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Analysis Of Governor Newsom’s 2023-2024 May Revision Budget

, By WCLP Policy Team

The Newsom Administration released its 2023-24 May Revision budget, projecting a $31.5 billion deficit. After years of a budget surplus, California is forecasting a downturn in funding due to a combination of capital gains losses and delayed tax filings due to natural disasters, but California remains strong. The May Revision reflects a $37.2 billion in total budgetary reserves and additional funds from the Managed Care Organization tax.  

Governor Newsom maintains many of the Administration’s and legislature’s previous commitments and proposes no new trigger cuts. He also proposes no new corporate or personal taxes, despite calls from the Senate and advocates to increase taxes on wealthy corporations and the state’s highest earners.  

We appreciate that the May Revision maintains past budget agreements including expansion of Medi-Cal to all regardless of immigration status, reforming the Medi-Cal share-of-cost, and on-time implementation of food assistance for Californians 55 years of age or older, regardless of immigration status.  

As the fourth largest economy in the world, California has made great strides in addressing poverty and systemic inequities, but there is more work to be done. We look forward to working with the legislature and Administration to protect low-income Californians as the State enters more uncertain fiscal circumstances.  

Below are our initial reactions to the proposed budget by issue area, with a focus on changes from the January budget proposal.   

HEALTH CARE 

Health4All: The May Revision maintains full funding to expand full-scope Medi-Cal eligibility to all income eligible adults ages 26-49 regardless of immigration status on January 1, 2024. The May Revision includes increases for previous expansions for adults 50 and older and ages 26-49 due updated managed care rates, higher share of state-only costs, higher caseloads, and higher acuity members. 

Managed Care Organization (MCO) Tax: The May Revision proposes a bigger MCO tax with an earlier start date (April 2023 through end of 2026). This results in $19.4 billion in total funding, including $3.4 billion for 2023-24. $8.3 billion is proposed to offset General Fund and $11.1 billion is proposed to support Medi-Cal investments that improve access, quality, and equity over an 8- to10-year period. These investments include rate increases to at least 87.5% of Medicare for primary care, birthing care, and non-specialty mental health providers and the remainder will be put into a special fund reserve for future consideration.  

Covered California Affordability Sweep: The May Revision maintains proposal to sweep Covered California reserve fund to General Fund totaling $333.4 million. 

Distressed Hospital Loan Program: The May Revision includes up to $150 million one-time General Fund to provide interest-free cashflow loans to not-for-profit and public hospitals in significant financial distress or to governmental entities representing a closed hospital, for purposes of preventing the closure of, or facilitating the reopening of, those hospitals.  

Home and Community-Based Services Spending Plan Extension: The May Revision includes a six-month extension until September 30, 2024 for specified programs such as the IHSS Career Pathways Program and the Senior Nutrition Infrastructure Program to fully spend allocated funding based on critical programmatic needs.  

Doula Services Implementation Evaluation: To align with later implementation date, TBL is proposed to extend the timeline of the Doula Stakeholder Workgroup (from April 1, 2022 until December 31, 2023) and to extend the evaluation of the doula benefit implementation in the Medi-Cal program (from April 1, 2023 until June 30, 2025).  

Medical Interpreter Pilot Program: Through TBL, the May Revision proposes to extend the expenditure authority of the Medical Interpreter Pilot Project for 12 months, from June 30, 2024 to June 30, 2025.  

988 Update: The May Revision includes a one-time augmentation of $15 million for a total of $19 million, from the 988 State Suicide and Behavioral Health Crisis Services Fund for California’s 988 centers. This increase will support workforce expansion to handle increased answered call volume, extensions of service hours, and the availability of chat and text options for callers utilizing the 988 services.  

BH-CONNECT Demonstration (formerly referred to as CalBH-CBC Demonstration): The May Revision includes an update to the BH-CONNECT Demonstration to include a new Workforce Initiative and includes $480 million in funding for each year of the five-year demonstration period ($2.4 billion total funding and no General Fund).  

CalRX and Reproductive Health: The May Revision includes TBL and $2 million one-time General Fund reappropriation from the Capital Infrastructure Security Program and allows the use of these funds for reproductive health care if necessary. 

Community Assistance, Recovery, and Empowerment (CARE) Act: The May Revision includes additional funding to support the implementation of the CARE Act. Compared to the Governor’s Budget, the annual increase is between $43 million and $54.5 million to account for refined county behavioral health department cost assumptions, additional one-time $15 million General Fund for Los Angeles County start-up funding. The May Revision also includes an additional $16.8 million in 2023-24, $29.8 million in 2024-25, and $32.9 million ongoing to double the number of hours per participant for legal services from 20 hours to 40 hours. 

HOMELESSNESS

The May Revision preserves the full $3.7 billion in funding for homelessness programs, as committed in previous budgets, including $1 billion for the Homeless Housing, Assistance and Prevention grant program. 

May Revision Adjustments:  

Behavioral Health Bridge Housing Program: $500 million one-time Mental Health Services Fund in 2023-24 in lieu of General Fund. This investment eliminates the January Budget proposed delay of $250 million General Fund to 2024-25 and restores the $1.5 billion commitment funded in the 2022 Budget Act for the program. 

HOUSING

While the May Revision reflects a steady commitment to Homelessness investments, the May Revision also culminated in a weakening of housing investments totaling $17.5 million in General Fund reductions and $345 million in deferrals related to housing programs. Funding for housing programs remains at approximately 88% of the allocations made in 2022-23 and proposed for 2023-24 ($2.85 billion). This outlook could change if there are sufficient General Fund dollars in January 2024. If that occurs, the Governor has committed to restoring $350 million of these reductions. Overall, the proposal includes $500 million continued annual investment in the state Low-Income Housing Tax Credit program, $225 million for the Multifamily Housing Program, and $100 million for the Portfolio Reinvestment Program. These programs have a proven track-record of addressing housing affordability and homelessness across California. 

May Revision Adjustments: 

Foreclosure Intervention Housing Prevention Program: Provides funds to various non-profit organizations to acquire foreclosed property and operate as affordable housing. Deferral of $345 million of the $500 million one-time General Fund over four fiscal years—for a revised allocation of: $50 million in 2023-24, $100 million in 2024-25, $100 million in 2025-26, and $95 million in 2026-27 

Downtown Rebound Program: Funds adaptive reuse of commercial and industrial structures to residential housing. Reverts $17.5 million in unexpended funding that remained in this program after the Notice of Funding Availability. 

In contrast, the Senate’s Budget Plan, which was released two weeks ago, both prevents funding cuts and delays, and builds on our progress by including ongoing investment in homelessness and resources for key housing production programs. Notably, that Plan provides $1 billion in ongoing funds to support the Homeless Housing Assistance, and Prevention Program, $1 billion towards the state Low-Income Housing Tax Credit Program, and an additional $300 million flexible allocation towards affordable housing programs.  

Western Center is a proud member of a coalition of California’s leading affordable housing, homelessness, and housing justice advocacy organizations championing a comprehensive coalition investment strategy for affordable housing production, preservation, and tenant stability. While the May Revision falls short of our requests to meet the housing and homelessness crisis at scale, we look forward to continuing our budget advocacy and encourage the Governor and Legislative leadership to finalize a budget that includes ongoing, significant resources like those included in the Senate budget plan and our coordinated housing budget letter. 

PUBLIC BENEFITS AND ACCESS TO JUSTICE  

CalWORKs Grant Increase: The May Revision reflects a 3.6-percent increase ($111.2 million in 2023-24) to CalWORKs Maximum Aid Payment levels, effective October 1, 2023. These increased grant costs are funded through the Child Poverty and Family Supplemental Support Subaccount.  

Supplemental Security Income/State Supplementary Payment (SSI/SSP): The May Revision continues to include an 8.6% increase in funding for the SSI/SSP and Cash Assistance for Immigrants (CAPI) program providing a $3.6 billion from the general fund. This allocation provides recipients with an increase in grant levels to $1,134 per month and $1,928 per month for couples. 

California Food Assistance Program (CFAP) Expansion Update: The May Revision moves up the issuance of food benefits for older undocumented immigrants to start October 2025, instead of the January Proposal that delayed it until 2027, which we appreciate but we still need Food4All regardless of age and immigration status. 

Summer Electronic Benefit Transfer (EBT) Program: The May Revision includes $47 million ($23.5 million General Fund) for outreach and automation costs to phase in a new federal Summer EBT program for children who qualify for free or reduced-price school meals beginning summer 2024.  

Safety Net Reserve: The May Revision withdraws $450 million (half of $900 million) from the Safety Net Reserve. The reserve is intended to maintain existing Medi-Cal and CalWORKs program benefits and services when program cost may increase due to economic conditions, which may occur if recession occurs, so we argue it is prudent to not draw from Safety Net Reserve until those conditions are met. 

Services for Survivors and Victims of Hate Crimes Augmentation: The May Revision includes an additional $10 million General Fund to support services for victims and survivors of hate crimes and their families and facilitate hate crime prevention measures in consultation with the Commission on Asian and Pacific Islander American Affairs. 

For questions, contact: 

  • Health:  Linda Nguy, Senior Policy Advocate – lnguy[at]wclp.org; Sandra Poole, Policy Advocate – spoole[at]wclp.org 
  • Housing and Homelessness: Cynthia Castillo, Policy Advocate – ccastillo[at]wclp.org; Tina Rosales, Policy Advocate – trosales[at]wclp.org 
  • Public Benefits/ Access to Justice: Christopher Sanchez, Policy Advocate – csanchez[at]wclp.org 

Western Center Roundup – January 2022

Welcome to Western Center’s first newsletter of 2022! The new year also brings a fresh look for our monthly newsletter. Welcome to the roundup!

From North to South, Two Suits Settled 

Two lawsuits settled since our last newsletter: Warren v. City of Chico and Banda v. County of San Bernardino. 
Legal Services of Northern California and Western Center brought the case in Warren v. City of Chico last year to challenge ordinances criminalizing homelessness in Chico. Now under the settlement, the city must build individual pallet shelters for people experiencing homelessness, and is prohibited from issuing citations and arrests for people who live outside when shelter is unavailable. Read more about the case and settlement here.

In December, Western Center, Inland Counties Legal Services, and Public Interest Law Project settled our case against the County of San Bernardino, resulting in several changes to the county’s General Relief program to help more people in extreme poverty access vital financial assistance. General Relief is the program administered by California counties that provides cash assistance to adults who don’t have enough resources or income to meet their basic needs. Our case prompted the county to make substantial changes to its General Relief process, making General Relief easier to access and maintain moving forward. The biggest change is the dollar increase in assistance. Read more about the case and settlement here.

Let the Budget Process Begin

Governor Newsom released his 2022-23 California budget proposal in mid-January – revealing yet another dramatic surplus for the State of California due to rapidly increasing wealth among the state’s top earners. Western Center’s analysis of the governor’s budget proposal outlines its potential impact on Californians — from the positive, like the proposal to expand Medi-Cal eligibility to those currently excluded due to immigration status, to challenges, like the need for more state-funded rental assistance than was included in the governor’s proposal. Read our analysis here.

Despite the large surplus and number of proposed initiatives, the proposal shows reluctance to invest in the state’s ongoing needs. Leading up to the budget’s May Revision, Western Center will advocate for the legislature to review the governor’s proposal with more of an eye toward meeting the short- and long-term needs of all Californians. To learn more about Western Center’s 2022-23 budget priorities and advocacy, you can view the recording of this month’s Meet the Advocate conversation with our Director of Policy Advocacy, Mike Herald.

February Reads    

If you’re looking for an informative read or three heading into February, our blog has you covered!

