Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
01.11.21 FW_ SYASL COVID-19 Update
From:Ring, Brian To:Alpert, Bruce;Bennett, Robin;Clerk of the Board;Connelly, Bill;Cook, Holly;Cook, Robin;Kimmelshue, Tod; Lambert, Steve;Lucero, Debra;McCracken, Shari;Paulsen, Shaina;Pickett, Andy;Ring, Brian;Ritter, Tami; Rodas, Amalia;Sweeney, Kathleen;Teeter, Doug Cc:Pickett, Andy;Snyder, Ashley Subject:FW: SYASL COVID-19 Update Date:Monday, January 11, 2021 4:49:58 PM Attachments:SYASL COVID-19 Update 1.11.2021.pdf Good afternoon Board – Please find the attached updated regarding COVID…as well as information on the proposed State budget. Brian Ring Assistant Chief Administrative Officer Administration 25 County Center Drive, Oroville, CA 95965 From: SYASL County Info <SYASLCountyInfo@SYASLpartners.com> Sent: Monday, January 11, 2021 4:03 PM To: SYASL County Info <SYASLCountyInfo@SYASLpartners.com> Subject: SYASL COVID-19 Update ATTENTION: This message originated from outside Butte County. Please exercise judgment before opening .. attachments, clicking on links, or replying. To: County Administrative Officers and Interested Parties From: Paul J. Yoder and Karen Lange Date: January 11, 2021 RE: SYASL COVID-19 Update Please find attached our daily SYASL COVID-19 update. -Paul and Karen COVID-19 Updates www.covid19.ca.gov January 11, 2021 Newsom Administration - Resources / Mutual Aid / Executive Orders Today, Governor Newsom -19 in California. Governor Newsom and Dr. Ghaly stated by the end of this week, they should have a good read on the data from the covid cases resulting from over the holidays and how those numbers may impact the contract staff to arrive in CA in the next 7 days to help hospitals and ICUs. With an all hands on deck approach, California continues forward with its goal of 1 million more vaccinations by this weekend. The State will be opening large-scale vaccination sites this week, including here and SYASL staff notes here. Tomorrow, Dr. Ghaly will provide an update. Budget Please see below for a breakdown of what Governor Newsom is asking the Legislature to act on sooner questioning here some of what the Governor has requested for early action. EDUCATION $2 billion school reopening. $4.5 billion in funding for summer school or a longer school year. $100 million in emergency financial assistance for community college students and others working full time. $20 million to bolster community college retention and enrollment. Additional changes to maintain Cal Grant eligibility for students. SAFETY NET $2.4 billion in $600 rapid cash grants for low-income workers. $250 million for housing development. $250 million for Homekey permanent housing for people who are homeless. $300 million for vaccine outreach and coordination BUSINESS STIMULUS A second round of $550 million in small business grants. $71 million in business fee waivers. $25 million in grants for museums and other cultural institutions. $430 million in CalCompetes grants and tax credits for businesses growing or moving to California. $25 million in labor apprenticeship programs. $35 million for a new California Dream Fund that issues $10,000 grants to entrepreneurs in underserved communities. $162 million for agriculture. ENVIRONMENTAL $323 million for forest health and fire prevention. $239 million for zero-emission vehicles. Budget Summaries For your convenience, we have gathered and listed below links to helpful budget overviews and summaries. o SYASL Budget Summary (updated to now include Environmental Quality and Protection) o Senate Budget & Fiscal Review Committee Overview o DOF Budget Overview o LAO 2021-22 Budget Overview o CSAC Budget Summary o CWDA Budget Summary o CBHDA Budget Summary o CPOC Budget Summary Cal/OSHA COVID-19 Prevention Emergency Temporary Standards FAQs Cal/OSHA has updated its COVID-19 Prevention Emergency Temporary Standards FAQs. There are now 69 FAQs with seven additional subheadings to help clarify and answer questions they have received about the COVID-19 Prevention Emergency Temporary Standards. CMSP COVID-19 Emergency Response Grant (CERG) Vaccine Distribution With the initial rollout of COVID- recognizes that some CMSP counties may have new funding needs related to vaccine distribution and administration. In light of this new potential need, they have written member counties to advise that they may request a redirection of currently approved, unspent CERG grant funds to support local vaccine distribution and administration activities. View here. We want to be sure to flag this for CMSP member counties. Legislative / Budget News -19 page here for updates. The LAO has been releasing a series of reports regarding Federal actions affecting California related to developments around COVID-19. View here. Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 C OMMITTEE ON B UDGET &F ISCAL R EVIEW Room 5019, State Capitol Sacramento, CA 95814 SENATOR NANCY SKINNER, CHAIR Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 The purpose of this Summary is to provide members and staff of the Legislature with an overview of the Governor’s proposed budget for 2021-22.More detailed reviews of the proposals will be developed as the Committee reviews the proposals in public hearings. If you have questions, please contact the committee at (916) 651-4103. Senate Committee on Budget and Fiscal Review 1| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 CONTENTS Page Overviewof the Governor’s Proposed 2021-22Budget3 K-12 Education19 Higher Education 25 Natural Resources and Energy32 Health34 Human Services41 State Administration and General Government46 Public Safety,Corrections, The Judiciary,Transportationand Labor52 Senate Committee on Budget and Fiscal Review 2| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Overall Budget Proposal The Governor has proposed a budget for the 2021-22 fiscal year that includes General Fund resources—carry-forward balance, revenues and transfers—of $170.6 billion and expenditures of $164.5 billion (total expenditures from all funds is proposed to be $227.2 billion). Based on the budget proposal, the General Fund would end the 2021-22 fiscal year with a Special Fund for Economic Uncertainties (SFEU) balance of $2.9 billion and include a deposit of approximately $3.0 billion to the Budget Stabilization Account (BSA), resulting in an expected balance in this account of $15.6 billion at the end of the budget year. As the Governor’s budget notes, although we entered the 2020-21 budget facing a $54.3 billion shortfall, California entered the COVID-19 recession on strong fiscal footing due to many years of building reserves, paying down debts, and focusing on maintaining structurally balanced budgets over the long term. Since the 2020-21 budget was enacted, the economic outlook and revenue forecast have improved. This is due in part to federal support (including the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act), and strong stock market performance (after a 33.9% fall in March of 2020, the S&P 500 index recovered in five months, compared to four years during the great recession). However, the recovery has been unequal and many Californian’s continue to struggle as they deal with the impacts of the COVID-19 pandemic. The Governor’s budget points out that, as of December 2020, over 4 million Californians were still receiving some form of unemployment benefits, and only about half of the jobs lost from the start of the pandemic had been recovered. Additionally, even with the increased revenues that have materialized during the current fiscal year, expenditures are projected to grow faster than revenues in the coming fiscal years leading to a projected structural deficit of $7.6 billion in the 2022- 23 fiscal year growing to $11 billion by 2024-25. Budget resiliency will continue to be critical to protecting programs going forward. The proposed 2021-22 budget’s adjusted base, incorporates a general reserve (SFEU), Safety Net Reserve, Public School System Stabilization Account (PSSSA) and BSA of approximately a combined $21.9 billion (with another $3.2 billion reserved for encumbrances).Overall, General Fund spending in 2021-22 is expected to increase by approximately $8.6 billion from the revised 2020-21 level. The Governor’s proposal of a budget for the 2021-22 fiscal year begins the annual budget process, during which the Legislature will review and analyze the Governor’s proposals, engage with the Administration and the public regarding the state’s resources and Senate Committee on Budget and Fiscal Review 3| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 priorities, and then negotiate a final budget with the Governor that reflects our shared values across the branches of state government. Overall Structure.The Governor’s budget includes $170.6 billion in General Fund revenues and other resources and $164.5 billion in total General Fund expenditures ($103.7 billion in non-Proposition 98 and $60.8 billion in Proposition 98 funds), providing for a $2.9 billion unencumbered reserve balance in the SFEU, a $450 million Safety Net Reserve, a $3.0 billion PSSSA balance, and reflecting $15.6 billion in the BSA. The Governor’s proposed 2021-22 budget strategically targets new one-timeand ongoing investments with a focus on equitably recovering from the COVID-19 pandemic. Additional funding is proposed for K-14 education, higher education, health and human services, emergency response, and housing and homelessness. Over the prior year, current year, and budget year, general fund revenues have increased by approximately $70.7 billion over the 2020 budget act estimates and reserves have increased by approximately $24.7 billion (these are both displayed in the following charts). As of the 2020 budget act, we were projected to exhaust our reserve accounts in the budget year. Senate Committee on Budget and Fiscal Review 4| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 The Governor’s budget General Fund budget details are summarized below. 2020-21 and 2021-22 General Fund Summary (Dollars in Millions) RevisedProposed 2020-212021-22 $5,359$12,203 PRIOR YEAR BALANCE $162,742$158,370 Revenues and transfers $168,101$170,573 TOTAL RESOURCES AVAILABLE $98,956$103,681 Non-Proposition 98 Expenditures $56,942$60,834 Proposition 98 Expenditures $155,898$164,515 TOTAL EXPENDITURES FUND BALANCE $3,175$3,175 Encumbrances Special Fund for Economic $9,028$2,883 Uncertainties Public School System Stabilization $747$2,988 Account Safety Net Reserve$450$450 Budget Stabilization Account $12,536$15,574 Paying Down Retirement Liabilities. The Governor’s proposed 2021-22 budget allocates approximately $3.0 billion in Proposition 2 debt payments in the budget year toward further reducing retirement liabilities (including State Retiree Health, State Employee Pensions, and Teachers’ Pensions). Proposition 2, passed by the voters in 2014, requires minimum annual payments toward eligible debts until 2029-30 and annual deposits into the state’s rainy day fund. Senate Committee on Budget and Fiscal Review 5| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Reserves.The Governor assumes approximately $4.3 billion will be transferred to the BSA (commonly referred to as the Rainy Day Fund) as a true up in the current fiscal year and $3.0 billion will be transferred in 2021-22. The BSA balance is projected to be $15.6 billion in 2021-22 and grow to $17.8 billion by 2024-25. The Governor’s budget does not include an additional deposit, which are discretionary, to the Safety Net Reserve, maintaining a balance of $450 million. However, there is a mandatory set aside to the PSSSA, bringing its total to $3.0 billion in the budget year. Finally, the budget reserves $2.9 billion in the SFEU to address emergencies and unforeseen events. Overall, the budget has $21.9 billion set aside in reserves. Structural Risks.The Governor’s budget points out that risks to the forecast remain higher than usual, and economic inequality has intensified since the pandemic began. Many households and workers did not benefit from the prior decade of growth and the COVID-19 pandemic has only exacerbated that. The Administration further points out that the budget forecast was finalized prior to the Federal relief that was passed in December of 2020. The benefits to the state from this relief will have to be assessed to ensure that they align with the Governor’s proposals. Future federal relief may also be critical to the state’s ability to continue to mitigate the impacts of the COVID-19 pandemic. The Administration’s initial estimates project that Proposition 4, the State Appropriations Limit or “Gann Limit,” will be exceeded for just the second time since its passage in 1979. The limit is currently projected to be exceeded by $102 million. Any funds above this limit are constitutionally required to be allocated evenly between schools and a tax refund. This calculation will be updated in the May Revision. Lastly, as noted earlier, the budget projects out-year shortfalls growing to $11 billion by 2024-25. The following chart from the Governor’s budget summary displays the projected budget surpluses and shortfalls from fiscal year 2019-20 through 2024-25. Senate Committee on Budget and Fiscal Review 6| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 COVID-19 Pandemic Emergency Response Expenditures. The Governor’s budget reflects an updated estimate of $13 billion in total expenditures for response efforts associated with the COVID-19 pandemic for fiscal years 2019-20 and 2020-21. Anticipating reimbursement from the Federal Emergency Management Agency for emergency related activities, the current projected General Fund impact is estimated to be approximately $2.5 billion. The current estimate for the two fiscal years is approximately $4 billion higher than what was included the final 2020 budget. While some areas have seen a decrease in the total estimated response costs, the Governor’s latest estimate reflects a significant increase in spending in state laboratory testing efforts, direct spending in state prisons and state hospitals, support for programs for California’s most vulnerable populations and assistance to small businesses. Immediate and Early Action.As the state continues to respond to the COVID-19 pandemic, the Governor’s budget proposes numerous items for immediate or early action, including: Immediate Relief for Individuals and Small Businesses.This would include $2.4 billion to provide a $600 state payment to low-income workers through the Earned Income Tax Credit, $575 million for grants to small businesses, small non-profits, and cultural institutions (bringing the total for this program to $1 billion), and targeted relief for impacted industries, including restaurants andpersonal services. Senate Committee on Budget and Fiscal Review 7| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Safe Reopening of Schools and Addressing Pandemic Impact on Students.The budget proposes immediate action of $2 billion Proposition 98 General Fund for safe reopening of schools beginning in February. The budget also includes early action for $4.6 billion Proposition 98 General Fund for extending learning time, including summer school programs and strategies to address the pandemic’s impacts on student learning. As noted earlier, the Governor’s budget forecast was completed prior to the federal relief package passed in December of 2020. It will be important to assess the Governor’s proposals in light of the federal relief. 2020-21 Budget Recap As a reminder of work done last year that the Governor’s budget builds upon, following is a recap of some of the components of the 2020-21 budget. Due to the COVID-19 pandemic, the Governor’s 2020-21 May Revision projected a $54.3 billion shortfall as compared to the 2020-21 Governor’s January budget.As such, the current year budget focused on closing this$54.3 billion shortfall througha combination of spending reductions, use of reserves, new revenue, cost shifts and borrowing, deferrals, use of federal funds,and baseline forecast adjustments. These included a withdrawal of $7.8 billion from the Budget Stabilization Account and $11.1 billion in spending reductions and deferrals that were included on a “trigger” list tied to additional federal funds. Specific Items in the 2020-21 budget include: K-12Education.In addition to Proposition 98 (General Fund and property taxes), K-12 education is funded through a variety of other fund sources, including federal funds, state lottery funds, local fund sources, and other funds. Totalfunding for K-12 education from all sources is approximately $98.9 billion in2020-21. Deferrals.In order to reduce Proposition 98 expenditures to the minimum guarantee level, but shield Local Educational Agencies (LEAs) from the impact of cuts, the budget agreement included deferrals of payments from oneyear to the next. Specifically, the budget defers a total of $11 billion in principal apportionment payments to LEAs from the 2020-21 fiscal year to the 2021-22 fiscalyear. Senate Committee on Budget and Fiscal Review 8| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Learning Loss Mitigation.The budget included a total of $5.3 billion in one-time funding ($4.4 billion federal Coronavirus Relief Fund, $355.2 million federal Governor’s Emergency Education Relief Fund and $540 million Proposition 98 General Fund) to address learning loss and other impacts of COVID-19. Higher Education.The budget restored the Governor’s budget proposal to provide a five percent or $169.2 million General Fund base increase to UC. In addition, the budget included a “trigger” reduction of $471.6 million General Fund, which would have been restored if additional federal funding was provided to the state. Additionally, the budget restored the Governor’s budget proposal toincreaseGeneral Fund support for CSU operations byfive percent, $199 million General Fundongoing, and includeda‘trigger” cut to CSUof $498.1million. Elimination of “Senior Penalty” in Medi-Cal Aged and Disabled Program. The budget includes expenditure authority of $135.5 million ($67.7 million General Fund and $67.7 million federal funds) for elimination of the “senior penalty”, which extends eligibility for the Medi-Cal Aged and Disabled Program up to 138 percent of the federal poverty level. Funding for Counties and Cities. The budget provided $1.3 billion in federal CARES Act funding to counties and $500million in federal CARES Act funding to cities for homelessness, public health, public safety, and other services to combat the COVID- 19 pandemic. Realignment Backfill for Counties. The budget included $750 million to provide support for counties experiencing revenue losses for realigned programs, prioritizing support for health and human services, entitlement programs, and programs that serve vulnerable populations. CalWORKs 60-Month Time Clock. The budget included trailer bill language authorizing a single 60-month CalWORKs time limit, effective May 1, 2022, or when the department notifies the Legislature that all necessary automation changes are complete. The bill also eliminated the 24-month limitation on certain welfare-to-work activities, effectiveMay 1, 2022, or when the department notifies the Legislature that all necessary automation changes are complete. Low Income Housing Tax Credits. The budget included $500 million in new State Low Income Housing Tax Credits for 2020-21. Senate Committee on Budget and Fiscal Review 9| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Earned Income Tax Credit (EITC).The budget included trailer bill language to extend the EITC and Young Child Tax Credit (YCTC) eligibility to Individual Tax Identification Number filers. Minimum Franchise Tax (MFT). The budget included the expansion of the first-year exemption from the $800 MFT to Limited Liability Companies, Limited Partnerships, and Limited Liability Partnerships. The exemption is applicable beginning January 1, 2021 and sunsets on January 1, 2026. This change is intended to alleviate burdens on newly formed corporations. Juvenile Justice Realignment. The budget included trailer bill language that included multiple provisions to realign the responsibility for state held youth to the counties. 2021-22 Proposed Budget Expenditures and Revenues The proposed budget includes additional required programmatic increases and new spending. The table below summarizes the Governor’s proposed expenditures by program area. General Fund Expenditures Current and Budget Year (Dollars in Millions) RevisedProposed Change Program Area 2020-212021-22 K-12 Education $57,836$59,657 $1,821 Higher Education16,861 17,873 1,012 Health and Human Services43,274 54,369 11,095 Corrections and Rehabilitation12,342 13,089 747 Business, Consumer Services, Housing911 961 50 Transportation245421 176 Natural Resources4,449 4,552 103 Environmental Protection2,480 460 -2,020 Labor and Workforce Development161 684 523 Government Operations2,111 3,051 940 General Government: Non-Agency Departments943 1,001 58 Tax Relief / Local Government1,182437 -745 Statewide Expenditures6,968 3,466 -3,502 Legislative, Judicial and Executive6,135 4,494 -1,641 Total$155,898 $164,515 $8,616 Senate Committee on Budget and Fiscal Review 10| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Note: Numbers may not add due torounding. The Governor’s 2021-22 budget proposes some major policy and budgetary changes. Some of the more important aspects of the budget proposal are outlined below: Education and Higher Education K-12 Education and Early Education.In K-12 Education, the Governor proposes a total of $6.6 billion in one-time Proposition 98 General Fund to immediately assist Local Educational Agencies (LEAs); of this $2 billion would assist LEAs returning to in-person instruction and $4.4 billion would assist LEAs in addressing learning loss. The Governor proposes to pay down significant portions of the payment deferrals created in the 2020-21 Budget Act, and defers a remaining $3.7 billion in Proposition 98 payments from 2021-22 to 2022-23. The Governor also proposes to provide $2 billion in ongoing Proposition 98 General Fund to provide a cost-of-living adjustment for the Local Control Funding Formula of 3.84 percent. In addition, the Governor proposes to provide an additional $300 million ongoing Proposition 98 General Fund for special education; $540 million ($315 million one- time Proposition 98 General Fund and $225 million non-Proposition 98 General Fund) for teacher professional development, recruitment, and preparation; and a variety of proposals related to student mental health and well-being. For Early Childhood Education, the Governor proposes $500 million ($300 million Proposition 98 General Fund and $200 million non-Proposition 98 General Fund) to support the expansion of transitional kindergarten and a variety of adjustments related to the shift of early education programs from the Department of Education to the Department of Social Services. Higher Education. The budget proposes significant investments in higher education, including an increase of $336 million ($136 million ongoing) for the University of California (UC), $425 million ($200 million ongoing) for the California State University (CSU), and $641 million ($213 million ongoing) for the California Community Colleges (CCC). These proposed investments most significantly include: (1) a three percent base increase for UC and CSU, or $104 million and $112 million, respectively, a cost of living adjustment or $111 million increase at the CCC, (2) one- time investments in emergency financial aid for students: $250 million at the CCC, $30 million at the CSU, and $15 million at the UC, and (3) supports for student basic needs, with $15 million ongoing at CSU, and $100 million one-time at CCC. Senate Committee on Budget and Fiscal Review 11| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Health and Human Services Suspensions of Health and Human Services (HHS) Programs. The budget proposes a delay of the suspension of several HHS programs for one year. The budget proposes suspension of these programs on December 31, 2022, instead of the current suspension date of December 31, 2021. These programs include the 7% reduction of IHSS service hours and the Uniform Holiday Schedule for developmental services providers (as well as supplemental rate increases for specified providers). Expanded Facilities to Support Housing. The Governor proposes $250 million one- time General Fund for the Department of Social Services (DSS) to acquire and rehabilitate Adult Residential Facilities and Residential Care Facilities for the Elderly with a focus on preserving and expanding house for low-income seniors who are homeless or at risk of becoming homeless. Food Assistance Programs. The budget includes $30 million one-time General Fund for DSS to fund food banks participating in the Emergency Food Assistance Program, as well as tribes and tribal organizations. Additionally, the budget includes $11.4 million one-time General Fund to provide the maximum allowable benefit to households participating in the California Food Assistance Program. California Advancing and Innovating in Medi-Cal (CalAIM). During the fall of 2019, the Administration released a comprehensive proposal to transform the delivery system of physical, behavioral, and oral health care services in the Medi-Cal program, known as California Advancing and Innovating in Medi-Cal (CalAIM).Due to the pandemic, the Administration delayed implementation of CalAIM in the 2020-21 fiscal year.The budget includes $1.1 billion ($541.9 million General Fund) in 2021- 22, growing to $1.5 billion ($755.5 million General Fund), as well as proposed statutory changes to the Medi-Cal program.The budget proposes allocation of this funding to the following CalAIM components in 2021-22: o$187.5 million ($93.7 million General Fund) to support the new enhanced care management (ECM) benefit in Medi-Cal managed care plans, beginning January 1, 2022. o$47.9 million ($24 million General Fund to support in-lieu-of services (ILOS) benefits adopted by Medi-Cal managed care plans, beginning January 1, 2022. o$300 million ($150 million General Fund) to fund incentives for managed care plansto invest in voluntary ILOS programs and partner with community-based organizations and providers, including but not limited to community clinics, public hospital systems, and county behavioral health systems. Senate Committee on Budget and Fiscal Review 12| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 o$401.6 million ($174.7 million General Fund) to support transitions of populations between the fee-for-service and managed care delivery systems, as part of the CalAIM transformation of Medi-Cal. o$113.5 million ($57 million General Fund) for enhanced reimbursements for dental services previously included in the Dental Transformation Initiative component of Medi-Cal 2020, California’s federal 1115 Medicaid Waiver. o$21.8 million General Fund for the behavioral health quality improvement program, which helps county behavioral health programs make technical and other improvements to facilitate future behavioral health integration and payment reform efforts. o$23.9 million ($11 million General Fund) for state operations costs related to CalAIM. Student Behavioral Health Services.The budget includes $400 million ($200 million General Fund) and proposed trailer bill language to implement an incentive program for Medi-Cal managed care plans, in coordination with county behavioral health departments and schools, to build infrastructure, partnerships, and capacity statewide to increase utilization of preventive and early intervention behavioral health services by students. Suspended Programs Delayed for One Year.The 2020 Budget Act implemented several program suspensions that would be implemented in the 2021-22 fiscal year if insufficient General Fund resources were available to fund the programs.These programs included Proposition 56 supplemental provider payments, optional benefits, the provisional postpartum Medi-Cal extension, and the expansion of screening for opioids and other drugs.The budget delays these suspensions as follows: o Proposition 56 –suspension of supplemental payments for physician services, dental services, trauma and development screenings, provider trainings, non- emergency medical transportation, and other value-based payments are delayed from July 1, 2021, to July 1, 2022.Suspension of payments for intermediate care facilities, freestanding pediatric subacute facilities and community-based adult services are delayed from July 1, 2021, to January 1, 2023.Payments for HIV/AIDS waiver providers, home health providers, pediatric day health care facilities, and value-based payments for behavioral health integration will not be suspended. o Optional Benefits –suspension of audiology and speech therapy, incontinence creams and washes, optician and optical lab services, and podiatry benefits in the Medi-Cal program will be delayed from December 31, 2021, to December 31, 2022. Senate Committee on Budget and Fiscal Review 13| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 o Provisional postpartum care extension –suspension of this eligibility extension will be delayed from December 31, 2021, to December 31, 2022. o Screening for opioids and other drugs –this screening program will not be suspended. COVID-19 Disaster Response.The budget includes over $1 billion in 2020-21 and $820 millionin 2021-22 for the Department of Public Healthto respond to the COVID-19 pandemic.This funding includes both state and federal support for emergency response measures, including enhanced laboratory capacity and testing, data-driven investigation, response and prevention, coordination with local partners, and the Valencia Branch Laboratory. Resources and the Environment Wildfire Prevention and Response. The Governor proposes $1 billion for a coordinated forest health and fire prevention strategy maximizing technology and science-based approaches to protect state forest lands. For early action in the spring, the Governor proposes $323 million to start forest health and fire prevention activities before the next fire season and increase the pace and scaleof these fire prevention efforts. This early action is also intended to accelerate economic recovery in the forest sector. To increase wildfire suppression efforts, the Governor proposes $143 million General Fund to support 30 new fire crews and includes$48 million to continue phasing in Black Hawk helicopters and large air tankers. Flood Preparedness. The Governor proposes $183 million in 2021-22, $365.2 million over the next four years from various fund sources to leverage $1.8 billion in federal funds for the American River Common Features project, maintenance and strengthening of levees, support of emergency flood response activities in the Sacramento-San Joaquin Delta, and support of collaborative flood risk management. Cap-and-Trade Spending Plan.The Governor proposes a $1.37 billion Cap-and- Trade Spending Plan, including several early actions for 2020-21. Among the proposed allocations include: $379 million for environmental equity programs related to clean air and drinking water, $635 million for low carbon transportation and zero-emission vehicle strategy, and $355 for natural and working lands. Toxic Waste Control. The Governor proposes $300 million General Fund one- time for toxic site cleanup and investigations of high-priority contaminated properties, which will be prioritized based on public health risk criteria. The Governor proposes to create incentives to clean up and develop these sites for Senate Committee on Budget and Fiscal Review 14| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 future housing. Similar to last year, the Governor proposes comprehensive governance and fiscal reform to the Department of Toxic Substances Control. Network of California Fairs. The Governor proposes $50 million General Fund one-time in 2021-22 to continue supporting state-affiliated fairgrounds operational costs that have been impacted by the COVID-19 pandemic. The Governor also proposes $10 million General Fund one-time to support fairground deferred maintenance, with a priority on properties that are used to support emergency operations. Transportation Zero Emission Vehicles. The budget includesthe securitization of approximately $1 billion in future revenues for the California Clean Energy Commission’s (CEC) Clean Transportation Program for the construction of electric vehicle charging and hydrogen fueling stations. The budget proposes statutory changes to extend existing vehicle regulation fees currently set to expire in 2024 and to authorize the securitization of these revenues to support this program. Department of Motor Vehicles. The budget includes $186 million for a variety of workload and operational issues. This includes $152 million in one-time funding for up to 1,300 temporary positions to address REAL ID demands prior to the enforcement date in October 2021, as well as $34 million ongoing for 258 positions to continue a number of ongoing operational improvements. Housing and Homelessness Housing Acquisition for Homelessness. The budget includes $1.75 billion in one- time General Fund resources to develop housing needed to combat homelessness. Infill Infrastructure Grant Program. TheAdministration is proposing to use $500 million in General Fund resources to expand the Infill Infrastructure Grant (IIG) program, which provides grants to housing related infrastructure in infill areas. The Administration is requesting early action on $250 million of this funding. Low Income Housing Tax Credits. The Administration is proposing a third round of $500 million in additional Low Income Housing Tax Credits to continue the investments the state has made in this area in 2019 and 2020. Senate Committee on Budget and Fiscal Review 15| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 General Government and Public Safety Expansion of Small Business Grants. The proposed budget includes an additional $550 million one-time General Fund allocation for relief grants to small businesses that have been impacted by the COVID-19 pandemic, to be administered by the California Office of the Small Business Advocate (CalOSBA) within the Governor’s Office of Business and Economic Development (GO-Biz). This, along with the initial $500 million investment made in November, would bring the total investment in small business grants to $1.05 billion. An additional $25 million is available for small cultural institutions, such as museums and art galleries. CalCompetes Tax Credit Expansion and Grant Program. CalCompetes incentivizes businesses to locate or stay andgrow in California.The proposed budget increases the amount of taxcredit available for allocation by $90 million in both 2020- 21 and 2021-22 for a total of $270 million per year, in line with recent demand which has far exceeded available credits.The proposed budget alsoincludes $250 million one-time General Fund to establish a grant component of CalCompetes for businesses that meet one or more of the following criteria: establish at least 500 net new jobs; make a significant infrastructure investment;commit to a high-need, high-opportunity area of the state; or receive a designation from the Director of GO-Biz that the application is a strategic priority of the state. The new program will dedicate at least $50 million of the $250 million one-time General Fund to high-need, high-opportunity areas of the state. Golden State Stimulus. The proposed budget includes $2.4 billion to provide a $600 refund to all 2019 taxpayers who received a California Earned Income Tax Credit (CalEITC) in 2020 as well as to 2020 taxpayers with individual tax identification numbers (ITINs) who receive a Cal EITC in 2021. The payments would be distributed in February through April, in order to immediately help low-income households. Californians with annual incomes of $30,000 or less may be eligible for CalEITC, and last year nearly 3.9 million CalEITC tax returns were filed. Extended Main Street Small Business Tax Credit. The Governor’s budget proposes an additional $100 million to expand a hiring tax credit for qualified small business employers. This is in addition to a similar hiring credit enacted in statute (Chapter 41, Statutes of 2020, SB 1447) with a $100 million cap. It is intended to encourage hiring new employees and rehiring former employees. State Infrastructure Plan.The budget proposes $52 billion in state infrastructure over the next five years, with investments in projects to renovate state office buildings, Senate Committee on Budget and Fiscal Review 16| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 state hospitals and correctional facilities, and to replace fire stations and courthouses, among others. Disaster Assistance.The budget proposes $256.1 million one-time General Fund through the California Disaster Assistance Act to assist local governments in serving their communities during and inthe wake of emergency events. This funding will be used to repair, restore, or replace public real property damaged or destroyed during disaster events or reimburse local governments for eligible costs associated with emergency activities undertaken in response to a state of emergency proclamation by the Governor. Cannabis.The budget proposes a consolidation of the licensing and associated regulatory functions into a new Department of Cannabis Control, and proposes $153.8 million Cannabis Control Fund to reflect the consolidation of the functions and positions of the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health into a new, stand-alone Department of Cannabis Control within the Business, ConsumerServices, and Housing Agency. The budget reflects an increase of $146.2 million compared to the allocation estimates in the 2020 Budget Act, compared to allocation estimates in the 2020 Budget Act. The budget also includes $15.5 million ongoing Cannabis Tax Fund and statutory changes to permanently support the local equity grant program that is administered by the Governor’s Office of Business and Economic Development. Labor.The budget proposes $555 million one-time General Fund for an anticipated interest payment associated with the federal unemployment insurance (UI) trust fund loan deficit. The Administration estimates that the state will have a $21.5 billion UI Trust fund deficit as of the end of 2020, which will grow to $48.9 billion by the end of 2021. Additionally, the budget proposes $25 million one-time General Fund for the California Workforce Development Board to increase the number of apprenticeships and pre-apprenticeships. The budget also proposes the creation of the Department of Better Jobs and Higher Wages, which would consolidate functions of the Workforce Development Board, Employment Training Panel, Workforce Service Branch and Labor Market Information Division of the Employment Development Department, and the Division of Apprenticeship Standards at the Department of Industrial Relations. The Division of Juvenile Justice (DJJ) Realignment.SB 823 (Committee on Budget), Chapter 337, Statutes of 2020, transfers the responsibility for managing all Senate Committee on Budget and Fiscal Review 17| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 youthful offenders housed at the state level to local jurisdictions and intends to close all DJJfacilities. Consistent with the provisions in SB 823, DJJ will stop the intake of youth on June 30, 2021 with limited exceptions. Additionally, the Administration announced in its summary that DJJ is expected to close on June 30, 2023. The budget also establishes the Office of Youth and Community Restoration (OYCR) within the Health and Human Services Agency, effective July 1, 2021. The objective of the OYCR is to fulfill the rehabilitative purpose of the state’s juvenile justice system through trauma-informed and developmentally appropriate services and programs. The budget also includes appropriations related to the Juvenile Justice Realignment Block Grant starting in 2021-22 and anticipated costs for the startup and operation of the OYCR. More detail can be found in the Health and Human Services and Public Safety chapters. Pandemic Early Disposition Calendar Program.The budget proposes the creation of a Pandemic Early Disposition Calendar to dismiss charges for defendants who have no new charges or violations upon and during their participation in a diversion program. Overall Proposition 98 –K-14 Education Budget Year –Overall Funding Levels.The proposed budget estimates a total Proposition 98 funding level of $88.1 billion(K-14). This is a $17.2 billion increaseover the 2020-21 Proposition 98 level provided in the 2020 Budget Act (a $5.3 billion increase over the revised 2020-21 Proposition 98 level, as discussed below). This large year over year increase in the Proposition 98 Guarantee reflects higher than anticipated revenues than previously projected related tothe impact of the COVID-19 pandemic. The Administration estimates that the Proposition 98 calculation for 2021-22 will be a Test 1 calculation. Prior and Current Year Adjustments. The budget proposes to providetotal Proposition 98 funding(K-14) for 2019-20 of $79.5 billion, an increase of $1.9 billion over the 2020 final budget act level. For 2020-21, the Governor estimates an increase in the total Guarantee of $11.9 billionfor a total of $82.8 billion.These adjustments are primarily also the result of higherthan anticipated General Fund revenues than projected at the 2020 final budget act related to the impact of the COVID-19 pandemic. The Administration estimates that the Proposition 98 calculations for 2019-20 and 2020-21 are both Test 1. Proposition 98 K-12 Education Changes. The proposed budget includes a Proposition 98 funding level of $75.9billion for K-12 programs.This includes a year-to-year increase of $3.4 billionin Proposition 98 funding for K-12 education, as compared to the revised Proposition 98 K-12 funding level for 2020-21.Under the Governor’s proposal, ongoing Senate Committee on Budget and Fiscal Review 18| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 K-12 Proposition 98 per