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HomeMy WebLinkAboutMINUTES - 02132001 - D.1 i r 5 L _ Contra TO: BOARD OF SUPERVISORS oft : FROM: PHIL BATCHELOR Costa a ;. ;��:,., --_ _a COUNTY ADMINISTRATOR : COUnty DATE: FEBRUARY 13, 2001 SUBJECT: SECOND QUARTER 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. ACCEPT the report from the County Administrator on the status of the Health Services Budget, which is projected to be balanced at year-end. 3. RECOGNIZE that the Health Services Department faces a potential $15 million shortfall in FY 2001-02, driven by declining revenues, loss of one-time funding, and uncontrollable cost increases. 4. ACKNOWLEDGE that the Health Services Department has already reduced, and continues to reduce wherever possible, its expenditures through cost cutting and efficiency measures. 5. ACKNOWLEDGE that substantive financial relief is not included in the Governor's Budget for FY 2001-02, despite the State surplus. 6. ACKNOWLEDGE that it is increasingly difficult for County health care systems to continue to deliver needed and mandated services at increasing costs, absent adequate funding from the State. 7. SUPPORT the California Association of Public Hospitals in their effort to promote legislative remedies to the financial fragility of County health care systems, including CONTINUED ON ATTACHMENT: YES SIGNATURE: :� C —� RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON February 13, 2001 APPROVED AS RECOMMENDED XX OTHER APPROVED recommendations as set forth above, and REFERRED the issue of monitoring pharmaceutical costs to the Finance Committee. VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. XX UNANIMOUS(ABSENT - - - - - ) AYES: NOES: ABSENT: ABSTAIN: Contact: Tony Enea,5-1094 Cc: CAO ATTESTED February 13. 2001 Auditor PHIL BATCHEL R,CLERK OF THE BOARD OFSUPERVISORS BY: ! �/�{% DEPUTY 1 -- i 1 a � s, o Eliminate the Disproportionate Share Hospital Administrative Fee; • Enact legislation to permanently extend the current Disproportionate Share Hospital distribution principles; e Increase base rates for Medi-Cal Inpatient and Outpatient reimbursement; ® Protect and stabilize the Selective Provider Contract Program Supplemental Payments through SB 1255; and o Ensure predictability in realignment funding to local government in support of essential health care services. 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 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 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 the key budgets for this period, a summary of the proposed State budget for 2001- 2002, and a preliminary budget forecast for 2001-2002. GENERAL COUNTY REVENUE General County revenues amount to $198 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 growth over the five months of 2000. However, December showed a troubling drop in revenue. We should know over the next several months whether the lower level of December revenue is a trend or on aberration. The nation and state is experiencing a showdown in the economy,.particularly in the manufacturing sector where General Electric, Daimler-Chrysler, Lucent and Southern California Edison have announced job cutbacks. Other companies are cutting travel costs and reducing hours of employees. Economic showdowns will impact sales tax revenues, vehicle registration fees and transient occupancy tax revenue initially. Prolonged economic slumps of more than a year will impact property tax revenues. Perhaps California's energy crisis poses a more serious problem in the immediate future both as a drag on the economy and higher costs to the County. It appears from the best evidence available that only a cool summer and high rainfall in the Northwest, to power hydro elective facilities, will avert blackouts and significant cost increases this summer. The State's emergency plan will result in higher retail electrical rates in the near future depending on customer usage levels. Some companies have reacted to higher energy costs by shutting down offices and facilities on specified days. .0 ' N YN vo -I lit, M HEALTH SERVICES DEPARTMENT: The Health Services Department projects a balanced budget this year, which is made possible by the infusion of one time funding and implementation of cost cutting and efficiency measures across all Health Services operations. For FY 2001-02, the Health Services Department faces a potential shortfall of $15 million including: • Funding $6 million COLA increase for FY 01-02 • Backfill for $6 million one-time use of reserve funds in FY 00-01 • Backfill the projected $1 million loss of further declining Tobacco Settlement and Tobacco Tax revenue • Funding for an estimated $1 + million in cost increases due to rate increases of Institutions for Mental Diseases, high costs for mental health clients in the hospital, and expansion of the Homeless Program. This shortfall does not include the $6.9 million requirement for detention health services. This fiscal year, the County General Fund assumed responsibility for that cost center. In addition, uncontrollable costs are looming which cannot be fully calculated yet. Among them is the implementation of new information technology systems necessary to meet