Administration’s January Proposal Fails to Prioritize Kids in the 2021-22 State Budget

Last week, Governor Gavin Newsom released his $227 billion 2021-22 state budget January proposal.

Children Now released this statement in response to the Governor’s proposal:

The Administration’s proposal for the most part fails to heed this week’s call from more than 1,000 diverse groups around the state to prioritize kids in the state budget. For example, while the proposal dramatically augments federal investments in some other areas, it does not include significant new state investments for our fragile child care system, which is essential to getting our economy back on track. California leaders must urgently address the fact that kids – especially kids of color, kids in poverty and youth in foster care – have been disproportionally impacted by the pandemic, and the learning loss and increase in mental health issues threatens their – and our collective – future.

An overview of proposed child-related investments, broken down by issue area, can be found below.

EARLY CHILDHOOD

As expected, the proposal is reflective of the overarching economic context resulting from the COVID-19 pandemic. Disappointingly, the Governor’s budget proposal very much mirrors California’s long-awaited Master Plan for Early Learning and Care (released in December 2020) in that it falls far short of the substantial, new state investments in child care that are needed now, and have been needed for decades. The bulk of proposed investments are earmarked for one-time investments intended to incentivize increasing spaces, facilities and workforce development in Transitional Kindergarten and Kindergarten. Unfortunately, even of those proposals, some are not “new” investments, but rather come from already-guaranteed Proposition 98 funding and if implemented as proposed would result in less per pupil funding for students currently enrolled in TK-12. Specifically, these investments include:

$250 million one-time Proposition 98 in incentive funding to school districts to expand Transitional Kindergarten, over multiple years.
$200 million one-time General Funds for school districts to construct and retrofit existing facilities to support Transitional Kindergarten and full-day Kindergarten programs.
$50 million to support professional development and teacher preparation for Transitional Kindergarten and full-day Kindergarten teacher development.
Updated Proposition 64 cannabis tax revenues will provide an additional $21.5 million for child care vouchers in 2020-21 and $44 million ongoing (total of 4,700 new child care vouchers).
$55 million one-time General Fund to continue essential worker child care and family fee waivers.

In addition to the above, the budget:

Shifts $31.7 million ($0.9 million General Fund) and 185.7 positions from the Department of Education to DSS to administer early learning, child care, and nutrition programs.
Includes $3.1 billion ($1.3 billion General Fund) and shifts the following programs to DSS, including: General Child Care, Alternate Payment Programs, CalWORKs Stage 2 & Stage 3, Resource & Referral Programs, Migrant Child Care Program, Severely Disabled Program, California Child Care Initiative, Quality Improvement Activities, Local Planning Councils, and Child and Adult Care Food Program.
Provides a 1.5% COLA to all statutorily required early education and TK-12 categorical programs that remain outside of LCFF, including nutrition, state preschool and youth in foster care.

California also expects to receive approximately $1 billion in new federal Child Care Development Funding from December 2020 Coronavirus Response and Relief Supplemental Appropriations Act. The 2020 Budget Act anticipated potential future federal COVID-19 funds for child care, and outlined guidance for their use, which the Governor’s proposal aligns to:

Up to $100 million for providers accepting vouchers to extend access to child care for children of essential workers, at-risk children, and other eligible children;
Up to $90 million in child care provider stipends;
Up to $35 million to increase the number of paid non-operational days for providers accepting vouchers that must close for health and safety reasons;
Up to $30 million for reimbursing child care providers for family fees waived for families enrolled, but not receiving in-person care, from September 1, 2020, to June 30, 2021 (these costs were addressed by the Administration through the October action);
Up to $30 million to increase capacity for up to two years for subsidized child care and preschool; and
Up to $15 million to assist child care providers with the costs of re-opening.

YOUNG CHILD AND FAMILY SUPPORTS

While we’re heartened that the Governor is seeking immediate action on $2.4 billion to provide CalEITC recipients with a one-time $600 tax refund, only very low-income households (earning less than $30,000 annually) are eligible, and while it will undoubtedly benefit some children, it is not known how many and due to the eligibility threshold, many struggling families will not receive this support.

