BILL ANALYSIS
SB 849
Page 1
Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 849 (Ducheny) - As Amended: June 22, 2010
Policy Committee:
AppropriationsVote:N/A
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This supplemental appropriations bill (SAB) appropriates $654
million (GF) to augment the Budget Act of 2009 to cover
deficiencies for the 2009-10 fiscal year. This appropriation is
factored into current budget figures and does not add to the
current budget deficit. Any unencumbered funds would revert to
the GF. Specifically, this bill requires the state controller to
allocate these funds as follows:
1)$406,184,000 to the Department of Corrections and
Rehabilitation (CDCR) for contract medical services.
This deficiency funding request is from federal health care
receiver Clark Kelso for contract medical expenditures. The
medical contract funding request also includes $2.6 million
for emergency medical contract costs related to the August
2008 riot at the California Institution for Men, Chino.
2)$111,264,000 to CDCR for the federal medical receiver's
turnaround plan.
The turnaround plan includes what the receiver terms special
projects designed to improve health care delivery by upgrading
information technology (IT) and creating an electronic health
records system.
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3)$131,137,000 to the Department of Developmental Services as a
result of Shaw v. Chiang, a fund shift for the cost of
transportation services for regional center clients from the
Public Transportation Account (PTA) to the GF.
The 2009 Budget included $138.3 million in PTA funding for
regional center (RC) transportation, which is an entitlement
under the Lanterman Act. The Shaw v. Chiang suit disallowed
the use of PTA funds for RC transportation, resulting in a GF
deficiency of $138.3 million, offset by a $7.1 million
decrease in RC costs.
4)$5,399,000 to the Department of Forestry and Fire Protection
(CAL FIRE) for unemployment insurance cost increases.
State departments are responsible for payment of both the
standard Unemployment Insurance (UI) claims and a portion of
the recent UI extension. CAL FIRE hires about 2,600 seasonal
firefighters during the high risk months. The recent UI
extensions, the economic downturn, and the inability of
seasonal firefighters to find full-time work have resulted in
increased UI payments.
5)$5,860 for Payment to Counties for Costs of Homicide Trials to
reimburse Mariposa County for qualified costs.
Counties may apply to the state controller for reimbursement
of homicide trial costs that exceed a specified percentage of
assessed property value in the county. Mariposa's request is
for trial-related costs - mainly ongoing vehicle storage - in
the case of People v. Cary Stayner in 2008-09 and 2009-10.
FISCAL EFFECT
Appropriates $654 million (GF) to augment the 2009 Budget Act
for unanticipated expenditures.
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COMMENTS
1)Rationale. This bill contains funding necessary to address
deficiencies in the 2009 Budget Act. These funds have already
been spent. The appropriations in this bill will not impact
current budget difficulties. The proposed funding in this
measure has been approved by the Department of Finance (DOF)
and the Joint Legislative Budget Committee.
2)The CAL FIRE deficiency is actually $14.4 million , but $9
million of that cost will be paid out of the $9 million
remaining in the 2009-10 budget item for deficiencies.
3)CDCR medical contract expenditures grow from $252 million to
$845 million from 2003-04 to 2008-09. (The receivership was
appointed in February 2006.) Despite this significant - and
anticipated - growth, the amount budgeted for medical
contracts has remained relatively static: from $204 million
in 2002-04 to $308 million in 2009-10 and 2010-11.
The receiver cites a number of factors leading to increased
medical expenditures, including longer terms and an increased
inmate population, resulting in more overcrowding and aging
inmates who require more health care. For example, some of the
most specialized and costly medical needs - respiratory
disease, heart disease, kidney disease, Alzheimer's disease -
are generally referred to community hospitals and clinics.
Also, as the level of health care has increased within the
institutions as a result of the receivership, more health
issues are identified. To address these issues, the
receivership has increasingly relied on outside contractors,
such as hospitals for inpatient and outpatient care, specialty
care physicians and laboratories.
4)According to the receiver, burgeoning reforms will hold
contract medical costs in check . The receiver contends - in
background information supporting last year's deficiency
request and in similar information supporting the current
request - implementation of a utilization management system
will reduce referrals to outside providers. The receiver has
also contracted with a third-party administrator to pay
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medical invoices to reduce the number of incorrectly paid
claims, as well as penalties for delayed payments. Based on
expenditures for the first half of 2009-10, the receiver
contends these measures will help reduce annual medical
contract costs in 2010-11 by as much as $300 million from
2008-09.
5)CDCR IT request rationale. The 19 projects under the rubric of
the "receiver's turnaround plan of action," will create an IT
infrastructure to allow prisons to track and share patient
information. The current system is paper-driven and
inefficient. According to the receiver, these projects are
essential for court compliance. Projects include instituting
an electronic medical records system, expanding the use of
telemedicine, and installing a new network in the state prison
system. The costs to develop the various projects will
increase to $235 million in 2010-11 and exceed $800 million
over five years. The proposed $111 million deficiency is on
top of a 2009-10 base of about $45 million for IT projects.
6)LAO cranky regarding receiver deficiency requests - this year
and last. The LAO noted in a June 23, 2009 letter that
deficiency funding is meant to cover unanticipated expenses in
advance of expenditure. The LAO notes, in reference to the
receiver's deficiency requests for 2008-09 and now for
2009-10, that the request for additional funding came after a
large share of the requested funding had already been spent.
"As a result, the Legislature has little choice at this point
but to approve the supplemental appropriation, since there is
no other feasible alternative at this time to address the
increased expenditures resulting from a court order regarding
inmate medical care."
Aside from process concerns, the LAO contends in a March 2010
letter that the receiver's IT plan carries significant risks.
"Based on our preliminary analysis of the 19 projects
identified in the request, we find that the Receiver's overall
IT plan is overly ambitious in terms of its scope and is very
costly. For example, the number and size of the IT projects
proposed by the Receiver greatly exceed the number of projects
that are normally managed by most state agencies at any one
point in time?
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"Before making what amounts to an $800 million commitment over
five years, we believe that it would be more appropriate for
the Legislature to consider the request as part of its
deliberations of the 2010-11 budget. This would permit the
Legislature to evaluate this request in the context of
competing budget priorities and the states' current
significant General Fund shortfall."
7)Related Legislation.
a) SB 90 (Ducheny) appropriated $645 million to address
2007 and 2008 Budget Act deficiencies related to CDCR
medical care. SB 90 was chaptered July 28, 2009.
b) SB 1069 (Ducheny) appropriated $135 million to address
the 2007 Budget Act CDCR deficiencies. SB 1069 passed this
committee 11-0 but was held on the Assembly floor.
c) SB 1068 (Ducheny) appropriated $22 million to address
2007-08 deficiencies. SB 1068 was chaptered June 2, 2008.
d) SB 100 (Ducheny) appropriated $141 million to address
2006-07 deficiencies. SB 100 was chaptered June 5, 2007.
e) SB 101 (Ducheny) appropriated $213 million to address
2006-07 deficiencies. SB 101 was chaptered July 17, 2007.
Analysis Prepared by : Geoff Long / APPR. / (916) 319-2081