May 21, 2026 · Budget Sub3 · 51,942 words · 13 speakers · 316 segments
Thank you. Thank you. All right, good morning everyone. Happy Thursday. we are back with our second hearing on the May revise similar departments from yesterday so we'll do part A which is the human services child welfare child support issues we'll take public comment on that and then we'll move into the part B of the health and then take public comment after that. Okay so let's get the show started and for those who knew about the soccer game SoCal lost 3-2 my goal almost went in. Hairline. And then later the referee said I should have called a foul, I could have gotten a penalty,
but Senator Portantino did not call it.
So he was a referee. All right. Let's get into serious stuff. Let's start with issue number one, Department of Child Support Services.
Good morning. I'm Nan Chen, Chief Financial Officer for the Department, and with me is Director Kristen Donaty. The May revise includes two technical adjustments for the Department of Child Support Services. The first is a $410,000 adjustment to account for a slight increase in estimated federal incentives. And the second is a net zero $1.3 million adjustment between two of our funds, our federal trust fund and our Child Support Recovery Fund. This adjustment takes into account a slight increase in our estimated federal share of collections. Happy to take any questions.
Easy peasy. Anything to add?
Ginny Bella with the analyst office. we agree that these are technical adjustments and we have no concerns.
Great. No questions on my end. We're going to hold issue one open, move on to issue number two. Department of Social Services.
Hi, Marnie.
Hi, Eric.
I heard.
So we just going to stand the whole way No you don It is awkward though
It's very awkward.
Like, hovering. Fairlist leader is not joining you today.
You've got this.
Yes, I know, I heard.
Okay to begin?
Yes, please.
Thank you. Good morning, Chair. I'm Claire Ramsey, one of the Chief Deputy Directors at the Department of Social Services. We appreciate the opportunity to share information related to the 26-27 May revision child care proposals. Before we dive into those proposals, I will share very briefly that the May revision for the Department of Social Services overall includes more than $67 billion in local assistance funding for FY2627, including federal, state, county, and reimbursement sources. Turning to the child development programs, the revised budget for child care includes $6.8 billion, which is $5 billion of general funds, in FY2627, which reflects a net increase of $15.5 million from the governor's budget. The increase reflects the awarded Federal American Relief Act, or ARA, Supplemental Disaster Relief Funds, and higher than previously projected caseloads and costs per case in CalWORK Stage 1 child care. These increases are partially offset by the reversion of funds to support the implementation of paying providers respectively due to the updated guidance from the Federal Administration for Children and Families and lower than previously projected caseloads in CalWORK Stage 2 and Stage 3 child care. Now turning to your questions, Deputy Director Jaime Milam and I are going to move back and forth between the different items that we were asked to speak. We'll alternate presenting each item. And additionally, we'll incorporate our responses to each agenda question on our overview of remarks for the corresponding proposal so it doesn't get confusing. On caseload and slot reductions, I'll start and then turn it over to the Deputy Director. The May revision provides updated assumptions on how reductions in Federal Child Care and Development Fund, or CCDF, and Proposition 64 revenues will be absorbed. The $104.1 million combined funding decrease in 26-27 is slightly lower than what was initially estimated in governor's budget, which had been $108.7 million, due to a lower estimate of the Proposition 64 revenue decrease. Currently, it is expected to be $18.1 million instead of the $22.7 million estimated at governor's budget. CDSS will continue to monitor and work with our ACF partners as the CCDF grant awards get finalized. The May revision continues to address the fund reduction in the current year on a one-time basis by utilizing general child care slots or CCTR slots awarded funds that will not be put into contract by the end of 25-26. However, in the budget year and ongoing, the May revision absorbs the fund reduction through point-in-time CCTR and Alternative Payment Program or CAP program relinquishments to avoid any disenrollments of families and their children. The distribution of relinquished funds between CCTR and CAP programs means that the number of slots awarded since 2021 are now approximately 123 instead of the 125 estimated in the Governor budget This is due to the difference in the average monthly cost of slots between CCTR and CAP The associated slot impact due to the fund reduction is a point estimate, and it's based on a combination of CCTR, request for application, and CAP funds that have been voluntarily relinquished to date within each program and that the department can immediately use to absorb the funding reduction without disrupting child care for any currently enrolled children. To further address your questions on the topic, I'll now turn it over to Dr.
Jaime Milam. In regards to your first question, as shared in the previous budget hearing, the department was still assessing how the funding reductions would ultimately be observed on an ongoing basis amongst the child care and development programs and anticipating providing an update estimates on the slot impact in May. Key considerations that we took into account as part of this assessment was to, most importantly, avoid any disruptions for children and families that are currently enrolled, how the fund reduction could be observed across each program, including CAP and CCTR, and also taking into account a point in time of relinquishments that occurred throughout the year and funds that are expected to go unspent. In response to the question that has, what has changed since January and why CAP is impacted, this is a reflection of what relinquishments that the department has identified, and it's also a point of time. We propose using relinquishment funds in both CCTR and CAP to avoid disruptions for current enrolled children and families as these funds are no longer under contract and are not tied to a child in an active slot. We recognize that through general cap contracts, we have been able to use more quickly than CCTR and that because the average cost of cap is lower, then slots are reduced with the cap to observe these federal and proposition 4 as part of the fund reduction. As such, we want to stress that this portion of CCTR and cap slots to observe this fund. Reduction is a point of time. NCDSS is open to continuing the conversation on how we can continue to look at these reductions to minimize disruptions for families. In terms of the next question, this is to please describe why APP agencies had voluntarily relinquished significant spaces. we first want to provide some helpful context related to relinquishments. First, relinquishments are part of the normal occurrence that happens throughout the year. In our experience, the department, contractors, and all agencies, we have the same goal of reducing the unmet needs for child care slots. It is normal, though, for the amount of funds to go unspent year after year due to a number of factors, like child's characteristics, type of care provided, enrollment patterns, family schedule needs, and the time contractors of agencies need to complete readiness activities before they can significantly increase enrollment levels. This means there will be instances where a contractor's rate of enrollment growth is less than the growth rate of their contract amount. As such as part of the normal contracting process the department works with the contractor who has under and therefore relinquishment funds Sometimes this happens in a one basis sometimes when we have identified that a contractor has under for multiple years and we work with the contractor to adjust permanently their contract amount. CDSS typically redirects relinquishment funds to another contractor within that same contract type within that same county. That's our normal process. However, this year, to try to avoid disenrollment of any families, we took this point-of-time relinquishment as not distributing, and so we have the ongoing funding available to observe Prop 64 reductions as well as the federal reductions. In CAP, the relinquishments of funds were from Placer, Riverside, Kern, Orange, Solano, and L.A. County. And then in terms of your next questions about how voucher-based CalCare spaces are allocated across the state's network of alternate payment contractors and relinquishments in regards to point of re-evaluating these allocations. The budget year of 2021 budget acts authorized significant increases in funding to support enrollment for CAP contracts. The allocation methodology used a couple of pieces in regards to that methodology. One is census data, eligibility rules, county-level cost information, and identified where unmet need was the highest. Counties with the highest percentage and underserved eligibility children received proportionally more funding to ensure equitable access statewide. We recognize that this sometimes takes a little longer for certain communities to ramp up as they have under-resourced ramped up funds for their contracts. CCTR slot expansion is also contingent of a request for applications. In this case, it targeted infant toddler care as one of their priorities, and then we also default to local planning council data. And then in terms of your next question about please describe why some APP agencies have voluntarily relinquished significant number of spaces, what's driving this, and is there a lack of need. lack of need. We think it would be helpful to first provide some content related to relinquishments. First, relinquishments, as mentioned, are part of the normal process. In our experience, the department, contractors, and agencies all share the same goal. I was like, I don't know if you were adding more than what you already shared. No, I'm sorry. I went ahead and I went on the wrong one. I think we're on the D question. Okay, perfect. Thank you for that. In terms of the next question, what administrative or statutory changes would improve the timely uptake of these in conversations with the field contractors and the community and previous technical assistance and things that we have already started to implement also is we're assessing and adjusting cctr rfa awards to align with actual expansion if the license capacity comes in lower than we adjust revert unspent cctr after an appropriate amount of time, if contractors have not made meaningful progress towards serving children, or if growth continues to fall under initial expectations. There's also strengthened the criteria the department uses to award and allocate funds to take into account prior success in expanding enrollment. capacity while remaining within their fixed amount, relatively levels of need based on wait lists, and the immediate availability of license capacity and facility space. And then maximizing how relinquished funds can be reallocated to other contractors, including contractors in another contract program. So, for instance, CCTR to CAP. And then in respect to your additional questions in the agenda related to the fund reduction, we would defer to Department of Finance in regards to that response. We can either defer to them or continue on the agenda to discuss the COLA.
Let's just go in order.
So I'll go to Department of Finance.
My name is Kassanera, Department of Finance. So in regards to your question on why prospective pay revision can be used to backfill the lost federal funds, so the prospective pay revision is one-time funds in 2526 and 2627. It will not address the ongoing federal fund reduction.
But it would fix for a year, two years?
It would be a temporary patch, but wouldn't address the ongoing.
Absolutely, but aren't we solving for just the first two years? You know, actually, I'm going to hold my own questions after. Is that the whole answer to number three?
Yes.
Okay.
Moving on to child care COLA. The May revision includes a COLA of 2.01% for child care providers. This COLA is lower than it would otherwise be because it is one of the general fund solutions identified to solidify the structural balance of the budget. The total funding for the COLA is $112 million, which includes COLA costs for all CalWORKs stages and the emergency child care bridge program. The 2.01% COLA funding for child care programs is still proposed under the May revision to be issued as a cost of care plus payment increase. This would reflect an approximate increase of 13.7% on the cost of care plus payments when applied to that structure. The resource and referral programs and the local planning councils would also receive the 2.01% COLA. I'll now pass it over to Deputy Director on the disaster funding. Thank you. In terms of federal funds to support the child care facilities impacted by disaster, the budget includes two child care infrastructure grants. The first one, as referenced in the initial governor proposal, Prop 64 proposal is focused on licensed family child care homes and centers that experience damage or service to interruption or service interruptions during the declared disaster of 2025, resulting in a reduced child care vulnerability and impacting families who relied on them. On the minor update, one minor update is that January budget proposed $11.5 million, while May revise now proposes $11.8 million. in Proposition 64 funding. This is a total increase of $308,000 to align with the update proposed 64 revenue projection. Second, CDSS was notified in February of 2026 of an award amount of $28 million to support licensed child care facilities that were impacted by disaster in 2023 and 2024 as well as to support other deliverables Of the million in the federal ARA funds million are going to be utilized for minor renovation and repair grants. The remaining funds will support state operations of the minor renovation and repair grants and continue of search and quality services programs that families and the affected community can regain, stable, and rely on child care. Because each of these funding sources is tied specifically with a disaster in a particular year, there is an overlap in the grants. Specifically, the Aura grant will be available for those impacted by 2023 and 2024, and the grant funded by Prop 64 will be available for those impacted in 2025. The administration of these grants will be done by CDSS. Next, the proposed child care infrastructure trailer bill language ensures coordination use all available, coordinated use of all available disaster related funding related to the newly awarded federal relief fund and the governor budget proposal 64 proposal. This alignment strengthens statewide disaster recovery efforts and maximizes funding impacts and helps stabilize the child care in the long run. The next one is the administrative support cost structure. So the May revise includes a $65.1 million general fund in 2026-2027 to increase allowable in-contract administration costs for alternate payment provider agencies by 1.5% of their total contract amount. The proposal reflects a transition of the $70 million included in the governor's budget, which had previously supported payments administrated outside of the contract structure. Maintaining separate in-contract and out-of-contract funding streams for administrative costs has created administrative burden, reporting inconsistencies, fiscal oversight challenges for the Alternative Payment Program contractors and CVSS. The proposal covers administrative and support costs to administering and maintaining the MOU with the Child Care Provider United CCPU. And the funds for administration with support costs associated with the MOU are currently being issued at a contract. I'll turn it back to Chief Deputy Ramsey to cover prospective pay.
The May revision proposes the reversion of funding that was associated with a prior federal requirement for states to pay providers prospectively. This includes $30.1 million from FY2526 for staffing and systems updates, and $43.8 million in FY2627 for staffing for child care and development agencies. On May 12, 2026, the Administration for Children and Families Office of Child Care published a CCDF final rule. This final rule takes effect on July 13, 2026. The final rule rescinds the federal requirement to pay child care providers prospectively and reverts to the option established in the 2016 final rule for states and territories to either pay providers prospectively or on a timely reimbursement basis. Under the new federal rule, we are expecting forthcoming federal guidance, which may help the administration and the legislature to understand what additional conditions the federal government may require if a state chooses to implement prospective payment instead of reimbursement payment and will help us determine the feasibility of moving toward prospective pay based on those requirements We would note that if prospective pay did move forward under the prior rule beyond the costs that were already included in the budget, there was a one-time implementation cost for contractors and required a shifting of at least $1 billion into an earlier budget year to allow for those prospective payments to be made. And I'll stop there on that, but happy to answer questions. Next, I'll move to the budget revision for the cost of care plus. While not technically part of the May revision, the agenda does include details on the recent budget revision to the 25 budget that provided $216.7 million to ensure payments to providers of the cost of care plus rate funding for the first quarter of 26-27. The budget revision and allocation timing aligns with previous fund allocation and payment timelines. These funds will ensure that the current payment process and timelines can be maintained as we transition between fiscal years. CDSS issues quarterly cost of care plus payments to contractors so that they can make their timely payments to individual providers. and we do pay those to our contractors on a quarterly basis based on projected enrollment. This approach insurers providers are not waiting for reimbursement and allows, excuse me, contractors are not waiting for reimbursement and timely payments can be made to providers directly. This schedule mirrors the initial apportionment schedule for in-contract funds where providing funds up front insurers contractors maintain sufficient cash flow to meet payment obligations. And now I'll turn it over to Deputy Director for the Infrastructure Grant.
Thank you. In terms of the closeout of the prior Infrastructure Grant TBL, this proposal requests the reappropriation of the $1.5 million general fund for existing Infrastructure Grant Program to allow the department to continue to contract with the Low Income Investment Fund to ensure the continuity and the timely closeout of these activities. Currently, we have 190 new constructions and major renovations that are set to finish in the next couple years. I'll turn it back to Chief Deputy Ramsey to continue with the next question.
This last question related to the Subcommittee 3 hearing on April 23rd, which asked about the unspent funds related to general child care. Based on our point in time annual estimates, which we provide to the legislature, which was provided in the most recent supplemental report from March of 2026, CDSS estimates that approximately $880.9 million in general fund will go unspent in 2526 across all child care programs. The majority of these unspent funds are projected to come from CAP and CCTR. Specifically, $262.2 million is projected to go unspent in CAP And $468.7 million is projected to go unspent in the CCTR funds Of the projected unspent CCTR funds, $217.8 million are in contract While the remaining $250.9 million reflect awarded funds that have not yet been put into contract Of those CCTR awarded funds not yet in contract It is typical that contracts need time to complete the multiple readiness activities we discussed in previous hearings which can take multiple years While these CCTR funds are projected to go and spend in 2526, in order to utilize them for an alternative purpose on an ongoing basis, the Department would need to go through the process of working with contractors on a non-voluntary relinquishment of their prior awards. This would include reviewing individual contractors' progress and notifying contractors what award amounts would be pulled. Actual unspent amounts will be based on final year-end reports. So the numbers I quoted were point in time from earlier in this year. And our reports are typically final around March of the following fiscal years after our audit process is closed out. So that's about nine months after the end of any fiscal year. And with that, I will pause. That is the end of our presentation.
Thank you so much. We'll turn to LAO.
Good morning, Chair, member. Dylan Hoxworth-Lizzo with the Legislative Analyst's Office. We have some comments on some of the largest of the proposals in the May revision. Starting with the shifting reductions from general child care to the alternative payment program, we think this presents some trade-offs. Our overall recommendation is that the legislature ask the administration to provide additional justification for applying a reduction to cap and to explain why this approach would be better for families and providers over the long run. Several aspects of the program make a reduction to cap less appealing. Starting with because the average cost per slot in CAP is lower than in general child care, this does result in a larger reduction in funded child care slots. You can see on page four of your agenda, based on the administration's estimates, the May revise reduces funded slots by about 6,800, whereas the January budget reduced it by about 4,200. Second, slots funded through CAP typically reach families more quickly. And then third, in recent years, the state has had a significant amount of unspent funding in general child care, suggesting that a reduction to that program might have less of an impact on families. Moving on, the proposed coal reduction, we do think that is reasonable, but we still have concerns about applying that consistently across programs. We recommend that any rate increases for child care and state preschool providers be applied consistently across all programs. The current proposal would have different rate increases for child care providers, state preschool providers who work in school districts and state preschool providers who work out of community-based organizations. We do recommend adopting the removal of the prospective pay funding. This would save about $43.8 million ongoing general fund and $30.1 million in 2025-26. Regarding the administrative cost shift for the alternative payment program, we do recommend rejecting that. We have concerns that replacing a fixed $70 million cost with a 1.5 percentage point increase to the administrative rate AP agencies receive would create general fund cost pressures in future years. In 26-27, this would result in a $5 million net reduction, but in future years, any time that either the number of slots were increased or provider rates were increased, that would result in a larger increase for the administrative agencies, the AP agencies, regardless of whether or not administrative workload increases. So we do recommend rejecting that proposal. Lastly, we recommend the legislature explore alignment of federal disaster relief grants And the Child Care Infrastructure Grant Program, it does seem like it would cover different years. The federal funds would cover 2023 and 2024, and the Child Care Infrastructure Grant Program would cover 2025. However, the legislature could still request additional details from the administration to ensure that the two programs are well aligned, complement each other, and avoid duplication. That concludes my comments. I'm happy to answer any questions at the appropriate time.
Thank you, Elio. So, Senator, do you have any questions before I dive in?
Oh, I'm sorry. I apologize. Sorry. She's going to dive in, I'm sure, but I do have questions.
The LAO's office, you're not supportive of the way they changed the cap programs or the programs from the one part of the budget to the second part on the May revise because it includes more child care slots, right, and it could be more expensive? It would be we're talking about the same total cost reduction the 70 million dollars that was a reduction affects more slots It would affect more slots. Okay, and your opinion on that is favorable or not favorable I think it represents some trade-offs for the legislature to consider
if it's you know, the administration has indicated that Would be easier to get those slots or that reduction as of may revision to get it from cap But as we mentioned, some of the trade-offs would be that, you know, cap is typically faster to get slots to families and that there has been significant unspent funding in general child care recently. So there are issues to consider.
I think you're confused. I'm so sorry. I think you might be confusing our question. You're talking about the $70 million. No, I'm talking about the 4,200 slots that would are –
Sorry.
What they're doing is they're shifting the money to a different program, and then so it increases and affects more slots for child care. You're right.
That's correct.
Sorry. Madam Chair. So that is true? Yes. Okay. It's not better for out years either, correct?
The relationship between the cost per slot, so that would be the same across years. A similar size reduction in general child care and in CAP, that will continue to affect more slots in CAP than in general child care in future years. Okay, and on issue number two, I know the committee notes that the education,
the super COLA per se, in corresponding with the new mandate for K-12, that's going to be negatively impacting the dollars in out years, correct, or not? Currently, I don't think the proposal for the super COLA affects the child care space.
There is a proposed reduction in the COLA for child care down from 2.87% to 2.01%. So that would impact funds for child care.
Why are we reducing that percentage point? I mean, the state of California promised all these parents child care, and now you're saying that they're not going to get the increase to pay for it? Go ahead. Yes.
I just want to make sure I'm understanding the question clearly. Related to the COLA, one of the budget solutions was to reduce the COLA by 30% from 2.87% to 2.01%, and that was as a budget solution item. That was, though, separate from the proposal related to the slot, so I just want to make sure I've answered your question.
No, you have. And I guess the big overall issue looking from 10 foot is that I sat on this committee through several chairs in the past and this committee deals with the most vulnerable people in our state the disabled the elderly which you guys are ripping apart in the next, maybe not you guys, but the administration is ripping apart. It's an attack, totally an attack on our seniors with what's going on in that piece of the hearing we're going to hear later. And so we deal with that, and I know the chair has a heart and a passion for it, where we fund other things. And so I guess the frustration that I have is that why are you guys always the first ones? Why is the administration always making cuts to these programs first, child care, elderly care, shifting colas, like moving shells? Like, you know, it's like a shell game. It's like we're going to go and shift money here under cap, and it's going to take – we're going to have more slots that are affected but at a less dollar amount. So it's the same amount of dollars, but there's more kids that are affected and families that are affected. So that's the frustration I think, and I'm speaking for the chair, but both of us have. So the COLA is a decrease. It was promised to parents or providers. It was promised so that they could have a COLA increase, and so we're taking that back. Or we aren't. The governor is, correct?
I would just clarify we will still be providing a COLA, and it will equate to—
It's not the COLA that was promised to them.
The COLA in governor's budget was 2.41%, and yes, so therefore it is a reduction from that percentage of COLA. It is actually more dollar amount or a higher dollar amount than what was proposed in governor's budget because we have applied the percentage to more programs. And so it was approximately $80 million in governor's budget and is now $112 million.
But I hear you're concerned about the reduction on the percentage. And then going to item number four, the child care administrative support cost structure, you went to a percentage versus a flat rate. What was the purpose of that? Because that, to me, shows that we're going to, as that number increases, the percent is going to increase and it's going to cost more money in out years. No or yes?
So the proposal is to move in the $70 million of what they are already doing for cost of care for dues deductions as well as CCPU-related structure into their administration dollars. So, therefore, it makes the funding more permanent, which then allows them to count on these funds to be able to do hiring in support of these functions versus having it at a contract where it does not get reported out to us. and so therefore we may not be tracking what the money is utilized for for this intent purpose. But it does create out your general fund obligations for a higher increase.
Aren't you going from 17.5% to 19.5%?
Yes, we are going from 17.5% to 19%.
And you don't think that's going to have a negative impact on the budget moving forward?
Yes. So the budget itself is a budget proposal that we do have for this. We understand that there will be some tradeoffs. However, this current tradeoff right now is looking to see how do we stabilize our current contractors in the long run.
What do you mean tradeoffs?
What I mean tradeoffs of this is that as we're looking at this money being part of the 19%, we are looking at it from a stance that we would like to make sure that contractors are able to do these functions within the administrative support and cost. Okay.
So the funding for the administrative costs would increase as workload increases correct or not
Senator, I don't think it would increase as workload increased because the percentage is fixed. It's based on workload, but the percentage.
The more work you do, the more money you're going to make.
I would say I think the cost pressure that I've understood identified from the agenda is more that if rates increase or additional slots are added, that that enhanced administrative rate will be more expensive to pay for in out years or because the administrative rate is a higher percentage.
Okay, and if you go to item number six, the $217 million to allocate the CARE Plus payments before the fiscal year begins, why are you doing that before the fiscal year begins? Why are you paying money from a previous year? That's what it looks like to me. To me, it looks like the Legislative Joint Budget Committee increased 2025-2026 child care spending by $217 million, but you're not paying that until the next year. Is that correct or not?
So the way it operationalizes is that we issue this payment to contractors as an allocation. It mirrors the current type of allocation that they do receive for their current administration of the current funds. As it mirrors that, that means that then they are not paying providers prospectively, but they have the cash in hand to pay them after the timesheet is submitted, which is typical how we allocate funds.
Okay, LAO, I noted that the state's proposing to no longer do prospective pay, and there needs to be allocated payments before the fiscal year begins. So we're using money from last year's budget before this fiscal year begins? It actually saves money for next year because we're paying it in the previous year? For the cost of care plus payment shift, the $217 million.
dollars. Our understanding is that the May revise includes those additional funds that were in 2025-26, and those will cover the first quarter of cost of care plus payments in 2026-27. So this is new money that was not included in the January budget. My understanding is the administration has indicated they want to continue paying the first quarter in advance going forward. so there would be a one-time cost of the $217 million, and then going forward, the first quarter of cost-to-care-plus payments of each year would be covered by the allocation from the previous year, the money allocated in the budget from the previous year. Our understanding is this action is not required by law, so if the legislature chose to undo this change or to provide only three-quarters of the year of funding for cost-to-care-plus in the 26-27 budget, then that would yield $270 million of savings.
You said new money. Where'd that money come from? What new money? It is additional authority in the 2025-26 budget.
Perhaps the administration would be better able to explain that.
Sure, go ahead. Where's the new money? I think he's going to... Oh, here we go. Hi. If you don't have... Oh, okay. I wouldn't even ask, but I heard new money. Do you know about new money?
Good morning. Edgar Cabral with the Legislative Balance Office. So this is something that was submitted in a, the administration submitted a provisional letter to increase general fund spending for 2526 This is something that we received in early May to provide this million payment to do this And our understanding is that we been making these monthly cost payments These are in addition to the main reimbursement rates that we give out to child care providers. These have been in place since, I believe, the 2023 MOU is when they were established. And the administration has indicated that in order to get them to providers in July, they need to make an appropriation. We need to appropriate early, essentially. And we haven't, so I would say this is where I think, this is where we're getting into the technical details, but we do think it's a difference than what the legislature has done before. We have never in the past appropriated from the budget bill funding for the next fiscal year within this year. Now, part of what happened is that when that 2023 MOU was established, there was a bunch of unspent funding from previous years that was used to fund a variety of activities, and that gave the department the flexibility to use those funds to make those payments. But we do think from the state's schedule in terms of making an appropriation, this is different than it was before. And so that's part of why we raised it. I think it was not our understanding that that was going to be the expectation moving forward. So this also, I think some of the questions that we have are just trying to understand why this is necessary to make those payments. And if we do, for example, have to make an early payment to make sure that cost of care plus payments are made in July? Why do we have to appropriate three months' worth of payments up front? Because this does, the net effect is this is a one-time additional $217 million cost in the budget window, which under, given the state's current fiscal situation, we think there's reason to think about whether that is necessary and whether there are other options. Thank you for that.
I want to know that, too. That's why I'm asking these questions, and he framed it much better than I did. But, like, again, we have 25 minutes to go over all this stuff and then get prepared to come down here and get mostly non-answers that we don't ever get when we're in this committee in the first place. But the bottom line is it looks like you're taking money from this year and trying to prepay it for next year, but you have a budget deficit that you're trying to get. It's like a shell game. It's like you're trying to rob Peter to pay Paul. So please answer the LAO's question as eloquently as he framed it. I appreciate the LAO laying out kind of what the history of this has been, and that is what he laid out was correct.
A couple of clarifications I would add is the payment is not being made to the providers early. So this is completely a separate issue from the prospective pay. I realize it seems like the two issues are connected, but they actually are completely separate from each other. This issue is really about us making sure our contractors who do provide the direct payment to our child care providers have enough cash on hand to make sure that they are making timely payments. And we are required to make timely payments according to our Child Care Providers United MOU agreement. and so we need to make sure that they have money, as Edgar said, to make payments in July and to continue to make those timely payments monthly to our child care providers, which is our obligation. They can't do that unless they have the cash on hand, and that is why we submitted the budget revision proposal. And we do understand that it gets technical and are happy to work with LAO on those technical questions along with our partners at DOF.
Okay, I still am not clear on why you're taking money and putting in it. Maybe the chair will get a different answer. But like I said, if we owe this money, I believe they should be paid on time. We owe this money in July, then it's next year's money. It's not this year's money because this budget goes into effect. We're passing this budget in June for the 27-28 year, correct? Or 26-27 year, sorry. I think Department of Finance would like to add a little bit to that. Sure, go ahead.
Hi, Tamara Weber, Department of Finance. So I think there's two questions here. So first of all, that first payment that needs to be made in July, the contractors that need to make the timely payments to the providers, they are actually paying them for services rendered in June of 2526. So at least that first payment is for services rendered in 2526. What happens is at the end of the month they will submit their attendance sheet, and then within 21 days the contractors have to pay them for that. So that first payment is for June. So just to clarify what is going on, it is money for 2526 services. Now there's a separate question of, okay, well, then why does it have to be a full quarter? There we go.
And this is something that we do plan to work more with LAO on,
and your staffer is happy to do it. There's some technical things about how long it takes, you know, from when signed the three-party agreement to the SCO to issue the money to contractors. The contractors themselves, it takes a certain amount of time to be able to issue those payments to the providers. So we can talk about seeing, like, what we can do in that process and what is the kind of reasonable amount that needs to be front-loaded, but those are kind of the two factors that are going into it. And then I just want to add, like the LAO laid out, this isn't some kind of – the reason this is coming up this year is because in the past we had this two-year funding authority.