Unfortunately, the proposal decreases certain CalWORKs (TANF) programs based on projected declining caseload at a time when statewide need is extraordinarily high – most notably, reduces the CalWORKs Home Visiting Program appropriation to $72 million (from current level of $91 million) due to a projected decline in caseload for 2021-22; and reduces diaper assistance funding by $2.5 million in the current budget year, with an increase of a similar amount in 2021-22 (based upon projected caseload levels).

The budget also proposes:

$300 million Proposition 98 (education) funding for special education early intervention grants. More details about this proposal will be included in as-yet-unreleased budget trailer bill, so it is not yet clear how and if it will alleviate California’s persistent under-performance on Part C IDEA metrics and low rates of identifying children with developmental delays via screening and Child Find.
$61.1 million ($42.7 million General Fund) to begin implementation of Part IV of the federal Family First Prevention Services Act (FFPSA), with further details to be forthcoming.
$5 million one-time General Fund to the California Department of Public Health to provide books to low-income children to improve child development and literacy, with further details to be forthcoming.

Additionally, the budget did extend by one year (from December 31, 2021, to December 31, 2022) the sunset of key Children Now priorities, including the temporary augmentation to the Emergency Child Care Bridge Program for foster youth, Child Welfare Public Health Nursing Early Intervention Program, and the Family Urgent Response System, as well as extending Proposition 56 supplemental Medi-Cal payments, including for developmental screenings and Adverse Childhood Experiences (ACEs) screening until July 1, 2022.

TK-12 EDUCATION

The news for schools is predominately positive for the budget year, including proposed investments that would be implemented through urgency legislation, as well as others implemented on the traditional budget timeline. We are especially pleased to see a number of Children Now’s budget priorities included in the Governor’s proposal, including funding for a Cradle to Career Data System, a partial investment in school county mental health partnerships, and the continued acknowledgment of the need to address the LCFF supplemental/concentration funding loophole (see more information below).

That said, we are concerned about the forthcoming fiscal dynamics districts will face. Specifically, beyond the COLA ($2 billion), there is little additional on-going funding for schools. At the same time, over $14 billion in funding is being proposed as one-time investments (e.g., re-opening schools $2 billion; learning loss/expanded learning time $4.6 billion; $540 million in teacher training and teacher pipeline programs; $300 million for transitional kindergarten training and expansions; $265 million for community schools; approximately $7 billion in new federal stimulus funds, etc.). The implication is that the districts will be expected to spend significant amounts of state and federal money in the near term, and then suddenly drop to a lower funding level the following year. Districts serving our students furthest from opportunity – students facing systemic inequities such as racism and poverty and unique learning needs, including our English learners, special educations students and foster and homeless youth — are likely most at risk of suffering the consequences of this funding instability. This fiscal dynamic could result in districts not being able to hire additional staff without then needing to lay off that staff off in the 2022-23 school year.

The state can and should do more to increase the level of ongoing multi-year resources dedicated to California schools. Instead, the state is actually planning to undo a commitment to higher out-year funding. In the 2020 Budget Act, there was a commitment to permanently increase the percent of the General Fund that would go to K-14 education (from 38% to 40% of the GF) making a “supplemental payment” above the Proposition 98 minimum guarantee. This budget proposes to undo that supplemental payment in the out-years, further exacerbating the fiscal cliff. The LAO estimated that the supplemental payment would have provided an additional $6.3 billion by the 2024-25 budget.

Below is a summary of the TK-12 budget proposal.

Early Action Proposals:

