On May 10, 2024, Governor Gavin Newsom held a press conference to announce the major elements of the May Revision of the 2024-25 Budget. The May Revision reflects a higher-than-expected deficit. In January, the Administration projected a $38 billion deficit for 2024-25, which was smaller than what was estimated by the Legislative Analyst’s Office (LAO). The May Revision shows lower-than-projected state revenues and projects a total budget deficit of $44.9 billion, an increase of $7 billion from the January Budget. The Administration and Legislative Analyst’s Office indicate the budget might not improve much over the next several years and additional budget cuts may happen. A summary of the May Revision can be found at https://ebudget.ca.gov/budget/2024-25MR/#/BudgetSummary.

The Governor’s proposed May Revision preserved some services and safety net funding. Governor Newsom did not propose new taxes, which many anticipated. However, there are several cuts to key state programs that impact disabled people in California. Significant issues DRC is engaging in advocacy on the Budget include: 1) Cuts to In-Home Supportive Services (IHSS) for undocumented Californians (DRC letter in response to IHSS cuts), and 2) The elimination of several key housing development and affordability programs serving disabled Californians.

Though not specifically included in the May Revision, a few days after the Governor’s May Revise release, he announced accelerated bond funding under Proposition 1. This is expected to pay for, among other things, locked treatment facilities for people with mental health disabilities.

DRC has been working with advocates, Budget staff and the California Legislature to ensure that the most vulnerable Californians have a strong voice on issues that directly impact them. We appreciate the Legislature’s recent proposals to keep some vital services and programs for people with disabilities intact. The Legislature and Budget staff will continue to negotiate with the Administration over several weeks, coming to a final agreement on the Budget by June 15th.

The following are some of the key items in the May Revision impacting persons with disabilities and the programs that assist them:

Department of Developmental Services (DDS) and Disability Works California

The Department of Developmental Services (DDS) and Disability Works California proposed May Revision Budget includes:

• Additional cuts and delays:
  • Moving the Office of Employment First from CalHHS to Disability Works California (DRC letter in response to moving the EFO Office).
  • Reduction of $4.4 million for the Health and Safety waiver assistance program which assists consumers and families in applying to regional center health and safety waivers.
  • Reduction of $1.1 million for emergency preparedness resources and informational materials to consumers.
  • Reduction of $750,000 in funding for Tribal Engagement for Early Start services outreach program.
  • $20 million reduction to the Direct Service Professional Internship Program: reverting to the spending levels prior to the 2022 increase in funding for this program.
• Maintained cuts from the January budget:
  • A one-year delay in rate study implementation.
  • Sunsets the virtual IPP option, which has been sustained through trailer bill language in previous years.

Education

K-12 Education

The May Revision reflects Governor Newsom’s attempt to maintain funding for K-14 education. On May 28, the governor announced an agreement on education in the Budget with the California Teachers Association that plans to “suspend” the Proposition 98 guarantee, which requires at least 40 percent of the Budget is earmarked for education. Details of the negotiation are still emerging, but this maneuver would allow the state to pay schools less in the near-term with Prop 98 funds, while loaning itself $6.2 billion to supplant some of the missing funding.

The Governor’s May Revision:

• Reflects funding revenues have fallen an additional $4.15 billion since the January Budget proposal.
• Retains the revised 2024-25 cost-of-living-adjustment (COLA) for teachers at .76 percent.

State Preschool Program

Cutting disability inclusion requirements in Pre-K

Beginning in 2022, the state began to require these preschool programs to set aside at least 5% of their space to enroll children with disabilities. The percentage of space set aside was to increase to 7.5% in 2025-26, and to 10% in 2026-27.

The Governor is now proposing to cancel that increase and leave the number of slots for children with disabilities at 5%. This move would save the state $47.9 million in 2025-26 and $97.9 million ongoing, beginning in 2026–27.

The Governor is also proposing to revoke funding to create physically accessible play structures and facilities for state preschoolers.

Early Literacy

Universal Transitional Kindergarten (TK) continues to roll out in the May Revision, with programmatic delays. Specifically, the following are delayed until 2025-26:

• Reduction in TK classroom ratios to 1:10
• The deadline for TK teachers to earn 24 units (or equivalent), a child development permit, or an early childhood education specialist credential.

