Preliminary Analysis: The Governor’s FY 2011 Budget Proposal

On January 27, 2010 Governor Deval Patrick unveiled a $28.2 billion budget proposal for the next fiscal year. The budget represents a 3 percent increase over estimated spending for the current fiscal year, based on an expected 3.2 percent increase in revenues. Still, because of what administration officials say are unavoidable increases in health care spending and other areas and given Patrick’s decision not to cut aid to municipalities and local school districts, the governor proposed a series of cuts to reach a balanced budget. Keep in mind this is just the first step in the budget process. The legislature will now craft their own budgets which go back to the governor for vetoes and back to the legislature for possible overrides in a process which typically takes until almost the start of the fiscal year on July 1.

Patrick’s budget plan counts on $1.9 billion in one-time revenues, including $800 million in federal stimulus money already approved by Congress and another $600 million the governor expects will be approved in the coming weeks. Jay Gonzalez, the governor’s budget chief, said the administration has received “strong indications from Congress and the White House’’ that the additional stimulus money will be approved. “If the federal government gives another chunk of money to the states to balance their budgets, then I think this budget will hold together,’’ said Michael J. Widmer, president of the Massachusetts Taxpayers Foundation. “If they don’t, then it will open up a major hole, and the Legislature will have to deal with it.’’

Patrick’s proposal would also take $175 million from the state’s reserve account. For the past few years, the state has been forced to scale back dramatically, several times implementing emergency midyear budget cuts to keep up with falling revenues.

In all, Patrick is proposing nearly $800 million in spending reductions, including a $56 million cut to adult dental care for low-income adults and a $9 million cut to job-training programs.

Health Care

The Governor, in his budget recommendation, does not reduce eligibility for many of the Commonwealth’s health care programs, and this is one of the few budgetary categories in which total funding is above FY 2010 budget levels. There are, however, reductions in funding for public health and mental health programs. Highlights of the Governor’s health care recommendations include:

• Cuts to mental health funding of approximately 2 percent.
• Elimination of restorative dental services for the more than 200,000 adults who currently receive coverage for dental care under MassHealth. This change will not affect approximately 4,300 disabled adults who are clients of the Department of Developmental Services (DDS). It is unclear whether this language is intended to exclude restorative dental services for any new DDS clients.
• Increases in co-payments for generic prescription medications from $2 to $3 (except on drugs to treat diabetes, hypertension, and high cholesterol) for MassHealth members.
• Maintaining eligibility for the Commonwealth Care program, including the special Commonwealth Care Bridge program for legal immigrants who do not meet the eligibility requirements for either MassHealth or Commonwealth Care. The budget includes a transfer of $797 million into the Commonwealth Care Trust Fund. Coupled with existing funds remaining in that Trust, and designated revenue from a cigarette tax, the Governor anticipates that his budget will support an enrollment increase of approximately 20,000 additional people in Commonwealth Care and 26,000 current enrollees in the Commonwealth Care Bridge Program.
• Funding for MassHealth (Medicaid) and health reform programs that is approximately 9 percent above current FY 2010 budgeted totals. The administration expects that MassHealth enrollment will increase by 3 percent during FY 2011. One of the largest programmatic increases is due to the ramping up to full implementation of the Children’s Behavioral Health Initiative, which is funding for children’s mental health services as mandated by what is known as the Rosie D. Settlement.
• Spending reductions of $265 million, based on a reduction of $174 million in provider reimbursement rates, $23 million in administrative changes to “tighten and strengthen” operations, and changes in service. Because MassHealth is partially funded by federal reimbursements, reductions in MassHealth spending would lead to reductions in federal reimbursements. The fiscal impact of these $265 million in savings would be anywhere from $132 million to $161 million in savings, depending upon the federal reimbursement rate.
• Recommendations to coordinate public health programs, by creating new consolidated line items. Compared to current FY 2010 budgeted levels and accounting for these consolidations, addiction control services (substance abuse services and gambling) are cut by 5 percent, children’s health (newborn programs, early intervention, the Women, Infants and Children (WIC) Supplemental Food Program, and pediatric palliative care) are level funded, health care safety and quality (10 line items) is cut by 5 percent, and health promotion, violence prevention and workforce development (12 line items) is cut by 1 percent.

Human Services

The Governor’s FY 2011 budget proposes a $35.4 million reduction to human services when compared to the FY 2010 General Appropriations Act (GAA). Human services include services for children and families, transitional assistance for low income families, services to the adults with developmental disabilities and other services.

