Governor’s Budget Protects Medi-Cal Expansion and Transformation; More Funding Necessary to Strengthen Health Care Workforce

Posted: January 11, 2024

LOS ANGELES – January 11, 2024 – Yesterday Governor Gavin Newsom unveiled his 2024-25 state budget proposal, which aims to address California’s budget deficit. The Governor’s budget estimates a $37.9 billion budget shortfall, substantially lower than the $68 billion gap projected by the Legislative Analyst’s Office in December. The proposal protects investments in Medi-Cal and the state’s historic expansion of the program on January 1, but delays critical health care workforce funding. 

Gov. Newsom intends to close the budget shortfall by withdrawing dollars from the state’s rainy-day fund and enacting various spending reductions and delays. The Governor also proposes seeking federal approval for an amendment to generate an additional $1.5 billion from the state’s Managed Care Organization Provider Tax (MCO Tax), a tax on health insurance plans that generates federal matching funds for the state, compared to the approved MCO Tax amount from 2023. The proposal maintains the agreement from last year’s budget to invest $50 million in MCO Tax revenue into community health centers. 

CCALAC applauds the Governor for upholding investments in expanding the Medi-Cal program. As of January 1, California became the first state in the nation to expand coverage to all income-eligible residents, regardless of immigration status. The budget also includes continued investments in CalAIM, the Medi-Cal health care delivery system transformation initiative.  

While the Governor’s budget preserves the expansion and transformation of Medi-Cal – projected to cover approximately 14.8 million people in 2023-24 – it falls short in investing in solutions to California’s health care workforce crisis. The Governor proposes delays in funding for workforce programs, including nursing and social work initiatives and other investments in growing the behavioral health workforce. Now is not the time to delay funds for essential workforce programs that seek to strengthen the safety net’s provider network. 

Further, Governor Newsom proposes to redirect $14.9 million in unused funds from the health care worker retention bonus program – funds that were slated for workforce development programs – for other purposes. The state should use these funds to bolster the health care workforce at this critical time.  

During his budget proposal unveiling, the Governor also shared his potential plans to seek delays in implementing the state’s new minimum wage mandate for health care workers under SB 525, signed into law in 2023. Regardless of SB 525’s implementation timeline, the state must ensure safety net providers, like community health centers, have sufficient reimbursement and resources to support their workforce. FQHCs’ Medi-Cal Prospective Payment System (PPS) reimbursement structure does not allow for rates to be adjusted in response to new wage mandates or changes, a concern health centers consistently raised over the last year.  

“Reimbursement reforms are long overdue to provide health centers with the resources to recruit and retain a high-quality workforce,” said CCALAC’s President and CEO, Louise McCarthy. “Additionally, health centers are critical partners to the state in ongoing care transformation initiatives and payment reform will provide the flexibility to transform how they provide care to their growing patient populations.” 

We look forward to engaging the Governor and Legislature throughout this year’s budget and legislative process as health centers seek to expand access to care, strengthen the Medi-Cal provider network and refine the PPS reimbursement structure. 


About the Community Clinic Association of Los Angeles County  

Founded in 1994, the Community Clinic Association of Los Angeles County (CCALAC) is the largest regional association of community health centers in California. Health centers in Los Angeles serve more than 1.89 million patients at over 380 sites across the county. The majority of these patients (75%) have low incomes, and 92% are covered by public insurance or uninsured. CCALAC is dedicated to helping health centers remain at the forefront of health care transformation, in support of the patients and communities they serve. For more information about CCALAC, visit or call (213) 201-6500.  

Contact: Taryn Burks – Communications Manager, | (213) 201-6529.

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