The Governor’s Plan To Close The Budget Gap

 

With the global economic crisis hitting here at home, and projecting a budget gap of $1.421 billion in the state's $28.2 billion budget for fiscal year 2009, the Governor has to make deep cuts to the state budget and increase revenues. Additional reductions may be necessary later this year.

As much as possible, the Governor tried to minimize the cuts to programs targeted to people experiencing homelessness, veterans, people with disabilities, and those fleeing domestic violence. In his speech announcing the cuts, Governor Patrick said, "I have a legal obligation to balance the state budget. I also have a moral obligation to ensure that our state government continues to provide, to the extent possible, the essential services we depend on as a community."

HEALTH CARE

The Governor’s “9C” (the authority used in times of fiscal shortfall to make cuts) cuts reduces funding for health care programs by $340.2 million, including $243.8 million for MassHealth and Health Reform, $33.5 million for mental health programs, $31.2 million for public health, and $31.7 million for state employee health benefits. Highlights of these reductions include:

MassHealth (Medicaid) and Health Reform

• Although the Governor reduces funding for MassHealth enrollment and outreach grants by $2.5 million, he has arranged for the Health and Education Facilities Authority (HEFA) and the Commonwealth Care Connector Authority (CCA) to cover the costs of funding this program.
• The reductions in the MassHealth program seem to focus on reductions in payments to providers, rather than on reductions in benefits or eligibility. The Governor concentrates the reductions in the Managed Care Program ($101.9 million), the Indemnity/Third Party Liability Program ($51.0 million), and the Senior Care Program ($60.2 million).
• The MassHealth dental program was preserved!
  MassHealth dental benefits and eligibility are preserved.  The rates paid to dental providers who treat children are expected to increase on January 1st.  Details about this rate increase have not yet been released.  The rates paid to dental providers who treat adults on MassHealth will remain at FY08 levels.  As you may know, FY08 adult rates do not cover the cost of providing care and are a major barrier to providing access to oral health care for all residents. 
• The Governor reduces spending in the Community First Initiative from $20.0 million to $6.5 million. Because this is a new program implemented under a federal waiver, no one will lose services, but there may be a slowing-down of this effort to encourage community-based long term care.
• The Governor reduces funding set aside in a new reserve to fund the implementation of MassHealth funded mental health evaluations (the so-called Rosie D. program) from $25.0 million to $21.5 million. The administration anticipates that this reduced amount, however, will still be sufficient to fund the costs of this new service.
• The Governor cuts $500,000 from a new reserve allocated to focus on strategies for health care cost containment, leaving $1.0 million. The Governor states, however, that health care cost containment efforts will continue.
• The Governor also, in accompanying legislation, proposes reducing a supplemental payment of $64.0 million to the Boston Medical Center, one of the Commonwealth’s safety net providers. This $64.0 million, which had been allocated to the Commonwealth Care Trust Fund to make this special payment, would be returned to the General Fund. The Governor also proposes returning to the General Fund $5.0 million of the $25.0 million transferred to a new eHealth Institute designed to encourage the statewide use of electronic health records.

Mental Health

• The Governor reduces funding for adult mental health services by nine percent, from $322.1 million to $294.1 million. Of the $28.0 million, $22.0 million would be covered by transferring the obligation to various trusts. Similarly, the $2.1 million reduction to the statewide homeless program would be covered by the transfer of the funding obligation to various trusts.
• The 9C cuts reduce funding for child and adolescent mental health services by $2.3 million, from $76.2 to $73.9 million. The Governor states that with the redesign of its service delivery system, this reduction should not significantly affect service levels.

Public Health

• The Governor cuts $2.9 million from funding of $5.8 million for youth violence prevention grants, eliminating funding for earmarked programs.
• The Governor cuts a new initiative intended to improve the health care delivery system: a $200,000 cut to a $500,000 academic detailing program, designed to improve the appropriate use of prescription medications.
• The cuts include a total of $8.1 million cut from substance abuse programs: $2.9 million from the Division of Substance Abuse Services; $200,000 from a step-down recovery program; and the elimination of a new $5.0 million program providing secure treatment services for people with opiate addictions.
• The 9C cuts reduce funding for AIDS/HIV prevention services by $1.5 million, from $37.7 million to $36.1 million.
• The Governor reduces funding for smoking prevention and treatment programs from $12.8 million to $12.2 million.

State Employee Health Insurance

The Governor proposes a $31.7 million cut to the Group Insurance Commission (GIC), the agency that provides health insurance for the state’s current and retired employees. This reduces the GIC budget from $1.328 billion to $1.296 billion. The Governor also proposes shifting health insurance costs onto state employees by implementing a three-tiered employee contribution schedule.

