* Assembly Budget Subcommittee on Health and Human Services Tables Action on Governor's Proposed Legislative Language On IHSS Residual Program - Administration Admits Language Needs Revising

* Subcommittee Tables Action on IHSS Quality Assurance Initiative and Rejects Governor's Proposed Legislative Language That Would Eliminate State Funding for IHSS Shared Domestic Services

SACRAMENTO -  The Assembly Budget Subcommittee #1 on Health and Human Services tabled for action later this week, legislative language from the Schwarzenegger Administration that advocates and the non-partisan Legislative Analyst Office claimed would give state agencies "tremendous" authority to make changes without further legislative approval, to the In-Home Supportive Services Residual Program.  The Schwarzenegger Administration conceded at the hearing that the proposed language (referred to as "budget trailer bills" because these bills follow or trail the main budget bill)  needed to be revised and corrected and promised to do so before the next hearing later this week.  The disagreement about the legislative budget language doesn't impact the proposal to the federal government for federal matching funds to support the IHSS Residual  that still needs approval by the federal government - but would impact how the Residual Program functions after July 1.

The Governor's Department of Finance said that the proposed legislative language was being corrected and that "...the Administration is seeking a waiver that would allow the State to claim federal Medicaid matching funds for expenditures that are currently funded by the State-only funded [IHSS] Residual Program .The issue before you [Assembly Budget Subcommittee]  seems to be pertaining to the trailer bill language that was submitted with the Department of health Services finance letter. I can assure you that it was not the intent of the Administration to discontinue services for anyone that is currently receiving services under the IHSS program. The [proposed] waiver would simply allow the federal government to pick  up a share of cost for the [IHSS] program."

Action On IHSS Quality Initiative Proposal Tabled
In addition, the Assembly Budget Subcommittee also agreed to table action until later this week on another controversial proposal by the Schwarzenegger Administration to impose a "Quality Assurance Initiative" on the entire IHSS program, resulting, when fully implemented in the 2006-2007 budget year, of a reduction to the IHSS budget of over $92 million (or savings to the state general fund).  [note: see below for details, and also see the CDCAN website at www.cdcan.org under "budget issues" and then under "Assembly Budget Subcommittee #1" for a copy of the actual May 17 agenda]

Assembly Budget Subcommittee #1 chair Mervyn Dymally said that all the Assembly budget subcommittees were asked by the Assembly leadership to finish its work by Thursday evening this week in order  to turn its work over to the 6 member joint budget conference committee.  That special joint committee, made up of 3 members of the Senate (2 Democrats, 1 Republican) and 3 members of the Assembly (2 Democrats and 1 Republican) is likely to begin meeting - open to the public (but no public testimony permitted) sometime the week of May 24th.  The Senate budget subcommittee on Health and Human Services, chaired by Sen. Wes Chesbro, are holding hearings through Saturday morning, May 22.

Other Actions Related to IHSS Taken By the Assembly Budget Subcommittee:
Note: all votes 3-0 by Assemblymembers Mervyn Dymally, chair (D-Compton, 52nd District), Loni Hancock (D-Berkeley, 14th District) and Robert Pacheco (R-Walnut, 60th District). Assemblymembers Ray Haynes (R-Murrieta 66th District) and John Laird (D-Santa Cruz 27th District) were absent from the hearing.
* Approved 3-0 the estimate of how much the state will save, as projected in the Governor's May 13 revised budget proposal for the IHSS Residual waiver (meaning the savings to the state resulting from the assumed approval of a proposal for federal matching funds).  That savings estimate by the Governor however also assumes the elimination of state funding for IHSS worker wages above the state minimum wage.
* Approved 3-0 the Governor's revised budget that proposed to restore state funding for the IHSS Residual program covering the period in the current budget (April 1, 2004 to June 30, 2004). The Governor's original proposal in November called for the elimination of the IHSS Residual Program effective April 1, 2004.
* Approved 3-0 the Governor's revised budget that proposed to restore state funding for the IHSS Residual program covering the 2004-2005 budget year that begins July 1 (which also assumes federal matching funds - and also assumes a rollback in state funding for IHSS worker wages above the state minimum wage)
* Approved 3-0 a request by the Governor's Department of Finance (called a "Finance Letter)  to restore funding for IHSS Shared  Domestic Services (see below for details) that originally was slated for elimination.  The Governor's representatives indicated that the Administration will develop another proposal to the federal government to request an exception (or waiver) to existing  federal Medicaid regulations and give the State authority to eliminate funding for shared domestic services.
* Rejected 3-0  the proposed legislative budget language by the Administration that would have eliminated state funding for IHSS shared domestic services and related services (see below for details)

