September 12, 2000
The Honorable Board of Supervisors
County of Los Angeles
383 Kenneth Hahn Hall of Administration
500 West Temple Street
Los Angeles, CA 90012
Dear Supervisors:
15. Approve an appropriation adjustment transferring $60,000,000 from the General Fund Designation for Health (1999-00 Tobacco Settlement revenues) to the Department of Health Services= (DHS) budget, making other cost and revenue changes related to the 1115 Waiver Medicaid Demonstration Project (AWaiver@) extension, and transferring $106,431,000 from DHS= budget to the DHS designation.
Consistent with conducting the 1999-00 fiscal year closing, this office and the Auditor-Controller have identified an additional $108,997,000 in available fund balance in the General Fund. As part of the Auditor-Controller=s Supplemental Budget Resolution (also on the September 12, 2000 Board agenda), the Auditor-Controller is recommending allocating this additional fund balance to the Appropriation for Contingencies. This letter reflects this office=s recommendations for use of these funds.
With regards to DHS, the recommendation will effectuate an additional $60.0 million in County contribution and $46.4 million in net additional appropriation and revenue changes associated with the negotiated 1115 Waiver extension. This will result in the use of $66.5 million, including $3.1 million in additional capital projects funding, to balance DHS= budget, and the reallocation of $106.4 million in funding to the DHS designation.
Capital Projects: The recommended projects, totaling $87,174,000, were identified through consultations among this office, affected departments, and Board offices. As reflected in the attached appropriation adjustment, $62,355,000 is recommended from the Appropriation for Contingencies for specific one-time, high priority capital project needs. An additional $26,069,000 in funding is recommended from: 1) the Designation for Health [1999-00 Tobacco Settlement revenue] ($12,000,000); 2) miscellaneous revenues ($1,850,000); 3) surplus bond proceeds revenue ($1,522,000); 4) the Designation for Budgetary Uncertainties ($1,197,000); 5) the Criminal Justice Facilities Temporary Construction Fund ($4,250,000); and 6) the Courthouse Construction Fund ($4,000,000).
Identified projects include replacements, refurbishments, or design needs for the East Los Angeles Civic Center, Sheriff stations, parks, courts, MacLaren Children=s Center, libraries, and probation camps. Also included is funding for: historic renovation and/or seismic retrofit at the El Pueblo, Patriotic Hall and Harbor/UCLA facilities; the Internal Services Data Center architectural program; improvements at the Pomona Fairplex facilities; general improvements countywide for unreinforced masonry buildings; and soil remediation activities.
Appropriation adjustments within the Courthouse Construction Fund and the Criminal Justice Facility Temporary Construction Fund are recommended to properly account for $8,250,000 in funding for court projects and $1,250,000 in funding for improvements to the Santa Monica Court.
The establishment of a new capital project for the Acton/Aqua Dulce Library reflects the high level of need for library services in this remote area of the County. The project entails the design and construction of a 5,500 square foot facility. Project programming will commence upon establishment of the capital project.
An appropriation adjustment for $627,000 within the LAC+USC Replacement Fund will reappropriate fund balance carried over from 1999-00 to the LAC+USC Medical Center Replacement Project.
Extraordinary Maintenance: A total of $28,354,000 is recommended for extraordinary maintenance needs, continuing the centralized program begun in 1998-99. The recommended funding is from the Appropriation for Contingencies and includes $15,854,000 for high priority deferred maintenance and $12,500,000 for FEMA-related projects, including completion of earthquake repairs on uninsured buildings. In addition, $6,000,000 in high priority deferred maintenance projects for the courts will be financed by existing revenue within the Criminal Justice Temporary Construction Fund.
Project and Facility Development: A total of $1,000,000 is recommended from the Appropriation for Contingencies to fund specialized County services and consultant activities related to capital projects which are under development, such as park facility assessments, master calendar development, and needs assessments, as well as improvements to County facilities implemented by other agencies. Of the recommended allocation, $250,000 will be allocated to fund the County=s share of the Los Angeles Civic Center Partnership=s efforts to coordinate the planning and development of civic center governmental facilities.