So we're not trying to do a policy change. This is just – in this case, this is the first year we're crossing that fiscal year is kind of presenting an issue. But, again, it gets very technical, and we're happy to have more conversations.
Okay, so I get it. Government is slow. You're worried about the payments going out to the providers, and you're looking at a full quarter funding just to make sure everybody's covered in layman's terms, I guess. But, okay, and then the only other question that I have. I'll skip that one. There were no issues there. On the CCDF, I don't have any issues there. Oh, we're not there yet. Okay, sorry. Okay, thank you. Thank you, Madam Chair.
No, thank you for joining me today. Give my voice a break. Okay, let's start with the most recent topic because that's fresh in mind. I appreciate the clarity and the openness to be able to talk about what really is needed. I think we sympathize that the July payment is really important because we do know it's for the month before. It's always paying the month before, so that's 100% we get that. Now I've heard more about it could also impede the following months to pay fully July. So maybe we can look at that. But I think the whole full adding up to extra months, that's where you lose me a bit. So I appreciate there's an ongoing conversation so we can see what really is needed and not to go above that, recognizing that there are a lot of cuts and this is potential savings. So I'd like if a technical assistance from Department of Finance and LAO on scenarios of doing only July. I sorry yeah I guess only July and August after those two months and the cost for that All right So let get back to the 4 to 6 Department of Finance, how much are we scoring in the January proposal for not funding the 4,200 slots? From the January proposal. Tamara Weber, Department of Finance. So whether the adjustment we make is in CCTR or CAP, it's the same amount of money. So what we have to account for is actually less than at governor's budget. So it's a total of $93 million in the budget year. So it's $93 million if we remove 4,200 slots, and it's $93 million if we remove 6,800 slots. So why remove more slots if we're scoring the exact same amount of money? The savings is exactly the same. So let me start by saying that subsidized child care is a shared priority for the administration. I would disagree that the administration has not showed that shared priority in the past couple of years. Well, so the proposed budget is maintaining $1.6 billion just for the expansion slots alone, and that's general fund. We have not moved. We have actually gone backwards. We are now at 123,000 slots. January proposal was 125,000 slots. We are going backwards. The golden star that we're giving ourselves is the fact that we have not cut more. We have not progressed further. We have not shown any additional commitment in child care. We have maintained the status quo and, in fact, have gone actually further back. I would ask that we lay out the facts and not give us any kudos for what we haven't done. So why would we, if we're scoring the exact same amount of dollars, remove more child care slots? The Department of Finance justifies cutting services by scoring savings. I don't understand the justification here. Well, we would say that the shift to cap is really to protect services. So the department has been continuously evaluating what enrollments are and where contractors are with earning their full contract. And I would just say I don't think it's totally fair to say that we're moving backwards because actual enrollments have been steadily going up. We are seeing uptake of slots. But this is a moment where we've had these funding adjustments in federal funds in Prop 64, not the funding amounts that we control. And we're looking at the budget and saying, well, where can we have the least amount of impact to families? And that is what is actually leading to the shift from CCTR to CAP. is that we're trying to make sure that we are maintaining service levels and supporting contractors who are doing, like, implementation activities and just doing a more kind of fine-grained assessment of how to best kind of serve with the funding that we have. But I think we're going to be judged by the numbers that we put on the board of how many slots are available. If we're just judged on that baseline, we are moving backwards. Outside of the context, outside of that, the amount of available slots, we went backwards. So we will judge ourselves based on that While we maintaining that great we maintaining that but we are moving backwards And to say you know Deputy Director you kept using the phrase we don't want to create disruptions, we don't want to create disruptions. Do we have a current wait list in the state of California of people waiting for child care? We do have a current wait list. Each contractor maintains their own wait list. Is that not a disruption to families that we don't get them off the wait list? We understand that there is great need in regards to families waiting on wait lists. There's no disruption of families currently in child care right now. We are, would be, not kicking people off of their child care slots. But we do have a disruption in families right now of waiting for child care of a wait list. That is, by definition, a disruption of inability to go to work, inability to provide for their family. This is a disruption to families in California by not adding child care slots and removing kids from the wait list. When we're not saving any additional money, what are we hanging our hat on as a justification to add 2,000 more removal slots? I recognize, I hear you on the relinquishments, the unused slots, but you've had a history of shifting those elsewhere, elsewhere, which I applaud the department in doing that, I don't understand why we can't do that again now. If we're not scoring any additional dollars, this is not a budget solution. No, I hear what you're saying. Again, I think we were trying to think about if we did stay with the governor's budget proposal back in January, which were 100% of them coming out of the CCTR slots, we had individuals or contractors that were in the pipeline of getting facilities ready. And so we're weighing, in a sense, the two, right? Whether we then say, okay, we're going to have to then pull back those contracts, or do we look at relinquishment? They were getting ready, but they can't get the contract yet until they're ready, right? Yes. So they're not in contract yet. Yes, but these are permanent, not ongoing. So once we do pull that contract, we don't do it at a one-time. We do it at an ongoing. Sure, sure. Yeah. The examples you're giving of people that are preparing, are they in contract right now? They are awarded but not in contract. Right, because they're preparing. But we can come back next year once they're fully prepared to see if there's a possibility to then move forward. No or yes? I want to know if that's correct. So because they are getting ready, if we pull these contracts for next year, that means that they would not be able to start services next year. So hypothetically, today we know that they are in the works. But July 1st, they could now be able to open up. If we do 100% of CCTR, that means that we cannot issue them a contract now. However, Chief Deputy, in the last question, you gave like $800 million potential unspent already on CCTRE. Are we scoring those savings now from 25-26? Wow. Sorry. Christian Amelho, Department of Finance. I'm going to stop touching that. So as part of the governor's budget and mayor revision process, past year savings are estimated and accounted for as we create and develop a balanced budget. So the savings that are mentioned if the fiscal year has closed then they assumed as projected savings in the overall calculation of the budget Okay so we already scoring the unspent dollars that you mentioned already Yeah For 25 26 and 26 7 that we anticipating Not entirely, given just the contract durations and the amount of time that contractors can go back and, you know, the department does audits and, you know, there may be changes that need to be made, but generally, like, when the budget closes, we score the past year dollars as part of the overall calculation. I'm wondering, there's going to be probably a scenario that we switch and keep the 4,200. We're worried about these contracts not getting their funding. We're going to have unspent dollars in the upcoming year that we can use to pay these contracts if we're so worried about it. I don't know if I said that correctly. LAO, I feel like you've...
I would just say I think that part of the issue in the tradeoff is sort of do you want to have the ongoing reduction sort of predictable, right? I think in the case of keeping it in the CCTR program, right, I think the number was $250 million that is not in contract now, and then several hundred million that were in contract that came back unspent, right? So you can imagine that there will be enough savings within even that program in and of itself to get to the $90 million or whatever the reduction is, right? I think the question is how many of those do ramp up moving forward, and if those ramp up, would then there be an expectation that there be an appropriation made? And so I think that's perhaps part of what's going on. On the AP side, on the CAP program, when you make the reduction, that's more for sure. But I think the question that we have about it, and I think the issue that we think is for you to consider, is that the CAP program is the more flexible program that we think is more effective at quickly serving families. So I think we have some questions just more about why AP agencies are relinquishing funds or why there is a need to relinquish. In virtually every part of the state, we have expectation that there are waiting lists. And so what is it that is preventing CAP programs from being able – We expect in the short run time for agencies to ramp up and to be cautious about making sure that they don't over-enroll. But we wouldn't expect in the long run that they would be unable to serve them. But making this reduction means you are reducing the amount that in the long run they would be able to serve. I think the idea being that if a family can't find care in one place, they have a lot more options through the voucher program. Then under CCTR where it is, we're funding very specific sites, and those sites may have specific challenges that might make it more challenging for them to get up and running.
And can I clarify one thing, Madam Chair? We did have to take some of the reductions in the budget year because of the CCDF reduction, and those all did come from unspent CCTR funds. So we were able to absorb all of that for the current year to CCTR funds. It's just in the budget year and ongoing where we need to continue to take ongoing permanent reductions. That's where we did the split between CCTR and CAP. But I think I hope what you're hearing from the administration is, like, we really recognize that there are significant tradeoffs, and we hear you about not going backwards. And we are telling you what is the point in time situation between CAP and CCTR. But we're very happy to continue to work with you to figure out how to absorb this reduction in a way that makes sense within the broader landscape of child care and supporting child care in the state. Right. I hear that. It's difficult, though, when in this world of child care, there are savings, but there are cuts. That doesn't add up. If there are savings in this world, that should... be shifted to where we don't cut. You can't have savings and need to cut to create budget solutions. The child care funding, so this is where for my, I'm like, there is no commitment because there is savings in this space and instead of reallocating to maintain the other spaces, we're also cutting. So we're taking money away from child care to balance the general fund even though these dollars should stay in child care spaces. We may not be moving forward because there's unspent, but at least we're not saying, hey, we're going to take what you didn't spend and give it elsewhere, recognizing there's still a great need across the state of California. If either of you can expand, that was my other questions we'll dive into, is the relinquishment of these. You mentioned a couple, Placer, Solano, L.A. County. I mean, everywhere I go in L.A. County, everyone's begging me for more child care slots. So it's not that the need isn't there. What is happening, what we're seeing as to why some vendors are relinquishing their cap slots? Yeah, so there's many different business models that vendors or contractors have. For instance, when we looked at the allocation, we went ahead and did an allocation across the entire contractors with the assumption that everyone would be able to take these increases based on the allocation formula. Now that we've had more time, we've started to look at expenditures year after year on these different contractors and discovered that there was unspent funds year after year on an average with some of these. In conversations with them, we found that their business model may be that they are supporting a certain group of families. I'll say, for instance, they are supporting families who experience domestic violence, and therefore they are serving families that are in that area to support them. And therefore, the allocation is too much for the number of families that walk through their door. So therefore, instead of them holding on to these monies year after year, then perhaps they would like to relinquish a portion of that. Because I think that's the clarification. When we talk about relinquishments, we're not talking about a full relinquishment of a contract, right? We're talking about apportionment to say, this is what we think for our community. Normal times we would then look at another alternative payment provider to be able to reallocate those funds that then would be able to serve all families that are on their wait list. Okay. Outside of the providers that are picking a target and doing that, is this news that we've learned about this is why they're having excess? or is this, if it's news, if this is new information, are we going to be reallocating differently? Yes, so we've had a lot of learnings, right? That is just one of other learnings that we have. And, yes, when we are looking at redistribution or allocation of new funds, we are taking several things into account, including having those type of thoughts. And we've also been in contact, like we did the first time with the association who also shared with us, when you do look at allocation of slots, for example, there should be a baseline for certain agencies to take into account. So there's different things that we are taking into account, but most importantly now that we have some historical data as a new division Of the expenditures that is another piece that we're going to take into account to say as we're allocating this certain vendor Does it make sense for us to give provide an increase in allocation When we seen that the expenditure has necessarily not been fully utilized year after year and perhaps instead of an X percentage of increase it's either none or a lesser percentage. So those factors are all new things that were taken into account. I appreciate that because I don't want that we continue to send it out knowing that they're not going to be filled and knowing that Department of Finance now has a fund to play with to backfill the general fund? I invoked your name so you can respond. Thank you. I would just say, first of all, that what we have right now is the current mayor revision proposal, and we're very happy to continue talking, get updates, and I think it's good to have this conversation to revisit and think about how are we actually allocating funds as we're trying to grow. In the beginning, we put a lot of money out there. we kind of predicted, hey, they're not going to be able to ramp up that fast. We knew there would be savings, but we wanted to show there's commitment. So that's why the money's in the budget. And whenever we, you know, together as a three-party, we put money in the budget, we don't want it to be savings. We want to provide those services. That's what we're doing. And I think having a conversation now about how best to actually turn the money that's in the budget into services so that you don't end up with a lot of savings, I think that's something we're very happy to talk about and to work towards because that is what we want also. I do believe we're going to continue to see savings in the CCTR section. I think the reallocation of utilizing the $93 million in cap is premature since we're going to continue to see savings that I think we're not present in a situation. I can't tell the future, but in such a high situation when we have X amount of contracts that we need to make up funding for, I keep hearing there's so many barriers and it takes such a long time that I don't see that being the driving force to switch from CCTR to CAP. On the COLA, Department of Finance, we have historically matched the COLA with K-12 for, I don't know, however long. This is a very unusual move to separate the two to have such a disparity. I've heard already that it was for a budget solution to go from 2.41 to 2.01. It can't be a budget solution here and then have K-12 drastically jump to 4.3.1. It can't be a budget solution if you're only cutting one place and ballooning another area. I'm not here to attack my colleagues in the CDE world. I think everyone should get it. But you created winners and losers in this space where you're pitting two vulnerable communities against each other. And no one's going to pick one or the other. I think everybody should be an equal, which is why historically we have matched the COLAs at the same time and matched them so that we didn't have different kind of groups fighting against each other. All that, why now the huge disparity? Krishan Malhotra, Department of Finance, and you said it already, is a result of needing to achieve a balanced budget. The May revision does include this budget solution. We just want to underline the point that the proposal is maintaining a $112 million general fund for child care providers, and they're getting a 13.75% increase to their monthly cost of care plus rate. So we're still providing an increase and a higher increase than what we had at the governor's budget. So just want to make that point. You didn't answer my question. Why steer away from historically matching the COLAs so that we wouldn pit two vulnerable communities against each other if it is a budget solution then there would be a cut on the other side as well It can't be a budget solution where you found money to do super COLAs in another space. Yeah, we can get back to you with some more information on that. I'm going to get back today before this hearing is over. Thank you. Thank you. Lourdes Morales with the Department of Finance. I think one of the key components here, and I think our LAO colleagues can sort of elaborate on this, is that the supercola, as I understand it, is Prop 98 funding. And so that is sort of a very different sort of consideration around the rules around the Prop 98 sort of total allocation, sort of how that's divided versus sort of non-98 general fund. fund you can tap into with Prop 98 that allows for a super cola. We don't have a Prop 98, so we can't allow an increase. All of the colas in our space are general funding. Thank you. I appreciate that response. Okay. And the $110 million that we're adding into this cola, it's because we forgot two additional programs, right, that we didn't include in the January? So it's not that we're just throwing more money. We just forgot to add two other programs. That's right, and I think we had mentioned it in testimony for governor's budget, but yes, the CalWORKs child care program and emergency bridge program hadn't been included in the governor's budget estimate, and so those two were included with the new 2.01 percentage. Okay. On the facilities of the additional funding that I'm so happy to hear that we're getting from the feds, How many facilities can we be able to, have we set the award amount per facility or how many facilities? We haven't set the award amount. However, the target individuals are individuals that reported out to licensing that they had impacts during these state disasters. So we're going by those specific numbers, and that was what was approved by ACF for us to do the distribution. Okay, so we have a certain amount for those. And then to clarify, the $28 million, it can't help the L.A. fire victims, right? Yeah, it's a different year. That's why we still need that 11.38, because those are specific to that area. Yeah. I mean, to that specific incident. Okay, let's move on to the support cost structure. The $70 million, I know Senator Grove dove into this a little bit. Department of Finance or Department, what problem are we looking to solve with this restructuring of percentage to a fixed income, a fixed rate structure? So in the beginning with the bargaining agreement with the Child Care Provider United, it was called out regarding that there was certain type of additional duties that needed to be performed by these contractors. So that included due deductions, inquiry information, to be able to process those monthly and timely for the contractors. What we did in a temporary basis as we were collecting more data and trying to understand it is we did a set aside for contractors to be able to do those duties by allowing for million As a result we started to hear from contractors the difficulty regarding having those out of contracts because they feel temporary in nature when they out of contract And so by bringing them into the admin and increase the admin by the 1.5%, then they become a permanent, in a sense, in regards to their administration dollars. Now bringing them up to 19%, for example, for the alternative payment program. So we were trying to make sure that we were solving that need in regards to making sure they had a permanent admin amount to continue to do these functions that would not necessarily be temporary in nature, but continue to be ongoing. Can you expand a little bit more? If this is built into the MOU, it seems pretty permanent. It's not temporary. It's part of the MOU. You can't rescind on that. Can you expand a little bit more how they felt temporary. Yeah, it felt temporary in terms that anything that is at a contract has a different responsibility in regards to reporting fiscally. So at a contract then provides some flexibility for contractors to be able to utilize the dollars. However, they do not then have to report out to us like the 17.5 regarding these dollars, how they're being utilized. And so it sent a little bit of a mixed message because we have done other out-of-contract additional admin percentage for other temporary pieces. And so as you're looking at some of the temporary pieces we did with COVID, for example, then even though it is, like you mentioned, part of the MOU, it still could be misinterpreted as a temporary piece. And I think I said it wrong because you're right, the $70 million is outside of the MOU. So I apologize, I said it wrong, though. Can the more, if it needs to be in contract, can it be a dollar fixed amount versus a percentage? I think we can look at different options and have more discussions because we are hearing directly from you and others in regards to different ways of thinking of these funds. So it's possible that it doesn't have to be a percentage in conversations. Again, I don't want to propose or have a conversation if it's not legal, if it's not reasonable or feasible. Yeah, we can definitely have more conversations in regards to what are different options. What I'm concerned about is that if it's a percent, it's going to grow dramatically. The more we give as a state to down for child care, the admin percentage is going to grow more and more, removing funding from actual child care slots. That's the concern. If it's about giving them more permanent assurance that this funding is going to come regardless and help with the reporting, then maybe it should be a fixed amount within a contract. It's the percentage part that just – because it's always going to grow. It's always going to grow. Do you want to add anything to that? No, you don't have to. I think you've covered everything. Okay. Okay. And on the same topic, Department of Finance, I'd like your perspective, because if this is correct, I'm not sure. If it's a percentage of it versus a fixed, it's going to keep growing. isn't that going to increase the structure or deficit? Krishnamal Huchir, Department of Finance. So if it was a percentage of the total contract and we were to increase either rates or add slots, it would be increasing. It would increase it, right? Yeah. So it would have an increase in the out years, depending on whether or not those rates are increased or if we add more slots or if other contract funding was to be changed. And if we're going to add to the structural deficit, I would prefer to be on services, not on admin. But either, I don't think any of us want to add to the structural deficit here. I think we should be a little bit more, if we could restructure it to not do that. On the abandoned prospective pay policy, Chief Deputy talked about those two reversions coming back. Of the nine positions that were approved, none of them were hired? That's correct. We didn't move forward on hiring those positions knowing that there was uncertainty from the federal government regarding the policy. And I think it was six positions, right? Six positions. I didn't say six? You said nine. Six. Well, I wrote six. I don't know why I said nine. I apologize. Okay. Okay. Okay, we're going to hold that issue open. Move on to issue number three. Issue number three. So in regards to the response regarding the child care single rate structure,
age grouping and inclusion framework, TBL, on this trailer bill proposals. This proposal seeks to codify foundational policy elements of the single rate structure by defining age-based rates, categories, and expanding acceptable documentation for the enhanced inclusion rate to include an individual family service plan, individual education plan, individual program plan, section 504 plan, or incidental medical service plan. The proposal would also establish the necessary statutory framework to support future implementations of the single rate structure, enabling the department to begin the preparatory activities to ensure alignment with the Joint Labor Management Committee recommendations. So age-based rate categories are as follows. Children under two years of age, the care of whom will be reimbursed as an infant rate. Children who are two years of age, the care of whom will be reimbursed at a toddler rate. Children who are three of age to six years of age, inclusive, who are not yet enrolled in first grade, the care of whom will be reimbursed at this preschool rate. Children five years of age and older who are enrolled in first grade or higher, the care of whom will be reimbursed at the school age rate. Now I will turn it over to Chief Deputy Ramsey to cover the site safety and emergency procedure trailer bill language. The site safety and emergency procedure trailer bill language is related to the department's current situation with being out of compliance with certain CCDF regulations related to licensing. As such, we are proposing this TBL to bring the Licensing Act into compliance on a number of issues. Specifically, this includes strengthening child care safety through mandatory anaphylactic policies, ensuring comprehensive pediatric first aid and CPR training for all staff and volunteers in licensed child care facilities, ensuring all child care facility licensees and staff complete training for recognition and reporting of child abuse and neglect, and establishing comprehensive emergency and disaster planning. These statutory changes are necessary to strengthen the safety and well of all children in care and to come into CCDF compliance I turn it back to Deputy Director Thank you In terms of CalWORKs Child Care this proposed trailer bill amends WIC code to include participation to CalWORKs program activities and identified areas of need that will then be utilized at the same areas of need categories for Stage 2 and 3. This facilitates a seamless transfer between CalWORK stages with minimal administrative burden on families and contractors and requires the inclusion of additional data elements to be shared with the CalWORK stages 2 and 3 administrators. And the last trailer bill language is the child care oversight. So this proposal includes cleanups, statutory language governing fraud and overpayment preventions and child care and development programs and provide CDSS, who has taken over the administration as of July 1st of 2021, of these contracts with clear authority to issue mandatory guidance to contractors. So it's a cleanup language that still referenced our CD partners.
Hello? Based on our initial review of the trailer bill language, we don't have any concerns at this time, but we will let the committee know if we have any other concerns as we continue to review.
