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CDCAN Disability Rights News Report

November 6, 2008

Major cuts to Health and Human Services by Governor

Calls for end of several Medi-Cal optional benefits; proposes major cuts to SSI/SSP and IHSS; big cut proposed for CalWORKS, calls for 3% Regional Center provider payment cut and 3% cut in Regional Center operations; proposes major revenue increases

SACRAMENTO (CDCAN) - Faced with a growing budget shortfall that is now over $11 billion and growing, Governor Arnold Schwarzenegger proposed a wide range of major cuts, as expected, to health and human services that impact children and adults with disabilities, mental health needs, seniors, the blind, low income children and families, providers across California. The Governor also proposed big cuts to public education (K-12) that will have major impact on children with special needs, though he made no specific cuts to special education. The Governor estimated that the shortfall could grow another $13 billion during the 2009-2010 State Budget year that begins July 1, 2009 – meaning the total budget deficit that the State needs to bridge this year could be nearly $25 billion.

The proposals, which the Governor wants the Legislature to approve and go into effect this budget year (meaning in some cases as soon as December 1, 2008 and in other cases, March 1, 2009 or later) will be considered by the Legislature in special session. The Governor issued formally his proclamation calling the current Legislature – who have 100 of 120 members whose terms will expire on November 30th, back into a special or extraordinary session to consider his proposals. Newly elected or reelected legislators who were up for election November 4th, won’t take office until December 1.

The Governor wants these proposed cuts be approved by the current Legislature, would apply for this budget year which began July 1, 2008, but also extends the cuts for the entire budget year that begins July 1, 2009 and ends June 30, 2010.. In some cases – such as the proposed elimination of the Cash Assistance Program for Immigrants, which provides SSP level state funded grants to eligible legal immigrants who have disabilities, blind or seniors, would be permanent, as would the cuts proposed for IHSS and Medi-Cal..

Governor said his package of spending reductions for the special session total $4.5 billion or nearly half (about 49%) of what the projected current budget shortfall is. Proposed revenue increases account for about $4.7 billion or just over 51% of what the current project budget shortfall is.

The Governor will provide additional proposals – that will likely include more spending reductions, when he presents his proposed budget for the 2009-2010 State Budget year, on January 10, 2009.

Governor proposes sales tax increase

The Governor also proposed ways to increase revenues, that includes an economic stimulus package and a temporary increase of the state sales tax, to be effective (if approved) January 1, 2009, of 1.5% for three years. At the end of three years, the sales tax would return to 5%. The Governor estimates that the increase would generate additional revenues of $3.540 billion for the current budget year that ends June 30, 2009 and another $7.319 billion for the 2009-2010 State Budget year that begins July 1, 2009. .

CDCAN will issue a report with more details on the other proposals by the Governor to raise revenues.

MAJOR CUTS PROPOSED BY GOVERNOR

All areas of the State budget were hit with spending reductions, though hardest hit was the education and health and human services budgets. Cuts proposed include:

Medi-Cal

* Proposal to reduce California Medi-Cal benefits to the level of optional benefits provided in most other states by eliminating permanently the following optional benefits:

- adult dental (excluding children), chiropractic, incontinence creams and washes, acupuncture, audiology, podiatry, and psychology Medi-Cal funded services.

* Proposal to reduce Medi-Cal benefits for newly qualified immigrants and immigrants who permanently live in California to the same level currently provided to undocument immigrants. Medi-Cal benefits that would remain include emergency services, pregnancy related services, long term care in a nursing facility, and breast and cervical cancer treatments.

* Proposal to reinstate share of cost for Medi-Cal services for persons with disabilities, blind or seniors with incomes over the SSI/SSP limits. Eligibility for Medi-Cal without a share of cost for those persons was expanded in January 2001 from 69% to up to 127% of the federal poverty level.

* Proposal to cut emergency services for undocument immigrants by implementing monthly eligibility determination for emergency services for undocumented immigrants, who currently receive up to six months of health services after an initial eligibility determination. The Governor’s proposal would limit those services to one month unless and until there is a subsequent health emergency.

* Proposal to change Medi-Cal eligibility by reducing the income level for new Medi-Cal applicants to the Section 1931 (b) program to the standard prior to March 2000 average of approximately 72% of the federal poverty level – and define “under employment” as the principal wage earner who works less than 100 hours a month for persons applying for the Medi-Cal Section 1931 (b) program.

* Proposal to shift the federal Safety Net Care Pool funding from designated public hospitals to parts of the California Children’s Services (CSS) program, the Genetically Handicapped Persons, the Medically Indigent Adult Long Term Care, and Breat and Cervical Cancer Treatment programs – who are all eligible for these funds. The Governor’s proposal for this says that no reductions to services for persons in these programs will result from this proposal.

In-Home Supportive Services (IHSS) [correction]

* Proposal to cut the State’s participation (matching funds) for IHSS worker wages and benefits to the level of the State minimum wage.

* Proposal to eliminate the IHSS share of cost buy-out for persons receiving IHSS with an average functional index score of less than 4 would be required to pay for more of their IHSS servcies before qualifying for state subsidies (money). Person on IHSS with an average functional index score of 4 and higher – persons the State says with the “most severe needs”, would not be impacted by this proposal.

