Q-and-A: State Senate President Pro Tem Darrell Steinberg breaks down California’s budget

For the first time during his tenure as Senate president pro tem, Darrell Steinberg's working with a budget surplus. On the eve of meetings with fellow legislators and Gov. Jerry Brown to hash out a deal, SN&R sat down with the senator to discuss worthwhile expenditures, and who the real adult in the room is.

We finally have a surplus in California. Tell me your ideas.

First of all, I think it's important to say I don't see us far apart from the governor. We have the same basic goals. None of us want to go back to 2009 or 2011. The era of massive deficits. Those deficits have real impact on people, obviously, and on our economy and on the confidence, or the lack thereof … that people have in the state. …

If you look at the four legislative leaders and the governor, I'm one of four left; I'm the only one left from 2009. I think I have a very real appreciation for why we never want to go back to an era of huge deficits. A lot of that is not California-made. A lot of it is a result of the national and international recession.

It is true that in the late '90s and early 2000s that we did not prepare or have a large enough rainy-day fund for the inevitable down times. Having said that, there is another part of what has occurred over the last five years that must be addressed. The impact of some of the cuts on the most vulnerable in California.

There are cuts, and then there are cuts. The cuts that really keep me up at night are the cuts that affect the poor, the elderly and the disabled, the most vulnerable, because they don't have the same vocal constituencies in most instances.

Education took a huge hit, but it's coming back. And [Proposition 98] has done the formula that requires not only about half of every year's budget to go education, but requires the payback of any additional money for cuts that were made in previous years. Education still has a ways to go, but it's coming back. … Higher education, there are built-in increases in the governor's budget for higher education.

It's health and human services. The so-called safety net, the services for the most needy that don't have constitutional protection, and they don't have that built-in vocal constituency. …

While I recognize that we cannot make up for all that has been lost over the last five years in these areas, that if we are committed to three things—paying down debt as aggressively or even more aggressively than what the governor suggests, having a reserve as large or even larger than what the governor proposes and making targeted investments in a couple of discreet areas where people were hurt the most—we can have a 2013-14 budget that we're all be proud of.

And so, from the very beginning of this year, I have asked my colleagues to engage with me in the Senate in a series of caucuses and in one very noted road trip to Long Beach and the Long Beach Unified School District. To engage in a process of prioritizing, recognizing that we must help as many people as possible, but we can't make up for all that has been lost. And we focused on several priorities—one: dental care for low-income people, the majority of whom are working people.

What are those priorities?

Three main priorities. No. 1 is dental care for the poor and many of whom are working poor. In 2009, at the height of the economic crisis, we faced a $42 billion deficit with a base budget of about a $100 billion. We made a necessary but heart-breaking not-just cut, but decision to eliminate adult Denti-Cal. We maintain dental care for low-income kids in California but we cut it for adults. And I've told this story many times, including the opening of the Legislature session in 2013, where I gave my opening speech about what we want to accomplish this year. I talked about my experience in October of 2012 in one of those regular Saturday-morning coffee klatches at the California Dental Association volunteer fair at Cal Expo and went up there not knowing what to expect, but saw something that had a profound effect on me. And it's since been repeated in San Jose two weeks ago. You literally had thousands of people waiting in line, not to get their teeth cleaned or get a dental checkup, but instead, to take advantage of one Saturday in the Sacramento area to have major dental surgery, to deal with abscessed teeth, to deal with untreated root canals, people who actually had teeth replaced, because they had lost all of their teeth because of the lack of dental preventative care.

It shocked me and upset me. And I decided that you hold this mantle of power for a temporary period of time and I always ask myself, “What are you going to do with it?” I decided that I was going to make this a priority, because in a state rich in resources, rich in technology, rich and proud in its history, we can't have what I saw in Sac and what the people in San Jose saw several weeks ago.

We've got to provide basic dental care to people in need, again, many of whom are working people.

No. 2 is not a new theme for me, but mental health. I've been dealing [with it] for several years with this sort of unspoken, and in many instances, articulated frustration.

