Assembly Budget Subcommittee No. 1 on Health

Good afternoon. We're gonna call this hearing to order. And committee staff, if you'll please call the roll.

Assembly member Addis. Assembly member Bonta. Assembly member Patterson. Assembly member Schiavo.

Assembly member Solache. Assembly member Stefani.

We're gonna continue as a subcommittee, obviously. So good afternoon and welcome to the assembly's budget subcommittee on health. We are in our last hearing about the May revise, but over the past five months, our committee has held eight hearings, including today's hearing where we reviewed the governor's January budget proposal across a full range of health care, mental health care, dental care, and other programs that serve millions of Californians in the health space. And as I mentioned today, we're gonna examine the governor's May revision.

Over the past number of months, we've heard dozens of hours of testimony.

So thank you to all of the folks that have come, over the past few months to give your testimony and are here today to give your testimony, and we've listened to hundreds of hours of public comment. And I would really wanna say thank you to the public for bearing with us through many hours of public comment. We know and I'll do it again this time.

We know we often make public comment tight because we wanna be respectful of the folks that are behind you in line when you come to the microphone. There's usually dozens of people who wanna do the exact same thing.

So we'll do that again today, and I'll get into that during housekeeping. I do wanna begin by acknowledging the administration's May revision and the fact that the administration has responded to some of the concerns that this subcommittee and our members have raised and, frankly, members across the assembly have raised over the past few months.

The May revisions, in my opinion, do move us towards doing what the people of California have asked us to do, which is to make California an affordable place to live and a place where each of us can thrive. And there's no more important place to do that than in the health care conversation. We know that health care costs are rising across the nation.

They've risen here in California. And when health care becomes out of reach, that hits Californian's pocketbooks in a particularly inhumane way. So I wanna say thank you to the administration for progress made, and that would include critical public health information, technology. We talked quite a bit about the vaccine tech programs in one of our recent hearings. And then right after that, it was announced about the Hantavirus and the Ebola outbreak.

So very pleased to see that there's more dollars proposed for health IT. Also, money for vital county administration in the face of HR 1 and work requirements and re-verification requirements. We know that this is going to hit counties particularly hard, and so I wanna say thank you to the administration, for making progress in that area. It's not everything that counties are asked for, but we have seen progress in May revision.

I also wanna mention asylees and refugees and other lawfully present immigrants who are on the verge of losing MediCal coverage.

This administration has put in a proposal for a very humane, in my opinion, a very humane delay to those cuts, and so we are pleased to see that. And then, of course, we, have talked about Covered California and how important those ACA subsidies that Congress failed to renew have been, and so pleased to see that the administration has added additional dollars for, subsidy backfill or to protect, subsidies and to protect, therefore, affordability for so many Californians.

I will say, though, that I do believe the May revision does still dismantle health care in California in a very inhumane way even for all the progress that we've seen since the last time we discussed this in a hearing. There are many things in this May revision that the legislature and many of our members, with great emotion said no to last year. So last year, we agreed to a $30 premium for MediCal for a certain UIS population or certain undocumented individuals.

Many in the assembly found that to be a tough pill to swallow, yet we reached agreement. However, now the administration is requesting or proposing a $50 MediCal premium, and I don't think people are gonna be happy about that. Additionally, we preserved health care for seniors. Last year, the administration really was proposing a draconian asset test for seniors. The legislature was not happy with that.

We did land on an agreement of an asset test that felt reasonable to the majority of people. Now the administration is back trying to ratchet that back, which will cut health care again to millions of seniors in California. We also see there's no solution for MediCal Dental, which is problematic. We've heard from a dentist at hearings earlier this year, and it's been a huge topic of discussion.

We know that dental care is a preventative cost saver, that will stop people from having to go to our emergency rooms, and there's no solution there.

Additionally, there are other key issues that legislators have been speaking up on dozens at a time on specific issues that are gonna hit their communities and all of our communities in a negative way.

This includes the lack of planning for funding to keep mobile crisis units as a requirement for every single county, the lack of workforce and quality incentive program funding, which really would boost quality in our skilled nursing facilities if those dollars were to stay in place or to be or those promises were to be met. We also have a lack of plan to address an acute physician shortage that particularly hits rural and coastal areas of the state.

So while there's good work, there's also a lot of work to do between now and getting to a final, budget agreement. So I know that I have at least one other colleague here on the dias with me and others who'll be coming that may have things to say, but assembly member, if you have comments and if not, we'll go into housekeeping.

Okay. We'll, move on then, and I trust other members have things that they'll wanna say throughout the day today if they're able to make this hearing. Just for housekeeping, the agenda is available online on our committee's website, and physical copies are available in this hearing room. We'll ask that panelists present representing the Department of Finance and the LAO. If the witness table gets full, we'll ask you all to be able to sit at the sides of the room to make to make room.

We're gonna keep with our normal course of business. After each panel presentation, we'll take questions from members followed by public comment, and then we'll open for public comment for items not on the agenda at the very end of the hearing. And as I mentioned at the top, we're gonna keep public comment at thirty seconds per person and direct folks if you could, name, organization, your position on that particular panel.

Before we jump into our first issue, we're pleased to have LAO here, and I know that you you had a sort of broad overview that you are prepared to present, and we welcome that. So over LAO, come, and please introduce yourself and begin when you're ready.

Yes. Good afternoon, members. Mark Newton with the legislative analyst office asked to provide a a brief overview of our office's analysis of the overall architecture of the governor's May revision. We released a report yesterday that offers our our initial take on on the governor's May revision. And happy to provide our technical assistance throughout this process to the to the subcommittee as you work through your deliberations.

So our report on the overall architecture was focused on the underlying condition of the state general fund. And our analysis did find that the administration has made, significant progress in reducing the state's operating deficit or structural deficit. That's sort of the difference between, revenues, and and expenditures. But we do find that the underlying condition of the the the state's budget is not sound.

And to give some context, despite booming revenues, the architecture of the May revision does rely on $20,000,000,000 of reserves and extra borrowing to make the budget balance.

So despite the booming revenues, even as we speak in the current year, there is still an operating deficit, meaning that spending is outpacing revenues sort of in the year. So what what this means then is that the state, excuse me. I should note that the governor's budget does balance the budget in the budget year plus in the following year, and that's one year beyond the the constitutional requirement.

But the balancing of the budget is through the reliance on reserves, prior fund balances, extra borrowing, and the like. So with the booming revenues but the operational deficit, this requires action.

And our office's recommendation, we have a a multi-part sort of recommendation on what we recommend for the legislative course of action. And that is maintaining the amount of solutions proposed by the governor, make new, actually, discretionary reserve deposits as opposed to, relying on reserves to and and drawing them down and not adding to the the state's already existing spending commitments.

Now on the latter, appreciating that there can be extraordinary cases where it can be a high priority for the legislature to to spend, and we think it's a very, very high bar for discretionary spending proposals. But certainly, health and safety requirements and the like can be a key factor there. So this does involve, we think, some really challenging trade offs for the legislature and decisions to make.

And we appreciate that on the one hand, and putting this into the context of the the committee's jurisdiction, HR 1 does mean that services are being reduced, and some Californians no longer will have access to the same supports that they did before. But on the other hand, the state's expenditures are exceeding revenues at a nearly unprecedented time of revenue growth. So our recommendation to build more reserves, the reason and the thinking is with implications of what would be required, should the market reverse course.

So saving now some of the run up in revenue actually helps will help prevent even deeper cuts and and more serious sort of trade offs when revenues do drop, which which they will. We're very happy as an office to, as I said, provide assistance to the legislature as it is making these important choices, but we wish to frame sort of the overall architecture to help guide the deliberations of of the subcommittee and others.

Thank you.

Thank you so much. Really appreciate the the overview. We're gonna move into issue one then. Our Department of State Hospitals May revision proposals. And welcome, and, please go ahead and introduce yourself, and you can begin when you're ready.

Good afternoon, chair Addis and members of the subcommittee. Victoria Rapley with the Department of Finance. The administration is here today to present the various May revision proposals. And before we dive into these, I'd like to provide some opening remarks. The May revision proposes steps to significantly address what the Department of Finance and the LAO have been identifying as large out year operating deficits, meaning we're spending more than the revenue collected in each of those years.

At the governor's budget, the operating deficits were over $20,000,000,000 each year starting in 2027-28. In the May revision, these have been more than halved in the out years starting in 2028-29. The May revision takes a balanced approach to addressing deficits by including a combination of proposals that increase revenues and reduce program costs. In health care specifically, the May revision proposes $385,700,000 in reductions and reforms in '26-27, and $1,200,000,000 in 2027-28, and ongoing.

The May revision also includes $2,700,000,000 each year associated with new revenue and fund shifts.

Specific revenue proposals that will directly support health care costs are the MCO tax renewal. This funding directly supports MediCal and helps fund the MediCal program. And the digital software tax, which would increase revenues for local jurisdictions by $560,000,000 in 2026-27 and $1,100,000,000 annually thereafter. Similar to the discussions last year, we acknowledge that these are challenging proposals and difficult decisions are still necessary to finalize a balanced budget that responsibly supports California's core programs.

We understand that the legislature may have other proposals and look forward to further discussions over the next few weeks as we develop the final budget act.

Great. Good afternoon, madam chair, member. Mark Beckley, chief deputy director for operations for the Department of State Hospitals. I'm joined today by my colleague, Chris Edens, who's the chief deputy director for programs. I'll be covering all the items in, our section on the agenda with the exception of items four and seven, which will be covered by Chris Edens.

And I'll start with, an overview of our, program. At May Revision, the Department of State Hospitals proposes a total budget of $3,230,000,000, which is an increase of 1% or $31,400,000 over governor's budget. DSH's projected census at the end of next fiscal year is 8,362, which is a decrease of 65 patients across our various programs. I'll now move on to, our first item, which is the County Bed Billing Reimbursement Authority.

The County Bed Billing Reimbursement Authority pertains to hospital beds that DSH makes available to counties for the Lanterman Petris Short or LPS and nonrestorable incompetent stand trial for IST patients who are a county responsibility.

DSH requests a reduction in county bed bill billing reimbursement authority of 12,400,000, in '25, '26, and 5,800,000 in '26 and '27, and ongoing to reflect a gradual phase in of LPS beds and projected bed utilization. Since last year, DSH increased its available bed capacity for LPS patients from 556 beds to 625. This increase was accomplished in two phases. 25 beds were added at the end of fiscal year 2425. An additional 44 beds were added in February of this year.

This reimbursement authority adjustment reflects the timing of this phase in, that utilization, and projected reimbursements to be collected. I'll now move on to the next item, which is limited public contract code exemption authority. DSH proposes budget billing which provide the department with contract exemption authority for for online services and subscriptions providing health care or pharmaceutical information that support the quality of and access to patient health care where DSH historically has only received one bid for these services.

DSH has has descriptions to a number of vendors that provide online support to our clinicians, nurses, and pharmacists for patient care and treatment. For instance, our pharmacists use an online pharmacy formulary that provides them with the most up to date medication information, including flagging negative medication interactions.

Another important online subscription is for our nursing plans. This suite of tools provides nurses and level of care staff with up to date evidence based clinical decision support and the ability for nursing care plans to be generated from the content that's suited to our specific patient needs. This limited contract exemption language would enable DSH to quickly process contract amendments for online health care subscriptions and contracts so that there are not service interruptions for critical pharmacy, clinical, and nursing information.

In addition, we have experienced issues in the past where certain contracts were deemed to be IT contracts because the information being provided is provided through the Internet. However, the vendor is not technically an IT vendor creating challenges in the procurement process that can significantly delay or prevent DSH from procuring these critical resources.

We believe these services are essential and can contribute to delays of services for, critical patient needs while DSH works to secure alternative providers, and this increases risk of poor patient outcomes. I'll now move on to the next item, which is the reversion of our prior year unspent funds. DSH proposes to revert $20,000,000 in general fund from the '24-25 fiscal year in operating expense and equipment and contracts where the funds were not fully utilized. I'll now move on to our DSH Metropolitan Central Utility Plant budget proposal.

Department of State Hospital's request to revert the existing authority of 50,500,000 from the public building construction fund and provide 58,100,000 in new lease revenue authority for the construction phase of the DSH metro central utility plant replacement project.

This is a net increase of $7,600,000. This project will replace the existing central utility plant, and the utility plant provides hot water and central heating as well as chilled hot water and air conditioning to 32 housing and administrative buildings throughout the metro campus. This system is 38 years old. It's nearing its end of life. The project will install new chillers, boilers, pumps, and controls at the central plant and and replace the existing seam based system with hot water piping.

The cost increases are attributable to additional requirements identified during the design and work and drawings phase of the project to ensure, safety, code, and energy efficiency requirements are met, by replacing the, central utility plants roof and HVAC system, relocating the central control room, and providing dedicated electrical and heating sources to two of our buildings. I'll now move on to our EHR, proposal.

DSH proposes 27,600,000 in 2026-27 to fund 68.6 limited term positions to implement and support the organization's continuum electronic health record solution or EHR solution for DSH Coalinga and to begin readiness activities for DSH Metro and Atascadero. DSH also proposes to reappropriate up to 6,300,000 from '25-26 and proposes provisional language to augment the funding as needed to maintain the proposed EHR 2026-27 project schedule.

The EHR will digitize and centrally store patient health information so that care can be administered quickly and accurately, enables hospitals to operate more efficiently, and provides continuity of care for patients removed from one DSH facility to another.

The system will also allow DSH to more easily analyze patient data for quality assure assurance and treatment improvement purposes. EHR will bring, DSH up to hospital to modern hospital electronic standards. And then finally, I'll present on our workforce development proposal. DSH proposes to use behavioral health service act funds to support its existing workforce development programs, including psychiatric residency, fellowship, and psychiatric technician training in lieu of using general fund.

In order to make this change, DSH requests $10,300,000 general fund reduction in 2026-27, and a $10,900,000 general fund reduction in 2027-28 with commensurate increases and reimbursement authority to capture the BHSA funds.

The BHSA funds, would be received via an interagency agreement from the Department of Health Care Access and Information. In addition, DSH proposes 3,800,000 in 2026-27, and 3,500,000 in BHSA, reimbursements ongoing to support an additional psychiatric training cohort at DSH Napa. Historically, DSH Napa has had very high vacancy rates for its psychiatric technicians. This program would add an additional 30 individuals to this cohort, which will help alleviate, DSH Napa's high psychiatric technician vacancy rate.

