The 2020-21 Budget: Department of Social Services

The 2020-21 Budget: Department of Social Services Summary The DSS Administers Several Major Human Services Programs. California’s Department of Social Services (DSS) administers a number of human services programs that provide a variety of benefits to the state’s residents. These include income maintenance for the aged, blind, or disabled; cash assistance and employment services for low-income families with children; protecting children from abuse and neglect; and providing home care workers who assist the aged and disabled in remaining in their own homes. This brief provides information, analysis, and key issues to consider in evaluating the Governor’s 2020-21 budget proposals for the major programs in DSS. Governor’s Proposals for IHSS and SSI/SSP Program Appear Reasonable. We have reviewed the administration’s 2020-21 budget proposals for the In-Home Supportive Services (IHSS) and the Supplemental Security Income/State Supplementary Payment (SSI/SSP) programs. Overall, we find the administration’s proposals—primarily related to increases in caseload and cost per case—to be reasonable at this time. We will continue to monitor IHSS and SSI/SSP programs and update the Legislature if we think any changes to the caseload and budgeted funding levels should be made. Governor’s Proposals for CalWORKs Appear Reasonable. We have reviewed the administration’s 2020-21 budget proposals for California Work Opportunity and Responsibility to Kids (CalWORKs), which includes a 3.1 percent grant increase triggered and funded by growth in certain local revenues. Overall, we find the administration’s proposals to be reasonable at this time. Governor Continues to Implement Continuum of Care Reform (CCR). The Governor’s budget proposes funding in 2020-21 to continue to implement CCR in the state’s foster care system. At a high level, CCR aims to reduce reliance on long-term group home placements and increase the utilization and capacity of home-based family placements for youth in the foster care system. While the Governor’s proposal for CCR does not include any major policy changes, it does reflect more up-to-date estimates of the costs of CCR implementation—including the expiration of certain temporary funding augmentations for the counties. We provide background on CCR, highlight recent implementation progress and challenges, describe the Governor’s funding proposal and changes in funding from 2019-20 to 2020-21, and raise issues and questions for legislative consideration. Proposed Deposit of $750 Million in CAAHS, Which Is Overseen by DSS, Discussed in Separate Report. In January, the Governor issued an executive order establishing the California Access to Housing and Services (CAAHS) Fund. The Governor envisions that the fund, overseen by DSS, will collect future state appropriations, as well as contributions from other governments and private sources, to fund various activities aimed at curbing homelessness. Days after the Governor issued his executive order, the Governor proposed in his 2020-21 budget to deposit $750 million General Fund in one-time funding into the CAAHS Fund. We discuss this proposal in detail in our report The 2020-21 Budget: The Governor’s Homelessness Plan. GABRIEL PETEK LEGISLATIVE ANALY ST FEBRUARY 24, 2020 analysis full gutter 2020-21 BUDGET IHSS BACKGROUND Counties’ Share of IHSS Costs Is Set in Statute. Historically, counties paid 35 percent Overview of the IHSS Program. The IHSS of the nonfederal—state and county—share program provides personal care and domestic of IHSS service costs and 30 percent of the services to low-income individuals to help them nonfederal share of IHSS administrative costs. remain safely in their own homes and communities. Beginning in 2012-13, however, the historical In order to qualify for IHSS, a recipient must be county share-of-cost model was replaced with aged, blind, or disabled and in most cases have an IHSS county maintenance-of-effort (MOE), income below the level necessary to qualify for the meaning county costs would reflect a set amount SSI/SSP cash assistance program (for example, of nonfederal IHSS costs as opposed to a certain about $940 a month for an aged and/or disabled percent of nonfederal IHSS costs. individual living independently in 2019-20). IHSS recipients generally are eligible to receive up to BUDGET OVERVIEW AND 283 hours per month of assistance with tasks LAO ASSESSMENT such as bathing, dressing, housework, and meal preparation. Social workers employed by The Governor’s budget proposes a total of county welfare departments conduct an in-home $14.9 billion (all funds) for IHSS in 2020-21, which assessment of an individual’s needs in order to is about $1.7 billion (13 percent) above estimated determine the amount and type of service hours expenditures in 2019-20. General Fund costs to be provided. In most cases, the recipient is are estimated to be $5.2 billion in 2020-21, a net responsible for hiring and supervising a paid IHSS increase of $712 million (16 percent) compared provider—oftentimes a family member or relative. to estimated 2019-20 levels. The year-over-year The average number of service hours that will be net increase in IHSS General Fund expenditures provided to an estimated 586,000 IHSS recipients primarily is due to caseload growth, increased is projected to be 114 hours per month in 2020-21. wage costs (including the state minimum wage), IHSS Receives Federal Funds as a Medi-Cal and the IHSS county MOE offsetting a smaller share Benefit. The IHSS program predominately is of IHSS costs. In this analysis, we discuss some of delivered as a benefit of the state federal Medicaid the main components of the Governor’s proposed health services program for low-income populations budget for IHSS and note any issues with them. (known as Medi-Cal in California). As a result, IHSS is subject to federal Medicaid rules, including the Primary Drivers of federal reimbursement rate of 50 percent of costs Increased Costs in IHSS for most Medi-Cal recipients. The state receives an Caseload growth, a rising number of paid hours enhanced federal reimbursement rate—93 percent per case, and wage increases for IHSS providers in calendar year 2019 and 90 percent in calendar are key drivers of increasing IHSS costs. In this year 2020 and beyond—for individuals that became section, we describe these trends and how these eligible for IHSS as a result of the Patient Protection cost drivers affect the Governor’s 2020-21 budget and Affordable Care Act (about 3 percent of IHSS proposal for IHSS. recipients). Additionally, about 45 percent of IHSS Increasing Caseload. The average monthly recipients, based on their relatively higher assessed caseload for IHSS increased 30 percent over the level of need, qualify for an enhanced federal past ten years, from about 430,000 in 2009-10 to reimbursement rate of 56 percent, referred to as an estimated 560,000 in 2019-20. Historically, the Community First Choice Option. Overall, the the caseload fluctuated year-to-year, increasing at effective federal reimbursement rate for IHSS is most by 5.6 percent in 2016-17 and decreasing by about 54 percent. The remaining IHSS costs are as much as 4 percent in 2013-14. More recently, paid for by counties and the state. 2 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET average year to year IHSS caseload growth has 2018-19 average hours per case. To the extent remained at about 5 percent and is expected to that, similar to the prior years, the average hours continue growing at a similar rate in 2020-21. per case grow in 2019-20 and 2020-21 (by about Specifically, the 2020-21 budget projects that IHSS 2 percent annually), the combined General Fund caseload will increase to 586,000—4.5 percent costs for IHSS in 2019-20 and 2020-21 could be above 2019-20 caseload estimates. The reasons roughly $200 million higher than estimated in the for the steady caseload growth in recent years are Governor’s budget. We will continue to monitor not completely understood, but could be related to the data related to average hours per case in the growth in California’s senior population (adults preparation for the May Revision. aged 65 and older). We have reviewed the caseload State and Local Wage Increases. In addition projections in light of actual caseload data available to increasing caseload and paid hours per case, to date and do not recommend any adjustments at provider wage increases have contributed to this time. increasing IHSS costs. Since 2009-10, the average Increasing Paid Hours Per Case. Over the past hourly wage for IHSS providers increased by ten years, the average number of monthly hours per 30 percent, from $9.90 to an estimated $12.91 in case for IHSS has increased by 29 percent, from 2019-20. (This average IHSS wage reflects the about 87 paid hours in 2009-10 to an estimated base hourly wages for IHSS providers averaged 112 paid hours in 2019-20. Between 2009-10 and across all counties.) IHSS provider wages generally 2012-13, average paid hours per case remained increase in two ways—(1) increases that are in relatively flat—at around 87 hours. However, response to state minimum wage increases, and between 2013-14 and 2018-19, average paid hours (2) increases that are collectively bargained or per case increased by 22 percent—from 92 hours established at the local level. to 112 hours. The growth in average paid hours per The Governor’s budget includes $524 million case reflects, in part, a series of policy changes. General Fund ($1.1 billion total funds) in 2020-21 For example, in 2015-16 the state implemented for the combined impact of recent state minimum the federal requirement that IHSS providers be wage increases and local wage increases. Here we compensated for previously unpaid work tasks, describe the estimated impact of state minimum such as time spent waiting during their recipient’s wage and local wage increase. medical appointments. Additionally, similar to the • State Minimum Wage Increase. We estimate increase in the caseload, as the IHSS population that about 40 percent of the increase in