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California Capitol Hill Bulletin

Volume 10, Bulletin 29 — October 10, 2003    [or see pdf version]  [or jump to the previous bulletin]


California Elects New Governor in Recall, Schwarzenegger Appoints Rep. Dreier To Head Transition Team

House Panel Examines Medicaid and Administration Grant Plan

Census Releases Report on Language Use and English Ability

New Report Examines Migration Patterns Of Metropolitan Areas

Ose/Dooley Introduce Specialty Crops Bill

Examination of Special Education Litigation Costs

Domestic and International Migration Trends Changing

Report: Living Costs Continue to Rise in California

Bob Hertzberg and Pete Wilson to Examine Recall at October 16 Event

Full List of Schwarzenegger Transition Team Members

To expand communications between Washington and California, the California Institute provides periodic bulletins regarding current activity on Capitol Hill that affects our state.  Bulletins are published weekly during sessions of Congress, and occasionally during other periods.  The e-mail edition is made possible in part by in kind donations from Sun Microsystems and IBM Corp.

California Elects New Governor in Recall, Schwarzenegger Appoints Rep. Dreier To Head Transition Team

By a 55-45 percent margin on Tuesday, October 7, 2003, Californians voted to recall Governor Gray Davis, and on the same ballot 49 percent of voters gave Arnold Schwarzenegger the plurality of votes needed to become the replacement.

Governor-elect Schwarzenegger announced that Rep. David Dreier (San Dimas) would serve as chair of his transition team.. In addition to Dreier, who serves as Chair of the House Rules Committee and of the California Republican Congressional Delegation, the transition committee includes a diverse array of 68 other Californians (who are listed at end of this bulletin).

At a press conference on October 8, Schwarzenegger said that he will look to the Bush Administration for help solving some of the state’s current problems. Noting that Bush "promised me that he will do everything possible to help California," Schwarzenegger said, "so I’m looking forward to working with him and asking for a lot of favors." Bush was quoted by the Associated Press as saying he is ready to work with the new governor.

In explaining the need for federal help, Schwarzenegger cited California Institute statistics showing that Californians send more taxes to Washington than the state receives in federal spending for grants, salaries, contracts and other payments. He stated, "They say that for every dollar we pay in tax, we get only 77 cents back." For additional information regarding the balance of payments, see .


House Panel Examines Medicaid and Administration Grant Plan

On Wednesday, October 8, 2003, the House Energy and Commerce Subcommittee on Health heard testimony regarding proposed changes to Medicaid, the nation’s source of health care funding for persons in poverty, including an Administration proposal to revamp current entitlement-based funding structure into a fixed-total grant system.

Based largely on predecessor programs, Medicaid was enacted in 1965 as a companion to Medicare, and since then it has operated as a partnership between the federal government and the states. While the federal government provides financial support to the states for portion of their costs by reimbursing state spending on a sliding-scale basis – and is responsible for general oversight of the program – each state designs and runs its own program. California’s current federal matching rate (technically the Federal Medicaid Assistance Percentage or FMAP) is at 50 percent, meaning that California is reimbursed 50 cents for every dollar it spends on Medi-Cal — California’s state-level Medicaid program. Medicaid is now the largest government health program in the United States, with total federal spending for the program over the next ten years estimated at $2.6 trillion. Medicaid covers health care expenses for low-income pregnant women, elderly, and people with disabilities, and for children with family incomes below 133 percent of the Federal Poverty Level (FPL), though states have flexibility regarding the scope of coverage. Due to an economic downturn over the past three years, 34 states have reduced eligibility and even more have restricted health care benefits.

At the hearing, entitled "Challenges Facing the Medicaid Program in the 21st Century", Subcommittee members heard from Thomas A. Scully, Administrator of the Centers for Medicare and Medicaid Services at the Department of Health and Human Services. Scully was joined by Dennis Smith, the Federal Medicaid Director; Adelaide Eckardt, Representative of the Maryland State House; and Diane Rowland, Executive Vice President for Health Policy at the Kaiser Family Foundation.