Thank you. Just a real, did you want to add anything? Christian, Mildred, Department of Finance. Nothing on the trailer bill. We just want to jump really quick back to the COLA. The cost of living adjustment for the child care programs in the state preschool program, the 2.01% is the same across both programs. Thank you for flagging. I had a question on that. It's your fault. I had forgot. LAO, you mentioned, because when I first read it, I thought it was the same across, but you say it's still not the same across, the 2.01 COLA. I think we were referring to the way that is applied to the cost of care plus rate. So technically what's going on is the state is not providing a COLA to reimbursement rates, but instead calculating how much would the COLA be, or in this case, how much would a 2.01% COLA be to the base reimbursement rates? And then the state would only be increasing the cost of care plus rate. But then the way that it's being implemented, then there's the Department of Social Services pot of money, then there's the non-98 preschool money, and then there's the 98 preschool. Those, for a variety of reasons, generate a different amount. So the exact cost of care plus increase and the exact cost of care plus rate that providers will receive will be slightly different in the three programs. So if you have a 4-year-old in CCTR and a 4-year-old in state preschool, technically you will be getting a slightly different cost of care plus number. The COLA will be the same. That's the same, but because the cost of care. And the methodology to calculate the COLA is the same. So they're different programs, same methodology, different outcome. So we fixed the COLA disparity from the January budget, yes? On the DSSI. Yes. Yes, but because the underlining is still different, that still creates the, okay. A couple, not a couple, a lot of states across the United States have defined infant in a different age group. I'm wondering, do they have it wrong? Like, do we have it wrong? Why the difference in how we define infant? and even I forgot what medical group also defines infant in a different age group We have it all the way up to two Yeah I can start So the definition you right So different states have the autonomy to define how they considered infants. We are looking from a health and safety age in regards to one adult and a number of children that they would be providing oversight. There is a document that is, and I think it's like caring for our children, nationally recognized that also talks about these type of, and I can definitely send you a link to that, that also talks about these definitions that we also utilize as a guide when we are having these discussions regarding the definition of infants. And I would just add that our two-year-old definition is linked very directly to our licensing category. So, for example, in small family child care homes, you can only watch, if you have all your children are defined as infants, you can only watch four. Right. So that's one adult with four babies. So if you had, say, lower to 18 months, that would be then you could have four children 18 months or younger plus, like. What was it, seven or eight? Yeah, it can, like, basically lead to a lot more younger children with only a single adult. So it is the balancing act that Lupe had referenced related to health and safety for the babies. Okay. Thank you. We're going to leave that issue open and move on to public comment. Go ahead. Thank you, Madam Chair and subcommittee members. Clinical lab scientists provide results that inform 75%. This is only public comment on child care issues. Oh, okay. Only child care. The health, part B, we're going to hear that next, and then public comment will be after that. Okay, very good. Sorry about that. Thank you. I have a comment about your child care discussion. I don't understand why you don't utilize audiovisual representations of graphs and tables to better comprehend the topic. Everything is verbal. Ms. Grove asked for clarification. It seems very hard to follow without visual. My suggestion. Thank you for that. You're welcome. Good morning, Madam Chair and members. My name is Donna Snaringer. I'm with the Child Care Resource Center in Los Angeles County. We provide subsidized child care services within the Senator's district. I wanted to focus on the issue related to the shift to take unspent AP dollars and really underscore that at least at our program, we're entirely full. We have not enrolled a family since March of 2025. And we currently have about 35,000 children on our waiting list, 6,500 of those in Senator Menjavar's district alone. And I think that the tradeoffs that are being discussed are not accurate. I agree with you. I think if there's unspent money, we should be talking about that first before we talk about permanent reduction of dollars. I also wanted to just say a couple sentences about the proposal related to our contracts and the support dollars we receive We haven had a change in those dollars since 2010 at the end of the Great Recession and we had a lot of complex workloads added to us because of the Child Care Providers United contracts. We appreciate the direction the administration is heading but hear your concerns as well and just really would like to be part of a conversation about how we could come to a better solution. Thank you. Good morning. Hello, my name is Anita Vicini, and I am a member of CCPU and have provided child care in the city of Sonora for the past 15 years. I am here today to urge the legislator to act now and ensure child care providers receive the full 4.31% cost of living adjustment, matching the adjustment provided for other educators. The governor's proposal falls short. It cuts back a COLA that was already not keeping pace with the rising cost of living or the actual cost of providing care. The bigger issue is that providers are still being paid based on an outdated formula from the 1980s. That only covers a fraction of what it truly costs to care for children today. Every day, providers are balancing rising costs of food, supplies, rent, utilities, and staffing while working to keep care accessible for families. In my own experience, the cost of living continues to rise, but the reimbursement rates we receive do not reflect that reality. Many providers are struggling just to stay afloat while continuing to serve our communities. Providers should not be asked to accept less while continuing to do more. Thank you. Thank you for allowing me to speak today. My name is Natasha Finister, and I'm a family child care provider of 31 years in the city of Hawthorne, California. Every single day, families across California are unable to find child care because there simply are not enough providers to meet the need. And every single day, providers are being pushed closer to leaving this profession because the rates paid to us are outdated, inadequate, and disconnected from the true cost of care. And caregivers who love what they do, but too many are being forced to consider leaving the job that they love in order to care for the families that they love. I personally have side jobs, which equal nine jobs on the side, nights, weekends, and holidays. I basically spend all of my time working. The legislator has already recognized the need to move toward true cost of care rates. Now is the time to be bold and ensure that the commitment is reflected in this year's budget. We cannot continue balancing this system on the backs of underpaid providers while families struggle to find care. This is a moment for action. Investing in providers means investing in children, working families, and the future of our communities. We urge you to stand with providers and make meaningful investments that reflect the real cost of care. Thank you. Thank you. Good morning. My name is Sylvia Hernandez, and I am a family child care provider in Van Nuys. And I'm here right now to tell you that too many families qualify for child care assistance but are denied access because there's simply not enough funding available. IGCs approve families, but there's not enough funding for child care slots or vouchers. That means that parents are left scrambling, children lose stability, providers are forced to absorb costs just to help families stay afloat. Without the slots or vouchers, working class families are being denied the opportunity to succeed. Child care was allowed parents to work, continue their education, and contribute to California's economy and future. We're asking the state to invest in children's parents in California's future by expanding access to child care slots and vouchers. Families should not be turned away simply because the state failed to fund the care that they already qualified for. Thank you. Thank you. Hello. My name is Yvonne Bejar. I'm a proud member to the CCPU. The government might revision amidst the one-time costs needed to the security prospective payment for child care providers. The Biden administration championed this policy, but it was removed under the Trump administration. Adopting prospective pay with the CCPU contract will make tremendous progress in stabilizing care for parents and providers. Prospective pay is not paperwork. It's a piece of mint in the difference between coming to work with dignity or coming with fair that payroll and support won't be there when the children need asthma. The governance might revision amid the one-time cost requirement to secure prospective payment for child care providers. I'm asking you to include it now because stabbing can weigh. When providers help pay on time, we keep our staff, parents, counselors that they care, kids can stay in the same loving classroom. This is the moment, please. Thank you. Thank you. Hello. My name is Portia Triplett, and I am an FFN child care provider from Pasadena, California. I have served my community for over 10 years. In January 2025, the Altadena wildfires affected my family, burned my home partially, and left me and my family, out of a place to live for about six months. Overnight, I lost my home, my community, and my income. To survive, I had to pay double rent, rent a rental car, and I couldn't serve my family. FFM providers like me are essential. We set up single parents, low-income families who have nowhere else to turn. I am grateful to be back in my home serving my community, but the financial pain from that disaster I am still struggling from. I am grateful for the budget funding to help the victims like me stabilize our child care, but the relief needs to reach the license-exempt providers, too. Because we were hit so hard, we serve a crucial part in our community. We urge the legislative to include the FFM providers to adopt the CCPU's guidance to how the L.A. Fire Child Care Facility, excuse me, how that should be put back into our communities and put back into our funds to help us rebuild. Thank you. Thank you. Good morning. My name is Yolanda Thomas, and I am a child care provider with Child Care Providers United, a partnership between the United Domestic Workers, 3930, AFSCME, SEIU, Locals 99, and 521. We are eager to work with the governor and the legislature to ensure that our joint labor management committee recommendations are achieved in the final budget. Pay should account for transportation, fair compensation for weekend and evening care, and more. JLMC recommendations are critical when it comes to including child care providers ensuring recommendations are made for us and by us Early childhood educators as early childhood educators we wear very many hats We're transporters. We're late night caregivers. And just an overall safe haven for parents and children. We work 12 to 14 hours a day, the invisible clock. We are only compensated for 8 to 10 hour blocks. Thank you so much, ma'am. Thank you. Good morning, Saravachas with Children. Now we urge you to reject the proposal of reducing the AP and CCTR slots, of which 69% of the families are on AP vouchers. They're enrolled in family, friend, and neighbor care. They're predominantly Latino and African-American families, the same parents and guardians that work in the care industry and work non-traditional hours. These are the same families facing the trifecta of the impacts from the harshest of federal actions and the minimization and destabilization of family support systems through stricter and unrealistic expectations during these difficult economic times for our most vulnerable children. Thank you. Thank you. Good morning. Jasmine Valle on behalf of the Low Income Investment Fund, LIF, a CDFI that supports affordable housing, child care facilities, schools, and other community infrastructure projects serving low-income communities. LIF strongly aligns itself with the ECE Coalition priorities. We urge the legislature to provide full funding for 2026-2027 cost of living adjustment, one that meaningfully reflects today's rising costs. Providers continue to face increasing expenses related to staffing, utilities, diapers, all of which impact their ability to continue serving families. LIF also greatly appreciates the Senate's continued commitment to child care, including the proposal to fund an additional 44,000 child care slots. This is an important investment toward expanding access for working families across the state. Additionally, LIF has had the privilege of partnering with CDSS to help administer $350 million through the Child Care Infrastructure Grant Program and has seen firsthand the extraordinary demand for child care facility funding across California. We continue to support the $11.5 million in infrastructure funding for fire recovery, and we're pleased to see $28 million for natural disaster recovery added. Thank you. Good morning, Chair, members and staff. Andrew Avilov with Early Edge California. We want to respectfully raise our concerns with the proposal to reduce COLA for child care, to abandon prospective pay for providers, and the lack of funding for the promised slots that our families so desperately need. We really urge you to please create a final budget that will support providers and families and meaningfully move us towards rate reform. Thank you. Thank you. Hello, Jennifer Greppy with Parent Voices California. And I asked the sergeant to hand this to you all. And what this is is a study that we did about families that are on that child care waiting list. And I will direct you to the second page, which has a picture of a four-year-old changing her baby sister's diaper. Okay? That is the consequence of keeping families on the waiting list. And we want to applaud the Senate proposal that adds 44,000 spaces that were promised to these families. These families have been waiting and waiting and waiting on the no hope list, and we just have to get them funded this year. Thank you. Thank you Good morning My name is Candida Duparwa I the Director of Public Policy at the California Child Care Resource and Referral Network I want to echo my colleagues behind me but I also want to say that I was once a mom on the waiting list and I had to go on CalWorks to get child care. So I am speaking today as a lived experience. Also, I want to represent our R&Rs throughout our state on the COLA because we are not fully funded in the R&R, and so we really need the super COLA. So I want to, and then I want to echo your 44,000. Thank you so much for that. But we do have 1.8 million children that are eligible and waiting for child care. Thank you. Thanks. Mackenzie Richardson on behalf of Thriving Families California Foundation, known as TFC, we thank the chair and the committee for your steadfast commitment to protecting child care spaces already appropriated by the legislature and for focusing attention on addressing the systemic barriers that limit the state's ability to serve the maximum number of families. At the same time, contractors cannot be expected to maximize contracts without the sustainable infrastructure necessary to do so. And as Donna Snyder noted earlier, community-based organizations have not received an increase to their administrative rate since the Great Recession, while the cost of doing business has risen dramatically, including double-digit increases in this year alone to liability insurance and workers' compensation costs. So I'd like to lift up that agencies need administrative and support service funding levels that provide the stable infrastructure required to maximize contracts, meet growing program requirements, and effectively serve families. And we look forward to working with the legislature and the administration to do so moving forward. Thank you. Thank you. Good morning. Maeva Renaud with Cadengo. We just want to say thank you so much to the Senate leadership for supporting the 44,000 child care spaces and also for your proposal to put non-LEA CSPP into Prop 98. I just want to emphasize some of the things that my colleagues have mentioned in regards to making sure that we are investing in our mixed delivery system in an equitable way because we are all serving the same children, California's children. And so, one, we just want to say that we're asking you to reject the cuts to the general child care or CCTR funding and AP funding slots. We're asking you to adopt a 15% flex factor to contract enrollment for center-based programs, maintain the $35 million to enable county offices of ed to implement universal pre-kindergarten, and in alignment with the ECE Budget Coalition, increase the COLA for the cost of care plus, and adopt the alternative methodology. Thank you. Thank you. Good morning, Chair and members. Alicia Hatfield, Every Child, California. We urge the rejection of reductions to general child care, and thank you for speaking out against that. We ask that uncontracted funds not be treated as lack of need. Families are still waiting, and contractors are navigating through structural and systemic barriers as quickly as they can to meet the need. We urge careful review of the site safety and emergency procedures trailer bill. We support strong safety standards. An implementation must come with funding and careful review so federal compliance doesn't become another unfunded burden on an already strained field. When it comes to COLA, I would like to note that CSPP is being moved under Prop 98. We urge fiscal support for true cost of care implementation, ask that AB 1981 passage be paired with fiscal resources. We also urge the preservation of higher reimbursement for three Finally as CSPP moves under Proposition 98 community providers need replacement contract flexibility CCTR should be part of the Proposition 98 solution Thank you. Thanks. Hello. Alexa Chavez, Ledge Advocate with UDW, here to just echo the comments made by our child care providers who spoke earlier today. and thank you for your thoughtful conversations around the disparities on the COLA's in the proposed budget and all of your thoughtful questions overall understanding that child care is essential for our economy. Thank you. Thanks. Good morning. Monique Ramos on behalf of the ECE Coalition, which represents all the folks you've heard already and most of the folks behind me. And I just want to underscore that, you know, child care is the thing that's going to help families when they face all the cuts, the CalWORKS cuts, the Medi-Cal cuts, and all the things. It's child care that's going to enable those families to go to work and be able to feed their families because, let's be honest, we know that the state's not going to be able to backfill everything that we had with the feds. And it's dealing with our wages and making sure that providers receive adequate and fair pay that means somebody doesn't have to work nine jobs in order to care for a baby. And so we appreciate the Senate's leadership in this, and we ask you to continue to push through negotiations. Thank you. Good morning, Senator. Karina Ligo with the Child Care Law Center. We want to first thank you for being the leader and having this great budget plan that includes 44,000 spaces for child care. You're right. You can't say we're having savings and also cut services. We also must ensure that child care providers get the support they need to continue providing and rich in care. As Senator Grove said, we can't take money away from providers, children, and families, and then move it somewhere else to balance the budget. So we urge the Senate Democrats, the Senate, to increase revenues and to ensure that the 44,000 spaces do start July 1, 2026 and include as many AP vouchers as possible to meet the urgent need of families. We also ask that the legislature reject any reduction to child care spaces that we have fought so hard for it. As you said, we can't go from 125 to 123. And we also ask that the legislature reject the reduction in the child care COLA and ensure parity between TK-12 educators and child care providers. We want to uplift that we support CES's CalWORKs trailer building, which is to harmonize child care eligibility and data sharing elements. Thank you. Thank you. Good morning, Madam Chair. Good to see you. Thank you, members, for this opportunity. Pamela Gibbs, representing the Los Angeles County Office of Education. I will lend my voice on behalf of our agency in support of equitable COLA for the early childhood education programs to mirror what's happening across Prop 98 for our K-12 schools. Also, urging your support for the infrastructure dollars that are being put in place for the childhood education programs. So we're happy to see that as a result of the 2025 wildfires. So thank you for that, and we urge your support in the final budget on that issue. Lastly, we urge your support, I'll say continued support, for the universal pre-kindergarten County Office of Education coordinator support for not only the planning and implementation grants for UPK, which is still fairly new, and also for the early education training and development funds. Many of our school districts have signed on to a letter asking our support and the support of other county offices of education to do so. So thank you again for your support. Good morning, Chair, committee senators. Debray Sanders with Blackie. First, we want to thank you and your leadership as well as the Senate for their proposal to, one, generate revenue as well as to fund 44,000 slots. Again, we request that the Senate deny the cut to the COLA and also work in whatever way to the extent possible to ensure that there's alignment with other education. because to align the COLA with at least the SuperCOLA or at least do the best we can to have them be close or at least keep up with inflation, which is 3.8% as of yesterday. We also really appreciate the investment of $11 million for infrastructure grants in relation to the Altena and Eaton fires and do request that there is explicit effort with the trailer bill to ensure that the historically black community of Altena is included and receives those supportive needs. there are still folks that have still not gotten what they need from those funds. We also ask that as we continue to work to move towards an alternative rate methodology that reflects a true cost of care that we continue to generate revenue to pay for it. Thank you. Yes, thank you. Good morning, Chair, committee members. Blake Johnson, Lomatha Child Action. I'm serving Sacramento County. I'm the Chief Strategy Officer. First off, thank you all for your leadership advocating for our field. I just want to say that we oppose the permanent reductions or shifts in alternative program funding while families remain underserved. In Sacramento County alone, we have more than 4,500 children remaining on the wait list waiting for subsidized child care. These reductions have the greatest impact on low-income working families who already struggle accessing affordable child care. AP programs are critical to California's mixed delivery system and provide the flexibility working families need to remain employed. We urge you to protect ongoing AP funding and continue expanding access for care for California's families. Thank you. Thank you so much. The subcommittee is going to take a 10-minute recess before we move on to Part B. Thank you. Okay, welcome back to Part B on the health portion of this committee. Let's turn it off with one issue under the Department of State Hospitals. Good morning, Madam Chair. I'm Mark Beckley, Chief Deputy Director of Operations for the Department of State Hospitals. I joined here with me today by my colleague Chris Eden who the Chief Deputy Director for Program Operations I be covering all of the May revision items with the exception of IST Solutions and the Independent Placement Panel Trailer Bill which will be covered by Ms Edens I'll start off with providing a program overview and then presenting our two BCPs, and then I'll talk about our premise adjustments. At the May Revision, the Department of State Hospitals proposes a total budget of $3.2 billion, which is an increase of 1% or 31.4% over Governor's budget. DSH's projected census at the end of the next fiscal year is $8,362, which is a decrease of 65 patients across our various programs. I'll now move on to our first BCP, which is our central utility plant project at Metro. The Department of State Hospitals requests to revert the existing authority of $50.5 million from the public buildings construction fund and provide $58.1 million in new lease revenue authority for the construction of the DSH Metropolitan Central Utility, or CUP, replacement project. This is a net increase of $7.6 million in overall authority for the construction phase. This project will replace the cup, which currently supplies steam for hot water and central heating, as well as chilled water for air conditioning to 32 housing and administrative buildings. The system is 38 years old and is nearing the end of its useful life. The project will install new chillers, boilers, pumps, and controls at the central plant and replace the existing steam piping system with a new hot water piping system. The cost increase is attributable to additional requirements identified during the design and working drawings phase of the project to ensure that safety, energy efficiency, and other code requirements are met. And it also includes replacing the CUPS roof and HVAC system, relocating the central control room, and providing dedicated and electrical heating sources to two buildings. I'll now move on to our next PCP, which is our Continuum Electronic Health Record proposal. DSH proposes $27.6 million in fiscal year 2026-27 to fund 68.6 limited-term positions and to implement the organization's EHR solution for DSH Coalinga and to begin readiness activities for DSH Metro and Atascadero. DSH also proposes to reappropriate up to $6.3 million from 2526 and proposes provisional language to augment project funding as needed to maintain the proposed 2026-2027 project schedule. The EHR will digitize and centrally store patient health information so that care can be administered quickly and accurately, enables hospitals to operate more efficiently, provides for continuity of care for patients who are moved from one DSH facility to another, and allows DSH to more easily analyze patient data for quality assurance and treatment improvement purposes. The HR will bring DSH up to electronic data standards found in most modern hospital systems. we'll now move on to our first premise item which is county bed billing reimbursement authority the county bed billing reimbursement authority pertains to hospital beds that dsh makes available to counties for the lantern and petrus short or lps and non and competent to stand trial patients who are a county responsibility DSH requests a reduction in county bed billing reimbursement authority of million in 2526 and $5.8 million for 2627 and ongoing to reflect the phase-in of LPS beds and projected bed utilization. Since last year, DSH has increased its available bed capacity for LPS patients from 556 beds to 625 beds. This increase was accomplished in two phases. 25 beds were added at the end of fiscal year 24-25, and additional 44 beds were added in February of this year. This reimbursement adjustment reflects the timing of the phase-in, bed utilization, and projected reimbursements to be collected. I'll now move on to a budget bill language item, which is limited public contract code exemption authority. DSH proposes budget billing, which to provide the department with contract exemption authority for online services and subscriptions, providing health care and pharmaceutical information that support the quality of and access to patient health care, where DSH historically has received only one bid for these services. DSH has descriptions with a number of vendors that provide online support to our clinicians, nurses, and pharmacists for patient care and treatment. For instance, our pharmacists currently use an online pharmacy formula that provides them with the most up-to-date medication information, including flagging negative medication interactions. Another important online subscription is for our nursing plans. This is a suite of tools that provides our nurses and level of care staff with up-to-date, evidence-based clinical decision support and the ability for nursing care plans to be generated from this content and then tailored to our specific patient needs. This limited contract exemption language would enable DSH to quickly process contract amendments for online healthcare subscriptions and contracts so that there are not interruptions in services. In addition, we have experienced issues in the past where certain contracts are deemed to be IT contracts because this information is provided on the Internet. However, the vendor that we contract with or propose to contract with is not technically an IT vendor, creating challenges for the procurement process that has resulted in significant delays and prevented DSH's procurement of these critical resources. These services are essential and can contribute to delays in services of critical care for our patients, while DSH tries to work to secure alternative providers, and this could result in poor patient outcomes. I'll now move on to reversion of our prior year unspent funds. DSH proposes to revert $20 million general fund from the 24-25 fiscal year in operating expenses and equipment, where contracts were not fully utilized. And then finally, for the workforce development premise, DSH proposes to use Behavioral Health Service Act funds to support its existing workforce development programs, including psychiatric residency, fellowships, and psychiatric training programs in lieu of general fund. In order to make this change, DSH requests $10.3 million general fund reduction in 2026-27 and a $10.9 million reduction in 2027-28. And then commensurate increases in BHSA reimbursement authority The BHSA funds would be received via an interagency agreement from the Department of Health Care Access and Information In addition to that proposal DSH also proposes $3.8 million in 2026-27 and $3.5 million ongoing in BHSA reimbursements to support an additional cohort at DSH NAPA for its psychiatric training program called our Fast Track Program. This would provide an additional 30 psychiatric technician assistance to increase the psych tech workload at NAPA. And this would help address a current 39% vacancy rate that we have for psych techs at NAPA Hospital. I'll now turn it over to Ms. Edens to address the IT solutions and IPP-TBL.
Hi. Chris Edens, the Chief Deputy Director for Program Services. This is the incompetent to stand trial solutions issue. First up, the department is reporting a $59 million reduction to the one-time prior year fiscal year 23-24 savings of $114 million reported in the governor's budget. This is related to the DSH funding infrastructure program. In addition, the department is also reporting an additional one-time savings of $11 million in fiscal year 25-26 and another $8 million in 26-27 one time related to updated program activation schedules of our DSH diversion and community-based restoration programs. The cumulative total savings for all IST-related programs across both Governor's Budget and the May revision are $55 million one time in fiscal year 23-24. $128.8 million one time in the current year and $102.2 million one time in 26-27. In addition, the department is requesting to realign $10 million in IST solutions funding in 26-27 and ongoing to, one, support increased statewide IST bed capacity at the Placer County Jail-Based Competency Treatment Program, totaling $3.9 million and to correctly reflect funding of $6.1 million for the conditional release program to support a 24-bed mental health rehab center as part of the continuum of care. I'll move on to the proposed trailer bill language. The department is proposing trailer bill language to remove the June 30, 2026 sunset date for the independent placement panel program. The independent placement panel was piloted as an independent panel to improve con rep access and participation for primarily not guilty by reason of insanity and offenders with mental health disorder commitments. The IPP could thereby expand the availability of state hospital beds for IST individuals by facilitating discharge of DSH patients to con rep for commitment types with historically longer lengths of stay. Overall, this pilot was successful. the independent placement panel largely met its objectives with increasing step-downs to the conrep continuum of care, providing standardized neutral and quality reports to the courts, and increasing public safety. The requested trailer bill will allow this effective program to continue ongoing. That concludes our testimony. Happy to take any questions.
Anything to add? On the public contract code exemption, how many contracts will be exempt?
I don't have an exact figure for you. We could definitely get that.
Is the authority to limit all of them?
Yes, for any... of our contracts that involve an online electronic subscription specifically for health support and information, that would exempt those contracts. So we do have the exact number, just not right now. Yes, we can get the number of, yeah, that's what we do.
And for how long?
This would be in perpetuity.
Okay. And I know you started to share about the impacts if we don't do this. Can you do a little bit, is it for people who we are contracted with right now because we need to renew them to continue care?
Yeah, it would apply to existing contracts as well as any future contracts. The problem that we run into is we may have something like the online pharmacy formulary, right? And that is something that created some delays because the vendor themselves do not define themselves as an IT vendor. They define themselves as a services vendor. So when we go out to contract for those type, we go out to contract as a services vendor. DGS and CDT in reviewing the contracts will sometimes say this is actually an IT contract because they're providing their services through an IT mechanism. through the internet. And so there's a lot of back and forth with, you know, DGS and CDT as well as with the vendor. And I think, you know, really for a lot of these vendors, what's confusing to them is since they don't see themselves as an IT vendor, there's a lot of separate terms and conditions that apply to IT contracts that don't apply to general services contracts. And so just, you know, kind of like educating them on these terms and then, you know, kind of like communicating with, you know, our control agency partners in terms of, you know, some of the concerns that they have. There's just a lot of back and forth that happens, and that does contribute to delays. The second thing that we see is sometimes the vendor will just make a really simple technical change to their platform that may trigger a contract amendment, and sometimes those contract amendments just can get held up or delayed. And, you know, those we see should be processed fairly quickly, especially to avoid interruptions. But we're specifically targeting just contracts that are providing health care medical information online, right, and support because of the dangers of the interruption of services and patient care. So that's why we're looking for this very narrow exemption to apply to just health care contracts that, you know, provide online services. Because the amendment part, you wouldn't have to go through the whole process just for an amendment on a contract, would you?
It depends on the contract.
Sometimes, yes. Sometimes DGS or CDT, depending on the scope of the contract change, may have to go through a review by them. And then, again, it can just trigger questions and delays in executing the contract amendment.
Okay. The reversion of unspent funds, this is from two years ago, and I think we just got updated information just on clarity of this. So we knew these were unspent last year.
No. Well, we have just done our reconciliation of prior year funds. These funds technically could be encumbered for an additional year, but in our examination we're really comfortable that the amount of funds that we've identified to date are available and can be reverted back to the general fund early.
When did we come across the unused funds?
We do monthly sort of like projections. So in you know we usually take a really robust snapshot in the middle of the year around December kind of like determine how close or far off we are with our prior year spending levels And then we kind of revisit this monthly leading up to the May revision So when we looked at the numbers you know we identified that we would have sufficient money So we decided as a prior year budget solution that we would propose this.
This wasn't, so it wasn't made aware to the department in last year's May discussion that this was going to, because this was already unspent last year.
Yeah, well, yeah. I mean, last year, and that's, I mean, with these contracts, we do a lot of projections about utilization and, you know, what the hospitals may need. But we're not comfortable with reverting the funds in that current same year because, you know, they still have plenty of time to bill and expend those funds. So, you know, looking back one year is probably safe where we do have a good understanding of what's going to be saved and what's going to be spent. And so, yeah, we're in that place now.
I'm going to hold that item open. Thank you. Move on to DHCS.
Good morning, Madam Chair. Michelle Boss, Director of the Department of Health Care Services. I'm going to speak to issue two, the Medi-Cal local assistance estimate for the May revision. The department estimates Medi-Cal spending to be about 194 billion total funds, 48.6 billion general fund in 25-26, and 216.7 billion total funds, 44.9 billion general fund in 26-27. The May revision reflects a 2.2 billion general fund increase for Medi-Cal expenditures in 25-26 compared to the governor's budget. This increase is driven primarily by a delay in federal approval for the 2025 hospital quality assurance fee, federal funds repayment and deferrals for state-only populations, increased health care costs for managed care and fee-for-service. The Medi-Cal shortfall in 25-26 at the May revision is estimated to be $4.2 billion general fund. In terms of our caseload, we are projecting a caseload of about $14,300,000 in the current year and in the budget year, 13,800,000 individuals. The May revision projects Medi-Cal general fund expenditures of $44.9 billion in 2016-2017, a decrease of about $3.7 billion compared with the revised 25-26 expenditures. This decrease is primarily driven by reduced costs resulting from some of the budgetary proposals to save general fund, lower managed care based costs associated with a projected decline in caseload, and revised timing assumptions for the hospital quality assurance fee program. The major proposals in the budget and major proposals related to general fund spending are the managed care organization tax We are proposing a renewal of the tax to generate about billion in annual dollars And I know that an agenda item for later so I will be brief H.R. 1, the May revision reflects that about 44,000 individuals will be disenrolled in the budget year. At Governor's budget, we had projected 233,000 individuals. So through the work on our medically frail exemption and CalFrosh ABOD's exemption, we were able to improve the number of individuals maintaining coverage as a result of H.R.1. We have a proposal to transition individuals with unsatisfactory immigration status to fee-for-service, and I know that is another agenda item later for today. We have a proposal related to Medi-Cal efficiencies, a general fund reduction of $68 million in 26-27, increasing to over $550 million in 29-30. And this relates to strengthening utilization management controls for applied behavioral analysis and transportation in the Medi-Cal program. The budget also includes general fund savings related to addressing the projected budget shortfall. And again, those are discussed in more detail later in the agenda. And that concludes the general comments on the May revision Medi-Cal local assistance estimate.
And if you want to, if it's, I know we're going to dive more into the budget solution, so if you want to save those comments for issue eight, we can. But if you have overall comments.
Min Lee, LAO. So we believe that the underlying caseload and cost projections reflected in the May revision estimates are broadly consistent with the long-run trends. Therefore, we recommend the legislature to treat the baseline estimates as a reasonable starting point and focus its attention on the major proposals. That said, we would just mention that May revision continues to show sizable growth in per-enrollee spending in areas like managed care rates and pharmacy spending. Therefore, over the longer term, the legislature may wish to better understand what's driving these cost increases. It's also the second consecutive year where the Medi-Cal budget in the current year has seen a sizable upward adjustment. And so, again, the legislature may wish to work with the administration to explore potential refinements to Medi-Cal budgeting. Thank you.
Director, I have some other questions. As I mentioned, Issue 8 will cover, will dive into deep in those budget solutions. I wanted to talk about the department's recent decision to forego dialysis treatment for the emergency Medi-Cal only. I know that's not being discussed here, so my first question is, is this a budget solution? Are we saving dollars by doing this?
Thank you, Madam Chair. Tyler Sadwith, state Medicaid director. This is not a budget solution. As context, the department has been engaging with our federal partners at CMS since 2020 regarding our state-only programs where we've expanded Medi-Cal coverage to individuals with unsatisfactory immigration status. These reviews have entailed CMS reviewing our methodologies for claiming appropriate federal dollars related to emergency Medicaid services for which federal financial participation is available for individuals with unsatisfactory immigration status And historically, we had claimed outpatient dialysis care as emergency Medicaid, pursuant to our best understanding at the time, and we drew down federal matching funds accordingly. In late 2025, CMS clarified that outpatient dialysis is not considered emergency Medicaid for the purposes of drawing down federal matching funds for Medicaid members with unsatisfactory immigration status. They directed us to change our claiming processes. And as a outpatient dialysis care for individuals enrolled in restricted scope. So it's unrelated to the budget. It's a new federal clarification from this administration.
Can you help me? I've been trying to – this is a new issue that just came across, so some questions may not come out appropriate, so I'm learning as we're going. If it's federal guidance but other states are continuing coverage of that, Why is California interpreting it a different way?
So I'm not aware of... 21 other states we're seeing are still covering outpatient dialysis. But it's the department's stance that this is federal guidance that has to be done.
Thank you, Senator. Because there's a lot of stakeholders that are...
Yeah, I'm not aware of 21 other states that are doing this today. It is federal guidance that has been provided directly to California on a one-to-one basis. This is not federal guidance that was published nationally. It was provided through, you know, under the sort of purview of the ongoing review that CMS conducts on every single quarterly CMS64 claim that we submit to certify federal funding.
Okay. What's the cost in the general fund impact to switching only to hospital dialysis?
We don't have that at the moment, but we are working on it. It's been requested earlier this week.
Director Q, was there analysis run on the impact of the changes before the change is being implemented? Thank you, Madam Chair.
I'm Ying-jei Huang, Deputy Director. We do have that. We just don't have it, but we could provide it as an action item.
Okay, so an analysis was ran?
We did have to, yes, we did have to run an analysis of the claims that we claimed under, incorrectly, under the emergency category. So we do have this information and can provide that.
So, sorry, let me rephrase my question. My question is on the analysis of the impact of this change, not the analysis of claims.
We do not have that available, but we could take that as an action item.
Was it run? I know you don't have it here, but was an analysis done to show the impact of this change?
And by analysis, you mean impact to members. I think based on kind of it was a federal audit on claims, and so we have the audits of the claims and the claim available. I think we can take back kind of the question on what does that translate into an impact to members.
And also the cost of the general fund.
But we haven't ran that yet. We don't know that information yet.
Not at this time. When does this go into effect?
Or did it already go into effect? The guidance has... It's already been updated just last month.
Okay. So we sent out a guidance, but we don't have the full impact of it just yet?
That's correct.
As Michelle and Tyler indicated, this was a financial management audit of the actual claims. So we have the claims information, but understanding at this time we have not ran an analysis on the impact on the members.
Okay. Director, let's talk numbers a little bit. I'm just wondering, we keep talking about how Medi-Cal costs are just booming so much. An individual who is now only accessible, able to get dialysis in a hospital in emergency cases, is going to get sicker. I don't think they'll be able to go to the hospital three times a week. Most dialysis patients, my tío, my uncle, goes three to four times a week. I don't think you can do that in a hospital. You're going to get sicker, and they're going to go into the hospital even more and more and more. Is it a safe correlation to then draw to say this is going to cost us more on the end run?
If people are going to get sicker. I think one could come to that conclusion, yes.
Okay. But it's the stance that this is a federal requirement just for California because it was a one-on-one guidance, not an actual CMS, whatever. We have our own APLs, our whole guidance letter to the whole states. It's just California has to do this.
That is correct, Senator. We're not aware of CMS issuing national guidance on this. CMS provided this direction through their review and audit of our quarterly claim for federal funding.
Could you help me explain from my knowledge what we follow from CMS that is an actual policy change versus, hey, you, California, you need to do this. What is our obligation to follow two separate kind of guidance that are more formal guidance?
