State Budget Cuts:
Healthcare & Social Programs Hit Hard

House and Senate lawmakers approved the “conference committee” $27.4 billion state budget on June 19th. This budget then went to Governor Patrick for his signature and vetoes. In signing the budget, Patrick issued $147 million in line-item vetoes.

Governor Patrick’s Vetoes The Governor’s vetoes and Supplemental Budget request were submitted too close to press time to fully integrate in the accompanying story. Budget veto highlights: Among the fiscal 2010 spending vetoed by Gov. Patrick Monday: $25 million for MassHealth senior care; $23.37 million for MassHealth "fee for service"; $3.87 million for MassHealth managed care; $2.8 million in housing authority subsidies; $2.5 million for services for children and families; $2.3 million for the Children’s Behavioral Health Initiative; $1.94 for family residential assistance; $1.16 million for health promotion and disease prevention; $1.1 million for the Women’s, Infants and Children program; $1 million for special education residential; $1 million for kindergarten expansion grants; $1 million for emergency food assistance; $1 million for a substance abuse family intervention and care pilot The legislature can override any vetoes with a two-thirds majority vote. Stay tuned…

At the same time, he submitted a separate $269 million supplemental budget to fund other initiatives, including $70 million for health care for about 30,000 legal immigrants who the legislature had proposed cutting from Commonwealth Care. This supplemental budget places the ball back in the Legislature’s court, meaning that the coverage will not continue past July unless the House and Senate approve that bill.

The budget also maintains current eligibility for state-subsidized health insurance programs and funds dental coverage for MassHealth and Commonwealth Care.

Governor Patrick also sliced roughly 5 percent of the funding for children’s mental health services that were ordered under a federal class action lawsuit known as Rosie D. Those services were supposed to start rolling out June 30th.

Any vetoes then may be overridden by the legislature with a two-thirds margin vote.

The budget calls for massive cuts in local aid, antigang, youth violence prevention, and elderly affairs programs in a budget that is to take effect July 1.This budget is about $700 million less than the budget lawmakers initially agreed to for the current fiscal year (FY ’09), the first time in recent memory that there has been a year-over-year drop in such a figure. The state budget almost always increases to account for things such as rising healthcare costs and inflation.

The lawmakers’ budget counts on $1.5 billion in federal stimulus money. It would also draw $199 million from the state’s reserve account, leaving the balance at less than $600 million.

Overview

Seeking to close a $5 billion budget gap, the legislative Conference Committee crafted a budget that

will require sacrifices across the board. The budget includes cuts that will limit access to health care, reduce public employee benefits, and decrease funding for public education, human services, public health, public safety protection, environmental protection, and virtually every other area of state government. To avoid cutting even further into public services that affect the quality of life of people in the Commonwealth, the Conference Committee budget also includes a sales tax increase (to 6.25 percent), an expansion of the sales tax to alcohol purchases, and a modest reduction in the tax subsidies provided to movie producers. While these tax increases restore only a portion of the tax reductions of the past decade,¹ they will help to strengthen the state’s long term fiscal stability.

The Conference budget relies heavily on revenue from the American Recovery and Reinvestment Act (ARRA). This federal stimulus law provides significant aid to states to reduce the budget cuts they would be required to make in response to the national recession. The Conference Report uses about $1.5 billion of this money to help close the $5 billion gap. Had those new federal dollars not been available, the state would have had to have cut services even more deeply, or raised taxes more. In addition to the long-term benefits of not cutting more deeply into important investments, such as those in education and preventive healthcare, the ability of states to use the ARRA funds to reduce budget cuts can help to reverse the downward spiral of the national economy. Public spending by state government is important for stimulating economic activity at a time when such stimulus is clearly needed. The reliance on this aid, and on over $200 million from the State’s Stabilization (“Rainy Day”) Fund, also means, however, that the state continues to face serious structural budget problems and will have to make additional hard choices in the years to come.

¹ See MassBudget's "Facts at a Glance: The Role of Tax Cuts".

Health Care

Mental health funding in the Conference budget is also less than in either the House or Senate proposals, and is $40.3 million (6 percent) below funding in the FY 2009 General Appropriation Act (GAA).. Public health services receive $513.2 million in the Conference budget; although this amount is $39 million above the totals recommended by the Senate, public health programs will still be deeply cut: the Conference budget is 14 percent below funding in the FY 2009 GAA.

