Senate, Assembly Move Toward Finalization of 2020 Budget Act
This week, the Senate and Assembly each took a series of actions as they work to meet the June 15 constitutional deadline to pass a budget. Below, we detail these actions:
Senate Subcommittee No. 3 Examines Health and Human Services Issues
On Sunday, the Senate Budget and Fiscal Review Subcommittee No. 3 on Health and Human Services convened a hearing to assess items included in the Governor’s May Revision. The hearing included remote participation from representatives from the California Health and Human Services (CHHS) Agency, California Department of Public Health (CDPH), Department of Health Care Services (DHCS), Emergency Medical Services Authority (EMSA), Office of Statewide Health Planning and Development (OSHPD), and other departments under CHHS.
DHCS Director Dr. Bradley Gilbert and Chief Deputy Director and State Medicaid Director Jacey Cooper presented DHCS’ items, walking subcommittee members through the Administration’s proposed May Revision modifications. Ms. Cooper detailed DHCS’ assumptions in Medi-Cal caseload changes due to COVID-19, including ongoing conversations between DHCS and the Legislative Analyst’s Office (LAO) regarding LAO’s assumptions on the caseload mix resulting in less General Fund costs. Ms. Cooper detailed the department’s success in obtaining COVID-19 flexibilities from the federal government around benefits, telehealth and telephonic services, and an enhanced Federal Medical Assistance Percentage (FMAP) match, among other areas. DHCS continues to explore the continuation of expanded telehealth and telephonic services beyond the COVID-19 pandemic emergency to ensure additional access to health services throughout the state.
In addressing the state’s projected budget deficit, Ms. Cooper discussed the Administration’s proposed elimination and withdrawal of a series of investments, including the CalAIM initiative, optional Medi-Cal benefits, Proposition 56 supplemental payments to providers, and specified senior services programs, among others. Ms. Cooper provided the subcommittee an update on ongoing negotiations with the U.S. Centers for Medicare and Medicaid Services (CMS) regarding an extension of California’s Section 1115 Waiver and Section 1915b Waiver. DHCS indicated California has received several approvals of its disaster state plan amendment (SPA) and Section 1135 requests from CMS in response to COVID-19. Ms. Cooper also discussed DHCS’ ongoing oversight and monitoring roles of Medi-Cal managed care plans, as well as the state’s managed care organization (MCO) tax, home- and community-based programs for seniors and individuals with disabilities, dental managed care services, pharmacy services, and federal claiming activities.
Subcommittee members raised questions and expressed concerns around the proposed elimination of senior services programs, older adult Medi-Cal eligibility expansions, health care provider supplemental payments, behavioral health counselors in emergency departments, optional Medi-Cal benefits, and other areas. Notably, Subcommittee Chair Senator Richard Pan discussed the potential for costs to increase because of the Administration’s proposed budget cuts, particularly in areas of home- and community-based services for older adults.
The subcommittee rejected the Administration’s proposed elimination of the caregiver resource centers augmentation and the health insurance premium program, but approved as budgeted a handful of other items, including the MCO tax. Several items were held open, including the Administration’s proposal to eliminate case management for the Child Health and Disability Prevention Program conducted by local health departments.
CDPH Director Dr. Sonia Angell, joined by Chief Deputy Directors Susan Fanelli and Brandon Nunes, presented CDPH items detailed in the Governor’s May Revision. Mr. Nunes detailed updated figures on a variety of programs included the AIDS Drug Assistance Program (ADAP), Women, Infants, and Children (WIC) Program, and others, as well as updates on proposed reversions of investments in the farmworker health study, sickle cell disease program, and mental health disparities funding. Mr. Nunes also detailed CDPH’s proposed investment in lead poisoning prevention activities and indicated the proposed investment follows the recent California State Auditor report which recommended a series of program improvements.
CDPH Center for Health Care Quality Deputy Director Heidi Steinecker detailed the Administration’s response to COVID-19 in health care and skilled nursing facilities (SNFs) throughout the state. Ms. Steinecker discussed CDPH’s actions in deploying infection control strike teams, SNF oversight and monitoring, surge capacity for SNFs and other care facilities, required reporting of SNFs, and collaboration with local health departments statewide.
