Plan to Increase the Childhood Lead Poisoning Prevention Fee

Fiscal Year 2021-22

January 15, 2021

Prepared by:

California Department of Public Health

Center for Healthy Communities

Childhood Lead Poisoning Prevention Branch

Plan to Increase the Childhood Lead Poisoning Prevention Fee

Update: For information on the revised 2022 CLPP Fee increase, please visit the 2022 CLPP fee increase web page.

Table of Contents

I.     Background: The Childhood Lead Poisoning Prevention (CLPP) Program

II.    Goals of the CLPP Program

III.  CLPP Fee Increase Discussion

IV.  Timeline for CLPP Fee Increase and CLPP Fee Assessment Cycle

Appendices

A.   Fee increase Formulas and Program Data

B.   CLPP Program Audits, Mandates, and BCPs from 1999 to 2020

C.   California Department of Public Health Organization Charts

D.   List of Local Health Jurisdiction Cooperative Agreements and Funding Allocations

E.   Legal Settlements' Impact on CLPP Fund

F.    Health & Safety Code §105310

I. Background: The Childhood Lead Poisoning Prevention Program

BACKGROUND: The State of California established a CLPP Program by legislation in 1986 (Health and Safety Code (HSC) §124125, et seq). Special funding for the CLPP Program was established in 1991 (HSC §105275, et seq). Today, the CLPP Branch is largely supported by fees assessed and collected annually from lead polluters (e.g., paint and petroleum industries as historical polluters, and industrial air emitters). There are approximately 400 fee payers, billed annually for $22 million, but approximately $21.5 million is collected. Collection is lower than the billed amount due to annual applications for reassessment or exemption of fees and/or non-payment by feepayers. The assessments are collected on April 1 in partnership between the California Department of Tax and Fee Administration (CDTFA) and the CLPP Branch. The fees are deposited into the CLPP Fund. The fees support state operations, and of the $21.5 million annual revenue, approximately 70% ($16 million) is allocated to local health jurisdictions to conduct lead poisoning prevention and case management. An additional $3.1 million has been allocated annually from fund reserve in recent years to support new program mandates.

In recent years, increased expenditure demands, originating from federal guidelines, new state mandates, necessary programmatic improvements, and implementing corrective actions for audit findings from the California State Auditor (CSA), have exceeded fee revenue. The CLPP Branch was able to cover its expenditures due to historical legal settlements that provided additional fee reserves to the fund from 2007 to present (see table for the CLPP Fund Historical Revenue FY 2007-2019). 

Childhood Lead Poisoning Prevention Fund Historical Revenue FY 2007-2019 (dollars in thousands)

Data Source: CLPP Fund (0080) Condition Statements from Department of Finance.

From FY 2012-16 (four years), the CLPP Fund averaged $3M "Prior/Current Year" adjustments per year with CLPP Fee revenues of $22M and expenditures of $22M. In FY 2015-16, the CLPP Fund accumulated the highest reserve fund balance at $77M, after disbursements. In FY 2016-17, the fund resources before expenditures peaked at $100M. The Protecting Children from Damaging Effects of Lead Exposure BCP became effective in FY 2016-17. In that year, the CLPP Fee appropriation authority increased to $28.3M.

*Amounts projected on Fund Condition Statement prior to end of fiscal year reconciliation.

Historical settlements that bolstered CLPP Fund reserve for fiscal year (FY) 2006-07 forward were initiated after promulgation of fee regulations in 2002 that changed fee assessment and increased fee collection. In 2004, a billing error for 2002 and 2003 fees was discovered that led 25% of assessed feepayers to petition the subsequent re‑billing. Final decisions for the majority of 2004 petitions were reached in late 2006 and early 2007, with some high-profile petitions not reaching resolution until early 2009. One significant petition was not resolved until after a Sacramento Superior Court decision in late 2010. Settlement of these petitions increased yearly adjustment and fee collections for FYs 2006-07, 2009-10, and 2011-12 as follows:

1. FY 2006-07: Increase of $13.942 million in past year billings over average prior year adjustment (PYA)[1], and $13.554 million increase in Fee revenue over authority[2]. 

