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Quick and Dirty Summary 2011-2012
Budget Proposals Impacting
People with Disabilities (1)

January 11, 2011

Background: Overall Budget Picture

Governor Jerry Brown released his budget for the 2011-12 fiscal year on January 10, 2011. His budget proposes $12.5 billion in cuts; $12 billion in revenue extensions and changes; $1.9 billion in other "budget solutions"; and, a $1 billion reserve. The plan addresses an 18-month budget gap of $25.4 billion, which includes a current year deficit (2010-11) of $8.2 billion and a budget year (July 1, 2011-June 30, 2012) deficit of $17.2 billion. His goal is to complete the budget process by March 2011.

Brown proposes a ballot initiative to maintain the state's current tax rates for an additional five years and scaling back some of the corporate tax breaks. There are also some one-time savings and borrowing, including: $1.8 billion in borrowing from special funds; $1.7 billion in property tax shifts; $1.0 billion from Proposition 10/First Five reserves; and, $0.9 billion from the Mental Health Services Act (MHSA or Proposition 63) to fund community mental health services.

While we understand the difficult fiscal circumstances facing California and appreciate that Governor Brown is proposing a balanced approach that includes additional revenues, rather than relying on a cuts-only approach as has been done in the past, the Brown budget reduces every health and human services program, causing real harm to Californians with disabilities. Not only will many people lose services from more than one program, these reductions come on top of the cuts in both income and services they have borne in recent years.

While not an all inclusive list, below are some of the key proposals in the budget that impact people with disabilities. For additional information on the budget, please continue to check our website at:

http://www.disabilityrightsca.org

Additionally, we suggest that you look at the following links:

The California Budget Project: http://www.cbp.org/documents/110101_Budget_Release.pdf

The Legislative Analysts’ Office (LAO):   http://www.lao.ca.gov

The Governor’s budget documents:   http://www.ebudget.ca.gov

Realignment

"Realignment" refers to a shift of responsibility for programs between state and local governments. The idea is that the entity that is responsible for administering a program should have discretion in how to administer the program together with a dedicated revenue stream for funding the program.

The governor's budget proposes to realign certain programs and realignment would be rolled out in two phases. In Phase One the state would transfer responsibility for administering and paying for several types of services to counties, including mental health services, substance abuse services, child welfare services, and adult protective services. For the health and human services programs, the state would continue to be the single agency for data collection and auditing, but would reduce state agency administration by 25 percent. Realigned programs would be funded through an extension of the Vehicle License Fee (VLF), sales tax increases implemented in 2009, and through a ballot initiative to use $861 million in MHSA funds.

Under Phase Two, the state would become responsible for costs associated with health care programs, including California Children's Services and In-Home Supportive Services and the counties would assume responsibility for CalWORKs.

Department of Developmental Services

The Department of Developmental Services (DDS) serves approximately 244,000 individuals with developmental disabilities in the community and 1,979 individuals in developmental centers. Services are provided through the developmental centers and community care facilities and the regional center system. Proposed funding for 2011-12 is $4.5 billion ($2.4 billion General Fund).

In 2009-10, the Administration adopted proposals that resulted in approximately $334 million in state savings and an additional $200 million in 2010-11. Savings were achieved through strategies such as restructuring, reducing or eliminating various services, restricting eligibility for certain services, and maximizing other available funding sources, primarily federal funds. Payments for community services were also reduced by 3 percent in 2009-10 and 4.25 percent in 2010-11.

The 2011-12 Budget proposes to reduce an additional $750 million in General Fund system wide through additional federal revenues, increased accountability, expenditure reductions and cost containment measures.

Developmental Centers

Developmental centers are licensed and certified 24-hour, direct care facilities that provide services to persons with developmental disabilities. DDS currently operates four developmental centers, and one community facility. The Budget proposal includes $618.1 million ($324 million General Fund) for developmental centers.

Saving Proposals: As part of the $750 million savings proposal, DDS will:

--Pursue additional federal funds for treatment services provided to individuals residing in the secure facility at Porterville Developmental Center. It is anticipated this will result in General Fund savings of $10 million in 2011-12. DDS will also consider other proposals to achieve General Fund savings.

--In April 2010, the Legislature was notified of DDS' intent to initiate the closure of the Lanterman Developmental Center. Lanterman Developmental Center, located in Pomona, currently serves 350 consumers and employs approximately 1,150 staff. It is anticipated the closure process will take at least two years. Closure will only occur when necessary services and supports are in place and each resident has transitioned to alternative living arrangements.

