ITUP Blog: California’s Final 2021-22 Budget

August 18, 2021

By Marissa Kraynak, Mary Nguyen, and Sandra Hernandez

California’s Final 2021-22 Budget

On June 29, 2021, Governor Newsom signed the Budget Act of Fiscal Year (FY) 2021-2022 into law following negotiations with the Legislature. The record-breaking state budget fueled by a $76 billion state surplus and $27 billion in federal aid, totaled $262.6 billion and includes $196 billion in General Fund (GF) spending. Total health and human services spending for FY 2021-22 totals $209.9 billion ($57.3 billion GF; $152.6 billion other funds). Key health care highlights from the budget include support to the states ongoing COVID-19 pandemic response and recovery efforts, efforts to increase access to health care across the state, and funds to support health care delivery system transformation.

This ITUP blog summarizes the 2021-2022 Budget Act and is the third in ITUP’s Budget Blog series in addition to Budget Updates—Governor’s 2021-22 Budget Proposal: Key Highlights and Key Highlights in the Governor’s May Revision.

Here are quick links to the:

Budget Bill (Budget Act of 2021, referred to as ‘the budget’): Assembly Bill (AB) 128, Chapter 21, Statutes of 2021.
Budget Bill Jr. (these are supplemental budget bills, in addition to AB 128): Senate Bill (SB) 129, Chapter 69, Statutes of 2021.
Health Trailer Bill: AB 133, Chapter 43, Statutes of 2021.
Human Services Trailer Bill(s): AB 135, Chapter 85, Statutes of 2021 and AB 153, Chapter 86, Statutes of 2021.

Key Highlights from the Final FY 2021-22 California State Budget

1. Continued COVID-19 Pandemic Response and Recovery

Economic Recovery and Direct Assistance for Californians: The COVID-19 pandemic and the resulting recession caused California’s unemployment rate to increase from a low of 4.3 percent in February 2020 to a record high of 16.0 percent in April 2020. The pandemic also exacerbated underemployment, which averaged 17.1 percent in 2020, over twice as high as the 2019 annual average rate of 8.3 percent.[i] As of March 2021, California has added back 1.2 million jobs—43.7 percent of the 2.7 million jobs lost in March and April 2020. Almost half of all jobs in leisure and hospitality, a low-wage sector, were lost; higher-wage sectors such as professional and business services largely shifted to working from home.

- The budget includes a second round of Golden State Stimulus payments for Californians including $8.1 billion in direct aid for taxpayers and their families that make up to $75,000 annually and did not receive a stimulus earlier this year.[ii] The consumers impacted by this proposal are:
  - Low- to Middle-Income Californians will receive a one-time $600 direct payment if they did not already receive a Golden State Stimulus. These direct payments are expected to go to 9.4 million tax filers and cost about $5.6 billion.
- Families with dependents may receive an additional $500 one-time stimulus payment. This stimulus is expected to cost $2.2 billion dollars and go to 4.3 million tax filers.
- Undocumented Families, ITIN taxpayers, may receive a $500 one-time stimulus payment. This stimulus is expected to reach 520,000 undocumented families and cost $260 million. Undocumented families are eligible for the “Families” stimulus as well, so they may receive up to $1,000.

Continued COVID-19 Response and Recovery: The budget includes $12.4 billion related to the COVID-19 response which includes expenses across different state departments and agencies. For more information, including charts of pandemic spending, see the Budget Summary: COVID-19 Pandemic Response and Federal Assistance. To view the most up-to-date statewide and county COVID-19 statistics, visit COVID19.ca.gov.

Vaccine Distribution: Over 45 million doses have been administered in California as of August 13th.[iii] Currently, all Californians ages 12 and older are eligible to receive the vaccine. In the American Rescue Plan Act (ARPA), the federal government assumed all responsibility to cover vaccine administration cost for Medi-Cal members beginning April 1, 2021.[iv For more information, visit the Governor’s Vaccinate ALL 58 page and “Vax for the Win” Vaccine Incentive Program page.

