Report 2017-117 All Recommendation 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.

Annual Follow-Up Agency Response From November 2020

The MHSA fiscal regulations were approved by OAL in May 2020 and became effective on July 1, 2020. MHSA reversion regulations are located at the following California Code of Regulations (CCR) sections:

- Section 3420.50. "Reversion for Counties with a Population of 200,000 or More: Community Services and Support Account, Prevention and Early Intervention Account..."

- Section 3420.55. "Reversion for Counties with a Population of Less than 200,000: CSS Account, Prevention and Early Intervention Account, and Innovation Account."

- Section 3420.60. "Reversion for All Counties: Capital Facilities and Technological Needs Account and Workforce Education and Training Account 420.60."

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From October 2019

DHCS submitted proposed fiscal regulations to OAL on March 8, 2019. The Notice of Proposed Rulemaking was posted on March 22, 2019. DHCS held the public hearing on May 7, 2019, and closed the 45-day comment period on May 17, 2019. DHCS has one year from the date when the Notice of Proposed Rulemaking was posted to promulgate the fiscal regulations.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From July 2019

DHCS submitted proposed fiscal regulations to OAL on March 8, 2019. The Notice of Proposed Rulemaking was posted on March 22, 2019. DHCS held the public hearing on May 7, 2019, and closed the 45-day comment period on May 17, 2019. DHCS has one-year from the date when the Notice of Proposed Rulemaking was posted to promulgate the fiscal regulations.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

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.

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.

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.

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.

Recommendation #2 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 clarify that the interest the local mental health agencies earn on unspent MHSA funds is subject to the same reversion requirements as the MHSA funds they receive.

6-Month Agency Response

DHCS issued MHSUDS Information Notice No: 18-033 on August 1, 2018. The Information Notice implemented Welfare and Institutions (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 clarifies for counties that interest earned on MHSA funds is subject to reversion.

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

In September 2018, Welfare and Institution Code section 5892(h) was revised and now requires that the interest the local mental health agencies earn on unspent MHSA funds is subject to the same reversion requirements as the MHSA funds they receive.

60-Day Agency Response

DHCS continues to draft MHSA fiscal regulations. The draft regulations specify that interest earned on unspent MHSA funds is subject to the same reversion requirements as the MHSA funds they receive. 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.

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.

Recommendation #3 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 establish and enforce an MHSA reserve level that will allow local mental health agencies to maintain sufficient funds to continue providing crucial mental health services in times of economic hardship, but that will not result in them holding reserves that are excessive. Health Care Services should also establish controls over local mental health agencies' deposits and withdrawals to their reserves.

Annual Follow-Up Agency Response From November 2020

The MHSA fiscal regulations were approved by OAL in May 2020 and became effective on July 1, 2020. The MHSA prudent reserve limits are located at CCR section 3420.30 found here: https://govt.westlaw.com/calregs/Document/IE86B1F7AC3524D8481AD89121D650719?viewType=FullText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=(sc.Default)

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From October 2019

DHCS submitted proposed fiscal regulations to OAL on March 8, 2019. The Notice of Proposed Rulemaking was posted on March 22, 2019. DHCS held the public hearing on May 7, 2019, and closed the 45-day comment period on May 17, 2019. DHCS has one year from the date when the Notice of Proposed Rulemaking was posted to promulgate the fiscal regulations.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From July 2019

DHCS submitted proposed fiscal regulations to OAL on March 8, 2019. The Notice of Proposed Rulemaking was posted on March 22, 2019. DHCS held the public hearing on May 7, 2019 and closed the 45-day comment period on May 17, 2019. DHCS has one-year from the date when the Notice of Proposed Rulemaking was posted to promulgate the fiscal regulations.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

The Legislature addressed this finding through Senate Bill

192. WIC Section 5892(b)(2) requires counties to calculate an amount it establishes as the prudent reserve for its Local Mental Health Services Fund, not to exceed 33 percent of the average community services and support revenue received for the fund in the preceding five years. DHCS will implement this provision through a MHSUDS IN. DHCS also incorporated this provision in its 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.

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

6-Month Agency Response

DHCS 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 of the maximum prudent reserve level. DHCS is currently drafting regulations that will specify the conditions a county must meet before it may deposit or withdraw funds from the local prudent reserve.

