Assembly Budget Subcommittee No. 7 on Accountability and Oversight

Look at you. Did you get a new ear?

I'm surprised you didn't get it with a laptop, given I feel like you're the ultimate like, hearing computer bringer. I know, Andy, simply. But no, it's not the like regular kind of question.

Good morning, everybody. I want to welcome everyone to the Assembly Budget Subcommitee on Accountability and Oversight. This is the fifth hearing of this year that we've had which continues our discussion on federal policy and funding changes and their impact on the State of California.

Now that HR1 has passed Congress and been signed by the President, we can now begin to assess its full and significant impact. In planning this hearing, dozens of stakeholders reached out and were eager to participate and share their concerns about the serious harm that this law will have on critical health, food and climate programs in California.

Level of interest was so great that today's hearing could easily have been spanned an entire day and still not capture the full breadth of perspectives from those that are affected by this legislation.

It's evident that this Subcommitee, along with others, will need to closely examine the details of HR1 in order to respond effectively and implement federal changes in a way that mitigates the damage as much as possible.

Our agenda will begin with my opening remarks, followed by the Legislative Analyst Office, who will provide a overview of the federal legislation and comments from the Department of Finance. We'll then proceed to Member questions and conclude with public comment. We've been bracing for this reality. President Trump's so called Big Beautiful Bill is now law.

This legislation is not simply a policy shift. It's a direct assault on California's core programs and our values. For decades, Californians have worked to expand health care coverage to nearly every resident, establish programs to combat hunger and reduce poverty, pioneer technologies that reduce pollution and transition us to clean energy. Invest in the education of our future leaders.

It's no coincidence that California now holds the world's fourth largest economy. It's the result of deliberate policy choices that prioritize both economic growth and the well being of our residents. In his war against California, President Trump's legislation was deliberately designed to dismantle these achievements in order to provide his billionaire friends with tax breaks.

Today's hearing is an opportunity to evaluate the harm California now faces and to begin shaping our response. Many stakeholders are looking to the state to mitigate, prevent or offset the fallout from these federal changes.

But sadly, the reality is the state does not have the capacity to backfill all of these draconian federal cundant cuts in the current budget. Climate Meeting those obligations will be difficult and our ability to assume new ones is extremely limited. We cannot simply write a check and make this go away. Still, we are not powerless.

California has always excelled at adapting to challenges with creativity, innovation and a commitment to our values. As we begin, I want to emphasize two major themes. First is the sugar rush that is represented by HR1 that includes some crowd pleasing provisions like no tax on tips and no tax on overtime.

These were designed to take effect right away, while the most painful cuts, such as reductions to MediCal and CalFresh, are delayed until after next year's midterm elections.

While much of the public focus has been on those looming cuts, our first decision points may involve whether to conform our state income tax system to these federal changes for the 2025 tax year. The second theme is the capricious treatment of California.

HR1 provides the Trump Administration with sweeping discretion over over how and when to implement new requirements for MediCal, CalFresh and the Managed Care Organization tax. The law is written to give the Administration the ability to treat California differently from other states, an alarming risk given the President's hostility toward our state.

That also assumes this Administration adheres to the bill's own rules, something we know we cannot be take for granted. Today's hearing is intended to map out our programs that are most vulnerable and to identify what when we can expect greater clarity on the extent of the damage.

This will help guide the Assembly's ongoing work in Budget Subcommittees and policy areas. Thank you all for being here. I hope today's discussion helps us chart the next steps and what will be a long and difficult journey. Before we begin, can I please call the roll.

[Roll Call]

Would any of the Committee Members like to make any introductory remarks before we have our first panelists? Yes. Assembly Member Patel.

Good morning and thank you for this opportunity to serve on this I think we know that HR1 will have devastating impacts on our low income and working families rely on subsidized health care. Republicans in Congress have delayed this impact until after midterm elections as our City Chair has said.

So we won't know for sure the true impact of some of these effects at this time, but I think we can clearly anticipate significant harm that will occur. While billionaires benefit from these tax cuts, these tax cuts are not paid for.

In fact, we know that instead of driving down the national debt, Trump and Republicans have just increased it while dismantling a very, very crucial social safety net that ultimately all of us will have to pay for. I'm pleased to join for the first hour of this hearing.

Unfortunately, I will have to step away just before to share an informational briefing with myself and Young Youth Mental Health. And thank you for shining a light on the perfect impacts that are most assuredly coming.

Chair Gabriel, would you like to go next?

Yeah. Thank you very much, Mr. Chair. I just want to start by thanking you for very able leadership of this Committee. And it's nice to have such a steady and thoughtful hand at the steering wheel as we enter these very turbulent and choppy waters. And I just want to associate myself with all of your introductory comments.

I thought they were exactly on point and we are facing a tremendous challenge here. I think serious harm is exactly the right word as you described it. But we, and I hope folks are listening in the Capitol because we're not in a position to backfill all of this. We're not. That's just not a possibility.

And that's something I think that folks who are impacted by this and stakeholders in the capital community need to understand.

But as you so eloquently put, we're not powerless and we're not going to stand idly by and the state is going to be creative and innovative and push back and do the things that we have always done to try to protect our people, to try to protect our planet, to try to protect our values.

And I really look forward to working with you on that and working with all of the Members on the Committee on that important task. That having been said, I hope that Members of the capital community and our colleagues.

I know, folks, it's a very busy day and I'm going to have to, I'm going to have to jet out as well. Are paying attention to this because it is so deeply and so fundamentally connected to what we will do in budget over the next couple of years.

It is so deeply and so fundamentally connected to all of the policy bills that people want to move forward, move forward.

So everyone in this capital, I think, needs to continue to have their eye on this because it is so the reach and potential impact of this is profound and I look forward to better understanding it with you and I look forward to working with you and with all the Members of this Committee and with our colleagues in the Senate and the Administration to do everything we can to prevent, mitigate and push back against those harms.

So thank you for your leadership.

Thank you, Chair Gabriel, Next Assemblymember Jackson and then Assembly Member Bennett.

Thank you very much, Mr. Chair, and thank you for your leadership on making sure that we continue to dissect the ramifications of HR1. And certainly as many of us as budget sub chairs have been highlighting different areas of HR1 before it became law.

The more and more we dive deeper into it, the more and more red flags that we see. And as I continue to look at the details, I grow even greater, greater concern of the amount of instability, the amount of pain, and quite frankly, the amount of death that we could be expecting as HR1 fully takes effect.

There's no doubt in my mind that as Republicans have thrown Californians under the bus once again, California is here to help try to clean up as much of the mess as possible.

And as our budget chair has indicated, although it's impossible to clean up all of the mess and to prevent all of the harm, California will do what California does best, and that is continue to innovate and continue to lead with a strong moral compass. But there's no doubt that a wave of instability is on the way.

And so as we continue to dive into this and hear from the various presentations, it is upon all of us to do our part to try to find ways to stop that wave from being as harmful as possible. HR1 is designed to try to make sure that California fails. And we will refuse to do so.

But the ripple effects that we're seeing, and in my training as a social worker, you are taught that there are key things for human existence to thrive, and that is food, that is housing, that is education, and that is health care. And HR1 devastates three out of those four pillars.

And so we have a lot of work to do. But this is a prime example of why elections matter. And we have got to continue to let people know that this Administration does not care about you, because there's nothing in this Bill that's going to truly help you out.

It's going to give you pennies while Trump's friends get billions. And so I want to thank you again for your leadership on this. And I know for sure that we will continue to dive deep into this and find ways to do our part to help clean up this mess. Thank you very much, Mr. Chair.

Thank you, Senator Jackson. Well said, Assemblymember Bennett.

Thank you very much, Chair Hart. I really look forward to this hearing. Now, I want to start from a big picture standpoint in terms of what's happening globally and what has been happening recently, and that is that autocrats around the world are seizing power by weakening democracy and eventually destroying democracy.

30 plus years ago, Russia was a democratic state. It no longer is. But there is a pattern that comes with these autocratic attempts to grab power. And first of all, they weaken and eventually destroy democracy.

The second thing that happens is consistently, if you see it around the world, the economy of those countries starts to fail because those autocrats have empowered the oligarchs and, and the oligarchs, along with that autocrat, are only concerned in their own enrichment, not the enrichment of their people.

And so consequently, what we have with this Bill is an attempt to empower oligarchs and empower the wealthiest amongst US with a $4 trillion increase to our deficit. And so I think we should view California as, as throwing a lifeline to a democracy under siege, throwing a lifeline to an economy under siege.

And from the standpoint of budget sub 4 and the issues that we're working on, throwing a lifeline to a climate under siege. It is so frustrating for me to see other countries, countries that are less democratic than us, still doing a better job than us in terms of moving forward. China is outpacing us in electric vehicles.

China is outpacing us in electric vehicle charging. China is outpacing us in solar panel production. China's outpacing us in solar panel installation. And the United States is losing its moral leadership on the climate stage, just like the United States is gradually losing its economy.

And as our chair eloquently pointed out, by using the analogy of a sugar rush. We all know from the surge of diabetes in our country that a sugar rush is bad for health and sugar rush is bad for an economy.

And the increased interest rates we will suffer as a result of higher, as a result of the higher deficits that we're going to run.

The decrease in confidence and the unwillingness of people to buy our bonds is going to hurt us when it comes to democratic leadership in the world, when it comes to economic leadership in the world, and when it comes to climate change leadership in the world.

So this September 30th, right, on September 30th, there will be the complete elimination in our country and perhaps our country alone, for subsidies for purchasing electric vehicles. December 31st of this year, there will be the complete elimination of the solar and the energy efficiency improvements, almost the only democracy in the world, eliminating any credits for that.

On June 30, we will eliminate the subsidies for all electric charging stations out there. And then on July 4th, utility scale wind and solar projects will have really strict guidelines that will eliminate long term planning and the long term investments that we need. We need to view ourselves as not being able to do everything.

When you're throwing a lifeline, you can't do everything. But we need to know how vital the lifeline is that we are throwing for democracy and for our economy and for our climate leadership in the world.

The world is counting on us to stand up to this autocratic grab of power for the autocrat and the oligarchs that surround him. Thank you very much. Thank you, Assemblymember Bennett.

Next we'll have Assemblymember Quirk Silva.

Thank you, Mr. Chair, for convening on this. And I just wanted to show appreciation to my colleagues here because now for two years we've been working on this budget in an unfavorable budget climate.

And with that means really scouring the budget to do as much as we can to protect programs, to ensure, as my colleague just said, we have a lifeline. We know that in this I'm going to not be as measured as my colleagues. And maybe that that's a little bit of being in my last term.

But this is a big, disgusting Bill. A big disgusting Bill, because what it does is impact our most vulnerable in all of the key areas that we've heard, from health care to education. But it is not only the impacts that are there. It's incredibly mean spirited.

It goes after individuals that we know have built this country, who have built California, even though it's not in this Bill, all the actions related to immigration raids.

But even when we look under education, as we celebrated in a bipartisan way on the floor about Head Start, and then now we're hearing about, oh, by the way, Head Start children who are undocumented won't be able to attend school. So this is exactly what my colleague Mr. Bennett just shared. It's a way to disenfranchise.

It's a way to disappear people. It's a way to other people, it's a way to dehumanize. And we as we are seeing before our eyes so many injustices.

But once you take food away from individuals, what's not mentioned here is even our federal subsidies for housing, These are people that many times are disabled living in our Section 8. And now to say you're either going to go to work or you're going to be on housing for two years, and that's good enough.

We are creating the outcomes that the President deplores. So now we're criminalizing homelessness. But we're also saying we're going to kick you out of Section 8 housing. This is a mad world. This is a world that many of us never thought we would be seeing before our eyes.

I don't think any of us would disagree that you have to streamline programs, you have to make programs better. There should be transparency, there should be accountability.

But when you are deliberately trying to hurt California's economy by all of the actions we've seen, withholding disaster funds, lawsuits against our, one of our largest public University at $1.0 billion UCLA. These are attempts to cripple our economy and hurt us. Why? Because we have a President who acts like an eight year old child. And why?

Because he's always gotten what he wants. And if he doesn't get what he wants, he throws a tantrum. And all of the people that follow suit or do not stand up are part of this. So yesterday as we had hundreds of people screaming and yelling about our redistricting and how unfair this is.

