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More on 2009 budget cuts

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1 More on 2009 budget cuts on Mon Jan 12, 2009 12:03 pm

csweepigirl

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FACING DEFICITS, MOST STATES ARE IMPOSING
CUTS THAT HURT VULNERABLE RESIDENTS
By Nicholas Johnson, Elizabeth Hudgins and Jeremy Koulish[1]


Examples of enacted or proposed cuts to state services include:

Public health programs: At least 19 states have proposed or implemented cuts that will affect low-income children’s or families’ eligibility for health insurance or reduce their access to health care services. For example, Rhode Island eliminated health coverage for 1,000 low-income parents; South Carolina is limiting coverage for many services, such as psychological counseling, physicians visits, and routine physicals; and California and Utah are reducing the types of services covered by their Medicaid programs. Additionally, the governor in California has proposed cuts that, when fully phased in, would cause more than 400,000 adults to be denied health coverage.
Programs for the elderly and disabled: At least 17 states plus the District of Columbia are cutting medical, rehabilitative, home care, or other services needed by low-income people who are elderly or have disabilities, or significantly increasing the cost of these services. For example, Florida has frozen reimbursements to nursing homes and relaxed staffing standards
K-12 education: At least 20 states are cutting K-12 and early education. For example: Florida, Georgia, Maine and South Carolina have each cut school aid by an estimated $95 or more per pupil; Nevada eliminated funds for gifted and talented programs; Rhode Island is eliminating early education funding for 550 children; and Massachusetts is reducing funding for a number of early care programs. Six states have cut K-12 funding mid-year, potentially putting a tremendous strain on local school districts.
The federal government, which can — and arguably should — run deficits during troubled economic times, can help states minimize damaging budget cuts by providing assistance to the states, as it did in the recession in the early part of this decade. Federal assistance can lessen the extent to which states take these harmful, “pro-cyclical” actions and prevent budget cuts in vital services residents need.

Budget Cuts

At least 30 states plus the District of Columbia have enacted budget cuts that will affect services for children, the elderly, the disabled, and families, as well as the quality of education and access to higher education. Two additional states have proposed similar cuts but not yet enacted them. [4] In several states, such as Arizona, California, Florida, and New York, some cuts have already been implemented and additional reductions may be considered for the current fiscal year. Newly released budget proposals from governors for the upcoming budget period include many new, deeper program cuts as well.

Public Health Programs

At least 19 states have proposed or implemented cuts that will affect eligibility for health insurance programs and/or access to health care services.

Arizona is reducing its Medicaid rolls by increasing the frequency with which some adult recipients must reapply for benefits. (Research has shown such added paperwork requirements have the effect of causing eligible people to become uninsured.) Arizona has also cut funding for community health centers and vaccines.
California is cutting its SCHIP program, including increasing co-payments and reductions in dental services. The state is requiring more frequent eligibility determinations for Medi-Cal beneficiaries, which could result in more than 260,000 children losing coverage by 2011. In November, the governor proposed additional cuts, including reducing eligibility for public health insurance for some poor adults. If enacted, this change — once fully phased-in — is expected to result in more than 400,000 people being denied needed health coverage.
In response to flat funding and rising costs, the health care agency in Illinois is lengthening the amount of time that it takes to pay health care providers such as doctors and hospitals for Medicaid services. This is likely to reduce access to health care for low-income families.
Maine approved a budget that requires an annual $25 Medicaid enrollment fee for some low-income parents. Enrollment fees can deter low-income individuals from seeking needed health insurance.
Nevada’s governor has capped the state’s SCHIP program at its approximate current number of enrollees and increased the premiums that families must pay. As a result, many applicants will be denied coverage, even though the economy is weakening and need consequently is rising. To align its SCHIP program with federal requirements, Nevada is also proposing to eliminate coverage for some pregnant women who are covered with SCHIP funds.
In New Jersey, funds for charity care in hospitals have been cut, potentially affecting hospitals’ ability to care for some of the state’s neediest residents.
For the upcoming budget period, the Oregon governor has proposed cutting community-based mental health services, inpatient psychiatric care, and alcohol and drug treatment services for adults who do not qualify for Medicaid.


