HealthyCal.org

By Daniel Weintraub

California’s economy sprung back to life in February, adding 96,500 jobs to far outpace the rest of the nation, according to the latest figures from the Employment Development Department.

The unemployment rate fell from 12.4 percent to 12.2 percent.

The leading sectors were high tech professional services, temporary help, construction and a big gain in the movie industry. Even the much maligned manufacturing sector continued added 3,600 jobs. Government employment continued to decline in February.

According to Steve Levy, director of the California Center for the Continuing Study of the California Economy, the state’s job growth was “well above expectations” and accounted for half of the total US job growth during the month. The numbers were so robust, Levy said, that it’s possible there will be a downward revision next month.

“The report confirms that the state’s leading economic sectors—tech, trade and tourism/entertainment—weathered the recession and are in growth mode again,” Levy said. “This is good news for the long-term strength of the economy and, eventually for revenues and the state budget.”

But Beacon Economics, an economic consulting firm, cast doubt on the numbers. The firm noted that the reported growth represented an 8.6 percent annual growth rate.

“This would be stunning in a strong economy,” Beacon said. “In a weak economy, we have to conclude it represents a fluke in the data. Indeed, household employment grew by only 13,000 jobs – a much more believable 1 percent annualized pace of growth. It is possible that the survey has been undercounting jobs in the past few months. Employment in California was functionally flat for the previous three months even as employment grew nationally. This may be a case where jobs, missed by the survey in recent months, have been adding up and are just appearing now.”

By Daniel Weintraub

One of the budget bills Gov. Jerry Brown signed Thursday seeks to make more than $1.5 billion in cuts to state spending on health care for the poor, mostly in Medi-Cal and the Healthy Families insurance program. Most of the cuts will be achieved by reducing by 10 percent the reimbursement for doctors, hospitals and other providers that care for the poor. The bill will also increase premiums in the Healthy Families program, implement co-payments in Medi-Cal and limit doctor visits and the reimbursement for over-the-counter medication.

The health care bill was among several Brown signed Thursday which together were estimated to achieve about $11 billion in savings, including $8.2 billion in spending cuts.

Among the cuts in health care:

Increased premiums in the Healthy Families insurance program. For families with incomes from 151 percent to 200 percent of the federal poverty level, premiums will nearly double from $16 per month to $30, with a family maximum of $90 per month. For families with incomes above 201 percent of the federal poverty level, premiums will increase from $24 per child to $42 per child, with a family maximum of $126. The budget also increases co-payment for emergency room visits from $15 to $50, while hospital stays would carry a co-payment of $100 a day and a maximum of $200.

Reduced reimbursement for facilities caring for people with developmental disabilities. Rates for these 24-hour care facilities will be reduced by up to 10 percent.

Cap on doctor visits. The legislation limits doctor visits paid for by Medi-Cal to seven per year per person unless a physician certifies that a visit will prevent the need for emergency care, prevent the need for inpatient hospital care, avoid disruption in ongoing medical therapy, or constitutes a diagnostic work-up that would prevent the need for hospital care.

Medi-Cal providers rate reduction. Rates for doctors and hospitals that care for low-income people in Medi-Cal will be reduced by 10 percent.

Long-term care rate reduction. Rates for long-term care facilities that care for low-income people will be reduced by up to 10 percent.

Hearing aids. Caps Medi-Cal spending on hearing aids at $1,510 per person per year.

Non-prescription medications. Eliminates coverage under Medi-Cal for non-prescription cough and cold medicine.

Co-payments. Requires $5 co-payments in Medi-Cal for doctor visits, $3 per prescription for generic drugs and $5 for brand name drugs. Also imposes a $50 co-payment for non-emergency ruse of the emergency room, $50 for emergency room use and $100 per day for hospital stays with a maximum co-pay of $200. The budget also implements a $5 co-pay for dental office visits.

Adult day health care. The bill eliminates adult day care as a service under Medi-Cal and provides funding to transition clients of these programs into other state-funded programs when possible.

The cuts are detailed in Assembly Bill 97. To see the entire bill, go here.

Michael Gardner of the San Diego Union Tribune
For California Budget Watch

SACRAMENTO – While the state may be short of money, there is no drought of cash-saving ideas.

But many cannot pan out politically, legally or logistically.

Nonetheless, Gov. Jerry Brown and lawmakers have in their hands a pair of promising far-reaching sets of recommendations developed by independent state investigators.

These separate proposals by the state Auditor and Little Hoover Commission have been overshadowed by the more immediate debate over spending cuts and tax extensions now playing out in the Capitol.

