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HomeMy WebLinkAboutMINUTES - 06032008 - D.1 TO: BOARD OF SUPERVISORS ` -�t`"` � Contra FROM: JOHN CULLEN, 8 Costa County Administrator County DATE: June 3, 2008 SUBJECT: Potential Impacts of 2008-09 May Revision on Contra Costa County SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION CONSIDER accepting report on the May Revision to the Governor's 2008-09 Proposed Budget, as recommended by the County Administrator. FISCAL IMPACT: The potential impacts of the 2008=09 May Revision on Contra Costa County are discussed in detail in this report. BACKGROUND: The Governor released his annual May Revision to the state budget on May 14, 2008, identifying an ongoing structural deficit and a $17.2 billion budget shortfall for the 2008-09 budget year. (The $17.2 billion number is calculated after the solutions the Legislature adopted in February and includes the Administration's desire to build a $2 billion reserve into the budget.) The May Revision includes revised caseload and revenue estimates based on the latest financial and utilization data. It also includes additional information on proposals, in the January Budget and introduces new initiatives such as the securitization of the Lottery and funding for the Budget Stabilization Act's "Rainy Day Fund." Essentially, the Administration proposes to close the $17.2 billion gap with $8.1 billion in revenue solutions and $9.1 billion in spending reductions, many of which fall on counties and the programs we operate. The release of the $144.35 billion budget proposal formally launches the budget-negotiating season in the Capitol. Not surprisingly, legislators from both parties'criticized the plan and said it has no chance of passing as proposed. While Republican legislators are pleased that the May Revision provides more money for education by fully funding the Prop. 98 guarantee, drops the early prisoner release proposal, and raises admission fees instead of closing state parks, they have indicated they will not support the proposed sales fax increase that would be a contingency if voters do not support the Lottery securitization plan. Democrats have said the Revision is full of gimmicks, though they appreciated the Governor's declaration that the deficit cannot be erased with cuts alone. It is notable that except for the disaster response surcharge on insurance policies and the increased park fees, the new "revenue solutions" are essentially additional borrowings that could make the long-term budget problem even worse. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATORR OMMENDATION OF BOAZIMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON �,tiy�Q_ J�' APPROVED AS RECOMMENDED _ X OTHER 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. UNANIMOUS(ABSENT ) AYES: NOES: ABSENT: ABSTAIN: Contact: L.Delaney 5-1097 Cc: ATTESTED "°�C�_. � 'Doo J.Cullen,CAO OHN CULLEN,CLERK OF THE BOARD OFSUPERVISORS L.Driscoll,GAO's Office BY: V ( DEPUTY ADDENDUM to D.1 June 3, 2008 On this day the Board considered accepting report on the May Revision to the Governor's 2008/09 Proposed Budget. County Administrator, John Cullen presented the Board with a if summation of potential impacts of 2008-09 May Revision on the County. (Please see attached Board Order). Chair Glover concurred with Mr. Cullen reported today, and noted the County would be faced with a difficult time trying to get anything done. Supervisor Uilkema questioned if the Vehicle License Fee revenues and other revenues are discretionary. Mr. Cullen said the County has already committed all local revenues as well as made decisions on how to spend anything that is discretionary and noted at this point the state changes would cause additional impacts locally through the loss of federal state revenues. He went on to say money has not been put aside to backfill when the state stops delivering on their mandate. Mr. Cullen said once they know the state changes an analysis would be made in the programs and staff would return to the Board with specific impacts. Referring to Supervisor Uilkema's comments, Supervisor Gioia said most of the cutbacks are monies aligned to run particular programs. He said when the state cuts back that revenue the County is forced to cut back that program unless those programs are backfilled with other general-purpose revenues. He said the dilemma is the County does not have general-purpose revenue to backfill. He stressed a reform needs to take place at the state level. He suggested having some discussion county wide about the need to raise revenues through different approaches the County can look at, and continue to advocate reform at the state level so there is more revenue to the state. He requested Mr. Cullen to return to the Board with the issue of the utility tax, the 911 fee utility tax. Mr. Cullen said it would be appropriate for the Finance Committee to schedule a presentation on the various revenue