Report 2017-117 Recommendation 4 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 #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.

All Recommendations in 2017-117

Agency responses received are posted verbatim.