Last week, Governor Gavin Newsom released his $286.4 billion 2022-23 state budget proposal.
Children Now released this statement in response to the Administration’s proposal:
The Administration’s proposal does not focus enough on two facts: 1) the COVID-19 pandemic has disproportionately impacted children, especially Black and brown kids, kids in poverty and youth in foster care; and 2) California ranks behind most other states in child well-being. In response, the state budget must make kids the first, second, and third priority. The Governor and Legislature must also ensure that all of the systems serving kids are racially equitable and free of systemic racism. While we applaud a number of the Governor’s proposals, including those to reduce Medi-Cal premiums for pregnant women and children and provide additional supports for dual language learners in preschool, what’s needed are more dramatic investments and reforms around direct supports for kids across the early childhood – especially given our fragile child care system – economic, health, K-12, higher education, housing and child welfare domains.
An overview of proposed child-related investments, broken down by issue area, can be found below. Children Now will continue to advocate with the Administration and the Legislature to make improvements to this proposal before the final state budget is approved in June.
The budget proposal includes good news with the zero-ing out of Medi-Cal premiums for over 500,000 kids and pregnant people. Some of the proposal’s key children’s health and dental investments are below.
Reduction of Medi-Cal Premiums to Zero — To increase access to health care services, the Administration proposes to reduce the financial burden of paying for health care coverage for approximately 500,000 Medi-Cal enrollees who pay monthly premiums for coverage. The budget includes $53.2 million ($18.9 million General Fund) in 2022-23 and $89 million ($31 million General Fund) annually to reduce premiums for beneficiaries, including pregnant women, children, and disabled working adults, whose income is marginally above the threshold for no cost Medi-Cal. This proposal is in direct response to this letter sent last November from 450 organizations, coordinated by Children Now via The Children’s Movement of California, as well as discussions with senior Newsom administration staff. Children Now will be working this year to make sure this becomes a reality.
Proposition 56 Provider Payments — Proposition 56 funds various supplemental payment programs including the Family Planning, Access, Care and Treatment program, women’s health services, dental and physician services, developmental and trauma screenings, non-emergency medical transportation, and others. Proposition 56 revenues continue to decline as the rate of tobacco use declines. In 2022-23, Medi-Cal supplemental payments funded by Proposition 56 are projected to exceed revenues by $176 million. To maintain the enhanced level of reimbursement, the budget includes $176 million General Fund to support reduced Proposition 56 revenue. Children Now led coalition efforts last year to protect Proposition 56 funded payments for children’s care, and we are pleased to see the Administration remain committed.
Medi-Cal Provider Equity Payments — During the COVID-19 Public Health Emergency, there has been a significant decline in utilization of preventive care and routine care for chronic conditions. In addition, the disparate impacts of COVID-19 on communities of color and other disadvantaged Californians underscore the existing disparities in our health care system. To promote patient-centered models of care, the budget includes one-time $400 million ($200 million General Fund) for provider payments focused on advancing equity and improving quality in children’s preventive, maternity, and integrated behavioral health care.
Elimination of Certain AB 97 Provider Rate Reductions — AB 97 (Chapter 3, Statutes of 2011) required DHCS to reduce most Medi-Cal provider payments by 10%, with limited exceptions. Since that time, certain AB 97 provider payment reductions have been rescinded. The budget proposes to rescind the AB 97 provider rate reductions for eight provider types based on COVID-19 Pandemic impacts and the Department’s quality and equity goals—nurses of all types, alternative birthing centers, audiologists and hearing aid dispensers, respiratory care providers, select durable medical equipment providers, chronic dialysis clinics, non-emergency medical transportation providers, and emergency medical air transportation providers. The budget includes fee-for-service costs of $20.2 million ($9 million General Fund) in 2022-23 and $24 million ($10.7 million General Fund) annually thereafter for elimination of these rate reductions.
Dental Managed Care — The Administration proposes to extend dental managed care contracts and reprocure new contracts no sooner than January 1, 2024.
Sunset of Child Health and Disability Prevention Program—The Administration proposes to sunset the Child Health and Disability Prevention Program (CHDP) effective July 1, 2023 to advance CalAIM’s goal of streamlining the Medi-Cal program. As part of this proposal, DHCS will implement the Children’s Presumptive Eligibility Program to replace the CHDP Gateway to allow applicable Medi-Cal providers to enroll children into Medi-Cal through the presumptive eligibility process. As active members on the CHDP Oral Health Committee, Children Now will work to ensure that the functions provided by local CHDPs to coordinate care to dental services for children enrolled in Medi-Cal are not lost.
