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HomeMy WebLinkAboutMINUTES - 05232000 - D2 D.2 � BOARD OF SUPERVISORS CONTRA D- . .OM: PHIL BATCHELOR, COUNTY ADMINISTRATOR ��'- -� u «• COSTA f -� COUNTY DATE: MAY 23, 2000 r SUBJECT: THIRD QUARTER REPORT SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATKIM RECOMMENDATIONS: 1. ACCEPT the report from the County Administrator's on the status of the County Budget. 2. RECOGNIZE that the Health Services Department has taken action as directed by the Board on March 23, 2000 to further reduce its operational expenditures and to identify additional measures to narrow the $10.4 million gap between expenditures and revenues projected for FY 00-01. 3. RECOGNIZE that these cost cutting actions have included tight fiscal controls, a targeted hiring freeze, expenditure deferrals and reduction of non-revenue offset activities. 4. RECOGNIZE that the Health Services budgetary shortfall is being driven by declining and inadequate federal and state financing of health care, combined with increased service demands and service delivery costs. 5. RECOGNIZE that other California county health systems are experiencing similar fiscal challenges, also driven by federal and state policies. 6. ACKNOWLEDGE that the magnitude of the State's budget surplus may result in State allocations to Contra Costa County for FY 00-01, recognizing, however, that the Governor has been very unwilling to address local government fiscal instability and that last year's State budget surplus resulted in a meager one-time allocation of$2.2 million to Contra Costa County. 7. DECLARE that the Board of Supervisors may apply any State budget surplus allocation to the Health Services FY 00-01 budgetary shortfall as a stop gap measure, recognizing, however, that unless the structural imbalance between expenditures and revenues is resolved, the Health Services Department will be faced with growing annual budgetary shortfalls. CONTINUED ON ATTACHMENT: YES SIGNATURE: �2o�-*�'Sr CE,_X.t—.-- RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE($): ACTION OF BOARD ON _ M m y 23 , 2000 APPROVED AS RECOMMENDED_XX_ OTHER_XI SEE THE ATTACHED ADDENDUM FOR BOARD ACTION VOTE OF SUPERVISORS AND VOTE I HEREBY CERTIFY THAT THIS IS A TRUE UNAN (ABSENT AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. Contact: cc: CAO ATTESTED__ May 21. 2000 Audidor-Contrdler PHIL BATCHELOR,CLERK OF THE BOARD OF Health SUPERVISORS AND COUNTY ADMINISTRATOR Empi Huamn Services Probati BY ��.DEPUTY 8. AUTHORIZE and DIRECT the Health Services department to continue to pursue expenditure`s reduction measures, including but not limited to maintenance of the targeted hiring freeze, elimination of nonessential contracts, limited use of overtime and registries, strict adherence to hospital and health center staffing guidelines and other actions that will help control expenditure requirements. 9. RECOGNIZE that federal and state policy changes have greatly increased the non-revenue offset operating costs of Home Health Agencies, and that, despite efforts at restructuring, Contra Costa's Home Health Agency, like many throughout the nation, is no longer financially viable. 10. AUTHORIZE and DIRECT the Health Services Department to phase out the Home Health Agency and to draft and post such notices and to undertake such consultations as necessary. 11. AUTHORIZE and DIRECT the Health Services Department to make further recommendations during the July budget hearings for Board action necessary to ensure a balanced budget for FY 00-01. 12. ACKNOWLEDGE that the Employment and Human Services Department is operating within budget for the first three quarters of FY 99-00 and projects an overall balanced budget at year's end. 13. DIRECT the Office of the County Administrator to continue to work closely with the County Redevelopment Agency to expedite the sale of the Oak Park Elementary School in Pleasant Hill to fund IHSS provider wage increases approved by Board effective December 1999. 14. RECOGNIZE that the Employment and Human Services Department continues to face numerous organizational challenges and fiscal uncertainties for FY 00-01. 15. RECOGNIZE that the Governor's proposal to restrict the ability of counties to earn CalWORKs incentive funds could result in a multi-million shortfall for core CalWORKs services. 16. ACKNOWLEDGE that the Probation Department is projecting a $500,000 shortfall in FY 99-00 mostly due to costs associated with Juvenile Court dispositions and State mandates; and further ACKNOWLEDGE that such costs are beyond the direct control of the Department. 17. ACKNOWLEDGE that the Probation Department's FY 99-00 shortfall will be offset by a $500,000 transfer from a surplus in Employment and Human Services Foster Care allocation. 18. ACKNOWLEDGE that the Probation Department submitted a $3.9 million maintenance budget request for FY 00-01 due to Court and State mandates related to Foster Care, California Youth Authority fees, medical services, and required pay equity and salary/benefit increases. 19. DIRECT the County Administrator to continue to work with the Probation Department to resolve the projected $3.9 million shortfall for FY 00-01. 