Assembly Budget Subcommittee No. 2 on Human Services

Good morning and welcome. This is the Assembly Budget Subcommittee 2 on Human Services issues. Today we will be discussing the Governor's May Revise proposal in child care and human services. We have part one on child care and part two on all other items in Sub 2's jurisdiction.

Before we invite our first panel to begin, I will make a few introductory comments and open it up to my colleagues if they would like to do the same. First, I would like to welcome Members of the Assembly who are joining us today who are here to understand so that they may have opportunities to ask questions about issues that are of concern to them. Second, I will keep my comments brief, as I know we have many items to cover.

I'd also like to hear from you all before the sun goes down at some point. It has truly been a roller coaster ride this year. When we started this budget process since January, we thought that California may be experiencing a small but healthy budget surplus. As this smoother budget year will not be realized, we are now facing what is one of the more difficult budget problems since the Great Recession.

However, we have learned much from those years and better understand the challenge and consequences before us. As this year will not spare any piece of this budget, I am committed to ensuring and fighting that our most vulnerable Californians stay housed, that our children are fed, and that this budget will not be disproportionately and unfairly balanced on the backs of California's most working poor and most service dependent populations.

It is not just, it is not what California should stand for when we balance our budget on the backs of our most vulnerable. In my mind, California is the model and should be the leader on every important issue, none more important than supporting our most vulnerable populations. So I welcome you all here today to the Assembly Budget Subcommittee 2. I look forward to hearing from you and standing with you in the days ahead. Now, with that, I would like to give the floor to our Majority Leader.

Good morning. Thank you, Assembly Member Jackson, as well as Speaker Rivas, for encouraging Members of the LWC to attend this hearing today. I'm grateful for your partnership. The LWC has consistently made child care our very first priority for over a decade.

So you won't be shocked to hear we're extremely disappointed and concerned that the 2025 May Revise fails to adopt the urgent need for child care rate reform and slot expansions. We understand that these are hard decisions to be made in the budget, but this proposal breaks a promise.

A promise that was made to Californians, to working families and childcare providers who are making progress toward a system worthy of California status as the world's fourth largest economy. The LWC is calling on the Legislature's budget leaders to reject all cuts to child care and to restore the cost of living adjustment known as the COLA.

We're calling for a budget that keeps the state promise to children, to families, and to providers by including the adoption of the actual cost of rate methodology and that funds additional progress towards the agreed upon 200,000 new slots. The May Revision doesn't include additional access to subsidized child care for California working families.

On Mother's Day 2021, Governor Newsom promised California moms an additional 200,000 child care slots. Child care slots that are based on a family's need for care so they can work to support themselves. This is not a handout. Remember, this is not a handout. It's an expenditure that will keep these families from needing other public assistance.

As of today, we're still 64,000 slots short of that promise with more than 2 million eligible children still lack access to child care subsidies, so it's critical that we expand access. And lastly, we're disappointed in the reduced funding for the Child Care Bridge Program, a program that provides critical support for foster parents.

We find this cut cruel, considering there are more than 15,000 kids still waiting home placement out of over 60,000 kids in California's foster care system. Mr. Chairman, we know you share our commitment to having our budget reflect our values. A budget that reflects child care as the backbone of a thriving economy and a critical need for everyday working families to survive. It is an essential investment in today's families who are struggling to make ends meet and one of the most essential investments is our state's future.

If we fail to act now, it'll make the existing child care crisis facing providers and families worse. It will make it worse. Break promises made. It'll break promises made and undue years of progress. We have worked so hard with the Women's Caucus for years on child care, and we are not giving up.

As all of our leaders speak about helping Californians afford the life in the Golden State, California can't afford to turn back on the very system that helps parents work and the children to thrive. Words are not enough. Thank you for your time today, Mr. Chairman.

Thank you very much, Majority Leader. Assembly Member Patel.

Good morning. And thank you, Chair Jackson, for allowing us to be here as guests on this Committee, and many thanks to the Speaker for encouraging Assembly Members to attend all of these budget sessions. In tough budget times like these, we have a unique opportunity to really carefully examine what we have before us and make sure that the budget aligns with our values. We need to develop and support a more deliberate budget process where we carefully examine all the supports and services that cover actual cost that the providers are experiencing.

This is not a time to just cut 5% here, 10% there, or 8% across the board where those cuts are experienced like blunt force objects. We need to be more strategic. We need to look at these budgets, make sure that they're supporting each other, that the budgets align with each other in different sectors of our economy.

We need to support and invest in our women, our children, and our working families because we know that this investment will secure a stronger budget long term for us. It will pay dividends back into California. We will see social mobility, we will see that economic mobility, and then our families will be able to realize and return back to our strong California economy. We're trying to build a brighter future for all. And I echo the sentiments of my colleague and want to make sure that we push for everything that our working families need. Thank you.

Thank you very much, Assembly Member. There is no doubt that we cannot, we cannot delay continued investments for our children. Currently, right now, the outcomes for our children and for working families, and particularly single mothers, are not looking good.

And so no matter what, no matter how bad the budget gets, I think this is a perfect opportunity to reestablish our priorities. And one of them is, first, we need to make sure we take care of our children, and then we need to take care of our seniors, and then making sure that our population remains stable.

So with that, we look forward to having more discussions on this on this topic. I would like to bring up our first our panel at this time, the administration, to go over the Governor's May Revise proposal on child care. And you may begin when you're ready.

Thank you so much. Good morning, Mr. Chair and Members. Jennifer Troia. I'm the Director, Department of Social Services. It's good to be here with you this morning on this important topic. We've had a number of hearings earlier this year related to the child care and development system and discussed the nearly doubling of total funding over the last five years for the system and increasing of the maximum number of children served annually from 294,000 in 1920 to more than 378,000 in 24-25.

We have also implemented our first and subsequent memorandums of understanding with the Child Care Providers United Union, and we've taken initial steps to unify our reimbursement rate structures. We have also spent a significant amount of time talking about the alternative methodology and the progress we're making toward rate reform. Today we'll focus on the May Revision, which includes $6.8 billion in total funding in 24-25 for child care and development, and $6.4 billion in 25-26, which does not reflect a change from the Governor's Budget for 25-26.

These funding levels include funding to maintain 146,000 new child care slots that have been added since 21-22 and maintain existing rate levels inclusive of the cost of care plus payments. The budget also includes funds that are needed to support implementation of a change in policy that will be coming in the future related to prospectively paying child providers.

So at the beginning of the month. This is now federally required under a new federal federal rule. However, we have a waiver from the federal government in terms of the timing of implementation because it will be very complicated to implement. That waiver goes through August 2026, but the May Revision includes funding to begin the administrative work to prepare for those changes. More specifically, it includes $43.8 million to support administrative costs for local agencies, 8.2 million automation costs, and six state positions to support the workload to prepare for the change.

The May Revision also includes $21.8 million in one time federal funds to support startup automation activities to move toward the single rate structure. To address the projected budget shortfall, the May Revision includes two General Fund solutions. The first is the suspension, as you referenced, of the 25-26 cost of living adjustments for child care, which saves about $60 million in General Fund. The second is a reduction to the Emergency Child Care Bridge Program for foster youth by 42.7 million.

To be sure that it is clear, I want to emphasize that the reduction to the Emergency Child Care Bridge Program is intended to align with utilization and not to disenroll any children who are currently in the program or stop any children who would otherwise have accessed it from accessing it. So we have sometimes referred to that as a sort of right sizing with expectations of what will actually be expended.

Lastly, the May Revision includes trailer bill language to extend authority for the cost of care plus payments so that we can maintain the current rate levels and trailer bill language to effectuate the suspension of the COLA, as well as an additional budget change proposal related to making sure we continue the ability to provide direct deposit to providers. I will leave it there. Happy to answer your questions at the appropriate time, but I know there are others who will also be presenting.

Department of Finance.

Good morning. Tamar Weber, Department of Finance. Happy to take any questions.

LAO.

Good morning, Mr. Chair, Members. Dylan Hawksworth-Lutzow with the LAO. May Revision includes both new proposals and new solutions. Two of these proposals, totaling $114.8 million, relate to existing administrative costs of making payments to child care providers and were included in previous budgets.

The other two are proposed increases to support changes in how child care providers are paid, for which we have more questions. The proposed suspension of the COLA for child care and preschool does seem reasonable to us. We are currently still investigating these proposals.

However, we have one recommendation and some comments for the Legislature to consider. Regarding the 21.8 million in federal funds for rate reform support costs, we have concerns about the proposed exemption from review or approval from the Department of Technology.

As a rule, our office typically recommends rejecting similar exemptions, as that review can help prevent projects from exceeding their proposed timelines and budgets. So we do recommend rejecting that particular language. The Legislature may want to consider additional oversight on some of these proposals.

We are not yet certain how the total proposed funding amounts for the rate reform support costs and the prospective payments for provider proposals, how those total costs were arrived at and what activities those proposals would cover. As we have not yet seen final details for the alternative methodology as well, we have questions about what exactly the $21.8 million for rate reform support would be used for.

Regarding the prospective payments, the proposal includes $43.8 million in ongoing funds, and we are still following up on what those funds funds will be used for in the budget year given the state has a waiver for this requirement until August 2026. The Legislature could consider requiring more details regarding automation activities and prospective payments as part of the existing statutorily required quarterly reports on rate reform, which are required through January 2026. The Legislature could also consider extending these reporting requirements until these projects are completed. Thank you.

Department of Education.

Thank you so much, Mr. Chair, Members. Virginia Early on behalf of the California Department of Education and the State Superintendent of Public Instruction Tony Thurmond. CDE appreciates that the may revise continues to prioritize early education, especially in the tough budget environment we're in.

We're also happy to see TK continue to be implemented, especially with a lower ratio, and happy to see that the cost of care plus rates are proposed to be continued. We hear regularly from our contractors that higher rates beyond these are needed and that the low reimbursement rate is making it challenging to operate programs.

While we are disappointed that the COLA dollars are swept, we appreciate the administration retaining the majority of the state preschool appropriation so that there are potentially funds that can be put into expanded access or bargained rate increases. As the new rates are finalized, CDE will be carefully looking at them to make sure that the amount contractors get for their classrooms will not go down.

We'd also like to flag that while the May Revise proposes new resources for DSS to make data system changes to implement the alternative methodology, similar and needed resources are not proposed for CDE in this May Revision. As we've previously shared, CDE has an ongoing need of at least $3.5 million and 24 positions ongoing to implement rate reform.

In terms of prospective pay, if the Legislature is interested in extending that proposal to also apply to the CDE operated California State Preschool Program, we would also need resources both to prepare for implementation and do implementation at CDE, but also resources for our state preschool contractors, similar to what's in the May Revise for the DSS contractor side.

Figuring out prospective pay is incredibly complex because it would require the state to allocate funds in one budget year across multiple fiscal years and then, as enrollment attendance changes, true up amounts after the fact. And they'll also require guidance and ongoing TA to ensure providers truly receive payments in advance and that payments are then reconciled to services.

So it's fairly complex. We're happy to develop an estimate of resource needs for both CDE and state preschool, but we would need additional details from the administration regarding their proposal to make sure that our estimate methodologies are aligned. I want to close by highlighting a few items not addressed in the May Revise that we would like to see addressed in the final budget.

First of all, the May Revise continues to propose a $9.2 million cut to funds that were intended to support state preschool programs to better serve children with disabilities, and it proposes to reallocate these funds to support minor grant increases to 58 LEAs with existing inclusive Early Education Expansion Grant Program.

This proposal takes essential supports away from all 644 state preschool contractors and also removes efficiencies for those 58 grantees, as they will need to themselves create resources to fill this gap. To the extent the Legislature is interested in increasing allocations for current Inclusive Early Education Expansion Grant grantees, those 58, we recommend finding a different funding source.

We'd also like to uplift feedback we've heard about the urgent need to provide additional time to our Universal Pre K Planning and Implementation grantees, Early Education Teacher Development grantees, and Universal Pre K Mixed Delivery grantees to spend their funds to support intentional use of planning and training dollars and also foster those key collaboration and local relationships needed for successful implementation of Universal Pre K beyond the first year of TK implementation.

The Legislature funded these grantees for specific activities, and in retrospect, the timeline has just taken a little bit longer than was originally anticipated and so having more time would be very helpful. And finally, we would just like to highlight the need for funding the California State Preschool Program based on enrollment. Thank you so much for your time, and happy to answer questions.

Thank you very much. First, I want to appreciate that this May Revision doesn't cut child care rates or services. As you know, destabilizing families is a non-starter for this Subcommittee, and I appreciate the shared value with the Governor, but I remain concerned about the destabilizing effects of what is not in the May Revision.

