BILL ANALYSIS
AB 1259
Page 1
Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON AGING AND LONG-TERM CARE
Bonnie Lowenthal, Chair
AB 1259 (Arambula) - As Amended: April 13, 2009
SUBJECT : Area agencies on aging: federal funding allocations.
SUMMARY : Allows an area agency on aging (AAA) to carry over up
to 5 percent of its annual total baseline allocation of federal
funds. Specifically, this bill :
1)Allows an AAA to carry over, for future use, up to five
percent of its annual total baseline allocation under Titles
III and VII of the federal Older Americans Act (OAA).
2)Prohibits an AAA from using the carried over funds to expand
baseline services.
3)Specifies that the carried over funds shall be used only for
the following purposes:
a) The purchase of equipment that enhances the delivery of
services to the eligible service population;
b) Home and community-based projects, approved in advance
by the California Department of Aging (CDA), that are
designed to address the unmet needs of the eligible service
population identified in the area plan; and,
c) Innovative pilot projects, approved in advance by CDA,
that are designed for the development or enhancement of a
comprehensive and coordinated system of services.
EXISTING LAW
1)Establishes the OAA which provides a national network of state
units on aging and AAAs to deliver home and community-based
programs for older adults. Programs include nutrition,
transportation, information and assistance, elder abuse
prevention, and caregiver support.
2)Establishes the Older Californians Act (OCA) which provides
state-funded programs and services for older adults and people
with disabilities.
3)Establishes CDA as the state unit on aging to administer a
broad range of home and community-based programs. The
department's mission is to provide leadership to the AAAs in
developing systems of home and community-based services that
maintain individuals in their own homes or least restrictive
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homelike environments.
4)Requires CDA to develop minimum standards for service delivery
to ensure that programs meet consumer needs, operate in a
cost-effective manner, and preserve the independence and
dignity of aging Californians.
5)Establishes the AAAs as the entities that provide for and/or
deliver services under the OAA, the OCA, and other funding
sources at the local level.
6)Requires AAAs to develop an area plan every four years that
considers available data and population trends, assesses the
need for services, identifies the sources of funding for those
services, and develops and implements a plan for delivery of
those services based upon community need.
7)Requires CDA to implement an intrastate funding formula to
apply to all federal and state funds allocated for programs
provided under Title III of the OAA. The intrastate funding
formula includes all of the following:
a) Assurances that all AAAs shall have a $50,000
administrative base with the remainder of the allowable
administrative dollars allocated to planning and service
areas (PSA) on the basis of the number of persons over the
age of 60;
b) An annual update by CDA for changes in population
characteristics to include the number of persons per PSA
over the age of 60 and persons in greatest economic or
social need as measured by the following variables:
i) The number of person over the age of 65 receiving
aid under the State Supplementary Program for the Aged,
Blind, and Disabled;
ii) The number of minority elderly over the age of 60;
iii) The number of persons over the age of 60 living
alone; and,
iv) The number of non-English speaking persons over the
age of 60.
c) A rural factor that guarantees a 105 percent allocation
to rural PSAs; and,
d) A hold-harmless factor that guarantees that no PSA shall
have its federal and state allocation of funds, excluding
administrative costs, reduced below the 1984-85 fiscal year
funding levels.
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8)Requires CDA to allocate a baseline amount of $35,000 to
Long-Term Care Ombudsman programs with the remainder of all
federal and state funds for local ombudsman programs
distributed as follows:
a) 50 percent to each local program based on the number of
facilities served by the program in proportion to the total
number of facilities in the state;
b) 40 percent of the funds based on the number of beds
within the local program's area of service in proportion to
the total number of beds in the state; and,
c) 10 percent of the funds based on the total square miles
within each local program's area of service in proportion
to the number of square miles in the state.