20. ACKNOWLEDGE that if the State were not transferring nearly $100 million a year in property tax revenue from Contra Costa County to the Educational Revenue Augmentation Fund (ERAF), the Board of Supervisors would find it much easier to balance the County's budget and fund local priorities. 21. AUTHORIZE the County Administrator and the County's lobbyist to continue to press the state for some or all of the following fiscal restructuring priorities: • Payment by the State of the school's share of the cost of administering the property tax, in view of the fact that the schools receive over 50% of the property tax and pay none of the administrative costs. • Cap the growth of the ERAF at the 1998-99 fiscal year level, thereby avoiding the annual increase in the losses to the State of property tax revenue. • Relieve the counties of their trial court maintenance of effort (MOE) and/or required fine and forfeiture revenue payments to the State; at a minimum provide the MOE relief contained in AB 2385 (Longville). 2 22. RECOGNIZE that none of the proposals in the Governor's May Revise provide sustained fiscal relief for counties, and that the actual revenue benefit to Contra Costa County is not sufficient to fully address the County's FY 030-031 budgetary challenges. 23. CONTINUE to support long-term, fundamental fiscal restructuring for counties. BACKUN 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 nine month period indicated that overall County budget is in a positive position. The Administrators 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 four key budgets for this period and preliminary analysis of the Governor's May Revise (attached). [—GENERAL COUNTY REVENU General County revenues amount to $174 million spread over 60 accounts. At the third quarter point, it appears that General County Revenues will meet budget targets. Property tax revenue should 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 funds. Major property tax assessment appeals by business and the oil industry have not been resolved and could result in significant revenue losses in the future. 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 DEPARTMENTI The Health Services Department will be balanced for the current fiscal year through the use of one time revenues, tight fiscal controls and expenditure deferrals. However the Department faces a projected minimum shortfall of$103.4 million for FY 030-01. On March 23, 2000, the Health Services Department briefed the Board of the forces driving its budgetary difficulties: declining and inadequate federal and state health care financing coupled with rising service demands and service costs. The Board directed the Health Services Department to identify further opportunities to reduce operational expenditures beyond the current tight fiscal controls, targeted hiring freeze, and reduction of non-revenue offset activities. This report responds to the Board's direction. Declinin State and Federal Revenues Fall to Meet Rlsina Costs The Health Services Department is caught between state and federal policy that is reducing already inadequate financing of health care coupled with the need to meet its duty to provide health care for the indigent and uninsured. On the federal level, the 1997 Balanced Budget Act has reduced reimbursement rates, established caps on service, limited fee-for-service structures and reduced safety net provider payments. The state has similarly acted to inadequately finance managed care rates and limit access to Medi-Cal aid code reimbursement. Federal and state compliance requirements have also increased the Department's administrative costs of service. At the same time, the Health Services Department is experiencing increasing demands for inpatient, outpatient and mental health services and rising service delivery costs. The Health Services Department's main revenue source for its medical services is Medi-Cal. Overall, revenues have declined 14% since 1996, while rates have remained basically flat. California Medi-Cal reimbursement rates have been among the lowest in the United States for 15 years, and Insurance 3 ff Providers are questioning the validity of these rates. Health Net has filed a Notice of Dispute with the State of California arguing that the actuarial base for Medi-Cal rates lacks soundness. The State Department of Health Services is also in a dispute with Contra Costa County over its Medi-Cal rates. In October 1999, the State informed Contra Costa County of a retroactive rate decrease totaling $1.8 million due to "calculation errors," despite written approval of the rate. Contra Costa is in negotiation with the State to settle this issue. However, until the rate dispute is resolved, Contra Costa County cannot receive reimbursement for new Medi-Cal Aid Codes which were issued this year to provide insurance to families leaving welfare for employment. The gap between revenues and expenditure requirements continues to grow: this year Medi-Cal revenue declined 23% from last year, while expenditures increased 12%. This trend is compounded by rising Medi-Cal and Basic Adult Care patient utilization rates, which have increased by 31% and 45%, respectively (BAC rates for Emergency Room utilization). During