Click to view the American Health Care Act
Click to view the Update on Taxes and Healthcare
Republican Draft Legislation
Affordable Care Act
ACA was passed in 2010 and fully implemented in 2014:
It is still a market based system, private for profit system; it did expand those eligible for Medicaid (state and federal program) – adults who are make less than 138% FPL (under age 65) joining those previously eligible – low income children and their parents, aged, blind and disabled, pregnant women.
ACA dropped uninsured rates to lowest ever; health care costs are still the highest in the industrialized world; while 28 million remain uninsured (2015)
Young adults stay on parent’s coverage until 26
No exclusion for pre-existing conditions
Prohibites lifetime and annual limits
Prohibits discrimination based on race, nationality, disability, age or sex
Undocumented can’t qualify – however, CA and other states – Illinois, Massachusetts, NY, DC and Washington State – extended health coverage to undocumented children
Nationally over 20 million people gained health coverage; in 2015 the uninsured rate was 10%, the lowest in decades (KKF.org).
The majority of people gaining health coverage were enrolled in Medicaid.
What has happened?
Premiums have risen because of increased numbers receiving coverage and the use of services – preventive (no cost) and those requiring care (could not determine until consumers signed up), employers dropped their coverage and sent employees to exchanges, not all states expanded Medicaid, those in the individual market were always subject to big increases.
Only 32 states expanded Medicaid:
100% of funding covered by feds
95% funding starting 2017
90% funding beginning in 2020 and beyond
Fifty –one states developed health exchanges:
12 State-based Marketplace; 5 state based marketplace – federal partnership, 6 state – Partnership Marketplace; 27 federally-facilitated Marketplace
California enrolled 3.7 million in Medi-cal and 1.2 million through the exchange but 3 million still uninsured, California’s uninsured rate
fell to 8%
AHCA – The newly proposed plan:
Tax credits are based on age rather than income or geography
Caps those with higher income – over $150,000
Individual mandate has been deleted – penalties removed as of 2016
Pre-existing coverage maintained unless you lapse, then a 30% premium to requalify for coverage
Medicaid expansion repealed by 2020
Funding will be per capita; more “flexibility” for states
Contributions to health savings accounts are doubled
Now – Individual $3400; family $6750
2018 – $6550; $13,100
Employer mandate to provide coverage is repealed
Penalties are removed retroactively to 2016
Older consumers will pay more – 5 times (3 times now) more than younger folk
Removes the requirement that insurance plans cover the 10 essential health benefits
Eliminates funding for public health, community health centers
Prohibits funding to Planned Parenthood for one year after enactment
Currently, the Congressional Budget Office (CBO) has not scored the act and we don’t know if this is a cost saver, if this causes a loss of health coverage or how many will be affected.
Finally, the major health and advocacy groups are opposed and/or have asked that the process be slowed until the CBO can score the act:
American College of Physicians
National Nurses United (CNA)
Even the Chief Medical Officer for Medicaid in the Trump Administration has “aligned with the experts in opposition to AHCA”, a cadre of Republicans and Democrats and various conservative groups have also voiced concerns regarding this attempt to “replace” ACA:
Americans for Prosperity
Tea Party Patriots
Club for Growth
The bill’s authors have responded to the criticism. “There’s a pretty big medical-industrial complex in America” Rep. Greg Walden of Oregon, Chairman of the House Energy and Commerce Committee, told reporters. “… when you touch it, I’ve discovered, it touches back.”
Sacramento Update – 2017
The 2017 legislative session met for their administrative session on December 5th to elect their leaders and their teams and to swear in 22 new Assembly members along with 9 Senators. The standing committees are now complete along with new Chairs of the Budget sub-committees.
On January 10th as required by the state Constitution, Governor Brown submitted his 2017-18 budget. We have a $179 billion budget with a reserve fund of $7+ billion with $2 billion being allocated for 2017-18. The Governor’s budget staff are projecting a $1.6 billion shortfall, although the LAO projections are different – showing a growth economy and that the state could weather a recession. As the governor stated, “California has the most progressive tax policy but the most volatile revenue stream”. This volatility is based on our dependence on taxing the higher income individuals, (Prop 30 and Prop 55), whose incomes appear to rise and fall based on market forces and investments. It should be noted the sales tax increase in Prop 30 was not extended so we received a tax cut. However, sales taxes are also based on the county and city in which you live.
On Tuesday, the PPIC held a webinar with the Legislative Leadership:
- Senator Kevin De Leon – Pro Tem
- Senator Jean Fuller – Minority Leader
- Assembly Speaker – Anthony Rendon
- Assembly Minority Leader – Chad Mayes
The panel discussed their priorities and vision for the 2017 legislative session. The priorities they listed were:
- Addressing poverty – highest in the nation
- Housing – high housing prices and rent, impacts jobs and economic growth
- Transportation Infrastructure
- Jobs and the economy – uneven throughout the state
- Education – Career Technical Education, early childhood education
- Climate change
All involved agreed there can be bipartisan agreement and that it is important to reach “common ground”. It was agreed that “transportation infrastructure could be the test case”. While all agreed affordable housing is an issue, the governor’s budget did not put forth any new funding and in fact eliminated the one time funding of $400 million for housing as well as the $45 million for the housing and advocacy program. If you recall there was much discussion and no agreement on how to handle these issues during last year’s budget deliberations.
I was personally struck that none of the leadership team mentioned health care issues. I can only surmise that was based on the uncertainty regarding what the current Congress will do and in fact has already begun to undue ACA.
As previously noted, Prop 98 (mandate education funding) and Prop 111 (minimum funding guarantee) determine the funding going to K-14. Because of the decrease in revenues, the state doesn’t have to meet the minimum guarantee. The 2017-18 guarantee is reduced by $322 million. This budget will increase per pupil spending by $3,900 over 2011-2012. The following budget issues adjust for the decrease in the minimum guarantee:
Local Control Funding Formula (LCFF) – additional $744 million to continue this program. This formula plays out over a number of years.
It is likely to be fully funded by 2018-19.
Provides $287.3 million in one-time funding to reduce mandate debt the state owes to schools
Provides $200 million for the Career Technical Education Incentive Grant Program – The proposed spending plan reflects the final installment of a three-year program that began with the 2015 Budget Act.
Provides cost-of-living-adjustments (COLAs) for non-LCFF programs – The Governor’s proposed budget funds a 1.48 percent COLA ($58.1 million) for several categorical programs that remain outside of the LCFF, including special education, child nutrition, and American Indian Education Centers.
Additionally, federal funding, lottery funds and various local taxes also add to the funding for K-14.
UC and CSU funding:
Funding to the higher education system will remain flat. State funding has been aligned with tuition increases which have not increased recently. However, both UC and CSU have plans to increase tuition this year. These decisions impact whether the legislature will provide additional revenues.
According to the Dept of Finance (governor’s finance team) – Since 2012‑13, the University of California has received $818 million in new funding, the California State University has received $1.1 billion, and the community colleges $1.8 billion.
