Legislative Analyst's Office

Analysis of the 2002-03 Budget Bill


Federal Funds Risk

Legislature Needs More Information on Federal Funds Maximization Proposal

The Governor's budget for Health and Human Services assumes savings of $50 million from unspecified proposals to maximize federal funds. Because no details are available concerning these proposals, this assumption represents a budget risk. We recommend that the Health and Human Services Agency provide details on its plan for achieving these savings prior to budget hearings.

Schedule 9 of the Governor's budget summary includes a "Miscellaneous Adjustment" of $50 million in additional federal funds that offset General Fund costs. Because no details concerning this proposal were available at the time this analysis was prepared, there is no way to assess the likelihood that California will receive these federal funds. Accordingly, assuming their receipt creates substantial budget risk. In order for the Legislature to exercise its budget review responsibilities, we recommend that the Health and Human Services Agency provide details of its plan for achieving these savings prior to budget hearings.

We note that the budget for Health and Human Services assumes other savings (totaling $616 million) that are dependent on federal action and, thus, represent substantial additional budget risk. These savings assumptions are summarized in Figure 1 and are discussed later in the relevant sections of this Analysis.

Figure 1

Savings Assumptions Contingent on Federal Action

(In Millions)

Department/Proposal

2001-02

2002-03

Total

Health and Human Services Agency

 

 

 

Unspecified proposals to maximum federal funds

$50

$50

Health Services

 

 

 

Offset for reduced Medicaid cost-sharing

$400

 

$400

Social Services

 

 

 

Restoration of federal Food Stamp eligibility

$35

$35

Child Support Services

 

 

 

Automation penalty relief

$181

$181

  Totals

$400

$266

$666

 


Return to Health and Social Services Table of Contents, 2002-03 Budget Analysis