the same period, pharmacy costs rose by 52%. Average monthly hospital outpatient visits increased by 9 % to 23,735 and average hospital inpatient days increased by 13%to 48,590 in the same period. In addition, increased demand for mental health services has resulted in an overflow both in the Hospital Psych Unit and Institutes of Mental Disease, which are locked facilities financed 100% by county funds. In the last five years, the average daily census has risen by 20% to 101 patients per day. Other major revenue sources are also declining. Disproportionate Share Hospital payments to serve uninsured patients are projected to decline by 27% to $10.1 million from FY 98-99 to FY 00-01. Prop 99 (tobacco sales) and tobacco settlement revenues were $2.8 million (19%) less than projected In addition, the Federal Balanced Budget Act has further reduced reimbursement for in-home visitations by the Home Health Agencies. A Kaiser Foundation study issued April 21, 2000, entitled: "Medicare Home Health Care Payments Plummet" reports that nationally, more than 15% of all Home Health Agencies have folded operations. Only Home Health Agencies in conjunction with large multi-state health care providers seem to have a chance for survival, according to the report. Contra Costa County has had to increase its subsidy to its Home Health Agency by 949 % in the last five years. The divergence between increased costs and demand for services on one side and loss of fiscal resources on the other results in a widening gap between revenue and expenses. This gap will be at least$10.4 million for FY 00-01, if further action is not taken. Trends Women In Other Public Hospital Systems The Second Quarter Budget Report looked at California's ten major counties and found that all counties with Public Hospitals are experiencing similar revenue losses. Since then, these data have been updated: San Francisco County is now projecting a year—end revenue loss of$8 million, while San Joaquin County is reporting a $10 million revenue loss in their Public Hospital System. The California Public Hospital Association estimates that public hospitals in California are facing a $70-100 million shortfall this year, excluding Los Angeles County. Nationwide, there are increasing numbers of reports of the health care crisis: Medicaid and Medicare reimbursement rates are so low that private doctors in Louisiana are seeing 20% fewer Medicaid patients, Ohio Hospitals have dropped Medicaid HMO programs, Florida Nursing Homes have appealed Medicare reimbursement rates, and Wisconsin has filed suit against the Federal Government over Medicare reimbursement. At the same time, industry reports show that the safety net for the poor is "Overburdened and Threadbare" (Kaiser Foundation, March 31, 2000) and that medical centers providing indigent care "must close or downsize to survive" because of the cuts following the 1997 Balanced Budget Act (Association of American Medical Colleges, May 5, 2000). impact of State Budget Surplus Unknown According to the May Revise, the budget surplus has grown to $12.3 billion. While details of the May Revise of the Governor's Budget are not yet fully analyzed, initial review indicates that there may be some benefit for the Health Services Department, although the extent of relief is not yet known. According to the May Revise, the Governor is proposing to keep the state's Tobacco Settlement revenue in the State General Fund, but to dedicate it to "health care." Areas that would benefit include medi-cal eligibility, CHDP, Breast Cancer Treatment and medi-cal rates. There is also language regarding the Disproportionate Share Hospital administrative fee and mental health. The extent to which Contra Costa County would benefit from these proposals, or incur additional share of cost, is unknown at this time. 4 The May Revise also proposes a small one-time allocation based on ERAF losses. If this relief is adopted, the Board may wish to apply it to the Health Services FY 00-01 budgetary shortfall as a stop gap measure. This action would provide short-term relief, but would not resolve the structural imbalance between revenue shortages and expenditure requirements. The Board will be faced with growing annual budgetary shortfalls in the Health Services Department unless systemic resolutions are found for health care financing. Fiscal lntegrlty The Health Services Department will be taking a number of management actions to help bring the projected expenditure base in line with available financing. It is anticipated that these actions will generate in excess of$3 million in savings through strict adherence to hospital and health center staffing guidelines; limited use of overtime and registries; the non-renewal of non-essential contracts and continuance of the targeted hiring freeze. Implementation of a productivity management system based on the patient acuity study will respond both to newly established Federal requirements and to the shortage of Inpatient Registered Nurses. Additionally, the Department is in the process of establishing a new contract with Crestwood Behavioral Health Care which will save an estimated $725,000 annually. The Mental Health Division contracts