Governor Newsom’s 2019-20 January Budget Proposal 

Thursday, January 10th, 2019, Governor Newsom released his 2019-20 budget blue-print. The budget projects continued robust revenue for 2019-20; however, the governor’s budget hedges against a recession by proposing less than 20% of new spending be used for ongoing costs. Below is a summary of the governor’s proposed budget and its impact on Californians with intellectual and developmental disabilities and their families:

 

Regional Center Services

The proposed budget estimates regional center caseload growth from 333,094 clients to 349,606 clients. The Governor’s Budget proposes $7.4 billion ($4.5 billion GF) for the Regional Center system, an increase of $506.2 million ($362.3 million GF) as compared to the updated current year budget. The increase is mainly a result of case-load adjustments of $402.2 million ($302.5 million GF) in regional center operations (OPS) and purchase of services (POS) as follows: OPS increase of $31.3 million ($24.0 million GF); POS increase of $370.9 million ($278.5 million GF). Other budget proposals include:

  • The Governor did NOT propose to eliminate the 14 day statewide uniform holiday schedule (also referred to as a mandatory furlough schedule), meaning that the furlough days would still be effective July 1, 2019. Note: The Arc California has sued the Department of Developmental Services on basis that this cut is a reduction in rates that has not been approved by the federal government. We are waiting on a decision from the courts.
  • $76 million to reflect the estimated full-year cost of the January 1, 2019 California minimum wage increase from $11.00 to $12.00 per hour, and $83 million to reflect the estimated half-year cost of the January 1, 2020 California minimum wage increase from $12.00 to $13.00 per hour.
  • Half-day billing is proposed to continue in 2019-20.
  • $15 million for HCBS transition grants proposed to continue for 2019-20.
  • DDS proposing to award a $3 million contract for assistance with on-site assessments of providers to assess HCBS compliance.
  • $5.3 million to expand acute crisis and mobile crisis services in the community in recognition to the closure of the developmental centers and the increased need for these services.
  • $8.1 million to support the reorganization of departmental headquarters.
  • $5.4 million to reduce regional center caseworker caseload ratios for consumers with specialized medical and behavioral needs.
  • $4.5 million one-time to expand the development of community crisis housing specifically for children.
  • $3.8 million for the increased monitoring of Enhanced Behavioral Support Homes and Community Crisis Homes.
  • The Governor briefly mentioned the regional center provider rate study saying that would be a future issue the State would be looking at in the coming months. The Governor’s budget summary does include a reference to the rate study as follows: “An additional focus on community services and associated reforms is expected given a statutorily required developmental services rate study that is due in March 2019. Discussions regarding rates must be done in conjunction with transparency and accountability reforms.”

Developmental Centers

The number of residents in the remaining developmental centers is projected to decrease to 323 by July 2019, and 292 by June 30, 2020. Sonoma Developmental Center entered warm shutdown in December, 2018. Overall funding for the developmental centers is proposed to decrease from $394 million to $305 million. There is a one-time proposed cost of $5 million for deferred maintenance.

SSI/SSP & CalFRESH 

The budget includes no increase for the State Supplemental Payment (SSP), which was reduced in the Schwarzenegger Administration to the federal minimum of $156 a month. SSI benefits are determined by the Federal government.

The Governor proposes to make permanent the “hold harmless” programs created in the 2018-19 budget, which was previously only funded for two years. These programs were necessary when the state repealed state law that barred SSI recipients in California from receiving federal SNAP benefits (known as CalFRESH in California). California was the only state that did not permit SSI recipients to receive SNAP. In ending the bar on SNAP, however, it is estimated that about 40,000 families would lose all or some of their current SNAP benefits when SSI income was included in determinations for their SNAP benefit amount. To prevent some low income households from becoming poorer, the Governor and the Legislature agreed to create two programs to backfill the loss of SNAP funds, but only provided two years of funding. With this budget, Governor Newsom has made that funding permanent. This was one of the highest priorities for SSI advocates in the budget in 2019.

IHSS

The budget proposes to restore the 7-Percent Across-the-Board Service Hours Reduction—Due to enactment of the managed care organization tax, the 7-percent across-the-board reduction in IHSS service hours was restored for the duration of the managed care organization tax. Under current law, the managed care organization tax will expire on July 1, 2019. While the Budget does not assume an extension of the tax, it does propose to restore the 7-percent reduction effective July 1, 2019. The cost to restore the 7-percent reduction is estimated to be $342.3 million General Fund in 2019-20. This will protect services for vulnerable individuals served by IHSS.

Electronic Visit Verification—Federal law requires states to implement an electronic visit verification system for personal care services by January 1, 2020, and for home health care services by January 1, 2023. Failure to comply with the electronic visit verification requirement would result in an escalating fiscal penalty in the form of a percentage point reduction in federal matching funds. To comply with federal law, the Budget includes $34.9 million ($5.3 million General Fund) to implement an electronic visit verification solution and enhancements to the Case Management, Information, and Payroll System for personal care services.

DEPARTMENT OF REHABILITATION

Includes $5 million for the Vocational Rehabilitation program at DOR, which will raise uniform fee-for-services rates for community rehabilitation program providers by 10 percent and adjust rates with a wage component to account for state minimum wage increases.