Sonja Petek from the LAO provided remarks on CDPH’s budget items, noting concerns with the Administration’s proposal to reduce funding to the Black Infant Health (BIH) program. Ms. Petek briefly discussed the services provided by BIH, potential health equity impacts, and disproportionate cases of COVID-19 among populations of color throughout the state. Similarly, Senator Melissa Hurtado expressed concerns with the Administration’s BIH proposal.
Both Senators Richard Pan and Melissa Melendez raised a handful of questions of CDPH representatives related to COVID-19 response activities, primarily around SNF protocols, testing capacity, and data reporting. Ms. Steinecker responded on behalf of CDPH by discussing COVID-19 containment planning by CDPH and local health departments, plans for testing SNF staff, and coordination activities with health care facilities. Senator Pan further inquired about funding being provided to local health departments to support contact tracing efforts. Ms. Fanelli detailed the state’s activities around contact tracing training and staff deployment, contact tracing data management, and federal funding allocated to local health departments to date under the CARES Act, but did not address plans for ongoing funding or .
The subcommittee approved the majority of CDPH’s budget items. However, the reversion of prior year savings for sickle cell centers, farmworker health study, and mental health disparities reduction grants were rejected. The BIH proposal was held open.
Assembly Convenes Committee of the Whole on the State Budget
On Tuesday, the Assembly convened a Committee of the Whole on the State Budget, a historic move that allowed for the full 80-member legislative body to receive presentations on the Governor’s FY 2020-21 May Revision Budget from the Department of Finance (DOF) and the Legislative Analyst’s Office (LAO). Notably, the last time a Committee of the Whole was convened in the Assembly was over 25 years ago.
In opening the Assembly’s proceedings, Speaker Anthony Rendon discussed the state’s drastically modified activities related to the budget, both in the state’s economic conditions as a result of COVID-19 and in the Assembly’s procedures for considering and acting upon the state budget. Assembly Budget Committee Chair Phil Ting was appointed chair of the Committee of the Whole and presided over the entirety of the committee’s activities. Assembly Member Ting discussed the major areas of consideration for the Assembly, including options available to the Legislature to address the state’s budget problem, how to assist Californians in the state’s economic recovery, and how to mitigate budgetary cuts to vital health and social services, among other areas.
The committee meeting began with a presentation from DOF Director Keely Bosler discussing the economic and budgetary impacts of the COVID-19 pandemic, resulting in the Administration’s projected $54.3 billion deficit. Ms. Bosler walked the Assembly through the major components of the Governor’s May Revision Budget, including the Administration’s identified solutions to address the budget problem in six areas: 1) cancelling proposed expansions other reductions ($8.4 billion); 2) using budget reserves ($8.8 billion); 3) borrowing, transferring, and deferring expenses ($10.4 billion); 4) new revenues ($4.4 billion); 5) federal funds ($8.3 billion); 6) trigger reductions that could be reversed with adequate federal financial support ($14.0 billion).
Ms. Bosler detailed federal funding support received by the state, including $1.3 billion for county public health, behavioral health, and other health and human services in responding to the COVID-19 pandemic. Ms. Bosler also detailed structural budgetary changes in public education, as well as the Administration’s efforts in enhancing state government efficiency by reassessing state office spaces, restricting nonessential travel, and reducing state hiring. On behalf of the Newsom Administration, Ms. Bosler committed to working with the Legislature on bolstering the state’s economy, getting residents back to work, and addressing ongoing budgetary deficits borne by the COVID-19 pandemic. DOF’s presentation was rounded out by the Newsom Administration’s continued plea for additional federal financial support for state and local governments.
