Transcript Federal Funding Update New Era in State-Federal Relations August 2011 Federal Funds Information for States.

Federal Funding Update
New Era in State-Federal
Relations
August 2011
Federal Funds
Information for States
Overview: What’s in Store for States?

Significant reductions in federal spending
–
–

Increased focus on program accountability,
performance, and transparency
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Program consolidations, eliminations, funding cuts
Potential changes in Medicaid financing, matching
rates (no longer the unthinkable)
New reporting requirements
Even more program uncertainty
–
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Program expirations, extensions
Health care reform
Pieces of the Federal Budget Pie
Grants to State and Local Government
State/Local Grants by Program Area
Federal Outlays to State and Local Governments, FY 2010
($ in Billions, % of Total)
Justice, $5 (1%)
HHS makes up 37%
Other, $8 (1%)
Income Security, $115
(19%)
Energy, Natural
Resources,
Environment, $12 (2%)
Health, $290 (48%)
Agriculture, $1 (0%)
HHS makes up 15%
Community and
Regional Development,
$19 (3%)
Education, Training
Employment, and Social
Services, $98 (16%)
Transportation, $61
(10%)
Federal Debt Negotiations
Federal Debt Negotiations

What will it mean for states if the debt limit
isn’t raised?
–
Reduced or delayed payments

–
Bills paid in order they come due

–
Federal revenue = 20% state/local revenue
Treasury officials – don’t have legal authority to pay bills
based on political, moral, or economic considerations
Bipartisan Policy Center Analysis

Daily inflow vs. committed spending (by program)
Federal Debt Negotiations

What will it mean for states if an agreement is
reached to raise the debt limit and reduce
federal spending over the next several years?
–
Deep cuts in discretionary spending
Most state impacts not immediately known
 Macro-level cuts (discretionary spending caps)
– Funding reductions will vary by program, determined
through appropriations process
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–
Mandatory program changes inevitable
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Create committee to propose further deficit reduction
Major Themes of Various Deficit
Reduction Commissions, Plans
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Reduce federal debt to a sustainable level
Bring federal budget into balance within the
next several years
Implement fundamental tax reform
Restrict domestic discretionary and defense
spending
Reduce improper payments
Cap growth of entitlement spending
Implement health care cost containment
Focus on Debt, Deficit Reduction

Examples of Medicaid Reforms
–
–
Greater use of managed care for “dual eligibles”
Modifying current federal matching payment
system
Block grant
 Reduce administrative costs
 Restrict/eliminate provider taxes
 Increase state flexibility, waivers
 Blended Medicaid matching rate

Blended Medicaid Matching Rate:
Much Attention, Few Details

President’s deficit reduction framework:
“Under current law, states face a patchwork of
different federal payment contributions for
Medicaid the Children’s Health Insurance Program
(CHIP). The President’s framework would replace
the current complicated Federal matching
formulas with a single matching rate for all
program spending that rewards States for
efficiency and automatically increases if a
recession forces enrollment and State costs to
rise.”
Blended Medicaid Matching Rate:
Much Attention, Few Details

What we are hearing:
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–

Proposal focuses on services, not administrative
costs
A single blended rate for each state
What we don’t know:
–
–
Effective date
How calculated, assumptions (particularly regarding
health care reform changes)
Current Medicaid Matching Rates
Description of Exception
Federal Match Rate
Certain populations, services, and payments:
Newly eligible individuals in new eligibility
group for non-elderly, non-pregnant
adults at or below 133% federal poverty
level (FPL)
Individuals in early-expansion states that
are enrolled in above eligibility group
Certain women with breast or cervical
cancer
Qualifying Individuals Program
Calendar years (CY) 2014-2016 = 100%
CY 2017 = 95%
CY 2018 = 94%
CY 2019 = 93%
CY 2020+ = 90%
Varies based on formula, effective CY 2014
Enhanced FMAP
100%
Family planning services and supplies
90%
Certain preventive services and adult
immunizations
Effective CY 2013, a one percentage-point
increase in FMAP
Current Medicaid Matching Rates
Description of Exception
Federal Match Rate
Smoking cessation for pregnant women (if
states also cover preventive services and
adult immunizations)
Health homes for certain individuals with
chronic conditions
Home and community-based attendant
services and supports to certain
individuals
Increased Medicaid physician
reimbursement rates for certain primary
care services (as mandated by ACA for CYs
2013-2014)
Services through Indian Health Service
Facility
State balancing incentive payments for
long-term care services and supports
Effective CY 2013, a one percentage-point
increase in FMAP
As of CY 2011, 90% for first eight quarters
Effective FY 2011, six percentage-point
increase in FMAP
100% of the incremental cost (only CYs
2013-2014)
100%
FYs 2011-2015, two or five percentagepoint increase
Federal Budget: FY 2011 Recap
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
Enacted via CR, not regular appropriations bill
–
No explanatory statements, funding tables
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Account-level funding, some program detail
–
Provided agencies with wide discretion
Cut spending by $40 billion, approximately $10
billion from state/local programs
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Included 0.2% across-the-board cut
–
Canceled $3.5b in CHIPRA performance bonuses
–
Reduced funding for major HHS programs (-2.4%)
President’s FY 2012 Budget - Overview