During his opening statement, Rep. Henry Waxman (Los Angeles) said that Medicaid has been uniquely successful, and helps low-income people with complex health problems. He suggested that better partnership with the states would help resolve many of the problems associated with Medicaid and would be preferable to a block grant conversion of the entire program. Echoing this sentiment, Rep. Lois Capps (Santa Barbara) said during her opening remarks that the program is working exactly the way it was designed to function, and urged the nation’s governors to reject Administration’s proposal that would convert Medicaid into a block grant to the states.

In his written testimony, Mr. Scully criticized many states for "inappropriately drawing down more federal Medicaid dollars with fewer state dollars, resulting in an effective federal Medicaid matching aid (FMAP) that is higher than the statutorily determined matching rates, which results in inequities among the states." Defenders of Medicaid and the special provisions to which Scully refers argue that some of the proposed changes — such as cuts in and caps on Disproportionate Share Hospital (DSH) payments, as well as restricting calculations of Medicaid’s Upper Payment Limit (UPL) — would reduce funding to California health providers, particularly its public hospitals. In particular, the UPL, which to date has allowed states to provide certain (public) hospitals up to 150 percent of the amount that medicare (as opposed to Medicaid) would have paid. The 150 percent UPL is now is being reduced and will be phased out entirely (reduced to 100 percent) by 2008. The University of California estimates the impact of the UPL phase-out on its hospitals alone will be approximately $50 million in federal Medicaid funds annually, and the California Association of Public Hospitals predicts that the state will lose $1 billion in federal funds throughout the phase-out period and at least $300 million per year thereafter. During the last Congress, a bipartisan letter signed by nearly the entire California Congressional delegation (50 of 52 members) argued in favor of retaining the 150 percent UPL.

Mr. Scully touted Administration’s proposal as one that would give states an option to manage their health care budgets, while preventing further service and benefit cuts and while expanding coverage for low income population. Though becoming part of the block grant system would be voluntary, Scully testified that those states electing to receive block grant funding for their Medicaid expenditure would have to continue providing current mandatory services for certain mandatory populations, while the states would have greater flexibility with respect to funding appropriated for optional populations and services. Supporters indicate that the Bush proposal would allow states to reduce benefits for optional groups but would retain entitlement status for groups and benefits required by federal law.

According to Mr. Scully, the amount that each state would receive under Administration’s proposal would consist of current baseline of spending plus medical inflation per beneficiary. When questioned by Rep. Capps about the possibility of demand for Medicaid coverage exceeding the available funding under Administration’s proposal, Mr. Scully said that states would be expended to pick up the rest of the cost.

Ms. Eckardt agreed with Mr. Scully about the need to reform Medicaid at the federal level, and offered several alternative suggestions to achieve the objective. Ms. Eckardt said, among other things, that federal government should provide tax deductions for long-term health care insurance. She testified that the program needs to work efficiently before further expansion, and stressed continued need for flexibility to allow the states determine eligibility and tailor different benefit packages to best meet the needs of the populations covered under Medicaid.

Noting that low-income children and their parents represent three-quarters of all beneficiaries, Ms. Rowland of the Kaiser Family Foundation said Medicare’s coverage of elderly and disabled with both medical care and long-term care services accounts for 70 percent of spending (even though they constitute only one quarter of beneficiaries). She testified that Medicare expenditure is consistently on the rise not because of excessive spending, but is rather due to the fact that the program covers higher numbers of elderly persons who need costlier health care services. Ms. Rowland argued that Medicaid is a relatively low-cost program when compared with other health care spending. She noted that spending on Medicaid grew 9.3 percent in FY 2003 while employer-sponsored health insurance increased 13.9 percent that same year. She said that putting a cap on spending as Administration is proposing would not enhance the program. In conclusion, Ms. Rowland agreed with Rep. Waxman that an enhanced partnership between the federal government and the states in conjunction with the maintenance of the coverage the program currently offers should be the center of the Medicaid reform.

A unique issue for California is that the state’s Medicaid costs per patient have been below the national average and far below that of some other states, so any proposal that would lock in current spending levels per patient would be likely to seriously disadvantage California in the long run. In 1999, California housed 6.2 million Medicaid recipients, 15.2 percent of the national total, yet its Medicaid spending of $15.4 billion represented just 9.9 percent of national spending. As a result, California spent only $2,483 per poor patient, whereas the nation on average spent $3,736 per patient, and New York, for example, spent $7,622 per poor patient.

