The revised 2007-08 budget for all Health and Human Services Agency (HHSA) budgets totals $79.5 billion in combined state and federal funds. This total includes expenditures for approximately 33,000 state employees. The 2008-09 total is $1 billion, or 1.3 percent, less than the revised 2007-08 budget.

The proposed budget was constructed first by computing the workload budget level.  From the workload budget, adjustments are made to reflect specific policy adjustments and reductions, including budget balancing reductions. 

Proposed Workload Budget

Making Health Care Affordable and Available

Medi-Cal, California's Medicaid program, is a health care entitlement program for low-income individuals and families who receive public assistance or lack health care coverage.  Medi-Cal serves an estimated 6.6 million people each year, or more than one in six Californians.

• $36 billion ($13.6 billion General Fund) in Medi-Cal expenditures, a decrease of $962.3 million ($472.1 million General Fund) from the revised 2007-08 budget and a decrease of $915.9 million ($678.7 million General Fund) from the Budget Act of 2007.
• $26.4 million ($13.1 million General Fund) and 1.9 positions to continue the simplification and acceleration of enrollment in Medi-Cal as well as to establish a two-county pilot program that will allow Medi-Cal beneficiaries to self-certify their income and resources at their initial application and during their redetermination process.
• $1.8 million ($0.6 million General Fund) to enhance data security of the Medi-Cal Eligibility Data System (MEDS).
• $0.2 million ($0.1 million General Fund) and 1.9 positions to begin implementation of the California Community Transitions (CCT) program as part of the Money Follows the Person Demonstration Grant. The goal of this program is to transition Medi-Cal eligibles from high-cost institutions such as acute hospitals and nursing facilities, into lower-cost home- and community-based care settings.
• $2.4 million ($0.6 million General Fund) for the Provider Enrollment Automation Project to purchase and implement a provider enrollment case and document tracking system. This system will streamline the provider enrollment process, thereby shortening the time it takes to enroll providers in Medi-Cal.
• $2.4 million ($1 million General Fund) and 19 positions for Adult Day Health Care Reform programs to continue program reforms and develop a new rate methodology to increase California's ability to retain federal funding and help ensure services remain available for qualified beneficiaries.

Children's Medical Services

Children's Medical Services includes the California Children's Services (CCS) program, the Child Health and Disability Prevention (CHDP) program, and the Genetically Handicapped Persons Program (GHPP).

• $287.5 million for Children's Medical Services programs, including the CCS program, the Child Health and Disability Prevention (CHDP) program, and the Genetically Handicapped Persons (GHPP) program.
• $1.3 billion ($390.4 million General Fund) for the Managed Risk and Medical Insurance Board (MRMIB). The MRMIB administers the Health Families Program (HFP), the Access for Infants and Mothers (AIM) program, the Major Risk Medical Insurance Program (MRMIP), and the County Health Initiative Matching Fund Program. These four programs provide health care coverage through private health plans to certain populations without health insurance.
  • $5.9 million ($2.1 million General Fund) and 2.8 positions for implementation of Chapter 328, Statutes of 2006 (SB 437) that will simplify and accelerate enrollment in the Healthy Families Program as well as allow families to self-certify their income during eligibility redetermination.
  • $153.7 million ($68.8 million Perinatal Insurance Fund), an increase of $19.2 million over 2007-08 funding.
  • $36 million for MRMIP, which provides health care coverage to medically high-risk individuals and the medically uninsurable who are denied coverage through the individual health insurance market.
• $4.5 billion for the Department of Developmental Services which is responsible for ensuring that more than 220,000 persons with developmental disabilities receive the services and support they need to lead more independent and productive lives and to make choices and decisions about their lives.
• $667.1 million ($354.8 million General Fund) and 6,520.1 positions for Developmental Centers, licensed and certified 24-hour, direct-care facilities that provide services to consumers.
• $3.8 billion ($2.3 billion General Fund) to support the 21 regional centers throughout California that are nonprofit corporations contracted by the Department of Developmental Services to purchase and coordinate services mandated under the Lanterman Act for persons with developmental disabilities.
• $1 billion ($300.8 million General Fund) for the Department of Child Support Services which is responsible for the child support program to promote the well-being of children and the self-sufficiency of families.
  • $41.5 million General Fund and 503 positions for state administration of the program.
  • $196.9 million General Fund to fund local agency administrative costs.

