HomeMy WebLinkAboutMINUTES - 11161999 - D3 TO: BOARD OF SUPERVISORS
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FROM: Phil Batchelor, County Administrator
.; COUNT
DA'C'E; November 16, 1999
SUBJECT: First Quarter Budget Report
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) BACKGROUND AND JUSTIFICATION
RECOMMENDATIOMLSJ-
I K ACCEPT the report from the County Administrator on the status of the County Budget.
RECOGNIZE that the health Services Department faces major budgetary problems this
fiscal year, which are reflective of the health care industry as a whole and, most
particularly, the public health care system.
3. ACKNOWLEDGE that the Health Services Department and County Administrator's istrator`s Office
have already taken action to monitor and control expenditures, including institution of a
targeted hiring freeze, review of all contracted services, deferral of expenses and reduction
of non-revenue offset activities.
4. RECOGNIZE that rather health care organizations have taken, and are taking, actions to
maintain their fiscal integrity through increased premium levels, reduced service levels
and/or restructuring their systems.
CONTINUED ON ATTACHMENT: YES SIGNATURE,
—-----RECOMMENDATION OF COUNTY ADMINISTRATOR—RECOMMENDATION OF BOARD ZOMMITTEE
—APPROVE OTHER
ACTION OF APPROVED AS RECOMME NDMED R
VOTE OF SUPERVISORS
UNANIMOUS(ABSENT..... I HEREBY CERTIFY THAT THIS IS A
TRUE AND CORRECT COPY OF AN
AYES: NOES-_ �� ACTION TAKEN AND ENTERED
ABSENT: - jiTAIW_ ON MINUTES OF THE BOARD OF
SUPERVISORS ON THE DATE SHOW
Contact Sam Hoffman,335-1090 �
PHIL BATCHELOR,CLERWOF
THE BOARD OF SUPERVISORS
CAO AND COUNTY ADM INMTRATOR
r,
A/ '
BY
sa,.
. AGREE that Contra Gaeta County`s strategy for its health care system should be to maintain
its high quality of care through:
> Maintaining CCHP enrollment levels;
> Staving off efforts to decrease state health plan rates;
> Reconfiguring health Services' business practices, and
> Maintaining strict fiscal control,
6. DIRECT" the Health Services Department and County Administrator's Office to return to the
Beard of Supervisors with a strategic action plan to re-organize and redesign the County
Health Care system including but not limited to:
> Examining every cost center to decrease expenditures;
> Researching opportunities to increase all revenue sources;
> Proposing new cost efficient service delivery strategies.
REQUEST the County's congressional and legislative delegations to work with Contra Costa
County to restore state and federal support for health care for low income, vulnerable children
and families,
BACKGROUND/REASONIS) FOR R l D TIONIS)a
Since 1984, the County Administrator's Office has prepared quarterly reports which analyze
the status of the budget and highlight the budget units which deviate from the budget plea in
terata of expenditures and revenues. Actions which are necessary to ensure a healthy budget
by the end of the year are recommended mended as part of the quarterly reporting process. Other
items which have major fiscal impacts are also reviewed as part of this period's report. The
Administrator's Office review of budgets over this three month period indicated that the overall
County budget is in a positive position, The Administrator's Office is working with
Departments to bring all Departments in compliance with their budget authorizations and is
recommending specific actions to insure a year-end balanced budget. What follows is a
discussion of sic key budgets for this period.
GENERAL COUNTY REVENUE
It is too early to determine the overall status of revenues relative to the budget plan. The
status of property tax revenues, which make up 53% of general county revenues, will not be
known until late November when distributions are made to all taxing agencies. Nearly all
major revenue sources are at or above their budget targets for this time period, seasonally
adjusted. These revenues are rotor vehicle registration fees, property transfer tax, transient
occupancy tax, interest earnings and sales tax. Only the supplemental propel taxes and the
unitary property tax roll are below the budget target for the first quarter. The overall revenue
picture reflects a continuation of strong consumer spending and business activity,
A continuing concern about property tax revenue remains the significant amount of property
tax assessments being appealed by private industry, Major property tax assessment appeals
by business and the oil industry total $5.8 billion in assessments with the potential lass or
revenue in the millions to various € nits of local government. The County has hired Baker and
O'Brien; a firm with international experience in the oil refinery sector to handle the appeals.
`hese appeals are currently under sturdy or being deliberated, with decisions expected in this
fiscal year and in 2000-2001.
HEALTH SERVICES S D PARTM NT
The FY 99-00 Recommended Budget reported on the increasing difficulty of maintaining fiscal
integrity and quality health care in the Health Services Department. State and federal
financial support are not adequate, The first quarter review of the health Services budget
confirms the severity of the Health Services Department's fiscal problem. The department
estimates that current decreases in revenue will result in future budget shortfalls, which could
easily exceed $ 10 million.
