Assembly Budget Subcommittee No. 2 on Human Services

Good afternoon, and welcome, everyone. This is the assembly budget subcommittee two on human services issues, and today's hearing is on the governor's May revision. And the most important part of the hearing is to hear from the public, your reactions, your feedback, your priorities, and concerns. So I'll begin with childcare and early education issues in part one, and then we'll go through all of the human services proposals in part two.

We have asked the administration to present briefly on the May revisions proposals and to pause to allow members to ask questions.

Before we invite our first panel to begin, I'll make just a few introductory comments and open it up to my colleagues if they would like to do the same. While we appreciate the time and the work put into the mayor revision, some of the proposed cuts from childcare to seniors, are simply unacceptable.

While HR 1 upon with HR 1 upon us, we must also ensure our counties have the support to implement its changes or risk losing even more people who depend on these services and causing unnecessary harm. To propose these cuts at a moment when the Federal Government has made harm a centerpiece of its mission, It is to ask us to watch our neighbors, friends, and family struggle to survive, to maintain their pride, and to trust that we are there for them.

As subcommittee chair of this committee, I will do my best to hold the line, to give voice to those who have none, and to ensure we are doing the least amount of harm possible because the threats we face now are both unavoidable and existential.

I've always said from the very beginning that we will always prioritize the things that are going to keep as many Californians stable as possible. Now we do not we are not ignorant to the fact though that what the Federal Government has done to Californians is something that we cannot fully shield Californians from. The cuts are simply too big.

But what we can do is make sure that our decisions are guided by the moral compass as set out, by our full committee chair, Assembly member Gabriel, and to make sure that we are not harming people who don't need to be harmed. And as I look through the May revision, there are things, that are being proposed that go beyond HR 1, that go beyond what is necessary.

And I believe that we can do more to serve and to save and to stabilize our population. And so, this committee will continue to do, just that. I want to make sure that everyone understands, that, we'll start listening to the panel speakers for the issues in the agenda, and then we'll take public comment after all the panels have concluded. There will be no votes taken in today's hearing. So I'm going to ask the first, panel to come forward and take your seats at the, witness table.

Please introduce yourself before you speak, and let's try to go in the order listed, in the agenda. And CDSS, you may begin when you're ready.

Good afternoon, mister chair and staff. Jen Troyer. I am the director of the California Department of Social Services. We appreciate the opportunity to be here with you today to share information related to the twenty twenty six, twenty seven May revision, beginning with childcare proposals. Before we talk about the individual proposals, I will just briefly share that the May revision for the department overall includes more than $67,000,000,000 in local assistance and all funds in twenty twenty six, twenty seven, including federal, state, county, and reimbursement sources.

Turning to the child care and development programs, the revised budget for child care includes $6,800,000,000, 5,000,000,000 general fund in twenty twenty six, twenty seven, which reflects a net increase of 15 and a half million dollars from the governor's budget. Your agenda includes an overview of budget and trailer bill, language proposals and also includes some questions related to them. The first major topic area that, I will give an overview of and also answer your questions related to is the caseload and slot reductions in the May revision.

The May revision provides updated assumptions about how reductions in federal child care and development fund and proposition 64 state revenues will be absorbed. There's a $104,100,000 in combined funding decreases in twenty twenty six, twenty seven.

That's slightly lower than what we initially estimated in the governor's budget due to a lower estimate of the Prop 64 revenue decrease. We will continue to monitor and work with the Federal Government as the CCDF grant award amounts get finalized in case there are any additional changes. The May revision continues to address those fund reductions in the current year on a one time basis through CCTR center based awarded funds that will not be put into contract by the 2526.

However, in the budget year and ongoing, the May revision makes a change to absorb the fund reductions through point in time CCTR and also California alternative payment program voucher relinquishments to avoid any disenrollments of children. The distribution of the relinquished funds between CCTR and the CAP programs means that the number of slots awarded since twenty twenty one, twenty twenty two with funding is now approximately 123,000 in additional slots instead of the 125,000 that was estimated in the governor's budget.

This is due to the difference in the average monthly cost of slots between CCTR and the CAP program. The associated slot impact due to the fund reduction is a point in time estimate based on a combination of the funds that have been relinquished to date within each program and can be used to absorb the funding reduction without disrupting childcare for any children who are currently enrolled.

With that, I'm gonna turn it over to deputy director Lupe Jaime Milam to further address some of the questions in the agenda related to the slots as well.

So in terms of the questions regarding the slots on, the first one for the first question, we think it would first be helpful to clarify that our contractors and agencies are not rejecting slot increases. In our experience, the department contractors and agencies all share the same goal of expanding care and reducing unmet need.

Some of the reasons why the general childcare alternative payment agencies may relinquish, funds includes, as part of the normal contract review process, the department works with the contractors who have under earned the multiple years to identify how their contract can be adjusted to reflect their specific program model and expenditure trends.

Again, this is not an indication that the contractor or agency is not committed to serving more kids, and families, but could be to changes in both their community needs, as well as being able to sustain a smaller scale up enrollment growth at this time. Another reason may be also that the general childcare contractor approved license capacity is ultimately less than what they were written in their current award amount when they first wrote their RFA, application.

Typically, relinquishing funds are then reallocated, to other contractors and agencies with a preference that it remains within the same, county. And then the next question in regards to, slots also is has to do with the relinquished funds that are not being reallocated to other agencies and contractors. So as a result of federal and proposition 64 reduction, the May revise proposal to observe the funding reduction through ongoing relinquishments to least harm for families that are currently not enrolled.

The CDSS, though, however, is open to conversations with the legislator about how these fund reductions are appropriated across programs to maximize the total number of slots retained to minimize any disruptions of contracts and disenrollment of children. And then the next question, which is, in regards to the process of new slot allocations.

So the twenty twenty one Budget Act authorized significant increases in funding to support enrollments for the CAP program. The allocation methodology uses census data, eligibility rules, and county level cost information to identify where the unmet childcare needs are the highest. Counties with the highest percentage of unserved eligible children receive the proportional more funding than ensuring equity across the statewide. Last year. CCTR slot expansion funds were allocated through a request for application or an RFA process.

And at that time, we were prioritizing infant toddler care in these communities. And then, and CDSS continuously reevaluates those allocation methodologies to really identify the most possible areas where we always wanna

do continuous improvement. The waitlist, which we are starting to collect as far as our continuing funding application, scale the level of growth based on the agency's previous enrollment trends, and for general childcare contractors, prioritize contractors who have any previous award slots expansion funds already in contract, and prioritize contractors that have immediate license capacity in existing, space available for more children. With that, I'll turn it back to director Troia to continue with the questions and agenda.

Before I do, mister chair, I just wanna check with you. Before we move on to each of the next major policy items, did you want us to pause for questions on each or would you like the whole presentation? Okay. So the next major policy that I'll highlight is the prospective pay policy. The May revision proposes the reversion of funding that was associated with a prior federal requirement for states to pay providers prospectively.

This included $61,100,000 from 2526 for staffing and system updates and $43,800,000 in 2627 for staffing for child care and development agencies. Earlier this month, the Administration on Children and Families, the Office of Child Care federally, published a final CCDF rule that takes effect in July. That final rule rescinds the federal requirement to pay child care providers prospectively and reverts to an option that existed and was established in the 2016 final rule for states and territories to either pay providers prospectively or on a reimbursement basis.

Your agenda asks why we are reverting these funds at this time and recommending a course shift. In response, we would note that under the prior federal rule, pursuing prospective pay would have required one time implementation costs for contractors in the department, lead time to complete the activities, and then shifting $1,000,000,000 approximately in payment costs to occur prior to the start of the following fiscal year.

Under the new federal final rule, forthcoming federal guidance may help both the administration and the legislature understand what additional conditions the Federal Government would require of a state that does choose to implement prospective pay instead of reimbursement based funding. We anticipate that those implementation activities will likely continue to include implementation one time costs, ramp up time, and a shift of about about $1,000,000,000 in payment costs prior to a fiscal year that would be needed if the state were to move forward to implement this policy.

The next major item is related to the cost of living adjustment for childcare providers. The May revision or or yeah. The May revision includes a COLA of 2.01% approximately for childcare providers.

This COLA is lower than it would otherwise be as a general fund solution to solidify the structure of the and the balance of the budget. The total funding for the COLA is a $112,000,000, which includes COLA costs for all CalWORK stages and the emergency child care bridge program as well as other programs under CDSS. The two point o 1% COLA funding for child care programs is still proposed to be repurposed for cost of care plus payment increases.

It would reflect an approximate increase of 13.7% when existing cost of care plus rate structure. Resource and referral and local planning councils would also receive that two point o one percent COLA.

With respect to your additional questions in the agenda related to the COLAs for childcare and preschool, we'll defer to the Department of Finance in case they have anything further to add. I'll turn it over to, deputy director Jaime Milam for, the childcare infrastructure grants.

Thank you.

The childcare infrastructure grant. So the budget includes two childcare infrastructure grants. The first, as referenced in the initial governor's proposal, the Prop sixty four four proposal was focused on the licensed family childcare homes and licensed centers that experienced damage and services interruptions during the declared disasters in 2025, resulting in reduced childcare availability and impacts to families who relied on these services.

Recently, CDSS was notified in February 2026 of an award in the amount of 28,000,000,000 to support licensed child care facilities that were impacted for for the disasters in 2023 and 2024 as well as supporting other deliverables.

Of the 28,000,000 in Federal ARRA, 15,400,000 will be used, for the mini grants, and the remainder funds will be used for state operations of the minor repair infrastructure grant and continuity of certain quality services programs such as SIP, an increase on that so that families in the affected areas can regain stable, reliable, and childcare.

Because of each fund source and specific disasters in particular years, there is an overlap in the grants. Specifically, the federal ARRA will be available for those impacted in 'twenty three, 'twenty four, and the grants available for Prop. Nine sixty four will be available for those impacted in 2025. The administration will be administrating these, these grants, within DSS. And then the next one is the alternative payment admin rate.

So the May revise includes a 65,100,000 general fund for fiscal year 2627 to increase allowable in contract administration costs for the alternate payment program agencies by 1.5% of their total contract amount. This proposal reflects a transition of the 70,000,000 included in the governor's budget, which has previously supported payments to administer outside of the contract structure.

Maintaining separate and contract and out of contract funding streams for administrative costs has created administrative burdens, reporting inconsistency, and fiscal oversight challenges for the alternative payment program contractors as well as CDSS. The proposal covers administrative and supportive costs tied to implementation to maintaining the MOU with our childcare provider United, the CCPU. The funds of for the administration and support costs associated with the MOU are currently issued at a contract.

And then the next one is the Low Income Investment Fund. So this proposal requests the appropriation of 1,500,000 in general fund for existing infrastructure grant, IGP, to allow the department to continue to contract with the Low Income Investment Fund, LIFT, to ensure communities and timely closeout of the grants that are more than, that are that contracts are more than a 190 new construction and major renovations that are in the process. Childcare nutrition program reduction, we will defer to Department of Finance.

And the Mabee Vice Preschool, we will defer to our CDE partners. We're happy to respond to questions when appropriate.

The Department of Finance.

Krishan Malhotra, Department of Finance. To achieve a balanced budget, the twenty twenty six twenty seven May revision includes a general fund solution for the childcare cost of living adjustment as the director had stated. We understand that the legislature may have proposals, and we look forward to discussions with you all and your leadership in the next few weeks as we develop a final budget act.

LAO.

Good afternoon, chair, members. Dylan Ochsifletso with the Legislative Analyst's Office. As context for your entire hearing today, before getting into the childcare proposals, we wanted to mention that we released a report today. This morning, we released our analysis of the May revision now evaluating the condition of the general fund. Overall, we find that the administration's proposals make progress towards addressing the structural deficit.

The underlying condition of the budget is is not sound. In particular, the budget relies on $20,000,000,000 in reserves despite the state experiencing a revenue boom. Periods of increased revenues such as this are typically when the state should be strengthening its fiscal position rather than drawing it down. As such, we recommend the legislature, one, maintaining the amount of solutions proposed by the administration, two, make discretionary reserve deposits, and three, not add new spending to the state's existing commitments.

This assessment will inform our comments to the committee on the various proposals before you today.

Shifting to our comments on child care, the May revision reduces twenty twenty six twenty seven child care spending by $61,000,000. We have comments on the largest of these changes. First, shifting reductions from general childcare to CAP, the California alternative payment program, presents trade offs. We recommend that the legislature ask the administration to provide additional reduction to cap and to explain why this approach would be better for families and providers over the long run. Several aspects of this program make a reduction to cap less appealing.

First, because the average cost per slot in cap is lower than in general child care, a reduction to cap would result in larger reductions to funded child care slots. As you'll see on page three of your agenda, based on the administration's estimates, the May revise reduces about 6,800 funded childcare slots compared with the about 4,200 in the January budget. Additionally, slots funded through CAP typically reach families more quickly.

And then lastly, the state in recent years, the state has had significant amounts of unspent funding in general childcare, suggesting that a reduction to that program might have less of an impact on families. On the proposed childcare cost of living reduction, we think that is reasonable, but we have concerns about consistency across programs.

Those are the same concerns that we voiced, regarding the January proposal. We recommend that any rate increases for child care and state preschool providers be provided consistently across all programs, specifically, you know, in terms of for moving towards the alternative methodology, we think that providers that are serving similar children in similar settings should be getting similar rates. We also recommend adopting the removal of prospective pay funding.

As the administration has already discussed, there is no longer a requirement to do so, and removing the proposal to adopt prospective pay saves the state $43,800,000 in ongoing general fund and then $30,100,000 in twenty twenty five, twenty six. We also recommend rejecting the AP or the alternative payment program administrative shift.

We have concerns with the proposal to replace a fixed $70,000,000 for administrative costs with a 1.5 percentage point increase to the administrative rate AP agencies receive. Although the proposal provides $5,000,000 in net savings in twenty twenty six, twenty seven, This change likely would create general fund cost pressures in future years. By providing funding as a percentage of contracts, funding for administrative costs would increase or increase by a larger amount anytime childcare slots or provider rates are increased regardless of whether administrative workload increases.

So we recommend rejecting this proposal. Lastly, we recommend exploring the alignment of the federal disaster relief grant and the childcare infrastructure grant program.