--General Fund workload savings include workforce adjustments and a decrease in personnel costs through contract savings and furloughs. Combined savings are 17.9 million in 2010-11 and 13.3 million in 2011-12

Regional Centers

The 21 regional centers, located throughout California, are non-profit corporations contracted by DDS to purchase and coordinate services mandated under the Lanterman Act for people with developmental disabilities. Services include outreach, intake, diagnosis and assessment of needs, coordination of services, resource development, residential placement and monitoring, case management, quality assurance and individual program planning assistance. The Budget includes $3.8 billion ($2 billion General Fund) for regional center operations and services.

Saving Proposals: As part of the $750 million savings proposal, DDS will:

--Continue Temporary Regional Center and Service Provider Payment Reductions. The 2010 Budget Act contains a 4.25 percent reduction to regional center and service provider payments. It was scheduled to sunset on June 30, 2011. The Budget proposes to extend it for another year resulting in state savings of $91.5 million in 2011-12.

--Continue Proposition 10 Funding. The regional center budget includes $50 million in reimbursement funding in 2010 -11 from the California Children and Families Commission (Proposition 10). These funds are used to provide services to consumers from birth to age five. The Budget proposes to continue this funding in 2011-12, resulting in a state savings of $50 million.

--Accountability and Transparency Measures. This proposal would set parameters on the use of state funds for administrative expenditures of regional centers and service providers, increase auditing requirements, increase disclosure requirements.

--Increase Federal Funds. This proposal would focus on increasing federal funding by: (1) expanding the pending federal 1915(i) State Plan Amendment to include additional consumers and related expenditures consistent with federal health care reform; (2) maximizing use of federal "Money Follows the Person" funding for individuals placed out of institutions; and, (3) pursuing other enhanced federal funding opportunities. This proposal would, at a minimum, save $65 million General Fund in 2011-12.

--Implement Statewide Service Standards. This proposal would establish statewide service standards that set parameters in the array of services available through the regional centers. DDS, with input from stakeholders, will issue Purchase of Service (POS) Standards for services in all budget categories. In developing these standards, DDS will consider eligibility for the service, duration, frequency and efficacy of the service, qualification of service providers, service rates, and parental and consumer responsibilities. DDS will also consider the impact of the standards, coupled with prior reductions in the service area, on consumers, families and providers. Standards will vary by service category. Service standards will be developed to allow for limited exceptions to ensure the health and safety of consumers and avoid the risk of out of home placement or institutionalization.

--Impacts from reductions in other Departments — An increase of $1.5 million in 2010 -11, and an increase of $54 million in 2011-12, as a result of establishing mandatory co-payments for all health related visits, limiting physician and clinic visits, eliminating the optional Adult Day Health Care benefit, and reducing the Supplemental Security Income/State Supplementary Payment grants for individuals to the federal minimum.

Medi-Cal

Medi-Cal is California's Medicaid health care program. This program pays for a variety of medical services for children and adults with limited income and resources, including people with disabilities. For many this is the only health care program they can afford. Key components of the Medi-Cal budget are included below.

--Limits Use of Services. Sets a yearly dollar cap on hearing aids ($1,510), durable medical equipment ($1,604), incontinence supplies ($1,659), urological supplies ($6,435), and wound care ($391), limits prescriptions (except life-saving drugs) to six per month, and limits the number of doctor visits to ten per year. This affects approximately 20,000 beneficiaries. These changes would take effect no later than October 1, 2011 based on the time needed to obtain federal approvals and provide necessary beneficiary and provider notification.

--Share in the Cost of Services. Includes a $5 co-payment on physician, clinic, dental, and pharmacy services ($3 on lower cost preferred drugs). Includes a $50 co-payment on emergency room services and a $100 per day and $200 maximum co-payment for hospital stays.

All beneficiaries who use these services would be subject to the co-payments. These changes would take effect on October 1, 2011, with the exception of dental co-payments, which would take effect on May 1, 2011.These proposals require federal approval and beneficiary and provider notification.

--The governor proposes to eliminate over-the-counter cough and cold medications and nutritional supplements as Medi-Cal benefits.

--Elimination of Adult Day Health Care (ADHC). Adult Day Health Care provides a variety of health, therapeutic, and social services for those at risk of being placed in a nursing home. Approximately 37,000 beneficiaries use ADHC services each month in about 330 centers statewide.