with private vendors to provide long-term, locked care for psychiatric patients who need that level of supervision and treatment. These facilities are licensed as skilled nursing facilities (SNF) by the State Department of Health Services. When such facilities serve only psychiatric patients under the age of 65, they are called Institutes for Mental Disease (IMD) and Medi-Cal does not pay for the cost of care. The cost must be paid by the County with realignment and County subsidy. The average cost of care for a patient in an IMD is about$4,000 per month. When such facilities have a patient population of 50 percent or more over the age of 65, they are termed SNFs and the cost of care is paid in large part by Medi-Cal. Recently, Crestwood Behavioral Health Care, Inc., a well known provider of IMD care, has opened a facility in Fremont which will care for patients both over and under the age of 65. For the past two months, the facility has been admitting patients over the age of 65, On July 1, 2000 the faculty will have about 25 beds available for patients under the age of 65. The cost to the County for each patient bed will be $28 per day ($840 per month). The Mental Health Division intends to transfer approximately 22 patients from IMDs to this new psychiatric SNF facility. Crestwood Behavioral Health Care, Inc. is currently working with staff from the Mental Health Division to design a program that will be appropriate for the patients to be admitted and will further the Division's goals of returning as many patients as possible to their communities. The Health Services Department has been contracting with Alameda County's Behavior Health Department for beds at Alameda County's North County Jail Criminal Inpatient Unit. Inmates at the Martinez Detention Facility who require acute psychiatric hospitalization are admitted to this unit. The contract amount for the 99-00 fiscal period was $204,000. Recent negotiations have resulted in a payment limit reduction of$102,800. Recent changes in Medicare reporting requirements and reimbursement rates have greatly increased the non-revenue offset costs of operating Medicare-licensed home health agencies. It has become clear over the last two years that small and medium-sized home health agencies operating with Medicare and Medi-Cal revenue are no longer financially viable. Only very large agencies with the ability to spread large fixed administrative and reporting cost requirements are able to continue to function in this current environment. The Health Services Department proposes to no longer seek Medicare reimbursement for home nursing visits and ancillary services in Public Health, and to conclude the restructuring by phasing out the Home Health Agency (HHA). Savings of$650,000 in County subsidy can be redirected to direct health care. However, Medi-Cal reimbursement would still be maintained through Targeted Case Management(TCM) for eligible home nursing services. This change will allow for the elimination of the extensive billing, financial and administrative services required for Medicare reimbursement. The permanent staff in HHA would be reassigned or offered jobs in other programs in Public Health or elsewhere in the Department, which are covered by existing revenue streams. Background on the Contra Costa Horne Health Anency Contra Costa County Health Services has operated a Medicare-licensed Home Health Agency for over 20 years. In 1996 the Agency was at its greatest capacity, with 70 permanent employees (48.9 FTEs) and 21 per diem registered nurses. In 1996 the Agency made 3100 to 3200 visits per month. In response 5 to the changing Medicare regulations, however, the department began to restructure the Agency. In addition, the Contra Costa Health Plan asked the department to ensure that every newborn baby and mother received a home nursing visit within 72 hours, if possible. At the same time, Medi-Cal opened a reimbursement stream for these home nursing visits which could be billed through Public Health at a rate of$320 per mother/baby visit. As a result of these administrative changes at the state and federal levels, as well as the interests of the Contra Costa Health Plan in ensuring that the newest Health Plan members receive early nursing services, the department began transferring staff from the Horne Health Agency into other parts of Public Health. In March 2000 the Home Health Agency had 14 permanent employees (11.9 FTE"s) and one per diem registered nurse. The Agency made 746 visits in March. The patient impact from CC Medicare-Reimbursed Home Nursing Services has been carefully screened. Findings are that the patients can be served by other agencies in collaboration with the Health Services Department. The Contra Costa Health Plan has agreements with a number of home health agencies to provide services to Health Plan members and other Contra Costa Health Services patients. Those home health agencies will bill Medicare or Medi-Cal directly for services to patients referred by Contra Costa Health Services. For those patients not covered by Medi-Cal, Medicare, or private insurance, the agencies will accept Contra Costa Health Services referrals at fee-for-service Medi-Cal rates. The