Although this is the final agreed upon budget, this agreement only avoids steep cuts to education and safety net programs until next year. Negotiations went better than expected as both Governor Newsom and the Legislature were encouraged by tax revenues which came in about $1 billion ahead of prior dismal May projections. This final version is very similar to the Legislative Version that passed on June 15th. 

This final version does not rely on additional Rainy Day Funds, Safety Net Reserve Funds, or the PERS deferral that were included in the Legislature’s version if additional federal funds did not materialize. Instead, it relies upon updated baseline forecast adjustments to revenues and expenditures and an increased Prop 98 deferral. $14 billion in additional funding would be appropriated if the State receives federal funding by October 15.   

Note: Although this is the final agreed upon budget, the Governor may still exercise line item vetoes in trailer bills. 

Health & Human Services

• Medi-Cal: No cuts will take place this year to Medi-Cal. The budget does not extend Medi-Cal to undocumented seniors but rather it has language to do so when funding becomes available in the future. 
• Rejected Proposed Cuts to: Aging Programs MSSP & CBAS, IHSS, employment and other services in CalWORKs, Medi-Cal optional benefits and Prop 56, and to Disability Services.  
• CalWORKs: Expanding back to the 60 month time-clock that existed prior to the Great Recession. Funding increased by $1 billion to reflectional anticipated additional caseload growth. 
• Cash Assistance Program: Permits all eligibility interviews for applicants and recipients of the Cash Assistance Program for Aged, Blind, and Disabled Legal Immigrants to be conducted electronically through December 31, 2020.

Financial Stability

• ITINs: Immigrant tax filers with young children (6 and under) will be able to access the EITC. Although this is not retroactive, qualifying filers will be able to take advantage of the credit for the upcoming year.

Education: Defers $3.4 billion in funding from 2020-2021 budget to the 2021-2022 budget. If no federal funding, it increases to an additional $5.7 billion. Creates authority for up to $300 million in deferral hardship funds for LEAs.

• K-12: Schools and community colleges will maintain their current funding levels, but a record $12 billion of the money would be deferred to future years. Districts can borrow against that funding or tap into their savings, with the state promising to pay them back later. $7 billion in discretionary state & federal funds for one-time COVID-19 impacts on K-12 schools and children. 
• Layoffs: Language was inserted to prevent the payoffs of teachers and many other school employees (classified employees) over the next year. These protected employees will include bus drivers, custodians, and nutrition workers but not classroom aides or after-school workers and administrato
• Special Education: Increase of $645 million Prop 98 funding for special education services and supports.
• Peace Officers: Adds intent language regarding LEA decisions for use of peace officers on school campuses.
• Childcare: Reject 10% trigger cuts to all childcare programs. Provides increased Child Care & Development Block Grant (CCDBG) for Alternative Payment Programs (CAPP). Adopts a “Child Care Trigger” for anticipated $300 million in new federal CCDBG aid. Provides $350 million in federal one-time CCDBG CARES Acts funds for child care costs in 2019-2020 and 2020-2021. Replaces the 14-day childcare provider notice period for when a parent changes providers with same-day notice. Eliminates $385 million in one-time funding for Child Care Workforce Grants and Child Care Infrastructure Grants. Up to $250 million in Child Care Triggers for anticipated but not yet appropriated federal CCDBG aid.
• CA State Preschool: Eliminate the proposed expansion of 10,000 slots. 
• Higher Education: Allows colleges to exclude direct costs related to the COVID-19 crisis when commuting expenses for purposes of ensuring that 50% or more of expenditures are classroom-related (sunsets in one year). Community College deferrals of $662 million in Prop 98 funding from the 2020-2021 fiscal year to the 2021-2022 fiscal year. Provides an additional deferral of $790 million that will be rescinded if federal funding is received. For UCs/CSUs, funding was restored, however, $970 million are proposed trigger cuts should federal funding not be received. 

Housing/Homeslessness

• $300 million increase in Homelessness funding (HHAP). $90 million to Continuums of Care (CoC), $130 million to each city that has a population of 300,000 or more, and $80 million to counties.

• CEQA Exemptions for Project Room Key projects if they meet certain requirements. 

