Senate Budget and Fiscal Review Subcommittee No. 3 on Health and Human Services

I think they lowered the temperature so we can get out of here faster. That was the whole plan. Hi. Good morning, everyone. Two fun facts I want to share with you. One, a probe is happening right now, and I've told my team not to text me on what bills died of mine or survived so I don't have to get further angry during the session of what bill's died for me. Second fun fact. CalMatters has a Digital Democracy website, and it ranks the most talkative legislators.

And right now I'm number two. So I think I'm going to replace Senator Laird after this subcommittee as number one because they take into account subcommittees, and I think this is the only place I have my speeches, nowhere else. So I think we're going to be number one after this. Okay, fun facts out of the way.

Today's plan is to do an overview of all the proposed May Revise new BCPs, new budget solutions, and so forth. Unfortunately, we're not going to see any reversion of anything that was proposed in the January Budget. They're all still pretty much intact. Unfortunately, here we're just piling up on top of that.

And first we're going to do the health portion of our HHS Committee. Then we're going to do public comment, and then we're going to go into the human services portion of it. During the human services portion of it, we're going to do public comment after major issues.

For example, after we talk about childcare, we do public comment, IHSS, public comment, foster system, anything that impacts that, public comment, and so forth. Just for those kind of portions. And then we'll come back for the following two to three sessions for voting. Did I miss anything? Okay.

I asked for overview sections that deal with case changes and uptakes and so forth, that we'd be as brief as possible for those kind of, on those issues. And then we focus more on the proposed budget solutions and BCPs. Okay. With that, let's dive into California Health and Human Services Agency area. We're going to start with a May Revision overview. I asked the Department of Finance, LAO, join us.

All right. Good morning, Chair, Committee Members. Joseph Donaldson, Department of Finance. Before we begin, we would like to provide some opening comments to highlight the overall budget structure of the May Revise, if that's okay. The May Revise is the Governor's proposal to bridge the additional shortfall that has been estimated since the Governor's Budget in 24-25 as well as 25-26, which also has a significant deficit.

To accomplish this, the Administration prioritized maintaining core services such as Medi-Cal and CalWORKs, while also identifying one time investments that could be pulled hold back as potential solutions. The Administration would emphasize that these proposed solutions are not a value statement of these specific programs, but rather a way to solve the budget problem at hand.

As noted by the Governor, the May Revision puts forward a balanced and responsible budget that puts us on a strong footing going forward so that we may continue to support core programs in the future. Lastly, the Administration will note that the May Revise is a proposal, and we understand that the Legislature might have alternatives to some of these solutions. We look forward to these discussions with the Legislature as we come to a final budget agreement. And with that I will hand it over to my colleague from Health and Human Services to provide updates.

Thank you, Madam Chair. Brendan McCarthy, CalHHS. I will go through the May Revision items for our agency. The first one is our one budget solutions agency. This is the proposed reversion of our all of the funding for the Health and Human Services Innovation Accelerator, which we've discussed in the Subcommittee before.

In total, it reverts $55 million over current year budget year and budget year plus one. Our other adjustments and items in the May Revision is a transfer of the Office of Employment First from agency to the Department of Rehabilitation. That was an augmentation in the current year budget, but with a delayed startup until July 2024.

We are proposing to shift the responsibilities and funding to the Department of Rehabilitation because we think they have much more programmatic expertise in this area to quickly stand up in office to implement the employment first policies such as phasing out of subminimum wage.

And so we at CalHHS would continue to work with DOR, DDS and other departments to implement any policies that are developed by that office. The next item is an increase in our federal funds authority of $1.3 million for the Preschool Development Grant award.

This is just increasing for additional federal funds that will be coming down in the budget year. We have a proposal for reappropriating money for the ePOLST system. This is something at EMSA, Physician Order for Life Sustaining Treatment. This is an electronic system to compile those.

They are in the planning stage of this and this is just a reappropriation of $6.3 million to continue planning and development of that system. We also have a reappropriation, also related to EMSA, of $2.1 million. This is planning implementation for the California EMS Central Registry Replacement Project.

This is an information technology system to consolidate various systems that take reported data from local EMS systems that they are required to report up to the state. And historically, this has been done in several systems. And so this is a new system that would consolidate all that reporting for more efficiencies and better data transparency.

Question on that. So system is, it's a brand new system?

It's a replacement for several existing systems.

Okay. We're just consolidating into one?

Yes, into one modern system so that we can retire those older existing systems.

Have we started the process?

We're in the planning stage right now.

Okay. Is this going to help with the planning?

Yes.

Okay.

And then we have a proposal. This is part of the proposed, the Administration proposal to reorganize some of the aspects of the Office of Planning and Research. So one of those is that the California Initiative to Advance Precision Medicine would be transferred from OPR to CalHHS. And so this is, its General Fund of authority of $31 million, as well as the staff shifting to CalHHS to continue their work, which has largely been focused on supporting research into precision medicine and coordination across state and local entities.

And then the last item we have is the transfer of juvenile justice programs from the Board of State and Community Corrections to OYCR within agencies. So this, the trailer bill and the proposal transfers all the balance of the existing program. So they will all, pursuant to existing law, they will all be transferred to CalHHS under this proposal.

Where is the $9.4 million coming from?

Joe Stone, Department of Finance. So the 9.3 million adjustment that was included in the May Revise, this is a revised growth revenue projection based on the grant that was already included at Governor's Budget. So this is just a technical adjustment based on projections of what that funding is. So the funding was already included in the transfer at Governor's Budget. This is just adjusting the amount based at May Revise.

I think I'm going to need that different way. I don't think I absorbed that well. Say that again.

No worries. So at Governor's Budget, at the time we proposed only a portion of the grants proposed with understanding that was the first step. Yes. So that first grant, we had the amount built in for that transfer, which is a direct allocation to counties. This adjustment represents an adjustment based on growth revenue projections as an update to May Revise. So it's just adjusting the amount that we already included at Governor's Budget.

So no less funding in grants is being allocated?

I believe so. I can clarify that. But this is just adjusting the amount based on the projections...

Because we already allocated them? Or we already accounted that...

We already accounted for the allocation. This is adjusting that amount.

Okay. Just, could we just double check that there's no left?

Absolutely.

Because I think one of my questions, and I'm pretty sure will come up and maybe Director Lucero can help me. That we're not violating, like, Prop 30 in relation to our mandate or our responsibility to bring down all the funds down to the counties for this realignment. So that's where I wanted to make sure.

Understandable. Yeah. We can double check your clarity on that for you.

Really excited about the Innovation Accelerator. I think I used that as an example for the past three months or four months on what we should cut. I'm really excited that we're able to transfer all the grants over to OYCR. Really looking forward to us taking on that responsibility more and further, having accountability of how it's utilized in our counties and so forth. I still have a question on that third to last one, the central registry.

You know, we're, you know, we'll proceed throughout this day and you'll see some of, some cuts that are like 1 million, 2 million. So everything right now, you know, scrapping pennies as much as possible. How can, as we're looking to re appropriate a lot of funds.

And I saw that the things that are being cut, it's reappropriation for whether unspent dollars or programs that haven't started, valid. But I think it's a little skewed maybe perhaps where certain things that are unspent and are being reappropriated get cut, but other things don't.

So I'm just wondering, for this example, can we survive with another year or two years of not reappropriating to consolidating those systems? And maybe perhaps as we go through later, other programs, I know it's not dollar to dollar if we save here, it doesn't directly go into other programs under HHS. But just wondering if this is something that is something we need to do right now. That would have been my question.

Yeah. I don't have an answer for you. Right. But I'm happy to get back to you on the cost of maintaining the existing legacy system versus...

That's a bigger cost than this. Okay,

We can follow up. Happy to follow up with you on that.

Appreciate it. Senator, any question on this? All right, we're going to hold that issue open. Moving on to CHFFA. CHFFA. CHFFA.

Good afternoon, or good morning. Carolyn Aboubechara, Executive Director of the California Health Facilities Financing Authority, also known as CHFFA. So as a budget solution in the May Revise the Department of Finance proposed eliminating rather than delaying the total funding for the Specialty Dental Clinic Grant Program that we received back in two budget acts, a total of $50 million from the 2022 and the 2023 Budget Act.

As you recall, we talked about this program in a previous subcommittee hearing, and basically it increases access to the oral healthcare needs of the special needs populations, which are basically children and youth with developmental, cognitive, and physical disabilities.

So since, in January, the budget proposed delaying it until 25-26 budget year, and now the proposals to eliminate that funding. And since the January budget and since the last hearing, the deadline passed, April 1, for the applications, and we received 101 applications totaling $270 million in requests for the $50 million. And so we just notified everyone that the program is on hold and waiting upon the decision on the final funding of the program. And so that's been reported. And happy to answer any questions on this program.

What was the average per application request?

The maximum is 5 million, but the average is about in the 2 million-ish per request and 101 applicants.

Department of Finance, how would a two year delay impact us? Why wouldn't we delay this two years? I know we're looking to balance plus one, so why don't we just delay? That's part one of my question. Part two. If we eliminate and we come back in three years, do we have to build the infrastructure all over again versus just delaying two years and the infrastructure is there? Or if we delay, is there something we have to pay to maintain the infrastructure?

Tyler Ulrey, Department of Finance. So you'll recall that we originally in the Governor's Budget included a delay from current year funding to budget year plus one. So a two year delay. Based on current projections, we believe that the General Fund deficit is going to extend beyond the budget year. So the May Revision includes $28.4 billion in addition.

Oh, it was already delayed two years?

Yeah, it was delayed from current year to budget year plus one. So the May Revision includes a full reversion of those dollars.

So the current delay, the January proposed delay, was for this to start again in 25-26?

That's correct.

Okay, sorry, I meant plus that. Why... If we delayed for the next two years the next fiscal year plus one, which I know we're looking to balance. If we delay those two, is there an impact or what is the impact of delaying it until that out year?

The Administration made the decision to revert the funds for budget year plus one to help solve this ongoing General Fund deficit. If an out year deficit does not come to fruition, this could absolutely be something that we decide to reinvest in in the future.

So the infrastructure would still be there? We wouldn't have to start again, put out an RFA to ask for applications again?

Well, I can answer that. So we have applications in house. Obviously, from now until two or three years, everything's going to change. We can definitely... I mean, the infrastructure of the program, the guidelines and the structure of how the program would work is all there. We would just have to reopen up an application period, accept updated applications.

That would be the change. Because whatever we have in house in two years probably would be stale. I mean, we can definitely ask the ones who've applied, who put their place in line to update what they've proposed. And so the infrastructure of the program development is there and we'll stay there since we've already worked very hard to develop it. The structure of the program, it's all there and it can stay until the funding replenishes.

So delaying this 2, 3 years won't have... Maybe LAO.

Thank you, Chair. Ryan Miller from the LAO. Well, you're very much asking kind of a budget structure question, and so if we may, I was going to hopefully provide a little bit of an overall perspective similar to the Department of Finance, and then I can answer that specific question as it relates to the Specialty Dental Grant Program.

We agree with the Department of Finance that the state's budget problem is serious and that it's multi-year in nature. And we also agree that the May Revision would put the state on much stronger fiscal footing. One of the key ways that the May Revision does that is by focusing on all the, to the extent that we can at this point, a lot of the temporary and one time spending that was approved in, in the surplus budgets, there are a lot of other proposals similar to that that will be heard today.

Some of those one time and temporary reductions. Like the one in the prior item, I think we would agree with the Chair that that was probably a good opportunity to be looking at as a way to improve the multi-year budget condition. Because by preserving those resources now, we think it'll be a lot more likely that the state can preserve its core services in the future, which we think is really a priority.

Of course, today you're going to hear a vast number of similar types of reductions that take what were perhaps previously delays and convert them to reductions, one time spending, convert them into reductions. And there certainly will be consequences from a lot of those. And I think that we imagine that there will be robust discussion about that today.

This is one where certainly earlier in this year, there were good questions about the impacts, and certainly there is a little bit of a different character of this one, given the kind of advanced nature of the program compared to maybe some others that we're still kind of getting off the ground. But all that said, in general, our office is viewing these types of reductions as reasonable, again, keeping that multi-year condition in mind. The Legislature certainly could revisit the May Revision proposal and do a longer delay, as you mentioned.

But I think the key consideration there is keeping the multi-year budget condition in mind, and there's kind of a, essentially just a risk calculus about how much deficit you're kind of willing to accept. But certainly there are a lot of alternative decisions that can be made, and we're here to assist the Committee in crafting those kinds of options and alternatives.

Thank you, Madam Chair. Refresh my recollection. This was a new program?

This is a new program. Exactly.

And so we don't have anybody hanging. We're not cutting anybody off at the knees. We're just dashing hopes that we would address this issue with some budget funding. I understand. Well, listen. I, for one, I understand the use of deferrals and delays, but at some point, a deferral or a delay becomes a cut. And I think we need to manage expectations if we're managing a budget properly. And however heartbreaking that is for those of us who have to sit through this Budget Subcommitee, I'll tell you. Thank you, Madam Chair.

You know, Senator, I put out a call if any of our colleagues wanted to join me here. No one took me up on my offer. We're gonna hold this item open, and we're gonna move on to issue... Next department, EMSA, issue number one.

Hi. Christine Cherdboonmuang, Department of Finance. So EMSA staff were not able to make it today, but we'll provide, between myself and Michael Muth from OTSI, we'll provide the overview, and we'll do our best to answer questions.

