The $19.9 shortfall is covered largely through spending cuts, although, as mentioned, the budget also relies significantly on an increase in federal funds to California. In the event that those federal funds are not received, additional spending cuts and revenue increases are triggered. The following chart has general descriptions of the Governor's proposed solutions.  
  

	2009-10 ($ in millions)	2010-11 ($ in millions)	Total ($ in millions)
Expenditure Reductions	$1,034	$7,475	$8,509
Additional Federal Funds	$8	$6,905	$6,913
Alternative Funding	$150	$3,736	$3,886
Fund Shifts and Other Revenues	$0	$572	$572
Total	$1,192	$18,688	$19,880

  
  
The Governor has also declared a fiscal emergency and has called the Legislature into special session (pursuant to Proposition 58) to address the crisis. The Legislature has 45 days (until February 22, 2010) to take action and may not take action on any other legislation during that time period. The Governor’s special session proposals address $8.9 billion of the overall $19.9 billion deficit. Proposals in social services, Medi-Cal, and the Healthy Families Program account for $2.7 billion of the special session proposals.   
  
Current Year (FY 2009-10)– The budget projects $88.084 billion in GF revenues for FY 2009-10 ($82.2 available after prior year negative balance), a decrease of $1.457 billion from the FY 2009-10 budget enacted July 28, 2009. Total statewide GF expenditures for the current year are proposed at $86.1 billion, an increase of $1.5 billion from the FY 2009-10 enacted budget.  
  
Budget Year (FY 2010-11)– The proposed FY 2010-11 budget projects a $1.2 billion increase in GF revenues over the revised current year estimates, for a total of $89.322 billion ($85.5 available after prior year negative balance). GF expenditures are proposed at $82.9 billion, a decrease of $1.7 billion from the FY 2009-10 enacted budget and a decrease of $3.2 billion from the revised FY 2009-10 budget.   
  
Cash Flow– The Governor’s Budget projects that the State will have sufficient cash to repay as scheduled in May and June 2010 $8.8 billion of Revenue Anticipation Notes (RANs) issued after the enactment of the 2009-10 budget in July. However, the Administration notes that the State will once again face cash challenges as early as March 2010 and, absent corrective action, face significant challenges meeting all GF cash needs beginning in July 2010. The Governor’s budget proposals would substantially reduce the cash gap, but the State will still need to obtain external financing and cash deferrals early in the FY 2010-11 fiscal year. There is no specific proposal around cash deferrals at this time.  
  
Federal Funds Trigger–Governor Schwarzenegger has identified a number of areas in which the federal government has mandated or failed to fully fund programs for which the state must provide funding. According to the Governor’s budget, federal mandates, including spending requirements, constraints on program reductions, and federal court decisions delaying reductions of services have contributed more than $1.4 billion toward the current budget gap.  
  
The state is demanding additional flexibility in managing certain program costs and additional federal reimbursement for certain programs. These requests total $6.9 million in new federal funding assumed in the Governor’s budget proposal.  
  
If the state fails to secure these additional funds by July 15, 2010, the Administration has developed a list of permanent reductions that will occur, totaling $4.6 billion General Fund:

• Eliminate the California Work Opportunity and Responsibility to Kids (CalWORKs) Program ($1.044 billion).
• Fund existing mental health services with Proposition 63 fund ($847 million).
• Reduce Medi-Cal eligibility to the minimum allowed under current federal law and eliminate most remaining optional benefits ($532 million).
• Reduce state employee salaries by an additional 5 percent ($508 million).
• Eliminate the IHSS Program ($495 million).
• Redirect additional county savings associated with CalWORKs and IHSS reductions ($325 million).
• Eliminate non-court required inmate rehabilitation programs, implement banked parole for low-risk serious and violent offenders, expand crimes where convicted felons will serve time in local jails, and increase the number of parolees each agent will supervise ($280 million).
• Eliminate the Healthy Families Program ($126 million).
• Eliminate funding for enrollment growth at the University of California and the California State University ($111.9 million).
• Eliminate various health services programs funded by Proposition 99 ($115 million)
• Make an unallocated reduction to trial courts ($100 million)
• Freeze the level of awards and income eligibility for Cal Grants ($79 million)
• Eliminate funding for the Transitional Housing Placement for Foster Youth-Plus Program ($36 million)

In addition to these reductions, the Governor proposes one-year revenue proposals totaling $2.4 billion General Fund:  

• Extend suspension of a business’s ability to reduce taxable income by applying net operating losses (NOL) from prior years to reduce current income ($1.2 billion).
• Extend reduction in the credit for each dependent on the personal income tax from $319 to $102 ($504 million).
• Delay use of business credits by unitary groups of corporations and instead retain current law which requires subsidiaries to have their own tax liability to use research and development and other credits ($315 million).
• Delay the change to the single sales factor allocation method for multi-state corporate income and instead retain the double weighted sales, property, and payroll formula ($300 million).
• Lower to 30 percent the first year phase-in of the ability of corporations to carry back losses two years to offset prior tax profits ($20 million).

