Appendix for the Department of Human Services
By Robin Baker, senior policy analyst, The Bell Policy Center
Shortcuts
Overview
Funding streams
Major budget lines
Factors driving the budget
Child Welfare
Referrals and county expenditures
Developmental Disabilities
Increasing demand for state-funded services
Regional center overcrowding
Division of Youth Corrections
DYC detention
DYC commitment
Juvenile mental health issues
Mental Health/Alcohol & Drug Abuse Services
Indigent non-Medicaid Mental Health Programs
Mental Health Institutes
Alcohol and Drug Abuse Prevention, Intervention and Treatment
Projections of future appropriations
Methodology
Method
Data
Results
End notes
Overview
The Department of Human Services (DHS) has 11 budget areas: Child Welfare, Disability Services, Division of Youth Services, Mental Health & Alcohol/Drug Abuse, County Administration, Executive Director’s Office, Information Technology, Operations, Child Care, Adult Assistance and Self-Sufficiency. Each of these areas has its own rules, regulations, appropriation formulas and state and federal guidelines and policies.
Of these 11 areas, the majority of General Fund appropriations go to support four divisions: Child Welfare, Developmental Disabilities, Youth Corrections, and Mental Health/Alcohol & Drug Abuse Services.1
back to top
Funding stream
State General Fund dollars make up 32 percent of the department’s total budget. Of the remaining funds, 30 percent are from federal sources and 38 percent are from Cash and Cash Fund exempt sources.
Sources for the Cash Funds and Cash Funds Exempt include the Alcohol and Drug Abuse Community Prevention and Treatment Fund, Offender Mental Health Services Fund, Community Prevention and Treatment Fund, Child Mental Health Treatment Act, Licensing Alcohol and Drug Abuse programs, child care licensing, Medicaid funds transferred to DHS from Health Care and Policy Financing, local funds and client revenue sources.
Major budget lines
Total costs for DHS result from the number of people served, the costs of providing a variety of public services, and how often services are accessed.
The primary budget drivers are caseload growth, per-client costs and state and federal policy changes. Over the last decade, the DHS structure and its appropriations have changed. Because of these changes and in order to estimate future General Fund appropriations, we collapsed mental health programs into one budget line item, discussed in detail in the methods section of this chapter.
As Figure 2 shows, DHS has many program areas, with four areas using more than 80 percent of the agency’s net state General Fund appropriations. Child Welfare uses 26 percent; Services for People with Developmental Disabilities uses 23.3 percent; Youth Corrections, 15.9 percent; and Mental Health and Alcohol/Drug Abuse, 15.3 percent of DHS net General Fund appropriations.
back to top
Child welfare 2
Of the General Fund appropriations for the Division of Child Welfare, 97 percent go to county human service departments. If a county overspends its annual share, it is required to cover the remainder with other county funds.
Statewide, about 57 percent of county expenditures are for families and providers who care for children who have been removed from their homes. The remaining expenditures go toward county staff, administrative costs, and services such as mental health and substance abuse treatment to children and families.
Referrals and county expenditures
In FY 2005-06 (the latest available data), counties received more than 67,000 reports of abuse or neglect of children, with 32 percent or 21,440 reports resulting in the need to call in county child welfare services. Still, 66 percent of these children remain in their own homes.
Each year the General Assembly decides whether to increase child welfare funding to cover increases in caseloads and inflation. According to the JBC, from FY 2000-01 through FY 2005-06, child welfare appropriations increase an average of 3.3 percent per year. However, child welfare expenditures have exceeded annual appropriations each of those years.
In deciding funding, the legislature considers these factors:
-
The number of reports of abuse or neglect received
-
The number of children and families in need of child welfare services
-
The number of children removed from their home and placed in residential care
-
The cost of providing residential care and other services
Using 2007 data from DHS Division of Administrative Review, the 10-year average annual growth rate in child welfare referrals statewide from FY 1996-97 to FY 2006-07 was 2.9 percent. Using this growth rate, the estimated number of child welfare cases statewide is projected to increase from 66,778 in FY 2006-07 to 79,337 by FY 2012-13. 3
back to top
Services for people with disabilities 4
DHS oversees community-based programs for people with developmental disabilities. The 20 non-profit Community Centered Boards (CCBs) coordinate these community-based programs. DHS also operates three regional centers that provide institutional and community-based programs for the developmentally disabled. The agency also administers vocational rehabilitation programs and oversees state veterans’ nursing homes.
