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State Hospitals budget trimmed; department says IST and service levels will be preserved
Summary
The Department of State Hospitals told an Assembly budget subcommittee on May 23 that the Governor’s May Revision reduces its proposed budget by about $191.5 million and would adjust positions, IST program allocations and capital project timing, but the department said current service levels would be maintained.
The Department of State Hospitals (DSH) told the Assembly Budget Subcommittee No. 1 on Health on May 23 that the Governor’s May Revision reduces the department’s proposed budget by approximately $191.5 million relative to the January proposal and contains a mix of operational efficiency adjustments, position authority changes and reappropriations to capital projects.
DSH Director Stephanie Clendenin said the May Revision reduces DSH’s total proposed budget to about $3.2 billion and includes a net reduction of roughly 100.8 positions for 2025–26; a larger set of position authority adjustments proposed earlier in the cycle are reflected in the overall reductions. The department described multiple proposed general fund solutions intended to align projected expenditures with available revenues.
Key program-level adjustments include rightsizing funding for incompetent to stand trial (IST) solutions programs: DSH proposes reductions to early access and stabilization services, community-based restoration and diversion funding, and county collaborative workgroup grants. Those IST adjustments total roughly $161.1 million in 2025–26 (with larger multi-year adjustments thereafter), which the department said reflect current contract and expenditure levels and lower-than-anticipated referral and enrollment rates.
Clendenin and Chief Deputy Director Brent Hauser said DSH did not expect service delivery to decline as a result of the IST rightsizing. “These adjustments reflect current contract and expenditure levels with private providers in the counties and provide funding to maintain on an ongoing basis the current service levels in these programs,” Clendenin told the subcommittee.
The department also proposed reappropriating $7.5 million for electronic health record plant planning and an appropriation for construction phases for capital projects, including a hydronic loop replacement at Coalinga. Staff said the Coalinga hydronic loop project is necessary because the existing piping system is deteriorated, has required emergency repairs and can disrupt daily patient living activities; the department said it had completed preliminary plans and working drawings and was prepared to award a construction contract if construction funding is secured.
Other operational proposals include implementing prior authorization and utilization management software for certain specialty care services, modest reductions tied to current isolation unit utilization (related to COVID-19-era capacity), a telepsychology pilot at Coalinga using reassigned vacant positions and a county billing reimbursement authority increase to reflect negotiated rate changes and projected census trends.
Labor and provider groups testified to significant staffing shortages and vacancy rates across the state hospitals system. Union representatives pointed to high vacancy and overtime levels and urged the subcommittee to consider impacts of contracting-out and workforce retention rather than deeper position cuts.
Ending: The subcommittee did not take final action. Members asked DSH and Department of Finance to provide additional details on the IST projections, the rationale for the contract-level adjustments and the Coalinga hydronic project bid status before the budget is finalized.
