Join Our Network

Follow Us:

  • RSS

State Budget

State Budget

Track the budget process with news about the latest proposals and their impact on California’s communities of color.

Updated 5/20/2020

Governor’s May Revision Proposes Deep Cuts Absent Federal Government Relief   

Sacramento, CA. On May 14th, Governor Newsom released his May Revise announcing an unprecedented shortfall of $54 billion in response to COVID-19. The proposal continues to include important provisions for low-income communities of color, specifically maintaining the minimum wage increase schedule and expanding job protections for paid family leave to more workers. Excluded is a January proposal to provide health care coverage for undocumented seniors and a 2019 approved plan to implement an expansion for low-income Aged, Blind and Disabled adults putting those individuals at increased risk of delaying COVID-19 related testing and care. Additionally, the Governor is proposing to reduce critical dental benefits and services for adults including deep cleanings, crowns and partial dentures which are necessary to maintaining good health. The May Revise also eliminates funds for community-based health care navigators who are trusted and relied upon by communities of color to connect people to health care services and could be of assistance to the state’s contact tracing efforts. As the Legislature closes in on the budget deadline, CPEHN urges our state and federal leaders to take a stand for the health and well-being of Californians. CPEHN will continue advocating for investments that prioritize the health of our most vulnerable communities. To view the full budget proposal, click here or read our full budget analysis below:                      

Highlights of FY 2020-2021 Budget: 

Overview 

  • Total Budget: $203 billion (an $18.8 billion proposed reduction from January’s budget)
  • General Fund Spending: $134 billion
  • Total Spending for Health & Human Services: $71 billion
  • Rainy Day Fund: Transfers $7.8 billion from the Rainy Day fund to meet current COVID related budget shortfalls          

Key Budget Items:

  • Fails to include Health4All Elders Expansion, a proposal initially included in the Governor’s January budget which would have expanded full-scope Medi-Cal to undocumented elders for a savings of $87 million General Fund.
  • Proposes Partial Elimination of Adult Dental Benefits: The May Revision proposes to reduce adult dental benefits to the partial restoration levels of 2014. Since the restoration of the full adult dental benefit, beneficiaries have been utilizing gum treatments to reduce their risk of periodontitis, which is a disease of the gums that can lead to tooth loss and is also a risk factor for heart and lung disease. Low-income Californians have a higher rate of developing periodontitis, and reducing the benefit puts this population at greater risk of complication. Other critical dental services including deep cleanings, partial dentures, and crowns are also slated to be eliminated, which would create immense financial hardships for low-income Californians to afford out of pocket.
  • Eliminates Funds for Community-Based Medi-Cal Enrollment Navigators: The May Revision pulls funds for county partnerships with community-based Navigators tasked with providing enrollment assistance to Medi-Cal beneficiaries. Community-based Navigators are trusted community messengers who provide culturally and linguistically appropriate outreach and enrollment assistance to low-income communities. Their services are needed now more than ever as California responds to the COVID-19 pandemic. Navigators can also be of assistance in helping to link community members to contact tracers as state and local governments move towards fully reopening businesses.
  • Fails to Move Forward with Medi-Cal Aged, Blind and Disabled Expansion: Approved in 2019, the revision proposes not to implement the expansion of Medi-Cal to aged, blind, and disabled individuals with incomes between 123% and 138% of the federal poverty level for a savings of 67.7 million General Fund. This would have resolved unfair situations in which seniors and adults with disabilities are subject to a lower income eligibility limit than others in the Medi-Cal population.
  • Withdraws Funds for the Black Infant Health Program (BIH) ongoing beginning in 2020-21. The BIH serves African-American women who are 18 years or older and up to 30 weeks pregnant at the time of enrollment with the goal of improving infant and maternal health, decreasing Black-White health inequities and social inequities for women and infants.
  • Withdraws the 2019 Budget Act expansion of Medi-Cal to Postpartum individuals who are receiving health care coverage and who are diagnosed with a maternal mental health condition, for a savings of $34.3 million General Fund in 2020-21.   

Health Care: The Governor’s May Revision includes a modest increase in the Medi-Cal budget from $99.5 billion ($22.7 billion General Fund) in 2019-20 and $112.1 billion ($23.2 billion General Fund) in 2020-21 due to projected caseload increases of about 2 million due to economic conditions associated with the COVID-19 Recession. Enrollment is expected to peak at 14.5 million in July 2020, or about 2 million above what caseload would have been absent the COVID-19 pandemic. Despite this growth, the May Revision includes significant cuts to Medi-Cal eligibility, benefits, services and provider rates.

