SAN MATEO COUNTY 2006 Federal Priorities April 10, 2006
Collaboration between San Mateo County’s local governments and the Congressional delegation is critical to meeting the needs of San Mateo County residents. Collaboration has generated a number of positive results such as:
			• Maintenance of the emergency status of Devil’s Slide • Extension of the Moving to Work demonstration program • Funding for the Girls Ranch at the Youth Services Center, and • Funding for the Forensic (Crime) Lab
The following is a brief outline of issues and programs currently before for the Congress that are of particular concern and interest to the County of San Mateo.
Environment
Pacific Coastal Salmon Recovery $67 million would be made available under the President’s Budget proposal in the form of grants to states, rather than direct payments. The grant awards would be subject to a matching requirement of funds or in-kind contribution of at least 33 percent.
Gasoline Oxygenate Requirement The 2005 Energy Policy Act eliminated the two percent oxygenate requirement for reformulated gasoline (RFG). U.S. EPA recently announced rules stemming a ten-year battle with California and oil industry to allow greater flexibility in determining the formulation of gasoline. The EPA requirement had force California to enhance its gasoline whether it needed to or not, first by adding the now banned MTBE, which polluted groundwater and then later by requiring expensive import ethanol. The new rules will mean California refiners will finally be allowed to make gasoline that is cleaner burning, consistent with the intent of the Clean Air Act, which required the use of, oxygenates in the first place.
Health and Human Services
Child Support Enforcement Under current law, child support programs can apply federal “performance incentive dollars” toward the local share of cost for child support services. The Budget Reconciliation Act would, among other things, prevent the use of federal incentive dollars as match. California is estimated to lose $90 million starting in FFY 2008. In doing so, this will significantly reduce the state’s ability to collect child support. The Child Support Directors Association of California estimates the loss in child support collections could be over $200 million annually in California.
San Mateo County’s Department of Child Support Services is considered one of the best performing in the state. The impact on San Mateo County is unknown due to a number of factors including the hopeful elimination of the federal automation penalties. However, following past cuts and ongoing flat funding, any future funding cut will likely impact the County’s ability to collect child support. This is particularly troubling in light of the fact that collecting child support reduces dependence on other social services like TANF.
Ryan White CARE Act Reauthorization The Ryan White Comprehensive AIDS Resources Emergency (CARE) Act (RWCA) was established in 1990 to address the health and support needs of people living with HIV. Reauthorization of RWCA is expected in 2006. The Administration’s RWCA reauthorization principles have created serious concerns in California over the potentially negative impacts of the federal proposal. In response, all nine of California’s Title I Planning Councils have joined, for the first time ever, to issue a Consolidated Statement of shared principles for reauthorization of RWCA.
	§ The San Mateo County AIDS Program Community Advisory Board supports the reauthorization of the Act if it conforms to the precepts detailed in the Consolidated Statement. The Board of Supervisors is expected to approve a similar resolution. § San Mateo County is part of the San Francisco EMA. The County’s current share of funding from the San Francisco EMA is $2,100,000. If the Administration’s principles were enacted, the San Francisco EMA could lose over $7 million, approximately one half of the formula portion of our EMA’s award.
California’s New Medicaid (Medi-Cal) Hospital Finance Waiver Though eight months have passed in the first fiscal year governed by the five-year Medicaid hospital finance waiver, public hospitals still have not been paid any of the federal money directed by the waiver. As a group, these hospitals were owed $650 million in federal funding as of December 31 2005, a number that will climb to $925 million on March 31 2006. San Mateo County has an estimated $20 million in outstanding reimbursements. While most hospitals, including San Mateo Medical Center, have been able to maintain services, continued delay in funding will result in reductions in services. While some funds can be expected in approximately a month, all federal funding is needed. This crisis in cash flow only highlights the hospitals’ concern about the structure of this new hospital finance system, which shifts the risks and responsibilities of hospital finance from a collaborative federal-state-local effort to one of federal-local.
Medicaid Department of Health and Human Services would total nearly $700 billion under the President’s Budget proposal, an increase of $60 billion. However, the proposal decreases Medicaid funding by $12.5 billion over five years through regulatory changes. $1.963 billion for health centers an increase of $181 million; $3.3 billion for Substance Abuse and Mental Health Services or a decrease of $67 million; and a lower reimbursement for Targeted Case Management (TCM) to the 50 percent administrative match to save $1.2 billion over five years.