ages, there may be an increasing number of more wage costs in 2020-21—roughly $220 million complex IHSS cases that typically require more General Fund—are attributable to the recent service hours. For example, as recipients live state minimum wage increases on IHSS longer, they may develop more severe needs and provider wages from $12 per hour to $13 per require an increasing amount of IHSS service hours. hour on January 1, 2020 and the scheduled In recent years, absent major policy changes, increase from $13 per hour to $14 per hour average hours per case have steadily increased on January 1, 2021. The General Fund costs annually by an average of 2 percent. associated with state minimum wage increases The Governor’s budget estimates that the in 2020-21 are less than the estimated average hours per case will be roughly the same 2019-20 costs. We estimate that this is in 2019-20 as they were in 2018-19 (112 hours) because the average wage increases needed and will then increase slightly to 114 hours in to reach $14 per hour ($0.35 average wage 2020-21. We have reviewed the estimates of increase) is expected to be less than the wage average hours per case in light of actual hours per increase needed to reach $13 per hour in 2020 case data available to date. While we do not raise ($0.42 average wage increase). This is primarily any major concerns at this time, based on recent due to locally established wage increases growth trends in hours per case, the average hours making it so that average IHSS base wages are per case in 2019-20 likely will be higher than (as closer to the to $14 per hour state minimum opposed to remain roughly the same as) actual www.lao.ca.gov 3 analysis full gutter 2020-21 BUDGET wage level in 2020-21 than they were to the Fund to restore IHSS service hours, but also $13 per hour state minimum wage level in included legislation that allowed for a possible 2019-20. We explain this in more detail next. suspension on December 31, 2021 (depending • Local Wage Increase. We estimate that the on whether General Fund revenues are expected remaining roughly 60 percent of the estimated to exceed General Fund expenditures). The increase in wage costs in 2020-21—roughly Governor’s budget continues to use General Fund $305 million General Fund—is attributable to to restore IHSS service hours, but delays the wage increases established by counties above possible suspension by 18 months until July 1, the state minimum wage, largely as a result of 2023. While the determination of the suspension collectively bargained agreements. Historically, actually taking effect will be determined in the the nonfederal costs of locally established future, the Department of Finance (DOF) currently wage increases generally were shared assumes in its multiyear budget estimates that the between the state and counties. However, suspension will be operative starting in 2023-24. the 2017-18 budget package made some This could change if revenue estimates increase changes that shifted what otherwise would sufficiently in the future. (Historically, the restoration have been county wage costs to the state. was statutorily tied to the existence of the For example, counties can establish a “local managed care organization [MCO] tax. The MCO wage supplement,” resulting in local IHSS tax expired at the end of 2018-19. Even though wages always exceeding the state minimum the administration is continuing the 7 percent wage by a specified amount. As previously restoration for 2020-21, the statutory language mentioned, locally established wage increases, linking the restoration to the MCO tax remains.) like wage supplements, have the effect of Medi-Cal Expansion to reducing the difference between the current Undocumented Seniors wage in a particular county and the new state minimum wage. This then reduces the state The Governor’s budget proposes to extend cost of reaching the new state minimum wage. full-scope Medi-Cal coverage to income-eligible However, wage supplements shift additional undocumented immigrants aged 65 years and older costs that are above the state minimum wage beginning on January 1, 2021. Given that IHSS is a level to the state, which prior to 2017-18 service provided through full-scope Medi-Cal, this would have been county costs. As of also would have the effect of expanding the number January 1, 2020, the state has approved local of people eligible for IHSS. The administration wage supplement provisions in 21 counties, an projects that IHSS caseload would increase, on increase of 10 counties since January 1, 2019. average, by 968 cases in 2020-21, increasing to roughly 4,600 cases in 2021-22. The administration We are currently working with the administration estimates the costs of this proposal to be $5.9 million to refine these cost estimates. We will provide in 2020-21, increasing to $120 million in 2021-22. an update as needed on the costs estimates for While we do not raise any major concerns with both state minimum wage increases and locally the 2020-21 caseload and costs estimates, established wage increases as we continue to out-year costs could come in lower if newly eligible gather information. undocumented seniors enroll in IHSS at a slower rate Continues Restoration of than what is currently assumed by the administration. IHSS Service Hours by 7 Percent Implementation of Paid Sick Leave The Governor’s budget includes $402 million Pursuant to Chapter 4 of 2016 (SB 3, Leno), General Fund to continue the 7 percent restoration IHSS providers became eligible to receive eight of IHSS service hours in 2020-21. The state has hours of paid sick leave beginning in 2018-19. The relied on the General Fund to fund the restoration maximum amount of accrued paid sick leave hours of IHSS service hours since 2016-17. The will increase to 16 hours annually on July 1, 2020 2019-20 budget continued to use the General 4 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET and ultimately will increase to 24 hours annually share-of-cost model was replaced with an IHSS on July 1, 2022 (after the state minimum wage county MOE. In 2017-18, the IHSS county MOE reaches $15 per hour). In general, providers must financing structure was revised, ultimately resulting first work a certain number of hours to be eligible in higher IHSS county MOE costs. When this to receive and use their paid sick leave hours. change was made, realignment revenues were not The 2020-21 budget includes $53 million General enough to cover total county IHSS costs. Moreover, Fund for paid sick leave costs, nearly double the in January 2019, DOF released a report finding that estimated paid sick leave costs in 2019-20. This 1991 realignment revenues would not be enough to largely is due to the maximum amount of accrued cover IHSS county MOE costs in the long run. To paid sick leave hours that a provider may be eligible address this problem, the 2019-20 budget made a to receive doubling in 2020-21—from 8 hours in number of modifications to the IHSS county MOE, 2019-20 to 16 hours in 2020-21. including rebasing the IHSS county MOE costs The budget assumes that 75 percent of to a lower amount in 2019-20—from $2 billion to IHSS providers—421,541 in 2019-20 and $1.5 billion—and lowering the annual adjustment 438,477 in 2020-21—will accrue and use the factor from up to 7 percent to 4 percent. (The new maximum amount of paid sick leave. While we do IHSS county MOE would still increase annually not raise any major concerns at this time, paid sick by the counties’ share of costs from locally leave costs could come in lower than estimated established wage increases.) The changes to the if fewer IHSS providers utilize paid sick leave or if MOE resulted in better aligning county IHSS costs providers use a lower than estimated amount of with realignment revenue. Overall, these changes paid sick leave hours in 2019-20 and 2020-21. shifted, on net, roughly $300 million of what otherwise would have been county costs to the Given the very limited availability of utilization state in 2019-20, increasing to roughly $550 million data, we find these budget assumptions reasonable in 2022-23. (For more information on these at this time. These estimates, however, should be changes, please refer to The 2019-20 Budget: revised in May when more data are available to Assessing the Governor’s 1991 Realignment better reflect actual utilization and paid hours of Proposals and The 2019-20 May Revision: Update paid sick leave. We will continue to monitor paid to the Governor’s 1991 Realignment Proposals.) sick leave utilization data relative to current budget assumptions and provide further comments at the State Costs Expected to Increase More Over time of the May Revision if necessary. Time Due to Recent Change in IHSS County MOE. While the change to the IHSS county MOE IHSS County MOE in 2019-20 alleviated some IHSS-related costs pressures for counties, it did so by increasing The Governor’s budget estimates that IHSS costs pressures experienced by the state. As a county MOE costs will increase by $83 million, result, the state is expected to cover a larger share from $1.58 million in 2019-20 to $1.67 million in of nonfederal IHSS costs over time. As shown in 2020-21. Counties generally pay for their share of Figure 1 (see next page), the IHSS county MOE IHSS costs with revenues from 1991 realignment. accounted for 29 percent of total nonfederal IHSS While total IHSS county MOE costs increase costs in 2017-18 and 2018-19, with the state from 2019-20 to 2020-21, the IHSS county MOE covering the remaining 71 percent. However, the is projected to offset a decreasing share of the budget estimates the counties’ share of costs will nonfederal IHSS costs—26 percent and 24 percent, decrease to 26 percent in 2019-20 and 24 percent respectively. This primarily is due to recent changes in 2020-21, resulting in the state’s share of cost made to the IHSS county MOE financing structure. increasing over time—74 percent in 2019-20 Next, we discuss the recent changes to the IHSS and 76 percent in 2020-21. Overall, the fact that county MOE financing structure and overall effects the IHSS