BILL ANALYSIS Ó
SB 80
Page 1
SENATE THIRD READING
SB 80 (Budget and Fiscal Review Committee)
As Amended June 13, 2013
Majority vote. Budget Bill Appropriation Takes Effect
Immediately
SENATE VOTE :Vote not relevant
SUMMARY : This is the 1991 Realignment/CalWORKs trailer bill,
containing statutory and technical changes necessary to
implement the Budget Act of 2013. This bill also implements a
mechanism for counties to share savings, which result from
implementation of the federal Affordable Care Act (ACA), with
the state. Specifically, this bill :
1)Creates "option 1" for determining county savings as follows:
A formula that measures actual county health care costs and
revenues. Revenues will include patient care revenues,
federal funds, health realignment dollars, and net county
contributions to health care services, which will be adjusted
to reflect historic growth rates. The difference between
total revenues and total costs will determine the savings.
Because this mechanism is cost-based, it includes incentives
for cost containment and maximizing enrollment in coverage,
and also accounts for the remaining uninsured being served by
the county, consistent with today's level of service. The
formula includes a cap on the amount of savings that will be
redirected based on the proportion of health realignment funds
historically used for indigent care, thereby allowing the
county to retain the full amount of realignment historically
spent on public health. Under this option, the costs counties
incur for serving the remaining uninsured will have first
priority before any savings are collected. To the degree that
federal reimbursement they receive for providing services to
the uninsured or Medi-Cal beneficiaries declines, those costs
will be funded prior to any savings being redirected. The
counties also will retain 20% of the savings. Funding for
public health is preserved, as the state's share of savings is
limited to the funding spent on indigent health.
2)Creates "option 2" for determining county savings as follows:
60% of a county's health realignment allocation plus
maintenance-of-effort (MOE) will be captured as savings and
the county retains 40% of its realignment funding for public
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health and to provide care to the remaining uninsured.
3)Provides that the 12 counties operating designated public
hospitals (DPH) and the 12 non-DPH/non-CMSP (County Medical
Services Program) counties have the option to select either
option 1 or 2, described above and created through this bill,
to determine county savings.
4)Provides for certain variations to option 1 specifically for
Los Angeles County (LA). Authorizes LA to calculate costs
based on actual total costs instead of actual Medi-Cal and
uninsured costs. Specifies that the maximum state redirection
for LA would be 82% of health realignment funds, rather than
based on a formula. Calculates revenue based on all payors,
rather than Medi-Cal and uninsured revenue. Includes
additional variations specifically for LA.
5)Provides that the 34 CMSP counties shall be subject to option
2, above, to determine county savings.
6)Requires that the $89 million that CMSP counties collectively
contribute annually to the CMSP Governing Board will be
redirected as savings, and the Governing Board will be
responsible for covering the remainder of the amount equal to
60% of the program's total realignment and MOE funding.
7)Requires that, beginning, January 1, 2014, and through June
30, 2014, counties, in the aggregate will redirect a pro rata
portion of their realignment funds up to $300 million. Actual
savings will depend on the level of realignment revenues for
those counties operating under the 60/40 formula and on the
various factors used to determine costs and revenues for those
counties utilizing the mechanism described in option 1.
8)Authorizes any county, if circumstances arise that affect a
county's health care finances and are out of a county's
control, to request to change the mechanism by which savings
are determined.
9)Creates the County Health Care Funding Resolution Committee to
hear requests to change mechanisms, as described above.
Stipulates that the Committee's members would be the Director
of Finance, the Director of Health Care Services, and a
representative from the California State Association of
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Counties.
10)Authorizes the state, for counties that choose option 1, to
revise the 2013-14 estimates in May and, if at that point in
time, the savings are estimated to be lower than $300 million,
the money will be provided to the county for health care
costs.
11)Provides that future year savings for all counties will be
estimated in January and May, prior to the start of the year
based on the most recently available data. Stipulates that
for all option 1 counties, a reconciliation will occur within
two years of the close of each fiscal year. To the extent
actual savings differ from the initial estimates, funding will
be retroactively adjusted. Requires a true-up process for all
other counties to ensure that the percentages transferred to a
county's Health Subaccount has been sufficient.
12)States that if the non-CMSP counties do not adopt a
resolution that confirms their approach, they will default to
a 62.5/38.5 state-county sharing ratio.
13)Provides a "true-up mechanism" for the counties that choose
the mechanism option rather than the 60/40.
14)Creates, for 2013-14, a special holding account in the Family
Support Subaccount for the public hospital counties, which
essentially creates a short-term true up mechanism for them.
15)Provides a true-up for the counties that chose the 60/40
option rather than the mechanism.
16)Requires the Director of Finance, Department of Health Care
Services (DHCS), and the State Controller's Office to work
together to ensure legislation is implemented as the
Legislature intended.
17)Includes intent language to review the funding formulas
established in Section 7 in the event that the federal
government enacts reforms to federal immigration laws that
create a pathway to citizenship for otherwise undocumented
persons, and that pathway does not provide for enhanced
federal funding. Requires the DHCS to analyze the potential
impacts of such a change on county health care expenditures,
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and report this information to the applicable fiscal and
policy committees.