Pandemic Response Review: The budget includes a one-time allocation of $3 million GF for the California Department of Public Health to assess the state’s public health and emergency response to the pandemic.[v]

Support for Public Hospitals and Health Systems Recovery: The budget includes a one-time allocation of $300 million GF to support grants to assist public health care systems in covering costs associated with critical care delivery needs provided during and beyond the pandemic.[v]

2. Medi-Cal Program and Covered California—Expanding Health Care Coverage and Enrollment Services

The state’s Medicaid program, Medi-Cal, is administered by the Department of Health Care Services (DHCS). The FY 2021-22 budget includes a Medi-Cal budget of $115.6 billion ($21.5 billion GF) in 2020-21 and $123.8 billion ($27.6 billion GF) in FY 2021-22.[v]

Impact of Increased Enrollment in Medi-Cal: The budget assumes that the Medi-Cal caseload will increase by 7.1 percent from FY 2019-20 to FY 2020-21 (assuming 13.6 million members) and increase by 6.6 percent from FY 2020-21 to FY 2021-22. In FY 2021-22, the Medi-Cal program is projected to cover about one-third of the state’s population or about 14.5 million Californians. The budget estimates the associated cost of the increase in Medi-Cal caseload to be $4.2 billion total funds ($1.1 billion GF) in FY 2020-21 and $9.4 billion total funds ($2.5 billion GF) in FY 2021-22.[v]

Expansion of Medi-Cal Eligibility to Seniors Aged 50 Years and Over Regardless of Immigration Status: Effective May 1, 2022, the final budget includes $67.3 million ($48 million GF) in 2021-22 and an ongoing $1.5 billion ($1.3 billion GF) to expand full-scope Medi-Cal, including In-Home Supportive Services to undocumented adults aged 50 years and older.[v][vi]

Medi-Cal Asset Test Removal: The FY 2021-22 budget includes $394 million ($197 million GF) in 2022-23 and ongoing to increase the Medi-Cal asset limit to $130,000 for an individual (plus $65,000 for each additional household member) no sooner than July 1, 2022. The budget also plans to fully eliminate the Medi-Cal asset test no sooner than January 1, 2024.[v][vi] Elimination of the asset test can result in nearly 18,000 people that will be newly eligible for Medi-Cal.[vii]

Covered California and New Federal ARPA Subsidies: The 2019 Budget Act included historic subsidies to help more low- and middle-income Californians afford health coverage through Covered California, and created an individual mandate that requires Californians to obtain comprehensive health care coverage or pay a penalty. For FY 2020-21 and FY 2021-22, ARPA provides more generous coverage subsidies than the current state subsidy program, effectively eliminating the need for state subsidies. The budget assumes General Fund savings totaling $732.7 million over FY 2020-21 and FY 2021-22 combined, due to new federal subsidy levels replacing the state subsidy program.[viii]

3. Medi-Cal and Social Services—CalAIM Updated and New Benefits Available to Consumers

California Advancing and Innovating Medi-Cal (CalAIM) Implementation: Effective January 1, 2022, the budget includes $1.6 billion total funds ($650.7 million GF) for FY 2021-22, and increases costs to $1.5 billion total funds ($812.5 million GF) by FY 2022-24. The budget projects a decrease of $900 million ($480 million GF) in 2024-25 and ongoing.[vi] CalAIM, which builds upon demonstration programs such as Whole Person Care and the Health Homes Program, will identify and manage member risks while focusing on whole person care, population health management, behavioral health addressing the social determinants of health, and make Medi-Cal less complex while increasing flexibility within the program. For more information on the CalAIM proposal, visit ITUP’s blog, CalAIM Summary and Timeline, and ITUP’s CalAIM Essentials Brief.

Key components of the CalAIM proposal are included in the final budget updated in the May Revision and approved by the state Legislature, including:

Medi-Cal Population Health Management System: This new data system will support DHCS, managed care plans, counties, and providers in delivering care to Medi-Cal members. The budget includes one-time $315 million total funds ($31.5 million GF) for population health management services to centralize administrative and clinical data from DHCS, health plans, and providers.[vi]
Providing Access and Transforming Health (PATH): The budget includes one-time $200 million total funds ($100 million GF) to support justice-involved individuals in their transition back into their communities 30 days prior to release.[vi]
Medically Tailored Meals Pilot Program Augmentation: The budget includes $9.3 million GF in FY 2020-21 (funding to include coverage until this benefit is available through CalAIM) and $10.6 million GF in FY 2021-22 in one-time budget allocations to provide tailored meal intervention services available through the Pilot program to a broader population.[vi] This program serves three tailored meals per day for 12 weeks to 1,000 eligible Medi-Cal members with congestive heart failure. For more information on individual pilot counties, see here.