SUMMARY OF MAJOR ACTIONS RELATED TO IHSS IN THE ASSEMBLY BUDGET SUBCOMMITTEE 5/17:
Note: no other services/departments directly impacting people with disabilities/seniors were heard or taken at this hearing.
* IHSS Residual Program Waiver  - Proposed Legislative Language (Trailer Bill Language)
Action Taken By the Assembly Budget Subcommittee 5/17:  Tables action on this until later this week to allow time for Schwarzenegger Administration to revise the language. No vote taken.
What The Assembly Budget Subcommittee Action Means: Members of the subcommittee who were present , including the chair, appeared to strongly favor the position of advocates and the Legislative Analyst Office, that the Schwarzenegger Administration would need to revise the draft legislative language to ensure continuation of the "Residual Program" regardless of what action the federal government takes on the proposal for matching funds; and to also reduce the scope and the authority in the proposed legislative language of state agencies to make changes to the "Residual Program", to ensure that Legislature has final say on the Residual Program eligibility and benefits.  The Governor's Department of Finance and other department representatives said that it was not the Administration's intent to "discontinue services" for anyone currently in the IHSS Residual Program, and that the language was being re-drafted to correct that and other concerns raised. In other words, the Administration is saying it made a mistake with the language and will correct it.  Both houses , and the Governor must agree and approve some version of budget legislative language relating to the IHSS Residual Program federal matching funds (waiver) proposal to become effective.
What the Governor Proposes:
The legislative language as originally proposed by the Governor regarding the IHSS Residual Program and the Independence Plus proposal to the federal government (to waive existing federal Medicaid regulations to allow for matching funds):
(a) It is the intent of the Legislature to authorize the transition of the benefits available under the In-Home Supportive Services program set forth in Article 7 (commencing with Section 12300) of Chapter 3, hereinafter referred to as the Residual program, into a Medicaid waiver under the federal Social Security Act.
(b) To the extent feasible, the waiver described in (a) shall incorporate the eligibility requirements, benefits, and operational requirements of the Residual program as it existed on the effective date of this section.  The Director shall have discretion to modify such eligibility requirements, benefits, and operational requirements as needed to secure approval of the Medicaid waiver.
(c) Upon approval of the waiver and to the extent federal financial participation is available, the benefits previously available through the Residual program shall be furnished through the waiver to persons who meet the eligibility requirements of the waiver.   Such benefits shall be limited by the terms and conditions of the waiver and by the availability of federal financial participation.
(d) Upon implementation of the waiver, the Residual program shall be terminated and benefits and services shall no longer be available thereunder.
(e) The director may adopt regulations as are necessary to implement this section.  These regulations shall be adopted as emergency regulations in accordance with the rulemaking provisions of the Administrative Procedure Act, Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).  For purposes of this section, the adoption of regulations shall be deemed an emergency and necessary for the immediate preservation of the public peace, health, and safety or general welfare.
(f) As an alternative to subdivision (e), and notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret or make specific this section by means of all county letters, provider bulletins, or similar instructions. Thereafter, the department may adopt regulations in accordance with the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.
Background:
* IHSS has two major components - Personal Care Services Program, that serves  the bulk of the 350,000 children and adults with developmental and other disabilities and seniors, and the Residual Program that serves about 75,000 children and adults with developmental and other disabilities and seniors.  A major part of the Residual Program allows, under strict eligibility and income rules, for parents of minor children with developmental and other disabilities to be their in-home worker, or for the spouse of an adult with disabilities (including eligible seniors) to be their in-home worker.
* The IHSS Personal Care Services Program is supported by funding from state, county and federal funds.  The IHSS Residual Program is funded only with a combination of state and county funds because existing federal Medicaid regulations do not permit funding for the services currently allowed under the IHSS Residual Program.  The Governor is seeking a waiver or exception to those federal Medicaid regulations.
* On November 24 the Governor proposed, as part of his mid-year spending reduction to the current budget the elimination of the IHSS Residual Program, effective April 1, 2004.  The Legislature refused to take action - though only the Senate Budget Subcommittee #3 on health and human services heard the issue at that time, on December 10th, though took no action.