I'll now turn to, Chris Edens to report on our other two items.

Good afternoon, chair members. Chris Edens, chief deputy director program services. I'll be covering incompetent to stand trial solutions first. At the May revision, we are updating our, savings, that was originally reported in the governor's budget. First up, we're reporting a total of 59,000,000 reduction to the one time prior year fiscal 23-24 savings of 114,000,000 reported in the governor's budget.

This is going to support our DSH infrastructure projects and additional seven projects for 625 beds. We are also reporting an additional one time savings of 11,000,000 in fiscal year '25-26 and 8,000,000 in '26-27 related to updated program activation schedules of DSH diversion and community based restoration programs.

The cumulative total savings for all IST related programs across governor's budget and May revision are 55,000,000 one time in '23-24, 128,800,000 one time in fiscal year '25-26, and 102,200,000 one time in fiscal year '26-27.

In addition, DSH is requesting to realign 10,000,000 of IST solutions funds in '26-27 and ongoing to, one, support increased statewide IST bed capacity at the Placer County Jail based competency treatment program totaling 3,900,000, and two, to correctly reflect funding of 6,100,000 for the conditional release program to support an MHRC program within that. As part of this item, I will also be covering the proposed trailer bill language.

We are proposing trailer bill language to remove the 06/30/2026 sunset date for the independent placement panel program that also known as IPP. The IPP was piloted as an independent panel to improve CONREP access and participation for primarily not guilty by reason of insanity and offenders with mental health disorder, patients within our state hospitals.

The independent placement panel could thereby expand the availability of state hospital beds for IST individuals by facilitating discharge of DSH patients to CONREP for commitment types with historically longer lengths of stay. Overall, this pilot was successful. The independent placement panel largely met its objectives with increasing step downs to CONREP, to the CONREP continuum, providing standardized neutral and quality reports to the courts and increasing public safety.

The requested trailer bill will also allow this effective program to continue operating ongoing. And then lastly, I'll cover the conditional release program non SBP adjustment. This was briefly actually mentioned in the IST solutions item. DSH is continuing to expand its continuum of care and anticipates a total contracted caseload of 862 CONREP clients in the in the current year and 877 in the budget year.

The department is requesting to realign 6,100,000 from the incompetent to stand trial solutions funding in fiscal year '26-27, and ongoing to support the activation of a 24 bed mental health rehab center within the CONREP continuum of care.

That concludes our testimony. Happy to answer any questions.

Thank you so much. Is there anything from LAO or DOF? No? Thank you. Any member questions?

Go ahead. Assembly member Bonta.

Just on the BHSA reimbursement for workforce development, so there's a 10.9 in in budget year plus one. Right? And then ongoing support for existing development coming from BHSA.

Is that a revenue source that has been is is that the prior revenue source for the workforce development, BHSA funding?

I'm sorry. It are you asking if it's the proposed revenue source? Or

No. Has it been the prior revenue source?

No. Historically, it's been general fund.

So general fund. So so and is the is this proposal to have that come from BHSA, what is that based on? Why why are you trying to pull it from BHSA?

So this is part of the general fund offset solution. Generally, this program was identified as an option under the workforce requirements. We do have kind of that item further along in the in the agenda that'll provide additional details.

Okay. Thank you.

Thank you.

And I would just like to note that the 10.3 is tied to our existing workforce programs, and then there's a separate funding amount to start new psychiatric training cohorts. So that's a new program using BHSA funding.

But in terms of scalability, the request right now is just for the 10.3 for this year and a request to consider ongoing support out of BHSA separately.

Yeah. Do you wanna answer?

Yeah. So there's two parts to this particular proposal. There is a 10,300,000 swap in the budget year and a 10,900,000 swap in budget year one. However, we are proposing that in budget year, a little over 14,000,000 be provided from BHSA, and then in the next year, 14,400,000.

So the total is 24,300,000?

Over the next two years. Yes.

Okay. From BHSA. Yes.

Thank you for the question. And we're gonna, I think in issue four item four, we're gonna talk more about all of the general fund offsets. So, I know there was, there has been a lot of talk about how we get to this balanced budget and and and different mechanisms to make that work. And I think one of those mechanisms has been a number of moves with general fund offsets that members may or may not, be pleased with. So I don't have any questions.

Any other questions from the dias? We're gonna move to public comment then for issue one, Department of State Hospitals may revision proposal. I don't see anyone in the room, but is there anybody out in the hallway?

Any other questions from the dias? We're gonna move to public comment then for issue one, Department of State Hospitals may revision proposal. I don't see anyone in the room, but is there anybody out in the hallway?

You said no? Okay.

Alright. Seeing no other com no public comments for issue one, we're gonna move on to issue two. This is the May Revision proposal for the emergency medical services authority. And I think we slotted you for about three minutes of of of testimony when you make it to the table here. So appreciate your your succinctness.

Absolutely. Is this is it on? Thank you.

It should be on. It should already be on.

Alright. Thank you, madam chair and members. Gabrielle Santoro with the Emergency Medical Services Authority. EMSA includes two proposals as part of the May revision to the governor's budget. First is a request for 203,001 time funds from the nine eight eight state suicide and behavioral health crisis services fund in budget year, to support the development of statewide guidance on behavioral health crisis response for EMS agencies.

Second, we have a request for about 2 4,300,000 general fund in budget year and 4,400,000 general fund in budget year plus one, to support the operations for the enterprise system development system, which includes three components, the, POLST e registry, the central registry system, as well as the California EMS information system. That concludes my remarks. Happy to answer any questions.

Thank you so much. And anything from LAO or DOF? Nope. Any questions from the dias on this proposal? Assembly member Bonta?

I mean, as you all know, we had a hearing recently on on the nine eighty eight centers. There seemed to be some concern about the the rate setting. Can you speak to where that conversation lies and the proposal that you have here?

Completely appreciate the question. Unfortunately, EMSA is not the the fund administrator for it. I'd have to defer to my colleagues with the California office of emergency services on the development of that rate.

Okay.

No other question. I don't have any questions either. Thank you at all. I don't see any others from the diocese. Any public comment on issue two MSMA revision proposals?

See one person coming up and if the surgeons can check if there's any in the hallway.

Hi. Darby Kernan on behalf of the EMS Administrators Association of California, IMSAAC. We are in support of the nine eight eight proposal. This is really to try to help with coordinating response to emergency situations that include behavioral health. Thank you.

Thank you. I think that's it on pub no. Their public comment on in the hallway. Okay. I think we're good.

We're gonna move. Thank you so much. Appreciate it. Your succinctness. Issue three, we're gonna go to listening to the May revision proposals for the Department of Managed Health Care.

And I think you also have about three minutes. So we welcome your succinctness, and then we'll see if LAODOF have any comments and then move to the dais.

Thank you. And good afternoon, madam chair, members of the subcommittee. My name is Dan Southard. I'm the chief deputy director at the California Department of Managed Health Care, and I'll go over two DMEC related May revision budget change proposal. The first being the California Managed Care complaint system resources and project implementation.

And during the fiscal year twenty five twenty six budget process, the DMEC requested and received approval for 1,157,000 in fiscal year twenty five twenty six from the managed care fund to initiate the planning phase to modernize customer and provider complaint customer relation management system.

The DVC is currently requesting resources for the initial implementation of the California managed care complaint system replacement platform that would provide solutions to the following businesses and technical risk issues remediate information security risk inherent to the current operating and existing legacy systems, provide more robust workflow automation that will allow existing case workers to process more complaints and reduce manual processes, enable rapid low code workflow automation that recurrently requires months or years of software development to days or weeks using low code technology, and foster more efficient complaint resolution and enhanced communication transparency in the resolution process, and finally, centralized systems tracking, system tracking, managing, and resolving, management systems.

The DMZ is requesting $3,336,000 in fiscal year twenty six twenty seven for the managed care fund to support the initial implementation of a health plan member and provider complaint management system. The resources requested in this proposal will allow the DBC to meet required time frames for reviewing consumer provider complaints and to support the DBC's customer service efforts to assist Californians.

Pause there and go to the next one. Alright. Second DMEC proposal is the electronic filing and analysis of claims and summit data project implementation. Similar to the prior previous proposal during the fiscal year twenty five twenty six budget process, the DMZ requested and received approval for 191,000 in consulting funding to initiate the planning phase to implement an electronic filing and analysis of claims settlement IT project and assist with IT project approval life cycle and development to implement the requirements of AB 3275.

The DMEC anticipates a twenty four month IT modernization project to implement the necessary system updates and support compliance with AB 3275.

The solution will also enhance the DMHC's DMHC's risk bearing organization oversight, financial reporting systems, grading criteria, corrective action plans, process, and claims timeliness reports to support full compliance with AB 3275.

This proposal requests project funding for two fiscal years in the amount of 2,420,000 in fiscal year twenty six twenty seven and 2,026,000 in fiscal year twenty seven twenty eight from the managed care fund to implement electronic filing and analysis of claim settlement data solution to meet the requirements of AB 3275. That concludes my brief overview. More than happy to answer any questions.

Thank you. Anything from DOFLAO? Nothing. Anything from the dias? Nothing.

Nothing. Any public comment? Looks like there's no public comment in here. None out there. So we'll say thank you so much for your report.

Appreciate it. And we're gonna move to issue

four.

So as you're, coming to the table, I'll just say that we're gonna hear from the Department of Finance on the administration's overall proposed spending plan for the state's share of Prop one revenues. I know I've heard a lot about this, from colleagues as well as from constituents.

I'll note that several prop one state investments will be administered by individual state departments, including Department of Health Care Access and Information, the California Department of Public Health, and the Department of Health Care Services that are all present today to answer additional questions if we have any. So I will turn it over to all of you to please introduce yourselves and begin whenever you're ready.

Good afternoon, madam chair and members. My name is Riley Thompson with the Department of Finance, and I am presenting today on Behavioral Health Services Act Fund state investments. Beginning in 2627, proposition one allocates at least 4% of total revenue for the Department of Public Health for population based behavioral health prevention programs and at least 3% of total revenue for the Department of Healthcare Access and Information for behavioral health workforce programs and the remaining amount for other state purposes.

Previously, the state directed cap of funding was 5% of total revenues. This has since increased to 10%, which has created new revenue, opportunities to support workforce and population prevention programs.

This is not an opportunity that the state has had in the past. The May revision proposes 174,800,000 for the Department of Public Health, a 131,100,000 for the Department of Healthcare Access and Information, and 335,200,000 for other state directed purposes, including 10,000,000 for the Commission for Behavioral Health from the Behavioral Health Services Act Fund in twenty six-twenty seven for the purposes described and required by Proposition one.

The May revision also includes 211,900,000 in behavioral health services funding in lieu of general fund in 2627 for existing statewide behavioral health programs. The administration has carefully evaluated existing behavioral health programs supported by general fund within the parameters of proposition one. Identified workforce programs aid the overall behavioral health workforce continuum and allow flexible post program placement within the state or counties.

Identified population health programs support mental health and substance use prevention programs for underserved populations. In addition to reducing general fund costs by shifting to the Behavioral Health Services Act Fund, these programs represent significant investments in behavioral health workforce and prevention, complementary to the new programming that will be enacted by the departments utilizing Behavioral Health Services Act Fund resources.

So accounting for this shift from the general fund to the Behavioral Health Services Act Fund, the Department of Public Health will have a 119,800,000 from the BHSA Fund, and the Department of Healthcare Access and Information will have 94,300,000 from the BHSA Fund to expend on new population health and workforce behavioral health programming. HCAI will also continue to support BH Connect with their allocation. Funds for the Department of Public Health and the Department, of Health Care Access and Information will be available through 06/30/2029.

Thank you for listening to this testimony. I'm happy to answer any questions, that the members may have.

Thank you so much. Is there anything from LAO on this?

Yes. Will owns with the, legislative analyst office. So our office is still in the process of reviewing the specific programs that are being, proposed to be offset, under the governor's proposal. So but that being said, a key question for the legislature with these proposals is whether the proposed solutions are consistent with the language within proposition one.

The first being that there is non supplementing language within proposition one and whether these proposals to offset general fund with the HSA revenues would kind of run a foul of that.

The second question is whether the specific programs proposed to be offset, constitute eligible uses of the funds under proposition one. So we've raised these questions with the administration and are working with them to get more information. And once we have that and with our analysis, we will promptly follow-up with the committee, but in the meantime, available to answer any questions. Thank you.

Thank you. Any questions from the IS? Assembly member Fanta.

Yeah. I I just want to better understand some of the proposed fund draws from BHSA and just the overall context I understand for Prop one funding and the movement or the impact I should say on counties that I've pretty consistently heard is that we've taken away a lot of prevention prevention dollars with the way that we've structured Prop one usage, and those are severely being being felt pretty severely and significantly on the front lines for people in particular.

So I have a question about the pop some one of the population based preventions, the Department of Industrial Relations equal representation in construction apprenticeship grant, the 3,500,000 out of BHSA. What is the nexus there?

Yeah. I'm happy to speak to that. And before I do, I just wanna really quickly note that the budget does not propose any changes to the local BHSA program. So counties will be receiving 90% of the BHSA funds pursuant to the requirements. So we're not anticipating an impact to the money received at the local level by the county.

But you are making a suggestion about how the state should be using its apportioned 10% of that funds for funding that seems to have questionable nexus to the purpose of prop one and BHSA.

Yeah. I'm happy to provide additional information with regards to that particular proposal. So as you mentioned, some of the funding is intended to be directed for the equal representation in construction apprenticeship grant. So the intention of this grant is to improve worksite culture at construction worksites for a targeted underserved population of women and gender nonconforming employees. Specifically, the grant supports mentorship, community building, focus trainings, and the fostering of peer connections to positively influence the behavioral health of participants.

So this is generally in alignment with the intention of proposition one to support underserved communities via community wide behavioral health programming.

And there are in both the population based prevention and workforce, Again, it seems like there's 11,900,000 directed at this mental health app. The chair had a serious hearing panel on that specifically and then an an additional $44,600,000 for apparently that same set of Apps?

So the children and youth behavioral health initiative services platform? Is that Yes. Yes. So this specifically for the mental health apps. Right?

Yes. So I can give a little bit of context as to that one as well. This platform supports virtual health services for children and youth to increase access to culturally responsive behavioral health care for youth in underserved and rural communities.

