The budget proposes $356 million in total expenditures in 1998-99. This is a decrease of $220 million, or 38 percent, below estimated current-year expenditures. The decline in the budget is due to reductions in the estimated amounts budgeted for disaster assistance. The budget does not include funds to pay for any potential state expenses and local assistance that might arise as a consequence of El Niño storms or other potential disasters.
Support Budget. Of the OES' total $356 million budget, $48.9 million is for direct support of the office. This includes $25.4 million from the General Fund, $18.1 million from federal funds, and the remainder ($5.4 million) from various other funds and reimbursements. The amount proposed for support is $14.7 million, or 23 percent, less than estimated current-year expenditures.
Local Assistance Budget. In addition to support costs, the budget includes $307 million for local
assistance to pay claims from previous disasters. This is $205 million, or 40 percent, less than
estimated current-year expenditures for local assistance. The proposed local assistance
expenditures for the budget year include $255 million from federal funds, $43 million from the
General Fund, $7 million from the Disaster Relief Fund, and $1.9 million from the Nuclear
Planning Assessment Special Account.
The Supplemental Report of the 1997 Budget Act directed the Legislative Analyst's Office to review the responsibilities of OES' law enforcement branch and report whether their responsibilities are best performed by the OES or whether they can be performed as effectively, or better, through transfer to another state agency. Our review is outlined below.
Background. California has over 800 local law enforcement agencies--sheriffs; city police; university, college, school district police departments; the California Highway Patrol (CHP); state park rangers; and fish and game wardens--each responsible for law enforcement within their respective jurisdictions. Generally, there is limited overlap in jurisdictions, except at times of emergency or disaster. In 1950, recognizing that the resources of the various law enforcement jurisdictions could be overwhelmed under certain circumstances, a mutual aid system for local law enforcement agencies was established through the California Master Mutual Aid Agreement. In 1970, the agreement, and the state's role, was established in statute in the California Emergency Services Act.
The mutual aid system allows local law enforcement agencies to mutually support adjacent or regional jurisdictions at any time a single agency's own resources are insufficient. The mutual aid plan outlines the procedures for alerting, coordinating, dispatching, and utilizing law enforcement personnel and equipment resources. For example, mutual aid agreements have been invoked when a city must deal with a large protest demonstration, civil disobedience or disturbance, or natural disaster. The mutual aid system provides the framework for local law enforcement agencies to deal with most unusual occurrences or emergencies.
The state has seven mutual aid regions, each under the direction of one of the region's sheriffs, who acts for the region as an operational area coordinator. Mutual aid is used when local law enforcement agencies determine that a situation is, or may become, beyond the agency's resources to manage. In those circumstances, the local law enforcement agency requests resources from the operational coordinator. Resources are then pooled from other agencies in support of the requesting agency. Depending on the event that triggers the mutual aid request, the operational area coordinator can direct the use of both local and state resources.
State-Level Mutual Aid Coordination. Most mutual aid requests are handled within the seven regions. The state has a limited role in coordination of these mutual aid events, except in providing state resources that are deployed locally (CHP officers, for example). However, in the event of natural disaster or major civil disturbance, a region may need resources from outside its area, including federal assistance. In those instances when the region has depleted its own law enforcement resources, the OES law enforcement branch assumes coordination responsibilities and ensures that appropriate local, regional, state, and federal resources are transferred to the afflicted area. In addition, the law enforcement branch has responsibility for law enforcement coordination in the event of any declared disaster or calamity. The branch will either assume responsibility for coordination at these times or will act to aid regional operational area coordinators.
The law enforcement branch currently has seven staff and a budget of about $1 million. There are five regional coordinators for the seven mutual aid regions. The regional coordinators and supervisors are sworn law enforcement officers.
Who Should Be Responsible for Coordinating Law Enforcement? As indicated above, the 1997-98 Supplemental Report directed our office to review the responsibilities of the law enforcement branch and report whether these responsibilities should be transferred to another state agency. We have reviewed the statutory and regulatory basis for branch activities, met with branch staff, contacted and received input from the California State Sheriff's Association and from various sheriffs acting as mutual aid operational area coordinators. In addition, we have reviewed how the state uses law enforcement resources during special occurrences and emergencies. Based on this review, we conclude that the OES is the proper place for disaster-related law enforcement coordination.