Increasing demand for state-funded services
Demand for state-funded services is increasing faster than state population and faster than the state can provide resources. Growth in the demand for service is due to population growth, the aging of people with disabilities and the aging of family members who care for developmentally disabled relatives. Service costs have also risen.
Under state and federal law, Colorado has discretion over the growth of state programs for people with developmental disabilities. Most services are funded through federal Medicaid waivers for home- and community-based services. Medicaid waivers also allow the state to limit the number of people served, resulting in waiting lists. (See Table 1.)
In June 2007, the U.S. Centers for Medicare and Medicaid (CMS) notified states that they can no longer use local funds to match federal funds. This will require the legislature to appropriate General Funds to backfill lost local funds or make services cuts.5
Colorado’s long waiting list for services for developmental disabled adults is a significant problem. As Table 1 shows, in 2001 there were 3,984 adults receiving adult comprehensive residential services. By 2006, the number of adults receiving these services increased 35 percent, to 4,960. The number of adults on the comprehensive residential services wait list, however, nearly tripled from 453 in 2001 to 1,308 in 2006.
A similar situation exists for adults in need of supported living services. As Table 1 shows, in 2001 there were 3,685 adults receiving supported living services. By 2006, that number jumped to 4,961—a 35 percent increase. Meanwhile, the number waiting for services nearly doubled, growing from 1,121 in 2001 to 2,438 in 2006.
back to top
Table 1. Colorado developmentally disabled adults receiving comprehensive residential and supported living services compared to those on service waiting lists, 2001 to 2006 |
| |
Adult comprehensive residential services * |
Adult supported living services ** |
| |
Number served |
Number waiting |
Percent not served |
Number served |
Number waiting |
Percent not served |
| 2001 |
3,684 |
453 |
12% |
3,685 |
1,121 |
30% |
| 2002 |
4,034 |
663 |
16% |
4,035 |
1,265 |
31% |
| 2003 |
4,254 |
758 |
18% |
4,255 |
1,347 |
32% |
| 2004 |
4,367 |
785 |
18% |
4,368 |
1,785 |
41% |
| 2005 |
4,664 |
1,057 |
23% |
4,665 |
2,111 |
45% |
| 2006 |
4,960 |
1,308 |
26% |
4,961 |
2,438 |
49% |
* Comprehensive services are for adults who require extensive supports to live safely, including access to 24-hour supervision and who do not have other resources for meeting those needs.
** Supported living services augment already available supports for adults who either can live independently with limited supports or who are getting support from other sources, such as their family.
It would cost more than $8 million in General Funds to eliminate the current wait lists for comprehensive services and $3 million to eliminate the wait list for supported living services per year. The average cost of providing comprehensive services to one adult is about $29,700 in 2007. The cost for supported living services is $9,320 per year.
back to top
Regional center overcrowding 6
Overcrowding of regional centers continues to be a problem for Colorado. Since April 2003, regional centers have been admitting only those with the most severe needs. Historically, regional centers provided care for the developmentally disabled when appropriate community programs were not available. As others are placed in community settings, community safety could become problematic.
According to the JBC, as of June 2007, there were 58 Colorado residents waiting for regional center placement. During FY 2006-07, 35 adults moved from the regional centers to community placements and their beds at regional centers were taken by harder-to-serve clients.
Division of Youth Corrections 7
The Division of Youth Corrections (DYC) is responsible for youth in two phases of involvement with the criminal justice system:
DYC caseload has grown substantially in the past two decades, largely in the commitment population.
back to top
DYC detention
SB 91-94 helped to curb growth in the detention population by providing alternatives such as electronic monitoring and day treatment. In FYs 2002-03 through 2004-05, SB 91-94 detention program funds were cut 35 percent due to the shortage of General Fund revenues. Although FY 2006-07 appropriations rose by 14.3 percent, funding is still well below the 2002-03 appropriation level.