No progress on the recognizing the true cost of care in our rate setting policy, no trailer bill proposal for the alternative methodology, no relief for fire impacted providers, and no timeline for resuming our progress on new slots in our new rate system. So we disagree with the administration. The alternative methodology must be codified.

It's supposed to be the backbone of our child care fiscal policy for the future, so I cannot imagine us not having this codified in this budget. And so I will be asking LAO to assist us in creating some language to ensure that we codify and make sure that the Legislature is a part of the final approval of the alternative methodology as well. Are there any questions or comments from Members? Majority Leader.

I just want to thank you very much, and I thank the panel that's here today. I think we all need to sit down and make this work. I want to go back with the message to the Women's Caucus that we hear you and then we're going to work our hardest to make sure we come up to a solution that works for all of us. I want to thank you, Mr. Chairman and the Speaker, for having us today. And unfortunately I have another meeting to attend, so thank you for letting me participate. Thank you.

Thank you very much. Question in terms of, I was fortunate enough to visit some of the providers in Altadena. And there are some very unique issues facing those providers, such as no access to loan programs that they can qualify for to help them with reopening those slots, making sure that we are bypassing local fire marshal requirements that are making it almost impossible to reopen childcare centers as well in the community. And so my question is what are we doing specifically for childcare providers, both center based and home based, to help them reopen and be able to continue their services?

Good morning, Chair Jackson. Thank you for your question. Claire Ramsey with the Department of Social Services. The Department actually has been very engaged with childcare providers in Altadena and who experienced either destroyed facilities or damaged facilities or were displaced by the Eaton Fire

This has included a lot of work by our Community Care Licensing Division to reach out to child care providers to understand the status, to understand what their ongoing needs have been, and then to work with those particular providers specifically to help them move forward, whether that is in a temporary location, whether that is them letting us know they're not going to be operating for some period of time.

We have had examples where individual facilities have worked with us and with the local jurisdiction, including their local city or town and their local fire jurisdiction, to basically come to a place where everything could be granted. And sometimes that is a complex set of steps that people need to take.

But we are working really hard to prioritize and expedite licensing and then to work closely with the local jurisdictions to overcome any barriers that people may be experiencing. If there are particular providers that feel that they need additional support, we're very open to hearing specifically who those providers are and then to reaching out to work more closely with them.

Most certainly. I would like to make sure that my office facilitates that so that we can make sure that we have a follow up so that you can hear their specific needs. Particularly, if I am a home based, home based child care provider and I lost my home, then number one, how do I secure another home and how do we make sure that during an emergency basis when maybe CSS has given a temporary permit to license for that to happen, but that we prohibit also landlords from prohibiting those services to be conducted as well?

Right. Because we are seeing that there are some landlords who, once they know that they plan on using it for also child care services, that they are denied opportunities to utilize the home. Secondly, what financial assistance are we providing so that they can replace all of the supplies and all of the, all of the equipment and all of the things that are necessary to make sure that they're providing the high quality services that they were able to provide as well?

And certainly, we are still having issues with local fire marshals. And so we need to find a way to ensure that, again, we should be moving all barriers out the way so that we can get children being served so that families can rebuild themselves. Right. And so I would love for us to make sure that we address that in this budget, because if we don't, it's going to be nearly impossible to make adjustments after the fact.

So want to make sure that you know that this is a top priority and that I ask for a commitment to help work through this and find ways and working with Department of Finance to making sure that we address these unique situations that are very specific to the devastation of the fires as well.

Obviously this Subcommittee is very, is opposed to the suspension of the child care and preschool statutory COLAs. Our system is fragile, is hanging on by a thread already, and to risk another year of this type of fragile system is quite concerning. And so I ask that we work together to find ways to ensure that we can at least do the COLA while we continue to negotiate on alternative methodology for for the future. Trying to see if there's anything... Any other any questions? Dr. Sharp-Collins.

Thank you, Mr. Chair. I don't have a question. I just wanted to add on to what you were just saying and actually asking if we can expand that to not only look at things pertaining to the fires, but really all natural disasters, particularly coming from San Diego.

We had a historic flood last year, and we have a lot of home based childcare programs and other child care facilities that are still trying to recover and some of them are not back online. So I'm asking, I know we have the fires, but if we can expand that also just to all natural disasters, I would really appreciate that.

Yes, we're happy to also, if there's specific facilities that you'd like us to reach out to, we're happy to take those names.

Thank you for that, Doctor. Why does the May Revision fund state agency prep for prospective pay, but there's no policy for the actual prospective pay?

There is already a federal requirement for us to implement prospective pay. Because it is really complex to implement, the federal government has given us additional time to prepare for its implementation. So part of what we are funding now is that preparation consideration.

While there are some details that will need to be enacted in statute, more specifically in time for implementation to truly take effect, it is also the case that there are some things about the policy that we already know from the federal government in terms of the basics of how it will need to operate. And so we can begin to work, both ourselves and to staff up for ourselves and at the local level, in preparation, knowing the outlines of what is already known based on the federal requirements.

And I notice here that the May Revise provides 51.9 million for CDSS and local agency administration costs that are associated with a plan shift to prospective child care payments. I mean, can you tell me your the logic? And I'm not sure if this is Department of Finance.

But of course, as you are making long term reductions, you're also making additions, additional expenditures. And so why are we prioritizing administration costs over making sure that we can get childcare and preschool COLAs? What's the rationale for that?

I can answer a little bit just of the context for the need for the funding, and then I'll give it to finance to answer the questions on the rationale. So just to add a little bit more detail, of the total funding, 43.8 million is to support the local administration and 8.2 million is automation costs.

On the contractor side, we assume that they will actually need to employ new staff, like expanding their provider payment departments, to address the reconciliation process that will be coming. So this is funding that allows us to both automate and staff up so that we can be prepared to implement in time for when the federal waiver expires. So that's context I want to provide. And in terms of rationale, I'll hand it to Finance.

Tamar Weber, Department of Finance. So as the Director explained, our understanding is that it's going to be a requirement for us to start paying providers prospectively in 26-27, as dictated by the federal rule. So given that these startup costs are necessary for the agencies and contractors. If we're going to make it a requirement, we felt they needed the administrative costs to be able to start preparing to be able to provide that service in line with the federal requirement.

Okay, thank you for that. Anything else? LAO, is there anything else you would like to add? We are good on that. Department of Education, is there anything additional you would like to add?

No, just again, if prospective pay is not in the budget for CDE, but if the intention is that it be in the budget, we would also need similar resources to what is in the May Revision for DSS.

Department of Finance, is there a distinction between the prospective pay for CDSS and compared to CDE? Is it assumed that you are proposing to do one for one but not the other?

So the reason that prospective pay is included in the budget for the child care programs is that it's tied to requirements for the Child Care Development Fund awards specifically. So because the child care programs at DSS receive those funds, it's a requirement for those programs to implement. And I will let my colleague speak to any requirements that may be on the preschool side.

Yeah, my colleague just said. Oh, it wasn't on. That it's not a requirement for preschool at this moment, so that's why it's not included in the budget.

Okay, thank you for that. But for parity sake, I think we should probably take another look at it so that we can make sure that we're continuing. Again, these are still whole communities, right? We don't want to act in silos. It's time for us to make sure that we are doing more things seamlessly as we are moving forward. But thank you so much for that. I think that is all that I have in terms of questions. Anything else? Doctor, you good? So we can probably move into public comment.

So what we're going to do is we're going to have a public comment, but to lead us off on public comment, we're going to have CCPU and EveryChild California lead us off with two minutes each, and then we ask everyone else to please head towards the microphone to line up for public comment.

Again, CCPU and Every Child California will have two minutes and then after that, each person after that will be limited to one minute each for public comment. Again, we have a hard stop at 11:00am at which time we will recess until 1:30 this afternoon to cover all other items under Subcommitee 2, you may begin.

Please state your name and affiliation, please.

Okay. Good morning. Good morning everyone. My name is Felisa Wright. I'm a Member of the SEIU Local 99 and CCPU. For the past 15 years, I ran a child care business in Altadena. Unfortunately, I lost everything in the Eaton fire this January. Both my home and my business is gone.

My childcare facility was like a classroom where children learn, came to learn their letters, sounds and numbers and a host of other things. Outside there was a play yard equipped with bikes, slides and sandboxes. I also prepared home cooked meals in the kitchen every day.

It was a place where children felt safe and where working families can depend on quality childcare. For months after the fire, my family and I remain displaced. My recovery journey has felt like an endless maze filled with challenges and numerous visits of the disaster center in Pasadena.

I am also still dealing with emotional and psychological trauma from my loss. I have followed all the steps given to me, yet I still have been denied from small business loans and FEMA assistance as well. I've been covering expenses from hotels, clothing, food and other necessities and it's been exhausting. I feel like I'm near my breaking point.

I feel like I'm near my breaking point. But I'm doing my best to get to try to get back on to work and continue to provide care for families in my community. That's what I love to do.

The reality is the fires devastated an already fragile childcare workforce because we earn an average of seven to $10 an hour.

If providers have been compensated fairly for the actual cost of care caring for a child over the years, I believe I would have built up reserve that would give me some breathing room and help me afford some of the things I've lost. Child care providers affected by the fires urgently need support to rebuild our lives and businesses.

This support should include access to affordable housing, financial assistance and streamline process to reopening our facilities. We need the state to demonstrate a sense of urgency in helping child care providers escape poverty.

There has been no progress in implementing a true cost of care model and no immediate measures to ensure that providers like me can support our families while doing the work we love. I urge you to continue to work with us to truly transform the child care industry in California by ensuring providers earn the true cost of care.

Thank you.

Thank you. Name and affiliation, please.

Good morning, I'm Michelle Kumar, family child care provider and Member of UDW and Child Care Provider United. Governor Newsom's May Revise as devastating to family child care providers. It threatens to reduce access, cut funding and ignore the law that says we must be paid the true cost of care.

I've cared for children in my home for 38 years. I open early, I close late. I do it all, cooking, cleaning, educated and loving them. But Governor Newsom's May Revise would freeze providers pay, cut access to care. We've been working at 2018 pay rates with 2025 prices.

That means providers like me are going into debt and just to keep caring for our communities. California is the fourth largest economy in the world, but the budget says child care is optional and that's wrong. Without us, parents can't work and children lose critical early access.

We urge you to reject the broken budget and fund childcare at the true cost of care. Our families and our futures depend on it. Thank you.

Thank you. Name and affiliation, please.

Good morning. My name is Alana Lewis and thank you for this opportunity to stand before you. I am a Member of the SEIU and CCPU Union for Childcare Providers. I live in the City of Altadena, which you are aware that was destroyed by fire. Our community is devastating.

It's heartbreaking to look at your home and not only your home, but your business to be destroyed. My home is still standing, but it's inhabitable. I cannot live there at this point in time. I have been relocated since January 7th of 2025. Relocated and dislocated because of the fires.

When I went in my home, the sith was so thick that it got into my tennis shoes. That's how bad the sith and the smoke was. My backyard was so severely damaged that the concrete wall fell and all of my daycare toys were destroyed.

I am here asking that you guys would please not only hear our story, but feel our pain as well. Let's see, where am I? I'm sorry. I lost my place because I wanted to say this from my heart. I didn't want to read this.

As far as the action that we are asking is, we're asking that you remember us when you sit down and you do your budget or whatever it is that you have to do, but remember not only that we were devastated by fires, but that children and their families was misplaced and dislocated. Because of the fires. Okay.

All right. So that's all I want to say. I could say a whole lot, but I just wanted to say it from my heart. All right.

I know you can say a whole lot, girl.

Thank you.

Name and affiliation, please.

Good morning, Chair Jackson and Members of the Committee. My name is Alicia Hatfield and I'm with Every Child California representing early learning and care providers serving families across the state.

We recognize the challenging decisions reflected in the May Revision and look forward to working with the legislature to strengthen four key areas that are foundational to a stable and equitable learning system. First, we appreciate the administration's continued investment in developing a new reimbursement rate structure based on the alternative methodology.

However, the May Revision fails to codify the methodology or commit to setting provider rates based on its outputs. We urge the legislature to act where the May Revision has been silent, codify the alternative methodology and statute and direct the Administration to to begin rate setting based on its outputs.

This is essential to ensure the equity, transparency and fiscal stability that California's early childhood system deserves. Second, we need a fire impact response plan for child care homes and centers. When all disasters strike we have clear systems to help K through 12 students return to their classrooms and routines.