While there are other state-level agencies that have law enforcement and disaster experience (for example, the CHP), we found that these agencies could have competing priorities which might result in a conflict of interest if they were to become responsible for the allocation of resources in emergencies. For instance, during a disaster, the CHP may be assigned to provide transportation related resources, while in other instances the CHP may be called upon to provide logistical support or emergency communications. These tasks are separate from law enforcement tasks. Requiring the CHP to allocate its own resources and those of local agencies may lead to instances where there is an appearance of a conflict of interest when determining how resources are to be provided and allocated. When an OES law enforcement coordinator, because he or she is not associated with any of the agencies providing resources, makes allocation decisions there is less chance of competing priorities. Furthermore, the OES' current system cost is small, considering the scope of its responsibilities. It is not clear whether another state agency would be able to provide similar services with the same level of resources.
New Coordinator Positions. As part of its budget request, the OES is requesting $129,000 from the General Fund and two new law enforcement coordinator positions. These positions will allow OES to assign one coordinator to each of the state's seven mutual aid regions. Currently, the coordinator for Los Angeles and Orange counties (Region I) also serves the region encompassing Ventura, Santa Barbara, and San Luis Obispo counties (Region IA). In addition, the coordinator for the 13-county region of northeastern California (Region III) also serves the 11 county Sierra foothill region (Region IV). The number of mutual aid events and disasters in the regions where the OES proposes to place the new coordinators has increased. We believe that the addition of full-time coordinators for these regions is justified on a workload basis.
Analyst's Recommendation. We conclude that the OES is the proper place for disaster-related law enforcement coordination, and recommend that the Legislature take no action to move these responsibilities to another state agency. Furthermore, we recommend approval of $129,000 and two new law enforcement coordinator positions to allow for a dedicated coordinator for each of the state's seven mutual aid regions.
The Legislature enacted Chapter 338, Statutes of 1997 (SB 959, Kopp) as part of last year's budget. Chapter 338 required the OES to develop a plan to limit its role in disaster claims processing to the absolute minimum number of staff necessary to work with the Federal Emergency Management Agency (FEMA) on issues related to state disasters. It also stated that it was the intent of the Legislature that the OES rely on interagency agreements with other state agencies to process disaster claims. Chapter 338 specifically stated that the OES plan not include contracting with private contractors. This legislation was the result of deficiencies cited in two Bureau of State Audit (BSA) audits of the OES claims processing system.
The OES completed its plan and submitted it to the Legislature in early January 1998. The OES concluded that it would not be cost effective to transfer its processing responsibilities to another state agency. The OES staff reviewed the processing systems of the Board of Control, Department of General Services, and State Controller's Office, compared its processing system to the systems of these agencies, and determined that whatever marginal efficiency might accrue from a transfer would be lost in the need for interagency coordination and in developing expertise with the federal FEMA regulations. As a consequence, the administration plans to have OES keep the claims processing function and not transfer it to another agency.
It should be noted that the OES processing system has undergone significant changes and improvements in the past two years. The OES has implemented the major recommendations of the BSA and appears to have made its system more efficient. In addition, 323 limited-term positions will be terminated at the end of the current year as claims from prior years are completed, while other positions are planned for elimination due to other efficiencies. As a consequence, total OES claims processing staff will decline to 232 in the budget year, from a high of 563 in the current year. Furthermore, during our review of OES claims processing, we saw evidence of the cooperation between OES staff and FEMA claims processing staff that appears to bolster OES' argument that it, rather than another state agency, has specialized expertise that helps in the expeditious processing of California disaster claims.
The Governor's budget proposes expenditures of $98.4 million ($61 million from the General Fund) to support the activities of the State Controller in 1998-99. This amount is $656,000, or less than 1 percent, more than estimated current-year expenditures.
The proposed budget requests $689,000 in reimbursements to begin a new information
technology project, known as the Automated Statewide Travel Expense Reimbursement Process
Project. The total cost of the project, which would be completed over several years, is estimated
to be $7.7 million. The State Controller's Office (SCO) indicates that development and
maintenance costs for the proposed system will be funded on a reimbursable basis by
departments that intend to use the system.