These supports provide first line and primary prevention activities that are consistent with the goals of the allocation for population based mental health and substance use disorder prevention programs, including reducing the prevalence of and risk of developing mental health and substance use disorders and incorporating evidence based practices. So this is in alignment with the intention of proposition one to bolster access to preventative behavioral health services for specified impacted populations on a community wide level.

Is there anyone besides DOF that through the Chair might wanna answer that question?

Apparently, no. Okay.

And then there has also been and chair has highlighted as well the defunding, if you will, of the mobile crisis services. Can you share with me the what the intention is of in this proposal for mobile crisis services?

Apologies. One moment.

Sorry. Do you mind repeating the repeating the question?

Mobile mobile crisis services. There's been a lot of talk about that. It's clearly been a priority of the many of our colleagues in the legislature to preserve funding for that and to not shift the cost of those two counties. I'm looking at something here that includes BHSA and mobile crisis services. So can you speak to that at all?

Yes. So that 20,000,000 BHSF dollars is to support the remaining portion of the nonfederal share for mobile crisis services through the required date in statute of 03/31/2027. And so this is just fulfilling that last portion of the nonfederal share. And just to provide additional detail, this is replacing the $9.88 special fund dollars that were scored for that were proposed for that portion of the non federal share in the governor's budget.

We're we're placing the $98 with behavioral health services fund as it's a more appropriate source of funding for for for the service.

Why is it a more appropriate source of funding? The intention of nine eight eight was to be able to ensure that there was a place to call and people to be able to be responsive to that in in urgent and efficient way.

So in order for mobile for $98 to be used for mobile crisis services specifically, the the service has to be initiated through a 988 contact and then transferred to a mobile crisis service. And so given sort of the the difficulty with being able to tie that contact initiation to the mobile crisis service initiation, it's it's just given that complexity, we think behavioral health services fund would be a more appropriate source.

Yeah. That was raised in our hearing on September and seemed to be an area of improvement, not an area to then defund or rationale to defund nine eight eight and the mobile crisis units within nine eight eight defunding. Those are all the questions that I have.

Thank you. I think the just to be transparent, this is kinda awkward because the voters voted for something, and now there's money being shifted around. I don't know that the voters really expected some of the things that are on page 10 here in terms of this money shift. So it creates an awkward situation to put something before the voters, to have the voters put their faith in a proposal, to have that begin to work, to get negative feedback from the counties in terms of their losses.

Assembly member Bonta said in terms of their loss of prevention dollars.

Right? So the counties are hit pretty hard, and we have heard from them quite a bit in terms of not being able to fund prevention. But then to see this amount of money that is both not in prevention and going to things that the legislature has expressed concern about. Certainly, we had as the assembly member mentioned, we had lengthy discussions about these mental health apps. I know we've had questions in the past about what a wellness coach does, how that licensing works.

Is that really beneficial for folks? I have questions around, you know, why are we paying for CDC, our budget? Not that I don't believe CDC, our staff should get trained or that there shouldn't be outreach coordination and mental health training for CDCR. Of course, there should. But why is that now coming out of these Prop $1 as opposed to coming out of the CDCR budget, the general fund, what have you.

How did all of this massive list of things all of a sudden become Prop One Dollars? And I don't think the voters really wanted Prop One to be a slush fund. I think the counties feel frustrated that they've lost prevention dollars. It's what the you know, what Prop One did was and it's why people had concerns about Prop One is the loss of prevention dollars to put into other very important things, more mental health beds.

But, certainly, when I have asked the question to counties who are feeling the tough part of loss of prevention dollars, I've asked the question, well, are you getting beds built in your community?

And there's also questions about where those dollars are. So it it this is, it's just it's a concerning proposal and a lot of questions around what we said at the top of this hearing was there's a lot of mechanisms, and I think LAO pointed it out. There's a lot of mechanisms to balance this budget, and the question is should it be balanced on the backs, on the back of Prop$1? So there's, I think there's a lot of concern.

I've certainly heard a lot of concern from the legislators that, aren't here today about how this proposal is rolling out.

So I guess my question would be, do you have, kinda any, you know, response about that piece of things and the and the fund shift overall and how this is how this money is it feels a little bit like it's being used as a slash fund to backfill general fund.

So I think, first of all, appreciate in here the concerns from the legislature. This proposal represents an opportunity to support these existing behavioral health workforce and population health programs with this fund source that has been deemed as appropriate. This these programs are in line with the intentions of proposition one to bolster the ability of individuals to access population health preventative care as well as, invest in these workforce pipelines.

And in doing so, it allows us some additional flexibility within the general fund that was previously supporting these programs. So within sort of the broader budget picture that we're facing, this was identified as one of the ways to give us some additional flexibility in those general fund dollars while maintaining these population health, and workforce, incentive programs and services for the state.

And do you have any response to LAOs that they've asked for and to start looking at? Does do these do these items really qualify? Are they actually eligible under Prop one? Do you have any response for LAO?

Yeah. So with regards to the concerns that were raised, the administration has evaluated the language of proposition one. We do not see this proposal as a violation of statute. So with regards to the concerns that were raised about supplementation, every year, statute requires that the funding set aside for state purposes be appropriated in the budget. So these dollars are not ongoing.

They're subject to the annual budget act. So these funds could be rolled back or augmented through this annual process as needed. And then with regards to the individual programs, I'm happy to answer specific questions about specific programs as needed. But in general, these programs were assessed within the intentions and context of proposition one, to identify programs that again provide population health programming being provided on a community wide level to target populations.

And the workforce bucket was assessed, to determine if these programs are helping to bolster this workforce pipeline into behavioral health employment opportunities at the county and state level.

So we sort of looked at all of the requirements of Proposition one and assessed whether or not these programs sort of fit within the intentions of this. And it was determined by the administration that the identified programs do fit within the intentions of proposition one.

Thank you. Anything else from the dais? We'll move to public comment. And I see there's a number of people. So just as a reminder, you have thirty seconds.

Even though you may have a longer testimony, we're gonna ask you to cut it off their name, organization, and, your position on issue for our over here overview of behavioral health services act proposals in the May revision.

Can I start? Hi. My name is Nico Fisher. I'm a high school student from the Bay Area. I'll be heading to UC Berkeley next year, and I'm here in support of Allcove. Allcove is a network of centers around California that provide needed mental health support for young people at no cost to them.

More than that, there are safe spaces for the entire community to come together. Allcove has had a tremendous impact on my community in Santa Clara County and in the Bay Area, and it's having an impact across the state. And we're asking the government of the state of California to provide a one time $24,000,000 allocation in the twenty twenty six, twenty twenty seven budget year to just stabilize our operations. This is a really important thing for the young people of California.

Thank you.

Hi there. My name is Yash Jamm, a high school senior in Los Angeles, California, and I'm the cochair of the Alcove Beach Cities Youth Advisory Group. We currently have five operating Alcove locations around California. We have we're gonna have 11 by the time August comes around. And I'm just here to also support the 24,000,000 budget ask, in support of all 11 centers and the entire Alcove network.

Thank you all for your time.

Thank you, and welcome.

Hi. I'm Sophie Martin. I'm from the Allcove San Juan Capistrano Center, and I'm from Tustin, California. I'm also here to support the 24,000,000, budget ask for Alcoa centers. The system that Alcoa provides has really proven to me and my peers that it's the way forward for supporting youth mental health and addressing the mental health crisis we have nowadays.

Thank you.

Hi. My name is Mona Cho. I'm 18, and I'm from Allcove Beach Cities. Allcove has supported my mental well-being, and I'm here to amplify the $24,000,000 budget ask in support of all 11 Allcove centers. Expanding Allcove means expanding access to hope and healing and agency for young people who are too often overlooked.

And the most effective investments are the ones that help young people before they reach crisis. Thank you.

I'm Sage Hernandez. I'm also part of the youth advisory group in San Juan Capistrano. I'm located in Oceanside, and I support the 24,000,000 budget ask.

Hi. I'm Susan Parmalee, executive director, of the agency that operates Alco San Juan Capistrano. And I said we've been deeply affected by the loss of county prevention money. This is innovative prevention and early intervention that we need to keep in California. We've already made an investment, and we really wanna keep it going, and we really need this one time 24,000,000 budget ask.

Thank you.

Good afternoon, chair members. George Cruz on behalf of the California Behavioral Health Association speaking on the, proposal for population based prevention. We we're in strong support and ask that, those prevention dollars focus on the existing programs like the California Reducing Disparities Project who have well documented ROI for the state's investment. Thank you so much.

Stacie Hiramoto with Remco, the Racial and Ethnic Mental Health Disparities Coalition, and several organizations with the California Reducing Disparities Project. We really wanna thank the members and the staff for trying to get answers about the population prevention dollars because it's been very confusing to us, and we're really glad that you're on top of this because as you mentioned, our, community defined evidence programs are finding very little support in the counties.

And then when the state cuts the commission funding and then the and then the other funds are getting shifted, Thank you for helping us keep your eye out.

Thank you. Thank you. Welcome.

Good afternoon, chair and members of the committee. Diana Luna with the County Behavioral Health Directors Association would like to express concerns with the proposal to shift BHSA funds to offset general fund commitments. As mentioned on the die on the panel, these shifts these funds were shifted from counties to state and resulted in significant cuts, and we do not think that it is consistent with the original intent of the proposition. Thank you.

Good afternoon. Glenn Baccus for Drug Policy Alliance in full support of the mobile crisis unit funding. Thank you.

Good afternoon. Trent Murphy with the California Association of Alcohol and Drug Program executives. We represent community based, providers in the the treatment system. We are concerned, like you are, about the proposal to backfill existing general fund commitments through the BHSA dollars. We're also alarmed by the shifts on a community based mobile crisis services from a state funded program to an optional one.

Making it optional would make the quality of treatment you receive dependent on your ZIP code. So we would urge the subcommittee to reject this approach. Thank you.

Michael Henning, California Alliance Child and Family Services. We represent nonprofit community based organizations that serve children, youth, families across the state, including providers of mobile crisis, nine eight eight services, CalAIMS advanced care management, and community supports. The California Alliance is concerned about the MABRE vision proposal to use BHSA to replace general fund support, and we agree with this subcommittee that this warrants additional review. We also strongly oppose this offsetting of BHSA funding. Thank you.

Thank you so much. Oh, please.

Hi. My name is Pizha. I'm with SONKAN. And I just wanna make sure I just wanna say we have to remember to, how important cultural competent in language education to reduce substance use. Thank you.

Thank you so much. Seeing no other public comment, thank you to the panelists. Appreciate you putting up with our tough questions. And, you know, we have some things that we're gonna work on between now and having a final budget. We're gonna go on to issue five, the commission on behavioral health.

May budget May revision proposals. Let's see. Welcome. And whenever you're ready, please go ahead. Introduce yourselves, and you're welcome to start.

Okay. Thank you.

Good afternoon, Chair Addis, Members. I appreciate the opportunity to present today. My name is Brenda Grealish, and I'm the Executive Director for the Commission for Behavioral Health, which is also known as the Behavioral Health Services Oversight and Accountability Commission. I'm joined today with one of my commissioners, Dr. Gary Tsai, who also is the Chair of our Program Advisory Committee.

The Commission is an independent state agency led by seven commissioners whose membership reflects the public behavioral health system, including consumers, family members, providers, community members, counties, and state partners.

Our role is to bring transparency, evaluation, data-informed policy recommendations, grant making, and technical assistance to strengthen outcomes for Californians most affected by the public behavioral health system, especially those who are underserved and those with the highest behavioral health needs. Given our Commission's independent voice, we're sometimes treated as a threat because accountability, transparency, and community voice can be uncomfortable when systems are under strain. We've seen this previously and repeatedly in the last few years.

During the development of Proposition 1, there were serious concerns about whether the Commission would lose independence. Last year, the Commission nearly lost the $20,000,000 annual allocation for the Mental Health Wellness Act, which has been our longest ongoing local assistance program.

And this year, the May Revise proposes cuts to two core BHSA tools that voters approved in Proposition 1: innovation and community advocacy. The May Revise proposal this year seems to have the same goal as last year, which is to weaken the Commission and limit our ability to administer grants as per our statutory duties. Specifically, this year's proposals would not just reduce programs, they would weaken two of the BHSA's foundational how-we-change-the-system mechanisms: innovation that scales and community voice that holds implementation accountable.

Starting with the innovation proposal to permanently reduce the Commission's five-year Innovation Partnership Fund from $20,000,000 to $10,000,000.

Essentially, Proposition 1 fundamentally changed innovation funding in California. Prior, under MHSA, innovation accounted for about 5% of funds, which was roughly $90 to $200,000,000 per year statewide across the counties. Under BHSA, innovation is now centralized into a statewide strategy through the Innovation Partnership Fund at $20,000,000, only $20,000,000 for five years. In other words, Prop 1 already shrank innovation dramatically. The state's dedicated innovation capacity is now far smaller.

So cutting innovation again would cut into the core of what the BHSA envisioned as a statewide pathway to learn what works and scale it. At the same time, it made sense to bring innovation to the state level so it would remove the burden off of counties. So the Commission is intended to be the state's dedicated statewide innovation engine, built to test, evaluate, and scale solutions across regions so counties can adopt what works.

It also allows us to bring forward scalable approaches for community-based organizations, tribal partners, universities, nonprofits, and the private sector, creating a funnel of innovation that does not rely solely on government to generate solutions. The immediate impact of this proposed cut would affect our current procurement.

We've received an extraordinary volume of this year's Innovation Partnership Fund applications, and we are right in the middle of scoring proposals. A midstream reduction would directly reduce the number of high-quality, implementation-ready projects that can be funded. Demand and readiness are clear. Since the March 2026 RFA was released, the Commission has received over 400 questions and inquiries. We've held two bidders conferences with over a thousand participants, and we've received over 300 applications.

Because we're in the middle of an active procurement, we can't disclose specific applicants or applicant details. However, we can say that the response reflects the kind of broad innovation ecosystem that the Legislature intended this fund to support. Applicants include nonprofits, counties, public health departments, county offices of education, hospitals, business, other private sector entities, universities, research organizations, consulting firms, small community-based organizations, faith-based organizations, and tribal organizations. Many of the applications explicitly specify public-private partnerships.

