BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2821| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2821 Author: Chiu (D) and Santiago (D), et al. Amended: 8/19/16 in Senate Vote: 21 SENATE HEALTH COMMITTEE: 9-0, 6/22/16 AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen, Pan, Roth, Wolk SENATE TRANS. & HOUSING COMMITTEE: 10-1, 6/28/16 AYES: Beall, Cannella, Allen, Bates, Galgiani, Leyva, McGuire, Mendoza, Roth, Wieckowski NOES: Gaines SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16 AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen ASSEMBLY FLOOR: 63-13, 6/2/16 - See last page for vote SUBJECT: Housing for a Healthy California Program SOURCE: Corporation for Supportive Housing Housing California DIGEST: This bill requires the Department of Housing and Community Development to establish the Housing for a Healthy California Program, which would fund competitive grants to pay for interim and long-term rental assistance for homeless Medi-Cal beneficiaries who meet specified criteria, including who are eligible for Supplemental Security Income. Establishes criteria for an applicant to be eligible for a grant, including AB 2821 Page 2 having identified a source of funding for housing transition services and tenancy sustaining services and which agrees to contribute funding for interim and long-term rental assistance. Requires the Housing for a Healthy California Program to be funded, upon appropriation by the Legislature. Senate Floor Amendments of 8/19/16 rename the Medi-Cal Housing Program as the Housing for a Healthy California Program, expand the definition of "long-term rental assistance," delay implementation dates in this bill, and delete references to and obligations of the Department of Health Care Services under this bill. ANALYSIS: Existing law: 1) Establishes various housing programs directed by the Department of Housing and Community Development (HCD), including special housing programs to provide housing assistance for persons with developmental and physical disabilities and persons with mental health disorders. 2) Establishes the Medi-Cal program, which is administered by the Department of Health Care Services (DHCS), under which qualified low-income individuals receive health care services. Authorizes DHCS, subject to federal approval, to create a Medi-Cal Health Home Program for enrollees with chronic conditions, as prescribed, as authorized under federal Medicaid law. This bill: 1) Requires HCD to establish the Housing for a Healthy California Program on or before October 1, 2017, which would fund competitive grants to pay for interim and long-term rental assistance. Requires the Housing for a Healthy California Program to be funded, subject to a legislative appropriation, and makes the funding of grants subject to annual legislative appropriations. 2) Requires HCD, on or before April 1, 2018, and every year AB 2821 Page 3 thereafter, subject to legislative appropriation, to award grants on a competitive basis to eligible grant applicants. Requires, if appropriations are made available in future years, counties to compete for each round of five-year grants. 3) Establishes criteria for an applicant to be eligible for a Housing for a Healthy California Program grant, including requiring an applicant to identify a source of funding for Housing Transition Services and Tenancy Sustaining Services, as defined in the Centers for Medicare and Medicaid Services' Informational Bulletin regarding Housing-Related Activities and Services for People with Disabilities. Permits funding for these services to include, but not be limited to, one or more of the following: a) County general funds; b) Whole Person Care pilot program funds; c) The Health Home Program; or, d) Other county-controlled funding to provide these services to eligible participants. 4) Requires an applicant, in order to be eligible for a Housing for a Healthy California Program grant, to agree to contribute funding for interim and long-term rental assistance through an identified source. 5) Requires an applicant, in order to be eligible for a Housing for a Healthy California Program grant, to designate a process for administering grant funds through agencies administering housing programs, and to agree to collect and report data under this bill to HCD and DHCS. 6) Requires an applicant to use grants awarded under this bill for one or more of the following, which may be administered through a housing pool: a) Long-term rental assistance for periods up to five years; b) A capitalized operating reserve for up to 15 years to pay for operating costs of an apartment or apartments within a development receiving public funding to provide AB 2821 Page 4 supportive housing to people experiencing homelessness; c) Interim housing; and, d) A county's administrative costs for up to 3% of the total grant awarded. 7) Prohibits eligibility for a grant award from creating an entitlement to grant funds, and makes eligibility subject to the availability of funds. 8) Defines eligibility to receive assistance under a grant awarded under the Housing for a Healthy California Program as a county resident who meets all of the following requirements: a) Is homeless upon initial eligibility; b) Is a Medi-Cal beneficiary; c) Is eligible for Supplemental Security Income; d) Is eligible to receive services under either the WPC pilot or the Health Home Program, or a locally controlled services program funding or providing services in supportive housing; and e) Is likely to improve his or her health conditions with supportive housing. 9) Requires HCD to coordinate with DHCS to match Program participant data to Medi-Cal data to identify outcomes among participants as well as changes in health care costs associated with housing and services provided under the Housing for a Healthy California Program to the extent that information is available, up to 12 months prior to each participant's move into permanent housing, as well as changes in costs after each participant's move in to permanent AB 2821 Page 5 housing. 10)Requires an applicant awarded grant funds to report all of the following data to HCD and DHCS at annual and midyear intervals: a) Data specified by HCD necessary to measure the costs and outcomes of the Program; b) The number of participants and the type of interventions offered through grant funds; and, c) The number of participants living in supportive housing or other permanent housing. 11)Requires the Legislature to consider the impact that housing and supportive services have had in changing utilization and health care costs, as identified in the evaluation, of moving eligible participants into supportive housing. 12)Requires HCD to reimburse DHCS for the costs of collaborating in matching and providing relevant data. Caps HCD administrative costs for program administration at no more than 5% of the funds appropriated for the Housing for a Healthy California Program. 13)Requires HCD, on or before October 1, 2017, to draft guidelines for stakeholder comment to fund competitive grants to pay for interim and long-term rental assistance under the Housing for a Healthy California Program. Requires the guidelines to detail competitive scoring criteria that includes, but is not limited to, scoring that awards points based upon specified criteria. 