Finding California’s Biggest Payees

California lags behind other states in transparency because it has not produced an on-line checkbook, showing detailed spending information by payee. The state does tell us how tax money is allocated by purposes (health, education, corrections, etc.), but it doesn’t tell us who receives this money.

When using the term payee, I am including any entity that receives money from the state other than employees and units of the state government. We know about state employee compensation by virtue of Transparent California. My concept of a payee also excludes California State University – which is part of the state – and University of California – which is a subsidiary (or “separately reporting component” in government accounting terms).

In a previous post, I gave the state controller’s explanation for the absence of a checkbook: payments are issued by 500 different departments, agencies and commissions and have not been totaled up anywhere.

Still, it is possible to identify many organizations that receive large amounts of money from the state by combing through on-line data sets and issuing public records requests. In early December, I obtained details of $18 billion in FY 2015 Medi-Cal spending via a public records request. That data, encompassing a list of over 30,000 payees and how much each received, is now available at openthebooks.com. Unfortunately, the spending details I received constitute a small fraction of the $85 billion the Department of Healthcare Services paid out last year.

A review of budgets and on-line records suggests that the state’s biggest payees are hospitals, school districts and contractors.

Hospitals

Big hospitals that serve large numbers of low-income patients each receive hundreds of millions of dollars annually. These reimbursements can be found in data published by the California Office of Statewide Health Planning & Development. The latest tabulated data is available for each hospital’s 2013 fiscal year at but is embedded in an enormous spreadsheet.

Here is a list of hospitals that received over $300 million in 2013 from Medi-Cal:

In Fiscal Year 2014, LAC/USC Medical Center received $717 million from Medi-Cal, substantially more than the $554 million shown above.  This was due to Medicaid expansion under ObamaCare, which kicked in at the beginning of calendar 2014. It is thus likely that all of the hospitals shown above received substantially more money in FY 2014 and 2015, than shown in the table.

Finally, it is worth noting that the amounts shown in this list are higher than those I received from the Department of Healthcare Services in response to my Public Records Act request – reinforcing my belief that their response was incomplete.

School Districts

Education is the largest component of state general fund spending and most of this money is parceled out (or “apportioned”) to individual school districts. The California Department of Education publishes district-by-district apportionment data on a regular basis. The districts that received over $300 million in apportionments are shown here:

It is not surprising that Los Angeles Unified tops the list (and appears to be the state’s largest payee in any category) because it is by far the largest school district in the state. That said, apportionments aren’t just based on enrollment; student need is also considered. This may be one reason that San Francisco Unified and San Jose Unified don’t appear on this list.

Contractors

Other state departments, such as CalTrans, DMV and the new High-Speed Rail Authority outsource large projects to big corporations that provide highly specialized services. Annual spending data is not available for these companies, but the Department of General Services does provide a lists of contracts and committed amounts. These large contracts typically span several years, so the amounts in the DGS disclosures are not comparable to the Medi-Cal reimbursements and school district apportionments shown above.

With that in mind, here is a list of the companies actively working on the largest state contracts:

The first three companies on this list are providing design and construction services for the state’s high speed rail authority. Elavon – a unit of US Bancorp – provides credit card merchant services to the Department of Motor Vehicles and other agencies. In 2014, the company apparently suffered a hacking incident resulting in the release of credit card information for California drivers. Dyncorp helps that state with its annual wildfire suppression efforts. Maximus handles healthcare claims administration for the Department of Healthcare Services.

Real Checkbook Needed

This analysis provides just a taste of what would be possible if the State of California had a real on-line checkbook – like most other states already provide. The idea that state payee data should be more transparent crosses the ideological spectrum.  Some of the best research and advocacy in this area has come from Service Employees International Union Local 1000. So this is really not a left versus right issue: transparent government is about getting better results for each dollar spent. The issue of whether savings go to more programs or are offset by tax rate reductions can be debated separately.