Reopening Schools – $2 billion for in-person instruction grants for COVID 19 testing and personal protective equipment; to improve ventilation, indoor and outdoor spaces; to invest in salaries for staff providing in-person learning; and to provide social and mental health support services connected to in-person learning. For the current trailer bill language on this proposal see here. This is a dynamic aspect of the budget with much controversy, including several legislators and large urban superintendents raising concerns that the Governor is not being aggressive enough to ensure schools reopen when health conditions allow (See (See AB 10, Ting; AB 76, Kiley; and superintendent’s letter here).
Learning Loss Mitigation – $4.6 billion for extended instruction time to target intervention supports for students in low-income households, English learners, foster youth, and homeless youth. We are also closely watching and engaging with the Assembly on AB 104, Gonzalez (currently spot bill language), as a key policy vehicle to help shape this proposal as the early action budget moves forward.
Federal Stimulus – The budget notes the approximately $7 billion in additional federal funds that will be allocated to schools via the Title 1 funding formula for several allowable expenses, including pandemic related expenses, learning loss mitigation strategies and student mental health (for a side by side between the first round of CARES funding and the more recent CRRSA funding see here).
Deferrals – $7.3 billion to pay down deferrals with $3.7 billion remaining. While the budget document does not make it clear that paying down deferrals will definitively be a part of the early action budget, given deferrals are slated to begin in February, we anticipate at least a portion of the paydown will be a part of these urgency negotiations.

Traditional Budget Timeline Proposals:

Cradle to Career Data (C2C) System – Nearly $19 million for the creation of a Cradle to Career data system ($15 million for the system itself, of which $3 million is one-time funding for upstart costs, plus $3.8 million for the California College Guidance Initiative). For more information on the vision and scope of the C2C see here.
Fiscal Transparency – The budget notes the Administration’s commitment to addressing the fiscal transparency and expenditure loophole concerns raised by our cosponsored legislation AB 1835. While we are pleased that the Administration has reaffirmed their commitment to this goal, we remain concerned that the proposed solution will not fully address the loophole and are waiting for trailer bill language to assess the efficacy of their proposed approach.
LCFF – $2 billion, which represents 3.84% in COLA. It is important to note that there originally was no COLA in 2020-21; this proposed COLA comprises 2.31% for 2020-21 and 1.5% for 2021-22 (1.5%).
Mental Health – $25 million in one-time funding to resource school county mental health partnerships, in line with one of Children Now’s top mental health budget priorities for 2021-22, as well as an additional $25 million in one-time funding to support innovative school county mental health partnerships.
Educator Supports – The budget proposes several one-time investments to support educators including:
- $100 million for teacher residency programs in STEM, special education, and bilingual education.
- $100 million for the Golden State Teacher Grant program for teacher candidates that commit to working in high-need subject areas and schools.
- $25 million for the Classified School Employee Credentialing program which supports a pipeline of classified staff into the teaching profession.
- $250 million in grants to LEAs to provide professional development on strategies to accelerate learning, reengage students, and provide restorative practices and implicit bias training.
- $50 million to create resources on social-emotional learning and trauma-informed practices.
- $8.3 million to support the California Early Math Initiative to support professional development on mathematics in preschool through 3^rdgrade.
- $7 million for the Subject Matter Projects in reading, mathematics (learning loss mitigation) and ethnic studies.
- $5 million in grants for LEAs to fund professional development and instructional materials purchases for ethnic studies.
Community Schools – $265million in one-time funding to support the development and expansion of community schools.
School Climate Surveys – $10 million in one-time funds for county office of education to support the development and deployment of school climate surveys.
Early Learning (Proposition 98 Funded):
- Special Education – $300 ongoing funding for special education early intervention services for infants, toddlers and preschoolers.
- Preschool – $250 million in one-time incentive funding to expand preschool; this funding will be available for expenditure over multiple years.
- Professional development – $50 million one-time for transitional kindergarten and kindergarten professional development to support English learners, social-emotional learning, trauma-informed and restorative justice practices, and implicit bias training.
- Facilities – $200 million infrastructure investments for transitional kindergarten and kindergarten facilities.

Proposition 98 Rainy Day reserve and Continuing Deferrals – The state plans to put $3 billion in the Proposition 98 rainy day fund related to the 2020-21 and 2021-22 fiscal years. This is occurring because specific factors are being met (i.e., Proposition 98 test 1 status, strong capital gains and no maintenance factor). At the same time, the plan would continue $12.5 billion in deferrals for the 2020-21 fiscal year and $3.7 billion in deferrals for the 2021-22 fiscal year. This action will require school districts to borrow money from the equity market at the same time that the state is holding funds in its rainy day account for schools.