This is exactly a spoiled child. I don't get what I want. So I'm going to scream and cry and whine because I don't like what you are doing. But who in fact is leading this effort?

Whether it's the big disgusting Bill that we're going to hear about the impacts or whining children when California finally stands up and punches back we're living in a child's world. And as a classroom teacher I've seen this over and over.

The big bullies who take all the attention in the class, get what they want, take the learning away from other kids because they are constant presence. This is who we have running the United States of America and impacting families in California at every step they take, every step they take is being impacted.

Housing, education, health care just goes on and on. So I'm pleased to be here. I know we're going to see the hard facts, but we don't have to have these hearings because the people of California are living it. Every step they make, they are seeing their golden California lives just diminished. And such a rapid amount of months.

Seven months. Seven months. Thank you.

Thank you Assembly Member. Next we'll have Assemblymember Baines.

Thank you Assembly Leadership and Chairman Hart for holding this informational hearing. We finally know what President Trump and Washington Republicans mean when they promise to make America great again. They believe America is made greater when they rip health care away from millions of Americans.

They believe our country is made greater when when fewer children eat lunch and when more seniors skip meals to pay for their medications. They believe the poorest Americans have too much food, too much education and way too many visits to the Doctor.

Instead of looking out for the working and middle class, Washington Republicans are focused on helping the very wealthy get even further ahead. They are worried about the cost of living, but only the cost of living for billionaires.

So they are giving the richest people in the country tens of thousands of dollars in tax cuts while reducing the incomes of our poorest families. This is a Republican Party. This has always been the Republican Party Party Republicans control every branch of government in Washington right now and this is what they got together and decided to do.

The big ugly law is a bailout for Wall Street. It's a stimulus package for Jeff Bezos's yacht. It is a trickle down economics that never trickles down. What we will hear about today is not new information. Every cut was known to every Member of Congress when they voted to pass this law.

They knew the rich would win and the poor would lose. They knew they were taking health care away from millions of of Americans. They knew they were taking food away from hundreds of thousands of children. They knew they were making life harder for everyone who didn't go to an Ivy League school or inherit a fortune.

Every single Republican Member of the California House delegation signed off on this. They all voted yes, even after some of them promised to their constituents that they would vote no. They fundamentally betrayed our country and they did it because they are more afraid of of Donald Trump than of the voters in their districts.

I introduced AJR13 three months ago to censure each and one of them because they deserve to be remembered for what they have done to our state and our country.

As we listen today to our panelists and hear more from about what this new law means for the people of California, I hope that we remember that every Republican Member of Congress, every Republican Member of Congress spent months writing this Bill, considering its impacts and moving it forward.

Anyway, we should pass AJR 13 as soon as possible to enshrine in the history books that we are living at a time in American history when Congressional Republicans have placed their pledge to MAGA above their oath to office.

Thank you.

Thank you, Senator Baines. Assembly thank you. Each for your incredibly powerful and inspiring remarks to start this hearing today. This is really a demonstration of our commitment to our constituents in California. Now I'd like to invite the panel to come forward. We'll hear from all the panelists first before we go to questions.

Ms. Chu and Ms. Halterman, thank you for being here. Ms. Chu, would you like to start?

Surely. Thank you. Good morning Chair and Members, Carolyn Chu from the Legislative Analyst's Office. I'll be presenting from a handout this morning which the sergeant is passing out if you don't already have a copy.

And for those in the audience and those watching online, the handout is posted to our website, Lao.ca.gov so turning to the first page of the handout, just a little bit about the focus of my presentation today. So we were asked to give an overview of some of the major impacts of HR1 or the big Bill.

And as has been commented on by the Members, and as everyone is well aware, it is a very sweeping package of legislation. So the handout in my presentation will not touch on every component, but rather focus on some of the most significant state government impacts.

And when I talk about state government impacts, the focus of my comments today will be on what the presentation refers to as first order effects. And by that I mean effects that in which the state will need to take action to implement the legislation.

As has been commented on by the Committee Members, there are a number of areas where there will be notable reductions to services and the Legislature may wish to backfill or think about alternative ways in which the state may respond to that change in federal support and activity.

My comments today will not focus on those potential alternative actions, but certainly we'd be happy to try to help answer questions if you have them. I also just want to highlight that the my presentation reflects our early understanding of the legislation.

There are still significant regulations and guidance that need to be promulgated by the Federal Government in order to understand how components of the legislation will be implemented. So turning to the first page, excuse me, second page. What are the major areas of focus of the legislation in terms of state impacts?

And we highlight five for our presentation today, Healthcare coverage and financing, Food assistance, Higher education, Personal incorporation, taxes, and clean energy and electric vehicle tax credits. So I'll highlight a couple of the changes that the Bill includes in each of these categories, but there are other components of change that are in the Bill as well.

So when it comes to healthcare coverage and financing, one of the major, more immediate impacts is a limitation on state's ability to levy provider Taxes as this Committee is well aware, provider taxes is a major source of financing in the state's medical program.

The Budget Committee has discussed at length the state's managed care organization tax and that is one of the major state level taxes that could be affected by the Bill in the nearer term.

The legislation also requires many adults to engage in what are called community engagement activities or work requirements, and it also increases the frequency with which individuals must be redetermined as eligible for the Medi Cal program in food assistance or in California.

CalFresh the legislation limits eligibility both for certain immigrant populations as well as what are termed able bodied adults and also increases the state share of costs for both Administration and potentially imposes a share of cost for benefits which is not something the state has in the past have been required to provide.

In higher education, the Bill expands Pell Grant eligibility as well as limits federal student loans largely for graduate students, and it also creates new federal student loan repayment programs and ends some of the existing programs for personal incorporation taxes.

Largely, the Bill extends provisions of the Tax Cuts and Jobs act that was enacted in 2017 whose terms were limited at that time, but also creates some new deduct largely for seniors overtime pay tips and auto loan interest. It also raises the limit on the state and local tax deduction. Lastly, for clean energy and electric vehicle credits.

As has already been mentioned by the Committee, the legislation largely sunsets and ends those tax incentives. So turning to the third page, when do these impacts occur? I'll just highlight a couple of them on this and the next page.

As you'll see in the first table relates the major provisions that affects health care coverage and financing largely in the Medi Cal program. It is possible that the limitation on the provider taxes could be immediate.

As was mentioned, there is the ability to provide an extension to states to continue to levy more significant taxes for three years, but that is at the discretion of the Secretary of Health and Human Services.

Largely, the other major provisions in the Medi Cal arena are phased in over the next couple of years for food assistance or CalFresh. A lot of those changes are immediate upon enactment of the Bill.

However, as I'll go into later, there are additional federal guidance that needs to be promulgated in order to understand exactly how the state should implement those changes. As such, many of them are not yet in effect. The increases in the state share of cost, however, are phased in over the next couple of years.

Turning to the fourth page, in higher education, the changes to Pell Grants, student loans and loan repayment program would take effect next year and then the majority of the other changes would take effect in 2028.

For personal corporation taxes, the changes to deductions occur in the current year, so that is currently law, and then the remainder of the provisions that extend the tax cuts and job act take effect in 2026 because that is when they were otherwise expected to sunset.

As was already highlighted by the Committee, the Clean Energy and EV credits phase out over the course of this and next year. So turning to page 5 what areas require further federal guidance?

Generally speaking, all areas require some level of federal guidance, additional federal guidance to implement, but are most significant in the first four categories health, food assistance, higher education and, excuse me, three categories and higher education. The state will need further information from the Federal Government in order to implement the community engagement or work requirements.

There'll be additional information is needed on the Rural Hospital Transformation Program as well as the redeterminations process. The increase in cadence in the redeterminations process. Similarly, in food assistance, additional guidance is necessary on the increased work requirements and the limitations to eligibility. In higher education, these are in large part new programs and so new guidance is needed.

For personal corporation taxes and clean energy, additional guidance is expected, but the impacts of those is clearer compared to the other categories. Turning to page six what changes could require implementing state legislation? So what state laws might need to be changed in order to effectuate the requirements of the Bill?

Until further federal guidance is promulgated, we won't know the full extent of what laws might need to change in the state to implement the federal requirements. That said, we do expect some amount in both healthcare and in food assistance. We expect there to be significant administrative action that's also is required.

For instance, in Medi Cal, DHCs will likely need to update regulations, the state may need to submit amendments to its Medicaid state plan, and counties will need to be given guidance about how to implement the additional work requirements and redeterminations that are required.

I'll also just note in the in food assistance, the state has the program called the California Food Assistance Program or cfap, and that program provides food assistance to immigrants who otherwise are not eligible, certain immigrants who are otherwise not eligible for CalFresh.

And there may need to be some examination of what legislative changes may be needed as a result of the limitation in eligibility at the federal level to certain immigrant populations. Turning to page seven, what changes are required in the current year?

So when talking about the current year here I'm focusing on the fiscal year 202526 not the calendar year. So this is giving a bit of a more budgetary focus and the first most significant category is related to the health care provider taxes.

If the state is not provided an extension on healthcare provider taxes, there is the possibility that a notable funding mechanism, namely the managed care organization tax, would not be the source of funding it currently is for the medical program.

Most notably, currently the program is providing $4.2 billion in the current year to help pay for the underlying program and if the tax were more restricted, the state would need to find alternative funding sources or make other adjustments to to account for that lack of funding.

Additionally, those funds carry out into the multi year the restriction on provider taxes also has the potential of impacting the hospital quality assurance fee, which the state's renewal of that fee is currently before the federal Administration. We also anticipate that some additional changes may be necessary in the current year for food assistance once federal guidance is provided.

And and again, I'll just note the Legislature will want to consider the implications for the CFAT program.

So just turning to the last page, which is our which focuses what actions could be required for the budget year 202627 there are a few steps the Legislature may wish to take as many of the changes are to occur over the next few years.

We anticipate significant federal guidance to be issued over the coming months and year. The Administration, the Governor's Administration, will be the one receiving that guidance most directly.

The Legislature may wish to ask the Administration for regular updates on the details of that guidance and any potential initial steps that the Administration needs to take to respond to that guidance to prepare for the changes coming in 2728 and so forth.

We also may suggest that the Legislature will want to consider pathways for implementing some of the new requirements. What steps need to be taken at the local level in order to respond to some of the administrative requirements that counties will need to implement.

What sort of administrative assistance do counties need to implement these new requirements so as to mitigate some of the service level impacts that may occur?

Are there ways in which that the state could excuse me, that the state could help streamline some of the Administration for CalFresh to reduce the fiscal impact or address the error rate in CalFresh?

I didn't note earlier, but one of the areas in which the state will face an increased fiscal cost is if the state's error rate does not come down, the state likely will need to share in the cost of food benefits, but the state could take proactive steps to try to reduce that error rate.

And when I say error rate, I.e. payments made in the CalFresh program that otherwise shouldn't have been made. So really, in terms of the budget you're focusing on, what is the pathway to get to the sort of best case implementation of some of these new requirements.

So with that, I'm happy to answer questions, but also defer to my colleague at the Department of Finance.

Thank you Ms. Chu. That was great. Has done a fabulous job in giving us the outlines of the challenges we face. So I appreciate that work.

Ms. Halterman Morning Chair and Members of the Committee, Mary Halterman, Department of Finance. I'm the Assistant Program Budget Manager for the Department's Federal Funds Accountability and Cost Tracking Team.

Since the creation of this team in 2021, we have sought to maximize the impact of federal investments by monitoring and highlighting new funding opportunities for California, administering and entering compliance over $27 billion in COVID 19 stimulus funding awarded to the major state programs and coordinating COVID 19 direct disaster response, cost tracking and recovery.

As requested, I'm here to present the potential state impacts of HR1 that was signed by the President on July 42025.

To start at a high level, HR1 reduces taxes, makes major changes to Medicaid and SNAP, provides additional resources for border enforcement and defense, rescinds billions and previously authorized funds dedicated to green and renewable energy and increases the statutory debt limit by 5 trillion over after Congress reinstated the limit at 36.1 trillion in January.

So I'll break down the provisions between those that are effective immediately in the current state fiscal year, those that will be effective during the 26-27 budget process, and those that will not be effective until after the 26-27 budget process.

So within each of these timeframes I'll highlight provisions under the following categories Medicaid Agriculture, which includes SNAP Inflation Reduction act repeals and rescissions Energy, Interior and transportation, Homeland Security, Housing, Education, tourism and taxes.

