LAO 2006-07 Budget Analysis: Health and Social Services TOC Analysis of the 2006-07 Budget Bill
Health and Social Services Issue-By-Issue Contents


Expenditure Proposal and Trends

Caseload Trends

Spending by Major Program

Major Budget Changes

Other Policy Changes

Crosscutting Issues

Improving Long-Term Care

Analysis of Long-Term Care Caseload and Costs


Characteristics of Long-Term Care

Summary of Long-Term Care Expenditures and Caseload

Historical Trends in Long-Term Care

Governor’s 2006-07 Long-Term Care Proposals

Governor’s Budget Proposals

Managed Care Pilot Programs Test Integration

Technical Budget Adjustments Warranted for Some Proposals

While Proposals Generally Have Merit-Fragmentation Problem Left Largely Unaddressed

Long-Term Care Council Should Sunset

Licensing and Certification Reform Proposals

Key Features of the Governor’s Proposal

Evaluating the Governor’s Proposals

Licensing of Health Facilities: State Oversight Needs Improvement


Governor’s Proposals to Improve Licensing of Health Facilities

Serious Weaknesses Exist in Nursing Facility Oversight

Reductions in Nurse Evaluators May Have Weakened Regulation

Governor’s Proposals a Step Forward, But Warrant Adjustments

Additional Health Facility Reforms Should Be Considered

Compliance with State Laws Should Be Ensured

Address Lack of Coordination With Attorney General

Residential and Child Care Facilities: Inspections Alone Do Not Ensure Safety

Licensing Inspection Visits

Governor’s Proposal

Governor’s Proposal Does Not Address Enforcement Gaps

Current Enforcement System

Problems With Enforcement System

Analyst’s Recommendations

Some Practical Steps to Increase Children’s Enrollment

A Multifaceted Approach to Enroll Children in Medi-Cal and HFP

Grant Funding for County-Based Outreach Efforts

Statewide Media Campaign

Expanding Application Assistance Incentives

Streamlining Healthy Families Enrollment

Simplifying Medi-Cal Reenrollment Forms

Staffing for Some Activities Should Be Rejected


Budgeting for County Administration


Governor’s Proposal

Comments on the Governor’s Proposal

Proposal Would Remove Incentive for County Cost Shifts

Controlling County Costs

Will Counties Cover Inflation Costs With Their Own Funds?

Proposed Language Is Broad in Scope

Proposal Is Inconsistent With Budget for State Operations

Short-Term Budget Solution Vs. Long-Term Budget Policy

Analyst’s Recommendation

Reject Trailer Bill Proposal

Adopt a Consistent Approach to Budgeting County Administration

Getting Better Budget Information

Budget Data Could Be More Accessible and Useful

Departmental Issues

Department of Alcohol and Drug Programs (4200)

The Substance Abuse and Crime Prevention Act: Proposition 36 At a Crossroads

Program and Funding Overview

The Future of Proposition 36

Administration’s Budget Proposes Major Policy Changes

Setting an Appropriate Level of State Funding for Proposition 36

Enacting Additional Policy Changes

Analyst’s Recommendation

Dependency Drug Court Funding

Medi-Cal (4260)

Governor’s 2006-07 Medi-Cal Budget Proposal

Caseload Projection Reasonable

The Effect of the Medicare Drug Benefit on Medi-Cal


The Effect of Part D on the Medi-Cal Budget

Attorney General to Sue Over Clawback

State Taking Action to Help Transition to Part D

Federal Implementation of Part D Has Been Problematic

Adjustments to Governor’s Budget Plan Warranted

Analyst’s Recommendations

A Targeted Strategy to Constrain Medi-Cal Costs And Improve Access to Community Care

