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Budget and Policy Post
November 6, 2023

The 2023-24 California Spending Plan

Human Services


In-Home Supportive Services (IHSS)

The 2023-24 spending plan provides a total of $22.4 billion (all funds) for IHSS, which is $3.7 billion (20 percent) above estimated total expenditures in 2022-23. Of this total, the spending plan includes $8.4 billion from the General Fund for support of IHSS in 2023-24, which is a net increase of $2.2 billion (36 percent) relative to estimated 2022-23 levels. There are three primary reasons for the year-over-year General Fund cost increases: (1) an anticipated expansion of full-scope Medi-Cal coverage to undocumented individuals aged 50 and over is estimated to result in costs of $900.7 million General Fund in 2023-24; (2) increased General Fund costs of $860 million, compared to 2022-23, to account for the gradual phase out of enhanced federal Medicaid funds used to offset IHSS costs; and (3) the continued year-over-year growth in two of the three primary IHSS cost drivers: caseload (4.3 percent) and cost per hour (2.7 percent). Hours per case are projected to stay flat between 2022-23 and 2023-24. We describe in more detail key cost increases and cost shifts in this section.

Eliminates Minor Recipient Provider Eligibility Requirements. Historically, a parent could only become the paid IHSS provider for their minor child if the care needs of their child would prevent the parent from maintaining full-time employment. If the care needs of the child did not prevent the parent from maintaining full-time work, a provider other than the parent could be hired. It is our understanding from the department that this requirement particularly impacted minor recipients with parents who were undocumented. In these cases, parents were unable to work due to their immigration status, not due to the needs of the child, and this resulted in children of these parents being unable to secure anyone, including their parents, to provide authorized IHSS services. By eliminating the minor recipient provider eligibility requirements, IHSS-eligible minor recipients will now be treated like all other IHSS recipients when it comes to the selection of a provider. As a result, it is estimated that more IHSS recipients will be able to claim their IHSS hours—resulting in estimated costs of $27.9 million General Fund ongoing.

Continues Phase in of Medi-Cal Asset Limit Repeal. Historically, seniors and persons with disabilities were required to have assets at or below $2,000 ($3,000 for couples) to be eligible for Medi-Cal. In July 2022, the asset limit was raised from $2,000 to $130,000 for individuals and from $3,000 to $195,000 for couples. Further, the 2023-24 spending plan assumes that the asset test will be fully eliminated on January 1, 2024. As a result of this change, an estimated 7,776 new monthly recipients will become eligible for IHSS, resulting in an additional $94.9 million General Fund cost in 2023-24.

Anticipates Complete Phase Out of Temporary Increases to Federal Medicaid Funds. Under the Families First Coronavirus Response Act, the federal government increased the federal match rate for Medicaid services by 6.2 percentage points for the duration of the national public health emergency caused by COVID-19. This increased federal match lowers state costs for Medi-Cal, IHSS, and other programs that rely on federal Medicaid funding. In December 2022, federal legislation outlined a ramp-down schedule for the enhanced federal funding. As a result, in April 2023, the enhanced rate for most services dropped from 6.2 percentage points to 5 percentage points, then to 2.5 percentage points in July 2023. By October 2023, the enhanced rate is scheduled to drop to 1.5 percentage points and is scheduled to be fully eliminated by January 2024. To account for this gradual decrease and ultimate phase out of federal funds offsetting IHSS costs, the 2023-24 spending plan includes an additional $194 million General Fund.

Continues to Expand Full-Scope Medi-Cal Coverage to Undocumented Individuals Aged 19-25 and 50 and Over. The 2023-24 spending plan continues to extend full-scope Medi-Cal coverage and IHSS eligibility to income-eligible undocumented immigrants. The administration estimates there will be 34,000 cases of undocumented individuals aged 50 and over who will enter IHSS through this Medi-Cal expansion. To account for this, the 2023-24 spending plan includes $900.7 million General Fund. The spending plan also includes an additional $1.2 million General Fund to account for additional newly eligible cases from undocumented individuals aged 19-25. Although full-scope Medi-Cal coverage is scheduled to be extended to undocumented individuals aged 26-49 no later than January 2024, the spending plan assumes that those applying for Medi-Cal in 2023-24 will not begin receiving IHSS until 2024-25. As a result, the 2023-24 spending plan does not include additional funding for the Medi-Cal expansion to the 26-49 age group.

