Senate Budget and Fiscal Review Subcommittee No. 3 on Health and Human Services

You all right? Good morning, everyone. Welcome back to Budget Sub three. Very excited to be here. Not excited about what we have projected for this year, but I'm really looking forward to working with all the stakeholders to find some common ground. What cuts will hurt us the least amount and what cuts and delays would really not bring year down the line impact on our most vulnerable.

Because we all know in sub three we're talking about literally all vulnerable communities, health, access, equity and so forth, on every single thing you could think about, from homeless prevention to just being a successful human being from our first breath to the last breath as we also look about looking to protecting that silver tsunami that's coming in with the older population falling into homelessness at a record rates. You'll see. My colleagues haven't joined me yet, but we have one Senator that won't be here, Senator Eggman.

But besides that, I wanted to get started before so we can get out of here at a decent time. I have to drive home today, so that's a six hour drive back to LA. That doesn't mean we're going to cut off conversations for our most vulnerable. It just means that I'm not a good driver at night, so let's there be some daylight as I'm driving home with precious cargo. Okay, so we know that in relation to public comments, we are no longer doing virtual public comment.

You have to physically fly a plane drive to Sacramento to provide public comment on things that would be impacting you. We will be doing public comment a little different, kind of somewhat similar to what y'all did before the pandemic. We're going to be doing public comment after each Department and so that perhaps Department heads will still be here listening to stakeholder input and so forth. And we can have conversations on that.

So after each issue within each Department, I'll have people come up and public comment will go for 1 minute. I think I've rambled enough. I thought maybe someone else would join me, but we're going to get started. If you don't remember, I like to interject some humor into my shareship to keep us all awake throughout this all. Okay, given that we're going to get started, we have several departments we're going to go over today.

We're going to do the overall HHS and all the wonderful departments under that. We're going to do California Health Facilities Financing Authority, EMSA Emergency Medical Services Authority and Office of Statewide Health Planning.

Healthcare. Access and Information healthcare access and information and Covered California. So let's start off with California Health and Human Services Agency, providing us with an overview. And then welcome back, LAO, Department of Finance, for your wonderful support as we move forward, I will have you begin in providing an overview.

Great. Thank you, Madam Chair. Brendan Mccarthy, deputy secretary for program and fiscal affairs at CalHHS. I'll be brief. Your agenda does an excellent job of laying out the overview of the agency budget. Overall. We oversee the 12 departments and five offices within CalHHS, coordinating activities between our departments and offices, providing health and social services to the most vulnerable and at risk Californians and public health services to all Californians. Throughout our work, our agency vision is to be person-centered, equity-focused, and data-driven.

And that is something that we try to embed in all the work that we do with our departments and offices. Speaking about the budget, overall budget, and these are all numbers, are for the governor's projected budget year. Budget.

I'm so sorry. Could you give me your name?

Oh, of course.

Your title.

Brendan Mccarthy, deputy secretary for program and fiscal.

Thank you.

For the budget year, we're projecting a total budget across the agency, so, including all departments and offices of $252 billion of total funds. Of that, $74 billion is General Fund, $38 billion is other state funds, and then $140 billion of federal funds. Of the state funds, mostly General Fund, but not exclusively. Just over half of that is in Department of Healthcare Services, mostly Medi-Cal. 20% or so is in the Department of Social Services. 9% is in the Department of Developmental Services. 7% is 1991 realignment.

And then there's about 12% in other areas across the agency. We have just over 39,000 employees in our departments and offices. Speaking specifically to CalHHS itself, the agency, our total budget for the budget year is $947,000,000. Important to point out that of that, $647,000,000 of it is funds in the Office of Technology Solutions Integration. That is the office that was formerly known as the Office of Systems Integration.

They work with our departments on major it projects, and so that large amount of dollars, $647,000,000, are essentially them working on major IT projects. So the funding comes from our departments, and it is a mix of General Fund and federal funds and other funds to support the development of those IT projects. We also have a fairly large increase in the agency budget this year of $255,000,000 in the Office of Community and Youth Restoration. You'll be hearing that next.

That reflects transfer of grant funding, which is a topic that you will be addressing in your agenda. So it is a large increase in the agency's budget this year as those grants come over to agency. What we call the office of the Secretary itself has a budget of $37 million. And that is excluding things like OICR and OTSI in the agency, we have just over 550 positions of that, though 409 of them are in OTSI.

So the lion's share, they are working on IT projects with our departments. There are 88 people directly under the secretary, 37 under OICR, and 15 under the recently established Center for Data Insights and Innovation, which pulled together some existing IT and other innovation activities in the agency to help better coordinate data and innovation within agency and within all our departments. And then lastly, we have seven positions in the office of the Surgeon General. That's a very brief overview.

I'll be happy to answer any questions you or the other members have,

Saving our questions for each Department or each section. Yeah, Department. LAO and Department of Finance. Would you like to add anything? Tell me who's who?

All right. Joseph Donaldson, Department of Finance. Nothing further to add. Thank you.

Ryan Miller, LAO. Nothing to add, but available for questions.

Great. Thank you so much. So let's dive into issue two. The office of Youth and Community Restoration. OYCR overview. We got to stop meeting like this. Yeah? No, it's good. I ask that the Administration presenters come up and present and answer the questions and waiting for her to come up. Okay.

Should I go ahead with the slides?

Go ahead.

Okay. Thank you for letting me be here today. I know that we were recently here, and so I'm not going to go over any of the information that's contained in the documents. But I did want to emphasize a forward focus. And if I could. Madam Chair, may I just give a brief opening statement,

Please.

Okay. So the further the youth get into the carceral system we move, we see a significant overrepresentation of Latino, black and native youth in long term incarceration.

Ultimately, this endtoend system transformation will require changes in certain assumptions around culture, distribution of resources, allocation of responsibilities, and definition of roles. It is not an instant pivot, but it is our north star, and we must be relentless in our focus on it. As you will hear today about when we discuss the data, OYCR remains vigilant that the availability of SYTFs at the local level does not result in net widening effect.

That increases the use of long term incarceration of young people for whom alternatives are available and for those who are adjudicated for serious offenses and sent to SYTS.

We must ensure that we do not just have the most minimal standards, but rather living conditions that support healing environments that do not retraumatize programming that engages the mind and body and credible messengers providing hope strong educational and vocational programs that prepare youth for future success and step down services to less restrictive programs as soon as we can and that the youth are supported in the community and living wrapped in high touch models. In the coming year,

There are positive opportunities, some systemic and some based on pilots of new approaches. Systemically, the children's Youth Behavioral Health initiative in CalAIM will be potential resources both for front end prevention and diversion and for back end healing and re entry. OYCR is working with DHCs to be sure there are roles for credible messengers and we are directly funding technical assistance to local CBOS to increase the participation of enhanced care managers, community health workers, promotores, representatives and coaches.

Our Ombuds program is now fully staffed and operational and available to help individual youth address and hopefully resolve any violation of their rights. OYCR will be working with our newly created youth Advisory Board, along with the rejuvenated State Advisory Council to identify and support the critical hinge points for community responses. We are partnering with the secondary and postsecondary education providers, both at the state and county level, to strengthen linkages and pathways for detained youth to access higher education.

And we are partnering with the Department of Rehabilitation on a pilot initiative in 10 counties to bring workforce development and vocational supportive services to youth in the justice system, both in the carceral setting and as they step out into communities. But what are we missing? Most immediately, data. Good granular information that shows us where within each jurisdiction there is exemplary engagement as well as where there are missed opportunities for off ramps from systems.

Cultural change is dependent upon self awareness, and we will be working with all our partners, local cbos, schools, behavioral health, social services, workforce development, probation and advocates to achieve the greatest possible transparency and thus promote a seamless systems that puts the welfare of all youth, including our youth, in the juvenile justice system, at the center of our efforts. I'm going to go ahead and go to the data now here.

This first slide demonstrates that the commitment of youth to SYTFs we have the 2022 and the 2023 data. As you can see, there looks to be an increase of 80% between those two years. I want to remind you that judges were not able to send youth to DJJ any longer after July 2021. So the first year that we see the 21-22 was the first year judges started sending kids to the local SYTFs.

I also wanted to indicate that in January of 2023 there were still 410 youth at DJJ and DJJ closed forever and for good on June 30 of 2023. I think a likely explanation for this increase that we see between the years is that 140 youth from DJJ went into the local facilities. So if you do the math, that's really 50 new admins between 2021 and 2023. If you don't count the DJJ kids, and I have more details on what happened with those 410 kids from DJJ.

If you would like that.

I'll take my questions.

The second slide it looks at gender and as you can see that most of the commitments are male. The female and nonbinary counts for 2021-22 were fewer than 12 to protect privacy of those youth captured in AB 102. We are not going to give you the exact numbers, but they're low. This gender breakdown is consistent with populations we see throughout the juvenile justice system. With regard to racial and ethnic categories,

with the highest counts of youth committed to SYTF, it is Hispanic and Latinx for both 2122 and 2223. Missing counts that are indicated in here are lower than 12. As you can see the overrepresentation of black and brown individuals within our justice system. In fiscal year 21-22 Latinos made up 60% of the population and African Americans made up 30% of the population. Similarly, in fiscal year 2023-22 Latinos made up a little over 60%.

African American or black represented 25% of the population. Then there's the age counts. In fiscal year 21-22 the average age of youth committed to the SYTF was 17.4 years. In fiscal year 22-23 it was 18.1 and I'll go ahead and hold any questions you can see there are some, the scope is 14 to 25 in this chart. Okay, next slide. This is with regard to the type of offense committed. The vast majority of youth offenses committed were assault, attempted homicide, completed homicide, and robbery.

I think this chart shows a willingness to keep youth who have committed the most serious offenses in the juvenile justice system and rehabilitated in their own communities, which is consistent with youth development.

I do want to highlight the number of youth with sex offenses and note that there are specific treatment needs for young people who've offended sexually and OYCR is providing technical assistance in this regard, but more does have to be done to ensure that best practices and uniformity of treatment is presented and available throughout the state. And I am also on the California Sex Offender Management Board and we have suggested guidelines that can be obtained by us and they're also on the case on website.

This slide stands for the Proposition that there was an increase in the use of less restrictive programs between fiscal year 21-22 and fiscal year 22-23. As you can see from the first chart, very few, less than 12 youth youth were moved that first 21-22 which makes sense since that's when youth first started being in the SYTFs. And then in 21-23 we had 100 youth reported through AB 102 data.

I do want to remind you that OYCR has identified 93 less restrictive programs throughout the State of California by this time, and our office has visited many, met with many, and have been asked to fund many. We have started an initiative to fund 10 counties to develop less restricted programs. With regard to the number of youth whom transfer hearings were ordered, this indicates a bump between fiscal year 21-22 and fiscal year 22-23.

I do want to note that of this data, in the first year, 139 actual hearings were held and in 2022-2023, 147 actual hearings were held. So even though they were ordered, they weren't always held. Transfers to adults. Just because there was a transfer hearing ordered, as I said, doesn't necessarily mean a hearing was held.

Some of the cases settle, but in these two charts you can see that there was a decrease in the number of youth transferred to adult court between fiscal year 2021 and 22 and 2022-23 and obviously be happy to answer questions about that when the time comes. I do want to add that what does this data tell us about how realignment is being implemented across the state? That was a specific question.

And then in what areas does the data show progress in meeting the goals of realignment? And in what areas does the data indicate causes for concern? First and foremost, we cannot draw many conclusions from the limited data from AB 102. On its own, our team is working to merge this data with other data sets and expect to be able to provide you with information in the coming months. Much of the juvenile justice data landscape is a puzzle. There is no uniform data collection system.

The promise of the DOJ database revision is still years away. At my last information it was six years away. So we have to put together a patchwork of data to see what the progress is, as well as some of the JJ data is. Some of it's reported in the fiscal year and some of it is reported in the calendar year. As an example, in order to make a net widening analysis, we need to remove the DJJ commitments which we believe were counted as new commitments.

In the final AB 102 data report. We will be able to bring in some other data and merge it with other data points and expect that we will be able to tell you about net widening. For the moment, we are just presenting frequencies. The LRP data, as indicated, is new and different, and I think that it does show some promising practices throughout the state. What additional data would be helpful to OYCR to carry out its mission is one of your last questions.

This data is a beginning and it's relatively basic. It's a good beginning because frankly, before we had it, we never even knew how many kids were being committed to the facility. So at least we have this annual data. However, to understand which youth are sent to SYTFs and how to better assist them, we need to know the following how many youth are involved in the various stages of the system? For example, at arrest detention. How many youth are adjudicated? How many youth have disposition hearings?

How long do youth stay in systems before their hearings? What are the key characteristics of youth involved? Race, family income, child welfare history, special ed, prior commitments, homelessness, parental incarceration? How did the youth become system involved? Did the youth come to us from another system? Was the family known to systems? How did the youth move through the system? Length of stay, kinds of programs offered? Is the system fair? Race equity measures that show who is brought into custody and who is cited and released?

When does the DA decide to file a transfer motion and for which youth was a transfer motion not filed? We need to know that information by race, ethnicity, and gender. How did youth change while in the system? Did the youth benefit from our program? Improved reading, math, other educational milestones? Did the youth get reconnected to family and community? Does the system meet the needs of youth, their families, and the community, the whole family and the whole child services?

Is their family able to shelter and care for their child when the youth is released? What was the experience of youth in the system? How much does it cost and what is the long term measure of success? Recidivism data is the one data point that every county counts and that is not mandated to be reported to OYCR. But it is the one data point that every county counts per their county plans, 19 counties do annual reports.

So I just want to say that we will continue to merge data sources to tell the picture when we do our final report, but this is the kind of data that we would need to carry out the full mission and vision of OYCR.

Thank you so much. Turn it over to Department of Finance for any comments.

Yeah. Joseph Donaldson, Department of Finance. Nothing additional to add, but happy to answer any questions.

Nothing to add.

Perfect. Okay, so let's jump into some questions. I'll start with the Department of Finance. In the 2023 Budget act, we included $3.5 million to report the SYTF data to a YCR. Can you talk to us a little bit how this funding was distributed to counties and how it was spent?

Hi, Allison Hewitt, Department of Finance. So the funds were allocated based on we utilized a methodology that had been used for a prior juvenile pot of funding that was available, that was actually included in SB 823. So we allocated funds to counties fairly straightforward, just based on a use of census data to say what a large, medium, and small county was and as we do with other types of grants, it was a direct allocation to counties.

And the idea was capacity building to help, given they're reporting slightly different data than they have been reporting previously. But in terms of how the funds were spent, once we do the allocation process and SEO, the state controller's office issues the funds we're not able to say how much counties expended or how they expended it, but we issued it kind of with the intent purpose of capacity building.

Thank you so much. And connected to that, Director, I know this is statewide data, and I know we're still compiling the county data that was supposed to come up in December, a couple of months ago. And I'm looking forward to perhaps coming back later on towards the end of step three to talk about all that data. Any preliminary information per county you can share? Is this what you would say the most insight you have for right now?

I wouldn't say it's the most insight, but I think it's the most vetted and cleaned up. And I have a lot of on my mind about what we're seeing, but I would like to give some very detailed and validated information to you, Senator. Yes.

So I think we should definitely come back in a couple of months, towards the end to get more data. So, one more question on that you spoke about that potentially the skew that we see here in the first data point is the 140 DJJ kids that were transferred. Did I understand that correctly, that that's why potentially we could see the skew?