But our youngest children, those early learners, are often left out. Their developing brains are especially sensitive and vulnerable to disruption and loss of care. With another fire season approaching, we must ensure these children and providers are not forgotten. Third, it's time to adopt enrollment based reimbursement.

The May Revision takes a step by preparing for prospective payment, but stops short of proposing it. Reimbursing based on attendance penalizes providers serving families facing housing instability, health challenges or poverty. Children deserve to have their spot held, a place where they are known, nurtured and safe.

Finally, we urge you to honor the CCPU bargaining table not just as a procedural step, but as a reflection of California's values. Let's pause, listen and partner with providers to ensure fair living wages for the vital work that they take on helping us all raise our children. Thank you.

Thank you very much. Name and affiliation, please.

Good morning. Julia Forte Frudden, Senior Policy Analyst at the Child Care Law Center, where a Member of the EC Coalition and Parent Voices California aligns with our comments.

Making sure that child care providers are paid fairly and families have the affordable child care they need will not only protect our communities from harmful federal actions and threats, but will also have an immediate positive impact on all Californians. We support the legislators leadership on increasing child care providers pay starting July 1, 2025.

Rejecting the elimination of the child care COLA, putting key aspects of fair pay into state law like paying based on enrollment rather than attendance and ending the current payment method which suppresses providers wages, funding the remaining promised affordable childcare spaces adding additional to meet the family to meet eligible families needs and including targeted support for child care providers impacted by the LA fires.

We also asked the legislator to analyze the underutilization of the Emergency Bridge Program before making any cuts to ensure there's no harm done and unnecessary harm done to children and families in foster care. Additionally, we urge the legislator to help meet the urgent needs of families and childcare providers by implementing revenue generating solutions.

Taxes are how Californians care for and protect each other. Thank you.

Thank you. Name and affiliation please.

Good morning Sara Bachez with Children Now we really appreciate your leadership and in alignment with the ECE Coalition we want to make sure that providers are held harmless from any transition to a new methodology that they don't then experience another form of reduction.

We hope and urge you to seek to establish an aspirational goal as we transition to a new methodology to fund that actually grows and provides additional supports to families and providers when the economy recovers. Thank you.

Thank you. Name and affiliation please.

Good morning Chair and Members. My name is Jeannette Carpenter. I'm here on behalf of Child Action. We serve 17,000 children and 9,000 of their families in Sacramento County. We raise serious concerns about the proposed cuts to the Emergency Child Care Bridge Program for foster children.

The proposed 42.7 million General Fund reduction in 25-26 and a further 51 million ongoing cut to the Bridge Program would have devastating consequences for our most vulnerable children. This trauma informed program has helped stabilize placements and improve outcomes. Cutting it would undermine years of progress. Please think of our children and families. Thank you.

Thank you. Name and affiliation please.

Good morning. Monique Ramos on behalf of the ECE Coalition, we want to thank the Committee and the Legislative Women's Caucus for their tireless support on this topic. It's been a long road and you've been with us for a long way. We just want to remind everyone this started with a vision.

A vision of a system that was going to take years to implement and was going to get us to fair pay. It was envisioned like LCFF. It was envisioned like the DSS Alternative Rate Model. The goal is not to reach the total dollar amount this year in the midst of a fiscal crisis.

The goal is to ensure that providers are fairly inadequately paid for their work and to lift this workforce up into a livable wage and to something that's honored as a profession. So as we close out this budget over the next several weeks, we request that everybody remember the larger goal of what we're trying to accomplish. Thank you.

Thank you. Name and affiliation please.

Good morning. Darby Kernan representing the First Five Association which represents the individual First Fives in all 58 counties. We would like to associate our comments with the ECE Coalition partners. Thank you.

Thank you. Name and affiliation please.

Good morning. Mckenzie Richardson, Director of Government Affairs for Thriving Families California. We are also a Member of the ECE Coalition and would like to align our comments. Additionally, we would like to lift up the need for a a cost of living adjustment for childcare providers this year and increasing their rates.

I'll just remind the Committee that The Cost of Care Plus was formulated and created in 2023 before being implemented in 2024, which makes that adjustment rate two years old already. And as we know, inflation and cost of living and poverty continues to rise.

So as we continue to move towards the vision, as the ECE Coalition said, just want to lift up the importance of also supporting the the providers this year and ensuring that they can keep their businesses open so they can continue to serve families and help families continue to thrive in California. Thank you.

Thank you. Name and affiliation please.

Mr. Chair and Members, Courtney Jensen, on behalf of the Low Income Investment Fund, we're continuing- we are members of the ECE Coalition align our comments with the Coalition. We are also continuing to request Trailer Bill Language to ensure childcare providers are not paying large tax bills on their facilities grants that they're receiving through the Infrastructure Grant Fund at CDSS

We believe this is a low cost, no cost proposal that could make a huge impact for child care providers who are receiving those facilities grants. I also, Mr. Chair, wanted to raise up your comments about the need for funding to recover from natural disasters.

The Infrastructure Grant Fund could be a natural place at CDSS to facilitate emergency funding for child care providers facilities needs. We have already been working with providers who received facilities grants who experienced an impact from the LA fires.

And as experts working with providers throughout the state on their facilities needs, we stand ready to partner with you on that issue in however we can help. Thank you.

Thank you. Name and affiliation please.

Hi Dr. LaWanda Wesley, Child Care Resource Center. Align my comments with the ECE budget as we're a part of that organization.

Just want to share that Child Care Resource Center serves 122,000 children, families and providers in Northern Los Angeles San Bernardino county and we want to also say we want to ensure that families have access to child care by making sure that we stabilize the workforce through fair pay.

I actually was a provider who had to leave the field because I was not able to get a fair wage. So this is critical and we need to make budget decisions now so that we have long term investments later.

I also want to just lift up quickly the need to increase access by ensuring that presumptive eligibility is also coupled. With enrollment, not attendance because if not. That is another additional reduction in cut to providers pay and then lastly ensuring to sustain them, the COLA. The COLA is critical to hold them.

We have cost pressures that are going up between tariffs and operating cost of business and then addressing this as both a gender and racial issue that needs to end as soon as possible. I complete my comments. Thank you.

Thank you. Name and affiliation please.

Good morning Chair, Members of the Committee. I'm Barbara Schmitz, I work for First 5 California. I just want to take a second to thank the Committee and the Chair for your deep knowledge and your commitment to these issues. It's very, very much appreciated. I want to align our comments with those from CCRC and the ECE Coalition.

Thank you so much.

Thank you. Name and affiliation please.

Good morning. Andrew Avila of Early Edge California. We first want to express our appreciation. For the leadership in this room, the Legislature and that Administration and urge you all to fulfill the promise of the alternative methodology. Although we appreciate the progress and the investments made so far, we do have concerns with what is being proposed.

Specifically the use of the BLS data for provider compensation, categorizing four year olds as school age children and paying family friend and neighbor providers less than half of those of family child care providers. We also want to express our great concern with the suspension of the much needed COLA.

We do align our voices with the ECE Budget Coalition. Thank you. Thank you.

Name and affiliation please.

Luan Nguyen, the Coalition of California Welfare Rights Organization. We are a nonprofit that works with legal aid organizations that serve family on public benefits. And so the CalWork Stage one, stage two, Stage three are within our domain.

But beyond that, because our families are so low income in the programs, they're generally entitled to their choice of the various child care programs. And that's how these conversations impact us. As I think about childcare very broadly.

You know, like it's just, it's the building block of everything else, right attachment and safety for children is the building block of a healthy society and funding needs to be considered for that. And which is why we're so grateful to the Legislative Women's Caucus for their support and very broadly, we're in a tough budget situation.

And that's why we're here having the conversation about freezing of COLAs and everything else that we're talking about, cuts to other programs. So if we are to solve this problem on a broader level and to make sure that people are paid for the work that the very important work that they do, we need revenue.

And I know that SEIU has led a letter and a campaign to increase revenue and over 100 organizations have signed on to that letter to increase revenue because revenue is what we need in order to fund the things that we're all opposed to here today.

And so we urge you to think about revenue increases to make sure that providers are paid and children are taken care of. Thank you.

Thank you. Name and affiliation, please.

Yep. Good morning chair, Members and staff of the Committee. My name is Dubrea Sanders with Catalyst California. We want to align our comments with the ECE Coalition. Also calling for the legislature to continue to work with the ECE Coalition to achieve and make earnest steps towards an alternative rate methodology.

Also making sure that that alternative methodology rejects the Bureau of Labor Statistics as well as rejecting the proposal to utilize only five regions and instead be more aligned with other models that include at least seven.

As well as rejecting the proposal to move four year old children into the school age category and rejecting the proposal to pay family, friend and neighbor providers half of the family child care rate. There's no data to support this. We also would reject ask to reject the suspension of the child care cost of living COLA.

Thank you so much for your time.

But my problem is I haven't seen any cookies in my office yet. But thank you for your comments.

Cookies and banana nut bread.

Uh huh. I'm sorry. Name and affiliation, please.

Good morning. Bryant Miramontes, the American Federation of State County Municipal Employees. Just want to align our comments with CCPU and also urge rejection of the elimination of the COLA. Instead include rate reform. Thank you.

Thank you. Name and affiliation, please.

My name is Racine Reese and I am a licensed family child care provider from San Bernardino county for 25 years. I'm here with Child Care Providers United. I want to say that I align my comments with Child Care Providers United.

But I also wanted to echo what the representative from First 5 said and about the appreciation for the involvement activeness of this committee in our concerns. So I just wanted to say thank you for that.

Thank you. Name and Affiliation please.

Greetings Dr. Jackson and Members of the Committee. My name is Amesha Griffin. I am a family child care provider out of San Bernardino county with a over 25 years in business in the high desert Apple Valley, California. And I align my comments with the CCPU speakers that spoke earlier. Thank you.

Thank you. Name and affiliation, please.

Hello, my name is Allison Davis and I am a proud childcare provider for 14 years and also a proud UDW Member. I also want to add that I'm also a mom of five and I can speak.

Five?

I'm a mom of five. Yes, yes.

And I can speak with assurance that I'm not the only parent in this room. Which is so important to say because I think it's very important to realize that in the midst of some shaky financial times, it's very important to remember that childcare providers, we are the workforce behind the workforce.

A parent can't go to work and do their job efficiently and do what they need to do to make this society thrive efficiently if they don't know that their child is in a right place. So I'm sure everybody can agree with that because I've been in that place before. Before I was a child provider. Yes, exactly.

So in the midst of times, what we cannot do is we cannot cut our child care force because that will delay California's progress. California is my home and I love California. California is a wonderful state to live in.

I want to see it to continue to thrive and it won't thrive and cannot thrive without a strong child care workforce. So I stand strong in solidarity with all of our supporters and my fellow child care providers. Thank you so much.

Thank you. Name and affiliation, please.

Hi, my name is Larae. I am with UDW Child Care and I strongly support the true cost of care and I align my thoughts with CCPU Child Care. Thank you.

Thank you. Name and affiliation, please.

Hello. Hi, my name is Darshana McNair. I-uh oh. I'm here with CCPU and I am a licensed child care provider. I also live in the City of Altadena. My home did not burned down, but I was evacuated and I also had to- I also had a lot of damage to my outside and inside.

And I'm going to piggyback off of what Ms. Alana said that if we were paid the true cost, we would be able to have some type of revenue. Basically, I had to pay out of pocket for everything, you know, cleaning so that my kids could get back in safely.

And I also had to take in a family member which was my great grandmother who was 99 years old. And so I had to convert my garage into my daycare so that cost me a lot of money. And so I just, you know, I'm out of my money.

And now I've lost some kids in the process because some kids were displaced. And then the ones that I did, that I did keep and that I'm driving every day to take this kid to Monrovia to school. His mom drops him off at 7 in the morning. So he goes to school at 12:30.

I drive, I take him to school, and then I go back and pick him up at 3, at 3:30. And the traffic is just horrible. It's just like, you know, and I'm. I'm just all over the place trying to help my parents, you know.

So, yes, I would like to see us, you know, get pay at our fair price. Thank you.

Thank you. Just a minute. Assembly Member. Did you want to come? You're good? Okay. Name and affiliation, please.

Good afternoon. Oh, good morning. Still sorry. My name is Anita Vacini, licensed child care provider out of Tuolumne County. CCPU Member. I'm part of the Bargaining Team with CCPU and it's huge that we get a cost of living raise, right?

We have a child care provider in our county right now that's closing her doors because she can't afford to keep doing it. So she's got eight families looking for care. She can't afford to pay her staff. She can't afford to keep the electric bill going because she just can't. She just doesn't make enough money.