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

60-Day Agency Response

In light of the recent oversight hearing on this audit and the concerns from members of the Legislature regarding the level of reserves maintained by the counties, the Department has reconsidered its recommendation on the amount of reserve and will be adopting the CSA's prudent reserve recommendation in its pending draft fiscal regulations, which is to set the reserve level at 33 percent. The draft regulations will include this specification as a maximum level of funding a county would be permitted to maintain. 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.

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

We are pleased that Health Care Services will reconsider its previous position regarding the appropriate MHSA reserve level, and we look forward to reviewing its analysis to establish a more prudent reserve level. However, Health Care Services has not addressed our recommendation to establish controls over local mental health agencies' deposits and withdrawals to their reserves, and we look forward to reviewing its proposed controls when it submits the six-month response to our audit.

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.

Recommendation #4 To: Health Care Services, Department of

Health Care Services should complete its analysis of the $225 million fund balance in the MHS Fund by May 1, 2018, to determine why this balance existed, whether there is any impact on funding to the local mental health agencies and, if so, distribute those funds accordingly. Further, it should establish a process to regularly scrutinize the MHS Fund to identify any excess fund balances and the reasons for such balances.

60-Day Agency Response

At the time of the finding, DHCS could not definitively determine whether the $225 million appropriation balance was supported by any available cash. After review of back-up documentation from the Department of Finance (DOF), which includes two SCO reports 1) Account Balance by Fund and 2) Fund Reconciliation Report, DHCS has determined the $225 million was not supported by any available cash. The monthly disbursements by the SCO and DOF is calculated based upon available cash within the fund. No reserve cash was held for the 2004 appropriation. DHCS has revised its monthly reconciliation process to review all its available appropriations and cross-check against available cash, and cross-check against the monthly DOF disbursement memo.

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

Health Care Services worked with the Department of Finance and determined that there is not a $225 million balance in the MHS Fund. Moreover, DHCS provided its revised process to reconcile the MHS Fund against both State Controller and Department of Finance records to detect and resolve any future fund balance amount variances between the records of Health Care Services, the State Controller, and the Department of Finance.

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.

Annual Follow-Up Agency Response From November 2020

The MHSA fiscal regulations were approved by OAL in May 2020 and became effective on July 1, 2020. MHSA regulations regarding the withhold process may be found at CCR section 3510.005: Withhold for Failure to Timely Submit a Complete and Accurate Annual MHSA Revenue and Expenditure Report, found here: https://govt.westlaw.com/calregs/Document/IA6633456B7C64EA1B50A0214293C5D6A?viewType=FullText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=(sc.Default).

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From October 2019

DHCS continues to withhold funds from counties that do not submit their ARER by the December 31, due date. The monthly payment report on the State Controller's Office website reflects the 25 percent withhold amount and the return of 25 percent withhold amount, by county. DHCS submitted proposed fiscal regulations to OAL on March 8, 2019. The Notice of Proposed Rulemaking was posted on March 22, 2019. DHCS held the public hearing on May 7, 2019, and closed the 45-day comment period on May 17, 2019. DHCS has one year from the date when the Notice of Proposed Rulemaking was posted to promulgate the fiscal regulations.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From July 2019

DHCS continues to withhold funds from counties that do not submit their ARER by the December 31 due date. The monthly payment report on the State Controller's Office website reflects the 25 percent withhold amount and the return of 25 percent withhold amount, by county. DHCS submitted proposed fiscal regulations to OAL on March 8, 2019. The Notice of Proposed Rulemaking was posted on March 22, 2019. DHCS held the public hearing on May 7, 2019 and closed the 45-day comment period on May 17, 2019. DHCS has one-year from the date when the Notice of Proposed Rulemaking was posted to promulgate the fiscal regulations.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

DHCS has addressed this finding. DHCS implemented a process to withhold 25 percent of MHSA funds from each county that does not submit their ARER by the December 31 due date through MHSUDS IN No. 18-033. DHCS began withholding funds from counties that had not submitted all ARERs through FY 2016-17 in September of 2018. As of January 2019, only one county, had not submitted its FY 2016-17 ARER and 11 counties had not submitted their FY 2017-18 ARER. DHCS included the withhold process in the draft fiscal regulations. 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 by Spring 2019.

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

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.

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.

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.

