NASWCA Budget Update

By Jacob Fraker, MSW Candidate, Social Work Intern

On June 27, 2019, Governor Gavin Newsom signed and approved his very first budget as Governor of California for the 2019–2020 fiscal year. The Governor’s budget strikes a balance between making historic investments in our state’s most vulnerable populations and budget resiliency through fiscal responsibility. Governor Newsom’s budget creates pathways out of poverty for millions of Californians through affordable healthcare, affordable housing and education. Unfortunately, lacking from this year’s budget was Earned Income Taxed Credit (EITC) eligibility for those that file their taxes using ITINS, which are largely undocumented individuals, and no increase in SSI/SSP benefits. Additionally, missing are investments in clean and renewable energy or increases in broader efforts in the fight against climate change. The U.S. is one of the biggest contributors to climate change and, as California is the largest economy and second largest contributor to CO₂ emissions in the nation, we have a responsibility to do more to address the climate crisis.

The $214 billion budget saw an increase in spending made possible by a three-year $21.5 billion surplus. The surplus is from a combination of higher revenue than estimated and lower state spending than anticipated. The budget includes reserves and a Rainy Day Fund that exceed $20 billion, the largest in state history. Much of the increase spending was put toward healthcare, housing/homelessness, Cal-EITC, and schools, both early and higher education.

Healthcare:

The budget preserves health coverage protections for Californians and includes a series of proposals that leads the nation in reducing healthcare costs and increasing access for families. Notable among these is the expansion of Medi-Cal to undocumented young adults ages 19–25; advocates had pushed for expansion to all undocumented. The Governor did note that this was just the beginning of the push for true universal healthcare, so we may see incremental expansion in the undocumented community in future budgets, as well as the increase of Medi-Cal reimbursement rates and premium support for middle-income families. While we have yet to reach universal coverage in California these steps are truly important in our move toward true universal healthcare in California.

Specifically the budget:

• Invests $1.45 billion over three years to increase Covered California health insurance premium support for low-income Californians — and provides premium support for the first time to qualified middle-income individuals earning up to $72,000 and families of four earning up to $150,000, partially funded by restoration of an enforceable Individual Mandate.
• Expands Medi-Cal coverage to all income-eligible undocumented young adults ages 19 through 25.
• Includes an increase of $1 billion, using Prop 56 funding, to support increased rates to Medi-Cal providers, expanded family planning services, and value-based payments that encourage more effective treatment of patients with chronic conditions.
• Invests in and supports California’s seniors by expanding health and other vital state services to this fast-growing part of California’s population.
• Ends the “senior penalty” in Medi-Cal by raising the income eligibility limit for older Californians.
• Approves $5.8 million General Fund one-time Proposal on Adult Protective Services (APS) and Public Administrator/Guardian/Conservator Training.
• Expands eligibility to 138% of the federal poverty level for the Medi-Cal Aged, Blind and Disabled program, estimated to help 22,000 Californians.
• Establishes a pathway to transition Medi-Cal’s drug benefit to a model where the state is directly bargaining for the lowest drug prices.
• Restores the 7% across the board reduction to In-Home Supportive Services (IHSS) service hours.

Housing/Homelessness

The high cost of housing is a defining quality-of-life concern for people across California. In order to increase housing supply, the budget makes a historic investment to accelerate the production of new housing, and supports local governments to meet their required housing goals.

Directly related is the homelessness epidemic across the state. Recognizing the importance of mental health supports in the fight against homelessness, the budget includes an historic $1 billion investment:

• The budget invests $1.75 billion in the production and planning of new housing. It includes support to local governments to increase housing production.
• To assist renters, the budget includes $20 million to provide legal aid for renters and assist with landlord-tenant disputes, including legal assistance for counseling, renter education programs, and preventing evictions.
• Provide homelessness emergency aid to local governments for emergency housing vouchers, rapid rehousing programs and emergency shelter construction.
• Increase mental health supports, which includes expanding Whole Person Care services that provide wrap-around health, behavioral health and housing services, and building strategies to address the shortage of mental health professionals in the public mental health system.

