Selected Items from Mid-Year Spending Reduction Proposals

From: DeafAdvocacy.com - 13 Dec 2002

On Dec 6th Richard from DeafAdvocacy.com says...

"Big cuts in DSS and VR spending. Layoffs planned of state employees.

I'll predict a lot of disabled and deafs out on the street panhandling by this summer."

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Mid-Year Spending

Reduction Proposals

GRAY DAVIS, GOVERNOR

STATE OF CALIFORNIA

DECEMBER 2002

HEALTH AND HUMAN SERVICES

Emergency Medical Services Authority

Consolidation of Emergency Medical Services Authority (EMSA) into the Department of Health Services (DHS): The Administration proposes legislation to consolidate the EMSA into the DHS, effective July 1, 2003. This consolidation is expected to produce the following benefits: (1) improved coordination of emergency medical policy with overall State health policy, (2) improved efficiency through the consolidation of similar functions, and (3) increased administrative efficiency. This consolidation is being proposed at this time to achieve full-year

General Fund savings in 2003-04.

Health and Human Services Data Center

-$0.47 million

Operations Program: The Budget Act of 2002 provided $133 million Revolving Fund Expenditure Authority for the Health and Human Services Data Center (HHSDC) to provide operations, software, telecommunications, and information systems support for its client departments. Of the amount provided, $473,000 is for discretionary operations' projects. The Administration proposes to defer the projects until the budget year, which would result in Revolving Fund expenditure authority reductions of $473,000.

Department of Aging

-$2.5 million

Nutrition Program: The 2002 Budget Act provided $72.4 million ($9.5 million General Fund) to serve meals to seniors in a congregate setting and to deliver meals to homebound seniors. Of the amount provided, $2.9 million General Fund is a discretionary overmatch to the federal funds that support the program. The Administration proposes elimination of the discretionary overmatch, which would result in General Fund savings of $614,000 in the current year, assuming an effective date of April 1, 2003. Funding of $62.9 million of federal funds and $6.6 million General Fund remains intact.

Respite Registry Program (RRP): The 2002 Budget Act provided $135,000 General Fund to the RRP to recruit and screen respite providers and match them to senior clients. In order to protect other critical programs, the Administration proposes elimination of this program, which would result in savings of $28,000 in the current year, assuming an effective date of April 1, 2003.

Foster Grandparent Program (FGP): The 2002 Budget Act provided $1.1 million General Fund to the FGP for tax-free stipends to participating volunteers. In order to protect other critical programs, the Administration proposes legislation to eliminate the FGP. Assuming an effective date of April 1, 2003, elimination of General Fund support for the program would result in savings of $219,000 in the current year.

Senior Companion Program (SCP): The 2002 Budget Act provided $2 million General Fund to the SCP for tax-free stipends to participating volunteers. The Administration proposes legislation to eliminate the SCP, in order to protect other critical programs. Assuming an effective date of April 1, 2003, elimination of General Fund support for the program would result in savings of $409,000 in the current year.

Brown Bag Program (BBP): The 2002 Budget Act provided $1.1 million General Fund to the BBP to provide surplus fruits, vegetables, and other unsold food products to low-income elderly persons. The Administration proposes legislation to eliminate support for the BBP, in order to protect other critical programs. Additionally, there is $11 million in direct funding available to local entities for similar food programs. Assuming an effective date of April 1, 2003, elimination of General Fund support for the program would result in savings of $180,000 in the current year.

Community-Based Services Program (CBSP): The 2001 Budget Act included $18.5 million General Fund for the CBSP to provide funding through a variety of programs to support senior participation and avoid institutionalization. Avoiding institutionalization results in direct cost savings to the State. Actual General Fund expenditures for 2001-02 were $500,000 less than budgeted. Therefore, the Administration proposes that $500,000 be reverted to the General Fund.

Adult Day Health Care Contract: The 2000 Budget Act appropriated $500,000 General Fund for construction of an Adult Day Health Care Center in San Francisco. The amount was reappropriated in the 2001 Budget Act. Contracts for the construction have not been processed. Therefore, the Administration proposes that $500,000 be reverted to the General Fund.

Department of Alcohol and Drug Programs

-$1.5 million

Alcohol and Other Drug Services: The 2001 Budget Act provided $40.4 million General Fund for various non-Medi-Cal alcohol and drug services programs. The Administration proposes that $1 million of this funding be reverted to achieve General Fund savings in 2002-03. These savings are the result of lower than estimated local administrative expenditures, and reversion of these funds will not result in program reductions.

