Tag: California State Budget Update

California Faces Cuts to Disability Services in Governor’s 2025-26 Budget Plan Amid Federal Medicaid Threats

Governor Proposes Cuts to Disability Services in May Revise Budget Proposal

Today, California Governor Gavin Newsom announced the May Revise of the 2025-26 state budget proposal. This budget proposal includes major cuts overall to Medicaid-funded services and DOES NOT include any potential impacts from the federal budget currently being considered in Congress. This means that the overall picture could get much worse in the next few weeks if the federal budget passes as currently proposed by the House of Representatives, which includes a $715 billion cut to Medicaid services. While we knew we were in a fight to protect Medicaid at the federal level, we did not expect we would also have a fight at the state level to protect Medicaid funded services, such as regional center services, Medi-Cal, In-Home Supportive Services (IHSS), and more.

Overall, the Governor’ May Revise budget anticipates a $12 billion shortfall next fiscal year and attributes the shortfall to both increased expenses in the state and decreased revenues due to President Trump’s tariffs and other economic policies. The budget proposal will now be considered by the Legislature, who will likely push back on certain parts of the Governor’s budget and will eventually send a final negotiated state budget back to the Governor by June 15. The massive federal cuts proposed by Congress, however, make the entire budget process more uncertain this year and may necessitate a second budget in the summer.

Below is a summary of several proposed cuts in the Governor’s May Revise budget that, if enacted, would impact California’s disability community:

DEVELOPMENTAL SERVICES

  • Require Provider Mandates for Quality Incentive Program Eligibility—A reduction of $221.7 million General Fund in 2026-27 and ongoing associated with requiring compliance with Electronic Visit Verification, annual audits, and Home and Community-Based Services rules as a pre-condition of eligibility for the quality incentive component of the rate models.
  • Health and Safety Waiver Assistance—A reduction of $3 million ongoing General Fund to eliminate health and safety waiver application assistance.
  • Implicit Bias Training—A reduction of $5.6 million ongoing General Fund to eliminate dedicated resources for refreshing regional center implicit bias training.
  • Direct Service Professional Workforce Training and Development (also known as “DSP University” or “DSP 1, 2, & 3)—A reduction of $17.6 million General Fund in 2025-26 and 2026-27, and $36.8 million General Fund in 2027-28 and ongoing to eliminate the Direct Services Professional Workforce Training and Development program, which has not yet been implemented.
  • Self-Determination Program—A reduction of $22.5 million General Fund in 2025-26, and $45.5 million General Fund annually thereafter, to reflect new guardrails that will be imposed on individual spending budgets.
  • Rate Reform Hold Harmless—A reduction of $75 million General Fund in 2025-26 to reflect ending the rate reform hold harmless policy in February 2026 instead of June 30, 2026. This means that service providers with rates above what is listed in the DDS rate models will have their rates reduced to match the DDS rate models in February instead of July.

MEDI-CAL

  • Medi-Cal Asset Test Limits—Reinstatement of the Medi-Cal asset limit for seniors and disabled adults of $2,000 for an individual or $3,000 for a couple, effective no sooner than January 1, 2026. Estimated General Fund savings are $94 million in 2025-26, $540 million in 2026-27 and $791 million ongoing, inclusive of IHSS impacts. These asset limits were removed in 2024, meaning that a person could own more than $2000 in assets and still qualify for Medi-Cal. This proposal would reinstate those limits, meaning that if an individual owns more than $2000 in assets or if a couple owns more than $3000 in assets then they would not be eligible for Medi-Cal.
  • Undocumented Individuals – Freeze enrollment into full-scope Medi-Cal, eliminate dental and IHSS benefits, and implement a $100/month premium. The last couple years California has made efforts to provide Medi-Cal coverage and other benefits to all Californians, regardless of documentation status. This proposal would walk that back and freeze any enrollment moving forward while allowing those already enrolled to maintain their Medi-Cal eligibility but with a $100/month cost. This proposal would also walk back other benefits, making undocumented individuals not eligible for IHSS, dental benefits, and other long-term care benefits.

SSI/SSP – No cuts, no increases.

IN-HOME SUPPOR SERVICES (IHSS)

  • Cap IHSS provider overtime and travel hours at 50 hours per week beginning in 2025-26.
  • Eliminate IHSS benefit for undocumented individuals.
  • Those individuals who would no longer be eligible for Medi-Cal due to the Asset Test Limits would no longer be eligible for IHSS.

Click HERE to view and download the Budget Summary

WHAT’S NEXT?