SB 286, passed in 2003 limited the number of state-funded detention beds to 479. State-funded beds are currently allocated by geographic region. Regions can borrow beds from each other if possible, or follow established procedures for emergency release.
DYC commitment
DYC spending is driven primarily by growth in the commitment population. As more youth are committed, the demand for case managers, medical services and community transitional services also grows. Without funds to build new state facilities, DYC manages this growth by contracting with private companies for additional beds. Contract beds represent about 65 percent of DYC’s commitment capacity.
According to the JBC, the annual growth rate in DYC net General Fund appropriations from FY 1990-91 through FY 2001-02 ranged from 6 percent to 24 percent. From FY 2002-03 through FY 2004-05, appropriations to DYC were reduced or remained relatively flat due to the shortage of state general fund dollars.
back to top
Juvenile mental health issues 8
The DYC is responsible for mental health screening, evaluation and arranging for treatment services at state-operated detention and commitment facilities.
According to the JBC, from FY 1999-00 to FY 2005-06, DYC had nearly a 300 percent increase in committed youth with serious mental health problems. Youth requiring substance abuse treatment grew more than 25 percent and the number of committed sex offenders increased by almost 40 percent.9
The prevalence of youth involved in the juvenile justice system with mental health disorders is substantial. According to a 2006 study by the National Center for Mental Health and Juvenile Justice, as many as 70 percent of youth involved in the juvenile justice system have at least one diagnosable mental health disorder and more than 60 percent of those also meet the criteria for a substance use disorder.10
Treatment for mental health and substance abuse disorders is critical but challenging to the juvenile justice system. Youth with more than one disorder require greater collaboration, continuity of care, and care by providers who are able to treat multiple needs.
DYC reports that it spends nearly 30 percent of its medical operating budget on medication for seriously mentally ill juveniles.11 Moreover, youth with multiple problems also require placement in settings that are not offered by private providers. Thus, the need for more state funding to add commitment beds in state-operated facilities is a growing concern.12
back to top
Division of Mental Health and Drug Abuse Services 13
Pursuant to HB 04-1265, most Medicaid mental health programs formerly managed by DHS were transferred to the Department of Health Care Policy and Financing. DHS still manages and provides policy direction to the Indigent Community Mental Health Program, the Mental Health Institutes, the Division of Alcohol and Drug Abuse and housing programs with continued care.
Mental health and drug abuse prevention programs and services cross over many state agencies beyond DHS, including Corrections, Judicial and Public Safety. DHS is the lead agency responsible for submitting a comprehensive annual budget request for such programs to the JBC.14
The JBC notes that an estimated 66,500 Coloradans have a serious mental illness and are living under 300 percent of the federal poverty level but not receiving any mental health care. Of those, an estimated 17,300 are medically indigent meaning they have no insurance and do not qualify for Medicaid.15
The state’s public mental health system also has substantial waiting lists for initial, non-emergency access and evaluation services. The average wait time is three to four weeks. According to a 2006 study conducted by the Division of Mental Health, more than 36,412 adults and 30,041 children with serious mental illness or serious emotional disturbances are not receiving services that they are qualified to receive.16
At the same time demand is increasing, per-client costs for mental health services have also increased. Part of the cost increase is due to the increasing severity of mental health problems and associated service needs.17
back to top
Indigent non-Medicaid Mental Health Programs
Indigent programs provide services for mentally ill persons who do not qualify for Medicaid and do not have other insurance. According to the JBC, the state direct services for an estimated 11,600 medically indigent patients in FY 2006-07. DHS reports that the average cost per client increased 3.25 percent from FY 2005-06 to FY 2006-07.
Indigent programs include early childhood mental health, community treatment programs and alternatives to inpatient hospitalization for youth.
Colorado’s per capita expenditures for mental health have been well below the national average for some time. For example, in FY 2002-03, Colorado’s per capita expenditures for mental health administration was 36 cents compared to the national average of $1.83. 18
back to top
Mental Health Institutes.Colorado operates two hospitals for the seriously mentally ill, Fort-Logan Mental Health Institute in Denver and Pueblo Mental Health Institute in Pueblo. Together they have 528 beds that serve about 7,180 individuals each year. The JBC reports that in FY 2007-08, the estimated average annual cost per bed is $169,804.