Calls for the Study of a Statewide and/or Regional Collective Bargaining Model. The spending plan includes $1.5 million General Fund for the Department of Social Services (DSS) to analyze the costs and benefits of transitioning to a statewide or regional model for collective bargaining for IHSS providers wages and benefits. Currently, IHSS provider wages are collectively bargained at the county level. This analysis is set to be provided no later than January 1, 2025. Additionally, the 2023-24 budget updates the penalty structure for counties who fail to reach a collective bargaining agreement and for who a fact-finding panel has recommended settlement terms that are more favorable to the IHSS employee organization. The fiscal penalty increases from a one-time assessment that was equivalent to 7 percent of the county’s maintenance-of-effort (MOE) to an ongoing, annual penalty that is equivalent to 10 percent of the county’s MOE, levied until a collective bargaining agreement is reached.

Monitors Impacts of Medi-Cal Redetermination on IHSS Consumers. During the COVID-19 public health emergency, eligibility redetermination requirements for current Medi-Cal enrollees were temporarily suspended. This allowed some Medi-Cal enrollees who otherwise may have lost full-scope Medi-Cal coverage to continue receiving Medi-Cal related services—including IHSS. As of April 2023, however, Medi-Cal has resumed the eligibility redetermination process. To monitor the impacts and outcomes of redetermination on IHSS consumers, DSS has been directed to collect information and report findings related to redetermination to the Legislature on a quarterly basis beginning in September 2023. The primary purposes of this monitoring are to (1) document the impact of Medi-Cal redeterminations and the subsequent loss of full-scope medical has on IHSS consumers and (2) to document the number of IHSS consumers enrolled in the IHSS Residual program (the program some IHSS recipients would end up in if they lose their Medi-Cal eligibility).

Increases Allowable Paid Sick Leave for IHSS Providers. Chapter 309 of 2023 (SB 616, Gonzalez) increases the required amount of paid sick leave for California employees, including IHSS providers, from no less than 24 hours or three days to no less than 40 hours or five days in each year of employment. Additionally, SB 616 increases the amount of paid sick leave an IHSS provider can accrue to 80 hours or 10 days. These changes will take affect beginning January 1, 2024.

SSI/SSP

The 2023-24 spending plan provides a total of $11.4 billion (all funds) for Supplemental Security Income/State Supplementary Payment (SSI/SSP) in 2023-24, which is $673 million more than estimated expenditure levels in 2022-23. Similarly, the amount of General Fund for SSI/SSP is expected to increase from $3.3 billion General Fund in 2022-23 to $3.6 billion General Fund in 2023-24. These funding estimates include costs associated with two other state-funded grant programs: (1) the Cash Assistance Program for Immigrants (CAPI), which provides grants to individuals ineligible for SSI/SSP solely due to immigrant status, and (2) the California Veterans Cash Benefit (CVCB) program, which provides a supplemental grant payment to veterans receiving payments from the federal Special Veterans Benefit program. Overall, both the total fund and General Fund increases primarily are attributed to (1) the full-year impact of federal SSI grant increases (8.7 percent) and state SSP grant increases (10.3 percent) implemented on January 1, 2023, and (2) the half-year impact of the federal SSI grant cost-of-living adjustment set at 3.2 percent and the state SSP grant increase set at 9.2 percent, effective January 1, 2024. We describe the anticipated federal and state grant increases in more detail below.

Increases SSP, CAPI, and CVCB Grant Payments. The 2023-24 spending plan includes $300 million General Fund to increase SSP grants to account for the full-year costs of the 10.3 percent grant increase that was provided as part of the 2022-23 budget. Additionally, the 2023-24 budget includes $146 million to provide a 9.2 percent SSP grant increase beginning in January 2024. This grant increase also applies to CAPI and CVCB grant levels. Overall, as shown in Figure 1, the maximum SSI/SSP individual grants will increase by $49.46 (4.4 percent) and the maximum SSI/SSP couples grants will increase by $95.08 (4.9 percent). The exact level of SSP grant increase that could be afforded with the funding provided was an estimate at the time the budget was enacted. The spending plan adopted language that required DSS and the Department of Finance (DOF) to calculate what SSP percent increase to grant levels the state could accomplish with the amount of funding appropriated in the 2023-24 budget and to notify the Legislature 30 days before notifying the federal Social Security Administration (which administers the SSP grant on behalf of the state) to operationalize the SSP grant increase. The administration recently provided this notification—indicating the grant increase would be 9.2 percent.

