Legislators weigh in on budget shortfall.

Byline: David Steves The Register-Guard

SALEM - State lawmakers tentatively signed off Thursday on a wait-and-see approach to the human services budget hole, accepting administrators' vows to run a tighter ship.

A subcommittee of the Legislative Emergency Board also recommended spending $9.3 million for interim steps to improve safety and treatment at the crowded and crumbling state psychiatric hospital.

The recommendations on the Department of Human Services' $172 million budget shortfall and the Oregon State Hospital improvements now go to the full E-Board for its decision today.

The recommendation followed the advice of Dr. Bruce Goldberg, the department's director: Give his agency a chance to improve its tracking of spending, revenue and caseload growth and to seek savings through efficiencies. The department also will rework how it forecasts caseload, since increased demand for services beyond what the Legislature had budgeted for accounted for $119 million of the $172 million gap.

That shortfall represents close to 7 percent of the 2005-07 budget of $2.61 billion for the agency, which provides health care and social safety net services to poor people, children, the disabled and the frail elderly.

The recommendation comported with Gov. Ted Kulongoski's insistence that the shortfall could be managed without calling a special session of the Legislature before the next regular session convenes in January 2007.

By then it will be known if caseloads will have increased by as much as forecasted. It also will give officials a year to reduce costs through administrative savings. Still, Goldberg said, lawmakers should be prepared for the likelihood that increased needs for health and human services clients will require more money or program reductions - steps that only the Legislature is authorized to carry out.

"The question really then becomes one of timing," he said. "And the plan that I'm proposing today proposes a strategy that brings us to January 2007. And that would incorporate added revenue, rather than reduced services."

Legislative and Kulongoski administration officials have identified several potential sources of revenue that would not require added taxes. They included higher-than-expected lottery profits, possible savings in a contract with home-care workers and money from the state's ending balance.

Legislators recommended the state spend $9.3 million for improvements related to the Oregon State Hospital in Salem. The aging psychiatric hospital has for years been under fire for crowding, inadequate staffing and unsafe buildings. It increasingly houses a challenging mix of forensic patients - those who have committed crimes but are sent to the hospital instead of prison because they are mentally unable to assist in their trials or are found guilty but for insanity.

Lawmakers agreed to spend $3.9 million to develop 71 additional forensic beds in secure community-based settings and $3.3 million to hire 30 more staffers, including therapists and doctors to improve the staff-to-patient ratios and to better prepare patients for their transition back to living outside the institution.

An outside consultant's preliminary findings, issued last spring, recommended closing the hospital and improving the state's entire system of care for the mentally ill. It identified as an immediate problem the campus' largest and oldest structure, the "J Building," which is at risk for major damage in an earthquake.

The Human Services Subcommittee forwarded to the full E-Board the department's request for $2.1 million to refurbish part of a leased hospital in Portland to house 24 inmates. Some legislators approved the move with reluctance, given the cost had doubled from a preliminary figure in October, while the patient capacity had dropped from 32 beds.

Rep. Bruce Hanna, R-Roseburg, questioned whether it made more sense to pursue alternatives that hadn't initially appeared to be cost effective when compared to the previously lower cost and higher patient bed-count at the leased Portland hospital. He said it didn't seem smart to put so much money into space that the state didn't own, since it was likely to build permanent facilities for mental patients to replace the rented facility.

"This is a short-term fix, and the reason we're finally moving forward, and that I'm going to move forward, is that we're really talking about the safety of these folks and the people who care for them," said Hanna, whose district includes eastern Lane County.