Stalled Federal Medicaid Funds Equals Less School Funds (MS)

June 30, 2010

Mississippi’s one of only two states that assumed the worst when making their state budgets for Fiscal Year 2011 that begins July 1 – and cut spending accordingly. For that decision, House Speaker Billy McCoy, Lt. Gov Phil Bryant, Gov. Haley Barbour and the Legislature all deserve some praise.

State lawmakers here resisted the temptation to "bet the come" on a six-month extension by Congress of enhanced federal Medicaid matching funds under the federal stimulus package when making Mississippi’s budget and produced an "honest" budget. So did Virginia’s legislature.

But an analysis by the Center on Budget and Policy Priorities found that 23 states that have completed their FY 2011 budgets relied on the rumor of a congressional extension of the enhanced Medicaid funds when crafting their budgets. Seven other states have not yet finished their budgets, while two more are working off two-year budgets that already have large budget gaps.

In all, the CBPP study found that at least 34 states will experiences additional budget cuts in public health, public education and other key service sectors unless Congress acts to extend the Medicaid funds. But growing concerns over the federal budget deficit and the national debt – against the backdrop of the midterm congressional elections – have killed a Senate bill that contained the extension at least through the November general elections.

That fact has led some Mississippi lawmakers – principally Hous e Education Committee chairman Rep. Cecil Brown, D-Jackson – to conclude that Congress will inevitably appropriate the Medicaid funds. But there is a growing realization that it’s highly unlikely that such an appropriation would come until after November.

At that point, if Republicans retake control of the U.S. House, all bets are off on the enhanced Medicaid funding coming at all.

What will that mean for Mississippi? McCoy, Bryant, Barbour and state lawmakers already know the answer to that question – for they’ve already made the cuts other states are just now facing.

The enhanced Medicaid funds would give Mississippi $187 million. The Legislature passed a contingent budget that would pull $110 million of state funds presently earmarked for Medicaid across the books for use public education at the K-12 and college and university level. It would also carry money forward to the FY 2012 budget year – presently forecast to be an even more dire fiscal year.

But that’s just numbers. As the CBPP pointed out in its analysis, the enhanced Medicaid funds would have put enough funds back into K-12 education in Mississippi to pay the salaries of 629 teachers.

Teacher layoffs have already taken place in a number of school districts statewide. Getting a congressional appropriation for the enhanced federal Medicaid funds after the November congressional elections will help state budgets, but it won’t help those teachers who are out of work.

The bottom line is that the state budget was tough in 2010, will be tougher in 2011 and is forecast to be tougher still in 2012. Of course, those forecasts were made before the BP Deepwater Horizon oil spill slammed the economy of the state’s Gulf Coast and threatened the tax receipts of virtually t he entire spring and summer peak tourist season on the Gulf Coast.

State revenue shortfalls are almost certain to continue into FY 2011. The longer the oil spill lingers, the worse those shortfalls will become.

In the teeth of that multi-year fiscal maelstrom, Mississippi will be holding statewide elections from the courthouse to the statehouse. Incumbents, hold onto your hats.