Overview

Governor Jerry Brown submitted his budget to the state legislature on January 10, 2011. As expected, the budget includes extraordinary reductions in health and human services. Many of these reductions are of severe consequence to In-Home Supportive Services (IHSS) program providers and recipients. These reductions are outlined below.

Background

The Governor’s budget predicts massive deficits each year through 2014 – 2015. Though the FY 2010-2011 budget was only recently enacted (October 2010), it was based on assumed revenues that have since failed to materialize. This has resulted in a current year budget gap of $8.2 billion. Compounded with a proposed budget deficit of $17.2 billion in FY 2011- 2012, the Brown Administration faces an unprecedented combined deficit of $25.4 billion.

The Great Recession has had a profound negative impact on the state’s financial situation. However there is widespread agreement that the state suffers from a reoccurring structural deficit.

Utilizing what the Administration refers to as a “balanced approach”, the Governor’s budget includes approximately $12.5 billion in expenditure reductions and approximately $12 billion in increased revenues. It also proposes the creation of a $1 billion reserve.

The Governor is urging a 60-day “fast track” approach to the budget process. This would entail the Legislature approving the proposed program reductions and authorizing a special election on the revenue proposals by March. The special election would be held in June, with a final budget vote to be held shortly thereafter.

Notable Reductions in Expenditure
(expected to be voted on in the legislature by March 1)

• $1.7 billion to Medi-Cal
• $1.5 billion to CalWORKS
• $1 billion to CA State University/University of CA
• $750 million to Dept of Developmental Services
• $580 million to state operations and employee compensation
• $486.2 million to IHSS 

The Governor’s budget maintains school funding for K-12 at 2010 – 2011 levels.

Notable Increases in Revenue
(expected to be on the ballot in a June special election)

Proposes to extend the current tax rate for five years:

• Personal Income Tax (PIT) Rate Surcharge – expected to generate approx $1.2 billion in 10-11 and $2 billion in 11-12
• PIT dependent exemption credit – expected to generate approx $725 million in 10-11 and $1.2 billion in 11-12
• Vehicle License Fee (VLF) – expected to generate $4.5 billion in 11-12
• Sales and Use Tax (SUT) – expected to generate $1.3 billion in 11-12

Additional proposes to implement certain changes in the Corporate Income Tax (CIT) are expected to generate over $1 billion on an ongoing basis.

2011-12 Realignment Proposal

The Governor proposes to transfer decision making and budgetary authority over certain programs from the state to the county. The state would provide direct funding streams to the counties in exchange for these new responsibilities. “Phase one” realignment programs will restructure almost $6 billion in revenue and will involve public safety programs as well as certain health and human services programs. Realignment funding must be approved by voters in the June special election.

The budget also includes a proposal to realign IHSS so that the state would assume all county responsibilities for the program. Details regarding this proposal are not yet known as realignment of the IHSS program is considered part of “Phase two” and would not occur during FY 2011-12.

Supplemental Security Income/State Supplementary Payment

The savings outlined below are based on the assumption that legislation is enacted by March 1 and implemented as of June 1, 2011.

• Proposes to reduce monthly SSP grants for individuals to the federally required minimum payment standard. The maximum monthly SSI/SSP cash grant would decrease by $15 – from $845 to $830.
• SSP grants for couples were reduced to the federally required minimum in 2009.
• Assumes a general fund (GF) savings of $14.7 million in 10-11 and $177.3 million in 11-12. 

In-Home Supportive Services

The Governor’s budget assumes the continuation of litigation currently pending in federal district court seeking to allow the state to implement program reductions enacted as part of the 2009-2010 budget process .

The savings outlined below are based on the assumption that legislation is enacted by March 1 and implemented as of July 1, 2011.

Reduction in Service Hours

• Proposes an 8.4 percent across the board reduction to assessed hours for all recipients.
• In light of the recently enacted 3.6 percent reduction in assessed hours, this will result in a combined across the board reduction of 12 percent.
• Assumes that the 3.6 percent reduction will be made permanent.
• Qualified recipients would be able to submit a Supplemental Care Application (SCA) if they are at risk of out-of-home care placement due to the reduction. This application would be submitted to the counties for potential restoration or modification of hours. Recipients would have the right to appeal this decision.
• The SCA is currently only applicable to the 8.4 percent reduction – however this may change to include the total 12 percent reduction.
• The Administration estimates that 21,000 recipients will utilize the SCA to receive full restoration of their assessed hours.
• Assumes a General Fund savings of $127.5 million in 11 – 12.

Elimination of Domestic and Related Services for Certain Recipients

• Would eliminate domestic and related service hours for consumers who live in any type of shared living arrangement in which these services can be “met in common” with other household members.
• Would eliminate domestic and related service hours for recipients under age eighteen who live with a parent who is able and available to provide the domestic and related services. This would create a policy consist with that which is applied to spouses in the program.
• If a recipient needs domestic and/or related services due to fact that other members of the household, or their parents if applicable, have a medically verified condition, they may request authorized hours for any of these services that meet the need assessment metrics.
• It is unclear how this would apply if a recipient resides in a shared living arrangement with an individual who refuses to provide domestic and related services not as a result of a medical condition.
• The Administration estimates this will impact approximately 300,000 recipients.
• Assumes a General Fund savings of $236.6 million in 11 – 12.

Elimination of IHSS Services for Recipients Without Physician Certification

• Would require recipients to obtain a physician’s written certification that personal care services are necessary to prevent out – of – home care in order to qualify for IHSS services.
• This certification would be required of all newly enrolled recipients as well as current recipients at the time of their annual or 18 month reassessment.
• The Administration estimates this will result in a loss of services for approximately 43,000 recipients.
• Assumes a General Fund savings of $120.5 million in 11 – 12. 

Elimination of State Funding for IHSS Advisory Committees

• Removes the mandate for counties to establish advisory committees.

Counties would have the option to continue advisory committees at their own expense; in doing so they would be eligible for federal matching funds.

Assumes a GF savings of $1.6 million in 11 – 12.