* On April 22, the Governor, through his Department of Finance and Department of Social Services representatives at the Senate Budget Subcommittee #3 on Health, Human Services, Labor and Veteran Affairs hearing backed off from his original proposal that called for elimination of the program and instead would submit a proposal to the federal government seeking federal matching funds.
* The Governor's revised budget proposal, issued May 13th proposed to restore state funding to the Residual Program to cover the time between April 1, 2004 and June 30, 2004 (the original budget proposed assumed the program would have been eliminated by April 1), and also restored state funding for the 2004-2005 budget year that begins July 1.  The revised budget assumed approval of the proposal for matching funds to the federal government, but included proposed legislative budget language that advocates and the Legislative Analyst Office claimed - the Administration admitted, could have given state agencies the authority to eliminate the program after July 1 if the proposal was not approved or even if approval was delayed.  Advocates and the Legislative Analyst Office also claimed that the legislative language proposed by the Schwarzenegger Administration also gave state agencies broad authority to make future changes to the program without new legislation.
* The Governor's May Revised Budget proposal also requests $734,000 ($367,000 state general funds and $367,000 in federal reimbursements) and 9.5 positions  to implement and manage the "Independence Plus Waiver Demonstration Project"  for the IHSS Residual Program. This federal Waiver program  would allow the State to claim federal Medicaid matching funds for expenditures currently funded under the State-only IHSS Residual Program.
Some Key Comments Made At Assembly Budget Subcommittee Hearing 5/17:
Assemblywoman Loni Hancock (D-Berkeley, 14th District): "If we [addressing Department of Finance] adopt the language as proposed, it looks to me, that we [the State] could stop the [federal proposed IHSS Residual Program] waiver on July 2, and eliminate the Residual Program entirely. Is that correct?"
Department of Finance: "The way the [proposed legislative] language is written, there would be a problem, as it is drafted.So we are willing work with the Administration [other state departments]  to come up with language to ensure that individuals would not be dropped off from receiving services. So the language does need to be revised."
Assemblywoman Hancock: "Okay."
Department of Health Services:"Certainly we concur with the statement. We've all been in agreement that the [legislative] language went forward, initially it was drafted when we thought the [proposed federal] waiver would cover everyone. Subsequently  we found that we don't want to take any chances that we would eliminate someone. So we are certainly going to work with whomever we need to, so that the program remains as it currently exists."
Willie Polete, United Domestic Workers: "...the Department of Finance has made it clear that the it is the intent of the Administration on the [proposed] waiver - that whether we get it or not, that the Residual Program is not going to see any cuts. That's our bottom line - Is the continuation of the [Residual] program, regardless of what is happening with the Administration and the federal government on the waiver. We want to make sure the program stays intact.  And [we] would hope that the [Assembly Budget] committee and the [Assembly] leadership would work with the Administration if this waiver does not come through... that this committee takes the appropriate action to make sure the program continues.  That is what is most important to us - is that the [people with disabilities and seniors] in California, who takes care of their family member, will not experience any reduction in the funding of the program by the State of California, regardless of what happens at the federal government level. We hope that the federal government will indeed grant the waiver, and the waiver continues the funding of the program.  We ask that the committee somehow work with the Administration and make sure that is indeed the case, that there is no break in service from the State of California upholding its responsibility to fully fund the Residual Program, regardless of what happens at the federal government level.  That's the most important thing....if there is a way to craft the appropriate language to ensure that does indeed happen..."
Assemblymember Dymally: "It's been suggested that we hold open the waiver  trailer bill language so you [advocates] can have the opportunity to negotiate with the Department of Finance and the appropriate agencies, so when we come back there will be some reconciliation.  The other parts [proposals] we are going to adopt in a few minutes when we hear from the county directors.." [ Dymally later also agreed to make sure that the Administration worked with advocates in revising the legislative language]
Actions Taken By the Senate Budget Subcommittee On This Specific Issue:  Subcommittee has not taken this issue up yet - may take it up on May 20.
Next Steps:
* The subcommittees in both houses are likely to approve revised legislative language that ensures continuity of the Residual Program, and limits scope and authority of state agencies to make changes to the program unless they receive legislative approval.
* A 2/3rds vote by both houses will needed to give final approval (though as part of a larger budget related bill) sometime in early  June.

