Governor Newsom’s Budget Makes Important Investments in Health Equity and Prevention

On Thursday, January 10th, Governor Gavin Newsom released his FY 2019-2020 State Budget. The $209 billion spending plan proposes an historic investment in health equity and health care quality, providing millions in funding to tackle disparities in pre-natal and post-partum care, chronic conditions and mental health. The budget also includes new funding to expand access to health care for undocumented young adults and improves affordability assistance in Covered California for low to middle income individuals earning between 250-600% of the Federal Poverty Level ($30,350 and $72,360 for a single individual) by strengthening and expanding subsidies.

CPEHN supports the additional investments proposed by the Newsom Administration that will prioritize the health of our most vulnerable communities. To view the full budget proposal click here.

Highlights of the FY 2019-2020 Budget:

Overview

Total Budget: $209 Billion
General Fund Spending: $144 Billion
Total Spending for Health & Human Services: $158.6 billion
Rainy Day Fund: Governor Newsom is proposing to set aside $4.8 billion towards the Rainy-Day Fund, bringing the Fund to $19.4 billion by 2022-23.

Key Items

Investment in Health4All ($260 million): The Budget includes additional funds to expand Medi-Cal eligibility to approximately 138,000 undocumented adults aged 19-25 after July 1, 2019. California currently pays for coverage of undocumented children up to age 19. This proposal will ensure continuity of care for young adults transitioning into the workforce. However, the Governor’s proposal fails to include any new funding to expand Medi-Cal coverage to the state’s undocumented adults and seniors.
New Funds to Improve Health Care Quality and Address Inequities ($360 million): The Budget acknowledges that California’s communities of color are experiencing a health crisis. The proposal includes $180 million in new Proposition 56 funds (and $180 million in federal matching funds) for value-based payments to encourage Medi-Cal managed care providers to meet goals in critical areas such as pre-natal and post-partum care, management of chronic disease and behavioral health integration. The proposal appears to be aligned with CPEHN’s 2018 sponsored legislation, AB 2275 (Arambula) to create a financial incentive program to improve Medi-Cal quality and reduce disparities.
New Funds for Early Developmental Screenings and Trauma Informed Care ($52.5 million): The budget also includes $60 million ($30 million Prop. 56 funds) to provide early developmental screenings for children and $45 million ($22.5 million Prop. 56 funds) for adverse childhood experiences (ACEs) screenings for children and adults in the Medi-Cal program. Studies have found a strong relationship between exposure to ACEs and subsequent negative health behaviors and outcomes later as adults. This new investment will help to improve health outcomes for all Californians.
Black Infant Health Program ($7.5 million): The Budget includes additional funds to increase participation in the Black Infant Health Program to improve African-American infant and maternal health through case management services, including home visiting.

Medi-Cal: The budget reflects an estimated decrease in expenditures in the Medi-Cal program of approximately $2.3 billion General Fund over the 2018-2019 state budget. The decrease is primarily attributable to retroactive payments of Hospital Quality Assurance Fee and drug rebates and lower-than-expected Medi-Cal caseload and managed care costs.

