2020-21 California State Budget Agreement Protects Critical Investments for Kids

This week, Governor Newsom and the California Legislature reached an agreement on the 2020-21 state budget. While many of the cuts to early childhood, education, health and child welfare that were proposed in the May Revision have been restored, California still lags the rest of the nation in quality supports for kids. Given the disproportionate impact of COVID-19, systemic racism, poverty and immigration threats on children and the systems that serve them, the state must go further to prioritize kids, especially those impacted most, and our collective future.

A detailed, whole child analysis of the impact of the budget is below:

 

CHILDREN NOW SUMMARY OF THE 2020-21 CALIFORNIA STATE BUDGET

EARLY CHILDHOOD

Child Care & Preschool

  • Takes essential actions to stabilize child care funding
    • Rejects the May Revise 10% trigger cuts to all child care programs.
    • Rejects January Budget and May Revise General Fund and Prop 98 reductions to Alternative Payment programs, General Child Care, and California State Preschool Program for negative growth.
    • Holds harmless direct-contract childcare providers for attendance if open in 20-21, and if closed due to short-time staff quarantine or school site closure; provides a hold harmless for AP and CalWORKs providers through fiscal year at certificated need.
  • Modest increases to access for families
    • Provides $53.3 million in new federal CCDBG funds in 2020-21 to the Alternative Payment Programs (CAPP) for approximately 5.6K new ongoing childcare service spaces.
    • Allows rollover of $50 million SB 89 Essential Worker Child Care vouchers into 20-21.
    • Provides an additional $73 million in CARES for one-time essential worker child care vouchers via the Alternative Payment Program. Prioritizes vouchers for SB 89 children.
    • Provides $8 million in CARES to extend the family fee waivers through June 30, 2020.
    • Aligns CalWORKs to federal 60-month clock and allows sanctioned CalWORKs participants to still remain eligible for child care.
  • Stipends to support providers
    • Provides $62.5 million in CARES for one-time child care provider stipends for AP and CalWORKS providers.
    • Creates a “Child Care Trigger” for up to $300 million in anticipated but not yet secured federal CCDBG aid, ensuring these funds will be used for additional child care access, re-opening grants for centers and family child care homes, and provider stipends, and are not swept for other purposes.
  • Steps toward building the system
    • Appropriates $13.4 million one-time federal Preschool Development Grant funds to HHS to strengthen the state’s early learning and child care system.
    • Allows $9.259 million in one-time federal CCDBG quality set-aside funds for an early childhood education data system, as part of the Cradle to Career data system.
    • Transitions all child development programs, except the California State Preschool Program, to the Department of Social Services, beginning July 2021, with the appointment of a Deputy Director for Child Development, and appropriates $2.278 million for this transition, one-time.
  • Other adjustments
    • Reduces funding to $2.2 million for the Early Childhood Policy Council.
    • Reduces CalWORKs Stages 2 & 3 caseloads estimates by $35.9 million.
    • Reduces planned California State Preschool Program full-day/full-year investments in 2020 and 2021 by $159.4 million, reducing planned preschool expansion by 20K service spaces, consistent with the May Revise.
    • Reduces the school-based California State Preschool Program by an additional $130 million in on-going Proposition 98 funds, consistent with the May Revise.
    • Eliminates 2019-20 Budget Act child care investments including:
      • $300 million in unspent full-day Kindergarten facility grants
      • $235 million provided for grants to renovate and construct facilities
      • $195 million provided for workforce development
      • $10 million provided to improve CDE’s early education data system

Family Support Programs

  • Delays a planned $30 million General Fund expansion of the California Department of Social Services CalWORKs Home Visiting program until 2021-22. This one-time reduction is not expected to impact families currently receiving these services in the program.
  • Adds voluntary evidence-based home visiting to the intensive case management models that counties may utilize to serve pregnant and parenting teens through the Cal-Learn Program.
  • Rejects the May Revise proposal to reduce $4.5 million General fund from the Black Infant Health Program.
  • Rejects the Governor’s May Revision proposal to eliminate the Public Health Nurse Early Intervention Program in Los Angeles County, that would have resulted in a cut of $8.3 million General Fund for 2020-21 and approves trailer bill language in an effort to facilitate timely implementation of this program.

Services for Infants & Toddlers with Special Needs

  • Rejects the Governor’s withdrawal of the supplemental rate increases for IDEA Part C Early Start Specialized Therapeutic Services, and Infant Development Programs.

