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California aims to cut cost of average COVID-19 test, shift more charges to insurers

“Jen Flory, a policy advocate at the Western Center on Law and Poverty, said she welcomed the administration’s intent to hold health plans accountable for covering COVID-19 testing and to expand testing in vulnerable communities. She said it’s important that the state ensure testing is available, in particular, to low-wage and essential workers, people with limited English proficiency and the uninsured.

But the state must still provide flexible testing options like the state’s drive-thru testing sites for Californians, even as it pushes to make more testing available in traditional medical settings, she said.

“There needs to be a way for people to get testing outside of traditional 9-5 doctors offices,” she said.”

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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

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.

https://calmatters.org/commentary/revised-budget-puts-older-californians-communities-at-risk/?fbclid=IwAR1itVXermQ2tpqXE-xe2ICXNOZRpfReVUuU895A8wKPNcJHFokQ3BTMK_8

 

How Newsom budget yanks back Medi-Cal health care gains for low-income residents

“The gains we had made have been cut from people when they were still recovering from the previous recession,” said Linda Nguy with Western Center on Law and Poverty. “To have them bear that burden once more is devastating.”

Newsom’s proposed budget especially lets down seniors, Nguy said.”

https://calmatters.org/health/coronavirus/2020/05/california-medi-cal-budget-cuts-benefits/

Newsom’s deep-cutting budget axes programs for poor people amid $54 billion shortfall

“1:20 –Michael Herald of the Western Center for Law and Poverty explains the effect of Newsom’s proposed budget cuts — many which go deeper than the cuts after the 2008 recession — on poor people. Programs implemented in the last two years and designed to keep poor people out of debt are on the chopping block.”

Newsom’s deep-cutting budget axes programs for poor people amid $54 billion shortfall; Plus, a spotlight on Alameda County Community Food Bank

Analysis: May Revision of California 2020-2021 State Budget

*PDF of this analysis available here.

The May Revision for the California 2020-21 budget is a troubling demonstration of how the COVID-19 crisis has impacted every aspect of our lives, and will continue to do so.

The proposed budget has cuts in virtually every area of state government, including devastating cuts to education, environmental programs, health care, public benefits, In-Home Supportive Services, and wages for state employees. Only programs directly fighting the pandemic will see budget increases.

The chart below makes the depth of cuts across programs clear:

Source: CA Dept. of Finance May Revise Budget Summary, page 11

In total, the May Revise estimates a two-year budget deficit of $54.3 billion. This dwarfs the highest budget deficit from the Great Recession of $28 billion. While the cuts are deep and painful, they would be worse if the state had not saved nearly $18 billion in reserves over the past decade. This budget proposes to use half of those reserves in the 2020-21 budget, while preserving the remainder of the reserve funds for future years.

Below is a high level summary of how the budget closes the $54 billion budget deficit.

Source: CA Dept. of Finance May Revise Budget Summary, page 4

Notably, the budget is balanced with $14 billion in cuts that will occur if additional federal funds are not received by July 1, 2020. These cuts, called “triggers” in budget parlance will go into effect automatically. They include cuts to CalWORKs, IHSS, Medi-Cal, and SSI. This means attention will be focused on Congress for the next several weeks. Western Center is working with a broad coalition of groups to advocate with Congressional members to pass the HEROES Act, a recently proposed $3 trillion federal relief package that includes $875 billion for state and local governments to fill budget deficits created by the pandemic.

CalWORKs
There are no grant cuts or eligibility cuts proposed for CalWORKs, but there are major reductions being proposed to county Single Allocation Funding (SAF) to accommodate explosive growth predicted in the program. CalWORKs caseload is expected to rise to 724,000 families just months after reaching an all-time low of approximately 350,000 families in the program earlier in 2020. This rise in caseload is significantly higher than it was for the Great Recession, which peaked at just below 600,000 cases. To absorb the caseload increases, the budget uses $450 million from the Safety Net Reserve in the 2020-21 budget while retaining an additional $450 million in reserve for future budget shortfalls.

