CDCAN REPORT #002-2012: Developmental Services Budget Faces $200 Million Reduction In State General Fund Spending During 2012-2013 Budget Year - Previously Announced In November

DEVELOPMENTAL SERVICES BUDGET FACES $200 MILLION REDUCTION DURING 2012-2013 BUDGET YEAR - CUTS TO BE IDENTIFIED THROUGH HELP FROM STAKEHOLDER PROCESS

$157 Million Mid-year Reductions In State General Fund Spending to Developmental Services - Though Bulk of That Reduction Will Come From Higher Than Expected Savings From Previously Approved Cuts and Policy Changes - CalWORKS Program Hard Hit By $1.4 Billion In Proposed Cuts

SACRAMENTO, CA (CDCAN) [Last updated 01/05/2012 02:55 PM] - Governor Brown released his proposed 2012-2013 State Budget that calls for, as he previously announced in November, $157 million in new state general fund spending reductions to developmental services in the current budget year to be achieved in large part due to higher than expected savings from previously approved cuts and other changes, and another $200 million in new cuts in state general fund spending during the 2012-2013 State budget year that begins July 1, 2012. The cuts in the 2012-2013 State Budget year could - depending on where the reductions are made - swell to $400 million if federal matching funds are included.  [See separate CDCAN Report covering other budget proposals impacting people with disabilities, mental health needs, the blind, seniors and others]

The reductions are in addition to other reductions (both on-going or proposed) impacting other critical services used by people with developmental disabilities including cuts to In-Home Supportive Services, mental health services, CalWORKS, and Medi-Cal.  The CalWORKS program - California's "welfare to work" program that includes thousands of children and parents with special needs and disabilities, including mental health needs - was particularly hard hit by proposed cuts of over $1.4 billion.

$100 Million Cut In Current Budget Year Due To "Trigger Cut"

$100 million of the $157 million during the current budget year is due to the pulling of the state budget "trigger cut" that was announced in November.  The additional $57 million on top of that is largely due to returning unused state money that would have been allocated for people with developmental disabilities for replacement services if Adult Day Health Care centers closed (manyt of those centers will remain open under a new program and regional center funded persons are supposed to be automatically transitioned to that new program).  About $8 million of the $57 million is due to savings from the developmental center part of the overall developmental services budget.

That $100 million reduction due to the State budget trigger cut continues into the 2012-2013 State Budget year that would increase to $200 million in State general fund spending cuts (still be to be identified).

The developmental services budget under the Department of Developmental Services, funds certain programs and services for over 240,000 children and adults with developmental disabilities, that are coordinated under contract by the 21 non-profit regional centers (who in turn contract with local community-based organizations and individuals to provide services.)  The department also operates four health facilities - called developmental centers and one smaller health facility where, as of December 28, 2011, 1,797 persons with developmental disabilities reside.

Governor's Budget Does Propose Some Increases for Caseload and Regional Center Provider Payments

• The Governor's proposed budget does include an increase of $162 million in state general funds for increased caseload for regional centers and an increase of $158 million in state general funds to restore payments to many regional center providers who are impacted currently by a 4.25% payment reduction that is scheduled to expire June 30, 2012 (unless extended by the Legislature and Governor).
• Those increases are crucial because it creates a different starting point on where the new $200 million in State general fund cuts for 2012-2013 will be made.

New Proposed $200 Million Cuts Still Need To Be Identified for 2012-2013 State Budget Year

• The $200 million in new state general fund reductions for the 2012-2013 State Budget year though how that level of reduction is to be achieved remains to be identified.  The department will use a stakeholder process to help identify options. It is not certain yet if the $200 million reductions in state general fund spending for the 2012-2013 State budget year is meant to extend into subsequent budget years.
• The $200 million in State general fund reductions could total over $400 million if those cuts are to services and programs matched by federal Medicaid dollars.
• The developmental center portion of the developmental services budget is about $18 million (in state general funds)less than what was projected in the 2011-2012 State Budget as passed and enacted last June, in part because it assume a reduction in population of about 230 people during the 2011-2012 State Budget year that ends June 30, 2012.
• The Governor's proposed 2012-2013 budget includes an increase of $162 million in state general funds to pay for increased projected caseload of about 2.4% (6,035 people) for regional center services and an increase of $158.2 million for restoration of payments to those regional center providers whose payments have been reduced for the past several years by 4.25% - a reduction that is scheduled to end on June 30, 2012 (unless extended)
• The Governor's proposed 2012-2013 State Budget includes an increase of $9 million in State general funds to pay for the new federal requirement for a financial management service for certain individual regional center providers.
• The proposed budget for developmental services also includes some accounting related reductions for the 2012-2013 State Budget year - such as $18.9 million decrease in state general funds that was put there originally to pay for servicecs as a result of the elimination of Adult Day Health Care.  With the creation of a new replacement program that people with developmental disabilities will automatically referred to, those funds will not be needed.

Next Steps

• The Department of Developmental Services will issue information in the coming week or so regarding the stakeholder process it will use to provide advice on how the additional $200 million reduction in state general fund spending will be made during the 2012-2013 State Budget year.
• The Legislature's budget committees will release its schedules of budget subcommittee hearings to consider the Governor's proposals.