The 2025-26 California Spending Plan

Human Services

Aging-Related Issues

In-Home Supportive Services (IHSS)

The 2025-26 spending plan provides a total of $29.9 billion (all funds) for IHSS, which is $3.1 billion (11.6 percent) above estimated 2024-25 expenditures. Of this total, the spending plan includes $11.1 billion from the General Fund for support of IHSS in 2025-26, which is a net increase of 1.2 billion (12.5 percent) relative to estimated 2024-25 levels. The primary reason for the year-over-year General Fund cost increase is the continued growth of the three primary IHSS cost drivers: caseload (7.8 percent), cost per hour (2.9 percent), and hours per case (1.4 percent). This cost growth was partially offset by multiple budget solutions. In this section we describe additional budget-related spending changes in more detail.

Cost of Community First Choice Option (CFCO) Late Penalties Shifted to Counties. CFCO is a federal program within IHSS that is aimed at serving those with the highest needs for assistance in the home. The IHSS cases eligible for the CFCO program receive the regular base Federal Medical Assistance Percentage (FMAP) of 50 percent, plus an additional enhanced FMAP of 6percent (for a total FMAP of 56 percent). However, if counties do not conduct timely, federally required reassessments of CFCO recipients, those particular cases are no longer eligible to receive the additional 6 percent FMAP. The cost of this lost 6 percent FMAP must then be reimbursed to the federal government. Since 2017, the cost of this lost 6 percent FMAP (also referred to as the CFCO late penalty) has been paid for with the General Fund and has grown over time—totaling $63.2 million in 2023-24.

In an effort to assist in addressing the state’s budget problem, as part of the May Revision, the administration proposed to require counties to cover the full cost of the CFCO late penalty beginning in 2025-26 (estimated to save $81 million General Fund in 2025-26). Ultimately, the spending plan modified the Governor’s May Revision proposal, choosing instead to require counties to cover half of the cost of the CFCO late penalty in 2025-26 (estimated to save $40.5 million General Fund in 2025-26) and requiring counties to cover the full cost of the CFCO late penalty beginning in 2026-27 and on-going. However, if counties comply with the CFCO reassessment requirements, they will not incur a penalty and will therefore not have additional costs.

Partial Restoration of Medi-Cal Asset Limit. In an effort to assist in addressing the state’s budget problem, as part of the May Revision, the administration proposed to fully reinstate an asset limit of $2,000 for individuals and $3,000 for couples to be eligible for Medi-Cal. This asset limit was first raised to $130,000 for individuals and $195,000 for couples on July 1, 2022 and was fully phased out starting January 1, 2024. Fully reinstating the asset limit was expected to result in fewer people being eligible to receive IHSS and, at the time of May Revision, estimated to save $25.5 million General Fund in IHSS costs in 2025-26 (we note this estimate was later revised up by the administration). Ultimately, the 2025-26 spending plan modified the Governor’s May Revision proposal, instead choosing to partially restore the asset limit to $130,000 for individuals and $195,000 for couples. This is estimated to save roughly $16 million General Fund in IHSS costs in 2025-26 (increasing to hundreds of millions of dollars in the outyears).

Operational Improvements within the Department of Social Services (DSS). As part of the May Revision, the administration proposed to authorize the Department of Finance (DOF) to contract with consultants to assist and advise DOF on analyzing and creating process improvements within state government. The goal of which was to identify areas where operations could be improved to achieve savings. DSS was identified as one of several General Fund departments where operational savings could be found. As of the May Revise, the administration estimated that $75 million in savings could be found through DSS operational improvements in 2025-26. It is our understanding that these savings would come from the IHSS program. (As of this writing, whether these savings will be achieved is unclear as the administration’s recently signed contract with a consultant does not appear to include DSS.)

Proposed Solutions Not Adopted in Spending Plan. Several other IHSS budget solutions were proposed as part of the Governor’s May Revision proposal, but ultimately were not adopted as part of the final budget package. These proposals include:

• Proposal to Eliminate IHSS Benefits for Undocumented Adults Aged 19 and Older. At the time of the May Revision, the administration estimated this proposal to save $158.8 million in 2025-26. This estimate was later revised down by the administration. This proposal was ultimately not adopted as part of the final 2025-26 budget package.

• Proposal to Cap Overtime Hours for IHSS Providers. At the time of the May Revision, the administration proposed to cap overtime hours for IHSS providers at 10 overtime hours per case per week. This proposal was initially estimated to save $688 million General Fund in 2025-26. (The administration later revised the estimated savings to be several hundred million dollars less in 2025-26.) This proposal was ultimately not adopted as part of the final 2025-26 budget package. In addition to rejecting this cap on overtime, as part of the final budget package, the Legislature adopted budget-related legislation that states that any hours worked that exceed 40 hours in a workweek will continue to be paid overtime rates even in the event that the federal government makes a future decision to no longer require overtime, or pay a share of the cost of overtime.