* IHSS - Quality Assurance Initiative
Action Taken By the Assembly Budget Subcommittee 5/17:   Tables action on this until later this week to allow time for Schwarzenegger Administration to consider revising  the proposal.
Vote Record:  No vote taken on this issue
What The Assembly Budget Subcommittee Action Means:  Gives the Administration a few days to consider revising this proposal to reflect concerns raised by advocates - and to also consider incorporating ideas suggested by the county welfare directors state association.
What the Governor Proposes:
* The Governor proposes legislative budget related language that would give the Department of Social Services broad authority to implement the Quality Assurance Initiative through the emergency regulatory process.
* A similar proposal was advanced by the Governor for regional center community-based services and funding, referred to as "Statewide Standards for Purchase of Services", that also proposed broad authority to a state department (Department of Developmental Services) to impose limits and make changes to community-based services through the emergency regulatory process. That proposal - which is encountering intense opposition from advocates (and was rejected by the Legislature twice before in the proposed budgets for 2002-03, and 2003-04, is still pending.
* The IHSS Quality Assurance legislative language proposed by the Governor is:
(a) On or after July 1, 2004 the State Department of Social Services shall implement a quality assurance initiative for the In-Home Supportive Services program.  The initiative may include:
 (1) Use of a variable intervals for reassessment of recipients;
 (2) Use of standardized hourly task guidelines;
 (3) Implementation of a county-level quality review function;
 (4) Enhancement of the existing department Evaluation and Integrity Unit;
 (5) Use of data matches to identify variance in expected service usage by recipients; and
 (6) Requirement that recipients and service providers sign timesheets under penalty of perjury.
   (b) Notwithstanding the provisions of the Administrative Procedure Act, Chapter 3.5 (commencing with Section 1340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement the initiative through all-county letter or similar instructions from the director.
   (c) The director shall adopt regulations, as otherwise necessary, to implement applicable quality assurance provisions.  Emergency regulations to implement the applicable provisions of this chapter may be adopted by the director in accordance with the Administrative Procedure Act.  The adoption of emergency regulations shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health, safety, or general welfare.
   (d) Emergency regulations shall be exempt from review by the Office of Administrative Law.  The emergency regulations authorized by this section shall be submitted to the Office of Administrative Law for filing with the Secretary of State and shall remain in effect for no more than 180 days.”
Background:
* The Governor originally hinted at a "IHSS Quality Assurance Initiative" in his proposed budget issued in January, but gave no specifics or budget reductions (or savings) from that proposal.
* In the revised budget proposed by the Governor on May 13, the IHSS Quality Assurance Initiative gives some specifics, and proposes savings to the state general fund (or cuts to IHSS, depending on the point of view) by  improved training and additional oversight at the State level.
* The Governor's revised budget proposal requests $1,724,000 ($862,000 General Fund and $862,000 federal reimbursements) and 18 positions to implement the proposed IHSS Quality Assurance Initiative, to conduct fraud investigation, monitor quality assurance activities conducted by county staff;  train State monitoring staff, establish a statewide training contract and training academy for county staff, etc..  The Quality Assurance Initiative would also implement authorization controls for IHSS protective supervision.  The Governor's revised budget claims that savings (or reductions to IHSS) resulting from this proposal  would more than support the new requested positions.
* The Governor's proposed revised budget calls for a reduction of $14,922,000 in state general funds to IHSS (or savings) to reflect implementation of the IHSS Quality Assurance Initiative for the 2004-2005 budget year.  Annual ongoing savings to the state (or reductions to the IHSS budget from a different point of view) will increase to an estimated $92.3 million in state general funds beginning in the 2006-2007 budget year that begins July 1.
* The proposed Quality Assurance Initiative is estimated to decrease assessed hours for protective supervision services by 25% beginning in September 2004, and 5%  for all other services beginning in February 2005.
How This Impacts People With Disabilities And Seniors:
* The Assembly Budget Subcommittee staff estimates that 93% of the projected savings by the Administration is attributed to the elimination of 3,000 Protective Supervision Cases.  The proposal assumes that 3,000 current protective supervision cases will lose eligibility for IHSS on September 1, 2004, resulting in a $54.2 million (of which $35.2 million is state general funds and the remainder federal reimbursements) savings (or a reduction to the IHSS budget from another point of view) for the 2004-2005 budget year that begins July 1.
* The proposed legislative budget language by the Schwarzenegger Administration proposes that counties verify that all protective supervision clients have the medical need for the services.  The Assembly Budget Subcommittee staff estimates that based on the Administration's proposed savings (or cuts to the IHSS budget) projected in the proposed revised budget, over 27% of the current protective supervision caseload would have to lose eligibility due to reassessment.
* The Assembly Budget Subcommittee staff raised questions in that "very little additional resources are provided to counties" to implement the proposal.  The Assembly Budget Subcommittee staff indicated that although counties will receive additional resources to improve the quality of their IHSS program, for most counties the amount of resources may not be sufficient to make a difference in the program’s performance.  The chart details how proposed staffing that counties would receive for IHSS Quality Assurance as currently proposed::
Caseload         Number of Cases
Under 1,000       (number of staff/cases:0.25)
1,000-5,000       (number of staff/cases:0.5)
5,000-10,000     (number of staff/cases:1.0)
over 10,000        (number of staff/cases:2.0)
Los Angeles       (number of staff/cases:7.0)

