BILL ANALYSIS
SB 873
Page 1
SENATE THIRD READING
SB 873 (Hollingsworth and Garrick)
As Amended August 31, 2010
2/3 vote. Urgency
SENATE VOTE : Vote not relevant
SUMMARY : SB 873 is the spending plan that reflects the
Governor's 2010-11 May Revision proposal with some minor
adjustments to the Governor's proposal. Appropriates $91.5
billion of State General Fund (GF). SB 873 would make dramatic
reductions to almost every area of State government. These
include:
1)K-12 Education:
SB 873 funds Proposition 98 for 2010-11 to $48.4 billion.
This funding level results in a total programmatic reduction
of roughly $3 billion in the budget year. In terms of K-12
per pupil funding, when adjusted for the removal of child
care, the Governor's May Revision provides approximately
$7,154 per pupil. When comparing prior year per pupil funding
levels, this level of funding is roughly the level provided in
2004-05. Additionally this level of funding reflects a
reduction of approximately over $1,000 per pupil since
2007-08.
2)Child Care and Development Programs:
SB 873 eliminates state funds for the need-based, subsidized
child care programs, totaling $1.2 billion. Pre-School
programs are not included in this reduction. This proposal
would eliminate subsidized slots for approximately 142,000
children. SB 873 includes $594 million in federal funds for
78,000 slots.
3)University of California:
SB 873 provides $305 million restoration of one-time
reductions from prior year and $51.3 million for 2.5 percent
enrollment growth, 5,121 full-time equivalent student slots.
SB 873 acknowledges UC's fee increase of 15% for fall 2010
academic year.
4)California State University:
SB 873
Page 2
SB 873 provides $305 million restoration of one-time
reductions from prior year and $60.6 million for 2.5%
enrollment growth, 8,290 full-time equivalent student slots.
SB 873 Assumes a 10% fee increase for fall 2010 academic year.
5)California Community Colleges:
SB 873 provides $126 million for 2.2% enrollment growth,
26,000 full-time equivalent student slots. The bill reflects
a reduction of $23 million, or 0.38%, to reflect a negative
COLA for apportionments and categorical programs. SB 873 also
shifts $10 million from Extended Opportunity Programs and
Services (EOPS) and Part-Time Faculty Compensation to fund the
Career Technical Educations.
6)CalWORKs:
SB 873 reflects the elimination of the CalWORKs program
effective October 1, 2010 for a savings of $1.6 billion. With
the elimination of CalWORKs, the state would forego $3.5
billion in Temporary Assistance for Needy Families (TANF)
funding in 2010-11, growing to $3.8 billion in 2011-12. This
proposal would eliminate benefits for 500,000 to 600,000
families (including more than 1 million children and 1,451,200
individuals) who receive assistance from the program.
CalWORKs provides temporary cash assistance, job training,
education, child care, and employment programs to families who
are unable to meet basic needs on their own. As part of the
CalWORKs elimination proposal, provides GF of approximately
$664 million for areas of the budget that had received federal
TANF Block Grant funds and assisted with meeting California's
Maintenance of Effort (MOE) requirement. Without CalWORKs and
the federal TANF Block Grant that funds the program and these
other government services, GF is further required.
7)In-Home Supportive Services (IHSS):
SB 873 assumes $750 million in unspecified GF savings to the
IHSS program. The program currently serves 489,972 recipients
with 385,074 providers and 2,330 county and state staff.
8)Drug Medi-Cal:
SB 873
Page 3
SB 873 eliminates all Drug Medi-Cal programs with the
exception of the Perinatal and Minor Consent programs,
effective October 1, 2010, for a decrease of $53.4 million.
The Drug Medi-Cal program serves 270,598 recipients currently.
9)SSI/SSP:
SB 873 reflects saving from the adoption of legislation that
would reduce grants for individuals receiving Supplemental
Security Income/State Supplementary Payment (SSI/SSP)
resulting in savings of $132.8 million GF in 2010-11. SB 873
also eliminates the Cash Assistance Program for Immigrants
(CAPI) and the California Food Assistance Program on October
1, 2010 resulting in revised savings of $116.4 million GF in
2010-11.
10)Medi-Cal:
SB 873 assumes enactment of legislation to achieve $750
million in GF savings through cost containment measures in
Medi-Cal these measures would include:
a) Utilization controls ($90.2 million) including:
i) Elimination of specified over-the-counter drugs ($13
million);
ii) A maximum annual benefit on hearing aids at $1,510,
durable medical equipment at $1,659, urological supplies
at $6,435, and wound care supplies at $391 ($3.8
million); and,
iii) Limit on prescriptions to six per month ($4.2
million); and,
iv) Limit the number of physician or clinic visits to 10
per year ($69.2 million).
b) Increased cost sharing ($218.8 million) with:
i) $5 co-payments on physician/clinic/dental/pharmacy
visits ($118.2 million);
ii) $50 co-payments on emergency room visits ($41.5
million); and,
SB 873
Page 4
iii) $100 per day co-payments and $200 maximum for
hospital stays ($59.1 million).
c) Other program changes ($213.7 million) including:
i) Enrolling seniors and people with disabilities in
managed care ($137.3 million);
ii) Reduce radiologist rates to 80% of Medicare ($10.5
million);
iii) Freeze hospital rates at current level ($64.9
million); and,
iv) Cease paying for Medicare Part B premiums for
beneficiaries whose income exceeds the Medi-Cal
eligibility threshold by less than $500 per month ($1
million). This also reflects loss of $76 million in
savings from not adopting various January proposals.