Federal guidelines that protect client data under the Health Information Portability and Accountability Act (HIPAA). Implementation costs are expected to exceed information technology upgrades for the Y21K problem (Washington Business Journal, 1/31/01). Health Services' operational budget will also continue to be subject to volatile cost increases for pharmaceuticals. Energy prices are another uncontrollable expenditure, particularly since the hospital and other critical health care facilities must remain operational at all times. Expected Federal and State Funding Increases Have Not Materialized In FY 00-01, the Board provided one time funding to the Health Services Department with the expectation that State and Federal legislative initiatives would recognize the growing fiscal fragility of County Health Care Systems, and take action to reform the funding structure. However, the Governor used his line-item veto authority to cut $210 million in proposed health care provider rate increases and mental health funding. For the coming fiscal year, local government is again called upon to support State- mandated services for which the state provides inadequate funding. The Governor's initiatives to provide funding for health care are limited to increasing enrollment: and do not include reimbursement rate increases for County "open door providers," including Contra Costa (see section "Impact of Governor's Budget"). An overview of revenue sources in Health Services shows an overall decline: Medi-Cal rates: The State has increased Medi-Cal outpatient rates by 30%. However, the Contra Costa County health care system and other County Open Door Providers that are Federally Qualified Health Centers (FQHC) will not receive any benefit from this rate increase. CCHP's lawsuits over the State's Medi-Cal rate calculation error and over Sutter Delta's Health Plan rate reimbursements are yet to be settled: $2..7 million dollars in receivables are at risk. Tobacco Settlement and Proposition 99: Due to a downward trend in tobacco sales, both revenue sources are declining for FY 2001-02. Tobacco Settlement revenues are projected at $8.7 million, which is $700,000 less than the Attorney General's original i projection. For Prop 99, last year's dramatic 38% revenue shrinkage has leveled off at 14%, to a $300,000 revenue loss. Disproportionate Share Hospital Payments: The Beneficiary Protection and Improvement Act (BIPA) has staved off further decline in DSH payments, and will result in $500,000 additional revenue to restore FY 98-99 funding levels. It is important to remember that the DSH program is slowly recovering from a near meltdown, and that revenues remain far below DSH 1997 funding levels. The State is still retaining its $87 million DSH administrative fee, while continuing its freeze of regular Medi-Cal rates. Realignment : This revenue source has been fluctuating and unpredictable in the past years. Based on FY 99-00 caseload growth, the State has increased allocations to the health account which would result in a revenue increase of approximately $200,000 this fiscal year. Such adjustments make revenue forecasts for this funding source relatively unpredictable. Other County Hospital Systems Report Substantive Shortfalls Contra Costa County is one of many county "Open Door Providers" already reporting financial difficulties for FY 01-02. San Francisco, Los Angeles and San Joaquin County are calling for increased local subsidy for FY 2001-02 to simply maintain current service levels. Despite a $1 billion infusion over five years, San Francisco needs an additional $22 million next year to avoid service cuts, since the Health Department has run out of further options to trim costs (San Francisco Chronicle, January 31, 2001). At the same time, San Joaquin County staff reports again a $10 million shortfall FY 01-02. Los Angeles County received a $1.5 billion five-year package consisting of extension of its federal waiver, State and City subsidies, and still faces a $150 million deficit in the coming year. Although Los Angeles County has considered privatizing hospitals, two studies by the California Medical Association (CMA) and by the Service Employees International Union (SEIU) suggest that this would even further increase costs and seriously undermine the Disproportionate Share Hospital Program. The SEIU report details "an erosion of access to health care in the state", while the CMA report outlines that services for medically indigent clients resulted in a cost overrun of $416 million in FY 1998-99 for Open Door Providers. Cost Efficiency Measures Compared to Cost Increases Changes in the pharmacy market have been the driving force behind substantive cost increases for Health Services for several years now. The Contra Costa Health Plan researched its purchasing practices and as a result, undertook an education campaign to inform its member doctors about their choices in pharmaceuticals, Nonetheless a 47% cost increase remains in the market and for the hospital system. New Information Technology systems need to be purchased in order to raise firewalls around client databases and data exchanges for claims to the State Department of Health and to the