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    Governor’s Proposed 2015-2016 State Budget Would Restore 7% Cut to In-Home Supportive Services (IHSS)

    From the Disability Organizing Network:

    January 9, 2015

    Forwarded from California In-Home Supportive Services Consumer Alliance (CICA) and the California Association of Public Authorities (CAPA),

    SACRAMENTO, CA [CDCAN LAST UPDATED 01/09/2015 – 10:12 AM] –  Governor Edmund G. “Jerry” Brown, Jr.’s proposed 2015-2016 State Budget released this morning includes a major proposal to restore the existing 7% across the board cut in service hours to all In-Home Supportive Services (IHSS) recipients, effective July 1, 2015, impacting over 450,000 children and adults with disabilities, including developmental, mental health needs, the blind and low income seniors. 

    The restoration would, under the Governor’s plan, be tied to additional new federal Medicaid funds that would come to California through a revised provider tax on Medi-Cal managed care organizations

    That 7% reduction was part of a larger 2013 federal court settlement between the State and IHSS recipients and advocacy organizations that resulted in rescinding three major cuts to IHSS that were enacted but never implemented in 2009 and 2011.  As part of the settlement, a temporary 8% across the board cut in service hours for all IHSS recipients was put in place from July 1, 2013 through June 30, 2014, and then reduced to 7% from July 1, 2014 through at least June 30, 2015. That 7% across the board reduction could be restored, under the 2013 court settlement, if sufficient new federal funding was obtained by the State to cover the costs of that restoration.

    The Governor’s proposal to revamp the Medi-Cal Managed Care Organization provider tax and to use some of that additional funding to cover the costs of the restoration of the 7% cut in IHSS hours, according to State officials, is meant to accomplish the requirements of the settlement.

    The Governor’s budget plan also includes still funding for IHSS overtime, though whether that is implemented in California depends on the outcome of a pending lawsuit in federal district court in Washington DC – and how the Brown Administration interprets any rulings from the court.

    A hearing before the federal district court in Washington, DC is scheduled today (Friday) at 11:30 AM Pacific Time (2:30 PM East Coast Time) to consider a request by the Home Care Association of America and other provider associations to issue a preliminary injunction or longer delay of implementation of the remaining federal regulations that were scheduled to go into effect January 1st, that impacted home care workers including removing previous exemptions to overtime pay.

    A temporary “stay” or delay of those remaining regulations was ordered by the court on December 31st that effectively delayed implementation of the regulations at least through January 15th.  The same judge on December 22nd struck down a key part of those regulations dealing with third party employers who employ home care workers for recipients. Third party employers include state agencies, community organizations and businesses that employ home care workers.

    CDCAN will issue a full report later today on the outcome of that hearing and any subsequent action by the State, and the impact to people who are IHSS recipients and workers and their families.

    The Governor’s proposed 2015-2016 State Budget, as expected, included no major restorations in funding for previous reductions to the developmental services budget, but does include funding in the current budget year of an additional $452 million in total funds ($333 million of that in State General Funds) to cover a shortfall in the regional center budget due to increased caseload costs and costs related to increased utilization (use of services).

    The Governor’s proposed budget also includes funding to cover the increase in the State minimum wage scheduled for January 1, 2016 covering the same programs and services that it did for the increase that occurred last July.  No funding was included to cover the impact of minimum wage increases for exempt staff.

    The Governor’s budget, as expected, does not include any additional closure of the remaining developmental centers and any across the board rate increases for community-based providers.

    As expected, the Governor’s proposed spending plan for 2015-2016 does not include any cost of living adjustment or restoration of the automatic cost of living adjustments for the State funded portion of the Supplemental Security Income/State Supplemental Payment (SSI/SSP) grants for the lowest income persons with disabilities, mental health needs, the blind and seniors.  Advocates have been pushing for restoration of cost of living for the SSP portion of the grants and intend to continue that effort in the coming months of legislative budget subcommittee hearings.
    The Governor’s plan does include, as it did last year, passing through to SSI/SSP recipients the increase for the federal part (SSI) of the grants.

