BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 662 (DeSaulnier)
Hearing Date: 05/16/2011 Amended: 04/28/2011
Consultant: Mark McKenzie Policy Vote: G&F 9-0
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BILL SUMMARY: SB 662 would authorize the Department of Finance
(DOF) to enter into a ten-year contract with a county for the
realignment of certain public services. Specifically, this bill
would:
Specify six public services for which program
responsibilities may be shifted to counties, such as
substance abuse treatment, fire protection, mental health,
juvenile justice, and child welfare services, among others.
Prescribe the contents and requirements of the contract,
including cost neutrality provisions, the range of defined
services, benchmarks and outcomes, a list of any necessary
statutory or regulatory waivers, and any required
agreements.
Require the submittal of the contract to the Legislative
Analyst, who would issue a report on the fiscal and policy
impacts within 60 days, and to the Legislature.
Require the Legislature to enact a bill to ratify the
contract and adopt any necessary statutory or regulatory
waivers to implement the contract.
Specify the contract would not be operative until that
bill is enacted and the contract is approved by the county
board of supervisors.
Require a county to submit a progress report on the
achievement of contract goals to DOF and legislative Budget
Committees in the fifth year of the contract.
Specify that the authority provided in this bill is
contingent upon a DOF finding that full funding is
available for the implementation of a realignment plan
proposed by the Governor in 2011 and enacted by the
Legislature.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
DOF contract negotiation unknown costs, likely
exceeding $200 General
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annually, depending on the number of
contracts
LAO review/report potentially unabsorbable staff
pressures,General
depending on the number of contracts
Contract costs/savings Unknown costs and savings related to
General
realignment of public services to
counties,
attributable to future legislation
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Central to the Governor's 2011-12 budget proposal is a plan to
realign a number of program responsibilities from the state to
counties in an attempt to decentralize program delivery to
promote innovation, efficiency, and responsiveness to local
conditions. The realignment plan would be funded by shifting
$5.9 billion in tax revenues collected as a result of a
five-year extension of certain temporary tax increases that were
enacted in 2009 and are scheduled to expire this year. To date,
efforts to extend these taxes have been unsuccessful. The fate
of the Governor's realignment proposal is unclear at this time,
primarily due to the uncertainty of state funding and the
continued development of the proposal through the budget
process.
SB 662 is intended to provide a basic framework for implementing
the transition of specified services from centralized state
control to county-level administration. The bill relies on
staff at the Department of Finance to negotiate any contracts
for the realignment of specified services. DOF would be
required to ensure that the contracts are cost neutral for both
the state and county. It is unclear whether each county would
enter into a single contract that covered all programs that
would be shifted from the state to the local level, or whether
there would be a separate contract for each service program for
each county. The bill specifies that each county would have the
discretion to determine the range of services to be integrated
SB 662 (DeSaulnier)
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for each program. As such, it is unlikely that DOF could
achieve economies of scale by creating contract templates that
could be used for every county and each program. DOF would
likely incur additional unabsorbable staff costs to negotiate
contracts and insure cost neutrality. The magnitude of staffing
pressures is unknown, and would depend upon the number and
complexity of the contracts negotiated in a single year. Staff
estimates these costs would likely exceed $200,000 annually. It
should be noted that the Governor's realignment proposal does
not include the addition of new state staff positions
specifically dedicated to implementation.
The bill would also require the Legislative Analyst's Office
(LAO) to evaluate each contract and issue a report on its policy
and fiscal effects within 60 days. The LAO typically absorbs
additional workload related to legislatively mandated reports,
but the requirements of this bill would create staffing
pressures that may be unabsorbable, depending on the number and
complexity of proposed contracts.
Any costs or savings related to individual realignment proposals
would be attributable to future legislation to implement the
provisions of a particular contract.