Medi-Cal Health Care Quality ($360 million): The Budget includes $180 million in new Proposition 56 funds which would be federally matched for value-based payments to encourage Medi-Cal managed care providers to meet goals in critical areas such as pre-natal and post-partum care, management of chronic disease and behavioral health integration.
Early Developmental and Adverse Childhood Experiences (ACEs) Screenings ($52.5 million): The California budget includes $60 million ($30 million Prop. 56 funds) to provide early developmental screenings for children and $45 million ($22.5 million Prop. 56 funds) for adverse childhood experiences (ACEs) screenings for children and adults in the Medi-Cal program. This proposal will allow providers to receive additional payment for these services.
Health4All Young Adults ($260 million): The Budget includes additional funds to expand Medi-Cal eligibility to about 138,000 undocumented adults aged 19-25 after July 1, 2019. California currently pays for coverage of undocumented children up to age 19. However, the Governor’s proposal fails to include any new funding to expand Medi-Cal coverage to undocumented seniors.
Supportive Housing ($100 million): The Budget provides one-time funds for supportive housing and other supports through the Whole Person Care Pilot Program (WPC) through 2025. It has been unclear how the state will continue to fund this program once California’s 1115 waiver expires.
Provider Payments ($1.05 billion): The Budget continues to extend supplemental payments and rate increases for physicians, dentists, family planning services, Intermediate Care Facilities for the Developmentally Disabled, HIV/AIDS waiver services, Home Health and pediatric day health services as authorized under Proposition 56.
Prescription Drug Costs: The Budget proposes a single-payer system for prescription drugs in California by transitioning all pharmacy services for Medi-Cal managed care to a fee-for-service benefit. This will allow California to negotiate drug prices on behalf of all 14 million Medi-Cal beneficiaries for an estimated savings of hundreds of millions of dollars starting FY 2021-22. Additionally, the Administration will also seek legislative changes to create a bulk purchasing prescription drug program to be accessed by public and private payers alike.
Safety Net Reserve Increase ($700 million): The Budget increases the Safety Net Reserve Fund bringing the total amount to $900 million. These funds will be available for CalWORKs and Medi-Cal services and benefits during an economic downturn.

Mental Health and Substance Use Disorder Services

Mental Health Workforce Investment ($50 million): The Budget includes additional one-time funding to increase training opportunities for mental health workforce programs, administered by the Office of Statewide Health Planning and Development (OSHPD).
Early Psychosis Research and Treatment ($25 million): The Budget includes additional one-time funds to better detect and intervene when young people have had or are at high risk of experiencing psychosis.
Whole Person Care ($100 million): As mentioned above, the Budget invests $100 million in one-time funding for to help provide additional supportive housing for people with mental illness. These funds are focused on coordinating health, behavioral health (mental health and substance use disorders), and social services.
No Place Like Home Bond Funding ($2 billion in bonds): The Administration promises to accelerate awards to help provide supportive multifamily housing for individuals experiencing mental illness who are either homeless or at risk of homelessness. In November 2018, California voters approved a $2 billion bond program (to be repaid with Mental Health Services Act revenues) for low-income housing.
Changes to 1991 Realignment for County Mental Health ($70 million): The Budget reflects an estimated increase of $70 million in county mental health program funding in FY 2019-20 as a result of changes in the counties’ share of In-Home Supportive Services program costs.

Other Health Programs

Black Infant Health Program ($7.5 million): The Budget includes additional funds to increase participation in the Black Infant Health Program to improve African-American infant and maternal health through case management services, including home visiting.
Home Visits for eligible CalWORKs families ($23 million): The Budget includes funds to expand the state’s home visiting program geared towards pregnant women and families with a child under the age of 2 for up to 24 months, with priority given to first-time parents. The services are intended to help young families reach self-sufficiency by improving family engagement practices, supporting healthy development of young children living in poverty, and preparing parents for employment.
Affordability Assistance to Purchase Health Insurance: The Governor’s Budget improves affordability assistance in Covered California by increasing subsidies for individuals with incomes between 250-400% FPL and expanding subsidies for individuals with incomes between 400-600% FPL funded in part through re-establishment of the individual mandate. A recent study conducted by UC Berkeley and UCLA estimates that without state action, the uninsured rate will rise to 12.9 percent by 2023—a 24-percent increase from 2016. It is estimated that the state will earn approximately 500 million through tax penalties related to the mandate.

