Budget Brief: May Revise Reveals New Cuts, Funding ShiftsMay 21, 2012
| Faced with a state deficit that has ballooned to $15.7 billion since January, Gov. Jerry Brown last week unveiled his budget proposal's May Revise that contained an additional $4 billion in cuts to state programs. If approved, many of these cuts would threaten the health and well-being of young kids and their families.
Some of the proposals included in the May Revise include:
Health Care: Health care programs took the brunt of the blow with an estimated $2.5 billion in proposed cuts, including:
- Reducing supplemental payments to private hospitals, along with the elimination of public hospital grants
- Halting increases to managed care plans for some supplemental public hospital payments
- Rescinding the 2.4 percent rate increase to nursing homes
- Keeping the 1 percent set aside for supplemental payments
Other relevant health care changes in the revise:
- First 5 California will provide $40 million in backfill Medi-Cal services for children ages 0 to 5.
- More than $42 million was added to Healthy Families to reflect savings lost due to the federal government's rejection of the Brown administration's move to increase premiums and copayments in the 2011-2012 budget passed in July. Brown has proposed shifting children from Healthy Families to Medi-Cal starting in October of this year.
Child Care: Brown retooled one of his earlier proposals to cut child care services for families that did not meet work requirements. Under the May Revise, these parents would again be eligible for child care subsidies for up to two years, but only if they are pursuing education or training.
But the revised proposal also recommends a new cut of $184 million to child care providers. Under this plan, reimbursement rates for licensed voucher-based providers would be reduced from the 85th percentile to the 40th percentile of the private pay market. License-exempt providers would meanwhile be reimbursed based on 71 percent of the new lowered licensed ceilings. Reductions of the reimbursement rate of this magnitude may result in numerous center closures.
Transitional Kindergarten: Brown continues to propose the elimination of the transitional kindergarten program, but has adjusted the savings to reflect $92 million - $132 million less than originally expected. The savings would now be directed toward the state's part-day preschool program.
Developmental Services: In January, Brown announced a round of trigger cuts that would go into effect if Brown's tax initiative does not pass in November. The May Revise includes a new trigger cut of $50 million to state developmental services. It is unclear at this time what policy changes would be implemented to achieve these savings.
First 5 California is also expected to provide another $40 million to support Early Start programs under the Department of Developmental Services.
Please find additional reading on the May Revise below. Hearings on the proposals are already underway in both the California Assembly and Senate. The Legislature is required by law to pass a balanced budget by June 15.
For more information, please contact Ruel Nolledo at RNolledo@First5LA.org.
Additional Reading: <<Back to this week's Monday Morning Report.
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