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Early-childhood expansion, Working Families Tax Credit drop and unexplained HCBS growth highlight risks in June forecasts
Summary
Staff said the June forecasts assume ECAP expansion using pre-k promise funds (2,495 new FY27 slots), the Working Families Tax Credit projection fell 10.7% from February due to updated actuals and tax-data ceilings, and home-and-community-based services growth includes a portion of unexplained increase that staff cannot fully account for.
Council staff presented several non-education forecasts that contain policy-driven steps and substantial uncertainty.
Early childhood: Eric Sund said the June ECAP forecast is on average 6.7% higher than February, primarily because the forecast recognizes planned expansion using philanthropic contributions placed in the pre-k promise account established under engrossed Senate Bill 5872 and because the 2026 supplemental authorized the Department of Children, Youth, and Families to add slots using those funds. "The June forecast assumes there will be 2,495 additional program spaces available" in fiscal year 2027, Sund said, and staff characterized that assumption as "fairly solid" while noting risk in later years.
Working Families Tax Credit: Webb Sprague told members the June forecast is "10.7% lower than the February forecast," reflecting actuals through April, a processing timing shift that moved approvals between months, and a caseload ceiling estimated from Department of Revenue tax-data analyses. Sprague cautioned the forecast carries high risk because the program has limited historical data and state tax data used for ceilings are lagged.
Aged, Blind and Disabled and medical assistance: Webb Sprague and Chidong Zhang discussed ABD and low-income adult forecasts. Webb said the June ABD forecast is 2.8% higher than February and noted impacts from prior legislation and effective-date changes. Chidong Zhang said the low-income adult forecast is 1.9% higher and attributed changes to a staffing adjustment tied to an anticipated 5,000-client expansion (Apple House), immigration-policy modeling updates, and lower-than-expected post-eligibility determinations.
Long-term care and HCBS growth: Chidong Zhang reported nursing-home caseloads tracking below February while home-and-community-based services (HCBS) have shown substantial post-pandemic growth. Members pressed staff to explain the magnitude of the HCBS increase; staff said transitions from nursing homes, hospitals, and behavioral-health settings into adult family homes and individual provider settings account for a substantial portion, but "we simply can't explain it" — staff and members said some of the roughly 10% surge remains unexplained and therefore is a forecasting risk.
Why it matters: the ECAP expansion, tax-credit eligibility changes, and unexplained HCBS growth have direct budgetary implications for multiple agencies and service providers; staff described a mix of concrete policy steps and areas where additional data or analysis are required.
Next steps: staff will investigate uptake rates and provider-level trends over the summer, work with the Health Care Authority on community engagement modeling, and provide more detailed underlying forecasts on request.