--Reduce Medi-Cal Provider Payments by 10 Percent. The budget reduces provider payments by 10 percent for physicians, pharmacy, clinics, medical transportation, home health, ADHC, certain hospitals, and nursing facilities.

The budget reduces rates for long term care facilities, including nursing homes by 10 percent. This proposal will require federal approval,

--Use Proposition 10 Reserves to Fund Health Services. Proposes to use $1 billion in Proposition 10 (known as the First 5 Program) funds from county commission reserves (estimated at $2 billion in 2009) to fund Medi-Cal services for children through age five. This change would require voter approval and would take effect July 1, 2011.

--Extend the Hospital Fee. The budget proposes to extend the existing hospital fee, which expired December 31, 2010, through June 31, 2011. Fee revenue is used to leverage federal funding to provide additional payments to hospitals for the provision of Medi-Cal services and save state dollars.

Healthy Families Program

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. The governor proposes to make the following changes to the Healthy Families Program:

--Eliminate the Vision Benefit. The Governor proposes to eliminate the Healthy Families vision benefit. This service provides testing, eye refractions to determine the need for corrective lenses, and care for injuries. The proposal would also eliminate the separate vision coverage for children participating in the program, which covers eyeglasses and other specialized services. This proposal would take effect June 1, 2011, after appropriate provider and beneficiary notification.

--Increase Premiums. The budget would increase monthly premiums for healthy families, affecting approximately 565,000 children. The new premiums would take effect on June 1, 2011, and are as follows:

-Premiums would increase for those who have income levels that are 150 to 200(2) percent of poverty by $14 per child (in other words, current premium of $16 per child would increase to $30). The budget would increase the maximum premium limit for a family with three or more children by $42--from $48 to a family maximum of $90.

-For families with incomes from 200 to 250(3) percent of poverty, premiums would increase by $18 per child (in other words, current premium of $24 per child would increase to $42) The budget would increase maximum premium limit for a family with three or more children by $54—from$72 to a family maximum of $126.

-No increase is proposed for families with incomes under 150 percent of poverty.

--Increase Co-payments.

--Increase co-payments for emergency room visits from $15 to $50.

--A new in-hospital stay co-pay of $100 per day, with a maximum of $200. Previously, there was no co-pay for hospital stays.

--Increased co-payments for emergency room visits from $15 to $50 and inpatient stays from $0 to $100 day/$200 maximum, to conform to a similar Medi-Cal proposals. These changes would take effect October 1, 2011, after appropriate provider and beneficiary notification. This proposal will result in savings of $5.5 million.

Healthy Families has co-payments that cover doctors' visits ($10), prescriptions ($15 for brand name drugs, and $10 for generic drugs), and emergency room visits ($15). Beneficiaries are not denied service for inability to pay. An annual co-payment maximum of $250 per family also exists. In November 2009, co-payments were increased by $5 for doctor visits and generic drugs, and by $10 for brand name drugs and emergency room visits.

Department of Aging

The California Department of Aging (CDA) contracts with the network of Area Agencies on Aging that directly manage an array of federal and state funded services that help older adults find employment; support older and disabled individuals to live as independently as possible; promote healthy aging and community involvement; and assist family members in their care giving role. CDA also contracts directly with agencies that operate the Multipurpose Senior Services Program through the Medi-Cal home and community based waiver for the elderly, and certifies Adult Day Health Care centers for the Medi-Cal program.

--Eliminate the MSSP optional benefit. The local Multipurpose Senior Service Program (MSSP) sites provide case management services for elderly clients who qualify for placement in a nursing facility but who wish to remain in the community. The program has 41 sites statewide and serves approximately 11,789 clients per month. Clients must be 65 years of age or older, currently eligible for Medi-Cal, be appropriate for case management services, and certified or certifiable for placement in a nursing facility. In addition to case management services, MSSP funds are also used to provide adult day care, housing assistance, chore and personal care assistance, protective supervision, respite, transportation, meal services, social services, and communications services. The MSSP program assists seniors in obtaining access to these services elsewhere in the community or through state programs first, and uses MSSP funds as a last resort for any potential gaps in needed care. This proposal would eliminate these services for a savings of $19.9 million General Fund in 2011-12.

CalWORKs

The CalWORKs program provides temporary financial assistance and employment-focused services to families with minor children who have income and property below state maximum limits for their family size.