  • Fails to include Health4All Elders Expansion, a proposal initially included in the Governor’s January budget which would have expanded full-scope Medi-Cal to undocumented elders for a savings of $87 million General Fund.
     
  • Trigger Cuts: The May Revision includes a series of reductions that will be triggered absent federal funds to restore them:
    • Reduces Adult Dental Benefits to Partial Restoration Levels of 2014: The May Revision proposes to reduce adult dental benefits to the partial restoration levels of 2014. Since the restoration of the full adult dental benefit, beneficiaries have been utilizing gum treatments to reduce their risk of periodontitis, which is a disease of the gums that can lead to tooth loss and is also a risk factor for heart and lung disease. Low-income Californians have a higher rate of developing periodontitis, and reducing the benefit puts this population at greater risk of complication. Other critical dental services including deep cleanings, partial dentures, and crowns are also slated to be eliminated, which would create immense financial hardships for low-income Californians to afford out of pocket. This cut is part of a larger list of trigger cuts that will automatically go into effect if the federal government fails to provide sufficient funding to restore them. The list also includes:
    • Eliminates other Optional Benefits in Medi-Cal including audiology, incontinence creams and washes, speech therapy, optician/optical lab, podiatry, acupuncture, optometry, nurse anesthetists services, occupational and physical therapy, pharmacist services, screening, brief intervention and referral to treatments for opioids and other illicit drugs in Medi-Cal, and diabetes prevention program services, for a total General Fund savings of $54.7 million.
    • Eliminates the Diabetes Prevention Program, a Medi-Cal covered benefit that provides beneficiaries with at least 22 peer-coaching sessions over 12 months, provided regardless of weight loss.
    • Eliminates the Community-Based Adult Services (CBAS) program and Multipurpose Senior Services Program (MSSP) effective January 1, 2021 for a General Fund savings of $106.8 million in 2020-21 and $255.8 million in 2021-22 (full implementation). The effective date for MSSP would be no sooner than July 1, 2020. These proposals are discussed in detail under The Department of Aging.
    • Makes an Adjustment to Proposition 56 Supplemental Payments to Providers: Beginning in 2020-21, the May Revision proposes to shift $1.2 billion in Proposition 56 funding from providing supplemental payments for physician, dental, family health services, developmental screenings, and non-emergency medical transportation, value-based payments, and loan repayments for physicians and dentists to support growth in the Medi-Cal program compared to 2016 Budget Act. About $67 million in Proposition 56 funding would continue to support rate increases for home health providers, pediatric day health care facilities, pediatric sub-acute facilities, AIDS waiver supplemental payments, already awarded physician and dentist loan repayments, and trauma screenings (and associated trainings).
    • Reduces funds for the Song-Brown Healthcare Workforce Training Program by $33.3 million General Fund ongoing. The Song-Brown Training Program provides grants to support primary care residency training programs in California, including family medicine, internal medicine, OB/GYN, and pediatrics with a focus on attracting residents from underrepresented communities and training students to work in underserved areas.
       
  • Eliminates Funds for Community-Based Medi-Cal Enrollment Navigators: The May Revision pulls funds for county partnerships with community-based Navigators tasked with providing enrollment assistance to Medi-Cal beneficiaries. Community-based Navigators are trusted community
    messengers who provide culturally and linguistically appropriate outreach and enrollment assistance to low-income communities. Their services are needed now more than ever as California responds to the COVID-19 pandemic. Navigators can also be of assistance in helping to link community members to contact tracers as state and local governments move towards fully reopening businesses.
     
  • Withdraws funds for implementation of California’s Medical Interpreter Pilot Project (AB 635) in four separate sites with the goal of evaluating a mechanism to provide and improve medical interpretation services for Limited English Medi-Cal beneficiaries.
     
  • Fails to implement the Medicare Part B disregard which would have stopped seniors and people with disabilities from losing access to free Medi-Cal because of a confusing Medi-Cal rule that creates fluctuations in income calculations even when a person’s income hasn’t changed.
     
  • Withdraws the 2019 Budget Act expansion of Medi-Cal to Postpartum individuals who are receiving health care coverage and who are diagnosed with a maternal mental health condition, for a savings of $34.3 million General Fund in 2020-21.
     
