|
Prepared by Precision Advocacy
Senate Budget & Fiscal Review Overview of the Governor’s 2026-27 Budget Proposal
The Senate Budget and Fiscal Review Committee convened to review the governor’s 2026–27 proposed budget last Wednesday. As budget subcommittees are scheduled to begin meeting soon, we will provide updates on all related discussions and developments. This is the optimal time for the County to communicate its priorities, enabling our legislative delegation to effectively advocate on the County's behalf.
During the hearing, the Department of Finance (DOF) emphasized that while the budget is balanced in the budget year, the state faces significant structural deficits, over $20 billion annually beginning in 2027-28 and intends to work with the legislature on longer-term solutions, potentially through proposals in the May Revision. Three members of Orange County’s legislative delegation sit on the Senate Budget and Fiscal Review Committee, Senators Catherine Blakespear, Steven Choi, and Kelly Seyarto.
Health and Human Services Cost Pressures on Counties. A central theme of the hearing was the growing fiscal and operational pressure on county-administered health and human services programs. DOF projected approximately $1.4 billion in new General Fund costs from H.R. 1 changes, with about $1.1 billion falling on Medi-Cal due to reduced federal matching funds and hospital quality assurance fee impacts, and roughly $300 million in CalFresh net costs, largely from the state share of administration increasing from 25% to 50%. These changes were acknowledged as growing in the out-years, raising concerns about counties’ ability to absorb additional eligibility processing, redeterminations, and service delivery pressures without corresponding administrative relief or funding. Lawmakers repeatedly emphasized that counties would face increased workload and service disruption risk as federal cost shifts, eligibility churn, and potential benefit reductions flow through locally administered systems.
Local Planning Uncertainty: Homelessness, Education, and Fiscal Volatility. During the hearing, local governments raised concerns about planning uncertainty created by delayed budget decisions and provisional funding assumptions. Legislators warned that cities and counties cannot reliably plan homelessness investments, staffing, or contracts when funding levels may not be confirmed until late in the budget cycle, limiting the ability of continuums of care and service providers to scale programs effectively. More broadly, the Legislative Analyst cautioned that revenue volatility and recurring structural deficits heighten the risk of future mid-year adjustments that could cascade to counties through program realignments, delayed payments, or shifted responsibilities, underscoring the need for earlier structural solutions to protect local service stability.
Senator Blakespear focused on the need for fiscal transparency and realistic problem definition, urging that the legislature should not minimize or obscure the true scale of the structural deficit. She pressed the administration and Legislative Analyst’s Office (LAO) to clarify what concrete methodologies and tradeoffs would be used to resolve ongoing deficits, including identifying specific areas that may need to be scaled back or reprioritized rather than deferring difficult choices. Her comments reflected concern that continued avoidance of explicit prioritization risks undermining credibility with the public and delaying necessary corrective action. Blakespear emphasized the importance of candidly acknowledging the magnitude of the problem and engaging earlier in substantive policy discussions rather than postponing decisions until later budget stages.
Senator Choi questioned the definition of a “balanced” budget when the state simultaneously projects $20+ billion structural deficits in the out years, arguing that reliance on reserves and optimistic assumptions masks underlying imbalance. He highlighted the paradox of California being the world’s fourth-largest economy while repeatedly facing major deficits and failing to resolve long-standing liabilities. Choi pointed specifically to the state’s failure to retire its federal unemployment insurance loan when large surpluses were available in prior years, noting that the state has since paid over a billion dollars in interest that could have been avoided. He framed this as an example of missed opportunities for long-term fiscal discipline and urged more proactive debt management and structural reform rather than continued short-term budgeting.
Senator Seyarto also raised concerns about fiscal discipline, emphasizing that expenditures have grown faster than revenues in recent years and warning that this pattern will worsen structural imbalance if not corrected. He criticized the use of bond funds to support what appear to be recurring operational expenses, particularly in wildfire-related programs, arguing that bonds should be reserved for durable infrastructure rather than ongoing costs that will eventually revert to the General Fund. Seyarto also highlighted the magnitude of Medi-Cal spending relative to other governments globally and questioned whether education funding increases are translating into tangible classroom resources, citing teacher reports of purchasing basic supplies out of pocket. He further pressed for a multi-year plan to pay down the unemployment insurance debt principal rather than merely servicing interest, warning that minimum-payment approaches perpetuate long-term fiscal strain on businesses and the state.
Implementing California’s Child Welfare Prevention Services Program
The Legislative Analyst’s Office (LAO) released a report on California’s implementation of the Family First Prevention Services (FFPS) program, discussing the state’s and counties’ ongoing implementation of prevention services since 2021-22.
FFPS places counties at the center of design, financing, and delivery of prevention services. Because child welfare is state-supervised but county-administered, counties are responsible for translating the state framework into locally tailored prevention systems. To participate, counties were required to develop Comprehensive Prevention Plans (CPPs) in order to access one-time state block grant funding. Ultimately, 51 counties (including Orange) and two Title IV-E tribes opted in. Through the CPP process, counties conducted needs and capacity assessments, mapped existing providers, identified service gaps, selected evidence-based practices, and defined target populations. Most counties reported that this planning exercise strengthened cross-sector coordination with behavioral health, education, tribal partners, and community providers, although some noted persistent communication silos and difficulty engaging certain stakeholders.
