Schwarzenegger Signs California State Budget, But Not Before Cutting Mental Health, Medi-Cal, and Discount Prescription Programs

"...while I support the goals of the program, this reduction is necessary to limit program expansions and to help bring ongoing expenditures in line with existing resources. To the extent counties find this program beneficial and cost-effective, it can be restructured to meet the needs of each county’s homeless population using other county funding sources, such as federal funds, realignment funds, or Proposition 63 funds. I am reducing Schedule (6) to eliminate the $12,000,000 legislative augmentation for the 5 percent rate restoration for mental health managed care. This technical veto is consistent with the legislative action taken in [Budget] Item 4440-103-0001."

Mental health advocates say that the immediate effect of the funding cut by the Governor could result in thousands of those people in the program being forced back on the streets at risk of hospitalization and incarceration. is that 4700 people who could be helped will be on the streets at risk of hospitalization and incarceration. The actual outcome of these programs depend on response of local mental health agencies and the Department of Mental Health - but advocates say the cut seeks to supplant funding from the landmark Proposition 63 Mental Health Services Act - funding that was meant they say only for new community based programs - and specifically not meant to fund existing programs.

Mental health advocates are planning legal action to overturn the Governor's funding cut and may take other measures.

Other Major or Significant Reductions Made By Governor

DEPARTMENT OF SOCIAL SERVICES

No major additional reductions beyond what is already in the budget and none impacting In-Home Supportive Services, or SSI/SSP (beyond what is already in the budget).

Governor did revise budget item 5180-153-000 by deleting Provision 2 that would have required the Department of Social Services to collaborate with stakeholders to develop the timeline, components, and execution of the evaluation of the Title IV-E Waiver. The Governor wrote that "This requirement would result in an expenditure increase without regard to the availability of revenues. Consequently, I am vetoing this language. Nevertheless, I am directing the Department to work with stakeholders to facilitate the successful implementation of the Title IV-E Waiver, which allows participating counties flexibility in using federal Title IV-E foster care funds for direct services and supports."

DEPARTMENT OF HEALTH CARE SERVICES

California Discount Prescription Drug Program - Cut $2,030,000 intended to specifically fund implementation costs. Governor said he was directing the Department of Health Care Services to identify resources to move forward with implementation.

Medi-Cal Managed Care Plans - Cut $106,286,000 ($53,143,000 General Fund and $53,143,000 Federal Trust Fund) of the funding for rates for managed health care plans in the Medi-Cal Program. This reduction, the Governor said, is "necessary to provide for a prudent General Fund reserve in light of the various uncertainties" in revenues and spending that the state faces this year. The Governor said that with this reduction, $108,000,000 ($54,000,000 General Fund) still remains to fund rate increases for plans to ensure adequate access to care for low-income Californians.

Medi-Cal Program Caseload Expenditures - Cuts $644,893,000 ($331,893,000 General Fund and $313,000,000 Federal Trust Fund). The Governor claims that this reduction is based on historical data showing that on average over the last three fiscal years, Medi-Cal expenditures have been more than $400 million General Fund lower than the estimate. This reduction doesn't actually impact services directly - it changes projections of what the State believed caseload expenditures would be. The move was criticized by some Senate Republicans who called it an "accounting gimmick" that was not a real spending cut, because the Medi-Cal Program - if it overspends -can seek more funds later.

SB 437 Medi-Cal Pilot Self Certification Program - Cuts $26,792,000 ($13,396,000 General Fund and $13,396,000 Federal Trust Fund) to delay the implementation of Chapter 328, Statutes of 2006 (SB 437), which included a pilot program for self-certification of income at enrollment for Medi-Cal and development of feasibility study reports to begin implementing changes to several automated eligibility systems. This action will delay implementation of SB 437 for one year, according to the Governor.

Children's Outreach Initiative - Reduced $19,652,000 ($9,826,000 General Fund and $9,826,000 Federal Trust Fund) in funding for the county grants portion of the Children’s Outreach Initiative. Governor says that even with this reduction, $147,020,000 ($64,680,000 General Fund) still remains to fund other components of the Children’s Outreach Initiative that streamline enrollment processes, improve retention, and support county-based enrollment efforts for children. The Department of Health Care Services will pay for any valid county claims for the Children's Outreach Initiative for the 2006-07 fiscal year from remaining funds within this item.