We did just get some good information on that, but we do recommend the legislature request additional details regarding the the childcare or the childcare infrastructure grant proposal to ensure that the two programs are well aligned, complement each other, and avoid duplication. I'm happy to answer questions at the appropriate time. Thank you.

I believe Department of Finance has another item.

Italys Betas with the Department of Finance. The May revision provides a total of 2,000,000,000 ongoing proposition 98 general fund and 1,000,000,000 ongoing non proposition 98 general fund to support the California state preschool program, CSPP, in 2627, which provides both part day and full day curriculum based services for low income eligible three and four year old children. Now there are various changes in the CSPP program that's being proposed from a revise, two of which are adjustments of decreases, and three are increases within the program.

I'll start with the decreases. So for the CSPP cost of living adjustment, the May revision proposes an ongoing decrease of 14,300,000 proposition on the eight general fund and 7,800,000 non proposition on the eight general fund to reduce the COLA for CSPP from 2.41% at the governor's budget to 2.01% at May revise.

This is in alignment with other childcare and development programs that are also being, proposed for the May revision. The revised COLA would be redirected to provide a total of 33,300,000 Proposition 98 General Fund and 18,100,000 non Proposition 98 General Fund for monthly cost of care plus payments to contractors for 2,627 and ongoing. Next, for the CSPP prospective pay program, the mayor vision proposes to remove funding for CSPP prospective pay implementation included in the 2025 budget act.

This is also in alignment on the childcare side with what's being proposed there. Specifically for LEAs, this includes a decrease of 5,700,000 proposition 98 general fund to assist local contractors with implementation, and as well as a decrease of $704,000 one time proposition 98 general fund for automation contracting costs.

Additionally, for the non LEA side, this includes a decrease of 2,700,000 non proposition 98 general fund to assist local contractors with implementation, as well as a decrease of 336,000 one time non proposition 98 general fund for automation contracting costs. This proposal also includes a decrease of a 125,000 ongoing non proposition 98 general fund and one position for CDE to have implemented the prospective pay in '25, '26, and ongoing. Now as for some of the increases, there's the CSPP quality rating and improvement system block grant.

So the May revision includes an additional 20,000,000 ongoing Proposition 98 general fund for the CSPP quality rating and improvement system, QRIS, which provides support for quality early care and education programs. In addition, there are two BCPs in CSPP.

One is for CSPP auditing support. The May revision includes the 910,001 time non proposition 98 general fund each fiscal year beginning in '26, '27 through '28 and '29 for CDE to receive auditing support from the Office of State Audits and Evaluations to help address the existing backlog for CSPP audits. As for the last BCP and CSPP, there is, the CSPP rate reform implementation BCP.

The May revision proposes $552,000 ongoing non proposition 98 general fund for information technology resources to implement the single reimbursement rate structure for CSPP. Now, I'll give an overview of some statutory changes within CSPP.

Beginning with the CSPP cost of living adjustment and inclusion rates and age grouping framework TBL, the May revision includes statutory changes to one, specify the cost of living adjustment is approximately 2.01% for the cost of care plus payment calculation, specifically for the 2627 fiscal year. And two, prescribe how reimbursement rates are set under the single rate structure. These changes are in alignment with the May revision proposals on the DSS side as well. Next, we have the CSPP family fee deductions TBL.

The May revision proposes statutory changes beginning in the 2627 fiscal year to require CSPP contractors to reimburse providers for the full amount of the certificate or voucher without reducing family fees and to collect these family fees.

This proposal aligns with the governor's budget trailer bill proposal on the childcare side, specifically on family fee deductions. Next, there's the CSPP eligibility portability TBL. The May revision proposes statutory changes to be added to extend the CSPP certification period for no less than twenty four months when a family member transfers from one CSPP program to another, or in cases when a child is voluntarily disenrolled for any period of time during that set eligibility. And finally, there's the CSPP excused absences and family fee waivers TBL.

The May revision proposes statutory changes to, one, include medical and educational appointments as excused absences in CSPP.

Two, allow a contractor to claim attendance for days the child is not in attendance during suspension or expulsion appeals process. And three, specify that a family receiving child protective services may be exempt from family fees for up to one certification period rather than specifying just twelve months. This proposal is in alignment with current practices with the DSS childcare program to maintain parity across programs.

Now, finally, in response to the agenda question number four, we wanna note that the May revision provides the same 2.01% COLA for both CSPP and DSS childcare and development programs to maintain parity for the COLA percentage across the programs. We also wanna note that if the COLA for the Proposition 98 side of CSPP were to be increased, it would also need to be increased on the non Proposition 98 side for both CSPP and childcare to make sure that both programs receive the same percentages.

We're also open to having further conversations on this with the legislature as we're working to reach a final budget agreement this spring. And with that, I'm available to take any

questions. CTE.

Good afternoon, mister chair and members. Steven Proffer from the California Department of Education, on behalf of state superintendent of public instruction, Tony Thurman. And we are pleased to see the governor's proposed investment in the California State Preschool Program Quality Rating and Improvement System Block Grant. The 20,000,000, proposed increase would bring us back to the purchasing power of the grant when it was originally appropriated in 2014, and the grant has been flat funded since then.

It's very important because the number of sites participating in the block grant have more than doubled since the program's inception, and inflation in program costs or program growth has meant that grantees have been forced to reduce services to state preschool programs in their area.

One thing we'd add just on this investment is to prevent this issue from happening again in the future, we request that the CSPP QIS block grant be provided an ongoing cost of living adjustment, applied each year. The May revise includes a, 2.01 cost of living adjustment for the California State Preschool Program. The amount provided, on our estimates can get us to an overall 15.9% increase to the cost of care rates.

However, we'd note that the, the the modest cola is not sufficient to cover the true cost of care. For example, if we look at Sacramento County in particular rates at May revise are still 30% below the true cost of care.

If the state preschool program were to get a COLA equivalent to what we see in t k 12, statutory COLA of 2.87 or even the, super COLA of 4.31%. This would further stabilize, state preschool programs and help them better recruit and retain, the important educators that are that are teaching our young children, as well as provide overall stability for programs.

As we have shared at prior hearings, it would be easier for contractors if any additional increased rates were put into the base rate rather than in the cost of care plus rate, which is paid outside of contract. Many contractors we find, despite our continued technical assistance, do not believe that the cost of care plus rates are ongoing and are reluctant to put those funds into salaries.

We'd also like to flag that the May revise includes a proposal to specify age groupings in the new rate system, specifically specifying that three year old children through kindergarteners will receive the preschool rate.

For this, we'd like we we flag this in particular because, at present, programs receive or state preschool programs receive 80% more for serving three year old children than for four year old children. So this proposed alignment to align rates for three and four year olds is a significant departure from the legislature's previous policy decision.

The CDE believes that the current adjustment factor for three year old children in CSPP has been an incredible support to programs as they've had to pivot their business model to serving younger children. And since the inception of this adjustment factor in the 2223 budget, we've seen enrollment of three year old children in state preschool increased by 44%.

We are still reviewing the remainder of Trailer bill language for additional comments, but this was a flag we wanted to make sure that we uplifted here in in the space because if the rates aren't set high enough, programs could get less for the three year old children that they are currently serving.

We'd also note that the May revision just on the topic of three year olds doesn't include funding to cover the increase in three year olds served, and as a result, funded slots in May revise are lower compared to 2022. Specifically, to right size that, the CDE would need 36,000,000 in non prop 98 funds.

And then on the prop 98 side, we believe the funding is there, but we would need the authority to allocate 80,000,000 from May revise proposed appropriation to ensure that total funded enrollment in state preschool program did not decrease. This would keep funded enrollment the same between March 2022 and March 2025.

And then in terms of just other proposals, we're pleased, that the May revise trailer bill language bill language includes medical and educational appointments as excused absence in the state preschool program, also allows a contractor to claim attendance for days the child is not in attendance during a supervision, or a suspension, I should say, or expulsion appeal process.

These changes dovetail very nicely with our draft regulations on attendance policies that will be replacing the old abandonment of care regulations for state preschool next month. We are pleased to see language in May revise trailer bill language that aligns us with CDSS childcare programs in important ways around family fees, and eligibility portability. Just on the two, budget change proposals that my colleague from Department of Finance shared, we appreciate the addition of staff, for data systems for rate reform.

You cannot design a system without staff to do it. What I'd also share is the to to to complement those positions, there are staff needed on the business side of, you know, the user interface, if you will.

So there are other components of that that BCP that are needed if the status to move forward with great reform, and data system changes specifically. We also appreciate the addition of staff, for auditing. It gives us more capacity for oversight, and our responsibilities. I'll shift now just to a cup the the two questions in the in the in the agenda for the Department of Education.

So with regards to new slot allocation, just sharing CDE's process, we look at each county based on its unserved eligible population, and we create county allocations within each county based on unserved eligible populations.

We award funding through a request for applications, and applicants are awarded funding based on the local childcare and development planning councils, priority ZIP codes, the amount of funding available for each ZIP code, and then in orders order of highest scoring applications. If less funding is requested than what we have estimated the unmet need is, then the funding is reallocated to counties with request that exceed the availability available funding in priorities that the LPCs have provided.

And then on the next question on robust proposition 98 growth and unique LEA cost for administering preschool. Overall, we are supportive of increasing wages as we know that the low rate in the state preschool program, especially in high cost counties, is making it challenging to recruit and retain qualified staff and pay a living wage to our critical workforce. However, we do have concerns about creating a system where one set of educators are getting more funds than others for the same requirements.

That concludes my remarks, and I'm here for questions at the appropriate time.

Any questions for members at this time? Just a few questions. I mean, obviously, you can imagine that the state assembly has been very vocal on the need to continue to expand and strengthen our child care system. And so you can imagine our response when we hear that a little over 6,000 slots were not utilized. Can you number one, I understand that for those contractees who'd for any given reason, we're unable to get those online.

However, we were those slots were so should have been reallocated somewhere. And can you tell me exactly why they were not reallocated?

This is typically the time when contractors will relinquish funds. It's usually towards the end of the fiscal year where we send off a continuous funding application where it allows them to be able to say, yes, I wanna continue to do business with the state or, the slots we have or I would like to do a change in regards to the number of slots that we have.

One of the reasons to answer your question, chair, is that then at this point of time, some contractors will come forward and say, we want to adjust our numbers based on community needs or what we see as far as us ramping up to make sure that those slots then are sent back to the state. And and being that we have now a Prop 64 shortfall as well as a CCDF reduction, then typically, we would have those slots out the door to relinquish it.

However, the timing aligns at a point of time now that we are holding off from having that process of having it re having it go out into the community pending this conversation that we're having with the budget.

What what are the primary counties that would have these slots would have gone to?

Give me one minute. There's eight different agencies. Placer, Riverside, Kern, Orange County, and San Solano County, and LA County.

Okay. And why is the recommendation in the May revise? Why is the recommendation not to reallocate but to terminate?

Yeah. So when we proposed the January 10 budget, the governor's budget, we were counting on looking at CCTR as a potential way of being able to to to meet the shortfall that we that we were looking at in regards to the CCDF reduction as well as the Prop 64. Since then till now, the point of time has shown that there has been some relinquishments that came in into CAP.

With the hearing from the field that we would like to do no harm, meaning families are currently not in those slots, then that was the that was our reasoning in regards to bringing this recommendation forward.

I understand from that perspective. I mean, there was times that particularly when we were facing a 70,000,000,000 deficit, the least amount of harm that could have been done was just to make sure that if they're not being filled, then we can do that. I'm not sure if we are that dire. I know LAO might disagree a little bit. They're getting more aggressive lately.

I don't know. But I think also but I think we can because we had already allocated these funds, it seems to me that this is gonna help a lot of families. And I think we're trying to provide as many Californians with as much relief as possible given the fact that they're facing so many other headwinds, from this federal administration. And so, we do look forward to continuing this, conversation as we go through, the budget process.

But I know for sure at this point in terms of eliminating 6,000 slots, that will be rejected from this committee.

We are not going back. We're holding the line, and we have tried to be as clear as possible. We all have our jobs to do, but our job is to, as this committee, is to strengthen and expand slots whenever we can. And we may need to find out ways that the legislature can be notified more when these slots are not being filled as intended because, you know, finding these out just in a January or May revise situation is not is not helpful in many cases.

Let's talk about perspective perspective pay.

Obviously, we were trying to follow a federal requirement that we get to that direction. We had allocated funds to be able to do so. Do you believe that our providers would have been better off by continuing with prospective pay, or it would basically not really be much of a improvement to their fiscal situate situation?

I will say that what we have heard from the field is that because private pay families do pay in this manner with prospectively paying at the beginning of the month That it would be helpful to providers to receive those, subsidies from the state in the similar manner rather than receiving them as a reimbursement. That is that was, historically always one of the appeals of the policy change. It is a complex policy change, and as you've indicated, it is no longer required by the Federal Government.

It is also an expensive policy change, so there are conversations that we will all need to have together once we have additional federal guidance. But in terms of the impact on providers, I think what we have always heard from them is that it would be helpful.

How much would this have cost us?

The funding that we are proposing to revert was funding to begin the preparations for implementation. The more significant point is that to make the adjustment, we need to shift around a billion dollars in payments from one budget year into the prior year, and it is a general fund impact that is not recouped, after that. And so there's around a billion dollar cost, on a one time basis, but that does not get recouped.

Department of Finance?

Iglis Perez with the Department of Finance. In addition to what was mentioned by my DSS colleagues, in terms of the California State Preschool Program, we, are estimating that the total cost of prospective pay for CSPP would be a one time cost, that would be in the hundreds of millions, and this is separate from the funding that I've identified that was initially included in the 2025 budget act.

Okay. Any additional questions from members of the committee on this item?

Family member, Arons. Thank you, mister chair. I just wanna I just wanna highlight the the comments from chair Jackson regarding the the need for a more robust discussion regarding childcare in general. I think that, as what's as what is mentioned, there's a very big chasm between what's recommended and what we are hearing on the ground from our constituents and what our policy positions that have been very clear regarding regarding childcare funding in these slots. And I just wanted to add how important that is.

Childcare for me is infrastructure. It is just as important, if not more important than our healthcare funding, transportation funding, housing funding. It is something that unlocks the economy. It's something that unlocks less crime. It it it it helps and and it is literally one of the few things in the state budget that you can point to that affects and helps virtually everything.