Addressing Poverty Issues
California has a safety net for the state’s neediest residents who live in poverty:
- The rising state minimum wage, which is scheduled to increase to $11 per hour in 2018 and to $15 per hour over time
- The expansion of health care coverage under the federal Affordable Care Act, which provides millions of Californians with insurance
- The first cost‑of‑living adjustment for Supplemental Security Income/State Supplementary Payment (SSI/SSP) recipients since 2005
- The repeal of the maximum family grant rule in CalWORKs, which denied aid to children who were born while their parents were receiving aid
- Increases in child care and early education provider rates and children served totaling $837 million.
Medi-cal (a state and federal program) is the largest state health program. Medi-cal covers, poor families and their children, the aged, blind and disabled.
Now based on ACA, childless adults up to 138% FPL, undocumented children and those with mental health and substance use issues are also covered under Medi-cal.
California currently covers 13+ million under Medi-cal and over one million get coverage in Covered California either through individual coverage or through the small business plan – SHOP.
With the uncertainty of “repeal and replace”, California can only fund health programs based on existing state and federal law and requirements:
Total Medi-Cal spending of $102.6 billion in 2017-18, is comprised primarily of federal dollars. Federal support for Medi-Cal is projected to be $66.8 billion in 2017-18, roughly two-thirds of total funding for the program. State General Fund support for Medi-Cal is projected to be $19.1 billion in the upcoming fiscal year, with other non-federal funds providing the remaining $16.7 billion.
Prop. 56 – Tobacco tax – increases the state’s excise tax on cigarettes by $2 per pack starting on April 1 and other tobacco products and electronic cigarettes that contain nicotine. This initiative also requires most of the revenues will go to Medi-cal services. There is a growing discussion between health care providers and the governor on whether any of these funds should be used to increase the reimbursement to physicians who provide Medi-cal services.
CHIP (formerly Healthy Families) will likely be authorized but projections are that the funding will be reduced. Since late 2015, the federal government has paid 88% of CHIP costs in California, with the state covering the remaining 12 percent. Previously, the federal share was set at 65 percent. With CHIP currently authorized only through September 2017, the Governor assumes that Congress will reauthorize the program this year, but revert to the prior sharing ratio (65/35) effective October 1, 2017. This change would increase the state’s General Fund costs for CHIP by $536.1 million.
Affordable Care Act (ACA) – “Repeal and Replace”
Since the inception of ACA, there have been discussions and Congressional votes on repealing and replacing ACA or Obama Care. In 2015, Congressman Price, the nominee to head HHS, wrote an appeal bill but it was vetoed by President Obama. Since then we have not seen a comprehensive plan to replace the repeal of ACA but numerous ideas have been floated:
- Medi-cal block grants
- Reduction in funding for Medicaid expansion
- Tax credits to enroll Medicaid enrollees in private insurance
- High deductible plans coupled with health saving plans
- Market driven health care
- Cap caseloads through allotments to states
- Selling insurance across state lines
- Develop high risk pools for those with pre-existing conditions
- Insurance for everybody
On January 12th, the US Senate voted on a resolution that will start the process of repeal and replace through the process of reconciliation – addresses current funding of ACA. The House is expected to vote on the issue on Friday. At this writing, the Congressional majority is “beginning to craft legislation that will repeal the most corrosive elements of Obamacare — the individual mandate, the taxes, the penalties — but at the same time, moving separate legislation that will allow us to introduce the kind of reforms in American health care that’ll lower the cost of health insurance without growing the size of government,” according to the Vice President – Elect.
To this end, the Congressional Budget Office (CBO) and the Joint Committee on Taxation issued a report on Tuesday estimating the budgetary results of H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015 1 which would repeal portions of the Affordable Care Act (ACA) eliminating, in two steps, the law’s mandate penalties and subsidies but leaving the ACA’s insurance market reforms in place.
According to the analysis by the CBO, two primary findings that will affect insurance coverage and premiums are:
The number of people who are uninsured would increase by 18 million in the first new plan year following enactment of the bill. Later, after the elimination of the ACA’s expansion of Medicaid eligibility and of subsidies for insurance purchased through the ACA marketplaces, that number would increase to 27 million, and then to 32 million in 2026.
Premiums in the non-group market (for individual policies purchased through the marketplaces or directly from insurers) would increase by 20 percent to 25 percent—relative to projections under current law—in the first new plan year following enactment. The increase would reach about 50 percent in the year following the elimination of the Medicaid expansion and the marketplace subsidies, and premiums would about double by 2026.
Additionally, H.R. 3762 would make two other changes that would affect insurance coverage and premiums. First, upon enactment, the bill would eliminate penalties associated with the requirements that most people obtain health insurance (also known as the individual mandate) and that large employers offer their employees’ health insurance that meets specified standards (also known as the employer mandate).
Second, beginning roughly two years after enactment, the bill would also eliminate the ACA’s expansion of Medicaid eligibility and the subsidies available to people who purchase health insurance through a marketplace established by the ACA. H.R. 3762 also contains other provisions that would have smaller effects on coverage and premiums. Importantly, H.R. 3762 would leave in place a number of market reforms—rules established by the ACA that govern certain health insurance markets. Insurers who sell plans either through the marketplaces or directly to consumers are required to:
- Provide specific benefits and amounts of coverage
- Not deny coverage or vary premiums because of an enrollee’s health status or limit coverage because of preexisting medical conditions; and
- Vary premiums only on the basis of age, tobacco use, and geographic location
The above reflect the national implications of repealing ACA. Now let’s determine what may happen in California.
In responses to a request for “ideas” from House Majority Leader, Kevin McCarthy on how to repeal ACA, the following were the comments and suggestions from Governor Brown and Insurance Commissioner Dave Jones:
Governor Brown in his response stated the following 2:
“It will destabilize the commercial market for small-business owners and individuals,”
“In a collapsing market, these business owners and individuals could face significant premium increases, out of reach for many.”
“Plunge the state’s uninsured rate to a historic low of 7.4 percent last year from 17.2 percent in 2013.
Governor Brown also pointed to the rising costs and diminished health outcomes of McCarthy’s own constituents in Tulare, Kern and Los Angeles Counties “where the number of Medi-Cal enrollees is high,” should they be stripped of insurance coverage.
“California stands ready to work with you and your colleagues to find decent and real solutions”
“But I implore you: don’t just shift billions of dollars in costs to the states. That would be a very cynical way to prop up the federal budget – and devastating to millions of Americans.”
More than $15 billion from the federal government flows to California to support Obamacare’s optional expansion covering nearly 4 million adults.
Insurance Commissioner Dave Jones responses: 3
A fundamental question must be asked before any vote is cast. Do you have a replacement that will maintain the fundamental protections – affordability, quality, and access to a comprehensive set of health care benefits for everyone who has health insurance coverage today?
Approximately five million Californians and 20 million Americans have health insurance coverage they would not have, but for the Affordable Care Act. Thanks to the Affordable Care Act, 91% of Californians are now insured. The Affordable Care Act cut the uninsured rate in California by more than half, changing this important indicator from
17.2% of Californians without health insurance in 2013 to a historic low of 8.6% in 2015.