Generally speaking, we follow guidance that CMS provides in a number of different ways. And this can include, you know, guidance that they publish in various formats, such as a state Medicaid director letter, a state health official letter, a informational bulletin. They have regulations that they promulgate. And at times they also do provide, you know, direction via, I guess, email correspondence. And through this ongoing review of our state-only program where CMS has issued and continues to issue deferrals of federal funding that we submitted to CMS saying this is eligible for federal funding, including dialysis as an emergency claim. And CMS then provides feedback to DHCS through meetings and through written instructions notifying us that certain claim lines or certain claims or certain types of claims are not eligible for federal funding because in this example, they're not included in the definition of emergency services. So this is through a formal review process of the mechanism by which we draw down federal matching funds and discuss the eligibility of those federal matching funds with the CMS
oversight team on their financial management review team Okay I would love to get confirmation if in fact other states still are paying getting Medicaid And so the option here, if it's our interpretation that the federal government is asking us to do this, in order to provide continued coverage of outpatient dialysis, That would be a general fund state coverage only because the interpretation is that no federal match will come down.
Correct.
And Madam Chair, one also clarification on impact.
This would only be for the restricted scope populations for folks impacted by the adult freeze. Oh, no. So it's not the broad UIS population. They have full scope state funded coverage of this. This is just for the UIS that don't second the tool. Because of the freeze.
Yes. Yes. So previously it was the two million individuals. I know. This is for the images.
They will still have access to that. This just impacts that we don't claim.
But more and more people are going to fall off of that.
That's accurate.
Recognize. So more and more people are going to fall into the lack of coverage here.
OK.
Give me a second here. Can you, Director, can you give me an update on our, we're seeking approval from the CMS and the Prop 56 dental rates sometime in the fall? Are we supposed to hear back sometime in the fall regarding?
So by the end of June, since these will go into effect in July 1st, we need to do a public notice of the proposed change in rate. And then by the end of September, so before the end of the first quarter, we have to submit to CMS what we call kind of essentially a rate kind of evaluation. respond to feedback from anything we heard during the public comment process, and that's kind of the formal process by which we would make these changes. In our report that we're sending, you know, because stakeholders are sharing that a lot of providers are going to leave the network in droves, CMS is going to be reviewing if we have adequate coverage in that.
Where are we anticipating CMS to share given our changes here and that impact there?
So just maybe a little bit more on the analysis that we have to provide. Based on the public feedback, we respond to the public feedback, the historical trends, provider participation, and service utilization. And so that will then be submitted to CMS. And then based on kind of their review and engagement with the department, kind of understanding whether or not they will approve the rate reduction.
Is our review, is the summary of our review or the department's perspective that the changes in rates are not going to have an impact? And is that the report we're going to be sending to CMS?
We haven't completed the report yet. It's not due to CMS until the end of September.
Okay. For later. Okay, we're going to move. So that was already or I'll hold it open regardless. Moving on to issue three. Issue three is the November or the, excuse me, the 2025 May revision family local assistance estimate.
The department estimates the family health spending to be 292 million total funds 265 million of that general fund in 25 and growing to 297 million total funds 275 of that general fund in 26 Really no significant changes with regards to the programs covered in the family legal assistance estimate.
Hold open, move on to issue number four. Issue 4 is the managed care organization tax and proposition 35. The May revision proposes to renew an MCO tax as of January 1, 2027 that conforms with the new federal requirements in H.R. 1. The budget reflects net revenue of $575 million in budget year, $2.3 billion in each of 27, 28, and 28, 29, and $1.7 billion in 2930, so an annual amount of about $2.3 billion. Funds would be used. $2 billion of the $2.3 would be used to support the Medi-Cal program, provide just general support to the Medi-Cal program, and about $300 million annually for the targeted rate increases that went into effect in 2024 to maintain 87.5% of Medicare rates for primary care, maternal care, and non-specialty mental health. For background today, the department administers the MCO tax consisting of two components. We have a component authorized by AB 119, which is subject to Proposition 35, and a component authorized by SB 136 and AB 160, which is not subject to Prop 35. Both of those components sunset at the end of the calendar year, so December 31, 2026. Proposition 35 requires the state seek federal approval to continue a Proposition 35 tax on MCOs on January 1, 2027 that is substantially similar to the current tax and caps the annual non-Medicaid tax liability to $36 million. H.R. 1 enacted eight months after Proposition 35 passed drastically changed the federal landscape for health care-related taxes and significantly constrained state options. Among the changes, H.R. 1 prohibits taxes that assess higher tax rates on Medicaid plans than commercial plans or otherwise disproportionately burden the Medicaid plans. For California, the H.R. 1 prohibits us from continuing a tax on MCOs that is really structured anything like what is authorized in Prop 35. In order to comply with both Proposition 35 and H.R. 1, the administration proposes to seek federal approval of a renewal of an MCO tax with two components. A Proposition 35 tax that is substantially similar to what is authorized today, but is not compatible with H.R.1. And then a separate component that is substantially dissimilar that is compatible with H.R.1 and requires legislative authorization via a two-thirds vote bill and is not subject to Proposition 35. We anticipate this approach will result in federal disapproval of the Proposition 35 tax component and approval of the non-Proposition 35 tax component, which would be compliant with H.R.1. The administration does not see a path to obtaining federal approval for a tax on MCOs that is both compatible with Proposition 35 and H 1 The administration proposes to comply with Proposition 35 requirement to submit a substantially similar Proposition 35 tax despite the expectation of disapproval. Additionally, and crucially, which is very important, Proposition 35 does not prohibit the state from seeking another MCO outside of Proposition 35. Today, again, we have a tax that is part of Prop 35, and then we have MCO taxes that are outside of Proposition 35. The May revision proposes to use, again, the funds from the renewed tax to support the Medi-Cal program and then maintain those 87.5% Medicare tax levels for primary care, maternity, and non-specialty behavioral health. The May revision also includes an additional $1.9 billion in MCO tax revenue to support Proposition 35 in 26, 27, and 27, 28 to support payment growth in the Medi-Cal program related to base rate increases compared to rate increases in 2024 or rates at 2024. Maybe I'll pause and see if there are questions. We could do the whole MCO. So just in terms of the $1.9 billion, we were tracking, I think everybody was tracking that there would be excess revenues compared to what Proposition 35 spells out for calendar years 25 and 26 in terms of the allocations. And then in addition to that, we were able to get a higher FMAP rate, federal matching rate for these expenditures. So needed less Proposition 35 MCO tax revenue. So that's where the $1.9 billion came from. That concludes my testimony. Jason?
Jason Concenturo, CELEO. So as with any MCO tax item, there are a lot of technical issues here, and we're happy to work with the committee to help understand those. But I wanted to focus my testimony really on the two key, really, policy issues before the legislature as under the administration's proposal. The first key policy issue, and really the first key tradeoff, is around the size of the tax and how much the tax is charging on private enrollment. So previous MCO taxes have largely derived the revenue from drawing down more federal funding. This is because the tax on Medi-Cal was very high and the tax on private enrollment was very low. And this is exactly the structure that H.R. 1 sought to change. And so the effect of the administration's proposal would be to have an MCO tax that is proportionate between Medi-Cal and non-Medi-Cal enrollment and affect private health insurance. The administration anticipates the MCO tax would have a per member per month tax rate of $8.85. And, again, the part that's on private health insurance enrollment would fall on private insurance to pay, And at least some of the costs probably would be passed on to consumers in the form of higher premiums. If you assume all of the cost is passed on, you know, average premiums are about $600 a month. That's a very rough rule of thumb. So in our rough rule of thumb, that $8.85 per member per month is about a 1% to 2% increase in premiums. That's a very rough sort of gauge of the sort of cost that would be entailed on consumers. So really the issue before the legislature is, is this acceptable? Is this level of cost acceptable given the sort of higher resources and continuing to have a reasonably sized MCO tax. Conversely, the legislature might be interested in going further with the MCO tax, given the fiscal constraints facing the state. And so another area of inquiry the legislature could explore here is whether there is additional capacity to expand the MCO tax. If so, how much capacity is there, and what would be the associated cost on private health insurance? Again, these would be the sorts of areas you could think about in this first area of trade-offs. The secondary of tradeoffs are about how to use the MCO tax money. So historically, the MCO tax was used for one purpose, which was to help pay for the existing Medi-Cal program. This is, in effect, offsetting general fund spending. In recent years, and also under Proposition 35, some of the tax had been intended to use for provider rate increases, basically, and other certain increases in health programs. by proposing an arrangement where we have an MCO tax outside of Proposition 35. The administration is now proposing, in effect, to use the MCO tax money to support existing services and, in effect, as a budget solution to offset general fund spending and Medi-Cal. More to that historic approach. There is a smaller $300 million increase that would be supported by the MCO tax that was approved back in 2024. But by and large, most of the money would be used to offset general fund spending. Whereas under Proposition 35, really, most of the money would be used for provider rate increases. And so this is the second tradeoff for the legislature. Is this the use of the funds it wants to pursue? On the one hand, using the funds the way the administration is using it, by offsetting more general fund spending, could help mitigate the need for additional budget solutions and help preserve services in Medi-Cal. On the other hand, it doesn't fund provider rate increases that had been of interest to the legislature. So the legislature has options to explore there in terms of whether or not it wants to consider different uses of the funds. We also wanted to emphasize that there are some provisions in Proposition 35. For example, there's a provision that allows amending Proposition 35 with a three-fourths vote in each house of the legislature.
that allows amendments, including potentially amending the limits on private enrollment in terms of the tax rate. And so there could be ways the legislature could explore to pursue a reasonably sized MCO tax, but it's still part of Proposition 35. But again, there are tradeoffs here. Doing that approach would mean that a lot of the funds would be for providing those increases under Proposition 35 would not be available as a budget solution. As we've emphasized, if you reject certain budget solutions or modify them, you'd want to find dollar-for-dollar reductions elsewhere. One other final point is that we're still getting more information on the specific proposal. This is sort of less about the specific fundamental policy tradeoffs and just more getting more information. We just recently this morning received the trailer bill, which we're reviewing, and then there's additional backup we think could still be warranted. We're working with the administration to get all that information ahead of the legislature's decision on this action.
Thank you, Jason. I also don't have, and that was one of the questions I even asked Scott because I was looking for the trailer bill language, but we just got it. So I don't have questions on that because I haven't reviewed it just yet. So my questions are also in the whole just how we're setting this up. So let's dive into it. So, Director, you already clarified that there's no provisions in Prop 35 that prevent us from submitting a whole separate other MCO tax so long as we submit their version or regardless if we submit their version?
So Proposition 35 requires us to submit a proposal to CMS that is substantially similar to the tax authorized today under the Proposition 35 framework And that why we submitting two components
Okay, you said components, so it's one MCO tax with components two?
One renewal package to CMS. They consider this a tax on MCOs. It doesn't matter. Today we have three different – we passed today's MCO with three different trailer bills. From CMS's perspective, it's one.
One. Okay, so that's why you're, two MCO taxes were submitting, it's components different with one existing. Okay. How much is going to go for general fund versus the 87.5% provider of Medicare?
So the tax generates $2.3 billion in revenue. $2 billion of that would go to support the Medi-Cal program and about $300 million to support the 2024 targeted rate increases.
Or $2 billion would go to the general fund because there's, I don't know which Medi-Cal program we're saving.
Would be used to support the general fund component of the Medi-Cal program, but would be used to support the Medi-Cal program.
Are we saving any cuts that are being proposed in the Medi-Cal with these additional $2 billion that we found?
As will be discussed later, we have additional proposals related to general fund savings. So overall, the May revision reflects about $3 billion in budget year and out years in terms of what we call general fund solutions.
So this is the MCO tax revenue in addition to proposals to reduce general fund expenditures.
So overall, we are actually reducing the program by $3 billion.
So it's not to support the Medi-Cal program because we're cutting more from the Medi-Cal program.
If without this revenue, there's potential that we would have to cut another $2.3 billion.
And I agree that if we are taking a budget solution off the table, we have to replace it with a budget solution. There's no way we can survive without finding a budget solution. The governor is proposing three different types of revenues amounting to the same amount that the Senate has proposed. The Senate is proposing approximately, well, a little bit more. The Senate is proposing $5 to $8 billion in revenues with our fair share plan. The governor is proposing $2.3 in this and $1.1 in something and $1.8 in the other one, which is the digital sales tax and the capping on corporations. Two of the three of the governor's proposal's revenues have a direct impact on consumers, increasing the cost to everyday Californians. The capping on corporation lupos is the only one that does not have a direct. The digital sales is a direct increase on taxes on Californians, and then the MCO tax, this new proposal, has a direct impact on increasing premiums for everyday Californians. The Senate's proposal that brings in $5 to $8 billion does not have a direct consumer increase. It just brings in revenues and, in fact, helps taxpayer dollars to not have to pay for people being on Medi-Cal when corporations should pay for the health insurance. There's a very distinct difference in how the Senate proposed bringing in revenues and how the administration is proposing to bring in revenues with the caveat that we're not going to increase people's costs on things. So as we're looking at bringing in revenues, Director of Department of Finance, did we keep in mind proposing revenues that are not going to increase costs for everyday Californians? Because, like I mentioned, two of the three do. Was that a consideration?
Nick Mills Department of Finance We understand that the legislature may have other proposals but I would say on the MCR tax specifically you know the federal government has really forced our hand here And the only way for us to continue using this financing mechanism is to tax Medicaid plans and commercial plans equally.
100% recognized we can't go outside of that. We need revenue creations. Are the cost increases to everyday Californians being taken into consideration when we're looking to create new revenue streams?
I think we're looking at a number of factors, but we believe we've proposed a balanced approach of revenue solutions and some new reductions.
So the cost per member per month is almost $9. It's $8 and something that comes out. to $110 per year, for family affords $440. Is it the Department of Finance or the department's stance that this is an appropriate increase on Californians given that health insurance costs are just skyrocketing?
We fully acknowledge that these are difficult choices that have to be made, but we think this proposal maintains the Medi-Cal program at this very fiscally challenging time.
So it's the department's stance that the cost-benefit analysis here,
there's more benefit in bringing revenues to offset general fund costs versus increasing premiums for everyday individuals who are not going to get a rate on return on this. It's just a balance of the general fund. I think we strike an appropriate balance between affordability concerns and supporting vital programs for Californians.
Are we worried, Director, that employers are going to leave the fully insured market to the self-insured market because of this?
We did not complete that analysis.
Okay. All right. Has that question been asked before, or has that been taken into consideration? Is this the first time someone's asking you this? Is this the first time someone's asked you this?
That's a simple question. It's the first time we've been asked, but I don't know.
Okay, okay. How would you run an analysis to determine the risk of them switching over? Is there a way to determine that?
I don't think we can speak to that. That analysis is not in their vision. I can't think of a way off the top of our head right now. Outside of just anecdotally them saying this is what's going to happen.
We worked really hard. I mean, this is outside of, like, you know, last year we had hearings on the benchmark and increasing and the cost of what that was going to be per member. But there were direct return on investments, hearing aids, DMEs, fertility coverage, actual tangible direct returns to consumers of, like, hey, if you pay a little bit more here, this is where you're going to get in return. we're asking Californians to pay 1-2% increase which amounts to $110 a year not for a direct service it so that we can balance our budget And we are getting attacked You know my colleagues on the other aisle like to attack that we are mismanaging or you know mismanaging our dollars and we're just going to increase for what? LA County is putting a proposal that's going to raise our sales tax. And they're saying it's going to be directly for X, Y, and Z for services. A bit of a more correlation to it, this one's a little harder. With the MCO previous tax, while I was never of the Prop 35 fan, I felt that we could use a lot of those funding for actual Medi-Cal services and pay for that. So I was behind that. This one's, I'm struggling to find that direct connection, and I recognize, I hear you, Director, wow, there's no direct $2 billion investments in Medi-Cal. If we don't do this, there's potential more cuts. I don't know what else we can take away from people, but I guess there's a longer list of things that Department of Finance can propose to cut in terms of services for Medi-Cal. But there is a concern of this vast increase, of this increase in everyday Californians for premiums, where the department has worked really hard, or Cal HHS has worked with OCA and trying to decrease the cost. This goes against our commitment of decreasing healthcare costs of everyday Californians with this revenue creation. Jason? You raised a question about weighing different revenue options. I can't
speak to all the revenue options in legislative packages and others that are in the governor's budget, but I did want to share an additional factor I maybe didn't fully share in my testimony just to raise it as an issue for consideration. So even though this version of the MCO tax would be more proportionate, there still would be a federal fund drawdown. It would depend on how enrollment is distributed, but it would probably be more of maybe a third or 50%. I would have to see the backup to understand it more, but there still would be a federal drawdown. And so one of the advantages of the provider tax is, even though they will be more proportionate, as there still will be some additional federal funding coming to the state.
On top of the 2.3?
It would be part of the 2.3.
Okay. Yeah.
So, you know, that's sort of maybe one advantage in favor of these provider taxes, even though they will be more proportionate. So that's just another factor to weigh as you're weighing different revenue options. And, Senator, if I may, thank you. I just want to expand on the LAO because I was thinking about offering a similar point. I think provider taxes such as the MCO tax are a mainstay in the way that states across the nation help finance their Medicaid programs. 49 states have provider taxes because of the benefit of drawing down federal funding. So comparing this directly to a sales tax misses the nuance that it does draw down some federal funding to support it. And, again, the state has long used this to help support the Medi-Cal program in general to provide services to members.
Point well taken, and that wasn't the correlation I was trying to build, which is why I was saying I've been a fan of the MCO tax. I've been very supportive of the MCO tax because of the ability we've been able to fund an array of things, whether it's clinics, whether it's emergency physicians and increase. We were able to do distressed hospitals, direct impact into the Medicaid, Medi-Cal program. That's where I've been involved. fan of. This version for me is an increase on that provider tax with the less return on investment in programs of Medi-Cal. It's hard to justify that. If we're going to do that, I'd be more on your side if we're getting more for the state. When it's just going back to the general fund, I get it. And without a direct connection to services in the Medi-Cal program, that's where It's the difference where I brought up the sales taxes. I guess L.A. County people, yes, I'm going to pay more in a tax, but hey, I'm going to get coverage of X, Y, Z. Still, maybe, but that's the correlation they're drawing at least. My other question is in the H.R. 1 parameters, one of them is perhaps new or increased provider taxes post 2025.
This is a renewal of our existing MCO tax.
So we have one authorized and we have a transition period that has been approved by CMS,
and so we are renewing our MCO.
Even though it's an increase?
It's not because it's charity. It's on a class of our managed care organizations.
Okay.
But we're allowed to do this. It's not going to get shut down.
Okay. And then the other question is, this is with the plan that it's with the intent that this is going to be kicking in in January of next year. It's six months?
Correct.
We would get back to us that quick?
We can't estimate when CMS would get back to us, but that we would submit it in the coming months.
And then CMS. In the past, under other administrations, it was a similar timeline.
It would pass to the governor's part of June budget, submit a couple months later, and then it was approved ultimately. The last one, I think, was approved in December before the year started.
I worry about that given the $1.3 billion. They're freezing. It doesn't seem they're favorable to California. I'm worried that we're going to be in a situation where we're going to be short $2.3 billion because we banked on the federal government to approve this in time, especially as this is to help Medicaid issues that they think they were XYZ. So what is our contingency plan if it doesn't get approved in six months?
I would imagine at next governor's budget, we would be discussing probably a supplemental appropriation that might be needed or kind of what other options there might be.
Jason?
This is before my time, but my understanding is there was another MCO tax where there was a lot of uncertainty about federal approval. And I think the way the budget treated that is it assumed kind of no tax, and then when the tax was approved, it provided additional savings to the state. So an approach like that, depending on how it's designed, you know, that's an approach you could weigh. The challenge, though, again, is that that means you have to find the savings somewhere else. And if there's a reasonable chance of the revenues materializing, it means you've maybe overshot your solution. So that's the tradeoff you'd weigh there.
Right, okay, hold that item open, move on to issue number five.
So I'd like to begin by providing an overview of the positions and resources requested for implementing the behavioral transformation and then I can turn it over to the Department of Finance to discuss the proposed redirections The department is requesting in the behavioral health transformation BCP, permanent funding equivalent to 10 positions and expenditure authority of $41,816,000, of which $25,858,000 is behavioral health services fund dollars. The remainder is federal funding in budget year. These resources are necessary for the department to implement Proposition 1 passed by voters. The resources are needed for contractors to provide with the expertise to support the discovery and development of technological solutions and services to meet the department's goals for implementing behavioral health transformation as envisioned under Proposition 1. The department also needs project management resources and oversight resources to support this. So with this request, the department will be able to develop a few different external-facing services, including licensing and certification platforms for providers to enable seamless and improved provider functions, a behavioral health policy manual that is necessary for counties and stakeholders to sort of rapidly digest the Behavioral Health Services Act policy, and other digital solutions to help support stakeholders in the department with implementation. This is necessary to support legislative timelines, changes to statute, and policy development within the required time frames. and this will also support enhanced accountability, oversight, transparency, and monitoring, which are core pillars of the Behavioral Health Services Act.
Good afternoon, Madam Chair. Riley Thompson with the Department of Finance. I'll be presenting today on Behavioral Health Services Fund State Investments. So beginning in 2026-27, Proposition 1 allocates at least 4% of total revenue for the Department of Public Health for population-based behavioral health prevention programs, at least 3% of total revenue for the Department of Health Care Access and Information for behavioral health workforce programs, and the remaining amount for other state purposes. Previously, the state-directed cap was 5% of revenues, and it has since increased to 10% of total behavioral health service fund revenues. This has created new opportunities to support workforce and population prevention programs. For those workforce and population prevention programs, the May revision proposes $174.8 million for the Department of Public Health, $131.1 million for the Department of Health Care Access and Information, and $335.2 million for other state-directed purposes, including $10 million for the Commission for Behavioral Health from the Behavioral Health Services Act fund in 26-27 for the purposes described in Proposition 1. The May revision also includes 211.9 million behavioral health services fund in lieu of general fund in 26-27 for existing statewide behavioral health programs. The administration has carefully evaluated existing behavioral health programs supported by general fund within the parameters of Proposition 1. Identified workforce programs aid the overall behavioral health workforce continuum and allow flexible post-program placement within the state or counties. and identified population health programs support mental health and substance use prevention programs for underserved populations. In addition to reducing general fund costs by shifting to the Behavioral Health Service Act Fund these programs represent significant investments in the behavioral health workforce and prevention complementary to the new programming that will be enacted by the departments utilizing Behavioral Health Service Act fund resources Accounting for this shift the Department of Public Health will have million and the Department of Healthcare Access and Information will have $94.3 million to expend on new population health and workforce behavioral health programming. HKI will also continue to support BH Connect with their allocation. Funds for the Department of Public Health and the Department of Health Care Access and Information will be available through June 30, 2029. Accounting for the totality of the proposed expenditures of $335 million in 2627, there is an approximate ending balance of $22 million in 2627 within the Behavioral Health Service Act fund. In addition to maintaining a partial reserve, supporting programming that is scalable creates flexibility to align with annual fluctuations in revenue. That concludes my testimony. I'm happy to answer any questions.
Will?
Will Owens with the LAO. So first I just want to preface my comments with something, as you've heard many times before, as my colleagues stated, that given the state's budget condition, any alternatives to budget solutions that the legislature is looking for would likely need to be offset by budget solutions elsewhere. Again, just reiterating, while we recommend that the legislature maintain the amount of total solutions within the governor's May revision, the legislature may, with its different priorities, choose to change what those budget solutions are. That being said, our office is still in the process of reviewing the specific programs that are being proposed to be offset with the use of behavioral health services funds. but there remains a key question for the legislature is whether the proposed solutions are consistent with Proposition 1. Specifically, whether the programs proposed for offsets constitute eligible uses of those funds within the specific allocations. And second, whether the offsets are in line with the non-supplanting language that is located within Proposition 1. for the state allocation broadly, as well as some of the specific allocation components. So we've raised these questions with the administration and are working to make those determinations and are ready to provide technical assistance to the legislature as they consider this proposal. Thank you.
Thank you so much.
I think I need a couple more numbers. I mean, I think I need those numbers again. I'm interested in specifically, I think you gave numbers on the breakdown of new funding. Can you share those again? Yeah.
Sorry, for new programs.
Yes. So actually, let me real quick.
I think it's easier to sort of walk through, starting with the overall amount, accounting for the offsets, and then what that leaves us for new programming. So for the Department of Public Health, their total allocation is $174.8 million. There are approximately $55 million accounted for within the offset. And then that results in a total of $119.8 million for the Department of Public Health to expend on new programming. So that's the Department of Public Health. And then for the Department of Healthcare Access and Information, their total allocation is $131.1 million. And then they were anticipating a total of $36.8 million for the offsets. resulting in a total of million for HKIA to expend on new programming Perfect And then are for other state programs million of that is for the commission Where is the million going for the state program state directed purposes
What programs is that funding? So some of the funding accounted for within the offsets is for
the community-based mobile crisis services and then drug medical organized delivery system. So That's a total of $120.1 million for the offset amount. For the remaining state-directed portion, I would need to defer to my DHCS colleagues to present details on that.
Because we get 3% for any state legislative purpose, intent, and it sounds like all of that has been accounted for.
That's correct.
That is correct. So is it accounted with those programs that you've mentioned, or can you share a little bit?
Sorry, do you mind repeating the question?
Yes, so we get, of the 10% to play with, it's the 4% to public health, the 3% to H-CHI, and the 3% to state-funded purposes. Where is the 3% for state-funded purposes? What is it funding?
So Sabrina Adams, Department of Finance. So just to take it back, before the 3%, there was 5% of behavioral health services fund that was allocated for broader state-directed purposes. Throughout the years, various investments have been made through annual budget acts to various departments. That includes Department of Health Care Services, Commission on Behavioral Health, and other various departments throughout Health and Human Services or even outside. and those investments are supposed to be consistent with the overall goal of the then Mental Health Services Act, now Behavioral Health Services Act. Oh, so we publish, the administration publishes an annual Mental Health Services Act expenditure report, so we could provide that to your staff if you want additional details on sort of what is funded within that 3%. 3%.
Is there a proposal to fund new things under this 3%? It's an annual 3%, right? Yeah.
One of the examples would be the Department of Health Care Services Behavioral Health Transformation, BCP, that my colleague presented on. That would be funded with 3%.
Oh, I thought all that was outside of the 3%.
It's all within the 3%. That is one example of something that would be funded within the 3%.
So is that the way you're getting around the non-supplant language that you're utilizing only the funds under 3%?
So the particular portion of statute that you're referencing is related to ongoing funding. Because we are required to assess this funding annually via the typical budget process, that's done on a year-to-year basis, so it doesn't fall within that ongoing definition as the administration's assessment.
Got it. That's a sneaky... Okay, so long as we don't allocate it ongoing, we're not violating that provision.
as long as we approve it year by year.
That's the administration's current assessment, yes. Okay. And everything that is of what CDPH is getting, what HKIA is getting for supplanting from BHSF to general fund, sorry, vice versa, all that is within the 3%. It's not outside of that. So they have their 4% and 3% allocation respectively, 4% for public health and then 3% for HCI. So all of their associated expenses are within those. Okay, so then I'm still confused on the 3% of the Funded purposes, that's why I guess I'm still not clear on what is being funded there.
Will, do you have anything?
Maybe. No, I'll go to you first. Specific to the offsets, is that your question? Are we using the 3%? Is there any offsets in there?
Yes.
What programs are we?
Yes.
Okay.
So within the 3%, there is $120.1 million dedicated for offsets. 20.1 million would go to support the remainder of the non-federal share for community-based mobile crisis services through its authorized statutory date, and then 100 million would go towards the drug medical organized delivery system. And that makes up the whole four.
So it's two programs that are being used under the 3%.
Yeah, so there's maybe to break it down a little bit, there is about four, as the administration proposed under the BCP, about $26 million for the Behavioral Health Transformation BCP. Then there is an additional 120 in offsets, which is the community, as my colleague mentioned, the 20 for the community-based mobile crisis, the 100 for the Drug Medi-Cal ODS, and then there is a number of other smaller allocations across a variety of departments. altogether in addition to the reductions to the Commission on Behavioral Health, that $10 million that we heard yesterday, as well as the $6.7 million, totals out to that total 3%. So it's the BCP, the offsets, the reductions, and then various other programs.
Okay. So as it stands right now, there's no room to add anything else. The administration has decided how the 3% is going to be allocated.
