Massachusetts Public Health NACCHO Project Recommended Formula for State Regionalization Incentives

Transcription

1 Massachusetts Public Health NACCHO Poject Recommended Fomula fo State Regionalization Incentives table of contents 1 Intoduction Poposed Regionalization Incentive Funding Fomula Base pe capita Adjustment 1. Degee of egionalization Adjustment 2. Base pe town in distict Adjustment 3. Population density Adjustment 4. Povety Adjustment 5. State cap Implementation Issues Appendix Refeences Pepaed by: Patick M. Benet, PhD. Floida Atlantic Univesity May Vesion: (FINAL Distict Funding) page 1 of 12

2 1 Intoduction This document povides a hypothetical egionalization incentive payment fomula to be administeed by the Massachusetts Depatment of Public Health. This daft is the wok of the autho, woking in consultation with the Funding Fomula Task Foce of the Massachusetts Woking Goup on Local Health Regionalization. Fo the puposes of this document, 'egionalization' occus when two o moe individual towns come togethe to fom a 'distict'. At a minimum, the 'distict' is an ageement among the individual towns. These ageements can take a myiad of foms to fulfill this geneal definition of a 'distict'. The following examples show the ange of possible aangements: o Town A and town B fom a distict. The distict is esponsible fo education and inspection sevices. The pat-time peson who used to do education just fo town A will wok full time and povide education sevices fo both towns. The pattime peson who used to do inspections just fo town B will wok full time and povide inspection sevices fo both towns. o Town A and town B fom a distict. The distict is esponsible fo inspection sevices. Both towns pool the money they used to spend on inspections. That pooled money is used to hie a peson who is esponsible fo all inspections in both towns. The goal of this pape is not to descibe the details of the legal documents behind the fomation of disticts. The manne in which costs and esponsibilities ae shaed within the disticts is a matte of negotiation between towns within each distict, and is the subject of othe wok by the Woking Goup. Instead, this pape focuses on the division of incentive payments among (and not within) disticts. It is based on the pemise that a hypothetical State-level payment is made available to disticts. The pupose of such payments would be to encouage the ceation of moe disticts. This wok was funded by the NACCHO Regionalization Poject. Vesion: (FINAL Distict Funding) page 2 of 12

3 2 Poposed Regionalization Incentive Funding Fomula This poposed fomula povides a financial incentive to suppot the fomation of disticts. The fomula begins with basic pe capita payments, then adjusts that payment based on degee of egionalization, povety and population density. Adjustment amounts ae based on fomulas that compae the distict to the est of the state. Thee ae seveal implementation issues elated to the use of these fomulas. Section 2.7 descibes these in moe detail. 2.1 Base pe capita Computation stats with a base allocation of $2.50 pe capita fo each life in a distict. Fo health depatments that do not paticipate in any distict, the base allocation is zeo. Vesion: (FINAL Distict Funding) page 3 of 12

4 2.2 Adjustment 1. Degee of egionalization This adjustment povides an incentive to communities to integate health depatments as fully as possible in ode to achieve the highest economies of scale and povide the highest level of sevice fo thei esidents. DPH defines how 'degee of egionalization' is judged. This measue is based on the degee of shaing of public health sevices WITHIN the distict. A distict will be placed into one of seveal categoies based on citeia to be developed by DPH. The fomula in Exhibit 1 shows each distict's adjusted pe capita is based on this 'degee of egionalization'. The example in Exhibit 2, based on a hypothetical table, shows distict A's egionalization classification (Cat2) has an adjustment facto of 1.50; meaning that the base payment is multiplied by 1.50 (fo an incease of 50 pecent fom $2.50 to $3.75 pe capita). Distict B's classification (Cat3) esults in a doubling of the base pe capita payment fom $2.50 to $5.00. The adjustment schedule is DPH's esponsibility. The one in Exhibit 2 is just fo demonstation puposes. Since this adjustment is geaed towads incentivizing geate degees of egionalization, DPH will conside how to best measue. Fo example, it might ange fom stand-alone, to seveal shaed sevices, to a compehensive distict in which vitually all public health sevices ae shaed. Exhibit 1. Adjustment 1 computation fomula v3130 = v2010 v3120 Whee: v2010 = pe capita incentive payment net of pevious adjustments v3120 = egionalization adjustment facto based on DPH table v3130 = adjusted pe capita incentive = distict Exhibit 2. Adjustment 1 example Sample DPH table categoy adjustment adjusted pe capita facto Cat v3011, v3012, v3013 Cat v3021, v3022, v3023 Cat v3031, v3032, v3033 Final adjustment Distict A Distict B Rest of State State total Regionalization level Cat2 Cat3 Cat1 v3110 = v30x1 Adjustment facto v3120 = v30x2 Adjusted pe capita v3130 = v2010 * v3120 Adjusted total payment 468, , ,750 v3140 = v3130 * v1010 Vesion: (FINAL Distict Funding) page 4 of 12

