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CDCAN Reports on Trigger Cuts and Other Forecasts

#203-2011 – DECEMBER 13, 2011 – TUESDAY

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California Budget Crisis – Breaking News:


However On-Going $100 Million Cut For 2012-2013 Budget Year Could Mean Spending Cuts Including Extension of 4.25% Provider Payment Reduction – Department of Developmental Services Will Announce Convening of Stakeholder Meeting Sometime Early Next Year – IHSS Cut Stopped For Now By Court Order

SACRAMENTO, CA (CDCAN)  [Last updated 12/13/2011 12:40 PM] –  The $100 million in additional spending cuts as a result of the state budget “trigger cuts” being pulled to the developmental services budget for the current budget year that ends June 30, 2012 will be achieved through budget savings from lower than expected spending and not from additional spending cuts to providers or to programs.  The developmental services budget was hit in the past two budget years by over $1 billion of budget reductions to programs and services and the Brown Administration believes that $100 million in savings can be found for the current budget year as a result of those reductions – meaning greater savings as a result of those cuts than expected – and also a result of lower than expected spending in other areas.

However, because the reduction of all the state budget trigger cuts are permanent – meaning it will continue into the next budget year and beyond, how the $100 million cut in spending will be achieved from July 1, 2012 through June 30, 2013 and beyond has not yet been determined and could come from extending the existing 4.25% provider reduction that is currently set to expire June 30, 2012.  The Departmentof Developmental Services also believes it can apply some significant amount of budget savings as a result of implementation of the autism insurance mandate legislation that will go into effect July 1, 2012.  The Brown Administration estimates that savings as a result of that legislation – which will require private health insurance plans to cover certain behavioral therapies for children with autism spectrum disorders effective July 1, 2012 – to be about $69 million in state general funds for a full budget year.

The Department of Developmental Services will convene stakeholders sometime early next year and will announce the exact date and location soon.

The developmental services budget funds certain services coordinated through the 21 non-profit regional centers and by the 4 state operated developmental centers for over 240,000 children and adults with developmental disabilities. Other services received by that population are provided by other programs including Medi-Cal, special education, In-Home Supportive Services, mental health and SSI/SSP (Supplemental Security Income/State Supplemental Payment grants).

Other health and human services programs – including those impacting directly people with disabilities, mental health needs, seniors and low income families – were not targeted with specific trigger cuts – other than a $15 million reduction to Medi-Cal managed care plans.  The “trigger cuts” however did not authorize any other additional cuts to Medi-Cal.

As reported earlier, with the state facing a $13 billion budget shortfall, Governor Jerry Brown announced today that the state budget “trigger cuts” authorizing about hundreds of millions of dollars in automatic spending reductions, including $100 million in cuts to In-Home Supportive Services and $100 million in cuts in spending to the overall developmental services budget that funds certain services through the 21 non-profit regional centers and 4 state operated developmental centers for eligible children and adults with developmental disabilities.  Higher education was also hard hit with major reductions, though cuts to K-12 education was far less than feared by education advocates.     [Attached to this CDCAN Report is official 9 page letter from the Department of Finance announcing that state budget trigger cuts will be pulled, titled “20111213 – 2012 Department of Finance Revenue Forecast Determination.pdf”  It was saved as a document pdf and can be read by persons who are blind or sight impaired using a screen reading device]

Matosantos said that all of the budget “trigger cut’ reductions are considered ‘on-going” impacting the current budget – and the 2012-2013 State Budget and beyond.

Summary of Trigger Cuts Announcement
*  $1 billion in new additional spending reductions to current year budget (2011-2012 State budget year that ends June 30, 2012) will go into effect on or sometime after January 1, 2012 as a result of the state budget trigger cuts being pulled.
* All of the “first tier” budget trigger cuts – about $600 milion in spending cuts – will go into effect, which includes the $100 million reduction to IHSS, $100 million cut to the developmental services budget.
*  The Department of Finance director said that the $1 billion in state budget trigger cuts are on-going – meaning not only effective for the current 2011-2012 state budget year – but would apply to the 2012-2013 state budget and beyond.
*  Budget reductions occuring in the current budget year that ends June 30, 2012 will be achieved through existing law – meaning no new legislation would be needed to authorize the cuts, according to the Department of Finance director. However some of those savings may be achieved through different means in the 2012-2013 state budget year and would likely require legislation to authorize it.
* Governor said that he does not expect to propose additional mid-year reductions beyond what will go into effect as a result of the $1 billion “trigger cuts”.
* Governor warned that his 2012-2013 State Budget, that will be releaased on January 10th, will however contain proposals for many more spending cuts that if approved by the Legislature – would take effect sometime after July 1, 2012 (depending on the reduction).  He did not provide any details on what programs or budget areas would be impacted.

IHSS Cut Stopped by Federal Court Order For Now
*  The $100 million reduction to In-Home Supportive Services – to be achieved through a 20% across the board reduction in hours for many people receiving IHSS effective January 1, 2012 – has been stopped from implementation due to a federal court order that was issued December 1st.
*  That temporary restraining order remains in force until a hearing before the US District Court in Oakland – originally set for December 15th, but rescheduled for a soon to be announced new date (as of December 13th the court has not yet announced a new hearing date) .
*  The lawsuit that was filed that brought about the temporary restraining order is seeking a more permanent order to stop the IHSS reduction – called a preliminary injunction, which the court will decide when it sets the new hearing date.
* What Does this Mean: While the trigger cut to IHSS is very significant, there is no immediate impact to people in the program and the workers because of the lawsuit and court order that has – at least for now (until the court hearing date on whether or not to issue a more permanent court order) – stopped implementation of this cut.

