Issues to Watch in 2015: Higher Education

December 30, 2014

As University of California (UC) students and their families enjoyed the holidays together, many of them were likely fretting over the prospect that their tuition may increase for the upcoming 2015-16 school year. Under a plan adopted by the UC Board of Regents last month, UC tuition for California residents could increase by up to 5 percent annually for the next five years. That means that tuition could rise to nearly $13,500 by 2019-20, after adjusting for projected inflation, a significant increase from the current level of $12,192 (see chart).



UC’s new plan runs counter to a separate plan set forth by the Governor in 2013 to give the UC and the California State University (CSU) annual state funding increases for four consecutive years in exchange for freezing tuition for California residents through 2016-17 at 2011-12 levels. This year’s budget agreement, signed in June, continued that plan and included modest funding increases of about $140 million each for CSU and UC in 2014-15. In early 2014, the Governor proposed 4 percent state funding increases for both CSU and UC in 2015-16 and 2016-17, the third and fourth years in the plan. However, UC President Janet Napolitano insists that it is not enough and that tuition will have to go up unless the state provides additional funds. CSU has also signaled it needs additional state funding by recently reducing enrollment targets for 2015-16 and raising the possibility of reducing freshman admissions this coming fall unless additional funds are provided.

For both CSU and UC, two sources of revenue — state funding and tuition — make up the vast majority of their core funding, which are dollars that support activities related to their primary education functions. As detailed in our report earlier this year, From State to Student, state disinvestment in higher education in recent decades has resulted in steep tuition increases at both institutions and has shifted a larger share of higher education costs from the state to students and families. Since 1990-91, tuition and fees have more than tripled at CSU and more than quadrupled at UC, after adjusting for inflation. Direct General Fund spending on a per student basis at both CSU and UC has generally been on the decline during this period and, in recent years, has been at or near the lowest point in more than three decades, after adjusting for inflation.

When state funding for CSU and UC gets cut or does not keep up with increasing enrollment, as California’s population grows and its economy changes, these institutions have very few options available to them. One is to raise tuition rates. Another is to reduce enrollment growth, as UC and CSU have each proposed to do in 2015-16, unless they receive additional state funding.

This is an issue that we, and surely many students and families, will be watching closely as we approach the release of the Governor’s proposed 2015-16 budget in January. Stay tuned for more CBP analysis on this topic.

— Phaelen Parker

How Did Child Care and Preschool Really Fare in the State Budget?

July 15, 2014

The 2014-15 budget agreement (read our initial analysis here) made changes to California’s subsidized child care and state preschool program that one legislator described as “the largest investment in those two areas in a decade.” This reinvestment is a positive step forward in restoring funding for the state’s child care and development system, but it is only the first step of many necessary to fully reinvest in these critical programs. A closer look at the numbers illustrates how much further California still has to go.

The budget agreement restores funding for 13,000 child care and preschool slots in 2014-15. Of these, 7,500 full-day, full-year preschool slots, 500 Alternative Payment Program slots, and 1,000 General Child Care slots were added on July 1, and an additional 4,000 full-day, full-year preschool slots will be added on June 15, 2015. However, even with the new slots the total number is still more than 20 percent below the number funded in 2007-08, and total state funding is still 31 percent lower than in 2007-08, after adjusting for inflation. The spending plan also does not restore funding for the Centralized Eligibility List (CEL), thus making it impossible to determine just how many children are waiting for a child care or preschool slot. Before funding for the CEL was cut in 2011, close to 200,000 children were waiting for a slot, and this number has likely grown since then.

The 2014-15 spending plan updates provider payment rates, but in many cases these rates still lag behind the rates paid in 2007-08. For example, providers that contract directly with the state will see a 5 percent increase in their payment rates, but will still be reimbursed at a value that is nearly 7 percent lower than the 2007-08 rate, after adjusting for inflation. Likewise, payments for providers that are reimbursed with vouchers will now be based on a 2009 market rate survey — an update from the 2005 survey used previously — but only after the 2009 regional market rates are reduced by 13 percent in making them the basis for payment. As a result, many providers won’t see an increase at all. In fact, in 46 out of 58 counties, providers categorized as licensed child care homes will not see an increase in their payment rate for infant care.

