The Governor and Legislature reached their 2023-2024 budget agreement, including a package of implementing bills detailing how California will spend $310 billion in revenues, manage a deficit, and maintain reserves for future uncertainty.
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 final budget reflects $37.8 billion in total budgetary reserves and additional funds from the Managed Care Organization tax.
While the budget agreement avoids cuts to critical programs that communities with low incomes and communities of color rely on and investments in our safety net, there are still major gaps in the investments needed to build an equitable and thriving California.
Health4All: The budget 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.
Managed Care Organization (MCO) Tax: The budget includes a larger and accelerated MCO tax with an earlier start date (April 2023 through the end of 2026). This results in $19.4 billion in total funding, which will offset the General Fund with the majority going to Medi-Cal investments. Medi-Cal investments include increasing reimbursements rates to 87.5% of Medicare rates for primary care, birthing care, and non-specialty mental health care. Other provider reimbursement will be decided and spent over a 4-to 5-year period instead of 8- to 10- year period originally proposed by the Administration.
Covered California Affordability Funding: The budget rejects the proposed sweep of individual mandate penalty funds to the General Fund. Funds will be used as intended to lower costs of Covered CA plans and provides $82.5 million ($165 million ongoing) from penalty funds to lower copays and deductibles for about 900,000 Californians beginning January 1, 2024. The budget includes a $600 million loan from the Health Care Affordability Reserve Fund to the General Fund, to be repaid in 2025-26.
Medi-Cal Transitional Rent: Funding to Medi-Cal plans under CalAIM community supports to allow up to six months of rent or temporary housing to eligible individuals experiencing homelessness or at risk of homelessness.
Medi-Cal Asset Test Clean-up Language: The budget includes cleanup language from the 2022 Budget that expands Medi-Cal access for older adults and people with disabilities by eliminating the Medi-Cal asset test effective January 1, 2024.
Community Assistance, Recovery, and Empowerment (CARE) Act: The budget includes additional funding to support the implementation of the CARE Act, including funding for earlier implementation for Los Angeles County and to double the number of hours per participant for legal services from 20 hours to 40 hours.
The Budget invests $3.5 billion in additional funding for homelessness programs, including $1 billion for the Homeless Housing, Assistance and Prevention grant program, which funds housing, outreach at encampments, emergency shelters and more. While there were no cuts, these investments represent a small portion of what it would take to tackle the crisis. With an estimated 171,521 unhoused residents living on the streets or in their cars, California is home to nearly one-third of the country’s entire homeless population. Looking forward, we will continue to advocate for ongoing long-term investments to ensure that deeply affordable housing units do not continue to languish in the pipeline, unhoused Californians need not wait months or years to access an affordable and accessible housing option, and we stem the inflow of Californians into homelessness through protecting their rights and preserving their affordable housing options.
2023-24 Homelessness Investments include:
Behavioral Health Bridge Housing Program: $1.5 billion over three years.
Behavioral Health Continuum Infrastructure Program: $2.2 billion over five years for the Behavioral Health Continuum Infrastructure Program, of which $50 million in 2022-23 is for the Department of General Services, with short-term statutory exemption, to deploy an estimated 1,200 small homes in the City of Los Angeles, County of Sacramento, City of San Jose, and County of San Diego as rapidly as possible.
CalAIM Transitional Rent: $175.3 million ($40.8 million General Fund, $114.9 million federal funds, and $19.6 million Medi-Cal County Behavioral Health Fund) at full implementation to allow up to six months of rent or temporary housing to eligible individuals experiencing homelessness or at risk of homelessness.
Encampment Resolution Funding Grants: $400 million in one-time General Fund for a third round of Encampment Resolution Funding grants.
The 2021 and 2022 Budget Acts invested a combined $21.5 billion over multiple years to advance the greater availability of housing throughout California. The 2023 Budget largely maintains a portion of these commitments and includes a housing package of $14.7 billion for 2023-24. Overall, the proposal includes $500 million continued annual investment in the state Low-Income Housing Tax Credit program, $100 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.