Enhancing the State's Ability to Protect Public Health

The Department of Public Health (DPH) is charged with protecting and promoting the health status of Californians through programs and policies that use population-wide interventions.

• $404.1 million ($165.8 million General Fund) for the Office of AIDS' Treatment and Prevention Program. The Office of AIDS administers programs that provide local assistance funding for HIV education and prevention services, HIV counseling and testing, early intervention to prevent transmission, epidemiological studies, therapeutic monitoring, housing, home and community-based care, and HIV/AIDS drug assistance to low-income persons statewide.
• $8.9 million from the Licensing and Certification Program Fund that will allow the DPH to conduct periodic licensing surveys of long-term care facilities to assess compliance with state standards of safety and care.
• $330.7 million for all programs supported by Proposition 99 revenues. Smoking rates in California continue to decline, due in part to the effectiveness of the Tobacco Tax and Health Protection Act of 1988 (Proposition 99), the California Children and Families First Initiative (Proposition 10), and California's tobacco control programs.

Promoting the Well-Being of Children and Strengthening Families

The Governor's Budget proposes $19 billion ($9.1 billion General Fund) for the Department of Social Services (DSS) which provides aid, service, and protection to children and adults in need of assistance. DSS programs are aimed at promoting the well-being of children, strengthening families, and helping adults and parents achieve their potential for economic self-sufficiency and independence.

• $7 billion for the California Work Opportunity and Responsibility to Kids (CalWORKS) program.
• $3.7 billion General Fund for the federal Supplemental Security Income (SSI) program which provides a monthly cash benefit to eligible aged, blind and disabled persons.
• $1.6 billion General Fund for the In-Home Supportive Services (IHSS) program, which provides support services, such as house cleaning, transportation, personal care services and respite care to eligible low-income aged, blind, and disabled persons. These services are provided in an effort to allow individuals to remain safely in their homes and prevent institutionalization.
• $4 billion ($1.6 billion General Fund) to provide assistance payments and services to children and families under several child welfare programs: Welfare Services (CWS), Child Abuse Prevention, Foster Care, Adoption Assistance and adoptions to children who are either at risk of or have suffered abuse and neglect.
• $118.2 million ($37.3 million General Fund) in 2008-09 for licensing activities that promote the health, safety, and quality of life of each person in community care facilities. The Community Care Licensing program directly licenses and monitors approximately 75,000 community care facilities and provides oversight, direction and training to counties that license approximately 11,000 additional facilities. These facilities include child daycare, children's residential and elderly residential and day support facilities and serve approximately 1.4 million clients statewide.

Providing Mental Health Services in Communities

The Department of Mental Health (DMH) ensures that a continuum of care exists throughout the state for children and adults who are mentally ill by providing oversight of community mental health programs and direct services through state mental hospitals.  The Governor's Budget includes $5 billion ($2.1 billion General Fund) for the DMH in 2008-09, a net increase of $144.4 million ($143.8 million General Fund) from the revised 2007-08 budget and an increase of $159.4 million ($168.3 million General Fund) from the Budget Act of 2007.

• $5.2 million General Fund in order to ensure that the state hospitals meet the wide-ranging treatment and performance requirements of the Consent Judgment. The federal Civil Rights of Institutionalized Persons Act (CRIPA) authorizes the U.S. Attorney General to conduct investigations and litigation relating to confinement in state or locally operated institutions. Since June 2, 2006, California's state hospitals have operated under a Consent Judgment with the U.S. Department of Justice (USDOJ) in order to address deficiencies in patient treatment and care which were deemed to be violations of CRIPA. The DMH has agreed to bring all four of the hospitals that fall under the direction of the Consent Judgment into compliance by June 30, 2009.
• $1.8 million General Fund for the Forensic Conditional Release Program (CONREP) mandates responsibility to the DMH for outpatient treatment and supervision of judicially committed patients including Mentally Disordered Offenders, individuals found Not Guilty By Reason of Insanity, Mentally Disordered Sex Offenders, and Sexually Violent Predators (SVPs).
• $1.2 billion General Fund for state hospitals operated by DMH provide long-term care and services to the mentally ill.
• $3.6 billion ($815 million General Fund) for community mental health services in 2008-09, an increase of $61.5 million ($58.7 million General Fund) compared to the revised 2007-08 budget.
  • An increase of $105.4 million ($51.4 million General Fund) from 2007-08 for the Early and Periodic Screening, Diagnosis and Treatment (EPSDT) Program, an entitlement program for children and adults under age 21 that provides services to correct or ameliorate diagnosed mental illnesses.