Why didn't Proposition 63 fix all of the problems in the mental-health system?

I think it's always important to say that Prop. 63 is doing remarkable work saving thousands of lives.

[Some] 27,000 people currently in “whatever it takes” services for those who are most seriously ill.

[There is] an array of prevention, early intervention, innovation, stigma reduction and suicide-reduction programs throughout the state that are off the charts.

The New York Times just wrote on Sunday, I believe on their front page, just wrote of the Hmong gardens in Fresno and how Fresno County is using Prop. 63 money to build community gardens. “Why?” you say. Because that is where the Hmong population and the Russian population and other distinct populations are comfortable [going] and talking about their issues. And they won't walk into a clinic that you just open on a storefront. It doesn't work that way.

We've got to be culturally competent; Prop. 63 is doing that and a whole lot more.

At the same time, there's this great frustration that people are not readily accessing services. And so, when we looked at the numbers, here's what we saw: Prop. 63 is generating a billion dollars a year, [plus] a little more. During that same period, that the billion dollars has grown and continued, … we have lost $700 million a year in pre-existing funding. If you remember, Prop. 63 was supposed to be on top of an insufficient level of funding. Instead, we've lost about $750 million at the bottom.

What does that mean? It means that people are showing up in emergency rooms, they are showing up at jails, they're on the streets, they're showing up at social-service facilities.

There is not capacity within the system to help people who are in the midst of a severe mental-health or mental-illness episode to one, get stable then two, be linked to the right level of long-term services.

We said this year, rather than focus on building more permanent services, which are needed—no question about it—instead, I decided that the best thing we could [do] with a limited amount of money was focus on the infrastructure and linkage. We've talked to the counties, we've talked to providers and we've talked to the clients. We saw the frustration that the governor has with, understandably, dealing with the three-judge panel in the federal court that says, “Release more people out of state prison.”

While the counties are saying, “Are you kidding me? We're already doing our fair share and more when it comes to realignment.” We all witnessed the terrible story of the Nevada mental-health system, where they bussed a guy to California and told him to call the police when he got off the bus. He ended up at Loaves & Fishes, God love them. They do God's work, and they do so much for so many. But the system is so broken, they didn't have the capacity to refer this guy and ended putting him on a bus to [UC Davis Medical Center].

All of that combined leads to a proposal, which calls for one-time expenditure of general-fund dollars of $142 million to build capacity for 2,000 crisis-residential and crisis-stabilization beds in California. What does that mean? There are great models throughout the state. Places outside of emergency rooms, outside of hospitals, outside of jails; places that have 24-hour care, where people in the midst of an intense psychotic episode or a severe mental-health episode can get the care they need outside of institutional settings [and] can get stable. Once they're stable, they then can be case managed and referred to the right level of treatment or services. It could be a full-service partnership under Prop. 63. It could be peer support, or it could be permanent supportive housing. It could be a whole host of things, depending on their history and what they need. The second part of the proposal is to provide the capacity of what I call “600 triage personnel.”

What are “triage personnel”? People with the training and the expertise to be able to assess somebody that comes into contact with the police, that comes into contact with the emergency room, that comes into contact in the jail setting, that comes into contact at Loaves & Fishes, or other similar places.

[They] can assess that person, refer them to a crisis bed, and then, ultimately, can case manage them to the right level of service.

I want 200 people that are stationed at emergency rooms throughout California, 200 people that are stationed at jails and 200 people that are at large social-service facilities throughout the state. To be able to be the point of contact for people with severe mental illness who come into contact with these systems. …

[I want] to get to people who might otherwise be hard to get to. We believe with this proposal, which only requires a one-time general-fund investment.

The rest can be done through a small tweak in the way we look at the state funding under Prop. 63 and matching it with federal funds. …

These 200 beds, of course, people will come in, but they will go, which will leave capacity for more people.