Human Services

California Earned Income Tax Credit (1 billion): The Budget proposes doubling the California Earned Income Tax Credit to cover close to 400,000 more individuals. The tax break will support low-income families with young children by providing a $500 credit for families with children under the age of six.
CalWORKs Grant Increase ($347.6 million): The Budget proposes to raise CalWORKs grant levels to 50 percent of the projected 2019 federal poverty level, effective October 1, 2019, increasing the maximum grant level for an assistance unit of three from $785 to $888 per month.
SSI/SSP: The Budget includes no new increase for the State Supplemental Payment (SSP), keeping in place a reduction approved under Governor Schwarzenegger that has impacted millions of SSI recipients. Nor does it provide a cost of living increase for the state payment, though the Legislature did restore the COLA beginning January 1, 2022.
In-Home Supportive Services (IHSS) ($4.3 billion): The Budget proposes a 15.2% increase in General Fund costs which can be attributed to restoration of the 7% across-the board service hour reduction in IHSS service hours, revised county IHSS Maintenance-of-Effort, and caseload increase. The 7% reduction was restored due to the managed care organization (MCO) tax that is set to expire in 2019. The budget does not assume an extension of the tax, but proposes permanently restoring the 7% reduction through $342.3 million General Fund in 2019-20.
Paid Family Leave: California’s Paid Family Leave program currently allows workers to take up to six weeks of paid leave annually to care for a seriously ill family member or to bond with a newborn or newly adopted child. The budget includes an adjustment of the reserve requirement for the fund that supports the Paid Family Leave program. This payment will enable the state to make a down payment on the expansion of the Paid Family Leave Program. The Administration will convene a task force to consider different options to expand Paid Family Leave.

Homelessness and Affordable Housing: The Budget proposes significant investment—$7.7 billion across multiple departments and programs—to address the shortage of affordable housing and support the growing number of homeless and displaced Californians. The budget addresses three aspects of the growing housing crisis: providing shelter, connecting people with necessary social supports, and addressing the severe lack of affordable housing across the state. CPEHN was proud to sponsor Senate Bill (SB) 1152 in 2017-2018 to require hospitals in California to develop a plan for safely discharging patients without homes.

Homelessness

Incentives for cities and counties to build emergency shelters, navigation centers, and supportive housing ($500 million): The budget aims to build infrastructure for homeless Californians by proposing a one-time investment of $500 million to incentivize local construction of emergency shelters, navigation centers, or supportive housing. This includes $300 million to build regional collaborations between counties and cities to expand or develop shelters and navigation centers. It also includes $200 million for general purpose grants to communities that demonstrate progress towards meeting shelter and housing development goals.
Support for county outreach, case management, and homeless advocacy programs ($25 million): The Housing and Disability Advocacy Program (HDAP) was established as a county match program to assist homeless and disabled individuals with applying for disability benefit programs, while also providing housing supports. The Budget proposes an annual appropriation of $25 million to continue this program beginning in 2019.

Affordable Housing

Grants to local communities to build housing and meet higher statewide goals ($750 million): California is in the midst of a housing crisis leaving most Californians struggling to pay rent and unable to consider home ownership. This Budget outlines a short and long-term strategy to address the severe unavailability of affordable housing. The Department of Housing and Community Development (HCD) will establish higher short-term statewide goals for new housing production across all income levels. To support local governments in meeting these goals, the Budget proposes $250 million one-time for technical assistance and staffing support. As communities reach these milestones, cities and counties will be rewarded with unrestricted general-purpose funding, of which the Budget allocates $500 million.
Stronger state enforcement of regional housing goals: The budget outlines a strategy to revamp the Regional Housing Needs Assessment (RHNA) process in order to hold local governments to higher affordable housing targets. In addition, the state will take on a greater enforcement role and proposes to withhold transportation funding from cities that fail to meet long-term targets.
Expanded state tax credit program to incentivize low-income housing development ($500 million): The Budget proposes to expand the state Low-Income Housing Tax Credit (LIHTC) program from $80 million in annual funding to $500 million annually. The LIHTC has become the main funding source for affordable housing development across the U.S. and research shows that families who benefit from LIHTC see greater housing stability, economic mobility, and improved educational outcomes for children.
Expanded loan program to incentivize moderate-income housing development ($500 million): The Budget proposes $500 million one-time to expand the Mixed-Income Loan Program which incentivizes developers to build moderate-income housing. This targets middle-income families with incomes between 60-80 percent of Area Median Income. The Governor announced that he has also urged Silicon Valley firms to match this funding investment.
While the budget makes significant investment in housing development, it does not directly impact key housing protections for low-income communities: local zoning requirements, rent control, or property tax reform and other tenant protections.