Proposed Budget Balancing Reductions

Total budget-balancing reductions for the HHSA amount to $246.6 million ($181.1 million General Fund) and 11.2 positions in 2007-08 and $4.5 billion ($2.7 billion General Fund) and 367.5 positions in 2008-09.  These reductions assume necessary statutory changes will be enacted by March 1, 2008.

Department of Health Care Services

• $33.4 million in 2007-08 and $602.4 million in 2008-09 from reducing Medi-Cal provider rates for physicians and other medical and service providers. A proportionate reduction will be made to manage care rates.
• $34.4 million in 2008-09 by shifting federal Safety Net Care Pool payments from designated public hospitals to the portions of the California Children's Services (CCS), the Genetically Handicapped Persons, the Medically Indigent Adult-Long-term Care and the Breast and Cervical Cancer Treatment programs, which are eligible for these funds. This shift will allow a corresponding reduction in General Fund for these programs.
• $30 million in 2008-09 by reducing reimbursement rates for hospitals that do not contract with Medi-Cal.
• $56.8 million in 2008-09 payments from a reduction in the payments to certain long-term care facilities.
• $24 million in 2008-09 from reduced Medi-Cal Disproportionate Share Hospital replacement payments for private hospitals. These payments are allocated to hospitals based on their uncompensated Medi-Cal and uninsured care costs.
• $10 million in 2007-08 and $134 million in 2008-09 by eliminating certain Medi-Cal optional benefits for adults including incontinence creams and washes, acupuncture, dental, audiology, optometry, optical, chiropractic, podiatry, psychology and speech therapy.
• $4.2 million in 2007-08 and $50.1 million in 2008-09 related to stopping the payment of Medicare Part B premiums for Medi-Cal share-of-cost beneficiaries who do not become Medi-Cal certified by meeting their share-of-cost during the month. These individuals are Medi-Cal eligible but have adjusted income that exceeds 129 percent of the federal poverty level and have not spent down their excess income. They will have the option to pay their own premiums to maintain their Medicare Part B benefits.
• $92.2 million in 2008-09 by reducing the 12 month Medi-Cal eligibility period for children and restoring quarterly status reports for both children and parents. Currently, children's eligibility is determined annually, while parent's eligibility is determined semi-annually. This proposal would reinstate quarterly status reports, which would allow an evaluation of the person's eligibility for Medi-Cal on a quarterly basis.
• $75.8 million in 2008-09 in Medi-Cal payments to counties. Adjustments include: elimination of the California Necessities Index-based cost-of-living adjustment that would be provided to county eligibility, administrative, and support positions; elimination of caseload growth funding that is used to hire additional county staff to address increased workload due to increases in Medi-Cal eligibles; a reduction of the county administration base, which provides funding for staff, support, and staff development costs associated with the Medi-Cal eligibility process; and reductions in funding for administration of the CCS and Child Health Disability Prevention programs.

Department of Public Health

• $11 million in 2008-09 for AIDS programs. This reduction will be achieved by reducing state support and local assistance for various programs, including AIDS Education and Prevention, AIDS Epidemiology Studies and Surveillance, AIDS Drug Assistance, and HIV Counseling and Testing. At this reduced level of funding, the state will continue to meet the federal maintenance-of-effort requirement for receipt of Ryan White Act funds.
• $5.4 million for family health programs. This will result in a reduced level of state support and local assistance funding for case management services for at-risk teens, domestic violence prevention activities, and education activities including breastfeeding, nutrition and Sudden Infant Death Syndrome risk reduction.
• $3.3 million for local chronic disease programs. This will result in a reduced level of state support and local assistance funding for cancer and injury prevention surveillance activities, developing public health interventions and monitoring environmental contaminants.

Managed Risk Medical Insurance Board

• $41.9 million in 2008-09 by reducing rates for Healthy Families Program plans, increasing premiums and co-pays and instituting an annual cap on dental benefits.

