Policy Focus: Proposed 2015-2016 California Budget

The 2015-2016 budget proposed by Governor Brown is $164.7 billion. Schools and other services of interest to UACF are expected to benefit from the positive surge of the state economy. UACF’s advocacy efforts primarily will focus on the education budget and parts of the health and human services budget.

In addition, this coming year will be the last with the full revenues of Proposition 30. The quarter-cent sales tax increase under the measure will expire at the end of 2016, and the income tax rates on the state’s wealthiest residents will expire at the end of 2018. As it was intended, the measure has provided the state with increased resources on a short‑term basis to give the economy time to recover. Under the measure, the state has been able to restore funding for education and the safety net, expand health care coverage, and pay off its budgetary borrowing. Still, the state has $227 billion in long‑term costs, debts, and liabilities. The vast majority of these liabilities, $222 billion, are related to retirement costs of state and University of California employees for the next 15 years.

Proposition 2 provides a dedicated funding source to help address these liabilities, but that funding alone will not eliminate them. In addition, the state faces $66 billion more in identified deferred maintenance on its infrastructure. Already, the commitments that the state made in the past two years are straining the state’s finances. Under a projection of current policies, the state would begin to spend more than it receives in annual revenues by 2018‑2019 (by about $1 billion). While forecasts four years into the future are subject to great uncertainty (and the state would have operating reserves on hand to maintain a balanced budget in that year), it is obvious that the state cannot take on new ongoing spending commitments.

To view the 2015-2016 California Governor’s Budget, click here.


Education Increases K-12 School Spending by $2,600 per Student Compared to 2011-2012

For K-12 schools, funding levels will increase by more than $2,600 per student in 2015-2016 over 2011-2012 levels. This reinvestment provides the opportunity to correct historical inequities in school district funding with continued implementation of the Local Control Funding Formula. Rising state revenues mean that the state can continue implementing the formula well ahead of schedule. When the formula was adopted in 2013-2014, funding was expected to be $47 billion in 2015-2016. The budget provides almost $4 billion more – with the formula instead allocating $50.7 billion this coming year.

In the fiscal year starting July 1, 2015, schools are expected to receive $7.8 billion more than Gov. Jerry Brown had budgeted for them last year. That’s about a 12 percent increase, according to the state budget. “The state cut schools disproportionately to other programs and services during the recession, and so they are entitled to a bigger share in the recovery,” said Brown at a press conference, January 9, 2015.

The surge in revenue will rise what the state is obligated to spend through Proposition 98 next year for schools and community colleges to $65.7 billion. K-12 schools will get about 90 percent of the total, with the bulk of new money – $4 billion – going to the Local Control Funding Formula, a new system channeling more funding to districts with high concentrations of English learners and low-income students. It is now the primary source of schools’ operating budgets. That spending total would be an 8.7 percent increase, an average of about $670 more per student than districts got last year. The increase for schools, Brown said, “protects kids, particularly those who face the biggest barriers to success.” (ED Parents of children with mental and behavioral challenges will have a greater chance to obtain the individualized services for their children with IEPs. Early identification of these challenges will also be greater as schools implement new programs on more campuses throughout the state.

Health and Human Services

The Department of Health and Human Services’ 2015-2016 Budget Includes $142 Billion ($31 billion general fund and $111 billion in other funds)

The Health and Human Services Agency oversees departments and other state entities that provide health and social services to California’s vulnerable and at-risk residents. The Budget includes $142 billion ($31 billion General Fund and $111 billion other funds) for these programs. California continues its implementation of federal health care reform, which has enabled millions of Californians to obtain health care coverage. Many Californians now have access to affordable, quality health insurance coverage through Covered California, the new health insurance marketplace. By law, health coverage cannot be dropped or denied because of pre‑existing conditions or illness. California also expanded Medi‑Cal to cover childless adults and parent/caretaker relatives with incomes up to 138 percent of the federal poverty level, and expanded Medi‑Cal mental health and substance use disorder benefits.


Medi‑Cal is a public health insurance program that provides comprehensive health care services at no or low cost for low‑income individuals. The federal government mandates basic services including physician services, family nurse practitioner services, nursing facility services, hospital inpatient and outpatient services, lab and outpatient services, laboratory and radiology services, family planning, and Early and Periodic Screening and Diagnosis and Treatment services for children (EPSDT). In addition to these mandatory services, the state provides optional benefits such as outpatient drugs, home and community‑based services, and medical equipment. DHCS also operates the California Children’s Services Program, the Primary and Rural Health Program, the Targeted Low‑Income Children’s Program (formerly Healthy Families Program) and oversees county‑operated community mental health and substance use disorder programs.

Since 2012‑2013, total Medi‑Cal benefit costs grew 10 percent annually (approximately $1.5 billion per year) to $81.3 billion in 2014‑2015 because of a combination of health care cost inflation, program expansions, and caseload growth. Medi‑Cal General Fund spending is projected to increase 4.3 percent from $17.8 billion in 2014‑2015 to $18.6 billion in 2015‑2016. Growth in Medi‑Cal General Fund expenditures has been reduced through the use of other funding sources, including the Managed Care Organization Tax (authorized in 2013‑2014), the Hospital  Quality Assurance Fee (first authorized in 2011‑2012), intergovernmental transfers, and Medicaid waivers that allow claiming of federal funds for state‑only health care costs.

