On Friday, Governor Jerry Brown unveiled his $169.3 billion revised spending plan for the 2016-2017 fiscal year.  The state estimates revenue will be $1.9 billion less than expected this year, due to sluggish tax receipts. Brown’s plan includes no spending cuts compared to the January budget proposal, with the revenue drop offset by a corresponding decrease in required transfers into state reserves and various funding formulas.

The proposal includes one major new policy change: Endorsement of a Senate proposal to effectively shift $2 billion from mental health programs to housing for homeless and low-income Californians. To move these funds will require that Republicans vote to support the proposal (to gain the two-thirds vote required by law).

Within the Health and Human Services section of the budget, the Governor made several funding augmentations:

• New Medi-Cal Waiver: The proposal includes $2.2 million in federal matching funds that were included in the recently approved 1115 Medi-Cal Waiver. This waiver is primarily hospital-focused; it expands existing uncompensated care pools and other quality programs.
• Behavioral Health: Brown's budget includes an additional $180.2 million to provide federally-required behavioral health treatment services.
• Medi-Cal Coverage for Undocumented Children: The proposal increases the amount set aside for expanding coverage for children regardless of immigration status by $45 million.
• Mental Health – Continuum of Care Reform: The revised budget proposal increases funding by $6.4 million for county mental health costs associated with the Continuum of Care Reform efforts that were enacted last year.

Medi-Cal – MCO tax

In the months since Brown's January budget proposal, the Legislature passed a new managed care organization (MCO) tax package designed to preserve more than two billion dollars in federal and state funds for Medi-Cal. Brown's revised budget proposal reflects this new tax, which is also funding several other health and human services expenditures, including:

• $287 million for various developmental services programs, including rate increases for providers who serve developmentally disabled individuals.
• $240 million for future retiree health care costs.
• $135 million to increase rates for Intermediate Care Facilities for the Developmentally Disabled and forgiveness of recoupment for Distinct Part Nursing Facilities.
• $2 million for the UC PRIME Program, which trains medical students who wish to practice in medically-underserved areas.

For more information on the budget proposal as it relates to health care, see CMA's budget summary.

Contact: Eduardo Martinez, (800) 786-4262 or emartinez@cmadocs.org.