Disability Rights California’s Summary of The Governor’s Proposed 2023-24 Budget

Projected $22.5 billion deficit poses challenges for expanding disability services
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Jan 27, 2023

Disability Rights California’s Summary of The Governor’s Proposed 2023-24 Budget

Governor Newsom released his 2023-24 proposed budget on January 10, 2023 (https://ebudget.ca.gov/budget/2023-24/#/BudgetSummary). The Governor’s Budget proposes $296.9 billion in total spending. In contrast to recent years where California enjoyed large budget surpluses, this year’s budget projects a $22.5 billion deficit, which the Governor proposes to address primarily with delays in some funding. The Governor stressed the State’s robust reserves to provide readiness for an economic downturn.

Governor Newsom released his 2023-24 proposed budget on January 10, 2023 (https://ebudget.ca.gov/budget/2023-24/#/BudgetSummary). The Governor’s Budget proposes $296.9 billion in total spending. In contrast to recent years where California enjoyed large budget surpluses, this year’s budget projects a $22.5 billion deficit, which the Governor proposes to address primarily with delays in some funding. The Governor stressed the State’s robust reserves to provide readiness for an economic downturn.

DRC appreciates the Governor’s budget proposal avoids major cuts to human services and maintains investments from previous budgets, including Medi-Cal expansion to all income-eligible adults regardless of immigration status effective January 2024.

In addition, there has been no change to last year’s budget deal to update the Medi-Cal Share of Cost so that seniors and people with disabilities can afford to access needed Medi-Cal services and continuous Medi-Cal coverage for children ages zero to five effective January 2025 with contingencies.

The proposed Budget falls short by not allocating new substantial funding to address homelessness, including a lack of targeted funds for rental assistance or permanent housing adequate to meet demand. There were over 171,000 Californians experiencing homelessness at the last point-in-time count, many with permanent disabilities.

DRC continues to oppose the CARE Court proposal from 2022, enacted late last year as the “CARE Act.” The Governor’s proposed Budget indicates he is moving quickly on implementation. On the same day he released the proposed Budget, he announced Los Angeles County would implement the Act by December 2023. The County’s implementation one year ahead of schedule will increase 2023-24 costs by an undetermined but substantial amount.

Disability Rights California looks forward to engaging with the Governor and Legislature as the proposed budget moves forward and will advocate to keep programs and services utilized by people with disabilities intact.

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

Table of Contents:

Aging

The Governor’s proposed Budget slows implementation of the Mello-Granlund Older Californians Act Modernization Pilot Program. $37.2 million will be spent annually across five years starting in 2022-23 for pilot programs supporting community-based services programs, senior nutrition support, family and caregiver supports, senior volunteer development, and/or aging in place. This reflects $186 million General Fund spent over five years instead of across three years as originally planned in the 2022 Budget Act.

The Governor’s budget proposal also reflects a $60 million reduction in expenditures that are part of the Home- and Community-Based Services (HCBS) Spending Plan based on revised federal claiming estimates.

CARE Act Community Assistance, Recovery & Empowerment (CARE) Act

The proposed Budget maintains $88.3 million General Fund for county start up and state implementation and proposes additional funding for ongoing costs. The Act requires a first cohort of seven counties (Glenn, San Diego, San Francisco, Tuolumne, Stanislaus, Orange and Riverside) to implement the CARE program beginning October 2023 and the remaining counties beginning December 2024. 

The proposed Budget includes $16.5 million General Fund in 2023-24, $66.5 million General Fund in 2024-25, $108.5 million in 2025-26 and annually thereafter to support estimated county behavioral health department costs.

The proposed Budget reduces CARE Act court funding by $13.9 million General Fund in 2023-24 and increases funding by $12.9 million in 2024-25, and $30.9 million ongoing. The totals for the Judiciary are $23.8 million General Fund in 2023-24, $50.6 million in 2024-25, and $68.5 million in 2025-26 and ongoing. In addition, the Budget includes $6.1 million General Fund in 2023-24, increasing to $31.5 million annually beginning in 2025-26, to support public defender and legal services organizations.