But these recommendations, a combination of ideas ready to launch and others that would take more time to implement, are no less contentious.

Proposals advanced by the Little Hoover Commission include more public-private partnerships, such as toll roads and water projects. Others involve dramatically overhauling public pensions, giving the state water agency more control over spot-market buying of electricity, and launching an independent review of prison sentences.

State Auditor Elaine Howle’s list includes reviewing the job classifications of some 78,000 state workers designated as public safety employees to determine whether they should qualify for the more generous benefits they receive as a result of their employment classification. She also wants to examine building leases to determine if some rented offices are truly necessary, and consider using the governor’s clemency powers to release prisoners too medically frail to commit new crimes.

Howle also suggested that fines and penalties should be adjusted for inflation and various state fees could be raised to cover the real cost of services provided.

Many of the ideas are not new, but were shelved for various reasons when offered before. For example, the Little Hoover Commission proposed a serious review of prison terms in 2007 and laid out a plan to merge state personnel departments 16 years ago. The auditor outlined fee proposals in 2008 and her office urged dropping some medicines from Medi-Cal coverage in 2003.

Daniel Hancock, chairman of the Little Hoover Commission, said the ideas will take time before producing cash savings and better efficiencies.

“None of the commission’s recommendations are quick fixes, as many of the problems the commission addresses have been decades in the making,” Hancock told the governor.

Both reports grew out of a challenge issued by Brown to provide a list of the “Top 10” actions the state could take to save money and make government more efficient.

The responses, in some cases, were familiar to Brown. He had already incorporated a few, such as turning over some parole services to county probation officers, in his budget.
Brown is locked in immediate budget talks, but his administration is reviewing the proposals, said Elizabeth Ashford, a spokeswoman.

“You want a balance between something that will save money and what is prudent,” Ashford said.

Neither report offered a complete estimate of savings, however.

Some proposals are already in the works, such as the early release of seriously ill prisoners and selling the glut of state-issued cars. Brown previously moved to save millions by forcing thousands of state workers to give up their mobile phones and he has trimmed state vehicle fleets.

Brown and lawmakers are still struggling to balance a state budget deep in the red, even as he signed legislation Thursday enacting about $12.5 billion in cuts. Negotiations drag on over putting before voters a ballot measure to extend temporary increases in the sales, car and personal income taxes. Without those taxes, the budget remains more than $11 billion out of balance.

Historically, Republicans have insisted that eliminating “waste fraud and abuse” could go a long way toward mitigating deep cuts. But neither state watchdog has uncovered billions of savings that would fall within those categories.

However, Republicans have identified just recently more than $109 million in questionable spending. Most of that involves overtime within the Department of Corrections, despite calls to curb the expensive practice. The GOP also has insisted pension reforms would save taxpayers untold millions. Cutting services to illegal immigrants, often difficult to do legally because of federal laws and court intervention, also has been a rally cry among conservatives.

Some Republicans have submitted recommendations on their own. For example, Assemblywoman Kristin Olsen, R-Modesto, supports five proposals coming out of another nonpartisan arm of state government, the Legislative Analyst. Taken together, the five could save the state more than $1 billion, said Olsen, a freshman who voted for most of the budget cuts last week.

The legislative analyst’s suggestions include allowing schools to save money by going out to bid in the private sector for non-instructional services, using electronic recording devices to tape court proceedings, and contracting out for court reporters.

“Certainly these actions alone will not solve the budget deficit, but these changes are achievable and available,” she said.

The Little Hoover Commission is a bipartisan body created by state law in 1962 to explore ways to make government more efficient. The 13-member body consists of nine members of the public and four legislators. There must be a balance of Democrats and Republicans.
The state Auditor’s office is an independent department that evaluates spending by various state and local agencies and programs . The lead auditor is appointed by the governor for a fixed term and does not need Senate approval. However, some probes have to be approved by a special joint Assembly-Senate committee. Investigations also launch inquiries in response to confidential whistleblower complaints.
Little Hoover Commission recommendations:
- Pension reform: Investigate radically overhauling public pensions offered by state and local governments, including freezing benefits and potentially rolling back credits in the future. Consider 401K programs instead of pensions that guarantee a set amount monthly.
- - Public-private partnerships: Stop using general obligation bonds where possible and instead shift to more public-private partnerships to not only build, but also operate, projects, from roads to water.
- Prisons: Take a fresh look at sentencing laws to determine whether terms meet public safety goals while keeping costs in check.
- Local government: Determine whether more programs should be shifted to counties, including setting financial incentives for local governments that meet state goals and cut expenses. Follow through with the governor’s proposal to realign some health and human services, sending more responsibilities and funding to counties.

