Budget Subcommittees Hear May Revision Issues, Senate Sub. No. 3 Closes out Open Items

With the release of Governor Newsom’s May Revision, budget subcommittees have been working in earnest throughout the week to hear all May Revision proposals. While the Senate Budget and Fiscal Review Subcommittees completed their work by voting on all remaining open items this week, the Assembly Budget Subcommittees are set to do so early next week. In the coming days and weeks, the budget committees of both houses will be provided a report of subcommittee actions, adopt their preliminary version of the budget, and convene a Conference Committee (still to be named) to reconcile differences between the houses. As a reminder, the constitutional deadline for the Legislature to pass the budget is June 15.

Full Scope Medi-Cal Coverage for Undocumented Young Adults. The Administration presented their proposal to delay the expansion of full-scope Medi-Cal to undocumented young adults ages 19-25 for six months to allow time for implementation. The Legislature and advocates expressed concern that the Administration’s proposal does not expand coverage to a broader population of undocumented adults.

AB 85 Redirection. The Department of Finance (DOF), noting the concerns shared by the four non-CMSP/non-formula counties (Sacramento, Santa Barbara, Stanislaus, and Placer), discussed the Governor’s action to rescind the January proposal to increase the redirection from 60 percent of 1991 health realignment to 75 percent. In addition, DOF noted that the May Revision proposes to treat Yolo as a CMSP county for purposes of AB 85 moving forward. Lastly, DOF shared the May Revision proposal to withhold realignment revenues from the CMSP Board until the Board’s reserves equals two years of operating expenses and then redirect 75 percent from the Board thereafter.

The LAO indicated that the priority to forego increasing the additional redirection for non-formula/non-CMSP counties and to withhold realignment revenues from the CMSP Board are reasonable policy choices. Further, the LAO indicated that the Legislature could delay specifying the percentage to be redirected for AB 85 purposes in the future as they predict it would take several years for the Board to spend down the reserve.

Members of the Assembly expressed considerable concern with the high reserve level of the Board. However, members of the Assembly and Senate also underscored the need to ensure the viability of the CMSP Board to provide services in the future.  

Senate Sub. No. 3 Actions:

  • Approve expenditure authority of $98 million ($74.3m GF and $23.3m FF) and placeholder trailer bill language to expand full-scope Medi-Cal coverage to undocumented young adults age 19 to 25, effective January 1, 2020.
  • Approve additional expenditure authority of $62.5 million ($49.6m GF and $12.8m FF) and placeholder trailer bill language to expand full-scope Medi-Cal coverage to undocumented seniors age 65 and over, effective January 1, 2020.
  • Adopt placeholder trailer bill language to increase eligibility for full-scope Medi-Cal for undocumented individuals one year every fiscal year, beginning with expansion to individuals age 26 in 2020-21.
  • Adopt placeholder trailer bill language to approve the Administration’s updated May Revision trailer bill proposal for redirection of county realignment funding.
  • Approve as budgeted two positions to support implementation.

Proposition 56 – Tobacco Tax Initiative. The May Revision provides an additional $263 million in Proposition 56 revenues due to a one-time fund reconciliation and makes investments in loan repayments for physicians and dentists, value-based payment program for behavioral health integration, provider training for trauma screenings for adult and children, and restoration of the optician and optical laboratory services benefit for Medi-Cal adult beneficiaries. These investments are in addition to the January investments which included Medi-Cal supplemental payments and rate increases for health care providers, care facilities and specified health services, funding for the Oral Health Program, family planning services, and funding for adverse childhood experiences and developmental screenings. Legislators and advocates expressed considerable concern with the Administration’s intent to sunset these investments in December 2021 and reiterated the voter intent of Proposition 56 funding.