raising abilities of local government, all the different subjects and areas and what the requirements would be of those'various elements. Supervisor Gioia requested copies of all memos County Counsel has received in the past about legal issues on fees. Supervisor Uilkema requested the presentation by the Finance Committee should be made to the whole Board and the public should hear it. Supervisor Piepho said the County does not have as an efficient county government financially today to manage increasing demand on services to deliver services and noted a better balance needs to be figured out. She said she would like the Department Heads to work on the impacts to the Departments and requested information of the potential impacts of 2008-09 May Revision. Supervisor Bonilla said it would be incumbent on the County to communicate throughout the County to all the constituents on impacts being proposed. She noted the reality is vulnerable groups of people would lose out and there would not be enough money to save all the programs. She said the public needs to be informed and have an educational strategy for the County in getting the word out and encouraged partnering with the news outlets to achieve the dissemination of information about what this would mean for the lives of the people in this County. She commented the Budget Stabilization Act Proposal does nothing to ensure spending could be maintained at reasonable levels when revenues dip significantly and explained the Stabilization Act offers no protection to counties from erratic state spending. Employment and Human Services Director, Jo Valentine said each year the state sends a survey filled out with actual costs to provide services, and noted since 2001 the state did not provide the County with any cost increase. He explained what the state reimburses the Counties does not cover the costs. He informed the Board additional proposal is in the state budget to reduce the basic funding now provided for MEDICAL. Supervisor Bonilla requested a workshop on revenue issues and a full report from all Departments that could be fashioned into a message for the constituencies throughout the County. Supervisor Piepho requested County employees be included in the workshop. By an unanimous vote, with all Supervisors present, the Board took the following action: Accepted report on the May revision to the Governor's 2008-09 Proposed Budget, as recommended by the County Administrator. Overview of 2008-09 May Revision--2 June 3, 2008 The centerpieces of the May Revision are the "Budget Stabilization Act," a constitutional amendment the Governor unveiled in January, and the proposal to leverage the state Lottery. LOTTERY SECURITIZATION PROPOSAL: The Administration proposes to securitize the Lottery to generate $15 billion in cash over,three years and use the proceeds to capitalize the Revenue Stabilization fund, also known as the "Rainy Day Fund". (Since it is pouring red ink right now, the first $5 billion would go right into the General Fund to help close`the gap.) The Lottery, which the Governor calls an "under performing asset," would need to be "modernized" to significantly increase sales to be attractive enough for an investor to take the risk. However, the Lottery changes would have to be approved by the voters. If rejected, a one-percent increase in the Sales Tax would kick in and remain for three years or until the balance of the Rainy Day Fund reaches $15 billion. After the tax triggers off, an amount equal to what it generated would be rebated to taxpayers. The sales tax proposal is intended to be part of the 2008-09 budget, and unlike the Lottery and Budget Stabilization Act proposals, would not go before the voters. One could assume that this proposal was intended to be more palatable to legislators opposed to tax increases who would have to approve it in a budget trailer bill. In her assessment of this proposal, the Legislative Analyst suggests that the Administration's estimates for how much Lottery sales could be increased are too optimistic. The Legislative Analyst provides a more moderate Lottery securitization proposal that would result in less "borrowing" and would be less risky for schools, which now get a third of the Lottery proceeds. It is worth noting that even the sales tax back-up plan that the Governor proposes in the event that the Lottery plan fails creates additional debt since the Governor proposes to rebate the proceeds of the temporary increase back to the taxpayers in the future. Furthermore, it should not be forgotten that a big piece of the February solution was borrowing. (There were $3.3 billion in additional deficit-financing bonds, deferral of a small fortune owed to counties for state programs, and'permanent:accounting shifts.) Unfortunately, difficult cuts are inevitable to solve the budget problem, which was approximately $14.5 billion in January and would stand at over $24 billion if the Governor and