Rising Health Care And Employee Costs Affect State Funding
State budget analysis shows State Health Care spending increased 62% since 2007-08; funding for Social Services, Universities, and other services declined sharply and user fees rose.
LOS ALTOS – California Common Sense (CACS) released a report analyzing how the State’s proposed budget has changed since 2007-08, which was the last time a California governor proposed a balanced budget. Revenue expected for 2013-14 is $10.8 billion greater than revenue expected for 2007-08, but funding for most services is expected to be lower due to growing health care and employee costs. Governor Brown recently called for a special Legislative session to address the state’s rising health care costs.
“Think of the State’s proposed budget as a pie. Compared to 2007-08, the overall pie is larger, but Social Services, K-12, Universities, Courts, and other services are now smaller slices,” said Autumn Carter, Executive Director of CACS. “On the other hand, Health Care Services, Employee salaries, Retirement benefits, and Debt Service are all larger slices.”
While both the 2013-14 and 2007-08 proposed budgets purported to be balanced, their overall compositions are quite different. Since 2007-08, some budget areas have fared much better than others, and some much worse. For example, despite the revenue increase, proposed spending on K-12 Education will be no higher than in the 2007-08 proposed budget and 2% less of the total 2013-14 state budget and Health Care Services has increased as a proportion of the budget by 7% from 13 to 20%.
The following are among the report’s findings:
- Despite higher revenues, proposed State spending on some areas is significantly lower in 2013-14 than in 2007-08: Social Services (-14%), Universities (-14%), Courts (-16%) and Transportation (-31%).
- Proposed spending on other areas is materially higher in 2013-14 than in 2007-08: Health Care Services (+62%), Employee Compensation (+16%), Retirement Benefits (+25%) and Debt Service (+24%).
- Special Funds, which derive their revenues largely from fees and to which more than 50% of the state’s employee compensation and benefits costs are allocated, are now responsible for 30% of state spending as compared to 21% in 2007-08.
- State spending on K-12 Education is expected to be no higher than in the 2007-08 proposed budget.
- User fees have risen significantly. CSU tuition has doubled, and UC tuition has more than doubled. Vehicle registration fees increased 68%, annual park pass fees increased 56% and court-filing fees increased 36%.
- General obligation and retirement benefit debt has grown substantially – 55% and 25%, respectively.
Access the report at www.cacs.org/ca/article/62.
California Common Sense (CACS) is a non-partisan non-profit founded by Stanford students and alumni to open government to the public, develop data-driven policy analysis, and educate citizens about how their governments work.
