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  








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            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  








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            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