5 2.3 Adjustment 2. Base pe town in distict This adjustment ecognizes that some distict stat-up costs ae popotional to the numbe of towns involved. This adjustment also encouages towns with small populations to join disticts. Although a town of just 600 people would not bing a lot unde pe capita payments, this flat potion still makes them attactive as potential distict patnes. Fo this adjustment, each distict eceives an additional $2,500 fo each town in the distict. So a distict compised of 5 towns eceives an additional $12,500. The fomula in Exhibit 3 shows each distict's total payment inceases by this pe-town adjustment, esulting in adjusted pe capita amounts. The example in Exhibit 4 shows distict A's total payment inceased fom $125,000 to $132,500, esulting in a new pe capita payment of $1.06 (up just $0.06). Distict B's pe capita inceased fom $1.50 to $2.38. The lage incease is because thee wee moe towns in distict B (7 towns in distict B, but only 3 in distict A). Exhibit 3. Adjustment 2 computation fomula v4030 [{ v1050 v1040 } v3140 ] + = v1010 Whee: v1050 = adjustment pe town ($2,500) v1040 = numbe of towns v3140 = Total incentive payment net of pevious adjustments v1010 = population v4030 = adjusted pe capita incentive = distict Exhibit 4. Adjustment 2 example Paametes adjustment amount Adjustment pe town 2, v1050 Final adjustment Distict A Distict B Rest of State State total Numbe of towns in distict v1040 Incentive payment 7, , ,000 v4010 = v1050 * v1040 Adjusted total payment (fom pevious st 468, , ,750 v3140 Adjusted total payment 476, , ,750 v4020 = v v3140 Adjusted pe capita v4030 = v4020 / v1010 Vesion: (FINAL Distict Funding) page 5 of 12

6 2.4 Adjustment 3. Population density. This adjustment povides moe money to less densely populated disticts. The pupose of this adjustment is to povide an incentive to small, ual communities to fom disticts. The Cente fo Rual Massachusetts defines ual as having a population density of 500 o less pe squae mile. Moe ual aeas face paticula challenges in foming pofessional health depatments and poviding a consistent level of public health potection to thei esidents. This adjustment is used to e-allocate funds AMONGST disticts. The distict's adjusted pe capita payment can go up o down depending on thei population density compaed to the est of the state. Vesion: (FINAL Distict Funding) page 6 of 12