We want to help thousands of people and think that by investing in infrastructure and linkage that we can make Prop. 63 even more successful, because there will be a system to get people from the streets, from jail, from emergency rooms, from social-services facilities to the services. That's essentially the proposal.

You said that there were three things. What is the third?

The third is on the educational side, to bring back vocational education or career technical education to California high schools. The dropout rate has dropped, but it is still unacceptable, especially for Latinos and African-Americans. We seem to have this false choice in our education system where you're either for high standards or you're for vocational education. We need both. Again, in a state with the technology and expertise like California, there's no reason why algebra, geometry, sciences, English and history cannot be taught in multiple applied ways that relate to the leading and emerging industries where the job potential for young people is the greatest.

We took the entire Senate down to Long Beach in February, where we looked at what they call “link learning.” They actually teach these core courses in ways that are relevant to the leading growth industries in and around the Long Beach area. About a third of California kids have access to what we call “link learning” or “partnership academies.” But that leaves two-thirds who don't have access to this kind of approach.

It addresses a couple things. It addresses the fact that too many kids are not engaged, because they don't see the relationship between what is being taught and what they might actually do with their lives. It is relevant to the complaint we hear too often from business leaders that we aren't educating and graduating skilled and trained workers. It addresses the civil-rights issue around disproportionately high dropout rates for African-Americans and Latinos. It deals with, obviously in the broader sense, beyond the needs of individual businesses, with what ought to be our lead economic development strategy for the 21st century. How to educate and train young people to become relevant in the high-wage workforce.

What we're calling for is a one-time infusion of $250 million under the Prop. 98 budget to allow local districts and regional collaborations like we have in Sacramento—NextEd, for example—to be able to apply for major grants to be able to invest directly in California high schools. Even though the bill is changing a little bit, what I've said that I want to at least pilot the notion that if a business invests in a California high school to establish a career academy and that career academy is successful.

Lower dropout rates. More young people employed in the summer and after school. More young people going on to college or apprentice program ultimately working in the high-wage workforce—if it's successful, we ought to give business their money, their principal, plus a rate of return higher than what if they put that same money in a Wall Street hedge fund. That's the principal. What is it going to take to make it worthwhile for leading California industries to invest directly in California's high schools?

So, the total price tag of these three initiatives, in terms of your budget and comparing to Brown's budget, how many dollars are we talking about?

Well, again, the mental-health one is a one-time general fund; I won't even count that, because there's no ongoing obligation.

The dental is about $130 million annually. The career-tech ed is one time within Prop. 98. Now, it's not that we don't have a few other priorities; we also want to do some augmentation of the beleaguered courts in California have taken huge hits. I also to work to make sure that coin of the realm applied behavioral therapy that is available for autistic kids, whose parents have private health insurance, also applies to autistic kids under Medi-Cal.

What about Medi-Cal—aren't there changes in the reimbursement rate?

The whole issue of implementing Obamacare is absolutely essential, but it's all part of the core budget mix, as opposed to something that is considered additional. In terms of rate increases, which is what I think you're asking about.

The reimbursement rate for doctors and hospitals?

Our budget provides some augmentation for senior-care facilities. For example, it got double hit as a result of the way it was done back several years ago. But we do not provide in our budget, unfortunately, an across-the-board rate increase for doctors or hospitals. We don't because the price tag there would be about $600 million a year.

So, the total package, if you take all of the things you are advocating, how much difference is there from the Brown budget?

Well, we also have some offsets; there are some savings that we use that the governor doesn't have embedded in. But it would be about $300 million to $400 million a year above the governor's budget. … Let me give you an exact number: We have the dental, which is [$131 million]. We have the partial restoration of the rate fees for some nursing homes. We have the [Applied Behavior Analysis] therapy. We have some, as they call, knits and gnats. We have the mental health, which is one time. We've got the courts. UC Riverside medical school. We have a little bit on child care stage three, but it's $14 million, and that adds up to $487 [million], minus the offset of a couple hundred million dollars. … I think what we're looking at is $300 million.

So, it's only $300 million that's separating you and Brown?

