Disability Rights California’s Summary of the Governor’s May Revision to the Proposed 2023-24 Budget
Disability Rights California’s Summary of the Governor’s May Revision to the Proposed 2023-24 Budget
Governor Newsom released his “May Revision” to the 2023-24 proposed budget on May 12, 2023 (https://ebudget.ca.gov/budget/2023-24MR/#/BudgetSummary). The revised budget proposal is constructed around the projected revenue and deficits in the current year and the 2023-24 budget year. In particular, the May Revision considers significant policy proposals announced since the January budget as well as changes in revenue projections as of April, when most annual income tax revenues are received.
The $22.5 billion deficit projected in January has increased to $31.5 billion, an almost 50% increase. Among the reasons for the significant deficit increase are tax deadline extensions by both the state and the IRS in response to significant storms in December and January.
The May Revision responds to the increased shortfall through a combination of funding delays, fund shifts, and some decreases. In behavioral health funding, for example, the May Revision proposes using more than $550 million in Mental Health Services Act funding in lieu of General Fund dollars.
The May Revision includes significant General Fund investments to support the Community Assistance, Recovery and Empowerment (CARE) Act, especially focusing on the county behavioral health department costs for the Act. This includes significant funding for Los Angeles County, which intends to start implementation before the end of the year. The Budget includes $32.7 million for the Judicial Branch and an increase in the years after.
The Governor has generally maintained education funding levels as proposed in the January budget, despite the gloomier economic forecast. Governor Newsom quipped that he is committed to maintaining education investments and is willing to use rainy day funds to stabilize funding if an economic recession is formally declared. Per pupil spending and special education spending also remain level, and Governor Newsom is committed to funding universal dyslexia screenings to all K-2 aged youth. Relating to foster youth, the Governor had initially proposed halting $40 million in foster youth services funding over two years, but has since reinstated $20 million for the fiscal year ahead. This budget also continues the guarantee of two free school meals to all students, and entertains proposals to also provide meals to their guardians upon request.
DRC is pleased to see that the May Revision maintains investments made in the January budget in Medi-Cal, such as the elimination of the asset test, expansion of Medi-Cal coverage to individuals regardless of immigration status and reformation of the Medi-Cal Share of Cost program. We also are pleased to see the $60.7 million ($27.9 million General Fund) ongoing investment in IHSS to better serve minor recipients and their families, a priority issue for DRC. This investment will help resolve access to services for a number of our minor clients, including kids with undocumented parents who will now be able to hire a non-parent provider. We encourage the Administration to ensure these parents (and other family providers without satisfactory status) have the option to provide these services and be paid.
DRC supports the inclusion of a six-month extension for the Home and Community-Based Services (HCBS) spending plan until September 30, 2024 for programs, such as the IHSS Career Pathways Program and the Senior Nutrition Infrastructure Program, and appreciate that the extension will enable these programs more time to serve older adults and people with disabilities.
While we recognize and appreciate that some critical investments have been maintained in the May Revision, we look forward to working with the Administration to ensure critical programs helping to address the older adult homelessness crisis are protected, including CCT and the Home Upkeep Allowance program. We also look forward to working with the Administration to improve Home and Community Based Services provider rates.
DRC will continue to analyze the May Revision and communicate with staff in the Legislature, Departments and the Administration to ensure that necessary investments for disabled people are sufficient.
The following are some of the key items in the May Revision impacting persons with disabilities and the programs that assist them:
Table of Contents
- CARE Act Community Assistance, Recovery & Empowerment (CARE) Act
- Department of Developmental Services (DDS)
- Department of State Hospitals (DSH)
- Emergency Response
- Foster Care
- Health and Human Services
- Homelessness and Housing
- In-Home Supportive Services (IHSS)
- Labor and Workforce Development
- Mental Health
- Public Safety
- Supplemental Security Income / State Supplemental Program
The May Revision provides $20 million General Fund in 2023-24, $20 million General Fund in 2024- 25, and $10 million General Fund in 2025-26 at the California Department of Aging to support the continuation of the Older Adult Friendship Line, a targeted media campaign for older adults, and competitive grants to local jurisdictions to build organizational capacity to identify and address older adult behavioral health and substance use disorder needs.