And it was a commitment. These slots are a commitment. And I just wanted to say, at this point, I'm not comfortable voting on a budget that doesn't have more more of a commitment to what has been said very publicly by this administration and the legislature, which is doubling down on supporting that. So I would like to see movement on that. I am a first term legislator, so I will continue to be quite vocal about it.

But as the budget stands right now, I won't be able to be supporting this on the floor unless, I see dramatic changes in prioritizing our childcare. Thank you.

Okay. Thank you very much. Thank you to this panel. Appreciate it. We'll move on to issue number two.

And CDS says, you may begin when you're ready.

And CDS says, you may begin when you're ready.

And CBE, you still owe me a meeting, by the way. Okay. Okay.

Good afternoon. I'm doctor Lupe Jaime Milam, deputy director of the childcare and development division at CDSS. To get started, I'm going to cover at high level the May revised trailer bill proposals as outlined in the agenda. In terms of the alternate methodology changes, which included the age groupings and inclusive policy frameworks.

This proposal is to codify foundational policy elements to the single reimbursement structure by defining age based rates, categories, and expanding accessible documentation for the enhanced inclusion rate to include an individual family service plan, individual educational plan, individual program plan, section five zero four plan, or a incidental medical service plan.

The proposal would establish the necessary statutory framework to support future implementations of the single rate structure, enabling the department to begin proprietary activities to ensure alignment with the joint labor management committee recommendations. Terms of the age rate categories are as follows. Children under two years of age, the care of whom will be reimbursed at the infant rate. Children who are two years of age, the care of whom will be reimbursed at toddler rate.

Children who are at three years of age to six years of age, inclusive, who are not yet enrolled in first grade, the care of whom will be reimbursed at the preschool rate, children five years of age and older who are enrolled in the first grade or higher, the care of whom will be reimbursed at school age rate.

The next one is the alternate payment program administration. This trailer bill corresponds to the already, discussed related, topic in the previous item one to the structure of the administrative funding for alternate payment programs. The next one is CalWORKs childcare eligibility. This proposal seeks trailer bill language to amend welfare institution code to include participation in CalWORKs program activities such as education, training, job readiness, as well as eligibility need category for stage two, stage three, and childcare.

To to facilitate a streamless transition between the CalWORKs stages with minimal administrative burden on families and contractors, the WIC section requires the inclusion of additional data elements to be shared with CalWORKs stage two and three administrators.

These changes will improve program alignment to reduce administrative burden to families and providers and strengthen the goal of the trans transforming CalWORKs initiative. I will now turn it over to chief deputy Ramsey to continue with the next topic.

Good afternoon, chair and members. Claire Ramsey with the Department of Social Services, presenting on childcare health and safety standards, site safety and emergency procedures, TBL. Currently, the department is out of compliance with certain childcare development fund regulations related to licensing. And as such, CDSS is proposing this TBL to bring the licensing act into compliance on a number of item.

This proposal will align state requirements with federal requirements including strengthening childcare safety through mandatory, anaphylactic policies, ensuring comprehensive pediatric first aid and CPR training for all staff and volunteers and licensed childcare facilities, ensuring all childcare facility licenses and staff complete training for recognition and reporting of child abuse and neglect, and establishing comprehensive emergency and disaster planning.

These statutory changes are necessary to comply and to strengthen the safety and well-being of all children in childcare. I'll now turn it back to doctor Jaime Milam.

Thank you. The next one is childcare infrastructure grant recovery and restoration. This trailer bill proposal ensures coordination use of all available disaster related funding, including the newly awarded federal relief funds and the governor budget proposal of Prop 64. This alignment strengthens statewide disaster recovery efforts and maximizes funding impacts and helps stabilizes the childcare system for the long term. One last addition that we'd like to also, include is the child care program oversight.

For this one, this proposal includes cleanup to statutory language, governing fraud and overpayment preventions in child care and development programs, and provide CDSS with clear authority to issue mandatory guidance to childcare and development contractors. The proposal also reflects the transition of these programs from the Department of Education to the Department of Social Services. Current law still identifies CDE as the lead agency for the oversight and error rate studies despite this this, by, statutory transferring over to the CCDF, childcare and development fund authority to CDSS.

I will now turn it over to the suggested questions in the agenda. First question, has to do with the alternative methodology design.

And so it would so I wanna start off first by stating that it would be helpful to distinguish between the alternative methodology and the single rate structure. So Federal Government requires states to assess how rates are adequately based on either the regional market rate survey or an alternative methodology that looks at the true cost of care. It's a tool, the alternative methodology, that estimates that true cost of care delivering services rather than price of what parents can pay.

However, the single rate structure is a little different. This is the stage we are now.

This is the unified reimbursement structure for all learning and care programs that will include specific rate categories that vary based on elements like age, geographical locations, and settings. As it relates to the alternative methodology, the governor's budget includes language to clarify that the department may use an alternative methodology in place of the market survey to align the timing of the alternative methodology survey with federal requirements.

The department believes this language reflects what is needed at this time prior to the next alternative methodology being completed by 07/01/2027. As it relates to the single rate structure, the May revise includes proposals to adopt two foundational elements by defining age, age, categories, and details around the enhancement inclusion rates. The CDSS is still evaluating all the other recommendations of the single rate structure policies and elements, including the joint labor management report, which we think are the remaining elements needed to finalize for the single rate structure.

Now the next question has been is related to alternate payment agency services and considerations. In response to that, we have not done a cost study at this time, But in previous hearings, we've acknowledged that evaluating how the administrative rate and support cost structure is established under the single rate structure are important to have. And so we're happy to continue conversations regarding this topic. And the next question, in light of the APP relinquishment, should agencies have higher minimum service standards?

And so, the response to that is we assume that minimal service standards, the subcommittee means adopting and enrolling standards for voucher based reimbursement, similar to what title five reimbursements are shifting for being based on in terms of enrollment level.

We are open to conversations as we share the goal to make sure that we're maximizing every slot in enrollment and families have the opportunity to fulfill to meet those those slots. Things, though, to consider is how do you incentivize enrollment growth while still ensuring contractors remain within their fixed contract amount and don't over enroll. The other piece to balance is what can be done with existing contracts and payment systems. But, again, happy to continue this conversation. This concludes our overview and our responses.

We're happy to take questions when appropriate.

Department of Finance.

Tamar Webber, Department of Finance. I just bringing it back to the slot adjustment. The administration just wants to echo that we share the priority of childcare subsidized childcare, and the budget maintains 1,600,000,000 general fund for the expansion slots that we have added. The 6,000 slot adjustment that we were discussing previously, this is just to align with funding changes that we're seeing in federal funds and prop 64, and it is just point in time based on what the department is seeing for utilization.

But we are open to having continued conversation with the legislature on this.

Thank you for that. Anything else on Department of Finance? LAO?

LAO? Dylan Ocasio with the legislative analyst office. Based on our initial review, we don't have any specific concerns, but we will let you know if we have concerns as we continue to review the TBL.

Oh, I know you'll let us know. Have mercy. Alright. Questions from committee members? Okay.

Are we is are these all are we anticipating any additional trailer bill language, or have we seen everything already?

As far as this budget cycle, we have submitted what you have seen. As far as the future, we're happy to continue conversation.

And I would just mention that the last proposal was not agendized because we did send the or Department of Finance sent the trailer bill over the weekend, but that you should have now all the trailer bill that is goes along with the May revise.

Okay. When do we anticipate it being posted?

The program oversight trailer bill should be posted today, and it's after five. So hopefully, it should be there.

Got it. Thank you. Really appreciate it. Thank you very much to this panel. We'll move on to part two on human services issues.

CDSS, you may begin when you're ready.

Thank you. At this point, I will say good evening, Mr. Chair. Jen Troia on behalf

Don't remind us. Come on.

On behalf of the Department of Social Services. Before diving into the individual items in the agenda, I'll briefly highlight that the May revision proposes 16 billion in total funds, 1.6 billion general fund in fiscal year 2026-27 for CalFresh and nutrition programs. This, includes a decrease of 1.3 billion or $25,000,000 approximately in general fund from the governor's budget.

The decrease is related to caseload adjustments for CalFresh and the Child and Adult Care Food Program or CACFP using more recent data, lower carry in for the nutrition education funding joined to the program being eliminated federally, and the decrease is offset by augmentations for, CalFresh County administration and lower than previously projected savings related to the ABOD time limit and, newly excluded noncitizens under HR 1. The CalFresh caseload for 2026-27 is projected to be approximately 3,000,000 households.

This reflects a caseload decrease of around 6.3% from the prior year. The California Food Assistance Program or CFAP caseload for 26-27 is projected to be approximately 46,000 individuals, which reflects a caseload decrease of 16.2% from the prior year. The first item in the agenda, item one, is the able-bodied Adults Without Dependents County Administrative Resources. You've asked a couple of questions related to the administrative funding and the caseload decline in CalFresh.

In response, I will highlight that funding for CalFresh administration is based on a methodology that was established by the most recent CalFresh rebase and by the most up to date caseload data that we have.

That methodology uses multiple variables, such as the overall caseload, the caseload characteristics, application volume, and more, and those variables were established by CDSS in consultation with the counties based on surveys that determined the time required for specific required administrative activities. The May revision includes 2,500,000,000 total funds, 1,200,000,000 general fund, for CalFresh eligibility administration in fiscal year twenty six twenty seven. The May revision does not importantly include any proposed solutions to reduce CalFresh funding for administration in order to balance the state budget.

That said, as the agenda notes, there is a proposed year over year decrease in the total CalFresh eligibility administrative funding from 25-26 to 26-27 of a 145,500,000 total funds. There is also an increase in general funds that's a result of the new cost sharing under HR 1.

The change to CalFresh administrative funding is driven by a decline in the CalFresh caseload based on more recent actual data. CalFresh caseload based on more recent actual data, and the CalFresh caseload is now anticipated to drop by 6.3% between those budget years. Because economic conditions have not improved, these recent decreases are likely driven by other factors, such as the chilling effect of federal actions.

The May revision does not reflect changes from the governor's January budget to the CalFresh administrative cost methodology specific to the ABOD time limit. So, for example, assumptions about the percentage of people who may be determined exempt or subject to the time limit remain consistent between the governor's January budget and the May revision.

In addition to caseload based funding, the May revision includes a proposed 1 time augmentation of $30,000,000 general fund with federal matching funds that's 61,900,000 total funds in fiscal year twenty six twenty seven for county administrative activities intended to be responsive to county concerns about workload and readiness to implement the ABOD time limit as required under HR 1. This funding is intended to provide additional support for county administration during the first year that the state implements the time limit at scale.

During the first year of implementation, California specific data will be collected to inform any possible methodology changes that can be considered as a part of the reassessment of CalFresh administration, which is scheduled to begin in the 2026. The administration's proposed augmentation of 30,000,000 general fund for ABOD administrative activities is proposed to be provided while this data is becoming available to help inform the reassessment of the CalFresh administration.

And on that note, that is a segue to item two, which is related to the county administration reassessment timelines.

There are three CDSS programs with statutory requirements to reassess administrative funding every three years. They include CalWORKs, CalFresh, and the in home supportive services program. Under current law, both CalWORKs and CalFresh reassessments would be due in Fed in fiscal year twenty seven twenty eight.

In light of the significant resources required for both the administration and the counties to engage in these detailed reassessment processes, This proposal would shift the timing of the IHSS and CalWORKs reassessments so that only one program is being reassessed in detail every year. Under the proposed timeline, the next reassessment for each program would be CalFresh in 27-28, CalWORKS in 28-29, and IHSS in 29-30.

As noted in the prior item, the May revise proposes 62,000,000 for 2026-27 for county admin, resulting in the reassessment in time for 2027-28. You also asked about HR 1 impact estimates. The result as a result of HR 1, we estimate funding for CalFresh will be cut by a total of 2.3 to 3,700,000,000 annually and that about 500,000 people could lose benefits. These are updated numbers since the governor's budget.

As I previously mentioned, we've seen a decline in actual CalFresh caseload that outpaces the projections.

And as we've previously discussed, there are several policy provisions in HR 1 that are expected to result in benefits losses. Those include, changes to who can claim the standard utility allowance, changes to the ABOD time limit, and, changes impacting non citizen eligibility. I'll dive deeper into the ABOD time limit and the expected impacts there because there are updates in the May revision, and I know this is a topic that we've had many detailed conversations about.

Taken together, HR 1 results in more Californians being subject to the time limit and so1r than they would have been under under pre HR 1 rules. The May revision estimates that roughly 2,600,000 adults ages 18 to 64 receive CalFresh, so it's down from a higher number in January.

We estimate that about two thirds or 1,600,000 are already exempt based on existing data, down from 1,800,000 in January to 1,600,000 now. That leaves roughly 806,000 adults whose exemption status is not yet known or who may be newly subject to the time limit because of HR 1. As a reminder, in January, that estimate was 955,000, and it is now 806,000.

Again, the decline in the total ABOD count from January to May estimates due to Californians leaving or not entering into the CalFresh caseload more rapidly than originally anticipated in the governor's budget is what's driving the changes in these numbers. You asked about our efforts to mitigate harm in implementation of cal HR 1.

And as we have emphasized, previously, we are maximizing the use of existing data within CalSAWs as well as state administrative data external to CalSAWs, including data from the departments of health care services and developmental services to identify exemptions and pursue additional automation opportunities. The anticipated exemptions that will result from data matching with DHCS and DDS are not yet accounted for in the May revision estimates of who is anticipated to be at risk of losing benefits that I just outlined.

In terms of additional work to mitigate harm, we continue to strengthen county training and engagement. We are also expanding CalFresh employment and training and exploring additional workfare options to help individuals meet the requirements where needed. Finally, with respect to HR 1 and the changes to noncitizen eligibility, we now estimate that about 34,000 noncitizen will lose eligibility for CalFresh once fully implemented.

That's down from seventy two thousand in the January estimates. The May revision reflects 59,400,000 in lost benefits in 26-27 as a result of this policy. The caseload decrease since the governor's budget is a in this specific area is a result of the caseload decline in this area, enhanced data inputs, and refined interpretations of eligibility for individuals.