Supports Centers of Medicaid and Medicare (CMS) efforts to stem IGTs by capping payments to government providers to “no more than the cost of furnishing services” which is expected to save $3.8 billion over five years. Additionally, the President proposes a new grant program with $500 million to fund innovative policies to “promote insurance among the chronically ill.”
The Medicaid’s formula determines each state’s federal share of health care payments of between 50 and 83 percent, with a national average if 55 percent. California’s 50 percent reimbursement or FMAP – federal medicaid assistance percentage is artificially low. The formula incorrectly assumes that state’s with high per capita incomes will have low poverty, a valid assumption for many states, but not California with large populations of both poor and wealthy individuals. As a result, California’s share is typically between 10 and 11 percent.
		§ An unfair formula that disadvantages California and hurts counties, like San Mateo, which operate a public hospital. Advocate modified federal formulas to achieve equitable distribution of funding for California; § Eliminate arbitrary base-year funding to ensure reimbursement is based on need. § Expand Health Families program eligibility to enable counties to apply local funds for drawing down federal funds; the State Children’s Health Insurance Program
SCHIP is scheduled to expire in FY 2007. The President’s Budget includes $5 billion in FY 2007. California receives nearly 17 percent of SCHIP funds.
Medicaid – Proof of Citizenship The federal Deficit Reduction Act includes Medicaid (in California, Medi-Cal) applicants to provide “satisfactory documentary evidence of citizenship or nationality”, specifically 1) a U.S. passport, or 2) a copy of their birth certificate and any documents described in the Immigration and Nationalization Act. Providing the documentation to support this new requirement may be an issue for some applicants since some do not have access to their birth certificates particularly if they were born in rural areas, during segregation, or in another country. San Mateo County would like to continue the practice of current state laws and regulations, which allow an applicant under the penalty of perjury to attest to their citizenship status.
Mental Health Substance Abuse The President’s Budget proposes a $71 million reduction to substance abuse and mental health services or $3.1 billion, which is in addition to the $103 million reduction in the prior year. The requested total of $1.8 billion for the Substance Abuse Block Grant, while representing level funding from FFY 2006, will in effect serve as a cut due to the reduced buying power of the dollar. The Substance Abuse Block Grant is a major source of funding for alcohol and other drug prevention and treatment services.
Medicare Drug Costs Senators Feinstein and Boxer have urged the President to reimburse California for the cost of providing low-income seniors with emergency access to prescription drugs during foul-ups. In a letter sent to Michael Leavitt, Secretary of Health and human Services, they also requested the Administration to honor a commitment to provide the State with savings related to the transfer of one million Californians from Medicaid to Medicare for drug coverage. The Medicare modernization Act enables states to retain ten percent of the saving from no longer providing drugs for dual eligible individuals, with that percentage growing to 25 percent over time. Not only has California not received the ten percent savings, but also under the federal program it is costing the state more money that if it had maintained drug coverage on Medicaid. California estimates that it has incurred a net cost of $72 million in FY 2005-06 form the so-called ‘clawback’ provision. California has had to spend more than $18 million and could spend up to $150 million in emergency funding to protect citizens from the flawed federal system.
According to the LAO the clawback payment and other factors emanating from the Medicare Modernization Act will cost California $758 million through FY 2008-09 and is considered a “massive unfunded mandate.” The San Mateo County Commissions on Disabilities and Aging and the Mental Health Board are working collaboratively on recommendations to the Board of Supervisors.
Social Services Block Grant/Foster Care Funding Option The Social Services Block Grant is cut 55 percent or a $1 billion reduction, funding SSBG at $1.2 billion for FY 2007. Increases Foster Care and Adoption assistance at $6.9 billion or $233 million more than the current year: $4.8 billion for foster care, $140 million for independent living activities and $2 billion for Adoption Assistance. The President proposes $32 million to establish an “alternative financing system for child welfare” through capped funding with increased state flexibility. Consistent with the administration’s FY 2004, 2005, and 2006 budget proposals, the FY 2007 budget again seeks legislation to allow states to choose an alternative funding scheme for foster care. States choosing to participate would receive funds in the form of flexible grants. A goal of the program would be to act as an incentive to create innovative child welfare plans with a strong emphasis on prevention and family support. While increased flexibility is attractive, the downside is that Federal block grants have had a tendency to remain at their initial funding level without
regard for increases in the cost of living. Rather than applying a statewide approach, California’s current effort for a Title IV-E waiver will allow up to 20 California counties to participate in greater flexibility without a statewide requirement.