Drug Medi-Cal: The 2002 Budget Act provided $46.8 million General Fund for Drug Medi-Cal funding. After allocating administration funding by formula to the counties, $253,000 is projected to remain unspent, which the Administration proposes for reversion to achieve General Fund savings in 2002-03.

Audit Repayment Trust Fund: The Department of Alcohol and Drug Programs collects repayments of state funds resulting from audits of local contracts. It is proposed to transfer $273,000 from the Audit Repayment Trust Fund to the General Fund. This transfer will not result in programmatic reductions.

Child Development Policy Advisory Committee

Child Development Policy Advisory Committee (CDPAC): The Administration proposes legislation to repeal all statutory provisions related to the CDPAC, effective July 1, 2003. In order to eliminate the CDPAC and to realize full-year General Fund savings of $367,000 in 2003-04, enactment of legislation is required in 2002-03.

Department of Health Services

-$201.8 million (Includes $25.8 million from prior years.)

Amendments to Medi-Cal Funding

Medi-Cal Provider Rate Reductions -$90,387,000 Elimination of Selected Medi-Cal Optional Benefits -$63,254,000 Reinstate Medi-Cal Quarterly Status Reports -$5,000,000 Rescind Expansion of 1931(b) Medi-Cal Eligibility -$6,209,000 Intermediate Care Facilities for the Developmentally Disabled -$2,500,000

Medical Care and Services Subtotal -$167,350,000

Reduce Outreach for Medi-Cal and Healthy Families -$168,000

County Administration Subtotal -$168,000

2002 Budget Act Total for Medi-Cal -$167,518,000

Prior Year Reversion-Disproportionate Share Hospital Capital Debt -$25,800,000

2001 Budget Act Total for Medi-Cal -$25,800,000

Medi-Cal Provider Rate Reduction: The 2000 Budget Act included Medi-Cal provider rate increases totaling $799.8 million ($402.8 million General Fund). The 2002 Budget Act maintained these increases. The administration proposes to reduce all Medi-Cal provider rates by 10 percent effective April 1, 2003, achieving savings of $90.4 million General Fund in 2002-03.

Selected Medi-Cal Optional Benefits: The Medi-Cal program currently offers 34 optional Medicaid benefits, the maximum number allowed under federal law. The Administration proposes legislation to eliminate the following optional benefits from the Medi-Cal program for adults above age 21 and not in long-term care: dental services, medical supplies, podiatry, acupuncture, chiropractic services, psychology, independent rehabilitation centers, and occupational therapy. The elimination of these benefits, effective April 1, 2003, will achieve savings of $63.3 million General Fund in 2002-03.

Reinstatement of Medi-Cal Quarterly Status Reports: The 2000 Budget Act and Chapter 93, Statutes of 2000, eliminated the requirement that families receiving Medi-Cal submit quarterly eligibility status reports. The Administration proposes legislation to reinstate Medi-Cal quarterly status reporting, effective April 1, 2003, which would result in current year savings of $10 million ($5 million General Fund) and budget year savings of $170.1 million ($85 million General Fund). In January 2001, the Administration established continuous eligibility for children. This proposal will not affect the eligibility of children in Medi-Cal.

Rescission of 1931(b) Medi-Cal Eligibility Expansion: Effective March 2000, eligibility for the 1931(b) Medi-Cal program was expanded to families with income up to 100 percent of the Federal Poverty Level (FPL). The Administration proposes legislation to rescind this expansion and limit eligibility to families with income up to approximately 61 percent of the FPL, consistent with the income limits for the California Work Opportunity and Responsibility to Kids (CalWORKs) program. This proposal would affect mostly two-parent income households.

Effective April 1, 2003, this proposal would result in savings of $12.4 million ($6.2 million General Fund) in 2002-03, $235.9 million ($118 million General Fund) in 2003-04, and annual savings of $985.1 million ($492.6 million General Fund) after full implementation.

Intermediate Care Facilities for the Developmentally Disabled: The Administration proposes legislation to levy an assessment of 6.5 percent on intermediate care facilities for the developmentally disabled. This assessment will be matched with federal funds. This action will result in revenues of $5 million in the current year and $20 million annually. A total of 75 percent of these funds would be provided to these facilities as a provider rate increase. The remaining 25 percent of these funds would be used to offset General Fund resources for these facilities. This proposal would result in $2.5 million General Fund savings in the current year, and $10 million General Fund savings in the budget year.

Cancer Research: The 2002 Budget Act provided $12.5 million General Fund for the Cancer Research program. The Administration proposes that expenditures be reduced to $6.2 million, resulting in General Fund savings of $6.3 million. This reduction represents a very small proportion of the over $4.2 billion in national funding provided by the federal government and private institutions.