But it is huge for these families to have subsidized care. I have a parent in my care that started with me eight years ago on subsidy care. A mother of four children. She started out making minimum wage because she gets subsidy care for her four children.

And not having to pay out of pocket, she was able to go back to school. She now eight years later, seven years later, because she's been there for a year now. She works with our District Attorney's office as a supervisor for our Victim Witness Program. She could not have done that.

She couldn't have done that without this program. So providers that quit because they don't get paid enough affects all of our families. Thank you.

Thank you. Name and affiliation, please.

Hi, my name is Javon Hernandez. I'm here with CCPU SEIU Local 99. And I align my comments with the CCPU speakers earlier.

Thank you. Name and affiliation, please.

Good morning. Alexa Chavez, on behalf of UDW AFSCME Local 3930, just wanting to uplift and align our comments with the providers that are here today. Thank You.

Thank you. Name and affiliation please.

Jess Bartholow, Government relations Director for SEIU California, on behalf of almost 800,000 workers across the state, in support of CCPU's request. Thank you.

Thank you very much. Any additional comments, Members? Doctor?

Thank you, Mr. Chair. I just wanted to say thank you to everyone who has come up to present but also provided your two minute testimony.

For you to be open and vulnerable and as I always say, to humanize the situation, it is extremely important for us to be able to see you, hear you and let you know that we do have the utmost respect and, and that we are going to fight for you.

And so I really appreciate you guys coming in to provide chest community. So that's what I wanted to do is just thank them because it does take a lot to stand up here and to speak your actual truth.

You know, we are in a time where people are trying to shut us up and tell us to get in line. And with this instance, having had my own children as well and struggle to find quality childcare for my son and knowing that we have a number of home base and other facilities that are still struggling.

I used to serve on a child care board for six years still fighting for adequate pay. So I hear you. And we've had to shift the budgets around us, do what we can to at least move forward and to meet the agreements that we made to our staff.

But then in the end, it hurts to know that we had to come back and pull some of it back because we still didn't get the money that we were promised. So the impact wasn't just to us, but the impact went to our staff.

It went back to those kids, and it trickled down to the communities, to where they still had to figure out how they're going to eat and how they're going to purchase clothes, even the diaper situation. So I hear you, I respect you, I value you. And I know myself and my colleagues, Mr. Chair

When I say he going hard, Dr. Jackson is going hard in the paint. So thank you guys for taking the time to come here, speak truth to power.

It's an honor to sit here and to be the representative for San Diego, but to have some strong colleagues here with me who truly understands the value of what it means to have adequate childcare and respecting those that are providing the care. Thank you so much for everything that you do, Mr. Chair.

And I'm honored to be here with you.

Thank you, Doctor. Assemblymember Ahrens.

Thank you, Mr. Chair. I want to also align my comments with Dr. Sharp Collins and Dr. Jackson. And I want to appreciate all the advocacy and testimony.

It helps better inform the legislature and it helps really give the human value and the potential human suffering that some of these cuts that we are grappling with, and it brings it into the light.

As my colleague has said, there's an intentionality in this deliberative process to always just cut programs, cut funding for these critical services whenever there are budget downfalls in the State of California.

But as I know Chair Jackson has championed these issues in the past, I just wanted to repeat them because I think it bears repeating because we need to keep talking about it is we're sort of falling into the same budget conversations that we always have had.

And I think we're in these very extraordinary budget situations, not only with our own internal deficit, but with the Federal Government cutting away these critical services. I think we need to acknowledge that this is not normal budget circumstances. And the State of California has made a commitment to better fund these.

And not just a commitment to better fund these critical services, but the fact that the, the investments that we're making, they in the long run, will save the State of California money. And I think we need to start talking about that more in our deliberative process about how these investments aren't just expensive.

They save the taxpayers and they save Californians and they save families. And so as we're talking about the need to do this and the promise to do this, I think we need to be a little louder about how, how critical these programs are and how lifesaving these programs are and how it also saves us money.

And as Mr. Chair, as you've championed, we so often look at programmatic cuts, but we're not looking at the nearly 80 plus billion in corporate tax breaks that the State of California gives out. And some of these tax breaks create jobs and they create great union jobs.

But we need to examine what it is that we are giving out and what these programs are doing. Because we talk so much in this deliberative budget process about programmatic cuts, especially in programs that affect in this Committee. But we're not giving the same due attention to the corporate tax breaks that we give out there.

And some of them are laudable and some of them are good, and they should have no problem coming before the Legislature and explaining that. But the reality is some of these corporate tax breaks have not been reexamined in decades.

And if they are doing so well, they should have no problem coming before this Committee and others in a transparent and deliberative process. And explaining how good their corporate tax breaks are for the State of California. And I want to align myself with my colleagues on that.

And I want to appreciate the chair bringing up some of these issues because you're absolutely right. So often when we have these situations, we just look at cuts. We just look at what are the expensive categorical programs, what are the most recent commitments we make to just roll them back.

And yet we are going to be spending hours of testimony and we're going to be begging the legislature to restore what we have, the commitments that we promised. And yet little to no discussion on- not just, you know, and I'm not even talking about revenue generation, which is, let's have that conversation.

But, but we're still ignoring the fact that we are giving billions of dollars away. And so, so it's not just about revenue generation. And we can't have these conversations in silos. It can't just be about that. We need to have. We need to, it's not just a zero sum game.

We can't just talk about revenue generation or cuts. That's a losing argument that we have made budget process after budget process. And so, and it is a- and I fear it is a losing argument amongst the electorate as well, amongst our communities back at home.

We do not want to talk about revenue generation right now as a losing argument. And special interests will twist generating revenue around in these deliberative discussions. And so I'm saying that we should have these conversations, but we should also be including what kind of corporate tax breaks are we giving away?

Are they actually doing what they are intending- that they were originally intended? And let's re examine those as well as part of the whole process and not just this zero sum game of we just want revenue generation and that will restore all these cuts. That's a losing argument.

We need to be digging a little bit deeper on that. And so to the advocates in the room, I want to thank you all for being here. I want to thank you for helping hold us all accountable. But we've got to do better. This is not a normal budget process.

We can't just talk about just increasing revenue and that will fix the cuts. We've got to talk about what we're giving away as well. And so I know I'm a freshman, I don't have a doctorate in these issues and I want to just really appreciate the expertise of my Committee Members.

But as someone who has grown up in abject poverty, we need to be a little bit more intentional and forceful about what the State of California is giving away because it's at the expense of someone and something.

And it so often comes to this Committee and we're, you know, we hear it all and we absorb it and as we move forward with those, with those advocates to the rest of our colleagues.

But I know, Chair Jackson, you've brought these issues up many times to me and to our colleagues, and I think I just wanted to just be a little bit louder about it because we need to have your back as you start talking about these conversations as well.

Thank you very much, Assemblyman. I assure you you have a PhD in survival and thriving. There is no doubt about that. Let me just end with a reflection of a statement that was made by a child care provider. California is the fourth largest economy in the world, but the budget proposal says that child care is optional.

We have learned the hard way. That. Child care is not optional in order to ensure that our economy, to ensure that our very society is able to function to its full potential.

So as we go through this budget process, I think it is very important to look at what is being proposed in the budget, to increase in different areas of the budget and really ask ourselves, is that more important than the stability and the well being of our families with children?

And I believe we will be hard pressed to look at the data to show what is the best bang for our buck when it comes to what is being proposed to be increased, not just in human services, but throughout the entire budget, compared to the type of outcomes and the type of return on our investment when it comes to investing in child care.

So we look forward to continuing this discussion, continuing to advocate. But under no uncertain terms, this Committee is committed. We will not pause on child care. We will not pause on child care. So with that, we will recess until 1:30.

We'll go to part two of the agenda now in numbered order of proposals starting with In-Home Supportive program proposals under the Department of Social Services. We're going to ask DSS, Department of Finance and LAO to please take your seats so that we may begin. Again, we are covering all items in the May Revise except child care.

Once we've concluded all the May Revise items, we are going to allow folks one minute each to be able to do public comment. And DSS, you may begin when you're ready.

Thank you very much, Mr. Chair and Members. Jennifer Troia--

Oh, I am so sorry. I almost messed this up. Would any Members of the Committee like to make any comments?

Thank you, Mr. Chair. Just very briefly because then we should get on with review of the May Revise. But I just want to say there are many things, of course, about the May Revision that concerns me from the administration. So many vital services are being cut or delayed for our most vulnerable in California very severely concerns me.

As previous colleagues have already mentioned to me, you know, it is quite concerning that we're perhaps balancing the fiscal health of the state on the backs of the poor instead of tapping into all the tax loopholes that exist for corporations and the wealthy today.

Something I do want to highlight, and we're going to probably-- I'm going to ask more about later, is I'm concerned about two primary issues where I am seeing immigrant families be kicked off of different services and I want to dive more deeply into why that is and what that looks like.

I'm very much concerning that we're discriminating based on immigration status. Secondly is I am also very concerned about the reinstatement of the asset tests, which affects, of course, citizens and immigrants alike and could again kick off a lot of people from the rolls.

Even though we made the right choice of abolishing the asset tax, I'm very concerned that we reinstate it. But I look forward to having a more fruitful discussion today and getting into the questions about many of the issue areas. But I appreciate the leadership of the Chair and, and I appreciate all the Committee comments made earlier today.

Thank you, Mr. Chair.

Thank you very much, Assemblymember. As we move forward, we're just gonna cover each subject area. We'll start with In-Home Supportive Services and then we'll allow all of our panel to make comments and then any questions we may have and then we'll move on to the next item after that. Madam Director, you may begin.

Thank you very much, Mr. Chair and Members. Jennifer Troia, the Director of the Department of Social Services. Good to be back here with you this afternoo. As you indicated, the first set of items that we'll cover this afternoon related to the May Revision is related to the In-Home Supportive Services, or IHSS program.

IHSS provides personal care services to individuals who are aged, blind or have a disability to enable them to remain safely in their own homes rather than requiring more institutional levels of care. In 2025-26, the program is expected to serve over 793,000 recipients statewide. The May Revision includes five major solution proposals related to IHSS.

I will note that for several of these proposals we have more updated information today about the anticipated timing that the proposals can take effect than we did at the time of the May Revision release.

So as I go through each item, I will share with you what those updates are in terms of when we believe they can be implemented and what that does to the savings numbers in the budget year. The first item is related to In-Home Supportive Services provider overtime.

The reduction in the May Revision is $688 million General Fund in 25-26. It reduces the number of hours that a provider can work in a given week to 50 hours. For context, there are currently caps on overtime services that can be provided, but they are higher than that.

So at 66 hours for providers who work for multiple recipients and 70 hours and 45 minutes for providers who work for one recipient. There are also currently two exemptions in place for providers to work up to 90 hours a week in specific circumstances.

The May Revision proposal would both lower the cap to the 50 hours and also eliminate the exemptions. We anticipate this proposal to impact 205,000 providers in terms of how much overtime they work and 230,000 recipients in terms of who would be providing their services.

I do want to note that there may have been some confusion on a particular point about whether or not this proposal impacts hours related to travel and reimbursement for traveling with the recipient. It does not. Travel time does not count toward the overtime caps, and there's no proposal to change anything about how travel time works.

As I mentioned earlier, the estimates are now-- we are now at a point where we can update them. So the 688 million reflected a full year impact of the proposal. We will, however, need time to provide guidance to the counties to provide notice to recipients and providers.

So we don't anticipate that the proposal could take effect until October 1, 2025 and as a result, the updated savings in the budget year would be 516 million General Fund. Currently around 30% of providers, so the approximately 205,000 I mentioned, claim overtime. The average provider who claims overtime works 55 hours a week.

As a result, we anticipate that capping IHSS service hours at 50 hours would impact providers an average of five hours per week. Of course, some providers could be impacted more and some less as the nature of averages would work out. We anticipate that the proposal would impact around 29% of IHSS recipients.

So that's the 230,000 I mentioned who had paid cases. I think it's really important to note, however, that we are not proposing any changes to those recipients' authorized numbers of hours.

So what would change is the amount of hours each provider that they employ could work, but they have the opportunity to employ another provider to provide the remaining hours of service. I think I will leave it there on that particular proposal. I'm happy to move on to the next IHSS proposal unless you have questions.

Yes, please cover all IHSS.

Okay, will do. The next IHSS proposal is related to IHSS services for undocumented adults. The May Revision proposes a reduction of $159 million General Fund in the budget year and ongoing to eliminate IHSS benefits for undocumented adults in ages 19 and older. Currently, there are around 3,300 undocumented recipients ages 19 and older being served in IHSS.

