2015-16 State Budget May Revise

The governor released his “May Revise” of the state budget proposal for 2015-16 on May 14, 2015.  The May Revise is an opportunity for the Administration to revise the January budget proposal based on receipt of state revenues.
As reported in the press, the state’s economy has strengthened and revenues have increased.  Despite these increased revenues, the budget remains balanced and the prospect of deficits in succeeding years remains resulting in a conservative budget. Most of these increased funds are used as follows:

  • Proposition 98 increases General Fund spending by $5.5 billion for K‑12 schools and community colleges.
  • Proposition 2 requires that an additional $633 million be saved in the Rainy Day Fund and an additional $633 million be used to pay down debts and liabilities.

The May Revision commits new spending in only three additional areas:

  • Creating the first‑ever California Earned Income Tax Credit to assist the state’s lowest‑income workers.
  • Holding tuition flat at the state’s universities for California undergraduate students for two more years by providing increased ongoing funding to California State University and temporary assistance to the University of California to pay down its unfunded pension liability.
  • Providing health care and other safety net services to currently undocumented immigrants who gain Permanent Residence Under Color of Law status under the President’s executive actions.

Of interest to hospitals (other than the above item that allows for Medi-Cal services provided to specified undocumented immigrants) is the fact that this May Revise does not contain any changes to the Medi-Cal program.  Unfortunately, this also means that the May Revise does not allow for revenues to eliminate the AB 97 “clawback,” the retroactive recoupment of rates for DP/NFs for the period June 1, 2011 through September 1 or October 1, 2013.  Separate from the budget activities are the continuing legislative efforts to eliminate this retroactive recoupment.  
The Legislature will now debate the budget with adoption expected by June 15.  We will keep you apprised of any budget activity relating to hospitals and Medi-Cal as well as the legislative efforts mentioned above.
Please let me know if you have any questions.