ITUP Blog: Governor’s FY 2024-25 Budget: Key Highlights in the May Revision

May 17, 2024

Governor’s FY 2024-25 Budget: Key Highlights in the May Revision

On May 10, 2024, Governor Newsom released the May Revision (May Revise) of the Fiscal Year (FY) 2024-25 budget which estimates that California is facing a total budget deficit of $27.6 billion.[i] Read ITUP’s full statement on the May Revision of California’s FY 2024-25 Budget here.

Below we highlight key health and human services proposals in the FY 2024-25 May Revise that maintain and provide access to coverage for Californians. In addition, we describe key health and human services reductions that would hinder and interfere with efforts to improve health outcomes and health equity for Californians, especially communities of color and people with disabilities.

Budget Items that Maintain Coverage and Provide Access to Coverage for Californians

Medi-Cal Expansion, Regardless of Immigration Status: The May Revise maintains funding for the Medi-Cal Expansion, regardless of immigration status. This expansion will provide coverage to an expected 764,000 adult enrollees.[ii] In addition, it includes $9.7 billion in revenue from the Managed Care Organization (MCO) tax to support Medi-Cal.[i]

Middle Mile Broadband Initiative (MMBI): The MMBI is an important initiative that would allow more Californians to access telehealth. The May Revise proposes allowing the Director of Finance to increase funding to the MMBI by $1.5 billion or 38.5%.[i] Currently, the MMBI has $3.9 billion in funding.[i]

Budget Reductions, Delays, and Pauses That Pose a Threat to Health Equity for Californians

Behavioral Health: California’s youth are facing a behavioral health crisis amplified by the pandemic with incidents of youth causing self-harm increasing by 50% between 2009-2018, a triple increase in opioid-related overdoses among youth aged 15-19 from 2019-2020, and a double increase in the Black youth suicide rate between 2014 and 2020.[iii] The May Revise reduces $72.3 million one-time in 2023-24, $348.6 million in 2024-25, and $5 million in 2025-26 for the Children Behavioral Health Initiative.[i]

Nearly 1 on 7 California adults have experienced mental illness [iv], almost a third, 31.7%, of California adults experience anxiety and/or depression, and drug overdose death rates have increased in California from 10.7 per 100,000 in 2011 to 26.6 per 100,000 in 2021 [v]. The May Revise eliminates $189.4 million Mental Health Services funds for proposed programs that would have been introduced during the 2025-26 budget and eliminates $450.7 million one-time funding from the last round of the Behavioral Health Continuum Infrastructure Program leaving this infrastructure program with $30 million in one-time general funding.[i]

Furthermore, the May Revise reduces funding for the Behavioral Health Bridge Housing Program by $132.5 million in 2024-25 and $207.5 million in 2025-26, leaving this housing program with $132.5 million General Fund (GF) funding in 2024-25 and $117.5 million ($90 million Mental Health Services Fund and $27.5 million GF) in 2025-26.[i] In addition, the May Revise reduces ongoing funding for the CalWORKs Mental Health and Substance Abuse Services by $126.6 million.[i]

Healthcare Workforce: The COVID-19 pandemic amplified significant stressors that the California health care workforce has endured for far too long, including workforce shortages, a lack of diversity, and persistent burnout. The ongoing healthcare workforce shortage and crisis have resulted in over 7 million Californians living in provider shortage areas.[vi] To meet the critical, urgent need for providers, California will need an additional 4,100 primary care providers by 2030 to meet projected provider demand.[vii]

The May Revise reduces $6.7 billion of revenue from the MCO tax over multiple years that would have increased Medi-Cal provider rates, funded Graduate Medical Education, and funded the Medi-Cal labor workforce. [i] To address the budget deficit, the May Revise proposes to increase the MCO tax to increase revenue for the GF by $689.9 million in 2024-25, $950 million in 2025-26, and $1.3 billion in 2026-27.[i]

The May Revise eliminates $300.9 million in 2023-24, $302.7million in 2024-25, $216 million in 2025-26, $19 million 2026-27, and $16 million in 2027-28 for critical and essential health care workforce initiatives including [i]:

The May Revise eliminates $280 million one-time funding over multiple years for grants that seek to improve quality, health equity, and primary care infrastructure through funding Medi-Cal providers.[i] The May Revise maintains $70 million for these grants from the 2022 Budget Act.[i]

Continuous Medi-Cal Coverage for Children Aged 0-4: Over half of California children, 56.5%, rely on Medi-Cal for health coverage. [viii] This percentage equates to 5.7 million kids on Medi-Cal. [viii] The May Revise explicitly states that continuous Medi-Cal coverage for Children Aged 0-4 will not be included in the 2024 Budget Act.[i]

 Public Health Funding: The COVID-19 pandemic highlighted the historic underfunding of our public health system. To respond to current threats and prepare for future threats to public health, we need to continue investing in our systems.   The May Revise eliminates $52.5 million in 2023-24 and $300 million ongoing funding for state and local public health funding.[i] According to this, public health funding would have gone toward [ix]:

  • Additional staffing;
  • Infrastructure;
  • Prevention;
  • Infectious disease control;
  • Population health; and,
  • Emergency preparedness.

