Enrollment in the state's healthcare program for the poor has soared past expectations as a result of President Obama's federal overhaul, Gov. Jerry Brown said Tuesday, and by next year about a third of Californians will be covered, costing hundreds of millions of dollars more than anticipated.
The expansion is "a huge social commitment on the part of the taxpayers of California," Brown said as he released his revised, $156-billion budget proposal. "I'm proud we did it.
"But we have to also take into account that this thing is growing," he said, and it will absorb money that interest groups and some Democratic lawmakers hoped could pay for more social services.
Brown is also pushing a significant new investment in teachers' pensions, aiming to eliminate the fund's $73.7-billion shortfall, one of California's most vexing financial issues.
The plan, which largely mirrors ongoing discussions among legislative leaders, would phase in higher contributions from the state, schools and teachers, with the goal of full funding in three decades.
"It costs us hundreds of millions of dollars for every year we wait" to increase deposits into the fund, Brown said. "We've been talking about it, and I believe it's time for action."
The governor's latest budget blueprint, with a $107.8-billion general fund that will be the subject of intense negotiations with lawmakers, includes more money than he offered in his original spending plan in January.
There's an additional $242 million for schools, $121 million extra for drought-related needs such as firefighting resources and $60 million more for the cash-strapped court system.
As lawmakers prepare to fight for their own wish lists before a June 15 deadline for passing a budget, Brown already faces calls for more spending than he included Tuesday.
The governor acknowledged that California's finances have been buoyed by higher-than-expected revenue, increasing pressure to restore more services slashed during the recession. But he said overspending leads to deficits.
"There are many good ideas, in healthcare, in schooling, the environment, in prison reform, in court expansion, but we only have so much money,'' Brown said. "… If you find more cookies in the jar, hallelujah."
Brown's plan addresses financial consequences of California's decision to aggressively expand healthcare coverage for the needy, making the state an enthusiastic adopter of Obama's Affordable Care Act.
Officials say 1.4 million more people will be enrolled in Medi-Cal than previously expected, bringing the total to 11.5 million by next year. There's now a backlog of 900,000 applicants waiting to be processed.
The exploding enrollment partly reflects California's poverty rate, the highest of any state, according to a recent study from the U.S. Census Bureau. To qualify for Medi-Cal, a family of three must have income of no more than $27,311 annually.
The federal government pays the full cost of patients who became eligible for Medi-Cal under the Affordable Care Act, and billions of dollars are expected from Washington for that purpose.
But the state is responsible for half the tab for people who were already eligible but hadn't signed up. This second group is now expected to grow 60% more than originally projected.
"The good news is now they have healthcare coverage," said Assemblyman Richard Pan (D-Sacramento). "But … we should've had them on board earlier."
Medi-Cal costs are pegged at $1.2 billion more than anticipated in January, with half that sum due to higher enrollment, officials said.
With all the publicity surrounding Obamacare, people "came out of the woodwork" to register for Medi-Cal, said Diana Dooley, the top official overseeing healthcare in Brown's administration. "The outreach was successful and people responded."
Even as California wrestles with the higher price of healthcare, Brown wants the state to increase deposits into the teacher pension fund and to raise the portion of their paychecks that school employees would contribute.
The brunt of the costs, however, would fall to schools, whose contributions would more than double to 19.1% of their payrolls over the next seven years.
By 2020, total contributions from all three sources would be $5 billion more than now allocated for the pension fund, according to Brown's proposal.
"We have to take the leap together," said Assemblyman Rob Bonta (D-Alameda), who has worked on the issue as chairman of a legislative committee on public pensions. "It's absolutely necessary … to fulfill our promises to our hardworking teachers."
The pension proposal is Brown's second major effort this year to address California's festering financial issues. He has already reached a bipartisan deal with lawmakers to save revenue in a reserve fund to cushion the state against future economic downturns.
The governor says that plan, expected to pass the Legislature and be placed on the November ballot, will stabilize California's volatile finances. If voters pass the measure, the state would collect $1 billion in the reserve in each of the next few years, according to administration estimates.
An additional $1 billion a year would be used to pay down debt and cover other long-term costs.
Brown faces difficult negotiations in other areas, including the state's program for providing home care to low-income elderly and disabled residents.
Enlisting support from Democratic lawmakers, the Service Employees International Union is fighting the governor's plan to cap the number of hours that caregivers can work to avoid paying overtime.
"The governor has been looking at this from a numbers perspective and not from a people's perspective," said Laphonza Butler, president of the union's state council.
At an afternoon news conference in San Diego, Brown said California's program is already more generous than those in other states.
"We're doing the best we can," he said.