That is one explanation off the top that I am seeing, because we did work, as you know, with the consortium between January and June, when we got all those youth realigned back to their counties, we worked diligently with probation and consortium and DJJ.

And what we know is that there was 400 youth that had to be realigned, like, absolutely had to leave DJJ, and 102 of those youth were discharged prior to closure, 308 had to be recalled by the counties as a result of the DJJ closure. Of these 308 who had to be recalled, 140 were committed to SYTF, 136 to their own county, and four to another county. I have other numbers.

Eight were committed to juvenile halls, two were committed to other county operated facilities, 46 were committed to less restrictive programs, four went to Pine Grove, two waived their stay at Dai, three were committed to a county jail, 77 went to community supervision. Of these, 11 were reported to be in transitional housing, 18 were dismissed and discharged, and seven, at the time of this report were still pending disposition in the counties. So that 140 is one explanation.

So, as I'm looking at the rest of the data points, essentially I should be looking at removing about 140 of each data.

That's what we would today opine, because those kids had to be counted somewhere, and they went to SYTFs because they were qualified by law. That's where they needed to go. And so that would certainly be a very good explanation for what we see between the two years.

And then how do the counties report up? Who does it go to, BSCC? Or is it going directly to OYCR?

Well, the AB 102 data is coming directly to OYCR, and I actually neglected to talk to you about some of the challenges of the data, but it does come directly to OYCR, and we.

Got it in time in December. We're just compiling it.

Actually, what happened was CPOC created a template for the AB 102 data submission. The data was submitted to us via email. Once the forms were received, they were reviewed for completeness and stored on our data team's sharepoint. If there was missing or inconsistencies, we had to reach back out to the counties. 16 counties had to do resubmissions. Of those 16 counties with corrections, three had to resubmit three separate times, and one had to resubmit four times.

OYCR received the last correction on February 24, which is when the AB 102 data collection was finally complete. There were issues with the consistency, the tracking, and the reporting of the data on the forum counties were provided. Data 0.1 which covers the number of youth for whom transfer hearings to adult criminal was ordered. The age at the time of the hearing being ordered began at 16.

However, one county actually changed their form, and so that again started to skew things, and we had to reach out to that county and let them know that 12,13 and 14 year olds could not be transferred and 15 year olds. So there were some issues with the form. And in the future, on a go forward, we're hoping that OYCR publishes the forms so it matches our data request. There was even the wrong labels. They asked about fitness hearings. There are no more fitness hearings.

They're all transfer hearings. We tried to negotiate that in order to ward off this confusion and we actually decided not to send out our own template so that the counties would not be further so. But I'm hoping that next year we'll have alignment on this.

Perfect. That was going to be my follow up question as to why CPAC did the template at us, but it sounds like going forward next year we're going to be more of the lead and sending that out to adequately get the data points that we want.

It was our preference always to the lead and that was a discussion that we had. But there was also a concern about timing and so it was always our intent to be the lead and we think we should be the lead.

Perfect. Thank you.

General.

Thank you, Madam Chair. When you spoke about the individuals committed to a secure youth treatment facility for sexual offenses, you mentioned that there was more to be done. I think if I heard it correctly, and I'm not sure exactly what that is, but since this is a Budget Subcommittee Hearing in Health and Human Services, I thought I would ask maybe what that is and whether it carries a dollar figure, and whether to make sure that someone has considered that.

Thank you.

Is that a fair question?

Series of them, actually.

Yes. Thank you.

Thank you, Senator. So, CASOMB, the California Sex Offender Management Board, used to have jurisdiction over DJJ sex behavior interventions. So when DJJ closed, that was no longer the case. And the youth who offend sexually are still on the planet, and now they're in the counties. The DJJ Sex Offender Therapy Treatment is state of the art best practices.

We have hired a former counselor, therapist Dr. Hunter on our staff to actually write all the training components so that counties can be trained up to use the exact programming that was held at DJJ. And those are the CASOMB guidelines for juvenile offenders. So I think ideally, we would bring those who treat juvenile offenders back under CASOMB and make sure that everyone is delivering the best possible treatment to our youth offenders and that the recidivism rate for youth who offend sexually remains less than three percent.

I also think that would give strength and comfort to those that are public safety minded, and we wouldn't see, for example, what some of us feared was an increase in transfer motions for juveniles who offend sexually because there's no longer a registration requirement. So if we knew that the treatment was as good as DJJ and was certified and overseen by something--a board like CASOMB--that that would serve our communities, our children, everyone better.

I mean we have these young folks--comparatively speaking--young folks sitting in secure youth treatment facilities for sexual offenses, and we need someone to write a training program and then get county people trained. Maybe I've missed it. I didn't see any money attached to this. Maybe there is.

Well, the training program is designed. It's published, as I had indicated on the CASOMB website, their juvenile offender training guidelines. OYCR is able to train, and that would be at no cost to the counties. Now, I think the money part might be in CASOMB having to certify and maybe even themselves train the providers. But the counties are already contracting with these therapists. They're already finding ways in counties that are doing this well, to have our youth have really state of the art interventions. There are some counties and one very large county that has no programs for youth who offend sexually.

Well, the reason I'm asking the question is I'm coming from a relatively uninformed perspective, so you can correct me at any point in time. My skin is very thick after 12 years up here. But I'm sort of concerned about this. And we have 58 counties and so what's the timeline to bring everybody on board? Is there a requirement buried somewhere in whatever we've done or the budget document that requires everybody to be on board with common training and a common curriculum?

Is there a deadline for everybody to--I'm a military guy, so I'm used to what gets measured gets done. So goals, objectives, and a plan of action. And I realize that's sort of a rare commodity up here, at least for us, but that's what I'm asking about and I'm not certain that I know.

So we are not a regulatory body. Our goal was to have expertise on our staff to do the training and we've done that.

And I'm not being critical.

Yeah, no, no. I'm just letting you know that I think that OYCR has done what it can to be on the ready to train counties, providers, behavioral health providers, private providers. It's a variety of ways that youth are being--getting the treatment in the facilities. So it's private contracts, it's Behavioral Health Department, so we're on the ready for that. There is no timeline by statute that this has to be done or that it even has to be done, that I'm aware of.

So that's on us. I mean, we spend a lot of time talking about sex offenses up here and sex offenders, both from the public safety standpoint and from dealing with rehabilitation. It would seem to me that this is a pretty important topic. I guess you would agree.

I would agree, and absolutely have been in the position of elevating it for the whole time that I've been here because of my participation in membership on CASOMB as well.

Well, you've just elevated it to the place it needs to be elevated to. So I'm not--Leadership, I'm sure, will figure this thing out. Yes, ma'am?

Chair, if I may, just from the budgetary perspective, I think what you're asking is what resources were provided to counties to help them serve, provide supervision and services for juvenile youth.

To require counties to take care of and account for youth who are in a secure youth treatment facility for sex offenses to make sure that they get the appropriate training and rehabilitation attention that they need while they are there, when they don't want to be there.

Sure. And I hear you. Where the youth are placed is up to judicial discretion. In terms of sex offenders specifically or what's available, the one thing I wanted to point out or a couple of things I wanted to point out from a budget perspective, first is trailer bill language was included in the 21-22 Budget that expanded the expertise of CASOMB to add individuals that have specific expertise in youth who commit sex offenses. So that did expand the membership of CASOMB.

SB 823 included 9.6 million for the regional programs and facilities grants. A portion of that funding was for the establishment of regional hubs, and part of what the idea was there is that counties could establish regional hubs for specialized populations that had specific needs.

So I just wanted to point that out. And then each county is given funds through the Juvenile Justice Realignment Block Grant in addition to other funds to provide specific services. So I just wanted to provide a little bit of color on the funding streams that are available.

And again, I wasn't being critical of the Administration on this at all. I was just somewhat concerned about the local option issue. And local option works. I'm a local control person myself. Local option works sometimes, but when it's a public policy issue of statewide concern, sometimes local option doesn't work quite as well as it does in other aspects. Thank you all for answering my question. I've dominated the Chair's hearing, and I will stop.

It's our hearing, sir. It's okay. Okay. I think we've no more questions on this issue. I'm going to move on to Issue Three: the Transfer of Juvenile Justice Programs to the Office of Youth and Community Restoration.

All right, thank you, Madam Chair. I'll start with--Joseph Donaldson, Department of Finance. I'll be starting with overview and my colleague will be helping with the additional questions. So this request shifts the federal Title II Grant Program administration functions from the Board of State and Community Corrections or BSCC to the Office of Youth and Community Restoration. Specifically, this proposal transfers the administration of the Title II Grant Program under the federal Juvenile Justice and Delinquency Prevention Act.

The transfer of grant administering authority includes the move of related spending authority and all grant administration functions, including support for the State Advisory Committee on Juvenile Justice and Delinquency Prevention and other compliance monitoring functions. This request also includes trailer bill language to effectuate the shift. Proposed changes establishes OYCR as a designated state agency to carry out grant administration functions, as well as repealing code sections that are no longer relevant or needed.

Additionally, the proposed changes delay the development of a new distribution methodology for the Juvenile Justice Realignment Block Grant from January 2024 to January 2025.

And I'll pick up from there. So I'm going to provide a brief overview of the six programs that were listed in the agenda, and there are a couple of questions about administration activities as well as interrelationship. So for the 2011 realignment allocations, which cover five of the six grant programs, the amounts that are included on page 15 of your agenda, there's a chart included from the Legislative Analyst Office, and the amounts within that chart are projected based on sales tax and vehicle licensing fee revenues.

Generally, the juvenile grants have a base amount, some of which are set, some of which fluctuate from year to year, as well as growth allocations, depending on whether growth materializes in any particular year. So for the purposes of my presentation, I'm relying on the chart provided on page 15.

For the Youth Offender Block Grant, that grant was established in conjunction with the 2007 Juvenile Realignment, which realigned lower level juvenile offenders to county supervision, and this funding is specifically to serve that realigned population and local justice-involved youth. For the Juvenile Justice Crime Prevention Act, this funding is available to counties to implement a comprehensive, multiagency juvenile justice plan and to fund programs that have proven effective in reducing crime and delinquency among at-risk youth as well as justice-involved youth.

The Juvenile Realignment Grant is a little bit more specific in terms of the population it's intended to serve. It is intended to serve local supervision of youth that would have been discharged from the Division of Juvenile Justice or DJJ, prior to DJJ's closure. And there's also a portion of that funding that goes to supervision of youth who may have committed a parole violation and are housed in juvenile detention facilities following their release from the former Division of Juvenile Justice.

In terms of the administration activities associated with these three grants, the Youth Offender Block Grant and the Juvenile Justice Crime Prevention Act have additional requirements they are required to provide, and those requirements were consolidated in 2016, so they're actually the same requirements and statute.

So the counties are required to provide a juvenile development plan to the Board of State and Community Corrections by May 1st of each year for their plans for the succeeding fiscal year, and then October 1st of each year, they're responsible for providing a report on how funds were expended from those two pots to the Board of State and Community Corrections and then this information is published on the BSCC's website. Just very quickly, I'll touch on the juvenile camps and ranches funding.

So this is specifically to support supervision of youth who are assigned to camps, which is another type of juvenile detention facility that operates--I think, Senator Menjivar, you mentioned that you've been to a few, including the one, Pine Grove, which is operated by the state.

The number of camps is a data set that's collected by BSCC in conjunction with their other statutory and regulatory responsibilities, and the funds are allocated based on the number of camps or number--the average daily population in those camps as specified in statute. Juvenile probation activities: this is a much broader pot, also included in 2011, and that is really available for a wide variety of purposes in terms of serving youth.

Some examples include educational advocacy, mental health assessments and counseling, family mentoring, life skills and counseling, among others. And on that last pot, those funds are directly allocated by the State Controller's Office based on a formulary that's set forth in statute. The Juvenile Justice Realignment Block Grant was established as a part of SB 823, and it's intended specifically to serve the realigned population.

The amounts are set forth in statute, and this year we'll incorporate like a growth element that's based on growth that applies to some of the other 2011 realignment grants. In terms of interrelationship, each pot of funding is available for its specific purposes. Our understanding is that counties will sometimes pool the funds and use them flexibly as long as they're meeting the specific legal requirements that exist, which are fairly extensive in each case.

So with that--and that was a very long presentation--if, happy to answer any questions. I can also quickly move on to the other points in the agenda about what kind of is included in this BCP, and then--okay, very good. I'll speed up a little bit. So, this BCP is--

I didn't mean speed up.

No, no. Yeah, I apologize. I know it's a lot of information. There are six programs. Again, if you have any specific questions, I'm available to answer. So, just very quickly, we view kind of the Governor's Budget proposal that's before you as the initial kind of start of the process. It does include the Title ll requirements that my colleague outlaid.

There is some additional discussion ongoing within the Administration related to the other 2011 realignment grants, and we are hoping to be able to share more with you soon, whether it's at the May Revision or otherwise. In terms of the resource needs related to the 2011 realignment grants, this proposal is a net-zero transfer between the Board of State Community Corrections and the Office of Youth and Community Restoration. So, from our perspective, we are transferring the resources that the BSCC was using to administer Title II.

They also had responsibility in relation to the 2011 realignment grants, and the Administration will be looking closely at OYCR's ongoing needs, which are subject to review through the annual budget process. The trailer bill language that delays the Juvenile Justice Realignment Block Grant formula, the rationale for the delay is really just more time is needed to engage with stakeholders, which includes the Legislature.

Delaying by a year allows us to provide some certainty to counties in terms of what will be available to them, which, just given the fiscal climate, seems appropriate and the Administration really values the necessary stakeholder feedback. OYCR will be leading that stakeholder engagement and is in the process of developing a plan for that that we are happy to share more when it's available.

It's still under development, but we, I think, looking forward to working collaboratively with the Legislature and stakeholders around what that revised formula will be with an interest, obviously, in making sure that formula is effective in improving youth outcomes.

Would you like to add anything for right now?

Just would agree that we have a blueprint for getting that stakeholder feedback. Think it's really important that it is robust and transparent, and we'll be working closely with DOF.

LAO, any comment on this? Okay. Let's jump in. Let's start with the grants right now, which is Title ll, which is like a really small portion of the total, approximately one billion dollars of when you accumulate all these six grants, right? Why--you said this is the start of the process--why does there need to be a start and why can't this just be a start-finish?

Yeah, completely understand. I think this is kind of the conversation about where the 2011 realignment grants--just perhaps my presentation implied, it's enormously complicated. They're subject to the Prop 30 guarantees. And so there's just some additional complexities around those grants that require a little bit more time and analysis, which is occurring within the Administration.

Wouldn't you say, though, that you've had enough time? It's been years. Why now, right before it's supposed to get up to the statue of this is a mandate? Why now say we need more time?

I think as we looked at the details more closely as a part of the budget development process, it was determined that more time was needed.

Are we going to meet our mandate and statue of transferring all the grants over?

I think we will be able to provide an update when we have a better sense of kind of those internal discussions that are occurring now.

When will you have a better sense? When will the internal discussion cease?

Yeah, so I think we have committed to the May Revision or sooner. I think it's something that we're interested in bringing forward as soon as we can as well. But the May Revision is obviously the next formal administration update, but if we can bring forward something sooner, we absolutely would.

