Budget Signals Narrowed Ambitions

For decades, California distinguished itself by pioneering easy and inexpensive access to college and championing broad medical coverage and a generous financial lifeline for the poorest families.

Now, driven by financial necessity, political leaders are redefining California’s government, positioning it as a follower instead of a leader.

That philosophical pivot is evident throughout Gov. Arnold Schwarzenegger’s first budget as he struggles to close a gaping budget shortfall by proposing that California retrench in areas where it outpaces the rest of the country: college tuition levels that fall below those of other states and social-service benefits that exceed the national average.

Grafted onto the governor’s 306-page budget summary is a kind of template for a government whose ambitions have narrowed.

In program after program, the goal is not so much to be different as to be the same. The state must cut welfare grants so they are “more in line with other large states” and university access “cannot be guaranteed for as many students as in the past.” Hoping to pare spending in the state’s Medi-Cal program for poor families, the governor’s office wants to borrow the “reform concepts utilized by other states.”

“California hasn’t been in the progressive leadership among states for a good 2 1/2 decades. But I think what it’s doing is spiraling downward much faster than it ever has in the last 15 years,” said Jaime Regalado, executive director of the Pat Brown Institute at Cal State L.A.

“The language really speaks to being comfortable with mediocrity,” he said.

Conservatives who favor less government have sought such cuts for years. Now, Schwarzenegger has embraced the idea for financial reasons, at least as a temporary measure. With this year’s budget shortfall topping $14 billion and another $14-billion gap expected to arise next year, austerity is the only means of staving off financial ruin, the governor and his allies say.

“We’re broke!” said state Sen. Jim Brulte (R-Rancho Cucamonga), the Senate Republican leader.

“We have the worst credit rating in America,” Brulte added. “We’re going to run out of cash in 4 1/2 months” if the governor’s $15-billion, deficit-reduction bond measure isn’t approved by voters March 2.

“I don’t think we’re losing sight of our progressive ideals,” Brulte said. “What happened is, the proponents of progressive ideals lost sight of fiscal reality.”

The tools that Schwarzenegger’s budget employs are fees and caps, both of which restrict access to government programs. Fees require people who get state services to pay a greater part of the cost. Caps explicitly ration services, requiring people who are eligible to wait in line until space becomes available.

As a state, California has never much believed in barring people from services, adopting the egalitarian view that they should be available to anyone in need.

California has always embraced the credo: “If you’re eligible, we’ll serve you. And no one should be discriminated against based on when you got in line,” said Jean Ross, executive director of the California Budget Project.

Across the board, Schwarzenegger raises thresholds for services.

He would cap enrollment:

* For immigrants in Medi-Cal at Jan. 1 levels: 909,500. They are but one population reached by a Medi-Cal program that has been exploding in growth. In a given month, Medi-Cal serves 6.8 million Californians.

* In a program that provides drugs for people with AIDS at Jan. 1 levels: 23,900.

* In a program for adults with genetic diseases: at 1,679. Recipients would be required for the first time to provide co-payments for services.

* In a children’s medical services program: at 37,600 clients.

The state began to retrench programs, particularly those aimed at the poor, after the tax revolt of the 1970s. What makes Schwarzenegger’s budget notable is its adoption of the idea that California should measure itself by the standards of what other states do, and his willingness to apply that same yardstick to higher education.

California’s notion of active government was rooted in a progressive tradition that rippled through much of the 20th century -- reflected in higher education and social-service programs seen as ahead of their time.

By the early 1920s, California had put in place a network of community colleges, state colleges and universities unequaled in size or quality, said John Douglass, author of “The California Idea and American Higher Education.”

The goal was to make low-cost education widely accessible -- as a tonic for the economy and an avenue for social mobility, Douglass said. And it worked. One of the least populated states at the time, California had the nation’s highest enrollment in public education.

Schwarzenegger’s budget would make it more costly to attend college; the document notes that “university fees are generally low compared to their value to students and by comparison with other states.”

The governor wants a 10% increase in undergraduate fees for the University of California and California State University systems. At UC, for example, fees would jump from $4,984 to $5,482 a year. That comes on top of a 30% increase last year.

Apart from the added expense, fewer students would have the chance to enroll. The budget would reduce the number of new freshmen by 3,200 at UC and 3,800 in the Cal State system.