In California, the uninsured rate dropped across all racial and ethnic groups. Significantly, the greatest gains in health insurance coverage were seen among Latinos; the number of uninsured among non-senior California Latinos fell by 1.5 million, representing a decrease in the uninsured rate from 23% to 12%.5
The magnitude of the positive impact of the ACA reforms is profound. The U.S. Department of Health and Human Services determined that:
Compared to pre-ACA coverage, 12,092,000 Californians are no longer threatened by lifetime limits on their health insurance coverage.
An estimated 294,000 young adults have benefitted from the ability to stay on their parents’ health insurance to age 26.
Expansion of preventative care has improved the health of 15,867,909 Californians, through access to flu shots, cancer screenings, mammograms, and tobacco cessation services at no cost.
The implementation of the Medical Loss Ratio (MLR), which requires insurers to spend at least 80% of their premiums on coverage, has returned $124,910,743 in insurance refunds to Californians who receive coverage through their employers.
The above comments from Commissioner Jones are not exhaustive as he sent an 18 page response with 5 pages of footnotes. Should you wish to review his entire comments, see link 3 below.
At this writing, SB 10 (Lara) which would have allowed adult undocumented residents to purchase health coverage through Covered California has been delayed until the new Administration comes into office. Senator Lara issued the following statement on Wednesday – “California filed for a state innovation waiver under Section 1332 of the Affordable Care Act in order to implement SB10. Today we learned that the waiver will be delayed until after the Presidential Inauguration. I am withdrawing the Health4All waiver request because I don’t trust the Trump Administration to do what’s best for California and to implement the waiver in a way that protects people’s privacy and health”.
Lastly, the repeal and replace of ACA will have profound consequences on our nation as it did when first signed in 2010 and fully implemented in 2014. The question for me has always been, why would anyone not want all people to have health coverage and access to affordable, quality and reasonably priced health care? I look forward to seeing how this critically important and fundamental issue plays out.
Organizational Session – December 5, 2016
The 92nd California State Legislature was sworn in – both houses – beginning at 12n today.
Both houses began with song, prayers and pledge of allegiance. On the Senate side, the Secretary of state certification was read and the Chief Justice Cantil-Sakauye swore in the newly elected Senators, only those in uneven districts were running, some were incumbent others are newly elected to the Senate.
The Assembly legislators, all were up for election – new and incumbent – were also certified by the Secretary of State and sworn in by Associate Justice Cuellar.
Senate – The most senior member of the Senate, Senator Jim Nielsen was called to the dais and the various resolutions were read which determine how the business of the Senate will be conducted. The election of the Pro Tem, Secretary of the Senate and the Chief Sergeant at Arms was accomplished and all sworn in. The Pro Tem gave a speech reviewing the accomplishments of last session and an overview of issues that need to be addressed this session – housing and infrastructure among them. He also spoke to the national discussion and how California is likely to address a number of the issues. Jean Fuller was recognized as the Minority Floor Leader. Hannah Beth Jackson is the Senate floor leader and was called upon by the Pro Tem to conduct the floor session.
Assembly – the nonmembers of the Assembly – Chief Clerk and both Chaplain and Associate Chaplain were nominated and sworn in. Anthony Rendon, the current Speaker was nominated as Speaker as well as Chad Mayes (R), the vote was in favor of Anthony Rendon. Kevin Mullin was sworn in as the Speaker Pro Tempore, he runs the floor sessions in the Assembly. He then assumed the dais to run the business of the floor. The various resolutions that determine the business and rules of the Assembly were presented and voted on.
HR 1 – the standing rules of the Assembly generated discussion as the Republicans asked that the newly passed initiative Prop 54, which requires among other things that “every bill be in print and online at least 72 hours before each house can vote on it”. There was a motion to post pone the vote on this section of the resolution until January 4th to allow the legislature to fully vet the issue. This motion was defeated and HR 1 as written was passed 55-25.
One resolution SR 7 and HR 4 on immigration generated many minutes of debate on this issue in both houses, as you can imagine the national discussion was the genesis of this resolution and the discussion.
There was much heat and emotion generated by this debate on both sides and in both houses. HR 4 ultimately passed on a 57-14 vote and SR 7 passed 27-3.
After the vote in the Senate on SR 7, Senator Anderson requested a suspension of the rules so that “there can be a bi-partisan vote on immigration – SJR 1”.
The vote to suspend the rules was defeated on a 13 -26 vote.
The Assembly adjourned at 1:57 pm to reconvene at 1 pm on January 4, 2017
The Senate adjourned at 2 pm to reconvene at 2 pm on January 4, 2017.
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“Stop the Bleed” is a nationwide campaign to empower individuals to act quickly and save lives.
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Results of November General Election – 2016
Donald John Trump is the President – elect. Secretary of State Clinton delivered her concession this morning and asked that we all come together to support the incoming President but also to heal the rifts that have developed and “to build a stronger, fairer America”.
California voted for Kamala Harris and she will replace Senator Boxer, her wining rate was 67.3% to 32.7%. She is the first woman of color to represent California in the Senate and she is the daughter of immigrants – father Jamaican and mother from India. It should be noted this is the first open US Senate seat in 25 years. Representative Sanchez who is also the child of immigrants represented the 46th district, Lou Correa, a former state legislator won this seat yesterday.
California had 17 initiatives on the ballot and the results are:
Prop 51 – issue $9 billion in bonds for school infrastructure
54% – yes 46% – no
Prop 52 – require approval of Medi-cal hospital fee changes
69.6% – yes 30.4% – no
Prop 53 – require voter approval on infrastructure bonds over $2 billion
48.6% – yes 51.4% – no
Prop 54 – require publication of legislative bills 72 hours prior to a vote
64.3% – yes 35.7% – no
Prop 55 – extend state tax on personal income over $250,000
62.1% – yes 37.9% – no
Prop 56 – increase tobacco tax to fund Medi-cal, smoking prevention
62.9% – yes 37.1% – no
Prop 57 – allow parole of nonviolent felons and sentence reduction
63.6% – yes 36.4%
Prop 58 – ease restriction on bilingual education in public schools
72.4% – yes 27.6% – no
Prop 59 – asks state officials to work to overturn Citizens United ruling
52.3% – yes 47.7% – no
Prop 60 – require the use of condoms in pornographic films
46.1% – yes 53.9% – no
Prop 61 – regulation of state prescription drug prices at VA rates
46.3% – yes 53.7% – no
Prop 62 – repeal death penalty, retroactive to current inmates
46.1% – yes 53.9% – no
Prop 63 – ban large magazines, require ammunition background checks
62.6% – yes 37.4% – no
Prop 64 – adult use of marijuana act
56% – yes 44% – no
Prop 65 – redirect grocery bag fees to a special conservation fund
44.7% – yes 55.3% – no
Prop 66 – change procedures on appeals for capital punishment convictions
50.9% – yes 49.1% – no
Prop 67 – uphold ban on single use plastic carryout ban
52% – yes 48% – no
State Legislative Races
The legislature is expecting to gain a Democratic 2/3 majority, they need to pick up 2 Assembly seats and one Senate seat if they can maintain the 52 Assembly seats and 26 Senate seats prior to the election. The following were the “hot contests’ for Assembly and Senate seats, only the odd numbered Senate districts were up for election this year, while all Assembly seats were in play:
AD 16 – Catharine Baker (R) the incumbent ahead with 55.8%
AD 35 – Jordan Cunningham (R) is ahead with 54.6% of the vote
AD 38 – Dante Acosta (R) is ahead with a 53.1% vote
AD 40 – Marc Steinorth (R) the incumbent is holding with 52.3%
AD 60 – Sabrina Cervantes (D) ahead of incumbent with 52.2% vote
AD 65 – Sharon Quirk-Silva (D) is ahead of incumbent with 50.8%
AD 66 – Al Muratsuchi (D) is ahead of incumbent with 53% of the vote
SD 5 – Cathleen Galgiani (D) the incumbent is ahead with 55.6%
SD 21 – Scott Wilk (R) ahead with 54.8% of the vote
SD 25 – Anthony Portantino (D) is ahead with 57.5%
SD 27 – Henry Stern (D) ahead with 55% of the vote
SD 29 – Ling Ling Chang (R) is ahead with 50.9%
The above results are from the Secretary of State as of 11/9 @ 10:24 am, all results at this time are considered “semi-official.” Final certified results are due to the Secretary of State for the presidential electors on December 6th and all other state contests are due December 9th. The final results are certified by the Secretary of State on December 16, 2016.