 Addressing Social Determinants of Health: The May Revise reduces ongoing funding for the CalWORKs Home Visiting Program by $47.1 million.[i] In addition, it pauses efforts to subsidize childcare that could have benefited the families of 119,000 children[i]. Based on the state’s fiscal conditions, government officials will determine when they end the pause.[i] The CalWORKs Home Visiting Program provides essential, early intervention activities for California families. With the passage of Proposition 1, there is now less money for these activities, further eroding health equity investments for pregnant and parenting families ages 0-5.

The May Revise delays $200 million for Broadband Last Mile from 2025-26 to 2027-28.[i] Furthermore, April 30th marked the last day of funding for the Affordability Connectivity Program, an essential, federal program that helped reduce the digital divide across California.[x] The May Revise does not include any state solutions to subsidize broadband services for low-income Californians furthering the digital divide.

The In Home Supportive Services Program (IHSS) provides crucial services that allow eligible aged, blind, and disabled Californians to avoid nursing facilities and receive essential care at home with their families.[xi] According to a poll conducted by the California Health Care Foundation, nearly three-fourths of Californians, 72%, say they want to live and stay at home if they ever need ongoing, living assistance. [xii] Even though the May Revise maintains funding for the Medi-Cal expansion, regardless of immigration status, it eliminates IHSS expansion for undocumented individuals of all ages and delays the California Food Assistance Program expansion to undocumented individuals aged 55 years and older to 2027-28, instead of 2026-27.[ix]

Budget Process: What’s Next

A Balanced Budget: The Legislature is required to produce a “balanced budget” and send it to the Governor by Saturday, June 15, 2024. Due to the requirement that a bill be in print for at least 72 hours before legislative action, watch for the budget bill to be in print by Wednesday, June 12, 2024. The Budget Bill requires a majority vote from both houses of the Legislature to be advanced to the Governor for enactment.

Final Budget Enactment: After the budget bill passes through the Legislature, the Governor then has 15 days to sign it into law by the start of the new fiscal year, which begins July 1, 2024.

“Budget Bill Junior” and Trailer Bills:

  • While there is a requirement that the Legislature sends the main budget bill to the Governor for signature by June 15, the Legislature also typically uses additional policy-area-specific bills called “trailer bills” to provide additional details about the expenditures contained in the budget bill.
  • These bills do not need to be sent to the Governor by June 15 and may be passed throughout the summer and before the Legislative Session ends in August.
  • Similarly, the Legislature may choose to revise the main budget bill with a “budget bill junior” before the Legislative Session ends in August.

Key Government Resources

Administration/Executive Branch Resources:

Legislative Resources:

Tools to Understand the California State Budget Process:

Stay tuned for our next update at the Final Budget Act!

References

[i] Department of Finance (DOF), May Revision, May 2024.

[ii] Legislative Analyst’s Office, Health Care Access and Affordability, February 23, 2022.

[iii] CalMatters, When children suffer: California to funnel billions into mental health overhaul, March 17, 2022.

[iv]California All, California’s Mental Health Movement, October 2023.

[v]KFF, Mental Health in California.

[vi]California Future Health Workforce Commission, Meeting the Demand for Health: Fact Sheet on California’s Looming Workforce Crisis, 2019.

[vii] Healthforce Center at the University of California, San Francisco, California’s Primary Care Workforce: Forecasted Supply, Demand, and Pipeline of Trainees, 2016-2030, 2017.

[viii]The Children’s Partnership, How Medi-Cal Continuous Coverage Protects California Kids, March 2023.

[ix] Senate Committee on Budget, Senate Committee on Budget and Fiscal Review Overview of the May Revision, May 2024.

[x]Federal Communications Commission, Affordable Connectivity Program, April 2023.

[xi]California Department of Social Services, In-Home Supportive Services (IHSS) Program.

[xii]California Health Care Foundation, New CHCF Poll Shows Californians’ Concerns About Obtaining Home-Based Supports, February 2023.