  • Delays Cal-AIM for a savings of $347.5 million General Fund. Cal-AIM, a multi-year initiative by DHCS that aims to improve health outcomes for Medi-Cal beneficiaries through implementing broad delivery system, program and payment reform across the Medi-Cal program.
     
  • Repeals Limitations on Estate Recovery for individuals who pass away after January 1, 2017. Estate recovery is asset seizure of the home and savings of poor individuals who have received health care coverage through Medi-Cal and are 55 or older or permanently institutionalized. This has acted as an enrollment barrier.
     
  • Eliminates the Carve-out for Federally Qualified Health Centers which provide critical community-based health care services for a savings of $100 million ($50 million General Fund).
     
  • Assumes a 1.5% Managed Care Rate Reduction for the period July 1, 2019, through December 31, 2020, for General Fund savings of $182 million in 2020-21 and makes other changes in the way capitation rates are calculated.

Other Health Care Coverage

  • Maintains Expanded Subsidies in Covered California including the extension of subsidies to individuals who are between 400 and 600 percent of poverty, up to approximately $75,000 for individuals and $150,000 for a family of four. The May Revision also includes the following significant policy proposals and workload adjustments.
     
  • Adjusts Funds for Covered California for a decrease of $164.2 million General Fund in 2019-20 and $90.3 million General Fund in 2020-21 to reflect lower-than-projected enrollment in state subsidies. In addition, an increase of $15 million General Fund revenues in 2020-21 to reflect increased individual mandate penalty revenues associated with an assumed higher number of uninsured individuals due to COVID-19 Recession.
     
  • Defers the Administration’s proposed new Office of Affordability tasked with creating greater transparency and accountability with regards to preventing inflated prices, for health plan premiums, for providers, and for prescription drugs.

Mental Health 

The state is allocating $1.3 billion of its CARES Act funding directly to counties based on population size to address the public health, behavioral health, and other health and human services needs that have arisen as a result of the COVID-19 pandemic.

  • Eliminates Behavioral Health Quality Improvement Program, which aimed to help counties county-operated community mental health and substance use disorder systems prepare for opportunities through the Cal-AIM initiative, for a savings of 45.1 million. Cal-AIM, a multi-year initiative by DHCS aims to improve health outcomes for Medi-Cal beneficiaries through implementing broad delivery system, program and payment reform across the Medi-Cal program, is also delayed.
     
  • Defers Mental Health Services Act (MHSA) Reforms: Proposition 63, also known as the Mental Health Services Act (MHSA), was approved by the voters in 2004 and imposes a 1-percent tax on personal income in excess of $1 million. Revenue generated under the Act primarily supports county mental health services. The administration rescinded its proposal update the MHSA to focus on people with mental illness who are also experiencing homelessness, who are involved in the criminal justice system, and for early intervention for youth. Advocates have previously raised concerns about discussions lack of transparency surrounding the state level discussions.
     
  • Expected Reductions in Mental Health Services Act (MHSA) Revenues: Though not discussed in May Revision, California can expect projected 10-25% reduction in MHSA revenue, which will be compounded by the loss in federal matching funds leveraged using MHSA funds due to the economic downturn and the deferral of the tax filing deadline to July.
     
  • Maintains Proposition 56 Funding for Trauma Screenings: About $67 million in Proposition 56 funding would continue to support rate increases for home health providers, pediatric day health care facilities, pediatric sub-acute facilities, AIDS waiver supplemental payments, already awarded physician and dentist loan repayments, and trauma screenings, and associated trainings.

Substance Use 

  • Eliminates Screening, Brief Intervention and Referral to Treatment for Opioids and Other Illicit Drugs, along with other option benefits, for a total savings of 54.7 million.
     
  • Maintains Funding for Drug Medi-Cal Organized Delivery System, including $426 million to support the Drug Medi-Cal Organized Delivery System, which provides expanded substance use disorder treatment for Medi-Cal beneficiaries. In light of the Cal-AIM delay, the May Revision also modifies a request to continue funding for the External Quality Review Organization (EQRO) contract.
     
  • Maintains Funding for Education, Prevention and Treatment of Substance Youth Disorders. The cannabis excise tax is forecast to generate $479 million in 2019-20, $199.7 million of which will be allocated to education, prevention and treatment of substance youth disorders and $66.6 million to public safety-related activities. Proposition 64, the measure to legalize recreational cannabis in 2016, aimed to scale back ineffective policies of the War on Drugs and its associated systems of mass criminalization and incarceration.
     
