STATE BUDGET UPDATE

California Budget Crisis:
NO END IN SIGHT TO BUDGET CRISIS – LEGISLATURE RECONVENES MONDAY– BUDGET CONFERENCE COMMITTEE TO MEET THIS WEEK

SACRAMENTO, CALIF (CDCAN) [Updated 07/31/2010 11:40 AM (Pacific Time)] With no end in sight to resolve the State’s budget crisis and how to close the $19 billion projected shortfall, the full Legislature will be returning to the State Capitol on Monday (August 2) to reconvene floor sessions and some committee hearings after a month long summer recess, and at least two scheduled meetings of the Budget Conference Committee.

Major Issues To Reach Budget Deal Are Outside the Conference Committee
The major issues of how to close the State’s projected $19 billion deficit – including ideas on raising or increasing revevnues, proposals to reduce spending either through cuts or increasing funding from the federal government, proposals to offset temporarily some major budget cuts and increase funding for some local government programs through borrowing – are issues that will not be ultimately resolved in the Budget Conference Committee.

Those issues – that when resolved could mean larger spending cuts or other major changes in state policies impacting children and adults with disabilities, mental health needs and seniors – is the central focus of discussion among the four legislative leaders and Governor.

Making California’s budget woes worse are the increasing likelihood that more federal money – including the extension of the temporary increase in the Medicaid funding match – will not happen.

Budget Conference Committee To Meet Tuesday and Wednesday
The Budget Conference Committee, chaired by Sen. Denise Ducheny (Democrat – San Diego, 40th State Senate District), is scheduled to meet at least twice next week at the State Capitol in Room 4203:
· August 3 (Tuesday) at 10:00 AM to 12:00 PM and from 2:00 PM to 4:00 PM
· August 4 (Wednesday) – conference committee will meet when the Senate Health Committee adjourns (the Senate Health Committee is scheduled to meet on Wednesday at 1:30 PM to hear 3 bills).

Budget Conference Committee Will Attempt To Close “Open” Items
The Budget Conference Committee will likely make a final attempt to close as many of the “open” issues before it, including taking action on some compromises reached on several controversial budget issues.

“Open” items are those budget issues where the Assembly and State Senate took a different action on a proposal by the Governor. Proposals where both houses took the same action, are not issues the Budget Conference Committee addresses.

However previous decisions by the two budget subcommittees to reject some earlier cuts or closing an issue in budget conference committee – given the size of the unresolved deficit – could be reversed completely or partially as part of a larger deal to reach a budget agreement later.