We are expecting that number to grow as the caseload grows in the budget year. So we estimate that approximately 5,400 individuals would lose IHSS services as a result of this proposal. The 159 million General Fund estimate reflects the full year impact of the proposal similar to the prior one.

We would, however, need time to provide guidance and to notify impacted individuals and to align with DHCS's implementation of other changes. So we don't anticipate the proposal taking effect until January 1, 2026. As a result, the updated savings associated with this proposal in the budget year would be 79 million General Fund.

The third IHSS proposal in the May Revision is related to the Community First Choice Option or CFCO and some late penalties that the state has been paying.

CFCO is a funding mechanism that the federal government offers that allows us to receive an additional 6% in bonus federal funding when we are serving recipients with the highest level of acuity.

So if they have been certified to need a nursing home level of care and are safely residing at home through the IHSS program services, then we receive an additional 6% in federal matching funds. The penalties come in the form of a loss of enhanced federal funding if we do not conduct reassessments of their needs on time.

We began being penalized in October 2017 in the amount of 15.7 million General Fund and since then the dollar amount of penalties has increased to 81 million in 24-25, which represents around 31,000 cases that have monthly overdue assessments.

Every month that the case reassessment is overdue, the penalty is that we repay the Federal Government that additional 6% in funding that they provided. We have to date refunded over $280 million in enhanced federal funding. Under this proposal, the responsibility for paying those penalties would shift from the state to the counties.

Counties would be responsible for the portion of the penalty that is related to their actual number of overdue CFCO cases for reassessments in their county. To avoid these penalties, counties can prioritize CFCO cases as needed when they conduct reassessments. So to be clear, everyone on the IHSS caseload will receive a reassessment of their needs.

For those who are not in the CFCO program, there are no penalties associated with the timeliness of those reassessments. For those who are in the CFCO program who are again those with the highest level of need, there are penalties.

So if counties move the folks with the CFCO funding to the front of the line and do those reassessments first, they would avoid all penalties. And rather than this being a cost shift, it would be an avoidance entirely of the penalty. This is not-- the reassessments are not a new obligation or mandate for the counties.

They've always been solely responsible for activities related to the required assessments and reassessments. The next proposal is related to the Medi-Cal Asset Test for older and disabled adults. As was referenced in the opening remarks, there is a there is a conforming reduction that is being proposed on the Medi-Cal side of the budget.

This is the $26 million General Fund reduction to IHSS to conform with that reinstatement of the Medi-Cal asset limit on the DHCS side of the budget. We currently anticipate this proposal impacting 1,900 IHSS recipients who would lose their services.

The 26 million General Fund estimate reflects the full year impact of the proposal to allow for the guidance and the noticing we expect though to implement on January 1, 2026. So the updated savings associated with the proposal would be $13 million General Fund.

The fourth proposal is related-- or actually I'll let you cover the Medicaid Final Rule if you don't mind.

Sure. This is not a cut proposal related to IHSS but is instead an obligation we have related to a new federal regulation that went into effect in 2024 known as the Home and Community-Based Services or HCBS Access Rule.

The HCBS rule sets forth new requirements for several Medicaid funded HCBS programs, including some of the funding that flows for In-Home Supportive Services from Medicaid and the final rule has various implementation timelines based on the activity and the first stage is implementing automation change in our case management information payrolling system known as CMIPS, and these changes will support the new policies that we need to make to comply with the federal rule.

The rule itself aims to increase transparency, standardize data and monitoring, and promote beneficiary access. I will just flag that the Department of Health Care Services is the lead on implementing, but there are multiple departments that need to make automation changes in order to comply.

Without this approved funding, the department will not be able to implement the appropriate system changes in time, which may result in federal penalties for the IHSS program. As such, the May Revision includes $1.5 million total funds and 162,000 in General Funds reflected in 25-26 to support the automation changes necessary to the CMIPS program.

The final solution proposal related to the In-Home Supportive Services program is related to the conforming of the application of Medi-Cal eligibility and IHSS eligibility. So IHSS is provided as a service of Medi-Cal. To be eligible for IHSS, you must be eligible for Medi-Cal under current law.

This proposal reflects $110.6 million General Fund savings in budget year plus one to automate the process of conforming IHSS eligibility to the timing of Medi-Cal coverage. It could impact 7-8,000 recipients a year who do not complete the required Medi-Cal redetermination process.

Again, in order to provide noticing and guidance, we believe we would need a period of time to implement, but not as long as a year. It could be implemented on September 1, 2025. As a result, the updated savings associated with the proposal in the budget year would be 106 million.

By way of background, what these folks are in is called the IHSS Residual Program. It was the original way that we funded IHSS prior to there being federal funding that was available for the program.

As federal funding became available for various subpopulations of the caseload, they were moved out of the residual program and into other programs for their funding. There are still individuals in the residual program by design who are there because they are not eligible for federal funding, but they are eligible for Medi-Cal.

That is who the residual program is intended to serve. And again, under current law, when you lose your Medi-Cal eligibility, you also lose eligibility for IHSS. However, in applying that current law, it's a manual process to terminate the IHSS eligibility and it does not happen consistently across the state.

So in some cases, when folks have lost their Medi-Cal eligibility, they also immediately lose their IHSS eligibility. In other cases, the county has not processed that loss of eligibility and the person instead is served through the residual program, which means through state only funding.

This proposal makes implementation of the required alignment between Medi-Cal and IHSS eligibility automatically. It automates it so that that inconsistency would no longer exist statewide.

It does also ensure that if IHSS recipients are able to restore their Medi-Cal-- they have a 90-day period to be able to restore Medi-Cal and get back benefits from Medi-Cal. If we have provided them services in the residual program, from a state only perspective, we cannot recoup that federal money.

If that had not happened in the residual program, we would instead be able to recoup that federal funding when they become eligible again during that 90-day period. So the savings associated with this proposal are the federal funds being restored as people restore their Medi-Cal eligibility and we can then claim federal funding.

That is the final IHSS proposal in the May Revision. You did also agendize for us to briefly address the reassessment of the IHSS administrative methodology. This is something that was required of us to do and to report back on recently, and we did complete that requirement. We conducted a review of how the IHSS administration funding works.

There are two elements of county administration costs that the estimates as a result of that review address. The first is the cost per hour of a social worker's time. And the second is the option of funding authorized-only cases.

So this is individuals who go through the process of becoming eligible for IHSS but do not collect claim any hours of service. The way that it works right now, the counties are not reimbursed for the time that it took to get that person to be eligible. They don't ultimately use the services.

The total increase in the IHSS Administration cost. If we made adjustments to the social worker cost per hour and to pay for authorized only cases would be $246 million in total and 124.8 of that would be state General Fund. I believe that was the last item you asked for on IHSS.

I anticipate that you will have questions for us and we're happy to take them, but I don't know if the LAO and Finance want to comment first.

Thank you very much. Department of Finance.

Idalys Perez, Department of Finance. As noted by the department, the May Revision includes five budget solutions related to the In-Home Supportive Services program. Program costs have grown rapidly in recent years and that continued rate of growth cannot be sustained by the General Fund.

The IHSS solutions proposed in the May Revision help to address growing costs in the budget year and into future years so that the program is more sustainable while also aiming to minimize impact on recipients. Additionally, some of the IHSS solutions reflect conforming adjustments resulting from the Medi-Cal related May Revision proposals.

Finally, as the department described in their comments, the scoring of these solutions in the May Revision reflects full year savings. We realize some of these solutions will require additional time to implement and we've provided your staff with the details that DSS spoke to about when these solutions can be implemented as well as the updated saving assumptions.

Okay, LAO. My man.

Juwan Trotter, Legislative Analyst Office. So we first want to start off by saying that we are still in the early stages of analyzing the proposals for IHSS, yet we have we have yet to receive trailer bill and so many of our comments today will consist of primarily of preliminary questions we want to raise on these proposals, many of which we have already shared with your staffs.

We do believe that in considering the budget problem facing the state, it is important to ask questions to better understand the trade-offs with each of these proposals as the proposals do represent meaningful changes to the IHSS program and do include the possibility that people may lose services.

One other overarching point we would like to raise is that within the suite of proposals, there are approximately $1 billion in estimated savings and most of these proposals do assume a July 1 start date. But as the administration has noted, many of these programs will not actually go into effect until months later.

So as such, there may be a little level of savings erosion before the beginning of the budget year. So beginning with the cap on provider workout, the proposal to cap provider work hours at 50 hours per week, this proposal is estimated to save a significant amount of money, approximately $688.5 million.

However, while we are still waiting on trailer bill for this proposal, at a high level we have questions around how the magnitude of the savings can be achieved, understanding that some of the providers will still work overtime and underneath the proposed cap.

The administration has acknowledged our questions and are working with us to kind of clarify the methodology in their assumptions.

With that being said, we have some additional high level questions we would like to highlight around implementation, including what is the current distribution of work hours, what do we know about the recipients who have providers and who work overtime and who would be impacted by the proposal, how many new providers would be needed to ensure recipients continue to receive their authorized services and are there any anticipated costs for counties to implement new cap and are these accounted for in the administration's estimates?

Additionally, if the legislature is interested in alternatives to post cap, some alternatives could be implementation of a cap that is higher than the $50 per week but below what is currently currently there. One could consider creating a higher cap for specific types of providers or including certain exemptions to the proposed cap.

However, we would acknowledge that any increase or added exemptions to the proposal could result in decreases in potential savings.

So moving on to the issue on In-Home Supportive Services for undocumented adults. Before I begin I would just note that the proposal to eliminate IHSS benefits for undocumented adults age 19 and older is a part of a larger suite of proposals within the Medi-Cal program.

For the awareness of the Members, I would point out that our office has recently released a report on these Medi-Cal proposals including those impacting IHSS, namely this one and the one on Medi-Cal asset limit that we'll touch on later.

But at a high level, this elimination captures most of the undocumented adult population over the age of 19, meaning those under the age of 19, a small portion of the caseload may still receive IHSS services.

Of the adult population proposed to be losing access to IHSS, the vast majority of them are within the 50 and above age group.

If the legislature is interested in maintaining services for additional age groups, the legislature may want to consider the trade-offs of eliminating services for the 50 and over age group, specifically as eliminating services for this age group would produce the most savings but would also impact the most recipients.

Additionally, at a high level we would just ask what services undocumented individuals would still have access to in the absence of IHSS.

Moving on to the Community First Choice Option late penalties proposal. So at a high level-- So some high level questions we are working through for this proposal include have counties been provided adequate administrative resources to perform the timely reassessment of CFCO cases?

Additionally, given that we know that a reassessment has been done by DSS concluding that counties need roughly an additional $125 million General Fund to perform administrative tasks and has been noted in the agenda that this funding is not including the government's made revision.

We would ask if this request to prioritize CFCO cases is logistically workable given the county's other workload requirements and if there are other workload reductions that we could look at to give to the counties to help them free up additional time and resources to better fulfill the CFCO workload.

For the proposal on reinstating the Medi-Cal asset limit, we would just note that the original Medi-Cal asset limit had complex asset test rules that, prior to its elimination, may have discouraged potential recipients from getting Medi-Cal because of this complexity.

If the legislature were to accept this proposal, you may want to consider other-- consider ways to simplify the asset test. Additionally, before the Medi-Cal asset test was fully eliminated, it was raised from $2,000 to $230,000 for individuals and from $3,000 to $195,000 for couples.

The legislature may want to consider if there is an asset test short of the full elimination that could achieve goals of limiting eligibility and producing General Fund savings without adding back some of these prior administrative complexities to the program.

Moving on to the proposal for the auto termination of IHSS consumers who lose Medi-Cal after redetermination. So some high level questions that we are working through include does the administration assume all who are terminated from Medi-Cal were returned to Medi-Cal and IHSS and after how many months is it assumed that Medi-Cal and IHSS will be restored? Additionally, what is the administrative cost with re-enrollment in IHSS?

Is this account for in the proposal? Do counties have the resources to administer administratively, help IHSS recipients reinstate their Medi-Cal eligibilities so they don't lose IHSS eligibility? And then just another comment on the IHS administrative reassessment methodology.

We would just say that several of the proposals, as I've noted within IHSS that we've been discussing potentially include added workload for county administrative offices. And so in light of this reassessment, including the counties need an additional $124 million general fund to continue their current workload and that these funds are not including the government revision, we would suggest just keeping this in mind as we evaluate the other IHSS proposals we have discussed and their potential impacts to counties.

