Budget Watch

In an effort to keep our stakeholders informed about the state of California budget, and how the budget will impact funding, as well as programs and services, we post news on “Budget Watch”. This page features updates from the Governor and Legislature, links to important news articles and various budget and advocacy related web sites, as well as important information about how you can get involved to make a difference. Visit this page regularly to keep current on budget issues.

CDCAN Reports on Proposed Cuts to Developmental Service and IHSS

State Budget Crisis - Summary of Proposals:

GOVERNOR PROPOSES OVER $2 BILLION REDUCTIONS TO HEALTH AND HUMAN SERVICES - BULK OF CUTS TARGET CALWORKS & MEDI-CAL PROGRAMS -

MAJOR CUTS PROPOSED ALSO TO DEVELOPMENTAL SERVICES AND IN-HOME SUPPORTIVE SERVICES; PROPOSES ELIMINATION OF CAREGIVER RESOURCE CENTERS - GOVERNOR HOPES VOTERS IN NOVEMBER WILL APPROVE $7 BILLION IN TEMPORARY TAX INCREASES TO AVOID ADDITIONAL NEW CUTS TO K-12 EDUCATION & HIGHER EDUCATION - ALL PROPOSALS STILL REQUIRE APPROVAL OF LEGISLATURE - STEINBERG NOT INCLINED FOR STATE SENATE TO PASS CUTS UNTIL UPDATED REVENUE NUMBERS ARE AVAILABLE IN MAY

SACRAMENTO, CA (CDCAN) [Last updated 01/06/2012 05:00 PM] - Governor Jerry Brown released his proposed 2012-2013 State Budget plan late Thursday afternoon (January 5th) that calls for a staggering $4 billion in additional massive spending cuts and nearly $7 billion in new revenues from temporary tax increases on the state's wealthiest taxpayers and a one-half percent increase in the state's sales tax, to close what the Governor said is a projected $9.2 billion budget deficit.

Over $2 billion of the total $4 billion in new cuts will come from health and human services, with reductions there largely centered on four major programs - CalWORKS and child care, Medi-Cal, In-Home Supportive Services and developmental services. Major and dramatic changes proposed by the Governor will also impact other areas, including proposals to replace the Department of Mental Health with a new Department of State Hospital which was previously brought up last May; the proposed elimination of the 11 Caregiver Resource Centers, and a proposal calling for the elimination of the Managed Risk Medical Insurance Board.

The new proposed reductions appear to be addition to the $1 billion in spending cuts announced in mid-December by the Governor when he also announced that the 2011-2012 State Budget "trigger cuts" would be pulled because projected revenues fell below what was budgeted. However the Governor's budget summary totals do not appear to reflect those reductions, though the narrative and specific details from department estimates do.

The Governor wants the Legislature to fast-track some of his proposals - including his proposals impacting CalWORKS and child care - seeking passage of those proposals by March. State Senate President Darrell Steinberg (Democrat - Sacramento, 6th State Senate District) said yesterday that he was not inclined to fast-track proposed cuts given the chance that the economy could continue to improve bringing in higher than expected state revenues by May - and indicated he wanted to wait until then to make decisions on program cuts (see below for full text of his statement).

Impact of Proposed Cuts Will Touch Hundreds of Thousands - But Impact Will Vary

The impact of the sweeping reductions to hundreds of thousands of children and adults with disabilities - including those with developmental disabilities - people with mental health needs, the blind, seniors and their families, community-based organizations, facilities, individual workers and low income families will vary because some proposed cuts deal with potential loss of actual services (as in the case of CalWORKS and In-Home Supportive Services) or outright elimination of a program (such as the Caregiver Resource Centers), while other cuts will result in a reduction in State spending due to significant decrease in the use or cost of certain services (referred to as "utilization") - as in the case of people transitioning from Medi-Cal "fee for service" into Medi-Cal managed care plans.

And in some cases the impact is not yet known because the specific cuts have not yet been identified (as in the case of developmental services).

Others are still reeling from the impact of reductions and program eliminations carried out in the past year and half including the spreading impact of previous cuts made in 2009, 2010 and 2011 to the community-based system funded by regional centers to serve people with developmental disabilities, and the elimination of Adult Day Health Care as a Medi-Cal benefit now scheduled at the end of February. Adult Day Health Care will be in part, replaced as Medi-Cal benefit by the creation of the new "Community-Based Adult Services" program, that will serve about 15,000 of the 34,000 people with disabilities and seniors who are in the Adult Day Health Care program. .

California Health and Human Services Agency Secretary Diana Dooley, who, along with her department directors and staff, held a two hour long conference call late Thursday afternoon to provide an update on the Governor's proposed budget and to answer questions with a large statewide audience of advocates and other members of the public, said the Administration understood the deep concerns of loss of services and supports, saying that she knew that "...there are consequences to every one of these reductions" . Dooley and the department directors stayed on the conference call for the entire over two hours until every question was answered and was praised for her candid responses and willingness to listen.

Governor Warns Budget Plan Hinges on Temporary Tax Increases, Prevailing In Court and the Economy

The Governor warned during his press conference Thursday that success of his budget plan hinged on many factors including both the State, national and world economic picture over the coming year and also whether or not voters approve his proposal to temporarily raise taxes. The Governor has launched an effort to place on the November 2012 ballot by petition his tax proposals but had in his budget new "trigger cuts" in the event voters rejected his proposal..