2. FY 2009-10: Increase of $10.049 million in past year billings and settlements over average PYA, and $5.848 million increase in Fee revenue.
3. FY 2011-12: Increase of $14.315 million in past year billings and settlements over average PYA.

[1] Average prior year adjustment was calculated using data for FYs 2012-13 to 2015-16 at $3.0 million where expenditures remained steady.

[2] Fee authority set at $22 million since 2002.

Due to reduced fee collections in 2004 and 2005 from the petitions, a General Fund loan was taken to sustain operations and repaid in FY 2010-11. In FY 2008-09 expenditures rose above revenues due to financial strain from ongoing petitions and economic downturn. Appendix E provides additional detail for legal settlements' impact on CLPP Fund.

From FY 2012-13, CLPP Fund reserves grew steadily. However, from FYs 2016-17 to 2018-19 , expenditures began to significantly outpace revenues at an annual average of 36%. In FY 2019-20, expenditures outpaced revenues by 113% due to the impact of additional program mandates and increased workload, as discussed in the Childhood Lead Poisoning Prevention Program Mandates and Workload History sections of this report. The following table describes the utilization of CLPP Fund reserve to support CLPP Program operations through FY 2019-20 without a fee increase.

Due to reduced fee collections in 2004 and 2005 from the petitions, a General Fund loan was taken to sustain operations and repaid in FY 2010-11. In FY 2008-09 expenditures rose above revenues due to financial strain from ongoing petitions and economic downturn. Appendix E provides additional detail for legal settlements' impact on CLPP Fund.

From FY 2012-13, CLPP Fund reserves grew steadily. However, from FYs 2016-17 to 2018-19 , expenditures began to significantly outpace revenues at an annual average of 36%. In FY 2019-20, expenditures outpaced revenues by 113% due to the impact of additional program mandates and increased workload, as discussed in the Childhood Lead Poisoning Prevention Program Mandates and Workload History sections of this report. The following table describes the utilization of CLPP Fund reserve to support CLPP Program operations through FY 2019-20 without a fee increase. 

CLPP Fund Reserve Use FY 2016-2019 (dollars in Thousands)

Data Source: CLPP Fund (0080) Fund Condition Statements from Department of Finance.

At present, settlement reserves will be depleted by FY 2021-22 end, and a new fee structure is needed to keep the program solvent.

Lead as an Environmental Hazard

Lead is a toxic heavy metal that persists indefinitely as a historical pollutant from leaded gasoline and paint, smelting, mining, manufacturing, and industrial emissions. Lead effects all bodily organ systems, but the typical health effects in children are neurological, including delayed learning, Attention Deficit Hyperactivity Disorder, lower IQ (impacting school performance and future earnings), and behavioral problems. In young children whose brains are still developing, even a small amount of lead can cause learning disabilities, behavioral problems, and anemia. At higher levels, lead exposure can result in seizures, coma, and even death. Childhood lead poisoning can also lead to health effects later in life, including hypertension, kidney disease, and reproductive problems. HSC §105275 and §124165 enable the CLPP Program to perform multiple functions to reduce childhood lead exposure and avert these outcomes.

Childhood Lead Poisoning Prevention Program Mandates

The California Department of Public Health (CDPH) CLPP Branch conforms to Centers for Disease Control and Prevention (CDC) guidance by providing services to children exposed to lead contamination in their environment. In accordance with updated guidance, the CLPP Branch lowered its blood lead level (BLL) criteria for cases of lead poisoning, and redefined a full case at 15 micrograms per deciliter (mcg/dL) or persistent values of 10 mcg/dL; with basic services provided at 5mcg/dL. Services include providing outreach, education, and health services to all children identified with BLLs of 5 mcg/dL and greater, which recognizes that there is no safe level of lead exposure to children. Within the first year of the lowered level, the program experienced a six-fold increase in lead poisoning cases and a two-fold increase in the number of children needing services.

New program mandates include an expanded definition of environmental risk factors that may contribute to lead exposure and poisoning, emphasis to improve delivery of program services, in coordination with Department of Health Care Services (DHCS) to ensure Medi-Cal eligible beneficiaries are served, and improved reporting requirements to be achieved with procurement of a new information technology data system that will enable CDPH and local health programs to work more efficiently (See Appendix B for CLPP Program Mandates and Resource Requirements).