LAO Gabriel Petek also addressed the Committee of the Whole, providing the Assembly with a descriptive overview of the LAO’s assessment of the Governor’s May Revision and the LAO’s recommendations of the Legislature in crafting the 2020 Budget Act. Mr. Petek’s presentation included data on direct COVID-19-related expenditures, including both expended funds and proposed funds, by the Newsom Administration to adequately respond to the ongoing pandemic. Mr. Petek pointed to a handful of the Governor’s proposed modifications and investments detailed in the May Revision for the Legislature’s further consideration, including the Administration’s corporate tax projections and reductions to higher education, judicial entities, and state employee compensation, among other areas. In looking ahead, Mr. Petek identified challenges and areas for further consideration by the Legislature in the multiyear budget outlook. Mr. Petek rounded out his presentation by discussing authority and oversight functions of the Legislature, particularly amid the COVID-19 pandemic. Mr. Petek expressed concerns with several of the Administration’s actions and proposals for their potential to erode the balance of power between the legislative and executive branches and urged the Legislature’s consideration in structuring the 2020 Budget Act to preserve the Legislature’s oversight function of the executive branch.
Each member was provided four minutes to provide statements on the Governor’s May Revision and to ask questions of DOF and the LAO. Members covered a wide range of topics, including job and economic recovery efforts, unemployment insurance claims, access to health services, safety net services, older adult and children’s services, emergency preparedness, wildfire prevention efforts, housing and homelessness activities, public education, environmental initiatives, public safety, criminal justice, and labor relations, among others.
Notably, Assembly Budget Subcommittee No. 1 on Health and Human Services Chair Joaquin Arambula discussed the widespread impacts of the COVID-19 pandemic on California’s vulnerable populations, including older adults, immigrants, children, and individuals with disabilities. Arambula discussed the state’s previous actions in expanding access to health care and extending health and social service benefits to residents, indicating his intent to protect programs and services to vulnerable populations despite the proposed reductions and eliminations included in the Governor’s May Revision. Similarly, Assembly Member Jim Wood decried the Administration’s approach in not funding preventive health services, eliminating critical programs to older adults and vulnerable populations, and cutting optional benefits in Medi-Cal.
The Committee of the Whole stretched over five hours and concluded with remarks from Assembly Members Jay Obernolte and Phil Ting reiterating the Assembly’s commitment to work with the Administration to craft a 2020 Budget Act. No actions were taken. The committee’s program is available here and a video recording of the proceedings is available here.
Senate Budget & Fiscal Review Committee Sets Forth Its 2020 Budget Act Framework
On Thursday, the full Senate Budget & Fiscal Review Committee convened for a hearing to finalize its budget framework. Budget & Fiscal Review Committee Chair Senator Holly Mitchell opened Thursday’s hearing with a moment of silence in memoriam of all residents and individuals “who have been plagued by both a virus and ignorance,” and provided remarks in regard to the historic situation in which California finds itself with a $54.3 billion budget shortfall and economic issues as a result of the ongoing pandemic.
Chair Mitchell provided highlights of the Senate’s proposed version of the budget, detailing the Senate’s approach in closing the budget shortfall, “triggering off” investments with adequate federal financial support, and use of budgetary reserves. Notably, Chair Mitchell indicated the Senate utilized the Governor’s May Revision framework but adds a “couple key differences” to safeguard California’s safety net programs and services for the state’s most vulnerable residents. Among those key differences are $600 million in 1991 realignment backfill for child welfare, $250 million for local homelessness programs, and $42 million for an Earned Income Tax Credit (EITC) expansion.
Legislative Analyst Gabriel Petek further detailed the Senate’s budget, walking the full Budget and Fiscal Review Committee through the budget items of significant difference between the Senate’s plan and the Governor’s May Revision. Mr. Petek discussed the Senate’s approach in utilizing $8.3 billion in budgetary reserves, deferring, transferring, or borrowing $9.3 billion, and anticipating $3.6 billion in savings in health and human services based on the Senate’s differing caseload-mix projections, among other key budget mechanisms.