14)Requires HCD to collect data midyear and annually from the Housing for a Healthy California Program grantees. 15)Requires HCD to contract with an independent evaluator, or work with an evaluator contracted with DHCS, to analyze data to determine changes in health care costs associated with services provided under the Housing for a Healthy California AB 2821 Page 6 Program by no later than April 1, 2018. Requires HCD to provide data collected to the evaluator on a regular basis as needed. 16)Requires HCD to report data collected to specified legislative budget and policy committees, by October 1, 2019, for grants awarded in 2018, and in subsequent years thereafter in which the Housing for a Healthy California Program is allocated additional funds. 17)Permits HCD or DHCS to enter into exclusive or nonexclusive contracts on a bid or negotiated basis to implement this bill. 18)Exempts contracts entered into or amended under this bill from specified provisions of the Government and Public Contract Codes, and from the review or approval of the Department of General Services. Comments 1)Author's statement. According to the author, California is home to 20% of the country's homeless population. Homelessness often creates an institutional circuit, where those experiencing it long enough cycle through living on the streets, emergency department visits, inpatient admissions, incarceration, and often nursing home stays. In addition to the moral cost to society, this circuit is expensive to our public systems: homeless individuals cost our public systems an average of $2,897 per month, two-thirds of that incurred through the health system. This bill attempts to coordinate delivery of services between the health and housing systems to further our goal of eliminating homelessness. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee analysis of the previous version of this bill: AB 2821 Page 7 1)Unknown annual costs to provide grants to support rental assistance for homeless Medi-Cal beneficiaries (General Fund/GF). The bill does not appropriate any funding for the program nor does it specify a projected level of funding for future years. Staff notes that the author and other members of the Assembly had proposed to include $60 million in the current year budget to fund this bill (as part of a larger program for affordable housing). That funding was not included in the enacted Budget Act. 2)One-time costs of about $500,000 to develop program requirements, consult with stakeholders, and adopt program guidelines by the HCD (GF). This bill requires HCD to develop the program immediately, whereas actually funding grants under the program would be subject to an appropriation by the Legislature. Therefore, HCD would incur the upfront administrative costs, regardless of whether the Legislature appropriated money in future years for the program. 3)Ongoing costs of about $300,000 per year to administer the grant program by HCD (GF). Based on the initial proposal for $60 million in initial funding, the Department anticipated needing about $300,000 per year to administer the grant program. 4)Ongoing costs, likely in the low hundreds of thousands per year, to contract with an independent evaluator to analyze program data, including health care spending data for program participants (GF). The bill requires HCD to contract for an independent evaluation. The bill does not place an end date on the evaluation of the program, therefore staff assumes that program evaluation will be an ongoing cost. 5)Ongoing costs, likely in the low hundreds of thousands, for DHCS to coordinate with HCD and to collect and report on Medi-Cal expenditures for participating Medi-Cal beneficiaries (GF and federal funds). The bill requires the independent evaluator to determine changes in health care costs for participating Medi-Cal beneficiaries. DHCS will likely incur staff costs to compile both fee-for-service and managed care expenditure data. 6)Unknown, but significant future public savings are likely due to reduced health care costs for participating individuals, to AB 2821 Page 8 the extent the program is funded (GF, local funds, federal funds). There are numerous published studies that have shown significant reductions in public spending when homeless individuals who are high-utilizers of public services are provided housing as well as physical and mental health services. Those studies have shown a strong cost-benefit ratio to "housing first" pilot projects. To the extent that this program is funded and funding is targeted towards high-utilizers of health care services, the program is likely to generate future cost savings in avoided health care costs (as well as potential savings due to decreased costs in the criminal justice system). Cost savings could accrue to the state due to reductions in hospitalizations at private hospitals, to local governments due to reductions in hospitalizations at public hospitals or psychiatric hospitals, and to the federal government which provides matching funds for Medi-Cal services. Because of the complexity of financing for Medi-Cal services, cost savings to the state may or not fully offset state expenditures. SUPPORT: (Verified8/22/16) Corporation for Supportive Housing (co-source) Housing California (co-source) California Association of Public Hospitals and Health Systems California Chapter of the American College of Emergency Physicians California Commission on Aging California Council of Community Behavioral Health Agencies Casa Major, Inc. Community Housing Partnership County Behavioral Health Directors Association County of San Bernardino Disability Rights California Episcopal Community Services of San Francisco League of California Cities Mental Health America of California PATH Ventures Southern California Association of Nonprofit Housing United Way of Greater Los Angeles Western Center on Law and Poverty AB 2821 Page 9 OPPOSITION: (Verified8/22/16) Department of Finance ARGUMENTS IN SUPPORT: The Corporation for Supportive Housing and Housing California argue Californians experiencing homelessness incur disproportionate Medi-Cal costs, are frequent users of hospitals and corrections systems, and have poor health outcomes. Supporters argue that evidence shows significant decreased health costs from moving people off the streets and into stable housing, and this bill will fund rental assistance tied to services. ARGUMENTS IN OPPOSITION:The Department of Finance opposes this bill because it may result in significant GF costs without generating any additional federal funding in the Medi-Cal program for housing initiatives. ASSEMBLY FLOOR: 63-13, 6/2/16 AYES: Achadjian, Alejo, Arambula, Atkins, Baker, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Waldron, Weber, Wilk, Williams, Wood, Rendon NOES: Travis Allen, Brough, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Mathis, Obernolte, Olsen, Wagner NO VOTE RECORDED: Bigelow, Mayes, Melendez, Patterson Prepared by:Scott Bain / HEALTH / (916) 651-4111 8/23/16 9:59:37 **** END **** AB 2821 Page 10