State Budget Update

Governor’s Revised Budget Takes Steps Towards Health Equity Once Again Misses Key Opportunities in Racial Equity and Public Health

Updated 5/19/2021

On Friday May 14th, Governor Newsom released his May Revise budget proposal for FY 2021-22. CPEHN is excited to see impactful investments working toward health equity, but dismayed at the missed opportunity to include meaningful investments in racial justice and public health. From historic investments in community health workers (CHWs) and doula services, expansions in Medi-Cal to undocumented adults (60+), innovative mental health programs, enhancing quality and equity standards, and expansions to broadband access – California is taking steps to lift up communities. The tireless work of advocates and community-based organizations have made these wins possible. 

The partnership with the Biden administration which includes $26 billion in discretionary funds combined with an unprecedented state surplus, has allowed California to seize on opportunities to continue leading the nation on policy goals that take steps toward equity.  

While there is much to celebrate, there is once again no new state funding for California’s public health departments. Local public health has been at the forefront of the pandemic response, upholding safety guidelines, employing contact tracers, and connecting people on the ground to critical resources and supports, but were notably absent from Governor Newsom’s proposal. The budget also fails to include California Reducing Disparities Project funding to continue their community defined evidence-based behavioral health practices and funds for community-based organizations to do field testing of translated Medi-Cal materials to enhance culturally and linguistically competent care was also ignored. 

Strong and meaningful investments in addressing racism as a public health crisis are still desperately needed. Moving forward, CPEHN will work with the legislature and the Newsom administration to ensure communities of color get the resources they need to thrive, addressing even more upstream health needs through public health investments, while also seeking to targeting systemic and institutional racism while advancing health equity, reducing disparities, and improving health outcomes through a new California Racial Justice Innovation Fund. 

Stay tuned for timely updates on state budget discussions and opportunities to advocate for stronger investments in racial equity and public health next week. To view the full May Revise budget proposal click here

Highlights of the FY 2021-22 Revised State Budget Proposal: 

Total Budget: $267.8 billion ($40.8 billion increase) 

General Fund Spending: $197 billion ($32.5 billion increase) 

Total Spending for Health & Human Services: $207.7 billion ($12.6 billion increase) 

Rainy Day Fund: $15.9 billion ($300,000 million increase) 


The Governor’s May Revise significantly expands access to health care by expanding Medi-Cal coverage to potentially 89,000 undocumented older (aged 60+) adults, adds community health workers and doulas who come from, have lived experience, and strong empathy with the diverse communities they serve as covered preventive benefits and services for Medi-Cal beneficiaries, and includes additional funds for the development of a health and community health information exchange to improve implementation of Cal-AIM’s Population Health Management program in Cal-AIM.  

However, while the budget includes $20 million directed to CHHS to improve language access, the proposal once again ignores repeated calls by CPEHN and advocates to fund community-based organizations to do field testing of translated Medi-Cal materials to ensure materials are culturally and linguistically appropriate for California’s diverse communities. 

The Medi-Cal budget is $115.6 billion ($21.5 billion General Fund) in 2020-21 and $123.8 billion ($27.6 billion General Fund in 2021-22): The May Revision assumes that caseload will increase by approximately 7.1 percent from 2019-20 to 2020-21 and increase by 6.6 percent from 2020-21 to 2021-22. Medi-Cal is projected to cover approximately 14.5 million Californians in 2021-22, over one-third of the state’s population.  

Key Changes: 