Good morning, Madam Chair Menjivar and honorable Committee Members. My name is Michael Muth. I'm from the Office of Technology and Solutions integration within the California Health and Human Services Agency. Before we get started, I wanted to thank you for your time today, as well as thank your staffers for all the hard work that they've done over the last couple of days to organize information in the agendas and so on.

So, as my colleague from the Department of Finance stated, our colleague Craig Johnson from the Emergency Medical Services Authority is not here today. I will be providing a department overview, and then high level overviews of the EMSA specific BCPs and then overviews of the OTSI EMSA BCPs. So I'll go ahead and start with the department overview, if that works. So, department overview EMSA was formally established by the...

We don't need to do a department.

Okay, perfect. All right. So first, starting off with their budget overview as well as their specific EMSA BCPs. The Governor's Budget May Revision for fiscal year 24-25 includes expenditure authority for 64.3 million and 121 positions. Of this amount, 38 million is delegated for the state operations and 26.3 million is delegated to local assistance.

This is an increase of 6.7 million over the January budget and an increase of 12 positions. The Department has seven budget proposals for the May Revise under consideration by the Legislature. First proposal is around staffing support resources for ePOLST. EMSA requests position authority for three associate governmental program analysts.

The requested resources will support the Electronic Physicians Order for Life Sustaining Treatment or ePOLST registry system. These positions will be funded from the annual ePOLST Registry General Fund allocation. POLST are medical orders signed by both the patient and the decision makers and a physician nurse practitioner, physician assistant, basically that specify end of life wishes for those that qualify. The legislative BCPs for chapter legislation so proposal two around community paramedicine and triage to alternate destination programs.

So AB 767. EMSA requests one permanent position and 686,000 in General Fund for 24-25, 606,000 in 25-26, and 432,000 ongoing to implement Chapter 27, statutes of 2023, Assembly Bill 767, entitled Community Paramedicine or Triage to Alternate Destination Act. The request includes temporary funding for two years of one time staff services manager, one specialist, and ongoing funding for two physicians that were permanently authorized in 21-22 but only funded through 23-24.

Additional resources are necessary to promulgate regulations, establish uniform implementation standards, modify existing data collection systems to accept CPTAD data, and manage oversight of the local programs in California. Any questions on that before I move on. And I may have to take the questions away.

Two questions, maybe for Department of Finance. So 121 positions. It's approximately 11 to 12% increase. I know the Governor proposing across the board 8% cuts, but if we're doing an increase, it's kind of offsetting the 8% cuts across the departments. How do we justify increasing departments while simultaneously saying that we're going to cut across department staff or just admin?

Are you referring to the three positions for ePOLST specifically?

Well, there's a couple. I know some are for chaptered legislation, some are for other. I guess it's more of an overall, as we see some departments are asking for an increase in staff at the same time that the May Revise is asking for an 8% cut.

Right.

It's kind of like going to offset, won't it?

They will offset. I guess you can see it in a way that the positions that were authorized will soften that blow of the vacancy cut that all departments will get. But in terms of ePOLST that was requested, as the Department currently doesn't have any positions dedicated to ePOLST. There's zero right now.

And so they're requesting to add three to implement that. And for the other positions, we sort of took a department wide approach in approving the chaptered leg pretty close to May Revise. And so for most of the chaptered leg or much of the chaptered leg, there were positions identified as needing to implement, a lot of it having to do with implementing the regulations.

Overall, not going into specific requests. Overall, are we going to really see a saving of 8%? Is the 8% cut really going to show us some savings if a lot of departments, if there are still requests for adding more staff? Do we have that outlook yet?

I think we're still working through that.

Okay. Did you want to add to that?

Yeah. So when we look at the proposal, we look at them each individually based on the merits of that proposal. So one thing to note also with EMSA is it is a smaller department, so a lot of times they're not able to absorb as much.

Yeah, that's why I didn't want to dive into specifically. It was just overall, as we move forward with all different requests and we're looking to shave at the same time, it kind of offsets. Senator?

Well, I was just going to comment. The one thing that is not reflected here is some of these items of chaptered legislation are designed to produce savings in other parts of state government. I mean, Transfers to Alternative Destination Act, where you. I assume that's the one where we divert individuals from acute care general hospitals to other settings, isn't it?

Yes.

And I assume that the Ambulance Patient Offload Time, AB 40, is also designed to reduce wall time at hospitals and produce savings in other parts of our healthcare delivery system. None of that's reflected in the FTE cost of this budget proposal. Am I thinking correctly? In other words, we're approving positions to implement legislation that's designed to save on the other end of the process. Maybe not.

What do you mean that's designed to save?

Well, what are we doing when we're reducing patient offload time? We're not having some employee, whether it's a county employee, a state employee, or some other government employee, hanging on the wall waiting for somebody to sign off on them in an acute care general hospital. Right. So there's a savings built in...

Freeing up resources to respond to emergencies.

There's a savings built into these proposals that unfortunately is not reflected in the budget stuff that we look at. So we're looking at a raw expenditure without a corresponding savings offset.

I see.

Right? I'm not a finance person. I defer to you all to do that.

Nina Hoang, Department of Finance. Oftentimes, sometimes these savings can't be seen until a little bit later. And so until it's known, we can't really put these savings into our actual fiscals.

I'm not being critical. I'm just trying to address my Chair's question too. How about I not... I'll stop talking.

If not, I'm going to get to that first place faster. So I need you to speak too. I'm seeing here. So we just, in the previous department, we talked about this request for CEMSIS, the Central Registry Replacement. See another request here. So it's now amounting to a little over 5 million. Is this reappropriation to help consolidate all into one. Is this two steps that need to happen at the same time? Is this one step needs to happen first versus, you know...

Michael Muth, OTSI. To clarify, Madam Chair, are you going to the CEMSIS Central Registry BCP, the reappropriation? Okay, perfect. So the, and I'll just go ahead and jump right to that one as well. So the Central Registry Replacement of the current legacy solution, as well as the CEMSIS reprocurement activities.

So this is a reappropriation of $3 million in General Fund, as well as provisional language authorizing encumbrance and expenditure through June of 2026. And so this is meant to achieve two key activities. One is to continue the planning and project work associated with the Central Registry project.

So currently that's in stage two of the California Department of Technology's PAL process or project approval lifecycle process. And the current legacy system is no longer, it basically no longer meets the current technology standards. There's quite a number of manual workarounds that are needed.

It is at a point where it needs to be replaced, and at this time, there's over 90,000 paramedics, licensures, caregivers, and so on that use that solution either for current or future employment within the healthcare or employment space that require that certification. The other key activity is around reprocurement for the California Emergency Medical Services Information System.

And just given the length of time that it takes to go through a procurement cycle within the state, we need to begin those activities as soon as July of 2024. The current existing contract has a baseline end of August 31, 2024 but we have two optional extension opportunities to extend that out to 2026. I believe that is actually part of the fall. BCPs requesting funding for those two optional years.

And so this request basically will help ensure EMSA meets its statutory and regulatory requirements related to collection and evaluation of EMS personnel licensing, certification, investigatory, and legal disciplinary actions as required in the California Code of Regulations, as well as the Health and Safety Code.

And essentially without these resources, EMSA suggest will not be able to continue the planning efforts for the Central Registry project, essentially putting at risk that's, you know, the users that use that system rely on it, and, you know, it also feeds into their overall strategic priorities for data collection.

I definitely wish that was a mindset, and when we're looking into... Not even talking to you, but I'm just overall. I wish that was a mindset as we look into human services, that it puts at risk the users of this system. Because that's what we're going to be going into the cuts.

And what you just said is perfect because you're here fighting for this because it's going to put at risk the people who use the system. The things that are proposed for cuts are going to put at risk the people who use those programs. Just wanted to say that.

Thank you, Madam Chair. When I think about these systems, I think about my family and friends that work as firefighters, paramedics, EMTs. I think about my grandparents that want their end of life wishes honored. So that's what I think about when I think about these requests.

I think about those same people when we're cutting senior nutrition. Grandparents. Will, LAO, any comments on this?

Will Owens with the Legislative Analyst Office. Regarding the proposals that are part of the legislative BCPs, we don't have any comments on those at this time. However, you know, we're prepared to assist the committee moving forward.

Thank you. We're gonna... Senator? Gonna hold that those items open, move on to HCAI. Thank you so much.

Good morning Chair. Albert Pineda with Department of Finance. I'll provide a brief overview of the May revision solutions proposed for the Department of Healthcare Access and Information. The May revision proposes various healthcare workforce reductions to address the shortfall and builds on the related workforce solutions proposed at the Governor's Budget.

The May revision reduces approximately 855 million General Fund over five years due to the shortfall 301 million in 23-24, 302.7 million in 2024-25, 216.4 million in 2025-26, 18.8 million in 2026-27 and 16 million in 2027-28 and ongoing.

These reductions impact the following programs, nursing, social workers, community health workers, Somg-Brown, California Medicine Scholars, and the Health Professions Careers Opportunity Program. The May revision also reduces 189.4 million mental health services funds, eliminating funding for Addiction Psychiatry Fellowship, University and college grants for behavioral health professionals, masters of social work slots, expansions and local psychiatry behavioral health.

The state is pursuing investments in new funding of 2.4 billion over five years for high priority behavioral health workforce and administration through the Proposition 1 and the behavioral health community based organized network of equitable care and treatment demonstration beginning July 1, 2026.

The May revision also includes 300 million in Proposition 98 in the community colleges for nursing over five years, with 60 million annually beginning in 2024-25 and the May revision also retains 268 million General Fund from prior year and current year investments, including for programs such as California Medicine scholars, the Nursing Initiative, Children and Youth Behavioral Health Initiative, Song-Brown, community health workers, addiction psychiatry and psychiatric graduate medical education.

I'll defer to my colleagues at HCAI to speak towards the BCP's and technical adjustments.

Good morning, Madam Chair and Senator Roth. Elizabeth Landsberg with HCAI. Would you like me to go through each of the proposed cuts, or what's your pleasure?

No, of the 12 proposed cuts of each different workforce, I think you said we're maintaining some funding. Can you go over which ones are going to maintain some funding in them again?

So in terms remaining in one time funding would be 267 million, 208 million would be in the Children and Youth Behavioral Health Initiative. So there are substantial funds to fund the certified wellness coaches, the new profession that we created under the initiative. So there's significant funds for that as well as some other CYBHI funds.

Okay, so 208 out of the 267? Where is the other one going? Where's the rest going?

15.8 million for reproductive health, for The Clinical Infrastructure Fund. So this includes funding for a warm line and scholarships for providers committed to providing reproductive health care, including abortion services.

So this is not out of not funding any of the 12. This is something new?

No, these are dollars that were previously appropriated that are maintained. So is that your question? Is the 267 that's maintained that constitutes?

Yeah. Of the proposed in the May revise the proposed reductions. CHW, nursing initiative, social work initiative, all those. I'm wondering if any of those 12 are going to have any dollars remaining in any of them.

Yes. Thank you, Madam Chair. So the social work dollars are proposed for elimination in their entirety.

Both the initiative and the slots?

Correct. For the community health workers, promotoras and tribal representatives, there's a proposal to cut almost 250 million and to retain 15 million in current year. So 15 million would be retained for CHWPR's. There's 5 million retained for behavioral health workforce, and then there is a small amount retained for Song-Brown RN.

The nursing, not the resident. Or there's two. The Song-Brown Nursing and the Song-Brown Residency.

Correct. So Song-Brown Nursing, 1 million for Song-Brown Nursing. And there are substantial cuts to the Song-Brown physician funds.

Okay. In regarding to Prop 1, I know we're going to use, there's the 4% coming to HCAI to be able to do workforce. One of the questions I had last time was, are we recreating the wheel? We already have, I can imagine applicants in these various sections.

Are we recreating the wheel or are we going to maybe, perhaps use that funding to already select some of the applicants that came in for these kind of sections?

Yeah. It's certainly a very challenging situation to have to do these cuts in terms of the Prop 1 Workforce Dollars. So 3% comes from workforce and then with a waiver, there's $480 million a year for five years. HCAI has started a strategic plan process for those behavioral health workforce dollars.

I think it's likely we're going to want to, of course, support social workers, support psychiatric, mental health nurse practitioners, and we can certainly leverage the structures that we've set up previously.

Yeah. Because I think one of the things I said last time was that we have the system in place. We have already people applying. What I don't want to see is utilizing some of the funding to like recreate a whole new program where we can just use Prop 1 Money.

I think unless I'm seeing this, sometimes when you think it's so easy, it's not really, and just supplement Prop 1 into these programs already.

Joe Stephenshaw, Department of Finance. I think it's important to note that you, you know, this Prop 1 funding is still being researched and determined that I think it's, it would be a little premature to consider this supplanting or potentially backfilling. I think it's important that this is new potential investments that we could be using for healthcare workforce.

It may have complementary uses similar to some of these programs that are up for solutions. But I think for us, we're still in the beginning stages of understanding what that funding could be and note it, which we'll get to the BCP related to behavioral health.

That that is kind of laying the work for both planning and implementation purposes for if that funding materialize. But I think just while we're noting that the May revise is planning for that investment, it's not something that we're taking the money in this bucket and dumping it into this one. So just really want to clarify that process.

In the Prop 1 funding, we won't see it for like another almost two years, right. For this kind of funding or.

No, we anticipate it sooner than that.

I just don't want whoever's in the Sub next year be like looking at a BCP. Hey, we want to do a working group to see what the behavioral workforce needs are.

