ADSA FY 2011-13 Reduction Proposals

STATE OF WASHINGTON

DEPARTMENT OF SOCIAL AND HEALTH SERVICES

P.O. Box 45050, Olympia, Washington 98504-5050

October 7, 2010

TO: ADSA Staff and Stakeholders

FROM: Kathy Leitch, Assistant Secretary KL

Aging and Disability Services Administration

SUBJECT: ADSA FY 2011-13 Ten Percent Spending Reduction Proposals

My September 29th memo to you on current-year budget reductions promised information about what has been submitted by DSHS/ADSA for the Governor’s consideration as she prepares her budget proposal for the 2011-2013 biennium.

Unfortunately, the revenue picture is not significantly brighter for 2011-2013. Each agency was asked to submit options to reduce state spending by 10%. That target is not in addition to the 6.3% current-year across-the board reductions I outlined last week. As you will see, we carried some of those proposals forward through the biennium, did not carry others forward, and have identified several new options.

Previously I said the state will be bringing fewer resources into its partnerships than planned and service recipients and their families will need to assess their ability to do more, service providers will need to reassess and revise their business models, we will ask more of the federal government, and labor, local communities, and governments will need to help sort out their priorities and what role they can play in streamlining government. I also said that given the magnitude of these changes there inevitably will be some services that will no longer be provided.

While we have a bit more latitude to be strategic as we approach 2011-2013, those statements are still accurate and will frame our discussions as we move forward.

ADSA’s proposals would reduce its expenditure of state general funds as follows:

Long Term Care $ (272,404,000)

Developmental Disabilities $ (98,915,000)

Mental Health $ (68,512,000)

Alcohol and Substance Abuse $ (18,083,000)

Total $ (457,914,000)

The figures above include an increase of $169M in “other” revenues for ADSA programs (primarily through increased federal match and increased fees). An increase in “other” revenues allows a corresponding decrease in expenditure of state general funds. The balance of the reduction in state general fund spending comes from cuts in programs.

The program specific steps are outlined in the attached chart. Details for all DSHS programs, including ADSA’s, can be found at the DSHS Budget Page. Beginning this week, OFM will begin reviewing agency proposals and we will work throughout the fall to refine those ideas as the Governor’s budget is developed and then finalized in December.

As you can see from the attached chart the types of actions we can take fall into the same categories as before, except there are also several new ideas for 2012-2013 that will increase revenues from non-state sources. In summary:

· Most of the 6.3% current year reduction proposals are continued through the biennium, with the following major exceptions (by category):

o ADSA Reductions: Temporary layoffs for employees are not continued.

o Rate Changes: Boarding home rate reductions; reduction to AAA Case management rates; and DDD SOLA reductions are not continued.

o Service Reductions: Suspension of the Individual and Family Support program for families who support people with developmental disabilities; reduction in funding for the Senior Citizen Services Act; suspension of entry to the Children’s Intensive In-Home Behavioral Supports program; and the reduction to Youth Detoxification are not continued.

· There are several items that appear for the first time on the biennial list:

o Service Alternative: A proposal to purchase health care for direct care workers employed by homecare agencies at a lower cost through the BHP or other Health Care Authority health plan options (DDD and LTC).

o Service Investment: Additional funding for the Volunteer Services Program to increase the number of volunteer hours provided in support of vulnerable adults; incentive-funding for nursing homes to engage more fully in the home and community-based service system; and an additional investment in the Family Caregiver Support Program to slow entry of clients into the Medicaid system (LTC).

o Additional Revenues: Five new revenue proposals that would create a net reduction of $153.3M in state general fund expenditure:

§ A proposal to extend a revenue-generating public utility assessment on DDD community residential providers, licensed boarding and adult family homes and home care agencies (DDD and LTC).

§ A shift of current in-home service participants to the new Community First Options Program under Medicaid, which provides a higher federal match rate (DDD and LTC).

§ Implementation of a quality assurance fee on nursing homes (LTC).

§ A Vulnerable Adults Safety Improvement Package that improves the abuse response system and covers more facility oversight costs through increases in facility license fees (LTC).

§ An increase in fees for licensing, certification, and regulatory oversight of chemical dependency treatment programs and community mental health agencies (ASA and MH).

As always, I will continue to keep you informed as we move toward the upcoming legislative session.

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