Children and the 2015-16 State Budget Proposal
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The document summarizes key aspects of California's proposed 2015-16 state budget as it relates to children and families. Some of the main points include: - The budget prioritizes debt repayment and rainy day funds over social services and continues a trend of fiscal austerity. - It provides increased funding for K-12 education per the Proposition 98 requirement but fails to substantially reinvest in programs like child care. - Modest increases are outlined for higher education, community colleges, and health care expansion through Medi-Cal, though cuts to providers remain. Cash assistance through CalWORKs and SSI grants remain below pre-recession levels.
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Children and the 2015-16 State Budget Proposal
- 1. CALIFORNIA CHILDREN AND THE STATE BUDGET January 2015 Michele Stillwell-Parvensky msp@childrensdefense.org Senior Policy Associate Children’s Defense Fund – California
- 2. California has the highest child poverty rate in the nation More than 1 in 3 Black and Latino children are poor Children under age 6 are the poorest age group
- 3. Governor’s 2015-16 Budget Proposal Revenues $4.1 billion higher than anticipated Continues to emphasizes debt repayment and building the rainy day fund Major investment in K-12 education, as required under Prop. 98 Prioritizes fiscal austerity over investing in the safety net or public services A flat-line, status quo budget
- 4. K-12 Education Prop. 98 spending increase of $7.8 billion $4 billion to continue implementation of Local Control Funding Formula $1.1 billion in one-time funding to implement Common Core Eliminates $897 million in debt owed to schools Allocates $320 million from Prop. 39 revenues for energy efficiency grants to school districts $273 million in one-time funding for emergency facility repairs $100 million in one-time funding for Internet connectivity Provides recommendations for overhauling the state school bond system for funding school facilities
- 5. Local Control Funding Formula (LCFF) Source: California Teachers Association Creates a more rational and equitable school finance system Provides more funds for students with greater needs (low-income students, English learners and foster youth) Increases local control, giving school districts more options on how to best use funds
- 7. Career Training & Adult Education Provides $250 million in Proposition 98 funding annually for 3 years for the Career Technical Education Incentive Grant Program Provides $500 million in Proposition 98 funding for a new block grant to support adult education
- 8. Community Colleges Proposes $200 million to improve student success programs and close achievement gaps Pays down $353 million in mandate debt owed to community colleges Increases base allocation funding by $125 million to pay for operating expenses Provides 2% increase ($107 million) for enrollment growth
- 9. Higher Education Continues a multiyear plan that modestly increases funding for UC and CSU, with the expectation that funding will be used to avoid tuition and fee hikes Increase of $120 million (4%) each for UC and CSU Provides a $45 million increase for the Middle Class Scholarship Program Reflects increase participation in the Cal Grant program with an increase of $267 million
- 10. Child Care and Development Fails to make any major reinvestments in the child care and development system Provides a modest COLA for child care and preschool programs Funding remains substantially lower than before the recession, despite a modest increase included in last year’s budget agreement
- 11. Health Care Reflects the continued implementation of federal health care reform in California including Medi-Cal expansion ½ of all children are in Medi-Cal Maintains a 10% cut to payments for many Medi-Cal providers Continues to redirect funding to the state that was previously used by counties to provide health care to uninsured residents Suggests that undocumented immigrants who benefit from Pres. Obama’s recent actions may be eligible for state-funded Medi-Cal Includes funding for behavioral health treatment services for children with autism in Medi-Cal New Managed Care Organization (MCO) tax
- 13. CalWORKs CalWORKs provides cash assistance and services to low-income families, 1 million children Proposes no additional increases for CalWORKs grants Grants remain below pre-recession levels and fail to lift most families out of deep poverty (50% of the federal poverty line) Maintains 24-month limit for parents to receive full array of benefits (down from 60 months)
- 15. Foster Care & Child Welfare Continuum of Care Reform (CCR) is a multi- year effort to improve the child welfare & foster care system - emphasizes that children belong in home-like environments, not institutions Includes $7 million to begin implementing the CCR recommendations Investing in foster care recruitment and retention Increasing social worker capacity to provide services