Since the California Health and Human Services Agency released a detailed hour long presentation on the impacts of Medicaid and snap changes on July 21, which is available on YouTube. I'll just summarize at a high level, the HR1 provisions related to both Medicaid and SNAP.

So the provisions that become effective in the current fiscal year are under all of those categories that I listed and for all the provisions that were effective upon enactments, we're still awaiting further policy and implementation guidance from the various federal agencies.

So that means that the actual impact to the state may still be unknown at this time, even for the ones that were effective immediately. So for Medicaid, the following were all effective upon enactment.

The suspension of the September 23 and April 24 final rules related to certain eligibility and enrollment provisions until September of 2034 the suspension of the May 24 final rule related to nursing home minimum staffing levels until September of 2034. It prohibits states from establishing any new provider taxes or from increasing the rates of existing provider taxes.

It waives the uniform tax requirement for the Medicaid provider tax. It caps the total state directed payment amounts for inpatient hospital and nursing facility services at 100% of Medicare payment rates. It establishes the Rural Health Transformation Program, which was supposed to mitigate the impacts of the cuts on rural areas.

It appropriates $50 billion so $10 billion annually for federal fiscal years 26 to 2030.

50% of the funds are supposed to be equally distributed among all states with an approved application and 50% of the funds are supposed to be allotted to states based on the percentage of the state's population that is located in a rural area, the proportion of rural health facilities in the state relative to the number of rural health facilities nationwide, and the situation of rural hospitals in the state and any other factors the Federal Administration Deems appropriate so effective for one year.

It prohibits the payment of Medicaid funds to health care providers that are nonprofit entities or essential community providers that provide abortion services other than those covered by the Hyde Amendment and that receive Medicaid funds in excess of 800,000 in federal fiscal year 23, effective for renewals scheduled on or after January 12026.

It requires states to conduct Medicaid eligibility redeterminations at least every six months for individuals in the Medicaid expansion population. Thank you for agriculture. The following were all effective upon enactment.

It requires able body adults without dependence between the ages of 18 and 64 with certain exemptions to work or participate in a work program an average of 20 hours or more a week to remain eligible to receive benefits under SNAP Limits eligibility for SNAP benefits to residents of the US who are citizens or nationals, aliens lawfully admitted for permanent residence, aliens granted the satisfaction of Cuban entrant, or an individual who lawfully resides in the US in accordance with the Compact of Free Association for the purposes of determining household income and SNAP benefits.

It restricts the availability of the standard utility allowance for households that receive a payment under the Low Income Home Energy Assistance Programs to only households with an elderly or disabled Member. It allows annual adjustments to the Thrifty Food Plan to reflect changes in the Consumer Price Index.

This is used to determine the SNAP benefit allotment made to families. It appropriates 4 million annually through federal fiscal year 31 for farm to Food bank projects under the Emergency Food Assistance act. For Farm Safety Net programs. It provides appropriations for many of the farm safety net programs that are traditionally provided in the Farm Bill.

It rescinds unobligated funds from the Inflation Reduction act for certain U.S. forest Service programs and increases funding for various USDA programs including Plant Pest and Disease Management and Disaster Prevention Program, the Specialty Crop Block Grant and the Animal Disease Prevention and Management Program for the Inflation Reduction Act.

Repeals and Rescissions it repeals the Greenhouse Gas Reduction Fund program and rescinds unobligated balances for the U.S. Environmental Protection Agency. It has recently announced that it it's terminating the Solar for All program under this GGRF. So California was estimated to receive 250 million and we have only received reimbursements of 101,000 to date.

In addition to the GGRF program, HR1 rescinds unobligated balances for 14 other inflation reduction act programs which affect California. In total, California was estimated to receive 1.7 billion between federal fiscal years 2022 and 2026 for these programs. Since California has received minimal reimbursements from these, nearly the entire amount is at risk of precision.

It Repeals or terminates 12 Inflation Reduction act tax credit programs with some setting dates beginning in 2026 under energy, interior and transportation. It rescinds 850 million in unobligated funds previously appropriated to the Public Wireless Supply Chain Innovation Fund by the Chips and Science act of 22.

Additionally, HR1 rescinds unobligated balances for the alternative fuel and low emission aviation technology credits authorized by the Clean Air Act. It reverses onshore and offshore oil and gas royalty rates to pre Inflation Reduction act levels and reintroduces non competitive leasing for public oil and gas resources.

The Department of Interior was directed to resume quarterly oil and gas lease sales as soon as possible. It extends energy infrastructure reinvestment financing for another two years until 2028. It provides an additional 1 billion to restore or increase the capacity and use of water conveyance facilities increase water storage.

It provides more than 12.5 billion from fiscal years 25 through 29 for air traffic control improvements, including the acquisition, construction, sustainment, and improvement of facilities and equipment under Homeland Security.

HR1 includes resources for the border, which includes 1 billion for the deployment of military personnel to support operations involving the border, Counter Narcotics enforcement and Counter Transnational Criminal Organization enforcement. It appropriates 6.8 billion to the US Department of Justice for immigration enforcement activities, including the incarceration of criminal aliens and gang related investigations.

Of this 3.3 billion is designated to reimburse states and locals for any costs incurred for participation during immigration enforcement activities. However, states and locals that impede enforcement of immigration laws are not eligible to receive reimbursement.

It also provides resources to reimburse states for the incarceration of criminal aliens, but specifically states that states are not eligible for reimbursement if they restrict federal enforcement activities in any way.

It removes the cap on the amount of fees charged to an individual seeking asylum while introducing new fees or substantially increasing pre existing fees and it does not grant any fee waivers and requires all appropriate fees be paid.

Appropriate 46.6 billion for new border infrastructure and wall systems with 10 billion in additional resources to reimburse states for expenses related to border security.

It provides 500 million to improve state and local capabilities to detect, identify, track any threats from unmanned aircraft Provides Operation Stone Garden with an additional 450 million provides DHS with over 20 billion to reimburse state and local governments for activities in support of safeguarding US borders and immigration enforcement activities.

For housing HR1 expands the low Income Housing Tax Credit program beginning in 2026. For the 4% credits it lowers the private activity bond financing threshold from 50% to 25% and for the 9% credits it makes permanent the 12% increases in annual state credit allocations.

It makes permanent the new Market Tax credit that permits investors to receive tax credits for making designated equity investments in qualified community development entities targeting low income communities. It makes permanent the Qualified Opportunity Zones program that provides tax incentives for investments in economically distressed communities.

For education, the greatest impact of the changes are related to student loans which falls on the borrowers, not states. As such, impacts to the state are more economic rather than budgetary with increased repayment burdens on individuals. So specifically for student loans, H.R.

1 requires the U.S. Department of Education to transition current student current student borrowers repayment plans to a set of income based repayment plans and requires all borrowers to begin repayment repaying loans on July 12028. It limits the amount of federally subsidized student student loans for graduate and professional students.

It prohibits the use of federal direct student loans to enroll students in an education program with low earning out outcomes, which is described as an educational program for which the median earnings for at least two of the three years preceding the year of determination or less than the median earnings of a working adult in the corresponding year.

It provides that students with a student aid index equal to or exceeding twice the amount of total maximum Federal Pell Grant for the academic year are ineligible to receive a Pell Grant.

Authorizes Workforce Pell Grants, which is defined as a program between 150 and 600 clock hours of instruction that provides education aligned with high skill, high wage or in demand industry sectors or occupations and leads to a recognized post secondary credential. It authorizes 100 million for the Department of Defense impact aid payments to local education agencies.

For tourism, HR1 provides 1.6 billion for security costs related to the 2026 World Cup and 2028 Olympics. It provides the Department of Interior with 150 million to host America 250 events across the nation. For individual federal taxes, the following changes were made in HR1.

It makes permanent the current individual income tax brackets that were created under the Tax Cuts and jobs act of 2017 with annual inflation adjustments. Makes the higher standard deduction permanent with annual inflation adjustments.

It increases the cap on itemized state and local tax the SALT deductions for individuals from 10,000 to 40,000 with a 1% increase each year through 2029 and it's subject to phase out for taxpayers earning over 500,000.

Permanently increases the child tax credit to 2020200 beginning in 2026 and index for inflation permanently increases the pre tax cap on the Dependent Care assistance program from 5,000 to 7,500. Additional 6,000 in tax deductions for qualified seniors through 2028.

Makes permanent the federal estate, gift and generation skipping transfer tax exemption of 15 million per individual effective in 26 and index for inflation up to 25,000 in TIP income deductions from 2025 through 2028 with income limits up to 25,000 in overtime pay deduction for married couples from 2025 through 2028 with Income limits up to 10,000.

Deduction on car loan interest on US assembled vehicles from 25 through 28 creates a new tax deferred savings account that allows it to 5,000 contribution per year for child for children up to 18 years old eligible for children born between 2025 and 2028 will receive 1,000 in contribution.

The provisions that would be effective during the 26-27 budget year under Medicaid and SNAP. For Medicaid, the following are effective October 12026 it limits the federal matching payment for emergency Medicaid to the match for the state's regular FMAP even for immigrants who would otherwise qualify for Medicaid.

Expansion coverage except for their immigration status prohibits Medicaid payments to states for medical assistance to individuals who are not citizens. The following Medicaid work requirements are effective not later than December 312026 or earlier at state's disc.

Requires individuals 19 to 64 to complete at least 80 hours per month of community engagement activities for individuals applying for Medicaid. States must verify that they comply or that they completed the community engagement requirements at least the preceding month or more at the state's discretion and not to exceed three preceding consecutive months.

For individuals enrolled in Medicaid, States must verify that the individual completed the community engagement requirements for at least the preceding month or more in between the last and upcoming eligibility determination.

Establishes exceptions to the community engagement requirements, including for short term hardship events, incarceration, pregnancy, being the parent or guardian of a dependent child 13 years or younger or disabled individual, or who is medically frail and has special needs.

Requires States to establish a process to reuse reliable information where available to identify whether individuals meet the community engagement requirements or they qualify for an exception.

Allows the US Secretary of Health and Human Services to exempt states from compliance with the community engagement requirements upon request if the Secretary determines that the State demonstrated good faith effort to comply. However, no exceptions can be can expire or be granted later than December 312028.

The following are effective January 2027 requires states to implement quarterly screening to review the Death Master File to verify that Medicaid or enrollees are not deceased. It limits retroactive coverage of Medicaid eligible expenses to one month prior to the month of application for Medicaid expansion enrollees and two months prior for traditional Medicaid population enrollees.

Requires the Chief Actuary for CMS to Certify that Section 1115 demonstration waivers are budget neutral before new or renewed waivers are approved. So for so this is effective on 1-20-27 for states to obtain contact information on October 12029 to establish a system to prevent double enrollment.

So specifically, it requires states to obtain Medicaid enrollee address information and the address information provided to a managed care entity.

So it requires the HHS Secretary to establish a system to share information with states for the purpose of preventing individuals from being simultaneously enrolled in Medicaid in multiple states and it requires states to submit monthly enrollee Social Security numbers and other information deemed necessary by the HHS Secretary to determine whether enrollees are enrolled in Multiple States.

Effective October 2026. HR1 reduces the federal cost sharing for administering SNAP from 50% to 25% beginning in federal fiscal year 27 and every year thereafter it maintains the 50% federal cost share for federal fiscal year 26.

The provisions that would be effective in 202728 or later are under Medicaid and SNAP again so effective for new waivers beginning July 12028 for the home and community based services. HR1 expands the scope of coverage for home and community based service.

915c waivers beyond people who require an institution level care Requires that any new request for a 915c waiver demonstrate it will not increase the average amount of time that people who need HCBs will wait for services.

Requires that any new request for a 915 waiver demonstrate the average per capita expenditure for medical assistance and the waiver will not exceed the state's average per capita expenditure for medical assistance for individuals receiving institutional care. These provisions related to cost sharing are effective October 12028. It eliminates Medicaid enrollment fees or premiums for expansion.

Population Adults Requires states to impose a Medicaid coverage cost sharing up to $35 per service on Medicaid expansion population adults with income of 100 to 135% of federal poverty level. It explicitly exempts primary care, mental health and substance abuse disorder services from cost sharing.

It maintains the 5% of family income cap on out of pocket costs so effective in Federal fiscal year 2030.

