BILL ANALYSIS �
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Mark Leno, Chair
Bill No: AB 104
Author: Committee on Budget
As Amended: August 26, 2013
Consultant: Michelle Baass and Jennifer Troia
Fiscal: Yes
Hearing Date: August 29, 2013
Subject: Health and human services-related statutory
revisions necessary to implement the Budget Act of 2013.
Summary: The bill makes technical and clarifying statutory
revisions affecting health and human services programs
necessary to implement the Budget Act of 2013.
Specifically, this bill:
1.1991 Realignment General Growth. Clarifies the intent of
AB 85 (Chapter 24, Statutes of 2013), a 2013 budget
trailer bill, to count 1991 Realignment General Growth
funds, as calculated under law effective July 1, 2013,
when calculating the total amount of 1991 Realignment
health funds that could be considered as part of the
calculation to determine county indigent health care
savings as a result of health care reform.
For purposes of considering 1991 Realignment health
funds, AB 85 considered 1991 Realignment General Growth
funds, as calculated under law effective January 1, 2012,
and did not reflect that the 2013 budget redirects a
portion of these General Growth funds to pay for CalWORKs
grant increases. Consequently, the change in this bill
would ensure that the General Growth funds considered
when determining county indigent health care savings
reflects the actual growth of these funds (rather than
the rate of growth that was in effect January 1, 2012).
2.Distribution of Fund Sources within Local Revenue Fund
(LRF). Amends provisions of AB 85 that established an
exchange of sales tax and Vehicle License Fund (VLF)
moneys between various accounts and subaccounts within
the LRF associated with 1991 health and human services
realignment. Specifically, this bill would:
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a. Require the State Controller's Office (SCO) to
allocate sales tax and VLF to Health and Social
Services Subaccounts as these moneys were allocated
prior to enactment of AB 85.
b. Require SCO to transfer, on a monthly basis and
pursuant to a schedule provided by the Department of
Finance (DOF), no more than $300 million in sales
tax funds from the Social Services Subaccount to the
Health Subaccount in 2013-14.
c. For 2014-15 and subsequent fiscal years,
require SCO to transfer, on a monthly basis and
pursuant to a schedule provided by DOF, no more than
$1 billion in sales tax funds from the Social
Services Subaccount to the Health Subaccount.
d. Beginning in 2013-14, require SCO to adjust, on
a monthly basis and pursuant to a schedule provided
by DOF, VLF distributions in order to redirect from
the Health Subaccount to the Social Services
Subaccount an amount of VLF that will create an
equal exchange of sales tax and VLF funds.
e. Clarify that the transfers and adjustments
described above cannot be used in calculating future
year sales tax and VLF allocations to the Social
Services and Health Subaccounts.
3.Historical Allocation Methodology. As provided in AB 85,
this bill specifies the definitions and methodology to
determine the sources and amounts of historical revenues
used by public hospital counties to fund their Medi-Cal
and uninsured costs. The three funding sources, as
specified in Welfare and Institutions Code Section
17612.2 (ab)(2)(C), are unrestricted special local health
funds, one-time and carry-forward revenues, and county
general purpose funds. This methodology determines a
"fair and reasonable manner of allocation" for these
funding sources for historical years (2008-09 to 2011-12,
inclusive). This is necessary given the nature of these
funding sources, as they are available to fund the entire
health system costs and are not specified for use for any
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specific populations.
This methodology provides for a:
A. Calculation of the applicable shortfalls and their
relative proportions. Specifically,
1. Determine the remaining low-income shortfall for the
applicable year after accounting for all applicable
Medicaid and uninsured revenues, county indigent health
realignment, and special local health funds restricted
for indigent care. (If no shortfall remains, no
allocation is necessary for that year).
2. Determine the other shortfall incurred by the county
public hospital health systems for all other healthcare
costs after accounting for all other revenues applicable
to those costs.
3. Determine the total shortfall to which the funding
amounts are to be allocated by adding together (1) and
(2).
4. Determine the low-income shortfall percentage by
dividing the remaining low-income shortfall (1) by the
total shortfall (3).
B. Calculation of the applicable total funding amounts
for each funding source and the amount of each source
needed to fund the total shortfall (3). Specifically,
5. Determine the total amount of unrestricted special
local health funds for the year.
6. Determine the total amount of one time and
carry-forward revenues for the year.
7. Determine the total amount of county general purpose
funds for the year.
8. Determine the total of all the sources by summing
together (5), (6) and (7).
9. Determine the percentage of the total of all sources
to be used by dividing the total shortfall (3) by the
total of all sources (8). If the percentage is greater
than 100%, 100% will be used.
10. Determine the total amount of each of the
unrestricted special local health funds to be used to
allocate to the total shortfall by multiplying the
percentage determined in (9) to the amount in (5).
11. Determine the total amount of each of the one time
and carry-forward revenues to be used to allocate to the
total shortfall by multiplying the percentage determined
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in (9) to the amount in (6).
12. Determine the total amount of each of the county
general purpose funds to be used to allocate to the total
shortfall by multiplying the percentage determined in (9)
to the amount in (7).
C. Calculation of the applicable amount of each source to
allocate as a revenue source for Medi-Cal/Uninsured.
Specifically,
13. Determine the amount of unrestricted special local
health funds allocated to Medi-Cal Uninsured by
multiplying the low-income shortfall percentage (4) by
the amount determined in (10).
14. Determine the amount of one time and carry-forward
revenues allocated to Medi-Cal Uninsured by multiplying
the low-income shortfall percentage (4) by the amount
determined in (11).
15. Determine the amount of county general purpose funds
allocated to Medi-Cal Uninsured by multiplying the
low-income shortfall percentage (4) by the amount
determined in (12).
