citizens through the Medi-Cal and Healthy Families Programs. The expansion of these programs has significantly increased the number of people receiving state-funded health care services who were previously uninsured. The State will continue to monitor the availability of resources in the local account to ensure maintenance of this program.
Childhood Lead Poisoning Prevention Program—To protect California’s children from the adverse effects of lead poisoning, the Budget provides $19.5 million, an increase of $1.1 million above the 2000 Budget Act, for enhanced preventive screening and case management services. This funding will be used to screen approximately 200,000 children, of whom approximately 4,000 children will be detected with elevated blood lead levels. The Budget also provides approximately $600,000 (fee-supported General Fund) to certify workers who identify and eradicate lead hazards. Further, the Budget provides $853,000 in one-time General Fund and 2.0 positions to upgrade and modernize California’s childhood lead exposure database system and $250,000 for an outreach program to continue to expand the screening of at-risk children.
Community Challenge Grant Program—The Community Challenge Grant program provides community-based grants to reduce the number of teenage and out-of-wedlock pregnancies. Because California was one of the five most successful states for decreasing the number of out-of-wedlock births, the State received a one-time $20 million federal bonus which was used to fund the program in 2000-01.
Due to California’s success in moving welfare recipients into the workforce, the State has received a one-time $36.1 million federal "high performance" bonus. To support California’s continued success in the reduction of out-of-wedlock births, the Budget proposes to use $20 million of the $36.1 million federal bonus to continue this program. The Budget also continues 6.0 positions in support of this effort.
Childhood Asthma Initiative—The Budget provides $4 million and a one-year extension of 4.0 limited-term positions to continue the Childhood Asthma Initiative. The program is funded by reimbursements from the California Children and Families Commission, and provides treatment to asthmatic children, provider education, and program evaluation.
Licensing of Medical Device Retailers—The Budget provides $1.3 million (regulatory fees) and 6.0 positions, to implement a program to inspect, license, and regulate home medical device retailers pursuant to Chapter 837, Statutes of 2000. The program will help to ensure the safety of medical devices used in California and reduce fraud and abuse among retailers of these devices.
Public Health Subvention—The Budget provides $3 million General Fund, tripling the amount included in the 2000 Budget Act, to be allocated to local health departments for various communicable and infectious disease control, surveillance, tracking, and treatment activities.
Proposition 99 Expenditure Plan—Californians continue to use fewer tobacco products each year, in part as a result of the effectiveness of the Tobacco Tax and Health Protection Act of 1988 (Proposition 99). As a result, estimated revenues for 2000-01 will decline $11.9 million below the 2000 Budget Act level to $360 million. For 2001-02, estimated revenues will decline $5 million to $355 million. Proposition 99 revenues continue to decline from year-to-year (see Figure HHS-4).
For 2000-01, the Budget includes increased expenditures of $6.3 million for caseload in the Access for Infants and Mothers (AIM) program. The Budget continues the base level of services for all remaining programs. Total expenditures of $470.8 million result.
For 2001-02, the Budget proposes to release $11 million in remaining litigation reserves to be used for the anti-tobacco media campaign. Using available resources, the Budget proposes the following:
The 2000-01 Budget included a one-time augmentation of $24.8 million to enhance access to critical health care in all California counties. These funds assisted counties by supplementing payments to emergency room physicians and specialists who care for uninsured individuals. The 2001-02 Budget proposes the continuation of these funds.
The 2000-01 Budget included $45.2 million for the anti-tobacco media campaign. The continuation of the media campaign in 2001-02 is part of the total $114.5 million effort to reduce tobacco use. In addition, the Budget proposes $20 million (Tobacco Settlement Fund) aimed specifically at reducing the incidence of smoking among California’s teens.
Proposition 99 revenues and expenditures for 1999-00, 2000-01, and 2001-02 are reflected in the Figure HHS-5, Figure HHS-6, and Figure HHS-7.
Child Health and Disability Prevention Program—This program provides preventive health assessments and immunizations to low-income children. For 2001-02, caseload is estimated to increase 3.6 percent over revised 2000-01 figures. In addition, the Prevnar vaccine will be added to the immunization schedule at a cost of $6.6 million to prevent ear and blood infections and meningitis. The Budget includes a total of $114.3 million ($49.3 million General Fund), or an increase of $12.4 million over the 2000 Budget Act.
California Children’s Services Program—This program provides medical services for children with serious medical conditions such as birth defects and chronic illnesses. For 2001-02, caseload is estimated to increase 3.4 percent over revised 2000-01 figures. The Budget includes a total of $68 million General Fund, or an increase of $4.3 million over the 2000 Budget Act.
Genetically Handicapped Persons Program—This program provides medical services for low-income adults with serious medical conditions. For 2001-02, caseload is estimated to increase 1.6 percent above revised 2000-01 figures. The Budget includes $35.9 million General Fund, or an increase of $4.8 million over the 2000 Budget Act.
Prostate Cancer—The Budget provides an augmentation of $10 million (Tobacco Settlement Fund), doubling the current program, to provide additional prostate cancer treatment to uninsured or underinsured individuals with incomes below 200 percent of the federal poverty level.
Youth Anti-Smoking—The Budget provides $20 million (Tobacco Settlement Fund) to enhance the State’s anti-smoking program. The program will provide grants to local non-profit agencies to conduct tobacco control interventions via college advocacy coalitions on college campuses throughout California. In addition, training to local agencies will be provided to increase enforcement efforts and reduce tobacco sales to minors. The Budget also provides grants through local lead agencies to implement a youth-focused participatory coalition that promotes tobacco prevention among teens. Finally, funds will be used to conduct a comprehensive evaluation to determine tobacco use and trends among teens and at-risk youth. Of this total augmentation, $5 million is for one-time purposes.
Medi-Cal, California’s Medicaid program, is a health care entitlement program for low-income individuals and families who receive public assistance or lack health care coverage. Federal law requires Medi-Cal to provide a set of basic services such as doctor visits, laboratory tests, x-rays, hospital inpatient and outpatient care, and skilled nursing care. In addition, California’s Medi-Cal program covers federal optional services such as pharmaceuticals, dental care, and emergency services. Medi-Cal’s benefit package is comparable to most employer-funded health plans and to other states’ benefit packages. These services are delivered by a wide range of public and private providers and facilities. Providers are reimbursed by the traditional fee-for-service method and by specific monthly payments under managed care. Medi-Cal is a key component of California’s health care delivery system, serving one in six Californians (see Figure HHS-8).
2000-01 Expenditures—For 2000-01, Medi-Cal expenditures are expected to be $24.6 billion ($9.5 billion General Fund), an increase of $204 million General Fund, or 2.2 percent above the 2000 Budget Act. Figure HHS-9 displays annual Medi-Cal General Fund costs per average monthly eligible.
2001-02 Expenditures—For 2001-02, Medi-Cal spending is projected to be $25.2 billion ($9.3 billion General Fund), a decrease of $132 million General Fund, or 1.4 percent below the revised 2000-01 Budget. This decrease results from the use of Tobacco Settlement funds for specified Medi-Cal expansions which have occured since the Master Tobacco Settlement. Since $468 million of tobacco settlement revenues are being shifted from the General Fund to a new Tobacco Settlement Fund, approximately $170 million of expenditures are being shifted as well. Caseload is expected to increase in 2001-02. As a result, the Budget reflects a growth in monthly eligibles of more than 640,000, or 12.3 percent, to just over 5.8 million eligibles. Figure HHS-10 displays year-to-year comparisons of Medi-Cal caseload and costs.
Some programs in departments other than the DHS, such as mental health services, are also eligible for federal Medicaid reimbursement. The federal funding for these programs is included in Medi-Cal expenditure totals, but state and local matching funds typically appear in the budgets for the other state agencies or local governments. Consequently, nonfederal matching funds of over $2.2 billion for those programs are not included in Medi-Cal program costs.
Caseload—Currently, about 5.2 million people qualify for Medi-Cal in any given month. The number of people eligible for Medi-Cal in 2000-01 is now estimated to be about 3.3 percent below the 2000 Budget Act. An increase of 12.3 percent, to 5.85 million eligibles is expected to occur in 2001-02. This caseload increase is due primarily to a variety of eligibility expansions and simplified eligibility processes as described later in this Medi-Cal discussion under "Expanding Access to Medical Care." This overall 12.3 percent increase compares to an expected 1.73 percent increase in the State’s population for the same period. Figure HHS-11 illustrates Medi-Cal caseload by eligibility category.