TANF Regulations The recently enacted Deficit Reduction Act reauthorizes the Temporary Assistance for Needy Families (TANF) program, known as CalWORKs in California, and directs the federal Department of Health and Human Services to issue an interim final rule by June 20, 2006 for counties to implement the CalWORKs program. San Mateo County respectfully asks that the following be considered as part of the new TANF regulations:
		• Give states and counties a reasonable implementation timeframe such as providing a transition period of one to two federal fiscal years; • Continue providing maximum flexibility for states to define welfare-to-work activities including the most appropriate mix of work participation options for each individual and each locality; • Utilize the penalty structure to promote improvement and recognize the extent of state and county efforts including not penalizing states and counties when making continuing substantial improvements and in measuring shortfalls, rules should give states and counties partial credit for families that participate some but not all of the required hours; and • Allow reasonable flexibility in work hour verification requirements and do not place an undue burden on working recipients or their employers including documentation of regular work schedule and continued employment, allowances for illnesses and absences for good cause, and enable states to adopt negative reporting systems in which attendance is assumed unless client is reported absent.
Housing
Community Development Block Grant Program Once again the President’s Budget targets the Community Development Block Grant (CDBG) program, along with other federal programs aimed at community and economic development, for significant reductions and elimination. The Administration’s budget proposes to reduce CDBG formula grants from $3.711 billion in FY 2006 to $2.775 billion, a cut of almost $1 billion (25 percent) in FY 2007.
It is anticipated that the Department of Housing and Urban Development (HUD) will propose legislation to revise the CDBG allocation formulas and provide bonuses tied to performance with funding reduced to $3 billion from FY 2006 amount of $4.1 billion.
Similar to last year’s effort, which San Mateo County opposes, the President recommends reducing funding to “wealthier” communities to instead target communities of greater need. This effort fails to recognize the importance of CDBG funding for the creation of affordable housing. In San Mateo County there is tremendous need for affordable housing where the fair market rent (FMR) as determined by HUD is among the highest in the nation at $1,536 for a two-bedroom apartment.
Section 8 In San Mateo County, where housing costs are well above the state and national average, Section 8 housing vouchers are critical and key to self-sufficiency and in preventing homelessness. The Housing Authority’s Section 8 programs’ total 4,298 Section 8 vouchers. All vouchers are currently fully utilized and many more are needed to service the nearly 7,000 applicants on the current waiting list. The County urges support for additional vouchers, particularly targeted to high cost counties, to support special groups’ self-sufficiency, including additional vouchers for emancipated foster care youth.
In addition, the San Mateo County Housing Authority is one of the original 24 housing authorities awarded participation in HUD’s Moving to Work (MTW) Demonstration Program. The County’s demonstration program has been a great success. Currently, there are 214 families participating in the MTW Program. A majority of them have established escrow accounts and are on their way to financial independence and potential homeownership. As a result of important language included in the FY 2006 Transportation, Treasury and HUD Appropriations bill, San Mateo County recently received a 3-year amendment from HUD to extend its MTW program through June 30, 2009. This effort has ensured that our MTW participants can remain in the program longer and better assure their success in the program.
Public Safety/Homeland Security
State Criminal Alien Assistance Program and Southwest Boarder Initiative The President’s budget proposes the elimination of the State Criminal Alien Assistance Program (SCAAP). $405 million was appropriated in FY 2006, of which California receives about 40 percent. Of the $301 million appropriated in FY 2005, California’s state and local governments received $121 million. The San Mateo County Sheriff’s Office receives about $ 1.2 million annually in SCAAP funding.
The Southwest Boarder Initiative Program (SWBI) was established to help those states that receive the great majority of undocumented individuals—including those committing and arrested for criminal acts. SWBI is supposed to reimburses local governments for expenses incurred in housing undocumented aliens pending prosecution. Despite apparent support from the Administration, SWBI is consistently under funded. In San Mateo County, SWBI reimburses the Sheriff’s Office for relevant costs. Unfortunately, the Administration has paid only 18 percent of submitted claimed costs.
