Updated February 26, 2010
On January 8, Governor Schwarzenegger proposed a budget which again targets low-income Californians by reducing or eliminating crucial health and human services programs. Some proposals duplicate those of previous years, most of which were rejected by the legislature. Some of the proposals approved by the legislature last year have been stopped by federal courts, yet the Governor is bringing them forward again.
The administration has attached savings to each proposal, but acknowledges that it has not factored in the costs, both human and financial, of the massive cuts. For example, the proposed dismantling of two key programs for Californians with disabilities, including seniors – In Home Supportive Services (IHSS) and Adult Day Health Care – will inevitably lead to:
- Massive harm to health, safety and independence;
- Increased use of more expensive hospitals and nursing homes; and
- Loss of at least 375,000 jobs, including those of home care workers and of IHSS consumers who are able to work and pay taxes because of IHSS.
As before, poor Californians would be hit by the budget hammer again and again, if they depend on multiple programs for their health, safety and income.
This preliminary analysis is based on the documents released on January 8, 2010, and focuses on programs and services which are particularly significant for adults and children with disabilities, arranged by each relevant state department. This analysis is not comprehensive, as it does not cover all the proposed cuts, such as in CalWorks, food and health programs, and general education, which affect people with disabilities along with other Californians. In addition, the administration has not yet released details for some of the cuts. In many cases, the Governor proposes both cuts for the current budget year and the next one.
We are linking our summary of the budget to other budget analysis prepared by advocacy groups and will continue to add links as we receive the information. Some of the references are listed below:
- The 2010-11 Budget: Overview of the Governor’s Budget, Legislative Analysts Office, 1/12/10
- Governor’s 2010-11 January State Budget, California Mental Health Directors Association of California, 1/11/10
- A First Look at the 2010-11 Health Care Budget Proposal, Health Access, 1/8/10
- Governor Proposes Devastating Cuts to Health and Welfare Programs, Western Center on Law & Poverty, 1/8/10
- California Budget Project: Governor Releases Proposed 2010-11 Budget
- Department of Developmental Services (DDS)
- Department of Education
- Department of Health Care Services (DHCS)
Medi-Cal (not including In-Home Supportive Services (IHSS)
- Department of Mental Health (DMH)
- Department of Social Services (DSS)
- In-Home Supportive Services (IHSS)
- Supplemental Security Income/State Supplementary Program (SSI/SSP)
- Cash Assistance Program for Immigrants (CAPI)
DDS is the state agency providing services and supports to individuals with developmental disabilities. These disabilities include mental retardation, cerebral palsy, epilepsy, autism and related conditions. Services are provided through state-operated developmental centers and community facilities, and contracts with 21 non-profit regional centers. The regional centers serve as a local resource to help find and access the services and supports available to individuals with developmental disabilities and their families.
The Governor proposes to reduce the DDS budget by $200 million:
- $61.6 million in additional savings when the $334 million saved in the current year is annualized to a full year;
- $60.9 million in savings, by extending the 3% payment reduction for regional center operations and for services provided through 2010-11;
- $52.5 million in savings, because state funds will be replaced by new federal funds which will result from an amendment to the current state Medicaid plan; This change allows California to receive federal funds for services to consumers who are eligible for Medi-Cal, but are not on the existing Home and Community-Based Services Waiver because they do not meet the institutional level of care required for this waiver eligibility. Waiver funded services, or waiver programs like the Home and Community-Based Services Waiver are provided under special conditions through federal approval whereby certain rules for eligibility are “waived” so individuals can qualify for services that enable individuals to remain in a community setting.
- $25 million in additional program cuts to be achieved through reforms developed by the existing stakeholder process which was initially pulled together last year by DDS and made up of representatives from the developmental disability community to help achieve a reduction of 334 million in state dollars to the DDS budget. The goal for DDS this year is to achieve an additional $25 million in general fund savings, while maintaining the entitlement to services under the Lanterman Act and ensuring program and service integrity.
In addition, similar to what was proposed in the 2009-10 May Revision, the budget reflects a state general fund savings of $200 million in the DDS budget through redirection of California Children and Families Act of 1998 (Proposition 10 funds). The Governor's proposal also redirects $300 million in Proposition 10 funds to Department of Social Services programs. Implementation of this proposal will require voter approval. If approved by the Legislature, it is anticipated this initiative will be included in the June 2010 election.
Regional centers also received an increase of $143.5 million in state dollars because of increased service utilization associated with autism spectrum disorders, for transportation funding, and for growth in regional center caseloads.
The budget proposes to cut $42.7 million in general fund dollars to regional centers, to be replaced by reimbursements from the federal Temporary Assistance for Needy Families (TANF) program. The federal government awards TANF money in block grants to states, which use these funds to operate their own programs. States can use TANF dollars to meet any of the four purposes set out in federal law, one of which is to assist families so that children may be cared for in their own homes or in the homes of relatives.
Finally, the Governor’s budget reduces the staffing levels in the Developmental Centers to coincide with the decrease in the developmental center population.