Department of Developmental Services (DDS)

The Department of Developmental Services (DDS) budget includes $14.2 billion, an increase of $1.6 billion compared to 2022-2023. DDS estimates that they will serve 421,000 individuals in 2023-2024. This year, the proposed Budget has the following new investments:

  • Safety net plan: $28.7 million, including:
    • Development of three five-person residential homes for a residential program for people with co-occurring developmental disabilities and behavioral health conditions ($10.5 million GF)
    • Conversion of two Stabilization Training Assistance Reintegration homes to Intermediate-Care-Facilities (ICFs) ($15.9 million TF, $9.8 million GF)
    • Extension of 10 beds at Porterville Developmental Center: increase of one-time resources to continue funding 10 additional beds at PDC through FY 2023-24 to maintain compliance with the 28-day timeline to provide services to individuals deemed incompetent to stand trial (IST), under the provisions of the Stiavetti lawsuit ($4.9 million GF)
  • A new Autism Services Branch of DDS to focus on services for autistic people with six dedicated staff people ($1.0 million TF, $0.8 million GF)

Department of State Hospitals (DSH)

The proposed Budget includes $3.2 billion ($3 billion GF). DSH administers five state mental health hospitals: Atascadero (1,184 beds), Coalinga (1,286 beds), Metropolitan (Norwalk - 826 beds), Napa (1,255 beds) and Patton (1,527 beds). The Administration estimates the population served by the hospitals and other programs will reach a total of 9,289 by the end of 2023-24, with 5,468 people committed to one of the five hospitals and 2,772 participating in one of DSH’s contracted non-hospital competency restoration or community-based treatment programs.

Incompetent to Stand Trial (IST)

According to DSH, efforts to address the backlog of individuals deemed IST have resulted in a waitlist reduction from 1,953 to 1,473 individuals from January to December 2022. The budget maintains General Fund expenditure authority of $535.5 million, increasing to $638 million in 2025-26 and annually thereafter for DSH to further reduce the backlog. Strategies include 1) early stabilization, 2) community care coordination, and 3) expanding diversion and community-based restoration capacity. DSH resources are intended to establish 5,000 beds to support felony ISTs. 

Education

Pre-K Education

California funds two pre-kindergarten programs: transitional kindergarten (TK) and the California State Preschool Program. TK provides two years of kindergarten through local educational agencies (LEAs) and is currently available to children whose 5th birthdays fall between September 2 and February 2. The California State Preschool Program is an early learning program for 3- and 4-year-olds with I/DD or from low- and moderate-income families and is offered by LEAs and community-based organizations.

The Governor’s proposed budget:

  • Continues expansion of the TK program. The proposed Budget maintains funding to implement the next phase of the TK expansion in 2023-24, providing eligibility to about 46,000 children at an estimated cost of over $850 million.
  • Implements a multiyear plan to make the State Preschool Program more diverse. The prior budget package increased payment rates for certain children enrolled in state preschool, including children with disabilities, dual language learners, and 3-year-olds. In exchange, preschool providers have begun enrolling more children with disabilities and providing enhanced services to dual language learners. The Governor proposes to continue implementing this plan in 2023-24, at a cost of $64.5 million Proposition 98 General Fund and $51.8 million General Fund.
  • Includes roughly $175 million to support an 8.13% statutory cost-of-living adjustment for the state preschool program. This increase reflects $112 million Proposition 98 General Fund and $63.3 million General Fund.

K-12 Education

K-14 Minimum Funding Level Drops Due to Lower Revenue Estimates

The Governor’s proposed Budget assumes a 2023-24 Prop. 98 funding level of $108.8 billion for K-14 education, $690 million above the 2023-24 minimum funding guarantee. Despite the governor’s proposal to provide more Prop. 98 funding in 2023-24 than is constitutionally required, the 2023-24 Prop. 98 funding level would be approximately $1.6 billion below the estimated 2021-22 Prop. 98 funding level of $110.4 billion.