Many state agencies, including the SCO, are working to make their computer systems accommodate the year 2000 change. In order to focus the state's information technology resources on this problem, we have recommended that the Legislature deny funding requests for new nonyear 2000 information technology projects unless the request is for a project that is mission critical to the state, or is specifically mandated by state or federal law. Because this proposed project is neither mission critical nor mandated, we recommend, without prejudice to the merits of the project, that the Legislature deny funding for this request. (For more information on the year 2000 problem, please see our analysis in the Crosscutting Issues section earlier in this chapter.)
The budget requests $724,000 from the General Fund in one-time costs to replace the current Local Government Reporting Systems (LGRS) with a new, single automated system. Using this system, the SCO currently collects data from local governments and produces nine mandated publications, including the annual reports of financial transactions for counties and cities. The financial information published in these reports includes revenue and expenditure statements and long-term debt schedules.
Budget Proposes System Replacement. The SCO reports that the current LGRS has not been converted to handle the year 2000 change at the end of the century. The cost for system improvements to accommodate the century change is estimated to be $332,000. The SCO indicates that investing in a new, single automated system would streamline the reporting and data collection process. Therefore, the SCO is requesting funds to replace rather than modify the current systems. The SCO expects that software needed for the new system already exists and can be purchased and modified to meet the reporting requirements. The SCO intends to develop a request for proposals in the current year by redirecting funds.
Critical Failure Dates Not Identified. The SCO's most recent quarterly update to the Department of Information Technology for the year 2000 project plan identifies the various systems of the LGRS. However, the SCO has not identified the dates by when these systems must be modified (known as the "critical failure dates"). In order to consider the priority and the merit of this request, it will be important to obtain the critical failure dates for these systems, including information on the impact that the year 2000 will have on the operations of the current systems.
Users Not Consulted. The users of the information from the LGRS systems include, the Legislature, local governments and associations, municipal finance analysts, and academics. Over the years, concerns have been raised by many of the users of the LGRS information. The concerns involved (1) the timeliness of the information, (2) the availability of data over the Internet, (3) the appropriateness of the categories of information currently available, and (4) the compatibility of data within each local government category. The current plans of the SCO do not include obtaining input from these groups in the development of the new system prior to the request for proposals. In order to ensure that the new system addresses the concerns of its "customers," we believe that the users should be included in the process that determines how the new system is designed.
Analyst's Recommendation. Based on the above findings, we withhold recommendation on the $724,000 requested to replace the current LGRS, pending receipt of additional information from the SCO regarding the critical failure dates for the current systems and a plan to include users of the information in the development of the new system.
The budget proposes total expenditures of $70.3 million for the Secretary of State in 1998-99. This is $8.4 million, or 11 percent, less than the current-year expenditures. Expenditures from the General Fund total about $33.9 million, a decrease of $14.5 million, or almost 30 percent, compared to current-year expenditures.
The reduction in General Fund expenditures is primarily due to the use of $10 million in surplus bond funds to offset on a one-time basis the cost of certain programs which otherwise would be supported with General Fund monies. Also, General Fund expenditures would decline in 1998-99 because less money is needed than in 1997-98 to pay for programs the state mandates upon local government, particularly those establishing rules for the conduct of elections.
Expenditures from the Secretary of State Business Fees Fund are projected to be $19 million, a
decrease of $4.2 million, or 18 percent, from current-year expenditures. The decrease is related
primarily to the completion of information technology projects and streamlining in the Secretary
of State's business programs division responsible for the filing of various corporate documents
through new procedures.
Chapter 913, Statutes of 1995 (AB 1701, McPherson) directed the Secretary of State to establish a statewide computer system comprised of voter registration data that would facilitate the removal of duplicate or prior registration of voters. The computer system is to be designed to result in the removal of large numbers of out-of-date registrations from the county voter rolls. Purging the rolls, for example, could eventually save the state and the counties millions of dollars annually because election officials would no longer print and mail election materials to persons who are listed on obsolete county voter registration lists but who have actually moved and possibly re-registered to vote in another county.
Chapter 913 provided a $3.5 million loan from the General Fund to the Secretary of State to develop the voter registration tracking system and specified that the loan be repaid out of the savings in printing and mailing costs made possible through the new system. The loan is repayable with interest by June 30, 1999.
