BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 180|
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THIRD READING
Bill No: AB 180
Author: Assembly Budget Committee
Amended: 6/24/09 in Senate
Vote: 27 - Urgency
PRIOR VOTE NOT RELEVANT
SUBJECT : Budget Act of 2009: Budget Revision
SOURCE : Author
DIGEST : Senate Floor Amendments of 6/24/09 delete the
prior version expressing the intent of the Legislature to
enact statutory revisions relating to the 2009 Budget Act.
The bill now makes necessary modifications to the 2009
Budget Act (SB 1 [Ducheny], Chapter 1, Statutes of 2009 of
the Third Extraordinary Session). This bill amends the
2009 Budget Act in order to address the budget gap for the
2009-10 fiscal year.
ANALYSIS :
This bill has an urgency clause for immediate
implementation.
In total, after all actions are taken into account, the
modified Budget provides, according to the Department of
Finance, for an approximately $4.1 billion General Fund
(GF) reserve for 2009-10 fiscal year.
CONTINUED
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Below, by major subject matter area, are some of the
significant reductions that are reflected in these
amendments. Statutory changes needed to activate some of
these reductions are typically in one of the several Budget
trailer bills.
Education
1. Overall Proposition 98 & K-12 Reductions . Adopts $5.5
billion in Proposition 98 reductions for K-14 education
over two years. This includes $4.5 billion in
reductions for K-12 education, involving the following
major adjustments:
A. $1.3 billion in revenue limit reductions in
2008-09 and about $1.9 billion in revenue limit
reductions in 2009-10. These amounts include
commensurate categorical reductions for Basic Aid
Districts.
B. $1.7 billion in deferral savings achieved by
shifting revenue limit payments from 2009-10 to
2010-11.
C. $282 million to partially restore Home-to-School
Transportation funding for local educational
agencies (LEAs) (on top of $214 million already
budgeted) and $3.9 million to fully restore
transportation services at the State Special
Schools in 2009-10, due to the elimination of
special funds.
2. Home-to-School Transportation Details . Provides total
funding of $496 million in Proposition 98 funding for
Home-to-School Transportation. This level of funding
equates to a program reduction of nearly 20 percent,
which is in line with reductions for other categorical
programs. These funds are then added to the categorical
flexibility program.
3. Federal Funds . Authorizes a significant increase in
federal funds in 2009-10, primarily new, one-time, funds
authorized under the ARRA (American Recovery and
Reinvestment Act), including:
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A. About $500 million in anticipated ARRA
Stabilization Funds to backfill K-12 revenue limit
reductions and related categorical reductions for
Basic Aid Districts.
B. $634 million in anticipated ARRA Individuals
with Disabilities Education Act (IDEA) funds for
students with disabilities.
C. $540 million in anticipated ARRA Title I Basic
Grants for low-income students.
D. $165 million in available Title I Set-Aside
funds -- including new ARRA funds -- to be
allocated to LEAs using Title I student counts.
E. $403 million in anticipated ARRA School
Improvement Grant funds that are set aside pursuant
to legislation.
Child Care
1. Fully funds Stage 2 and Stage 3 child care services.
2. Adds $15.5 million from Federal ARRA funds for
additional child care slots for low-income families.
3. Eliminates the Extended Day Care Program, which is
redundant of the Prop 49 After-School Education & Safety
program, effective September 1, 2009.
4. Denied Governor's proposal to increase family fees and
decrease reimbursement rates for child care providers.
Higher Education
Community Colleges
1. Reduces funding by approximately $700 million for
community colleges consistent with the Proposition 98
minimum funding guarantee and the funding levels
proposed by the Governor in the May Revise.
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2. Provides smaller reductions to priority categorical
programs, and places many (but not all) categorical
programs into a flexible pot. Provides community
colleges with some flexibility to achieve savings.
3. Increases student fees by six dollars per unit (to $26
per unit), consistent with pre-2007 levels. The
additional fee revenue provides community colleges with
$80 million in funds to offset necessary reductions.
However, no reduction is made in the area of financial
aid administration, ensuring that there are resources
for students to find financial assistance.
4. Provides community colleges with $130 million in federal
economic stimulus funds to offset cuts.
University of California/California State University
1. Total reductions of $1.4 billion in the current year
($717.5 million to each segment) and $266 million to
each segment (total of $532 million) in 2009-10 are
equal to the Governor's May Revise proposal, but unlike
the Governor's proposal, cuts are equalized between UC
and CSU. Of these total reductions, $1.97 billion over
two-years, approximately $1.7 billion will be offset by
federal economic stimulus funds.
2. Does not eliminate funding for academic preparation as
proposed by the Governor, but rather achieves savings
through unallocated reductions.
Hasting College of the Law . Rather than eliminate all
funding for Hastings, the conference committee adopted a 10
percent reduction.