No, we're absolutely going to leverage all the expertise that we've gained with the Children's Youth Behavioral Health Initiative and other behavioral health-

To be able to jump in. Okay.

Department of Finance or maybe you too. My question is, and it's kind of like the same question, we're reducing 12 different programs for workforce. It's a huge workload, but we're asking for more staff. If we're reducing, what programs is HCAI getting that needs more staffs if we're reducing a big workload amount?

Can you clarify request for more staff?

So we're asking for 12 more positions for HCAI, but we're reducing 12 different programs under HCAI. Can the current staff work on the needs for this chapter legislation if we're removing 12 different programs out of HCAI for them that they're not going to be running anymore?

I think this will be part of their kind of administrative strategy of understanding the current resources the Department has as well as kind of projected workload. I think that's something that's still an ongoing process as well as some other kind of statewide solutions to address the budget shortfall.

So in terms of kind of a direct answer right now, I'm not sure if we have that data available, but both our collaboration with HCI as well as departments across the state, and I think that's part of the ongoing discussion of what we can do with the resources we have amidst this situation.

I would also notify, Madam Chair, that with the significant additional funds that we got over the last few years, which were one time funds, we've used a variety of flexible staffing options. So we do have some temp help and the like.

So I understand, as you know, the question to be, if we're getting rid of all these dollars, do we still need the same staff? And so I think we, as you know, we still have the Song-Brown and a number of other key programs. We still do the research data center.

We still have the workforce council, the primary care office, but we'll certainly be mindful of the staffing needs as we move forward.

And thank you. And is that conversation. Is that you're saying we're still having now, or is this like, zero, in the next fiscal year, we're gonna look to see how else?

The process is occurring right now. I mean, it's an ongoing process, but obviously, when things become. When things materialize of what the final direction is, obviously, we'll keep apprised of what that direction is. But just noting that, you know, these are ongoing administrative planning processes.

And then my last question is, are we implementing something for the next time daughters come to HCAI, that we get them out the door sooner so we're not back here because it's unspeakable. It's on the chopping block now. Is there something. I know we've talked about this. Just want to know.

Just, like, moving forward and maybe just overall, you know, a lot of things that we're cutting are unspent. They didn't get out the door. What we're doing, what we might do differently to make sure these dollars are out the door sooner so they're not up for grabs.

Yeah, absolutely, Madam Chair. And so when these proposed cuts came down, you know, my Chief Deputy Director and I did talk to our staff. We. When we're given five year expenditure authority, we assume we have some time, but we have spent 75% of the funds given to us.

So these are some of the funds that were not spent, but significant funds were spent. And I would note that some of the funds proposed to be cut for current year, actually, we've entered into contracts with, you know, with entities for Song-Brown funds, and the like. So they were not officially encumbered.

Not out the door, but we had entered into contracts. But it's always our intent, and I think the team has done a very good job of trying to get the money out to its intended purpose as quickly as possible.

Senator, Roth.

Thank you, Madam Chair. I'm just trying to get an idea of- I realize we have to cut, and I think the Administration did a-we can disagree on what's been cut, but I think, you know, when it's 27 something billion dollars, you have to cut.

I'm just trying to get a handle on what's left on these items, on 8 and 9 on our agenda. So there's 15 million left on the health care workforce in your pot of money to spend, workforce reductions for community health workers.

I didn't catch what was left in the healthcare workforce reductions having to do with the nursing initiative. Is there any money left in that?

No.

All gone.

210 million gone.

Okay. And then social work all eliminated. Addiction psychiatry medicine fellowships and the behavioral health professionals at university and college grant, all gone.

Those are also eliminated in their entirety.

Okay. And then the I assume the expansion of masters in social work slots, that's gone.

Yes, sir.

So this question, this next question applies to several of them. Given the fact that we're reducing expenditure authority from the Mental Health Services Fund, in this particular case, masters and social work, of 30 million, why would we reduce expenditure authority from the Mental Health Services Fund? Are we sending that money someplace else? I mean, that's not.

I mean, that's a fund that's to be used for specific things. Right. So where is that money going?

Correct. So I think the overall reduction, and we mentioned in the opening statements that there is a reduction of 189.4 million of Mental Health Service Funds for these various behavioral health initiatives. It's more related to the General State of the Mental Health Services Fund as compared to General Fund solutions proposed and other general funded initiatives.

So, related to the Mental Health Service Fund. Even though at the May revise there is a minor increase in revenues compared to the Governor's Budget, the fund could not sustain this full amount of funding that was initially delayed into that fiscal year for the 189.4 million.

And additionally, as part of the Governor's overall proposal for addressing the budget shortfall, Administration is proposing to use 90 million in available Mental Health Services Fund to offset additional General Fund for the behavioral health Bridge housing program in 25-26. So it's interconnected to some other issues related to the mental health services.

We have a pipeline of mental health services funding. We delayed projects from one budget year into the next, and when we did, the total required for our line items in the budget exceeds that year's Mental Health Services Fund, correct? Is that what you said?

So I understand that cut, but why are we taking Mental Health Services Funding and shifting it to bridge housing. Is that a permissible use under the current, under the old Mental Health Services Act rules?

I would, in terms of specifics of the program, I would defer to my colleagues within Department of Healthcare Services because it's not directly administered by HCAI, however, noting that, that was what was included within the revision of how to utilize those funds.

So even despite the fact there was a minor increase in revenues at May revise, this fund still was unable to sustain those 189.5.

I get that one. It's just the, it's just the shift in use for the Mental Health Services Act, and I understand Prop 1, but maybe you could get back to.

It's not my position to be able to ask, but maybe you could get back to my Chair and she can share it with me if she chooses to do so. So let's move on to the psychiatry and behavioral health programs. Was any part of that retained?

Not a lot of money there, but it's, again, Mental Health Services Fund.

No, it's a new program, and it's proposed to be cut in its entirety.

Okay. And then the Medicine Scholars Program, and I think I read the Health Professions Careers Opportunity Program. Both of those are full cuts. Right.

Is there some that continues?

Scott Christman, HCAI. There's also SB 395, ETAC. So there's a small amount for the health career professions Opportunities program ongoing, but yes.

Yes, to elaborate on it, through SB 395, which is an excise tax on electronic cigarettes. Through the revenue stream, there is some funding that comes to HCAI annually.

It's approximately, and I can get back to you on the exact numbers on this, but I believe it's approximately, approximately 2 million a year that goes to HCAI for the specific workforce program. So that funding that's coming through that excise tax is still being maintained.

However, the appropriation for the California Medicine Scholars program of 2.8 million each year is being proposed for the reduction. So that 2 million that's still coming from the excise tax is still being retained. So there is some funding still for the program, but the appropriation made for the program is being proposed as reduction. Hopefully that answers your question.

Yeah, it does. Thank you. And thanks for taking the time to go through them, obviously.

Sorry. If it's coming from the Special Fund, how is it being proposed to be?

So there's two separate funding streams. So, first, there was a General Fund appropriation for the program that's independent of the SB 395. The special fund amount is, it's parallel funding, but it's different from the General Fund. So the funding that's coming from SB 395 is still being.

We're just not matching it anymore, is what you're saying.

It's not. It's two separate. When, if I recall correctly, the appropriation for this program and the funding that came through SB 395, there were independent policies that came. They weren't kind of interlocked of, if this is funded this amount, we then match it.

It's a coincidence that the current funding is roughly 2 million, and then the amount right now is 2.8. So it's not directly connected.

Just. I appreciate your time going through these. Obviously, these were all programs that those of us here were invested in. So just curious as to what's left on the table when we take the machete to the budget.

I assume that there's a total of the Mental Health Services Fund that does exist that's being redirected to this bridge housing program. You're going to provide that to the chair. It's not 189.4 million, because that's a reduction.

We can definitely get back onto that. And I believe our colleagues, when we get to Department of Healthcare Services, they can also provide more info. But if not, we can definitely circle back to get more clarity on that issue.

Perfect. Thank you, didn't mean to belabor this. Thank you, Madam Chair.

Okay. I think there's a couple other things on here. We can go under the other adjustments at May revision. I don't think we dove into those yet.

Thanks, Madam Chair. Scott Christman, HCAI. So the first one on CalRX technical adjustment is actually an accounting error that was applied. So we're, we had resulted in expenditures being overstated by 5.2 million in FY 22-23. So it's a technical adjustment to correct the error. No net change. The technical- Pardon?

Can you say that to me again?

Sure sure. So the 5.2 million adjustment was an overstatement, an accounting error.

We said that we had 5.2 million. Correct. Just in numbers.

Correct. No net change to that biosimilar insulin initiative, which still had the $50 million investment.

Okay.

And then the technical adjustments on the transfer to the board registered nursing fund. This was essentially an individual line item enacted in 2022, 10 million over three years. And the idea was to provide an incentive to public health nurses by paying for certification fees. We had originally come to HCAI's budget.

We were going to transfer that through interagency agreement. We found that we were unable to do that. They didn't have the authority to spend over Department of Consumer affairs for the licensing board. And so this is essentially a transfer to put the dollars into their budget. And then the third one, which we've touched on, behavioral health transformation.

This is a BCP. HCAI is requesting three positions and $631,000 from the Behavioral Health Services Fund to support planning, implementation, and oversight for behavioral health workforce initiatives, as discussed under SB 326, Proposition One. So again, we're excited to begin that planning and develop a strategy to apply that.

We'll be informed by all of the work that we've done in the past in the area of behavioral health, including social work and the like. I can touch on the two BCPs if you'd like.

Yes.

So in terms of chapter legislation, SB 779, the Clinic Data Modernization Act, was passed last year, significantly expands reporting requirements for licensed clinics in California to submit data to HCAI, which are then posted for public transparency purposes. It also extends the application of this data reporting requirements to additional clinics.

So we've always collected utilization data from primary care clinics. This also includes intermittent clinics. So it kind of doubles the collection, adds a number of new data elements.

So to implement the law, we're requesting personnel to administer the report submission, review and evaluate the data reports, perform statistical de-identification on additional data collected, perform compliance activities, and the like. So we are asking for 15 PY over three years. So five PY in the 24-25 budget year and then eight additional in the following, and then two in bypass.

Not General Fund, right?

No, this is from the California Health Planning Data Fund.

Yeah.

And again to the earlier point, I mean, the work in collecting and managing data is very different than managing the workforce grants. So this is definitely an expansion of this particular area.

And then the second is also from the same area of our organization implementing AB 1392, which amends existing law related to the hospital Supplier Diversity Reporting program and requires specified hospitals to submit an annual report to HCAI about the hospital's minority women, LGBT, and disabled veterans. Business enterprise procurement efforts so specific about suppliers.

This bill expands the scope of those reporting requirements. Also requires us to provide additional technical outreach and support to hospitals, manufacturers, vendors, and diverse business enterprises to work with HCAI's hospitals. Prior diversity Commission developing. Implemented new guidelines to assist hospitals enhancing procurement efforts to increase participation from diverse businesses. Yeah.

So the request there is for a total of five PY, four in the budget year and one in budget year, plus one to implement that law.

Okay.

Thank you.

And then one remaining leftover from the January budget.

Oh did you. That's on the. I think that's on state hospital psychiatry.

Psychiatry payment program reversion.

Did you want to touch on that. In terms of what was included in the Governor's Budget? That's still being, yeah, that's still on there.

Any additional comment?

Yeah. Jason Constantouros, Legislative Analyst, office as my colleague noted in the previous item, you know, our office's general recommendation is to focus on pulling back limited-term spending to address the budget problem before addressing core spending. This proposal largely aligns with that. It focuses primarily on limited-term spending.

I did want to note two things for the Legislature to keep an eye on. The first is we learned that some of the solutions in the current year of 23-24 and some of those funds the Department indicates had been obligated or committed for certain contracts or commitments.

So we recommend the Legislature get more information on that to assess the potential impacts of that. We're working with the Department right now to get more information, and then we.

Also, we're pulling it back. The ones that got awarded already.

Yes, so it's our understanding that there have been some award commitments made, but the funds were not encumbered, and so they would involve pulling back some of those commitments that had been made. And then we also want to note that there is some ongoing base spending in this solution, too.

So, for example, you discussed earlier, HCOP, that was a program, that General Fund amount had been ongoing. And so because there's some ongoing items in here, and those were intended to be ongoing when they were enacted, that could be something for the Legislature to keep in mind, too, as it's weighing its final decisions.

Madam Chairman. Well, I assume that we took that into account when we made, when somebody made decisions to recommend that monies be reverted or whatever the term is we want to use. For example, if you have a medical residency program, you have to have enough money in the pipeline to get the medical resident through the program.

So if it's three years, we can't be cutting our medical residency program and leaving medical residents without the money to finish or the schools without the money to finish the program, number one.

And number two, when it comes to psychiatric loan repayment, if we've made commit, if we have hired psychiatrists in state hospitals just to pick one on the premise that if they work, they get their loan repaid and they've turned other jobs down because of that, then that doesn't work for me either. So, and that's not your fault.

We're going to have to sort through that Department of Finance, because that is a disaster. And when you're talking about medical residency programs, that's a real disaster because once you have a medical resident in a program, it is very difficult and the program goes away because we drop the funding.

It's very difficult for that medical resident to find another residency because there are not enough residency programs and on match day there are physicians who don't get one. And so they're still in the pot.

So somebody who understands how this process should work is going to have to work through that and then provide us with a report, if that's what you're suggesting, Mr. LAO, that we've got some of these dangling whatever out there, we're going to have to tidy it up.