Figure HHS-12 reflects caseloads and costs for the ten most populous states from federal fiscal year 1998, the most recent year data are available. By percentage of state population, California served the highest percentage of state residents, but had the lowest average cost-per-eligible—$2,693 versus a national average of $3,895 per unduplicated annual eligible.
Benefits—All states are federally required to provide specific, basic medical services including physician, nurse practitioner, and nurse-midwife services; hospital inpatient and outpatient services; specified nursing home care; laboratory and x-ray services; home health care; and early and periodic screening, diagnosis, and treatment services for children until age 21.
In addition, federal funding at the rate of 51.4 percent is available for 34 optional services. These services include outpatient drugs, adult dental, optometry, hospice, chiropractic care, and occupational therapy. All states provide some optional services, with California providing 32 optional services. Many states (including California) provide these optional services both for the categorically needy (receiving public assistance) and medically needy beneficiaries (not receiving public assistance, but still qualifying for Medi-Cal based on income and other eligibility factors).
Medical costs vary considerably among the various categories of those eligible for Medi-Cal. For example, an individual receiving Medi-Cal as a result of CalWORKs eligibility will use services valued at about $125 per month in 2001-02, whereas a disabled person in long-term care will use about $5,310 in benefits per month.
Drugs—During the last few years, the cost of drugs has increased dramatically (see Figure HHS-13 and Figure HHS-14), and pharmaceutical costs are now the fastest growing component of all health care costs. Technological advances in the development of new drugs and increased advertising of new and more expensive drugs have contributed to rising costs. In an effort to control costs, the Medi-Cal program utilizes a Medi-Cal list of contract drugs and a state supplemental rebate program.
Managed Care—The Medi-Cal Managed Care program is a comprehensive, coordinated approach to health care delivery designed to: improve access to preventive primary care, improve health outcomes, and control the cost of medical care. Currently, over half of the people receiving Medi-Cal benefits and services, are receiving such services through managed care. Managed care includes three major health care delivery systems: the two-plan model, which consists of a local and commercial plan, Geographic Managed Care (GMC), and County Organized Health Systems (COHS).
Approximately 70 percent of Medi-Cal managed care beneficiaries are enrolled in the two-plan model, first implemented in January 1996. Twelve counties were initially selected to offer beneficiaries a choice between two managed care plans. Under the two-plan model, counties offer the choice between a commercial plan selected through a competitive bidding process or the county-sponsored "local initiative." The commercial plan consists mainly of providers serving privately insured individuals. The local initiatives consist largely of providers who have traditionally served the Medi-Cal population. The two-plan model ensures continued participation by the "traditional" providers and maximizes the types of providers caring for beneficiaries. Approximately 1.8 million beneficiaries are enrolled in the two-plan model.
The GMC model allows the State to contract with multiple managed care plans in a single county. The first GMC system was implemented in Sacramento in 1994. A second GMC system began operation in San Diego County in 1998-99. Approximately 314,000 beneficiaries are enrolled in GMCs.
The third model, the COHS, administers a prepaid, comprehensive case-managed health care delivery system. This system provides utilization controls, claims administration, and health care services to all Medi-Cal beneficiaries residing in the county. Five COHS, serving seven counties and 460,000 beneficiaries, are currently in operation.
In total, slightly less than 2.6 million Medi-Cal beneficiaries are currently enrolled in managed care plans at a cost of $4.2 billion ($2.1 billion General Fund) in 2001-02. Additional funding for increased payment limits or rate increases is included. For example, increases of $153.5 million ($76.8 million General Fund) in 2000-01 and $181.4 million ($91 million General Fund) in 2001-02 are included for the 9.2 percent two-plan model rate increase effective October 1, 2000. The Budget continues $1.3 million for outreach to assist Medi-Cal eligibles in selecting managed care plans and providers.
Expanding Access to Medical Care
In this Budget, the Administration continues its commitment to expand health care access to low-income working families, the disabled, seniors, and the uninsured. Enrollment in the Medi-Cal program is estimated to increase by 12.3 percent in 2001-02 from 5.2 million to 5.85 million eligibles due primarily to a variety of eligibility expansions and simplified eligibility processes.
Specifically, significant program expansions include eligibility for families, affecting employed, two-parent families, with net incomes up to 100 percent of the federal poverty level (FPL); provision of no-cost Medi-Cal to aged, blind, and disabled persons with income below 133 percent FPL; and expansion of Medi-Cal coverage to the working disabled.
No-Cost Medi-Cal for the Working Poor—Effective March 2000, Medi-Cal benefits were extended to two-parent working families with incomes at or below 100 percent FPL, to allow these families to keep more of their income. This program allows these parents to receive no-cost medical benefits while continuing to support their families after leaving CalWORKs. To date, 99,400 adults have taken advantage of this program. An additional 149,400 parents are expected to enroll in this program in 2001-02. The 2001-02 Budget includes $245.8 million ($123 million Tobacco Settlement Fund) for this program.
Medi-Cal for the Working Disabled—Effective April 2000, Medi-Cal benefits were extended to disabled working individuals with income below 250 percent FPL. These individuals pay a monthly sliding scale premium for this coverage based on their income level. This program was implemented to promote self-sufficiency and to reduce the fear of losing publicly funded benefits many of these individuals experience when entering the workforce. Currently, 443 individuals are enrolled in this program at an estimated cost of $760,000 ($380,000 General Fund) in 2001-02.
No-Cost Medi-Cal for Low-Income Seniors and Disabled Individuals—Effective January 1, 2001, no-cost Medi-Cal benefits were extended to aged, blind, and disabled individuals with incomes currently below 133 percent FPL. Approximately 52,800 beneficiaries are expected to qualify for this program in 2001-02, at a cost of $94.1 million ($47 million Tobacco Settlement Fund).
In addition to these eligibility expansions, the Administration has simplified the complex eligibility process by eliminating quarterly status reporting, providing continuous eligibility for children, and continuing eligibility for persons leaving CalWORKs until their annual Medi-Cal eligibility redetermination date.
Eliminating Quarterly Eligibility Status Reports—The 2000 Budget Act and Chapter 93, Statutes of 2000, expanded Medi-Cal caseload by eliminating the requirement for Medi-Cal families to submit quarterly eligibility status reports. Many Medi-Cal families were discontinued because they failed to complete and return these quarterly reports. As a result of eliminating this paperwork, approximately 218,000 adults will retain coverage at a cost of $142 million ($71 million General Fund) in 2001-02.
Providing Continuous Eligibility to Children—To reduce the number of uninsured children in California and to ensure continuity of medical care for these children, the Budget includes $269.5 million ($134.8 million General Fund) to provide 12-month continuous eligibility to children 19 years of age and younger, contingent upon federal financial participation. Continuous eligibility will result in an approximate increase of 369,000 average monthly eligibles in 2001-02.
Continuing Eligibility to Persons leaving CalWORKs—Chapter 1088, Statutes of 2000, prohibits counties from redetermining Medi-Cal eligibility when a beneficiary is terminated from CalWORKs, unless the reason for the CalWORKs termination is clearly a reason indicating a need for a Medi-Cal eligibility redetermination. Reasons for termination include such things as a significant increase in income or change in family composition. This simplification of the eligibility process will allow approximately 15,750 adults, previously discontinued from Medi-Cal for failure to provide eligibility information, to continue receiving Medi-Cal benefits. The Budget includes $17.9 million ($9 million General Fund) for this purpose.
Funding for Ancillary Services Provided in Institutions for Mental Disease—The Budget includes $19.6 million General Fund to continue state-only funding for ancillary medical services provided to individuals in Institutions for Mental Diseases until federal Medicaid funding is available. Federal law currently prohibits federal funding for these services; thus, under state law, the services to these individuals are not a covered Medi-Cal benefit. Responsibility for payment of these services was shifted from the State to local government in 1991-92 in the realignment of mental health programs. However, the State has funded these services since 1992 to mitigate the fiscal impact on local governments. The Administration will continue to seek a change in federal law to secure federal financial participation in these costs.
Medi-Cal Reimbursement Rates for Hospital Outpatient Services—Since 1990, the State has been involved in litigation with hospitals regarding Medi-Cal reimbursement rates for outpatient services. Under terms of a recent settlement agreement, the DHS will provide hospitals a one-time payment of $350 million ($175 million General Fund) to address previous years’ reimbursement levels. In addition, the 2001-02 Budget includes $128.4 million ($64.2 million General Fund) to increase reimbursement rates by 30 percent, effective July 1, 2001. For the next three years thereafter, the rates will increase annually by an additional 3.33 percent. At the end of three years, a new procedure for determining rates will be put in place. This settlement reached with California hospitals will ensure that hospitals have the resources to continue to provide quality care.
