Dear Community,
July 1, 2025 marked the start of the 2025 State Budget and its associated changes to the law. We are pleased to share that the budget fully funds caseload growth for all programs, and rate reform, as proposed by Governor Newsom. Given the overall budget situation for California, this is great news.
California’s budget for your services through the Department and regional centers totals $18.7 billion this year. About 37 percent of that money comes from the federal government through Medicaid (called Medi-Cal in California).
The most significant budget savings item in the State’s budget for your services affects service providers. If a provider’s pre-existing rates were kept during 2025 instead of using the new rates established in rate reform, only rate reform’s rates will be paid after February 28, 2026. This ends the use of pre-existing rates four months sooner than previously planned. Some people refer to this issue as “ending hold-harmless”.
There also was a change in the law to give time for service providers to plan ahead for their rates in next year’s budget. To be eligible to earn the quality incentive piece (up to ten percent) of the full rate of payment after July 1, 2026, service providers first must meet certain requirements: using electronic visit verification, being compliant with home- and community-based services rules, and completing any applicable fiscal review and audit requirements.
There were several small budget changes to create savings. Funding for implicit bias training for regional center staff, and for dedicated health and safety waiver application assistance for some individuals and families, both were made optional. Also, about 8 percent of estimated cost growth in the Self-Determination Program was avoided by setting the same rules statewide for how budgets are created when people first enter that program. Even with those savings, the SDP still had a budget increase of $230 million compared to last year.
State law also was updated about the topics below. The Department’s letter to regional centers earlier this month provides more details about these changes:
- Requiring meetings twice per year of the Committee that guided development of the Master Plan for Developmental Services;
- Requiring the Department to establish a definition of “cost effective” for all programs by August 2026;
- Adjusting language about tailored day programs and employment services to conform to rate reform implementation; and
- Updating training requirements for people who must report suspected abuse and neglect, starting in 2027.
We continue to watch the federal government’s budget and legal changes for their potential impacts to California overall, and specifically to services for individuals with intellectual and developmental disabilities and their families and caregivers. So far, most potential impacts will not take effect for at least another year or two.
With appreciation to the Administration, the Legislature, and so many of you in our community who advocate in state and federal spaces,
-Pete