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HomeMy WebLinkAboutMINUTES - 02152000 - D2 DZ TO: BOARD OF SUPERVISORS CONTRA COSTA FROM: Phil Batchelor COUNTY County Administrator DATE: FEBRUARY 15, 2000 SUBJECT: SECOND QUARTER REPORT SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: "I. ACCEPT the report from the County Administrator's on the status of the County Budget. 2. RECOGNIZE that the Health Services Department faces serious budgetary challenges and that, while significant progress is being made towards addressing the revenue shortfall, sustained commitment and leadership will be required to bridge the gap between expenditures and revenues. 3. RECOGNIZE that other County public health systems are experiencing similar fiscal challenges, also driven by inadequate and declining federal and state support for health care. 4. ACKNOWLEDGE that the state did not provide adequate funding for County health care systems in FY 99-00 nor is help anticipated for FY 2000-01, according to the state budgetary proposals. 5. ACKNOWLEDGE that the Health Services Department and County Administrators Office are continuing to carefully monitor and control expenditures. 5. SCHEDULE March 28, 2000 for a Board workshop to review a broad range of activities and actions necessary to assure the continued fiscal integrity of the Health Services Department. 7. ACKNOWLEDGE that the Governor's Budget fails to propose using any part of the substantial State budget surplus for returning property tax to local government. CONTINUED ON ATTACHMENT: Y YES SIGNATURE; RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE —APPROVE —OTHER SIGNATURES): ACTION OF BOARD ON B APPROVED AS RECOMMENDED�OTHER VOTE OF SUPERVISORS 1 HEREBY CERTIFY THAT THIS IS A X UNANIMOUS(ABSENT – – – – "" S TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ABSENT:_.. _._ ABSTAIN: ON MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Contact: Tony Enea,6-1094 CC: CAO ATTESTED. E tlBt."ST 15. 20©0 Auditor-Controller PHIL BATCHELOR,CLERK OF THE BOARD OF SUPERVISORS D COUNTY INISTRATOR B DEPUTY BACKGROUND/REASON(S) FOR RECOMMENDATION(S): 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 pian in terms of expenditures and revenues. Actions which are necessary to ensure a healthy budget by the end of the year are recommended 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 six 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 five key budgets for this period and a summary of the proposed State budget for 2000-2001. GENERAL. COUNTY REVENUE: General County revenues amount to $172 million spread over 60 accounts. At the half-year point, it appears that General County Revenues will meet budget targets. Property tax revenue should slightly exceed budget levels, after adjusting for city redevelopment agencies, no and low city revenue losses, state mandated transfers to school districts, Board directed distributions to Crockett and Rodeo, and the estimated impact of property tax refunds. The other major revenue sources should also achieve their revenue targets. Vehicle license fee and sales tax revenue show continued growth and a clear reflection of strong consumer spending. Property tax transfer and transient occupancy tax revenue are exceeding budget targets and are indicators of a strong real estate market and a high level of business activity and travel in the County. HEALTH SERVICES DEPARTMENT: The Health Services Department faces serious budgetary challenges, as detailed in the Recommended Budget and First Quarter Budget Report. The First Quarter Report projected a revenue shortfall for FY 99-00 in excess of $10 million. Significant progress has been made towards balancing the budget for this year. Every revenue and cost center has been subject to scrutiny. There has been, and continues to be tight fiscal controls, a targeted hiring freeze, expenditure deferrals and reduction measures, and reduction of all non-revenue offset activities. However, it must be recognized that many of the solutions to this year's fiscal shortfall depend on one-time, non-recurring revenues. The key challenge, therefore, is to position the department so that it can move towards fiscal stability for the FY 00-01 budget year. The driving force behind the Health Services Department's fiscal crisis is the continuing decline of state and federal revenue that finances health care for low-income children and families. The gap between revenues and expenditures continues to widen, posing a serious threat to the County health care system. In order to survive, we must rethink how we do business in our health care system. To this end, the Health Services Department has established Task Forces and commissioned analyses, which now are in varying stages of completion. Contra Costa County has always been committed to quality care in its hospital and clinic system. The Managed Care commission is scheduled before the Board on February 15, 2000 to review the Health Employer Data and Information Set (HEDIS) report, an assessment of our hospital systems, and other health issues. However, it is becoming increasingly difficult to maintain our current level of care given the declines in federal and state funding. Contra Costa County is one of many public hospital systems in California that is facing significant revenue shortfalls. Eleven of the large urban counties that operate hospitals report that their systems are also at-risk. The California Association of Public