Funding for Medicare Health Maintenance Organization (HMO) Premium Payments for Beneficiaries Who Are Also Medi-Cal Beneficiaries— Approximately 85,000 Medicare beneficiaries enrolled in Medicare HMOs throughout the state are also eligible for Medi-Cal. Medicare HMOs are the primary payer for services, including pharmacy services. Once these benefits have been exhausted, Medi-Cal will then provide medical benefits to these beneficiaries.
Recently, most of the Medicare +Choice HMO plans announced that, effective January 1, 2001, they would begin charging beneficiaries a premium, or an increased premium, to continue enrollment in their Medicare +Choice HMO program. Since many of these beneficiaries are on a fixed income, it is unlikely they would be able to afford the increased monthly premium, and would disenroll from their Medicare HMOs and revert to fee-for-service Medicare/Medi-Cal coverage. This would result in Medi-Cal payment for all services not covered by Medicare, including all pharmacy services.
In order to avert the potential disenrollment of these vulnerable seniors from their HMO plans and ensure continuity of care and preventative health services, the Budget includes $19.8 million ($9.9 million General Fund) to begin paying these premiums to qualifying Medicare +Choice HMOs in January 2001.
Health Insurance Portability and Accountability Act
In August 1996, the President signed the Health Insurance Portability and Accountability Act (HIPAA). The HIPAA is designed to improve the availability of health insurance to working families and their children, including 25 million Americans who change jobs, are self-employed, own small businesses, or have pre-existing medical conditions. It also requires administrative simplification, revised security procedures, and fraud control. The HIPAA will affect nearly every business process of the health insurance industry and result in significant systems changes. If the State is not compliant with HIPAA regulations, federal funding for health care delivery programs may be lost and other financial penalties may be imposed. Inadequate implementation could result in increased General Fund costs and hinder the delivery of and payment for health care.
As part of administrative simplification, the HIPAA requires all health care providers and health plans that engage in electronic administrative and financial transactions to use a single set of national standards and identifiers. Electronic health information must meet security and privacy standards, which should result in more cost-effective claims processing and coordination of insurance benefits.
The 2001-02 Budget includes $18.7 million ($2 million General Fund) and 15.1 positions for the DHS to develop policy associated with the administrative simplification objective of the HIPAA. The DHS will ensure that all the appropriate health plans and programs that electronically maintain or transmit health information comply with requirements to use a single set of national identifiers and codes.
Licensing and Certification
Licensing and Certification activities promote the highest quality of medical care in community settings and facilities. In continuation of the Administration’s commitment to help elderly people remain at home, increase community-based placement alternatives, and enhance the quality of care in nursing homes, the 2001-02 Budget proposes the following enhancements:
Managed Risk Medical Insurance Board
Healthy Families Program—The Healthy Families Program (HFP) is a subsidized health insurance program for children in families with low-to- moderate income who are not eligible for no-cost Medi-Cal. The HFP provides low-cost health, dental, and vision coverage to eligible children from birth to age 19.
The 2000-01 Budget includes a total of $400.1 million ($145.6 million General Fund) for HFP to serve 455,000 children. This represents an estimated caseload increase of 159,000 children over the previous year. In 2000-01, the base year for the Tobacco Settlement Fund, $32 million was provided to expand HFP coverage to children with family incomes between 200 and 250 percent of the federal poverty level (FPL). The 2001-02 Budget includes $733.1 million ($125.2 million General Fund, $74.4 million Tobacco Settlement Fund) for HFP to serve the estimated 561,000 children who will be enrolled by June 30, 2002.
Additionally, the 2001-02 Budget proposes $201.5 million ($76.1 million Tobacco Settlement Fund) to expand the HFP to include uninsured parents of children eligible for the Healthy Families and Medi-Cal for Children programs. Eligibility will be extended to parents with incomes up to 200 percent of the FPL. This program is expected to serve 174,000 uninsured adults by June 30, 2002.
Total HFP enrollment is expected to grow to 735,000 children and adults by June 30, 2002. Figure HHS-15 displays program costs by department.
Access for Infants and Mothers—The Access for Infants and Mothers program provides low-cost, comprehensive health insurance coverage to uninsured pregnant women with family income between 200 and 300 percent of the FPL. This coverage extends from pregnancy to 60 days postpartum, and covers infants up to the first two years of life. The 2000-01 Budget includes a total of $60.2 million ($1.3 million General Fund, $56.4 million Perinatal Insurance Fund, $2.5 million Federal Fund) to serve an average of 468 new women per month through June 30, 2001. The 2001-02 Budget includes a funding increase of $5.1 million to maintain coverage of an average of 527 women per month.
Managed Risk Medical Insurance Program—The 2000-01 Budget contains an additional $5 million one-time augmentation funded by Proposition 99 to provide health insurance to more individuals who cannot obtain coverage through the individual insurance market. The MRMIB should continue its efforts to work with the Legislature and the insurance industry to find market-based solutions to provide coverage to this uninsured population.
Department of Mental Health
The 2001-02 Budget includes $2 billion ($953.2 million General Fund), an increase of $210.5 million ($75.4 million General Fund) above the 2000-01 revised Budget (these amounts exclude Capital Outlay expenditures) for state mental health hospital and community mental health programs. The increase reflects higher caseloads for the state hospitals; Mental Health Managed Care; Early and Periodic Screening, Diagnosis, and Treatment; and Therapeutic Behavioral Services. The Budget also includes a major funding augmentation for deferred maintenance projects at the state hospitals, start-up funds for a new Psychiatric Technician Training program, and the staffing of the inpatient mental health program at Salinas Valley State Prison.
State Hospital Population—The 2001-02 Budget includes $598.1 million ($450.7 million General Fund), a net increase of $49.6 million ($52.1 million General Fund), or 9 percent over revised 2000-01 expenditures for state hospitals. This funding level will support a total caseload of 4,593 commitments.
Mental Health Managed Care Program—Chapter 633, Statutes of 1994, established the Mental Health Managed Care Program and transferred responsibility for providing Medi-Cal psychiatric inpatient and outpatient care from DHS to the Department of Mental Health. The Budget includes an increase of $21.2 million ($20.2 million General Fund) above revised 2000-01 expenditures for mental health services to be provided by the counties through the Mental Health Managed Care Program. The Budget also reflects the receipt of funding from DHS for rate increases for Mental Health Managed Care psychiatrists and psychologists. These increases are commensurate with those included in the 2000 Budget Act for other Medi-Cal providers and bring Mental Health Managed Care provider rates into parity with other Medi-Cal providers.
Early Periodic Screening, Diagnosis, and Treatment Program Caseload and Service Expansion—The Budget includes an increase of $117.3 million (reimbursements) for continued increases in Early Periodic Screening, Diagnosis, and Treatment services. This augmentation provides for an increase of 27 percent in program costs (all fund sources) based on actual historical growth rates. This high growth rate reflects ongoing implementation of a recent federal entitlement program, which has not yet stabilized nor reached its peak utilization. Refer to Figure HHS-17 for Early Periodic Screening, Diagnosis, and Treatment expenditures.
Salinas Valley State Prison New Mental Health Facility—The Budget includes $2.3 million (reimbursements) and 97.0 positions to staff a new 64-bed inpatient mental health facility at Salinas Valley State Prison, scheduled for completion in March 2002.
Improvements to State Hospital Facilities—The Budget includes a total of $34.5 million in one-time General Fund for deferred maintenance and security improvement projects in the four state hospitals. The deferred maintenance and security improvement projects include $7.6 million General Fund to upgrade personal alarm systems at all the state hospitals, $20 million for deferred maintenance repairs to the state hospitals (including $6.1 million for projects and repairs associated with Americans with Disabilities Act compliance at Metropolitan State Hospital) and $6.9 million to purchase modular buildings for patient recreation, group treatment facilities, and staff offices. Funding for Capital Outlay projects includes $349.3 million for the construction of an SVP Facility at Coalinga, $2.5 million to begin new remodeling and new construction projects at the four state hospitals, and $676,000 for minor projects.
Homeless Mentally III—Recent estimates indicate there are 50,000 homeless, severely mentally ill Californians, including 10,000 to 20,000 homeless, mentally ill veterans. These individuals are at great risk of becoming involved in the criminal justice system. The 2000 Budget Act included a one-time $20 million General Fund appropriation and a $35.6 million ongoing General Fund increase for grants to counties to provide integrated services focused on serving the homeless, parolees, and probationers with serious mental illness. The 2001-02 Budget provides $55.6 million on an ongoing basis to provide these services annually. These funds are available to counties currently providing integrated services and counties prepared to implement such programs.
