Human
Services
Budget
Update
|
Reporting on state budget provisions affecting Ohio’s |
|
Ohio United Way |
88
East Broad Street, Suite 620 Columbus, Ohio 43215-3506 (614)
224-8146
Fax (614) 224-6597 E-mail: [email protected]
ISSUE 3
FEBRUARY
7, 2003
In
This Issue
ü
2004-2005
Executive Budget Highlights
ü
House
Bill 40—Budget Corrections Bill
ü
Child
Care
On Monday, February 3, 2003 the Taft
Administration unveiled its recommendations for Ohio’s Fiscal Years 2004-2005
Biennial Budget. The budget period begins July 1, 2003 and ends June 30, 2005.
Although much of the proposal has been shared over the last two weeks, at 540
pages, the “blue disk” provides much more detail. A full picture will be
available once the budget bills are introduced. The bills will contain the
permanent and temporary law language needed to implement the program changes.
The Governor and Tom Johnson, Director
of the Office of Budget and Management, provided an overview of the economic and
budget realities that have lead us to a proposed budget which is universally
called “grim.” While some legislators and others are certain excessive
spending caused current and projected deficits, the Taft Administration blames
double digit increases in Medicaid spending and an economy that has been slow to
recover from a national recession. These
factors are primarily responsible for the current fiscal year’s $720 million
deficit and projected shortfalls of $3-4 billion for the 2004-2005 biennium. The
Governor was hesitant to put an exact figure on the shortfall, saying it depends
on one’s assumptions. He presented a budget proposal that is balanced through:
·
Continued cuts in state agency budgets,
·
Revenue enhancements, and
·
Medicaid cost containment.
The following Executive Budget
highlights are taken from or summarize, materials prepared by the Office of
Budget and Management.
How big is the budget?
|
|
Fiscal |
Fiscal |
Fiscal |
||
|
|
$ (in billions) |
$ |
% |
$ |
% |
|
All Funds |
48.6 |
48.7 |
.1 |
50.4 |
3.5 |
|
|
|
|
|
|
|
|
General Revenue Fund |
22.9 |
24.1 |
4.9 |
25.2 |
4.2 |
|
GRF—State Share |
18.2* |
18.8 |
3.5 |
19.5 |
3.8 |
|
|
|
|
|
|
|
|
Human Services–GRF |
10.0 |
10.9 |
9.0 |
11.4 |
4.6 |
|
Human Services—GRF State Share |
|
5.6 |
|
5.8 |
3.6 |
*
Ohio United Way estimate
The following table shows how state
spending increases have been driven by Primary and Secondary Education,
Medicaid, prisons and youth services institutions.
The DeRolph lawsuit has only increased pressure to adequately fund
schools. The Medicaid program is a health insurance program and is an
entitlement. The same increases we see in the health care industry are reflected
in the Medicaid program. State prisons are overcrowded and a move to lower cost,
community corrections has been slow.
