Accelify Blog

States Expect Stimulus Funds (MS)

May 24, 2010

More than half of the states have passed or are in the process of passing budgets that count on additional federal stimulus funds.

But when Congress will approve the additional funds is not known, and some question whether they will be approved this year.

The legislation already has passed both chambers of the U.S. Congress by wide margins, but in different forms. Now, the debate seems centered on how to pay for the additional aid to the states.

"Its timing is up in the air and largely contingent on how many arms can be twisted to avoid paying for it," said Ryan Annison, a spokesman for Republican Sen. Roger Wicker of Tupelo. "The House of Representatives is working to bring up a bill in the coming days, but it remains to be seen if there will be enough votes in the Senate to pass it."

Expected funds

What the states are counting on is an extension of a provision of the American Recovery and Reinvestment Act that increases the federal share of the cost of the Medicaid program, which provides health care for the elderly, disabled and poor pregnant women and poor children.

For instance, in Mississippi, normally the state pays 24 cents of each dollar spent on Medicaid and the federal governments puts up 76 cents.

But as part of the stimulus program passed last winter, the federal match was increased to 84 cents and the Mississippi match dropped correspondingly.

That change meant Mississippi had to spend literally hundreds of millions of dollars less on its Medicaid program. But the enhanced Medicaid match is set to expire at the end of this calendar year.

What is being debated in Congress is an extension of the program through June 30, 2011, which would mean continuing the enhanced Medicaid match for the length of the upcoming fiscal year.

States across the nation would be helped by the extension because most are facing major budget woes caused by a dramatic drop in tax collections. The size of the decline in revenue has been unprecedented in Mississippi.

In an effort to soften their financial woes, many states already have budgeted counting on the extension of the enhanced Medicaid match.

In the South, Alabama, Florida, Kentucky, South Carolina and Texas have passed budgets counting on the continuation of the enhanced Medicaid match, according to information provided by the National Conference of State Legislatures.

If Congress does not finally approve the extension of the enhanced Medicaid match, it would leave sizable holes in their state budgets.

The NCSL, in a May 6 letter to congressional leaders, wrote, "We further urge expeditious resolution of this issue that would provide funding certainty to states as FY 2011 budgets and appropriations bills are adopted. … States continue to address sizable budget gaps that have compelled state lawmakers to make dramatic programmatic and revenue changes in order to ensure balanced general fund budgets."

Most of the nation’s governors, including Haley Barbour of Mississippi, also have urged Congress to pass the enhanced Medicaid match.

Mississippi did not count directly on the enhanced Medicaid match in the budget it passed in April.

But what the Mississippi Legislature did do is pass a budget with a provision that commits part of the enhanced Medicaid match if Congress does pass it later this year. If Congress passes the enhanced Med icaid match, it is estimated that it would free up $187 million in Mississippi state funds that no longer will be needed for Medicaid.

The bill passed by the Mississippi Legislature would commit $110 million of the those funds no longer needed for Medicaid to other agencies, mainly education. The rest of the funds would be saved for the next fiscal year, which also is expected to be difficult.

Education from kindergarten through the university level would get $97 million of the freed-up funds.

"Without those funds, education will be in trouble," conceded House Education Chair Cecil Brown, D-Jackson, acknowledging that even with the additional funds education will sustain deep cuts.

But if the enhanced Medicaid match is approved by Congress, it would allow local school districts to fill some of the teacher slots that they plan to leave vacant next year because of the historic drop in state tax collections.