LAO 2003-04 Budget Analysis: Health and Social Services

Legislative Analyst's Office

Analysis of the 2003-04 Budget Bill

In-Home Supportive Services

The In-Home Supportive Services (IHSS) program provides various services to eligible aged, blind, and disabled persons who are unable to remain safely in their own homes without such assistance. An individual is eligible for IHSS if he or she lives in his or her own home—or is capable of safely doing so if IHSS is provided—and meets specific criteria related to eligibility for the Supplemental Security Income/State Supplementary Program (SSI/SSP).

The IHSS program consists of two components: the Personal Care Services Program (PCSP) and the Residual IHSS program. Services provided in the PCSP are federally reimbursable under the Medicaid program. The PCSP limits eligibility to categorically eligible Medi-Cal recipients (California Work Opportunity and Responsibility to Kids and SSI/SSP recipients) who satisfy a "disabling condition" requirement. Personal care services include activities such as: (1) assisting with the administration of medications; and (2) providing needed assistance with basic personal hygiene, eating, grooming, and toileting. The following cases are excluded from the PCSP and, therefore, receive services through the Residual (state-only funded) IHSS program: cases with domestic services only, protective supervision tasks, spousal providers, parent providers of minor children, "income eligibles" (generally recipients with income above a specified threshold), "advance pay" recipients (eligible for payments prior to the provision of services), and recipients covered by third party insurance.

The budget proposes $16 million from the General Fund for the IHSS program, which is a decrease of about $1 billion compared current-year expenditures. This decrease is attributable to the Governor's proposal to realign the IHSS program to the counties. (The $16 million General Fund cost for 2003-04 is for automation improvements and one-time costs to make certain individuals federally eligible for PCSP.) For our discussion of the Governor's realignment proposal, please see "Part V" of The 2003-04 Budget: Perspectives and Issues.

Governor Proposes to Suspend State Participation in Wage Increase

The Governor proposes trailer bill language to suspend the In-Home Supportive Services (IHSS) revenue "trigger" for state participation in higher wages for certain providers. This legislation would only impact program costs if (1) the Legislature rejects the Governor's proposal to realign IHSS to counties and (2) revenue growth in 2003-04 is greater than 5 percent. We recommend that the Legislature's action on this issue be consistent with its policy on IHSS realignment.

State Participation in Wage Increases. Chapter 108, Statutes of 2000 (AB 2876, Aroner), authorizes the state to pay 65 percent of the nonfederal cost of a series of wage increases for IHSS providers working in counties that have established "public authorities." The wage increases began with $1.75 per hour in 2000-01, potentially to be followed by additional increases of $1 per year, up to a maximum wage of $11.50 per hour. We note that state participation in wage increases since 2000-01 are contingent upon General Fund revenue growth exceeding a 5 percent threshold. Chapter 108 also authorizes state participation in health benefits worth up to 60 cents per hour worked. As of 2002-03, the state participates in provider wages of $9.50 per hour plus 60 cents per hour worked for health benefits.

Governor Proposes Suspending Trigger Mechanism. Even though the Governor's budget does not estimate that a 5 percent revenue growth will be achieved in 2003-04, the Governor proposes to suspend the application of this trigger. This suspension results in no savings because of the separate proposal to realign the IHSS program to the counties. Thus, this proposal would have no practical effect unless the revenue growth estimates increase substantially in May, and the IHSS realignment proposal is not approved.

Action on Wage Trigger Should Be Consistent With Realignment. If the Legislature adopts the Governor's proposal to realign IHSS to counties, then the Legislature should repeal the wage trigger legislation. Without such a repeal, legislative intent as to whether the state would participate in future wage costs would be unclear. If the Legislature rejects the realignment proposal, then a decision about whether to suspend the trigger in 2003-04 would depend on the Legislature's revenue and expenditure priorities.

Return to Health and Social Services Table of Contents, 2003-04 Budget Analysis