The "Trigger" Cuts
The following cuts are slated to go into effect on July 1, 2009 now that the Director of Finance and the Treasurer determined that $10 billion in federal stimulus dollars will not be available by June 30, 2010 to offset state General Fund costs.
· Reduce CalWORKs grants by 4 percent: $146.9 million
(Approximately $30 from a family of three receiving the maximum grant of $723)
· Reduce SSI grants by 2.3 percent: $267.8 million
(Approximately $20 per month for individuals and $35 per month for couples)
· Eliminate certain Medi-Cal benefits for adults: $129.4 million
(Dental, podiatry, acupuncture, chiropractor, incontinence creams and washes, speech and audiology services, psychology, and optician/optical laboratory. All of these benefit cuts affect only adults — not children. Moreover, adults in nursing homes will still be eligible for the benefits. Emergency dental services and dental services that could be performed by a doctor will continue to be provided as will pregnancy-related services.)
· Cut Public Hospital Rates by 10%: $54.2 million
· Cap IHSS Wages: $78.0 million
(Reduction would limit the state's contribution to $9.50 per hour and $.60 per hour for benefits and would eliminate the share-of-cost buy-out program for new recipients after July 1, 2009.)
· University of California and California State University: $100 million
· Judicial Branch: $171 million
The cuts disproportionately impact low income families by cutting basic assistance grants and services at a time of growing need. The cut to the CalWORKs grant is particularly unwise because if California cuts CalWORKs grants by $146.9 million it will lose $117.5 million in TANF emergency funds. Thus the state only saves $29.3 million from the CalWORKs cut and misses out on $117.5 million that could help struggling low income families.
Similarly, the Medi-Cal cuts are short-sided. The federal stimulus bill includes an increased FMAP (federal medical assistance percentage) for states. California will get an increase of 11.6% in the rate that the federal government matches our Medi-Cal expenditures — from 50% for most services to 61.6%. Because of this increase, for every cut the state makes, it will not realize the savings estimated and will give up critical federal financial assistance that could help stimulate the state economy. The budget assumes savings of $129.4 million in General Fund if the Medi-Cal benefit cuts are enacted. However, with a 61.6% FMAP, the state savings for this cut will only be $99.4 million. If the state cut these benefits, instead of losing $129.4 million from the federal government, the state would forgo $159.4 million in federal assistance.
The Good News: Medi-Cal Mid-Year Status Reports for Children Suspended, Food Stamps Increasing, and One-Time SSI Stimulus Payments Coming
In order to qualify for the increased FMAP, states cannot restrict eligibility standards, methodologies or procedures for their Medi-Cal program beyond those in place on July 1, 2008. Accordingly, the California Legislature passed and the Governor signed SBx3 24 which suspends the imposition of mid-year status reports for children on Medi-Cal while the state is receiving the higher FMAP (through 12/31/10).
Also Food Stamp benefits are increasing as of April 1, 2009 by 13.6 percent. This will increase the average monthly benefit from $300 a month to $341 a month. SSI recipients will start receiving a $250 one time stimulus payment in May.
We May See Additional Cuts
This enacted budget package, if everything works perfectly, would result in approximately $41.6 billion in solutions. But the package relies in part on a series of special election ballot initiatives which will be voted on May 19, 2009. If 1C, 1D, and 1E are defeated, the state will need an additional $6 billion. The Legislative Analyst Office estimates additional budget shortfalls of $8 billion in 2009-10. More exact revenue numbers will be available after tax receipts are tallied in April. The usual May Revision will address these likely shortfalls though it may become the "June Revise" because it will likely be after the special election results on May 19.
For more information: Michael Herald, Legislative Advocate (Welfare), 916.442.0753 ext 12, mherald at wclp dot org; Elizabeth Landsberg, Legislative Advocate (Health), 916.442.0753 ext 18, elandsberg at wclp dot org.