Do you want me to pause on those or keep going with calculus?

Yeah. I wasn't sure. I was, like, Kinda debating with myself. But so help me to understand, at first, in terms of our non citizen brothers and sisters, it was first thought of that we were going to have seventy two thousand affected, and now it's down to thirty four thousand. Help me understand what drove that change.

What exact why did it change like that?

Yeah. A few things that we are that we would say. One is the chilling effects. So approximately thirteen thousand newly excluded, lawfully present, noncitizens have already exited the caseload between July 2025 and December 2025.

Left?

This is the chilling effect of federal policy.

Explain chilling effect.

Individuals .

Cause I don't like the cold, and that's it's actually a little too cold in here for me. But, anyway

What we Yeah. What

Explain the chilling effect.

Sure. What we frequently hear from the immigrant communities is related to the how how frightening it now feels to interact with the government and to receive benefits from the government, particularly recognizing the impact that that might have on immigration status and just in general being more visible to the government.

I don't know if there's anything you'd wanna add, but that that seems to be the main thing that we hear from community in terms of people's fear of continuing to come forward even if they are eligible for benefits.

Should they be concerned? If I am a noncitizen in the state of California and I'm facing food scarcity, other issues of instability. I'm doing everything I can, need some help. Are there are there any real risks of participating in these California programs?

The answer to that is very complex and highly dependent on each individual's immigration status and a number of other things. What we typically do is encourage individuals to consult with immigration counsel, if at all possible, including through the legal services that we provide through our immigration legal services programs to understand their individual status and what they are eligible for and what possible impacts it could have on, for example, public charge.

Having said that, the Federal Government has made policy changes and is continuing to make them, so people's fear of what might happen in the future is also something that really does have a significant impact. I will say that individuals, often express that it is more comfortable in that situation to receive assistance through food banks where there is no identifying information that is necessary to be provided in the same way.

So that may be part of what we see as driving the demand that's increasing to food banks at this point, while we are also seeing a CalFresh caseload decline.

Is the, what about the decline number in ABOD work requirements, that population? What is causing the downward trend there?

So the changes between January and May in the ABOD estimates are related to the decrease in the caseload overall. So as we see fewer people in the caseload, we are also seeing fewer people of the ages for which ABOD would be applicable and individuals who would fit each of the categories if you think of it as a funnel of sort of the total number of people eligible down to the place where we

But why are we seeing a reduction? I'm trying to figure out the why.

Again, our best, guess here is that this is that same chilling effect.

Even though they're citizens?

Yes.

Explain that to me.

In many instances, Californians live in mixed status households, and so there it may be an instance in which the larger environment and the larger family safety is still a significant consideration even if the individual applying is a citizen and is eligible.

K. LAO, do you have any comments in regards to that chilling effect? You seem pretty chill.

I think it's a little cool in here too. We reviewed the caseload projections, and they are uncertain, but we think they're reasonable. And in terms of whether the cause is this chilling effect, I don't think we have anything to add it. That does seem like a plausible explanation.

Okay. Standard utility allowance. Your chart talks about those who are going to have a decrease in benefits, but are there some who will be losing benefits and how many that are not on this chart?

Alexis Fernandez Garcia with the Department of Social Services. So our estimates show that about 470,000 people will either lose eligibility entirely or see a reduction. Of the 470,000. About a 110,000, will lose eligibility entirely.

So I'm gonna go rogue here. And when we talk about harm reduction, we can think of that in different ways. First, we can think about how do we make sure that we keep as many people enrolled as possible to prevent the harm from being kicked off due to not meeting the ABOD requirements. We can think about, you know, how we can obviously, food banks have always been a part of our harm mitigation so that they have somewhere to go.

I think we're at the point where food banks are meeting their Max in terms of what they're able to do that's exceeding the need.

What else could we be doing in terms of harm mitigation? Understanding nothing will be as efficient and impactful as CalFresh or CFAP. And where can we find that in the May revise?

So one area of work that we've emphasized over the last few years and will continue to do is client education and outreach, ensuring that people who remain eligible are aware of the benefits available to them, coming back to the chilling effect and whether that might be founded, you know, educating people so they can make the right choices for themselves and their personal circumstances, and so they're not unnecessarily leaving the caseload if they remain eligible. And any concerns they have can be addressed through that education.

So that is work that will continue. It's not highlighted in in the May revision, but it is work that continues through our network of community based organizations.

Certainly, I think a lot of bad things can happen from September to January when we come back. And I'm always looking for ways to make sure that while we're no longer here in Sacramento, although many people working here will be happy because we won't be here, that we wanna always leave some type of contingency. I know we are in uncharted territory right now, but it seems to me that we could still be doing more. It will never meet all the needs. No doubt about that.

But the type of instability that we're going to be seeing and the ripple effects of that just seems to me that we should be trying to do all that we can. And are there other things that we are not discussing? For instance, before HR 1, you may agree with me, you may not agree with me, counties were already underfunded in terms of being able to handle the requirements and the work that we have asked them to do.

And it seems from the numbers that I've seen that counties have are still being shorted because even though the caseload has gone down I applaud the administration for putting additional dollars in. I wanna make sure that I recognize that.

But at the end of the day, it's still a a net negative. And that net negative goes on top of the negative they already were experiencing due to before HR 1. And by the way, administration continues to add in these cost shifts that adds on to that in many ways. How do we expect the counties to make it?

It just doesn't now I'm a political science major, and I did that specifically so I can take as many so I can take as many less math classes as possible.

It was my goal, but the math doesn't add up to me. And I'm wondering if you can help me understand that is at this point, the work that really has to be done is gonna be on the shoulders of counties. And

do you believe we're setting up counties for success, and this may revise? It can be Department of Finance or it could be administration. I don't care. I definitely wanna add LAO to chime in as well, though.

I can get us started and then colleagues may sort of add on as well. Lourdes Morales with the Department of Finance. As we talked about earlier in the agenda as we sort of brought a broader overview of county administration, what you see in sort of changes to sort of baseline funding does reflect an adjustment to sort of workload, which is our long standing existing practice.

But what you also see are sort of one time augmentations both in current year and in budget year to support county efforts with implementation related to ABOD. So you see the 20,000,000 that was authorized by part of our joint agreement for the last year and then the additional 61,900,000 for for budget year.

Really, that reflects an acknowledgment that there is sort of additional workload and helps counties sort of move forward with that work as we look ahead towards that tri annual assessment so we can use a data informed approach to revise methodology as sort of necessary and inform the development of the subsequent budget. The other thing we haven't touched on yet, if it is later on your agenda, is budget BCP, excuse me, for CalFresh implementation, which also includes technical assistance support.

This is resources of the Department of Social Services to help support on a sort of TA basis county efforts to move forward with HR 1 implementation. And I'll turn it over to DSS for additional comments.

I'll just add a little bit of context that, CalFresh is one of the programs where we previously completed a rebase a couple of years ago, a reassessment of funding. And as a result of that process, we did add, in the hundreds of millions of dollars in the CalFresh program for administration, things like funding applications that are denied so that that work is covered, which didn't previously exist.

So we did engage in a process to work through the, methodology for CalFresh funding a few years ago, and it resulted in significant new resources for the counties. As you have pointed out, and the county certainly have pointed out as well, we certainly did all of that before HR 1, and so these conversations have taken on a new life for sure under the changes to the program that are really unprecedented.

So, we are proposing that additional set of resources that the Department of Finance was referencing for the budget year, and then we'll be engaging again in the reassessment process for the triennial process, during the budget year to inform the out years.

LAO, are we are we giving counties what they need?

Ultimately, the methodologies that have been developed and that the administration has described are guides to help the legislature in determining the amount of funding that it wants to prioritize. It's difficult to identify a binary incorrect correct amount of funding. It depends on what the legislature wants to prioritize in this area versus other items in the budget given limited resources.

One thing I would note is that, while the reduction in administrative funding due to the caseload change is certainly consistent with, the typical practice and methodology, When there's rapid change in Enrollment, particularly rapid declines in Enrollment that leads to changes in funding, this can be difficult for counties from an administrative perspective to accommodate. This has been an issue that's come up in in other health and human services administrative methodologies in in recent years.

The legislature could choose to provide more, consistent with its priorities. But if it does so, we would recommend that the legislature identify offsetting savings else elsewhere in the budget to avoid adding to the state's ongoing commitments.

Oh, I'm mostly talking about one time funding. I know that, for I mean, since I've gotten into this chairmanship, we've been dealing with deficits. So I don't know about I don't even dream about multiyear stuff anymore.

I'm thinking about one time that if we are wanting to make sure that we're setting up the counties to do everything they can to prevent people from losing their benefits, Do you believe that a mayor revised addresses helps us to meet that goal, or do you think we should be doing more?

Don't have a recommendation in terms of what the specific amount of funding should be. Again, this really is a question of legislative priorities. The budget is constructed consistent with past practice, and and the administration has put forward what it believes is is appropriate, but it's perfectly reasonable for the legislature to to disagree on that.

Okay. Any other questions on the ABOT County Administrative Resources before we move on to item number two? No? Okay. You already you already addressed item number two.

Got it. Item number three.

I did not do item three yet.

Go for it.

Item 3 relates to the Cal Food program. So Cal Food is funding that supports food banks for the purchase, storage, and transportation of food grown or produced in California. In recognition of the increased demand that we were just referencing, the May revision proposes $30,000,000 in total funds, which is also 30,000,000 general fund, one time in 2627 to augment the Cal Food Program baseline funding of $8,000,000 general fund. So there's a total proposed of 38,000,000 in 2627.

Food banks use this funding to distribute food purchased with their share of the Cal Food allocation as part of their regular food distributions, including the federal emergency food assistance program and the commodity supplemental food program to supplement the mix of food that would otherwise be available by including fresh California grown commodities.

I will continue on. So, item four for CalFresh is related to the state administrative expense adjustment or SAE. The SAE target serves as a planning threshold for administrative costs for the supplemental nutrition assistance program, SNAP, which we know as CalFresh in California. It's a target that's set by the food and nutrition services Administration. In federal fiscal year 2025, for the first time, the state exceeded our SNAP SAE target by approximately 53,000,000 or 4%.

Federal fiscal year 2026, we are also projected to exceed the federal target. The increase in spending reflects CalFresh caseload growth, partially offset by a decrease in the cost per case. The target has kept pace with inflation over the years, but it has not kept pace with California's caseload growth. On April 21, we submitted a justification to the Federal Government for additional federal funding for federal fiscal year twenty twenty five to reimburse the state for the $53,000,000 above the SAE target.

There's no established timeline by which we expect a specific response from FNS related to those requested funds.

We have not yet received a response from them. In the interim, additional general fund and county funding is required for cash flow purposes to maintain operations while the request for additional federal funding is under review. The May revision proposes to fund the federal match amounts that exceed the SAE planning target in '25, '26, and '26, '27 until additional federal funds have been secured and can be used to repay that general fund. The additional funds will cover costs above the SAE target to prevent any funding gaps.

Item five for CalFresh is related to staffing for HR 1 and federal changes, and I'll turn that over to the deputy director.

So item five, this proposal requests $8,000,000 in fiscal year twenty six, twenty seven, and 9,900,000 ongoing for six permanent positions to support the effective implementation of HR 1 and, a number of other, federal requirements that have been imposed.

Actions taken at the federal level, including but not limited to the passage of HR 1, require California to implement significant policy changes and meet new oversight mandates, such as increased monitoring, for example, related to the ABOD time limit, the development of mandated corrective action plans, and responses to unforeseen federal audits and data demands amongst other, actions.

We are working to mitigate the harms associated with these actions, including the provision of technical assistance, the active monitoring of county performance as required, and implementation of timely interventions through site visits, increased data analysis, and so on. This proposal seeks to make permanent repositions that were originally approved on a limited term basis and also requests three permanent positions. There was previously a question about how this relates to the request in January.

So overall, combined, these two proposals make 16 out of the 18 previously limited term positions permanent, and adds 11 permanent positions.

And this is the $9,000,000?

$99,900,000 ongoing. Oh, excuse me. 9.1 general fund ongoing.

General fund for 11 positions?

For the request in May revision, it's six permanent positions.

Noel Fakati, Department of Finance. Another component of the MRBCP is to adjust other positions within the fee division for the admin cost share change from the 50% to the 25%. So that's the larger portion of the funds requested.

So it's not just the positions. It's also the cost share shift.

Or the existing positions in our division.

Okay. Because at first, that's that looked like a lot of money for I was wondering if there's any job openings I should be applying for.

I wish. They're they're not they're not that expensive.

Oh, okay. I was about to get me a real job. Okay. Let's go on to the next item.

Item six, related to the Child and Adult Care Food Program or CACFP. This is a state and federally funded child nutrition program designed to provide nutritious meals and snacks served to infants, children, and adults in, care settings. The May revision proposes to update the CACFP state meal reimbursement rate due to the statutorily required cost of living adjustment. This meal reimbursement cola is tied to the childcare cola. So the current state meal reimbursement is 21.6¢.

And with the cola, it will increase to 22¢for 26-27.

Thank you for that. Questions on this item? I'm sending over to Ahrens.

Thank you, Chair Jackson. I too was a political science major, and I did take math classes as required by my major. And I will say the math Please proceed. The math is not mathing. The math is not mathing in this proposal.

I wanna thank the chair for your leadership and advocacy on protecting our most vulnerable populations. I also just wanted to preface my comments by mentioning that the May revision appears to be the highest level of general fund balances and reserves ever included in a May revision proposal in the history of the state of California.

I think it's 30 inclusive of the general fund's $32.5 billion fund balance in the May revise, the 9.7 billion proposed to be deposited temporarily to the projected surplus, temporary holding account, and $25 billion held in the rainy day fund. And I will say that it is raining outside. So I think we're very far apart.

And I know that this is sort of what the legislative and budgetary process is like, but it doesn't sit well with me how far we are apart. And I just wanna also point out that with that May revise coming out last Thursday, it is appears to be that the our revenues are much better than anticipated largely or at least due to a great part because of Silicon Valley industry that I represent.

But I wanna continue to bring up attention to CalFresh and the populations that are at risk of losing their benefits that was briefly talked about due to HR 1. Specifically, the reclassification of families with dependents age 14 to 18 as able-bodied adults without dependents. That is gonna result in the estimates that I am receiving.

