CMH CARRYFORWARD - S.B. 1013: ENROLLED ANALYSIS
Senate Bill 1013 (as enrolled) - PUBLIC ACT 273 of 2000
Sponsor: Senator Bev Hammerstrom
Senate Committee: Families, Mental Health and Human Services
House Committee: Appropriations
RATIONALE
The Mental Health Code allows a community mental health (CMH) services program to retain a portion of its unspent appropriations for use in the following fiscal year, rather than returning the funds to the State. Specifically, the Code states that a CMH services program may carry forward the "operating margin" up to 5% of the program's State share of the operating budget for a fiscal year. ("Operating margin" means the excess of State revenue over State expenditures for a single fiscal year, excluding capitated payments made under a managed care system. In the case of a CMH authority, the carryforward is in addition to reserve accounts the authority has established for employee benefits and/or for depreciation of capital assets and for expected future expenses for an organizational retirement plan.) Prior to the passage of Public Act 417 of 1998, the Code allowed the carryforward until March 29, 1999; Public Act 417 extended the carryforward authorization for fiscal years 1998-99 and 1999-2000. Some people believed that the authorization for CMH services programs to carry forward that portion of their operating margin should be extended to future fiscal years.
CONTENT
The bill amended the Mental Health Code to allow a community mental health services program to carry forward up to 5% of the program's State share of the operating budget for the fiscal years ending September 30, 2001 and 2002, in addition to the fiscal year ending September 30, 2000.
MCL 330.1226
ARGUMENTS
(Please note: The arguments contained in this analysis originate from sources outside the Senate Fiscal Agency. The Senate Fiscal Agency neither supports nor opposes legislation.)
Supporting Argument
Community mental health services programs should be encouraged to be innovative and efficient in the delivery of mental health services. Being allowed to retain a portion of their unspent budgeted funds can help to accomplish that purpose. Extending the Mental Health Code's authorization for CMH services programs to carry forward those funds is in the best interests of the health of Michigan's citizens.
Response: If keeping excess funds encourages innovation and efficiency, perhaps the carryforward provision should be made permanent, rather than merely extended for two years. The introduced version of the bill would have eliminated any sunset on the carryforward authorization.
Opposing Argument
As reported from the Senate Committee on Families, Mental Health and Human Services, the bill would have removed the carryforward's 5% cap. Eliminating the 5% limit on the carryforward authorization would provide additional money to CMH services programs.
Response: Without this cap in place, the currently budgeted carryforward would be about $45 million rather than $30 million. These excess funds have already been budgeted for other items, and the Legislature would have to come up with that funding from elsewhere in the budget.
Opposing Argument
The CMH carryforward authorization should be eliminated. It is inappropriate to allow a governmental entity to keep taxpayer-supplied funds that the entity does not need. If the CMH programs do not have a use for all of the money budgeted to them in a given fiscal year, those excess funds should lapse to the State. Continuing to allow the CMH programs to keep a portion of their unspent budgeted funds will just encourage those governmental entities to request more money from the State than needed to provide mental health services for the fiscal year.
Response: The carryforward authorization encourages innovation in the delivery of mental health services by CMH programs. In addition, CMH programs are funded differently than most State programs. Mental health services are provided by the local CMH programs under a contract with the State. It is inappropriate for the State to ask for the return of contractual payments.
- Legislative Analyst: P. Affholter
FISCAL IMPACT
In FY 1998-99 CMH boards were able to carry forward about $30 million due to the 5% carryforward provision. This funding otherwise would have lapsed to the State. Extension of the sunset will not alter current policy. If the sunset took effect, however, it would decrease State expenditures by up to $30 million per year through FY 2001-02.
- Fiscal Analyst: S. AngelottiA9900\s1013ea
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.