Workload History

The CLPP Program has experienced significant workload increases at both the state and local level. From FYs 2016-17 through 2019-20, there have been over 400 new cases of lead poisoning per year; children with BLLs greater than or equal to 5 mcg/dL with increased services from 4,232 to 8,500 children (see table below for CLPP Program Workload History).

CLPP Program Workload History by Fiscal Year

^1/  Some children are tested more than once; reporting to CLPP Branch is required by law.

^2/  Cases through FY 2015-16 based on criteria of BLL > 20 mcg/dL or persistent values > 15 mcg/dL; beginning in FY 2016-17 cases are based on criteria of BLL > 15 mcg/dL or persistent values > 10 mcg/dL. CDPH rounds BLLs to the nearest whole number (for example, 5 includes 4.5 mcg/dL and 10 includes 9.5 mcg/dL.

^3/  Most services noted are provided by local programs. Since July 1, 2016, local programs must provide specified case management services to children with blood lead levels 5 mcg/dL and higher and lower levels as resources allow. Prior to July 2016, local programs provided some services to children with levels lower than 10 mcg/dL as resources allowed.

II. Goals of the Childhood Lead Poisoning Prevention Program

The CLPP Branch currently strives to achieve six goals as part of its mission statement and work. (See Appendices C-1 and C-2 for organization charts):

• An informed public able to protect children from lead exposures.
• Well-supported, effective local programs to detect, manage, and prevent childhood lead poisoning.
• Fully developed capacity to track lead exposure statewide, and to monitor the management of lead-burdened children.
• Strong infrastructure enabling the prevention of children's exposure to lead through partnerships with government agencies, community-based organizations, and private sector.
• Full compliance with federal and state statutory and regulatory requirements.
  
• Continued state and national leadership through research, policy development, and standard setting.
  

Local Health Programming

The majority of direct services to children are provided by 50 local programs, including 47 counties and 3 cities, under contract with the CLPP Branch. Funding for local programs is provided based on the population of children under 21; number of low-income children; children with elevated lead levels; and children living in older housing. Local CLPP Programs provide services to all California children based on BLLs. These services are free regardless of insurance status. The local programs also carry out public health nursing case management and environmental investigation to identify sources of lead for children with high BLLs. Other services provided include extensive outreach and education activities to families, communities, and health care providers, promoting screening to reduce lead exposure in their communities and identifying additional sources of lead exposure.

The CLPP Branch provides services at eleven local level counties that choose not to contract with the CLPP Branch. The services include public health nursing case management, home visits and nutritional counseling by public health nurses, lead testing and environmental investigation by environmental professionals, and community outreach by health educators. The CLPP Branch also performs statewide surveillance, data analysis, oversight, and outreach, lends technical assistance, and assists programs with services not available locally (see Appendix D for a list of Local Agencies Cooperative Agreements with Funding Allocations) for each county.

The State Childhood Lead Poisoning Prevention Activities

The CLPP Branch is responsible for the following activities HSC §124125 et seq., §105275 et seq., and §105250 et seq.: 

• Sets policies and establishes regulations; oversees activities of local CLPP programs; provides direct services in health jurisdictions without a local CLPP program; develops educational materials; promotes screening and case identification through outreach activities and written materials; tracks cases of children with increased BLLs and potential sources of exposure; seeks to assure the quality of local CLPP services; and provides scientific and technical expertise.
• Maintains a database on lead screening and lead-poisoned children and their case management, monitors and assists with case management of lead‑poisoned children, identifies sources of poisoning, and guides intervention strategies.

• Implements the Lead-Related Construction (LRC) Program that develops regulations for lead-safe construction practices, provides training accreditation and worker certification, conducts related enforcement and compliance activities, and offers technical assistance to state and local housing and environmental agencies[3].

[3] Environmental enforcement is supported by the CLPP Fund. The LRC Fund solely supports accreditation and certification for lead abatement construction workers, supervisors, planners, and investigators.