In Florida, nursing homes and other providers will not get scheduled cost-of-living adjustments in their reimbursements and staffing standards will be relaxed for one year in the expectation that the freeze would result in staffing cuts. Medicaid reimbursements to hospitals and community-based services for the elderly, such as meals and homemaker services, have also been cut.
In Georgia, services for the elderly, such as Alzheimer services, elder service centers, prescription drug assistance, and elder support services, have been reduced.

Tennessee has reduced community-based services for people with intellectual disabilities and cut nursing services for some adults with serious disabilities.
Vermont has reduced some home-based services, such as housekeeping and shopping, for people who are elderly or disabled. Such services help pay stay in their own homes and possibly delay or avoid more expensive nursing home care.
Virginia has decreased facility reimbursements for special hospitals serving people with needs relating to mental health, mental retardation, or substance abuse. Additionally, pass-through grants for various aging programs have been reduced. Funding for local mental health providers was also cut.
At least 20 states have implemented or proposed cuts to K-12 education.

Florida has cut aid to local school districts for the current year by $140 per pupil. Georgia has cut aid to local school districts for the current year by $99 per pupil. South Carolina has cut per-pupil funding by $95 in the current year. Maine has cut K-12 funding about $140 per pupil; this comes on top of education cuts earlier this year that were targeted to reduce specific programs.
California is reducing basic K-12 education aid to local school districts. It also is cutting a variety of other programs, such as adult literacy instruction. Additional cuts are proposed.

The New York governor proposes nearly $2 billion in cuts in education funding in FY 2010. Reductions in aid to individual school districts would range between 3 percent and 13 percent. In addition, a number of specific programs are eliminated, including supplemental math/science programs and new-teacher mentoring programs. The governor in Washington has also proposed K-12 cuts for the upcoming budget period.
Colleges and Universities

At least 26 states have implemented or proposed cuts to public colleges and universities and/or implementing large increases in college tuition to make up for insufficient state funding.

In Florida, university budgets and community-college funding have been cut. The University of Florida has announced it will eliminate 430 faculty and staff positions and decrease funding for disability services, financial aid services and internship opportunities. Student enrollment is declining by more than 1,000 students at both Florida State University and the University of Florida. The legislature has approved a statewide tuition increase of 6 percent; the University of Florida is increasing tuition for in-state under-graduates by 15 percent.
In Kentucky, state budget cuts to colleges and universities of about 3 percent have led to in-state tuition hikes of 5.2 percent at the Kentucky Community and Technical College System. The Council on Postsecondary Education has also approved in-state tuition increases for universities across the state from 6.1 percent (Murray State University) to 9 percent (University of Kentucky and University of Louisville). Additionally, the University of Kentucky has announced 188 faculty and staff positions will be eliminated.
New York has enacted mid-year tuition increases. Resident undergraduate tuition has increased 14 to 15 percent. Funding for community colleges is proposed to be cut but the impact on tuition is not yet known.
When the state of Rhode Island cut higher education funding last year, the University of Rhode Island, Rhode Island College, and the Community College of Rhode Island all increased tuition for the current academic year. Each of these institutions now has gone one step further by increasing tuition further mid-year, by 6.7 percent, 8.2 percent, and 4.3 percent respectively.
Following cuts to state university budgets, tuition increases have been announced in Alabama (13 percent), Maine (10 percent), New Jersey (4 percent to 9 percent), Oklahoma (9 percent to 10 percent), South Carolina (6 percent), Tennessee (6 percent) and Virginia (average increase of 7.3 percent when fees are included). California is raising in-state tuition by 7.4 percent to 10 percent as part of its October budget deal, and in November the governor called for additional 10 percent cuts to universities.

Cuts in Other Services

States also are making cuts in a variety of other programs, including programs for very poor families and other vulnerable populations.