Projected Completion Date Not Met. The Feasibility Study Report outlining the project specified that the new computer system was to have been deployed in all California counties as of November 1997, in time to achieve the maximum possible savings in printing and mailing costs for both the June and November 1998 elections. However, a Special Project Report issued recently by the Secretary of State indicates that deployment of the system will commence in 14 counties this spring but will not be completed in all counties until July 1998 at the earliest. The Secretary of State has indicated that the delay is necessary in order to accommodate county election officials, who must play a significant role in implementing the new computer system while simultaneously making preparations for the 1998 elections.
The delay in the full deployment of the voter registration computer system means it is unlikely that the Secretary of State will achieve the full $3.5 million in savings needed to repay the loan as required by the end of the budget year. However, our review of the status of the project indicates that the project is likely to generate the additional state savings needed to repay the loan during the June and November 2000 elections. We would note that the 1998-99 expenditure plan does not assume the $3.5 million repayment.
Analyst's Recommendation. Although we believe the voter registration project remains a worthwhile state investment that will ultimately prove to be successful, the delay in its implementation means it is unlikely that $3.5 million in total state savings will be achieved in time to meet the present loan repayment deadline. Therefore, we recommend the adoption of legislation that would postpone the due date for the loan until December 31, 2000. We believe this time extension is reasonable given the progress made to date on the project and the likelihood that it will result in major additional state savings during the year 2000 election cycle.
In November 1996, California voters approved Proposition 208, the initiative ballot measure enacting the CPRA. In our analysis of the budget of the Fair Political Practices Commission (FPPC) (see Item 8620), we discuss in detail the ongoing litigation in federal court that has resulted in an injunction against state enforcement of the CPRA on the grounds that the measure's limits on campaign contributions are unconstitutional.
The Secretary of State, along with the FPPC, was to play a significant role in the implementation of the CPRA. The Secretary of State's 1998-99 budget includes a request for $286,000 from the General Fund and 2.8 personnel-years for the Political Reform Division to ensure that campaign finance disclosure statements filed by candidates are in compliance with the requirements of the CPRA. Because of the orders issued by the federal court and the subsequent decision of the FPPC to appeal that ruling, however, it is now uncertain what resources, if any, the Secretary of State will need during the budget year to implement the CPRA.
Analyst's Recommendation. Because of uncertainty as to the final outcome of this court case, we believe the Legislature should wait until later in the budget process to take action on the CPRA-related budget request. Thus, we withhold recommendation on the funding and staffing sought for this purpose at this time. We further propose that the Secretary of State report to the Legislature at budget hearings regarding the status of the CPRA case and, if warranted, submit a revised budget request by then in regard to implementation of the political reform law.
The Governor's budget proposes total expenditures of $567 million from various funds (including $12.3 million from the General Fund) to support the activities of the DGS in 1998-99. This is $3.4 million, or about 1 percent, above estimated current-year expenditures.
Statewide Support Services. Expenditures for statewide support services are $340 million in the budget year, representing an increase of $6.6 million, or 2 percent, over estimated current-year expenditures. The augmentation is primarily for local assistance to continue efforts to upgrade the 9-1-1 telephone system to handle the increased volume of calls due to expanding cellular phone usage.
Building Regulation Services and Real Estate Services. Proposed budget-year expenditures for
these services are $220 million--$2.9 million less than current-year levels. Major changes
include (1) a decrease of $18 million for one-time expenditures in the local public buildings
portion of the 1990 earthquake safety program, (2) an increase of $7 million for debt-service
payments on the new state office building in Oakland, (3) an increase of $3.1 million to operate
and maintain the new state office complex in San Francisco, (4) an increase of $0.9 million for
repairs to state office buildings, and (5) an increase of $4.1 million (from currently authorized
general obligation bonds for prisons) to remove and/or replace single-walled, underground
storage tanks owned by the Department of Corrections. Federal regulations require removal of
these underground tanks by December 1998.
The Legislature adopted supplemental report language last year requiring the department to develop a plan to phase out operations of the two state surplus property warehouses, which comprise the Property Reutilization Program. The Legislature's action stemmed from its concerns with excessive cost and little return on investment of the surplus property warehouses. The department was required to submit the plan to the Legislature by December 1, 1997.