Safe Drinking Water

Safe and Affordable Drinking Water Fund ($4.9 million plus new tax): Access to safe and affordable drinking water is a fundamental right. The budget includes short-term measures to bring immediate relief to communities without safe drinking water and also proposes an ongoing sustainable funding source—placing a new water, fertilizer, and dairy fee, to assist communities, particularly disadvantaged communities, in paying for the short-term and long-term costs of obtaining access to safe and affordable drinking water. The budget includes $4.9 million one-time General Fund allocation to implement this new program.

Transportation

Implementing SB 1, which enacted a 12 cent/gallon tax on gasoline: The Budget projects $4.8 billion in new SB 1 funding to invest in road repairs, alleviate congested commute corridors, and more—including $458 million for local transit operations and $386 million for capital improvements for transit, commuter, and intercity rail.

Climate Change

Cap and Trade Expenditure Plan ($1 billion): The Budget proposes a $1 billion Cap and Trade Expenditure Plan to support programs that reduce or control greenhouse gases, including programs that benefit disadvantaged and low-income communities and job training and apprenticeship opportunities to support the state’s transition to a low carbon economy.
Green Economy ($27 million): Communities of color are disproportionately impacted by climate change in workforce indicators and health outcomes. The Budget proposes $27 million Greenhouse Gas Reduction Fund to increase job training and apprenticeship opportunities focused on disadvantaged communities.
Statewide strategy and education campaign on wildfire disaster preparedness and safety ($50 million): The budget proposes $50 million General Fund one-time to immediately begin a comprehensive, statewide education campaign, on disaster preparedness and safety with a focus on community engagement and public education in high wildfire-risk areas with an emphasis on public health and safety. In addition, local grants will be available to address local and regional education needs.
The budget continues core programs but decreases overall investment in climate, including cuts or underinvestment in programs that support low-income households and communities of color who are disproportionately impacted by the effects of climate change.

Other

2020 Census Funding ($54 million): The Budget includes an additional $50 million for statewide outreach efforts related to increasing the participation rate of Californians in the decennial census, bringing the total funding available to $140.3 million. The Budget also includes $4 million a survey that will identify barriers to a complete count and successful approaches taken by the various outreach efforts and help develop recommendations for the 2030 Census.
Support for immigrant communities ($100 million): The budget allocates $25 million (including $5 million to be made available in the current year) for an immigration rapid response program to assist qualified community-based organizations and non-profit entities in providing services to address the humanitarian crisis at our state’s border with Mexico. In addition, the budget allocates $75 million for immigration-related services including assisting applicants seeking Deferred Action for Childhood Arrivals; naturalization; and other immigration services.

Early Childhood

Universal Full-Day Kindergarten: Lack of access to full-day kindergarten contributes to longstanding disparities in education achievement and health outcomes for communities of color. Lack of facilities is a major barrier to offering full-day kindergarten in many California school districts. The budget includes a one-time $750 million investment to construct new or retrofit existing facilities for full-day kindergarten programs and other activities to help reduce barriers to full-day kindergarten.
Universal Preschool: The budget includes $125 million to expand access to subsidized full-day, full-year State Preschool for four-year-old children – for a total of approximately 180,000 State Preschool slots- with additional increases in the following years to provide access for all low-income 4-year-olds by 2021-22. The budget provides funding to State Board of Education to develop a long-term plan to achieve universal preschool in California and to improve access to and quality of subsidized childcare. The budget also eliminates the existing requirement that families with four-year-old children provide proof of parent employment or enrollment in higher education to access full-day Kindergarten.
CalWORKs Grants: CalWORKS provides critical public assistance to low-income children and parents but the grant levels have been unable to keep up with the cost of living in California and reduce child poverty. The budget includes $347.6 million to fund an increase in CalWORKs grant levels by 13.1 percent. The increase in CalWORKs grant levels will bring monthly grant payments for families up to 50 percent of the 2019 federal poverty level.
Students with Children: The budget includes $121.6 million to increase or provide new financial assistance awards for students with dependent children attending the University of California, the California State University, or Community Colleges.

