LAO 2004-05 Budget Analysis: General Government

Analysis of the 2004-05 Budget Bill

Legislative Analyst's Office
February 2004

Department of Aging (4170)

The California Department of Aging (CDA) administers funds allocated to California under the federal Older Americans Act (OAA). These funds are used to provide services to seniors, including supportive services, nutrition programs, employment services, and preventive health services. In addition, CDA administers a range of programs, supported by state and federal funds, that provide noninstitutional services for older Californians and functionally impaired adults, including the Multipurpose Senior Services Program, Linkages, Adult Day Health Care, and the Alzheimer's Day Care Resource Centers. Finally, CDA administers the Foster Grandparent, Senior Companion, Respite Purchase of Services, Respite Registry, and Brown Bag programs.

The budget proposes total expenditures of $185.3 million for 2004-05 ($33.4 million General Fund, $139.5 million federal funds, $9.2 million in reimbursements, and $3.3 million from special funds) which is unchanged from the current year. General Fund spending is proposed to be $33.4 million in 2004-05, a reduction of $1.7 million (4.7 percent) compared to estimated expenditures in 2003-04. This reduction is primarily due to the proposal to convert all funding for local assistance into a block grant and reduce the block grant by 5 percent.

Consolidating Local Assistance Into Single Block Grant

Currently, the Department of Aging oversees the administration of Older Americans Act (OAA) programs and Community Based Services Programs (CBSP). Area Agencies on Aging (AAAs) deliver services to California seniors at the local level. The budget proposes to (1) eliminate the requirements for CBSP, (2) consolidate funding for both CBSP and the OAA programs into a single block grant for the AAAs, and (3) reduce the proposed block grant by 5 percent. We recommend approval of the consolidation proposal and make no recommendation on the proposed 5 percent reduction.

Background. The CDA operates the OAA programs and the CBSP. The OAA programs authorized by federal law are: Supportive Services, Congregate Nutrition, Home Delivered Meals, National Family Caregiver Support Program, Preventive Health, Senior Employment, and Ombudsman/Elder Abuse Prevention. Total General Fund support for OAA programs is $16.4 million in 2003-04. The CBSP authorized in state law are: Foster Grandparent, Brown Bag Network, Senior Companion, Linkages, Alzheimer's Day Care Resource Centers, Respite Registry, and Health Insurance Counseling and Advocacy Program. General Fund support of CBSP is $15 million in 2003-04. Although state legislation establishes standards and goals for the CBSP, these programs could be operated by the existing AAAs under the authority of the OAA.

Governor's Proposal. The Governor proposes to (1) make CSBP optional, (2) consolidate all funding for OAA programs and CSBP into one block grant to the AAAs, and (3) reduce funding for the block grant by 5 percent. Because the consolidation will reduce administrative overhead at CDA, the budget proposes to eliminate 1.5 positions in administrative support and achieves General Fund savings of $107,000 in state operations. Eliminating the requirement to operate the CSBP should provide some administrative relief at the local level (in the form of reduced accounting and reporting requirements). We note however, that the administrative relief is likely to be less than the proposed 5 percent reduction in the block grant.

Proposal Makes CBSP a Local Option. Although the proposal would delete the requirement that AAAs operate the CBSP, all of the individual programs that make up CBSP may be operated under the authority of the supportive services programs within the OAA. Whether to continue the CBSP would be a local decision under the proposal.

Comments on the Governor's Proposal. The consolidation and 5 percent reduction proposals present the Legislature with two issues. First is the fiscal question of whether funding for California's programs for senior citizens should be reduced by 5 percent. Second is the policy question of whether the decision to operate CBSP should be devolved to the local level.

Fiscal Considerations. Whether to reduce funding for the consolidated funding stream by 5 percent is a question of fiscal priorities for the Legislature. We believe that the proposal will relieve the AAAs from some accounting and reporting requirements specifically associated with the CSBP, but such savings are likely to be less than the $1.6 million (5 percent) reduction. As a point of reference, we would note that total funding for the CDA peaked at $189 million in 2002-03 (compared to $185 million proposed for 2004-05). In contrast, General Fund support for CDA has decreased substantially from its peak of $60 million in 2000-01 to the $33 million proposed for 2004-05. The General Fund decrease is attributable to program eliminations and budget reductions made during the current period of fiscal distress. Increases in federal funds have offset most of the General Fund reductions over the past few years.

Consolidation Proposal Has Merit. The consolidation proposal would eliminate the legislative mandate to operate CSBP. We think the proposal has merit because it increases local flexibility to structure programs for senior citizens in ways that reflect local priorities. In general, this proposal would provide local governments greater ability to adjust programs to meet the needs of their communities and experiment to determine which efforts improve program outcomes. In general, local governments are in a better position than the state to discern what works in their community and preserve the programs yielding the best outcomes during tight fiscal times. Accordingly, we recommend approval of the block grant proposal.

We would further note that this proposal stands in sharp contrast to the county block grant proposal discussed in the "Crosscutting Issues" section of this chapter. The proposed consolidation of aging programs does not involve income maintenance where devolution of such programs raises concerns about intercounty migration effects if counties establish varying grant levels. In addition, the CBSP consolidation proposal provides the AAAs with real flexibility to modify programs to meet local priorities, whereas the county block grant proposal does not contain such flexibility.

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