State Auditor recommendations:
- State vehicles: Review whether to contract out for state motor pool operations and garages. Ensure that issuing a state car is justifiable in terms of need and expense, compared to renting or reimbursement for using a personal car. Significantly cutting motor pool costs could save up to $50 million.
- Public safety pensions: Modify job classifications to ensure that those in those jobs are truly involved in front-line public safety. Public safety pensions awarded to firefighters and police, mostly, are more generous, allowing them to retire sooner at higher pay. (No savings estimated.)
- Trim the number of medicines covered under MediCal .
- Resolve disputes with drug companies over rebates. Currently, $423 million is in dispute.
- Sate buildings: With fewer employees and budget pressures, review whether rented offices are necessary. Stems from probe reporting the Department of Corrections had leased 5,900 sq. ft. for four years, but the offices remained vacant at a cost of $580,000.
- Prisons: Release permanently incapacitated inmates. Some have already been transferred out of prisons. It cost taxpayers $46 million to care for just 32 of these prisoners last year.
Some proposals from Republicans that have also been outlined by the nonpartisan Legislative Analyst:
- Kindergarten: Change kindergarten enrollment date to Sept. 1 and require that students be at least five years old. Similar legislation has been adopted, but does not go into effect until the 2012-13 school year.
- Education: Loosen restrictions so schools and community colleges have more flexibility to contract out for non-instructional services, such as payroll and food service.
- Courts: Allow courts to shift from shorthand court reporters to electronic taping and contract out for private interpreters, who are generally half as expensive as court employees.
- Require University of California faculty to teach one additional course every three years.

By Jennifer Chaussee

As Gov. Jerry Brown and state lawmakers look for places to cut in the state’s $85 billion budget, a popular program that provides in-home services for hundreds of thousands of disabled and elderly Californians has become a natural target.

The In-Home Supportive Services program is the fastest growing major social program in state government. Democrats defend it as a humane and cost-effective way to keep people living independently rather than in more costly nursing homes. But Republicans have questioned the program’s policy of paying relatives to care for their loved ones and have suggested that the program is rife with fraud.

Both parties, however, share a concern about the program’s rapid growth.

Enrollment has more than doubled in the past ten years. So has the cost of caring for the average client. As a result, spending on the program has increased by an average of 13 percent annually, according to the non-partisan Legislative Analyst’s Office, which serves as a key advisor to the Legislature.

The cost increases have been driven by higher wages and benefits for the caregivers and more hours of care for the recipients.

The in-home workers were once paid only minimum wage. But many of them were unionized earlier this decade and their wages and benefits improved. This made it easier for clients to find help but also increased the cost of the program. The average client receives about 85 hours of care per month in their home.

The program now costs about $5.5 billion a year. Since 1993, the federal Medicaid program has paid for half of that cost, leaving the state and the counties to split the rest. The state’s share came to about $1.5 billion last year.

Former Gov. Arnold Schwarzenegger tried repeatedly to cut the cost of the program by limiting wages, eligibility and services, but most of his proposals were rebuffed by Democrats in the Legislature. This year, Brown proposed to cut $486 million in state money from IHSS, essentially eliminating the program for about 87 percent of its recipients, or about 375,00 elderly or disabled people.

“The goal of the administration’s proposal is to try to achieve savings while maintaining a core level of care to these clients,” said H.D. Palmer, deputy director of the Finance Department.

Legislators responded with a scaled back plan that seeks to save the same amount of money with far less impact on the recipients.

Lawmakers accepted Brown’s proposal to require clients to obtain a doctor’s certification stating that they would be forced into a nursing home if they lost the services they were getting at home. This is expected to end services for about 43,000 people and save the state about $120 million a year.

Legislators are also counting on getting an additional $121 million in federal funds and have approved $128 million in cuts to the program that will be specified later.

Among the most controversial proposals still on the table is Brown’s plan to eliminate domestic services – housecleaning, laundry, cooking – for people who live with their caregiver. These are mostly cases of people who are being cared for by a family member.

One feature of the program that has been widely praised is its policy of allowing recipients to choose their own caretaker. The client is considered a consumer and the state government, acting through the counties, handles eligibility screenings and pays the wages for the caregivers.

This policy empowered the clients to choose their own family members as caregivers, in turn allowing the family members to stay at home and not forfeit an income. Today, the majority of caregivers are relatives of the recipients. Advocates say that without this provision the relatives would have to work outside the home, leaving the recipients without care. They would eventually end up in nursing homes at an increased cost to the taxpayers.