For more information about this hearing, please visit House Energy and Commerce Committee website at: .


Census Releases Report on Language Use and English Ability

The U.S. Census Bureau, on Wednesday, October 8, released a new report entitled, Language Use and English Ability, analyzing the number of U.S. residents who speak a language other than English at home, with an emphasis on Spanish speakers. The data from the 2000 Census shows that one in five people, or nearly 47 million U.S. residents five years of age and older, speak a language other than English at home. That number represents an increase of 15 million people since the 1990 Census. Of those speaking non-English at home, however, 55 percent also reported that they spoke English "very well," according to the report.

There were almost 11 million more Spanish speakers at home than were reported in the 1990 Census. Spanish speakers jumped from 17.3 million in 1990 to 28.1 million in 2000, a 68 percent increase. A little over half of Spanish speakers also reported speaking English "very well."

The 10 places with the highest proportions of non-English speakers at home included three in California and four in Texas. Eighty-seven percent of the population of East Los Angeles speaks a language other than English at home, with 86 percent speaking Spanish. El Monte (81percent) and Santa Ana (80 percent) were also in the top ten. Spanish speakers in those areas were 70 percent in Santa Ana and 62 percent in El Monte. Pomona also has a high percentage of home speakers of Spanish with 55 percent. Hialeah, Florida led the nation in both speakers of a language other than English at home (93 percent) and those speaking Spanish at home (92 percent).

According to the report, "the West was home to more than one-third (37 percent) of all those who spoke a language other than English at home, the highest proportion of any region. California led the states (39 percent), followed by New Mexico (37 percent) and Texas (31 percent)." In addition, "after English (215.4 million) and Spanish (28.1 million), Chinese (2 million) was the language most commonly spoken at home, eclipsing French, German and Italian over the decade of the 90s."

The full report can be obtained through the Census Bureau’s website at: .


New Report Examines Migration Patterns Of Metropolitan Areas

The Brookings Institution Center on Urban and Metropolitan Policy recently released a report entitled Metropolitan Magnets for International and Domestic Migration prepared by William Frey.

The report analyzes the international and domestic migrant flow into and out of the country’s 81 most populous metropolitan areas. Among its findings are:

– The nation’s metropolitan areas gained the most migrants from abroad in the late 1990s, but lost the most domestic migrants. Los Angeles, San Francisco, New York, Chicago, Miami, and Washington gained 3 million immigrants from abroad in the late 1990s, but lost 2.1 million domestic migrants to other areas of the United States. The five county Los Angeles region gained nearly 700,000 immigrants, but lost nearly domestic 550,000.

– Residents leaving metropolitan magnet areas were more racially and ethnically diverse than in the past. For instance, in the late 1990s only 35 percent of net domestic out-migrants from the Los Angeles area were non-Hispanic whites; whereas in the late 1980s 78 percent were non-Hispanic whites.

– The three regions that gained the most domestic migrants between 1995 and 2000 were: Phoenix-Mesa, AZ Metropolitan Statistical Area (MSA); Atlanta, GA MSA; and Las Vegas, NV MSA.

– The report concludes that because Los Angeles and San Francisco lost more domestic migrants that were more racially and ethnically diverse than in previous decades, they have become "redistributors" of population to fast-growing metropolitan areas in the U.S. interior, a role that New York and Chicago played in earlier decades.

To view the report in its entirety, visit the Brookings website at: http://www/ .


Ose/Dooley Introduce Specialty Crops Bill

Reps. Doug Ose (Sacramento) and Cal Dooley (Visalia), joined by several other members of the bipartisan California delegation introduced H.R. 3242 on October 2, 2003. The legislation is intended to aid farmers and growers of specialty crops in all areas of fruit, vegetable, nut, and horticulture production.

H.R. 3242 would provide funding for specialty crops in the form of block grants from the Federal government, distributed to the individual State’s Departments of Agriculture. The block grant provisions are designed to improve efficiency for specialty crop growers and enhance the long-term competitive characteristics within the specialty crop industry throughout the world marketplace. Those eligible for the grants include projects for research and development, marketing programs, and increased production technology to maintain a competitive specialty crop industry.

