Memorandum
Date: December 9, 2025
To: The Honorable Lake County Board of Supervisors
From: Elise Jones, Director of Lake County Behavioral Health Services
Subject: Lake County Behavioral Health Services Fiscal Recovery Plan - Status Update and Board Endorsement of Ongoing Implementation
Executive Summary:
Lake County Behavioral Health Services (LCBHS) has taken significant steps to stabilize its financial position following the cash flow challenges created by delayed state reimbursements and the front-loaded cost structure of the Medi-Cal Intergovernmental Transfer (IGT) process.
Over the past several months, the Department has implemented a disciplined Fiscal Recovery Plan focused on three priorities:
1. Protect payroll and essential services.
2. Align provider payments to the timing of state receipts.
3. Build long-term fiscal controls to prevent recurrence.
To achieve these goals, LCBHS has:
• Developed a 12-week cash runway to forecast weekly inflows, payroll, and vendor payments.
• Adopted a receipt-linked disbursement policy, releasing payments only after the related state funds are received.
• Established a vendor prioritization framework that ensures life-safety, placement, and essential community providers are paid first.
• Begun weekly reconciliation with the Department of Health Care Services (DHCS) to track pending claims, state draws, and any payment offsets (“intercepts”).
• Re-aligned major contracts under firm spending caps and pass-through ceilings to prevent cost overruns.
Despite ongoing state payment delays, these measures have prevented service disruptions, maintained payroll, and given the Department a predictable financial roadmap.
LCBHS is also collaborating with DHCS and other small counties on process improvements, including:
• A weekly payment tracker showing claim status from submission to state payment.
• Same-day notice of any intercepts or reductions.
• Clear processing time targets and transparency on how the state calculates county “target balances.”
• A small-county expedited lane and authority for partial payments when county match funds are already on deposit.
The Department will continue to provide weekly internal cash-flow updates and will return to the Board in early 2026 with a progress report and loan-repayment plan.
Requested Board Actions (Dec 9):
1. Endorse continuation of the receipt-linked disbursement policy and two-payroll reserve floor.
2. Support the Department’s state advocacy efforts for greater payment transparency and small-county flexibility.
3. Acknowledge the Department’s corrective progress and authorize ongoing fiscal stabilization measures through June 2026.
If not budgeted, fill in the blanks below only:
Estimated Cost: ________ Amount Budgeted: ________ Additional Requested: ________ Future Annual Cost: ________
Purchasing Considerations (check all that apply): ☒ Not applicable
☐ Fully Article X. <https://library.municode.com/ca/lake_county/codes/code_of_ordinances?nodeId=COOR_CH2AD_ARTXPU_S2-38EXCOBI>- and/or Consultant Selection Policy <http://lcnet.co.lake.ca.us/Assets/Intranet/Policy/Policies+$!26+Procedures+Manual/Ch4_2021v2.pdf>-Compliant (describe process undertaken in “Executive Summary”)
☐ Section 2-38 <https://library.municode.com/ca/lake_county/codes/code_of_ordinances?nodeId=COOR_CH2AD_ARTXPU_S2-38EXCOBI> Exemption from Competitive Bidding (rationale in “Executive Summary,” attach documentation, as needed)
☐ For Technology Purchases: Vetted and Supported by the Technology Governance Committee <http://lcnet.co.lake.ca.us/Assets/Intranet/Intranet+Forms/Information+Technology/AdvPlan.pdf> (“Yes,” if checked)
☐ Other (Please describe in Executive Summary)
Consistency with Vision 2028 <http://www.lakecountyca.gov/Government/Directory/Administration/Visioning/Vision2028.htm> (check all that apply): ☐ Not applicable
☐ Well-being of Residents ☐ Public Safety ☐ Disaster Prevention, Preparedness, Recovery
☒ Economic Development ☐ Infrastructure ☐ County Workforce
☐ Community Collaboration ☒ Business Process Efficiency ☐ Clear Lake
Recommended Action:
1. Receive the staff presentation on the LCBHS Fiscal Recovery Plan and accept the status update.
2. Endorse ongoing implementation of the Fiscal Recovery Plan, including:
a. A receipt-linked disbursement policy (sequence provider payments to state receipts).
b. A two-payroll cash reserve floor as an operating guardrail.
c. Use of payment waves and partial payments to maintain essential services (patient safety, licensed placements, core partners).
d. Contract controls (spend caps/ceilings, true-ups, and monitoring of spend vs. cap).
3. Authorize the Director of LCBHS (or designee) to continue these measures and make operational adjustments necessary to protect service continuity, within the adopted budget.
4. Support LCBHS’s state-level process improvements, including weekly payment status reporting, same-day intercept notice, reasonable processing time targets, and small-county stabilizers.
5. Direct staff to report back to the Board in January 2026 with an updated cash forecast, provider payment status, and any recommended budget actions.