Subcommittee questions IHSS cuts in May Revision — overtime cap, immigration-related eligibility and automation costs

Assembly Budget Subcommittee No. 2 reviewed five May Revision proposals affecting the In-Home Supportive Services (IHSS) program, focusing on potential impacts to providers and recipients and on the administration's timelines for implementation.

The administration described proposals that would reduce state general fund costs through a mix of eligibility, programmatic and administrative changes.

The gist of the proposals and administration testimony

- Overtime cap: "The reduction in the May revision ... reduces the number of hours that a provider can work in a given week to 50 hours," Jennifer Troy, director of the Department of Social Services, told the subcommittee. The May Revision scored that item at $688 million general fund in a full year; the administration estimated implementation delays would reduce the budget-year savings to $516 million because counties require time for guidance and notice. Troy emphasized the proposal would not change the number of hours authorized for recipients but could mean recipients receive services from more than one provider.

- Undocumented adults: The May Revision would eliminate IHSS benefits for undocumented adults ages 19 and older; the department estimated roughly 5,400 individuals could lose IHSS services when the change takes effect and scored $159 million in full-year savings (about $79 million in the current budget year after assumed delayed implementation).

- Community First Choice Option (CFCO) penalties: The state has been repaying enhanced federal funding when county reassessments are overdue. The administration proposed shifting responsibility for late-penalty payments to counties; the department described the change as an encouragement for counties to prioritize reassessments for CFCO-eligible recipients and avoid penalties by changing reassessment order rather than adding new mandated tasks.

- Medi-Cal asset test conformity: The May Revision includes a conforming IHSS reduction to mirror a Medi-Cal asset limit reinstatement elsewhere in the budget; the administration estimated about 1,900 IHSS recipients could be affected and scored a $26 million full-year effect (about $13 million in the budget year after implementation timing).

- Federal HCBS access rule automation: The administration said the federal Home and Community-Based Services (HCBS) Access rule requires systems changes to case-management and payrolling systems; the May Revision includes funding for automation to avoid federal penalties.

Analyst questions, county workload and risks

LAO staff and subcommittee members raised multiple questions about the practical effects and assumptions underpinning the proposals. Jawan Trotter of the Legislative Analyst's Office noted that the IHSS proposals assume significant savings and asked for details about distribution of provider work hours, how many new providers would be needed if recipients split care among multiple workers, and whether county administrative costs are fully reflected in the estimates. "We have questions around the implementation, including what is the current distribution of work hours," Trotter said.

Several members voiced concern that cutting provider overtime or reducing eligibility could destabilize care. Assemblymember Sharp Hollins and other members described the provider shortage and noted that many recipients rely on long-hours caregivers to meet complex needs. The administration repeatedly said it expected authorized recipient hours to remain unchanged and that counties could hire additional providers where needed, but members questioned whether workforce shortages, travel burdens and local realities would allow that substitution in practice.

Next steps and oversight requests

Subcommittee members asked the administration to provide more granular data on caseloads, provider hours and county administrative capacity; LAO staff recommended the legislature consider alternatives (phased caps, exemptions) and requested reporting on automation and reassessment timelines. Members also pressed for estimates of downstream social costs — for example increased homelessness or greater emergency care use — should recipients lose services, and flagged concerns about resurrecting an asset test that stakeholders had previously described as administratively complex.

The department and finance officials said they would follow up with more detailed answers to legislative staff and committee members.