Analysis of the 2008-09 Budget Bill: Health and Social Services

Department of Alcohol and Drug Programs (4200)

The Department of Alcohol and Drug Programs (DADP) directs and coordinates the state’s efforts to prevent or minimize the effects of alcohol–related problems, narcotic addiction, drug abuse, and gambling. As the state’s alcohol and drug addiction authority, the department is responsible for ensuring the collaboration of other departments, local public and private agencies, providers, advocacy groups, and beneficiaries in maintaining and improving the statewide service delivery system. The DADP operates data systems to collect statewide data on drug treatment and prevention and administers programs in the following areas: (1) substance abuse prevention services, (2) substance abuse treatment and recovery services, (3) licensing adult alcoholism or drug abuse recovery or treatment facilities, (4) criminal justice, and (5) problem gambling.

Governor’s Budget Proposal. The Governor’s budget proposes $662.5 million from all funds for support of DADP programs in 2008–09, which is an increase of $5 million, or almost 1 percent, above the revised estimate of current–year expenditures mainly due to a fund shift from the California Department of Corrections and Rehabilitation (CDCR). The budget proposes $286.9 million from the General Fund, which is an increase of $10.3 million, or 3.7 percent, above the revised estimate of current–year expenditures. The budget plan includes the following proposed spending:

• Fund Shift From CDCR. The Governor’s budget includes a $25 million General Fund increase in funding for the Substance Abuse Services Coordinating Agencies contract which passes through DADP to CDCR. This is in addition to the existing $8.9 million General Fund that passes through to CDCR, which was exempt from the Governor’s budget balancing solutions. The department is using these pass–through funds to keep their overall spending high enough to satisfy maintenance of effort requirements for federal Substance Abuse Prevention and Treatment block grant funds.
• Reduced Drug Medi–Cal Provider Rates. The budget plan proposes $133 million ($64.9 million General Fund) for the Drug Medi–Cal Program. This is a $12.6 million General Fund reduction in 2008–09 compared to current year revised funding due mainly to a 10 percent across–the–board reduction in provider rates.
• Reduction of Proposition 36 Funding. The spending plan proposes to reduce funding for the Substance Abuse and Treatment Trust Fund by $3.3 million General Fund in the current year and $10 million General Fund in the budget year. Additionally, the spending plan includes General Fund reductions of $667,000 in the current year and $2 million in the budget year for the Offender Treatment Program. We describe the potential fiscal impacts of these proposals in more detail below.
• Reduced County Funding for Drug Court Programs. The spending plan proposes a 10 percent reduction of current county funding for all drug court programs including the Comprehensive Drug Court Implementation Act (CDCI), Drug Court Partnership (DCP), and dependency drug courts (DDCs). This reduction would result in General Fund savings of $1 million in the current year and $3.1 million in the budget year. We discuss the fiscal impacts of these proposals in more detail below.
• California Methamphetamine Initiative (CMI) Continuation. The Governor’s Budget proposes a General Fund reduction of $360,000 to the $10 million provided in the 2007–08 Budget Act and $1 million in the budget year for CMI social campaign efforts. The budget year is the last of a three–year multimedia methamphetamine prevention campaign that provided roughly $10 million in funding each year.

Reductions to Drug Diversion Programs Likely to Result in Increased State Costs

The Governor’s proposal to reduce Proposition 36 and drug court programs funding in both the current and budget year is likely to result in offsetting increases in state criminal justice system and child welfare services costs, including state prison expenditures. Based on the demonstrated cost–effectiveness of Proposition 36 and drug court programs, we recommend rejecting these funding reductions and instead funding these programs at 2007–08 Budget Act spending levels. In a subsequent issue, we identify funds that could be used to backfill the Governor’s proposed reductions in Proposition 36 and drug court programs. (Increase Item 4200–105–0001 by $3.3 million in the current year and $10 million in the budget year and Item 4200–101–0001 by $1.7 million in the current year and $5.1 million in the budget year.)

Background

The DADP funds drug diversion programs intended to provide treatment in the community generally to nonviolent drug offenders in two primary ways—Proposition 36 and county–operated drug court programs.

Proposition 36 Approved by Voters in November 2000. The Substance Abuse and Crime Prevention Act, or Proposition 36, passed in 2000 and changed state law so that certain adult offenders who use or possess illegal drugs are sentenced to participate in drug treatment and supervision in the community rather than being sentenced to prison or jail, supervised on probation, or going without treatment. Proposition 36 programs are funded through the Substance Abuse Treatment Trust Fund, established by the measure, and the Substance Abuse Offender Treatment Program (OTP) established by Chapter 75, Statues of 2006 (AB 1808, Committee on Budget). (For additional background information, see page C–78 of the Analysis of the 2006–07 Budget Bill and page C–29 of the Analysis of the 2007–08 Budget Bill.)

County Administered Drug Court Programs. Generally, drug court programs combine judicial monitoring with intensive treatment services over a period of about 18 months. Individuals who usually qualify are nonviolent drug offenders but often have more serious offenses than those who are eligible for Proposition 36 programs. The department funds many types of drug courts that are supported in part through two programs: (1) the DCP program created in 1998 that supports adult drug courts in 33 counties and (2) the CDCI program created in 1999 that supports adult, juvenile, family, and DDCs in 54 counties. The DDCs provide intensive substance abuse treatment along with close court supervision to parent(s) identified with a substance abuse problem referred through child protective services. This drug court model also provides parent(s) with skills and treatment necessary to prevent their children’s potential placement in the foster care system and allows them instead to remain safely at home.