  • New: Expands Medi-Cal Coverage to Undocumented Older (aged 60+) Adults ($69 million in 2021-22 and $1 billion ongoing) —California currently provides full scope Medi-Cal benefits to eligible individuals under 26 years of age, regardless of immigration status. Additionally, for the upcoming year, existing law requires the expansion of Medi-Cal full scope coverage to individuals who are 65 years of age and over who do not have satisfactory immigration status be prioritized for inclusion in the upcoming FY 2021-22 budget. The May Revision expands Medi-Cal, including In-Home Supportive Services, to undocumented adults aged 60 and older effective no sooner than May 1, 2022. The expansion is projected to cover an additional 89,000 undocumented adults aged 60 years and above, compared with just 30,000 aged 65 and above.  
  • New: Extends Payment for Community Health Workers ($16.3 million, increasing to $201 million by 2026-27): The May Revision adds community health workers to the class of health workers who are able to provide benefits and services to Medi-Cal beneficiaries, effective January 1, 2022. CHWs are skilled and trained health educators who work directly with individuals and families who may have difficulty understanding and/or interacting with health care providers due to cultural and/or language barriers. CHWs provide vital education, and navigation assistance and can bridge gaps in communication and reduce health and mental health disparities experienced by vulnerable communities in California. 
  • New: Adds a New Doula Benefit ($152,000 GF 2021-22 and $4.4 million annually): The May Revision adds community-based doula services as a preventive covered benefit in the Medi-Cal program, effective January 1, 2022.  Disparities in black infant and maternal mortality rates are persistent in California. Doulas, can help to increase health equity through the provision of culturally and linguistically appropriate personal support to pregnant individuals and families throughout labor, and the postpartum period.  
  • Fails to Include Funds for Community-Based Field Translations of Medi-Cal Forms and Documents ($1 million 2021-22 and $30,000 ongoing): The Governor’s May Revise fails to include funds to strengthen language assistance through community-based reviews of translated Medi-Cal forms to ensure forms are culturally and linguistically appropriate to the communities they serve. In 2019, CPEHN and Western Center on Law & Poverty co-sponsored, AB 318 (Chiu) which would have required DHCS to pay for materials to be field tested by native speakers through focus groups or outreach from community-based organizations. The bill was vetoed by the Governor due to budgetary constraints and should be revisited given the state’s significant surplus.  

Other Medi-Cal Changes/Adjustments: 

  • New: Extends Medi-Cal Eligibility for Postpartum Individuals for Five Years ($90.5 million in 2021-22 and $362.2 million annually between 2022-23 and 2027-28): The May Revision takes advantage of federal authorization under the American Rescue Plan Act that allows states to receive federal funding if they extend Medi-Cal eligibility from 60 days to 12 months for most postpartum individuals, effective April 1, 2022 for up to five years.  
  • New: Makes Permanent Accelerated Enrollment for Adults ($14.3 million in 2021-22): The May revision proposes to expand accelerated enrollment to adults ages 19 through 64 at the time of application while income verifications are pending.   
  • New: Permanently Ends the Suspension of Medi-Cal Optional Benefits specifically audiology and speech therapy, incontinence creams and washes, eyeglasses and contacts, and podiatric services. 
  • New: Eliminates Proposition 56 Suspensions ($550 million ongoing): The 2020 Budget Act included the suspension of various health and human services investments effective July 1, 2021 and December 31, 2021. Given the improved revenue outlook, the Governor’s January Budget proposed to delay the suspensions for one year. The May Revision proposes to eliminate Proposition 56 supplemental payment increases, as well as to reverse the 7% reduction in In-Home Supportive Service hours and Developmental Services provider rate increases. 
  • New: Provides Additional Support for Public Hospitals and Health Systems ($300 million one-time): The May Revision includes federal COVID relief funds to help public health care systems cover costs associated with critical care delivery needs provided during and beyond the pandemic. 
  • New: Revises Telehealth Audio Only Policy to Pay for Visits at 65% FPL: As part of the Administration’s proposal to extend telehealth flexibilities utilized during the pandemic, while providing assurances of appropriate access to in-person care, DHCS will establish rates for audio-only telehealth that is set as 65 percent of the Medi-Cal rate for the service rendered in fee-for-service, and comparable alternative to prospective payment system (PPS) rates for clinics to maintain an incentive for in-person care. Only providers located in California or border communities and able to provide in-person services to each client served by audio-only telehealth can claim Medi-Cal reimbursement for the service. DHCS will consult with subject matter experts to establish utilization management protocols for all telehealth services prior to implementation of post-pandemic telehealth services. 