Developmental Services Budget Reduction Will Come From Budget Savings – Not Additional Cuts To Programs
*  The $100 million reduction to the developmental services budget – while significant – will not impact directly any services or programs, because the reduction for the current budget year – which ends June 30, 2012 – will be achieved by savings as a result of lower than expected spending in several areas.
*  As a result, department director Terri Delgadillo said there is no need to make additional spending cuts to programs or services – including additional provider payment cuts.
* However other measures to achieve the $100 million cut in the next budget year that begins July 1, 2012 could mean cuts in programs and services including extension of the existing 4.25% provider payment cut to most regional center providers that is currently set to expire June 30, 2012.  That cut – and other reductions to programs – would need additional legislation to authorize it.  The department will be soon announcing a stakeholder meeting to help identify how the $100 million in cuts can be achieved during the 2012-2013 budget year and beyond (not the current year).
* What Does This Mean: The $100 million reduction in the developmental services budget for the current year – meaning the budget for 2011-2012 – will come from existing and likely savings due to lower than expected spending in various areas of the budget.  It will not come from new spending cuts to actual programs or cuts in provider payments.

Summary of Budget Trigger Cuts  Authorized Today
The following are the $1 billion in reductions as authorized today by the state budget “trigger cuts”
Budget Area – Budget Reduction for Current Year and for 2012-2013
0690-102-0001  Reduce Vertical Prosecution Grants $14,558,000
4260-101-0001  Medi-Cal-Extend Provider Cuts and Copayments to all Managed Care Plans $8,642,000
4300-101-0001  Reduction to the Department of Developmental Services $100,000,000
5180-111-0001  In Home Supportive Services-20 Percent Reduction in Service Hours, Eliminate Funding for Local Anti-fraud Efforts $101,481,000
5225-001-0001  Department of Corrections and Rehabilitation-Unallocated Reduction $20,000,000
6110-111-0001  Home to School Transportation $248,000,000
6110-194-0001  Child Care-Non Proposition 98—4 Percent Across-The-Board Reduction $17,084,000
6110-196-0001  Child Care-Proposition 98—4 Percent Across-The-Board Reduction $5,900,000
Education Code Sec. 42238 Proposition 98—Reduce Apportionments (effective February 1, 2012) $79,600,000
6120-150-0001, 6120-160-0001, 6120-211-0001, 6120-213-0001  Eliminate State Grants to Local Libraries $15,866,000
6440-001-0001  University of California-Unallocated Reduction $100,000,000
6610-001-0001  California State University-Unallocated Reduction $100,000,000
6870-101-0001  Community Colleges-Reduce Apportionments, $10 Per Unit Fee Increase $102,000,000
Revenues pursuant to Ch. 36, Stats. of 2011 Juvenile Justice-Increase County Charge for Youthful Offenders Sent to Department of Corrections and Rehabilitation $67,700,00

State Budget “Trigger Cuts”
*  The State budget “trigger cuts” that would – if pulled – implement additional new automatic spending cuts – was part of the 2011-2012 State Budget that was passed by the Legislature and signed into law by Governor Brown in late June.
*  Lawmakers and the Governor had hoped that additional State revenues would come in between July 1, 2011 and June 30, 2012  totaling $4 billion – which in turn,  avoided the need to make additional spending cuts in June to balance the budget then.
*  To add credibility to the forecast of increased revenues – a forecast that some budget analysts and the Republican legislative leadership felt was unrealistic – “trigger cuts” were included, that would be pulled if revenues fell below what was hoped for in California, the State budget “trigger cuts” will be pulled – triggering up to $2.5 billion in automatic spending cuts in specific budget areas – if the State’s $88.5 billion in projected revenues do not come in at a certain level as budgeted.
* If State revenues are forecast in December 2011 to be lower by $1 billion to $2 billion, the first State budget “trigger” is pulled, triggering  $600 million in automatic spending cuts for specific programs, effective on or sometime after January 1, 2012.
* If State revenue numbers in December 2011 are forecast to be lower by more than $2 billion,  then the second State budget “trigger” is pulled, triggering spending cuts of up to $1.9 billion impacting K-12 education.
Summary of Budget Trailer Bill Dealing With Health and Human Services Trigger Cuts
For specific information about the trigger cuts as it relates to health and human services program cuts, see SB 73 (one of the 18 budget trailer bills that make up the 2011-2012 State Budget as passed and signed into law in June):

AUTHOR: Senate Budget and Fiscal Review Committee
Makes changes in State law to allow for implementation of $200 million in reductions in State general fund spending in the health and human services budget, that is part of the $2.5 billion in “trigger cuts”.  Would make $15 million in reductions to Medi-Cal impacting PACE (Program for All Inclusive Care for the Elderly, AIDS Foundation and Senior Action Network; $100 million in State general fund cuts to developmental services to be identified by the Department of Developmental Services from across the developmental services system and $100 million in across the board cuts in State general funding to In-Home Supportive Services
PREVIOUS ACTION 06/28/2011: PASSED Assembly by vote of 51 to 28. PASSED State Senate by vote of 23 to 17. Sent to Governor at 09:50 PM.
LATEST ACTION 06/30/2011: SIGNED by Governor.
EFFECTIVE DATE: Immediate upon signature of Governor.
* There are a total of three bills dealing with the budget “trigger” – including one (AB 121) that gives authority to the Governor’s Department of Finance to determine whether sufficient level of new revenues are coming in as projected by January 2012 – and then to implement certain levels of cuts up to $2.5 billion if it is determined that revenues are not coming in as projected.  AB 121 only lists budget area numbers and spending reduction amounts and the conditions that those reductions would be made)
For html version of AB 121:
For pdf version of AB 121:
*  The other two bills deals with the specific levels of reductions that would occur in K-12 education and  – this bill (SB 73) – on health and human services should the triggers be pulled in January 2012.

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