October 2016 – Sacramento Update
Today we are 20 days from our general election. If you or anyone you know needs to register, October 24th is the final date for voter registration in California. If you wish to vote by mail, all requests for a ballot must be in by November 1st.
If you are unsure about your voter status, visit: https://voterstatus.sos.ca.gov/
You may also check your voter status, by contacting your county elections web site or by phone. Mail in ballots have and are being mailed to those who permanently vote via mail and so voting has begun in California.
If you are not interested in any of the candidates and wish to write in a name,unfortunately that is not allowed in California. Only those candidates that received the top two votes in the primary are eligible for votes in the general election. However, candidates running for the office of U.S. President can run in the general election as either a Presidential Elector using the independent nomination process or a Presidential Elector write-in candidate.
All Assembly seats and half the Senate seats are up for election in 20 days. Those winning can now serve 12 years based on the revised term limits initiative passed in 2012. This will certainly slow down the loss of institutional memory and policy expertise that is needed for such a complex and diverse state. Because of national issues, increasing numbers of decline to state voters, the slide in those registering as Republicans and the usual higher voter turnout for general elections, it is possible the Democrats will regain the 2/3 – supermajority – 2 seats in the Assembly and one Senate seat, they last held in 2012. In recent elections, we have seen the emergence of “moderate “Democrats” classified as more “business friendly” and less likely to vote for tax increases. We will have to see if their numbers increase and if they will be able to negotiate their positions on policy issues.
Issues for 2017-18
The Legislature has adjourned until December 5, 2016 @ 12n. They will reconvene to elect their leadership teams to include committee Chairs, etc. It should be noted the first extraordinary session which the governor called into session in June 19, 2015 has yet to be acted on and thus remains “in session”.
This extraordinary session was convened:
To consider and act upon legislation necessary to enact pay-as-you-go, permanent and sustainable funding to:
- Adequately and responsibly maintain and repair the state’stransportation and other critical infrastructure; and
- Improve the state’s key trade corridors; and
- Complement local efforts for repair and improvements of localtransportation infrastructure.
To consider and act upon legislation necessary to:
- Establish clear performance objectives measured by thepercentage of pavement, bridges, and culverts in good condition; and
- Incorporate project development efficiencies to expedite projectdelivery or reduce project costs.
During the first special session, SBx1 1 was introduced, discussed but no movement was taken on this issue. While the governor had a proposal relating to roadway maintenance, this too went nowhere, probably because of the 2/3 requirement for taxes to cover costs. All can agree California’s roads are in sad shape and continuing to deteriorate but our representatives and interested stakeholders have not been able to engage in meaningful discussions and/or bring forth solutions. This issue will likely resurface during the 2017-18 legislative session.
Health care coverage, access and costs are certainly going to be discussed during the upcoming session. Costs for health coverage are going up because of a variety of issues:
The nation’s largest health plan – UnitedHealth – is dropping out of the not only Covered California but most of the other exchanges they are involved in throughout the country
Health plans are now experiencing higher risk with sicker patients, costs they did not fully anticipate because who knew who would sign up for what plan?
72% of previously uninsured Californians are now insured, 33% of those recently insured are covered by Medi-cal
While children regardless of immigration status are now covered, there remain about 27% of people uninsured because of “costs” and while emergency room health care has dropped it remains the most expensive means of receiving health care. Issues relating to why people still seek in the ER needs to be addressed, we know some of the issues.
The ability to access care with over 6 million more patients with coverage will remain an issue particularly for the five million more on Medi-cal: California has one of the lowest reimbursement rates and Many providers will not take Medi-cal patients because of the reimbursement rates
Providers want the 2011 10% cut restored
Prop 52 (Medi-cal hospital fee) and Prop 61(standard drug prices) relate to health care issues:
Prop 52 has garnered support from some of the state’s largest newspaper editorial boards and elected officials
A September USC and LA Times poll shows that 66% of voters are in support of Prop 61. At the federal level legislation has been introduced that would require drug companies to justify increases over 10%.
Education issues are constantly being discussed and debated. Thiselection session is no different. Props 51, 55 and 58 address the current
education issues for this election. At this writing Prop 55 (extension ofProp 30, taxes on higher income residents for education and health care) and Prop 58 (multi-lingual education, will reverse Prop 227 – 1998) appear to have support and are likely to pass. Prop 55 (support 54% in PPIC poll) and Prop 58 (support 67% in Field poll). The results are from polls taken in September.
However Prop 51 (school construction bond) according to a PPIC poll from September showed more support from public school parents – about 47% support this initiative. Polls taken in the coming weeks may show amore definitive position on this initiative with broader support or not.
Other key issues affecting California now and beyond include water and the effect of the lingering drought. Governor Brown and the legislature continue to work on efforts to address California’s water issues. The governor in May issued an executive order – https://www.gov.ca.gov/news.php?id=19408
Each year we have fires around the state and this year is no different and of course these affect our environment, agriculture and water issues. We are in our 5th year of drought and there does not appear to be an end in sight. The drought affects agriculture, our economy and also encourages the spread of West Nile Virus and other mosquito borne diseases. So it is clear this issue will remain an important policy issue for the foreseeable future.
Other key policy issues affecting California are also on the ballot this year:
Economic issues – taxes and revenue bonds
Criminal justice – death penalty and parole issues
Government transparency – legislation and Citizen’s United
While not on the ballot the state budget and pension liabilities remain critical issues for debate and discussion. This brief listing is by no means exhaustive
but I believe these are a few of the issues that will continue to be front and center for the governor, the legislature and the people of California.
Finally, the Zika virus and the devastating results occurring particularly to pregnant women and the infants they deliver have garnered a great deal of concern, resulting in requests for funding to address the issues caused by this mosquito borne disease. Currently, there is no vaccine although human trials for a vaccine will begin this coming spring. The Congress finally the end of September allotted $1.1 billion for Zika research and this will allow the research to continue for vaccine development and the infrastructure development for moving this effort forward.