III. CLPP Fee Increase Discussion

The CLPP Branch has not adjusted its fees for inflation and the number of children served since 2002, while expenditure needs have steadily grown. As such, the CLPP Fund is projected to be in a deficit by FY 2021-22. The proposed CLPP fee increase will address the increased workload.

Expenditures

Total program expenditures increased due to changes in the BLL guidelines published by the CDC, new mandates, replacement of an outdated information technology system, and the findings of CSA Report 2019-105. Specifically, total program expenditures are increasing due to the reasons indicated below.

• The CLPP Branch is mandated to implement a standard of care at least as stringent as the new CDC BLL guidelines which estimated over 500 new lead poisoning cases.
• Mandates that require increased public reporting.
• Designing and implementing the new Surveillance, Health, Intervention, and Environmental Lead Database (SHIELD) to replace the Reporting and Surveillance System for Childhood Lead Exposure (RASSCLE) II.
• CSA Report 2019-105 findings recommending more equitable allocation of local assistance dollars to underfunded counties experiencing a higher incidence of lead poisoning.
  

Total new expenditures include $13.3 million in FY 2020-21, $14.7 million in FY 2021-22, $14.6 million in FY 2022-23, and $12.9 million for FY 2023-24 forward.

The CLPP Fund status quo table illustrates the CLPP Fund structural deficit when comparing total revenue against total expenditures from FYs 2019‑20 through 2022-23 without a CLPP Fee increase.

Status Quo - Without CLPP Fee Increase by Fiscal Year (Dollars)

The CLPP Fund without the CLPP Fee increase illustrates that increases in expenditures without a fee adjustment is unsustainable. The annual revenue of $22 million and depleting CLPP Fund reserve will not cover the projected program expenditures of $44.8 million in FY 2021-22. 

Projection - With CLPP Fee Increase by Fiscal Year (Dollars)

Revenue

The CLPP Fee was established and set at $16 million annually by a legislative mandate  in 1993. The first, and only, adjustment occurred in 2002, increasing the assessed fee level to $22 million, adjusting for inflation and number of children served.

 CLPP Fee Increase Methodology

The CLPP Fee ("Fee") increase currently proposed was calculated using methods compliant with Health and Safety Code Section (HSC) 105310(c). The calculation method uses the two adjustment factors specified in HSC 105310(c):

1. Number of Children Served (#CS)

2. Change in California Consumer Price Index (∆CPI)[4]
   

[4] Change in CPI as determined by the Department of Industrial Relations (DIR) (data was elicited from the Department of Finance (DOF) website as published using DIR formula).

These factors, as applied in Appendix A, result in a total increase in CLPP Fee collection of $22 million, increasing authority from $22 million to $44 million. The Fee implementation plan includes a stepped increase of $22 million over two years. The Fee implementation plan includes the collection of an additional $8 million in 2021 for use in FY 2021-22 and the collection of another additional $14 million in 2022 for use in FY 2022-23 (see table in Section IV below).

Fee Increase Supporting Documentation

Additional information regarding the calculation of the CLPP Fee Increase and data applied to the increase is available in Appendix A, CLPP Fee Increase Formulas and Program Data. 

IV. Timeline for CLPP Fee Increase and Fee Assessment Cycle

CLPP Fee Implementation

The following table illustrates the proposed CLPP Fee increase over two years.

Existing statute, HSC §105310, allows an annual adjustment based on children served and CPI. Baseline fee assessment level is $22 million.

CLPP Fee Implementation Milestones

• CLPP Fee Increase Assessment Cycle:
• January 2021: Provide Fee Assessment Year 2020 list to the California Department of Tax and Fee Administration (CDTFA) for reconciliation. Send CLPP Fee Adjustment Notification to feepayers.
  
• February 2021: Send final Assessment Year package (fee payer lists and letters) to CDTFA.
• March 2021: CDTFA sends the letters and assessment forms to fee payers for collection of the Assessment Year 2020.
• April 2021: Fees are due and payable on April 1, 2021.
• July 2021: 2020 CLPP Fee revenues become available for expenditure.
  