pupil expenditures increase from $12,372provided in 2020-21 (revised) to $13,015in2021-22, an increase of 5.2 percent. Public School System Stabilization Account (PSSSA).The state’s Proposition 98 Rainy Day Fund was established with the passage of Proposition 2 in 2014. The 2021-22 proposed budget required deposits for 2020-21 and 2021-22 of $747 million and $2.4 billion, respectively, for a total balance of approximately $3 billion. Proposition 98 Multi-Year Obligation.The 2020-21budget includeda multi-year payment obligation designed to supplement funding provided by Proposition 98. This new obligation designated1.5 percent of General Fund Revenues per year to K-14 education beginning in 2021-22 to provide $12.4 billion over a multi-year period. This funding was intended to accelerate the recovery of the Proposition 98 Guarantee from reductions due to the impact of COVID-19 and increasethe Proposition 98 share of General Fund from 38 to 40 percent in a Test 1 year by 2023-24.With the General Fund revenues estimated in the proposed budget, the recovery of the Proposition 98 Guarantee from reductions related to COVID-19 is achieved and the 2021-22 budget provides a one-time overappropriation of the Proposition 98 Guarantee in 2021-22 by $2.3 billion and eliminates this statutory obligation in future years. K-12 Education –Major Spending Proposals Federal Stimulus Funds.The proposed budget does not include funds from the recently enacted federal COVID-19 relief bill, from which California is anticipated to receive more than $6 billion Elementary and Secondary Schools Emergency Relief Fund (ESSER) for public K-12 schools(of which 90 percent would go directly to Title I schools) and $400 million Governor’s Emergency Education Relief Fund (GEER) for both public and private pre-kindergarten through higher education institutions.These resources will assist schools in reopening and remaining open for in-person instruction and addressing the immediate needs of students. The Administration has indicated they will engage with the Legislature on the immediate allocation of these funds and need for any related Legislation. Immediate Support for Schools -Early Action Items. The proposed budget includes a total of $6.6 billion in one-time Proposition 98 General Fund to provide immediate support for schools and the Governor requests early action on this package. Specifically, $2 billion would be provided in grants for LEAs that adhere to COVID-19 related health and safety guidance from the California Department of Public Health, including for completing safety plans and adopting a state-recommended testing cadencefor teachers and students, and Senate Committee on Budget and Fiscal Review 19| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 th open for in-person instruction by March 15. Those LEAs that have already th opened or open for in-person instruction by February 15would be eligible for higher grant amounts. Accompanying trailer bill language specifies that LEAs would need to open for grades kindergarten through 2 and for th specified high-risk populations by February 15, increasing through grade 6 th . Additional provisions are made for schools in counties in by March 15 severe purple tiers to remain closedbut remain eligible for funding. The remaining $4.6 billion would be available for all LEAs for targeted interventions that focus on students from low-income families, English language learners, youth in foster care, and homeless youth, including for extending the school year, providing summer school, or other targeted strategies that address learning loss related to the pandemic, including community learning hubs. K-12 Local Control FundingFormula.The bulk of funding forschool districts and county offices of education for general operations is provided through theLocal Control Funding Formula (LCFF)and is distributed based on the numbers of students served and certain student characteristics. The state typically annually adjusts the grant amounts by a cost-of-living adjustment (COLA). In the 2020-21 Budget Act, a COLA was not included for the LCFF. The proposed budget provides a COLA of 3.84 percent (1.5 percent attributed to 2021-22 and 2.31 percent to reflect the foregone COLA in 2020-21), approximately $2 billion, for the 2021-22 fiscal year, bringing total LCFF funding to $64.5 billion. In addition, while the 2020-21 budget included a hold harmless on average daily attendance for purposes of LCFF (the hold harmless also applies for the 2021-22 school year) and authorized distance learning for 2020-21, the proposed budget makes no similar provisions for 2021-22. Instead the Administration notes an expectation of in-person instruction in the 2021-22 school year, but commits to working with the Legislature on any needed flexibilities due to continued impacts of the COVID-19 pandemic. Deferrals.In order to reduce Proposition 98 expenditures to the minimum guarantee level, but shield LEAs from the impact of cuts, the 2020 budget agreement included deferrals of payments from one year to the next. Specifically, the budget deferred a total of $11 billionin principal apportionment payments to LEAs reducing apportionments for the Proposition 98 Guarantee by this amount in 2020-21 in order to meet the Proposition 98 Guarantee as of the 2020 Budget Act. The 2021-22 proposed budget includes paying down $7.3 billion in deferrals in 2021-22, while the remainder of $3.7 billion would continue to be deferred from 2021-22 to 2022-23 and in ongoing years. Senate Committee on Budget and Fiscal Review 20| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 K-12 Special Education.The proposed budget included an increase of $300 million in ongoing Proposition 98 General Fund for the Special Education Early Interventiongrant, to be provided to LEAs based on the number of three through five-year olds with exceptionalneeds. The proposed budget also includes $5 million one-time Proposition 98 General Fund to establish professional learning networks to increase LEA capacity to access federal Medi-Calfunds; $250,000 one-time Proposition 98 General Fund for a lead countyoffice of education to provide guidance for Medi-Cal billing within the statewide system of support; and $500,000 one-time Proposition 98 General Fund for a study to examine certification and oversight of non-public school special education placements. Community Schools. The proposed budget includes $264.9 million in one-time Proposition 98 General Fund for grants toLEAs to supportexistingnetworks of community schools, establish new community schools, and to coordinate a wide range of services to theseschools, with priority given to schools in high-poverty communities. Teacher Training, Recruitment, and Retention. The proposed budget includes the following programs and funds to recruit, retain, and support educators: $250 million one-time Proposition 98 General Fund for the Educator Effectiveness Block Grant to provide LEAswith resources to expedite professional development for teachers, administrators, and other in-person staff, in high-need areas including accelerated learning, re-engaging students, restorative practices, and implicit bias training. $100 million one-time non-Proposition 98 General Fund for continued investment in the Golden State Teacher Grant Program, which provides grants to students enrolled in teacher preparation programs who commit to working in high-need fields and at schools with high rates of under-preparedteachers. $100 million one-time Proposition 98 General Fund to expand the Teacher Residency Program, which supports clinical teacher preparation programs dedicated to preparing and retaining teachers in high-need communities and subject areas, including special education, bilingual education, and STEM. $50 million one-time Proposition 98 General Fund to create statewide resources and provide targeted professional development on social-emotional learning and trauma-informed practices. $25 million one-time Proposition 98 General Fund to expand the Classified School Employees Credentialing Program, which provides grants to local educational Senate Committee on Budget and Fiscal Review 21| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 agencies to recruit non-certificated school employees to become certificated classroom teachers. $8.3 million one-time Proposition 98 General Fund for the California Early Math Initiative to provide teachers with professional development in mathematics teaching strategies for young children pre-K through third grade through the statewide system of support. $7 million one-time non-Proposition 98 General Fund to the University of California Subject Matter Projects to create high-quality professional development on learning loss in core subject matter content areas like reading,math, and ethnic studies. $5 million one-time Proposition 98 General Fund to fund professional development and instructional materials for local educational agencies who are offering, or would like to offer, courses on ethnic studies. K-12 School Facilities.In November 2016, the voters passed the Kindergarten through Community College Facilities Bond Act of 2016 (Proposition 51), which authorizes the state to sell $9 billion in general obligation bonds for K-14 facilities ($7 billionfor K-12 and $2 billion for community colleges). The proposed budget includes approximately $1.5 million in K-12 bond authority in 2021-22, similar to the amount included in prior years, for new construction, modernization, career technical education, andcharter facility projects. K-12 School Mental Health.The proposed budget includes $25 million one-time Mental Health Services Fund (Proposition 63), available over multiple years, to expand the Mental Health Student Services Act Partnership Grant Program, which funds partnerships between county behavioral health departmentsand schools. In addition, the proposed budget includes$25 million ongoing Proposition 98 General Fund to fund innovative partnerships with county behavioral health to support student mental health services. This funding would be provided to LEAs to match funding in county Mental Health Services Act spending plans dedicated to the mental health needs of students. In addition, the Department of Managed Health Care Services budget includes a related proposal to provide $400 million one-time in a mix of federal funds and General Fund, available over multiple years, for the Department of Health Care Services to implement an incentive program through Medi-Cal Managed Care Plans, administered by county behavioral health departments and schools. Senate Committee on Budget and Fiscal Review 22| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 School Climate Surveys.The proposed budget includes $10 million one-time Proposition 98 General Fund toa county office of education to support the use of school climate surveys, including through training for LEAs, and providing start-up grants to LEAs for the use of school climate surveys. County Offices of Education.The proposed budget includes an increase of $10.2 million ongoing Proposition 98 General Fund to reflect a 1.5 percent COLA and ADAchanges applicable to the LCFF. Instructional Quality Commission.The proposed budget includes an increase of $206,000 one-time non-Proposition 98 General Fund for the Instructional Quality Commission to continue its work on the development of model curriculum and frameworks. Cost-of-Living Adjustments.The proposed budget also provides $85.7 million Proposition 98 General Fund to support a 1.5 percent COLA for categorical programs that are not included in LCFF. These programs include special education and child nutrition, among others. Local Property Tax Adjustments.The proposed budget includes an increase of $54.1 million ongoing Proposition 98 General Fund for school districts and county offices of education in 2020-21 as a result of decreased offsetting property tax revenues, and a decrease of $1.2 billion ongoing Proposition 98 General Fund for school districts and county offices of education in 2021-22 as a result of increased offsetting property taxes. LCFF Fiscal Accountability.The proposed budget includes a proposal to be detailed in upcoming trailer bill language that would address concerns that some LEAsallocate funds for increased and improved servicesin theLocal Control and Accountability Plan (LCAP) and then leave them unspent, reallocating them for other purposes in future years by requiringthat, once established, an LEA’sresponsibility to increase and improve services continues until fulfilled. Adults in Charter Schools.Theproposed budget includes a proposal to be detailed in upcoming trailer bill language that would clarify current law allowing charter schools in exclusive partnerships with specified state or federal job-training programs to receive state apportionment funding for students above 19 years of age. Free Applicationfor Federal Student Aid (FAFSA).The proposed budget requires LEAsto confirm that all high school seniors complete a FAFSA or California Dream Act Application beginning in the 2021-22 academic year. Senate Committee on Budget and Fiscal Review 23| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Cradle-to-Career Data System.To support the continueddevelopment of the Cradle- to-Career Data System, the budget proposes $15 million General Fund ($3 million is one- time)to establish an office within the Government Operations Agency to provide support and resources for a data system and $3.8 million ongoing Proposition 98 General Fund to support the California Career Guidance Initiative (CCGI) which provides an interface for student data between high schools, students, and families that will be integrated into the Cradle-to-Career Data System. Early Education In the 2020-21 Budget Act, a proposal was adopted to shift most child care programs, with the exception of state preschool, from the Department of Education to the Department of Social Services on July 1, 2021. As a result, major early education changes are described below, while child care changes are now described in the Health and Human Services section of this report. State Preschool Program. The proposed budgetincludes an increase of $11.2million ongoing Proposition 98 General Fund forthe State Preschool Program in 2021-22 reflecting an increase of $19.1 million for a COLA of 1.5 percent, and a decrease of $7.8 million for one-time family fee waivers provided in 2020-21. Transitional Kindergarten. The proposed budget also includes an increaseof $29 million (for a total of $902 million)Proposition 98 General Fund for Transitional Kindergarten, reflecting traditional ADA growth and COLA. This funding is included within LCFF totals as discussed earlier in this report.In order to facilitate theexpansion of transitional kindergarten to younger children the budget includes the following additional proposals: $250 million one-time Proposition 98 General Fund, available over multiple years, to provide grants to LEAs that offer early access to transitional kindergarten, to help them cover up-front costs associated with expandingprograms. $200 million one-time General Fund for school districts to construct and retrofit existing facilities to support transitional kindergarten and full-day kindergarten programs. $50 million one-time Proposition 98 General Fund to support the preparation of transitional kindergartenteachers and provide both transitional kindergartenand kindergarten teachers with training in providing instruction in inclusive classrooms, support for English language learners, social-emotional learning, trauma-informed practices, restorative practices, and mitigating implicit biases Senate Committee on Budget and Fiscal Review 24| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Higher Education University of California (UC) Base Allocation.The Governor’s January budget proposes an increase of $104 million General Fund ongoing for a three percent base increase to campuses, the Office of the President, the UCPath Center, and Agriculture and Natural Resources (ANR).The Administration expects the UC to: (1)maintain resident undergraduate tuition and fees at existing levels, (2) reduce equity gaps, (3) align student learning objectives with workforce needs, (4) adopt policies related to online course and program offerings, and (5) to create a new dual admissions pathway for first time freshman applications to be considered for guaranteed admission to UC upon completion of an Associate Degree for Transfer (ADT) or its UC equivalent. Programs in Medical Education (PRIME).Thebudget proposes an increase of $13 million General Fund ongoing for UC PRIME to support and expand existing programs and to establish a new UC PRIME focused on Native American communities. UC is encouraged to use the funds to support PRIME programs that would service underrepresented areas of the state and may establish additional PRIME programs that are state priorities. California Institute for Science and Innovation.The budget proposes $20 million one- time General Fund for four science and innovation institutes at UC campuses to support stipends for students over a five-year period and for research teams to link with industry partners to better align educational programs with workforce needs. Mental Health and Instructional Technology. The budget proposes $15 million General Fund ongoing for student mental health and instructional technology. Graduate Medical Education. The budget proposes an increase of $1 million General Fund ongoing to offset a like amount of declining Proposition 56 funding for graduate medical education. Learning Management System.The budget proposes $1 million General Fund ongoing for UC to adopt a common learning management platform for online courses at each campus that aligns with the platform used by community colleges, known as Canvas, by 2023-24 academic year. Deferred maintenance. The budget proposes $175 million General Fund one-time for deferred maintenance and energy efficiency projects. Senate Committee on Budget and Fiscal Review 25| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Emergency Financial Aid.The budget proposes $15 million General Fund one-timefor emergency student financial aid for full-time, low-income students and other students who previously worked full-time. K-12 Subject Matter Projects. The budget proposes $7 million General Fund one-time to create new K-12 Subject Matter Projects for learning loss and ethnic studies. Professional Development.The budget proposes $5 million General Fund one-time for faculty professional development. UC San Francisco (UCSF)–Department of Public Health (DPH) Modeling Consortium. The budget proposes $1.25million one-time General Fund that will be available over two years to support health modeling consortium partnership between UCSF and DPH. UC ANR Fire Advisors.Connected to the wildfire and forest resilience package, the budget proposes $2 million General Fund one-time for UC ANR Fire Advisors. Governor Proposes Allowing ANR to Charge Campus Assessments.The budget proposes budget bill language to authorize new campus assessments of up to $7.3 million for ANR. Though the 2020-21 budget allowed UC to charge campus assessments to support the UCPath center, it prohibited campus assessments to support the UC Office of the President and ANR. In combination with the three percent base increase, the new campus assessments for ANR would restore ANR’s base budget to its 2019-20 level. Postpones Sunset of Summer Financial Aid Programs.The Administration proposes delaying the sunset of summer financial aid programs at the public universities by one year—moving the sunset date from December 31, 2021 to December 31, 2022. California State University (CSU) Base Allocation. The budget proposes an increase of $112 million ongoing General Fund for a three percent base increase to CSU with the expectation that CSU (1) maintain undergraduate tuition and fees at currentlevels for 2021-22, (2) take action to reduce equity gaps, (3)adopt policies related to online course and program offerings,(4) align student learning with workforce needs, and (5) create a new stand-alone dual admissions pathway enabling first-time freshman applicants to be considered for guaranteed admission to CSU upon completion of ADT at a community college. Senate Committee on Budget and Fiscal Review 26| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Retiree Health Benefit Costs.The budget proposes an increase of$55 million ongoing General Fund for increased retiree health benefit costs. CSU Monterey Bay Computing Talent Initiative.The budget proposes $10 million one-time General Fund for the CSU Monterey Bay Computing Talent Initiative. The initiative will support acomputer science acceleration program that will guide several cohorts of underrepresented computer science college students through a series of educational and employment related modules and workshops. Basic Needs. The budget proposes an increase of $15 million General Fund ongoing for student basic needs under the Graduation Initiative. This proposal seeks to sustain or expand support for the program and support students experiencing food and housing insecurity, financial distress and other challenges that disrupt educational success. Mental Health and Instructional Technology. The budget proposes an increase of $15 million ongoing General Fund for student mental health and instructional technology. Learning Management System. The budget proposes $2 million for a learning management system that is common across all three public segments. CSU Stanislaus Stockton Center.The budget proposes $1 million ongoing General Fund to increase enrollment at the CSU Stanislaus Stockton Center. This proposal will increase enrollment by 115 students. Corporation for Education Network Initiatives in California (CENIC). The budget proposes $246,000 ongoing General Fund to pay higher CENIC costs. Deferred Maintenance.The budget proposes $175 million General Fund one-time for deferred maintenance and energy efficiency projects. Emergency Financial Aid.The budget proposes $30 million General Fund one-time for emergency student financial aid for low-income students who are enrolled full-time, and otherstudents who were previously working full-time. Professional Development. The budget proposes $10 million General Fund one-time for culturally competent faculty professional development. CSU San Marcos.The budget proposes $5 million General Fund one-time for CSU San Marcos to study enhanced firefighting equipment and strategies to protectfirefighters from conditions present during wildfires in the wildland urban interface. Senate Committee on Budget and Fiscal Review 27| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Postpones Sunset of Summer Financial Aid Programs.The Administration proposes delaying the sunset of summer financial aid programs at the public universities by one year—moving the sunset date from December 31, 2021 to December 31, 2022. California Community Colleges (CCC) Please see the K-12 Education section of this report for additional information on the overall K-14 Proposition 98 budget. Early Action Package. The budget proposes the following package of investments for the Legislature to take early action on: Emergency Financial Aid. The budget proposes$250 million Proposition 98 General Fund one-time for emergency student financial aid grants (of which $100 million is proposed as part of the early action package). Regarding the $100 million for early action, the Administration proposes that this is to support low-income, full-time students and other students who were previously working full-time who demonstrate financial need. Theremaining $150 million will be available to low- income students who are enrolledfull-time or students who previously worked full- time and can demonstrate need and had at least a 2.0 GPA in one of their last three semesters or four quarters. Student Retention.The budget proposes $20 million Proposition 98 General Fund one-time for student retention and enrollment strategies.These funds would be used to engage former students who may have withdrawn fromcollege due to COVID-19, and to engage with current or prospective students who are hesitant to remain or enroll in college due to COVID-19 impacts. Work-based Learning.The budget includes $20 million Proposition 98 General Fund one-time for a work-based learning initiative. California Apprenticeship Initiative.The budget proposes an increase of $15 million Proposition 98 GeneralFund ongoing for the California Apprenticeship Initiative, which supports the creation of apprenticeship opportunities in priority and emerging industries and sectors. Repaying Deferrals. The 2020 budget included $1.45 billion in Proposition 98 payment deferrals for the CCC. The Governor proposes $1.127 billion one-time Proposition 98 General Fund to pay down deferrals in the budget year. For 2021-22, $326 million in deferrals would remain in place. Specifically, CCC’s June 2022 apportionment payment would be deferred to early 2022-23. Senate Committee on Budget and Fiscal Review 28| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Apportionment. The budget proposes an increase of $111 million ongoing Proposition 98 General Fund for a 1.5 percent COLA for apportionment. The budget also proposes an increase of $52.7 million one-time Proposition98 General Fund in 2020-21, and a decrease of $292.7 million ongoing Proposition 98 General Fund as a result of increased offsetting local property taxes. Categorical Programs.The budget proposes an increase of $14 million Proposition 98 General Fund ongoing for a 1.5 percent COLA to select categorical programs (Adult Education Programs, apprenticeship programs, CalWORKs student services, campus childcare support, Disabled Students Programs and Services, Extended Opportunity Programs and Services, and mandatesblock grant). Mental Health and Instructional Technology.The budget proposes an increase of $30 million ongoing Proposition 98 General Fund for student mental health and instructional technology. Enrollment Growth.The budget proposes an increase of $23 million ongoing Proposition 98 General Fund for 0.5 percent enrollment growth. Online Education Block Grant.The budget proposes $11 million Proposition 98 General Fund ongoing for an online education and support block grant. This grant will support continuity of education and quality distance learning, including access to online tutoring, counseling and student support services such as mental health. Corporation for Education Network Initiatives in California (CENIC).The budget proposes an increase of$8 million Proposition 98 General Fund ongoing to pay higher CENIC costs. Adult Education Technical Assistance.The budget proposes$1million Proposition 98 General Fund ongoing for Adult Education Program technical assistance. Basic Needs. The budget proposes $100 million Proposition 98 General Fund one-time for student basic needs to address food and housing insecurity. Professional Development. The budget proposes$20million Proposition 98 General Fund one-time for a systemwide effort to provide culturally competent online faculty professional development. Zero-Textbook Cost Degree Initiative.The budget proposes $15 million Proposition 98 General Fund one-time for a zero textbook cost degree initiative (similar to last year). Senate Committee on Budget and Fiscal Review 29| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Instructional Materials for Dual Enrollment.The budget proposes $2.5 million Proposition 98 General Fund one-time for instructional materials for dual enrollment students (similar to last year). Implementation of AB 1460 (Weber), Chapter 32, Statues of 2020 and Anti-Racism Initiatives.The budget proposes $600,000 Proposition 98 General Fund one-time to implement AB 1460 ethnic studies course requirements and systemwide anti-racism initiatives. Capital Outlay.The budget proposes an increase of General Obligation Bond Funding of $355.8 million, including $2.2 million to start one new project and $353.6 million for the construction phase of 17 projects anticipated to complete design by the spring of 2022. Hastings College of the Law Base Adjustment.The Governor’s budget proposes a $2.1 million (14.3 percent) unrestricted General Fund base increase for Hastings. The Administration states that the increase buys out a sevenpercent increase in tuition that Hastings would otherwise consider adopting. California Student Aid Commission (CSAC) Early Action Package. The budget proposes the following package of investments for the Legislature to take early action on. Cal Grant A Eligibility.The Governor proposes an increase of $58 million ongoing beginning in 2020-21 to restore Cal Grants for students who lost eligibility due to a change in living arrangement. Private-Nonprofit Institutions.The budget proposes to amend existing law to delay the requirement for private nonprofit institutions to offer admissions to at least 2,000 Associate Degree for Transfer students for the 2020-21 academic year in order to maintain the maximum Cal Grant award at $9,084 in 2021-22. The delay shifts the requirement to apply the admissions threshold to 2022-23. Case Load.The budget proposes $2.8 billion for CSAC, reflecting a five percent increase over the revised 2020-21 level. Competitive Cal Grant Awards.The budget proposes $35 million ongoing to fund an additional 9,000 new competitive awards annually (bringing the total number of new awards annually to 50,000). Senate Committee on Budget and Fiscal Review 30| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Foster Youth Awards. The budget proposes an increase of $20 million ongoing to provide Cal Grant access awards of up to $6,000 to current and former foster youth. Golden State Teacher Grants. The budget proposes an increase of $100 million one- time for Golden State Teacher Grants, administered by CSAC. Additional information on this proposal may be found in the K-12 section of this report. Free Application for Federal Student Aid or the California Dream Act. The budget proposes trailer bill language requiring school districts to confirm that all high school seniors submit a Free Application for Federal Student Aid or a California Dream Act Application. Additional information on this proposal may be found in the K-12 section of this report. California State Library Ongoing Initiatives. The Governor’s budget proposes making two local library initiatives ongoing: (1) $1 million ongoing for the Zip Books program and (2) $800,000 ongoing for the Lunch at the Library initiative. One-time Initiatives.Since 2018-19, the state has provided $1 million one-time funding annually for each initiative. The administration proposes continuing one-time funding for two other initiatives: (1) $5 million one-time for early learning and after school library programs; and (2) $3 million one-time for mobile libraries. The state provided both initiatives identical amounts of one-time funding,respectively, in 2019-20. Other Higher Education Proposal Workforce Investment.The budget proposes $250 million one-time General Fund to support forthcoming proposalsthat are focused on workforce development, segment alignment and improving linkages between higher education institutions and employers. Senate Committee on Budget and Fiscal Review 31| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Natural Resources, Environmental Protection, and Energy Natural Resources Wildfire Prevention and Response. The Governor proposes $1 billion for a coordinated forest health and fire prevention strategy maximizing technology and science-based approaches to protect state forest lands. For early action in the spring, the Governor proposes $323 million to start forest health and fire prevention activities before the next fire season and increase the pace and scale of these fire prevention efforts. This early action is also intended to accelerate economic recovery in the forest sector. To increase wildfire suppression efforts, the Governor proposes $143 million GeneralFund to support 30 new fire crews and includes $48 million to continue phasing in Black Hawk helicopters and large air tankers. Sustainable Groundwater. The Governor proposes $60 million General Fund one-time ($30 million in 2020-21 and $30 million in 2021-22) for grants to support local planning and implementation of Groundwater Sustainability Plans across critically over-drafted basins. Flood Preparedness.The Governor proposes $183 million in 2021-22, $365.2 million over the next four years from various fund sources to leverage $1.8 billion in federal funds for the American River Common Features project, maintenance and strengthening of levees, support of emergency flood response activities in the Sacramento-San Joaquin Delta, and support of collaborative flood risk management. Fish and Wildlife. The Governor proposes $45.1 million one-time ($41.8 million General Fund and $3.3 million bonds funds) for investments in equipment, technology, and process improvements to deliver more effective and efficientservices with existing staff resources. California Geologic Energy Management Division (CalGEM). The Governor proposes $4.8 million and 26 positions phased in over three years to improve CalGEM oversight such as inspections, enforcement, review of pipeline management plans, and improving transparency and data reliability. Environmental Protection Cap & Trade Expenditure Plan.The Governor proposes a $1.37 billion Cap-and-Trade Spending Plan, including several early actions for 2020-21. Among the proposed appropriations: $379 million for environmental equity programs related to clean air and Senate Committee on Budget and Fiscal Review 32| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 drinking water, $365 million for low carbon transportation and zero-emission vehicle strategy, and $355 million for natural and working lands. Department of Toxic Substances Control (DTSC) Reform.Similar to last year, the Governor proposes comprehensive governance and fiscal reform to the DTSC. Toxic Waste Cleanup. The Governor proposes $300 million General Fund one-time for toxic site cleanup and investigations of high-priority contaminated properties, which will be prioritized based on public health risk criteria. The Governor proposes to create incentives to clean up and develop these sites for future housing. Pesticide Mill Fee. The Governor proposes to replace the current flat-fee mill assessment on pesticide sales with a risk-based tiered mill assessment, where higher toxicity pesticides are assessed a higher fee. Phased in over four years, this tiered fee is intended to discourage the use of toxic pesticidesin favor of safer, more sustainable agricultural and non-agricultural pest management practices and is intended to fund the following: integrated pest management, enforcement and air monitoring, and community engagement. Integrated Pest Management (IPM).The Governor proposes $20 million ongoing to expand IPM practices, including: (1) investments in research and education; (2) University of California and California State University IPM programs to support grower implementation of safer alternatives to high-risk pesticides; and (3) support for other state-level IPM programs. Beverage Container Recycling Program.The Governor proposes $5 million from The Beverage Container Recycling Fund in 2020-21 and 2021-22 as well as statutory changes to expand pilot programs to address consumer redemption in communities underserved by recycling centers. Food and Agriculture Small and Mid-Size Farm Support. The Governor proposes $6.7 million General Fund one-time ($3.35 million in 2020-21 and $3.35 million in 2021-22) to contract with the University of California Cooperative Extension to provide direct technical assistance and grants to technical assistance providers and small, mid-sized, and underserved farmers for purposes such as business planning, regulatory compliance, and accessing and leveraging additional state and federal funds. Network of California Fairs. The Governor proposes $50 million General Fund one- time in 2021-22 to continue supporting state-affiliated fairgrounds operational costs that Senate Committee on Budget and Fiscal Review 33| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 have been impacted by the COVID-19 Pandemic. The Governor also proposes $10 million General Fund one-time to support fairground deferred maintenance, with priority on properties that are used to support emergency operations. Climate Catalyst Fund.The Governor proposes $50 million General Fund one-time to the California Infrastructure and Economic Development Bank (IBank) to support Climate Smart Agriculture loans to advance projects, such as methane reduction, equipment replacement, water efficiency, healthy soils,circular economies, and energy efficiency for food processing. Energy Zero Emission Vehicles. The budget includes the securitization of approximately $1 billion in future revenues for the California Clean Energy Commission’s (CEC) Clean Transportation Program for the construction of electric vehicle charging and hydrogen fueling stations. The budget proposes statutory changes to extend existing vehicle regulation fees currently set to expire in 2024 and to authorize the securitization of these revenues to support this program. The budget also includes $50 million in one-time General Fund resources to support the installation of ZEV charging stations at state- owned facilities, $465 million in one-time Cap-and-Trade funds to improve access to new and used ZEVs, including light, medium, and heavy-duty vehicles, as well as off-road vehicles. The budget also includes statutory changes to delay the property tax assessment of ZEV charging and fueling stations that are completed by January 1, 2024. Health The Governor’s January budget includes a total of $195.1 billion ($64.3 billion General Fund and $130.8 billion other funds) for health and human services programs that serve low-income, vulnerable individuals and families. This figure does not include all costs related to the COVID-19 pandemic. Department of Health Care Services (DHCS) The budget includes $122 billion ($23 billion General Fund) in 2020-21 and $126.3 billion ($29 billion General Fund) in 2021-22 for the Departmentof Health Care Services (DHCS), which provides Californians with access to affordable, integrated, high-quality health care including medical, dental, mental health, substance use disorder services, and long-term care. Of this amount, the budget includes$956.6 million ($250 million General Fund) in 2020-21 and $1.1 billion ($279.6 million General Fund) in 2021-22 for state Senate Committee on Budget and Fiscal Review 34| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 operations, and $121 billion ($22.8 billion General Fund) in 2020-21 and $125.3 billion ($28.8 billion General Fund) in 2021-22 for local assistance. Medi-Cal Program Current Year (2020-21)–The budget includes total expenditures of $117.5 billion ($22.5 billion General Fund) for the Medi-Cal program in 2020-21, a 4.9 percent decrease in General Fund expenditures compared to the assumptions included in the 2020 Budget Act. According to DHCS, the primary drivers of these decreased General Fund expenditures are lower than expected caseload, additional savings from enhanced federal matching funds, lower than expected reimbursements to the federal government for inappropriate state-only claiming, and additional revenue from the Hospital Quality Assurance Fee. These savings are partially offset by increased costs due to delayed implementation of the Medi-Cal Rx program, additional withholding of federal payments, and one-time net costs of corrections to Medi-Cal managed care payments. Budget year (2021-22)–The budget includes total expenditures of $122.2 billion ($28.4 billion General Fund) for the Medi-Cal program in 2021-22, a 26.4 percent increase compared to the revised General Fund expenditure assumptions for 2020-21. According to DHCS, the primary drivers of these increased General Fund expenditures are additional caseload growth and utilization related to the COVID-19 pandemic, expiration of enhanced federal matching funds related to the pandemic, vaccine administration costs and other impacts of the pandemic, funding for major initiatives such as the Behavioral Health Continuum and California Advancing and Innovating in Medi-Cal (CalAIM), General Fund support for Proposition 56 supplemental payments, implementation of the student behavioral health services incentive program, Medi-Cal managed care capitation rate adjustments, and new Medi-Cal benefits including remote patient monitoring and continuous glucose monitoring. These costs are partially offset by savings due to full- year implementation of Medi-Cal Rx, completion of the correction process for Medi-Cal managed care payments, and an assumed resolution of withheld federal payments. Caseload -Medi-Cal is projected to provide health care services to approximately 15.6 million Californians in 2021-22, which represents an increase of 22.9 percent since 2019- 20. This caseload increase is primarily attributable to the economic impacts of the pandemic. The budget assumes 4.8 million Californians will be covered through the optional expansion of Medi-Cal in 2021-22. California Advancing and Innovating in Medi-Cal (CalAIM). During the fall of 2019, the Administration released a comprehensive proposal to transform the delivery system of physical, behavioral, and oral health care services in the Medi-Cal program, known as California Advancing and Innovating in Medi-Cal (CalAIM). Due to the pandemic, the Administration delayed implementation of CalAIM in the 2020-21 fiscal year. The budget includes $1.1 billion ($541.9 million General Fund) in 2021-22, growing to $1.5 Senate Committee on Budget and Fiscal Review 35| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 billion ($755.5 million General Fund), as well as proposed statutory changes to the Medi- Cal program to implement CalAIM. The budget proposes allocation of this funding to the following CalAIM components in 2021-22: $187.5 million ($93.7 million General Fund) to support