UDW – Homecare Providers Union
FY 2011-2012 Governor’s Budget May Revision
IHSS Overview – May 16, 2011

Overview

Governor Jerry Brown submitted a revised state budget proposal to the legislature on May 16, 2011. This revision takes into account substantive fiscal and legislative changes that have taken place since his original budget proposal in January. At that time the Administration estimated a combined budget deficit of $25.4 billion. Consequently, the Governor and the Legislature approved massive cuts in state spending (almost $10 billion). These actions, along with higher than expected tax revenues, have reduced the deficit to $9.6 billion. The Administration is now proposing additional budget solutions that total $10.8 billion. The extra funds are intended to create a reserve of $1.2 billion.

March 2011 Legislative Actions

The Governor’s Budget in January included $486.2 million in spending reductions to the IHSS program. The Legislature rejected a majority of the Governor’s proposals, which included an across the board reduction in service hours and the elimination of domestic and related services for many IHSS recipients. In March, the Budget Conference Committee adopted a series of measures that achieved the targeted savings:

• A requirement that all recipients obtain certification from a licensed health care professional that without IHSS services the recipient is at risk of being placed in institutional care (estimated savings of $133.5 million).
• A mandate for the state’s participation in the new Community First Choice Option available under Federal law as of October 1, 2011 (estimated savings of $128 million).
• The elimination of the mandate and most of state funding for IHSS Advisory Committees (estimated savings of $1.4 million).
• A mandate for the implementation of the Medication Dispensing Pilot Project beginning July 1, 2011. The goal of the pilot is to reduce hospitalization and institutionalization resulting from medication noncompliance among high-risk Medicaid recipients. There is a stipulation that should the requisite savings not be achieved by July 1, 2012, there will be a mandatory across the board reduction in service hours for all IHSS recipients (estimated savings of $140 million).
• These measures were contained in SB 72, the human services trailer bill, and were signed into law on March 24, 2011.

Impact of the May Revision on IHSS

The May Revision contains no major changes to the provisions described above. It does include the following modifications:

• Decreased estimated savings from the new health care certification requirement, from
  $133.5 million to $71.2 million.
• A slight increase in estimated savings resulting from reduced caseload in the current and
  next fiscal years.

Revenue

The need for additional revenue remains as strong today as it did in January. The Governor
continues to propose the temporary extension of current tax rates in order to generate $9.3 billion in additional state income. Notable tax solutions are listed below:

• Maintain the Personal Income Tax (PIT) Rate Surcharge from 2012 through 2015 –
  expected to generate $1.3 billion in 11-12.
• Maintain the PIT dependent exemption credit for five years – expected to generate $1.4
  billion in 11-12.
• Maintain the Vehicle License Fee (VLF) for five years – expected to generate $1.1 billion
  in 11-12.
• Maintain the Sales and Use Tax (SUT) for five years – expected to generate $4.5 billion
  in 11-12.
• Make mandatory the Single Sales Factor for multi-state/national corporations – expected
  to generate $950 million in 11-12.

The Governor proposes to make these revenue changes effective July 1, 2011 with the understanding that they would become finalized through a special election to be held sometime in the fall.

Phase Two Realignment

The Governor continues to propose a future realignment of the IHSS program (termed “Phase Two Realignment”) from the county to the state level. The goal of this effort would be for the state to assume all county responsibilities for the program, however as yet there are no details as to how this would occur. We expect the full proposal to be included as part of the Governor’s budget for FY 2012-2013. Preliminary discussions with stakeholders will begin in the late spring.