Therapeutic Behavioral Services—The Budget includes $13 million, a $12 million increase (reimbursements) for Therapeutic Behavioral Services (TBS), up from $1 million in 2000-01. The Department of Mental Health and the local mental health plans will be required to provide TBS as a Medi-Cal benefit. TBS is an intensive one-on-one, short-term outpatient treatment intervention for children and youth who are seriously disturbed and need additional short-term support. This support is intended to prevent placement in the most expensive, intensive-service level group homes, or locked mental health facilities, including acute care, or to enable transition from any of those levels to a lower level of residential care. The increase includes funds to contract for mid- and post-service reviews for appropriate use of TBS.
Psychiatric Technician Training School—The Budget includes $650,000 for one-time start-up costs to develop a Psychiatric Technician Training program at West Hills Community College in Coalinga. This effort is to help ensure that sufficient qualified psychiatric technicians are available to staff the new SVP facility scheduled to open in Coalinga in October 2004 and to provide opportunities to local residents to receive training and employment in the new facility.
Department of Developmental Services
The 2001-02 Budget includes $2.7 billion ($1.8 billion General Fund), an increase of $122.9 million ($55.5 million General Fund) above the 2000-01 revised Budget for programs for the developmentally disabled. This increase reflects an additional 8,300 clients (from 166,814 to 175,116).
Although a population change is not projected for the Department in 2000-01, the Budget includes a current year increase of $36.5 million General Fund to replace lost federal reimbursements resulting from federal certification issues at the Developmental Centers (DCs).
The Budget includes the following significant adjustments for 2000-01:
The Budget includes the following significant adjustments for 2001-02:
The Budget includes the following significant adjustments for 2000-01:
Regional Center population is not projected to change in the current year. While the Budget reflects no net overall funding change, it includes an increase of $8.8 million reimbursements and a commensurate decrease of $8.8 million General Fund for the following major current year revisions:
The Budget includes the following significant adjustments for 2001-02:
Regional Center population is projected to increase by 8,460 clients, from 162,970 to 171,430. The increasing population and cost per client result in a funding increase of $148.6 million ($141.7 million General Fund). Specifically, the Budget provides the following major adjustments:
The 2001-02 Budget also includes the following:
Early Start Program—$2.6 mil-lion General Fund to increase Regional Center personnel in the Early Start program. This augmentation will increase clinical staff for necessary evaluations and service coordination and add personnel for speech, physical, and occupational therapy as well as audiology services to meet federal Office of Special Education program requirements and ensure continued federal funding.
California Developmental Disabilities Information System—$5.6 million General Fund for the second of three phases to implement a statewide fiscal accounting and program monitoring system, which will replace two existing systems. The five-year project is expected to cost approximately $14 million General Fund.
Special Incident Reporting—$9.2 million ($7.5 million General Fund) for additional Regional Center staff to expand the Special Incident Reporting system. These additional resources are expected to bring the system into compliance with federal requirements to ensure continued Home and Community-Based Services Waiver funding.
Funding Shift—$346 million General Fund and commensurate decreases in DHS General Fund to simplify budgeting processes. Previously, the General Fund portion of Medi-Cal costs was budgeted in DHS and transferred to DDS as a reimbursement. Beginning in 2001-02, the General Fund portion of Medi-Cal costs for Regional Center consumers will be budgeted directly in the DDS budget, eliminating unnecessary fund transfers between State agencies.
Department of Alcohol and Drug Programs
The 2001-02 Budget includes $680.3 million ($273 million General Fund), an increase of $72.3 million ($69.3 million General Fund) above the 2000-01 revised Budget for substance abuse treatment programs. This increase reflects an additional 5,120 clients (from 293,200 to 298,320, excluding Proposition 36 caseload); expanded Drug Medi-Cal programs; expanded services at Indian Health Clinics; and implementation of Proposition 36, a voter approved initiative.
The Budget includes the following major adjustments:
Expansion of Drug Medi-Cal Audits—$352,000 ($176,000 General Fund) and 4.0 positions to perform Drug Medi-Cal financial audits. It is estimated that the audits will increase program recoupment by $500,000.
Drug Medi-Cal Caseload Expansion—$20.9 million ($10.2 million General Fund) to provide case management and expand the Day Care Habilitative program to include all Medi-Cal eligibles and to establish a new relapse prevention program pursuant to Chapter 108, Statutes of 2000. The relapse prevention program will provide medically necessary services to individuals who have successfully completed the active treatment phase of an alcohol, drug treatment, or recovery program or after the individuals have completed the maintenance phase of narcotic replacement therapy.
Indian Health Clinic CalWORKs Services—$2.8 million (reimbursements) and 2.0 positions to allow the Department of Alcohol and Drug Programs to implement CalWORKs Mental Health and Substance Abuse Services for Native Americans. This funding will provide a substance abuse clinician in each of 33 Indian Health Clinics and transportation services to allow tribal participants to engage in program activities.
Feasibility Study/Consolidated Database—$300,000 (General Fund) to conduct a feasibility study for a statewide, consolidated relational database incorporating several existing stand-alone databases and the requirements of the Health Insurance Portability and Accountability Act. The study will provide the information necessary to determine if a single statewide system could support client billing, service utilization and delivery cost tracking, service data analysis, and rate versus cost of service analysis.
Proposition 36—As passed by the voters, this Proposition provides an appropriation of $60 million General Fund in 2000-01 and $120 million General Fund annually thereafter, through 2005-06. The Proposition requires substance abuse treatment services in lieu of incarceration, for persons convicted of specified non-violent drug possession charges.
The Budget reflects these appropriations and 15.0 positions in 2000-01 and 25.2 positions in 2001-02 for the Department to implement the treatment provisions of Proposition 36. State support costs for the Department total $1.2 million in 2000-01 and $2.8 million in 2001-02 for various administrative functions such as licensing and certification of the treatment programs, regulation development, and required audits.
The balance of funds appropriated by the Proposition have been allocated to the counties for start-up activities in 2000-01 and will be allocated for treatment and probation services in 2001-02 and thereafter. (See the "Health Care and Human Services" Section for a more extensive Proposition 36 discussion.)
Mentoring At-Risk Youth—The Department of Alcohol and Drug Programs continues to be responsible for coordinating the State’s mentoring effort. The Budget includes $28.4 million ($17.3 million General Fund, including $15 million Proposition 98), an increase of $4.5 million over the 2000 Budget Act, for various State agencies involved in the Mentoring Program. The changes include an increase of $5 million Proposition 98 General Fund in the Office of the Secretary for Education and a decrease of $500,000 in federal funds in the Department of Community Services and Development. Funding continues at the previous level in the Departments of Alcohol and Drug Programs, Youth Authority, and Education. These programs are designed to assist at-risk youth to become productive members of society while reducing juvenile crime, teenage pregnancy, gang association, and the school dropout rate. The $4.5 million increase in funding will help serve more at-risk youth currently on a waiting list for mentors. (Figure HHS-18 reflects mentoring funding by department.)
Employment Development Department
Workforce Investment—The Budget includes $800.7 million in federal Workforce Investment Act funds to maintain a highly skilled California workforce. The California workforce development system is based on an innovative network of "one-stop" career centers, which provide a full range of job training, education, and employment services at a single neighborhood location. Each one-stop center not only provides job seekers with assessment services, information on employment and training opportunities, unemployment services, and job search and placement assistance, but also gives employers access to well-qualified workers and specialized education and training programs.
Recognizing that California’s economy will benefit from a well-educated and adaptable workforce, the California Workforce Investment Board establishes the policies necessary to implement and operate the Workforce Investment Act in California. The Board’s 65 members, who represent a broad cross-section of highly qualified public and private sector individuals, assist the Administration in reviewing Local Workforce Investment Area plans and providing oversight of local workforce education and training programs.
Faith-Based Initiative––The Budget includes an augmentation to continue, for an additional year, the $5 million General Fund added in 2000-01 to contract with faith-based organizations to deliver employment services. This funding will be provided via a competitive grant process to faith-based organizations that are uniquely suited to provide services to individuals facing multiple barriers to assimilation into the workforce. In 2000-01, the Employment Development Department received 231 proposals from faith-based organizations representing all regions of the state, requesting over $87 million. Final award recommendations are currently under consideration by the Administration.
Department of Community Services and Development
California Mentor Program—The Budget includes $1 million General Fund to continue the California Mentor Program in the Department of Community Services and Development. The funds will allow approximately 2,000 children to be matched with mentors in 2001-02. This effort continues the Administration’s commitment to match successful role models with at-risk children to assist them to become responsible adults.