The Governor’s plan focuses on maintaining Proposition 98 per pupil funding. However, the Proposition 98 guarantee earmarks or requires a minimum portion of the state budget to be spent on K-14 education. The guarantee has been revised and lowered to reflect lower actual revenues than were anticipated in the past two fiscal years. He proposes significant cuts for administrative services funding, such as dollars provided to the local school districts. He also counts some savings based on larger classroom numbers, lower average daily attendance, and lower program costs. His proposal provides $1.5 billion in revenue increases to offset decreased income from property taxes. With respect to children with disabilities, the Governor proposes:
- An increase of $65 million for the ongoing costs of mandated behavioral assessments and behavioral intervention plans, and
- To shift $32 million from federal Individuals with Disabilities Education Improvement Act (IDEA) funds to the Early Start program. IDEA experienced a temporary increase in funding as a result of Federal ARRA. This will result in an overall decrease in special education funding because this shift of federal funds to the Early Start program will replace existing state funding of the same amount.
Department of Health Care Services (DHCS)
Medi-Cal (not including In-Home Supportive Services (IHSS)
Medi-Cal is California’s version of the state-federal Medicaid program; most Medi-Cal programs are housed in the Department of Health Care Services. The Medi-Cal program provides health care coverage for more than six million low-income children and families as well as elderly, blind, or individuals with disabilities. Medi-Cal is jointly funded by the state and federal government, IHSS is part of Medi-Cal, although it is administered by Department of Social Services (DSS). California receives matching funds from the federal government to finance most of the Medi-Cal program, i.e., the portion that meets federal requirements and is therefore eligible for federal funding.
Ordinarily, the federal government provides 50% of the cost of Medi-Cal services. As part of the economic recovery package enacted by Congress in January 2009, this amount was temporarily increased from 50% to 61.59% to provide the state with fiscal relief. This increase in federal funds saves the state $1.5 billion.
The Governor is asking the federal government to increase the permanent federal matching funds rate by 7%, from 50% to 57%. This would be in addition to the temporary 11.59% increase that is already in effect. He calculates that this will save the state an additional $1.8 billion. (The total federal/state cost of the Medi-Cal program is about $30 billion.) He proposes one set of budget reductions if the federal government does what he asks. He proposes a different set of budget reductions if the federal government does not do what he asks; these are being called “trigger cuts.”
The first set of reductions listed below is proposed whether or not the federal government agrees to increase federal matching funds to 57% - they are not “trigger cuts.”
Medi-Cal (other than IHSS) cuts:
- Cut $104 million by eliminating the Adult Day Health Care (ADHC) program; these are community-based day care programs providing a variety of health, therapeutic, and social services to those at risk of being placed in a nursing home.
- Cut $118 million by eliminating Medi-Cal for adult immigrants who are lawful permanent residents (LPR) but who have been residing in the United States for less than 5 years. Medi-Cal would continue for immigrants who are permanently residing in the United States under color of law (PRUCOL), immigrants who are not citizens, but remain in the U.S. indefinitely with government permission. Since there is no federal funding to provide these benefits under federal law, it is essential that the state maintain coverage for this population.
- Cut $750 million by:
a) Limits on services and utilization controls
b) Increased copayments, premiums, or both
c) Other unspecified programmatic changes
- Cut $55 million by delaying payments to institutional providers, such as hospitals and nursing homes. This proposal may create a lack of access to care, as hospitals will be required to care for more people with fewer dollars. With people losing eligibility for Medi-Cal, and people losing private health coverage through job loss, there will already be more people lining up for help at hospital emergency rooms.
- Cut 28.7 million by rolling back a rate increase for family planning providers.
- Save $26.4 million through increased anti-fraud efforts; and
- The Governor proposes to reduce Healthy Families program eligibility from 250 percent to 200 percent of the federal poverty level. A decrease of $10.5 million in 2009-10 and $63.9 million in 2010-11. Healthy Families is low cost insurance for children and teens. It provides health, dental and vision coverage to children who do not have insurance and do not qualify for free Medi-Cal.
- He proposes to reduce Healthy Families program benefits and increase premiums by eliminating vision coverage and increasing monthly premiums in families with incomes from 151 percent to 200 percent of the federal poverty level by $14 per child or $42 maximum increase per family with 3 or more children. Current premiums are $16 per child or $48 maximum per family.
Second set of cuts: The governor proposes these trigger cuts if the federal matching rate for Medi-Cal is not increased to 57%, and other federal funding increases are not forthcoming by July 15, 2010:
- Eliminate all remaining state funding for Medi-Cal county mental health services. These include inpatient hospital services, outpatient mental health services including residential services, and targeted case management;
- Reduce Medi-Cal eligibility to the minimum allowed under current federal law. This would result in elimination of:
a) The Medically Needy (MN) Program, which provides healthcare coverage to low-income individuals who have a disability and are under age 65. This includes individuals who have a share of cost for Medi-Cal.
b) The Medically Indigent (MI) Program, which provides low-cost healthcare to former foster youth, nursing facility residents between the ages of 25 and 65, and pregnant women under the age of 25.This includes individuals between 19 and 21 who do not have a disability, are not pregnant, or are not a caretaker relative.