The proposals reflect a wide range of strategies to improve California's behavioral health system.

Some are focused on specific Behavioral Health Services Act priorities, while others are aimed at broader system improvement, implementation support, and innovation adoption. Notably, when the Commission conducted the early concept development to help shape our Request for Application, we received a diverse set of ideas showing both the demand for and the potential of this funding.

These concepts range from AI-enabled tools to reduce administrative burden and improve service delivery, to technical assistance and infrastructure support to help community-defined evidence practices become integrated into the behavioral health system. In fact, several departments within the administration submitted concepts for the Commission to consider. And that's significant because it demonstrates that the need for funding was recognized not only by outside stakeholders, but also by the administration.

In other words, state departments identified ideas and priorities they believed were worth advancing through this fund. So it is therefore difficult to reconcile that earlier recognition of the fund's value with the proposal now to substantially reduce it just as the Commission is about to make awards. A 50% cut at this stage would be highly disruptive and would significantly reduce the impact of the program.

It would essentially mean that the small grant category would go from eight to four awards, moving from $4,000,000 to $2,000,000, which would impact community-based organizations, nonprofits, and tribal organizations because we have a specific carve-out. And it would also reduce the large grant categories from about three grants that we were anticipating to maybe one to two, going from $16,000,000 to $8,000,000.

And this would have real consequences. It would reduce access to funding for smaller and community-based applicants, narrow the range of ideas that the state can support, and diminish the state's ability to test, refine, and scale innovations that could improve behavioral health outcomes. It's also troubling given that this process was shaped in part by input from across the field, including hundreds of community stakeholders and departments within the administration, all of whom submitted concepts for what this fund should support.

Throughout the process, the administration provided important constructive input and distributed our RFA announcement to help promote this funding opportunity broadly. So to invite that level of engagement, build a funding opportunity around those ideas, solicit applications, and then cut the program in half immediately before awards are announced will send a deeply discouraging message to our applicants and our community partners.

Applicants invested extensive time and resources in good faith, relying on the funding structure that the Commission has published. For smaller organizations especially, that investment is significant. Cutting the program at the last moment would not just make the competition tougher, but it will pull back opportunity after the state encouraged innovation and partner participation. Put simply, we're the only entity in state government looking at innovation for a broken system.

Cutting this funding sends the message that the California behavioral health system doesn't need dedicated innovation support, despite the clear demand, the ongoing implementation pressures on counties, and the realities that families and communities are facing every day.

For these reasons, I respectfully request that you reject the May Revision proposal and maintain the full $20,000,000 for the Innovation Partnership Fund. Moving to the advocacy proposals: the proposal is a permanent reduction of $6,700,000 ongoing to our very long-standing community advocacy program. This is essentially shrinking the voices of those who this behavioral health system exists to serve. The Mental Health Services Act was pioneering because it required transparent, collaborative planning with robust community engagement.

It was nothing about us without us. I mean, that's been the mantra for years. Proposition 1 added a new statewide expectation for community planning and integrated county plans. And the point is not paperwork, but the point was that the right people are able to show up, understand the system, and advocate effectively so that the plans can actually reflect what the community needs.

The administration has been appropriately emphasizing that Prop 1 requires a stronger, more inclusive community planning process, and that counties must meaningfully engage these stakeholders in developing integrated plans.

If the state's raising expectations for county engagement, it should not simultaneously eliminate the only statewide funding source that helps underserved communities understand the system, participate effectively, and bring their perspectives forward. The community advocacy contracts are the state's practical mechanism to reach and engage underserved communities, reduce barriers, teach people how the system works, and ensure that participation is real and not performative so that county plans and state implementation can reflect lived experience.

I'd say eliminating the program would abruptly remove capacity delivered through 16 contracts serving nine underserved populations, including LGBTQIA+, diverse racial and ethnic communities, veterans, K-12, clients, consumers, families, parents, transition-aged youth, and immigrants and refugees. And just as an example, our California Association for Veteran Services Agencies had done some analysis on the MHSA three-year program and expenditure plans under our advocacy grants that we had provided to them in 13 counties.

And while all of them had acknowledged the need for veterans, only five had actually identified veteran-level programs through MHSA funding.

And that's the kind of work that's done under these advocacy grants that could and would continue under these advocacy programs if they continued. There's no dedicated statewide funding that supports this type of advocacy, outreach, education, and engagement for these underserved populations. These contractors are community-based infrastructure. They are trusted messengers who convene community-led events, connect people to services, and provide direct feedback to improve implementation. Many of our contractors are midway through multiyear contracts right now.

Elimination would halt work underway and destabilize community partners at the exact moment the Behavioral Health Services Act depends on incredible community engagement. And direct services alone do not fill that gap because many people cannot benefit from services that they don't know about, that they can't access, or that they don't trust. These contractors are the bridge between vulnerable communities and the systems they rely on for essential care. And for these reasons, I respectfully request that you reject the May Revision proposal and maintain the $6,700,000 community advocacy program.

And with that, I'm going to pass over to Commissioner Gary Tsai to say a little bit more about the Innovation Partnership Grants from a commissioner and a county behavioral health perspective.

Thank you.

Good afternoon, Chair Addis, Members. Thank you for the opportunity to speak today. I am Dr. Gary Tsai. I'm the Director of Substance Use for Los Angeles County, a board-certified physician in psychiatry as well as addiction medicine, and a commissioner on the Commission for Behavioral Health. I'm here to urge you to reject the May Revise proposal to permanently cut the Innovation Partnership Fund from $20,000,000 to $10,000,000.

From a county implementation perspective, BHSA is a major system shift occurring alongside workforce shortages, rising acuity levels, as well as increasing expectations for accountability and outcomes. Under MHSA, innovation was largely county-based, which resulted in situations where scaling across California could be challenging.

The shift to BHSA's statewide innovation strategy is important because it created a mechanism for California to better adopt and scale models that have been piloted, evaluated, and refined at both the county as well as the community-based organization level. The Innovation Partnership Fund is designed specifically to support novel behavioral health programs that can be implemented and sustained.

It's also intentionally structured to bring in ideas and tools from outside government, while still benefiting counties and focusing on the most vulnerable populations highlighted by the BHSA.

This is exactly what California and counties need: practical solutions that can be adopted locally with evidence supporting them and with an intentional plan to scale. Reducing the Innovation Partnership Fund would not just reduce a line item, but it would also reduce what counties can realistically access in terms of tested tools, models, and best practices that address high-need populations.

As a county public health leader and the Chair of the Commission's Program Advisory Committee, which plays a leading role in the Innovation Partnership Fund, I'm committed to making this fund work for counties and for California. The Innovation Partnership Fund was developed with extensive engagement from community members, providers, counties, and state partners to help shape the RFA that is actionable, aligned with BHSA priorities, and built for real-world implementation.

For these reasons, I respectfully ask you to reject the May Revise proposal and to maintain the full $20,000,000 for the Innovation Partnership Fund.

Thank you.

Thank you. Is there anything from DOF or LAO?

Victoria Rapley, Department of Finance. So first, to address the $10,000,000 allocated for Innovation Partnership Grants. The May Revision includes $10,000,000 Behavioral Health Services Fund for grants to private, public, and nonprofit partners to promote development of innovative mental health and substance use disorder programs and practices. Proposition 1 requires up to $20,000,000 be allocated to the Commission annually for five years. The amount included in the May Revision is in alignment with the requirements of Proposition 1.

In addition, for the $6,700,000 related to the Community Advocacy Grant Program: with the implementation of the Department of Public Health population-based prevention activities, many of the activities of this grant program also align with CDPH's state and local activities. This reduction also allows the state to support direct service investments.

LAO? No. Okay. Any questions from the dais? Assemblymember Bonta.

I want to thank both commissioners for your testimony. I think one of the most striking budget hearings that we had was last cycle. Chair Addis had a review of culturally concordant care within behavioral health. I don't remember the specific issue, but I do remember so many people offering public comment that it wrapped all the way down to our sergeant there outside the door and down the hallway, probably outside this building.

And those are people who were from tribal communities, from very diverse communities, veterans communities, LGBTQ communities, immigrant and refugee communities, all speaking to the need to be able to offer very sensitive and culturally concordant behavioral health drafted and organized in a way that was representative of their communities.

My understanding of both of these funds, the Innovation Partnership Grant Program as well as the Community Advocacy Grant Program, is that you've organized a 27-member commission to really make sure that we have an opportunity at the state to be able to make sure that those organizations have the resources that they need to be able to blossom and to support our communities in a very deep and meaningful way.

Last week, we heard in an informational hearing in combination with the Select Committee on Native American Affairs, the deeply troubling ongoing needs for our tribal communities to be able to address the levels of suicidality and depression in tribal communities.

It's fair to say that for both of those, I'm assuming, I don't know who the grantees are that have applied, but I'm very distressed at the fact that a grantee community-based organization probably spent their last dollar in identifying a grant writer, putting together multiple thousands of dollars of resources to be able to make an ask of one of these two programs, only to kind of mid-cycle have that potentially not be funded.

From what I heard, and this is where I want clarity, was many of the activities also aligned to support direct services. And it's essentially a shift from our to be able to do some cost savings because we can't, because by statute and Prop 1, you know, there's an up-to amount of $20,000,000, and we've just decided to essentially say, yeah.

So what? In this budget year, we're going to mid-cycle keep you from being able to fund those very important programs. So please explain again to me the rationale by DOF to essentially defund midstream these grant programs through this Commission?

First, the $20,000,000 was originally held at Governor's Budget for the budget year. This proposal would decrease that amount to $10,000,000. The rationale for this was, in the past, the administration received feedback that there is a

desire for Proposition 1 funding to prioritize core direct services as much as possible. So this redirection of funds will allow us to instead allocate funding for direct services within the 3% state-directed cap.

From the commissioners, before continued response through the Chair, these grant programs, the Advocacy Grant Program as well as the Innovation Partnership Grant Program, would you categorize that work as direct service behavioral health work?

This is, so basically, and I think there's a little confusion between what CDPH is doing for the population-based prevention, which is prevention of, like, stigma campaigns or opioid campaigns, versus what these community advocacy grants do, which are really, they're the folks that are supporting people in the community so they can get direct services. So these are advocacy organizations that are really speaking for their populations.

For example, like, as I was mentioning, the veterans, they can go through the plans and look and do the analysis, see who's not putting direct services for veterans into their integrated plans, and then show up and advocate for those populations.

So these are the voices of the population getting served, to be able to make sure that the services that are being offered or provided to them are the services they want and need and that they can access them.

So it's the voices of the community.

So we're able to pierce through our state level noise to actually hear from community what community needs around behavioral health.

And that's different, like, than a statewide campaign for suicide prevention

Yeah. Thank you. For example. It's good. Is it okay?

Oh, please. Please.

Joseph Donalds, Department of Finance. So just to kind of further reemphasize some of the points my colleague made. So the overall approach of this is trying to focus the direction of, or reallocating the funds to direct services. I know the Commission has expressed concerns that we understand. There's concerns from the Legislature, and we're open to having those conversations, understanding,

you know, to where technical assistance can be provided. I think I would just reemphasize the funding that would be reallocated. A lot of the programs, there's a lot of alignment with what CDPH is doing, which does consult and collaborate with the Commission, with a lot of the communities that you mentioned, especially tribal communities, of programs that can address those very needs. So while we understand there are concerns with this proposal, just want to reemphasize that.

The purpose was trying to reallocate those funds to those direct services. But if there's any other concerns or questions, we're happy to take those back and continue that conversation.

I would just offer that. I think we probably have different definitions of what direct service means for your consideration.

I believe that when a community is afforded an opportunity to outline through a needs assessment what's, where there are gaps, where there are assets, need and needs assessment, and where there are people and resources that can be relied upon in order to be able to organize addressing a particular behavioral health concern, mental health concern, needs of the community, that is actually a part of what needs to happen in order to be able to provide adequate direct service.

And it is also in and of itself direct service when we are hearing directly from communities around what they need. So I almost feel like the definition that has been generated by DOF is perhaps a bit too literal and is discounting the importance of making sure that people have the opportunity to claim what they need and articulate that in a way that will allow them to be able to have the capacity to support their communities.

So I have questions through the Chair about the rationale that's been offered by DOF for cutting these programs, and I certainly have questions and concerns about doing so midstream, mid-funding cycle, as somebody who has written many grants. Thank you.

Thank you, Assemblymember Schiavo.

Alright. So I'd love to hear from the commissioners on this point of overlapping with CDPH and what's already happening. Is that your understanding or assessment?

I think it's apples and oranges. So what CDPH is doing are statewide population-based efforts. So like I was saying, like, stigma reduction, that's not what our contractors do. Our contractors are in the communities working to advocate for their populations at their local planning processes. So, like, the annual or the three-year integrated plans, now Behavioral Health Services integrated plans.

We want community members to show up and say what they need and be able to meaningfully participate in those discussions. That's one way. That's one example of what these advocacy organizations do, but they're really in their communities, very deeply embedded in their communities, doing the work, working alongside the local boards and commissions and the county behavioral health departments to really advocate for the needs of the populations they represent.

And I would just add, the work that the California Department of Public Health will be doing, as was mentioned, is population-based. And so it is still focused on the community. I think that's where there are similarities, but how it's focused on the community is different. Right? So campaigns, those are population level. Innovation Partnership Funds,

the advocacy work would be more targeted in terms of specific innovations, specific groups that have specific interests, and identified needs within the behavioral health services. And so I do think that it's a bit of a different comparison and a different way of kind of looking at that. I also would point out that direct services need not be only Medi-Cal reimbursable. Right? We can also provide direct services that are not Medi-Cal reimbursable, and those also add value to the system.

Yeah. Thank you for that. I mean, excuse me. I share the concerns raised by my colleague about the cuts to both of these.

You know, as someone who in a past life was an organizer, I know organizing, all of those things, turning people out to meetings, making sure that people know how to share their stories, talking about how you can input and how the process works, all of those things takes resources. It takes money to pay organizers and staff and people who can do that organizing work. And I think to Chair of the Health Committee Bonta's point about the joint hearing that we had last week.

You know, I also worked for a tribe in the nineties when mental health was a crisis and suicidality was a crisis then, and we're not figuring it out.

And I think part of that is kind of cookie cutter solutions when unique communities need unique solutions that fit their needs. And one of the things that I've heard from tribes both last week and on other issues is that a lot of grant programs are not structured in a way that allows tribes to access them in a real way.

