Governor Proposes $9 Billion in New Massive Cuts; Entire Programs Targeted for Elimination

Governor Proposes $9 Billion in New Massive Cuts; Entire Programs Targeted for Elimination

California’s budget situation is growing worse with the budget deficit projected at over $24 billion by the end of the 2009-2010 State budget year. Governor Schwarzenegger stated that California’s day of reckoning is here in his speech to legislators on June 2nd, and has proposed almost $9 billion in new massive, permanent spending cuts and program eliminations to health and human services, education and other areas of the State budget – all of which are in addition to the cuts he proposed in his May Budget Revision. He also proposed layoffs for 5,000 state workers, and $7.5 billion in borrowing from state and local government and investors. No action on the Governor’s proposals are expected until at least mid June.

In addition, legislative analysts have said that even if California adopts all of the Governor’s proposed cuts, the budget deficit for the 2010-2011 State Budget year could still be over $15 billion. The non-partisan Legislative Analyst Office (LAO), who works directly for the Legislature and provides analysis, recommendations and review of budget issues, also estimates that if California’s budget shortfall and cash flow crisis are not resolved soon, the State may not be able to pay its bills after July 1st.

Last week’s proposed cuts to health and human services include: elimination of several senior programs, such as Multiple Senior Services Program (MSSP); major funding reductions to In-Home Supportive Services, Medi-Cal, regional centers, mental health services, and Supplemental Security Income/State Supplemental Payment (SSI/SSP) grant amounts; elimination of Healthy Families, CalWORKS, Cash Assistance Program for Immigrants, and Adult Day Health Centers; and cuts in state funding to the community care licensing program and more.

Below is a summary of these most recent proposed cuts, followed by a summary of the cuts already approved and effective as of July 1, 2009. Also listed are legislative contacts for submitting your comments regarding the Governor’s additional proposed cuts, and resources for more information on the State’s budget.

Summary of Governor’s Additional Proposed Cuts

Medi-Cal – LIMIT Medi-Cal Eligibility and Reduce Other Medi-Cal Costs

The American Recovery and Reinvestment Act (ARRA) provided increased funds to states for Medicaid programs. To access the stimulus funds, states must ensure that the Medicaid eligibility rules are not more restrictive than the rule in effect on July 1, 2008. Thus, to make cuts in Medi-Cal, including limiting eligibility, the Governor requested a waiver from the federal government to allow California to make $750 million in cuts despite the provision in ARRA. Yet, more than a waiver may be needed to enact the Medicaid eligibility cuts without jeopardizing California’s $8 billion in federal Medicaid funds, according the Western Center on Law and Poverty. The only way to make the eligibility cuts without jeopardizing the funds would be an act of Congress changing the ARRA provision.

In addition to the proposed $750 million in cuts, last week the Governor proposed another $250 million cut to the Medi-Cal program, which comes to a total of $1 billion in unspecified cuts to Medi-Cal, if the waiver is granted by the federal government and the state decides to enact the eligibility cuts. If approved, these cuts could deny coverage to nearly 1 million California children, parents, seniors and people with disabilities.

Medi-Cal – ELIMINATE Certain State Only Programs

Proposes eliminating certain “state-only” programs that don’t get federal funds, thus denying coverage to specific populations for breast and cervical cancer treatment, postpartum care, dialysis, and non-digestive nutrition.

  • 2009-2010 State Budget year: $34.4 million cut (state general funds)
  • 2010-2011 State Budget year: $57.8 million cut (state general funds)

Medi-Cal – SUSPEND Skilled Nursing Facility Costs of Living Increase

Proposes suspending an estimated 5% cost of living increase effective August 1, 2009 for skilled nursing facilities.

  • 2009-2010 State Budget year: $67.1 million cut (state general funds)
  • 2010-2011 State Budget year: $109.8 million cut (state general funds)

Multipurpose Senior Services Program (MSSP) – ELIMINATE

Proposes eliminating the Multipurpose Senior Services Program and senior community-based services programs. MSSP currently has programs in 41 counties serving over 11,000 people.