Cal-AIM Adjustments:  

  • New: Invests in Population Health Management Health and Community Information Exchange ($315 million one-time GF): The May Revision includes one-time funding for population health management services that would centralize administrative and clinical data from the Department, health plans, and providers. Access to this information would allow all parties to better identify and stratify member risks and inform quality and value delivery across the continuum of care while implementing CalAIM. The service will also facilitate the connection between important health data and critical social service data for a given beneficiary. 
  • New: Establishes Medi-Cal Providing Access and Transforming Health Payments (PATH) ($200 million one-time funding): The May Revision includes one-time funding to build capacity for effective pre-release care for justice-involved populations to enable coordination with justice agencies and Medi-Cal coverage of services 30 days prior to release. 
  • New: Continues Medically Tailored Meals ($9.3 million one-time funding): The May Revision continues the provision of medically tailored meals in the period between the conclusion of the existing pilot program in 2021 and when medically tailored meals become available as an option for In-Lieu of Service (ILOS) under CalAIM.  

Other Health and Human Services Adjustments: 

  • New: Language Access ($20 million one-time general funds): The May Revision includes one-time funds to improve and deliver language access services across the spectrum of Health and Human Services programs.  
  • Health Information Exchange: The Governor’s May revise fails to include funds for AB 1131 an independently operated statewide health information exchange, opting instead to provide more limited funds for HIE housed under CHHS and DHCS. Specifically: 
  • New: Provides Funds for HHS HIE Leadership ($2.5 million one-time funds): The May Revision includes one-time funds for the Health and Human Services Agency to lead efforts and stakeholder engagement in building out information exchange for health and social services programs. 
  • New: Population Health Management Health and Community Information Exchange ($315 million one-time GF): See description above. 

Covered California Adjustments: 

  • New: Reduces State Spending on Affordability Assistance in Covered California (A decrease of $732.7 million over 2020-21 and 2021-22 combined): The Governor’s May Revise captures approximately $730 million in General Fund spending on state subsidies to go into a new health care affordability reserve fund ($333.4 million) and replaces that spending with new federal subsidies. Advocates had proposed to use those funds to pay for additional consumer affordability provisions in Covered California.  
  • New: Decreases in Individual Mandate Penalty Revenue (A decrease of $345 million in 2020-21 and 2021-22 combined): The Franchise Tax Board is currently processing returns for the 2020 tax year, the first year in which the individual mandate penalty is in effect. Based on initial sample data, the May Revision reflects reduced revenue from the individual mandate penalty of about $345 million over 2020-21 and 2021-22 combined.  
  • New: Includes Subsidies for Zero-Dollar Premium Plans ($20 million): Health care consumers pay $1 premiums for health plans due to federal policy concerning abortion coverage. The May Revision proposes to subsidize this cost for Covered California consumers. 
  • New: Establishes a Health Care Affordability Reserve Fund ($333.4 million): While ARPA provides substantial near-term relief to Californians purchasing health care through Covered California, the future of the enhanced federal assistance is uncertain. To partially backfill the loss of the more generous federal subsidies if they are not extended, or if other state health care affordability investments are explored in the future, the May Revision sets aside $333.4 in a new Health Care Affordability Reserve Fund.  

Behavioral Health Adjustments: 

The Governor’s May Revision significantly expands access to behavioral health coverage by extending Medi-Cal coverage for older (60+) undocumented adults, and also expands behavioral health outreach and services for children and youth, but severely limits investments in the type of services desperately needed to improve the mental health of BIPOC communities.  Funding to continue the successful and innovative California Reducing Disparities Projects to continue their community defined evidence-based behavioral health practices was ignored. Now more than ever, there is a clear need for new strategies to help reduce behavioral health disparities in BIPOC and LGBTQ+ communities.  

