BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 662 HEARING: 5/4/11
AUTHOR: DeSaulnier FISCAL: Yes
VERSION: 4/28/11 TAX LEVY: No
CONSULTANT: Ewing
2011 REALIGNMENT
Authorizes the Department of Finance to enter into
contracts with counties to permit the integration of
services, consistent with the Governor's Realignment
proposal.
Background and Existing Law
The state and local agencies provide a range of services to
meet the health and safety needs of Californians.
Generally, these programs are authorized and funded under
state or federal law, often with additional authorization
and funding from local agencies. While the state provides
some direct services, such as parole programs, most health
and safety programs are operated by local agencies,
regional entities, or community-based organizations under
agreements with the state. Those agreements often include
cost-sharing ratios that distribute costs between federal,
state, and local governments.
The state's enduring fiscal crisis has necessitated
significant reductions in spending. In response, the
Governor's January 2011 budget proposal calls for
restructuring the operations of specific programs,
including shifting funding and responsibility for those
programs from the state to counties. The Governor's
proposal is intended to avoid duplication and reduce
administrative costs. The programs proposed for
restructuring include parole, juvenile justice, mental
health, substance abuse treatment, child welfare services,
and others.
The Governor's proposal draws upon similar, prior efforts.
In 1991, in response to a fiscal crisis, the state adopted
major changes in the organization of specific mental
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health, social service, and health programs. Those changes
shifted program responsibilities from the state to the
counties, established new cost-sharing ratios, and provided
the counties with a dedicated funding stream for those
programs.
As in 1991, the Governor's current proposal addresses a
fiscal problem and is premised on the following principles:
Dedicated revenue. In general, the programs proposed for
realignment rely on annual state appropriations.
Designating a dedicated revenue stream that would go to
counties to fund these programs is intended to improve
funding stability and enable local officials to improve
program operations and planning.
Enhanced flexibility. The state imposes a range of
requirements and restrictions on the programs proposed for
realignment. Those restrictions help manage costs and
promote statewide consistency. Yet restrictions also
impede flexibility, undermining local agencies' abilities
to tailor program design to local needs. Shifting
decision-making authority from the state to local
governments is intended to enhance flexibility, which can
enable service integration and opportunities for
innovation.
Aligned incentives. Shifting responsibility for programs
and control of funding also is intended to ensure that
county governments accrue the fiscal benefits of
implementing cost effective practices, such as prevention
and early intervention, and bear the financial burden of
inefficient or ineffective programs.
Expanded local control. Traditionally, the state, through
the annual budget process, determines how to allocate
funding across multiple health and safety programs.
Because realignment shifts program and fiscal authority to
counties, each county can decide - within any limits
specified in the enabling legislation - how to prioritize
funding across programs.
Improved state oversight, focus on outcomes. In 1991, and
in the Governor's current realignment proposal, the role of
the state shifts from allocating local assistance funding
to providing technical assistance and providing oversight
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of local programs.
Proposed Law
Senate Bill 662 authorizes the Department of Finance to
enter into contracts with counties to operate and integrate
the health and safety programs included in the Governor's
realignment proposal. Those contracts must do the
following:
Identify statutes or regulations that must be
waived or modified to meet the goals of realignment.
Include benchmarks and outcomes for the programs
covered by the contract.
Reference agreements with other local agencies that
must be adopted to achieve the goals of the contract.
Identify strategies to ensure compliance with
applicable federal requirements.
Senate Bill 662 requires contracts between the state and
the counties to be cost-neutral to both parties and to last
10 years unless they are extended in the ninth year.
The bill requires that contracts be approved by the
Legislature and Governor in the form of a bill and be
ratified by the county Board of Supervisors before they
take effect. The Legislative Analyst's Office must issue a
report on the policy and fiscal effects of each contract.
After five years, SB 662 requires counties to submit a
report to the Legislature on progress toward the goals
included in the contract. SB 662 is contingent on
enactment of funding for the Governor's realignment plan as
determined by the Department of Finance.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Senate Bill 662 creates a path to
implement the Governor's realignment proposal. SB 662
authorizes each county to tailor its approach to service
integration through negotiations with the Department of
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Finance while ensuring adequate review by the Legislature,
the Governor, and the county Board of Supervisors. SB 662
builds upon prior legislation that authorized
county-specific approaches to service delivery, such as the
San Mateo Consolidated Human Services Agency (SB 1347,
Morgan, 1992), the Solano County Integrated Health and
Human Service Program (AB 866, Thomson, 1997) the Placer
County Pilot Project (SB 899, Leslie, 1996) and the County
Integrated Health and Human Services Program (AB 1259,
Strom-Martin, 1999). SB 662 extends the approach of those
earlier programs and provides broad authority for counties
to design their service delivery systems to meet local
needs. SB 662 requires contracts to include performance
and outcome measures, review by the Legislature Analyst's
Office, and periodic reporting on performance and outcomes.