the new enhanced care management (ECM) benefit in Medi-Cal managed care plans, beginning January 1, 2022. $47.9 million ($24 million General Fund to support in-lieu-of services (ILOS) benefits adopted by Medi-Cal managed care plans, beginning January 1, 2022. $300 million ($150 million General Fund) to fund incentives for managed care plans to invest in voluntary ILOS programs and partner with community-based organizations and providers, including but not limited to community clinics, public hospital systems, and county behavioral health systems. $401.6 million ($174.7 million General Fund) to support transitions of populations between the fee-for-service and managed care delivery systems, as part of the CalAIM transformation of Medi-Cal. $113.5 million ($57 million General Fund) for enhanced reimbursements for dental services previously included in the Dental Transformation Initiative component of Medi-Cal 2020, California’s federal 1115 Medicaid Waiver. $21.8 million General Fund for the behavioral health quality improvement program, which helps county behavioral health programs make technical and other improvements to facilitate future behavioral health integration and payment reform efforts. $23.9 million ($11 million General Fund) for state operations costs related to CalAIM. Suspended Programs Delayed for One Year.The 2020 Budget Act implemented several program suspensions that would be implemented in the 2021-22 fiscal year if insufficient General Fund resources were available to fund the programs on a multi-year basis. These programs included Proposition 56 supplemental provider payments, optional benefits, the provisional postpartum Medi-Cal extension, and the expansion of screening for opioids and other drugs. The budget delays these suspensions as follows: Proposition 56 –suspension of supplemental payments for physician services, dental services, trauma and developmental screenings, provider trainings, non- emergency medical transportation, and certain value-based payments are delayed from July 1, 2021, to July 1, 2022. Suspension of payments for intermediate care facilities, freestanding pediatric subacute facilities and community-based adult services are delayed from July 1, 2021, to January 1, 2023. Supplemental payments for HIV/AIDS waiver providers, home health providers, pediatric day Senate Committee on Budget and Fiscal Review 36| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 health care facilities, and value-based payments for behavioral health integration will not be suspended. Optional Benefits –suspension of audiology and speech therapy, incontinence creams and washes, optician and optical lab services, and podiatry benefits in the Medi-Cal program will be delayed from December 31, 2021, to December 31, 2022. Provisional postpartum care extension –suspension of this eligibility extension will be delayed from December 31, 2021, to December 31, 2022. Screening for opioids and other drugs –this screening program will not be suspended. Behavioral Health Continuum Infrastructure Funding. The budget includes $750 million General Fund, available over three years, to provide a continuum of behavioral health services to address short-term crisis stabilization, acute needs, peer respite, and other clinically enriched longer-term treatment and rehabilitation services for persons with behavioral health disorders. Counties would receive funding for these investments through a competitive grant process, which includes a match of local funds, with a goal of adding at least 5,000 beds, units, or rooms to existing behavioral health capacity. Student Behavioral Health Services.The budget includes $400 million ($200 million General Fund) and proposed trailer bill language to implement an incentive program for Medi-Cal managed care plans, in coordination with county behavioral health departments and schools, to build infrastructure, partnerships, and capacity statewide to increase utilization of preventive and early intervention behavioral health services by students. Office of Medicare Innovation and Integration.The Administration intends to propose funding and trailer bill language in the spring to establish a new Office of Medicare Innovation and Integration to explore strategies and models to strengthen and expand access to services and supports for low-and middle-income Californians. Medi-Cal Rx.The budget includes net savings of $612 million ($238 million General Fund) in 2021-22 for full-year implementation of Medi-Cal Rx, which carves out pharmacy benefits for Medi-Cal beneficiaries from managed care into the fee-for-service delivery system, beginning April 1, 2021. General Fund Support for Proposition 56 Supplemental Provider Payments.The budget includes $275.3 million GeneralFund to support supplemental provider payments previously funded entirely by Proposition 56 tobacco tax revenue. Due to declining tobacco tax revenue available for this purpose, General Fund resources are needed to maintain these payments at their current levels. Senate Committee on Budget and Fiscal Review 37| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Extension of Telehealth Flexibilities and Remote Patient Monitoring.The budget includes $94.8 million ($34 million General Fund) to expand and make permanent certain telehealth flexibilities authorized during the COVID-19 pandemic for Medi-Cal providers, as well as coverage for a new remote patient monitoring benefit for Medi-Cal beneficiaries, effective July 1, 2021. Continuous Glucose Monitoring. The budget includes $12 million ($4.2 million General Fund) to add continuous glucose monitors as a covered Medi-Cal benefit for adults with type 1 diabetes, effective January 1, 2022. Department of Public Health (DPH) The budget includes $4.2 billion ($1.1 billion General Fund) for the Department of Public Health (DPH), which is dedicated to optimizing the health and well-being of all Californians through a variety of public health monitoring, protection, education, direct services and emergency preparedness activities. COVID-19 Disaster Response. The budget includes over $1 billion in 2020-21and $820 million in 2021-22 to respond to the COVID-19 pandemic. This funding includes both state and federal support for emergency response measures, including enhanced laboratory capacity and testing, data-driven investigation, response and prevention, coordination with local partners, and the Valencia Branch Laboratory. Cannabis Transition.The budget proposes to transfer 119 positions and $29 million in 2021-22 from DPH to a new Department of Cannabis Control for activities related to regulation of adult use and medical cannabis. Alzheimer’s Investments.The budget includes several one-time General Fund investments in prevention and treatment of Alzheimer’s Disease and related disorders, including: $5 million for a public education campaign on brain health, $4 million for new training and certification for caregivers, $2 million for expanded training in standards of care for health care providers, $2 million for grants to communities to become dementia-friendly, and $4 million for research to address disparities and equity in Alzheimer’s. Senate Committee on Budget and Fiscal Review 38| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Department of State Hospitals (DSH) The budget includes $2.5 billion ($2.3 billion General Fund) in 2021-22 for the Department of State Hospitals (DSH), which administers five state mental health hospitals, the Forensic Conditional Release Program, the Sex Offender Commitment Program, and the evaluation and treatment of judicially and civilly committed patients. The Administration estimates that the population served by the five state hospitals and other programswill reach a total of 6,361 by the end of 2021-22. COVID-19 Impacts.The budget includes $51.9 million General Fund in 2021-22 to address the impacts of the COVID-19 pandemic, including isolation and testing capacity, outside medical invoicing, other supports for patients and employees, and facility contracts for an alternative care site for isolation of positive cases. The facility, located in Norwalk, was activated in mid-December to support isolation of patients from the DSH-Patton hospital. Incompetent to Stand Trial (IST) Referrals–According to the Administration, DSH continues to experience a significant number of incompetent to stand trial (IST) commitments from local courts, with the number of individuals awaiting placement into a state hospital exceeding 1,400 as of December 2020. DSH has undertaken several significant efforts over recent years to address the waiting list of IST commitments, including capacity expansions and the implementation of a mental health diversion program to provide local grants and judicial flexibility for community-based treatment of individuals at risk of IST commitment. The budget includes several proposals to address the number of IST commitments pending placement, including: Community Care Demonstration Projectfor Felony IST (CCDP-IST).The budget includes $233.2 million General Fund in 2021-22 and $136.4 million General Fund annually thereafter to contract with three counties to provide a continuum of services to up to 1,252 individuals determined IST. Expansion of Community Based Restoration (CBR). The budget includes General Fund expenditures of $9.8 million in 2020-21, $4.5 million in 2021-22, and $5 million annually thereafter to expand the current Los Angeles County CBR program beginning in 2020-21 and establish new CBR programs in additional counties in 2021-22. These programs would increase capacity by up to 250 beds in 2021-22. Reappropriation and Expansion of IST Diversion Program.The budget reappropriates $46.4 million General Fund expenditure authority to expand the Senate Committee on Budget and Fiscal Review 39| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 existing IST Diversion Programs and expand to additional counties. These funds were set to expire in 2020-21. Expansion of Jail-Based Competency Treatment Program.The budget includes General Fund expenditures of $785,000 in 2020-21and $6.3 million in 2021-22 and annually thereafter to expand jail-based competency treatment programs to seven additional counties. Forensic Conditional Release Program (CONREP) Mobile Forensic Assertive Community Treatment (FACT) Team.The budget includes General Fund expenditures of $5.6 million in 2021-22, $8 million in 2022-23 and 2023-24, and $8.2 million annually thereafter to implement a FACT team model in the CONREP program, which would increase capacity by up to 100 beds in 2021-22. CONREP Continuum of Care Expansion.The budget includes General Fund expenditures of $3.2 million in 2020-21 and $7.3 million in 2021-22 and annually thereafter to increase step-down capacity in the community to transition stable non- IST patients out of state hospitalbeds. This program would expand capacity by up to 40 beds in 2021-22. Other Health and Human Services Issues Office of Health Care Affordability –The budget includes expenditure authority from the Health Data and Planning Fund of $11.2 million in 2021-22, $24.5 million in 2022- 23, and $27.3 million annually thereafter to establish an Office of Health Care Affordability to increase price and quality transparency, develop strategies and cost targets for different sectors of the health care industry, impose financial consequences for entities that fail to meet these targets, and promote health care workforce stability and training needs. The Office would be established within the Office of Statewide Health Planning and Development, which the Administration intends to transition into a new Department of Health Care Affordability and Infrastructure in a spring proposal. Center for Data Insights and Innovation–The budget proposes to consolidate existing resources to establish a Center for Data Insights and Innovation within the Health and Human Services Agency to focus on leveraging data to develop knowledge and insights to improve program delivery and drive system transformation across health and human services. Senate Committee on Budget and Fiscal Review 40| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Human Services HHS Program Suspensions. The budget proposes to extend temporary augmentations for a variety of HHS programs that were originally set to be suspended on December 31, 2021. The budget proposes to delay these suspensions until December 31, 2022. Suspensions will be lifted if the Administration determines through the 2022 budget that there is sufficient revenue to support all programs. These programs are listed below. More detail on the programs and costs is found in the relevant departmental sections. IHSS Seven Percent Reduction in Service Hours Emergency Child Care Bridge Program “No Wrong Door” Aging and Disability Resource Centers model Supplemental Rate Increases for the Department of Rehabilitation (DOR)andthe Department of Developmental Services(DDS)service providers Uniform Holiday Schedule affecting DDS service providers Rate increases for Foster Family Agencies Child Welfare Public Health Nursing Early Intervention Program Family Urgent Response System Master Plan for Aging. The budget includes a $5 million General Fund placeholder for spring proposals to further implement the Master Plan for Aging. Expanded Facilities to Support Housing. The Governor proposes $250 million one- time General Fund for the Department of Social Services to acquire and rehabilitate Adult Residential Facilities and Residential Care Facilities for the Elderly with a focus on preserving and expanding housingfor low-income seniors who are homeless or at risk of becoming homeless. Aging and Disability Resources Centers (ADRCs). The Governor proposes a delay to the suspension of funding for “No Wrong Door” networksthroughout the state. These networks provide one-stop access to information and assistance with aging issues in multiple languages. The Governor proposes $7.5 million in 2021-22 and Senate Committee on Budget and Fiscal Review 41| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 $5 million in 2022-23. This funding would be subject to suspension on December 31, 2022. IHSS COVID-19 Backup Provider System. The Governor’s budget includes $5.3 million one-time General Fund to extend the backup provider system and the backup provider wage differential. California Department of Aging (CDA). The budget includes a total of $258.1 million for CDA. As mentioned above, the budget extends and increases funding for ADRCs, subject to a suspension on December 31, 2022. The budget also extends funding for the Senior Nutrition program, also subject to suspension on December 31, 2022. The 2020 Budget Act slated both programs to be suspended on December 31, 2021. Department of Social Services(DSS).TheGovernor proposesan overall 2021-22 budget of $36.2billion($14.4billion General Fund)forDSS. California Work Opportunity and Responsibility to Kids (CalWORKs).The Governor proposes an overall 2021-22budget of $7.4billion for overall program expenditures and estimates acaseload of 482,436 (a19 percent increasefrom the revised 2020-21projection). Time on AID Exemption. The budget includes $46.1 million one-time General Fund (TANF) block grant funding to temporarily suspend any month in which CalWORKs aid or services are received from counting towards the CalWORKs time limit based on a good cause exemption due to the COVID-19 pandemic. CalWORKs Grants. The budget includes a 1.5 percent increase to CalWORKs maximum aid payment levels, effective October 1, 2021. This increase is estimated to cost $50.1 million in 2021-22 and will be funded entirely by the Child Poverty and Family Supplemental Support Subaccount. CalFresh. The budget estimates a caseload of 2.6 millionin 2021-22 (an increase of 392,324 from the revised 2020-21 projection).The budget also includes $22.3 million ongoing General Fund for adjusted benefit amounts in the Supplemental Nutrition Benefit and Transitional Nutrition Benefit Programs. These programs were created to mitigatethe effects of the SSI CalFresh expansion. Other Food Assistance Programs. The budget includes$30 million one-time General Fund for DSS to fund food banks participating in the Emergency Food Assistance Program, as well as tribes and tribal organizations. Additionally, the budget includes Senate Committee on Budget and Fiscal Review 42| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 $11.4 million one-time General Fund to provide the maximum allowable benefit to households participating in the California Food Assistance Program. In-Home Supportive Services (IHSS).The budget includes $16.5billion($5.3billion General Fund), a10percent increasein General Fund costsover the current yearand estimates a 592,829 personcaseload in 2021-22(an approximately four percent increase from the revised 2020-21 projection). IHSS Service Hours Restoration. The budget includes $449.8 million General Fund in 2021-22 and $242.6 million General Fund in 2022-23 to delay the suspension of the seven percent reduction to IHSS service hours until December 31, 2022. Minimum Wage. The budget reflects $1.2 billion ($557.6 million General Fund) to support minimum wage increases to $14 per hour on January 1, 2021,and $15 per hour on January 1, 2022. County Administration. The budget includes $17.8 million General Fund for updated county administration costs for 2021-22. Supplemental Security Income/State Supplementary Payment (SSI/SSP).The Governor’s budget includes $2.69billion General Fund for the SSI/SSP program.The estimated caseload for the SSI/SSPprogram is1.2million recipients(29.3percent aged; 1.4percent persons who are visually impaired or blind; 69.4 percent persons with disabilities).Effective January 2021, maximum SSI/SSP grant levels are $955per month for individuals and $1,598per month for couples. Child Welfare Services(CWS).The budget includes $700.1million General Fund (a decrease of 3.1 percent from 2020-21 budget levels) to provide services to children and families in these programs. COVID-19 Supports for CWS. The budget includes $61.1 million General Fund to support services related to quarantine needs for foster youth and caregivers, the temporary extension of assistance payments to emergency caregivers, the provision of laptops and cell phones for foster youth, and temporary assistance payments for youth who turn 21 while in extended foster care after April 17, 2020,through December 31, 2021. Federal Family First Prevention Services Act (FFPSA). The budget includes $61.1 million ($42.7 million General Fund) to begin implementation of Part IV of the FFPSA. The FFPSA Part IV sets outnew criteria for non-foster home placement settings eligible for federal Title IV-E foster care maintenance payments. Senate Committee on Budget and Fiscal Review 43| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Child Welfare Workforce Development. The budget includes $10.1 million ($5.9 million General Fund) ongoing to establish an additional child welfare social workers regional training academy in northern California and to modernize and increase ongoing training for social workers. Delay Suspension of Various Programs. The budget proposes to extend the temporary augmentation to the Emergency Child Care Bridge program, rates to Foster Family Agencies, the Child Welfare Public Health Nursing Early Intervention Program, and the Family Urgent Response System from December 31, 2021, to December 31, 2022. The estimated cost to delay the suspension of all these programs is $54.5 million General Fund. Immigration Services.The budget includes $75million ongoingfor immigration-related services. Of note, the budget includes $5 million one-time General Fund for the Rapid Responses Program to support entities that provide assistance and services to immigrants when federal funding is not available. Child Care. The 2020-21 Budget Actshifted most child care programs, with the exception of state preschool, from the Department of Education to the DSS commencing with the 2021-22 fiscal year. The proposed budget includes $3.1 billion ($1.3 billion General Fund) and shifts the following programs, including: General Child Care, Alternate Payment Programs, CalWORKs Stage 2 & Stage 3, Resource & Referral Programs, Migrant Child Care Program, Severely Disabled Program, California Child Care Initiative, Quality Improvement Activities, Local Planning Councils, and Child and Adult Care Food Program. The DSS budget includes funding for the following program increases and related state operations: State Operations. The proposed budget shifts $31.7 million (185.7 positions) from the Department of Education to DSS starting July 1, 2021 associated with new workload related to the shift of child care programs. Non-CalWORKs Child Care.The proposed budget includes $19.9million for a 1.5 percent COLA adjustment for non-CalWORKs child care. The proposed budget also includes $21.5 million in 2020-21 and $44 million ongoing for 4,700 additional Alternate Payment Program slots due to updated Proposition 64 cannabis tax revenues. CalWORKs Child Care.The proposed budget includes several adjustments to reflect changes in the CalWORKs child care caseload and cost of care for a net Senate Committee on Budget and Fiscal Review 44| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 decrease of $141 million, reflecting a $62 million decrease in Stage 1, a $112 million decrease in Stage 2, and a $33 million increase in Stage 3. COVID-19 Related Support. The proposed budget includes $55 million one-time General Fund to support child care providers' and families’ needs as a result of the pandemic Federal Stimulus. The proposed budget does not include federal Child Care Development and Block Grant Funds associated with the passage of the Coronavirus Response and Relief Supplemental Appropriations Act, through which California is anticipated to receive approximately $1 billion. The 2020-21 Budget Act specified how $270 million of these funds will be spent, and the Administration notes they will work with the Legislature on appropriating the remaining funds. Department of Developmental Services.The Governor proposes an overall 2021- 22budget of $10.5billion ($6.5billion General Fund)and estimates that approximately 386,753individuals will receive developmental services by the end of 2021-22. Regional Center Emergency Response. The budget includes $2 million ($1.4 million General Fund) ongoing for emergency coordinators at Regional Centers (RCs). Each RC will receive a position to coordinate emergency preparedness, response, and recovery for DDS consumers. Out of State Placements.The budget includes $5.8 million ($3.5 million General Fund) to support youth in their transition from out of state placements back to California. In December 2020, the Legislature approved a $2.9 million ($1.8 million General Fund) allocation for this purpose. Supplemental Rate Increases. The budget includes $454.6 million ($261.2 million General Fund) to continue supplemental rate increases included in the 2019 and 2020 Budget Acts. The budget proposes to delay the suspension of these rate increases from December 31, 2021, to December 31, 2022. Uniform Holiday Schedule. The budget includes $55.9 million ($35.8 million General Fund) to suspend implementation of the Uniform Holiday Schedule. The budget proposes to delay the implementation of the schedule until December 31, 2022. Department of Child Support Services. The budget includes $24.9 million ($8.5 million General Fund) ongoing for Local Child Support Agencies (LCSAs), and $23.8 Senate Committee on Budget and Fiscal Review 45| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 million ($8.1 million General Fund) for local child support courts andstate operations funding. Office of Youth and Community Restoration. The budget includes $3.4 million General Fund in 2021-22 and $3.1 million General Fund ongoing to develop reports on youth outcomes in the juvenile justice system, staff a Child WelfareCouncil Committee focused on improving outcomes for justice-involved youth, and create an Office Ombudsperson. General Government and Local Government The budget includes several proposals related to statewide issues and cross-departmental functions. Housing Eviction Moratorium. The Administration is requesting an extension of AB 3088 (Chiu), Chapter 37, Statutes of 2020, which createdsome of the strongest eviction protections in the nation. Many of the provisions of AB 3088 expire on January 31, 2021. Federal Rental Assistance Funding.In late December, a federal COVID-19 relief bill was enacted that included $25 billion in rentalassistant. Approximately $2.6 billion of this is expected to be directed to California. Approximately $1.2 billion is projected to be sent directly to local governments with populations over 200,000, with the balance going to the state. This funding will be used to support low-income tenants under 80 percent of the Area Median Income (AMI), with a priority focus on those under 50 percent AMI, to address rent and past due utility payments. Fair Housing. The Administration is requesting $2 million from theGeneral Fund for the Department of Fair Employment and Housing to conduct outreach and education campaigns, housing surveys, and to prosecute violations of anti-housing discrimination laws. National Mortgage Settlement. The 2020 budget included $331 million in funds from the National Mortgage Settlement, with $31 million provided to the Judicial Council for tenant legal aid and $300 million to CalHFA for housing counseling and mortgage relief. CalHFA recently provided funding to more than 90 housing counselors across the state and plans to provide mortgage assistance beginning in 2021. Senate Committee on Budget and Fiscal Review 46| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Infill Infrastructure Grant Program.The Administration is proposing to use $500 million in General Fund resources to expand the Infill Infrastructure Grant (IIG) program, which provides grants to housing related infrastructure in infill areas. The Administration is requesting early action on $250 million of this funding. Low Income Housing Tax Credits. The Administration is proposing a third round of $500 million in additional Low Income Housing Tax Credits to continue the investments the state has made in this area in 2019 and 2020. Excess State Land Development.The Administration is proposing statutory changes to encourage additional development, including authorizing market-rate and commercial development to provide flexibility and financial support for fair and affordable housing production on excess lands. Housing Accountability Unit. The budget includes $4.3 million from the General Fund for the Department of Housing and Community Development (HCD) to create a Housing Accountability Unity to facilitate housing production through monitoring, technical assistance, and enforcement of existing housing production laws. Improving HCD’s Funding Process. AB 434 (Daly), Chapter 192, Statutes of 2020 directed HCD to align its major rental housing programs with a single application and scoring system. The Budget includes $2.7 million from the General Fund for HCD to implement the requirements of this bill. Housing Acquisition for Homelessness.The budget includes $1.75 billion in one-time General Fund resources to develop housing needed to combat homelessness. This includes: $750 million for additional acquisitions via Project Homekey, which was funded with federal Coronavirus Relief Funds in the 2020 budget. This includes a request for early action on $250 million of these funds. $750 million, available over three years, for the Department of Health Care Services to provide competitive matching grants to counties for the acquisition and rehabilitation of real estate assets to expand the community continuum of behavioral health treatment resources. $250 million for the Department of Social Services to work with counties on the acquisition or rehabilitation of Adult Residential Facilities (ARF) and Residential Care Facilities (RCF). Senate Committee on Budget and Fiscal Review 47| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Department of Technology Stabilizing Critical Services. The budget proposes $11.4 million one-time General Fund for Department of Technology to target critical services, perform assessments of vital and at-risk services, develop report cards, drive interventions and improvements, and identify key safeguards. IT Security Assessments.The budget proposes $20.1 million ongoing General Fund to conduct IT security assessments of state departments by funding those assessments up front, allowing departments the ability to use the savings from not having to reimburse CDT for the cost of assessment. Department of Cannabis Control Consolidation. The budget proposes a consolidation of the licensing and associated regulatory functions into a new Department of Cannabis Control, and proposes $153.8 million Cannabis Control Fund to reflect the consolidation of the functions and positions of the Bureau of Cannabis Control, the Department of Food and agriculture, and the Department of Public Health into a new, stand-alone Department of Cannabis Control within the Business, Consumer Services, and Housing Agency. Cannabis Tax Fund.The budget also reflects an increase of $146.2 million Cannabis Tax Fund compared to the allocation estimates in the 2020 Budget Act, compared to allocation estimates in the 2020 Budget Act. Local Equity Grant Program.The budget also includes $15.5 million ongoing Cannabis Tax Fund and statutory changes to permanently support the local equity grant program that is administered by the Governor’s Office of Business and Economic Development. Other State Administration Savings through Efficiencies.The budget proposes $57.4 million ongoing General Fund savings to reflect operational efficiencies within state departments and agencies. State Infrastructure. The budget proposes $52 billion in state infrastructure over the next five years, with investments in projects to renovate state office buildings, state hospitals and correctional facilities, and to replace fire stations and courthouses, among others. Senate Committee on Budget and Fiscal Review 48| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Creation of the California Privacy Protection Agency. The budget includes $5 million General Fund in 2020-21 and $10 million ongoing General Fund beginning in 2021-22 to support the operations of the California Privacy Protection Agency, which was created by Proposition 24, the California Privacy Rights Act of 2020. Fee Waivers.The budget proposes $70.6 million one-time General Fund to provide fee waivers for barbers, cosmetologists, and manicurists, as well as bars and restaurants. California Creative Corps. The budget proposes $5 million to provide resources for the Arts Council to partner with various organizations to develop a media, outreach, and engagement campaign to increase vaccine adoption. California Department of Tax and Fee Administration (CDTFA): Centralized Revenue Opportunity System (CROS). The proposed budget includes $23.9 million to support the final implementation phase and transition to the maintenance and operations phase of the CROS Project, which is an information technology modernization effort designed to enable the CDTFA to expand tax and fee payer services, to improve the efficiency and effectiveness of its operations, and to enhance its ability to generate increased revenues, reducing the tax gap. Department of Financial Protection and Innovation: Debt Collector Licensing and Regulation. The proposed budget includes $10.7 million Financial Protection Fund and 44 positions in 2021-22, $10.3 million and 51 positions in 2022-23, and $10.9 million and 55 positions in 2023-24 to implement SB 908 (Wieckowski), Chapter 163, Statutes of 2020, the Debt Collection Licensing Act, which creates oversight of the industry through licensing, examining, and regulating debt collectors. Governor’s Office of Business and Economic Development Climate Catalyst Fund.The Governor’s proposed budget includes an additional $97 million for the Climate Catalyst Fund, which was established in the 2020 Budget Act to provide loans for climate-related projects. It includes $47 million one-time General Fund in 2020-21 in the wildfire and forest resilience package and $50 million one-time General Fund for agriculture-specific activities (i.e., methane reduction projects; equipment replacement; water efficiency; healthy soils; and energy efficiency for food processing). Expansion of Small Business Grants. The proposed budget includes an additional $550 million one-time General Fund allocation for relief grants to small businesses that have been impacted by the COVID-19 Pandemic, to be administered by the California Office of the Small Business Advocate (CalOSBA) within the Governor’s Office of Business and Economic Development (GO-Biz). This, along with the initial $500 million Senate Committee on Budget and Fiscal Review 49| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 investment made in November, would bring the total investment in small business grants to $1.05 billion. An additional $25 million is available for small cultural institutions, such as museums and art galleries. The proposal also includes $901,000 from the General Fund and permanent authority for six positions in 2021-22 and ongoing for CalOSBA to provide the extensive and scalable direct support to small businesses. CalCompetes Tax Credit Expansion and Grant Program. CalCompetes incentivizes businesses to locate or stay and grow in California. The proposed budget increases the amount of credit available for allocation by $90 million in both 2020-21 and 2021-22 for a total of $270 million per year, in line with recent demand which has far exceeded available credits. The proposed budget includes $250 million one-time General Fund to establish a grant component of CalCompetes for businesses that meet one or more of the following criteria: establish at least 500 net new jobs; make a significant infrastructure investment; commit to a high-need, high-opportunity area of the state; or receive a designation from the Director of GO-Biz that the application is a strategic priority of the state. The new program will dedicate at least $50 million of the $250 million one-time General Fund to high-need, high-opportunity areas of the state. California Dream Fund.The proposed budget includes $35 million one-time General Fund to support micro-grants up to $10,000 to seed entrepreneurship and small business creation in underserved groups that are facing opportunity gaps. IBank. The proposed budget includes $50 million one-time General Fund to use across The California Infrastructure and Economic Development Bank (IBank) programs, with a focus on programs that benefit underserved businesses in California. This includes the Small Business Finance Center and the California Rebuilding Fund. The proposed budget also includes $50 million one-time General Fund to the principal program of the Small Business Finance Center, the Small Business Loan Guarantee Program, so this program can continue to provide loans as businesses recover from the COVID-19 Recession. This will be leveraged to provide up to $250 million in loans. This program is utilized by larger small businesses with larger loan sizes (average amount of $500,000 or more). Senate Committee on Budget and Fiscal Review 50| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Franchise Tax Board (FTB) Golden State Stimulus. The proposed budget includes $2.4 billion to provide a $600 refund to all 2019 taxpayers who received a California Earned Income Tax Credit(Cal EITC) in 2020 as well as to 2020 taxpayers with individual tax identification numbers (ITINs) who receive a Cal EITC in 2021. The payments would be distributed in February through April, in order to immediately help low-income households. Californians with annual incomes of $30,000 or less may be eligible for CalEITC, and last year nearly 3.9 million CalEITC tax returns were filed. Extended Main Street Small Business Tax Credit. The Governor’s budget proposes an additional $100 million to expand a hiring tax credit for qualified small business employers. This is in addition to a similar hiring credit enacted in statute (Chapter 41, Statutes of 2020, SB 1447) with a $100 million cap. It is intended to encourage hiring new employees and rehiring former employees. S-corporation Shareholder Tax Credit. The proposed budget contains a provision that allows S-corporation shareholders a credit against tax equal to 13.3 percent of their S- corporation income in order to help them recoup some of the tax benefitslost by Californians when the State and Local Tax (SALT) deduction was limited as part of the 2017 federal Tax Cut and Jobs Act. The Elective S-corporation Tax is an additional 13.3 percent rate on taxable income on top of the regular 1.5 percent. As corporations, S- corporations are allowed to deduct that tax from their taxable income for federal and state tax purposes. Shareholders pay personal income taxes on S-corporation income, at a rate of up to 13.3 percent. In return for the Elective S-corporation Tax, the S-corporation shareholders are allowed a credit against tax equal to 13.3 percent of their S-corporation income. The Elective S-corporation Tax is expected to on net to produce a revenue gain between $0 and $20 million starting in 2021-22. California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) Sales Tax Exclusion.The proposed budget includes an additional one-time investment of $100 million in 2021-22 to the CAEATFA sales tax exclusion program, which is available to manufacturers that promote alternative energy and advanced transportation. Delayed Property Tax Assessment of Zero-Emission Vehicle Charging and Fueling Stations. The proposed budget includes statutory changes to exclude the construction or addition of electric vehicle charging and hydrogen fueling stations completed by January 1, 2024 from the definition of accessible new construction for ten years. Senate Committee on Budget and Fiscal Review 51| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Enterprise Data to Revenue Project –Phase 2.The proposed budget includes $55.6 million General Fundto begin the Enterprise Data to Revenue (EDR2) project, which is the second phase of the FTB’s tax system modernization information technology project. Public Safety, Corrections, The Judiciary,Transportationand Labor California Department of Corrections and Rehabilitation (CDCR) The budget proposes total funding of $13.1 billion ($12.7 billion General Fund and $345 million other funds) for the CDCR in 2021-22. Adult Institution Population. The adult inmate average daily population is projected to decrease by 20 percent from 122,536 in spring 2020 to 97,750 in 2021-22. The overall current projections, show that the adult inmate population is trending downward and is expected to decrease by another 2,626 incarcerated people between 2019-20 and 2020- 21. The significant decrease over the last year is due to the COVID-19 pandemic, which forced a variety of actions to mitigate the spread of the virus. Parolee Population.The average daily parolee population is projected to decrease by four percent from 47,929 in spring 2020to 45,924 in 2021-22. Workers’ Compensation due to COVID-19. The budget includes $51 million General Fund in 2021-22, growing to $77.6 million through 2024-25 for increased workers’ compensation costs associated with SB 1159 (Hill), Chapter 85, Statutes of 2020. SB 1159 re-defines “injury” for an employee to include illness or death resulting from the 2019 novel coronavirus disease (COVID-19) under specified circumstances, until January 1, 2023. Project Hope and CDCR due to COVID-19. The Project Hope program was created to protect people releasing from prison during the COVID-19 pandemic and the California communities to which they are returning. This voluntary initiative, a collaboration between the CDCR, Office of Emergency Services, and Department of General Services provides free hotel accommodations to people released from state prison who have a need to quarantine or isolate due to COVID-19 exposure or positive status. As of December 17, 2020 the program served around 930 people returning from prison. Intake Suspensions at Prisons and Budget Implications. To reduce the risk of exposure to COVID-19, the state halted the intake and transfer of people from county jails to state prisons. Intermittently, the practice of resuming intake and transfers has occurred but largely remains suspended. Per legislation, the state is required to reimburse counties Senate Committee on Budget and Fiscal Review 52| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 for every day that a person eligible for transfer to state prison is held in jails. As of December 1, 2020, the state provided $38.8 million General Fund to county sheriffs, with an additional $40.4 million General Fund pending. The budget estimates a total of $163.4 million in additional reimbursement through June 30, 2021. Prison Closure.Due to the steady declines in prison population pre-COVID-19, the Administration reduced its reliance on contract prison capacity. CDCR terminated six of seven in-state contracts by October 2020 and will close its final in-state contract facility by May 2021. The Administration anticipates the closure of the Deuel Vocational Institution by September 2021. The closure is estimate to achieve savings of $113.5 million General Fund in 2021-22 and $150.6 million General Fund beginning in 2022-23. The Administration plans to close a second state-operated prison in 2022-23. The Division of Juvenile Justice (DJJ) Realignment. Consistent with the provisions in SB 823 (Committee on Budget), Chapter 337, Statutes of 2020, DJJ will stop the intake of youth on June 30, 2021 with limited exceptions. The estimated population is 729, which is 126 fewer than projected in the spring. The projected decrease reduces costs by $10.1 General Fund in 2021-22. Moreover: The budget announces that DJJ is expected to close on June 30, 2023. A one-time $9.6 million General