Behavioral Health  

  • Fails to include funds for Community-Defined Evidence Practices (CDEPs) expanded under the California Reducing Disparities Project.  Research from the Office of Health Equity and the California Reducing Disparities Project suggests community-defined evidence practices improve the behavioral health of children and youth from Black, Indigenous, People of Color (BIPOC) and Lesbian, Gay, Bisexual, Transgender, Queer and Plus (LGBTQ+) communities as opposed to traditionally funded services. Funding for these innovative and successful strategies will expire in a year. To sustain these practices, mental health advocates are currently requesting the Legislature approve a $63 million investment in the California Reducing Disparities Project over the next four years. 
  • Expands behavioral health coverage to Seniors by extending Medi-Cal coverage for older (60+) undocumented adults. California’s Medi-Cal program currently includes behavioral health benefits for adults. However, beneficiaries are only able to access these benefits if they are in the full-scope Medi-Cal program. The May Revision proposes to expand full scope Medi-Cal for adults 60 years and over regardless of immigration status, to be implemented no sooner than May 1, 2022. Passage of this proposal means older Californians, regardless of immigration status, can see a qualified mental health professional to address their behavioral health needs.  
  • NEW: Children and Youth Behavioral Health Initiative. The May Revision includes $4 billion investment in behavioral health services for children and youth age 25 and younger, including:  
    • NEW: Funds to procure a business vendor to implement a virtual platform to integrate behavioral health services with screening, clinic-based care, and app-based support services for children and youth, regardless of payer source ($83 million in Coronavirus Fiscal Recovery Funds for FY 2021-22 and growing in the out years). The direct service platform proposes to incorporate regular automated screenings and self-monitoring tools; develop tools and services to help families navigate how to access help; facilitate a statewide e-consult service to allow primary care pediatric and family practice providers to receive asynchronous support and consultation to manage behavioral health conditions for patients in their practices; and use a tiered model to deliver and monitor behavioral health treatment.  
    • NEW: grants to qualified entities to increase behavioral health services at or affiliated with schools ($100 million in Coronavirus Fiscal Recovery Funds for FY 2021 and growing in out years).  The May Revision proposes to build infrastructure, partnerships, and capacity statewide to increase access to ongoing behavioral health prevention and treatment services on or near school campuses and connect consumers to commercial insurance plans and Medi-Cal managed care plans, counties, community-based organizations, and schools via data sharing systems. 
  • NEW: grants to support development and expansion of evidence-based programs (10 million in Coronavirus Fiscal Recovery Funds for FY 2021 and growing in out years). The May Revision includes grants for Medi-Cal behavioral health systems, tribal entities, health care service plans, Medi-Cal managed care plans, community-based organizations, and behavioral health providers to support implementation of evidence-based practices for children and youth. In addition to evidence-based practices, advocates have long highlighted the need to expand the suite of practices and services provided by grants to also include community-defined evidence practices.  
  • NEW: competitive grants to construct, acquire, and rehabilitate real estate assets to expand the behavioral health infrastructure targeted at individuals age 25 and younger ($2.455 billion total funds over three years)  
  • NEW: Medi-Cal dyadic service benefits ($200 million funds ongoing) new statewide benefit that provides integrated physical and behavioral health screening and services to the whole family.  
  • NEW: Behavioral Health Outreach for Young People ($100 million over the next five years). The May Revision includes resources to support youth behavioral health education and outreach programs through the Department of Public Health.  
  • Fails to expand investments in the behavioral health of diverse Californians over the age of 25. The Governor’s May Revision significantly expands behavioral health services for children and youth but does not expand investments in outreach and services needed to improve the behavioral health of adults. However, recent data suggests the mental health of adults, particularly adults from communities of color, are impacted by COVID-19 at a significantly higher rate than their White counterparts.  

Oral Health 

  • NEW: Medi-Cal Coverage to Undocumented Adults Aged 60 and Older: Effective no sooner than May 1, 2022, undocumented adults aged 60 and older will be eligible for full-scope Medi-Cal regardless of their immigration status. The May Revise is alloting $69 million ($50 million General Fund) in 2021-22 and $1 billion ($859 million General Fund) ongoing to expand Medi-Cal to this population. For many, this will be the first time they have access to comprehensive oral health coverage. Some of the benefits this newly eligible population will have access to are full and partial dentures, root canals, and deep cleanings.   
  • NEW: Restoration of Dental Fee-For-Service (FFS) in Sacramento and Los Angeles Counties: The May Revise announces an elimination of Dental Managed Care (DMC) and a transition to an entirely fee-for-service (FFS) system in Medi-Cal Dental. The restoration of FFS comes as DMC has failed to meet its goals of improving access to dental care since its inception. With the elimination of DMC, the budget estimates a net savings of $20 million total funds ($8million General Fund). The restoration would occur January 1, 2022. The Department has proposed trailer bill language related to the elimination of DMC. You can read that language here.  
  • NEW: Permanent Removal of Proposition 56 Suspensions and Adult Optional Benefits: The May Revision proposes permanently removing all suspensions of Proposition 56 payments and optional benefits currently in law. These supplemental payment increases incentivize providers to provide quality dental care to Medi-Cal patients without the worry of a low reimbursement rate for popular procedures like cleanings, root canals, and crowns. This suspension means supplemental payment increases for certain Medi-Cal Dental procedure codes will remain. The Department has proposed trailer bill language as part of the May Revision related to Prop 56 suspensions and adult optional benefits, and you can read it here. The resulting cost for eliminating the suspensions is $550 million ongoing. 