Hospitals has laid out a clear legislative agenda necessary to ensure that California provides adequate health care to low- income children and families. However, the Governor's Proposed Budget for FY 2000-01 does not provide for any significant fiscal relief. State and Federal Fiscal Support Inadequate The growing inadequacy of state and federal funding for health care for our most at-risk populations increasingly shifts responsibility for adequate care to local government. Both the state and federal governments have ignored rising medical and pharmaceutical costs over the past decade. And, in California, state seizure of local property taxes severely limits counties' ability to backfill the growing disparity between revenue and expenditure requirements. i. No Help from the State Neither Medi-Cal inpatient nor outpatient rates cover the actual cost of service. Both rates have generally been static over the past decade, rising minimally if at all. California's outpatient rates are now 39% below the national average. Furthermore, the state is attempting to impose a retroactive rate reduction for 1997-1999 despite prior written documentation and verification of the rate structure. The reduction has a revenue accrual loss potential of 2 million. At the same time, the State has drained local resources: the County's General Fund lost over$93 million of local property tax this fiscal year and over$607 million since the State seizure in FY 92-93. The governor's Proposed Budget for FY 2000-01 provides little relief to cover rising health care costs: Funding levels for health care financing programs remain flat or decline slightly without offset, including SB 1255 — Emergency Services and Supplemental Payment Fund, Tobacco Tax (Proposition 99) and vehicle license fees; a Tobacco Settlement revenues are absorbed into the State General Fund rather than being appropriated to meet local health care needs; o $24.8 million of Tobacco Tax (Proposition 99) revenue is diverted for Emergency Room Physicians, rather than making it available for public hospital systems. Furthermore, informal reports from the State Department of Finance indicate that Counties should not expect allocations to health care even if the State May Revise shows increased expected revenues for FY 2000-01. The Governor's Proposed Budget lists the County Medical Services Program (CMSP) as an example of untimely spending by local government. In 1999, the CMSP reserve was in excess of$55 million, and it is expected to grow to $97 million by June 30, 2000. This program does not apply to Contra Costa County, as CMSP is a State-administered program operated for small, rural counties. 11. Little Help from the Federal Government On the federal level, there are small signs of hope. The Federal Government has announced that planned Federally Qualified Health Center (FQHC) decreases will not occur in FY 2000-01; however, the phasing out of this funding source remains effective October 1, 2003. In addition, Congress has lifted the sunset of the "$500 Million Fund" for health care outreach. However, California has so far utilized only 7% of its allocated $83.7 million, so there has been little local benefit. Outreach is critical to enrollment into Medi-Cal/Healthy Families and to reducing the number of uninsured children and families. In Contra Costa County's public hospital and clinics, health care for the uninsured is expected to be as much as 31% of operational costs for FY1999-00. On the negative side, the federal government decreased actual reimbursement for SB 855 Disproportionate Share Hospital (DSM) payments another$600,000 this year. DSH is projected to decline by $2 million in FY 2000-01 (with a slight offset through reduction in DSH State Administrative fees). Ill. Rising Costs versus Declining Revenue The revenue decrease for health care triggers a cascade of problems and creates fiscal strains throughout the department. All divisions have increased net county cost requirements for salary, benefits and uncontrollables. Some divisions, like Detention Health and the Homeless Program, have little offsetting of revenues and are reliant primarily on General Funds. The revenue shortfall for the hospital and clinics makes it difficult for the department to stay within its net county cost and still operate its general fund dependent divisions. On a percentage basis, Contra Costa's net county cost appropriation for Health Services is the second lowest of the ten largest counties in California, yet it includes more general fund dependent programs, in particular the Homeless Program and Detention Health. In FY 2000-01, the Health Services Department will also need to fund salary and benefit increases of$7.3 million and in FY 2001-02 $8.7 million. In addition, it will need to absorb projected losses of Tobacco Settlement revenue, estimated at $1.4 million in FY 2000-01, as well as the current fiscal year loss of$1.1 million, due to lower tobacco sales. IV. Other Public Hospital Systems at Risk The County Administrator's Office conducted a survey among eleven large urban counties operating public hospitals to determine whether revenue losses and instability of the public health systems were occurring elsewhere. Seven counties operating public hospitals report significant State and Federal revenue shortfalls. In four of the seven counties, health services budgets are being balanced with one - time appropriations and deferred expenditures. Five of the