- 16. Supplemental Security Income (SSI/SSP) SSI/SSP helps the families of 118,000 children with disabilities afford basic necessities Maintains past cuts to grant levels and fails to restore the state cost-of-living adjustment Maximum grant remains at the federal minimum and below the poverty line
- 17. In-Home Supportive Services IHSS helps low-income seniors and people with disabilities, including children, live in their own homes, preventing costly out-of-home care Includes a plan to restore a 7% cut to hours of care ($483 million) Delays implementation of new federal labor regulations mandating overtime pay for home care workers due to federal court ruling
- 18. Cap-and-Trade Includes $1 billion in revenues from cap-and-trade auctions (up from $870 million in 2014-15) $250 million for high-speed rail $200 million for Sustainable Communities Program (including affordable housing) $350 million for clean transportation $110 million for energy efficiency and clean energy At least 25% of cap-and-trade funds must benefit disadvantaged communities
- 19. What’s Next
- 20. Additional Resources California Budget Project www.cbp.org Western Center on Law and Poverty www.wclp.org Legislative Analyst’s Office www.lao.ca.gov
- 21. Children’s Defense Fund – California www.cdfca.org www.cdfca.org/endchildpoverty Thank you! Michele Stillwell-Parvensky msp@childrensdefense.org
Editor's Notes
- Hello, my name is Michele Stillwell-Parvensky and I’m with the Children’s Defense Fund-California. In this presentation, I’m going to delve in to the impact that the Governor’s budget proposal would have on California children.
- Before we dive into the Governor’s proposal, want to provide some important context on child poverty. Budgets express our values and priorities as a society, and I know you all agree that California should have a budget that protects every one of our children from poverty. We know that growing up poor has long-term negative consequences. California has the highest child poverty rate in the nation, according to the U.S. Census Bureau’s supplemental poverty measure, which takes into account cost of living and the impact of public benefits. 1 in 4 California children is poor. More than 1 in 3 Black and Latino children in California lives in poverty. I bring up these statistics because they provide critical context about poverty that should inform the budget decisions California policymakers make. This Governor has shown a willingness to tackle big problems with bold plans: passing prop 30 and then fundamentally restructuring the school finance system to direct resources to low income and at risk students paying down billions of dollars in debt high-speed rail, and water What we need now - especially at a time when many families are still struggling in the current recovery – is a bold plan to reduce child poverty in California. Unfortunately, the Governor’s budget proposal does not include one. The budget does include a section in the introduction on addressing poverty, but only highlights incremental steps California is already taking rather than proposing how to change a status quo that’s not working for too many of our families and children. In past years, the budget conversation has been structured as a trade-off: either we remain fiscally disciplined and pay down debt OR we rebuild the safety net. The good news with our improving fiscal situation is that it doesn’t need to be a choice. At the women’s policy Summit last week both Sen. Holly Mitchell and assembly speaker Toni Atkins highlighted that California can do both pay down debt and save for a rainy day AND reinvest social services for children and families.
- Now, let’s move on the Governor’s budget. The good news is that California’s fiscal situation is continuing to improve. After years of huge budget deficits and devastating cuts, we have budget that is in the black for the third year in a row. The Governor’s budget reflects $4.1 billion in additional unanticipated revenues. The governor continues to emphasize debt repayment and building a rainy day fund, and prioritizes fiscal austerity over investing in the safety net or public services. Under the Governor’s proposals, we would end 2015-16 with $3.4 billion in reserves. This total is the combination of $1.6 billion deposited in the Budget Stabilization Account (BSA) before Proposition 2, a $1.2 billion projected deposit in the BSA for this budget year, and $534 million in the regular reserve. The budget also pays down $1.2 billion in debts under Proposition 2. As I’ll discuss, there are substantial increases for education. But the proposal does not include any major restorations in funding for a variety of areas that were subject to deep cuts in recent years, including child care and preschool programs, CalWORKs and health care. In the Health and Human Services sections of the budget, we very much have a flat line, status quo budget – this problem is that the status quo funding levels reflect where we were in the midst of the recession after the significant budget cuts. The Governor’s proposal basically assumes that the weakened safety net is the new normal, and doesn’t make repairing the social safety net a priority.
