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.