Program Review and Investigations Committee




<MeetMDY1> December 14, 2006


The<MeetNo2> Program Review and Investigations Committee met on<Day> Thursday,<MeetMDY2> December 14, 2006, at<MeetTime> 10:00 AM, in<Room> Room 169 of the Capitol Annex. Representative Tommy Thompson, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Representative Tommy Thompson, Co-Chair; Senators Brett Guthrie, Vernie McGaha, Joey Pendleton, and Katie Stine; Representatives Adrian K Arnold, Sheldon E Baugh, Dwight D Butler, Rick G Nelson, and Ruth Ann Palumbo.


Guests:  Steve Shannon, Executive Director, Kentucky Association of Regional Programs (KARP); Linda Harney, Deputy Commissioner, Department for Mental Health and Mental Retardation Services, Cabinet for Health and Family Services; Crit Luallen, Auditor of Public Accounts, Cindy James, Assistant State Auditor, Ellen Hesen, General Counsel, and Joe Meyer, Senior Policy Advisor, State Auditor’s Office; and Yvette Perry, Kentucky Department of Education.


LRC Staff:  Greg Hager, Committee Staff Administrator; Rick Graycarek; Jim Guinn; Christopher Hall; Margaret Hurst; Van Knowles; Perry Papka; Rkia Rhib; Cindy Upton; Tanlee Wasson; and Jennifer Beeler, Committee Assistant; Program Review and Investigations Committee.


Rep. Thompson opened the meeting by recognizing Rep. Adrian Arnold for his 29 years of service to the committee.  Rep. Arnold, who is retiring from the General Assembly, is an original member of the Program Review and Investigations Committee.  Since the committee’s creation in 1978, he has attended more than 200 of its meetings.  Rep. Arnold thanked his current and past General Assembly and committee colleagues and committee staff.


Cindy Upton, Program Review staff, presented the report Kentucky’s Community Mental Health System Is Expanding and Would Benefit From Better Planning and Reporting.


Ms. Upton stated that in November 2005, the Program Review and Investigations Committee directed staff to review Kentucky’s community mental health and mental retardation centers.

She stated that the study covered three objectives: describe the community mental health and mental retardation centers’ mission, activities, and available personnel and financial resources; analyze how the centers determine consumers’ needs and what procedures are used to satisfy those needs; and examine the processes of treatment, monitoring, and outcome evaluation.


Ms. Upton stated that KRS Chapter 210 establishes the regional board structure, creates local boards of citizens, sets oversight authority and funding decisions with the secretary of the Cabinet for Health and Family Services, and describes the board’s and cabinet’s responsibilities for funding and reporting.  She said the cabinet’s oversight role is exercised by the Department for Mental Health and Mental Retardation Services (MHMR).


She stated that Kentucky has 14 regional boards.  The regions compete with each other and other states for resources.  Each regional board operates programs that provide mental health, mental retardation, substance abuse, and other services.


Ms. Upton explained that the boards are the statutory planning authorities for the state.  Each is required to submit an annual plan and budget to the department each year.  The approved plan and budget are incorporated into the contract between the department and the board.  She said that the budget process does not take full advantage of the work of a number of other statutory planning partners.  She said that the 843 Commission and the 144 Commission were established in statute to assess statewide needs, develop state plans for program development, and identify funding requirements.


She explained that the 843 Commission’s responsibility includes community services and inpatient and residential care.  She said it encompasses coordination of services and funding across agencies and funding sources.  The 843 Commission is co-chaired by a member of the General Assembly and the secretary of the Cabinet for Health and Family Services.


Ms. Upton said that the 144 Commission considers the needs of persons with dual diagnoses, such as mental retardation and mental illness.  The 144 Commission is chaired by the secretary of the Cabinet for Health and Family Services.


Recommendation 2.1 is if it is the intent of the General Assembly that the 843 Commission and the 144 Commission develop comprehensive plans for needed services and funding, then the General Assembly may wish to direct the commissions to present a plan to the Governor and the Legislative Research Commission in sufficient time before each biennium so that the plan could be useful in the budgetary process.  The plan should include specific population and service targets, funding needs, and measurable outcomes.