Since the mid-1990s, the mental health institutes have lost funding due to a decline in the number of patients hospitalized. The state operated 813 beds in FY 1994-95 compared to the 528 beds today, a drop of 35 percent. The decline is due to changes in the way mental health services are delivered and the policy of “de-institutionalization,” which moved seriously mental ill clients from mental health hospitals to community managed care.
Though fewer seriously mentally ill patients are receiving care in an institutional setting, other institutional costs are climbing, such as medical inflation, pharmaceuticals, professional salaries and the Neiberger lawsuit settlement. According to DHS, 19 from FY 1999-2000 to FY 2004-05, mental health institute pharmaceutical costs alone increased an average of 10.7 percent annually.
NOTE: The Neiberger v. Schoenmakers 20 federal court settlement agreement requires DHS to meet certain staff-to-patient ratios, limit the number of patients in the institution andidentify treatment and release plans. As a consequence, medical operating costs areexpected to continue increasing at rates that far exceed overall inflation rates.
The Colorado Mental Health Institutes at Pueblo (CMHIP) and Ft. Logan (Ft. Logan) employ more than 300 nurses and together are the state government’s largest employer of nursing staff. However, the institutes report growing difficulty in hiring and retaining registered nurses. DHS notes that if nursing shortages are not addressed, the potential for litigation similar to the Neiberger and Zuniga cases is increased.
The 2008-09 JBC Briefing Document notes that “during FY 2006-07, CMHIP experienced nursing staff turnover rates of approximately 15 percent for the forensic and civil units, and Ft. Logan experienced a 22 percent turnover rate. In comparison, during 2005 the national average turnover rate for all nursing positions was 14 percent.” (p. 48) Moreover, both institutes have experienced increased assaults. CMHIP assaults have increased by almost two-thirds and Ft. Logan by 30 percent.
back to top
Alcohol and Drug Abuse Prevention, Intervention and Treatment (ADAD)
The state legislature established ADAD in 1971 to develop, support and advocate for comprehensive services to reduce alcohol, tobacco and other drug abuse and promote healthy individuals, families and communities. 21 ADAD uses state General Funds, federal funds and cash funds. ADAD provides funding for community-based alcohol and drug abuse prevention, treatment, and detoxification programs statewide.22
The majority of funding for ADAD comes from the federal Substance Abuse Prevention and Treatment (SAPT) block grant. The grants have been cut by nearly $20 million over the last four years. Colorado’s FY 2007 SAPT block grant allocation of $23.7 million represents about 60 percent of ADAD’s substance abuse treatment budget.23
back to top
Medicaid Mental Health Capitation
The majority of state spending for community-based mental health services falls under the Department of Health Care Policy and Financing (HCPF) for the Medicaid mental health capitation program. DHS administered the state’s Medicaid mental health capitation (managed care) programs from 1993 until 2004. HB 04-1265 transferred the administration and programmatic responsibilities from DHS to HCPF. Until 2006, DHS continued to administer some Medicaid mental health services pursuant to the Goebel lawsuit settlement.24
The changes to the capitation program could have substantial impacts on programs administered by DHS, because programs interact in a wide range of areas. For example, the majority of General Fund appropriations to DHS support the two state mental health institutes at Fort Logan and Pueblo. In contrast, HCPF receives more appropriations to support Medicaid mental health programs compared to the appropriations DHS receives for the non-Medicaid mental health and alcohol and drug abuse programs for services to individuals who are indigent and mentally ill but not eligible for Medicaid.
Though the Medicaid and non-Medicaid appropriations fall in different sections of the budget, the programs and monies interact at the community level where people are served. A large portion of both the Medicaid capitation and non-Medicaid-eligible funding is used to support services that are delivered by the state's 17 community mental health centers. Some individuals with mental illness may be eligible for the Medicaid program in one month and not eligible the next, due to changes in their income or level of disability. The mix of financial responsibility can be complex and problematic at times.
back to top
Projections of future appropriations
Methodological issues
The Colorado Department of Human Services is responsible for a wide range of public support systems. While DHS systems overlap, each area of service has its own laws, rules, regulations and methodological procedures for estimating growth, service needs and costs.