Healthcare Financing Administration. Costs for this undertaking are currently being assessed. In addition, recent federal regulatory action under the Clinton Administration further expanded Information Technology mandates beyond the HIPAA requirements. With energy price increases, and with the opening of Los Medanos Community Hospital in June 2001, General Services projects a $1.7 million cost increase for electricity and natural gas in FY 01-02. However, these are conservative estimates, and may easily be exceeded depending on the energy market. i1 _. . VIA . . �. !jrWvoj 1>11 ow , knomw ONO 'S , TA At the same time, the Health Services Department has worked to implement cost reductions. Hospital staffing guidelines have been improved; permanent nurses have been hired to reduce overtime and per diem payments; non-essential contracts have not been renewed; and purchasing practices have been aligned under the Board's' new purchasing policy. The transfer of clients from Institutions of Mental Diseases to Crestwood, a Skilled Nursing Facility capable of serving psychiatric clients, was implemented for a $725,000 cost reduction. At the same time, though, the state imposed a new 17% IMD rate increase, driving up local expenses. The hospital's expenditures for mentally ill clients have increased dramatically, because non-acute treatment facilities are filled, thus stalling client transfers. Under the direction of the Board of Supervisors, the Mental Health Division is therefore searching countywide for non—acute, community—based treatment facility sites. However, the current housing situation makes this task: difficult and creates delays that cost the Department. CCHP Enrollment Remains Stable Due to High Quality Services Membership in the Contra Costa Health Plan (CCHP) remains relatively stable with an increase of 800 Healthy Families and AIM members and an increase of 1,290 County Employees and commercial members, balanced by a decline of 1,400 Medi-Cal members and a 100 member decline in BAC enrollment over a period of two years. It is important to realize however, that these membership categories do not realize the same revenue per member for CCHP. Revenue per Healthy Families Program member is lowest and this is the category with the strongest future growth. Publication of three independent studies has been very helpful in marketing CCHP: the NEDIS, the Department of Health audit, and the Medicare Information Brochure on health plans, where CCHP ranks highest in the State in several service categories. All verified the Health Plan's high quality standards. Projects Continuing Next Fiscal Year Program expansions that originated in prior years will continue in the coming fiscal year with ongoing expenditure requirements: Los Medanos Community Hospital. The new hospital is scheduled to come online in June, 2001. Operations costs are budgeted for next fiscal year. Homeless Shelters Expansion: The increasing numbers of homeless families in Contra Costa County have necessitated expansion of the County's homeless shelters during the winter months. In November 2000, the Board approved a temporary expansion of up to 100-beds. Also, both single adults and families now stay in the shelters for longer periods of time, because there is less opportunity to transition into other housing. In addition, operational costs for the new Brookside Shelter in West County and Transitional Family Housing in East County will increase the irevenue requirement for the homeless program. The department is currently assessing the revenue requirement and is exploring financing options to come back to the Board with a detailed report in the next quarter. Detention Health: For FY 00-01, the Board removed detention programs as a burden from the Health Services budget, thereby freeing up $6.9 million in one time General Fund allocation. Funding for the detention health program expenses for FY 01-02 needs to be resolved. Legislative Initiatives ., . �' .' _ .. r ,. � ... _ • ,. .. .. l' ..t � ,4 .. .. .. .. :,� Several legislative initiatives are being introduced this legislative session which could expand the availability of health services for Contra Costa citizens: SB 59, (Escutia): Healthy Families Program demonstration projects: Authorizes demonstration projects to allow health care coverage for immigrants, homeless individuals, people living with HIV/AIDS, and other populations currently facing health disparities. AB 59 (Cedillo): Health programs: eligibility. Provides that any child enrolled in specified programs shall be deemed to have met the income eligibility requirements for the Healthy Families Program and the Medi-Cal program. SB 98 (Kuehl). Medicaid. services for persons with dual diagnoses: Creates a dual contract option with the State Department of Mental Health and the State Department of Alcohol and Drug Programs to provide specified services under the IVledi-Cal program to persons with a dual diagnosis of alcohol or drug addiction and mental illness. SB 30 (Chesbro): Mental health: study. Creates a workgroup comprised of the State Department of Mental Health, the Department of Finance, and the office of the Legislative Analyst to study various options to