On January 14, 1998 the department submitted a plan on how it was going to survey interested parties to determine whether to phase out the surplus property warehouses. The department indicated that it would provide its report to the Legislature in March 1998. The plan indicated that DGS may not phase out these warehouses.
In our view, the department's actions are inconsistent with the legislative direction given in the of 1997-98 supplemental report. The Property Reutilization Program was established to save tax dollars by reusing state-owned materials. However, the program lost $400,000 in 1996-97 and is projected to lose $500,000 in both 1997-98 and 1998-99. We recommend that the department report at budget hearings on how it intends to comply with the supplemental report language.
In 1996, the DGS began the divestiture of the state's telecommunications operations, known as CALNET, and the procurement of telecommunications services from another firm. CALNET, which was developed in the early 1990s, was never fully accepted by state departments as DGS had planned. As a result, it never generated the revenues anticipated and has lost, and is projected to lose, approximately $2 million in each of the last four years since 1994-95. The DGS attributes the annual financial losses to the fact that departments used other telephone services. If they had been required to use CALNET, DGS maintains that the service would have been profitable. Departments cite better service and lower rates as the reason for not using CALNET. As it is, the state still owes approximately $20 million on equipment it purchased.
Because CALNET has been losing money, the state decided to sell off its hardware (switches, routers, etc.) and procure these services from a vendor without owning any equipment. In January 1997, the department released its strategic plan for providing statewide telecommunications services, known as the California Integrated Information Network. The plan included moving to a privately owned and operated network, which would involve a contract with a vendor which could be valued at $500 million over five years.
Last year, we expressed concern that DGS would not be able to complete its procurement for the telecommunications services by January 1, 1998, as planned. As a result, the Legislature adopted budget bill language requiring DGS to provide the Legislature with a copy of the Feasibility Study Report and Request for Proposals and to report to the Legislature by February 1, 1998 on its progress. Because the procurement process was still underway at the time this analysis was prepared, these documents had not yet been provided to the Legislature.
Because of the impact of this procurement on state government, we recommend that DGS report to the Legislature during budget hearings on its progress in awarding this contract.
Background. Chapter 887, Statutes of 1997 (AB 1198, Hertzberg) requires DGS to develop two pilot projects to test different ways of reducing the number of nonemergency telephone calls that are made to the emergency telephone system, known as 9-1-1. The bill appropriated $200,000 from the State Emergency Telephone Number Account (known as the 9-1-1 Account) for the pilots. One pilot is to implement a new technology using a telephone number, 3-1-1, for the public to reach public safety agencies for nonemergency assistance. The other pilot requires the establishment of an educational campaign in a locale different from the first pilot on the appropriate use of 9-1-1 and how to find the appropriate seven-digit nonemergency telephone number. Chapter 887 directed the department to compare the results of each pilot project, including measur- ing the decrease in nonemergency calls to the 9-1-1 system in each of the two areas, and to report its findings to the Legislature.
Department Should Not Expand Pilot Project. The budget requests $985,000 from the 9-1-1 Account to fully fund the two pilot projects required by Chapter 887, plus fund a third pilot. The third pilot will test an alternative technology to implement the 3-1-1 telephone number. The department discussed the pilot projects for a special telephone number with three vendors and chose two to participate. These two vendors will provide specific technologies to switch calls to a 3-1-1 telephone system from the local 9-1-1 system.
We have two concerns with the department's proposal. First, it is unclear why the department is testing different technologies when Chapter 887 established the pilot projects to compare the merits of an educational campaign versus the creation of a special telephone number. If creation of a separate telephone number proves to be more successful than an educational campaign, the department ought to solicit bids from vendors at that time and choose the proposal, and its associated technology, which meets the needs of the state. Otherwise, the department may end up acquiring a technology that is outdated once the pilot projects are finished and the department begins implementation. Second, if the department decides to implement one of these technologies to establish a 3-1-1 telephone system statewide, it is essentially selecting a vendor which has exclusive ownership and thus effectively eliminating competition.