Legislature had not made mid-year cuts in February. The Department of Finance''', (DOF) predicts that California's economy will grow little in 2008, slowly in 2009, and moderately in 2010. The DOF attributes the continued economic sluggishness to lower real Gross Domestic Product growth, weak job expansion in the state, and smaller personal income tax gains in 2008 and 2009. The 2008-09 estimates for major revenues are all down: Personal Income Taxes by $2.7 .billion, Sales and Use Tax by $1.8 billion, Corporation'Tax by $900 million. Counties are already well aware that Property Tax revenues are down, increasing the need for the State to increase its contribution to schools. The reduced Sales Tax estimate directly affects county Realignment revenues as well. Compounding the problem of declining revenues is the fact that spending is up. The forecast for the current year was about $102 billion, but the latest figures put thecost of the state's commitments at more than $104 billion. The state's economic issues only worsened a structural problem in the state budget: spending is programmed by law to grow each year at a rate that is generally faster than tax revenues can match. Current state law would push general fund spending to $113 billion next year if nothing is done to slow it, while revenues are projected to decline to $95 billion. Therefore, the May Revision attempts to address longer-term budget reform with the Budget Stabilization Act and a plan to establish a bipartisan Tax Modernization Commission, which would undertake a comprehensive examination of the state's tax laws. BUDGET STABILIZATION ACT PROPOSAL: Although the proposal has not yet been introduced as legislation, Finance Director Mike Genest shared a draft of the Co;nstitutional ''Amendment called the "Budget Stabilization Act" a few weeks ago. The Act is intended to remedy 'two problems with the budget process: 1) The State tends to spend all the money it takes in during good years, leading to unsustainable spending levels in the long run, and 2) Spending ;formulas make it difficult to slow expenditures when the economy declines. The Governor apparently would like to introduce the measure in the Legislature soon, with the hopes of getting it on the November ballot. The Governor expects it to be introduced as a trailer bill, but his office has not yet shared any revised language. The Budget Stabilization Act is comprised of two parts: a revenue limit and mid-year spending reduction authority. The revenue limit is based on a rolling average of the annual percentage growth in General Fund revenues for the previous ten years. If taxes are'; increased or decreased, the limit would be adjusted to reflect that change. The Department of Finance (DOF) would make all the calculations required under the Act. Revenues that exceed the limit would be placed in the Revenue Stabilization Fund. At the end of any year, if the fund totals more than 15 percent of that year's revenue limit, the excess could be used only for specific purposes. . (1) Schools and community colleges could receive an amount based on their share of General Fund appropriations that year. Overview of 2008-09 May Revision--3 June 3, 2008 (2) The Legislature could spend the remaining excess on tax relief,`,infrastructure, or debt service on bonds. In years when revenues are less than the limit, the Legislature could transfer an amount out of the Fund to cover the shortfall. However, the transfer must be made in a separate bill that does not deal with any other matter and it must be passed by a two-thirds vote, in each house of the Legislature. While the proposal is designed to prevent spikes in spending that could exacerbate fiscal problems in lower revenue years, it does nothing to ensure that,; spending can be maintained at reasonable levels in those years when revenues dip significantly. Therefore, it,offers no protection to counties from erratic state spending. The mid-year spending reduction- authorit ry would kick in during years when Finance determines that spending will exceed revenues. DOF would make calculations for'"this purpose three times a year — in November, January, and June. If Finance finds that spending wil(exceed revenues, it could reduce appropriations. If the gap between spending and revenues were estimated to be, less than one percent, appropriations would be uniformly reduced by an annualized amount of two percent. If the gap exceeds one percent, the annualized reduction would be five percent. A few spending categories would be exempt from the mid-year cuts:'payments required by contracts, collective bargaining, or other entitlements created prior to the enactment of the StabilizationAct, and payments on bond debt. Reductions would not be allowed if they would result in either increased General Fund expenditures or a reduction of General Fund revenues. The Legislature would b,e required to spell out in law how, the reductions would be