11)Nursing Homes:
SB 873 assumes a 3.9% rate increase to AB 1629 nursing
facilities, at a cost of $80 million, expected to be fully
offset by an increase in the quality assurance fee (QAF)
achieved by:
a) Assessing fees on currently exempted multi-level
retirement communities;
b) Decreasing Department of Public Health (DPH) licensing
and certification fees; and,
c) Using more recent data on which the fee is based.
12)Managed Care Plan:
SB 873 reflects a 3.7% rate increase to managed care plans, at
a cost of $174 million.
13)Hospital Fee:
SB 873Assumes the extension of the AB 1383 hospital fee for
two quarters resulting in $160 million savings in Medi-Cal,
SB 873
Page 5
$700 million in increased fee revenue, and $1.1 billion in
federal matching funds.
14)Medi-Cal Eligibility:
SB 873 decreases Medi-Cal by $44 million due to a methodology
change in determining funding growth for County
Administration.
15)Asthma Public Health Initiative:
SB 873 shifts $11.3 million in Prop 99 funds, to backfill GF
in Medi-Cal, from the Asthma Public Health Initiative (APHI)
($1.3 million) and the Expanded Access to Primary Care program
($10 million). This would eliminate the APHI, which currently
educates and supports an estimated 365,000 people,
approximately half the number of people served prior to 2009
Budget reductions.
16)Healthy Families:
SB 873 assumes increase monthly premiums in Healthy Families
for families between 200 and 250% of the Federal Poverty Level
(FPL) by $18 per child ($54 maximum per family with 3 or more
children) for increased funding to the program of $13.3
million. This bill also assumes a reduction to Healthy
Families by $3.2 million by increasing emergency room
co-payments from $15 to $50 ($2.5 million) and adding hospital
inpatient services co-payments of $100 per day with a $200
maximum ($0.7 million). SB 873 assumes a one-time increase of
$25.8 million from the state and local First 5 California
Children and Families Commission for children up to five years
old in the Healthy Families Program, between 200 and 250% FPL.
Total requested contribution for 2010-11 is $81.4 million.
17)Mental Health:
SB 873 shifts county mental health funding to county social
services programs, resulting in $602 million in GF savings and
the same loss in funding in mental health programs at the
local level.
18)AB 3632 Mandate:
SB 873
Page 6
SB 873 Assumes the suspension of the AB 3632 mandate, for $52
million in savings. AB 3632 mandates counties to provide
mental health services to children who need them in order to
succeed in school.
19)Developmental Services:
SB 873 adopts an additional 1.25% reduction to regional center
purchase of services and operation, resulting in an additional
reduction of $48.1 million ($25.3 million GF).
20)Corrections and Rehabilitation:
SB 873 achieves $811 million in savings by assuming the
Governor's proposal to reduce support for the Prison
Receiver's Medical Services Program to a per inmate medical
cost level that is comparable to other states' correctional
health care programs. SB 873 also includes $244 million
unallocated cut to account for savings in lieu of the
Governor's "three-year to local" proposal.
21)Courts:
SB 873 adds $297 million GF to backfill revenue assumed from
the Governor's Automated Speed Enforcement proposal. Does not
provide sufficient funding to ensure trial courts can avoid
one-day per month closure and loss of additional trial court
jobs. SB 873 also reduces $13 million GF in 2010-11 to
reflect savings resulting from the implementation of
electronic court reporting and assumes $60 million in revenue
from a $15 increase to the fee for court security.
22)Employee Compensation:
SB 873 assumes various reductions to employee compensation
including:
a) $445.7 million GF and $349.8 million Non-GF associated
with implementation of a one-day-per-month personal leave
program for all state civil service employees from July 1,
2010 until June 30, 2011;
b) $529.6 million GF and $278.5 million Special Funds
associated with implementation of a 5% across-the-board
salary;
SB 873
Page 7
c) $405.8 million GF and $213.3 million Special Funds
associated with a 5% increase in employee pension
contributions;
d) $450 million in savings from the adoption of the
Governor's proposed 5% reduction to state agency personnel
budgets;
e) $200 million GF associated with anticipated savings from
partial reimbursement for reinsurance costs for early
retirees included in the Federal Health Care Reform Act,
passed in March of 2010; and,
f) $152.8 million GF and $64.6 other funds associated with
authorizing the state to contract for lower-cost health
care coverage either directly from an insurer or through
CalPERS.
COMMENTS : While SB 873 reflects the Governor's 2010-11 May
Revision budget proposal, there are some differences between
this bill and the May proposal. SB 873 does not assume revenue
from the red light cameras for speed enforcement, Emergency
Response Initiative, water fees, or AB 32 fees, which were all
part of the original May Revision proposal. The bill also makes
program reductions to Corrections in lieu of the May Revision
proposal to shift low-level offenders to local jails.
Analysis prepared by : Christian Griffith / BUDGET / (916)
319-2099
FN: 0006855