|
Percentage |
|
|
|
|
|
|
|
|
|
|
General |
|
|
|
|
|
|
|
||
|
Fiscal |
|
|
|
|
|
|
|
|
|
|
Dollars |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recommended |
|
|
|
|
Expense |
FY |
|
FY |
% |
FY |
% |
FY |
% |
|
|
Education |
|
|
|
|
|
|
|
|
|
|
|
Primary |
$6,064.1 |
|
$6,385.60 |
5.3% |
6,561.0 |
2.8% |
$6,904.6 |
5.2% |
|
|
Higher |
$2,456.5 |
|
$2,461.10 |
0.2% |
2,509.5 |
2.0% |
$2,581.5 |
2.9% |
|
|
Other |
$52.3 |
|
$50.60 |
-3.3% |
45.6 |
-9.9% |
$48.5 |
6.4% |
|
|
Subtotal |
$8,572.9 |
|
$8,897.30 |
3.8% |
9,116.1 |
2.5% |
$9,534.6 |
4.6% |
|
|
|
|
|
|
|
|
|
|
|
|
Health |
|
|
|
|
|
|
|
|
|
|
|
Medicaid |
$7,126.6 |
|
$8,053.70 |
13.0% |
8,840.0 |
9.8% |
$9,305.6 |
5.3% |
|
|
Other |
$976.3 |
|
$880.80 |
-9.8% |
891.3 |
1.2% |
$897.9 |
0.7% |
|
|
MH/MR |
$852.4 |
|
$849.70 |
-0.3% |
884.4 |
4.1% |
$897.6 |
1.5% |
|
|
Other |
$253.6 |
|
$255.90 |
0.9% |
267.3 |
4.5% |
$277.6 |
3.9% |
|
|
Subtotal |
$9,208.9 |
|
$10,040.10 |
9.0% |
10,883.0 |
8.4% |
$11,378.7 |
4.6% |
|
|
|
|
|
|
|
|
|
|
|
|
Public |
|
|
|
|
|
|
|
|
|
|
|
Adult |
$1,576.0 |
|
$1,611.90 |
2.3% |
1,671.4 |
3.7% |
$1,695.2 |
1.4% |
|
|
Other |
$74.9 |
|
$65.90 |
-12.0% |
68.1 |
3.3% |
$70.2 |
3.1% |
|
|
Subtotal |
$1,650.9 |
|
$1,677.80 |
1.6% |
1,739.5 |
3.7% |
$1,765.4 |
1.5% |
|
|
|
|
|
|
|
|
|
|
|
|
General |
$1,434.4 |
|
$1,558.90 |
8.7% |
1,555.5 |
-0.2% |
$1,576.7 |
1.4% |
|
|
Executive/Legislative/Judicial |
$287.1 |
|
$292.40 |
1.9% |
315.5 |
7.9% |
$329.7 |
4.5% |
|
|
Transportation |
$324.1 |
|
$334.00 |
3.1% |
327.6 |
-1.9% |
$338.8 |
3.4% |
|
|
Environment |
$136.7 |
|
$137.90 |
0.9% |
140.1 |
1.6% |
$148.7 |
6.1% |
|
|
Capital |
$12.6 |
|
$8.10 |
-35.7% |
– |
0.0% |
– |
0.0% |
|
|
Total |
$21,627.4 |
|
$22,946.50 |
6.1% |
24,077.3 |
4.9% |
$25,072.6 |
4.1% |
|
|
Note: |
|
|
|
|
|
|
|
||
|
Prepared |
|
|
|
|
|
||||
The next table shows the impact of
non-discretionary budget items on the percentage growth in state spending. Once
again, Medicaid, education, and the institutional agencies are driving state
spending growth. Debt service is the amount the state must pay in interest for
capital projects.
GRF
Spending Growth
FY 04 FY 05
Total
State GRF growth
3.5% 3.8%
Ø
Less
Medicaid programs
2.3% 3.4%
Ø
Less
institutional agencies
1.9% 3.8%
Ø
Less
debt service
1.6% 3.6%
Ø
Less
education
0.5% 0.6%
Ø
Less
elected officials
-0.3%
0.2%
The Governor calls
Medicaid the “Pac Man” of the state budget. The following table and graph
show how Medicaid was one-third of the state budget in FY 2002 and is projected
to consume more than 37 percent of the state budget in FY 2005.