Well, then the Assembly has its priorities. The Assembly has the speaker's Middle Class Scholarship, which I support, and they do some augmentation on the child-care side, as well as the CalWORKs side, all very worthy things. In the next two weeks, we're going to have to sit down and work this all out and negotiate it.

What is interesting about our approach is that the mental-health proposals, [there is] no ongoing general-fund money.

The dental is ongoing, but it is a crucial investment for, and related, connected inextricably, to physical health as well. That is ongoing. The rest of it is our other big initiative on the 98 side, which is in the education budget. And the remainder of this is small amounts of money. When you look at it this way, it's about $400 million on an ongoing basis.

For the three main things you talked about—Prop. 98, vocational education and dental health—these are all things that would, ultimately, prevent a bigger problem later. These are all things that are investments in our health infrastructure.

All three areas meet the definition of “invest modestly now, help a lot of people and save a lot over the long run.” Untreated dental-health issues lead to more frequent emergency-room visits and more physical-health problems. Mental health, it's obvious.

I think the conundrum right now that the governor faces, that I'm sympathetic to—about the courts saying you have to release more people from state prison—at the same time, the counties are saying we have as many people that we can handle in our county systems.

The one thing the courts don't have [is] the obligation to look at the whole system. They're just looking at one part of it. And what we have an opportunity to answer here—if not for the courts, at least for ourselves—is how do we keep people out of jail and prison once they leave? And one clear answer is investing in better mental-health services. The police will tell you, the sheriffs will tell you, the last place they want to drop people off who are either have committed some minor crime or no crime at all are at either the jail or the emergency room.

There's no other place else to take them currently. There is an opportunity to save precious resources by doing some smart investing in the mental-health area. And on the career-tech ed issue, what is the cost of these kids dropping out? It's hard to even calculate.

This debate has been characterized as Brown as the adult in the room. How do you want to respond to that?

You know, I've been around long enough to know that governors act like governors. Jerry Brown is the major adult in the room, but not the only one. I was here in 2009. I was here in 2010. I've been here during Gov. Brown's first two years. And we have made cuts that would be unimaginable in any other period of time in California. I never shied away with my politics and why I was motivated to run for public office in the first place. My colleagues and I never shied from making the hardest of hard cuts, because we had to. When it comes to arguing for modest reinvestments or modest investments into crucial areas, I feel just fine about where we stand.

Put the $400 million in context of the whole state budget. What percentage of it is it?

The general-fund budget under our proposal would be about $98 billion.

So, we're talking about half-a percent?

And again, remember, the Assembly has it's priorities, too, that will need to be factored in. It's still a small percentage, but here's the point that I'd like to make with you: It's budgetese, but it's really crucial.

If we have a difference with the governor at this stage, I think we can work all this it out. He projected revenues that were much more conservative than the legislative analyst. The legislative analyst does not have a reputation for being wild and crazy when it comes to state spending. They're very conservative themselves. But they said that the Department of Finance is too conservative.

Here's one of the important arguments: By taking the legislative-analyst's revenue, we can make some modest augmentation, like the kind I've described. But we also have the ability to pay down debt faster than what the governor proposes and to have a higher reserve than what the governor proposes in his May revision. And to have enough left over in case the legislative analyst's revenues are not conservative enough. That's an important point. …

That's why I say were not poles apart from the governor. We've been through the pain of cuts, we've made them, and we don't want to make them again. And the only way you don't make them again is to keep the budget stable. At the same time, there's a need to not only let a little air out of the pressure valve, but out of the hose.

But you've got to respond to the human need as well. Especially when it is so obvious and apparent, and you see people who are hurting and hurting really badly. It's that balance that I'm confident we can achieve.

Let's take that broad thing of the three programs and narrow it down.