county MOE is offsetting a decreasing on state costs. share of IHSS nonfederal costs is a key reason IHSS County MOE Has Evolved Over Time. why the year-to-year increase in state IHSS costs Beginning in 2012-13, the historical IHSS county www.lao.ca.gov 5 analysis full gutter 2020-21 BUDGET (16 percent) is greater than Figure 1 the growth in total IHSS costs State General Fund Expected to Cover (13 percent). Increasing Share of Nonfederal IHSS Costs Update on IHSS Collective Bargaining Provisions. Budget-related legislation 76% enacted in 2017-18 temporarily 71% provided counties and unions State Costs the ability to appeal to the Public Employment Relations Board (PERB) if a bargaining agreement 2017-18a 2018-19a 2019-20 2020-21 over IHSS provider wages and benefits had not been reached by January 1, 2018. As a part of the County Costs 2019-20 budget, this provision was 29% extended to counties and unions 24% that had not reached a bargaining agreement on or after October 1, 2019. Additionally, a county may a Reflects total IHSS county maintenance-of-effort minus temporary General Fund assistance. be subject to financial penalties IHSS = In-Home Supportive Services. if an agreement is not reached under certain conditions—such as if an agreement is not reached unions more than counties. We understand that, thus following the completion of the fact-finding process far, one county has been subject to a withholding that issues recommended settlement terms that favor of 1 percent of 1991 realignment funds. These provisions are set to expire by January 1, 2021. SSI/SSP The SSI/SSP program provides cash grants to for SSI/SSP are determined by both the low-income aged, blind, and disabled individuals. federal government and the state. The federal The state’s General Fund provides the SSP portion government, which funds the SSI portion of the of the grant while federal funds pay for the SSI grant, is statutorily required to provide an annual portion of the grant. Total spending for SSI/SSP cost-of-living-adjustment (COLA) each January. grants is estimated to remain relatively flat at This COLA increases the SSI portion of the grant $9.7 billion in 2019-20 and 2020-21. This largely by the Consumer Price Index for Urban Wage is due to the effects of estimated caseload decline Earners and Clerical Workers (CPI-W). In years that (1.8 percent in 2020-21) being partially offset by the CPI-W is negative (as was the case in 2010, increased federal expenditures resulting from the 2011, and 2016), the federal government does estimated annual increases to the federal SSI grant. not decrease SSI grants, but instead holds them Of this total, the Governor’s budget proposes about flat. The state has full discretion over whether and $2.7 billion from the General Fund in 2020-21, how to provide increases to the SSP portion of the which is $44 million less than updated 2019-20 grant. Until 2011, the state had a statutory COLA. General Fund cost estimates. Despite the state statutory COLA, there were many years when the COLA was not provided due to Background on SSI/SSP Grants budget constraints. As part of the 2016-17 budget Both the State and Federal Government package, the Legislature provided a COLA of Contribute to SSI/SSP Grants. Grant levels 2.76 percent on the SSP portion of the grant, the 6 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET first since 2005. The Governor’s 2020-21 budget minimum levels in June 2011 and November 2009, proposal does not include an increase to the SSP respectively. Since these reductions, SSP grants for portion of the grant. The 2018-19 budget included individuals and couples have only been increased legislation to provide future annual COLAs to the once—in 2016-17, as described earlier. SSP portion of the grant beginning in 2022-23, to Total Grants Have Been Gradually Increasing the extent that funding is provided in future budget Largely Due to Federal COLAs, but Remain years. Currently, DOF’s multiyear budget projections Below FPL for Individuals. As shown in Figure 3, do not include funding for a COLA to the SSP the maximum SSI/SSP monthly grant amount for grant in 2022-23 and onwards. We estimate that individuals (the bulk of the SSI/SSP caseload) the cost of providing the SSP COLA in 2022-23 and couples have been increasing gradually since (based on an estimated California Necessities Index 2011-12—predominantly due to the provision of of 2.8 percent) would be roughly $70 million. Figure 2 During Constrained Budget Environment, SSP Grants Maximum SSP Grant For Individuals and Couplesa for Individuals and Couples 2000-01 to 2020-21 Reduced to Federally Required Minimum. The state is required $600 to maintain SSP monthly grant 500 Couples levels at or above the levels in 400 place in March 1983 ($156.40 300 for SSP individual grants and 200 Individuals $396.20 for SSP couple grants) in order to receive federal Medicaid 100 funding. As shown in Figure 2, during the most recent recession, 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13 2014-15 2016-17 2018-19 2020-21b the state incrementally decreased a The maximum monthly grants for aged and disabled individuals and couples living in their own households. SSP grants for individuals and b Proposed. couples until they reached these Figure 3 Maximum SSI/SSP Grants for Individuals and Couplesa Compared to Federal Poverty Levelb $1,800 SSP 1,600 SSI Federal Poverty Levelb 1,400 1,200 1,000 800 600 400 200 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 Individuals Couples a The maximum monthly grants displayed refer to those for aged and disabled individuals and couples living in their own households, effective as of January 1 of respective budget year. b Federal poverty guidelines as established by U.S. Department of Health and Human Services, effective as of January 1 of the respective budget year up to 2019-20. www.lao.ca.gov 7 analysis full gutter 2020-21 BUDGET federal COLAs. Despite these increases, however, (1.8 percent). (The actual CPI-W will not be known current maximum SSI/SSP grant levels for until the fall.) The expected increase to the SSI individuals remain below the federal poverty level portion of the grant in 2021 is relatively the same (FPL), while grant levels for couples remain just as the 2020 grant increase (based on 1.6 percent above the FPL. CPI-W), but less than the 2019 grant increase (based on 2.8 percent CPI-W). Governor’s Budget Estimates Figure 4 Caseload Slightly Decreasing. Actual and Projected SSI/SSP Caseload Trends in Governor's Budget The SSI/SSP caseload grew at a rate of less than 1 percent Monthly Caseload each year between 2011-12 and 1,320,000 2014-15. Beginning in 2015-16, 1,300,000 however, SSI/SSP caseload 1,280,000 began to slowly decline at an Actuals 1,260,000 average rate of 1.4 percent each year. Figure 4 shows the 1,240,000 budget projects that caseload will 1,220,000 decrease annually by 1.8 percent 1,200,000 2020-21 Governor’s Projections in 2019-20 and 2020-21, 1,180,000 which generally aligns with past 1,160,000 caseload trends. While we do 1,140,000 not raise any major concerns 1,120,000 at this time, based on recent 1,100,000 actual monthly caseload data, July 2015 July 2016 July 2017 July 2018 Jul 2019 July 2020 caseload likely could be slightly SSI/SSP = Social Security Income/State Supplemental Program. higher in 2019-20 than current budget projections. Typically, these estimates are revised in May when a greater amount of Figure 5 data is available to better reflect SSI/SSP Monthy Maximum Grant Levelsa Governor’s Proposal actual caseload. We will continue 2020-21 to monitor SSI/SSP caseload Governor’s Change From data relative to current budget 2019-20 Estimatesb 2019-20 assumptions and provide further Maximum Grant—Individuals comments at the time of the May SSI $783.00 $797.00 $14.00 Revision if necessary. SSP 160.72 160.72 — Federal SSI Grant Increase. Totals $943.72 $957.72 $14.00 As shown in Figure 5, the Percent of Federal Poverty Levelc 89% 90% Governor’s budget estimates Maximum Grant—Couples that the CPI-W that the federal SSI $1,175.00 $1,195.00 $20.00 government will use to adjust the SSP 407.14 407.14 — SSI portion of the grant in 2021 Totals $1,582.14 $1,602.14 $20.00 Percent of Federal Poverty Levelc 110% 112% will be 1.7 percent, increasing the a maximum monthly SSI/SSP grant The maximum monthly grants displayed refer to those for aged and disabled individuals and couples living in their own households, effective as of January 1 of the respective budget year. by $14 for individuals and $20 for b Reflects Governor’s budget estimate of the January 2021 federal cost‑of‑living adjustment for the SSI portion of the grant. couples. This is roughly the same c Compares grant level to federal poverty guidelines from the U.S. Department of Health and Human Services for 2020. as our estimate of the CPI-W 8 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET CALWORKS Background Adults Generally Limited to 48 Months of CalWORKs Cash Assistance. When CalWORKs The CalWORKs program was created in was first established, adults in the program could 1997 in response to the 1996 federal welfare reform collect cash assistance for a total of 60 months (the legislation that created the federal Temporary maximum allowed for recipients of federal TANF Assistance for Needy Families (TANF) program. funding). Starting in 2011, California reduced this CalWORKs provides cash grants and job services to a 48-month time limit. This change was one of to low-income families. The program is administered several made during the most recent recession to locally by counties and overseen by DSS. reduce the state’s program costs at a time when CalWORKs Provides Cash Assistance to CalWORKs caseload was at a historic high (about Low-Income Families. Grant amounts generally 585,000 cases, or about 60 percent more than in are adjusted for family size, income level, and 2019-20). Adults who exceed the time limit are no region. Recipients in high-cost counties receive longer included as part of the CalWORKs case for grants that are 4.9 percent higher than recipients purposes