California Budget Woes Threaten Elderly

Legislative Deadlock Leaves Healthcare in Limbo

By Josh Richman

Published July 18, 2003, issue of July 18, 2003.
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OAKLAND, Calif. — California’s ongoing budget crisis has Jewish federations and their social service agencies bracing for deep cuts that may leave some of their most vulnerable clients in dire straits.

Topping administrators’ fears are proposed cuts in their already deficient reimbursements from Medi-Cal, the state’s Medicaid healthcare program for the poor. That would force them to turn away some of the elderly whose day-to-day care depends on that funding.

“You always hear gloom and doom, but it never really comes to fruition. This year it’s real,” said Jessica Toledano, government relations director for the Jewish Community Relations Committee of the Jewish Federation of Greater Los Angeles.

“When I go over to Jewish Family Service’s adult Alzheimer’s day care… I get a huge lump in my throat,” she said. “I just can’t imagine if my grandmother was in the shoes of some of the people who are here in our care facilities… to go to a center and be told, ‘You can’t come here anymore,’ and to have to take her and all her belongings and put her in an institution. It’s a very, very bleak situation.”

Other services — after-school programs, mental health counseling, immigrant assistance and more — also face decimation as California grapples with a budget deficit of $38.2 billion, by some estimates more than all other states’ deficits combined.

Yet uncertainty reigns due to a legislative deadlock, with Democrats refusing any further cuts and Republicans refusing any tax increases. Democrats hold a majority in both houses of the Legislature, but California is one of only three states requiring a two-thirds majority on budget votes, so any final deal must win some Republican backing. That has not happened yet.

The Democratic governor, the wildly unpopular Gray Davis, has little leverage. He’s struggling to survive a strong Republican effort to recall him. There’s no telling when or how the situation will resolve itself.

Caught in the crossfire and unwilling to take sides, the organized Jewish community has avoided assigning blame for the deadlock. “We haven’t taken a position on tax increases per se one way or the other,” said Michael A. Futterman, chairman of the Jewish Public Affairs Committee, a lobbying coalition for Jewish federations around the state.

“We are a nonpartisan organization, and we would like to see both sides of the aisle come together to come up with a reasonable solution,” Futterman said. “We’re happy that the legislators we’ve spoken to understand the predicament and are sensitive to those less fortunate, and what we hope is that this sensitivity overcomes some of the partisan disagreements that are currently contributing to the stalemate.”

Cliff Berg, a lobbyist for the public affairs committee, said community officials have visited Sacramento, the state capital, regularly since last October to convince lawmakers it would be “penny-wise and pound-foolish” to slash their programs. They met with Davis in May. “The good news is that so far the Legislature has been responsive to our message,” he said. The bad news is that the budget battle is far from over and something eventually must give.

Paul Castro, executive director of the Jewish Family Service of Los Angeles, wonders what will be left when the dam finally breaks. Topping his worry list is his Multipurpose Senior Service Program, a state-funded program providing at-home alternatives to nursing homes for frail seniors. Services are provided by social workers and nurses and cost about half the price of placement in a nursing home.

Slashing such a program to save money would thus cost twice as much as cuts elsewhere, Castro said. Davis’s May budget proposal included a 15% reduction in Medi-Cal reimbursement rates, which would send scores of Castro’s seniors into nursing homes.

But fewer beds might be available there as well. If the budget includes deep Medi-Cal cuts, “we will have to look at salaries; we might have to restrict the number of Medi-Cal patients we accept,” said Suzanne Sloan, administrator of the 180-bed Reutlinger Community for Jewish Living in Danville, east of San Francisco. “We’re still recovering from the energy crisis last year, when our energy costs more than doubled — there was no increase in Medi-Cal for that. Every year we go backwards, and that’s if the reimbursement rates remain the same.”

If rates decrease significantly, she estimated, up to 400 California nursing homes could close entirely, leaving Medi-Cal patients backed up in already-strained hospitals because there’s no place else to send them. To fight it, state nursing-facility owners and operators have formed an alliance with labor unions to present a united front to Sacramento lawmakers. “To me, that says how serious this is, when you’ve got cats and dogs getting on the same side to fight for the solvency of nursing homes,” Sloan said.

