Authors:

Abstract

This paper analyzes "program realignment," California's 1991 policy of decentralizing provision of public services, on indigent health spending. Realignment gave California's counties more fiscal and administrative control in the delivery of health and welfare services, providing counties with state tax revenues and vehicle fees, and flexibility to transfer funds among services. Drawing from the economics literature on intergovernmental transfers and using a data base constructed for this study, we analyze the impact of realignment on indigent health spending, an area of the program that has yet to be studied. Our analysis reveals that realignment has had minimal impact on the pattern of indigent health spending in the counties, which is consistent with a kind of fiscal inertia that is often observed in other settings in which government decentralization occurs.