May 25, 2017

The Legislature is moving to preliminarily approve the Governor’s May Revision proposal to appropriate $400 million in state general fund dollars for In-Home Supportive Services (IHSS) costs. The CSAC Board of Directors also voted to support the proposal, which includes a new county maintenance of effort (MOE) and a series of mitigations. The Senate Budget and Fiscal Review Committee approved the concept on Tuesday, and the Assembly Budget Committee followed suit this afternoon.

The Governor’s original proposal in January would have shifted more than $600 million in IHSS costs back to counties. CSAC and a working group of County Executive Officers spent much of the last two months in intensive negotiations with Governor Brown and his Administration to reduce the size of the costs shift and develop mitigations for counties as they absorb a new MOE. Now, the overall state cost shift is $592 million, but with the promise of $400 million in state funding for 2017-18 and other changes, the net cost to counties in the coming fiscal year will be about five percent more than they had anticipated.

The Governor’s May Revision proposal also offers ongoing state general fund for IHSS, with $330 million in 2018-19 $200 million in FY 19-20 and $150 million ongoing thereafter, as well as a MOE with a zero inflation factor in 2017-18, five percent in 2018-19, and seven percent thereafter. County costs would rise significantly after the first two years under the MOE inflator, but the plan also calls for counties and the state to examine costs and revenues in year two.

While the impacts on individual counties Individual county numbers are not yet available, in general, counties can expect to add about 5 percent to their 2016-17 IHSS costs for this coming fiscal year, as opposed to the 3.5 percent annual increase included in the original MOE. For counties, the key in the out years is the commitment from the Administration to reopen, or “look back” in year two to examine whether the new MOE is effective and how the costs of IHSS fit – or don’t fit – within 1991 Realignment.

CSAC is proactively supporting the plan in the Legislature and also beginning to work toward a long-term solution that is stable, predictable and sustainable. Please click here for CSAC’s letter of support for the IHSS plan in the May Revision. The State Senate Budget and Fiscal Review Committee approved the broad outlines of the plan earlier this week, and the Assembly Committee is looking at it today. At the same time, CSAC is working with the Department of Finance to develop trailer bill language to be adopted with the June 15 Budget Act.

“We were in an extremely difficult position in January,” said CSAC Executive Director Matt Cate. “We worked closely with the County Welfare Directors Association and the CAO working group. People from both organizations gave us invaluable technical assistance and helped convey the impact the initial proposal would have had on counties. While this issue is far from over, the plan in the May Revision gives us two years of sustainability and a commitment to examine costs and 1991 Realignment revenues in the long-term.”

Within the past few years, IHSS costs have increased due to pay increases, paid sick leave and overtime pay for providers, and also due to simple demographics: California’s population is aging. Both of those trends are expected to continue—highlighting the need to address the program in a comprehensive manner.

This new IHSS MOE framework is a step in the right direction in the short term. It is especially needed due to the expiration of the county MOE that was tied to the now-defunct Coordinated Care Initiative demonstration project. For more information about IHSS, the CCI, and county impacts, please click here for more details.

While out-year costs and growth in the IHSS program remain critical concerns for counties, the CSAC Board supports the Governor’s May Revision proposal. CSAC will share any details as they emerge in trailer bill language form to ensure that the broad outlines of the proposal are accurately translated into law.