Required Cap on school districts fiscal reserves – Because of the level of contributions that this budget would put in the Proposition 98 Rainy Day fund, a trigger would be pulled that would force school districts to lower their district reserves generally below 10%. This will remove one of the only tools that districts have to survive the fiscal cliff discussed above.
Pensions – $1.15 billion in one-time funding to pay down the employer contributions to pensions ($820 million for CalSTRS and $330 million for CalPERS).

HIGHER EDUCATION

While the Governor’s proposed budget includes much-needed increases to the core operating budgets of the UC, CSU and Community Colleges, the overwhelming majority of new spending is one-time in nature and therefore is unlikely to result in sustained improvements in student outcomes or increased institutional capacity. The reality is that our public colleges and universities are still recovering from the Great Recession of the early 2000s and the costs to students and families continue to rise. Given the unexpected surge in state revenues, we would have expected significantly higher and sustained investment in all of public education.

Additionally, the impacts of the coronavirus pandemic are just beginning to reveal themselves and currently enrolled students will need extended support to address learning loss and ensure they successfully transfer or graduate. Our postsecondary institutions will also need resources to support incoming students who have suffered from school shutdowns, the transition to distance learning, and the upending of the college application and admissions process. The legacy of these disruptions will not be short-lived and California needs to fund our colleges and universities so students successfully transition and go on to complete their education.

Following are a few highlights from the Governor’s higher education budget proposals:

Community Colleges

Food & Housing Insecurity – $100 million to address food and housing insecurity among community college students.
Technology & Internet Access – $30 million to support student technological access to higher education by enabling students to have electronic devices and high-speed Internet connectivity, as well as increase student mental health resources.
Faculty Professional Development – $20 million for a systemwide effort to provide culturally competent online professional development for community college faculty, including in leveraging technology to improve learning outcomes.
Apprenticeship – $15 million to augment the California Apprenticeship Initiative, which supports the creation of apprenticeship opportunities in priority and emerging industry sectors.
Work-based Learning – $20 million to expand work-based learning models and programs at community colleges, including working with faculty and employers to incorporate work-based learning into curriculum.

California State University – The Budget includes $144.5 million in ongoing General Fund to provide a three-percent increase in base resources to support the CSU’s operational costs, support for the Basic Needs Initiative component of Graduation Initiative 2025, student basic needs focused on digital equity and the provision of mental health services, the adoption of a common intersegmental learning management platform, and enrollment at the CSU Stanislaus Stockton Campus.

In addition, the Budget includes $225 million one-time General Fund to support emergency financial assistance grants to students in need, support for culturally competent professional development focused on the provision of online courses and programs, support for the Computing Talent Initiative, and for deferred maintenance.

University of California – The Budget proposes ongoing General Fund augmentations of approximately $136 million to support a three-percent General Fund increase in base resources for UC campuses and the UC Office of the President; UC Payroll, Academic Personnel, Timekeeping & HR (UCPath); the Division of Agriculture and Natural Resources; student basic needs focused on digital equity and the provision of mental health services; UC Programs in Medical Education (PRIME); the adoption of a common intersegmental learning management platform; and other baseline adjustments for ongoing support.

In addition to this ongoing funding, the Budget proposes $225 million one-time General Fund to address deferred maintenance and energy efficiency projects at UC campuses, support emergency financial assistance grants to students in need, support the California Institutes for Science and Innovation, provide support for culturally competent professional development focused on the provision of online courses, provide the UC Subject Matter Projects resources for K-12 teacher professional development regarding learning loss mitigation and ethnic studies, and to support UC Fire Advisors.

These investments are provided with the expectation that the CSU and UC:

Maintain resident undergraduate tuition and fees at current levels for the 2021-22 academic year;
Take action to significantly reduce equity gaps with the goal of fully closing equity gaps by 2025;
Adopt policies furthering educational opportunities using online learning programs;
Better align student learning objectives with workforce needs; and
Create a new, stand-alone dual admissions pathway enabling first-time freshman applicants to be considered for guaranteed admission to UC upon completion of an Associate Degree for Transfer (ADT), or its UC equivalent, at a CCC. In designing a new, stand-alone dual admissions pathway that relies upon a UC ADT equivalent degree, the Administration expects the UC to identify for students: (1) courses that overlap between the existing ADT pathway and its UC equivalent pathway, and (2) courses that do not overlap between the existing ADT pathway and its UC equivalent pathway.