The size of the shortfall is less than the nearly $13 billion hole the non-partisan Legislative Analyst projected in mid-November that the State would face by the end of June 2013 unless the Governor and Legislature took action.

The proposed budget plan - originally scheduled to be released January 10th - was moved up hastily because some budget documents were posted by mistake on the Governor's Department of Finance website on Thursday. The unexpected early release of the budget caught many by surprise, resulting in state agency and department officials, advocates, lobbyists, media, legislators and staff by scrambling at the last minute to react and respond.

November 2012 Ballot State Budget Trigger Cuts

The Governor's proposed 2012-2013 State Budget includes $5.390 billion in additional automatic spending cuts to go into effect if voters reject his ballot initiatives that call for $7 billion in temporary tax increases.

These new "trigger cut" reductions do not include any health and human services budget areas since those programs were hit hard by when the 2011-2012 State budget "trigger cut" was pulled in mid-December when state revenues it was determined by the Governor's Department of Finance that state revenues would fall significantly short of what was budgeted.

The Governor's proposed spending cuts in his 2012-2013 State Budget - including the over $2 billion in cuts to health and human services will go forward - if approved by the Legislature - whether or not the temporary tax increse ballot initiative passes or fails in November.

The following budget areas would be impacted by the November 2012 ballot "trigger cut":

* K-12 education and community colleges - $4.800 billion reduction

* University of California - $200 million reduction

* California State University - $200 million reduction

* Courts - $125 million reduction

* Department of Forestry and Fire Protection - $15 million reduction

* Flood Control - $6.6 million reduction

* Fish and Game - Non-Warden Programs - $2.5 million reduction

* Fish and Game Wardens - $1 million reduction

* Park Rangers - $1 million reduction

* Park Lifeguards - $1 million reduction

* Department of Justice - $1 million reduction

NEXT STEPS

LEGISLATURE:

* Both Assembly and State Senate full budget committees will likely hold hearings within the next week to provide an overview of the Governor's budget proposal - though not hear specific details and public testimony. No hearings have yet been officially announced - though that is expected by early next week.

* It is not clear yet how the Assembly and Senate will proceed in considering the Governor's budget proposals. Most of the proposals are clearly for implementation sometime during the 2012-2013 State Budget year and would go the normal budget process route with subcommittee hearings beginning likely in late February through May. However the Governor wants the Legislature to fast-track some of his proposals - including his proposals impacting CalWORKS and child care - seeking passage of those proposals by March. State Senate President Darrell Steinberg (Democrat - Sacramento, 6th State Senate District) said yesterday that he was not inclined to fast-track proposed cuts given the chance that the economy could continue to improve bringing in higher than expected state revenues by May - and indicated he wanted to wait until then to make decisions on program cuts (see below for full text of his statement).

GOVERNOR:

* The Brown Administration, while releasing the Governor's proposed budget plan five days early, still needs to release more details, and any proposed budget legislative language (called "budget trailer bill language") that is needed to make changes to existing State law in order to implement his proposal. The proposed language is important - more than the Governor's budget summary of his proposals or even the details provided in the more extensive department budget summaries - because it is the language that adds or makes changes to State law to actually implement his proposal, including a proposed cut.

* The Governor will make revisions to his January budget proposal in mid-May - referred to as the "May Revision" or the "May Revise" using more updated spending and revenue figures. Governors often change, add or rescind budget proposals - and it is that document that the Legislature really takes final action from.

* Governor is pursuing efforts to qualify his proposed temporary tax increase initiative for the November 2012 ballot (via signatures) and is talking with various groups on possibly getting them to withdraw or hold off on placing their own tax increase initiatives on the same election.

OTHERS

* Legislative Analyst Office (LAO), the non-partisan budget analyst for the Legislature, will release its analysis and review of the Governor's proposed spending plan, usually in early February, with an updated forecast on the state's budget shortfall, including updated spending and revenue numbers.

REACTION BY LEGISLATIVE LEADERS TO GOVERNOR'S BUDGET

State Senate President Darrell Steinberg (Democrat - Sacramento, 6th State Senate District) in response to the Governor's budget said that "Together, we have made a giant dent in a once overwhelming budget deficit. The price has been high for students, working families and those struggling to improve their lives. Those cuts have real consequences on the lives of real people, and I am wary of immediately continuing down that path."

But Steinberg was not inclined to fast-track certain spending cuts through the budget process by March as the Governor is asking, saying that "Between revenue estimates by the Legislative Analyst’s Office in November, and the Department of Finances numbers in December, projected revenues increased $1.5 billion. If that trend continues even slightly, we may avoid the need to make the kinds of cuts the Governor now suggests. While in the end we may have to cut more, doing it now should be a last resort.

We will begin budget hearings this month on the 2012-13 budget.”

Assembly Speaker John Perez (Democrat - Los Angeles, 46th Assembly District) issued this brief statement on the Governor's proposed budget: ""The Governor's budget plan reflects the fact that even though California's economic recovery is gaining strength, we still face a year of difficult choices. His plan underscores the need for new revenues to avoid cuts that will be a major drag on the recovery, and I am looking forward to working with the Governor and my colleagues to produce an on-time budget that reflects California's values by our June 15th deadline."