Analyst's Recommendation. The department indicates that to meet the minimum requirements of Chapter 887 (that is, two pilots), it needs an additional $275,000. We concur and recommend approval of that amount. As regards the third pilot, we believe that it is premature and would lead to an award of a contract without competitive procurement. Rather, the department should first determine whether an educational campaign or a 3-1-1 number is most likely to significantly reduce nonemergency calls to the 9-1-1 system. If it determines that a separate 3-1-1 number is most effective, it should then solicit bids from vendors to implement this solution. Thus, we recommend a reduction of $710,000.
The budget includes $2.4 million to pay consultants for various studies related to potential selling or leasing of 12 specific state properties. This total is about $1 million above the amount provided in the current year for similar property studies. The amounts proposed for each property are listed under Item 1760-015-0002. The amounts range from $50,000 for a study related to the Long Beach state office building to $1 million for further studies related to Agnews Developmental Center property.
Under Chapter 193, Statutes of 1996 (SB 1770, Johnston), the Director of General Services was given authority to sell or lease most of these properties, which were previously identified as part of the state's Surplus Property Inventory. Disposition of the state office buildings in Long Beach and San Diego was authorized in other legislation. The sale and leasing of state-owned property is the responsibility of the Asset Planning and Enhancement Branch of the department's Real Estate Services Division.
Proposal. The purpose of the consultant studies is to obtain information about the characteristics of the properties so that the state can maximize its return through selling or leasing. The studies can include environmental assessments; engineering investigation of soils, toxic materials, and site infrastructure; planning; and zoning reviews.
We recommend reductions totaling $925,000 related to the department's proposals for the following sites:
In addition to the above reductions, we withhold recommendation on $250,000 proposed to prepare a master plan for the Lanterman Developmental Center in Pomona. The DGS, with funding for consultants provided in 1997-98, is performing an initial survey of the buildings and land at the center. Based on the results of survey, the DGS and the Department of Developmental Services will determine what portions of the property might be surplus to program needs. We will review the conclusions of this initial survey, which should be completed by the spring, and evaluate whether the budget proposal for master planning is consistent with those conclusions. We therefore withhold recommendation on the $250,000 proposed for master planning this site.
The budget proposes expenditures of $164 million for 1998-99. This is a 1.4 percent decrease from the estimated current-year expenditures. The proposed General Fund appropriation of $14.9 million accounts for 9.1 percent of the department's funding. Federal funds account for $103.9 million, primarily for the Community Development Block Grant and Home Investment Partnership Act programs. A number of state special funds provide the remainder of the department's funding. The department has a proposed staffing level of 438 personnel-years.
Below, we review HCD's Emergency Housing Assistance Program (EHAP) and the department's proposal to verify the alien and citizenship status of program clients.
As has been the case for the past several years, the budget proposes $2 million from the Housing Trust Fund to fund the EHAP. The EHAP is a grant program that provides funds to local governments and nonprofit organizations to support shelters and services for the homeless. The funds can be used for a wide variety of purposes, including rehabilitation, lease payments, general operations, housing vouchers, rental assistance, and administrative costs. Each county receives an allocation of EHAP funds, which are then distributed to various local agencies. In 1996-97, 114 grants totaling $1.9 million were distributed.
Program Has Improved Management and Service. Chapter 1022, Statutes of 1993 (SB 388, Rosenthal), created EHAP to replace the Emergency Shelter Program, a similar program but one that suffered from various inefficiencies and service problems. The new program included a number of innovations, such as the creation of Designated Local Boards (DLBs) to help administer the grants. Local communities can choose to create a DLB to replace HCD as the entity that ranks the applications in order of funding priority. In addition, the department has instituted a number of streamlining measures to simplify and speed up the distribution of grant funds.
Program Design Necessitates High Administration Costs. The program currently requires that each county receive an allocation of at least $10,000 in grant funds, and that rural counties receive at least 20 percent of total program funds. The remaining funds are added to county allocations based on local levels of poverty and unemployment. Funds are then distributed within each county to various government and nonprofit agencies that provide services for the homeless. In 1996-97, the average grant size was $16,650.