I guess I'm wondering, after years, you just need a couple--the Administration needs like three more extra months to be able to really dive into why we can't do the complete shift. If this is a net-zero, maybe OYCR, you can help me understand what are the potential difficulties that we don't have or what don't we have in place to be able to just sweep everything and have a BCP that proposes everything?

I appreciate the question. I'm just not in a position to share more at this time.

Would it been maybe helpful for us to have someone here in the well that was in a position to share more information?

I think when I say I can't share more, it's because the discussions that are internal to the Administration, the budget development kind of conversations generally are confidential. So it's not that conversations aren't happening, it's just that we're not really in a position to share more at this point.

Just--Lucero, do you see any obstacles with OYCR having the capacity to onboard all these six grants? I know you have JJB--that acronym always gets me--you already have that under your purview. Do you--is there any extra help, capacity building you would need to onboard everything?

Gratefully, we met with BSCC, and at this time, I would have to say, after meetings and understanding the current requirements for staff hours, there are no obstacles to assuming management.

Because, if I'm not mistaken, I think BSCC doesn't even have a single position allocated to all of these grants. They're just embedded in their everyday duties, and they're able to run like that. So maybe by May, we'll understand why there's a delay, but let's switch over. Once this happens and we meet our mandate, how do you see OYCR changing how we administer these grants? I know we heard from Department of Finance how some of these grants are administered.

We're meeting some of these goals. You and I, you know how I feel. I don't think most counties are meeting the goals and services for our youth. So what role can we play in how we can change the funds being administered to counties?

Well, I'm a law follower. The heart of it, I came from the bench, so I would not do anything that the statute doesn't allow or require or that isn't already being done by the BSCC. So we don't expect to make major changes because we would be following the mandates of the law to the letter. I think other than what is statutorily required, which is consultation with counties, we would not be doing anything new and different.

Besides the potential methodology for--

Well, that's for the--

Yeah, that's for the separate one, but outside of that, okay. Hear what you're saying. I am really very curious to get this full plan as to what is holding us back of why Title ll got the green light and no other ones got the green light for right now. We heard that OYCR is ready to take on this, and it seems like it'd be status quo for most of the grants, so not much would change.

I've heard BSCC doesn't have any new extra positions like it's running smoothly. Looking forward to before May or by May to find out why the Department is hesitant in moving all these grants over. OYCR ombudsperson, you're all up and running. A full, staffed up. It seems like we're ready to go. No further questions on our end on that. We're going to move on to Issue Four. We're now going to be talking about the deferral of CalHHS Innovation Accelerator. Welcome back.

Thank you, Madam Chair. Again, Brendan McCarthy, Deputy Secretary for Program and Fiscal Affairs at CalHHS. So the agenda asks us to provide a brief overview of the project, which I'm happy to do. The problem we're trying to address here with this proposal is that sometimes there are innovations in the health care system that are slowly translated into the safety net, meaning in our mind, you know, public hospitals and clinics in the safety net that serve low-income residents of California, particularly the Medi-Cal population.

And so we want to accelerate the dissemination of those kind of innovations, particularly to address the disparities we see in many health conditions in our state. As I said, the point here is not to do new, original research. It's translational research. What is out there that really isn't being provided in the social safety net? And so the plan is to set some key targets or areas of focus.

For example, we've thought about looking at diabetes-related mortality, disparities in maternal and infant health, and the burden of infectious diseases, areas where we know there are large disparities in outcomes, and then try and make sure that the best available methods of care, technology, systems of care, are available in the health care safety net. The current year budget includes 75 million dollars General Fund for this effort. The Governor's January 10th Budget Proposal proposes to delay that funding to budget year plus one and budget year plus two--excuse me--delay 74 million dollars of it to budget year plus one and budget year plus two.

We had been intending to use one million dollars in the current year for planning efforts, and we actually were in the process of doing an RFP on this, but given the changes to the state's fiscal situation, we canceled the RFP just to wait to see what the decision is between the Administration and the Legislature about this program.

If it is included in the final Budget Act this year, then we would use the budget year for that planning effort, where we would dive deeper into the specific kinds of technologies and models of care we would look at, further refining what areas, like I mentioned, like diabetes prevention as an example, that we would be focusing on, and also thinking about governance models and ways that we may be able to partner with outside entities like philanthropy and other organizations who are also interested in addressing disparities to leverage the state investment.

Let's see. So that is essentially kind of an overview of the project. There are some other questions. Do you want me to address the questions in the agenda, Madam Chair? Okay. So you had asked what entities will be partners to receive funding. Our vision is that this is very much a partnership with the health care safety net, so public hospitals and clinics being the primary entities that we are thinking of.

But part of that planning process would be to look if there are other partners that would receive grants, either health care providers or maybe entities that can help in bringing those innovations into the safety net system. So that would be something we would address through the planning process. And as we discussed in the pre-hearing, we would envision having some kind of third party entity administering the grants, but that also would be something we would flesh out in the planning process.

And then your agenda asks for examples. So it's a little tricky because we still need to do the planning, but some examples that we have thought about, for example, are there uses of information technology that would better help coordinate care--for example, diabetes prevention or ways to look ahead and, for example, identify high risk pregnancies so that we can make sure all the appropriate care is available in a timely way to improve maternal and infant outcomes.

So those are the kind of things. It's not about new drugs or new devices, but it's about what's out there that we can bring to bear in the social safety net, new models of care to improve outcomes. Essentially, that's our thinking about what kinds of activities would be funded with this funding.

Thank you. Department of Finance. Any comments?

No further comments at this time.

LAO?

Ryan Miller, LAO. Just as a bit of background on this item, this was proposed initially last year. We had raised a number of questions about the funding and ultimately recommended rejecting the proposal. It was included in the three party, the final budget agreement in the summer, and the Administration, of course, now proposes us for a delay.

While the Administration has answered some of the questions that have been raised about this and continue to try to provide a sense of what these funds would be used for, the program really does still seem to be largely conceptual at this point, and especially given that the Administration has already proposed reductions to other programs, the Legislature is going to have to weigh those reductions or other potential reductions against keeping funding for this program.

So I think given the largely conceptual nature of this proposal still, it seems to us like a strong candidate to convert into a reduction rather than a delay. If the program does remain in the state's fiscal plan in this eventual budget, we would recommend that the Legislature adopt provisional language that would provide some oversight over the program as it develops, and we'd be available to provide technical assistance on that. Thank you.

Thank you so much. So you mentioned, Deputy Secretary, yes? Title? Regards to closing some of those or reaching some of those gaps in social equity, and I completely agree with you. Why I'm baffled is that with that being the mission of the Department, why we're cutting programs for CalWORKs and foster youth, which we know that we have enough data on, that really addresses the social equity gaps and really helps to prevent physical, mental health barriers.

This is top of my list in having it just cut. I don't think we should delay this. I think we should immediately cut this because down the line I can't, and I don't think you could really give me a good reason as to why this is more important than--first, why this is more important than SILPs for foster youth. There's no one that can argue that this is going to be more important to fund entities versus funding our vulnerable population. So this one's going to be a really difficult one for me to--and I'll see what we can do after Sub Three stuff, but that's how I feel about this topic. General?

Oh, thank you, Madam Chair. I am sort of taken back to my time in Budget Sub Four of, I guess, a decade or more ago when we were debating, initially at its infancy, precision medicine. Some of you may remember that, and we had the same conversation about whether that should be funded in light of conflicting budget priorities, and I took a particular position. That program, over time, has proven to be very, very valuable in the health care arena.

But given the budget constraints that we have this year and the ones that are projected in the three years following, assuming the projections are accurate, and we don't have any reason to believe that they're not, I just wonder and agree with my Chair if this money can't be put to use maintaining health-related benefits that are threatened under the premise that some health care today is better than better health care tomorrow or the day after or three years later, given the cuts that are proposed or the deferrals that are proposed, in addition to the programs that the Chair has mentioned to very, very important health care workforce training programs, behavioral health training programs, where the pipeline is long and if we interrupt the pipeline, we're just kicking the can down the road to make it worse three, four, five, ten years from now.

So I'm not going to belabor this, but I have to say that I do agree with my Chair on this particular budget item, and we need to think very long and hard about how we handle it.

So no really questions, just our thoughts on it. Thank you so much for your time.

Thank you, Madam Chair and Members.

That concludes our CalHHS section. I now invite anyone that wants to provide comments on the first four issues that we've talked about to please step forward. You will have a minute to share with us your insights and thoughts.

All right, good morning. Josh Gauger on behalf of the Chief Probation Officers of California. As you know, with the passage of SB 823, county probation departments are now responsible for the full continuum of juvenile justice at the local level, including care for the highest need youth previously admitted to State DJJ. As outlined in the agenda, probation chiefs are collaborating locally on their annual realignment plans and expenditure of the Juvenile Justice Realignment Block Grant and coordinating with the Office of Youth and Community Restoration.

Pursuant to last year's budget bill, probation departments are also collecting and submitting realignment related data to OYCR as displayed in the agenda. SB 823 actually called for a plan to overhaul the DOJ JCPSS system, but in the absence of that project that would take several years, probation departments began collecting realignment data on our own, knowing there would be an interest among policymakers.

When the new data submission requirements passed, we actually didn't send a template to counties until the last week of October because counties only had a couple of months to report the data at that point. Just quickly, we also agree with the goal of avoiding net widening and know it's a delicate balance as we try to stand up quality juvenile programs that can help reduce adult transfers. Relative to Issue Three--

You can wrap up, please.

On the transfer, no concerns with what's out there now. I know there was a lot of conversations today about transferring additional grant programs. Essentially, our main focus is ensuring in any transition of juvenile grants that it doesn't disrupt the stability, consistency, and continuity of the existing programs that were a foundation of existing success. Thank you.

Thank you. Anyone else? Okay, moving on to our next Department: California Health Facilities Financing Authority.

Welcome the administration's presenters. You can provide me your name and then an overview of CHFFA. CHFFA. Okay, there you go.

Yes. Carolyn Aboubechara, Executive Director of the California Health Facilities Financing Authority, also known as CHFFA. Yes. Thank you, Madam Chair. So, to begin, I can just begin with the overview. Okay, so I'll begin with the overview. So the California Health Facilities Financing Authority, or CHFFA, was established in 1979 to improve healthcare access in California by providing financial assistance to nonprofit and public hospitals and health facilities throughout the state, mainly through financings of cost effective bonds, loans, and direct grant programs.

There are 21 different types of facilities or health facilities throughout the state that we can finance through our act, ranging from small rural health facilities or clinics to multi hospital systems throughout the State of California. We mainly finance facilities, property, and equipment. CHFFA is governed by nine members. The state treasurer, Fiona Ma, is the chair.

We also have the state controller, the Director of finance, two members appointed by the Senate Rules Committee, two members appointed by the speaker of the Assembly, and two members appointed by the Governor, subject to confirmation by the Senate. We have in the materials before you nine active financing programs, including tax exempt bonds, low cost loans, and grant programs, two of which I'm going to be speaking about today. So I can pause there before I get into the other two issues if you have any questions about CHFFA.

Department of Finance, any comment on this?

Ty Olray, Department of Finance. Looking to add.

Ryan Miller, LAO, nothing to add, but available for questions.

Thank you so much. Just dive into issue number two. One of the first grant programs.

Yes. So the first one is the specialty dental clinic grant program. So this program is the newest program that CHFFA had received a budget allocation in the Budget Act of 2022 for $25 million, and then another $25 million in the Budget Act of 2023. This program is developed particularly to increase access to dental care for the special healthcare needs populations through the development and expansion of specialty dental clinics. So after CHFFA received the funding, we hired a technical advisor, the California Dental Association.

We worked on various stakeholder meetings, engaging Department of Developmental Services, Association of Nurse Anesthesis, Dental Hygienist Association. We developed guidelines, and we held a virtual public stakeholder meeting with over 100 stakeholders to kind of grasp the need of the community and what are the needs out there so we can build the program as a robust program. We developed guidelines that the CHFFA board approved last summer of 2023.

Then we actually conducted some site visits to some specialty dental clinics to kind of see the care that's provided so we can build our program to meet their needs. And we heard that it can take a year or two to get an appointment for this type of population because of their special health care needs. And so after the board approved the guidelines in summer of 2023, we opened a funding round to accept applications with a deadline of April 1, 2024.

We held an application technical assistance webinar to walk all potential applicants through our process so that they can apply. Given with the January budget release, it was announced that the funding would be delayed till the 25-26 budget year. And so we discussed what is the best option given the fact that we are already in an open funding round. We had already received six applications, so we discussed about various options and we decided to continue accepting applications until the April 1 deadline.

However, we've notified everyone that the scoring and the review and the evaluation of those applications will be on hold until the funding is replenished. At the time when the funding is replenished, we will give everybody the opportunity to update their applications and update projects, because a project could change if they're buying real estate or construction, update their costs and update their timelines. And so that is kind of what we've decided currently.

As of now, we have received 10 applications, four applications from Northern California, five from Southern California, and one from Central California. So it's kind of where we're at right now, ready to proceed with whatever goes forward.

Department of Finance, any comment on this matter?

Nothing to add.

LAO?

We think that the proposed delay is reasonable in light of the budget condition.

Yeah, sad, but reasonable. Few from my knowledge. How many of these specialized clinics do we have in the state? Do we know?

I would have to get that probably, but I don't know. I can get that for you after the fact.

No, I actually did a tour in one of my clinics in my district and I learned a lot about this topic. And you shared one to two years to get an appointment. That's exactly what they talked to me about, especially in the sub three. We've dived into the IDD population and how it correlates all this intersectionality.

So it sounds like, potentially, depending on how our budget is for the next couple of years, that there is maybe a small window to be able to continue with these applications. The 10 applications.

We don't have the funding, so we are going to accept them, but we're going to put them on hold. As soon as the funding replenishes, we'll begin the scoring and review and then make the awards. We can't make a commitment for funds when for example, if we were to make an award without the funds, we would be legally and obligated, committed to give them the funds. But then if the funds don't come for a year, they won't be able to proceed with their projects.

Then their whole application will completely change. Real estate might go off the market, construction costs may increase, timelines will change. So what we awarded will be a completely different animal when it's time to fund.

And how long do we have that person that we hired on to help with this program?

That person that was hired for this program right now is being utilized for other programs. So we're going to continue to keep that position. We have a little bit of funding for support that's not being reverted. Very little, I think 1.25 million.

And what's that going to be used for?

It's just going to be used for staffing because we continue to get emails and questions, like four or five every single week, people who are interested, questions on the program, and then applications being submitted. So we're going to continue very little with staffing. The good thing is we hadn't staffed up the positions below the manager. We had hired and dedicated a manager for this program, but we hadn't filled those positions until we were going to do it earlier this year. But then we heard the news.

Okay.

Yeah.

Can you share a little bit more anecdotally, just the need for this?

Yes, definitely. We had a stakeholder meeting. We had over 400 or 500 emails or people sign up to our email list that were interested in the program. We held a webinar for 100 different providers, associations, local members voiced their need for the program and talked about the uniqueness of this population and how long it takes that there's a shortage. Obviously, everyone wanted to make that clear, that they wanted this program to be implemented in the best way possible to help the clients.

So we've been hearing a lot. I mean, we visited specialty dental clinic in Sacramento. We visited one in the Bay Area. And we kind of saw how much special treatment they need. I mean, they need to have, like if a person has cognitive issues, they need a room that's kind of silent, little noise, specialized equipment. We got to see all of that. And so that's the goal of us being able to fund through the program. But, yeah, we've heard a lot over the years and we get four to five inquiries every single week.