Recommendation #6 To: Health Care Services, Department of

To ensure that local mental health agencies appropriately spend MHSA funds, Health Care Services should publish its proposed regulations in the California Regulatory Notice Register by September 2018. It should then develop and implement an MHSA fiscal audit process, independent of the Medi-Cal reviews, to review revenues and expenditures for the most recent fiscal year.

Annual Follow-Up Agency Response From December 2023

DHCS continues to finalize the draft fiscal audit and appeal regulations. The appeal process underwent extensive changes, which necessitated significant edits to the statement of reasons. In addition, SB 326 (Eggman) was recently chaptered and made significant changes to the Mental Health Services Act (MHSA). DHCS is reviewing the statute to align the appeal process, where appropriate, to a Behavioral Health Services Act (BHSA) audit and appeal process or other behavioral health audit and appeal process. DHCS is seeking to cause minimal disruption or confusion to counties if additional changes to an audit and appeal process are necessary upon approval of the BHSA. Because of the recent changes, DHCS anticipates submitting by June 30, 2025, the public notice announcing the proposed MHSA audit and appeal regulations and the 45-day public comment period to California's Office of Administrative Law for publication in the California Regulatory Notice Register.

If the ballot initiative (March 5, 2024) does not receive voter approval, DHCS anticipates submittal to the Office of Administrative Law no later than December 31, 2024. This will allow time for the draft regulations to continue through the internal DHCS review and approval process.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2021

DHCS continues to finalize the draft fiscal audit and appeal regulations. The Department will expedite, to the extent possible, the remaining reviews. DHCS anticipates submitting the public notice announcing the proposed MHSA audit and appeal regulations and the 45-day public comment period to OAL for publication in the California Regulatory Notice Register by December 2021.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From November 2020

DHCS concluded the rulemaking process for the MHSA fiscal regulations in May 2020 with the regulations becoming effective on July 1, 2020. Resources have transitioned to drafting the MHSA fiscal audit and appeal regulations. While a preliminary draft of the regulations has been completed, the draft still requires comprehensive internal reviews by DHCS Legal and Fiscal Divisions and external review by the California Health and Human Services Agency and the Department of Finance. DHCS will expedite, to the extent possible, the remaining reviews. Due to the COVID-19 pandemic, DHCS anticipates submitting the public notice announcing the proposed MHSA audit and appeal regulations, and initiating the 45-day public comment period, to OAL for publication in the California Regulatory Notice Register by December 2021.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From October 2019

DHCS is developing the draft audit and appeal regulations package for the provision of fiscal audits and program oversight. 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 by December 2019. Because DHCS required additional time and resources to update the draft fiscal regulations to include recent statutory changes, this package was delayed. DHCS has one year from the date when the Notice of Proposed Rulemaking is posted to promulgate the audit and appeal regulations.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Annual Follow-Up Agency Response From July 2019

DHCS is developing the draft audit and appeal regulations package for the provision of fiscal audits and program oversight. 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 by Fall 2019.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

DHCS is developing the draft audit and appeal regulations

package for the provision of fiscal audits and program oversight. 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 by Spring 2019.

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

6-Month Agency Response

DHCS continues to develop the draft audit and appeal regulations package for the provision of fiscal audits and program oversight. 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 by spring 2019.

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

60-Day Agency Response

DHCS continues to develop the draft audit and appeal regulations package for the provision of fiscal audits and program oversight. 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 lay for publication in the California Regulatory Notice Register by spring 2019.

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

We are concerned that Health Care Services now intends to wait until Spring 2019 to submit its proposed regulations for fiscal audits. 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. As recently as February 2018, Health Care Services stated to us that it intended to submit its regulations for review by September 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

Further, Health Care Services should develop and implement a meaningful MHSA fiscal audit process, independent of the Medi-Cal reviews, to review revenues and expenditures for the most recent fiscal year.

Recommendation #7 To: Health Care Services, Department of

To ensure that local mental health agencies comply with their performance contracts and MHSA requirements, Health Care Services should establish a process for conducting comprehensive program reviews and begin conducting those reviews by July 2018.

1-Year Agency Response

DHCS staff implemented a process for conducting program reviews of county performance contracts and MHSA requirements in a pilot program that began in August 2018 and concluded on October 2018. A total of four pilot counties participated (Placer, Mendocino, Madera, and El Dorado). Full implementation of the MHSA program reviews began on January 8, 2019, starting with Napa county. Approximately two county reviews will be performed per month from January to September 2019. All 59 counties will be reviewed over a triennial period with the three year cycle.