Colleagues, questions, comments on IHSS? Doctor.

Thank you so much, Mr. Chair. Let me try to slide over here. I do have quite a few questions actually and the first one that I do want to go into is that I am really disheartened by these cuts. When we go back to item number four and looking at the actually go back to item number one, first off overtime and travel hours, I know so many IHSS workers and they deserve to be paid for their overtime and for that extended travel time.

And I'm saying that because we need to remember that they are the lifeline for so many people, for so many people. And allowing them in the lifeline they are allowing people to really have the quality of life and other people's quality of life of who they're caring for should not depend on a budget.

They should be allowed to live, they should be allowed to experience happiness for as long as they are here on this earth. And to have people who are willing to give of themselves to be there to help support that is important. And like I said, a budget should not determine that in my personal opinion.

And so when we're talking about the overtime cuts, I'm talking to my constituents and I'm hearing from them and they're telling me even this past Saturday that they will not be able to afford care for their children as well, and meaning children with special needs.

And if these cuts are approved, especially around overtime, it's going to be really hard for them. So I'm asking what support can we offer to families throughout the state who rely on these resources to pay for care who for their children?

Thank you for the question and for the concern that you clearly have for this population. I think it might be helpful to just reemphasize that the individuals who receive the services are not, in this proposal proposed to receive any reduction in the total hours of services that they would be provided.

They may be provided them by a different mix of providers than they are today. And we have certainly heard feedback from recipients and care providers that that would cause hardship. But I do just want to be clear that there is not a loss of the ability to obtain the services in terms of what is authorized.

Okay, thank you. When we talk about the asset test on item number four, I have a few questions in regards to this. One is why has the administration included proposals to target older adult and persons with disability with the asset test reinstatement of $2,000, which is an amount that hasn't been updated since the 1980s.

And when you think about our current climate right now, $2,000, just having that in your account can just be the money towards your rent, not necessarily your full rent, but the money towards your rent. And so to have that be something that is listed as income to possibly have you removed from a program, that is another concern of mine. So I'm wondering if someone can speak to that about why the administrator actually included a proposal that targets older adults and persons with disability with this test.

Idalys Perez, Department of Finance. So yeah, with IHSS, this is one of the programs that costs are outpacing revenues. And this is our proposal to make the program more sustainable in the long run by trying to address costs in the program through the proposed solutions while also trying to be thoughtful in our proposals.

But you know, we are open to hearing any alternatives on other ways to address the long term sustainability of IHSS through other ways in which this could happen when working to reach a final agreement for the budget.

Okay. This is why I'm glad everyone is here, because we have to come up with a better way to sustain instead of taking it away from those that need it to sustain. So another question that I'm having is does the administration believe that it is fair to balance the budget by kicking off about 112,000 people off Medi-Cal? That's part one. And then how will this save money in the long term if people just come back to the program sicker after they have exhausted any small assets that they have.

Kia Cha, Department of Finance. So as my colleague here has already mentioned, I mean this is the administration's approach to addressing the shortfall in budget year and to help make the cost and the out years more sustainable. But we, you know, if the Legislature has alternatives to achieve the long-term sustainability of this program like we're open to continuing those conversations as we work to adopt a balanced budget.

So as we continue the conversations then does administration estimate the potential cost of rise in homelessness due to the economic insecurity that this proposal has on older adults and persons with disability? Because that's exactly what it's going to do. So are we accounting for that?

I think our solutions are. Our scoring for the solutions is just based on the proposals as described. So we don't make, we're not making assumptions, other assumptions.

Okay. As we continue to plan and talk about sustaining, we need to sustain households, keep roofs over people's head, keep food food as well, keep the services provided. So I think that we need to start thinking about that cost because if this goes forward, we will have a rise.

And I'm not okay with having my seniors in my people with disability home. I'm not okay with anybody being homeless. But to as we talk about affordability, we're doing things that is impacting that real conversation about affordability. We have to do better. I will pause there. Thank you.

Thank you, Doctor. Assemblymember Lee.

Thank you, Mr. Chair. And I thank my colleague for her very thoughtful comments. You know, we talk a lot and I've said this in the committee before, I think our legislative body is more intent on saving lives and saving dollars and saving costs. It is beyond just numbers on a spreadsheet, but true people's lives and their impact that matters to us. And that's why you hear some of the comments and then line of question we have today.

First, I want to talk about to the department on Items 3 and 7, which is the in home supportive services community first choice ownership option, late penalties and the reassessment methodology for the counties and the department.

So I understand we're trying to accomplish some cost savings by shifting over the penalty payment which I know you elaborated on how to avoid the penalty, but shifting over the penalty payment to the counties at the same time acknowledging that we don't really provide for the amount of funding necessary to even complete that workload.

Is there any concern from the from I would just phrase it this way. I've heard from concern from stakeholders, especially my own counties, about how they're already trying to do so many different things, but now we're trying to put onto them the burden of one other additional task while not providing for such unmet need.

Do you predict that we could lose money, federal funding, or be subject to more late penalties if we basically decentralize this approach back down to the counties?

I think what's important to emphasize is that this is already the responsibility of the counties to meet this mandate. And they are already responsible for reassessing the needs of everyone on their caseload, including these recipients who are within the subpopulation.

And what we are suggesting is that they have the opportunity to adjust how they manage their workload and the workflow without adding to their overall work. So it will change the ordering of how they do their reassessments, but it would result in a complete avoidance of any penalties at all.

So the proposal right now is to make the cost shift because the state is bearing the cost of those penalties, even though we do not have control over the timing of the reassessments. And so in shifting the costs, I think our expectation is that there would be a shift of priorities and that ideally the penalties would be avoided.

Okay. All right, moving on then. I want to talk about the asset tests as well. Since we only just recently moved to the elimination of the asset test, I think useful for the public record to talk about. I want to ask other department or DOF to talk about why did we eliminate in the first place?

And then moving forward, if it were to be reinstated, how would that actually be? How would the test actually be conducted on our seniors? It's a two part question. So why do we eliminate in the first place? And how and how would we reinstate it? How would an actual senior be? How the assets be tested?

So I'll just comment that this is a proposal on the DHCS side, which is not in our assignment area area, but we could take that back.

Okay. Is any other commentary of how. Because it would still affect, of course our IHSS population. The same thing.

Yeah. So obviously the proposals on that side because of the nexus with the IHSS does impact our population here. But again, like just as to the why and on the asset limit, I think we're going to have to get back to you on that.

Okay, that would definitely be helpful. I mean, as my colleague pointed out, right now those are asset limits set in the 90s and the values of even if someone owned a home or had a checking account. $2,000 does not go as far as it did even 10-20 years ago.

So it is really important that we not reinstate that because I think it reflects very cruel reality. I do want to ask LAO, because you did bring up some alternatives. You're talking about if we were to do a gradual approach or a not total elimination of the asset test, what would be some of those options look like if you were able to share.

I think a potential option, as you noticed, that we did gradually transition to the full elimination with the stair step going to 130 and 195. However, I would note that the limit test does have some kind of, as you noted, some complexities in how it tests assets, how it tests assets, and how. And so any level of asset test would still have some level of complexity to it. And so I would say looking into how to kind of minimize those complexities wherever we land on the test would be a good idea.

Hi, sorry. Karina Hendren, LAO. My assignment also includes the Department of Healthcare Services. So as my colleague mentioned, one option could be to go to sort of the intermediate step in which the asset limit was increased, rather than not counting assets whatsoever. So sort of an in between option.

Another thing that we found in doing our research is that again, as my colleague mentioned, the rules of the asset tests are complex and in many cases difficult to understand. And so there might have been individuals who would have actually qualified, but simply the daunting task of passing the test and providing documentation deterred them from applying in the first place.

And so another alternative could be to ask the administration, within the bounds of what is federally permissible, to make the rules more streamlined so that more individuals could apply and not be deterred simply by the complexity of the application process.

And just so for the public's awareness, if you can comment if you're able to, about how historically their assets were tested. How does an individual go about saying, oh, this is how much property or everything or checking account I have? How did it work in the past?

I'm not able to speak to that in detail. There were certain assets that were excluded, not counted. So a home, a single vehicle, the individual would work with their county eligibility worker and provide documentation to verify their assets. But there were like some common misconceptions about whether like a retirement like 401k would be included and things like that.

Okay, thank you. Yeah, I would definitely like to hear more about, in General later on about how the asset testing had worked in the past because if we're envisioning almost stepping backwards and redoing it, we're going to be reimplementing the same system. And I appreciate you don't have to you don't have to squat anymore.

You don't have to hold that position. But I do. So I do appreciate you coming up and saying that. But you know, it is something in commentary worth pointing out is in something in the human services world I lament about a lot is the amount of bureaucratic means testing we do to make sure that people are poor and we never have the same asset inventory on billionaires ever. We always let them get away with everything.

But we have to make people prove through so materials that they are poor constantly. And it is one of those things I meant about a lot. So in general something I'm very, very concerned about and maybe we can have further conversation with asset testing in the if that is something that together. I understand that of course it's much more so in the medical world than it rolls over here, but I think it is important even in this realm for people to understand. I think that is it for my questions for time being, Mr. Chair.

Those squats were very impressive. I need to make sure you understood. I think overall, I think it's important to understand the context in which at least this committee sees it is that there's no doubt that when you look at the numbers that we cannot the budget cannot withstand additional increases in terms of enrollment for IHSS.

So we have to relieve the budgetary pressure somewhere. But it's our purview that instead, just because that is the reason why that program is the reason why the growth is occurring, that doesn't mean it should be the first thing to be cut. It just means that we have to prioritize. And so I'm sure there are other things in other parts of the budget that may be deemed less harmful to the population. There may be things that may be less priority in terms of from a budget standpoint.

And it's very discouraging to see decreases in this vulnerable population, but yet we see increases in other places that does not provide people with housing, that does not provide people with food, that does not provide people with health care, and does not provide people with education.

Which according to the Constitution is our main responsibility, which is the health and welfare of our citizens. And so it is my belief that we would encourage and of course, in partnership after the May revise, it is our responsibility to engage with the administration and propose alternatives. If we do not like the solutions that the governor has proposed.

But I think it's very important that it's just very discouraging that we're even having to discuss these things in this way. The best thing we can do as a state during a tough budget year is first make sure that we do all that we can to stabilize the population and to make sure people do not get into a place where they start being in survival mode. Bad things happen when people are in survival mode.

It has ripple effects in a whole host of issues that at some point we will be back here having to clean up later. And so we want to prevent ourselves from cleaning up later and instead investing in people more instead of trying to get them out of a state of crisis. I'm very concerned with the elimination of the asset test. Again, it was a huge win and a huge relief to so many people that they didn't have to face selling off assets in order to get basic human needs met.

And so it is my perspective, and from this committee's perspective, we are opposed to the elimination of the asset test because, again, we don't want to kick people off of programs in tough budget times. I fully agree. Even though I don't like it, I agree. Even when we have planned to put more people onto programs, if they're not currently receiving programs, then those are the first things that should be paused.

But if they're already receiving services and they've begun to utilize that as a way to maintain a sense of stability for themselves and for their households, then it would not be appropriate to kick them now off of a program. And so the first things we want to make sure that we do is if we have to pause additional enrollment, I'm more amenable to that than to kick people off of necessary services.

Is there a way that, as we are thinking about, even if we would have to eliminate the bring back the asset test, is there a way to maintain those who are currently in the program and instead of kicking them off of the program during reassessments, is that possible?

I think we can take that back, Chair. Again, just reiterating that, you know, this is the administration's approach, but we look forward to continuing the conversations with you if you guys have other ideas, such as this one.

Well, it's certainly my idea to make sure that if they're already receiving the services, that we maintain they are, in a way, grandfathered in or grandmothered in, of course. But then, of course, then holding new people to that asset test, if there's a way we can achieve that I would feel a whole lot more comfortable because I believe we are expecting that around 1900 clients will lose their services due to the asset test being reimplemented. Am I correct in that?

That's correct. On the IHSS side, of course, as, as we've referenced, the IHSS proposal is conforming to the Medi-Cal proposal. So the impacts on the Medi-Cal side are larger and different. But in terms of IHSS, yes, 1900 recipients.

Thank you for that. And then also I think that. I mean, unfortunately we know that you're right. We, our enrollment has grown faster than we even thought it would. And so that means we have to continue to make hard decisions.

And even though from a moral perspective, we've been trying to include as many people as possible to receive services so it doesn't become a greater strain on our other services such as our emergency rooms and other things, obviously it does seem prudent to perhaps go in that direction.