And so I'm very concerned that this will cut down on hearing those issues and hearing those voices and hearing what unique communities need. As Chair of Military and Veteran Affairs, certainly, when it comes to our veterans, very concerned about those voices also not being heard.

And I think that if we are shifting to statewide planning and really kind of bringing this up to a statewide level, that maintaining that local input and that input from diverse communities that have different needs is really, really important, because otherwise we get back to that very cookie cutter approach where we're just burning through a bunch of money and it's not really meeting the needs of the people who need it. Right?

And I think at this moment when we don't have money to burn and we have to be very intentional about how we do it, I feel like this is, you know, well, certainly this is not going to balance our budget, these cuts. And I think by making sure that we're having these kinds of grants and input and programs, this helps us to be more targeted and use our money more wisely and more effectively.

And I think that that is the kind of process we need to encourage right now when we have to be careful about what we're spending on and how and with whom.

Thank you. I should have mentioned this at the top. I think this is one of those things that, last year, the administration came before us, tried to cut one of your programs. People were very upset. We had an agreement.

Legislature put that money back in the budget. We got an agreement on the budget last year, passed it. Things are fine. Now we're back having a very, very similar discussion around cutting programs from the same Commission, already knowing that the Legislature didn't want to cut this program. So equally disturbed as what I said at the top of this hearing around having to revisit year after year things the Legislature has already said no to in terms of specific proposals.

I also, I just had to look back at Issue 4, and it looks to me like the proposal is to take $211,000,000 out of Prop Fund, backfill the General Fund with so-called behavioral health, so-called behavioral health areas, while also cutting $16,700,000 from a verified expense that we already know qualifies under Prop 1.

So it seems the shifting of dollars, we just had that lengthy discussion around this shifting of dollars and questions that the LAO raised that we certainly are raising around, do those things from Issue 4 even qualify? Yet here under Issue 5, we have something we know for sure qualifies. You're taking that money away to backfill General Fund. So I want to understand really the rationale of how this is helpful in the face of also putting $211 million over into General Fund backfill.

It's confusing to me because it's not really a savings, for the Assemblymember's comment. Certainly, the $16.7 combined here isn't going to fill the budget gap, but also you're taking that money just to backfill General Fund. It's actually not even a real reduction that would help our budget that much, particularly compared to the detriment that we're hearing here. So, I mean, happy to hear any reaction on that.

Yeah. Joseph Donaldson Department of Finance note. Totally hear your concerns on this proposal. And we're open to continuing this discussion in the next couple of weeks as we move towards the enacted budget.

Thank you for that. We'll move to public comment on Issue 5. As you're coming up, just a gentle reminder. If you could give your name, your organization, your position on the Commission for Behavioral Health May Revision proposals, and feel free to fill that gap so we can just get the next person in. I know we all kind of give a gap there, but just so that we can get the next person up as quickly as possible.

Go ahead. Stacy Hiramoto with REMHDCO, the Racial and Ethnic Mental Health Disparities Coalition. I really want to thank the Members for your thoughtful questions. I think you understand the issue. Out of all the places to cut at the Commission, these are the last two places that we would recommend cutting.

These programs give hope to underserved communities, not only BIPOC, but to LGBTQ, the veterans, youth, you name it. These programs give hope to the community, and we just really thank you for your thoughtful questions, and please reject these cuts. Thank you.

Good afternoon, Chair and Members. I'm Evan Fern with Disability Rights California. We strongly oppose the proposed elimination of the Community Advocacy Program and the 50% cut to the Innovation Partnership Fund. These investments are critical for ensuring that consumers, families, veterans, and other impacted populations have a voice in shaping our behavioral health system, and that the state can test and expand behavioral health solutions that actually work. Eliminating these funds would silence community input and limit service innovation. We urge you to reject these cuts,

George Cruz, on behalf of the California Behavioral Health Association, I just wanna thank the committee for their thoughtful comments and questions on this specific issue, and we're also strongly opposed to the reduction of, from $20 to $10,000,000 on the Innovation Partnership Fund. Thank you.

My name is Anthony Garibay-Mena. I'm the Program Manager for LIVE, and I'm here representing also our LIVE partner organizations, Virac, Valla, Asian Mental Health Project, AIDS Healthcare Foundation San Diego Impulse Group, and North County LGBT Resource Center. LIVEhas supported LGBT plus communities across all five behavioral health regions in California by partnering with 14 community based organizations to address barriers to behavioral health care, including lack of cultural competency, limited safe spaces, and inadequate access to affirming providers.

Through this statewide community briefing, providers, community based organization advocates, and public health officials across four different communities have gained greater insight into the needs of the LGBTQ plus community. We strongly oppose.

Thank you.

Thank you.

I'm Shelby G of Mental Health America of California. I'm also here on behalf of Stonewall Alliance Center of Chico, San Francisco AIDS Foundation, VERA Drag Story Hour, and REACH LA in strong opposition to cuts to the CBH community programs.

Hello. My name is Alondra Garcia Perez, program supervisor for the California Youth Empowerment Network. And on behalf of On the Margins of Sonoma County, Masa Sasef from Sacramento County, Koreatown Youth Plus Community Center from LA County, we strongly oppose the budget cuts to the CBH community advocacy grants. CYEN has served more than 2,400 transitional age youth ages 15 to 26 across 34 California counties, reaching both rural communities such as Trinity, El Dorado, and Humboldt, and urban regions such as Los Angeles, San Diego, and Sacramento.

Hi. My name is Lex Salamiel. I'm a project coordinator with the California Youth Empowerment Network or CAYEN. And I'm also here on behalf of the Human Response Network up in Trinity County and Project Youth in San Diego County. Kyan has trained and empowered youth leaders throughout California to influence behavioral health policy at both the local and statewide levels.

Youth participants have contributed to changes in school policy, county programs, and statewide legislation, and we're in strong opposition.

Thank you.

Greetings, chair and community members. My name is Danny Thirakul with Mental Health America of California, also on behalf of Disability Rights California, Mental Wellness Center, and Mental Health Association of San Francisco. The commission's behavioral health community advocacy grant program is the only funding source that ensures underserved and historically marginalized communities have an actual voice in behavioral health decision making process. We respectfully urge to you protect this critical funding and reject the governor's May revision proposal.

Preserving this program is essential to maintaining community engagement, equity, accountability, and transparency in California's behavioral health system.

Thank you.

Good afternoon, chair, committee members. Karen Vicari on behalf of Mental Health America of California. We urge you to protect both of these vital CBH funds, which go directly to the very communities that the MHSA, now BHSA, is designed to serve. Thank you.

Good afternoon. Tiffany Murphy, chief operations officer with Mental Health America of California, also representing our partners, Children's Partnership, Project Return Peer Support Network, and Youth Ford in strong opposition of the proposed elimination of these BHSA funds. These proposed cuts would create long term and potentially irreversible impacts across California's behavioral health system. Remember, advocacy is not just focusing on the changes needed reflective of the community serve, but also protection of the things that are working.

The MHSA, now BHSA, was approved by voters with the intent of funding not only direct services, but also the support of the infrastructure.

Thank you.

Hi there. Danny Offer with the National Alliance on Mental Illness, also known as NAAMI California. Obviously, you get it beyond the wildest dreams of a subcommittee. So thank you very much. Just to add that, you know, these resources have existed, since the first Mental Health Services Act back in 2004, for a really good reason that of the core six values of the MHSA, community collaboration was number one.

And for families, advocacy is it's not just abstract. It gives us agency in a system that kind of often feel impossible to move. So thank you.

Thank you.

Hello, everyone. My name is Maxim Temple. I'm here with Calvoices. I'm here to oppose item 4560, which which would eliminate funding for community advocacy grants. We urge legislature to reject the proposal and the community voice alive.

Thank you.

Good afternoon. My name is Nicole Rosendo, and I'm with Cal Voices. I'm here to oppose item four five six zero, which would eliminate funding for community advocacy grants. We urge the legislature to reject the proposal and keep community voices alive. Thank you.

Hello. My name is Savannah Mitchell with Cal Voices. I'm here to oppose item 4560, which would eliminate funding for community advocacy grants. We urge the legislature to please reject this proposal and keep community voices alive.

Hi. My name is Virginia. I'm here with Cal Voices. I'm here to oppose item 4560, which would eliminate funding for community advocacy grants. We urge the legislator to reject this proposal and keep community voices alive.

Good afternoon. My name is Grace Gallagher, advocacy manager with Painted Brain. I oppose the elimination of the community advocacy grants. I also urge you to reject the May revision cuts to community based behavioral health services, including peer support, mobile crisis, and prevention programs. California cannot address the behavioral health crisis while cutting the workforce and organizations preventing hospitalization, incarceration, and homelessness.

Please protect funding for community based care and ensure that peers are not left behind at this conversation. Thank you for your time.

Good afternoon. Trent Murphy with the California Association of Alcohol and Drug Program Executives or CAT P. We strongly oppose the cuts to the advocacy grant, and we also oppose the reduction in the innovation funds that were explicitly put there to build up trust with the populations that we most wanna center in in Prop one. Thank you.

My name is Jocelyn Farrell from Cal Voices. I'm the program coordinator for Access California program, which is a community advocacy grant for the client and consumer population. I stand in opposition to the cuts, the community advocacy program, and we urge the legislature to reject this proposal and keep community voices alive.

Good afternoon. My name is Nicole Chilton, and I am program manager of Access California, which is a program of Cal Voices, and we are funded by the commission. Our program subcontracts with 12 agencies throughout the state who directly work with individuals receiving services in California's behavioral health system, and are vital to promoting advocacy and providing direct services for community members. I am here to oppose item forty five sixty, which would eliminate funding for our community advocacy grants directly impacting our 12 subcontractors and furthermore, their community.

We urge you the legislature to reject and keep community voices led.

Good afternoon. My name is Marona Gonefer. I'm with CAL VOICES. We would like to thank you for your strong defense of the CBH grant program. Thank you so much.

The legislature must reject the move to balance the budget by giving go going after a small fund intended to enhance the voices and engagement of communities in the behavioral health system. Please reject this proposal, and thank you.

Hi. My name is Jerrick Ruiz with Ignite Filipino based here in Sacramento, and I urge y'all to reject the government's proposal to eliminate the commission on behavioral health, especially with this program. This this program provides grants to culturally responsive and community led organizations that serve populations that often face barriers to accessing to behavioral health, including cultural and linguistic barriers and long lasting stigmas. Thank you.

Good afternoon. Angelica Cabande with SonCan. California's budget deficit cannot be solved by continuing cuts to medical and health equity programs. That's why we say no to the governor's proposal to eliminate the commission on behavioral health community advocacy program. These are really important especially for communities like my community, the Filipino community that still has a lot of stigma around mental health and accessing that.

Therefore, organizations that goes out there in the community and speaks to our to our folks is really important. Thank you. Thank you.

Hi. My name is Anne. I'm with Songkran from San Francisco. We provide direct services to mostly Filipino immigrant community in San Francisco. I'm here to strongly oppose.

Thank you.

Good afternoon, chair and members. Omar Al Tamimi with CPAN, the California Paneth Ethnic Health Network. Appreciate the questions earlier, expressing our shock at the proposed cut and respectfully request a rejection of the governor's proposal to cut the community advocacy program in a year where revenue was $16,500,000,000 over projections, cutting $6,700,000 from legally enshrined program as draconian and unjust, especially a program that engages BIPOC, native, LGBTQ, and other vulnerable communities on these BH issues related to Prop one as required by law. Thank you.

Good afternoon. My name is Andrea Mackey. I'm the associate organizing director with the California Panethnic Health Network, and we reject the cuts to the commission of behavioral health.

Good afternoon. My name is Lindsay Rodriguez, and I'm the health policy advocate at the Mixteco Indigenous Community Organizing Project on the Central Coast where I live and work in Lompoc, California. I'm here to reject the elimination of the Commission for Behavioral Health Community Advocacy Program. We urge this committee to stand together with the state's most vulnerable population. Thank you.

Good afternoon. My name is Alondra Mendoza. I community advocate with the Mixedeco Indigena Community Organizing Project in Ventura County on the Central Coast. I am here to reject the elimination of the commission of behavioral health community advocacy program during this time of family separation from ICE, the emotional scars are left behind to our communities community members, and we urge you we urge this community to stand with the most vulnerable population. Thank you.

Good afternoon. My name is Daisy Salazar. I am a program manager with Mixe Coimbi Henna Community Organizing Project in Santa Barbara County on the Central Coast. I oversee a prevention early intervention mental health program known as ALAS. Cutting the commission for behavioral health community advocacy program would pose a critical threat to our indigenous communities' well-being.

Please fight to keep the BHCA program. Thank you.

Good afternoon, Chair, Members. My name is Juan Carlos Diaz. I'm a community advocate with the Mexico y Indigena community organizing project, also known as MICOP, in Ventura County on the Central Coast. I'm here to reject the elimination of the commission for behavioral health community advocacy program. We urge this community to stand with the most vulnerable communities.

Thank you.

Thank you. Good afternoon, Chair and Members. Vanessa Teran, Director of Policy with MICOP. As an advocacy organization dedicated to serving the indigenous Mesoamerican population, we expressed significant concerns regarding the proposed cuts to behavioral services. These reductions will directly impact two critical initiatives in our prevention and early intervention programs for mental health and domestic violence in the Central Coast.

On behalf of MICOP, we respectfully urge the subcommittee to reject the proposed 6,700,000 cut to the commission for behavioral health community advocacy program in the May revise. Thank you.

Good afternoon, Chair and Members and staff. My name is Thoy Do on behalf of the Southeast Asia Resource Action Center. I urge you to please oppose the May revise proposal to cut $10,000,000 from the Innovation Partnership Fund, eliminating half of this grant program with strict critical funding to be granted in July of this year to services for California's most vulnerable populations.

Southeast Asian American organizations serving families impacted, refugees impacted from the Cambodian genocide, Vietnam war and secret war and loss have applied to IPF to address the stigma, language barriers, historical trauma, and the lack of cultural relevance care.

So thank you so much for your time.

Good afternoon. My name is Anita Gautam. I am a mental health specialist at Center for Empowering Refugees and Immigrant. Our organization is funded by Commission for Behavioral Health's community advocacy program. We reject the governor's proposal to eliminate this program because eliminating this program would remove the primary way that our vulnerable communities can meaningfully participate in planning, oversight, and continuous improvement of behavioral health services act that ensures communities receive essential mental health funding and services.