seven counties have issued public statements on state - driven revenue shortages for health care on their web pages. Increasingly, County General Funds carry the burden to respond to local health needs and to support prioritized health care programs. For ten of these counties, the net county cost support for Health Services Departments range from 8% to 27%. Contra Costa is the second lowest with 9%. Also, only Contra Costa and San Francisco (27% NCC) operate both the Homeless Program and Detention Health in their Health Department, two highly General Fund dependent divisions. V. Quality Health Care and Fiscal Integrity Contra Costa County provides excellent quality health care for its low-income children, families and adults. CCHP's 1998 Health Employer Data and Information Set (HEDIS) shows that all measurable quality indicators significantly exceed the California Medi-Cal average and are equal to those of commercial HMO's. CCHP is competitive in the market and has maintained its market share. However, this level of competitiveness and quality cannot be maintained without significant measures that reconfigure its revenue requirements, or a dramatic reversal of current state and federal policy. CCHP Medi-Cal enrollment, the major source of revenue, has declined due to the success of CalWORKs and the lack of Medi-Cal eligibility codes available to the low-income working community. As clients move from cash assistance eligibility to earned income eligibility, they drop off the Aid Code 38 list and are often lost to CCHP. Latest census data also raise the troubling prospect that increases in children's coverage brought about by Healthy Families may be more than fully offset by declines in Medi-Cal enrollment in the years ahead. Increased health care coverage is being outpaced by the rapidly growing number of uninsured children and families needing health care. The Contra Costa Health Access Coalition has developed a strategic plan to help mitigate this trend. Supported by a strong community of Community Based Organizations, Foundations, Healthcare Providers, School Districts, and County Government Agencies, the Coalition's objective is enrollment of all eligible families in Contra Costa County into health coverage. Hopefully, 8,000 children will be enrolled into the Healthy Families program. These contacts will trigger enrollment outreach to the children's parents for the AIM (Access for Infants and Mothers) and Medi-Cal programs. Of course, the fiscal impact of this outreach is uncertain. The Health Services Department anticipates that more Medi-Cal Aid Codes for the working poor will be made available in June 2000. This may give the County an opportunity to retain some of the CalWORKs clients transitioning to the workforce. VI. Board Workshop A workshop has been scheduled for the Board on March 28, 2000 on the Health Services Department. Staff will present findings on the operations of the Health Services Department, reviewing cost centers and revenue streams. At that time, we will be prepared to discuss the status of actions and activities necessary to meet the challenge of increased salaries and benefits, to backfill one-time revenues, to ensure state bond reserve fund stability, and to offset declining state and federal funding. This is an enormous challenge, a work in progress that will take sustained commitment and leadership in order to assure both quality health care and fiscal integrity. EMPLOYMENT AND HUMAN SERVICES: The Employment and Human Services Department projects an overall balanced budget for fiscal year 1999-2000. The department projects a budgetary shortfall in the Adult and Senior Services Bureau due primarily to the Board-approved increase in IHSS provider payments. The Board previously gave direction to offset these expenditures through application of funds from the sale of the Oak Park Elementary School in Pleasant Hill, which is pending at this time. All other Bureaus project spending within the currently budgeted allocations for fiscal year 1999-2000. The financial condition of the Employment Services Bureau was strengthened in the second quarter by the receipt of$7 million in additional State CalWORKs funds. Adult and Senior Services The department projects a budgetary shortfall in the IHSS program for the remainder of this fiscal year resulting from the Board-approved $1.27 per hour increase in IHSS provider payments that became effective December 1, 1999. This shortfall will be offset by a projected $3 million in one- time revenue from the sale of the Oak Park Elementary School in Pleasant Hill. Employment Services The Employment Services Bureau projects a balanced budget for the current fiscal year. The CaIWORKs program continues to demonstrate outstanding performance. From July 1999 to December 1999 the percentage of CalWORKs participants reporting earnings increased from 27% to 31%. The percentage of caseload exits due to earnings also increased over the same period. As a result of increased earnings by CalWORKs participants, the average cash grant paid to participants has declined this fiscal year by approximately $15 per month. The overall CalWORKs caseload continues to decline steadily, with a current caseload of slightly over 9,000 participants. CaIWtORKs is funded through three sources: the basic CalWORKs single allocation; performance incentive fundi and the County's maintenance of effort (MOE). In FY 99-00, total revenues approximate $54,191,317 of which 