Senate Sub. No. 3 Actions:

  • Approved $2.1 billion ($712.5m Prop. 56 and $1.4b FF) in FY 2018-19 and $2.2 billion ($769.5m Prop. 56 and $1.4b FF) for supplemental provider payments in Medi-Cal and adopt placeholder budget bill language requiring DHCS to seek a three-year state plan amendment for supplemental provider payments in Medi-Cal fee-for-service and managed care.
  • Approve $544.2 million ($250m Prop. 56 and $294.2 FF) for the implementation of the Value-Based Payments program and adopt placeholder implementing trailer bill language.
  • Approve $105 million ($52.5m Prop. 56 and $52.5 FF) for adverse childhood experiences and developmental screenings.
  • Approve $50 million ($25m Prop.56 and $25m FF) for provider trainings on delivering trauma screenings.
  • Approve $500 million ($50m Prop. 56 and $450m FF) and placeholder trailer bill language for family planning services.
  • Approve $240 million ($120m Prop. 56 and 120m FF) for the physician and dentist loan repayment program.
  • Approve $33 million ($11.3m Prop. 56 and $22.1m FF) for restoration of optician and optical lab services authorized in the 2017 Budget Act.
  • Reject the Administration’s proposed sunset of Prop. 56 DHCS investments.

Whole Person Care (WPC) Expansion. The Department of Health Care Services provided overviews of the additional $20 million included in the May Revision to expand WPC to new counties. The May Revision maintained the $100 million investment into WPC for supportive housing services.

While CHEAC and our county affiliates are supportive increased funding for WPC to support both current and new programs, we did raise concerns regarding the potential differences between allowable target populations, the inability to use funding on tenancy-based services and lack of consultation in the allocation methodology. DHCS expressed concern that current pilots are not maximizing tenancy-based services that are currently allowable under the Waiver.

Senate Sub. No. 3 Actions:

  • Approve $100m GF as budgeted to WPC pilots.
  • Approve $20m MHSA (state administration) as budgeted for new WPC counties.

Infectious Disease Control. The California Department of Public Health briefly described the Governor’s May Revision proposal to provide $40 million to local health departments and tribal communities for infectious disease prevention, testing, and treatment. The proposal would allocate $8 million to state operations for four positions and contracts for expert support and $32 million for local assistance.

The LAO raised questions about the high share of state operations funding, whether funds would be provided in a one-time grant or on an annual basis over four years, and how CDPH would coordinate with tribal communities. The Department of Finance indicated the disbursement of funding would be determined by CDPH in consultation with stakeholders. Legislators expressed further concerns with the large share of state operations funding and the need to ensure the effective use of this funding.

Senate Sub. No. 3 Actions:

  • Approve $4 million GF for state operations.
  • Approve $36 million GF for local assistance for grants to local health jurisdictions and tribal communities.
  • Approve placeholder budget bill language to require CDPH to provide grants in a lump sum available for four years, create an allocation methodology in consultation with local health jurisdictions and allocate $1 million of the $36 million local assistance grant funding to tribal communities.

Proposition 64 – Cannabis Surveillance and Education. CDPH presented their May Revision proposal to dedicate $12 million in Proposition 64 funding for cannabis surveillance and education. The Administration seeks to build a robust real-time data system that would inform their education and prevention strategies.

The LAO inquired about whether the data system would include other substances beyond cannabis. In both the Senate and Assembly, legislators were interested in the data sets to be collected and education and messaging of CDPH to be applied.

Senate Sub 3 ActionsNo action required.

California Home Visiting Program (CHVP) and Black Infant Health (BIH). In Senate Subcommittee No. 3, CDPH briefly presented their May Revision proposal to further maximize the General Fund investments included in the January budget proposal through the drawing down of federal funding.

Senate Sub. No. 3 Actions:

  • Approved $23 million GF for CHVP and $7.5 million GF for BIH as requested.
  • Maintain state operations funding at $2 million for CHVP and $500,000 for BIH.
  • Redirect additional Federal Fund reimbursements of $22.9 million CHVP and $12 million BIH to local assistance.
  • Adopt placeholder budget bill language to allow BIH expenditures to be used by local health jurisdictions for programs implemented under the California Perinatal Equity Initiative.

In-Home Supportive Services. The Administration briefly presented their May Revision proposal related to IHSS, which remains the same proposal from January (including eliminating the diversion of health and mental health growth beginning in FY 2019-20) with updated caseload, realignment projections, and cost estimates. As a result, the Administration is requesting an additional $55 million.

Senate Sub. No. 3 Actions:

  • Approve May Revision adjustments to the IHSS maintenance-of-effort (MOE).
  • Adopt placeholder trailer bill language to reduce the IHSS MOE inflation factor to four percent only when a collective bargaining agreement is in place with wages above the state minimum wage.

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