Contra Costa Health Plan has recently contacted the home health agencies, and they have responded that they are available to accept all the additional referrals. There would be a minimum 60-day phase out period to implement this action. The state requires a 30- day notice to close a home health agency; however, placements with other home care agencies may take up to£0 days. Further Action The Health Services Department is continuing to identify cost factors in its operations and is prepared to make further recommendations to the Board during the July Budget Hearings. On a State level, the Health Services Department has supported the 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 Contracting Program Supplemental Payments through SB 1255; • Develop alternative revenue sources to recover declines in Proposition 99 Tobacco Tax subsidies; and • Ensure predictability in realignment funding to local government in support of essential health care services. EMPLOYMENT AND HUMAN SERVICE The Employment and Human Services Department projects an overall balanced budget for fiscal year 1999-2000. The Department continues to project a budgetary shortfall in its Aging and Adult Services Bureau due to the Board-approved wage increases for IHSS providers that became effective in December 1999. However, this shortfall will be offset this year with one-time revenues. Looking towards next fiscal year, the department faces significant service delivery and organizational challenges in several areas and must continue to operate in an environment of financial uncertainty. Uncertainty persists with regards to CaWORKs incentive funding. Funding is also at risk in the areas of foster care and child care. At this time, it appears that Contra Costa will receive additional state funds for child welfare services, but not an amount sufficient to fully meet staffing needs in this area. In addition, participation in new programs and expansion of services in other areas will place additional strain on the Department's resources in the coming year. Aging and Adult Services All programs in the Aging and Adult Services Bureau are operating within budget this fiscal year with the 6 0. exception of the IHSS program. The Department projects a shortfall in IHSS this year as a result of IHSS provider wage increases. This shortfall can be offset with one-time revenues. The Department experienced seven months of increased IHSS provider payments this fiscal year, as the increase became effective in December. The Department will experience the full twelve months of these ongoing costs neat fiscal year, placing an additional $3 million strain on the Department's budget. These costs could be offset next fiscal year by the sale of the Oak Park Elementary School in Pleasant Hill; however, this is a one-time limited source of funds. Even the proceeds from the sale of Oak Park may not be sufficient if IHSS provider hours continue to increase as they have in recent months (IHSS provider hours for January and February were up 11.7% over the same period in 1999). Furthermore, 31% of any additional wage or benefit increases would be borne by the County General Fund under the current cost-sharing plan. Child Welfare Services Funding for foster care is at risk as state and federal agencies are considering implementation of licensing requirements for foster parents who are related to the child. Such licensing requirements could reduce revenue for foster care payments and the Department's administrative overhead as well as increase the program's administrative costs. Revenue to fund foster care payments would be lost in cases where foster parents are unable to meet licensing requirements. Furthermore, a reduction in the percentage of federally eligible foster care cases would reduce the Department's allowable claiming for administrative overhead. The overall loss of revenue could total as much as $5.9 million. In addition, the Department would incur administrative costs associated with hiring staff necessary to oversee the licensing process. In the area of child welfare services, the Department anticipates some state funding to support the hiring of additional child welfare workers based on the State "Yardstick" study, which reportedly found that there are currently only half the number of child welfare workers statewide necessary to satisfy the state's program requirements. Nevertheless, the Governor's May revise includes only $58.1 million statewide. Contra Costa's share of this would be roughly $2 million. This will allow the Department to hire an additional 14 child welfare workers, an 8% increase in the current number of workers. Workforce Services The Workforce Services Bureau projects a balanced budget this fiscal year but faces continued fiscal uncertainty next year as the Bureau remains heavily reliant on unstable CalWORKs incentive funds to pay for core services. The Department projects that next year's CalWORKs expenses will exceed the current base allocation from the state by $14.76 million. To pay for these additional costs, the Department has requested an increase of roughly$7 million in its base allocation, which may or may not be received in full. The balance of the projected $14.76 