Prostate Cancer Treatment: The 2002 Budget Act provided $20 million from the Tobacco Settlement Fund for Prostate Cancer Treatment. Due to lower than anticipated participation in the treatment program, the Administration proposes that expenditures be reduced to $10 million, resulting in Tobacco Settlement Fund savings of $10 million to be transferred to the General Fund. This proposal reduces the program to its original level. Approximately 1,200 men will continue to receive treatment at the reduced funding level.

Eliminate Valley Fever Vaccine Research: The 2002 Budget Act provided $700,000 General Fund for the Valley Fever Vaccine Research program. The Administration proposes that the program be eliminated effective January 1, 2003, resulting in General Fund savings of $350,000 in 2002-03 and $700,000 in 2003-04. The research program is a consortium of several public and private entities and the State funding represents but a portion of the funding available.

Eliminate the Gynecologic Cancer Information Program: The 2002 Budget Act provides $150,000 General Fund for the development and distribution of health education materials for gynecologic cancer. The Administration proposes to eliminate this information program, resulting in General Fund savings of $150,000 in 2002-03, since there are alternative sources for this information.

Outreach and Media Campaigns: The 2002 Budget Act provided approximately $26.1 million General Fund for various outreach activities and media campaigns. The Administration proposes that contracts that have not been signed and funds that have not been invoiced or obligated be reduced, resulting in General Fund savings of $1.7 million. Additionally, the 2002 Budget Act included $10.3 million ($3.9 million General Fund) for application assistance and a toll-free telephone line to increase the enrollment of children in Medi-Cal and Healthy Families.

The Administration proposes to eliminate training for certified application assistants, which would result in current year savings of $168,000 General Fund.

Prior Year Reversion-Disproportionate Share Hospital Capital Debt: The Administration proposes to revert $25.8 million General Fund that was included in the 2001 Budget Act but remains unexpended due to lower than anticipated debt service payments. This funding was intended for debt service payments on construction and renovation projects for disproportionate share hospitals.

Department of Developmental Services

-$143.7 million

Increased Federal Financial Participation Savings: Past year General Fund savings are available as a result of the Administration's effort to maximize claims for federal financial participation allowed for eligible beneficiaries under the Home and Community-Based Waiver. Updated projections indicate that increased federal financial participation for the 2001-02 budget year totals $156.7 million. Therefore, the Administration proposes that another $142.7 million be reverted in addition to the $14 million reverted in the 2002 Budget Act.

Statewide Standards: The Administration proposes to reduce Regional Center Purchase of Services by $100 million through implementation of statewide standards, effective July 1, 2003. The Department will seek to identify opportunities to maximize the $2.2 billion provided for the Community Services program, increase administrative efficiency, and improve consistency of the service provided to consumers throughout the state, while maintaining the entitlement guaranteed under the Lanterman Act. While there are no current year savings associated with this proposal, the necessary statutory changes are proposed to achieve the full-year budget savings in 2003-04.

Porterville Air Condition Main Kitchen: The 1999 Budget Act provided $1 million General Fund for the construction phase of the Air Condition Main Kitchen project at the Porterville Developmental Center. This funding remains unexpended. Therefore, the Administration proposes to revert these funds to the General Fund.

Department of Mental Health

-$4.8 million

Early Mental Health Services: The Administration proposes to eliminate Early Mental Health Services that were counted toward the Proposition 98 guarantee and funded through the Department of Mental Health, in order to protect other critical programs from reduction or elimination. This proposal will achieve General Fund savings of $549,000 in 2002-03 and $15 million in 2003-04. More than $1.1 billion is available in Realignment funds for local mental health services, and an additional $3.4 billion in special education funding is available for the children that received Early Mental Health Services.

Mental Health Managed Care: The Department of Mental Health (DMH) provides mental health services to Medi-Cal eligible clients through a system of contracts between the DMH and county mental health departments. The Administration proposes statutory changes to implement a 10-percent provider rate reduction effective April 1, 2003. This change will achieve General Fund savings of $4 million in 2002-03 and $16 million in 2003-04.

Preadmission Screening and Resident Review (PASRR): The 2002 Budget Act included $3.2 million ($789,000 General Fund) to expand the current mental health evaluation process to include individuals that are not eligible for Medi-Cal who are residents of or being admitted to nursing facilities statewide. Due to late implementation of the contract to provide PASRR services, there will be General Fund savings in 2002-03. The Administration proposes that $232,000 be reverted to achieve General Fund savings.