Governor’s Budget Proposes 10 Percent Reductions

The Governor’s budget plan proposes to reduce General Fund support for both Proposition 36 programs and drug court programs in the current and budget years as shown in Figure 1. For the current year, the Governor proposes to reduce Proposition 36 program funding by $4 million from the appropriation amount of $120 million to $116 million. The budget proposes to further reduce Proposition 36 program funding by 10 percent in 2008–09.

As regards the drug court programs, the Governor’s spending plan proposes a $1 million reduction in the current year and a $3.1 million reduction (10 percent) in the budget year.

Proposition 36 Programs And Drug Courts Reduce State Costs

A number of evaluations of Proposition 36 and drug court programs show that these drug treatment programs result in net savings to the state primarily through the diversion of drug offenders from prison.

Proposition 36 Programs Shown to Reduce State Costs. A recent benefit–cost analysis of Proposition 36 indicates that costs are $2,861 lower per offender for all Proposition 36 participants (a benefit–cost ratio of $2.50 saved for every $1 spent) and costs are $5,601 lower per offender for those that complete the program (a benefit–cost ratio of $4 to $1). Based on our review of this report, and our own prior analysis (see page C–32 of the Analysis of the 2007–08 Budget Bill), we conclude that Proposition 36 results in net savings to the state, primarily because of diversion of offenders from state prisons.

Adult Drug Court Program Evaluations Indicate Criminal Justice Savings. According to departmental studies, adult felony drug court programs result in savings to the state. The department indicates that in 2006–07, the most current year for which data are available, the CDCI program saved $35.5 million by avoiding days in prison for those who successfully complete the drug treatment program. The estimated benefit–cost ratio is $4.64 to $1. Similarly, adult drug felons who successfully completed treatment in the DCP program saved $26.9 million in avoided prison costs (a benefit–cost ratio of $3.50 to $1) in 2006–07. Differences in savings between these two drug court programs may be due to variation in county implementation.

The DDCs Help Avoid Costs. Evaluations of the DDC model have determined that working with parents with substance abuse problems reduces the amount of time required to unify them with their children, increases reunification rates, and increases participation in substance abuse treatment programs. These programs help the state avoid cost increases in Child Welfare Services (CWS) programs, including Foster Care.

Reductions in Drug Diversion Programs Increase Other State Costs. The current– and budget–year reductions proposed for drug diversion programs funded by DADP are likely to result in increased costs to other state programs such as CDCR, Department of Justice, and CWS. For example, if funding for drug courts is reduced, a judge presiding over an adult drug felon case is less likely to propose a drug court program for that individual if there are no resources for treatment and supervision. Alternatively, the judge may be more likely to send that individual to prison so as not to risk public safety. Such a decision would result in an increase in state prison costs. If the person had participated in a drug court program, prison costs would not have been incurred. The cost of serving an individual in the drug court program is generally less than the cost of prison, as discussed earlier.

Analyst’s Recommendations

In order to ensure that the state continues to achieve net savings, primarily from the diversion of drug offenders from state prison, we recommend the Legislature fund Proposition 36 and drug court programs at the 2007–08 Budget Act appropriation levels. Accordingly, we recommend the Legislature fund Proposition 36 programs at $120 million General Fund and all drug court programs at $31 million General Fund in 2008–09.

As we discuss in the next issue, we believe that the Governor’s proposed reduction in Proposition 36 programs and drug courts can be backfilled by redirecting funds from two separate funding sources.

Reductions Could Be Offset With Other Funds

The Governor proposes to cut funding for Proposition 36 and drug court programs that have been shown to reduce overall state costs. We recommend the Legislature consider alternative funding sources for these substance abuse treatment services as follows: (1) redirecting advertising funds from the California Methamphetamine Initiative (CMI) and (2) using a portion of proceeds from state and federal narcotic asset forfeitures. These alternative funding sources could help maintain current spending levels for cost–effective substance abuse treatment services.

Advertising Funding Could Be Redirected. The CMI funds multimedia advertising and outreach education intended to prevent the use of methamphetamine by Californians. The Governor’s spending plan proposes about $8.6 million for support of CMI activities in 2008–09. This amount reflects a $1 million reduction in the budget year from the Governor’s workload budget amount of $9.6 million. (The Governor is also proposing a $360,000 reduction in the current year.)

Given that many of the state’s drug treatment services including Proposition 36 and drug courts have proven to reduce costs in other state programs such as CDCR, we believe cuts to these programs are not cost–effective. To offset the proposed cuts, the Legislature could redirect up to $9.6 million General Fund from CMI to drug treatment programs to minimize the cuts proposed for the budget year. This redirection would be on a one–time basis because, under current law, funding for CMI was appropriated for three years only beginning in 2006–07 through 2008–09.

Use of Forfeiture Proceeds Could Be Shifted. We recommended in our 2002–03 Analysis of the Budget Bill (see page C–55) that the Legislature consider modifying state law to redirect asset forfeiture proceeds to support drug treatment programs. The state receives proceeds from seizures of assets found to have been used in illegal drug–trafficking activities. The majority of these forfeiture monies currently fund local law enforcement agencies. Based on our prior analysis, the state could shift between $4.5 million and $10 million of the approximately $50 million in state and federal asset forfeiture proceeds to support substance abuse treatment programs.

Analyst’s Recommendation. In order to continue the current level of funding for Proposition 36 and drug court programs which have proven to be cost–effective, we recommend the Legislature consider:

• Redirecting $9.6 million (compared to the workload budget) in methamphetamine prevention advertising funds from CMI to these substance abuse treatment services, which have proven to be cost–effective.
• Modifying state law to redirect a portion of asset forfeiture monies (between $4.5 million and $10 million) to support drug treatment programs. We have assumed savings of $10 million from asset forfeitures in our LAO budget alternative discussed in The 2008–09 Budget: Perspective and Issues.