But the same provision that empowered the disabled also opened the door for fraud as some people inflated their hours and others simply concocted relationships between caregiver and client that did not exist. State officials reported a backlog of 400 potential cases last year, although they say they don’t know how much money is lost to fraud.

“There is no way to actually determine the amount of fraud,” Norman Williams, spokesman for the California Department of Health Services, said.

Over time, changes were made to IHSS in the name of fraud prevention. As of 2010, potential IHSS caregivers are screened through the IHSS authority within their county to verify that they have not been convicted of crimes like elder abuse or government fraud.

The Health Services Department reported having received 136 case referrals for IHSS fraud since June of 2010, just within Southern California alone. If the state recovers all the money alleged to have been lost in those cases, it would amount to $2.5 million, Williams said.

Others say that the more aggressive efforts to deter fraud may have deterred clients from seeking services to which they are entitled.

“I think a number of people believe that former Governor Schwarzenegger’s anti-fraud measures enacted in 2009 have had a real impact on caseload,” said Karen Keeslar, Executive Director of the California Association of Public Authorities, county agencies that run the program for the state.

Aside from the anti-fraud efforts, the question of whether cutting the program could actually save or cost the state money is complex.

The obvious alternative for many IHSS recipients is to move into a nursing home. And since nursing home care can be three or four times more costly than in-home services, it is assumed that the state would be forced to spend more on elderly and disabled care in the absence of the in-home program.

But not all recipients would be forced to enter an institution if they are denied IHSS benefits. A report by the LAO last year found that while IHSS is cost effective for the state budget alone, it is unlikely that enough patients would be forced to enter nursing homes to make the program cost effective for both the state and the counties.

And if the program is preserved for the most impaired clients while eliminating or sharply curtailed for others, the increase in costs associated with nursing home care could be minimized. The quality of life of those who lose their assistance would likely decline, but they and their families, not the state’s taxpayers, would feel the pain.

Jennifer Chaussee is a correspondent with the California Health Report at www.healthycal.org.

By Michael Gardner of the San Diego Union Tribune
For California Budget Watch

SACRAMENTO – Five Senate Republicans have volunteered to be on the front lines of the initial budget battle this year, including weighing whether to put taxes before voters again.
In doing so, those Republicans have jeopardized their political lives.

Thus far, the senators have limited public posturing to brief statements on their goals. Moreover, none have committed to asking voters to continue higher taxes – the most controversial element of Gov. Jerry Brown’s spending plan — even if they secure significant concessions.

Key ingredients are no-loopholes laws to: rein in pensions, impose a spending cap, adopt more business friendly regulations and cut spending. Those actions must be taken first, before a tax extension vote, the senators insist. They also want the higher taxes to disappear much sooner than the five years the governor has proposed as part of his spending plans.

Talks at times have been promising. Other times they have been at impasse. Perhaps telling of the group’s philosophy is this statement issued earlier this month as they decided to return to the just-left table:

“Getting to a constructive agreement involves difficult compromise. Although various interest groups may not have an appetite for real change, we believe the public is demanding it.”

And on Tuesday, the day before the Legislature began taking up the budget on both floors, the members vowed to hold out until their demands are met.

“We remain united as a team in the fight to get these priorities implemented,” said a joint statement.

While Republicans and Democrats joined to approve billions in spending cuts this week, the bipartisanship ended there. There were still no Republican votes for the special election Gov. Brown wants to hold in June to seek approval for the tax extensions. Two Republican votes are needed in each house to make that happen.

And that’s where the serious dealing begins – and ends.

Conservatives have long-pressed the same goals the GOP 5, as they are called, are pushing. But at the same many of the same partisans are vilifying the five for something they have yet to do, which is support asking voters whether to continue the temporary sales, income and car taxes due to expire June 30.
Opponents point out that voters in May 2009 rejected each tax extension. Those critics hold that the state will never seriously cut spending and deflate a bloated bureaucracy as long as more tax revenues flow.

Those taxes would raise about $11 billion a year, helping bridge a $26.6 billion budget gap over the next 15 months. That shortfall between projected spending and revenues represents nearly a-third of the state’s $86.4 billion annual general fund.

Brown proposes a five-year extension used to cover a range of expenses – mostly for schools and to help counties fund new responsibilities for state programs.

The internal warfare has been escalating leading into this weekend’s California Republican Party convention. Conservative factions are planning to issue condemnations of any Republican who dares support asking voters for more taxes. Moreover, the most zealous have even threatened to launch recalls.

In many respects, it is a replay of 2009. In February of that year several Republicans agreed to a budget deal that included tax hikes through June 30,2011. Those Republicans were branded traitors at the subsequent GOP spring convention.