2. Just do it . Some counties currently tailor their
approaches to service integration. The legislation
establishing the San Mateo Consolidated Human Services
Agency (SB 1347, Morgan, 1992), the Solano County
Integrated Health and Human Service Program (AB 866,
Thomson, 1997) the Placer County Pilot Project (SB 899,
Leslie, 1996), and the County Integrated Health and Human
Services Program (AB 1259, Strom-Martin, 1999), demonstrate
that counties can obtain the statutory authority they need
to tailor service delivery to meet local needs.
3. An overly complicated approach ? Senate Bill 662 could
result in 58 unique approaches to delivering services,
undermining the capacity of state agencies to deliver
technical assistance, monitor effectiveness, and promote
evidence-based practices. Under existing mental health
statutes and regulations, counties must provide specified
services to eligible children as defined by the state.
That specificity allows the state to monitor compliance.
Under SB 662, each county would potentially be able to
decide who is eligible for services, which services would
be available, and how they are delivered. That variation
will make it difficult for the state to monitor program
effectiveness by sampling programs for evaluation, or
promoting evidence-based practices, which often must be
implemented in strict conformity with the evidence base,
including issues such as how programs are staffed. The
Committee may want to explore opportunities to balance
county flexibility with statewide consistency to ensure
that state agencies can monitor programs and document
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effectiveness. That balance could be in the form of
minimum standards for service eligibility and delivery,
with flexibility in how services are delivered.
Alternatively, the Committee could limit the number of
unique contracts, and instead authorize a limited number of
implementation approaches, developed in consultation with
the counties, from which counties could choose.
4. Fast-track legislative review and approval . Senate
Bill 662 establishes a procedure for the state and counties
to negotiate the implementation of realignment. That
process would likely have four stages: 1) the counties
negotiate contracts with the Department of Finance, 2)
contracts are reviewed and approved by the Legislature, 3)
contracts passed by the Legislature are assessed and
approved by the Governor, and 4) the final version approved
by the state is ratified by the County Board of
Supervisors. That process could be lengthy, delay
realignment implementation, and reduce associated cost
savings. The Committee may wish to consider strategies to
fast-track one or more components of the process to prevent
delays. An example of fast-track approval is the process
for reviewing Governor's Reorganization Proposals, which
prevents the Legislature from amending the proposal and
requires either house to oppose the proposal by majority
vote to prevent it from taking effect. Alternatively, the
Committee could establish a timeframe within which
contracts must be finalized by the counties and the
Department of Finance.
5. Equipping the LAO . Senate Bill 662 directs the
Legislative Analyst's Office to evaluate each contract
within 60 days of its receipt. The Committee may wish to
consider amending SB 662 to enable the LAO to seek a time
extension, if needed, and direct the Department of Finance
and counties to provide information, data and materials to
the LAO, upon request, that may be essential to that
evaluation. The Committee also may want to specify the
objectives the LAO should use to inform its evaluation,
beyond the goals specified in each contract.
6. Aligning timeframes . The Governor's realignment
proposal is intended as a long-term, if not permanent,
shift in program responsibilities. Senate Bill 662
authorizes 10 year contracts for the implementation of
realignment. The Committee may wish to more closely align
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the timeframes envisioned under the Governor's proposal and
those in SB 662, by requiring a rolling ten year contract
that automatically is reauthorized each year unless either
the state or the county objects. Additionally, the
Committee may wish to amend SB 662 to specify the
conditions under which contracts authorized by SB 662 could
be modified in response to changing fiscal, demographic or
related conditions, including changes in federal policy.
7. Many details to be addressed . Senate Bill 662
establishes a framework for implementing the Governor's
realignment proposal. But it is unclear how that strategy
would be implemented. The Governor's realignment proposal
affects nearly a dozen state departments, multiple programs
that operate under federal restrictions, and involves 58
counties, each with numerous local partners involved in the
delivery of services. It is unclear if each county would
enter into a single contract that covered all of the
programs that would be shifted to the counties, or a
separate contract for each program. Implementing SB 662
will require considerable planning and consultation with
federal agencies, county leaders, community and client
organizations, service providers and others. Many of the
details have yet to be worked out.
Support and Opposition (4/28/11)
Support : Unknown.
Opposition : Unknown.