  • Maintains Funding for Mental Health Services for Inmates, which includes 5.9 million to support the expansion of telepsychiatry, a service that is critical now more than ever. While the governor has taken proactive measures to reduce the presence and spread of COVID-19 in its institutions California’s inmates, and their families, have been disproportionately impacted by COVID-19, with more than 600 inmates and staff in California state prisons are infected with coronavirus.
     
  • Maintains Funding for Prevention, Early Intervention and Treatment Services to Prevent Opioid Deaths, including 89.2 million combat opioid overdose through better prevention, early intervention, and treatment to stabilize conditions before they become severe. Specifically, the budget includes $89.2 million for the Medication Assisted Treatment Expansion Project, which aims to expand access points for individuals who need access to medications in combination with counseling and behavioral therapies. However, research indicates ongoing work is needed to address racial and ethnic disparities in programmatic outcomes.
     
  • Withdraws Proposal to Expanding Community Treatment of the Incompetent to Stand (IST) Trial Population, a proposal initially included in the Governor’s January budget which would have expanded funds to community alternatives to increase diversion of mentally ill offenders and decease county IST referrals to state hospitals through a six-year pilot program in three counties, for a savings of $24.6 million.
     
  • Fails to Implement an Expansion to Screening for Additional Substances: SB 78 required the Department to expand the Medi-Cal benefit for adult Alcohol Misuse Screening and Behavioral Counseling Interventions in Primary Care to include screening for additional substances (i.e., opioids and other drugs). The Department proposes to no longer implement the expansion for screenings for additional substances.

Oral Health 

  • Reduces Adult Dental Benefits to Partial Restoration Levels of 2014: The May Revision proposes to reduce adult dental benefits to the partial restoration levels of 2014. Since the restoration of the full adult dental benefit, beneficiaries have been utilizing gum treatments to reduce their risk of periodontitis, which is a disease of the gums that can lead to tooth loss and is also a risk factor for heart and lung disease. Low-income Californians have a higher rate of developing periodontitis, and reducing the benefit puts this population at greater risk of complication. Other critical dental services including deep cleanings, partial dentures, and crowns are also slated to be eliminated, which would create immense financial hardships for low-income Californians to afford out of pocket. This cut is part of a larger list of trigger cuts that will automatically go into effect if the federal government fails to provide sufficient funding to restore them. 
     
  • Adjusts Proposition 56 Funding for Supplemental Payments for Dentists: Beginning in 2020-21, the May Revision proposes to shift $1.2 billion in Proposition 56 funding from providing supplemental payments for physician, dental, family health services, developmental screenings, and non-emergency medical transportation, value-based payments, and loan repayments for physicians and dentists to support growth in the Medi-Cal program compared to 2016 Budget Act. About $67 million in Proposition 56 funding would continue to support rate increases for home health providers, pediatric day health care facilities, pediatric sub-acute facilities, AIDS waiver supplemental payments, already awarded physician and dentist loan repayments, and trauma screenings.
     
  • Maintains Proposal to Replace Current Administrative Service Organization Contract for the Medi-Cal Dental Fee-For-Service Delivery System. DHCS still plans to start its re-procurement efforts to replace the current new Administrative Services Organization (ASO) contract   for   the   Medi-Cal   Dental   Fee-For-Service delivery no later than July 2020,  for a new contract beginning in July 2023.  DHCS has undertaken additional efforts to make substantial improvements in response to the concerns raised by advocates.
     
  • Withdraws Medi-Cal Dental Program Workload Proposal, which would have added resources and staffing to support oversight of the Medi-Cal Dental Program, for a savings of about 1 million. That oral health disparities have persisted before and after the restoration of adult dental benefits has raised concerns from the California State Auditor and other California advocates regarding oversight of the Medi-Cal Dental program.
     
  • Adjusts Medi-Cal Dental Program Integrity Proposal, for a decrease of approximately 600,000, resources previously requested to maintain the Dental Managed Care Program, which the May Revision continues to propose for elimination effective January 1, 2021.
     
  • Maintains Funding for the State Oral Health Program, other than a 3.8% reduction in projected revenue. The State Oral Health Program aims to address the burden of disease, increase access to oral health services for high risk populations, and to increase the oral health status of all Californians.