• Proposal to Conform IHSS Residual Program with Medi-Cal Coverage. At the time of the May Revision, the administration proposed to conform the IHSS Residual program with the timing of Medi-Cal Coverage. As a result, under this proposal, all IHSS recipients who became ineligible for Medi-Cal would be automatically terminated from the IHSS program. At the time of May Revision, the administration estimated this proposal to save no money in 2025-26. The administration later revised the estimated cost savings to be $106.6 million in 2025-26. This proposal was ultimately not adopted as part of the final 2025-26 budget package.

New Spending for IHSS Collective Bargaining. The 2025-26 spending plan also included an additional $3.3 million General Fund for the Department of Human Resources to support IHSS collective bargaining and its potential transition to state level collective bargaining. Although these funds were provided, there is no current statutory requirement to make this transition.

Supplemental Security Income/State Supplementary Payment (SSI/SSP)

The 2025-26 spending plan provides a total of $11.5 billion (all funds) for SSI/SSP in 2025-26, which is approximately $211 million more than estimated 2024-25 expenditures. This increase is primarily due to the full-year impact of the federal SSI grant cost-of-living adjustment (COLA) (2.5 percent) and the half-year impact of the federal SSI COLA estimated to be 3.9 percent, effective January 1, 2026. The amount of General Fund for SSI/SSP is expected to decrease slightly from $3.7 billion in 2024-25 to $3.5 billion in 2025-26. This decrease is primarily due to the declining SSI/SSP caseload. The state SSP portion of the grant did not receive an increase in 2025 and the spending plan does not include an SSP grant increase for January 1, 2026. The total funding for this program also includes costs associated with two other state-funded grant programs: (1) the Cash Assistance Program for Immigrants, which provides grants to individuals ineligible for SSI/SSP solely due to immigrant status, and (2) the California Veterans Cash Benefit program, which provides a supplemental grant payment to veterans receiving payments from the federal Special Veterans Benefit program.

Overall, as a result of the federal COLA, in 2025-26, the total maximum SSI/SSP individual grants are estimated to increase by $37.71 (3.1 percent) and the maximum SSI/SSP couples grants are estimated to increase by $56.55 (2.7 percent)—as shown in Figure 1.

Other Aging-Related Budget Actions

In this section, we discuss additional key budget actions, outside of IHSS, that primarily impact older adults.

Provides Additional One-Time Funding for Home Safe. The 2025-26 spending plan includes $83.8 million in one-time General Fund to continue supporting the Home Safe program. This funding is available for encumbrance or expenditure until June 30, 2028, and will support the safety and housing stability of older adults and adults with disabilities served by Adult Protective Services. Without this funding, the Home Safe program would have ended at some point in 2025-26.

Provides Additional One-Time Funding for the Housing and Disability Advocacy Program (HDAP). The 2025-26 spending plan includes $44.6 million in one-time General Fund to continue supporting HDAP. These one-time funds are available for encumbrance or expenditure until June 30, 2028, and are in addition to the $25 million of on-going annual base funding for HDAP.

Provides Additional One-Time Funding for the Holocaust Survivors Assistance Fund. The 2025-26 spending plan includes $14.5 million in one-time General Fund to continue supporting Holocaust survivors residing in California. These one-time funds are available for encumbrance or expenditure until June 30, 2027. Without this funding the Holocaust Survivors Assistance fund would have ended at some point in 2025-26.

Transfers Funds From Special Fund Accounts to Long-Term Care Ombudsman Program (LTCOP). The LTCOP receives a baseline funding amount of $400,000 from the Licensing and Certification Program (LCP) fund and up to $2.1 million from the State Health Facilities Citation Penalties (SHFCP) account annually ($1.1 million at the beginning of the fiscal year and another $1 million if the SHFCP account exceeds $6 million on January 1 of the fiscal year). The 2024-25 Budget Act then included language that allowed for an additional one-time transfer of $4.25 million in additional funds from the LCP fund (for a total of $4.65 million from the LCP fund ) to support the LTCOP, along with increasing the amount of funds eligible for transfer from the SHFCP account from the existing $2.1 million to $3.1 million (making $1.1 million available at the beginning of the fiscal year and the other $2 million available if the SHFCP account exceeds $6 million on January 1). The 2025 spending plan now allocates the baseline $400,000 from the LCP fund to support the LTCOP, along with $4.1 million from the SHFCP account (made available at the beginning of the fiscal year).