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Legislative Analyst's OfficeAnalysis of the 2001-02 Budget Bill |
The Department of Mental Health (DMH) operates four state hospitals—Atascadero, Metropolitan, Napa, and Patton. As of December 2000, the system housed over 4,000 patients. Of that amount, around 400 were classified as sexually violent predators (SVP). The budget includes $3.2 million from the General Fund and $349.3 million in lease payment bonds for the department's 2001-02 capital outlay program. The estimated future cost to complete the proposed projects is $32.8 million. The budget includes the following proposals:
Previously Funded
New Proposals
Of the six major capital outlay projects in the budget, three were previously funded for study, preliminary plans, and/or working drawings. The budget proposes to fund the working drawings and/or construction phases for these three projects. The three other major projects are proposed for initial funding.
We recommend approval of $480,000 for a new multipurpose building at Atascadero State Hospital, and $423,000 of the minor capital outlay request. The balance of the program, and our recommendations, are discussed below.
We withhold recommendation on the $349.3 million requested for construction of the new sexually violent predator (SVP) facility because (1) the cost has increased $66 million (23 percent) and information has not been provided to substantiate this increase and (2) based on the projected SVP population, a 1,500-bed facility is not needed. We further recommend that, if construction funds are provided, the Legislature appropriate the necessary amount from the General Fund rather than lease payment bonds.
The Governor's budget includes $349.3 million in lease payment bonds to construct a new SVP facility for the department. A total of
$16 million was approved in the 1999-00 Budget Act for preliminary plans and working drawings to construct a new 1,500 bed secure mental health treatment facility to house
SVPs. At that time, the Legislature recognized a future cost of $283 million (adjusted for inflation) to construct the facility. The 1,148,851 gross square feet (gsf) facility includes
850,722 gsf of clinical services program space, 157,041 gsf of support services space,
74,370 gsf of administration space, 31,115 gsf for plant operations, and a secure perimeter fence with guard towers. Other infrastructure improvements include roadways, drainage
systems, site grading, an electrical substation, and a wastewater treatment plant. Preliminary plans were completed and approved by the Public Works Board in December 2000.
Site Selection. The department's site selection process was limited to sites where the local government adopted a resolution in support of construction of the facility within their
community. As a result, two potential sites were considered—Pleasant Valley State Prison in Coalinga, Fresno County, and Centinela State Prison in Imperial County. A total of
$6 million was provided in the 2000-01 Budget Act for community mitigation for education facilities and local government infrastructure. In August 2000, the department notified
the Legislature that the Coalinga site had been selected for the facility.
Insufficient Justification for Increased Cost. As discussed above, at the time design funds were appropriated, the Legislature recognized a future cost of $283 million to construct the project. However, at the time preliminary plans were approved by the Public Works Board, the estimated construction cost had increased to $349.3 million. This is over $66 million (23 percent) more than the Legislature previously recognized. Under existing law, the board can approve preliminary plans that exceed the legislatively approved amount by up to 20 percent if the Legislature is notified pursuant to the Government Code. Projects exceeding the 20 percent level must be resubmitted to the Legislature. In this case, the Legislature was not provided the augmentation notification and the cost exceeds the administration's authority. Furthermore, the department has not provided justification demonstrating why the original project budget is inadequate. Consequently, we withhold recommendation on funding for the project pending receipt of information (1) substantiating the need to augment the project and (2) demonstrating the steps taken in an attempt to complete the project within the approved costs.
1,500 Beds Not Justified by SVP Population Growth. In 1998 when the department was seeking authorization and initial funding for the new SVP facility, DMH was projecting significant growth in the SVP population. At that time, the population was expected to total 536 by June 2000, with projected ongoing growth of 132 patients per year. As such, the total population was expected to reach 1,328 by June 2006—the date when the new 1,500 bed facility was to be fully operational.
As of mid-January 2001, however, DMH reported that its facilities were actually holding only 369 SVPs (with all but one held at Atascadero State Hospital). The most recent official DMH projections are that growth in the SVP population will occur at about 46 patients per year. At this rate, the total population as of June 2006 would be 590, or less than half the DMH's original projection. The DMH has indicated that recent population trends may cause the department to revise its SVP projection to reflect a somewhat higher growth rate, but not nearly enough to offset the downward revisions of its population projections that have occurred since 1998.
Given this situation, it is not clear why the state should build the facility at the original 1,500-bed capacity—over 150 percent above the current projected population for 2006. For example, if the facility was reduced to a 750-bed capacity, there would still be 160 beds in excess of the projected population.
If Funded—Use General Fund. The administration has proposed using lease payment bonds to fund construction of the facility. As there is no revenue associated with this facility to pay off the bonds, debt payments are dependent on annual General Fund appropriations. We estimate that, over the life of the bonds, lease payment bonds cost the General Fund approximately $2.20 for every $1 borrowed—$1 for the $1 borrowed and $1.20 in interest (adjusting for inflation, the interest amount is about 60 cents). If the project were funded instead from the General Fund, that interest cost would be avoided. Consequently, we recommend that if the Legislature decides to fund this project, it do so with a direct General Fund appropriation.