Overall freeze on non-security discretionary
spending for five years
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Major restructuring of education and
transportation programs, few changes in other
areas
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Program consolidations (chronic disease)

A few new programs (substance abuse/mental
health)

Focus on program integrity (LIHEAP, Medicaid,
Child Care)
President’s FY 2012 Budget - Overview

Replaces existing formula programs with
competitive programs

Increased focus on performance, incentive
payments (CSBG, CSE, Foster Care)

Major Discretionary Programs: 20% increase
(absent transportation, level funding)
–

Health and Human Services – 1.7% reduction (some
program eliminations)
Major Mandatory Programs: 7% increase
FY 2012 Congressional Action
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House adopts budget resolution (4/15/11)
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Sharply reduced spending ceilings
Major program assumptions
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Convert Medicaid to block grant in FY 2013
Repeal key provisions of health care reform
Convert SNAP into block grant with time limits and work
requirements
And more!
No budget resolution in Senate, action on hold
Behind schedule, even more than usual (another year of
CRs, great uncertainty); most difficult bills not yet tackled
Progress on Appropriations Bills
Bill
House
Agriculture
Full:
6/16/11
Commerce/Justice/
State
Committee:
7/13/11
Defense
Full:
7/8/11
Energy/Water
Full:
7/15/11
Financial Services
Committee:
6/23/11
Homeland Security
Full:
6/2/11
Senate
Conference
Progress on Appropriations Bills
Bill
Interior/
Environment
House
Senate
Committee:
7/13/11
Labor/HHS/Ed
Legislative Branch
Full:
7/22/11
Military/Veterans
Full:
6/14/11
State/Foreign
Operations
Transportation/
HUD
Full:
7/20/11
Conference
Overall Cap, Subcommittee Allocations
Appropriations
Subcommittee
President’s Request
(in millions)
Senate
House v.
President
House v.
FY 2011
Agriculture
$22,868
-22.6%
-13.4%
Commerce/Justice
60,539
-12.9
-5.8
Defense
530,891
-1.7
3.3
Energy/Water
35,343
-16.1
-3.3
Financial Services
25,514
-22.6
-9.4
Homeland Security
43,636
-6.8
-2.6
Overall Cap, Subcommittee Allocations
Appropriations
Subcommittee
President’s Request
(in millions)
Interior/EPA
Labor/HHS/Ed
House v.
President
House v.
FY 2011
$32,377
-12.2%
-7.1
170,611
-23.0
-11.6
Legislative Branch
5,124
-11.1
-5.0
Military/Veterans
75,996
-1.7
-0.8
State/Foreign
Operations
56,656
-22.1
-17.8
Transportation/
HUD
68,739
-36.2
-13.9
$1,128,294
-10.7%
-2.9%
TOTAL
Senate
Funding Levels for Major Health and
Human Services Programs
Program
FY 2010
(in millions)
FY 2011
(in millions)
FY 2011 v.
FY 2010
President v.
FY 2010
President v.
FY 2011
$1,799
$1,783
-0.9%
-17.0%
-16.2%
Mental Health
Block Grant
421
420
-0.3
3.3
3.5
Maternal & Child
Block Grant
662
656
-0.9
-1.2
-0.4
2,190
1,581
-27.8
-3.3
34.0
Preventive Health
Block Grant
102
80
-21.5
-100.0
-100.0
Family Planning
317
299
-5.6
3.2
9.2
Substance Abuse
Block Grant
Consolidated
Health Centers
Funding Levels for Major Health and
Human Services Programs
Program
FY 2010
(in millions)
FY 2011
(in millions)
FY 2011 v.
FY 2010
President v.
FY 2010
President v.
FY 2011
Immunization
Grants
$497
$426
-14.3%
-12.8%
1.7%
Ryan White AIDS
Grants
2,291
2,312
0.9
4.8
3.9
Hospital
Preparedness
Formula Grants
420
378
-10.0
-10.7
-0.8
CDC-State &
Local Capacity
761
654
-14.0
-14.5
-0.5
7,235
7,560
4.5
12.0
7.1
282
281
-0.4
0.0
0.4
Head Start
Child Welfare
Services
Funding Levels for Major Health and
Human Services Programs
Program
FY 2010
(in millions)
FY 2011
(in millions)
FY 2011 v.
FY 2010
President v.
FY 2010
President v.
FY 2011
Community
Services Block
Grant
$700
$679
-3.1%
-50.0%
-48.4%
Child Care &
Development BG
2,127
2,233
4.5
37.6
31.7
Low-Income
Home Energy
Assistance
5,100
4,701
-7.8
-49.6
-45.3
731
729
-0.2
12.9
13.1
1,516
1,497
-1.3
6.9
8.3
Refugee
Assistance
Administration on
Aging
All Eyes on Program Accountability,
Performance, and Transparency