California Student Aid Commission

Competitive Cal Grant – An increase of approximately $35 million ongoing General Fund to add 9,000 Cal Grant Competitive awards, increasing the total number of awards to 50,000.
Former and Current Foster Youth Access Award – An increase of approximately $20 million ongoing General Fund to increase the access awards for all former or current foster youth. Eligible new or renewal Cal Grant A students will receive an access award of up to $6,000, eligible new or renewal Cal Grant B students will see their access award increase from $1,648 to $6,000, and eligible Cal Grant C students will see their book and supply award increase from $1,094 to $4,000.
FAFSA or California Dream Act Application – As referenced in the K-12 Education Chapter, the Budget includes statutory changes to require local educational agencies to confirm that all high school seniors complete a FAFSA or California Dream Act Application beginning in the 2021-22 academic year.

Children Now will track the development of the state budget in the coming months and elevate our priority issues for higher education, STEM teaching and learning, and addressing issues of equity and access.

HEALTH

In the upcoming year, we will be working to ensure the Administration and the Legislature increase their efforts to best support children’s health by:

eliminating the suspension of Proposition 56 Medi-Cal payments;
increasing the dollar amount for Mental Health Student Services Act Partnership Grants to ensure all available school-county partnerships can be funded; and
implementing child-friendly CalAIM policies in Medi-Cal.

Medi-Cal

Funding for an expected increase of 10% in the Medi-Cal caseload next year.
A one-year delay (to July 1, 2022) in the suspension of Proposition 56 payments for services like well-child visits and developmental screenings.
$1.1 billion ($532m GF) investment for the California Advancing and Innovating Medi-Cal (CalAIM initiative). The CalAIM investments include Enhanced Care management and In Lieu of Services, infrastructure to expand Whole Person Care approaches statewide (with funding to be phased out in 2024-25); changes to medical necessity, and building on dental initiatives for kids and adults. DHCS released a revised CalAIM proposal in conjunction with the Governor’s budget release, with a new CalAIM start date of January 1, 2022. More detail on the CalAIM policies and opportunities for public comment will be coming in February.
$94.8 million ($34m GF) for telehealth policies and flexibilities, including remote patient monitoring as a new benefit.
Financing to implement the Medi-Cal Rx program that provides the prescription drug benefit to children and youth in Medi-Cal.
$300 million in one-time payments to managed care plans to correct past payments for Medi-Cal enrollees made under an incorrect aid code.

Student Mental Health

One-time $400 million ($200 million GF) available over multiple years for the DHCS to implement an incentive program through Medi-Cal managed care plans, in coordination with county behavioral health departments and schools. This effort seeks to build infrastructure, partnerships and capacity statewide to increase the number of students receiving prevention and early intervention behavioral health services from schools, providers in schools or school-based health centers.
$25 million one-time mental health services fund, available over five years for the Mental Health Services Oversight and Accountability Commission to augment the Mental Health Student Services Act Partnership Grant Program, which funds partnerships between county mental health plans and school districts.
$25 million ongoing Proposition 98 General Fund to fund innovative partnerships to county behavioral health departments to support student mental health services. This funding would be provided to local educational agencies as a match to funding in county Mental Health Services Act spending plans dedicated to the mental health needs of students.
$30 million ongoing Prop 98 GF to support technological access to higher education by enabling students to have electronic devices and high-speed internet connectivity, as well as increase student mental health resources.
$10.6 million ongoing Proposition 98 GF to support the continuity of education and quality distance learning, including access to online tutoring online counseling and online student support services such as mental health services.
$265 million one-time Proposition 98 GF to expand existing networks of community schools.