59,177 individuals who have children begin their three month limit of benefits beginning on June 1. And it's also estimated that these families of up to 70% of them will begin losing their access to SNAP beginning October 1. Is that correct? Thank you. There is a lot of uncertainty right now, rising food costs.

And I believe that it should be a priority of this administration to protect Calfrac recipients and assist with our most vulnerable families and feeding their loved 1s and their children. And due to this reclassification, it's only gonna hurt our most vulnerable families. I I know that the administration knows that, which is why I'm request respectfully requesting again that we backfill the $98,000,000 in 1 time funding to protect our families from HR 1 and Trump's anti child food aid.

So I guess more plainly, I want to ask the department, how and what are we doing to ensure that kids don't go hungry on October 1?

Thank you for that question and for your support of the program. I think the main thing that I would say is that we have had a number of conversations about the urgency with which we are working to preserve benefits for as many people as possible under HR 1, including individuals who are subject to the ABWOD rule. So, the parents that you are referencing are those who have become newly subject to the rule because of the age of their children.

If we have any reason to exempt them based on the data that we already have or can obtain, that is our first priority. If we're unable to exempt them, then screening them to see if they are already compliant with the rules or if we can provide supports through employment and training and other services to help them become compliant with those rules would prevent them from losing their benefits.

Having said that, I think we have all acknowledged that the, the expectation of the Federal Government is that a significant number of people will lose benefits, and we do recognize that despite our best efforts, it is likely that there will be individuals who will lose benefits. But we are doing everything that we can to minimize that number.

Thank you. And with doing everything we can, we could backfill those cuts so it's not quite everything. It's $98,000,000 is doing everything we can of the $25,000,000,000 in the rainy day fund, 98,000,000 would completely cover these cuts temporarily. I would be remiss, Mr. Chair, to mention that Massachusetts has already identified this, and other states have acted.

50,000 children in Massachusetts will be covered due to the same cut. Another 10,000 more in Arizona. And so, you know, in California, we like to talk about how we're leading, we're leading the country, first in the country coverage, first in the nation program, first, you know, when, when we do things, California leads, the rest of the country follows. But we're, we're certainly falling behind on, on leading the country and addressing this acute problem that that other states are, are beginning to lead on.

So, I just wanna register it doesn't sit well with me, the, the back and forth of things being included in in the May Revision and us always having to go back and forth. I don't wanna spend my time in the legislature negotiating those budget games. But I, I will say that it, it is hard for my constituents to swallow—it's hard for me to swallow advocating for them up here while seeing historic levels, never before seen levels.

Billions and billions and billions of dollars of unexpected forecasted revenue surplus, $25,000,000,000 in a rainy day fund.

Just, just mentioning the rainy day fund, not, not to include the other aspects that was mentioned, while identifying $98,000,000 that can completely cover and feed hungry children. I, I think that if we are going to protect and, and save anyone in our budget, it's protecting the, the kids, ensuring that they're not gonna go hungry. And, and we have a program that already does that. We have the infrastructure that already does that.

We just need the state legislature to step up and work with the governor and the administration to cover it.

We have the deadline. We have the funding. I do not want the CalFresh recipients to be lost in the other targets and the other good things that we are trying to work on when a, a small ask could help literally be a lifeline for these hungry kids. I was one of these hungry kids. I was on the free and reduced lunch program.

I got by, and I am the direct beneficiary of a, a lot of these programs that we're talking about. And I just, I can't imagine how I would ever get to the legislature without that kind of support. I can't imagine how I would get to next week without the kind of support. We had it when, when food stamps was all types of different colors. We, before those.

You had real food stamps?

I got the blue, the green, the purple.

Older than I thought you were. Wow.

I'm only 36. My point being, Mr. Chair, is that is there anything in this current budget revise that would prevent—do you, do you in, do you anticipate do you see anything that we can do in our negotiations to backfill these cuts from the Federal Government so that children don't go hungry on October 1st?

The May Revision, presented to you by the administration, reflects sort of our plan to address the stability of the, the budget, sort of on an ongoing basis. As, as we know though, the ultimate budget adopted reflects agreement between the legislature and the admin—administration. I think the only note I would say is that as we work to develop a balanced budget, we sort of think about sort of the relative tradeoffs, sustaining that stability over the long run.

Having heard your, your comment about sort of reserves, that will certainly be a key point of discussion within the legislature and the administration about what's the appropriate level to sort of mitigate potential, you know, future economic conditions and revenue volatility.

And I, and I appreciate that very much, and, and please accept my, my passion and criticism in the manner in which it's intended, which is I, I love these programs. I wanna see these programs funded. And I hope that the administration looks very carefully at the legacy that this administration and California has had on advocating for child hunger and protecting children from going hungry. It's an amazing legacy to do that.

Many programs, long before I got here, have led on that, helped my family, helped so many starving families in California, and I just hope that we look to that legacy, and we look to that commitment to combat child hunger in this next proposal. Thank you. Thank you, Mr. Chair.

Assemblymember, thank you very much for your passion and your lived experiences. I remember those food stamps as well that got us through a lot of hard times. As a matter of fact, I remember the first time, the first Christmas that there were no gifts. And it was probably the hardest conversation my parents had—my mother had to have with me. And she says that and she asked me, is it okay that instead of gifts this year that I buy you socks and underwear?

Right? And so, these are real things that we have to continue to understand from the point of view of those who are just trying to make it through, just trying to survive, in a state that promised that your dreams can come true. And I think we're still trying to find ways to, to make sure that we stop lying to people. California dream does not exist right now.

And how do we make sure that we revive that in a meaningful way, so that future generations can be on a pathway to thrive like so many of us were able to when our families were in survival mode?

But somehow, through the support systems and through a lot of people along the way, gave us an opportunity to to be here today. I'm wondering, first, I wanna make sure that Department of Finance, has an opportunity. If there's any other comments you want to make on any of these items, I think I jumped from—I jumped around a little bit. You guys okay?

LAO, is there anything you would like to make in terms of these? At, at what point do we believe—LAO, we hear you loud and clear. We're on borrowed time.

And where is the balance, do you believe, in terms of balancing what we know are some structural deficits, expenditures exceeding revenues, obviously understanding that we can't do everything we may want to do when it comes to HR 1, but we have to make sure that our fiscal house is in order. What is the balance between making sure that we don't make the same mistake though as this legislature did during the Great Recession? A whole lot of people were hurt.

A whole lot of instability happened, and it wasn't until a decade that we were—these populations were able to recover from that. At what point does—do we also have to make sure that we're not creating so much instability that it ends up costing us more in the long term?

Any thoughts about what is that balanced approach? Right? I mean, I mean, this, this is unfortunately one of the few committees that actually have to think about this in a more meaningful way. And, obviously, we're in unchartered territory, and we gotta figure out what is the appropriate balance. And what are your thoughts about that?

Social cost versus physical cost. And at some point, if the social cost is so much, we could be spending another decade digging our way out of this stuff, spending more than what we would have spent if we would have just kept them on the services that we're currently providing them.

So, I, I think we would certainly acknowledge that the situation the state finds itself in with respect to the budget is a very challenging one, and the impacts on, on people that receive these services are real and they're significant. At the same time, as was discussed by my colleague on an earlier panel, the May Revision is only balanced because it actually draws down reserves, which is an indication that our, our current expenditures, before any new investments, outstrip the revenues that are available.

And with respect to the, to the revenue picture, it's, I think, widely understood that revenues at this level are unlikely to continue. And so, it is a balance. As you say, it's a difficult balance, but the legislature and the administration could wind up in a situation where deeper reductions are, are needed in the future, if additional augmentations are locked in now.

And that's why our recommendation is that the legislature stick with the level of solutions that the administration has proposed. Now, there can, of course, be disagreements about what the composition of those solutions entails. That's a perfectly reasonable and appropriate place for the legislature to insert its own priorities. But from the perspective of trying to balance the, the big picture, that is, that is our recommendation that the legislature stick to the amount of solutions that the May Revision proposes.

Thank you for that. Department of Finance, I mean, obviously, there's no doubt that this legislature agrees in terms of making sure that we are not handing over a deficit to the next administration. Definitely something I believe is the right thing to do. But it seems to me that this administration is also locking in some long-term expenditures that are also adding to the structural deficit. At the same time, trying to get the legislature not to do the same thing.

And so, can you explain why you, why the administration is choosing to add additional long-term spending, as opposed to one-time spending?

Are there, are there specific examples within the Human Services Department of Social Services space you would note? I, I couldn't speak to new augmentations in other areas.

Well, I'm just speaking overall. I mean, there's no doubt. I mean, LAO, you say there are some additional long-term expenditures. Correct? That is, that are being proposed in the May Revise?

Ginny Bello with the Legislative Analyst's Office. I'll, I'll, I—we'll have to get back to you on the ongoing. Sorry, we are just still digesting the May Revision ourselves. So, this is something that we'll, we'll get back to you, maybe in the next even few minutes as we look into it.

So, what is the biggest driver of taking out dipping into the reserves? What's the biggest driver for, for doing, for the administration to do that?

We could follow-up with more information around sort of the, the overall structural approach presented to you at the May Revision.

I will—this is, again, Ginny Bello with LAO. I will say part of it is a report we just looked at, just a little over a month ago, which looked at just our underlying cost of programs and that the cost of those programs are exceeding the revenues coming in. So, we have to dip into the reserves just even to fund our existing level of program.

Which is primarily on the health, health care side?

Much in the health and human services world. Correct.

What are the part of the human services that are adding to that need?

What are our big program drivers? Our cost programs that are going quickly in the human services world are really in-home supportive services, Department of a Developmental Services, I think were the big cost drivers in human services.

Got it. Okay. Any other questions from members? Assembly member?

Yes, I just wanted to clarify for the record. IHSS is a—certainly a cost driver, but it is also a huge cost savings compared to the alternative. So, I just took an issue with that classification, how we describe IHSS. Thank you.

That's a perfect segue into our next item. IHSS. Thank you very much to this panel. Thank you. Thank you to the sergeants for recalibrating the temperature.

It's nice and comfy. I hope no one tries to take a nap while we're here. Heard that. Administration, you may begin when you're ready.

Thank you very much, Mr. Chair. As we were just discussing, in-home supportive services program is the cornerstone of California's long-term services and supports system. It provides domestic and personal care services to children and adults with disabilities and older adults to keep them safely in their own homes and communities and avoid institutionalization.

The revised budget includes $33,700,000,000, 12,800,000,000 of which is general fund, in fiscal year '26-'27 for the IHSS program, which reflects an increase of $303,900,000, 226,300,000 of which is general fund from the governor's budget. The May Revision also reflects HR 1 impacts to conform IHSS qualified noncitizens moving to state-only Medi Cal until 07/01/2027 and then moving to restricted scope Medi Cal due to federal eligibility changes beginning in '27-'28.

The caseload for '26-'27 is projected to be approximately 875,000 recipients, served by the projected number of IHSS providers of 803,438. With that, I'm gonna turn it over to Chief Deputy Director Claire Ramsey to go through items seven through 11 in the agenda in greater detail.

Good afternoon. Claire Ramsey with the Department of Social Services. I'll start with item seven, the impact on IHSS of reinstatement of the Medi Cal asset limit. The May Revise is proposing a reduction of $62,600,000 in general fund in '26-'27 to conform IHSS with the reinstatement of the Medi Cal asset limit for seniors and adults with disabilities to $2,000 for an individual and $3,000 for a couple. This would be effective no sooner than 01/01/2027.

The current asset limit is $130,000 for an individual and $195,000 for a couple. We have a few questions that we're answering. Our first question is to please confirm or correct the number of people who are estimated. There are 7,755 IHSS recipients estimated to lose Medi Cal, I, excuse me, at IHSS, in '26-'27, as a result of the reinstitution of the 2,000, 3,000 dollar asset limit.

And this is in addition to the 15,509 recipients already projected to lose Medi Cal in FY '26-'27 as a result of the current asset limit policy.

Additionally, the estimate reflects an additional 11,166 IHSS recipients who will lose Medi Cal in '27-'28. And that's in addition to the 22,333 recipients already projected to lose Medi Cal in FY '27-'28, as related to the partial reinstatement of the asset limit. The next question was what will home, excuse me, what home and community-based alternatives to care will people have? We do want to acknowledge that this proposal impacts IHSS eligibility as a function of Medi Cal eligibility because IHSS is a service of Medi Cal.

But this does mean that individuals who are receiving IHSS have not lost their need for home and community-based services.

We do know that individuals who are regional center eligible may have access to additional services through the developmental services system. And we know that other individuals may be able to access some services in their communities through older American act funding, but generally acknowledging that there isn't a broad replacement for IHSS, unless individuals can privately pay for home care. Next question is, what are the likely personal and medical impacts to people and additional costs to the state?

It is our understanding that impacted individuals will lose their Medi Cal, which means they will have lost their health insurance, for other medical services and not just IHSS. But we would have to defer to the Department of Healthcare Services regard to the medical services.

With regard to personal care impacts, we would refer back to the alternatives in the community that may be available, that individuals could see. Next, moving on to item eight, auto termination of IHSS to align with Medi Cal. The January budget proposed savings of $86,000,000 associated with automating the process of terminating and reinstating IHSS in tandem with medical eligibility, which also determines IH—eligibility for IHSS.

We will note that the May Revision reflects an updated estimate of savings associated with this proposal to $56,300,000 in general fund savings in '26-'27. This is a reduction of savings of $29,700,000 from the governor's budget.

This is related to an updated projection of the number of IHSS residual recipients, will be—how many will be impacted. In the January budget, was estimated slightly over 10,000 cases would be impacted. And in this May Revision, we are estimating 6,711 IHSS cases will be impacted by this policy change. The proposal involves automating terminations from the IHSS residual program with the loss of Medi Cal coverage when individuals do not re—complete the redetermination process, beginning in '26-'27.

The first question in the agenda asks us about county advocate legislative and other stakeholder feedback we've received, related to this proposal and whether it's altered our thinking.

I do just wanna acknowledge that the department has had a number of different conversations with a wide array of stakeholders. And just last week, we held a meeting, as requested by the chair, with our county partners, legal advocates, recipients, providers, public authorities, unions, to really hear back on our various proposals. We did appreciate the feedback and the good conversation that was had during those meetings.