HR1 provides that HHS may waive the reduction in federal financial participation participation for erroneous payments for medical assistance above the allowable 3% error rate for overpayments for eligible individuals and family families caused by errors in determining the amount of expenditures or for payments where insufficient information is available to confirm eligibility.

It does not allow the waiving of the reduction of federal financial participation for erroneous payments above 3%, above the 3% error rate for eligible individuals and families or repayments for items and services furnished to ineligible individuals. For SNAP, these state matching requirements are effective October 12028.

It reduces the federal cost share for SNAP benefit allotments for states with error rates above 6%. California's error rate in 2024 was above 10%. It permits states to use payment error rates from Federal fiscal year 2025 or 2026 to determine the state cost share for fiscal Federal Fiscal Year 28.

For Federal Fiscal Years 2029 and thereafter Sachel use the error rate from the third fiscal year preceding the year the state share is being calculated for.

So in addition to all of These provisions included, HR1 PAYGO sequestration will also be triggered 15 days after congressional adjournment, most likely on around January 222026 unless Congress acts to avoid it. The Congressional Budget Office estimates that HR1 will increase the deficit by 3.0 over 10 years.

The PAYGO act prevents new tax and direct spending legislation from increasing the federal budget deficit and requires the opposite of management and budget to maintain scorecards displaying the cost or savings produced by legislation over 5 and 10 year periods.

If Congress adjourns having increased the deficit over either period, OMB must offset the increase by ordering annual across the board cuts to specified mandatory and direct spending programs. All discretionary funding and most mandatory funding is exempt from sequestration, which includes Social Security, veteran benefits, Medicaid, snap, tanf, Unemployment Insurance and ssi.

Medicaid funding is subject to sequestration, but cuts are capped at 4%. To avoid PAYGO sequestration, Congress would need to pass legislation that resets the PayGo scorecard to zero or pushes the deficit into future years.

This type of legislation will require 60 votes in the Senate and a majority of the House to patch pass and no such legislation has been introduced to date. As additional information and implementation guidance on the numerous provisions in HR1 is released, Finance will continue to monitor the potential impacts on the state's budget.

All of these changes are being considered and taken into account as we start our process on working through the fall on developing the Governor's Budget that will be released on January 10th.

And then we will continue to work into the spring and work collabor collaboratively with the Legislature as we continue to these address these changes for the next budget.

Thank you Ms. Halterman for the very detailed presentation. I know Committee Members would appreciate your remarks in writing if that's possible.

And Ms. Chu talked about the importance of having regular communication with the Department of of Finance and Legislature as we go through these implementation stages, get additional guidance from the Federal Government that would be really helpful and would appreciate if you could commit to kind of regularly updating the legislative leadership and the Members of this Committee as those guidance become apparent.

And we are working through those issues. So thank you again. Assemblymember Bennett, you had a question?

Thank you very much, Chair Hart. Between the two of you, number one, I really appreciate that you had to read all of that into the record and it is I defy anybody to have listened and caught every detail. It's just impossible. But that was a great job of getting it all out there for us.

But I'd like now to sort of call attention to some some of the key things between the two of you. Can either one of you answer the question and in the fields of energy and transportation. Transportation.

Has anyone determined specifically how much is California going to lose in direct grants when it comes to energy and transportation and how much are we going to lose in terms of tax credit value? Do you have that information or do you know where we can get that information? And I see assistance reinforcements arriving. Right. Okay.

So all of the programs under the inflation reduction act that are being rescinded, we do have a list of those programs and the amounts for the tax credits. I don't think we have that specific information because that's more on the individual.

So you have it for the direct grants? Yes. Do you have it broken down for transportation and energy?

We have it by program. So we can figure out like which one are transportation versus energy.

You get that for us? I think that'd be very helpful as we particularly talk about climate issues, climate leadership, and the lifeline that we need to throw out there to try to keep these industries going. Because that's one of my concerns is we've asked everybody to gear up and make this transition.

And now if we cut all of this, companies whose business plan called for, we're going to take a loss at the beginning because we know the demand is going to grow up. We have to try to keep those industries sustainable through this crisis so that they can be there for us later as we move forward.

Second thing is that we had a national study done and it estimated that overall low income people will have a Net loss of $1,200 in total benefits and taxes that they have to pay.

When I read that figure, I thought that's interesting because I'll bet it's much higher for California low income people because of the vindictiveness of the Administration going after California in particular. Have we been able to calculate what the total loss is when you look at the loss in benefits as well as the taxes that they pay?

If you look at the whole big picture for Californians, by comparison to that national figure of 1200, we do not.

Have a sort of a distributional analysis, as you're referring to that specific to California in part, particularly for lower income individuals and communities.

It will depend very much on the implementation on some of the increased administrative requirements to social safety net benefits and the extent to which the state is able to put in place procedures that mitigate individuals from disenrolling from the program.

So once we have a better picture of what that will look like based on federal guidance and what the state Legislature opts to do, we may be able to have Sort of a better idea of what that could look like, but not yet.

Thank you. If I could continue, if I could follow up. I appreciate that we'll have more information later as we get more guidance. But somehow with this national study, they had to make some assumptions. They made some assumptions.

If we make the exact same assumptions for California that they made nationally, would we be able to determine using the same formula that they used? Assuming. They must be assuming. States are going to backfill X amounts. States are going to do this.

We might be able to calculate that, but it would be very valuable for us to be able to identify that.

And it would also be valuable for us to identify the additional burden all taxpayers in California are going to have to absorb because of the negative impacts to our low income earners in terms of what that translates into, in lower performance in school and less job training and in overall long term problems.

Because we all know that when the least amongst us suffers, we all suffer in some way. And we have to get more message out there about how we're all in this together. And no matter how wealthy you are, if you live in the midst of abject income inequality and poverty, etc.

You will suffer more than half if you lived in an area where everybody had their minimum needs taken care of in a healthy way. So appreciate that. Thank you.

Yeah, I think that's particularly important in the healthcare area where the system is integrated. And if hospitals are destabilized or clinics are destabilized, more than just Medicaid recipients are affected by that action too. So that's extremely important. Assembly Member Jackson thank you very much, Mr.

Chair. I'm particularly concerned about the issues of health care and food assistance. Obviously that can create some great instability in our system and in our state when it comes to some of our most vulnerable populations in terms of health care coverage.

I mean, how many people do we anticipate losing health care because of the health care coverage changes?

We are still doing our own analysis on what the potential both fiscal implications for the State are of HR1 as well as the potential disenrollment effects.

Again, and I know it can be frustrating to hear it depends on the future choices, but it will depend on what those redeterminations look like and what the community engagement and work requirements look like. So we will be forthcoming with that analysis in a month or so.

But the Administration did issue their own estimates of what they think the disenrollment effects are. So I would let the Department of Finance speak to their estimate.

So I know the Health and Human Services Agency, as the LAO pointed out, has released some initial information on what the impacts would be. I don't have it off the top of my head, but I can get you their report.

I think I heard something in the ballpark about 3 million Californians, but if you can please get us that information, that'll be important. I mean, obviously what's so important is not just what rules are being changed and what regulations, but what does that mean in terms of the human effect.

And I think we need to start talking more about the human effect, not just regulatory changes, so we can see how it really affects everyday people. Same question in regards to food assistance, what are Department of Finance, what is your.

What are the estimates currently in terms of how many people may be getting reduced food assistance and how many people may be losing food assistance altogether?

I believe some estimates have been released on that as well, so I can provide all of that.

Okay. In terms of higher education. Well, first back to healthcare. I forgot this one. It seems like we're missing the point here when we talk about requiring able bodied adults in Medicaid to work, study or complete community services. Number one, who's going to determine what is an able bodied adult?

Is that left to a Doctor or is that left to some Department in dc? And then number two, there are many cases where you may someone who may be physically able to get out of bed may not be mentally able to get out of bed.

And so what are we looking at or what do we anticipate seeing when it comes to ensuring that eligibility or who is able to do certain things is based upon science and not based upon ideology?

So I think with a lot of that, I believe we're still waiting for the rules and the guidance from the federal agencies on how that's to be implemented. So I don't think any of that was specified in HR1.

In terms of higher education that places new caps on annual and aggregate federal student loans for all borrowers. Are we hearing anything from any of our departments or University systems when it comes to how would that affect people's ability to complete college?

The changes largely affect graduate students, not undergraduate students. But if your question is specific to graduate students, I would need to defer to finance or my higher education counterparts.

Jennifer Pichella from the LAO, it's not going to be a particularly satisfying answer. I know UC is in the room. They probably have the best idea of the immediate impact of these graduate student loan caps on whether they're having an immediate impact.

They're most likely to be affecting professional school students, health and law school students, business school students that have the highest rates. The typical academic student who's maybe in a doctoral program is much less likely to be affected. The limit is still at 200,000 cumulatively for graduate education. So it's again, the students in those particular programs.

I'm sorry though, we don't know the impact. For example, this fall or next fall. I'm sorry, the loans don't, the caps don't go to effect until July 1st of 2026. So even UC might not have a great idea of what's going to happen in the future school year.

No I understand that. I mean, obviously this is also a grave concern, as we have, we know that. I don't... In my last three years, I haven't heard of an industry yet that are not short in terms of professionals in the workforce and many of them needing higher levels of education in terms of master's and doctorate degrees.

And certainly as someone, as a state that is whether it's a leader in technology, biomedicine and other industries that we're still trying to catch up on professions is going to be very important to really dissect which professions will that actually be the most harmful for as we begin to go into particularly the next budget cycle as well.

So if we can get that information, that'll be very important next going into personal and corporate taxes.

Senator Jackson, we have a representative from UC here that might be able to answer some of your questions.

Perfect.

Thank you for the opportunity to speak, Seya Vertan, University of California. The elimination of the Graduate Plus Loan program beginning July 1st of 2026 for new students will impact primarily professional degree students at UC. In 23, 24 fiscal year, UC students received $223 million through the Graduate Plus Loan program.

This was about 6,800 students who took out loans in that first year. When new students are no longer eligible, it'll impact about 1,700. The overall impact for the state will be that especially our health professional students will not be able to get subsidized loans. They'll have to go to the unsubsidized loans. It'll make the programs more expensive.

It'll exacerbate our health workforce shortage in this state. And we think it will impact underrepresented minority student attendance in advanced, in our professional degree programs beyond bachelor's degrees.

And are you thinking more in terms of medical doctors and those who are, you know, dentists and others in those medical fields? Are you even talking about nurses and others?

Primarily doctors and dentists. But it will impact nurses as well. Any programs that are costly, that take multiple years will be impacted. Lawyers as well, but.

All right, thank you very much.

Thank you for the opportunity to speak. Thank you.

Thank you very much. In the area of personal and corporate taxes, obviously, some key distinctions I think are very important, and that is even though we are seeing deductions for seniors, overtime pay, tips and auto loan interest, is very important to see that those are only temporary, correct?

That's correct.

And when do those, when do those expire?

In calendar year 2028. Tax year 2028.

So in calendar year 2028, basically along an election cycle or two, we are seeing that for everyday people, they are getting which really amounts to really small financial help that we are seeing. What's most important is the permanency of a number of the business and bonuses and others that are really affecting the most wealthier individuals.

When you look at different percentages, what percentage of these tax deductions, whether they're permanent or temporary, what percentages does this really help everyday working people that are at $100,000 or below?

Yeah. Brian Euler with the LAO. So the CBO recently published a distributional analysis of the Bill and I think that's been referred to a few times. I think some of them are... Bennett quoted the $1200 number. In that same study, it does lump together the tax and the benefit and the other changes.

But for the upper, let's say the top 10%, most of the changes there are for taxes. And for that group, as compared to sort of the median, the dollar amount of their benefit is about 10 times the size of a median taxpayer and about three times the size in terms of the percentage of their income.

So are we saying that, I mean, are we talking about 80, 90% in terms of who those who are benefiting who are at the top 10% of income in our country, or are we talking about, I mean, do you have any idea in terms of percentage of how much it really helps people?

I'm sorry, I think maybe I'm not understanding your question.

Meaning when it took, when it comes to the total amount of money that is going towards tax relief overall, are we looking at a 60-40 split when it comes to higher income people and working people or, I mean, how disproportionate is this?

I know you said 10 times this and 10 times that, but I'm a political science major, so I can't do that.

Yeah, I'm sorry. So that's the statistic I brought at hand. I mean, I think from that same study we could probably get a, I could get a number for what you're looking at. We could follow up with you.