* Proposal to eliminate IHSS domestic and related services for persons receiving IHSS, as measured by a functional index rank of 4 or less. Would maintain those services for persons who have a higher functional index than 4). Proposed effective date, if approved would be March 1, 2009.

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

* Proposal to reduce the State part of the grant (SSP) to the “maintenance of effort” as required by federal law, effective (if approved), March 1, 2009. This would mean, for example, that persons receiving SSI/SSP in January, who receive the maximum SSI/SSP grant of $907 (including federal cost of living increase for SSI that is due January 1, 2009) would see a reduction of about $77 dollars – or a total SSI/SSP grant level reduced to $830

* Proposal to permanently eliminate the Cash Assistance Program for Immigrants (CAPI), effective (if approved) March 1, 2009.

Regional Centers

* Proposal for a 18 month 3% regional center provider rate reduction (excluding supported employment providers who had a rate reduction of 10% this year) (proposed to be effective December 1, 2008).

Not included in this proposed cut: Certain payments would be exempt from this reduction including supplemental rent/lease payments for persons with developmental disabilities receiving supported and independent living services, and “usual and customary” rates for services such as bus fares and also payments that would impact health and safety.

* Proposal for a 3% reduction – unallocated – the regional center operations budget, (proposed to be effective December 1, 2008)

* Proposal to provide “flexibility” to regional centers on their caseload ratios (currently 1 service coordinator to 66 persons).

Not included in this proposed cut: Some groups served would be exempted from this “flexibility” including persons moving from developmental centers into the community, infants (in the California Early Start Progra) and persons on the federal Medicaid waivers)

* Proposal to suspend reporting requirements for staff salary schedules and contract expenditures

California Food Assistance Program (CFAP)

Proposal to eliminate this program, effective July 1, 2009, which is state funded only and provides food assistance to low income legal immigrants.

CalWORKS

Note: thousands of children with special needs, and thousands of their parents with special needs, including mental health needs, are in the CalWORKS program

* Proposal to reduce CalWORKS benefits by changing the Safety Net program, by limiting benefits for families beyond the 60 month time limit only if they meet federal work participation requirements. Proposal would be effective, if approved, March 1, 2009.

* Proposal to limit cash aid for families receiving child only CalWORKS benefits to 60 months.

* Proposal to put in place a “face to face self sufficiency review” every six months with a county works for CalWORKS families whoa re not meeting work requirements. Would go into effect, if approved, March 1, 2009

* Proposal to reduce CalWORKS grants by 10%, effective March 1, 2009 (if approved). That would mean, if approved, a reduction of over $93 million for the current budget year and over $280 million in state funds for 2009-2010. The cut, if approved, would mean a reduction in the maximum CalWORKS grant for a family of 3, from $723 to $651.

Education (K-12)

Note: No cuts specific to special education programs, which serve over 650,000 students with disabilities and special needs, but the huge size of the cut proposed for this budget year to education will likely have a major impact to special education programs, because it will have an impact on teachers and related services.

* Proposal to cut education funding (K-12) under Proposition 98 (passed by voters in 1988 that guarantees a certain level of state funding for public education) by $2.5 billion for the current budget year. Proposal also includes elimination of the cost of living adjustment (COLA) provided to various education programs including K-12 revenue limits and community college apportionments, child care programs sacings and further reducing general purpose funding for all local education agencies.

Mental Health

No specific major cuts for the special session proposed for direct mental health services under the Department of Mental Health, though many of the other cuts proposed to CalWORKS, SSI/SSP, Medi-Cal, regional centers, IHSS have direct impact to children and adults with mental health needs.

Governor’s proposals will need approval by Legislature

Any proposal by the Governor – whether to increase revenues or to cut spending – would need approval by the Legislature. While the Governor can order the Legislature to return for a special session – which has never before been held this late in an election year before – he cannot force them to act. However, given the enormous projected budget shortfall – that is also impacting the State’s cash flow so it can pay its monthly bills – legislative leaders from both parties promise action. However, Democrats and Republicans in the Legislature, as they did in the budget stand-off this past summer, have sharp differences on how to address the budget crisis. Democratic legislative leaders – and the Governor – want to include tax increases, though the Governor is likely only to propose some form of increases to the state sales tax. Democratic legislative leaders insist that the budget shortfall cannot be closed only with more spending cuts alone.

Republican legislative leaders are adamantly opposed to any tax increases, saying it is a bad idea during a time when the economy is so bad in California.

Either way, the Legislature when it returns, will be acting – or not acting – on a fast track because terms of office for many will expire by November 30th. In addition, the State Constitution requires that the Legislature must send any bill to the Governor on or before November 15th. It is not absolutely clear how that provision in the State Constitution applies to a special session “urgency” or emergency bill, because there never has been a special session held at this time of the year before.

The Legislature will almost certainly hold some form of public hearings – though it is not clear how or when that will happen.

If the current Legislature fails to take action this month, the Governor could call the new Legislature, with new members taking office December 1, in December or in January, to meet at the same time when the regular session for 2009 officially begins.