applied, including changes in formulas, benefits, eligibility, and amounts. If the Legislature does not articulate sufficient direction in statute, lIthe Governor could make these decisions. Further, the Governor could suspend any law or regulation that would inhibit the application of the reductions. Any changes in funding formulas, benefits, etc., would remain frozen in place until a later law changed them. Realignment funds and tax revenue already constitutionally restricted to a specific purpose would be outside of the above .provisions but programs that counties' provide in partnership with the state would be included. Therefore, counties could ',,contract with community based organizations or enter into labor agreements with employees based''on an adopted state budget, only to have state funds unilaterally reduced mid-year. County Counsels who reviewed the draft language for the proposal, contend that the Governor's plan has such a dramatic transfer of power from the Legislative to thell Executive branch of government that it is in fact a constitutional "revision." If that is the case, thea':voters would have to agree to a constitutional convention to make such a change. While many Legislators have nottaken kindly to the plan, there is a good chance that some iteration of it could become a bargaining chip in negotiations on the Budget. Counties should therefore be aware that one outcome of the 2008-09 state budget could be increased mid'year uncertainty in the future with regard to expected payments or subventions from the state. Further, should a spending limitation plan be included in this year's budget, it could lock in current shortfalls in programs counties operate on behalf of the state, most notably those that already suffer from, the "Human Services Funding Deficit" (formerly known as the "Cost of Doing Business" gap). Programs that are critically underfunded such as Child Welfare Services and Adult Protective Services could be locked in at levels that will never enable them to be staffed at appropriate levels without even greater overmatching than counties currently provide. HOW THE GAP IS CLOSED To address the budget year shortfall, the Governor includes $9.3 billion in actions that he proposed in January, including the ten percent across-the-board cuts, many ofi,which have been rejected by the Legislature. Additionally, the May Revision takes $828 million from gas tax Spillover revenue that would otherwise go to transit. Transit will only get the same amount as it did last year, notwithstanding the increase in the cost of fuel and in ridership. There are an.additional $627 million of cuts in Health and Human Services that include CaIWORKS grant reductions and policy changes, limiting state participation in In-Home Support Services (IHSS) to minimum wage, and the elimination of the Cash Assistance Program for legal Immigrants, and several others. The Administration also proposes in the May Revision to borrow $575 million and transfer $75 million from various state special funds that would have to be paid back by 2010-11. In addition, the May Revision includes the elimination of$420 million in funding for the CCPOA contract, even though some amount close to that may be owed when the contract dispute is settled and would have;to be paid`.from the reserve. The Governor also proposes.to delay the $75 million annual mandate payment to local governments. All in all, the May Revision proposes to take in about half a billion dollars less than the current year budget and spend about one and a half billion less, ending with a $2 billion ,'reserve. Overview of 2008-09 May Revision-4 June 3, 2008 IMPACTS TO HEALTH AND HUMAN SERVICES Health and Human Services is the second largest part of the budget, and since the Governor admits "We can't spend money we don't have," this sector takes a big 16t in the Revision. In fact, the Governor's revised plan includes deeper cuts for heath and human services than proposed in January. Funding for health and welfare would be reduced by about $3.4 billion, with about $1.1 billion coming from Medi-Cal. The Governor's staff told county rep'`resentatives, however, that these cuts "are not a statement of his Administration." , Further, the Governor still thinks that reforming health care is critical to achieving budget stability and is planning to'„unveil new initiatives in this area. They will be implemented in two phases: first, the proposals with no General Fund impact, and then issues such as prevention and cost containment. The proposed reductions in the May Revision to Health and Human Services'will have direct impacts on counties by increasing pressure on General Assistance and health and hospital systems. Again, the reductions are generally in addition to the ten percent reductions proposed in January. IMPACTS To HEALTH SERVICES: In Medi-Cal, the Administration would roll back eligibility for working families to 61 percent of poverty (about $13,000 per year for a family of four), limit benefits to legal immigrants to those currently available to undocumented persons (emergency services, pregnancy-related services, long-term care, and breast and cervical cancer treatment), and implement a ;;monthly eligibility requirement for emergency services for undocumented immigrants. The Revision would also reduce funding for county administration of Medi-Cal by $152.5 million. 