The governor’s budget solves the FY 2012-13 general fund budget deficit through a mixture of increased revenues, a delay in the school aid payment shift, and permanent spending cuts.
Of the proposed solution, 24 percent is from the school shift buyback, 67 percent from increased revenue, and 9 percent from the net reduction in spending. Excluding the shift buyback, $950 million in spending cuts are offset by $465 million in new initiatives for a total impact on spending of $485 million. See table 1 for a breakdown of the separate revenue and spending components.
Table 1– Summary of Governor’s Proposal |
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FY 12-13 General Fund Deficit Spending Changes Revenue Changes Cash Flow Account Reduction Total |
$(6,188) 1,940 4,129 136 $6,191 |
Table 2 provides a similar summary of the major changes in the area of health & human services. The proposal relies heavily on increasing revenue, mainly through increasing Medicaid surcharges. The total general fund impact is $1.1 billion. Of the $330 million of new spending, about $250 million is from rate increases traditionally given to offset surcharge costs. Forty-one (41) percent of the $676 million in reductions are cuts to programs impacting the elderly and disabled – a total of $280 million.
Table 2 – Health & Human Services Changes |
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FY 12-13, HHS GF Impact Spending Reductions |
$1,122 676 877 |
Items Directly Impacting Providers:
Reduce Provider Rates & Grants: Effective 7/1/2011, reduces payment rates for home and community based providers by 4.5 percent, reduces aging and other continuing care grants by 4.5 percent, and reduces payment rates for nursing homes by 2 percent. This generates $144.5 million in savings in FY 2012-13.
Reduce Certain Congregate Living Rates: This proposal identifies approximately 3,600 individuals currently receiving waiver services in congregate care settings with “low” medical needs and reduces rates for their care. The rationale is to encourage them to be served in less expensive settings. Reductions for these rates would average 10 percent in FY 2012 and 2013, and 15 percent in FY 2014 and 2015, and is effective 10/1/2011. Saves $12.3 million in FY 2012-13.
Disability Waiver Enrollment Limits: This reinstates caps on waiver growth in current law that expired at the end of FY 2011. (DD at 6 per month, CADI to 60 per month, and TBI is reduced from 6 to 3 per month.) These caps would be effective 7/1/2011 through 6/30/2013. The proposal saves $45.8 million in FY 2012-13.
Eliminate Delayed 1% DD Waiver Acuity: This eliminates the 1 percent DD waiver acuity adjustment to county allocations that was delayed from July 1, 2009 to July 1, 2011. This adjustment is only to allocations, which counties then have discretion to spend. The acuity adjustment resumes July 1, 2011. Savings associated with this proposal is $9.0 million in FY 2012-13.
Restructure Licensing Fees: As part of a proposal to move licensing activity from the general fund to the state government special revenue fund, increases licensing revenue by $900,000 per year beginning in FY 2012. The budget page does not specify which fees would be increased, but mentions a 10 percent surcharge on existing fees (up to $150) for implementation of the state’s e-licensing system.
Licensing Fees for Background Studies: This adds a $20 fee for every provider licensed by the department to cover the cost of conducting these. The fee raises approximately $1 million per year beginning in FY 2012.
Other Items Impacting Individuals with Disabilities
Reduction in Children & Community Services Act (CCSA) Grants: $22 million
Managing Elderly Waiver & Alternative Care Programs: Makes various changes, notably reduced rates for components of 24 hour and regular customized living, restricted criteria for case mix L, require 3 ADLs for 24 hour customized living, and add staff for auditing - $26.1 million.
Increase MA-EPD Premium & Cost Share: Increases monthly premium from $35 to $65 and increases the unearned income obligation from .5 percent to 5 percent. Savings are delayed until FY 14-15 due to federal MOE requirements.
Rehab Service & Prior Authorization Changes: Eliminates coverage of specialized maintenance therapy (SMT), and eliminates one-time services thresholds for rehab therapies and replaces it with prior authorization requirement - $1.1 million.
Critical Access Dental Eligibility: Reduces eligibility and reduces who can receive CAD payments - $5.3 million.
Reduce Basic Care Rates: 0.5 percent reduction to outpatient hospital services and other basic care services that aren’t specified - $2.5 million.
Reduce Rates for Special Transportation Services: 4.5% ratable reduction for transportation services including ambulance, special transportation services (STS) and access transportation services (ATS) - $4.1 million.
Reduce SOS Mental Health Services: Closes the state behavioral health hospital in Willmar - $5.4 million.
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--Craig Wieber, Chief Fiscal Analyst