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HomeMy WebLinkAboutMINUTES - 11142000 - C221 TO: Beard of Supervisors -- = - , Contra FROM: Phil Batchelor, County Administrator Costa GATE: November 14, 2000 County SUBJECT: First Quarter Budget Report SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: 1. ACCEPT the report from the County Administrator on the status of the County Budget. 2. ACKNOWLEDGE that the Health Services Department has undertaken cost cutting and efficiency measures to achieve a balanced budget for this fiscal year while maintaining high quality services. 3. RECOGNIZE that other health care organizations in Contra Costa County have taken actions to maintain their fiscal integrity that are resulting in reduced availability of health services for low-income families and single adults in Contra Costa County. 4. ACKNOWLEDGE that the Health Services Department is currently implementing new and costly Federal requirements while providing health services to an ever- increasing uninsured population. 5. RECOGNIZE that State imposed rate increases for Institutes of Mental Disease and increased service demands necessitate finding and opening new residential treatment facilities for mental health clients. 6. RECONFIRM that emergency shelter beds and homelessness services for homeless residents in unincorporated areas and in cities of Contra Costa County are a continuing need which must be addressed not by the County alone but by multiple partners. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER _ S_IGNATURE(S): ACTION OF BOARD ON l ovember 14, 2000 APPROVED AS RECOMMENDED yx OTHER VOTE OF SUPERVISORS 1 HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF XX UNANIMOUS(ABSENT - -- - - - THE BOARD OF SUPERVISORS ON THE DATE SHOWN. ) AYES: NOES: ABSENT: ABSTAIN: Contact: Cc: CAO ATTESTED Noyembgr 14. 2000 Auditor PHIL BATCHELOR,CLERK OF THE BOARD OFSUPERVISORS Health Serwhus EHS Community Services BY; DEPUTY Proludion 7. 'RECOGNIZE that according to early indications, the Health Services Department faces a projected $15-20 million shortfall for next fiscal year due to unchanged Mate and Federal policies for Health Services, which affect the health care industry as a whole and, most particularly, county-operated systems. 8. REQUEST the County's congressional and legislative delegations to work with Contra Costa County to continue to lobby for legislative changes that address the increase of the uninsured population and the crisis of the health care system. 9. ACKNOWLEDGE that the Employment and Human Services Department projects a balanced budget for FY 00-01. 10. RECOGNIZE that the Employment and Human Services Department continues to face unstable State funding in critical programs, such as CaIWORKs and Child Welfare Services. 11. RECOGNIZE that payments to IHSS service providers may exceed the budgeted net county cost if service hours continue to increase at their present rate. 1 . ACKNOWLEDGE that the Community Services Department has implemented large-scale program expansions over the past four years to provide needed and high quality services for children and families in Contra Costa County. 13. RECOGNIZE that the Community Services Department's administration has been taxed to implement and track a new Child Start accounting structure while continuously supporting expanding services. 14. RECOGNIZE that the Community Services Department has begun implementing new administrative support systems to ensure continued fiscal integrity. BACKGROUND/REASON(S) FOR RECOMMENDATION( 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 plan 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 three-month period indicated that the overall County budget is in a positive position. The administrator's Office is working with recommending specific actions to insure a year-end balanced budget. What follows is a discussion of six 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 51% 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 motor vehicle registration fees, property transfer tax, transient occupancy tax, interest earnings and sales tax. Only the supplemental property 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 nearly $5 billion in /t1 assessments with the potential loss of revenue in the millions to various units of local government. The County has haired Baker and O'Brien, a firm with international experience in the oil refinery sector to handle the appeals. These appeals are currently under study or being deliberated, with decisions expected in this fiscal year. Health Services The FY 00-01 Recommended Budget reported cost cutting and efficiency measures for Health Services which are currently being implemented by the Health Services Department. The Health Services Department projects a balanced budget this fiscal year. For FY 01-02 however, the increasing gap between mandated expenses of the County's health care system and shrinking State and Federal revenues provided to maintain these services poses a serious threat to the Health Services Department's budget. The majority of proposed Federal and State policies, which could have