- Now, I’m going to go into how the budget affects children on various issues – except for child care, which we will cover later. Let’s start with K-12 education. How the state allocates education dollars is especially important in California, because its schools rely more heavily on state funding – and less on local property taxes – than those in the rest of the US. First, a little bit of background on Proposition 98. Proposition 98 (1988) constitutionally guarantees a minimum level of funding for K-12 schools, community colleges, and the state preschool program. Increases in state General Fund revenues tend to boost the Proposition 98 guarantee. With the increase in revenues this year due to both Prop. 30 and the recovering economy, the Prop. 98 minimum guarantee went up considerably this budget year (and the Prop. 98 calculations for 2012 and 2013 also went up). In total, the budget proposal reflects $7.8 billion in additional Prop. 98 funding. It’s important to note that this is the amount of school spending that is constitutionally mandated – the Governor hasn’t funded education above what is required. The budget proposal reflects a 39 percent increase since 2011-12, raising per-student spending by $2,600 during that time. The Legislative Analyst’s Office calculated that the proposed average per-pupil spending will be about $200 per student above the pre-recession level of 2007-08, adjusted for inflation In a rare alignment of fiscal stars, K-12 education will get nearly every dollar of the unanticipated increase in General Fund revenue in the current year. I won’t get into all the wonky details of it being a test one year and the need to pay back the maintenance factor, but basically in some high-revenue years, the state must repay schools for the Prop. 98 IOUs accumulated in poor revenue years. The Governor devotes $4 billion to continue implementing the Local Control Funding Formula, which steers additional dollars to low-income students, English learners and foster youth. The budget provides $1.1 billion in one-time funding to implement Common Core state standards, which will be used to reduce mandate debt the state owes to schools. Under the However, to the extent any educational entities have existing mandate reimbursement claims, the Governor’s proposal would reduce those claims by the amount of funding they receive for standards implementation and new LCFF-related responsibilities. Mandate debt reflects the cost of state-mandated services that school districts provided in prior years, but for which they have not yet been reimbursed. The state owed K-12 education $5.3 billion for unpaid mandate reimbursement claims. The budget eliminates $897 million in debt owed to schools. Retires the state’s remaining $273 million funding obligation for the Emergency Repair Program, under the Williams v. California settlement agreement. The Governor is also proposing a major change in how school facilities are funded. Under the current system, local districts can access state bond money on a matching basis. Brown wants to eliminate state assistance for all districts except those that do not have enough property wealth to be able to finance new facilities on their own. Other proposals: Allocates $320 million from Prop. 39 revenues for energy efficiency grants to school districts $273 million in one-time funding for emergency facility repairs $100 million in one-time funding for Internet connectivity
- As I mentioned, the Governor hopes to channel a big portion of the new education funds over the next several years into his landmark school finance system, which passed two years ago – the Local Control Funding Formula (LCFF). LCFF created a more rational and equitable school finance system which provided more funds for low-income students, English learners and foster youth. LCFF also grants school districts more flexibility and local control to make spending decisions, with the hope being that they make decisions that are more responsive to the needs of their students. I think most folks have a good sense of LCFF so I won’t dive into details, but there’s more information in the printed slides.
- Here’s a graph from the Governor’s budget that shows the projected Prop. 98 investment in education. You can see that the proposed funding level for 2015-16 is substantially higher than the lows of 2011-12, and above the spending levels before the recession. Increases in state money for education are projected to slow starting in two years, when temporary taxes from Proposition 30 start expiring.