  • Western Center’s Executive Director Crystal D. Crawford and Manal J. Aboelata, Deputy Executive Director at Prevention Institute and author of a new book, Healing Neighborhoods, reflect on the federal Infrastructure Investment and Jobs Act and what it could mean for ensuring all Americans the right to live in a healthy neighborhood. Read here.
  • Abraham Zavala, Western Center’s Outreach and Advocacy Associate, wrote an eye-opening post about the struggles facing long-term tenants at City Center Motel in Long Beach, and how the untimely death of one tenant spurred others to mobilize and organize. Read here.
  • Western Center’s senior policy advocate Jen Flory and senior attorney Helen Tran co-wrote a post outlining new patient protections for hospital billing available this year. Read here.

Analysis of Governor Newsom’s 2022-2023 California Budget Proposal

Governor Newsom released his January proposal for the 2022-23 California state budget. In total, the administration projects a $45 billion surplus — a combination of higher revenue collections for the past two budgets and higher than anticipated revenue for the 2022-23 budget. As the governor noted in his press conference, if current economic trends continue, the surplus could grow even more by the time the proposed budget is revised in May. The budget includes a record $36 billion reserve.

SUMMARY

The governor’s proposed budget includes a historic investment in health care by expanding Medi-Cal eligibility for those currently excluded from the program due to immigration status, and by eliminating Medi-Cal premiums for children, pregnant people, and people with disabilities. It does not eliminate the burdensome “share of cost” that many people on Medi-Cal still pay as a monthly deductible.

The budget also includes expanded funding to house people experiencing homelessness, a large investment in health care related workforce development, and an expansion of proposals intended to reduce poverty such as increasing CalWORKs grants, passing on all child support to families formerly on public assistance, and expanding the state child tax credit to households with no reported income. The budget also proposes to fund 36,000 new childcare slots for working families, but this means approximately 150,000 families will remain on the waiting list.

Unfortunately, this proposal misses an opportunity to build on significant progress made through existing poverty-reduction initiatives. Despite the expiration of the very effective federal child tax credit increase, the governor’s proposed budget does not backfill that lost income for California families. It also fails to fund more stimulus payments for Californians with low incomes. Additionally, it does not provide a cost-of-living increase for the SSI/SSP grant as required by state law, and it does not accelerate the SSI/SSP grant restoration scheduled for January 2024.

The need for rental and utility assistance in California has greatly outpaced federal funds allocated to the state. While California was recently allocated an additional $62 million in federal funds to address the growing need, the state needs about $2 billion. The governor missed an opportunity to supplement the federal dollars with surplus from the General Fund. However, California will continue to advocate for additional funding from the federal government.

Despite the large surplus and number of proposed initiatives, the governor’s proposal uses just $20 billion for the needs of Californians. More than half of the surplus is being used to fund reserves and to pay off long term debt. Of the $20 billion being spent, the governor proposes to use 86 percent for one-time expenditures. The reluctance to invest in ongoing needs means proposals that could make a major impact, like funding a broadly available rental assistance program, are not part of the discussion. The legislature should review the governor’s budget with an eye toward meeting more of the short- and long-term needs of all Californians.

HEALTH CARE

The governor’s proposal expands Medi-Cal to all adults regardless of immigration status. This would make California the first state in the nation to cover all adults, and together with the recent increase in the income level for seniors and people with disabilities, as well as the scheduled elimination of the Medi-Cal assets test by January 1, 2024, all adults under 138 percent of the poverty level will be eligible for free, full-scope Medi-Cal. The governor’s proposal also eliminates premiums for children, pregnant people, and the Working Disabled Program, and expands Medi-Cal coverage of custom crowns for back teeth. In addition, there are affordability, provider payment, and workforce investments.

Medi-Cal

  • Health4All: The governor’s proposal expands full-scope Medi-Cal coverage to an estimated 700,000+ undocumented adults ages 26 through 49, effective no sooner than January 1, 2024, with estimated costs of $819 million total funds ($614 million General Fund) in FY 2023-24 and $2.3 billion total funds ($1.8 billion General Fund) at full implementation.
  • Zero out premiums: The proposed budget includes $53 million total funds ($19 million General Fund) in FY 2022-23 and $89 million total funds ($31 million General Fund) ongoing and trailer bill language to reduce premiums to zero for Medi-Cal and other Children’s Health Insurance Program (CHIP) programs. This includes Medi-Cal premiums for children above 160 percent of the poverty level, the 250 percent Working Disabled Program premiums, as well as the premiums for pregnant women and infants under the Medi-Cal Access Program (MCAP) and County Children’s Health Insurance Programs (C-CHIP).
  • Justice-related initiatives: The proposal includes $50 million total funds ($16 million General Fund) in FY 2022-23 to implement the CalAIM justice-related initiatives with implementation beginning January 2023. This includes pre-release applications, pre-release “in-reach” services, and coordinated re-entry. There will also be trailer bill language to extend the duration of suspension of Medi-Cal benefits when an individual is incarcerated to increase the likelihood that coverage is maintained.
  • Dental Lab Processed Crown (AKA Custom Crown) Coverage: The budget includes $37 million total funds ($13 million General Fund) in FY 2022-23 and trailer bill language to update adult coverage requirements to include lab processed crowns for posterior teeth, in place of stainless-steel crowns. Also related to dental, the administration proposes to extend dental managed care contracts and procure new contracts no sooner than January 1, 2024.
  • The governor’s proposal includes the following provider payment investments:
    • Proposition 56 Supplemental Provider Payment Backfill: To address declining tobacco revenue, the proposal includes an increase of $29 million from the General Fund to fully fund remaining Proposition 56 payments at their current level in FY 2022-23.
    • Equity and Practice Transformation Payments: To close health equity gaps in preventive, maternity, and behavioral health care measures and address gaps in care arising out of the pandemic, the proposal includes $400 million total funds ($200 million General Fund) in one-time funds, aligning with the goals of the Medi-Cal Comprehensive Quality and Equity Strategy.
    • Elimination of Certain AB 97 Provider Payment Reductions: The budget includes $20 million total funds ($9 million General Fund) in FY 2022-23 and $24 million total funds ($11 million General Fund) ongoing to eliminate AB 97 payment reductions for nurses, alternative birthing centers, audiologists/hearing aid dispensers, respiratory care providers, durable medical equipment, oxygen and respiratory services, chronic dialysis clinics, non-emergency medical transportation, and emergency air medical transportation.
  • Discontinue Child Health and Disability Program (CHDP) and Expand Children’s Presumptive Eligibility (PE): The Department is proposing to sunset CHDP by July 1, 2023 via trailer bill language and replace with the Children’s Presumptive Eligibility Program, which will include all Medi-Cal providers.
  • Mobile Crisis Services: The proposal includes $108 million total funds ($16 million General Fund) and trailer bill language to add qualifying 24/7 community-based mobile crisis intervention services as a Medi-Cal benefit as soon as January 1, 2023. The benefit will be implemented through county behavioral health delivery systems by multidisciplinary mobile crisis teams in the community.

Other Health Proposals 

  • Office of Health Care Affordability: The proposal reappropriates funding for the Office that was originally included in the 2021 Budget Act (originally $11.2 million in 2020-21 and $24.5 million in 2022-23) and proposes statutory changes for its establishment. The Office is charged with increasing cost and quality transparency, developing cost targets for the health care industry, enforcing compliance, and filing gaps in market oversight.
  • Covered California: The proposal continues to deposit into a reserve fund to be used for future Covered California affordability programs the $333.4 million General Fund that would have been used for Covered California state premium subsidies (not currently needed due to American Rescue Plan Funds).  The administration intends to work with the Legislature to determine the best use of these funds based on the recent AB 133 affordability report produced by Covered California, after determining what ongoing federal support will be available. In addition, the proposal continues to include $20 million General Fund in 2022-23 to support the One-Dollar Premium Subsidy program, which zeros the cost of Covered California consumers for health plans due to federal policy concerning abortion coverage.
  • Behavioral Health Bridge Housing: The proposed budget includes $1.5 billion General Fund ($1 billion in FY 2022-23 and $500 million in FY 2023-24) for behavioral health bridge housing to address the immediate housing and treatment needs of people experiencing unsheltered homelessness with serious behavioral health conditions by purchasing and installing tiny homes and providing time-limited operational supports in various bridge housing settings.
  • Workforce Development: The proposal includes $1.7 billion in Care Economy Workforce investments, including $350 million General Fund to recruit and train 25,000 new community health workers as well as additional health care providers.

HOUSING & HOMELESSNESS

In total, the governor’s 2022-2023 budget dedicates $9 billion for housing and $8 billion for homelessness. Largely building on last year’s efforts, this budget proposal attempts to chip away at the housing and homelessness crisis by streamlining production, increasing housing accountability, and funding homelessness solutions through a climate focused lens.

This “Housing as a Climate Strategy’’ focuses on preservation and production of affordable housing near schools, jobs, transit, density, and community hubs to fight climate change. Despite the well-placed investments in climate resilient housing, the budget falls short in supporting struggling Californians from eviction with the notable lack of state funding for eviction protection. The budget also proposes to battle the state homelessness crisis with an eye toward housing and behavioral health. While on the surface this plan addresses the long-standing need for better mental health for the unhoused community, it plays on the trope that all people experiencing homelessness have mental health conditions, rather than recognizing the very tangible fact that most Californians simply cannot afford the high cost of living, which has steepened since the start of the pandemic.

The governor is also increasing funding for “beautification” and “hazardous material removal” in encampments, which translates to increased sweeps, harassment, and further ostracization of people experiencing homelessness. With another budget surplus, we hope the budget’s May revision will use the additional funding to preserve and increase affordable housing, prevent needless evictions with increased funding for California’s Emergency Rental Assistance Program, and provide tangle solutions to get people off the streets and into safe, stable, affordable, and permanent housing.

Affordable Housing and Climate 

  • $300 million one-time General Fund for the Affordable Housing and Sustainable Communities program to support land-use, housing, transportation, and land preservation projects for infill and compact development that reduce greenhouse gas emissions.
  • $100 million one-time General Fund to expand affordable housing development and adaptive reuse opportunities on state excess land sites.
  • $100 million one-time General Fund for adaptive reuse incentive grants to remove cost impediments to adaptive reuse (e.g., structural improvements, plumbing/electrical design, exiting) and help accelerate residential conversions, with a priority on projects located in downtown-oriented areas.
  • $500 million in Low-Income Housing Tax Credits.
    • $4.6 million in farmworker Housing Assistance Tax Credits.
  • $200 million one-time General Fund for the California Housing Finance Agency (CalHFA) to provide loans to developers for mixed-income rental housing, specifically for households with incomes between 30 percent and 120 percent of the Area Median Income.
  • $200 million one-time General Fund for the Portfolio Reinvestment Program to further preserve targeted units in downtown-oriented areas and continue increasing the state’s affordable housing stock.

Mobile Home Rehab

  • $100 million one-time General Fund for HCD’s Mobile Home Park Rehabilitation and Resident Ownership Program. These funds will finance the preservation and development of affordable mobile home parks.

Infill Housing

  • Infill Infrastructure Grant Program—$500 million one-time General Fund ($225 million in 2022-23, and $275 million in 2023-24).

Emergency Rental Assistance Program

  • California requested an additional $1.9 billion in federal funding to address the growing need for rental assistance and utility assistance for Californians. California was allocated an additional $62 million from the U.S. Department of Treasury. While grateful that California was allocated 30 percent of the total federal reallocation, this amount is woefully short of the need.  Currently, California needs almost $2 billion more than what we were originally allocated, and the need is growing. California will continue to advocate with the federal government to obtain additional rental and utility assistance.

Formerly Incarcerated Housing

  • $10.6 million one-time General Fund over three years to the Returning Home Well program that will provide transitional housing to parolees at risk of housing insecurity or homelessness.

Legal Services for Renters

  • $40 million investment in legal assistance for renters and homeowners.