Proposed Budget Includes Large Cost-of-Living Adjustment for K-12 Education

The Governor’s proposed Budget would provide a large cost-of-living adjustment to the state’s K-12 education funding formula but to do so would significantly reduce one-time funding for the Arts, Music, and Instructional Materials Block Grant. Specifically, the governor’s proposed budget:

  • Increases Local Control Funding Formula (LCFF) funding by more than $4 billion. The LCFF provides a base grant per student, adjusted to reflect the number of students at various grade levels, as well as additional grants for the costs of educating English learners, students from low-income families, and foster youth. The proposed budget would fund a 8.13% COLA for the LCFF, but uses $613 million in one-time dollars in 2022-23 and $1.4 billion in one-time dollars in 2023-24.
  • Cuts approximately $1.2 billion from the Arts, Music, and Instructional Materials Discretionary Block Grant. The Governor proposes reducing one-time funding for a discretionary block grant provided to LEAs as part of the 2022-23 budget agreement from nearly $3.6 billion to approximately $2.3 billion.
  • Includes $300 million for a new “equity multiplier” add-on to the LCFF. The equity multiplier is intended to increase funding for the state’s highest-needs schools and would be accompanied by changes to the state’s K-12 accountability system intended to identify and address student group or school-level equity gaps within a local educational agency.
  • Reduces funding for the School Facility Program (SFP) by $100 million. The proposal would reduce a planned 2023-24 SFP allocation from approximately $2.1 to approximately $2.0 billion.

Early Literacy

  • Provides $250 million to increase one-time funding for literacy programs. The Governor’s proposal is intended for schools in high-poverty areas to hire additional personnel to improve the quality of reading instruction and would build upon $250 million in one-time funding for the Literacy Coaches and Reading Specialists Grant Program provided in the 2022-23 budget agreement.

Universal School Meals

In 2020, the U.S. Department of Agriculture allowed states to apply for a waiver of certain requirements connected to the National School Lunch Program and School Breakfast Program. The Budget protects the funding for universal access to subsidized school meals and the additional enhanced meal rate. California will spend over $1.4 billion to reimburse school meals and ensure all students who want a meal will have access to two free meals each day.

Modernizing Schools

  • Delays a planned $550 million investment in preschool, TK, and full-day kindergarten facilities from 2023-24 to 2024-25. This investment is intended to help build new school facilities or retrofit existing buildings in order to provide appropriate spaces for preschool, TK, and full-day kindergarten.

Special Education

  • Provides $669 million to fund COLAs for non-LCFF programs. The Governor’s proposed Budget funds an 8.13% COLA for several categorical programs that remain outside of the LCFF, including special education, child nutrition, and American Indian Education Centers.
  • Maintains funding for Dyslexia research through the University of California (see section on the University of California below).

Higher Education

University of California

Dyslexia Research

The proposed budget:

  • Continues appropriations of $15.2 million General Fund for dyslexia research and screening tool pilot projects through the University of California.
  • Provides $10 million one-time General Fund to support the University of California San Francisco Dyslexia Center.
  • Allocates $4 million to fund the California Dyslexia Initiative to support the piloting of the UC San Francisco dyslexia screener and provide professional learning to educators to support the instructional needs of students with specific learning disabilities, including dyslexia.

California State University

The Governor’s proposed Budget includes an increase of $227.3 million ongoing General Fund to support the CSU’s operations and minimize the likelihood of tuition increases.

California Community Colleges

Categorical Program Cost of Living Adjustment: The budget proposes an increase of $92.5 million ongoing Proposition 98 General Fund to provide an 8.13-percent COLA for select categorical programs and the Adult Education Program.

Emergency Response 

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. The proposed Budget includes $3.3 billion ($771.7 million General Fund) and 1,877 positions for Cal OES.