We do know that people have lifted up to us that there is a gap in understanding between Medi Cal eligibility and its connection to IHSS eligibility and have flagged that that may be one place to lean in. We have also identified that there may be opportunities to outreach or to provide more messaging to people before they ever lose Medi Ca; eligibility because that is really at the crux of all this, is the initial loss of Medi Cal.

We've also heard that additional notices or messaging on notices issued by both DHCS and our department could be helpful to add clarity and make the connection points and the next actions required by individuals more clear. So, we have taken note of all these concerns and all the potential solutions raised. We are looking at what preventative measures can be taken to keep people from losing IHSS in the first place.

We are exploring both what our cost-neutral proposals that—including messaging on our website, messaging on notices of action, and potentially what other solutions might be available, but could potentially have a cost associated like outreach before people lose Medi Cal. We are continuing to review these proposals and are happy to continue conversations both with our stakeholders and with the legislature about how to move forward on this proposal in a way that keeps people on their Medi Cal and on their IHSS.

Moving to item 9, HR 1 impacts on IHSS, related to qualified noncitizens. So, to be clear, HR 1 amends the federal definition of qualified noncitizens by removing several immigration statuses as eligible for federally—federal financial participation Medi Cal. Effective August, excuse me, effective 10/01/2026, certain categories of lawfully present noncitizens will no longer be eligible for federally funded full scope Medi Cal. Consistent with our Department of Healthcare Services policy assumptions, these individuals will remain eligible for IHSS through IHSS Residual Program until 06/30/2027.

So, basically, what would happen is individuals—under DHCS's proposal and our proposal, DHCS would keep individuals on state only Medi Cal and as such, the Department of Social Services would keep individuals on our IHSS Residual Program for the same length of time.

As of 07/01/2027, those individuals would move into restricted scope Medi Cal and would no longer be eligible for IHSS at that time. We would note that we do have to make automation changes to our CMIPs system to operationalize these HR 1 policy requirements. We were asked a couple of questions. How many recipients will be impacted by this proposal?

We worked with our colleagues at Department of Healthcare Services and estimate that approximately 2,068 cases will move from federally funded Medi Cal to state only Medi Cal because of these new qualified non-citizen federal requirements.

So, that would be how many people move over in '26-'27. And then, we anticipate the same number of cases would move off of IHSS in '27-'28 and ongoing as those cases moved into restricted scope Medi Cal. The next question was what home and community-based services alternatives to care for these people? Just to reiterate that because this proposal is actually a proposal to add funding to keep people on state only Medi Cal, these individuals would have access to their same IHSS services throughout the budget year.

And then beyond, we understand that people may have to make hard choices related to their care, including looking to see if there are alternatives in the community to help support them, if they have family or are able to private pay.

But we recognize not all individuals have families or the ability to private pay under those circumstances. What are the likely personal and medical impacts? Again, we think that this proposal is beneficial for individuals because it does allow them to stay on their full scope Medi Cal and on their IHSS throughout the budget year, but we do recognize that, once they move to restricted scope that they may have more limited access to both the healthcare services and to home and community-based services.

Moving on to item 10, the IHSS permanent backup provider system.

The governor's budget proposed 3,500,000 in general fund reduction to eliminate the in-home supportive services backup provider system, also sometimes referred to as BPS, beginning in '26-'27. After reviewing program data, we did find that BPS had been utilized less than we anticipated and that request for backup providers, that we anticipated would grow as the system came online, have not occurred. In addition, we have noted, and has been noted by this committee, that the administrative costs have exceeded the cost of actual services.

We do understand that it is a significant level of work for the counties and public authorities to locate providers, so, we do understand why some of those costs have been higher but noting the—that most of the costs have been driven by the admin cost. The May Revision does make an update to these estimates of $43,200,000 in general fund saving in '26-'27 and that is based on updated caseload data and IHSS cost drivers. Moving to item 11, local IHSS collective bargaining trailer bill language. This proposal would add enforcement provisions related to collective bargaining agreements for IHSS provider wages and benefits.

Specifically, counties that have not reached an agreement by 07/01/2026 would be required to reach an agreement with the employee organization within ninety days.

Failure to reach an agreement within that timeframe would result in the withholding of a portion of 1991 realignment funding, regardless of whether the county is operated—operating—under an expired collective bargaining agreement. And the current penalty is 10%. This penalty language has been in place since FY '23-'24, however, the loophole that's being closed here is the original language didn't account for counties that had never had a collective bargaining agreement, and thus, were able to basically not have to comply with this penalty proposal.

We do not see any cost to the state of this proposal. With that, I will pause. Those are all the IHSS items. Happy to answer any questions.

Department of Finance.

Thomas Locke, Department of Finance. Nothing for—at this time.

LAO?

Ginny Bello, LAO. Before turning to my colleague for our IHSS comments, I did wanna follow-up on a question you had a few minutes ago about the level of ongoing new spending proposed in the budget. So, overall, the budget has 1,300,000,000 in new spending proposals, 170,000,000 of which are ongoing proposals. And they're not—primarily not in the HHS world. They're in the resources area.

So, very little compared to the overall new spending, 170,000,000 out of 1,300,000,000.

And the rest are based upon the ongoing increase in cost of the current programs we are.

Other increases, right? Our workload budget. Yeah.

I'll turn to my colleague now for IHSS.

Got it.

Juwan Trotter, LAO. I, so, I'll start my comments, comments with issue number seven, talking about the restatement of the Medi-Cal asset test limit. So, I was noting in the agenda, back in 2022, the state began the phase-in approach to fully remove the Medi-Cal asset limit. First, partially raising the asset limit and then fully removing the asset test in 2024. However, in January, the asset limit was partially reinstated to the current level of 130,000 for individuals and about 195,000 for couples.

And now, the governor is now proposing to fully reinstate the asset test limit to where it was prior to 2022 at $2,000 for individuals and $3,000 for couples. Now, as was noted in the agenda and by the administration, there are some estimates for the number of IHSS recipients who may be impacted by this proposal.

However, we would note that when we first began to remove the asset limit, we were limited in our ability to fully estimate how many individuals actually entered the IHSS program as a direct result of the asset test being removed. And as such, as we consider this current proposal, we may be similarly limited in our ability to fully estimate the number of individuals who will lose access to IHSS as a result of the asset test being fully reinstated.

And so, with that being said, should this proposal be accepted by the legislature, we do believe that it will be important to maintain a kind—consistent oversight of the over the number of individuals who actually lose access to IHSS because of this proposal.

Lastly, on this specific issue, while we are continuing to analyze this proposal, we have some concerns about the level of additional administrative complexity that may result from reinstating a more restrictive Medi-Cal asset limit of $2,000 for individuals and $3,000 for couples. Onto the proposal to auto terminate, IHSS says eligibility to align with the, the loss of Medi-Cal.

So, it is, it is, as was kind of noted by the administration, it is, saying that the auto termination proposal has not fundamentally changed from what was proposed in January, and it is our understanding that this reduction in savings does reflect an estimated decrease in the number of IHSS recipients anticipated to be impacted by this proposal and does not reflect the change how this proposal will actually work, in practice. Moving on to the proposal on HR 1 impacts on qualified noncitizens.

We will just note on this proposal, the legislature does continue to—as the legislature continues to consider this proposal, you may wanna ask the administration, related to the last proposal, how they anticipate this increase in recipients entering the IHSS Residual Program, will interact with the governor's proposal to streamline IHSS eligibility to align with Medi Cal.

Moving on to the proposal to eliminate the permanent backup provider system. Much like the previous January proposals, we understand this proposal not to be a fundamental change from what was proposed in, in January, and the slight decrease in the level of savings being a reflection of a change of estimates of how many people would be impacted by this proposal. And then, on the, the localize, just a collective bargaining trailer bill language, we're still in the process of reviewing the trailer bill language.

And so, if we have additional concerns in the future, we'll be sure to bring that with you at that time.

Thank you very much. Just a a few questions for myself. I believe that, number one, just wanna reiterate, and, of course, we'll look forward to any further conversations. But at this point, item number eight, this committee will be rejecting that item pending further conversations, as well as issue number 10. We mentioned the legislature still—this committee still feels the need to have a backup provider system.

However, we are equally concerned about the unbalanced cost that are associated with that. CDSS, are you, are, are you gonna provide any ideas on how we can bend that cost curve as opposed to elimination? Or are we just going to not move forward with this item?

Chair Jackson, we're happy to take that question back to see if there's alternative proposals. But I don't know that it's something that could be figured out within the next six weeks before the budget is passed. But we're happy to talk more about how to, how to work on the admin cost versus the services cost.

Yeah. I just wanna reiterate that in the time that we had our first hearing on this item, we, we mentioned the same thing and the need to take our concern seriously. And so, that was a few weeks ago that we brought this up. So, again, if you want to see this item be addressed, I suggest we engage in conversations earnestly because this is—you're gonna back into one of our red lines here.

Excuse me, Mr. Chair. Just...Department of Finance. I just wanted to, to flag that I think you had asked LAO to kind of look at some options and for us to kind of, like, work with them, and I think just flagging that we've had a conversation with the LAO on this, as you have requested.

Okay. We'll have further conversations on this, but I just wanna reiterate item number ten and eight again, that further conversations need to be had with this committee. And I'll leave it at that. Okay. Any additional questions or comments on IHSS?

Dr. Sharp-Collins?

Thank you. I know I had to rush back. This is a really important conversation for me, as we had, we had a press conference last week in regards to making sure that we pushed our governor, knowing that we have rejected three different things. And I'm happy to hear that this committee is still moving to reject item number eight and number 10 because when you think about the budget itself, we often—it is said that our budget is a statement of, of our values.

And I think that is time that we continue to make sure that it is a true statement based on, on our values.

And to me, this offers an opportunity for us to be able to move forward, knowing that IHSS funding, it represents cost savings, and we need to continue to do everything we can to make sure that folks are able to really survive and thrive at home. And so, I would like to just say, thank you to our chair for reiterating the fact that we are going to continue to reject and highlighting number eight and number 10.

I do hope that we can continue to push our governor and push others, but that press conference to me said, it, to me, it actually said, said a lot. When it comes to this process, the validation that comes from care in a setting that is, that is most comfortable was something that we should con constantly be actually thinking about and the recognition of the demanding nature of the work for hundreds of thousands of IHSS workers statewide is something that we need to continue to think about.

And finally, really having an an understanding of the sacrifices made by family members who commit themselves to providing for a loved one.

We need to continuously think about that. So, I don't want us to accept these types of cuts from our Federal Government. I want us to continue to do exactly what we're doing here, standing boldly and in solidarity with all of our workers to make sure that recipients alike continue to say that, that enough is enough, and I'm saying that enough is enough, so, I will continue to push to make sure that we are rejecting these cuts.

And so, as it stands, I will not be supporting any budget items until these things are fixed, as it pertains to IHSS workers.

Thank you.

I wanna just point out another item that's not listed here, and that is the proposed cost shift in terms of IHSS as well. And so, just wanna make sure you also know that this committee is not supportive of that effort. Also, we are highly worried about multiple cost shifts that have occurred, that are being proposed on this budget, and what that does to the huge amount of work we're asking them to do, due to HR 1 as well.

So, looking forward to further conversations on that also. I wanna thank this panel.

We'll move on to adult protective services. And while we transition adult protective services, just some housekeeping items here. We are gonna be waiving some presentations, and we're gonna be wait for the, and just to say, we wanna get to as much public comment as possible. And so, we're gonna be waiving some presentations. That does not mean we are—this committee is in agreement with them.

It just means that we are choosing to waive them and we'll have some further conversations throughout the budget process as well. So, we'll be waiving items number 18 to 37. You're welcome. We'll be waiving items 41 through 43.

We'll be waiving items 45 to 47, And we'll be waiving items 49 and 50. Okay. DDS, you do not get a pass. We waiting for you, baby. That's right.

Okay. Let's go to Adult Protective Services.

Thank you very much, Mr. Chair. Jennifer Troia, again, on behalf of the Department of Social Services. Item number 12 is a proposal to repeal the adult protective services program expansion. It was authorized through AB 135 in 2021. It lowered the APS eligibility from age 65 to age 60.

The proposal would reduce associated funding by $70,000,000 from the state general fund for the adult protective services program. It assumes implementation of these changes effective 07/01/2026.

I will also note that in addition to broadening the population that was eligible for APS, AB 135 included an expansion of longer term case management services for clients with more complex needs as well as providing APS to individuals experiencing homelessness and housing services that were provided through APS, including housing support and navigation in addition to the Home Safe program. These expanded services and the funding for them would also be eliminated with this proposal.

Adults 60 64 who meet the definition of dependent adults would continue to be eligible for APS.

However, those additional services I just referenced added under AB 135 would no longer be available through APS regardless of age.

With that, you had a couple of questions in the agenda, and I'll turn it over to the chief deputy director to respond to those.

Thank you, Chair Jackson and Members. Claire Ramsey for CDSS. Your first question was what other services may be available for those who would lose access to APS? And prior to the expansion, what do we know about how this population was served? I would just highlight that previous to this expansion, individuals 60 to 64 were served as director Troyer mentioned if they were considered to be dependent adults.

And that would continue to be true, if this reverted back to the original, definition. So therefore, we would still see service of individuals sixty to sixty four, but it would be more limited. However, more broadly, individuals between the ages of 60 and 64 who did not qualify under dependent adult would no longer be eligible for APS services. And we do acknowledge that there is no specific alternative service that replicates what adult protective services does for these individuals.

Although there are other community supports related to emergency rooms or police and other services along of that kind in their communities.

The next question was will the funding affect county's ability to retain APS personnel in the counties? And how will they specifically contract their staffing and service delivery. It is our understanding from the California Welfare Directors Association and from the counties that it is possible that this proposal will impact the ability of APS to retain staff in county offices. We don't we don't, you know, those aren't our employees, but that's our understanding from them.

We know that our AB 135 funds were primarily used to hire staff across APS and were not specifically, directed toward that expansion, but were basically used as a part of their, budget toward funding their staff and to to maintaining their entire workload including that additional work for those 60 to 64.