We now have some evidence that once infected with the Zika virus:
People infected with Zika virus may not be susceptible to Zika virus again, according to the latest research involving Kansas StateUniversity’s Biosecurity Research Institute.
“This means people infected during this current epidemic will likely not be susceptible again. When a large proportion of the population is protected — known as herd immunity — the risk offuture epidemics may be low.”
2016 Legislative Session Ends
The 2016 legislative session ended August 31st with 398 bills headed to his desk to join the 391 already on his desk. By September 30th, we will know which measures will be law in California. The 2 year session 2015-2015 saw the introduction of approximately 5,000 bills and we are now down to about 800 heading to the governor. This number closely mirrors the number of bills that landed on his desk last year. He tends to sign about 86% of the bills he reviews.
We have a number of legislators termed out and with that we are losing a plethora of policy expertise – Senator Lois Wolk, a champion for school nurses and water issues is termed out as is Senator Mark Leno (minimum wage), Senators Liu (education issues), Hancock social and public safety issues) and Pavley environmental, author of AB 32) all consistent supporters of our issues. Senator Huff who introduced a number school health bills is also termed out.
Six Senators are termed out – 5 Dems and 1 Republican, one incumbent “decided not to run for re-election”, one incumbent is running for Congress – District 44 and State District 21 is open because of the death of Sharon Runner in July. On the Assembly side we are losing 14 legislators, including the former Speaker who is running for a Senate seat. All Assembly seats and one half of the Senate seats are being contested.
As previously mentioned, there are 17 initiatives on the November 8th ballot, Prop 51 –Prop 67, covering education, tobacco taxes, income tax increase, the environment, marijuana, campaign finance, health care and the death penalty. For more specifics on the initiatives, the following link takes you to the Secretary of State web site – http://www.sos.ca.gov/elections/ballot-measures/qualified-ballot-measures/
I would like to point out a few of the initiatives because of their more direct impact on health and education issues:
Proposition 51 – California Public School Facility Bonds Initiative (CSNO supports)
Will fund $9 billion in bonds to be distributed as follows:
$3 billion for the construction of new school facilities;
$500 million for providing school facilities for charter schools;
$3 billion for the modernization of school facilities;
$500 million for providing facilities for career technical education programs; and
$2 billion for acquiring, constructing, renovating, and equippingcommunity college facilities
Proposition 52 – Voter Approval to Divert Hospital Fee Revenue Dedicated to Medi-Cal
For a state to receive federal Medicaid funds, the state has to contribute a matching amount of its own money. In 2009, a new program was created such that California hospitals were required to pay a fee to help Californiaobtain the available federal Medicaid funds. This program has resulted in California hospitals receiving roughly $2 billion a year in additional federal money to Medi-Cal. However, California has diverted some of the funds from the hospital fee program to the state’s general fund.
Proposition 55 – California Extension of the Proposition 30 Income Tax Increase Initiative
Supports extending the personal income tax increases on incomes over$250,000 approved in 2012 for 12 years in order to fund education andhealthcare. The sales tax component is not extended. 89% goes to schools.
Proposition 56 – Tobacco Tax Increase
Increases the cigarette tax to $2.00 per pack, with equivalent increases onother tobacco products and electronic cigarettes
Proposition 58 – California Non-English Languages Allowed in Public Education Act (Senate Bill 1174)
Repeals the sheltered English immersion requirement and waiver provisions required by Proposition 227, and, instead, require that school districts andcounty offices of education shall provide English learners with a structured English immersion program
Proposition 61 – the Drug Price Standards Initiative
Supports regulating drug prices by requiring state agencies to pay the same prices that the U.S. Department of Veterans Affairs (USDVA) pays for prescription drugs; affects state agencies only, not individuals purchasing drugs
Other initiatives that have generated some discussion are:
Proposition 63 – the Background Checks for Ammunition Purchases and Large-Capacity Ammunition Magazine Ban Initiative
This initiative if voted in would ban the possession of large capacity ammunition magazines
As a result of San Bernardino shooting, there were numerous “gun bills” introduced this session and six have been already signed by the governor, including a budget item which funded a research center on gun violence at UC. It was just announced UC Davis will House this center, this is not surprising since Dr. Garen Wintemute has for many years done research on this issue and with the 20 year ban on this type of research by the CDC, California becomes the first state to fund this type of research. (SB 1006 –Wolk)
The budget contains $5 million over five years for the research center.
Proposition 64 – The California Marijuana Legalization Initiative
Supporters call it the “Adult Use of Marijuana Act. There were numerous other initiatives filed on this issue, but this is the only one that qualified.
Proposition 66 –The Death Penalty Procedures Initiative
Supports changing the procedures governing state court appeals andpetitions that challenge death penalty convictions and sentences.
Proposition 67 – Plastic Bag Ban Veto Referendum
“Yes” vote approves and a “No” vote rejects, SB 270 (2014) that:
Prohibits grocery and certain other retail stores from providing single-use plastic or paper carryout bags to customers at point of sale
Permits sale of recycled paper bags and reusable bags to customers, at aminimum price of 10 cents per bag
I see this as an insider issue, i.e. legislators, lobbyists and those organizations that concern themselves with the legislative process. Not sure the usual or average vote is aware of this issue:
Proposition 54 – the Public Display of Legislative Bills Prior to Vote
Requires that every bill is published in print and online at least 72 hours before each house of the legislature can vote on it (prohibits gut and amends)
Requires that the legislature make audiovisual recordings of its public proceedings and publish the recordings online within 24 hours
Allow any individual to record any open legislative proceedings either through audio or visual means and use these recordings for any legitimate purpose
Building a Legacy
Speaker Rendon was voted in as the Speaker earlier this year and during his “inaugural speech” spoke of his disadvantaged background and how the “safety net” of California along with hard work allowed him to succeed.” One of his key issues was poverty reduction and looking at some of the legislation that passed, we can say he and the Pro Tem along with their colleagues were able to address some of issues affecting the less fortunate in California.
The issues covered are wide ranging from the removal of taxes from diapers and menstrual supplies to minimum wage increase, overtime pay for farmworkers, to removing the criminalization of teenage prostitutes, the banning of large capacity guns, smoking age in California is now 21 years and e-cigs are labeled as tobacco products with all that includes. Other issues include clean air changes (extension of AB 32 and strongly supported by the governor), extension of paid family leave (signed by governor in April), gender neutral single stall bathrooms and limiting asset forfeiture. However, one of the more critical issues, affordable housing was not able to be fully addressed in spite of the governor pushing the initiative and $400 million in the budget.
Understanding the lack of access many Californians have in spite of over a million formerly uninsured now having coverage, the issue of access remains. California has been designated as being medically underserved or having areas of health professional shortages especially in the rural and inner city areas of the state. Many if not most of California’s licensed health care providers are in short supply. The legislature however did not pass two nursing bills that would have allowed advanced practice nurses – nurse practitioners (NP) and Certified Nurse Midwives (CNM) to practice without MD oversight. It should be noted that NPs are more likely to practice in underserved areas, thereby increasing access to primary care.