Providing Access and Transforming Health (PATH) — The Administration proposes the PATH initiative to further the successful implementation of CalAIM Enhanced Care Management and Community Supports, including transition of services to managed care; technical assistance; collaborative planning; and capacity and infrastructure transition, expansion, and development funding for providers, community-based organizations, and counties. The estimate includes $390 million total fund ($134 million General Fund) in FY 2021-22 and $707 million total fund ($253 General Fund) in FY 2022-23 for the CalAIM Medi-Cal PATH initiative.
Community Health Workers — $350 million General Fund to recruit, train, and certify 25,000 new community health workers by 2025 in areas such as climate health, homelessness, and dementia to meet the goal of a more ethnically and culturally inclusive workforce by 2025.
Covered California Subsidies — The budget includes $20 million General Fund in 2022-23 for Covered California to support the One-Dollar Premium Subsidy program which subsidizes the cost of Covered California consumers for health plans due to federal policy concerning abortion coverage.
Social Determinants of Health — The Administration proposes to require non-profit hospitals demonstrate how they are making investments in local health efforts, specifically community-based organizations that address the social determinants of health. Additionally, the Administration proposes statutory changes that direct that 25% of a non-profit hospital’s community benefit dollars go to these social determinants of health efforts, while giving the Department of Health Care Access and Information enforcement authority over these requirements.
Enhancing Public Health — The budget includes $200 million General Fund annually for local health jurisdictions (LHJs) to enhance their public health infrastructure. The intent is to drive collaboration across counties and leverage resources collectively in order to gain economies of scale. LHJs will receive a minimum base allocation of $350,000, which is based on an LHJs’ population-based share (50%), Race Ethnicity index (25%) and the Poverty Index (25%). DPH has collaborated with local partners to develop key metrics, minimum requirements for use of the funds, and reporting requirements. While LHJs may have more individualized investment areas of focus to meet their local community needs, additional resources should broadly include the following elements: workforce expansion, data collection and integration, and community partnerships. Children Now will be working with stakeholders to ensure this funding supports children’s health.
Office of Health Care Affordability — The Administration will move forward with a $30 million reappropriation to establish an Office of Health Care Affordability, housed within the Department of Health Care Access and Information, to address underlying cost drivers and improve the affordability of health coverage and charged with increasing transparency on cost and quality, developing cost targets for the health care industry, enforcing compliance through financial penalties, and improving market oversight of transactions that may adversely impact market competition, prices, quality, access, and the total cost of care. In addition to lowering the rate of cost growth, the Office will promote health care workforce stability and innovation, report on the quality of care and equity in services on the entire health care system, advance payment models that reward high-quality, cost-efficient care, and promote investments in primary care and behavioral health.
This year’s budget proposal is largely absent of children’s mental health investments; instead the Administration has reiterated the commitment to the Children & Youth Behavioral Health Initiative, with $1.5 billion of the $4 billion dedicated for year two (2022-23) of the initiative. In addition, the following investments are proposed:
- $10.6 million in funding through June 30, 2023 for the California Infant and Early Childhood Mental Health Consultation program to support the mental health needs of children, families, and child care providers.
- We will be encouraging a larger investment for early childhood mental health.
- Psychiatric Resident Program—$120 million General Fund to create training positions for psychiatric residents, psychiatric mental health nurse practitioners, psychology interns/fellows, and psychiatric nurses. Increasing on-site training programs will assist in building the workforce while also serving as an active recruitment pool for advancement within the health and human services workforce, leading to promotional pathways and increased salaries.
- It is unclear how much of these funds will be directed to ensuring a robust child psychiatry program, Children Now will encourage specific allocation for residents who will serve children.
- $50 million dedicated to a public awareness campaign targeted towards youth opioids education and awareness and fentanyl risk education.
- We are thrilled there is a commitment to mitigate the dangers of opioids and fentanyl, as youth overdoses have been on the rise.
- $135.1 million, over a three-year period to extend Medi-Cal provider training for ACEs screenings.