That's correct, Steve.
amount has been allocated. Okay. Of the breakdown that you shared, here it is. Of the breakdown you shared, majority of the funding is going to go for new programs. Great. I'm wondering these existing programs that we're offsetting with general funds, are these programs that
ongoing programs? Are they limited programs? It's a mix of programming. So I'm happy to speak to
if there's like a particular program that you're requesting any information. I guess I'm just wondering, is there a scenario that we're going to need to continue to have this kind of breakdown moving forward? Or are these long-term programs, the majority of them? Yeah, it's a variety of
programming, I think I would just state that similar to what we discussed a little bit earlier, to the extent that there's any adjustments that need to be made because we're doing these assessments of this fund annually, we can make adjustments and modifications as necessary.
And for the BCP on the positions, given that we just talked about how a lot of these are offsetting current programs, the funding is for positions to help support the continuing implementation. But if a lot of the money is going for existing programs, why do we need more positions to help with existing programs that are getting funded with BHSF? The positions requested
in the BCP are really intended to support our oversight and monitoring of the county's implementation of the Behavioral Health Services Act. There are a lot of new, I mean, it overhauled the Mental Health Services Act There are massive new policy reforms and requirements that counties must meet pursuant to the BHSA and the positions requested are designed to oversee that in conjunction with other oversight that this team does for other county-delivered behavioral health services, including Medi-Cal and SAMHSA grant funding.
If the counties or if the full funding was available for new programming and it wasn't being partially offset to offset general fund, would the positions seem to increase because more funding would be available for new programming? Or does the 10 position match the current available funding for new programming?
The 10 positions reflect our need to do oversight pursuant to the Behavioral Health Services Act with respect to the possibility of new programming under the 3% prevention and the 3% state-directed, it doesn't bear anything.
Does it matter how much money is for new programs or existing programs?
The workload will be exactly the same to match the 10 positions.
That's correct, unless these new programs require tons of new additional oversight.
And I think our BCP is very much more focused on the local assistance or what is happening at the local county level, whereas these dollars that we're talking about here are more state level. And so our focus is really on kind of oversight at the local level county behavioral health departments and implementation of the Behavioral Health Services Act. These are a little bit different because it's kind of state operations or state programs.
Okay.
We're going to hold it open and move on to issue number six.
So I can provide a brief overview of the proposed redirection and turn it over to the Department of Finance for further detail. The department proposes to revert expenditure authority of $19.6 million in opioid settlement funds from HKI that was appropriated initially to support the CalRx Naloxone Access Initiative. As context, the department administers the Naloxone distribution project, which historically was paying $45 per unit of Narcan, which is a brand name of Naloxone that we were purchasing. To address the high costs of this naloxone distribution project, HKI was appropriated $25 million in the 2023 budget to support the development and actually to support the manufacturing of a low-cost naloxone product that can be used in lieu of that brand name. Instead of manufacturing naloxone, HKI contracted with a naloxone manufacturer for the department's naloxone distribution project to purchase at a lower cost, resulting in HKI no longer needing to use the funds as originally intended. In addition to that, the department requests one-time redirection of $35.4 million in the Opioid Settlements Fund to offset general fund to support the non-federal share of the drug Medi-Cal organized delivery system provided to Medi-Cal members with opioid use disorders specifically. And I'll turn it over to the Department of Finance for any of the further questions.
Are you able to answer number two? So that's what I'm... Oh, they're doing number two? Okay.
Hello, Chair. Liz Basko-Ceo with the Department of Finance. So I think the question was related to whether the OSF was an allowable use of the drug medical organized delivery system. And according to the National Opioid Settlement Agreement treatment programs for opioid use disorders that follow an evidence approach and that adhere to the American Society of Addiction Medicine are an allowable use of funds
and currently the Drug Medi-Cal Organized Delivery System operates with a model that aligns with the ASAM continuum of care. Okay. And do you have number three, too? Yes. The ending fund balance in 26-27 is anticipated to be approximately $13.5 million. Okay. Who will? Okay. Hold that and I'm open. Move on to issue number seven. Thank you. Issue number seven is regarding the transition of two million Medi-Cal members who have what the federal government calls unsatisfactory immigration status from our Medi-Cal managed care delivery system to the Medi-Cal fee-for-service delivery system. The May revision proposes this transition effective January 1st, 2027, consistent with new federal requirements. Specifically, this change is required under federal guidance, a state Medicaid director letter that CMS issued in September 2025, clarifying that federal funds available for emergency Medicaid services provided to individuals with UIS cannot be covered in risk-based capitated managed care and are only available in fee-for-service arrangements. This is a new interpretation of the Social Security Act that represents a departure from how CMS has historically treated this authority. To clarify up front, Medi-Cal eligibility is not changing, only the delivery system through which members receive care. And as context, as of January, approximately 700,000 Medi-Cal members received care through the fee-for-service delivery system. There are certain benefits that are only available in managed care, including enhanced care management and community supports, that are not technically available in the fee-for-service delivery system. However, there are some services that do provide care coordination and do provide support very similar to ECM that are available in the fee-for-service delivery system. So this impacts approximately 2 million Medi-Cal members who have unsatisfactory immigration status. This includes undocumented individuals, lawful permanent residents within the five-year waiting period before they're eligible for full-scope, federally-funded Medi-Cal, and individuals who are permanently residing under color of law or pre-call. In terms of next steps for members, the department plans to send a general notice and a set of frequently asked questions to members in early fall. We are going to vet these with stakeholders for feedback. They will be vetted for readability, and they will be translated into 19 Medi-Cal threshold languages. The department plans to work closely with Medi-Cal managed care plans on, you know, ensuring that the transition across delivery systems is seamless and that care is not disrupted, looking at prior authorizations for services, looking at care coordination needs for, you know, highly complex or in special needs populations. The department will operationalize changes to our eligibility system in late December for our current UIS members to take effect January 1st and ongoing for new members. These changes do not impact county social services workload. The main revision proposes language that would authorize million in state operations to the department to support the transition These funds would allow the department to expand capacity for current fee functions that we do today but anticipating a greater volume. Things like utilization management reviews, member noticing and communications, fielding inquiries and providing technical assistance directly to providers that are interested in participating in fee-for-service, and additional workload related to analytics and forecasting. These funds will also support the department to stand up new capacities to really support the transition across delivery systems, including collaborating closely with managed care plans, dedicating new call center resources that are available to members to help them navigate the transition and find a provider, and new guidance directed for providers to clarify how the fee-for-service benefits can help support case management and care management like ECM. The main revision also includes $33 million in local assistance for data system costs that are typically captured in local assistance, primarily anticipating greater volumes of claims processing through our fiscal intermediary. I want to clarify a couple things about what's not changing. Members will retain their eligibility if they renew on time. Access to medications and pharmacy will remain the same through Medi-Cal RX, which is already a fee-for-service delivery system. Specialty behavioral health services like specialty mental health and substance use disorder will remain available and delivered through the counties. That is not impacted by this new federal guidance. Long-term services and supports, including home and community-based services, are not impacted. And children and pregnant women who retain dental benefits as part of their Medi-Cal eligibility will continue to receive dental care predominantly through the fee-for-service delivery system as it exists today. I want to take a moment to talk about how we're approaching this transition, given the serious impact it has on members. We are committed to mitigating the impact and ensuring a seamless transition across delivery systems for these 2 million people. We are planning to collaborate closely with managed care plans to review authorization data so we can incorporate that into our implementation plan to avoid disruptions or interruptions in care across transitions. We're developing scripts and frequently asked questions materials to support member-facing services and interfaces, such as call centers. We're actively conducting analytics to identify the extent to which Medi-Cal managed care plan network providers are enrolled with us as a fee-for-service provider and actively participating in the fee-for-service delivery system. This is helpful to help us understand what the gap is so we can do outreach, have plans do outreach, and have ECM workers do outreach to encourage those providers to accept fee-for-service so we can close the gap. And so we're looking at that provider network overlap at the level of the county and at the level of the plan within each county. We are committed to ensuring ECM providers are either enrolled in fee-for-service or have all the technical assistance they need to enroll in fee-for-service so that they can deliver and bill for the community health worker benefit. It's not exactly a one-to-one, but it will be a key resource and a key asset so members can continue trusted relationships. their UCM providers to help navigate that delivery system. We're going to conduct targeted provider outreach to those providers that are planned network providers but not enrolled in fee-for-service to help guide them to enter the fee-for-service delivery system. In terms of the sort of fiscal impact, the top line is that the May revision assumes $583.8 million total fund, of which $471.6 million is general fund in budget year. And ongoing, the fiscal impact is $1.5 billion, of which $1.2 billion is general fund in savings. This savings model considers multiple factors, leveraging primarily calendar year 2026 managed care data as a data source. And so just to highlight some of the major drivers of the savings and costs for full transparency, there are general fund savings from no longer covering ECM, both in budget year and ongoing. There are general fund savings from no longer covering community supports. There are general fund savings from not paying managed care plans for administrative load components. There are anticipated general fund costs that are projected due to anticipated higher utilization of certain services in the fee-for-service delivery system after members transfer. There are general fund savings of lower utilization of other services in the fee-for-service delivery system, including a chilling effect or a dampening effect related to immigration pressures right now in today's environment. There are also additional general fund savings related to qualified noncitizens who will be newly designated as having unsatisfactory immigration status effective October 1st due to H.R. 1. We recognize that this transition represents significant risk to members. I just want to highlight quickly also budget volatility. We monitor cost and utilization and will develop budget projections based on the best information available through this new fee-for-service delivery system, which doesn't sort of suppress volatility like a managed care delivery system does. So happy to provide more details about historical utilization and projected utilization, and also happy to pause for questions.
I appreciate the robust overview of this change. Go to LAO.
Good afternoon. Karina Hendren, LAO. First, we understand that this change is in response to a federal requirement, but that being said, we do want to note that the proposal raises several issues for further investigation. There's uncertainty, one, about the amount of potential savings, as well as to issues regarding program implementation and implications. First, on the potential amount of savings, the administration stated that there will be about $240 million in general fund savings realized from managed care plans no longer performing the administrative functions for affected enrollees. The legislature could ask the department to identify the estimated annual costs FOR THE STATE TO TAKE ON THESE ADMINISTRATIVE FUNCTIONS FOR THE EFFECTED ENROLLEES IN THE FEE DELIVERY SYSTEM ADDITIONALLY THE MAY REVISION REFLECTS EXPENDITURE AUTHORITY AS THE ADMINISTRATION NOTED OF MILLION FOR ADMINISTRATIVE COSTS AS WELL AS ABOUT Normally the May revision reflects expenditure authority as the administration noted of million for administrative costs as well as about million for system costs in 26 The legislature can ask the department whether it would need to add any positions to implement the transition, as the department was talking about expanding capacity, if that would involve, again, adding positions to execute those functions. And then second turning to the programmatic implications, the legislature could ask the department to explain how any care coordination that is available in the fee for service delivery system would compare to care coordination in the managed care system from the perspective of the enrollees of whether those services are comparable in the different delivery systems. and then the legislature could also ask the department to provide more detail on its projections regarding changes in utilization of services after the change is effectuated and then finally as the department noted the managed care system is intended to sort of help smooth volatility in the Medi-Cal budget over time. And so just flagging that with this change, the legislature could potentially expect to see more volatility over time in the fee-for-service delivery system. Thank you.
Can you – we talked about, like, the technical changes and so forth. We mentioned DCM, community supports. Can you walk us through, like for an everyday person now, the 2 million people, what does it mean now for them? They're looking for a provider, and now they don't have ECM. What do they do?
Thank you, Senator. So from a member perspective, they will no longer have sort of a plan to call. They will no longer have a card to put in their wallet or a handbook directly from a plan that has a provider directory specific to that plan or, say, a nurse care manager line to call for direct assistance. That said, all of their benefits will remain the same, with the exception of community supports, which aren't universally covered today. They're covered at parent option.
Sure, radically.
They can have, instead of enhanced care management, one service that is available in the delivery system that we would encourage ECM providers to take advantage of so that they can continue supporting members, that they're supporting today would be the community health worker benefit. The scope of that service is broadly consistent with ECM, and it allows members to receive support from trusted messengers from their community with lived experience, with navigating the medical system, navigating behavioral health, navigating social services, navigating their renewals. in effect a lot of the same types of supports they would get from ECM.
Just on that, so one of the lives of the two millions would be able to go and get assistance from a CWH and that ECM hub or whomever can bill for that?
Yes, so community health workers are able to bill if they meet some specific training qualifications. So there may be an initial depending on the ECM lead care manager or the ECM team member that is delivering care today they may have to receive you know some nominal training in order to be certified or recognized as a community health worker. With that, they would be federally authorized to provide community health worker services to members, and then, you know, their organization could then bill the department for the community health worker benefit and in effect provide very similar services.
How would I find a provider? I don't have a health plan to call. How do I know who's in my network?
So upon the point of transition, just in sort of the November, December, January timeline, we would be working with plans and with their care managers to help guide members to know, hey, the providers you're seeing today participate in fee-for-service, and you're going to be able to maintain your relationship with them. So that's a helpful bridge during the immediate transition process. But for new members who enter after January, there are provider directories for the fee-for-service delivery system. I'll be candid. They're not as user-friendly maybe as a handbook that they might get from their plan. But on our website, we do have today federally compliant provider directories for all providers enrolled in fee-for-service. And part of the resources that are – at Governor's Budget, we anticipate coming back to request more resources for ongoing implementation in fee-for-service. And that may include things like a more user-friendly provider directory.
You are now the official provider directory for 2 million people, and we've seen hiccups after hiccups on health plan provider directories. We want to make sure this doesn't. So, okay.
If I may also just add, many individuals get their care at clinics, and from that kind of delivery system perspective, there may be no change to kind of where they go to get their care and how it's coordinated. And, you know, our clinics can, under this, under the fee-for-service model, can bill for community health workers, which today there's some challenges in that space of Qs and community health workers' benefits. So I think it's going to vary depending on geography, where people get their care.
Yeah. And you shared a couple examples. Well, you recognize that you need to encourage providers to be part of the fee-for-service. How can we encourage them if they're going to get paid less? What encouragement can actually exist outside of reimbursement hire? I don't know how else we can encourage them to participate.
It's a very fair question, Senator. We do have a Medi-Cal fee schedule for payment rates in the fee-for-service delivery system, and depending on the negotiated contract rates that any given provider has with their managed care plan, the rates that they're receiving may be similar or equivalent to our fee schedule. Depending on the provider or the service, the rates may be higher. And so it is a reality that for some providers, in order to continue seeing their patients, they would face the prospect of a rate cut. What I hope, as we see in the governor's budget for next year, and I think to LAO's point, you're probably, like you mentioned, You going to need some additional support for this right But what I don want to see is an imbalance of asking for funding to support the admin side of it creating this beautiful provider directory without providers on it and there not an equitable investment in how we can get providers to participate as well. We can't create a beautiful gym and have no one come and work out in it. So we have to make sure we're looking at it both sides.
I'd like to hear your perspective response. Stakeholders are sharing that we're interpreting this incorrectly, that this isn't actually something we have to do.
Thank you, Senator. It is quite clear and unambiguous that emergency care cannot be provided in risk-based capitated managed care arrangements. in conversations with other states that are facing similar problems. Those other states are interpreting the guidance as we are, and they are proposing to transition their members to fee-for-service delivery systems as well. I think in our May revision highlights, we note that in order to, you know, maintain these 2 million members in, you know, capitated managed care plans, the estimated, you know, we could forsake the federal matching funds for emergency services. This is all hinging on CMS saying emergency services are only claimable, they're only matchable in a fee-for-service delivery system.
In theory, one option is to cover emergency services as a state-only benefit. So that the rest can be?
So that we can keep them with their plan. And our main revision highlights note that the total estimated cost for that is $6 billion general fund annually.
Okay. So, I have so many questions. Can I go back to the question I had regarding the ability to utilize community health workers and ECM for that? Is the rate paid the same for whether it's the CHW?
We don't dictate the rates for ECM. So what ECM providers are able to bill from their plan depends on the negotiated rate that they arrive at with their plan.
Okay.
If I just may, just as a reminder, ECM is really intended for those with the most, most complex conditions, right? So at quarter two of 2025, we had about 200,000 individuals out of the 14 million. 14 million.
So I just, in terms of what we're talking about. So what do we have of the 2 million?
We don't have that number, but just for context of the proportionality of individuals who have ECM today, 200,000 out of 14 million. So we would anticipate community health workers will be used at a much more extensive rate than ECM because that is available to everybody.
Okay. And I think you kind of answered this potentially in the governor's January budget of the administrative costs to LAO's question. Are we going to, is there, are you assuming we're going to, the cost is going to be, or the administrative workload is going to be more for us compared to the health plans? Because we're different.
They're slightly different. So as we noted, we're, the Department of Finance would augment our state operations budget for budget year by $25 million. And then on the, just for data systems, it's another $33 million. That would be that 20 $5 million is comprised of two parts. It's sort of ramping up our capacity to do things that we do today for the 700,000 members in our fee-for-service. It also represents some sort of, you know, one-time capacity to help navigate this transition that aren't necessarily proposed to be ongoing. The managed care plans, you know, the $240 million in budget year and the $575 million ongoing in the administrative load, Those are some of the savings that we're projecting. Those include some components that are distinct to risk-based managed care plans, that it's apples and oranges to us. And these include things like underwriting gain or a profit. These include things like the cost of capital and financial solvency that plans must maintain for federal and contractual requirements. So those are components that are not relevant to a fee-for-service delivery system.
When were we made aware of this?
September 2025.
It just came out of left field?
Yes, absolutely.
Okay. So we just made costs covering the UIS population much, much more cheaper if we're just talking about dollars. If we're just talking about dollars, the cost now to cover this population just became cheaper drastically. There were earlier sentiments in the past year or so that this population was the driving force of Medi-Cal's growth. It just became drastically cheaper to cover UIS population.
just publicly want to say they are not the driving force of Medi-Cal costs when now it's the savings just to provide in fee-for-service is going to be $1 billion ongoing.
$1.5 billion, I think.
$1.5 billion.
$1.5 billion.
One point.
Yeah.
Ongoing. It's a drastically cheaper way.
$1.5 billion total fund savings ongoing as a result of this.
Yeah.
Right.
Right.
Okay. I think that is all I have on this issue.
Yes. I'm going to hold the item open and move on to issue number eight. Issue number eight, general fund solutions. So to address the out-year structural projected budget shortfall, The May revision includes the following proposals to achieve general fund savings. These proposals reflect difficult choices related to ensure financial and fiscal stability and preserve the long-term viability of the Medi-Cal program. We recognize these are proposals, and the legislature and the administration will work together over the coming weeks to achieve a balanced budget. We are proposing to increase the monthly premiums for adults with unsatisfactory immigration status from $30 to $50. no sooner than July 1, 2027. The May revision estimates general fund savings of approximately $427 million in 2017-2018, decreasing to approximately million annually in 2019 as a result of a reduction in caseload The members who are subject to these premiums are individuals aged 19 years and older non not in foster care or former foster youth are enrolled in state-only full-scope Medi-Cal. The 2025 Budget Act imposed a $30 premium that goes into effect no sooner than July 1, 2027. The May revision proposes to reinstate the full asset test limit no sooner than January 1, 2027. This goes to an asset limit for a household of one to be $2,000 or $3,000 for a couple. We estimate approximately 25,926 individuals will lose coverage as a result of this proposal in 26-27 and up to 37,000 in 27-28. This proposal results in a general fund savings of $278 million in 26-29, growing to about $495 million in 29-30. The May revision also proposes to eliminate the Medi-Cal coverage of acupuncture services, which is an optional Medicaid benefit. This benefit elimination would apply to all Medi-Cal members except for certain mandatory populations and settings. It would go into effect no sooner than January 1, 2027. The estimated savings are $5.4 million in 2016-2017, $13 million in 2017-2018. The May revision proposes to further cap the program of all-inclusive care for elderly are PACE rates. PACE rates at the lower bound, actually sound lower bound, beginning 2027. This would not apply for a new PACE organization entrance in their first two years of operation. Estimated general fund savings are $33.7 million in 2016-2017, increasing to $84.9 million in 2018-2019. The May revision proposes some refinements to our community supports and enhanced care management benefits. This includes refining referral pathways, eligibility criteria, service definitions, utilization management criteria, and these go into effect January 1, 2027. For community supports, we estimate $26.9 million general fund savings in 26-27, $58.8 million in 27-28, and $51 million ongoing. These are designed to really strengthen the community supports benefit and utilization, recognize some of the inefficiencies that existed today, and really wanting to not dilute the cost-effectiveness of these services with no value for our members. In regards to the enhanced care management, the proposed savings will result in 41.4 million general fund savings in 26-27 and 99 million ongoing. These are intended to strengthen the ECM benefit. It was always designed to be a very high-touch in-person benefit, so really driving towards fidelity with that service model. The May revision proposes to redirect the medical loss ratio remittances to the general fund. This is a savings of about $25 million ongoing starting in 27-28. Currently, these MLR remittances are transferred to the Medi-Cal Loan Repayment Program Special Fund Program. The May revision proposes to strengthen utilization management for applied behavioral health excuse me applied behavioral analysis and behavioral health treatment and transportation services in the Medi program Over time, utilization of these services has increased significantly with some patterns consistent with overuse and misuse. Some of our current utilization management policies around these benefits are less stringent than some of our peer states and or clinical guidance regarding their use. These UM controls are intended to mitigate the risk of waste and abuse by ensuring that services meet medical necessity and are clinically appropriate. Karina Hendren, LAO. We are continuing to review all of the proposals at this time, but we had comments on three specific ones. We'll go in the order of the agenda. So first on the restoration of the asset limits. We find that the estimated savings from the proposal are generally reasonable at that time, at this time rather. That being said, the proposal does raise trade-offs in terms of access to care for seniors and people with disabilities. If the legislature wishes to prioritize access for this population, as we noted before, alternative solutions of at least this magnitude would be needed elsewhere in the budget. And as the legislature considers this proposal, there are a few questions that it could potentially ask the administration, such as how the proposal would affect county eligibility workers and their workload, how the department would communicate the change in eligibility to affected enrollees, and whether a different asset limit could potentially mitigate some of the access impacts while still achieving some level of budget savings. Next on the premium for undocumented enrollees, again we find that the estimated savings are subject to some uncertainty. And we note this because existing research suggests that premium increases beyond a certain threshold might actually have a diminishing sort of incremental impact on enrollment and additional disenrollments. Because of this, we find it is unclear the extent to which the proposed increase in premiums would result in additional savings above the current policy. And third, on the Medi-Cal efficiencies, this is part of an existing contract that the state has to find operational improvement in efficiencies. and the May revision is updating some of the savings estimates as well as providing some detail on the planned activities under the contract. Overall, we recommend caution when it comes to incorporating the estimated savings from the efficiencies in Medi-Cal. The legislature will want to ensure that it understands the assumptions that form the administration's estimates to ensure that these assumptions are realistic. Additionally, the legislature will want to ensure that the proposed activities align with legislative priorities. On the specific activities that have been shared in the May revision for the utilization management, we note that the legislature could ask the department how it plans to ensure that these utilization management controls are applied in a consistent way statewide across all managed care plans. Thank you.