The amounts in steps 13, 14 and 15 are the amounts to be
utilized as the historical amounts for these funding
sources.
4.Cap on 2013-14 County Indigent Care Savings. Clarifies
that there is a cap of $300 million (for all counties) in
county indigent health savings, as a result of health
care reform, that can be redirected to the Family Support
Subaccount in 2013-14.
In addition, clarifies that no more than a county's
actual county indigent health savings can be redirected
to the Family Support Subaccount in 2013-14. The actual
projected savings will be included in the 2014 May
Revision and then reevaluated and adjusted in 2016. This
clarification applies to counties that choose the formula
mechanism to measure and compare actual health care costs
and revenues to determine county indigent health savings.
(AB 85 provides for two mechanisms to determine county
indigent health savings: 1) a formula that measures and
compares actual health care costs and revenues, and 2) a
predetermined percentage--60 percent--of a county's
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health realignment allocation plus a county's health
realignment maintenance of effort.)
As a result, the $300 million cap can be adjusted
downward only, depending on actual counties' savings.
5.Date Changes for County Mechanism Selection. Extends the
dates when counties have to: 1) inform the Department of
Health Care Service (DHCS) as to which AB 85 county
financing mechanism they will select to determine county
indigent care savings, 2) adopt Board of Supervisor
resolutions selecting the county financing mechanism, 3)
determine historical allocation amounts and percentages
(for public hospital counties) and when DHCS has to
assess the historical allocation amounts and percentages.
According to DHCS, this will provide additional time to
accurately determine the historical allocation amounts
and percentages that will become part of the methodology
for reallocation of county funding. The change will also
allow the counties additional time to make an informed
decision on the methodology they wish to elect, a
decision that can change only under very specific
circumstances. The one month extension will minimize
potential disagreements between the state and the
counties, as more time will be available to reconcile
differences between the two parties. The proposed date
changes do not affect the ability for DHCS to inform the
Department of Finance of any needed changes to the
savings assumptions in time for the May Revision of the
2014 budget.
6.Technical Changes. Makes other technical and
non-substantive changes to provisions enacted through AB
85, as well as provisions enacted through recent human
services trailer bills, including AB 74 (Chapter 21,
Statutes of 2013).
7.LIHEAP Benefits. Clarifies the fund source for nominal
benefits that CalFresh recipient households receive
through the Low-Income Home Energy Assistance Program
(LIHEAP) and deletes a related, outdated reporting and
planning requirement that was erroneously reinserted into
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Section 18901.2 of the Welfare & Institutions Code.
Background: AB 85. AB 85 (Chapter 24, Statutes of 2013), a
2013 budget trailer bill, establishes county financing
mechanisms to determine county indigent health care savings
as a result of the federal Patient Protection & Affordable
Care Act (health care reform) and makes changes to funding
mechanisms governing the 1991 realignment of health and
human services programs, as well as the funding of CalWORKs
grants.
Historical Allocation Methodology. AB 85 requires the
Department of Health Care Services (DHCS) to submit to the
Legislature, by August 1, 2013, a "fair and reasonable
methodology" to allocate three specific funding amounts for
the purposes of determining the historical amounts or
percentages that are necessary for the operation of the
county public hospital health system formula. AB 85
requires DHCS to develop this methodology in consultation
with the county public hospital health systems, and to
submit to the Legislature the agreed upon methodology,
unless there is no agreement, in which case both
methodologies shall be submitted. This bill contains the
agreed upon methodology between the county public hospital
health systems and DHCS.
1991 Realignment General Growth. Growth in 1991 Realignment
revenues-beyond the amounts needed to pay annual cost
increases for certain social service and health programs-is
designated as "General Growth." Historically, General
Growth was allocated to counties in proportion to their
historical share of state funding for the realigned
programs, with health, mental health, and social service
programs each receiving a portion. AB 85 redirects a
portion of these General Growth funds to pay for CalWORKs
grant increases. Specifically, the share of General Growth
allocated to county indigent health and public health
programs will be based on historical growth and Social
Services Subaccount programs will no longer receive General
Growth allocations. These funds instead will be used to pay
for future CalWORKs grant increases.
Distribution of Sales Tax and Vehicle License Fund Moneys
within Local Revenue Fund (LRF). Existing law establishes
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the LRF, a continuously appropriated fund that allocates
specified Vehicle License Fund and sales tax moneys.
Existing law also creates various accounts and subaccounts
within the LRF, including the Health Subaccount and the
Social Services Subaccount. AB 85 requires reallocating
funds in the 2013-14 fiscal year and subsequent fiscal
years to change the relative percentages of funds from
those two sources that are allocated to the 1991
Realignment Health and the Social Services Subaccounts.
Specifically, AB 85 requires permanently redirecting $1
billion in sales tax allocations from the Social Services
Subaccount to the Health Subaccount, and $1 billion in VLF
allocations from Health to Social Services. Changes to
those provisions that are contained in this bill instead
specify that the SCO shall make the transfers between those
Subaccounts monthly and pursuant to a schedule provided by
DOF to the State Controller, and specify a maximum of $300
million in such transfers for the 2013-14 fiscal year and
$1 billion for subsequent fiscal years. According to DOF,
the proposed changes are needed to ensure that, on a
county-by-county basis, the total amount of LRF funds
allocated for health and social services programs is not
altered (i.e., only the mix of sales tax and VLF between
the two program areas is adjusted) and that each county's
base LRF funding allocated to health and social services in
subsequent years is not altered.
Fiscal Effect: This bill should not result in any fiscal
changes to the budget act or related budget actions.
Support: Unknown
Opposed: Unknown
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