State Spending Plan
July 12, 2017

The 2017-18 Budget

California Spending Plan

(Preliminary)

Human Services


Overview of Spending. The 2017-18 spending plan provides over $13 billion from the General Fund for human services programs. As shown in Figure 15, this is only $13 million more than revised estimates for these programs in 2016-17. This relatively flat year-over-year General Fund support for human services programs is largely the result of various fund shifts that have had the effect of reducing General Fund support for the programs in 2017-18 without reducing their overall funding levels. The General Fund savings achieved by these fund shifts is offset by increases in human services caseloads, costs per case, and targeted programmatic augmentations. Figure 16 shows the major policy changes adopted by the Legislature as part of the 2017-18 spending plan. These changes are discussed in more detail below.

Figure 15

Major Human Services Programs and Departments—Spending Trends

General Fund (Dollars in Millions)

2016-17

2017-18

Change From
2016-17 to 2017-18

Amount

Percent

SSI/SSP

$2,795.3

$2,890.8

$95.5

3.4%

Department of Developmental Services

4,032.3

4,207.8

175.5

4.4

CalWORKs

728.8

445.0

-283.8

-38.9

In-Home Supportive Services

3,506.2

3,476.4

-29.8

-0.9

County Administration/Automation

810.8

773.5

-37.3

-4.6

Department of Child Support Services

315.0

314.3

-0.7

-0.2

Department of Rehabilitation

62.6

62.8

0.2

0.4

Child welfare servicesa

335.4

433.9

98.5

29.4

Department of Aging

36.0

33.8

-2.1

-6.0

All other social services (including state support)

450.0

447.1

-2.9

-0.6

Totals

$13,072.3

$13,085.5

$13.2

0.1%

aThis includes state funding for nonrealigned child welfare services, such as the Kinship Guardianship Assistance Payment Program, Approved Relative Caregiver Program, and funding for the Continuum of Care Reform efforts.

Figure 16

Major Actions—Human Services Programs

2017-18 General Fund Effect (In Millions)

Program

Amount

CalWORKs

Augments county “single allocation” funding for services and administration

$108.9

Provides one-time funding for CalWORKs educational incentives

4.0

Integrates Online CalWORKs Appraisal Tool with county automation systems

3.7

Establishes CalWORKs Outcomes and Accountability Review system

0.6

Discontinues fingerprint imaging requirementa

In-Home Supportive Services (IHSS)

Provides support to counties for their share of IHSS costs

400.0

Codifies existing IHSS overtime exemptions

3.1

Child Welfare Services

Funds continuation of Child Welfare Services-New System IT project

25.6

Establishes Emergency Child Care Bridge Program

15.5

Converts Approved Relative Caregiver Progam into statewide entitlement program

4.1

Increases number of public health nurses who oversee foster youth’s health care

3.8

Funds training to prevent unintended pregancies for foster youth

2.9

Creates psychotropic medication review program for foster youth

0.1

Immigration

Expands Immigration Services Funding program

30.0

Food Assistance

Augments funding for food banks through CalFood programb

8.0

Establishes drinking water pilot program

5.0

Other Department of Social Services

Provides one-time disaster assistance related to Coyote Creek flooding

5.4

Provides one-time assistance for Poverello House social services agency

1.0

Developmental Services

Covers lost federal funding for BHT for children without autism diagnosis

16.5

Provides one-time funding for Community Placement Plan program activities for DC movers

13.6

Provides one-time augmentation for development of safety net services and supports

7.5

Removes cap on respite services

5.6

Funds installation of a nitrate removal system at Porterville DC

3.7

Provides one-time augmentation for Best Buddies Program

1.6

Provides one-time funding for psychologist positions at RCs to provide BHT referrals

1.0

Increases departmental oversight of housing development projects

0.6

aBudget legislation discontinues the fingerprint imaging requirement no later than July 2018. The spending plan reflects no changes in funding related to this action in 2017-18.

bPreviously known as the State Emergency Food Asssitance Program.

IT = information technology; BHT = Behavioral Health Treatment; DC = Developmental Center; and RC = Regional Center.

California Work Opportunity and Responsibility to Kids (CalWORKs)

The spending plan provides a total of $5.2 billion from all funds to support the CalWORKs program in 2017-18, a decrease of $21 million (0.4 percent) relative to estimated spending in 2016-17. This small year-over-year decrease reflects the net effect of roughly $120 million in costs from new augmentations, an additional $120 million in costs from the full-year implementation of previously approved policy changes (primarily the repeal of the maximum family grant rule), and roughly $260 million in savings due to declining caseloads. Within the total funding amount, the spending plan provides $445 million from the General Fund to support CalWORKs in 2017-18, a decrease of $284 million (39 percent) relative to 2016-17. This decrease largely reflects a funding shift as additional local funds from realignment are estimated to be available to offset General Fund costs. Major changes in CalWORKs funding and policy included in the 2017-18 spending plan are described in greater detail below.

