HOPE’s Response to the 2021 California Budget
HOPE applauds the strategic and equity focused investments in the 2021/22 California Budget released by Governor Newsom. We believe that many of the proposals presented in the $227.2 Billion budget are a strong step to supporting Latinas and all Californians on the road ahead to relief and recovery from the devastating impacts of COVID-19.
THE STATE OF LATINOS & COVID-19
In California, 1 in 5 people is a Latina and the Latino Community comprises 26.7% of California’s electorate. Latinos contribute billions into California’s economy and boasted an impressive $453 Billion purchasing power in 2019, a 70% increase from 2010. This growth was almost wiped away overnight with the COVID-19 induced economic recession and public health crisis which continues to disproportionately impact Latino communities in our state.
“Latinas have been disproportionately impacted by the COVID-19 pandemic both in health and work, highlighting the systems that holds our communities back,” said Helen Torres, executive director of HOPE. “While Latinas remain resilient, policymakers must implement policies and an equity-based budget to advance Latinas’ economic recovery and eliminate inequalities moving forward.”
HOPE firmly believes that the state’s recovery from COVID-19 must be led with an equity lens, given the disparate health, education and economic impacts of this pandemic on the Latino community.
▪ As of December 2020, Latinos in the state have accounted for 56% of confirmed COVID-19 cases and 48% of deaths, despite being 39% of the population.[1]
▪ In California, 11% of Latinos had no health insurance coverage in 2018 and represented 63% of all uninsured people in the state.[2]
▪ As of June 2020, the average Latino student experienced roughly 9 months of learning loss.[3]
▪ Nearly 30% of all Latinas lost their jobs in the first months of the pandemic and nearly 40% of undocumented Latinas lost their jobs by May 2020.[4]
▪ Prior to COVID-19, Latinas had created 2.3 million new firms representing 18% of all women-owned businesses. Like all small businesses, this landscape has dramatically altered due to COVID-19 shelter in place orders. Polls in March and May 2020 found that 65% of small business would not be able to continue operating beyond a six-month lockdown.[5]
CA 2021/22 BUDGET RESPONSE
As the 5th largest economy in the world, California’s $227.2 Billion budget is the sharpest tool that decision makers have to ensure that the path to relief and recovery works for Latinas and all Californians. We look forward to partnering with the Governor and the California Legislature to ensure that the final budget will reflect our collective values and concretely support those who have been most impacted by the pandemic. We are encouraged by the following proposals announced by Governor Newsom:
EDUCATION
Latino students are the largest student group in California’s K-12 system and as noted in our 2020 Economic Status of Latinas Report, are the largest share of each of the student subgroups in the Local Control Funding Formula. Supporting Latino students, English Learners, Foster Youth and Low-Income Students will be necessary in mitigating the learning loss experienced during distance learning. We are encouraged by the following investments:
▪ 2 Billion for Safe Schools for All Plan is a proposal that creates a blueprint for school districts to safely open for K-6 grades if their respective county is experiencing less than28 per 100,000 COVID-19 cases. This proposal allocates funding for teacher Personal Protective Equipment, Contract Tracing, Testing and other services that would allow for a safe opening. Additionally, it allocates an additional $450 per pupil and an additional $360 for student subgroups such as English Learners, Foster Youth and Low-Income Students.
▪ $4.6 Billion for Extended Learning which allows Local Education Agencies to extend classroom instruction via summer school, before & after school programs.
▪ $300 Million for preschool programs (an unprecedented 60% increase)
HIGHER EDUCATION
In California, 15% of Latinas had at least a Bachelor’s degree, a 2% increase between 2015 and 2018, but considerably lower than 43% of White women who have at least a Bachelor’s degree — a gap of 28 percentage points. This progress has been impacted by COVID-19 where students are dis-enrolling in higher education at high rates, an estimated 8% compared to last Fall for California Community Colleges.[6] The 2021/22 Budget proposes total funding of $36.1 billion ($21.8 billion General Fund and local property tax and $14.3 billion other funds) for higher education, a notable 3% increase in areas of student engagement, financial aid and faculty professional development.
▪ $786 Million Additional funding for CSU’s & UC’s. This proposal includes $361 Million for the UC’s and $425 for the CSU’s in 1-time additional funding to recover from the multitude of impacts of COVID-19 and enrollment. This new funding will be coupled with an estimated 2.9 Billion that California’s higher education institutions are slated to receive from the most recent Federal COVID-19 Stimulus package passed in December 2020.
