First in a Series of Essays by Sheila Kuehl on the 2008 California State Budget: Background Information

The January cuts to the current budget reduced overall Prop 98 (K-12 and community colleges) funding by over half a billion dollars, but used past unused funds to make it up. Still, lower revenues, as is the case this year, reduce the minimum guarantee for schools set out in the formulas contained in Prop 98. This means that the actual amount of money needed to “fully fund” Prop 98 will be lower in the 2008-2009 budget, allowing the state to say it is “fully funding” Prop 98 even if the actual dollars are lower. (more about this in the next two essays). The January actions also deferred payments that were supposed to be made in the 2007-2008 budget to the teacher’s retirement fund, throwing the debt into the next budget.

Health and Human Services

As always, this was the section that took multiple stab wounds.

The Governor proposed a ten-percent reduction for all the “reimbursements” paid to healthcare providers under the Medi-Cal program. (Reimbursement means money paid for services. Regular people call it paying their bills). The Legislature generally agreed, but exempted payments for family planning programs, breast and cervical cancer treatment programs, some nursing homes and other programs that had been historically funded at lower rates and had just been allowed to catch up. The cuts also reduced by 10% rates paid under the California Children Services Program, the Child Health and Disability Prevention Program and the Genetically Handicapped Persons Program. Many providers indicated that these reductions in already-low payments to doctors and other healthcare providers to the poor would only mean that there would be fewer of them able and willing to take these patients.

In developmental services, the changes reduced the operations budgets of the regional centers, increased the amounts that families have to pay (yes, even poor families on Medi-Cal must pay co-pays) and eliminated a number of positions that happened to be vacant across all these services.

In mental health, the January change reduced the early and periodic screening and treatment program for children, reduced funding for caregiver resource centers, and delayed a whole host of payments in order to “score” cost savings for a few months.

Social Services: CalWORKs, SSP, etc.

As is the case this year, most of the January cuts fell on services for children, seniors and the poor. (The largest sections of the budget are education, prisons, health and human services and social services). Even though the federal government provides a cost-of-living increase for those on CalWORKs, the state kept it and did not pass it on to the poor families. Result: $41 million more to fill the deficit. The January changes also eliminated pay for performance incentive funds (ways to get people to work more quickly), delayed any cost of living increase for those on State Supplemental Program (sick and elderly), and reduced monies for the case management system.

Resources

Although the resources budget is (not counting the bonds) about 1% of the state budget, the Resources Agency was cut by another $4.2 million, and the Department of Parks and Recreation by $1 million. The fisheries restoration program was also cut, along with the Department of Fish and Game

Other cuts:

Cuts were also made to the judicial system, veteran’s services, and local government reimbursements and six positions in the state public defender’s office were eliminated.

In the prison system, $40 million was saved by delaying the beginning of a number of treatment programs.

Whew!

So, in February of this year, the current (2007-2008) budget was back in balance.

Next: The 2008-2009 proposed budget presented by the Governor in January, 2008.