The State Department of Mental Health, or its successor, the State Department of State Hospitals, shall be reimbursed for use of state hospital beds by counties pursuant to Part 1 (commencing with Section 5000) of Division 5 as follows:

(a) (1) For the 1991–92 fiscal year, the department shall receive reimbursement in accordance with subdivision (b) of Section 17601. This total may be adjusted to reflect any and all amounts previously unallocated or held in reserve for use by small counties and any adjustments made pursuant to Chapter 1341 of the Statutes of 1990.

(2) It is the intent of the Legislature to encourage and allow greater flexibility with respect to resources during the first transitional year, and, to this end, the Director of Mental Health, or his or her successor, the Director of State Hospitals, may implement proposals for purchase in or purchase out of, state hospital beds which were proposed in accordance with Chapter 1341 of the Statutes of 1990.

(3) Funds and bed days historically allocated to small counties shall be allocated to counties with no allocation.

(b)  Each fiscal year, the State Department of Mental Health, or its successor, the State Department of State Hospitals, shall be reimbursed in accordance with the contracts entered into pursuant to Section 4331.

(c) The rate of reimbursement which shall apply each fiscal year shall be determined by the State Department of Mental Health, or its successor, the State Department of State Hospitals, and shall include all actual costs determined by hospital and by type of service provided. Any costs resulting from overexpenditure in the previous year shall be clearly separated from actual costs projected for the contract year and identified as a part of the rate negotiation. Costs shall not include costs incurred for capital outlay relating to existing facilities or capacity, which shall remain the responsibility of the state. Costs for capital outlay related to future expansions or construction of new facilities requested by any county or cost related to innovative arrangements under Section 4355 shall be a cost to the county unless the expansion, construction or innovative arrangements are determined to be of statewide benefit. Pursuant to Section 11343 of the Government Code, the rate of reimbursement shall not be subject to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.

(d) After final determination of state hospital costs for patients covered under Part 1 (commencing with Section 5000) of Division 5, funds that remain unencumbered at the close of the fiscal year shall be made available to counties that used fewer state hospital beds than their contracted number, proportional to the contracted amount not used, but this amount shall not exceed the value of the unused contracted amount. These funds shall be used for mental health purposes.

(Amended by Stats. 2012, Ch. 24, Sec. 113. (AB 1470) Effective June 27, 2012.)