BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
564 (Portantino)
Hearing Date: 8/27/2009 Amended: 7/23/2009
Consultant: Katie Johnson Policy Vote: Health 7-2
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BILL SUMMARY: AB 564 would limit the maximum amount of public
funds in the Substance Abuse Treatment Trust Fund that may be
used for compensation of a director, officer or employee of a
non-profit entity that provides substance abuse treatment in
California to the salary limitations established by the federal
government.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Counties' administrative minor and absorbable General
costs
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Existing law provides for the licensure of substance abuse
treatment programs by the Department of Alcohol and Drug
Programs (DADP).
Existing law, Proposition 36, establishes the Substance Abuse
and Crime Prevention Act of 2000. It requires that non-violent
drug possession offenders and parolees receive drug treatment in
lieu of incarceration. It also establishes the Substance Abuse
Treatment Trust Fund, which requires the transfer of money from
the General Fund commencing in FY 2000-2001 and ending in
2005-2006 for allocation to counties through a specified
distribution formula. The program received General Fund
transfers of $60 million in start-up funding in FY 2000-2001,
and $120 million annually from FY 2001-2002 through FY
2005-2006. In the following years, the Legislature appropriated
$120 million in FY 2006-2007, $100 million in FY 2007-2008, and
$90 million in 2008-2009. There is not an appropriation for this
program in the FY 2009-2010 budget. Funds are used by counties
to provide drug treatment programs, vocational training, and
family counseling, among other programs.
This bill would limit the maximum amount of public funds in the
Substance Abuse Treatment Trust Fund that may be used for
compensation of a director, officer or employee of a non-profit
entity that provides substance abuse treatment in California to
the salary limitations established by the federal government on
grant awards from the federal Substance Abuse and Mental Health
Services Administration (SAMHSA). The federal salary cap
limitations are imposed for FFY 2009 by the Omnibus
Appropriations Act, 2009 Public Law 111-8. Executive salary is
limited to an amount that is no greater than Executive Level I
of the Federal Executive Pay Scale. Effective January 1, 2009,
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AB 564 (Portantino)
that annual salary is $196,700. If a California-based substance
abuse treatment program receives SAMHSA grants, it would already
be subject to similar provisions under federal law.
This bill would prohibit the use of public funds for
compensation for any director, officer, or employee who collects
rent from a substance abuse treatment facility unless that
person certifices that he or she is in compliance with the
federal Office of Management and Budget Circular A-122, which
relates to cost principles for non-profit organizations.
Since DADP performs audits of substance abuse treatment programs
only upon request, it does not regularly audit all facilities.
DADP would need an office technician to initially contact each
substance abuse treatment program to obtain salary information.
Since DADP does not track the non-profit status of substance
abuse treatment programs, it would need to contact all programs
licensed in the state. Additionally, the department would likely
need half an analyst position permanently to evaluate data and
produce reports. There are 900 substance abuse treatment
programs licensed by the department. Costs to DADP would be
approximately $100,000 in FY 2009-2010, $220,000 in FY
2010-2011, and $50,000 ongoing from the Substance Abuse
Treatment and Prevention Fund, which receives its monies from
the General Fund, federal SAMHSA grants, and federal funds.
Additionally, there would be unknown database start-up and
maintenance costs.
The author's proposed amendments would require that the
restriction on executive payment of any corporation, both
for-profit and not-for-profit, providing substance abuse
treatment in the state, as provided by this bill, be included as
a term of all contracts entered into in the state to provide
drug treatment services when using public funds to provide
treatment. This amendment would eliminate the need for DADP to
survey all substance abuse treatment programs in the state and
would reduce costs accordingly. The effect of this bill would be
minor and absorbable for counties since most of them currently
include this type of provision in their substance abuse
treatment program contracts.