- We will be encouraging the State to ensure training for non Medi-Cal providers, to best support the efforts of SB 428, co-sponsored by Children Now and passed last year.
Our advocacy efforts this year will be focused on increasing budget allocation dedicated to early childhood mental health, educating policymakers on the importance of investing in a child-serving mental health workforce, and pushing the State to commit to racial equity in the Children and Youth Behavioral Health Initiative through setting specified goals and metrics to support black and brown children.
The Governor’s January 2022-23 Budget Proposal included some proposed investments in early childhood, preschool, transitional Kindergarten (TK), home visiting, and family supports; highlights are below. The biggest takeaway for us is that only modest investments are proposed for early childhood, and there is ample room for the Governor and Legislature to use California’s budget surplus to invest in young children and families, and truly support a Pro-Kid agenda the benefits children and families.
For early learning and care, there is a glaring lack of funding for infants and toddlers, specifically for 0-3-year-olds. If we invested in 0-3-year-olds similar to how we approach 4–18-year-olds, it’s roughly a $20 billion plus investment. Further, the expansion of universal preschool, if not done thoughtfully, could put 0-3 child care at risk by siphoning off talented providers, who would rationally be seeking work in higher paying jobs in the preschool/TK system. This is a well-researched dynamic and needs to be rectified before we see further destabilization of the child care field. There is great leadership at the state level and in the early care and education field working to resolve these issues, but leaders need resources and we’re concerned we don’t see that reflected in the budget proposal.
There are a few bright spots in the proposed budget, including supports for dual language learners and special education students in preschool ($309 million); rate augmentations for child care and preschool; and further implementation of transitional kindergarten (TK). Children Now will continue to advocate for the State to adequately expand access to quality preschool for 3-year-olds and provided the necessary structures to support effective coordination between existing State Preschool Programs, Head Start, TK, and child care for the benefit of children and families, which must be a key area of focus moving forward. There is also a significant need to preserve families’ choices across the mixed-delivery system and to offer full-day wraparound care for children in TK. Specifically, with respect to the requirements of last year’s education trailer bill, funding would be provided to expand TK to include children born in January and February and the Administration proposes to pay for this expansion ($639.2 million) above the existing Proposition 98 guarantee, so it does not negatively impact the resources available for existing TK-14 students. Under current law starting in 2022-23, staffing ratios for TK classes would need to be reduced. The January budget proposal clarifies that the additional staffing will have to be either certificated or classified staff, and the budget provides $383 million from within Proposition 98 resources for this purpose. We will continue to advocate that the costs for additional students should not come at the cost of current students, and thus these staffing changes should be funded by expanding the Proposition 98 guarantee.
Child Care – $823.7 million to add an additional 36,000 child care slots and $373 million to support a full year of rate increases. For Early Childhood Data – $4.8 million to support California Supporting Providers and Reaching Kids (CalSPARK) and $3.1 for the Brilliant Beginnings data initiative and single verification hub.
Preschool – $309 million to augment LEA and non-LEA preschool provider rates to serve at least 10% students with disabilities and provide additional supportive services for dual language learners, and $166.2 to support a full year of rate increases. The creation of an Inclusive Early Education Expansion Program – $500 million to fund infrastructure to support general education and special education students in inclusive classrooms.
Transitional Kindergarten (TK) – $639.2 million above the Proposition 98 guarantee to pay for the expansion of TK (2 additional months children born in January and February) and $383 million to add one additional certificated or classified staff person to every transitional kindergarten class.
Paid Family Leave (PFL) – The Governor’s proposed budget fails to include funding to extend or expand the current wage replacement rates for Paid Family Leave. Currently, California families that need to take time to care for themselves or a loved one due to illness or bond with a new child receive between 60-70% of their weekly salary under the state’s Paid Family Leave program. In the absence of leadership from the Governor and California policymakers, the current wage replacement is set to expire and drop to 55% in 2023. The state’s lowest income workers’ pay into but are least likely to utilize PFL due to low wage replacement rates. Children Now will continue to urge state leaders to commit to expanding wage replacement rates to 90% in this year’s budget to promote economic and health equity for all Californians.