There is also very bad news for CalWORKs recipients in this budget. It reduces expenditures in CalWORKs by $850 million by making the following reductions if additional federal relief funding is not approved by Congress:

CalWORKs Employment Services and Child Care
The May Revision assumes CalWORKs Employment Services and Child Care will not be utilized by as many families due to the lack of jobs. These changes would result in a savings of $665 million General Fund in 2020-21.

CalWORKs Expanded Subsidized Employment
The May Revision reduces all but the base funding for CalWORKs Subsidized Employment. This proposal would result in a savings of $134.1 million General Fund in 2020-21.

CalWORKs Home Visiting
The May Revision reduces funding for CalWORKs Home Visiting by $30 million General Fund in 2020-21.

CalWORKs Outcomes and Accountability Review (CalOAR)
The May Revision eliminates funding for CalOAR, but provides counties with the ability to continue implementation. This proposal would result in a savings of $21 million General Fund in 2020-21.

The impact of these cuts will be a sharp curtailment of CalWORKs welfare-to-work activities. While the budget does not exempt all families with young children, as was done in the Great Recession, it assumes that the high unemployment rate will result in significantly reduced use of child care and employment services. It takes away significant funding from subsidized employment at a time when this program would be very helpful to encourage and support employers to hire CalWORKs recipients as the economy opens back up.

The budget also proposes one cut to CalWORKs not contingent on receipt of additional federal funds. The Governor’s January budget proposal to increase the child support pass through to CalWORKs families was withdrawn. This policy change would have allowed families to keep up to $100 for one child or up to $200 for two or more children in child support paid rather than keep this payment to pay the state, local and federal governments for the cost of providing basic needs help to low-income families.

While there are some disappointing cuts to the CalWORKs program services and pass through income, the Governor’s proposed budget stays the course on gains made to end childhood deep poverty. First, it retains California’s grant levels, including the proposed 3.1% increase proposed in January. CalWORKs grants will be at or above the “deep” poverty level for the first time in decades, just when poor families need the money most. Second, the budget makes no changes to CalWORKs eligibility, meaning that if the economy continues to lose jobs, there will be a safety net for families not eligible for unemployment insurance. Third, the budget does not reduce funding or eligibility for homeless and housing programs like Homeless Assistance, the Housing Support Program (HSP), Family Stabilization or CalWORKs diversion (where the Governor recently expanded eligibility via executive order).

These programs will be vitally important in protecting recipients from evictions once the pause on unlawful detainer filings is lifted.

Income and Tax Credits
While the budget makes no reductions to the state Earned Income Tax Credit and proposes an increase in the child poverty tax credit, it fails to end the exclusion for workers with ITINs.

The budget recognizes the role that wages have in reducing poverty and does not suspend the next increase in the minimum wage to $14 an hour on January 1, 2021.

SSI/SSP Grants
State funding for SSI/SSP grants is proposed to be reduced on January 1, 2021 to the federal minimum of $156 a month. While that is not good news, because the Legislature has only restored $4 of the $77 cut from SSI/SSP grants during the Great Recession, there is now only $4 a month that can be taken from recipients. This cut, like the CalWORKs cuts outlined above, will not go into effect if the state receives additional federal funding.

Equal Access Fund
The budget proposes a reduction of approximately 5% in the Equal Access Fund, or around $1 million from the $20 million fund. The one-time $20 million augmentation to the EAF is not impacted because those funds were already dispersed in the 2019-20 budget. The budget also proposes to use $31 million from the Mortgage Settlement Fund to fund legal services for persons facing eviction or homelessness. These funds will be administered by the Judicial Council, who will determine who receives the funds and for what purposes.

CalFresh
There are no changes to the CalFresh program. The budget retains funding for both the Supplemental Nutrition Benefit and the Transitional Nutrition Benefit program which were created in 2018 to help households that lost federal SNAP benefits when SSI recipients were made eligible for SNAP. The May Revision also proposes a decrease of $11.4 million ongoing Proposition 98 General Fund to establish or support food pantries and CalFresh outreach at community college campuses. Instead, it proposes statutory changes to support community college food pantries within available Student Equity and Achievement Program funding.