But I mean, I think it's certainly based on those numbers in the CBO report, it's a significant majority, even just to the top 10% of taxpayers are receiving the majority of the benefits.

If it means anything to you, the studies I've read suggest 90%,

90%?

top 10%.

90% of tax breaks are actually going to the top 10% of wage earners and, well, I won't even say they earn those wages, but of rich people. Right.

Is it fair to say that the administration's ultimate goal of a permanent wealth redistribution in this country was successful in HR1?

I think that the Bill does, prior to. Excuse me, as compared to prior law, does result in additional resources going to higher income families than those in the rest of the distribution.

Okay, thank you very much, Mr. Chair. Thank you. Senator Jackson, Senator Quirk-Silva.

Thank you. I don't. Do you know, you have your light on? You're light on your.

Oh, thank you. I didn't know that.

That's been on for a long time. Okay. Yeah. I have a few questions. I appreciate the questions from my colleague sitting right here, starting with the SALT deduction.

Can you give, on an average, if you want to say middle income California, what this does as far as dollars or an estimate, I should say.

Yeah. So that's another one. I think we'll probably have to get back to you. So one thing that I can say though is that in General, the benefits for the SALT are more skewed towards upper middle income and higher income because a prerequisite to benefiting from the SALT deduction is that you're an itemizer.

And for the most part, that's only upper middle income and higher income individuals who are itemizing.

So there are, there are, there are individuals that are very pleased with this big disgusting Bill because it benefits them. You don't have to comment on that. All right.

On the students, as far as student loans related to this year's enactment, do we have any, again, estimate of how much of an increase this will be to the average student loan in dollars. So say they were paying $200 a month. What's the estimate of how much more they will be paying per month?

Yeah, so when it comes to the new Jennifer Pichella, again, when it comes to the repayment plans, which I think is the question about the new repayment options, there's only been a few studies so far that have tried to simulate what the impact will be.

The lowest income folks have a minimum $10 monthly payment, which under some of the existing, under one existing repayment option there's a zero requirement. So in that regard, some folks will be paying more. The average, which I think was your question for, is not likely to increase much, if at all. So it will.

The repayment structures are, I'm sorry, they are slightly less generous, but on the undergraduate level they're thinking again, there's not much study on it right now, but the average might not go up much. The plans on the student loans, they don't have notable components that would make you think costs would be notably higher.

It simplifies the payment plans by and large. So rather than having something like seven or more plans, they come down to two plans. One is a standard mortgage type plan. Depending on how much you take out, you have a 15, 20 or 25 year standard repayment.

And then this new repayment assistance, which I think has been the largest piece of conversation, replaces all those existing income repayment income linked plans. It's graduated, it starts at $10, goes up to 10% of your income. So I'm sorry, I don't know if that answers your question.

Kind of, but, and it's good to hear that it's not as dramatic as we might be thinking, you know, maybe going from $200 a month to $400 a month or doubling. But where would the average again, person who has taken out student loans be able to attain this information on how it's going to directly affect them?

Because I know they're taking the loans out of the education and putting them into small business, I think, or where are those loans going to so they can know the information we've still been accessing has been coming from the US Department of Education. I suspect campus financial aid offices will be doing their best. But yes, there could be an impact just on students understanding their new options. Now they are given a few years before existing borrowers have to...

They don't have to move into a new plan until 2028. But I think it will take some time for students and campus financial aid offices to navigate the new...

When you get that information, can you get it to us? Because again, we have constituents that we want to be giving this information out in real time. As again, for many of us who are not counting every penny every month, you can absorb $100, $200.

But for students or people who are just entering the workforce after college and they're expecting to pay X and now that much maybe, you know, another $100, another $200.

This is real math for them and it's very concerning, especially when you see other areas of support that they may need to finance now, whether it's health care and other areas.

All right, very quickly, just going back to the CalFresh, I just want to try to get like again, a dollar amount when we say that there will be limits and there will be individuals that won't be covered. What is the average CalFresh payment say for a family of four that qualifies, of course, in a monthly number?

I want to. My colleague will help me, but I want to say the average benefit or the average benefit was around $165 per month.

Thank you. Ginny Bello with the Legislative Analyst Office. The information I have in front of me right now from the Administration says that the average monthly benefit per individual is about 194.

Okay. So a family might be a little bit more than that. So somewhere close to $200 of food assistance to those who qualify will be eliminated as of now is that?

We're still waiting federal guidance for the majority of the reductions on CalFresh that will impact eligibility and benefits. There are some. There's some recent guidance that was just issued related to the amount of deductions you can take in determining your eligibility amount, but that still has not been fully implemented yet.

So again, speaking to constituents of ours, what would be our best messaging that in the next 2, 3, 4, 6 months they can expect a... Either an elimination of this benefit or a change in that. How do we go about explaining this, too?

Yes, I think for this one, it's a little bit difficult because there's different implementation deadlines for different things and it affects different families in different ways. So for non citizens, those would be in effect immediately, but we don't have guidance yet.

So we're still waiting for that federal guidance to be able to tell the implementation deadline. For other things, they're longer term. Right. So we know that there's going to be differences in how the monthly benefit amounts are calculated going forward compared to how we've historically done it. So that's something that will be implemented in a few years.

So there's different components of it that are happening at different times. So it might be helpful for us to follow up with a little table for you that shows you sort of all the different deadlines and the different pieces that kick on at different times.

That would be really helpful because, again, whether we believe as a country or a state that people should have access to benefits, these are people that need to be able to manage their lives related to food and related to feeding their families.

And if we, in fact, intersect all these issues that are happening at the same time, for example, mass immigration raids where people are afraid to go to work or are not going to work or afraid to send their kids to school, and then we know there's school meals and so forth that they're not getting, we have a real crisis.

This isn't awaiting to happen in six months or a year. This is happening in real time. When we intersect families who, even though they've been, I think, told it's safe to send your kids to school, ICE won't be allowed on campus. And yet the first day of school in Los Angeles, you have a student who's arrested.

These are messaging that they're receiving. And so for when we can get whatever information we can that is just concrete and real, it at least helps them make decisions. And sadly, there's going to be families that are making decisions to leave completely.

But we need to have as much information as we can gather, even though I know there's a lot of chaos and information, because these are people trying to make decisions about their lives with the information we can give them. But I appreciate. And then on all your robust notes, we appreciate.

Is there a way we can get a copy of that?

I can provide summaries of this.

That would be great. Thank you.

Thank you, Senator Member Quirk-Silva. My questions have to do with eligibility for Medi Cal and CalFresh. There's a certain percentage of folks who are eligible that are not taking that assistance now.

And I know from the experience in Georgia when the eligibility requirements for Medicaid were tightened as a, I think it was a pilot program there that resulted in a dramatic drop in folks who are participating in the program.

The bureaucratic steps that were created became extremely onerous, were very difficult for folks to navigate, and as a result, many, many people fell off Medicaid rolls in the State of Georgia. And I'm worried about the same thing happening in California. But I think that is something potentially that we can control by making that, you know, as...

As less onerous as possible. But I'm, I'm curious about, you know, the starting place. What, what percentage of eligible Californians receive Medi Cal and CalFresh today? What it, what is the standard?

The take up rate for both programs is pretty high in part for Medi Cal it 's so high because of automatic enrollment when individuals come to the ER. CalFresh is somewhat lower, I think around 80%. But I'll let my colleagues speak to the Pacific percentages.

Those are the right. Okay, good. All right.

Well, and I guess there's not a lot of potential there, but that is something I think that we can control is that, you know, doing more to make more folks eligible for the diminished benefits that both those programs are going to represent is, is an important part of trying to help overall.

And that's something I know it's difficult to do that without having the guidance from the Federal Government to know precisely what it is. But, you know, some thought to what could we do to make it even easier and bring the uptake?

And I imagine that that, you know, percentage is also geographically distributed in different ways and that there are pockets where there is much less uptake that we probably need to concentrate outreach efforts. And, and yes, anticipating my thoughts.

Well, I just wanted to really highlight a point you're driving to, which is that what past experience has shown for work requirements in some states, and only a few states have sort of implemented work requirements for Medicaid. But what they found is that, you know, most able bodied adults in Medicaid, most states generally already work.

And so a lot of that disenrollment are people who otherwise meet their requirements but are lost in having to prove eligibility each month and the heightened burden of proving eligibility. That is, if the state's thinking about how to mitigate some of the impacts, some of that will be very dependent on implementation.

And that could be a key area of focus for the Legislature. The state has some experience with this. Over time. The state has unwound policies that were in place during the pandemic that made many people eligible for Medi Cal. And the state implemented certain flexibilities that helped mitigate some of the disenrolling effects of that.

So the state has a record of exploring ways to ease implementation. And there are some potential flexibilities in the new recent federal legislation as well. For example, for work requirements, instead of measuring hours worked, you can also measure it based on income.

So there are different tools the Legislature can maybe dig into and explore to help mitigate some of those effects.

Thank you. That's exactly what I was looking for. It's just creativity in that space to try and mitigate the damage that we're looking at. Are there any other questions from Committee Members? All right.

Well, thank you so much all for being so prepared to answer these complicated questions and with the information that helps us set the table for ongoing conversations. Very valuable time today. Next, we'll go to public comment. Anybody like to line up? Going to set up a microphone?

Yes, please go right ahead. Thank you.

Thank you. Justin Garrett with the California State Association of Counties, representing all 58 counties. Really appreciative of you holding the hearing today and starting the conversation on the far-reaching budget impacts of HR 1. Many provisions of HR 1 will have monumental impacts to county budgets, severely constraining the ability of counties to provide safety net services.

Some of the examples include significantly increased county administrative workload and operational responsibilities for new and expanded work requirements and eligibility verifications for CalFresh and Medi-Cal at a cost of hundreds of millions of dollars, a straight cost shift of the county portion of the CalFresh administrative cost of more than $200 or $200 million annually, and then reduced eligibility for these programs will put untenable strains on other county programs that could potentially serve individuals who lose coverage or benefits.

So simply put, counties will not be able to manage the increased costs that result from HR 1 without additional supports and resources and partnership without severely reducing and eliminating county services and programs across the full spectrum of county government.

CSAC's appreciative of this Legislature and the Administration, understand the valuable partnership and essential role that counties perform in providing mandated services on behalf of the state, and we're eager to partner with you on what is needed to mitigate the impacts of HR 1 on county budgets and ensure that vulnerable individuals can still receive all the needed safety net services. Thank you.

Thank you for those comments. It's exactly what I spoke to at the beginning of the hearing, saying that we could have had stakeholders and presentations from everybody that's lined up today. We would be having a hearing all day and it would be very valuable time spent, so thank you for your comments.

Good morning, Mr. Hart. Alicia Hatfield, EveryChild California. Thank you so much for taking the time to examine how passage of this bill is going to be be impacting Californians.

So as we continue to assess the impact of HR 1, I'd really love for the committee to keep in mind that we sustain early education through a blend of federal funding and state funding. Because of this bill, early educators are now carrying heavier social, emotional, and financial burdens than ever before. The passage of HR 1, combined with the recent reinterpretation of the eligibility for Head Start, has also increased administrative burden on early childhood educators.

At the same time HR 1 provided a substantial increase to the funding for ICE, it shifted this burden over to early childhood educators, and we--while the state obviously can't do something directly, we ask that that ICE take care of this administrative burden that they've been so financed for instead of passing it on to our teachers.

Finally, pay is already unsustainably low for early educators and many of our educators depended on SNAP and Medicaid just to make ends meet. I do know personally of one mother raising three daughters who has a decrease in $975 per month. So Mr. Bennett brought up that there would be a $1,200 decrease as estimated by the CBO and that is grossly underestimated. Thank you so much.

Thank you for that information and for your work with our early children. Hi.

Hi. Good afternoon or good morning. My name is Vanessa Orozco. I'm a Legislative Advocate with Golden State Opportunity. We appreciate the opportunity to comment on the impacts of HR 1, specifically regarding the Child Tax Credit, the changes in HR 1, including excluding children and parents without Social Security Numbers is going to have devastating consequences on California families.

The Child Tax Credit has proven to improve children's health, education, and economic outcomes. Excluding families based on immigration status will create hardship, especially for low-income and rural communities. As California examines how to respond to these federal changes, it's important to consider the real consequences for family and children across the state. Golden State Opportunity is committed to working with the Legislature and partners to ensure all California children have the resources they need to thrive. Thank you.