of determining the family’s grant amount. in lower-cost counties. As an example, a family (Children and other eligible adults in these families of three in a high-cost county that has no other continue to receive assistance.) This has the effect earned income currently receives $878 per of reducing the family’s monthly grant amount, month, whereas a similar family in a lower-cost typically by about $100 to $200 per month for each county receives $834 per month. In 2019-20, the ineligible member. administration estimates the average CalWORKs In More Than Half of Cases, Family Size grant amount to be $689 per month across all Differs From CalWORKs Assistance Unit family sizes and income levels. These grants are Size. Monthly CalWORKs grant amounts are funded through a combination of federal TANF set according to the size of the assistance block grant funding, state General Fund, and unit (AU). The size of the AU is the number of county dollars. Families enrolled in CalWORKs CalWORKs-eligible people in the household. Grant typically are also eligible for CalFresh food amounts are adjusted based on AU size—larger assistance and Medi-Cal health coverage. AUs are eligible to receive a larger grant amount— State, Federal Law Require Most Adults to account for the increased financial needs of Receiving CalWORKs Assistance to Work larger families. In about 40 percent of CalWORKs or Participate in Employment Services. As a cases, everyone in the family is eligible for condition of receiving CalWORKs, adults generally CalWORKs and therefore the AU size and the family are required to be employed or to participate in size are the same. In the remaining 60 percent of job search and readiness training. People who cases, though, one or more people in the family are are enrolled in these activities also may receive not eligible for CalWORKs and therefore the AU size services to help them meet these requirements, is smaller than the family size. including subsidized child care, reimbursement for Family Members May Be Ineligible for transportation, and housing assistance. Housing CalWORKs for Several Reasons. Most commonly, assistance may include short-term vouchers, people are ineligible for CalWORKs because they rental deposits, and long-term subsidized housing. (1) have exceeded the 48-month time limit, (2) are Adults who do not meet the work participation currently sanctioned for not meeting the work requirements of the program may be sanctioned. participation requirements, or (3) are receiving Sanctioned adults are temporarily ineligible to SSI/SSP benefits (state law prohibits individuals receive cash assistance, meaning grants for these from receiving both SSI/SSP and CalWORKs). families are reduced by about $100 to $200 per Additionally, individuals may be ineligible due month until the sanction is addressed. to their immigration status. Undocumented www.lao.ca.gov 9 analysis full gutter 2020-21 BUDGET immigrants, as well as most immigrants with legal 50 percent of the 2019 FPL for households of status who have lived in the United States for fewer one. than five years, are ineligible for CalWORKs. • Increased the earned income disregard (or Federal, State, and County Governments the amount families can earn before further Share CalWORKs Costs. Federal law allows for a income reduces their grant amounts) from degree of state flexibility in the use of federal TANF $225 to $500 per month starting in June funds. The state receives $3.7 billion annually for 2020. its TANF block grant, about $2 billion of which goes • Increased the value of assets a family can to CalWORKs (an additional $1 billion helps fund possess and remain eligible for CalWORKs student aid and the remainder helps fund a variety from $2,250 to $10,000, and increased of smaller human services programs). To receive the separate limit on the value of family its annual TANF block grant, the state must spend automobiles from $9,000 to $25,000 starting an MOE amount from state and local funds to in June 2020. provide services for families eligible for CalWORKs. • Changed the way the state funds counties for This MOE amount is $2.9 billion. State and federal CalWORKs employment services. CalWORKs funding generally is allocated to • Increased funding for and made permanent counties which directly serve eligible families. In the CalWORKs Home Visiting program. addition to funding for cash grants, counties receive • Granted greater flexibility for CalWORKs several other funding allocations to administer and families to access Homeless Assistance operate CalWORKs. The main funding allocation— benefits (emergency funding intended known as the “single allocation”—currently funds to prevent families from experiencing employment services, eligibility determination and homelessness). administrative costs, and child care subsidies. Under State Law, Local Revenue Growth CalWORKs Caseload Continues Automatically Triggers CalWORKs Grant Historic Decline Increases. Following a major realignment of state and local responsibilities in 1991, some funds Fewer People Participating in Program generated by the state sales tax and vehicle Than at Any Point in Its History. The number license fee accrue to a special fund with a series of families in California receiving cash assistance of subaccounts which pay for a variety of health declined rapidly following federal welfare reform and human services programs. Under state law, in 1996, largely as a result of new time limits on sufficient revenue growth in the Child Poverty and receiving aid and the requirements that most Family Supplemental Support Subaccount triggers adults receiving aid participate in work-related an increase in CalWORKs cash grant amounts. activities. Figure 6 shows CalWORKs caseload In the past, this account funded grant increases settled at approximately 480,000 families following of 5 percent in 2013-14 and 2014-15 and of this transition and the economic expansion of 1.43 percent in 2016-17, as well as funding the the mid-2000s. Caseload then increased during repeal of the maximum family grant policy starting the Great Recession, peaking at 585,000 families in 2016-17. during 2010-11. The caseload has since declined 2019-20 Budget Act Made Several Changes every year, and the administration estimates it will to CalWORKs Program. Among the most notable drop further to 358,000 in 2020-21. changes made to CalWORKs in the most recent Low Caseload Due Primarily to Economic, budget are: Demographic Factors. Our office forecasts CalWORKs caseload using three factors: (1) current • Increased cash grants beginning in October economic conditions, (2) economic conditions over 2019 at an estimated cost of $331.5 million in the last two years, and (3) the number of Californians 2019-20. This increase was designed to bring ages 0-18. Lower unemployment rates are linked the grant amount for all AUs of one to at least to lower CalWORKs caseloads, and California’s 10 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET unemployment rate (3.9 percent in Figure 6 December 2019) is at its historic CalWORKs Caseload Continues Historic Decline low. Further, we find high numbers of initial jobless claims are linked to increases in CalWORKs caseload 700,000 on about a two-year lag (this 600,000 could be because many of the recently unemployed only turn to 500,000 CalWORKs after exhausting all other options), and initial jobless 400,000 claims have been very low in California for many years. Finally, 300,000 Administration’s Projections there are fewer Californians under the age of 18 now than in other 200,000 recent years, largely because California’s birth rates are at a 100,000 historic low. Because only families with minor children are eligible 2002-03 2006-07 2010-11 2014-15 2018-19 2022-23 for CalWORKs assistance, fewer children generally means fewer CalWORKs cases. Caseload Decline Expected to Continue in Short Term, but budget proposes $5.5 billion in total funding for the Long-Term Floor Unknown. Both our office and CalWORKs program in 2020-21, a net increase of the administration assume the caseload decline $169 million (3 percent) relative to the most recent will continue through at least 2020-21 and likely estimate of current-year spending. This increase longer. In the event of a recession, we anticipate is the net effect of higher spending on cash grants caseload would increase in line with increased (due to recent and proposed increases in grant unemployment, and likely would remain high for levels and other policies included in the 2019-20 several years even after the economy recovers. Budget Act) offset somewhat by lower underlying Should the expansion continue, we anticipate costs that result from declining year-over-year some families will continue to receive CalWORKs caseload. assistance either due to a temporary financial crises General Fund Accounts for Small, but or because one or more adult family members Growing, Share of CalWORKs Costs. Figure 8 struggle with substantial barriers to long-term (see next page) shows how CalWORKs costs are employment—such as mental health challenges, shared between federal, state, and local revenue substance use, domestic violence, or other issues sources. The budget proposes a notable increase causing family instability. Because these factors in the amount of General Fund going towards are somewhat independent of the overall economy, CalWORKs (77 percent), although the General continued expansion is unlikely to ever drive the Fund still accounts for a fairly small share of overall CalWORKs caseload to zero. Consequently, we program costs (17 percent). This increase reflects expect the CalWORKs caseload to reach a “floor” at the cumulative cost of several policy changes made some point, but are uncertain when that will occur. over the last several years (previously those costs were borne in part using one-time carryover of Budget Overview federal funds). Total CalWORKs Spending Projected to Budget Includes 3.1 Percent Grant Increase Increase as a Result of 2019-20 Changes. As Triggered by Local Revenue Growth. The shown in Figure 7 (see next page), the Governor’s