The 2018-19 Budget

California Spending Plan (Final Version)

Chapter 1: Key Features of the 2018-19 Budget Package

Major Features of the 2018‑19 Spending Plan

The major General Fund and special fund spending actions in the 2018‑19 budget package are shown in Figure 5 and briefly described below. We discuss these and other actions in more detail in “Chapter 2.”

Considerable New Spending on Education. The budget package contains significant increases for every education segment. For elementary and secondary schools, the state surpasses the Local Control Funding Formula target rates set in 2013‑14. For both the California State University and the University of California, the budget supports higher ongoing spending (intended largely for employee compensation and some enrollment growth) as well as considerable one‑time spending. For early education, the budget contains higher spending for more slots, rate increases, staff training, and facilities. For community colleges, the budget provides an augmentation to support an overhaul of the apportionment formula—moving from an entirely enrollment‑based formula to one that has a performance component. Receiving the most discussion of any education proposal this year, the budget package also establishes a statewide online college intended to help working adults improve their career technical skills.

Healthcare and Mental Health. The budget package provides funding for some healthcare and mental health programs. Most notably, the budget allocates $1.3 billion in Proposition 56 taxes on tobacco products to three major purposes: (1) to increase payments to Medi‑Cal providers ($821 million), (2) to establish a student loan repayment program for Medi‑Cal physicians and dentists, and (3) to offset General Fund spending in Medi‑Cal. The budget plan also uses General Fund resources to (1) reduce the state’s mandate backlog related to county mental health services for children and (2) increase the availability of Hepatitis C treatment for those receiving care through Medi‑Cal and at the state’s correctional and state hospital facilities.

Homelessness. The budget provides about $600 million in General Fund increases for homelessness initiatives in 2018‑19. There is a one‑time allocation of $500 million for block grants to local governments, which will fund services such as shelters, rental assistance, outreach, and construction of affordable housing. The spending plan provides $50 million in one‑time General Fund grants to counties to fund outreach, treatment, and related services for homeless persons with mental illness. The budget also provides funding for CalWORKs families who are homeless or at risk of becoming homeless to find and move into permanent housing, and increases the daily maximum voucher amount for the Homeless Assistance Program. The budget package also places on the November ballot a program—No Place Like Home—to construct and rehabilitate permanent supportive housing for those with mental illness and are homeless.

Poverty. The budget package takes two major actions to increase cash assistance, both with the aim of reducing poverty. First, the budget plan includes $90 million General Fund in 2018‑19 to support a 10 percent across‑the‑board increase to CalWORKs maximum grant levels, beginning April 1, 2019. (As a result, the 2018‑19 cost of this change is $90 million, but the administration anticipates the full‑year, ongoing cost will be $360 million.) Second, the budget includes legislation that would eliminate the Supplemental Security Income (SSI) cash‑out policy, which made SSI/State Supplementary Payment (SSP) recipients ineligible for CalFresh food benefits, and provides $220 million to implement the change.

Infrastructure and Equipment. The 2018‑19 budget package sets aside over $1.5 billion to fund various infrastructure projects and to purchase equipment. This includes $630 million to replace the Capitol Annex and $333 million for deferred maintenance projects across various departments, which the administration will have the authority to allocate in future years. The budget also provides funds for flood control, including levee maintenance and various urban flood control projects; counties to purchase new voting systems; and infrastructure and equipment at correctional facilities, including replacing the roofs at three facilities.

Other Major Features. In addition to General Fund and special fund spending, the 2018 budget package allocated bond funding, took actions with respect to authorizing new bonds, and made some other notable policy choices. Figure 6 summarizes some of these actions.