18)Provides for the CalWORKs 5% grant increase in 2013-14,
effective March 1, 2014, and describes the process for
providing future grant increases. The estimated cost for this
increase is approximately $50 million, with annualized cost of
approximately $150 million, depending on caseload changes.
19)Specifies that the grant increases will be funded through the
new Child Poverty and Family Supplemental Support Subaccount,
which consists of redirected 1991 Realignment general growth
funds.
20)Requires the Director of Finance to annually, as part of the
January 10 and May 14 Budget process, determine both the cost
of continuing to provide the previously implemented grant
increases pursuant to this process and comparing that to the
amount of revenue projected to be in the Child Poverty and
Family Supplemental Support Subaccount for the current and
budget year.
21)Prescribes that if the Child Poverty and Family Supplemental
Support Subaccount is projected to have more funds than are
needed to cover the previously implemented grant increase
costs, adjusted for caseload, then a calculation will be done
to determine the additional grant increase percentage that can
be afforded for the following fiscal year.
22)Specifies that to the extent it is determined that a new
grant increase can be afforded, that grant increase would be
effective the upcoming October 1, starting October 1, 2014.
The final projections depend on the level of revenues adopted
in the Budget Act. Upon enactment of the Budget, the Director
of Finance will provide legislative notification regarding the
grant increase level.
23)Specifies that previously implemented grant increases will
not be adjusted downward if it is projected that revenues in
the Child Poverty and Family Supplemental Support Subaccount
are not sufficient to cover the entire cost of the grant
increases. In these situations, current General Fund
provisional authority will be used to ensure grants are
funded. Additional grant increases pursuant to this mechanism
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will not be provided until and unless the ongoing cumulative
costs of all prior grant increases provided by this process
are fully supported by the Child Poverty and Family
Supplemental Support Subaccount.
24)Sunsets, as part of the changes to 1991 Realignment, current
accounts within the Local Revenue Fund and establishes new
accounts within the Local Revenue Fund effective July 1, 2013.
25)Establishes the Family Support Subaccount and the Child
Poverty and Family Supplemental Support Subaccount at the
state level and establishes the family support account at the
local level.
26)Moves, for 2013-14, $1 billion in sales tax from the Social
Services Subaccount to the Health Subaccount.
27)Establishes the ongoing structure, which adds the Child
Poverty and Family Supplemental Support Subaccount as an
account that receives base funding from the sales tax account,
and otherwise the structure is the same as current.
28)Applies language that exists for the CalWORKs Maintenance of
Effort (MOE) Subaccount that prevents locals from reallocating
up to 10% of the fund among other accounts to the family
support account, and places both pieces of law into the same
section.
29)Allocates, pursuant to a schedule developed by the Director
of Finance, moneys from the Child Poverty and Family
Supplemental Support Subaccount (state level), to the family
support account (local level). All funds that are allocated
shall be used for grant increases. Any funds not allocated
will remain at the state level, and will be available for
allocation in the following year.
30)Directs the Controller to move money monthly to the family
support account to be used by counties to pay an increased
county contribution towards CalWORKs costs.
31)Establishes short term and ongoing methods for transferring
funding from the Health Subaccount to the Family Support
Subaccount.
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32)Requires the Controller to account for the Sales Tax swap
when distributing Vehicle License Fee revenue.
33)Establishes how the general growth in the sales tax account
is allocated among a) mental health (same as current law), b)
health (18.4545%), and c) the new Family Supplemental Support
Subaccount (the remainder). There is no General Growth for
social services.
34)Requires that funds deposited in the family support account
may only be used to pay an increased contribution towards
CalWORKs as the funds were allocated by the Director of
Finance.
35)Requires that funds deposited in the family support account
may only be used to pay an increased contribution towards
CalWORKs as the funds were allocated by the Director of
Finance.
36)Contains an appropriation allowing this bill to take effect
immediately upon enactment.
COMMENT : This bill is a budget trailer bill within the overall
2013-14 budget package to implement actions taken affecting the
Department of Health Care Services, and related to the
implementation of federal health care reform.
For background, the Local Revenue Fund under 1991 realignment
provides a dedicated funding source to 1) help pay county
contributions toward various social service and health programs
(Foster care, Adoptions Assistance, Child Welfare Services,
In-Home Supportive Services (IHSS), CalWORKs, and California
Children's Services), termed the Social Services subaccount
programs, and 2) support county indigent health, public health,
and mental health programs. The Local Revenue Fund receives
both sales tax and vehicle license fee revenue. Current law
establishes a process by which annual growth in these revenues
are allocated amongst the various programs supported by 1991
Realignment. First call on revenue growth is to fund the
increases in program costs experienced in the prior year for the
Social Services subaccount programs. These allocations are
known as Caseload Subaccount allocations. Remaining funds,
termed "General Growth" are then allocated to all of the 1991
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Realignment programs based on historical formulas, with indigent
and public health (collectively) and mental health receiving
roughly equal shares and the Social Service subaccount programs
receiving a significantly smaller amount.
Analysis prepared by : Andrea Margolis and Nicole Vazquez /
BUDGET / (916) 319-2099
*This bill is pending in the Assembly Budget Committee.
FN: 0001189