administration estimates a budget-year cost of www.lao.ca.gov 11 analysis full gutter 2020-21 BUDGET Figure 7 CalWORKs Budget Summary All Funds (Dollars in Millions) Change From 2018-19 2019-20 2020-21 Revised Proposed Amount Percent Number of CalWORKs Cases $363,095 $358,086 -$5,009.0 -1% Cash Grants 3,031 3,183 152.0 5 Single Allocation Employment services $851 $832 -$18.5 -2% Cal-Learn case management 26 32 5.9 23 Eligibility determination and administration 579 585 5.9 1 Subtotals ($1,456) ($1,449) (-$6.6) (—) Stage 1 Child Carea $320 $333 $12.7 4 Home Visiting Initiative 90 117 28.0 31 Other County Allocations 412 405 -8.0 -2 Otherb 23 14 -9.0 -39 Totals $5,331 $5,500 $169.0 3% a In 2019-20 and prior years, this was included in the single allocation. Starting in 2020-21, it is a separate allocation. We present it as a separate line item in both years for ease of comparison. b Primarily includes various state-level contracts. $73 million (annual cost of $97 million) to fund a updated projection reflects a 5.3 percent decline 3.1 percent increase to cash grants starting in relative to 2018-19 and is 0.3 percent lower October 2020. This increase was triggered and than the level assumed in the 2019-20 Budget will be funded by revenue growth in the Child Act. The Governor’s budget further projects Poverty and Family Supplemental Subaccount. that an average of 358,086 families will receive Figure 9 shows this increase would raise grants CalWORKs assistance each month during 2020-21, for all AU sizes in high-cost counties to at or above a year-over-year decline of about 1.4 percent. 50 percent of the 2020 FPL (assuming household Although the continued rate of caseload decline size equals AU size), whereas grants for most appears reasonable, more data will be available for AU sizes in lower-cost counties would remain us to fully assess the estimate for the May Revision. somewhat below 50 percent of the FPL. (As part Budget Begins Process of Major Child Care of the 2018-19 Budget Act, the Legislature set a Reorganization. The budget includes $6.8 million goal to increase CalWORKs grants to 50 percent to the California Health and Human Services of the FPL for a family that is one person larger than the AU size, a Figure 8 considerably higher target than would be reached in 2020-21 CalWORKs Funding Sources under the Governor’s budget.) (Dollars in Millions) Administration’s Caseload Change From 2019-20 2019-20 2020-21 Forecast Appears Reasonable. Revised Proposed Amount Percent The Governor’s budget updates Federal TANF block grant funds 2,263 $1,982 ‑$281 ‑12% previous caseload projections State General Fund 516 913 396 77 and assumes that an average Realignment and other county fundsa 2,552 2,605 53 2 of 363,095 families will receive Totals $5,331 $5,500 $169 3% CalWORKs assistance each a Primarily various realignment funds, but also includes county share of grant payments, about $60 million. month during 2019-20. This TANF = Temporary Assistance for Needy Families. 12 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET Figure 9 Governor’s Budget Includes 3.1 Percent Increase to CalWORKs Grants As Shown, for CalWORKs Familes With No Other Income Lower-Cost Counties Before 3.1 After 3.1 Percent Percent Increase Increase AU As Share As Share Sizea of FPLb of FPLb Amount Amount 1 $520 49% $536 50% 2 661 46 681 47 3 834 46 860 48 4 1,007 46 1,038 48 5 1,180 46 1,217 48 High-Cost Counties Before 3.1 After 3.1 Percent Percent Increase Increase AU As Share As Share Sizea of FPLb of FPLb Amount Amount 1 $550 52% $567 53% 2 696 48 718 50 3 878 49 905 50 4 1,060 49 1,093 50 5 1,242 49 1,281 50 a Assistance unit (AU) size is the number of family members who are eligible for CalWORKs. b Share of 2020 federal poverty guideline for a family size equal to AU size. FPL = federal poverty level. www.lao.ca.gov 13 analysis full gutter 2020-21 BUDGET Agency to establish a new Department of Early the Governor’s proposal, these programs would Childhood Development, which would oversee a remain at their current departments until 2021-22, number of existing child care programs including when they would be shifted to the new department. CalWORKs Stage 1 (currently overseen by DSS) (We will describe and assess this proposal in detail and CalWORKs Stages 2 and 3 (currently overseen in our report The 2020-21 Budget: Early Education by the California Department of Education). Under Analysis.) CONTINUUM OF CARE REFORM California’s child welfare services (CWS) highlight are not an exhaustive accounting of all system serves to protect the state’s children from CCR changes, but are those most relevant for abuse and neglect, often by providing temporary understanding the Governor’s 2020-21 budget out-of-home placements for children who cannot proposal for CCR.) safely remain in their home, and services to safely Types of Out-of-Home Placements for Foster reunify children with their families. Beginning in Youth. Counties—which carry out the day-to-day 2012, the Legislature passed a series of legislation child welfare activities for the state—historically implementing CCR. This Legislative package makes have relied on various placement types for foster fundamental changes to the way the state cares youth—kinship care, foster family homes (FFHs), for youth in the foster care system. The state pays foster family agencies (FFAs), and congregate care. for the net costs of CCR, which include upfront (For this analysis, we refer to kinship care, FFHs, implementation costs. While not a primary goal, the and FFAs as Home-Based Family Care [HBFC].) The Legislature enacted CCR with the expectation that box on page 16 explains these placement types in reforms eventually would lead to overall savings to more detail. Figure 10 illustrates the distribution of the foster care system, resulting in CCR ultimately foster youth across these various placements as of becoming cost neutral to the state. This analysis October 2019. (1) provides background and implementation updates for the major changes underway as a Impetus for CCR result of CCR, (2) outlines the Governor’s proposed Congregate Care Placements Are Costly and budget for CCR in 2020-21, and (3) provides key Associated With Poor Outcomes for Children. questions and issues for the Legislature to consider Congregate care placements can cost more than as it evaluates the budget proposal. $13,000 per child per month depending on the level of care provided. In contrast, foster care payments CCR BACKGROUND for home-based family settings generally range from $1,000 per child per month for relative and FFH CCR aims to achieve a number of placements to over $2,700 per child per month for complementary goals including: (1) ending FFA placements. (Some home-based placements long-term congregate care placements; for youth who require intensive services can (2) increasing reliance on home-based family receive grant payments of over $6,300.) Moreover, placements; (3) improving access to supportive long-term stays in congregate care are associated services regardless of the kind of foster care with elevated rates of reentry into foster care, placement a child is in; and (4) utilizing universal lower educational achievement, and higher rates of child and family assessments to improve involvement in the juvenile justice system. (Given placement, service, and payment rate decisions. youth placed in congregate care may have higher In this section, we first highlight some of the needs, however, determining whether congregate key issues CCR is intended to address and then care placements themselves directly lead to discuss some of the major changes underway as these poor outcomes is difficult.) Recognizing the a result of CCR. (We note that the changes we above shortcomings associated with congregate 14 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET care, CCR aims to end long-term Figure 10 congregate care placements. Distribution of Foster Youth by Placement Type Concerns About the As of October 1, 2019 Availability and Capacity of Home-Based Family Placements. Caseload Total: 56,011 Reducing reliance on congregate care placements has been a Congregate Othera Care priority for the state for some time. A major challenge to achieving Kinship Care SILP/ this goal has been an inadequate Transitional supply of home-based family Housing placements suitable for youth with elevated needs. Additionally, historically, the mental health and FFH other supportive services to help FFA home-based family caregivers care for youth with elevated needs have not been accessible at all home-based family placement a Includes, for example, children in pre-adoptive homes and temporary shelters. types. Improving the capacity and Source: UC Berkeley California Child Welfare Indicators Project, Accessed January 2020. SILP = Supervised Independent Living Placement; FFH = foster family home; and availability of home-based family FFA = foster family agency. placements is a principal goal under CCR. In addition, CCR aims to make mental health and other STRTPs are intended to provide exclusively supportive services more accessible to youth in short-term, intensive treatment and other services home-based placements. facilitating youth’s transition to a family setting as quickly and successfully as possible. As a MAJOR CHANGES UNDER CCR result of the shorter expected durations of stay in STRTPs, as well as reducing the number of STRTP placements (as compared to group homes), STRTP CCR Created a New Placement Type capacity statewide (number of beds) will be lower STRTPs Replace Group Homes for than statewide group home placement capacity CWS-Supervised Foster Children. As described prior to CCR. earlier, foster youth can receive care in various CCR restricts STRTP placements to youth who settings, depending on their needs. Given the have been assessed as requiring the high level of aforementioned concerns about group homes, behavioral and therapeutic services that STRTPs a key goal of CCR is to end group homes as a are required to provide. Children whose level of placement option for CWS-supervised foster youth. need may qualify