Our fight to protect vital disability services for Californians IS NOT OVER! We must continue to let our state and federal elected officials understand how devastating these proposed cuts will be to thousands of individuals with disabilities and their families. Click HERE to record a message that we can share.

Join us and organizations across the state for the Keep the Promise Rally on Thursday, May 22 at the California State Capitol in Sacramento from 11:30 a.m. to 1:00 p.m. to make our voices heard! Learn more at rally.thelantermancoalition.org 

California’s 2023-24 Approved State Budget Final Detailed Summary

June 30, 2023 – This year’s state budget was finalized within the context of a $32 billion deficit with projected multiyear deficits, after several years of record budget surpluses.  Despite the deficit, the final agreement did not pull from state reserves, and instead balanced the budget with selected spending cuts and delays.  As a result of stakeholder advocacy, the Legislature and Governor largely spared the disability community from spending cuts to state programs, and even made some investments in critical areas.

The Arc of California’s detailed summary of California’s enacted 2023-24 budget and its impact on people with intellectual and developmental disabilities and their families is below:

Regional Center Services

RATE MODELS

      • Independent Living Services – Fixes a flaw in the current provider reimbursement rate models for independent living services. Provides $15 million Total Fund (TF), $8.5 million General Fund (GF) beginning January 2024 to increase the rate to ensure proper access to the service.
      • Minimum Wage Adjustment – Requires the California Department of Developmental Services (DDS) to update all provider rate models to account for the increases in the statewide minimum wage, which is one of the many inputs in determining the final reimbursement rate.
      • Rate Model Quality Incentives (aka The 90/10 Rule) – During the implementation of the rate models in previous budget years, total rates included a 90% “base rate” and 10% quality incentive payment. The Arc & UCP California Collaboration quickly raised concerns about the implementation of quality incentive payments that act more as punishment than incentives, and also had many flaws in how it would be implemented.  This year’s budget includes the following fixes to those concerns:
          • Requires DDS to implement a hold harmless policy for providers whose rates in effect on January 1, 2023 exceed 90 percent of the rate model, until June 30, 2026.
          • Requires that a provider is actually eligible for a quality incentive payment that, when added to their base rate, allows them to earn the fully funded rate model.
          • Allows the department to establish quality measures or benchmarks in the initial years of the quality incentive program that focus on building capacity, developing reporting systems, gathering baseline data, and similar activities while working towards meaningful outcome measures at the individual consumer level for all services.
          • Specifies that beginning in 2024-25, there will be an opportunity for eligible providers to earn full quality incentive payments through one or more measures.
          • Requires the department to determine each provider’s quality incentive payment percentage prior to the start of the fiscal year by measuring the provider’s performance against the quality measure or benchmarks for the most recently available reporting period.
      • Family Home Agencies – Clarifies the current rate structure for family home agency services are based on the rate for Community Care Facilities licensed for four beds or fewer.

FAMILY SERVICES

      • Extension of Remote Option for Individual Program Plan (IPP) Meetings – Extends the option for a consumer and their family to request a remote IPP meeting or individualized family service plan meeting through June 30, 2024.
      • Regional Center Family Fees – Implements a one-year suspension of regional center family fee assessments, including the Family Cost Participation Program and the Annual Family Program Fee, through June 30, 2024.
      • Parent Participation in Applied behavioral analysis (ABA) therapy – Prohibits a regional center from denying or delaying the provision of ABA or intensive behavioral intervention services for children due to the lack of parent participation.
      • Coordinated Family Support Services Program – Appropriates $10.8 million General Fund to the Department of Developmental Services to continue implementation of the Coordinated Family Support Services Program.

ACCESS TO REGIONAL CENTER SERVICES

      • Early Start, Provisional Eligibility for Children Ages 0-2 – Expands provisional eligibility for Lanterman Developmental Disabilities Services Act (Lanterman Act) to include children from birth through two years of age. The 2021 Budget Act expanded eligibility for regional center services for children three or four years of age. This change makes provisional eligibility inclusive of all children four years of age or under.
      • Medical Services, Access to generic services – Requires regional centers to purchase medical services identified in the individualized family service plan if the service is not available within 60 days through the family’s health insurance or Medi-Cal. Requires a regional center to purchase medical services during any plan delays, including the appeals process.
      • Social Recreation Services – Prohibits a regional center from requiring an individual with an intellectual or developmental disability (IDD) or their family from doing any of the following: (a) exhaust In-Home Supportive Services, (b) exchange respite hours or any other service or support, or (c) pay a copayment, in order to receive social recreation services. Allows DDS to implement the provision of social recreation services, camping services, and nonmedical therapies through participant-directed services. States legislative intent for social recreation services, camping services, and nonmedical therapies to include, but not be limited to, specialized recreation, art, dance, and music, and that these services be made widely available to individuals with developmental disabilities, not only for socialization, but to lead the lives they want in the community.