Okay. General?

So that was helpful, by the way. So the one to two years to get an appointment, is that solely because of facilities or is it providers?

What I was told it's both and, providers, in order to be able to serve this population, need a facility. Does that work? Okay, so, yeah, that is what we've heard. It's both.

And the pay for the services, is that Medi-Cal?

Medi-Cal. The program that was built through statue is for Medi-Cal patients, and that is the goal of this program. It's for the Medi-Cal patients.

And are the Medi-Cal dental rates for this particular program higher than they are for the normal Medi-Cal, the other portion of the Medi-Cal population?

I do not know the answer to that. I don't believe so. But I can definitely follow up with you on that.

Because, I mean, I'm trying to remember, aren't Medi-Cal reimbursement rates for dental services said to be low?

We've heard that it's not enough funding. So what we've heard is that providers do not want to engage fully 100% into this business because the rates cannot sustain a full 100% occupied. A facility, if it were to serve or have 10 operatories, not all 100% of the facility would be dedicated to Medi-Cal because it wouldn't be enough to provide economies of scale. That's what we've heard. A lot of the providers will be providing to both populations, insurance, and Medi-Cal.

And we built the program to accommodate that so we can get as many providers as possible to want to provide Medi-Cal services. If we funded a facility, not 100% of it has to be used for this population. It can serve both populations. So a facility can be sustainable in the future.

Well, I mean, don't get me wrong. This is a very, very important piece of the budget. We spend a lot of our time and attention, as we should, on this population, because they deserve everything that we can give them and then some, health care and otherwise. I'm just concerned that this is focused on construction, and it may not address the other portion of it having to do with reimbursement rates. And I realize it's a different portion of the budget, so we'll continue to push for this. Thank you, Madam Chair.

I hear you on that, General. I agree. Thank you so much. LAO, any comment on this?

Nothing further to add.

Department of Finance, I skipped you.

Nothing to add.

Great. Okay, no further questions on our end. Thank you so much. We're going to hold this item open and move on to issue number three.

Okay, so issue number three is a proposal to extend the deadline to utilize the administrative funds that were allocated for the Distressed Hospital Loan Program by CHFFA and the Department of Healthcare Access and Information from June 30, 2026 to the December 31, 2031 deadline or sunset date of the program in statute.

So, if you may remember, back in May of 2023, the Distress hospital loan program was established through urgency legislation authorizing both CHFFA and HCAI to co-administer the program and issue loans to hospitals in significant financial distress and offer 0% loans with 72 month loan terms with an 18 month grace period payment deferral at the beginning of the loan issue. And the goal of this program is to prevent closure of distressed hospitals and facilitate the reopening of closed hospitals.

The program was funded with 7.5 million to administer the program and we entered into or CHFFA entered into an interagency agreement with HCAI so that we co-develop the application process, methodology, and the distribution of loans.

And also due to the complex financial situation of a lot of the hospitals being in significant financial distress and being in bankruptcy, we hired outside legal counsel to assist us with the preparation, review, and negotiation of all the loan terms to ensure we secured the security that's required in the statute due to their situations. The CHFFA received 30 applications in the first funding round. By the July 31, 2023 deadline, HCAI made determinations to 17 hospitals for a total of $292.5 million, allocating all available funds.

Since then, one hospital forfeited its funds and then, as of now, as of today, CHFFA has dispersed $222.4 million to 13 hospitals. There are only three hospitals remaining, two of which are in bankruptcy and are a little more complex, and we continue negotiations, conversations, and engaging our council on those situations. So CHFFA basically is contractually committed right now to at least 13, eventually 16 hospitals for ongoing work to at least 2030. These are six year loans. There's a lot of compliance duties.

After a loan is issued, hospitals might want to take on more debt. They need to get consent from us. There are 16 reports they have to submit annually, which include audited financial statements, unaudited quarterly financials, board approved budgets a progress update on the turnaround plan that each hospital engaged in to in order to turn around their hospital operations to ensure sustainability. Utilization statistics, financial ratios this is all ongoing work that CHFFA staff has already committed itself to for at least until 2030. And so basically this proposal is just to extend. It's not additional funding, it's extending the deadline to utilize the already allocated funds till 2031.

Thank you. Questions? Department of Finance any additional comments?

Ty Olray, Department of Finance. Just wanted to add that we received the proposed trailer bill language after our release of the Governor's Budget. In January. So we're still working to complete our evaluation of the change, and we'll work with CHFFA to that end as we move into the spring.

Thank you. LAO?

No concerns.

Thank you. You mentioned several audits and reports. Is that on an annual basis or is that until after the 18 months that they pay? After the 72 months and 18 months that they pay?

So, for example, a lot of the loans close late 2023 and early 2024. So every quarter a report is due, and we give them, like, 30 or 45 days after each quarter. So we already have a lot of reports due now. And so there's 16 throughout the year. We will be collecting on an annual basis. So 16 times six, I would say. And then we would be looking at those with HCAI obviously.

We're working conjointly together on this program, on assessing them, and there's going to actually be additional work on determining the application process for modification because that's also in the statute as well as potentially loan forgiveness. That is to come after these get dispersed, the two agencies will work together on developing that criteria. So there's a lot more work to come.

Of the 16, with 13 right now, potentially 16. Would you say that we've captured the majority of the hospitals that needed support?

I could say the most dire. The ones out of all the hospitals, the most dire and the ones that are in most significant financial distress.

So we did capture all of them. There wasn't one that somehow didn't apply for it?

There was a lot that applied. I mean, we got 30 applications, but with the limited funding, we picked the most dire that really needed the funds to keep their doors open and, yeah, more to come on the reopening and the bankruptcy situation.

Okay. General?

Thank you, Madam Chair. I'm just curious. I realize most of this was under the gun last year, where hospitals were either one closed and others were preparing to close, and others were probably getting in line. I'm just curious, when the hospitals submitted their plans of action and recovery plans and various reports, did you have the time prior to loan closing to conduct an accounting or forensic review of their plan of action, to determine whether it looked like it might work?

So we partnered with HCAI, and there was a methodology that was developed. Four main criteria about liquidity, how liquid the hospital is, their financial capacity, and the turnaround plan. The turnaround plan was key. All the turnaround plans. Each hospital is required to submit a plan, how it would take the loan from the program, and how it would turn around the operations to become sustainable on its own. HCAI had the responsibility to do the analysis and the determination of those.

And there was a deep analysis of cash flow projections and plans of maybe just operation changes in order to show that they can potentially become sustainable before the decisions were made.

Was that documented?

Yes.

I'm not asking who has it, I'm just asking.

So there's the methodology on CHFFA's website as well as HCAI's website on how the assessment was done.

I assume part of it entailed, in some cases, if not many of those cases, changes in the payer mix at the hospital, Medi-Cal versus commercial, Medicare.

I mean, there was mentions of them. Yeah, there was a variety of different. I mean, from what I've seen, because there's just so much. There's hospitals suggesting closing divisions that aren't maybe profitable, reopening other divisions that are more profitable, getting lines of credit. There was just a variety of different tasks or items that they were going to pursue. It was all over.

Well, for example, closing lines of business that are not profitable. We have some role in that. I mean, not the Legislature necessarily, but government does. Was there follow up to make sure that those actions were, that we facilitate those actions if you all determined it was appropriate? For example, I hate to say it, but a maternity line of service?

So each hospital will be giving a quarterly update on whatever they said that they were going to do in the turnaround plan. So if they had said that they were going to close the clinic or open a clinic, they are going to have to give us quarterly updates. That comes to us and to HCAI, and we'll be looking into their progress. Eventually, once we develop the application process for modification and forgiveness, we will definitely dive into how well they were able to implement those turnaround plans.

And just one final question. Given the fact that I understand we're going to have to undertake this in a different Committee this year, but was the cost of seismic upgrade included in the analysis of the hospital's continued viability?

Not in the initial. Not in the initial decision of, well, not that I believe so. I would have to confirm with HCAI, but I don't believe it was in the initial decision. So it was more how to give which hospitals needed the funding to keep the doors open and prevent from closure.

We'll have to deal with that later. Thank you very much for your response. Thank you, Madam Chair.

Thank you so much. No further questions. We're going to hold the item open, move on to public comment for issues one through three. Please keep your comments to one minute.

Good afternoon, Chair and Members. Jessica Moran with the California Dental Association, here to give comments on item number two on the specialty dental clinic grants. Just wanted to again urge you, the Legislature, to not delay those grants. I wanted to also address some comments that were asked of the Committee. So as far as how many sites are currently in the state, it's really hard to quantify.

We do know that most people go to UCSF or UOP in the Bay Area if they're in LA, typically USC, UCLA. The dental schools are, who really have the most capacity to treat these know, you know, UCLA has six chairs, so they can only see six patients at a time. And this population, because they do need special modifications or extra time for desensitization and to get them used to being in the chair, their appointments do take longer.

So that is part of the reason why waitlists are so backed up, in addition to Covid and just lack of capacity. So the reason this grant is focused on construction is we're trying to really increase capacity throughout the states. That way the patients don't have to travel to the Bay Area or to LA.

Right. Sorry. So again, just really, these adaptive facilities will really make an impact for this population. This is a long standing issue, and we thank CHFFA for developing this grant in such a thoughtful way to increase geographic diversity. Sorry, not reduce it. So, yeah, again, urge you not to delay. And thank you so much. We'll continue to work with the Legislature on this issue. Thanks.

Thanks.

Daniel Savino, Association of Regional Center Agencies. The Regional Centers are also in opposition to issue two, the proposed delay of funding for these clinics. It really is an access and capacity issue. Families have to drive hours to get an appointment, to get to an appointment once they can get it. A roommate of mine once had a very bad toothache. It was utterly debilitating for him, and his sole challenge was poverty. It was not distance, it was not communications. It was not disability.

And living with that for a period of time was utterly debilitating for him. Imagine when you throw in special needs, other challenges, the lives of our families and the community that we serve. This is really a critical issue. We hope that the Committee will reject this.

Thank you.

Good morning. Good morning. Andrea Rivera, on behalf of the California Pan Ethnic Health Network, CPEN would also like to express our disappointment on the delay of the specialty grant program. The delay will prevent many communities from accessing preventative and early intervention care and disrupt timely access, particularly for geographically isolated parts of the state. Thank you. Thank you.

Hi. Good morning. My name is Matt Roman with Niemela, Pappas and Associates representing Pacific Dental Services, again echoing the concerns from CDA on the delay of the specialty dental clinic funding. This is already a largely disenfranchised, this is going to continue disenfranchising a really largely marginalized population in this state. We just want to see that this funding is held and we urge the Committee to reject it.

Thank you.

Madam Chair, Members of the Committee. Stephanie Roberson, on behalf of the Association of Dental Support Organizations, echoing comments from the CDA and Pacific Dental Services. You've already heard from my partners, you've heard from the staff at CHFFA that this is an important program. It's a staffed up program, and they're already accepting applications right now. And so with that, we request that the Legislature rejects the governor's proposed delay of these dental clinic programs. And again, the deferral of this program would further exacerbate access to care for an already existing vulnerable population. Thank you for your time.

Thank you. Anyone else for public comment? Before you leave, I just was thinking about something and maybe this is for DOF and LAO. Is there something? Being mindful, I get it. We have to cut somewhere, delay somewhere where some funding could be allocated, where we can start some planning of these so that when potentially we come back to moving the program forward, that some planning of the applicants is ready to go and we don't delay it completely?

The challenge is if we were to legally grant an award just for planning. Our awards are not for planning initially. It's for infrastructure. It's for buildings, equipment, and basically getting the facility up and running. So I don't think the statute opens it up to planning grants. But a lot of the proposals that we've received, they already have their plans together. So we have to legally commit ourselves to funding the full grant. So I don't know.

We've done a lot of grants over the years, and I guess you kind of have to fund the full project per person, per applicant. It's hard to just give money just for planning when these projects should be shoveled ready when they apply or as shovel ready as possible when they apply to be competitive. Okay, that might be.

And just to add to that, it was determined from our side that best solution for considering all the programs that were up for solutions, that the full delay was most appropriate for the governance budget.

Yeah, I think we would also add, this is a case where it appears that there's already been a lot of groundwork laid to have this program ready. They've already accepted applications.

There's kind of varying degrees of these delayed programs in terms of the extent to which they are off the ground, I think we would point to the item in the HHS section of the agenda that was already heard as one that was really not in that position. Right. So the Legislature will want to weigh these choices and trade offs. Of course, at the end of the day, the budget condition appears to be worsting beyond that that's shown in the Governor's Budget. And so there are a lot of tough choices that apparently will have to be made, I guess.

Thank you so much.

Well, I'll just say this. I mean, I think we're going to have to make a list, and we're going to have to make a list of all these that are proposed to be reversions and all these that are proposed to be deferrals, particularly in the healthcare arena. And we're going to have to do some triaging.

And I think you're right, we have to close a gap, but we're going to have to take a look at, in closing the gap, who are we going to hurt the most, given that everybody's going to have pain and we're going to have to make some tough decisions, and this may be one of those that needs to be left on the table instead of being swept off.

I think we also need to take a look at our Medi-Cal reimbursement rates for those who are providing this service to those with special needs. And we may need to figure out how to incentivize those individuals who have dental skills to work in this area. So that's my comment, Madam Chair.

Maybe MCO? Thank you so much. We're going to move on to the next department. I'd like to welcome up EMSA. The Administration can start with an overview of the Emergency Medical Services Authority.

Absolutely.

And yes. And your name, too, please.

Is it on now? Okay. I'm Craig Johnson, Administration and Human Resource Division Chief for the Emergency Medical Service Authority, which I'll refer to as EMSA going forward. And as requested, I'll provide you the overview of our department and our proposals. So EMSA was formally established by the Emergency Medical Services System and Prehospital Emergency Care Personnel Act, SB 125 in 1980 as the state lead agency and centralized resource to oversee emergencies and disaster medical services in California.

California's emergency medical system in California was created in 1981 by the Health and Safety Code Division 2.5 with the intent of creating a statewide system with EMSA responsible for coordination and integration of all state activities concerning emergency medical services to ensure the provision of effective and efficient emergency medical care. EMSA is charged with providing leadership in the innovation and administration of the emergency medical services system throughout the state, which includes setting standards for the training and scope of practice for various levels of EMS personnel.

EMSA is also responsible for promoting disaster medical preparedness throughout the state and, when required, coordinating and supporting the State of California's medical response to major disasters. EMSA works closely with many local, state, and federal agencies, private enterprises and those in disaster medical services roles to promote quality EMS services statewide. The EMSA authority's program functions are organized into three divisions, EMS Personnel Standards Division, EMS Systems Planning and Development Division, and Disaster Medical Services Division. I'll leave it there for our overview.

Department of Finance, any additional comments with overview?

Christine Cherdboonmuang, Department of Finance, nothing further but add thank you.

Will, welcome back.

Good to be back. So, Will Owens, Legislative Analyst Office. Nothing further to add on the overview but available for questions.

You might be the only name I've memorized. Could I just get an update? Last year we talked about this transition of the, I believe it was the post and the advanced directive. And just like some of the barriers in transferring all that information, just want to get a quick update on that situation there.