them for STRTP placement Under CCR, Short-Term Residential Therapeutic include, among others, those assessed as having Programs (STRTPs) are expected to replace group a serious mental illness and victims of commercial homes as the permissible placement setting for sexual exploitation. youth who cannot safely and stably be placed in home-based family settings, providing a similar CCR Establishes a New Foster Care level of supervision as group homes, but with Payment Rate Structure expanded services and supports. In addition, CCR CCR Foster Care Payment Rates to Vary aims to reduce the overall number of placements Based on Children’s Needs. Until January 2017, in STRTPs by increasing services available for the state’s foster care payment rates primarily home-based placements. varied by age for youth in HBFC. For example, www.lao.ca.gov 15 analysis full gutter 2020-21 BUDGET a foster caregiver caring for a child below age 5 determined by a statewide “level of care” (LOC) would receive a monthly payment of around $700 assessment tool, which we describe later in this while a foster caregiver caring for a child over analysis. age 14 would receive around $900. Under the There are five payment rates under CCR’s HBFC foster care payment rate structure envisioned under payment rate structure, each with a corresponding CCR, rates vary by the youth’s level of need as LOC. LOC 1 (basic rate) represents the lowest level Home-Based Family Care (HBFC) Kinship Care. Established child welfare policy and practice in the state prioritizes placement with a noncustodial parent or relative. Kinship care comprises care from relatives and nonrelative extended family members, and is a unique foster care placement type in multiple respects. For example, unlike other placement types, kin caregivers can take in foster youth on an emergency basis before being fully approved by counties as foster caregivers. Foster Family Homes (FFHs). County-licensed foster homes, known as FFHs, are often the preferred placement option when a suitable kin caregiver cannot be found and the child does not have needs requiring a higher level of services. Counties recruit FFH caregivers and provide basic social work services to foster youth in this placement type. Foster Family Agency (FFA) Homes. FFAs do not directly house the youth under their care. Rather, FFAs are private, nonprofit agencies that recruit and approve foster caregivers, place youth into FFA-supervised foster homes, and provide supportive services to the youth in their care—typically youth with elevated needs compared to those placed in FFHs. Congregate Care Congregate care includes group homes and Short-Term Residential Therapeutic Programs (STRTPs). Operated as private, nonprofit agencies, group homes and STRTPs provide 24-hour care, supervision, and services to foster youth with the highest levels of need, often youth whose significant emotional or behavioral challenges can make it difficult for them to successfully remain in home-based family foster care settings. Professional staff, as opposed to a parent-like foster caregiver, provide care and supervision to youth in group homes and STRTPs. Group homes and STRTPs are considered the most restrictive, least family-like foster care setting, and are generally the least preferred placement option. Under Continuum of Care Reform (CCR), STRTPs are expected to replace group homes eventually as the permissible congregate care placement setting for CWS-supervised foster youth who need intensive services that are unavailable in an HBFC setting. (We discuss the differences between group homes and STRTPs further in the “Major Changes Under CCR” section of this analysis.) Transitional and Independent Living Placements In recent years, counties increasingly have relied upon supervised independent living placements (SILPs) and transitional housing placements instead of HBFC placements or congregate care settings for older, relatively more self-sufficient youth. SILPs are independent settings, such as apartments or shared residences, where nonminors who remain in the foster care system past their 18th birthday may live independently and continue to receive monthly foster care payments. Transitional housing placements provide foster youth ages 16 to 21 supervised housing as well as supportive services, such as counseling and employment services, that are designed to help foster youth achieve independence. 16 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET of care and corresponds with the lowest payment to provide specialty mental health services to rate. Intensive Services Foster Care (ISFC)—a resident foster youth. In addition, FFAs are required level of care above LOC 4—represents the highest to ensure access to mental health services for the level of care for home-based family settings and foster youth they supervise either by providing the comes with the highest payment rate. In addition to services themselves or contracting with mental changing the basic structure of foster care payment health service providers to do so on their behalf. rates, the HBFC basic rate generally is higher than On top of aiming to improve access to mental the basic rate prior to CCR. Unlike the rate structure health services, CCR mandates that certain other that governed group home payment rates—which “core services” be made available to foster youth. differentiated group home payment rates by the These core services include permanency services level of care and supervision that different group to help foster youth reunify with their parents homes provided—under CCR, there is a single or, alternatively, secure permanency through monthly payment rate paid for all STRTP-placed guardianship or adoption. youth. Figure 11 summarizes payment rates under CCR Changed the Caregiver Approval CCR for the current year. (We note that these rates have been only partially implemented. We discuss and Placement Processes continued delays in full implementation of this rate Resource Family Approval (RFA) Replaced the structure later on in this update.) Previous Approval, Licensing, and Certification Assessment Tool Used to Determine Rate for Processes for Home-Based Family Caregivers. Each Child. DSS developed an LOC assessment Before foster caregivers may begin providing care tool to determine the foster care payment rate that and receiving foster care payments, they must caregivers will receive. The assessment is designed be approved to provide care. (Although in the to identify the care needs of a foster child and to case of kinship placements, relative caregivers translate those care needs into an appropriate may begin providing care for a child and obtain foster care payment rate. We note that, due to temporary grant funding while their application is concerns with the tool, the LOC tool and rate processed.) Prior to CCR, the approval process structure has been only partially implemented. differed by placement type—for example, nonrelative caregivers were licensed according to CCR Aims to Expand Access to one set of criteria while relative caregivers were Mental Health and Other Supportive approved under a different set of criteria. CCR Services replaced the multiple approval standards with a single, more comprehensive approval process that Improving foster youth’s access to mental health incorporates features included in assessments services has been a longstanding goal of the state. for prospective adoptive parents (such as a CCR builds on these efforts by requiring STRTPs Figure 11 2019-20 Level of Care-Based Foster Care Payment Rates Per Child Per Month Rates HBFC Level of Care 1 2 3 4 ISFC County-Supervised Foster Family Homes $1,000 $1,112 $1,225 $1,337 $2,609 Foster Family Agency (FFA) placements Foster caregivers $1,000 $1,112 $1,225 $1,337 $2,609 Services and administration (retained by FFA) 1,266 1,312 1,358 1,440 3,682 Total Payment for a Child Placed in an FFA Home $2,266 $2,424 $2,583 $2,777 $6,291 STRTP $13,532 ISFC = Intensive Services Foster Care and STRTP = Short‑Term Residential Therapeutic Program. www.lao.ca.gov 17 analysis full gutter 2020-21 BUDGET psychosocial assessment). Because RFA is a more CCR FUNDING comprehensive approval process, completing the process is intended to qualify a foster caregiver State Provides Funding for Net Costs of for guardianship and adoption. CCR legislation CCR. As a result of 2011 realignment—described more fully in the nearby box—counties are only required all new prospective foster caregivers to required to implement new state CWS policies complete the RFA process beginning in January to the extent that the state provides funding to 2017. Obtaining RFA is required of all existing foster cover the new policies’ costs. CCR creates new caregivers by the end of December 2020 in order costs for counties, for example, in the form of for them to continue to serve as foster caregivers. higher administrative costs, while also potentially More Collaborative Placement and Service generating eventual savings for counties as the Decisions Through the Use of Child and Family proportion of foster youth in costly placements Teaming. To increase child and family involvement such as congregate care placements decreases. in decisions relating to foster youth’s care, CCR As counties implement the various components mandates the use of child and family “teaming” of CCR, the state provides them up front with through every stage of the case planning and the estimated costs of roll out. Once CCR is fully service delivery process. The child and family team implemented, the state has agreed with counties (CFT) may include, as deemed appropriate, the to fund CCR’s net costs on a county-by-county affected child, her or his custodial and noncustodial basis. That is, the state will fund the difference parents, extended family members, the county between (1) the new costs that CCR creates on caseworker, representatives from the child’s a county and (2) any savings that CCR generates out-of-home placement, the child’s mental health for that same county. The state will continue to clinician, and other persons with a connection fund