COUNTY OF SAN MATEO

Inter-Departmental Correspondence
County Manager’s Office
 
DATE:
 January 23, 2008
BOARD MEETING DATE:
 January 29, 2008
SPECIAL NOTICE/HEARING:
 None
VOTE REQUIRED:
 Majority
 
TO: Honorable Board of Supervisors
FROM: John L. Maltbie, County Manager
SUBJECT: County Manager’s Report #1—Preliminary Impact Analysis of the Governor’s Mid-year 2007-08 State Budget Reductions and Proposed 2008-09 State Budget
 
RECOMMENDATION:
Accept this report.
 
VISION ALIGNMENT:
Commitment: Responsive, effective and collaborative government
Goal(s): Goal 20—Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.
 
SUMMARY:
The Governor’s proposed Mid-year 2007-08 State Budget Reductions and 2008-09 State Budget would have a significant impact on County revenues and services. San Mateo County is estimated to lose $6.5 million in budget year cuts. In part, they include:
•
 $2.6 million in reductions to Health Department services in areas including mental health; public health, family health and aging and adult services.
•
 $3.1 million in reductions to Human Services Agency programs including CalWORKs assistance payments, Child Welfare Services and CalWORKs eligibility determination.
•
 $833,000 in reductions for public safety programs including youth crime prevention, juvenile offender programs and gang reduction activities.
 
In addition to current year and budget year reductions, the Governor also proposes cash management solutions totaling $8.7 billion. While staff continues to assess the impact of the deferral of payments, Public Works has reported that the Governor’s proposed five-month suspension of gas taxes would result in an estimated loss of $5 million upon which current activities are based.
 
In addition, Human Services staff estimates that suspension of cost of doing business increases equate to a defacto reduction of $8 million.
 
BACKGROUND:
On January 10, the Governor released his proposed 2008-09 State Budget. In addition, the Governor declared a fiscal emergency and called for a special session of the Legislature to consider mid-year budget corrections. Under Proposition 58, the Legislature has 45 days from the call of the special session (until February 23) to respond to the Governor’s declaration. While it is unclear what (minimum) action the Legislature must take to satisfy the requirements of Proposition 58, there is consensus that, absent legislative action, the current year budget will suffer a $3.3 billion deficit and the budget year will experience a $11.2 billion shortfall for a $14.5 billion general budget deficit. To maximize current year savings and minimize the budget year deficit, the Governor seeks to implement current year reductions by March 1.
 
Generally, the Governor has proposed a 10 percent across-the-board reduction, of which more than half impacts health and human services. The impact to San Mateo County is detailed below.
 
In addition to the near-term budget balancing solutions, the Governor proposes a constitutional amendment call the Budget Stabilization Act (SBA) that would limit spending in future positive years to restrain spending and bank resources for more challenging budget times.
 
The below analysis is preliminary. Unless otherwise noted, the estimates are for budget year reductions
 
DISCUSSION:
Health—Overall—($2.6 million)
The Governor’s proposed budge would cut an estimated $2.9 million from Health Department programs impacting both local operations and services that meet the health needs of San Mateo County residents. Some of the key issues include: reductions in Medi-Cal provider rates, the elimination of adult dental care and certain Medi-Cal optional benefits for adults and the imposition of quarterly Medi-Cal eligibility reporting for families.
 
Health—Health Families Program
The Governor’s Budget proposes to reduce rates for the Healthy Families Program by 5 percent and increase premiums and co-pays for subscribers above 150 percent of the Federal Poverty Level. The Governor’s Budget would also institute a $1,000 annual cap on dental benefits. The estimated savings for the State from these measures is $41.9 million in 2008-09. While this would not affect the Health Department’s budget directly, there are 9,435 individuals enrolled in the Healthy Families Program who will be affected by the increased premium and reduced dental benefits. In addition, providers may be impacted by the reduction in rates.
 
Health—In Home Supportive Services (IHSS)
The Governor’s Budget includes an 18 percent reduction in domestic and related hours of service in IHSS. In addition, the Governor proposes to extend the current reassessment requirement from 12 months to 18 months. While these combined actions would have minor fiscal impact on the Health Department, it would significantly impact IHSS clients by reducing services such as housekeeping, meal preparation, laundry, food shopping, and errands. The extension of the reassessment could also impact the health and safety of clients.
 
Health—Adult Protective Services—($143,453)
The Governor’s Budget includes a 10 percent decrease in revenue for Adult Protective Services (APS) for a statewide reduction of $10.2 million. San Mateo County’s loss is estimated at $143,453. The proposed reduction is compounded by the fact that State funding for APS has remained flat for many years, while program costs continue to grow.
 
Health—Multipurpose Senior Services Program—($85,700)
The Governor’s budget includes a 10 percent reduction in caseload for the Multipurpose Senior Services Program, a Federal Waiver program that provides services to prevent or delay the placement of our most severely impaired clients into skilled nursing facilities. San Mateo County’s currently serves 200 clients through this program. A 10 percent reduction would result in 20 vulnerable community members not being able to receive necessary services to remain at home. The 10 percent reduction in caseload would result in a decrease of funds totaling $85,700.
 