Public Health:  

The May Revise budget proposal revealed that there is yet a fundamental lack of understanding of the core public health functions that are critical to protecting and upholding all communities’ health and well-being: at the baseline, communicative or infectious disease prevention and mitigation, and more broadly, the mission to address broader, more upstream social factors that impact the lives of all Californians, including institutionalized racism and discrimination. While rapid and widespread vaccination, bolstering state hospital systems and achieving universal health care are important investments to make, adequate investments are needed now in order to implement effective and equitable preventive measures early on before the next pandemic.  

The Governor’s budget fails to include funds to integrate community-defined practices that have proven effective for Black, Indigenous and other communities of color, immigrants, LGBTQ+ communities and other underserved Californians. Additionally, the budget fails to include funds responsive to community requests that the state declare racism a public health crisis and explicitly and affirmatively invest in antiracist programs and strategies by setting aside large-scale, flexible funding to support community-based solutions in reducing racialized health disparities. The state must also bolster funding for local health departments who have been underfunded, understaffed, overworked and exhausted this pandemic, so that local health departments have adequate resources to hire equity positions and implement equity plans, improve data and surveillance systems, build capacity to conduct stakeholder engagement and build relationships with community groups in order to raise public education and awareness collectively with community groups about public health, including countering myths and misinformation.  

Pandemic relief and recovery  

  • COVID-19 Response Costs ($1.08 billion) The May revision includes funds to support testing and laboratory operations, continued vaccinations including an outreach and education campaign in partnership with hundreds of community groups, medical surge capacity, contact tracing management, and other state operations needs.  
  • Funds public hospitals and health systems ($300 million one-time funding) with federal funds to cover costs associated with the pandemic.   
  • Immediate economic relief for individuals and businesses, including $12 billion Golden State Stimulus for low-to-middle income Californians, including ITIN filers, and $2.5 billion total in grants and tax credits for small businesses including cultural institutions and non-profits as well as longer-term historic investments to support renters, workers and the unhoused population  

Equity in emergency response structure  

  • Establishes a New Office of Equity at Cal OES ($29.9 millionGeneral Fund ongoing) and makes permanent a Listos grant program to further strengthen connections and build resiliency with all communities  
  • Develops and implements a new initiative, “Prepare California,” ($250 million one-time General Fund) modeled after a successful FEMA program, designed to build disaster-resistant communities through state, local, federal, and private sector and nongovernmental organization partnerships.  

Public health infrastructure  

  • Includes Funds for a Public Health Review ($3 million) to assess the lessons learned, identify programmatic gaps, and develop a proposal as part of the 2022 Governor’s budget to fund prevention. 
  • Adds Community Health Workers ($16.3 million, 2021-23, $201 million by 2026-27), to the class of health workers who are able to provide benefits and services to Medi-Cal beneficiaries, effective January 1, 2022.  

Long-Term Investments in Prevention and Racial Justice: 

  • Fails to Include $500 Million Racial Justice Innovation Fund, “to grant funding to stakeholders such as community based organizations, tribal organizations, local health departments, non-law enforcement branches of state and local government, and other entities that seek to reduce disparities for chronic diseases impacting communities of color, community health equity innovation projects, and to support program implementation and evaluation.” (CPEHN)  
  • Fails to Include $200 Million ongoing general fund for Local Health Departments, to train and recruit adequate workforce, improve and expand communicable disease prevention and mitigation, address health equity and health disparities, and improve environmental health capacities  
  • Fails to Include $180 Million Health Equity fund, “$60 million per year over three years as a one-time appropriation of $180 million,” “to engage communities most severely impacted by the pandemic in selecting and implementing policy, systems and environmental change strategies to mitigate the health and social impacts of COVID-19.” (Public Health Institute)  


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