Second Level Treatment Authorization Request (TAR) Appeals: The 2002 Budget Act included $64,000 General Fund for the Department of Mental Health to process Second Level TAR appeals. California is the only state that currently allows second-level TAR appeals, if mental health providers are not satisfied with the results of the first appeal to their county Mental Health Plans. Therefore, the Administration proposes to eliminate this process and that $64,000 be reverted to the General Fund.

Department of Community Services and Development

-$1.5 million

Department of Community Services and Development (DCSD) Consolidation: To improve the efficiency and effectiveness of State government, the Administration proposes, that effective July 1, 2003, the DCSD be consolidated with the Department of Social Services (DSS). The Community Services Block Grant program and the Low-Income Home Energy Assistance Program (LIHEAP) would be administered by the DSS. The proposed consolidation would result in an elimination of nine DCSD positions and a redirection of approximately $922,000 federal funds from State operations to local assistance.

In addition, the Administration proposes elimination of the General Fund support for the Naturalization Services and Mentoring Programs, effective July 1, 2003, as programs operated by other State departments provide citizenship instruction and mentoring services. Over $30 million is available for the AmeriCorps program, some of which has been used for tutoring and mentoring; approximately $22 million in federal funds is available for English language and citizenship instruction.

California LIHEAP: Chapter 7, Statutes of 2001, First Extraordinary Session, appropriated $120 million General Fund for the DCSD to provide energy bill assistance and weatherization services to certain needy households. Of this amount, $95.9 million has been expended and $23.8 million reverted through December 2002, leaving $285,000 unspent. Therefore, the Administration proposes that $285,000 be reverted to the General Fund in 2002-03.

Naturalization Services Program: The 2002 Budget Act provided $7.9 million ($2.9 million General Fund) for this program. Of this amount, $1.3 million General Fund will not be granted to community-based organizations by January 1, 2003, and as outlined above General Fund support for this program is proposed for elimination beginning July 2003. The Administration proposes that $1.3 million be reverted in 2002-03, along with State operations savings of $14,000 General Fund.

Department of Rehabilitation

-$21.8 million

Home and Community-Based Waiver Funding for the Habilitation Services Program (HSP): The cap on the Home and Community-Based Waiver (Medicaid reimbursements) has been increased, and it is anticipated that the Department of Rehabilitation will receive an additional $4.8 million for 2001-02 and $5.8 million for 2002-03, which would offset a corresponding level of General Fund. Therefore, the Administration proposes to increase reimbursement expenditure authority and revert $10.6 million to the General Fund.

Habilitation Services Program: The 2001 Budget Act included $120 million General Fund for the HSP to provide employment skills training to persons with developmental disabilities. In 2001-02, $7.6 million General Fund was not utilized and is available for reversion. Therefore, the Administration proposes that $7.6 million be reverted to the General Fund.

HSP Consolidation within the Regional Centers: The Administration proposes legislation to consolidate the HSP within the Regional Centers to produce a more efficient program and capture the resultant General Fund savings of $2.2 million in 2003-04. In order to achieve full-year savings in 2003-04, it is proposed that the consolidation, which would be effective July 1, 2003, be authorized to begin in 2002-03.

Rate Reductions for Work Activity Program (WAP) and Supported Employment Program (SEP): The WAP and SEP provide employment skills training to persons with developmental disabilities through non-profit organizations. The Administration proposes legislation to reduce the rates paid for services by $1.4 million (with a related $103,000 in State operations), or 5 percent, and to revert the savings to the General Fund.

WAP Rate Suspension: The WAP provides employment skills training in sheltered work settings to persons with developmental disabilities through non-profit organizations. Provider rates are statutorily required to be adjusted biennially, and 2003-04 is a rate-setting year. The Administration proposes legislation to suspend the statutory rate adjustment for three years.

Department of Child Support Services

-$9.7 million

Local Child Support Administration Incentives: The Department of Child Support Services (DCSS) received an additional $9 million in federal Child Support Incentives for local administration in 2002-03, which can be used to offset administrative costs currently funded by the General Fund, with no effect on the child support enforcement program. Therefore, the Administration proposes that $9 million be reverted to the General Fund to achieve savings in 2002-03.

Local Child Support Contracts: Two local child support contracts entered into in 2000-01 and 2001-02 were completed at a cost lower than budgeted. Therefore, the unexpended balance of these contracts, $366,000 in 2000-01 and $290,000 in 2001-02, is available to be reverted to the General Fund. Therefore, the Administration proposes that $656,000 be reverted to the General Fund.