Maternal Health

  • Restores $34.3 million General Fund to implement the extension of pregnancy-only Medi-Cal coverage for up to 12 months after delivery for patients diagnosed with a maternal mental health condition, as approved through the 2019 budget.
  • Approves two CDPH positions and General Fund expenditure authority of $348,000 annually to track and publish data on pregnancy-related deaths and severe maternal morbidity, pursuant to the requirements of SB 464 (Mitchell), the California Dignity in Pregnancy and Childbirth Act which was passed in 2019.

Tax Credits for Young Children

  • Extends the California Earned Income Tax Credit and Young Child tax credit to ITIN filers with at least one child six years of age or younger

Paid Family Leave

  • Remaining unresolved is the Governor’s January Budget proposal to extend Paid Family Leave job protections to all workers currently eligible for the program, and extend pregnancy/birth disability job protections to all workers currently eligible. SB 1383 (Jackson), while not technically a trailer bill, was introduced late in proceedings at the request of the Newsom Administration and has narrowly passed out of Senate Budget Committee.  It will move procedurally with the budget, and if enacted would apply existing paid family leave provisions to all employers in California with one or more employees.

Other Changes

  • Approves expenditure authority from the Childhood Lead Poisoning Prevention Fund of $10.3 million annually to increase interventions and other activities designed to reduce children’s exposure to lead.

 

K-12 EDUCATION/PROPOSITION 98

  • Total Proposition 98 spending (K-12 and CCC) will be $70.5 billion, a reduction of $10.6 billion from the current year.
  • The budget makes no cuts, includes flat funding the Local Control Funding Formula and most categorical programs, and provides an augmentation of $645 million for special education.
  • In order to maintain programmatic spending level, the budget will borrow $11 billion for K-12 from the 2021-22 fiscal year through a funding deferral. This deferral will have significant cashflow implications for districts and will leave districts facing a very difficult 2021-22 budget situation since $11 billion of Proposition 98 will already have been used for that year.
  • There is a federal fund trigger that would reduce the K-12 deferrals by roughly half ($5.7 billion) if the state receives an additional $14 billion in federal funds. The reduction will be prorated if a smaller amount of federal funds is provided.
  • Schools will receive almost $7 billion in mostly CARES Act federal funds to address learning loss, COVID-19 related costs, special education services, school meals during the summer and other uses. The largest pot of these funds, $2.9 billion, will be distributed with an equity focus formula that Children Now developed in partnership with other equity groups.
  • Districts will have flexibility with instructional minutes and allowed to continue distance learning or hybrid (mixed direct instruction and distance learning) for 2020-21. To offer distance learning, districts must meet specific programmatic requirements including:
    • All students will have devices and connectivity
    • Use standards-aligned materials
    • Be provided academic and other supports for anyone behind including English learners, special education, foster care, homeless and mental health supports
    • Accommodations to ensure special education student’s plans are implemented
    • English language development supports
    • Daily live interaction with a teacher and peers
    • Protocols for reengaging students who have missed three days in a week
  • Districts will have to adopt “Learning Continuity and Attendance Plans” in place of the Local Control Accountability Plans that also address learning loss issues, and issues about implementing any distance learning. These plans will have a stakeholder engagement process prior to a Sept 30thapproval deadline.
  • The distance learning requirements and plan requirements reflect many of the elements that Children Now and other equity partners have called for. There is still work to do here to ensure that the distance learning experience in the fall is far improved from that offered during the spring. We would like to see more specificity around ensuring that some level of face-to-face (synchronous) instruction happens daily; ensure that the new plan template ensures sufficient detail; and ensure that there are supports in place for districts that are struggling to meet the requirements.
  • Budget agreement doesn’t include the closing of the LCFF loophole that allows districts to misuse LCFF supplemental and concentration grant funds that should benefit students who are low income, EL and foster youth. AB 1835 (Weber), co-sponsored by Children Now, would close the loophole and passed the Assembly on a unanimous vote. It will continue outside the budget process, and will be heard in the Senate Education committee in early August (where it appears to have support since the Legislature included it in the budget package it passed).
  • Other major provisions include:
    • Districts can’t lay off teachers or custodial, transportation, or food service staff
    • $1 billion to buy down district contributions to STRS and PERS pension costs
    • Districts will be funded next year based on their attendance in 2019-20 through Feb. 2020
    • Districts are asked to re-evaluate police policies on school sites
    • No 2020 California School Dashboard and no Local Control Accountability Plans
    • $50 million for Early literacy Support Block grant
    • $6 million for the Subject Matter Projects for professional development for teachers targeting learning loss