Health—Services to Seniors and Persons with Disabilities—($138,776)
The Governor’s budget includes a 10 percent reduction in all Older Americans Act (OAA) funded programs that provide services to seniors and persons with disabilities, including Home Delivered Meals, Congregate Nutrition, Ombudsman Services, Health Insurance Counseling and Advocacy (HICAP), Brown Bag Services, Senior Employment, and Linkages. In addition the proposal reduces AIDS Case Management services funding, which AAS receives from Public Health. The estimated impact of the OAA and AIDS funding reductions is $138,776.
 
Health—Behavioral Health and Recovery Services—($1.29 million)
The Governor proposes a number of reductions to mental health and alcohol and other drug services.
•
 For the Early and Periodic Screening Diagnosis and Treatment Program, the Governor proposes a $13.4 and $92.6 million cut in current year and budget year respectively. For San Mateo County, this would result in a 932,458 reduction in state and matching federal funds.
•
 The Governor also proposes a reduction in group home rates that would cut funding to Canyon Oaks by $84,000.
•
 The proposed 10 percent reduction to Substance Abuse and Crime Prevention Act funding (Proposition 36) would result in a $161,925 loss for the County.
•
 The Governor also proposes a 10 percent reduction to the Substance Abuse Offender Treatment Program ($37,322), Drug Court ($41,819) and Perinatal Services ($35,211).
The Governor’s Proposed Budget targets several items for early implementation in FY 2007-08, commencing in March. The FY 2007-08 impact of the proposal is a reduction of $343,753.
 
Health—Emergency Medical Services and the California Health Indigent Program—($77,000)
A 10 percent reduction in the Emergency Medical Services Administration (EMSA) and California Health Indigent Program will result in approximately $77,000 loss of funding which supports program operations.
 
Health—Public Health and Family Health—($549,286)
The Governor proposes a variety to cuts to AIDS, family health and local chronic disease programs. In San Mateo County this would mean:
•
 A $136,074 reduction in State AIDS Master Grant, which is a combination of federal pass-through and State general funds.
•
 An estimated $122,045 in State Aid for Anti-Terrorism. This reduction will impact purchases of supplies/equipment and delay implementation of anti-terrorism preparedness training.
•
 A $149,794 reduction in California Children Services (CCS) in both CCS Administration and in the Medical Therapy Unit. These services are mandated. The State has not yet made clear how these reductions would be implemented; therefore the impact on the County budget is unclear
•
 A $141,373 reduction would result from the proposed 10 percent State General Fund reduction for FY 2008-09 and would be implemented fairly evenly across various Family Health programs including Child Health and Disability Prevention (CHDP), Maternal Child Adolescent Health (MCAH), Black Infant Health (BIH), Adolescent Family Life Program (AFLP). These programs use a relatively small amount of County general funds to leverage larger amounts of Federal and State dollars. While not impacting any one program significantly, the lost revenue may result in waiting lists for services and/or possibly reductions in program services.
 
Human Services—Child Welfare Services—($1.536 million)
The Governor’s Budget proposes a 11.4 percent reduction ($129.6 million) statewide and directs the Department of Social Services to work with the California Welfare Directors Association to identify where and how this statewide reduction should be made in the program. However, given the Child Welfare Services performance standards that counties must meet and counties current underfunding from suspended cost of doing business increases, absorbing a reduction of this magnitude may be operationally impossible.
 
Human Services—Cost of Doing Business—($8 million)
Starting in FY 2001-02, counties’ cost of doing business increases were eliminated. Due to increasing costs, counties have experienced a growing funding shortfall. As noted above, an additional 10 percent reduction will exacerbate the ongoing funding shortfall. Staff estimate the Human Services Agency is under funded approximately $8 million in current year due to the elimination of the cost of doing business increases.
 
Human Services—CalWORKs—Assistance Payments—($1.54 million)
Similar to last year, the Governor proposes to eliminate assistance payment for certain sanctioned, safety-net and time-limited families. If the children in such families were assisted in the General Assistance program at their current CalWORKs payment levels, county costs could increase annually by a net of $1,540,000. What differs this year is a more graduated full-family sanction and the complete elimination of safety-net benefits for timed-out families. In addition, all the policy changes are assumed to begin June 1, 2008 rather than in November as with last year’s proposal. The FY 08-09 proposals would:
•
 Impose a graduated full-family sanction, with the grant reduced to 50 percent of the child-only grant after an accumulated total of six months of noncompliance. After a second accumulated six months of noncompliance the grant would be reduced to zero.
•
 Eliminate safety-net benefits for timed-out families not meeting federal work participation requirements.
•
 Impose a 60-month time limit for certain child-only cases such as children of undocumented parents, drug felons or fleeing felons.
 
