Summary of LAO Findings and Recommendations on the 2010-11 Budget

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See Detail  Healthy Families Program CHIPRA Implementation Approve the administration’s request for $7.2 million and 9.0 two-year limited-term positions, along with budget bill language that allows for legislative oversight and accountability for the funding. Direct MRMIB to explore partnerships with Department of Health Care services where possible to implement CHIPRA provisions. 5-26-10
See Detail  Healthy Families Program Managed Care Organization (MCO) Tax Revenues Could Offset General Fund Support for Healthy Families Program (HFP) Reduce General Fund support for HFP by $11.0 million and increase support from the Children‘s Health and Human Services (CHHS) special fund by the same amount. 5-26-10
See Detail  Access for Infants and Mothers (AIM) Program May Revision proposal for Access for Infants and Mothers We consider it likely that the proposed May Revision level of funding will be adequate to fund all eligible caseload, and recommend adopting the May Revision proposal for the AIM program. If the Legislature wishes to increase the likelihood that the program is able to accept all eligible enrollees and that no policy changes will be necessary, it would require augmenting funding from the level proposed in the May Revision in order to ensure a prudent reserve. 5-20-10
See Detail  California Medical Assistance Commission Proposed Changes to California Medical Assistance Commission (CMAC) Recommend the Legislature adopt the Governor’s proposal to transfer contract negotiations for GMC health care plans to DHCS because we believe this action will likely achieve savings and may administratively streamline these contract processes. We have concerns with the Governor’s other proposals to shift other responsibilities to DHCS and allow the Department of Finance to reduce or eliminate CMAC appropriations in the budget year, because we believe they are premature. 5-20-10
See Detail  Department of Health Care Services Medi-Cal Managed Care Rate Setting Methodology for Two Plan Model Based on our review of DHCS’ new rate development methodology, which includes a risk adjustment mechanism, it seems reasonable and overall appears to be consistent with the Mercer recommendations. We also make several recommendations regarding TPM rate setting. Please see the narrative below. 5-20-10
See Detail  Department of Health Care Services, Medi-Cal Medi-Cal 2010-11 caseload estimate seems reasonable. Adopt the Governor's proposed May Revision 2010-11 caseload estimate for the Medi-Cal Program. 5-20-10
See Detail  Department of Health Care Services- Medi-Cal Cost containment proposals. See details. 5-20-10
See Detail  Department of Health Care Services- Medi-Cal Proposed new Control Section 23.25. Reject the proposed new control section 23.25. We believe that changes to appropriations for the purpose of implementing federal health care reform should be subject to the same legislative oversight as other changes to appropriations. 5-20-10
See Detail  Department of Health Care Services- Medi-Cal Health Information Technology Act—Medi-Cal Electronic Health Record Incentive Program. Approve request for 11 staff and contract funds given the complexity of implementing this program and the sizeable amount of funding that it has the potential to distribute to Medi-Cal providers. However, instead of using money from a foundation, we recommend the Legislature fund the state’s share of the cost of $180,000 using General Fund dollars. 5-20-10
See Detail  Healthy Families Program Increases in Copayments. Consider similar proposals in Healthy Families Program (HFP) and Medi-Cal in tandem and make copayments for the lowest-income HFP families consistent with those in Medi-Cal, consider adopting reduced levels of copayments, and consider making clarifying changes to proposed trailer bill language. 5-20-10
See Detail  Healthy Families Program Increases in Premiums. Adopt the administration’s proposals to increase premiums in order to achieve General Fund savings. 5-20-10
See Detail  Healthy Families Program May Revision caseload estimate. We recommend no caseload adjustment at this time. 5-20-10
See Detail  Department of Mental Health State Hospital Caseload Over Budgeted Recommend the Legislature reduce caseload funding by $6 million General Fund in the current year, and $14.6 million General Fund in the budget year to reflect lower than budgeted caseload in the Mentally Disordered Offender and Sexually Violent Predator populations. 5-19-10