restructure mental health services and funding in California. Recommendations to the Legislature and the Governor are to be made on or before January 31, 2002. AB 48 (Washington): Minority alcohol and drug integrated treatment services network: Implements a 3-year demonstration project to make grants to eligible alcohol and drug integrated treatment services networks in certain counties and "communities of color". AB 1.31 (Corbett): Medi-Cal: utilization controls. Provides for extended numbers of annual visits to service providers under Medi-Cal coverage. AB 32 (Richman):. Health care coverage: Cal-Health Program. Creates the Cal- Health Program to be administered by the Managed Risk Medical Insurance Board -to provide a range of health care coverage options through health plans including a standard uniform benefit package that would be required to be carried by health plans. AB 142 (Richman): Health care service plans: Shifts the burden of liability from physicians to health plans. While these initiatives are spotlights on the overall problem, a comprehensive agenda still needs to be proposed by the State Legislature. The Contra Costa Health Services Department supports the comprehensive and wide-ranging action plan of the California Association of Public Hospitals which calls for the State to: • Eliminate the Disproportionate Share Hospital Administrative Fee; • Enact legislation to permanently extend the current Disproportionate Share Hospital distribution principles; • Increase base rates for Medi-Cal Inpatient and Outpatient reimbursement; • Protect and stabilize the Selective Provider Contract Program Supplemental Payments through SB 1255; and • Ensure predictability in realignment funding to local government in support of essential health care services. -oil EMPLOYMENT AND HUMAN SERVICES: Based on activity to date, the Employment and Human Services Department projects a balanced budget for the current fiscal year, with all major programs operating within budget. Aging and Adult Services Bureau - The number IHSS provider hours delivered has stayed within projected levels during the first six months of the year, so that the program should be within budget at year end. Children and Family Services Bureau - The Bureau recently reached an agreement with the State to fully implement the CWS/CMS information system by June 2001. This agreement fulfills the County's obligation to qualify for $2.5 million in State Child Welfare Services funding budgeted for this year. This brings the County's total CVIIS allocation to $26.9 million for the current fiscal year. Workforce Services Bureau - This year, the Department received a total CaI)NORMCs allocation of $45.7 million, $1.8 million less that the department's original $47.5 million request. Consequently, CalWORKs fiscal incentive funding has been used as a supplement in building the employment-focused workforce services system for the County. Workforce Development Board— No material budgetary issues. COMMUNITY SERVICES: The Department projects a balanced budget this year. New administrative staff was hired to increase support for fast expanding operations and to implement further changes under the Child Start model. The Department has implemented a new online accounting system that will track expenses and revenue of this combined program daily. The Child Start model has received national and State commendations, which contributed largely to more grant awards including a $7 million award to build a new child care facility near the Power Center in the Richmond Iron Triangle. The Department continues to recruit for administration, management and operations. However, recruiting child care teachers has become increasingly difficult in the job market. The Department has helped to form a Bay Area — wide cluster of Head Start programs to address this issue, and, if necessary, introduce new legislation to expand financial reward for child care teachers. 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 continues to maintain a daily population of 166 year-to-date, 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 2000-2001. Expenditures for Out-of-Home Placements, California Youth Authority, and medical services are within budgeted levels through the second quarter. Projections based on second quarter reimbursement claims indicate that revenues will also be realized at budgeted levels. LIM V-pol ", a on IMPACT OF GOVERNOR'S PROPOSED BUDGET: On January 10, 2001, Governor Davis released his proposed FY 01-02 State Budget. The budget signals the beginning of the governor's and legislature's annual negotiation on state funding priorities which, of course, have a substantial impact on the fiscal health of Contra Costa County. This year, according to the Legislative Analyst's Office, there may be little resemblance between the January Proposed Budget and the governor's May revise. Two factors are driving substantial changes in the State of California's fiscal outlook and the expenditure requirements: the economy and the energy crisis. California's Economy The proposed budget anticipates $79.4 billion in general fund revenues, a 3.3% ($2.5 billion) increase over last year. The budget forecasts a real