Newly elected Senate Republican Leader Bob Huff (Republican - Diamond Bar, 29th State Senate District) praised Brown's budget plan as "...a good first step" but that said that it "...relies far too much on a $7 billion tax hike that voters are likely to reject."

Huff said that "Senate Republicans are pleased to hear the Governor admit that the economy is improving. Revenues are up by 3.5% this year and are projected to grow at a faster pace in the years to come. We remain focused on working with the Governor and our colleagues in the Legislature to reduce the wall of debt and to adopt the reforms needed to make California government more efficient, effective and competitive. The anticipated growth in revenues will help us to bring spending in line with revenues without a $7 billion increase in taxes.

Assembly Republican Leader Connie Conway (Republican - Tulare, 34th Assembly District) criticized governor Brown's budget plan in a statement saying that "It is disappointing to see Governor Brown propose yet another reckless budget scheme. His plan relies upon a painful $35 billion tax increase on hard-working California families so Sacramento can grow General Fund spending by 7 percent. With the economy improving and revenues on the rise naturally, we must live within our means. '

"The Governor's budget also expands his dangerous public safety realignment plan, which will lead to more criminals being housed in communities across the state. Ironically, the Governor's budget will grow Corrections spending, despite the fact that 10,000 inmates have been sent to already overcrowded local jails.

"The news that tax revenue to the state is growing significantly shows that lowering taxes stimulates the economy. Assembly Republicans will again stand as the last line of defense for taxpayers, fighting hard to bring back private sector jobs, reform government, end wasteful spending and stop the Governor's costly tax increase. We believe Sacramento's focus should be growing the economy and getting spending under control, not trying to raise taxes."

TEXT OF GOVERNOR’S MESSAGE TO LEGISLATURE

To the Senate and the Assembly of the California Legislature:

I hereby submit to you my proposed Budget for 201213.

When I came into office, California was facing an immediate $26.6 billion budget gap and future budget deficits of $20 billion a year.

In January of 2011, I proposed a budget that combined deep cuts with a temporary extension of some existing taxes. It was a balanced approach that would have finally closed our budget gap. In the end, the taxes were not extended and massive cuts — totaling $16 billion — were enacted.

The 2011 budget did, however, lay the foundation for fiscal stability. It cut the annual budget shortfall by threequarters — from $20 billion to $5 billion or less. It shrunk state government, reduced our borrowing costs and gave local governments more authority to make decisions.

The budget that I am submitting today keeps the cuts made last year and adds new ones. The stark truth is that without some new taxes, damaging cuts to schools, universities, public safety and our courts will only increase.

That is why I will ask the voters to approve a temporary tax increase on the wealthy, a modest and temporary increase in the sales tax and to guarantee that the new revenues be spent only on education. I am also asking that the voters guarantee ongoing funding for local public safety programs. This ballot measure will not solve all of our fiscal problems, but it will stop further cuts to education and public safety and halt the trend of doubledigit tuition increases.

 

My budget plan also includes important reforms. It improves government efficiency and pays down debt. It reorganizes state government to make it more efficient and saves tax dollars by consolidating or eliminating functions. It restructures social service programs to better support working families. It gives substantially more flexibility and decisionmaking to local school districts. The plan also calls for bold investments in our future: to assure a reliable water supply, build high speed rail and reduce greenhouse gas emissions.

As California’s economy continues to slowly recover — and recover it will — our plan will provide fiscal stability and make California government more transparent and responsive to the people.

I look forward to working with you in the coming year.

[signed]

Edmund G. Brown, Jr.

 

CDCAN SUMMARY OF GOVERNOR'S BUDGET PROPOSALS IMPACTING HEALTH AND HUMAN SERVICES

The following is a CDCAN summary of the Governor's budget proposals - good, bad and uncertain - in the health and human services budget that impacts children and adults with disabilities, mental health needs, the blind, seniors, their families, community-based organizations, facilities and individual workers and low income families:

MENTAL HEALTH

Mental health services, as authorized by the 2011-2012 State Budget last year, is going through a major transition, with many community-based services being shifted to the counties, some services such as those mandated by AB 3632 being shifted back to the schools – and other services or oversight transferred to the Departments of Health Care Services, Public Health or the Mental Health Services Act Oversight Commission. Operations of the state hospital will be overseen by a newly created Department of State Hospitals, that will replace the existing Department of Mental Health.

NEW DEPARTMENT OF STATE HOSPITALS

* The Governor’s budget establishes, as announced December 7, 2011, a new Department of State Hospitals that will replace the existing Department of Mental Health (the community-based mental health services are being transitioned to other departments – including Department of Health Services, Public Health or to the counties or to the Mental Health Services Act Oversight Commission).

* The new Department of State Hospitals structure will be implemented at California’s five mental health hospitals: Metro, Atascadero, Napa, Coalinga and Patton, along with two psychiatric programs at Vacaville and Salinas Valley state prisons.

ELIMINATION OF CAREGIVER RESOURCE CENTER FUNDING

* Governor is proposing a reduction of $2.9 million in State general fund spending in the 2012-2013 State Budget due to eliminating all contract funding for these centers.