▪ $250 million one-time General Fund to support workforce development and better linkages between higher education and gainful employment, focusing on communities that have been systematically excluded from opportunities to build skills and create wealth.
▪ $225 million one-time General Fund to support emergency financial assistance grants to students in need, support for culturally competent professional development focused on the provision of online courses and programs, support for the Computing Talent Initiative, and for deferred maintenance.
SMALL BUSINESS INVESTMENTS
HOPE’s 2018 Microbusiness report highlighted that Latinas start microbusiness at 3 times the rate of typical entrepreneurs and prior to COVID-19, Latinas had created 2.3 million new firms representing 18% of all women-owned businesses. Like all small businesses, this landscape has dramatically altered due to COVID-19 shelter in place orders. Polls in March and May 2020 found that 65% of small business would not be able to continue operating beyond a six-month lockdown. Significant investments in supporting struggling small businesses will be critical to ensuring California’s economy is poised to recover swiftly, these concentrated proposals are a positive first step to this end.
▪ $1.075 Billion Small Business COVID-19 Relief Grants that will put money into the hands of the most impacted small businesses as quickly as possible. Governor Newsom is requesting a rapid response to this budget proposal. The program offers grants up to $25,000 to micro and small businesses that have been impacted by the pandemic. These grants will be distributed across the state, with priority given to regions and industries impacted by the COVID-19 pandemic, disadvantaged communities and underserved small business groups.
▪ $70. 6 Million Invested in fee waivers to small businesses that have not been able to operate or are operating at reduced capacity during the pandemic. These include barbers, cosmetologist, manicurists, bars and restaurants.
TAX CREDIT
A growing body of research confirms that investing in the California Earned Income Tax Credit (Cal EITC) is one of the strongest anti-poverty strategies the state has. The Center on Budget and Policy Priorities finds that “low-income children whose families receive the EITC have better health and higher school test scores and education attainment, on average, which in turn is linked to increased earning and employment- and, thus, likely lower rates of poverty in adulthood.”[7]
▪ Golden State Stimulus would expand the California Earned Income Tax Credit (CalEITC) to provide $600 to 3.9 Million Californians who received the CalEITC in 2020 or who are eligible for the credit in 2021. The CalEITC that individuals receive depends on income and family size. You can click HERE to check eligibility. We applaud leadership for ensuring that this benefit extends to those with an Individual Taxpayer Identification Number (ITIN).
HEALTH ACCESS/COVID-19 RECOVERY
As of December 2020, Latinos in the state account for 56% of confirmed COVID-19 cases and 48% of deaths, despite being 39% of the population. The devastation of high infection rates among Latinos are exacerbated by low insurance coverage rates in our communities. In California, 11% of Latinos had no health insurance coverage in 2018 and represented 63% of all uninsured people in the state.
▪ $300 Million in a Vaccination Campaign which can be allocated immediately as needed for expenses to expedite the delivery of COVID-19 vaccinations.
The health of California’s economy is directly tied to the health, economic, and educational prospects of Latinas. We feel encouraged by these budget proposals and look forward to furthering the conversation around Health Care 4 All, Higher Education Restoration of Funds, and that small business investments support those most impacted. We look forward to partnering with the Governor and State Legislature to ensure the final budget works for Latinas and all Californians.
Resources:
Legislative Analyst Fiscal Outlook 2021–22
California’s Safe Schools For All Plan
California Earned Income Tax Credit
Full 2021/22 CA State Budget Proposal
Sources:
[1] The COVID Tracking Project. Retrieved December 29, 2020. https://covidtracking.com/race/dashboard#state-ca.
[2] U.S. Census. (2018). American Community Survey 1-year estimates. [Table C2702 and S2702]
[3] COVID-19 and student learning in the United States: The hurt could last a lifetime. https://www.mckinsey.com/industries/public-and-social-sector/our-insights/covid-19-and-student-learning-in-the-united-states-the-hurt-could-last-a-lifetime
[4] HOPE Economic Status of Latinas Report, September 2020.
[5] Stanford Latino Entrepreneurship Initiative. (2020). The Impact of COVID-19 on Latino-Owned Businesses. https://www.gsb.stanford.edu/sites/gsb/files/2020_slei_first_covid_survey_results.pdf?undefined.
[6] CA Proposed Budget. http://www.ebudget.ca.gov/2021-22/pdf/BudgetSummary/HigherEducation.pdf
[7] CEnter on Budget and Policy Priorities. EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s Development, Research Finds. https://www.cbpp.org/research/federal-tax/eitc-and-child-tax-credit-promote-work-reduce-poverty-and-support-childrens