Health and Human Services

COVID-19 (Sawait)

The Governor’s proposed Budget:

  • Includes $176.6 million General Fund in 2023-24 for the state’s emergency response and SMARTER Plan implementation to continue the state’s response to COVID-19 and to support planning for future public health emergencies.
  • Assumes reduced COVID-19 direct response expenditures of approximately $614 million California Emergency Relief Fund in 2022-23 compared to the 2022 Budget Act driven by reduced response activities.
  • Includes $51.3 million General Fund in 2023-24 to protect State Hospital patients and staff from COVID-19 and other infectious diseases.
  • Ends COVID-19 relief for workers. Despite providing relief for businesses to cover sick leave expenses related to COVID-19, the budget does not extend support for workers. By letting the supplemental paid sick leave expire, many workers with disabilities are left with just three days of paid sick leave annually.

Medi-Cal

The Governor’s proposed Budget reflects reduced expenditures in Medi-Cal in 2022-23 of $4.2 billion General Fund due to shifting certain repayments to the federal government to 2023-24 and net savings from the extensions of the federal COVID-19 Public Health Emergency through mid-April 2023.

The Governor’s Budget also includes $844 million total funds ($634.8 million General Fund) to expand full-scope Medi-Cal coverage to adults aged 26 through 49, regardless of immigration status, effective January 1, 2024. With this expansion, full-scope Medi-Cal coverage will be available to all otherwise eligible Californians regardless of immigration status. This expansion is consistent with the 2022 Budget Act.

New Programs

Proposes the creation of the Health and Human Services Innovation Accelerator Initiative to address the health of all Californians with focused research and development tools that address health disparities and ensure innovations are quickly accessible to all. Funding for this program will be included in the May Revise.

Homelessness and Housing

Affordable Housing

The governor’s budget proposal generally maintains the funding for affordable housing development that was included in the 2022-23 budget agreement. However, the governor proposes no additional or expanded investments to increase the supply of affordable housing. The budget proposal does not include new funding to replace the Prop. 1 bond funds that are expected to be exhausted in spring 2023, which support the development of affordable multi-family housing.

Trigger reductions for 2023-24 are proposed for $300 million that was included in the 2022-23 state budget agreement for homeownership programs (including $200 million for the Dream for All program and $100 million for CalHome) and for $50 million that was included for 2022-23 for the CalHFA Accessory Dwelling Unit program. These reductions would be restored if sufficient General Fund is available in January 2024.

Behavioral Health Bridge Housing Delay:

The proposed Budget delays a portion of the $1.5 billion General Fund commitment to Behavioral Health Bridge Housing adopted in the 2022 Budget Act. The delay allows for $1 billion in 2022-23, $250 million in 2023-24 and $250 million in 2024-25 for clinically enriched temporary housing for unhoused individuals with serious behavioral health conditions.

CalAIM 

The proposed Budget leverages potential federal and state Medicaid funds for homelessness prevention and rehousing assistance if select waivers are approved by the federal government. Including:

  • The CalAIM Transitional Rent Waiver Amendment, which would provide up to six months of rent or temporary housing to eligible unhoused individuals or those at risk of homelessness who are transitioning out of institutions or foster care and are at risk of inpatient hospitalization or emergency care. This is estimated to cost $17.9 million ($6.3 million General Fund) in 2025-26 and will increase to $116.6 million ($40.8 million General Fund) at full implementation.
  • The California Behavioral Health and Community-Based Continuum (CalBH-CBC) Demonstration that would allow rental payments or temporary housing coverage for individuals enrolled in Medi-Cal with serious behavioral health conditions.

Homelessness

This year, the administration is primarily focused on establishing stronger accountability measures and maintains previously promised funds from the 2022-23 Budget Act for 2023-24, including:

  • $1 billion General Fund for the Homeless Housing, Assistance and Prevention (HHAP) Grant Program that provides local jurisdictions with flexible funds to address homelessness.
  • $400 million General Fund for encampments resolution grants for local jurisdictions.
  • $250 million General Fund for the Behavioral Health Bridge Housing Program, which supports people experiencing homelessness with serious behavioral health conditions through short-term bridge housing and services. This amount reflects a $250 million General Fund reduction from the 2022 enacted budget that is proposed to be reallocated in 2024-25.

