Oct. 18, 2018

The Legislative Analyst’s Office (LAO) released a report Monday titled Rethinking the 1991 Realignment. This report analyzes whether 1991 Realignment is currently meeting the original intent of aligning the finances, responsibilities, and risks associated with providing social services, health, and mental health services at the local level. The report also offers potential solutions for improving 1991 Realignment.

The LAO has been working on this report for nearly two years and consulted with CSAC, county affiliates, and numerous counties during their research and drafting of the report. Their mission is to inform the Legislature on contemporary policy issues, and the enactment of the 2017 In-Home Supportive Services (IHSS) Maintenance of Effort (MOE) prompted them to focus on the structure of 1991 Realignment.

Overall, the report concludes that 1991 Realignment is no longer meeting some of the key LAO Realignment principles. Specifically, the LAO cites the following principles as a necessary foundation for any realignment of programs and services from the state to counties:
 

• Counties’ share of costs reflect their ability to control costs in the program.
• Revenues generally cover costs over time.
• Flexibility to respond to changing needs and requirements.
• Funding is transparent and understandable.

The report details how policy changes, increased service requirements, growing caseloads, and additional program requirements have led to their conclusion. The LAO also dedicates significant analysis to IHSS  and how state and federal policy changes and caseload growth have changed the program dramatically since 1991. The report identifies IHSS as the main factor in why 1991 Realignment revenues are no longer sufficient to cover counties’ share of costs for social services programs. The report concludes that it is not clear if the funding for 1991 Realignment health and mental health programs is properly aligned with program responsibilities. Staff were unable to provide a comprehensive analysis because county spending on these services varies widely, information is not readily available in a common format, and revenues are allocated by a formula instead of related to actual costs.

For solutions, the LAO identifies three pathways for improving 1991 Realignment so that it can more closely match the original intent and identified LAO principles:
 

1. Change Cost-Sharing Ratios – The LAO outlines an option to reduce the county share of cost for certain programs and to replace those costs with a share of cost for a program that counties would have more discretion in controlling costs. The LAO notes that it makes sense to reduce the county share of cost for IHSS as counties’ ability to control program costs has been constrained or altered since 1991. They recommend replacing that reduced cost with a county share of cost in felony forensic court commitments, an idea that counties have opposed in the past.
2. Better Align Revenues and Costs – The LAO includes some suggestions to alter Realignment funding allocations. These include shifting growth funding for the Family Support and Child Poverty subaccounts to the Health and Mental Health subaccounts and reducing the funding in the Family Support and Child Poverty subaccounts and redirecting it to the Social Services subaccount.
3. Other Improvements to Align to Principles – The final set of options include changes that may better align 1991 Realignment with the LAO’s identified principles. These include applying lessons from 2011 Realignment to 1991 Realignment (constitutional mandate protections, base restoration, simplified funding transfers), tracking Realignment revenues and costs, encouraging reserves, and considering the long-term impact of policy decisions.

This LAO report is timely and relevant as counties throughout the state are currently confronting these challenges and there is the potential for action on this issue in the 2019 legislative session. As counties are aware, the 2017 budget legislation that established the new IHSS MOE requires the Department of Finance (DoF) to issue a report in the January 2019 Budget that includes findings and recommendations on 1991 Realignment revenues, IHSS program growth, the impact on public health and mental health programs, and the status of IHSS collective bargaining. CSAC and counties have engaged with the Department of Finance in recent months related to this DoF reopener report.

The LAO report provides a comprehensive analysis that can be helpful as the Administration, the Legislature, counties and other stakeholders work together to identify sustainable pathways for counties to successfully deliver realigned services, including IHSS and other critical programs, on behalf of the state.

For more information on the IHSS MOE, please visit the CSAC IHSS MOE page.