Health and human services budget asks vulnerable Minnesotans to pay a price

Many of Minnesota’s most vulnerable populations, including the elderly, those with disabilities, and low-income families with children, are being asked to help balance the state’s budget through $1 billion in cuts to health and human services in the final budget approved by Governor Dayton and the Legislature. This is an eight percent cut in FY 2012-13 compared to base funding, which means a reduction from current levels of service.

While some of the most troubling proposals, including those that would have caused more than 100,000 Minnesotans to lose their current health care coverage, did not make it into the final legislation, the health and human services bill still contains provisions that will increase barriers for low-income families trying to work, for the elderly and people with disabilities who want to stay in their homes, and for Minnesotans trying to access health care.

As a result of the final budget, working parents and other low-income Minnesotans will face challenges in building a more secure economic future. For example:

• Access to quality, affordable child care will become more difficult for working parents. In the budget, provider reimbursement rates are reduced, flexibility for families is limited, and grants supporting system improvements and parental information are cut. The budget agreement also captures $5 million in child care assistance funds that were not spent in calendar year 2010 and transfers them back to the general fund. These resources could have been used to help 500 additional families in 2012.
• Low-income individuals will find it more difficult to obtain post-secondary education, purchase a home or start a new business. The decision to eliminate Family Assets for Independent in Minnesota (FAIM) means they will lose both the state and federal match on their savings.
• Funds intended to support families seeking to stabilize their lives, find employment and become self-sufficient are instead used to help balance the state’s budget, including $20 million from the Minnesota Family Investment Program (MFIP) Consolidated Fund and $38 million in federal funds for Temporary Assistance for Needy Families (TANF).

The final budget will also make it harder for people with disabilities and the elderly to access the services they need to remain independent. For example:

• There will be additional limits on the number of individuals who can enroll in waiver programs that enable the elderly and people with disabilities to access community-based care and avoid entering an institution. Cuts to these waiver programs total $64 million in FY 2012-13.
• People with disabilities who rely on a relative to provide their care may find it harder to get the assistance they need. The bill cuts payments to these Personal Care Attendants by 20 percent, creating financial challenges for these families. This cut particularly raises concerns for people with disabilities in rural areas, where relative caregivers are often the only option.
• Some funding cuts do not fall on individuals directly, but will reduce funding for the institutions and community-based providers they rely on. These decisions could hurt the financial stability of these providers, raising concerns about whether some of them will be able to continue to serve their community. For example, there are more than $70 million in cuts to various payment rates for a variety of community-based providers and continuing care facilities that serve the elderly and individuals with disabilities. And, although nursing homes are exempt from most immediate payment rate cuts (a few will even get a small rate increase), the bill eliminates a scheduled $133 million increase in reimbursement rates in FY 2014-15. This planned “rebasing” would have re-evaluated the state’s current reimbursement rate to bring it in line with the cost of providing care.

There is some positive news: the final budget keeps intact Medical Assistance for extremely low-income adults, a health care reform that was approved by Governor Dayton in January. This preserves access to health care for tens of thousands of vulnerable Minnesotans. However, other changes in health care programs will increase the barriers to accessing health care for some individuals. For example:

• Approximately 7,200 adults without children who are between 200 and 250 percent of poverty (that’s an income between $21,780 and $27,225 for a single adult), will lose their health insurance under MinnesotaCare and be given a subsidy to buy coverage in the private market. It remains to be seen whether affordable coverage options exist in the current insurance market. The bill seeks federal permission to expand this Healthy Minnesota Contribution Program to include parents on MinnesotaCare.
• Access to health care, particularly in rural areas, could become more challenging. Hospitals face the loss of an anticipated $106 million increase in reimbursement rates in FY 2012-13 and another $491 million in FY 2014-15. As with nursing homes, the bill cuts a planned re-evaluation of payment rates intended to increase the rate to better represent the cost of providing care.
• Children and adults facing mental health issues will find some funding to counties for mental health services has dried up. The bill cuts Children and Community Services Act grants by 17 percent. The act is renamed the Vulnerable Children and Adults Act and the remaining funds will be used for child protection and to protect vulnerable adults. It will no longer fund mental health services for adults and children.

