What California’s Budget Proposals Could Mean for the Disability Community

Medi-Cal and IHSS

On June 24, Governor Gavin Newsom and state lawmakers announced a budget deal that brings some relief for families relying on Medi-Cal and IHSS — California is dipping into its "rainy day" savings to cover the rising costs of Medi-Cal. Here’s what you need to know:

• The current IHSS overtime cap will stay at 66 and 70 hours/week.
• IHSS will continue to be available regardless of immigration status.
• Medi-Cal health insurance will still be frozen for new applicants with unsatisfactory immigration status.
• Existing Medi-Cal recipients will receive a $30/month copay instead of $100 and a 3-month grace period for renewal.
• The asset limit for individuals on Medi-Cal will be restored but at the higher figure of $130,000 — so this will affect only a few adults. Most people can avoid this by saving in an ABLE account.

However, the planned cuts to the Regional Center Self-Determination Program remain. The state is looking to save $22.5 million dollars from SDP (which currently has an overall budget of $480 million) over the next year starting July 1, 2025, and increasing to a $45 million cut in subsequent years.

AB143

As of July 3, Governor Gavin Newsom has signed AB 143, a budget trailer bill that set out tightened regulations for Regional Centers with the goal of saving $30 million this year and $250 million next year. Most of the cuts will come in the reduction of quality assurance incentives that will now be tied to certain quality measures. The Self-Determination Program (SDP) is particularly impacted by these plans.

1. The budget will be based on authorized services, rather than past spending. Prior to AB 143, individual budgets often mirrored historical "purchase of service" (POS) expenditures. Now, budgets must be structured around the services authorized in the Individual Program Plan (IPP), offering clearer alignment with participant goals.

2. SDP participants must have their spending plans certified by Regional Centers for completeness, reasonableness, and alignment with IPP objectives before disbursements, adding an extra layer of oversight (and delay).

3. AB 143 also instructs the Department of Developmental Services (DDS) to develop and implement standard procedures and criteria for SDP, incorporating community input, to ensure consistency across all Regional Centers by March 1, 2027.

Over the Regional Center systems as a whole, AB 143 mandates that providers meet electronic visit verification, HCBS rules, and fiscal audit standards starting fiscal year 2026–27 to qualify for quality incentive payments.

SDP started in 2013, but it is only since 2021 that any Regional Center participant could switch to this option. At the time that this program was developed, advocates argued that it would be cost-neutral. However, in practice SDP participants are spending twice as much as those on traditional services.

In reality, the requirement to identify unmet need is probably raising costs since many families going into SDP have few services to begin with, due to the underfunding of the Regional Center system over the period 2008-2020. Removing this requirement may have the consequence that many families with young children in the regional center system will have too few authorized services to make moving to Self-Determination viable, even though it would be easy to document their unmet need.

In a recent webinar, Disabilities Voices United Executive Director Judy Mark discussed that advocates are fighting to maintain the ability to set provider rates as essential to SDP, while reminding families to set reasonable rates.

SDP participants should expect possible pushback from Regional Centers when their budgets and spending plans are renewed. Keep in mind:

• Link items in your budget to IPP goals.
• Try to use as few service codes as possible to make it easier to adjust your spending plan.
• Avoid paying family members significantly higher rates.

If you are planning to switch to SDP, it might be advisable to make the transition sooner rather than later when new regulations are in force.

U.S. Department of Education Withholds School Funding for FY25

On July 1, a new funding crisis appeared as the federal government withheld $6.8 billion in education funding that has been authorized by Congress for disbursement to all the state governments. California’s public education system is without $928 million that should have been delivered on July 1. Without these funds, state Departments of Education will not be able to disburse expected funding to our public schools. So far, this does not affect Title I or special education funds, but any reduction in revenue is likely to have a huge impact on our schools, especially when occurring without any time to plan ahead.

HR 1

Congress has passed the HR 1, which contains substantial cuts to Medicaid. See more about the cuts here.

How it affects California families

Many state and county programs — such as Medi-Cal, Regional Center, and IHSS in California — are partially funded by Medicaid reimbursement, some as much as 70%. Most Regional Center funding is reimbursed at least to 50%. If this support is cut, it is unlikely that California will be able to sustain current levels of funding for Regional Center and IHSS.

For California, the Governor’s office estimates that the bill will eliminate coverage for up to 3.4 million Californians, largely among those covered under the Affordable Care Act (ACA) expansion and will cut at least $22 billion in federal Medicaid funding through burdensome requirements on low-income Californians.

California’s commitment to cover residents without satisfactory immigration status for non-emergency benefits will cost at least $4 billion each year in federal reimbursements. California will also lose billions of dollars in funding through the restrictions on provider taxes. The bill could also shut down nonprofit providers like Planned Parenthood by cutting them off from Medicaid funding — unless California can find alternative state funding.

California Governor Newsom said on May 14, 2025, that the penalty for covering Medi-Cal for undocumented residents will cost California $5 billion, and he proposes that the state reverse their course on this. Although this will help California meet the costs for other residents, there are still major cuts coming from the limits on provider taxes that have to be made up.

Status

The president signed the final bill on July 4, 2025.