We recommend the Legislature approve $36,000 to fund only preliminary plans for the Patton Hospital Admissions Suite renovation because of the lack of information to warrant funding the working drawing phase. (Delete $59,000 under Item 4440-301-0001 [5].)
The budget includes a request for $95,000 for preliminary plans ($40,000) and working drawings ($55,000) to renovate the existing admissions suite at Patton State Hospital. The project will renovate the existing 2,939 square foot admissions suite, including expansion into 529 square feet of adjacent hospital support space and installation of a new mechanical system. The estimated future cost to construct the project is $527,000. This cost, however, is based on an estimate prepared by the institution in 1997 for which no detailed cost information is available. Consequently, there is insufficient information to determine if the renovation can be completed within the estimated amount.
Based on the department's schedule, preliminary plans should be completed in March 2002. At that time, the renovations to be undertaken and an accurate cost estimate will be available. This will give the Legislature sufficient information to appropriate working drawings and construction in 2002-03. Therefore, we recommend deleting the $55,000 requested for working drawings because they are not needed in the budget year. In addition, the preliminary plan request includes $4,000 for an environmental impact report, which should not be necessary because the project simply renovates existing space. These funds should also be deleted, for a total reduction of $59,000.
We withhold recommendation on $901,000 for three capital outlay proposals to install personal security alarm systems at various institutions because it is not clear how the requests are related or will be implemented. The department should report to the Legislature prior to budget hearings with a complete security plan which identifies the coordination between projects and how each will be implemented. (Withhold recommendation on $628,000 under Item 4440-301-0001 [4] and $273,000 under Item 4440-301-0001 [6].)
The budget includes three requests for capital outlay under Item
4440-301-0001 totaling $901,000 to install security alarm systems at various institutions (see Figure 1).
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Figure 1 |
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Department of Mental Health |
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(In Thousands) |
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Item |
Project Description |
Phase a |
Budget Amount |
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(4) |
Patton State Hospital: Install personal duress alarm system |
P; W; C |
$628 |
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(6) |
Metropolitan State Hospital: |
P; W; C |
124 |
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(6) |
Atascadero State Hospital: |
P; W; C |
149 |
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Total |
$901 |
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a P = preliminary plans; W = working drawings; and C = construction. |
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The proposals include design and construction to install a dual tone personal alarm system (1) in all areas of Buildings G, T, O, and P at Patton State Hospital; (2) on the living unit patios of the Chronic Treatment East, Chronic Treatment West, and Receiving and Treatment buildings at Metropolitan State Hospital; and (3) in the interior courtyards of Atascadero State Hospital.
In addition, under the department's support budget (Item 4440-001-0001) the administration has proposed $7.6 million to install and upgrade the personal alarm systems at the same hospitals—Atascadero, Metropolitan, and Patton State Hospitals. Thus, the budget includes a total of over $8.5 million to change the personal alarm systems at three hospitals.
Clearly, it is important to have appropriate security systems at these facilities. Unfortunately, the department has not provided information demonstrating how these separate requests address a security issue. For example, the department has not identified how the separate proposals will be coordinated, or to what extent the proposals address the department's overall security needs. In order for the systems to work properly within each institution, the projects need to be properly planned and coordinated to ensure the resulting security system addresses the institutions' needs. To accomplish this, the work should be planned, designed, and installed as a single project at each institution.
The fragmented proposals in the budget do not give the Legislature the information it needs to assess the separate requests. Consequently, prior to budget hearings the department should provide clarifying information to the Legislature. This information should include at least the following for each institution:
Pending receipt and review of this information, we withhold recommendation on the $901,000 requested under Item 4440-301-0001. (In our analysis of the department's support budget, in the "Health and Social Services" chapter of this Analysis, we have withheld recommendation on the remaining $7.6 million).
We withhold recommendation on $1.3 million for preliminary plans and working drawings for two renovation projects at Metropolitan and Napa State Hospitals pending receipt of two studies assessing the need for these projects. (Withhold recommendation of $1.3 million under Item 4440-301-0001 [2] and [3]).
The Governor's budget includes a total of $1.3 million for preliminary plans and working drawings for two renovation projects, at Metropolitan and Napa State Hospitals as shown in Figure 2.
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Figure 2 |
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Department of Mental Health |
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(In Thousands) |
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Item |
Project Description |
Phase a |
Budget Amount |
Future Cost |
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(2) |
Metropolitan State Hospital: |
P; W |
$686 |
$4,884 |
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(3) |
Napa State Hospital: |
P |
642 |
13,765 |
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Totals |
$1,328 |
$18,649 |
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a P =preliminary plans and W = working drawings. |
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A total of $229,000 was provided in the 2000-01 Budget Act to study the needs and scope of work for the Building 206/208 renovation ($79,000) and the Building 194 renovation ($150,000). The studies were originally scheduled to be completed in December 2000 and March 2001, respectively. Neither study was complete at the time this analysis was prepared. Consequently, we withhold recommendation on the $1.3 million requested for these projects pending receipt and review of the completed studies.