Public Health: For 2020-21, the May Revision Budget provides $3.2 billion for the support of Public Health programs and services, a decrease of .3 percent from the 2020-21 Governor’s Budget. Of the amount approved, $1.1 billion is for State Operations and $2.1 billion is for Local Assistance.

The May Revision maintains and increases the Department’s disease surveillance and identification workforce. Specifically, 

  • COVID-19 Testing: $5.9 million General Fund for 2020-21 and $4.8 million General Fund ongoing, to support laboratory staff to increase the laboratories’ testing capacity, and to purchase equipment and laboratory supplies that are specifically utilized for COVID-19 testing as well as other diseases.
     
  • Other infectious disease: In addition, the May Revision maintains critical funding for infectious disease prevention and control, including $5 million General Fund each for STD, HIV, and hepatitis C virus prevention and control.
     
  • Withdraws Department of Public Health Home Visiting and Black Infant Health—$4.5 million General Fund ongoing beginning in 2020-21.

Federal/State COVID-19 Public Health Spending: The May Revision reflects $1.8 billion net General Fund expenditures for the state’s direct emergency response efforts for the COVID-19 pandemic. A quarter of this will be used to draw down FEMA funding. So far the state has supported PPE & other critical medical supplies, hospital surge preparation, hotels for health care workers and support staff, supporting vulnerable populations (homeless, foster youth, seniors), state response operations and other support systems, safe reopening (including testing and contact tracing and tracking). Additionally, the May Revision includes $716 million net General Fund as a set-aside contingency for additional response activities in the budget year.

Assistance from the Federal Government:

To date, California has received over $186 billion in federal aid related to the COVID-19 pandemic through four stimulus bills: Preparedness and Response (HR 6074), Families First (HR 6201), CARES Act (HR 748), Pay Roll Protection/Health Care (HR266), with the largest portion of aid, $134 billion, coming from the CARES Act:

  • $115 billion of these funds is for direct support or stimulus that goes to individuals, businesses, schools, local governments etc.
     
  • $71 billion is for the state of California with the majority ($50 billion) already spent on Unemployment Insurance

Federal COVID-19 assistance and spending on public health/health systems: California has spent the following federal funds as part of our COVID-19 response to date:

  • Over $600 million on “State and local public health,” excluding Los Angeles County which received funding directly from the federal government
  • $5.3 billion on enhanced federal share of costs, primarily Medi-Cal
  • $5.3 billion on hospitals, providers and rural and community clinics
  • $5.8 billion to 21 local governments with populations over 500,000. It will be important to ensure all public health departments are funded appropriately as part of this next round of stimulus funding.

The May Revision includes an additional $1.3 billion to local governments for public health, behavioral health, and other health and human services from the CARES Act’s Coronavirus Relief Fund (CRF) to the state (i.e. as part of that $71 billion), and will run out by Dec 2020


Other Issues:

  • Eliminates Community-Based Adult Services (CBAS) and Multipurpose Senior Services Program (MSSP). The May Revision proposes to eliminate the CBAS and MSSP, programs that help older adults and people with disabilities remain living in their homes, for an initial savings of 106.8 million.
     
  • Deep Cuts to the In-Home Supportive Services (IHHS), which provides domestic and related services such as housework and transportation, and personal care services to eligible low-income aged, blind, and disabled persons. These services are provided to assist individuals to remain safely in their homes.
     
  • Maintains the Earned Income Tax Credit (CalEITC) but Continues Exclusion of Certain Immigrant Communities. The California Earned Income Tax Credit (CalEITC) a refundable tax credit that puts money back in the pockets of low-income working families with annual incomes below $30,000. Many people who work are excluded from the CalEITC, including people who use an Individual Taxpayer Identification Number (ITIN) to file their taxes and people who have a Social Security Number (SSN) but lose their DACA or TPS status.
     
  • Maintains CalWORKs Grant and Eligibility Levels. However, California will make reductions to employment services and child care, subsidized employment, and home visiting services if additional federal relief funding is not approved by Congress. CalWORKs caseload is expected to rise to 724,000 families just months after reaching an all-time low of approximately 350,000 families in the program earlier in 2020.

CPEHN will continue advocating for investments that prioritize the health of our most vulnerable communities. 

Stay tuned for a more in depth analysis and for more information about CPEHN's policy priorities, visit: https://cpehn.org/policy-center