Homelessness

  • $2 billion one-time General Fund, multi-year grant to cities, large counties and Continuums of Care working with the California Interagency Council on Homelessness (Cal-ICH). Cal-ICH will work with grantees on their homelessness accountability plans.
  • $500 million one-time general fund dollars in housing encampment resolution efforts that will expand program jurisdictions investment in short- and long-term rehousing strategies for people experiencing homelessness.
  • $25 million in Clean California and $20.6 million for hazardous material removal at encampments.
  • $1 million investment in homeless youth programs.
  • $1.5 billion in General Funds over two years dedicated to resources to address the immediate housing and treatment needs of people experiencing homelessness who have behavioral health conditions. This funding will be administered through DHCS’ Behavioral Health Continuum Infrastructure program to purchase tiny homes and facilitate bridge/transitional housing. Such funding can also be used for bridge housing including an expansion of Project Homekey Acquisition.
  • $5 million for Housing Opportunities for Persons with AIDS (HOPWA).

PUBLIC BENEFITS & ACCESS TO JUSTICE

CalWORKs Grants

The governor is proposing a 7.1 percent grant increase to CalWORKs grants starting October 1, 2022. The funding for the increase comes from Child Poverty Subaccount, a stream of revenue dedicated to CalWORKs grant increases. As a result of the 7.1 percent increase, maximum CalWORKs grants will equal 54 percent of the federal poverty level. For families not subject to sanctions, timed off aid or with an ineligible adult, the grant levels exceed the deep poverty level, which means a reduction in the well-documented, long-term negative impacts of deep poverty on children. Despite the increase in the grant level, the administration’s budget does not fulfill the commitment to increase CalWORKs grants so that no child is living in deep poverty. The so-called AU+1 approach requires significantly more investment than this budget provides. Below is a chart which shows current grant amounts, grant amounts with the 7.1 percent increase, the percent of the federal poverty level, what the grant would need to be to ensure an end to deep poverty, and lastly, the gap between the current grant and an end to deep poverty.

Workforce Development

The administration is proposing two major investments in workforce development. One is a $1.5 billion Proposition 98 General Fund effort to support the development of college and career pathways focused on education, health care, technology, and climate-related fields. Promoting pathways that allow students to move seamlessly from high school to college and career will improve the number of students who pursue and achieve post-secondary education and training.

The governor is also proposing to invest $1.7 billion over three years in care economy workforce development—across both the Labor Agency and California Health and Human Services Agency—that will create more innovative and accessible opportunities to recruit, train, and hire, and will advance an ethnically and culturally inclusive health and human services workforce, with improved diversity and higher wages. These programs will target students such as those in CalWORKs welfare to work.

Safety Net Reserve

The budget provides no increase in the safety net reserve, maintaining a $900 million level. While this amount represents an important safeguard against Medi-Cal and CalWORKs program reductions in lean budget years, the continuing growth in spending in both programs might require additional funds to preserve the effectiveness of the reserve.

Child Support Pass Through

The governor is proposing a major change to child support rules by allowing all child support paid by non-custodial parents to go to families formerly receiving CalWORKs or Medi-Cal. For decades it has been state policy for the state to retain any child support for the state to pay off the cost of providing welfare and medical benefits. In short, the state has reimbursed itself and made the families live with less income. When fully implemented, these families are estimated to receive an additional $187 million. While the idea of passing through all child support is certainly welcome, it is notable that the administration is proposing to do this only for families no longer receiving government assistance. The governor chose not to allow a 100 percent pass through to families currently on aid. The legislature may wish to consider expanding this proposal to pass through all child support to all families.

SSI/SSP Grants

The administration did not propose an increase in the SSI/SSP grants for 2022-23 budget, citing last year’s agreement to a two-step increase in SSP funding to restore grant cuts made by the state in the 2010 and 2011 budgets. The first of these grant increases went into effect on January 1, 2022, and in conjunction with a federal cost of living increase for the SSI portion of the grant, SSI/SSP grant levels went from $954 a month up to $1,040 a month for a single individual. The second step of grant increases is set to go into effect in January 2024.

In 2018, the legislature and then Governor Brown agreed to provide a state cost of living adjustment on the SSP portion of the grant beginning in January 2023. While that agreement is subject to funding in the budget, the administration chose not to include it in the January budget. As it currently stands, SSI recipients would not see any increased state funding for two years. The legislature may wish to consider whether to accelerate the second SSP increase to 2023 or to provide a cost-of-living adjustment.

Home Visiting

The administration proposes to increase funding for Home Visiting by $50 million ongoing for the Department of Public Health (CDPH) to expand the California Home Visiting Program and the California Black Infant Health Program, serving approximately 6,000 additional families over five years on top of 3,700 currently served by the Home Visiting Program and 1,650 served by the Black Infant Health Program. The administration does not propose increased funding for the CalWORKs Home Visiting program, which was cut in 2020 during the early days of the pandemic. The budget proposes greater flexibility for home visiting models offered to meet the diverse needs of families across the state, expands home visiting services to additional counties, and makes them accessible to families with the highest need. Additionally, this proposal will support early literacy by including books and early literacy programming provided by home visitors, and will be further supported by a $350 million General Fund investment to recruit, train, and certify new community health workers.

Earned Income Tax Credit

The administration is proposing to allow families with zero reported income to be eligible for the $1,000 state child tax credit so long as the family would otherwise be eligible. The concept of a zero-earnings tax credit potentially opens the door for allowing people receiving SSI, SSDI, and Social Security to get the same state assistance that families receive from the state EITC and Child Tax Credit.

Civil Assessments

The administration is proposing to reduce the impact of fines and fees on low-income Californians by reducing civil assessments from a maximum of $300 to a cap of $150. Civil assessments are imposed on people in criminal and traffic courts when they fail to appear for a hearing, or they fail to pay a fine in a timely fashion. Legal service advocates tell us that many clients receive multiple civil assessments that increase the amount they owe and make it even harder to pay court ordered fines and fees. While this proposal goes part way in meeting the goals of legislators and advocates, as proposed, civil assessments would still impact Californians with the lowest incomes most, and leaves open the question of whether retroactive civil assessment debts would continue to be subject to collection.

California Food Assistance Program

The administration proposes phasing in the expansion the California Food Assistance Program to all Californians ages 55 and older, regardless of immigration status. This year’s budget proposal includes $35.2 million for initial planning phases of the expansion and allocates $113.4 million annually starting in the 2025-26 budget year for the full expansion.

Golden State Stimulus/Grants

The administration chose not to provide another round of pandemic stimulus payments. These payments, which went out to low- and moderate-income households, were instrumental in allowing families and individuals to absorb some of the costs of the pandemic and to give breathing room in household budgets. The grants were also a method for the state to reduce state expenditures below the Gann Limit, which caps the amount the state budget can increase from year to year. The governor noted in his press conference that the door is not closed on this and it may be under consideration for the May Revise.

For questions, contact:

  • Public Benefits/ Access to Justice: Michael Herald, Director of Policy Advocacy – mherald[at]wclp.org
  • Food Access: Christopher Sanchez, Policy Advocate – csanchez[at]wclp.org
  • Health Care: Jen Flory, Policy Advocate – jflory[at]wclp.org; Linda Nguy, Policy Advocate – lnguy[at]wclp.org
  • Housing: Cynthia Castillo, Policy Advocate – ccastillo[at]wclp.org; Tina Rosales, Policy Advocate – trosales[at]wclp.org

California leaders have two weeks to get the state budget right by investing in poverty elimination rather than band aids.

, By Mike Herald, Western Center's Director of Policy Advocacy

Over the next two weeks, the Governor and Legislature will determine how to spend the state’s $38 billion dollar surplus (closer to $76 billion if you include constitutionally mandated spending). The Governor has requested nearly 400 new spending proposals, many of them one-time investments to be spent over several years. There are many worthy proposals in the Governor’s budget — most demonstrably, a $12 billion commitment to reduce homelessness.

California is one of the wealthiest places on earth. We have more billionaires than any other state and our per capita income ranks 6th among states at over $71,000 a year. California residents, by far, pay the most in federal income taxes, exceeding New York by roughly $90 billion annually. We have a highly progressive state tax structure that asks those with the most to pay more. This wealth provides the largest budget of any state in the nation. But for all its wealth, California has a dark side.

More than one in six children lives in poverty in California. 450,000 California children are estimated to live in households that earn less than half of the abysmally low federal poverty level. This is often referred to as deep poverty. Research shows that children who live in deep poverty experience a form of toxic stress that slows normal brain development, results in lower educational achievement, higher risk of chronic health conditions, and lower earnings as adults.

For decades, California has provided sub-meager grant levels to people who are disabled (Supplemental Security Income (SSI), families with kids (CalWORKs), and indigent single adults (General Relief). For years, CalWORKs grants were worth less than 40 percent of the federal poverty level, at around $700 a month. That’s a program for kids and families living deep poverty, where the family income is less than 50 percent of the poverty level. Due to ridiculously low CalWORKs grants, these families are housing unstable, and must occasionally use homeless services.

Former Senator Holly Mitchell led the effort to increase CalWORKs grant and succeeded when Governor Brown committed to a three-step increase to prevent children on CalWORKs from living in deep poverty. Though Governor Newsom did provide the second of the promised increases, his current budget doesn’t finish the job. It provides an increase that falls short of eliminating deep poverty among children.

To his credit, Governor Newsom gets it. In addition to following through on the second of the CalWORKs grant increases in his first budget, one of his first acts as governor was a refundable $1,000 child tax credit for families in poverty, paid for by closing corporate tax loopholes. Legislators and advocates believed that the dream of ending childhood deep poverty in California would finally happen in the 2020-21 budget, but then COVID hit. Millions of people lost jobs and the state’s revenues plummeted. California could no longer afford to end deep childhood poverty, or so we thought.

As it turns out, the state’s revenues quickly rebounded, since billionaires made so much money during the pandemic. California ended up with the largest surplus in its history.

Even so, Governor Newsom did not include funding to end childhood deep poverty in his 2021 May budget announcement, instead offering a modest, insufficient grant increase for CalWORKs. It is simply unacceptable that one of the richest places on earth will continue to allow children to live in abject poverty.

Similarly, the Governor offered a modest $10 a month increase to SSI recipients who are blind, aged and disabled. Over the past decade, the standard of living for SSI recipients has degraded due to the elimination of state cost of living adjustments and the resistance by successive governors to restore cuts made during the Schwarzenegger and early Brown administrations. California saved over $10 billion with those cuts and kept them in effect even when the state was running substantial surpluses with large reserves.

Against this backdrop, Senate Budget sub-committee #3 considered the Governor’s 2021-22 SSI proposal. The empathetic new chair, Senator Susan Talamantes Eggman, noted that the proposal leaves SSI recipients below the poverty level, and that she is helping a friend living on SSI just to make it month to month. Single, indigent adults leaving the criminal legal system have it even worse, with paltry assistance upon release and $221 in General Relief they can use for housing. In fact, 70% of Californians experiencing homelessness have a history of incarceration. It’s all a recipe for instability.

Governor Newsom really wants to do something about homelessness, which is good, but it doesn’t matter how much we spend on housing and services if we don’t slow the stream of people losing their housing due to poverty.  California is using austerity tactics on people in poverty, getting the same results over and over again. Now we’re funding a $12 billion emergency program to fix the carnage. If we want to end homelessness, we must give people the money they need to stay stably and safely housed.

State governments are afraid to provide benefits it may have to cut down the road and believe that a way to save money is to deny adequate levels of assistance. What legislators fail to see is that the reluctance to spend money upfront causes enormous downstream costs. Homeless services, child welfare, emergency food, and foster care are not free, but require funding at ever increasing amounts. If we simply invested to keep people housed and healthy from the get-go, rather than forcing them to live in a constant state of toxic stress caused by extreme poverty, we might not have that problem.