million shortfall not offset by base allocation increases will need to be paid for by the County General Fund or incentive funds, which are at risk due to the Governor's proposal to restrict the ability of Counties to earn additional incentive funds. A reduction in the availability of incentive funds would impair the Department's ability to effectively serve its CalWORKs clients who are increasingly individuals with multiple barriers to employment. Funding is also at risk in the area of child care. The Governor has proposed to reduce CalWORKs stage one and stage two child care funding next fiscal year. The Governor has committed to fully funding atge three child care, but for one year only. These reductions are being proposed despite continued demand for child care services. The CaIWORKs caseload has declined substantially in recent years as many program participants have found jobs. However, many of these jobs pay very low wages and workers cannot afford to pay for child care. Child care services are critical to the ability of CalWORKs participants to retain employment. A reduction in child care funding would negatively impact the Department's ability to provide the services necessary for CalWORKs participants to transition to self- sufficiency. elfsufficiency. The Department is advocating at the state level for additional stage one child care funding as well as additional stage two and stage three funding through the State Department of Education. Another major challenge for the Workforce Services Bureau in the coming year will be continued implementation of the Workforce Investment Act (WIA). The Department will become the primary operator of the local One-Stop Centers mandated by WIA. While the Department is taking on this added responsibility, the Department's funding for WIA-related activities is expected to decline from $14.4 million this year to $9 million next year. There may be additional net county cost associated with operation of the One-Stops depending on the outcome of ongoing negotiations with other mandated One-Stop partners. 7 PROBATION DEPARTIVIENTI The Probation Department projects a $500,000 shortfall by the end of the fiscal year. The expenditure areas contributing to Probation's budget deficit are not new, are largely mandated by Juvenile Court dispositions and State mandates, and have been escalating for several years. The problem areas are: • Foster Care/Out of Home Placements • Juvenile Hall Staffing • California Youth Authority Fees • Medical Costs at Juvenile Facilities • Home Supervision The first quarter budget report projected a deficit between $871,000 to $945,000. During the second quarter, the Department developed a plan that estimated operational savings and increased revenues that projected a balanced budget by year's end. Then, during the third quarter, the average daily population at Juvenile Hall shot up over 25%, from 145.6 in December to 183.1 in March, and even hit a one-day all time high of 205 in mid-February. The overpopulation of Juvenile Hall significantly negated the Department's budget control efforts and will result in a deficit for FY 99-00, The FY 99-00 Balancing Act Early in the fiscal year the Department was projecting over a $2,100,000 deficit due to costs historically outside of their direct control. By delaying the implementation of several new programs targeted to begin in FY 99-00 (Tamalpais, Chris Adams Girls Center, and the Transition Center), over $561,000 was redirected to support existing programs. To further offset the deficit, the Department projected an additional$760,000 in revenue from Title IVE and TANF. Additionally, Employment and Human Services agreed to provide a one-time-only supplement of$450,000 to the foster care budget. Even with these increases the budget remained precarious and based on actual expenditures through March, is projecting a $500,000 budget shortfall. The issues that continue to plague Probation's budget are estimated to finish the year as follows: Foster Care— estimated Shortfall $19022,633 The largest hole in Probation's budget results from the shortfall in Foster Care/Out-of-Home Placements. The shortfall in Probation's foster care program has grown from $160,125 in FY 97-98, to $534,507 in FY 98-99, and to an estimated $1,022,633 in FY 99-00. While the caseload remains relative stable, Probation's average cost per foster care case increased over 34%, from$2,838 per month to $3,810 per month, in the three year period between FY 95-96 and FY 98-99. For several years, the Department has voiced strong concern over the inequity of funding for the foster care program in Employment and Human Services vs. Probation. To illustrate the inequity of foster care funding between the two Departments, while Probation is projecting a $1,022,633 defici , Employment and Human Services should complete the year with a surplus of $1,535,971. To assist Probation, Employment and Human Services agreed to provide a one-time-only supplement of$450,000 in FY 99- 00 through claiming of Probation's TANF overmatch to partially offset the foster care shortfall. Additionally, Employment and Human Services will transfer$500,000 to Probation from the surplus in its Foster Care