counties’ CCR activities until each county’s to the child. The CFT is required to meet at least CCR-related savings equal or exceed its CCR once every six months (or once every 90 days for costs. The state will not recoup from counties youth receiving specialty mental health services) any CCR-related savings that exceed counties’ to discuss and agree on the child’s placement and CCR-related costs. (We understand that the state service plan. and counties are in the process of finalizing a Functional Assessment Tool Used to Inform methodology to track CCR’s overall ongoing net Placement and Service Decisions. CCR requires costs for counties in order to identify the amount of foster youth to receive a comprehensive strengths state funding needed, if any, to pay for CCR on an and needs assessment upon entering the child ongoing basis.) welfare system in order to improve placement Federal Funds Also Help Support Foster decisions and ensure access to necessary Care. Funding for various child welfare services, supportive services. In late 2017, the Child and including some foster care services, stems from Adolescent Needs and Strengths (CANS) tool several federal sources in addition to the state and was chosen by DSS as the state’s functional county funds described previously. In many cases, assessment tool to be used within the CFT process counties may use federal TANF and Title IV-E and was gradually rolled out for use across the dollars to help pay for foster care payments and counties. The tool is used only to inform the some other services related to foster care. placement and care decisions of the CFT. It is administered separately from the LOC assessment CCR Eventually Expected to Result in tool—which is to be used in determining foster Savings Due to Caseload Movement. In addition to generating some higher county costs, CCR care payment rates—as discussed earlier in this is expected to result in offsetting savings for analysis. counties. As previously discussed, CCR aims to shorten foster youth’s lengths of stay in congregate care, reduce the number of youth ever placed in congregate care, and provide greater resources to 18 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET home-based family placements in order to improve that resource families are identified and approved their stability. To the extent that CCR succeeds in a timely manner. To help RFA processing times, in reducing the number of foster youth in more the Legislature approved one-time funds in the costly congregate care placements in favor of less 2019-20 Budget Act for counties to address their costly placement settings, such as HBFC settings, RFA backlogs. Specifically, the 2019-20 budget counties are expected to experience offsetting provided county welfare agencies and probation savings. departments $25.9 million ($17.9 million General Fund) to assist with implementing RFA, in addition UPDATE ON CCR to $6.7 million ($4.7 million General Fund) in one-time funding explicitly to address the backlog. IMPLEMENTATION IN 2019-20 As of the third quarter of 2019 (the most recent In this section, we describe CCR implementation period for which data was available), the median progress and challenges over the past fiscal year. RFA processing time was 120 days, and more than For more detail about CCR implementation in 3,000 resource families were approved by counties prior years, refer to our 2018-19 and 2019-20 each quarter during each of the six most recent human services budget briefs. (The updates we quarters. While processing times still exceed the highlight are not an exhaustive accounting of all target 90 days, this is a marked improvement from CCR progress, but are those most relevant for the peak median processing time of 176 days in understanding the Governor’s 2020-21 budget early 2018. proposal for CCR.) Additional Funding for Placements Prior to Approval. Chapter 35 of 2018 (AB 1811, RFA Committee on Budget) requires counties to provide Timeliness of RFA Process Has Improved, grant payments to kinship foster caregivers with but Still Misses Target. CCR legislation generally a pending RFA application in an amount equal directs RFA to be completed within 90 days to the basic rate paid to approved resource of application. In practice, a majority of RFA families. These grants are funded through applications have been taking longer than 90 days Emergency Assistance-Temporary Assistance for to process. These RFA delays could present Needy Families (EA-TANF) funding with counties an obstacle to successful CCR implementation responsible for the nonfederal share of costs because the goal of placing as many foster youth (30 percent). For caregivers determined to be as possible in family care settings necessitates ineligible for EA-TANF, the state General Fund Realignment 2011 Realignment Revenues Major Source of CWS Funding. Until 2011-12, the state General Fund and counties shared significant portions of the nonfederal costs of administering child welfare services (CWS), including foster care. In 2011, the state enacted legislation known as 2011 realignment, which dedicated a portion of the state’s sales tax to counties to administer CWS. As a result of Proposition 30 (2012), under 2011 realignment, counties either are not responsible or only partially responsible for CWS programmatic cost increases resulting from federal, state, and judicial policy changes. Proposition 30 protects counties by establishing that counties only need to implement new state policies that increase overall program costs to the extent that the state provides the funding. Counties are responsible, however, for all other increases in CWS costs—for example, those associated with rising caseloads. Conversely, if overall CWS costs fall, counties retain those savings. www.lao.ca.gov 19 analysis full gutter 2020-21 BUDGET covers what would have been the federal share deadline was subsequently extended as DSS of costs. In 2019-20, recipients are generally continues to process provisional and permanent eligible for this funding for up to 120 days (and licenses for STRTPs. As of January 2020, there under certain conditions, up to 365 days) until were nearly 350 licensed STRTPs (with a total their applications are approved or denied. Current capacity of more than 4,000). This is a marked law reduces the maximum length of grant funding increase from October 2018, when there were from 120 days to 90 days without the option for fewer than half as many licensed STRTPs. an extension beginning in 2020-21, under the Foster Youth Transitions from Group assumption that the RFA process likely would speed up as counties gained more experience with Homes to Other Placements the process. However, as of the third quarter of Congregate Care Placements Continue to 2019, the median RFA processing time for families Decline. As of January 2020, the congregate with placement prior to approval was 116 days—an care caseload was around 3,500. Both in terms improvement from the peak median processing of raw numbers and proportionally, this is the time of 164 days in early 2018, but still missing the lowest congregate care placements have been 90 day target. in over a decade. However, the number of youth residing in congregate care has been declining LOC-Based Rate Structure since 2003—long before the implementation of LOC Assessment Tool And Rate Structure CCR. What portion of the decline in congregate Remain Partially Implemented. Implementation care placements is attributable to CCR efforts is of the LOC assessment tool developed by DSS unknown. to determine foster care payment rates began in For foster youth who were in group home early 2018 exclusively for FFAs. DSS intended to placements as of May 2019, counties were required apply the tool to all HBFC placements thereafter, to develop child-specific transition plans detailing but rollout beyond FFA placements has been the targeted placement type for those youth. delayed with no new implementation dates officially According to DSS, around 30 percent of targeted set. The extended delay stems from longstanding placements for youth in group homes are STRTPs, stakeholder concerns about the LOC assessment 27 percent are HBFC placements, and 43 percent tool developed by DSS. For example, alongside are a type of transitional housing or independent other concerns, one issue that has been raised living program (for older foster youth) or plans to is that the tool may assign foster youth with reunify with biological parents. elevated needs into inappropriately low LOC levels. In response to these concerns, DSS has halted Utilization of CFTs and CANS the rollout of the tool beyond the FFAs. In the Assessment meantime, all other HBFC placements made since Increased Usage of CFTs. Since CFT 2017 have been receiving the LOC 1 rate (or the implementation began in 2017, counties ISFC rate for youth with elevated needs). Because increasingly have integrated this approach into the LOC 1 rate generally is higher than the pre-CCR case management for foster youth. As of November age-based rates, foster caregivers are receiving 2019, nearly 70 percent of foster youth and higher payments through this partial implementation nonminor dependents in foster care had received a of the LOC-based rate structure than they would CFT meeting, compared to around 40 percent one have under the pre-CCR payment rate structure. year prior. Group Homes and STRTPs Implementation of CANS Continues. In 2019, counties began rolling out CANS assessments More Group Homes Transitioned to STRTPs. as part of the CFT process. As of December Originally, CCR legislation required all group homes 2019, more than 6,000 CANS assessments have to end operations as congregate care providers been completed using an automated system. or convert into STRTPs by January 2019. This 20 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET We understand, however, that more CANS Lower Spending for Several CCR assessments have been completed outside of the Components Offset by Projected Increase in automated system. Exactly how many have been HBFC Rate. As Figure 12 illustrates, funding for completed in total, however, is unclear. (We note several CCR components is lower or zeroed out in that DSS’s budget assumes full implementation of 2020-21 compared to 2019-20. This primarily is CANS in 2019-20.) because initial ramp-up funding for those elements is scheduled to end in 2019-20. These decreased OVERVIEW OF THE costs, however, are more than completely offset by anticipated increases in the HBFC rate. In this GOVERNOR’S BUDGET FOR CCR section, we describe these components in greater Proposed CCR Budget Slightly Increases detail. From 2019-20 to 2020-21. The administration • RFA Funding for Counties Sunsets in proposes approximately $495 million ($329 million 2019-20. Ramp-up funding that the state General Fund) for CCR in 2020-21. This provided to help counties implement the represents an increase of less than 2 percent RFA process required under CCR—including from the $486.2 million ($327.6 million rapidly increasing the number of foster General Fund) provided in the 2019-20 revised families approved for home-based care budget. Figure 12 compares the 2019-20 and placements—is scheduled to end in 2019-20. 