INFORMATION

      • Regional Center Purchase of Service Data – Requires DDS to post data relating to purchase of service authorization, utilization, and expenditure across various demographics on a statewide aggregate basis. Requires the department to provide trend analysis on the changes observed in this data over time, and requires the department and regional centers to post this information. Requires the department to maximize transparency whenever possible, including aggregation by region. Requires the department to consult with stakeholders twice a year to review purchase of services data and identify barriers to equitable access to services and supports among individuals and develop recommendations to help reduce disparities in purchase of service expenditures. Requires purchase of service data to be deidentified in a manner that maximizes transparency.

EMPLOYMENT

      • Employment First Office – Requires the State Council on Developmental Disabilities (SCDD) to form a standing Employment First Committee, responsible for identifying the respective roles and responsibilities of state and local agencies in enhancing integrated and gainful employment opportunities for people with IDD, identifying strategies for increasing integrated employment, identifying sources of employment data, and recommending goals and policy changes for increasing integrated employment. Beginning July 1, 2024, establishes the Office of Employment First. The Office’s mission is to coordinate the Employment First Policy, in order to reduce redundancy, ensure coordination of all employment support services across all agencies and departments, avoid fragmentation of services, guide strategic planning, and promote racial equity toward employment for individuals with IDD.
      • Limited Examination and Appointment Program (LEAP) – Permanently extends the LEAP program, which permits individuals with developmental disabilities to choose to complete a written examination or readiness evaluation, or to complete an internship, in order to meet qualifications for state service.

SSI/SSP

State Supplementary Program (SSP) 2024 Grant Increase – Subject to an appropriation in the Budget Act of 2023, and commencing January 1, 2024, increases the amount of aid paid under the State Supplementary Program for the Aged, Blind and Disabled (SSP) by a percentage increase calculated by the CDSS and the Department of Finance, and requires those departments to notify specified legislative committees and the Legislative Analyst’s Office of the final percentage increase effectuated by the appropriation in the Budget Act of 2023 for the purposes of implementing the increase. The planned SSP increase at the 2023 May Revision is approximately 8.6%.

In-Home Supportive Services (IHSS)

IHSS parent provider reform: No more leaving full-time employment requirement – Deletes currently codified conditions under which a provider who has the legal duty to provide for the care of their child who is the recipient of supportive services may be remunerated for the services provided. This change will allow IHSS-eligible minor recipients to select a parent or a non-parent as their provider. Requires that these policy changes to minor provider eligibility guidelines are to take effect 60 days after the CDSS issues policy guidance and, if needed, fiscal guidance through all-county letter or similar written instructions. The Budget Act includes $60.7 million ($27.9 million General Fund) ongoing for this policy change.

K-12 Education

      • Overall Education Budget – Despite the deficit, education did not experience the same level of cuts as other areas.  The final Prop 98 guarantee is slightly higher than the Governor originally estimated.   The budget included an increase of $3.4 billion for LCFF and an 8.22% cost of living adjustment for 23-24.  Overall, the total amount of cuts is about $1.79billlion (about $335 per pupil) which was taken from the Arts and Music Block grant, and the Learning Recovery Emergency Block Grant.
      • Reading Screening – Requires LEAs to begin screening pupils in kindergarten through second grade for risk of reading difficulties, including dyslexia, by 2025-2026.
      • Special Education – Special Education receives the 8.22% COLA and requires in 2023-24 that each special education local plan area (SELPA) allocate funding to LEAs at least equal to prior year per pupil funding plus the COLA.
      • Mental Health –Prohibits a health care service plan or health insurer from requiring prior authorization for behavioral health crisis stabilization services and care, but authorizes prior authorization for medically necessary mental health or substance use disorder services following stabilization from a behavioral health crisis addressed by services provided through the 988 system.
      • Nutrition – Continues the Universal Meal program which guarantees 2 free meals per day to any k12 student regardless of income eligibility.
      • TK Expansions – Funding for the second year of TK expansion to provide eligibility for all children turning five-years-old between September 2 and April 2 and maintains funds to support one additional certificated or classified staff person in transitional kindergarten classes.

CLICK HERE to Download PDF Summary

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