2023-24 Housing Investments include:
Multifamily Housing Program: $100 million in 2023-24 for the Multifamily Housing Program for a total of $325 million in 2023-24.
Dream For All:$500 million one-time General Fund to the California Housing Finance Agency for the Dream for All program, which provides shared-appreciation loans to help low- and moderate-income first-time homebuyers achieve homeownership.
CalHome:$350 million one-time General Fund ($250 million in the 2022 Budget Act and $100 million committed for 2023-24) for the Department of Housing and Community Development’s CalHome program, to provide local agencies and nonprofit agencies with grants to assist low- and very-low-income first-time homebuyers with housing assistance, counseling and technical assistance. The Budget withdraws $50 million one-time General Fund in 2023-24, leaving $300 million for this program.
Foreclosure Intervention Housing Prevention Program:The 2021 Budget Act included $500 million one-time General Fund for the Foreclosure Intervention Housing Prevention Program, which provides funds to various non-profit organizations to acquire foreclosed property and operate as affordable housing. The Budget defers $330 million of the $500 million one-time General Fund over four fiscal years—for a revised allocation of: $82.5 million in 2023-24, $85 million in 2024-25, $100 million in 2025-26, and $62.5 million in 2026-27.
Downtown Rebound Program:The 2000 Budget Act included $25 million one-time General Fund for the Department of Housing and Community Development to provide funding for adaptive reuse of commercial and industrial structures to residential housing. The Budget reverts $17.5 million in unexpended funding that remained in this program after the Notice of Funding Availability.
One-time investments, especially at this limited scale, are not sufficient to meet our state’s affordable housing and homelessness needs. While the final budget falls short of our requests to meet the housing and homelessness crisis at scale, we look forward to continuing our budget advocacy in the coming years to encourage the Governor and Legislative leadership to prioritize a comprehensive, long-term investment strategy that prioritizes significant, ongoing funding to solve homelessness and ensure that every Californian has a safe, stable home that they can afford. Ongoing investments can address the disproportionate harms of skyrocketing housing costs, housing instability, and homelessness on Black, Indigenous, and people of color, people living in poverty, and other marginalized communities.
PUBLIC BENEFITS AND ACCESS TO JUSTICE
CalWORKs: The budget includes a 3.6% increase to CalWORKs grants to continue efforts for No Child in Deep Poverty and makes permanent the 10% grant increase that took effect last October so no longer subject to a cut in 2024. Additionally, the budget requires CalWORKs grant display to account for households where the Assistance Unit does not account for all the people in the family, which applies to 60% of CalWORKs households. Unfortunately, the budget does not include Legislature’s proposal to implement the first phase of Reimagine CalWORKs despite UCSF’s new report that shows economic shocks are a key driver of homelessness that can be mitigated by reforming sanction.
Food Assistance: The budget maximizes the new Summer EBT program, which will provide $40 per month in summertime food benefits to approximately 4 million children beginning in Summer 2024, bringing about $480 million in federally funded food benefits to California; initiates the CalFresh Minimum Nutrition Benefit Pilot Program, a $15 million pilot program to raise monthly minimum food benefits to $50 minimum from the current minimum of $23; approves the expansion of the California Food Assistance Program for adults age 55 and older, regardless of immigration status, to begin in late 2025, instead of January 2027; and approves improvement to EBT card security to protect CalFresh and CalWORKs families from theft.
SSI/SSP: The budget includes an 8.6% increase to SSI/SSP grants and Cash Assistance for Immigrants (CAPI) program. Effective January 2024, this allocation will provide recipients with an increase in grant levels to $1,134 per month and $1,928 per month for couples.
Humanitarian support: The budget approves $150 million for the Rapid Response program, which funds sheltering and humanitarian support at the Southern border.
Safety Net Reserve: The budget rejects the May Revision proposal to draw $450 million from the safety net reserve.
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: Linda Nguy, Senior Policy Advocate – lnguy[at]wclp.org; Christopher Sanchez, Policy Advocate – csanchez[at]wclp.org