• To address anticipated increases in demand, the Governor’s budget proposes $11.1 million, or 4 percent, increase to TAFDC grant payments over FY 2010 budget as DTA anticipates an increased caseload. Recently, the Governor rescinded an FY'10 9C budget cut to the TAFDC account that would have terminated or reduced cash assistance benefits for approximately 9,000 households in which the parent has a severe disability and receives Supplemental Security Income (SSI). The Governor's budget proposal would continue to fund the annual clothing allowance and the infant layette benefits as well.
• The Governor's budget would increase funding for the Emergency Aid to the Elderly, Disabled and Children Program (EAEDC) to $88.8 million for FY'11. The Governor included this increase of $4.16 million over the FY'10 appropriation level as the Department of Transitional Assistance (DTA) anticipates an increased caseload.
• The Governor reduces funding for the Department of Children and Families by $23.8 million, or 3 percent, relative to the FY 2010 GAA. The Governor’s budget also reorganizes the line item structure of the department, in an effort to streamline functions.
• The Governor recommends level funding for elder services, which means that the existing waiting list for community-based long-term care services will likely continue.

Infrastructure, Housing & Economic Development

The largest proposed cuts in this area come from economic development programs. In contrast, many of the housing programs, with the exception of Residential Assistance to Families in Transition, received level-funding or increases in their appropriations because of growing demand for many housing and homelessness services.

“While some of the programs we follow most closely would be cut by the Governor's budget, most would see their funding levels maintained or slightly increased to accommodate increased demand.” says Massachusetts Coalition for the Homeless.

Highlights of the Governor’s recommendations include:

• Under the Governor’s proposal, funding for homeless families will receive cuts. The budget virtually eliminates the Residential Assistance for Families in Transition, providing $60,000 for FY 2011. RAFT received $3 million in FY 2010 GAA, but most of the funding was transferred to the Massachusetts Rental Voucher Program. In his FY 2011 budget, the Governor proposes that the family shelters receive a $22 million increase in funding over the FY 2010 GAA. The Governor’s proposal, however, is $20 million less than the $133.5 million that the state expects to spend because of increased demand for these services in FY 2010.
• The Governor's budget would level fund the line item that provides funding for shelter and services for unaccompanied individuals at-risk and experiencing homelessness. The line item also includes new language that would direct DHCD, Interagency Council on Housing and Homelessness, and at least three shelter providers to work together to standardize shelter rates and increase the number of programs providing transitional housing and Housing First models for individuals.
• The Governor's budget would reduce funding for the Emergency Assistance family shelter and services program from the anticipated FY'10 spending level of $133.5 million to $113.5 million for FY'11. The Governor's figure is very close to the final FY'09 spending level. In a conference call with stakeholders this morning, the Department of Housing and Community Development (DHCD), which oversees the program, has indicated that the Administration hopes to save money in FY'11 by reducing the need to use motels to shelter families. It is unclear if those estimated cost savings are realistic, given the tremendous need for shelter, housing, and services by families with children. DHCD also said that the Administration wants to be able to provide 12-month contracts to providers at the start of the fiscal, in contrast to the 6-month contracts that were offered at the start of FY'10.
• The Governor's budget would also change the rules around providing shelter placements to families who are in immediate need but lack one or more requested verifications. Families currently are eligible to receive "placements pending verification" for up to 30 days if they appear to be eligible for Emergency Assistance, but lack all of the requested documentation at the time of application. The House 2 budget would reduce the length of placements pending verification to 10 days.
• In an effort to help meet demands for affordable housing programs, quasi-public agencies have committed to supporting certain programs. Under the Governor’s proposal, MassHousing will provide funds for the Massachusetts Rental Voucher Program. In addition, the Governor proposes $32.7 million in state spending for MRVP in FY 2011 which is level funding. Level funding would allow DHCD to continue to serve all of the households currently participating in the program.
• MassHousing Partnership has agreed to continue to support the Soft Second Loan Program at $2 million; the Governor’s budget does not include any proposed funding for this program.

Law & Public Safety

• The Governor’s budget proposes to maintain cuts to youth violence prevention grants, or Shannon Grants, implemented during the FY 2010 9C cut process. This would represent a $2 million, or 30 percent, cut to this program when compared to the FY 2010 GAA.

-From: “Preliminary Analysis: The Governor’s FY 2011 Budget”, Massachusetts Budget and Policy Center, http://www.massbudget.org/documentsearch/findDocument?doc_id=718&dse_id=1059 retrieved 1/28/10, “Governor Patrick Has Released His Fiscal Year 2011 Budget Recommendations” e-mail, Mass. Coalition for the Homeless, January 28, 2010 and “ Tax hikes, job cuts in Patrick budget; State spending would rise 3%; rivals pounce” by Matt Viser and Michael Levenson, The Boston Globe, January 28, 2010 , http://www.boston.com/news/local/massachusetts/articles/2010/01/28/patricks_282b_budget_plan_has_3_percent_spending_hike/, retrieved 1/28/10.

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