In some areas, the impact of the budget decisions are harder to predict. For example:

• The agreement eliminates the MinnesotaCare provider tax beginning in 2020. This tax on health care services is one of the major funding sources for the Health Care Access Fund (HCAF), which in turn funds MinnesotaCare and other health-related grants and services. This significant source of health care funding (projected to raise more than $1 billion in revenue in FY 2012-13) would be eliminated without any specific plan for how to continue funding these important public health functions.
• There are about $400 million in general fund savings from managed care reforms, including rate reductions, efforts to reduce hospital admissions/re-admissions and emergency room usage, and competitive bidding. The estimated savings associated with these reforms grows to $540 million in FY 2014-15. Unfortunately, it isn’t clear how these savings goals will be achieved, or what will happen if the actual savings falls short of what is anticipated.

We couldn’t possibly touch on all the important changes included in the health and human services budget in this blog. We will be releasing a more comprehensive analysis of the budget agreement in the coming days.

In the meantime, for more information on how Minnesotans will be impacted by the health and human services budget, check out analysis by the Affirmative Options Coalition, National Alliance on Mental Illness of Minnesota, Child Care WORKS and the Arc of Minnesota. 

-Christina Wessel

Agreement between Governor Dayton and Legislature cuts transit by $54 million

Details of the agreement between Governor Dayton and the Legislature on funding transportation emerged Monday afternoon. The bill includes more than $54 million in reductions to mass transit in the Twin Cities and Greater Minnesota. While this level of cuts is far below the $118 million proposed by the Legislature, the Governor’s budget had proposed no reductions in funding for transit.

The transportation bill cuts general fund support for transit in the Twin Cities metro area by $52 million, a 40 percent reduction in FY 2012-13. Suburban transit providers that have “opted-out” of the Metro Transit system will also see a cut of approximately $7 million for the biennium. This overall level of cuts is significantly less than the 84 percent cut approved by the Legislature in May (and vetoed by the Governor). The agreement backfills some of these cuts to transit operations by redirecting revenues from a quarter-cent regional sales tax away from the construction and operation of rail and bus rapid transit projects. The Metropolitan Council has said they will also use reserves and federal funds to maintain current levels of service.

The transportation bill also cuts funding for transit operations in Greater Minnesota by about $3 million, an eight percent reduction. Once again, the reduction is less than the 23 percent cut approved by the Legislature, but will still have an impact in area where there are already few transportation alternatives.

The agreement makes no cuts to funding for commuter and passenger rail through the Department of Transportation. The Legislature eliminated this funding in its budget, which would have represented a loss of $1 million in FY 2012-13.

One new proposal showed up in the bill – $127 million in additional funding from the trunk highway fund for the Better Roads for a Better Minnesota program, which is aimed at repairing roads in poor condition.

Transit is a basic public service, getting people to and from work and school and other destinations, and reducing congestion and pollution. While the transportation bill has softened the blow to transit, transit authorities will still be diverting resources from other projects to maintain current operations. If we fail to make critical investments today in our transportation infrastructure, tens of thousands of Minnesotans – seniors, individuals with disabilities, working adults and students – are likely to find it a little harder to get where they need to go in the future.

-Christina Wessel

Budget solution means our revenues still don’t match up with our priorities

Late Thursday afternoon, Governor Dayton and legislative leaders came to an agreement on a framework for the state’s budget that will have a profound impact on Minnesota’s future economic vitality and fiscal health. The agreement increases the size of the shift in payments to school districts, borrows $700 million from the future through tobacco bonds, and reduces funding for vital public services by more than $2 billion.

Lawmakers agreed to approximately $2.2 billion in cuts to services that will impact our quality of life and our current and future economy. While the details will be worked out over the next few days, cuts of this magnitude will likely mean fewer vulnerable Minnesotans will have access to basic health care insurance, some individuals with disabilities will lose vital community-based services that allow them to avoid institutionalized care, many people will find it harder to get to work as mass transit options decrease, students will find it more challenging to access higher education, fewer individuals will get the training they need to find and keep jobs, and some parents will no longer be able to access affordable child care so they can work. More details on the possible impacts are available in our recent analysis of the Governor’s and Legislature’s budget proposals, and we’ll be sure to blog as details of the deal emerge.