Information Technology Infrastructure Fund: A total of $12,451,000 is recommended for general and specific information technology needs indicated below. The allocations are as follows:
-- $5,000,000 for the review and upgrades to various Auditor-Controller financial systems, to build a reporting database, and implement a suite of report writing tools which will maximize customer access to information;
-- $2,900,000 for an upgrade to the network infrastructure within the Hall of Records to support all of the new applications, consistent with the County standard for multi-tenant buildings;
-- $2,000,000 to begin the review and design of the Department of Children and Family Services= Automated Health Care Passport System, improving the quality and timeliness of health care delivery and other services to children in foster care; and
-- $2,551,000 to increase the General Fund=s contribution to the Information Technology Infrastructure Fund to $8,000,000 for fiscal year 2000-01.
Within the Information Technology Infrastructure Fund, we are also recommending that $6,695,000, which was placed in the Designation for Infrastructure Growth by the Auditor-Controller at the close of the 1999-00 fiscal year, be transferred to Services and Supplies primarily for projects already approved by the Board, but not completed during 1999-2000. In accordance with existing Board policy, all projects over $100,000 will continue to be presented to the Board for specific approval.
Designation for Public Works= Permits Tracking System: We are recommending $4,637,000 from the Appropriation for Contingencies be transferred to a newly established Designation for Public Works= Permits Tracking System. This funding was generated in 1999-00 from a one-time increase in building and plan check revenues by the General Fund Public WorksBCounty Engineer budget. The establishment of the designation will allow the Department of Public Works (DPW) to reserve these one-time surplus fees for the replacement of the Development and Permits Tracking System (DAPTS).
DAPTS has been used by DPW since 1994 for automated permit processing, plan tracking, and fee processing. It is now necessary to replace the current system to more efficiently and effectively monitor these activities.
Other Ministerial Actions: The following are recommended:
B Assessor: An appropriation adjustment is recommended within the Office of the Assessor transferring $685,000 from Other Charges to Services and Supplies to provide for the reclassification of a building lease expenditure.
B Community Based Contracts: A total of $200,000 is recommended from the Appropriation for Contingencies to provide for the carryover of additional Board discretionary contracts funding not fully expended in fiscal year 1999-00.
B Provisional Financing Uses (PFU): A total of $2,650,000 is recommended to be transferred from PFU for the following purposes:
$ Probation: Allocate $1,900,000 to fully fund the Adult Restructuring Program.
$ Sheriff: $750,000 to fund operations of the Office of Independent Review for fiscal year 2000-01.
$ Rampart: Allocate $0.5 million of the total $11.3 million previously appropriated by the Board for Rampart-related expenses of the District Attorney, Alternate Public Defender, and Public Defender; this allocation addresses expenses associated with the review of cases handled by indigent defense contractors.
Our funding recommendations for the use of available funding total $108,997,000, utilizing the balance in the Appropriation for Contingencies. In addition, $7,350,000 remains unallocated within the Provisional Financing Uses budget which is available for the Board=s priorities.
Department of Health Services: On June 27, 2000, the County concluded negotiations with State and Federal agencies regarding the County=s waiver extension. On June 30, 2000, the Federal Health Care Financing Administration (HCFA) issued a letter indicating they anticipated reaching resolution on the special terms and conditions (T&C) and issuing an award letter in the near future to extend the Waiver, and that it will be effective July 1, 2000. Finalization of the T&C is still pending.
One of HCFA=s principal objectives was to end the County=s receipt of Federal funds through the Waiver. Under the terms of the five-year Waiver extension, Federal funding will be gradually reduced after the initial year, fiscal year 2000-01. Additionally, the negotiations resulted in a number of changes in County, State and federal financing elements for DHS, requires additional expenditures to satisfy the T&C, and imposes monetary sanctions if certain performance standards are not met during the five-year extension period.