Student Financial Aid
1. Does not eliminate the Cal Grant Financial Aid Program.
2. Achieves substantial savings by transferring $32 million
in excess funds in the Student Loan Operating Fund to
the GF to offset Cal Grant costs.
3. Makes reductions to the Cal Grant Program, but makes
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cuts effective for 2010-11. Reductions include freezing
the income eligibility level at the current thresholds
for Cal Grant A recipients for one year and reducing the
maximum awards for students attending private colleges.
Health
Healthy Families . Rejects elimination of the program, but
achieves substantial savings of approximately $70 million,
by establishing a waiting list for enrollment unless
third-party philanthropic organizations, donations, or
other sources, become available to continue enrollment of
children throughout the year.
Medi-Cal . Does not adopt the Governor's proposals to
eliminate Adult Day Health Care, state-only programs,
clinic programs, services for legal immigrants, or recent
family planning rate increases.
1.Reduces by about $2.8 billion (GF) to reflect receipt of
enhanced federal funds as provided under the ARRA.
2.Assumes receipt of $1 billion in federal funds for
repayment to California for expenditures made within the
Medi-Cal Program which should have been funded by the
federal government, including expenditures which should
be have provided under the federal Medicare Program.
3.Adopts the Governor's unallocated reduction of $323.3
million (GF).
4.Reduces by $22.5 million (GF) by requiring pharmacies to
bill Medi-Cal at a rate that is comparable to private
third-party payers as specified in trailer bill
language.
5.Reduces by $37 million (GF) by making changes in the
Medi-Cal reimbursement made to pharmacies as it pertains
to the estimated acquisition cost of drugs.
6.Reduces payments to hospitals by sweeping the Distressed
Hospital Fund for a savings of $23 million (GF).
7.Reduces Adult Day Health Care coverage to three days per
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week and related changes, for a savings of $26.8 million
(GF).
8.Increases fees paid by skilled nursing facilities by
expanding the amount of revenue upon which the AB 1629
fee is based, to include Medicare revenue, for increased
revenue to the State of $18 million.
9.Suspends cost-of-living increases effective August 1,
2009, for skilled nursing facilities and other long-term
care for a GF savings of $75.8 million in 2009-10.
10.Reduces by $14 million (GF) to reflect the elimination
of the state-only payment for ancillary health services
provided in Institutions for Mental Disease.
Other Health Programs .
Maternal and Child Health . Rather than total elimination
of the various programs and services offered, a reduction
of $11.5 million was adopted.
Community-Based Clinics . Rather than total elimination as
proposed by the administration, the conference committee:
(a) reduced Rural Health Services by $2.2 million; (b)
reduced Seasonal Migratory Worker services by $1.9 million;
and (c) reduced Expanded Access to Primary Care Clinics by
$8.4 million (total funds).
HIV/AIDS . Rather than total elimination of these programs,
a reduction of $33.5 million was adopted without
jeopardizing federal Ryan White funding and utilizing AIDS
Drug Rebate Funds to offset a portion of the GF reduction.
Domestic Violence Shelters . Reduced overall funding by 20
percent, rather than a complete elimination as proposed by
the Governor.
Emergency Medical Services Authority . Reduces funding for
the California Poison Control System, which provides
immediate free treatment advice and assistance over the
phone, for a savings of $3 million.
Department of Mental Health . Proposes to reduce the Mental
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Health Managed Care Services and Early and Periodic
Screening, Diagnosis, and Treatment Program for a combined
GF savings of $92 million.
Developmental Services . Reduces by $334 million, as
proposed by the Governor, through a methodical and
inclusive approach with substantial input from the
communities that access these services.
Human Services
CalWORKs . Does not eliminate the program, but achieves
$270.5 million in budget year savings by reducing funding
to counties, temporarily exempting certain families (e.g.,
those with very young children) from work requirements,
reverting funds, and adjusting caseload estimates.
In-Home Supportive Services (IHSS) . Does not make the
devastating cuts proposed by the Governor, but achieves
$117.8 million in budget year savings by increasing the
share of costs for some recipients and reducing or
eliminating services for clients with the lowest levels of
need.
In the February 2009 Special Session, the IHSS
share-of-cost buy-out was eliminated effective July 1,
2009, for prospective cases only. This proposal, which
would become effective September 1, 2009, reduces by 50
percent the state's share of the buy-out for clients who
were previously grandfathered in to continue receiving a
full buy-out.
Does not reduce worker wages; however, adopts Governor's
proposed savings of $40 million from improved fraud
detection.
Supplemental Security Income/State Supplementary Program
(SSI/SSP) . Adopts modified version of Governor's proposal.