In the next couple of weeks leading up to the budget deadline, the Legislature has a chance to end this shameful chapter in our history by using this year’s surplus to reverse toxic trends that reinforce poverty. Grants for SSI and CalWORKs should be substantially raised so no one is homeless, and the same level of benefits should be provided to people coming out of the criminal legal system and those on General Relief.

This is California, the 5th largest economy in the world. We can and must do better.

 

Analysis of Governor Newsom’s May Revision of California’s 2021-2022 Budget

*PDF of this analysis available here.

Over the past year, millions of Californians experienced the most devastating pandemic and economic downturn in nearly a century. The cumulative impact of COVID-19 has caused financial devastation and a prolonged period of wealth and asset stripping from Californians unlike anything in recent memory. With that in mind, we see this budget revision by the Governor as a mixed bag.

While it includes notable investments in homelessness and housing funding and health care, it falls short in meeting the existing needs of Californians with low incomes. Doing so would include providing health care for ALL, restoring decade-old cuts to grants for SSI recipients, insuring CalWORKs families have enough income to allow children to thrive, and helping those who are in debt and threatened with eviction due to the pandemic receive justice. The $76 billion budget surplus is more than adequate to meet those needs, and we call on the Legislature to revise the Governor’s budget proposal to ensure that families with low incomes receive a truly historic investment.

OVERVIEW

Governor Newsom’s 2021-22 May Revision of the California budget includes an unprecedented level of state funding. Despite high unemployment for the past year and increased state costs in responding to the pandemic, the budget has $41 billion more in state revenue than anticipated in the January budget. When combined with federal funds, the total surplus is more than $75 billion. These figures could change (likely higher) since the April tax deadline was pushed back by one month.

For the first time in nearly 40 years, budget funding exceeds the Gann Limit, which caps state budget spending based on a formula that limits budget growth to population increases and inflation. The budget anticipates that state funding will exceed the Gann Limit by $16.2 billion in 2023, and in response expands the Golden State Stimulus tax refunds to families earning less than $75,000 and increases state funding for K-12 education.

The proposed budget includes substantial reserve funds including $15.9 billion in the Proposition 2 Budget Stabilization Account (Rainy Day Fund) for fiscal emergencies, $450 million in the Safety Net Reserve, $4.6 billion in the Public School System Stabilization Account, and $3.4 billion for the state’s operating reserve.

The Senate Budget and Fiscal Review Committee analysis provides more specifics on the Governor’s budget.

ACCESS TO JUSTICE

Traffic Fines

The budget includes $300 million in one-time spending for debt forgiveness on uncollectible traffic court debts, which would eliminate 100 percent of debt for applicants with low incomes. However, this funding level is inadequate to meet the actual need, as there is more than $8 billion in uncollected traffic debt outstanding.

We are encouraged by the proposal for traffic fines but urge the Governor and Legislature to go far beyond what the Governor proposed. The state needs to undo the archaic policies that criminalize people in poverty – predominately in Black and brown communities, and eliminate criminal system administrative fines and fees. We are co-sponsoring SB 586 (Bradford) to eliminate the rest of the fines and fees that were not eliminated last year.

Legal Aid for Renters in Landlord-Tenant Disputes

The May Revision includes $20 million federal ARPA funds annually for three years ($60 million total) to provide legal aid services for renters and homeowners to avoid eviction and foreclosure. Specifically, these additional funds will provide free legal services for landlord-tenant issues, including legal assistance for counseling, renter education programs, and preventing evictions. More about this can be found below in the housing section.

HEALTH

The Governor’s May Revision includes major health care expansions, including expanding full-scope Medi-Cal to all income-eligible seniors age 60+ regardless of immigration status (Health4AllElders), adding the services of doulas and community health workers as Medi-Cal benefits, extends Medi-Cal eligibility for postpartum individuals, eliminating Medi-Cal program suspensions, and making $4 billion in behavioral health investments for children and youth under age 25. Unfortunately, the May Revision does not include a repeal of the Medi-Cal asset test, funding to build out housing support service capacity as part of CalAIM, or complete Health4All by adding adults ages 26-59.

Medi-Cal

  • The May Revision proposes to expand full scope Medi-Cal for adults 60 years and over regardless of immigration status, to be implemented no sooner than May 1, 2022. Health4AllElders is expected to cost $68 million ($50 million General Fund), fulfilling and building upon last year’s budget commitment of elders age 65+, and is expected to cover an additional 80,000 people. Trailer bill language (TBL) is forthcoming.
  • The proposal adds doula services as a Medi-Cal benefit to be implemented January 1, 2022 and includes $402,584 ($152,043 General Fund) in FY 2021-22 and approximately $4.4 million ($1.7 million General Fund) annually at full implementation. TBL is forthcoming.
  • The proposal adds Community Health Workers to the class of individuals who can provide Medi-Cal covered services to be implemented January 1, 2022 at a cost of $16.3 million ($6.2 million General Fund) in FY 2021-22 and increasing to $201 million ($76 million General Fund) by 2026-27.
  • The proposal includes one-time $315 million ($31.5 million General Fund) to provide population health management services as part of a CalAIM initiative that would centralize administrative and clinical data from the Department, health plans, and providers to better identify and stratify member risks and allow providers and beneficiaries to see what additional services are available.
  • The May Revision includes one-time $200 million ($100 million General Fund) to build capacity for effective pre-release care for justice-involved populations to enable coordination with justice agencies and Medi-Cal coverage of services 30 days prior to release.
  • The proposal includes an additional one-time budget allocation of $9.3 million to expand a current pilot that provides medically tailored meal intervention services to a broader population, which includes Medi-Cal participants with diabetes, chronic obstructive pulmonary disease, renal disease, chronic kidney disease, cancer, and malnutrition, and adds Fresno, Kings, Madera, Santa Cruz, and Tulare counties to the service area.
  • The proposal permanently ends the suspension of Medi-Cal benefits and provider rate funded through Medi-Cal and will have TBL. Specifically, the following will no longer sunset:
    • Optional benefits restored in the 2019 budget, specifically audiology and speech therapy services, incontinence cream and washes, eyeglasses and contacts, and podiatric services.
    • Supplemental provider payments and elimination of the AB 97 rate freeze.
  • The proposal expands accelerated enrollment to adults, ages 19 through 64, to provide immediate and temporary benefits while income verifications are pending at a cost of $14.3 million ($7.2 million General Fund) in FY 2021-22. Also see our earlier announcement of settlement in our Rivera Medi-Cal case.
  • The proposal revises its telehealth policy (TBL forthcoming) to set rates for audio-only telehealth at 65% of the Medi-Cal rate for the service rendered in fee-for-service, and comparable alternative to prospective payment system (PPS) rates for clinics. Only providers who can provide in-person services to each client served by synchronous and audio-only telehealth can claim Medi-Cal reimbursement for the service.
  • Federal funding from American Rescue Plan Act:
    • Medi-Cal eligibility extension from 60 days to 12 months for all postpartum individuals for 5 years.
    • Increased Federal Funding for Home and Community-Based Services (HCBS).
    • Increase in payments to disproportionate share hospitals of $1.1 billion ($105 million General Fund) in FY 2021-22.
    • Increased Substance Abuse and Mental Health Services Administration (SAMHSA) Block Grant Funding.
  • The proposal includes $5 million ($2 million General Fund) in FY 2020-21 and $18 million ($9 million General Fund) in FY 2021-22 to provide specialty mental health services to foster youth returning from out of state and other youth with similar level of needs that otherwise would have been placed out of state.
  • The May Revision proposes ending dental managed care and restoring dental fee-for-service in Sacramento and Los Angeles to be implemented January 1, 2022 for a savings of $20 million ($8 million General Fund.) TBL forthcoming.
  • The May Revision includes $4 billion investment in behavioral health services for children and youth, including:
    • Procuring a business services vendor to implement an all-payer behavioral health direct service and supports virtual platform to be integrated with screening, app-based supports, and direct behavioral health services for children and youth age 25 and younger.
    • Building infrastructure, partnerships, and capacity statewide to increase access to ongoing behavioral health prevention and treatment services on or near school campuses.
    • Grants to Support Development and Expand Age-Appropriate and Evidence-Based Behavioral Health Programs for Children and Youth.
    • Behavioral Health Continuum Infrastructure Program to provide competitive grants to qualified entities to construct, acquire, and rehabilitate real estate assets to expand the community continuum of behavioral health treatment resources funded at $2.455 billion over three years.
    • $50 million one-time provider training in FY 2022-23.
    • New Dyadic Services Benefit in Medi-Cal that provides integrated physical and behavioral health screening and services to the whole family funded at $200 million total ($100 million General Fund) ongoing.
  • The May Revision includes $12.6 million ($4.4 million General Fund) to reimburse specialty pharmacies for services provided to beneficiaries with complex drug therapies in the fee-for-service delivery system, effective July 1, 2021.
  • The May Revision includes one-time funding of $73 million ($36.5 million General Fund) in each of 2021-22 and 2022-23 to resume annual Medi-Cal redeterminations upon conclusion of the federal public health emergency and continuous coverage requirement.
  • The May Revision includes $300 million one-time federal fund to help public health hospitals cover costs associated with critical care delivery needs provided during and beyond the pandemic.

Other Health Proposals                                                  

  • The proposal includes $20 million ongoing to zero out $1 premium for health plans due to federal policy concerning abortion coverage.
  • The proposal sets aside $333.4 million in a Health Care Affordability Reserve Fund to deposit individual mandate penalty revenue in the event the federal subsidies are not extended, and to allow for future investment in Covered California subsidies for future affordability investments, but returns $732 million to the General Fund in unspent state subsidies.
  • The proposal includes $20 million one-time General Fund for language access services across Health and Human Services programs and builds upon January’s proposal to develop and implement an HHS-wide policy framework to improve language access standards across programs and services.

HOUSING & HOMELESSNESS

The Governor’s May revise increases funding for housing and homelessness programs to a grand total of $9.3 billion and $12.4 billion respectively. Building on Legislative efforts to keep Californian’s housed throughout the pandemic and protect renters from eviction, $5.2 billion have been assigned to bolster California’s Emergency Rental Assistance Program (ERAP) to pay 100% of retroactive and several months of prospective rent for Californian’s unable to pay their rent due to the pandemic.

Record unemployment and loss in hours and wages has left many Californians struggling to pay rent and utilities including water, power, and gas. In recognition of this hardship, the revise has allocated an additional $2 billion to cover the costs of utility bills. We commend this critical investment and urge the Governor and Legislature to continue to work with community and equity partners to improve the program and ensure the rollout of the funds is as quick as possible. We also implore the Governor and Legislature to critically examine and improve the HCD ERAP application so renters and landlords can receive the full benefits of the rental assistance program. We cannot take our foot off the pedal now.

The revise allocates $12.4 billion to combat the issue of homelessness in California, which has the highest number of people experiencing homelessness in the United States. The Governor’s proposal focuses on current state programs such as Project HomeKey, which focuses on the acquisition and rehabilitation of facilities for housing, and Project RoomKey which uses empty motels and hotels to provide temporary shelter during the pandemic for people experiencing homelessness.

Additional attention is given to encampment cleanup and safety inspections — we are concerned that the proposed partnership with CalTrans may encourage sweeps, and incorrectly targets trash cleanup as a priority instead of investing in the avoidable humanitarian crises at hand. We should focus our resources on ensuring that all Californians have access to safe, stable, affordable housing and target the root of the problem.