The proposed changes to CalWORKs are estimated to reduce the 2011-12 caseload projection to 458,000 families, a 21.3-percent decrease from the 2010-11 estimate.

--Establish Time Limit of 48 Months. Limits families to a 48-month time limit for CalWorks, down from the current 60 month limit. After 48 months on aid (applied retroactively) all families would lose assistance unless (a) they meet a federal time limit exemption such as the parent being on SSI, the parent is caring for a family member with a disability, or is a teen parent who is not head of household or (b) are meeting work participation requirements. Approximately 115,000 families, including 230,000 children, would lose eligibility for CalWORKs due to this change.

--Reduce CalWORKs Grants. Would reduce the maximum monthly grant for a family of three from $694 to $604 (a 13-percent reduction), effective June 1, 2011, for savings of $13.9 million in 2010-11 and $405 million in 2011-12. CalFresh (formerly Food Stamp) benefit levels would increase, thereby partially offsetting the reduction to families' total resources.

--Maintain County Funding Reductions in CalWorks. The "single allocation to counties" provides funding for CalWORKs employment services, child care, and county administration. It provides counties with the flexibility to prioritize these funds to ensure desired programmatic outcomes at the local level.

This proposal would maintain the reduction to the funding levels included in the 2009 and 2010 Budget Acts for savings of $376.9 million in 2011-12. Continued as an unallocated reduction, counties will need to re-prioritize the use of funds to serve clients. This proposal assumes implementation on July 1, 2011. The CalWORKs program changes described above will generate total savings of nearly $1.5 billion (TANF and General Fund) in 2011-12. The $1.5 billion reduction includes both state General Fund and federal Temporary Assistance for Needy Families (TANF) block grant dollars. Specifically, $533.1 million reflects state savings in the Department of Social Services (DSS), and the remainder – $946.8 million – reflects TANF block grant savings. The Administration proposes to transfer the TANF block grant funds to the California Student Aid Commission to offset a like amount of General Fund.

Calworks Child Care and Development Program

The CalWORKs Child Care Program is administered in three stages. Stage One is administered by the county welfare departments. Stages Two and Three are administered by agencies under contract with the California Department of Education (CDE). The three stages of CalWORKs child care are defined as follows:

Stage One begins with a family's entry into the CalWORKs program. Clients leave Stage One after six months or when their situation is stable, and when there is a slot available in Stage Two or Three. Stage Two begins after six months or after a recipient's work or work activity has stabilized, or when the family is transitioning off of aid. Clients may continue to receive child care in Stage Two up to two years after they are no longer eligible for aid. Stage Three begins when a funded space is available and when the client has acquired the 24 months of child care, after transitioning off of aid (for former CalWORKs recipients). The budget proposes to:

--Eliminate services for 11-and 12-year olds. Reduces by $34 million CalWORKs Stage 1 (administered by Department of Social Services, savings reflected in that section) related to the elimination of this program.

--Restore Stage 3 Childcare - Governor proposes to restore Stage 3 child care in April but with new cost sharing provisions for families who are in higher cost child care programs. The proposal does not address what families will do until April.

Supplemental Security Income/State Supplemental Payment (SSI/SSP) Program

SSI/SSP provides cash assistance to help low-income seniors and people with disabilities meet basic living expenses. The Governor proposes to reduce the maximum monthly SSI/SSP grant for individuals from $845 to $830 – the minimum allowed by federal law – effective June 1, 2011 for savings of $14.7 million in 2010-11 and $177.3 million in 2011-12. The grant for couples is already at the minimum level permitted by federal law, and therefore the state cannot cut it further.

Special Education

Special education services are designed to address the individualized educational and related service needs of children with disabilities. Special education services include Early Intervention Services for infants and toddlers, pre-school for students starting at age three, services for school age children in grades K-12, and transition services for eligible students up to age 22.

Special Education Increase. An increase of $7.4 million Proposition 98 General Fund for Special Education growth.