See Detail  Department of Mental Health Redirection of Some Sex Offender Commitment Program Savings Not Justified Recommend the Legislature adopt the Governor’s proposal to reduce the Sex Offender Commitment Program by $10.3 million. However, reduce the proposed redirection for DMH legal work from $3.1 million to $1.2 million and require DMH to contract with DOJ for legal services; and, thereby increase the net General Fund savings from $7.2 million to $9.1 million. 5-19-10
See Detail  Department of Mental Health Mental Health Realignment Risky, May Violate Proposition 63 Recommend the Legislature require the department to report at budget committee hearings on its interpretation of the MHSA maintenance of effort requirements, and the potential impact of the proposed reduction on existing state and local programs. 5-19-10
See Detail  Immunization Programs Local assistance for immunization Approve $10.5 million of the proposed $18 million General Fund in funding for local assistance for immunization. 5-19-10
See Detail  California Asthma Public Health Initiative Elimination of asthma programs. Modify the proposal to preserve $1.2 million in funding for the California Asthma Public Health Initiative and eliminate $106,000 for a study within the Environmental Health Investigations Branch. 5-18-10
See Detail  Drinking Water Immediate Implementation of the 2010 Water Bond Deny majority of administration’s proposal to appropriate $1.1 billion for multiple programs in 2010-11, approving funding only for planning purposes. Require the administration to return in January with a complete multi-year bond expenditure implementation plan and detailed program expenditure criteria. 5-18-10
See Detail  Every Woman Counts (Breast Cancer Early Detection) Fiscal and Policy Options for the the Every Woman Counts (EWC) Program (includes analysis of Governor’s May Revision Proposals for EWC) Adopt a modified version of the Governor’s cost containment proposals, consider redirecting existing funding for research to direct clinical services, improve transparency and legislative oversight by requiring the administration to prepare a formal budget estimate for the EWC program, and consider the long-term future of the program in light of federal health care reform. 5-18-10
See Detail  Department of Developmental Services Lanterman Closure Proposal Has Merit, But Plan Lacks Fiscal Details Recommend closure on a policy basis. It is consistent with state and federal laws, legal rulings, and past actions of the Legislature. As the population of developmental centers continues to decline, and more individuals with disabilities receive services in a community setting, it makes sense for the state to close these facilities. Withhold recommendation on closure plan pending receipt by the Legislature of fiscal and programmatic details of the plan. 5-04-10
See Detail  Medi-Cal Fiscal Intermediary Contract An issue has arisen regarding the transition costs in 2010-11 of switching to a new fiscal intermediary (FI) for Medi-Cal. The Department of Health Care Services (DHCS) estimates the new contract will result in savings of $0.9 million in 2010-11 while the current FI's consultant, Blue Sky Consulting, believes that the switch will result in costs of $11 to $13 million. Found that costs in 2010-11 are likely to be similar regardless of whether the state goes forward with a new fiscal intermediary (FI) or extends the current contract. Moreover, any modest difference in short-run costs is not a significant enough factor, in our view, to delay moving forward with the new long-term FI contract. 4-23-10
See Detail  Department of Health Care Services The administration requests resources for Medi-Cal claims processing systems and oversight of implementation of a replacement California Medicaid Management Information System (CA-MMIS). Approve 34 of 35 positions. Reduce 4260-001-0001 by $15,000 and 1 position. 3-18-10
See Detail  Department of Health Care Services Implementation of SB 1755, Extension of Limited Term Positions. Consistent with our budget recommendation to support the Governor’s proposal to eliminate the ADHC benefit, we do not recommend approval of this request. However, if the Legislature chooses to continue the ADHC benefit, we recommend the Legislature approve 20 of the 23 requested positions. Reduce 4260-001-0001 by $83,000 and 3 positions. 3-18-10
See Detail  Healthy Families Program Reduce eligibility, increase premiums, and scale back benefits. Adopt the Governor’s premium and vision coverage proposals. Consider the Governor’s eligibility proposal and the LAO alternatives. 3-17-10
See Detail  Department of Developmental Services Governor's Proposed Cuts Increase Demand for Regional Center Services Conforms to legislative actions on other related budget issues. Our analysis indicates that the cost of maintaining services for regional center consumers could be greater than $300 million General Fund. Recommend Legislature direct administration to provide detailed implementation plan. 3-15-10