46% is from the single allocation; 46% from the performance incentive fund; and 8% from the County's MOE. This funding structure is very different from the last fiscal year in which the single allocation was the primary financing source for CaWORKs. This year's financing structure increases our reliance on performance incentive funds and puts more pressure on the department for continued excellent performance. In addition, it increases the fiscal uncertainty for the CalWORKs program. The governor's Proposed Budget criticized counties for not expending all of their incentive fund allocations. The governor's budget states that, "of a total $1.1 billion in incentive fund payments appropriated in 1998-99 and 99-00, only$5.3 million has been spent for CalWORKs services as of September 30, 1999. In this county, incentive funds had not been claimed primarily due to the dramatic reduction in our single allocation from $39.7 million in 98-99 to $25.1 million in 99-00. As a result of this reduction, EHS had conserved incentive funds to pay for services that could no longer be covered by the single allocation. The department expects to expend approximately $13.1 million in incentive funds in the third and fourth quarters of this fiscal year after the single allocation is exhausted. The governor's position on "unspent incentive funds" as well as the proposed reduction in availability of performance incentive funds for FY 00-01 introduces a level of uncertainty for long term funding of the CalWORKs program. Children and FarnRy Services The Children and Family Services Bureau is financially sound. Foster care caseload has declined slightly (5%) from the end of last fiscal year. The percentage of foster care cases qualifying for federal eligibility has remained stable over this period at 78%, suggesting that budgeted County funds will be sufficient to pay for projected expenses in this area. SHERIFF-CORONER: The Sheriff-Coroner Agency is within acceptable expenditure levels through December 31 of fiscal year 1999-2000. General fund gross expenditures for the agency were 52% expended and revenues were 37% received. It should be noted that second quarter expenditures include not only the cost of this year's COLA, but the entire 6% retroactive COLA that was effective October 1, 1998. Additionally, the entire annual credit from Risk Management for Workers' Compensation costs was reflected in year-to-date totals. Although revenues are considerably under 50% received, it should be noted that several large sources of revenue, including Proposition 172 funds, payment of contract law enforcement, communications services, and grant revenues, are routinely received in arrears. By maintaining control of expenditures and actively pursuing new sources of revenue, the Department is expected to achieve a balanced year-end budget. PROBATION DEPARTMENT: The first quarter budget report concluded that the Probation Department would overrun budgeted expenditure levels and projected an overall deficit between $871,004 to $945,000. The County Administrator had imposed a hard hiring and purchasing freeze and was working with the Department to determine if there were any opportunities for expenditure reductions and/or revenue increases. As a result of Probation's efforts to seek out operational savings and increase revenues the Department developed a plan that projects a balanced budget by year's end. During the next six months the County Administrator will continue to work with Probation and carefully monitor the tenuous budget to ensure that the necessary savings and revenue projections are realized. The issues contributing to Probation's budget deficit are not new and have been reported and escalating for several years. While in-roads have been made toward maintaining the Juvenile Hall population at budgeted levels, other programs and services largely outside of the control of the Probation Department continue to experience increasing costs. Programs at the center of Probation's budgetary difficulties include: • Out-of-Home Placements • California Youth Authority Fees • Juvenile Facilities Medical Costs + Home Supervision The program contributing most to Probation's budget deficit is Out-of-Home Placements. Under orders of the Juvenile Court, Probation must develop alternative living plans and provide board and care for approximately 200 youth annually, who cannot remain at home because of serious delinquent or behavior problems. While State and federal foster care programs contribute revenues to financially eligible minors, the County is responsible for all remaining expenses. Prior to FY 93/94 Probation's out-of-home placement costs were included in the Employment and Human Services budget. Beginning in FY 93/94 Probation was appropriated $2,626,444 for foster care, based on the State's allocation of Realignment revenue. Over the past six years, foster care costs continued to escalate and Probation worked diligently to control out-of-home placement costs, including re-budgeting funds to establish more cost efficient options like a Diversion Program and other services designed to give youth an opportunity to avoid placement. During this same period, Realignment revenues increased over 25%, however, the allocation to Probation for foster care was not augmented. As a result, Probation is estimating an $841,400 shortfall in FY 99/04 based on a $1,778,400 budget and total expenditures of$2,579,000. The Diversion Program helped