Existing regulations specify the process for the redistribution
of federal funds in the following scenarios: funds that are not
expended or encumbered for services by an AAA, funds that are
recovered from an AAA as a result of a fiscal audit
determination and resolution by CDA, or funds allocated by the
Administration on Aging to CDA as a result of the federal
re-allotment process. Depending on the original funding source,
CDA uses the intrastate funding formula and/or the funding
formula for the Long-Term Care Ombudsman program in
redistributing unused or recovered funds.
Under regulations adopted in 2007, AAAs are allowed to carry
over up to five percent of their baseline allocation annually.
The use of the retained funds is restricted to the following:
the purchase of equipment which enhances the delivery of
services; home and community-based projects approved in advance
by CDA and designed to address the unmet needs of an eligible
service population identified in the AAA's area plan, or
innovative pilot projects, approved in advance by CDA and
designed for the development or enhancement of a comprehensive
and coordinated system of services. The carry-over funds are
not allowed to be used to increase baseline services.
In addition, regulations allow CDA to waive the reallocation
requirements for an AAA affected by a federal, state, or locally
declared emergency or natural disaster affecting the delivery of
OAA services. If a waiver is granted, the affected AAA may
carry over all of its unspent funds for up to one year following
the emergency or disaster.
FISCAL EFFECT : Unknown.
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COMMENTS :
California has 33 AAAs which provide services that are vital to
the well-being of older adults such as basic nutrition,
transportation, in-home assistance, and caregiver support. AAAs
in communities across the state plan, coordinate and offer
services that help older adults remain in their home.
AAAs receive funding from the federal OAA, the state OCA, and a
variety of local and grant sources. OAA funds are allocated
according to the state's fiscal year calendar and distributed
across several program categories (supportive services,
congregate meals, home-delivered meals, caregiver support,
etc.), and must be spent at the local level within that program
category, with limited flexibility allowed for fund transfers
across certain program areas. In the event that an AAA does not
fully expend or encumber its federal funds for services by June
30th of a given fiscal year, the AAA is allowed to retain up to
five percent of the funds by program category to be carried over
into the following year. The remaining funds above the five
percent carry-over are redistributed to all AAAs via the
appropriate intrastate funding formula for one-time-only use.
In Fiscal Year 2007-08, California's AAAs received $103,667,590
in total baseline funding, with just over $5 million unspent at
the close of the fiscal year. Under existing regulations,
$2,332,293 was carried over across all AAAs and $3,041,234
redistributed by CDA through the intrastate funding formula.
The amount of unspent funds, and the corresponding carry-over
funds, varied by AAA with over one third of the AAAs with
unspent funds less than $15,000.
In 2007, CDA adopted a new regulation restricting the ability of
AAAs to carry over unspent funds to five percent of their
baseline funding in each funding category. The author contends
that this new policy has a negative affect on agencies,
particularly the smaller and rural ones who tend to have lower
federal allocations to begin with. However, under the new
regulations, numerous rural AAAs have benefited from the
redistribution of unspent funds. For example, the AAA serving
Lassen, Modoc, Shasta, Siskiyou, and Trinity Counties had $4,120
in unspent funds at the close of the 2007-08 fiscal year. They
were allowed to carry over all of their unspent funds, and also
received $37,631 in redistributed funds. The AAA covering
Fresno and Madera Counties had $98,948 in unspent funds at the
close of 2007-08, carried over all of their unspent funds, and
received an additional $87,157 in redistributed funds.
This bill will change the carry-over allowance by enabling AAAs
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to carry-over up to five percent of their total baseline
allocation, instead of the existing five percent carry-over
allowance by program category. Under existing federal law, AAAs
must expend their federal dollars by program category. The
federal requirements would also apply to the carry-over funds.
While the proponents' intent is to provide more flexibility in
the carry-over funds, the actual impact may be a greater
administrative burden for local AAAs and CDA to track the total
carry-over funds per AAA and the corresponding allocations and
expenditures by program category as required by federal law.