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

6-Month Agency Response

DHCS staff implemented a process for conducting program reviews of county performance contracts and MHSA requirements in a pilot program that began in August 2018. DHCS has conducted two MHSA county onsite reviews and scheduled four more for a total six pilot counties (Sonoma, Plumas, Placer, Mendocino, Madera, and El Dorado).

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

Health Care Services provided its draft processes for conducting MHSA program reviews of the local mental health agencies. However, Health Care services did not provide its initial schedule of review for the 59 local mental health agencies, nor did it or indicate the frequency of ongoing reviews for the local mental health agencies.

60-Day Agency Response

DHCS developed a protocol (evaluation tool) and review program and performed a pilot review in February 2018. After the pilot visit, DHCS made revisions to the protocol.

DHCS expects to distribute the protocol to stakeholders for review and feedback in May 2018. After receiving stakeholder input, DHCS intends to perform additional pilot testing of the protocol in four counties during the months of July, August, September and October 2018. Thereafter, DHCS plans to conduct 20 county on-site visits per year; for total completion of all 58 counties on a triennial basis and continuing thereafter.

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

Recommendation #8 To: Mental Health Services Oversight and Accountability Commission

To ensure that local mental health agencies are able to spend Innovation program funds in a timely manner, the Oversight Commission should continue its efforts to help local mental health agencies understand the types of Innovation projects that the commissioners believe are appropriate. These efforts should include engagement and dialogue with local mental health agencies through Innovation events and forums about the types of innovative approaches that would meet the requirements of the MHSA. The Oversight Commission should use meetings of the Innovation subcommittee or a similar mechanism to evaluate the progress of its efforts to reduce unspent Innovation funds and the need for continued engagement and dialogue with local mental health agencies.

Annual Follow-Up Agency Response From October 2019

The Commission has substantially improved and extended its efforts to develop a shared, statewide understanding of the goals of the MHSA Innovation component and to support local mental health agencies' ability to contribute to statewide learning. During FY 2018-19, the Commission approved over $303 million in county Innovation projects, with an average size of $5.7 million, up from $149 million cumulative and an average size of $4.8 million in FY 2017-18.

Commission staff continue to provide counties with focused technical assistance, centered on the Innovation Toolkit implemented by the Commission in April 2018. Additionally, Commission staff have regularized solicitation of public comments on proposed Innovation project to support local and Commission decision making.

Finally, the Commission's strategic efforts have resulted in the development of several, major, multi-county collaborative Innovation projects and are expected to continue to yield collaborative projects throughout the balance of 2019-20. The Commission provided technical assistance that resulted in October 2017 approval of a major, multi-county Innovation project designed to test the viability of various smartphone applications for supporting effective mental health screening and treatment. The Commission provided a small grant that resulted in December 2018 approval of a major, multi-county early psychosis learning community Innovation project. The Commission in 2018-19 implemented $2.5 million in Innovation Incubator contracts designed to result in three major, multi-county collaborative projects intended to reduce criminal justice involvement of persons living with mental illness. And the Commission is in the planning phases to commit an additional $2.5 million by June 2020 to support further, strategic, statewide investments in Innovative projects intended to reduce criminal justice involvement.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

The Commission has continued its efforts to support local mental health agencies, as well as mental health stakeholders to have a shared understanding of the goals of the MHSA Innovation component. More and more local mental health agencies are using the Innovation Toolkit implemented by the Commission in April 2018, which includes information and guidance to support counties in effective design of Innovation projects and a recommended template to assist counties to meet Innovation regulatory requirements.

Commission staff communicate regularly with county staff as counties prepare Innovative Project concept papers and Workplans. Staff highlight the value of completing the Project Plan Recommended Template for designing and presenting Workplans both locally and to the Commission. Additionally, Commission staff have improved communication with stakeholders about public notice and comment periods on draft Innovation Project Workplans to encourage more robust public participation at the county level.

Finally, the 2018-19 enacted budget includes $2.5 million in state administrative funding, with another $2.5 million expected in 2019-20, to support the implementation of an Innovation Incubator as a strategy to support Innovation plan development. The Commission contracted to support the design of a business plan for the Incubator. This design process, which included a series of "design laboratory" events and listening sessions around the state in May, June and July 2018, culminated in the presentation to the Commission of implementation options at the January 2019 Commission meeting. Commissioners directed staff to implement a "hybrid" model for the Innovation Incubator, including internally-managed functions and externally contracted functions. The Commission currently is drafting a procurement to identify an external contractor to manage the external functions, with implementation expected to begin early in July 2019.