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The department has already taken action to control expenditures, including institution of a
targeted hiring freeze; deferral of expenses; review of all contracted services; and reduction of
non-revenue offset activity. This strategy has proved successful in the past; however both the
department and County Administrator's Office concur that this will not be sufficient for the
future. The department must reconfigure its business practices to be more cost efficient as
well as continue to pursue an aggressive legislative agenda to support state and federal
health care policy reform,
State and Federal Health Care Policies
State law requires Contra Costa County to provide health care to all persons regardless of
their ability to pay or insurance status. State and federal funding to finance this legal mandate
has declined dramatically, as has reimbursement for Medi-Cal patients.
� Medi-Cal Inpatient Rates — Over the past decade the state's provider rates for Medica
Cal inpatient services have risen minimally, if at all, even though health care
inflation, new technologies and quality standards have continued to increase the cost
of hospital care. For example, between FY 93-95 and FY 99-00 (projected), out of
plan pharmacy costs have increased by 350% from $2.6 million to $9.1 million,
Fiat quarter data shows that the total number of prescriptions is down by 13% from
last year, but the cost per prescription is up 32%. The department also faces
potential rete reductions: it is currently in negotiation with the Mete to stave off a
Mete announced retroactive health plan rate decrease, which could reduce revenues
as much as $2.6 million this fiscal year,
� Medi-Cal Outpatient Rates — California's outpatient rates have been generally static
over the last dude and now reimburse providers abet 43% of actual costs,
� SB 355 Disproportionate Share Hospital Payment (DSH) — The Balanced Budget Act
also slashed the DSH program with a five year phase out. This fiscal year, DSH
revenges are going dawn to an estimated $11.4 million, from $13,4 million.
SB 1255 Emergency Services and Supplemental Payment Fund — SB 1255 is the
state equivalent of DSH, Funding is dependent upon the annual state budgetary
process. For FY 99-00, the County's SB 1255 revenues are estimated at $ 1.5
million, a reduction of$1 million from last year,
Tobacco Tax (Prop 99) — Dependent upon tobacco sales, Prop 99 has been
declining revenue source over the past ten years. It is expected to further decline
because of Proposition 10's impact on cigarette sales. For FY 99-00, revenues are
expected to be at $1.4 million, a loss of 1 million or 43 percent.
Realignment — Realignment was created in 1991 to replace AB 8 revenues (County
Health Service Programs) and Medically Indigent Service Programs, which had been
perennially underfunded since 1930. The department anticipates a loss of $500,000
in revenue growth, for a final total of$49.8 million.
Growin Number of Uninsured Children and Families
While state and federal funding for € ninsured health care is declining, the number of uninsured
is increasing. In Californias 7 million children and adults under age 65 do not have health
insurance. The number is estimated to be growing at a rate of 50,000 per month. In Contra
Costa, an estimated 22¢450 patients (31%) receiving health services in our health centers
were uninsured in FY 9399, requiring a County subsidy or private payment for services. The
number of uninsured patients is expected to grow as CaIWO Ks families transition off welfare
to work. Many jobs do not provide health care coverage; 30% of California's uninsured work
at least part time and nearly half work full time, year round,
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The cost of providing health care to the uninsured is substantial. In FY 98-99, $5,970,000
total charges were incurred for health care for the uninsured in the hospital and clinics, 30.9%
of their operating budgets.
Health Plan Membership
Over the past five years, dramatic increases in the Contra Costa health Plan ( CIDP)
membership offset losses in federal and state revenues. Membership in revenue producing
plans grew from 18,190 members in 1996 to 49,674 in September 1999. to the sane period,
average ,monthly enrollment in the basic adult program for the medically indigent ( 100% net
county cost) declined from 4,994 to 3,632.
Overall membership increases mask a concern over the fedi-Cal enrollment figures which
have declined by 1,318 since the beginning of January, from, 41,579 to 40,261. At issue is the
potential loss of Medi-Gal membership as families transition off welfare into work. Under
state regulations, a redetermination of eligibility is required when families no longer receive
cash assistance, A potential 19,999 children and families in Contra Costa County could lose
their Medi-Cal coverage, resulting in an $11.5 ,million revenge loss to CCHP. Another
concern is CCHP's ,market share. In 1998, 94% of the Nadu-Cal mandatory eligibles were
members of the local initiative, CCHP. This has since declined to 88%, in part dire to the
entry of Blue Cross as the alternative plan provider.