allocation. The County Administrator is working with both Departments to find a more permanent solution to this funding discrepancy. Juvenile Hall Sta, ,- Estimated Shortfall $543,654 During the third quarter, the average daily population at Juvenile Hall increased over 25%, from 145.6 in December to 183.1 in March, and even hit a one-day all time high of 205 in mid-February. The Department anticipates that the Juvenile Hall population will persist above budgeted levels for the remainder of the fiscal year and consequently result in significant use of overtime and temporary salaries. Salaries and benefits at Juvenile Hall are estimated to exceed budgeted levels by $543,654 in FY 99-00. Callfornia Youth Authority— Estimated Shortfall,$407.700 Due to the State's new fee schedule, monthly costs for California Youth Authority (CYA) services have almost tripled in the past two years. Prior to the inception of the new few schedule monthly costs were 8 around $27,000. By January 2000 monthly CYA costs were almost $76,000. As a result, Probation's shortfall due to CYA fee increases is expected to reach $407,700. Medical Costs -- Estimated Shortfall $317,000 Probation is projecting a $317,000 shortfall for medical services at juvenile facilities, based on the$7.89 per bed day rate. (Probation negotiated an MOu with the Health Services Department that modified billing to a per bed day rate.) while the per bed day rate ties charges directly to the population at the institutions, control of such costs cannot be achieved by the Probation Department. The Department is looking into outsourcing this program to a private vendor. Home Supervision - Estimated Shortfall $276,000 Nome Supervision is projecting a $276,000 shortfall due to a dramatically increasing caseload. The program is budgeted for 80-100 clients per day but is seeing an average of 160 per day. Overall, Home Supervision is a very cost-effective program. The average cost per day in Juvenile Hall is $125, compared to an average daily cost of only $20 for Home Supervision services. The increased caseload in Home Supervision has required a significant use of overtime. The issue is further complicated by a lack of temporary employees in the Probation Counselor series. As a result Deputy Probation Officers Ills are working overtime at a much higher cost. Impondlna Fate for FY 00-01 The outlook for Probation in FY 00-01 is not optimistic. The Department submitted a Maintenance Budget Request of$3.9 million. The major reasons for the deficit are outside of the direct control of the Probation Department and if not addressed the problems are certain to intensify next year. The County Administrators Office is working with the Department to resolve these issues before the FY 00-01 budget hearings. LITTLE RELIEF FROM GOVERNOR'S MAY REYIS On May 15, 2000 the Governor announced that the state budget surplus had grown to $12.3 billion. Once again, there is no major sustainable fiscal relief for local government. While the details are not yet known, listed below are some of the Governor's proposals: « $250.0 million in one-time discretionary funding to local governments, allocated 50% on per- capita population and 50% on the share of the local government's contribution to the ERAF. • $50.3 million General Fund to implement an English Language and Literacy Intensive Program through local libraries. • $59.2 million to provide health care coverage for the 639,000 children estimated to be eligible for the Healthy Families Program. • $115.0 million to eliminate, effective January 1, 2001, the requirement for Medi-Cal families to submit quarterly eligibility status reports. $66.9 million in rate increases for Medi-Cal Managed Care. $157.0 million for an approximately 10% provider rate increase for all other Medi-Cal (other than long-term care and managed care). • $50.0 million, on a one-time basis, for the Adult Mentally III Offender Crime Reduction Program, in the form of competitive grants to counties to expand or establish a cost-effective continuum of care of graduated mental health responses to mentally ill offenders. • $56.4 million for the State's share-of-cost for Public Authority providers for the In-Home Supportive Services (IHSS) Program to increase wages and $34.2 million for Public Authority provider health benefits, subject to specific state General Fund revenue targets. • $25.0 million to further reduce the State administrative fee paid by disproportionate share hospitals, bringing the total reduction to $55.0 million. 9 * $35.6 million for each of the next three years for Integrated Services for Homeless Adults to provide resources to actively seek out and provide treatment services to about 5,100 adults who are homeless or at-risk of criminal involvement and do not request treatment. * An increase of$75.0 million to provide local assistance grant awards on a competitive basis for counties to build, renovate, or expand local juvenile detention facilities. * An augmentation of$25.0 million to supplement the existing Juvenile Crime Enforcement and Accountability Challenge Grant programs in 20 counties. * $200.0 million to increase the housing supply by providing financial incentives to cities and counties that issue building permits, particularly for developments that place less demand on State infrastructure resources, such as in-fill projects, reuse of commercial or industrial sites for mixed uses including housing, housing served by transit, housing in high job growth areas, and housing affordable to low-income and moderate-income families. Staff is currently reviewing the May Revise to better understand its possible implications for Contra Costa County and will be prepared to discuss it further at the May 23'4 Board meeting. 