No decision about communities without communities. Thank you.

Hello. My name is Erin Scott, and I'm here on behalf of Refugee Enrichment and Development Association, REDDAA, here in Sacramento. I'm here to oppose the proposal to cut CBH's community advocacy program. This program is critical in engaging refugee and immigrant communities and BHSA as required by law. A cut to this funding is a cut to our most vulnerable communities.

Thank you.

Good afternoon. My name is Ravi Singh, and I'm with the Cambodian Family in Orange County. We've been serving the immigrant and refugee communities for forty six years, and the community advocacy program has been instrumental in helping smaller organizations like ours build the capacity to advocate for our communities. We've been able to have monolingual and ESL Cambodian community members submit their feedback to local three year plans in language.

Local engagement would not be possible without the community advocacy program, and we've only been able to move the needle this far because of this investment.

We call them the legislature to reject reject this proposed cut.

Hello. My name is Kecoa Lopez Bagullo, and I'm on the grants manager at the California Panetic Health Network. And I reject the governor's main revised proposal that would eliminate the commission for behavioral health, community advocacy program, which enables CPEN to advocate with partners statewide to inform county level BHSA integrated plans as required by law and would threaten funding midterm while community engagement for final county BHSA integrated plans are at the highest need. Thank you.

Chair members, Kathy Mossberg on behalf of the First Five Association. Wanna, share our opposition to the the May revise proposal to eliminate half or 10,000,000 of the innovation partnership fund. These funds are due to go out. I know there's been discussion. This will cause great impact to the community.

Certainly, those we're serving was zero to five, so we encourage you to reject this proposal. And then on the behavioral health side I'm sorry. On behavioral health side, on the public health side, we know we need more dollars there as well. So we'll work with this committee and hope we can get a few more dollars on that side as well. Thank you.

Good afternoon, Chair and Members. Magali Zigal with Greenberg Charter on behalf of Triple P America. Again, we align our comments with First Five Association. We strongly urge you to reject the governor's proposal for the $10,000,000 innovation partnership fund. Thank you.

Michael Henning, California Alliance of Child and Family Services. The California Alliance proposes the the proposed reduction to the, innovation partnership fund and supports sublease subcommittee one's request for the rationale, behind this decision. Thank you.

Hi. Good afternoon. My name is Maria. I represent Youth Leadership Institute, and we strongly oppose the cuts to the, community advocacy program. Right now, California is experiencing unprecedented challenges, environmental disaster, new technologies like social media and AI, attacks on our immigrant and queer communities, and we have never seen youth so depressed, isolated, and anxious.

And we need behavioral health services that respond directly, can nimbly respond to this shifting landscape, and, we urge you to reject the proposal.

Hello. My name is Anu representing Youth Leadership Institute opposing issue five, item four five six zero. We urge you to reject cuts to the BHC community advocacy program. I am here today as an adult ally to uplift our youth voices. Youth are the future voices and leaders of California.

Without these programs, there wouldn't be hope for youth voices to shape behavior or health policies. Thank you.

Good afternoon, Chair and Members. Alfredo Medina here with Nanette Phillips and Phillips on behalf of the Joe Torrey Safe at Home Foundation.

Here to urge the assembly, reject the governor's May revise proposal as it relates to the innovation partnership fund, specifically, as it relates to Joe Torrey and the programs that and the kids that they serve, and to uplift and support Assemblymember Solace's 5,000,000 budget request asked and one time funding to support the Joe Torrey safe at home markets place program, which provides trauma informed and mental health and prevention services to students and families.

This comes at a time in which we have bridge funding needed to ensure that the continuity of care in the state continues, and while Joe Torrey conforms to the new BHSA framework. Thank you.

Thank you so much, and, appreciate all the public commenters for, for your succinctness and working with us so that everybody can have their voice heard. We're gonna move to issue six. California Department of Public Health may, may revision proposals, and we'll welcome you forward to give your testimony. And please go ahead and introduce yourself when you are ready.

Madam Chair, Members, my name is Brandon Nunez. I'm the Chief Deputy Director for Operations at the Department of Public Health. Your agenda does a great job of highlighting a lot of our, issues, so I'll try to be as quick as I can. For us, the twenty six, twenty seven May revision, includes 5,400,000,000. It's a 5.6 increase percent increase, rather, from governor's budget and includes 750,000,000 in general fund, 4,600,000,000 in special and federal funds, 2,100,000,000 for state operations, and 3,300,000,000 for local assistance.

As your agenda highlights, there are some basic, kind of estimate updates that we do every year. You'll see that the majority of those updates are related to, tobacco revenue accounts. These are changes in revenue estimates that occur in our budget related to prop 56 and prop 99 tobacco revenues. And those changes primarily are impacting our center for healthy communities and our center for environmental health. And so you'll see a number of different changes related to those accounts.

We can go into those if you like later, but we also have changes related to our various estimates for WIC and genetic disease screening program. Particularly, the WIC estimate includes a $71,700,000 decrease, and this is driven by a decrease in participation projects offset by a slight increase in food inflation projections. Sorry. Participation projections offset by food inflation projections.

And then for GDSP, the estimate reflects a $3,000,000 decrease, and this is a decrease that's attributed to lower participation in our CF DNA and our neural tube defect prenatal screenings.

And then for our AIDS drug assistance program estimate, there's a couple things going on in that estimate. There's a $7,300,000 increase, and this is primarily driven by a funding extension for the funding extension for the disease intervention specialist funding that was introduced back in the 2526 budget. And then we have 60,000,000 one time from our rebate fund that includes 50,000,000 to support services for those living with and at risk of HIV, and especially for services that are impacted by the loss of federal funding.

And then an additional $10,000,000 for LGBTQ plus community centers also experiencing a loss in federal funds. There's a number of different program, investments that are made in the mayor vision as well.

Couple of them that the agenda asked us to highlight a little more specifically. One of those is what the chair mentioned in her opening remarks related to our public health information technology systems. There has been an increase related to funding for those systems, specifically a $113,300,000 that will go to support, all of our public health information technology systems. You may recall that only SAFIRE was funded at governor's budget.

Now we have funding included in the budget for SAFIRE, our California immunization registry, our vaccine management system, SAFIRE as well, and CalConnect.

We have funding to design, develop, and implement our future disease surveillance system, as well as funding that helps support core CDPH enterprise architecture. To help fund this, we were able to identify some some special fund sources as well as reappropriating general fund that we were saving in the current year that we're gonna pass to be reappropriated in the budget year to help offset some of those costs. There's an investment to go through some more of the programmatic investments.

There's an investment related to sickle cell centers of excellence. $30,000,000 general fund is included, and that's gonna be $6,000,000 a year over the next five years for CDPH to support sickle cell centers of excellence, and this will help provide treatment and health care for individuals with sickle cell disease.

Another item that we were asked to kinda do a deeper dive into was the statewide perimenopause and menopause campaign. As you know, perimenopause and menopause impact more than half the population, yet symptoms remain under recognized, under discussed, and frequently under diagnosed. To support this, CDPH is requesting a major vision increase to general fund of $3,000,000 to improve provider training and increase public awareness so more Californians can access timely evidence based support.

The funding will be used to implement a comprehensive dual audience communication strategy that addresses both consumer focused communications to help normalize perimenopause and menopause, validate lived experiences, and empower women to seek information, evaluation, and treatment, and provider focused communications to improve awareness, responsiveness, and quality of menopause related care. Let me go if you like, I can you want me to adjust and go back through the agenda item by item or I'm I may be jumping around on you.

I apologize for that.

No. You're good. You're good. Whatever you have there in front of you is perfect.

Yeah. Moving over to another investment that we had is the Los Angeles County contract extension. For years now, we've been contracting with Los Angeles County to provide health care quality inspections in the LA County area. CDPH is seeking to extend the term of that contract for one more year for one year. The extended contract in 2627 is projected to total a 148,200,000, including 16,000,000 funded by federal resources and a 132,000,000 funded by the licensing and certification program special fund.

And that's gonna be an increase of 24,200,000 for the contract extension. And this increased funding will support salary and benefit increases for LA County staff who are required to complete state licensure and federal regis certification workload on behalf of CDPH for the terms of the contract. And for the LA County area in particular, the LA County contract has facilities in the Los Angeles County area pay for services related to that contract. There's a specific fee on facilities in that area.

Moving on to the Behavioral Health Services Act state allocation, CDPH is requesting a 119,800,000 annually to build, expand, and operate a comprehensive prevention infrastructure, including statewide campaigns, training, data and evaluation systems, and direct support for local health jurisdictions, community based organizations, and tribes.

These resources will allow CDPH to establish a center for social and behavioral health, ensuring we can evaluate behavioral health as a public health priority, centralize and coordinate statewide strategies, manage grants and contracts, and lead suicide prevention efforts as required by statute. Funding also will support high impact statewide initiatives such as the new suicide prevention and nine eighty eight awareness campaigns, expansion of the Cal Hope Warm Line, stigma reduction efforts, and targeted strategies for young men and boys under the governor's executive order.

The resources will also be provided to local communities, giving counties and partners the resources to expand prevention services, strengthen coordination with Medi Cal and County behavioral health systems, and reach underserved populations. We were also asked to provide some input on trailer bill language that, we have. We have four pieces of trailer bill, in our budget as of May revision.

The first item is related to SB 669. It's technical cleanup. As you may be aware, Senate Bill 669 requires the California Department of Public Health by 07/01/2026 to establish a ten year pilot project to allow up to five critical access hospitals that meet specified eligibility requirements to provide standby perinatal services as defined.

CDPH is required to, in consultation with stakeholders, develop a template to collect and evaluate data and to report to the legislature within two years of the end of the pilot. So with this trailer bill we'll do, it's gonna be able to allow us to it's a cleanup measure that makes technical changes that will allow CDPH to more effectively implement the pilot project.

Related to the age drug assistance program, we have a piece of trailer bill that's related to disease investigation intervention rather specialists. And this trailer bill language updates health and safety code to clarify the allowable use of the AIDS drug assistance program rebate fund. The amendments explicitly authorize ADAP rebate funds to support state and local disease intervention and investigation activities and services as determined by CDPH for HIV, STIs, Pepsi, HCV or m pox, and other communicable diseases transmissible through sexual or intimate physical contact.

Another p the third piece of trailer bill that we have is related to composite distinct part SNFs, skilled nursing facilities. CDPH proposes adding statute establishing requirements for a general acute care hospital seeking to add a composite distinct part SNF to its license.

This proposal would require general acute care hospitals to demonstrate that the the composite distinct part will improve access to care and address a specific unmet need. And then finally, the last piece of trailer bill that we have is related to home health agencies' moratoriums. This proposal would authorize CDPH to establish a temporary moratorium on licensure of new home health agencies, limit changes of ownership for existing health home health agencies, and revise licensure and disclosure requirements disclosure requirements and require CDPH to update regulations.

And the purpose of the moratorium is to allow CDPH to make a thoughtful approach in revising regulations and to establish requirements for HHAs that are not that are similar to those in place for hospice agencies. I know I kind of took a high level approach to that.

If there are any items that you'd like us to dig back into, we can. Plus, we have some of our subject matter experts from the department if you have specific questions in other areas.

Thank you. No. I really appreciate it. Is there anything from DOF, LAO please?

Yes. Will Owens with the Legislative Analyst Office. So just want to kind of circle back to some of the comments my colleague made at the opening of the committee. So given the state's kinda current budget condition, our general recommendation is that proposals for new discretionary spending have a particularly high bar.

Now in cases of health and safety, the legislature may find those to be priorities. That being said, in instances where the legislature considers new discretionary proposals, we would recommend that the legislature look for dollar for dollar reductions in ongoing expenditures for those proposals, one time or ongoing expenditures for those proposals given the structural deficit. But with that, able to answer any more questions properly. Thank you.

Thank you. Is there any questions from the dais? Please, Assemblymember Bonta. Thank you.

I wanna actually just thank the DPH for reflecting, I think, in DOF some of the aspirations and hopes that we had as it related to ensuring that we had a strong public health network given this moment in time. So particularly the health information technology systems, we know need to be in place in order to be able to ensure that California can meet the moment, around infectious disease and, in healthy communities as we know.

We are dealing with a different kind of reality in terms of the way in which the CDC is stepping up in that regard.

So thank you for giving us an opportunity to, in all likelihood carry more than California in that area and very much appreciate that as well as the funding to be able to support sickle cell centers, which was a California Legislative Black Caucus priority and to be able to provide allocation of funding to make sure that we have an opportunity to look at any deleterious kind of events that happen in within our hospitals to ensure that we are offering care in an appropriate manner.

So I wanna thank you for for those and many other program elements here that align with, I think, what I've heard from my colleagues are important priorities for for them as well.

Thank you.

I'll echo those those compliments. Appreciate getting to see that something we discussed not very long ago. You've already made adjustments on, and I think it certainly leaves me optimistic. I did have one question and it's also, I think, called out in the agenda around the prop 99 funds and the effect that this could have on on can't the cancer California Cancer Registry and what the if you're cutting funds there, if so, what kind of savings we would see?

We are looking at the reductions to prop 99 that impact the cancer registry. We acknowledge there's about a $1,600,000 reduction that a result to the CCR. 720,000 will be a reduction from prop 99, and then there's an $850,000 reduction related to prop 56. And then we're currently going through a process just just assessing the impact currently.

So how will you if you're going through the process of assessing the impact, when will you have that when will you know what the impact is?

I think one of the things that we're looking at is the impact that some of this has is it trickles through federal funds that we receive for this too. So that's one of the assessments that we're making and then seeing what's left to be able to support the entire cancer registry. So that's something we're working on now and could probably have something for you and your staff, shortly either this week.

I wanna say possibly next week, but I won't need to work with Department of Finance and within the administration too.

Okay. I do think it would be important to get that information. I know that oftentimes cancer registry really can indicate other environmental factors that may be happening. I mean, there's definitely linkage, right, between pockets of where people are getting are diagnosed with cancer and it sort of can unwrap some other things for us to be able to have that data, particularly if we're talking only a $1,600,000 savings.

I don't mean that's a small amount, but in the scope of California's budget, it's a small amount to save, and we could be giving up quite a bit of important information for that.

