This Briefing Paper summarizes the conclusions of the California Legislative Analyst’s Office (LAO) report from January 2010, which argued that IHSS is just barely cost effective to the state, and shows that some of the LAO’s assumptions are unrealistic. It presents a more realistic set of assumptions and then re‐estimates the relative benefits of the IHSS program. Finally, it considers the savings to the state if, instead of cutting or part of the IHSS program, the state transitioned one‐third of nursing home residents back into the community.