Declin,1M,General Fuad Revenue Increasing l evenue lRe uirements
In FY 91-92, the General Fund contributed $45.6 million to the health Services budget of
$252.4 million or 17.4 % of the total. For FY 99-09, the General Fund is contributing
$40,067,855 of $443.5 million, 9.4 %. During this same time, the department has
experienced significant increases in the net county cost requirement. For example, in FY 99-
91, the General Fund provided $4.1 ,million of detention health costs, For FY 99-00, detention
health will cost the General Fund $6.6 million, a 61% increase.
Convergence of Factors
The revenue shortfall projected by the Health Services Department for FY 99-99 reflects many
of the same conditions experienced in past years. This year, however, the ,magnitude of the
problem is much greater and the resources available to the department to internally meet its
revenue requirements are much less.
Major revenge shortfalls are attributed to the health care system: hospital, clinics, CCHP,
detention health and the Home health Agency. These include uncontrollable costs, such as
PG&E utility increases at the hospital ($,5 ,million); increases in pharmacy expenses;
increases in Auditor-Controller charges; across the board medical expenses as well as
reduced CCHP enrollment revenue; Flee Health Agency revenue losses; and increases in
detention costs. Salary and benefit cost increases add to the fiscal burden on the health care
serrvices. In addition, the department is facing increased expenditures in the mental health
I s; California Children's Services; and a higher requirement for medical insurance
premiums. Additional costs are associated with salary and benefits for non-medical divisions
of the department.
In the past, the department has benefited from growth in its revenue base. For example, the
department managed to increase the number of CCHP ,members during FY 97-98 with the
advent of managed care, which helped spread fixed costs over a larger revenue base. In
addition, strut cost controls and major expenditure deferrals were implemented to meet the
departments revenue requirements. In FY 98-99, the department deferred payments for
insurance premiums and relied on tobacco settlement revenues, For FY 99-90, tobacco
settlement revenues of $6.2 million of new revenues backfilled Drop 99, SB 855 and
realignment revenue losses as well as the cost of Irving adjustments authorized in 98-99.
With strict fiscal controls, and deferring expenditures where necessary to FY 00-01, it is
possible for the department to meet its revenge requirements for this fiscal year. However,
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this will push a part of the problem to net fiscal year and, without charges in the way the
department does business, the result will be a reed for more General Fuad support.
Furthermore, the estimated cost for salary and benefit increases in FY 00a0is $7.3 million
and $8.7 million in FY 01-02,
The Health Services Department and County Administrator's Office will be closely controlling
and monitoring health services this budget year and plan to return to the Board with options
and alternatives on restructuring the department to increase operational efficiency and to
maintain fiscal integrity,
EMPLOYMENT AND HUMAN SERVICES DEPARTMENT
Based on flat quarter activity, the Employment and Human Services Department projects a
balanced budget for fiscal year 1999-2000. However, this projection does not take into
account changing financial conditions in In-Home Supportive Services (IHSS) or CalWORKs.
The County Administrator's Office is monitoring the Department's fiscal status and will
recommend budgetary adjustments to the Board if necessary,
Adult and Senior Services
All major programs in the recently created adult and Senior Services Bureau operated within
budget during the first quarter. This bureau continues to grow in response to increased State
and Federal funding, most notably in the area of Adult Protective Services.
First quarter expenditures do not include costs for the Board-authorized IHSS public authority
operations or the associated increase in provider payments. The net county cost of public
authority operations is estimated at $1468360 annually. Provider payment salary increases of
.27 per hour were approved by the Board, at an estimated County cost of $3,000,000
annually. This estimate is based on 5.000,000 provider hours worked per year, which may be
exceeded if the number of provider hours continues to increase at the current rate. Revenue
from the sale of the Oak Park Elementary School in Pleasant Hill can be used to offset
increased IHSS public authority casts; however, this is a one-time revenue source.
Eioent Services
The Employment Services Bureau is operating within budget and anticipates a balanced
budget for the current fiscal year. A recent reduction in the State's base allocation to Contra
Costa County for the CalWORKs program should be offset by CalWORKs "incentive funds"
that the County will receive for achieving caseload reduction targets,
The reduction in the County's base allocation is indicative of the current flux at both the state
and federal levels regarding CalWORKs funding. Last year the department expended 34
million of its $39 million allocation for Cal' ORKs. At that time, counties were assured by the
state that FY 99@00 funding would not be less than expenditures in FY 98-99. This promise
was very narrowly "interpreted" by the state and Contra Costa County's allocation is now
$25,117,811. The Department may recover part of this reduction in the rear future as the
State distributes 0 million in previously unallocated CalWORKs dollars to the counties, The
remaining revenue shortfall in the current year can be made up by using incentive funds;
however these funds may or may not be available in future years.
Children and Farm ServicS
All programs within the Children and Family Services Bureau are in stable financial condition.