The revise also allocates $20 million a year for three years for legal services for those who are at risk of eviction. This minimal investment fails to recognize the increasing need for legal services, which was already severely underfunded. With eviction protections set to expire on June 30, 2021 and reports of a slow roll out of the rental assistance funding, there will be an eviction tsunami that the courts and legal services providers are simply not prepared or funded for. The revise also does not include any additional funding for the state to comply with the U.S Supreme Court decision, Jameson v. Desta, which is critical to ensuring that litigants have full access to their due process rights. Thus, the $20 million allocated by the Governor does not match the need from community.

Lastly, the revise includes funding for housing production, one of the main contributing factors in California’s housing shortage. Among other proposals, the Governor proposes $1.75 billion in one-time funding to support Housing and Community Development affordable housing projects, 6,300 of which are currently shovel ready.

In summary, the May Revise makes the following investments:

Rent and Housing Relief

  • $5.2 billion in federal rental relief aid for state and local entitlement jurisdictions from the U.S. Treasury.
  • $331 million in national mortgage settlement funds for mortgage assistance for homeowners.
  • $1 billion to the California Housing Finance Agency (CalHFA) for mortgage assistance and principal reductions.

Housing Production

  • $1.75 billion in one-time general funds to support Housing and Community Development affordable housing projects, 6,300 projects that are currently shovel ready.
  • $81 million in one-time funds to expand CalHFA’s Accessory Dwelling Units (ADU) program.
  • $45 million to scale up excess land development.
  • $500 million for Housing and Community Development to provide planning and implementation grants to regional entities for infill developments, the goal of which is to reduce vehicle miles traveled (VMT) and align with the state’s climate goals.
  • $300 million in one-time funds to sustain Housing and Community Development legacy project affordability requirements.

Homelessness

  • $3.5 billion in one-time funds for HomeKey program to acquire and rehabilitate more housing facilities.
    • $1 billion of this funding is dedicated to families experiencing or at risk of experiencing homelessness.
  • Project RoomKey Transition
    • The budget provides $150 million to help transition individuals from short term Project RoomKey housing into permanent housing. Trailer bill language is anticipated that would provide more information on how these funds are to be used.
  • $40 million one-time general fund available over five years to Homeless Coordinating Financing Council for grants and tech assistance to jurisdictions.
  • $53 million in one-time general funds to “coordinate encampment outreach services” with CalTrans to connect unhoused individuals with services.
  • $475 million in general funds in both 2021- 22 and 2022-23 to expand the existing CalWorks housing support program.
  • $280 million in general funds in both 2021-2022 and 2022-2023 to expand program which will provide housing related supports to eligible families experiencing homelessness in the child welfare system.
  • $100 million in general funds dollars in 2021 and 2021 to support access to health, safety, and housing support for people experiencing or at risk of Adult Protective Services involvement.
  • $20 million one-time funding for deferred maintenance for seasonal farmworker rental housing.
  • $175 in general funds annually through 2023-2024 for people with disabilities who are experiencing homelessness under the Housing and Disability Advocacy program.

Student Housing

  • $4 billion in one-time general funds split evenly for fiscal years 2021-20221 and 2022-23 to invest in the low-cost student housing grant program.
  • An increase of $130,000 for the Homeless Youth Project through the California State Library.

Homeownership

  • $100 million to expand CalHFA First Time Homebuyer Assistance Program.

PUBLIC BENEFITS

The pandemic exposed significant gaps in our state’s social safety net that leaves many Californians to fend for themselves as the federal, state, nor local governments were able to find solutions during the global pandemic. However, the pandemic also provided a chance to build from the current safety net. We are encouraged by proposals in the May Revise that advance the goal of building a permanent safety net that captures everyone who calls the golden state home.

Food Security

Efforts by the Governor to tackle hunger are appreciated, however, the state must go far beyond the investment laid out in the May Revise to truly address hunger for all Californians. Many Californians continue to lack access to food, so the Governor and Legislature must make an investment that significantly invests in providing emergency food to all Californians, regardless of their immigration status.

  • In January, Newsom put in $35 million one-time to food banks to provide emergency food assistance, but no additional funding is included in the May Revise.
  • We are advocating for $800 million in emergency food assistance to all Californians, a proposal championed by Assembly member Santiago and prioritized by the Latino Caucus. The Governor must do a lot in in this budget to truly make a make a significant dent on hunger.

Free School Meals

During the pandemic, we’ve seen success in providing every school aged child free grab and go meals throughout California — we applaud the Governor for prioritizing Universal School Meals in the May Revise for all students to access free breakfast and lunch. This is a critical program that tackles hunger for children who live in food insecure homes. We look forward to working with the Governor and Legislature to ensure that all children have access to free breakfast and lunch.

  • Governor’s proposal: $150 million ongoing Proposition 98 General Funds to encourage local educational agencies to participate in one of the federal universal meal provisions. The flexible language is questionable; however, we believe that we may see this as a competitive grant.

Food Distribution

Another result of the pandemic is the disruption of how food arrives to communities. The Governor’s proposal creates additional funding to get older Californians enrolled in the CalFresh program and allocates funding to direct California grown food to reach urban communities.

  • Governor’s proposal:
    • $2 million ($1 million from general fund) ongoing allocated to the Department of Aging for outreach to older adults to enroll in the CalFresh program.
    • $68 million (in addition to the $10 million in the January budget for a total of $78 million) one-time funding to increase access to California grown food in urban communities. The proposal heavily supports small and urban farmers.
    • The ideas and intentions for these proposals are good, but the lack of detail does not promise that food will be redirected to existing food deserts or other communities where produce is not readily available.

CalWORKs

The May Revise provides a 5.3 percent increase for CalWORKs grants, an increase from the January budget proposal of 1.5 percent. This will raise grants for all family sizes above 50 percent of the federal poverty level. However, this increase fails to complete the agreement to raise CalWORKs grants to assistance unit plus one which would ensure that no child receives a CalWORKs grant that is less than half the federal poverty level.

The chart below compares current grant levels, where grants would be if funded under the 2019 agreement, and what the grant would be under the Governor’s May Revise budget. We call on the Legislature to fully fund CalWORKs grants to AU+ 1.


One Time CalWORKs Payments

The budget proposes to use $203 million in federal TANF Emergency Pandemic funds to provide a $640 one-time payment to all CalWORKs households. This payment will be provided in July and will be the second payment CalWORKs families receive in 2022.

CalWORKs Family Re-Unification Funding

The budget proposes $8,776,000 ongoing to provide cash assistance to parents whose children have been removed from the home and placed in out-of-home care and who would not otherwise qualify for CalWORKs.

CalWORKs Overpayments

The budget proposes to reduce the monthly amount collected from CalWORKs grants where a family got a cash assistance overpayment during the pandemic due to delays in re-determining eligibility and grant levels. Currently, such overpayments take ten percent of the monthly grant; under this proposal, the reduction would be five percent of the grant amount. Western Center supports waiving all such overpayment collections.

CalWORKs Housing Support Program

The budget proposes a massive $475 million increase in funding for the CalWORKs Housing Assistance Program (HSP) in each of the next two years. This funding will be on top of the existing $90 million in funding for the program and will include statutory changes that may allow counties to serve households before they receive a three-day notice of eviction.

Golden State Stimulus II

The proposed budget includes $8.1 billion for an additional Golden State Stimulus (GSS) payment, including $600 payments for families earning up to $75,000 who did not already receive a GSS payment. The budget includes an additional $500 payment to families with dependent children making up to $75,000 and an additional $500 to ITIN filers that earn up to $75,000 and have a dependent. This would bring the total investment in the GSS to $11.9 billion when combined with the earlier funding provided in February.

We support the Governor’s providing an additional state stimulus that includes ITIN holders, however, barriers remain for providing pandemic relief to undocumented Californians who lack an ITIN, Californians who do not file taxes because they do not make enough in earnings, and those most in need who are currently enrolled in public benefit programs, including General Assistance recipients.

Guaranteed Basic Income Pilot

The budget proposes to provide $35 million to cities and counties to establish guaranteed basic income pilot programs. Western Center supports this as a solid step toward providing people with low incomes more economic autonomy and dignity.

SSI/SSP

The budget proposes a 6.4 percent increase in the SSP portion of the grant for individual SSI recipients only. This would increase the overall grant amount by approximately $10 a month beginning January 1, 2022. This is the first SSP grant increase since at least 2008 (the 2017 increase was a one-time COLA) but falls far short of the level needed to restore the SSI/SSP grant to the federal poverty level. When combined with the anticipated federal cost of living adjustment, SSI grants for individuals would rise from $954 a month to $998 a month.

Housing Disability Advocacy Program

This program provides grants to counties to assist homeless individuals to apply for SSI and to provide housing while the application is pending. The budget proposes to increase funding by $175 million over each of the next two budgets for HDAP. The budget also proposes to eliminate the requirement that counties collect interim assistance payment reimbursements.

Immigration Programs

The budget proposes $20 million in one-time funding to provide additional support for Unaccompanied Undocumented Minors (UUMS) through the Opportunities for Youth pilot project and UUM legal services.

Deferred Action for Childhood Arrivals (DACA) and Naturalization Filing Fees: The budget provides $25 million for immigration services for work on behalf of clients involved in federal DACA status.

 

 

 

Western Center Analysis of Governor Gavin Newsom’s 2021-2022 California Budget Proposal

PDF available here

Governor Newsom has released his proposed 2021-22 state budget. Due to a strong, unanticipated influx of General Fund revenue, Newsom proposes to spend billions of dollars on a one-time basis to address the immediate needs of tenants, landlords, businesses, schools and others in the midst of the pandemic. The budget follows the outlines of the 2020-21 budget agreement, which largely avoided the draconian cuts to education, health and public benefit programs that characterized many past budgets during economic downturns. This proposed budget, while not austere, is conservative both in terms of its long term economic outlook and ambition to meet existing needs of millions of Californians.

Though the budget avoids deep cuts and proposes immediate action to bolster spending, the Governor assumes slower growth in revenue in future years, resulting in significant deficits beginning in 2022-23, which could result in lower spending in the future. In short, the 2022-23 state budget and beyond will either require deep cuts or substantial new revenues to maintain current spending levels.

BACKGROUND

The 2020-21 budget assumed that there would be a substantial loss of state General Funds due to the economic crisis brought on by the COVID-19 pandemic. The budget was passed using half of the Prop 2 Budget Stabilization reserves (aka Rainy Day Fund) and by assuming that the state would receive $14 billion from the federal government in the form of COVID relief by September 2020. Without that funding, the “trigger” mechanism would institute $14 billion in budget cuts.

Despite the fact that federal COVID relief did not arrive in September as projected, budget cuts have not been implemented. In late December, the federal government approved additional COVID relief, but much-needed funding for state and local governments was not included. The state did receive billions to address some COVID related costs, and to fund transportation, education and rental assistance. But in general, those funds cannot be used to fill holes in state budgets.

Fortunately, the deep recession did not result in the massive loss of state General Fund revenue that was predicted. Throughout the second half of 2020, state revenue coffers exceeded estimates by billions of dollars. This counterintuitive outcome reflects the growing impact of income inequality in California, where despite double digit unemployment, tax receipts continue to climb because the incomes of the wealthy are growing — most of the lost jobs were in low wage employment. Additionally, many of those who lost jobs received unemployment insurance that was supplemented by the federal CARES Act. Higher income workers largely did not suffer job losses, and many online enterprises saw substantial increases in profits leading to higher tax payments to the state.

Additionally, anticipated higher caseloads for health and human service programs did not materialize, resulting in lower state spending in the 2020-21 budget. By late November, the non-partisan Legislative Analyst Office projected a $26 billion surplus for the state. The Governor’s budget, however, is cautious, and pegs the surplus at $15 billion. But starting with the 2022-23 budget, the Governor projects that revenue will be more than $6 billion short of estimated expenses, and by the 2024-25 budget, the deficit could grow to $11 billion if no adjustments to spending or revenue are made.

