On January 10, 2023, HHSA staff came to the Board of Supervisors requesting a temporary General Fund loan to cover negative cash within the Opportunity Center (OC) fund due to revenues not coming in as budgeted. At that meeting, it was discussed that the OC financial issues are significantly related to lack of client referrals and revenues not coming in as budgeted.
The Board received presentations on October 4, November 8, and December 6, 2022, regarding the financial viability of the OC. On December 6, 2022, the Board considered a recommendation to transition the OC to a Private Non-Profit (PNP) but voted to defer a decision to a later date. Any PNP provider who is interested in taking over and providing OC programs must be vendorized (that is, approved to provide services in Shasta County) by the Far Northern Regional Center (FNRC). Additionally, the PNP would need to bid on and be selected to provide federal contract revenue services; the County has no control over the selection, negotiation, and award of these agreements (five for our OC).
The OC receives referrals from three different groups: FNRC, Department of Rehabilitation, and Shasta County Mental Health. The OC is a vendor for FNRC. One of the OC’s largest sources of revenue comes from FNRC and is driven by the number of Client referrals received, processed, and accepted by the OC. FNRC is the agency that approves providers, sends Client referrals, and authorizes payments for services to Clients. All OC programs and services are voluntary on the behalf of the Client. The number of referrals has dropped significantly in the past few years due to COVID; however, as the COVID epidemic is coming to an end, the FNRC referrals are not increasing as was anticipated and budgeted for. FNRC is not required to send a specific number of Clients to the OC and there is no guarantee that the OC will receive a minimum number of Client referrals. Because of this, reliable revenue cannot be guaranteed. Additionally, some Clients have not returned to the OC and some prefer to explore other programs. Below is a chart showing how referrals have fluctuated.
|
Calendar Year
|
FNRC
|
Dept of Rehab
|
Mental Health
|
Total
|
|
2019
|
67
|
128
|
5
|
200
|
|
2020
|
28
|
76
|
6
|
110
|
|
2021
|
20
|
68
|
5
|
93
|
|
2022
|
39
|
86
|
6
|
131
|
As of February 7, 2023 the OC has received 16 referrals from FNRC and five from Dept. of Rehab for the 2023 calendar year.
Number of Clients Authorized and Served by OC per Fiscal Year:
|
11/12
|
12/13
|
13/14
|
14/15
|
15/16
|
16/17
|
17/18
|
18/19
|
19/20
|
20/21
|
21/22
|
|
100
|
85
|
102
|
132
|
111
|
87
|
108
|
205
|
189
|
103
|
135
|
Along with referrals, the OC pays for benefits for Clients in the form of five days of paid leave each for vacation, sick time, and holiday pay. At this time, we are not aware of any other adult rehabilitation program that offers these benefits, and the OC is not reimbursed for the full costs of these benefits. The Board adopted Resolution No. 89-274 on December 19, 1989, authorizing up to 15 paid days off per each Client in paid status per year. These paid time off benefits are not required, and they are not provided by any other provider in Shasta County. The Commission on Accreditation of Rehabilitation Facilities (CARF) recommends the paid days off as a best practice. Should the OC continue with the County, there should be a discussion as to whether the County wishes to continue to offer these benefits to the Clients participating in this program.
The current Fiscal Year (FY) 2022-23 mid-year analysis projects the OC ending FY 2022-23 with expenditures exceeding revenues by approximately $1.05 million dollars. The OC started FY 2022-23 with a fund balance of $951,490. Even with immediate cost saving measures and efforts by the OC and FNRC to increase revenues, current spending and revenues will completely deplete the OC fund balance and the OC will end the fiscal year in a negative cash position of approximately -$100,000.
At this time, the OC has held eight full-time positions vacant: one Employment Services Supervisor and seven Employment Services Instructors I/II to immediately reduce expenditures. Opportunity Center and HHSA-Administration staff and FNRC consultant and former retired OC Manager, Jane Work, has analyzed contract rates and all other revenue sources to validate or modify current revenue accounts to bring the budget into balance. However, each analyzed contract has shown an operating loss. Additionally, staff were working to submit a balanced requested budget (no use of OC fund balance or General Funds) for FY 2023-24. After further analysis this cannot be accomplished without increasing contracts and fees costs by 40-50%. Recently it was also discovered, after discussions with the Auditor-Controller, that OC fees on the County’s Master Fee List are very understated and do not cover costs to provide those services. For the OC there are several different types of rates and fees: rates developed for individual contracts, rates from the state and federal government for their contracted services, as well as FNRC rates which cannot be increased regardless of costs, rates charged to the public for OC services (Master Fee List), and rates charged to County departments for OC services such as the Mail Room, shredding, janitorial, and car wash. The OC has a total of 29 various contract revenue agreements.