With 1/4 of Californians 60 and older by 2030, experts warn of fiscal disaster

(The Center Square) - One in four Californians will be 60 or older by 2030, according to a new report from the state government. Amid rising deficits and declining workforce participation, a declining number of workers are left to pay for state benefits for a growing population of retirees, including illegal immigrants. Without major reductions in spending, experts warn the state faces fiscal disaster.

As the state’s population ages, state leaders have focused their attention on creating more benefits for older Californians, namely through growing food, healthcare and housing programs. However, the state already faces a $68 billion deficit for the 2024-2025 fiscal year, leading experts to suggest that this expansion, let alone maintaining current levels of benefits, may not be feasible.

“When enough people actually move out of the state and stop generating personal income taxes and when real estate starts to flatten and then decline, things start to happen with revenues at the state and local level,” said government and pension finance expert and former State Sen. John Moorlach to The Center Square. “When it comes to budget cuts, the last thing the government has an ability to do is reduce the workforce because the unions are powerful enough to maintain a posture of not doing any layoffs. Cuts are going to have to go to this impacted demographic group of seniors and welfare — that’s the obvious first cut.”

Due to outmigration of working individuals and their families, California’s population has been in decline since 2020. Meanwhile, the state has nearly doubled its budget in the last six years to expand government programs and services. With a $68 billion deficit projected for the 2024-2025 fiscal year by the non-partisan, state-run Legislative Analyst’s office, S&P reduced its outlook for the state’s general obligation bonds from “positive” to “neutral,” a move that Moorlach said is likely a prelude to a downgrade of the state’s credit rating if major fiscal changes are not made.

“Older Californians continue to face challenges accessing affordable and equitable health care and long-term care, economic supports, housing, and other resources — all made worse by ageism, racism, and other forms of discrimination that are deeply entrenched in everyday life. But the state’s Master Plan for Aging — now in Year 3 and focused on implementation — offers a roadmap to a more equitable California for all,” said Denny Chan, who serves on the state’s Equity Advisory Committee on Aging and Disability and Justice in Aging, in the Department of Aging’s third annual report.

The state’s 2023-2024 budget expanded CalFresh, the state’s food assistance program, to cover illegal immigrants over the age of 55 starting in October 2025, and earlier expanded CalFresh to older adults receiving Supplemental Security Income and State Supplementary Payments, increasing the number of older beneficiaries from 332,000 older adults in 2018 to 992,000 in 2022.

The state is also adding “skilled nursing facility care” into “Medi-Cal Managed Care Plans” that all residents are now eligible for; California expanded Medi-Cal eligibility to illegal immigrants on January 1, 2024. The expansion of Medi-Cal to illegal immigrants is expected to cost the state $3.4 billion this year, with the adoption of a $25 per hour healthcare sector minimum wage — to be also paid at skilled nursing facilities through Medi-Cal — projected to cost the state another $4 billion in just its first year of adoption alone in higher public healthcare medical costs. Medi-Cal is also phasing out its asset test, which currently excludes individuals with assets over $130,000, plus an additional $65,000 allowed for each household member, to facilitate the program’s coverage expansion.

Medi-Cal has also been expanded to cover housing, with assisted living waiver (ALW) recipients, able to receive personal assistance, laundry services, housekeeping services, skilled nursing care, daily meals, transportation, recreational activities and social services. ALW recipients cover their own room and board — approximately $1,400, with Medi-Cal paying residential care facilities for the elderly and home health agencies rates ranging from $88 per day to $250 per day depending on the level of care required. Because this program is not an entitlement, participation is contingent on available supply, and there are waitlists. Nonetheless, the program is a significant cost, and growing this program and other Medi-Cal programs to cover even “middle income” Californians, as outlined in the Department of Aging’s third annual report, would require major growth in public spending.