These are the core issues of budget solutions that the administration is proposing in the May revision So let's go on this roller coaster of what a senior or a person with disability has gone through in the past five years with these asset limits. In 2021, we increased the asset limit to $130,000. in January 2022, and then it went into effect in January 2022. We eliminated it altogether in 2024. And then in the 2025 budget, we brought it back to $130,000, which started just in January of this year. Now, the administration is proposing to bring it back down to $2,000 for it to start in January of 2027. In five years, we have asked seniors and people with disabilities to figure out if they're eligible for Medi-Cal or not, whether the asset limit that's been changed will kick them off Medi-Cal or put them back on Medi-Cal. Outside of talking of the costs of county admin to figure this out, of sending five different letters in five different years, this is beyond cruel to put seniors and people with disabilities through a roller coaster of this kind. Today you have health insurance, tomorrow you don't have health insurance. will figure out how the third day goes for you. I don't understand how we continue to put these individuals as a possibility for solutions. And yet, just one example of what's in the governor's budget for May revise. $20 million is being requested by the Department of Finance to augment for purposes of recognizing the history and legacy of Californians living governors. That's just one example of what is being prioritized in this budget and what is being cut for services. I do not care to recognize the legacy of governors past or present. I care about seniors having health insurance and people with disability having health insurance. Those are tangible investments that actually will increase the legacy of our leaders in California and our state. I don't understand how the Department of Finance continues to come here that these are budget solutions and yet proposes requests for things that are absurd and are not going to benefit the lives of Californians. I don't even know what questions to ask because I won't get a response as to why this is on the chopping block and why we continue to put people through these loopholes. The Senate's budget plan, because I'm a broken record, doesn't do any of these cuts and also slashes the structural deficit by 50%. We, in fact, reverse most of the cuts, if not all of the cuts that is proposed in the January budget, and we saw for this year and plus one. The Senate's leadership has found a way to do all of this while also being mindful that we have to put into our reserves more, and we do have to create some cuts. I have a long list of cuts that I want to make in sub-3. I am not going to say we shouldn't cut anything in budget sub-3, but none of them are direct services to individuals. There's a way to do this, and while I recognize this is a three-party negotiation,
the fact that we have to put energy and agendize this and have people come up and advocate for these things is what bothers me the most. We shouldn't be putting this on these agendas. They should never be considered as possibilities because we're getting people literal heart attacks and then We don't even approve these. The acupuncture one, I am struggling to sit down today because I have massive back problems. And I've been a recipient of acupuncture. It has been beneficial. I can imagine a lot of people depend on acupuncture so it's not more expensive. We make little cuts and then it costs more in the long run because these are preventative investments. To increase the premiums from $30 to $50 is just cruel. It's just cruel. It's really just cruel. I think LAO has somewhat of a point of if people can afford $30, they'll afford $50. I think people will fall off. $30 to $50 is still a lot. $20 is still a lot of money. But let me ask some questions. When we implemented the $130,000 asset limit of January 2026, have we seen the anticipated fall-off? Have those numbers matched what we anticipated? So we have some preliminary information from the January and February of this year. The LAO came out with a report last year that estimated that about 112,000 individuals became eligible for Medi-Cal when we eliminated the asset test. And so we're working with that kind of number. About 112,000 would be impacted by both these proposals, both the first piece and the second piece. and about two-thirds or so, it's looking like about two-thirds of the 112 have lost eligibility January, February of this year. So, I mean, these are all rough numbers at this time, but yes. It's on track to meet the most. So the people that we've retained, they actually went and did the paperwork because a lot of it was the paperwork. It wasn't the limit. It was the paperwork. So now the people that actually stayed on and went and did the paperwork, those are the ones we're now going to lose because even though they know to do the paperwork, they just won't meet the 2,000 asset limit. On the premiums, how do you account for a decrease in savings in the out years? It's a result of just the over time the numbers will people who will be eligible the numbers will just go lower. So just kind of the starting point just gets lower over time. And so less individuals would lose coverage because of non-payment. Okay, so it's not the opposite that more people will lose because because there's more people can't keep up with those monthly payments. Yeah. And the population that has to pay the premiums, it just gets smaller over time. That's because there's a freeze and no more people can be added on. That's what you were going to say. For the Cal-M reforms, I was struggling to understand utilization management of community supports. These are one-time things. How do you utilize management if it like a down payment if it stuff like that So some of these are also related to the referral pathway So for example asthma remediation and medically tailored meals really these are kind of clinical decisions and having a referral pathway from the primary care or specialist or maybe even the health plan as they look at their population-based data. And so really being a little bit more tight in terms of who can refer to these types of services. And then for some of these other items, also, for example, housing transition and sustainability services. Also, adjusting payment levels can measure it with the service intensity. So really thinking about how we pay our providers based on the intensity of the different services. Okay. So it's not so much there's step therapy for these community supports. It's more how it gets referred? For those two in particular, it's where who can generate the referral. for these two in particular, really, given the clinical nature of who is eligible for those, that those referrals come from the primary care provider or a specialist or a health plan as they look at their population data. Okay. Do you want to add to that? Thank you, Senator. Yeah, and just as context, right, these community supports are new to CalAIM. We are sort of reaching implementation maturity, maturity, but we've had four years of initial learnings. Yeah, and they all rolled out at different times. That's correct, and in different geographies at different times. And a lot of these community supports are for providers that are not only the new services, they're new providers, a lot of CBOs, grassroots providers, new to Medi-Cal, and we put a lot of effort along with our plans to stand up this new model of care. And a lot of the efficiencies that are proposed here are based on our experience over the past four and a half years with these services, learning what's effective and what's not effective. You know, when we deliver these services, you know, over a 12-month period and don't see a single change in member outcomes, is that a good use of this service? So this is really observing sort of qualitative feedback we've gotten from plans and from providers. and quantitative data. We now have submitted our second annual report to CMS demonstrating cost effectiveness of these using rigorous methodologies to understand the extent to which these community supports prevent inappropriate ED visits, inpatient stays, nursing facility stays. So we have good data now to understand how to tailor these to make them cost effective and good for members and sort of try to get rid of the waste. This prompted a question I forgot to ask in the fee-for-service section. Recognize it's a small percentage of the 2 million that are ECM. Because it's such a small percentage who are ECM, we know CalAIM saves money. It's a lot of costs, but it saves money in the long run. Because it's a small percentage on ECM, do we not anticipate higher costs? of those people because they no longer have this kind of wraparound. So in reflected in kind of what we say the cost savings, there are some increases in some utilization offset by some decreases in utilization, but our estimate does reflect that. Yes, it does. Okay. Thank you. Back to the asset of the people that we've lost so far, we said we're two-thirds on track to the 112,000 people that was anticipated to lose Medicare out because of the $130,000 asset limit. Do we have information if it because it was the asset that kicked them out or the paperwork We do have this information and we planning to actually publish a dashboard per statutory requirements in the coming weeks which will share information on the number of individuals that we lost on a procedural basis because of the paperwork or whether it's because they actually. Is there a one pager the senator can get versus the dashboard? Yes, we can, of course. I appreciate that. For the acupuncture, does that cut also apply to FQHCs? So there are certain populations and certain... Yeah, there was exemptions, but I don't think I heard the exemptions. Sure, if a person is under the age of 21, pursuant to our early and periodic screening and diagnostic, our EPSTT requirements, they are exempt. individuals receiving long-term care in a nursing facility, individuals receiving pregnancy-related services and services for other conditions that might complicate a pregnancy, emergency services, medical and surgical services provided by a doctor of dental medicine or dental surgery, otherwise excluded optional benefits included within the scope of a FQHC or rural health clinic services and any other members as required under federal law. So there are certain federal requirements with regards to this optional benefit. And what about, so if this were to go into effect starting July 1st, right? January 1, 2027. January 2027. So that gives enough time so that treatment doesn't stop in the middle, so that no other referrals are given in anticipation of that? Yes, and I think in general we'll have to assess and do that assessment in terms of how, from a coordination perspective, when the referrals stop and to the extent possible carryover. Okay. For the PACE rates, what's the problem we're solving? Today, most of our Medi-Cal managed care plans get paid at the lower bound of the actual early sound rates. Last May revision, we came with that proposal for our PACE organizations, and what was ultimately adopted was the midpoint range for actual early sound rates. We're proposing, again, as a general fund savings item to go down to the lower bound actuarially sound rate for these providers. And for new entrants into the pay space, having a two-year period where this does not apply. Last year was the midpoint we landed on. Which was, yes, correct. Now it's called the lower bound. Lower bound. And what was the two years? So if you're a new PACE organization, not being subject to this because you're kind of just building your business. Okay. Is it different outside of the new ones? Is everyone going to have this lower bound reimbursement or it would be different for – Correct. Okay. And how was the lower bound calculated? So that based on kind of an actuary process actuaries when they develop and when we kind of go through our rates there a lower bound and mid and a high bound rate And so that kind of based on cost and data and utilization They come up with these estimates And even at the lower bound, an actuary certifies that services and benefits can be paid for at that rate. And is it the same rate for the PACE and an MCP? Today, our Medi-Cal managed care plans are generally paid already at the lower bound rate. Okay, so this brings the PACE level to the MCPs. To the MCPs. Not the same rate level, but the same kind of bound. Or the same kind of, for them, there's a range. Each organization has a range, and it's at the lower bound. So for both MCPs and for PACE, we use actuaries to develop an actuarially sound range of rates. And that range includes the lower bound, the midpoint, and the upper bound. So both MCPs, there is an actuarially certified rate range. And historically, as the director noted, we've always paid MCPs at the lower end of the range. That's certified by actuaries. But their range. Their range. Their range. Even though it's the lowest, it's at a higher rate. It's a totally different amount. So PACE is the rate range for PACE organizations is distinct, not equivalent to the range for MCPs. It's a different population, different benefit set, et cetera. But just the framework where for PACE organizations, the actuaries that we contract with also develop a range. And they say within that range, anywhere in that range is actuarily sound for these PACE organizations to deliver the services. But it could be. It's the same demographic. They just choose one or the other, right? Like a senior can choose a managed care plan or it can be cared under PACE, right? You can have both. Correct. So the eligibility for PACE is a very small subset of who can enroll in an MCPA, but they are enrolled in one or the other. Karina Hendren, LEO. So individuals are eligible for PACE if they are duly enrolled in both Medi-Cal and Medicare, And then if a person chooses to enroll in PACE, that PACE organization kind of becomes their managed care plan. So they provide the services, they provide the care coordination. So why is the rate different? If they're providing the same services, whether you're on managed care plan or PACE, you're getting treated one way or the other. Go ahead. The rates paid to manage care plans reflect a lot of different populations that the plans cover. Oh, you have to group it into everything. That's what you're trying to say. Okay. Got it. It's not. Okay. I get it. Okay. Okay, that is all I have on this issue, on issue eight. But in case you forgot, these are terrible proposals. Okay, we're going to hold them open, move on to issue number nine. On issue number nine on county administration allocation, The May revision proposes a one-time county administration augmentation of $228.7 million total fund, $171.6 million general fund in 2627 to account for the additional workload introduced as a result of House Resolution 1. The one-time augmentation. is in addition to the current base allocation of the $2.4 billion total fund for core eligibility functions in the county administration budgets for 26-27. The one-time augmentation provides counties with additional support to adjust operations and workflows and also accounts for the refresh Medi-Cal caseload projections for H.R.1, which shows fewer cases requiring and county review in 26-27. And we will continue working with our county partners to recalibrate funding in the future, in the out years, given the uncertainty of the HR1 impacts. DHCS also proposes a $33.3 million total fund, $16.7 million general fund across. It will be this amount for three years, which is for limited optional surge staffing. contracted through DHCS to provide immediate relief to county social services agencies for ancillary workload such as call center support, processing incoming paperwork from applicants and members, and operational tasks as directed by the counties. The work by the surge staffing is not meant to supplant the county's ability and authority to make final Medi-Cal eligibility determinations. We understand the counties will require time to ramp up activities like hiring and training if the one-time augmentation is approved by the legislature. So the one-time or the three-year limited term surge staffing will kind of help to fill the void and we will have an ability immediately to help with the impacts and the workload associated with HR1. As part of the May revision, DHCS is also proposing a stronger accountability structure introduced through trailer bill language, which will introduce tighter oversight of state performance and could require repayments estimated at several billion dollars annually as it relates to timely and accurate Medicaid eligibility processing. And given the increase of significant federal repayment requirements, DHCS must strengthen county performance and accountability. Currently, under current state law, DHCS cannot impose financial penalties on counties that are not meeting performance metrics related to timely adjudication of applications and redeterminations processing unless the counties receive a cost of living adjustment in that very year. And the proposed changes in the trailer bill would de-link the imposition of those financial penalties from the cost of living adjustment and instead give DHCS the authority to impose financial penalties in the year in which the department allocates funds to the counties in excess of the current county-based allocation for core eligibility functions. We believe the changes will increase the state's ability to drive sustained performance improvements, creating a stronger accountability framework, and mitigating the risk of significant ongoing federal repayments. This ends my remarks and happy to answer any questions. Thank you.
Min Lee, LAO, we wanted to offer a few comments on the county admin funding proposal. So we believe supporting county readiness is important to ensure smooth implementation of the H.R.1 requirements and to mitigate avoidable coverage losses. At the same time assessing the right level of funding is quite challenging County workload next year will depend on uncertain caseload effects from not only H 1 but also other policy changes like the enrollment freeze for undocumented adults, the changes to the asset limits. In addition, the current methodology for budgeting county administration of Medi-Cal does not have a clear link to workload. Now the largest workload changes due to H.R. 1 are expected to occur in budget year plus one. So that does leave some room for the legislature to hold off on committing to longer term funding as implementation proceeds. But waiting until next year to adjust funding could leave counties without time to hire and train new staff. We believe one option could be to make one-time funding available as the administration has proposed, but to pair that with provisional authority to increase funding based on workload indicators. The idea is that in the months leading up to H.R.1 implementation, we will likely have a better sense of the workload pressures on the counties based on the caseload and the number of redeterminations that they're having to process manually. So these indicators could help determine whether counties need or counties should access provisional funding. Now, one element of the administration's proposal that aims to provide this kind of flexibility is the surge staffing. The administration believes that as counties take time to ramp up their capacity, the surge staffing can help address more immediate workload pressures. We think this could make sense in concept, but there are questions that the legislature may wish to ask. For example, how would surge staff be trained? What sort of quality controls would be in place? Who would be accountable for their performance? And how much statewide capacity would the proposed dollars actually purchase? So we think that answers to these questions could help the legislature better assess the proposal. Thank you.
Thank you for that. I have no questions on this. I'm going to hold it open and move on to issue 10. Issue 10 is a BCP to address the waiver personal care services backlog. We are requesting two-year limited-term resources equivalent to four positions and expenditure authority of $901,000, of which $451,000 as general fund, in budget year to build capacity to absorb the growth and maintain compliance within the waiver personal care services program. As context, since 2020, enrollment has tripled, and the number of providers has nearly tripled over that time. This rapid growth has created significant backlogs in service authorizations, provider enrollment, provider payments, and responses to inquiries. These backlogs can result in delays in access to care and in responding to legislative inquiries. So these resources will help improve member and provider access to allow for more timely authorizations and payments. It will prevent service disruptions and will support vulnerable members and their caregivers. It will also help strengthen our ability to maintain program integrity and compliance by dedicated staff, able to conduct fraud prevention audits, manage employment verification, and maintain compliance with state and federal requirements.
Karina Hendren, LAO. Just noting that we're still reviewing this proposal and we'll follow up with the committee if we have any issues to share.
Thank you, Karina. Hold it open. Move on to issue number 11 Issue number 11 is a BCP requesting four permanent positions to be transferred from H and expenditure authority of in budget year These resources are requested to transform, manage, and transmit Medi-Cal data to H-Chi and to utilize health care payments data to support Medi-Cal program management. These resources are necessary to meet federal requirements for Medi-Cal data reporting and to ensure ongoing eligibility for federal funding. They will allow the department to manage Medi-Cal data integration within the health care payments data system. I lied on the previous one. I do have a question. I apologize on the waiver. We've talked a lot about the wait list of the AWL. I'm wondering if this BCP with increased positions is going to help that. I know there was last year a commitment to that. Is that going to help with this? These programs are distinct in terms of workload. I will say just generally speaking, our waiver programs have had just a substantial increase because we've increased the number of slots available. So significant workload increases over the last few years and trying to build teams to support that. Two distinct, why isn't the department asking for support on the other one then? If that's where we've been hearing a lot of the concerns. We are working to sort of optimize our processes on both programs. So we worked with the Office of Data Digital Innovation to sort of do a little bit of a sort of forensic on our system and our processes and to sort of recommend new workflows so that we can, in effect, work better with existing resources. They helped us with that. They also identified these resources are necessary, so they recommended this BCP. We're similarly working on the ALW backlog to do sort of root cause analyses to identify what are the inefficiencies in the system. So we're starting to sort of improve the backlog on that side. And I think it's just, you know, that workload is a little bit earlier on in the process compared to this backlog. And we have redirected resources both to this and to ALW to kind of get that head start in terms of what are the true resource needs and how do we improve our processes as well. Are you able to share any update? There's 5,000 available on release slots for ALW and I think about 3,000 in the HCBA on the wait list. Sorry. 5,000 on release slots for ALW. And for the HCBA, there's over 6,000 on the wait list. Is there a timeline internally that you've placed amongst yourselves to get that down to zero? Because there's capacity. We just haven't hit the capacities, and people are on the wait list still. So there's a couple of factors here impacting these slots from being realized by members. On the ALW, you know, slot increases do expand sort of the wait list or the, sorry, they do expand sort of slots in the program but there are sometimes provider shortages So even as slots expand that doesn mean that the supply of providers is sufficient to meet all of those slots. That is one factor. Another factor is the time that it takes from an approval from CMS. Is that a potential factor or is that an actual factor that's happening? My understanding is that's an actual factor. Okay. The second one? would be the administrative workload and the time that it takes for a team with finite resources to not only deal with the backlog and deal with the growth that we've experienced, but also take on this new growth and the new segment of growth associated with the expansion. To my question of if that's needed, does the department need support in addressing that? I think we're internally trying to redirect and see what we can do with this, the team that we have available. And I would also just, when we spoke about this last year, the topic came up about individuals on the wait list and referring to our Medi-Cal managed care plans because of the community supports that are very similar. And so we did do that work. That is a potential. And so we did do that. I don't have numbers for you on what we can follow up. but we did take that action to kind of try to facilitate individuals who are on those wait lists. How are other ways for them to be able to get similar services in the community? Karina, any thought? Do you have anything on this?
Karina Hendren, LAO. This is an issue that we've been working to understand better. We're not prepared at this time to share any conclusions, but we are looking into it, and we'll follow up with the committee if we have any recommendations.
I've been very much since a couple years interested in this backlog, so we'd love to see what the department's doing to move forward on that. I know we accomplished something last year with that list, but if it is a provider shortage, there must be people on that way list that don't fall under that, that could be put in. Sorry. Of the reasons that you've given, if there's anybody that can be removed outside of those reasonings, if we can move on those first and then address the more systemic log issues later. But it's still a lot of people. It's a lot of people on the wait list. It's a lot. And there's room. Okay. Back to issue 11. But I think you finished that one, right? You did. We're going to hold issue 11 open. Move on to issue number 12. Issue number 12 involves the Narcotic Treatment Program Licensing Trust Fund and the Driving Under the Influence Program Licensing Trust Fund. The department requests increased expenditure authority of $1 million from the Narcotic Treatment Program, or NTP, licensing trust fund, and $1 million from the DUI licensing trust fund in budget year and ongoing to support compliance monitoring and licensing programs, activities in both of these programs. This increased expenditure authority will allow the department to appropriately use these licensing fees and funds as intended to support these functions, rather than seeking general fund to support ongoing work, given our current expenditure authority from these funds is insufficient. This request builds off of a BCP last year which authorized an increase of the NTP licensing trust fund by $500,000. DUI licensing trust fund, the department has not needed to seek increased expenditure authority since fiscal year 22-23. And simply due to insufficient expenditure authority, we are unable to use available revenue in these funds to support our ongoing business operations. We do not project a need to increase DUI program fees in 26-27. However, we do anticipate a need to increase DUI licensing fees in budget year plus one. We do not project needing to increase NTP licensing fees during budget year, and we will monitor in future fiscal years. Who pays into that? Is the ones who get DUI you pay into that? For the NTP licensing trust funds, it's the narcotic treatment programs. for the DUI program, I will have to get back to you. Okay. Okay. No one? Okay. We're going to, oh, whoa, do you have anything to add on this? Okay, we're going to hold the item open and move on to issue number 13. Issue 13 is a BCP requesting resources to support the CalAIM waiver renewal planning and implementation, specifically $17,500,000 in budget year, of which $8,750,000 is general fund to support the Section 1115 demonstration and Section 1915B CalAIM waivers, which are set to expire at the end of this year. We're requesting these resources to meet the necessary negotiation, CMS engagement, federal review processing to secure approval from CMS to continue CalAIM as part of the renewal package. They'll support key activities like enhanced care management, community supports, and behavioral health reforms. Some of these resources are also specific to continuing one component in CalAIM, resources necessary for our contingency management program, which is operated both with a technical assistance provider at UCLA as well as a vendor that actually electronically manages and administers the incentives under that program, which is showing really, really effective results. So this is an effective resource for us to be able to continue CalAIM. So this is the dream team that's going to get our waivers extended? Yes, Senator. Okay. Anything out of this? Hold the item open. We'll move on to issue number 14. Issue 14 is a proposed trailer bill in targeted sections of the statute to strengthen the department's ability to conduct program integrity and compliance enforcement in Medi-Cal. These updates really would enhance the department's ability to act swiftly and act promptly when program integrity risks arise to enhance transparency and to support consistent risk-based provider enrollment actions. These proposals build on robust authority we have today. They would provide clearer authority cleaner business standards and improved alignment with longstanding federal risk frameworks I happy to sort of walk through the details if you interested A little bit just like does it cover all the programs And I don't see any personnel attached to this. So the department has the capacity to do it, they just need the teeth? Yes, more or less, yes. This is just statute changes to give the department sort of targeted authorities in certain ways to sort of act more promptly and act more robustly, primarily on taking actions related to provider enrollment. So when we suspect potential fraud, waste, or abuse, and we're actively investigating, this would allow the department to, for example, impose a temporary suspension faster than we're allowed to do today. It would eliminate a 15-day notice period that's currently in state law. When it comes to our ability to impose a payment suspension and submit a credible allegation of fraud to our Medicaid Fraud Control Unit, which is the Department of Medi-Cal Fraud and Elder Abuse inside the State Department of Justice, this would align the sort of definition of a credible allegation of fraud with a federal definition. Currently, state statute has a higher bar. So this would enable us to sort of impose a payment suspension more swiftly in alignment with federal standards. And sooner, since it doesn't have to reach a higher, more threshold. Exactly. This would enable the department to make public what's called a restricted provider database. So when we are concerned about a provider due to suspected fraud, waste, or abuse, we are able to put them on a restricted provider database. We do require managed care plans to check that and to take action accordingly. This would authorize the department to make that list public. A wall of shame. In effect. Oh, okay. And so it covers all programs that get Medi-Cal funding? It covers Medi-Cal providers that enroll with the Department of Health Care Services. Okay. So some of the authorities that we're requesting impact providers that enroll directly with Medi-Cal. some of them would impact providers that cause Medi-Cal billing, so that are involved in any capacity in a Medi-Cal provider. Okay. Will? Will owns LAO. We're still evaluating this trailer bill proposal, but we'll follow up with the committee if there are any concerns. Thank you. Hold that. I'm open. Move on to issue number 15. Issue number 15 entails several technical adjustments. The first is ensuring access to Medicaid Services' budget change proposal adjustment. We're requesting expenditure authority of $882,000 general fund and budget year to recover funds that were not reflected in the governor's budget proposal. Specifically, these resources will allow us to meet all federal and state requirements pertaining to a rule that CMS issued in 2024, commonly known as the access rule. There's another technical adjustment related to grants that we received from CMS pursuant to HR1. The department received two grants totaling slightly over $20 million in federal funding as authorized under HR1 to support states with establishing system capacity to implement the work requirements policy in HR1. We are exploring the use of these funds to obtain additional data to in effect perform more ex parte determinations of compliance or exemptions to help people retain their Medi And we share more information about this proposal as it becomes available And the final technical adjustment is a breast cancer control account adjustment Specifically, we request a transfer of $3 million, expenditure authority to transfer $3 million from the breast cancer control account to state operations to support state operations costs for the Every Woman Counts program. Historically, that account, the breast cancer control account, has been funded by the tobacco tax, but revenue has been declining, and there are insufficient funds in that fund to support state operations. This technical adjustment is needed to continue program operations. Okay. All right. Your time in the hot seat, DHCS, is over. Thank you. Thank you, Senator. We are now moving on to the Department of Public Health with issue number 16. Thank you. Good afternoon, Joseph LaGrama, branch chief of the ADAP branch within the Office of AIDS. For current year 2526, the Office of AIDS estimates that the ADAP Budget Authority need will be $436.4 million, which is $7.6 million lower than reported in the 2627 Governor's budget. The 1.7% decrease is driven primarily by lower medication and medical out-of-pocket expenditures due to decreased caseload projections and decreased cost per client per month than previously estimated. For budget year 2627, the Office of AIDS estimates that the ADAP budget authority need will be $511 million, which is $67.3 million higher than reported in the 2627 governor's budget. The 15.2% increase is driven primarily by stakeholder proposals for 2627 and the funding extension for the disease intervention specialists initially introduced in the 2526 health trailer bill. And then regarding question number two. Nicholas Schiller, Department of Finance. So the $60 million is intended for HIV treatment and prevention programs that were previously supported by federal funds. Some of the programs that may be supported are pre-exposure prevention, post-exposure treatment, anti-HIV drug products, HIV and STD testing, training for medical staff, and disease investigation. The million for the centers is that inallowable our understanding is that it is allowable and if there are any concerns that arise we will introduce trailer bill language Is it $10 million flexible for the centers to use as they see fit? Does it have parameters of what they can use it for? So dollars from the ADAP rebate fund may be used for HIV treatment and prevention, and with the new introduction of trailer bill disease intervention services, so there would be conditions on what that funding is allowable for. For how the centers can use it for? Correct. Okay. Thank you. No other questions? Hold it up and move on to issue 17. I have a question on home health. I know it's not. Who would be? Is anyone here from DPH that can answer questions on home health? Okay. Thank you. Thank you. Okay. Go ahead. Hi. I'm Dimple Kona. I'm the division director for GDSP, and I'll provide a brief overview of the changes to the Genetic Disease Screening Program estimate since the 26-27 governor's budget focused on expenditures and caseloads. For newborn screening, our caseloads for the current year are down 0.3% from the governor's budget, and for budget year, there's no change from the governor's budget. For newborn screening expenditures for 25-26, there's a slight increase of 0.2% from the governor's budget. And for 26-27, there's no change from the governor's budget. For prenatal screening programs, our caseloads for the current year are down 7.1% from the governor's budget. And for budget year 26-27, down 7.38% from the governor's budget. For neural tube defect screening, for current year, we are down 0.67%, and for budget year, down 0.92% from the governor's budget. Overall, prenatal caseload is lower than the governor's budget, mainly due to lower participation. For PNS expenditures, for 25-26, we have a decrease of 5.6% from the governor's budget, and for 26-27, a decrease of 5.8% from the governor's budget. So some of the key drivers for these changes are the reductions really are driven by almost entirely lower than expected participation in our CFDNA and neural tube defect screenings. I remember that was part of the conversation last time that we were talking about. Yeah. Okay. I don't have any further questions. Thank you. Order open. Move on to issue 18. Thank you. Good afternoon. There we go. I thought red meant mute. Okay, good afternoon for Choudhury, WIC Division Director. I'll be providing an overview of caseload and expenditure changes in the WIC May revise. So for the May revise, I'll start with WIC expenditures. In the revise, WIC's food expenditure estimate is $1.047 billion. This is a decrease of $71.7 million, or 6.41%, compared to the governor's budget, and is driven by a forecasted diminishing growth of participation compared with prior estimates. The figure, however, is slightly offset by a food inflation rate of 3.12%, which is up from the 2.8% projected in the governor's budget. The anticipated expenditures for local administration are estimated to be around $350 million. That figure has not changed from what was projected in the governor's budget, and state operations are estimated at around $71.000,000, which also represents no change from the governor's budget. As an update on caseload, CDPH estimates that an average monthly participation will decrease to 959,795 individuals, which is a decrease of 4.7% from the January budget. We continue to monitor any changes in participation moving forward, However, the assumption is that participation may begin to decline further in subsequent budget cycles in California as a result of declining birth rates. That would impact the enrollment of both pregnant people and infants eligible for the program. And we do continue to monitor other economic and political trends that may impact trends in participation. But for right now, we just think it's just a declining birth rates. Nothing knows that. Yeah, we're going to have to monitor for a little bit longer. Okay, it's not, it's this, you don't see a chilling effect having impacts in the decline? Not in a macro sense just yet. I do want to add that the government shutdown, we did see a decrease in enrollment, about 16,000 people in October. We continued our services and everything was, you know, communicated that WIC was open. but just that and event itself can serve as a shock to the system. We're recovering. Hopefully things stay stable on the federal level going forward, but those things can impact. And count on it. Yeah, I know. Anything to add here? Okay, we're going to hold the item open and move on