Thank you.

Sorry. Good morning. Mariam Sossouadouno. I'm a Staff Attorney at the Child Care Law Center. A government's budget should help every person work, live, and raise their family with dignity, creating a more equitable society for all. Instead, a majority of our federal Republican leaders have chosen to inflict pain, suffering, and death on our communities.

We urge the Legislature to develop new revenue pathways to protect and sustain life-changing programs like affordable childcare, Medi-Cal, and CalFresh. As we saw in the 25-26 state budget, closing budget shortfalls without raising revenues results in discriminatory policies that harm the same policy--the same populations that the federal government is targeting.

California must close corporate tax loopholes and end inequitable tax breaks. We also encourage you to recognize funding affordable childcare as a revenue-generating solution that will have an immediate, positive impact on all Californians. This is how we protect our communities during this time of uncertainty and threat and we make our state stronger now and in the future. Thank you.

Thank you.

Good morning. Christine Smith with Health Access California. We are members of the Fight for Our Health Coalition and continue to oppose HR 1's impact on community health and Medi-Cal. Millions will either find it harder to reach coverage or afford their care.

The cuts--the changes in federal law and the cuts in our state budget to Medi-Cal for undocumented people will make it increasingly challenging for people to get healthcare in California. We are also voicing concerns about the expiring enhanced premium tax credits that could raise healthcare costs by 97% for Californians in Covered California.

Premiums are expected to double or more for many enrollees, and people ages 55 to 64 earning over 62,600 will face premiums as high as $1,400 per month. Communities that had some of the highest gains in enrollment since 2020 will face the greatest threats to affordable coverage without the enhanced premium tax credit. Thank you.

Thank you, Ms. Smith.

Good morning. Michelle Johnston with the National Multiple Sclerosis Society, also a member of the Fight for Our Health Coalition. I want to thank you for holding this hearing and urge you to seek solutions to mitigate HR 1's impact on the health of Californians with disabilities.

For individuals with MS and their care partners, Medi-Cal and SNAP are more than just safety nets; they're a critical lifeline. Throughout the country, over 15% of persons living with MS are on Medicaid, not including the long-term care. Managing MS requires lifelong care at an average annual cost of over $88,000 per year.

Ensuring continuous and adequate coverage reduces the risk of disease progression, prevents costly hospitalizations, and can enable people like myself who live with MS to remain engaged in our communities and our workforce.

We're also concerned that the recent codification of rules related to the Affordable Care Act and the upcoming expiration of the enhanced advanced premium tax credits will lead to many being unable to find affordable care--affordable coverage.

Since over half of people living with MS experience some form of cognitive symptoms, navigating more frequent, complicated administrative procedures when attempting to enroll or maintain their health insurance will make it significantly more likely that they will lose access, as was mentioned earlier. We ask you to continue to seek opportunities to mitigate the negative impacts of this legislation. Thank you.

Thank you, Ms. Johnston.

Morning, Chair Hart. Laura Lane, on behalf of the California Association of Public Hospitals. Thank you for convening the hearing today. As you heard, HR 1 cuts nearly $1 trillion from Medicaid over ten years. That's about $250 million every day ripped from healthcare across this country. HR 1 threatens the foundation of California safety net systems.

Our 17 public healthcare systems serve three million patients, providing 35% of all Medi-Cal and uninsured hospital care. The financial impact of this bill is devastating. By 2032, just the state directed payment cuts alone will result in a $2.3 billion net loss to our public healthcare systems.

When combined with other looming federal cuts and state budget cuts to our program serving undocumented immigrants, we're looking at more than $7 billion in lost funding annually while simultaneously serving millions of additional uninsured patients.

HR 1's eligibility changes could strip coverage from up to 3.4 million Medi-Cal members, creating a surge in uncompensated care precisely when our funding is being slashed. This isn't theoretical. Closures, service cuts, and layoffs are practically guaranteed, and the collapse will cascade far beyond our public systems to overwhelm every hospital, clinic, and emergency room across the state. We need your partnership to develop strategies that preserve coverage, protect patients, and prevent any further cuts to California's healthcare system. Thank you.

Thank you, Ms. Lane, for sharing those sobering facts.

Good morning. Whitney Francis with the Western Center on Law and Poverty, also a member of the Fight for Our Health Coalition. We appreciate the opportunity to comment on HR 1 implementation, which unfortunately will result in massive healthcare coverage losses, significant medical debt, and worse health outcomes and push Californians further into poverty, disproportionately harming our working poor and adults experiencing homelessness.

We oppose HR 1's discriminatory policies targeted at immigrant communities, including expansion of ICE enforcement, funding cuts, and rule changes to social safety net benefits and the parental Social Security Number requirement that nearly excludes immigrant families from accessing the Child Tax Credit on top of racist cuts to food and healthcare.

California can and should take innovative and bold approaches to minimize the harms of HR 1 and reduce barriers to Californians' healthcare and social safety net access, regardless of immigration status.

This includes adopting new, non-regressive revenue solutions, maximizing automations in Medi-Cal while being mindful of AI pitfalls, bringing member-centric efficiencies to date's burdensome manual processes, and centering members through effective, fully translated, and understandable communication and outreach. We look forward to working with you. Thank you.

Thank you very much.

Good morning, Chair Hart. My name is Danielle Bautista with United Ways of California, also here as a member of the Fight for Our Health Coalition, here to uplift that we must protect and keep intact our most vital programs, as you know, to ensure the health, wellness, and financial stability of all Californians.

As my colleague mentioned, about 3.4 million Americans could lose health coverage through HR 1, and the Golden State is estimated to lose close to $30 billion in Medi-Cal funding. And on top of this, even more Californians could find it harder to access and afford health coverage.

Additionally, the new federal Child Tax Credit exclusions will mean that less households would have access to this final tax credit, translating to less support for basic necessities, meaning less money going into our local economies. And as the fourth largest economy, we know and we are capable of doing right by our most vulnerable neighbors and communities and we strongly urge the Legislature to take action this session and into the next sessions to strategize and mitigate the detrimental harm and impacts of HR 1. Thank you so much.

Thank you, Ms. Bautista.

Good morning, chair. Jorge Cruz, on behalf of the California Behavioral Health Association. HR 1 will take billions out of California's health system. Cuts to the MCO cost, the MCO tax, the hospital quality assurance fee, and state direct payments will leave major holes in the Medi-Cal budget, and without backfills, behavioral health providers will save closures and--will face cuts or closures.

New work requirements and frequent eligibility renewals will also drive up administrative costs while reducing federal match. This means a lot, a lot less money going to direct care and more spent on paperwork.

Every lost federal dollar will shift cost to counties, emergency rooms, and crisis services, which is the most expensive way to provide behavioral healthcare. We urge you to prioritize sustainability financing to keep services in place for those who need it the most. Thank you so much.

Thank you, Mr. Cruz.

Good morning, Mr. Chair and members. My name is Conrad Crump, and I'm here on behalf of Disability Rights California, and we appreciate the opportunity to speak and provide comment today. We know HR 1 will make many changes, but as Assembly Member Jackson previously alluded to, we're asking you to remember the human effect, and as such, our ask is simple.

We're asking you to protect home and community-based services for as many Californians as possible, including our disabled immigrants. Now, programs like IHSS, the HCBA Waiver, and Regional Center Services for people with developmental disabilities let people with disabilities live full lives in their communities and they also save the state money.

Now, the alternative is forcing hundreds of thousands of disabled people who need daily care into institutions. That costs far more and it takes away the right for them to live independently. Now, California has spent decades moving away from that model and for very good reason, and if we cut these services, we ultimately raise costs in the long run, and families, counties, healthcare systems will all be left scrambling.

Protecting them isn't just the right thing to do; it's also the fiscally responsible choice for California. So, respectfully, we ask that you protect and preserve these critical services for California's most vulnerable populations. Thank you.

Thank you, Mr. Crump.

Good morning, Mr. Chair. My name is Oussama Mokeddem, here speaking on behalf of the Council on American Islamic Relations, California. We're the nation's largest Muslim civil rights organization, providing direct, legal, and upstream services to California's various immigrant communities. We're also here as a member of the One California Coalition.

Our communities are deeply concerned about the devastating impacts of HR 1, particularly on immigrant families as well as all Californians. By cutting billions from healthcare and food assistance while funneling it into unprecedented resources for immigration enforcement, the bill threatens the safety, the dignity, and the well-being of millions.

In California alone, millions stand to lose access to Medi-Cal, food assistance, and other essential supports, while immigrant families live under the constant fear of raids, detention, and deportations.

This is not only an attack on immigrants; it undermines the health and stability of every Californian, and we urge the Legislature today to act boldly as well as the governor and, you know, we urge you to protect California's immigrant communities to ensure ongoing access to state safety net programs and pursue revenue solutions that prioritize the health and security of all people in our state, and we'd like to thank you for holding this convening today to discuss the detrimental impacts of HR 1. Thank you.

Thank you for speaking up for our immigrant neighbors.

Tiffany Whiten with SEIU California. Thank you, Mr. Chair and committee members for lifting up the importance for beneficiaries to continue to have access to CalFresh. Unfortunately, the provisions outlined would have drastic effects on access to food assistance, the workload of the county workforce, and our ability to get services to individuals and their families.

These provisions will also impact our state's payment error rate which will only further jeopardize access to assistance. One important piece to note is that although the error rate provision doesn't take effect immediately, we as a state can make sure that important changes are made now to improve our error rate accuracy.

And given that errors or both over-issuance and under-issuance can be counted towards the state's error rate, we urge caution and extreme care when considering implementation of AI systems to the administration of public benefits.

And then finally, as we all know, that these impacts to the CalFresh program will have a ripple effect on the safety net programs that we care and love so much and dearly and help other Californians, so we should consider these implications as we continue to work together over the weeks and coming months. Thank you.

Thank you.

Good morning, Chair Hart, and thank you for this hearing. I'm also with SEIU California--Beth Malinowski--and just want to really speak a bit to the work our SEIU members have been doing really over the past six months.

As you're well aware, we did countless actions over the past six months to prevent the conversations we are forced to have today, partnering incredibly closely with our Fight for Our Health Coalition--you heard from my colleagues in that coalition earlier today--Anti-Hunger Coalition, and our immigrant right communities.

Now, we took this fight to DCA, we bring it back here, and as was shared earlier, we're not powerless. I think that's incredibly important for us to remember collectively is our collective shared values, our workforce across all sectors that have really driven our economy, driven the equity we have moved towards, that can be moved towards here as a state, and we need to really dig into those shared values, not only address what my colleague Tiffany just spoke to, but to navigate these cuts to stop losses in care and services, to drive our economy forward, and to find new revenue.

I was glad to hear that reference earlier today on the dais and just want to really reiterate how important it is that we are working together to strengthen our economy to find those new revenue sources, and really with that, we can bring back some hope and progress to our state during these difficult times. So, thank you.

Thank you for that positive, optimistic message.

Good morning. I'm Sarah Diaz from the California WIC Association, and HR 1 poses serious risks to California WIC families. There are about a million of them in California. Many participants qualify through Medi-Cal or SNAP, so cuts to these programs will undermine WIC access, adding burdens for pregnant people, parents, children, and staff, and leaving families without nutrition support during critical years.

Medi-Cal provides essential health coverage for about 80% of WIC families. Reducing eligibility or benefits would strip care and block a key pathway to WIC. SNAP cuts would heighten food insecurity which already affects 45% of California WIC families while removing another route to eligibility for WIC. Together, fewer families qualifying for WIC and greater hardship from HR 1's cuts would worsen maternal child health, reducing breastfeeding support and increasing risks like anemia and obesity.

We urge state lawmakers to preserve--to the extent possible--access to Medi-Cal, SNAP, and other safety net programs. Weakening them will deepen inequities, harm child development, and drive up long-term healthcare costs. Thank you.

Thank you. Appreciate the challenge for us to do better.

Good morning, Chair Hart. My name is Symphoni Barbee, here on behalf of Planned Parenthood Affiliates of California, representing the seven Planned Parenthood Affiliates across the state, operating 109 health centers, community health centers, and for Planned Parenthood in California, HR 1 is devastating. The law federally defunded Planned Parenthood overnight.