The Governor and legislative leaders also agreed to $2.8 billion in one-time solutions, including $1.4 billion by continuing the current shift in payments to school districts, another $700 million in a new shift in payments to school districts, and $700 million in tobacco bonds. So, instead of paying upfront for an educational system we value, we have said we will pay for it sometime in the future. That is unsustainable. And this heavy reliance on one-time solutions means the state will be back facing deficits in another two years.

Minnesotans are proud of our quality of life – our highly skilled workforce, amazing outdoor spaces and vibrant culture are what attract people and businesses to this cold weather state. However, maintaining this quality of life requires investments in our people, our communities and our infrastructure. We do not have a revenue system that raises enough to meet the state’s priorities, and this budget deal does not correct that current inbalance.

Unfortunately, the reliance on one-time resources also means Minnesota’s bond rating is very likely to be downgraded (again), making it more expensive for the state to borrow for capital projects in the future. Just last week, Fitch Ratings downgraded Minnesota’s bonds from AAA to AA+. Their decision was triggered by the state’s recent track record of using accounting gimmicks and one-time resources to address budget deficits. While Fitch had anticipated that lawmakers would use $1.4 billion in one-time solutions to solve the current deficit, the final agreement actually doubles that amount to $2.8 billion. This signficant and repeated use of one-time resources could trigger other rating agencies to take action. A lower credit rating means higher borrowing costs not just for the state, but also school districts, cities and counties across Minnesota.

It’s time to face reality. We are no longer kicking a can down the road, it has become a 55-gallon drum. Minnesotans value healthy families, educated workers, vibrant communities, thriving outdoor spaces and a strong infrastructure – all of which are building blocks for our future economic growth – and we need to step up and pay for them. And that means ensuring that the revenues we collect match up with the investments we need to make to meet  our expectations.   

-Christina Wessel

Special Master hearings yield a little good news

More government funding will flow in response to orders issued by Judge Kathleen Gearin on Thursday. The decisions are the result of a series of hearings over the last few days before court-appointed Special Master Kathleen Blatz.

On June 29, Judge Gearin issued a ruling that outlined what funding should continue during a Minnesota state government shutdown. Since then, dozens of nonprofits and businesses have petitioned the Special Master to clarify whether their funding was covered in the initial order, or to ask the Court to expand the order to include their funding. So far, Judge Gearin’s decisions have focused mostly on clarifying the initial order, rather than expanding it. On Thursday, she ruled that:

• Emergency services, such as the Emergency General Assistance Program and Emergency Supplemental Aid Program should be funded during a shutdown, as should payments for short-term shelter and utility needs paid through the Minnesota Family Investment Program (MFIP) consolidated fund.
• Training for individuals who are blind, whether run by the State Academy for the Blind or by another entity, are critical core functions and should be funded.
• Special education is a critical core function of government and should be funded.
• The background checks necessary to continue critical core functions are also vital and the state government staffing needed to perform those checks should be funded during a shutdown. 

Not every petitioner got good news on Thursday. Judge Gearin ruled that housing access services, while an important support for individuals eligible for Medical Assistance home care or Medicaid waiver services, does not reach the level of a critical core function and will not be funded.

Separately, the Court ruled over the holiday weekend that food shelf distribution should start up again and allowed the Minnesota Zoo to reopen.

More rulings are expected in the coming days.

-Christina Wessel

First day of the state government shutdown

As we enter the first day of the Minnesota state government shutdown, we wanted to take a few moments to reflect on what is still running and direct you to resources you may find useful.