Yeah. Well, our point is that it would be good for the Legislature to get more information. We're still trying to understand which of the, of the funds had been obligated. So that's the kind of the first priority is to understand which programs these are affecting and then to understand what the sort of implications are that of those.

Well, we know we've cut residency funds. We know we've cut Song-Brown residency funds.

Yeah, and it's our understanding that those are some of the obligated funds were for residency programs.

Correct. So we've obligated $81 million in song Brown specifically. And we have 19 physicians with whom we've made awards for loan repayment. Award letters. Those are potentially going to be pulled back. Those are proposed for elimination under the 19, for current year dollars.

We're going to, I mean, we've committed and we're going to pull them back.

Yeah. 19.

And then, and then what? The residency programs? We're going to, we've committed. We're going to pull that money back.

That's what's proposed under the May revision, Senator.

This is in the current year. So this is 23-24 amounts that the Department had been implementing and they're proposing to pull back the funds. But they've made.

I think that's a disaster so I think, I'm not going to belabor this hearing with this, but we're going to have to have some conversations either offline or in one of the later hearings when somebody comes in with some other, more data.

I mean, I understand by, I understand terminating a program because we don't have money, but to commit to people that we're going to do something and then pull it back or to tell schools that they have money. Here's whatever it is.

$75,000 for your three year or $175,000 for your three year internal medicine residency, and to tell us, a medical graduate, that they have a residency, and the medical graduate shows up because that's pay. And then to say, oh, we're not going to do it anymore, that doesn't work for me.

So I'll close my lips and not talk anymore.

We have a very short window. I mean, we have, like, three subcommittees left. I think this is a good time.

Well, they're going to have to get back to us. I mean, the LAO raised the issue, and that's what flagged it for me. I assume that we. That we were cutting this thing at appropriate points to cut, and it may be that we need to take another look at that. No criticism, ma'am.

You all do a great job. Thank you, Madam Chair.

I also meant to point out there was a question about sort of what's left in the HCAI budget.

And I just wanted to note that at sort of the top of your agenda, notes on the top of page eight, as a result of the, you know, may revision, you know, in 2024, sort of about $70 million is left in HCAI for General Fund support.

And that's really, you know, the core of that is supporting ongoing funding for the Song-Brown program. So some funding for the song Brown program would remain. It's about 33 million. It's ongoing. And then there's also ongoing support for the Office of Healthcare Affordability that would sort of remain the core of its ongoing budget.

Okay.

And there'll be some additional one time funding for other non workforce related items.

Okay. Thank you so much. We're gonna hold it open. Thank you. Moving on to Department of Managed Healthcare.

Hey there. Good morning. Mary Watanabe, Director of the Department of Managed Healthcare. I'll just start quickly with the change in our budget. Since January, the Department of Managed Health Care's budget increased from 163 million to 178.4 proposed budget. Million budget. An increase in positions from 724 authorized positions to 783 authorized positions.

That's a 9.4 increase in our budget and 8.15 increase in positions. We have seven bcps that are proposed that I'll run through quickly. Three of these are related to workload. One technical adjustment, and three are related to legislation implementation. The first is related to information technology, security and workload.

As you're aware, cyber attacks, including data breaches and ransomware attacks, are exponentially increasing, especially in the healthcare space.

In June of 2021, the California Military Department, the California Department of Technology, conducted an assessment and found that the DMHC has a number of security and compliance areas where we need to improve our compliance with both state and federal requirements.

We're requesting additional resources to come into compliance with these requirements, as well as to oversee our security remediations and systems. We're requesting nine positions, an expenditure authority of 1.9 million and 24-25 and annually thereafter.

I'm sorry, we can zoom through these. The first three are from the special Fund. Right.

So the Department is all special. We get no General Fund. I know. Okay, I'll go really quickly. The next one is to add positions for Executive and Management support. As we've significantly grown, we're looking to really kind of right size our organization and comply with CalHR's supervisor-to-staff ratios.

The biggest one here is our help center workload augmentation. We've seen a nearly 50% increase in the core functions at our help center. We've grown significantly. We'll have almost 200 positions. So we're looking to split the help center under two deputy directors. So this is related to that.

We also have a technical adjustment related to a previous legislation related to our fines and penalties. We need additional time to move the funding and get a contract in place. So we're looking just for a technical adjustment to allow us more time to do that.

And then moving on to our legislation implementation there was a Bill, AB 1048, that will have the Department doing rate review of dental plans and dental rates. So this would be positions and authority to bet up a dental rate review program. And then we have doulas, AB 904. The plans will be reporting to us on their doula coverage and programs.

We'll be preparing a report to the Legislature requesting resources and positions to do that work. And then last but not least, biomarker testing. Under SB 496, the plans will have new coverage requirements related to covering biomarker testing. So we're looking for positions in authority to oversee the implementation of that.

Okay. We're going to hold the item open. Moving on to Department of Healthcare Services.

Hello. All right.

Good morning, Chair, Members. Michelle Baass, Director of the Department of Health Care Services. The May revision proposes 164.1 billion for the Department in 4,688 positions to support the Department's programs and services. Of that amount, about 1.4 billion is for state operations, and then the vast majority, 162.7 billion, is for local assistance, predominantly the Medi-Cal program.

Your agenda does a great job comparing Governor's Budget to May revision, so I will move on to some of the solutions proposed as part of the Governor's Budget. As you know, the state is facing a significant General Fund challenge, 27.6 billion in the budget year and 28.4 billion in the budget year plus one.

And the Department has a General Fund expenditure of about 36 billion and represents a significant portion of the state's General Fund spend. As such, we'll go through some of the solutions proposed as part of May revision for the Department.

We recognize that these are proposals and that the Administration and Legislature will work together over the coming weeks to achieve a balanced budget to serve Californians. In terms of the Managed Care tax, or MCO tax, as part of May revision, we are proposing modifications to the MCO tax effective April 1, 2024 to account for Medicare revenue as part of the model, and by doing so we can increase the maximum aggregate tax allowable while still meeting federal requirements.

The May revision assumes 689.9 million in net reduced General Fund costs in the budget year, 950 million in 2025-26 and 1.3 billion in 26-27. So we're proposing to amend or revise our MCO tax model to now allow or include Medicare revenue as part of the calculation.

This allows us to increase our tax on Medi-Cal managed care plans. There is no impact to our commercial plans as we are only proposing to increase the tax on the Medi-Cal managed care lives.

Are we sure this is a max?

So I will say, as part of our discussions with the Federal Government, we submitted after early action at the end of March, and we continue to work with CMS on the MCO tax.

They provided clarification to us just at the end of April related to the ability to what can be considered as part of the 6% revenue that can be included. And so we just recently received this clarification from CMS that we can indeed include Medicare revenue.

As we think about some of our other provider taxes, it's really thinking about the class of the provider and not just necessarily the revenue of commercial and Medi-Cal. And so this is a recent clarification based on actually a rule from 2008 from CMS. And so it is a newer update.

So when we apply for the next one, we'll be able to include this new calculation. Okay. Director, so the breakdown each year that I'm seeing here, all of it for the outgoing years, would be General Fund.

Correct.

Okay. The one thing, and I'm gonna jump a little ahead, I didn't have on my bingo card, 115 million for a children's hospital from MCO tax. I don't think anyone did. Where did this come from?

So, this is a new proposal related to children's hospital, and it's to create a directed payment using our Medi-Cal managed care plans to provide supplemental payment, essentially, to our children's hospitals as they care for the state's most vulnerable and sickest children.

I'm not gonna disagree or contest the value of our children's hospital, but they've never been part of the conversation the past couple of months of where the need is. I don't know if I miss those conversations, but what need are we addressing? What's happening in the situation?

So, children's hospitals, as a hospital, we're always going to be part of the emergency department, the outpatient. So some of the categories that we had proposed for 2025 rate increases. So always part of the conversations, but maybe not singled out in terms of the particular need, but just based on conversations and kind of the need for some of their.

You know, their costs are extremely high for some of the most vulnerable and sickest children, some of that kind of what we call outliers, of the way we think about some of the costs for some of those children and youth. That is why we are making this proposal.

Well, not that we were having those conversations. I'm wondering, you know, rural hospitals have always been at the forefront of what we've been talking about. This is stress hospital and so forth. I mean, I just had a rear admiral come into my office yesterday.

Ridgecrest Hospital, just another labor and delivery just got closed, and the closest one is 80 miles away. I'm just trying to figure out. I guess I'm still trying to figure out how we choose in some of these things, and I know we have to choose some over the other, but if. I don't know, if I have a question there.

I will just say this is our proposal, and we have weeks to work together on revisions that the Legislature may wish to explore.

Okay.

You know, Madam Director, I do agree that the children's hospitals have a very difficult situation. They're Medi-Cal patients, correct? For the most part?

Vast majority. I don't know if you have the breakdown, Lindy.

I don't have the breakdown with me. But yes, we do hear that they have a heavy Medi-Cal population.

And the cost of providing care. First of all, they require pediatric specialists, specialty physicians, which are in high demand, and there's a shortage throughout the state.

And they also most often have to deal with the sickest of the sick when we're talking about our kids and our acute care general hospitals, for the most part, there may be some exceptions, have no pediatric units anymore, for whatever reason.

And so we're going to need to preserve this capacity, however limited it is, to try to take care of kids who need that type of care. I also do think, however, though, that I realize this is a proposal.

We're going to have to talk about how we sort of put a little bit more money in a distressed hospital fund this year. And I don't know where we find it in a year where we're cutting programs that not only break our hearts but undo work that many have been spending years around here trying to do.

We're going to have to figure out how to put a little bit more money in a distressed hospital Fund, tide our rural hospitals over until we figure out how to do, with money, targeted Medi-Cal reimbursement rates that help some of them make the lines cross.

How we persuade the Federal Government to help us by providing some additional dish on steroids for rural hospitals, and in the case of hospitals that are in rural areas that service military members, civilian employees and their spouses at remote military installations, how they help us help them by supplementing the money that we're able to provide in the state to those hospitals, to help them keep the doors open, to provide critical health services to those personnel who can't get it anywhere else.

So that's a comment, not a question. I want to thank you for what you do. I think we're going to have to have the conversation as we move through this process.

No, 100%. I think he said it more eloquently. That's what I was trying to say. But also a lot of labor and delivery units are getting closed across the entire state.

Children's hospital are going to get an influx of more kids because more complicated pregnancies or deliveries are going to happen if we're not addressing or closing that gap throughout our state. So when it comes to one of some of those distressed hospitals. I think we do need to perhaps focus a little bit more.

I shouldn't say focus more. Think about as we're allocating 115 out of this for maybe including a little bit more and stay within that zone of hospital. I know it's ongoing conversations. I mean, we had a whole hearing on this whole thing and moot point now, but just throwing that out as we continue conversations. Director, please proceed.

Okay. Additionally, as part of the May revision, we're maintaining the 2024 targeted rate increases that went into effect January 1, 2024. And those, again are for primary care, non specialty mental health and maternity care, bringing those to 87.5% of Medicare.

And finally, we are eliminating the 2025 rate increases that we've spoken about previously in Subcommitee and using those dollars in the Reserve Fund to offset General Fund cost in the Medi-Cal program. And moving on to some of the other solutions.

Maybe Department of Finance, help me understand. This is more in the weeds. You're the experts on the structure of the budget, really trying to understand. We're balancing, we're solving for upcoming fiscal year plus one. So that gets us into 26-27, correct? Do I have that so far? No.

That gets us into 25-26. Okay. A lot of proposed solutions are cuts into year three, year four, or like MCO. We're already allocating General Fund for year three, year four. Explain to me the technicality or the math behind why do we solve for year 3 and 4? Why do we have to allocate for that now if we're only doing next plus one?

Aditya Voleti, Department of Finance. The Administration prioritized one time or short term solutions, given the budget situation. But for some of them, I mean, we have proposed more out year solutions. And just given the difficulty of the budget situation, the proposal for the MCO taxes for the out years.

is there a mathematical reason, like, we have to balance out year three, year four? I guess I feel like I'm looking for more, I don't know what's the reason for balancing 3 and 4.

I think that while the budget year and the year after that were definitely heavily the priority, given some of the spending, we might face additional problems in the out years. And so for this proposal, the out years are also a part of the solution.

Why do we lock ourselves into the numbers for 3 and 4 when we don't know what things are going to look like in 3 and 4? We're locking ourselves into 3 and 4, right? If right here the request is for up to 26-27?

I mean, this is currently like the estimate for years 3 and 4. So we would continue to update and revise those numbers as the budget process continues over the out years.

Moving on to the next item, just wanted to touch on some of the budget solutions related to the Children and Youth Behavioral Health initiative. The May revision proposes a reduction of 337.1 million to CYBHI.

These adjustments are first a right sizing of some of the funding allocations and will not hinder the department's commitment to this really important and groundbreaking work. To date, just for context, we've awarded 248 million in CYBHI grant funding to 424 organizations across 58 counties to improve access to evidence based and community defined practices and programs.

We've also distributed 110 million in funds to 58 county offices of education and local education agencies. In terms of the solution, we are proposing a one time reduction of 140 million for the ​​​​​​​​​​​​​Behavioral Health Virtual Services Platform.

This will essentially right size the budget based on the way we've constructed the contract because it's based on utilization and you know, we just started in January. So year one of utilization is not going to match years 2, 3, and 4. So really, really it's more of a right sizing of the contract and the way we've set it up.

How successful? I've heard it's not. Well, maybe a different perspective. How successful is this? Not a lot of utilization.

