BILL ANALYSIS SB 1392 Page 1 Date of Hearing: August 4, 2010 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 1392 (Steinberg) - As Amended: August 2, 2010 Policy Committee: Health Vote:18-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill addresses the distribution of funding from the state to the counties in several mental health programs. Specifically, this bill: 1)Establishes the Specialty Mental Health Services Federal Trust Fund (Federal Trust Fund) in the State Treasury. Establishes a continuous appropriation of the Federal Trust Fund to the California Department of Health Care Services (DHCS) without regard to fiscal year. Requires the continuously appropriated funds to be distributed by DHCS to community mental health programs based on adjudicated claims. 2)Requires the California Department of Mental Health (DMH) to allocate and distribute full, annual appropriations of Mental Health Services Act (MHSA) funding to counties. 3)Deletes a provision in current law that authorizes DMH to withhold 5% of Mental Health Managed Care funds. FISCAL EFFECT 1)Establishes an annual continuous appropriation of $500 million (100% Federal Trust Fund) in Medi-Cal funds to DHCS for distribution to county-administered, community mental health programs. The funding mechanism established in this bill is intended to reduce funding instability and service interruption that occurs when the state budget is not passed by the start of the fiscal year. 2)Establishes a lump sum distribution of the Mental Health Services Act Funding. This lump sum will result in the earlier SB 1392 Page 2 release of $275 million (100% MHSA special funds) from a total annual allocation of $1.1 billion. Under current law 75% of MHSA funds are released by the state to the counties based on planning allocations and proposed county activities. The final 25% of funds are withheld until counties provide final reconciliation to the state on activities and expenditures. This bill would provide a lump sum instead. 3)Ends a 5% withhold of Mental Health Managed Care Funds resulting in the earlier release of approximately $5 million each year. COMMENTS 1)Rationale . This bill increases the continuity of funding to county mental health programs in two major areas, Medi-Cal and the Mental Health Services Act. According to the author and supporters, this bill ensures federal funding remains available to counties when the state budget is not passed by the start of the fiscal year. In addition, this bill reduces funding delays experienced by county MHSA programs by requiring DMH to end the practice of withholding 25% of county allocations until local programs report final activities, outcomes, and expenditures. According to the author and supporters, county mental health programs have endured major budget reductions over the past several years. In addition, several recent audits by the federal government and state entities have identified inefficiencies and delays in mental health funding allocation and distribution methodologies. This bill makes major sources of funding more readily available to county programs. 2)Specialty Mental Health Services . California's Medi-Cal specialty mental health program is administered by counties. DMH contracts with counties to provide mental health services to Medi-Cal beneficiaries with mental health issues. Specialty mental health services are carved out of the Medi-Cal program, meaning they are not administered by DHCS, but governed by DMH and county mental health departments. Less specialized mental health services, those provided by primary care physicians, remain within the purview of DHCS. DHCS has a role in SB 1392 Page 3 reviewing and validating county and state mental health claims and expenditures under Medi-Cal as the single statewide agency responsible for Medicaid funding. 3)Mental Health Services Act . Proposition 63, approved by voters in November 2004, enacted a state personal income tax surcharge of 1% that applies to taxpayers with annual taxable incomes of more than $1 million. The funds are used to provide local mental health services statewide. In the current year, $1.1 billion in Proposition 63 funding is available for expenditure. Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081