Foster Parent Training Fund: The Administration proposes legislation to eliminate funding from child support collections for foster parent training programs within the California Community Colleges, effective July 1, 2003. This action would result in additional General Fund revenues in 2003-04. This action is proposed in the current year to realize full-year General Fund savings in 2003-04.

Department of Social Services

-$24.8 million

Residential Care Facility Evaluations: Current State law requires an annual review of adoption agencies, community treatment facilities, foster family and small family homes, group homes, foster family agencies, transitional housing placement programs, adult residential facilities, and residential care facilities for the chronically ill and elderly. The Department of Social Services licenses these facilities and performs an annual inspection. The Administration proposes that the evaluation process be streamlined to save administrative costs and to prioritize inspections of high-risk facilities. Therefore, it is requested that $650,000 be reverted to the General Fund. This proposal would also result in an associated State operations reduction of $655,000 General Fund.

Supplemental Security Income/State Supplementary Payment (SSI/SSP) Cost-of-Living Adjustment (COLA): The 2002 Budget Act provided $22.3 million General Fund for the June 2003 COLA for the SSI/SSP program based on the California Necessities Index. The Administration proposes to suspend the June 2003 and January 2004 COLAs. Therefore, it is requested that $22.3 million be reverted to the General Fund. In addition, based on updated caseload projections, the cost to provide the June 2003 COLA is now estimated to be $24.1 million General Fund. This proposal will also result in a General Fund cost avoidance of $1.8 million for the June 2003 COLA and $328 million for the January 2004 COLA in 2003-04.

CalWORKs COLA: Consistent with the suspension of the SSI/SSP COLAs, the Administration proposes that the June and October 2003 CalWORKs COLAs be suspended. This would not result in General Fund savings, since the State must meet the federally-required Temporary Assistance for Needy Families (TANF) maintenance-of-effort requirement. Therefore, the Administration proposes that $12.2 million TANF be reverted to the Federal Trust Fund to be available for CalWORKs costs in the Budget Year.

STATEWIDE

Additional Architecture Revolving Fund Savings: The Department of Finance has identified $1 million in the Architectural Revolving Fund (ARF) that can be transferred back to the General Fund. Therefore, the Administration proposes to transfer these funds from ARF to the General Fund.

Architecture Revolving Fund Transfer: The Department of Finance has identified a number of projects that may be delayed, stopped, or shifted to an alternative funding source. It is requested that the Department of Finance have the authority to transfer funds in the Architecture Revolving Fund to the General Fund.

Inmate Construction Revolving Account Transfer: The Department of Finance has identified a number of projects that may be delayed, stopped, or shifted to an alternative funding source. It is requested that the Department of Finance have the authority to transfer funds in the Inmate Construction Revolving Account to the General Fund.

Employee Compensation

-$470.0 million

Reduction of Employee Compensation Costs: The Department of Personnel Administration is directed to negotiate through the collective bargaining process, where applicable, a $470 million reduction in 2003-04 employee compensation costs. In order to accomplish this reduction, the State is prepared to pursue deferring scheduled salary increases, lowering or freezing future salary or benefit expenditures, layoffs, furloughs, and other similar personnel actions in order to produce the needed savings.

Elimination of Annuitants from the Rural Health Care Equity Program: The Rural Health Care Equity Program assists with the out-of-pocket health care expenses for employees and annuitants who live in rural areas that are not covered by the State's contracts with HMOs. The Administration proposes this program no longer include annuitants as of January 1, 2003.

Statewide-Reduction in State Operations

-$320.8 million

Chapter 1023, Statutes of 2002, added Control Section 3.90 to the 2002 Budget Act, authorizing up to a five-percent reduction of State operations appropriations to reflect a total reduction of up to $750 million. Given the magnitude of the anticipated two-year budget shortfall, the Governor issued Executive Order D-64-02 to identify General Fund savings and reduce expenditures.

Only a portion of the $750 million target can be achieved without statutory changes to programs that would allow reductions in State operations costs. The Administration has expanded the focus of reductions beyond just State operations reductions. In this mid-year reduction package, the Administration is proposing $3.4 billion in current year General Fund reductions, of which $320.8 million encompasses State operations. To address, in part, the requirements of Control Section 3.90 of the 2002 Budget Act, the Administration is proposing reversion items to capture the savings.

Budgets for State operations will be reduced, and General Fund savings achieved through various actions including, but not limited to, the following:

• Reductions in specific program areas

• Shifts in program funding

• Reductions and eliminations in operating expenses for non-essential activities (e.g., out-of-state travel, training, equipment purchases, etc.)

• Increases in federal funds

• Eliminations of departments/programs

• Prior years savings