Okay. Good morning. Elizabeth Basnett, the Director for the Emergency Medical Services Authority. So I believe last year, recalling correctly, we had trailer bill language put forward to remove the advanced Healthcare directive out of the e-POLST electronic registry, the electronic registry for the physician order for life sustaining treatment. So as a part of that, we are still standing up the pulse registry electronic registry statewide.

And we are adding, as the advanced healthcare directive is managed by the Secretary of State's Office, we are adding a checkbox to the bottom of our e-POLST form so that if a patient has an advanced healthcare directive with the Secretary of State's Office, that that is then informed with the physician or whoever could pull up that POLST form and they can see that they could also reach out to the Secretary of State's office. Is that helpful?

Yeah. And then I know we also changed some of the background for one of the positions that you needed to hire. Shoot, it was the chief medical, Chief Medical Officer because we were having some difficulties bringing in somebody. So we realigned that. Were we able to bring in that person?

So the change was, we had put forward to change the Director of EMSA. The requirement was always there to be a physician specializing in emergency medicine.

And then we bifurcated that where the Director, that was no longer a requirement, but we did add a Chief Medical Officer. We are working with the governor's office to try to bring somebody in that role, but we do have an acting Chief Medical Officer who's serving us now and doing a fantastic job.

Great. Thank you. Okay, let's move on. Any questions in general, on the overview? Great. Let's move on to issue two: maintenance and repair of the critical biomedical equipment.

Wait for it to come back on. There it is. So EMSA requests 2 million General Funding '24, '25 and ongoing, to maintain critical biomedical equipment and medical supplies acquired during the Covid-19 pandemic and provide life saving, resuscitative, and medical surge services to relieve suffering for disaster victims during pandemics or other catastrophic emergencies. The 2021-22 Budget Act included 2 million General Fund to maintain approximately 4,000 pieces of equipment. Funding for the maintenance contract expires at the end of 23-24.

These funds are used to contract with biomedical equipment maintenance company via the Department of General Services Equipment Maintenance Management Insurance Program. During the Covid-19 pandemic, EMSA had nearly 3,000 pieces of biomedical equipment deployed throughout the state and country. The request outlined in this proposal will keep approximately 4,000 biomedical equipment pieces ready to deploy for future large incidents, disasters, and pandemics. If approved, EMSA Disaster Medical Service Division will be able to significantly support and improve disaster medical preparedness, mitigation, response, and recovery for major disasters.

Department of Finance, any comments?

No comment. Thank you.

Well, yes, so we have the same comments for all of the proposals. So I'll just say now, so as not to repeat myself, but generally we have no concerns with any of the proposals. That being said, given the budget situation, the Legislature may want to weigh any new General Fund spending proposed in the budget. Given the budget situation now and moving forward. That being said, no concerns necessarily with these specific proposals.

General Roth.

You know, this takes me back about a decade. I hate to keep saying that, but it unfortunately is true in sub four in this state. We at one point in time maintained, I can't remember exactly, and by the way, this isn't your area of responsibility, but three to four mobile field hospitals, much like the military does still, and they were staged in various locations in the state to be available for natural disasters and other health care emergencies.

Unfortunately, for budget reasons, in a prior Administration, the Administration decided not to maintain, update the mobile field hospitals because not only does the equipment require repair and maintenance, pharmaceuticals need to be reviewed and replaced, and equipment, surgical equipment and the like, the hospitals were allowed to deteriorate were eventually removed from various locations in the state, warehoused in a warehouse somewhere here in the Sacramento area, and allowed to further deteriorate to the point where I assume they just tossed them in a trash bin or disposed of the hazardous material and they are completely unusable to the extent they exist today.

As we deal with seismic issues with hospitals up and down the state and closures of hospitals, for a relatively small amount of money, those could have been maintained and kept in strategic locations around the state and available to deploy. I thought it was a mistake then, I think it was a mistake now. I continue to believe we should have that sort of resource.

So, having said all that, I commend this request and I hope that we can figure out a way to find $2 million to allow you to maintain repair the equipment that we have today so that we don't have to repurchase it, reacquire it the next time we have one of these statewide emergencies. That's my comment, Madam Chair.

Thank you so much, General. Yes, agree with that. I think it's helpful for us to be prepared, right? Not be a kind of situation that we were a couple of years ago. My only thing is it's going to be for both issues is I would ask that the department come back again next year and that we think about approving only by the year. Given the budget and what it's looked like. I'm a little hesitant in setting aside for the next two x years, so that would be my only thing for this issue. And same comments for the next issue, but go ahead with issue number three.

So issue proposal number two, I assume. Sorry about that. So EMSA requests 4.2 million General Fund in 2024 and 25, and 4.4 million General Fund in 25-26. The requested resources will provide for the continued maintenance and operation of the California Emergency Medical Services Information System, known as CEMSIS. Additional resources will continue to allow EMSA to monitor and improve California emergency medical services system to meet the patient and clinical care needs of 39 million residents and 268,000,000 visitors per year.

CEMSIS is a secure, centralized data system for collecting data about individual emergency medical services requests, patients treated at hospitals, and EMS provider organizations. CEMSIS uses a universal standard for collecting patient care information from an emergency 911 call for assistance called the National Emergency Medical Services Information System, or NEMSIS.

CEMSIS provides the only statewide means of monitoring the overall health of the EMS system and the care that EMS agencies provide to California residents and visitors, and identifying strains and threats to the EMS system from local or statewide events. Throughout the Covid-19 pandemic, CEMSIS has proven an essential source of critical information for evaluating patient care.

Continued operation of CEMSIS is critical to maintain an effective and statewide EMS system, as well as meet the statutory requirement for LEMSIS to require emergency medical care providers to provide health data in a format that complies with CEMSIS and NEMSIS standards. And that's according to the California Health and Safety Code of 1797.227.

Any further comment?

No further comment. Thank you.

What kind of data points are we collecting?

Thank you so much.

I feel like you knew that was coming.

Yes, and we love this question. So here's a great, maybe just two quick, great examples of how we use this data. One is you can see when EMS provider arrives on scene, they fill out in the electronic patient care record what the primary impression was. We do 7 million plus transports a year.

And so we know right now from the data that 740 patients a day, it's documented that their primary impression is behavioral health or psychiatric need. And so as we have these great conversations around 988 or policy and legislation, this really helps inform that. And then another just a disaster example, because I think that's really important as well.

During the Covid-19 pandemic, as you all, I think would be aware, we deployed ambulance patient offload teams to the hospitals to support the emergency departments across the state, using the CEMSIS data around ambulance patient offload time and the data that was inputted into those EPCRs. And so when you have 7 million transports a year across 58 counties, you really are able to understand quality assurance, the ebbs and flows within the system, and have some hopefully really good policies.

Last year, somebody remember Freddie Rodriguez and I can't remember if it got signed or not to collect data around the wait time. Will you be collecting, does that information come up to EMSA?

AB 40. Is that what a charge of EMSA.

Have we started collecting that information?

We have not started collecting that. Well, we collect ambulance patient offload time. That piece of legislation was around electronic signatures between a nurse and an EMS providers was very technical. That has not started yet. Those electronic signatures have not been implemented today, but it is something that we're working through.

And did you say that 70% of the types of cause are behavioral health?

Sorry. 740 patient touches a day across the state, the primary impression is listed as behavioral health. And so that's just one example. There's hundreds of data fields in an electronic patient care record, but that's just a real life example of just policy conversations we're having today and how that data can be used and why this system is so important.

So, I mean, knowledge for me, if I needed information on something related to this, I could reach out to EMSA: hey, do we have a data point on this? You share that. Oh, good to know. General?

Are you able to tell us what, for example, in the behavioral health area, what percentage of the total calls that 700-and-something represents?

So I can't do the math on my head, but it's 740 a day times 365 days. And we know we do 7 million transports a year, so I can't run that percentage.

Oh, I see.

Off the top of my head. But yes, we could absolutely follow up with that information.

So there's a total daily figure and then we know 700 of the total daily.

Exactly.

Is behavioral health. And somebody could do the math and figure out what percentage for those?

That's an average, right. A point in time average across if you were to run it across 365 days versus maybe the fourth quarter of the year around the holiday season, that data might look different.

And it's not geographically sliced.

Well, we can. Right. We definitely can.

So one other question, and it relates to the wall time in the hospitals, when will you start being able to capture the electronic sign off between the paramedic and the nurse in the hospital?

I think if we could follow up on that. I think we have our state database, but the requirement for an electronic signature, we have a lot of work ahead with stakeholders for their local EPCR platforms and how they would implement it. So I couldn't give you an answer on that today, but we could absolutely follow up.

No, your system has to interface with 58 counties.

Yes. And those system have to integrate with 1000-plus providers.

Thank you.

One last thing. Is there anything on there that are top of head other interesting data points just to share with us?

Not top of mind, but absolutely would welcome. We have an annual CEMSIS report that we would love, we'd be happy to share.

Great. Okay, we're going to hold the item open and we're going to move on to issue number four.

Great. So EMSA requests General Fund of 3 million in 24-25, 3.1 million in 25-26 and 3.2 million in 26-27. The requested resources will be used for the continued storage and security of emergency medical response equipment and supplies. So during the Covid-19 pandemic, EMSA's single warehouse, which contained approximately 25,000 square feet of storage, was woefully insufficient to house the needed equipment and supplies to support the department during the Covid-19 response efforts, as well as any other future responses.

So, to meet the immediate need for space, EMSA leased three additional warehouses to support the emergency operations, including the in-processing and storage of nearly 15,000, 16,000 ventilators, plus infusion pumps and oxygen concentrators and other associated equipment and devices. To scale back warehouse storage capacity in proportion to declining emergency medical response needs after the initial Covid-19 pandemic surge, the three additional warehouses were consolidated in '21 and '22 into one warehouse with 255,000 square feet, which includes 13,000 square feet of office space.

Now, EMSA requires 255,000 square feet of warehouse space, as well as security services and janitorial services to address current warehouse operational needs and to adequately store and manage existing inventories of medical equipment, medical supplies, and other medical response assets.

Department of Finance any additional comment?

No further comments.

No further comments on my end. We're going to hold the item open, and before you leave, we're going to open it to public comment. If anyone has any public comment under EMSA, please come forward. You have 1 minute each.

Madam Chair, Members of the Committee, my name is Nick Clay. I am the President of the California Emergency Medical Services Administrators Association of California, also known as EMSAAC. We represent all 34 local EMS agencies across the state, representing all 58 counties. We are here today to stand in support of our closed partner EMSA and their budget item, and we support their budget proposal. Thank you.

Thank you.

Good afternoon. John Poland. I'm the regional Executive Director of the Sierra Sacramento Valley EMS Agency. We're one of the six regional EMS agencies in the State of California. We actually cover 10 counties in Northern California. I'm not going to read them all because I only have a minute, but again, as a partner of EMSA, we support the budget proposals, and again, we are just as interested in the EMS data, which has improved significantly, and we like to continue to see that improve as well.

Thank you.

Hello.

Hello.

My name is Jeff Ferris. I am the EMS Administrator for the County of Kern, and I am the President elect for EMSAAC. And I want to echo my colleagues in our support of the budget for EMSA. We work very closely with them on a daily basis, and it's vital that their system remain functional for the people of the State of California.

Copy and paste. I hear you. Seeing no further public comments. Thank you so much, Department, for coming today. We're going to move on to HCAI, Department of Healthcare Access and Information. I welcome up the Administration, LAO, and Department of Finance. We have four issues under this department. We're going to start with an overview of HCAI.

Our mission is to expand equitable access to quality, affordable health care for all Californians through resilient facilities, actionable information, and the health workforce that each community needs. We have five program areas that I'll talk about, facilities, financing, workforce, data, and affordability. Our current year budget is 1.2 billion and our proposed budget for 2024-25 is 523. I said, yes, 523,000,000.

Many of the funds we received previously had multiyear authority, so some of the funds from prior years are still available, and we'll go through that with our colleagues from Department of Finance and our workforce deputy to talk about the delays. The proposed budget does reflect delays in our workforce programs that we'll talk about. We are requesting position authority for 19 positions in this budget, which would bring us to 748 positions for the budget year. So I'll just go through briefly our five program areas.

On the building side, we are the building department for hospitals and skilled nursing facilities, monitoring the construction, renovation, and seismic safety of these facilities. Our primary goal is to promote patient safety by ensuring that each facility remains functional in the event of a natural disaster, including major earthquakes. On the financing side, we have our Cal mortgage program, which provides loan insurance to nonprofit and public health facilities for the development and expansion of healthcare services throughout California.

We also administered with CHFFA, the distressed hospital loan program, and I'm happy to answer some of the questions you were having with CHFFA about the distressed hospital loan program, if that would be helpful. Our finance team also runs the Small and Rural Hospital Relief program, which provides grants to rural and critical access hospitals for seismic safety compliance projects. On the data side, we're a leader in collecting healthcare data and disseminating it.

So we have for decades been collecting hospital financial data, skilled nursing facility financial data, prescription drug transparency data, and patient outcome data. We have, over the last six years, been standing up California's all-payer claims database, the healthcare payments data program, and we are about to submit to you a report showing the success of that program. So we were required to be substantially compliant and did start publishing data.

So we literally have access to billions of claims that have been paid by health plans to providers and hospitals in California. So it's a very rich data set. So we've started to publish. We have a snapshot that we've published, as well as some demographic and geographic information to really understand healthcare. And our priorities for this year will be around prescription drug costs, hospital costs, as well as social drivers of health. So we'll look forward to sharing that information.

On the health workforce program side HCAI's workforce development programs all have three goals. The first is to increase the racial and linguistic diversity of the healthcare workforce. The second is to make sure that we're developing a healthcare workforce that serves medically underserved areas. And then the third is to make sure that we're helping develop a workforce that will serve MediCal members.

We focus specifically on primary care, behavioral health and oral health, and we've appreciated the opportunity to speak with the chair about some of our programs. We'll get into more detail both about some of our programs and some of the proposed delays. But as you know, we have pipeline programs to bring more folks and a more diverse candidate pool in to become healthcare workers. We are supporting the individuals through stipend programs, scholarship, and loan repayment, and then we're supporting the training and educational programs.

HCAI's last program area is affordability, and we have three main components there, the Office of Healthcare Affordability, the CalRx program to address pharmacy costs, and our hospital fare billing program. So I know the next item is to give an overview of OHCA, so I'll hold off on that. And then in response to increasing prescription drug prices, the state has set up this CalRx program, which Vishal Pagani will give an update about in an upcoming agenda item.

In January of this year, HCAI took over enforcement of California's Hospital Fair Billing Act, which imposes parameters on what hospitals can charge uninsured and underinsured patients. So HCAI now has a consumer complaint process where we can accept consumer complaints about hospital bills and review those to see if hospitals have followed their own discount and charity care policies. And we can make sure that the policies comply with the law. So that's a new program area for us.

I'm happy to move on to the overview of OHCA or answer any questions you may have. Okay, in terms of the Office of Healthcare Affordability that was established in the 2022-23 budget to address the crushing costs consumers face in paying for healthcare premiums and services. Every year the California Healthcare Foundation does a survey, and every year there's findings that more than half of our California neighbors and family members go without needed care services due to cost and face worse health outcomes as a result.