1931(b) Eli igbility Rollback: Medi-Cal eligibility for parents in two-person households who qualify under the 1931(b) program would be reduced to 61% Federal Poverty Level (FPL) and the rule requiring the primary earner no more than 100 hours per month would be reinstated. Reduction in Benefits for New Immi rants: Newly qualified immigrants 1 and immigrants who permanently reside under the color of law (PRUCOL) would lose full scope Medi-Cal benefits and be eligible only for services available to undocumented persons (emergency, pregnancy, long-term care and breast and cervical cancer), Monthly Eligibility Determination for Emergency Services for Undocumented Persons: The period of eligibility for emergency services (except pregnancy related) for undocumented immigrants would be limited to the month or months during which the services are received. According to the Health Services Department (HSD), it is impossible at this time to calculate the impact on the Department if the above actions are taken. It can safely be assumed, however, that they will have the effect of reducing the number of Medi-Cal covered individuals in the County. It is likely these individuals will continue to seek services from HSD with no coverage. How many will seek services is unknown. IMPACTS To HUMAN SERVICES: In CalWORKS, the May Revision erases the January proposal to give CalWORKS recipients a cost of living adjustment and adds a five percent grant cut. The Governor keeps the January proposals to impose full-family sanctions, time limits for child-only cases, a 10% reduction to foster care and group home reimbursement rates, and eliminate benefits for timed-out',':families. He also endorses the Legislative Analyst's proposal to create a pre-assistance employment readiness program to screen families from CalWORKS. The Governor would eliminate county Pay-for-Performance ($40 million) and reduce Single Allocation funding by $20.6 million. He would also hold back the Federal COLA for SSI/SSP recipients and keep it in the General Fund instead of passing it on to the aged, blind, and disabled. Additionally, the Governor would eliminate the Cash Assistance for Immigrants Program to save $111 million. This is a program that California created in 1997 to care for elderly, blind, and disabled immigrants who no longer qualified for SSI/SSP as a result of changes that were made as part of federal welfare reform. However, the biggest county cost in this area is the failure for the state to address the "Human Services Funding Deficit,” formerly called the "Cost of Doing Business." The survey of this deficit now required to be included in the Revision pegs this number at $9711.3 million,statewide, $183 million more than last year. It is actually $1.063 billion when all federal reimbursements are included. For Contra Costa County, the shortfall in state funding already exceeds $23 million, and the additional Overview of 2008-09 May Revision--5 June 3, 2008 impact of the Governor's January and May Revise proposals on the County is over $27 million. This includes the loss of federal funding which the reductions in state funding will trigger. REDUCTIONS TO IN HOME SUPPORT SERVICES (IHSS) The Governor proposesi to save $187 million in IHSS by reducing services to those clients with a lower level of need and by limiting state participation in NSS wages to the minimum wage. DOF Director Mike Genest said, "If counties want to pay more than the minimum wage, it's on their dime." These changes substitute for the January proposal to reduce domestic-type service hours by 18 percent. In review, the 2008-09 May Revision makes deep cuts to the IHSS program that will reduce the services that keep the elderly and infirm out of nursing homes and hospitals, cutting wages for providers, and by increasing county workloads. The May Revision also restricts Medi-Cal eligibility for low-income working parents to move more than 400,000 of them into the ranks of the uninsured. It reduces health services to legal immigrants, cuts CalWORKS grants and increases program administration while reducing county funds. Clearly these changes and others will increase county General Assistance caseloads and indigent health costs and reduce funds flowing into our communities through wages and grant payments. The most vulnerable children, adults, and families in Contra Costa County will be. hit the hardest. Below is a summary of some of the most significant impacts: CHILD WELFARE SERVICES: The health- and safety of thousands of children in Contra Costa County could be put in jeopardy by the Governor's continued proposal to implement, an 11.4% across-the- board cut to all child welfare services. If implemented, Contra Costa County could lose funding for at least 10 Social Worker positions. The increase in workload for the remaining Child Welfare Social Workers would put children at risk due to increased delays in responding to complaints of child abuse and neglect. Currently, Contra Costa County exceeds federal standards for responding on a timely basis to child abuse referrals. 