Home Visiting – The proposed budget includes $50 million ongoing General Fund for the Department of Public Health (CDPH) to expand the California Home Visiting Program and the California Black Infant Health Program to serve an additional 6,000 families over the next five years. While we are happy to see increased funding to support home visiting services, the proposed allocation is woefully below what is needed to truly ensure all California families can receive these critical comprehensive supports when they need them. We will continue our efforts to urge state officials to leverage Medi-Cal and other funding streams to expand home visiting services.
California Infant and Early Childhood Mental Health Consultation program – $10.6 million to support the mental health needs of children, families, and child care providers.
Early literacy – $10 million to expand early literacy efforts by developing a partnership between CDPH and First 5 California to administer a statewide program to provide multilingual books and early literacy programing for families with young children in collaboration with other state programs such as home visiting, child care, early childcare centers, and foster care.
Young Child Tax Credit (YCTC) – The budget includes $55 million ongoing General Fund to extend the YCTC to households with no or negative earned income and includes $19 million to index the YCTC for inflation starting in the 2022 tax year. Statewide, nearly 3.25 million children live in low-income families. Growing up in poverty can have a lifelong impact on children’s health, learning, and opportunities, but research shows that income assistance is a key piece of the puzzle to lift families out of poverty. Children Now will continue to urge state leaders to commit to moving families above the poverty level.
K-12 & HIGHER EDUCATION
At a high-level, strong revenues and California’s existing K-14 guaranteed funding requirement (Proposition 98) have resulted in significant new funding for schools (more than $16 billion in new ongoing and one-time funds), while in comparison, only modest investments are proposed for early learning (as mentioned above) and higher education.
In K-12, the proposed budget reflects a commitment to providing core funding for school districts to support educational programs, including a proposed $3.3 billion to fund a Local Control Funding Formula (LCFF) cost of living adjustment and $500 million for special education, as well as a number of fiscally responsible investments to plan for the future, including increasing contributions to the Proposition 98 rainy day fund by $2.2 billion for current and past years and adding $3.1 billion for the budget year and $1.3 billion to invest in facilities. The Administration also built on last year’s budget by putting forward investments in a number of critical education and well-being strategies, including continuing the roll-out of transitional kindergarten (as mentioned above), accelerating the planned expansion of afterschool and summer programming (nearly $4.5 billion), and ensuring universal meals across the state ($596 million).
There is a lot to admire in this proposal, but as we laid out in our blog post, If We Want Equity in our Schools, We Need to Invest Wisely to Get It, it will be detrimental to students if policymakers don’t do more to effectively address the current and chronic staffing shortages schools face by building the talent pipeline and retaining the existing workforce. In addition, the budget misses the opportunity to invest in more equity-oriented strategies, including evaluating the implementation of LCFF to consider different approaches to strengthen the formula (see more detail in the blog post) and taking a long-term systemic approach to ensure that as California’s school enrollment declines, there is planned, consistent funding available to reduce the need for corresponding educator layoffs, especially in high-concentration schools.
- Overall Proposition K-14 98 Funding – $8.2 billion in ongoing funding and $7.9 billion in one-time funds. Roughly a third of the increase will be deposited in the Proposition 98 rainy day fund.
- Proposition 98 Rainy Day Fund – Increases contributions to the Proposition 98 rainy day fund for 2020-21 and 2021-22 by a combined $2.2 billion and then the budget expects an additional $3.1 billion for 2022-23. These contributions will bring the total rainy day fund balance to $9.7 billion (9.5% of Proposition 98), just shy of the maximum required rainy day fund contribution of 10%.
- Gann Spending Limit – The budget acknowledged that there is a reasonable chance that the Gann Spending limit will take effect in the budget year, but the Administration will address it at the May Revision. If that happens, K-14 schools will receive half of any funding above the limit.
- Retirement (PERS/STRS) – Perhaps unexpectedly, no additional funding was provided to continue relief from rate increases to PERS and STRS contribution rates for school employees. Under current law, STRS rates will increase from 16.92% to 19.10% of teacher salaries in 2022-23, while PERS rates (most classified employees) would increase from 22.91% to 26.10%. We estimate that these rate increases would result in around an additional $1 billion in costs, taking up a large share of the annual COLA.
- Local Control Funding Formula – $3.3 billion to fund a 33% cost of living adjustment.
- Declining Enrollment – $1.2 billion to provide funding to revise the LCFF calculation to consider the greater of a school district’s average daily attendance from among the current year’s, prior year’s, or the average of three prior years’ calculations.