Further, providers that contract with the state have to meet more stringent licensing requirements that include a developmental component. This is in addition to meeting the health and safety standards that voucher-based providers are held to. Due to the more stringent licensing requirements, contract-based providers should be paid at a greater rate for the higher-quality standards that they are required to meet. However, in 17 counties — representing a third of all counties — voucher-based centers caring for preschool-age children will be paid at a rate that actually exceeds that for contracted providers, even though the quality standards may not be as high. In addition, in eight counties voucher-based licensed child care centers will be paid at a rate for infant care that exceeds contract-based providers.

Lastly, state policymakers did not update the income eligibility limit, which is the highest income at which a family qualifies for subsidized child care and preschool. Yet, as we noted in a recent report, state policymakers have not adjusted the income eligibility limit in years, and it is currently set at just 70 percent of the 2005 state median income (SMI). This means that families lose eligibility at a lower income than they would if the income limit were updated to reflect the most recent SMI for which data are available. In fact, the income limit would increase by more than 10 percent if based on the most recent SMI — a difference of over $400 a month for a family of three.

The 2014-15 budget agreement represents a missed opportunity to more significantly invest in one of California’s most vulnerable populations: children living in poverty. Access to subsidized child care and high-quality preschool programs helps to mitigate the effects of poverty and helps families achieve economic security. This boosts local economies and reduces future state costs for remedial education, corrections, and safety net programs, to name a few. Increasing support for California’s child care and development system doesn’t just boost support for low- income families, it is an effective way to invest in California’s economic future as well.

— Kristin Schumacher


Policymakers Take Steps to Improve Food Security, but Opportunities to Address Hunger Remain

July 14, 2014

State policymakers have recently taken several important steps to expand access to CalFresh food assistance for California families, but opportunities to address high levels of poverty and hunger in the Golden State remain.

More than 15 percent of California households struggle to afford enough food, even several years after the Great Recession officially ended. And it is especially troubling that more than one-quarter of California children are food insecure. Many administrative decisions that can expand CalFresh eligibility, increase participation, or simplify enrollment are made at the state level, presenting policymakers with the opportunity to make investments and other policy choices that yield broadly shared benefits to California communities. CalFresh benefits, which are 100 percent federally funded, are spent locally at grocery stores and farmers markets. Researchers have found that $1 spent on benefits generates about $1.80 in economic activity during difficult economic times.

Given the significant unmet need for — and the broad benefits of — CalFresh food assistance, it is fortunate (as we blogged about earlier) that policymakers took important steps during the recent budget deliberations to expand eligibility.

For example, the 2014-15 state budget creates a new, state-funded energy assistance program that avoids harsh CalFresh benefit cuts that otherwise would have resulted from the new federal Farm Bill. The Farm Bill imposed restrictions on state “Heat and Eat” policies, which increase benefits to households who also receive federal energy assistance. More than 300,000 California households would have lost an average of $62 per month, or about one-third of the average household benefit amount. This $10 million state investment will keep $300 million in federal funds flowing to California to be spent on families’ most basic needs.

The 2014-15 budget agreement also helps more low-income families qualify for CalFresh by increasing the gross income limit to 200 percent of the federal poverty line. This change takes advantage of the federal option known as “broad-based categorical eligibility.” Households will still need a net income — their gross income minus expenses like housing and child care — at or below 100 percent of the poverty line, or $19,790 for a family of three, in order to receive CalFresh food assistance. Taking advantage of broad-based categorical eligibility removes a significant barrier for families who are working, but spend large shares of their income on basic needs, leaving too few dollars in their budgets to provide an adequate diet.

Further, the budget agreement repeals the lifetime ban from CalFresh — as well as from CalWORKs — for Californians with certain drug felony convictions. California now joins 21 other states in opting out of the federal policy creating this lifetime ban, inaugurated as part of welfare reform in the mid-1990s. The state Senate estimates this change will benefit 20,000 Californians directly.

Other Policy Options Left on the Table

While the state has made progress in maintaining or expanding access to critical food assistance, several policy options — which would especially help children and students — remain on the table.

California is tied for dead last among states for overall CalFresh participation, and has the lowest participation rate among eligible working families. Streamlining enrollment processes would lower barriers to participation and ease potential sources of confusion during difficult times for families. These families would also benefit from investments in meals their children are served in the child care and development system.

