STATE’S HEALTHY FAMILIES PROGRAM GETS A LAST-MINUTE LIFELINE

A $16.8-million check from First 5 California would allow the children's health insurance program to keep enrollment open through June. GOP leaders suggest $15.6 billion in cuts to schools, healthcare

By Jordan Rau | LA Times

Tuesday, 16 December 2008 -- Reporting from Sacramento -- The state's healthcare program for the working poor received a temporary reprieve Monday when First 5 California's board voted to provide $16.8 million to avert imminent enrollment restrictions that were expected to leave 162,000 children without medical coverage in the next six months.
The money will allow the Healthy Families Program to continue enrolling children through the end of the fiscal year in June instead of capping enrollment, as state officials planned to do Wednesday.

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But the unexpected intervention, hailed by children's advocates, is only a stopgap measure as the Legislature remains deadlocked over how to erase a budget gap that is projected to reach $41.8 billion by mid-2010.

The severity of that problem was highlighted as Republican legislative leaders, who have been under attack for not offering their own solution, endorsed cutting $15.6 billion in funding for schools, healthcare for working-class families, and welfare, reducing many of these programs nearly to the minimum levels allowed by law.

The plan includes a $10.6-billion cut in school spending over the next 1 1/2 years, increases in class sizes at the state's universities and community colleges, and a 10% reduction in welfare grants.

The GOP plan would also seek voter approval to take $6 billion from pots of money the electorate set aside to bolster healthcare for children and the mentally ill -- including $2.1 billion from First 5, which voters created in 1998 and funded with a portion of the tobacco tax. Republicans want to divert that money to help pay for existing programs in those areas.

The $22.1 billion in combined savings from the GOP proposal, while larger than alternatives offered by either the governor or the Democrats who hold the majority in the Legislature, would still address only a little more than half of the anticipated budget gap.

Assemblyman Mike Villines of Clovis and Sen. Dave Cogdill of Modesto, the Republican leaders, said that they continue to oppose raising taxes, and that the plan would go a long way toward dealing with the state's long-term budget troubles. "If we had any of this in place, the problem wouldn't be as bad as it is today," Cogdill told reporters at an afternoon news conference.

The GOP plan also included some of their longtime priorities, including tax credits for businesses, but did not include the costs to the state's treasury. It listed other breaks for businesses, including delays in requirements for companies to meet new rules intended to limit greenhouse gas emissions, "regulatory flexibility" for the agriculture industry, and allowing schools to hire private contractors to handle transportation, cafeterias and other services.

The Republicans said they wanted to avoid future budget crises by limiting future state spending growth to inflation and population increases, which currently amount to about 5%, and expanding the state's reserve account to help the state in tough times.

Aaron McLear, the governor's press secretary, said the plan was "not a negotiated compromise" but a "rehash" of past GOP ideas.

Democratic leaders said they would hold hearings on the proposal, but made clear they found the GOP's ideas unsatisfactory. Senate President Pro Tem Darrell Steinberg (D-Sacramento) said the plan relied on "phantom revenues that may never materialize," and Assembly Speaker Karen Bass (D-Los Angeles) said that "at first glance it appears this proposal is not the serious response this crisis requires."

The enrollment restrictions for Healthy Families was expected to be one of the first concrete effects of the budget crunch. The Managed Risk Medical Insurance Board, which runs the program, had scheduled a meeting Wednesday to limit new enrollments in the program, which provides medical insurance for 900,000 children whose families are slightly above the federal poverty line.

The money from First 5, which is charged with improving healthcare for young children, will be used for enrollment of children under 6.

Kris Perry, executive director of First 5 California, said the idea came about after her group was approached by Healthy Families leaders looking for a way to avoid the cuts. The board is expected to accept the financing offer Wednesday.

"If this goes through, it would be a lifeline to tens of thousands of kids who wouldn't be able to see a doctor otherwise because they don't have health insurance," said Wendy Lazarus, co-president of Children's Partnership, a Los Angeles-based advocacy group. "It is just critical that we protect kids whose parents need to turn to our state's health insurance programs because they're losing their jobs or they can't pay."

Rau is a Times staff writer.