This means a loss of $305 million annually to the state in federal matching dollars to reimburse Planned Parenthood for family planning services they provide in the Medi-Cal program, and for a little context, around 80% of all of our patients, our Medi-Cal beneficiaries.

And so as a result, the future of sexual and reproductive healthcare here in California hangs in the balance. We look forward to having further conversations and working with state leaders to ensure that patients maintain access to Planned Parenthood health centers and that California remains a reproductive freedom state. We thank you for your attention to this matter. Have a good one.

Thank you, Ms. Barbee, and Planned Parenthood is so critical to our state and nation.

Good morning. Sara Bachez with Children Now. We're just alarmed with the impacts of the federal actions, including HR 1, that have on our children, our youth, and their families' safety, well-being, and ability to persist.

The state's main educational funding system, known as the Local Control Funding Formula, recognizes and accounts for generating additional funds for students that are low-income, foster youth, and English learners, and families that are eligible for Medicaid and SNAP. It's one of those mechanisms that we use to meet low-income thresholds.

We're concerned of the drastic changes to access to these federal programs will have unintended consequences in accounting for that additional funding to serve those students that generate it at the local level.

We're also concerned that the reductions of staff and the elimination of the department, the U.S. Department of Education, will remove student civil rights and programmatic protections, including for students with disabilities and access to higher education financial aid.

We urge you to continue to advocate for the protection of those already appropriated funds that were there to ensure our most vulnerable children and their families can overcome the steep economic and systemic barriers they face. Thank you for your leadership.

Thank you.

Good morning. Thank you, Chair Hart and members of the committee for holding this important hearing. My name is Mandy Diec with Southeast Asia Resource Action Center, SEARAC, and we represent the largest share of refugees ever resettled in this country.

This year, 2025, marks 50 years since our communities began resettling from Laos, Cambodia, and Vietnam and began calling California our new home. As survivors of war and genocide, Southeast Asian Americans still face disparate health and mental health outcomes as well as significant economic, educational, and linguistic barriers.

The federal government is slashing safety net programs to supercharge immigration and border enforcement. For Southeast Asian Americans, the increase in detainment and deportation and the separation from their families is a re-traumatization and the exact situations that many fled and escaped to come to this country.

Millions of Californians, including refugee children and families, will be deprived of healthcare and food assistance to pay for 10,000 more ICE agents, 3,000 more Border Patrol agents, and immigration jails and detention camps to jail over 100,000 people.

3.5 million Californians will lose access to Medi-Cal, including many Southeast Asian American refugee and immigrant families, and over 100,000 immigrant Californians will lose access to Covered California. 74,000 immigrant Californians will also now be ineligible for SNAP and benefits because of HR 1.

So we ask that the Legislature must ensure that ongoing state benefits are there for immigrant Californians and pursue revenue-generating solutions to address future budget shortfalls and fund a state budget that protects the health, safety, and well-being of all Californians. Thank you.

Thank you, and congratulations on your 50 years of service. We need you more than ever.

Kelly Brooks, on behalf of the County Welfare Directors Association. The federal SNAP changes, which are effective upon enactment of HR 1, create a massive increase in workload for counties to support newly affected populations like older adults, parents with older dependent children, veterans, and former foster youth. Counties are already at capacity within their CalFresh allocations.

Without urgent resources before the end of session, efforts to maintain access to food benefits will be jeopardized and risks an increase in error rates and potential service disruptions. We need immediate action to ensure counties can protect clients' access to CalFresh.

Additionally, we are evaluating the Medicaid eligibility changes and anticipate significant workload that will require state resources, automation changes and training, and look forward to continued conversations over the coming weeks and months. Thank you.

Thank you, Ms. Brook.

Hi. Good morning, chair. My name is Maria Morales, here on behalf of Hispanas Organized for Political Equality, HOPE. We work to build economic mobility for Latinas and the larger Latino community, and we also know that HR 1 will have a devastating impact on the population that we serve and particularly Latino children who make up over half of the children in the state.

This bill would strip healthcare from 3.5 million Californians, blocking over 112,000 immigrants from Covered California. It also makes the largest cuts to food assistance in history, leaving 74,000 immigrant Californians without SNAP and threatening Latino children in particular, since nearly three out of five Latino children nationwide rely on Medicaid or SNAP. It also eliminates the Child Tax Credit for 4.5 million U.S. citizen children in mixed-status families, punishing them simply because one parent is undocumented.

We urge the state to act to backfill these federal cuts, including by reimplementing federal flexibilities to the extent possible to keep families insured, like removing burdensome paperwork and expanding automatic renewals to the extent that they can, ensuring state-funded care benefits so families don't lose food after their three-month time limit, and advancing progressive revenue solutions so California can protect immigrant and Latino families from these devastating cuts.

And we urge the Legislature and Administration to act this year and into the next so that our most vulnerable children and families are not denied the healthcare, food, and economic supports they need. Thank you.

Thank you, Ms. Morales.

Hello, and thank you, chair. My name is Sam Wilkinson, and I'm with END Child Poverty in California coalition. I really appreciate the questions from the committee today that highlighted the devastating harm this bill is going to have on Californians with the lowest incomes, and as many folks have rightfully pointed out today, those safety net cuts are going to be made in order to fund tax cuts for the wealthy as well as mass immigration rates, detention, deportation and border enforcement that will only widen existing inequities and compound harm on families.

We'd like to align our comments with the Fight for Our Health Coalition as well as HOPE, and uplift that the state can and should minimize harms in the Medi-Cal program by undoing discriminatory policies adopted in this year's budget.

As far as the Child Tax Credit, the federal Child Tax Credit, HR 1 makes it harder for the lowest income families to access the full federal Child Tax Credit and adds a new parental Social Security Number requirement, and these changes taken together are going to directly harm California's lowest income families and further target immigrant families.

We are excited to work with the Legislature to find ways to mitigate the income loss for families who are already living in or near poverty. And lastly, we urge the Legislature to adopt progressive revenue solutions from the same corporations and wealthy individuals that are now reaping trillions in rewards from the tax cuts from this bill. Thank you.

Thank you, Ms. Wilkinson.

Hi. Good morning. Mark Farouk, on behalf of the California Hospital Association. Want to thank you first for this hearing today. Before HR 1 was passed, 50% of California's hospitals operated in the red every day, and as you heard this morning, HR 1 really fundamentally attacks how we finance the Medi-Cal program and provider rate increases in California through things such as the MCO tax and the Hospital Fee Program.

Our early estimates on the impact of HR 1 to California's hospitals are a loss in revenue over the next decade of between 66 and $128 billion as well as an increase in uncompensated care of nearly $10 billion. I know there's a bit of a range there between the 66 and 128 billion.

Part of that is, many of these rules in HR 1 are left to the discretion of federal regulators of how they interpret this so it's really open to a lot of interpretation as where we fall in that range, but whether it's the low end of that range or not, these are devastating cuts to communities that really can least afford it. And really what's behind these numbers is the risk of hospital closures and reductions in services.

We look forward to working with you and your legislative colleagues and other healthcare stakeholders to figure out creative ways that we can mitigate this damage. Thank you.

Thank you, Mr. Farouk. We have a lot to do together.

Good morning, Mr. Chair and members. I'm Keely O'Brien with the Western Center on Law and Poverty. We urge the Legislature and the Administration to act as soon as possible to mitigate the impacts of HR 1, particularly on hunger in California, and we have several recommendations that require immediate attention in this session, including ensuring timely support for immigrant Californians who will lose access to CalFresh by investing in the California Food for All Program and funding fees for immigration petitions.

We also must minimize the harm from the cruel, three-month time limit cut that will impact veterans, former foster youth, people experiencing homelessness, and families with children. We recommend expanding workforce development supports and creating clarity around student eligibility to avoid people losing access to benefits.

We also need to invest now to improve payment accuracy while maintaining program access to lower our payment error rate. Investments now will minimize our future fiscal liability from increased state benefit cost share and from decreased federal administrative cost-sharing.

We recommend funding staffing and expanded training, amending forms to correctly capture income, enhancing policy on the use of income reports, integration of income information from other programs, and aligning income reporting thresholds for CalWORKs with CalFresh to prevent errors.

We agree that the state can't afford to backfill all the severe cuts in HR 1, which is why we urge you to adopt progressive revenue solutions from the same corporations and extremely high earners that are now reaping trillions in rewards from tax cuts from HR 1. Looking forward to working with you on these solutions. Thank you.

Thank you, Ms. O'Brien.

Morning, chair. Andrew Shane from GRACE End Child Poverty California. I'm also going to focus on food assistance as my colleagues from Western Center and SEIU have. I think that's indicative of the fact that these cuts are some of the most immediate and appreciate how the panel spoke to that.

As has been stated, the benefit cost shift doesn't take place technically until October 2027, but it has a look back, right, so we actually need to invest now, and most of these payment errors, they're half essentially on people not reporting changes and half what are considered agency errors or unintentional mistakes, right?

Those aren't fraud as we put that on the record, but it's a very complicated program and it's going to get more complicated because the feds have now taken away exemptions for foster youth, for veterans, people experiencing homelessness, and expanding one of the cruelest rules called the three-month time limit to nearly every county.

Some counties haven't implemented this since I started doing this over a decade ago. So we have every reason and incentive to act now. While we still have 50% federal funding for CalFresh administrative costs in the training, in the streamlining, in the ways to act on information that's already been reported, but maybe it's been reported over here in IHSS--we're not pulling it in on the CalFresh side--but we have to take these actions now or we will be looking at that $2 billion hole in the program just to maintain the program we have today.

And if we don't do that, similar to what Mr. Farouk said on the hospital side, this isn't just going to explode food insecurity. We're talking about world grocers closing. We're talking about farmworkers not having loads to pick and loads to put on trucks. I mean this is going to explode across our food economy. Thank you.

Thank you for very eloquently stating what I was trying to get to. You did a much better job.

Yeah. Thank you for your comments.

I would also--Kellie Longo Flores with the California Association of Food Banks. I just want to plus one to everything Andrew just eloquently said, as well as Keely, Western Center and GRACE and SEIU. We represent or we work alongside 42 food banks who serve six million Californians every month across the State of Californian--of California.

Our network helps stabilize families' food budgets during disasters, economic downturns, and day-to-day struggles with affordability, which we know is becoming a lot more common. We are already experiencing longer lines at our food bank with less food to be able to meet that need.

We're also seeing the tremendous amount of increased costs due to ICE activity around our food banks that were not anticipated in last year's budgets. So--and we cannot, when we talk about what we're going to be seeing in terms of the longer line--food banks cannot fill that gap.

And just for a little bit of context, for every one meal provided by a food bank, SNAP provides nine, so seeing this much of a cut to such an important program is just not something that we can absorb. So we thank the Legislature. You guys came to our need.

We got 60 million for a program called CalFood in this year's budget. We want to make sure that we're still getting in the food to anticipate that longer line, and just again, to plus one my colleagues about how we can take early action to make sure we're mitigating those changes, including the outreach component which is part of that admin funding, which will see a significant decrease. Hunger is a policy choice and we thank you for standing alongside us during this critical time.

Thank you for highlighting that.

Hi. Good morning, Mr. Chair. Jack Anderson with the County Health Executives Association of California, representing our local health departments throughout the state. Just want to highlight two primary areas within HR 1 with significant impacts on public health, the first being, HR 1 entirely eliminates the SNAP education program known as the CalFresh Healthy Living Program in California as of September 30th of this year.

The SNAP ed program provides 55 million and supports 430 staff positions in our California local health departments with a variety of public health professionals delivering nutrition education and obesity prevention programming activities and events among low-income Californians.

Elimination of this program is anticipated to result in termination of the largest nutrition education program in the country as well as potential staff layoffs among our local health departments. The second area is related to Medicaid program changes.

Thank you for the discussion today among the various changes to Medicaid that are expected. From the local health department perspective, as Californians lose health insurance coverage due to the barriers imposed by HR 1, local health departments are preparing for potential increased demand for and enrollment in county indigent health programs.

And it's important to note that following the implementation of the Affordable Care Act in 2013, the state redirected to social services programs a significant portion of revenues from counties that would have otherwise been used to support these county indigent health programs.

So we continue to assess HR 1 impacts and local needs to best serve residents without health insurance coverage. And then lastly, just want to highlight that beyond HR 1, our local health departments continue to experience uncertainty with federal funding, including unanticipated and unexplained funding reductions and restrictions on key federal public health funding sources, including those for communicable disease control and public health emergency preparedness. Thank you.

