FY 2009-10 HHS Budget Recap

FY 2009-10 Budgeted Appropriation: $5.02 billion

FY 2008-09 Estimated Actual Expenditures: $4.76 billion

The total budget appropriation of the Department of Health and Human Services in the 2009-10 budget is $5 billion, which includes $1.1 billion in federal support. The total is up from the $4.76 billion in estimated actual expenditures for last fiscal year.

Legislative changes to the FY 2009-10 budget include recurring (permanent) reductions totaling $695 million and nonrecurring (one-time) reductions totaling $937 million. There was a net loss of 506 employment positions in DHHS, out of a department staff totaling more than 19,000.

Many of the budget expansions shown below are being funded by federal stimulus dollars.  Similarly, most of the largest budget “cuts” are not really cuts at all, but rather the replacement of state funds with federal funds.

Significant changes to the HHS budget include:

Federal Appropriations:

• Medical Assistance (Medicaid) payments offset by federal recovery funds ($857 million). Total spending for Medicaid for FY 2009-10 comes to $3.18 billion, up from estimated actual 2008-09 expenditures of $3.1 billion.
• State child care subsidy support is reduced by $15.1 million, but replaced with a one time Assistance for Needy Families Block Grant (TANF) ($12.4 million), and additional Recovery funds of $54 million.
• Appropriates federal recovery funds for weatherization assistance ($131 million).

Budget Cuts:

• State funding for children’s Smart Start program is reduced by $15.9 million.
• Reduces state funding at 2 mental health hospitals- Broughton and Cherry ($6 million).
  • The one-time reduction of state funds to Broughton Hospital, however, are more than compensated for due to a “payback” of federal funds expected from Centers for Medicare and Medicaid Services  ($9.3 million).
• One time reduction of state-funded services provided through Local Management Entities in the Division of Mental Health (DMH, DD, SAS) ($40 million).
• Eliminates the inflation increase for the premium cost reimbursement to the NC Health Choice program ($7 million).
• Anticipates Medicaid savings through greater case management and consolidation by Community Care of North Carolina (CCNC) ($110 million).
  • $69 million in savings from “greater care management” by CCNC (a group created in 1998 to “better manage” the enrolled Medicaid population).
  • $41 million in projected savings from “consolidating case management services” throughout the Medicaid program.
• Reduces appropriations for Work First Cash Assistance ($7.1 million).
• One time reduction in NC Reach – which provides education assistance to adoptees and foster youth – post secondary scholarship support ($3.1 million).
• Reduces Medicaid provider reimbursement rates ($76 million).
• Reduces appropriations for community support services ($65 million).

Budget Expansions:

• Provides funds to increase NC Health Choice enrollment ($17 million).
• Increases funding to Health Net and Safety Net Community Health Centers ($7 million).
• Adjusts continuation budget to allow for Medicaid enrollment growth ($154 million).
• Increases Medicaid appropriations due to final phase-out of county share ($252 million).

Jobs Lost:

• Eliminates 350 positions within the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services.
• Eliminates 45 positions within the Division of Public Health.

Jobs Created:

• Creates 19 new positions federally funded by Centers for Disease Control and Prevention in the Division of Public Health (salary range $38,759 – $101,867).
• Creates 132 new positions federally funded by the Social Security Administration in the Division of Vocational Rehabilitation (salary range $38,894 to $122,734).

Other Notable:

• Increases existing child care licensure fees by 50% and imposes a new fee for child care homes (expected revenue $602,385).
• Implements increased fee for vital records acquisition ($15 to $24 per copy, out of state is $5 increase) (expected revenue $1.2 million).
• Increases co-payments for prescription drugs for NC Health Choice enrollees by up to $10 (expected revenue $450,000).
• Reduces personal care services benefits for Medicaid enrollees to reduce overutilization ($40 million).
• Reduces prescription drug costs in the Medicaid system by increasing the use of generic drugs in place of brand name drugs and implementing a preferred drug list ($25 million).
• Increases fee for initial facility license (adult care homes, hospitals, nursing homes, home care, and mental health facilities) (estimated revenue not included).