State Budget – Peeling the Onion 

Youth Mental Health Emergency

The Governor has yet to declare an emergency, which was requested by Children Now, CSAP, and other advocacy organizations. However, we want to pass along this note from Children Now regarding last week’s May Revise state budget proposals: 

“While the Governor has not declared a youth mental health emergency, the May Revision does allocate resources to the emergency, which was what we discussed when we met with the Administration….thank you all for your continued partnership. 
Specifically, the $290 million is to be allocated as follows:

  • Youth Suicide Prevention Program—$40 million General Fund to develop and implement a data-driven targeted community-based youth suicide prevention program for youth at increased risk of suicide such as Black, Native American, Hispanic, and foster youth.  
  • Crisis Response—$50 million to provide grants to pilot school and community-based crisis response and supports following a youth suicide or youth suicide attempt and pilot a new approach of designating youth suicide and youth suicide attempts as a reportable public health event, which would trigger screening and resource connections at the local level for the impacted community.  
  • Wellness and Mindfulness Programs—$85 million over two years for grants for wellness and mindfulness programs in schools and communities and expansion of parent support and training programs. 
  • Video Series—$15 million to develop and distribute a video series for parents to build their knowledge, tools and capacity to support the behavioral health of their children. 
  • Career Development—$25 million to identify and support the early career development of 2,500 highly talented and culturally diverse high school students interested in mental health careers. 
  • Assessment and Intervention—$75 million for next generation digital supports for remote and metaverse based mental health assessment and intervention.”

Several Other May Revise Items of Note

We tried to capture everything in last week’s newsletter. Got most of them. Here are several others:

Supporting peace officers’ physical, mental, and emotional health is fundamental to creating safer communities and building meaningful relationships. The May Revision includes $50 million one-time General Fund to fund grants intended to improve general officer health and well-being, build resiliency, decrease stress and trauma, and improve community trust and relations. These funds build on $5 million one-time General Fund included in the Governor’s Budget for the Commission on Peace Officer Standards and Training to develop a Law Enforcement Wellness Program to support officers’ overall health. The grants will be distributed by the Board of State and Community Corrections to counties and cities to support eligible programs.
Increasing access to probation services, particularly among individuals who are unhoused and struggling to meet supervision requirements, is critical to enhance public safety and successfully support their reintegration. The May Revision includes $20 million one-time General Fund to establish a competitive grant program for counties to create mobile probation centers, modeled after a program established by Placer County. Grant funding will help with one-time investments, such as the purchase of vehicles and technology, including computers, internet, phones, televisions, and video communication. The mobile service centers will facilitate court appearances and pre‑trial check-ins; complete needs assessments; and identify housing, employment, and other related services.
The Department of Health Care Services notified counties in January of their intention to recoup nearly $250 million for past inpatient psychiatric hospital claims and services for individuals who did not qualify for federal financial participation based on their immigration status (referred to by the state as “Unsatisfactory Immigration Status” or UIS). CSAC and the County Behavioral Health Directors Association are working to verify the accuracy of the potential recoupments and have asked that the state forgive these potential obligations as well as the remaining 2018 federal Office of Inspector General (OIG) audit amount of $134.5 million. 7 The Governor’s May Revision allows the verification process for the proposed UIS and inpatient psychiatric costs to continue into 2022-23 but does not stay the August 2022 payment from each county’s 1991 Realignment Mental Health Subaccount for the OIG Audit. That payment is pegged at about $46 million. 

The May Revision proposes to provide an additional $10.4 million in 2022-23 to assist Short-Term Residential Therapeutic Programs (STRTPs) with 16 beds or more to transition to a smaller capacity or change their programming in order to comply with federal Medicaid requirements associated with Institutions of Mental Disease (IMD). Additionally, and reflected in the DHCS budget, the department continues to provide $7.5 million to cover lost FFP for Specialty Mental Health Services (SMHS) in 2022-23. Although the IMD requirement pre-dates FFPSA, the state only became aware of this issue upon implementation of FFPSA in California. While we support the funding proposed in the May Revision, we note that DHCS plans to submit a waiver proposal in the fall of 2022 to federal CMS to allow for longer stays in IMD settings, which would implement sometime in 2023 pending federal approval, thereby allowing California to continue to receive federal funds for mental health services provided in STRTPs for another two years. CWDA is concerned that the departments continue to require STRTP providers to meet the IMD rule by December 30, 2022, even though the waiver, if approved by CMS, will allow those providers continue to operate at larger capacity for up to two additional years. This will result in significant loss of capacity at a time when county placing agencies are facing a children’s mental health crisis and shortage of residential treatment settings. Since January 2020, according to the DSS STRTP data shared with counties, California has lost 1,193 STRTP beds statewide. CWDA urges the Administration and the Legislature to permit STRTP providers additional time to transition under the proposed waiver. Please note this request was communicated to the departments in a letter sent April 29, 2022.

With the substantial tax relief, infrastructure, and emergency (COVID 19 and drought) spending items in the May Revision, the administration estimates the state’s appropriations subject to this constitutional limit would be $2.6 billion under the limit for the two-year period that ends on June 30, 2022. The administration’s calculations are that the May Revision’s appropriations subject to the limit would be $3.4 billion over the limit for the 2022-23 fiscal year. It is clear that the Gann Limit will need to be changed by voters, likely in 2024, to prevent future, unsustainable constitutional obligations that would necessitate cuts to core state and local programs. The Gann Limit threatens to hold the state back from building more robust future state budgets and will need to be repealed or significantly reformed in future years or many existing programs could suffer. This may seem counter-intuitive given the State’s current surplus, but it is no less true.

Single Payer

This exchange occurred between the Governor and a reporter last week: 

Reporter: Why isn’t CA moving towards a single-payer system?
Newsom: I would refer to you the actions that we have recently taken to move towards that. We have established a commission on that and we are deeply analyzing the “how.” There is a report that was just submitted to the legislature on that. We are struggling with the Biden Administration to get waivers.

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