10 l a ADDENDUM TO ITEM D,2 & D.3 May 23, 2000 Agenda On this date,the Board of Supervisors considered Agenda Item D.2,the report and recommendations of the County Administrator on the Third Quarter status of the County Budget. The Board also considered at this time, Agenda Item D.3, the Budget Workshop for FY 2000-2001,including the Probation Department Budget Report. Philip Batchelor, County Administrator presented the Third Quarter Budget Report and an explanation of the anticipated budget for next year. Mr. Batchelor stated there were three primary departments to be concerned with at this time, Employment and Human Services, Health Services and the Probation Department. John Cullen, Director of Employment and Human Services,presented the fiscal outlook for his department. Mr. Batchelor advised the Board of the funding shortfalls in the Health Services Department. He informed the Board that the losses make it near impossible to maintain the Home/Health Agency. William Walker,M.D.,Health Services Director, noted the actions the Department was taking to help control expenditures. He requested the Board authorize closing the Home/Health Agency,which would prompt a Beilenson Hearing, staff would notice the hearing, and the issue would return to the Board with necessary actions to be taken. As part of this budget workshop, Steve Bautista, County Probation Officer, offered a slide presentation on his Department's budget. Mr. Batchelor stated that the Supervisors would meet with the County's Legislative Delegation on June 9, 2000, at 10.00 a.m., in the Board's Chambers. Discussions will include the County's concerns with administering the State's programs, and the State Budget surplus. Public comment was opened, and the following people appeared to speak: Kathryn Fitzpatrick,R.N., County Health Services nurse, 1122 C Street, Antioch; Roberta Hespen, R.N., County Health Services nurse, 3366 Smoke Tree Commons,Pleasanton; Deidre Barkley, R.N., County Health Services nurse, 1553 Sherman Drive,Benicia; Patrice Coelho, County Health Services nurse, 1821 Glenhaven .Avenue, Walnut Creek; Walt Lautenberger,2001 Oakmont Way,#6, Walnut Creek; Henry L. Clarke, Local One, Martinez; Jacque Salvador,President, Local One, Probation Counselor, Martinez; Jim Hicks,American Federation of State, County, Municipal Employees, 1000 Court Street, Martinez. Supervisor Canciamilla stated he was prepared to accept the recommendations before the Board today as a part of the Third Quarter Report,with the provision that the termination of the Home/Health Agency be continued for 30 days. He would support moving forward with the Beilenson Hearing during that time. The matter could then come back to the Board in 30 days, along with the recommendations of the various staff members, employees, and concerned parties. Mr. Batchelor suggested that the Board set the Beilenson Hearing for June 27, 2000, and the employees could come back June 13, 2000,with their suggestions for cost savings and cuts in their departments. 1 Supervisor Canciamilla advised that he would like the departments to schedule a meeting and a process for the employees to provide their input. Mr. Batchelor stated that it would be appropriate for Dr. Walker to schedule a meeting. Supervisor Canciamilla moved to accept the Third Quarter Budget Report; to continue consideration of the closure of the Home/Health Care Agency to June 27, 2000, during the intervening period schedule the Beilenson Hearing; to refer back to staff the matter of further cuts in Health Services; and to request input from various employee organizations and individuals in Health Services. Supervisor Gerber seconded the motion. Ms. Gerber requested that prior to any direct service cuts in Health Services, the Board be provided with a list of consultant contracts with the County,other than those of providers and direct services. The Board continued to discuss the issues. Supervisor DeSaulnier requested an amendment to the motion to include re-examining other budgets, including the County Administrator's and the Board's, and perhaps stopping new programs, such as the new County Administration building, temporarily; to look for savings to aid the Probation Department shortfall; and advocate to the Legislature and the Governor that education money is important,but children aren't being served, if when they are out of school they don't have the support services that Health Services and the Probation Department provide. Supervisor Gerber stated that the comments of the Board members were amendments to the motion. The Chair called for the vote,which was as follows: AYES. 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