23-05-2025
Stanislaus County CEO foresees unsteady fiscal outlook. Medi-Cal and shelter cuts
Stanislaus County's top executive said the fiscal situation will be more challenging going forward, after years of stability for county government.
Chief Executive Officer Jody Hayes delivered a fiscal update to county supervisors at their board meeting Tuesday evening.
Gov. Gavin Newsom's budget revision this month included proposals to deal with a $12 billion projected deficit, as well as balancing out existing and future state reserves, Hayes said.
State Department of Finance briefings identified budget challenges driven by cost increases for programs including Medi-Cal and also charted negative trends in revenue tied to the economy and slower job growth.
Hayes said significant imbalances in annual state budgets are projected over the next several years. 'The long-term modeling is not looking very well at the state level,' the county CEO said. 'What we are seeing in the (2025-26) state budget is just the start of more reductions that will come in other areas.'
Hayes said clear impacts are projected for county programs that rely on Medi-Cal coverage and associated reimbursements. Those programs are administered by the Community Services Agency, Behavioral Health and Recovery Services and the Health Services Agency.
Another concern is the absence in Newsom's budget proposal of Homeless Housing, Assistance and Prevention program funding for shelters. It could directly impact the Salvation Army low-barrier shelter in Modesto, as well as homeless shelter operations across the state, Hayes said.
A coalition of mayors in California is urging Newsom to restore the funding, The Sacramento Bee reported. Newsom said recently that enough homeless services money has been provided to local jurisdictions.
Hayes' fiscal update also mentioned some state budget ramifications for the county Probation Department, child welfare services and health services.
Hayes noted that the governor's revised budget does not reflect potential difficulties for states in the federal budget that narrowly passed Thursday in the House of Representatives. Health advocates said the federal bill will cut billions of dollars in Medi-Cal funding for California, requiring hospitals to eliminate services and causing many residents to lose coverage.
Among other changes, the federal plan includes a work requirement for childless adults to qualify for the Medicaid program, which is called Medi-Cal in California.
'If there are reductions at the federal level, it's going to compound what happens at the state level,' Hayes said.
The county has prepared a budget that will allow county departments to 'keep the lights on' or maintain the current level of operations and services, Assistant Executive Officer Patrice Dietrich said.
The budget plan recommends status quo operations in the coming year, with some flexibility for cost increases and revenue trends, Dietrich said by email. The county expects to release the budget for 2025-26 on May 30 and hold a budget hearing June 10. The proposed budget will be posted online.
County staff will continue to monitor the state and federal budget and policy updates and recommend any necessary budget adjustments to the Board of Supervisors in September, Dietrich said.