2020-21 budgets by major CCR component area. In addition, the one-time RFA backlog Figure 12 CCR Local Assistance Budget in 2019-20 Compared to 2020-21 (Dollars in Millions) 2019-20 2020-21 Change in Amount of Change General Fund in General Fund +/- Total General Fund Total General Fund Home-Based + 283.4 188.2 372.3 246.6 58.4 Family Care Rate CFTs 74.4 54.5 77.3 54.5 no change 0 Placement Prior - 32.8 17.0 20.4 10.6 -6.4 to Approval LOC Protocol Tool 10.0 7.3 10.3 7.3 no change 0 RFA (includes one-time - 32.7 22.6 5.8 3.9 -18.7 backlog funds) - FPRRS 29.6 21.6 0.0 0.0 -21.6 - CANS Implementation 13.5 9.8 0.0 0.0 -9.8 Other Administration and - 9.8 6.6 8.9 6.1 -0.5 Automation Components + Totals 486.2 327.6 495.0 329.0 1.4 CCR = Continuum of Care Reform; CFTs = child and family teams; LOC = level of care; RFA = Resource Family Approval; FPRRS = Foster Parent Recruitment, Retention, and Support; and CANS = Child and Adolescent Needs and Strengths. www.lao.ca.gov 21 analysis full gutter 2020-21 BUDGET funding included in the 2019-20 budget is not 120 days, with the possibility for extension proposed for renewal in 2020-21. Beginning up to 365 days. In 2020-21, the maximum in 2020-21, county welfare departments are duration of funding decreases to 90 days (with fully responsible for the RFA process. The no extension). The shorter possible funding $5.8 million ($3.9 million General Fund) RFA duration—combined with assumptions about funding included in the 2020-21 budget is for shorter RFA processing times—results in a county probation departments. lower budgeted amount for placements prior • Expiring Funding for Foster Parent to approval in 2020-21. Recruitment, Retention, and Support • Higher Spending on Projected HBFC Rates. (FPRRS). Through 2019-20, the state The proposed 2020-21 budget assumes provided counties with ramp-up funding that the cost of the HBFC rates will be to help ensure that counties could quickly nearly $250 million General Fund in 2020-21 build up and effectively retain their supply of (about $60 million more than estimated high-quality, home-based foster caregivers—a costs for 2019-20). We understand from the prerequisite for CCR’s successful department that this increase is primarily a implementation. Ramp-up funds for FPRRS result of their projections of (1) the movement are budgeted to sunset in 2019-20, with of youth across placement types and (2) the counties bearing full responsibility for estimated costs of those various placement continuing to recruit, retain, and support types. home-based foster caregivers beginning in 2020-21. LAO ASSESSMENT • Expiring Funding for CANS Implementation. In 2019-20, the state provided counties with Although we raise no major concerns with the one-time funding to begin utilizing CANS Governor’s proposed budget for CCR, we do assessments within the CFT process. Funding recommend that the Legislature use the budget was meant to provide additional support to process to seek clarification on several key counties for the extra time that caseworkers components of the proposal. In this section, we needed to complete the assessments identify those issues and highlight some remaining during the initial roll out and training phase. questions about CCR’s implementation that we This funding is not budgeted for renewal currently are working with the administration to in 2020-21, assuming counties will have understand. completed necessary initial trainings and that caseworkers will be able to complete State Funding for RFA Ends Before the assessments as part of their normal Target Dates Are Met responsibilities going forward. CCR’s success depends in no small part on the • Decrease in Placement Prior to Approval continued recruitment and retention of resource Funding. As described earlier in this report, families, but state funding for counties’ RFA is set family members may begin providing care for to expire at the end of 2019-20. Continued RFA a child before completing the RFA process processing that takes over 90 days could negatively (whereas nonfamily members may not begin impact the supply of home-based foster caregivers, fostering prior to completing RFA). Counties particularly in light of the decrease in placement are required to provide grant payments to prior to approval funding to 90 days beginning in those kinship caregivers with a pending 2020-21. RFA application in an amount equal to the Consider Extending 2019-20 Level of Funding basic level rate paid to resource families to Assist Counties With the RFA Process. Given having completed RFA. In 2019-20, kinship the critical importance of resource families for caregivers pending approval could receive CCR’s success, the Legislature could consider EA-TANF grants and state funds for up to 22 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET extending budgetary support to county welfare earlier in this analysis, DSS developed the LOC departments for RFA processing until counties protocol tool to perform this function, but the have an opportunity to demonstrate they are able tool has not been fully implemented. DSS has to sustain processing times of 90 days or less. We expressed an ongoing willingness to coordinate estimate funding these activities in 2020-21 would with advocates to find an appropriate solution. cost approximately $20 million General Fund. The However, full implementation of an LOC protocol Legislature also could choose some lower level of tool has been stalled for some time. As a result, funding, to more gradually “phase out” funding from CCR’s HBFC rate structure has not been fully the 2019-20 levels. implemented, with the majority of foster youth receiving the basic rate (LOC 1). Implementation of We are in the process of working with the CANS Assessment Tool administration to understand issues currently still outstanding regarding the LOC tool including: Full Implementation of CANS Not Likely in 2020-21. The 2020-21 budget assumes • How Will Rollout of the LOC Tool Proceed? full implementation of CANS in 2020-21, and The rollout of the LOC tool has been stalled therefore discontinues the state funding support for over a year. At this point, how the tool will for implementation. We understand, however, that be used beyond its current implementation CANS will not be fully implemented in the budget for FFAs is unclear. We recommend that year. This raises several key questions that we the Legislature seek clarification from the are continuing to work with the administration to administration on how it plans to move understand. forward with the tool. • Timeline for Full Implementation of CANS. Key Questions to Consider Regarding When does the administration expect full HBFC Rate Estimate. To calculate the HBFC implementation of CANS? Could ending state rate increase, we understand that DSS makes funding for implementation support for CANS estimates about the movement of youth across impact the full rollout of CANS? various placement types—for example, from STRTPs and group homes to HBFC placements— • Ongoing CANS Workload Assessment. The and the cost of the associated placement types 2019-20 budget included budget-related and level of care. We are continuing to work with legislation requiring the department to work the administration to fully understand all of the with counties to determine the ongoing components that comprise the HBFC rate. Some workload associated with CANS. It is our key questions to consider are: understanding that this assessment is beginning. Absent this assessment, how did • Placement Assumptions. What does the the administration determine that no state budget assume to be the distribution of foster funding for CANS was needed in 2020-21? youth across all placement types in 2019-20 and 2020-21? Implementation of LOC • LOC Rate Assumptions. What is the Assessment-Based HBFC Rates assumed number of foster youth receiving each LOC rate in the budget year? What Current Stall in LOC Protocol Tool’s proportion of foster youth remain on the Implementation Means LOC-Based former age-based rate structure in 2019-20 Rates Cannot Be Fully Implemented. Full and 2020-21? implementation of the HBFC payment rate structure as envisioned by CCR requires the use of an LOC • Budget Impact of Delay in LOC assessment to determine foster youth’s general Implementation. What would be the level of need and, accordingly, to determine an budgetary impact of a continued delay in the appropriate foster care payment rate. As noted rollout of the LOC rate structure in 2020-21? www.lao.ca.gov 23 analysis full gutter 2020-21 BUDGET SOCIAL SERVICES UNIT Ryan Anderson CalWORKs 916-319-8308 Ryan.Anderson@lao.ca.gov Jackie Barocio In-Home Supportive Services 916-319-8333 Jackie.Barocio@lao.ca.gov SSI/SSP Angela Short Child Welfare Services 916-319-8309 Angela.Short@lao.ca.gov Continnum of Care Reform LAO PUBLICATIONS This report was reviewed by Ginni Bella Navarre and Carolyn Chu. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 24 LEGISLATIVE ANALYST’S OFFICE