Fund allocation in the 2020-21 budget year will be made by the Board of State and Community Corrections in concurrence with a new office to assist counties in the development of a local continuum of care. This funding shall not be used by counties to enter into contracts with private entities whose primary business is the custodial confinement of adults or youth in a prison or prison-like setting. SB 823 makes the following appropriations by the Controller for fiscal years 2021- 22 through 2023-24 to the counties for use by the county to provide appropriate rehabilitative housing and supervision services of the defined population: o For the 2021-22 fiscal year, $46.5 million General Fund o For the 2022-23 fiscal year, $122.9 million General Fund o For the 2023-24 fiscal year, $195.9 million General Fund o For the 2024-25 fiscal year and each year thereafter, $212.7 million General Fund Additional information is contained in the Health and Human Services chapter. Inmate Rehabilitation. The budget proposes $546.9 million General Fund for providing rehabilitative programming for incarcerated individuals. Most significantly, the budget includes $23.2 million General Fund in 2021-22, declining to $18 million ongoing to Senate Committee on Budget and Fiscal Review 53| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 provide increased access to modern technology for inmates participating in academic and vocational training. The proposal includes the purchase of approximately 38,000 laptop computers for use by academic program participants. Staff Support and Development. The budget proposes $21.2 million General Fund in 2021-22, declining to$16.1 million ongoing General Fund in 2024-25 to give new training for correctional officers for better interactions with incarcerated populations. This involves repurposing the former Northern California Women’s Facility. Inmate Medical Care and Mental Health Services. The budget proposes $3.4 billion for inmate health care services programs. This includes $4 million General Fund in 2021- 22 growing to $11.6 million General Fund in 2023-24 and ongoing to provide staff that will evaluate risks and implement best practices to improve health care delivery. Support for Roof Replacements.The budget includes $33.6 million General Fund over two years for roof replacement projects at California State Prison, Los Angeles County. Health Care Facility Updates at California Rehabilitation Center.The budget includes a one-time allocation of $6.8 million General Fund to replace damaged flooring, walls, wall-mounted air conditioning units, counters, and storage spaces in existing health care treatment areas at California Rehabilitation Center. Deferred Maintenance. The budget includes $50 million General Fund one-time to address the CDCR’s highest priority deferred maintenance projects. Cellular Interdiction. The budget includes $1.8 million General Fund in 2021-22 and ongoing to maintain the use of a technology that blocks unauthorized cellular usage in prison. Armstrong Court Compliance. The U.S. District Court of California ordered CDCR to develop a plan within 21 days after finding that systemic abuses against incarcerated people with disabilities existed, were documented in more than one hundred declarations, and that the CDCR were aware of these abuses violated the Americans with Disabilities Act and court orders previously issued inArmstrong v. Newsom.Thebudget includes $13.5 million General Fund in 2020-21, $10.1 million General Fund in 2021-22, and $6.9 million General Fund in 2022-23 to implement court-ordered reforms at the Richard J. Donovan Correctional Facility. Notable, these reforms include the installation of security cameras throughout the prison within 90 days, use of body-worn cameras within 60 days, and modifications of the staff complaint and disciplinary processes and increases to supervisory staffing and training. This funding is also for the installation of security cameras on two yards at the California State Prison, Los Angeles County. The state is currently appealing the order. Senate Committee on Budget and Fiscal Review 54| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Increased Healthy Menu Options. The budget includes $7.5 million General Fund ongoing to implement healthier menus at its institutions based on U.S. Department of Agriculture dietary guidelines. Transgender, Nonbinary, and Intersex Inmate Housing and Search Preferences. The budget includes $2.8 million General Fund in 2021-22, declining to $1.2 million in 2022- 23 and ongoing to develop and implement policies as a result of SB 132 (Wiener), Chapter 182, Statutes of 2020. SB 132 requires the CDCR for a person who is transgender, nonbinary, or intersex to only conduct a search of that person according to the search policy for their gender identity or according to the gender designation of the facility where they are housed, based on the individual’s search preference. The bill additionally requires the department to house the person in a correctional facility designated for men or women based on the individual’s preference, except as specified. Finally, the bill requires the CDCRto, during initial intake and classification, and in a private setting, ask each individual entering into the custody of the department to specify the individual’s gender identity whether the individual identifies as transgender, nonbinary, or intersex, and their gender pronoun and honorific as well as prohibit the department from disciplining a person for refusing to answer or not disclosing complete information in response to these questions. Local Public Safety County Jail Relinquishments. The Board of State and Community Corrections administers five financing programs for adult jail facilities in counties statewide. The budget proposes reallocating $202 million currently available for allocation, due to project savings that went unspent and awards that were relinquished, to purchase or modify community mental health facilities. Proposition 47 State Savings. The Administration estimates that the net savings associated with Proposition 47, the Reduced Penalties for Some Crimes Initiative (2014), will be $114.8 million, an $11.9 million increase over estimated savings in 2020-21. Adult Probation Reform. The Governor’s budget includes $122.9 million General Fund ongoing to county probation departments based on the highest payment to individual counties over the prior three fiscal years as determined by the California Community Corrections Performance Incentive Act of 2009. Youth Probation. The budget includes $46.5 million General Fund in 2021-22 to provide county probation departments with support to implement DJJ Realignment. The funding is proposed for development of appropriate placements and rehabilitation programs especially given that intake to DJJ will close on July 1, 2021 except for specified cases in SB 823. Senate Committee on Budget and Fiscal Review 55| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 Department of Justice (DOJ) The budget includes total funding of approximately $1.1 billion, including $358 million General Fund, to support the DOJ. Police Use of Force Investigations. The budget includes $13 million in 2021-22 and $13.5 in 2022-23 and ongoing to implement the provisions of AB 1506 (McCarty), Chapter 326, Statutes of 2020. AB 1506 requires a state prosecutor to investigate incidents of an officer-involved shooting resulting in the death of an unarmed civilian and makes the Attorney General the state prosecutor unless otherwise specified or named. The proposed funding would be used to establish three teams—one in each of northern, central, and southern regions of California to conduct investigations across the state. Bureau of Forensic Services.The budget proposes $16 million ($6 million General Fund and $10 million Fingerprint Fees Account) in 2021-22, increasing to $28.3 million ongoing ($18.3 General Fund and $10 million Fingerprint Fees Account) to backfill the continued decline in fine and fee revenues in the DNA Identification Fund. This funding will enable the DOJ to continue processing forensic evidence for client counties. Healthcare Rights andAccess Section.The budget includes $2.1 million Public Rights Law Enforcement Special Fund to address workload concerns in the recently established Healthcare Rights and Access Unit within the Division of Legal Services. Consolidated Forensic Science Laboratory. The budget includes $6.5 million General Fund one-time to build a new facility to expand forensic capacity and capability. Juvenile Court and Probation Statistical System (JCPSS).The budget includes $1.9 million General Fund in 2021-22 and $1 million in 2022-23 to convene a working group to submit a plan for the replacement of the JCPSS. The plan to update this system is part of the Division of Juvenile Justice Realignment. Task Force to Study and Develop Reparation Proposals for African Americans. The budget includes $1.1 million General Fund in 2021-22 and 2022-23 to support the implementation of AB 3121 (Weber), Chapter 319, Statutes of 2020. AB 3121 established the Task Force to Study and Develop Reparation Proposals for African Americans, with a Special Consideration for African Americans Who are Descendants of Persons Enslaved in the United States, consisting of 9 members, appointed as provided. The bill also requires the Task Force to, among other things, identify, compile, and synthesize the relevant corpus of evidentiary documentation of the institution of slavery that existed within the United States and the colonies. Finally, the bill requires the Task Force to recommend, among other things, the form of compensation that should be awarded, the Senate Committee on Budget and Fiscal Review 56| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 instrumentalities through which it should be awarded, and who should be eligible for this compensation. Penal Code Review Committee on Revision to the Penal Code.The budget includes $494,000 General Fund ongoing for additional staffing. The Committee is expected to produce its first set of recommendations in January 2021. The Judicial Branch The budget includes total funding of $4.1 billion ($2.1 billion General Fund and $2 billion other funds) in 2021-22 for the Judicial Branch, of which $2.2 billion is provided to support trial court operations. Pandemic Response. In response to the impacts that the COVID-19 pandemic had on court operations, the budget includes multiple proposals to provide ongoing support to the trial courts. The budget includes: $72.2 million General Fund in 2021-22 and ongoing to assist courts in providing access to justice, modifications to improve court process, and implement recently enacted legislation. $19.1 million General Fund in 2021-22 and ongoing to provide self-help services for underrepresented litigants. $11.7 million General Fund one-time to implement the provisions in AB 3088 (Chiu), Chapter 37, Statutes of 2020. AB 3088 provided relief to tenants and landlords by delaying the date that trial courts could process unlawful detainers until February 1, 2021 and allowing landlords to recover unpaid rental debt through small claims court until February 1, 2025. This funding will be used to process the anticipated increase in filings due to AB 3088. Pandemic Early Disposition Calendar Program.The budget proposes the creation of a Pandemic Early Disposition Calendar to dismiss charges for defendants who have no new charges or violations during their participation in a diversion program. This proposal builds on a program, initiated by the Chief Justice, in response to the significant COVID- 19 related processing delays in criminal cases. Reducing Criminal Fines and Fees for Low-Income Californians.The budget includes $12.3 million General Fund in 2021-22, increasing to $58.4 million General Fund ongoing by 2024-25 for the statewide expansion of a program that allows low-income and indigent individuals to apply online to have their fines and fees for traffic and non-traffic Senate Committee on Budget and Fiscal Review 57| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 infractions reduced. This proposal isan expansion of a pilot project enacted as part of the 2018 Budget Act. The 2018 Budget Act included $3.4 million General Fund and seven positions in 2018-19, and $1.4 million and seven positionsongoing, for an eight-court pilot with the goal of moving toward a civil model for adjudication of minor traffic violations and simplifying current criminal procedures. The $58.4 million in 2024-25 includes two components: $2.7 million General Fund to implement an online application system. $55.7 million General Fund to backfill the estimated loss in revenue to support trial court operations as a result of penalty reductions. Trial Court Trust Fund Revenue Backfill. The budget includes$118.3 million General Fund to continue backfilling the Trial Court Trust Fund for the revenue decline expected in 2021-22. Facility Operations and Maintenance. The budget includes$53.5 million General Fund in 2021-22 and ongoing to support maintenance, utility, and lease costs for trial court and Courts of Appeal facilities. Deferred Maintenance. The budget includes$30.1 million General Fund one-time to support deferred maintenance projects for trial court and Courts of Appeal facilities. Trial Court Employee Adjustment.The budget includes $39.1 million General Fund ongoingGeneral Fund for trial court employee health benefit and retirement costs. Trial Court Facility Modifications.The budget includes $18.9 million General Fund in 2021-11 and $48.8 million in 2022-23 to make facility modifications at two trial courts in Orange and San Diego Counties to correct deficiencies identified by the State Fire Marshal. Construction Fund Consolidation. The budget combines the Immediate and Critical Needs Account and the State Court Facilities Construction Fund which were facing insolvency due to steady decreases in fine and fee revenue. Consolidation allows the remaining fund to be solvent in 2021-22. Governor’s Office of Emergency Services (Cal OES) California Disaster Assistance Act (CDAA).The budget proposes $256.1 million one- time General Fund available through the CDAA to assist local governments in serving their communities during and in the wake of emergency events. This funding will be used to repair, restore, or replace public real property damaged or destroyed during disaster Senate Committee on Budget and Fiscal Review 58| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 events or reimburse local governments for eligible costs associated with emergency activities undertaken in response to a state of emergency proclamation by the Governor. California Earthquake Early Warning System.The budget proposes $17.3 million one-time California Earthquake Safety Fund, which relies on a $17.3 million one-time General Fund loan, for operation and maintenance of the system. Regional Hazardous Materials Response. The budget proposes $3.6 million ongoing General Fund to buildthe state’s ability to respond to regional emergencies involving hazardous materials. Home Hardening Pilot Grant Program. The budget proposes $25 million one-time General Fund in 2020-21 for Cal OES ($21.9 million) and the Department of Forestry and Fire Protection ($3.1 million) to support implementation of a home hardening pilot grant program. Emergency Response Capabilities. The Administration is still developing a spring proposal to strengthen Cal OES’ ability to respond to emergencies and support recovery efforts, especially in vulnerable communities. Deferred Maintenance. The budget proposes $5 million one-time General Fund to address identified deferred maintenance needs as described in the Five-Year Infrastructure Plan. Transportation Impact of COVID-19 Pandemic on State Transportation Funds. Fuel excise tax revenues, while still growing moderately, are expected to be lower than pre-pandemic forecasts by roughly $1.5 billion through 2024-25. However, the recently-enacted federal COVID-19relief bill provides $10 billion for highway projects, of which California is expected to receive roughly $900 million. Additionally, California received roughly $500 million in the most recent annual August Redistribution of unused federal funds, closing nearly the entirety of the $1.5 billion funding gap. The budget continues to provide roughly $3 billion in fuel excise tax revenue directly to cities and counties for local streets and roads. Multiyear Funding.For the four-year period from 2020-21 through 2023-24, the $17.4 billion is programmed through the State Highway Operations and Protection Program (SHOPP), $2.4 billion through the State Transportation Improvement Program, $1 billion Senate Committee on Budget and Fiscal Review 59| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 for traffic congestion, $900 million for active transportation projects, and $800 million for partnerships with local transportation agencies. Transit Funding.The budget includes nearly $1.3 billion in baseline formula funding for transit and rail, including $667 million in State Transit Assistance funds, $487 million for the Transit and Intercity Rail Capital Program, and $107 million for the Low Carbon Transit Operations Program. Climate Action Plan for Transportation Infrastructure.The California Transportation Agency is working to produce the Climate Action Plan for Transportation Infrastructure by July 15, 2021 and implement Executive Orders N-19-19 and N-79-20. Eventually, the Agency is directed to leverage $5 billion in annual state transportation funds to reduce greenhouse gas emissions from the transportation sector. Department of Motor Vehicles.The budget includes $186 million for a variety of workload and operational issues. This includes $152 million in one-time funding for up to 1,300 temporary positions to address REAL ID demands prior to the enforcement date in October 2021, as well as $34 million ongoing for 258 positions to continue a number of ongoing operational improvements. Transportation Development Act.The budget includes statutory changes to provide transit agencies with regulatory and reporting relief related to the Transportation Development Act. Labor, Public Employment and Retirement California Workforce Development Board (CWDB) Early Budget Action.As a part of the Early Action Package, the Administration proposes $25 million one-time General Fund to the CWDB to provide over 2,000 new apprenticeship and pre-apprenticeships as follows: Construction. The budget proposes $8.5 million one-time General Fund to expand constructionand apprenticeship and multi-craft pre-apprenticeship programs that will result in 650 jobs. Forestry and Agriculture.The budget proposes $6.5 million one-time General Fund for training center jobs with utility tree contractors for wildfire prevention, resulting in 500 jobs. Healthcare.The budget proposes $4 million one-time GeneralFund to expand training for allied health roles to address COVID-19 related health care needs and Senate Committee on Budget and Fiscal Review 60| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 a pilot for registereddental assistance in partnership with the Dental Association, resulting in 350 jobs. Trade and Logistics.The budget proposes $4 million one-time General Fund through Youth Work for a pilot training program for youth in Ontario Los Angeles, Visalia, and the Bay Area, resulting in 500 jobs. Information Technology.The budget proposes $2 million to expand cyber security apprenticeship with public and private employers, resulting in 200 jobs. Workforce Innovation Opportunity Act (WIOA). The budget proposes $407 million in federal funds to continue training and apprenticeship services for adults, youth and dislocated workers. Employment Development Department(EDD) Unemployment Insurance (UI) Trust Fund. The budget proposes $555 million one- time General Fund for the anticipated interest payment associated the loan from the federal UI Trust Fund. EDD estimates that the state will have a $21.5 billion UI Trust Fund deficit as of the end of 2020, rising to $48.3 billion by the end of 2021. Department of Industrial Relations (DIR) Division of Occupational Health and Safety (Cal-OSHA).The budget proposes language to allow DIR to increase resources of $14.4 million and 70 positions for additional workplace safety inspectors. California Public Employees’ Retirement System(CalPERS) Annual Contribution.The budget proposes$5.5 billion one-time ($3 billion General Fund)for the statutorily required annual state contribution to CalPERS for state pension costs. This is a $115 million net decrease compared to 2020-21 associated with the reduced employer contribution rates due to the supplemental payments from 2019-20 to 2021-22 and payroll impact of the 2020 Personal Leave Program. Supplemental Pension Payment.The budget proposes a$1.5 billion one-time Proposition 2 debt supplemental pension payment for2021-22 to reduce the unfunded liability. Senate Committee on Budget and Fiscal Review 61| Page Summary of the Governor’s Proposed 2021-22Budget January 8, 2021 California State Teachers’ Retirement System(CalSTRS) Annual Contribution. The budget proposes $3.9 billion one-time General Fund for the statutorily required annual state contribution to CalSTRS. This is an increase of $430 million compared to 2020-21 due to payroll growth and the anticipated decision by the Board to increase the state contribution rate, as permitted by statute. Supplemental Pension Payment.The budget proposesa$410 millionone-time Proposition 2 supplemental pension payment in 2021-22 to reduce the unfunded liability. Employee Compensation Minimum Wage Adjustments. The budget includes an increase of $42.1 million ($29.5 million ongoing General Fund) for increases related to minimum wage changes, increases in health care and dental premiums and enrollment for active state employees, and savings related to health affordability payments for various bargaining units. Health Care Benefits.The budget proposes $6.8 billionongoing on health care benefits in 2021-22 for more than the 850,000 state employees, retirees and their families. This includes $2.8 billion forretireehealth care benefits for 2021-22, which has grown by 74 percent compared to 2012-13. Prefunding Retiree Health.The budget also proposes $310 million one-time Proposition 2 funding for the employer’s share of General Fund prefunding retiree health care contributions,and an additional $616 millionone-timeProposition 2payment on behalf of employeesbecause employeeprefunding contributions are suspended in 2020-21 due to the Personal Leave Program 2020to help reach full funding for retiree health benefits by 2046. Other Budget Proposals Department of Better Jobs and Higher Wages.The budget proposes to create the Department of Better Jobs and Higher Wages, which would consolidate functions of the CWDB, Employment Training Panel, the Workforce Services Branch and Labor Market Information Division of the EDD, and the Division of Apprenticeship Standards at DIR. Senate Committee on Budget and Fiscal Review 62| Page /µ¤±µ¨¤¶ ®¥ ³§¤ '®µ¤±®±͒² "´£¦¤³ January 10, 2021 4§¤ ΑΏΑΐ-ΑΑ "´£¦¤³ Introduction Major Budget Proposals Overall LAO Comments Conclusion Appendix %·¤¢´³¨µ¤ 3´¬¬ ±¸ State Fiscal Picture Has Improved Amidst Continued Crisis. The pandemic disrupted the livelihoods of millions of Californians and takes the lives of thousands of Californians each month. Last year, the Legislature faced an unprecedented challenge - pandemic levels and state costs have not risen as dramatically as anticipated. While the crisis is still ongoing, this budget offers the Legislature an opportunity to consider how the state can best use its resources to help California respond and recover. State Has Significant Windfall to Allocate in 2021-22, but Faces Multiyear Challenges. -21 with $18.9 billion in total reserves, an increase of $7.5 level. This increase is the result of constitutionally required reserve deposits, which reflect much stronger than anticipated revenue growth. In addition, we estimate the Governor had a significant windfall$15.5 billionto allocate in developing his 2021-22 budget proposal. However, the state budget faces challenges over the longer term. In particular, the administration anticipates the state would have operating deficits if the billion in 2024-25. Govern-Time Spending. The figure below shows how the Governor proposes the Legislature allocate the $15.5 billion windfall. In particular, the Governor proposes spending over half of the windfall on one-time or temporary purposes. This report describes the various major budget proposals in more detail, offers some initial assessments, and provides Appendix figures detailing the /µ¤± «« ,!/ #®¬¬¤³² Recent Federal Pandemic Relief Should Inform State Actions. In late December, the federal government passed a fifth round of pandemic relief, providing additional funding to most taxpayers, people receiving unemployment insurance benefits, renters, er of significant proposals that address similar pandemic-related needs. While this overlap is proposal in light of the new federal relief. Specifically, we recommend the Legislature: (1) determine how to best target state funds to those not benefiting from the federal assistance, and (2) strive to complement, rather than duplicate, the federal activities. includes $4.5 billion in actions he proposes the Legislature adopt within the next few weeks. First, the Governor proposes $2 billion for in-person instruction grants connected to a school reopening proposal. We are concerned this proposal sets unfeasible time lines. Second, the Governor proposes providing $2.4 billion in tax refunds to low-income taxpayers, which we think could be more targeted. Third, we million in small business grants is worth considering. -at-home orders is reasonable. Framework for Considering Early Action Proposals. The Governor proposes over two dozen proposals costing $6.5 billion that he is asking the Legislature to pass in the early spring. We recommend the Legislature consider each proposal separately and ask a series of questions to determine if the proposals warrant early action. These questions are: (1) Does the administration provide sufficient evidence of a problem? (2) Is the proposal time sensitive? (3) Is the entire funding amount time sensitive? (4) Is there sufficient detail in the plan to assess its potential success? Restoring Budget Resilience. In June 2020, the state took a number of actions including making withdrawals from reserves and shifting coststhat were larger than necessary. In light of this fact, as well as continued economic uncertainty and anticipated future deficits, we think it is important that the state restore most or all of that in a sizeable deposit to rebuild some budget resilience, but he uses very few discretionary proposals to restore these tools. We agree the state should remain focused on the crisis at hand, but taking some of these actions now is nonetheless weather the next unexpected downturn. Introduction The sta coronavirus disease 2019 (COVID-19) pandemic last year. Although the state economy abruptly ground to a halt in the spring with the emergence of COVID-19, it has experienced a quicker rebound than expected. While negative economic consequences of the pandemic have been severe, they do not appear to have been as catastrophic from a fiscal standpoint as the budget anticipated. But, the recovery has been uneven. Many low-income Californians remain out of work, while most high-income workers have been spared. On January 8, 2021, Governor Newsom presented his proposed state budget to the Legislature. In this report, we provide a brief summary of the proposed budget based on our initial review. In the coming weeks, we will analyze the plan in more detail and release several additional budget analyses. proposals for the Legislature, including any themes that emerged as we conducted our preliminary review. We also provide our initial assessment of the structure of the budget and raise issues for legislative consideration on the major budget proposals. Budget Bu£¦¤³ #®£¨³¨® Figure Figure 1 General Fund Condition Summary (In Millions) 2019-20 2020-21 2021-22 Revised Revised Proposed Prior-year fund balance $11,292 $5,359 $12,203 Revenues and transfers 140,623 162,742 158,370 Expenditures 146,556 155,898 164,516 Ending fund balance $5,359 $12,203 $6,058 Encumbrances $3,175 $3,175 $3,175 SFEU balance 2,184 9,028 2,883 Reserves BSA $17,120 $12,536 $15,574 SFEU 2,184 9,028 2,883 Safety net 900 450 450 Total Reserves $20,204 $22,014 $18,907 SFEU = Special Fund for Economic Uncertainties and BSA = Budget Stabilization Account. Total Reserves Reach $18.9 Billion. The bottom of Figure 1 shows total reserves planned for the end of 2021- -21 with $18.9 billion in total reserves. This represents an increase of $7.5 billion over the enacted reserve level of $11.4 billion in 2020-21. The increase is the result of three factors: Deposit of $3 Billion in BSA for 2021-22. Proposition 2 (2014) requires the the Budget Stabilization Account (BSA). Generally, these reserve deposits are higher when the state collects more revenues. Under the adminis revenue estimates, the state is required to make a $3 billion deposit into the BSA in 2021-22. $4.2 Billion in Reserve Deposit Adjustments. Proposition 2 also requires the ears the state would need to make $4.2 billion in true-up deposits to the BSA for 2019-20 and 2020-21 due to notably improved revenue estimates since the 2020-21 Budget Act. Of this total, $3.2 interpretation of the constitutional rules (see the nearby box). Increase in the Discretionary Reserve Balance of $267 Million. main discretionary reserve is called the Special Fund for Economic Uncertainties (SFEU). The 2020-21 budget package enacted a discretionary reserve balance of $2.6 billion and the Governor proposes a year-end balance of $2.9 billion in that reserve. -5¯ Rules The constitution requires the state to make annual deposits into the Budget Stabilization Account (BSA) unless the withdrawal is reduced or suspended under a budget fiscal years as revenue estimates are updated. In 2020-21, the state suspended the required BSA deposit and withdrew $7.8 interpretation of the constitutional rules is that the state still must make a true-up deposit for the year in which the deposit was suspended. This results in an increased reserve requirement of $3.2 billion. This interpretation is not unreasonable, but other interpretations are plausible. Administration Estimates Large Multiyear Operating Deficits. An operating deficit occurs when baseline expenditure growth outpaces anticipated revenue growth. Both our office and the administration anticipate this is the case. In our November Fiscal Outlook, we found the state faces large and growing multiyear operating deficits over the outlook period. Under its own revenue forecast, the administration also anticipates proposals. Specifically, these deficits would grow from $7.6 billion in 2022-23 to $11.3 billion in 2024-25. Windfall We Estimate Governor Allocated a Windfall of $15.5 Billion. We estimate the Governor had a $15.5 billion windfall to allocate in the 2021-22 budget process. This is slightly larger than the $15 billion surplus the Governor has cited. Both our office and by estimating the amount of discretionary spending in the budget. We define discretionary spending as new spending not required under law or to maintain current service levels. In a number of areas, our office and the administration differ on whether a spending proposal is discretionary or not. For example, recent budgets made a number of programmatic spending amounts subject to suspension under certain conditions. Those conditions are not met, so we do not count funding those program amounts as discretionary, although the administration does. Comparison to LAO November Outlook. In our Fiscal Outlook released in November 2020, our office anticipated the state would have a windfall of $26 billion, significantly higher than the windfall allocated in the Gover Much Higher BSA Deposits and Constitutional Debt Requirements. Across the budget window, the administration anticipates the state will have $5.6 billion in higher required reserve deposits and debt payments under the requirements of Proposition requirements and higher estimates of capital gains revenues. Higher Direct COVID-19-Related Costs. The administration estimates direct COVID-19 expenditures, which we do not consider discretionary, are higher by $4.4 billion compared to the budget act assumption. (We define direct COVID-19 expenditures to include expenses for testing, contact tracing, and vaccine distribution.) In our Outlook, we assumed these costs would be higher than 2020-21 by only $2.8 billion. In addition, the administration appears to assume a much lower federal reimbursement rate on COVID-19 expenditures, resulting in an additional $1.2 billion in costs relative to our November estimates. On net, the administration estimates COVID-19-related costs are $2.8 billion higher than we assumed. Higher Spending on Caseload-Driven Programs. health an Fund spending is higher by nearly $2 billion compared to our estimates. Most of these differences are in Medi-Cal and California Work Opportunity and Responsibility to Kids. In these two programs, the differences in our estimates of $900 million and $800 million, respectively. Very Similar Revenue Estimates. After accounting for reserve deposits and reimbursements from the federal government, our estimates of revenues over the budget window are only $1.7 estimates. Given that both our office and the administration revised revenue estimates upward by tens of billions of dollars, these figures are very similar. '¤¤± « &´£ 7¨£¥ «« How the Governor Allocates the Windfall. Figure 2 shows how the Governor proposes the Legislature allocate the $15.5 billion windfall. Specifically, the Governor proposes allocating: $8.1 Billion to One-Time or Temporary Spending. The Governor proposes spending just over half of discretionary resources, or $8.1 billion, on a one-time or temporary basis for a variety of programmatic expansions. (We define temporary to mean three years or fewer.) $2.9 Billion to the SFEU Balance. The Governor proposes the Legislature enact a year-end balance in the SFEU of $2.9 billion. While the Legislature could set this fund balance to any amount greater than zero, in recent years, the Legislature has enacted balances in the SFEU around $1.5 billion or more. $2.5 Billion to Revenue Reductions. The Governor proposes using $2.5 billion, about 15 percent of the windfall, to reduce revenues. Nearly all of this total would provide a $600 tax refund to low-income taxpayers. $1.3 Billion to Ongoing Spending Increases. proposals include $1.3 billion in ongoing spending, slightly less than 10 percent of the windfall. (We estimate the costs of these proposals would grow slightly over time, totaling $1.4 billion by 2024-25.) $700 Million to Repay Debts and Liabilities. In addition to $3 billion in constitutionally required debt payments, the Governor proposes the Legislature use $700 million in discretionary resources to repay state debts and liabilities. This includes repaying some special fund loans made in 2020-21 and an additional payment to the Cali How the Governor Allocates the Windfall by Program Area. Figure 3 shows how the $15.5 billion in spending proposals are distributed across major program areas. (School and community college spending is excluded from this figure because it is constitutionally required and, therefore, not discretionary.) The largest one-time spending proposals are for housing and homelessness, as well as natural resources and the environment. In these areas, the Governor proposes spending $2.3 billion and $1.9 billion on one-time or temporary purposes, respectively. The Governor focuses ongoing amounts on health and behavioral health. As Figure 4 shows, the Governor distributes the $15.5 billion windfall over 150 proposals. (The Appendix itemizes these proposals by program area.) Governor Allocates $2.5 Billion of the Windfall to Discretionary COVID-19-Related Spending. In addition to the new $4.4 billion in direct COVID-19 expenditures included billion in discretionary COVID-19 spending. (Discretionary COVID-19 expenditures include funding allocated to respond to the secondary effects of the pandemic, for example, funding for business assistance.) Figure discretionary COVID-19 spending among program areas. In addition to the amounts shown in the figure, more than $7 billion 98 proposals are directly related to COVID-19. Governor Proposes $11.5 Billion for Immediate or Early Action. The Governor proposes the Legislature take immediate or early action on $11.5 billion in spending or revenue reductions (see Figure 6). This includes $2.4 billion in spending using the windfall, $6.7 billion in school and community college spending, $2.4 billion in tax refunds, and $1.4 billion in spending from special funds. The largest of the early action proposals using the windfall are $550 million for small business grants and $250 million for funding to continue the Homekey program. Figure 6 Spending Increases and Revenue Reductions Proposed for Immediate and Early Action (In Millions) Program/Department Proposal 2020-21 2021-22 Immediate General Fund Windfall Spending GO-Biz Small business grants, second round $550 X GO-Biz New grant program 250 250 Housing and Community Funding to continue Homekey Development program Housing and Community Funding for housing-related 250 Development infrastructure Department of Forestry and Fire Wildfire and forest resilience package 61 $195 Protection California Student Aid Commission Cal Grant A eligibility change 58 58 Board of State and Community Enhanced probation services for adults 50 Corrections and juveniles GO-Biz Forest resilience funding 47 Alcoholic Beverage Commission License Renewal Fee Waiver 45 X GO-Biz Grants to entrepreneurs 35 Department of Water Resources 30 30 Sustainable groundwater management grants Board of Barbering and License Renewal Fee Waiver 26 X Cosmetology GO-Biz Cultural institutions grants 25 X California Workforce Development Expand existing apprenticeships 25 Board Department of Conservation Wildfire and forest resilience package 25 60 Office of Emergency Services Home Hardening and Community 22 Protection Department of Food and Agriculture 20 20 State Water Efficiency and Enhancement Program grants Sierra Nevada Conservancy Wildfire and forest resilience package 20 50 Department of Parks and Recreation Wildland firefighting research grant 10 75 Department of Fish and Wildlife Wildfire and forest resilience package 9 36 Arts Council California Creative Corps Pilot 5 10 Program Tahoe Conservancy Wildfire and forest resilience package 1 11 Aging and Disability Connections Increase funding to ADRC centers 3 Totals, General Fund Windfall Spending $1,814 $548 Schools and Community College Spending (General Fund) Department of Education Expanded learning and academic $4,557 intervention Department of Education In-person instruction grants 2,000 X California Community Colleges Emergency student financial aid 100 California Community Colleges Student retention and enrollment 20 strategies Totals, Schools and Community Colleges $6,677 Revenue Reductions (General Fund) Revenue-related proposal Low-income tax refunds $2,400 X Revenue-related proposal California Competes tax credits $10 Totals, Revenue Reductions $2,400 $10 Special Fund Spending Various Cap-and-trade expenditure plan $624 $745 CalRecycle Beverage container recycling pilots 5 5 Totals, Special Fund Spending $629 $750 Total General Fund Early and Immediate Action Proposals $11,520 $1,308 0, 2021. However, we continue to receive information from the administration. GO- CalRecycle = California Department of Resources Recycling and Recovery. - ©®± "´£¦¤³ 0±®¯®² «² budget. We include General Fund proposals (both within Proposition 98 and non- Proposition 98), as well as large spending proposals for special funds and bond funds. 4 · 2¤£´¢³¨®² £ "´²¨¤²² !²²¨²³ ¢¤ Tax Refunds to Low-Income Californians. - time $600 tax refund to all taxpayersincluding those using an Individual Taxpayer Identification Number (ITIN)who received the California Earned Income Tax Credit for 2019 or who will receive it for 2020. The refund payments would begin in February billion in 2020-21 for these refunds. LAO Comment: Legislature Could Consider Alternative Targeting of Refunds. -income workers struggled to job losses have fallen disproportionately on low-wage workers. In light of this, the -income Californians makes sense. The Legislature, however, could consider alternative ways to target this relief. Over the last year, most low-income Californians received two federal stimulus checks totaling $1,800 per adult and $1,100 per child. One exception is Californians who use an ITIN to file their taxes, who were not eligible for the federal programs. Given this, the Legislature ITIN taxpayers. For example, our preliminary estimates suggest providing a refund of $1,800 per adult to ITIN taxpayers with incomes below $75,000 (a similar threshold to Expansion of Tax Incentives. -time increases of several existing tax credits and exclusions: Affordable Housing. $500 million for tax credits to builders of rental housing affordable to low-income households. (This is the third consecutive year in which the Governor has proposed a one-time credit, for a total of $1.5 billion in tax credits. The administration has not reduced revenues to account for any of these allocations in its multiyear estimates. As with the prior expansions, up to $200 million would be available for the development of mixed-income housing projects.) California Competes. $180 million for California Competes to award tax credits aimed at attracting or retaining businesses in California. Hiring Credit. $100 million for tax credits to smaller businesses that increase their number of employees. Sales Tax Exemption. $100 million for sales tax exclusions awarded by the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) on purchases of equipment for certain manufacturing activities. Taxpayers would claim these tax credits and exclusions over a number of years beginning in 2020- General Fund revenues by $76 million in 2020-21 and $30 million in 2021-22. Expands One-Time Grants to Various Entities. several one-time proposals to provide assistance to businesses: Small Business Grants. $550 million to double the size of a recently created program that awards grants up to $25,000 to businesses and nonprofits with revenues under $2.5 million that were impacted by the pandemic. Other Business Grants. $250 million for California Competes to provide grants to businesses in addition to its traditional tax credits. Fee Waivers. $71 million to waive some of the fees paid by certain professionals and businesses disproportionately affected by the pandemic, such as manicurists and small restaurant owners. Other. $135 million for a variety of other grant and loan programs aimed at helping small businesses, with a focus on those from underserved communities. Also, the budget provides $25 Economic Development for cultural institutions. LAO Comment: Some Proposals Raise Concerns. The Govern expand California Competes (both tax incentives and grants) and CAEATFA raise a number of concerns: (1) we previously noted issues with the effectiveness of California Competes and CAEATFA exclusion, (2) these programs are not well targeted to businesses impacted by the pandemic, and (3) businesses would realize the financial benefits more slowly than alternatives such as cash grants. (For our previous analysis of California Competes see: Review of the California Competes Tax Credit. For our previous analysis of the CAEATFA exclusion see: Evaluation of a Sales Tax Exemption for Certain Manufacturers.) 