- Expanded Learning – $3.4 billion new funding, on top of $1 billion from last year, for LEAs to offer no-cost before school, after school, and summer learning programs; $937 million for expanded learning infrastructure investments focused on integrating arts and music; and $148.7 million continues one-time reimbursement rate increases from the 2021 Budget Act for the After School Education and Safety and 21st Century Community Learning Centers programs.
- Early Literacy – $500 million to train and hire literacy coaches and reading specialists; $200 million to create or expand multi-lingual school or classroom libraries; $10 million to provide multilingual books and early literacy programing for families with young children (0-5); $2 million for preschool disability assessment tools; and $60 million for training early identification for learning disability.
- Educator Workforce – $24 million to waive certain teacher examination fees; $12 to waive select credential fees; $10 million to develop/integrate teacher preparation programs; and approximately $9 million for additional educator workforce investments.
- Special Education – $500 million to fund multiple policy changes, including for planning and projections, extraordinary cost pool, mental health services, a new special ed addendum in the Local Control Accountability Plans (LCAPs), comprehensive IEP, and a working group for an alternative diploma/alternative coursework.
- College and Career Supports – $1.5 billion to support building career pathways in technology, health care, education, and climate fields; $500 million to strengthen and expand student access and participation in dual enrollment (credit-bearing college coursework taken while in high school); and $2 million for Agriculture CTE Incentive Grants.
- Transportation and Electronic Buses – $1.5 billion, including $500 million for electric buses, $500 million for high-concentration LEAs, and $500 million for small/rural LEAs.
- Universal Meals Program & Nutrition – $596 million for the state to take on the costs of the universal meals program, replacing current federal funds; $450 million for school kitchen upgrades; $3 million for the School Breakfast and Summer Meal Start-Up and Expansion Grant Program; and $33 million for Farm to School programs.
- Facilities – $1.3 billion to support new construction and modernization, with an additional $925 million for this purpose in 2023-24 budget. $30 million for the Charter School Facility Grant Program.
- Model curricula – $14 million to develop model curricula related to the Vietnamese American refugee experience, the Cambodian genocide, Hmong history and cultural studies, and Native American studies.
In higher education, the Governor’s budget proposal would provide a total of $39.6 billion for the California community colleges, California State University, University of California and Student Aid Commission and it prioritizes the important goals of increasing college going and completion, addressing the high cost of attendance, boosting student financial aid, targeting resources to students with the greatest need, such as foster youth, and building more student housing for low-income students. However, when it comes to educational equity, the proposal relies almost exclusively on the non-binding multi-year compacts negotiated between the Administration and the segments that offer little opportunity for external input, particularly from the Legislature. And, while those agreements commit to increasing enrollments, closing equity gaps, focusing on student success, and addressing the escalating costs of college, the budget proposal continues to rely on one-time investments and does not directly hold the institutions accountable for successfully addressing educational equity. The budget proposal has few direct investments in dealing with disparities in college readiness, particularly for students under-represented in higher education, or greater alignment between K-12 and higher education to smooth and improve the transition from high school to college. That said, there will be much work to do between the release of this January budget proposal and the May Revision.
Higher Education Investments:
- Student Success Completion Grant – $100 million for newly eligible students due to expanded Cal Grant B and Cal Grant C eligibility for community college students.
- Community College Financial Aid Offices – $10 million augmentation of resources for community college financial aid offices.
- Community College NextUp Program – $10 million to expand availability of foster youth support services by the NextUp program from 20 community college districts to 30 districts.
- Community College Transfer – $65 million for community colleges to implement the transfer reform provisions required by AB 928 (Chapter 566, Statutes of 2021).
- Student Retention Rates and Enrollment – $150 million to continue to support community college efforts to increase student retention rates and enrollment, particularly with former students who may have withdrawn from college due to COVID-19 and connecting with current and prospective students who are resistant to remain or enroll in college due to the impacts of COVID-19.
- Community College Apportionments: COLA & Enrollment Growth – Increases of $409.4 million ongoing Prop 98 funding to provide a 5.33% COLA and $24.9 million in ongoing Prop 98 funding for .5% enrollment growth.