OK, we've chosen three areas that minimize ongoing expenses, are responsive to those who have been hurt worse by those cuts over the last five years and provide an essential foundation for economic growth in California. Dental, the need is so obvious when you see what happens to people when they don't get preventive dental care. You see thousands lined up at a public venue to have a root canal dealt with or an abscess tooth or even major dental surgery to replace what's remaining of their teeth, because they didn't get preventative health care. The link between dental health and physical health is obvious and these same people are showing up at emergency rooms, costing the taxpayers a lot of money. And it's just plain humane to make sure that everybody has the ability to get their teeth fixed and to not have to suffer so much. Mental health? We have made such great strides in California, more than any other state in the country. And Prop. 63 is helping thousands of lives.

Investing in the right kind of prevention, early intervention and innovation approaches that are changing the face of mental health not only in the state but in the country. But there's so many more people in need, in part because we've lost so much of the funding that existed prior to Prop. 63 and rather than just build more services we call for more investment in infrastructure. Which is another way of saying how do we get people who come into contact with jails, emergency rooms and social-service facilities. How do we help that anguished parent get their adult child into services? How do we link them up to services? And our focus is building capacity for 2,000 crisis residential beds in California so that there's a safe place for people to get stable so they can get long term help. Then to hire 600 triage workers at jails, emergency rooms, social service facilities and mobile outreach vans. So there are trained people to help those who are really in trouble to help them get the help they need.

Then on career-tech ed, we want to change the face of high school in California, because one size does not fit all. And there is no reason why we can't have both high standards, academic rigor and career application across the board. We must find ways to invest leading California industries in California's high schools and that's what we seek to do with our $250 million proposal to invest directly into linked learning and career based academies.

And so, in all three of these areas I think that the stuff that's not in the proposal is the savings in jails, emergency rooms, and in terms of the dropout rates and in terms of dental health and to a certain extent you're almost doing bridge repair to the population that's going to have ancillary benefits for the future as opposed to letting the bridge fall apart.

On the health-care issues, we are paying a high price for not investing in that which should be basic. And you see it, the emergency rooms see it. The mental health proposal for example was stirred by the hospital association coming to me as saying what can you do to make it easier for us to release people being held on 5150 in emergency rooms. I said, we don't want to just release people, what are we doing for them? The dental care issue, I guess there a lot of people that aren't getting any care or treatment when they have an infection. Or have a high fever when they have an untreated dental abscess. But there are a lot of people showing up at the emergency rooms. I know on the education issue that we must engage more young people so that they don't become dropouts. All of these issues are define the essence of modest investments going a long way towards helping thousands of people and saving the taxpayers a lot of money at the same time. they're at the core of the definition of prevention.

To switch subjects, of course our readers are very interested that you sponsored the marijuana bill. Do you want to give an update on what's happening with that and that issue?

Yes, but they may not love my answer, because I really don't subscribe to legalization. I do believe that those have serious illnesses, whether it be epilepsy or late-stage cancer, those who are fighting to maintain their appetite, should have access to medical cannabis. And I worry now that so long as it is unregulated—and with the federal government taking the posture that they can come down and close a dispensary without notice—that those in need of medical cannabis are at risk. And so the feds have all but said to us, “Regulate this so that there is a clear distinction, yes on the medical cannabis side, no on the legalization side.” My bill is intended to help draw that line in a way that will assure those who need cannabis for medical reasons can get it now and in the future.

Do you think that it's going to get through the Assembly?

Yes, I'm working with Tom Ammiano, who's got part of the package as well.

Where is Gov. Brown on this?

I don't know. We haven't yet talked about it. We had a few other things to talk about first.

Anything else you want to add to this list?

No, you know for me, I've got 19 months left. The first four years as my time as the pro tem has been dominated by fiscal crisis and the budget cuts. I'm glad that time is over, don't want to go back, don't want any of my successors to have to go back but at the same time let's help the people who need help the most.

What happens in 19 months and 1 day?

I don't know, it's all up in the air at this point. I'm beginning to think about what I'm might do next in my life. It'll be hard to match this experience. I've no doubt that I'll do something that is interesting, that contributes and that keeps me involved in the stuff I care about. There may be another political office in the future. I just don't know yet.