We've noticed that there is an unknown out of year $1 billion savings when it comes to IHSS. In the Department of Finance solutions sheet, it shows 75 million savings for DHCS, DSS and then rising to over 1 billion in two years in 2027, 2028, and ongoing. What is, can you tell me what is causing the savings? What else are we eliminating or what occurring to be able to get to this billion dollar savings?

Yeah. Idalys Perez, Department of Finance. So the Department of Finance hired a consultant for a three month period to help us identify areas within the budget where process improvements could be made to achieve additional savings.

The focus was on departments with larger general fund spending, including the California Department of Corrections and Rehabilitation, the Department of Health Care Services, and the Department of Social Services. Because the administration had difficulty in achieving the target savings through our statewide efficiency effort, the consultant helped us in planning and scoping opportunities for these additional savings.

The May revision includes a 200,000,000 one-time general fund for the Department of Finance to contract with an external entity to continue this work that would support, that would support departments on potential process improvements to achieve these additional savings.

The request was the subject of discussion in the Assembly and the Senate Budget Committees on the State Administration hearings, focusing specifically on the Department of Social Services portion of this effort. The May revision presumed savings for DSS of 75 million general funds in 25-26 and growing to 500 million general fund savings in 28 to 29. So we're working to share additional details on opportunities to achieve these operational improvements within the IHSS program.

So you're saying that by spending the 20 million on a consultant to help with streamlining and things like this, you believe throughout that process it eventually will save $1 billion, Is that what you're saying?

That's the vision.

So that's the vision. So we're basically going to do like a California Doge or something. Is that what we're doing?

We're sort of seeking additional sort of contract supports to help us sort of think through operational efficiencies. Ultimately, any proposal that we bring forward to the Legislature's consideration represent sort of the administration's position on what we think are the right next steps.

LAO, does this make sense?

Thank you, Mr. Chair. Ginni Bella with the Analyst Office. We, as you've heard, this is part of a broader proposal. There's some reductions targeted in CDCR, DHCS, and DSS, and we have raised some concerns with sort of the transparency of that. Of course, it's good for us to be looking for efficiencies. That's something government should do.

But one thing we learned this last year with the efficiencies targets that we were seeking is that it's not easy to find that in operational savings alone. And so we have questions about the magnitude of the target that has been selected here.

We also don't know what the proposal is for the In-Home Supportive Services program at this point. So there's 75 million in savings scored in the budget year for In-Home Supportive Services, but we don't have the detail yet on what that proposal will be.

So that really raises the question from a timeline perspective, as you've heard today, you've heard details about reductions across a lot of different elements of the program, and you have a lot of questions about those. But this is one where we don't have the infrastructure yet of the proposal.

Sort of what does it entail and is it sort of operational in nature? Does it have eligibility impacts? These are some of our questions around it. So we have a number of questions sort of on the overall request for the 20 million and then what the Legislature's role will be, how you will have oversight, at what time you will get information, what will the reporting back to you be?

So how often will we get information if this funding is provided to look for these efficiencies? Where will we make sure that the Legislature is informed and has appropriate oversight?

And is this one eventually, is this 75 million savings and 1 billion in two years, is that being scored as a part of the elimination of the deficit.

I would defer to the Department of Finance on their out year for, for the budget year. It is, it is included, the 75 million is included as part of the solution.

Okay, so by spending 20 million we anticipate saving 75 million within a budget year.

That is the budget year amount sort of presumed within the Department of Social Services. As my colleague mentioned, as part of a broader effort. There's also components associated with Department of Healthcare Services and CDCR through sort of the three year budget window. So sort of additional savings over the next four years.

This is a tough one to swallow to be honest. It is my perspective that I mean I have a lot of proposals and I can tell you what I hope to do but I would anticipate that that would not be. That wouldn't even pass your sniff test if we proposed it. And so I'm concerned that number one I'm concerning we are even trying to think about spending additional $20 million when we are trying to cut additional money in programs that people really need to survive.

And so I mean at this point I anticipate, I intend to reject this proposal so that we can actually get some real numbers to making sure that we're doing some things. I would love to see that 20 million actually going towards something that will keep people stable. Any additional questions or comments at this time on In-Home Supportive Services? Assemblymember Tangipa.

Actually really want to thank the Chair for pointing out some of those same concerns and the concerns that we all have especially with that $20 million because I think about what the governor's $20 million to clear out and hire a consultant when we should really determine and depend on the LAO and the Department of Finance and what they've already shared with us that there is a lot of areas that are unsustainable because of the rapid expansion that, that for some wasn't expected.

I think about that $20 million and the foster care services was one because as I was watching I was prepping for some of my meetings. The family response team, the $13 million. What is going to happen to the foster youth if we lose the ability for the respond to call services? I remember what was happening before, but could you explain that?

I can. So we haven't actually presented this item yet. It will be in the next section but I'm happy to jump ahead with the Chair's indulgence. Okay. The Family Urgent Response System is a system that does. It provides both a hotline and also in person call response as you've suggested. Similar to some of the other reductions we've discussed, our proposal is to reduce the expenditures for that program into alignment with what we expect to actually be expended.

So in recent years, there's been money left on the table that has gone underutilized. So we are not proposing to cut the program in a way that we would expect would eliminate services for anyone, but rather to recognize the amount of funds we expect to be utilized.

So that $13 million decrease in that is just to align it because that's what's already been left on the table.

Correct.

Because that's my biggest point is I did a lot of work with Fresno County in the Foster Care Oversight Committee, as some of us heard before a couple years ago. And this was something that we really wanted to make sure that I've got friends and people that I really care about that we're in the foster care system that do need and it's those levels of services for some of the people in the most disadvantaged or maybe they've had some really hard time that we got to make sure that they just don't end up in handcuffs.

And I remember before this program, there were a lot of foster care youth that were that the only thing you could do and the only response team was 911 and now this funding. So I really am glad to hear that there was just money left on the table, and then we can actually balance and then work in those areas.

I joined my colleagues on the asset test, and I was reading a lot about that this morning, and it shocked me to hear the, you know, the governor stating on, you know, essentially that this cut needs to happen because of the expansion on it. And so we're putting our most disadvantaged at risk.

It almost feels like they're incentivizing that if you're right there on the line, spend money, drain your account before this happens so you can receive these benefits. Is that what you feel could happen if the return of the asset test is really implemented?

Just to sort of clarify, the solution here is really on the Department of Healthcare Services for the Medi-Cal program. What you're seeing before you in this committee is just the conforming adjustment for IHSS. And so we'll sort of take back the sort of broader concerns. I know it's being tracked well by our colleagues. It was part of a robust conversation in other hearings this week.

And this last question of mine is, so the governor missed a window on the Medi-Cal reimbursement rates and that additional funds and this could be completely on, again, another topic, but that's where I'm trying to figure out is if those federal match dollars would have came in, would have that left us enough money to make sure that we're protecting the Californians and those who are most disadvantaged need it.

We're happy to take back that Medi-Cal related question to our appropriate colleagues. Thank you.

Okay, well, thank you.

First, Assemblymember Gonzalez and then Assemblymember Gipson.

Thank you, Chair, for allowing me the opportunity to ask a couple questions. I join you in your hard hitting questions. We have to ask these questions. Right. And I appreciate the perspective that you have in really trying to, you know, dial it in because we come from the same area and we know our community and the need that they have. And I appreciate how you are, you know, trying to provide solutions and also say, you know, this something ain't going to work.

So that's, that's very important and I thank you for your leadership in that. The 20 million that makes me take a second look. When we have food banks who we've allocated in previous years $60 million and now we're at 8 million, we could put that 20 million to feed some people. People are hungry, right?

I appreciate someone's expertise in a specific field, but people are hungry and they're hungry today. And when we take 20 million for a consultant and not for the people of our community and feed them, we're slapping them in the face.

So I thank you, Chair, for your leadership in spite of, as you know, as some of you know, I have a son with special needs. He's got cerebral palsy with spastic quadriplegia. So we are an IHSS family. Right. And we are in that community as a pastor.

You know, we have friends and everything across the board for people working in homes. So it's important that we take care of them and take care of the one take care of them because they take care of our loved ones. So that being said, if the asset test is necessary to bring back, if we're thinking about bringing back the asset test, why did the administration use the older limit and not the most recent limit of $130,000?

That was a proposal put forward by the administration. I can sort of take the specific question back to our sort of colleagues within the Medi-Cal assignment. But again, sort of the.

And can we bring them here to answer those questions?

So I know it's been a topic of discussion for the health subcommittees of the budget. I imagine that question has been asked. I apologize, I can't answer it sort of directly, but there has been sort of robust conversation around the sort of asset proposal and sort of overall, the May revision reflects the governor's attempt to respond to the budget deficit. But we always have a conversation and we'll work together to enact the final budget.

Yeah, I think it's important to have the people who have the answers to be here, so that way we can ask those questions. And I get it, you can't answer that question, but someone can, so let's bring them to this room.

So what I'm going to ask is obviously In-Home Support Services is a little more complex because it affects more than one budget subcommittee. But what I will ask to do is the Department of Finance and LAO to help make sure that if you don't have the answers right now, that you get those answers to them so that they don't have to try to. I mean, they deserve an answer. That's our job, is to get answers.

And so I would ask that you please make sure that you provide those answers, whether it's a Zoom briefing or a meeting or in writing. So I ask that you please make sure that that happens. Go ahead, Assemblymember.

Thank you. I appreciate that. Chair. That's exact. Thank you for your leadership. I appreciate that. It's just, it's a matter of life and death. Right. Especially in my house, it's a matter of life and death. And I can tell you from a lot of homes, it's a matter of life and death.

When it comes to services and providers going from 70 hours to 50 hours, that's significant. Right. When you have someone with a significant need and we're saying you don't get to have the rest because we need to put it on something else. So my question to you is, how will the governor's proposed cuts impact service ability throughout the state?

The reference to the reduction of hours I'm going to assume is related to the overtime cap. Yeah. Okay. So I'll answer on that proposal. So the proposal is to reduce the total hours that an individual provider can work, but not to reduce the hours that the individual recipient is authorized to receive. So it, it may result in receiving those services from a different mix of providers in order to honor the cap of overtime for a specific provider, but the intention is for the services to still be available.

Please don't take this the wrong way. On the ground, try and find somebody that is qualified and passionate enough to even show up to take care of some of these, some of these most vulnerable. That's the real problem. So when you find someone that's willing to work extra hours, thank God. Thank God.

Because it is, it is not easy. So to say that we can just get some, this is not you. I get it. To say that we can just get somebody else. My son is 32 years old. Good luck. It ain't going to happen. It just doesn't happen. We are fortunate that we have a couple angels that visit our house and are willing to put their time, talent and efforts sweat equity. But the reality is we're one of very, very few in the community. I'm here because the system is broken. That's why I decided to run.

And this is one of the many issues, I'm telling you, if this is one of the many issues that I plan to tackle with my colleagues to say we need to take care, this is, these are the most vulnerable. Right. My son cannot, does not have a voice.

And when you take away 20, when someone take, when the governor takes away 20 hours, that is, that is, that means bed sores, who's going to clean the wound vacs, the trachs, the suction, the diapers at 2 in the morning instead of them sitting in feces. How do I know? Because I do it.

So this is, we have to tackle this. This is not a tomorrow problem. This is a today problem. Rural and underserved areas, especially where we come from, such as the ones I represent, are facing provider shortages, like I just said. And the governor's proposal will only further strain the already limited resources available. On top of this, those within the disability community and providers alike will suffer as a result of these cuts. Is the administration estimating a reduction in service availability once those caps are reached?

We have not assumed any reductions in utilization of the hours associated with this proposal. The savings are all associated with hours that will be paid at a regular pay rate as opposed to an overtime pay rate. Because of the change in the cap.

I get the savings and I want to save as much as the next person. But there's the, the, the, the fiscal reality that we're in and the reality of someone's home where they have a someone that they have to care for.

So by taking away from this, where someone cannot say, let me dial 911, where someone can't say help when someone has fallen, we're taken from the wrong pot, folks. How are those in need of services expected to continue receiving the care they need if the providers are not able to help them? It's a question for anyone. How? How are those in need of services expected to continue receiving care, the care that they need, if the providers are not able to help them because the providers are not there?

Again, we authorize the hours and we do provide services like the public authorities that offer opportunities to assist in the recruitment of providers. But ultimately the recipients are the employers. And I do hear the concerns you're raising. We have certainly heard them as well from many advocates on the ground.