- The Governor also has several proposals on career training and adult education. The budget proposal provides $250 million in Proposition 98 funding annually for three years for the Career Technical Education (CTE) Incentive Grant Program. This temporary program would operate in addition to the existing Career Pathways Trust Program, which provides grants to CTE programs. This new competitive grant program would require a local school district match. The goal of this new program is to create “new and expanded high-quality CTE programs.” The budget would provide $500 million in Proposition 98 funding for a new block grant to support adult education - it would direct, dedicated state funding that was missing under LCFF. This block grant would support a variety of programs, including citizenship courses, education programs for adults with disabilities, and CTE and apprenticeship programs. In the block grant’s first year, dollars would be provided to K-12 school districts directly in the amount needed for districts to maintain their adult education programs. In following years, dollars would be provided through regional “allocation boards” that would be responsible for administering the block grant funds.
- Community college funding is also part of Prop. 98, so it receives increases. The Governor’s budget provides $200 million to improve and expand student success programs - $100 million to increase funding for orientation, assessment, placement, counseling, and other education planning services, and $100 million targeted toward underrepresented student groups to close achievement gaps. Provides $353 million in one-time funding to reduce mandate debt the state owes to community colleges. Under the Governor’s proposal this one-time funding could be used by community colleges to address deferred maintenance, instructional equipment, and other one-time costs. Also: Increases base allocation funding by $125 million to pay for operating expenses Provides 2% increase ($107 million) for enrollment growth Pays the remaining $94.5 million in previously deferred payments owed to CCCs Provides $92.4 million to fund a 1.58 percent COLA Expands apprenticeship programs Provides $48 million in one-time funding for the Career Technical Education Pathways Program Allocates $39.6 million from Proposition 39 revenues to community college districts for energy efficiency project grants
- In higher education, the Governor continues a multiyear plan that modestly increases funding for UC and CSU, contingent on the funding being used to avoid tuition and fee hikes. However, even with the 2014-15 increases and the proposed 2015-16 increases, General Fund spending for CSU and UC would still be significantly lower than in 2007-08, after adjusting for inflation. In recent years, direct General Fund spending on a per student basis at CSU and UC has been at or near the lowest point in more than 30 years. Tuition and fees have increased dramatically in recent decades, more than tripling at CSU and more than quadrupling at UC since 1990-91, after adjusting for inflation. In late 2014, UC President Janet Napolitano and the UC Board of Regents approved a plan that would increase UC tuition and fees by up to 5 percent annually for the next five years, unless the state provides additional funds beyond the levels proposed in the Governor’s multiyear plan -- setting up for a potential battle between Governor Brown and Napolitano. This year both UC and CSU would receive a 4% increase of hundred and $20 million. The increase in General Fund support for UC in 2015-16 ($119.5 million) is contingent on the University: – Reversing the recent decision to raise tuition and instead maintain it at current levels. – Not increasing out-of-state enrollment in 2015-16. – Taking actions to control costs. (The Governor expects the UC Regents to form a committee to develop proposals to “reduce the University’s cost structure.”) The budget proposal provides $45 million to continue implementation of the Middle Class Scholarship (MCS) Program. The MCS Program would provide scholarships to eligible California resident undergraduates from families with incomes up to $150,000 who attend a UC or CSU. Upon full implementation, participating students would be eligible for awards that, combined with other publicly funded student financial aid, would cover up to 40%of tuition and fees. Full implementation of the MCS is expected in 2017-18. The Governor’s budget also reflects at additional $267 million for increased participation in Cal Grants.