Home Energy and Weatherization Assistance—The Budget includes $4.9 million (Petroleum Violation Escrow Account) to provide energy assistance and energy saving services to low-income households. This augmentation will allow approximately 6,625 additional households to be served and will save an estimated $769,000 in energy costs during 2001-02. A comparable level of savings should continue in future years, depending on the price of energy.
California Department of Aging
Senior Wellness Education Campaign—The Budget includes $1 million General Fund and 2.0 positions to continue, on a permanent basis, first-year efforts of the Senior Wellness Education Campaign. This program was part of the 2000-01 Aging with Dignity Initiative. The campaign will educate seniors and their families on innovative community-based and in-home care alternatives to institutional placement.
Linkages Program—The Linkages Program, currently supported with $10.2 million General Fund, serves 3,600 clients in 36 programs operated by the 33 local Area Agencies on Aging. These programs provide case management and supportive services to seniors who may not qualify for other state or federal programs, but still need assistance in order to remain in their homes. The Budget includes $1.5 million General Fund to expand the program by adding, for each of the 36 programs, 25 additional client slots (900 statewide) and a half-time registered nurse who will provide case management and health improvement services for clients.
Adult Day Health Care Program—The Budget includes $982,000 ($484,000 General Fund) and 8.5 positions for the Adult Day Health Care Program to provide certification, oversight, and monitoring activities. These activities will help provide a more safe and secure environment in which seniors may receive important health, therapeutic, and social services that will allow them to remain in their homes longer.
Department of Rehabilitation
Vocational Rehabilitation Program—On June 29, 2000, the Department of Rehabilitation (DOR) modified its service priority system, the Order of Selection, to provide Vocational Rehabilitation (VR) program services to all applicants in the Most Severely Disabled category, regardless of their dates of application, and to eligible applicants from the Severely Disabled category who may apply through June 30, 2001. The Administration proposes to continue services for these categories during 2001-02 to serve as many clients as financially possible. However, the Budget does not reflect any increased caseload service levels for 2001-02, since the federal budget for this area was passed too late for DOR to reliably project its federal funding level for the 2001-02 Budget. This issue will be addressed as part of the May Revision of the Budget.
Work Activity and Supported Employment Programs—The Budget includes an additional $7.2 million ($9.4 million General Fund increase, $2 million federal fund decrease, and $0.2 million reimbursement decrease) for 2001-02 changes in Work Activity Program and Supported Employment Program caseload under the VR and the Habilitation Services programs. The Budget also includes federal reimbursements available to the DOR since 1998-99 under the federal Home and Community-Based Services Waiver. These reimbursements are estimated to be $12.9 million in 2000-01, and result in General Fund savings on a dollar-for-dollar basis. These funds pay for services provided to developmentally disabled clients. The Budget contains $12.2 million in waiver reimbursements for 2001-02. The Budget also includes an additional $5.3 million General Fund for 2000-01 in order to address current-year entitlement caseload changes.
Home and Community-Based Waiver Program Staffing—The Budget includes $570,000 ($285,000 General Fund) to make permanent 8.0 positions to continue, on an ongoing basis, staffing for the Home and Community-Based Waiver Program at the same level as in the current year. As noted above, participation in this program saves the State over $12 million in General Fund that would otherwise be required to pay for the department’s two entitlement programs (work activity and supported employment).
Americans With Disabilities Act Unit—The Budget includes $414,000 in reimbursements to permanently fund 5.0 positions in order to continue staffing for the Americans with Disabilities Act (ADA) unit at the same level as in the current year. The DOR is the State’s lead agency on ADA issues, and it provides training and support for state entities in their efforts to address issues relating to disability awareness and workplace accessibility.
Assistive Technology Services for Independent Living Centers—The 2000-01 Budget provided $2.25 million in one-time General Fund to allow Independent Living Centers to perform assistive technology assessments of their clients and to begin providing services as they are found necessary. The DOR anticipates that these assessments will be completed prior to the May Revision of the Budget, and 2001-02 funding for assistive technology will be considered at that time.
Office of Statewide Health Planning and Development
Medical Information Reporting for California—The Office of Statewide Health Planning and Development (OSHPD) was required by Chapter 735, Statutes of 1998, to improve California’s health care data system by expanding its patient information database and providing more timely reporting and public disclosure. Toward that end, since 1998-99, OSHPD has been funded to develop the Medical Information Reporting for California (MIRCal) Project. The Budget includes an augmentation of $540,000 (Health Data and Planning Funds) and 4.0 positions to implement Phase 3 of the MIRCal project. Of this amount, $99,000 is to fund 1.0 position to initiate compliance with new federal requirements on electronic data collection and transfer due to the Health Insurance Portability and Accountability Act of 1996.
Health Careers Training Program—This program identifies staffing needs of health care employers, identifies and develops health care training programs, and recruits and places individuals into health care positions. The Budget includes $172,000 (California Health Data and Planning Funds) to make permanent 2.0 positions and provides ongoing support costs to continue the Health Careers Training Program at the same level as in the current year.
Rural Health Development Grants—In prior years, $3 million General Fund has been provided on a year-by-year basis for the Rural Health Development Capital Grants Program, which provides grants to licensed nonprofit and public rural healthcare providers for capital improvements and equipment. During the same period of time, from $1 million to $2 million (Proposition 99 funds) was provided on a year-by-year basis for the Rural Health Policy Council Small Grants Program, which provides grants of up to $25,000 per grantee to partially offset the uncompensated cost of providing health care services to low-income individuals. The Budget includes $3 million General Fund and $1 million Proposition 99 funds to continue these two programs for one additional year.
Emergency Medical Services Authority
Emergency Medical Services for Children—The Budget includes $120,000 General Fund to continue the implementation of the Emergency Medical Services for Children program, which addresses the special needs of children related to injury prevention, pre-hospital care, critical care, and trauma services. This funding will allow program implementation to continue in those counties that do not have comprehensive systems in place, and will provide for the improvement and maintenance of emergency medical care capabilities for existing systems.
Disaster Medical Assistance Teams—The Budget includes $200,000 General Fund to support mobile Disaster Medical Assistance Teams, comprised of medical professionals capable of providing emergency medical care in a devastating medical environment. This funding will allow for statewide training exercises and will provide for storage of emergency supplies for the teams.
Child Care Provider First Aid—The Budget includes $157,000 (Emergency Medical Services Training Program Approval Fund) to enhance the Child Care Provider First Aid training program. These enhancements include developing a video to train child care providers in the proper use of inhalers, protocols for the treatment of children with special medical needs, Spanish-language curriculum materials, and a program evaluation component to encourage continued improvement.
Department of Child Support Services
The Child Support Program provides child support services and conducts collection activities that contribute to meeting the financial, medical, and emotional needs of children. To provide enhanced fiscal and programmatic direction and oversight of child support enforcement activities, Chapters 478 and 480, Statutes of 1999, established the Department of Child Support Services (DCSS). These measures authorized the implementation of a single statewide child support system comprised of local child support agencies under the supervision of the new Department. The DCSS assumed responsibility for child support enforcement activities in January 2000. At the local level, activities to transition from the former district attorney-managed system will occur between January 2001 and January 2003.
The Department is designated as the single State agency to administer the statewide program for securing child and spousal support, securing medical support, and determining paternity. The primary purpose is the collection of child support payments for custodial parents and their children.
In addition, the Department is charged with the following functions:
State Administration—The Budget proposes total expenditures of $29.8 million and 229.1 personnel years to support the Department. Departmental staff will ensure a more effective program through expanded state-level direction and supervision of local child support agencies. Specific mandates require the Department to increase oversight of local program and fiscal operations; provide detailed procedures, regulations, and training to counties to ensure uniformity of program operation; establish best practices for counties; and establish customer service requirements and a proactive customer services approach.
County Administration—Under the new statewide system, the counties will receive federal financial participation and capped federal incentives for administrative expenses, with the remaining share of cost funded by state incentive funds up to the amount appropriated in the annual Budget Act. To ensure the uniform administration of child support enforcement programs statewide, the State determines the appropriate level and usage of state incentive funds. Accordingly, each county submits for review by the Department a proposed budget for child support administrative costs. The Department monitors the level of county expenditures, the amount of federal reimbursements counties receive, and the amount of federal incentives paid to each county. Any remaining administrative costs will be funded from the state incentive funds, provided the costs incurred by the county meet specified criteria. Each county is responsible for funding, out of its local resources, any costs not meeting these standards.