Universal School Meals

The Governor’s January Budget proposed $122.2 million to fully fund the Universal Meals Program in 2024-25, and the May Revision proposes to increase this funding to pay for growth in the projected number of meals served.

Modernizing Schools

The 2022-23 budget agreement included an intention to allocate $875 million in one-time funding for the School Facility Program (SFP) to support K-12 facilities construction in 2024-25.

The Legislature’s “early action” package approved the Governor’s January budget proposal to reduce the 2024-25 SFP allocation by $500 million. The May Revision proposes to eliminate the remaining $375 million in 2024-25 SFP funding and instead use these funds for electric school buses.

Higher Education

The May Revision Maintains Deferrals for the CSU and UC Systems

Governor Newsom is reluctant to cut K-14 programs but is inclined to pursue cuts in California’s university system as he negotiates with the Legislature. The Governor’s revised Budget includes additional cuts to higher education and maintains funding deferrals for the state’s public university systems.

• University of California
  Maintains deferrals totaling $259 million General Fund dollars from 2024-25 to 2025-26 for the UC.

• California State University
  Reflects a deferral of $240 million General Fund dollars from 2024-25 to 2025-26 for the CSU.
  Maintains a reduction of $494 million in General Fund dollars for the California Student Housing Revolving Loan Fund Program.

• California Community Colleges (CCC)
  The May Revision increases withdrawal amounts from the Prop. 98 reserve for CCC apportionments totaling $914.1 million and provides additional resources to fund an increase in the COLA.

Foster Youth

The May Revision:

• Reduces funding for the Bridge Program, reflecting a reduction of $34.8 million in 2024-25 and $34.8 million in 2025-26. The Bridge Program provides time limited vouchers for child care services for foster care system families.
• Maintains proposed cuts to the Family Urgent Response System (FURS) by $30.1 million. FURS is a hotline for current or former foster youth and their caregivers to call and get immediate help for any issue they may be experiencing.

Health and Human Services

The May Revision:

• Reduces the Managed Care Organization (MCO) Tax by $6.7 billion over multiple years from the Medi-Cal provider rate increases planned for January 1, 2025, as well as Graduate Medical Education and Medi-Cal labor workforce.
• Delays implementation of Share of Cost Reform so that seniors and people with disabilities can afford to access needed Medi-Cal services.
• Delays continuous Medi-Cal Coverage for Children Aged 0 through 4.
• Cuts Funding for Adult Protective Services Expansion resulting in a reduction of $40 million ongoing.
• The May Revision proposes to eliminate all remaining funding for the Older Californians Act Modernization ($37.2 million in 2024-25, 2025-26, and 2026-27, for a total of $111.6 million).

Housing and Homelessness

Housing

The May Revision proposes $1.7 billion in cuts for various programs that support affordable housing development and homeownership. These include:

• An additional cut of $236.5 million for the Foreclosure Intervention Housing Preservation Program in 2023-24, bringing the total reduction to $474 million, which will eliminate the program.
• An additional cut of $75 million for the Multifamily Housing Program, bringing the total reduction to $325 million, eliminating state funding in 2023-24.
• A newly proposed cut of $127.5 million for the Adaptive Reuse Program, with $87.5 million from the 2023 Budget Act and $40 million from the 2022 Budget Act, which will eliminate the program. 
• An additional cut of $35 million for the Infill Infrastructure Grant Program, with $25 million from 2023 Budget Act and $10 million from the 2022 Budget Act, eliminating state funding in 2023-24.
• An additional cut of $26.3 million for the Veterans Housing and Homelessness Prevention Program from the 2022 Budget Act. The January proposed Budget already fully reduced allocated state funds for this program in 2023-24.

Homelessness

The May Revision proposes no new resources and reduces previous allocations, effectively leaving no significant state funding to address homelessness in 2024-25 or beyond.

It includes cuts to the following programs: 

• Housing and Disability Advocacy Program
  A reduction of $50 million General Fund for the Housing and Disability Advocacy Program. This program assists people experiencing or at risk of homelessness to connect with disability benefits and housing supports.
• Homeless Housing, Assistance and Prevention (HHAP) Grant Program
  The May Revision proposes to eliminate $260 million in supplemental grant funds for HHAP in 2025-26. HHAP is critical as it provides local jurisdictions with flexible funds to address homelessness in their communities in a variety of ways.
• Behavioral Health Bridge Housing
  Reduces $132.5 million in 2024-25 and $207.5 million in 2025-26 for the Behavioral Health Bridge Housing Program.
• Home Safe Program
  Reduces $65 million General Fund for the Home Safe Program. Appropriated in the 2022 Budget, these funds address the safety and housing stability of individuals involved in Adult Protective Services.