Earlier this week, the court ruled on what government services should continue in the event of a shutdown (our earlier blog discusses Judge Kathleen Gearin’s order). Here are some examples of what is still open, either because the court ruled it a critical core service, or because it has an alternative funding source:

• Judge Kathleen Gearin ruled on Wednesday that constitutional offices should remain open, that means the offices of the Governor, Lieutenant Governor, Attorney General, Secretary of State and State Auditor will continue to function during a shutdown.
• Judge Bruce Christopherson ruled on Tuesday that Minnesota’s court system must remain open to protect the constitutional rights of individuals.
• Programs that are federally-funded through Temporary Assistance for Needy Families (TANF), Medicaid (known as Medical Assistance in Minnesota) and the Supplemental Nutrition Assistance Program (formerly known as Food Stamps) will continue to operate.
• State-funded health care programs, such as MinnesotaCare, will continue to serve individuals and health care providers will be paid.
• Nursing homes, regional treatment centers and veterans homes will remain open and providers will be paid.
• The Unemployment Insurance system will remain functional during a shutdown. To deal with the anticipated rush of state worker claims, a schedule for when eligible individuals should apply has been created.
• Although state-run Driver and Vehicle Services (DVS) offices are closed, offices run by other entities will remain open and process limited functions like driver’s license renewals, tabs and plates. To find an open office, visit mndep.com.
• Although the Minnesota Zoo will be closed (a decision that is being appealed), they have announced that their summer concert series will continue and the IMAX theater will be open.
• Most state forests and trails are open for day use, as are public water accesses. State parks are closed.
• Although you cannot purchase a fishing license, the DNR will continue enforcement.

Judge Gearin’s decision contains a more detailed list of what funding will continue. The document isn’t too long, so it is worth a read.

Of course, there is a great deal that is not being funded. And some of those funding decisions are being challenged or need further clarification. The court-appointed Special Master, former Minnesota Supreme Court Justice Kathleen Blatz, started holding hearings beginning on Friday morning to hear from entities that are petitioning the court to have elements of funding continue during a shutdown. A list of the entities appearing before the Special Master on Friday has been posted on the Second District Court’s website. Some of the issues being discussed include support for background studies and housing access services.

Although an estimated 23,000 state employees will be laid-off as of Friday, the unions reached an agreement with the state to save costs: laid-off state employees won’t be paid severance or vacation during the shutdown, although they will continue to be eligible for health care benefits. State employees will also be eligible for Unemployment Insurance benefits.

More information on how the shutdown is impacting Minnesota’s nonprofit sector is available from the Minnesota Council of Nonprofit’s government shutdown resource page.

And if you want a chance to speak up, Minnesota Public Radio is collecting people’s stories, questions and insights on the government shutdown.

Of course, behind all of this is a conflict between two fundamentally different philosophies about the future of Minnesota. If you want to reflect on what policymakers are fighting over during this shutdown, then review our recent analysis, A Tale of Two Visions: Comparing Governor Dayton’s and the Legislature’s FY 2012-13 Budgets.

-Christina Wessel

Special Master will hear petitions on Friday, July 1

Judge Kathleen Gearin appointed former Supreme Court Justice Kathleen Blatz as the Special Master to hear petitions and make recommendations to the Court on issues regarding funding during a state government shutdown. This will help clarify any remaining questions as to what should, or should not, be funded.

It has just been announced that Justice Blatz will holds hearings on Friday, July 1 in Room 230 of the Minnesota Judicial Center (25 Rev. Dr. Martin Luther King Jr. Blvd. in Saint Paul) from 8:00 a.m. to 5:00 p.m..

To schedule a hearing, please email Christopher Channing at christopher.channing@courts.state.mn.us. You will be asked to submit six copies of a case statement in advance of your hearing that outlines your position (just one or two pages long). Since these are informal proceedings, this does not need to be written as a formal legal document and you do not need a lawyer to represent you. You may bring people who will be affected by a shutdown to help make your case. Hearings may last up to 20 minutes.

Hearings will continue on Tuesday, July 5, until all petitioners are heard. If necessary, emergency issues may be considered over the holiday weekend.

If you have more information about the process, feel free to leave it as a comment to this blog posting. Also, watch the Minnesota Council of Nonprofit’s shutdown page for further information.

-Christina Wessel