2014-15 State Budget Statement and Summary

July 2, 2014
Email, RSS Follow
Email

June 2014

California’s 2014-15 State Budget Statement & Summary

The final budget for 2014-15 is another missed opportunity to address our poverty crisis and invest in the people of California. Instead of prioritizing people and investing in our communities to help reduce poverty and make us more resilient to economic crashes, we are unnecessarily accelerating the payment of debt and pouring billions of dollars into a “rainy day fund.”

In a time when 9 million Californians are facing economic storms and living in poverty, the prioritization of debt repayment while making insignificant restorations and not halting deep cuts to services and programs that so many people rely on to survive could be considered gross negligence. This year provided a chance to show a vision for the future of all Californians- a road map out of poverty and towards prosperity. Despite ample opportunity, this budget does not show a path forward to repair the tattered safety net, reduce or eliminate what is now the highest poverty rate in the nation, and build back a future where every Californian can thrive.

There were a few notable victories for our communities: fending off a cap on in-home supportive service worker hours, restoration of the Black Infant Health Program, small investments in CalWORKs and child care, modest expansion of pre-kindergarten and higher education. And, the onerous, backwards, bigoted law that prevented Californians returning from prison from accessing basic food and income support was repealed- justice long in coming, and happened only because of consistent, powerful, dedicated organizing of our allies, friends and communities.

The legislature made some strides in pushing for some substantial investments, but unfortunately nearly all of them were pushed out in the final agreement, leaving our communities in peril, and attempting to set the “new normal” of what we can expect from a safety net: insufficient funding, undervalued in the importance to the lives of Californians and to the economy of the state, and accepting of a California that works for some, but not nearly for all.

In total, this budget underestimated the amount of resources available, overestimated the cost of vital programs, and chose investing in debts, rainy day funds, and prisons instead of the people of California and the vital services they need.

We believe budgets are moral documents- an actual accounting of what our state values, and what it doesn’t. This budget tells us two things- first, that our moral document does not yet reflect the vision that Californians share for a state built for all. Second, that the only way to get to that place is to work deeply in our communities, tell our stories, trust one another, and to organize.

Summary

General Fund Revenue and Expenditures:

  • Assumes available revenue to equal $105.488 billion, this is $3.705 billion below what the independent Legislative Analyst’s Office (LAO) estimates.
  • $1.6 billion was removed from consideration as revenue by the Governor and instead accounted for as “Budget Stabilization Account/Rainy Day Fund.” This is a highly unusual accounting practice in California’s budget. All tax revenue, even those that are dedicated to certain programs like Proposition 98 funds, are first accounted for as revenues before they are allocated as expenditures. The LAO considers this an available resource for allocation.

Budget Stabilization Account/Rainy Day Fund Constitutional Amendment: California voters will be asked to decide on a constitutional amendment on the November election to replace the existing “rainy day fund” with a new system.

Under current projections this amendment would sequester $6 billion in the first three years of operation. If Capital Gains tax revenue continue to exceed 8% of General Fund tax revenues this number will surge higher.

The amendment would:

  • Require 1.5 percent of annual General Fund revenues to be set aside each year.
  • Require additional deposits to the fund when capital gains revenues exceed 8% of General Fund tax revenues.
  • Set the maximum size of the Rainy Day Fund at 10 percent of General Fund revenues.
  • Require half of each year’s deposit for the next 15 years be used for supplemental payments to debt or other long‑term liabilities. After that time, at least half of each year’s deposit would be saved, with the remainder used for supplemental debt payments or savings.
  • Allow the withdrawal of funds only for a disaster or if spending remains at or below the highest level of spending from the past three years.
  • Limit the amount withdrawn during the first year of a recession to half the Fund’s balance.
  • Require that the state provide a multiyear budget forecast to help better manage the state’s longer term finances.
  • Create a special reserve for Prop 98 funding that would store increases above the guaranteed level of funding for use when funding would otherwise decline.

Human Services:

CalWORKs: California Work Opportunity and Responsibility to Kids Program is intended to help provide for more than 1 million low-income children while parents receive work training, overcome barriers to employment, and find employment.

  • For the 2nd year in a row, CalWORKs monthly grants will increase by 5% beginning in April of 2015.
    • The current maximum CalWORKs Monthly Grant for a family of three is equivalent to only 38.7% of the federal poverty level in the Counties of Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, San Diego, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Sonoma, and Ventura.
    • The current maximum CalWORKs Monthly Grant for a family of three is equivalent to only 36.9% of the federal poverty level in all counties not listed above.
    • $20 million General Fund to provide funding for families for whom homelessness and housing instability is a barrier to self-sufficiency.