Highlights (lowlights?) of the Conference budget health care funding include:

• There is language in the budget that cuts approximately 28,000 legal immigrants out of the Commonwealth Care program. Thirty days after the budget is signed, foreign-born individuals with "special immigration status," a group of legal immigrants that includes new legal permanent residents (green card holders) who are not eligible for federal Medicaid reimbursement, will lose Commonwealth Care coverage. Many of these immigrants are seeking asylum from war-ravaged regions, such as Iraq, Somalia, and the Sudan. Advocates say the group includes people who have survived torture or were victims of human trafficking and have serious mental health and post-traumatic problems that require treatment. In signing the budget, Governor Patrick submitted a separate “Supplemental Budget” that proposes reversing this cut. It will need to be approved by the legislature. "These are lawfully residing, working, tax-paying residents of the Commonwealth, just like anybody else who receives coverage. Parents who lose their coverage may not know that they will still have coverage for their children, and it creates a number of barriers to access at a time when everyone is preaching the importance of preventative and primary care. Many more people than the 28,000 directly affected will lose access as a result." said Eva Millona, Executive Director for the Massachusetts Immigrant and Refugee Advocacy Coalition (MIRA). Further, she said “The economic rationale for these cuts does not withstand scrutiny. Lacking the most basic preventative care, these immigrants will now seek care in the safety net hospital and community health center system as they seek emergency care for many maladies that could have been treated at far less expense and with far more efficacy beforehand.”
• The Conference budget puts $9.162 billion into the MassHealth (Medicaid) program. While this is 6 percent more than funding in the FY 2009 GAA, because of rising health care costs and increasing caseloads due to the recession, this funding level will still require significant cuts in the MassHealth program – most likely in the form of reductions in reimbursements for providers. Included in this total is $68 million for the Children’s Behavioral Health Initiative (Rosie D.) which received $25 million at the beginning of FY 2009, $14.2 million for the Children’s Medical Security Plan, $17.2 million for Healthy Start, and $324.5 million for the MassHealth Essential Program. There is no funding for the Community First Initiative. In addition, the Prescription Advantage program is level funded at $40 million.

Children’s mental health services are funded at $72.2 million. Funding in the FY 2009 GAA was $76.2 million, so this year’s budget is a 5 percent cut. Governor Patrick sliced roughly 5 percent of the funding for children’s mental health services that were ordered under a federal class action lawsuit known as Rosie D. Those services were supposed to start rolling out today. It remains to be seen if the legislature will override this veto.

• The Conference budget funds adult mental health at only $374.4 million. This is a 4 percent cut from funding in the FY 2009 GAA.
• Public health - the FY 2010 budget will result in broad cuts in public health programs. There are likely to be significant cuts in:
• youth violence prevention, which receives $3.5 million (63 percent below the FY 2009 GAA);
• smoking prevention, which receives $5 million (61 percent below the FY 2009 GAA);
• and family health services, which receives $4.8 million (38 percent below the FY 2009 GAA).
• Early intervention services are also cut deeply, although there is an important change in the funding for these services for developmentally delayed infants and toddlers. There is language that will require insurers (including MassHealth) to cover a larger portion of early intervention costs. Nevertheless, the $25.6 million included in the Conference budget will likely result in greater restrictions on eligibility for these services.

Human Services

The Conference Committee budget allocates $1.260 billion to the Department of Developmental Services (DDS, formerly the Department of Mental Retardation or DMR). In FY 2009, $1.272 billion was appropriated for DDS.

Notably, the Committee funded:

• Respite family supports at $46.5 million. In FY 2009, the program received $56.1 million.
• Community-based Day and Work programs at $120 million. In FY 2009, the program received $129.2 million.
• Community-based residential supports at $697.7 million. In FY 2009, the program received $571.6 million.

Department of Children and Families (DCF) - The Conference Committee budget allocates $786.3 million In FY 2009, $836.5 million was appropriated for DCF.

• $300.2 million is allocated for the primary account that funds services for children and families within DCF. The Conference Committee indicates that $5.6 million in ARRA funds will be allocated to the family services account. (These services include stabilization, unification, adoption, guardianship, and foster care services.) This account received $313.8 million in FY 2009.
• The Conference Committee allocated $155.3 million for social workers within the DCF. This account received $157.3 million in FY 2009.
• The Conference Committee allocated $223.6 million for Group Care services. This account received $229.6 million in FY 2009.

Department of Transitional Assistance (DTA) - The Conference Committee budget allocates $886.6 million. DTA received $901.1 million in FY 2009.

• The Conference Report approves $91.6 million for the Emergency Assistance program which provides housing and services to homeless families. This level, is well below the $113 million the state expects to spend on assisting these families in 2009.   The Governor's proposed FY'10 budget appropriation was $90.4 million, making this potentially an attractive veto target according to the Coalition for the Homeless who add that there are significant cuts in eligibility contained in the Conference Committee's budget.  Further they say, any additional funding cut will likely result in further cuts in shelter and rehousing services just when they are needed the most. The Conference Committee also reconciles differences in eligibility requirements for families receiving assistance through the program. Current law allows families that live at or below 130 percent of poverty to qualify for assistance. The final budget lowers eligibility to families living at or below 115 percent of poverty. The budget does allow families, exceeding the 115 percent limit and who are already receiving services prior to June 30, 2009, to continue receiving services for six months. The Committee did not include new protections contained in the House budget line item preventing terminations of shelter if a family fails to meet the savings requirements because it needed to spend money for nutrition, health or other expenses necessary to satisfy the family's basic needs, or if the parent did not accept an offer of housing because it would require a member of the family to lose paid employment or access to adult education or training. 
• Transitional Aid to Families with Dependent Children (TAFDC) - The Conference Committee allocated $308.1 million for grant payments to families that qualify. This account received $302.7 million in FY 2009.

