February 8, 2012

Overview of the Governor’s Budget Proposal

Governor Brown released his 2012-13 budget proposal on January 5, 2012.  The governor addresses a projected deficit of $9.2 billion through $4.2 billion in spending cuts and $4.6 billion in increased revenues.  The proposed budget assumes California voters approve a tax initiative the governor is seeking to put on the November ballot.  The tax initiative raises income taxes on very high-income households and increases by the state sales tax. If voters reject the ballot initiative, it would automatically trigger an additional $5.4 billion in mid-year spending cuts, predominately to public education.

Deep Health and Human Services Cuts Proposed

Health and human services are targeted for immediate and deep cuts.  $2.5 billion of the proposed cuts are targeted at health and human services programs and child care.  Nearly 60% of the proposed cuts are to health and human services programs and child care, even though those programs only make up one-third of the budget.  The proposed cuts to critical safety net services would have a dramatic impact on California’s vulnerable children and families.

California Work Opportunity and Responsibility to Kids (CalWORKs)

CalWORKs provides cash assistance and services to low-income families, including 1.1 million children.  CalWORKs benefits are already very low – they provide just 41% of the federal poverty line.  CalWORKs has already undergone devastating cuts in recent years.

The governor’s proposal would reduce CalWORKS funding by $946 million and substantially restructure the program.  He proposes reducing benefits for families not meeting work requirements from 48 months to 24 months. The proposal would also decrease the monthly grant amount for child only cases by an average of 15%.  The proposed cuts to CalWORKs come at a time when job prospects in California remain grim and would put tens of thousands of children at serious risk of homelessness.

 California’s Children Health Programs

The governor’s budget proposes to transition all of the 875,000 children in the Healthy Families program to Medi-Cal.  Such a transition could undermine access to care for those children, meaning that parents might not be able to get a doctor for their child when they need one.

The Governor’s proposal would also reduce the rates paid to providers in Healthy Families by nearly 26%.  Reducing these rates will cause the state to lose $128 million in federal matching funds.

The budget also reduces eligibility for the Medical Therapy Program, which provides physical therapy to children with handicapping conditions.

 Child Care and Development

The governor's budget proposal cuts child care and development programs for low-income children by $517 million, affecting about 62,000 children in early care and education programs. The cuts would slash program eligibility and reduce reimbursement rates to providers.

 K-12 Education

Funding for K-12 education in the Governor’s budget proposal is tied to the fate of the Gov’s tax initiative.  If the tax initiative passes, schools would receive $2.2 billion, which would repay deferred payments from previous years.  If the voters do not approve the initiative, the governor would eliminate that $2.2 billion repayment and make $2.6 billion in mid-year spending cuts, which the governor says would be the equivalent of “shortening the school year by more than three weeks.” 

The budget also eliminates state funding for the new transitional kindergarten program.  The budget does not provide a cost-of-living adjustment (COLA) for K-14 education programs.

The governor also proposes to change how schools are funded in an attempt to give districts and schools more flexibility. He would do this by eliminating designated funds for the vast majority of categorical programs, except those mandated by the federal government. He would also introduce a weighted student formula that would provide more money to districts with high proportions of disadvantaged students.

 Higher Education

If the Governor’s tax initiative passes, there will be an increase of $218 million to partially restore previously deferred funding to California’s community colleges.

The Governor would reduce the Cal Grant awards for students attending private colleges and raise the minimum GPA required for Cal Grant eligibility. If the ballot measure fails, the University of California system and the California State University system would be cut by $200 million each.

Services for Children with Disabilities

In-Home Supportive Services (IHSS) helps low-income seniors and people with disabilities, including children, live safely in their own homes, preventing more costly out-of-home care.  The governor proposes eliminating domestic and related services for approximately 254,000 recipients, including most children.  He would also implement an across-the-board 20% reduction in hours of service, which was imposed last year but the courts have thus prevented from taking effect.

The Department of Developmental Services (DDS) oversees services provided to more than 250,000 Californians with developmental disabilities. The Governor proposes a $200 million reduction to the DDS budget.

Child Support

The Governor proposes to continue the suspension of the county share of child support collections in 2012-13 ($34.5 million), which means that counties will have less money for programming.

Unemployment Insurance

The Governor proposes to raise the earnings threshold needed to qualify for unemployment insurance benefits.  Approximately 40,000 workers would lose eligibility for benefits.  These cuts could be devastating for laid-off workers who are trying to support a family.

Corrections

The governor’s proposes to stop accepting new juvenile offenders in state facilities and transfer responsibility for this population to local jurisdictions. The proposal would provide $10 million to help counties plan for this transition.

What’s Next?

If the Governor’s proposed budget were implemented, there would be billions of dollars of cuts that would hurt California children and families who are already struggling in this economy.  The Governor’s budget would be balancing the budget on the backs of our most vulnerable citizens, and would mean a disinvestment in California's children and the future of our state.

However, Democrats in the state legislature have already said they do not want to make reductions before May, in case the economy recovers enough to boost tax revenue and shrink the deficit further.