* The 11 centers were created about 28 years ago by the Comprehensive Act for Families and Caregivers of Brain-Impaired Adults and serve thousands of families and caregivers of persons with Alzheimer’s, strokes, Parkinson’s and other disorders.

SSI/SSP

The federal Supplemental Security Income (SSI) and the state funded portion – State Supplemental Payment (SSP) provide cash monthly grants to eligible individuals and couples. In the 2010-2011 State Budget year that ended June 30, 2011, the caseload for SSI/SSP was 1,266,6552 people of which 70% (886,666 people) are persons with disabilities, 28% (360,547 people) of that total are seniors (aged); 2% (19,439 people) are persons who are blind.

COST OF LIVING ADJUSTMENT

* The automatic federal cost of living adjustment (COLA) that goes into effect each year on January 1st, was passed through and (and will continue to be passed through) to SSI/SSP recipients.

* No federal cost of living adjustments were given in January 2010 and 2011 because the economic measurement by which the COLA is determined did not provide for any increase. (California cannot withhold this and future cost of living adjustments from the federal government because it lowered the SSP portion of the grants for both couples and individuals to the lowest level allowed by the federal government in previous budget years)

NO NEW REDUCTIONS

* No new reductions or other changes in the Governor’s proposed 2012-2013 State Budget to SSI/SSP

CAPI (CASH ASSISTANCE PROGRAM FOR IMMIGRANTS)

This program serves eligible legal immigrants who are seniors (aged), blind, and/or persons with disabilities who are not eligible for SSI/SSP, providing grants equal to SSI/SSP, minus $10 per individual grant and minus $20 per grant for couples.

NO NEW REDUCTIONS

* No new reductions or proposals to eliminate this program in the Governor’s proposed 2012-2013 State Budget.

DEVELOPMENTAL SERVICES (REGIONAL CENTERS & DEVELOPMENTAL CENTERS)

The total budget for the Department of Developmental Services proposed in the 2012-2013 State Budget year is $4.661 billion (of which $2.652 billion is State general funds), to serve a projected caseload of 256,059 children and adults with developmental disabilities in community-based services coordinated through the 21 non-profit regional centers, and 1,759 people with developmental disabilities who reside in one of the four remaining developmental centers or a smaller health facility that are operated by the State. The budget for regional centers proposed for 2012-2013 totals 4.063 billion ($2.344 billion of that State general funds). The Developmental Center budget proposed for the 2012-2013 State Budget year totals $559 million ($283.6 million of that State general funds). [CDCAN Note: CDCAN will issue a more detailed report on the proposals impacting developmental services later today or by the weekend]

CASELOAD FUNDING INCREASE

* The Governor’s budget proposes an increase of $162.7 million ($115.2 million of that State general funds) for regional center operations and the purchase of services (purchase of services is the part of the regional center budget that pays for community-based services) due to a projected increase in regional center caseload of 6,232 people during the 2012-2013 State budget year.

FINANCIAL MANAGEMENT SERVICES INCREASE

* Governor proposing a $9 million increase ($4.5 million of that State general funds) for financial management services (required by the federal government) to account for tiered rates and 100% of people with developmental disabilities using participant directed option for certian services being covered. Community-based training services were added.

EXPIRATION OF 4.25% REGIONAL OPERATIONS AND PROVIDER PAYMENT REDUCTION

* Governor’s budget includes an increase of $158.2 million ($108.4 million of that State general funds) in the 2012-2013 State Budget as a result of the current 4.25% payment reduction to most regional center providers and to regional center operations that is set to expire on June 30, 2012.

* It is possible that this payment reduction or some form of it could be extended into the 2012-2013 Budget year if the Brown Administration eventually decides with stakeholder input that extending the cut would help achieve the overall $200 million reduction in State general fund spending in the developmental services budget required by the 2011-2012 State Budget trigger cut that was pulled in mid-December.

STATE BUDGET TRIGGER CUT - $200 MILLION

* The Governor's budget includes a total $200 million reduction in State general fund spending covering both the 2011-2012 State Budget year – and the 2012-2013 State Budget year. There is no indication that this $100 million reduction is a permanent on-going cut that will automatically be applied to subsequent budget years.

* The Department of Developmental Services indicated earlier that it believes that much of the reduction for the 2011-2012 State Budget year can come from higher than expected savings resulting from implementation of previously approved budget reductions and policy changes, caseload and expenditure adjustments, unexpended contract funds and other administrative savings.

* However achieving the $100 million reduction during the 2012-2013 State Budget year will require likely actual cuts in spending, possibly by extending the 4.25% payment reduction to most regional center providers and regional center operations or some other similar type of program reduction.

* The Governor’s budget does not specify how the $200 million overall spending reduction is to be achieved but allows the Department of Developmental Services to consider many options including payment reductions to regional center providers and operations, cuts to the developmental center budget, to headquarters, and other savings.

* The actual size of the reduction - when taking into account possible loss of federal matching funds, could mean the hit to the developmental services system could be twice as high - meaning a $100 million cut that is to programs or services matched by federal Medicaid dollars would mean the actual cut to the system would be $200 million, depending how reductions are identified and made.