|
Percentage |
|
|
|
|
|
|
|
|
|
|
General |
|
|
|
|
|
|
|
||
|
Fiscal |
|
|
|
|
|
|
|
|
|
|
Dollars |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recommended |
|||
|
Expense |
FY |
% |
FY |
% |
FY |
% |
FY |
% |
|
|
Education |
|
|
|
|
|
|
|
|
|
|
|
Primary |
$6,064.1 |
28.0% |
$6,385.6 |
27.8% |
$6,561.0 |
27.3% |
$6,904.6 |
27.5% |
|
|
Higher |
$2,456.5 |
11.4% |
$2,461.1 |
10.7% |
$2,509.5 |
10.4% |
$2,581.5 |
10.3% |
|
|
Other |
$52.3 |
0.2% |
$50.6 |
0.2% |
$45.6 |
0.2% |
$48.5 |
0.2% |
|
|
Subtotal |
$8,572.9 |
39.6% |
$8,897.3 |
38.8% |
$9,116.1 |
37.9% |
$9,534.6 |
38.0% |
|
|
|
|
|
|
|
|
|
|
|
|
Health |
|
|
|
|
|
|
|
|
|
|
|
Medicaid |
$7,126.6 |
33.0% |
$8,053.7 |
35.1% |
$8,840.0 |
36.7% |
$9,305.6 |
37.1% |
|
|
Other |
$976.3 |
4.5% |
$880.8 |
3.8% |
$891.3 |
3.7% |
$897.9 |
3.6% |
|
|
MH/MR |
$852.4 |
3.9% |
$849.7 |
3.7% |
$884.4 |
3.7% |
$897.6 |
3.6% |
|
|
Other |
$253.6 |
1.2% |
$255.9 |
1.1% |
$267.3 |
1.1% |
$277.6 |
1.1% |
|
|
Subtotal |
$9,208.9 |
42.6% |
$10,040.1 |
43.8% |
$10,883.0 |
45.2% |
$11,378.7 |
45.4% |
|
|
|
|
|
|
|
|
|
|
|
|
Public |
|
|
|
|
|
|
|
|
|
|
|
Adult |
$1,576.0 |
7.3% |
$1,611.9 |
7.0% |
$1,671.4 |
6.9% |
$1,695.2 |
6.8% |
|
|
Other |
$74.9 |
0.4% |
$65.9 |
0.3% |
$68.1 |
0.3% |
$70.2 |
0.3% |
|
|
Subtotal |
$1,650.9 |
7.6% |
$1,677.8 |
7.3% |
$1,739.5 |
7.2% |
$1,765.4 |
7.0% |
|
|
|
|
|
|
|
|
|
|
|
|
General |
$1,434.4 |
6.6% |
$1,558.9 |
6.8% |
$1,555.5 |
6.5% |
$1,576.7 |
6.3% |
|
|
Executive/Legislative/Judicial |
$287.1 |
1.3% |
$292.4 |
1.3% |
$315.5 |
1.3% |
$329.7 |
1.3% |
|
|
Transportation |
$324.1 |
1.5% |
$334.0 |
1.5% |
$327.6 |
1.4% |
$338.8 |
1.4% |
|
|
Environment |
$136.7 |
0.6% |
$137.9 |
0.6% |
$140.1 |
0.6% |
$148.7 |
0.6% |
|
|
Capital |
$12.6 |
0.1% |
$8.1 |
0.0% |
– |
0.0% |
– |
0.0% |
|
|
Total |
$21,627.4 |
100.0% |
$22,946.5 |
100.0% |
$24,077.3 |
100.0% |
$25,072.6 |
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: |
|
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Source: |
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||
 |
Budget Corrections Bill
House
Bill 40 sponsored by Representative
Charles Calvert
(R-Medina) was introduced this week. The bill includes revenue enhancements that
the Governor says are necessary to avoid further agency and program cuts this
year. The Governor stressed that schools, higher education, PASSPORT, substance
abuse treatment programs and economic development programs would be cut if his
budget-balancing plan were not enacted. The 2004-2005 Executive budget assumes
the Governor’s plan for FY 2003 will be enacted.
In
his testimony, OBM Director, Tom Johnson identified the components of the FY
2003 projected deficit and Governor’s plan for addressing the deficit as
follows:
|
Tax |
$630 |
|
Earnings |
$50 |
|
Medicaid |
$40 |
|
Total |
$720 |
Budget Cuts
The
Governor has already issued an Executive Order that imposes an additional 2.5%
cut on state agencies, which will yield $121 million in savings. Because the year is half over, this is the equivalent of an
additional 5% cut, on top of the 15% cut that most agencies already received
this year.
In
addition, the Governor proposed a 2.5% cut for local governments, who have been
held to zero growth this year, which will generate $30 million. The Governor’s plan also calls for a transfer of $35
million from unclaimed funds and $21 million from non-GRF rotary funds.
Budget Stabilization
Fund
Use
the remaining $65 million available balance in the state’s Budget
Stabilization Fund, $40 million of which would go towards the increased costs of
the Medicaid program.