 

POSTSECONDARY EDUCATION

University of California

  • Restores the Governor’s Budget proposal to increase General Fund support for UC operations by 5%, or $169.2 million.
  • Approves a trigger cut to UC of $470 million from the new, higher base; the cut would be restored on Oct. 1 if sufficient federal funding is received by the state.
  • Provides $4 million in one-time General Fund to support summer financial aid for students.
  • Modifies the May Revision proposal to provide $6 million in federal funds to the UC Subject Matter Projects by requiring existing projects to address learning loss in English language arts, science and mathematics.

California State University

  • Restores the Governor’s Budget proposal to increase General Fund support for CSU operations by 5%, or $199 million.
  • Approves a trigger cut to CSU of $500 million from the new, higher base; the cut would be restored on Oct. 1 if sufficient federal funding is received by the state.
  • Provides $6 million one-time General Fund to support summer financial aid for students.

California Community Colleges

  • Maintains current-year level of apportionment funding.
  • Provides $120 million in one-time Proposition 98 General Fund and federal funding to support a basic needs/learning loss/COVID-19 response block grant to colleges, to support expenses such as mental health services, housing and food insecurity, re-engagement for students who left college in Spring 2020, technology and development of online courses, and student supports.
  • Rejects the May Revision proposals to reduce funding for the Strong Workforce and K-12 Strong Workforce programs, keeping the programs at 2019-20 spending levels.
  • Rejects the May Revision proposal to reduce support for the Student Equity and Achievement Program, keeping the program at the 2019-20 spending level.
  • Rejects the May Revision proposal to reduce support for adult education, keeping the program at the 2019-20 spending level.
  • Approves a $332 million deferral from 2019-20 to 2020-21, and a $662.1 million deferral from 2020-21 to 2021-22.
  • Approves triggering an additional deferral of $791.1 million Proposition 98 General Fund; this deferral would be rescinded if the state receives sufficient federal funding.
  • States that it is the intent of the Legislature that community college districts retain all classified employees, and with the amount of funding and flexibility provided to community colleges in the 2020 Budget Act, community colleges can and should avoid layoffs of classified employees in the 2020-21 fiscal year; prohibits the governing board of a community college district from terminating the services of any permanent or probationary classified employees of the school district or community college district that either hold classifications in or are assigned to positions in nutrition, transportation, or custodial services.

California Student Aid Commission

  • Provides $15 million in one-time General Fund monies to support emergency financial aid for undocumented students at UC, CSU and the community colleges.
  • Rejects the May Revision proposal to reduce Cal Grant support for students attending non-profit institutions; students will receive the 2019-20 level of support.
  • Modifies the May Revision proposal to eliminate state funding for the Golden State Teacher Program; state funding will be restored if the state receives sufficient federal funding.
  • Approves the May Revision proposal to provide $15 million in federal funds to support grants for special education teachers.

 

HEALTH

The budget agreement averts most of the proposed cuts to children’s health care programs and services in the May Revision, including:

  • Proposition 56 Medi-Cal payments – While there will be no cuts to Prop 56 supplemental provider payments (for things like well-child visits, dentist visits, developmental screenings, and trauma screenings) or provider loan repayment program this year, these payments will be suspended on July 1, 2021 (originally scheduled for 2023) unless certain fiscal conditions exist.
  • Community health navigator program – Preserves state and federal funding for the two-year health navigator program approved last year and that launched in March 2020.
  • Local case management for children’s health – Rejects the proposal to eliminate $6.6 million General Fund for case management for counties administering the Early and Periodic Screening Diagnosis and Treatment (EPSDT) benefit to Medi-Cal eligible children.
  • Clinic ratesPreserves payment rates to community clinics for carved-out services.
  • Medi-Cal Dental benefits – Maintains dental benefits for adult populations, including former foster youth and young adults.
  • Black Infant Health Program – Rejects a $4.5 million cut to the Black Infant Health Program.
  • Maternal mental health – Restores $34.3 million General Fund to implement the extension of pregnancy-only Medi-Cal coverage for up to 12 months after delivery for patients diagnosed with a maternal mental health condition, as approved through the 2019 budget.
  • Mental health and social supports for college students – Provides $120 million one-time Proposition 98 General Fund and federal funding to support a basic needs/learning loss/COVID 19 response block grant to colleges to support expenses such as mental health services, housing and food insecurity.