to issue number 19. Thank you. Good afternoon, Madam Chair. Adrian Barraza, Assistant Deputy Director for the Center for Infectious Disease. So the May revise includes $113.3 million in fiscal year 2627 to support public health information technology systems. Excuse me. CDPH received $96.3 million in general funds to support public health data systems. This includes $16.6 million in general funds reappropriated from the current year savings that originated from the ability to spend federal dollars that expire July 2026. The department also received authority for $17 million for special funds from programs that use public health data systems This funding is going to enable the department to maintain M for the California Immunization Registry, the California Vaccine Management System, the Surveillance and Public Health Information Reporting and Exchange, or SAFIRE, the California Confidential Network for Contact tracing or CalConnect. And then also it would allow us to maintain design, development, and implementation for the future disease surveillance system, as well as support core CDPH enterprise architecture. And with that, I'm happy to answer any questions you may have. Will? Will Owens with the LAO. Nothing to add on this time, but available for questions. We're funding the ones that we weren't going to fund, huh? They were introduced and they revised. The Hantavirus just, like, scared us, or what? Well, I think it was a continuing dialogue within the administration recognizing these were a priority system. Yeah, no, they're priorities. I get it. But it kind of helped to have these little viruses go around to remind us how important these platforms are. Thank you for your proposal. I mean, your presentation. We're going to hold it open and move on to issue number 19. Thank you very much. No, that was 19. Bye. Yes. We're now on issue number 20. Good afternoon. Charlotte Archuleta, Assistant Deputy Director with Center for Laboratory Sciences. I'll be providing an overview of the budget change proposal. The California Department of Public Health requests 3,810,009 positions in 2627. and 4,327,018 positions in 2027-28, and ongoing from the Clinical Laboratory Improvement Fund to support growing demand for license processing. The current staffing levels cannot keep pace with a substantial workload increase in all major programs, resulting in application backlogs and delays in required inspections, including roughly 600 overdue facility inspections. Happy to answer anything. Yeah, could you help me? This is a new proposal, so I'm trying to get an understanding. I've gotten a lot of stakeholder input on this proposal, a lot, and I can imagine public comments are going to be mostly a lot on this. Not mostly, but a lot on this. So walk me through this. I'm hearing stakeholders say that they apply online for their lives. Well, first, let me ask. To fund these, will you have to increase the licensing fees? Yes. So a fee increase was authorized in the 2025 Budget Act and then instituted January 1, 2026. So those fees are already in effect, already done. And the reason that those were instituted was because there had not been a fee increase for the fees associated with this fund in over 10 years. So the purpose of that was to essentially right-size the revenues in alignment with expenditures and make sure that those are matching so that the program can have operational efficiencies and promote long-term sustainability. So now that the increase has happened, you have more revenue in the fund, and that's going to cover these positions? Correct Yes ma No ma Can you from my knowledge share Stakeholders have walked me through how they get their licensee and I've been hearing that they'll go online, submit it, and within minutes they get their license approval. So they're questioning why the need for more people to process this if it gets instantaneously they get their license renewed. the processes that they apply and then they are reviewed internally by staff. So the positions that are being requested, they review the applications to see if they meet the educational experience, the training, and everything like that. And we actually were receiving a lot of feedback from stakeholders that we were taking approximately six months or over a year to get a license approved. We were very far behind on that. So these positions are to help increase so that the licenses can be approved much quicker. So it's not a computer generated through an online portal? No, they do apply online, but not an automatic approval, ma'am. Okay. Okay. The rate that we approved that went into effect this year, is it true that it was a 335% increase? I would have to get back to you on that. Do you have those numbers? Apologies. There were a series of fees that were increased, so there's a large number of increases that were applied across the board. Maybe adding them all up? Yeah, potentially. I'm not 100% certain, but we can take a look. Okay. But you also mentioned this is not just for processing their licenses, also to do visits? Inspections, ma'am. Inspections. What gets inspected? The laboratories. Okay. And we're behind on those? We are. Okay. And the increase that we just implemented from last year, is that on a three-year rolling basis? Or is it until it stays in place until a proposal comes forward? In terms of how fees are assessed, whether that be annually or on a three-year basis, I would need to defer to my departmental colleagues. I'm not sure what the exact timeline is. but this is the new baseline for these fees. We don't know how long, and it's the baseline until whenever the department sees that we need more? Yes, the fees are based for operational needs, so it's to support the program. Right, and then so this will keep us whole for a while? At this time, yes, ma'am. Okay. Okay. Thank you. We're going to hold that item open and move on to issue number 21. Thank you. Good afternoon. Is this on? Hi. Hi, Maria Ochoa. I'm one of the assistant deputy directors with the Center for Healthy Communities, and I will be giving an overview on our May revise. So the California Department of Public Health is requesting $1.8 million in existing funds from Special Fund 0800 for 2627 through 2829 to support Health and Safety Code 105310 for local health jurisdictions and providing services to children with blood lead levels that meet or exceed the Center for Disease Control's latest blood lead reference value. Our previous BCP in fiscal year 23 authorized an allocation of million on an annual basis from existing funds in the Childhood Lead Poisoning Prevention Fund to initiate implementation of a new workload for case management due to the Center for Disease Control Prevention lowering its blood lead reference value However that BCP decreased the authorization allocation from $9.7 million to $6.1 million in 2627 and ongoing. LHJs have already seen a significant increase in case management workload resulting from the updated lead level and have expressed a need for funding to remain at the same level to continue providing services. Additionally, CDPH plans to adopt the lead exposure risk factor regulation package in fiscal year 26-27, which will further increase the number of children receiving case management services. Happy to answer any questions. I don't have any questions on this. We're going to hold it open. Thank you. Move on to issue number 22. Are you doing 22? I'm 23, so I was going to sit here. Okay. Who's going to tell me how you're going to help with my health disparities? There's a door right there, too. Thank you. Red is on. Good afternoon, Stephanie Weldon, Deputy Director of the Office of Health Equity. Issue 22, budget change proposal may revision. CDPH requests to shift a general fund expenditure authority of $2.5 million from local assistance to state operations. If approved, this fund will shift which support activities that address lesbian, bisexual, and queer women's health disparities. Anything else? What kind of programs? I can give the background. I have that. I think you're reading everything I have. Yes. So if you have anything else. Open for questions or anything else specific. Yes, just what kind of programs. So what this. What are the activities, yeah. The activities are grants to be able to maintain for staff to oversee the program and opportunities to monitor and provide technical support to current local partners and complete program evaluation. And it will allow the department to be able to award roughly $1.4 million in local funding that would have otherwise gone unspent. Okay, anything to add? Okay, we're going to hold it open. Move on to issue number 23. Okay, issue 23 is sickle cell. In the Budget Act of 2019, CDPH received a one-time $15 million allocation, which was allocated to the Center for Inherited Blood Disorders to establish a network of sickle cell disease centers in local health jurisdictions of Alameda, Fresno, Kern, Los Angeles, Sacramento, San Bernardino, and San Diego to provide access to specialty care and improve quality for care of adults with sickle cell disease, support workforce expansion for coordinated health services, conduct surveillance to monitor disease. disease incidence, prevalence, and other metrics. The May revise reflects a $6 billion budget adjustment annually over five years to continue to support Sickle Cell Centers for Excellence Network. Thank you, Narwa. Neither on my end. We're going to hold it open. Thank you so much. Thank you. Momentation number 24. Good afternoon. My name is Tina Espana, outreach and education team lead for the Office of Communications. I will provide a very quick statewide overview of the perimenopause and menopause campaign. Perimenopause and menopause impact more than half the population, yet symptoms remain under-recognized, under-discussed and frequently under-diagnosed. To address gaps in menopause care, the May revision includes $3 million to improve provider training and increase public awareness so more Californians can access timely evidence-based support. At Governor's Budget, budget bill language was initially included in the agency's item appropriation. Because CDPH is taking lead, the intent is to move the funding directly to the CDPH budget. Can you also remind me again the plan for the public awareness, the details behind it? The goals. How are we going to do the public awareness? It will be a paid media campaign, so we will contract a vendor to help with producing the paid media campaign assets, including research, content development, production, and ad buys, among other asset purchases. and that will also include community insights, research, and subject matter expertise consultation. Have you given thought, because it's going to, I know we need a vendor for the content and to put it out, but to do the research and the subject matter, UC has a center. They have the experts in the research on this. I'm wondering if our funding would be better utilized, Department of Finance, and giving the money to the experts already? One of the goals is to contract with the subject matter. So far that money would have to go to them? UC could be one of those that we do contract to help inform the campus. Oh, so the $3 million would go to the department, and from that the department would utilize it to then hire on everybody to do a little piece. Correct, yes. There is a portion of the budget allocation that is for subject matter consultation, and then additional portions allocated to the campaign asset. Do you have that breakdown? I have a proposed breakdown. The subject matter expert and research is $250,000 of the $3 million, while the paid consumer media, so the paid content development, and working with the contractor would be a little over $2 million. What percentage is going to stay with the Department for Administrative Workload? I don't have an exact number. I think I'll have to get back to you on that. Okay. Yeah. And it's just going to be a paid media? Well, with paid media, we also plan for earned media, so maybe that's your question. We do plan for post campaigns. Is it just going to be ads we're going to be looking at? Not only ads but perhaps video content resources for providers So it could be also print resources and perhaps looking at influencers as well to help get the message out One of the other partners we use, of course, is our local health jurisdictions and community-based organizations. Okay, thank you. No further questions. We're going to hold the item open and move on to issue number 25. Thank you so much. Good afternoon, Michelle Bell from the Center for Healthcare Quality. So for issue 25, as part of the 2025 Budget Act, CHCQ replaced four special deposit subfunds with separate special funds, improving their efficiency, transparency, and accountability. This proposal effectuates that conversion by transferring the funding from those obsolete subfunds into the new special funds. By changing these four subfunds into special funds and statute, separate account balances have been created for each fund to receive the balances, revenues, and make authorized expenditures. There's no fiscal or programmatic impact to the funds, but this is just a technical adjustment. Okay. Hold it open, move on to issue number 26. CHCQ requests $1,765,250 in 26-27, $74,000 in 27-28 and ongoing from the internal departmental quality improvement account, and $450,000 in 26-27 from the licensing and certification fund. CDPH also requests provisional language to authorize expenditures for program flex waiver software contingent upon CDT approval through the PAL project lifecycle or the project delivery lifecycle or upon the proposed effort being scoped into the patient safety and anti-discrimination AB 3161 implementation. The requested funding is for the following projects. $60,000 in 2627 from IDQIA to establish a proof of concept for the skilled nursing facility surveillance pilot project. $74,000 in 2627 and ongoing for a new learning management system contract. $231,250 in 2627 for health application licensing migration or the HAL system. and $1.4 million in 2016-2017 from IDQIA and then $450,000 from the Licensing and Certification Program Fund upon approval by CDT for the program flex waiver software upgrade. You're the one who waived over, was it you? Yes, but my colleague Chelsea is our expert. Okay, great, great, great. So a new TBL just dropped, and we don't have the opportunity to dive into it in this subcommittee. Above both of our pay grade of how the system works, TBLs get approved after the budget process. So I'm going to ask some questions on this. Can you run me through there a current 36 ramp for a transition of ownership from home health and now it being proposed for five years Did I say that right I learning as I go Okay so I just say my name for Chelsea Druskell with CDPH So right now, I think the 36 months you're referring to is a renewal for recertification. Not the transition of ownership? No. Okay. Okay. And so the trailer bill that was just introduced is putting a moratorium in place to allow the department to develop regulations that will address several criteria, including limitations on leadership positions, travel distance for staff to reach patients, and office requirements. some of the things that are very similar to what we put in place for hospice when we put the moratorium in place and subsequent efforts. So it's really just trying to implement some of those same safeguards that we felt were necessary for hospice and bringing those over to home health because we see potential for risk there. Okay, yeah. So we're trying to get ahead of another hospice situation in the home health space. So there's going to be a moratorium. the department's proposing a moratorium on any new home health? Yes. And no renewals will happen? Oh, you can renew if you're already existing. If you're already, okay. If you're already, yeah, you can keep operating. What we're saying is we don't want them opening up into new service areas during the moratorium. And we also want to make sure that the person who applies for the license holds it and uses it for the first five years unless there is some extenuating. What's the last part? that they hold the license for five years so they can't get a license and sell it to somebody else right away to flip it. That's what I was referring to of the ownership. Okay. Yeah. Okay, yeah. So it's a five-year. It's currently 36 months. So the way that it works now is under the CMS rules, if they aren't in operation for 36 months, the person who purchases the existing business would have to reapply as a fresh owner, not as a change of ownership, if that makes sense. Sorry. It does. Okay. And now we're increasing that to five years. We're doing it on the state side. So the federal rule is still where it is. We're being more stringent here. Okay. And then how has the department has identified certain demographics that have difficulties in finding home health? Is this moratorium? I know we need to balance it, but is this moratorium going to further widen that gap? That's certainly not the intent. We do have provisions in there that allow a new license to be adopted or opened if there's extenuating circumstances. So if there's unmet need in a particular area, we could go ahead and give an exception to the moratorium. So it's not a complete lockout. If you can establish that there's a need and that it's not over-concentrated already in the area, then you can proceed with licensure. How long do we anticipate the rulemaking to last? That is a good question. We are anticipating a two-year development period. Okay. Development, and then we have to go into the public comment and all that? Yes. And the moratorium will also be in existence during the public comment process and all that? Yes. Yes So the moratorium is going to be in place for 90 days after the adoption of the regs So the regs would be in effect for 90 days and then we would lift the moratorium Okay Thank you Potential more questions follow up as we become more aware I know the language just dropped. I know, it just dropped, so that's the only thing I had for right now. But I appreciate you answering them. All right, we're going to hold issue 26 open, move on to issue number 27. Okay. This is the Los Angeles County Contract Extension. CHCQ requests expenditure authority of $24.2 million in fiscal year 2026-27 and ongoing from the state licensing and certification program fund. And to augment the LA County contract for updated indirect costs, employee benefits and rates, personnel costs, and lease costs. As you're probably aware, about a third of the facilities that are operated in our state are in Los Angeles County. And so the contract is to provide regulatory oversight for those county by the county staff to oversee the facilities in that county. We're also seeking to extend the term of our current contract for one year. The extended contract is projected to total $148.2 million, including $16 million from federal resources and $132.2 million funded from the Licensing and Certification Fund. Will owns the LAO. Nothing to add at this time, but available for questions. Do we like this system? this approach? You mean contracting with the county? Yeah. I think that... Is it working for us? I think it is working. Okay. You know, there's a need to... There's a lot of facilities there. Right. And so I think one of the challenges is that the county pays a higher salary, and so the state would probably have difficulty recruiting staff in that area because of the pay differential, which is why we have the supplemental L.A. fee. Okay. But are they meeting the expectations we have? So we have performance metrics that are part of the contract, and we monitor those, and if they aren't meeting those performance metrics, then they have to do a corrective action plan to come into compliance to meet our expected standards. How responsive are they being to the 20% of complaints we're getting? I don't have that information with me. I will be able to get that for you and bring it back. I'm hearing investments in the waste and fraud area. We're trying to do different things. This has been a partnership for a very long time. I'm just wondering, is this something we're looking at changing as well as we're strengthening our ability to address these issues? I think we're evaluating sort of all of our workload across the state and looking for strategies on how do we improve to be able to meet all of our targets statewide. Okay. Okay, thank you. We're going to hold it open, move on to issue number 28. Okay, issue number 28 is nursing home staff recruitment campaign. CHCQ request 7.5%. $4 million in one-time funds from the Federal Health Facility Citation Penalties Account to support the CMS Nursing Home Staffing Campaign. The campaign will provide financial incentives for nurses to work in skilled nursing facilities, and these will include things like tuition reimbursement for RNs and LBNs that are working in skilled nursing facilities. The funds are going to be administered through a contractor that CMS will be procuring to sort of run the campaign and award the funding out to the nurses who are participating. CMS had requested that the states obligate around 35% of their penalties account to support the campaign, and so that's the dollar amount that we have. Okay. Anything, Will? Nothing to add on my end. Hold it open, move on to your last issue, issue number 29. Yes. This is the Patient Safety Reporting Systems Reappropriation. In the 2526 Budget Act, CDPH was approved for $1.1 million to develop the AB 3161 system to collect information related to discrimination. That's in hospitals. Michelle kind of talked about that earlier. And so this is sort of shifting funds out to align with the program timeline. No questions, Mayan. Thank you so much. Appreciate it. That concludes all our presentations for the May revise under Health and Human Services. Issue 30 are a list of stakeholder proposals. The chair has noted them, but they won't be for presentation. We are now moving to public comment section. All right, here we go. Good afternoon, Dr. Valencia. I'll try to keep it quick so everyone can go home, but I am one of 25 boarded clinical laboratory specialists in the country, and it is my professional opinion on issue number 20. That is a management issue, not a fund issue. the licensing fee went from $179 to $330 that's a double to then going from every two years to every year I don't know why that the department was unable to answer that question for you this is also impacting students as students who had not had to get licenses are now having to do that in addition to that the inspections are already done under CLIA either through CAP, COLA, or JCO. I don't understand why clinical laboratories have to have an additional inspection in addition to as well as FDA if they have a blood bank. Thank you. Thank you. Good afternoon, Chair and members of the committee. Last year with AB144, the governor sought the authority to adjust fees annually without public input. Senator Shannon Grove, who was present earlier today, correctly warned that granting unilateral authority like that would reduce transparency and accountability. I believe the governor current budget request makes clear that the revenue increase being sought by LFS is primarily about laboratory oversight not laboratory personnel oversight Yet the financial burden is being disproportionate on laboratory professionals themselves The CDPH more than tripled clinical laboratory scientists personnel fees, while facility fees increased only about 24 to 64 percent. regarding issue 20 on today's agenda, licensing fees, resources, it is not appropriate for lab personnel, the people in the lab, to subsidize the cost of broader laboratory oversight. Laboratory professionals strongly oppose this proposal until a legislator has addressed the disproportionate fee increases on the lab workforce. Thank you. I urge you to do a thorough inquiry into the more than tripling of my clinical laboratory license. Revenue from licensing is supposed to self-fund licensing of personnel. That was the governor's intention. Funding of inspections of labs and other activities concerning the labs are coming from license fees. By the way, I have not seen a state inspector in a laboratory since 1985. As Luke mentioned, we participate in CAPs testing and we are inspected by Joint Commission, which inspects the whole hospital annually. We are currently the number one hardest to fill profession in the state. We are struggling to fill vacancies right now. We rely on travelers, part-timers, and those close to retirement. I'm 66 years old, folks. One of my coworkers is 80 years old, and she works the weekend. Protect health care, ensure doctors and other providers can still receive timely and accurate lab results for their patients. Please look into it and block or modify this part of AB 144. Thank you very much, and you have the most stamina I have ever seen from an elected official. Thank you. I have a couple 80-year-old colleagues as well. They work on the weekends too. Oh, my God. All right, good afternoon. My name is Marilyn, and I've been a lab scientist for 10 years as well as an educator. I'm here in opposition to this proposal to increase laboratory licensing fees, including raising clinical laboratory scientists' renewal fees from $179 every two years to $300 every year, which is in fact a 335% increase. Laboratory professionals are an essential part to patient care. We provide the testing behind emergency blood transfusions, critical diagnoses, infection detection, and life-saving treatment decisions. California already faces severe laboratory shortages, as Valerie said. Increasing licensing fees creates a lot more barriers for new laboratorians, pushes experienced professionals away, and ultimately threatens patient safety through delays in cares, increased burnout, and reduced workforce capacity. I respectfully and urgently ask you to revise this proposal. Thank you. Thank you. Thank you, Madam Chair and subcommittee members. I myself am a clinical scientist, and like my colleagues have said, we provide results that inform 75% of all medical diagnosis and treatment decisions. We are incredibly important to health care. I urge AB144 clinical lab personnel fee to be revised to 270 every three years, and lab field services continue to be funded by state funds and by lab facility fees to prevent clinical lab work shortages that will devastate hospitals, public health labs, and blood centers. AB 144 caused the rise of our lab personnel license fee from $180 twice a year to $300 annually, yet lab field services has not shown how these funds will be allocated or why such a steep increase was necessary. Newly graduated lab scientists, travel scientists, semi-retired scientists who all feel critical work shortages are likely to avoid California and exit this health career. Our license fee was already the highest in the U and higher than most other California healthcare professionals including nurses who are paid more than us The best solution is a tri licensing cycle implementation and AI software implementation Thank you. Thank you. Thank you so much. Are you on the same topic? No. I just want to note, though, this past last year, we didn't get this kind of pushback whatsoever. I read as much as possible and just, I just want to note that this, you know. It was snuck in. Yes. I was told by our consultant who is a national ASCP max lobbyist in Washington, D.C. It's okay. Yeah, go ahead. He just said that it was not searchable using key terminology. And I have a lobbyist. They never told us about it until January. Okay, after it passed. So it was snuck in there. Okay. There was no warning. All right. Which is a shame. Because we gave time to this. That's why I'm always mindful. I'm always mindful of the pushback on things. It's just we didn't hear anything on this last year. Yeah, we didn't know. I have a lobbyist, PPA. I'm an ex-president of CAML, C-A-M-L-T. They're very active monitoring legislation that affects our profession. Nobody saw this coming. And, in fact, we're way behind in scheduling and the schedule of trying to address this. That's why it was so critical for us to come here today and yesterday to address this to push back because this is going to cause a terrible, catastrophic loss of personnel. Thank you. Okay. It's not good. Okay, thanks. Go ahead. Good afternoon, chairs and committee members. My name is Simon Vood on behalf of the California Behavioral Health Planning Council. The Behavioral Health Service at BHSA is a voter-protective fund dedicated to improving California behavior health system, particularly for people with serious mental illness. Redirecting BHSA dollars to fill general fund gaps, conflicts with voter intent and puts at risk the treatment, housing, crisis care, and recovery support that counties are providing every day. Workforce initiative and broad prevention activities are valuable, but they were never intended to be funded by VHSA and fought outside of county responsibility. So we urge the legislature to uphold voter intent and also reject the proposal to ship VHSA funds to cover general funds shortfalls. Thank you. Thank you. Thank you very much, Vanessa Cajina, on behalf of two of the investment proposals. On behalf of OCHIN, we really appreciate the perspective on the health techs job proposal. And then on behalf of Visione Compromiso, an appreciation of the request on reporting for Promotora and CHW use. And then I'd also like to uplift Visione Compromiso's request for Promotora and community-based organization support to mitigate some of the most devastating effects of HR1. Thank you. Thanks, Vanessa. Good afternoon, Madam Chair. My name is Carly Holko with the California PACE Association. We respectfully urge the legislature to reject the additional cuts to PACE rates proposed in the May revision. Last year's budget agreement already capped PACE rates at the midpoint, which will result in significant cuts and savings to the state. Unlike managed care plans, which are paid at the lower bound and serve a broad population with varying acuity levels, PACE exclusively serves some of California's most medically complex and frail older adults. Additional cuts threaten the workforce and care infrastructure needed to sustain this highly coordinated model of care. California should be protecting PACE, not weakening it. Thank you. Thank you. Hi. Good afternoon, Madam Chair. Veronica Palacios representing SEIU 1021. I am an eligibility specialist at Alameda Health Systems in Alameda County. Please hold the line on the Medi Fair Share Revenue Solution to address and protect our health care system Thank you Natalie Pita on behalf of the California Academy of Family Physicians We appreciate the planning around the expiring MCO tax. We urge the legislator to ensure that Medi-Cal provider reimbursement and primary care remains a priority as intended in Prop 35. We are also concerned that this budget does not adequately address the loss of coverage due to the HR1 and does not invest in the safety net systems that will absorb the impact. We are also concerned about redirecting medical loss remittance funds to the general fund instead of preserving funding for the physicians and dentists' loan repayment program. With CalHealthcare is a separate funded loan repayment program unfunded since 2023. Maintaining workforce investments is especially important. We look forward to continuing conversations. Thank you. Thank you. Thank you, Chair. Nick on behalf of the California Association of Health Plans. First, I would like to state that we are strongly opposed to the transfer from managed care to fee for service. In the interest of time, my colleague from the local health plans will get into more of the details and I will align my comments on that issue there. But on the MCO tax, we have some serious concerns about the administration's proposal. It raises a number of affordability and sustainability red flags for premium payers. We've always been team players on the MCO tax. We've worked diligently with the state in the past, and it's allowed us to actually support the tax when it's affordable, and the funding goes to actually improve the Medi-Cal program. This proposal strays pretty far from those principles, and so that's what we're seriously concerned. It's a $1.5 billion tax on the commercial markets. So we just ask that you seriously consider the magnitude and impacts of this proposal. And we're working on our formal position, and we'll express that when we get there. But thank you. Thanks, Nick. Yeah. Madam Chair, Peter Kellis, on behalf of the California Association for Health Services at Home, we saw the TBL last night at about 8 o'clock on the home health moratorium. We want to make sure to be very clear that we're against fraud, want to work with you and the administration to work on it. We think that it's an improvement over the language on the hospice moratorium. It has some problems with it from our perspective. We're looking forward to engaging in stakeholder discussions so there's not more problems that will yield the similar problems as the hospice moratorium and look forward to working on that. Also, speaking of home health, here in favor of the private duty nursing investment and then for two other clients that relate to the program for all-inclusive care for the elderly, that would be St. Paul's PACE and San Diego PACE. We're opposing the proposal by the administration. Thank you. Good afternoon, Madam Chair. Angela Hill with the California Medical Association. On issue number four, the administration's MCO tax proposal is effectively taxed to fill the general fund, and it will increase health care costs, including higher premiums for patients and the employers who are providing that coverage. Funds from a health care tax should be reinvested into the health care system to protect patient access as envisioned by what voters overwhelmingly approved through Proposition 35. And then on Issue 8, we also opposed the proposal to increase premiums to $50 for people without documentation. This is a really troubling proposal that will reduce access to very vulnerable Californians. Thank you. Thank you. Alina Workman, California WIC Association. WIC has approved targeted intervention supporting almost 1 million Californians each month during their most vulnerable time of need. We remain deeply concerned that any disruption in services will be catastrophic to our families' short and long-term health. The fear of another government shutdown or withheld federal funding is real. The impact of a funding gap would be devastating to participants, as well as the state and local workforce who provide the program, grocers, food manufacturers, farmers, and countless other companies and organizations that support these sectors. This program deserves our full support and investment, especially during moments of crisis, and we hope that this program is prioritized should the need arise for state assistance. Thank you. Thank you. You're the real champ, Senator. Robert Gamboa, Los Angeles LGBT Center, here to speak on four items, two to critically entangle and two in full support. We appreciate including the In the Epidemics proposal and the LGBTQ Plus Community Center Fund in the May revise. However, we respectfully urge the legislature to untangle the LGBTQ Community Center Fund from the AIDS Drugs Assistance Program $60 million proposal. The community center fund is intended to be a flexible $35 million general fund investment to help stabilize LGBTQ community centers responding to rapidly evolving federal threats and funding instability. Only general fund dollars provide the flexibility to support the necessary support in these broad range of services that LGBTQ centers can provide and not to draw from HIV medication and prevention funds. So therefore, we respectfully urge full funding for the $35 million for the LGBTQ Community Center Fund, $26 million for the California Access to Gender Affirming Care Fund from the General Fund, full funding from Ending the Epidemics of $143 million, and $26 million in Opioid Settlement Funds, and then obviously full support in URASC. Thank you. Good afternoon. Whitney Francis with the Western Center on Poverty and on behalf of Justice in Aging. Again, we appreciate and support the Senate's fair share proposal, which is critical to rejecting the May revisions, devastating Medi-Cal cuts. We also echo the chair your opposition to drastically lowering the Medi-Cal asset limit to $2,000, which will force older adults and people with disabilities to impoverish themselves to access Medi-Cal. And although delay proposed, we remain opposed to cutting Medi-Cal for 200,000 humanitarian immigrants and increasing already unaffordable premiums to $50. We continue to urge the legislature to reject this two-tiered Medi-Cal system and to reject state budget proposals that go beyond what H.R. 1 demands by rejecting harmful work requirements and six-month renewals to state-only populations. We appreciate the department's work to reduce H.R. 1 impacts and urge support for reinstatement of key renewal relief strategies to keep eligible people enrolled in Medi-Cal and to support the county workers who administer it. Regarding the fee-for-service shift, we know transitions result in disruptions and care, so we urge there to be protections in place prior to any move, including detailed access. Thanks. Good afternoon, Chair. Matt Veles with the Latino Coalition for Healthy California. First, we want to thank the Chair and the Senate for their leadership to protect Latino and immigrant health. LCHC is appreciative of the proposal for new investment to support a report by DHCS on the utilization of the community health worker Medi-Cal benefit to ensure that all beneficiaries are accessing the benefit. Additionally, urging the Senate to reject proposed increase in premiums for undocumented Californians. Also reject bringing back the asset test included in the May revise and urge the Senate to continue supporting approaches that keep people covered, things like removing the freeze, eliminating worker requirements for state-funded populations, and extending flexibilities to automate renewals. Thank you so much. Thank you. Hi, good afternoon. My name is Maria Betancourt representing SEIU I a specialist clerk at John George Psychiatric Hospital in Alameda County Please hold the line on the Medi Fair Share Revenue Solution to address to protect our health care systems I like y'all's new shirt. Thank you. Very nice. If one happens to fall and be in that corner, it would be okay. Good afternoon. Michelle Johnston with the National Multiple Scorosis Society. I'm sorry to hear about the game. An administration that has prided itself on being a leader in improving health care access, it's concerning and disappointing to see budget savings projections that are due to hundreds of thousands of Californians losing their health care coverage over the next few years. We ask you to reject the following proposals that will be particularly harmful to people living with MS and other chronic conditions. Reinstatement of the lower Medi-Cal asset limits. We talked about that a lot today. elimination of the benefit for acupuncture, which is a tool that helps people with MS manage their symptoms such as pain, migraines, foot drop, and depression. The imposition of utilization management for transportation services, which are critically important for people with MS who often cannot drive due to cognitive fatigue or gait issues. Without transportation, health strength alone is insufficient. Losing coverage can lead to delays and gaps in necessary tests or treatments, and this disease may result in serious, long-term, and irreversible consequences. We also are here in support of the Western Center for Law and Poverty's proposal around the release strategies. Thank you. Thank you. Good afternoon, Chair. Diana Luna with the County Behavioral Health Directors Association. We shared a letter with the committee