7 This adjustment is in invese popotion to the distict's density elative to the est of the State (see Exhibit 5). Exhibit 6 demonstates that Distict A's total egionalization payment would decease because thei density is slightly highe than the est of the state (833 vesus 787 pesons pe squae mile). Anothe way to intepet this is that Distict A gets less because they ae moe densely populated than the est of the state. Continuing the example in Exhibit 6, Distict B's adjusted payment inceases because thei density is fa below State aveages. Exhibit 5. Adjustment 3 computation fomula v5040 = v4030 all s all t v1010 s v1010 t all s all t v1020 v1020 Whee: v4030 = pe capita incentive payment net of pevious adjustments v1010 = population v1020 = land aea = distict s = towns NOT in distict (IE - est of the State, whethe in anothe distict o not) t = towns in distict s t Exhibit 6. Adjustment 3 example Pee aveages fo Distict A Distict A All othe State total Land aea 150 8,038 8,188 v5010 = v1020 Population 125,000 6,328,968 6,453,968 v5020 = v1010 Density v5030 = v5020 / v5010 Ratio of all-othe to distict A 0.94 Pee aveages fo Distict B Distict B All othe State total Land aea 109 8,188 8,188 v5010 = v1020 Population 20,000 6,453,968 6,453,968 v5020 = v1010 Density v5030 = v5020 / v5010 Ratio of all-othe to distict B 4.29 Final adjustment Distict A Distict B Rest of State State total Adjusted pe capita (fom pevious step) v4030 Adjustment 4 (atio of all-othe to distict v5030 Adjusted pe capita v5040 = v5030 * v4030 Adjusted total payment 449, , ,077 v5050 = v5040 * v1010 Vesion: (FINAL Distict Funding) page 7 of 12

8 2.5 Adjustment 4. Povety This adjustment povides moe money to pooe disticts. This adjustment is in popotion to the disticts povety elative to the est of the State. This adjustment is intended to ecognize that pooe communities face additional challenges both in funding health depatments and in poviding public health sevices. This adjustment is used to e-allocate funds AMONGST disticts. The distict's adjusted pe capita payment can go up o down depending on thei elative shae of povety compaed to the est of the state. Vesion: (FINAL Distict Funding) page 8 of 12

9 This adjustment is in invese popotion to the distict's density elative to the est of the State (see Exhibit 7). Exhibit 8 demonstates that Distict A's total egionalization payment would incease because thei povety ate is much highe than the est of the state (14% vesus 9%). Anothe way to intepet this is that Distict A gets moe because they ae pooe than the est of the state. Continuing the example in Exhibit 8, distict B's adjusted payment deceases because thei povety ate is below State aveages, implying that they ae iche. Exhibit 7. Adjustment 4 computation fomula v6050 = v5040 all s all t v1030 s v1030 t all s all t v1010 v1010 Whee: v4030 = pe capita incentive payment net of pevious adjustments v1010 = population v1030 = numbe of people in povety = distict s = towns NOT in distict (IE - est of the State, whethe in anothe distict o not) t = towns in distict s t Exhibit 8. Adjustment 4 example Pee aveages fo Distict A Distict A All othe State total Numbe of people in povety 17, , ,366 v6010 = v1030 Population 125,000 6,328,968 6,453,968 v6020 = v1010 Povety ate v6030 = v6010 / v6020 Ratio of distict A to all-othe 1.54 v6040 = v6030.distict / v6030.all.othe Pee aveages fo Distict B Distict B All othe State total Numbe of people in povety 1, , ,366 v6010 = v1030 Population 20,000 6,453,968 6,453,968 v6020 = v1010 Povety ate ,732,187 v6030 = v6010 / v6020 Ratio of distict B to all-othe 0.60 v6040 = v6030.distict / v6030.all.othe Final adjustment Distict A Distict B Rest of State State total Adjusted pe capita (fom pevious step) v5040 Adjustment 4 (atio of all-othe to distict v6040 Adjusted pe capita v6050 = v5040 * v6040 Adjusted total payment 692, , ,249 v6060 = v6050 * v1010 Vesion: (FINAL Distict Funding) page 9 of 12

