DMH—State Hospital Caseload Needs Adjustment

Governor’s Budget Plan

State Hospital Budget Proposals. The Governor’s budget proposes a net increase of about $19 million General Fund for state hospital operations compared to the revised current–year estimate of expenditures (excluding department headquarters and lease–revenue debt service). The increase is primarily due to the continued activation of Coalinga State Hospital, increases in the numbers of certain staff in the Salinas Valley Psychiatric Program, inflation adjustments to offset increases in certain operating costs, and caseload adjustments. The budget plan also proposes to extend statutory language through 2012 that allows Patton State Hospital (PSH) to hold up to 1,530 patients. If this measure were not enacted, the statutory cap on the number of patients at PSH would revert to 1,336.

Current– and Budget–Year Caseload. Under the Governor’s 2009–10 budget plan, the overall state hospital population (including two DMH–operated psychiatric facilities for inmates held in state prisons in Vacaville and Salinas) is projected to decrease slightly from 6,075 patients by the end of 2008–09 to 5,998 patients by the end of 2009–10. The budget–year decrease of 77 patients is due to a reduction of 86 IST and 70 MDO patients, partially offset by an increase of 69 SVP patients and 10 other forensic commitments. In addition, the Governor’s plan assumes that the number of LPS and CDCR beds will remain steady through the budget year.

LAO Assessment

Current–Year Caseload Overbudgeted. Our analysis of recent state hospital population data through mid–January 2009 indicates that the caseload adjustment should be about 94 patients below DMH’s estimate of patients for the current year. Our caseload estimate assumes that the caseload includes 38 fewer ISTs and 69 fewer MDOs than budgeted, but 13 more of the other types of forensic patients. On this basis, we believe that the Governor’s budget plan overestimates the General Fund support needed in the current year by about $6 million. This budget adjustment assumes that the average half–year funding per bed is $64,000. The hospital census numbers upon which we base our recommendation are shown in Figure 10.

Current–Year Adjustment Methodology. Under a methodology agreed to by the Legislature and the administration in 2002, current–year caseload adjustments are generally made for each major commitment category (IST, MDO, NGI, SVP, and “other forensic”) if they vary by 2.5 percent from the budgeted amount. Our calculation, that the Governor’s spending plan has budgeted $6 million more than is needed for state hospital caseload, is consistent with this past agreement.

We note, however, that the state hospitals have changed significantly since the budgeting methodology agreement made in 2002 in ways that suggest it may be time to revisit how such caseload adjustments are made. For example, significant changes in patient treatment models and staff training have been made due to federal requirements. Please see our analysis of the state hospital budgeting improvements in the “Other Issues” section of this report for a more detailed discussion of the state hospital’s budget and these federal requirements.

Budget–Year Caseload Projections Seem Reasonable. Our analysis shows that the Governor’s budget–year projections appear reasonable given current caseload trends. We will continue to monitor the state hospital caseload trends and will recommend any appropriate adjustments to the budget–year estimate at the May Revision.

Continuation of PSH Cap Necessary. Our caseload analysis shows that the forensic patient population is increasing at the state hospitals. Based on this trend, we find that the Governor’s proposal to continue the statutory patient population cap at PSH is necessary and will allow DMH the flexibility it needs to accommodate projected hospital caseload.