Evaluation report 15-06 December 2015 Distribution of State General Fund Dollars to Public Health Districts Distribution of State General Fund Dollars to Public Health Districts Office of Performance Evaluations Idaho Legislature Promoting confidence and accountability in state government Office of Performance Evaluations Created in 1994, the legislative Office of Performance Evaluations (OPE) operates under the authority of Idaho Code §§ 67-457 through 67-464. Its mission is to promote confidence and accountability in state government through professional and independent assessment of state programs and policies. The OPE work is guided by professional evaluation and auditing standards. Joint Legislative Oversight Committee 2015–2016 The eight-member, bipartisan Joint Legislative Oversight Committee (JLOC) selects evaluation topics; OPE staff conduct the evaluations. Reports are released in a public meeting of the committee. The findings, conclusions, and recommendations in OPE reports are not intended to reflect the views of the Oversight Committee or its individual members. Senators Senator Cliff Bayer (R) and Representative Cliff Bayer Steve Vick Michelle Stennett Cherie Buckner-Webb John Rusche (D) cochair the Representatives committee. John Rusche Maxine Bell Gayle Batt Elaine Smith 2 Distribution of State General Fund Dollars to Public Health Districts From the director December 2, 2015 Members Joint Legislative Oversight Committee Idaho Legislature 954 W. Jefferson St. This evaluation focuses on the formula for distributing state Boise, ID 83702 general fund dollars to Idaho’s seven public health districts. The Ph. 208.332.1470 formula is developed and administered by the Trustees of the legislature.idaho.gov/ope/ Boards of Health. The legislative requesters of this evaluation wanted to know if state funds are distributed in a way that meets the needs of public health districts. The formula is easy to understand and implement. However, the distribution of funds is not clearly or consistently linked to program needs within districts, nor does the formula necessarily reflect how funding requirements vary among districts. We were also asked to evaluate whether state funds are being Included in the distributed equitably. Our findings in this area relate to the regulatory programs operated by districts. These programs issue back of the licenses and permits and conduct inspections—such as for report are formal sewage disposal and food establishments. We found that often responses from these programs need to be subsidized by state and county funds the Governor because the fees charged are insufficient to fully deliver services. Furthermore, subsidies differ among programs and districts; and public health subsidizing these regulatory programs affects funding for other districts. programs. To address these issues, we have identified policy options for the Trustees and the Legislature to consider. We appreciate the cooperation and assistance of the seven public health districts, the Department of Health and Welfare, the Division of Financial Management, and the legislative Division of Budget and Policy Analysis. Sincerely, Rakesh Mohan, Director Office of Performance Evaluations 3 Contents Page Executive summary ................................................................ 5 Bryon Welch and 1. Introduction ...................................................................... 10 Tony Grange of OPE and Robert Thomas of 2. General fund distribution formula ................................... 12 Robert C. Thomas and 3. Impact of the formula changes ......................................... 22 Associates conducted this 4. Adequacy and equity of distribution ................................ 29 study. Margaret Appendices Campbell copy A. Study request .................................................................... 43 edited and desktop B. Study scope ....................................................................... 45 published the C. Methodology ..................................................................... 46 report. D. Public health in neighboring states .................................. 49 Brad Foltman, E. Formula calculations ........................................................ 54 former director of the Division of Financial Responses to the evaluation ................................................... 58 Management, conducted a quality control review. 4 Distribution of State General Fund Dollars to Public Health Districts Executive summary Why we were asked to conduct the study Idaho’s seven public health districts are statutorily obligated to provide public health services to the state’s citizens. Although health districts are not state agencies, they rely on state appropriations to fund public health services. The state appropriates a lump sum of money to the group as a whole, and the Trustees of the Boards of Health distribute funds among the seven districts using a formula determined by the Trustees. Before 1993, state general fund dollars were distributed proportional to county contributions. In 1993 the Trustees revised the formula to include new measures as a way to represent need for public health services. The Trustees distributed funds to each district based on population, poverty rates, and public assistance enrollment, in addition to county contributions. 5 The Trustees used the formula for approximately 20 years until State general questions arose about the reliability of the public assistance fund distribution enrollment data. For fiscal year 2014, the Trustees dropped is based on public assistance enrollment from the formula and adjusted county weights of the remaining measures. The new formula gave more contributions, weight to county contributions and poverty rates, and less weight population, and to population (see exhibit 1). poverty rates. As a result, the distribution of state funds among districts changed. Two districts saw a decrease in state funding from the previous fiscal year. District funding changes raised questions from policymakers and stakeholders about the rationale and fairness of the formula, particularly for districts that received less state general fund dollars. Exhibit 1 The formula’s measures and their relative weights have changed twice since the early 1990s. Before 1993 1993–2013 2014–Present Measure (%) (%) (%) County contributions 100 60 67 Population 0 20 18 Poverty rates 0 10 15 Public assistance 0 10 0 What we learned A distribution formula should be simple and effective. It should be administratively feasible while addressing need within districts. Although a formula that maximizes both simplicity and effectiveness is ideal, tradeoffs between the two are usually necessary. The current formula is quite simple to implement but could be more effective. 6 Distribution of State General Fund Dollars to Public Health Districts Findings Formula measures are The formula has potential to fund some districts less than 67 percent of county contributions. Idaho Code broad compared requires the state to appropriate funds equal to at least 67 percent to specific of county contributions to public health districts. We found that funding criteria total state matching funds have exceeded the combined county of individual contributions and are substantially greater than the required programs. minimum. However, because of the way the formula weights county contributions, some districts could receive less than 67 percent of their county contributions if state funding was equal to the statutory minimum. The formula does not weigh program needs. We found no clear link between the needs of various contracted programs and the weight of measures within the formula. Two measures of the formula, poverty rates and population, intend to address public health needs. These measures are broad compared to specific funding criteria of individual programs. For example, within the contract for the general epidemiology program, a base amount of funds (40 percent of the total) is shared equally among districts, with the remaining (60 percent of the total) distributed according to each district’s number of cases reported from previous years. Programs with regulatory fees are subsidized with state and county funds. In several programs, regulatory fees have not kept pace with district program costs. For example, restaurant health inspections are heavily subsidized by state and county funds in that affected districts must direct state and county funds to these programs instead of using the funds for other public health services where fees may not be collected. Regulatory programs are unequally subsidized. The formula does not account for the unequal subsidization of regulatory programs. For example, restaurant inspections and sewage disposal inspections receive various levels of support from counties and the state, with restaurants receiving about twice the percentage of subsidy compared with sewage disposal. Funding provided for contract services does not always fully cover the cost of the program. Districts receive funding through contracts for many of their programs; however, funding is often inadequate and does not fully cover program costs. When state agencies contract with districts for such programs, the state pays for services through the contract and districts subsidize the 7 program with additional state general fund dollars received The Trustees through the formula. have authority to make changes to Best practices from other states do not exist. Other states the formula. provide