On January 12, the Legislative Analyst's Office (LAO) released their analysis of the budget and had these conclusions:  
  
• Reasonable Estimate of the Problem but Downside Risk. LAO notes that the Governor’s Budget baseline estimates of both revenues and expenditures are somewhat more optimistic than the LAO’s. In addition, the LAO notes several court cases that are pending that could negatively impact the Governor’s budget figures.  
  
• Governor’s Budget Overstates Federal Funding. While the LAO notes that the Governor is correct to seek additional federal relief, the likelihood of the federal government to agree to all of the requests is almost non-existent.  
  
• No Way to Avoid Reprioritizing State Finances. The LAO notes that there is no way to avoid making difficult cuts, but believes that the Legislature should consider more targeted changes instead of eliminating programs.  
  
Below is a preliminary analysis of issues of importance to counties. Analysis was provided by the California State Association of Counties (CSAC), Urban Counties Caucus, the County Welfare Directors Association, and Contra Costa County CAO and department staff.  
  
Transportation (For additional information, see Attachment A.)  
  
Proposition 42 and HUTA. The Governor proposes to eliminate the 5 percent (temporarily 6 percent through FY 2010-11) sales tax on gas (Proposition 42), and partially replaces the funding by increasing the excise tax on gas (Highway Users Tax Account or HUTA) by 10.8 cents. This would bring the total excise tax to 28.8 cents per gallon, whereas the existing  
combined Prop 42 and HUTA taxes currently total 34.4 cents per gallon.  
  
Staff has not yet reviewed language for this proposal, but it has been represented by the administration as not changing the current distribution of HUTA, funding levels for the State Transportation Improvement Program (STIP) or local streets and roads in FY 2010-11.  
  
The new 10.8 cent excise tax would be allocated as follows (in FY 2010-11):  

• $629 million for the STIP;
• $629 million for local streets and roads (identical to Proposition 42 amounts); and
• $603 million for the General Fund for transportation bond debt service.

It is uncertain how the new distribution will impact local funding in future years. Since the fund source would no longer be from the state sales tax on gasoline, these funds would no longer be protected by Prop. 42 and Prop. 1A (2006). Instead, the Governor’s administration maintains that these funds would be protected by Article XIX of the state constitution - the same law that protects current 18 cent per gallon Motor Vehicle Fuel Excise tax allocations. The Governor’s budget summary does indicate that the excise tax will be adjusted in future years to cover future bond debt.  
  
Although there is no mention in the budget proposal, the Administration assures us the proposal only affects the 5 percent (temporarily 6 percent) state sales & use tax rate and would leave Prop 172, county realignment, locally adopted add-on rates and the local Bradley Burns rates in place on sales of gasoline.  
  
Transit. This funding swap has the greatest immediate impact on transit operations. Prop. 42 funds the Public Transit Account and the Spillover are both be eliminated under this proposal. This means a reduction of transit funding of $1.5 billion in FY 2010-11.  
  
The Governor proposes to fund capital projects for transit:  

• $350 million in Prop 1B funding for local transit projects; and
• $581.4 million in High Speed Rail bonds and $375 million in Federal ARRA funding to continue environmental planning and preliminary engineering, and to begin purchasing land.

However, none of these sources are available for transit operations.  
  
Public Contracting. The budget proposes to shift $12.5 million in costs to local agencies for developing Cal-Trans Project Initiation Documents for local projects.  
  
Redevelopment Agency Property Tax Shift. The Redevelopment Agency property tax shift proposed last year for FY 2010-11 budget remains. The Governor proposes to shift $350 million in redevelopment agency property tax increment revenues in FY 2010-11 to fund county trial courts. This is consistent with the approved FY 2009-10 Budget and is the subject  
of legal challenge. However, the use of the funds to supplant state funding of trial courts is new.  
  
State Cash Flow and Delays of Local Payments. Projects that the cash flow difficulties faced in recent years will be substantially reduced, particularly if the budget solutions offered are adopted. However, the Governor's proposal states that some payment deferrals will still be needed. These are not specified, but county funds affected by these payment deferrals in recent years include monthly payments of local HUTA funds and Prop. 42 state sales tax on gasoline funds for streets and roads.  
  
State Mandate Reimbursement. The Governor proposes to again delay payments to local governments owed for mandate costs prior to FY 2004-05. This funding was deleted from the last two fiscal years' budgets.  
  
Public Safety  
  
COPS and Booking Fees. Governor’s proposal would maintain the formula established in the FY 2009-10 budget that created the Local Public Safety Account providing funding for COPS programs, booking fee reimbursement, rural sheriffs, juvenile probation, and crime prevention programs. The account was created by shifting the program funds from a direct General Fund allocation to a 0.15 percent carve-out from the Vehicle License Fee (VLF).  
  
The account would receive $442 million in FY 2010-11, representing a $26 million increase from FY 2009-10. However, these projections fall short of the $500 million allocation made from the General Fund in previous budget years. This funding, however, would expire at the end of FY 2011 when the VLF increase is scheduled to sunset. The Department of Finance did note that revenues would likely continue to trickle in past theexpiration date because vehicle owners have been making late payments on their vehicle registrations.  
  
