Covenant Membership News

Originally Submitted by Rob Thompson, Executive Director of the Covenant with North Carolina's Children

Budget Summary

Overview -

Last night, the Conference Committee for S897 (budget bill) released the final version of the state budget (Click here to access the money report; click here to access the special provisions). Both chambers plan to give final passage by Wednesday, 6/30.

Given the circumstances, House and Senate negotiators did a respectable job maintaining funding for important health and education priorities, though certain areas, such as Social Services, took it on the chin. At the bottom of this email is a more detailed summary of how different child-related items fared (I'll have some notes on the special provisions tomorrow).

In this final draft of the budget, legislators included an "Extraordinary Measures" provision, which instructs the executive branch on what to do if Congress fails to extend the FMAP increase and NC is faced with an increased shortfall up to $518 million. The legislature instructs the state budget director to take the following actions in this order beginning January 1st:
(1) Transfer from the Disaster Relief Reserve Fund (30,000,000)
(2) Transfer of unclaimed lottery prize money and excess receipts (35,000,000)
(3) Use of interest from all other funds (50,000,000)
(4) Use of balance in General Fund Availability (23,469,157)
(5) Reduction of Medicaid Provider rates (26,618,975)
(6) Use of funds from the Savings Reserve Fund (37,307,714)
(7) Reduction in Retirement System contributions (139,000,000)
(8) One percent (1%) Management Flexibility Reduction spread across all agencies (177,500,000)

Thus, if by January 1st, NC receives no money, then the budget director will implement all listed options. Two
of the options will have a significant impact on children and family services - reduction of Medicaid rates and the one percent flexibility cut.

Like previous proposals, this budget is very tight, meaning that there's little room for any deviation from the predictions set forth. However, there are LOTS of anticipating savings that might not materialize, which could mean significant cuts during the course of the year.

HHS
Division of Child Development
Smart Start - $5 million (2.5%) reduction. The Senate recommended a $10 million reduction, while the House recommended no reduction.

Child Care Subsidy - $23 million are replaced with federal TANF dollars. No expected impact on subsidy availability.

Electronic Payment System for Child Care Subsidy - the final report includes $6 million in anticipated savings from an electronic payment system. The payment system does not yet exist and any unrealized savings could come from subsidy dollars.

MH/DD/SA
Community Service Funds - The Conference Committee includes $40 million to restore cuts made in the last budget cycle. This is great news for a depleted system. (Over $30 million of this restoration comes from a transfer from the More at Four program, which was then backfilled with federal dollars.)

School-based Child and Family Teams - no cut

Whitaker School to PRTF - This appears as a $1.9 million cut, but it allows the Whitaker School to be Medicaid eligible.

Public Health
Positions Eliminated - The final budget eliminates 27 positions ($900,000). This will be tough for the Division to handle given that it is already stretched.

Universal Vaccine Program - The conference report eliminates the appropriation ($15,894,853) for the Universal Vaccine Program, though it includes $3 million to help purchase vaccines in advance of the 2010-11 school year. In the future, children served under the public vaccine program will be receive vaccines through private insurers.

School Health Nurses - The final budget includes $500,000 in expansion for 10 additional school health nurses.

AIDS Drug Assistance Program - The final budget includes $14,177,632 in additional funding, which will ensure that eligible individuals who are enrolled as of July 1 will be served.

Infant Mortality Prevention - The Folic Acid, 17-p Progesterone, and Safe Sleep campaigns are all funded through an allocation from the Health and Wellness Trust fund. The High-risk Clinic at ECU is also funded through an allocation from the Trust fund.

Adolescent and Teen Pregnancy Prevention - $400,000 is allocated for prevention, teen parenting, and drop-out prevention. $250,000 is allocated for the Adolescent Pregnancy Prevention Campaign of NC.

NC Health Choice
Enrollment Growth - The final report includes $6.5 million in expanded funding for enrollment growth. It's estimated that this increased funding would cover an additional 2,750 children.

Division of Medical Assistance (DMA)
Mental Health Drug Savings - This item adds mental health drugs to a Preferred Drug List, which budget writers believe will save $10 million. Mental Health advocates are concerned that the inclusion of mental health drugs on a PDL will prevent clients from receiving the services that they need.

Prior Authorization for Children's Outpatient Services - this item requires prior authorization for children's outpatient visits at 16 visits instead of 26. This will likely mean that some kids don't get the services that they need. Budget writers estimate $933,547 in savings.

Enhanced Mental Health Changes - $41 million cut. It's unclear how this is anything different from a flexibility cut. The budget writers direct the Department to find savings through "rate and utilization management."

Division of Social Services
Position Eliminations - 15 positions eliminated, which will be tough given that the Division is already under-staffed. ($959,632)

Children's Advocacy Centers - $375,000 cut in state-funding, though the budget writers stipulate that the reduction will be offset by an allocation from the Social Services Block Grant.

NC REACH - The cut to the NC REACH scholarship program for foster youth is consistent with the House and Senate proposals - $160,507 recurring and $1,584,125 non-recurring.

Permanency Planning Match - This item is a reduction of $682,512 in state spending. It requires counties to be responsible for 25% of the match requirement for federal IV-81 funding. This is troublesome, because many of these counties are worse off than the state, especially low-income counties.

PUBLIC EDUCATION
Lottery Receipts - The conference committee decided to adopt the House's proposal to make available additional lottery funds to protect teacher jobs. $121,243,793.

More at Four - There is a $30,599,012 reduction to state More at Four state spending, but that money is being replaced by TANF emergency contingency funds.

Mentoring - All state funded mentoring programs are eliminated for this fiscal year. $9,214,190 cut for this year only.

Child and Family Support Teams - $2.5 million reduction that will be distributed by the state Board of Education to schools it deems to be implementing the programs ineffectively.

Textbooks - $2.5 million is allocated for the emergency purchase of new textbooks.

At-risk student allotment and DSSF - the final budget includes no cuts to these funds designed to support at-risk students.

JUVENILE JUSTICE
Flexibility Reserve - Though not in either the House or Senate budget, the conference committee assigned the Department with finding $2.7 million in savings. However, there was a line item in both budgets that reduced the YDC budget by $2.5 million that's not included in the final report. It appears that legislators agreed to give the Department more flexibility in finding savings.

Eliminates Positions - 31 vacant positions are eliminated saving $1,158,259. Just because these positions are vacant doesn't mean that they aren't needed.

Restores Samarkand YDC - this restoration costs $3,521,954 and increases much needed capacity for YDC placement.