* The department will be convening a stakeholder process to receive input and ideas on how to achieve the reduction target. Any actual reduction to programs or services – such as extending or increasing payment reductions to providers or operations – would require legislation and approval of the Legislature. The Department of Developmental Services under the Brown Administration will consider various options to achieve the target of $200 million in cuts in State general fund spending including the extension of all or part of the 4.25% payment reduction (set to expire June 30, 2012), ideas to decrease the need for admissions from the community into Developmental Centers, opportunities to achieve "efficiencies through emerging technologies" and, as mentioned earlier, additional savings and reduced spending due to recently enacted legislation and budget reductions.

DEVELOPMENTAL CENTERS

* The Governor’s budget assumes that caseload in the developmental centers (and one smaller health facility) operated by the State will fall from 1,759 in the current budget year to 1,533 during the 2012-2013 State budget year, for a decrease of 226 people.

* The Department of Developmental Services indicated that most of that number will result from the transition of people moving from Lanterman Developmental Center – but some of the number would be a result of other factors, including the cap on referring people to the Porterville Developmental Center’s secure treatment program.

* Closure process of Lanterman Developmental Center in Pomona will continue into the 2012-2013 State Budget year, though no exact closure date is set. Increase of $2.9 million ($1.6 million of that State general funds) to retain 28 positions for "enhanced" Lanterman Developmental Center Closure staffing, that the department says is needed for the "...continued safe and successful transition of residents and continuation of all closure related activities in support of approximately 180 residents transitioning to community living arrangements" during the 2011-2012 and 2012-2013 State Budget years.

* Increase of $2.4 million in reimbursement authority for the state staff in the Community program

* Decrease of $24.5 million ($14.4 million of that State general funds) for Level of Care and Non-Level of Care updated staffing. The department says that a portion of the staffing updates are "counted towards the Administration's state wide operational efficiencies savings plan."

* Net decrease of $5.2 million ($2.6 million of that State general funds) due to statewide changes (referred to as 'control sections") that resulted in adjustments in retirement, health benefits rates, and personal services cost reductions achieved through collective bargaining or actions of the Governor in state employee compensation during the 2011-2012 State Budget year.

* Net increase of $4.5 million ($2.7 million of that State general funds) due to statewide changes (referred to as "control sections") that resulted in adjustments in retirement and health benefits rates.

* Decrease of $3 million ($2.5 million of that State general funds) due to updated Quality Assurance fees paid by Developmental Centers for the 2011-2012 State Budget year.

* Decrease of $3 million ($2.5 million of that State general funds) due to updated Quality Assurance fees paid by Developmental Centers for the 2012-2013 State Budget year.

MEDI-CAL MANAGED CARE FOR PERSONS ELIGIBLE FOR MEDI-CAL & MEDICARE

* The Governor proposes (see details under Medi-Cal and IHSS) to shift people eligible for both Medi-Cal and Medicare (referred to as dual eligible) from Medi-Cal fee for service” to Medi-Cal managed are plans and make certain community-based services such as In-Home Supportive Services, Community-Based Adult Services (which is the new model of Adult Day Health Care) Medi-Cal managed care plan benefits.

* The Governor’s proposal specifically mentioned however that community-based services coordinated by regional centers under the Home and Community-Based Developmental Disabilities (DD) Medicaid waiver, would still continue to be administered by the Department of Developmental Services meaning it would not be a Medi-Cal managed care benefit.

* However people with developmental disabilities will be impacted by the transition, since those who are dual eligible for Medi-Cal and Medicare would be transitioned into a Medi-Cal managed care plan for their health services and for those community-based services, such as IHSS, which regional centers do not coordinate or fund.

IHSS (IN-HOME SUPPORTIVE SERVICES)

Over 433,000 children and adults with disabilities (including developmental), the blind, mental health needs and seniors are in the IHSS program that is almost completely Medi-Cal funded.

DOMESTIC AND RELATED SERVICES REDUCTION

* Governor proposes elimination of domestic and related services (ie housework, shopping for food, meal preparations and clean-up and laundry).for IHSS recipients living in a "shared living arrangement" – excluding those IHSS recipients who reside only with other IHSS recipients.

* A shared living arrangement is defined as a living arrangement in which a IHSS recipient lives in a dwelling with another individual.

* The IHSS services provided in common to an IHSS recipient only shared living arrangement” (meaning a living situation of only IHSS recipients) will be prorated against the IHSS service hours or each of the recipients.

* This proposal will require budget related legislation (referred to as 'budget trailer bill language") that the Department of Social Services will need to submit the Legislature in the coming weeks or months.

STATE BUDGET TRIGGER CUT - 20% ACROSS THE BOARD CUT (STOPPED FOR NOW BY COURT ORDER)

* Authorized in the 2011-2012 State Budget as one of the automatic additonal spending cuts if the state budget "trigger cut" was pulled in December. That trigger was pulled in December because the Governor's Department of Finance determined that state revenues would fall short of what was budgeted.

* The $100 million reduction in State general fund spending to the IHSS program from this "trigger cut" would be achieved by implementing a 20% across-the-board cut in IHSS service hours for all IHSS recipients, with several important exceptions. (exempting recipients under protective supervision or receiving paramedical services; also partial or complete restoration of the 20% cut to those IHSS recipients who are eligible and file for Supplemental Care).

* This reduction would be on top of the existing 3.6% cut for a total of reduction of 23.6%

* Originally scheduled to go into effect January 1, 2012, but is currently blocked by a temporary restraining order issued in December by a federal district court, with a court hearing set for January 19th that could extend that order for a longer period of time.

