Report 2017-117 Recommendation 1 Responses

Report 2017-117: Mental Health Services Act: The State Could Better Ensure the Effective Use of Mental Health Services Act Funding (Release Date: February 2018)

Recommendation #1 To: Health Care Services, Department of

To effectively monitor MHSA spending and provide guidance to the local mental health agencies, Health Care Services should publish its proposed regulations in the California Regulatory Notice Register by June 2018 and subsequently develop an MHSA fiscal reversion process to ensure that the State can reallocate any MHSA funds that local mental health agencies do not spend within the statutory reversion time frames to other local mental health agencies that are better positioned to use the funds to meet the MHSA's intent.

1-Year Agency Response

DHCS has partially addressed this finding. DHCS described the mechanism by which it will calculate reversion in MHSUDS IN No. 18-033. DHCS issued MHSUDS IN No. 18-033 pursuant to bulletin authority provided by the Legislature through Welfare and Institutions Code (WIC), Section 5899. 1(b). The process described in MHSUDS IN No. 18-033 has the force of regulation until regulations are promulgated by July 1, 2019. DHCS is also continuing to draft regulations and expects to submit the public notice that announces these proposed regulations and initiates the 45-day public comment period to OAL for publication in the California Regulatory Notice Register by Spring 2019. DHCS was required to update the draft regulations based on recent statutory changes (SB 192, Chapter 328, Statutes of 2018) to reversion, which caused a delay in submitting the draft regulations to OAL.

  • Estimated Completion Date: Spring 2019
  • Response Date: February 2019

California State Auditor's Assessment of 1-Year Status: Pending


6-Month Agency Response

DHCS provided counties with direction regarding reversion of FY 2015-16 funds in MHSUDS Information No.18-033. Reversion of 2015-16 funds will begin in April 2019. SCO will collect the reverted funds and redistribute to other counties each month with the monthly MHSA distribution. The process for calculating reversion is included in draft regulations expected to be submitted to OAL in

January 2019.

  • Estimated Completion Date: January 2019
  • Response Date: September 2018

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

AB 114 provided DHCS with bulletin authority (through July 1, 2019) to implement reversion. DHCS communicated the reversion process to counties on December 28, 2017, in MHSUDS Information Notice No. 17-059. DHCS will issue final notices of reversion to counties for FY 2005-06 through FY 2014-15 beginning on January 22, 2019.

DHCS is drafting a second MHSUDS Information Notice to provide counties with direction regarding reversion of FY 2015-16 funds. The Information Notice is expected to be released by June 2018. Reversion of FY 2015-16 funds will begin in April 2019. DHCS will utilize the same methodology to prepare the reversion calculation for FY 2015-16 funds that was used to calculate reversion for FY 2004-05 through FY 2014-15. For FY 2015-16 and forward, SCO will collect any reverted funds by offsetting the monthly distribution amount until all reverted funds have been collected. The reverted funds will be redistributed to other counties each month with the monthly MHSA distribution.

The reversion process is included in the draft fiscal regulations, which are expected to be sent to OAL in January 2019 prior to the 45-day comment period.

  • Estimated Completion Date: January 2019
  • Response Date: May 2018

California State Auditor's Assessment of 60-Day Status: Pending

As noted in our audit, Health Care Services has not provided an explanation for the delay in submitting its proposed regulations to the Office of Administrative Law to begin the process of establishing regulations. In response to our audit, Health Care Services had once again delayed the submission of its proposed regulations to January 2019, when as recently as January 2018 Health Care Services had stated to us that it intended to submit its regulations for review by June 2018. As we state on page 13 of our audit, Health Care Services cannot claim either lack of funding or time as a cause for the delay: Health Care Services has spent from $7.9 million to $8.6 million annually over the past four fiscal years to administer the MHSA and it has had statutory authority to develop necessary regulations since 2012. However, it only began drafting these regulations in 2016. Given the funding it has received and the amount of time that has elapsed since it became responsible for developing these regulations, we believe Health Care Services should already have taken appropriate action to implement a reversion process. Moreover, we are concerned that Health Care Services has delayed finishing these regulations and while we are currently evaluating Health Care Services' response as pending, we look forward to seeing evidence of its progress when it submits the six-month response to our audit.


All Recommendations in 2017-117

Agency responses received are posted verbatim.