In addition, the legislation would increase marketing and promotion programs and strengthen fair trading practices within USDA’s Agricultural Marketing Service. The bill also calls for trade reforms that will allow specialty crop producers to effectively compete in a global marketplace that is often subsidized for foreign producers. Additionally, the bill encourages greater conservation efforts from farmers and specialty crops producers through enhancements of sustainability practices.


Examination of Special Education Litigation Costs

Congress continues deliberations toward reauthorization of the Individuals with Disabilities Education Act (IDEA), the federal law governing the education of disabled children. The House has approved its version of the bill; the Senate has yet to schedule floor consideration of its bill following approval by the Senate Committee on Health, Education, Labor and Pensions. Among the issues raised in discussions about IDEA reauthorization has been the cost of litigation over school provision of special education services.

A recent report examining the issue of litigation costs was prepared by the General Accounting Office (GAO) and is entitled "Special Education: Numbers of Formal Disputes Are Generally Low and States Are Using Mediation and Other Strategies to Resolve Conflicts." The title suggests and the report argues that special education litigation costs are relatively small. However, the report finds that California is an exception to this general rule.

Citing data from the National Association of State Directors of Special Education, GAO concludes that "nationwide, in 2000, about 5 due process hearings were held per 10,000 students with disabilities. According to the these data, over three-quarters of the due process hearings had been held in five states– California, Maryland, New Jersey, New York, and Pennsylvania–and the District of Columbia." (These six jurisdictions account for 26 percent of the nation’s children identified as disabled.) Thus, the GAO report implies that California’s litigation costs are above the national norm.

Special education litigation in California has reportedly been rising. According to the California Department of Education (at ), due process hearing requests for the 2002-2003 school year numbered 2,799.

In addition, the University of the Pacific, which is the primary source of California data on special education litigation, found that 93 percent of mediations resulted in agreements between families and schools – the highest percentage of the four states GAO examined for its report. GAO also noted that UoP reported in January 2003 that California’s average cost to the state for mediation was $1,800, while the average cost to the state of a due process hearing was $18,600. (It is important to note that figures apparently do not include costs, such as attorney fees, incurred by school districts, and may not include parental attorney fees either, which would greatly expand these totals.)

GAO also noted that, in California, parties can request "mediation only" without filing a request for due process hearings. GAO states, "In this option, California state law specifically excludes attorneys–for parents or school districts–from participating. Although state and local education officials and advocates viewed the option as a viable and less adversarial alternative for dispute resolution, it was used in California 208 times, compared with 1,774 mediations tied to due process hearings in fiscal year 2002." CDE data indicate that 410 cases were for mediation-only resolution during the 2002-2003 school year, up from 268 in the preceding year.

GAO conducted its California fieldwork, including site visits, in the Los Angeles Unified and Salinas Union High School Districts. The report, numbered GAO-03-897, is available on the web at .

For information about California’s share of special education funding and issues related to the reauthorization of IDEA, see "Federal Formula Grants and California: Education Programs for Disabled Children" at or directly at , a September 2003 release from the joint venture between the Public Policy Institute of California (PPIC) and the California Institute.


Domestic and International Migration Trends Changing

The newly released report by the Brookings Institution Center on Urban and Metropolitan Policy found, among other things, that the nation’s largest metropolitan areas gained the greatest numbers of international immigrants and lost the most domestic migrant. This survey of the nation’s 81 most populous between 1995 and 2000 shows that six "immigrant magnet metros" – New York, Los Angeles, San Francisco, Chicago, Washington, and Miami areas – gained 3 million immigrants and experienced a net loss of 2.1 million migrants to other parts of U.S. San Francisco (gain of 373,869 immigrants, and loss of 206,670 of migrants) and Los Angeles (gain of 699,573 and loss of 549,951), along with New York and Chicago, led the group in the absolute numbers of immigrants they gained and the absolute number of domestic migrants they lost over this period. The study indicates that such international migrants tend to fuel population growth in and around the core urban counties of metropolitan areas.