Digital Accountability and Transparency Act
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Passed House committee in June
Support from Senate, administration
Key provisions
–
–
–
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Mandates full multi-tier reporting
Requires recipients to report on use of funds
Fewer exemptions from reporting requirements
Establishes FAST Board (Federal Accountability and
Spending Transparency Board)
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Focus on waste, fraud, and abuse
All Eyes on Program Accountability,
Transparency, and Integrity
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State concerns
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–
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Increases cost for states without funding or ability to
increase administrative caps within existing programs
Leaves significant discretion to FAST Board,
particularly regarding reporting frequency
Excludes state/local representative from FAST Board
Retains duplicate reporting for states
Creates new reporting system, less than a year after
FFATA was fully implemented
Even More Program Uncertainty
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Upcoming program expirations (require
congressional action)
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TANF, Child Care Development Fund – matching and
mandatory (September 30, 2011)
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–
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
TANF supplemental grants (June 30, 2011)
Medicaid Qualifying Individuals (QI) Program
(December 31, 2011)
Transitional Medical Assistance (TMA) Program
(December 31, 2011)
Many discretionary programs w/ lapsed
authorization
Health Care Reform Funding
Remains at Risk


Affordable Care Act (ACA) included more than
100 funding opportunities of interest to states
Some programs received both authorizations and
appropriations (most of these funds have been
announced or awarded)
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Most programs received only an authorization
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–
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Prevention and Public Health Fund (PPHF)
Require funding through appropriations process
No new funding to date, some programs have
received PPHF transfers
Proposals to restrict/repeal funding
Health Care Reform Grant Allocations
(dollars in thousands)
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Total
$15,747
14,803
27,663
18,028
177,945
57,589
37,218
7,701
26,645
90,358
26,352
16,641
28,813
80,264
27,500
22,251
41,064
37,196
26,211
21,432
24,477
219,505
47,287
201,575
46,766
42,347
9,161
18,018
State
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Virgin Islands
Territories
Unallocated
TOTAL
Total
16,675
8,191
36,565
59,343
120,519
50,515
6,820
137,749
75,358
91,870
40,179
35,750
17,788
3,828
165,510
59,711
12,541
29,817
49,778
53,386
49,724
66,298
14,529
23,587
2,830
7,674
4,120
$2,651,213
Take-Aways
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FY 2012 budget won’t happen anytime soon
Program extensions continue (few, if any,
reauthorization bills will pass)
Entering an era of restrained federal spending for
foreseeable future
Major restructuring of state-federal programs
–
–

Program consolidations
Entitlement reform
What does this mean for states?
Federal Revenue as a Percent of State and
Local General Revenue, FY 2008
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
State
Louisiana
Mississippi
District of Columbia
Montana
South Dakota
Vermont
New Mexico
Arkansas
Wyoming
West Virginia
Kentucky
Alabama
Maine
Oklahoma
North Carolina
Missouri
Rhode Island
Arizona
Tennessee
South Carolina
North Dakota
Georgia
Oregon
Ohio
Idaho
Iowa
Percent
35.8%
35.5
30.0
28.0
26.5
26.5
26.3
25.9
25.7
25.0
24.9
24.8
24.0
23.8
23.5
23.4
23.1
22.6
22.6
22.4
22.0
22.0
21.6
21.4
21.2
20.8
Rank
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
State
Michigan
Texas
Utah
Pennsylvania
U.S. Average
Nebraska
Hawaii
New Hampshire
New York
Indiana
Massachusetts
Maryland
Illinois
Minnesota
Washington
California
Wisconsin
Kansas
Florida
Delaware
Colorado
Connecticut
New Jersey
Virginia
Alaska
Nevada
Percent
20.3%
20.1
20.1
19.9
19.8
19.7
19.6
19.6
19.5
19.4
19.1
18.2
18.2
18.1
17.7
17.6
17.6
17.3
17.1
17.0
15.1
14.6
14.1
14.1
13.3
12.5
The End
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