Cal-EITC:

The Cal-EITC has helped put money back into the pockets of California’s working families, lifting some out of poverty. The budget more than doubles the investment in the Cal-EITC to $1 billion, which will increase the number of participating households from 2 million to 3 million and:

• Help low-income families with young children through a new $1,000 credit for families with children under the age of six.
• Significantly increase the average yearly amount individuals receive through the tax credit.
• Expand eligibility to include full-time workers making the 2022 minimum wage of $15/hour.
• These expansions however will not apply to those who file with ITINs.

Education:

The budget makes an historic investment in education for Californians, paving the path toward universal preschool, recruiting and retaining qualified educators and facilitating tuition freezes at the UC and CSU.

K-14

• Makes highest-ever investment in K-14 education, including approximately $5,000 more per K-12 pupil than eight years ago.
• Puts California on the path to provide universal access to preschool for all four-year-olds and full-day kindergarten, including funding for childcare workers, expanding state-subsidized facilities and increasing slots.
• Supports students with specialized needs by providing a 19.3% increase in funding for special education.

Higher Ed

• Significantly increases funding for higher education, facilitating tuition freezes and increased enrollment slots at both the University of California and California State University systems for the 2019–20 school year.
• Provides support for community college students by funding two years of free community college tuition for first-time, full-time students.
• Provides $41.8 million to increase the number of competitive Cal Grant scholarships from 25,750 to 41,000 for income-eligible Californians.
• Provides $50 million for child savings accounts that aid families in managing future higher education expenses.

Lobby Days Impact:

Thanks to the incredible effort of social workers’ statewide lobbying on behalf of the NASW at this year’s Lobby Days, we saw the inclusion of most of our Lobby Days’ budget items:

• Fund rapid rehousing and basic needs initiatives for students in the University of California,

California State University and California Community College systems.

• Creates a Family Urgent Response System (FURS), approving $15 million General Fund for 2019–20 and $30 million General Fund for 2020–21 and ongoing, with trailer bill language.
• Provides $8 million General Fund ongoing to expand the Transitional Housing Placement Plus Program (THP-Plus) to reduce homelessness for former foster youth, with trailer bill language and possible suspension on December 31, 2021 if revenues are lacking, with the funds working through the Department of Housing and Community Development.
• Provides $5 million General Fund one-time for housing navigators for foster youth, with the funds working through the Department of Housing and Community Development.

Fiscal Responsibility

In order to guard against future economic recessions, ever more likely due to the Trump tax cuts, the budget makes smart investments in our saving funds and addresses our large debt burden.

• The budget will end the year with total reserves of $19.2 billion, of which $16.5 billion is in the Rainy Day Fund, $1.4 billion in the Special Fund for Economic Uncertainties, $900 million in the Safety Net Reserve, and nearly $400 million in the Public School System Stabilization Account.
• The budget makes an extra payment of $9 billion over the next four years to pay down unfunded pension liabilities. This includes $3 billion to CalPERS and $2.9 billion to CalSTRS on behalf of the state, and $3.15 billion to CalSTRS and CalPERS on behalf of schools.
• The budget invests $4.5 billion to eliminate the Wall of Debt and reverses the decade-old deferral undertaken during the last recession.
• The budget prioritizes one-time investments, with 88% of new expenditures being temporary rather than ongoing. This addresses the affordability crisis facing Californians while minimizing ongoing commitments to avoid putting the state at fiscal disadvantage in the future.

The 2019–2020 budget is bold and sensible in its approach to supporting Californians with the issues facing them here and now, while ensuring that the government will be able to help with them with the issues of the future. At the press conference following the signing of the budget, Governor Newsom remarked that the budget is a reflection of our values. If that is true, then it is clear that California under Governor Newsom values giving to those in need and saving for their future. While there is much more to be done, this is a step in the right direction toward a California that truly works for all.