Federal Incentive Structure—Under the performance-based federal incentive methodology, each state receives federal incentive funds based on the following performance categories:
Total incentive funding is 13.6 percent of distributed collections. Therefore, state funds provide the difference between federal funding and the capped incentive rate, subject to the Budget Act appropriation. The federal incentive methodology will be fully implemented in federal fiscal year 2001 rather than federal fiscal year 2002 as previously estimated, resulting in a $12 million loss of federal incentive funds in 2000-01.
Child Support Collections—The child support program establishes and enforces court orders for child, spousal, and medical support from absent parents on behalf of dependent children and their caretakers. For display purposes only, the Budget reflects the total collections received, including payments to families and collections made in California on behalf of other states. The General Fund share of assistance collections is included in statewide revenue projections. For 2000-01, the Department anticipates total collections of approximately $2.1 billion, resulting in General Fund revenue of $350.3 million. In 2001-02, the Department estimates total collections of over $2.3 billion ($385.1 million General Fund).
Child Support Automation—Chapter 479, Statutes of 1999, designated the Franchise Tax Board (FTB) as the agent of the Department for the procurement, development, implementation, and maintenance and operation of the California Child Support Automation System. The State will assume all costs associated with developing, implementing, and transitioning all counties onto this new system. When in place, the system will protect California from the imposition of penalties for not having a federally approved system for collection and distribution of child support payments. Already, California’s delay in implementing a single, statewide automated system has resulted in significant federal penalties. In the current year, the Budget includes $113.5 million General Fund to reflect payment of the federal penalty, an increase of $12 million over the 2000 Budget Act level. The federal penalty anticipated in 2001-02 is estimated to be $163.2 million General Fund.
Funding also was provided in the 2000 Budget Act for FTB to expand its responsibility for the collection of overdue child support payments until the statewide automated system is in place. Due to the denial of federal funding for this effort, FTB is preparing an alternative benefits-funded contract for implementing an automated system that meets legislative requirements. Despite the loss of federal financial participation, the State is proceeding with this project as the centralized management of child support arrearages is expected to result in increased child support collections of over $70 million annually when fully implemented, which is sufficient to cover the system development costs. Development of this alternative was not complete at the time the Budget was prepared. Therefore, additional information will be provided as it becomes available. Current FTB funding levels are expected to be adequate to implement this alternative in 2001-02; however, additional state funds will be required by the DCSS for associated implementation costs, and by FTB in future years, to offset the loss of federal funds.
Department of Social Services
California Work Opportunity and Responsibility to Kids
The California Work Opportunity and Responsibility to Kids (CalWORKs) program implements California’s version of the federal Temporary Assistance for Needy Families (TANF) program. The CalWORKs program replaced the Aid to Families with Dependent Children (AFDC) program on January 1, 1998.
The CalWORKs program is California’s largest cash aid program for children and families and is designed to provide temporary assistance to meet basic needs (shelter, food, and clothing) in times of crisis. While providing time-limited assistance, the program also promotes self-sufficiency by establishing work requirements and encouraging personal accountability. The program recognizes the differences among counties and affords them maximum program design and funding flexibility to better ensure successful implementation at the local level.
Caseload Trends—Caseload is projected to decrease for the seventh consecutive year in 2001-02, a significant turnaround from the rapid growth of the early 1990s, when caseload peaked in 1994-95 at 921,000 cases (see Figure HHS-19 and Figure HHS-20). Policy reforms promoting work skills and encouraging job skills training, increasing child care services, increasing financial incentives encouraging work, and an improved private sector economy have assisted recipients and potential recipients in finding work. The revised caseload projections are 521,000 cases and 1,482,000 persons in 2000-01, and 494,000 cases and 1,397,000 persons in 2001-02.
TANF Block Grant and Maintenance-of-Effort—Under federal TANF provisions, California is awarded a block grant of $3.7 billion per year. Any unspent block grant amount may be carried forward by the State from year-to-year.
The State and counties have a federal maintenance-of-effort (MOE) requirement based on the federal fiscal year 1994 baseline expenditures for the former AFDC program and the proportion of CalWORKs recipients that are participating in work activities. The 2001-02 CalWORKs budget reflects California’s success in having recipients meet the federally mandated work participation requirements. With that goal being met, the federally imposed MOE level for California was reduced from 80 percent of the federal fiscal year 1994 baseline expenditures for the former AFDC program ($2.9 billion) to 75 percent ($2.7 billion), saving $181.8 million General Fund for use in other programs. In addition, the Administration has successfully appealed a federal decision that California did not meet the 1997 TANF work participation rate requirement. As a result, the State’s MOE requirement is reduced on a one-time only basis by an additional $153.9 million General Fund for 2000-01, saving a corresponding amount for use in other programs.
CalWORKs Expenditures––In total, CalWORKs expenditures for 2001-02 are proposed to be $7 billion. Of the $7 billion, $5.7 billion is budgeted within the Department of Social Services (DSS), and an additional $1.2 billion is budgeted as follows: $506.4 million in the California Department of Education and California Community Colleges for child care; $100 million for a child care reserve; $477.8 million in other departments’ budgets, and $144.4 million in county budgets (see Figure HHS-21).
Also included in the Budget is $2.8 million to be transferred to the Department of Drug and Alcohol Programs. This funding will be allocated to Indian Health Clinics to provide mental health and substance abuse services as well as transportation assistance to CalWORKs recipients.
In addition, $84.9 million is set aside as a general TANF reserve for unanticipated program needs. A program reserve allows the State to deal with unforeseen pressures that otherwise could drive program costs above the federally-required General Fund match level. Furthermore, the current structure of the CalWORKs budget does not provide the State with sufficient flexibility to shift funding between CalWORKs program elements when mid-year corrections are needed. This reserve and the child care reserve reduce the need to shift funding between program elements in these instances.
Employment Services Funding Reconsideration—The 2000 Budget Act includes a $55.7 million TANF Block Grant Reserve for unanticipated CalWORKs program needs. To date, $5.3 million has been transferred from this reserve to pay the current year cost of a pregnancy special need benefit. The Budget Act also authorizes the allocation of funds from this reserve to counties that successfully appeal disallowances from their CalWORKs employment services budget requests. The DSS has conducted a reconsideration process and $91.6 million in appeals have been approved. As a result, the entire $50.4 million available reserve funding will be allocated to counties prorated on the basis of the successful appeals. In addition, the Budget includes an augmentation of $91.6 million above the 2000 Budget Act level for additional employment services expenditures in 2001-02.
TANF Bonus Award—The Budget includes $36.1 million federal TANF funds awarded by the U.S. Department of Health and Human Services to California as a bonus award for its high job retention rate and earnings gain rate among current and former CalWORKs recipients. Of the $36.1 million, $20 million will be transferred to the Department of Health Services’ budget for continuation of the Community Challenge Grant Program for teen pregnancy prevention. The remaining $16.1 million will be used to fund the general TANF reserve for unanticipated program needs.
County Block Grant—Under CalWORKs, the State sets basic program standards, including grant levels, eligibility criteria, and time limits. The Budget provides funds for counties as a block grant that may be used to divert recipients from public assistance or to provide employment services, child care, and other supportive services to help recipients transition to unsubsidized employment. This block grant provides counties with the necessary fiscal discretion to manage their CalWORKs program to ensure local success. Of the total $1.9 billion budgeted for CalWORKs services, county administration, and child care, over $1.6 billion will be included in the block grant available to counties in 2001-02. In addition to the block grant, counties are provided with $55.2 million to provide substance abuse services, $54.1 million to provide mental health services, and $88.6 million for the State’s matching share for the federal Welfare-to-Work grant administered by the Employment Development Department.
Performance Incentives—The CalWORKs statute provides for performance incentive payments to counties equaling 50 percent of savings resulting from exits from aid due to employment, grant reductions due to earnings, and diversion of applicants before they enter the program. Pursuant to Chapter 108, Statutes of 2000, incentive earnings are subject to Budget Act appropriation. The 2000 Budget Act included $250 million for incentives. It was anticipated that this entire amount would be needed to pay county incentives earned prior to 2000-01, with an additional appropriation to pay the remaining amount owed to counties in 2001-02. However, actual incentive earnings from prior years are lower than was estimated at the time the Budget Act was enacted. It is now estimated that the current year appropriation will be sufficient to pay the entire amount earned prior to 2000-01, leaving $153 million for other purposes. Under the 2000 Budget Act language, this funding would remain available for incentive payments. However, as there is increased demand for employment services in 2001-02, the Administration is proposing urgency legislation to specify that only incentives earned prior to 2000-01 will be paid from the amount appropriated in the current year, and to allow the $153 million to instead be carried over into the budget year to augment county employment services by $91.6 million and the general TANF reserve by $61.4 million.