So if we could get that information sooner than later as we go through the process to finalize the budget, it would be helpful.

Understood. We'll work with our colleagues on that.

Thank you. And then one other question on the IT is if the if are these one time are you looking at this as a one time allocation? We're gonna need to potentially rediscuss this next year and in out years how we're funding the vaccine IT programs, please.

Riley Thompson, Department of Finance. So what is proposed at May Revision is a one time investment of a $113,300,000 general fund as well or sorry. A $13,300,000 both general fund and special fund.

Got it. Thank you. I'd any other questions? No. Okay.

We will turn this over to public comment if there's anyone in the room with public comment for issue six. California Department of Public Health May revision proposals. Welcome.

Thank you. Thank you, Chair, Members. I'll start with thank you for highlighting the cancer registry. On behalf of the Public Health Institute, we are very concerned with this 1.57 or 1.6 rounded up cut to the cancer registry. This registry continues to get cut year over year, and we are very concerned about what that will mean for our federal SEER dollars that will come up for for us to apply for next year.

But we do urge you to reject this cut and then backfill it if you can. On behalf of San Francisco AIDS Foundation, APLL health, and Essential Access Health, we wanna thank the department for considering the use of the ADAPT drug assistance fund, but we would encourage this committee, the subcommittee in the legislature to look toward the slate of investments that have been put forward by the LGBTQ caucus. We support all of those, and we encourage you to support them as well. Thank you.

Greetings. Oops. Robert Gamboa with the Los Angeles LGBT Center. We appreciate including the indie epidemics proposal and the LGBTQ plus community center fund in May revise. However, we respectfully urge the legislature to untangle the LGBTQ plus community center fund from the AIDS, drugs, assistance program 60,000,000 proposal.

The community center fund is intended to be a flexible 35,000,000 general fund investment to help stabilize LGBTQ community centers responding to rapidly evolving federal threats and funding instability. Only general fund dollars provide the flexibility necessary to support the broad range services LGBTQ community centers provide across California and should not drop from HIV medication and prevention funds. Thanks.

Thank you.

Thank you, Madam Chair. Members, Cathy Senderling-Mcdonald on behalf of Public Health Advocates, a statewide nonprofit that runs the legislative creative legislative created All Children Thrive or ACT program. We're urging adoption of Trailer bill language, reauthorizing the ACT program for two calendar years at an investment of $10,000,000 general fund spread over three fiscal years to continue the program.

Today, the act has supported policy and funding wins impacting more than 2,800,000 youth and helped our partners in 31 communities secure more than $37,000,000 in additional funding well beyond what the original legislative investment was. Thanks for your consideration.

Good afternoon, Madam Chair and Members. Jack Anderson with CHIAF representing local health departments throughout the state, commenting on a few items related to public health information technology systems expressed support for the proposed $113,000,000 investment for the key public health IT systems in 2627, and appreciate this subcommittee's leadership on that item. We also expressed support for the $18,700,000 proposed investment of ADAP rebate funds for the disease intervention specialist workforce and local health departments statewide.

And then lastly, related to BHSA, expressed support for the proposed provisional language to provide CDPH BHSA funding to local health departments as direct allocations. Thank you.

Good afternoon. Beth Malinowski, the SEIU of California. On behalf of our state and county public health workers, wanna thank the state for the inclusion, the mayor vision of the public health IT infrastructure funding, and hope this can stay in the final budget. Thank you.

Bruce Palmer with the California Association of Public Health Laboratory directors in support of CDPH public information technology systems in line with CHIAC. Thank you.

Good afternoon. Glenn Backus for Drug Policy Alliance in support of the ending the epidemic's request for funding, using ADAP funding and opioid settlement funds to fund HIV, hepatitis, STI, and overdose prevention, and navigation into drug treatment and medical care. Thank you.

Thank you. Seeing no other, public comment, we'll move to issue seven, which is Department of Health Care Access and Information, and we'll welcome you, up. Please feel free to introduce yourself and start when you're ready. And then if there are any other comments from DOF or LAO, we'll take those afterwards.

Good afternoon, madam chair and members. Elizabeth Landsberg, director of HCAI, the Department of Health Care Access and Information, joined by our chief deputy director, Scott Christman. I'll go through two of the items, and then mister Christman will will cover the others. Starting with the distressed hospital grant program, the May revision proposes up to 50,000,000 for another round of state grants to hospitals in immediate and significant financial distress to help prevent the closure of those hospitals.

And I just wanna briefly talk about the data that we have available to us because there has been a lot of interest in the financial stability of hospitals, which we certainly share, and I do wanna level set on the data that HCAI receives.

HCAI receives detailed annual financial disclosure reports and less detailed quarterly financial reports. Both sets of data include utilization data by payer, balance sheet statements of changes in equity, income statements, statements of cash flows, and revenues by payer. There is a data lag. So hospitals are required to submit their quarterly financial data 45 after the conclusion of each quarter and have a thirty day extension available.

So for example, the quarter that ended May 31, quarter one of twenty twenty six, that data was due to us last Friday.

Less than hospitals have less than half of hospitals have submitted that data. So the most recent financial data we have right now is as of 12/31/2025. We do summarize data from financial reports, on our website, both by specific topic as well as longitudinal trend data by hospital annual financial, disclosure report. But I just wanna be clear that there's a limit on on the real time data that we do that we do have available to us.

I thought the committee would also be interested in an update on the AB 108 grant program passed earlier this month authorizing $25,000,000 for a distressed hospital small grant program.

As of last evening, HCAI has received 10 grant applications from hospitals indicating immediate and significant financial distress. Seven of these hospitals are existing recipients of the distressed hospital loan program, and in all the 10 hospitals are requesting a 118,500,000 in grant funding. HCAI is in the process of evaluating and scoring these applications over the next week based on severity of financial distress to follow-up with grant awards for near term financial support.

I'm gonna take out of order, and talk about the Behavioral Health Services Act, request from HCAI. So we do have a BCP for 3,200,000 in state operations funding to implement the Behavioral Health Services Act workforce initiative funding component.

These funds will support positions and contracting services to support community engagement and coordination across various stakeholder groups, research and evaluation to support individual programs as well as overall impacts of the initiative and information technology enhancements to implement and accurately track, data to track data regarding the initiative. So we have been engaging in a months long stakeholder engagement process to develop the BHSA WET or workforce education and training plan, and these resources would allow us to to implement that plan.

With that, I'll turn it over to my colleague for the remaining items.

Great. Thank you. Item two on the agenda is has to do with the diaper access initiative provisional language. This is actually a technical adjustment to correction to add identical language identical language that is included in the 2025 budget act. It was inadvertently left out when the 2627 governor's budget was released in January.

So the May revision finance letter corrects this oversight. On item number four, also technical in nature, the CalRx biosimilar insulin initiative reappropriation. The mayor vision request would reappropriate up to 18,400,000 in the 2022 budget act until 06/30/2029, extending, for time to continue the development of low cost biosimilar insulin under the CalRx program. Item number five, is, for the rural health transformation program, which we've actually discussed with this committee.

This budget request actually increased spending authority for federal funds awarded to California administered the rural health transformation program for a budget year.

So this follows a current year request for authority approved by the joint legislative budget committee. So the May revision request is to increase HCAI spending authority by a 126,400,000 one time for a total budget authority of the $233,600,000 award received by the state from CMS. Also included is provisional language for an exemption from the public contract code and authority for use of a third party administrator to meet the condensed timelines required by CMS for program implementation.

Last item six, having to do with the opioid settlement fund, reversion. The proposal asked to actually revert $19,600,000, in the 2023 budget act.

This will go to the Department of Health Care Services. This is essentially dollars that will expire if not used, and and they had been appropriated for the naloxone initiative, which we were able to essentially implement without using all of those funds. And so we're looking to revert. Happy to answer your questions.

Thank you. LAO or do you have anything?

Jason Constanturos, LAO. I wanna focus on two key issues for the legislature to consider on this item. The first really reiterates a point you've heard my colleagues make a number of times, which is around sort of new spending in the budget. As you've as you've heard us say, we have a general recommendation of, having a high bar for new spending in light of the state's fiscal constraints.

And that if there there is something that's particularly high priority to find sort of dollar for dollar reductions elsewhere in the budget to to help pay for that.

I did wanna also note though that if this particular if number one on your agenda on page 19, that's the distressed hospital grant program. If this is a high priority for the legislature, you know, the administration noted that in its summary of it that this really was meant to be a starting place and that it intends to work with the legislature. And we think there are modifications that that could be added to this. For example, there could be, more parameters that are added.

Currently, there are sort of only two parameters of sort of estimate of sort of how many how much cash you have on hand and also your sort of payer mix.

But the distressed hospital loan program had many other factors that I considered that measured community need, that also looked at other measures of financial distress. And so that we think that's an area the legislature could explore. The a lot of loan program also, required hospitals to have a turnaround plan.

We think that could be particularly helpful given that this is one time funding, Having that having sort of plans to for long term financial sustainability would sort of help ensure that the one time funding has a sort of long term impact. The other area that I wanted to touch on is just sort of overall budget solutions.

So our our office has recommended identifying more budget solutions than what's in the, on top of really what's in the May revision. And we think this could be an opportunity to revisit some initiatives that are in HCAI's, budget. For example, there there's a you can see there's a proposal on page two involving the diaper access initiative. So last year's budget did provide an additional amount of funding for this year in 26-27 of 12 and a half million for this initiative. So this isn't a new proposal of something agreed to last year.

But given the fiscal constraints in the state, that could be an example of something to look at. The sorts of things that you're that you'll see in HCAI, again, another example would be number four, the CalRx, sort of reappropriation. These are not, in the grand scheme of things, the largest and, you know, proposals will be carrying Medi Cal in a bit. Those will be much bigger, sort of spending items.

But it's the sort of things the legislature could revisit and, you know, some of these smaller actions in aggregate can can help sort of adjust sort of get to that sort of a budget solution goal. Thank you.

Thank you so much. DOF? No? No. Okay.

Any questions from members? Please. Assemblymember Bonta.

I did have just one question around the structure of this distressed hospital grant program with the 50,000,000 allocation here recognizing we just previously allocated in this, took early action on 25,000,000, and then we have an already existing distressed hospital loan program to impart to LAO's comments. There we now have three different grant programs, essentially, with three different criteria for implementing for making sure that we are following through on what the grant program is intended for.

Is can you speak to the need potentially to streamline those programs for efficiency sake?

Certainly. Thank you, Assemblymember. So just to be clear, the second, the 25,000,000 that you all just passed last week, The statute required the the less than ten days cash on hand, but we used a lot of the same criteria. So the the statutory language gave us just discretion to work with our colleagues at Department of Finance to come up with the criteria. So there are some standard ratios that we use, debt service ratio and the like.

So we did, with our application that's posted on our website, get a lot of the same information. It's true, as noted by the LAO, that we did not require a turnaround plan with the 25,000,000. Right? The first 300,000,000 is a grant program. Pardon me, is a loan a no interest loan program.

This 25,000,000 is a grant program, and we didn't require a turnaround plan for the 25,000,000, noting that it's that it's such an immediate program. But I just wanna know that we do have standard ratios and criteria that we've been using across the program.

So now we're essentially putting 75,000,000 into this grant program, not requiring across the two, the 50,000,000 and the 25,000,000, not requiring the turnaround component for

at least this 50,000,000 or at least the 25,000,000. Is it in the 50,000,000?

Yeah. Joseph Donaldson, department finance. I think it's important to kinda contextualize the difference between the distressed hospital loan program and now these per the the program that was passed in early action as well as a proposal here at May or May revise. So this current proposal that allows that augmentation up to 50,000,000. This is intended for a little bit different purpose, but also directed towards distressed hospitals.

This specific program, is intended to provide the short term bridge assistance of hospitals that are facing really, kind of immediate risk of closure rate. So I think while these programs do have the intended goal of directed towards distressed hospitals, this one has a little more of immediacy to it. But as noted, you know, with this proposal, this is a starting point for this proposal. We understand that seen as AB 108 was passed just recently.

There is obviously interest by both the legislation administration to address this.

So we're hoping that this is a starting point as we move towards the enacted budget.

Please.

I just wanted to just touch help sort of frame the issue a little bit as well. So that that 20 as the sort of administration noted, that $25,000,000 sort of early action item, as it was sort of explained, by the committee when it when it when it was sort of adopted, there were a couple of hospitals that had indicated they were, on the on on the path to closure by the end of this fiscal year.

And so that was real that was really the intent of that.

This really is a is a sort of this is a proposal that you it could be you could think of it as adding on to what what the early action is, but that doesn't that's that's not necessarily the same objective here.

This is really meant for the upcoming fiscal year. The legislature could have a have a broader focus if that's if that's a high priority for it. And we'd also emphasize that it it's it you know, the the statute does give the administration flexibility to add more parameters.

But we think it's a general generally good practice that the legislature adopts the sort of high priority parameters in the in the statute so that it ensures the the funds are being allocated as it intends.

And this, you know, we the states now implemented the loan program. It's now implementing the grant program. Presumably, there are lessons learned here that the legislature could use to to sort of add a little more specificity on the parameters.

Yeah. Thank you. I would I I would agree wholeheartedly with LAO's comments. I think that we've had an opportunity to have this loan program in place. It's been very beneficial to distressed hospitals.

We know that as as the director indicated, seven of the existing recipients for that loan program are part of the 25,000,000, the AB 108, grant program. And presumably, you know, '17 or the, you know, the others that are in there will would be reapplying.

So I'm kinda I'm trying to hold the idea that we are in a crisis moment for sure where our hospitals, because of, HR 1 and our own choices related to how we are funding Medi Cal, are going to not have the resources that they need in order to be able to address this their stability over a long period of time when especially in these hospitals, many of them have very high Medi Cal Payer Mixes, disproportionately high payer mix.

So we're kind of sitting with that, recognizing that these hospitals are going to be in additional distress over time and also recognizing that we did require with the initial with the initial loan program a turnaround plan. And we're kind of seeming to bypass the turnaround plan component of this when we keep on funding without through grant, through these additional grant programs without kind of making sure that we're aligning ourselves with the requirements that we put in the loan program.

So those are, I think, obviously incredibly important to fund, but I would like to see a more streamlined and more coherent approach across all three programs so that we know as a legislature whether or not we are on track to make sure that we're addressing the structural concerns of these hospitals.