In June the governor signed SB 10 (Lara) which allows undocumented access to health care through purchasing coverage under Covered California. However, they are not eligible for subsidies. In May, over 170,000 undocumented children under the age of 19 began to receive care through Medi-cal, SB 4 (Lara) and SB 75 (2015-16 Budget) signed last year allowed that to occur.
The FDA on August 26th released recommendations for testing all blood and blood components donations throughout the US. At this writing, I am not aware of any blood donations that have tested positive for Zika. California has had 2 known cases of infants born with microcephaly, their mothers being infected with Zika as a result of travel in infected areas. Nationwide there have been 13 babies born with microcephaly again the result of their mothers’ travel to countries with outbreaks.
The Department of Public Health maintains a reporting mechanism for Zika. As of September 2nd there were:
Total infections: 241
New infections reported this week: 52
Cumulative number of infections due to sexual transmission: 1
Cumulative number of infections in pregnant women: 32
Live born infants with birth defects: 2
Pregnancy losses with birth defects: 0
The majority of infections have been reported in LA and San Diego, 64 (1 in Long Beach) and 34 respectively.
To rid the neighborhood of mosquitoes, the Consolidated Mosquito Abatement District is releasing 20 tubes full of mosquitoes in Clovis, California, at the northern tip of Fresno County in the Central Valley. This is all a big experiment. The district hopes the Wolbachia-infected male mosquitoes will become a vital tool against Aedes aegypti, a mosquito species invading the US that can carry diseases like dengue, yellow fever, chikungunya, and Zika. Infecting the mosquito with Wolbachia prevents the mosquito eggs from hatching. It is hoped that the FDA will approve the use of these mosquitoes as a “pesticide”. For the full story, see the link below.
The end of the 2016 legislative session officially ends on September 30th with either signatures or vetoes on the 800+ bills currently on his desk. We tracked 34 bills, of those 15 are dead, 8 have already been signed into law and the remaining bills are on the governor’s desk. We supported 2 bills – resolutions and opposed one – AB 2855 (Frazier). Two key bills that affect employers and employees alike are:
SB 3 (Leno) increases the minimum wage to $15/hr was signed by the governor in April, however cities and counties may raise the minimum wage higher than the state level. Presently the state minimum wage is $10/hour and will jump to $12 hour in 2019 for those companies with 26 or more employees. The $15/hour takes effect in 2023 based on economic conditions at that time.
SB 654 (Jackson) started out as SB 1166 – extends the parental leave law;the bill would allow parents at smaller companies with 20 to 49 employees to take six weeks’ leave to care for a newborn or newly adopted child, without fear of losing their jobs. Current state law extends only such job protection to those at businesses with 50 or more employees.
The state became the first in the country to guarantee workers paid leave to care for a new child or ailing family member more than 15 years ago. But two main challenges have kept many parents from taking advantage of the law: Some could not afford to take time off because of the limited partial wages offered, while others feared they would lose their jobs if they did – LA Times.
AB 908 (Gomez) – signed into law in April will allow people earning close tominimum wage to be paid 70% of their salary while on leave, while workers with higher pay, up to $108,000 annually, will get 60% of their salary during leave. The change takes effect in 2018.
So if you believe the role of government is to assist the least among us, then this has been a banner year! Attached is the latest bill folder, the final bill folder will be sent in early October when the governor has made his decisions.
Looking forward to working with the Legislative committee as we move the agenda of BCC forward.
Various electronic and written media outlets
Capitol Track – bill tracking system
July 2016 Update
The legislature closed down for summer break on July 1st, they will reconvene August 1st. The final recess in 2016 is August 31st and the Governor has until September 30th to sign or veto bills on his desk before September 1st.
As noted, the governor signed the budget, SB 826 (Leno), on June 27th along with a number of trailer bills which enact changes to the budget. The Governor did not blue pencil any items, this has not happened since 1982, during Brown’s second term. Before that, the last budget with no vetoes at all was in 1970-71, when Ronald Reagan was governor.
The primary election results for state and federal offices will not be certified until July 8th. However certified local election results can be found on your county elections web site. California has a top two primary for statewide constitutional offices, U.S. Senate, U.S. House of Representatives, State Senate, and State Assembly. Only the two candidates who receive the most votes in each contest will move on to the November general election. On the Democratic side the top two candidates for President were Clinton and Sanders. On the Republican side, the top two were Trump and Kasich; obviously things have changed since June 7th. There are 4 other parties with candidates that will appear on the November ballot.
Prop 50 was the only initiative on the June ballot and it passed with a 75% vote. This change to the State Constitution will require a two-thirds vote of the Senate or Assembly in order to suspend a state legislator. The Senate or Assembly can eliminate that legislator’s salary and benefits during the suspension. This initiative is the result of the breaches of the public trust that have occurred recently and the need for the legislature to take action against their colleagues.
The initiatives on the November ballot, while not complete, appear to be the most since March 2000, when there were 20 on the ballot. At this writing, there are 17 initiates qualified for the November 8th ballot. They cover a wide range of issues – marijuana legalization, death penalty, increase tobacco taxes, gun issues, plastic bag referendum, regulation of prescription drug prices, Medi-cal funding, extension of Prop 30 tax, etc. As we get closer to the November election, more information on the initiatives will be provided
For the first time in over twenty-five years, there is no incumbent running for one of California’s Senate seats; however, we will maintain two female Senators regardless of who wins. The top two candidates are Kamala Harris and Loretta Sanchez, two women of color and both from immigrant families. Either candidate will make history if elected, Sanchez if she wins will be the first Latina in the Senate, Harris if she wins will be the second African-American woman and the first with roots in the sub-continent to serve in the Senate. Presently, there is only one woman of color in the Senate, an Asian-American from Hawaii, Mazie Hirono.
Guns in California
The shootings in San Bernardino galvanized gun activists and the legislature introduced numerous gun bills. These bills really become a force after the Orlando shootings. The Senate gathered their bills and presented them as a “package”. ” AAP-CA was the co-sponsor of SB 1006 (Wolk) which establishes a research center at UC to examine gun violence prevention issues. This bill was held in committee as it was approved through the budget – $5 million – and in the Education trailer bill. The governor signed 6 of the 11 bills on his desk.
Three of the bills signed include:
- Background checks for those buying ammunition and the creation of a database
- Banning the possession of ammunition magazines that hold more than ten bullets
- Restricting the loaning of a gun to a family member without a background check
Of those vetoed:
- Require those that make guns (ghost guns) to register them and get serial numbers
- Require stolen guns to be reported within 5 days
- Limit Californians from buying more than one rifle or shotgun a month
- The Pro Tem and Lt. Governor are in a battle about the legislation the governor vetoed which would have placed an initiative on the ballot that clarified the theft of a gun is grand theft and is punishable as a felony. The “Safety for All” initiative sponsored by Gavin Newsome is moving forward.
California has some of the most stringent gun controls laws in the country; the legislative package according to the legislators will close “loopholes” in current laws.
A group of six parents and four advocacy groups filed the following suit –“Complaint For Declaratory and Injunctive Relief – Temporary Restraining Order Sought” in the US District Court in San Diego on July 1st.