GDP growth of 3%, down from 5% the previous year and 4% in each of the previous three years. This is based on the assessment of next year's economy, which is characterized in governor's budget summary as . . . "Although a mild recession poses a risk, the most likely outcome remains the 'soft landing' with growth moderating to a more sustainable pace." In fact, however, the economy was much weaker in the fourth quarter of last year than reported in the Governor's Budget. Actual growth was only 1.4%. Alan Greenspan, Federal Reserve Board Chair, has been reported as saying that the United States may have 0% growth in the first quarter. As a consequence, according to the LAO, the base assumption for growth is looking too high and should perhaps be a-more modest 2%. Another factor to be considered in assessing the governor's revenue projections is personal income. 56.4% of state general fund revenues come from personal income tax (with the remaining mostly from sales tax, 29.5%; and bank and corporate tax, 8.7%). In California, the top 3% of wage earners pay almost 50% of all income tax, while stock options/capital gains constitute 20% of income tax revenue. Consequently, the State General Fund is very sensitive to variations in personal income. A 1% variance in the growth of personal income in the State of California can increase or decrease State General Fund revenues by approximately $1.2 billion. It is also interesting to note that this year's budget expenditures are greater than revenues for the first time in three years. and that the projected year end fund balance is much less than in the past years (See Figure 1 below). -. . . . . , ,.... � . . : � - . . :. ,. . t Governor's Budget General Fund Condition 1999-00 Through 2001-02 (Dollars in Millions) 1999-00 2000-01 2001-02 Percent Change Prior-year fund balance $ 3,930 $ 9,367 $ 6,557 Revenues and transfers $ 71,931 $ 76,899 $ 79,434 3.30% Total resources available $ 75,861 $ 86,266 $ 85,991 Expenditures $ 66,494 $ 79,708 $ 82,853 3.90% Ending fund balance $ 9,367 $ 6,557 $ 3,139 Encumbrances $ 701 $ 701 $ 701 Set-aside for le al Contin encies -- 7 500 Detail may not total due to rounding. Energy Crisis Energy could become the bottomless pit that consumes every spare dollar of the state surplus and more. On January 29, 2001, the State Department of Water Resources (DWR) announced that the $400 million that had been appropriated to purchase power had been dispensed and that it was now spending $45 million per day to prevent outages statewide. At the CSAC Board of Directors February 1, 2001 meeting, the LAO reported that expenditures were actually $514 million as of January 27, 2001. On January 31St, legislators passed AB 1X, which was promptly signed by the governor. AB 1X authorizes DWR to enter into contracts and agreements for the purchase and sale of electrical power. Funding would come from issuance of up to $10 billion in revenue bonds. In theory, ratepayers would pay the cost of the bonds; however, there is no consensus at the legislative level as to what would happen if the rates cannot cover the bond payments or what rate structure would be appropriate for what customers. In addition, the legislature has been discussing purchase of utility assets such as transmission lines or hydroelectric .plants, which would have substantial financing requirements. The question is not only how much debt can the state afford to take on, but also what would be the impact of transferring private property into the public domain (Contra Costa County General Fund received approximately $1 .28 million from PG&E property taxes this fiscal year and $1.6 million from franchise fees in FY 99-00. All taxing jurisdictions collectively received $9,845,374 million in property taxes this year). Another factor in the energy equation is California's current lack of rainfall. As of this writing, California has only a 10% chance of normal rainfall for the year, which would hurt the production of hydropower, an inexpensive source of electricity. $8 Billion Projected State Surplus According to the LAO, the $8 billion surplus projected in the Governor's Budget may not survive to the May Revise. If so, the issue becomes what budget proposals, will be eliminated or reduced in magnitude. The LAO has stated that the $1.9 billion for Prop 98 will certainly be funded and that one-time expenditures will most likely be the target for cuts. Cuts could include the $250 million discretionary revenue for local • ' �.. ' .:. .. .; .: �:.:� � y�''I .. •. .. f' ... .. �.1� .. government (ERAF relief) and the $300 million local government incentive for new housing construction. At CSAC Board of Directors meeting on February 1St, the LAO advised counties to look for structural reform, not to fiscal relief, from this year's budget. Overview.