Single Allocation Augmented Pending Revised Budgeting Methodology. The Governor’s May Revision proposed a year-over-year reduction in 2017-18 of $245 million (13 percent) in county funding for CalWORKs administration and services—referred to as the “single allocation”—to reflect the declining number of families receiving assistance as the state’s economy has improved. In response to concerns that this significant reduction would underfund county costs, the final spending plan provides an augmentation of $109 million for the single allocation above the Governor’s May Revision, resulting in a smaller year-over-year net reduction of $136 million (7 percent) in 2017-18. Budget legislation additionally directs the Department of Social Services (DSS) to develop, in collaboration with counties, recommendations for changes to the single allocation budgeting methodology that would take a more detailed approach to estimating administrative costs and potentially smooth year-over-year decreases or increases in funding as caseloads change in the future.

Funding Provided for New Educational Incentives. The spending plan provides $4 million from all funds on a one-time basis in 2017-18 to provide educational incentive payments in the CalWORKs program. Budget legislation specifies that, beginning in January 2018, CalWORKs recipients may receive a one-time incentive award of $500 for completing a high school diploma or its equivalent. CalWORKs recipients enrolling in programs leading to a career technical education certificate, an associate’s degree, or bachelor’s degree may receive a one-time stipend of $1,000. Incentive payments will be limited to the amount appropriated in the budget, and funding for additional incentives in later years will be contingent on appropriations in future budgets.

Online CalWORKs Appraisal Tool (OCAT) to Be Integrated With County Case Management Systems. The OCAT is a standardized appraisal used by all counties to identify CalWORKs recipients’ barriers to employment when they begin participating in employment services. The OCAT is currently not integrated with other county case management systems, which has led to duplicative data entry and limited how information from the OCAT can be used for program administration. The spending plan includes $3.7 million from all funds in 2017-18 to begin the process of integrating OCAT with county case management systems over the next few years.

New Performance Measurement System Adopted. Budget legislation creates a new performance measurement system for CalWORKs, to be known as the CalWORKs Outcomes and Accountability Review (Cal-OAR). Pursuant to this legislation, performance indicators related to program goals will be developed and data on these performance indicators will be collected and published regularly. On a three-year cycle, each county will use performance indicator data to (1) conduct a self-assessment to identify strengths and weaknesses in current practice and other factors that affect the county’s performance, (2) develop a system improvement plan that describes actions the county will take to improve its performance relative to the indicators, and (3) provide annual progress reports to DSS on the implementation of the system improvement plan. Budget legislation requires the Cal-OAR to be established by July 2019, and directs DSS to convene a workgroup beginning in the fall of 2017 to develop plans for how Cal-OAR will operate. The spending plan includes $600,000 from all funds in 2017-18 to begin the development of Cal-OAR.

Fingerprint Imaging Requirement Discontinued. The state currently requires adults applying for CalWORKs to have their fingerprint images taken and matched against those of other applicants through the Statewide Fingerprint Imaging System (SFIS) in order to identify instances where individuals might receive assistance under more than one case at a time (referred to as “duplicate aid”). Budget legislation requires DSS, by November 2017, to provide options to the Legislature for implementing a new system of verifying the identity of CalWORKs applicants that is “non-biometric” (does not rely on the physical characteristics of applicants, such as fingerprints) as a way to detect potential duplicate aid. Pursuant to budget legislation, following the department’s report, the Legislature would adopt a new system that would be implemented by April 2018, at which point the fingerprint imaging requirement and the state’s operation of SFIS would be discontinued. In the event that a new identity verification system is not implemented by April 2018, the fingerprint imaging requirement and state’s operation of SFIS could continue until no later than July 2018. Due to uncertainty about when the SFIS system would be decommissioned and the potential costs of an alternative identity verification system, the spending plan assumes costs from a full year of operating SFIS in 2017-18.

In-Home Supportive Services (IHSS)

The 2017-18 spending plan includes $3.5 billion General Fund for IHSS, similar to revised estimates of 2016-17 costs. The major changes to the IHSS program include the (1) establishment of a new IHSS state-county cost sharing structure and state-level collective bargaining appeals process, and (2) codification of existing IHSS overtime exemptions.

