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2012

Other Budget Issues

Further Detail

Governor’s 2012-13 Budget Proposal

The budget proposes $4.7 billion from all funds for support of the Department of Developmental Services (DDS) in 2012-13, which is a 5 percent increase above estimated current-year expenditures. General Fund expenditures for 2012-13 are proposed at $2.7 billion, an increase of $173 million, or 7 percent, above estimated current-year expenditures. Other fund sources include federal funds and the California State Lottery Education Fund.

Community Services Program Budget Proposal. The budget proposes $4.1 billion from all funds ($2.3 billion General Fund) for the support of the Community Services Program in 2012-13. This represents a $225 million ($181 million General Fund) increase, or almost 6 percent, over estimated current-year spending. The increase is a result of caseload growth, higher utilization rates for services, and other program changes. Of the total $4.1 billion in proposed funding, $537 million is for Regional Center (RC) operations and $3.7 billion is for the purchase of services. The Community Services Program budget plan includes the following major proposals:

• Budget Trigger Cuts. The budget plan assumes $200 million in General Fund savings in the budget year to be achieved system wide through a variety of strategies in the developmental services system. This builds on the $100 million General Fund reduction in the current year that was triggered when state revenues came in below projections. Meetings of stakeholders will be convened to provide input on how to achieve the savings.
• Funding Restoration Due to Expiration of 4.25 Percent Payment Reduction. The budget reflects an increase of $158.2 million ($108.4 million General Fund) due to the expiration of the 4.25 percent payment reduction for RC operations and service providers due to sunset on June 30, 2012.   
• Shift Eliminated California First Five Commission Funding to General Fund. The budget plan reflects the elimination of $50 million in funding from the California First Five Commission that was provided in the current and previous years for costs associated with services to children up to age five. 

      Developmental Centers (DC) Program Budget Proposal. The budget proposes $559 million from all funds ($284 million General Fund) for the support of the DCs in 2012-13. This represents a net decrease of $9.8 million General Fund, approximately 3 percent below estimated current-year expenditures. The DC budget plan includes the following major proposals:

• Lanterman DC Closure. The budget plan continues to assume the eventual closure of the Lanterman DC. In 2012-13, Lanterman DC expenditures grow by $2.9 million ($1.6 million General Fund) to reflect increased staffing to ensure the effective transition of residents from Lanterman into the community. 
• Staffing Decreases. The budget plan proposes a decrease of $24.5 million ($14.4 million General Fund) to reflect staffing level adjustments. 

Analyst’s Recommendations on Governor’s Budget Proposal

We have the following recommendations on the Governor’s major proposals:

• Trigger Cuts. We recommend the Legislature approve the proposal to achieve $200 million in ongoing savings through a variety of strategies to be identified through a stakeholder input process. 
• Lanterman Closure and DC Staffing. We recommend the Legislature approve the Governor’s proposal to continue the process of closing Lanterman and reduce staffing for DCs. 
• Obtain Additional Proposition 10 Funds. We recommend the Legislature direct the administration to try to secure additional Proposition 10 funding for the budget year. This could be any amount that the First Five Commission can provide to help offset the General Fund expenditures.

Further Savings Options for Legislative Consideration

Here we provide the Legislature with options to achieve savings in addition to the Governor’s proposals. 

Extend Payment Reduction. The Governor’s budget proposes an increase of $173 million in General Fund support for DDS over the estimated current-year budget.  This increase is largely due to the expiration of the 4.25 percent provider payment and RC operations reduction. We estimate the department could achieve General Fund savings of about $110 million by extending the 4.25 percent provider payment and RC operations reduction in the budget year. 

Impose Means Testing. The LAO has previously recommended means testing as a way to lower costs and slow growth in RCs. Means testing is when eligibility is limited to persons who demonstrate they do not have the means to pay for the services themselves, or that paying for the services would present a financial hardship.  Assuming 400 percent of the federal poverty level, we estimate means testing of RC consumers could achieve approximately $57 million in General Fund savings in the budget year. For more information on means testing, please see our February 2011 report, The 2011-12 Budget: Options to Achieve Savings in the Regional Center System. The report can be found here: http://www.lao.ca.gov/analysis/2011/health/regional_center_020111.aspx