Figure 1

SSI/SSP Monthly Maximum Grant Levelsa

(Dollars in Millions)

January 2023 (Actual)

January 2024 (Actual)

Changes From January 2023

Maximum Grant—Individuals

SSI

$914.00

$943.25

$29.25

SSP

219.73

239.95

20.22

Totals

$1,133.73

$1,183.19

$49.46

Percent of FPLb

93.31%

93.74%

Maximum Grant—Couples

SSI

$1,371.00

$1,414.87

$43.87

SSP

556.62

607.83

51.21

Totals

$1,927.62

$2,022.70

$95.08

Percent of FPLb

117.30%

118.49%

aThe maximum monthly grants displayed refer to those for aged and disabled individuals and couples living in their own households, effective as of January 1 of the respective calendar year.

bCompares grant level to federal poverty guidelines from the U.S. Department of Health and Human Services for 2023. Estimates of federal poverty guidelines for 2024 are based on the LAO Consumer Price Index for All Urban Consumers projection. The 2024 federal poverty guidelines will not be finalized until fall 2024.

FPL = federal poverty level.

Considers Possibility of Switching to Total Expenditures Method to Meet MOE Requirements. To meet federal MOE for supplementary payment level requirements, the state has two options: (1) the Payment Level method, which requires the state to maintain 1983 SSP grant payment levels ($156 for individuals and $396 for couples), or (2) the Total Expenditures method, which requires the state to meet SSP grant payment levels from the previous calendar year. Historically, California has always utilized the Payment Level method to meet the MOE requirement. However, budget-related legislation requires DSS to provide the Legislature with information (1) describing the process that would be necessary to switch from the Payment Levels method to the Total Expenditures method and (2) identifying challenges, barriers, and key considerations that should be considered when switching payment to the Total Expenditure method. This information will be provided no later than February 1, 2024.

Department of Aging

Temporary Restoration of Older Californian Act Programs Spread Over Five Years. The 2022-23 spending plan provided $186 million over three years to temporarily fund Older Californian Act programs that are included in statute, but have not been funded since 2008. The Older Californian Act programs include family and caregiver support services, senior volunteer development resources, aging in place services, and other home- and community-based services (HCBS). The 2023-24 budget continues the one-time spending for these programs, but instead of spreading the funding over three years, the spending plan spreads the funding over five years ($37.2 million each year through 2027-28).

Older Adult Behavioral Health Initiative. The 2023-24 Spending Plan includes $50 million over three years to fund the Older Adult Behavioral Health Initiative ($20 million in 2023-24, $20 million in 2024-25, and $10 million in 2025-26). At a high level, the initiative will focus on addressing behavioral health and/or substance use disorder needs of older adults. The initiative has four main components:

  • $30.3 Million for Community Capacity Building. This funding is intended to be provided to local community partners—such Area Agencies on Aging, Caregiver Resource Centers, and Community Based Adult Services programs—to assist these organizations in building the capacity to identify and serve older adults with behavioral health needs. The initiative will specifically focus on older adults who have been historically underserved based on race, ethnicity, language, culture, immigration, sexual orientation, and gender identity.

  • $10.5 Million for Campaign to Reduce Behavioral Health Stigma and Isolation. This portion of the initiative is intended to be used for media campaigns to raise awareness and reduce stigma around available behavioral health services. The media campaigns will be specifically focused on communities of color, immigrant communities, veterans, and those who identify as LGBTQ+. The funding also will be used to conduct data collection to identify gaps in behavioral health access to be able to better target the campaigns.

  • $4.5 Million for the Continuation of Older Adult Warmline. This funding will allow for a three-year continuation of existing phone line that older adults can call to receive support.

  • $4.7 Million for State Oversight and Support. Specifically, the funding will be used to provide oversight and support to local partners by funding five positions at the Department of Aging for these activities.