Kevin Starr, the state librarian and a professor of California history at USC, said the enrollment curbs “represent a turning away” from the implied promise of the state’s 1960 master plan for higher education -- that “we will allow you to reach your fulfillment to whatever levels are appropriate.”

Schwarzenegger has portrayed the reductions as temporary, promising that programs would be replenished after the state’s finances improved.

“We have to make some trims, some savings everywhere in order to solve this problem,” the governor told an audience of high school students last week when he was asked how he would make college more affordable.

That is notable, Starr said. The cuts are “nothing the governor prefers. Notice that he’s not ideologically backing these positions. He’s representing them as emergency measures.”

But the pattern in Sacramento has been that after a program is cut, the money is seldom restored.

That has been particularly true in social-service programs that have been decreased during slow economic times and are now targeted for further cuts.

The state’s Medi-Cal program, which provides medical care for the poor and elderly people in nursing homes, is one of the main areas targeted for cutbacks. The $29-billion program covers nearly a fifth of the state’s population. .

Apart from the basic services the state is required to provide by federal law, California offers more optional services than any other large state. They include podiatry, chiropractic care and acupuncture. In other parts of the program, however, Medi-Cal already is more restrictive than many other state Medicaid programs.

Schwarzenegger is seeking a federal waiver by the end of the year so he can redesign Medi-Cal, anticipating $400 million in reduced costs in 2005-06.

“We cannot afford to maintain a program that serves the same number of people and provides the same services through the same delivery system. We have got to institute some structural reforms, and that’s what the redesign effort is about,” said Kim Belshe, secretary of Health and Human Services.

Similar cuts would make other programs less generous: In-Home Supportive Services, which gives aid to the disabled and elderly in familiar surroundings in an effort to keep them out of nursing homes, would cut the pay of workers to the state minimum wage of $6.75 per hour. Currently, caregivers can earn up to $10.10 an hour. The budget also would eliminate money for about 74,000 spouses and parents who are paid to provide care for their family members.

Welfare payments also would become more restrictive. In most states, if a parent doesn’t work enough hours in a week to comply with welfare rules, the entire family is cut off. In California, only the parent loses aid.

An average family of three in Los Angeles, for example, receives $670 a month in payments. If the mother fails to work enough hours in a week, the family loses about $130 -- her portion of the check.

Under Schwarzenegger’s budget, the family would lose an additional $135 -- 25% of the children’s part of the check -- reducing the monthly benefit to about $405.

“Thirty-seven other states totally eliminate” the money when parents don’t work, the budget summary states.

Some see such statements as an admission that a state whose identity once was tied to being in the vanguard now is aiming for the middle of the pack.

Some programs at stake have evolved over decades, propelled by a succession of governors who served during fertile periods of growth and policy innovation.

Hiram Johnson (1911-17) ushered in child labor and workers’ compensation laws and free textbooks for schools. Earl Warren (1943-53) embraced publicly sponsored healthcare and set up a Department of Mental Hygiene that “pioneered the employment of preventative and treatment-oriented mental health programs,” Starr wrote in his book “Embattled Dreams.” Pat Brown (1959-67) presided over a master plan for higher education, built more than 1,000 miles of highway and increased social-service spending to accommodate a growing population.

Even as California’s finances were strained by the dot-com collapse, former Gov. Gray Davis plowed resources into the subsidized health insurance program for poor children, Healthy Families. Enrollment rose from about 100,000 to 700,000.

Donna Arduin, Schwarzenegger’s finance director, questioned the sincerity of recent officials who had approved such largess. With no steady source of money for the expansion, the state was not so much preserving a progressive legacy as indulging a policy whim, Arduin suggested.

Schwarzenegger’s budget would cap the Healthy Families program at Jan. 1 levels: 732,300.

“If the policymakers that preceded our being here had a long-term plan for those programs, the argument would be much stronger that these were the priorities of the state,” Arduin said in an interview. “I don’t see that long-term funds were planned and made available to keep these expansions going.”

In navigating the financial crisis -- preserving essential services while wiping out the state’s deficit -- California may yet prove to be a model for the rest of the country, she added.

“I’d say we have an opportunity to do it again,” Arduin said, “in terms of ... trying to continue these programs in a sustainable and affordable way.”

“We’re getting creative again.”