Emergency Response Initiative. The Governor reintroduced for a third year his Emergency Response Initiative that places a surcharge on all residential and commercial property insurance plans statewide to fund the state’s emergency response capabilities. The surcharge amount of 4.8 percent would result in an annual appropriation of $200 million  
towards enhancements for CAL FIRE, the California Emergency Management Agency (formerly Office of Emergency Services), the Military Department, and assistance to local agencies first responders in support of the state’s mutual aid system.  
  
Corrections. The Governor proposes cutting the Department of Corrections and Rehabilitation budget by $1.2 billion for the second year in a row. As outlined, this would be partially achieved by changing sentencing for non-violent, non-serious and non-sexual felony offenses so that county jails can retain a segment of inmates that would otherwise be sent to state prison. (Drug possession is an example felony that would carry a one-year jail sentence  
in lieu of prison.)   
  
Contra Costa Impact: This proposal has an unknown impact on the County Health Services Department for the provision of medical services to an increased jail population. Medical services provided at the County detention centers are funded in the Health Services Department largely from County General Funds.  
  
The Governor's budget would achieve an estimated $811 million in savings from reductions to inmate health expenses. The savings are anticipated to be achieved largely by state contracts with private providers for medical and administrative services.  
  
Other savings would be achieved through changes enacted in last year’s corrections budget that are currently underway including reforms that placed non-violent, low-risk parolees on summary parole with no direct state supervision, enhanced credit earnings for training program completion, and the cutting non-court mandated inmate rehabilitation services.  
  
The FY 2010-11 budget proposal also assumes an $880 million reduction for the General Fund achieved by obtaining federal funds to pay for the incarceration of alien criminals in state prisons. This is roughly the amount the federal government has yet to reimburse California for providing alien inmate services.  
  
Other Public Safety Savings and Reductions  
  
Department of Justice (DOJ) Forensic Labs. To cover the expense of the DOJ forensic labs, serving local law enforcement agencies without their own lab facilities, current penalty assessments levied on fines will increase from $1 to $3 dollars. In the Governor’s 2009-10 budget, he proposed shifting the cost of DOJ forensic labs to local agencies by charging a direct fee for each service. This was dropped later.  
  
California Highway Patrol (CHP).The budget proposal would provide $17.8 million to the CHP for 180 new officer positions to increase road patrols and provide quicker response times to accidents and call for assistance.  
  
Automated Speed Enforcement Revenue. This proposal would provide $337.9 million in revenue from a new speed enforcement program based on using red light cameras to identify and fine persons speeding through intersections. The proceeds would be used to alleviate the General Fund deficit and provide $41 million towards  
trial court security.  
  
Housing/Land Use  
  
California Environmental Quality Act (CEQA) Streamlining. The Business, Transportation, and Housing Agency would be authorized through the Governor’s proposed budget to select 20 projects from around the state for job creation and capital investment. The selected projects would be exempt from any challenge to the certification of the environmental review under CEQA. The exemption would be valid for 12 months.  
  
Elimination of Office of Planning and Research (OPR). The Governor’s budget proposes to eliminate the Governor’s OPR and moving many of the existing functions, such as the CEQA Clearinghouse and the general plan guidelines, to other agencies such as the Department of Resources and Housing and Community Development (its difficult to tell from the language provided exactly which departments will receive various functions).  
  
Environment  
  
Water: The Governor proposed an increase of $70.5 million (47 new positions) to implement the comprehensive water package passed in November, 2009. These funds and positions reflect the establishment of the Delta Stewardship Council and the Sacramento-San Joaquin Delta Conservancy, as well as funding the development of the new Delta Plan outlined in the recent legislation.  
  
Additionally, the Governor proposed a reduction of $6.4 million in funding to the State Water Resources Control Board. These cuts would be offset by increases to existing fees for several water quality regulatory programs, including National Pollutant Discharge Elimination System programs, Water Rights and Irrigated Lands.  
  
In addition to fee increases by the State Water Board, the Governor proposed an additional $5.5 million (32 new positions) as a part of the recent water package implementation. These monies will help establish and augment water investigation and enforcement units at the State Water Board.  
  
Parks. The Governor is also proposing to fund state parks by reviving a plan that failed last summer to raise money with additional oil drilling off the Santa Barbara coast. This proposal would generate $100 million this fiscal year and $1.8 billion over the next 14 years, according to the administration.  
  
Beverage Container Recycling Fund. Finally, the Governor is proposing a $54.8 million in FY 2009-10, and a $98.2 million loan repayment in FY 2010-11, to the Beverage Container Recycling Fund. This is part of a comprehensive proposal by the administration which includes eliminating continuously funded grant payments to cities and counties for recycling in  
lieu of annually appropriating these funds.  
  
Job Creation, Training, & Retention through Employer Incentives  
  
$230 million is proposed to be allocated to the Employment Training Panel (ETP):  

• $140 million would be available to employers and training providers that deliver training for unemployed and underemployed individuals, as well as for employment expansion and job retention;
• $90 million would be available to provide a $3,000 incentive to employers to hire and retain an unemployed individual. Until there are further details, staff is uncertain as to whether this proposal will apply to local governments.

