Calculating Fiscal Impact of Realignment, Mandates no Easy Task

Shifts in authority don’t always bring the dollars

By John Howard

As the state shifts more and more responsibility to local governments, disputes over the size of the tab and who picks it up are growing. 

In theory, the transfer of state authority to the locals, such as in the $6.3 billion realignment program in which some state prisoners are sent to county lockups and myriad services are shifted to the counties, is supposed to be a wash, or revenue neutral. 

In fact, the counties say they are getting less than they bargained for. 

On health care, as patients get moved to federally funded Medi-Cal under the Affordable Care Act, the state intends to scale back commensurately on how much goes to the locals for providing care to those patients. In theory, it sounds logical. In reality, however, perhaps not. 

And a variety of state mandates requiring local funding – the recent flap over the locals’ costs associated with the Public Records Act, for example – tap scarce local resources.

“What we’re saying is ‘Give us the funding, don’t gyp us,” said Orange County Supervisor John Moorlach, who said the combination of state-ordered programs and an increasing number of mandates from Sacramento are taking a toll. “If you’re going to realign, then be fair. Be fair that we have enough resources to handle your inmates and enough to handle health care, to reduce costs in the future so we can invest in ourselves as opposed to the state sweeping it out.”

“Every year, it’s one thing on top of another,” he added. “It kind of stacks up, and it’s extremely difficult.”

Matt Cate, the top executive at the California State Association of Counties, says the state’s 58 counties and the Brown administration are negotiating through their differences and are making progress. In health care, the counties and the state agreed to local options as the ACA kicks in, he noted. In one, the counties could set aside their public health funding, then return 80 percent of it to the state, while retaining 20 percent. In the second option, there would be a straight 60-40 split.

Billions of dollars are at stake.

“For most counties, this would be a fair deal,” Cate said. “But no one knows yet how this health care piece is going to play out for sure. We don’t know how fast these people are going to Medi-Cal. Until that shakes out, it is going to be difficult to know if this financial transaction part of the ACA was done that perfectly.”

The stakes are just as high in the correctional realignment, which lawmakers and the governor approved in 2011.

“In terms of public safety, counties got a little over $1 billion in funding for housing and supervising offenders that were formally a state responsibility,” he said. “But we know that counties are getting far less dollars than the state was spending previously.”

“My agency,” added Cate, who formerly ran the state prison system, “spent more on handling these offenders than the counties are receiving, and that was at a time when the state (budget) was $25 billion upside down.”

But it’s difficult to get to the bottom line on costs because there are other, less visible benefits to the locals, the state notes. 

“As a result of realignment, a large portion of adult felony probationers who are revoked or commit new crimes (49.5 percent) now serve their sentences in county jails instead of prison.  Consequently, it can be inferred that a similarly large percentage of the revocations and new crimes prevented as a result of SB 678 (a 2009 bill authored by Sen. Mark Leno, D-San Francisco) are also generating savings at the county level due to reduced sentences and time served in county jails,” the state Finance Department noted.  

The Finance Department’s latest estimates show some $140 million in funding for the counties, plus about 15,000 felony probationers who otherwise would have been in custody.

The state also saves money because of a change to what is called “standardized staffing” from the previous system of fixed-ratio staffing, which required at least one officer for every half-dozen inmates. “Standardized staffing allows for the inmate density to range from 100 to 160 percent of design capacity without the need to adjust the number of correctional officers,” the state said.

Big-ticket issues such as corrections and health care are not the only state-ordered programs confronting the locals. Still to be calculated are the costs of ensuring that state inmates in local custody obtain health care coverage after the first of the year, when the ACA gets under way. 

A series of smaller, but still costly, programs known as “state mandates” have bedeviled the locals for decades and more mandates are coming to light all the time. A separate panel known as the Commission on State Mandates – an obscure body virtually unknown outside the Capitol — was set up to decide what constitutes a mandate and what doesn’t, and to determine who should pay for it: the locals or the state. 

A review by the Legislative Analyst’s Office of “newly identified mandates” that require local spending included a half-dozen dealing with domestic violence background checks, identity theft and voter identification procedures, among others. 

The LAO report noted several other mandates for which the Brown administration had proposed a suspension in funding, including the California Public Records Act, or CPRA, which captured the most public attention and which costs millions of dollars a year to comply with public’s request for documents. The administration, amid complaints from the media and good-government groups, later restored funding for the CPRA.

The LAO noted that the Commission on State Mandates “has yet to issue a statewide cost estimate (and) the annual state cost of funding the CPRA mandate is uncertain. However, given the breadth of activities required by the CPRA mandate and the number of local governments affected, we estimate that the annual state costs could reach the tens of millions of dollars.”

Getting reimbursed for the cost of the mandates is a major issue for the locals, who must have their requests approved by the Commission on State Mandates.

“And that can take seven to 14 years,” Cate said.

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