Balancing Act: Navigating California's Budget & Its Impact on CHCs

Every year, the California Governor releases their proposed budget as a framework for state spending on critical public services such as health care, housing, and education. The proposed cuts are not surprising as California is facing a budget shortfall of $56 billion over the next two years. Naturally, cuts are inevitable for the state to balance its budget for the next two years, but if the legislature passes the Governor’s proposal, community health centers (CHCs) will be negatively impacted. Recently, the legislature (i.e., Senate and Assembly) released their joint budget proposal that aligns with but also rejects some of the Governor’s recommendations. Negotiations between the Governor and legislature are pending, but time is running out before the constitutional deadline of June 15th. This month’s blog will examine a brief snapshot of California’s budget process and areas impacting CHCs to highlight the need for advocacy.

California Budget Process and Importance 

The budget is important because it determines California’s priorities and funding for key public services and systems that impact us all. For example, budgets determine funding for K-12 education, healthcare, housing, and transportation. State funds primarily go towards education and health/human services. In FY 2023-2024, 7 in 10 dollars went towards human services (37.2%), K-12 education (25.4%), and higher education (7.4%) shown in Figure 1. Decisionmakers, elected through voting, determine funding levels, spending reductions, or total elimination of programs.

Figure 1

California is required to release and pass a state budget bill on several key dates involving the Governor and legislature. The first begins in January when the Governor releases their initial budget proposal. In the initial release, their budget must be balanced and include estimated revenues. Next, the Governor releases the May Revise on or before May 14th which includes edits to the original proposal. Finally, the legislature must then agree to pass a bill by June 15th.  During the weeks in between these deadlines, the California legislature introduces its budget bills that go through budget committees in the Senate and Legislature. Once the May Revise is released, both houses reconcile any differences and put forward a joint proposal. The legislature then votes to pass the budget for the Governor to sign as shown in Figure 2.

Figure 2

California Budget Process

While these discussions occur between legislators and the Governor’s office, advocacy is key to informing our elected officials why certain funding priorities are critical. As you will see, several budget reductions and cuts are impacting community health centers across the state making advocacy more critical than ever before.

Fiscal Year 2024-2025 Proposed Budget

Although the proposed $30 billion in cuts were inevitable to balance the budget, the Governor and legislature’s proposals have wide-ranging impacts on key programs and services our most vulnerable populations rely on. One of those reductions includes decreasing the Community Health Outreach Initiative (CHOI) by $18 million from the State General Fund, which means an additional $18 million cut from federal matching dollars – a total loss amounting to $36 million. The CHOI program conducts coordinated outreach to reduce the number of uninsured populations. At Northeast Valley Health Corporation (NEVHC), we understand the lack of adequate health insurance coverage is a barrier to healthcare. It is why we have several Health Navigators, funded via CHOI, to help patients and the wider community enroll in the coverage that fits their health needs. Additionally, Health Navigators help patients enroll in Medi-Cal, understand their insurance benefits, and guide individuals through the cumbersome Medi-Cal renewal process. The process to seek coverage is not easy to navigate or understand given the online systems and long wait times to speak with a Medi-Cal representative. However, our Health Navigators are trusted messengers to help our patients navigate those complex processes for free. As a result of dedicated Health Navigators, NEVHC impact has included:

• Outreached to 54,524 families since 2013.
• Submitted 12,594 enrollment applications since 2013.
• Assisted 6,413 individuals renew their Medi-Cal via the unwinding process since April 2023.

Without this funding, patients would be left with no assistance to maintain their healthcare coverage. The Governor and legislature’s proposed budget also includes the following cuts:

• Managed Care Organization (MCO) Tax: The Governor’s proposal looks to increase revenue from the MCO tax and redirect it to the General Fund. An agreement made last year in the legislature originally stipulated a portion of MCO revenues go towards increased provider rates for those who serve low-income patients.
• In-Home-Supportive-Services (IHSS): The Governor proposed to eliminate the IHSS program for undocumented individuals. IHSS provides in-home assistance to eligible aged, blind, and disabled individuals as an alternative to out-of-home care. The legislature’s proposal would preserve this program.
• Public Health Funding: The Governor proposed to eliminate $300 million in public health investments, including $200 million that goes to counties. However, the legislature’s proposal seeks to preserve this funding for public health.
• Healthcare Workforce: The Governor’s budget is proposing delays, reductions, and full eliminations of certain workforce programs. For example, the Governor wants to reduce funding for the Graduate Medical Education (GME) to support primary care physicians, eliminating $10 million from the Song-Brown Primary Care Residency Program. This funding is critical to recruiting and retaining the next generation of the primary care workforce. The legislature agrees with the Governor’s proposal but wants to maintain funding for current individuals in workforce programs such as Song-Brown.
• Equity and Practice Transformation (EPT): The May Revise is proposing a substantial cut of $700 million over 5 years to $140 million (including federal matching dollars). EPT funds certain Medi-Cal providers that are intended to improve quality, health equity, behavioral health integration, and primary care infrastructure.
• CalWorks Home Visiting Program: The Governor is proposing a $47.1 million reduction in ongoing funding. The legislature is rejecting the Governor’s cuts and proposes to reduce funding by $30 million in 2023-2024 and $25 million in 2024-2025. This program aims to support positive health development and well-being outcomes for pregnant and parenting a by matching them with trained professionals who make personal home visits during important early years of your child’s life.
• California Food Assistance Program: The Governor is proposing to delay the expansion of CFAP to adults age 55+, regardless of their documentation status, by 2 years. The legislature agrees with this proposal.
• CalFresh Minimum Pilot: The May revision proposes to eliminate a pilot program to increase the minimum monthly CalFresh assistance to $50 from the existing federal minimum of $23 a month. The legislature’s proposal rejects this proposal and would keep the pilot program.

What’s Next? A Call to Action

The Advocacy window is quickly closing regarding the budget, but NEVHC has been actively advocating on behalf of our patients to ensure they have access to the healthcare they need. The legislature will likely be voting on budget bills this week to meet their Constitutional June 15th deadline. Budget specifics will be included in subsequent budget trailer bills.

Preview our latest action alert sent to contact local representatives to remind them the Community Health Outreach Initiative is integral to maintaining health coverage for our medically underserved populations! Click here to see how you can advocate! Don't forget to also join NEVHC's Advocacy Network to receive action alerts and quarterly legislative updates! Sign up here!

Written by Julie Leyba, Government & Community Relations Manager, NEVHC