Staff will continue to review the Governor’s budget proposals for potential county impacts in detail as language becomes available.  
  
Health and Human Services  
  
Across all health and human services programs, the FY 2010-11 budget proposes a GF reduction of $2.4 billion (approximately 8 percent) from the FY 2009-10 enacted budget. This includes a “workload” increase of $2.1 billion GF due to rising caseloads and other workload adjustments offset by $4.5 billion in GF “solutions.” The solutions include $2.8 billion of program cuts and about $1.8 billion of alternative funding.  
  
Specific proposals related to health and human services issues include the following:  
  
Human Services Funding Deficit  
  
The budget does not propose to fund cost increases to counties to deliver mandated programs on behalf of the state. Through 2009-10, counties are funded about $1 billion ($600 million GF) below what is needed to cover the actual cost to deliver human services. As such, to the extent human services programs receive funding increases based on rising caseloads, amounts are based on 2001 cost levels. Also, the human services funding deficit amount does not include the $667.1 million ($427.7 million GF) in permanent cuts to base program funding that have occurred since 2002.   
  
Centralized Eligibility  
  
Although there are no expenditures or savings proposed for the current or upcoming budget years, the Governor's proposed budget does include "Centralizing Eligibility and Enrollment for Public Assistance" as one of the Administration's reform activities, noting that "resulting savings could be as high as $1 billion ($500 million General Fund) annually by 2012-13". The budget documents do not provide any detail for this cost saving estimate, but it is worth noting that the number mirrors earlier estimates that included privatization of eligibility. We can only conclude that the Administration is still considering privatization, despite assurance that this initiative has been dropped, and proceeding toward a sole-source, noncompetitive procurement of one contracted eligibility system for California, despite the requirements of the 2009-10 trailer bill to do a full analysis of possible alternatives prior to assuming the solution.  
  
Proposition 10 Funding Redirection  
  
Similar to what was proposed in the FY 2009-10 version of the budget passed in February 2009 and rejected by voters last May, the proposed FY 2010-11 budget assumes passage of a June 2010 ballot initiative to redirect $350 million in California Children and Families Act of 1998 (Proposition 10) funds to various human services programs to offset a like amount of GF costs in those programs. If the June ballot initiative fails, the Administration states that the lost Proposition 10 funding would be backfilled with GF. The human services programs included in the Proposition 10 redirection include:  
  
• CalWORKs Stage 1 Child Care – $73 million  
• Foster Care Grants (56 Counties) – $23 million  
• Foster Care Administration – $7 million  
• AAP – $37 million  
• Kin-Gap – $29 million  
• Adoptions – $35 million  
• Child Welfare Services (56 Counties) – $39 million  
• Title IV-E Waiver Counties – $42 million  
• SSI/SSP – $65 million  
  
Contra Costa Impact: The Governor’s plan, if implemented as described and approved by the voters, would prevent First 5 Contra Costa from carrying out its strategic commitment to spend $70 million over the next five years.  
  
CalWORKs  
  
Revised average monthly caseload estimates for the program are 558,664 cases in 2009-10 and 605,542 cases in 2010-11 for a 10.6 percent increase in the current year and an 8.4 percent increase in the budget year.   
  
Single Allocation– The budget proposes to maintain funding for the Single Allocation at the 2009 10 appropriation level, or $1.9 billion. This funding level continues the $375 million reduction included in the 2009 Budget Act, as well as the $60 million Employment Services veto from the 2008 Budget Act.  
  
Pay for Performance– The Pay for Performance program remains suspended, for savings of $40 million. The Pay for Performance program was established in 2005-06 to create incentives for counties to achieve program outcomes; however, counties have never received funding for meeting or achieving those outcomes.   
  
CalWORKs Grants– The Governor proposes to reduce grants by 15.7 percent, effective June 1, 2010, for savings of $48.1 million in the current year and $604.5 million in 2010-11. This proposal is in addition to the four percent grant cut that was implemented July 1, 2009, and would reduce the maximum monthly grant for a family of three from $694 to $585.   
  
Eliminate CalWORKs Grants for Recent Non-Citizen Legal Immigrants– The budget proposes to eliminate CalWORKs grants for Recent Noncitizen Entrants, effective June 1, 2010, for savings of $3.5 million in 2009-10, and $57.6 million in 2010-11. Recent Noncitizen Entrants include the following individuals in the U.S. less than five years: 1) Parolees; 2) Conditional Entrants; 3) Legal Permanent Residents; 4) Permanently Residing in the U.S. Under Color of Law; and 5) Battered Noncitizens. Approximately 24,000 recipients (in approximately 9,500 cases) would lose eligibility for CalWORKs benefits and services as a result of this reduction.  
  
Employment Services Ramp-Up for 2011 CalWORKs Reforms– The budget proposes to redirect $46.7 million to CalWORKs Employment Services in the budget year for ramp-up costs to implement the CalWORKs reforms scheduled to be implemented in July 2011. The $46.7 million would be redirected from Stage 1 Child Care to Employment Services. The reforms scheduled to be implemented in July 2011 include: new 48 month time limit, self sufficiency reviews, and increased sanctions. These reforms are estimated to result in $600 million annual savings.  
  