* The Governor's revised budget projects only $3.7 million ($1.4 million state general fund, the remainder federal) in savings (or cuts to the IHSS budget)  from the reassessment activities.
* Assembly Budget Subcommittee staff raised concerns that the estimate for savings (or reductions to the IHSS budget) for budget years beyond 2004-2005 "seem too aggressive" with data that suggests that counties with larger IHSS caseloads tend to have less quality and training related savings.  The $92.3 million level of saving projected in the budget is about 9% of the total IHSS budget - meaning the cuts or savings resulting from the proposed Initiative, if based on real data, would be substantially lower.
* Other options, according to the Assembly Budget Subcommittee staff,  for savings (or IHSS budget reductions) may be available:  The State may be able to save additional state general funds by increasing the frequency of assessments for IHSS recipients that receive care due to a temporary health condition.
Actions Taken By the Senate Budget Subcommittee On This Specific Issue:  Subcommittee has not taken this issue up yet - may take it up on May 20.
Next Steps:
* The Assembly budget subcommittee may take this issue up later this week - possibly Wednesday (May 19).  Both budget subcommittees would have to take action that is exactly the same, or the issue goes to a joint budget conference committee to resolve differences.
* A 2/3rds vote by both houses will needed to give final approval (though as part of a larger budget related bill) sometime in early  June.