- Healthcare Vocational Education – An increase of $130 million in one-time Prop 98 funding over three years ($30 million in 2022-23, $50 million in 2023-24, and $50 million in 2024-25) to support healthcare-focused vocational pathways for English language learners across all levels of English proficiency, through the Adult Education Program.
- AB 540 Students – $20 million to provide emergency student financial assistance grants to eligible AB 540 students – which is any student, including undocumented students who attended high school in California for 3 or more years and earned a high school diploma or its equivalent – to pay in-state tuition at California’s public colleges and universities.
- Pathways Grant Program for High-Skilled Careers – $20 million for a grant program that incentivizes public-private partnerships that prepare students in grades 9-14 for the high-skill fields of education and early education; science, technology, engineering and math (STEM); and healthcare.
- CSU Base Grant Funding – An increase of $211.1 million in ongoing funding for operating costs.
- Enrollment Growth – $81 million in ongoing support for California resident undergraduate enrollment growth of 9,434 full-time equivalent students.
- CSU Foster Youth Supports – $12 million in ongoing funding to support foster youth students.
- UC Base Grant Funding – An increase of $200.5 million in ongoing funding for operating costs.
- Enrollment Growth – $67.8 million in ongoing support for California resident undergraduate enrollment growth of 6,230 full-time equivalent students.
- UC Foster Youth Supports – $6 million in ongoing funding to support foster youth students.
- Student Aid Commission – An increase of $515 million in ongoing funding for a modified version of the Middle Class Scholarship that will focus resources toward reducing a student’s total cost of attendance.
- Student Housing – $750 million in one-time funding for the second installment of a planned $2 billion one-time General Fund appropriation over a three-year period for the Higher Education Student Housing Grant Program, which would provide one-time grants to community colleges, CSU and UC to construct student housing or acquire and renovate properties into student housing.
Foster Youth Tax Credit: This proposal provides an additional $1,000 tax credit for young people who have been in the foster care system at some point at age 13 or older and who are now 18 through 25 years of age, and who otherwise qualify for the California Earned Income Tax Credit (CalEITC). This proposal is expected to cost roughly $20 million ongoing General Fund.
Foster Youth Independence Pilot Program: The budget includes $1 million one-time General Fund, available over two years, for county child welfare agencies to provide case management and support services for youth formerly in foster care who are utilizing federal housing choice vouchers through the Foster Youth Independence Pilot Program.
Family Finding and Engagement: This proposal includes $1 million ($750,000 General Fund) ongoing for the California Department of Social Services (CDSS) to provide additional technical assistance and training to counties in meeting the need for children in foster care and unaccompanied minors to be connected to permanent family.
Resource Family Approval (RFA) Applications: The budget includes $6.1 million ($4.4 million General Fund) one-time, available over three years, for county child welfare agencies to address RFA applications that have pending or probationary approval for more than 90 days.
Grants for Infrastructure Improvements: With the realignment of services for justice-involved youth from the state to the counties, additional investment is needed to help counties prepare to serve and provide treatment to youth. The budget includes $100 million one-time General Fund for grants to be administered by the Board of State and Community Corrections (BSCC) to support improvements to county-operated juvenile facilities to make these locations more conducive to serving justice-involved youth with a wide range of needs, with a focus on supporting trauma-informed care, restorative justice, and rehabilitative programming.
Ongoing California Advancing and Innovating Medi-Cal (CalAIM) Reform to Benefit Youth in Foster Care: The budget proposal notes that the Administration intends to continue to work with stakeholders in the budget year to develop a new Foster Care Model of Care to address the complex medical and behavioral health needs of youth in foster care, and to build on the Continuum of Care Reforms. DHCS and CDSS will center this effort on establishing an accountability framework across systems, advancing equity, and integrating services and care. Children Now will continue to engage with the Administration, DHCS, CDSS and other stakeholders to positively inform the Foster Care Model of Care work.
Increased Funding for the NextUp Program, the California State University (CSU), and University of California (UC) to Support Students Currently or Formerly in Foster Care: The budget includes an increase of $10 million ongoing Proposition 98 General Fund to expand availability of foster youth support services offered by the NextUp program from 20 California Community College districts to 30 districts. Additionally, increases are proposed for the CSU and UC, $12 million and $6 million ongoing General Fund, respectively, to increase support for students currently or formerly in foster care.