Thank you, Mr. Anderson.

Good morning, Mr. Chair. Omar Altamimi with the California Pan-Ethnic Health Network. HR 1 is a serious threat to the healthcare of California's most vulnerable populations, threatening to exacerbate disparities faced by California immigrants and communities of color.

Policymakers must stand ready to develop creative policy solutions such as automation in order to mitigate the damaging provisions of HR 1, which seek to undermine and destroy our healthcare system by adding unnecessary administrative hurdles to maintaining healthcare coverage on top of cuts the Legislature made largely to immigrant families in this year's budget.

HR 1 will mean more people losing access to healthcare as a result of burdensome, new reporting requirements that will unfairly target women and caregivers, many of whom are already working. As a result, people will be living sicker and dying unnecessarily from illnesses that could have been prevented.

It expands the categories of immigrants ineligible for federal funding, those considered to be UIS, which unfortunately was also baked into the state budget eligibility changes, and it changes how provider taxes can be leveraged and raises questions whether Prop 35 should continue to be implemented as written or whether we must go back to the voters or if the Legislature should take action to restructure it to avoid additional cuts to healthcare access in the future.

These changes and disruptions to the healthcare system will also mean more Californians end up with medical debt. We're going to need policymakers to focus on making sure we maintain a strong safety net for those who need it.

As we work towards implementing HR 1, we need policymakers to put the healthcare of Californians first, must put people's health before profits, increase revenue, and look to alternative funding sources while we also hold industry accountable to keep access and coverage intact. Thank you.

Thank you.

Mr. Chairman, David Campos, Deputy County Executive for the County of Santa Clara. We are the largest county in Northern California, sixth largest in the state, but we actually run the second largest public hospital system in the entire state, and I want to go back to some of the comments that have been made about the public hospital system.

That public hospital system is really key to providing the healthcare needed by Californians. We're only 6% of hospitals, but the public hospital system constitutes 50% of all burn and trauma center visits.

50% of all physicians are trained in public hospitals. When you as a county choose to run a public hospital system, it also means that not only do you make an investment with your General Fund, but it also makes you more reliant on federal funding.

The County of Santa Clara, the heart of Silicon Valley, a wealthy county, nevertheless is very vulnerable right now because we get a third of our funding from the federal government, and right now we are facing just this coming fiscal year, a $500 million deficit because of HR 1 cuts.

In three years, that is going to go beyond a billion a year. Now we're actually going to the ballot this November, in just a few days, asking our voters to help with that, but even if that passes, it's not going to be enough to deal with the magnitude of these cuts.

We're asking for a partnership with the Legislature and our public hospitals because that partnership is key to make sure that we protect the safety net that so many of our residents and two million in Santa Clara rely upon. Thank you very much for your time.

Thank you, Mr. Campos.

Good day, Chair Hart. My name is Ejiro with United Way California Capital Region, and want to thank you for this very informative hearing talking about HR 1. As we know, HR 1, there are several changes to Medicaid, including some of the cost-sharing requirements.

United Way California Capital Region is one of many providers of CalAIM community support services that allow for certain cost-saving activities such as providing housing, housing deposits, housing sustainability services that allow less utilization of very expensive Medicaid services.

It's important that as we change these cost-sharing requirements as we look at that, that we preserve this 1115 waiver as much as we can with the federal government and also making an investment to make sure that we continue to fund these very essential services. Thank you.

Thank you.

Good morning, chair. Alejandro Solis on behalf of CHIRLA Coalition for Humane Immigrant Rights. The new federal budget will significantly harm California's communities by cutting 2 trillion from health care and food safety net programs.

We urge this subcommitee to protect our communities by continuing state support for health and nutrition programs and investing in solutions that shield Californians from federal harm. The foundation of California's prosperity is deeply rooted in its hard working immigrant families.

We implore you to put California first at a time that our Federal Government has decided to put us last. Thank you.

Thank you, Mr. Solis.

Luanne Nguyen Coalition of California Welfare Rights Organization. First, I want to thank you and thank the Assembly Budget Committee as a whole for holding this hearing because we need to have the space to be able to bring ideas and express concerns. So thank you for that.

You painted such a good picture of the narrative already and so many people have. So we won't go into that based on what we are seeing right now.

What I want to spend my time talking about is the triaging based on the timeline component of when things will be implemented and to get to the things that are being implemented right now and sort of hold off on some of the other elements that will be implemented later on.

And so I want to spend that time and some of that will get into the nuts and bolts and I'm going to read it a little bit of it to you, if that's okay. The SNAP work requirements are taking effect immediately. We're waiting for guidance.

Previously, California had a waiver that was going that was given to us by the Federal Government for two years. And so we didn't have to comply with the work requirement until 2027, but they yanked that away from us. They yanked one year away from us.

And now we're down to a one year waiver and that waiver ends at the end of January 2026. What does that mean? That means that we only have a landing path of six months to implement the new work requirements and all the rule changes.

And in order to do that well, we need to achieve the greatest efficiency and to prevent. Just even to comply with the law? Right, Even to just comply with the law.

We need CALSOs, the Automated Welfare System, because everything's automated now, to kick into effect and implement all of the components that would make you eligible for welfare to work. For CalFresh. For CalFresh, sorry, not welfare to work.

And so all of that automation needs to happen within a period of six months and workers need to be trained on the new policy and the new rule and in order for that to happen, the Legislature has to fund and take action.

So if you're waiting for the administration, there are certain, certain components in law where they cannot do it. And I hope that you do this before you go on your break because then we're going to be SOL sorry because January is going to roll around and things are going to.

And we won't have the tools and the components that we need when it starts to kick in. So we need automation around student change eligibility. We need automation to capture the folks who are subject to the work requirement but that are exempt because they're in CalWORKS welfare to work programs.

We need automation for all the rule exemptions and to capture the people who have applied for Social Security and unemployment benefits. Right now they're only automating and capturing the people who receive it but not apply it. So that's a different category of people who also needs to be captured in the automation process.

We need to automate the new exemptions for the Native American population. This is the urban Indian, the California Indian and the regular Indian population. So those are some of the automation component. But we also need training and staffing capacity because these are new policies and new changes and you need people who have the capacity to do that.

And part of the challenge that already exists in our system is that the call centers are so overwhelmed and people can't get through. So you someone here mentioned like the rate of people who are eligible who can't get through and who aren't in the system. That's part of the reason why.

And so we need to clean up our government delivery system so that it doesn't negatively impact people with respect to the error rate. Right. Why do we need to talk about the error rates now when it's happening in 2027?

Because once it takes effect, it's contingent on the error rate that we have in this current year and the coming year. And what does that mean? That means that we have a year to clean up our error rate to prevent us from losing what, 2.4, $2.1 billion.

And if we can get our error rate down, then we will be less likely to have to put out money. Right. To cover the cost of Administration. So we have to actually triage and attack the error rate situation right now. And there are ways you can do that.

That involves creating an interface between the case management information and payrolling system and CalSOs to capture information from IHS providers so that the income reporting is correct and addressed immediately so it doesn't increase the error rate estimating like income reporting thresholds. Got it. For people.

And making sure that we have the right data points to reduce the error rate constantly. Like try to keep everything in real time as much as possible. Also, you need to really talk about CalSOLs and the data system and what it's able to do throughout. Now there's been mention of the immigrant population.

They're going to be cut off immediately. That takes effect. We think that the right approach is to pay for them in the CFAP program. That's about $113 million. And there's conversations being had around the child tax credit and sort of the harmful impact that they did on these citizen kids because their parents were undocumented.

That's crazy and it's insane. And the state needs to figure out how to backfill that. Thank you so much.

Thank you, Ms. Nguyen. Appreciate that.

Hello, good morning and thank you for having the hearing and the opportunity to comment. My name is Elizabeth Zuercher. I'm a senior attorney with the National Health Law Program and Health, national nonprofit law firm committed to improving health care access, equity and quality for underserved individuals and families.

As we know, HR1 will have devastating impacts on the lives of millions of Californians across the state on MediCal and Covered California.

We urge you to protect MediCal and Covered California for low income Californians to the full extent possible by streamlining enrollment and renewals to alleviate consumer and county burdens, minimizing cost sharing, ensuring clear communication about changes to benefits, identifying who may be exempt from work requirements, requesting a delay in implementation of work requirements to 2028.

And as other fight for our health partners have mentioned, advocating to preserve as much as possible Affordable Care Act Covered California benefits. So thank you very much.

Thank you.

Good morning, Chair Hart. I'm Seija Virtanen for the University of California. HR1 will reduce payments for MediCal Services, increase uncompensated costs and reduce funding for graduate medical education. The annual impact for UC Health is expected to exceed $100 million and grow as additional state and federal policy changes take effect.

UC Health is the second largest provider of Medicaid services in the state. And as I stated earlier, we're also concerned about the Graduate plus program. Thank you.

Thank you for petitioning during the hearing too. Appreciate that.

Good morning. Lan Le on behalf of Asian Americans Advancing Justice Southern California. Every year we serve up to 15,000 organizations and individuals, many of whom are low income with limited English proficiency.

The cuts combined with the increased funding for immigration enforcement will be devastating for the Asian and Pacific Islander communities in California will tear families apart and push vital care out of reach for the most marginalized in our community. In Los Angeles, where our nonprofit is based, entire communities were upended by ICE raids.

700 Marines and 2000 National Guard troops flooded immigrant neighborhoods like Koreatown, Little Tokyo and Chinatown. ICE arrests of Asians have tripled in 2025 and and California accounts for 20% of those arrests. In Los Angeles, over 107,000 undocumented residents are AAPI. And more than 111,000 AAPI individuals with legal status live in mixed status households.

These families live in fear of losing care, of being separated and of being targeted. Now one of four AAPI individuals in Los Angeles rely on Medi Cal and many of them could potentially lose access to care.

And for the 25% of Covered California enrollees who are AAPI, premiums could raise as much as 74% next year, pricing many out of coverage. We are talking about seniors skipping medication, children going without food and domestic violence survivors not going to courthouses and hospitals out of fear of detention and deportation, often without access to legal representation.

Thank you.

Thank you.

Thank you. I'm Kat DeBurgh with the Health Officers Association of California representing the physician health officers in our 58 county and three city health departments. Local health departments serve everybody who lives in California, every single person.

At the same time when our public health protections are needed more than ever, we, like all of our colleagues, are facing federal cuts and federal uncertainty. Grants we thought were certain are being taken away.

And so I just to urge you at the state level to continue with the future of public health funding which is not subject to federal whims. It's up to local priorities. And reassures us that local health department workers weren't just essential during the pandemic. They're essential all the time. So thank you for the hearing today.

Thank you, Ms. DeBurgh.

Good morning Chairman Hart. Monica Miller. On behalf of Alzheimer's Los Angeles, Alzheimer's Orange County and Alzheimer's San Diego. And we want to thank you first and foremost for this hearing today. Secondly, we want to provide some concerns, express some concerns with regard to HR1 and the cuts that are forthcoming.

Specifically, there are 1.4 million Californians who currently care for a loved one, a family caregiver who has an Alzheimer's or Alzheimer or dementia related diagnosis. And with these cuts were concerned because those caregivers are going to lose access potentially to their health care as well as the the loved one who is living with a cognitive impairment.

There was no exemption for those adults who are caring for loved ones who are very concerned about that as they will not be able to fulfill the federal work- work requirements that are being asked of them currently.

They, they create a $50 billion savings in the system by keeping their loved ones at home and caring for them there versus having them institutionalized. As you know that something that they could automatically enter the medical system, they could be potentially moved into institutionalized care. That is not their preference. They'd like to keep their loved ones home.

And again, it is a cost savings of $50 billion annually to the State of California. So we're very concerned about that and hope that as we have these discussions we can talk about how we can work through that and come up with some ways to mitigate those costs.

We're also concerned about potentially those individuals losing access to community based services such as adult day health care services and not having that respite care, as well as the cognitive connections for these individuals.

We want to make sure that we as we're looking at cuts, we look at making sure we also protect mom programs such as that and others. And then on behalf of the National Council of Jewish Women Los Angeles, I'd like to echo the comments with regard to the child care tax credit.

We're very concerned about that cut as well and look forward to again working with you and your team as we try to work through all of this. And thank you for your time today.

Thank you. Ms. Miller.