* Governor’s proposed budget assumes it will win in the courts and that this reduction will go into effect April 1, 2012. However the Governor’s proposed budget does include state general funds “set aside for the IHSS program if the courts rule against the State and the 20% across-the-board cut continues to be blocked.

3.6% ACROSS-THE-BOARD IHSS SERVICE HOURS REDUCTION

* The Governor is not proposing to extend this 3.6% cut in his 2012-2013 State Budget, which means this particular cut will end as of June 30, 2012 unless the Governor and Legislature decide later in the budget process to extend it.

IHSS PUBLIC AUTHORITY ADMINISTRATION

* No change or additional new reductions

IHSS ADVISORY COMMITTEES

* No other changes or additional new reductions proposed by the Governor in his 2012-2013 State Budget.

FUNDING INCREASES DUE TO DELAYS IN PROJECT OR PROGRAM IMPLEMENTATION

* The proposed budget for 2012-2013 includes an increase of $231 million in state general fund in for the IHSS program for various projects and programs that were supposed to be implemented during the current budget year but were delayed. including IHSS Provider fee (6 month delay with starting date now assumed to be January 1, 2012)

MEDICATION DISPENSING MACHINE PILOT PROGRAM

* The Governor is proposing that the state law provisions regarding the medication dispensing machine pilot proposal that was passed as part of the 2011-2012 State Budget be rescinded. Unless rescinded, current state law included another trigger cut reduction of additional cuts in IHSS service hours if the target of $140 million in State general fund savings resulting from the medication dispensing machine pilot proposal, will not be met. The Department of Social Services will need to submit budget related legislative language (referred to as "budget trailer bill language") to the Legislature regarding this.

DUAL ELIGIBLE (MEDI-CAL AND MEDICARE) - IHSS MANAGED CARE BENEFIT

* Governor proposing, starting January 1, 2013, over a three year period, to transition the 1.2 million persons with disabilities and seniors who are eligible for both programs (dual eligible). In that first year, IHSS and other community based services (though not those funded through regional centers) will become Medi-Cal managed care plan benefits.

* The Governor’s proposed budget says the IHSS program, under this change, will “essentially operate as it does today except all authorized IHSS benefits will be included in managed care plan rates.

* Recipients in 8 to 10 selected counties will also receive their Medicare benefits and long term care services through their Medi-Cal managed care plan. These changes will be phased in over a 12 month period beginning January 1, 2013.

* The Governor’s plan indicates that over time, [Medi-Cal] managed care plans will take on increasing responsibility for home and community-based services including IHSS. It is not clear what that will mean to the existing structure of IHSS.

* There is no savings or reduction to the IHSS program budget in the Governor’s proposed budget for this transition of IHSS for persons who ardual eligible though there is a major savings over-all to the Medi-Cal program budget that could swell to over $1 billion in the 2013-2014 State Budget year.

PREVIOUS REDUCTION: 2009 STATE PARTICIPATION (STOPPED FOR NOW BY COURT ORDER)

* The State Participation IHSS Wage Reduction to $9.50 in Wages and $0.60 in Health Benefits passed as part of the 2009-2010 State Budget was supposed to go into effect July 1, 2009 but was blocked from implementation by a federal court order, upheld by the US 9th Circuit Court of Appeals.

* The case Dominguez v. Schwarzenegger is linked to several Medi-Cal related lawsuits that was heard before the US Supreme Court on October 3, 2011.

* A ruling by the high court is expected before June 2012. The Governor’s 2012-2013 State Budget still assumes implementation of the reduction July 1, 2012, assuming the US Supreme Court rules in the State’s favor and all legal issues are resolved.

PREVIOUS REDUCTION: 2009 COST CONTAINMENT (STOPPED FOR NOW BY COURT ORDER)

* The 2009 Cost Containment (reductions using a minimum functional index score 2.00 to determine eligibility for any IHSS services; and a functional index ranking of 4 or 5 to be eligible for domestic and related services (ie housework, shopping for food, meal preparations and clean-up and laundry). These new eligibility restrictions would not apply to IHSS recipients under protective supervision or receiving paramedical services.

* These reductions were scheduled to go into effect November 1, 2009 but were blocked by federal court order on October 19, 2009 in a lawsuit originally V.L. v. John Wagner (now known as David Oster, et al v. Will Lightbourne, et al

* The case was appealed by the State to the US 9th Circuit Court of Appeals, which heard the case on January 28, 2011 but has delayed taking action until a ruling from the US Supreme Court is handed down on the Medi-Cal cases (including the lawsuit dealing with State participation of IHSS worker wages).

* The Governor’s 2012-2013 State Budget still assumes implementation of the reduction July 1, 2012, assuming the US Supreme Court rules in the State’s favor and all legal issues are resolved. It appears additional budget related legislation will likely be needed to implement this reduction even if the State prevails in court however, because of the way the original budget trailer bill language was written.

MEDI-CAL PROGRAM

The state's Medi-Cal program serves over 7.7 million Californians including about 1.7 million people with disabilities (including developmental), the blind and low income seniors.