Health Care System Planning Investments

The budget proposes to establish a new Office of Health Care Affordability, which will be charged with, among other things, enforcing compliance through financial penalties.
The budget proposes utilizing a Health Information Exchange to improve data infrastructure, including within the Medi-Cal program.
$1.7m for the California Health and Human Services (CHHS) Agency to conduct analyses on health equity; a consolidation of CHHS data efforts through the Center for Data Insights and Innovation; and $4.1m for CHHS to develop an Equity Dashboard that “will identify data (race/ethnicity, Sexual Orientation Gender Identity (SOGI), etc.) completeness, disparities, disproportionalities, and program participation.”

CHILD WELFARE

COVID-19-Related Supports for Child Welfare Services: The Budget includes continued funding to support services related to quarantine needs for youth in foster care and their caregivers, temporary assistance to emergency caregivers, support to Family Resource Centers, state-administered contracts for youth and family helplines, provision of laptops and cell phones to youth in foster care, assistance to families with youth who are at-risk of entering foster care, and temporary provision of assistance payments to youth who turn 21 while in extended foster care through 12/31/2021, and for any non-minor dependent who met eligibility criteria for the Extended Foster Care program and who lost their employment or has experienced a disruption in their education program resulting from COVID-19, and cannot otherwise meet any of the participation requirements.
Family First Prevention Services Act (FFPSA) Implementation: The Budget proposes $61.1 million ($42.7 General Fund) to begin implementation of Part IV of FFPSA and meet new federal requirements surrounding congregate care placements. More specifically, Part IV of the Act requires California’s Short-Term Residential Therapeutic Programs (STRTPs) to provide 24/7 access to nursing consistent with their treatment model, a minimum of six months of aftercare services when a youth exits a STRTP placement to a family-based setting, and have all placements assessed by qualified individual.
Child Welfare Workforce Development: The Budget proposes $10.1 million ($5.9 million General Fund) to establish an additional child welfare social workers regional training academy in northern California (bringing the statewide total to five academies), increase ongoing training for social workers and supervisors, assess training effectiveness, and modernize how social worker training is monitored and used to inform workforce development planning.
Youth Returning from Out-of-State Foster Care: The budget includes $5.2 million one-time General Fund that was allocated in December 2020 for the California Department of Social Services to support youth in their transition back to California. These resources are supporting county capacity building and supportive services for the returned youth, COVID-related quarantine costs, and technical assistance to support the counties placing the youth. The Budget also includes $5.8 million ongoing ($3.5 million General Fund) for the Department of Developmental Services to support youth in foster care in their transition back to California.

Juvenile Justice:

Division of Juvenile Justice (DJJ) Realignment: To facilitate the realignment of DJJ to the Office of Youth and Community Restoration under the Health and Human Services Agency, the Budget includes $3.4 million General Fund in 2021-22 and $3.1 million ongoing General Fund to develop reports on youth outcomes in the juvenile justice system, staff a Child Welfare Council committee focused on improving outcomes for justice-involved youth, and create an Office Ombudsperson.
County Probation Departments: To facilitate the transition of youth offenders from state to county care, the Budget makes an additional investment of $50 million one-time General Fund in 2020-21 for county probation departments to support these transitions, proposing that the Legislature take action on this funding early in 2021. The Budget also includes $46.5 million General Fund in 2021-22 for county probation departments to work toward the development of appropriate placements and rehabilitative programs at the county level.

K-12 Education:

In-Person Instruction Grants: The Budget proposes $2 billion in one-time Proposition 98 General Fund to augment resources for schools to offer in-person instruction safely, prioritizing students impacted by COVID-19, including students in foster care and students experiencing homelessness.
Expanded Learning Time and Academic Intervention Grants: $4.6 billion in one-time Proposition 98 General Fund is included in the budget to address learning loss due to the pandemic, for districts to design targeted interventions that focus on high-needs students, including students in foster care and students experiencing homelessness. Funding can be used to operate community learning hubs.

Higher Education:

Former and Current Foster Youth Access Award: The Budget provides $20 million ongoing General Fund for the California Student Aid Commission to increase financial aid available for former and current foster youth who are eligible for Cal Grants.

Children Now will track the development of the state budget in the coming months and elevate our priority issues for youth in foster care and their caregivers including access to stable housing, child care, targeted educational supports, trauma-informed services, improved health and well-being, and other supports that promote stability.