California is suspending cost-of-living adjustments to cash assistance programs for low-income families and cutting child care subsidies. The governor has proposed various additional changes that could result in more than 180,000 children losing basic monthly assistance, and he has also proposed a 10 percent reduction in monthly benefits for those children continuing to receive aid.
In Connecticut, the governor has ordered budget cuts to programs that help prevent child abuse and provide legal services for foster children.
In the District of Columbia, already meager monthly cash assistance payments to needy families have been reduced. Additionally, funding has been cut for services that help low-income residents stay in their own homes and communities.
Illinois has reduced funding for child welfare, mental health, youth services, and other programs.
In Maine, the governor has cut funding for homeless shelters.
In Maryland, institutions that provide services to abused and neglected children have had their reimbursement rates cut.
The Nevada welfare agency will make it harder for low-income families to receive cash assistance and health insurance, for instance by increasing the amount of time before which some families that have lost benefits may reapply, with the expected result that fewer families will receive those benefits.
Rhode Island has cut funds for affordable housing, eliminated health insurance for home-based child care providers, restricted TANF cash assistance for children, reduced health insurance for retired state workers and cut support to localities by $10 million.


Tax Increases

States can avert deep cuts in vital services by enacting temporary or permanent revenue increases. Several states already have enacted tax increases, closed loopholes, restricted tax credits, increased tobacco taxes, raised tuition as noted above, or implemented other revenue raising measures.

In Virginia, to help close the budget hole starting in the current fiscal year, the governor has proposed doubling the state’s tobacco tax to 60 cents per pack. This is projected to raise $154 million annually. He also proposes other tax reforms, including restructuring a tax credit and closing loopholes to generate an additional $140 million. Governors in Kentucky and Mississippi are also proposing increases to their state’s tobacco tax.
The governor of New York has proposed measures to raise $3.1 billion in the 2010 budget. These measures would be in addition to measures enacted in the 2009 budget that are raising approximately $1.5 billion in revenue through a variety of measures including closing tax loopholes, delaying tax credits, raising cigarette taxes, requiring collection of taxes for more on-line purchases, and increasing various fees.
There are several revenue-raising proposals in California, in addition to measures already enacted. In November the governor proposed revenue increases of $4.7 billion in the current year budget, including a broadening of the sales tax base and temporary increase in the sales tax rate; those have not been enacted. In December, the legislature voted for a budget plan that included more than $9 billion in new revenues, but the governor has declared he will veto it.
The California proposals are in addition to revenue measures in the current fiscal year that include limiting certain business tax credits, suspending corporate “net operating loss deductions,” accelerating tax withholding, changes to accounting rules, and other actions.[5] Programs that provide property tax relief for seniors and families also have been eliminated.

The Need for Federal Assistance

When states cut spending, they lay off employees, cancel contracts with vendors, reduce payments to businesses and nonprofits that provide services, and cut benefit payments to individuals. All of these steps remove demand from the economy, which only worsens a downturn. Tax increases also remove demand from the economy by reducing the amount of money people have to spend.

Federal assistance can lessen the extent to which states take these harmful, “pro-cyclical” actions and the extent to which vulnerable populations are hurt by state budget cuts. In the recession early in this decade, the federal government provided temporary fiscal relief: 1) a temporary increase in the federal share of Medicaid costs; and 2) general grants to states, based on their population. The increased Medicaid match averted even deeper cuts in public health insurance than the substantial cuts that occurred, while the general grants helped prevent cuts in a wide variety of other critical services.

The major problem with that assistance was that it was enacted long after the onset of the recession, so it was much less effective than it could have been in preventing state actions that deepened the economic downturn. To avoid that problem, the federal government should consider aiding states earlier, rather than waiting until the downturn is over or nearly over.

It seems increasingly likely that this recession will be more severe than the last recession, and thus state fiscal problems may be worse, for at least three reasons.

These factors suggest that state budget problems will be worse in the coming year than they were earlier this decade. The federal government should consider providing enough fiscal assistance to avert a majority of the budget cuts and other harmful actions states otherwise would take.

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