HUMAN SERVICES

The Governor’s 9C reductions eliminate $46.4 million in funding for Human Services programs. These cuts include:

• $4.0 million (from a $106.7 million appropriation) for the elder home care program. The savings is achieved by changing eligibility requirements.
• $3.1 million from the Department of Mental Retardation by closing Glavin Regional Center, an intermediate care facility in Shrewsbury that currently houses 54 residents.
• $1.0 million from a $5.0 million item that was added this year to hire additional social workers within the Department of Children and Families (DCF). The additional hires would enable DCF to reduce social workers’ caseloads.
• $1.1 million (from an $8.6 million appropriation) for a program that provides employment assistance for severely-disabled adults within the Massachusetts Rehabilitation Commission.

DTA Accounts:

• Emergency Assistance Family Shelter and Services Account (EA): The Governor did not change eligibility for shelter, but did cut $974,789 in earmark spending from the account. This includes a $250,000 cut to the Coalition's First Stop Initiative, a homelessness prevention program based in community health centers and public schools. In addition, funding was cut in half or eliminated for Horizons for Homeless Children's Playspace Program, Crossroads Family Shelter in East Boston, the Weymouth Youth & Family Services Teen Center, Casa Latina in Northampton, Project Just Because in Hopkinton, Open Pantry Community Services in Springfield, and River House in Beverly.
• Transitional Aid to Families with Dependent Children Account (TAFDC): The Governor cut $4,572,800 from the account. The 9C notice says that the reduction reflects "lower-than-budgeted caseload projections". The Governor also cuts $3.1 million (from a $27.7 million appropriation) for the Employment Services Program (ESP). The ESP program offers education, training and job search assistance to current and former recipients of cash assistance through the Transitional Aid to Families with Dependent Children (TAFDC) program for up to one year after their financial benefits cease. It also includes the elimination of earmarks for Travelers Aid's Transportation Assistance Program in Boston and the statewide LIFT program.
• Emergency Aid to the Elderly, Disabled, and Children Account (EAEDC): The Governor cut $381,360 from the account. Reportedly this cut should not lead to a grant decrease for program participants, but rather the elimination of a proposed rate increase to rest homes.
• State Supplement to Supplemental Security Income (SSI): The Governor cut $917,681 from the account. As with EAEDC, this cut should not lead to a grant decrease for program participants, but rather the elimination of a proposed rate increase to rest homes.

Housing and Community Development

The Governor eliminates $11.5 million from the Department of Housing and Community Development’s (DHCD) $141.9 million budget. This represents an 8 percent cut in the DHCD’s total budget.

• Housing Services and Counseling: The Governor cut $260,963 from the account. The statewide network of Housing Consumer Education Centers lost $100,000, with additional funds cut from earmarked programs in Springfield, Cambridge, and Worcester.
• Fortunately, the 9C cuts did not impact other line items such as Residential Assistance to Families in Transition(RAFT).

Of those DHCD cuts, about $2.5 million comes from eliminating funding for earmarks. The remaining $9.0 million in cuts are offset by independent authorities, including cuts that:

• Reduce the soft second mortgage program by $2.0 million dollars. MassHousing has committed to providing this funding so that the state can still provide soft second loans to first time home buyers who are low-and moderate-income.
• Reduce the Mass Rental Voucher Program (MRVP) by $2.5 million. The Mass Housing Finance Agency has committed to funding this $2.5 million shortfall for the program. As noted in MassBudget’s Budget Monitors for the FY 2009 GAA, even with this current level of $33.0 million for MRVP, it is unlikely that funding will be sufficient to meet current demands.
• Reduce funding for interest subsidies to developers who build affordable housing by $4.5 million. Again, the Mass Housing Finance Agency has committed to cover this funding shortfall.

Workforce Development and Labor

The Governor’s 9C reductions eliminate $19.1 million in funding for workforce development and labor programs. These cuts include a $9.0 million, or 42.8 percent, reduction in funding for workforce training programs.

-Adapted from: “MassBudget Brief: Examining the Governor’s Plan to Close the Budget Gap, October 16, 2008” from http://www.massbudget.org/documentsearch/findDocument?doc_id=634 October 16, 2008; retrieved October 17, 2008; Mass. Coalition for the Homeless e-mail “A Look at the Governor's 9C Cuts: How Homelessness, Housing, and Benefit Programs Fared”, October 16, 2008, and “Oral Health Advocacy Taskforce - Update: 9C Cuts and Oral Health”, Health Care for All e-mail, October 28, 2008.

 

10/08