- Moving on to health care. The budget proposal reflects the continued implementation of federal health care reform in California, including an expansion in the Medi-Cal program. About 2 million newly eligible Californians are expected to be enrolled in Medi-Cal as of June 2015. An additional 1.1 million Californians who were already eligible for Medi-Cal but had not signed up, are expected to be enrolled in the program as of this coming June. In terms of enrollment, ACA implementation in California has been more successful than advocates and state policymakers hoped. The vast majority of the expansion ($17.1 billion) is paid for by the federal government. Now, half of California children (4.5 million) have health coverage through the Medi-Cal program – which means the Medi-Cal program is central to the health and well-being of California children. The Governor’s budget maintains a 10% cut to payments for doctors and other Medi-Cal providers that was passed in 2011 - I will talk about this more in a moment. The budget also continues to redirect funding to the state that was previously used by counties to provide health care to uninsured, low income residents. There is still uncertainty whether counties will be left with sufficient funds to provide health care for the 3 to 4 million Californians who are projected to lack coverage even after full implementation of health care reform. The budget suggests that undocumented immigrants who benefit from President Obama’s recent actions on immigration may be eligible for state-funded Medi-Cal. In November, President Obama announced a new federal policy allowing certain undocumented immigrants to apply to temporarily remain in the US without fear of deportation. (This is known as “deferred action.”) California already allows such immigrants to sign up for state-funded, comprehensive Medi-Cal coverage if they meet the program’s income eligibility guidelines (Permanent Residence Under Color of Law (PRUCOL) status). However, despite this longstanding state policy, the Administration acknowledges only that undocumented immigrants helped by the President’s actions may “potentially” qualify for Medi-Cal and cites “a great deal of uncertainty about the scope, timing and effect of these actions.” Includes funding for behavioral health treatment services for children with autism in Medi-Cal, now a federally required Medi-Cal benefit ($151 million GF annually) Includes a plan to replace the current tax on Medi-Cal managed care plans with a new tax that meets federal guidelines, and provide some additional revenues.
- As I mentioned, The Governor’s budget maintains a 10% cut to payments for doctors and other Medi-Cal providers that was passed in 2011. Medi-Cal reimbursement rates are already among the lowest in the nation. As a result of the low rates, some providers decide not to take Medi-Cal patients, which can undermine access to care. As were adding millions more people to the Medi-Cal program , we also need to make sure we have enough providers to actually provide care to children and families when they need it.
- CalWORKs, which provides cash assistance and services to low-income families, including about 1 million children, was a particular target of budget cuts in the past. This year’s budget reflects the 5 percent increase in the CalWORKs grant that was adopted in last year’s budget agreement, but there are no additional grant increase proposed. Grants are still much lower than they were before the recession. The budget does maintain the cuts and changes made in previous years: Length of aid for which parents are eligible for benefits through the program has also been reduced over the past decade, from 60 months of lifetime eligibility to just 48 months. In addition, parents’ eligibility for welfare-to-work and support services has been reduced from 60 months to 24 months (with some exceptions).
- This graph from the California Budget Project shows that the maximum CalWORKs grant is far below the federal poverty line – and is actually below the deep poverty threshold of 50% of the FPL. The grant size is now up slightly after small increases pushed by the legislature in the past 2 budget cycles, but as of this month, the maximum cash grant for a family of three is $638/month, just 41% of the FPL. Grants are still lower than they were before the recession. Furthermore, the grants have declined significantly in value over the past 30 years – they haven’t kept up with inflation. Welfare spending as a share of total state spending had dropped by more than half since 1996.
- Now, let’s look at foster care and child welfare. The Continuum of Care Reform (CCR) is a multi-year effort started in 2012 to improve the child welfare & foster care system. The CCR effort is the result of the 2012 budget bill (SB 1013), which required Department of Social Services to form a workgroup to develop recommendations for reforming the current rate-setting system, as well as services and programs serving children and families in the continuum of placements eligible for foster care benefits. The recommendations released in a report this week, and they emphasize that children belong in home-like environments, not institutions. Vision is that all the children live with a committed, permanent, nurturing family, and that group home care only be used when needed as a short-term, high-quality, intensive intervention as part of a continuum of care. Services and supports are tailored to meet the needs of the individual child and family being served with the ultimate goal of maintaining the family or transitioning the child to a permanent family. The budget proposal includes $7 million to begin implementing the CCR recommendations, including investing in foster care recruitment and retention and increasing social worker capacity to provide services.