We do think it is possible because of the changes that, you know, they cannot maintain and would not be able to maintain their current workload. Obviously, there are a couple items that would come out specifically that they would no longer be required to do if this rule went into effect. But also, obviously, they wouldn't be serving those 60, 64 year olds any longer, in this program.

The next question was what level of savings could be achieved if the state allowed you to con allowed us to continue age 60 to 64 but eliminated the other services? That's actually a hard question for us to answer.

The funds are incorporated incorporated into the overall APS county allocations and are not tracked separately from broader APS program funding. So as a result, it's not possible to identify or isolate expenditures tied solely to the age expansive expansion once distributed to counties. So just wanted to to clarify that. How will this cut impact senior homelessness in California? So as director Torrey mentioned, this proposal would eliminate expanded homeless services as provided by APS that were tied to the AP excuse me, AB 135 expansion.

We do understand there are some limited services would still be available through APS. Do wanna note that the funding does not change the funding related to HomeSafe. However, it does apply those same definitional changes to HomeSafe. So we do think there would be less services under HomeSafe for individuals sixty to sixty four who do not qualify as a dependent adult. More broadly, because HomeSafe is, has time limited funding, some counties have reported that they don't have separate HomeSafe staff.

Instead, they use their APS staff as a staff to work on HomeSafe and that could be also impacted by this proposal. And generally, we do wanna acknowledge that we know the older adult homeless population is growing and recognize that that was part of the question too. But those 65 and older would continue to be able to receive home safe services as an older adult. Finally, your oh, I'm sorry.

Thank you. That was your last question. Happy to answer anything else.

Department of Finance?

Thomas Locke, Department of Finance. Nothing further to add at this time.

LAO?

Juwan Trotter, LAO. So our main comments regarding this proposal are, laid out in the agenda, but one that we would want to further emphasize here is and it was mentioned by the administration is that because the funds allocated in the APS expansion were allocated, two counties to to be spent on ABS programs more broadly, Any reductions in APS services as a result of this proposal will likely impact APS recipients, including those age 65 and over and those outside the expansion group.

Referring to, or follow-up on one of the questions regarding, continuing to fund the fund the APS for the, 60 to 64 age population, I think a a follow-up question could be that you may wanna ask administration is, what would it take to establish a sort of methodology to provide that age based funding level for that expansion population that either does or does not include, the expanded services that are part of the APS expansion.

Thank you very much. Questions or comments from committee members on this? Seeing none, I'll just make it, make it quick. This committee is going to be rejecting this item for pending further conversation. Our seniors are too fragile at this point.

Highest number of population falling into homelessness. We're gonna hold the line. We're gonna hold the line. We cannot we cannot allow these seniors to have an opportunity to fall into homelessness. Looking forward to further conversations on the item.

Moving on to immigration services. You may begin when you're ready.

Thank you, Chair. Jennifer Troyer on behalf of the Department of Social Services again. Item 13 relates to immigration legal services. The May revision proposes a one time $20,000,000 allocation for immigration legal services in addition to the ongoing annual budget of 70,000,000 $75,000,000 for these services. This immigration legal services funding is intended to increase legal services capacity to help more Californians who are facing immigration court proceedings, particularly for individuals who are in civil immigration detention.

To provide some additional context and respond to the question in your agenda, I will turn it over to the director of our Office of Equity.

Good evening, Chair and Members of the committee. Eliana Kaimowitz with the Department of Social Services. In response to your agenda questions, out of the ongoing amount of $75,000,000, the department currently allocates 10,000,000 annually for removal defense programs to represent clients currently in or facing removal proceedings. In state fiscal year 2526, the department bolstered these investments by funding 5,000,000 for a two year program representing individuals in detention and also added 14,000,000 across two years to the removal defense program with the one time one California allocation.

These supplemental funds roughly doubled the annual investment for removal defense services to about 20,000,000 for removal defense services annually.

In addition to these investments, there are separate investments that are youth focused, which in the state fiscal year in this state fiscal year includes 6,700,000 for youth legal services as well as the $10,000,000 investment for CHIRP. As the number of Californians facing deportation proceedings has risen, nonprofits have struggled to meet the demand for services. Hiring immigration attorneys with the skills and experience to secure to secure clients released from detention and represent them in immigration court has become increasingly difficult.

To meet the immediate demand and extend the capacity of our nonprofit partners, this funding would further tap into the expertise of California's existing attorney pool to assist with immigration cases and expand nonprofit capacity to represent Californians in immigration court and help get individuals held in civil immigration released. We plan to work closely with service providers to determine the specific strategies that will be funded.

The strategies implemented will be based on what best achieves intended outcome while remaining cost effective within the proposed allocation. Also, the strategies may differ by region. Depending on factors such as the availability of attorneys as well as the presence of immigration courts and detention centers. Happy to answer any questions.

Questions on this item, members? Seeing none, we'll move on to CalWORKs.

Again, Jennifer Troia on behalf of the Department of Social Services. As you know, CalWORKs provides temporary cash assistance to low income eligible families with children along with education, employment, and training programs, and supportive services. Maximum aid program payments in the pro in the program, so the maximum amount of grants that we provide, are determined by the family size and by region. The May revision includes $6,200,000,000 in total funds, 682,000,000 of which are general fund, in 2526, which is a decrease from the governor's budget.

In 26-27, the May revision proposes $6.3 billion, 963,800,000 of which is general fund for the CalWORKs program, which reflects a net decrease of a 184,200,000 from the governor's budget.

The net decrease reflects faster caseload decline and slower growth in the employment services caseload than we previously projected. With that, I will turn it over to the deputy director to cover items fourteen and fifteen.

So Alexis Fernandez Garcia with the Department of Social Services. On item 14, the May revision proposes 59,500,000 in 26-27 for an ongoing MAP increase of 1.8% effective 10/01/2026, funded with revenues in the child poverty and family supplemental support subaccount. The increase will bring the nonexempt MAP level from 1,175 to 1,196 per month for an assistant unit of three residing in a high cost county, which is a $21 increase from current levels and equates to 53% of the 2026 federal poverty level.

As it relates to item 15, CalWORKs special needs notices of action. Currently, COWS, the state's eligibility system, lacks automation for standardized notices of actions related to special needs payments resulting in inconsistent communication and potential delays in ending payments when required.

The May revision proposes to provide 605,000 total fund in 2026-27 to automate new standardized NOAs or notices of action in CalSAWs for those special needs requests. The automation will ensure clear approval or denial notices, tiny timely discontinuance of payments, and proper notification of hearing rights for CalWORKs families. Happy to take any questions.

Department of Finance.

Noel Fakaji, Department of Finance. Nothing further to add on these items.

Hello? Ryan Wolsey, Legislative Analyst Office. Based on our preliminary review of the CalWORKs budget, the, grant increase estimate seems reasonable to us, and we don't have anything to add on the, special needs notice of action item.

Okay. Members of the committee, anything on these items? Seeing none, we will move on to children's programs.

Still Jennifer Troia on behalf of the Department of Social Services. Child welfare services include family support and maltreatment prevention services, child protective services, foster care services, and adoptions. Our, child welfare system provides a continuum services to children who are either at risk of or have suffered from abuse and neglect.

Our children and family services programs, in the revised budget have a a budget of total of $10.6 billion, 1.1 billion of which is general fund in 26-27, which reflects an increase of a 180,000,000, 75,200,000 of which is general fund from the governor's budget.

With that, I will hand it to the deputy director to cover item 16 and 17.

Good evening. Angie Schwartz with the Children and Family Services Division at the Department of Social Services. Item 16 pertains to the child welfare services California automated response engagement system, which is to replace the child welfare services case management system with a compliant comprehensive child welfare information system in order to keep the needs of local child welfare practitioners at the forefront and meet the regulations and policies of state and federal law. We will be delivering the CWS care solution through two versions.

Version one is intended to provide the functionality required to decommission CWS CMS, support new policies and programs such as the Family First Prevention Services Act and the tiered rate structure, and lay the foundation for full CCWIS compliance that is scheduled for statewide implementation in October 2026.

Version two is intended to build on that core functionality of version one and provide additional capabilities to bring the CWS care system into full compliance with the CCWIS requirements and is anticipated for April 2028. The CWS care's budget for fiscal year twenty six twenty seven is in alignment with the special project for report six published in May 2023 and includes a total of 357,316,000, which is a 179,774,000 general fund, a $17,600,000,794,000 federal funds, and 748,000 in reimbursement. Happy to take any questions.

In terms of item number 17, that deals with the title four e stipend project. The proposal requests $18,400,000.01 time general fund in fiscal year twenty six twenty seven to provide continuity for currently enrolled bachelor's of social work and master's of social work programs.

The title four e stipend program provides professional education and monetary support to students seeking a bachelor's or master's degree in social work for students who intend to pursue or continue a career in the field of public child welfare. Students who complete their degree are required to complete their service requirement of twenty four months with a qualifying agency. The four e stipend program is a significant support for building and sustaining the child welfare workforce.

Guidance released by the administration for children and families in March 2025 clarified how the four e calculation works for the stipend program and requires us to make some adjustments. In order to correct the calculation, universities need to come up with an additional match.

The 18,400,000 requested will allow universities time to adjust and allow current students to continue with their studies.

Very important program. Probably the most important program in the world. MSWs are very important people. Just wanna make sure you're I am very biased. Department of Finance.

So, Hammad Zohar, the Department of Finance, nothing further to add.

LAO, would you agree MSWs are the only play in the area?

Ginni Bella, Legislative Analyst Office. On the CWS CARES proposal, as was mentioned, it aligns with the most recent project report project report for this particular project, and so we have no concerns it was expected. On the title 4e stipend project, we're still reviewing this.

Mostly, we have questions about what it means, long term since this is a one time solution, What is the ongoing approach and what it means to for universe universities to adjust and whether that's something that takes work, what it what does that mean, what does the administration have to do to, facilitate that? And if it doesn't happen, what would be the impact on the number of social workers that are able to go through the program?

Absolutely. Questions from committee members on this item? Okay. Awesome. Thank you very much on these items.

We will now waive items 18 to 37, and we will go to item number 38. DDS. May begin when you're ready.

Yeah. Thank thank you, Mr. Chair, Members, and staff. Pete Cervinka, Director, department of developmental services. Very quick overview for for May revision, super fast. I appreciate you tried to take number 41 off the agenda, but I'm gonna refer to it anyway very quickly.

Pleased to present a budget for a department that does not include budget solutions per se. Our budget is proposed at $21.6 billion. That's about $300,000,000 higher than the governor's budget. As I just said, the numbers in, issue 41 are important. I'd like to call out that despite that increase, we're actually down nearly 80,000,000 in general fund and up almost half $1 billion in federal funding claiming.

It's an opportunity, to appreciate, of course, the teams that, that we have with regional centers and at the department making progress on that, but also appreciate the legislature approving fiscal sustainability resources, in a prior budget. With the that dedicated effort, we've managed to secure a significant improvement in our federal claiming effort. So while it's not a budget solution, I would say that that's a massive investment, in our ability to sustain our programs. In a budget that big, 21,600,000,000, we only have two nontechnical proposals.

They're both equity focused, and they advance the implementation of old Olmstead.

They're informed by listening to our community, particularly as we undertook the and continue to undertake the standardization of the intake intake process with regional centers. Both of them, those substantive proposals include trailer bill language. Yes. They are policy, but they are also important fiscal policy direction that will inform how we spend next year's budget. We are in this budget and those proposals moving to long term planning.

We're informed by the learnings that we've had in the past. My team, I will make way for them, in in just a minute, and they'll explain more in in detail. One is to limit the duration of people's residency inside of state operated facilities. I think we can all agree if I told you that I wanted you to live there for twenty years, you would look at me and say, why would I wanna do that?

We have people doing that, and we think that doing the right thing by them to get them out is a critical policy direction to move.

And the second, we hear a lot about equity. We've talked with the legislature for several years about equity in our system. And in our standardization of the intake process, we really believe that we need a consistent needs assessment across all of California 21 regional centers. Where you live should not matter when it comes to deciding whether you have access or not to our services. Both of these are multiyear efforts.

They're complex. We admit there's still much to work through. We think we need to start somewhere, and there's lots of time with both proposals to figure that stuff out, engage engage with the community, to plan and direct resources, and and put in that kind of effort before we affect individuals. So I just wanna make a plug for the couple of things that you're gonna hear about. One that you also waive, but is an important key piece.

When I talk about not having people live in our facilities, they have to have some place to go. And so one of these proposals in its number 47, which we won't hear today. There is trailer bill language on that one that merges those two funding proposals, but also provides some ability to be more directive about the alternative placement options that we can develop in the community. So there's a nexus between number 41 and our proposal to impose time limits on some facilities.

Really pleased to present this budget to you today.

I am grateful that I am not among the colleagues that have a harder job than I do here. We are forward looking, looking ahead to the future, trying to make the world a better place, and really proud of the team that's gonna talk to you in more detail about those proposals starting with mister Yang Lee next to me. Thank you, sir.

Great. So Yang Lee with Department of Development Services on issue number 38. We're really brief. So we talked a lot about this issue. It's just the federal grievance process.

The government's budget included resources and statute changes in order to make some to implement that. Bay revision includes resources for the regional centers to also comply with the the increased workload related to that policy change. So just wanna make sure that they have adequate resources to do the work that is expected of them. Happy to take any questions.

Keep going. 39.

My colleague my other colleagues would come up.

Oh, y'all better come up to the front row. We gonna go fast here now.

Thank you. I will be very brief. Dana Simon with the Department of Developmental Services, deputy director. The department is requesting funding for the support of an additional rate model for early start services.

Based on our engagement with service providers and our stakeholder feedback, the department determined that the original rate model for center based services was made with the assumptions of more of, like, a one to one therapy type environment, and we found that it didn't cover the needs for children in more center based programs that were multi day, multi hour group settings.

And so, after review with our consultants, we wanted to, implement a rate model that would, associate and support or support that service. So we are asking for an increase of 15,000,000 in order to support this additional rate model.

Issue number 40.

Thank you, Mr. Chair. Carla Castaneda with the Department of Developmental Services. With my colleague will present forty and forty four. The next one, the equitable and consistent needs assessment, the department is requesting 11,400,000. That is supporting as your table on page 19 shows department resources as well as regional center staff to implement these changes.