COVID-19

The Governor is calling for “early action” by the Legislature on a package of assistance to respond to the COVID crisis. Among the items in the package are:

  • $600 checks to all households receiving the state earned income tax credit. This would provide cash to approximately 4 million Californians.
  • $575 million to small businesses and non-profits impacted by the COVID crisis.
  • $2 billion in Prop 98 funds to safely re-open public schools starting with classes for the youngest children.
  • $1.2 billion to help Californians with low incomes acquire green vehicles.

While this spending is welcome, it does not come close to meeting the needs of struggling Californians. Increased cash payments to the poorest Californians are needed now and should not be limited to those who have earnings from work. More state assistance is needed to ensure tenants are not saddled with debt that will decimate their credit and drive them further into poverty. The greatest public health crisis in memory is the time to provide health care for all.

FINANCIAL SECURITY

CalWORKs

The budget proposes a 1.5% increase in CalWORKs grants to begin October 1, 2021. The increase will bring the grant for a family of three to 49% of the federal poverty level or a maximum grant of $891 a month. This is similar to a proposed increase from last year’s budget that was dropped when the pandemic started. This funding is provided from the Child Poverty subaccount.

Overall spending on CalWORKs is declining to account for lower than anticipated caseload. The 2020-21 budget assumed the caseload would rise by more than 200,000 families. However, the increase was far more modest, resulting in an increase of about 50,000 cases. Thus, funding for the 2020-21 budget is proposed to be clawed back. Funding for 2021-22 is $600 million lower than the current year but a caseload increase to 480,000 families is funded in the budget.

  • Total TANF (Temporary Assistance for Needy Families) funding: $9.3 billion. This amount includes $7.4 billion for CalWORKs program expenditures and 1.9 billion in other programs.
  • Average monthly caseload for CalWORKs is to be 482,436 2021 – 22, this is a 19% increase from last year.
  • CalWORKs Time on Aid Exemption – $46.1 million one-time General Fund (TANF) block grant funding to temporarily suspend any month in which CalWORKs aid or services are received from counting towards the CalWORKs 48th month time based on a good cause exemption due to the COVID-19 pandemic.
  • CalWorks Grant Increase – 1.5% increase to CalWORKs maximum aid payment levels effective October 1, 2021. $50.1 million in 2021 – 22. The increased grants costs are funded entirely by the Child Poverty and Family Supplemental Support Subaccounts of the Local Revenue Fund.

SSI/SSP

There is no SSP grant adjustment in the Governor’s budget. The budget describes the passing through of federal COLAs that are required under current federal law, but that is not an increase. Indeed, state spending for SSI is proposed to decline again, by an estimated $20 million. Yet again, as in past years, these “savings” are not re-invested into the program to benefit recipients who still have not had grant cuts restored from the last recession. The ongoing failure to address these cuts is unreasonable and unjust.

  • $2.69 billion General Fund, a 0.6% decrease from last year’s budget.
    • Monthly average case load is expected to be 1.18 million recipients this fiscal year, a 1.1% decrease.

$2.4 Billion in Earned Income Tax Credit Assistance

The Governor is proposing a one-time $600 increase in state Earned Income Tax Credit (CalEITC) payments to families that receive CalEITC. With so many people in California struggling, and with many working families losing jobs or income from work, putting cash in people’s pockets is good for people experiencing poverty and good for the state economy. The Legislature may wish to consider increasing the size of the payments or providing more cash assistance to the lowest income families.

The Governor’s proposal will benefit more than four million California families, but it leaves out several million California households who do not have earnings from work. This includes CalWORKs families, virtually all SSI recipients, immigrants with neither SSNs or ITINs, people on General Assistance and many others who are unemployed. The Legislature should consider ways to provide assistance to all low income families and individuals.

Food Security

  • $30 million in one-time General Funding for emergency food assistance to food banks, tribes, and tribal organizations.
  • Supplemental Nutrition Benefit and Transitional Nutrition Benefit Programs Adjustment – $22.3 million ongoing General Fund.
  • California Food Assistance Program – $11.4 million in one-time General Funding for households to receive max allowable allotment based on household size.
  • $10 million one-time General Funding to the Office of Farm to Fork’s Farm to School Program. Brings healthy food to schools and supports agriculture education, including school gardening, farms and cooking.

Higher Education

  • $100 million in Prop 98 funds to address food and housing insecurity for community college students.
  • Increase of $15 million ongoing General Fund to the CSU Graduation Initiative 2025 that targets students experiencing food and housing insecurity.
  • $35 million ongoing from the General Fund for Cal Grants which will add 9,000 students to the Cal Grant awards, bringing the total to 50,000 awards.

Child Support

  • $24.9 million ($8.5 million General Fund) ongoing for local child support agencies to improve collections and services
  • $23.8 million ($8.1 million General Fund) for local child support courts and state operations for child support funding.

Miscellaneous

The proposal includes $35 million one-time General Fund to support micro-grants of up to $10,000 seed funding. These grants are for underserved groups, including undocumented immigrants, to start small businesses.

ACCESS TO JUSTICE/ FINES & FEES

Online Traffic Court Adjudication Pilot

The Governor is proposing again to expand the traffic court online adjudication pilot program statewide. This pilot allows people to pay traffic tickets online rather than make an appearance in court. People with low incomes are given a minimum reduction of 50% of the fines, fees and assessments due to the court. It also allows them to get on a payment plan not to exceed $25 a month.

The proposal allots $12.3 million General Fund, increasing the total to $58.4 million ongoing General Fund by 2024-25, to expand the program statewide, and to include non-traffic infractions.

The Legislature chose not to move forward with the proposal last year and instead used the funding provided for the pilot to reduce criminal fees. Advocates also expressed concern about the design of the pilot and were seeking changes that would expand discounts to people with low incomes.

HEALTH CARE

The Governor’s proposal takes a baseline approach to health care with no major expansions, including no proposal to expand Medi-Cal to undocumented elders or eliminate the harmful Medi-Cal assets test. The proposal resumes the California Advancing and Innovating Medi-Cal initiative (CalAIM), which was put on hold due to the pandemic; expands Continuous Glucose Monitoring systems; extends suspension of Medi-Cal benefits and supplemental provider rates for 12 months; proposes one-time funding for behavioral health services, particularly for school-aged children; and takes further steps to implement the Master Plan on Aging.

Medi-Cal

  • The Governor’s proposal assumes a 10.1% Medi-Cal case rate from 2019-20 to 2020-21 and 11.7% from 2020-21 to 2021-22, starting with nearly 14 million Californians and increasing to 15.6 million (peaking at 16.1 million in January 2022), representing nearly 40% of California’s population in 2021-22. The administration bases this estimate on continuous coverage requirements under federal law and a pandemic-induced recession, although enrollment numbers have not born out these projections.
  • The proposal includes $12 million ($4.2 million General Fund) to add Continuous Glucose Monitoring systems as a Medi-Cal benefit for beneficiaries ages 21 and older with diabetes, effective January 1, 2022.
  • The proposal implements the CalAIM initiative effective January 1, 2022, including $1.1 billion ($531.9 million General Fund) for FY 2021-22, growing to $1.5 billion ($755.5 million General Fund) in FY 2022-23. This investment follows the proposal that was put on hold last year.
  • The proposal includes $750 million General Fund, available over three years, for DHCS to invest in critical gaps across the community-based behavioral health continuum, including the addition of at least 5,000 beds, units, or rooms. Funding would be made available to counties, requiring local funding match, via a competitive application process.
  • The proposal includes $400 million ($200 million General Fund) one-time over multiple years to implement an incentive program through Medi-Cal managed care plans, in coordination with county behavioral health departments and schools, to build infrastructure, partnerships, and capacity statewide to increase the number of students receiving preventive and early intervention behavioral health services.
  • The Governor’s proposal extends the suspension of Medi-Cal benefits, eligibility, and provider rates by 12 months. Specifically:
    • Optional benefits restored in 2019 Budget, specifically audiology and speech therapy services, incontinence cream and washes, eyeglasses and contacts, and podiatric services, have been extended by 12 months to 12/31/2022 for a cost of $47 million ($15.6 million General Fund).
    • The proposal delays the suspension of Medi-Cal post-partum extended eligibility by 12 months to 12/31/2022 for a cost of $27.1 million General Fund.
    • Supplemental provider payments are also extended by 12 months to 6/30/2022 for a cost of $3.2 billion ($275.3 million General Fund, $717.8 million Prop 56 funds, and $2.2 billion in federal funds).
      • Payments to intermediate care facilities for the developmentally disabled, freestanding pediatric subacute facilities, and Community Based Adult Services proposed to be extended to 12/31/2022 to align with managed care calendar rate year. The 7% IHSS hour cuts has also been proposed to be suspended to 12/31/2022.
      • Supplemental payment for Women’s Health, Family Planning, the Loan Repayment program, behavioral health integration program, AIDS waiver, home health, and pediatric day health no longer subject to suspension.
    • The proposal reflects last year’s announcement to postpone the carve-out of prescription drugs through Medi-Cal Rx to April 2021. Under revised estimates, Medi-Cal Rx is projected to result in less net savings of $612 million ($238.1 million General Fund) in FY 2021-22.
    • The proposal makes permanent the restoration of adult over-the-counter cough/cold and acetaminophen drug benefits for savings of $21 million ($7.8 million General Fund) effective July 2021, although the waiver provided temporary reinstatement earlier as of March 2020.
    • The proposal includes $94.8 million ($34 million General Fund) to make permanent and extend telehealth flexibilities, including implementing remote patient monitoring services as an allowable telehealth modality in fee-for-service (FFS) and managed care delivery systems.
    • The proposal states the administration’s intention to focus on health disparities and cultural and language competency through health plan contractual language.

Other Health Proposals                                                                     

  • The proposal includes $11.2 million in 2020-21 and $24.5 million in 2022-23 to establish the Office of Health Care Affordability, which is charged with increasing cost and quality transparency, developing cost targets for the health care industry, enforcing compliance, and filing gaps in market oversight. The Office will be under the newly created Department of Health Care Affordability and Infrastructure, which will also house the current Office of Statewide Health Planning and Development.
  • The proposal provides $25 million in one-time Mental Health Services Act (MHSA) funds over five years, for the oversight and accountability commission to augment the mental health student services act partnership grant; $25M ongoing Prop 98 General Fund to fund partnerships and county behavioral health departments to support student mental health.
  • The proposal provides $750M in one-time General Funding for competitive grants to counties to acquire and rehabilitate real estate assets to expand the community continuum of behavioral health treatment resources.
  • The proposal establishes a new Office of Medicare Innovation and Integration that will explore strategies and models to strengthen and expand low and middle income Californians access to services and supports, while developing new partnerships with federal government.
  • The administration will appoint a senior advisor on Aging, Disability, and Alzheimer’s to advance cross-Cabinet initiatives and partnerships; $5 million General Fund to further implement Master Plan on Aging; $3 million one-time General Fund for OSHPD to grow and diversify geriatric medicine workforce.
  • In response to the pandemic, the proposal includes $300 million as an initial estimate for vaccine distribution, including a public awareness campaign.

HOUSING

The Governor’s budget proposal includes important investments to address California’s existing housing crisis at a time when the COVID-19 pandemic is making the crisis worse for low-wage workers and communities of color. The proposal builds on recent efforts to provide stability to at-risk households and invest in programs that will aid economic recovery, and increase the supply and production of very low, low, and moderate income housing. In total, the Governor proposes more than $8 billion in housing resources.

Preventing Evictions and Foreclosures

Last August, the Legislature enacted AB 3088 to create strong statewide eviction protections for tenants unable to pay rent due to hardship caused by COVID-19. The bill extended rental protections to January 31st, 2021 to forestall an incoming wave of evictions. The administration is seeking an immediate extension of AB 3088 beyond January 31, 2021 to allow the state to use federal resources to assist those with arrears, rent, and utilities so families and individuals with low incomes stay housed. The budget includes $11.7 million one-time General Funds for trial courts to process the anticipated increase in unlawful detainer and small claims filings resulting from AB 3088.