We're tracking, I think about 20,000 registrants, about 2,800 coaching sessions have occurred. So you know, it just came out in January. Really, I mean, now is the part of kind of getting the word out and working with all of our partners, our schools, etcetera, to get the word out.

We do project, you know, utilization to grow over the year and then obviously as the school year starts as well. That's a new way to really bring out the effort.

Ongoing allocation of funding for this program. What is left after we're proposing to take out 140 million?

I would have to get back to you on that. I will say our contract goes through June 30, 2027.

Okay, so we already have a contract that has to go through 2027. How much are we allocating annually?

Nate Williams, Department of Finance. So just to clarify, so you're looking for kind of just the annual, ongoing, as we kind of reach the full implementation? Okay.

Up to 2027. How much?

For the services and supports platform, it would be approximately 178.9 million.

That we've already committed to this vendor that we're going to do for 3 more years?

Well, that would be just the kind of what we're projecting to be the yearly ongoing cost. As far as what we've included, so some of what you're seeing in the budgeted dollars. So, for example, in 24-25 we have almost 220 million budgeted. So that includes some payments that are still due as well as the ongoing funding as well.

I guess I'm wondering, Director, Department of Finance, this just started in January. I think that's been kind of like our, somewhat of our guiding light for things that are proposed for cut, things that are not super, super new. So I'm just wondering if there's room to get out, but it sounds like there's a contract at 2027.

We do have a contract with the two vendors, and I would say that the Department has worked extensively with stakeholders, a scientific workgroup. Really, the planning to develop and kind of launch these platforms was a significant effort. It lasted over, I think, close to two years.

Really all the stakeholder work, the engagement with youth to really design and kind of come to these products. And so a significant amount of work has been done to essentially launch these platforms and work with the vendor to implement and release in January.

Okay.

Okay. The next two related items are the ​​​School-Linked Partnerships and Capacity Grants for our community colleges and our CSUs and UCs. For the community colleges, a reduction in 100 million in grants split between 23-24 and 24-25 and then also a reduction for our CSUs and UCs of 50 million in 24-25.

We maintain committed to working with our institutes of higher education with regard to implementing the fee schedule which will go live for our community colleges in the fall of this year, and then for our UC's and CSUs starting in January of 2025.

So continue the work on the technical assistance and getting ready for these engagements, but these are a reduction in some of the capacity grants to support them. Also a reduction in the ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Evidence-Based and Community-Defined Behavioral Health Program Grants​​​. This is a reduction of 47.1 million in the budget year.

When we initially developed this grant program, we had planned for six rounds of grants, with the last one being really focused on evidence based and community defined practices. But all previous grants, rounds of grants have included that focus as well.

And so just given the state's fiscal situation, recognizing this is a potential solution. With regard to the ​​​​​​​​​​​​​​​Naloxone Distribution Project funding and medication assisted treatment, the May revision proposes to reduce by 57.3 million General Fund from local assistance and 3.7 million in General Fund from state operations.

This reflects a reduction of 35 million for the NDP program and then about 22 million related to the Medication-Assisted Treatment Expansion program.

I will say with the recent announcement of CalRx as the state's new partnership that allows the states to purchase CalRx branded OTC, over the counter, naloxone, for $24, a lot cheaper than what we are purchasing today.

And so this reduction, and then an additional 8 million in opioid settlement funds, we do not think there will be a reduction to that program. With regard to the Behavioral Health Continuum Infrastructure Program, the May revision proposes to essentially eliminate round six of this program.

No awards or announcement has been made for these programs, so there are no grantees that will be impacted by the reduction of this.

I will note, earlier this week, the Governor announced the release of our program guidance for the BHCIP Bond Round 1 funding, where we will be releasing 3.3 billion in BHCIP dollars related to the bond this summer. And so this week we released the guidance.

So potential awardees really know what the structure of the program will be and will be ready once the notice for request for applications comes out this summer.

We're leaving approximately like 30 million on the table for BHCIP. Why?

That is related to contracts we have, related to emergency stabilization units that we've worked with the Department of General Services on.

Just to finish off the contract? Okay. And then for the other one, we left some money as well, the bridge housing.

Oh, yeah, so I'll get to that one. Yeah, sorry. And then in terms of the bridge housing, the Behavioral Health Bridge Housing, the May revision proposes to reduce funding by 132 million General Fund in 2024-25 and 275 million in 25-26.

So for budget year, essentially reduction of the original proposal or the original funding by a half, and then for budget year plus one, this is where the Administration is proposing to replace some of those dollars with Behavioral Health Services Act or MHSA funding, which was discussed in the previous item with HCAI.

And so using 90 million from the Mental Health Services Act, state administrative dollars to Fund bridge housing.

And Madam Director, that's related to Prop One and the recharacterization of the Mental Health Services Fund?

These are actually dollars that are really still under MHSA.

Oh, is bridge housing a permitted use?

Yes. As part of Governor's Budget, we had already proposed a shift in some General Fund to MHSA dollars, and this is a further shift.

Okay. As part of the May revision, we're proposing to eliminate a portion of the ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Equity and Practice Transformation Program or grants, essentially only using the amount that was appropriated as part of the 2022 Budget Act. This results in about 280 million in reduced General Fund expenditures.

As a result, cohort one, which was announced in January, we will need to revise the program milestones and program guidance given the reduction in funding for those grantees. We are proposing also to eliminate the Health ​​​​​​Enrollment Navigators, the final year of funding for those contracts. That program began July 2022.

It provides funding to counties and community based organizations to serve hard to reach populations potentially eligible for Medi-Cal. These dollars are used for outreach, application assistance, enrollment, retention, assistance with redeterminations, etcetera.

Okay. We are also proposing to eliminate adult acupuncture. It's an optional benefit in the Medi-Cal program. This is General Fund savings of 5.4 million in the budget year and 13.1 million ongoing. This benefit was eliminated in 2009 and restored back in 2016.

But as mentioned earlier by the Department of Finance, the intent of some of these reductions is really just to focus on core healthcare programs. The May revision proposes to eliminate 2 million in ongoing general funds for free clinics. AB 128 statutes of 2021 provided funding to support free and charitable clinics.

These are tax exempt organizations that are not Medi-Cal providers or do not qualify as Medi-Cal providers. The Department distributes these funds to the California Association of Free and Charitable Clinics, who then determines the allocation of these dollars to clinics.

We dug deep for this one, huh? This is 2 million for free clinics. Oh my gosh. That's the 2 million for this census thing that I talked about. That's. Wow. Okay.

The May revision proposes to freeze funding levels for county administration of Medi-Cal eligibility funding. This is a reduction about 20 million in 24-25 ongoing.

I would note that this has been done in previous years when the states faced fiscal challenges starting in 2008-09, going through 2017-18, and then was restored in 18-19 and proposing to again freeze that as part of the May revision.

Will the Department come back in 26-27 to look at if we still need to continue to freeze the 65 million in the 88.8?

So as part of the trailer bill, every year we need to add the year, and so it is a conversation every year to freeze. Yes. The May revision proposes to eliminate the Indian Health Program with reduced General Fund costs of 23 million annually starting in 24-25.

These grant funds support, really, prevention and primary care services that are responsive to the needs of American Indian patients and are provided in a primary care savings settings. Many of these dollars are used to supplement primary care provider salaries.

I would note this program was eliminated in 2009-10 as a result of the state's fiscal situation and was restored in the 2022-23 budget. So recently restored.

And it's getting cut again? Director, you weren't here during that time, but I wonder amongst your colleagues. From the recession we had and all the cuts we did to core services, I mean, the impact that we're going to start seeing. Are we really prepared for that?

Maybe we'll start seeing it next year, but this is going to cost us a lot of money on the out years. Like, I'm wondering just structurally, how the Department is preparing for that. What creative things are we coming up with within our infrastructure that can offset some of these really negative impacts? I'm just wondering if there's just any insight to your genius brain of what you're thinking.

I think for some of these, where we were really making a targeted effort on to really reduce disparities or really address some of the needs of some of the state's populations that haven't been really addressed before, we will need to think about even just from a quality perspective, how we can just keep our eye on the data and keep our eye on other interventions that our health plans maybe also be able to implement. And so this is something that we will be thinking through.

Madam. Thank you, Madam Chair. Madam Director, I tried to ask this in another section, probably inarticulately, but when we eliminate this money to provide primary care services, in this case to tribal members, isn't that going to put a burden in terms of perhaps uncompensated care on our hospital system at some level, or increase the cost of the care on our acute care general hospital system?

And do we take that into account and try to quantify what that increase is versus what the, was it $23 million, the 23 million that we're cutting? And so it's cheaper to cut the 23 million? Am I making sense?

Oh, definitely. I think the Department really has had such a focused effort over the last few years, particularly with our comprehensive quality strategy and even with our targeted rate increases with the MCO on primary care and prevention and these types of proposals. We will need to think about how we're going to address them because there is such, there's so much evidence.

In terms of prevention and primary care and how that reduces hospital stays, how that reduces ER utilization. And so, yes, we will have to think through that. I don't know if the Department of Finance has anything to do with that.

And we're dealing, of course, in this Committee, this Chair deals with the most vulnerable all over the state all the time.

But in the case of, for example, the Indian Health Grant Program, we're dealing with not only some of the most vulnerable, but some of the most vulnerable that historically have been the most ignored or some of the most ignored in our state. We probably need to have a conversation about that. Thank you, Madam Chair.

Please continue, Director.

We are proposing to eliminate the ​​​​​​​​Major Risk Medical Insurance Program, often referred to as MRMIP, and redirect 78.9 million from the Health Care Services Fines and Penalties Funds to pay for Medi-Cal costs. We are proposing.

Sorry, Director, I have a question on that one. There's still some people on MRMIP.

That is correct. We currently have approximately 400 people enrolled in the program. My name is Sarah Brooks with the Department of Healthcare Services. Apologies.

So what are we doing to notify them that in like two weeks they're gonna lose their health insurance?

Well, certainly we won't eliminate the program in two weeks. We'll provide adequate time and notice to them. To provide them with notice so that they can transition to a new program. We will set up, just as we do with other transitions, we'll provide notice to them.

We will assist them to transition to other programs and provide them with information about Covered California, about Medicare, about other programs that are available to them that they can enroll in.

I mean, obviously anything over MRMIP is going to be better health insurance. I'm glad that we're getting people off here. So what I'm hearing is that they won't fall off until we get a hold of them and let them know.

We certainly will be noticing them and providing information. Yes, we will go through our normal process of noticing individuals and that will be certainly. Yes, of course.

Okay. So this savings here won't really go into full effect if it takes us like a month or so to get a hold of them and notify them that they're getting off MRMIP.

So I would defer to my colleagues at DOF with respect to the savings in terms of the implementation timeline, but, With respect to your question, Madam Chair, you're correct that we would not be able to immediately transition individuals off of the program, because we would need to allow enough time to notice them and to get them time to identify a new program to transition into.

Isabella Alioto, Department of Finance. Yes, so the savings reflect the fund balance of what we have now for MRMIP. So the program would have to be eliminated and then those funds transferred. So there could be not a delay necessarily, but that would all depend on when it's fully eliminated.

Okay. But we have approximately a year, at least, to hit the full reaching out to everybody, and then we could potentially even just score the 78.9 February of next year, just any time this whole year. Okay. So it gives us some time to reach out to everybody.

We do have some time to reach out, and we want to ensure that individuals have enough time to transition to new programs.

Okay, thank you.

The May revision proposes, with regard to Proposition 56, a backfill. As you know, in recent years, Proposition 56 revenues have not been sufficient to fully cover the cost of the Proposition 56 supplemental payments.

And so May revision proposes to use 145 million from the MCO tax to support Medi-Cal family planning, women's health, and physician services supplemental Proposition 56 payments in 2024-25. So by doing so, we are not reducing our 2024 TRI rate increases.

There will be no reduction. And then also using 64 million General Fund in 24-25 to fully fund the dental services Proposition 56 supplemental payments. The May revision also proposes to increase directed payments to public hospitals through programs such as the Enhanced Payment Program and the Quality Incentive Pool.

In conjunction with this, the May revision proposes to include an administrative fee on intergovernmental transfers related to these directed payment programs. Taken together, these actions are estimated to result in General Fund reimbursements of 37 million in the budget year and 74 million in budget year plus one and ongoing. We will have trailer bill to implement this.

Today, we have an administrative fee on some of our other programs with our public hospitals, and so mirroring that type of framework with regard to these programs and the EPP and QIP, the acronyms there. But there are opportunities to really bring in additional dollars to our public hospital systems not using state funds. Okay.

And then in regard to the other adjustments in trailer bill language proposed as outlined on page 15 of your agenda, we are proposing the first item there is really a technical adjustment related to receiving additional federal grants related to mental health and substance use disorders.

We have a proposal in local assistance related to behavioral health transformation, or Proposition One, and county behavioral health departments.

Can you talk to me more about that? Help me understand that Prop One was going to help Fund everything.

Right. So as part of 2011 realignment and Proposition 30, when the state imposes additional administrative function on county departments, the state needs to adjust costs to our counties.

And so as part of SB 326, there was actually language in that Bill requiring the Department to work with CSAC and the County Behavioral Health Directors Association to work through the administrative cost to implement Proposition One at the local level.

And so the 85 million, 50 million General Fund reflects the year one of what we think the cost might be to begin implementation and preparation for Proposition One. We talked about the children's hospital.