Recommendation 2.2 is that the General Assembly may consider merging the 843 Commission and the 144 Commission to identify needs, prepare a plan for services and associated funding, and identify expected outcomes for individuals with mental illness, substance abuse disorders, mental retardation and other developmental disabilities, and dual diagnoses.  The General Assembly may consider requiring the combined commission to have a legislator and the secretary of the Cabinet for Health and Family Services as co-chairs.  If the commissions are merged, then recommendation 2.1 would apply to the combined commission.


Recommendation 2.3 is that each regional board should develop a strategic plan that describes clearly set objectives, strategies and timetables to implement them, and cost estimates.  The board’s plan should include expected outcomes and measurable indicators.  The plans should be an integral part of statewide planning decisions.


Ms. Upton stated that in fiscal year 2001, the centers provided 14 million services to 140,000 unique individuals.  In 2005, the centers provided 18 million services to 163,000 individuals–an increase of 4 million services and 23,000 people.


She explained that on average mental health services were about 42 percent of the total services, mental retardation and other developmental disabilities services were 36 percent, and substance abuse and other services made up the remaining 22 percent.


Ms. Upton stated that in fiscal year 2005, federal revenue was $185 million, an increase of about $7 million since fiscal year 2002; state revenue was $104.2 million, a decrease of about $400,000; and local revenue was $13 million, an increase of about $2 million.  She said other revenue, which includes charges to patients, was $37 million, an increase of about $7 million since fiscal year 2002.


She stated that over this period, the number of consumers increased about 17 percent, the number of services increased about 28 percent, and the amount of revenue increased about 9 percent in inflation-adjusted dollars.


Ms. Upton stated that in general, higher regional poverty rates correlate to larger percentages of the population that access community services.


She stated that community care support is flexible state general fund money that is intended to support the safety net by funding services for people who have no other payer source.  In nominal dollars, the fiscal year 2006 allocation was more than $25 million, which includes an additional $2 million to shore up the safety net.  However, adjusted for inflation, the funds have declined nearly 7 percent since 2001.  She said to equal the fiscal year 2001 allocation, the 2006 allocation would need to be $1.9 million more than it was.

Ms. Upton stated that the centers are required by statute to provide services regardless of a person’s ability to pay.  The “charity allowance” is the amount an indigent person is not required to pay.  It is determined on an income-related sliding fee scale.  She said the amount of charity care provided cannot be measured with certainty.  Staff obtained an estimate from each region, but the reliability of the estimate is uncertain because of different interpretations of what should be measured and variations in accounting systems among regions.  She said that the department and the centers need to know how much charity care is being provided.


Recommendation 4.1 is that the Department for Mental Health and Mental Retardation Services should develop a standardized method to calculate charity allowances.  The department should require the boards to use that method and report annually, in conjunction with their annual financial statement audit, a separate schedule of charity allowances.  The boards’ independent auditors should be required to certify that the charity allowances are reported in accordance with the departments’ instructions.


Ms. Upton stated that staff analyzed the regions’ financial health using standard ratios for nonprofit organizations.  There is great variability among regions.  Statewide, the system shows declining financial health, which may reflect pressure from increasing expenses not matched by new revenue.  She said the system statewide appears to be stable in terms of providing current services to current populations, but the system’s capacity to expand services or serve larger populations is questionable, particularly in some regions.


She explained that this report also provides information on consumer outcomes and other performance measures.  The report illustrates how consumer groups advocate for improvement outcomes.  It discusses a project to decrease the rate of psychiatric hospital admissions in western Kentucky,  which will use telehealth technology to help alleviate resource shortages identified by the regions.  The report describes how assessing consumer outcomes is difficult, in part because of lack of consensus nationally on what performance should be measured.  She explained that the report discusses how best practices are being implemented by the boards and are being incorporated in the contract between the department and each board.


Sen. Stine asked which member of the General Assembly is the current co-chair of the 843 Commission, and how is it determined if the co-chair is from the House or Senate and how it was determined that both the House and Senate do not have co-chairs.


Ms. Upton stated that the current legislator co-chair is Rep. Marzian and she did not know how she was selected. 


Mr. Shannon stated that Rep. Marzian was a sponsor of House Bill 843. The bill  did not specify how the legislative co-chair is chosen from among the legislators on the commission.


Sen. Stine asked if there were any data that include the list of people who are on waiting lists or who are turned away from services.