CARE Act Community Assistance, Recovery & Empowerment (CARE) Act
CARE Act implementation begins October 1 with the first of two cohorts of counties (Glenn, San Diego, San Francisco, Tuolumne, Stanislaus, Orange and Riverside). The remaining counties must begin implementation by December 1, 2024; Los Angeles has announced its intention to begin this year on December 1.
Total funding in the May Revision is $128.9 million General Fund in 2023-24, $234 million General Fund in 2024-25, $290.6 million General Fund in 2025-26, and $290.8 million General Fund in 2026-27. Of this amount:
- $15 million is an addition for Los Angeles County startup along with an additional $8.9 million in 2023-24 and $4.7 million in 2024-25 for Judicial Branch costs due to early implementation in Los Angeles County.
- Compared to the January budget, the May Revision includes annual increases from $43 million and $54.5 million “to account for refined county behavioral health department cost assumptions based on engagement with county stakeholders.”
Department of Developmental Services (DDS)
The Department of Developmental Services (DDS) May Revision budget includes $14.1 billion, which is decreased from the proposed $14.2 billion in the January draft of the Budget, and still up by $1.5 billion compared to the previous year.
- Independent Living Services (ILS) Rate Adjustment: $15 million ($8.5 million GF) to raise the ILS rate to better align with similar professions.
- Coordinated Family Support Services: $18 million ($10.8 million GF) to continue funding the Coordinated Family Support Pilot through June 2024 once the HCBS Spending Plan timeframe ends.
- Cost-Sharing and Fee Programs: extends the suspension of the annual family program fee and family cost participation program through December 31, 2023.
- Multifamily Housing Projects: $10.8 million GF reappropriated from FY 2020-21 Community Placement Plan to support regional centers in developing multifamily housing projects.
- Expanding participant-directed services to include social recreation and camping services.
Department of State Hospitals (DSH)
Incompetent to Stand Trial (IST)
- The May Revision reflects decreased funding of $35.7 million in the current fiscal year and $33.2 million General Fund for 2023-24. According to the Governor’s Administration, the waiting list for IST beds continues to decline. Recent data places the waitlist at 992 with 200 of those receiving early stabilization services.
- Family Fee Waivers: allocates $4.4 million non-Proposition 98 General Fund and $5.3 million Proposition 98 General Fund from the 2022 Budget to continue to waive family fees from July 1, 2023, through September 30, 2023.
- Implements a multiyear plan to make the State Preschool Program more diverse.
- Annualizes rate increases for the California State Preschool Program, to require at least 7.5 percent of slots be provided to students with disabilities in 2023-24, and to 10% in the 2024-25 school year.
Universal Transitional Kindergarten (TK)
The May Revision maintains funding for Universal Transitional Kindergarten (TK) expansion.
- Allocates $762 million to maintain full implementation and facilitate an estimated 42,000 new universal TK enrollments in 2023-24, maintain decreased ratios at 1 adult for every 12 children.
Early Education and Child Care
- Increases overall funding for child care to a total of $6.6 billion annually, including $3 General Fund in 2023-24.
- Annualizes funding for the 2022-23 Budget Act 36,000 new child care slots.
- Maintains the goal to serve 200,000 new children by 2025-26, but delays the planned 20,000 new child care slots to 2024-25.
- Provides the child care nutrition programs with a 8.22 percent cost of living adjustment.
The May Revision maintains K-12 education spending consistent with January levels, including:
- Provides nearly $107 billion in total Proposition 98 spending.
- Per pupil spending is nearly level at $23,709, a $17 decrease.
- Maintains $5.4 billion to address learning loss during the peak of the COVID-19 pandemic.
- Maintains $4.3 billion for school-based behavioral health.
- Maintains $4 billion ongoing funding for before-school and after-school programs.
The May Revision provides funding increases over last year for California’s early literacy initiatives. These allocations include:
- $250 million one-time Proposition 98 funding for intensive interventions including literacy coaching, in addition to the enacted Budget’s $250 million.
- $1 million one-time General Fund for a state Literacy Roadmap.
- $1 million for reading screening assessments proposal.
Universal School Meals<
- Maintains the California universal meals program with $1.5 billion ongoing annual funding, for two free meals for all students.
- Provides a decrease of approximately $239 million one-time Proposition 98 General Fund for deferred maintenance needs, for a total reduction of $452 million one-time funds.
- The May Revision will continue to allocate $3.5 billion for special education programs, consistent with the January Budget.