alleviated some of the burden, were voted down by the legislature or vetoed. This year, the Federal Health Care Financing Administration has issued expensive billing and reporting requirements which place an additional financial burden on the health services system after the onset of the revenue shortage imposed by the 1997 Balanced Budget Act and its 1999 reinforced policies. The new Medicare Ambulatory Payment classification system reduces reimbursements for operational and capital costs while implementing new payment classifications and billing codes. At the same time, the cost of implementing the Health Information Portability and Accountability Act (HiPAA) is projected to exceed the costs of Y2K compliance. A projected $5 million COLA cost increase, and the loss of $6.9 million in this year's one time General Fund contribution further contribute to projected fiscal challenges for the coming fiscal year. At this time, the Health Services Department projects a budget shortfall of $15 - 20 million for FY 01-02. Health Care System In Crisis Medi-Cal contracts — Many private health care organizations nationally and in Contra Costa County are terminating their Medi-Cal contracts or have capped their portion of Medi-Cal 1 Healthy Families patients, recognizing that services are financially not remunerative. As a result, public hospitals are overburdened by indigent patient visits: Basic Adult Care outpatient visits to the Contra Costa Regional Medical Center have increased by 9% from last year. Medi-Cal Inpatient Rates — The State Governor has vetoed AB 754 which would have required the state to provide prospective Health Plan rates prior to the start of each fiscal year and would stave off retroactive rate decreases. Approval of AB 754 would have resolved the $1.8 million retroactive rate reduction imposed on the County by the State. The administrative appeal is still pending, with resolution not expected before March 2001. Tobacco Tax (Prop 99) and Tobacco Master Settlement Agreement (MSA) -- Due to declining tobacco sales, both Prop 99 and Tobacco Settlement revenues have been shrinking by 14% since last year. The Health Services Department projects a $100,000 revenue shortfall for Prop 99 and a $400,000 shortfall for the MSA. Quality of Services - Contra Costa County Health Services' quality of care remains among the highest in California (California Department of Health, 2000, and Medicare Information Brochure for 2001). Comparably, physicians nationwide perceive that the quality of care has gotten worse (56%), expect further decline (54%) and believe that a fundamental change is needed (72%) (International Health Policy Survey of Physicians, Harvard University, 2000). Clearly, the current quality of care being supported by additional one time General Fund allocations cannot continue as the solution to inadequate State and Federal health care financing. Growing Numbers of Uninsured Children and Families The number of uninsured patients grew last year as CaIWORKs families transitioned off welfare to work. Many jobs do not provide health care coverage: 80% of California's uninsured work at least part time and nearly half work full time, year round. A special joint effort of Health Services and Employment and Human Services is currently being implemented to ensure that aid-code 38 clients transitioning off welfare to work do not lose their health insurance. While the program is too young to project results at this time, the department believes that up to 10,000 children are eligible for services. However, the State-mandated mailing packages for Medi-Cal enrollment, re- enrollment and change reports have increased in complexity, adding another barrier to our clients' reluctance to re-enroll in new Medi-Cal codes. The State Governor signed several bills to support Healthy Families: > AB 2145 (Migden) eliminates the current one year limitation on eligibility for Healthy Families for legal immigrant children who entered the Unites State on or after August 22, 1995; SB 87 (Escutia) clarifies and improves maintenance of health coverage for families leaving cash assistance for work. ➢ AB 1015 (Gallegos) begins the process for covering parents through Healthy Families by directing the state to apply for a federal waiver; and ➢ AB 2900 (Gallegos) provides for 12 months of continuous eligibility for children in Medi-Cal. However, the State Governor vetoed AB 1722 (Gallegos) despite strong support by the legislature for this bill, which would have eliminated the complicated assets test in the Medi-Cal program for working families. In the meantime, Contra Costa County is implementing its independent strategy with creation of four health assistance centers to enroll and refer families. The countywide strategic plan, supported by $1 million in foundation grants is receiving statewide recognition (Medi-Cal Policy Institute, August 2000, California Healthline, September 2000). State Imposes 17% Rate Increase on Institutes of Mental Disease Contra Costa Regional Medical Center (CCRMC) is overburdened with mental health patients who cannot be placed in alternative treatment