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

6-Month Agency Response

The Commission has continued its efforts to support counties, as well as mental health stakeholders to have a shared understanding of the goals of the MHSA Innovation component. More counties are using the Innovation Toolkit implemented by the Commission in April 2018, which includes information and guidance to support counties in effective design of Innovation projects and a recommended template to assist counties to meet Innovation regulatory requirements.

Commission staff communicate regularly with county staff as they prepare Innovative Project concepts. Staff highlight the value of completing the Project Plan Recommended Template for designing and presenting the plans. Commission staff also have improved communication with stakeholders about public notice and comment periods on draft Innovation Projects to encourage more robust public participation at the county level.

Finally, the 2018-19 enacted budget includes $2.5 million in state administrative funding, with another $2.5 million expected in 2019-20, to support the implementation of an Innovation Incubator as a strategy to support innovation plan development. The Commission contracted to support the design of a business plan for the Incubator. This design process included five day-long "design laboratory" engagements in Oakland (May 8, 2018 and June 4, 2018), Los Angeles (May 21, 2018 and June 11, 2018) and Sacramento (July 10, 2018), as well as listening sessions with stakeholders held in Sacramento on May 4, 2018 and June 20, 2018, respectively, to insure that the business plan presented to the Commission would strongly reflect the principles of the MHSA and would lead to the creation of an Incubator that would be sustainable over time and provide on-going support to counties for mental health innovation. This business plan will be presented to the Commission in late Fall 2018, with implementation expected to begin early in calendar year 2019.

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

60-Day Agency Response

The Commission has continued its efforts to support local mental health agencies, as well as mental health stakeholders to have a shared understanding of the goals of the MHSA Innovation component. In April 2018 the Commission implemented an Innovation Toolkit for local mental health agencies. The Toolkit was developed with considerable input from county staff and stakeholders. It includes four tools: (1) Innovation Framework Decision Tree that provides information and guidance on how to design Innovation projects; (2) MHSOAC Innovation Review Process that explains the Commission's workflow for reviewing Innovation projects; (3) Innovation Project Plan Recommended Template to assist counties to meet Innovation regulatory requirements; and (4) Presentation Guidelines that provides guidance on how to present Innovation projects to the Commission. The Commission also has continued its engagement with local mental health agencies through presentations at the County Behavioral Health MHSA Boot Camp held on April 16 and 17, 2018, and a meeting of the California Association of Local Behavioral Health Boards/Commissions on April 20, 2018.

Commission staff communicate regularly with county staff as counties prepare Innovative Project concept papers and Workplans. Staff highlight the value of completing the Project Plan Recommended Template for designing and presenting Workplans both locally and to the Commission. Additionally, Commission staff have improved communication with stakeholders about public notice and comment periods on draft Innovation Project Workplans to encourage more robust public participation at the county level.

Finally, the Governor's Budget includes $5 million in state administrative funding to support the development of an Innovation Incubator as a strategy to support innovation plan development. We are working with the administration and the Legislature to secure these funds and provide on-going support to counties for mental health innovation.

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

Recommendation #9 To: Mental Health Services Oversight and Accountability Commission

To ensure proper oversight and evaluation of outcomes for the Prevention and Innovation projects, the Oversight Commission should finalize its internal processes for reviewing and analyzing the program status reports no later than July 2018. Further, in order to fulfill its statutory responsibility to provide oversight and accountability for MHSA programs, the Oversight Commission should ensure that it launches all three data tools to track local mental health agencies' funding, services, and outcomes as it intends.

Annual Follow-Up Agency Response From October 2019

Commission staff completed and implemented internal processes for reviewing and analyzing the county Annual PEI MHSA reports in early 2019. Additionally, the Commission has launched all three data tools as part of its Transparency Suite which is on the Commission website. The first tool focused on fiscal transparency and was launched in August 2017 and substantially revised in March 2018. The second tool allows the public to search for, view, and compare MHSA-funded programs on key characteristics, such as target population, budgets, and program goals was launched in April 2019. The third tool allows the public to explore program outcomes data, with an initial emphasis on Full Service Partnership programs, was also launched in April 2019.