3¢§®®«² £ #®¬¬´¨³¸ Colleges More Than $19 Billion in New Spending Proposals. Proposition 98 (1988) establishes a minimum annual funding level for schools and community colleges commonly known as the minimum guarantee. Due to increases in the minimum guarantee over the 2019-20 through 2021-22 period (see nearby box), the state has $19.1 billion available for new spending on K-14 programs. The Governor proposes to spend most of this amount on three main priorities: Paying Down Deferrals ($8.4 Billion One Time). The June 2020 budget plan deferred $12.5 billion in payments to schools and community colleges. The Governor proposes to pay down $8.4 billion of this amount, with districts receiving the associated cash in 2021-22. Slightly more than $4 billion would remain deferred from 2021-22 to 2022-23. Providing In-Person Instruction and Expanding Academic Support ($6.6 Billion One Time). The Governor proposes immediate action to provide $2 billion in one-time grants to incentivize schools to offer in-person instruction for younger students and students with high needs, potentially as soon as February 16, 2021. To receive this additional funding, school districts must (1) develop or update a school reopening plan consistent with updated guidance from the California Department of Public Health, including a plan for asymptomatic testing of all students and staff potentially as often as every week, and (2) approve collective bargaining agreements to implement the new school reopening plan by February 1. (Districts could receive somewhat lower grant amounts if they meet these requirements one month later.) The Governor also proposes early action to provide schools with $4.6 billion in grants to offer additional academic support for disadvantaged students, which could include summer school, longer school days, community learning hubs, and other locally developed interventions. Funding Cost-of-Living Adjustments (COLA) ($2.2 Billion Ongoing). Most of 3.84 percent COLA for the Local Control Funding Formula. This COLA rate reflects the estimated statutory COLA for 2021-22 (1.5 percent) plus the compounded value of the COLA the state did not provide in 2020-21. For other education programs, including community college apportionments, the budget provides only the 1.5 percent COLA. #§ ¦¤² ¨ ³§¤ 0±®¯®²¨³¨® ΘΗ '´ ± ³¤¤ 5£¤± ³§¤ Gov Substantial Upward Revisions to Estimates of the Minimum Guarantee. Each year, the state calculates the minimum guarantee using a set of formulas in the State Constitution. The guarantee encompasses state General Fund revenue as well as local property tax revenue. Compared with the estimates in the June 2020 budget plan, the administration revises its estimates of the guarantee up $1.9 billion (2.4 percent) in 2019-20 and $11.9 billion (16.8 percent) in 2020-21. For 2021-22, the guarantee is up an additional $3 billion (3.6 percent) relative to the revised 2020-21 level. In addition, a law enacted last June requires the state to make a $2.3 billion supplemental payment on top of the guarantee in 2021-22. Including this payment, total Proposition 98 funding for schools and community colleges in 2021-22 is $88.1 billion$60.8 billion from state General Fund and $27.3 billion from local property tax revenue. Budget Proposes Eliminating Supplemental Payments After 2021-22. When the state created the requirement for supplemental payments, it had anticipated a steep drop in the minimum guarantee that would affect school and community college funding for several years. The supplemental payments were intended to accelerate the recovery from this drop, with payments growing from $2.3 billion in 2021-22 to more than $6 billion by 2024-25. Due to the strong rebound in the minimum guarantee, the Governor proposes to eliminate these payments after 2021-22effectively making the $2.3 billion included in the 2021-22 budget a one-time payment. Proposition 98 Reserve Deposits Required in 2020-21 and 2021-22. Proposition 2 (2014) established the Proposition 98 Reserve and set forth rules requiring deposits and withdrawals under certain conditions. Generally, the state is required to deposit Proposition 98 funding in this account when revenue from capital gains is relatively strong and the minimum guarantee is growing faster than per capita personal income. The administration estimates the state is required to make a $747 million deposit in 2020-21 and a $2.4 billion deposit in 2021-22. The total balance of the reserve would be $3 billion, which equates to about 3.5 percent of all funding that would be allocated to schools and community colleges in 2021-22. LAO Comment: Budget Reflects a Reasonable Mix of One-Time and Ongoing Spending. Of the new spending specifically attributable to 2021-22, the budget allocates $2.6 billion for ongoing commitments and $2.9 billion for one-time activities. This one-time spending, combined with a $2.4 billion one-time deposit into the Proposition 98 Reserve (discussed in the nearby box), creates a budget cushion of $5.3 billion. This cushion helps protect ongoing programs from volatility in the minimum guarantee. Specifically, to the extent the guarantee drops or grows more slowly in the future, the expiration of these one-time allocations allows the state to accommodate the lower guarantee without relying on program cuts or payment deferrals. Having a large one-time cushion seems especially important in 2021-22 given the continued and significant economic uncertainty due to the pandemic. Moreover, $2.3 billion of the total Proposition 98 funding allocated to schools in 2021-22 is supported with a one-time supplemental payment (the Govern are provided after 2021-22). LAO Comment: Concerns With Feasibility of In-Person Instruction Proposal. Given the short time frame and significant steps schools would be required to take, we are concerned the proposal for offering in-person instruction is likely unfeasible and could discourage school district participation. To be open by February 16, schools would only have a few weeks to complete their reopening plans, arrange routine testing, and develop collective bargaining agreements with their labor unions. It is also unclear whether the state and local health departments have the capacity to provide the support and technical assistance necessary to help schools implement their reopening plans in such a short time frame. The Legislature will want to consider whether the proposal provides sufficient time for planning and whether the schools and public health agencies have the capacity to effectively implement the requirements under the time lines specified. To address these concerns, the Legislature could, for example, modify the proposal to first offer in-person instruction to all high-needs students a month before bringing back all younger students. This would allow time for schools to ramp up testing capabilities and address other implementation issues with a smaller group of students and staff. Alternatively, the Legislature could direct resources to expanding statewide testing capacity and infrastructure that would allow schools to more easily access routine testing as a way to support school reopening. However, doing so by February 16 may be difficult. LAO Recommendation: Allocate Greater Share of Funding to Paying Down Deferrals and Addressing Pension Cost Increases. School districts report a number of costs associated with responding to the COVID-19 pandemic and preparing to resume in-person instruction. Examples include purchasing devices and internet connectivity for distance learning, cleaning and reconfiguring facilities, training teachers, and testing for the virus. However, the 2020-21 budget allocated more than $7 billion in state and federal funds to address COVID-19-related costs and mitigate learning loss. Recent federal legislation budgetis likely to provide a similar amount of one-time funding in 2021-22. Although some additional state funding directed toward academic support and reopening schools might be warranted, we think the budget misses an opportunity to make more progress on two other issues. Specifically, we recommend the Legislature allocate a larger share of the one-time funds for (1) paying down deferrals or (2) mitigating future cost increases related to pensions. Paying down deferrals would better position districts and the state to weather economic volatility by reducing pressure on future Proposition 98 budgets. Paying down future pension costs could help smooth out a notable increase in costs currently projected for 2022-23. Although taking these actions might mean somewhat less one-time funding is available for new programs in 2021-22, we think they would increase the likelihood that the programs districts do develop in the coming year can be sustained over time. Universities Governor Proposes Ongoing Base Increases Linked With Certain Expectations. The Governor proposes a total of $336 million in additional ongoing funding for the California State University (CSU) and the University of California (UC). The largest ongoing proposals for the universities are 3 percent General Fund base increases ($112 million for CSU and $104 million for UC). The Governor links these base increases to CSU and UC meeting three expectations: (1) developing a plan to eliminate their achievement gaps by 2025, (2) permanently increasing the share of courses they offer online by at least 10 percentage points over their pre-pandemic levels, and (3) expedite student transfer from community colleges to CSU and UC. The Governor also expects the universities to improve the alignment of their courses and programs with workforce needs. Additionally, he expects the segments to keep their tuition flat at 2020-21 levels. Consistent with his budget approach the past few years, the Governor sets no enrollment growth expectations for CSU or UC. Beyond the base increases, the Governor proposes ongoing augmentations for several student support programs, including student basic needs and mental health. One-Time Proposals Focus on Maintenance and COVID-19 Relief. The Governor proposes a total of $450 million in one-time funding for the universities. The largest one- time initiatives are $175 million each for CSU and UC, with both segments able to use the funds for deferred maintenance and UC also able to use the funds explicitly for energy efficiency projects. Other notable one-time proposals focus on emergency student financial aid and faculty professional development, with the intent to help students and faculty navigate some of the challenges associated with the pandemic and the administration is estimating that California will receive roughly $2.9 billion in additional one-time higher education support from the new round of federal relief funding. A portion of the $2.9 billion would go to CSU and UC, which they could use for emergency student financial aid as well as various institutional purposes (such as addressing revenue losses in their housing programs and covering higher COVID-19- related technology and professional development costs). We provides additional funding for base operations to partly address the reductions the are generally in line with legislative priorities the past several years (though the Legislature could consider expressing other expectations, for example, on enrollment growth). The budget package designates more new funding to one-time than ongoing few years. It also designates the bulk of one-time spending for maintenance and energy efficiency projectshelping address existing backlogs while avoiding more costly future repairs and potentially having some modest economic stimulus effect. The Legislature might want to were to decide to put additional ongoing funding into student support programs, we recommend the Legislature consider several fundamental policy issues, including crystallizing overarching objectives, measuring unmet need, linking funding levels and allocations with unmet need, and tracking progress toward meeting objectives. The Legislature also could evaluate most, if not all, of the Gov-time proposals (beyond the facility proposals) in light of the new federal relief package, which has funding for the same purposes. Lastly, as lower-income students (those most affected during these times) receive full tuition coverage at the public universities and campuses generally are on track to resume in-person operations for the 2021-22 academic year, the Legislature could reconsider having the universities keep tuition levels flat. Raising tuition would increase overall budget capacity, allowing more state priorities to be addressed, including potentially supporting more or better university services. (®´²¨¦ £ (®¬¤«¤²²¤²² Key Homelessness Proposals. The Governor proposes $1.75 billion one-time General Fund for various programs related to homelessness. Homekey Continuation. The Governor proposes $750 million to continue the Homekey Program administered through the Department of Housing and Community Development (HCD). Over $800 million in one-time funding (all funds) was provided to the newly established Homekey Program in 2020-21. The program allows for the acquisition and rehabilitation of hotels, motels, vacant apartments, and other properties that could be used to provide permanent housing for persons experiencing homelessness or at risk of homelessness, and who are impacted by COVID-19. HCD provides Homekey grants to local governments to acquire these properties, which are owned and operated at the local level. The administration indicates that the existing Homekey funding will create over 6,000 housing units for individuals and families. Of the $750 million, the Governor requests early action from the Legislature to authorize $250 million in 2020-21. Behavioral Health Infrastructure. The Governor proposes $750 million for the Department of Health Care Services (DHCS) to provide grants to counties for the acquisition and rehabilitation of properties to expand behavioral health treatment resources. The administration estimates this proposal would produce at least 5,000 beds to treat persons with behavioral health disorders. (This proposal is also discussed in the health and behavioral health section of this report.) Expanded Facilities to Support Housing. The Governor proposes $250 million for the acquisition and rehabilitation of Adult Residential Facilities and Residential Care Facilities for the Elderly with a focus on preserving and expanding housing for low-income seniors who are experiencing homelessness or are at risk of homelessness. The Department of Social Services (DSS) would administer the program and provide grants to local governments. Funding for Housing-Related Infrastructure. The Governor proposes $500 million one-time General Fund to the Infill Infrastructure Grant (IIG) program administered by HCD. This program helps to fund housing-related infrastructure such as building site remediation, sewers, and roads. Of the $500 million, the Governor requests early action from the Legislature to authorize $250 million in 2020-21. This proposal adds to the $300 million General Fund recently provided for IIG. Eviction Protections. The Governor proposes $11.7 million one-time General Fund to trial courts for the implementation of the Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020 (Chapter 37 of 2020 \[AB 3088, Chiu\]). Under the legislation, no tenant can be evicted before February 1, 2021 because of rent owed due to a COVID-19-related hardship experienced between March 4 and August 31, 2020, if the tenant provides a declaration of hardship. The law also specifies that for a COVID- 19-related hardship that occurs laterbetween September 1, 2020 and January 31, 2021tenants must pay at least 25 percent of their rent due to avoid eviction. Tenants are still responsible for paying unpaid rents to landlords, but those unpaid amounts cannot be the basis for an eviction. Under the legislation, landlords may pursue such unpaid rent in small claims filings. The administration anticipates an increase in eviction cases (known as unlawful detainers) and small claims filings when the statutory protections expire, resulting in new workload for trial courts. The Governor requests early action from the Legislature to authorize the entire $11.7 million in 2020-21 in anticipation desire to extend the eviction protections in AB 3088 past January 31, 2021. The budget proposal does not provide details about an extension of the eviction moratorium. LAO Comments: Governor Continues to Rely on One-Time Solutions. While the housing affordability by once again proposing significant state resources toward these esponse continues to focus on one-time solutions. As we have said previously, a clear, long- investments would have a meaningful ongoing impact on its housing and homelessness challenges. In addition, and rehabilitation of properties using one-time resources. Moreover, whether the unclear. Lastly, it is unclear how the administration would target the resources administered by DHCS and DSS to address homelessness. It is possible that addressing homelessness will not be the principal benefit of these proposals. (¤ «³§ £ "¤§ µ¨®± « (¤ «³§ Budget Reintroduces the California Advancing and Innovating Medi-Cal (CalAIM) Proposal. As a part of the January 2020-21 budget, the Governor proposed a large number of Medi-Cal reforms collectively known as CalAIM. With this proposal, the Governor aimed to: (1) provide a more comprehensive suite of services to high-risk, high-need Medi-Cal beneficiaries (such as transitional housing services to protect against homelessness); (2) standardize and streamline Medi-Cal managed care; (3) extend programs and the associated federal funding for Medi-Cal currently authorized under temporary waiver authority; and (4) rethink how mental health and CalAIM was withdrawn at the 2020-21 May Revision. The Governor-22 budget reintroduces CalAIM in a broadly similar, but more developed, form. (Consultation with components of the proposal beginning in January 2022, the Governor proposes to spend $1.1 billion total funds ($531.9 million General Fund) in 2021-22, and $864 million total funds ($423 million General Fund) on an ongoing annual basis. LAO Comment: Legislative Considerations Regarding the CalAIM Reforms. In concept, CalAIM reflects a promising package of reforms to bolster, streamline, and transform care delivery in Medi-Cal. At the same time, the CalAIM proposal is complex and far-reaching. While the stakeholder process leading up to the proposal was robust, the onset of COVID- the proposal and provide input. Accordingly, we suggest the Legislature use the upcoming budget process to: Y many ways. For example, the implementation time line is revised. Also, whereas last year the administration announced it was exploring whether to pursue a new federal funding opportunity for residential services for individuals with mental illness, the current proposal announces an intent to pursue this opportunity. Additionally, the current proposal expands the list of nontraditional Medi-Cal benefits that may be offered to enrollees to include asthma remediation services. Resolve Key Outstanding Questions About the Proposal. While the Governor released extensive documentation with the updated CalAIM proposal, whether this information answers key outstanding questions is unclear. For example, how would the administration implement and continue to refine CalAIM in coordination with other major statewide planning initiatives, including the Master Plan for Aging, the Behavioral Health Task Force, and other state efforts related to homelessness? Weigh the Potential Benefits and Risks Presented by This Complex Reform Package. CalAIM presents both benefits and risks for Medi-Cal beneficiaries, providers, and policymakers. For example, transitioning Medi-Cal beneficiaries and benefits into and out of managed carethere are CalAIM proposals in each of these two directionsoften brings short-term disruptions even if long-term improvements are likely to materialize. Proposal. The CalAI transform Medi-Cal. The Legislature could consider whether it has additionalor differentpriorities for transforming Medi-Cal and whether any components may osal, such as requirements for robust evaluation and oversight. Budget Includes Several Major Behavioral Health Proposals. budget includes several major proposals to address behavioral health needs statewide. These include: $750 Million to S As described earlier, the Governor proposes $750 million General Fundmade available over three yearsfor competitive grants to counties to purchase or renovate real estate for behavioral health facilities. Counties would be required to provide matching funds to receive these grants. $400 Million to Provide Student Behavioral Health Services Through Medi- Cal. The Governor proposes $400 million total funds ($200 million General Fund)made available over three yearsto incentivize Medi-Cal managed care plans to establish treatment partnerships with county behavioral health departments and schools. $233 Million for Counties to Treat Felony Incompetent-to-Stand-Trial (IST) Patients. The Governor proposes $233 million General Fundof which $136 million is ongoingfor a demonstration project in which counties would treat felony IST patients instead of the Department of State Hospitals. This budget, but structured differently. Potential Redirection of Jail Bonds for Community Mental Health Facilities. The Governor has expressed interest in redirecting unused jail bonds to purchase or renovate community mental health facilities. According to the administration, about $202 million could be made available for this purpose. LAO Comments: Legislative Considerations for Behavioral Health Proposals. First, the Legislature may wish to consider whether counties have the capacity to increase their funding for behavioral health to meet the Behavioral Health ing existing services. Second, in considering the student behavioral health proposal, the Legislature may wish to ask the administration whether Medi-Cal managed care plans would have the capacity to meet the requirements to receive the incentive payments given the proposal. Finally, the Legislature also may wish to ask the administration why it is proposing ongoing funding for the county felony IST demonstration project, rather than funding decision. %µ¨±®¬¤³Ǿ . ³´± « 2¤²®´±¢¤²Ǿ £ $¨² ²³¤± Preparedness Zero-Emission Vehicles (ZEVs) and Infrastructure. three proposals that would provide a total increase of up to $1.5 billion (various funds) to promote ZEVs. First, the budget includes up to $1 billion (Alternative and Renewable Vehicle and Fuel Technology Fund) to support new ZEV fueling infrastructure. The funding would come from extending various vehicle-related charges (such as a portion of vehicle registration fees) set to expire in 2024 and using some of the future revenue to issue revenue bonds. Second, the budget includes $465 million from the Greenhouse Gas Reduction Fund (GGRF)$239 million in the current year and $226 million in the budget yearfor (1) heavy-duty ZEV incentives and (2) light-duty ZEV incentives for low-income households in disadvantaged communities. Third, the budget includes $50 million one time from the General Fund to support ZEV charging stations at state- owned facilities. LAO Comments: Legislative Considerations in Reviewing ZEV Package. These g order. In reviewing the proposals, there are many different issues for the Legislature to consider, including (1) whether the proposals are likely to be the most effective set of quality goals; (2) how these state programs will be integrated or coordinated with existing programs, such as ZEV programs administered by electric utilities; (3) how the administration intends to balance efficiency and equity considerations in the allocation of funding for ZEV infrastructure and vehicles; and (4) whether issuing bondsrather than continuing a pay-as-you go approachis the most appropriate funding mechanism for the proposed activities. Disaster Response and Preparedness. In addition to the COVID-19-related spending related to responding to and preparing for disasters. (The budget also assumes total additional state spending in 2020-21 of over $3 billionincluding a net General Fund increase of $1.3 billion after accounting for federal reimbursementsfor response and recovery activities related to the 2020 wildfires.) Some of the major proposals include: Wildfire Resilience and Forest Health. of $1 billion$323 million in 2020-21 and $677 million in 2021-22for 15 departments to implement various efforts related to improving forest health and making communities more resilient to future wildfires. The total includes $675 million from the General Fund and $325 million from GGRF. Given the severity of wildfires in recent years, it is reasonable to consider additional spending on wildfire prevention and mitigation activities. In comparison, most wildfire response capacity. In reviewing the proposed package, it will be important to evaluate the relative effectiveness of each proposal at improving wildfire safety and, in turn, whether funding the particular mix of programs would be the most effective way to spend the total funding ultimately provided. In addition, all of the proposed General Fund augmentations are one time, but the Legislature might want to consider whether certain programs should operate on an ongoing basis to address what is a long-standing wildfire risk in many areas of the state. California Disaster Assistance Act (CDAA) Funds. The administration proposes $256 million one time from the General Fund to assist local governments with emergency response and recovery through CDAAa $155 million increase over the amount budgeted for 2020-21. CDAA funding is used to (1) restore or replace public real property damaged during disasters or (2) reimburse local governments for eligible emergency response costs. Local governments are typically responsible for 25 percent of the eligible costs under CDAA, with the state covering the remaining 75 percent. Flood Management. The proposed budget includes $67 million from the General Fund in 2021-22, plus an additional $158 million over the subsequent three along the American River. The Governor also proposes $75 million one time from the General Fund for deferred maintenance on levees in the Central Valley, as well as about $140 million from Propositions 1 (2014) and 68 (2018) for various other flood-related projects and initiatives. Disaster Response Emergency Operations Account (DREOA) Authority Extension. The authority the administration uses to access funds in DREOA for pandemic-response is set to expire at the end of 2020-21. The administration proposes extending its authority to access DREOA for pandemic response through control section language (C.S. 11.92) in the 2021-22 budget. In reviewing the language, the Legislature will want to consider whether it allows for sufficient legislative oversight of pandemic response expenditures given the critical nature and magnitude of these expenditures. Clean Up of Contaminated Sites. million one time from the General Fund in 2021-22 for the Department of Toxic Substances Control (DTSC) to clean up contaminated properties. The amount proposed would be allocated for cleanup and investigation activities at sites across the state according to risk-based criteria. The administration states that the proposed funding would be contingent upon posed governance and fiscal reform package for DTSC, which includes creation of an oversight board and changes to the charges that LAO Comments: DTSC Proposal Has Merit, but Lacks Important Details. We find that the proposals have merit given a backlog of contaminated sites, the potential for an oversight board to increase transparency and accountability, and the structural deficits of the two affected funds. However, certain details will be important for the Legislature to evaluate each proposal. For instance, additional information is needed on the specific criteria DTSC will use to prioritize the $300 million and the specific projects that will be selected. In addition, while the funding is proposed as one time, it is unclear if there will be ongoing costs to maintain and operate implemented projects. The specific statutory language to establish the board and change the structure of charges also will be important. For example, the Legislature will want to consider whether the proposal fairly assigns costs to payers that should bear the fiscal burden, as well as whether the charges can be adjusted in future years to address inflation or other cost increases in order to avoid future structural deficits. /µ¤± «« ,!/ #®¬¬ents 2¤¢¤³ &¤£¤± « 0 £¤¬¨¢ 2¤«¨¤¥ Recent Federal Action Provides Substantial Pandemic Relief Through the Spring... In late December, the federal government passed an additional package of pandemic relief which included lump-sum payments to most taxpayers; expanded unemployment insurance benefits; and provided funding for rental assistance, additional significant proposalsmany of them proposed as immediate and early actionsthat address similar pandemic-related needs. This overlap is understandable given that the final details of the federal package were only known as the administration was cementing its budget proposal. ...Reducing the Urgency of Immediate State Action. Nonetheless, given what we light of new federal relief. The additional federal relief significantly reduces the pressure on the state to act immediately to provide economic assistance to those affected by the -income Californians costs $2.4 billion, whereas we estimate the recent federal unemployment benefits expansion will provide another $20 billion to $30 billion to Californians impacted by job losses. State Should Complement Federal Action and Focus on Controlling the Spread of Virus. In light of the recent federal action, we recommend the Legislature: (1) determine how to best target state funds to those not benefiting from the federal assistance, and (2) strive to complement, rather than duplicate, the federal activities. While the st capacity to provide economic assistance is much more limited than the federal government, state funding can make a significant difference for public health measures complementing federal efforts is to restore economic activity by controlling the spread of the virus, for example, through rapid vaccine distribution. )¬¬¤£¨ ³¤ £ % ±«¸ !¢³¨® Immediate Action Proposals. billion in actions he proposes the Legislature adopt within the next few weeks. These actions are intended to address some the most pressing issues of the pandemic. As noted earlier, however, some of these issues have been addressed in the near term by the federal relief package passed in December. Below, we summarize our assessment of these proposals and whether immediate actionas proposedis warranted. School Reopening Time Lines Likely Unfeasible. Given the short time frame and significant steps schools would be required to take, we are concerned the proposal for offering in-person instruction is unfeasible and likely would discourage school district participation. It also is unclear whether state and local public health agencies have the capacity to support schools on such a short time line. The Legislature will want to consider whether the proposal provides sufficient time for planning and whether the schools and public health agencies have the capacity to effectively implement the requirements under the time lines specified. Tax Refunds for Low-Income Californians Could Be More Targeted. Some groups, in particular taxpayers who use an ITIN, have not been included in recent federal cash assistance programs. The case for immediate action is strongest with regard to providing income support to these taxpayers. Small Business Assistance Worth Considering. Recent federal business assistance, while considerably larger than proposed state assistance, is not well targeted to the most impacted businesses. Because of this, immediate state action on the $550 million for small business grants, which are targeted at impacted businesses, is worth considering. (Taking immediate state action on the $25 million in cultural institution grants also is worth considering for similar reasons.) Doing so, however, would not give the Legislature a chance to determine how much demand actually exists for this brand new program. Should the grants be approved, the administration should report regularly on their distribution. If funds remain unspent by May Revision, the Legislature should consider reallocating them to more pressing needs. Fee Waivers Reasonable. Waiving fees for individuals and businesses directly affected by the pandemic and stay-at-home orders is reasonable. Moreover, the Legislature may wish to ask the administration if individuals and business would be reimbursed for fees paid since March 2020. In reviewing the specific proposals, the Legislature will want to consider whether a full General Fund backfill is necessary given the condition of the special funds affected. In addition, the Governor has indicated interest in taking immediate action on the eviction moratorium, which is set to expire at the end of January. To date, the administration has not provided us with the details of this proposal. Early Action Proposals. The Governor proposes over a dozen proposals costing $6.5 billion that he is asking the Legislature to pass in the early spring. A few of these proposalslike academic support for K-12 students and emergency financial aid for community college studentsoverlap with recent federal action. While a number of proposals increase funding to existing state programs, others are mostly new, like those related to promoting sustainable agriculture. We recommend the Legislature consider each proposal separately and ask a series of consistent questions when determining whether the proposals warrant early action. Specifically, we recommend the Legislature ask: Does the Administration Provide Sufficient Evidence of a Problem? To make this determination, we suggest the Legislature consider whether the proposal aims to address pressing pandemic-related issues in ways that go beyond federal actions. Moreover, we suggest the Legislature consider whether, absent the pandemic, the proposal would be worth pursuing. If not, we suggest taking more time to review the proposal and its policy goals. For instance, we do not think early action is a warranted on the expansion of California Competes, as this proposal is not well targeted to help the most impacted business and also raises many policy questions that deserve thorough consideration. For example, state recoup funding i Is the Proposal Time Sensitive? Specifically, we suggest the Legislature consider whether early action is advantageous. As noted earlier, the recent federal action has reduced the need for urgent action in some areas. What is the overlap of the early action proposals with federal action? Would early state action provide substantial additional benefits? For example, the administration proposes providing $250 million to expand Project Homekey in early action. Does the administration have a list of properties ready for purchase and renovation? Would early action allow individuals experiencing homelessness move in earlier than they otherwise would? Is the Entire Funding Amount Time Sensitive? Sometimes the administration asks for most or all of the funding associated with a proposal in order to start planning and developing the program. The full cost of the proposal, however, often is incurred later. The Legislature may want to consider whether some early action proposals could be approved in concept with the final funding amounts determined as part of the final budget package. For example, some funding proposed for early action would not be spent until 2021-22. Is There Sufficient Detail in the Plan to Assess Its Potential Success? By definition, with early action items, the Legislature has less time to understand the proposals, voice its concerns, and ensure necessary changes are incorporated. Consequently, when adopting an early action proposal, the Legislature should have sufficient information from the administration to be reasonably assured the proposal will achieve its stated goals. We recommend weighing whether the advantages of taking early action outweigh likelihood of success. For instance the state currently does not have an emergency financial aid program for community college students (although it does have traditional financial aid programs for these students). Deciding how to best allocate state emergency financial aid funds could take extra time and deliberation, especially as the Legislature would want to consider how any potential state allocation methods could interact with federal allocation methods. Ultimately, making decisions with the benefit of knowing how vaccine distribution proceeds, how the economy responds, how revenues perform in the spring, and whether the federal government distributes additional funds to states will be very valuable for determining 2¤²³®±¨¦ "´£¦¤³ 2¤²¨«¨¤¢¤ Rebuilding Budget Resilience. The 2020-21 budget addressed a $54 billion budget problem, which arose as a result of an estimated historic decline in revenues. While those estimates were reasonable at the time, since then, we have learned that they were too pessimistic. This means the state took a number of actions to balance the budgetincluding making withdrawals from reserves and shifting coststhat were larger than necessary. In light of that fact, as well as continued economic uncertainty and anticipated future deficits, we think it is important that the state restore most or all of that resilience. The state has two avenues available to do so: Constitutional Requirements. The ad assumptions result in large constitutionally required reserve deposits and debt repayments. For example, the state would end 2021-22 with $18.9 billion in reserves, about $1.6 billion less than the amount proposed under the 2020-21 . In addition, the state would be required to dedicate about $3 billion to debt payments, and the administration proposes using a significant share of this total to pay down unfunded liabilities. Allocating the Windfall. While the administration does reflect large constitutional reserve deposits and debt payments, the Governor proposes using very little of the windfall to restore budget resilience. Specifically, the Governor proposes using $700 million to repay debts and liabilities and sets the balance of in 2020-21. Otherwise, however, the Governor does not use the windfall to he state weather the next downturn. Addressing the Structural Deficit. Like our office, the administration anticipates the ongoing supplemental payment to schools and community colleges shrinks the size of these deficits. However, the Governor does not lay out a plan to address the remainder, which is significant and growing over time. We recommend the Legislature begin to consider how the state might address the bud using some of the windfall to make supplemental pension payments would reduce the multiyear structural deficit. Conclusion The pandemic has disrupted the lives and livelihoods of millions of Californians and continues to take the lives of thousands of Californians each month. In the spring of 2020, the Legislature faced an unprecedented challenge to respond to the pandemic and adopt a budget in the face of unprecedented economic uncertainty. Almost ten months into this di nearly back to pre-pandemic levels and state costs have not risen as dramatically as anticipated. Moreover, effective vaccines are being administered. While the state still is very much in the midst of this crisis, there is hope on the horizon. The budget process offers the Legislature an opportunity to consider how the state can best use its resources to help California respond and recover. Appendix Appendix Figure 1 Business Assistance: Discretionary Spending Proposals in the 2021- (In Millions) 2021-22 Program or One Time or Department Proposal 2020-21 Temporary Ongoing GO-Biz Small business grants, second round $550 GO-Biz 250 California Competes: new grant program GO-Biz Small business finance center $50 GO-Biz Small business loan guarantee program 50 GO-Biz Grants to entrepreneurs 35 Totals $835 $100 GO- Appendix Figure 2 Criminal Justice: Discretionary Spending Proposals in the 2021- (In Millions) 2021-22 Program or One Time or Department Proposal 2020-21 Temporary Ongoing BSCC Support for county probation departments $50.0 