Some potential policy options include:

o   Reinvesting in nutrition assistance for early childhood education programs. The federal government reimburses child-care providers for nutritious meals and snacks served to low-income children. Recognizing higher food costs in the state, California has contributed state funding to this reimbursement. Yet over the last three years, nearly all of the state’s share has been cut. During the recent budget deliberations, the Assembly proposed a $10 million state reinvestment in early childhood nutrition, modestly increasing reimbursements. The 2014-15 budget agreement did not include this restoration, which would have provided an added incentive for child-care providers to serve nutritious meals.

o   Streamlining eligibility for community college students. Federal law limits CalFresh eligibility for college students, who are generally required to work at least 20 hours per week or be enrolled in a work training program to qualify. This presents a barrier for nontraditional students who do not rely on their parents for support. Assembly Bill 1930 would allow more community college students to qualify for CalFresh by considering participation in EOPS — Extended Opportunities Programs and Services — as work training. This policy change could help more than 70,000 low-income students afford sufficient food and thus be better able to concentrate on their studies. The bill will be heard in the Senate Appropriations Committee in August.

o   Aligning Medi-Cal and CalFresh eligibility. State policymakers have already begun to more closely align programs for health coverage and food assistance, both in recognition of the close relationship between nutrition and health and in an effort to increase efficiency. For example, more than 90 percent of individuals eligible for CalFresh are also eligible for Medi-Cal. Senate Bill 1002 would allow households to renew their eligibility for Medi-Cal and CalFresh at the same time and would help families to more easily maintain benefits and reduce needless paperwork. SB 1002 will be heard in the Senate Appropriations Committee in August.

Food security is a key component of family well-being. CalFresh food assistance provides broad benefits to low-income families and their children and to local communities. State policymakers took several vital steps to expand eligibility to vulnerable populations in the recent budget deliberations. There is more work to be done to help families make ends meet in the aftermath of the Great Recession.

— Miranda Everitt

Budget Agreement Includes Some Advancements for Low-Income Families, but Greater Investments Are Needed

June 30, 2014

The 2014-15 budget agreement (read our initial analysis here) includes a number of investments and policy changes that will help alleviate economic hardship among California’s lowest-income residents, who suffered disproportionately during the recession and who have continued to be left behind in the economic recovery. However, given the magnitude and breadth of the cuts made to California’s core public services and systems — cuts which low-income families and children bore the brunt of even as the state’s poverty rate reached nearly 25 percent — much bolder action is needed to set California on a path toward more broadly shared prosperity. Here’s a quick assessment of how well the budget package addresses the needs of low-income Californians at a time when poverty and long-term unemployment remain high.

The budget agreement makes some advancements for low-income Californians. For example, it:

  • Increases the maximum grant for CalWORKs, which provides modest cash assistance and job-related services to low-income families with children, by 5 percent effective April 1, 2015. This increase, together with the 5 percent increase that took effect March 1, will restore most of the grant cuts made since 2008-09 and will help very-low-income parents with children make ends meet as they search for work or build skills to broaden their employment options.
  • Dedicates funds to help families participating in CalWORKs to obtain safe, affordable, and stable housing. This assistance is extremely important given that the maximum monthly CalWORKs grant for a family of three doesn’t even cover the average cost of a studio apartment priced at “fair market rent” in California.
  • Prevents a substantial reduction in CalFresh food assistance benefits that was slated to occur under recent changes in federal law. As we pointed out in a blog post earlier this year, more than 300,000 households would have lost an average of $62 per month in food assistance absent state action — a cut equal to nearly one-third of the average CalFresh household’s benefits.
  • Expands eligibility for CalFresh by taking advantage of a federal option called “broad-based categorical eligibility.” In a prior blog post, we detailed how this policy change would remove a significant barrier to food assistance access primarily for low-income working families who spend much of their incomes on necessities like child care and housing and thus have little left over for food.
  • Lifts the lifetime ban that prevents parents with certain drug felony convictions from receiving CalFresh food assistance and CalWORKs income support, job-related services, and child care. This change could benefit thousands of low-income children whose parents are currently prohibited from participating in these programs.
  • Provides funding to restore 13,000 child care and preschool “slots” for California children and includes provisions that would make these programs more affordable for some families. Watch for an upcoming blog post for more detail on these policy changes.