Miscellaneous

• Bargaining Units: The Legislature has given the Governor authority to freeze pay increases and impose furloughs for any bargaining units that have not reached a deal by July 1.

In January, California was propelling the American economic resurgence—with 118 consecutive months of growth, stratospheric job creation, and its highest credit rating in nearly two decades. Because of prudent one-time investments which enabled the state to attain the largest rainy day fund in its history,  California in a far stronger fiscal position today than it has been during previous downturns. 

In this blog post, we will go over:

• California's economic outlook prior to the COVID-19 induced recession.
• The rationale for this year's May Revise and projected budget cuts.
• An in depth analysis of areas most important to our members, including: education & child care, financial stability, health, as well as housing & homelessness; and,
• The State's Economic Outlook for the Future.

This past week, Governor Newsome signed four new executive orders that will:

• Wage Garnishment & Student Loan Protections: Exempt garnishment for any individuals receiving federal, state or local government financial assistance in response to the COVID-19 pandemic. This includes recovery rebates under the CARES Act. Funds may still be garnished for child support, family support, spousal support or criminal restitution for victims. The Governor also announced a new initiative for students with commercially owned Federal Family Education Loan or privately held student loans who are struggling to make payments due to the COVID-19 pandemic which now may also be eligible for expanded relief. Relief options include providing a minimum of 90 days forbearance, waiving late payment fees, ensuring that no borrower is subject to negative credit reporting, and helping eligible borrowers enroll in other assistance programs.The text of the Governor’s executive order can be found here and a copy can be found here.
• School Transparency: Empower schools to focus on responding to COVID-19 and to provide transparency to their communities.The order extends the deadlines for local educational agencies to submit Local Control and Accountability Plans (LCAP), which are multi-year planning documents tied to budget projections. By law, LCAPs must be developed in collaboration with parents, students, teachers, and community groups. Given the COVID-19 pandemic, school leaders are appropriately focused on managing the immediate needs of their students and families.

This past week Govenror Newsom signed 6 new executive, ranging from juvenile justice to the establishment of a new task force on economic recovery.  

• Task Force on Business and Jobs Recovery: Bringing together leaders across California’s diverse, innovative economic and social sectors to chart a path forward on recovery in the wake of COVID-19, Governor Gavin Newsom announced the formation of a state Task Force on Business and Jobs Recovery. The Task Force will be co-chaired by Governor Newsom’s Chief of Staff Ann O’Leary and philanthropist, environmentalist and businessman Tom Steyer, who was also appointed Chief Advisor to the Governor on Business and Jobs Recovery. He will receive no compensation for his service.

• Members of the Task Force include Senate President pro Tempore Toni Atkins, Assembly Speaker Anthony Rendon, Senate Minority Leader Shannon Grove, Assembly Minority Leader Marie Waldron, former Federal Reserve Chair Janet Yellen, Walt Disney Company Executive Chairman Bob Iger, former head of the Small Business Administration Aida Álvarez and dozens of prominent leaders in business, labor, health care, academia and philanthropy.

Changes to California's SNAP Program 

California has officially been approved to allow food stamp recipients to buy groceries online. 

California will be allowed to participate in an ongoing pilot program experimenting with giving Supplemental Nutrition Assistance Program recipients the option to use their benefits to shop for groceries online. This will allow nearly 5 million more people to use online shopping services that often include delivery. 

California is expected to launch its SNAP online program by the end of the month.

This week Governor Newsom singed 3 new executive orders:

• Upcoming Special Local Elections: Three local special elections that have been scheduled for May and June will be held as all-mail ballot elections. Local election officials can also make in-person voting available, to ensure every voter has an opportunity to vote, but only in a manner consistent with public health and safety, including appropriate physical distancing.

  The upcoming elections impacted are a May 19, 2020 special recall election in the City of Santa Ana; a June 2, 2020 special municipal election scheduled in the City of Commerce; and a special recall election in the El Rancho Unified School District, also scheduled for June 2, 2020.

  A copy of the Governor’s executive order can be found here and the text of the order can be found here.

