by Sheila Kuehl
August 31, 2012

This is the eighth in a series of nine essays exploring California's 2012-13 budget. On June 15th, the Legislature sent a majority-vote budget to the Governor.  Over the next two weeks, the Governor and the Democratic leaders negotiated a final budget.  This essay presents the major revisions adopted in that final budget.

So These Two Guys Walk Into A Room....

The minute the June 15th Democratic-majority budget hit the Governor's desk, messages began to fly on whose vision would win out---the Governor's, as expressed in his May Revision or the Legislature's.  The budget process had already taken a series of bizarre twists, first by the decision that there would be no Conference Committee to reconcile the differences between the Senate and the Assembly versions, and then by the announcement that only the Democratic leaders would meet with the Governor.  Where five men generally convened (except, of course, when Karen Bass was Speaker), it was decided that the Republicans were now superfluous and would not receive an invitation. In a move reminiscent of Agatha Christie's And Then There Were None, the Big Five had been whittled down to the Big Three.

This was further reduced to the Big Two, however, when the Speaker of the Assembly missed a few of the negotiations and left the Senate President pro Temps on his own to bargain with the Governor. 

Picture this: two men in an office playing a high-stakes game of strip poker, except the people losing their shirts and shoes are hundreds of thousands of the most vulnerable children and families in the state.  That is to say, the final disagreements centered primarily on Healthy Families, CalWORKS, and child care.

So These 880,000 Kids Walk Into Medi-Cal

The Healthy Families program, up to this year, provided subsidized medical coverage for 880,000 children whose parents earn more than the federal poverty level but don't have health insurance.  Families qualified if they earned below 250 percent of the federal poverty level, about $56,325 for a family of four.

The Democratic budget, sent to the Governor on June 15th, shifted about 187,000 of these children---those whose parents earn 133 percent of the federal poverty level, or about $29,725 for a family of four---to Medi-Cal. These particular children were already going onto Medi-Cal in 2014 under the federal health care changes.

The Governor had insisted all year that he wanted to end the Healthy Families program and, instead, move all the HF kids to the Medi-Cal program. The Governor won this one.  In the final budget, all 880,000 children in Healthy Families are shifted to Medi-Cal in three phases during 2013.  The first group of 415,000, those already enrolled in Healthy Family plans that also serve Medi-Cal, transition in January, with the rest following throughout the year.

There Is Nothing Either Good Or Bad, But Thinking Makes It So....the Shifting Theories of Welfare and Child Care

Shakespeare recognized that the virtues and failures of any idea existed mostly in the minds of those making the decisions.  This has been true in this country over decades, if not centuries, concerning opinions about who should work and who should care for children.  Early on, the prevailing opinion held that parents (usually mothers) were best suited to care for children and should, therefore, stay home. This never worked too well, of course, for poor families, where mothers had no choice but to work.  In some ages, however, public policy supported poor mothers staying home to care for children.  It was called welfare.

During World War II, when the nation needed women to work in factories, suddenly child care became a panacea for children. Parallel theories about early childhood education rose up along with the great value of encouraging all adults to work.  This was reversed again at the end of the war, when women were encouraged to go home to care for their children so that men returning from the war could find work.

In modern times, welfare-to-work policies show a preference for putting poor parents to work, while providing child care funds for their children.  This preference has also spawned a struggle between child-care-for-poor-families advocates and early childhood education advocates that has resulted in a rift in funding in California, with money divided between CalWORKS and the Dept. of Education.

The CalWORKS program makes grants for child care, job training and transportation to about 585,000 California families.  The question that created serious differences between the June 15th budget and the Governor's May Revise related to whether to continue allowing the parents of very young children to stay at home and still collect CalWORKS grants.  After all, the current theory underlying welfare-to-work programs holds that all parents should be required to work.  But the savings generated by allowing mothers (mostly) to care for their own children tempted the Legislature in its June 15th budget to cut about 327 million from CalWORKS by continuing to allow parents of young children (one child under two years, or two children under six years) to receive cash aid without proving they were trying to find work.  The savings was claimed because the state didn't have to provide training, child care and support services.

The Governor did not support allowing these parents to escape work requirements, either because he wanted to realize greater savings (most likely) or is a supporter of making certain that all children have the socializing experience of child care.  In any event, the Governor's proposals won out in the final budget by phasing out the work exemption over the next two years.  All parents in CalWORKS will then have to meet federal work requirements---about 30 hours of work a week---or lose all support after two years, with some limited exceptions that counties may choose.  A 48-month lifetime limit on welfare and services is imposed.  Families are allowed, however, to keep more of the income they earn: $225 each month, plus $.50 of each additional dollar earned.

But Child Care Is Hardly a Winner in the Money Department

Although it appears that the Governor preferred to have children of poor families in child care so their parents could work, child care programs still lost a good deal of money, which translated to a loss of child care slots.  There were roughly 352,000 subsidized child care slots for low-income families, roughly a third of them for families enrolled in CalWORKS. 

The June 15th Democratic budget had moved partial-day preschool slots into the overall education budget,  presumably using money that had been allocated to other programs, and cut $50 million overall to subsidized child care, which is equivalent to cutting about 6,600 slots.

The final budget took it all back to the Governor's proposals (he seems to be quite good at getting his way with Democratic leaders) by transferring some child care programs into the welfare system, and out of education.  The overall savings to the state is pegged at about $80 million, a loss of about 10,500 child care slots.

All in All, Few Other Changes....

The Governor's proposal to limit the use of Cal Grants by (mostly for-profit) institutions of higher education that don't meet at least 30% graduation rate as well as a loan default rate of 15.5% was reincorporated into the final budget.

Both UC and CSU avoided increases in student fees as the budget provided a base funding increase of 125 dollars each, beginning in 2013-14, contingent, of course, on the passage of the Governor's tax measure in November.

The Governor's May proposal on Medi-Cal and Medicare was modified a bit, but the final budget integrates services for people who are eligible for both as well as integrating long-term care services, In-Home Supportive Services and nursing home care into managed care.  This is the big, continuing shift for medical services in the state.  The final budget also expanded managed care to the 28 (out of 58) remaining counties still paying by fee-for-service.
 
Medi-Cal recipients will also be required to make copayments for various treatments, pending federal approval.  For example, Medi-Cal patients would pay $15 for non-emergency visits to emergency rooms and $3 for preferred drugs ($5 for non-preferred).
 
Charter schools did slightly better in the last iteration of the budget, gaining $50 million in growth funding and the ability to obtain loans from County Boards of Education.
 
However, Like the Fifth Act in The Tempest.....there's one more set of surprises to come:  The Blue Pencil Blues...in the next and last essay on this year's budget.