No funding is included in the Budget for new incentive earnings in 2001-02. We note that counties have earned $1.2 billion in incentives through 1999-00. However, they have only spent $46.2 million as of October 2000.
Grant Levels—The Budget includes an October 2001 cost-of-living adjustment (COLA) of 4.85 percent based on the California Necessities Index (CNI). The CNI is higher than the Consumer Price Index (CPI) for 2001-02 because rent and utilities are weighted more heavily in the CNI, and rent and utility costs are increasing at a faster rate than other components included in these indices. The cost of the COLA is $128.3 million, and will increase the monthly cash grant level for a family of three from $645 to $676 in Region I (higher cost) and from $614 to $644 in Region II (lower cost).
The CalWORKs program grant structure rewards working families by allowing them to retain earnings in excess of twice the grant amount and still remain enrolled in the program. As an example, a family of three, living in Region I can earn up to $1,577 per month before its entire grant would be reduced to zero. In addition to the grant amount, the family typically would be eligible for employment services, child care, food stamps, and Medi-Cal.
CalWORKs Child Care—The Budget funds the projected child care need for CalWORKs recipients. A total of $1.2 billion will provide child care services in 2001-02. Of the $574.1 million included in the DSS budget for CalWORKs child care and related costs, $565.9 million will be allocated to counties. In addition, the budgets for the Department of Education and the Community Colleges include $491.4 million and $15 million, respectively, to provide CalWORKs child care services. The Budget includes a $100 million reserve to be used for either DSS or Department of Education child care providers, as needed.
Welfare-to-Work—The federal Balanced Budget Act of 1997 established the U.S. Department of Labor Welfare-to-Work program to provide grants to states and local communities over two years to assist them in meeting the goals of the federal TANF program. California uses the funds from this program to supplement the CalWORKs program. The State received $190.4 million in 1997-98 and $177.2 million in 1998-99 that has been appropriated to the Employment Development Department for allocation to local Service Delivery Areas. The State is required to match every $2 of this funding with $1 in State funding within the overall time frame that the federal funds are being spent. The 2001-02 Budget includes $88.6 million General Fund, as part of this match, to supplement CalWORKs employment services.
Supplemental Security Income/State Supplemental Payment
The federal Supplemental Security Income (SSI) program provides a monthly cash benefit to eligible aged, blind, and disabled persons who meet the program’s income and resource requirements. In California, the SSI payment is augmented with a State Supplemental Payment (SSP) grant. These cash grants assist recipients with basic needs and living expenses. The federal Social Security Administration administers the SSI/SSP program, making eligibility determinations and grant computations, and issuing combined monthly checks to recipients.
2001-02 Program––The Budget proposes $2.9 billion General Fund for SSI/SSP in 2001-02. This represents a 9.3 percent increase above the revised 2000-01 expenditure level. This increase is the result of caseload growth, the full-year effect of the January 1, 2001, COLA, and the January 1, 2002, COLA. The Budget assumes an estimated 4.85 percent CNI COLA effective January 1, 2002. The federal government will contribute a 2.1 percent increase in its portion of the total grant based on the increase in the national CPI. The January 1, 2002 COLA will increase the Payment Standard to $747 for an individual and $1,326 for a couple (see Figure HHS-22). As reflected in Figure HHS-23, California continues to provide the highest level of support to SSI/SSP recipients among the ten most populous states.
Caseload Trends––The caseload in this program is estimated to be 1,111,000 recipients, a 2.2 percent increase over 2000-01. Figure HHS-24 compares the annual percentage change in California’s SSI/SSP caseload and California’s population. Except for caseload decreases associated with federal eligibility changes in the mid-1990s, the caseload has grown faster than the general population throughout the 1990s. The SSI/SSP caseload consists of 31 percent aged, 2 percent blind, and 67 percent disabled persons.
Administrative Fees––The Social Security Administration administers SSI/SSP benefit payments for a monthly check fee of $8.10. The fee will increase on October 1, 2001, to $8.50. The General Fund costs for SSP administration are estimated to be $114 million in 2001-02.
Cash Assistance Program for Immigrants—Chapter 329, Statutes of 1998, established the Cash Assistance Program for Immigrants (CAPI). The Budget includes $97.6 million General Fund for CAPI in 2001-02. This state-only funded program provides benefits to (1) documented persons in the country prior to August 22, 1996, who were not receiving SSI/SSP benefits on September 30, 1998, and (2) documented persons arriving in the country after August 22, 1996, whose sponsor is deceased, disabled, or abusive. In addition, in 1999-00, CAPI was expanded to also include documented persons arriving in the country after August 22, 1996, subject to the deeming of sponsor income. This expansion sunsets on September 30, 2001.
Special Circumstances Program––The Budget includes $8.3 million General Fund for the Special Circumstances Program. This program, administered by the counties, offers time-limited benefits for nonrecurring needs in order to assist in maintaining individuals in their homes. Benefits may include housing repairs, moving expenses, home modifications, foreclosure prevention, and recovery from catastrophe.
Adult Protective Services
The Adult Protective Services (APS) is a county-administered program that includes the investigation of situations involving elderly or dependent adults who are victims of abuse, neglect, or exploitation. Chapter 946, Statutes of 1998, established a state-mandated comprehensive system to address the increasing need for APS in California. Services include a 24-hour emergency response system, emergency shelter, food, transportation, and in-home protective care. The Budget includes $88.2 million ($69.5 million General Fund) for APS. The Budget also includes $42.9 million ($17.2 million General Fund) for the County Services Block Grant program that provides funding for county social service programs including APS.
In-Home Supportive Services
The In-Home Supportive Services (IHSS) program provides support services, such as house cleaning, transportation, personal care services, and respite care to eligible, low-income aged, blind, and disabled persons. These services are provided in an effort to allow individuals to remain safely in their homes and prevent premature institutionalization. The program consists of the state- and county-funded Residual Program and the Personal Care Services Program for Medi-Cal eligible individuals.
The 2001-02 average monthly caseload is projected to be 265,000 cases, an increase of 6.4 percent over 2000-01. Total IHSS General Fund expenditures are projected to be $843.3 million, an increase of 13 percent above revised 2000-01 expenditures. This includes a $22.2 million General Fund increase representing the remaining half-year cost of the $0.50 increase in California’s minimum wage of $5.75 per hour, effective January 1, 2001, and the half-year cost of a second $0.50 increase, effective January 1, 2002.
Public Authority Wage Increases—Funds were included in the 2000 Budget Act to implement the Administration initiative for state participation in significant wage and benefit increases for IHSS workers in Public Authority (PA) counties. The initiative provides for state participation in further hourly compensation increases of $1 in each of the next four years if General Fund revenues increase by at least 5 percent each year. The goal of this program is to enhance the ability of public authorities to recruit and retain IHSS providers and, thereby, allow more seniors to live independently at home or with their families. The 2000 Budget Act included $143.8 million General Fund for the state share of provider rate increases above the state minimum wage ($5.75) in PA counties. This amount included $90.6 million, as part of the Aging with Dignity Initiative, to increase the maximum provider rate in which the State would share costs from $6.60 per hour to $8.10 per hour ($7.50 for wages, $0.60 for benefits).
The revised General Fund expenditure level for 2000-01, however, has been reduced from $143.8 million to $48.1 million. This reduction is largely due to several counties negotiating PA wage rates at levels lower than the maximum rates in which the State would participate. In comparing the rates in all eight PA counties as of January 1, 2001, for example, three PA counties, making up 78.1 percent of the PA caseload, have set PA rate levels (wages and benefits) from $6.50 to $6.75 per hour, compared to the maximum rate of $8.10 per hour in which the State will share. Another county, which contains 3.3 percent of the PA caseload, provides $7.90 per hour. The remaining four counties, consisting of 18.6 percent of the PA caseload, have set rates at the maximum state-sharing rate of $8.10 per hour. In addition, the current year reduction in PA costs is also due to the delayed adoption of the PA mode of service by two counties and an accounting shift of $15.1 million, now considered as part of the cost of recent state minimum wage increases.
For 2001-02, the Budget estimates that General Fund revenues will grow by less than the requisite 5 percent, and thus, the PA rate receiving state funding participation will not be increased by $1. The Budget, however, includes an increase of $9.3 million General Fund for the PA rate increase to fund growth in the estimated number of cases to be served through the PA mode of service delivery and further phase-in by counties of the provider rate increases.
