Governor Newsom’s budget priorities shift drastically due to COVID-19, creating a $54 billion shortfall in the state’s budget

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On January 10, 2020, Governor Gavin Newsom introduced his 2020-21 state budget, a $222.2 billion budget proposal which demonstrated a strong commitment to strengthening California’s healthcare delivery system. The Governor’s January budget was the first step of a five-month budget period, during which time state legislators, including our State Senators and State Assembly members, review the Governor’s budget proposal, and budget committees and subcommittees in both the Senate and Assembly host public hearings through the 5-month period, ending in May. By May 14, the Governor provides an updated budget known as the May Revise, reflecting his proposed changes which usually reflect California’s most current financial state. The legislature must finalize and send a budget for the Governor to sign by June 15, 2020, as mandated by constitutional law. The budget bill becomes law as soon as the Governor signs it, and the new budget and fiscal year takes effect July 1 and continues through June 30, 2021.


Some highlights from Governor Gavin Newsom’s January budget proposal included California Advancing and Innovating Medi-Cal (formerly known as Cal-AIM) – a multi-year initiative to transform the state’s Medi-Cal program through an investment of $695 million for 2020-21 growing to $1.4 billion in 2021-22 and 2022-23. Governor Newsom’s budget also allocated $80.5 million to expand full-scope Medi-Cal to all income eligible undocumented seniors age 65 or older – also known as Health4All Seniors, and provided $150 million in supplemental funding to help community health centers (CHCs) mitigate expected financial losses caused by his proposed Medi-Cal 340B pharmacy transition to a fee for service model, which is scheduled to take effect on January 21, 2021. Governor Newsom’s budget priorities shifted drastically due to the COVID-19 pandemic’s impact on the state’s fiscal reality.


On May 14, 2020, Governor Gavin Newsom released his 2020-21 May Revision which included a $54 billion shortfall and $14 billion cuts to several health and social programs, a significant change to his January budget proposal. The Governor’s May Revise included several proposed cuts – also known as trigger cuts, which would take effect if the state does not receive financial support from the federal government. The State’s legislative leadership including the Speaker of the State Assembly, Senate Pro Tempore and the Assembly and Senate Budget Committee Chairs came to an agreement regarding the 2020-21 State Budget. Their budget agreement included anticipated funding from the federal government with trigger cuts taking effect in October if the state does not receive funds from the federal government. The Governor and the legislature were able to reach an agreement on the state’s budget on June 22, 2020. Thanks to our ongoing advocacy, the Governor signed the final budget on Sunday June 28, 2020, which included funding for the following programs important to our patients and community including but not limited to:


  • 340B Medi-Cal Drug Discount Program: The final budget includes $150 million in supplemental funding to support the 340B Drug Discount Program and establishes a stakeholder process to develop and implement a method to distribute the funding to qualifying community health centers like NEVHC.
  • Health Navigator Program: The final budget includes $15 million state general funds for health outreach and enrollment navigators.
  • Workforce: The final budget invests in health care workforce programs including the Song-Brown Primary Care Residency Program.


Our work is not over! Stay tuned for additional advocacy opportunities to remind our legislators to continue valuing community health centers as they begin their second budget negotiations for items not included in this budget, such as funding for telehealth and telephonic visits and Health4All Seniors!


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NEVHC is a Health Center Program grantee under 42 U.S.C. 254b, and a deemed Public Health Service employee under 42 U.S.C. 233(g)-(n) with respect to certain health or health-related claims, including medical malpractice claims, for itself and its covered individuals.  

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