Quarterly Reporting/Prospective Budgeting– The budget assumes net administrative savings of $70.5 million, a $2.2 million increase from the current year. This amount includes increased administrative costs of $245.9 million offset by savings of $316.3 million.   
  
Tribal TANF– Total funding is proposed at $88.4 million, including $81.0 million for grants, $2.0 million for employment services, and $5.3 million for administration. This amount is an $11.3 million increase over the current year.   
  
TANF Reserve– The budget proposes no TANF reserve.   
  
Substance Abuse and Mental Health– The Governor proposes $120.3 million for the budget year, a decrease of $6.0 million in Substance Abuse services and an increase of $1.6 million in Mental Health services, based on current expenditure trends. Current year funding remains the same at $124.7 million ($54.3 million Substance Abuse, $70.3 million Mental Health). The flexibility to use SA/MH funds for the Single Allocation continues until June 30, 2011.  
  
Contra Costa Impact: The proposed reductions will adversely impact those families receiving benefits, making it more difficult to make ends meet while engaging in job training and job search. Child care providers may refuse to accept children from families on CalWORKs due to lower reimbursement rates.  
  
Child Care  
  
Stage One– The budget proposes total funding of $436.3 million, a $103.0 million decrease from the current year due to the shift of $46.7 million for the Employment Services Ramp-Up for the 2011 CalWORKs changes (see description in CalWORKs above), and the $54.8 million reduction due to the Regional Market Rate ceilings reduction (below). The budget proposes no Stage One reserve.   
  
Regional Market Rate Ceilings Reduction to 75th Percentile– The budget proposes to reduce reimbursement rate limits in voucher based programs from the 85th percentile of the market rate to the 75th percentile, based on the 2005 regional market rate survey, effective July 1, 2010 for General Fund savings of $77.1 million ($54.8 million in Stage 1). This proposal would also reduce the reimbursement rate limits for licensed exempt providers from 90 percent of the ceilings for licensed family child care homes to 70 percent.  
  
Unallocated Reduction to Funding for CalWORKs Stage 3 Child Care– The budget proposes to cut $122.9 million from CalWORKs Stage 3 Child Care to achieve additional ongoing Proposition 98 GF savings. It is the intent of the Administration to provide child care services to California’s neediest families, CalWORKs and non-CalWORKs working poor families alike. Therefore, the Administration intends to explore options in the coming months to achieve these goals and to develop such proposals for action this year.  
  
Food Stamps  
  
Non-Assistance Food Stamps caseload has increased 25.2 percent over the last year and is projected to increase 17.1 percent next year to 1,137,766 families. As such, there is a proposed current year augmentation of $20.7 million GF for a revised current year allocation of $330.8 million GF. Budget year funding is proposed at $386.8 million GF for a $56.0 million increase over the revised current year amount. This amount includes continuation of the 2008 base cut of $21.0 million ($8.6 million GF) that resulted in the elimination of funding for 181 eligibility workers providing food stamps benefits to thousands of needy families.   
  
Quarterly Reporting/Prospective Budgeting– The budget assumes net administrative savings of $116.4 million ($41.0 million GF), a $19.4 million increase from the current year. This amount includes increased administrative costs of $172.1 million ($60.0 million GF) offset by savings of $288.5 million ($101.0 million).   
  
Funding for SAWS Consortia Food Stamp Projects – The budget includes funding for the proposed SAWS modernization projects. Food Stamp ARRA funds will be used for normal administrative costs, freeing up funds for projects in each consortium.  
  
Child Welfare Services and Foster Care  
  
Overall, child welfare services funding is held constant from last year, providing $1.1 billion total funds for the 56 non-waiver counties and $1.17 billion for the two Title IV-E waiver counties.   
  
The Administration projects a decrease in the foster care caseload in both the current year and budget year. The current year foster care caseload is projected to average 61,785, a decrease of 5.1 percent from 2008-09. In FY 2010-11, the foster care caseload is expected to decline further by 4.0 percent, to 59,307 foster children.  
  
Sharing Ratio Changes– The Administration proposes significant changes in the Child Welfare, Foster Care and Adoption Assistance Program (AAP) areas beginning July 1, 2010. First, the Administration would redirect county savings resulting from cuts and savings proposed in other areas of the budget toward the child welfare program, with new county sharing ratios. Specifically, the budget would capture $505.5 million, achieved through the proposed CalWORKs grant cut, reduction in IHSS services, the 6-month ARRA extension in foster care, AAP and IHSS, and elimination of the CalWORKs non-citizen program. New sharing ratios (for the non-federal costs of the programs) would be:  
  
• Foster Care: 25% state/75% county (currently 40% state/60% county)  
• AAP: 41% state/59% county (currently 75% state/25% county)  
• CWS: 30% state/ 70% county (currently 70% state/30% county)  
  
Federal Fund Assumptions– The budget contains three significant assumptions. First, it assumes passage of a June 2010 ballot initiative, previously rejected by the voters last year, to redirect $213 million in Proposition 10 funds (see Proposition 10 discussion above). Second, the budget assumes new federal policy will implement on June 1, 2010 to make all foster children federally-eligible under Title IV-E, for a net savings of $18.7 million total funds ($7.5 million state GF, $11.2 million county) in the current year, and $217.2 million total funds ($86.9 million state GF, $130.3 million county) in the budget year. Third, the budget assumes federal ARRA that augments the federal share of Title IV-E from 50 percent to 56.2 percent will be extended another six months through the end of the budget year.  
  