Early Childhood Health and Wellness

Adverse Childhood Experiences and Developmental Screenings: Research shows that individuals who experienced Adverse Childhood Experiences (ACES) are at greater risk of heart disease, diabetes, premature death, and mental health challenges. The budget allocates $45 million to the Department of Health Care Services (DHCS) to assess ACES among children and adults in the Medi-Cal program. This proposal provides ACEs screenings to children and adults under age 65 at least once every three years, and supports increased referrals to appropriate services depending upon screening results. DHCS will work with stakeholders to develop a screening tool for children and will utilize an existing assessment for adults. The budget includes $60 million for the Department of Health Care Services (DHCS) to increase developmental screenings for children.
CalWORKs Home Visiting: Research shows that home visiting services for children ages 0-3 that provide support to pregnant and parenting women in California have a significant positive impact on young children’s educational achievement and health outcomes. The budget includes $78.9 million for home visiting services to eligible CalWORKs families. Nearly one-third of the state’s population, and approximately 45 percent of new mothers, receive Medi-Cal benefits.
The Black Infant Health Programs and Other Home Visiting Programs: African-American infants continue to die at more than 3 times the rate observed for other racial/ethnic groups. African-American infants are also twice as likely to be born with a low birth weight. The budget includes an additional $30 million for the expansion of home visiting services in the Department of Public Health. Of this amount, the budget allocates $7.5 million to the Black Infant Health Program to improve African-American infant and maternal health.

K-12 Education

Local Control Funding Formula (LCFF): The budget includes $2 billion increase for the LCFF – a school funding mechanism enacted in 2013 to prioritize funding for students and school districts with higher needs. The LCFF has two core tenets: first, to prioritize funds for low-income, limited English proficient, and foster youth. Second, to provide local communities and districts with independence and flexibility in how their funds are spent. Concerns have been raised about the extent to which districts are creating strategies that meet the needs of their student populations through this process. The budget commits on continuing to increase accountability and transparency.
Special Education: Local educational agencies are required by federal law to provide appropriate and comprehensive educational programs for students with disabilities. Most local educational agencies in California struggle to improve academic outcomes for those students. The budget includes $576 million (of which $186 million is one-time) to support expanded special education services and school readiness supports at those local educational agencies with high percentages of students with disabilities and students who are low-income, foster care, and English language learners.
Longitudinal Education Data: Although local educational agencies and public segments of higher education collect a significant amount of student level data, the systems that house this data are not aligned to provide a clear picture of how students advance from early education programs through K-12 schools to postsecondary education and into the workforce. The budget provides a one-time $10 million investment to plan for and develop a longitudinal data system that should connect student information from early education providers, K-12 schools, higher education institutions, employers, other workforce entities, and health and human services agencies to track disparities in educational achievement across California.

