March 9, 2017 - In California, the federal‑state Medicaid program is administered by the Department of Health Care Services (DHCS) as the California Medical Assistance Program (Medi‑Cal). Medi‑Cal is by far the largest state‑administered health services program in terms of annual caseload and expenditures. In this report, we provide an analysis of the administration’s caseload projections, including a discussion of the projected increases in ACA optional expansion caseload. We also provide an assessment of several aforementioned major factors affecting projected changes in Medi‑Cal spending in 2017‑18 and other policy changes proposed by the administration. These include the Governor’s proposed uses of Proposition 56 revenues, the proposal to shift additional New Qualified Immigrants (NQIs) to Covered California in 2017‑18, assumptions around federal CHIP funding, and the proposed abolition and transfer of the Major Risk Medical Insurance Fund (MRMIF).
October 18, 2017 - Each year, our office publishes the California Spending Plan to summarize the annual state budget. This publication discusses the 2017‑18 Budget Act and other major budget actions approved in 2017. In general, it reflects budgetary actions that the Legislature has taken through September 2017. In some cases, as noted, we discuss budget actions approved by the Legislature after June 15, 2017. In late July, for example, the Legislature passed and the Governor approved, an extension of authority for the Air Resources Board to implement the state’s cap‑and‑trade program from 2020 to 2030.
February 27, 2017 - In this report we provide (1) background on the health care and Long‑Term Services and Supports (LTSS) issues that the Coordinated Care Initiative (CCI) was intended to address, (2) an update on the CCI’s results and challenges to date, (3) an assessment of the Governor’s elimination of the CCI and budget proposal to extend certain CCI components, and (4) options for the Legislature on how to move forward. As ending the In‑Home Supportive Services (IHSS) has major, and rather complex, implications for 1991 realignment, we include a technical appendix at the end of this report that provides an in‑depth analysis of these implications.
January 13, 2017 - This publication is our office’s initial response to the Governor's 2017-18 budget proposal. The administration's estimates anticipate slow growth in the personal income tax (PIT), the state’s dominant revenue source. The Governor’s estimate of PIT growth in 2017-18 is probably too low. As a result, by the May Revision, the state could have more General Fund revenue than the Governor now projects, but much of that revenue would be required to go to schools and Proposition 2 reserves and debt payments. Facing uncertainties we have long discussed about the economy and new uncertainties about changes to federal policy, the Legislature may want to set a target for total state reserves at—or preferably above—the level the Governor now proposes.
May 14, 2018 - In this post, we describe and provide our initial comments on adjustments to the Medi-Cal budget in the 2018-19 May Revision.
November 16, 2016 - Under our current projections, assuming no changes in existing state and federal policies, we estimate the state will end the 2017-18 fiscal year with $11.5 billion in total reserves. This includes $8.7 billion in required reserves, which must be deposited into the rainy day fund, and $2.8 billion in discretionary reserves, which the Legislature can appropriate for any purpose. These reserve levels reflect the continued progress California has made in improving its budget situation. Our estimates include the effects of statewide ballot measures that were approved on November 8. The condition of the state budget depends on many volatile and unpredictable factors. This uncertainty is present in the near term and becomes greater in each subsequent year. We discuss two illustrative economic scenarios for the fiscal years after 2017-18. Under a mild recession scenario, the state would have enough reserves to cover its operating deficits through 2020-21. This means, under our assumptions, the state could weather a mild recession without cutting spending or raising taxes. However, this conclusion assumes that the state does not make any changes to its current policies and programs in any year during the outlook. This outlook also assumes no changes in federal policy, even though the recent election results suggest some such changes are now likely. State or federal policy changes could have a significant impact on the state's bottom line.
November 18, 2015 - California's state budget is better prepared for an economic downturn than it has been at any point in decades. Under the main economic scenario in this year's LAO Fiscal Outlook, 2016-17 would end with reserves of $11.5 billion, assuming the state makes no new budget commitments through next year. If the economy continues to grow through 2019-20, annual operating surpluses and larger reserves could materialize, and there may be capacity for some new budget commitments—whether spending increases or tax reductions. An economic or stock market downturn, however, could occur during our outlook period. To illustrate this economic uncertainty, we provide projections under alternative scenarios such as a hypothetical recession that causes budget deficits to re-emerge. The more new budget commitments are made in 2016-17, the more likely it is that the state would face difficult choices—such as spending cuts and tax increases—later.
May 13, 2017 - On May 11, 2017 the Governor presented his 2017-18 May Revision budget proposal to the Legislature. We are releasing our assessment of the May Revision in various online products. This post describes the major features of the Governor’s May Revision and our office’s initial comments on it. Other posts in this series discuss our office’s independent assessments of the state’s economy, revenues, and spending proposals in the May Revision.
November 4, 2013 - The LAO’s annual California Spending Plan publication details the 2013-14 budget package, including legislative and gubernatorial actions through October 2013. (Our office released a preliminary electronic version of the report on July 30, 2013 that summarized legislative and gubernatorial actions through that date.) Major features of the 2013-14 budget plan include $2.1 billion for a new formula to distribute funding amongst schools, a state-based plan to expand Medi-Cal to cover more than one million additional low-income adults, and selected program augmentations.
May 14, 2019 - The Governor’s May Revision includes Medi-Cal spending of $19.7 billion from the General Fund ($93.4 billion total funds) in 2018-19 and $23 billion from the General Fund ($102.2 billion total funds) in 2019-20. As will be described in this post, about half of the reduction in estimated spending in 2018-19 reflects a shift of costs in Medi-Cal to a different budget item, rather than a true reduction in estimated program costs. After accounting for this shift, the May Revision is about $350 million below January estimates across 2018-19 and 2019-20.
February 16, 2018 - In this report we provide a broad overview of the Governor's health and human services budget, highlighting major year-over-year changes. We then provide a more in-depth analysis of select programmatic areas.