Continuation of 2009-10 Veto– The Administration assumes continuation of the $120 million ($80 million GF) vetoed by the Governor ($60.9 million GF plus $19.1 million GF for the Title IV-E Waiver counties). As was the case last year, this cut would be an unallocated cut to the child welfare program.  
  
Foster Care Grants– The proposed budget assumes continuation of a ten percent cut to group homes, foster family agencies, and rates paid on behalf of Seriously Emotionally-disturbed (SED) children. No rate cut is proposed for foster family homes. However, the lost savings due to the California Alliance v. Wagner lawsuit, which impacts group homes only, is not yet reflected in the budget estimate. In addition, the budget includes $13.3 million total funds in the current year, and $26.6 million total funds budget year, to support the transportation costs of foster children in order to maintain their educational stability as required by recent federal legislation.  
  
Kin-GAP and Subsidized Relative Guardianship – The budget assumes a slight increase in the Kin-GAP caseload for 2010-11 at 14,670 cases (2.5 percent increase), but a decrease in county administration of $1.29 million. The budget attributes this decrease to new cases enrolling instead in a Subsidized Relative Guardianship (SRG) Program, which would begin October 1, 2010. Recent federal law allows states to draw down federal Title IV-E to support these relative guardianship placements. The budget assumes 1,062 cases for the 2010-11 budget year and provides $476,000 in total for county administration for non-waiver counties.  
  
Adoption Assistance– The budget continues the “de-linking” provisions as passed under federal law for 16 year olds and expands to the next eligible group of 14 year olds or older, for a savings of $753,000 in the budget year. The budget also continues the policy approved in last year’s budget prohibiting age-related increases to the AAP rate, for a net savings of $11.4 million ($4.9 million GF) in the budget year.   
  
Monthly Social Worker Visits– The budget continues funding of $9.8 million ($4.4 million GF) to support increased monthly social worker visits, in an effort to comply with new federal standards for monthly visitation. This is a slight decrease over 2009-10 due to adjusted caseload and federal grant funds. Another $2 million in PSSF is also available to counties for this purpose (an increase of $1 million federal funds over the current year).  
  
P.L. 110-351– Other items related to implementation of the federal Fostering Connections to Success and Increasing Adoptions are funded in the budget, including: $9.7 million GF to provide health oversight and coordination through county public health nurses serving children in foster care, $564,000 ($255,000 GF) to create Transitional Independent Living Plans prior to youth emancipation, commencing January 1, 2010; $2.9 million ($1.3 million GF) to support activities related to identifying and notifying relatives within 30 days of a child’s removal beginning January 1, 2010; and $1.5 million federal funds pass-through in adoption incentive funds to be reinvested based on a methodology that will be developed with input from counties.  
  
Program Improvement Plan (PIP) Activities– The following expenditures in support activities to comply with the State’s PIP are continued in the budget: $5.9 million ($2.6 million GF) for increased family case planning meetings and $12.2 million ($5.5 million GF) for increased relative search and engagement.   
  
Foster and Adoptive Family Recruitment Campaign– Provides $185,000 ($119,000 GF, no county match) in the budget year to support various strategies to test and implement a foster and adoptive family recruitment campaign in seven to ten counties.  
  
Transitional Housing Programs– The budget proposes to maintain funding for THPP at $13.8 million ($3.5 million GF) and THP Plus at $35.9 million GF, although THP Plus is subject to elimination due to the trigger.   
  
Contra Costa Impact: Services to approximately 65 young adults currently served by Contra Costa County will be eliminated, potentially leaving them homeless.  
  
Legislation– The budget continues to suspend AB 340 the Resource Family Approval Pilot Program and AB 2985 Foster Youth Identity Theft. The budget does provide funding to support grants, food stamps administration and automation necessary to implement AB 719, the Transitional Food Stamps for Foster Youth program.   
  
Federal Grants– The budget reduces grants for child abuse and neglect prevention and treatment to $8.78 million, due to a reduction of the Community-Based Child Abuse Prevention (CBCAP) grant portion of funding, for a net decrease of $2 million. Federal PSSF for counties is estimated for FFY 2010 at $32.7 million, the same as the prior FFY.   
  
In-Home Supportive Services  
  
The IHSS caseload is projected to increase in both the current year and budget year. The current year caseload is projected to be 460,041, for a growth rate of seven percent from 2009-10. In 2010-11, the IHSS caseload is expected to grow by 6.5 percent, to 489,972 recipients.   
  