BSCC Funding for post release community $19.5 supervision population BSCC COVID-19-related funding for post release 12.1 community supervision population CDCR One-time deferred maintenance allocation 50.0 CDCR 20.3 Valley State Prison: Arsenic and Manganese Removal Water Treatment Plant CDCR California Institution for Men: Air Cooling at 13.9 Facility A CDCR Various other proposals 19.6 $45.7 DOJ Consolidated forensic science laboratory 6.5 campus DOJ DNA Identification Fund backfill 6.0 Judicial Branch Deferred maintenance 30.0 Judicial Branch Courthouse construction and planning studies 8.3 Judicial Branch 53.5 Courthouse facility operations, maintenance, and leases Judicial Branch Continuation of self-help services funding 19.1 Judicial Branch Online adjudication of infractions and 12.3 ability-to-pay CalVCB Restitution Fund backfill 33.0 Totals $50.0 $180.0 $170.0 BSCC = Board of State and Community Corrections; COVID-19 = coronavirus disease 2019; CDCR = California Department of Corrections and Rehabilitation; DOJ = Department of Justice; and CalVCB = California Victim Compensation Board. Appendix Figure 3 Health and Behavioral Health: Discretionary Spending Proposals in the 2021- (In Millions) 2021-22 Program or One Time or Department Proposal 2020-21 Temporary Ongoing CDPH $17.0 awareness, training CDPH Books for low-income children 5.0 CDPH Infectious disease (COVID-19) modeling 0.5 activities CHHS, Secretary Various proposals 7.6 EMSA Various proposals $0.7 Medi-Cal Provide incentives for student behavioral 200.0 health Medi-Cal Reintroduce CalAIM reforms 108.9 423.0 Medi-Cal Expand and make permanent certain 34.0 telehealth flexibilities Medi-Cal Add continuous glucose monitoring benefit 3.8 OSHPD Increase geriatric workforce 3.0 State Hospitals Establish county demonstration project for 96.8 136.4 incompetent to stand trial patients State Hospitals Construction projects 54.3 State Hospitals Extend and expand incompetent-to-stand trial 46.4 diversion pilot program State Hospitals Deferred maintenance 15.0 State Hospitals Various other proposals $13.0 5.0 19.2 Totals $13.0 $593.4 $583.1 CDPH = California Department of Public Health; COVID-19 = coronavirus disease 2019; CHHS = California Health and Human Services Agency; EMSA = Emergency Medical Services Authority; CalAIM = California Advancing and Innovating Medi-Cal; and OSHPD = Office of Statewide Health Planning and Development. Appendix Figure 4 Higher Education: Discretionary Spending Proposals in the 2021- (In Millions) 2021-22 One Time or Program or Department Proposal 2020-21 Temporary Ongoing California State University Deferred maintenance $175 California State University Emergency student financial aid 30 California State University CSU Monterey Bay Computing Talent 10 Initiative California State University Faculty professional development 10 California State University $15 Student basic needs (Graduation Initiative) California State University Student basic needs (mental health and 15 technology) California State University Other proposals 3 California Student Aid Cal Grant A eligibility restoration $58 58 Commission California Student Aid Golden State Teacher Grants 100 Commission Additional Cal Grant competitive awards 35 California Student Aid Commission California Student Aid Cal Grant supplemental awards for foster 20 Commission youth University of California Deferred maintenance and energy 175 efficiency projects University of California California Institutes for Science and 20 Innovation University of California Emergency student financial aid 15 University of California 15 Student basic needs (mental health and technology) University of California Programs in Medical Education 13 (PRIME) University of California Other proposals 15 1 Other Workforce development and higher 250 education linkages Totals $58 $800 $175 Appendix Figure 5 Housing and Homelessness: Discretionary Spending Proposals in the 2021- (In Millions) 2021-22 Program or One Time or Department Proposal 2020-21 Temporary Ongoing Medi-Cal Provide grants to counties for behavioral health $750 infrastructure HCD Funding to continue Homekey program $250 500 HCD Funding for housing-related infrastructure 250 250 HCD Assistance for housing law compliance $4 RCFE and ARF 250 Expand RCFE and ARF housing for seniors at risk of homelessness Totals $500 $1,750 $4 HCD = California Department of Housing and Community Development RCFE = Residential Care Facilities for the Elderly; and ARF = Adult Residential Facilities Appendix Figure 6 Human Services: Discretionary Spending Proposals in the 2021- (In Millions) 2021-22 Program or One Time or Department Proposal 2020-21 Temporary Ongoing Child Care $55.0 COVID-19 related support to providers and families Child Welfare Expansions and flexibilities for non-minor 49.5 dependents and former foster youth CalWORKs Prevent adults from timing out of cash aid 46.1 during pandemic Food banks Augment funding for food banks during 30.0 pandemic SNB and TNB $23.1 Increase benefit amounts in SNB and TNB programs CalWORKs Reinstate funding for Cal-OAR 19.6 accountability project IHSS Adjust IHSS county administration for 17.8 caseload increases CFAP Augment CFAP benefits consistent with 11.4 federal CalFresh actions DDS Various proposals 3.4 7.8 Child Welfare Various proposals 11.2 5.9 Child Support Various proposals 16.6 Other Various proposals 17.8 Totals $224.4 $90.7 COVID-19 = coronavirus disease 2019; SNB = Supplemental Nutrition Benefit program; TNB = Transitional Nutrition Benefit program; Cal-OAR = CalWORKs Outcomes and Accountability Review; IHSS = In-Home Supportive Services; CFAP = California Food Access Program; and DDS = Department of Developmental Services. Appendix Figure 7 Resources and Environmental: Discretionary Spending Proposals in the 2021- (In Millions) 2021-22 One Time or Program or Department Proposal 2020-21 Temporary Ongoing Climate Catalyst Fund Sustainable agriculture funding $50.0 Climate Catalyst Fund Forest resilience funding 47.0 Conservation Corps Wildfire and forest resilience package $15.0 Conservation Corps Additional fire crews $5.9 Department of Wildfire and forest resilience package 25.0 60.0 Conservation Department of Fish and Wildfire and forest resilience package 9.0 36.0 Wildlife Various one-time upgrades and equipment 41.8 Department of Fish and Wildlife CalFire Wildfire and forest resilience package 61.1 195.0 CalFire Additional fire crews 137.3 CalFire Various capital outlay projects 54.2 CalFire Deferred maintenance 10.0 CalFire Other proposals 5.0 8.3 Department of Parks and Wildland firefighting research grant 10.0 75.0 Recreation Department of Parks and Deferred maintenance 20.0 Recreation Department of Parks and Backfill for Harbors and Watercraft Fund 10.0 Recreation Woolsey wildfire repairs 10.0 Department of Parks and Recreation Department of Parks and Other proposals 15.2 Recreation Department of Pesticide Integrated pest management programs 8.3 Regulation DTSC Exide facility closure 20.0 66.0 DTSC Cleanup of contaminated properties in 300.0 impacted communities DTSC 22.5 Backfill for Hazardous Waste Control Account DTSC Legal cost recovery for Exide facility 14.0 DTSC Backfill for Toxic Substances Control 13.0 Account Department of Water Sustainable groundwater management 30.0 30.0 Resources grants Department of Water Deferred maintenance of levees 75.0 Resources American River flood project 67.0 Department of Water Resources DGS Resources Building renovation 452.1 Natural Resources Agency Wildfire and forest resilience package 15.0 Sierra Nevada Wildfire and forest resilience package 20.0 50.0 Conservancy State Lands Commission Wildfire and forest resilience package 12.0 Tahoe Conservancy Wildfire and forest resilience package 1.0 11.0 Totals $273.0 $1,683 .0 $152.0 CalFire = California Department of Forestry and Fire Protection; DTSC = Department of Toxic Substances Control; and DGS = Department of General Services. Appendix Figure 8 Other: Discretionary Spending Proposals in the 2021-22 (In Millions) 2021-22 Program or One Time or Department Proposal 2020-21 Temporary Ongoing ABC License Renewal Fee Waiver $45.0 Arts Council California Creative Corps Pilot Program 5.0 $10.0 Board of Barbering and License Renewal Fee Waiver 25.6 Cosmetology California State Library Various proposals 8.0 CalSTRS External investment audit services $12.3 Department of Food State Water Efficiency and Enhancement 20.0 20.0 and Agriculture Program grants Department of Food Support for state-affiliated fairgrounds 50.0 and Agriculture 14.4 Department of Food Blythe and Needles Border Protection and Agriculture Stations Department of Food Integrated pest management programs 11.8 and Agriculture Department of Food Deferred maintenance at fairgrounds 10.0 and Agriculture Department of Food Farm to School grant program 10.0 and Agriculture 21.0 Department of Fund information security audit program Technology and Security Operation Center with General Fund Department of Stabilize IT systems and staff Broadband 11.4 Technology for All efforts DGS Gregory Bateson Building Renovation 191.6 DGS Jesse Unruh Building Renovation 122.4 DGS OS EVSE Infrastructure Assessment and 50.0 Facility Development DGS One-time deferred maintenance allocation 20.0 Franchise Tax Board Second phase of Enterprise, Data, Revenue 55.6 project 6.1 Department of Enhance insurance fraud investigation and Insurance prevention GovOps, Secretary Develop and implement Cradle-to-Career 3.0 12.0 Data System GovOps, Secretary Implement statewide data strategy 0.6 GO-Biz Cultural institutions grants 25.0 CWDB Expand existing apprenticeships 25.0 OES Home Hardening and Community 21.9 Protection OES California Disaster Assistance Act 193.5 adjustment OES 17.3 California Earthquake Early Warning System OES One-time deferred maintenance allocation 5.0 School Facilities Construction and renovation of TK and 200.0 full-day Kindergarten facilities Totals $167.5 $936.8 $120.8 ABC = Department of Alcoholic Beverage Control; IT = information technology; DGS = Department of General Services; OS = Office of Sustainability; EVSE = Electric Vehicle Supply Equipment; GovOps = California Government Operations Agency; GO-Biz = Governor Proposed California State Budget 2021-2022 Table of Contents Intro / Summary / Overview ..................................................................................................... Page 2 “Back of Budget” ...................................................................................................................... Page 5 Cannabis .................................................................................................................................. Page 6 Energy ....................................................................................................................................... Page 7 Environmental Protection ......................................................................................................... Page 7 Greenhouse Gas Reduction Fund .............................................................................................. Page 9 Health and Human Services .................................................................................................... Page 12 Higher Education .................................................................................................................... Page 14 Housing and Homelessness .................................................................................................... Page 14 Labor and Workforce Development ........................................................................................ Page 17 Local Government .................................................................................................................. Page 17 Natural Resources .................................................................................................................. Page 21 Public Safety ........................................................................................................................... Page 25 Taxes / Tax Reform ................................................................................................................. Page 27 Transportation ....................................................................................................................... Page 28 Water ..................................................................................................................................... Page 29 Intro/Summary/Overview Governor Gavin Newsom submitted his 2021-2022 “Budget Built on Strong Fiscal Foundation” proposal to the Legislature today. The Governor presented a $227 billion January spending plan that includes a record level of spending for education and allocates large sums to help reverse the effects of COVID-19, presenting a large shift from the past June budget. California’s budget is looking dramatically better than expected due to record stock market gains and tax growth from its most affluent residents. The overall proposed spending total for 2021-2022 is $5 billion higher than in last January’s budget, while the General Fund among is $11.5 billion higher. The Governor stated today that compared to the $54.3 billion budget deficit from 2020, California is currently seeing a $34 billion budget resiliency according to what we have in our reserves and in surplus. The Governor stated that he is projecting $22 billion in reserves with $15.6 billion in the Rainy Day Fund, $3 billion in the School Stabilization Reserve, $2.9 billion in the operating reserve, and $450 million in the Safety Net Reserve. This year, the Governor is proposing $9.5 billion in retirement liabilities with $3 billion in additional payments in 2021-2022 and $6.5 billion over the next three years. The Governor projected a $15 billion surplus for this fiscal year. However, risks to the forecast remain higher than usual, and economic inequality has intensified since the pandemic began. Budget resiliency will be critical to protect programs in the future, as expenditures are projected to grow faster than revenues, with a structural deficit of $7.6 billion projected for 2022-23 that is forecast to grow to over $11 billion by 2024-25. Golden State Stimulus Earlier this week, the Governor announced the inclusion of the Golden State Stimulus as part of the 2021-2022 Budget. The Golden State Stimulus would provide a $600 rapid cash support directly to roughly four million low-income Californians who, coupled with federal stimulus, could receive at least $1,200 of direct relief. The state’s stimulus will also reach low-income Californians who are excluded from the federal stimulus, like undocumented households that file taxes with an Individual Taxpayer Identification Number (ITTN), including parents with U.S. citizen children. Eviction Protection Earlier this week, the Governor called for immediate action to protect more Californians from eviction by extending critical eviction protections enacted by AB 3088 and ensuring that California’s $2.6 billion share of federal rental assistance is distributed according to greatest need and with accountability. The Governor is proposing that the state quickly and accountably deploy all $2.6 billion in federal renter relief as early action-- $1.4 billion of which is allocated directly to the state and $1.2 billion of which is allocated to entitlement jurisdictions—all targeting low-income California households, while helping stabilize small property owners who are also struggling. Under this proposal, California renters who are experiencing financial hardship related to the COVID-19 pandemic and pay at least 25 percent of their monthly rent cannot be evicted for unpaid rent. Small Business Grants Prior to the pandemic, small businesses created two-thirds of new jobs and employed nearly half of all private-sector employees. California is home to 4.1 million small businesses that employ nearly half of 2 the state’s total workforce. To help keep these businesses afloat, the Governor is proposing a total of $1.075 billion for the State’s Small Business COVID-19 Relief Grant Program. The Governor has proposed immediate legislative action on $575 million in additional grants. The investment will add to the initial $500 million allocation announced in November. The Program offers grants up to $25,000 to micro and small businesses that have been impacted by the pandemic. These grants will be distributed across the state, with priority given to regions and industries impacted by the COVID-19 pandemic, disadvantaged communities and underserved small business groups. The $575 million Early Action Budget proposal includes $25 million for small cultural institutions, such as museums and art galleries, that have been constrained by the pandemic in their ability to educate the community and remain financially viable. California Jobs Initiative The Budget proposes sustained investments to preserve California’s competitiveness. The California Jobs Initiative, a $777.5 million proposal, focuses on job creation and retention, regional development, small businesses and climate innovation, including increased funding for: $430 million for CalCompetes, $100 million for the Extended Main Street Small Business Tax Credit, mitigating the SALT deduction limitation for S-corporation shareholders, $35 million for the California Dream Fund, $50 million for IBank, and $100 million for expanded sales tax exclusions through the Treasurer’s Office to reduce the cost of manufacturing equipment in order to promote innovation and meet the state’s climate goals. This funding also includes $12.5 million allocated, in partnership with the Legislature, in late 2020 to fully capitalize the California Rebuilding Fund to support $125 million low-interest loans to underserved businesses. Workforce Development The Budget proposes one-time and ongoing investments totaling $353 million to support California’s workers as they adapt to changes in the economy brought about by COVID-19. These investments lift up proven workforce development strategies like apprenticeship and High-Road Training Partnerships and encourage greater collaboration and coordination among California’s institutions of higher learning and local workforce partners. Demand-driven workforce programs can help California train the workforce of the future in key sectors including health care and technology. Fee Waivers The Budget proposes $70.6 million for fee waivers to individuals and businesses most impacted by the pandemic—including barbers, cosmetologists, manicurists, bars and restaurants. These waivers will assist those who have not been able to operate or are operating at reduced capacity during the pandemic. Deferred Maintenance In recognition of the job-creating potential of infrastructure projects on state-owned properties, the Budget includes a $300 million one-time General Fund for the most critical statewide deferred maintenance, including greening of state infrastructure. This proposal will help create jobs in California 3 while achieving our state’s climate goals. Projects include the installation of electric vehicle charging stations at state-owned facilities. Housing Through the Infill Infrastructure Grant (IIG) Program, this Budget proposes $500 million to create jobs and long-term housing developments to unlock more than 7,500 new permanently affordable homes for Californians. IIG grants to local governments and developers bring the cost down for new housing by defraying costs for things like sewers, roads and site preparation, all while putting thousands of people to work in good jobs building this housing-related infrastructure. $250 million of these funds are proposed for early action. Zero Emission Vehicles and Zero-Emission Vehicle Infrastructure Building on California’s historic commitment to requiring sales of all new passenger vehicles to be zero- emission by 2035, this Budget proposes an additional $1.5 billion investment to accelerate our state’s progress toward these goals while creating jobs. The proposal will support jobs and economic growth and provide air quality benefits and support for low-income Californians to purchase cleaner vehicles. Funds will support purchases of clean trucks, buses and off-road freight equipment and Clean Cars 4 All programs. It will also support job-creating construction of electric charging and hydrogen fueling stations necessary to accelerate zero-emission vehicle adoption. The Budget proposal will leverage additional private sector capital to build the necessary infrastructure and create jobs to support California’s recovery. Safe Schools for All California’s Safe Schools for All framework to safe reopening of in-person instruction is built on four pillars: 1. Funding to Support Safe Reopening: The Budget will propose for immediate action in January, $2 billion to support safety measures—including testing, ventilation and PPE—for schools that have resumed in-person instruction or phasing in of in-person instruction by early spring. 2. Safety and Mitigation Measures for Classrooms: To further ensure health and safety in the classroom, the Administration will support implementation of key health measures. This will include frequent testing for all students and staff, including weekly testing for communities with high rates of transmission; masks for all students and staff, including distribution of millions of surgical masks for school staff; improved coordination between school and health officials for contact tracing; and prioritization of school staff for vaccinations. 3. Hands-on Oversight and Assistance for Schools: Dr. Naomi Bardach, a UCSF pediatrician and expert on school safety, will lead the Safe Schools for All Team, a cross-agency team composed of dedicated staff from CDPH, Cal/OSHA, and educational agencies. The Team will provide hands-on support to help schools develop and implement their COVID-19 Safety Plans. These supports will include school visits and walk-throughs as needed, webinars and training materials and ongoing technical assistance. 4. Transparency and Accountability for Families and Staff: A state dashboard will enable all Californians to see their school’s reopening status, level of available funding and data on school outbreaks. Additionally, a web-based “hotline” will empower school staff and parents 4 to report concerns to the Safe Schools for All Team, which will lead to escalating levels of intervention beginning with technical assistance and ending with legal enforcement. K-14 Education Under Proposition 98, the Budget’s improved revenue estimate results in not only significantly more funding for schools, but also the highest funding level ever at $85.8 billion. The 2020 Budget Act included a supplemental payment in addition to the Guarantee because of a projected anomaly in the school funding formula. Even though this anomaly no longer exists, the Budget continues to commit $2.3 billion General Fund one-time in recognition of the additional costs schools face as they respond to the pandemic. The Budget directs a significant portion of additional funding to paying down nearly two-thirds of the deferrals implemented last year and provides a 3.84-percent cost-of-living adjustment to the Local Control Funding Formula. The significant growth in capital gains and overall General Fund revenue growth also triggers deposits of roughly $3 billion into the Public School System Stabilization Account, resulting in a statutory cap of 10 percent on local school’s district reserves in 2022-23. BACK OF THE BUDGET Probation $50m one-time for county probation departments to support SB 823 transitions. $122.9m for SB 678 program. $19.5 for post-release community supervision (PRCS). Proposition 47 Current estimate of savings at $114.8m (with 65% going to mental health and substance abuse programs, approximately $74.6m. Police Use of Force Investigations $13m to establish three teams, one in each of the northern, central, and southern regions of California, to conduct investigations pursuant to AB 1506 (Chapter 326, Statutes of 2020). State Fairs $50m to continue supporting state-affiliated fairgrounds operational costs while the state evaluates alternative business models. Also, $10 one-time to support fairground deferred maintenance with a priority on fairgrounds that are used to support emergency operations. Extended Producer Responsibility (EPR) CalRecyle will embark on an evaluation of existing programs to identify opportunities to better align with a circular economy approach, combat climate change, and support economic recovery. The Administration remains support of EPR especially where further system redesign is needed to achieve a circular economy. 5 Reducing Criminal Fines and Fees The 2018 Budget Act included $3.4m through the Judicial Council for an eight-court pilot program to allow indigent and low-income individuals to apply online to have their fines and fees from traffic infractions reduced. This year’s proposal would include $12.3m (growing to $58.4m in 2024-25) to expand this program statewide and incorporate both traffic and non-traffic infractions. The idea is to implement in a phased way, with several courts joining each year. Gann Limit Using current estimates, the State may exceed the Gann Limit by the end of the current fiscal year. The current estimate is $102m over the limit. If this occurs, it is estimated that an additional $51m would go to K-14 education and $51m in CANNABIS Department of Cannabis Control The Budget includes $153.8 million Cannabis Control Fund to reflect the consolidation of the functions and positions of the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health into the new stand-alone Department of Cannabis Control within the Business, Consumer Services, and Housing Agency on July 1, 2021. This proposal seeks to further the goals of legalization and regulation by creating a single point of contact of cannabis licensees, local government, and other stakeholders. With a focus on making licensing and compliance more straightforward, transparent, and efficient, this proposal aims to simplify participation in the legal market and support the successful and safe operation of a cannabis business in compliance with state law. Further centralizing the licensing programs’ enforcement efforts will result in more effective enforcement that better protects public health, safety, and lands, and makes it more costly and inefficient to participate in the illicit cannabis industry. Of the 621 positions in the new department, 598 are existing and 23 are new, primarily to establish an executive management structure consistent with that of other state departments. There are also two new position related to AB 1525 (2020) to process request from financial institutions and accountants who engage with cannabis businesses for license-related information, including track and trace data. This data sharing will facilitate the ability of financial institutions to comply with due diligence reporting requirements to federal regulations agencies, thereby creating the potential for increased access to banking services for licensees. Updated Allocation of the Cannabis Tax Fund Pursuant to Proposition 64, expenditures are prioritized for regulatory and administrative workload necessary to implement, administer, and enforce the Cannabis Act, followed by research and activities related to the legalization of cannabis and the past effects of its criminalization. Once these priorities have been met, the remaining funds are allocated to youth education, prevention, early intervention, and treatment; environmental protection; and public safety-related activities. The Budget estimates $443.1 million will be available for these purposes in 2021-22, and the structure of these allocations is unchanged from 2020-21: 6 • Education, prevention, and treatment of youth substance use disorders and school retention— 60 percent ($265.9 million). • Clean-up, remediation, and enforcement of environmental impacts created by illegal cannabis cultivation—20 percent ($88.6 million). • Public safety-related activities—20 percent ($88.6 million). The Budget also includes statutory changes to establish permanent funding authority from the Cannabis Tax Fund for the local equity grant program that is administered by the Governor’s Office of Business and Economic Development (GO-Biz). The Budget includes $15.5 million ongoing Cannabis Tax Fund for this program. Cannabis Excise Taxes Cannabis excise taxes are expected to generate $544 million in 2020-21 and $658 million in 2021-22. ENERGY The budget includes a one-time investment of $100 million in 2021-22 to the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA). The CAEATFA offers sales and use tax exclusions to innovative manufacturers that promote alternative energy and advanced transportation. The budget also includes statutory changes to establish the Climate Catalyst Fund, a financial tool to provide revolving loans to climate-related projects. The budget includes $97 million, which will be used to seed the fund. ENVIRONMENTAL PROTECTION The California Environmental Protection Agency’s programs promote the state’s economy in a sustainable manner by reducing greenhouse gas emissions, enhancing environmental quality, and protecting public health. The Secretary coordinates the state’s regulatory programs and provides fair and consistent enforcement of environmental law. The Governor’s Budget includes $4.3 billion ($460 million General Fund, $3.8 billion special funds, and $16.8 million bond funds) for programs included in this Agency. Department of Toxic Substances Control Reform The Budget proposes statutory changes and funding to establish and staff a five-member Board of Environmental Safety that will set fees through regulation, hear permit appeals, and provide strategic guidance to the Department. This will create a transparent decision-making process for all stakeholders. The Board will also employ an Independent Ombudsperson who will report to the chairperson of the Board and serve as an impartial resource to the public. The budget proposes $3 million General Fund in 2021-22 for the Board, with costs shifting to the Department’s special funds in 2022-23. To enable the Department to meet its statutory mission, the Budget also includes statutory changes that will provide sustainable funding on an on-going basis. The Budget includes one-time General Fund 7 support and proposes a structure for potential future increases in the Hazardous Waste Control Account and the Toxic Substances Control Account. This sustainable funding model will enable the Department to enhance its ability to enforce hazardous waste laws, investigate and remediate contaminated sites, and more effectively direct the use of safer chemicals and manufacturing processes in the state. Although the Department has made substantial progress improving all of its programs, the remaining challenges facing the Department cannot be addressed without a sustainable funding structure. This effort will be comprised of three core elements: Fee Authority – The Budget proposes statutory changes to authorize the Board to utilize a public fee-setting process, with spending levels, with spending levels subject to the budget process. This will create fiscal stability for the future Hazardous Waste Control Account Fee Restructure – Hazardous waste management fees should equitably distribute the cost of managing hazardous waste and reflect polluter pays principle. The proposed statutory language will streamline the existing fee structure and will provide the Board with the ability to set fees through a public process. The Budget also proposes a $22.5 million one-time General Fund backfill for this Account. Toxic Substances Control Account – The Budget proposes statutory changes that would authorize the Board to adjust the environmental fee through a public process. The Budget also proposes a $13 million one-time General Fund backfill for this Account. Site Cleanup In conjunction with governance and fiscal reform and to support community development and job creation, the Budget proposes $300 million one-time General Fund to accelerate the cleanup of contaminated properties in impacted communities. The Budget also includes $500 million one-time General Fund for infill infrastructure grants to facilitate affordable and sustainable infill housing development on brownfield sites. Developing these site creates an opportunity to leverage private sector resources for the cleanup of these properties. The Budget also proposes $31.4 million one-time General Fund for the Department to meet the state’s existing commitment to clean up 3,200 residential properties with specified lead contamination levels that surround the Exide facility. The Budget includes one-time funding of $14 million General Fund, and $2.5 million ongoing funding from the Lead-Acid Battery Cleanup Fund, for these and future cost recovery efforts. The state continues to monitor the progress of the facility closure, which is being conducted by a trustee pursuant to a court order. Safe and Sustainable Pest Management To protect and enhance the health of California residents, the state’s policies must accelerate the transition away from harmful pesticides while continuing to provide nutritious food through a strong agricultural economy. This transition must incorporate science; include collaboration between communities, workers, growers, and consumers; drive innovation solutions; and provide technical assistance to increase adoption of integrated pest management (IPM) practices. 8 To facilitate this transition, the Budget proposes to replace the current flat-fee mill assessment on pesticide sales with a risk-based tiered mill assessment, where higher toxicity pesticides are assessed a higher fee. Phased in over four years, this tiered fee will discourage the use of toxic pesticides and will fund the following multi-faceted effort to support this transition. Significant Adjustments: IPM- $20 million ongoing to expand IPM practices across California, including (1) investment in IPM research, education and extension programs to support sustainable pest management, (2) bolstering the UC and CSU IPM programs to support grower implementation of safer alternatives to high risk-pesticides; and (3) support for other state-level IPM programs. Strengthened Enforcement and Air Monitoring-- $16.5 million ongoing to enhance enforcement of pesticide use laws and regulations to improve worker and community health safety. The Budget increases funding to support local enforcement by County Agricultural Commissioners and also provides resources to increase air monitoring for pesticides, generating data to identify pesticide exposures and guide regulatory efforts. Community Engagement -- $1.5 million ongoing to support community engagement, particularly with pesticide –impacted disadvantaged communities, to seek input from agricultural communities and farmworkers during the transition to safer pest management practices. Circular Economy Current law (Chapter 395, Statutes of 2016), initiated a path to reduce organic materials in landfills, which accounts for two-thirds of landfill waste and is the third largest source of methane in the state. To combat climate change, successfully implementing this organic recycling program will close the loop by recognizing the greater value of turning organic waste into new organic products while creating 2,000 permanent jobs in the state. The Budget proposes $5 million from the Beverage Container Recycling Fund in both 2020-21 and 2021- 22 and statutory changes to expand pilot programs to expand consumer redemption in communities underserved by recycling centers. The Budget also proposes ongoing funding from the Beverage Container Recycling Fund to implement Chapter 115, Statutes of 2020, requiring that plastic beverage containers contain at least 50 percent post-consumer recycled content by 2030. In addition, CalRecycle will embark on an evaluation of existing program grants, loans, and payments to identify opportunities to better align with a circular economy approach, combat climate change and support economic recovery. The Administration also remains supportive of extended producer responsibility policies, especially where further system redesign is needed to achieve a circular economy. GREENHOUSE GAS REDUCTION FUND The Cap and Trade Expenditure Plan proposes $1.369 billion Greenhouse Gas Reduction Fund ($624 million for Early Action in 2020-21 and $745 million in 2021-22) to provide funding for programs that reduce or sequester greenhouse gases (GHGs). 9 The proposed Expenditure Plan advances the state’s priorities on environmental justice and protects public health by delivering clean air and safe and affordable drinking water. The Expenditure Plan also promotes implementation of the Governor’s recent Climate Executive Orders N-79-20 and N-82-20, related to zero-emission vehicles and natural and working lands, respectively. Equity Programs The Cap and Trade Expenditure Plan continues a focus on community air protection by providing $325 million to support the AB 617 program, which reduces exposure in communities with disproportionate exposure to air pollution through targeted air monitoring and community emissions reduction programs. California Air Resources Board, AB 617—Community Air Protection—$125 million in 2020-21 and $140 million in 2021-22 ($265 million total) for incentive actions to reduce both stationary and mobile source emissions in communities identified as heavily impacted by air pollution. California Air Resources Board, AB 617—Local Air District Implementation—$50M in 2021-222 to support local air districts’ implementation of AB 617, including establishing and coordinating community steering committees, emissions reduction program development, deployment of air monitoring within communities, and implementation of Best Available Retrofit Control Technologies (BARCT) requirements. California Air Resources Board, AB 617—Technical Assistance to Community Groups—$10 million in 2021-22 for technical assistance grants to community-based organizations to participate in the AB 617 process, including for involvement and support of the development of community emission reduction plans. State Water Resources Control Board, Safe and Affordable Drinking Water—$130 million to assist water systems in providing a safe and affordable supply of drinking water to communities. The focus of these funds is accelerating the implementation of short- and long-term solutions, funding consolidations, 10 planning, technical assistance, administrators, replacement water, and operations and maintenance. Projects funded by the program will improve climate change adaptation and resiliency of disadvantaged communities. Low Carbon Transportation & ZEV Strategy To help the state meet the targets set in Executive Order N-79-20, the Cap and Trade Expenditure Plan includes $465 million to improve access to new and used zero-emission vehicles, including passenger cars and trucks, medium- and heavy-duty vehicles, and off-road equipment. California Air Resources Board, Clean Trucks, Buses, and Off-Road Freight Equipment–-$165 million in 2020-21 and $150 million in 2021-22 ($315 million total) for incentives for zero-emission trucks, transit buses, school buses, and freight equipment in the early stages of commercialization. These investments support the equitable transition of the transportation sector to zero-emission and provide critical air quality and health benefits to communities. California Air Resources Board, Clean Cars 4 All and Transportation Equity Projects—$74 million in 2020- 21 and $76 million in 2021-22 ($150 million total) for equity-focused investments that increase access to clean transportation for low-income households and disadvantaged communities. Projects include voluntary Clean Cars 4 All car scrap-and-replace incentives, financing assistance for low-income consumers, clean mobility options such as car sharing, community-based transportation equity projects, and rural school bus replacement. California Air Resources Board, Agricultural Diesel Engine Replacement & Upgrades—$90 million in 2020-21 and $80 million in 2021-22 ($170 million total) for farmers and agricultural businesses to replace existing diesel, agricultural vehicles and equipment with the cleanest available diesel or advanced technologies. Emissions from agricultural equipment are a significant source of air pollution, especially in the San Joaquin Valley, and reducing these emissions is critical for meeting health protective federal air quality standards. California Energy Commission, ZEV Infrastructure – While not included in the Cap and Trade Expenditure Plan, the Budget includes $1 billion in future revenues to increase the pace and scale of the construction of electric vehicle charging and hydrogen fueling stations necessary to accelerate zero-emission vehicle adoption. The Budget proposes statutory changes to extend existing vehicle registration fees currently set to expire in 2024 and to authorize the securitization of these future revenues to support expansion of the California Energy Commission’s Clean Transportation Program, which supports infrastructure development for light-, medium- and heavy-duty vehicles. Natural & Working Lands Consistent with the Natural and Working Lands Executive Order N-82-20, this proposal includes $30 million one-time for the Healthy Soils Program to provide grants for on-farm soil management practices that sequester carbon. The Expenditure Plan also continues investments for CAL FIRE for forest health and fire prevention programs consistent with the directives of Chapter 626, Statutes of 2018 (SB 901, Dodd). CAL FIRE, Healthy & Resilient Forests and Prescribed Fire and Fuels Crews—$125 million in 2020-21 and $200 million ($325 million total) for forest health and fire prevention activities, including to build healthy 11 and fire resilient forests. This includes funding for projects and grants for fuel reduction and tree thinning; reforestation; forest insect and disease mitigations; prescribed fire; local community capacity development; research; and other forest resilience activities, such as conservation easements or other actions to restore watershed health and function, and support biodiversity and adaptation to climate change. This also includes funding for a total of 10 dedicated fuels crews and related staff necessary for CAL FIRE to increase the pace and scale of prescribed fire and other fuel reduction activities to better meet CAL FIRE annual fuel reduction goals and the state’s carbon goals. California Department of Food and Agriculture, Healthy Soils Program—$15 million in 2020-21 and $15 million in 2021-22 ($30 million total) to support the Healthy Soils Program (HSP). The HSP consists of Healthy Soils Incentives and Demonstration Project grants. The HSP Incentives Program provides financial incentives to California growers and ranchers to implement conservation management practices that sequester carbon, reduce atmospheric GHG, and improve soil health. Workforce Training and Just Transition The Budget includes $25 million in one-time General Fund as an early action to expand the High Road Training Partnership model in several, industry-specific sectors. The additional investment will focus on growing sectors in the economy and further the state’s equitable economic recovery and climate goals. HEALTH AND HUMAN SERVICES Health Medi-Cal – lower expenditures of $1.2b due primarily to reduced COVID-19 caseload costs, additional Federal Medical Assistance Percentage (FMAP), reduced costs associated with the state-only claiming adjustment, and additional Hospital Quality Assurance Fee (HQAF) savings. Behavioral Health County Behavioral Health - $750m one-time GF for competitive grants to counties to acquire and rehabilitate real estate assets to expand the community continuum of behavioral health treatment resources. The Administration is also exploring opportunities to repurpose relinquished adult jail bond financing to add to this effort. Residential Mental Health Facilities – Repurposing of jail facilities / revenue bond financing. Incompetent to Stand Trial - $233m for demonstration projects. Student Mental Health - $400m available over multiple years, to implement a program through Medi-Cal managed care plans, in coordination with counties and school to build infrastructure, partnerships and capacity to increase number of students receiving preventive and early intervention behavioral health services from school, providers in schools or school-based health centers. For ACES screening, suicide prevention, wellness and early intervention services. Also, $25m one-time to augment the Mental Health Student Services Act Partnership Grant Program. Further, $25m ongoing Proposition 98 for innovative partnerships with county behavioral health departments to support student mental health services. 