Continuous Glucose Monitoring: Effective January 1, 2022, the budget includes $10.9 million ($3.8 million GF and $7.1 million federal funds) to add continuous glucose monitoring systems as a Medi-Cal benefit for beneficiaries with Type 1 diabetes who demonstrate medical necessity.[v] Diabetes is a condition that disproportionately affects communities of color. In California, diabetes prevalence is highest in Black (14.4 percent) and Latinx (12.4 percent) communities. Nationwide data shows an even higher diabetes rate in Native communities (16.4 percent); the prevalence of diabetes in the general California population is 10.1 percent. Continuous glucose monitors improve diabetes management and outcomes, subsequently improving quality of health care and life.

Telehealth: The budget includes $151.1 million ($53.3 million GF) in FY 2021-22 to extend the public health emergency telehealth flexibilities through December 31, 2022, pending recommendations for the ongoing use of telehealth in Medi-Cal. The permitted flexibilities include payment parity for audio only and remote patient monitoring. The budget also includes $106.4 million ($37.3 million GF) for ongoing remote patient monitoring.[vi] Initially, these flexibilities were set to expire with the declared public health emergency. The budget also authorizes remote patient monitoring as a telehealth modality. See ITUP’s Telehealth Fact Sheet for more information on telehealth during the COVID-19 pandemic.

Doula Benefits for Medi-Cal Members: The budget includes $403,000 total funds ($147,000 GF) in FY 2021-22 to add doula services as a preventive benefit in Medi-Cal, effective January 1, 2022.[v][vi] Doulas provide emotional and physical support during pregnancy and postpartum and have been linked to better health outcomes and birth experiences.[ix]

Access to Community Health Workers (CHWs): The budget includes $16.3 million total funds ($6.2 million GF) in FY 2021-22 to add Community Health Workers (CHWs) to the authorized list of skilled and trained individuals who can provide clinically appropriate Medi-Cal covered benefits and services.[vi] At the 2020-21 ITUP Regional Workgroups across the state, ITUP has repeatedly heard that CHWs are an effective and needed part of the health care delivery system because they bridge gaps in communications and reach vulnerable communities to reduce health disparities.

Dyadic Services Benefit in Medi-Cal: The final budget for FY 2021-22 includes $800 million total funds ($400 million GF) for a new statewide benefit that provides integrated physical and behavioral health screening and services to families.[v]

Proposition 56 Supplemental Payment Programs: The final budget for FY 2021-22 eliminates the suspensions for Proposition 56 supplemental payment increases and includes an increase of $2 million one-time additional funds for the Loan Repayment Program.[v]

CalWORKs Grant Increase: Beginning October 1, 2021, the budget includes the Governor’s May Revision proposal and reflects a 5.3-percent increase to California Work Opportunity and Responsibility to Kids (CalWORKs) Maximum Aid Payment levels, which is estimated to cost $142.9 million in FY 2021-22.[vi] These increased grant costs are funded entirely by the Child Poverty and Family Supplemental Support Subaccounts of the Local Revenue Fund. CalWORKs families are eligible for Medi-Cal.

In-Home Support Services (IHSS): The budget eliminates and permanently appeals the IHSS 7 percent reduction in service hours resulting in costs of $248 million GF in FY 2022-23 and $496 million ongoing GF.[vi] Average monthly caseload in this program is estimated to be 590,293 recipients in FY 2021-22; IHSS is administered by the Department of Social Services, it is considered a Medi-Cal benefit.