The attached appropriation adjustment incorporates changes related to the first year of the Waiver extension, and with the changes below DHS is financed within that available funding, less $4.3 million for capital projects related to DHS. Programmatic changes recommended to DHS= Adopted 2000-01 Budget are:
Waiver Expansion Projects Cost: Includes Waiver Expansion Projects to help ensure revenues are maximized and the T&Cs are met to avoid Waiver performance sanctions. These projects include: a 11 percent rate increase for PPP clinics effective January 1, 2001; expansion of the Clinical Pathways and Disease Management Clinical Resource Management (CRM) programs; development and implementation of Health Insurance Portability and Accountability Act (HIPAA) and Itemized Data Collection (IDC) systems; review, update, and augment cost-allocation mechanisms; expansion of outreach; and implementation of the first phase of simplified financial screening. The total funding required in 2000-01 for these projects is $28.6 million, which also adds 165.6 budgeted positions.
Revenue Changes: Increases net funding for ambulatory care by $54.2 million, including implementation of Cost-Based Reimbursement Clinic status for all outpatient clinics and a Medi-Cal rate increase for emergency room visits pursuant to the Waiver negotiations.
Other Cost Changes: Decreases appropriations for ongoing operational needs by $9.4 million, including additional reengineering savings and implementation of the Department=s Austerity Program pursuant to the Waiver Negotiations.
One-Time Revenue Changes: Includes an increase of $33.3 million in funding over the estimate included in the 2000-01 Adopted Budget, and a transfer of $13.0 million from the Community Health Plan (CHP) Trust Fund for use as operational funding on a one-time basis pursuant to the Waiver negotiations.
Miscellaneous Changes: Includes the redirection of $106.4 million net funding to the DHS SB855 Enterprise Fund from various cost and revenue changes associated with the 1115 Waiver extension. This change, in addition to the $33.3 million increase in funding, brings the increase to the DHS SB855 Enterprise Fund from the 2000-01 Adopted Budget to $139.7 million and the total amount in the designation available for future years to $195.8 million.
Included in the County financing elements, and also recommended in the attached appropriation adjustment, is an additional $60.0 million in County contribution, above DHS= maintenance-of-effort requirement, from the County General Fund Designation for Health (1999-00 Tobacco Settlement revenue) that the County committed to provide during Waiver negotiations. This funding brings the total amount of County General Fund available for DHS to $533.2 million for Fiscal Year 2000-01.
In addition to the $60.0 million in additional annual County Contribution from Tobacco Settlement funds, the County committed to providing another $100.0 million in additional County Contribution over the five-year extension period ($20.0 million per year). However, adding another $20.0 million in County Contribution to the 2000-01 Final Adopted Budget would only have had the effect of increasing the $195.8 million in the DHS designation by that same amount. Since DHS is currently projected (absent any new revenue sources) to have significant operating deficits in subsequent years as Waiver revenues decline, we are recommending the commitment be achieved by Aramping-up@ this additional County Contribution by $10.0 million per year over each of the next four years (to $10.0 million, then $20.0 million, etc.).
These recommendations appropriate additional 1999-00 carryover savings identified in the book closing primarily for one-time capital project and infrastructure needs. The Health Services recommendation uses 1999-00 Tobacco Settlement revenues of $60.0 million to increase the Department's net County cost, makes net increases in revenues of $67.0 million and appropriations of $20.6 million associated with the negotiated 1115 Waiver extension, and sets aside $106.4 million ($60.0 million + $67.0 million - $20.6 million) in the DHS Designation for future years.
Financing for all recommendations is available in the Appropriation for Contingencies, the designation accounts, and the special funds budgets, as appropriate.
Not applicable.
Adoption of these recommendations would allow your Board to:
-- Address high priority capital needs as well as long-delayed and critical physical infrastructure needs;
-- Implement the initial year of the five-year 1115 waiver for DHS and make other necessary adjustments in the Department=s budget.
B Address high priority infrastructure improvements and telecommunication and information technology needs, including the access to financial information and improvements in the quality and timeliness of services to children in foster care.
Respectfully submitted,
DAVID E. JANSSEN
Chief Administrative Officer
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Attachments
c: All Department Heads