Counties’ assessments consistently identified both strengths and structural gaps in local service systems. About 20 counties cited strong leadership and collaborative infrastructure, while larger and urban counties often benefit from more robust networks of community-based organizations capable of delivering prevention services. At the same time, nearly all counties reported shortages in mental health and substance use disorder services, limited availability of domestic violence services, and gaps in wraparound supports such as transportation, childcare, and housing stabilization. Rural and geographically large counties emphasized logistical barriers to reaching families and persistent provider shortages, particularly for organizations capable of delivering evidence-based practices to required fidelity standards. Counties also highlighted that many high-risk populations, including families affected by poverty, language barriers, and cultural isolation, are not well served by the existing menu of federally approved interventions.
In selecting prevention services, counties gravitated toward flexible and lower-cost models. Nearly all counties selected Motivational Interviewing because it can be embedded in existing workforce practice and does not require heavy reliance on external providers. More than half selected Parents as Teachers, while smaller shares selected therapy-based models such as Functional Family Therapy, Healthy Families America, Nurse-Family Partnership, or Parent-Child Interaction Therapy. Many counties also plan to continue operating locally developed or culturally specific programs that are not eligible for federal reimbursement, including cultural broker models and tribal-led prevention approaches. This reflects a recurring tension between federal eligibility rules, and the services counties believe are most effective for their communities.
Several counties are exploring a new “community pathway” approach that allows families to access prevention services through trusted community organizations rather than through the formal child welfare hotline. This model is intended to reduce trauma and stigma while expanding early access to supports. Counties generally view the approach as promising but report significant uncertainty around operational requirements, liability, staffing capacity, and data reporting expectations. Many counties are awaiting more detailed state guidance before fully scaling this pathway.
The most significant issues for counties relate to financing and sustainability. Counties must provide a dollar-for-dollar local match to draw down federal Title IV-E funding, yet they cannot begin claiming reimbursement for prevention services until the statewide CWS-CARES data system launches, currently expected in October 2026. In the interim, counties are relying primarily on one-time state block grant funds and local realignment dollars to build programs. Some counties have already exhausted much of their block grant funding, while others are holding funds in reserve to use later as the required federal match. Many counties expressed concern that existing realignment allocations are already stretched to support baseline child welfare obligations, raising questions about long-term fiscal sustainability once temporary state funding expires.
Counties also face operational complexity in coordinating funding across systems. Because Title IV-E is the payer of last resort, counties must first maximize Medi-Cal reimbursement where services overlap. Counties report ongoing confusion about billing rules, documentation requirements, and how to braid Medi-Cal, federal child welfare funds, and local resources. Smaller providers in particular may lack the administrative capacity to manage Medi-Cal billing, potentially limiting service availability in rural and under-resourced regions.
Implementation costs pose another barrier. Many evidence-based practices require expensive training, certification, and fidelity monitoring by national program developers, sometimes costing hundreds of thousands of dollars per model. Several counties have already scaled back planned implementation due to these costs. Workforce shortages further complicate implementation, as staff turnover undermines the return on training investments and slows program build-out. Counties report that recruiting and retaining qualified social workers and clinicians remains a persistent constraint.
Overall, the report concludes that counties broadly support the shift toward prevention and view the program as a long-term opportunity to improve outcomes and reduce foster care entries. However, near-term success depends heavily on resolving funding timing issues, improving clarity around Medi-Cal coordination, reducing the cost burden of implementing evidence-based practices, and providing more tailored technical assistance to counties with limited administrative capacity. Without additional alignment between state policy, federal rules, and county fiscal realities, many counties may struggle to scale prevention services sustainably, even as demand for these services continues to grow.
Grant Opportunities
Below is a list of the latest grant opportunities released by the state. All opportunities for local jurisdictions may be found here.
Application deadline: 4/16/26 15:00
Title: GFisheries Restoration Grant Program (2026)
State Agency / Department: Department of Fish and Wildlife
Match Funding? No
Estimated Total Funding: $16,000,000
Funding Method: Advances & Reimbursement(s)
Application deadline: 4/7/26 00:00
Title: Farm and Ranch Solid Waste Clean Up and Abatement Grant Program FR90
State Agency / Department: Department of Resources Recycling and Recovery
Match Funding? No
Estimated Total Funding: $200K maximum per applicant each FY $50K maximum per cleanup site
Funding Method: Reimbursement(s)
Application deadline: 9/20/26 23:59
Title: Vertebrate Pest Control Research Program
State Agency / Department: Department of Resources Recycling and Recovery
Match Funding? No
Estimated Total Funding: $200,000
Funding Method: Reimbursement(s)
Application deadline: 9/20/26 23:59
Title: Vertebrate Pest Control Research Program
State Agency / Department: Department of Resources Recycling and Recovery
Match Funding? No
Estimated Total Funding: $200,000
Funding Method: Reimbursement(s)
Governor’s Press Releases
Below is a list of the governor’s press releases beginning January 22.
January 28: Hot take: The National Rifle Association agrees with Governor Newsom
January 27: California tops $1.2 billion in illegal cannabis seizures, up 18x since 2022
January 27: Governor Newsom and Attorney General Bonta to law enforcement: Local and state police have authority to investigate crimes committed by federal agents
January 27: In the four years since Governor Newsom’s new hospice provider ban took effect, California has revoked more than 280 licenses
January 27: Weak Trump retreats from Paris Agreement as California leads climate action on the global stage
January 26: Governor Newsom proclaims National Mentoring Month
January 26: Governor Newsom highlights Anduril Industries’ $1 billion expansion in Southern California
January 24: Know your rights, California
January 23: West coast governors united against Trump’s disastrous offshore drilling plan
January 23: California disrupts international wildlife poaching network
January 23: Governor Newsom proclaims Ed Roberts Day 2026
January 23: Governor Newsom meets with World Health Organization Director-General, announces California becomes first state to join WHO-coordinated international network
|