In-Home Supportive Services (IHSS)

IHSS is a statewide program that provides home care services to help eligible people with disabilities including children, adults and seniors remain in their own homes.

The May Revision:

• Eliminates IHSS services for undocumented children and adults resulting in a reduction of $94.7 million ongoing placing vulnerable community members who rely on these services for daily care and well-being at grave risk. It also strips children and older adults of services they are currently receiving, placing them at risk of institutionalization.
• Eliminates the IHSS Permanent Backup Provider program resulting in $11.6 million in ongoing reductions. The shortage of available caregivers has had a significant adverse impact on the quality of life of people with disabilities and older adults. Given the shortage of caregivers, eliminating the IHSS Permanent Backup Provider program may further exacerbate gaps in care for IHSS recipients which creates a risk of costly hospitalization and institutional placement.

Mental Health 

CalWORKs Mental Health and Substance Abuse Services:

The May Revision reduces $126.6 million ongoing for CalWORKs Mental Health and Substance Use Disorder services.

Behavioral Health Continuum Infrastructure Program Delay:

The May Revision eliminates $450.7 million in one-time funding from the last round of the program, while maintaining $30 million in one-time funding (General Fund) in 2024-25.

Children and Youth Behavioral Health Initiative:

The May Revision includes a reduction of $72.3 million General Fund in 2023-24, $348.6 million General Fund in 2024-25, and $5 million General Fund in 2025-26 for school-linked health partnerships and capacity grants for higher education institutions, behavioral health services and supports platform, evidence-based and community-defined grants, public education and change campaign, and youth suicide reporting and crisis response pilot.

Medication Assisted Treatment (MAT):

The May Revision reduces $10.5 million in 2023-24 for competitive grants to counties to use for various purposes relating to the treatment of substance use disorders and the provision of medication-assisted treatment.

Public Safety

California Department of Corrections (CDCR)

• Housing Unit Deactivations
  Reduces $80.6 million ongoing to reflect the deactivation of 46 housing units across 13 prisons, totaling approximately 4,600 beds.
• Board and State Community Corrections
  Post Release Community Supervision—Reduction of $4.4 million one-time in 2024-25 to eliminate funding provided to county probation departments for the temporary increase in the number of offenders released from prison to Post Release Community Supervision pursuant to Proposition 57, the Public Safety and Rehabilitation Act of 2016.
• Adult Reentry Grant
  Community-based organizations use Adult Reentry Grant (ARG) funds to help formerly incarcerated people successfully transition back to their communities. In January, the governor proposed to cut $7.8 million in unspent ARG funds from 2022-23 and delay $57 million in ARG funds budgeted for 2024-25 to the next three fiscal years (2025-26 to 2027-28 — providing $19 million per year). The May Revision maintains the $7.8 million cut and also proposes two significant reductions: 1) eliminate (rather than delay) the $57 million budgeted for 2024-25, and 2) cut $54.1 million in ARG funds budgeted for 2023-24.

Supplemental Security Income / State Supplemental Program

The federal Supplemental Security Income (SSI) and State Supplemental Programs provide a monthly cash benefit to individuals with disabilities, including children and adults, and individuals who are ages 65 and over who meet the programs’ income and resource requirements.

There were no proposed cuts in the May Revision to the SSI/SSP programs.

Transportation

Active Transportation Program:

Cuts $300 million in 2025-26 and $99 million in 2026-27 for funds appropriated for active transportation grants.

Transit:

The May Revision:

• Shifts $555.1 million from the General Fund to the Greenhouse Gas Reduction Fund above what was proposed in the Governor's Budget and includes a total of $1.3 billion in proposed fund shifts for transit.
• Maintains the Formula Transit and Intercity Rail Capital Program ($4 billion) and the Zero Emission Transit Capital Program ($1.1 billion) funding levels. Fund shifts are not expected to have any program impact.
• Reduces $148 million not used for awarded projects from the Competitive Transit and Intercity Rail Capital Program and maintains 96 percent of the Competitive Transit and Intercity Rail Capital Program ($3.5 billion of the originally planned $3.65 billion).