facilities. CCRMC's average length of stay of psychiatric patients has increased by 10% since last year due to the lack of alternative facilities. Since these are counted as psychiatric "administrative " days, CCRMS receives a lower level of reimbursement. Alternative services are provided by Institutes of Mental Disease (IMD) which do not have beds available at this time. The State has imposed a 17% rate increase on IMD services this year effective August 1$t, 2000. A second alternative to hospital or IMD is placement in residential treatment facilities, which receives a higher State reimbursement rate. The Health Services Department regards finding alternative placement facilities a high priority. If the situation remains unchanged, however, the Health Services Department projects a $889,000 cost over-run in this cost center. Fnancina for Homeless Services On October 10, the Board of Supervisors approved an increase of $176,904 to the Health Services Homeless Program Budget to expand services by 40 emergency shelter beds in West and Central County and 15 transitional housing beds in East County. This was decided recognizing that overcrowding, lack of affordable housing and surging rents have increased the numbers of homeless families and single adults in Contra Costa County. The Health Services Department received direction to build new partnerships and seek additional funding to further expand homeless services in FY 01-02. Such partnerships are now being explored; however, preliminary outcomes of such discussions show that Federal funding regulations are making it difficult to implement streamlined partnerships. New Federal and State health care initiatives needed The revenue shortfall projected by the Health Services Department for FY 01-02 reflects the unchanging Federal and State health care policies which fail to address the increased complexity of health care delivery and the increasing burden of the uninsured population on the counties' health tare systems. Over the past several years, the Health Services Department has applied strict cost controls and deferred major expenditure deferrals to meet the department's revenue requirements. In FY 90-00, tobacco settlement revenues of $6.2 million back--filled Prop 99, SB 855 and realignment revenue losses as well as the cost of living adjustments authorized in FY 98-99. For FY 00-01, strict fiscal controls, a one time General Fund contribution and further expenditure deferrals, where necessary, should make it possible for the department to meet its revenue requirements. However, continuing unrelenting Federal and State revenue cuts increasingly push the health budget problem into ever-higher dollar amounts each fiscal year. New legislative initiatives to increase appropriations are few and, once approved (AB 2901, Gallegos -- Adjusts Disproportionate Share Hospitals Allocation), change the existing picture incrementally, but do not address the need for fundamental changes. Other bills to provide health care appropriation increases do not receive bipartisan support and the necessary votes to be chaptered (AB 1821, Thomson —Adjust Disproportionate Share Hospitals Eligibility, H.R. 1582, McCarthy — Create non-partisan support for health care needs of the uninsured, S 2753, Graham —Appropriate new Medicare Drug Benefits, S 2888 — Wellstone — Create decentralized, universal health coverage). Some existing Federal regulations such as the Children's Health Insurance Program eligibility requirements (California: Healthy Families) create barriers to use available dollars effectively. Legislative analysts and policy institutes agree that a more comprehensive and long-term legislative policy is needed to avert a breakdown of the health care safety net, and to resolve the budgetary challenges of the counties' health care systems. Employment and Human Services Based on activity in the first quarter, the Employment and Human Services Department projects a balanced budget for fiscal year 2000.2001. However, fiscal uncertainties remain in critical areas of service such as CalWORKs and Child Welfare Services. In addition, the cost for IHSS provider payments is increasing due to an increase in the number of provider hours worked. The County Administrators Office is monitoring these issues and will provide additional information to the Board as it becomes available. Workforce Services The Workforce Services Bureau anticipates a balanced budget for FY 00-01. Financial uncertainty persists with regards to CaiWORKs, as the State is yet to arrive at a stable methodology for funding this program. For FY 00-01 the department requested a CalWORKs single allocation of $42.3 million in State funds to provide core CalWORKs services. The State awarded the department $41.3 million, $1 million less than the requested amount. The department has filed an appeal with the State for the full amount. ff the Mate denies this appeal the department will have to increase its reliance on CaiWORKs fiscal incentives to fund core services. This is an unsettling trend, as the State continues to decrease the ability of counties to earn fiscal incentives and restrict