Well, this advocate has a microphone and this advocate will fight on top of the mountain to make sure that our most vulnerable are taken care of. Because this is a disservice not only to my community, but the communities that every single one of my colleagues represent. And that's why they're here, to fight for their communities. And I stand with them to say we have to figure this out. Thank you, Chair.

Thank you, Assemblymember. Assemblymember Gipson.

Thank you very much, Mr. Chairman. And want to thank our speaker for allowing members who don't sit on this subcommittee and also the Human Services Committee. I used to sit on the sub on the Human Services Committee and miss the committee and the dialogue. But thank you for allowing us to be on the committee today.

I won't be redundant. I think my colleagues here have certainly expressed their life lived journey and certainly appreciate my colleague from San Diego for sharing his. San Diego. Right? Riverside. Okay. Riverside. For sharing his life lived journey. And what fuels his fire in this particular space is certainly personal and certainly you can speak to this in a very personal way and appreciate your voice in this space because it needs to be heard.

And so I also share concerns that the Chair has raised about the $20 million and concern that we are increasing and giving contracts out at a time where the body, the governor's office, and others are asking us to make some significant cuts, cuts by which people may not ever rebound from.

These are significant cuts in which people are already struggling to make ends meet and trying to keep their head above water. Cuts in which there may in fact not be anyone coming back. And California in terms of its leading those who are unhoused in the state and how this could be a direct correlation to those people being unhoused and our numbers and populations even growing. And so without repeating what my colleagues even said about the asset task, which I'm very concerned about, they think our Chair talked about a process.

But I want to close the loop because I believe in time certain. When are we expected the answers to these questions that have been given and articulated by my colleagues? When can we expect a response from who? Because you said you would take back these suggestions, you would take back these suggestions to colleagues.

Well, who are these colleagues? When are you going to take these suggestions back? And someone is writing these questions down. Hopefully they've accurately depicted the questions that my colleagues have asked. And so what is the timeline that we can expect an answer to these questions, and in what form are these questions going to be answered?

Thank you, Assemblymember. We recognize that whenever the governor puts forward sort of budget proposals, whether it's in January or May, the Legislature sort of digs in to really understand those proposals. We've worked closely with staff since the since May revision since the 14th.

We've been having extensive back and forth with sort of Budget Committee staff to sort of address and make sure they're understanding the proposals. We'll continue that effort and sort of. We always document questions and flow through your staff to ensure that responses come back on a timely basis. We know that we're working collaboratively together to adopt a budget on time.

Right. But so staff, staff is not up here answering these questions. So my question is, how will we get the answers to these questions back to us? Those who are on this, on this committee right now in a timely fashion.

Happy to provide that to your staff so it makes its way to you both sort of Budget Committee staff and personal staff.

Okay. When?

We're sort of flowing, a lot of the responses have already flowed for sort of questions that have come our way. And so again, we understand we're working towards adoption of the budget. And so time is short, and so we're flowing those out as quickly as we can.

So does that mean 72 hours?

We're working as quickly as we can, understanding sort of time is short. So we're working to sort of address all of your questions. We know that ultimately the budget will reflect sort of a joint agreement.

Because that's going to dictate in terms of how at least I vote when it comes down to a budget presented to us, because I have constituents to report to. And I want to make sure that I that my constituents know that I fought to do everything that I can, even if I have to be the loan, the loan, no vote when it comes down to the budget.

And so I want to make sure when that happens that I have done everything that I could do and ask every question and those and got the appropriate response back to me so I can make an informed decision when it comes down to the green or the red button on the day that we are taking up the budget.

Thank you very much. Assemblymember. Any other questions or comments on In-Home Supportive Services at this time? Seeing none. Let's move on to foster care and child welfare.

Okay. That's fine. Yeah, thanks.

Okay, thank you very much. Administration if you'd like to start.

Again. Jennifer Troia on behalf of the Department of Social Services. Within the space of Child Welfare Services, the first item that you've asked us to address is related to the foster care tiered rate structure.

You can speak up please.

The first item that you've asked us to address is related to the foster care tiered rate structure. In recent years, we have adopted extremely significant reforms to the rates for foster caregivers. The budget maintains funding to continue a transition to the foster care tiered rate structure which is currently projected to be implemented in July of 2027.

There's $27.54 million included in fiscal year 25-26 for automation, County Administration and CDSS state operations activities to support the transition. Again, this is we are currently operating under an interim foster care rate system. We've been operating under that system since 2017.

The permanent rates were required to be in place by January 1, 2025 and are scheduled to begin implementation on July 1, 2027 or when automation is complete. The reforms under the tiered rate structure ensure that all children in foster care will receive additional supports for strengths building and for meeting their immediate needs.

Children in foster care with the highest acuity of needs will also have additional support and funding for services so they can be raised in families with the supports that they need. The proposal that's before you makes it dependent on the Department of Finance's determination regarding the availability of general fund in the spring of 2027 as to whether or not the reforms that I just described would be triggered on.

If there are not sufficient funds for the tiered rate structure to be implemented in July of 2027, the interim rate structure that exists under current law would continue and all children in foster care would continue to receive the interim rates.

Second. Oh, Angie Schwartz, Deputy Director of the Children and Family Services Division.

As to the second item on the agenda dealing with the budget change proposal related to the first phase of the foster care tiered rate structure, the department's requesting six permanent positions and 3 year limited term positions to support the first phase of implementation of the permanent foster care rate structure.

The funding for these positions would be 1.9 million total fund for FY 25-26, with 788,000 of that being General Fund. Once the three limited term positions expire, the cost will be ongoing funds of 1.5 million to support the six permanent positions.

Some of these positions are focused on ensuring fidelity to cans, which is necessary even if the rates are not triggered on, as Director Troia was just speaking to. And some are focused on the fiscal funds functions including auditing, which is also related to the fidelity of the cans.

Additionally, establishing those positions will assist with cost avoidance of federal fiscal or federal financial penalties and support continued improvement in the accuracy of county expenditure information, thereby increasing accuracy and budgeting for both new and existing programs. Happy to answer questions.

Thank you so much. Department of Finance?

Would you like us to do all?

Sure, you can. Yeah.

Let's keep going through the rest of the items. That's okay.

That's a good times roll.

Okay, we'll keep going. The next two proposals are related to the utilization of funding as I was referencing earlier to reduce funding as a May revision solution to conform to the amount of funding that we expect to ultimately be expended. The first is for the Emergency Child Care bridge program.

It's a reduction of 42.7 million General Fund in 25-26 and ongoing. It maintains $51 million in funding for the program. Again, the reduction is intended to align to the current utilization rates and not expected to result in the displacement of any children accessing the bridge vouchers. The bridge program currently serves around 2,300 children.

The second proposal in that spirit is for the Family Urgent Response System, which we already spoke a little bit to, but I'll just reiterate that it was established by the legislature and governor in 2019 and operates in all 58 counties, was designed by youth in foster care and caregivers to provide crisis support and preserve placements of children and youth and family homes.

It includes both a 24/7 statewide hotline and in person county mobile response units. The May revision includes a reduction of 13 million General Fund in 25-26 and ongoing to the FERS program. The proposal does however, maintain 17 million ongoing General Fund for FERS.

This funding level is higher than any of the amount of funding that has been utilized to date and is intended to correspond to expected expenditures in the program. The next item. Oh, Kevin's right here.

Next item is oversight of manual restraints and seclusions in short term residential treatment programs. We're requesting a permanent position authority, about six positions and $1.1 million each of the next two fiscal years to implement Senate Bill 1043 from the previous term which was enacted and effective this coming January.

Again, the purpose of the bill is to increase our duties associated with reminders to youth who are experiencing seclusions and/or restraints in congregate facilities of their rights and to provide reporting on online reporting on the website we have built the website we are ready to implement. We just need the ongoing funding to actually fully implement.

Items 13 and 14 on the agenda are related the technical cleanup to eliminate the Federal Fund Transfer Authority which would result in a decrease of 996,000 for the Foster Family Home and Small Family Home Insurance Fund and then provisional language to appropriate the 600,000 towards that fund which is also often referred to as the FISH Fund for the 25-26 fiscal year.

Further allowing the Department of Finance to approve expenditures in excess of that amount when notified by the Department of Social Services that the approved claims have exceeded the amount appropriated for the FISH Fund.

This is necessary because recently there has been an increase in FISH Fund claim payments due to, among other things, the inclusion of resource families under the FISH Fund. There have also been inflationary pressures on the services necessary to treat foster child injuries covered under the FISH Fund.

As such, the maximum payout of 300,000 under the FISH Fund is much more common today.

I think the next item relates to the child and adolescent needs and strengths fidelity and training premise item with a request of funding for 2.9 million total fund, that's 2.1 million General Fund ongoing to support the implementation of the tiered rate structure by integrating the IP CANS and the CFT Fidelity plans and as an update to the CANS Fidelity and training proposal that was included in the governor's January budget.

This is an increase of 1.3 million total fund and 928,000 General Fund compared to that previously proposed funding.

The funding will facilitate the development of training and implementation of system level and case level fidelity tools including the County Practice and Implementation Profile and the CFT Observational Tool in order to monitor and improve practices related to CANS and CFT. And then I think colleague Jessica Rougeux who has the last item. I'll switch.

You want to swap out?

Oh, you want. I can swap out too.

Go ahead. I can stand. Good afternoon. Jessica Rougeux, Child Welfare System.

Sorry, can you speak up please? For the record?

Yes. Jessica Rougeux, Child Welfare System Branch CDSS. So item 16 regards the provisional language only for Child Welfare Services, California Automated Response and Engagement System, also known as CWS cares. This proposes budget bill language to provide flexibility for Department of Finance to increase augmentation amounts available from prior year's budgets.

The CWS CARES project aligns with the Cal HHS strategic priorities of a person centered, data driven designed to integrate health and human services to improve the lives of California's most vulnerable children. And we are just looking to realign prior to. Sorry. Do an augmentation of prior budget years for the completion of the project.

Thank you very much. Department of Finance.

Kia Cha, Department of Finance. Nothing to add, but here to help answer questions.

Thank you. LAO.

Thank you. Angela Short with the Legislative Analyst Office. We do have some comments to begin specific to the proposed trigger language for the foster care tiered rate structure. As you heard from the talk about.

Are you talking about item nine? Just so we can follow along.

On item 8 and 9, as they're related. Yes, yes.

So for the tiered rate structure, as the director noted, the administration is proposing that in the spring of 2027 the Department of Finance would at that time make a determination whether the General Fund has sufficient resources to support the implementation of the new foster care rate structure, the tiered rate structure.

We question whether this trigger language makes sense for a number of reasons. Firstly, the trigger language if the Department of Finance in the spring of 2027 would not trigger on the proposal. In essence, this could effectively put an indefinite delay to implementation on the tiered rate structure, creating uncertainty for youth caregivers and service providers.

At the same time, regardless of the trigger related to item 9 as well as related to item 15, the administration is still proposing that preparations to implement the tiered rate structure would continue regardless of the tiered. Excuse me. Regardless of the proposed trigger.

Given these upfront administrative costs and requirements, as well as the amount of work that the department and other stakeholders will need to undertake over the next couple of years. If the rate structure is not triggered on in the spring of 2027, this could essentially result in an inefficient use of state resources in the meantime.

Additionally, we believe that the trigger language undercuts the legislative role in the process. Namely, the trigger language defers an important policy decision whether to implement the tiered rate structure in 2027-2028 as was initially envisioned to the Department of Finance without a role for the legislature at that time.

However, as noted, this is two years away and the administration as well as our office does project that the state will continue to face budget challenges in those intervening years, meaning the legislature will have to continue to assess its priorities and weigh trade offs and make decisions about potential reductions or ways to solve budget problems over the next several years.

Therefore, we don't think that it's necessary for the legislature to decide what to do about implementing the tiered rate structure in 2027 today. There's no need to defer that future choice.

Finally, should the legislature determine that implementation of the tiered rate structure is an area where the legislature would like to reduce costs, we do think that there could be some alternatives aside from an all or nothing trigger.

For example, the legislature could direct the administration to phase in the new rate structure more slowly or could choose to phase in certain elements, for example the immediate needs or the new rates and not other elements such as the strengths building component right away.

So again, we think there are some other ways to achieve cost savings without deferring this important policy choice entirely to the administration. Thank you. Happy to answer any questions.

Thank you. Like to open it up to my colleagues. Any questions? Yes, Chair Jackson.

Thank you. Mr. Chair. A few things in terms of the. I'm going to take that gavel back.

For the foster care rate structure. I mean obviously what. Can you remind us what is the proposed savings by implementing a trigger? Department of Finance and then LAO.