In Home Supportive Services (IHSS)

IHSS is a statewide public program providing personal care and domestic services to aged, blind or disabled Californians who are unable to remain safely in their own homes without such assistance. The IHSS program is successful at keeping people out of more costly and less desirable out-of-home placement in nursing homes or other institutions. IHSS services include personal services such as bathing, dressing and assistance with walking and transferring from bed to chair; domestic assistance such as meal preparation, shopping, heavy house cleaning; and protective supervision. A combination of state, county, and federal funds through Medicaid support IHSS. The budget proposes to make the following changes to IHSS:

-- IHSS Advisory Boards. Eliminates all state funding for the consumer advisory boards of the Public Authorities and makes them optional for counties. These advisory boards have been the crucial in facilitating consumer voices in IHSS program changes and in support of IHSS. The estimated state savings is: $1.6 million dollars

-- Across the Board Reduction. Proposes a permanent 8.4% reduction in IHSS hours, effective July 1, 2011. Additionally, makes the 3.6% cut from the 2010-11 budget, which starts next month, permanent instead of ending on June 30, 2012. The 8.4% is in addition to the 3.6% cut, for a total across the board cut of 12.0%. The estimated state savings is $24 million.

--Exception Process. The proposal includes an exception process. To request an exception and restoration of hours, consumers will be able to file a Supplemental Care Application, which the county social worker would review. If that Application is denied, the consumer can file an appeal through the regular state process.

--Medical certification. For each new and current consumer, a physician would have to certify that the consumer has functional limitations which require IHSS assistance to prevent institutionalization. This does not mean that the consumer must meet a particular institutional level of care.

(Note that the Medi-Cal budget proposal includes a $5 co-pay for physician visits and limits the number of visits allowed.)

The savings prediction accounts for county administration costs and state hearing costs but does not reflect the cost to Medi-Cal for the physician visits. The budget projects that 43,000 consumers will lose services because they won't get the certification. The estimated state savings is $120 million.

--Domestic and related services. This includes laundry, cleaning, meal preparation and other services.

--Eliminates payment for domestic and related services for minors living with an "able and available" parent. This change is described as aligning with current policy for spouse providers. There are provisions for exceptions if the parent is unable to do the tasks or if the tasks have to be done while a parent has to be out of the house, such as at work. This cut would affect an estimated 7,187 minor consumers, who will lose an average of 4.91 domestic and related hours per month. Estimated state savings is $1.6 million.

--Eliminates domestic and related services when the consumer shares living quarters and when those services "are met in common with other household members", unless the services cannot be met in common due to a medically verified condition of other household members. This applies to all shared living situations, including when the consumer and housemates are unrelated and are sharing housing because of economic necessity. The administration acknowledges that the house-mates, whether they are related or not, have no legal obligation to provide services to the IHSS consumer. Forty-eight percent of IHSS consumers share a household. Their domestic and related services are already pro-rated depending on the size of the household. The proposed cuts to domestic and related services for adults in shared households will affect 352,390 IHSS consumers. The administration estimates that 259,970 consumers with pro-rated hours will be cut, with an average loss of 14.25 domestic and related hours per month. An estimated 92,420 consumers with non-pro-rated hours will be cut, on an average of 16.53 domestic and related hours per month.

This reduction is in addition to the across the board 12% - . The estimated state savings is $235 million.

Department of Mental Health

The Mental Health Services Act(MHSA)(4) 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.

Counties provide what are called "specialty mental health services", through mental health managed care (MHMC). 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 and adults under age 21 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.

AB 3632 was a bill passed in 1986 by the California Legislature that mandates county mental health departments to provide mental health special education related services to children who need them pursuant to an Individualized Education Plan (IEP). They did this to maximize the unique expertise offered by county departments of mental health and to better coordinate public resources to support students with disabilities receiving special education services. Under AB 3632, county departments of mental health were responsible for providing services such as, case management, counseling, medication management, and residential placement and sometimes out-of-state residential placement. The budget proposals include:

--AB 3632. $98.6 million General Fund to cover mental health services for students, mandated under federal law, for prior year costs incurred by counties per a state mandate created by AB 3632.

--MSHA. Shifts MHSA funds to the Department of Mental Health, to replace the General Fund for AB 3632 services, the EPSDT Program and MHMC for General Fund savings of $861.2 million in 2011-12.

--Realignment. Realigns to counties AB 3632, EPSDT, and MHMC and replaces MHSA funding

(1) This summary includes information taken directly from the Governor’s 2011-12 budget documents and information provided by the California Budget Project.

(2) 150 percent of percent of poverty is an annual income of $21,855 for a family of two and 200 percent of poverty is an annual income of $29,140 for a family of two.

(3) 200 percent of poverty is an annual income of $29,140 for a family of two. 250 percent of poverty is an annual income of $36,425 for a family of two.

(4) Also known as Proposition 63.

 

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