— Governor's Budget The Governor's Proposed Budget provides for an $82.9 billion spending plan. 85% is expended in three program areas: K-12 and higher education (51.8%); health and human services (26.1%); and youth and adult correction (6.5%). Overall, 54% of expenditures are. ongoing and 46% are one-time. The following are highlights of the governor's budget which could have a fiscall impact on Contra Costa County. Revenue and Taxation — Proposals of particular interest to counties include: • Return of Property Tax Revenues - $250 million in one-time discretionary funding for local government, allocated 50% on a per capita basis and 50"/0 based on local government contributions to ERAF. The budget also mentions the promise to continue discussion with the governor's Director of Intergovernmental Relations and Director of Finance to address long range reform of the state fiscal relationship which, as stated by the governor in his press conference, should be addressed "one step at a time." ■ Property Tax Administration Loan Program - $60 million would fund continuation of the Property Tax Administration Loan Program. In addition, the Department of Finance has indicated that the governor would support a five-year extension of the loan program at the current funding level and was open to options for restructuring the program. 4 Tax Cuts — A number of tax credits and exemptions are proposed in the budget including a "Back to School" sales tax holiday. It would be a three-day holiday in late August on purchases of up to $200 on clothing, $200 on footwear, and $1,000 for computers and related equipment. According to the proposed budget, cities and counties would have the option not to participate in the tax holiday. Law and Justice — Proposals of interest to counties include: Juvenile Justice and Citizens Option for Public Safety (COPS) — The governor's budget proposes a one year extension of the $242.6 million in funding provided by AB 1913. Monies would be split equally between the Juvenile Justice Crime Prevention/Intervention Program and the statewide COPS program. It would also maintain the $100,000 minimum funding level for local law enforcement "front line" services. Contra Costa County's allocation for COPS is anticipated to remain at $3,285,543 under the governor's proposal. The County's Juvenile Justice Coordinating Council is in the process of developing a comprehensive multi- agency juvenile justice plan for the Board's review and approval no later than May 1, 2001. At this time, the plan is focusing on sustainability of the Challenge One Grant Program and SafeFutures Program. The Challenge One Grant funds Probation Officers in select high schools that provide supervision to juvenile offenders and other at risk youth. Funding -for the SafeFutures Program, which concludes its five-year federal grant on September 30, 2001, will most likely focus on core programs, including: . �, - :; - . .�. . ,. :., ,. :; � . . . _ � .� ' .. ..� .t ., a �� - � .. !. • ." intensive aftercare for youth leaving the Boys' Ranch; specialized mental health treatment services at the Summit Center; and the Volunteers in Probation program which supports more than 70 volunteer mentors who work with minors at risk. ■ Local Crime Lab Funding - $30 million in competitive grants for equipment purchase and facility construction and/or upgrade for local forensic labs (Note: It is rumored that these funds are pre-committed). • Prop 36 Implementation — No augmentation beyond funding provided in Prop 36 ($60 million). Nonetheless the budget predicts a significant increase in the number of probationers, yielding additional County probation costs. In addition, there will be costs of testing for substance abuse. Housing, Land Use and Transportation — Proposals of interest to counties include: ■ Transportation - $1.5 billion over the next 5 years to cities and counties for road maintenance and rehabilitation. This is a $500 million increase from last year's projection, based on the growth in gasoline sales tax revenues. Based on last year's allocation, Contra Costa County's share would be $2.187 million. ■ Housing - $300 million for incentive grants for cities and counties to promote issuance of housing permits (an estimated $150 million available in early 2002; the remainder in early 2003). Grants will be available as discretionary revenue as opposed to last year's $100 million program which regulated use of the funds. Health Services - The governor's budget does not address serious underfunding of County Open Door Providers, such as Contra Costa County's hospital and clinic system. ■ Healthy Families Program Expansion - $74.4 million from the Tobacco Settlement Trust Fund for expanded coverage to children with family incomes between 200% and 250% of the federal poverty level. $201.5 million ($76.1 million from the Tobacco Settlement Trust Fund) to expand Healthy Families Program to include the uninsured adult parents of children covered by either Healthy Families or Medi-Cal with family incomes between 100% and 200% of the federal poverty level. • Medi-Cal Expansion — $25.2 billion for Medi-Cal, to reflect a 12.3% growth rate. In addition, eligibility is expanded to include no cost benefits to low income families with incomes at or below 100% of the federal poverty level and to aged, blind and disabled persons with incomes below 133% of the federal poverty level. In addition, effective January 1, 2001, quarterly status reporting is replaced by continuous eligibility for children and for former CaIWORKs clients until the annual Medi-Cal redetermination date. Note that general fund allocations for Medi-Cal actually declined by 1.4%. The funding loss was offset by shifting funding responsibilities for $600 million to the Department of Developmental Services and a $170 million backfill from the Tobacco Settlement Trust Fund. ■ Homeless Mentally III - $55.6 million for grants to provide integrated services to serve the homeless, parolees and probationers with serious mental health illnesses. This is an expansion of last year's $35.6 million program. ■ Long Term Care — $1 million for a pilot projects to explore community-based options for clients currently placed in institutions for mental disease. ,1-. .. .. t. e.. • �, . -. .. .. * r is y. ... �) � �S}�.t r.. .. _ r. .. ... � ,. `!