Department of Developmental Services

• $348.3 million ($235.1 million General Fund) in 2008-09 through extension of existing Regional Center cost containment measures, including rate freezes on targeted program categories that are scheduled to sunset June 30, 2008.
• $18.3 million ($14.2 million General Fund) in 2008-09 to freeze rates negotiated by regional centers for all provider types not yet frozen and to set parameters or limits on the rates for new providers with whom the regional centers may negotiate.
• $0.8 million General Fund in 2008-09 to expand the Family Cost Participation Program (FCPP) by assessing a share of the cost of respite, day care and camping services to parents of Early Start consumers and by expanding the share of cost scale so that families between 400 percent of the Federal Poverty Level (FPL) and 500 percent of the FPL will pay 10 percent of the cost of these services and families at 2,000 percent of the FPL or above will pay 100 percent of the cost of these services.

Department of Mental Health

• $8.2 million General Fund in 2007-08 and $23.8 million General Fund in 2008-09 for managed care primarily by eliminating the annual cost-of-living increase and reducing the non-inpatient State Maximum Allowance (SMA).
• $6.7 million General Fund in 2007-08 and $46.3 million General Fund in 2008-09 for the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program. The savings would be achieved primarily by requiring prior authorization by mental health providers for EPSDT day treatment that exceeds six months, eliminating the annual cost-of-living increase, and reducing the non-inpatient State Maximum Allowance (SMA).

Department of Social Services

• $73.7 million in 2007-08 and $389.1 million in 2008-09 for the CalWORKs program. The savings would be achieved as part of a reform proposal intended to improve the state's work participation rate, as necessary to avoid federal sanctions. The proposal combines work incentives with sanctions for not meeting work requirements.
• $83.7 million in 2008-09 in reduced Child Welfare Services allocations to counties. Counties will decide how to apportion the reduced allocation.
• $6.8 million in 2007-08 and $81.5 million in 2008-09 for foster care and adoptions programs. The proposal would reduce rates for foster family agencies, foster family homes, group homes, adoptions assistance, and Kin-GAP recipients.
• $23.3 million in 2007-08 and $300.3 million in 2008-09 for the SSI/SSP program, achieved by suspending the June 2008 and June 2009 state COLAs. Recipients will still see increased benefit payments in both years due to provision of the federal COLAs.
• $109.4 million in 2008-09 for the IHSS program by reducing the hours allocated to IHSS recipients for non-medical services.
• $3.4 million in 2007-08 and $44 million in 2008-09 by eliminating the Interim Statewide Automated Welfare System (ISAWS) Migration project. The current ISAWS system remains fully operational and eliminating the ISAWS Migration project prevents the need to make reductions and introduce significant risk in other critical projects.
• $2.3 million in 2008-09 by reducing community care licensing random visits. Under this proposal, 14 percent of facilities would receive random inspections annually. No reduction will be made to follow-up inspection schedules for facilities that have previously been found to be out of compliance with licensing standards.

Special Session Issues

The Governor has called a special session of the Legislature to immediately address the budget and cash shortfalls. Included in the special session are the following proposals that help to address the state's cash shortage:

• $814.2 million by delaying the July and August payments and advances to counties for programs in the Department of Social Services budget until September. Payments for the SSI/SSP and IHSS programs would not be impacted.
• $454 million delay in payments to Medi-Cal institutional fee-for-service providers in 2008-09. This proposal temporarily delays the August weekly payments to September.
• $400 million change in disbursement pattern to Regional Centers in 2008-09. The Governor's Budget proposes to reduce the amount of advance payments the Regional Centers receive in July and August by $400 million. In September, this funding would be restored. This modified disbursement will preserve the Regional Centers' ability to pay providers in a timely manner.
• $232 million by delaying the August payments to Medi-Cal managed care plans and Delta Dental until September.
• $199.7 million by delaying the mental health managed care program advance from July until September.
• $165 million savings in 2007-08 by delaying a June payment to Medi-Cal fee-for-service providers into July. This same transaction would occur in subsequent fiscal years.
• $164.3 million by delaying the first quarterly payment to counties for Medi-Cal administration from August to September.
• $92 million by delaying the quarterly advance to counties for the Early and Periodic Screening, Diagnosis, and Treatment program from July to September.