May 29, 2020 Edition

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

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

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.

The full agenda for health items is available here. Outcomes of the subcommittees actions on budget items are available here. A video recording of the subcommittee hearing is available here.

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:

Thursday’s hearing agenda is available here and a video recording of the hearing is available here. An overview of the Senate’s budget framework is available here.

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.

Legislature on Fast Track

Despite the holiday weekend, the Senate conducted budget hearings throughout the Memorial Day weekend, and with the shortened week this week, they also wrapped up their policy committee hearings. As you may recall, the Assembly returned to Sacramento a week earlier than the Senate, so there was some catch-up to do in the upper chamber. No policy hearings of note occurred on bills of interest to CHEAC. The Assembly was focused on their Committee of the Whole to debate State budget proposals (please see our budget update for more details). Next week’s legislative hearings will pivot to the houses’ respective Appropriations Committees with the Senate convening on Monday and the Assembly to take up their bills on Tuesday.

This week’s CHEAC Weekly Bill Chart is available here.

LAO Issues Report on Medi-Cal Caseload Figures, Estimates Administration Overstates General Fund Costs

The Legislative Analyst’s Office (LAO) recently issued a report detailing Medi-Cal caseload and cost changes included in the Governor’s FY 2020-21 May Revision. In its report, the LAO assesses the Newsom Administration’s caseload projections, determining that the Administration’s caseload figures are on track with the LAO’s Spring Fiscal Outlook. However, the LAO finds the Administration’s projection for around $3 billion in higher General Fund costs in Medi-Cal due to COVID-19-related caseload increases are more than double than what the LAO projects.

Further, the LAO raises questions around the Administration’s assumptions about the mix of Californians who are likely to join Medi-Cal, namely high new enrollment figures among seniors and persons with disabilities (who tend to have higher costs) and low new enrollment figures among parents, childless adults, and children (who tend to have lower costs). As such, the LAO estimates that the Administration’s assumptions related to new Medi-Cal entrants results in nearly $750 million in overstated General Fund costs. The LAO provides the Legislature with revised figures on caseload increases and associated costs and ultimately recommends the Legislature decrease its budget figure for Medi-Cal costs in the 2020 Budget Act.

The full LAO post is available here.

CDPH Issues Chronic Disease Burden Report

This week, the California Department of Public Health (CDPH) issued The Burden of Chronic Disease, Injury, and Environmental Exposure, California, Second Edition. The Burden Report provides a snapshot of the burden of chronic conditions, injuries, and environmental exposures in California and showcases successes in moving toward achieving healthy communities. The second edition of the report is an expansion of the content covered in the first version from 2013. The report included 15 chronic conditions and the impact that environmental and occupational exposure on health, in addition to emerging issues such as the opioid epidemic and the legalization of recreational use of cannabis by adults.

The full report is available here.

DHCS Proposes New Medi-Cal Long-Term Care at Home Benefit

Late last week, the Department of Health Care Services (DHCS) announced that it will embark on the development of a potential new “Long-Term Care at Home” benefit in the Medi-Cal program. This new benefit is intended to help address the COVID-19 pandemic and provide eligible beneficiaries with a coordinated and bundled set of home and community services to help vulnerable adults statewide stay healthy at home.

The proposed Long-Term Care at Home benefit will include: 1) individual, person-centered assessment; 2) transition services; 3) case management; and 4) home- and community-based services. The benefit is proposed to be bundled with existing Medi-Cal benefits and offered through both Medi-Cal managed care and fee-for-service delivery systems. The benefit is intended to support home care for individuals transferring from hospitals to home, from skilled nursing facilities to home or to prevent a skilled nursing facility stay. The benefit also aims to allow skilled nursing facilities and residential care facilities to decompress so fewer people are exposed to higher risks of viral infection in communal settings.

DHCS plans to develop this benefit in coordination with the Master Plan for Aging Stakeholder Advisory Committee, the California Department of Social Services, Department of Aging, Department of Public Health, Department of Developmental Services, and Department of Rehabilitation. DHCS will further seek approval from the U.S. Centers for Medicare and Medicaid Services (CMS) and aims to implement the benefit in early 2021. Notably, the benefit is intended to be cost-neutral for the state General Fund.

Additional information on DHCS’ proposed new benefit is expected to be posted online in the coming days.

Newsom Announces Text-to-911, Domestic Violence Victim Support

Today, Governor Gavin Newsom and First Partner Jennifer Siebel Newsom announced new initiatives related to 911 services and services for domestic violence victims amid the ongoing COVID-19 pandemic. The California Office of Emergency Services (OES) Public Safety Communications Branch rolled out “text-to-911” capability throughout the state, allowing individuals to text ‘911’ for emergency services. According to the Governor’s Office, 75 percent of California’s population can actively send texts to 911, including almost every major metropolitan area. Cal OES is also in the process of enabling “text from 911” capabilities at all public safety answering points (PSAPs) throughout the state. This will allow 911 dispatchers to text a caller back in the event their call is disconnected.

Additionally, the Governor announced $5.3 million in existing Victims of Crime Act funds to three coalitions to support domestic violence victims during the COVID-19 pandemic: 1) $3 million to California Partnership to End Domestic Violence; 2) $1.6 million to California Coalition on Sexual Assault; and 3) $721,337 to Children’s Advocacy Centers of California. These three entities will distribute funds to local victim service providers. In addition to the state funds, the Women’s Foundation of California has committed to working with the state to raise private funds that support domestic violence organizations.

Further, the Governor’s Office announced a partnership with the California Partnership to End Domestic Violence, Airbnb, and Uber to provide free accommodations up to 30 days and transportation to victims of domestic violence. The partnership will launch in Sacramento, San Francisco, and Los Angeles areas with the intent to expand the pilot to other areas within the state.

The announcement from the Governor’s Office is available here.