Child Nutrition Programs
No cuts were made, but the $70 million in the Governor’s January budget proposal to increase access to and quality of food served has been withdrawn. Additionally, the May Revision proposes some of the remaining $1.6 billion in federal Elementary and Secondary School Emergency Relief funds be given in grants to county offices of education for the purpose of developing networks of community schools and coordinating health, mental health, and social service supports for high-needs students, citing food insecurity as one of the barriers to learning that this funding is intended to address.

Child Support
The May Revision has withdrawn the Governor’s January Budget Proposal that would have increased the child support disregard pass-through and would have automatically forgiven uncollectable child support debt owed to the government, resulting in a savings of $8.4 million General Fund in 2020-21. Absent additional federal COVID-19 general relief funds, the budget would assume the funding levels for local child support agencies at the 2018 funding level, resulting in savings of $38.2 million General Fund in 2020-21. It would also require savings of $8.2 million in Department contracts and services.

Criminal Justice Fines and Fees
To address the expected decline in revenue for fines and fees collection, the Governor’s May Revision includes an additional $238.5 million one-time General Fund in 2020-21 and a 2-year total backfill to $315.5 million General Fund. No action was taken to relieve people who owe fees and fines.

Fees and fines will continue to weigh heavily on the physical, economic, and mental health of those impacted, and will continue to damage credit scores, access to traditional banking, and access to tax credits. What’s more, that debt will continue to impact relationships within families, and relationships with employers. Western Center will continue to push our co-sponsored bill, SB 144, to end these devastating fees in California.

The May Revision maintains funding included in the Governor’s Budget to expand the ability to pay program statewide.

Health Care
Unfortunately, the May Revision makes deep cuts to the Medi-Cal program at a time when many of California’s poor families have not yet rebounded from the last recession. The Medi-Cal budget grows slightly from last budget year to $112.1 billion ($23.2 billion General Fund) due to an anticipated increase in caseload of 2 million due to the COVID-19 pandemic, for a total of 14.5 million (an increase of about 2 million absent the COVID-19 pandemic). However, there are significant proposed cuts to eligibility, benefits/services, and provider rates as outlined below:

The May Revision proposes the following Medi-Cal eligibility cuts:

  • Withdraws January proposal to expand full-scope Medi-Cal to undocumented elders (Health4AllElders) for a savings of $87 million General Fund. Maintains Medi-Cal eligibility for undocumented children and young adults (Health4AllKids and Health4AllYoungAdults).
  • Does not implement the 2019 Budget Act expansion of Medi-Cal Aged and Disabled Program for individuals with incomes between 123% and 138% of the FPL, for a savings of $67.7 million General Fund. The 2019 Budget scheduled implementation for January 2020, but was delayed to August 2020, and now proposed to be eliminated.
  • Does not implement the Medicare Part B disregard, which would have stopped seniors and people with disabilities from losing access to free Medi-Cal because of a confusing Medi-Cal rule that creates fluctuations in income calculations, even when a person’s actual income has not changed.
  • Does not implement the 2019 Budget Act to extend Medi-Cal eligibility from 60 days to one year for post-partum women diagnosed with a mental health disorder, for a savings of $34.3 million General Fund in 2020-21.
  • Reverts one-time $30 million General Fund funding for enrollment navigator funding that was approved in the 2019 Budget.

On the Medi-Cal benefits/services side, the May Revision proposes trigger cuts (absent additional federal funds) to:

  • Reduce adult dental benefits to the partial restoration levels of 2014. Partial dentures, gum treatment, and rear root canals will be cut for adults.
  • Eliminate audiology, incontinence creams and washes, speech therapy, optician/optical lab, podiatry, and optometry, all of which were restored earlier this year. It also proposes to eliminate acupuncture (which was restored July 2017), nurse anesthetist services, occupational and physical therapy, pharmacist-delivered services, screening, brief intervention and referral to treatment for opioids and other illicit drugs, all of which were newly approved in the 2019 budget.
  • Repeal 2016 Budget Act that limited estate recovery to 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 have received health care coverage through Medi-Cal and are 55 or older or permanently institutionalized. This has acted as an enrollment barrier.
  • Eliminate diabetes prevention program services.
  • Eliminate the Community-Based Adult Services (CBAS) program, effective January 2021, for a General Fund savings of $106.8 million in 2020-21 and $255.8 million in 2021-22. Eliminate the Multipurpose Senior Services Program (MSSP) effective no sooner than July 2020.