98.5% of all immediate referrals are responded to immediately, and over 90% of 10 day referrals" are responded to within the federal standard of 10 days.An increase in workload could increase our response times which would not only put more children at risk, but could result in federal financial penalties for not meeting the standards. A decrease in Child Welfare Social Workers could also put at risk our ability.to regularly monitor the safety and well-being of the over 1,400,children in supervised out-of-home care for which the County has a legal responsibility. The Governor is also proposing a steep 10% reduction in foster care and group home reimbursement rates. There are currently over 400 licensed foster homes in Contra Costa County caring for over 1,400 children. The proposed reduction in foster care rates would affect all foster caregivers, including relative caregivers. The average foster care rate for children is currently $530 per child, which is already inadequate for covering the real costs of caring fora child. The proposed reductions would drop this to $477 a month. With this reduction, it is likely we will lose foster family homes as well as some of our group home providers. The only alternatives left will be more expensive agency- operated homes or using slots in group homes that are reimbursed at higher rates because they were meant for more seriously disturbed children.. We may even be forced to place more children out of the county or even out of the state. The net impact may actually drive up 'our costs for caring for children and likely negate any savings that might have been realized. CALWORKS: Approximately, 9,000 low-income families would have their monthly CalWORKS grant cut by 5%. For a family of three, this would mean that the maximum amount of assistance they could receive would be reduced from $723 a month to $687. This is lower in real dollars than what families received 20 years ago! In addition, the Governor is also proposing that the 4.25% Cost of Living increase that was originally proposed in his January budget be eliminated. C"aIWORKS families have not received an increase in years, even though the costs of housing, food; gas, and other basic necessities have increased dramatically. The May Revision continues most of the Governor's January proposals to eliminate cash assistance to children in families in which the parent is either not working enough hours, has exceeded the 60 month time limit, or falls into one of the categories of undocumented citizen, drug felon or fleeing felon. For parents not working enough hours, the elimination of cash assistance would be phased in over a year. We estimate that 70% of the 511 cases in this category would still be unable to meet the work hour's requirement after 12 months. The combined impact of all of the Governor's CalWORKS policy changes would leave over 2,600 children in Contra Costa County without any financial assistance. Overview of 2008-09 MayRevision--6 June 3, 2008 CHILD CARE: The May Revision continues the Governor's proposal to ',,reduce the number of subsidized preschool and child care slots, as well as reduce funding for general.child care payments for working parents. In Contra Costa County we could lose over 113 subsidized preschool and child care slots as well as the equivalent of 3,200 days of subsidized child care. In addition, the Governor is also proposing to reduce. the percentage of the market rate that the state. pays from 85% to 75%. Although the state is updating what it considers the "market rate" based on a .new survey, the net impact is still likely to be a reduction in what the state will reimburse for child care. It is likely that even fewer child care providers will be willing to take state subsidized children, leading parents to have to leave their children in unlicensed and sometimes unsafe settings. MEDI-CAL: Some working families who are working more than 100 hours will lose their Medi-Cal benefits due to a proposed technical policy change. Statewide, as many as 433,500 families could lose medical coverage. Working parents would risk losing their job and even their housing if they became ill or injured. The Governor is also proposing substantial cuts to the allocations for county administration of the Medi-Cal program for authorizing benefits and managing caseloads. In Contra Costa County, this could mean a reduction of 45 