• Support for Older Adults and Vulnerable Young Children: The order will allow for a 60-day waiver for In-Home Supportive Services (IHSS) program caseworkers to continue their work and be able to care for older adults, as well as individuals with disabilities.

  A copy of the Governor’s executive order can be found here and the text of the order can be found here.

• Help the state procure necessary medical supplies to fight COVID-19.

Updates from the California Legislature

New Executive Orders

This past week Governor Newsom issued 7 new executive orders:

Child Care: Will facilitate child care for children of essential critical infrastructure workers by allowing the California Department of Education and California Department of Social Services the flexibility to waive certain programmatic and administrative requirements in response to the COVID-19 pandemic. The waivers will focus on current eligibility and enrollment priorities that prevent child care and afterschool programs from serving children of essential infrastructure workers. The waiver will allow eligibility for child care to prioritize essential workers, including health care professionals, emergency response personnel, law enforcement, and grocery workers.

Additionally, the order states that the Department of Education and the Department of Social Services shall jointly develop and issue guidance on how the essential worker prioritization will roll out, as well as guidance on how child care programs and providers can safely provide care. This guidance will be issued no later than April 7, 2020.

Priority for abused and neglected children will not be impacted.

The order also allows the state to take advantage of new federal flexibility to provide pandemic Supplemental Nutrition Assistance Program (SNAP) benefits to children. Specifically, the California Department of Social Services and the California Department of Education will share data and information to identify students who may be eligible for the pandemic SNAP benefit, to reduce food insecurity and ensure children receive nutritious meals at low or no cost.

This past week, Governor Newsom issued 3 new executive orders. 

Statewide Rental Eviction Moratorium: California landlords will not be able to evict tenants while the state fights coronavirus. The ban will be in place through May 31, 2020. The moratorium allows tenants who cannot pay their rent because of COVID-19, the disease caused by the coronavirus spreading through the state. It requires tenants to declare in writing that they can’t pay their rent because of the pandemic within a week after their rent was due.

State Prisons & Juvenile Facilities: Meant to reduce the risks of COVID-19 in correctional settings, this order directs the California Department of Corrections and Rehabilitation (CDCR) Secretary to temporarily halt the intake and/or transfer of inmates and youth into the state’s 35 prisons and four youth correctional facilities. Those inmates and youth will remain in county custody for the next 30 days. This period can be extended if needed. This action builds on the state and local correctional and public safety leaders’ longstanding partnership, to protect public health and safety in the context of the COVID-19 crisis. 

Judicial Council Emergency Authority: Specifically, the executive order empowers the Judicial Council and the Chief Justice of the California Supreme Court to take necessary action to be able to conduct business and continue to operate while responding to the COVID-19 pandemic. The order allows the Judicial Branch to allow for remote depositions in every case (the law had previously required that parties be deposed in person) and electronic service of process. Additionally, the order leaves the Judicial Branch discretion to make any modifications to legal practice and procedure it deems necessary in order to continue conducting business.

Last Friday, President Trump signed into law the largest stimulus bill in American history, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act will provide billions of dollars of relief to individuals, businesses, state and local governments, and the health care system suffering the impact of the COVID-19 coronavirus in the United States. Although the program's price tag is $2.2 trillion, the economic impact is expected to approach nearly $7 trillion over the course of several economic cycles. Some of the key provisions include:

One-Time Financial Relief Payments

• All U.S. residents (meaning those that file with an ITIN are excluded, unless they have military service) with adjusted gross income up to $75,000 ($150,000 for married couples) would get a $1,200 ($2,400 for couples) “rebate” payment. They are also eligible for an additional $500 per qualifying child. The payments would start phasing out for earners above those income thresholds and would not go to single filers earning more than $99,000; head-of-household filers with one child, more than $146,500; and more than $198,000 for joint filers with no children.

• The federal government will use previous tax information to determine the amount tax units will receive. If the Internal Revenue Service already has bank account information for a tax unit, it will transfer the money via direct deposit based on the recent income-tax figures it has (2018 or 2019 if filed already).
• People who don’t pay taxes, such as those with very low incomes, may be hard to reach the way the program is designed.
• An excellent FAQ article by the New York Times that goes into greater detail can be found HERE.