However, even with these advancements, the budget agreement places greater emphasis on paying down debt and saving for a rainy day than it does on reinvesting in our communities. Although state revenues are projected to increase more than previously anticipated, policymakers left in place deep cuts to many vital programs and services as well as policy changes that restrict economic opportunities for low-income Californians. For example, the budget package:

  • Does not fully address low-income families’ critical need for affordable, high-quality child care and preschool. The budget agreement restores only a fraction of the 110,000 child care and preschool slots eliminated since 2007-08. With potentially close to 200,000 children on waiting lists for slots, this level of investment doesn’t come close to meeting existing demand.
  • Does not reinstate the statutory cost-of-living adjustment (COLA) for CalWORKs grants that was eliminated in 2010-11. Without an annual COLA, CalWORKs grants have been gradually losing purchasing power, making it harder for families to afford basic necessities. Moreover, the grant increase included in the new budget agreement doesn’t go far enough to help low-income families with children escape poverty. Even after the increase takes effect, the maximum monthly grant for a family of three will be about $700 — equal to just 43 percent of the poverty line, well below the deep-poverty cut-off of half the poverty line.
  • Does not restore grant cuts or reinstate the annual COLA for the SSI/SSP Program, which provides modest cash assistance to 1.3 million low-income seniors and people with disabilities. Policymakers eliminated the COLA in 2010-11 after suspending it several times in prior years and reducing the state’s portion of the grant to the minimum level allowed under federal law. The amount of assistance individuals lose each month due these cuts is equivalent to more than three weeks of groceries – a significant loss, particularly given that SSI/SSP participants are not eligible for CalFresh.
  • Does not restore a 10 percent cut to payments for certain Medi-Cal providers that began to be implemented late last year. Maintaining this cut not only reduces the amount of federal Medicaid funds that flow into the state, but also could discourage some health care providers from participating in Medi-Cal, thus potentially impeding access to care for millions of low-income Californians as enrollment rises.
  • Does not restore a reduction in the total hours of care that In-Home Supportive Services (IHSS) consumers can receive. IHSS helps more than 450,000 low-income seniors and people with disabilities remain safely in their own homes, preventing the need for more costly out-of-home care. IHSS consumers were hit with an 8 percent across-the-board cut in total hours effective July 2013, and this reduction is scheduled to scale back to 7 percent effective July 1, 2014. The budget agreement leaves this cut in place.

With the highest poverty rate in the nation, California has much work to do to expand economic opportunity. This work is critical: our state’s future prosperity will be largely determined by the extent to which we invest in families, children, and communities today. Fortunately, with state revenues projected to continue their rebound, California should be well positioned to make those investments. We’ll look to policymakers to take advantage of this opportunity and present bolder strategies for leading our state toward long-term economic growth and more broadly shared prosperity. As debates on poverty and economic opportunity unfold in coming weeks and months, watch for additional CBP commentary and analysis on the key policy choices facing our state and what they mean for low-income families.

— Alissa Anderson

Statement from Chris Hoene on the Newly Announced Budget Agreement: “Only a Very Small Step Toward Much-Needed Reinvestment”

June 13, 2014

The California Budget Project (CBP), a nonpartisan public policy research group, released the following statement from Executive Director Chris Hoene on the budget deal announced by Governor Jerry Brown and legislative leaders today:

“The budget agreement announced by the Governor and legislative leaders today moves our state only a very small step toward much-needed reinvestment in California’s families and communities.

“The increased funding for state preschool is important and will help expand early learning opportunities for low-income children and mitigate the harmful effects of poverty. But beyond this, the budget deal includes no significant new support for many core public services and systems that were hit hard by years of cuts, such as child care slots, higher education, and safety-net services for low-income seniors and people with disabilities. The budget deal also leaves in place deep cuts to health services for low-income Californians, such as a sharp reduction in payments for doctors and other providers who participate in Medi-Cal.

“Providing sufficient funding for key state services is always critical, but it’s especially so with poverty and long-term unemployment still so high. Given the need to help more individuals and families share in California’s economic recovery, it’s disappointing that this budget agreement fails to strike the right balance among paying down debt, saving for a rainy day, and boosting support for core public systems and services, and that it also falls short of laying out a clear vision for investing in our state’s future.”


The CBP will release additional commentary and analysis on the budget agreement in the coming days and weeks.