to minimize foster care increases by providing intervention and intensive supervision services to minors in imminent risk of placement. Ultimately, the Department has limited discretion over placement decisions but continues to work with the Juvenile Court to ensure that all placements are appropriate and absolutely necessary. Despite Probation's efforts, however, the Court occasionally orders that a juvenile be placed against the recommendation of the probation officer. Another uncontrollable cost for Probation results from charges for wards committed to the California Youth Authority (CYA). While the number of youths committed to CYA remains relatively stable, the cost per ward continues to increase due to a new fee schedule implemented by the State. Two years ago, average monthly CYA costs were $27,000. Final estimates for December 1999 are $80,457, reflecting a 200% increase. Total CYA costs for FY 99/00 are projected at $965,000, with a $ 634,000 budget and a $331,000 deficit. Currently, 136 of the 176 wards are on the new fee schedule and 40 remain on the old fee schedule. Probation has experienced some recent success at reducing the population at Juvenile Hall. Historically, the average daily population exceeded budgeted levels and resulted in significant overruns in overtime and other costs. The Juvenile Hall is budgeted for an average daily population of 160. In December of 1998 the average daily population was 176, but by December of 1999 the average daily population decreased to 146. One of the successful strategies used to reduce the Juvenile Hall population has been to increase the use of Home Supervision services when appropriate. The average cost per day in Juvenile Hall is $125, compared to $20 for Home Supervision services. While the cost per day is significantly less, the Home Supervision program is only budgeted for a daily caseload of 80-100 clients, but in December 1999 the program saw an average of 160 clients per day. As a result, while the Juvenile Hall population has been reduced, the increased caseload in Home Supervision is projected to result in an annual shortfall of$275,500. Even with the Juvenile Hall population at budgeted levels the cost of medical services for juvenile facilities continues to increase. Medical services are provided by Health Department personnel and are subsequently charged to Probation. The arrangement leaves Probation with the financial responsibility and no actual authority over staffing levels. In the past three years, charges to Probation have increased 20%. In an effort to gain some control over the escalating costs, Probation requested a formal Memorandum of Understanding (MOU)with the Health Department. The proposed terms include a $7.89 per day per bed reimbursement rate. Based on this rate, total charges for FY 99/00 are estimated at $800,000 (including services at the newly opened Chris Adams Girls Center) against a $518,000 budget, resulting in a $282,000 deficit in juvenile medical services. Despite ongoing increases in uncontrollable costs that result in budget deficits, the Probation Department identified operational savings and increased revenues, and developed a plan that currently projects a balanced budget by year's end. Probation projects an additional $672,000 of TANF and Title IV-E revenue. Additionally, the Employment and Human Services Department agreed to allow Probation to claim $450,000 of excess TANF costs as a means to partially offset the deficit in Cut-of-Home Placements until the issue regarding equitable distribution of Realignment funding can be permanently resolved. Operational savings totaling $540,000 are projected, not as a result of existing programs, but due to delays in implementing programs originally targeted to begin in FY 99/00. Both the Edgar Transition Center and the expanded Tamalpais Unit at Juvenile Hall were budgeted to begin operations during the current year. Because implementation is postponed until next year the appropriated funds will be redirected to other Probation programs experiencing deficits as a means to balance the budget. While it is encouraging that Probation has developed a plan to stay within the Department's approved budget for FY 99/00, several of the strategies are temporary or one-time-only provisions. Because costs will only continue to increase, there is concern that the Department will go on to experience an even more strained budget situation in the next fiscal year. The County Administrator will continue to work closely with the County Probation Officer and take corrective action where necessary to ensure a balanced budget in FY 99/00, and to develop a budget for FY 00/01 that adequately funds essential Probation programs and mandates. 