Ms. Upton stated that staff looked into the concept of waiting lists.  What they found was that all the centers try to see those who are in crisis within 24 hours, sometimes immediately.  For a person who is not in a crisis, it may take longer to be seen.  She said that staff had information on first-time appointments for nonurgent consumers.  Adults are seen typically within 10 days, with a range of 0 to 14 days.  Children are also seen within 10 days, with a range of 0 to 14 days.  For an adult to see a psychiatrist, it can be as long as 23 days with a range of 3 to 52 days.  For a child to see a psychiatrist, it is 24 days, with a range of 3 to 43 days.  She said that these numbers were for those individuals who are not in crisis; the people who are in crisis are seen within 24 hours.


Sen. Stine asked if that is the average throughout the state.


Mr. Shannon stated that the wait time depends on the nature of the individual making the call.  He said for a family member, it is always a crisis.  Statewide, an individual in crisis is seen immediately.  There is at least one facility in each region.  Several regions have one for adults and one for children.  For substance abuse services, the wait time may depend on the availability of the services and the status of the individual based on the intake information.


Sen. Stine asked if there is a correlation between individuals in poverty and services that are used and needed. She also asked whether there is a correlation between services and the percentage of residents who are uninsured.  She asked about some people in some areas getting more services than others.


Ms. Upton stated that all of the regions are serving people as well as they can, and as equally as they can, but that financial help is starting to decline.


Sen. Stine asked if the report included analysis of revenue sources by region.


Ms. Upton replied that such data is available but that it was not in the report.


Sen. Stine asked if staff did analysis of distribution of funding based on a per capita basis of people needing services among the regions.


Ms. Upton stated that staff looked at per capita allocation for the Community Care Support Funds, but this was not done for all types of funding.


Mr. Shannon stated that KARP is studying the distribution of funding and it is hoped that action could be taken by February 2007.


Sen. Stine stated that the issue is not redistributing money among regions, but whether needs are being met.  The reason it is such an important question is because there is a strong correlation between substance abuse and domestic violence, child abuse, theft, drug arrests, and failure to pay child support.


Mr. Shannon stated that the Community Mental Health Centers (CMHCs) create a statewide public safety net for individuals with mental illness, mental retardation, and substance abuse services.  He stated they are also a behavioral health public utility.  He stated that the report shows the CMHCs contribute significantly to healthy people and strong communities. 


Mr. Shannon stated they concur with the first recommendation. The two commissions are vital; they should be in the planning process.  In regard to the second recommendation, he stated that the two commissions operate differently.  The 843 Commission has regional planning councils, which do not exist in the 144 process.  He stated that the merging process needs to be well planned to ensure the different constituencies of the two commissions are adequately represented.  This may cause the size of the merged commission to become too large to be effective.


He stated that they concur with recommendation 2.3.  He explained that the annual plan and budget process required by MHMR ensures that strategic planning occurs.  He said the significance of this recommendation is that the plans should be an integral part of statewide planning decisions.  It has been the experience of the 14 CMHCs that the annual plan and budget process has not been an integral part of statewide planning decisions for a number of years.  He explained that the current plan and budget plan is that MHMR tells each CMHC how much money it will receive, each CMHC limits its plan based on that dollar amount, and MHMR approves each annual plan and budget.  He said it is recommended that each CMHC submit a plan and budget for each region and what they need for that period and then the plan be accepted by MHMR.  It may have to be amended based on funding, but at least it is a record of what the regions need. 


He stated they concur with the final recommendation and offer to assist the department in developing a standardized method to calculate charity allowances.  He said in statute the Commonwealth of Kentucky charges the CMHCs to serve individuals in every county across the entire span of mental illness, mental retardation, and substance abuse diagnosis and across the entire life span regardless of the individuals’ ability to pay. 

Mr. Shannon stated that another issue that must be stressed is whether or not the 14 CMHCs can sustain the growth in persons served and units of services provided.  It is their contention that during the last five fiscal years management techniques to control costs have been implemented by the CMHCs.  These include efficiency goals for clinicians, maximizing the amount of time clinicians spend doing therapy, and maximum caseload sizes for case managers.  These have all been implemented without sacrificing the quality of care.  However, since there has not been an across-the-board increase to compensate for the increasing cost of doing business, the system of care and the network of services across the Commonwealth are at risk.  He said it should be noted that there has not been an increase in the Community Care Support Funds for 12 years and Medicaid rates have remained frozen at 2001 levels.  In addition, Community Care Support Allocations, which are general fund allocations to the CMHCs, have decreased by 7 percent when adjusted for inflation from fiscal year 2001 to 2005.  He said that the cost of doing business has clearly increased during this period.