Thank you. Thank you, Assemblymember Bonta. I have a couple questions on this. The first is, are you saying and maybe you could clarify. Are you saying it's quicker to get money to these hospitals by giving them a grant instead of a loan? And if so, why is that?

It is somewhat quicker to to do it through a grant program. So the original distressed hospital loan program, we were partnering with CHFFA under the under the treasurer's office. And so we sort of had two sets of processes we were going through. And so that that does streamline things to some extent. Are there other

No. I think that's it. It's it's not unlike getting a loan where you're going through a loan processor, and there's there's quite a bit of review and and and approval. So the the grant can can be expedited, and we'll be administering that directly from HCAI.

And is it months, weeks, days? What's the timing difference?

I'm incredibly proud of my team who who put up an application, two days after the governor signed, the bill, and we gave hospitals a week. We got the 10 hospitals, and we plan to have recommended grants by next week.

Compared to what time frame on loans?

It was a six week process. And and even that admittedly is sort of a a you know, it's a shared responsibility. Like, that was a strain on hospitals to put together all the financial documentation in six weeks time. So to do it in a week time was was herculean and we're we're still working through, those pieces. But, yeah, we're proud to get the grant pieces in and, again, it's just as much lighter lift than a loan.

And then those seven that applied for the grant, they do have the turnaround plan because they had applied for the loan. And then how many more don't have a turnaround plan?

That's right. So every hospital that received a distressed hospital loan did submit a turnaround plan, and we do get updates from them. So we do have those for for the seven, and the other three aren't required. It's certainly so it we hear the legislature, and it could be something that we could add if the budget continues to include a 50,000,000 or some other grant program moving forward.

What we do ask for is an operating budget against the grants. So how the grant funds can be used to maintain operations and keep the doors open over the next, you know, twelve weeks.

I guess that what I was wondering is could you get a turnaround plan after you give I certainly understand the, the vital nature of getting funds out quickly, and it's something I've commented on from the diocese. How frustrating it is for the public when we set up a program and we cannot get them the money out the door that we promised that we were putting in the budget. So I get the the need for immediacy.

One thing I'm wondering though is could you not in this next round even if there's an immediate need to get the 50,000,000 to these hospitals, if we approve all of that, could you not ask for a turnaround plan within x amount of time after that money has been allocated. So at least we could keep tabs on what's happening.

Certainly, with a new grant program, we could request turnaround plans. And for those that have applied, if we make them a grant award I mean, I just wanna our finance deputy works closely with those hospitals, and we are tracking the elements of a turnaround plan with them.

Okay. I I just I think from a transparency perspective and for the public if this has turned from a loan that we're hoping to recoup as a state to tax dollars going to Help hospitals stay open, which we want and need for the transparency for the public to understand that they're yes. We're not gonna keep giving grants indefinitely. These hospitals do have plans. It sounded like last time we heard this issue, there's some success for a finite number of hospitals in their turnaround plans by starting to expand services.

That was a happy moment in our hearing, I would say, particularly around maternity words, and we would wanna see that more hospitals are starting to, do the that kind of planning if tax dollars are being used. The other question I know it's come up before is, how the 25,000,000 that that's already allocated. We voted on that, but that's compared to a 118,000,000 requested. So now this 50,000,000, how did you get to that figure compared to what we assume is that probably doesn't meet the need.

And I think I've heard from public hospitals have said the gap is more like 300,000,000 or, excuse me, distressed hospital, public hospital. Like, does that make sense?

Yeah. Joseph Donaldson Department of Finance. So, you know, this figure included for, May revise for this proposal, as we've noted, is a starting point. We acknowledge that, you know, the need might might be greater than what this in this proposal.

You know, as as noted, we're you know, the language is a starting point to provide either, you know, feedback from the legislature of what, new parameters, you might wanna see. But, you know, this proposal just reflects kind of that, importance of addressing this issue and that really immediacy related to distressed hospitals. So, you know, to the extent that the legislature has, you know, any, you know, has any questions, you know, we can engage with that level of technical assistance.

I saw LAO looking this direction. Didn't know if there's another comment. I appreciate that. I do think that there's widespread agreement that we don't want any more hospital closures, whether they're distressed or other hospitals in California. And then my other question, and I know you shared the timeline with us in the prior hearing on the rural health transformation program, but I've still continue to receive questions on what's happening with that program.

So if you could just remind us briefly, the parameters, the timing, what's happening, where that money is going.

Yeah. Absolutely. Absolutely. I mean, we're happy. we've sort of built our capacity.

We have, you know, both state staff, built working as well as professional services consulting on the work. So design is happening right now across the three initiatives, the transformative care model, rural workforce development, and technology and tools. So I would expect to see, you know, in in early summer, there will be released, request for applications, to actually apply for a set of grant programs across those three areas. So that work's happening now, and we're we're on we're on track to start launching those in the summer.

We've done another stakeholder webinar since we last spoke. And again, with that, we believe there's enough lead time to to take in applications, review score, award, get through the review process and approvals, and have that first tranche of dollars committed or obligated by October 30 this year. So it's, it's in, it's underway.

Okay. Thank you. That's helpful. And and just as a reminder, this is non duplicative money, of the public hospitals of the I'm mixing up my terms.

It's great.

Of the distressed hospital loan and grant program monies.

You're spot on. We had the conversation. So we've been very deliberate with CMS that the what we're calling the transformative payments for rural health, those who go to hospitals that are not necessarily meeting criteria for distress and not intended to. Those will be investments in rural health transformation that sort of serve the goals directly of the CMS program. That sort of makes sense.

Perfect. Perfect. Thank you. And separately, because I know I'm mixing up terms here. Just to clarify for the public.

Sure.

This is all about distressed hospitals, loans and grants, the rural transformation, the public hospitals are totally separate. I know I wove that in, but totally separate conversation. So thank you for that. Thank you. I don't have any more questions.

It looks like no more from the diocese or any public comment for this item. Department of health care access and information budget change proposal or May revision proposal. Welcome.

Good afternoon, madam chair, members. Mark Farouk on behalf of the California Hospital Association. Just wanna acknowledge the inclusion of the 50,000,000 in the grant program as an initial first step. I think the discussion here this afternoon revealed the scope of the need given the number of applications and the dollar amount of the applications for that first 25,000,000 that was previously appropriated in AB 108.

Just wanted to say that CHA, we continue to support, assembly member Soria's request for an additional 300,000,000 in funding for distressed hospitals. Thank you.

Good afternoon, madam chair. Connie Delgado on behalf of the District Hospital Leadership Forum. These are the 33 district and municipal hospitals here today in support of the 50,000,000 for distressed hospitals. As an illustration, our members were nine of them were the recipients of the original loan program. There were 16 in total, which really illustrates the ongoing need that these hospitals face every day and financially making sure that they stay viable and to support the members in their community.

We also want to, support HCAI's efforts on the rural transformation program as they work to implement this with district hospitals. Thank you very much.

Good afternoon. Erin Norwood on behalf of Madera Community Hospital, also in support of the 50,000,000 additional funding. Appreciate the legislature passing the initial 25,000,000, and we have applied for that. But, obviously, it's been discussed here. That is a drop in the bucket, and we're very supportive of the additional funding. Appreciate it. Thank you.

Thank you. Vanessa Cajina on behalf of OCHIN here in appreciation of, HCAI's partnership on the rural health transformation grants and then on behalf of vision y compromiso, the statewide network of promotoras and community health workers for our partnership with them on pillar one and assembly member Celeste Rodriguez's budget request for $30,000,000 to continue that work. Thank you.

Thank you. Seeing no other public comment, we are gonna move on. Alright. We're moving on to issue eight on covered California. We're gonna hear about the May revision proposals and, the health care affordability reserve fund.

So May revision proposals for Covered California and the health care affordability reserve fund. And welcome, and feel free to begin and introduce yourself when you're ready.

Alright. So good afternoon. My name is Angel Alonso Coronet with the Department of Finance. We're also here joined by today by my colleagues at the Covered California. I'll be presenting today the three proposals included in the May revision.

The May revision includes 26,800,000 from the health care affordability reserve fund in 2026, '27, and 13,400,000 in from the health care affordability reserve fund in 2027, '28, and ongoing to augment the gender affirming care program. This reflects an increase of 13,400,000 compared to the governor's budget, which included 15,000,000. The augmentation aligns with available program funding with updated costs reported by health plans.

The 2026, '27 amount is higher than the ongoing amount because it provides an increase in funding, for two coverage years, coverage year 2026 and coverage year 2027. Ongoing years augment a single, coverage year.

The program design, eligibility, and cover services remain unchanged, and Covered California would continue to refine projections using cost submissions from the June 2026 rate negotiations and thereforth. I can move on to the next proposal. Yep. Okay. Perfect.

Moving on to the next proposal, the $1 premium subsidy program. The May revision, proposes shifting the $1 premium subsidy program from the general fund to the health care affordability reserve fund with 20,350,000 in 2026, '27, and ongoing. This proposal will will maintain the program in full. It supports access to reproductive health services for Covered California enrollees. This shift will accomplish two things, provides approximately 20,350,000 in ongoing general fund savings in a constrained fiscal year, and it also maintained the program without any changes to enrollee experience.

And I can move on to the third proposal. We have the state premium subsidy program. So the May revision proposes augmenting the state premium subsidy program by 110,000,000 from the health care affordability reserve fund in 2026, '27, and ongoing, bringing total program funding to 300,000,000 compared to the governor's budget, which included 190,000,000. This augmentation will expand eligibility from 165% of the federal poverty level to now 200% of the federal poverty level beginning in the 2027, coverage year.

The projected impact includes over 200 additional 200,000 additional Californians usually eligible for a state premium subsidy.

This brings total enrollees receiving a state subsidy to over 500,000 in plan year 2027 compared to over 200,000 in plan year 2026. What this augmentation would do for enrollees is up for those up to 150% of the federal poverty level will continue to have access to $0 premium plans, enrollees between 150 and 165% of the federal party level will receive a more generous subsidy in plan year 2027. Last but not least, enrollees between 165 and 200% of the federal product level will now be newly eligible for state premium subsidies.

This concludes my presentation. We, alongside with with my colleagues from Covered California, are here to respond to any questions from the members.

Thank you. Is there anything from LAO? Any questions from the dais? No. I have a question, around HCARF funds and what's the dollar amount in HCARF that will be left if we approve all these proposals?

Yeah. So the projected ending fund balance for 2026, '27 is approximately 230,900,000.

That's what will be left

That's correct.

in HCARF. And is that including the loan repayment?

Correct.

Okay. So there used to be close to 1,000,000,000 in that fund. Much of it was left lent to the general fund, I understand. I'll say maybe over over half a mill over over half 1,000,000,000. I'll call it close to to 1,000,000,000.

Maybe it was more like 600,000,000.

Yeah. Joseph Donald's Department of Finance. So I think it's important to remember that with the revenues from this this special fund, it's kind of twofold. You have the one time, repayments from the general fund. You know, we have the it's I think it's the tune of over 700,000,000 that we spread out over, about three years.

And then we have the revenue coming in from the ISRP. Flagging that that, obviously, that revenue source is a bit unpredictable given, obviously, with the changes now with federal HR 1. As my colleague noted, we're projecting that with the proposals and the May revise both with the $1 subsidy, the state subsidy program, as well as the augmentations to gender affirming care and other existing programs, there would still be a balance of 230,000,000.

And then what what's the plan for that money? Why leave that why leave that money just sitting there?

So I think with this program, you know, we addressed we understood the need to kind of understand how we could use this to address the population in terms of affordability. But I think there's also a need to Kinda temper that with sustainability. With this program augmentation to the state subsidy program, we felt that this would provide that added affordability assistance in a way that's still sustainable if the, ISRP revenues experience volatility.

You know, given, kind of uncertainty, this kind of HR 1 and everything else affecting the state budget, we wanted to put forth a prudent proposal that would be sustainable over several years rather than create a proposal that may not be sustainable if revenues, you know, adjust, you know, differently in the out years.

What's the portion now of the ISRP versus the state loan repayment? Isn't the state loan repayment closer to in the 2 hundreds?

I believe this year, there will be a repayment. I'll defer to my colleague to correct me, but I think this year, there is about a repayment of about 200,000,000 this year.

Isn't that year of I mean, we have a couple years of that happening. Correct? Not just this year. It'll be next year.

It's over a three year period. But

So couldn't we be able to count on 200,000,000 for the next three years coming into this fund?

We can count those dollars. I think for you know, in terms of developing the program, we still wanna be cognizant of outside of past those one time loan repayments. That revenue stream kind of is exhausted. Then it's just fully relying on ISRP revenue. So the the real goal of this is just trying to create a sustainable of a program as possible.

But to the extent that the legislature has additional feedback, we're happy to have those conversations.

I asked the question just because of this push and pull between looking at dollars on a page and then looking at real people who are who didn't get the health care subsidies from Congress, looking at real programs that we have to make very challenging decisions about that are real people's lives. And when you see 230,000,000 sitting in account that is, you know, planning for a future. I understand wanting to be and needing to be good fiscal sponsors.

That's what we're here for is to steward the taxpayers' dollars. But I also know that this program has a couple 100,000,000 that's supposed to come into it over the next three years, that there should be some surety around that.

And I do think there's folks that are wondering, you know, why not more into the subsidies or more into, you know, a different program if that would make, you know? Yeah. Thank you. Thank you. I don't have any other questions on this.

We'll move to public comment for issue eight Covered California and the health care affordability reserve fund may revision proposals. And if you can state your name, organization, and tell us your position in thirty seconds, we'd be grateful.

Good aft good evening. Whitney Francis with the Western Center on Law and Poverty. We support the increase in funding to expand the state premium subsidy program, which will support people under 200% of the federal poverty level to afford and maintain health coverage. We also support the gender affirming care augmentation, but additional investment is still needed to protect access to medically necessary health care for transgender youth. Thank you.

Good afternoon. Michelle Johnston, director of advocacy and policy with the National Multiple Sclerosis Society. We support the governor's efforts to mitigate the harms of federal legislation by proposing a $110,000,000 increase to the health care affordability reserve fund. Most individuals with MS are diagnosed in their twenties to forties when they're getting established in their careers. Without adequate medical and prescription drug coverage, managing this disease becomes financially impossible for many individuals.