In-Home Supportive Services (IHSS)

The proposed Budget includes $20.5 billion ($7.8 billion General Fund) for the IHSS program in 2023-24. Average monthly caseload in this program is estimated to be 642,000 recipients in 2023-24.

Mental Health  

California Behavioral Health Community-Based Continuum (CalBH-CBC) Demonstration Waiver:

The proposed Budget includes $6.1 billion ($314 million General Fund, $175 million Mental Health Services Fund, $2.1 billion Medi-Cal County Behavioral Health Fund, and $3.5 billion federal funds) over five years to support CalBH-CBC Demonstration, effective January 1, 2024. The demonstration, part of the California Advancing and Innovating Medi-Cal (CalAIM) initiative, is intended to expand access and strengthen the continuum of mental health services for Medi-Cal beneficiaries living with serious mental illness or serious emotional disturbance.

Institutes for Mental Disease (IMDs) are facilities with 16 or more beds that primarily treat people with mental diseases, including substance use disorders. They are excluded from Medi-Cal reimbursement. This provides an incentive to increase community treatment over institutional treatment. As part of CalBH-CBC, the Department of Health Care Services intends to apply for a federal Medicaid waiver from the exclusion.

Behavioral Health Continuum Infrastructure Program Delay:

The proposed Budget delays the final round of funding for the Behavioral Health Continuum Infrastructure Program to future years. According to DHCS, $1.2 billion has been awarded to date. The $480.7 million scheduled for 2022-23 will instead be awarded in 2024-25 ($240.4 million) and 2025-26 ($240.3 million). 

Medication Assisted Treatment (MAT):

The proposed Budget includes an increase of $3.5 million in ongoing Proposition 98 General Fund dollars for all middle and high school sites to maintain at least two doses of naloxone hydrochloride or another medication to reverse an opioid overdose on campus for emergency aid.

Public Safety

Criminal Procedures Discrimination:

  • The proposed Budget includes $2.2 million General Fund in 2023-24, $2.1 million in 2024-25, and $848,000 in 2025-26 and 2026-27, to address increased litigation-related workload associated with increased appeals for past convictions.

Prison Closures:

  • On December 6, 2022, the California Department of Corrections and Rehabilitation (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. CDCR also announced the planned closure of Chuckawalla Valley State Prison (CVSP) in Blythe by March 2025. In addition, to continue the flexibility required to meet the needs of the incarcerated populations, CDCR announced the deactivation of specified facilities within six prisons by the end of 2023. The facilities are located within the California Rehabilitation Center, California Institution for Men, California Correctional Institution, Pelican Bay State Prison, the California Men’s Colony, and the Folsom Women’s Facility within Folsom State Prison. In total, CDCR estimates $150 million in ongoing General Fund savings as a result of these facility deactivations.

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 proposed Budget includes:

  • $1 billion General Fund annually to provide increased cash assistance to individuals with disabilities and older adults in the SSI/SSP Payment program, and low-income children and families in the CalWORKs program.
  • Maintains over $1 billion General Fund annually to provide increased cash assistance to individuals with disabilities and older adults in the Supplemental Security Income/State Supplementary Payment program, and low-income children and families in the CalWORKs program.
  • Reflects $146 million General Fund in 2023-24 and $292 million ongoing for an additional SSP increase of approximately 8.6 percent, effective January 1, 2024.

Transportation

The proposed Budget maintains approximately $180 million for sustainable community-based transportation equity projects that increase access to zero-emission mobility in low-income communities.

Safety Grade Separations:

  • The Budget delays $350 million of funding originally planned to be available in 2023-24, to deliver the same number of originally planned projects that improve safety for people walking, biking, and driving at rail crossings.
  • The Budget proposes a net reduction of $2 billion over three years to future transit infrastructure funding. The Governor expects a large increase in federal funding to backfill this cut.