Several interrelated issues drive demand and cost for services. Economic shifts, population growth, an aging population, financial stress in families, and state and federal policies influence demand for services. Cost for services is driven by inflation and by the need for qualified case managers, probation officers, mental health professionals and nurses.
Meanwhile, state and federal policy changes affect appropriations. For example, beginning in 1996 the federal government policy and fiscal changes to welfare, child support and child care programs. The federal government also cut funding for the social services block grants to states that provide home and community based services for the elderly, abused and neglected children, low-income families, and the disabled.25
At the state level, welfare reform efforts were initiated before 1996. Colorado continued to shift programs and funding for child welfare, self-sufficiency, and for people with disabilities into early 2000. The 2001-03 recession forced abrupt program cuts that have been only recently restored to 2001 levels.
back to top
Method
Given the large array of factors influencing human services and limited data sources, projecting future appropriations is difficult. One common way to project appropriations is to measure their historical growth rate over a multi-year period. The year-over-year growth rate is referred to as the compound average annual growth rate.
The compound average annual growth rate is a mathematical formula that smoothes varying rate of growth over good and bad economic times. It is also effective when data sources are limited. When used over a span of years (typically five to 10), it is a better indication of appropriation trends than a single year’s growth would be in an unusual year such as an economic recession. In other words, compound average annual growth rate measures growth over a period of years as if it occurred at a steady rate.
The compound average annual growth rate does not reflect the volatility in appropriations that occurred during the economic recession and budget cuts sustained in FYs 2001- 2004. Instead, it reflects the appropriations at their recently restored baseline level before the budget cuts.
As mentioned in the preceding section, DHS has gone through several program and funding changes since welfare reform. The only DHS program areas that have remained relatively constant are Executive Director, Office of Information Technology, Office of Operations and the Division of Youth Corrections.
Given the changes in structure, we used the 10-year compound average annual growth rate to estimate appropriations for these divisions. This also better reflects expenditure trends in the Division of Youth Corrections before capitation of commitment/detention beds (as a cost-saving mechanism) as well as the upward trend in costs associated with the implementation and maintenance of the Colorado Benefits Management System (CBMS). The seven-year compound average annual growth rate is used for all other divisions or line items.
Due to shifts in the funding of mental health programs, both Medicaid and non-Medicaid community health program appropriations were collapsed into a single line item or category, and the 10-year compound average annual growth rate was used as an estimate of growth in overall mental health funding. The bulk of General Fund appropriations for mental health programs is through Health Care and Policy Financing. These funds are categorized as Cash Exempt Funds in the DHS budget. For purposes of estimating future appropriations, only those General Fund appropriations listed as General Fund in the DHS budget by line item are used.
back to top
Data
Data from JBC appropriations reports were used to estimate the costs of maintaining the current DHS budget. Actual expenditures were used for FY 2000-01 (the baseline year) and the JBC estimated appropriations for FY 2007-08.
Results
Figure 6 shows the projected total General Fund appropriations for the Department of Human Services from FY 2007-08 to FY 2012-13. The compound average annual rate of growth in General Fund appropriations between FYs 2007-08 and 2012-13 is 4.03 percent.
back to top
End notes
1 Each Colorado Joint Budget Committee Budget Briefing document for the Department of Human Services may be found at:http://www.state.co.us/gov_dir/leg_dir/jbc/2006humbrf.htm
2 FY 2007-08 Staff Budget Briefing Department of Human Services: Executive Director’s Office, Child Welfare, and Youth Corrections, prepared by Patrick Brodhead.
3 Source: T. Whitaker and M. J. Mackert (2007). Protecting Colorado’s Children: An Analysis of Available Data on Referral and Assessment Trends (p. 5). Colorado Department of Human Services, Administrative Review Division.
Note: Data were extracted and updated from the Trails database in early March of 2007. Historical information (1995-2000) is from the legacy child welfare database CWEST. Historical numbers were collected from the Division of Child Welfare Services.