Note: The May Revision includes an additional $386.7 million in General Fund costs in 2019-2020 and $284.5 million in 2020-2021 for COVID-19 response for changes including:

  • The COVID-19 presumptive eligibility program for the uninsured and underinsured who are ineligible for Medi-Cal.
  • Hospital Presumptive Eligibility Expansion (HPE) for people over age 65 and for additional time periods.
  • Waiving Shares of Cost for COVID-19 testing and treatment.
  • Emergency Paid Sick Leave for IHHS and other providers.
  • Testing, Diagnosis, and Treatment of COVID-19 for people who are Medi-Cal eligible and incarcerated.
  • A number of provider rate increases.

On the Medi-Cal provider side, the May Revision proposes to:

  • Eliminate supplemental provider rates for physicians, dentists, family health services and developmental screenings, non-emergency medical transportation, value-based payments, and amounts not yet spent on the physician and dental loan repayment programs funded by Prop 56, absent additional federal funds. These funds will be redirected toward caseload growth.
  • Eliminate Prospective Payment System (PPS) carve-outs for FQHCs and Rural Health Clinics for Medi-Cal services including pharmacy, dental and other services with the exception of Specialty Mental Health and Drug Medi-Cal Services, for $50 million General Fund savings.
  • Reduce rates to Medi-Cal plans resulting in $452.6 million General Fund savings, including a retroactive rate reduction going back to July 2019.
  • A 4-month, 10% rate increase to Skilled Nursing Facilities to support COVID-19 response.

Other Medi-Cal proposals:

  • Delay implementation of the CalAIM initiative, resulting in a decrease of $347.5 million General Fund in 2020-21.
  • Withdraw proposal to provide payments to non-hospital clinics for 340B pharmacy services for a savings of $26.3 million General Fund in 2020-21, but continue planned implementation of Medi-Cal Rx for January 2020.
  • Remove $45.1 million General Fund in 2020-21 in associated funding for the Behavioral Health Quality Improvement Program.
  • Revert one-time $20 million General Fund for behavioral health counselors in emergency departments that was approved in 2019 Budget.
  • Revert one-time $5 million General Fund for the Medical Interpreters Pilot Project that was approved in the 2019 Budget.
  • Adjustment of $5.1 billion General Fund savings due to enhanced Federal Medical Assistance Percentage (FMAP) rate through June 30, 2021 and $1.7 billion saving from federally approved Managed Care Organization tax in April.
  • Shift $50 million from the County Medical Services Program (CMSP) reserves in each of the next four fiscal years to offset CalWORKs costs, but maintains realignment annual allocation.

The May Revise proposes the following changes to other health programs:

  • Covered California – keeps the additional state-based subsidies for households below 138% FPL and between 200-600% FPL. Because the take-up rate has been lower than anticipated, there are savings of $164.2 million for 2019-2020 and $90.3 million for 2020-2021, and $15 million in increased individual mandate penalty revenues in 2020-2021.
  • Hearing Aids – the $5 million General Fund proposal to help cover the cost of hearing aids not covered by insurance for children in households up to 600% FPL is withdrawn.
  • Medi-Cal’s Health Insurance Premium (HIPP) program in which Medi-Cal pays the premiums for eligible enrollees’ private insurance for $.7 million General Fund savings will be eliminated.

Housing Stability and Housing Supply
The Governor’s revised budget proposal includes a recognition of the devastating impact of the COVID-19 pandemic on the state’s finances as well as its disproportionate impact on low-income Californians, including with respect to housing. Importantly, the Governor’s May Revise outlines principles with respect to housing which we support, and are critical to recovering from the current crisis while advancing the goals of equity and inclusion. The proposal acknowledges the great need for increased stabilization and protection of tenants, and the related need to preserve and maintain existing affordable housing resources. At the same time, the proposal meets the current crisis and is informed by lessons learned from the foreclosure crisis by outlining the need to acquire properties and use public resources to ensure every Californian has a place to call home.