Mr. Shannon stated that continuation funding, which has been the pattern for the past several years, is coupled with an unfunded mandate: the significant increase in the employer contribution to the Kentucky Employee Retirement System (KERS) for which the CMHCs received no additional funding. The increase will cost the CMHCs approximately $4 million in fiscal year 2007 and $7 million in fiscal year 2008.  Therefore, they believe the reports conclusion that ‘the system’s capacity to expand services or serve larger populations remains in question’ is too optimistic.  He said they believe that continued growth in people served; continuation budgets, which are really a deficit budget with no cost of living increase; and increases in KERS will make it very challenging to sustain services in all 120 counties in fiscal year 2008 and through the next biennium.


Ms. Harney stated that the department concurs with the recommendations.  She stated there are inconsistencies regarding charity care and they plan on working with KARP and the centers to develop a required, consistent system.


Ms. Luallen stated that the Auditor’s office published a report on Kentucky’s dropout rate in October.  She stated this audit was conducted to determine whether Kentucky’s dropout rate was valid and accurate. 


She stated that in August 2003, during the last months of the previous auditor’s term, the Program Review and Investigations Committee requested that the Auditor of Public Accounts verify Kentucky’s reported dropout rate.  The review was initially deferred while the Kentucky Department of Education began implementation of an upgraded reporting system that was planned to assign a student identifier by the end of the 2003-2004 school year.  She said the department then advised the office that the implementation would be delayed until the 2005-2006 school year.  She stated at that point it was decided to move forward with the audit. 

Ms. Luallen stated that the unique student identifier, the number that has been established for each student, has now been instituted by the Department of Education. Coupled with many of the recommendations included in the audit, it is believed that the system can be made more responsive and accurate.  She stated that this audit is a performance audit, which provides an independent assessment of how the state performs a particular function with recommendations on how to improve efficiency and effectiveness of the process.  She said that it was an audit of the Department of Education’s dropout calculation, not an audit of an outside vendor.  She said the vendor at the time of the audit provided a means to manage and produce data as requested by the Department of Education and the school districts.


 Ms. Luallen stated that the data that were provided by the department were compared with dropout numbers reported by the districts. In addition, the auditors surveyed the school districts.  She said there are three recognized methods for calculating dropout rates.  Kentucky uses an event rate, which is set out in statute.  She said the event rate measures the percentage of students who drop out in a given year, but to calculate that rate, the state must look at three years of data from local school districts.  The dropout rate is then published in a report produced by the Department of Education.  The audit determined that Kentucky’s dropout number for the 2004-2005 school year was underreported by at least 1,979 students, or 30 percent of the number of dropouts that were reported.  For that school year, the dropout rate for grades 9 through 12 was reported as 3.47 percent.  However, based on the number of students who were coded as dropouts in the information system by the local schools, the dropout rate should have been approximately 4.7 percent.  She explained that it is important to note that some school districts have done a very good job of tracking their dropouts.  She said the 30 percent variance is a net number; some districts reported more dropouts and some fewer dropouts than were in the final report produced by the department. 


Ms. Laullen stated that students who leave school at the end of one school year and do not return in the fall, known as summer dropouts, are not coded in the information system.    She said that the numbers they reported in their audit could be higher than they have been able to verify.  Since Kentucky’s formula for calculating the graduation rate is dependent on the dropout numbers reported by the districts, it means that the graduation rate has been overstated.  She said that the audit also illustrates that dropout rates cannot be compared nationally because dropout definitions and the manner of calculations are not consistent among states. 


Ms. Luallen stated that for a variety of reasons, including dropouts, their numbers indicate a loss of almost one-third of students from freshman year to graduation.  She stated not all of those are dropouts who have fallen through the cracks.  Some students move out of state, others are moving into the state, some go to private schools, and some are transferring in from private schools.  She said the point is there is no way of telling exactly where those students are because of the way students are tracked in the system.  She said Kentucky cannot track each individual child from one year to the next and that kind of tracking has to be a priority if the problem of keeping students in school is going to be solved. 