Due to data privacy concerns as well as staffing and fiscal constraints, the Commission has not yet been able to incorporate appropriate service statistics from the FY 2016-17 annual reports into the Transparency Suite database. Staff also are analyzing the first triennial PEI evaluation reports, which covered the FY 2016-17 and 2017-18 service years and were due in June 2019. The Commission expects to incorporate program service data and evaluation results from both the annual reports and the triennial reports during the first half of calendar year 2020.

The Commission anticipates some fiscal constrains to maintaining and updating these data tools. The Commission was able to initially launch the tools with administrative savings and it is unclear if we can sustain this effort with savings.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

The Commission has established a two-phase process for the internal review and analysis of the Prevention and Early Intervention (PEI) program and Innovation project annual reports. Phase one, a preliminary review of compliance with the regulatory requirements has been completed. The second phase, a program-level data review, which extracts information about each program including demographics of those served, is approximately two-thirds completed. This information will be analyzed to evaluate programmatic trends, including whether the programs are serving the intended populations and whether they are addressing the seven negative outcomes of untreated mental illness specified in the Mental Health Services Act. Information from these reports is being used to populate parts of the Commission's on-line transparency data tools.

The Commission has made great progress towards launching all three data tools, for fiscal transparency, program transparency, and outcomes transparency, respectively. The first tool was launched in August 2017 and substantially revised and extended in March 2018. The second tool is currently in final testing, with publication expected in April 2019. This tool allows the public to search for, view, and compare MHSA-funded programs on key characteristics, such as target population, budgets, and program goals. The database, based on information provided by the counties, as of February 22, 2019 includes information on 887 PEI programs. The third tool will allow the public to explore program outcomes data, with an initial emphasis on Full Service Partnership programs. This tool is currently in final testing, with publication expected in April 2019.

The Commission anticipates some fiscal constrains to maintaining and updating these data tools. The Commission was able to initially launch the tools with administrative savings and it is unclear if we can sustain this effort with savings.

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

6-Month Agency Response

The Commission has established a two-phase process for the internal review and analysis of the Prevention and Early Intervention program and Innovation project annual reports. Phase one, a preliminary review of compliance with the regulatory requirements has been completed. The second phase, a program-level data review, which extracts information about each program including demographics of those served, is in progress. This information will be analyzed to evaluate programmatic trends, including whether the programs are serving the intended populations, as well as whether they are addressing the seven negative outcomes of untreated mental illness specified in the MHSA. Information from these reports is being used to populate aspects of the Commission's on-line transparency data tools.

The Commission has made great progress towards completing the second part of Recommendation #9, that the Commission launch all three data tools, for fiscal transparency, program transparency, and outcomes transparency, respectively. The Commission's first tool (Fiscal Transparency) was launched in August 2017 and substantially revised and extended in March 2018. The second tool (MHSA Program Search, Display and Compare) is currently in beta testing, with publication expected in November 2018. This tool will allow the public to search for, view, and compare MHSA-funded programs on key characteristics, such as target population, key intervention strategies, budgets, and program goals. The database, based on information provided by the counties in their 2017-2020 MHSA Three-Year Program and Expenditure Plans, annual MHSA Revenue and Expenditure Reports, and annual Prevention and Early Intervention program reports, as of August 22, 2018 includes information on 446 Prevention and Early Intervention programs from across the state.

The Commission has launched its data tools with administrative savings and it is unclear if we can sustain this effort or timeframe with savings.

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

60-Day Agency Response

The Commission has established a two-phase process for the internal review and analysis of the Prevention and Early Intervention program and Innovation project annual reports. Phase one includes a preliminary review, which identifies which counties have submitted their reports. Commission staff will follow up with the counties that have not submitted their reports until all the required reports have been submitted. This first phase includes a preliminary review of compliance with the regulatory requirements. The second phase is a program-level data review, which extracts information about each program including demographics of those served. This information will be analyzed to evaluate programmatic trends, including whether the programs are serving the intended populations, as well as whether they are addressing the seven negative outcomes of untreated mental illness specified in the Mental Health Services Act.

Information from these reports will be used to populate the Commission's on-line transparency data tools. In August 2017 the Commission launched the first of these tools, the Fiscal Transparency Tool that displays counties' annual MHSA revenues, expenditures, and year-end balances of unspent funds. The second tool will provide information on the programs and services and the third tool will provide information on the outcomes of those programs.