- SSI/SSP helps 1.3 million low-income seniors and people with disabilities, including 118,000 children with disabilities, afford basic necessities. Like for other social safety net programs, the Governor’s budget does not include any increases, and maintains past cut to grant levels. State policymakers made deep cuts to SSI/SSP cash assistance in recent years. SSP grants for couples and for individuals were reduced to federal minimums. In addition, the annual state COLA for SSI/SSP grants was eliminated beginning in 2010-11. Due to these changes, state funding for SSI/SSP cash assistance has fallen by more than 30 percent since 2007-08, after adjusting for inflation. Grants remain below the January 2009 level, even without adjusting for inflation. The maximum SSI/SSP grant is below the federal poverty line.
- Moving on to In-Home Supportive Services, which helps pay for home care services for 440,000 (per month) low-income seniors and people with disabilities, including children, so they can live safely in their own homes, preventing costly out-of-home care. The budget includes a plan to roll back the current 7% cut to IHSS consumers’ hours of care. In recent years, the state has reduced the authorized hours of care that IHSS consumers may receive. Under the Governor’s proposal, IHSS consumers’ hours of care would be fully restored using proceeds from a revised tax on managed care organizations. The budget delays the implementation of new federal labor regulations regarding home care workers. In 2013, the federal government issued rules mandating overtime pay for home care workers – including IHSS providers. The 2014-15 budget agreement provided state funding to implement these changes. However, a federal court recently prevented the new rules from going into effect. As a result, the Governor has delayed implementing these new regulations.
- I’ll finish with some information about the state's cap-and-trade program, which is in its second year of producing revenues. The Governor’s budget estimates $1 billion in revenues from cap-and-trade auctions (up from $870 million in 2014-15), and allocates it in the following way (based in part on a budget deal between the Governor and the legislature last year): $250 million for high-speed rail $200 million for Sustainable Communities Program (including affordable housing) $350 million for clean transportation $110 million for energy efficiency and clean energy One important thing to note is that under a bill passed in 2012, at least 25% of cap-and-trade funds are required to benefit disadvantaged communities. On the environmental side, the Governor’s budget indicates that the state is on track to meet the AB 32 goal of reducing greenhouse gas (GHG) emissions to 1990 levels by 2020.
- So – what’s next? This is only the Governor’s proposal – and the next step is for the Legislature to weigh in and pass the budget. The reaction from legislative Democrats to the Governor’s budget proposal was generally positive, with key leaders highlighting other investments they want to prioritize. Last week, I heard some interesting points from Christian Griffith, Chief Consultant for the Assembly Budget Committee: he emphasized that with the longer term limits for legislators, and the fact that the budget surpluses meant they could move away from year-to-year budgeting, the assembly is thinking about issues in terms of multiple years and trying to figure out how to really fix key problems. That’s exciting because there are some serious challenges facing California’s children and families that need long-term, transformational solution. But advocates will need to continue pressuring legislators to actually develop and move forward with those solutions. As I mentioned earlier, advocate should follow the lead of Sen. Holly Mitchell and speaker Toni Atkins in rejecting the false choice between fiscal discipline and investing in children and families - we can and must do both. I do think that a lesson from the past few years for advocates is that pressing for incremental restorations of past cuts can be difficult even with a sympathetic legislature, and we need to reframe our asks within the more ambitious plans to transform California’s biggest problems.
- I want to say thanks to a few organizations that provide very useful budget information – their websites are here is you would like to learn more.
- Questions? Thank you for your willingness to learn about the California budget, and how the Governor’s proposal would impact our children. If you have any questions, I encourage you to contact me – my email address is in your handout. You can also visit our website at www.cdfca.org for updated information on the budget and how it affects children. I look forward to working together with you over the upcoming year to protect California children!