Report 2017-117 Recommendation 5 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 #5 To: Health Care Services, Department of

To ensure that it provides effective oversight of local mental health agencies' reporting of MHSA funds, Health Care Services should publish its proposed regulations in the California Regulatory Notice Register by June 2018. Health Care Services should then subsequently implement a process that will enable it to withhold MHSA funds from local mental health agencies that fail to submit their annual reports on time.

6-Month Agency Response

DHCS continues to draft MHSA fiscal regulations. By January 2019, DHCS 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.

DHCS also issued MHSUDS Information Notice No: 18-033 on August 1, 2018. The Information Notice implemented W&I Code, Sections 5892 (h) and 5899.1(a) through bulletin authority provided DHCS in W&I Code, Section 5899.1(b). This Information Notice informs counties that DHCS will begin withholding 25 percent of a county's monthly distribution from the Mental Health Services Fund if the county has not submitted a complete and accurate ARERs by the due date. On July 20, 2018, DHCS informed those counties that had not submitted complete and accurate ARERs through FY 2016-17 that DHCS would instruct SCO to withhold 25 percent of the county's September 2018 distribution if DHCS did not receive all late ARERs within 30 days. On August 27, 2018, DHCS sent a memo to SCO instructing it to withhold 25 percent of the September 2018 monthly distribution for four counties.

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

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


60-Day Agency Response

DHCS continues to update the draft fiscal regulations. The Initial Statement of Reasons is also being updated. By January 2019, DHCS expects to submit the public notice that announces these proposed regulations and initiates the 45-day public comment period to the Office of Administrative Law for publication in the California Regulatory Notice Register.

DHCS continues to work with the Department of Finance (DOF) and the State Controller's Office (SCO) to develop the process and mechanics for withholding funds from counties late in submitting ARERs. DHCS expects to begin withholding funds in July/August 2018.

  • 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. 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.