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.

Los Angeles, CA – Below is a statement from Peter Manzo, President and CEO, on behalf of United Ways of California (UWCA), regarding the proposed State Budget agreement: 

California is the fifth largest economy in the world and is experiencing an almost $9 billion surplus, so while United Ways of California is pleased that the budget agreement between Governor Brown and the Legislature includes more workers in the state earned income tax credit and funding to address the growing housing and homelessness crisis, we also see missed opportunities for smart and much needed investments in healthcare and expanded early child care. 

The economic well-being of hundreds of thousands of working Californians hangs in the balance as California’s Budget Conference Committee meets to work out their disagreements for the 2017-2018 budget before final negotiations with Governor Brown. This legislative budget will get us one step closer to determining whether California’s Earned Income Tax Credit (CalEITC) will support self-employed, “gig-economy” workers. Both houses have luckily already agreed that outreach dollars again are needed to build awareness of the CalEITC among the very low-income workers living in poverty and just trying every day to make ends meet.

The CalEITC is a refundable state tax credit that increases the economic security of working families, who can receive as much as $2,706 from the program, depending on their income, in addition to the income boost they receive from the federal EITC.

California’s finances are more solid than they have been for several years, thanks in no small part to Governor Brown’s leadership. While the Governor’s proposed budget increases investment in K-12 education, similar investments in health programs and initiatives that help families achieve financial self-sufficiency are needed to strengthen opportunities for low-income families, which are essential to California’s overall competitiveness and well being. Click here to read our full press release.