Update on Home- and Community-Based Services Spending Plan

Temporary Increase to Medicaid Federal Share of Cost for HCBS Programs and Services. Under the American Rescue Plan Act of 2021, the federal government increased the federal medical assistance percentage (FMAP) by 10 percentage points for Medicaid-funded HCBS services and programs provided from April 1, 2021 through March 31, 2022. (The FMAP represents the federal government’s share of cost for Medicaid services eligible for cost sharing.) States had discretion about whether to claim the additional funding (which we refer to throughout this post as the “increased HCBS FMAP funding”) for some or all of its HCBS expenditures during the spending period, provided they meet certain program requirements. For example, states could not replace existing state funding for HCBS programs and services with the increased HCBS FMAP funding; rather, the increased HCBS FMAP funding had to be spent on new—or enhanced—programs that are in addition to existing state HCBS funding (this and other requirements are discussed in the next section of this post). The most up-to-date estimates assume that the state would draw down $2.8 billion in increased HCBS FMAP funding, which reflects the estimated maximum amount of federal funding California could claim from the increased HCBS FMAP.

States Required to Spend an Amount of State Funding Equivalent to the Increased HCBS FMAP Funding on New HCBS Expansions and Enhancements. The state’s decision to claim increased HCBS FMAP funding reduced its share of cost for existing HCBS services by an equal amount (in California’s case, $2.8 billion). The federal government requires states to “reinvest” these freed-up state funds on expanded, enhanced, or strengthened HCBS services (which we refer to throughout this post as “HCBS enhancements”). These HCBS enhancements must supplement and build upon existing HCBS activities in place as of April 1, 2021 in either Medicaid-funded or non-Medicaid-funded services and programs. As shown in Figure 2, the state’s HCBS Spending Plan includes 26 HCBS activities. The total costs associated with the state’s HCBS Spending Plan are nearly $4.5 billion, which includes the $2.8 billion HCBS FMAP funds and an additional $1.7 billion in federal matching funds for Medicaid-eligible HCBS activities.

Figure 2

Summary of California’s Home‑ and Community‑Based Services Spending Plana

As of April 2023

Home‑ and Community‑Based Services (HCBS) Spending Plan Activities

Total Fundsa (in Millions)

Workforce: Retaining and Building Network of Home and Community‑Based Direct Care Workers

In‑Home Supportive Services (IHSS) Career Pathways. Provide specialized training opportunities to IHSS providers.

$295.1

IHSS HCBS Care Economy Payments. Provide one‑time $500 payments to IHSS providers that worked at least two months between March 2020 to March 2021.

295.0

Direct Care Workforce (Non‑IHSS) Training and Stipends. Provide specialized training opportunities to non‑IHSS HCBS providers.

150.0

Providing Access and Transforming Health Funds for Homeless and HCBS Direct Care Providers. Expand homeless system of care and create an effective pre‑release care for justice‑involved populations.

100.0

Increasing Home and Community Based Clinical Workforce. Increase the number of home and community‑based clinical care providers for individuals with disabilities and aging adults.

75.0

Non‑IHSS HCBS Care Economy Payments. Provide one‑time $500 payments to non‑IHSS HCBS care providers that worked at least two months between March 2020 to March 2021.

12.5

Traumatic Brain Injury (TBI) Program. Expand the capacity of existing TBI sites and stand up new TBI sites.

5.0

Home and Community‑Based Services Navigation

Language Access and Cultural Competencies Orientations and Translations. Provide funds to translate DDS documents, coordinate and streamline interpretation and translation services, and ensure culturally appropriate translations.

$45.8

CalBridge Behavioral Health Pilot Program. Hire trained behavioral health navigators in emergency departments to screen and refer patients to mental health or substance use disorder programs.

40.0

Dementia Aware and Geriatric/Dementia Continuing Education. Develop a cognitive health assessment tool and provide geriatric/dementia trainings to health care providers.

25.0

No Wrong Door/Aging and Disability Resource Connections (ADRC). Support ADRC program operations, including data collection and sharing practices.

5.0

Home and Community‑Based Services Transitions

Housing and Homelessness Incentive Program. Provided incentive funds to Medi‑Cal managed care plans to address homelessness and keep beneficiaries housed.

$1,299.6

Community Care Expansion Program. Acquire, rehabilitate, or construct adult and senior care facilities.

53.4

Eliminating Assisted Living Waiver Waitlist. Eliminate Assisted Living Waiver waitlist by increasing waiver slots by 7,000.

92.1

Laguna Honda Enhanced Transition Services Benefit. Transfer Medicaid‑funded residents of Laguna Honda Hospital to new care setting.

0.6

Services: Enhancing Home and Community‑Based Services Capacity and Models of Care

Developmental Services Rate Model Implementation. Implement rate models recommended by the 2019 Rate Study.

$1,538.6

Social Recreation and Camp Services for Regional Center Consumers. Provide camping services, social recreation activities, educational therapies, and nonmedical therapies for eligible individuals who have a developmental disability.