0,01 Y, IMPACT OF GOVERNOR'S PROPOSED BUDGET ON COUNTIES Summary: The Governor does not propose to take any additional tax revenue from counties or lay substantial new unfunded responsibilities on counties. However, the Governor also has failed to propose using any part of the substantial unanticipated surplus to begin the process of returning property tax revenue to counties, cities and special districts. As the Legislative Analyst notes in her"Overview of the 2000-01 Governor's Budget": Outside of education, the new proposal is largely a workload budget, which funds existing programs and makes adjustments for workload and most cost- of-living increases. It contains modest new spending initiatives and a tax credit relating to long-term care (the"Aging with Dignity" initiative), but no major ongoing commitments elsewhere. At the end of her analysis, the Legislative Analyst suggests: However, we believe that the budget seriously understates the amount of revenues that will be available in the current and budget years. Thus, in evaluating the Governor's plan, the Legislature will need to consider both the Governor's proposals and its own priorities for allocating $3 billion in additional funds which are not recognized in the budget. Counties must continue to make the case this year that a significant portion of this unanticipated surplus must go back to counties, cities and special districts to cap and begin to reduce the transfers to the Educational Revenue Augmentation Fund (ERAF). Following are some of the positive features in the Governor's Budget and some of the negative features of the Budget, from the perspective of counties. Positives: • Current year revenues are coming in $2.9 billion higher than originally budgeted. The projection for 2000-2001 is that revenues will come in 4.7% or$3.1 billion higher than in 1999-2000. The very healthy economy has allowed the Governor to fund his budget without taking a big bite out of county programs. The Legislative Analyst believes that the Governor's revenue estimates are still too conservative and that, between the current and the budget year, revenues may increase as much as $3 billion above what has been anticipated in the Budget. Much of this is due to incredible increases in personal income tax payments at the end of 1999. • Extend $100 million COPS Program through 2004-05. Same formula. $100 million for one-time competitive grants for law enforcement agencies for local law enforcement technology purchases and other public safety programs. Seventy- five percent for technology; 25% for juvenile crime, school safety and anti-gang activities. • $20 million to support local efforts to serve the homeless, parolees, and probationers with serious mental illness. To be awarded through competitive grants. • $220 million in funding has been set aside for the funding of Proposition 15, to provide funding for forensic crime laboratories, depending on its fate on the ballot March 7, 2000. • Although Proposition 99 revenues continue to decline because of reduced tobacco consumption, Proposition 99 revenues are higher than originally anticipated. • No share-of-cost Medi-Cal would be extended to the medically needy, aged and disabled individuals who earn up to 100% of the Federal poverty level, at an additional cost of$26.2 million . Under current law, individuals above 87% of the Federal poverty level must pay a share of cost. • Increases funding to the Healthy Families Program by $111.5 million in order to enroll an additional 91,000 children and an additional $10 million to increase outreach efforts. • The Budget includes a one-time $20 million appropriation to expand an existing program in three counties to provide integrated services to homeless mentally ill individuals. These funds would be awarded through a competitive grant program. • The administrative fee for the disproportionate Share Hospital Program (DSH) is reduced by an additional $30 million, bring the fee down to $54.8 million. This can provide an additional payment to DSH hospitals. • Full funding is provided for prenatal care for undocumented immigrants, at a cost of $85.1 million. • The Budget contains money for wage increases for IHSS Public Authority counties from $6.25 per hour to $8.00 an hour in five years. The 2000-2001 Budget continues this year's 50 cent an hour increase, but cuts the State's share of that increase from 80% to 65%, the standard State contribution level. Increases above this level in increments of 355 cents an hour would be triggered providing State revenues reach specified levels. • The Budget includes $101.6 million General Fund to pay for Federal penalties resulting from the State's failure to establish an automated statewide child support system. There had been an effort to transfer this penalty to the counties. • The Budget funds both the current year shortfall and the estimated budget year cost for stage three families that have reached the two-year limit for child care services. For stage one, funding of$431.2 million is provided. For stage two and three, the budget includes $639.6 million. This is an increase of$280.7 million and will serve an additional 143,000 children per month. • The Budget continues to provide $40 million emergency funding for additional social workers. The Budget notes that the study of Child Welfare Services staffing and funding is expected to be released in February 2000. • The Budget notes that Proposition 10 revenue is expected to be $719 million in 2000-2001. Eighty percent of this goes to county commissions for expenditure. • The Budget contains $44 million for the Department of Water Resources Local Flood Control Subvention Program. This amount is considered the third of four payments towards the State's arrearage in local claims. • The Budget includes $633.9 million fir payment of disaster response and recovery costs incurred by local governments for various past disasters. • The Budget increases funding for the Library Families for Literacy Program by $508,000 which is intended to fully fund the existing 58 participating library jurisdictions, • The Budget includes one-time Federal fund increases of $5 million in the current year and $50 million