Summary of the Governor’s 2018-19 Budget Proposal
The Governor’s Proposed Budget for the coming year (2018-19) will spend $190 billion from state General Funds ($135 billion) and state Special Funds ($56 billion). General Funds may be spent on any state or local programs; whereas Special Funds (e.g. the Highway Fund financed by gas taxes) must be spent on their designated purposes. For example, the $56 billion K-12 budget is financed by $55 billion in state General Funds. While the $14 billion transportation budget is financed by $13 billion in state Special Funds.
The revenues to finance state spending come from the state’s tax payers, but in different ways: state income taxes, state sales taxes, state gas taxes, vehicle license fees, tobacco taxes, corporate taxes, income taxes, etc.
A significant portion of the state’s budget comes from the federal government. Some comes as a match for state spending, like the federal Medicaid match for low-income individuals and Families or the CHIP match for health coverage for low-income children. Some federal funds come as a block grant to the state, like the federal funds referred to as TANF (Temporary Assistance to Needy Families) or the Title XX Social Services block grant. Some comes as a contract or grant for a specific purpose such as immunizations. Still other federal funds are administered by the state, such as Covered California, but the funds (tax credits/premium assistance) are paid directly from the US Treasury to the health plan selected by the individual or family; these expenditures are not reported as part of the state budget at all.
Likewise, counties, cities and school districts receive and spend state funds that are reported in the Governor’s State Budget. They also receive local taxes, which are not reported, and direct federal funds (not reported in the Governor’s Budget).
This year’s Governor’s Budget has a surplus, and it puts aside significant funding as a Rainy Day Fund to help fund programs when the next recession hits, and it also pays down existing state debts. When the Governor took office in 2011, he faced a “wall of debt” estimated at $35 billion; this has been steadily reduced to less than $6 billion and is proposed to be paid down by an additional $1 billion in this year’s budget. The biggest state debts are for teachers, UC and state employee pensions and retirement benefits – nearly $275 billion. The state has implemented a series of pension reforms under which state employees must contribute equally to their retiree health benefits.
Health and Human Services
The Health and Human Services budget from all sources is $155 billion of which $37 billion is state General Fund. Sixty-five percent of that budget is for Medi-Cal -- $101 billion, of which the state General Fund contribution is about $21 billion. Realignment funds to counties are $11 billion for behavioral health, public health, social services and indigent health, virtually all state funds. In Home Supportive Services costs $11 billion and helps pay for services, which allow seniors and the disabled to stay at home rather than enter nursing homes. Developmental Services costs $7 billion to help adults and children with developmental disabilities. CalWorks (California’s version of TANF) costs $3.8 million to help needy families get back on their feet and return to work. SSI/SSP costs $2.8 billion to help low-income seniors and disabled pay their rent, utilities and purchase food.
The Medi-Cal caseload is 13.5 million, little changed from last year, but a huge increase from 8 million enrolled in December 2013, just prior to the start of ACA enrollment. About 1.3 million Californians get their health coverage through Covered California. California has reduced its uninsured population from 7 million to 3 million in less than four years. There is reference to efforts to better increase coordination and integration of behavioral and physical health services, but no reference to increased accountability for counties and health plans to improve patient outcomes or reduce opioid dependency.
1.6 million Californians are enrolled in CalFresh, California’s version of Food Stamps. 1.3 million elderly and disabled Californians are enrolled in SSI/SSP for low-income seniors and the disabled. 545 thousand elderly and disabled Californians receive IHSS services to allow them to stay in their own home, rather than enter a costly nursing home. 400 thousand low-income family members receive CalWorks to help them get back into and stay in workforce. 333 thousand Californians with developmental disabilities receive care through their local Regional Centers.
The Governor’s Budget notes that the President and many Republican members of Congress (including the entire California House delegation) would like to repeal the Affordable Care Act and shift the costs of expanded coverage back to the state and the counties with or without some federal funds attached. There are 3.9 million low income Californians on Medi-Cal as a result of the Affordable Care Act. Their projected cost is $23 billion, of which the state General Fund contributes $1.6 billion. It also notes that the enhanced federal CHIP funding for health care to low and moderate income children has not been re-authorized and is at risk.
K-12 Education educates a bit less than 6 million California students in more than 10,000 schools. K-12 attendance has been slowly declining, and average daily attendance is projected to be 5.94 million in 2018-19.
The guaranteed funding for 2018-19 is $78 billion, up from $47 million in 2011-12. Total projected per pupil spending from all sources in 2018-19 is projected to be $16,000 per pupil. There are budget provisions calling for more transparency in local school funding and improved outcomes for those students at greatest risk. The budget document notes the progress in graduation rates, college admissions and lower rates of student suspensions.
State funds comprise 61% of the K-12 school’s budget; federal funds 9%; and local taxes 25% and other local funds 5%. Sixty-two percent of the school funding goes into classroom instruction, 12% to instructional support, 10% into maintenance, 5.5% to general administration, 7.7% to pupil services and 2.7% to other. The percent going into the classroom seemed quite small to me.
Higher education encompasses the UC, CSU and Community Colleges. The total proposed budget is $34 billion of which $18 billion is state General Fund and local property taxes. UC will receive $9 billion, CSU receives $7 billion and Community Colleges receive $15 billion. The Cal Grant program provides $2.2 billion for student aid.
2.1 million Californians attend community colleges. UC enrolls 270,000 students. CSU enrolls 405,000 students. The budget proposes that community college funding be linked to student success ass opposed to daily attendance: half would be base funding; 1/4th as supplemental grants and 1/4th linked to student success.
8.7 million Californians have a high school diploma but no college degree, and thus face challenges in an economy requiring ever-increasing amounts of training and education. The budget proposes an on line community college to begin to help these individuals to increase their education to meet the needs of the modern economy.
Prepared by: Lucien Wulsin