As expected, the Governor late yesterday signed the FY 2010-11 State Budget bill and the associated trailer bills. Unexpected, however, was his veto of $962.5 million in spending - most of it targeting programs for low income, sick or disadvantaged Californians - ostensibly to build a bigger "rainy day" reserve fund (brought up from $364 million to $1.3 billion). 

Child care was a particular victim. With a sweep of his pencil, he wiped out CalWORKs Stage Three child care, effective November 1. Specifically, the act chopped the Stage 3 Setaside from $365,918,000 to $109,918,000, for a "savings" of $256 million.

Here's what his veto message said:

"I am reducing $256,000,000 from CalWORKs Stage 3 child care. This action is necessary to help bring ongoing expenditures in line with existing resources and to build a prudent reserve. With this reduction, $128,823,000 in federal funds remains to support existing Stage 3 child care services through October 2010."

Legislative Democrats took pride in protecting CalWORKs and CalWORKs child care in the Budget compromise. They have to be surprised by the Governor's action, which surely must violate their handshake agreement. 

There's probably not much that can be done, however. Even if the Legislature wanted to recoup, with the support of a new governor in January, Stage 3 recipients may have been cut off already.

"This is a heartless act by the Governor," said Nina Buthee, Executive Director of the California Child Development Administrators Association. "Recipients, with no warning, will lose child care support in the middle of this economic downturn. I thought it was all about jobs, jobs, jobs, Governor!"

It remains to be seen how many of the Stage Three recipients backtrack to State One, where the State pays both cash aid and child care subsidy. This action also will eliminate hundreds of child care staff and provider jobs across the state.

In addition, Schwarzenegger cut out some funds for ELAC staffing and student tracking in Early Education. Here's what his message said:

"I am deleting Provision 39 which states legislative intent language that a portion of the grant under the American Recovery and Reinvestment Act for the State Advisory Council on Early Childhood Education and Care (ELAC) be used to study the feasibility of implementing a data system containing information on children five years of age or younger. This language is inconsistent with the approved grant application for these funds which contains funding to contract for a needs assessment that will explore expanding existing data systems for this purpose.

"I am deleting the legislative augmentation of $385,000 in reimbursement authority and 2.0 limited-term positions for support of the State Advisory Council on Early Childhood Education and Care (ELAC) because the increase in workload has not been justified. Further, I am vetoing $118,000 in reimbursement authority proposed in the May Revision for one redirected position given that the Sacramento County Office of Education will assume the responsibility for coordinating the activities of the ELAC. The Budget continues to provide authority for 2.0 limited-term positions for the Department to provide additional support for the ELAC's work, which should be sufficient."

Finally, the Governor's veto message provided clarification about the amounts that make-up the $48.2 million in "savings" from the new license-exempt RMR and AP Admin/Support reductions. Here is the breakdown: "A decrease of $18.7 million to reflect a reduction of license-exempt provider reimbursement rate limits from 90 percent of the licensed provider limits to 80 percent. This solution also saves $12.4 million General Fund in the Department of Social Services Stage 1 Child Care program budget. This is an ongoing solution that will save additional amounts in out-years when annualized. A decrease of $17.1 million to reflect a reduction in the administrative and support services cost allowance for voucher-based contractors from 19 percent of the contract amount to 17.5 percent."

From The Los Angeles Times: Schwarzenegger's vetoes "were directed at making life more difficult for California's working parents and the poorest, sickest and most elderly Californians. This is disappointing, but not surprising," Assembly Speaker John A. Pérez (D- Los Angeles) said in a statement.

"Now we know we have no say over it whatsoever," said Alicia Trost, spokeswoman for Senate leader Darrell Steinberg (D- Sacramento). "It's just a question of how cruel he wants to be." 

Other Education Blue Penciling

K-12 Education did not escape unscathed. Here are the Education blue pencils:

• A decrease of $1.7 billion in Proposition 98 General Fund in 2010-11 to reflect a deferral of revenue limit apportionments for K-12 school districts, county offices of education and charter schools, to be repaid in the 2011-12 fiscal year.
• A decrease of $700 million in unallocated ending balances as of June 30, 2010 from a variety of K-12 categorical programs. Of these unallocated funds, $360 million are as a result of program savings; the balance of $340 million is attributable to Special Education, all of which will be repaid with one-time 2009-10 savings from the Class Size Reduction program.
• A reduction of $550 million to reflect projected savings in the K-3 Class Size Reduction program in 2010-11. Since the penalties for exceeding class size limits were significantly reduced in 2009-10, program savings due to schools increasing class sizes are anticipated.
• A reduction of $340 million to reflect projected savings in the K-3 Class Size Reduction program in 2009-10. Since the penalties for exceeding class size limits were significantly reduced in 2009-10, program savings due to schools increasing class sizes are anticipated.

Other Social Services Blue Penciling

Here are Social Services blue pencils:

• A decrease of $365.9 million from utilizing an advance of Temporary Assistance for Needy Families Block Grant funds for the quarter ending June 30, 2011 in lieu of General Fund. This will provide one-time General Fund relief without any adverse program impacts.
• A decrease of $300 million in the In-Home Supportive Services (IHSS) program, comprised of (1) using IHSS provider-generated revenue to draw down additional federal funds and offset General Fund expenditures in the program ($190 million), (2) imposing a 3.6 percent across-the-board reduction to the hours assessed for IHSS recipients ($35 million), and (3) reflecting an updated caseload estimate based on an actual decline in recipients as compared to the previous caseload projection ($75 million).
• A decrease of $80 million to maintain the level of funding in the Child Welfare Services program that was included in the 2009-10 Budget.
• A one-time decrease of $70 million from eliminating state funding for the Seriously Emotionally Disturbed portion of the Foster Care program. This is related to the mandate suspension issue included in the General Government and Statewide Issues section.
• A decrease of $12.4 million from reducing the reimbursement rates for License-exempt child care providers. This reduction saves federal funds in the Department of Social Services budget, which can be transferred to the Department of Developmental Services budget for use in lieu of General Fund.
• A decrease of $395.4 million from the federal government continuing through 2010-11 the Temporary Assistance for Needy Families Emergency Contingency Funding.

Maybe I'm being defensive - and I certainly lack program knowledge in all funding areas - but it seems that the majority of the above Education and Social Services cuts are one-time in nature, or will eventually be re-paid downstream. The Child Care cuts are massive and permanent.

I don't get it.

In sum, Child Care and Development in this Budget sustained over $598 million in cuts: $201 million (sweep of unspent funds); $84 million (center reserves reduction to 5%); $5 million (latchkey funds left over); $3.5 million (unused migrant child care); $48 million (AP admin/support and license-exempt provider payment limits); and $256 million (Stage 3 elimination). That doesn't count CalWORKs caseload reductions (now just for Stage 1 and 2), based upon what we think are under-projected use and demand estimates.

I just don't get it!