Traumatic Brain Injury Program—The Budget includes $1.2 million General Fund in 2019-20 for the Department of Rehabilitation’s Traumatic Brain Injury program, which provides specialized services and supports through local entities to individuals who have suffered a traumatic brain injury.

Early Childhood

The Budget includes funding for universal preschool for all income-eligible four-year-old children in the state, phased in over a three-year period. This funding will allow state preschool providers to offer full-day/full-year care to better accommodate working parents. The Budget proposes the development of a plan to achieve universal preschool for all children in California, including new revenue options to support increased enrollment. This plan will also include a framework to implement a comprehensive, high-quality child care system in the state—including simplifying the system, increasing access, and reflecting the principle of shared responsibility among government, businesses, and parents. The Budget includes $500 million one-time General Fund to build child care infrastructure, including investing in the education of the child care workforce. The Budget proposes to reduce health disparities in early childhood. The Budget includes additional funding to improve the detection of adverse childhood experiences and increase developmental screenings provided to children in Medi-Cal. The Budget also includes funding to expand existing home visiting programs with innovative new approaches to reach low-income young mothers, and an augmentation to the Black Infant Health program.

ADVERSE CHILDHOOD EXPERIENCES (ACES) AND DEVELOPMENTAL SCREENINGS The Budget proposes $45 million ($22.5 million federal funds and $22.5 million Proposition 56 funds) to the Department of Health Care Services for ACEs screenings for children and adults in the Medi-Cal program. Beginning no sooner than January 1, 2020, this proposal provides ACEs screenings to children and adults under age 65 at least once every three years, and supports increased referrals to appropriate services depending upon screening results. The Department of Health Care Services will work with stakeholders to develop a screening tool for children and will utilize an existing assessment for adults. The Budget proposes $60 million ($30 million federal funds and $30 million Proposition 56 funds) for the Department of Health Care Services to increase developmental screenings for children. Developmental screenings assess a child’s educational, social, and emotional development and are recommended for children at nine months, 18 months, and 30 months of age.

Healthcare

Expands full-scope Medi-Cal to all income-eligible undocumented adults up to age 26. Two years ago, California expanded full-scope Medi-Cal to all income-eligible children up to age 19, regardless of immigration status. The Governor’s budget proposal provides $260 million ($196.5 million General Fund) to extend Medi-Cal eligibility to all income-eligible undocumented adults up to age 26 beginning no sooner than July 2019, dependent on system changes and network readiness. This expansion is expected to provide full-scope coverage to approximately 138,000 undocumented adults in the first year.

Improves affordability assistance in Covered California for families with incomes between 250-600% federal poverty line (FPL): The Governor proposes to increase the size of the subsidies for families with incomes between 250-400% FPL and make new subsidies available for families with incomes between 400 to 600% FPL. The affordability assistance excludes lower income families with incomes up to 250% FPL, many of whom struggle to pay current Covered California premiums or go without coverage.

Institutes a state individual mandate: To pay for increased affordability assistance for families, the budget proposes to reinstate the individual mandate at the state level, which would negate the federal repeal of the individual mandate in California. The individual mandate would apply to many families not eligible for additional subsidies (incomes below 250%).

Carve-out pharmacy services as a fee-for-service benefit: The budget proposes to transition all pharmacy services for Medi-Cal managed care to a fee-for-service benefit to provide the state with additional negotiating power. Annual savings are expected to be in the hundreds of millions, starting in fiscal year 2021-22.

Proposition 56 (tobacco tax) funding: The budget proposal continues to include supplemental payments and rate increases for physicians, dentists, women’s health services, intermediate care facilities for the developmentally disabled (ICF/DD), HIV/AIDS waiver services, home health agencies, private duty nursing, and pediatric day health care. The estimated total funding for these supplemental payment and rate increases for FY 2019-20 is $3.174 billion ($769.5 million Proposition 56 funds). New Proposition 56 funds include:

  • Early developmental screening for children ages 0-21 ($60 million total, $30 million Proposition 56 funds).
  • Additional $50 million in Proposition 56 funds for family planning services in the Medi-Cal program.

Special Education

The budget proposes $576 million in Proposition 98 General Fund ($186 million is one-time) to support expanded special education services in school districts with a high concentration of special education students. The budget also includes $750 million one-time General Fund to address barriers to full-day kindergarten. About one quarter of students enrolled in kindergarten do not have access to a full-day kindergarten program.

Families & Workforce

Earned Income Tax Credit (EITC): The budget proposes to significantly increase eligibility and benefits for the state earned income tax credit program. The current program provides about $400 million in EITC to two million households. Under the proposal released today, the size of the current program would roughly double. A new program for low-income Californians—the “Working Families Tax Credit”—includes an additional $500 credit for families with children under the age of six. The proposal also increases the maximum eligible earned income so that workers working up to full-time employment at the 2022 minimum wage of $15 per hour will be eligible for the credit.

CalWORKs: The budget proposes to end deep poverty for families in the CalWORKs program. The proposal would increase CalWORKs grants beginning this October from $785 a month to $888 a month for a family of three, at a full year cost of $455 million. This increase in the maximum grant amount by family size would bring the grant to 50 percent of the federal poverty level. Only New Hampshire provides a TANF (Temporary Assistance for Needy Families) grant that exceeds 50 percent of the federal poverty level, according to the Center on Budget and Policy Priorities.

Jordan Lindsey, Executive Director, The Arc of California

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