Report 2017-117 Recommendation 2 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 #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.

All Recommendations in 2017-117

Agency responses received are posted verbatim.