Expanded Access to Primary Care (EAPC) - Reduced by $10,000,000 General Fund from Expanded Access to Primary Care (EAPC). The Governor said he will seek a subsequent bill this session to fund this program with Proposition 99 funding and maintain a constant level of funding in the program.

California Children's Services Program - Timely Discharge - Governor vetoed Provision 3 in SB 77 that directs the Department of Health Care Services to work with various constituency groups to resolve issues with the timely discharge of patients enrolled in the California Children’s Services Program. The Governor is vetoing this provison because:

"This requirement would result in an expenditure increase without regard to the availability of revenues. Consequently, I am vetoing this language. Given the Legislature's interest in this area and the importance of this program, I am instructing the director of the Department of Health Care Services to continue the activities of this legislative request to the extent such activities can be achieved using existing resources and without impairing the Department of Health Care Services ability to perform its essential functions."

California Discount Prescription Drug Program - Deletes $4,300,000 intended specifically to fund local assistance implementation costs for the California Discount Prescription Drug Program. This action is necessary to further build a prudent reserve in light of the various uncertainties in revenues and spending that we face this year.

DEPARTMENT OF MENTAL HEALTH

AB 2034 Integrated Services for Homeless Adults - Governor deleted the $54,850,000 legislative augmentation for the Integrated Services for Homeless Adults with Serious Mental Illness Program. Governor wrote that:

"While I support the goals of the program, this reduction is necessary to limit program expansions and to help bring ongoing expenditures in line with existing resources. To the extent counties find this program beneficial and costeffective, it can be restructured to meet the needs of each county’s homeless population using other county funding sources, such as federal funds, realignment funds, or Proposition 63 funds. I am reducing Schedule (6) to eliminate the $12,000,000 legislative augmentation for the 5 percent rate restoration for mental health managed care. This technical veto is consistent with the legislative action taken in Item 4440-103-0001."

DEPARTMENT OF VETERANS AFFAIRS

Deletes Provision 5 in the budget bill relating to Item 8955-001-0001, which would have required the Department of Veteran Affairs to report on the Department's progress in providing a "restraint free" environment for residents at Veteran Homes. The Governor wrote that:

"This reporting requirement would result in an expenditure increase without regard to the availability of revenues. Consequently, I am vetoing this language. Nevertheless, in recognition of the Legislature's desire to obtain this information, it will be addressed as though the request had been included in Supplemental Report language. Therefore, I am instructing the Secretary of the California Department of Veterans Affairs to comply with this legislative request for this report to the extent compliance can be achieved using existing resources and without impairing the California Department of Veterans Affairs ability to perform its essential functions."

OFFICE OF ADMINISTRATIVE LAW

Deletes Provision in the budget bill relating to item 8910-001-0001, which would have required the Office of Administrative Law to report to the Legislature on the use of positions assigned to underground regulation review. The Governor wrote that:

"This reporting requirement would result in an expenditure increase without regard to the availability of revenues. Consequently, I am vetoing this language. Nevertheless, in recognition of the Legislature's desire to obtain this information, it will be addressed as though the request had been included in Supplemental Report language. Therefore, I am instructing the director of the Office of Administrative Law to comply with this legislative request for this report to the extent compliance can be achieved using existing resources and without impairing the Office of Administrative Law's ability to perform its essential functions."

DEPARTMENT COMMUNITY SERVICES AND DEVELOPMENT

Naturalization Program - Reduced from $250,000 to $150,000 by deleting the $100,000 legislative augmentation to expand the Naturalization Services Program. The Governor wrote that "with this reduction, $3,000,000 still remains to support the Naturalization Services Program, and to assist legal immigrants in completing their citizenship application, citizenship testing, and in preparing for the interview. In addition, similar services are provided by the California Department of Education, such as instruction in civics and English."

Reduced to conform with the reduction in budget item 4700-101-0001) from $4,750,000 to $2,850,000 by $1,900,000 to conform to my action in Item 4700-001-0001.

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