One last question about the children's hospital part. Going back to the purpose of the MCO outside of helping balance the budget to address equity. So what are we seeing? Are we seeing our kids not going to a children's hospital? Are we not seeing providers working here? I know the Senator brought that up.

Again, I think it's as you look at the cost of providing care to those sickest children and being able to maintain those services, they have expressed concerns and so this was our attempt to help resolve those issues.

Director of PDN too, that can help address some of those concerns. Get those 1,000 kids on the waiting list out of the hospitals.

This is the issue with the plans not wanting to refer to the children's hospital but trying to keep children in the plan system. Is that an issue?

I have not heard that issue, Senator Roth. That has not been raised to me.

Okay, well, just thought I'd ask. Thank you.

So we've talked about the children's hospital. We've talked about the Naloxone Distribution Project, the augmentation of the 8 million in opioid settlement funds. The next item that.

Sorry, Director, on that. Can you give me an update on what happened? Last year, we approved out of the Opioid Settlement Fund funding into the Harm Reduction under... it was for community? Maybe Department of Finance knows. Do you remember what I'm talking about?

Yes, I believe you're speaking about. Sorry. Nate Williams, Department of Finance. You're speaking about the program through CDPH. Off the top of my head, I think.

No, this was community request. It was a proposed.

Yeah, it was the Harm Reduction Initiative.

Yes, yes, yes. Okay. That's on pause, right? Or were we able to allocate the funding to them?

No, there's still funding built in OSF for that proposal.

Let me find my chart here. Yeah. So in the current year we have 15.25 million. In the budget year, we have 13.35 million and then 13.65 million budget year one.

Did we take a cut earlier this year in January from it? Because there wasn't enough in the OSF, Opioid Settlement Fund. Yeah.

Correct. Yes. So at Governor's Budget, there was a reduction to the revenue proposed for the OSF. And so there were multiple programs.

For this proposal, Is this from the Fund? This 8.3 million is from the OSF?

Yes. So the 8.3 million augmentation to NDP is coming from additional funds that are now available in the OSF.

Are we, with the additional fund, rightsizing what we took away from the Harm Reduction Initiative?

No, we did not. The Governor or the May revision did not propose to reinstate.

I'm definitely interested because those are community, on the ground initiatives. For this, I'm interested in looking at decreasing this number and offsetting for what we took from the community investment program. Just wanted to flag that. Not extra money.

Yes. Yeah. When looking at allocating the additional OSF revenue, our first priority was to look at the Naloxone Distribution Project.

And with the additional funding that was taken away from the Naloxone Distribution Project to solve for the General Fund condition, we decided to augment that so that we wouldn't lose the actual medication that's going out from the NDP. So we can have approximately the same number of units supplied with the lower cost.

I'm looking at this, not criticizing the Department, but wouldn't we want to take out the middle person?

Why don't we just distribute the funding to the communities who are actually on the ground doing this, versus providing more funding directly to the Department, who perhaps is then going to reach out to community members saying, hey, we have this amount. Here you go. Can you distribute naloxone in the community? That's how I'm looking at it.

So why wouldn't we invest more into the organizations that, last year, said, hey, we're distributing this, we need this right now on the ground. They're doing the same thing, distributing naloxone in communities.

One goes the money to the Department and then maybe funnels down. The other investment goes straight to the communities into the hands of people that need it.

I guess I would say the Naloxone Dstribution Project is actually contracted to provide the medication. So it would go to these organizations who are.

So why don't we just remove the middle person and give the funding to harm reduction initiatives that goes straight to the community organizations? Why do we need to put funds to have the Department distributed. Am I making sense?

Well, without knowing the harm to reduction program at the Department of Public Health, the NDP, really, the efficiencies of the state being able to purchase at bulk and distribute, I think is a value. But again, not understanding what the Harm Reduction Initiative does, does. I don't want to compare.

I'm not sure. And I don't know that I could speak specifically to all of the organizations, but I'm not sure they would be able to leverage the same cost. So if they had to purchase.

We'll send up some follow up questions and then we could come back on Monday or next Thursday to dive a little bit more into this. Yeah. Okay.

Then related to the next item, the CYBHI next-generation parent video series and digital supports, we will have to get back to you, actually, on this item. CYBHI generally has exemption authority, and this is something we can follow up with your consultant on. And then the MCO tax general office, and this is just a technical adjustment related to MCO dollars.

What does that mean?

As the way the numbers, the actual tax revenue coming in, the payments to the Medi-Cal managed care plans. It's just a technical adjustment on how those dollars come in.

Okay. For chapter legislation, you don't need to go through everything. I just have a question on the behavioral health transformation. For SB 326, so we gave 40 million last year, and I think we're providing the same amount from MHSA. We need all this additional much as well?

Yes. We are building an entire IT infrastructure to support our counties in terms of the county integrated planning process, the Behavioral Health Services Outcome and Accountability Report.

And so a lot of these dollars are actually for IT infrastructure, both at the state and local level, to support, really the ability to kind of gather the data and understand.

You say IT system, black hole. Sucks in all that, I get it. Okay. Okay. One other question on chapter legislation. AB 1163, that throughout today, I think is the most chapter legislation is getting the most amount of money. I think every single Department is requesting funding for this. It's great.

But my question is. So the LGBT Disparities Reduction Act is looking to support information collected by the state. We had a conversation earlier this year regarding some of the. We can't collect some of that data, privacy issues and so forth.

What I don't want is allocate funding and then come next year and said, hey, we got all this funding, but we couldn't collect any of this data because of privacy issues. Are we going to encounter some of these issues? You don't have to answer now, but I'd like to get an answer next week.

Again, don't want to allocate. And then the data is not going to be collected because we'll get the same privacy issues excuse. That's my only thing for that one.

We can be prepared next week for that. And then on page 18, maintaining the Governor's Budget proposal to transfer about 14.9 million in dollars from the Clinic Workforce Stabilization payments that were unused to the General Fund.

Okay. We're going to hold all those items open. Move on to issue number two. Zoom through.

Okay. Really, I think we covered many of the large items related to local assistance for the Medi-Cal program. Just a couple quickly to note. In addition, the May revision proposes revised projected estimates for the 26 to 49 undocumented expansion. This adjustment reflects the total impacted population, about 739,000 individuals.

That's an increase over the November estimate and just kind of a reflection of updated costs there.

Okay. Amongst these numbers, is this where you're calculating the proposed reduction of the IHSS for undocumented?

That is in the Department of Social Services budget.

So it doesn't come out of the Medi-Cal caseload?

They carry it.

Got it. Okay. Okay. Thank you. Hold the item open. Moving on to issue number three.

And then finally, the Family Health Local Assistance Estimate. The Department estimates family health spending. This is again for the California Children's Services Program, the Genetically Handicapped Persons Program of 259 million in the current year and 276 million in the budget year.

Okay. Holding the item open. Moving on. Thank you so much. CDPH.

Please begin when you're ready. Not on.

There we go. Brandon Nunes, I'm the Chief Deputy for Operations at the Department of Public Health. Just real quick overview of our budget. We had a proposed roughly $5 billion budget at Governor's Budget. Our proposal now is 4.8 billion. The majority of that change is coming from the General Fund, which obviously will be having some conversations there.

We had proposed 815 million at Governor's Budget and we're now at 470 at May revision. I can kind of run through some of the proposals. Obviously, the largest piece of that reduction from Governor's Budget is an elimination of the future of public health funding. There's two, technically two proposals this is funding that's been in our budget since 22/23. There's some reversion of current year dollars totaling 52.5 million, roughly 11 million of that coming from local assistance. In the balance from state operations, you may recall there was 100 million for state operations, 200 million local assistance split between that 300 million. And then ongoing, beginning in 24/25 a full elimination of the future public health 300 million.

So let's get into this a little bit. Doctor Pan, before COVID was always asking about public health infrastructure. Are we ready? Are we ready? And we weren't ready. And it was kind of like a told you so moment for him. Right? Are we ready? If something else happens in eliminating this infrastructure, have we built capacity to be ready?

Yeah. You know, there were some investments that occurred during COVID that kind of helped bolster that ability to be prepared. However, a large piece of this 300 million was to assist with preparedness ongoing, obviously, at both the state and the local level. Some of this funding was put into our emergency preparedness office.

It was put into communication efforts. We learned from COVID that communication was an important piece of - communicating with the public, was an important piece of the response, as well as some investments that we put in our regional public health office, which helps kind of the relationship building between our Department and the local health jurisdictions ongoing.

So it's true, it's obvious kind of that this will have an impact on that. And in some ways, this kind of brought public health up to a baseline. However, given the current fiscal situation that we're in, there's definitely some difficult decision making that has to be made. And this was, is one of those.

Doctor Tomás, you know, a couple of times came here, talked about, you know, our values or goals, meet equity, address equity issues. It kind of takes away the confidence in being able to address equity issues. If we're slashing eliminating funding for the future of public health. And one thing in particular, this is not just for COVID-19 right. There's an issue that's a public health issue in my district, silicosis, that is killing men in their twenties. And this funding would essentially wipe out the ability to combat that. Unless you think there's an infrastructure at public health that's going to help address issues like silicosis in my backyard.

Yeah, no, I mean, I'll just go back to what I said. I mean, this clearly will impact a lot of the preparedness capabilities that we in the local health jurisdictions had. Again, I guess I would just say that this is also a starting point, as the Governor mentioned in some of his comments. Starting point as far as conversations with the Legislature, we're happy to continue conversations in this space with you as well. But again, right now, given the budget situation.

So we're moving away from the Governor's SMARTER Plan.

There were elements of this that would help support the SMARTER Plan. There's additional funding that remains in the budget, kind of help support some of the systems that were stood up during COVID that kind of help feed into.

Could you share some of those with us?

I could get you a list of those systems. The one that kind of pops into mind is the SaPHIRE system and some others, but I can get you definitely a list of some of those systems that are invested into the SMARTER Plan.

In reality, how are counties - what TA are we going to be able to provide to counties, local public health to be able to respond to outbreaks XYZ?

Yeah, it's again, it will impact that ability. Like I mentioned, part of the 100 million that came to the state was for our regional public health office. It built some of those relationships and was able to kind of provide some of those best practices and technical assistance and ongoing communications between us and the local health jurisdiction. Under this proposal, that particular office would be eliminated, and so it would have an impact there.

And staff layoffs.

We do have 400 positions at the state level and roughly, I think it's roughly 1300 at the local level, if I'm remembering the number right. Ramping up hiring, it's true, was a very important part of this when we received the funding in 22/23. Both we at the state and the local health jurisdictions are roughly at about 80% hired of the staff that I mentioned. And so we will definitely not be able to do the things that were in this original proposal. However, we do have some vacancies in the Department.

We would be looking to move folks into some of those vacancies, but those are funded with Special Funds and other areas that can't really backfill this effort. So. But it is a focus and definitely an important piece to kind of look at play placing those staff throughout the Department.

Prop 1 is giving public health some funding. I get them confused. It's 3 or 4%. Can that help with some of these issues - with some of these initiatives?

Yeah, I think it's a piece that we're going to definitely have to look at. I know that there were some conversations about how Prop 1 might be able to backfill in some other areas. I think that's a piece that CYBHI I think, was one of them. I mean, it's definitely an area that we're going to look at. It's still, I think, kind of soon to see how Prop 1 would come to us and how it would be used.

What are you able to share with me? And I apologize, I forgot your.

Sorry. Brandon Nunes with.

Director?

Chief Deputy for Operations.

Chief Deputy. What is public health? How are we being creative? What are we doing within our current capacity to be able to address the tip of the iceberg of some of the things we're going to be seen? Like, are we, are we having conversations with the local public health? Are we, what do we, what do we, what are we doing? Or what will we be doing?

Yeah, I think that those are probably some conversations that, like, when we have hearings next week and Doctor Aragón is able to attend, I think he'd be able to kind of fill in better. I know from, you know, a technical perspective, some of the things that we're doing on kind of the operations side is, you know, performance improvement and efficiency is definitely an area that we've been looking at throughout the Department. And so trying to improve our contracting methods, our hiring methods, etcetera, are some areas that we're looking to become more efficient and save dollars and whatnot. But as far as kind of the relationship, like you mentioned on the public health side of things and the relationship with local health jurisdictions, I would probably defer to Doctor Tomás when he comes back next.

Department of Finance, this is annually. Why again, are we choosing to cut it completely versus just for the next 2-3 years delay?

Good morning, Madam Chair. Nick Mills, Department of Finance. We have a significant budget problem, and the Administration's proposal to solving the budget problem and putting the state on a fiscally responsible path was to protect core services like Medi-Cal. And this could lead to pressures on deficits in the out years. So what's proposed today puts the state on a responsible fiscal path, but we understand that the Legislature may have alternative ways for solve the budget problem.

Thank you, Madam Chair. You know, from an operations standpoint, in the military, we call it the tooth to tail ratio. We're the tail and the teeth really are in the counties. So I guess what I'm going to be looking for when we get into the detail is whether we've made a conscious effort, recognizing we have some serious cuts to be made. Conscious enough effort to drive as much money down to the counties in the public health areas, where some could argue the real work is done.

Not that we aren't working up here, but significant work is done at the county level to retain personnel, for example, people that are difficult to hire. And when the disaster happens or the virus occurs, we don't have a lot of time to ramp up. And so we need to maintain a certain level of capability, I think, at the county level. And we can probably adjust up here. So perhaps next time we gather at the river, you all can talk to me about how in our planning for this reduction, in this particular section, we've planned to drive as many resources as we can during the reduction down to the county level and the public health departments.