the use of incentives already earned. The department anticipates sufficient fiscal incentives to fully fund the CaIWORKs program this fiscal year, but uncertainty persists regarding the level of incentive funds that will be available. The appropriation for Ca[WORKs fiscal incentives in the State budget is less than the amount of fiscal incentives earned by counties. Therefore, counties will not have access to all of the incentive funds they have earned. The State has yet to inform counties how the fiscal incentive dollars available will be allocated to counties. The precise level of incentive funding available to the department this fiscal year will remain unknown until the State provides additional information. Children and Family Services The Children and Family Services Bureau projects a balanced budget for FY 00-01, but the long-term financial picture for this bureau is unclear, particularly in the area of Child Welfare Services (CWS). Based on a workload study conducted by the State last fiscal year, the State augmented Contra Costa's CWS budget by $2.5 million this year to a total allocation of $28.9 million. The department plans to hire 13 additional child welfare workers with these funds. However, these funds are contingent on the department fully utilizing the State-mandated CWS/CHIS computer system. Furthermore, there is no guarantee that next year's CWS budget will be augmented to the same level. Adoption Services is another area of fiscal uncertainty for this bureau. The State budget includes $12.7 statewide to reduce the backlog of adoption applications. However, Contra Costa is one of six counties to receive none of these funds due to the State's perception of greater need in other counties. The department has appealed the State's decision. AAgiLig and Adult Services The Aging and Adult Services Bureau projects a balanced budget for fiscal year 00-01. The greatest fiscal uncertainty for this bureau is in the IHSS program. Beginning on October 1, 2000 the Authority increased the hourly wage paid to IHSS providers from $7.02/hr. to $7.83/hr. This wage increase was made possible by an increased State share of cost authorized in this year's State budget. Recent data suggests that the number of IHSS provider hours is increasing throughout the county. in recent months the projected annual rate of service hours provided has increased from 5 million per year to 5.5 million per year, largely due to an increase in the number of providers available to serve clients. Continued growth in provider hours could result in up to $350,000 of expenditures beyond the IHSS program budget. The CAC) will continue to monitor this situation. Workforce Investment Board MIB The WIB projects a balanced budget for FY 00-01. The WIB was recently awarded a $1 million federal grant to provide training for hospital nursing staff. Accordingly, an appropriation adjustment will be presented to the Board to increase revenue for this bureau. Comrnunity S ryi 2a In 1997, new demand for full day and year round childcare services for low-income clients emerged in Contra Costa County with the implementation of welfare-to-work. As the largest provider for child care in Contra Costa County, the Community Services Department responded with a large-scale expansion to full day services through C4l" blended half-day programs, resulting in the Child Start model. While the number of line staff expanded with the program, administration stayed largely at the same level as before service expansion. Over time the department's administration was taxed to support line staff. It has now begun a process of recruiting new staff for accountancy, personnel, network administration and general support. Beginning December 2000, Child Start Blended Fund accounting will also be supported by an online accounting system allowing real time expense and revenue tracking, which will cut lag times in transferring charges between the Head Start and Child Development accounts. The department is meeting with County Administrator's staff monthly to improve fiscal systems and will keep the Board updated on its progress during the quarterly budget reports. Probation The Probation Department received an additional $3.9 million from the General Fund to cover a projected deficit in their FY 2000-2001 budget. Based on actual first quarter activity, the Probation Department now projects a balanced budget for FY 2000-2001. The Juvenile Hall received $1.4 million to address overpopulation. While the Juvenile Hall continued to maintain a daily population in the 180s during the first quarter, expenditures are currently within budgeted levels. Additionally, in recent years the escalating cost of caring for court wards has severely impacted Probation's financial stability. The budget for the care of court wards was increased by $2.9 million for FY 200012001. First quarter expenditures for Out-of--Home Placements, California Youth Authority, and medical services are all within budgeted levels. By maintaining control of expenditures and actively pursuing new sources of revenue, the Department is expected to achieve a balanced year-end budget.