The study, titled "Metropolitan Magnets for International and Domestic Migrants" and authored by William Frey, also found that areas of Southeast and non-California West attracted the largest numbers of domestic migrants. Phoenix, Atlanta, and Las Vegas led the set of identified "domestic migrant magnets". Domestic migrants migration patterns indicate that they tend to settle down in suburban counties. Increasingly, those leaving California’s "immigrant magnet metros" particularly Los Angeles area, are no longer predominantly white, but rather tend to be more racially and ethnically diverse than before. At the same time, mirroring past trends those with lower educational attainment tend to leave in higher numbers than those who are college-educated.

The study concludes that recent trends of gain and attrition of migrant populations, establish Los Angeles and San Francisco areas as "redistributors" of migrants population – whose members are increasingly Hispanics, blacks, and Asians – to fast-growing metropolitan areas in the interior U.S.

For more information about this study, please visit the Brookings Institution Center on Urban and Metropolitan Policy website at:


Report: Living Costs Continue to Rise in California

A family with two working parents needs an annual income of $58,269, which is equivalent to both parents working full-time for an hourly wage of $14.01, in order to achieve modest standard of living for a family of four in California, according to the new study released by the California Budget Project on Tuesday, September 30, 2003. Titled "Making Ends Meet: How Much Does It Cost to Raise a Family in California?", the study also found that a single adult needs an annual income of $22,943, or an hourly rate of $11.03 to cover food, shelter, transportation, and other basic costs. The state’s median wage was $29,245 in 2002, while hourly minimum wage in 2003 was $6.75.

Regionally, the picture is even bleaker. Families living in Bay Area, those with both parents working, two kids at home and no public assistance, require on average $70,204 annually to provide for basic needs, with half of that income going towards housing and child care. The report assumes that families rent, rather than own, their homes, since California’s homeownership rate remains, at 58 percent, to be among the lowest in the nation. A single adult in this region needs $27,781 to provide for basic living arrangements. The latest numbers show an increase of 14 percent for cost of living in the Bay Area since 2001. The next area with the highest cost of living is San Diego and Imperial counties. An average family cost of living in that area is $59,224 on annual basis, or $14.24 an hour, while the cost to a single adult runs at $23,664 (or $11.38 an hour). Similarly, it costs $57,800 a year for the average family of four with two working adults to pay for the basics in Los Angeles County, while it costs $22,943 for a single adult to achieve modest standard of living in the area.

The study found that counties to the north of Bay Area (including but not limited to Del Norte, Mendocino, Tehama, Butte, and Shasta) and those to the north of the Los Angeles area (including Fresno, Kern, Mariposa, and Inyo) had some of the lowest modest standard of living costs. The cost to provide for a family of four with two adults working full-time in these regions runs in the range of $45,845 to $48,317, or an hourly rate of $11.06 to $11.61. For a single adult the cost of living in such areas runs anywhere from $18,836 to $19,014 annually, or $8.95 to $9.18 an hour.

At the same time, the living wage for Sacramento and surrounding areas was higher than it was in the counties mentioned above, with an average family cost of living running at $54,828 ($13.18 an hour), and single adult living wage at $21,636 ($10.40 an hour). The cost of living in Ventura and surrounding counties was similarly at $55,572 (or $13.36 an hour), and $22,425 ($10.78 an hour) for a single adult, while it was higher for the neighboring Santa Barbara and counties immediately north, with family living wage at $56,027 (or $13.47 an hour) and single adult living wage at $23,390 (or $11.25 an hour).

For more information about the report, visit .


Bob Hertzberg and Pete Wilson to Examine Recall at October 16 Event

On Thursday, October 16, 2003, former California Governor Pete Wilson and former California Assembly Speaker Robert Hertzberg will be the featured speakers at an event in Washington D.C. entitled "After the Recall What’s Next?" Among other topics, the speakers will seek to provide answers to such questions as what the election of Arnold Schwarzenegger means for California and the nation, how it will affect the 2004 Presidential and Congressional campaigns, and what may be in store for California business and the economy.

The event is scheduled for 4:00 pm on Thursday, October 16 at the Mayflower Hotel, in the State Room. To attend the briefing, which is sponsored by Fleishman-Hillard, call (202) 828-9750. Anyone who will not be in town on that date may listen to the discussion live by webcast beginning at 4:15 pm Eastern time (1:15 pm Pacific Time) at . The webcast will also be available after the event.


Full List of Schwarzenegger Transition Team Members

The full list of members of Governor-elect Arnold Schwarzenegger’s Transition Committee is provided below.

