COVID-19 has led us to study a part of the state budget we’ve never before reviewed in detail: the Department of Public Health (DPH), which has the responsibility of protecting the public from communicable diseases. DPH gets funding from both the federal government and the state government, in the latter case via both Special Funds and the General Fund. Our focus here is on state funding.
State funding for DPH has recovered from the Great Recession, though it’s flat on a per capita basis because of population growth:
But compare that flatness to the rise in state revenues, which over the same period grew 49 percent (38 percent per capita):
Or to state spending on Medi-Cal, Retirement and CDCR (Corrections), which together consume 35x more of the state budget than DPH and grew as fast or faster than revenues, taking budget share away from other programs:
The pattern is the same when measured from the nadir of recessionary state revenues in 2010–11:
As the charts indicate, even during a period of torrid revenue growth, important programs were being crowded out by even-more-torrid growth in spending on Medi-Cal, Retirement and CDCR. Absent reforms, a decline in state revenues would turbocharge that crowd-out.
To address the pandemic, the legislature and governor have already approved $1.1 billion of emergency General Fund spending, more than 3x the amount the General Fund was expected to spend on DPH this fiscal year. More may be needed and state revenues are likely to be adversely impacted at the very same time as spending on Medi-Cal, Retirement and CDCR keeps growing.
For now, all attention must be directed to flattening the infection curve while protecting jobs and wages, but even before COVID-19, the state needed to get more value (ie, health!) from Medi-Cal, means-test post-retirement subsidies, suspend automatic pension benefit increases and reduce un-accrued pension benefits for years not yet worked, and rein in CDCR spending. More than ever, state revenues should not be hived off to special interests at the expense of discretionary programs, residents and taxpayers.
Govern For California supports lawmakers who legislate in the general interest.