DUAL ELIGIBLES (MEDI-CAL AND MEDICARE)

* Governor proposing, starting January 1, 2013, over a three year period, to transition the 1.2 million persons with disabilities and seniors who are eligible for both programs (dual eligible).

* This includes, in the first year, making IHSS and other home and community-based services and nursing home care funded by Medi-Cal to become Medi-Cal managed care benefits (as mentioned in the section on IHSS).

* However community-based services funded through regional centers under the home and community-based Medicaid waiver will continue to be administered by the Department of Developmental Services

* The transition of Medicare benefits to Medi-Cal managed care will occur over a three year period starting first with 8 to 10 counties that the State believes already have the capacity to serve these individuals. The Governor’s budget proposes to expand Medi-Cal managed care statewide starting June 2013

* Dual eligible recipients in these managed care counties will transition during the 2014-2015 State Budget year.

* The Governor’s proposal says it will achieve savings and reductions in State general fund spending as recipients transition from Medi-Cal “fee-for-service” to Medi-Cal managed care plans due to a reduction in utilization including a reduction in hospital and nursing home costs.

* The Governor’s budget estimates that this expansion will mean a reduction in State general fund spending to the Medi-Cal program of about $678.8 million during the 2012-2013 State Budget year which will grow to over $1 billion during the 2013-2014 State budget year.

MEDI-CAL MANAGED CARE EXPANSION

* The Governor proposes, beginning in June 2012, to expand Medi-Cal managed care into rural counties that are currently only provide Medi-Cal fee for service.

* The Governor’s budget assumes that this proposal will result in a $2.7 million reduction in State general fund spending in the Medi-Cal program during the 2012-2013 State budget year, which will grow to $8.8 million during the 2013-2014 State budget year.

MEDI-CAL MANAGED CARE ANNUAL OPEN ENROLLMENT RESTRICTION

* Current law allows Medi-Cal recipients in Medi-Cal managed care plans to change plans once per month or up to 12 times in a year. The Governor proposes instead a once a year open enrollment period for Medi-Cal recipients in managed care plans, who would have to receive care through that plan for the entire year.

* The Governor’s budget assumes that this proposal will result in a $3.6 million reduction in State general fund spending in the Medi-Cal program during the 2012-2013 State Budget year, to grow to $6 million during the 2013-2014 State budget year.

MEDI-CAL MANAGED CARE GROSS PREMIUM TAX

* Governor proposes to eliminate the sunset (or ending) date of this special tax on Medi-Cal managed care plans.

* The Governor’s budget assumes that this proposal will result in $161.8 million in reductions in State general fund spending during the 2012-2013 State budget year, which will grow to $259.1 million during the 2013-2014 State budget year.

MEDI-CAL PROVIDER PAYMENT DEFERRAL & MANAGED CARE PAYMENT POLICIES

* Linked to the proposal to transition persons dually eligible for Medi-Cal and Medicare into Medi-Cal managed care plans, to speed up those budget savings during the 2012-2013 State budget year, the Governor is proposing one payment deferral for all Medi-Cal providers during that budget year.

* His budget also proposes to bring together (or align) payment policies for all Medi-Cal managed care plans. The savings from these two proposals is part of the overall spending reduction of State general funds total ($678.8 million) tied to the transition of persons who are dual eligible for Medi-Cal and Medicare during the 2012-2013 State Budget year.

MEDI-CAL "OPERATIONAL FLEXIBILITIES"

* With the current projected number of Medi-Cal recipients of 8.3 million Californians expected to swell to over 10 million by January 2014 when the federal health care reform is implemented, the Governor is proposing a new process that will incorporate stakeholder input and determine cost-effectiveness before implementing changes in benefits to the Medi-Cal program.

* This would include an assessment of the impact of changes made, changes proposed in payment rates and policies.

* The Governor’s budget indicates that State general fund spending in the Medi-Cal program will be reduced by $75 million during the 2012-2013 State Budget year as a result of this proposal.

FEDERALLY QUALIFIED HEALTH CENTERS AND RURAL HEALTH CLINICS CUTS

* The Governor is proposing that payments made to these health centers and clinics participating in Medi-Cal managed care plan contracts will change from a cost and volume-based payment to a fixed payment to provide a broad range of services to those Medi-Cal recipients.

* A new Medi-Cal waiver will be developed to allow these centers and clinics to follow “efficient best practices” including group visits, telehealth, telephonic disease management, and allow clinics to perform multiple services on the same day.

* Governor’s proposal assumes a spending reduction in State general fund spending in the Medi-Cal program of $27.8 million during the 2012-2013 State budget year, that will grow to $58.1 million during the 2013-2014 State budget year.

PRIVATE AND NON-DESIGNATED PUBLIC HOSPITAL "STABILIZATION" FUNDING CUT

* Governor proposes that Private and Non-Designated Public Hospital "Stabilization" funding that has not yet been paid for the State budget years 2005-2006 through 2009-2010, will instead be put back into the State general fund.

* The Governor’s budget assumes that this proposal will mean a $42.9 million in State general fund spending reduction.

NURSING HOME FEE PROGRAM

* Governor's budget includes funding to restore the 10% provider rate reduction ($171.1 million in State general funds) and also includes supplemental payments ($245.6 million in State general funds).

* The Governor's budget however does not include the maximum 2.4% cumulative rate increase for 2011-2012 and 2012-2013 because "preliminary fee revenues [from the nursing homes] are insufficient to support such an increase."