The department enters into a legal contract with each grant recipient. Over the course of the grant, the department monitors the recipient to ensure compliance with the requirements of the grant. While the contract and monitoring requirements help ensure funds are used appropriately, it is costly--the department spent an average of $4,600 to administer each grant in 1996-97. This level of administrative costs does not include the significant amounts of time and money that grant recipients spend applying for and receiving the funds. Figure 8 shows that the budget proposes to spend 22 percent of EHAP expenditures on administrative costs. While
|EHAP Administrative Costs|
|1996-97 Through 1998-99
(Dollars in Thousands)
as a percent of total expenditures
the program could distribute larger grant denominations without increasing administrative costs, the relatively small grant amounts under the current program design result in excessively high administrative costs. Source of Administrative Funding Will Be Depleted in 1998-99. For the recent annual allocations of EHAP funds, the department has paid its administrative costs from an on-going reserve in the Emergency Housing Assistance Fund. This reserve, funded by interest earnings and unused previous year allocations, has allowed the department to distribute the entire annual EHAP appropriation to counties for direct homeless assistance. While the department proposes to use the same approach for funding administrative costs in 1998-99, the fund's reserve will be virtually exhausted in the proposed budget year. Therefore, to pay the current level of administrative costs in 1999-00 the Legislature would face the following choice:
Recommend Restructuring Program to Maximize Dollars for Actual Assistance. The current dollars that are annually spent on administering the EHAP program could be better spent directly providing services for the homeless. Consequently, we recommend that the Legislature enact legislation restructuring the program to eliminate its costly contract and monitoring components. Instead, the state should simply make the current county allocations available to those county governments that request it--with the requirement that the monies be spent on homeless services.
The 17 counties that currently use DLBs to distribute the grant funds should be encouraged to continue the use of this procedure. These boards base their decisions on an existing homeless strategy plan and could continue to do so. Since these DLB counties receive almost 60 percent of the EHAP funds, the majority of funds would continue to be allocated under current procedures. Other counties could integrate the allocation of EHAP funds within their existing administrative and budgeting processes.
Although the state would lose some of its ability to ensure that the funds are spent according to state priorities, local governments and service providers would likely take great strides on their own to ensure that the EHAP funds were put to good use. If needed for oversight purposes, the state could require a short report from counties listing grant recipients, amounts distributed, and the purpose for which the funds were used.
The 1996 federal welfare reform legislation, known as the Personal Responsibility and Work Opportunity Reconciliation Act, requires that recipients of state and local government benefits be either U.S. citizens or qualified aliens. In terms of the state's housing programs, a public benefit pertains to "public or assisted housing" and professional licenses provided by the department. The department proposed regulations in September 1997 that would govern its verification procedures, including charging a fee of an estimated $15 for each verification performed. The regulations have gone through a public comment process and are currently being revised by the department.
The budget proposes $258,000 in fee reimbursement authority and 3.8 positions to implement these procedures in 1998-99. Of the total augmentation, $79,000 and 1 position would be ongoing.
Department Lacks Sufficient Federal Guidance to Implement Procedures. The department has attempted to move forward in the implementation of the federal verification requirement. However, the federal government has thus far failed to provide sufficient guidance. The United States Attorney General has issued initial guidelines for federal agencies to implement the requirement, but regulations for state and local governments have not yet been issued. Moreover, expected regulations from the federal Department of Housing and Urban Development (HUD) on housing-related benefits also have not yet been issued. These HUD guidelines would govern the state's components of federal housing programs, as well as provide clarifications for HCD's non-federal housing programs.
Without these federal guidelines, major legal questions regarding the verifications will not be clarified. For instance, the definition of which "public and assisted housing" programs would be subject to verification is unclear. In addition, the federal legislation exempted nonprofit organizations from performing verifications, but whether the state is responsible for verifications in these cases is unresolved.
Current Proposal Would Also Encounter Implementation Problems.The initial HCD approach proposes using an Immigration and Naturalization Services (INS) automated phone service to perform verifications. However, the U.S. Attorney General has since informed states that this system will be unavailable for routine verifications. Instead, the department would be required to send document copies to INS local offices for verification. This process would likely take a minimum of 30 days and potentially much longer if the local offices are inundated with requests. Lengthy periods for verification could delay the provision of needed housing services to applicants.
Recommend Denying Approval Pending Federal Guidelines. For the reasons noted above, we recommend that the department's budget request for a verification and fee system be denied until federal guidelines are provided. At that time, the department will be in a better position to develop a proposal to submit to the Legislature.