- Increases funding for the Golden State Teacher Grant Program with $6 million one-time federal funds for special education teacher candidates in high need schools.
- Proposes statutory changes to Special Education funding, to limit non-direct student services, extend a moratorium on new single-district Special Education Local Plan Areas, and require the Department of Education to post local fiscal documents.
- The Governor’s May Revision maintains funding to require universal screening for reading difficulties and risk of dyslexia in grades K-2.
- Beginning in the 2025-26 school year, local educational agencies would be required to screen all students in grades K-2 annually.
- Provides $7 million one-time to support Restorative Justice best practice implementation.
University of California & California State University
- The May Revision proposes a 5% across the board funding increase for the UC and CSU.
- The budget maintains continued support for the multi-year compact that includes sustained funding increases for the UC, in exchange for clear commitments to expand student access, equity, and affordability.
- Shifts state funding to bond funds to provide student housing, with General Fund monies used for debt servicing.
California Community Colleges
- Decreases funding for CCC student housing – The May Revision reduces $500 million allocation to $450 million in 2023-24 from $200 million to $45 in 2024-25.
- Provides $10 million a year for three years to support the Los Angeles Community College District LGBTQ+ Pilot Project.
The Office of Emergency Services (Cal OES) serves as the state’s leadership hub during emergencies and disasters. This includes responding, directing and coordinating local, state and federal resource and mutual aid assets across all regions of the state.
- Disaster Response Emergency Operations Account: The May Revision sets aside $25 million one-time General Fund in the current year in anticipation of potential additional disaster relief and response costs associated with recent storms and future flooding.
In the Governor’s January budget, Newsom proposed to cut $40 million from a $60 million promise for the Court Appointed Special Advocates (CASA) program. The program operates 44 centers and consists of more than 11,000 volunteers to help and advocate for foster youth navigating the judicial and child welfare system.
- The May Revision restores $20 million in funding for the fiscal year ahead.
Health and Human Services
The May Revision includes:
- An augmentation of $9 million General Fund ($10 million in total) at the Health and Human Services Agency to establish a new public-private partnership that will create solutions targeting diabetes related morbidity and mortality, addressing disparities in maternal and infant mortality faced by women and their babies, and preventing and mitigating infectious disease. The Initiative will look to accelerate the translation of research and development into innovations that help to directly address disparities and inequities in California’s safety-net programs.
- Proposes renewal of the Managed Care Organization (MCO) Tax, effective April 1, 2023 through December 31, 2026, resulting in $19.4 billion to help maintain the Medi-Cal program with $8.3 billion over the MCO Tax period for General Fund offset, which represents $3.4 billion (a $2.5 billion increase over the Governor’s budget) in General Fund offset in 2023-24, and $11.1 billion over 8-10 years to make improvements to the Medi-Cal program, as follows:
- $237 million ($98 million General Fund) in 2023-24, beginning January 1, 2024, and approximately $580 million ($240 million General Fund) annually thereafter to increase rates to at least 87.5 percent of Medicare rates for primary care, obstetric care (including doulas), and non-specialty mental health services; and,
- $10.3 billion, including $922.7 million in 2023-24, to be set aside for future consideration by the administration and to be included in the 2024-25 Governor’s Budget.
- Decreases funding by $50 million (General Fund) for COVID-19 response for programs and services. 2023-24 COVID-19 Response. The decrease is driven in part by a ramp down of emergency response activities across the state consistent with the end of the state of emergencies at the federal and state level.
- $19.7 million reduction in 2022-23 and $9.2 million reduction in 2023- 24 to COVID-19 response expenditures under the Department of State Hospitals and an $8 million General Fund decrease in 2022-23 for unspent workers’ compensation funding previously authorized for COVID-19 related claims.
Provides an increase of $6.7 billion General Fund in overall Medi-Cal expenditures for 2023-24, as compared to the revised 2022-23 expenditures, for a total of $37.6 billion General Fund, reflecting the following:
- One-time repayment to the federal government related to state-only populations;
- Assumed loss of increased federal funding consistent with the end of the federal COVID-19 public health emergency;
- The implementation of the Medi-Cal expansion to undocumented individuals aged 26-49 beginning January 1, 2024; and,
- Partially offset by the MCO Tax renewal.