Reduces grants for couples who are aged, blind or disabled
to federal minimum level (as proposed), but reduces grants
for individuals by a lesser amount. Ensures that grants
for individuals are close to the poverty line (unlike
Governor's proposal, which would have dropped substantially
below). These changes result in GF savings of $115.9
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million in the budget year.
In the February 2009 Special Session, SSI/SSP grants were
reduced by 2.3 percent, or $20 for individuals and $35 for
couples per month, effective July 1, 2009, under the
assumption that federal funds would not be received at a
$10 billion level. This proposal would further reduce the
maximum grants for individuals from $850 to $845 per month
and for couples from $1,489 to $1,407 per month.
Foster Care . Proposes a GF reduction of $36.7 million to
foster care programs, including savings of $26.6 million
from a 10 percent reduction to rates for Group Homes,
Foster Family Agencies, and placements for Seriously
Emotionally Disturbed children.
Safety Net and Food Programs for Poor Immigrants . Does not
eliminate Cash Assistance Program for Immigrants (CAPI) or
California Food Assistance Program (CFAP), as proposed by
the Governor. However, CAPI recipients (approximately
12,000 aged, blind, and disabled legal immigrants who would
be eligible for the SSI/SSP program but for their
immigration status) will see a decrease in their grants
consistent with the reductions adopted in the SSI/SSP
program. CFAP will continue to provide food assistance to
more than 22,000 low-income legal non-citizens between the
ages of 18 and 65, who meet all the eligibility
requirements for the federal Food Stamp program but have
resided in the United States for less than five years.
Alcohol and Drug Programs . Reduces funding by $90 million
for Proposition 36 programs that provide treatment to
substance abuse offenders, but continues to fund treatment
under the Offender Treatment Program (OTP). Provides
federal Byrne funds of approximately $60 million to
supplement OTP services.
Reduces, by 10 percent, the rates paid to Drug Medi-Cal
providers for a GF savings of $8.8 million.
Correction and Judiciary
Overall in Corrections . Achieves $1.2 billion in savings
(somewhat less than the Governor's amount). Includes
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prison and parole reforms (including eliminating parole for
low-risk offenders, increasing supervision for higher-risk
parolees, bolstering probation supervision, implementing
re-entry courts); modification to sentencing laws for
"wobblers" (fewer changes than proposed by the Governor);
and alternative custody options.
Reduces funds for less effective rehabilitation programs
(but not elimination, as proposed by the Governor), and
includes unallocated reductions to the Department of
Corrections and Rehabilitation, including to headquarters
administration (using more realistic assumptions than the
Governor's).
Department of Corrections and Rehabilitation (CDCR)
1. Reduces $402.5 million related to targeted reductions in
the state prison population by: (1) commuting sentences
of undocumented immigrants in our prison system and
having them immediately deported by Federal Immigration
and Customs Enforcement; (2) changing sentencing options
for low-level offenders by eliminating the current
sentencing options for specified crimes that may be
treated either as felonies or misdemeanors, making them
punishable by a jail term rather than state prison; and
(3) placing certain lower-rise inmates under GPS
monitoring. These proposals will prioritize the
incarceration of the most serious offenders.
2. Reduces CDCR programs by $175 million. The CDCR will
also have a $100 million unallocated reduction, at least
$20 million of which will come from headquarters. In
addition, funding for building maintenance is being
eliminated on a one-time basis in 2009-10. In total,
2009-10 expenditures will be reduced by $322.6 million.
Judicial Branch
Reduces funding, by $168.6 million, by reducing GF support
to the courts by 10 percent. This reduction will be
achieved through various measures, including one-day per
month court closures, transfer of reserves in various
funds, and an increase in fees.
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Natural Resources and the Environment
Department of Parks and Recreation . State Parks, assumes
enactment of $15 "park pass" vehicle license fee (VLF)
add-on. Funds will be used to avoid park closures and pay
for parks-related bond debt service (saves $145 million
annually GF [$70 million in budget year]). This is in lieu
of complete closure of California's state parks.
Department of Conservation . Suspends "Williamson Act"
payments of $34.7 million to counties for Agricultural and
Open Space Land Preserves.
Forestry and Emergency Services . Adopts Governor's
Emergency Response Initiative. This surcharge would
average approximately $48 a year per insurance policy
holder and generate $120 million in additional revenue in
2009-10. This proposal will delay all enhancements to
emergency response proposed in the January 10 budget,
generating $78 million in GF savings by offsetting current
baseline costs for CalFIRE.
Office of Environmental Health Hazard Assessment . Shifted
$5.7 million from GF to special funds. This created $4.1
million in GF savings over the Governor's proposal.
State Government
Consolidations and reorganizations . Adopts Governor's
proposed savings from consolidations and reorganizations.
Information Technology Savings . Reduces funding for state
information technology services, consistent with recent IT
consolidation, and provides the Office of the Chief
Information Officer (OCIO) additional authority to achieve
another $100 million in savings.
