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Home My WebLink AboutMINUTES - 04062004 - SD6 TO: BOARD OF SUPERVISORS Contra FROM: John Sweeten, Costa County Administrator DATE: April 6, 2004 �°��- County SUBJECT: LUSS OF FUNDING FOR REALIGNED HEALTH AND HUMAN SERVICES PROGRAMS SPECIFIC REQUEST(S)OR RECOMMENDAT€ON(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION(S1; CONSIDER directing County Counsel to explore filing suit against the State of California over its failure to provide uninterrupted funding for mandated Realignment programs. CONSIDER directing County Counsel to explore options for immediately terminating Realignment programs for which State funding has been abruptly interrupted. FISCAL IMPACT; Loss of Vehicle License Fees statutorily earmarked for Realignment programs could total $12.5 million in the current fiscal year, and at least $27.7 million next fiscal year, for Contra Costa County. Together, these losses would exacerbate next year's budget shortfall by more than$40 million, Statewide, the losses will be approximately $1.5 billion annually. BACKGROUND/REASON(S)-FOR RECOMMENDATION(SI; As of March 1, 2664, California counties are no longer receiving the Vehicle License Fee (VLF) revenue that is statutorily dedicated to fund health, mental health, and Social services programs pursuant to the massive Realignment of health and human services programs in 1991. For Contra Costa County, $12.5 million is at risk this fiscal year and $27.8 million in FY 04-05. The revenue loss results from triggering of one of the "poison pill' provisions in the Realignment statutes. CONTINUED ON ATTACHMENT: YES SIGNATURE`, -_--_--__-_________________4__ . ________________ RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATIF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON APM, 60 APPROVE AS RECOMMENDED OTHER SEE ADDENDUM AZTA( . VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN .__UNANIMOUS(ABSENT N= ) AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. AYES: NOES: _ ABSENT: ABSTAIN: ATTESTED CONTACT: JOHN SW STEN,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR CC: BY 5 ) ` s`lat_.- DEPUTY REQUEST TO SPEAR FORM (THREE (3) MINUTE LIMIT) Complete this farm and place it in the box near the speakers' rostrum before address i the Board. Name: Phones C �� A Address:. Tsi, ��, - --: City a.'r I am speaking for myself or organizations r (row of or4&nixution) CHECK ONE °-' I wish to speak on Agenda Item #sh C Dates '" �U My comments will be. general for against I wish to speak on the subject of I do not wish to speak but leave these comments for the Board to considers Page 2 "Realignment" was a multi-billion dollar transfer of responsibility and funding for major health and human services programs from the State to counties. Funding was provided by (1) a half-cent increase in the sales tax, and'(2) a delay in the depreciation schedule for vehicles that produced an increase in the Vehicle License fee earmarked to fund these programs. The 1991 Realignment statutes contained a "poison pill" provision that would repeal the Vehicle License Fee increase if a final court decision were reached that counties are owed additional funds for indigent health care as a result of a prior unfunded transfer of program responsibility. In 1994, San Diego County sued the State to recover costs for the transfer of the Medically Indigent Adults (MIA) program from the State to counties. On September 24, 2403, an appellate court entered a decision finding that San Diego County is entitled to recover $3.4 million from the State. Both the State and San Diego County petitioned the Supreme Court for review. On December 24, 2043, the Supreme Court denied the petitions, making the appellate court decision final. The final adjudication of the San Diego County case resulted in the State Department of Finance notifying the Department of Motor Vehicles (DMV) in February 2004 that the poison pill had been triggered, and that the VLF depreciation schedule-- along with DMV's authority to transfer the proceeds to a "Local Revenue Fund" created solely to fund Realignment programs —would be repealed as of March 1, 2004. DMV immediately promulgated emergency regulations restoring the VLF depreciation schedule (effective March 1 through June 29), but lacks the authority to transfer VLF revenues otherwise dedicated to Realignment to the Local Revenue Fund. These funds are being held by DMV until a legislative solution can occur. On March 26, counties received about $66 million in VLF revenues for Realignment. This represents: about half a month's payment. Annual VLF revenues statewide for Realignment programs are estimated to be nearly $1.5 billion. These revenues primarily fund health and mental health programs. Counties remain responsible for these programs and their costs, notwithstanding the interruption of the revenue stream upon which the transfer of responsibility to counties was expressly predicated. Counties are now in a situation where they are providing a variety of critical health and human services programs on behalf of the State, without the State funding to support those programs. Contra Costa County has no way to backfill this funding loss in the face of a budget shortfall in FY 2004-05 that could exceed $82 million. Indeed, each dollar of lost revenue adds a dollar to the anticipated budget year shortfall. Apart from this County's budgetary impact, loss of these revenues could result in the unraveling of the Realignment program itself, a program that has been credited with maintaining critical safety net services during difficult budget times in which the programs might otherwise have been lost. Indeed, the Administration's mid-year budget reduction plan and FY 2004-05 budget proposals clearly recognize the importance of maintaining Realignment. County programs that will be impacted by a foss of Realignment funds include: 6.8 million annually in mental health programs; $21 million in various indigent/public health programs; • $1.4 million to children's welfare programs including foster care and severely emotionally disturbed children; $1 million in aging and adult services programs to the elderly and disabled; and • $643,000 in workforce services programs for Cal/WORKS clients. Though provided an easy option for immediately addressing this problem (AB 5X), the Legislature has failed to take action to fix the VLF poison pill problem. If the Legislature does not act immediately to fix the problem, the County should consider its options, including the possible elimination of programs or pursuing litigation against the State. Page 3 Because the County does not have the resources to backfill this loss of revenue, time is of the essence. The County has been placed in a very difficult position in what appears to be a very cavalier fashion. The fact that this situation could occur is symptomatic of the dysfunctional nature of the State's relationship with its counties. Notwithstanding that structural problem, the solution to the immediate crisis is well within reach of the Legislature. Now is the time for the mature leadership the public demands and those served by State- required programs depend. ADDENDUM SD.6 April 6, 2004 On this day the Board considered report on possible actions to be taken in response to the State's failure to provide funding to support realigned health and human services programs. The Board discussed the history of the issue and requested clarifications of various relative items from staff. The Chair invited comments from the public, and the following person spoke: Rollie Katz, P.O. Box 222, Martinez (Local No.1); The Board of Supervisors accepted the report on possible actions to be taken in response to the State's failure to provide funding to support realigned health and human services programs; and took the following action:- • DIRECTED County Counsel to explore fling suit against the State of California over its failure to provide uninterrupted funding for mandated Realignment programs; • DIRECTED County Counsel to explore options for immediately terminating Realignment programs for which State funding has been abruptly interrupted; • and DIRECTED the County Administrator to outline in writing the specific types of services and programs impacted and return to the Board of Supervisors for consideration..