Even if some Senate Republicans eventually cast yes votes, peace cannot be declared. Negotiations will then shift to the Assembly, which is generally considered even more conservative.

So far, no Republicans in the lower house have stepped forward publicly to suggest they would be willing to deal on the tax extension vote.

But, if the budget drags out that long, some may come out of the shadows after the Republican Convention.

Not all Republican groups are issuing threats. The New Majority, a moderate group with chapters in Orange and San Diego Counties, has sent a carefully worded letter to GOP legislative leaders urging compromise.

In an interview, Joe Jubela , chairman of the New Majority’s San Diego County branch, said the group wants guarantees that the pursued changes are in place. “That must happen first,” he said.

Then, it could get behind a tax extension, but only then.

Jubela said the spending cap, cuts and pensions would send an important message. Now, he continued, “Californians are paying far too much for far too little in services.”
Orange County’s Larry Higby, the statewide chairman of the New Majority, said in an interview that his policy is “no loopholes, no delay” toward reforms.

“We don’t believe in any tax increases without simultaneously doing the cuts and reforms,” Higby said.

Democrat constituencies have resisted overtures. Labor unions oppose restricting pension plans. And environmental groups are lobbying against easing regulatory standards, which they claim will gut laws protecting human health and wildlife. Teachers and others strongly oppose a strict limit on spending, claiming education has been shortchanged for several years.

Pure politics may be in play as much as policy and philosophy.

Conservatives tend to dominate Republican primaries, forcing GOP candidates to lean right. The opposite is true in many Democrat-heavy districts. But that could change in some parts of the state next year. That’s because California will implement for the first time a “top two” system that will send the two highest vote-getters on to the general election. In some instances, that could mean a face-off between a conservative and moderate Republican in the general election, or a liberal and moderate Democrat.

Also, with the census finished, political boundary lines are being redrawn by an independent commission. That means some lawmakers may see their power base moved out of the district. In other instances, two sitting legislators may find their homes in the same district.

Personal ambitions also come into play. Of the GOP 5, one is termed out. Another must run again in 2012.

But three of the Senate Republicans do not go before voters again until 2014 – a lifetime in politics. They could be the ones demanding a shorter timeframe for the extensions so the taxes disappear before they are on the ballot.

Governor Brown could also offer plum appointments to those who cannot or will not seek reelection.

WHO ARE THEY:

Tom Harman of Huntington Beach: Former assemblyman will be termed out of Senate next year. An attorney, he will be 70 in late May.
Bill Emmerson of Hemet: A former assemblyman, he joined the Senate following a special election in 2010. Must run again in 2012. He is 65 and an orthodontist.
Sam Blakeslee of San Luis Obispo: a former Assembly Republican leader, he won a special election for the Senate last summer. Next election is in 2014. A geophysicist, he will be 56 in late June.
Tom Berryhill of Modesto: A former assemblyman elected to the Senate in 2010. Next election is 2014. A winegrape grower, he will be 58 in late August. His brother , Bill, serves in the Assembly.
Anthony Cannella: He is the youngest and only one of the five senators without experience in the Assembly. Elected last year, does not go before voters until 2014. The former mayor of Ceres and a civil engineer, he turns 42 on Tuesday (March 22).

WHAT THEY WANT:

Few specifics are being revealed. But here is a broad outline of what they have been discussing for some time with no resolution: *
- Spending cap: A tight rein that can only be broken in emergencies. School funding would be a priority, allowing for more on per-pupil spending.
- Education reforms: Modifications to tenure that protects teachers. Tying jobs with performance, giving administrators more flexibility to fire bad teachers. Parents should have a right to choose schools.
- Pensions: End guaranteed, or defined, pension plans for new employees. Switch to 401K type plans and require workers to pay more into the system. End the policy of tying pension benefits to the last, and presumably, highest salary. Ban pensions that would exceed $100,000 a year.
- Regulations: Draft more business friendly regulations and require rules and laws to include the estimated cost on business. Also, more tightly control lawsuits brought against business.
- Government services: Allow private business to bid on more state services and projects.
- Tax reform: Adopt comprehensive reforms, particularly lower the tax rates. In return, close loopholes and broaden the taxpayer base.
- Redevelopment: Agree to some reforms on divisions of the property tax and limit the types of projects that can be funded. But, protect the basic structure and goals of redevelopment agencies and enterprise zones designed to encourage business investment in selected neighborhoods.
- Tax extension: Only agree to place a measure on the ballot if the above demands are complied with substantially. Even then, have the extension expire sooner than the currently proposed five years.
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Source: GOP proposal to governor and interviews.