Employee Compensation . Rejects Governor's proposal to
reduce salaries by five percent, thereby maintaining a
two-day furlough for all employees.
Assumes some savings that will be achieved if proposed
labor agreements are not ratified by the Legislature. GF
savings are estimated at $60 million in 2008-09 and $150
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million in 2009-10.
Paycheck Deferral . Defers June 30, 2010 state employee
paychecks to July 1, 2010 to achieve budget savings of
approximately $1.2 billion.
Rural Health Care Equity Program (RHCEP) . Proposes to
eliminate funding for the RHCEP (except for Bargaining Unit
5, until its existing contract expires) which provides
reimbursements for certain health care expenses for State
employees who do not have access to a Health Maintenance
Organization (HMO). Estimates annual savings of $15.7
million. The 2008-09 approved budget eliminated payments
through the RHCEP for retired annuitants.
Public Employees' Retirement System (PERS) . Rejects the
Governor's proposal to save an estimated $132.2 million,
beginning in January 2010, by contracting for lower cost
health care coverage either through PERS or directly from
an insurer. This change could conflict with existing
collective bargaining contracts. Instead assumes PERS'
2010 final adopted health and dental premium rate increase
will be less than the nine percent increase assumed in the
February enacted budget and scores $50 million in savings.
Additionally, recognizes the plan adopted by the PERS Board
to rebate, via a two-month payment holiday in 2009-10, $100
million in excess Preferred Provider Organization premiums
paid by the state.
State Compensation Insurance Fund . Adopts the Governor's
proposal to sell a portion of the State Compensation
Insurance Fund (SCIF) to a private entity for an estimated
$1 billion. The SCIF will remain the "insurer of last
resort".
Department of Industrial Relations . Shifts the majority of
the remaining GF support in the Department of Industrial
Relations budget to fee-support.
Employer fees will be increased to fund the Occupational
Safety and Health Program and the Labor Standards
Enforcement Program. Similar fees on employers were
increased in the 2008-09 budget to address funding
shortfalls. Ongoing cost reductions beginning in 2010-11
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will produce over $60 million in GF savings.
Department of General Services . Delays repairs to the
State Capitol building and park, for one year, providing
$6.6 million in savings.
American Recovery and Reinvestment Act of 2009 (ARRA)
Oversight . Provides GF loans of $4.1 million to the
Department of Finance (DOF) (including the Inspector
General, the ARRA coordinating task force, and the Office
of State Audits and Evaluations) and $1.6 million to the
Bureau of State Audits to fund ARRA oversight. It is
anticipated that the loans will be repaid within the
2009-10 fiscal year once the federal government clarifies
the method by which states may obtain federal reimbursement
for ARRA oversight costs. The Department of Finance
funding includes $2.5 million for a new statewide ARRA
database in order to better meet federal reporting,
transparency, and accountability requirements.
Local Government and Transportation
1. Does not suspend Proposition 1A in 2009-10.
2. Adopts the Governor's proposals on public transit funds.
This includes new GF relief of $336 million by
directing new transit "spillover" revenues to
transportation-related debt service. Additionally,
directs $315 million in transit revenue formerly
directed to home-to-school transportation, to
transportation-related debt service.
3. Adopts the Governor's proposal to redirect the local gas
tax for GF relief, but limits the shift to two years
instead of permanent. In 2009-10, the amount of the
shift would be $986 million, and in 2010-11, the shift
would be about $750 million. These amounts are
consistent with the limit on bond debt payment of 25
percent of fuel and weight fee revenues outlined in
Article XIX, Section 5 of the California Constitution.
Future legislation can provide local governments with
new opportunities to raise funds for public transit and
local transportation services.
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4. "Realigns" VLF funds from the Department of Motor
Vehicles to counties. Counties will use funds to
support CalWORKs grants.
5. Extends the shift of redevelopment funds for education
by two years, the shift of $350 million enacted for
2008-09 will be continued in 2009-10 and 2010-11.
6. Suspends state subventions to local governments
(primarily counties) under the Williamson Act Program
for a GF savings of $34.7 million.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Coto, Davis, De La Torre, De Leon, Eng, Evans,
Feuer, Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Krekorian, Lieu,
Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, John A.
Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas,
Saldana, Skinner, Solorio, Swanson, Torlakson, Torres,
Torrico, Yamada, Bass
NO VOTE RECORDED: Adams, Anderson, Bill Berryhill, Tom
Berryhill, Blakeslee, Conway, Cook, DeVore, Duvall,
Emmerson, Fletcher, Fuller, Gaines, Garrick, Gilmore,
Hagman, Harkey, Jeffries, Knight, Logue, Miller,
Nestande, Niello, Nielsen, Silva, Smyth, Audra
Strickland, Tran, Villines
DLW:do 6/23/09 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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