See Detail  Department of Mental Health Adjust for overbudgeting of state hospital caseload in current year. Recommend Legislature reduce the Department of Mental Health's 2009-10 state hospital caseload funding by $10.1 million General Fund. 3-15-10
See Detail  Department of Developmental Services Community Services Program Overbudgeted Recommend the Legislature reduce the Community Services Program budget to adjust for lower-than-budgeted caseload in the current year. We estimate the program is overbudgeted by $30 million to $40 million General Fund for purchase of services, and by $3.9 million General Fund for regional center operations. 2-10-10
See Detail  Every Woman Counts (Breast Cancer Early Detection) Informational handout on Proposition 99 funds and Every Woman Counts Our office presented an informational handout on Proposition 99, as well as caseload and funding for the Every Woman Counts program, to the Assembly Budget Committee at a February 8, 2010 oversight hearing on the program. 2-10-10
See Detail  Healthy Families Program Caseload. Recommend no caseload adjustment at this time. 1-27-10
See Detail  Crosscutting The 2010-11 Budget: How the Special Session Actions Would Affect Health Programs In this report we make several recommendations regarding the Governor's special session budget proposals. 1-24-10
See Detail  Department of Health Care Services: California Children's Services Align eligibility reduction with the Healthy Families Program. Conform changes in California Children's Services (CCS) eligibility with changes made to eligibility in the Healthy Families Program. 1-23-10
See Detail  Department of Health Care Services: Medi-Cal Eliminate full-scope Medi-Cal benefits for certain immigrants. Adopt the Governor’s proposal to eliminate full-scope benefits for adult newly qualified immigrants and PRUCOLs. As an alternative, benefits could be eliminated prospectively. 1-23-10
See Detail  Department of Health Care Services: Medi-Cal Expand anti-fraud activities. Adopt the proposed General Fund savings of $21.7 million associated with the antifraud activities focused on physicians and pharmacies. We do not recommend the approval of any additional staff to conduct these activities. 1-23-10
See Detail  Department of Health Care Services: Medi-Cal Roll back rate increase for family planning services. Reduce General Fund expenditures by $15.4 million in 2010-11, given the state’s fiscal difficulties. 1-23-10
See Detail  Department of Health Care Services: Medi-Cal Caseload likely overstated in current year. Reduce 2009-10 General Fund expenditures in Medi-Cal by $35 million to reflect the likely overstatement of the current-year caseload. 1-23-10
See Detail  Department of Developmental Services Title XX block grant. Conform to DSS, since the Title XX block grant is budgeted in DSS. There would be no impact from this fund shift on DDS programs and services. 1-22-10
See Detail  Department of Developmental Services Extend the 3 percent provider payment reduction. Recommend Legislature approve an extension of the 3 percent provider payment reduction. Given the state's fiscal condition, we think this is a reasonable proposal. 1-22-10
See Detail  Department of Health Care Services: Medi-Cal Budget assumes savings from unspecified cost containment strategies. Withhold recommendation until the administration provides a detailed proposal for implementing these cost containment measures. 1-22-10
See Detail  Department of Health Care Services: Medi-Cal Eliminate adult day health care. Adopt the Governor’s proposal to eliminate the ADHC benefit due to the state's continuing poor fiscal situation and the need for immediate savings. We further recommend that the Legislature direct the administration to develop a savings estimate that incorporates DHCS’ administrative savings and fully identifies the cost shifts that would result from the elimination of ADHC. 1-22-10
See Detail  Department of Health Care Services: Medi-Cal Defer institutional provider payments. Deny the Governor's request to defer institutional provider payments in the current year because the implicit cost of this deferral is too high due to the prompt pay penalty. The Legislature may wish to consider this option at a later time in the budget year when it is unlikely that the state would face such a penalty. 1-22-10
See Detail  Department of Mental Health Ballot measure to amend the Mental Health Services Act (Proposition 63). Recommend the Legislature consider options such as this one to increase its flexibility to respond to the state's fiscal crisis. 1-22-10