The Governor is relying on the federal COVID-19 relief bill that was enacted in late December, which will allocate $2.6 billion in rental relief funds to California. Rental assistance will be dispersed between the state and local governments with an estimated $1.4 billion going to the state and $1.2 billion to local jurisdictions with populations over 200,000. The federal program includes eligibility parameters related to eligible use of funds as well as income parameters, with the primary focus of the rental assistance to support individuals and households with less than 80% Area Median Income (AMI), with a priority for individuals and households with less than 50% AMI.

National Mortgage Settlement Program

In the 2020-2021 budget, the California Housing Finance Authority allocated $331 million in National Mortgage Settlement funds to prevent foreclosures and evictions. Last year, the Judicial Council provided $31 million of those funds to local legal service organizations, with the California Housing Finance Authority (CalHFA) recently providing the remaining amount to 90 certified housing counselors throughout California. CalHFA plans to continue to provide mortgage assistance in 2021-22.

Anti-Discrimination

The Budget proposes $2 million General Fund dollars for the Department of Fair Employment and Housing to prosecute violations of anti-housing discrimination laws and to conduct surveys and education and outreach campaigns.

Low-Income Housing Tax Credits

The budget proposes a third round of $500 million in tax credits to reduce funding gaps in affordable housing units. These tax credits will be administered by the California Debt Limit Allocation Committee, the Tax Credit Allocation Committee, and the California Business Consumer Services and Housing Agency.

Excess State Land Development

The Governor is proposing statutory changes to allow market-rate and commercial development on excess state land.

Construction Apprenticeships

In an effort to align housing development with workforce development, the budget proposes $8.5 million General Fund to expend access to state-approved construction apprenticeships and pre-apprenticeships that will result in approximately 650 jobs.

Infill Infrastructure Grant Program

$500 million in General Fund dollars is included to create jobs and increase long-term housing development to further a more equitable housing supply in a post-COVID-19 housing market. This includes $250 million in the current fiscal year and $250 million in fiscal year 2021-22.

Expanded Facilities to Support Housing

To further the goal of ending homelessness in California, the Governor’s budget includes $250 million for the acquisition and/or rehabilitation of Adult Residential Facilities (ARF) and Residential Care Facilities for the Elderly (RCFE). These funds will support physical upgrades and capital improvements.

Project Homekey

To accelerate the work on providing permanent housing for people experiencing homelessness and stop the spread of COVID-19 among this vulnerable population, the Governor is allocating $750 million to extend the program. $250 million is allotted for the current year (2020-21), and $500 million for fiscal year 2021-22. This will be administered by the Department of Housing and Community Development.

 

 

Full Analysis of 2020-2021 California Budget

PDF available here.

The state Legislature approved the 2020-21 budget after reaching a compromise with the Governor. The budget avoids most of the cuts proposed in the Governor’s May Revise to close an estimated $54 billion two-year budget deficit.

Progressive advocates mounted a strong campaign against the Governor’s proposed cuts, arguing that cuts during a recession harm low income families who need help now, make the recovery from the recession even harder, and reinforces structural racism and inequality by not asking the wealthy to pay more in taxes. Rather than approve the proposed austerity budget, the negotiated agreement includes a number of program advancements, and prevents almost all of the painful cuts proposed by the Governor.

Beneficial elements of this budget:

  • Restores lifetime limit for adults on CalWORKs to 60 months, adding 12 additional months that were stripped in last recession.
  • State Earned Income Tax Credit and Child Tax Credit no longer excludes ITIN tax filers with children under six.
  • Increased pass through of child support for families on CalWORKs from $50 to $100 for one child, $200 for two or more.
  • No trigger cuts to SSI, CalWORKs, or Medi-Cal.
  • No cuts to existing Medi-Cal services and eligibility.
  • No cuts to SSI – federal COLA to be passed through on January 1, 2021.

The approved budget relies on the receipt of $14 billion in federal COVID emergency funds by September. Without that funding, the “trigger” mechanism will institute $14 billion in budget solutions. The Governor previously proposed a different trigger, but it was centered around cuts to Medi-Cal, CalWORKs, SSI, IHSS and K-12 education. The trigger agreed to in the budget agreement does the following:

  • Draws an additional $2.7 billion from the rainy day fund and Safety Net Reserve.
  • $1.3 billion one-time benefit from reinstatement of a longstanding deferral of state payments to CalPERS, including from state special funds.
  • $5.9 billion of increased deferrals to Proposition 98 (K-14 education) funding.
  • $600 million reduction to the county realignment backfill in this budget plan (leaving $400 million of county backfill remaining).
  • $770 million of university reductions ($370 million for UC and $400 million for CSU).
  • $100 million of reductions to the judicial branch budget.
  • At least $1.5 billion in state employee compensation reductions, for represented employees, through the collective bargaining process.
  • Potentially, another $1.6 billion from reinstatement of the one-day June payroll deferral instituted during the last recession. (This change would be optional at the direction of the Director of Finance.)

The budget plan contains total reserves of approximately $11 billion, including about $2 billion in the discretionary reserve, $900 million in the Safety Net Reserve, and $8.35 billion in the Proposition 2 Rainy Day fund. If the federal funds do not arrive and these trigger actions take effect, total reserves would be over $7 billion, including over $800 million in the discretionary reserve and $6.5 billion in the rainy day fund.

Even with this agreement, the state’s budget problems are not solved. The budget relies on an estimate of state income tax revenues which were delayed from April 15th to July 15th. The budget assumes significant revenue declines, but if these estimates are inaccurate, it could make the deficit larger (or smaller). Additionally, large revenue gaps exist in the projected 2021-22 budget, and while this budget saves some solutions for the future, there is likely to be an $8-10 billion gap.

Progressive advocates organized under the banner of Commit to Equity are advocating for the Legislature and Governor to pass additional tax increase measures this summer to bridge this gap. Among the ideas under consideration are a tax on the top one percent of tax payers, increasing taxes on corporations and instituting a wealth tax on billionaires.

Public Benefits and Human Services

The Governor’s May Revise called for significant cuts to CalWORKs and SSI. In CalWORKs, the Governor proposed a significant reduction in funding for welfare-to-work just when tens of thousands of people were coming onto the program for both cash assistance and a chance to find employment. That cut was rejected. Smaller cuts to the CalWORKs Home Visiting program and a one-year suspension in funding for the Cal-OAR program were approved.

Supplemental Security Income — The Governor proposed to reduce the state contribution to the SSI grant by approximately $5 a month. That proposal would have kept the SSI maximum grant amount flat for 2021 since a similar sized federal cost of living adjustment is expected starting January 1. But that cut was rejected in the compromise, and SSI recipients will now get the full value of the federal funds.

CalWORKs “Time Clock” — In 2012, under pressure of another large budget deficit, the Legislature went along with Governor Brown’s proposal to cut CalWORKs time on aid from 60 months to 48 months, and to institute two confusing and unproductive 24 month clocks, one with more welfare to work flexibility and one rigidly following federal TANF work requirements. As a practical matter the changes had virtually no positive client impact and both advocates and counties advocated for it to end.

This budget finally restores the full 60 months on aid permitted under federal TANF law (a racist and misogynistic rule in itself) and eliminates the two 24-month work activity approach. It means that adults forced off CalWORKs because they hit the 48-month limit will be eligible to return to CalWORKs for an additional 12 months, have their grant restored, and be eligible for all supportive services. This change will start in May, 2022 after the counties complete the transition to a single welfare information system. Read our Coalition’s budget letter here.

In addition to the CalWORKs victories, the budget also includes several additional investments to prevent hunger. The budget includes hundreds of millions of dollars for:

  • CalFresh outreach to and application assistance for Supplemental Security Income (SSI) recipients who do not yet receive CalFresh;
  • The extraordinary effort by California’s food banks to respond to COVID-19;
  • Simplifications in the CalFresh program that will help those enrolled retain benefits and those who are eligible to access the program more readily;
  • Implementation and expansion of CalFresh to Medi-Cal dual enrollment outreach, in reach and retention;
  • Extension of the sunset for the CalFresh Safe Drinking Water Supplemental Benefit Pilot Program;
  • Shoring up county and state administration of the CalFresh program;
  • Summer meal and school meal programs.

In addition to achieving new funding, the budget also rejects the Governor’s May Revision proposal to delay the implementation of the statewide Restaurant Meal Program, to cut $8.5 million General Fund for the Senior Meals on Wheels Program, and to cut funding from college basic needs programs.

Overissuance in CalFresh — The budget extends the authority of the Department of Social Services to seek federal authority to reduce the numbers of overissuances collected in the CalFresh Program. To learn more about why this authority is needed and how harmful overpayments and overissuances of benefits can be, see this article in The New Republic, which includes quotes from Western Center and our partners at Bay Area Legal Aid. Unfortunately, the budget does not include similar protection for CalWORKs families who had overpayments triggered by the Governor’s executive order suspending re-determinations. Advocates will be working to resolve this problem over the summer.

Calfresh Application Simplification — Makes simplifications in the CalFresh program application, interview, and recertification process and requires counties to do more to ensure that applicants and recipients for Medi-Cal receive assistance in applying for CalFresh. This alignment between Health Care enrollment and CalFresh enrollment is something Western Center has been working on for years in coalition with others, and this budget action mirrors the vision of SB 1002, a Western Center co-sponsored bill vetoed by then-Governor Brown.

Simplification of Reporting Processes — Requires a workgroup to be convened by the Department of Social Services to simplify the CalFresh Semi-Annual Reporting (SAR) process. Authorizes counties to communicate with CalFresh and CalWORKs recipients about redetermination via text, cell, or email, and allows counties to use alternative methods to verify information needed to complete the reporting process and rescind a discontinuance notice.

Protecting Human Services Workforce – Limits to the amount of county share-of-cost will be required for administrative costs in the CalFresh program during the COVID-19 recession, and for two years, to ensure there is no incentive for counties strapped with budget shortfalls to reduce staff. During the last recession, loss of county safety-net jobs were significant, creating a bottleneck for accessing needed services of newly unemployed Californians, but also leaving many in that workforce without a job and prolonging our state’s economic recovery. In some counties, caseworker jobs were never fully restored and their safety net programs suffer as a result.

Immigrants and CalEITC/ Child Tax Credit — Immigrant advocates got a partial victory with the inclusion of undocumented immigrants in the state Earned Income Tax Credit (they are still barred from the federal EITC) and the state Child Tax Credit. Both are limited to families with children under six years of age, so many undocumented immigrants who file with Individual Tax Identification Numbers (ITINs) are still excluded from receiving tax credits even though they are poor and pay taxes. Advocates will be mounting a campaign to complete the work of making state tax credits available to all workers.

Child Support Pass Through — The budget increases the pass through of child support paid to a family on CalWORKs from $50 to $100 for one child, and $200 for two or more children — a change Western Center has been seeking since 2007. Western Center and other members of the Truth and Justice in Child Support Coalition sponsored SB 337 (Skinner) last year, which was vetoed by the Governor. We have been calling for broad reforms of the child support system, including a transition to 100 percent pass through of child support paid. Read our Coalition’s budget letter here.

Access to Justice

The budget includes full funding for the Equal Access Fund. The Governor proposed a five percent cut in the May Revise, but that was rejected by the Legislature. The budget also includes $31 million from the Mortgage Settlement Fund for legal service organizations and support centers to provide eviction defense or other tenant defense assistance in landlord-tenant disputes, including pre-eviction and eviction legal services.