The Governor’s proposal stands for the principle that we cannot allow distressed properties to be acquired en-masse by entities which will utilize them as speculative investments, but rather must ensure community acquisition and control to advance our goals and put such properties to work solving our housing crisis.

With respect to housing production, we are heartened to see the Governor’s proposal maintain $500 million in funding for state tax credits for affordable housing construction. This program is critical for producing the units we need that can serve those hit hardest by our housing crisis. The Governor’s revised proposal also maintains various bonds and other funding streams for affordable housing production: approx. $277 million affordable housing funding from real estate transaction fees, approx. $452 million in cap and trade auction proceeds, and $4 billion in Prop. 1 bonds for affordable and veterans’ housing production.

The May Revise also recognizes available federal funding for affordable housing and necessary infrastructure to support it: $1.1 billion in CDBG funds for infrastructure and disaster relief stemming from the 2017-18 wildfires, and an additional $532 million in funding from the CARES Act for housing and homelessness. While the precise breakdown of proposed uses of this funding is not included in the Governor’s proposal, the proposal states these funds will be used to support ongoing efforts to address homelessness and to secure low- and moderate-income housing.

Recognizing the state’s dramatically reduced revenue projections, the Governor’s proposal also cuts several existing sources of funding for affordable housing that have not been dedicated to specific projects. The proposal includes $250 million in cuts to mixed-income development funds over the next three years, $200 million in cuts to the infill infrastructure grant program, and $115 million in cuts to various unnamed sources. Overall, we are pleased to see the level of funding for affordable housing in the Governor’s proposal, given the economic reality our state is facing.

Renters and Homeowners
The revised budget summary highlights actions that have been taken to provide temporary, emergency relief from evictions during the pandemic, but recognizes that increased support for both homeowners and renters will be critical to our recovery. At the same time, the Governor’s May Revise recognizes the economic reality we face after COVID-19, and makes reductions to multiple sources of funding for housing production.

The budget allocates $331 million in funds from the National Mortgage Settlement by providing $300 million for housing counseling and mortgage assistance to homeowners, and $31 million for grants to legal aid programs to assist struggling renters, which we estimate will enable these programs to provide eviction prevention services to up to 7,000-10,000 renters. While we are heartened to see this recognition of the need for renter assistance, as well as the critical role of California’s legal services programs in any disaster recovery effort, we are disappointed that the budget does not account for the scale of increased need for legal services for California’s 17 million renters. Legal assistance is most successful when paired with financial assistance and substantive legal protections against inappropriate eviction; Western Center echoes the Governor’s call for federal funding for struggling renters.

Homelessness
The May Revise reiterates the critical need to shield our unhoused residents from the COVID-19 pandemic, and the need to continue advancing solutions to reduce homelessness overall, while recognizing the reality of the state’s financial outlook. The May Revise proposes to maintain the $750 million level of funding contained in the previous budget proposal, but anticipates these funds to come from federal sources, and proposes to use this funding to acquire properties currently being used as temporary housing under Project Roomkey, to be operated by local governments or nonprofits. To date, the state has acquired approximately 15,000 units through this program, approximately half of which have been successfully occupied.

Additionally, the May Revise proposes to send $450 million in CARES Act funding to cities that did not get a direct allocation of CARES funds to reduce homelessness, $1.3 billion to counties for the same purpose, as well as a commitment to seek additional federal funds for various homelessness programs, including rapid rehousing, rental subsidies, and temporary/interim housing.

 

 

Here’s how a $54 billion deficit will hurt Californians

“Since eyeglasses and hearing aids are not required by the federal government, they are most likely the first benefits to be cut by the state, said Linda Nguy with the Western Center on Law and Poverty.

Health advocates sought to expand Medi-Cal to undocumented seniors, but the proposal will be a tough sell in the current environment. “I think this is a message to temper our expectations,” Nguy said.”

https://calmatters.org/economy/2020/05/california-budget-deficit-severe-cuts-ahead-recession/