Revenue Items
For three straight months state revenues have come in well below
expectations. As of the end of
January, revenues are $112.4 million below estimates for the year.
The
Governor’s plan also contains several revenue provisions, including a plan to
accelerate collections of the sales tax.
Drug Rebate
Confidentiality
This
provision would keep confidential information shared between the Department of
Job and Family Services (ODJFS) and drug manufacturers in the process of
negotiating supplemental rebates. Without
this protection, drug manufacturers will likely be unwilling to participate in
this program because of competitive concerns.
The supplemental rebate program was first authorized in SB 261 of the 124th
General Assembly. The program is
projected to prevent the expenditure of at least $157 million in the upcoming
biennium. Without this change,
those savings would be in severe jeopardy.
Child Care Cost
Containment
Funding
the existing child care program, as it exists today would cost an additional
$117.5 million in FY 2004 and $151.3 million in FY 2005 above the levels
recommended in the Executive Budget. Language
in this bill will give ODJFS explicit authority to begin to implement a series
of cost containment proposals, including restricting eligibility for services. See
below.
RECLAIM Ohio Funding
Change
Currently,
the Department of Youth Services does not have the statutory authority to modify
the amounts distributed through the RECLAIM program if funding is reduced.
An amendment in this bill would grant them the authority to modify the
existing formula, only if their budget is modified.
Child Care
China
Widener, Assistant Director of the Department of Job and Family Services,
testified Thursday, February 6 before the House Finance and Appropriations
concerning the Governor’s FY 2003 proposal to contain child care costs as
detailed in House Bill 40. ODJFS is using unspent Temporary Assistance for Needy
Families funds to address a $70 million shortfall in child care funding this
year.
Cost
containment measures include:
- Lower
eligibility to 150 percent of the federal poverty level, from 185 percent
- Disenroll
existing participant above 150 percent of poverty during a six month transition
period
- Adjust
provider ceiling rates
- Increase
co-pays
There
has been some confusion regarding the specific proposals, so much so that ODJFS
Director, Tom Hayes, wrote a letter to legislators clarifying the child care
cost containment provisions.
Medicaid Cost
Containment
Bill
Hayes, and other members of the Ohio Health Plans staff provided clarification
regarding the Medicaid reform proposals. ODJFS’
elimination of the optional services of vision, dental, chiropractic, podiatric,
and psychological services only effect adults. Because of the EPSDT (Early
Periodic Screening , Diagnosis, and Treatment) program, children continue
eligibility for these services.
The
cut of psychology services is only for those services provided by a psychologist
who directly bills Medicaid. Community mental health centers or other
institutional mental health providers should not be affected.
Except
as the overall drug coverage may change to include co-pays for non-preferred
drugs, Medicaid coverage for mental health drugs will also not change.
Per Gene King of Ohio State Legal Services Association, ODJFS also clarified the
proposed changes to vision services. Medicaid will continue to cover eye
exams and medical treatment for vision needs, but it will no longer provide for
glasses. So, a Medicaid recipient will be able to get an eye exam,
including a prescription for glasses, but will have to pay for glasses herself.
Please
contact me for information (614.224.8146 or [email protected]), or visit the
following websites if you want copies of the Executive Budget or testimony:
·
FYs
2004-2005 Executive Budget— http://www.state.oh.us/obm/information/budget/Bluebook0405/pdf/comp.pdf
·
OBM
Director’s February 4, 2003 Testimony before the House Finance and
Appropriations’ Committee on the FYs 2004-2005 Biennial Operating Budget– http://www.state.oh.us/obm/information/budget/Bluebook0405/pdf/testimony0405.pdf
;
·
ODJFS
Assistant Director, China Widener’s testimony regarding House Bill 40’s
child care provisions – http://www.state.oh.us/odjfs/oleg/testimony/HouseBill40_125.pdf
·
Director
Hayes’ letter to the General Assembly regarding House Bill 40’ child care
provisions– http://www.state.oh.us/odjfs/oleg/comm/HB_40.pdf
Robin Harris, Director
of Public Policy