I can comment on that. Christine Cherdboonmuang. Department of Finance. So not to, you know, every cut is a, is a cut to capacity. So not to dismiss any of that, but I just wanted to just point out that it's not a cut to our entire capacity to respond to public health threats. Right. So we still maintain 1.4 billion in the Center for Infectious Diseases, of which 214.6 million is from the General Fund and 945.2 million will go to local health departments in the state. And Mister Nunez mentioned SaPHIRE earlier. That is still something that is in place as a part of our disease surveillance infrastructure. In addition.

Tell me about SaPHIRE again. I know we talked about this a couple of weeks ago.

Good afternoon, Adrian Barraza.

Sorry to cut you up before I forget that question.

No worries.

So SaPHIRE is essentially a gateway that serves to facilitate the transfer of our data. So it receives the data, transfers it to our surveillance system, CalREDIE, and then our downstream contact tracing system in.

I'll remember that. Okay, thank you so much. Go ahead. Oh, Senator Roth, did you have a question on that?

Well, I just. When you're going through this, then maybe I missed it. You know, I've asked about impact analysis before. Maybe you could touch on what the impact of the, what is it $300 million ongoing reduction is going to have on the delivery of services where the pedal hits the metal, which is at the local level.

What's the impact of the 300 million? I mean, is it insignificant? Is most of the cut impacting up here? That was my question earlier. What's going to happen in the 58 counties around the state as a result of a $300 million reduction? Is it a loss of two? We call them something else here. We used to call private sector, we call them FTEs. Is it two positions, a county? Is it what? So now I interrupted you, ma'am, so I'm going to stop talking and let you.

Let's have, if you can answer that question first and we'll go back.

Yeah. So the split of the 300 million was 100 million state - at the state level, 200 million went to the local health jurisdictions, a large, just like it was with the state level. A large proportion of that went to fund staff at the local level. So your FTE question, I believe it was roughly 1300 FTEs across the state, of which 80% are roughly filled at this point. So you got your FTE equivalent, but actually people in positions, and that's obviously each local health jurisdiction had priorities on how they used the funds they worked. They utilized plans with the Department and kind of had that conversation about how they were used. It was obviously a little bit different in each local health jurisdiction, but that's roughly a statewide impact is 1300 FTEs.

A little over 900 positions have been filled statewide.

So I guess I need, occasionally the Chair asks this question, so I'm going to ask you, I need a little more clarity. So if 80% of the positions have been filled, is the 200 million then accounted for the, by eliminating the 20% of vacant positions. We're cutting 200 million. We're cutting 200 million out of the counties. Right. So can we cut 200 million out of the counties and they just eliminate vacant positions or is it going to cut into the 80% of the positions that are filled?

I would. I mean, that's definitely conversations we're going to have to have with the local health jurisdictions, as I mentioned, like at our level, and I know that there's some who may testify today, but I know that there are at our level, we'll be looking to repurpose or move folks into vacancies. You may, you may not have that ability to do that within local health jurisdictions, particularly on the size some local health jurisdictions. This is the funding they use to support these staff. So it's going to vary local health jurisdiction by local health jurisdiction. But for the most part, I would imagine it's going to be a difficult thing to absorb.

And I mean, I mean, these are the people who did our contact tracing, right.

Contact tracing, EPI's, possibly lab. Again, it's going to differ.

Well, that's why we're concerned. I mean, we just need to know and then it's on us. If we, if we damage the public health services to a significant degree in our 58 counties and something happens, they'll look to us. Thank you, Madam Chair.

Let's try a third time.

Okay. So just to mention a few other parts of our existing infrastructure that are still in place to respond to public health threats, particularly infectious diseases. So we talked about SaPHIRE, and there's also an ongoing 61.8 million appropriation for the disease surveillance, readiness, response, recovery and maintenance of IT operations program. You will see in the budget solutions that there's a cut of 6.9 million, still leaves about 54 million. And those cuts actually begin in the out years in 25/26. And so we decided to withdraw the cut from budget year in response to some concerns from the Department.

And there's a small cut of 3.8 million reversion savings from current year. There's also 18.1 million in budget year and 8.1 million annually thereafter in the Information Technology, Data Science, and Informatics Framework for a 21st Century Public Health System. It's a long name program and that also supports response to public health threats and workforce development.

So I just wanted to mention that. And I think also, you know, Mister Nunes has also mentioned that, you know, this is a starting point, right, in terms of what's on the table for May revise. And you mentioned that there are, you know, like there's concerns in your community, right? Like silicosis is a huge threat in your community. So I think that's you part of the process in the Legislature to give us guidance. What are the priorities that we want to make sure we keep and kind of take a deeper dive into the resources that we do still have in place? And is this sufficient to keep those priorities funded? And if not, what do we need to move around? And so we're totally open to that conversation.

No, thank you for that. Yeah, I think it's worrisome and I thank your honesty, honestly and saying like this will have an impact. We don't know how bad it's going to be, but it is going to have an impact. I mean, it is something that we're worried about personally on what's happening in my backyard, but just on preparation. Right. So definitely in the next couple. In the next week or two. Coming back to this conversation, please proceed.

Moving through the CYBHI funding, there were a couple different areas within our Department. The crisis response pilot program there was originally was a $35 million investment. There's a $1.5 million reduction in 24/25. I'm sorry, $13.5 million. I think it was.

In 22.

Yeah, sorry, 22. And so this was originally for the suicide prevention piece of it. As far as data collection went, we thought that there would be some systems that we could utilize this funding for, but ultimately, we didn't fill the systems like Cal Connect and others were the right systems to do the data collection, so we weren't going to utilize this particular funding. So we were able to.

Are we still going to be able to collect the data?

So it actually comes down to our inability to collect the data because suicide attempts are not a reportable condition. So that's really what it drives down to.

Talk to me a little bit more, because this is an LGBTQ+ caucus priority. So I'd like to get a little bit more information on this. The goal is to start - to have this be a reportable item so we can track it, it's a public health issue, and so forth. So tell me, in the past two years, what were we doing in the past few years to start collecting this data?

So with regard to the data that we can collect into CalREDIE, we're really bound to what's in Health and Safety Code Section 120130. And then so. And also Title 17 defines all of the infectious diseases that we're able to collect into CalREDIE. There were also some privacy concerns. From my understanding with utilizing Cal Connect, as it would involve identity and privacy concerns.

Privacy thing for LGBTQ+ people, again comes up. How are we going to address the issues in my community if I don't understand? Not for you. Overall, to all departments and HHS, we're not going to be like, my little queer kids are dying. They're dying by suicide, and we need to find a way to get ahead of it because they continue to die by suicide. I think we need to do a better job in figuring out and going past that excuse because we need to collect this information to be able to stop it.

We're not going to be able to do anything like, public health is made up of wonderful geniuses that know that we need data to examine and to address, and this is one of them. I mentioned this is a caucus priority for us. So it's something that in the next two subcommittees we'll be bringing back. And I'd like a little bit more. I would like a little bit more on this issue.

Understood.

Moving on to the next CYBHI issue, the public education and change campaign. We received 100 million one time from those funds to implement this campaign. We're pulling back some of that funding. So in 23/24 there's a reversion of 28.8 million and then an ongoing or. Sorry. Well, a reduction of the one time funding. 40 million in 24/25 and 5 million in 25/26.

Deputy Director, did we skip ADAP or is that down your list later?

The estimate. Oh, sorry. The 500 million from the early action. Sorry. Yes, that was the loan that was proposed at Governor's Budget. We proposed a $500 million loan that was adopted through early action. And we do have some other loans to discuss as far as solutions here, but there's not another ADAP loan related to that.

Department of Finance, maybe this is a question for you. Do we have. Of the. For. And I'm really excited about this one. We were able to. The expenditure authority for the additional 23 million to. For the various program enhancements from the ND epidemic request. Of that list, do we have an idea of what one of those. Jesus Christ. Do we have any idea which of those perhaps is ineligible to be funded through ADAP?

Yeah. So currently the ADAP Rebate Fund is essentially. There are state statute really limits the services that can be paid from that fund. Of the. What is it? Six proposals that were put forward, the harm reduction clearinghouse increased of 10 million would require statutory change, as would the TGI wellness and equity fund proposal for 5 million ongoing.

And the. Let me see here. There was 5 million for SB 954. That would also require a statutory change. There are other proposals that are more closely connected to the intent of the Rebate Fund, such as increasing the federal poverty level from 500% to 600% of the - or the eligibility rather to 600% of the federal poverty level. That would also require a statutory change potentially, but from an implementation perspective, much more straightforward. And then the health insurance premium cap should also be an item that would be more easily implemented.

Okay, but what we could do is just potentially add up the amount for all of this or a little less. Just add up how much this is going to cost and add that to the loan. Right. Because if you just say, hey, I want $515 million from ADAP loan and then the 15 million is to fund the other things that can't necessarily be fund from that loan that meets statutory requirements.

So we would have to consult with our legal Department. But I believe there is what the $5 million for SB 954 is structured in that manner.

What do you mean?

So it would be pulling from the loan amount according to. But I think the specifics around it might be getting worked out.

Department of Finance. Could we come back to see on the legality and on that one? Okay.

We'll get back to you. Thank you.

The next issue, the Office of Oral Health backfill at Governor's Budget. We received 30 million from Prop 56 funding for the Office of Oral Health Program at Governor's Budget to support kind of a deficit of Prop. 56 funds. We did a backfill of 4.6 million from the General Fund.

Given the budget situation at Governor's Budget or sorry, May revision, we're proposing to eliminate that backfill ongoing. So the 4.6 million will come out. Similar on the - similar-ish, on the skilled nursing facility audit shift at Governor's Budget, we had proposed a one time shift of $4 million from the General Fund to our Special Fund.

This is now a proposal to do that from an ongoing perspective, beginning now in 25/26. Some funding that we received for climate health surveillance programs, $10 million back in 22/23. We're doing a reversion of some of that funding. So 3.1 million ongoing beginning in 24/25 from that original 10 million that we received.

And then something that was mentioned earlier. As far as kind of additional support for public health, some funding was provided for maintenance and operations for our IT systems that were stood up during the COVID response. We were able to. So 61.8 million is available ongoing to support those systems.

We did identify some savings that are available in the current year. So there's a - of that amount, there's a $3.8 million reversion that's coming out of 23/24. But then there is a proposal for an ongoing reduction, not this year, not the budget year, but budget year plus one.

In 25/26 there'll be an ongoing reduction of 6.9 million out of that fund, or, sorry, from those funds. And then similar again on the IT side. Not only did we receive funding for maintenance and operations, but we received funding to modernize our IT systems. There was 18.1 million that was supporting 33 positions ongoing beginning in 25/26. So we'll kind of have a year to prep for this. How it will impact. There'll be, though a $10 million reduction ongoing to that funding that was provided.

And then, as I kind of mentioned, similar to the ADAP Rebate Fund loan that was provided at Governor's Budget, there's $140 million that's being proposed from loans from various special funds. The largest of which you'll see there is the Licensing and Certification Fund, of which 70 is coming from that. This will be loaned to the General Fund in 24/25 and then with a repayment schedule of 26/27.

Okay.

And then there are a number of miscellaneous kind of adjustments. We received additional funding from the JUUL Lab settlement that you see there in the agenda. There's adjustments to some reimbursement authority that we get from EPI and lab capacity, federal funding that was used to support COVID and other public health initiatives.

And then every may revision we do updates to our tobacco tax funding. So you see there some adjustments to our Prop 99 funds based on updates to revenue, miscellaneous adjustments of in various different Prop. 99 health accounts that we have.

Under the chapter legislation, I just have one question. The California Cancer Registry. We're potentially funding positions to report to the registry that could essentially go away if we do continue to fund it. Am I understanding that correctly? Earlier this year we heard a proposal for investment into the registry because funding is running out, but we're going to fund a position to report to the registry, but the registry is not getting supported and it could close.

Yeah. And I think I'll ask for program folks to come up and weigh in on that one a little bit because there is some funding that, like, I know there's been a conversation about what it takes to kind of. On the registry. I believe it was 800,000 to fully fund the registry, but I'm not sure if it would fully go away or not. Do you want to. Sorry about that. No, no. This is our program, folks.

Hello. Yes, now we are looking at other ways to fund the cancer registry to keep it flat funded. So we've redirected some funding this year from one of our other Proposition 99 accounts, and we're just looking at other solutions to keep it whole. But we have about an $800,000 deficit right now.

Okay. So are we going to see that? Am I.

We're still looking for solutions right now.

Okay. But there's potentially something coming out in the next two weeks for it.

We're still looking at ways to. Yeah.

Okay. Because I don't think it would make sense to fund a position first than funding the actual registry.

Yeah, we'll definitely take that back.

Okay. Senator. Any questions? No further questions on this. Just on the topic that we were talking about earlier, the harm reduction initiative, looking to see where we're going to right side them.

Yeah, I noted that conversation. I'll have to go back and have our program folks, but definitely can be available. If you have kind of those conversations next week as well, we can have them available.

Great. Okay, thank you. We're going to hold the items open. Move on to issue number two.

Great.

And you can really zoom through because we talked about it a little bit already but.

Absolutely, we have some very routine caseload adjustments. So for current year, the may revision reflects an increase of 20.1 million in local assistance, and in budget year, it reflects an increase of 10.7 million in local assistance.

Okay, hold the item open. Moving on to issue number three.

Okay, hold it open. Anything?

And then I believe the next one is for the genetic disease screening program.