It’s come to this because California, more than other states, relies on capital gains and income taxes for its revenue, making the state particularly vulnerable to recession. When the dot-com economy boomed in the 1990s, revenue surged. Republicans now blame Davis and his fellow Democrats for spending the money as fast as it came in, though Democrats note that lawmakers of both parties approved huge spending increases, particularly for education. When the dot-com crash came, tax revenue dropped precipitously. Suddenly California had no way to pay for raised expectations.

One recent crisis that did not contribute to the current deficit was the state’s 2001 energy crunch. It drove up power costs across the state, and Davis spent billions on overpriced, long-term energy contracts to stabilize power companies nearly bankrupted by soaring wholesale costs. But that money already has been returned to state coffers with revenue bonds, to be repaid by customers over the next decade.

Assemblyman Keith Richman of Northridge, a Los Angeles suburb, was the sole Republican to break ranks and join with a Democrat to pitch a budget compromise. It included both deeper spending cuts and a half-cent sales-tax hike. But both parties rejected it.

For now, a month after the Legislature passed its constitutional budget deadline, Sacramento remains “in partisan gridlock” with the debate “driven by the political extremes of both parties,” Richman said. The long wait hurts, and so will the budget that finally emerges, but he’s more fearful that lawmakers will try to evade that pain with an irresponsible budget that borrows or transfers money to cover costs this fiscal year, pushing the problem off until next year.

That would only prolong the state’s uncertainty and exacerbate the problem, he said. Social service agencies — along with cities, counties, school districts and others — would remain unable to make meaningful plans. California’s credit rating, already the lowest of any state, could be dropped by Wall Street to junk-bond status.

“It’s better to take our medicine now,” said Richman, a physician.

The elderly seem most vulnerable and are most agencies’ priority, but other programs are on the chopping block, too. Judith Turtletaub, executive director of the Jewish Family Service of Sacramento, said her agency has taken a 36% cut in local government contracts since last year as Sacramento County prepares to lose an enormous chunk of state money. Her agency is dropping mental health services for welfare families and an after-school program at a high school with a large Russian-speaking population.

They’re being proactive, too. A year ago, after deciding that “complaining about the reductions isn’t going to help us a whole lot,” Turtletaub said, her agency began exploring steps to “reduce costs and diversify our revenue stream.”

Last winter they moved into a cheaper office, saving about $16,000 per year on their $600,000 annual budget. In the spring, they opened a thrift shop, which is expected to break even later this year. Last October they published their first community directory with paid advertisements.

“It is a method of appealing for greater funds,” Turtletaub said. “But times are tough for everyone.” A local Catholic parish is considering donating a month’s tithing to revive her agency’s decimated after-school program. Corporations mostly haven’t been willing or able to help out, and competition for even the smallest foundation grants has become cutthroat.

Brian Goldberg, executive director of the Jewish Federation of Greater San Jose, said his outfit — located in Silicon Valley, ground zero of the high-tech economic collapse — is “refocusing our energies on creating an endowment to help us through lean times.” But that’s long term. For now, “we’re going out there and knocking on doors and asking our donors to respond to this crisis” despite high unemployment, Goldberg said.

Some communities are rising to the challenge. The Jewish Federation of Greater Long Beach and West Orange County projects its 2003 annual campaign to finish $80,000 to $85,000 ahead of 2002, “which in this economy is tremendous,” said executive director Michael Rassler. And a June fundraiser netted more than $550,000 in support of his federation’s new community campus.

But some federations are tapped out. In the Bay Area, the Jewish Family and Children’s Services of San Francisco, the Peninsula, Marin and Sonoma Counties — with more than 40 programs serving more than 45,000 people annually — is turning directly to the community for help. “We’ll do more private fundraising,” said executive director Anita Friedman. “We can’t go to the federation; they’ve already told us they can’t help.”

The state crisis, she said, “just continues to shift the responsibility for caring for poor and sick people to the private sector. Our clients are extremely anxious and scared. They depend on the kindness of strangers, and they’re worried about what’s going to happen to them.”

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