Housing and Homeless Funding

The Governor’s January budget proposed a $750 million one-time investment in homeless programs that would have been administered through regional collaborations. The May Revise pulled this proposal back and replaced state funding with funding from the federal CARES Act.

Project Roomkey — The final budget compromise includes $550 million in federal Coronavirus Relief Fund dollars for Project Roomkey. These funds will be available to cities, counties, and other local entities to acquire and rehabilitate motels, hotels, apartments, adult residential facilities, residential care facilities for the elderly, manufactured housing, and other buildings with existing residential uses that could be converted to permanent or interim housing for people experiencing homelessness. Funds can also be used for master leasing properties, relocation assistance for individuals displaced due to rehabilitation, and capitalized operating subsidies. Funds must be spent by September 1 or they can be reallocated to ensure the state meets the end-of-year deadline to expend funds or return them to the federal government.

Another $50 million will come from the General Fund for Project Roomkey for the acquisition, conversion, and rehabilitation of hotels, motels, and other properties into housing for people experiencing homelessness. These funds can also be used for capitalized operating reserves and must be spent by June 30, 2022.

Additionally, $1.789 billion in federal Coronavirus Relief Fund dollars will go to cities and counties for public health, public safety, or homelessness, with a September 1 deadline to expend funds:

  • $225 million to cities with populations greater than 300,000 that did not receive a direct allocation from the federal government.
  • $275 million to cities with populations less than 300,000.
  • $1.289 billion to counties.

Homeless Housing, Assistance, and Prevention (HHAP) program — $300 million from the General Fund will go to the Homeless Housing, Assistance, and Prevention (HHAP) program, administered by HCD, with funds to be allocated proportionally based on the 2019 Point in Time (PIT) Count:

  • $90 million to continuums of care.
  • $130 million to cities with populations over 300,000.
  • $80 million to counties.
  • At least eight percent of funds must go to assist homeless youth.

Funds must be spent on evidence-based solutions for homelessness, including:

  • Rapid rehousing, including rental subsidies and incentives to landlords, such as security deposits and holding fees.
  • Operating subsidies for affordable or supportive housing, emergency shelters, and navigation centers.
  • Street outreach to assist persons experiencing homelessness to access permanent housing and services.
  • Services coordination, which may include access to workforce, education, and training programs, or other services needed to promote housing stability in supportive housing.
  • Systems support for activities necessary to create regional partnerships and maintain a homeless services and housing delivery system, particularly for vulnerable populations including families and homeless youth.
  • Delivery of permanent housing and innovative housing solutions, such as hotel and motel conversions.
  • Prevention and shelter diversion to permanent housing, including rental subsidies.
  • New navigation centers and emergency shelters based on demonstrated need.

California Tax Allocation Committee — Allocates $500 million in new State Low Income Housing Tax Credits (LIHTC) for 2020-21.

Foreclosure Assistance — $300 million from the National Mortgage Settlement allocated to The California Housing Finance Agency (CalHFA) for foreclosure assistance.

Health Care

Following agreement from the Governor, the health omnibus trailer budget bill (AB 80/SB 102) closely resembles the legislative deal reached earlier this month. The budget deal rejects many of the health cuts proposed in the May Revision. Specifically, it maintains critical Medi-Cal benefits, rejects reinstating the senior penalty by raising the Medi-Cal Aged & Disabled income limit, limits estate recovery, and restores navigator and black infant health funding. Unfortunately, the budget indefinitely delays Health4AllElders by not expanding Medi-Cal to undocumented Californians aged 65 and older.

The budget deal maintains eligibility expansions approved last year but indefinitely delays Health4AllElders: 

  • Ends the senior penalty by expanding the Medi-Cal Aged & Disabled Program for individuals with incomes between 123 and 138 percent of the federal poverty line (FPL). The 2019 Budget scheduled implementation for January 2020, but was delayed to August 2020.
  • Implements the Medicare Part B disregard, which would stop seniors and persons with disabilities from losing access to free Medi-Cal due to a confusing Medi-Cal rule that creates fluctuations in income calculations even though a person’s actual income has not changed.
  • Extends Medi-Cal eligibility from 60 days to one year for post-partum women diagnosed with a mental health disorder.
  • Upholds 2016 Budget Act that limited estate recovery federal requirement to long term services for individuals who pass away after January 1, 2017. Estate recovery is asset seizure of the home and savings of poor individuals who receive health care coverage through Medi-Cal and are 55 or older or permanently institutionalized. The proposed expansion of estate recovery would have acted as an enrollment barrier, and perpetuated government-sanctioned asset stripping in communities of color.
  • Maintains one-time $30 million General Fund funding for enrollment navigators, approved in the 2019 Budget.
  • Aligns with federal law to prohibit termination of Medi-Cal eligibility for a juvenile under age 21 or foster care youth under age 26 while incarcerated.
  • Once funding is available, prioritizes Health4AllElders, which would expand full-scope Medi-Cal for adults 65 and older who, but for immigration status, would be eligible.

On the Medi-Cal benefits/services side, the budget deal: 

  • Maintains all critical Medi-Cal benefits, including adult dental benefits, audiology, incontinence creams and washes, speech therapy, optician/optical lab, podiatry, optometry, acupuncture, nurse anesthetists services, occupational and physical therapy, diabetes prevention program services, pharmacist-delivered services, screening, brief intervention and referral to treatments for opioids and other illicit drugs.
  • Services that keep individuals in their home rather than nursing facilities, including Community-Based Adult Services (CBAS) and Multipurpose Senior Services Program (MSSP) remain. In-Home Supportive Services (IHSS) service hours remain uncut.
  • Maintains funding for behavioral health counselors in emergency departments, approved in the 2019 Budget.
  • Extends the Medically Tailored Meals Pilot Program authority for an additional year, at no additional cost due to delayed implementation.
  • Directs DHCS to maximize federal funding to provide COVID-19 testing and treatment to uninsured and underinsured individuals through the COVID-19 Presumptive Eligibility (COVID19 PE) program.

On the Medi-Cal provider side, the budget deal: 

  • Maintains supplemental provider rates for physicians, dentists, women health services, family health services, developmental screenings, CBAS, Adult Day Health Center, non-emergency medical transportation, intermediate care facilities- developmental disabilities, hospital-based pediatric physician, adverse childhood experiences (ACEs) screening and provider training, value-based payments, and physician and dental loan repayment, but suspends these payments (with the exception of women’s health services) on July 1, 2021 unless revenues exceed expenditures.
  • Maintains $8.2 million in supplemental payments to the Martin Luther King Jr. Community Hospital in Los Angeles.
  • Provides payments to non-hospital clinics for 340B pharmacy services and continues planned implementation of Medi-Cal Rx for January 2021.
  • Negotiated agreement cuts Medi-Cal plan rates up to 1.5 percent from July 2019 to December 2020, due to anticipated lower costs and utilization related to the pandemic, but does not include a cap on managed care plan rates for in-patient hospital stays. The budget also establishes a risk corridor as safeguard against unanticipated costs.

Other Medi-Cal budget agreements: 

  • Delays implementation of the CalAIM
  • Maintains dental managed care in Sacramento and Los Angeles.
  • Maintains funding for the Medical Interpreters Pilot Project that was approved in 2019 Budget.
  • Prescription drugs – allows Medi-Cal to negotiate for rebates based on the international “best price,” allows DHCS to seek federal approval to establish a prescription drug rebate program for non-Medi-Cal populations, and eliminates copays and the six prescription limit in Medi-Cal fee-for-service.

Other health program budget deals: 

  • Department of Public Health – maintains funding for the Black Infant Health program and rejects reversions of 2019 augmentations, including partial reversions of funds appropriated for sickle cell disease and a farmworker health study, and an entire reversion of technical support for mental health disparities grants and mental health services grants.
  • Covered California – keeps the additional state-based subsidies for households below 138 percent FPL and between 200-600 percent FPL at lower expenditure authority to reflect lower than projected enrollment.
  • Health Care Payments Data System – establishes the system to provide for data collection and requires publicly available reporting and data releases.
  • Hearing Aids – maintains funding to help cover the cost of hearing aids not covered by insurance for children in households up to 600 percent FPL to be implemented no sooner than July 2021.

 

 

 

Update on the 2020-21 California Budget

On Monday, June 15th, the California Legislature met the state constitutional deadline for passing the 2020-21 budget by approving a new state budget. At this time, it is unclear if the Governor will support the budget, as no deal has been announced.

The Legislature approved this budget to uphold its constitutional duty, but it is not the final version. The COVID-19 pandemic has caused unprecedented economic and public health uncertainty, and it has highlighted and exacerbated every existing inequity the state has failed to address. On top of the pandemic, social unrest calling for justice and equality for Black people has created a demand for leaders at every level to do things differently to dismantle entrenched white supremacy. If the Governor and Legislature simply ram through a budget deal, it will disproportionately harm Black people and other communities of color – as the economics of this state always do.

Forthcoming actions on this budget by the Legislature and Governor must take into account the needs of ALL Californians. The state’s economics must change — that includes increasing revenue through taxes on extreme wealth, and not making cuts to the programs millions of Californians rely on.

The budget approved by the Legislature rejects the vast majority of cuts proposed in the Governor’s May Revision budget, and includes several program expansions sought by advocates. The Legislature’s budget includes a trigger mechanism that is substantially different than the one proposed by the Governor. The trigger approved by the Legislature would not take effect until October 1, 2020, and will be “triggered” if the U.S. Senate and President fail to approve the $14 billion in assistance to states that the House of Representatives approved last month, on a bi-partisan basis.

To bring the budget into balance if federal leaders fail to deliver additional funding, the Legislature’s trigger would utilize reserve funding, deferrals of school funding, delays in previously approved spending, and state employee compensation reductions. It would not include most cuts to health programs, CalWORKs, SSI, IHSS, or programs for elders, which were proposed by the Governor. More details are available here.

The Legislature’s budget does include some program corrections, restorations, and expansions — notably, it ends the exclusion of immigrant workers with Individual Tax I.D. Numbers (ITINs) for the state Earned Income Tax Credit (CalEITC), restores the CalWORKs lifetime limit for adults to 60 months, provides another $350 million for homeless programs, and provides COVID-19 inspired CalFresh program simplifications and out-of-office technology advancements. All of these proposed changes are subject to ongoing negotiations, and until a “deal” is announced, we won’t know if they are in the final budget.

For health care, Western Center supports the Legislative budget’s rejection of cuts proposed in the Governor’s May Revision. The Legislature’s budget protects the health of California’s elders and communities of color in several ways. It does not reinstate the senior penalty by raising the Medi-Cal Aged & Disabled income limit, per last year’s budget. It rejects Medi-Cal benefit cuts and limits estate recovery, which disproportionately seizes homes from Black, Latinx, and API families. It also restores funding for the Black Infant Health program and for health navigators, and expands Medi-Cal to elders regardless of immigration status, though, Western Center would like to see that implemented sooner.

The Legislature’s budget recognizes the need to address the state’s homelessness crisis for unhoused community members, while also preventing additional homelessness. The budget allocates resources for traditional interventions, as well as funds to increase permanent housing options through the expansion of the low income housing tax credit, acquisition of hotels and motels which may appropriately serve as longer-term housing resources, and funds for the provision of legal assistance to low-income households that may be threatened with displacement or eviction. Given the magnitude of California’s housing challenges, which are compounded by the COVID-19 pandemic and ensuing responses, we look forward to building on this foundation.

Commentary: Revised budget puts older Californians, communities at risk

, By Western Center's Linda Nguy & Justice in Aging's Claire Ramsey , CalMatters

“No one expected good news when Gov. Gavin Newsom announced the May Revision of the California budget. As the COVID-19 pandemic obliterates plans and economies, there was no expectation that California’s budget would go unscathed. However, we never predicted the biggest blow would go to California’s older adults.“

 

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