  • 2009-2010 State Budget Year: $24.2 million cut (state general funds)
  • 2010-2011 State Budget Year: $35.3 million cut (state general funds)

Medi-Cal Adult Day Health Care (ADHC) Program – ELIMINATE

Proposes eliminating the ADHC program to cut state spending by $117 million. Advocates argue that nursing home costs for the state would cancel out the estimated savings from eliminating the ADHC program if just 20% of the program’s 38,000 beneficiaries move into nursing homes (see California Healthline article, 6.1.09).

In-Home Supportive Services – REDUCE Services for Only the Most Functionally Impaired

Proposes limiting the domestic and related services and the IHSS share-of-cost buy-out to the most functionally impaired persons, and further limiting state participation in IHSS wages from what they will be as of July 1st (see section below). Estimated savings of $301.5 million.

Cash Assistance Program for Immigrants (CAPI) & California Food Assistance Program (CFAP) – ELIMINATE

Proposes eliminating both programs. CAPI provides cash assistance to approximately 12,000 aged, blind, and disabled legal immigrants, who would be eligible for the federal SSI/SSP program but are not eligible because of their immigration status. CFAP provides benefits to more than 22,000 low-income legal non-citizens between the ages of 18 and 65, who meet all the eligibility requirements for the federal Food Stamp program but have resided in the United States for fewer than 5 years. Estimated savings of $120.2 million.

Supplemental Security Income/State Supplemental Payment (SSI/SSP) Grants – REDUCE to the Minimum Federally Allowable Levels

Proposes reducing SSI/SSP grants to $830 for an individual and $1,407 for a couple per month. If approved, this will be the 3rd cut this year. Reduced grant rates would be effective September 1, 2009, cutting over $500 million in benefits to 1.25 million blind, aged and disabled persons over the next year. See below for cuts effective July 1st.

Mental Health Managed Care Services and Early Periodic Screening, Diagnosis and Treatment Services (EPSDT) – REDUCE FUNDING

Proposes reducing funding for these services but retaining funding for Mental Health Managed Care services for acute inpatient services and prescription drugs for Medi-Cal enrollees only. EPSDT reduction would result from eliminating State general fund money for county programs identified as new programs in 2007-2008 and 2008-2009.

  • 2009-2010 State Budget Year: $92 million cut (state general funds)
  • 2010-2011 State Budget Year: $92 million cut (state general funds)

Community Care Licensing – ELIMINATE STATE FUNDING

Proposes eliminating state funding for the Community Care Licensing program. According to the Governor, the reduction would be off-set by a fee increase to maintain “critical health and safety standards.”

  • 2009-2010 State Budget Year: $19.5 million cut (state general funds)
  • 2010-2011 State Budget Year: $39 million cut (state general funds)

AIDS Drug Assistance Program – REDUCE FUNDING

Proposes reducing funding for the AIDS Drug Assistance Program (ADAP) and for other Office of AIDS programs. Specific proposals include: expanding client cost-sharing and limiting the formulary in the AIDS Drug Assistance Program; reducing and eliminating other HIV/AIDS programs such as HIV Counseling and Testing, Epidemiologic Studies/Surveillance, Therapeutic Monitoring Program, and Home and Community-Based Care.

  • 2009-2010 State Budget Year: $55.5 million cut (state general funds)
  • 2010-2011 State Budget Year: $58.9 million cut (state general funds)

CALWORKS Program – ELIMINATE

Proposes eliminating California’s “welfare to work” program formally called the California Work Opportunity and Responsibility to Kids program, that includes thousands of children and parents with special needs. Program serves over 500,000 people.

  • 2009-2010 State Budget Year: $1.31 billion cut (state general funds)
  • 2010-2011 State Budget Year: $1.77 billion cut (state general funds)

Healthy Families Program – ELIMINATE

Proposes eliminating funding for this program and assumes that the program will phase out “as quickly as possible” after providing notice to those persons in the program. Program serves over 900,000 children.