Service Reductions– The budget proposes to limit IHSS services to recipients with a functional index (FI) score below 4.0. This assumes the Administration prevails in the V.L. vs. Wagner lawsuit, currently blocking the State from imposing service reductions based on FI Score to recipients at or below an FI Score of 1.99. Projected savings in the budget year would be $234.3 million ($77.3 million GF) in the current year and $3.5 billion ($1.1 billion GF) in the budget year, assuming implementation on June 1, 2010. At full implementation, just 63,239 recipients would remain eligible for the program, receiving on average 74.4 hours of services.  
  
County Administration– The budget includes a significant cut to county administration due to the service reduction, beginning July 1, 2010, reducing administrative funding by 86 percent, to $45.5 million ($16.1 million GF). The budget also includes continuation of last year’s five percent base cut to IHSS social workers, proposed at the same level as last year for another $15.0 million ($5.3 million GF) reduction in county operating costs. Since this second cut is proposed at the same level despite the reductions in county administrative costs due to eliminating services, the additional cut equals 33 percent of the remaining fund for county administration, and brings the net reduction to $302.4 million ($21.4 million GF).   
  
Anti-Fraud Activities– The budget continues to fund several IHSS anti-fraud activities, including:  
  
• Anti-Fraud Initiative: In support of county IHSS and district attorney-related activities, is continued at essentially the same level, in 2010-11 ($28.3 million total, $10 million GF).   
  
• County Investigators: 78 county positions are continued in the budget year at a cost of $10.1 million ($3.6 million GF).  
  
• Provider Enrollment Form: Includes $10.7 million ($3.8 million GF) in the current year and $473,000 ($167,000 GF) in the budget year for county administration activities necessary to implement a required provider enrollment form.  
  
• Recipient Finger Imaging: In the current year, $8.2 million ($4.4 million GF, no required county share) was appropriated for one-time equipment purchases, training and county activities associated with recipient finger imaging, which goes into effect April 1, 2010. Pending the testing of SFIS portable devices, the budget assumes one-time costs for the purchase of fingerprint ink, cards and Polaroid cameras. In 2010-11 on-going costs are budgeted at $5.6 million ($2.7 million GF).  
  
• Other county administrative activities relating to anti-fraud efforts: Specific activities funded in the budget include the provider enrollment form, criminal background clearances, targeted mailing and annual fraud training for county staff, at a cost of $786,000 ($287,000 GF), reduced from the current year to account for fewer IHSS recipients assuming the service reductions are adopted.   
  
The budget also estimates that $387.1 million ($135.1 million GF) will be saved in the current year and $245.7 million ($70.9 million GF) in the budget year, as a result of state and county anti-fraud activities. The budget displays this savings as “net” of administrative costs for IHSS anti-fraud costs, including those referenced above.   
  
Provider Wages and Benefits– The budget proposes to roll back the State’s participation in wages and benefits to the state minimum wage of $8.00 per hour plus 60 cents for health benefits effective June 1, 2010, for savings of $26.5 million GF in the current year and $338.2 million GF in 2010-11. The proposal would result in a direct cost shift to counties. Under current law, the State participates in wages up to $11.50 per hour plus 60 cents for health benefits. There is no proposal to remove the statutory requirement for counties to collectively bargain for wages and benefits. The 2009-10 budget as passed last February would have reduced state participation to $9.50 per hour plus $0.60 for health benefits; however the court blocked implementation and the State has filed an appeal. Under the 2010-11 proposal, the county share of the savings would be redirected to pay for increased county share of costs in CWS, Foster Care, and AAP (see Sharing Ratio Changes discussed above).  
  
IHSS Quality Assurance– Maintains funding for county IHSS Quality Assurance activities at $31.8 million ($11.2 million GF).  
  
IHSS Plus Option– Adjusts current year funding for social worker “supports-broker” training and implementation of a risk assessment process based on delayed implementation to $5.4 million ($1.9 million GF) and $1.5 million in 2010-11 ($549,000 GF).   
  
V.L. v. Wagner County Administrative Costs– Reimburses counties for the cost of complying with the court order to restore IHSS service reductions at a cost of $3.1 million ($1.6 million GF) in the current year.   
  
Contra Costa Impact: The reduction in state participation in the wages of IHSS workers to minimum wage and limiting services to consumers with a functional index of 4.0 or greater assumes that the State will prevail in pending litigation. If the State does prevail, an estimated 87 percent of consumers will be cut from the program.  
  
Adult Protective Services  
  
The Governor proposes $44.1 million GF to continue the current year ten percent cut to the APS program for savings of $13.2 million ($6.1 million GF). The cut results in the loss of 75 social workers that would have investigated 18,775 reports of abuse or neglect.   
  
Medi-Cal Administration and Program  
  
County eligibility operations base funding is proposed at $1.4 billion ($689 million GF) to maintain funding at the current year level. In addition to base funding, $188.5 million ($94.3 million GF) is budgeted for caseload growth.  
  
Cost of Doing Business– Funding for cost-of-doing-business increases in the budget year is proposed to be suspended for savings of $44.3 million ($22.1 million GF), and the funding vetoed from the final 2010-11 budget by the Governor in July is not restored, resulting in a continued cut of $121.1 million ($60.6 million GF).  
  