The Governor’s initiative for the IHSS program in the current year also included $9.5 million General Fund for counties to expand the contract mode of delivery and $3.7 million General Fund for a 3 percent increase above the minimum wage for IHSS providers not working in PA counties. For contract mode expansion, the 2001-02 Budget includes no changes over the current year appropriation. However, future statewide levels of contract mode use could vary, depending on the extent to which counties elect to use the IHSS contract mode. With respect to the current-year increase of 3 percent above minimum wage for non-PA provider wages, $3.7 million General Fund has been added to address the impact of both the January 1, 2001, and January 1, 2002, minimum wage increases.
Children’s Services Programs
The child welfare system in California provides a continuum of services to children who are abused or neglected, and to their families, through various programs. The Budget proposes $3 billion ($1.3 billion General Fund) to provide assistance payments and services to children (see Figure HHS-25).
Child Welfare Services Augmentation—Responding to the need to better protect California’s vulnerable children, the Budget continues to provide $124.9 million ($74.3 million General Fund) for additional county CWS workers, expressly targeted for the emergency response, family reunification, family maintenance, and permanent placement components of CWS. This funding will allow counties to reduce the workloads of caseworkers responding to approximately 175,000 cases of abused and neglected children each month. Through its Child Welfare Stakeholders’ Group, the Department currently is conducting a review of existing CWS programs, components and systems, which is expected to lead to recommendations for improvement over the next three years.
California Health and Human Services Agency Data Center
The Health and Human Services Agency Data Center (HHSDC), one of the State’s three consolidated data centers, provides the Agency’s various departments electronic data processing (EDP) capacity by using shared, centralized resources to minimize equipment and staff duplication. The central processors and peripheral equipment operate 24 hours a day, 7 days a week. Telecommunications network and software support services also are furnished. The Data Center assists the Agency in identifying potential EDP-related applications and recommending policies on the appropriate use of EDP among client departments. Special project management activities are performed on behalf of the DSS. Data Center costs are reimbursed by service users.
For the Data Center’s primary facility operations, the Budget includes an increase of $1.8 million in Data Center Revolving Fund authority and 1.0 position for basic infrastructure expansion and upgrades. For the special projects managed by HHSDC for DSS, the Budget proposes a net increase of $19.8 million in spending authority and a net increase of 8.0 positions.
The HHSDC manages five major automation projects for DSS. These systems assist in the administration of the CalWORKs, Food Stamps, Child Welfare Services, and In-Home Supportive Services programs, and further the Administration’s goal of providing quality services as efficiently as possible while preventing fraud and reducing long-term costs.
Statewide Automated Welfare System—The Statewide Automated Welfare System (SAWS) automates welfare eligibility processes and administrative functions for the CalWORKs, Food Stamp, Medi-Cal, Foster Care, Refugee, and County Medical Services programs through the development of the following four separate consortia systems:
The Budget also includes $3.3 million federal funds for the SAWS Welfare Data Tracking Implementation Project (WDTIP). The WDTIP is intended to allow the four consortium systems to share CalWORKs time-limit tracking data. Additionally, the Budget includes $520,000 ($266,000 General Fund) for the CalSERVE Middleware project. The CalSERVE Middleware project will provide a standard communication method to link the four SAWS consortia systems and other welfare-related systems. The system will provide the ability to transfer welfare-related information between consortia systems accurately and in a timely manner. Finally, the Budget includes $8.3 million ($2.9 million General Fund) for DSS and HHSDC consortium planning, State oversight, and management of the SAWS system as a whole.
Child Welfare Services/Case Management System—This system automates tracking and reporting information for the Child Welfare Services, Foster Care, and Adoptions programs. The Child Welfare Services/Case Management System (CWS/CMS), which is fully operational in all 58 counties, assists counties to more effectively administer the CWS program by enabling social workers to make better decisions for neglected and abused children, allowing social workers to spend more time providing services to clients rather than doing paperwork, and improving statewide information sharing. It also provides the counties with better program management information, facilitates compliance with federal reporting requirements, and provides statewide statistical information. The Budget includes $98.2 million ($49.1 million General Fund) for contract-related costs for system maintenance and operations to continue these services and for reprocurement of a maintenance and operations vendor.
The Budget also includes one-time funding of $7.6 million ($3.8 million General Fund) to improve the CWS/CMS infrastructure by replacing application servers that exceed useful service life. Additionally, the Budget includes $736,000 ($368,000 General Fund) to proceed with planning activities necessary to incorporate adoptions functions into CWS/CMS to meet federal guidelines.
Statewide Fingerprint Imaging System—The Statewide Fingerprint Imaging System is a database system that will detect and reduce multiple case fraud in the CalWORKs and Food Stamp programs. The Budget includes $12.2 million General Fund to complete system implementation.
Electronic Benefit Transfer—The Electronic Benefit Transfer (EBT) will provide a system to deliver public assistance benefits to eligible recipients through electronic funds transfer, automated teller machines, and point-of-sale terminals in retail outlets. Federal welfare reform requires states to implement EBT to deliver Food Stamp benefits by October 1, 2002. Counties also are statutorily permitted to use EBT to deliver CalWORKs benefits. When operational, all Food Stamp and CalWORKs recipients will be able to access their benefits via ATM-like cards, in lieu of monthly checks or Food Stamp coupons. The Budget includes $7.7 million ($3.4 million General Fund) to begin statewide implementation.
Case Management, Information, and Payrolling System—The Case Management, Information, and Payrolling System processes eligibility determinations of In-Home Supportive Services applicants; provides case management services for recipients; calculates In-Home Supportive Services authorized service hours and issues notices of action to recipients for any change in that service level; provides payroll services for individual providers including income tax and other payroll taxes; audits invoices for third-party contract providers; and produces reports for program management. The Budget includes $1.4 million ($923,000 General Fund) for contract reprocurement activities.
California Children and Families Commission
Proposition 10 established the California Children and Families Commission in November 1998 to develop a statewide system of information and services to strengthen early childhood development from the prenatal stage to five years of age. Because Proposition 10 funds must supplement, not supplant, existing funds, the Proposition 10 moneys will result in significant increases in baseline services. In addition, the state Commission and county commissions working in collaboration may use Proposition 10 funds to leverage new federal funds.
The initiative, through taxes on cigarette and other tobacco products, is currently projected to generate $676 million in 2000-01 and $666 million in 2001-02. Proposition 10 provides for the backfill of the loss of Proposition 99 tobacco tax revenues for health education, research, and breast cancer programs due to the decreased consumption of tobacco products resulting from the initiative’s increased taxes. The backfill in 2000-01 and 2001-02 totals $24 million each year. The initiative provides that 20 percent of available funds remaining after the replacement of Proposition 99 revenue and the administrative cost of tax collection, are allocated to the state Commission for programs indicated in Figure HHS-26. The initiative also provides that the remaining 80 percent is allocated to county commissions for early childhood development programs including, but not limited to, health care, child care, education, domestic violence prevention, maternal nutrition, and child abuse prevention.
In 1991-92, State-Local Realignment restructured the state-county partnership by giving counties increased responsibilities and funding for a number of health, mental health, and social services programs. Realignment also provided an ongoing revenue source for counties by establishing a new ½-cent sales tax and an increase in the motor vehicle license fee (VLF). The ½-cent sales tax is a dedicated funding stream for realignment and will not be affected by the recent statewide ¼-cent reduction in sales tax. Similarly, the amount of VLF revenue available for realignment is not affected by the 67.5 percent reduction in vehicle license fees that resulted from Chapter 107, Statutes of 2000, because General Fund is provided to backfill these lost VLF revenues. Therefore, local governments do not suffer from the lower sales tax and vehicle license fees paid by California citizens.
During 1998-99, the amount of sales tax growth required to be deposited into the Caseload Subaccount was deficient by $23.9 million. This shortfall was consequently restored with 1999-00 sales tax growth revenue, which totals $146.5 million for the Caseload Subaccount.
Realignment revenues for 2000-01 are estimated to total $3.5 billion, which represents an increase of $292.5 million above 1999-00. The $3.5 billion is comprised of $2.3 billion in sales tax revenues and $1.2 billion in VLF. The VLF amount includes $451.5 million General Fund, which represents the backfill for lost VLF revenues, as previously discussed.
For 2001-02, realignment revenues are estimated to total $3.7 billion, which represents an increase of $197.6 million above 2000-01. The $3.7 billion total includes $2.4 billion in sales tax revenues and $1.3 billion in VLF. The VLF amount includes $465.6 million General Fund to backfill for lost VLF revenues (see Figure HHS-27, Figure HHS-28, and Figure HHS-29).
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