positions. Such a reduction would delay how long someone would have to wait to have their application processed and risk increased errors and possibly fiscal penalties as a result of inadequate staffing. Additional Medi-Cal changes are being proposed that would require all families to complete a new status report every three months. The administration is hoping that this would, save costs by leading more families to be terminated due to not completing the paperwork on `time. However, past experience shows that most of these families would still be eligible, and there will simply be an additional workload impact for us as we reprocess their applications. FOOD STAMPS: A proposed cut in funding for county administration of the Food Stamp program is also being proposed at a time when food stamp applications are increasing rapidly as a result of the economic downturn. Such a reduction would result in delays in needy :persons receiving food assistance, as well as a possible increase in errors which could trigger federal financial penalties. AGING AND ADULT SERVICES: The May Revision budget continues the proposed 10% cut in Adult Protective Services Social Workers. Funding for Adult Protective Services is already dangerously low and referrals continue to rise as a result of the new state law that mandates reporting on financial exploitation, as well as from the overall increase in the senior population itself. Any reduction in APS will mean that new referrals will have to be triaged, with life threatening situations receiving higher priority than financial abuse cases. Almost 900 frail seniors and disabled adults could receive a reduction in their "In-Home Supportive Services" due to several proposed policy changes that would either reduce the types of assistance that could be provided or the amount of the state's participation in the share of the cost. Some will lose services altogether, resulting in an increase in institutionalization. The Governor is also proposing a reduction in funding for Social Work staffl'to assess clients who might need In-Home Supportive Services and to set up their case plans. Seniors and disabled adults who suddenly need services to remain in their own home or community will have to wait longer to be seen even as their condition deteriorates. Also proposed is the elimination of cash as to aged, blind, and disabled immigrants which could affect over 200 persons in Contra Costa County. These persons would be eligible for county funded "General Assistance," resulting in a cost shift to counties. IMPACTS TO CORRECTIONS In Corrections, the Administration cast off its plan to release inmates from state prisons early, at least in part because prison and parole populations have declined. These trends result in statewide budgetary savings of approximately $300 million. ' However, the May Revision maintains the Summary Parole proposal, .which would place non-violent, non-serious and non-sexual offenders on "summary parole," offering no active supervision by the State and subjecting parolees to minimal parole conditions. In addition, the Governor's across-the-board 10 percent budget reductions proposed in his January spending plan are sustained for public safety programs. Overview of 2006-09 May Revision--7 June 3, 2008 IMPACTS TO PROBATION: Adult Drug Treatment Program (Prop. 36) `- The May Revision proposes a $10 million reduction in Prop. 36 funds, statewide. In Contra Costa County, the funds are distributed'67.25% Alcohol and Other Drugs Services (AODS, a Health Services division), 26.25% Probation, and 6.5% Courts. AODS (the lead agency) provides treatment and case management. Courts provide a court .once a week. Eligible offenders receive a grant of probation, along with drug treatment, in lieu of a' prison sentence. Probation provides. offender supervision by 4 deputy probation officers. Currently 144 felony cases' are actively supervised by deputies. There are approximately 160 misdemeanor cases on file which 'are "banked", meaning they only receive services when reported by AODS as non- compliant. u Juvenile Justice Crime Prevention Act (JJCPA) programs — The May Revision contains an $11.9 million reduction to these programs. The Probation Department has used this funding to provide needed diversion and supervision services for about 1,000 minors in the community. Funding has - allowed Deputy Probation Officers to work with 8 Law Enforcement Agencies, 18 schools, and support 3 Deputy Probation Officers providing intensive aftercare services at the Orin Allen Youth Rehabilitation Facility. In addition to juvenile prevention activities, Probation staff provide investigation and supervision services to juvenile offenders and other at-risk!':Youth. This fund also supports community-based counseling services. for juvenile wards of the Court, Drug Treatment at .Orin Allen Youth Rehabilitation Facility, Read-to-Live, and Senior Tutors. Mentally Ill Offender Crime