The Commission has made great progress towards completing the second part of Recommendation #9, that the Commission launch all three data tools. The Commission's second tool is on track to be completed by September 2018. This tool will allow the public to search for, view, and compare key program characteristics, such as target population, key intervention strategies, budgets, and program goals.

The Commission's third data tool is under development and the Commission anticipates piloting key outcome metrics specified in the MHSA late in the 2018-19 fiscal year.

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

Recommendation #10 To: Mental Health Services Oversight and Accountability Commission

To ensure that the MHSA-funded triage grants are effective, the Oversight Commission should require that local mental health agencies uniformly report data on their uses of triage grants. It should also establish statewide metrics to evaluate the impact of triage grants by July 2018.

Annual Follow-Up Agency Response From October 2020

In May 2018, the Commission awarded thirty triage grants through three sets of Requests for Applications (RFA). Each of the grants require the local mental health agencies to collect and report data as part of the statewide evaluation of the triage grants.

In January 2019, the Commission contracted with the Behavioral Health Centers of Excellence (BHCE) at UC Davis and UCLA to perform the statewide evaluation of the triage grants. In July 2020, the BHCEs submitted to the Commission a Statewide strategy for metrics to evaluate the impact of triage grants. Over the next year, the Commission staff in collaboration with the BHCOEs will continue to update the strategy to ensure the feasibility and sustainability of the proposed metrics.

California State Auditor's Assessment of Annual Follow-Up Status: Partially Implemented

In July 2020, UC Davis and UCLA developed metrics for the Oversight Commission to evaluate impacts of triage grants. However, as the Oversight Commission indicated in its response, it will take the next year to evaluate the feasibility and sustainability of the proposed metrics. We look forward to reviewing the Oversight Commission's review and evaluation of the effectiveness of the proposed metrics.

Annual Follow-Up Agency Response From October 2019

In May 2018 the Commission awarded thirty triage grants through three sets of Request for Applications (RFA). Each of the grants require the local mental health agencies to collect and report data as part of the statewide evaluation of the triage grants.

The Commission has contracted with the Behavioral Health Centers of Excellence (BHCOE) at UC Davis and UCLA to perform the statewide evaluation of the triage grants. Under the contracts the BHCOE, prior to the end of 2019, are required to establish a clear strategy to evaluate the impact of the triage grants. Additionally, the BHCOE are to submit a draft evaluation plan in January 2020 setting forth the statewide metrics to evaluate the impact of the triage grants.

California State Auditor's Assessment of Annual Follow-Up Status: Pending

1-Year Agency Response

Recognizing the need for standardized data collection and evaluation, in January 2018, the Commission authorized $10 million to contract with a third party to do statewide evaluation of the triage grants. The evaluator will work closely with grantees and Commission staff to devise evaluation strategies including establishing statewide metrics.

The Commission awarded thirty triage grants through three sets of Request for Applications (RFA). Each of the grants require collaboration with the third party evaluator in collecting and reporting required data as part of the statewide evaluation of the triage grants.

In 2018 the Commission entered into negotiations with the Behavioral Health Centers of Excellence (BHCOE) at UC Davis and UCLA to perform the statewide evaluation of the triage grants and had anticipated finalizing the contract before July 1, 2018. However, as a result of the $12 million per year reduction in funding for Triage programs in the 2018/19 enacted budget the Commission, in July 2018, reduced the funding of each of the grants and the statewide evaluation contracts. This reduction in funding required further negotiations with the BHCOE. The Commission executed the contracts with the BHCOE in January 2019. Under the contracts the BHCOE, prior to the end of 2019, are required to establish a clear strategy to evaluate the impact of the triage grants.

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

6-Month Agency Response

Recognizing the need for standardized data collection and evaluation, in January 2018, the Commission authorized $10 million to contract with a third party to do statewide evaluation of the triage grants. The evaluator will work closely with grantees and Commission staff to devise evaluation strategies including establishing statewide metrics.

In May 2018 the Commission completed awarding thirty Triage grants through three sets of Request for Applications (RFA). Each of the grants require collaboration with the third party evaluator in collecting and reporting required data as part of the statewide evaluation of the triage grants.