MEDS Security Agreements– The budget proposes no funding for MEDS security agreements in 2010-11. DHCS staff indicates that this issue will be revisited in the May Revise after results of the annual county cost survey are compiled. A question will be added to the survey regarding MEDS security agreement funding needs.  
  
Citizenship Requirements– The budget proposes $1 million ($500,000 GF) for the Deficit Reduction Act citizenship documentation requirements in 2010-11, reflecting implementation of the option provided under the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) that allows states to use a Social Security Administration (SSA) data match in lieu of obtaining evidence of U.S. citizenship from Medi-Cal applicants and beneficiaries. It is assumed that county administrative workload will decrease because counties will not need to verify citizenship if there is an SSA data match.  
  
Newly Qualified Immigrants– Benefits for newly qualified immigrants (those who have been in the U.S. for less than five years and are subject to the five-year bar on benefits) and PRUCOLs would be reduced from full-scope to limited-scope. The proposal would result in estimated GF savings of $1.1 million in the current year and $117.6 million in 2010-11. The proposal assumes the receipt of new federal funds because some of the emergency services would now be eligible for federal financial participation.  
  
Mid-Year Status Reports and Continuous Eligibility for Children (MSR/CEC)– The budget assumes the implementation of Mid-Year Status Reports and the elimination of Continuous Eligibility for children in Medi-Cal effective January 1, 2011 for savings of $4.9 million ($2.5 million GF). If the federal funding increase provided in the federal economic stimulus package is extended past the current December 31, 2010 expiration date, the MSR/CEC changes would not go into effect. Note that the trailer bill language that authorized the MSR/CEC changes sunsets these changes as of July 1, 2012.   
  
Six-Month Moratorium on BCCTP Screening– Currently, doctors in the Every Woman Counts Program screen women diagnosed with breast and cervical cancer for potential eligibility to the Breast and Cervical Cancer Treatment Program (BCCTP). The budget proposes a temporary moratorium on this screening, from January 1, 2010 to July 1 2010 and assumes savings of $1.1 million ($471,000 GF) in the current year and $6.5 million ($2.9 million GF) in the budget year.  
  
Aged, Blind, and Disabled Asset Verification– Federal law requires DHCS to develop methods for electronic verification of assets for all Aged, Blind and Disabled beneficiaries. The department intends to contract with a third-party vendor that would provide information to county eligibility staff. If unreported assets are identified, counties would have to follow up with the applicant/beneficiary for additional documentation. No savings are included for this activity in the current or budget year. The budget includes $1.2 million ($600,000 GF) to pay for the contractor that will provide asset verification services.   
  
PARIS Matching Pilot– The budget indicates that DHCS intends to continue pilot testing the Public Assistance Reporting Information System (PARIS), an information system maintained by the U.S. Department of Health and Human Services, to test the viability of identifying beneficiary residence changes and public assistance benefits received in other states. Savings of $204,000 ($102,000 GF) are assumed in 2010-11 for this pilot.  
  
SSI/SSP  
  
The budget proposes to reduce the SSP portion of SSI/SSP grants for individuals to the federally-required maintenance of effort (MOE) level paid by the state in 1983, beginning June 1, 2010. This reduces the GF obligation by $13.7 million in the current year and $177.8 million in the budget year. Under this proposal, individual grants would be reduced from a maximum of $845 per month to $830 per month. Grant levels for couples would remain unchanged, as the SSP portion of grants for couples were already reduced to the state MOE effective October 1, 2009. Other cuts enacted last year will remain, including withholding of the federal COLA pass-through (effective May 1, 2009), a 2.3 percent grant cut (effective July 1, 2009), and a 0.6 percent SSP grant reduction for individuals (effective November 1, 2009).   
  
Due to the negative Consumer Price Index (CPI) projected in 2010, there will be no federal COLA; however, the budget proposes to pass-through the projected 2.0 percent federal COLA for SSI grants in FFY 2011. For SSP, the state COLA is based on the California Necessities Index (CNI), which is projected to increase by 1.53 percent in 2010-11; however, statutory changes enacted in last year’s budget suspend all future state COLAs indefinitely.  
  
Cash Assistance Program for Immigrants (CAPI)  
  
The budget proposes to eliminate the program effective June 1, 2010 for savings of $8.1 million GF in the current year and $107.3 million GF in 2010-11. This proposal would eliminate benefits for 10,886 aged, blind, and disabled immigrants.   
  
California Food Assistance Program (CFAP)  
  
The budget proposes to eliminate this program effective June 1, 2010 for GF savings of $3.8 million in 2009-10 and $56.2 million in 2010-11. This proposal would eliminate food assistance for 37,258 aged, blind, and disabled immigrants.  
  
Realignment  
  
The Administration projects about a five percent shortfall for the current and budget year Realignment base which would result in the fourth straight year of funding below the base. However, for 2010-11 the budget projects growth funding of $175.3 million, including $146.5 million in sales tax. Counties are owed $285 million in unfunded caseload growth from the past three years.  
  
====================================================  
  
For additional information and analysis provided by CSAC, see Attachment B.  
  

CLERK'S ADDENDUM

The Board requested reports from the Sheriff and District Attorney on the impacts of the proposed State budget on their department operations and on jail capacity.