4. Health Care Affordability, Health Information Exchange, Children’s Behavioral Health, and the Master Plan for Aging

OSHPD Reorganization: The final budget includes $4.9 million ($116,000 GF savings) in FY 2021-22 and $2.4 million ($204,000 GF savings) in FY 2022-23 and ongoing to recast and rename the Office of Statewide Health Planning and Development (OSHPD) to the “Department of Health Care Access and Information” (HCAI). This department would focus on the safety of health care facilities, increasing the health care workforce, improving the affordability and quality of health care, and financing health facilities. The renaming of the office also reflects the recent addition of administering the Health Care Payments Database and the proposed Office of Health Care Affordability.[vi]

Children and Youth Behavioral Health Initiative: The budget includes a $4.4 billion dollar investment over four years to transform California’s behavioral health system for children and youth ages 0 to 25.[v][vi] This initiative includes the following to transform California’s behavioral health system for children and youth:

Services developed under the Initiative will be provided to children and youth aged 25 years and younger, available statewide (in both commercial plans and Medi-Cal), and will be evidence-based, culturally competent, and equity-focused.
Services will address a broad and complex range of issues affecting mental and emotional well-being, including alcohol and other substance use, stress, trauma, grief, anxiety, and psychological disorders. A virtual platform will connect children and youth to these services 24 hours a day, seven days a week.

The Initiative includes resources for DHCS to: implement a virtual platform to integrate behavioral health services with screening, clinic-based care, and app-based support services; provide grants to qualified entities to increase behavioral health services at or affiliated with schools; develop and expand age-appropriate evidence-based programs offered through plans as well as the CalHOPE Student Support Program; provide funds for behavioral health workforce initiatives at OSHPD; provide funds to support mobile behavioral health crisis teams; provide dedicated funds from the Behavioral Health Continuum Infrastructure Program to build infrastructure targeted at individuals aged 25 years and younger; and, provide Medi-Cal dyadic service benefits.

Partnerships to Increase Student Access to Behavioral Health Services: The budget shows a significant investment in behavioral health services for youth in schools. In particular, $205 million is set aside for the Mental Health Service Act to fund incentive programs through Medi-Cal in coordination with county behavioral health departments and schools, to build infrastructure, partnerships, and capacity statewide to increase the number of students receiving preventive and early intervention behavioral health services from schools, providers in schools, or school-based health centers.[v][vi]

Mitigating and Preventing Adverse Childhood Experiences (ACEs): The budget includes $12.4 million one-time GF for the California Initiative to Advance Precision Medicine within the Office of Planning and Research to develop seven demonstration projects focused on advancing research on, and building scalable approaches to treating and preventing ACEs. An additional, one-time allocation of $25 million GF is included in the FY 2021-22 budget to support All Children Thrive, a statewide initiative that supports efforts to mitigate the disparate effects of ACEs on California children.[v]

Implementation of the Master Plan for Aging: California’s over-65 population is projected to grow to 8.5 million (20 percent of the population) by 2030. To serve the growing aging population better and more equitably in California, Governor Newsom released a Master Plan for Aging blueprint on January 6, 2021. Throughout the pandemic, nearly 80 percent of COVID-19 related deaths were age 65 or older.[viii]

Master Plan for Aging Implementation: The budget includes $3.3 million GF ongoing to provide the Department of Aging with policy, project management, and information technology leadership necessary to implement the Master Plan for Aging.[v]
Establishing New DHCS Office of Medicare Innovation and Integration: Includes $602,000 ($452,000 GF) in FY 2021-22 and $566,000 ($425,000 GF) in FY 2022-23 to provide DHCS focused leadership and expertise to lead innovative models for Medicare beneficiaries in California, including both Medicare-only beneficiaries and individuals dually eligible for Medicare and Medi-Cal.[v][vi] For more information on programs available in California to promote healthy living for older Californians, see ITUP’s Medicare and Health for Aging Californians.
Older Adult Recovery and Resiliency: To address the physical and mental health impacts from the COVID-19 imposed isolation, particularly on older Californians, the May Revision includes $106 million GF over three years to increase services of existing programs including Senior Nutrition, Senior Legal Aid, Home Modifications and Fall Risk, Behavioral Health Friendship Line, and more.[vi]
CalFresh Expansion Older Adult Outreach: The budget includes $2 million ($1.1 million GF) ongoing for the Department of Aging to continue CalFresh Expansion outreach efforts to older adults.[vi]
Housing and Disability Advocacy Program: Modified from the May Revision, the budget includes $150 million GF annually through FY 2023-24 to assist disabled individuals who are experiencing homelessness. These funds will be available for use through June 30, 2024.[vi]
Community Care Expansion Program: Modified from the May Revision’s proposal, the budget includes one-time, first-year funding of $805 million in 2021-22 for the construction, acquisition and/or rehabilitation of adults and seniors in care facilities who are homeless or at risk of becoming homeless, and will further stabilize these facilities with physical upgrades and capital improvements.[vi]