Ms. Luallen said that in order to measure progress and to understand where limited resources need to be spent, accurate data is required to establish the programs to keep students in school.  She said the report recommends that the student information systems should be enhanced to properly code and track students, and the department is in the process of improving that system.  She said that they hope future reviews will show progress.  The new system should be designed to record summer dropouts and allow information to be tracked over multiple school years.  She said Kentucky should clarify dropout definitions and streamline the process for collecting data.  They recommend that Kentucky consider adopting the uniform calculation method currently under development by the National Governors Association.  Once a revised student tracking system is implemented, they recommend that the department train school districts to use the system properly and consistently across districts.  She explained that the current vendor has requested the opportunity to respond to the audit.  That response will be posted on the Auditor’s Web site. 


Ms. Luallen stated that the National Alliance for Excellent Education estimates that more than 18,000 students who did not graduate from Kentucky’s high schools in 2004 will cost the state more than $4.8 billion over their lifetimes in lost wages, taxes, and productivity.  To illustrate that this is not an issue of money and statistics, she recounted the story of a student who had emailed her to discuss the difficulties of remaining in school.


Rep. Thompson asked if there was a standardized tracking system that was agreed on.

Ms. Luallen said one of the problems is that students move from state to state, and because states track children differently, it is hard to find out where they go.  One of the goals of the National Governors Association project would be to standardize that tracking process across the states. Kentucky should be a part of that process.


Sen. Pendleton asked whether parents taking their students out of school to home school them are counted as dropouts or remain in the school system.


Ms. Luallen stated that it depends on what information the school has from the parents and if the school is willing to take the extra steps to find out what happened to the students.    


Rep. Palumbo asked why it is necessary to look at three years to determine the dropout rate for one year.

Ms. Luallen stated that you have to begin with the data on how many kids were in school starting their sophomore year, and then have to look and see how many kids came back the next year and stayed in school and re-enrolled the next year to get to the total number.


Ms. James stated that KDE has a deadline to report a dropout by October 1 of the year following the year that is being counted.  For the 2004-2005 school year, they were determining if anyone dropped out that had been enrolled in the 2003-2004 school year or if they did not return before October 1 of the following school year.  She said the only dropouts that are being counted are for one school year, but you have to take into account other years.


Mr. Meyer explained that according to statute, before a student is considered a member eligible to be added to the dropout calculations in a given year, that student must have been enrolled 30 days the previous school year.  He explained that when looking at how many students will be part of the calculation of the 2004-2005 dropout rate, you have to go back to 2003-2004 and ask how many of those students currently enrolled were in school that previous year for at least 30 days.  You then have to go to the next year to see how many of the students enrolled in school during 2004-2005 have returned in October 2005-2006. 


Rep. Palumbo asked whether a student who went to summer school and then did not return in August or September was considered a summer dropout.


Ms. James stated that a summer dropout is enrolled and finishes a school year but does not return in the fall.  At the beginning of a school year, the school district does bring forward the electronic data into their current year to show who was in their school district the prior year.  But if those students do not attend school the first few days of the school year, the school district can code them as inactive without having to assign a withdrawal code.


Rep. Palumbo stated that there could be a lot more dropouts than anyone knows about, but a lot of the students that did not return could have moved or had to get full-time jobs.


Ms. Luallen concluded by saying that the department had a response to each of the recommendations and is clearly moving forward with improvements.


Ms. Perry stated that the dropout definition that Kentucky uses is the definition that the National Center for Education Statistics uses.  She explained they have been in the process of improving the dropout reporting, which goes back to the 2003-2004 school year when they started the implementation of the student specific identification number.  In order to report an accurate dropout number, there needs to be student specific data.    It takes a couple years of a student specific identification number to calculate the dropouts completely.  The 2006-2007 school year is the first school year for which the department has the data to calculate that dropout number. 


Minutes of the November 9, 2006 meeting were approved, without objection, upon motion made by Sen. McGaha and seconded by Sen. Pendleton.


Sen. Stine proposed that the community mental health system report should be revised to include information on the correlation between the percentage of population served and percentage uninsured, and breakdown by region for each major funding source.


Sen. Guthrie made the motion that the report be adopted with these revisions to be made.  Rep. Baugh seconded. The report Kentucky’s Community Mental Health System Is Expanding and Would Benefit From Better Planning and Reporting was adopted without objection by roll call vote.


A motion to initiate studies of 1) the Kentucky Housing Authority 2) drug courts 3) the Medicaid prescription drug program and 4) the school insurance program operated by the Kentucky School Boards Association was approved by roll call vote, upon motion made by Sen. Pendleton and seconded by Rep. Arnold.


The meeting adjourned at 11:45.