Care Not Always Delivered in the Best Medical Setting

Copayments Commonplace in Health Care Systems

Recent Federal Policy Changes Provide Opportunities to Reshape System

The Federal Deficit Reduction Act of 2005

A Targeted Strategy to Reduce Medi-Cal Costs and Improve Community Care

Analyst’s Recommendation

Hospital Waiver Increasing State General Fund Costs


Governor’s Budget Proposal

Waiver Projected to Increase Net General Fund Costs

Budget Assumes More Federal Funds, But Additional Funding Possible

Analyst’s Recommendations

Medi-Cal’s Bitter Pill: High Payments to Pharmacies

How the Medi-Cal Drug Benefit Works

The “Spread” Is Costly to Medi-Cal

Federal Measure Would Reduce Drug Costs

Three Types of Drug Prices and What They Mean

State Has Planned a New Measure-Average Wholesale Price

Analyst’s Recommendation

Other Program Adjustments

Coordinated Care Proposals Should Be Modified

Reduce Funding for Disease Management Contract

Requests for Added Staff Excessive

Evaluating the Governor’s Budget Requests

Department Already Has More Positions Than It Can Fill

Justification Lacking for Some Budget Requests

Analyst’s Recommendations

Public Health

Budget Proposals

Public Health Program Expenditures

Public Health Expenditure Information Unavailable

Women, Infants, and Children Program Could Face Major Penalties

Managed Risk Medical Insurance Board (4280)

Healthy Families Program


Future Federal Funding Unlikely To Meet Program Requirements

SCHIP Reauthorization

State Has Expanded Use of Its SCHIP Funds

Potential Future Federal Funding Shortfall

Alternatives for Addressing the Funding Shortfall

Caseload Projection Too High

Protect Legislative Oversight of Expenditure Authority

MRMIB-State Operations

Request for Additional Staff Positions Unjustified

Department of Developmental Services (4300)

Better Oversight of RC Purchases Needed


Who Decides Which Services RC Clients Will Receive?

How Do RCs Provide Services for Their Clients?

Tracking Purchase of Services Spending

Purchase of Some Services Varies Greatly Among RCs

Oversight of RC Purchase of Services Could Be Improved

Audit of Purchase of Service Data Warranted

Community Services Program

Caseload Overbudgeted for RCs


Governor’s Budget Proposal

Rate Increase No Substitute for Rate Reform


The Governor’s Budget Proposal

Rate-Setting Reform Still Warranted

Analyst’s Recommendation

Developmental Centers Program

Legislature Should Proceed Cautiously On Law Enforcement Expansion


DC System Subject of Investigations

Governor Proposes Additional Resources for OPS

Per-Capita Costs Increasing as Population Drops

Analyst’s Recommendation

Department of Mental Health (4440)

Response to Federal Investigations Premature


The Governor’s Budget Proposal

CRIPA Settlement Agreement Has Not Been Finalized

Analyst’s Recommendation

Hospital Caseload Funding Overbudgeted As Staffing Problems Mount


Governor’s Budget Proposal

Hospital Caseload Lagging as Coalinga Activation Stalls

LPS and Children’s Population in Decline

Analyst’s Recommendation

California Work Opportunity and Responsibility to Kids (5180)

Grant Levels Follow Current Law

Governor Proposes to Increase TANF Expenditures On CWS

Proposed Midyear Reductions Contrary to Legislative Intent


Comments on the Governor’s Proposal

Deficit Reduction Act of 2005 Creates Potential for Substantial Fiscal Penalties

Scope of Legislation

Current Federal Law

Key Changes in Work Participation Rate and MOE Calculations

Conclusion: California Faces a Significant Participation Gap

Strategies for Meeting Higher Work Participation Requirements

Current Work Participation Status

Increasing Participation for Existing Cases

Adding in Former Recipients Who Are Now Employed

Separate Programs for Recipients With Multiple Barriers to Employment

Fiscal Considerations


In-Home Supportive Services

Current-Year Costs Are Overbudgeted

Legislature Needs More Information About Fraud Prevention Activities

Supplemental Security Income/State Supplementary Program

Budget Proposes to Further Delay Federal 2007 COLA Until July 2008

Options for Providing Benefits for Sponsored Immigrants

Federal Restrictions

Legislative History

Caseload and Cost Trends

Estimated Fiscal Impact of Expiration of Deeming Period

Policy Options


Child Welfare Services

California Failing to Meet Performance Improvement Goals


California’s Current Performance

Penalty Exposure

Current Improvement Efforts

Further Improvement Efforts

Funding for CWS Should Be Flexible

Outcomes and Accountability Framework

Governor’s Proposal

Comments on the Governor’s Proposal

Dependency Drug Court Funding

Foster Care

Foster Family Agency Caseload Overstated