We know that's worse for black Californians, for Latinx Californians, and for low-income Californians. In response to that affordability burden, the Governor and the Legislature partnered to create the Office of Healthcare Affordability, or OHCA. OHCA has three main components, slowing healthcare spending growth, promoting a high-value system, and assessing market consolidation. So we've had our first full year of engagement with healthcare stakeholders, sibling state departments, and the public. And so I'm really pleased to give you an update.

The Healthcare Affordability Board, which is making some of the key decisions as part of this effort, was appointed and began meeting last March. So we meet monthly. We just had a meeting yesterday, and I can say we have very robust stakeholder engagement. So we have a lot of folks who come to our OHCA Board Meetings and are participating. One of the key components is to establish a spending growth target.

And OHCA and the Healthcare Affordability Board are working toward a June 1 statutory requirement to set that spending growth target that establishes an acceptable annual rate of growth for per capita healthcare spending. So under the statute, the steps are that the office has to propose a spending growth target. And in January, our office recommended to the board a 3% statewide spending target for five years from 2025 to 2029.

And that is based on the 20 year average annual change in median household income for the last 20 years. So we really view our mission to make sure that health care is affordable for consumers. So it made sense for us and for the board to look to that historical median household income growth. So we believe it's in alignment with the board's preference for using a consumer-centric economic indicator.

We think tying the target to historical median household income growth really signals that healthcare spending shouldn't grow faster than the income of California families, because what we've seen over the last 20 years is that wages have barely kept pace with inflation and healthcare costs have been rising at twice that amount. This recommendation places California on the path of a more sustainable, affordable and equitable healthcare system, slowing the trajectory of healthcare spending growth and improving affordability for Californians.

So the board has until January 1, pardon me, June 1, to adopt that first spending growth target. So they'll do so in one of their next three meetings. One of the key tools of the office is transparency. So we are collecting a new data set of total health care spending in the state.

We've not had that access to that data, so we're in the final stages of drafting regulations establishing requirements for health plans to submit total healthcare data to us to facilitate the data collection necessary to measure total healthcare expenditures. With that data, we'll be publishing a baseline Healthcare spending report in 2025. Another key piece of our work at OHCA is health is really trying to drive to a high-value system.

This is not about a race to the bottom, but we really want a high-value system that's more equitable and a quality system. So to ensure a balanced approach to slow spending growth, we're promoting high-value system performance through creating alternative payment model standards so that we're hopefully paying for value instead of just for care. We're setting primary care investment benchmarks. The research is clear that if you spend more on primary and preventive care, you actually can both improve health outcomes and bring costs down.

Similarly, we'll be setting benchmarks for behavioral health spending and measuring quality and equity measures at the same time that we're measuring costs. And we're also working on developing a workforce stability standard. Last, because healthcare consolidation is a major driver of healthcare cost, the third main area that OHCA has authority over is healthcare market oversight. So we have issued regulations to have new requirements if there's a proposed merger acquisition, dealing a significant merger acquisition in the healthcare space in California.

There's now a requirement to file a notice with us. If we have concerns that that transaction could result in negative impacts to consumers around access or affordability, we can do a full cost of market impact review. So our team stood up a portal to accept those notices. And as of January 1, healthcare entities are required to provide OHCA with 90 days advance notice of a proposed transaction.

We have not yet received our first transaction, but we are ready and we are waiting and we are collaborating with the Attorney General. If we have concerns about a transaction, we'll certainly be working collaboratively with our sibling departments and agencies on that. With that, I'm happy to answer any questions.

And you said your colleague is going to go into CalRx, right?

Great. Then my first question to you is regarding the data point we're going to get showing the spending costs, is that going to break it down through types of insurance? MediCal, private. Okay, great.

Yes.

Yeah. So we'll be reporting separately on commercial coverage, MediCal, and Medicare.

Okay.

And doing an analysis of cost drivers.

Thank you. General, any questions? Great. We'll go on to that third question.

Good afternoon, members of the Committee. I'm Vishaal Pegany, Deputy Director for the Office of Healthcare Affordability at HCAI. I'll first start with providing an update on the CalRx Biosimilar Insulin Initiative as many of you are aware, in February 2023, HCAI initiated a contract with Civica Rx, a nonprofit drug company, for the development of biosimilars of the three most popular versions of insulin, insulin aspart, Lispro, and Glargine. Civica is advancing on its development efforts and maintains close communication with the FDA.

They do not at this time have a specific timeframe for approval. In his role as a Civica Foundation Board Member, Dr. Mark Galley, Health and Human Services secretary, will continue to work with and help drive our civica partners to make CalRx insulin available as soon as possible. Civica is also enhancing its Petersburg, Virginia team with additional new members dedicated exclusively to insulin.

Regarding the Governor's Budget deferral of the 50 million for the manufacturing facility, we note that this component of the initiative entails complex planning with active collaboration among HCAI, Civica and Gobiz. It is anticipated to extend beyond the current fiscal year due to its multifaceted nature that includes site selection, assessing water and energy needs, and ensuring access to skilled labor.

The project will be necessary when Civica needs to extend beyond its initial overseas supplier for active drug substance, at which time the California based manufacturing facility would be the domestic source for active drug substance. Civica is also making good progress on commercialization. This is about getting the product in the market and getting it covered.

Civica is having discussions with health plans and pharmacy benefit managers in California to achieve preferred formulary status to get the insulins covered on the health plan drug formularies for the Civica and CalRx branded products once they're approved by the FDA. And I'll now move on to providing an update on the Naloxone Access initiative regarding our work to bring a low-cost, over-the-counter version of Naloxone. We have been having positive ongoing discussions with multiple vendors.

We are confident we will be able to procure an over-the-counter version of Naloxone at significantly reduced price than the public interest price currently available to the Department of Healthcare Services Naloxone Distribution program. Our goal is to have a partnership agreement in place by summer and a Cal Rx-branded naloxone product available for purchase by the end of the current year. And that wraps up my CalRx update. Happy to take any questions at the appropriate time.

Like to turn over to Department of Finance for any additional comments.

Albert Pineda of the Department of Finance, nothing further to add.

LAO?

Jason Constantouros LAO, nothing more to add on this item, but available for questions.

Perfect. I just want to confirm. So there's no specific timeframe for the FDA approval for the insulin portion, is that what you mentioned?

Yes.

Okay. And then for Nalaxone, by the end of the year, consumers will be able to purchase the cheaper version?

Yes. We hope to reach an agreement by summer. And then by the end of the year, not just consumers, but also organizations that serve harm reduction agencies will be able to get the California, the price that we negotiate.

And what's that going to look like in terms of how would an organization or an individual consumer be able to purchase them?

So there's a few use cases. There's one is the state purchasing, which is the NDP program that DHCS administers. So, some lower prices that we negotiate with a partner, they'll also be able to purchase at that lower price. But we also want to extend the pricing that we negotiate to other entities that may not qualify to get free Naloxone through the NDP. So these could be counties, local governments, or just other type of nonprofits that may not be eligible.

So we want to extend the same terms and conditions of pricing to them for the selected partner and then for consumers that are more direct, like individuals that may be purchasing for a family member that's experiencing opioid use disorder, we're also working on how do we make that available so that they could purchase smaller quantities.

Would this bring in additional revenues on top of, are we breaking even?

Joseph Donaldson, Department of Finance. Can you clarify your question?

So, if we're going to be selling this item, is it, after creating it, the investment we put into this and then selling it, are we breaking even? Or is that going to bring additional revenues to the state?

Let us get back to you on that to get some more detail on that, and we can connect with your staff. At the top of my head, I can't give clear. Good answer on that. But let us look into that matter and we'll give you a better response.

Okay.

Just a quick question, Madam Chair. With respect to the insulin project, I realize we can't control the length of time that it takes FDA to issue an approval. But since this is otherwise a business activity, do we have any projection, maybe you mentioned this, as to how long it will take to roll it out once FDA approval has been granted?

Yeah, once FDA approves it, Civica intends to have batches of products in production that they could immediately begin distributing.

Is that a year? Is that 18 months following FDA approval?

I can't give us specifics on when FDA approval will occur. It won't be this year.

But company must have an idea once they get FDA approval, it's going to take us 12 years to move this or 12 months to move this. Or 18 months.

Yeah. Once it gets approved by the FDA, it would be within months that they could begin distributing. There wouldn't be another year that needs to go on.

Perfect. Thank you. Thank you, Madam Chair.

We're going to take a quick five minute recess for five minutes and we'll be right back.

We'll resume. We're moving now on to Issue Number Two. Please proceed.

I'll be covering Issue Two, which is the CalRx Technical Adjustment BCP. For background, last May, HCAI submitted a BCP for CalRx Naloxone Access Initiative, which included funding to support a partnership to bring a low cost, over-the-counter version of a naloxone nasal product, as well as funding for three permanent positions to support the increasing workload of administering the CalRx Program. The funding for these three positions was approved through the May Revision BCP.

The request for position authority was described in the narrative, but did not make it to the summary of the May Revision BCP due to an oversight. This proposal requests technical changes to enable HCAI to true up its position authority with the associated workload of program administration. That wraps up my overview. Happy to take any questions.

Department of Finance.

Albert Pineda, Department of Finance. I would just note that this BCP has no fiscal tied to it and is utilizing existing resources.

LAO.

Yeah. Just to emphasize what the Administration has said, this is a technical correction. Last year's budget provided funding for the positions, but didn't provide authority to increase the positions, and so this provides that authority. So for that reason, we don't have concerns with it.

LAO, actually, I have a question for you. Let's start there. I think it was just yesterday you came out with your HCAI overview, and in there it talked about just the growth of HCAI. You shared 7,418 employees potentially, and the workload potentially decreasing. A lot of programs, they were done and a lot of other programs are being proposed for delay, for it to be delayed. Could we talk a little bit more about just the--

Yeah. And now that is on your agenda for Issue Three, so we'd be happy to--we could talk about it now or we could--

We could talk about it then.

Then? Okay, great. Yeah, we'll get to that for Issue Three.

Any questions for right now, General? Okay, move on to Issue Three then.

Thank you so much and good afternoon. Libby Abbott, Deputy Director for the Office of Health Workforce Development. The alignment of Health Workforce Development programs and staffing resources proposal is requesting position authority for 16 positions for the Office of Health Workforce Development for Fiscal Year 2024-25 and ongoing. To implement multiple new and expanding Health Workforce Development programs and initiatives, these 16 positions would be supported by previously authorized expenditure authority.

The BCP is a true up for workload, and we are using it to replace, contract, and blanket staff and transition them to permanent state staff in order to catch up with and sustain workload associated with a significant increase in funding to HCAI for workforce programs. Last year's and current year's delays spread the increased workload out over time, but do not reduce our total workload.

The funds in question have multiyear spending authority, and many of our 56 programs that we now have in flight at HCAI are implemented and need to be monitored over several year periods with associated workload for that monitoring. So we anticipate a sustained workload for at least several years. That concludes my comments. Happy to answer any questions.

Department of Finance.

Albert Pineda, the Department of Finance, nothing further to add.

Thank you. Jason, go ahead.

So just for reference on page 37, you can again see that the proposals for 16 positions but no associated fiscal effect of that, and that's because the Administration is proposing to manage these increased positions within its existing resources. That's very understandable given the budget problem. And because of this, the proposal itself does not contribute directly to the budget problem.

That said, and we'll discuss this more also in the next issue, too, but the state's budget situation is deteriorating and the Legislature likely will face pressure to identify additional solutions beyond those identified in the Governor's Budget. And to the extent it were to identify additional solutions within HCAI's budget, that would have potential workload implications for the Department.

For that reason, we recommend the Legislature revisit this proposal in May when it has a better understanding of the revised sort of budget situation and also a sense of what actions are taken, and to the extent that additional actions are taken to pull back funding for HCAI workforce initiatives, that it adjusts HCAI staffing accordingly. Thank you.

Thank you so much. So last year, the budget was a little tiny, tiny bit better, and it was proposed for delay. And I know we'll talk more about it in Issue Four, but just getting a little ahead of ourselves here. And it was proposed for delay, and then this year, budget is worse, and it was again proposed for delay. I have little hope that next year that it will, in fact, it'll be proposed for delay again.

So I'm wondering, you shared that this will be ongoing work. Could you talk a little bit more if we continue delaying to maybe--I don't know--cutting, how you foresee that ongoing work looking?

Yeah, absolutely. So the impacts of the delays certainly push out the launch of new programs or new cycles, but we've received significant additional funding over the last few years. And what I alluded to briefly in my earlier comment was that when we implement a program, it's often implemented over a two, three-year cycle.

So programs that we started with the 2022 Budget Act in 23-24 are going to have several years sort of of workload associated for evaluation of those funds have they been effective, grant monitoring to make sure we're in compliance, associated sort of financial monitoring functions as well.

Can you talk to us a little bit about the non--the workforce programs that weren't proposed for delay, the ones that are still going, the ones that we already spent some money on?

Absolutely, and I think that's skipping ahead to the later question, but I'm happy to jump to that. So 2022 Budget Act--

Maybe let's connect that to Issue Three. The positions. These 16--I forget--16 positions. Are we attributing these positions to the grant programs that have been ongoing as maintaining them or are you attributing these to--

So these positions are actually staff that we already have either contract staff or temporary staff. So it's for our current workload, and what we're proposing to do is transition them to permanent state staff with this BCP. So those are program--or sorry--staff that support our ongoing programs, including those that were implemented over the last year.

Are they part time right now? Or are they full time without being--

They're full time contract or in the blanket.

Okay. Because they're contracted, are we paying at a higher price for contract? Would it be different now going into state?

I think I would want to get back to you on that one.

Okay.

Just to not misspeak on any specific numbers.

Okay. Well, when does the contract end?

We have contract authority through, I believe, middle to end of 2025. It's a sort of a rough estimate given we anticipate some savings. Our hope is to bring on staff so that we can transition sort of the institutional knowledge we've been relying on these contractors for the last year and a half, and we want to have an overlap period so we can transition.

So these positions--the funding won't take into effect until the next budget cycle if these positions are funded until next fiscal year?

Well, and to clarify, this is just position authority. We already have the funding for it.

I guess what I'm saying, meaning everything's on the table. I mean, if foster kids are on the table, everything's on the table, right? Meaning that funding that was allocated, in some world, could we essentially pull it back for that year because we don't need it for the next year since those positions are already funded for one more year? Did I describe that?

Yeah. I mean, I think part of what we're trying to convey is the programs are in flight, right? So it's true that there's proposals to delay social work and to delay nursing and to delay some of the behavioral health, but we're still doing work in all of those areas, and so we do need staff to continue to do those work.

But they're staffed and funded by the contracts until mid 2025?

Correct.

So the money that's sitting in HCAI will be sitting in HCAI until mid 2025?

There's different pots of money and we typically will get five-year expenditure authority, so, right. We had Children, Youth Behavioral Health Initiative dollars that came in two years ago. We had workforce for Healthy California for All dollars that came in last year, each of which has five-year expenditure authority.

Yeah, maybe just to add to that, I think what the Department is indicating is that they are implementing initiatives that were funded in previous budgets. Those funds came with multiyear expenditure authority, so they anticipate some of those activities to persist in the future.

The question before the Legislature is these are proposed sort of permanent staffing positions and just the budget situation is uncertain and the sort of future of some of these funding allocations for workforce are uncertain, and so that's why the Legislature likely will want to keep that in mind as it's reviewing the need for these positions on a permanent basis.

General?