Earlier this year the Commission entered into negotiations with the California Behavioral Health Centers of Excellence (CBHCE) at UC Davis and UCLA to perform the statewide evaluation of the triage grants and had anticipated finalizing the contract before July 1, 2018. However, as a result of the $12 million per year reduction in funding for Triage programs in the 2018/19 enacted budget the Commission, in July 2018, reduced the funding of each of the grants and the statewide evaluation contracts. This reduction in funding requires further negotiations with the CBHCE. The Commission anticipates finalizing the contracts by October or November 2018. Commission anticipates a clear evaluation strategy will be in place by July 2019.

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

60-Day Agency Response

During the initial triage grant phase the Commission required counties to propose an evaluation strategy as part of the application to ensure counties could evaluate their progress while also ensuring counties could tailor the program to their local priority needs. All grantees were required to submit periodic reports on hiring, encounters with mental health services, evaluation efforts, and expenditures. This approach allowed the counties to propose a triage program that is responsive to the unique priorities and could be integrated into their continuum of care. Recognizing the need for standardized data collection and evaluation, in January 2018, the Commission authorized $10 million to contract with a third party to do statewide evaluation of the triage grants. The evaluator will work closely with grantees and Commission staff to devise evaluation strategies including establishing statewide metrics.

The Commission issued three sets of Requests for Applications (RFA) for the triage grants. Each of the RFAs requires the grantee collaborate with the third party evaluator in collecting and reporting required data. On March 22, 2018 the Commission awarded triage grants for adult services and is scheduled to award the triage grants for children and transitional age youth services at its April 2018 meeting. The final set of grants which is for triage services in partnership with schools will be awarded in early May. The Commission anticipates the contracts for all grants will be fully executed in June 2018.

The Commission is in negotiations with the California Behavioral Health Centers of Excellence (CBHCE) at UC Davis and UCLA to perform the statewide evaluation of the triage grants and anticipates finalizing the contract by June 30, 2018. Commission anticipates a clear evaluation strategy will be in place prior to July 2019.

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

Recommendation #11 To: Alameda County Behavioral Health Care Services

To strengthen its monitoring of MHSA projects and ensure that it spends MHSA funds appropriately, Alameda should develop and implement MHSA program monitoring guidelines to ensure that staff appropriately perform and document their monitoring activities.

Annual Follow-Up Agency Response From October 2019

Alameda County has completed its Mental Health Services Act (MHSA) monitoring guidelines for all ongoing MHSA funded programs. A dedicated team has completed the guidelines which were posted to the the County website on 6/25/19. These guidelines were in use as of July 1, 2019 for FY 19/20.

With these guidelines in place Alameda now has a monitoring mechanism to ensure that staff appropriately perform and document their monitoring activities.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

Alameda County is continuing to make progress on finalizing its Mental Health Services Act (MHSA) monitoring guidelines for all ongoing MHSA funded programs. A dedicated team has completed a draft version of the guidelines which are currently being reviewed by the MHSA Division Director and the Network Office (contracting office) Director for edits and further refinement. Alameda expects to have the monitoring guidelines in place by the end of FY 18/19 and will have annual reports for all ongoing MHSA programs in place by the end of FY 18/19.

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

6-Month Agency Response

Alameda County is making significant progress towards the development of MHSA monitoring guidelines for all ongoing MHSA funded programs. A dedicated team is meeting regularly and has consolidated and cataloged all current ongoing MHSA funded programs, the existing monitoring processes and best practices. To date the team has discussed various categories/tiers of monitoring to include in the guidelines, e.g. desk monitoring in regular intervals based on the type of MHSA funded program, site visits, TA contacts/visits, and provider/county meetings. Alameda expects to have the monitoring guidelines in place by the end of FY 18/19 and will have annual reporting guidelines and reports for all ongoing MHSA programs in place by the end of FY 18/19.

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

60-Day Agency Response

Alameda County has begun reviewing all current MHSA monitoring tools and procedures. Staff have been identified to work on this process and are meeting regularly to identify all current monitoring processes. The review and identification of best practices in relation to MHSA monitoring will continue until the end of the fiscal year FY 17/18. We will then consolidate these documents into one user manual that will be available to all staff members via our website in FY 18/19. Revisions to the users' manual will be made as needed to ensure the manual is current at all times. The staff will be advised of all revisions.

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

All Recommendations in 2017-117

Agency responses received are posted verbatim.