  • 2009-2010 State Budget Year: $247.8 million cut (state general funds)
  • 2010-2011 State Budget Year: $322.4 million cut (state general funds)

Community Clinic Programs — ELIMINATE FUNDING

Proposes eliminating state funding for Indian Health, Seasonal and Agricultural and Migratory Workers, Rural Health Services Development, and Expanded Access to Primary Care (EAPC).

  • 2009-2010 State Budget Year: $34.2 million cut (state general funds)
  • 2010-2011 State Budget Year: $34.2 million cut (state general funds)

Summary of Health Care Related Cuts Scheduled to Happen on July 1st

(Note: these will most likely be greater due to the additional cuts proposed above.)

Medi-Cal

Eliminate Medi-Cal’s “optional” benefits for adults. “Optional” benefits are those that the federal government does not require state Medicaid programs to provide. The optional Medi-Cal benefits being cut include: adult dental, optometry, acupuncture, chiropractic, podiatry, audiology and speech therapy and psychology services, and incontinence creams and washes. See our blog article for more info on the impact of adult dental cuts.

These “optional” benefits cuts come to a total of $258.8 million during the 2009-2010 State Budget year beginning July 1, 2009.

Note: People in the Early and Periodic Screening, Diagnosis, and Treatment Program (EPSDT) and in a long-term care skilled nursing facility or intermediate care facility are exempted from this cut.

Public Hospitals

Cut $54 million to public hospitals (county-owned and University of California hospitals) via a 10% rate cut.

In-Home Supportive Services (IHSS)

  • Cap state participation (the state’s reimbursement to counties for IHSS wages and benefits) at $10.10/hour (meaning IHSS wages can be no higher than $9.50/hour with $0.60 for benefits). Twenty of California’s 58 counties currently pay IHSS providers wages and benefits that are more than $10.10/hour with Santa Clara County paying the most at $14.68/hour. This $78 million in cuts will affect over 139,170 IHSS providers.
  • Limit the existing share-of-cost buy-out payment for IHSS recipients to those who are eligible before July 1, 2009. Approximately 7,100 IHSS recipients currently have a share-of-cost (SOC) and enjoy the share-of-cost buy-out payment which the state provides to supplement the SOC they pay towards their IHSS services.

Barring new IHSS recipients who become eligible on or after July 1, 2009 from receiving the SOC buy-out payment will save $3.8 million in the 2009-2010 State Budget year. New IHSS recipients will then have to pay their own SOC, which on average amounts to over $400 each month in services before receiving coverage. Those who cannot afford the cost will lose their home care services.

Supplemental Security Income/State Supplemental Payment (SSI/SSP)

As of May 1, 2009, the SSI/SSP rates went down to last year’s amount, down $37 for individuals to $870/mo. and $55 for couples to $1,524/mo.. As of July 1, 2009, these grant rates will be cut an additional 2.3% for a $267.8 million savings. Thus, a $20/mo. cut for individuals, setting the rate at $850/mo.; and a $35/mo. cut for couples, setting the rate at $1,489/mo..

Exempted from this 2.3% reduction are people receiving SSI/SSP living in SSP living arrangements for Non-Medical Out-of-Home Care and Title XIX medical facilities, as well as those receiving a Restaurant Meal Allowance.

Submit Your Comments to Your State Legislature

For the first time, the State’s Budget Conference Committee is receiving public comments on the Governor’s additional cuts proposed last week and in his May revise. If you’re not able to come to a public hearing in person, you can submit your written comments to:

Assemblymember Noreen Evans, Chair
Assembly Budget Committee – Budget Conference Committee
State Capitol
Sacramento, CA 95814

Be sure to include your complete name and address. Also send a copy to the vice chair of the Budget Conference Committee, Senator Denise Ducheny (she is also the chair of the Senate Budget and Fiscal Review Committee).

Senator Denise Ducheny, Chair
Senate Budget and Fiscal Review Committee
State Capitol
Sacramento, CA 95814

Resources for More Information on the State Budget

Note: some information on the Governor’s recent proposed cuts was edited from the California Disability Community Action Network’s (CDCAN) 5/26/09 Alert.

Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.