BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           564 (Portantino)
          
          Hearing Date:  8/27/2009        Amended: 7/23/2009
          Consultant: Katie Johnson       Policy Vote: Health 7-2
          _________________________________________________________________ 
          ____
          BILL SUMMARY:  AB 564 would limit the maximum amount of public  
          funds in the Substance Abuse Treatment Trust Fund that may be  
          used for compensation of a director, officer or employee of a  
          non-profit entity that provides substance abuse treatment in  
          California to the salary limitations established by the federal  
          government. 
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2009-10      2010-11       2011-12     Fund
                                                                  
          Counties' administrative minor and absorbable          General
          costs
          _________________________________________________________________ 
          ____

          STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.

          Existing law provides for the licensure of substance abuse  
          treatment programs by the Department of Alcohol and Drug  
          Programs (DADP).
          
          Existing law, Proposition 36, establishes the Substance Abuse  
          and Crime Prevention Act of 2000. It requires that non-violent  
          drug possession offenders and parolees receive drug treatment in  
          lieu of incarceration. It also establishes the Substance Abuse  
          Treatment Trust Fund, which requires the transfer of money from  
          the General Fund commencing in FY 2000-2001 and ending in  
          2005-2006 for allocation to counties through a specified  
          distribution formula. The program received General Fund  
          transfers of $60 million in start-up funding in FY 2000-2001,  
          and $120 million annually from FY 2001-2002 through FY  
          2005-2006. In the following years, the Legislature appropriated  
          $120 million in FY 2006-2007, $100 million in FY 2007-2008, and  
          $90 million in 2008-2009. There is not an appropriation for this  
          program in the FY 2009-2010 budget. Funds are used by counties  










          to provide drug treatment programs, vocational training, and  
          family counseling, among other programs.
          
          This bill would limit the maximum amount of public funds in the  
          Substance Abuse Treatment Trust Fund that may be used for  
          compensation of a director, officer or employee of a non-profit  
          entity that provides substance abuse treatment in California to  
          the salary limitations established by the federal government on  
          grant awards from the federal Substance Abuse and Mental Health  
          Services Administration (SAMHSA). The federal salary cap  
          limitations are imposed for FFY 2009 by the Omnibus  
          Appropriations Act, 2009 Public Law 111-8. Executive salary is  
          limited to an amount that is no greater than Executive Level I  
          of the Federal Executive Pay Scale. Effective January 1, 2009, 



          Page 2
          AB 564 (Portantino)

          that annual salary is $196,700. If a California-based substance  
          abuse treatment program receives SAMHSA grants, it would already  
          be subject to similar provisions under federal law.

          This bill would prohibit the use of public funds for  
          compensation for any director, officer, or employee who collects  
          rent from a substance abuse treatment facility unless that  
          person certifices that he or she is in compliance with the  
          federal Office of Management and Budget Circular A-122, which  
          relates to cost principles for non-profit organizations.

          Since DADP performs audits of substance abuse treatment programs  
          only upon request, it does not regularly audit all facilities.  
          DADP would need an office technician to initially contact each  
          substance abuse treatment program to obtain salary information.  
          Since DADP does not track the non-profit status of substance  
          abuse treatment programs, it would need to contact all programs  
          licensed in the state. Additionally, the department would likely  
          need half an analyst position permanently to evaluate data and  
          produce reports. There are 900 substance abuse treatment  
          programs licensed by the department. Costs to DADP would be  
          approximately $100,000 in FY 2009-2010, $220,000 in FY  
          2010-2011, and $50,000 ongoing from the Substance Abuse  
          Treatment and Prevention Fund, which receives its monies from  
          the General Fund, federal SAMHSA grants, and federal funds.  
          Additionally, there would be unknown database start-up and  










          maintenance costs.

          The author's proposed amendments would require that the  
          restriction on executive payment of any corporation, both  
          for-profit and not-for-profit, providing substance abuse  
          treatment in the state, as provided by this bill, be included as  
          a term of all contracts entered into in the state to provide  
          drug treatment services when using public funds to provide  
          treatment. This amendment would eliminate the need for DADP to  
          survey all substance abuse treatment programs in the state and  
          would reduce costs accordingly. The effect of this bill would be  
          minor and absorbable for counties since most of them currently  
          include this type of provision in their substance abuse  
          treatment program contracts.