My colleague will describe those changes in a bit. For the department resources specifically that is broken out between program staff to support some of those stakeholder engagements and workload as well as the information technology support in modernizing the evaluation tool. And then finally, regional center staff on a limited term basis to help with that implementation.

Hi. Good evening. Michi Gates, Department of Developmental Services, here to discuss item 44, equitable and consistent needs assessment. The equitable and consistent needs assessment proposal would improve equity with access to the regional center system and then also equity and divide and identifying the needs of people in the regional center system. It standardizes the way Lanterman eligibility determinations are made at the 21 regional centers and adopts a new way to assess the needs of individuals who are in the regional center system.

Currently, each regional center does eligibility determinations for Lanterman services differently. Eligibility consists of two things, identifying the presence of a developmental disability and secondly, identifying whether it is substantially disabling. Both requirements are defined in statute, but it is not defined how defined how a regional center will make those determinations. The result is a great deal of very variability between regional centers and how they determine whether or not someone is eligible for services.

This has resulted in a great deal of confusion and distrust in the system and how regional centers are coming to these determinations.

And, as mentioned earlier, we have heard this clearly in the many stakeholder meetings that we have held as we standardized the intake process. It is clear that if we do not address this aspect, this very important aspect of the intake process, that will we will be leaving something, very much undone and unsatisfactory. It is this difference across the regional centers is also reflected in some of the data.

For example, in the percentage of people found diagnosed to be diagnosed with autism across the regional centers, So in the 21 centers, the percentage of individuals diagnosed with autism compared to the total regional center caseloads varies from thirty three to sixty three percent across different centers, and that is a huge amount of variability. People should be able to apply for regional center eligibility and have the same experience regardless of which center they have applied to and have the same outcome.

So that is the first part of this proposal. The second part addresses equity for individuals who are in the regional center system. This would be to adopt a new tool that would be a better assessment of individual's needs. Currently, regional centers use the client development evaluation report or what is referred to as a cedar. It has been around for a long time.

It is not a person centered instrument, and it is not a very good assessment of needs. Planning teams do not find it helpful. Clinicians, etcetera, across the board, people have not found the cedar helpful. So it makes sense to, adopt a different tool and to replace this. And there are many tools out there that can do a better job that are person centered, and that would identify needs and and the intensity of needs for individuals.

This would allow us to better tie those needs to services that a person would receive. And as I think all of you know, equity in the services provided to individuals and concerns about individuals, perhaps not receiving all of the services and supports they need has been a concern for some time in our system.

So the the use of such a tool, adopting a tool, a new tool that would better assess needs in a per person centered way and that would be done each year with the individual program plan, would make would be a way for planning teams to be supported in making sure that they identify all of the needs that individuals have and then determining what services and supports might meet those needs, whether that's through the regional center, through generic resources, or some other source.

So both efforts, are are large big tasks, but they're certainly worthwhile as was mentioned earlier. They would be huge improvements to our system and to our efforts to increase equity.

And both of these efforts would entail a lot of stakeholder input. We would want this to be a transparent process that takes the input of people in the regional center system, their families, advocacy organizations, providers, and regional centers, of course, because we wanna make sure that when we do things like this, we get it right. Just as we've been asked many times with standardizing the intake process, please get it right, that that's more important than getting it done quickly.

Make sure that you're not going to make things worse or have unintended consequences. So we would plan to have a lot of stakeholder feedback in this process.

So those are the proposals, and I'm happy to take any questions.

Item number 48.

Good evening. Christine Bagley, Department of Developmental Services. Happy to provide, an overview of our proposal for the state operated transitional and rehabilitative services. This proposal is seeking to, establish time limits on the lengths of stays for individuals, that are admitted to Canyon Springs and Porterville Developmental Center. The absence of time limits in both of those settings has really led to an overreliance on Canyon Springs and Porterville as a long term residential placement option rather than prioritizing, you know, transitional and community based options.

And so individuals are remaining in highly restrictive settings way way past, what is, necessary for them to be, receive the, you know, clinical supports and rehabilitative services they need to, safely integrate into the community. So this proposal is really, aligning the purpose of Canyon Springs and both Porterville, to that program program programmatic kind of approach. And so, just quickly, the proposal would put a Max stay at Porterville at twenty four months. That is put out to begin July 2031.

And then at Canyon Springs, also a time limit of twenty four, months, and, with the option of a sixty day extension.

So, and then that would begin July 2027. I mean, I would just note, you know, we're we're intentionally staggering some of those timelines, so for for several reasons. One, to attune to individuals' annual court commitments processes and in in order to allow the department time to really kind of develop out and transition people out in phases.

The last thing I would, note, which, was referenced earlier is, you know, this proposal really does tie into item number 47, which is to align our community placement plan and community resource development plan and merge those two, which would allow us to more deeply attune to the urgency, the timing, and prioritization of our development in the community for those transitions, out of Canyon Springs and Porterville. Happy to answer any questions.

Department of Finance.

One more time. Department of Finance. Nothing further to add.

LAO.

Karina Hendren, LAO. We had a few comments on the, spending proposals. First, for items thirty eight and thirty nine, we consider these two proposals to be non discretionary. That's because the first proposal implements a federal requirement, and the second proposal implements a technical adjustment to rate reform. And to this end, we have no concerns to raise with either of these proposals at this time.

For number 40, this proposal, as we understand it, is related to SB 138, which waS Budget related legislation enacted in 2023 that codifies, several efforts to make processes across regional centers more consistent in order to improve access to services statewide. Our our understanding is that what the department is proposing would build upon the requirements in in SB 138. And so this proposal does have a discretionary element to it.

Because of that, we generally recommend that the legislature apply a high bar for new discretionary spending proposals in light of projected structural deficits. And then, moving on to the trailer bill proposals for item number 48, we wanted to note that this, proposal does raise significant policy considerations.

It's a fairly significant change in the long standing policy. And because of this, we recommend that the legislature defer taking action at this time and instead direct the administration to reintroduce the Trailer bill language as part of the governor's budget next January. This would allow the legislature more time and capacity for sufficient consideration of the policy's potential benefits, implications, and trade offs, as well as, more thorough engagement with stakeholders. And we do wanna emphasize this recommendation is without prejudice to the merits of the proposal.

So we're not commenting on the merits, just noting the significant policy change that it represents in light of the constricted time frame at May revise.

Questions from committee Members? Seeing none, thank you very much. We will move on to Department of Aging, item number 51. May begin when you're ready. Go ahead and press your button there.

Good evening, Mr. Chair, Member, and staff. I'm Susan DeMarois, the Director of the California Department of Aging. And I'm so pleased that tonight, our items will be addressed by our brand new chief chief deputy director, Nicole Shimasaka, who was just appointed by the governor on Friday.

Oh, muckety muck. Okay.

Thank you very much. Nicole Shimasaka, chief deputy director of California Department of Aging. The first item that I will present is on the MSSP software and support reduction. This is a technical budget reduction, which is act it's actually very good. It's, a savings to the state as a result of the MSSP, software and support program being reclassified from a criticality level two to a level one.

As such, there no longer needs to be CDT oversight. This is something that could be overseen by the, California Health and Human Services. You'll remember that this is a proposal that was approved this year as a result of the, access rule to ensure that our MSSP sites are, compliant with new access rule requirements for data reporting and case management. So we're creating a statewide system.

Project is well on track and on, exactly where it should be, and this is simply just a reduction to move that oversight over to CalHHS.

Move on to number 52.

Nicole Shumasaka again. Thank you. This is a item that is directly involving our intrastate funding formula that allocates all older Americans act funding to our 33 area agencies on aging. This has been a project that began with inception of the master plan for aging. It was one of the very first, initiatives that was, recognized for the state of California to undertake.

And over the last eighteen months, we have done extensive work among with, the California Association of Area Agencies on Aging and the triple As. And in consultation with them, we have reached a, a really great place, a very future forward thinking formula that was presented as, required per Senate bill 1249. This formula increases the admin base from a 150,000 to 250,000 per AAA.

We have updated factors for the first time in thirty years, which is not only, a part of the Senate Bill 1249, but it's also a requirement of the administration on, community living, per their feedback to CDA and the governor in the state plan. And for the first time in the state's history, we have a disability factor, which is very notable and it's on trend with what we're seeing across the nation as well.

There is a 2122 hold harmless that's included, and this new proposed formula aligns proportionally proportionably and equitably with where older adults are residing across the state of California. We appreciate how engaged the AAA network and the, C4A Association has been in this process. We've conducted at least eight webinars, we've worked in person together, we did, surveys, we had a calculator tool to model that's still available online, and we've done more than one draft that we've received feedback and we've updated accordingly.

We've reached a consensus of having five factors focused on age, income, minority status, disability status, and a rural geographic isolation, factor as well. Public comment just ended May 11, and we were heard from over 250, different interests in that public comment phase.

Of that, nine of the 33 AAA's responded as did C4A. Seven of those triple a's expressed a desire to further refine the in the interstate funding formula, two supported it, and then 24, did not offer any feedback.

We recognize that this is a a change that we have not visited the revisited this since the nineties, but this is why ACL is requesting that we do this now, and this will be in alignment with the other objectives as well of, Senate Bill 1249.

Notably, 12 of the AAA's will receive increases, 12 would receive, decreases, and the formula does account for where the largest growth areas are across the state, which includes the Sacramento area, followed by parts of Southern California, primarily the Inland Empire, which would see an increase, and the San Joaquin or Central Valley. I have additional very specific information that I'm happy to share, but that is an overview of the work that we've done on the interstate funding formula and where we are at today.

Department of Finance.

Jennifer Ramirez with the Department of Finance. Nothing further.

LAO.

Juwan Trotter, LAO. So we're still reviewing this charitable language, but the administration has reached out and they are setting up a meeting to further explain this, T bill with us later in the week. So we will reach back out, if we have more to share after that.

Just a question on item number 52. Tell me about how do you see this as an improvement of the system, and why do you think that there are some advocates who are opposed to this item?

Susan DeMarois, Director of California Department of Aging. In terms of an improvement, it has been three decades since we've last visited this formula, and we've seen demographic shifts throughout our state. So notably, the fastest growing areas, as we heard from Nicole, are, the Inland Empire, San Joaquin Valley, and Far Northern California. And so in those areas, we haven't kept pace with the growth. So we will see better resource allocation in those communities that are experiencing growth.

The formula using the five factors does account for rural isolation and disability and poverty. And so that's all taken into account for those communities as well. Where we do see concern is the the overall sum total of funding, the total statewide allocation is not increasing. And so, we are resourcing communities that have been under resourced. And several of our triple a's will see a decline because either their population has declined or perhaps they don't meet one of the factors.

They're highly urban and don't have the rural factor.

Got it. After you do a briefing with LAO, I would love to sit down and learn more about it as well so we can it seems like we need to do a little bit more conversations so that we can make sure that we know what we're doing, making sure that we let our advocates know and truly understand what their concerns are, and then we can see where we move forward from there. I appreciate it. Alright. Thank you.

Delighted to sit with you and talk further about this. And and one other item of note we failed to mention is this takes effect in, July 2029, and the full rollout is July 2031. So we're we're proud of our network to be, getting ahead of this and to have the opportunity for advanced planning. Thank you so much.

Thank you. Any other questions on these items? Okay. Thank you very much. We'll move on to community services and development, item number 53.

And go ahead and just, present on 53 through 55.

Hi. Good evening, Chair, Member, and staff. My name is Daphne Hunt. I'm the Chief Deputy Director of the Department of Community Services and Development. Tonight, we have three brief items.

All of them are administrative in nature and really have to do with streamlining our budgetary processes. The first is we are seeking an increase in the reimbursement authority for the California earned in earned income tax credit, e I Cal EITC, education outreach grant program administration activities. The Cal EITC program is authorized annually, but total funding can vary with the passage of each budget.

This technical adjustment would reduce administrative requirements associated with adjusting the reimbursement authority after the budget is passed by creating a broader standing authority for these reimbursements. Second, our next item requests an increase in our existing general fund loan authority for state operations, increasing it from 3,000,000 to $5,000,000.

This increase is needed to ensure the loan adequately covers state operation costs as CSD has seen in recent years, increased delays in the release of appropriated federal funds. And then lastly, this also has to do with our general fund loan authority. CSD is, requesting an increase for the reimbursement. So for the general fund loan authority for reimbursement of our local agencies, looking at an increase of 40,000,000 to $305,000,000.

The general fund loan allows for continuity in payments to CSD's local agencies, many of which are nonprofits, unable to float costs while awaiting appropriated funds to be released by the Federal Government.

Approval of this item will help that ensure that CSD is able to efficiently reimburse its local agencies for their expenditures in a timely manner when delays and approved federal grant awards or reimbursements occur. Thank you.

Department of Finance.

Kayla Knott, Department of Department of Finance. Nothing further to add.

Ginny Bella, Legislative Analyst Office. In reviewing the May revision, we did notice a couple places throughout the human services budgets where there are these requests to increase the level of general fund loan authority. So it's just something we're taking a closer look at. We're asking some questions around how the new levels were determined, how that compares to other departments, what would be the mechanisms in place for when those would be used, and what the role of the legislature would be.

LAO.

So it's just something we're trying to look at across the different departments that are, requesting that increase in general fund loan authority.

Of course, having that increased flexibility is helpful, but we wanna make sure we understand how it will work.

And once you're done with your assessment, I mean, obviously, what is the mechanism in which you then educate us on whatever concerns or updates or clarifications you may have?

Sure. I think if we if we have concerns, we'll definitely be raising those. In these tight timelines, we tend to do that through our our emails and our our messages to you all and to staff. Or if we have other hearings, we can bring those up in hearings as well.

Thank you very much. Additional questions or comments? Doctor Sharp Rollins.

Thank you. I do appreciate you speaking to the fact because you actually stated one of my questions. Two of them was trying to really identify how how the new levels were actually being determined and then what our role would actually be. But I'm also just wondering because that's a huge jump, 265,000,000 increase.

So I'm just wondering how we came about those particular figures, if you don't mind elaborating.

Sure.

And I may need to lean on my finance colleagues a little bit in this piece, but it really has to do with the way the funds are encumbered. It's very technical. And, typically, we would really only need a loan of up to 40 or $50,000,000. That's pretty typical, and that's why you see that amount before.