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State agencies warn of potential federal cuts to Medicaid programs and civil‑rights protections that could affect developmental services
Summary
Officials told the subcommittee they are monitoring congressional budget actions, possible reorganization of the Department of Education, threats to Section 504, and risks from lack of reauthorization of the Rehabilitation Act.
Department witnesses warned the committee about multiple federal developments that could reduce funding or protections for Californians with disabilities and increase demands on state services.
The Department of Developmental Services told the committee it is tracking federal budget negotiations that could impose deep cuts to Medicaid and Medicare; federal budget guidance cited to committees suggested target reductions of $250 billion–$300 billion for those programs, DDS said, and the department said any cut to Medicaid-funded programs (including IHSS and other generic services) would likely increase pressure on state general fund programs and on the developmental services system.
Department of Rehabilitation Director Kim Rutledge told the committee she is monitoring possible elimination of the U.S. Department of Education and a reorganization that could move the Rehabilitative Services Administration (RSA) into another federal department (Labor or HHS). Rutledge said RSA provides most federal oversight and roughly 80 percent of VR funding; a shift in federal oversight or reductions through the absence of a reauthorization could lead to "gradual erosion" of VR services.
Rutledge also warned of litigation that could threaten Section 504 of the Rehabilitation Act; she said 17 states filed Texas v. Becerra seeking to declare Section 504 unconstitutional and that a decision against Section 504 would remove a critical civil‑rights protection for disability accommodations in federally funded programs. She also noted possible reductions in grants that support DEI and other workforce supports, and that independent living centers briefly experienced funding interruptions during a federal freeze.
Witnesses and members urged vigorous advocacy and legislative attention to potential federal changes, noting that California's entitlement to developmental services and the state's role as the "payer of last resort" could compound impacts if federal supports were reduced.