earlier today, but we would like to reemphasize on issue number five. We have concerns with using HCRAI and CDPH's BHSA allocation to offset existing general fund commitments. These allocations were shifted from counties to the state and resulted in significant cuts to local programs, and we do not believe the proposed swaps would be consistent with the original in time of BHSA. As the legislature continues to work towards a final budget agreement, we also strongly urge maintaining the statewide mobile crisis benefit. Mobile crisis services remain a critical part of California's behavioral health continuum, and we look forward to continuing to work with the legislature to identify a sustainable approach to maintaining the benefit. Thank you. Thank you. Good afternoon, Chair. George Hughes on behalf of the California Behavioral Health Association. We just want to voice our opposition to restoring the Medi-Cal asset limit and proposal that increases premiums and reduces coverage for UIS populations. Over the last decade, California has worked to reduce barriers to care because coverage inability has led to delayed treatment, higher emergency room utilization, and more uncompensated care pressures on providers. We would also like to note our support for investments to the menopausal awareness program prevention. Early intervention and coordinating care improves outcomes and reduces long-term costs across the health system. And we would also like to note our support for population-based prevention and ask that that funding be focused on existing programs like the California Reducing Disparities Project that has a well-documented ROI on the state's investment. Thank you. Thanks. Madam Chair, members, Tim Madden representing the California chapter of the American College of Emergency Physicians. In recognition of the challenges facing emergency departments and emergency physicians, the legislature has included funding for emergency physicians treating Medi-Cal enrollees in the last three budgets. This was before H.R. 1 was signed. The previous funding has been primarily through the MCO tax, which was signed back in 2023. The current MCO tax proposal outlined in Issue 4 does not include continued funding for emergency physicians. As noted in the analysis the emergency physicians are requesting continued funding be included in the 26 budget whether as a part of the MCO tax or as a standalone allocation This committee has consistently heard about the cuts in previous years budgets to the health system as well as the devastating impact of HR1 Many people have talked about people coming to the emergency department as a result. So this funding will help us staff emergency departments and help ensure we get access to timely care. Thank you. Thanks. Madam Chair, Darby Kernan on behalf of Ceres Community Project which established a CBO Medi-Cal Coalition comprising of more than 700 CBOs across the state providing ECM and CS services. We're deeply concerned with the governor's May revision. These programs are shown to be cost effective, reducing emergency, acute care, and other transitional system costs. So we'd ask you to reject their proposal. Also, on behalf of Leading Age California and In Child Poverty California, we oppose the reinstatement of the asset limit for all the reasons you discussed today. Thank you. Thank you. Good afternoon, Josh Goger on behalf of multiple clients. On behalf of the California Association of Public Hospitals and the University of California Health, the May revision only reaffirms the immediate need for $500 million appropriation in 2026-27. We are estimating the transition of individuals with unsatisfactory immigration status from managed care to fee-for-service, The proposed $50 premium and the PPS rate cuts will result in over $800 million in impacts to public hospitals. Between H.R. 1 and the May revision, public hospital systems are facing $4 billion in revenue reductions. In addition, UC Health wants to highlight the absence of a proposal to reverse plan cuts to dental supplemental payments. On behalf of the Center for Elder Independence, the proposal to lower the PACE rate cap is an unexpected and harmful departure from last year's budget agreement. And we also have concerns with the transition of the UIS population to fee-for-service. Thank you. Thanks. Kelly Brooks on behalf of the urban counties of California and the counties of Los Angeles, Riverside, Santa Clara, Santa Cruz, Santa Barbara, and Ventura. We are concerned about the lack of meaningful investment in mitigating the impacts of HR1 and the May revision. The May revision provides $100 million less than the counties have requested for Medi-Cal eligibility operations, while also proposing new penalties tied to eligibility processing timelines that we cannot meet without sufficient staffing and resources. Public hospitals requested $500 million to offset H.R. 1 impacts, yet the May revision provides no relief and makes the problems worse. Finally, there is no investment in county indigent care systems. We urge the legislature to consider a short-term bridge strategy for individuals who lose coverage. Look forward to working with you. Thank you. Thank you. Craig Scholler on behalf of the California Primary Care Association. California's FQHCs are the backbone of primary and preventative care for low-income Californians, including UIS communities. They may revision its proposal to cut managed care protections and maintain elimination of PPS reimbursement for UIS communities in the same budget cycle dismantles the delivery system and the financing that sustains it simultaneously. We ask the legislature to delay the cuts to PPS for the UIS population to at least July 1, 2027. We are opposed to the proposed shift of the UIS population from managed care to fee-for-service, along with the increase of premiums to $50 for UIS beneficiaries. This creates access to care on paper, but not in reality. Communities will not be able to afford these premiums. We also oppose the proposal related to the asset limit test and cap on pace rates. And finally we are concerned with the administration proposal on the MCO tax and hope to work with the legislature administration to renew the MCO in a way that follows the will of the voters from Prop 35 Thank you. Are you new with them? Yes, I am. Welcome. Thank you. It sucks in here. Chair, Kathy Mossberg on a couple of issues. On behalf of the San Francisco AIDS Foundation, APLA Health, and Essential Access Health, part of the End the Epidemics Coalition, While we appreciate the efforts of the administration in providing some ideas for the ADAPT Drug Assistance Program and the rebate fund, we would welcome the overlap, encourage the coalition priorities, and also want to prioritize what the LBGTQ coalition has put forward in their budget request. Also want to call out for the Public Health Institute that there was a cut of $1.57 million to the cancer registry. and we've worked with your subcommittee before to provide backfill here. We think it's a critical point in time that this has to be maintained. This is just going to be level funding. There's nothing additional here. So we want to continue to work with you and your staff on that. And then on behalf of Delta Dental, we are opposed to the Prop 56 cuts. So thank you. Good afternoon. Katie Andrew with Local Health Plans of California. We strongly oppose the May revision proposal to move Medi-Cal members with unsatisfactory immigration status out of managed care and into fee-for-service, as well as the proposal to unnecessarily move qualified non-citizens out of full-scope coverage. The difference between the two systems is stark. Fee-for-service is coverage on paper versus true access to high-quality coordinated care provided to members in managed care. We see this as an accounting issue for UIS emergency services and does not require moving an entire vulnerable population into a second-tier delivery system. We have questions about the savings scored from this proposal solution. It does not account for the significant cost to build a fee-for-service system capable of serving 2 million Medi-Cal members or the cost of these members seeking care in the emergency department. We look forward to working with you. Thank you. Thank you. Thank you, Madam Chair. Brenda McCarthy with the California State Association of Counties. As has been noted, the May revision includes no funding related to HR1 for indigent care, public hospitals, or county behavioral health, and really inadequate funding for county administration. Given the lack of funding in the May revision and the state's fiscal condition, we've shared an alternative approach with the committee for addressing indigent care and the population who will lose their Medi-Cal eligibility due to work requirements. This proposal would put people into a state-funded, limited-scope benefit. The benefit of that is it keeps people connected to Medi-Cal, making it easy to put them back into full scope as their circumstances change. It would allow the state to draw down federal dollars for any inpatient stay, which is the most expensive part of indigent care and emergency Medi-Cal. And then we think it would provide a bridge for the next two years to allow the state to comprehensively decide what to do to maintain the coverage gains we've made over the last several years. Thank you very much. Do you have that? Do you have that? Sarah DeKett, on behalf of the Rural County Representatives of California, I want to echo the comments of my colleague. We support the proposal, the temporary proposal to put folks in emergency scope medical that lose their coverage due to the work requirements. We also want to say we're very concerned and urge the legislature to reject the proposal on the county administration for eligibility workers. Not only are they proposing to underfund them, but then to penalize counties, so take away the resources and then penalize us. It's a perfect storm setting us up for failure. Now's the time to invest in eligibility workers so we can keep people connected to Medi-Cal. Thank you. Thanks. Thanks. Thank you, Madam Chair Kathy Senderling-McDonald, for two clients today. First, for the California Association for Adult Day Services. We join others in urging rejection of the asset limit proposal for older and vulnerable adults. We do also continue to request the no-cost trailer bill language, and thank you for enabling us to present that cost relief package earlier in the year. Second, on behalf of Public Health Advocates, it's a statewide nonprofit that runs the legislatively created All Children Thrive or ACT program. We request adoption of trailer bill language reauthorizing ACT for two calendar years and $10 million general fund spread over the next three fiscal years. ACT has helped spur policy and funding wins in 31 communities, supporting 2.8 million youth, and bringing in 37 million on top of what we've received from the state. Thank you for your considerations. Good afternoon, Madam Chair. Michelle Gibbons with the County Health Executives Association of Counties, representing local health departments. would echo the comments of my county colleagues that came before me regarding the state alternative to indigent care. Without having a solution, what ends up happening is that counties are being asked to serve a returning population, and the state is retaining dollars that we once used to do so. And so we definitely want to be modest in our proposal. The goal is full scope coverage, and we understand that. But we recognize the budget climate, and we think that the alternative is a reasonable interim step. Thank you. Thanks. Good afternoon, Madam Chair. Cleo Bluthenthal with the California Community Foundation in partnership with the Fight for Our Health Coalition. Our state's most vulnerable are relying on us to find sustainable long-term revenue solutions to fund Medi-Cal for all Californians. We strongly support the California Senate's leadership in reaffirming our state's commitment to Medi-Cal through an employer fair share contribution. We ask that you hold the line as we enter final budget negotiations. Thanks so much. Thank you. Good afternoon, Madam Chair. Nora Angeles with children now. Related to issue eight, we are concerned that as churn increases for adults and they fall off Medi-Cal rolls, children will be caught in the crossfire. For mixed status families in particular, impacts for children will be an unintended consequence of these cuts. We urge the department to provide estimates of the numbers of children losing coverage and to develop specific strategies to keep as many kids covered as possible. We also want to support the public health IT investment and the childhood-led poisoning prevention enhancement. Thank you. Thank you. Hello, my name is Vanessa Flores, and on behalf of the Alameda County Board of Supervisors, we are deeply concerned that the May revision fails to meaningfully address the impacts of HR1. Counties are on the front lines of Medi-Cal implementation, yet funding for eligibility operations falls roughly $100 million short of county's request while adding new processing penalties. At the same time, public hospitals face $4 billion in reductions. Alameda County has long maintained its indigenous care program and remains committed to serving vulnerable residents, but without additional state investment and a short-term bridge strategy, counties and safety net providers will face growing strain and Californians will risk losing care. We urge the administration and legislature to partner with counties to stabilize these systems before the full impacts of HR1 take hold. Thank you. Thanks. Chairman Javar, I'm Marvin Pineda with California Advocacy on behalf of Children's Hospital of Los Angeles. CHLA is the backbone of pediatric care and California's Children's Services Program. They care for one in five CCS children in the state, kids with cancer, heart defects, and needle transplants. Kids who have nowhere else to go from all 58 counties come to CHLA CHLA is in a crisis Since 2018 the state has systematically cut the Medi reimbursement funds that provides this complex care And CHLA loses hundreds of millions of dollars every year. Not hundreds of millions, millions of dollars every year. Every single day, they receive around eight transfers from hospitals that cannot provide that type and volume that CHLA offers. If CHLA reduces services, there is no backup. The California can not let that happen. We respectfully ask for your support on the one-time $63 million budget request. Thank you. Thank you. Good afternoon, Madam Chair. Jackie Anderson with CHIAC representing our local health departments. Under DHCS related to the California Children's Services Program, we do want to note that the May revision does not propose adequate funding for the county administration of the CCS program, including case management. As a reminder, current allocations are $109 million below what DHCS staffing standards indicate. Also on that note, related to the UIS fee-for-service transition, do want to note that we anticipate impacts to the CCS state-only population and want to work with the administration and legislature to better understand the needs for rebuilding that case management staff that was lost as an implementation of the CCS whole child model. And lastly on CCS, we would request repeal of the CCS monitoring and oversight provisions as part of the administration's proposed CalAIM waiver renewal trailer bill language. Under CDPH, I want to express support for the $113 million for the public health IT systems and appreciate your leadership on that issue. We do express support for the proposed $18.7 million investment of the ADAP rebate funds to support the disease intervention specialist workforce. And then lastly, on CDPH-BHSA dollars, I want to express support for the proposed provisional language to provide that funding to local health departments as direct allocations. Thank you. Thank you. county eligibility workforce at $157 million for the Medi-Cal side. Additionally, we want to reject the proposal on the table for the administration to use these eligibility funds to contract out these services. These dollars must go to the counties. Lastly, we support the county proposed alternative to urgent care and want to thank the administration for including a revised public health IT infrastructure funding. Thank you. Thank you. Hello, Madam Chair. I'm Carl with N Child Poverty California here to speak about Protect Medi-Cal for All. Our families are already facing proposed premiums and enrollment freezes in Medi-Cal. Under the January proposed budget, California would mirror federal work requirements for undocumented community members enrolled in state-funded Medi-Cal. Unfortunately, this may revise. It does nothing to address the concerns the community has been advocating for in the past months. In fact, it doubles down by making it even more expensive for immigrants to access health care by increasing premiums. Immigrant communities are already navigating barriers to care, discrimination in the health care system, unstable employment and fear of immigration enforcement in their workplaces. We urge you to reject these policies and protect equitable access to health care for all Californians. Thank you. Thank you. Chris Dombrowski on behalf of Western Dental, the largest Medi-Cal dental provider in the state, urging the committee to restore cuts to the Prop 56 dental provider rates We want to thank the committee for prioritizing a delay of these Medi dental cuts in your budget blueprint and respectfully urge you to follow through by adopting at least a delay Prop 56 payments are what allowed providers like Western Dental to rebuild dental access in high-need communities after years of chronic underfunding. California should not return to a system where low-income families rely on charity events, emergency rooms, or delayed care. Please protect access to Medi-Cal dental for the millions of Californians who rely on it. Thank you, Madam Chair, for your list. Thank you. Good afternoon, Madam Chair. Jessica Moran here on behalf of the Association for Dental Support Organizations and Golden Age Dental Care. Also here for Proposition 56. Simply put, we cannot go back to the way things were before Proposition 56 rates were put into place. Not only will this decimate the provider network, but most importantly, it will impact our most vulnerable Californians, our most vulnerable children, adults, seniors, and those in developmental disabilities. urging the legislature to hold the line. I really appreciate you putting this in the Senate budget plan. Thank you. Thanks. Thank you, Madam Chair. Chris Scrogg with Capital Axie on behalf of Big Smiles and Children's Choice Dental Care, echoing the comments of past speakers requesting the legislature to restore Proposition 56 funding for Medi-Cal dental patients. To put it shortly, this has been integral to expanding the provider network, which therefore has expanded access to many patients. And if we cut this funding now, then we risk losing all that progress. So thank you very much. Thank you. Hi, Rachel Blucher. On behalf of a few clients, first on behalf of LA Care, we align our comments with LHPC on the move of certain immigrant populations to fee-for-service. We believe that such a change risks eroding critical services like enhanced care management and community supports for a very underserved population. We recognize this difficult budget environment and committed to partnering in a constructive way to preserve access wherever possible and maintain continuity of care. Second, on behalf of the counties of Contra Costa, San Diego, Yolo, and Lake, align our comments with our other county colleagues. Really have concerns around the lack of meaningful investment in county infrastructure. Just want to emphasize that we urge the administration and legislature to partner with the counties to stabilize these systems. county workforce is responsible for the eligibility work and underfunding this work will inevitably lead to unavoidable coverage loss and greater strain on local systems. Thank you. Thanks. Madam Chair, Keith Coolidge, a volunteer on behalf of AARP California. Appreciate some of the concerns you raised with the so-called budget solutions in issue item 8. Three points. So on behalf of AARP, we strongly oppose the proposals to revert the asset test back to $2,000. Older Californians and individuals, as you pointed out, have been on this roller coaster ride for the last five years, and it's really time to stop the cruelty. We oppose the CalPACE rate caps and the tax. It's a critical program that provides home and community-based services for dual eligible beneficiaries, who are at risk of being placed in a nursing home. It's proven. It's an evidence-based program that keeps older Californians in their homes and communities and alleviates burdens on family caregivers. And finally, we oppose the proposal to increase the age eligibility for adult protective services to 65 years from 60. Elder abuse is on the rise. It can affect any person of any ethnicity, background, or social status. Thank you for your comment. Thank you. Good afternoon, Madam Chair. I all to meet with CPEN the California Pan Health Network I here to align my comments with previous speakers especially on the rejection of cuts to our UIS populations the increase in premiums in the IHSS medical asset test limits respectfully requesting rejection of these draconian cuts. In a year where the state has brought in $16.5 billion in revenue over what was expected, if we're still making cuts to our most vulnerable communities, the state should really be talking about how to hold corporate parties accountable, how to raise revenue, and how to make sure that we're funding health care and our state's safety net reserves. You know, these cuts are not saving our state any money. People are going to be delaying doctor's visits and seeking emergency care and living sicker and dying younger. Thank you. Thank you. Chloe King with Political Solutions. First, on behalf of the County of San Mateo, just would like to reiterate the comments made by the urban counties of California and our other county partners. Secondly, on behalf of the California Dental Association, we really appreciate you prioritizing health in the budget for dental health in the budget blueprint. But the proposal to cut Prop 56 leaves about $518 million in federal funds on the table, similar to 2009 when the state incurred roughly $2 billion in additional costs due to increased emergency room use. Voters have consistently supported dental access through Prop 56 in 2016 and Prop 35 in 2024, and that need has not changed. So we urge you to protect these investments in the budget. Thank you. Thanks. Good afternoon, Madam Chair and committee members. My name is Tawanda Gilbert. I am with SEIU Chief Shop Steward at John George Psychiatric Hospital within Alameda County. And I am speaking on behalf of over 4,000 members, and I request please hold the line on the medical fair share revenue solution to protect our public health care hospital. Thank you. Good afternoon. My name is Lawrence Evans. I'm an employee with Alameda Health System, EVS Department. I'm just asking that you continue to fund Medicare, a fair share revenue solution, and to also protect our health care system. Thank you for coming. Good evening, Madam Chair. My name is Kishina Johnson. I am a pharmacy technician at Highland Hospital, a part of Alameda County. Every day, California should not be left scrambling for coverage in the aftermath of H.R. 1. While corporations benefit from Trump's tax cuts, we strongly support the California State Senate leadership in reaffirming our state's commitment to Medi-Cal through an employer fair share contribution. We ask that you hold the line as we enter our final budget negotiations. Thank you. Thank you. Hello, Madam Chair. My name is Benjamin Fisher. I'm an activity therapist at John George Psychiatric Hospital in Alameda County, like many of my fellows here in Purple. We strongly support the state's leadership in reaffirming our state's commitment to Medi-Cal through a fair share contribution. We ask that you can hold the line as we enter the final budget negotiations. Thank you. Thanks. Hi, my name is Cynthia Harris. I'm a registered nurse at the Family Birthing Center at Highland Hospital in Alameda County, and I'm here to echo what my colleague said to please hold the line for the Medi-Cal Fair Share Program. Thanks. Thanks. Michael Henning, California Alliance of Child and Family Services. We represent nonprofit community-based organizations that serve children, youth, and families across the state. Related to Issue 7, the California Alliance continues to oppose restricting health care access for 200,000 immigrants, including refugees, asylees, domestic violence survivors, and holders of visas for crime victims to emergencies. only Medi-Cal. Regarding HR1 more broadly, we support the Western Conference on Law and Poverty's proposals for investments around Medi-Cal renewal relief strategies and rejecting HR1 Medi-Cal work requirements and six-month redeterminations for state-only populations. Under Issue 13, CalAIM's enhanced care management and community supports are a critical component of our behavioral health continuum of care. We support DHCS in converting time-limited positions to permanent staff for CalAIM implementation, but we are also deeply concerned and opposed to the proposed cuts to ECM and CS reflected in the May revise and would like more clarity around the rationale for this change. Thank you. Thanks. Good afternoon, Chair. Chloe Amosio with the California Immigrant Policy Center. As co-chair of the Health for All Coalition, we would like to thank you for your unwavering advocacy for immigrant health. We also want to thank the Senate for pushing back on the most egregious cuts to Medi-Cal that we saw come out in the previous couple of years. We fully reject all proposed cuts to the Medi-Cal expansion, including the most recent proposal to increase premiums from $30 to $50 per month. These proposals will cause millions of immigrant Californians to lose access to Medi-Cal and be barred from receiving the preventative care that is keeping them alive. If a fee-for-service transition moves forward, safeguards must be included to ensure equitable access for immigrant enrollees, including consideration of how language access, provider networks, and specialty care will impact enrollees as a result of the transition. As we continue budget negotiations in the next few weeks, we urge the legislature to prioritize approaches that will keep people enrolled and protect the most vulnerable of our communities. Thank you. Can you send me a list of those guard rows? Thank you. have suffered torture abuses, victims of crime. We really cannot eliminate full-scope Medi-Cal for these populations that desperately need access to care. Additionally, we should not be taking this opportunity to increase the premium. As we've heard from the LAO today, it's not clear that there's actually savings, and we know more people will be kicked off. In some parts of the state, you can barely get three gallons of gas for $20. We should make sure people can keep that in their pockets. We urge you to reject all of the cuts to immigrants, and we thank you very much for the plan in the Senate that protects immigrant health. Thank you. Thank you. Hello, Chair. My name is Sadalia King. I'm with EDW Ask Me, Local 39 and 30. The governor's proposed reductions to adult protective services, the reinstatement of the medical asset tests and offsets from the mobile crisis services would balance the budget by shifting the burden onto older adults and folks with disabilities. We echo all the concerns that you uplifted today. So thank you for holding the line, as everyone else is saying on that. But the budget solutions do not hurt seniors and folks with disabilities who depend on Medi-Cal to stay healthy, independent, and safe at home. And also want to note that the Medi-Cal asset limit test was something that we fought off last year, and it's just as bad this year as it was last year. So please continue to fight on that regard. And the mobile crisis services, IHSS providers depend on those services to help the folks that they care for. And California should be focusing on making these programs stronger and not creating funding problems that will put our future at risk So thank you and look forward to continuing conversations Thank you Good afternoon. My name is Maydee Lowe with the California Behavioral Health Planning Council. We are a majority consumer and family member advisory body with federal and state mandates to advocate for individuals with serious mental illness, urging you to reject the proposal to eliminate the statewide Medi-Cal mobile crisis benefit. Mobile crisis teams are an essential part of our behavioral health crisis system, with 44% of adults engaging in treatment within 30 days. These services reduce unnecessary hospitalizations, 50-150 holds, and law enforcement involvement. Making the benefit optional would force many counties to cut services, leaving children, youth, and adults without timely care and deepening inequities. Thank you. Thanks. Hello. My name is Brenda Garcia. Thank you for this opportunity. I'm an IHSS provider for Yolo County, a parent advocate. When my daughter was in school, she was dropped, her spinal fusion was broken, and she wound up hospitalized needing more care. As a result, requiring extenuating expenses, ultimately costing the taxpayer more money. People shouldn't experience substandard care to receive adequate care. Please hold the line against H.R. 1 and tax billionaires. May corporations pay their fair share of employees who are utilizing Medi-Cal services. Thank you. Thank you. Good afternoon, Madam Chair. Hi. My name is Constance Hill. I'm with Local 2015. I just want to ask you to please hold the line on Medi-Cal Fair Share Revenue Solution to address to protect our health care system. I'm representing Sacramento County as well as Stop the Harm of H.R.1, the big billful bill that is bad for all Californians. Thank you. Thank you. Hi, good afternoon. My name is Erin Rivera. I'm an IHSS provider and a proud SEIU 2015 member. I am a champion for the people that I care for. I am opposed to a couple of portions of the governor's budget, specifically reinstating the challenge question. This will mean that if my IHSS recipients own a home or have a car, they will lose access to affordable care. By passing legislation, forcing billionaires to pay their fair share, we will generate a sustainable source of funding for Medi-Cal and other programs, keeping our program intact, and ensure the health and safety of our recipients that we so promise to protect. Thank you for your time. Thank you. Good afternoon. Diana Douglas with Health Access California. We call on the Senate to reject the May revise's various Medi-Cal cuts, including the Medi-Cal premiums increase, work requirements for UIS populations, cuts to adult dental, and the reinstatement of the asset limit, which, again, we were here last year also fighting against. We must look ahead also towards ending the enrollment freeze, which is a closed door for those who most need care. We are strongly supportive of the Senate's leadership in driving forward a revenue initiative focused on corporate accountability so that we can break the cycle every year of being back here on the same issues, trying to fight for the same people who need our help. Finally, on the transition to fee-for-service, we just urge the Senate to push forward measures that will protect network adequacy and continuity of care and to ensure the savings goes back into the Medi-Cal system. Thank you. Thanks. Thank you, Madam Chair. Andrew Mendoza on behalf of the Alzheimer's Association, we are opposed to reinstating the Medi asset test and we are also opposed to capping pace rates And then for the UIS population we are opposed to moving them to fee and increasing their premiums We really appreciate all of the commentary that you made during the hearing today about those issues and it couldn't make us more thankful to have you in this position so we really do appreciate all of your work on this and we do believe that you would have won the soccer game if we hadn't taken up all of your Good afternoon, Madam Chair. My name is Yasmin. You can bring it down if you want. There you go. Thank you. I'm here on behalf of Disability Voices United in collaboration with Fight for Our Health. And I'm here as a parent leader. First of all, thank you. Thank you for your incredible leadership and for holding the line. I'm here to echo what has been said before me, that we support sustainable revenue solutions to ensure that corporations pay their fair share. Millions of Californians on medicals tend to lose life-saving care without an ongoing revenue generation to fund medical for all populations impacted by recent state and federal changes. So, thank you. Thank you. Good afternoon, Chair. I'm Kendall Jack Ray with the Weideman Group on behalf of DentaQuest. We just want to align our comments with the other dental organizations that were advocating for the reversal of the proposed Prop 56 cuts. We also want to thank the Senate and the Assembly for including the reversal of these proposed cuts in their respective budget plans. And we respectfully urge for you guys to remain resolute through the final budget negotiations and ensure the harmful cuts are not allowed to take effect. Thank you. I'm going to have a plan, but... Nicole Wordleman on behalf of the Children's Partnership. Under proposals for investment, we urge the legislature to prioritize funding for community health workers and Medi-Cal flexibilities in order to keep families covered. On behalf of Orange County and San Bernardino County, we are deeply disappointed in the lack of investment toward H.R. 1 issues, eligibility, public hospitals. and in particular indigent health care. For context, in Orange County, we have 20 people in our indigent program. We're looking at increasing that by about 75,000. Thanks, Nicole. Good afternoon, Madam Chair. My name is Sean Yen. I'm with California Coverage and Health Initiatives, and I'm here to echo comments from previous speakers on supporting the creation of a sustainable revenue stream to support Medi-Cal, specifically through a corporate fair share contribution. Thank you very much. Thank you. Good afternoon, Madam Chair. Christopher Sanchez with the Mesa Verder Group here on behalf of the Central American Resource Center, Cades, and aligning my comments with the Health for All Coalition, asking you to reject the governor's proposal, and then just a fine point on TPS with the Supreme Court ruling that could happen at the end of this year. Folks, we would also ask you to repeal the freeze because folks will become undocumented. if a bad, unfavorable ruling happens and have no place to go for medical care. Thank you. Thank you. Oh, shoot. I got a script. Good afternoon, Chair. My name is Carmen Nicole Cox with The Cox Firm on behalf of California Children's Hospital Association. Here in support of the $63 million request for Children's Hospital Los Angeles, This is one funding to address an urgent issue that directly impacts the health and well of tens of thousands of children and their families not just in LA but across Southern California and the state In fact CHLA provides care to children from every county in California Meanwhile the California Children Services Program which provides essential care to children with the most severe chronic medical conditions, has seen reductions in reimbursement since 2018, as we heard from CHLA. These reductions have been devastating for CHLA, which could be forced to reduce or delay access to care. Your support is needed and appreciated. Thank you. Thank you. Good afternoon, Madam Chair. Norlin Asperich with Axiom Advisors here on behalf of Prime Home Health, a provider of private duty nursing services to children with medically complex conditions. We're requesting a 40% rate increase for PDN services. This investment would result in $175 million cost savings. Without the rate increase, Prime Home Health would likely reduce or eliminate PDN services to clients and families. This would impact 211 prime home health clients, and of those, 45 clients reside in your district. We urge the committee and legislature to prioritize and support this proposal. Thank you. Thank you. Madam Chair, Rand Martin, on behalf of Aviana Healthcare, I echo Ms. Asperger's comments. I would add that just last week the governor, in response to the $1.3 billion deferral of IHSS, made the point that IHS costs 10 times less than institutional care. The same thing can be said for private duty nursing and institutional care. I also want to align myself with Mr. Kellison's remarks earlier about the home health moratorium. We don't object to the proposal. We understand the purpose of the proposal. We are concerned about some of the language and look forward to working. We don't want to put additional administrative burdens on PDN providers when they're going to have to use that money to pay for those administrative new regulations and taking it away from the services for the kids. Thank you very much. Thank you. Hi, good afternoon. Carol Gonzalez on behalf of the Vizpanas Organized for Political Equality. Thank you so much, Madam Chair, for your patience and time today. Echoing my comments with the Health for All Coalition, and appreciate your time and your pushback. And Latinas across the state rely on Medi-Cal, and we really hope that your advocacy will make it to the finish line. Thank you. Thank you. Clifton Wilson, and firstly on behalf of Siskiyou County, in opposition to the trailer bill that retroactively changes statute to apply bargaining requirements on the county, Siskiyou's IHSS workforce has never had a bargaining agreement. They're currently at impasse over wages right now, and in the context of H.R. 1 impacts and the massive potential cost to counties to maintain a safety net. Tilting the scales at the bargaining table to try to force the county into concessions they cannot afford is deeply unfair. We ask for the committee to reject this trailer bill and support counties trying to uphold their safety net. And then also, on behalf of the over 20 different county clients that my firm represents, we just want to align our comments with the other county advocates expressing concern with the lack of meaningful investment for H.R. 1 impacts in the May revise. and we just urge you and the committee to take action to adopt the alternative presented to the legislature earlier this week. Thank you for your time. Thank you. Thank you, Chairman Javar and staff. Andrew Shane on behalf of CWDA. In strong support of the Senate plan, thank you for investing in our Medi-Cal workers, the same workers that drove our uninsured rate down to 6% during the ACA. The mayor revision only invests in a third of the workers we need against the surge and sea change of work for the work requirements and the six-month registrations. So we're asking you to augment the main revise to reach a total of $197 million in the budget year and $368 million in the out year, in 27-28, because that's when the workload really is going to peak. We're also asking you, as SKA also stated, to reject and redirect the surge staffing proposal. Counties are very clear that we need real workers. The surge proposal is well-intentioned, but it's going to take longer to train these folks and bring them on. We need to invest in real workers. And finally, to reject the performance sanctions TBL, to impose new penalties on counties. Our proposal for the TBL reinstates the existing accountability structure with the CPI reinstatement. Thank you so much on a personal level. Thank you. Thank you. I love you, Ty. Budget Subcommittee on Health and Human Services is adjourned.