2025 May Revision Budget Proposal

State Budget Update: 2025/2026 May Revise

Governor Newsom released the May Revise on Wednesday, April 14. He provided a general outline and some details of his proposed budget revisions - known as the "May Revise" to the 2025-2026 State Budget proposal that he submitted to the Legislature on January 10^th, 2025. The proposed changes, which the Legislature must approve, include the latest spending and revenue projections, as well as new or rescinded proposals aimed at addressing an anticipated $16 billion budget shortfall.

Some key areas of what is contained in the May Revise include some reductions to:

• Health and Safety Waiver Assistance
• Regional Center Implicit Bias trainings
• Self-Determination Program
• Direct Support Professional (DSP) workforce training and development
• Rate Reform Hold-Harmless' sunset date has been accelerated to February 2026

As anticipated, the Governor's May Revise does not include proposals related to potential cuts to Medicaid and other federal funding that Congress is currently considering. These changes will only be addressed once actual legislation is passed and signed into law by the President.

Read the entire 2025-26 May Revision to the Governor's Budget here. If you want to only read the May Revise as it pertains to Health and Human Services, read here.

Read a letter from the Director of the Department of Developmental Disabilities:

Dear Community,

Governor Newsom this morning released the May Revision budget proposal. The full details are available from the Department of Finance in the "May Revision" section's "Summary" in the center of the California Budget page. The Department of Finance anticipates a two-year budget deficit of $16 billion. State revenues won't be enough to fully cover planned spending in the next few years. Estimates of how much money the State will bring in are impacted by tariff uncertainties, stock market fluctuations, and the delayed filing of taxes for the roughly 40 percent of California's taxpayers impacted by wildfires earlier this year.

What's changed for the Department?

In January, the Governor proposed a $3.2 billion increase for the Department in the next fiscal year. The May Revision still projects nearly $3 billion in growth for next fiscal year, for a total of $18.7 billion. We expect an additional 39,000 people to receive regional center services next year. This means regional centers will serve 491,000 in an average month. This is tremendous growth, equivalent to adding a moderately large regional center in a single year.

With less revenue coming in, state spending will need to decrease. The May Revision has some short-term and future spending reductions, and some small investments. These are listed at the end of this message. The May Revision is a budget proposal. Negotiations with the Legislature will occur before the budget is finalized. Some proposals require changes to the law, too.

We are fortunate that these spending reductions protect the right to services and support under the Lanterman Act entitlement, after other sources of services and supports have been used. The May Revision also preserves services to young children. Services early in life make a big difference in a person's life. There is a small investment in the Life Outcomes Improvement System, which recognizes that proper infrastructure is necessary to effectively and efficiently continue to offer programs and services through our regional center partners, service providers and state-operated programs.

There are additional proposals in the May Revision that would impact individuals and families. There are proposals affecting In-Home Supportive Services, Medi-Cal, and other programs. Descriptions of these additional proposals can be found in the chapters of the Department of Finance publication in the first paragraph above.

Thank you for continuing your work to advance outcomes for the people of California. There is lots of good work still to do together.

- Pete

Budget Solutions

• Estimated savings of $867.2 million General Fund from 2022-23 and 2023-24 lessen the General Fund deficit.
• Other budget solutions reduce expected spending for the budget year by about $123.7 million from the General Fund. This includes:
• $75 million (one-time) to end the rate reform hold harmless policy as of March 1, 2026, instead of June 30, 2026.
• $22.5 million ($45.5 million ongoing) for new guardrails that protect the sustainability of the Self-Determination Program.
• $17.6 million ($36.8 million ongoing) to eliminate the Direct Services Professional Workforce Training and Development, which has not yet been implemented. This also is known as "DSP University".
• $5.6 million ongoing to eliminate a refresh of regional center implicit bias training.
• $3 million ongoing to eliminate health and safety waiver application assistance, although the ability to request these waivers remains.
• Public Records Act - Regional Center Requirements (AB 1147) Adjustments ($819,000): Reduction of 6 positions compared to the January budget proposal, reflecting a reevaluation of the compliance approach. The Department will continue to provide legal support and training to regional centers.
• Budget solutions beginning in 2026-27 include:
• Requiring compliance with Electronic Visit Verification, annual audits, and Home and Community-Based Services rules as a condition of eligibility for earning the quality incentive component of the rate reform rate models.
• Porterville Developmental Center reduction of $10 million ongoing, reflecting historically achieved savings.

Investments

• Life Outcomes Improvement System (LOIS) with $13.3 million total funds: Includes one-year limited-term resources equivalent to 17 positions at the Department, and resources for regional centers to continue the planning phase of the project.
• Federal Access Rule with $1.9 million total funds: Includes one-year limited term resources equivalent to 9 positions to support the increased workload related to compliance with the new federal Home and Community-Based Access Rule requirements.
• Staffing for Health and Safety Investigations and Due Process Caseload with $1.4 million total funds for 2025-26: Includes 9 permanent positions and $2.0 million in 2026-27 and ongoing to support increased workload related to health and safety concerns, such as rising appeals and complaints workloads.
• Clinical Monitoring Team Support for Specialized Community Homes with $680,000 total funds: Includes 4 permanent positions to support development and monitoring of specialized community homes and services.

Increased Reimbursement and Cost Recovery with $1.3 million in total funds and $1.1 million General Fund: Includes 5 permanent positions and contracted consultant support to explore options and obtain payment from public and private health insurers for services purchased by regional centers on behalf of eligible individuals.