Just a question of interest, reading about the various programs in terms of workforce funding, almost one billion dollars, and thank you very much for what you do. I think it's badly needed. I'm just wondering if there's a report of results. In other words, students enrolled. I'm a data guy, so forgive me for asking the question.

It's a great question. Yeah, absolutely, and I've touched on that in Issue Four, so ready to go to that one--

Well, that's okay. I can certainly wait. Although I've been accused of not having any, I do have some patience, so I'll wait for Issue Four.

Seems like a lot of our questions are on Issue Four, so we're going to move into Issue Four.

I can provide a brief overview. So the Governor's Budget proposes a delay of 140.1 million General Fund for the Nursing and Social Work Initiative, moving these funds to 2025-26. The budget also delays 189.4 million Mental Health Services Funds due to lower than projected revenues for various behavioral health initiatives. The budget overall maintains 974.4 million over a multiyear period. The budget also reverts 14 million for a state hospital loan repayment, retention, and recruitment program, and these are funds that have not gone out.

And there was an opportunity to pull the funds as a solution to address the budget shortfall. I would also flag that through Prop 98 funding, there is a complementary nursing program through the community college system that allocates 60 million per year or a total of 300 million over the next five years starting in 2024-25.

Yeah, so there are a lot of workforce initiatives at HCAI, and there are several initiatives affected by this proposal. If you turn to page 40, you'll see a table kind of towards the bottom there, and it extends through page 41. And that shows all the affected initiatives under this proposal, and it also shows the amount of General Fund and also Mental Health Services Fund that's either being delayed or reduced.

So generally our comments here are going to be similar to comments you've heard about other budget solutions. We generally find the proposals addressing one-time spending to be reasonable. Turning to one-time spending first avoids having to turn to core ongoing programs, and also makes available other one-time related solutions available in the future, such as drawing down reserves. That said, there are two key points I want to emphasize here for this proposal for the Committee's consideration.

The first is that, as has been referenced earlier, the state's budget situation is deteriorating. The Legislature will likely have to find additional solutions than what's being proposed in the Governor's Budget. That raises two key decision points for the Legislature with regard to this proposal. It could mean pulling back additional one-time funding for HCAI workforce initiatives that remain under the Governor's Budget.

Or alternatively, if these initiatives are of high priority to the Legislature, the Legislature would want to find not only a like amount of funding elsewhere in the budget to address, but even more than that, given the increasing budget problem. The second point I want to emphasize is that much of these solutions focus on delays rather than reductions. And the implicit assumption there is that implementation for these initiatives will resume in the following year.

And as was sort of referenced earlier, both our Office and the Administration project there to be deficits in the outyears, running around 30 billion dollars each year, and so given those deficits, that assumption that some implementation would continue kind of the following year might not be realistic. Thank you.

Thank you so much. We're also here. We're not here just to say we want to fund everything. Let's also find other ways, right? We can be creative, and I agree with you, Jason, maybe even though it's difficult when other one-time funding we can delay or cut. So to that point, my first question is related how we came to some workforce programs moving forward and others not.

So I saw that seven million for County-Based Psychiatric Loan Repayment and then matching seven million from the MHS Fund is not being proposed for delays or cut. How do we get to that being chosen as the one? Because that's already people inside, right? So instead of funding programs that bring more people to the workforce.

Just to clarify, are you referring to the Local Bureau Health Psychiatry Program? I just want to make sure we're talking about--

I think I copied this verbatim, but it was just County-Based Psychiatric Loan Repayment Program. Seven million General Fund and then seven million from MHS Fund.

Yeah, our apologies. There's two kind of like-named psychiatry programs. So there's the one that is being reverted as part of the Governor's Budget is the state hospital specific--

Yes, that's the one.

Okay, so the state hospital specific--

No, just kidding. That's not the one. It's county-based one.

False alarm. So the other one, the local behavioral health, separate from state hospital. So the funding that is being delayed, the second component of the 14 million. So there are seven million General Fund, seven million Mental Health Services Fund. That seven million is kind of lumped in with the general 189.4 million that we noted was being delayed due to availability of resources. At the time of our Governor's Budget analysis, the Mental Health Services Fund had lower revenue projections than we initially anticipated.

So based on that, the decision was made to delay several behavioral health initiatives, including this one we're speaking about. So the seven million is a component of the 189.4 million.

So it is getting to like--

Yes. To your point, there are two different loan repayment programs, one for state hospitals and one for counties. So the Governor is proposing to reduce spending on the one for state hospitals, but is not proposing any changes to the one for counties, and that is the one.

That's the one I'm talking--

More to your point, there's one-time spending in the Department. Some of it's been carried over into the current year and hasn't been encumbered yet. So in addition to looking to funds that are scheduled to be appropriated in the budget year, the Legislature could also look to pull back spending that's been carried over into the current year and hasn't yet been encumbered.

The trick there is that as time goes on in the current year, more funds will be encumbered, and so that's a bit of a moving target, but that would be another area for the Legislature to turn to. And more to the point, also that specific loan repayment program for counties, the one that isn't being affected by a budget solution, it's our understanding those funds haven't been encumbered yet. So that would be an example of a program that could be reduced if that was of interest to the Legislature.

And that's why I noted that down. Let's tie in with this other question of, I feel like this was a topic that came up last year. HCAI is up to the chopping block of funding to be clawed back because we haven't distributed the funds. What lessons learned have we taken back and saying, 'hey, for the upcoming years, let's distribute the money that we have to XYZ so that we're not an option to have money be clawed back?' What is our process in getting this funding out as quickly as we can so we're not an option for clawbacks?

Yeah, I will just say I think we're actually a model in trying to get funds out as quickly as possible. So the Children and Youth Behavioral Health Initiative is one example. We had 300 plus million for the wellness coaches. We had 300 million plus for these eight different work streams, a number of which were new for us. We'd never done work on substance use disorder. Justice system involved youth. So we've gotten very meaningful dollars out very quickly.

Now, on last year's proposal, when there are proposed delays, we have to hold on implementation. But generally, I'm very proud of the team's work in getting dollars out quickly.

What impact do we see? Because we have to pause each time, like you just mentioned, right? So we paused last year and we're pausing again this year. So it's approximately, well, close to two years of pausing, and how is that impacting the applicants coming in for these programs or what we're doing with them? Are we still having some applications come in? And our message--

We have a lot of applications coming in, and the team is doing a lot of outreach, but, yes, Madam Chair, I certainly take the point that if there's a proposed delay, it wasn't until the budgets said we're going to move forward that we then kind of restart the process. But Ms. Abbott can speak to it. The team is always doing a lot of--

I think what we're really trying to do is--and I'll let Libby talk about--is to take a strategic approach and have priorities so that we're ready to go with programs when we have the funding.

Yeah. So there's two things I can speak to there. On the strategic planning side, we're sort of taking advantage, I suppose, of a little bit of slowdown with the deferrals to go through a strategic planning process for both behavioral health workforce and nursing workforce. So we're going to start with supply and demand modeling and try to understand what does our behavioral health workforce, for example, need to look like in ten years?

What will the composition of that workforce be in terms of provider type, race, ethnicity, and language? How will they be distributed throughout the state? Where are they needed? Working backwards from that, understand where are our greatest gaps in terms of training? Where do we need to support retention? We are undertaking that process now with results expected by the end of the year, so that as our budget situation changes and there's additions or deferrals, we have a crystal clear picture of our priorities.

And we can always anchor back to that to determine sort of where best to spend our funds. The second piece of what I think you are asking about is sort of like, how do we deal with the start-stop nature and make sure that our programs are continuing? We use a lot of these funds to fund programs that are already existing, and so we channel the funding to, let's say, the existing Behavioral Health Scholarship Program or the existing Loan Repayment Program.

And so that allows us, when there is a deferral of funds or a delay of funds, to potentially continue a cycle for that program with funding from other sources. So, for example, we are using CYBHI, Children and Youth Behavioral Health Initiative funding to fund cycles for some of the programs that are impacted by these deferrals. So we're looking ahead next year to think about how we can do that.

We may have to adjust some of our award amounts down, and the total funding, of course, will be smaller. So we'll be able to make a smaller award, but that's how we try to sort of keep our programming continuing in a fluctuating environment.

That was going to be one of my questions, but let's put a pin into CYBHI for a moment there. I want to know also regarding the proposed MCO Workforce Program. I think it's approximately 75 million dollars. There's not a lot of information under HCAI of what that workforce investment under MCO is going to look like. Can you share a little bit what more you can share on this?

Are you referring to the LMC, the Labor Management Collaborative?

Yeah, but it's workforce--

You're missing one of the Cs, but yeah, LMC.

But it's for workforce, right?

Correct. Correct. So I don't have a lot of information about that. I think it was a stakeholder requested proposal that we look forward to implementing, but yes, it is to really looking at collaboration between some of the labor groups to develop workforce, I think, focused on Allied Health, and we do--Allied Health is certainly one of our areas of focus. And so we look forward to implementing that program should it move forward.

LAO, you have any comments or you have additional--

Go ahead.

This is new for us, but I'll just add a little bit, which is to say the goal of the initiative would be to strengthen and support the development and retention of the Medi-Cal workforce through labor management cooperation committees. We will establish program criteria and issue grants starting in 2025 to strengthen and support the development and retention of the Medi-Cal workforce through labor management cooperation committees, which can develop and deliver high quality workforce development programs.

And the grants would go to..?

To these committees.

Okay. LAO, comments on this?

Yeah, this is new information and also the trailer legislation, to our knowledge, hasn't been released yet, so we're still waiting to get more information before we can assess this. We recommend the Legislature withhold action on this until that more information is sort of provided. Would also emphasize that the MCO tax is another source of funding. So as the Legislature is weighing its options, that's another potential place to turn to. There's lots of considerations involved there. The proposal involves many other areas of spending, so those all have to be weighed, but that--I just wanted to emphasize that point.

Thank you. General.

Well, I don't know where to start with this. I understand the budget issues, and I understand that they're severe, and I understand that the outyears are not much better under the projections. And if those projections are accurate, I don't know when we would be able to flip the start switch on these programs again. And that's concerning to me. You all know we have a 6.4 billion dollar Behavioral Health Infrastructure Bond and Mental Health Services Act measure that's before the voters.

It's outside the purview of this, certainly for my staff, but if that happens to be approved, we also have policy issues that are floating around the building here, essential policy issues, frankly, having to do with fentanyl and substance abuse treatment, which, if approved, both of which, both the bond, once those are issued, and the facilities that ultimately will be constructed and the policy programs need a workforce, and you're in the business. So I'm lecturing to the choir, I guess.

But we can't flip a switch and expect the requisite number of practitioners to pop out the end of the pipe. I think I asked someone what the ratio of kids to child psychiatrist was in Inland Southern California, and I thought I read somewhere it was like a handful to 600,000 kids. You probably know the statistic because you maintain those statistics, but whatever it is, it's unbelievable and it's almost outrageous. And so I don't have a question. I guess I have a comment.

I think we're going to have to figure out perhaps picking and choosing among these initiatives how to continue funding behavioral health workforce training programs given the fact that in many cases, it takes four or five years to get someone with an appropriate degree, and then in some of these programs it takes 2,000 or 3,000 hours of work after that to secure the necessary licensure to move forward to even begin to provide unsupervised care and treatment of those who need it.

I don't, again, know how to do this. I think once--the comment I made earlier was, I think we're going to have to have a big long list of these programs and we're going to have to triage. Because one thing is for sure, while we don't do it in any other area in this state, or very many of them, our policies on the left and the right are going to have to coordinate and work together.

No sense in floating bonds, no sense in adopting fentanyl treatment policies in the Legislature and then not providing for funding for the workforce necessary to implement those initiatives. It's not your issue and not your job. It's our job to figure it out. We're going to have to figure it out, Madam Chair.

If I may, Senator, I couldn't agree more. And I just want to say, I mean, this Administration is very aware of the workforce crisis that we're facing and trying to do everything we can to address it. And you're right, it takes time to develop workforces. And I think part of what we're trying to do is develop new workforce professions to really look at that ladder and support people to get through it as quickly as possible. We're never going to have the number of child psychiatrists we need.

We're really proud that we're funding psychiatric mental health nurse practitioners and that we've developed this new wellness coach model to serve youth and families in schools and in community-based organizations. So those are some of the solutions and there are hard choices.

Believe me, I'm not being critical. I think this Administration has stepped up more than probably any other perhaps in modern history after Ronald Reagan to try to address the behavioral health issues. I mean, I didn't mention this. I know my Chair is interested in foster kids and that Riverside County tries to recruit ten to 15 social service workers to deal with the events of the recent past, and you all are very familiar with those down there in Inland Southern California.

You try to recruit ten to 14 of these and you get three. And yet we read about it on A1, the consequences of not having appropriately trained and skilled workers in these very, very critical, very sensitive issue dealing with our most vulnerable population. So we're going to have to work with you to fix this.

No, absolutely, and I wanted to echo some other things. LA Times, a couple of weeks ago, had information on CARE Court and how it's enrolling in LA County, always LA County a little slower to get things up and running because we're so big, but the lack of LCSWs or other mental health therapists who are approving these applications is really impacting the process. You know, that's where my question was like, how do we pick and choose which ones when we do have some of the dollars that we support?

Is it the one retention or is it creating a new workforce? And I can imagine you had these conversations all the time. So many big programs in California right now, and I just think about CARE Court and CalAIM as one of the big ones. And then with Prop 1, I know we're taking away a lot of money from services--great for housing, but the services part is going to hurt a little bit.

So how can we maintain these programs? We can build everything, but it's not like the movies. Just because you build it, they won't come. You need the people to actually work them so they can come. So this is going to be top of mind for a lot of us as we continue, and seeing this 75 million for MCO tax, is it really going to help create opportunities for more people to come in?

With all due respect, is it a political play or are we really utilizing this MCO money to invest? And for the next five years, ten years that I'm here, we can say, 'hey, the investment of 75 million really worked. We have X amount of mental health and health care workers,' so forth. And then quickly, before we move on, CYBHI. Did I do that acronym right? Boy. Two things. One: I'd like for you, Libby, if you could talk a little bit more.

You said that you're looking at--because I brought this up, I think in the first overall budget hearing--we have some money. Can we use some of that funds to cover some of the delays or cuts? And two: maybe DOF, LAO, how much money do we have left in CYBHI?

So it's a great question, and I don't have the precise number for you, but I can confirm that we're using CYBHI funds to fund some of the programs that we've discussed. So, for example, Social Work Education Capacity Expansion, this is a program that we have that awards funding to training institutions to support existing or expanding slots for social work education, how to create more social workers, as you've just described, there is a great need for. With these deferrals, we--

But what does that mean? What does that program mean?

So we'll give funding to an educational institution that runs a social work program--let's say for master's in social work program--to add slots to their program so that they can train more social workers.

So just like the proposed delay of the social work slots, right? Audience agrees. It replaces that?

So there's one program--and this is sort of what we were referring to earlier--we use different pots of funding to fund that program, but we've been running that program for a couple of cycles. That program is impacted by the deferrals under the Social Work Initiative, and we will be using CYBHI funding to continue next year's cycle. So there are a couple of programs, and I can get back to you with the specifics because I don't have it all off the top of my head--

It'd be helpful, yeah.

Where we're using CYBHI funding to kind of keep things moving forward.

Great. And during that time, was that enough time to see how much money we have left?

Joseph Donaldson, Department of Finance. Our apologies. We don't have those numbers readily available on us, but we can definitely circle back and give you those numbers.