* IHSS - Shared Domestic Services
Action Taken By the Assembly Budget Subcommittee 5/17:  Rejected 3-0 the Schwarzenegger Administration's proposed legislative budget language (trailer bill) relating to shared domestic services.
Vote Record: Assemblymembers Dymally (D-Compton 52nd District), Loni Hancock (D-Berkeley 14th District)  and Robert Pacheco (R-Walnut 60th District) voted to reject.  Assemblymembers Ray Haynes (R-Murrieta 66th District) and John Laird (D-Santa Cruz 27th District) were not present for the hearing.
What The Assembly Budget Subcommittee Action Means:  The proposed legislative language that would eliminate state funding for IHSS shared domestic services will not be pursued, according to Administration officials. Instead, the Administration will seek to develop a proposal to the federal government seeking a waiver or exception to existing federal Medicaid regulations that would allow the State to eliminate funding for these services - though it is not certain at all that either house budget subcommittee will go along with that.  The Administration representatives said they had no details on the proposal.
What the Governor Proposes:
* The legislative language as originally proposed by the Governor regarding the IHSS Shared Domestic Services to eliminate funding for shared domestic and related services:
Notwithstanding any other provision of State law and to the extent permissible under federal law, beginning on the first day of the first full month after 90 days following the effective date of the act that adds this section, the state shall not pay for domestic and related services provided to a recipient who resides with a family member when the services are for a need that is shared in common by the recipient and the family member, except under any of the following circumstances:
(a)The recipient resides only with minor children.
(b)The need cannot be met in common.
(c)There is substantiation that the other family members in the home are unable to provide the services
* The Governor's May Revised budget proposal also requests $80,917,000 ($26,298,000 state general funds and $54,619,000 in federal reimbursements) due to delayed implementation of the Governor's original  proposal to eliminate shared domestic and related services for IHSS recipients who live with their family members, when the need for these services is provided in common with other household members.
* In order to implement this proposal, the Governor's May Revised budget proposes to pursue a federal waiver to a Medicaid  rule requiring comparability between services provided to different recipient groups.  Due to the time required to draft this waiver, await federal approval, and notify counties of resulting changes, none of the $26.3 million in state general fund savings (or from another view, cuts to the IHSS budget)  included in the revised budget will be achievable in the 2004-05 budget year that begins July 1.
Some Key Comments Made At Assembly Budget Subcommittee Hearing 5/17:
Department of Social Services: "Protection and Advocacy addressed their concerns with regards to the waiver approach to the domestic services proposal. And at this time, since Health Services indicated did indicate to use that there were comparability issues, the Administration is taking under consideration approaching a waiver-type approach to this, but we don't have any details right now on this..."
Department of Finance: For clarification, the [proposed 2004-2005] budget restored the savings that were originally associated with the domestic services proposals. For the waiver to be pursued, drafted and approved, that we wouldn't realize savings [in the 2004-2005 budget year]".
Actions Taken By the Senate Budget Subcommittee On This Specific Issue:  Subcommittee has not taken this issue up yet - may take it up on May 20.
Next Steps:
* The Assembly budget subcommittee may take this issue up again later this week - possibly Wednesday (May 19) if the Administration comes up with a different proposal and revised legislative language.  Until then, because the Assembly Budget Subcommittee rejected the proposed legislative language - unless the Senate Budget subcommittee agrees exactly with this action, the issue will go to the joint budget conference committee that is expected to begin meeting the week of May 24th to resolve differences and hammer out a budget.
* A 2/3rds vote by both houses will needed to give final approval (though as part of a larger budget related bill) sometime in early  June.

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As  of  5/17/04, many many, thanks again,  to the friends, people with disabilities and their families, community organizations and others who have sent in generous and needed contributions and donations.  As mentioned before, individual thank you letters are now being sent out (due to workload have been delayed!). However, until grant funding is finalized, contributions from people and organizations is still very urgently needed to keep the advocacy efforts going for the next several months. Please make check or money order  to:  California Disability Community Action Network  (or abbreviate CDCAN). CDCAN is not yet a non-profit organization (work on this will have this happen in within the next few months) Send contributions to: California Disability Community Action Network,  1225 8th Street Suite #480, Sacramento, CA  95814.  A method to contribute by credit card (through Paypal) is NOW set up on our website, at www.cdcan.org.
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