Elder home care programs (including purchased services, case management and the Community Options program) receive $189.9 million in the Conference budget. Funding in the FY 2009 GAA totaled $202.3 million, so this year’s proposal is a 6 percent cut, and there are predictions that hundreds of frail elders will lose these community-based services.

Infrastructure, Housing & Economic Development

The Conference Report includes substantial cuts to the state’s housing, workforce and economic development programs. It:

• Funds summer jobs for at-risk youth at $4 million, $4.1 less than the FY 2009 GAA.
• Funds Workforce Training Grants at $10 million, $11 million less than the FY 2009 GAA. This program provides grants to employers for worker retention and training.
• Affordable housing - These funding levels raise questions about how the state can continue to maintain existing levels of service for individuals and families who rely on these programs.
• Public housing authority subsidies - The Conference Report provides $65.3 million, $1.2 million below the FY 2009 GAA . Vouchers provided to individuals with disabilities are funded at $3.4 million which is $500,000 below the FY 2009 GAA.
• The Residential Assistance to Families in Transition (RAFT) receives $5 million which is $500,000 less than the FY 2009 GAA. The Governor's revised FY'10 budget proposes to slash RAFT funding to $847,000, making this item potentially a prime target for a veto according to the Coalition for the Homeless. The Governor's funding level would drastically reduce the number of households that can be assisted to stabilize their housing.
• The Massachusetts Rental Voucher Program (MRVP) receives $30 million in the Conference Committee’s budget, a reduction of $3 million from the FY 2009 GAA and almost $6 million below the House budget request. This will not be enough to cover the full costs of operating the program in FY'10. Some cuts will need to be made to meet this lowered budget amount which will likely include a combination of: rent increases, elimination of rental assistance to some recipients and other administrative cuts. The Department of Housing and Community Development is responsible for planning to meet this budget appropriation.
• Outside Section Making Technical Corrections to the Homelessness Reorganization Components of the Article 87 Bill Passed This Year. Several “Outside Sections” (adopted with DHCD's approval) guarantee the carry over of rights and protections which are currently afforded applicants/recipients of shelter and rapid rehousing services under the Department of Transitional Assistance after the program administration is shifted to DHCD.  These protections are related to asset rules, fair hearing procedures and the fair, just and equitable administration of the program. 

Early Education and Care

The Conference Committee report provides $537.2 million in funding for early education and care programs, a cut of $52.9 million from the FY 2009 GAA funding level of $590.1 million.

Specifically, the Conference Report:

• The Conference Report appropriates $467.6 million in total for subsidized childcare. The Conference Report moves a group of children from the line item which provides guaranteed subsidized childcare, to the income eligible subsidized childcare program.
• Funds the state’s Universal Pre-K program at $8 million. In the FY 2009 GAA, the Universal Pre-K program was funded at $12.1 million.
• Funds programs to improve parenting skills for families participating in EEC programs at $5 million. These parenting skill programs were funded at $9.6 million in the FY 2009 GAA.

2 Budget language requires that in years where 0.385 percent of sales tax revenue is less than $275 million, money will be transferred from the General Fund to the MTF to ensure that it receives an additional $275 million annually.

-From: Preliminary Analysis: The FY 2010 Conference Committee Budget, Friday, June 19, 2009 from http://www.massbudget.org/documentsearch/findDocument?doc_id=622, retrieved 6/22/09; “Budget cuts draw bleak predictions, calls for veto; Local aid, healthcare, social programs hit hard” By Matt Viser, The Boston Globe, June 20, 2009, at http://www.boston.com/news/local/massachusetts/articles/2009/06/20/budget_cuts_draw_bleak_predictions_calls_for_vetoes/, retrieved 6/22/09; “Conference Committee's FY'10 Budget” e-mail from Mass. Coalition for the Homeless, June 19, 2009 and “ PRESS STATEMENT: State Budget Pummels Immigrants”, MIRA Coalition, June 19, 2009. Additional information from “Patrick hints at hike in gas tax; Signs budget, says levy on sales may not suffice; Cites need to bolster transportation system” By Matt Viser , Globe Staff, The Boston Globe, June 30, 2009, http://www.boston.com/news/local/massachusetts/articles/2009/06/30/patrick_won8217t_rule_out_another_tax_increase_after_signing_budget/ retrieved 6/30/09; “Deval Patrick acts on stars’ behalf; Gov reinstates 25% credit for actors’ salaries”, By Edward Mason, The Boston Herald, June 30, 2009, http://www.bostonherald.com/news/politics/view.bg?articleid=1182077&srvc=news&position=2, retrieved 6/30/09; “ Gov. Deval Patrick cuts $147m from fiscal 2010 line items”, By State House News Service , The Boston Herald,June 29, 2009, http://www.bostonherald.com/news/politics/view/20090629gov_deval_patrick_cuts_147m_from_fiscal_2010_line_items/ retrieved 6/30/09; and “Patrick Signs Sales Tax Increase, Sends Back $147M In Vetoes” By Martha Bebinger, WBUR, http://www.wbur.org/2009/06/29/state-budget-2 retrieved 6/30/09.

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