Changes to IHSS Cost Sharing Structure and Collective Bargaining Appeals Process. The budget includes a number of changes to the IHSS cost sharing arrangement between the state and counties, including shifting some costs from the state to counties, establishing a new county IHSS maintenance-of-effort (MOE), and providing some General Fund assistance to counties to meet the new MOE. In addition, trailer legislation allows counties and unions to appeal to the Public Employment Relations Board if they cannot reach a bargaining agreement, under certain conditions. For background on the IHSS cost-sharing structure and a discussion of the 2017-18 changes, see below.

Codification of Existing IHSS Overtime Exemptions. The 2017-18 budget provides $3 million General Fund for various changes to the IHSS overtime exemption policy. These changes include (1) codifying the existing IHSS overtime exemption policy, (2) removing a current time restriction on eligibility for one of the exemptions, (3) requiring a one-time notification to providers potentially eligible for each exemption, and (4) increasing the state’s role in processing exemption requests. In addition, trailer bill legislation allows recipients who were denied a provider exemption to request a state hearing if the denial puts them at risk of losing services.

Child Welfare Services

Establishes Emergency Child Care Bridge Program. The spending plan provides half-year funding of $15.5 million General Fund to establish the Emergency Child Care Bridge Program. For greater detail on this program, please see the Child Care section earlier in this report.

Converts Approved Relative Caregiver (ARC) Funding Option Program Into a Statewide Entitlement Program. In 2014-15, the Legislature established the ARC program to equalize foster care payment levels for foster caregivers regardless of whether the child in a foster caregiver’s care is eligible for federal foster care payments. Prior to ARC, relative caregivers for foster children who were not eligible for federal foster care payments—“ARC cases”—received CalWORKs child-only payments, which are significantly less than foster care payments. Initially, the ARC program provided counties around $30 million General Fund annually to equalize foster care payments between ARC cases and non-ARC cases. Participation in the program was optional at the county level. Although the ARC program generally equalized foster care payments, ARC recipients remained ineligible for two elevated foster care rates that were available for non-ARC cases—(1) the dual agency rate for individuals with developmental disabilities and (2) the infant supplement available to foster children who have a child or children. The 2017-18 spending plan converts the ARC program from an optional program into a required statewide program, making it available in all counties and tying total state ARC funding to statewide ARC caseload. Additionally, budget-related legislation extends eligibility for the dual agency rate and the infant supplement to ARC families. In 2017-18, the administration estimates ARC expenditures to be $36 million General Fund.

Immigration Assistance

Immigration Services Expanded. The Immigration Services Funding program provides grants to nonprofit organizations in the state to assist individuals applying for naturalization, deferred action, and other immigration remedies, and to conduct outreach and education in immigrant communities relative to these remedies. The spending plan provides an augmentation of $30 million from the General Fund on top of base funding of $15 million for the Immigration Services Funding program, for a total of $45 million from the General Fund in 2017-18, and assumes that this augmentation will be maintained through 2019-20. Budget legislation provides additional flexibility in what services can be funded through the program’s grants (for example, legal defense of individuals subject to deportation proceedings will be an allowable activity for grant recipients) and also prohibits grant funds from being used to provide services to individuals convicted of serious or violent felonies.

Food Assistance

Funding for CalFood. The CalFood program purchases food grown or produced in California to distribute to food banks in the state. The CalFood program has received several one-time allocations since it was created in 2011, most recently $2 million provided from the General Fund on a one-time basis in 2016-17. The spending plan provides $8 million from the General Fund for the CalFood program in 2017-18, with an expectation of ongoing annual funding of $6 million.

Other Social Services

One-Time Pass-Through Funding for Local Entities. The spending plan includes two one-time funding items for DSS that will be passed through to local entities. First, the spending plan provides $5.4 million from the General Fund to be passed through to the City of San Jose to provide assistance to individuals affected by flooding that occurred in February 2017. Second, the spending plan includes $1 million from the General Fund to be passed through to Poverello House, a social services agency located in Fresno County, for infrastructure improvements.

Department of Developmental Services

Under the budget plan, General Fund spending for DDS will increase more than 4 percent from about $4 billion in 2016-17 to about $4.2 billion in 2017-18. This year-over-year increase is largely the result of caseload increases, changes in service utilization, and costs associated with state minimum wage step increases. The budget includes several policy changes as well as capital outlay at Porterville Developmental Center (DC), together comprising about $50 million in General Fund spending.