Proponents argue that allowing AAAs to carry-over a slightly
larger amount will allow agencies to plan and sustain AAA
services during a period in which no federal or state funds are
distributed. Yet, the bill as drafted does not guarantee an AAA
a larger carry-over amount, and even with the potential for
greater carry-over under this bill, a number of issues will
likely prohibit the ability of the carry-over funds to sustain
services due to a budget delay, including:
? Timeline for distribution of carry-over funds: At
the end of a given fiscal year, AAAs have until August
30th to submit their closeout statements to CDA. CDA
then has to reconcile the reports and calculate the
amount of carry-over allowed in each program category for
each AAA which can take over a month. The process used
by both the AAAs and CDA inhibit the availability of the
carry-over funds to be used during a budget impasse.
? Limited flexibility for carry-over funds: In the
event that an AAA has cash advances from CDA for services
that were unspent during the current year (prior to July
1), the cash advances remain with the AAA and can only be
spent on current year expenses until the budget is
signed. Only after the budget is signed could an AAA use
the carry-over funds as normal. AAAs cannot execute
contracts and allocate money for the new budget year if
the state budget is delayed.
? Restricted use of carry-over funds: Both current
regulations and this bill restrict the use of the
carry-over funds to one-time-only use and explicitly
prohibit the use of carry-over funds for expansion of
baseline funding. Furthermore, federal law requires that
funds be spent within the program category they were
originally allocated to, limiting an AAA's ability to
transfer money to services or providers who may be
struggling due to the budget delay. In most cases, the
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amount of carry-over funds available in a given program
category will not be adequate to truly sustain services.
The Fresno-Madera AAA argues in support of the bill that CDA has
used the update in regulations to regress back to a time of
micromanagement of AAAs and that the new regulations are far
more restrictive than the federal OAA. In addition, CDA has the
authority and responsibility to sanction any AAA that
intentionally rolls over large sums of money from one fiscal
year to another for inappropriate purposes.
The California Association of Area Agencies on Aging (C4A), the
statewide association representing the AAAs throughout the
state, writes in opposition that the bill is intended to undo
recently enacted regulations setting consistent statewide policy
for the prudent use of OAA funds. The broad objective of the
regulations is to ensure that funds allocated to AAAs are spent
in a timely and efficient manner for the purposes intended by
Congress and federal law.
C4A contends that the current authority and flexibility to roll
over up to five percent of federal funds allows an AAA to spend
dollars more effectively, plan for needed one-time-only
expenditures, and maintain dollars that were unexpectedly
unspent. In fact, the data illustrates that most AAAs spend
within the five percent allowed, a level that C4A believes is
prudent, responsible, and acceptable. Finally, C4A argues that
the current regulations have accomplished their intended purpose
of ensuring that dollars are spent for direct client services.
Rather than change regulations to accommodate those AAAs having
difficulty in complying with the mandate to spend their
allocation, education, technical assistance, and training is the
appropriate approach.
According to the author, the new regulation, budget cuts, and
lateness of the budget passage have devastating affects on AAAs,
particularly the smaller and rural ones who tend to have lower
federal allocations to begin with. In the current model, AAAs
must spend their money early or lose it. Allowing AAAs to carry
a slightly larger amount will allow agencies to plan and sustain
AAA services during that period in which no federal or state
funds are distributed. In these tough economic times of
uncertainty, AAAs are not asking for more money, but simply for
flexibility in spending what has already been allocated to them.
Policy Questions
1)Does allowing an AAA to base its five percent carry-over
amount on the total baseline allocation across program
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categories as opposed to existing regulations create a greater
administrative burden for the AAA and CDA?
2)Does this bill provide a greater disincentive for spending all
of an AAA's federal funding within each program area during
the fiscal year?
REGISTERED SUPPORT / OPPOSITION :
Support
Aging Services of California
Center for Independent Living-Fresno
Council on Aging, Silicon Valley
Fresno-Madera Agency on Aging (FMAAA)
Opposition
California Association of Area Agencies on Aging (C4A)
Planning and Service Area 2 Area Agency on Aging
Analysis Prepared by : Allison Ruff / AGING & L.T.C. / (916)
319-3990