Friday, April 24, 2009

 

H.B. 1 Update: Items of Interest

We have concerns about a number of unmet needs in the Executive Budget in health and human service programs and the state’s overall fiscal health. Here an update of the changes made by the House to some of the items that we have been watching.

Eligibility determination (income maintenance) for County Departments of Job and Family Services (CDJFSs). CDJFSs serve as the front door for human service programs. GRF dollars are used along with federal food stamp, Medicaid, and TANF dollars to fund staff to perform eligibility determinations for these programs. Even though caseloads for food stamps, Medicaid, and cash assistance are expected to increase, state GRF support for this line item (GRF 600-521) is substantially reduced when compared to FY 2008 actuals ($19 million less in FY 2010 and $25 million less in FY 2011). The state does add some flexibility to counties by allowing the local mandated share to be used for food stamp or Medicaid eligibility determination; however, this change will reduce funding for TANF services at a time when TANF resources already have been substantially reduced due to the spend-down of the surplus balance. In a nutshell, this change plugs a hole in one funding stream by creating a hole in another.
  • House Changes: There were no changes to this program.

TANF funding for county Prevention, Retention, and Contingency (PRC) programs and Title XX services. The Executive Budget reduced the TANF allocation for counties by $32 million per year when compared to FY 2008 actuals. In addition the county allocation from the transfer of TANF funds to Title XX will be reduced from $67 million to $6 million per year. PRC funds provide diversion, emergency assistance and work participation activities while Title XX dollars are primarily used to fund child welfare and adult protective services. During an economic downturn, reports of abuse and neglect rise.

  • House Changes: The House added $12.5 million in new GRF fund dollars per year through JFS line item 660-533, Child, Family, and Adult Community & Protective Services. Funds will be distributed according to the current ODJFS Title XX distribution formula. Funds are to be used to help individuals at or below 200% of poverty achieve or maintain self-sufficiency; respond to reports of abuse, neglect, or exploitation of children or adults; provide outreach and referral services for home and community based services for individuals at risk of placement in a group home or institution; and to provide protective services in cases of actual or potential abuse, neglect, or exploitation of a child or adult.

Child welfare programs. Due to the spend-down of the TANF surplus, a total of $17.5 million per year in TANF funding earmarked for child welfare programs is eliminated in the Executive Budget. These programs provided financial assistance to kinship caregivers who provide a permanent home to children who have been in the child welfare system, financial assistance to help former foster children transition to adulthood, and funding to recruit adoptive families for children in need.

  • House Changes: The House added $5 million per year in a new GRF line item (600-541, Kinship Permanency Incentive Program) in the ODJFS budget for financial assistance to kinship caregivers.

Food assistance. The Executive Budget maintains funding for the Ohio Association of Second Harvest Food Banks at $8.5 million per year, but the need for food assistance is rising. An additional $8.5 million per year is needed to help the food banks keep up with their growing demand.

  • House Changes: The House added $1 million per year in GRF to JFS line item 600-410, TANF MOE, and earmarked the funds for the Ohio Association of Second Harvest Food Banks to purchase and distribute food products. The House also added $1.5 million per year to JFS line item 600-535, Early Care and Education, for the Children’s Hunger Alliance to fund the Child Nutrition Program outreach efforts.

Lift the statutory cap on assisted living slots. To ensure long term financial sustainability in the Medicaid program, Ohio must develop a long-term care system that is more balanced between institutional care and home and community based care. Right now Ohio's care system is heavily skewed towards nursing facility care, and increasing home and community based options for consumers will help to bring balance to this system.

  • House Changes: The House lifted the statutory cap on assisted living slots; however, the House backed away from meaningful long term care system reform by increasing state financial support for nursing home care through a significant rate increase that will cost an additional $56.4 million in FY 2010 and $177.3 million in FY 2011.

Need for New Revenues. We remain concerned about the strength of our revenue system, which has been severely damaged by five years of tax cuts and the unprecedented amount of use of one time funds to support FY 2010-2011 spending. We estimate that up to an additional $8 billion in new revenue will be needed to support state spending in the next biennium. We have been telling everyone who will listen to us that we must act responsibly and act now to start dealing with our structural deficit. We have recommended a series of revenue options that will yield about $2 billion in new revenues over the biennium to begin to address the state’s structural deficit.

  • House changes: The House adopted the LSC revenue estimates, which enabled them to assume an additional $342 million in revenues (Federal revenues are excluded from this analysis due to changes in the treatment of Title I federal stimulus). The LSC estimates were more pessimistic than the Executive in FY 2010 but assumed a more robust recovery in FY 2011. The change between the two estimates is very small given the overall size of the state budget; however, we have two concerns about relying on a more optimistic forecast. First, neither the LSC nor executive forecasts have been adjusted to account for the impact of the recent $0.62 per pack federal tax increase on cigarettes. This change, according to the testimony of LSC Director Mark Flanders before the House Finance committee, will likely reduce GRF revenues by $100 million over the biennium. Second, the balance sheets in both the Executive and LSC forecasts assume that $387.2 million in GRF revenue will be carried forward from FY 2009 to FY 2010. Through March 2009 state tax receipts were trailing revised estimates by $195.8 million. It is looking more and more unlikely that the state will be able to hit its FY 2009 revenue targets.


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