March 27, 2020 Edition

Historic COVID-19 Emergency Spending Bill Passes Congress

Today the House of Representatives passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) via a voice vote. Speaker Pelosi acknowledged during her remarks on the floor that the CARES Act was not perfect and that Congress would have to do more in a fourth package.

Many representatives sat up in the gallery above the House floor in order to ensure members were both appropriately distanced from each other and to ensure a quorum on the floor. One member made clear he would object to voting via a voice vote thereby requiring members to return to Washington, DC. However, the House was quickly able to defeat the member’s request to force a roll call vote.

President Trump signed the bill just hours after its passage.

For more detailed information on the provisions contained within the CARES Act, please see our memo released on March 26.

Newsom Issues Additional COVID-19-Related Executive Orders

Over the past week, Governor Gavin Newsom issued three additional executive orders related to COVID-19 response activities.

Executive Order N-35-20 was issued on Saturday, March 21, 2020, and is referred to as an “omnibus” executive order. This order contains a wide array of actions to provide the state the ability to increase healthcare capacity in clinics, mobile health units, and adult day healthcare facilities. Local governments are also provided additional flexibility to utilize the skills of retired employees and reinforces the importance of the delivery of food, medicine, and emergency supplies.

Executive Order N-36-20 was issued on Tuesday March 26, 2020, and directs the California Department of Corrections and Rehabilitation (CDCR) to temporarily cease the intake and/or transfer of inmates and youth into the state’s 35 prisons and four youth correctional facilities. Inmates and youth will remain in county custody for the next 30 days; this timeframe can be extended if necessary. The executive order also directs the Board of Parole Hearings to develop a process to conduct all scheduled parole suitability hearings through videoconferencing starting no later than April 13, 2020, for the next 60 days. This process will facilitate remote participation of individuals typically in attendance, including staff, parole board members, victims, families, inmates, attorneys, and others.

Executive Order N-37-20 was issued today, March 27, 2020, and halts evictions for 60 days for any tenant who is served while this order is in effect, under the following conditions: 1) tenants must have paid rent due to the landlord prior to the date of this Executive Order; 2) tenants must notify the landlord in writing, prior to rent being due or within 7 days after the due date, of their inability to pay all or some of the rent due to COVID-19 related reasons. Tenants must retain documentation to support their inability to pay. This Executive Order will remain in effect through May 31, 2020. Also, in the event this order conflicts with EO N-28-20, which was signed on March 16, 2020 and included authorization for local governments to halt evictions for renters and homeowners, EO N37-20 would supersede that order.

CMS Approves DHCS Section 1135 Waiver Requests; CDPH Requests Additional Flexibilities

On  Monday, the Centers for Medicare and Medicaid Services (CMS) approved a first wave of Section 1135 Waiver requests submitted by the California Department of Health Care Services (DHCS) to  assist in California’s COVID-19 response efforts. Recall, DHCS submitted two request letters, the first on March 16and the second on March 19. In those letters, DHCS sought flexibility on key areas, including prior authorizations eligibility, telehealth, service authorizations, administrative timelines and rate setting methodologies. DHCS guidance related to requests approved by CMS can be found on the DHCS COVID-19 Response page.

The California Department of Public Health (CDPH) also submitted a letter to CMS requesting Section 1135 Waiver flexibilities around health care facility staffing and facility space to provide additional surge capacity. CDPH also requested modifications to key program requirements to facilitate access to care for additional patients. CMS provided several blanket Section1135 Waiver authorities, which can be found here. Additional CMS determinations of specific state requests will be provided on a rolling basis.

DOF to Reevaluate All Budget Change Requests, Transfers $1.3B to Disaster Response-Emergency Operations Account

This week, the California Department of Finance (DOF) took two significant actions related to the ongoing COVID-19 emergency.

DOF Budget Letter

On Tuesday, DOF issued a budget letter to all agency secretaries and departmental directors and senior staff notifying them of severe economic impacts, including a significant drop in economic activity with corresponding negative effects on anticipated revenues in the current and upcoming fiscal years, to California’s economy due to COVID-19. As such, DOF will reevaluate all proposed agency and departmental budget changes within the context of a workload budget, based on the merits of each proposal and ultimately subject to the availability of funding.

Current statute defines a “workload budget” as “the budget year cost of currently authorized services, adjusted for changes in enrollment, caseload, or population, or all of these changes” and additional specified factors, including statutory cost-of-living adjustments, chaptered legislation, one-time expenditures, or federal mandates. DOF further indicates that agencies and departments should have no expectation of full funding for either new or existing proposals and adjustments. The only exception to DOF’s new evaluation criteria will be proposals or adjustments necessary to support the emergency response to COVID-19; all other new requests which fall outside of these parameters will not be reviewed by DOF.

$1.3 Billion Fund Transfer for COVID-19 Response Activities

On Wednesday, DOF notified chairpersons of the Senate and Assembly Budget and Appropriations Committees of a transfer of $1.3 billion from the Special Fund for Economic Uncertainties (SFEU) to the Disaster Response-Emergency Operations Account (DREOA). The SFEU serves as the state’s discretionary reserve and may be used for a variety of needs, including disaster response.

DOF indicates that these funds will be utilized to secure personal protective equipment (PPE) and critical medical supplies, enhance the surge capacity of hospitals and medical facilities, and procure any other items necessary to support the state’s efforts to protect public health and safety and reduce the spread of the COVID-19 outbreak.