The suit argues that the law violates the California Constitution’s guarantee of a public education for all children. It also claims the law violates the rights to, among other things, equal protection and due process guaranteed by the U.S. Constitution.
Obama on Friday asked the Congress to pass the Zika funding prior to their August vacation. Senate Democrats blocked a Republican proposal to provide $1.1 billion in funding to combat Zika. Democrats and the White House said the plan fell short of Obama’s $1.9 billion funding request and included measures that would take funds from other important health initiatives.
School Health Issues3
The American Academy of Pediatrics in May released an updated policy on school nurses, stating:
School nurses provide both individual and population health through their daily access to large numbers of students, making them well positioned to address and coordinate the health care needs of children and adolescents. The impact of social determinants of health are felt in the school setting and well known to school nurses. School nursing is a specialized practice of professional nursing that advances the well-being, academic success, and lifelong achievement and health of students. To that end, school nurses understand and educate about normal development; promote health and safety, including a healthy environment; intervene with actual and potential health problems; provide case-management services; and actively collaborate with physicians who work in schools, such as medical advisors and team physicians, families, community service providers, and health care providers, to build student and family capacity for adaptation, self-management, self-advocacy, and learning.
Blood shortage in California4
During the summer months, a seasonal shortage of blood occurs but this year, the shortage is “unprecedented “because of the concerns about Zika outbreak in a number of Latin American countries”. Travel restrictions resulting from travel to countries with outbreaks have resulted in a delay in those wishing to donate; the FDA has recommended potential donors wait 28 days after returning to the US. The American Red Cross and BloodSource have put out an emergency call for blood so that it will be available when needed.
1 – http://vote.sos.ca.gov/
2 – http://www.scpr.org/news/2016/07/01/62252/parents-advocacy-groups-sue-to-overturn-california/
3 – http://pediatrics.aappublications.org/content/early/2016/05/19/peds.2016-0852
4 – http://www.sacbee.com/news/local/health-and-medicine/article87883977.html
June 27, 2016 Budget Update
SACRAMENTO – Governor Edmund G. Brown Jr. today signed a balanced, on-time state budget that doubles California’s Rainy Day Fund, pays down debt, increases school funding and boosts programs to combat poverty and homelessness.
“This solid budget makes responsible investments in California and sets aside billions of dollars to prepare for the next recession,” said Governor Brown.
Significant details of the 2016-17 Budget:
Boosting Reserves, Paying Down Debt
In addition to the constitutionally-required $1.3 billion deposit, the budget directs an extra $2 billion contribution into the Rainy Day Fund – bringing the state’s reserve fund to $6.7 billion, or 54 percent of the goal. The budget also directs $1.75 billion to the Special Fund for Economic Uncertainties, which also helps the state meet obligations in the face of declining revenue or unanticipated obligations, and pays down debts and liabilities by $1.3 billion from Proposition 2 funds.
Investing in Education
The minimum funding guarantee for K-12 schools and community colleges will grow to $71.9 billion this year, the highest level in state history and a $24.6 billion increase since 2011-12. Per-pupil K-12 funding is increased to $10,643, a $440 increase over last year and a $3,600 increase over 2011-12 levels. This reinvestment continues to help correct historical inequities in school district funding with $2.9 billion in new funding for the Local Control Funding Formula – bringing the formula’s implementation to 96 percent complete.
The budget keeps University of California and California State University tuition at 2011-12 levels while providing significant, new one-time and ongoing funding increases.
This year’s budget begins implementing the state’s new $15 per hour minimum wage by raising the statewide minimum wage to $10.50 per hour beginning on January 1, 2017. The budget also funds cost-of-living increases for Supplemental Security Income/State Supplementary Payment, the first boost since 2005.
The budget also repeals of the “maximum family grant rule” in CalWORKs, which had denied support to children born to parents who were receiving aid. It also limits the state’s asset recovery from the estates of deceased Medi-Cal recipients.
Reducing Housing Costs
The budget reflects $3.6 billion in state and federal funding and award authority for many affordable housing and homelessness programs, including increased funding for CalWORKs rapid rehousing and emergency homeless shelters.
Of this amount, the budget sets aside $400 million in the General Fund for allocation later in the legislative session for affordable housing programs. The funding will be coupled with the Administration’s proposed legislation requiring ministerial “by right” land use entitlements for multifamily infill housing developments that include affordable housing. This would help constrain development costs, improve the pace of housing production and encourage an increase in housing supply. In addition, legislation will authorize a $2 billion bond from a portion of future Proposition 63 mental health revenues to develop and administer homelessness and affordable housing programs for the mentally ill.
The budget includes $2 billion for state infrastructure improvements and maintenance, including $1.3 billion General Fund for state buildings, $270 million in lease-revenue bond authority for local jails and $688 million ($485 million from the General Fund) for critical deferred maintenance at levees, state parks, universities and community colleges, prisons, state hospitals and other state facilities.
The budget and related acts (trailer bills which implement the state budget) – signed by the Governor today include:
–SB 826 by Senator Mark Leno (D-San Francisco) – Budget Act of 2016.
–AB 1602 by the Committee on Budget – Education. – contains funding for UC research center on firearm violence prevention
–AB 1603 by the Committee on Budget – Public Social Services Omnibus.
–AB 1606 by the Committee on Budget – Developmental Services.
–AB 1607 by the Committee on Budget – Medi-Cal: Hospitals: Quality Assurance Fee.
–SB 827 by the Committee on Budget and Fiscal Review – Budget Act of 2015: Augmentation.
–SB 828 by the Committee on Budget and Fiscal Review – School Finance: Education Omnibus Trailer Bill.
–SB 833 by the Committee on Budget and Fiscal Review – Health.
–SB 836 by the Committee on Budget and Fiscal Review – State Government.
–SB 837 by the Committee on Budget and Fiscal Review – State Government.
–SB 843 by the Committee on Budget and Fiscal Review – Public Safety.
–SB 844 by the Committee on Budget and Fiscal Review – Correctional Facilities: Construction: Financing.
–SB 848 by the Committee on Budget and Fiscal Review – State Employment.
For full text of these bills, visit: www.leginfo.legislature.ca.gov. Additional details on the 2016-17 Budget can be found at www.ebudget.ca.gov.
This budget made history in that it has been many, many years since a budget was passed without any spending being blue penciled by the governor. Obviously, the governor and the key leaders of the legislature agreed on all issues or at least enough that no blue pencil was required.
An agreement has been reached on housing funding – $2 billion bond – for the mentally ill, funding to be taken from Prop 63, which funds mental health issues. The passage of this issue requires a 2/3 vote and the vote
will be taken on Thursday.
Budget highlights 2015-16
On Friday, January 9th, the governor released his 2015-16 budget. It is balanced and according to the requirements of Prop 2 has $2 billion in the rainy day fund; over one billion is for paying down existing debt and moneys owed to K-12. The 2015-16 budget is $165 billion with $113 billion in the general fund.