    In-Home Supportive Services
    The IHSS program provides domestic and related services such as housework, transportation, and personal care services to eligible low-income aged, blind, and disabled persons. These services are provided to assist individuals to remain safely in their homes and prevent institutionalization. The IHSS program is also a key component
    of the Coordinated Care Initiative (CCI). IHSS will be incorporated into the managed care delivery system, along with a range of long-term services and supports. For additional information on CCI, refer to the Department of Health Care Services section.

    The Budget includes $8.2 billion ($2.5 billion General Fund) for the IHSS program in 2015-16, a 14.4-percent increase over the revised 2014-15 level. Average monthly caseload in this program is estimated to be 463,000 recipients in 2015-16, a 0.3-percent decrease from the 2014 Budget Act projection.

    Implementation of the U.S. Department of Labor regulations that require overtime pay for domestic workers effective January 1, 2015, is estimated to cost $403.5 million ($182.6 million General Fund) in 2014-15 and $707.6 million ($314.3 million General Fund) annually thereafter. Chapters 29 and 488, Statutes of 2014 (SB 855 and SB 873), limit providers to a 66-hour workweek, less the current 7-percent reduction in service hours (or a 61-hour workweek). IHSS providers who work for multiple recipients will be paid for their travel time between recipients, up to 7 hours per week. In late December 2014, a federal district court ruled that a portion of the regulations exceeded the Department of Labor’s authority and delayed the implementation of the regulations. Under state law, the state’s implementation of overtime is also delayed pending further action by the federal court.

    The Budget proposes to restore the current 7-percent across-the-board reduction in service hours with proceeds from the new tax on managed care organizations effective July 1, 2015. The cost to restore the 7-percent reduction is estimated to be $483.1 million in 2015-16. For additional information on the tax, refer to the Department of Health Care Services section.

    Coordinated Care Initiative

    •         As of November 1, 2014, approximately 69 percent of eligible participants have opted out of the demonstration compared to initial projections of approximately 33 percent.  That percentage is around 80 percent for In-Home Supportive Services (IHSS) beneficiaries, and participation varies widely by county.
    •         Due to revised federal Fair Labor Standards Act regulations, IHSS providers are entitled to overtime compensation. Because the CCI established a Maintenance-of-Effort funding formula for the IHSS program, the state’s IHSS costs have significantly increased due to the CCI. This arrangement changed the fiscal exposure for counties from a share of non-federal costs to a cost cap based on 2011-12 expenditure levels plus annual growth of 3.5 percent. The cost cap applies to all 58 counties, not just the seven counties implementing CCI. This fundingchange, together with the federal government’s change in overtime regulations, has significantly increased the state’s costs.
    •         Under current law, the Director of Finance is required to annually send to the Legislature a determination of whether the CCI is cost-effective. If the CCI is not cost-effective, the program would automatically cease operation. Although the Budget projects netGeneral Fund savings for the CCI of $176.1 million in 2015-16, these savings are primarily from the tax on managed care organizations. Without the tax revenue, the CCI would have a General Fund cost of $396.8 million in 2015-16. The most recent analysis also shows that the initiative could result in net costs to the state in 2016-17 and beyond due to the factors outlined above. If these factors are not improved by January 2016, the CCI would cease operating effective January 2017.
    •         The Administration remains committed to implementing the CCI to the extent it can continue to generate program savings. Over the course of the next year, the Administration will seek ways to improve participation, extend an allowable managed care tax, and lower state costs.
    •         The Administration is proposing a new managed care tax that complies with federal law. The new revenue will offset the same amount of General Fund expenditures as the current tax, as well as fund a restoration of the 7-percent across-the-board reduction to authorized IHSS hours of service. The restoration of hours is consistent with a settlement of various IHSS cases to seek a non-General Fund source of funding for these hours.


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