Previously proposed health investments that will not be moving forward this year include:

  • Hearing aids for children – Delays implementation of a program that provides hearing aids and related services to children up to 600 percent of the federal poverty level to no sooner than July 1, 2021, and assumes $15 million General Fund in ongoing annual costs beginning in 2021-22.
  • Provider Training for Trauma Screening Program – Withdraws the Administration’s January budget request for $10 million General Fund to develop a cross-sector training program and public awareness campaign for Adverse Childhood Experiences (ACEs), but continues screening for ACEs.
  • CalAIM – Withdraws the January proposal for the California Advancing and Innovating Medi-Cal initiative, including a Behavioral Health Quality Improvement Program.
  • Office of Health Care Affordability – Withdraws proposal to establish an Office of Health Care Affordability.

Some other notable issues affecting children’s health in the budget, include:

  • Dental managed care elimination – Defers without prejudice the Administration’s January budget proposal to eliminate dental managed care in Sacramento and Los Angeles, for $8.9 million General Fund.
  • Medi-Cal Dental contracts – Approves the withdrawal of the Administration’s January budget proposal for the Medi-Cal Dental program to monitor and oversee contracted vendors, establish quality improvements in contracts, and address workload increases.
  • Medi-Cal Dental Audit and OversightDefers without prejudice the Administration’s January budget request, modified at May Revision, to support oversight and auditing of Medi-Cal Dental Program.
  • Managed care rates – Modifies the Administration’s May Revise proposal to adjust managed care capitation payments (by up to 1.5%) for the period of July 2019 to December 2020, by lowering the gross medical expense portion of the capitation payments for this period due to anticipated lower costs and utilization related to the pandemic, and to implement other efficiencies, while rejecting proposed policies that would result in reduced funding to hospitals, for total savings of $243.4 million General Fund.
  • Medi-Cal enrollment – The budget assumes approximately $8 billion (primarily federal funds) to reflect increased Medi-Cal costs as a result of the COVID-19 pandemic, including: increased caseload, suspension of annual redeterminations, increased federal flexibilities, and the increase in the federal matching percentage.
  • MCO tax – Approves the Administration’s estimate of net revenue from the Managed Care Organization tax of $1.7 billion, which offsets the non-federal share of expenditures in the Medi-Cal program, as recently approved by the federal government effective January 1, 2020.
  • Developmental services rates – Includes supplemental rate increases for Early Start Specialized Therapeutic Services, Infant Development Programs and Independent Living services, first proposed in the Governor’s January Budget, which cost $10.8 million General Fund in 2020-21 and $21.6 million in 2021-22, with trailer bill language to effectuate this change.

 

CHILD WELFARE

Many of the cuts to child welfare services that were proposed in the May Revision have been restored, including:

  • Family Urgent Response System (FURS), a 24/7 trauma-informed response system for current and former foster youth and their caregivers ($30 million). The budget also allows for FURS implementation to be expedited and for county-based mobile response systems to be temporarily adapted to address circumstances associated with COVID-19.
  • The Public Health Nurse Early Intervention Program, a Los Angeles County program to improve outcomes for children at risk of entering foster care by connecting children and families with preventative services to meet their medical, mental, and behavioral health needs ($8.3 million).
  • Foster Family Agency social worker rate increases, intended to help stabilize Foster Family Agency social workers ($4.8 million).

The agreement also includes critical provisions to support current and former foster youth during the pandemic and in its aftermath:

  • Eliminates proposed cuts to Dependency Counsel, who are the voice of abused and neglected children in legal proceedings.
  • Eliminates proposed cuts to rates for short-term residential therapeutic program (STRTP) providers and the proposed suspension of additional level of care (LOC) rates ($28.8 million).
  • Includes Emergency Caregiver Funding, to ensure children and youth in emergency placements are provided with resources while Resource Family Approval is pending ($13.4 million).
  • Allows foster youth to remain in the extended foster care program through June 30, 2021 regardless of age or work or school status.
  • Allows counties to continue serving former foster youth who are participating in the Transitional Housing Program-Plus (THP-Plus) until July 1, 2021, regardless of their age or the length of time they have received services.
  • Augments the Transitional Housing Program-Non-Minor Dependent (THP-NMD) rate with a housing supplement to support programming for parenting foster youth in extended foster care and reflect the variability of housing costs across the state, beginning on July 1, 2021.