121.1

Older Adults Resiliency and Recovery. Provide funding to various older adult programs, including food assistance, legal services, employment services, and behavioral health line.

106.0

Contingency Management. Implement treatment pilot for stimulant use disorder.

50.2

Coordinated Family Support Services. Create pilot to assist families in coordinating the receipt and delivery of services for DDS consumers living in the household.

41.7

Enhanced Community Integration for Children and Adolescents. Provide local grants to develop integrated community‑based social recreational activities for children with and without developmental disabilities.

12.5

Alzheimer’s Day Care and Resource Center. Provide dementia‑capable services at licensed Adult Day and Adult Day Health centers.

5.0

Home and Community‑Based Services Infrastructure and Support

Access to Technology for Seniors and Persons with Disabilities. Increase access to technology for older adults and adults with disabilities.

$50.0

Senior Nutrition Infrastructure. Provide capacity an infrastructure improvement grants to senior nutrition program vendors.

40.0

Modernize Regional Center Information Technology Systems. Conduct initial planning process to update the regional center fiscal system and implement a statewide Consumer Electronic Records Management System.

7.5

Long‑Term Services and Supports (LTSS) Data Transparency. Create LTSS Data Dashboard linked with statewide nursing home and HCBS utilization, quality, demographics, and cost data.

4.0

Total

$4,470.7

aReflects HCBS Spending Plan activities and funding levels as of April 2023. Per federal guidance, the state must spend all of these funds by March 31, 2025.

Federally Required HCBS Spending Plan Updates. The federal government requires states to submit quarterly reports that provide up-to-date information on the amount of increased HCBS FMAP funds the state has claimed and/or anticipates to claim between April 1, 2021 and March 31, 2022 and anticipated and/or actual expenditures for HCBS activities. Additionally, states are required to submit semiannual implementation progress reports which provide information on outcomes, lessons learned, and implementation challenges for each HCBS activity and how the state intends to sustain these activities after the expiration of HCBS FMAP funds.

State Extended Expenditure Deadline of HCBS Spending Plan Funds. Initially, the federal government required states to spend all HCBS Spending Plan funds by March 31, 2024. The 2022-23 budget included budget language requiring all HCBS Spending Plan funds be spent by December 31, 2023 (allowing for close-out activities to be completed by March 31, 2024). Additionally, the budget language allowed DOF to extend the deadline to conform with any new federal guidance and propose changes to the HCBS Spending Plan, including creating new HCBS Spending Plan activities (referred to as HCBS activities) or shifting funds across HCBS activities.

After the passage of the 2022-23 budget, the federal government extended the deadline by which states must spend all HCBS Spending Plan funds from March 31, 2024 to March 31, 2025. States have discretion on whether to take advantage of the federal extension. The Governor’s 2023-24 January budget proposal assumed that all HCBS spending would be completed by December 2023 and therefore no extension was necessary. However, due to observed delays in spending all of the enhanced funding, the 2023-24 May Revision assumed a six-month extension beyond the original March 31, 2024 close-out date (until September 30, 2024) for certain HCBS activities. All other HCBS activities were still subject to the earlier deadline of March 31, 2024. Ultimately, the 2023-24 budget extends the expenditure deadline for all HCBS activities to up to December 31, 2024 (allowing for close-out activities until March 31, 2025). DOF can further extend the expenditure deadline to up to March 31, 2025 on a case-by-case basis. While the latest possible HCBS expenditure deadline is extended, program expenditures can still end at an earlier date (for example, funds can be spent at a faster rate due to higher-than-expected demand or program activities can be ended at an earlier date due to lower-than-expected demand, allowing for funds to be shifted to another HCBS activity). Additionally, the 2023-24 budget continues to include budget-related language that allows DOF to propose changes to the HCBS Spending Plan activities upon notification to the Joint Legislative Budget Committee.

Budget Language Requires Administration to Provide Legislature With an Update on HCBS Spending Plan Expenditure Levels. The 2023-24 budget includes budget language that requires DOF to report by February 1, 2024 the amount of actual unexpended or unencumbered HCBS FMAP funds as of September 30, 2023 and the projected amount of unexpended or unencumbered appropriations for March 31, 2024 by programmatic area. The report shall be provided to the Joint Legislative Budget Committee and the chairpersons of the budget committees and relevant subcommittees in each house of the Legislature.