1991 Realignment No Longer Meets Many LAO Principles. Due to the various changes to 1991 realignment programs without corresponding changes to the funding structure, 1991 realignment today no longer meets many of the core principles of a successful state‑county fiscal partnership. Today, counties’ share of some program costs exceeds their ability to control those costs. In addition, overall realignment revenues are not sufficient to cover the costs of those programs over time. Lastly, the flow of funds in realignment is extremely complex and not flexible enough to allow counties to respond to changing needs and requirements. As a result, 1991 realignment likely is not achieving the desired benefits.
Options for Improving 1991 Realignment. There are a few ways to better align the fiscal structure of 1991 realignment to achieve the intended benefits. One set of options would change the cost sharing ratios between the state and counties to better align counties’ share of costs with their ability to control those costs. Specifically, the state could reduce counties’ share of IHSS costs and increase their share of cost for another program (like felony forensic court commitments). The second set of options would better align revenue and costs by changing the flow of realignment revenue and increasing funding to address revenue shortfalls. The third set of options outlines other improvements that could be made to 1991 realignment including applying lessons from other realignments, better tracking realignment revenues and costs, encouraging counties to maintain reserves, and carefully consider future program expansion.
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