Higher Education

University of California: The budget includes $240 million for the UC system to fund operating costs, efforts to increase student success, improve student mental health services, and better address student hunger and homelessness. The budget includes an ongoing $49.9 million to support the UC’s proposed effort to improve student success, improve students’ timely completion of a degree program, and close the degree attainment gap between students from disadvantaged backgrounds and other students. Improving students’ timely degree completion and reducing students’ total degree costs as well as closing the degree attainment gap is expected to further improve students of colors’ economic and social mobility opportunities.
Mental Health Services: The UC provides mental health services to students through its Counseling and Psychological Services program. Each campus has a division of Counseling and Psychological Services staffed with psychologists and psychiatrists for students with mental health needs. The budget includes an ongoing $5.3 million to support efforts to hire additional clinicians and improve student mental health services.
California State University: The budget includes an ongoing $300 million increase for CSU. This includes $193 million for operational costs, $62 million for enrollment growth, and $45 million to continue the efforts of the Graduation Initiative 2025. The budget also includes a one-time $247 million for the CSU to help address its deferred maintenance backlog and to improve and expand on-campus child care centers.
Two Free Years of Community College: The budget includes $40 million to support a second year of free tuition for students. Approximately 28,000 first-time, full-time students are projected to be eligible for a second year of free tuition.
Potential CSU campus in San Joaquin County: The budget includes a one-time $2 million for the Chancellor’s Office to undertake a review of a potential CSU campus in San Joaquin County, likely in Stockton. The growing population of high school graduates in San Joaquin County and the need to increase the college attendance of students in the region makes it time to consider the expansion of the CSU system. While the number of jobs in the San Joaquin County region has grown faster than the statewide average, real personal income is lower compared to other areas of the state and unemployment is nearly double the statewide average. CPEHN in collaboration with local partners recently held the Stockton Reducing Disparities Public Hearing in Stockton to discuss how different stakeholders and community leaders can work together to address disparities in Stockton.
Supporting Student Hunger and Housing Initiatives: The budget includes a one-time $15 million for the CSU to assist each campus’s existing efforts to address student hunger and housing needs. This funding will assist the CSU in developing an emergency housing pilot program to provide temporary housing to students who are homeless or at risk of becoming homeless. The budget also includes an ongoing $15 million to assist the UC’s efforts to address these issues. Recent surveys show that over 40 percent of UC undergraduate student body is characterized as having “low” or “very low” food security and that 5 percent experienced homelessness in 2016.
Immigration Legal Services: The immigration legal services program provides legal advice and representation for undocumented students and their families, campus clinics and workshops to assist immigration-related relief and applications for benefits available under the Deferred Action for Childhood Arrivals. The budget includes investments in program across all higher education institutions; $1.3 million at the University of California; $7 million at the California State University, and $10 million at Community Colleges.
Project Rebound: The budget includes an ongoing increase of $250,000 to support Project Rebound, a CSU program that provides assistance to formerly incarcerated individuals seeking to enroll in participating CSU campuses.

Public Safety

Reorganization of the Division of Juvenile Justice: The budget includes a proposal to move youth correctional facilities from the California Department of Corrections and Rehabilitation to a new department under the Health and Human Services Agency. This change will enable the state to better provide youth offenders with the health and human services needed to be successful when they are released.
Inmate Literacy: Currently, 53 percent of California’s adult inmates read above the 9th grade level. The budget includes $5.5 million for a package of programs specifically aimed at improving literacy rates among the offender population and therefore addressing disparities associated with reading levels.
Tattoo Removal Program: Tattoos often present an obstacle to formerly incarcerated individuals seeking to reintegrate into society. The budget includes $2.5 million for an expanded tattoo removal program for the adult offender population. This funding could allow the department to remove tattoos from approximately 4,400 additional adult offenders per year.
Local Law Enforcement Training: The budget includes $14.9 million implement new, and update existing, training curriculum for law enforcement so that courses reflect current best practices in areas such as verbal communication and listening skills, cultural awareness and diversity, de-escalation techniques, and engagement with individuals suffering from mental health or homelessness issues.
Human Trafficking Victim Assistance Program: The budget includes an ongoing $10 million for the Office of Emergency Services to continue funding for the Human Trafficking Victim Assistance Program- a program assists victims of sex and/or labor trafficking in recovering from the trauma they experience and reintegrating into society.