Governor Brown Releases 2015-2016 Proposed Budget

09-Jan-2015

Governor Brown Releases 2015-2016 Proposed Budget

Today, Governor Brown released his proposed $113 billion budget for the 2015-16 fiscal year. While California’s fiscal situation continues to improve, spending increases are limited to only a few key areas, which is consistent with the Governor’s ongoing position to exercise restraint. K 12 Education funding will increase approximately $2,600 per student or $8 billion total (from 2011-12 levels). Caseload in Medi-Cal, the State’s Medicaid program, has increased from 7.9 million in 2012-13 to an estimated 12.2 million in 2015. While the Governor indicated in his inaugural address earlier this week that infrastructure maintenance is a problem that needs to be addressed, the Budget does not significantly increase funding in that capacity. Once again, the 10% Medi-Cal provider rate cuts remain intact in the Governor’s proposal. Propositions 1 and 2, passed in November, are included in the 2015-16 Budget with spending for the Water Bond and a reserve in the Rainy Day Fund. Overall, Brown’s budget focuses on increased healthcare responsibilities, Proposition 98 funding, environmental protection, and increases to higher education. Attached, please find the Governor's 2015-16 Budget Summary and highlights below:

Health and Human Services

Health and Human services spending continues to increase due to Affordable Care Act implemation and Medi-Cal expansion. The 2015-16 Budget proposes $142 billion in health and human services program spending ($31 billion GF and $111 billion other funds). As expected, much of this spending is allocated to Medi-Cal, California's Medicaid program. The Governor projects a 4.3% increase to $18.6 billion in GF Medi-Cal spending from the 2014-15 fiscal year to 2015-16, and assumes Medi-Cal caseload will increase from 2.1% to 12.2 million in 2015.

• Includes $150 million additional funding for county Medi-Cal administration 
• Includes continuation of the SkilledNursing Quality Assurance Fee for five years with annual reimbursement rate increases of 3.62%.
• Restores existing 7% IHSS across the board cuts with a 6.4 percent funding increase for total spending of $2 billion.
• Includes net fund savings of $176.1 million from implementation of the Coordinated Care Initiative (CCI), but acknowledges that, without the Managed Care Organization (MCO) tax revenue, the CCI would cost the State $396.8 million in 2015-16 and continue to post net costs to the state in 2016-17. If these factors don't change, the budget notes that the CCI will be terminated in January 2017.
• Notes that the Administration is proposing a new, restructured MCO tax that will be in compliance with federal law.
• Reserves $300 million for high-cost (primarily Hepatitis C) drugs, stating the Administration will convene a work group to address the issue of high cost drugs in Medi-Cal, corrections and state hospitals.
• Does not eliminate the existing Medi-Cal 10% provider rate cuts, except for the providers previously exempted in past budget years.
• Assumes net costs of $2 billion ($943.2 million GF) in 2015-16 for mandatory Medi-Cal expansion, and $14.3 billion for optional Medi-Cal expansion.
• Includes $9.6 million ($7 million GF) to start implementing the Continuum of Care Reform, which reforms the foster care system to emphasize more home-based care and funds increases to foster family agencies for social work services.
• Includes $9 million GF monies and 92.3 positions in 2014-15 and $18.1 million GF/184.5 positions in 2015-16 to increase the Porterville Secure Treatment Program by 32 beds.
• Includes $21.4 million and 179.5 positions for ongoing implementation of Program Improvement Plans at the Sonoma, Fairview, and Porterville Development Centers.

Environmental Protection

Total proposed 2015-16 Environmental Protection Agency program budget is $3.8 billion ($69.5 million GF).

• Includes the last $1 billion in spending from the 2006 flood bond to shore up flood protection.
• Includes $1.1 billion in cap-and-trade monies for low-carbon transportation, energy efficiency, and high-speed rail, among other programs.
• Includes $532 million from the Water Bond (Proposition 1, which was approved by voters in November) to implement the Water Action Plan, the Administration's five-year plan for sustainable water management.
• Notes that the Brown Administration will work with the Legislature and stakeholders to develop a midterm reduction target for 2030 consistent with the State's 2050 emission reduction goals, which will include improving existing building energy efficiency, decarbonizing electricity, and putting a price on carbon.
• $840,000 and 6 positions to support pilot project to address hazardous wastes generated in large quantities.

Local Government

• Continues ongoing process to wind down the State's former redevelopment agencies (RDAs).
• Anticipates that for 2014-15 and 2015-16 combined, an additional $580 million in property tax revenue will go to cities, $660 million to counties, and $200 million to special districts.
• Notes that the Brown Administration will introduce a bill through the budget to streamline the RDA dissolution process and that any new legislative proposals to change the dissolution process must meet the Administration's principles.

Education

• When the Local Control Funding Formula (LCFF) was implemented in 2013-14, the expected education funding for this year was expected to be $47 billion. The 2015-16 Budget contains almost $4 million more, totaling $50.7 billion.
• The General Fund revenue increases and a settle-up payment for prior years totals an increase of $7.8 billion in K-12 education. This equates to $13,462 in per-pupil spending in 2015-16 - an increase of $306 per-pupil.
• The one-time K-12 deferral payment of $900 million will eliminate the remaining outstanding deferral debt.
• Includes $100 million in one-time Proposition 98 funding to support Internet connectivity and technology infrastructure.
• Proposition 39 funds will be allocated to K-12 for energy efficiency project grants ($320.1 million), Community College Districts for energy efficiency project grants ($39.6 million), California Conservation Corps for continued technical assistance to K-12 school districts (%5.3 million) and Workforce Investment Board for job-training ($3 million).
• Commits $762 million to each of the university systems. The increase is contingent on tuition remaining flat. The Governor also stressed continued work toward additional approaches must be explored to reduce costs instead of tuition increases.
• Includes more than $1.2 billion for adult education, career technical education, workforce investment and apprenticeships.

Public Safety

Total proposed 2015-16 Public Safety Budget is $10.3 billion dollars ($10 billion GF).

• The projected average daily inmate population is 135,002 in for 2015-16. These projections are prior to adjustments for court ordered population reduction and Proposition 47. Prop 47 is estimated to reduce the population by 1,900 due to resentencing and avoided new admissions.
• The new construction of three level II dormitory housing facilities at existing prisons, authorized by the 2012 Budget Act, is expected to be completed in February 2016. The Budget includes $35.5 million General Fund and $90,000 Inmate Welfare Fund to activate the three new infill facilities.

Future Timeline

End of January
• Legislative Analyst Office (LAO) will release an analysis of the Governor’s Budget 
March-Early May
• Senate and Assembly Budget Committees will hold Budget hearings 
Mid May
• Governor will release May Revisions with latest spending and revenue figures 
June
• Governor and Legislative leaders meet to discuss differences in budget proposals
• Joint Budget Committee will hold Budget hearings
July
Govenor expected to sign the Budget on or before July 
1 July 1 new budget goes into effect, if signed