12 Social Services Food Banks - $30m one-time GF to augment funds previously appropriated. CalWORKs – average monthly caseload estimated to be up 19% from the revised 2020-21 projection. CalWORKs grant increase of 1.5% still scheduled to go into effect October 1, 2021. Realignment Sources projected to increase by 5.6% from 2019-20 to 2020-21 and decrease by 1.9% from 2020-21 to 2021-22. In Home Supportive Services Service Hours Restoration - $449.8m to reflect a delay in suspending the 7=percent across-the-board reduction to IHSS service hours. The increased funding for service hours now proposed to be suspended on December 31, 2022. Minimum Wage - $1.2b to support projected minimum wage increases to $14/hr. on 1/1/21 and $15/hr. on 1/1/22. SSI / SSP Effective 1/1/21, maximum grant levels are $955 for individuals and $1598 for couples. Consumer Price Index growth is estimated at 2.2% for 2022. As a result, grant levels will increase by approximately $17 and $26 respectively effective January 2021. Child Support $24.9m for Local Child Support Agency administrative costs. Children’s Programs Youth Returning from Out of State - $5.2m one-time GF was allocated in December 2020 to the Department of Social Services to support youth in their transition back to California. Also, for Foster Youth, $5.8m ongoing to support transitions back to California; this is in addition to the $2.9m appropriated for same purpose December 2020. Immigration $5m one-time GF for the Rapid Response Program to support entities that provide services to immigrants during emergent situations when federal funding is not available. Aging Master Plan (as previously reported) and related measures. 13 Cannabis New Department – transfer of 119 positions and $29m from the Department of Public Health to support consolidation of resources from the new Department of Cannabis Control. HIGHER EDUCATION The Budget proposes total funding of $36.1 billion for Higher Education. The total reflects growth of $950 million compared to revised 2020=21 expenditures. The figure below does not include the estimated $2.9 billion in the recently passed federal Covid-19 pandemic relief bill. HOUSINGANDHOMELESSNESS The Budget proposes more resources to continue to address the housing availability and affordability crisis exacerbated by the COVID-19 pandemic, including: $500 million in one-time General Fund investments for infill infrastructure to accelerate housing development $500 million low-income housing tax credits to support low-income housing development 14 $1.75 billion one-time General Fund monies to further then Project Homekey effort begun in 2020, including funds to purchase additional motels, develop short-term community mental health facilities, and purchase or preserve housing dedicated to seniors The Budget also proposes changes to the state’s Medi-Cal system to better support behavioral health and housing services that can help to prevent homelessness. The Governor also proposes creating a new Housing Accountability Unit within the Department of Housing and Community Development (HCD), to provide technical assistance to local governments, and, in the words of the Governor, “to monitor city council meetings and meetings of board of supervisors and planning commissions” – to look for opportunities to work with those local governments and assist them in meeting their housing planning and production obligations, and, to enhance the Administration’s enforcement of those obligations. The Budget also proposes various HCD funding program application streamlining measures, and, harmonization of existing state programs. The Budget proposes to provide resources for toxic site cleanup, and incentives to clean up and develop these sites for future housing. The Administration also seeks immediate extension of the law passed last year establishing renter eviction protections, AB 3088, past January 31, 2021. The homeless spending proposals are summarized here: Chart may be duplicated elsewhere 15 The Governor’s affordable housing spending proposals are summarized here: Chart may be duplicated elsewhere 16 LABOR AND WORKFORCE DEVELOPMENT Employment Development Department (EDD) EDD administers the state’s Unemployment Insurance (UI), Disability Insurance and Paid Family Leave programs. Unemployment Insurance Trust Fund: The Budget includes $555 million in one-time General Fund for the anticipated interest payments (accrued interest for six months) due in September 2021. Federal law requires interest payments to be made from the state funds annually until the UI loan principal is repaid. With the recently enacted federal COVID-19 relief bill, interest will be waived through March 14, 2021; however, the anticipated loan interest repayment estimates do not reflect this relief and will be updated in the May Revision. Department of Industrial Relations (DIR) DIR administers and enforces laws related to wages, workplace safety and health, retaliation, and workers’ compensation benefits. The department’s Division of Occupational Safety and Health (Cal/OSHA) enforces workplace safety laws by investigating in workplace hazards and health and safety violations. Budget includes language to allow DIR to increase resources mid-year by up to $14.4 million and 70 positions for Cal/OSHA to hire additional workplace safety inspectors when the Department meets its hiring goals. Budget includes $8.6 million and 43 positions to implement and enforce recently enacted legislation that makes it easier for first responders, health care workers, and people who contracted COVID-19 due to an outbreak at a workplace to access workers’ compensation benefits. Workforce Development Board Proposes $25 million one-time General fund as part of an early action package to expand High Road Training Partnership (HRTP) model in several specified industry sectors. Proposes $407 million federal trust fund in 2020-21, to continue Workforce Innovation Opportunity Act training and apprenticeship services programs. Department of Better Jobs and Higher Wages Budget proposes a new Department of Better Jobs and Higher Wages and statutory changes to consolidate the workforce functions currently spread across the Labor and Workforce Development Agency. The Department will be comprised of the California Workforce Development Board, the Employment Training Panel and Workforce Services Branch and Labor Market Information Division, and the Division of Apprenticeship Standards currently in the Department of Industrial Relations. LOCAL GOVERNMENT Quick and notable points: 1. Realignment (1991 and 2011) are projected to increase 5.6% in this new budget, but then decrease 1.9 percent the following year. 17 2. California did so well it actually saw more tax withholding during the last nine months of 2020 than in 2019. The Governor is proposing the following funding levels and programs of particular interest to counties: Housing Infusing $500 million for Infill Infrastructure Grants (an existing program administered through HCD); $500 million in tax credits (administered by the Tax Credit Allocation Committee and Debt Limit Allocation Committee). A new housing accountability unit at HCD and $4 million to staff it. The accountability unit will implement and enforce housing laws, CEQA streamlining, ADUs, the Housing Accountability Act, and Density Bonus laws. Evictions – nothing beyond earlier announcement proposing $1.5 billion in rental assistance from the federal government. We are working on a proposal to allow entitlement jurisdictions to participate in the state program so they wouldn't have to stand up a whole new program (i.e. have state administer the local money). Complete housing and homelessness funding charts follow on next page: 18 Chart may be duplicated elsewhere 19 Chart may be duplicated elsewhere Homelessness $1.75 billion in one time funding for acquisition/rehabilitation for homeless housing including local grants. Of the $1.75 billion: $750m for HCD for "homekey as we know it", $750m to HHS health care services for counties to aquire housing to intense behavior health housing like board and cares, residential care facilities, folks who can't be successful in PSH. $250 million through DSS in grants to counties for acquisition and rehabilitation for at-risk and homeless seniors. No details on timelines/operating subsidies will be worked through the trailer bill process. Proposing same suite of streamlining that went through original Homekey program. Emergency Response $256.1m in Disaster Assistance Grants; $17.3m in one-time funding for Earthquake Early Warning; $3.6m in hazardous materials response; $49m (multiple funding sources) for home hardening pilot program 20 COVID Below is the complete chart of estimated COVID-related expenditures along with comparison from the current year. In total, the State’s COVID-related expenditures total is proposed at $12.9b. NATURAL RESOURCES The Natural Resources Agency consists of 26 departments, boards, commissions and conservancies responsible for administering programs to conserve, restore and enhance the natural, historical and cultural resources of California. The Budget includes total funding of $7.4 billion ($4.6 General Fund, $2 billion special funds, $812.6 million bond funds) for the programs included in the Agency. The Agency’s departments help the state become more climate resilient, expand equitable access to parks and wildlands, and conserve California’s remarkable biodiversity. 21 Department of Water Resources The Department of Water Resources plans for the sustainable management of California’s water resources and helps to implement the Administration’s Water Resilience Portfolio. The Portfolio prioritizes actions to maintain water reliability, protect natural systems, and build regional capacity to adapt to an uncertain climate future. Implementation of Portfolio actions is well underway, and the Budget continues to state investments to advance the Portfolio across the Natural Resources Agency, California Environmental Protection Agency, and Department of Food and Agriculture. These agencies are coordinating closely to prepare drought and flooding; advance projects of statewide scale and importance; provide resources, tools and standards that support regional leadership; and help coordinate and address challenges that are beyond the scope of any region. The Budget makes important investments to support local agencies as they work to build regional water resilience, including: Sustainable Groundwater -- $60 million one-time General Fund ($30 million in 2020-21 and $30 million in 2021-22) for grants to support local planning and implementation of Groundwater Sustainability Plans across critically over-drafted basins. This additional funding for existing Department grant programs will help local agencies address known data gaps, plan and implement projects, and address deficiencies in initial ground water sustainability plans. Additional investments in agricultural irrigation efficiency, as referenced in the Climate Change and Sustainable Agriculture Chapters, will also support local agencies as they work to balance groundwater pumping and recharge. Flood Preparedness -- $183 million in 2021-22, $365.2 million over the next four years, from various fund sources to leverage $1.8 billion in federal funds for the flood risk reduction American River Common Features project, the maintenance and strengthening of levees, the support of emergency flood response activities in the Sacramento-San Joaquin Delta (Delta) and the support of collaborative flood risk management. Deferred Maintenance -- $75 million one-time General Fund for critical levee repair projects to enhance the state’s resilience to catastrophic flooding. Delta Resilience -- $43.7 million in 2021-22, $69.6 million over the next five years, from various fund sources to support ecosystem restoration and watershed resilience work on the San Joaquin River and for projects that improve water quality or ecological conditions within the Delta. Department of Parks and Recreation The Budget includes $82 million in 2021-22 to improve access to state parks and builds upon last year’s investments through the Parks for All initiative, Highlights include the following: 22 $20 million one-time General Fund to support critical deferred maintenance projects throughout the state park system to enable improved access and an enhanced visitor experience. $12.7 million ongoing Cannabis Tax Fund to the Natural Resources Agency for the Youth Community Access Grant Program, which funds projects and programs that support youth access to natural and cultural resources with a focus on low-income and disadvantaged communities. $10 million one-time General Fund and $23.4 million one-time reimbursements from Federal Emergency Management Agency funds for the continuation of Woolsey Fire restoration projects to restore destroyed facilities and trials. $6.3 million one-time General Fund and $6.3 million one-time federal reimbursements to provide state matching funds to leverage the recent increase in the federal Land and Water Conservation Fund. $2.7 million one-time Proposition 68 bond funds to provide the design of the initial care improvements to further public access and recreation enhancements at Candlestick Point Recreation Area. $585,000 ongoing State Park and Recreation Fund to continue community liaison programs that engage underserved and underrepresented communities in urban areas. Protecting Forests in State Parks In 2020 fires burned over 115,000 acres across 22 state parks. The Department of Parks and Recreation continues to assess funding needs for post-wildfire recovery in these parks and will identify those priority needs through the spring budget process. The Budget includes $85 million one-time General Fund to increase the pace and scale of forest management at state parks. Creating Fiscal Stability for Boating Programs The administration proposes a balanced program to address structural funding issues in the Harbors and Watercraft Revolving Fund, including: 1) Reducing ongoing annual expenditures by $13 million, 2) Increasing ongoing annual revenues by $20.6 million through adjusting the vessel registration fee, 3) Providing $10 million annually for two years from the General Fund to offset transfers for recreational costs at State Water Project facilities, and 4) Maintaining programs that are vital to boater access and safety The administration will seek stakeholder input on longer-term revenue options, such as tiered vessel registration fees based on vessel length. 23 Department of Fish and Wildlife Current law (Chapter 51, Statutes of 2018) requires the Department to conduct a service-based budget review to identify service levels and activities, cost-estimates, and staffing requirements to meet the Department’s mission and statutory requirements, and perform an analysis of the Department’s existing revenue structure. The Budget includes $45.1 million one-time ($41.8 million General Fund and $3.3 million bond funds) for strategic investments in equipment, technology, and process improvements to deliver more effective and efficient services with existing staff resources. These investments will implement the Governor’s Executive Order N-82-20 and better allow the Department to conserve the environment and maintain biodiversity, including: Wetlands Management -- $9.8 million one-time ($9 million General Fund and $800,000 Proposition 12) to modernize the Department’s water conveyance systems into managed wetlands, which will improve habitat, reduce staff maintenance costs, and buffer against climate-driven threats. Human Wildlife Conflict Response -- $7 million one-time General Fund to respond to increased human-wildlife conflict incidents across the state. Over 6,500 human-wildlife conflicts occur annually and is rising as communities expand into established wildlife territory and create competition for resources. Access for All and Biodiversity Resiliency -- $6 million one-time ($3.5 million General Fund and $2.5 million Proposition 12) to support access and biodiversity resiliency across ecological reserves and wildlife areas. The Department owns and operates approximately 1.2 million acres across more than 700 properties in the state. Hatchery Operations -- $7 million one-time General Fund to modernize the Departments hatchery facilities and equipment to provide greater operational reliability and improve fish survival once released inter rivers. Vegetation Mapping -- $5.5 million one-time General Fund to generate a high-resolution vegetation classification map of nearly one million acres of the Northern California coast. Air Support to Protect Natural Resources -- $4.5 million one-time General Fund to purchase a fixed-wing aircraft to continue replacement of an aging airborne patrol fleet. Offshore Patrol Vessel to Protect Marine Resources -- $4.5 million one-time General Fund to purchase a large offshore patrol vessel to continue replacement of the Department’s aging patrol fleet. Fishing and Hunting Licenses Modernization -- $750,000 one-time General Fund to modernize the licensing platform for customers’ ease of use, provide a mobile application to display fishing and hunting licenses. 24 Department of Conservation The Department of Conservation’s California Geologic Energy Management Division (CalGEM) protects public health, safety, and environment in its oversight of the oil, natural gas and geothermal industries, while working to achieve the state’s climate change and clean energy goals. The Budget proposes additional resources to strengthen CalGEM’s enforcement of existing laws and regulations, reduce the state’s financial liability for orphaned well operations, improve transparency of data and information, and implement recent legislation. Specific Adjustment: CalGEM Oversight --$4.8 and 26 positions phased in over three fiscal years to: o Increase field presence to perform regulatory inspections to protect the health and safety of those living near oil and gas wells and attendant facilities. o Enhance CalGEM’s regulatory programs including enhanced focus on compliance through timely enforcement actions o Review pipeline management plans and testing of tanks. o Review and approve idle well management plans to confirm there is adequate financial coverage for idle and orphaned wells o Improve public transparency and data reliability. PUBLIC SAFETY Criminal Justice The State Budget proposes total funding of $13.1 billion for the Department of Corrections and Rehabilitation in the 2021-22 state budget. The COVID-19 pandemic has impacted prison operations and the average daily adult inmate population is expected to decrease by 97,950. By mid-December CDCR had spent $408 million on COVID-19 activities including inmate and staff testing, cleaning, tents, and PPE purchases. By the end of 2020-21, CDCR expects to spend up to $723.8 million more and there is $281.3 million in one-time general fund for 2021-22. The Administration continues its focus on inmate rehabilitation and reentry and includes $546.9 million in funding for rehabilitative programs. Division of Juvenile Justice Realignment: Pursuant to SB 823 of 2020, the state will discontinue the intake of juvenile wards on June 30, 2021. To facilitate the transition of youthful offenders from state to county care, the Board of State and Community Corrections will distribute one-time funds in the amount of $9.6 million general fund in 2020-21 for the Regional Youth Programs and Facilities Grant Program. SB 823 also included ongoing funding for the following: $46.5 million general fund in 2021-22 $122.9 million general fund in 2022-23 $195.9 million general fund in 2023-24 25 and $212.77 million ongoing in 2024-25 for county probation departments to take over responsibility for youth who will no longer go to the DJJ. Local Public Safety and Rehabilitation County Probation Departments: The budget makes an additional investment of $50 million one-time general fund to support the transition of youthful offenders from state to county facilities. The Administration proposes that the Legislature take action on this funding in early 2021. These funds may be used on a broad range of services with an emphasis on keeping youth and adults out of the criminal justice system. The Budget also provides $122.9 million ongoing general fund to county probation departments to reduce or maintain low recidivism rates. In addition, the budget provides 19.5 million one-time general fund for county probation departments to supervise the temporary increase in the average daily population of offenders on Post-release community supervision as a result of the implementation of Proposition 57. There is also $202 million in funding available to be allocated for the county jail facilities. Department of Justice The Budget includes $1.1 billion in funding for the Department of Justice. Significant budget adjustments include the following: $13 million to establish three teams to investigate incidents of officer involved shootings that resulted in the death of an unarmed civilian. $16 million to the Bureau of Forensic Services $6.5 million to the Consolidated Science Forensic Laboratory $2.1 million to address Healthcare Rights and Access workload $1.9 million in 2021-22 and $1 million in 2022-23 to convene a working group to submit a plan for the replacement of the Juvenile Court and Probation Statistical System $1.1 million for the Task Force to Study and Develop Reparation Proposals for African Americans Who Are Descendant of Persons Enslaved in the United States Judicial Branch The Budget provides for $4.1 billion in funding for the Judicial Branch of which $2.2 billion is provided to support trial court operations. In addition, to maintain access to courts during the COVID-19 pandemic the Budget includes $72.2 million ongoing general fund. The Budget also provides for: $19.1 million ongoing general fund for the trial courts to continue providing self-help services for unrepresented litigants. $11.7 million in 2020-21 to the trial courts to process the increase in unlawful detainer and small claim filings as a result of AB 3088. The Administration proposes that the Legislature take action on this funding in early 2021. 26 Pandemic Early Disposition Calendar Program The Administration plans to work with the Legislature and the Judicial Council to establish a Pandemic Early Disposition Calendar Program to create an opportunity for certain defendants to be eligible for diversion. Consideration could be given to dismiss charges for defendants who have no violations or new charges while participating in a diversion program. Reducing Criminal Fines and Fees for Low Income Californians AB 1869 of 2020 eliminated the ability of state and local agencies to impose certain administrative fees for criminal offenses. Currently six courts have implemented this trial program and the budget includes $12.3 million general fund in 2021-22 increasing to $58.4 million by 2024-25 to expand this program statewide and include traffic and non-traffic infractions. The Judicial Council will implement this program on a phased schedule with several courts joining each year. TAXES / TAX REFORM The action plan to address the COVID-19 pandemic and its adverse impact on the economy includes the proposed Golden State Stimulus, $2.4 billion in tax refund payments of $600 to nearly 4 million low- income Californians, in a sense matching the Federal government’s recent actions. The plan also includes $71 million in various fee and license waivers for small business. These are noted here, which also lists other relief proposals: 27 More details on individual and business relief, including other tax and fee relief, is shown here: TRANSPORTATION In the Governor’s Budget Summary, the narrative is focused on job creation, encouraging federal investment in infrastructure, supporting transit’s recovery, and reducing emissions from the transportation sector. For a breakdown of the anticipated revenues and expenditures for FY 2020-21 and FY 2021-22 for the state’s core transportation programs, please see the table below. The table below does not reflect anticipated revenues from Cap & Trade flowing to the various continuously appropriated programs (TIRCP, LTCOP). In FY 2020-21/2021-22, the programs are expected to generate $100 million / $106 million and $200 million / $213 million, respectively. Finally, the LTF is estimated to generate approximately $1.8 billion in both FY 2020-21 and 2021-22. 28 WATER Sustainable Groundwater Management Grants (SGMA) $60m one-time through Department of Water Resources for mitigation planning and groundwater implementation projects across crucially over-drafted basins. Restoration of Natural Areas and Ecosystems $125m one-time Proposition 68 to support multi-benefit water quality, water supply and watershed protection and restoration projects. 29 $79.9m one-time for the Wildlife Conservation Board to support multi-benefit ecosystem and watershed protection and restoration projects including the Lower American River Conservancy Program, the Pacific Flyway program, and Wildlife/Fish Passage programs. $43.7m to support restoration projects through the Riverine Stewardship and San Joaquin Restoration programs, ecosystem enhancement projects in the Delta, and a plan to increase watershed resilience in the San Joaquin Basin. Flood Management $81m for the Delta Levees System Integrity Program. $183m in 2021-22 and $365.2m over the next four years to leverage $1.8b in federal funds for flood risk reduction, flood responses, and support of collaborative flood risk management. $75m one-time GF for levee repair projects to enhance the state’s resilience to catastrophic flooding. $67m for the flood risk reduction American River Commons Features project. $28.5m for collaborative flood risk management. $6.5m to support emergency flood response in the Delta. Watersheds $512m to a variety of things relative to resilient forests, including watershed health and post-fire recovery. Safe and Affordable Drinking Water Program “Funding necessary to maintain full implementation of the…Program”. Looks like $24m out of diminished Cap and Trade revenues in 21-22, which would be in addition to the $30m appropriated for 2020-21. Climate Smart Agriculture $50m one-time to the iBank for loans to advance projects including water efficiency. Also, $40m through the Department of Food and Agriculture to reduce irrigation water use and greenhouse gas emissions from agriculture pumping. Link to full Governor’s Budget Summary 2021-22 http://www.ebudget.ca.gov/FullBudgetSummary.pdf 30 January 9, 2021 To: CBHDA Members From: CBHDA Staff Subject: Governor Newsom’s Proposed FY 2021-22 State Budget Overview Governor Gavin Newsom’s proposed Fiscal Year (FY) 2021-22 State Budget allocates $227.2 billion in total state spending, consisting of $164 billion from the state General Fund (GF), $58.3 billion from special funds and $4.4 billion from bond funds. When federal financial participation (FFP) is included, Medi-Cal is by far the largest state program at $117.9 billion in FY 2021-22. In this year’s proposed budget, the state is experiencing a one-time $15 billion surplus due to the difficult to predict impacts of the pandemic on revenues and expenditures. However, much of this surplus is proposed to be allocated as one-time funding, because the state forecasts ongoing structural general fund deficits in outyears (i.e., $7.6 billion in FY 2022-23 growing to over $11 billion by FY 2024-25). Given the budget instability, the Administration also proposes continued investments in budget reserves totaling nearly $22 billion between last year and the proposed FY 2021-22 budget. The Newsom Administration’s January budget proposes a historic investment in the county behavioral health safety net and proposes an infusion of $1 billion combined, largely in one-time spending intended to build out the delivery system capacity, particularly at the community level, and support the state’s intention to eventually pursue the Medicaid Institutes of Mental Disease (IMD) waiver. This investment is one of several important contributions to county behavioral health and the individuals we serve, outlined in the sections below. The Governor’s budget assumes anticipated County Behavioral Health Revenues (FY 2021-22) as follows: Behavioral Health Subaccount (2011 Realignment) – $1.545 billion with no anticipated growth. Mental Health Subaccount (1991 Realignment) -- $1.12 billion in 2011 Mental Health Account with no anticipated growth. An additional $72.8 million from 91 Realignment above CalWORKs MOE into the Mental Health Subaccount. 1 Mental Health Services Act - $2.6 billion estimated revenue and $140 million redirected to pay for No Place Like Home repayments. According to the budget, 1991 and 2011 Realignment sources are projected to increase by 5.6% from FY 2019-20 to FY 2020-21, the current fiscal year and decrease by 1.9% in the next fiscal year, from FY 2020-21 to FY 2021-22. The annual state budget process begins with the introduction of the Governor’s proposed budget each January, proceeds through the legislative budget process over the next six months, with significant fiscal and policy adjustments in the Governor’s May Revision issued in mid-May. th The budget must be finalized by June 15per the state constitution. The legislature must vet and negotiate the final budget agreement with the Governor. CBHDA is active in advocating on behalf of county behavioral health directors on numerous budget issues. Below is a summary of what is currently known about the significant budget items for behavioral health, Medi-Cal broadly, children and youth, and criminal justice policies. CBHDA will continue to inform the membership as further details are released on the various proposals. To review the Governor’s January state budget, visit http://ebudget.ca.gov/. Please do not hesitate to contact CBHDA staff with any questions you may have. Priority Behavioral Health Investments County Behavioral Health Continuum. The budget includes $750 million one-time GF for competitive grants, available over three years, to counties to acquire and rehabilitate real estate assets to expand the community continuum of behavioral health treatment resources, including the addition of at least 5,000 beds, units, or rooms to expand capacity. The resources will address short-term crisis stabilization, acute needs, peer respite, and other clinically enriched longer-term treatment and rehabilitation opportunities for individuals with behavioral health needs in the least restrictive and least costly setting. Funds can be used for acquisition and/or rehabilitation. According to the California Health and Human Services Agency (CHHS), the funds will not be authorized for personnel. Counties will be required to provide a match of local funds. Although none of the budget documents specify the match amount, in a preliminary discussion with the Administration the local match was cited as 25%, or $250 million, which would bring the total investment in the county behavioral health continuum up to $1 billion in state and local funding. The Administration also linked this investment to its intention to pursue an opt-in to the Institutes of Mental Disease (IMD) waiver under CalAIM, described below. In addition, the Administration is exploring opportunities to repurpose relinquished adult jail bond financing to add to this effort. See County Jail Relinquishments below. CalAIM. The Budget includes $1.1 billion in FY 2021-22, and $1.5 billion in FY 2023-24 to implement CalAIM (effective January 1, 2022). This budget proposal includes $21.8 GF in FY 2021-22, which will grow to $86 million total (according to discussions with DHCS) over three years to support county behavioral health CalAIM transformation under the Behavioral Health Quality Improvement Program (BH QIP). According to DHCS, this program will provide support 2 and create incentives to help county behavioral health agencies reach specific milestones in the implementation of CalAIM, including coding and medical necessity-related infrastructure changes. The broader funding amount, inclusive of Medi-Cal managed care, includes investments to provide Enhanced Care Management, In Lieu of Services, and infrastructure to expand whole person care approaches statewide. Beginning FY 2024-25, the Administration proposes to phase out infrastructure funding, resulting in ongoing costs of about $846.4 million per year. IMD Waiver. The DHCS Budget Summary document includes a mention of the Administration’s intent to pursue the Serious Mental Illness/Severe Emotional Disturbance Institutions for Mental Disease (IMD) waiver as part of its CalAIM initiative. The Administration has communicated that the state intends to take a phased approach, in coordination with the infrastructure investments discussed above, and pursue the IMD waiver over multiple years. Student Mental Health. The budget includes one-time $400 million ($200 million GF), available over multiple years, for DHCS to implement an incentive program through Medi-Cal managed care plans, in coordination with county behavioral health departments and schools. Funds seek to build infrastructure, partnerships, and capacity statewide to increase the number of students receiving prevention and early intervention behavioral health services from schools, providers in schools, or school-based health centers in light of increased need for children’s mental health services. This funding allocation will be dispersed to Medi-Cal Managed Care plans to draw down a federal match; however, the DHCS will also provide enhanced incentives for creating 3- way contracts between Medi-Cal Managed Care plans, county behavioral health departments and schools. The Administration will propose budget trailer bill language to increase access to student behavioral health services. Expanded Board and Care Support. The Budget proposes $250 million one-time GF for the California Department of Social Services to counties for the acquisition or rehabilitation of Adult Residential Facilities (ARF) and Residential Care Facilities for the Elderly (RCFE) with a specific focus on preserving and expanding housing for low-income seniors. We will be working to ensure our clients are included in the budget trailer bill language that frames this proposal. Mental Health Services Act (MHSA). The budget includes statutory changes to extend flexibilities in county spending of local MHSA funds that were included in the 2020 Budget Act in response to the COVID-19 pandemic for an additional fiscal year. Statutory changes will allow counties to draw down prudent reserves without requiring a county-by-county authorization from the state. The budget discusses allowing flexibility in the amount of Community Services and Support (CSS) funds allocated to Full Service Partnerships and the ability to use existing MHSA spending plans if COVID-19 has delayed the adoption of a new plan. As DHCS develops budget trailer bill language, we will verify that other MHSA flexibilities have also been extended including safeguarding funds against reversion. The budget includes $25 million one-time Mental Health Services Fund (MHSA Administrative Funds) available over five years, for the Mental Health Services Oversight and Accountability 3 Commission to augment the Mental Health Student Services Act Partnership Grant Program, which funds partnerships between county mental health plans and school districts. The budget also proposes to allocate $25 million in ongoing education funding via Proposition 98 to fund innovative partnerships with county behavioral health departments to support student mental health services. These funds would be provided to local educational agencies as a match to funding from county MHSA spending plans dedicated to the mental health needs of students. FMAP. The Administration assumes COVID response will continue through December 2021 and anticipates the continuation of enhanced Federal Medical Assistance Percentage (FMAP) or federal match through 2021 in Medi-Cal. If enhanced federal match continues through 2021, counties will be able to provide less in non-federal share for Medi-Cal benefits. The budget includes $4.9 billion in increased federal funding. For FY 2021-22, the budget includes $3.3 billion in increased federal funding. Criminal Justice County Jail Relinquishments. The budget proposes to use adult jail financing savings and reallocate $202 million in bond funds for the purchase or modification of community mental health facilities. Proposition 47 Savings. The Department of Finance estimates net GF savings of $114.8 million, an increase of $11.9 million over the estimated savings in 2020-21. Funds are allocated according to the formula outlined in the initiative, which requires 65% to grants to public agencies to support recidivism reduction programs (such as mental health and SUD services). Division of Juvenile Justice (DJJ) Realignment. The budget includes: Office of Youth and Community Restoration - $3.4 million GF in FY 2021-22 and $3.1 million GF ongoing to develop reports on youth outcomes in the juvenile justice system, staff a Child Welfare Council committee focused on improving outcomes for justice- involved youth and create an Office Ombusdsperson. Population Estimate - Intake will stop for wards to DJJ on June 30, 2021. The FY 2021- 22 population is estimated to be 729, a reduction of 126 from spring projections. DJJ is expected to close on June 30, 2023. Board of State and Community Corrections (BSCC) - The BSCC will distribute one- time funds of $9.6 million in FY 2020-21 for the Regional Youth Programs and Facilities Grant Program. SB 823 also included ongoing funding for the Juvenile Justice Realignment Block Grant as follows: $46.5 million GF in FY 2021-22, $122.9 million in FY 2022-23, $195.9 million in FY 2023-24, and $212.7 million ongoing beginning in FY 2024-25. Prison Capacity and Closures. Long-standing efforts to decrease the state prison population have been accelerated due to the risks to inmates and staff presented by COVID-19. The Department of Corrections and Rehabilitation (CDCR) plans to close Deuel Vocational 4 Institution by September 2021, achieving savings of $113.5 million GF in FY 2021-22 and $150.6 million GF beginning in FY 2022-23, with plans to close a second state-operated prison in FY 2022-23. Department of State Hospitals Community Care Demonstration Project for Felony Incompetent to Stand Trial (CCDP- IST). The budget includes $233.2 million GF in FY 2021-2022 and $136.4 million in FY 2022-23 and ongoing to contract with three counties to provide a continuum of services for felony ISTs to be served at the county level rather than at the state hospitals. This proposal seeks to demonstrate the effectiveness of streamlining services to drive improved outcomes for individuals with serious mental illness. This proposal is projected to serve 1,252 ISTs in the county continuum of care settings in FY 2021-22. Expansion of Community Based Restoration (CBR). The budget includes $9.8 million GF in FY 2020-21, $4.5 million in FY 2021-22, and $5 million GF ongoing to expand the current Los Angeles County CBR program and establish new CBR programs in additional counties in FY 2021-22. This proposal is projected to increase capacity by up to 250 beds in FY 2021-22. Reappropriation and expansion of the IST Diversion program. The budget includes $46.4 million one-time GF, available over three years, to expand the current IST diversion program in both current and new counties. The budget additionally includes five-year limited-term funding of $1.2 million GF annually to support research and administration for the program. Further, the budget authorizes the reappropriation of existing program funds set to expire in July 2021. Forensic Conditional Release Program (CONREP) Mobile Forensic Assertive Community Treatment (FACT) Team. The budget includes $5.6 million GF in FY 2021-22, $8 million GF in FY 2022-23 and FY 2023-24, and $8.2 million GF in FY 2024-25 ongoing to implement a FACT team model within CONREP, in lieu of the typical centralized outpatient clinic model, to expand community-based treatment options for both IST and non-ISTs in counties and backfill State Hospital beds with IST patients. This expansion is estimated to increase capacity by up to 100 beds in FY 2021-22 CONREP Continuum of Care Expansion. The budget includes $3.2 million GF in FY 2020-21 and $7.3 million GF in FY 2022-23 and ongoing to increase the step-down capacity in the community in order to transition more stable non-IST patients out of state hospital beds and backfill state hospital beds with IST patients. This expansion is estimated to increase capacity by up to 40 beds in FY 2021-22 Social Services/Child Welfare Children’s Programs. The budget includes $700.1 million GF in FY 2021-22 for children and families who may be receiving Child Welfare Services, including family support and maltreatment prevention services, foster care services, and adoptions. This is a decrease of 5 $22.6 million GF compared to the 2020 Budget Act. When 1991 and 2011 realignment funds are included, total funding for children’s programs is in excess of $8.9 billion in FY 2021-22. The decrease is attributed to decreased caseload under the Continuum of Care Reform (CCR). COVID-19 Related Supports for Child Welfare Services. The budget includes $61.1 million GF in FY 2021-22 for services related to quarantine needs for foster youth and caregivers, support to Family Resource Centers, state-administered contracts for youth and family helplines, laptops and cellphones for foster youth, and assistance for families at risk of entering foster care. The budget provides temporary assistance payments for youth who turn 21 while in extended foster care after April 17, 2020 through December 31, 2021 and for any nonminor dependent who met eligibility requirements for Extended Foster Care and have been impacted by COVID-19. Family First Prevention Services Act (FFPSA). The budget includes $61.1 million ($42.7 million GF) in child welfare funding to begin implementation of Part IV of the Act (congregate care provisions). Family Urgent Response System (FURS). The budget intends to extend the temporary augmentation of FURS from December 31, 2021 to December 31, 2022. The suspension will be lifted if the Administration determines through the 2022 Budget Act Process that there is sufficient GF revenue to support suspended programs in the subsequent two fiscal years. Youth Returning From Out of State - $5.2 million one-time GF was allocated in December 2020 for CDSS to support youth in their transition back to California. These resources are intended to support county capacity building and supportive services for the returned youth, COVID-related quarantine costs and technical assistance to support counties placing the returning youth. Child Care. The 2020 Budget Act shifted early learning, child care and nutrition programs from the California Department of Education (CDE) to the California Department of Social Services (CDSS.) This transition becomes effective July 1, 2021 and will align child care programs within a single department. State Operations - The Budget shifts $31.7 million ($0.9 million GF) from CDE to CDSS to administer. Local Assistance – The budget includes $3.1 billion ($1.3 billion GF) and shifts various programs. Proposition 64 Cannabis Tax Revenue – Will provide $21.5 million for child care slots in 2020-21 and $44 million ongoing. These funds will provide 4,700 child care slots. Master Plan for Early Learning and Care. The 2019 Budget Act included $5 million one-time GF for a long-term roadmap to universal preschool and a comprehensive, quality, and affordable childcare system. The Master Plan was released on December 1, 2020 and provides recommendations and a multi-year plan for transforming the state’s child care and early education systems. An increase of $4.3 million Cannabis Fund to expand access to child care vouchers for more than 4,500 children with $21.5 million available starting in FY 2020-21. 