CHA News Article

Governor Releases 2017-18 State Budget

Today, Gov. Brown released his state budget plan of $177 billion for fiscal year 2017-18. As he has in the past, the Governor emphasized fiscal prudence, noting that California’s growth has slowed, with revenues coming in $1.3 billion below projections. 

“We’re in very uncertain times. We’re subject to a lot of unpredictability,” Brown stated in his presentation this morning. 

To compensate for the modest decline in revenues, the Governor’s budget rebalances Proposition 98’s education funding to the minimum level.

The budget continues its implementation of federal health care reform, which includes the expansion of Medi-Cal to cover individuals with incomes up to 138 percent of the federal poverty level. Medi-Cal caseload has increased from 7.9 million people in 2012-13 to a projected 14.3 million in 2017-18, covering over one-third of the state’s population.

Beginning this year, the state assumes a 5 percent share of cost for the optional expansion population. The budget assumes costs of $18.9 billion, with $1.6 billion coming from the state General Fund, for the 4.1 million Californians participating in the optional Medi-Cal expansion. For now, this budget continues to reflect existing state and federal law. The Governor stated that, if federal law changes, California will “have a big challenge on our hands.” He went on to say, “The Legislature has to be very prudent this year. There are too many uncertainties.”

In other Medi-Cal news, the Coordinated Care Initiative will see some program changes, as funding for in-home supportive services (IHSS) will no longer be included in capitation rates. However, the budget proposes to extend the Cal MediConnect program, continue mandatory enrollment of dually eligible individuals and integrate long-term services and supports, except IHSS, into managed care. It also encourages plans and counties to continue collaboration on care coordination. 

The budget includes $1.2 billion in new funds from Proposition 56, the tobacco tax initiative. This Act requires 82 percent of the funds remaining after specified allocations to be transferred to the Healthcare Treatment Fund to support new growth in Medi-Cal expenditures, compared to last year’s budget.

Additionally, the budget assumes state General Fund savings of over $1 billion in this year’s budget with the passage of Proposition 52, CHA’s initiative that makes the hospital fee program permanent.

This release begins the formal budget process. Over the next several months, budget subcommittees will hold hearings on the various aspects of the budget. In mid-May, the Governor will release a revised budget plan reflecting the most up-to-date revenue and expenditure information, as well as any changes affecting health care coming out of Washington, D.C.