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The Governor’s Budget, the May Revise,
and an Overview of the State Budget Process

On May 14, Governor Schwarzenegger released his May revision (May Revise) for budget year 2010-11.  He proposes deep cuts to heath and human services. The cuts could harm Californians with disabilities and individuals with low incomes.  The governor does not propose any way to bring in new money (revenue). 

Disability Rights California opposes these harmful cuts, some of which may be against the law and lead to lawsuits if passed.  Check our website (www.disabilityrightsca.org) for more information on lawsuits filed to stop some of last year’s cuts.

The Numbers

In the May Revise, the adjusted deficit is $19.1 billion in general fund (i.e. state dollars) for the two-year period ending June 30, 2011.  While the state received $700 million in additional federal funds, the governor assumed the budget gap grew by an additional $1.1 billion, consisting of reduced revenues of $600 million and increased expenditures of $500 million. He also proposes to increase the state budget reserve by $200 million to $1.2 billion. 

Budget Gap in January

-$19.9

Special Session Approved Solutions

$1.4

Achieved Federal Funds

$0.7

Revenue Decline

-$0.6

Cost Increases

$.05

Increase Budget Reserve

-$0.2

New Budget Gap

-$19.1

 

In the January budget, the estimated state revenue shortfall was $19.9 billion. Of that total 19.9 billion dollar gap, $6.6 billion of it was left over from 2009-10 fiscal year in the state budget that the governor signed on July 28, 2009.  This is often called the “current year” budget because this is the budget for the current fiscal year. To try and fix the “current fiscal year” deficit of 6.6 billion dollars, the governor called a special session of the legislature.  The special session ended in early March. The legislature passed $3.5 billion in solutions. The governor vetoed $ 2.1 billion of these solutions, leaving only $1.4 billion in agreed solutions

The May Revise:  An Overview of Process and Proposals

The May Revise has costs and revenues that were estimated in the January budget. The May Revise is based on a better picture of what money the state has, including income taxes.  It also shows other changes such as increased or decreased program caseloads and new or withdrawn administration proposals.  The legislature holds hearings and considers the May Revise proposals in mid and late May. California law gives the legislature a deadline of June 30 to submit a final budget to the governor for his signature.  This deadline is almost never met.

The attached chart shows the details of cuts impacting people with disabilities.  These are some of the cuts in the May Revise:

  1. A $15 a month reduction in SSI grants for individuals, reducing the grant from $845 to $830 a month. This would drop California to the federal minimum and would be the fourth cut in a year for SSI recipients.
  2. Major Changes to the Medi-Cal Program, including:
    • Eliminating over the counter drug coverage and setting annual caps on hearing aids and durable medical equipment;
    • Annual limits on physician visits;
    • Monthly limit on prescriptions;
    • Copayments for physician/clinic/dental, pharmacy, emergency room visits and in-hospital stays; and
    • Mandatory enrollment of seniors and people with disabilities into managed health care with no choice to opt out.
  3. Withdrawing the “trigger” proposals (described below) to eliminate nine Medi-Cal benefits and cut Medi-Cal eligibility to the “federal minimum.” Eligibility cuts to Medi-Cal and Healthy Families are prohibited by federal health reform law.
  4. A 50% cut to state fund support for the In Home Supportive Services (IHSS) Program; specifics to be determined through stakeholder process by July 1.
  5. Reductions to community mental health services including:
    • Shifting $602 million or 60 percent in county realignment funds to administer Food Stamps and Child Welfare Services, which would be movedfrom the state to county budgets. Realignment funds are used by counties to pay for community mental health services.
    • Mental health services provided under Medi-Cal would be cut down to in-patient treatment and medications for adults, and Early and Periodic Screening, Diagnosis and Treatment Program (EPSDT) services for children identified as seriously emotionally disturbed.  Only $435 million in county realignment funds would be available for this purpose, along with federal funds.
    • All other community based mental health services (except for those funded by the Mental Health Services Act), such as clinic outpatient services, crisis management services, psychiatric therapies, and related medically necessaryservices would not be funded under this proposal.
  6. Elimination of the following effective October 1, 2010:
    • Cash support known as CalWORKs
    • Cash Assistance Program for Immigrants (CAPI)
    • California Food Assistance Program (CFAP)

Budget Proposal Chart

The attached chart describes the key proposals in the governor’s budget and May Revise that impact people with disabilities. It includes items that were considered in the “special session” and items that are being considered as part of the regular budget process which began in late March.

Read the glossary of some key terms used in the chart and an explanation of how the chart works.

Special Session Actions and Savings Carried Over from 2009-10

The outcomes of the “special session” proposals are noted in the chart.   Included in the chart are savings that resulted from actions taken in 2009-10 budget that carry over and affect 2010-11 (this includes Department of Developmental Services budget because of the Budget Advisory Group process that took place last year which resulted in savings), and pending items that have yet to be heard or finalized by the legislature.  Some of these items have been heard and rejected or held open and not decided upon.  Many of these items are going to be considered in mid-May.   Any actions, including pending items, are noted in the chart’s “outcomes” column.

Trigger Cuts off the Table

The governor’s January budget for FY 2010-11 proposed significant cuts to and elimination of health care programs if federal funds did not arrive and fill the budget gap. These cuts would have greatly impact low income Californians and persons with disabilities.  These are known as “Trigger Cuts”.   The governor is no longer proposing trigger cuts in the May Revise.

 

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