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SFY 14 Block Grant PlanningMeeting No. 2

John R. Kasich, GovernorTracy J. Plouck, Director, ODMHOrman Hall, Director, ODADAS

(Future) Department of Mental Health & Addiction Services May 22, 2013

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Agenda

• 3 Major Topics – all pertaining to SAPT BG1. SFY 13 SAPT reduction• Dept. cash replenishment

2. Cash award timing from SAMHSA3. Sequester

• Discuss proposed solutions• Review, discuss scenario options

(Scenario 2)• Review, discuss conceptual model • Identify next steps related to

allocations/grants

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Review from May 9 meeting:

• FY 13: No reduction impacts to the field during SFY13 as a result of the following; o Utilized Fund 4750 to maintain service

levels to communityo Cancelled unobligated balances and

projects that have not yet begun • FY 14/15 plan: Propose solutions and

determine plan for SFY 14/15 with community partners

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Problems to Solve: SAPT BG

1. FFY 13 SAMHSA SAPT BG Award - $65,991,3612. SAPT award adjustment - $164,420 was reduced by SAMHSA

from FFY 12 to FFY 13 award3. SAPT reduction – (5%) - $3,299,568 4. Fund 475 used to off-set FY 13 - $3,134,592

Reduction Description

Reduction/Adjustment Amount

SAPT Award Adjustment (prior to sequestration)

-$164,420

SAPT Total Sequestration

-$3,299,568

Fund 475 applied to off-set SAPT subsidy reduction

-$3,134,592

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Problem 1: Fund 4750 cash

• We applied State fund 4750 to maintain SFY 13 BG subsidy to Boards and Providers so there were NO REDUCTIONS IN SFY 13 TO THE COMMUNITY.

• In order to manage this off-set, we plan to implement the sequester reduction and commitment across SFY 14/15 in order to balance the Dept budget.

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Solution to Problem 1: Need to replenish Admin cash

• We plan to withhold $391,824 per quarter for 8 quarters (SFY 14-15 biennium) to balance the Fed award amount of $62,691,793

• See Scenario #2 SAPT13 Sequester Reduction

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Problem 2: Timing of Fed Award

• Historically, SAMHSA cash installments during this time frame have been 75% of the SAPT Block Grant NOA . In SFY 13 to date, we have received only 31% of the total award amount (Orig award $65,991,361. Amount received to date: $20,754,284).

• In the past, the Dept maintained SAPT BG service levels to the community, in spite of Federal award reductions.

• The combined effect of maintaining prior service levels with the delay in receiving our Fed award, has resulted in the current inability to send payments out to the field when the Federal deposit is delayed.

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Solution to Problem 2: Implement Cash Realignment of SAPT Award

• Cash management realignment in the short-term will allow for a smoother, more predictable budget planning process in the future.

• Amount needed for cash management is approx. $15 million (1 qtr of the award).

• Under a 7 qtr cash model, there will still be 3 qtrs where the cash balance is less than subsidy

• The 7 qtr model shows a qtrly reduction amount of $2,127,043. (See Scenario #2 Cash Realignment Impact) beginning in Qtr 2 SFY 14

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Solution to Problem 2: Implement Cash Realignment of SAPT Award

• In order to get to an even distribution of subsidy to the community, the cash realignment/management requires a reduction in SFY 14

• Beginning July of SFY 14, the allocated amounts will be disbursed on a quarterly basis (push-out) instead of the current request (draw-down) process.

• Direct Grant amounts will continue to follow the draw-down process

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CAVEAT: Cash Realignment Depends on Timing

• The proposed solution to cash realignment depends upon cash availability

• The solution is only as viable as the timing of the receipt of Federal funds

• Once a cash balance of 1 quarter is reached, then the subsidy will go back to 95% of the award

• This is a one-time fix to a problem that has grown and needs to be corrected

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Problem 3: Sequestration

• Total FY 13 award reduction estimate is 5%. (SAMSHA has not yet sent the official Notice of Award).

• Applying 5% to the SFY 13 award amount of $65,991,361, equals a total reduction amount of $3,299,568.

• The total reduction amount applied to subsidy is $3,134,592.

• Regardless of 5-Qtr Scenario or 7-Qtr Scenario, the bottom line amount of subsidy for SFY 14/15 (FFY 14 award) will be $101,090,516

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Solution to Problem 3: Reduce Allocations & Grants

• We will manage the sequestration reduction by applying a qtrly reduction of $391,824 for 8 qtrs (See Scenario 2: 7 Qtr Model)

• Cash will be insufficient in Qtr 2 & 3 of SFY 14 and Qtr 2 of SFY 15 under this Cash model.

• Scenarios assume BG award is held level at $62,691,793 (5% sequestration reduction).

• We have no official FFY 14 award information at this time. When we receive official NOA, this analysis will be updated to reflect any change.

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Allocations & Grants

• For the purpose of managing the subsidy reduction, we are exploring reductions on both allocations that are funded to all 50 Boards, as well as grants that may go through a Board, stay at a Board, and/or go directly to a provider.

• We are evaluating all subsidy payments and will be reaching out to our partners for specific discussions, specifically for SFY 15 planning

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Discuss: Conceptual Model

• See Draft Conceptual Model for SAPT discussion

• Option 1: Spread reduction evenly over 7 qtrs• Option 2: Spread reduction unevenly, with

more in second half of biennium • This requires more reductions/realignment

of grant projects/programs, other state funding options (Medicaid expansion) to balance service levels in community

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Discuss: Mental Health Block Grant

• MH BG award (FFY 13) $14,438,637• FY 13 Amount of reduction is $721,932• Currently evaluating projects• Anticipate some amount of FY 13 balance of

unspent/unobligated funds• Potential minimal change to SFY 14/15 projects• No anticipated reduction to award qtr 4 (July SFY 14)• No change to Board Base Allocation• If reduction needed, will explore conceptual model

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Next Steps

• Determine final solutions for planning• Explore conceptual model as proposed, or

offer other • Next meeting or specific assignments