5. Advancing Health Equity and Address the Social Determinants of Health—Housing, Homelessness, Food Security and Broadband

Housing and Homelessness: The budget for FY 2021-22 includes $12 billion over two years ($7.3 billion in FY 2021-22 and an additional $4.7 billion in FY 2022-23) in state and federal funds to address homelessness.[x]

Housing Children and Families: Reduced from the May Revision proposal, the final budget includes $190 million GF in both FY 2021-22 and FY 2022-23 to support vulnerable families through the CalWORKs Housing Support Program, and $92.5 million GF in both FY 2021-22 and FY 2022-23 for the existing Bringing Families Home Program to provide housing-related supports to families in the child welfare system. The funds for both programs will be available until June 30, 2024.[v]
Homekey Program Continuation: The budget includes $2.75 billion in one-time funds over two years to continue acquiring and rehabbing facilities for the Homekey Program.[vi]
Examples of Other Proposed Housing Supports Programs:
- $80 million over three years for community-based organizations to receive legal assistance grants through the Judicial Council for eviction and foreclosure counseling.[x]
- $100 million one-time federal ARPA funds in FY 2021-22 for California Housing Finance Agency (CalHFA) to expand its First-Time Homebuyer Assistance Program, which helps first-time homebuyers with making a down payment, securing a loan, and paying closing costs on a home.[x]

$80 million one-time GF for the development, maintenance, and preservation of farmworker housing including $50 million for farmworker housing through the Joe Serna Program[v], and $30 million for critical deferred maintenance needs and improved habitability at the Office of Migrant Services (OMS) centers.[x] The state’s OMS Centers provide affordable, seasonal rental housing near work locations for migrant farmworkers, a group disproportionately impacted by the pandemic.

Addressing Food Insecurity: The budget provides substantial investment in addressing food insecurity through support of food banks. It includes $110 million one-time GF to help food banks address the overwhelming need brought on by the COVID-19 pandemic and operate in the 2021- 22 fiscal year. The budget also includes $5 million GF in FY 2021-22 in supports of the “Food for All” initiative, expanding the California Food Assistance Program (CFAP) to provide state-funded nutrition benefits to those ineligible for CalFresh or the current CFAP solely due to immigration status.[vi]

Expanding Broadband Access: The budget includes a historic $6 billion (decreased from May Revision’s $7 billion proposal) to develop equitable, affordable, statewide access to high-speed internet service through investments in middle mile and last mile service (both critical components of broadband infrastructure, see ITUP publication linked below for definitions).[i] Today, approximately 83.4 percent of Californians are using broadband at any speed, but only 52.4 percent of Californians, including rural, urban, and tribal communities, are using broadband at the modern benchmark speed of 100 megabits per second (Mbps). Service at speeds below 100 Mbps is not enough for households who are juggling the demands of distance learning, telework, and accessing telehealth. See ITUP’s Broadband and Health Basics Fact Sheet for more information about broadband.

Details of the allocations for broadband access were adopted in the trailer bill, SB 156, signed by the Governor in July 2021 include:

$3.25 billion federal American Rescue Plan Act (ARPA) funds for the construction of an open-access broadband middle mile in FY 2021-22.
$2 billion ($928 million GF and $1.1 billion federal ARPA) for last mile funding ($1.1 billion FY 2021-22; $125 million FY 2022-23; $803 million FY 2023-24).
$750 million GF to create a Loan Loss Reserve Account within the California Advanced Services Fund to help secure financing for locally-owned broadband projects sponsored by counties, municipalities, and tribes.