Child Care: Intended to help low-income parents find and keep jobs by providing safe and affordable child care and educational pre-schooling. Since 2008, cuts to the program have eliminated more than 110,000 child care and preschool slots.

  • 500 slots for the Alternative Payment Program, 1,000 slots for General Child Care, 7,500 slots for part-day state preschool, 7,500 slots for part-day wrap around care slots
  • Specification for an additional 4,000 part-day State Preschool and 4,000 part-day wrap around care slots in 2015-16
  • 5% increase to standard reimbursement rates for state contracted providers.
  • Repeals part-day State Preschool family fees

In Home Support Services (IHSS): Intended to help more than 400,000 low-income seniors and people with disabilities live in their own homes and avoid the need for expensive care in nursing homes and assisted living facilities.

  • $172.2 million General Fund in 2014-15 and $354.4 million General Fund ongoing to pay overtime to providers who work in excess of 40 hours per week and for compensation for providers traveling between multiple recipients, wait time associated with medical accompaniment, and time spent on mandatory training.
  • Continues the scheduled 7% cut in hours to IHSS recipients.

Supplemental Security Income/State Supplementary Payment: SSI/SSP is intended to lift 1.3 million low-income seniors and people with disabilities out of poverty by helping them afford basic necessities like food. The maximum SSI/SSP grants of $877 per month for an individual are below the federal poverty line and have been below since 2009.

  • No changes for the State Supplementary Payment.

State Utility Assistance Subsidy: a state‑funded energy assistance subsidy for CalFresh recipients to enable access to the standard utility allowance (SUA.) This program increases household monthly food budgets by an average of $62 for over 320,000 families.

  • Increase of $10.5 million to comply with recent federal changes regarding the minimum energy assistance benefit that must be received by a household to continue access to the SUA.

Health

Medi-Cal: Provides basic health care services to low-income people. Medi-Cal enrollment is expected to rise to 11.5 million in 2014-15, about 30% of the state’s population, increasing the state’s contribution to the program by $2.4 billion.

  • This budget leaves intact a 10% provider reimbursement rate that took effect in 2014.
    • Medi-Cal payments to providers are just 80 percent of the national average; California currently ranks 49th in per-child Medicaid spending.
    • The average amount Medi-Cal pays for a doctor’s visit is $41.48 compared to $102.45 for Medicare.

 

Education

Higher Education:

  • $594 million in programmatic funding to California Community Colleges
  • General fund increase of $142.2 million for the CSU and UC systems.
  • $107 million for implementation of the Middle Class Scholarship Program in 2014-15.

 

K-12: The K-12 system in California is undergoing a transformation in funding that will see the implementation of a new Local Control Funding Formula (LCFF). The system will provide school districts with a base grant per student, plus additional grants for the costs of education English learners, students from low income families, and foster youth.

  • The budget includes $4.5 billion to fund LCFF grants, and includes cost-of-living adjustments.  

Corrections and Rehabilitation

The legislature authorized an additional $500 million in lease revenue bond financing authority to build and expand county jail facilities.

The State was granted an extension to reduce prison populations through investment in mental health, anti-recidivism programs, and sentencing reform.

  • $91 million is available in the Recidivism Reduction Fund in 2014‑15
    • The California Department of Corrections and Rehabilitation is provided $42 million recidivism Reduction Fund and $4.2 million Inmate Welfare Fund
    • The Board of State and Community Corrections is provided $28 million Recidivism Reduction Fund
    • An additional $21 million from the Recidivism Reduction Fund is provided for Court Programs, Social Innovation Bonds, and Workforce Investment Boards.

Naturalization Services: The program helps immigrants statewide adequately prepare for naturalization. Through local government agencies and community-based organizations, immigrants are assisted in intake and assessment to determine eligibility for citizenship, interview preparation, advocacy with USCIS, translation services, and referrals to English as a Second Language classes and citizenship classes.

The Naturalization Services Program (NSP) was eliminated under Governor Schwarzenegger in September 2008.

  • Since the elimination of funding for the program, the need has only grown – with the application costs steadily increasing and the application form doubling in length.
  • Naturalized citizens have greater earning potential and are better able to weather economic crises than their non-citizen counterparts.
  • Nearly 2.5 million green card holders are eligible to naturalize in California, the state is missing an opportunity to improve immigrant integration and reap the benefits of having more citizens in our populace.

 

For more information on our work, please visit us at www.california-partnership.org.

California Partnership is a statewide coalition of community-based organizations that fights poverty in California. Through organizing and advocacy, we work together under common values at local, state, and national levels for policies and programs that reduce and end poverty. 

 

For the full 2014-2015 budget please see http://www.ebudget.ca.gov/California Budget Project www.cbp.org

For additional questions please contact Jeff Brewer at [email protected], Pete Woiwode at [email protected]