Reduction (MIOCR) Juvenile and Adult programs — The May Revision reduces funding for the MIOCR Grant Program., which supports the implementation and evaluation of locally developed demonstration projects intended to reduce recidivism and promote long-term stability among mentally ill adult, and juvenile offenders by $4.5 million, from $44.6 million to $40.1 million. In Contra Costa County, this collaboratively-operated program between Mental Health, Sheriff, and Probation serves adult .and juveniles in their community and in" their homes in lieu of custody or placement. It currently serves 65 youths, with caseloads ramping up. Juvenile Probation and Camps Funding (JPCF) programs — Total JPCF funding in the May Revision reflects the Governor's previously proposed 10 percent reduction. However, ',it shifts approximately 75 percent of the program in state general funds to the Temporary Assistance for Needy Families (TANF) block grant. These funds support the Orin Allen Youth Rehabilitation' Facility, and the Home Supervision and Juvenile Electronic Monitoring Program. The demand' for these services is. consistently at, or above, full capacity,. These programs provide the court with alternatives to costlier out-of-home placement. Other Changes with Indirect Impacts on Probation:_ Foster Care`and Adoptions — $6.8 million current year reduction and $81.5 Imillion 2008-09. The proposal would also reduce rates for Foster Family Agencies, foster family homes, group homes, Adoptions Assistance, and Kin-GAP recipients. Probation predicts that reductions in the foster care system could result in new pressures on our local programs for service delivery and care, resulting from the probable closure of group homes that could not survive the revenue reductions. IMPACTS TO GENERAL GOVERNMENT In the area of general government, the Governor proposes to delaythe third payment of $75 million to local governments for mandate _costs that were incurred before 2004.. This 'ldebt is scheduled to be repaid over fifteen years, ending in 2020-21. In the May Revision, the Governor hangs on to the January concept of putting a surcharge on all residential and commercial property insurance policies to cover wildland fire costs. However he modifies it a bit. Instead of limiting it to fires, it would become the Emergency Response Initiative, to help finance responses to emergencies and disasters. The surcharge would be set at 1.40 percent for those who live in high hazard`zones for earthquakes fires, or floods and 0.75 percent for those in less_ hazardous areas.. Overview of 2008-09 May Revision--8 June 3, 2008 In transportation, the Governor plans to fully fund Proposition 42, although revenues will be down slightly. Contra Costa County is projected to receive $6,981,278 in 2008-09 Prop. 42 revenue: Not surprisingly, the gas tax "Spillover" revenues are up considerably because of the increased price of gasoline. However, $828 million of the "Spillover" will be swept to fund $593 million on student busing and $235 million for the General Fund. This same increase has driven more people to use public transit, but notwithstanding the bounty in the Spillover account, transit'will receive no bump to accommodate the increased ridership. POSITIVE IMPACTS IN THE REVISE ' There were Ia few positive notes in the Revision. The Governor did not propose to suspend Proposition 1A or Proposition 42. Nor did he propose raids on funds from Proposition 63, the Mental Health Services Act, or Proposition .10 (First Five Commissions). And he did request that $89,617,000 be added to the Secretary of State's Budget to reimburse counties for their costs in conducting the presidential primary election held in February. And we found a couple of additional nuggets buried in the Revision. The Governor proposes to spend' $800,000 to fund Screening and Brief Intervention, which will allow Medi-Cal providers to screen patients in emergency departments for non-dependent substance abuse and refer patients to appropriate services. The Revision also points out that five percent of Medi-Cal patients incur sixty percent of,all fee-for-service expenditures, and of those, two percent incur more than forty percent of expenditures. To address this situation the Administration expresses commitment to work with the. Legislature to identify ways to reduce the costs of this frequent user population. NEXT STEPS The Assembly and Senate budget committees are meeting to consider the Governor's proposals. The CAD's Office and our departments will continue to provide information to our legislators, professional associations, and lobbyists on the impact of proposals on local service delivery and financial impacts. We will oppose cuts that attempt to shift costs and state responsibilities to counties. Updates will be provided to the Board of Supervisors as the state budget process continues. Once we see a final state budget, any local impacts will need to be addressed.