4 JBC FY 2008-09 Staff Budget Briefing: Department of Human Services, Office of Operations and Services for People with Disabilities.
5 Ibid, pp. 90-95.
6 Ibid.
7 JBC FY 2007-08 Staff Budget Briefing Department of Human Services, end note 2.
8 Ibid.
9 Ibid, p 53.
10 Shufelt, J. L. and Cocozza, J. J. (2006). Youth with Mental Health Disorders in the Juvenile Justice System: Results from a Multi-State Prevalence Study. The National Center for Mental Health and Juvenile Justice, Research and Program Brief, Delmar, N.Y.
back to top
11 Colorado Department of Human Services (2006). Economic Conditions Affecting Offices and Programs.
12 JBC FY 2008-09 Staff Budget Briefing Document, p. 53, end note 2.
13 JBC (2006). FY 2007-08 Staff Budget Briefing: Department of Health Care Policy and Financing, Medicaid Mental Health Community Programs and the Department of Human Services, Mental Health Programs and Alcohol and Drug Abuse Programs, prepared by Alexis Senger;
and JBC FY 2007-2008 Figure Setting, Department of Human Services, Mental Health and Alcohol and Drug Abuse Services, Administration and Mental Health Sections, prepared by Amanda Bickel.
14 JBC FY 2008-09 Staff Budget Briefing Document: Mental Health and Alcohol and Drug Abuse Divisions
15 Ibid.
16 Colorado DHS (2006), end note 11.
17 Colorado Department of Human Services (2005). An Analysis of Recent Trends in Colorado’s Public Mental Health System. Division of Mental Health, Office of Behavioral Health and Housing.
18 JBC FY 2007-08 Staff Budget Briefing, end note 13.
19 DHS (2006), end note 11. The Mental Health Institutes are having difficulty in recruiting and retaining psychiatrists and other physicians due to low base salaries. Institute physicians receive base salaries of $111,000 to $157,000 annually, compared to Front Range physicians’ salaries, which range from $140,000 to $165,000 annually. In order to retain qualified personal and meet the requirements under the Neiberger lawsuit, DHS has had to shift funds from other direct care positions.
20 Attorney General Salazar and Human Services Directors Hammons announce settlement in Mental Health Lawsuit, Dec. 20, 2002, press release.
Neiberger v. Schoenmakers, Case No. 99-B-1120, U.S. District Court, Colorado, was a federal lawsuit filed in April 1999 on behalf of eight patients of the Institute of Forensic Psychiatry at the Colorado Mental Health Institute of Pueblo (CMHIP) against CMHIP alleging that the facility was understaffed, overcrowded and dangerous, and that needed care was not provided. In 2002, the case was converted to a class action lawsuit on behalf of all patients committed to the facility as "not guilty by reason of insanity" from a criminal offense The major terms of the settlement are an agreement to maintain an average daily population of 278, maintain a staff-to-patient ratio that is appropriate to standard care, pay outside experts to consider treatment, progression and release from CMHIP, and to establish a mechanism for dispute resolution.
back to top
21 Colorado Department of Human Services (2006). The Costs and Effectiveness of Substance Use Disorder Programs in the State of Colorado, a report to the General Assembly House and Senate committees on Health and Human Services, submitted by the Alcohol and Drug Abuse Division, Colorado Department of Human Services.
22 JBC FY 2008-09 Staff Budget Briefing Document, end note 14.
23 National Association of State Alcohol and Drug Abuse Directors (2007). http://www.nasadad.org/resource.php?base_id=983
24 JBC FY 2007-08 Staff Budget Briefing, end note 13.
The Goebel lawsuit was the result of two class action cases filed against the state of Colorado in 1994. Residents of northwest Denver with chronic mental illness alleged that they had been denied appropriate services. The settlement created a class of clients eligible for Medicaid under the oversight of the Department of Human Services. The Goebel lawsuit was dismissed in March 2006. In September 2006, Medicaid funding for clients previously served under the Goebel lawsuit was transferred from DHS to HCPF.
25 National Conference of State Legislatures (2007). Human Services Federal Issues Overview.
back to top