in 2000-2001 to provide substance abuse prevention and treatment services for youth and pregnant women. Negatives: • The Budget contains about $2.9 billion in one-time expenditures, some of which is directed to counties. While this may be prudent because of the possibility that the economy will soften in the foreseeable future, it makes it difficult for counties to implement programs on a one-year basis and be unsure right up to the time the State Budget is enacted the following year whether the program will be funded again or whether it will be necessary to dismantle an existing program on short notice or provide local funding to continue the program. * No mention of ERAF, although the Governor says he is aware of the Sonoma County decision and may address the issue in the May Revise. * The Budget proposes to eliminate the State $20.2 million contribution to the County Medical Services Program (CMSP). « Threat to take back $1.7 billion transportation money and $800 million in Federal congestion mitigation funds if they are not used. (See County report in attachment A). « Allegations that local redevelopment monies are not being used timely, particularly $1.4 billion in Low/Moderate Income Housing Funds. (See County report in attachment B). « Allegations that there is an unspent surplus of $55 million in CMSP funds. (Response in Health Service Section). * Allegations that nearly$1.1 billion in CalWORKs incentive payments have not been spent for CalWORKs services. (See explanation in EHS section). 11 Attachment A Contra Costa Caunjx Use of Lgol. State and Federal TransWrtation Fund On January 5, 2000, Governor Davis, in his"State of the State"address, stated that there are $1.7 billion of local transportation funds that are not being used. The $1.7 billion is made up of. $600 million in the State Transportation Improvement Program (STIP) that has not been programmed. • $800 million in Federal allocations to metropolitan areas that has been programmed but not obligated. • $300 million In local Road Funds that has been programmed or obligated but carried over to the new fiscal year. $600 million In un-Rrogrammed STIP funds In 1998, the State Legislature passed Senate Bill 45 which changed the way State transportation dollars are programmed. Many technical problems surfaced, resulting in delaying the programming of about $600 million of mostly rural county allocations. However, Contra Costa County has programmed all Its allocations. In fact, the East Contra Costa County Fee Financing Authority is investigating whether it should borrow funds from the State Highway Account to accelerate the construction of the State Route 4 Bypass. $800 million of un-obligaW Federally funded !CMAQ nroje+i�ts As part of the Transportation Equity Act for the 215t Century (TEA-21), the Federal Government almost doubled the allocations to metropolitan areas. Most of the Increases are in the form of Congestion Management and Air Quality (CMAQ) funds. Although the Metropolitan Transportation Commission (MTC) programmed the first three years`allocation in 1938, the authority to spend the funds did not come until June 1999 when the Federal Transportation Improvement Program (TIP) was amended to Include the new projects. The County intends to advertise our projects for bids in February 2000. $300 million of Carry-over funds In the Fiscal Y_2a[98-92 Rgaid R-eRorts The remaining $300 million in the Governor's address are local funds reported in the Fiscal Year 98-99 Road Reports as carry-over funds. Most construction projects are bid in the spring and constructed between April and September. It Is not unusual for local governments to have a large carry-over of construction funds from one fiscal year to another because the construction season spans over two fiscal years. These encumbered funds are required to be reported In the Road Reports as unrestricted carry-over funds, creating an Illusion that $300 million of local Road Funds are unused. In Contra Costa County, we typically carry over $1 million into another fiscal year to cover construction costs. Attachment B Status of Redevelopment Housine Set-Aside for City and County Azencies The Redevelopment Housing Set-Aside represents the single largest source of affordable housing funds in the State of California. And it is one of the few sources that is growing. As reported by the County's Redevelopment Department in October 1999: • Statewide the housing set-aside funds are increasing at an annual rate in excess of $500 million; • The statewide housing set-aside aggregate balance is approximately$1.5 billion, of which 1/3 is reported as unencumbered; • In Contra Costa County,the aggregate fund balance of the sixteen redevelopment agencies is $34.6 million,of which$10.1 million(29%)is reported as unencumbered(as of 6/97). Annual revenues for the housing set-aside amount to $13.5 million. In response to an Internal Operations Committee request in October 1999,the Redevelopment Department reviewed the financial and budgetary data of twelve of the county's sixteen agencies. The conclusions of the data are as follows: • Funds are being expended at a rate comparable to receipt of revenues; • No agency in the county has "Excess Surplus" funds(an accumulation of unexpended funds); • Most of the activities are highly leveraged using a broad variety of private and public funds, including low income tax credits,tax exempt bonds,Federal 202 Funds,bank loans,and County Funds -CDBG/HOME.