Dean Andal, former Republican assemblyman from Stockton; Eloise Anderson, former director of social services for Wisconsin Gov. Tommy Thompson; Annelise Anderson, former member of President Reagan’s budget office; Bill Baker, former Member of Congress and state assemblyman from Contra Costa County; Eli Broad, Los Angeles-based builder and chairman of AIG SunAmerica and KB Homes; Willie L. Brown Jr., San Francisco mayor; Tammy Bruce, writer and political commentator; Jim Brulte, Senate Republican leader from Rancho Cucamonga; Michael S. Carona, Orange County sheriff; Carol Chandler, farmer from Selma and former member of the UC Board of Regents; Rick J. Caruso, Los Angeles-based developer and member of the Los Angeles Police Commission; Rabbi Abraham Cooper, associate dean of the Simon Wiesenthal Center; Jon Coupal, president of the Howard Jarvis Taxpayers Association, Dave Cox, Assembly Republican leader from Fair Oaks; David Crane, San Francisco attorney; Viet Dinh, law professor at Georgetown University Law Center; Charles P. Diamond, Los Angeles attorney; David Dreier (committee chair), U.S. Representative from San Dimas and Chair of the California Republican Congressional Delegation; Susan Estrich, law professor and head of the 1988 Dukakis for President campaign; Carly Fiorina, chief executive officer of Hewlett-Packard; Matt Fong, former state Treasurer and Republican nominee for U.S. Senate; Bonnie Garcia, assemblywoman from Cathedral City; Bob Grady, investment banker and member of the Bush I administration; James K. Hahn, Los Angeles mayor; Peter Hannaford, Washington, D.C.-based marketing and public affairs consultant; John M. Hein, associate executive director of the California Teachers Association; Warren Hellman, San Francisco-based investment banker; Bob Hertzberg, former California Assembly Speaker; Bonnie Hill, Los Angeles-based public affairs consultant; Bill Jones, former California secretary of state; Frank Jordan, former San Francisco mayor and chief of police; George Keiffer, Los Angeles attorney; Jessie Knight, CEO of the San Diego Chamber of Commerce; John Koeberer, Redding businessman; Robin Kramer, former chief of staff to Los Angeles Mayor Richard Riordan; Sean Liou, Fremont-based businessman; Abel Maldonado, Republican assemblyman from Santa Maria; Jillian W. Manus, literary agent from Palo Alto; Jeannine Martineau, California School Boards Association from Lake Elsinore; Kevin McCarthy, Assemblyman from Bakersfield; Tom McEnery, former mayor of San Jose; Rebecca Morgan, former state senator from south San Francisco; Thomas A. Nassif, President and CEO of the Western Growers Association; James Nielsen, former state senator from the Central Valley; Carlos Olamendi, businessman from Laguna Niguel; Beverly O’Neill, mayor of Long Beach; Gerry Parsky, advisor to President Bush; Bill Pauli, Mendocino County vintner and President of the California Farm Bureau; Sally Pipes, head of the Pacific Research Institute; Cassandra Pye, vice president of the California Chamber of Commerce; Safi Qureshey, founder of AST Computers; Michael A. Ramos, San Bernardino County District Attorney; Bonnie Reiss, Los Angeles businesswoman; William Reilly, environmental attorney from San Francisco; Ivan Reitman, Hollywood director-producer; Richard Riordan, former Los Angeles mayor; Piedad Robertson, President of Santa Monica City College; Mario Rodriquez, Orange County-based businessman; Elizabeth Rogers, Santa Barbara-based businesswoman; Jeff Sedivec, retired firefighter and paramedic from San Marcos; George Shultz, former U.S. Secretary of State and Treasury; Bill Simon, 2002 Republican Nominee for Governor; Donna Tuttle, former commerce administrator under Presidents Reagan and Bush; Al Vasquez, marketing consultant from Coachella Valley; E. Myrtle Williams, Los Angeles County Sheriff’s Deputy; Pete Wilson, former California Governor; Sophie C. Wong, Los Angeles-based businesswoman; Charlene Zettel, former Assemblywoman from Poway.

For more information, including a complete list with biographical paragraphs of each member, see .

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