c) The 250% Working Disabled Program provides affordable healthcare coverage to working individuals with a disability who have a net family income of less than 250 percent of the federal poverty level. For example, 250% of the poverty level for one individual is a gross income of $27,075; and,
- Eliminate most Medi-Cal “optional” services, including medical supplies such as diabetic test strips, prosthetic limbs, orthotics, wheelchairs and other durable medical equipment, hearing aids and other benefits. He does not propose to eliminate pharmacy coverage. He cannot eliminate these Medi-Cal services which are mandatory under federal law: Inpatient hospital services; Outpatient hospital services; Rural health clinic services; Laboratory and x-ray services; Physician services; Home health services; Pregnancy-related services; Early and Periodic Screening, Diagnosis and Treatment (EPSDT) services for individuals under age 21; and
- Eliminate the Healthy Families program. The Governor’s proposal would completely eliminate the Healthy Families program. This safety net program is imperative for low-income families to keep their children, including children with disabilities, healthy. This proposal would inhibit preventative care and result in greater instances of emergency room use and more frequent hospital stays.
Community Mental Health Services:
The Governor proposes to reduce the General Fund by $452.3 million for two years and shift funding for the EPSDT(see definition below) supplemental mental health services program and a portion of the Mental Health Managed Care program to the Mental Health Services Act (MHSA/Proposition 63) to make up for the reduction. This would require cuts in programs currently being funded under MHSA and would require amendment of the non-supplantation and maintenance-of-effort provisions of Proposition 63 by the voters. A similar proposal was overwhelmingly rejected by the voters last year. This year, the Governor anticipates the initiative will be included in the June 2010 election.
The MHSA/Proposition 63, passed by voters in 2004, authorized a 1% income tax surcharge on incomes over $1 million. The purpose of the MHSA is to provide funding for innovative community mental health programs to offer support so that people with psychiatric disabilities do not end up institutionalized, in jails or homeless.
Mental Health Managed Care: Counties provide what are called “specialty mental health services” through managed care. These are mental health services that are not provided by physical health care providers or by Medi-Cal fee-for-service providers. These include inpatient hospital services, outpatient mental health services including residential services, and targeted case management. Outpatient services can be provided by psychiatrists, psychologists, licensed clinical social workers, marriage and family therapists, and peer counselors.
Early and Periodic Screening, Diagnosis and Treatment (EPSDT) requires states to provide children with all services listed in the Medi-Cal schedule of benefits that are appropriate for children, as well as all other medical services that are eligible for federal matching funds. These services include Therapeutic Behavioral Services and Therapeutic Foster Care.
In the area of mental health if trigger funds are not received, the Governor proposes to further reduce mental health funding in FY 2010-11 by $847 million with the intent to replace it with MHSA money. This would be a one time shift. Many advocates believe this funding shift will cause the closure of most MHSA programs in FY 2011-12 as there will not be sufficient MHSA funds to continue them beyond FY 2010-11. This proposal will also need approval by the voters in June.
The first set of cuts is proposed whether or not the federal government agrees to increase federal matching funds to 57%. These are not trigger cuts.
Cut $77.9 million in the current fiscal year (2009-10) and $872.6 million in 2010-11 by program changes which are similar or identical to those blocked by federal court injunctions:
- Using the functional index (FI) scores to deny services to certain groups who, in the absence of the services, cannot perform the services themselves. Services would be reduced for individuals with functional index scores below 4 . Approximately 87% of IHSS consumers would lose service if this cut happens.
- Limiting state funding for provider wages to a percentage of the minimum wage of $8.00 per hour, plus $0.60 per hour for provider benefits. Currently, the state share of IHSS wages is $10.10 per hour.
IHSS Trigger cuts
Second set of cuts: if the federal matching rate for Medi-Cal is not increased to 57%, and other federal funding increases are not forthcoming, the governor proposes to eliminate the IHSS program.
Reduce the Supplemental Security Income/State Supplementary Program (SSI/SSP) by $21.8 million in 2009-10 and $285.2 million in 2010-11 by cutting SSI/SSP grants for individuals to the federal minimum from $845 to $830 per month (a $15 decrease), saving the state $13.7 million in 2009-10 and $177.9 million in 2010-11. SSI/SSP grants for couples are already at the federal minimum. This change would affect approximately 1 million individuals.
Cash Assistance Program for Immigrants (CAPI) provides cash assistance to immigrant seniors and persons with disabilities who do not qualify for federal Social Security Income (SSI) because of there immigration status. The Governor’s budget eliminates the CAPI program that provides state-only benefits to 10,800 legal immigrants. This results in an $8.1 million savings in 2009-10 and a $107.3 million savings in 2010-11.
A functional index score is a single number that is determined by averaging all of the functional index ranks. The purpose of the score is to provide a single measure of an IHSS recipient’s need for the assistance of another person in carrying out the activities of daily living that are considered in the assessment of need for IHSS services. More specifically, as part of the assessment for services, the county determines the person’s ability to complete certain tasks. The county then gives a “functional index rank” from “1” to “6” for each of the tasks. This ranking, with a weight to consider other factors, is then averaged out. The result is called the “functional index score”.