Governor Cuomo Introduces His Executive Budget for 2011-2012

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Governor Cuomo Introduces His Executive Budget for 2011-2012

Budget Targets Medicaid and Education


Facing a budget gap in 2011-12 fiscal year of more than $10 billion, Governor Andrew Cuomo’s first Executive Budget targets spending cuts in Medicaid and Education, the two largest areas of the state budget.

The state also faces budget gaps of $10 billion in 2011-12, $15.3 billion in 2012-13, $17.9 billion in 2013-14, and $21.4 billion in 2014-15.  The proposed overall state budget for the 2011-2012 fiscal year is $132.9 billion, which is a $3.7 billion reduction over the current fiscal year, or 2.7 percent.
Overall state operations will be cut by 10 percent, and agencies will be expected to reduce operations by this amount, including the possibility of layoffs.  The budget also proposes some consolidations/mergers in state budget, primarily in correctional and criminal justice services, banking/insurance regulation, and economic development.

Governor Cuomo’s budget address was also showered with language and policy proposals to go after what he characterized as an “Albany cycle of overspending,” calling for major reforms to state aid for education, the Medicaid program and the structure of state government.  In both his press release and budget address, the Governor directly challenged the State’s longstanding approach, through statutory formulas, that drive the future projected costs of Medicaid and state education aid. He said:

“First, we are redesigning how the budget is created. We are rejecting a system of automatic and unrealistic budget increases that, for years, has caused spending to skyrocket to unsustainable levels.

“Second, the process is not just a budget exercise; it must be a management exercise. That means that we cannot just keep throwing money at the problem. More funds does not mean better health care, or better schools or better programs. The changes must start with a look at the programs: do they work for the patient, the student, or the New Yorker.”

For state school aid, which the Governor said would grow by about13 percent using current formulas, would instead “be based on the change of New York State personal income, with a funding mechanism that benefits high-need school districts.”  Anticipate that education advocates and the teachers union will be out in force during this budget season to oppose many of these changes. 

The Governor’s budget proposes a major revision of the existing methodology, set by statute, which calculates future spending for Medicaid.  He proposes to make “the target growth rate for Medicaid will be the long-term average change in the medical component of the Consumer Price Index.,” which currently stands at about four percent.  This is significantly lower than the projected increase in Medicaid that the Governor says would have been 13 percent without any changes.

Governor Cuomo has targeted nearly $3.66 billion in cuts from state Medicaid spending for the 2011-12 fiscal year.  The Executive Budget calls for a decrease of nearly $1 billion ($982 million), or two percent, in Medicaid spending in 2011-12 over spending in 2010-2011.  The Governor has charged a “Medicaid Redesign Team,” an outside panel composed of industry and health care policy advocates, with finding ways of restructuring the Medicaid program so that it is more sustainable over time to produce both short-term and long-term savings.  Their report is due on March 1 with recommendations that will be included in the budget negotiation process with the Legislature   This Team is charged with identifying additional gap closing actions totaling an another $2.85 billion for 2011-12.  Essentially, the Governor is charging the Redesign Team with finding specific cost-cutting measures in the Medicaid program (in addition to a proposal overall cut of 2 percent), a departure from past actions of proposing specific cuts in Medicaid as part of the Executive Budget often targeting reimbursement rates.

AIDS Institute
As part of broader plans to consolidate state operations, the separate budget line for the AIDS Institute appears to be consolidated in overall State Department of Health Administration. The budget documents eliminate distinct funding for FTEs and state operations for the AIDS Institute and move them, along with several other departments, to overall DOH administration.  The AIDS Institute will also be subject to the same 10 percent cut in state operation as all other agencies.  This will make monitoring changes in staffing and funding for specific agencies almost impossible in future budgets if these distinct budget lines are eliminated.

State funding for ADAP remains unchanged at $42.3 million.


Human Services
The last increase in cash assistance for public assistance recipients will be delayed. The state will continue to assume the local share of previously implemented grant increases, but the Executive Budget proposes delaying until July 2012 the enacted 10 percent increase that was to be implemented beginning on July 1, 2011.  This means that recipients on public assistance, including those on HASA, will have to wait another year for an increase in benefits.

The budget would also “strongly encourage public assistance recipients to seek employment.” by withholding a household’s public assistance grant in the second and any subsequent instances in which the head of the household does not comply with employment requirements.

The 2011-12 Human Services Cost of Living Adjustment (COLA) would also be eliminated.  This proposal would eliminate the projected 1.2 percent COLA scheduled to take effect in 2011-12 for OCFS programs including Foster Care, Adoption, Bridges to Health, and New York/New York III.

In a dramatic shift in the Early Prescription Insurance Program (EPIC), starting on January 1, 2012, EPIC would only provide payment for drugs when an enrollee has entered into the Medicare Part D coverage gap. Additionally, effective July 1, 2011, EPIC enrollees will be responsible for paying their Part D premiums or their full deductible.

In short, the state budget season has officially started.  If the legislature and Governor agree on a budget on time, this process will continue until the March 31 deadline.  The biggest battles in this year’s budget may very well be shaped by the recommendations of the Medicaid Redesign Team, which is to report by March 1st.