Homelessness and Housing
The May Revision reduces total housing funding by $367.5 million, with $345 million in funding deferrals, primarily within the state Foreclosure Intervention Housing Prevention Program.
Bridge Housing – Funds Shifted from Mental Health Services Act (MHSA)
- Maintains a $1.5 billion addition to the Behavioral Health Bridge Housing Program by using $500 million in one-time MHSA funding instead of General Fund dollars for Bridge Housing Program. This funding eliminates a delay proposed in the January Budget but also shifts $817 million General Fund from the current year to the next three years to reflect updated timelines.
The May Revision provides $3.7 million through 2026 to enable California Correctional Health Care Services to develop an information technology system to support the Medi-Cal billing process. This system will enable the state to draw down federal reimbursements for certain health-related services provided to incarcerated individuals.
Earlier this year, Governor Newsom demanded stronger accountability for homeless dollars directed to local governments as a condition for funding. It appears he is satisfied with accountability metrics presented to him and the budget maintains funding from the January budget including:
- $3.7 billion in overall funding for homeless programs.
- Conditions funds in the Homeless Housing, Assistance and Prevention Program to focus on reducing unsheltered homelessness, including funding for CARE Court and Project Homekey.
In-Home Supportive Services (IHSS)
The May Revision includes $60.7 million ($27.9 million General Fund) ongoing to increase access to authorized services and better serve the IHSS program’s minor recipients and their families. In addition, the May Revision includes a six-month extension for the Home and Community-Based Services (HCBS) spending plan until September 30, 2024 for specified programs, such as the IHSS Career Pathways Program and the Senior Nutrition Infrastructure Program to fully spend allocated funding based on critical programmatic needs.
Labor and Workforce Development
Employment Development Department
- The May Revision proposes a one-time loan of $306 million from the Unemployment Compensation Disability Fund to the General Fund to pay the annual interest payment on the state’s Unemployment Insurance loan balance for the 2023 calendar year.
Significant Behavioral Health Reductions
- The May Revision reduces Medi-Cal costs of $1.4 billion in the current year compared to the Governor’s budget due to revised implementation dates for the Children and Youth Behavioral Health Initiative, the Behavioral Health Continuum Infrastructure Program, and the Behavioral Health Bridge Housing Program.
- Includes one-time funding of $15 million for the 988 State Suicide and Behavioral Health Crisis Services Fund for call center services. The total for 2023-24 is $19 million. Ongoing funding is expected to be $12.5 million beginning in 2024-25.
CalHope – Funds Shifted from Mental Health Services Act (MHSA)
- Shifts funding support for CalHope services by proposing $50.5 million in one-time MHSA funds in lieu of General Fund dollars.
- On December 6, 2022, CDCR announced its plan to terminate the lease of the California City Correctional Facility, its last privately-owned prison facility by March 2024, ending its use as a state prison. This will achieve an estimated $155.7 million in annual ongoing savings.
- CDCR estimates $170 million in ongoing General Fund savings with several other closures of prisons starting in 2023.
Health Care Services for Incarcerated Individuals
- The May Revision includes $3.9 billion General Fund in 2023-24 for health care programs, which provide incarcerated individuals with access to medical, mental health, and dental care services, that are consistent with the standards and scope of care appropriate within a custodial environment.
Expansion of Tele-Mental Health Services
- The May Revision includes $11 million General Fund and 85 positions in 2023-24 and 17.3 million and 144 positions beginning in 2024-25 to expand the use of tele-mental health within the Statewide Mental Health Program to include psychology and social work disciples in addition to psychiatry, which the Department began implementing in 2014-15.
Supplemental Security Income / State Supplemental Program
The federal Supplemental Security Income (SSI) program provides a monthly cash benefit to individuals with disabilities, including children and adults, and individuals who are ages 65 and over who meet the program’s income and resource requirements. California adds to this benefit through the State Supplemental Program (SSP). The May Revision includes:
- $3.6 billion General Fund in 2023-24 for the SSI/SSP program including CAPI. The average monthly caseload in this program is estimated to be 1.1 million recipients in 2023-24.
- $146 million General Fund in 2023-24 and $292 million ongoing in an additional SSP increase of approximately 6.6 percent, effective January 1, 2024.
The May Revision provides $39 million and 143 full-time equivalents for Caltrans engineering work for the state’s many transportation programs.