Justice Assistance Programs The President’s Budget proposes a major reorganization and consolidation of justice assistance programs: State and local Law Enforcement Assistance; Weed and Seed; Juvenile Justice Programs; Public Safety Officers’ Benefits; and Justice Assistance. The proposal would decrease funding for the Office of Justice Programs (OJP), Community-Oriented Policing (COPS) program and the Office of Violence Against Women in half, from $2.4 billion in FY 2006 to $1.2 billion in FY 2007. The Byrne Memorial Grants would be eliminated. In FY 2006 Byrne Grants totaled $416 million.
Prisoner Re-Entry H.R. 1704, the Second Chance Act, would provide $110 million over two-years (Senate version proposes $100 million) to fund demonstration projects to provide ex-offenders with a continuum of housing, health, education, employment and mentoring services. San Mateo County support grant opportunities and welcomes a partnership to develop more comprehensive plans for re-entering offenders from both state prisons and county jail.
Homeland Security Support a revised formula for distribution of State Homeland Security Grant program funding and a reduction in the per-state minimum allocation, which ensures funding is targeted to areas where the threat of terrorism is greatest like California. The current system unfairly directs more funding to low-risk, low-population states, such as Wyoming, instead of high-risk states.
The President’s Budget proposes $633 million for the State Homeland Security Grant Program and $838 million for Urban Area Security Grants (UASI). San Mateo County is part of the Bay Area UASI and does not have a vote in the allocation of funds similar to San Francisco, San Jose and Oakland. This is despite San Mateo County’s similar population to that of San Francisco and that it is home to several critical assets. These assets include: 60 miles of Hetch-Hetchy pipeline and its watershed and drinking water reservoir serving 2.5 million people in the Bay Area, dams, a significant west coast shipping port, two critical bridges and an international airport. The funding allocation process should be more representative and democratic. The San Mateo County Sheriff seeks, and the Board of Supervisors supports, a San Mateo County vote in the allocation process.
Science
National Science Foundation Though the President’s Budget proposes $4.7 billion for NSF, an increase from $4.4 billion in FY 2006, the funding level is still lagging by nearly $3 billion. These funds are critical for research including biological science, computer information, engineering, geosciences and mathematical and physical science. The funds
support such important area projects as high-energy physics for the “B-Factory” project at the Stanford Linear Accelerator and the overall economic recovery of the Bay Area region.
Taxes/Telecommunications
Tax Deductibility Conference negotiations on a $70 billion tax package that would extend and make permanent the option to deduct state and local taxes in lieu of income taxes, would impose new requirements on tax-exempt bonds pools, extend reduced tax rates on capital gains and dividends, and extend the AMT patch.
R&D Tax Credit The President’s Budget proposes to permanently extend the research and development tax credit, which expired on December 31, 2005. Estimated costs to make the credit permanent will be about $86 billion through 2016. Silicon Valley and closer to home, biotechnology interests argue the R&D tax credit is necessary for the continued economic recovery and growth of the Bay Area region.
Alternative Minimum Tax The President’s Budget does not anticipate extending the so-called “patch” that reduces the impact of the alternative minimum tax on middle-income taxpayers, or those with incomes slightly above the national average and high home and property values and costs. As a result, Californians are more likely to be subject to the AMT and a larger than average percentage of the stat’s taxpayers fall under its provision. A permanent fix should be accomplished.
Telecommunications Act San Mateo County supports telecommunications reforms that: 1) are in consumer’s interest, ensure universal availability for consumers, and provide enforceable customer service protection requirements; 2) preserve local franchise and permit fees; 3) preserve local governments’ ability to regulate and be compensated for the use of public rights-of-way; 4) preserve local franchising authority over video service providers; 5) preserve Public, Education and Government (PEG) channels; and 6) allow local authorities to deploy and operate municipal broadband networks.
Workforce
Workforce Investment Act Programs The FFY 2007 Budget request would shift a majority of funds authorized under the Workforce Investment Act (WIA) and Wagner-Peyser Act program totaling $3.4 billion to new Career Advancement Accounts (CAAs). The CAA proposal would consolidate the WIA Adult, WIA Dislocated Worker, WIA Youth, Work Opportunity Tax Credit, Labor Market Information and Employment Service state grants into a single state grant. The new accounts would be used to pay for expenses directly
related to education and training and could be used by states to pay for basic employment services including career assessment, workforce information and job search assistance. Regardless of the Administration's success in acquiring legislative approval to consolidate some WIA programs and create CAAs, its FFY 2007 Budget request would reduce by over $500 million those programs CAAs would consolidate.