* The Governor proposes to permanently extend the rate methodology and nursing home fee initially established by AB 1629 in 2004. The Governor's budget says that this action is necessary "to continue to fund the current payment methodology without a greater impact to the General Fund."

MEDICAL THERAPY PROGRAM ELIGIBILITY RESTRICTION

* The Governor proposes to put in place income eligibility requirements or means testing for the Medical Therapy Program linked to the California Children’s Services (CCS) program.

* Under the proposed new requirements, families with annual incomes less than $40,000 or with annual California Children’s Services medical expenses exceeding 20% of their annual income, will be eligible for the Medical Therapy Program.

* The Governor’s budget assumes this proposal will result in a $9.1 million reduction in State general fund spending during the 2012-2013 State budget year, and $10.9 million during the 2013-2014 State budget year.

MEDI-CAL MANAGED CARE RATE ADJUSTMENT

* The Governor's budget includes an increase of $203.4 million in State general fund fpr the 2012-2013 State Budget as a result of increasing managed care rates by 3.61%.

* The rate adjustments are based on the previous year's increase. The managed care rate increase for 2012-2013 will be updated in the Governor's revised budget proposal in May.

FUNDING TO RESTORE PROVIDER RATE CUTS IF STATE FAILS IN LAWSUITS

* The Governor's budget includes a "set aside" of $86.8 million in State general funds for the current 2011-2012 State Budget year and $260.4 million in State general funds for the 2012-2013 State Budget year in the event that various lawsuits blocking or seeking to stop the Medi-Cal provider rate reductions end up being successful.

HEALTHY FAMILIES

This program, administered by the Managed Risk Medical Insurance Board, is matched by funds from the federal State Children's Health Insurance Program (SCHIP), provides comprehensive health, dental and vision benefits through participating health plans for children not eligible for Medi-Cal.

HEALTHY FAMILIES PROGRAM RATE REDUCTION

* Governor proposes to reduce Healthy Families managed care rates by 25.7%, effective October 1, 2012. This cut will result in a $64.4 million reduction in State general fund spending in the program during the 2012-2013 State budget year and another $91.5 million during the 2013-2014 State budget year.

TRANSITION OF CHILDREN FROM HEALTHY FAMILIES TO MEDI-CAL

* Governor proposes transferring about 875,000 children in the Healthy Families program to the Medi-Cal program over a nine month period beginning October 2012.

* The Governor’s budget indicates that this transition will simplify eligibility and coverage for children and families, improve coverage through retroactive benefits, increase access to vaccines, and expanded mental health coverage and eliminate premiums for lower income recipients.

* There was no budget savings or spending reduction listed resulting from this proposal .

ELIMINATION OF MANAGED RISK MEDICAL INSURANCE BOARD

* Governor proposes elimination of this board by July 1, 2013, with the remaining programs administered by the board shifted to the Department of Health Care Services by that date.

* Those programs include Access for Infants and Mothers, California Health Initiative Matching Fund Program, the Major Risk Medical Insurance Program (MRMIP), the Pre-Existing Conditions Insurance Plan (PCIP).

* The MRMIP and PCIP programs will be eliminated in January 2014, according to the Governor’s budget because individuals in those programs will be able to purchase health insurance through the California Health Benefits Exchange as part of the roll-out of the federal health care reform implementation.

CALWORKS

The CalWORKS (California Work Opportunity and Responsibility to Kids) program is California’s welfare to work program designed for low-income families with children, and provides temporary cash assistance for basic needs and services so families may become self-sufficient. Over 580,000 families are in the CalWORKS program including thousands of children and parents with special needs, disabilities and/or mental health needs. The Governor’s proposed reductions and changes to the program if approved by the Legislature would result in a significant 44.8% drop in the program caseload during the 2012-2013 State Budget year, decreasing from over 580,000 families to 324,000 families.

REDUCTION OF $1.1 BILLION

* Governor proposes to achieve this reduction by eliminating grants for parents who don't meet federal work requirements after 24 months, compared with 48 months now in a new CalWORKS Basic Program” while others who met federal work participation requirements would be placed in a new CalWORKS Plus Program” that include possibility of higher benefits and higher income disregards and ability to stay in the program up to 48 months.

* The Governor’s budget assumes that these changes will result in a $1.1 billion reduction in State General Fund spending during the 2012-2013 State Budget year.

* Note: CalWORKS along with the child care proposed reductions are those proposals which the Governor wants the Legislature to consider approving by March 2012 to allow early ramp-up and implementation to achieve the highest level of savings (or reduction depending on how one views it). The creation of the new Child Maintenance Program partially reduces the savings of this spending reduction, according to the Governor’s budget, to about $946.2 million.

NEW CHILD MAINTENANCE PROGRAM

* Governor proposes the creation of a new Child Maintenance Program” that, beginning October 2012, would provide basic support to children whose parents would not eligible under the restructured CalWORKS program, assuming that proposal is approved by the Legislature.

* Eligibility for this program for those families would be the same as for families in the CalWORKS program, but the Child Maintenance program grant will be less than the current amounts available for child-only cases, dropping the average monthly grant from $463 to $392. The family would eligible for CalFresh benefits according to the Governor's proposal.

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