Foster care is currently within budget despite two state authorized cost of living increases
totaling 4.7%. Caseload is down, averaging 1,774 cases for the first two months of the fiscal
year vs. 1,826 for last year. One note of caution in faster care caseload decline is the
potential growth in the number of children not qualifying for either state or federal foster care
payments, Eligibility for foster care is based on AFDC regulations, rather than current
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CalWORKs regulations, and therefore family receipt of cash assistance is no longer a basis
for state or federal foster care eligibility.
The new Children's Receiving Center in Central County, funded through $200,000
augmentation in County General Fund revenue authorized by the Board of Supervisors, is
scheduled to open in December 1999.
SHERIFF-CORONER
The Sheriff Coroner Agency is within acceptable expenditure levels through September 30 of
fiscal year 1999-2000. Since the cast of living adjustment for Deputy Sheriff' Association
members will not be reflected in expenditures until November, the enact fiscal impact of this
expense is as yet unknown. The Workers' Compensation credit due from Risk Management is
also not reflected in fiat quarter expenditures. Permanent overtime costs are nearly $200,000
less than the same period last year. Although revenues are considerably under 25% received,
it should be noted that several large sources of revenue, including Proposition 172 funds,
payment for contract law enforcement, communications services, and grant revenues, are
routinely received in arrears. The department is € aintaining control of expenditures and
actively pursuing new sources of revenue. The department is expected to achieve a balanced
year-end budget.
PROBATION DEPARTMENT
'while the Probation Department's budget is currently within appropriate levels for the first four
months of fiscal year 1999-00, we anticipate an overall budget deficit by year end if additional
revenues are not identified. The Department estimates that expenditures will overrun
budgeted levels between $1,266,000 and 1,340,000, which will be partially offset by
$395;000 in additional revenues, and result It in a projected overall deficit of $871,000 to
$945;000.
In June of 1999, the County Administrator imposed e lard hiring and purchasing freeze on the
Probation Deportment. Additionally, the County Administrator and the Department are
working to determine if there are any funding opportunities that are being missed or if any new
funding can be sought. To date we have worked with the Juvenile Court to obtain more
discretion for the Department in managing the population at Juvenile ball and have facilitated
e service agreement between Probation and Health Services on medical service costs. We
expect that these measures will mitigate some of the overspending that caused the budget to
overrun last year.
Despite an additional $2£895,584 in net county contribution in fiscal year 19996009 the
Deportment continues to be plagued with the same budget issues that forced the trimming of
prevention/supervision programs in the pasty
* Juvenile Hall overcrowding,
High foster care and private placement costs,
Climbing California Youth Authority (CYA) fees, and
* Increasing detention facility medical costs.
In an attempt to alleviate Juvenile Hall overcrowding, the County Administrator facilitated a
plan, with the Court's approval, that allows Probation more discretion in releasing wards
based on charges, family situation, and time in custody. So far the new plan has been
successful in keeping the Juvenile Hall population close to budgeted parameters. While the
number of juveniles admitted to the ball was up to 627 compared to 555 for the same period
last year, the average daily population (ADP) decreased to 165.3 from 173.7. As a result,
child care days were reduced from 15,980 to 15,208.
In addition to juvenile detention costs, juvenile foster care and placement costs continue to
exceed budgeted levels. The Department estimates that expenditures will exceed budgeted
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levels by $766,000. Probation staff continues to work diligently with the Juvenile Court to
ensure that all placements are appropriate and absolutely necessary. The County
Administrator and Probation are working with Social Services to identify additional funding.
Additionally, the opening of the Chris Adams Girls' Treatment Center in November may
enable the Department to reduce placements to some extent.
California Youth ,authority costs are projected to result in a $368,000 shortfall. While the
number of committed wards has remained relatively constant (currently at 176), the monthly
cost per ward has increased from 150 to between $1,299 to $2,596 per month, Two years
ago; when the new fee schedule was about to be implemented, we projected and reported that
the potential impact of the new fees was $1.1 million. At that time, the total average monthly
cost for C A services was $27,000. By the end of this year, the monthly costs are projected
to be about $78,000 per month.
Medical costs for the Juvenile ball and Boy's Ranch are projected to result in a $249,000
shortfall, A newly negotiated agreement between health Services and probation establishes
a $7.89 per day per bed rate and estimates annual charges at $767,000. The budgeted
amount for medical services in fiscal year 1999-00 is $518,000.
The 10-bed Tamalpais expansion that was budgeted to begin operations in November is
experiencing significant delays due to contractor failure. As a result, until the facility is
complete, the $229,000 budgeted for operations of the unit is available to assist in meeting
other shortfalls. Additionally, cost containment strategies should result in $272,000 of savings
in services and supplies within theDepartment's overall budget.
The County Administrator will continue to work with the Department to improve its financial
position. Our best efforts, however, may not be enough to completely resolve probation's
operating shortfall.