  

Appendices List

A.   Fee Increase Formulas and Program Data

B.   Childhood Lead Poisoning Prevention Program Audits, Mandates, and BCPs from 1999 to 2020

C.   CDPH Organization Charts: 

• C-1 Center for Healthy Communities
• C-2 Childhood Lead Poisoning Prevention Branch

D.   List of Local Health Jurisdiction Cooperative Agreements and Funding Allocations

E.   Legal Settlements' Impact on CLPP Fund

F.    Health & Safety Code §105310

Appendix A: CLPP Fee Increase Formulas and Program Data

Definitions of Formula Abbreviations:

%∆ – Percent Change

BL – Baseline Year

#CS – Number of Children Served

CPI – Consumer Price Index

CY – Current Year

Overall Formula to Determine an Adjusted Fee Cap:

Authority for this fee adjustment formula is drawn from Health and Safety Code Section (HSC) §105310. HSC §105310 specifies an annual adjustment of the CLPP Fee using two factors: 1) number of children receiving services from the CLPP program, and 2) increase in annual average of CPI as recorded by the Department of Industrial Relations.

CPI data for this formula was retrieved from Department of Finance who publishes annual CPI change data using the formula developed by Department of Industrial Relations.

Number of children served data was retrieved from the Reporting and Surveillance System for Childhood Lead Exposure (RASSCLE) II for all children up to, and including, 21 years of age with blood lead levels of 4.5mcg/dL or higher.

Proof of Formula for Adjusted Fee Cap:

Administrative Adjustment Pursuant to HSC §105310(f):

HSC §105310(f) allows for administrative adjustment to CLPP Fee collection to no more than is reasonably necessary to implement the program. While calculated CLPP Fee authority is $51.5 million, only $44 million is required to implement the program.

Formulas to Determine a CPI Adjustment for Future Fee Increases:

Proof of Formula to Determine CPI Adjustment for a Future Fee Increase:

This formula is not effectuated for the proposed CLPP Fee increase and is included as proof of concept for future CPI increases for CLPP Fee authority as determined necessary.

Inflation Rate of 3.1% is projected by the Department of Finance using the Department of Industrial Relations' formula mandated by Statute.

In accordance with HSC §105310(f), allowing administrative adjustment of the CLPP Fee to no more than reasonably allowed for implementing the program, the CPI Fee adjustment is applied at $1 million.

CPI and Number of Children Served Program Data

1/ CPI as published by Department of Finance using Department of Industrial Relations formula.

2/ #CS as retrieved from RASSCLE II for children up to 21 years of age with BLLs of 4.5 mcg/dL or above.

Appendix B: Childhood Lead Poisoning Prevention Program Audits, Mandates, and BCPs from 1999 to 2020

Appendix C-1: Center for Healthy Communities

Appendix C-2: Childhood Lead Poisoning Prevention Branch

Appendix D: Local Health Jurisdiction Cooperative Agreements - FY 2020-2023 (3 years)

FY 2020-23 Contracted CLPP Local Jurisdiction Allocations

Appendix E: Legal Settlements' Impact on CLPP Fund

Childhood Lead Poisoning Prevention Fund

Childhood Lead Poisoning Prevention Fees (Fund 0080) Fund Condition Excerpt for FY 2006-07 through FY 2016-17

Showing only the years of spike resulting from legal decisions (Dollars in thousands)

^1/ BOE fee collections including past fee assessments, after BOE hearings ruled in CDPH favor.

^2/ Total amount received by BOE from July 2008 through May 2009. This includes fees for 2008/09 billings and one-time payment on past years' billings.

^3/ The higher amount of collections in FY 2009-10 was due to one-time back payments and interest on fees owed from prior years.

^4/ $24 million settlement collected by the Board of Equalization in December 19, 2011. This one time payment was the result of a final legal settlement, including interest on fees owed from past years' billings. The large part of the difference is because last year's fund condition statement did not match the SCO fund condition statements. DPH's FCS was higher than SCO by $9.3 million, so a reduction had to be made for last year's error. That issue aside, there was also an additional $1.7 million in PY adjustments that were not included in the original DPH submission. ($24.9 + 1.7 - 9.3 = $17.3M)

Appendix F: Health & Safety Code § 105310