6 Housing and Homelessness Local Accountability Framework. The budget includes resources to create a Housing Accountability Unit at the Department of Housing and Community Development (HCD) to further facilitate affordable housing production through monitoring, technical assistance, and enforcement of existing housing production laws. This includes $4.3 million GF for HCD to provide technical assistance to help local governments meet planning and zoning requirements before enforcement becomes necessary. Low-Income Housing Tax Credits. The budget proposes a third round of $500 million in low- income housing tax credits. This will further reduce funding gaps in affordable housing units statewide. Eviction Protections. The budget proposes an immediate extension to AB 3088, which prevented a wave of evictions by protecting tenants from evictions. Many provisions of the law expire on January 31, 2021. Continued Homekey Acquisitions. The budget proposes $750 million one-time GF for HCD to continue to provide competitive grants for local governments to purchase and rehabilitate housing, including hotels, motels, vacant apartment buildings, and other buildings, and convert them into interim or permanent long-term housing. The Administration is asking the Legislature to take early action to approve $250 million one-time GF and related streamlining benefits in FY 2020-21 to continue funding Homekey acquisition and rehabilitation projects. COVID Response COVID-19 Response. The budget reflects $1 billion in FY 2020-21 in state and federal support for emergency response measures including supporting enhanced laboratory capacity and testing, data driven investigation, response and prevention, and coordination with local partners. The FY 2021-22 budget includes over $820 million to continue to build on the emergency response measures. COVID-19 Medi-Cal Caseloads Impacts. There is an anticipated increase in the Medi-Cal caseload for two primary reasons. First, the federal Families First Coronavirus Response Act (FFCRA) requires states to implement a “continuous coverage requirement,” under which Medi- Cal beneficiaries may be disenrolled only under limited circumstances. Second, under the difficult labor market conditions related to the pandemic, more individuals are qualifying for and enrolling in Medi-Cal. While the increases in Medi-Cal caseloads have been less than projected, they are consistently growing and continued growth is anticipated. The budget assumes that the average Medi-Cal caseload will be about 14 million in FY 2020- 21, with associated cost increases of $5.4 billion total funds ($1.7 billion GF). In FY 2021-22, the budget assumes that the average Medi-Cal caseload will increase to about 15.6 million, with associated cost increases of $13.5 billion total funds ($4.3 billion GF). 7 COVID -19 Vaccine Administration Costs. The budget includes $31.7 million total funds in FY 2020-21 and $315.7 million total funds in FY 2021-22 to cover vaccine administration costs including a public awareness campaign to increase vaccine adoption across the state’s diverse communities. Reopen Schools Safely. The budget includes $2 billion one-time Proposition 98 General Fund allocation available beginning in February 2021 to augment resources for schools to offer in- person instruction including COVID-19 testing, PPE, as well as social and mental health support services provided in conjunction with in-person instruction. Health Equity Health Equity. The budget seeks to address disparities that have been further exacerbated by COVID-19 and includes $4.1 million in FY 2021-22 and $2.1 million ongoing for California Health and Human Services Agency (CHHS) to further the use of health equity data and develop an equity data dashboard. Additionally, the following initiatives seek to address equity: Health Plan Equity and Quality Standards - Invest in the Department of Managed Health Care to establish health equity standards for full service and behavioral health plans and take action against non-compliant health plans. Improving Equity Through MCP Reprocurements - As Medi-Cal managed care plan (MCP) contracts come up for renewal, a focus on health disparities and cultural competency will be addressed in contract language. Analysis of COVID-19 Impacts - The budget includes $1.7 million in FY 2021-22 and $154,000 in FY 2022-23 from the GF for CHHS to analyze the intersection of COVID-19, health disparities, and health equity. Office of Health Care Affordability. The budget includes $11.2 million in FY 2021-22, $24.5 million in FY 2022-23, and $27.3 million in FY 2023-24 from the Health Data and Planning Fund to establish the Office of Health Care Affordability. This Office will be charged with increasing transparency on cost and quality, promote healthcare workforce stability, report quality performance equity metrics on the full healthcare system, promote payment models that reward high-quality, cost-efficient care, and promote investments in primary care and behavioral health. OSHPD and the Office of Health Care Affordability will be moved under the umbrella of a newly created Department of Health Care Affordability and Infrastructure. Other Health Care Investments Medi-Cal Rx. The budget includes costs of $219.9 million in FY 2020-21 and savings of $612.7 million in FY 2021-22 associated with the carve-out of the Medi-Cal pharmacy benefit from managed care to fee-for-service, effective April 1, 2021. Full annual savings are projected to be approximately $1.2 billion by FY 2023-24. 8 State-Only Claiming Adjustments. The budget includes $249.8 million GFin FY 2020-21 and $279.1 million GF in FY 2021-22 for retroactive and ongoing dental, pharmacy, and managed care, targeted case management, and behavioral health costs associated with state-only populations. Health Information Exchange (HIE). The Administration is looking to accelerate the utilization and integration of HIEs throughout California, leveraging existing investments and identifying potential federal funding, in alignment with new federal interoperability rules. The goal is that the entire healthcare continuum contributes to and makes available data through HIEs, with priority put on state health programs. Master Plan for Aging. The budget includes $250 million on-time General Fund to expand housing along with additional proposals to address California’s 65 and older population. Additionally, the budget has a $5 million General Fund placeholder for other proposals including establishing a new Office of Medicare Innovation and Integration to lead innovative models for dually eligible and Medicare only eligible beneficiaries. The newly finalized Master Plan for Aging includes various proposals linked to behavioral health, including the addition of the California Department of Aging (CDA) to the Health and Human Services Agency (CHHSA) Behavioral Health Task Force. Telehealth Flexibilities in Medi-Cal. The Budget includes $94.8 million ongoing to expand and make permanent certain telehealth flexibilities authorized during COVID-19, primarily for Medi- Cal physical health providers for whom there were significantly more telehealth flexibilities added due to the pandemic, and to add more remote patient monitoring as a new covered benefit, effective July 1, 2021. This effort will expand access to preventative services and improve health outcomes, thereby increasing health equity. Delay Proposition 56 Program Suspension. Given the improved revenue outlook in the short term, the budget delays the suspension of Proposition 56 programs by 12 months and includes a total of $3.2 billion ($275.3 million GF, $717.8 million Proposition 56 Fund, and $2.2 billion federal funds) for these programs in FY 2021-22. The General Fund partially supports supplemental payment programs at current levels now that program costs exceed declining tobacco tax revenues, due primarily to the assumed implementation of the ban on flavored tobacco and vaping products. The budget assumes Prop 56 suspension effective July 1, 2022, except for supplemental payments to intermediate care facilities for the developmentally disabled, freestanding pediatric subacute facilities, and Community Based Adult Services which will be suspended December 31, 2022. The Budget also proposes to exempt supplemental payments for the Behavioral Health Integration Program, the AIDS waiver, Home Health, and Pediatric Day Health from suspension because they would not be deemed eligible by the federal government. 9 To: All Chiefs From: Karen Pank, Executive Director Rosie McCool, Deputy Director Danielle Sanchez, Legislative Director Date: January 8, 2021 Subject: Governor Releases January Proposed 2021-22 State Budget _____________________________________________________________________________ Today, Governor Newsom released a $227.2 billion proposed state budget for 2021-22. He began his briefing by reflecting on where we were in January of last year which included record low unemployment, $21 billion in reserves, and 10+ years of expansion. As of May of 2020, the projected $5.6 billion surplus became a $54.6 billion deficit as a result of the pandemic. The budget proposal reflects a total of a record high $22 billion in reserves, $15.6 billionof which is the Rainy-Day Fund to continue to be prepared to respond to future economic needs and downturns. These reserves, along with a one-time discretionary surplus, will be important as the State has a projected structural deficit of $7.6 billion for 2022-23 that is forecastedto growto over $11 billion by 2024-25. This budget also makes a record investment of $85.8 billion for education with the highest per pupil spending. The Governor highlighted this budget’s focus and priorities which include: Vaccinations Safely reopen schools Support small business Money to support Californians Wildfire preparedness We are very pleased to see the Governor’s recognition of the role of probation as an alternative to incarceration, in supporting moving people out of the system successfully, and in implementing reforms in the juvenile and adult space. We are also pleased to see investments to probation to support and stabilize SB 678, DJJ realignment, PRCS mitigation and related areas. The final budget is due to the Governor by June 15 and must be signed into law by July 1, 2021. The full budget summary can be viewed at: http://www.ebudget.ca.gov/2021- 22/pdf/BudgetSummary/FullBudgetSummary.pdf Probation Priority Items SB 678 –The budget provides$122.9 million to county probation departments, based on the highest payment to individual counties over the prior three fiscal years. This freezing of the formula reflects the COVID-19 impacts to court processing as well as AB 1950 –both of which impact revocation rates and make it difficult to account for the calculations within the exiting formula as they have little relation to probation department’s performance. The Administration intends to revisit the performance -based formulas after trends in the probation population stabilize. SupportingProbation’sDeliveryofServices–The Budget makesan investment of $50 million one-time funding directly allocated to county probation departments. The budget narrative speaks to probation’s integral role in implementing transitions such a DJJ realignment, adult realignment, SB 678, AB 1950, and other programs. These funds may be used for a broad range of services with an emphasis on keeping juveniles and adults out of the criminal justicesystem, moving them quickly and successfully through the system, and keepingthem from reentering the system. Enhancing services in the community supports meeting the treatment and programming needs while also providing the courts confidence in probation as an alternative to incarceration. PRCS Mitigation Funding – The Budget proposes $19.5 million to be appropriated directly to probation departments to mitigate workload related to PRCS offenders as a result of Proposition 57. STC –The Budget includes the continuation of current STC funding levels at $20.9 million. DJJ Realignment –The Budget provides an overview of the funding provided pursuant to SB 823 to support “county probation departments to take over responsibility for youth who will no longer go to the DJJ.”The Governor’s budget further notes that “county probation departments are integral to the success of the realignment of juvenileoffenders from the state to the counties.” o Closure Date – The Budget notes that DJJ is expected to close on June 30, 2023. The 2021-22 estimated population is expected to be 729, a reduction of 126 compared to the spring projections. o Office of Youth and Community Restoration – Budget includes $3.4 million in 2021- 22 and $3.1 million ongoing to develop reportson youth outcomes in the juvenile justice system, staff a Child Welfare Council committee focused on improving outcomes for justice-involved youth and create an Office Ombudsperson. FosterCareFunding-The Governor’s budget contains a total of $10.882 million in funding for probation departments for the continued implementation of the Continuum of Care Reform. The breakdown by CCR activities is below. Further, the budget contains $61.1 million, of which $42.7 million is state general fund, to begin implementation of the Families First Prevention Services Act (FFPSA). Lastly, as has been previously shared, the budget contains the $5.2 million in funding to assist with returning youth from out of state as a result of the state’s action to decertify out of state programs. We have also attached more detailed foster care fiscal materials specific to probation provided by DSS. It includes information on FFPSA implementation, funding related to returning youth from out of state and more information and background on CCR funding and programmatic details. CPOC is in the process of analyzing this information. CCR Activity State GF FederalTotal Child and Family Teams $3.679m $1.353m$5.032m Resource Family Approval $4.202m $1.593m$5.795m Second Level Review $40,000.00$15,000.00 $55,000.00 Total $7.921m $2.961m$10.882m 2011 Realignment - Realignment is funded by both sales tax revenue and vehicle license fees. Of note in the Governor’s January Proposed Budget is the updated projections for growth in 2020-21 which now estimates growth in all the Law Enforcement Subaccounts, not just the Enhancing Law Enforcement Activities Subaccount (ELEAS). It is important to note however that growth is not expected for FY 2021-22 except for the ELEAS account as it receives its funding from vehicle license fees. For detailed information on the revised estimates, please see the attached chart. CCP Implementation Grants - The budget continues to propose $7.95 million to go out to the counties that report on their realignment efforts to the BSCC. Counties are eligible to receive funding if they submit a report to the Board of State and Community Corrections annually that provides information about the implementation of the Community Corrections Partnership plan accepted by the County Board of Supervisors pursuant to Section 1230.1 of the Penal Code. As in years past, the funds would be distributed based on the most recent county population as follows: (1) $100,000 to each county with a population of 0 to 200,000, inclusive, (2) $150,000 to each county with a population of 200,001 to 749,999, inclusive, and (3) $200,000 to each county with a population of 750,000 and above. California Department of Corrections and Rehabilitation InmateRehabilitationandReentry–TheBudget includes $546.9 million General Fund for rehabilitative programs, nearly double the funding since 2012-13. The Budget also includes $23.2 million in 2021-22, and $18 million ongoing for information technology to enhance access to rehabilitative programming and academic programs. Prison Capacity and Closures- The average adult inmate population for 2020-21 is projected to be 97,950, a decrease of 20 percent from spring projections. CDCR terminated six of seven in-state contracts in 2020 and this budget reflects closing the final in-state contract facility by May 2021. Consistentwith the 2020 budget, the Department plans to close Deuel Vocational Institution by September 2021. The Administration plans to close a secondstate-operated prison in 2022-23. Suspension of Intake –There continues to be a suspension of intake from county jails. Per theBudget, in circumstances where CDCR cannot accept the intake and/or transfer ofan inmate from a county jail, the state is required to reimburse counties for holding inmates. The State hasprovided$38.8 million, with an additional payment of $40.4 million pending, to county sheriffsand county corrections for housing inmates due to the temporary stoppage of intake. Current projections suggest a total of $163.4 million in additional reimbursement throughJune 30, 2021. Staff Development and Support –Includes $21.2 million in 2021-22 to enhance staff development through new training for correctional officers. Health and Human Services California Advancing and Innovating Medi-Cal (CalAIM) o Proposes to implement CalAIM effective January 1, 2022 o Budget includes $1.1 billion in 2021-22 which will provide for enhancedcare management and expand whole person care approaches. Community Behavioral Health Treatment o$750 million included for competitive grants to counties to acquire and rehabilitate real estate to expand the community continuum of behavioral health treatment resources to address individuals experiencing a crisis and as part of a framework to mitigate and address homelessness. The Administration is exploring the repurposing of relinquished adult jail bond financing as part of this proposal. Specifically, the Administration proposes the reallocation of $202 million in adult jail facility bonds that have been relinquished by county recipients in order to purchase or modify community mental health facilities. Student Mental Health o The Budget includes one-time $400 million available over multiple years for the Department of Health Care Services to implementan incentive program through Medi-Cal managed care plans, in coordination with county behavioral health departments and schools. o$25 million one-time MHSA available over five years to augment the Mental Health Student Services Act Partnership Grant for partnerships between county mental health and school districts. o$25 million ongoing Prop 98 to fund partnerships with county behavioral health to support student mental health services. Judicial Branch The Budget includes $72.2 million ongoing GF, an increase of 3.7 percent compared to 2020, for the trail courts to help address impacts of COVID-19. Fines and Fees – The Budget includes $12.3 million in 2021-222, increasing to $58.4 millionongoing to expand the Judicial Council ability to pay program statewide and incorporateboth traffic and non-traffic infractions. The ongoing costs include $2.7 million to implementan online application system and $55.7 million to backfill the estimate loss in revenue tosupport trial court operations. This will be implemented on a phased schedule with severalcourts joining each year. Pandemic Early Disposition Calendar Program – The Administration plans to work with the Legislature and the Judicial Council to establish a Pandemic Early Disposition Calendar Program, which would create opportunities for certain defendants to be eligible diversion. Consideration will be given to dismiss charges for defendants who have no violations or new charges while participating in a diversion program. There is no current language being proposed, in concept it is intended to address misdemeanor and some low level felonies. Proposition 47 Currently estimates reflect General Fund savings of $114.8 million, an increase of $11.9 million over the estimated savings in 2020-21. This is attributable primarily to increased savings resulting from the end of the state’s use of contract facilities. 65 percent will be allocated for grants to public agencies to support recidivism reduction programs. Department of Justice Use of Force Investigations – The Budget provides $13 million in 2021-22 to establish three teams (northern, central, southern) to conduct investigations pursuant to AB 1506. AB 1506 also requires DOJ, commencing July 1, 2023 to operate a Police Practices Division to review and make recommendations on the use of deadly force policies. Juvenile Court and Probation Statistical System – The Budget includes $1.9 million in 2021- 22 and $1 million in 2022-23 to convene a working group to submit a plan for the replacement of the Juvenile Court and Probation Statistical System with a modern database. Emergency Preparedness and Response COVID-19 o Current estimates of total direct COVID-19 emergency response costs are approximately $13 billion, with an estimated General Fund impact of approximately $2.5 billion. This represents costs incurred in the prior fiscal yearas wellas projected costs i the next few years. CARES o The State has obligated or spent nearly $8.7 of the $9.5 billion authorized by the CARES Act as includedin the 2020 budget. The State is finalizing the allocation of the remaining $800million to pay for additional emergency response costs. VaccineRelated Efforts o$300 million initial investment for vaccine distribution and public awareness campaign Department of State Hospitals Felony Incompetent to Stand Trial - The number of IST’s pending placement into the state hospital system was approximately 1,428 individuals in December 2020. o Community Care Demonstration Project for Felony IST –The budget includes $233.2 million General Fund in 2021-22 and $136.4 million General Fund in 2022- 24 and ongoing to contract with three counties to provide a continuum of services to felony IST’s in the county as opposed to state hospitals. This proposal would serve up to 1,252 IST’s in the county continuum in 2021-22. o Community Based Restoration – The budget includes $9.8 million in 202-21 to expand the current Los Angeles County Community Based Restoration program and establish new programs in additional counties. o IST Diversion –The budget includes $46.4 million one-time, available over three years, to expand the current IST Diversion program in current and new counties. o Jail Based Competency – The budget includes $785,000 in 2020-21 and $6.3 million in 2021-22 to expand jail-based competency to seven additional counties. Other Items of Note Penal Code RevisionCommittee – The budget includes $494,000 for additional staffing for the Committee on Revision of the Penal Code. Governor Newsom Update, January 11, 2021 GGN 39,839 in the latest reporting period have tested positive Test positivity rate in the state has fluctuated 291,931 7-day average daily tests The growth rate of hospitalizations at 6% over last two weeks Substantially lower rate of growth in terms of new cases in hospitals Both hospitals and ICUs are seeing a more modest rate of increase We are in a surge phase in Socal and San Joaquin Valley We should expect Dr. Ghaly to update tomorrow, but based on numbers, we should expect the stay at home order to continue 264 deaths Jan 10 476 7-day average 5,681 14 day change Our emphasis is on contract staff We are expecting 1,000 more contract staff in the next 7-days 2,466,125 total doses shipped as of 1/10 CA set the goal of 1 million more vaccinations by this weekend There is always a day or two lag in data, we will have better numbers by this weekend Today this expanded pool and loosing of tiers to allow more expedited administration of the vaccine We recognize more folks need the ability to administer the vaccine We are getting more and more folks, including dentists who can help administer National Guard has been deployed to help Today we have socialized more EMTs and Paramedics pairing wit local health officers and others to help administer Using every dose offer healthcare providers flexibility to move to the next tier if no one is in line and they still have doses CVS and Walgreens are doing the lions share We talked last week about Phase 1C this is the phase you and I might be in, this is now up on the covid19 website We will need substantially more doses to get into this next phase We are looking to get clarity so we can start getting timelines out there We recognize the current strategy will not get is where we want to go We are looking at opening large-scale vaccination sites $372m was submitted to the legislature this past Friday The public education campaign is focused on key messages: safe and effective, available at no cost We want to build on our engaged and trusted messenger strategy We are partnering with 150 CBOs and philanthropy 40+ ethnic media outlets in 18 languages We have 2 gorillas a tth eSan Diego Zoo that have tested positive for covid-19 Confirming source of infection and strain Human to animal transmission has long been a concern 3 gorillas are symptomatic Press We have been in touch with the CA board of nursing who has trained students who can help will you consider this? GGN Yes we are engaging them in terms of vaccination protocols going forward The 1k staff is specific to ICU surge in hospitals, students at nursing schools is separate and are being sought to help with vaccines Dr. Ghaly The idea of using nursing students came up early on and now with vaccines, it seems like a large resource we can match experience Yolanda We are looking at retired providers and firefighters in addition to students AP Are we opening the vaccine to tiers 1B and 1C? GGN The survey just about people saying yes or no, it was about issues we are running into in the last mile UC: only 2% of healthcare workers have declined or postponed covid vaccine CalVet: 5 out of 8 homes have held clinics, 81% of eligible residents have received the vaccine Dr. Ghaly They survey was comprehensive, we learned a lot as far as what supports individual counties need Some of the top things we heard was support with additional staffing Our goal is to increase the availability of vaccines as much as possible and that we support 1A in the process SacBee (could not understand speaker) Dr. Ghaly The idea that tiering and phases has slowed us down we have certainly started addressing this We want people profiting, and we cant afford any waste We need to make sure we use what we have in our freezers which is part of why we have the illion dose goal We recognize that risk and exposure is important and ensuring we stay focused on our oldest Californians and congregate care facilities We need to focus on exposure GGN We are allowing more flexibility within the phases LA Times What extra security precautions have you ordered for the protests in the coming day? GGN Everyone is on high alert and making sure everyone is protected We want free speech advanced but safely We have a heightened level of security SF Chron What is your current stance on impeachment? GGN I am all for it I am focused on the vaccine distribution and the surge I support the effort but I am focused on the safety of you and your families and getting people through safely Press (out of LA) Concerns with oxygen supply where are we at with that and with minority populations? It is getting scary in Los Angeles. Where are we at? Dr. Ghaly A lot has come together in the past few days things we have been working on for weeks We are working to make sure oxygen is available for those who need it to be discharged, making sure hospitals have it, and to make sure we can circumvent any disaster that may happen in a crisis all three efforts are underway GGN Last week we put out a deck of slides on our efforts: It is a dynamic process and we continue to stay on top of it NBC 4 With the large scale vaccination centers, do you plan to move further down the tiers while still in current vaccine tiers? Are hospital numbers due to numbers not being as bad as we thought or people with lesser issues being transferred out? GGN It is an AND, not an OR as we get more supplies and doses, we will do more at these large scale facilities Dr. Ghaly These large scale sites will allow us to reach our goals We want to make sure those who are giving he vaccines are protected We also want to protect those who have been hit the hardest during this pandemic, which is where the equity framework comes in We knew if people made different decisions in the end of December, we would see a different outcome We are concerned we have seen high case numbers over the past week and a percentage of those will end up in the hospital GGN When should we see the surge from the holidays? Dr. Ghaly Yesterday we had 2500 admissions, which is significant, but not as high as we thought it would be We will know more in the coming days GGN This week will be profoundly significant in being able to answer surge questions after the holidays KCRA Some businesses are operating when they are not supposed to. What are you seeing across the state? GGN The majority of businesses are doing the right thing and holding strong against all the headwinds of their own economic vulnerability We are doing direct contact and we are enforcing not just with retailers but larger manufacturers There are outliers and we try to do out best to address those head-on We look forward to Dr. Ghalys update tomorrow, and we look forward to updating you in realtime as the week continues KBOVBSZ!22-!3132 Pwfswjfx!pg!uif!Hpwfsopst! 3132.33!Cvehfu QSFTFOUFE!UP; Bttfncmz!Dpnnjuuff!po!Cvehfu Ipo/!Qijmjq!Z/!Ujoh-!Dibjs MFHJTMBUJWF!BOBMZTUT!PGGJDF Uif!Hpwfsopst!%26/6!Cjmmjpo!Xjoegbmm Dpnqbsjoh!MBP!up!EPG!Xjoegbmm!Dbmdvmbujpo Pvs!Opwfncfs!Gjtdbm!Pvumppl!boujdjqbufe!b!xjoegbmm!pg!%37!cjmmjpo/!Nbkps! tpvsdft!pg!ejggfsfodft!bsf; !Voefs!Efqbsunfou!pg!Gjobodf!)EPG*!ftujnbuft-!%6/7!cjmmjpo!npsf!jo! sftfswft!boe!efcu!qbznfout!sfrvjsfe!voefs!Qspqptjujpo!3!)3125*/ !EPG!jodmveft!%3/9!cjmmjpo!npsf!jo!dpspobwjsvt!ejtfbtf! 312:!fyqfoejuvsft-!ofu!pg!gfefsbm!sfjncvstfnfout/ !EPGt!ftujnbuft!pg!cbtfmjof!tqfoejoh!po!nbkps!Ifbmui!boe!Ivnbo! Tfswjdft!qsphsbnt!ijhifs!cz!bcpvu!%3!cjmmjpo/ ! cz!pomz!%2/8!cjmmjpo*/ Ipx!uif!Hpwfsops!Bmmpdbuft!uif!Xjoegbmm Ipx!uif!Hpwfsops!Bmmpdbuft!uif! %26/6!Cjmmjpo!Xjoegbmm!cz!Qsphsbn!Bsfb )Jo!Cjmmjpot* Ipvtjoh!boe!Ipnfmfttoftt Sftpvsdft!boe!Fowjsponfou Ifbmui!boe!Cfibwjpsbm!Ifbmui Ijhifs!Fevdbujpo Cvtjoftt!Bttjtubodf Dsjnjobm!Kvtujdf Pof!UjnfPohpjoh Ivnbo!Tfswjdft Puifs !1/6!2/1!2/6!3/1%3/6 MFHJTMBUJWF!BOBMZTUT!PGGJDF 2 Qspqptjujpo!:9!Gvoejoh Npsf!Uibo!%2:!Cjmmjpo!jo!Ofx!Tqfoejoh!gps!Tdippmt!boe!Dpnnvojuz! Dpmmfhft/!Uif!Hpwfsops!qspqptft!up!tqfoe!nptu!pg!uijt!bnpvou!po!uisff! nbjo!qsjpsjujft; !Qbzjoh!Epxo!Efgfssbmt!)%9/5!Cjmmjpo!Pof!Ujnf*/!Uif!cvehfu!qbzt! epxo!%9/5!cjmmjpo!pg!uif!%23/6!cjmmjpo!jo!qbznfout!efgfssfe!jo!uif!Kvof! 3131!cvehfu!qmbo/! !Qspwjejoh!Jo.Qfstpo!Jotusvdujpo!boe!Fyqboejoh!Bdbefnjd! Tvqqpsu!)%7/7!Cjmmjpo!Pof!Ujnf*/!Uif!Hpwfsops!qspqptft!jnnfejbuf! bdujpo!up!qspwjef!%3!cjmmjpo!jo!pof.ujnf!hsbout!up!jodfoujwj{f!tdippmt! up!pggfs!jo.qfstpo!jotusvdujpo!gps!zpvohfs!tuvefout!boe!tuvefout!xjui! ijhi!offet-!qpufoujbmmz!bt!tppo!bt!Gfcsvbsz!27-!3132/!Uif!Hpwfsops! bmtp!qspqptft!fbsmz!bdujpo!up!qspwjef!tdippmt!xjui!%5/7!cjmmjpo!jo! hsbout!up!pggfs!beejujpobm!bdbefnjd!tvqqpsu!gps!ejtbewboubhfe! tuvefout/ !Gvoejoh!Dptu.pg.Mjwjoh!Bekvtunfout!)DPMB*!)%3/3!Cjmmjpo! Pohpjoh*/!Uijt!jodmveft!b!4/95!qfsdfou!DPMB!gps!uif!Mpdbm!Dpouspm! Gvoejoh!Gpsnvmb!boe!b!2/6!qfsdfou!DPMB!gps!puifs!fevdbujpo! qsphsbnt/ Tqfoejoh/!Cz!ibwjoh!b!tvctuboujbm!bnpvou!pg!pof.ujnf!tqfoejoh!jo!3132.33-! uif!Hpwfsopst!Qspqptjujpo!:9!qbdlbhf!qspwjeft!b!dvtijpo!up!qspufdu!pohpjoh! qsphsbnt!gspn!wpmbujmjuz!jo!uif!njojnvn!hvbsbouff/! MFHJTMBUJWF!BOBMZTUT!PGGJDF 3 MBP!Dpnnfout Sfdfou!Gfefsbm!Bdujpo!Tipvme!Jogpsn!Tubuf!Bdujpot/!Xf!sfdpnnfoe! uif!Mfhjtmbuvsf;!)2*!efufsnjof!ipx!up!cftu!ubshfu!tubuf!gvoet!up!uiptf!opu! !tusjwf!up!dpnqmfnfou-!sbuifs! uibo!evqmjdbuf-!uif!gfefsbm!bdujwjujft/ Bttfttnfou!pg!Hpwfsopst!Jnnfejbuf!Bdujpo!Qspqptbmt/!Uif! Hpwfsopst!cvehfu!jodmveft!%5/6!cjmmjpo!jo!bdujpot!if!qspqptft!uif!Mfhjtmbuvsf! bepqu!xjuijo!uif!ofyu!gfx!xfflt; !Tdippm!Sfpqfojoh!Qspqptbm!)%3!Cjmmjpo*;!Xf!bsf!dpodfsofe!uijt! qspqptbm!njhiu!tfu!vogfbtjcmf!ujnf!mjoft/! !Uby!Sfgvoet!gps!Mpx.Jodpnf!Dbmjgpsojbot!)%3!Cjmmjpo*;!Xf!uijol! uijt!qspqptbm!dpvme!cf!npsf!ubshfufe/! !!Njmmjpo*;!Uijt! qspqptbm!jt!xpsui!dpotjefsjoh/! !Gff!Xbjwfst!)%82!Njmmjpo*;!Uijt!qspqptbm!jt!sfbtpobcmf/ Gsbnfxpsl!gps!Dpotjefsjoh!%7/6!Cjmmjpo!jo!Fbsmz!Bdujpo!Qspqptbmt/! Xf!sfdpnnfoe!uif!Mfhjtmbuvsf!btl!uif!gpmmpxjoh!rvftujpot!bcpvu!fbdi!fbsmz! bdujpo!qspqptbm/!)2*! qspcmfn@!)3*!Jt!uif!qspqptbm!ujnf!tfotjujwf@!)4*!Jt!uif!foujsf!gvoejoh!bnpvou! ujnf!tfotjujwf@!)5*! tvddftt@ Sftupsjoh!Cvehfu!Sftjmjfodf/!Xf!bhsff!uif!tubuf!tipvme!sfnbjo! gpdvtfe!po!uif!dsjtjt!bu!iboe-!cvu!sftupsjoh!nptu!ps!bmm!pg!uif!cvehfut! sftjmjfodf!jt!jnqpsubou!up!beesftt!uif!tubuft!nvmujzfbs!cvehfu!qspcmfn!boe! ifmq!Dbmjgpsojb!xfbuifs!uif!ofyu!vofyqfdufe!epxouvso/ MFHJTMBUJWF!BOBMZTUT!PGGJDF 4 2021- January 2021 Erika Li Chief Deputy, Department of Finance Revenues have dramatically improved $158B (up $29B from 2020 Budget Act) CA GDP largely recovered from a 31.5% drop (Q2 to Q3, back to 2019 levels) 8.2% unemployment rate 4M Californians still receiving UI benefits 1.4M fewer Californians employed than in Feb 2 2021- U.S. and California Real GDP 120 115 California 110 United States 105 100 95 4 1234123412341231234123 QQQQQQQQQQQQQQQQQQQQQQQ 55556666777788889999000 11111111111111111111222 00000000000000000000000 22222222222222222222222 3 2021- Budget Structure Total expenditures$227B General Fund$165B Total reserves$22B One-time surplus$15B Additional state retirement liabilities paid$3B (about $6.5B over the next 3 years) Scheduled program suspensions delayed$2B 4 2021- Improved Revenues Improved revenue picture attributable to: Less severe economic downturn than expected Unequal spread of wage losses Strong stock market performance 5 2021- Budget Projects Surplus, But Future Shortfalls Projected $25 $20 $15 $10 s n o i l l i $5 B n i s r $0 a l l o D -$5 -$10 -$15 -$20 2019-202020-212021-222022-232023-242024-25 6 2021- COVID-19 Direct Response Budget prioritizes emergency response (over $4B) Testing Contact tracing Vaccines Food banks Community engagement 7 2021- Immediate Budget Action Safely Reopen Schools and Immediately Provide Relief to Individuals and Small Business Safely Reopen Schools ($2B)Prioritize in-person instruction Golden State Stimulus ($2.4B)One-time $600 tax refund to low-income households Small Business Grants ($575M) Fee Waivers ($70M) $2.6B federal relief funds and eviction moratorium extension 8 2021- Budget Prioritizes Job Creation to Expedite Recovery California Jobs Initiative ($778m) CalCompetescredits and grants ($430M) Small business tax credits, grants/micro-grants, loans ($247.5M) Alternative energy sales tax exclusion ($100M) Infill infrastructure grants ($500M)projects leading to long-term housing development 9 2021- More Job Creation Zero-emission vehicles package ($1.5B) construction of charging stations and incentives to improve access to ZEV Wildfire and forest resiliency package ($1B) projects that mitigate wildfire risks Forest management Secure fuel breaks Home hardening 10 2021- W orkforce Development Improving linkages between higher education institutions and employers ($250M) Higher Education ($78M) Apprenticeship and work-based learning opportunities Labor apprenticeship programs ($25M) 11 2021- EducationProposition 98 Proposition 98 funding ($85.8B)highest level ever Cost of living adjustment ($2B)fully funds LCFF target levels Majority of K-12 deferrals paid ($9.2B)$3.7B remain Additional non-Proposition 98 General Fund ($3.4B) Supplemental payment$2.3B Retirement contribution rate buy down$1.1B 12 2021- Extended Learning Time student learning Targeted interventionssuch as community learning hubs, summer school, and extended school days Request early action to allow time for districts to plan for these interventions 13 2021- Higher Education California Community Colleges ($111M cost of living adj) Emergency financial aid ($250M) Basic needs support ($100M) CSU and UC (3% base increase) CSU:$200M ongoing/$225 one-time UC: $136M ongoing/$225M one-time Both segments must maintain resident undergrad tuition/fees at current levels and reduce equity gaps Financial Aid ($35M)9,000 additional Competitive Cal Grants 14 2021- Homelessness HomekeyExpansion$1.75B in grants to local jurisdictions to acquire housing $750Mhousing for people experiencing homelessness $750Mhousing to expand community continuum of care treatment resources for those with acute behavioral health needs $250Mhousing for vulnerable seniors, such as Adult Residential Care Facilities/Residential Care Facilities for the Elderly 15 2021- Health Health quality and affordabilityOffice of Healthcare Affordability Student mental health ($400M) CalAIM($1.1B)transform delivery system for Medi-Cal beneficiaries 16 2021- Climate and Environmental Protection Cap and Trade Plan ($1.4B) priorities on environmental justice, clean air, and water Toxic site clean up ($331M)accelerate the clean up of contaminated properties in impacted communities using health-based criteria Integrated Pest Management ($38m)to facilitate transition away from harmful pesticides Replace flat-fee mill assessment on pesticides sales with a risk-based tiered assessment based on toxicity 17 2021- Immediate Budget Action Safely Reopen Schools ($2B)Prioritize in-person instruction Golden State Stimulus ($2.4B)$600 refunds Small Business Grants ($575M) Fee Waivers ($70M) $2.6B federal relief funds and eviction moratorium extension There are additional proposals for early action not part of this package 18 2021-