� .t � � s 1. �t� .. .. � .. � / _ ...n Impact of HIPAA - $70 million to implement "statewide" information technology changes required by the Federal Health Information, Affordability and Accountability Act (HIPAA). The budget does not specify if local government would be eligible for any of these monies. Medi-Cal Outpatient Rate Lawsuit Settlement - $350 million lump sum payment to hospitals of the California Health Care Association, including Contra Costa County, which settled litigation over inadequate reimbursement rates dating back to 1989. The Contra Costa Health Services Department expects to receive approximately $1.5 million of one-time revenues. Breast/Prostate Cancer Treatment - $40 million from the Tobacco Settlement Trust Fund for treatment of uninsured or underinsured clients whose income is below 200% of federal poverty level. ■ Youth Anti-Tobacco Initiative - $20 million of funding available through competitive grants. Employment and Human Services - The governor's budget would have a. mixed impact on the Employment and Human Services Department; positive in some areas and negative in others. ■ CaIWORKs Incentive Fund - $154 million reduction for performance incentives, effectively eliminating the incentive program. These funds have been used to supplement the inadequately funded CalWORKs single allocation in building an effective employment-focused workforce services system for the County. Projected loss for Contra Costa would be approximately $4.2 million. ■ IHSS Wage Increases — No appropriation for provider rate increases in Public Authority counties. The budget estimates that state general fund revenues will grow by less than the requisite 5%, so that the $1 state share for provider rate increase will not be triggered. $9.3 million is included in the budget for caseload growth. ■ Adult Protective Services - $88.2 million for Adult Protective Services which represents a 23% increase in funding. In Contra Costa County, this would potentially increase funding by $286,000, which should support necessary ancillary services in the Public Guardian's Office, County Counsel's Office and for District Attorney Investigators. Energy — $1 billion to help reduce energy demand on the power system, promote conservation and bring additional power generation online. $350 million would be spent on programs, including $2.5 million to implement measures that would reduce electrical demand by updating efficiency standards for appliances; training local government on the standards; and providing information to local government about urban planning methods entitled "Planning for Community Energy, Economic and Environmental Sustainability." BUDGET FORECAST FOR 2001-2002 It is clear that the budget forecast for next year is uncertain at the least, and is in a greater potential deficit position than was the case at this time last year. Our latest forecast indicates a $23 million deficit as a worst case and a $15 million a probable case. The key elements of the forecast are presented below in terms of net county cost •;;; � -. . ti. � .. �1' ~ .. �y� ..�. . '` J ` w .. .. •`. . 1. � •S Probable Case Worst Case Reduction in Non-recurring Revenue $14,000,000 $15,000,000 Elimination of One-time Appropriations -6,500,000 -5,500,000 Reduction in fund Balance 6,000,000 7,000,000 Retirement Rate Increase 0 0 Salary and Benefit Increase 12,000,000 13,000,000 General purpose Revenue Increase -24,000,000 -21,000,000 Facility and Energy Increase 5,000,000 6,000,000 Health Services Department Deficit *8,500,000 8 500,000 Total $15,000,000 $23,1000,000 * When COLA's are considered, deficit is $15,000,000 In sum, the use of non-recurring revenue to balance the Health Services Department budget this year and the Department's continuing inability to raise sufficient revenues to cover costs next year constitute the bulk of budget problem. The California energy crisis is expected to add another $2,500,000 to $3,500,000 to the budget deficit. The Board of Supervisor's averted another $10,000,000 problem . in retirement rate increases by persuading the Retirement Board to finance the rate increase. Financial forecasting over the next six months is particularly hazardous because of the downturn in the economy and because of the California energy crisis. In view of this situation, the County Administrator will refine its budget forecast monthly and continue to work with the General Services Department to propose ways in which to reduce energy costs.