I believe it's the WIC estimate, very similar to the ADAP estimate. Some case load adjustments. WIC participation's been changing slightly in California and nationally. This budget estimate, the current year revised estimate is 990,000 participants a month, which is a 0.22% decrease. And then 1 million is proposed. Roughly 1 million participants is proposed for budget year.

As a note, in April of 2024, we served 1 million recipients, which was the first time since August of 2018 that we've served a million recipients. And part of the adjustments are related to decrease in food expenditures based on slowing food inflation rates. And decreases related to, or sorry, from the May revision include a decrease of 2.5% compared sorry, to the Governor's Budget.

Yeah, the ....

The May revision estimate for GDSP. Again, similar caseload changes for 2023/24 will be 164.8 million, which is a decrease of 3 million compared to the 2024 Governor's Budget. And for budget expenditures in 24/25 totaling 176.8 million. It's a net decrease of 4.7 million compared to the 24/25 and decreases in both years are primarily attributed to lower prenatal screening program and newborn screening program caseload than was previously projected at the Governor's Budget.

And then finally, in our skilled nursing facilities, or, sorry, CHCQ estimate, we have a number of different changes related to those issues. There's $4 million ongoing or sorry, sorry. There's funds in there that's going to support mandated activities related to monitoring and enforcing skilled nursing facility minimum staffing requirements.

We talked a little bit about that ongoing shift of 4 million, and then we talked a little bit about the loan that's again, coming from the skilled nursing facility audit or, sorry, skilled nursing facility fund to the General Fund. So just some similar but minor changes to things that we've already kind of discussed with CACQ. I think that kind of is a high level of our estimates.

Sorry, I just lost track. They're out of order here.

Did I go out of order? I apologize.

It's okay. Perfect. So that was your last. Will, any comments overall for public health?

Will Owens, Legislative Analysts Office. So we have some kind of General overview comments, kind of echoing what some of my colleagues had mentioned earlier about the state of the overall budget, as well as maybe some specific comments as related to the future of public health proposed elimination.

So, as kind of mentioned, given the state's budget situation, the Governor's May revision includes not just one time and limited terminal funding reductions, but some reductions to ongoing services programs, as you kind of heard earlier with, like the Indian health grant program, for example, as well as now here with the future of public health dollars. So the Legislature is going to have to wait some of the trade offs, specifically as it relates to the reductions in funding for these ongoing programs.

Especially as it relates to core services like this, the future of public health funding, I'm sure you know. But just to give a little bit of context, how this funding came about is early on in the pandemic, there was kind of created this future public health workgroup that provided a number of recommendations on how a potential infusion of funding could be used to help shore up the state's public health system.

Particularly, they found that the state's public health system, after decades, the funding had been relatively stagnant, particularly with General Fund. Prior to this dollar amount, I think it averaged around like 5% of the budget for the Department of Public Health was General Fund. So the funding had been stagnant and was also relatively inflexible.

A lot of this funding is from special funds for very specific programs, very specific diseases, things like that. So it kind of limited the state's ability to respond to the pandemic, and that kind of came up, as you're well aware. So given the programmatic and planning efforts that have already gone underway because of this funding, primarily, as the Senator Roth noted, there's a lot of workforce. The majority of the state's $100 million in General Fund is for workforce, and counties are required to spend 70% of their allocation of that $200 million on workforce as well.

So with the elimination of this funding, it could definitely cause some disruption to public health activities. And as I mentioned, these are core activities, the 300 million. The intent of the funding was to bring public health funding up to a baseline service level, whereas prior to that, it had very limited to stagnant funding, like I said.

So these are some of the trade offs that the Legislature should consider, and our office is available to kind of weigh and help assist in assessing some of the impacts of what eliminating this funding would be. And I think you had also asked about Proposition 1 funding, particularly as it relates to the offsetting some of the impacts of the elimination of this funding.

So Proposition 1, the portion for up to 4% for the Department of Public Health, is specifically for population based prevention services as related to behavioral health, whereas currently the $100 million for the future of public health is, while I'm sure, includes some prevention services.

And the Department could speak a little bit more to that is broader, including things like infectious disease, laboratory IT services, things like that. That kind of extend beyond just population based behavioral health programming. But with that. Happy to answer questions.

Thank you, Will. Senator.

So I guess the key question for us is how do we maintain, essentially, capability to deal with the next crisis, whatever that essential. And how much is it going to cost? Essential core capability that we have on hand to deal with the next crisis. It could be tomorrow.

And how much is it going to cost and how long will it take us to ramp up with the additional capability that it will take to fully meet the crisis? And we just had a pandemic, so we, it's not like we haven't had something that is on a relatively massive scale. So that's what you all are going to have to help us deal with and make a decision about. Because when we deal with raw numbers, it's very easy to say, well, we've got $27 billion deficit we're going to cut, and it's 300 million here and it's 200 million there. But we really ought to be taking a little more granular look at, at what we're cutting.

And whether we have to keep something because we can't get it up to speed fast enough to deal with a major incident in the state. And whatever that level is, if it's 80% or if it's 70%, and then we know how much, we're going to tell us how much that's going to cost and then to be fully capable, how long is it going to take us to get from here to there and how much will that cost? And then we can make, I think these are semi intelligent questions. That's the only way I know to ask them, and then it's not for today, but we'll be revisiting this, I'm sure. Thank you, Madam Chair.

Thank you so much. Moving on to our next Department, State hospitals.

Please proceed.

Good afternoon. Stephanie Clendenin, Director for the Department of State Hospitals, and I'm joined by Chris Edens, who is our Chief Deputy Director of Program Services.

The Department of State Hospital's proposed budget for Fiscal Year 24-25 totals 3.4 million, which is a decrease of 55.6 million, or 2% from the 24-25 Governor's Budget with 25 proposed positions and budget year, with a majority of these reflecting converting limited-term positions to permanent.

We also reflect current year savings of 151.2 million related to changes in implementation timelines for new programs and bed capacity that's approved in prior budget acts. Among other savings, we are proposing the reversion of unused current year funds.

As a General Fund solution, the Department proposes to replace existing General Fund expenditure Authority of 1.9 million for the working drawings phase of the Central Utility plant Replacement project at our DSH Metropolitan State Hospital with 1.9 million of expenditure authority from the Public Building Construction Fund.

This proposal also includes provisional budget bill language to authorize the state public's work board to issue bonds to finance the cost of the design and construction of this project.

For a brief summary of the Department's May Revision program and caseload updates and budget change proposals. Overall, the Department is projecting a census of 8,163 by the end of fiscal year, the current fiscal year, and 92,67 across its programs by the end of budget year.

This increase is primarily related to continuing efforts to expand capacity for the treatment of incompetent to stand trial individuals. For our DSH Metropolitan Increased Secure Bed Capacity Project, we are reflecting an additional one-time savings in the current year of 3,901,000 due to changes in timeline for completing the work associated with the skilled nursing facility roofing project.

For the Enhanced Treatment Program staffing, we're reflecting 281,000 in current year savings for the enhanced treatment program unit at DSH Patton, and this is a unit to treat patients who are at the highest risk of violence and cannot be safely treated in a standard treatment environment.

This savings reflects the current anticipated timeline for completion of the construction for this project in July of 2024. For the mission-based review, direct care nursing and treatment team, and primary care proposals, we continue to work to hire the additional positions that were previously authorized by these proposals.

For nursing, we are reflecting an additional savings of 3.6 million in current year and for treatment team and primary care positions, we are reflecting an additional current year savings of 3.1 million.

The Department also proposes to delay 34.4 treatment team positions that are scheduled to phase in during 24-25 until July 1, 2027, which results in an additional General Fund savings of 8.2 million annually. This will allow the Department to continue to focus recruitment on the established positions and phase in additional positions at a later date.

The Department also proposes to revert 6.6 million General Fund that's also tied to the MBR treatment team proposal, and this was for the trailers for additional office space. For the patient-driven operating expense and equipment. The Department is reflecting the savings adjustment of 1.6 million in current year and 632,000 in budget year and ongoing.

This adjustment is due to updated census projections at May Revision. The Conditional Release Program for our non-SVP clients. The Department is reporting a caseload of 960 in 23-24, 938 in 24-25 and are reporting a current year savings of 2.6 million associated with hiring challenges by our providers for clinical staffing. Incompetent to stand trial solutions.

We're reporting an additional one-time current year savings of 118.3 million in current year, 45 million of that was re-appropriated from the Budget Act of 2022 and an additional one-time savings of 49.9 million in budget year associated with updated activation timelines for the JBCT or jail-based competency treatment and community-based restoration and diversion programs, and for county stakeholder workgroup grants that were not yet executed.

Additionally, the Department proposes to shift 129.5 million from 25-26 to Fiscal Year 26-27 to better align with anticipated future IST program implementation timelines and the Department continues to make great progress in implementing IST solutions to provide timely access to treatment for IST individuals and to expand community-based restoration and diversion opportunities.

As in May Revision, the Department reported an IST pending placement list of 397, which was a 21% reduction from the Governor's Budget. Allocations for employee compensation and staff benefits. We're requesting General Fund expenditure Authority of 108,000 in current year and $145,000 annually thereafter to reflect revised employee compensation costs and also request General Fund expenditure authority of 9,000 in current year and 11,000 annually thereafter to reflect revised employee benefit costs.

The Department requests two 2023 Budget act reversions. The first is 7.2 million General Fund for electronic health records due to updated project timelines and 2.2 million General Fund for our Health Care Provider Network. The May Revision includes three budget change proposals for the Department that are position authority-only requests. No funding is requested.

The first is for the data is for data compliance. We're requesting eight positions in budget year and ongoing to support data leadership structure, data operation, and data compliance. These resources will enable the Department to make greater data insights to better inform decision-making for the provision of treatment across our Integrated Behavioral Health System.

And this request will make permanent six two-year limited-term positions that were previously authorized in 22-23 to establish a data leadership team at the Department in an additional two positions needed to meet enhanced data capabilities required by recent legislation, policy, and equity initiatives across both state and federal level and the joint commission, which is DSH's accrediting body.

The last budget change proposal was for workers compensation staffing adjustment. We're requesting position authority for the conversion of seven limited term positions that were originally authorized in the 21-22 fiscal year to make them permanent and ongoing to address workers compensation workload. Oops, sorry, there's a third one. The SB 1034 increased workload.

DSH requests 10 positions in budget year and ongoing to support increased workload for the Department and its contracted provider for the Forensic Conditional Release Program for sexually violent predators resulting from the passage of SB 1034.

SB 1034 requires the Department to convene a committee of specified county representatives to obtain relevant assistance and consultation regarding securing a suitable housing in the community for each SVP patient approved for conditional release. These committees are in effect from the date of the con rep order to the date of the individual's placement into con rep.

These new requirements resulted in the establishment of new county-specific housing committee meetings that are open to the public, an increased number of court hearings, tasks and criteria tracking, reporting requirements and interagency coordination across multiple counties across the state. We have experienced additional workload to support these committees to ensure compliance with the Bagley-Keene Open Meeting Act.

And lastly, as it relates to capital outlay for the Coalinga New Activity Courtyard, the Department requests a supplemental appropriation of General Fund expenditure authority of 1.1 million and 24-25 due to procuring a new general contractor and associated construction delays.

I think you did that in one breath.

You wanted it quick.

Two questions on the same topic. The MBR, the Mission-Based Review Treatment Team.

Yes.

We're delaying 31.4, and I'm thinking about the 10,000 vacant positions we're looking to remove. Maybe have three questions here. Overall, I'd like to know which of those positions are under HHS. Two.

Which ones? Way more than two questions. Okay, I have four. Two. Are any of those positions connected to any chaptered legislation? Would it impact any of them? And then going back to this proposal adjustment, I'm seeing here an example that we can delay things outwards of three years. So, this proposal is delaying it to 2027.

And for the past 2 hours I've been asking, why can't we delay other things outwards 3 and 4? And I'm getting the response that, well, outward years, we need to balance everything and everything. I would like a uniform approach.

If you're coming to us and saying this is what we want to do, you can't pick and choose some of them to be able to delay, delay some of them to 2027 and others we can't do. So why can we delay this to 2027 but others we can't?

Joseph Donaldson, Department of Finance I think every Department, when we're looking at kind of their budgets and their operating expenses in the context of this year's budget, I think it's sometimes hard to view things with this than a uniform approach. Obviously, we have approaches with department state hospitals that might differ from other departments.

While we might be able to delay things to a degree to this level, with state hospitals, it may not be feasible with other departments. So, obviously we're looking at all departments holistically, but sometimes taking a same approach or one size fits all is not always feasible based on how each department operates.

I agree. You're right.

Definitely acknowledging the comments of noting the differences of solutions.

So I definitely agree you're right. Not everything is the same and different platforms and all that can be different. It may be more feasible, like you mentioned, for this Department than the other one.

I guess I'm still trying to figure out what the impact will be on our budget if we just delay versus cut and then still have the ability to cut in two years. If the budget is still, we're still in that deficit hole.

I think it depends on when looking at differences of items that were proposed for reduction or proposed delays, it's hard to kind of give an apples-to-apples comparison why those decisions were made across the board, you know, within the overall structure of the May Revise.

You know, we're trying to solve for both for budget year and budget year one, as well as trying to push ourselves in a good financial footing going forward. Based on how we structured, the Administration structured May Revise. It was based on the items for state hospitals.

It just worked that some of these things could be delayed, whereas other departments determination was to have these items reduced. So we can definitely provide more details on differences.