10 2.6 Adjustment 5. State cap Fomulas must allow fo the possibility of a fixed State budget. Quite simply, thee is no guaantee of a bottomless well of State funding. All disticts that qualify fo funding will split the pot. The fomula in Exhibit 9 basically means that the payment to all disticts will popotionately decease if total computed payments exceed the state cap. If the total incentive payment fo all disticts exceeds the State cap, then each distict is simply given a elative shae of the State cap based on elative shae of fomula-computed totals. Exhibit 9. Adjustment 5 computation fomula [ v6050 v1010 ] v7030 = v [ v6050 v1010 ] all Whee: v6050 = pe capita incentive payment net of pevious adjustments v1010 = population v1060 = State cap amount (budget) = distict { v } The example in Exhibit 10 shows how this would wok. The total incentive payments come to $315,878. Howeve, in this example, the State capped those expenditues at $125,000. Evey distict's shae of the total deceases popotionately. So distict A oiginally had 61% of all incentive payments, and they continue to get the same shae; Only now, they ae getting 61% of $125,000 ($76,226). Distict B, whose pe capita payment was $6.16 though adjustment 4, sees that educed to $2.44; that is thei shae of eductions implemented to bing total spending in line with State caps. Exhibit 10. Adjustment 5 example Compute shae of adjusted total Adjusted total payment 692, , ,249 v6060 Shae of total v7010 = v6060.distict / v6060.state.total State cap amount 125,000 v1060 Final adjustment Adjusted total payment 86,783 38, ,000 v7020 = v7010 * v1060 Adjusted pe capita v7030 = v7020 / v1010 Vesion: (FINAL Distict Funding) page 10 of 12

11 2.7 Implementation Issues If any adjustment is consideed unnecessay, the adjustment facto can simply be set to 1.00, which effectively emoves it. Some adjustments can sometimes appea exteme. Fo example, if a low population density adjustment esults in the doubling of one distict's pe capita amount, othe disticts might potest. This can be addessed by simply subjecting only a potion of the total pe capita payment to each given adjustment. o Fo example, suppose a potion of the population density adjustment table looks like this: Distict A density = 200 Statewide density = 400 o Density adjustment would be 2.00 (because the state aveage is two-times as big as the distict density). This means the Distict A's pe capita amount will be doubled. If this sounds excessive, DPH can decide that only 20% (fo example) of the pe capita payment is subject to density adjustments. This dampens the impact fom 2.00 down to It still means a 20 pecent incease fo distict A. Most of the adjustments ae diven by fomula and not by table. Fomula diven adjustments may be hade than tables to undestand at fist. Howeve, they behave much bette once implemented fo a vaiety of easons: o Tables gow out-of-date quickly. Fo example, as populations move, what might have been consideed 'densely populated' five yeas ago might seem only mildly dense in the futue. o Thee ae 'theshold' issues with tables. Fo example, suppose that population densities of got a 50% bonus and densities got only a 25% bonus. A distict with a density of 102 would find it athe unfai that a vitually identical distict with a density of 98 was getting a much highe bonus. o Computation is easie. o The fomulas can be 'sold' in an identical fashion to the tables. Fo example, both could state the simple ule that 'less densely populated disticts get highe pe capita payments'. Whethe done though fomula o table does not change the fundamental concept. Vesion: (FINAL Distict Funding) page 11 of 12

12 3 Appendix 3.1 Refeences BCBOHA, 2009a Bekshie County Boads of Health Association. "LBOH Coe Duties." Povided in e- mail fom P. Walke dated Febuay Benet, 2008a Benet, Patick M. "Bidging the elationship between public health funding and outcomes." Ameican Public Health Association Annual Meeting San Diego, CA Octobe 28, MADOR, 2008a Massachusetts Depatment of Revenue. "2006 Equalized Valuations." Downloaded fom on 10/01/2008. MDPH, 2009a Massachusetts Depatment of Public Health. "Public health sevice condensed list." Povided in fom P. Walke dated Febuay MGIS Massachusetts Geogaphic Infomation System. "File with land aea and population by township." Downloaded 10/06/2008 fom PHFSC, 1994 Public Health Functions Steeing Committee. Pubic Health in Ameica Downloaded fom web.health.gov/phfunctions.. Vesion: (FINAL Distict Funding) page 12 of 12