The budget assumes that caseload will increase approximately 2.1 percent from 2014‑2015 to 2015‑2016 (from 11.9 million to 12.2 million), largely because of the continued implementation of federal health care reform. Federal health care reform will increase the program’s caseload by an estimated 1 million in 2014‑2015 and 1.1 million in 2015‑2016. In the short term, the state will receive 100 percent federal funding for non‑disabled childless adults with income up to 138 percent of the federal poverty level, and parent and caretaker relatives with incomes between 109 and 138 percent of the federal poverty level. With these trends, approximately 32 percent of the state’s total population will be enrolled in Medi‑Cal. Caseload has increased from 7.9 million in 2012‑2013 to 12.2 million in 2015‑2016. Since 2012-2013, total Medi‑Cal benefit costs grew 10 percent annually (approximately $1.5 billion per year) to $81.3 billion in 2014‑2015 because of a combination of health care cost inflation, program expansions, and caseload growth. Medi‑Cal General Fund spending is projected to increase 4.3 percent from $17.8 billion in 2014‑2015 to $18.6 billion in 2015‑2016.

Behavioral Health

In July 2014, the federal government required behavioral health treatment services be covered under Medicaid Early and Periodic Screening, Diagnosis and Treatment requirements for services delivered on or after July 1, 2014. The budget includes costs of $190 million ($89 million General Fund) in 2014‑2015 and $320 million ($151 million General Fund) in 2015‑2016 for behavioral health treatment services for individuals with Autism Spectrum Disorder up to 21 years of age. Chapter 40, Statutes of 2014 (SB 870), requires the Department of Health Care Services to implement behavioral health treatment services, including Applied Behavioral Analysis, to the extent required by the federal government. Provider Rates – Chapter 3, Statutes of 2011 (AB 97), reduced most Medi‑Cal provider rates by up to 10 percent. The 2014 Budget Act assumed retroactive recoupment of rate reductions for some services in fee‑for‑service Medi‑Cal and prospective savings from rate reductions in fee‑for‑service and managed care.

The 2014 Budget Act also exempted additional providers, including high‑cost prescription drugs, specialty physician services, various distinct‑part nursing facilities and nonprofit pediatric dental surgery centers. The budget reflects an estimated $130 million annual General Fund cost for these exemptions.

Child Welfare

The Department of Social Services (DSS) serves, aids, and protects needy and vulnerable children and adults in ways that strengthen and preserve families, encourage personal responsibility, and foster independence. The Department’s major programs include CalWORKs, Cal-Fresh, In‑Home Supportive Services (IHSS), Supplemental Security Income/State Supplementary Payment (SSI/SSP), Child Welfare Services, Community Care Licensing, and Disability Determination. The Budget includes $20.3 billion ($7.2 billion General Fund) for DSS, an increase of $244.7 million General Fund from the revised 2014‑2015 budget, primarily due to an increase in IHSS expenditures.

Interagency Child Abuse and Neglect (ICAN) Investigation Reports Grants – the budget includes $4 million General Fund to support an optional grant program for counties to report instances of suspected child abuse or neglect to local law enforcement agencies.

The Budget includes $9.2 million General Fund to provide a state‑funded energy assistance subsidy for Cal-Fresh recipients to comply with federal changes regarding the minimum energy assistance benefit that must be received by a household in order to access the standard utility allowance. This program increases household monthly food payments by an average of $62 for over 320,000 families. Additionally, the Department of Health Care Services (DHCS) and the Department of Social Services (DSS) have held stakeholder meetings over the last 3 years to improve service delivery to more of a one-stop-shop. They are also working to make medical records available to all service entities serving families, children, and consumers. This could mean that with your permission the therapist working with your family could have access to your physical medical records, which would result in whole-person treatment.

Foster Care and the Continuum of Care Reform

The budget includes $9.6 million ($7 million General Fund) to begin implementing the Continuum of Care Reform. This reform effort builds upon past collaborative system improvements, including the development of preventive services to help keep children safely in their homes, kinship guardian programs to help increase long‑term family care for children, extended foster care supports through age 20, and wraparound and increased mental health services to help support successful reunifications. In 2012, in response to a desire to reduce the number of foster care youth residing in congregate care for extended periods of time, the Legislature directed the Department of Social Services (DSS) to develop a report identifying recommendations to improve the foster care system. The report is being released concurrently with the Governor’s budget. It is called the Continuum of Care Reform and can be accessed here.

The report contains 19 interdependent recommendations, two of which require action in the 2015-2016 budget year. This increases the availability of home-based care through recruitment and retention efforts, bolstering the social worker capacity of foster family agencies to provide services in home-based family care placements. Implementation will require a multi-year effort with continuing consultation with policymakers, counties, youth, families, and practitioners.

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