The governor’s budget highlights several major areas:
Local Control Funding – this program puts forth a new financing system for K-12. It provides funding to those districts serving English learners, students from low income families and youth in foster care. It allows districts to determine how to spend this funding in meeting specific educational goals. According to the DOF, those districts who received grants are approximately 20% of the school districts. There is concern regarding how this program will be implemented and how success is measured.
Public Safety Realignment – with the courts mandating California’s prison system address problems of overcrowding and the lack of adequate medical services. Over the last two years, more offenders have been shifted to the counties and the emphasis has shifted to improving rehabilitation and reduced recidivism.
Health Care Reform – with health care reform the numbers of Medi-cal recipients has grown to 12 million or over 30% of our population. The cost for the increased Medi-cal case load is $18.6 billion. However the issue of access is present given the 10% reimbursement cuts as well as the elimination of the primary care bump. The primary care bump was an effort at the federal level to encourage primary care providers to see more Medi-cal patients.
Climate Change – the Cap and Trade program will provide one billion dollars to address low carbon transportation, energy efficiency, urban forests and high speed rail issues. All of these have their advocates and adversaries, however this appears to be not only an issue for the governor but for some within the legislature as well.
Water Action Plan – California is facing a drought and while there is agreement about that, how to address the issues associated with it causes much angst. The governor has a five year plan and with Prop 1 water bond, there is $532 million available for implementation.
Redevelopment Dissolution – this program is on pace to complete the elimination of these agencies and with that, more than $4 billion will be returned to the counties and the schools to fund appropriate services. The dissolution has already returned $5 billion to K-14. It is anticipated that legislation is needed to complete the review process because of the complexity of eliminating almost 400 agencies.
Pension Reform – over the last few years there has been much discussion and movement toward addressing the unfunded liabilities of pensions and health care benefits.
Many of the changes have been accomplished through union negotiations retirement ages have been pushed back, increased employee cost sharing, and restricting of pension formulas. In this budget, the governor addresses teachers’ pensions with $1.4 billion to implement the second year of the pension funding plan.
Education as always plays a major role in the budget. Prop 98 and Prop 30 add to the funding for K-14 education here in California. As revenues increase, more money goes to education. According to the governor, more than $2600/student is the increase over the 2011-12 levels. It should also be noted, this budget returns the outstanding moneys owed to K-12. 2015 will be a good year for K-14, all budget deferrals are eliminated, with Prop 98 receiving over $65 billion; total K-12 spending for Prop 98 will be $9667 with total spending $13,462.
We are aware of the looming arguments about UC funding, in this budget the governor allocates $762 million to each of the systems, funding that primarily is the result of Prop 30. However, it is clear in the budget this funding is dependent on tuition remaining flat. As we know the UC Chancellor has stated she and the regents agree there needs to be a 5% increase in tuition. UC has 10 campuses and educates approximately 249,000 students. The CSU system educates 448,000 students on 23 campuses and the CCC system provides programs for over 2 million students over 72 districts, 112 campuses and 72 educational centers. Each system has differing issues but the ultimate goal is to invest in student success and assure students finish in a timely manner without too much financial hardship for students and their families.
The LAO is projecting an additional $2 billion in revenues will come into the state, this is higher than the projection of the governor’s finance staff – DOF. However, any new moneys always go to Prop 98 and the LAO cautions that any “promises of new funding to non- Prop 98 programs could present problems if we have a down turn in the economy”. He also cautions the same for the full funding for Prop 98.
The long term liabilities are related to retirement costs and state health care benefits for retirees. As many baby boomers retire our costs are growing and now the percentage is almost 2% – $2 billion. The pay as you go for health benefits is according to the budget not working and plans are under way to lower the growth in premium costs by having both employer and employee share in “prefunding” this benefit. This approach is already in place for pensions.
Expenditures – 2015-16 General Fund Total State Expenditures
K-12 Education – 41.6 % – $47,173 million 29%- $48,337 million
Higher Education – 12.4 % – $14.063 million 8.8% – $14,489 million
Health – 21.3% – $24,086 million 20.7% – $34,090 million
Human Services – 6.9% – $7,843 million 11.2% – $18,377 million
Corrections and Rehab – 9% – $10,160 million 7.7% – $12,676 million
Natural Resources – 2.3% – $2,561
Transportation – 6.8%- $11,170 million
Other – 6.5% – $7,412 million 15.5% – $25,564 million
We can see the major spending is Education with health and human services accounting for another 28% of the expenditures.
It is clear when one reviews the numbers why health and human services programs took the biggest hits during the down turn as Prop 98 does not permit any major cuts to education and when not fully funded, this money has to be repaid.
General Fund Revenues Total Revenues
Personal Income tax – 65.6% – $75,213 million 48% – $76,988 million
Sales and Use tax – 22% – $25,166 million 24.3% – $38,916 million
Corporation Tax – 8.9% – $10,173 million 6.3% – $$10,173 million
Insurance Tax – 2.2% – $2,531 million 1.6$ – $2,531 million
Other – 1.3% – $1,517 million 11.9% – $19,090 million
Highway Users – 3.1% – $4, 907 million
Motor Vehicle Fees – 4.1% – $6,521 million
Cigarette Tax – .5% – $770 million
Alcoholic Beverages Taxes and Fees – .2%- $374 million
As noted above the volatility of our budgets are based on how profitable the wealthy are as the personal income tax is the major source of income in California.
LAO comments on 2015 budget
Legislative Analyst’s Office (LAO) sees the Governor’s budget as reasonable and prudent. He does warn against the volatility of our economy and the commitments that can be problematic if there is another down turn in the economy. He agrees the limited commitments outside of Prop 98 may lessen the “boom and bust” budgets of the past. He also agrees with the attention to the unfunded liabilities even though the governor doesn’t allocate funding for these issues, however he believes Prop 2 can provide the necessary funding. He also states we can expect an additional $1-2 billion in revenues this budget year given the increasing economic outlook. Looking further out, Prop 30 will not exist after 2018 and the reserves required under Prop 2 will only exist if the economy remains robust.
Assembly Overview of Budget
The Assembly Budget Committee met Thursday morning to hear an overview of the budget from both DOF and the LAO. Assemblymember Weber, Chair and Melendez, Vice Chair appear to be running a tight ship. They announced the hearing would last 2 hours and it ended at 1:59 minutes. They further stated they will start sub-committees hearings soon and they too will begin and end on time, we will see.
There were many questions from the committee members which I believe give us some sense of what programs and services are likely to be in the Assembly budget packet:
Local Control Funding Formula (LCFF)
Income disparities/safety net
Senator Holly Mitchell, the new Chair of Senate #3 – Health and Human Services has been quite outspoken and appears to have thrown down the gauntlet – “We are going to pay down debt, and we are going to rebuild families,”; “It’s not an either-or.” She is joined by the Speaker Toni Atkins and the Pro Tem Kevin de Leon, both of whom grew up poor, they have voiced support for programs and services serving this population.
This is heartening to the child and safety net advocates who were disappointed last year and with the 2015-16 budget but with projected additional revenues, they are optimistic the programs and services serving the low income populations in California will be made whole.
Assembly Overview of the Budget
2013-14 end of legislative session
2013 end of legislative session