Controversial or Major Issues Left “Open” Still In Conference Committee
Some of those issues could include final action by the committee include (this is not the full list of remaining open issues – CDCAN will issue a report later this weekend covering all remaining “open” issues in the budget conference committee:
· AB 3632 special education mental health mandate – Governor proposed earlier to suspend current state law and shift responsibility, but not the funding, back to the schools. The bill number refers to legislation authored in the mid 1980’s by then Assembly Speaker Willie Brown, that took responsibility and provided funding to the counties to oversee and implement mental health services for special education students.
· AB 1629 the reauthorization to continue with several major changes, the AB 1629 quality assurance fee imposed on many nursing facilities that in turn is matched by federal Medicaid dollars. With the increased funding coming to the State, the providers are reimbursed for the fee that they paid (with some exceptions) . A compromise agreement by advocates and the State would impose some new requirements on nursing facilities in order to receive additional increased reimbursements from the quality assurance fee money. The compromise agreement – which still needs final approval from the Legislature and the Governor – would also include some level of funding for the Long Term Care Ombudsman. “AB 1629” refers to the original bill – authored by then Assemblymember Dario Frommer in August 2004, that first authorized the quality assurance fee on nursing facilities. The concept of imposing a fee on a provider so it could be matched by federal Medicaid money was first done a year earlier for intermediate care facilities for the developmentally disabled (ICF-DDs).
· In-Home Supportive Services: Instead of making deep reductions to the IHSS program as proposed by the Governor, the Legislature is looking a proposal – advanced by the unions representing some of the IHSS workers, to impose a “fee” on In-Home Supportive Services (IHSS) workers (providers) that would be matched by federal Medicaid dollars. The fee would be similar in concept to the quality assurance fee imposed on certain types of nursing homes (under AB 1629) and intermediate care facilities for the developmentally disabled. Those IHSS workers would be reimbursed for the fee – and the remaining increased federal money coming to the State would help to off-set some of the costs to the IHSS program. Details of the proposal will be put into legislation which will likely be heard in policy committees in the coming weeks. This proposal – even if approved by the Legislature and Governor – would still need approval by the federal government.
· Section 1115 Medicaid Waiver – the Legislature last July approved the Governor’s proposal to renew and significantly expand the existing Section 1115 Medicaid Waiver – set to expire in August this year. Two identical bills – AB 342 (by Assembly Speaker John Perez) and SB 208 (by Senate President Pro Tem Darrell Steinberg) were amended in June, to include some of the issues and concerns raised regarding the waiver proposal – which includes mandatory enrollment for hundreds of thousands of people with disabilities, mental health needs and seniors into existing managed health care plans. The issue before the conference committee technically is about approving additional state staffing to move forward on the waiver – not the actual waiver itself.
· Regional Centers – Governor proposed an additional $50 million (includes federal matching funds) reduction to be achieved with an additional 1.25% cut in reimbursements to most regional center providers and in the regional center operations budget. That would increase those reductions – first imposed February 1, 2009, to 4.25%, if the additional cut is approved.

OTHER LEGISLATIVE HEARINGS
Meanwhile, the Legislature comes back to resume regular floor sessions, Appropriations Committee hearings and some policy committee hearing. Several important upcoming deadlines are approaching for non-budget bills:
· August 13 (Friday) – last day for the Assembly and Senate Appropriations Committees to hear and report out bills to their floors. Any bill held in these committees cannot move forward (unless it is an “urgency” measure). There are no further policy committee hearings allowed in August except for bills with a rule waiver or bills that are “urgency” measures or bills where a committee simply wants to hear the subject matter.
· August 31 (Tuesday) - the Legislature must take action on its remaining bills still alive on or before August 31 – the deadline in the State Constitution for the Legislature to pass bills this year. That deadline has no impact on the State Budget however, because the Legislature can consider those budget related bills – as it has before – in a special (or extraordinary) session.

SUMMARY OF HEARINGS (NON-BUDGET)
AUGUST 2, 2010 - MONDAY
ASSEMBLY AGING AND LONG–TERM CARE COMMITTEE
2:00 PM – State Capitol – Room 126 [note room change]
Chaired by: Assemblymember Mariko Yamada (Democrat – Davis)
***Oversight (Informational) Hearing: “The Long Term Care Ombudsman Program – Protecting the Protectors of Our Most Vulnerable Adults”
CDCAN Note: Funding for this program last year was dramatically reduced by the Governor and had a significant impact on this program and the people and families it serves. Some efforts to restore some or nearly all of the program’s funding is being made this year – through legislation (AB 2555), renewal or reauthorization of the AB 1629 Quality Assurance Fee, and some actions by the legislative budget subcommittees.

AUGUST 4, 2010 - WEDNESDAY
SENATE HEALTH COMMITTEE
1:30 PM – State Capitol – Room 4203
Chair: Sen. Elaine Kontominas Alquist (Democrat – Santa Clara, 13th State Senate District)
Note: Bills to be heard in order of bill author sign-in. Public testimony limited to two witnesses in support and two witnesses in opposition (2 minutes each person)
· AB 52 (Portantino) - Umbilical Cord Blood Collection Program. (Urgency)
· AB 718 (Emmerson) - Health Care Coverage: Federally Eligible Defined Individuals: Preferred Provider Products: Premium Rates. (Urgency)
· AB 2599 (Bass) - Medi–Cal: South Los Angeles. (Urgency)
CDCAN Note: Budget Conference Committee will convene immediately upon adjournment of this committee hearing in the same hearing room.