Yeah, I'd be really interested in that.

When you're finished, I just want to follow up. You know, one of the issues, as I understand it in the social work area is it's not only the slots in the schools, but the clinical placements.

And what I've been told by those who run these schools, at least depending, I guess, on where you are in the state, is that there's a shortage of clinical placements because there's a shortage of people who will agree to mentor those for the requisite number of unbelievably long hours that the social work graduates have to complete in order to obtain licensure. I assume there's no program to assist in paying. Is there a program to assist in paying these mentors or whatever we call them, proctors?

Supervisors.

Supervisors?

Great question. So that is something we were hoping to stand up with, the 70.1 million that's delayed under social work. We had a program in mind for social work, clinical supervision. We will be able to stand that up when the funds are restored.

Well, we better put that on our list to triage because that's a real problem now, let alone when we start expanding these programs.

Yeah, and I also want to add, Senator Roth, we did reinstitute the social work stipends, and we're very pleased to have been able to do that because these 3,000 hours without a stipend, folks are working without pay, which is another barrier, and then they have to have a job. So very happy to have that--been able to reinstitute the stipend program.

Roth: aye on that, too. Thank you. Thank you, Madam Chair.

Jason, did you want to add something to that?

You know, I--we'll get back to the Committee. I have some data on the CYBHI, but it might be better to answer that without doing the mental math on the spot.

Okay, that totally works. I think we've covered everything--

And I want to make sure we've addressed your data question, Senator Roth, and I just want to say we have stood up a workforce research data center. We're getting terrific data from all the licensing boards, and we owe the Legislature a report that we'll be getting to in the next month showing the data, but it has race ethnicity data, it has geographic maldistribution. So, no, I don't know that ratio that you were asking before, but we have some of that data that can help answer those questions.

Well, I just want to be very, very clear in saying I thank you, because it seems to me that anytime we have an issue--and I'm guilty of this, too--we turn to HCAI and just ask you to fix it for us. So thank you for what you do.

Thank you.

Libby, I was going to ask, I don't know if you had an opportunity. I think it was last week, the Select Committee on Mental Health, the long title, had a hearing on workforce development and where the gaps are on demographics, race. And they spoke on that, as you mentioned. I don't know if you had a chance, but it was really good. You can imagine. The same as always, right? Not enough bilingual, Latin, and so forth.

And Director Landsberg and I were on the panel.

Oh, great. I was watching the TV. I couldn't go there, so, I mean, I missed y'all part. All right.

We leveraged some of the amazing data that Director Lansberg just used to describe what we understand are the challenges of concordance and where we're heading.

Yeah. Thank you. Okay, so we're going to open this up for public comment. On HCAI, if anyone has a public comment on Sections One through Four, we're holding each-- we're holding Issues Two, Three, and Four open, but welcome your public comment to one minute, please.

Hi. Diana Douglas with Health Access California. On Issue One, Health Access strongly advocated for the creation of the Office of Healthcare Affordability and has remained very active in implementation to ensure the Office lives up to its vision to truly bring costs down and importantly, increase access to care. The affordability targets are a cornerstone to the Office, and Health Access supports the proposed three percent targets and the proposed methodology tying them to household income so at least health costs don't further grow more unaffordable for Californian families.

On the next issue: CalRx. Again, Health Access strongly supports this program, including the addition of naloxone, and we appreciated the updates today and look forward to seeing the program come to fruition and further expand as an innovative way to keep costs down. Thank you so much.

Good afternoon. Andrea Rivera, on behalf of the California Pan Ethnic Health Network, CPEN appreciates the continued support by the Administration to ensure that vital health safety net programs remain in place despite the current fiscal uncertainty. That said, we do appreciate that the community health worker promotora and health representative workforce dollars remain intact.

However, we would urge the Administration and the Legislature to use previously allocated unspent dollars under HCAI that are connected to the MediCal benefit to increase rate reimbursements for community health workers promotoras and health representatives. CHWPRs are mostly women communities of color that deliver culturally and linguistically competent services, and much of CalAim actually relies on CHWPRs to carry out the evolution of our healthcare delivery system. We look forward to engaging with you on this issue, and thank you so much.

Thank you. Before we move on to the next, can you share a little bit more about that, about our work on community health workers? Yeah. And the medical reimbursements and your role, and I didn't know if there was a role there.

Yeah, we wouldn't be able to address the MediCal reimbursement issue specifically. So MediCal went through the process of getting federal approval to have community health workers be a medical reimbursable item. And then we've gone through a stakeholder process to develop a certificate program and did a bit of a restart on that to really make sure we were hearing from the community. And so that is in progress currently.

So your role is just the program and ensuring that those dollars will maybe I'm not understanding exactly.

So the dollars that we have are to support the training of community health workers promotoras and also employer grants, which we're doing in collaboration with California Health and Human Services Agency and Department of Health Care Services. We're deeply committed to that team-based care, and it takes some delivery system change to have doctors and nurses know how to effectively partner with community health workers. So we will be providing stipends, training grants and employer grants for community health worker promatoras and representatives.

Thank you. Jason, you're eyeing me. You have something? You're good.

No, as long as that was clear.

Yeah, great. I got it. Thank you so much. Okay. Next, public comment.

Josh Gauga, on behalf of the California Association of Public Hospitals and Health Systems in the urban counties of California, we have concerns about delaying investments in health and human services workforce. Public healthcare systems are struggling to retain workers and fill positions across the delivery system. State-level investments are needed to address the workforce crisis. In particular, those proposed delays would impact nursing, social work and behavioral health workforce programs, the professions where public healthcare systems in urban counties experience some of the greatest staffing shortages.

While we understand this is a difficult budget year and there is a significant deficit, we hope the Administration and the Legislature can continue to prioritize investments in the health workforce. Thank you.

Thank you.

Good afternoon. I'm Sandra Poole, Western center on Law and Poverty, and I stand to align and support the comments of my colleagues at CPEN related to reimbursements for community health workers. And I'll keep it short because she covered it pretty well. Thank you.

Oh, thank you so much.

Madam Chair, Senator, Toni Trigueiro, on behalf of the California Teachers Association, always happy to be in this committee where education and health meet at the school site. We're speaking to the HCAI programs that are on pages 40 and 41 targeted for revision or delay. They include the comprehensive nursing initiative, social worker initiative, and the expanded masters in social work. We'd like the Legislature to seriously consider extending the eligibility for these programs to candidates who are seeking credentials as school nurses, counselors, psychologists and social workers.

They are currently not eligible for the workforce funding, and we believe this was a serious oversight. This is critical given the workforce shortages in schools, and our understanding of the students ability to engage in learning is directly related to whether their behavioral health and social and emotional needs are being met. Students who need individualized and ongoing counseling receive those services on the school campus in a way that minimizes lost instructional time and maximizes the benefits in which a credentialed professional can evaluate and address those issues.

We just hope that in the out years, the funding survives in this category and that we can expand the eligibility to include that category of employees. They're licensed, all they need is a year to get their credential, and they could be employed at school sites. So we think it's an important activity to look into. Thank you.

All right. Hello, everybody. Richardson Davis, with the California Council of Community Behavioral Health Agencies, also representing the CAC, the California Access Coalition, CBHA, representing mental health and substance use disorder clinics and substance use disorder clinics across the state.

So everybody.

Oh, you said what?

Everybody.

Everybody, yeah.

But also just wanted to speak in support and in favor of a couple of issues that we are issue 2 and 3. I want to applaud the work being done by HCAI on the cultural diversity inside of the healthcare workforce. I know that building a workforce is important. A lot of our membership has struggled with workforce as of the past couple of years, with COVID and everything.

And so as we build it, hearing about the programs that were coming up to build a stronger, more diverse workforce. We support that, and we're excited to hear about it. And also on behalf of the CAC, eliminating barriers for Californians to have access to medication related to the Cal RX adjustment. I just wanted to throw our support out there and say thank you for the work that's being done by the Administration and thank you for the Committee today. Appreciate it.

Thank you so much.

You too.

Have a good one.

Good afternoon, Chair and members, Beth Malinowski of SCIU California. I want to start by seconding the comments by my colleague at Health Access regarding the standing up of the Office of Healthcare Affordability to tremendous work by the department and continue the support from this committee has had in that area, in the area of healthcare workforce. Just want to actually appreciate the really robust dialogue and debate you've had here today. We know it's a difficult year, difficult decisions have to be made.

But really hope we continue the conversations about how to continue these investments in our healthcare workforce, especially in behavioral health access. Thank you.

Thank you so much.

Madam Chair, member. Sara Flocks, California Labor Federation. I just wanted to commend the work of HCAI in standing up the Office of Healthcare Affordability, their work on finding out our total healthcare spending and transparency, and we very much support the recommendation for a 3% target on spending to reduce health care for all Californians. Thank you.

Thank you so much. All right, we are moving on to our last portion of our hearing. California Health Benefit Exchange, also known as Covered California, like to welcome the Administration to kick us off with an overview, an open enrollment update, and then we'll go into issues two through three. Please state your name, and then we can kick off with issue one.

Good afternoon, Madam Chair and Senator Roth. I'm Katie Ravel. I'm the Director of Policy, Eligibility, and Research at Covered California, and I'm happy to be with you to provide an overview and then answer questions about enrollment trends in our Healthcare for Striking Workers program. So Covered California is a product of the Affordable Care Act. It was passed in 2020, and it dramatically changed the individual health insurance market. And that's well summarized in your agenda for today.

A key component of the Affordable Care Act was the creation of health benefit exchanges that offer comprehensive health plans with income based financial help to lower premiums and out of pocket costs for individuals who don't have affordable health care through their employer, Medicaid, or Medicare.

Our mission at Cover California is to increase the number of insured Californians, improve health care quality, lower costs, and reduce health disparities through an innovative, competitive marketplace that empowers consumers to choose the health plans and providers that give them the best value.

Covered California contracts with 12 insurance carriers throughout the state, and our members choose from several coverage options that vary in the amount of premiums and out of pocket costs they have. Over the last five years, state and federal action has built on the foundation of the Affordable Care Act to provide more support for our enrollees to afford their coverage. Federal action includes enhanced premium subsidies, which were authorized through the American Rescue Plan and then extended through 2025 by the Inflation Reduction Act of 2022.

California has taken several exciting actions on affordability, which include implementing in 2020 the nation leading California Premium Subsidy program, through which middle income Californians were able to access premium assistance for the first time in our marketplace. Implementation of the California Premium Credit program, which enabled Covered California to offer plans with $0 monthly premium, and more recently, implementation of subsidies to reduce out of pocket costs in health care for striking workers.

The Budget Act of 2023 authorized cover California to spend $82.5 million to lower out of pocket costs for cover California enrollees. We call this the California Cost Sharing Reduction Program for 2024 benefit year. We use the funding to eliminate deductibles and lower costs for key services like primary care and outpatient mental health visits and prescription drugs for our lowest income enrollees. With the implementation of this program, Covered California was able to offer the highest level of affordability assistance in our 10 plus year history.

So let me turn to question two, and we'll see how this translated into enrollment in our latest open enrollment period. As of January 31, when our open enrollment closed, over 1.78 million Californians had selected Covered California plans for 2024. New sign ups increased by 16% relative to 2023, exceeding 306,000 new plan selections. This is our highest level of enrollment during open enrollment since 2020.

And then this year we did offer, through a special enrollment, a couple of extra days for people to complete their open enrollment activity. And once we tallied all of that, we're close to 1.8 million enrollees signed up for 2024. Thanks in large part to the new state funding to lower out of pocket costs for our lowest income enrollees and our silver health plans, we did see a greater share of our enrollees choosing those plans.

So among consumers with income under 250% of the federal poverty level who qualify for the new state program as of 2024, the enrollment in our enhanced silver plans jumped from 70% in 2023 to 82% in 2024. It's a big jump for us. Particularly enrollment in our gold plans dropped for this population by more than half. This is encouraging to see.

It's a little counterintuitive to say, well, silver enrollment is better than gold, but in this case, those plans, those silver plans offer lower premiums and more cost sharing support. So you're going to pay the lowest price for the highest value. So we're very encouraged to see that. Turning to question three in item one, Covered California is now working on the design of the 2025 cost sharing reduction program. The governor's fiscal year 24-25 budget includes an appropriation of 165,000,000, so roughly double for this program.

With that higher funding level, the 2025 program will continue support for those who are currently eligible, and we expect to expand eligibility above the current income cap of 250% of the federal poverty level. We're modeling costs and potential enrollment, and we'll have a draft design of that 2025 program in April. I'm happy to pause here for questions or move on to issue two.

Department of Finance, any comments on this?

Nothing further to add.

Ryan Miller, LAO, nothing to add but available for questions.

Thank you. So just for right now, on that third portion, more information will come in April, but for right now, you're looking to expand the eligibility above 250?

We are, yes.

Great. General?

Just one question. I think I noted that our public Medi-Cal provider, IEHP, IEHP down in inland Southern California, is participating in the Covered California program. It's probably too early to have any data on that, and I assume the purpose is to make sure that we try to capture people who are dropping out of the Medi-Cal population due to income and make sure that they transition into commercial healthcare coverage.

We were very excited to add Inland Empire Health Plan, and they are the lowest cost plan in that region. So they are the recipient of auto enrollment. As people lose Medi-Cal in the region, they are automatically enrolled into IEHP, which, as you mentioned, increases their continuity of care as they make that transition from the Medi-Cal program to Covered California. So we were very excited to get that started this year.

And I look forward to getting a report on the data and how successful it is. So thank you for facilitating that.

Absolutely happy to follow up.

Two questions, and I apologize if I missed this. With Medi-Cal redetermination and kind of talking about that and how people fell off because they were eligible. We have seen an increase right of lives under Covered California, and do we attribute that solely to the Medi-Cal determination coming back or other factors?

It is a portion of it. About 30,000 of our enrollees during open enrollment were actually those transitioners from Medi-Cal. At this point in the transition, we're seeing maybe 15,000 transitioners per month effectuating coverage with Covered California. The SB 260 program that was authorized Senate Bill 260 from 2019 has been incredibly successful. It gives us that authority to provide, to automatically select a plan for individuals, which we're finding really early success with.

We turned on the program when the public health emergency ended and Medi-Cal redetermination started over the summer. And we are seeing good takeup in the program and people keeping that plan and really finding that plan assignment very helpful to them in making the coverage transition.

And for the plan moving forward with doubling the subsidies, do we know the potential of how many, the percentage of lives we can impact?

That's what we're working on now. With the program that's limited to 250% for the current year, about 650,000 of our existing members were able to take advantage of those.

650,000?

So those individuals who are already enrolled with us automatically get the new subsidies. And then about half of our new enrollees qualify for the new subsidies as well.

That's amazing.

And we do hope for a significant eligibility expansion, just depending on the final numbers.

Okay. Department of Finance, what does our Fund look like, that pot?

In terms of the cost sharing assistance?

What is the Fund called?

Yeah. Or are you talking about Healthcare Affordability Reserve Fund?

Yes.

I apologize. I don't have it right in front of me. I believe for budget year, there is a Reserve of. I apologize. This is kind of off the cuff. We can get back to it. I believe it's in the realm of about 100 million.

To the rescue.

Yes. One second. Sorry. At the end of our current year, there'll be a Fund balance of about 19 million, and then at the end of budget year, it would be about 124,000,000.