Budget Update: Major New Cost Savings Proposed for Regional Center System

With the defeat of the propositions in the special election on May 19, the budget deficit in California is now projected at over $24 billion.

Prior to the special election, Governor Arnold Schwarzenegger had released the May Revise on Thursday, May 14, to inform Californians about the status of the state budget and what additional cuts he would make if the propositions were defeated.

Major New Proposals
The Governor proposed an increase of an additional $234 million savings target for the developmental services system regardless of the outcome of the May 19 special election.

On top of the $100 million in General Fund savings the regional centers are already required to achieve pursuant to the early 2009 Budget Act, the total savings now required of regional centers is $334 million.

The Department of Developmental Services (DDS) has been working with a stakeholder group to develop proposed changes to regional center services to achieve the original required $100 million savings. This collaborative process will be sustained to come up with solutions to achieve the new savings target. This group is continuing to meet and is expected to complete its work in June.

It is important to note that people with developmental disabilities also receive services from a variety of publicly funded sources, such as schools, Medi-Cal (including IHSS), and SSI, which will also be severely impacted by the ongoing budget cuts. Actions proposed by the Governor include the elimination of the Healthy Families program, that provides health insurance for more than 900,000 children of low-income families, elimination of IHSS services to all but the most needy, and millions in reductions to special education.

Cash Flow
The State projects that it will be out of cash and unable to pay bills as early as July. To deal with the cash flow crisis, the State plans to borrow as much as $2 billion from local governments, further impacting services provided at the local level. The federal government has also informed the State that it will not guarantee loans to California. In order for the State to be able to borrow for short-term cash needs, a budget needs to be in place by July 1. The Conference Committee of the Legislature is meeting to consider additional spending reductions to attempt to have something in place by that deadline.

The situation remains very fluid. We will do our best to keep your informed as additional information becomes available via our Web site and e-mail bulletins. 

Post Date: June 02nd, 2009