“Safety Net” Development. The spending plan provides a one-time augmentation of $7.5 million General Fund for DDS to develop crisis stabilization and other safety net resources for individuals with developmental disabilities. The department’s safety net plan will also be supported with $13.7 million repurposed from existing sources—$9.4 million from Community Placement Plan (CPP) resources (primarily funded by the General Fund), $1.3 million in rental proceeds from the Harbor Village apartment complex adjacent to Fairview DC in Costa Mesa, and $3 million from existing Regional Center (RC) purchase-of-service funding. The overall plan includes development of two DDS-operated mobile acute crisis teams, five DDS-operated acute crisis homes, seven vendor-operated homes—three for people transitioning from the secured treatment program (STP) at Porterville DC and four for people transitioning from Institutions for Mental Disease (IMDs)—and intensive wrap-around services for people transitioning from Porterville STP or from IMDs. Crisis stabilization and safety net services take on particular importance for the system as the three remaining DCs set to close between 2018 and 2021 (except for the STP at Porterville DC). The DC closures mean there will no longer be state-operated “placements of last resort” for consumers with the most challenging service needs.

Other Spending Changes Related to DC Closures. DDS is in the process of completing the final phase of a decades-long transition from an institutionally based system of service delivery to a more integrated community-based system. Costs have been incurred during the transition—developing resources in the community for former DC residents (including safety net services), facilitating closure of DC facilities, providing bonus incentives to retain DC staff for remaining DC residents, and offsetting the loss of federal funding at the DCs. The spending plan provides additional funding for several related activities in 2017-18:

  • $13.6 million one-time General Fund ($25.7 million total funds) to support the transition of consumers at Sonoma, Fairview, and Porterville DCs to community living situations. (This is in addition to $67.9 million in total “base” CPP funding that has historically been provided.)
  • $554,000 ongoing General Fund ($597,000 total funds) to support four new positions at DDS headquarters for housing development oversight and fiscal management. As consumers transition from DCs, IMDs, and other relatively restrictive settings, DDS and RCs are using CPP funds to develop community-based housing, including some new housing models for consumers with complex needs.
  • $260,000 General Fund ($500,000 total funds) in each of three years for the archival of records at Fairview and Porterville DCs, including the inventory, scanning, and packaging of clinical records.
  • $245,000 General Fund ($300,000 total funds) in each of two years to dispose of furniture, medical equipment and supplies, artwork, photos, and other items located at Sonoma DC. (This is in addition to $300,000 General Fund [$500,000 total funds] annually in 2016-17, 2017-18, and 2018-19 that was previously appropriated for the archival of clinical and historical records.)

Removal of Cap on Respite Services. The spending plan provides $5.6 million General Fund ($10.3 million total funds) to remove—beginning January 1, 2018—the cap on respite services that was implemented in 2009 as part of a package of solutions to close the budget deficit at that time. In 2018-19 and ongoing, the increased full-year cost is estimated at $11.7 million General Fund ($21.6 million total funds). The cap limited in-home respite to 90 hours per quarter and out-of-home respite to 21 days per fiscal year. The amount of respite care needed will continue to be determined through the individual program planning (IPP) process.

Changes to Federal Funding for Behavioral Health Treatment (BHT) Resulting in Increased General Fund Costs. For children under 22 whose IPP indicated a need for BHT (it is state policy to provide such services to this group of children), DDS historically has received a federal share of cost to pay for these services. A recent change made by the federal government in 2016 means that federal funding for BHT will now be provided through Medi-Cal; however, to receive the benefit, a doctor must deem BHT as medically necessary. The new determination has led to some additional General Fund costs as follows:

  • $16.5 million ongoing General Fund to pay for BHT for children (about 4,000 in 2017-18) for whom a doctor has not deemed BHT medically necessary, but whose IPPs indicate a need for BHT.
  • $968,000 one-time General Fund ($1.3 million total funds) for RCs to hire 10.5 psychologists to assess children and provide referrals for BHT for those children who need it. Such referrals will render these services eligible for payment by Medi-Cal.

Porterville DC Capital Outlay. The spending plan includes $3.7 million one-time General Fund to install a nitrate removal system at Porterville DC (where the STP will remain open even after the general treatment area closes in 2021). Porterville DC relies on groundwater wells for its drinking water supply, yet the regional groundwater basin is subject to unhealthy levels of nitrate contamination. After completing a contracted study of mitigation alternatives, the Department of General Services (DGS) concluded the nitrate removal system is the most effective solution. DGS estimates a May 2020 completion date.

Department of Aging

The 2017-18 spending plan provides a one-time augmentation of $1 million from the State Health Facilities Citation Penalties Account for the Long-Term Care Ombudsman program. This augmentation maintains total funding for the Ombudsman program at 2016-17 levels ($11 million total funds). Associated budget bill language allows the administration to increase funding for the program by up to $1 million in future years when the following conditions are met: (1) funds in the account are made available first to the Department of Public Health for purposes in accordance with the account, and (2) the account balance is estimated to exceed $6 million, as determined by the Department of Finance on January 10.