Human Services—CalWORKs—Eligibility Determination—($324,000)
The Governor proposes to fund basic eligibility operations for FY 2008-09 at current year levels, less an amount for the workload reductions due to the expected caseload reductions associated with the proposed changes above. The net reduction would be $34 million, or 7.6 percent statewide. San Mateo County’s prorata share of such a decrease would be $324,000. While in theory reduced funding due to reduced caseloads would not disadvantage counties, this does not addressed fixed costs. In addition, the continual lack of cost of doing business adjustments means that the county will still have to absorb a defacto reduction.
 
Human Services—CalWORKs—Child Care—$314,000
The Governor’s Budget proposes $550 million for basic Stage One Child Care. This is $42.8 million, or 8.4 %, increase over FY 2007-08 and is the net effect of a projected natural caseload decrease, offset by the impact of the proposed CalWORKs policy changes and a $69 million Regional Market Rate increase. Our prorata share of such an increase would be $314,000.
 
Human Services—Medi-Cal Eligibility Determination—Unknown
The Governor’ proposes a 2.5 percent reduction in the Medi-Cal eligibtility determination appropriation. The baseline amount has not been determined. Since counties may not have been fully expending the Medi-Cal eligibility determination budget appropriation, the 2.5 percent reduction may have no material impact. The Governor also proposes to reinstate quarterly status reports for Medi-Cal beneficiaries and assumes that the increased workload associated with quarterly reports will be offset by a decreased caseload from increased discontinuances.
 
Human Services—AFDC Foster Care—Unknown
The Governor’s Budget proposes to reduce on June 1, 2008 the rates for foster family homes and group homes by 10 percent and for foster family agencies by 5 percent. While the fiscal impact to the County has not yet been determined, the proposal’s effect on our ability to recruit and maintain foster homes could be of greater concern.
 
Child Support Services—None
It appears the State Department of Child Support Services will absorb the 10 percent reduction and some vendor contracts will be eliminated. Local Child Support Agencies and the California Child Support Automation System were exempted from budget balancing reductions. Reductions in these areas would jeopardize the implementation of the automation project and reduce the local agencies’ ability to provide child support collection services. While Governor has not proposed to reduce local agency funding, this would represent the sixth year of flat funding and effectively a defacto reduction similar to the Human Services Agency’s cost of doing business suspension.
 
Probation—Juvenile Justice Crime Prevention Act—($196,561)
As part of the Governor’s budget balancing reductions, the Juvenile Justice Crime Prevention Act funding would be reduced by $11.9 million statewide. San Mateo County’s share is estimated at $196,561.
 
Probation—Juvenile Probation Camp Funding—($360,118)
As part of the Governor’s budget balancing reductions, the Juvenile Probation Camp Funding would be reduced by $20.1 million statewide. San Mateo County’s share is estimated at $360,118. This would impact Camp Glenwood and to a lesser extent MJK Girls Camp as well as possible reductions for contracts with nonprofit providers.
 
Sheriff—Citizen’s Option for Public Safety—($40,000)
As part of the Governor’s budget balancing reductions, the Citizen’s Option for Public Safety program would be reduced by $11.9 million statewide. San Mateo County’s estimated loss is $40,000 that could impact the Sexual Habitual Offender Program and jail operations.
 
Sheriff—Mentally Ill Offender Crime Reduction Program—($94,000)
A possible reduction to the Mentally Ill Offender Crime Reduction Program could result in a loss of up to $94,000 in funding for alternative treatment and re-entry programming for adult mentally ill inmates/probationers.
 
Sheriff—Gang Task Force grant funding—($35,000)
A possible reduction to the Gang Task Force grant funding could result in a loss of up to $35,000 which could impact the County’s ability to conduct anti-gang initiatives countywide in conjunction with other local law enforcement agencies and the Probation.
 
Sheriff—Local Detention Facility Fund (Booking Fees)—($74,000)
The Governor proposes a $3.5 million reduction in funding to offset booking fees that would otherwise be collected from local law enforcement agencies. Under current law, counties may be able to charge pro-rated booking fess to address the under-appropriation. San Mateo County’s estimated loss is $74,000.
 
Sheriff—California Multijurisdictional Methamphetamine Enforcement Team (Cal-METT) Program—($33,000)
The Governor proposes minor reductions to this program that could result in an estimated $33,000 loss in funding for the eradication of meth labs in San Mateo County.
 
Libraries—Unknown
The State Budget includes reductions totaling $2.8 million to two public library programs including the Public Library Fund and the Transaction Based Reimbursement Program. The Public Library Fund provides aid to public libraries for basic public library service. Funds are distributed proportionally according to population. The Transaction Based Reimbursement Program partially reimburses libraries for the cost of loaning books to distant customers within the state and distributes funds according to the level of activity and a payment rate based on total allocation. The specific impact to the San Mateo County Library is unknown at this time due to the distribution methods, however lower reimbursement compared to the prior year is anticipated. In FY 2006-07 the San Mateo County Library received Public Library Funds totaling $159,050, and Transaction Based Reimbursement Program funds totaling $477,495.
 
FISCAL IMPACT:
San Mateo County is estimated to lose $6.5 million in budget year cuts under the Governor’s proposed 2008-09 State Budget.