The Senate’s budget framework includes trigger solutions upon receipt of federal financial assistance similar to the Governor’s May Revision. However, the Senate’s version flips the presumption and budgets as though federal funds will be received and “triggers on” or pulls back solutions should federal funds not be received. Recall, the Governor’s May Revision proposes $14 billion in budget cuts and is based on the presumption that federal funds will not be received; if funds are received, those cuts would be “triggered off.” Further, the Senate’s version related to federal financial assistance sets an effective date of October 1, 2020, allowing Congress more time to act to provide financial relief to state and local governments. Under the Governor’s May Revision, the proposed cuts would occur July 1, 2020.The Senate’s version also instead proposes other solutions to be “triggered” as opposed to making significant cuts to education and health and human services programs and benefits as the Governor’s May Revision proposes.
During Thursday’s hearing, the committee discussed a series of items related to CalWORKs, education, public safety, and labor. Notably, the Senate also discussed its legislative proposal to backfill 1991 Realignment for child welfare services using $600 million General Fund subject to the Senate’s trigger plan. Senator John Moorlach discussed the legislative proposal, indicating his support of the backfill funding and querying DOF and LAO regarding the trigger mechanism of the proposal. Senator Moorlach, in referencing the trigger mechanism and reliance on federal financial support, urged the Administration not to “hold this hostage” over the 58 counties.
Thursday’s hearing featured over 90 callers for public comment. CHEAC Executive Director Michelle Gibbons during public comment discussed the role of local health departments in communities throughout the state, particularly as it relates to COVID-19 response. Ms. Gibbons urged the Legislature to backfill 1991 health realignment, and urged further investments to bolster the public health infrastructure.
The committee convened its hearing by voting on its budget framework. Below, we detail the committee’s actions of interest to CHEAC Members:
|Item||Governor’s May Revision||Senate Budget Framework|
|Black Infant Health (BIH) Program||Cuts $4.5 million General Fund to BIH Program||Reject Governor’s May Revision proposal; adopts Senate’s trigger plan|
|EPSDT (CHDP) Case Management Allocation to Counties||Eliminates all funding for CHDP county case management||Rejects Governor’s May Revision proposal; adopts Senate’s trigger plan|
|Vaping Tax||Maintains January Budget proposal to impose nicotine-content-based tax||Defers the proposed tax until a later date|
|Full-Scope Medi-Cal Coverage for individuals age 65 and over regardless of immigration status||Withdraws January Budget Proposal to expand eligibility||Maintains January Budget proposal to expand full-scope Medi-Cal to individuals age 65 and over regardless of immigration status, delays start date to January 2022; provides Governor authority to further delay implementation|
|Medi-Cal Optional Benefits||Eliminates all optional benefits; could be triggered off with adequate federal financial support||Rejects Governor’s May Revision proposal; adopts Senate’s trigger plan|
|Proposition 56 Supplemental Payments||Eliminates supplemental payments; could be triggered off with adequate federal financial support||Rejects Governor’s May Revision proposal; adopts Senate’s trigger plan|
|Proposition 56 Provider Loan Repayment Program||Cancels loan repayment program; could be triggered off with adequate federal financial support||Rejects Governor’s May Revision proposal; adopts Senate’s trigger plan|
|Multipurpose Senior Services Program (MSSP) and Community-Based Adult Services (CBAS)||Eliminates programs; could be triggered off with adequate federal financial support||Rejects Governor’s May Revision proposal; adopts Senate’s trigger plan|
|“Senior Penalty” and Medicare Part B Disregard||Reinstate “senior penalty” and eliminates the Medicare Part B Disregard||Rejects Governor’s May Revision proposal; adopts Senate’s trigger plan|
|County Human Services 1991 Realignment||(No action)||Provides $600 million General Fund backfill to assist with child welfare services costs; could be triggered off without adequate federal financial support|
Looking Ahead to the June 15 Constitutional Deadline
Recall, the Legislature has until June 15 to pass a balanced budget. With the Senate’s version of the budget adopted, negotiations between legislative leaders and the Newsom Administration are expected to continue. Assembly Speaker Anthony Rendon announced late Thursday after the Senate conducted its budget hearings that he looks “forward to working together to hash out remaining differences” in budget items. CHEAC will continue to keep its members updated as information becomes available.