Legislative/Budget Update
February/March 2005

State of Ohio Budget

Overview

Extensive changes intended to create a more inviting tax code for businesses in Governor Taft’s $51.4 billion biennium budget proposal will generate an estimated $833 million less in tax revenue during the next two fiscal years, despite a $5 billion structural deficit projected for the FY06-07 budget (starts July 1, 2005). Though the proposal represents a 4.4% increase over two years, the structural deficit means that established revenue sources already do not have the capacity to cover existing programs. That means downward pressure on spending and big cuts.

The proposal’s tax reform features a version of trickle-down economics, lowering personal income tax rates by 21 percent by 2010 as well as estate taxes. Analysis has shown that Ohioans earning an average of $643,000 a year would reap nearly a quarter of the tax benefits ($8,400 per person). The Dispatch wrote: “The idea is to stimulate the economy by giving all taxpayers an income-tax cut--and to lower taxes for top executives and 300,000 business owners who pay income rather than corporate taxes.” Though Ohioans earning less than $10,000 annually would pay no income tax (average gain of $12 per person), the proposal also retains half of the penny-per-dollar sales tax set to expire June 30th , and with it, the regressive bias against lower income persons who will pay a higher percentage of their income in taxes than the wealthy.

Prime targets for cuts include Medicaid (slowing overall growth), state subsidies to local government (i.e., layoffs, cuts to basic services--public safety, fire, EMS, parks, sanitation, street repair, etc.), libraries, and regulatory agencies, such as the Ohio Environmental Protection Agency. The Ohio Dept. of MR/DD is one of 18 state agencies that are flat-funded. The debate will include controversial issues (statewide tax-funded vouchers for private schools), other revenue issues (replacement tax collection options, user fees, sin taxes, etc.), and massive lobbying by cities, counties, universities, nursing homes, and everyone else.

Suffice as background that Ohio’s business community is supportive, and leaders in the House and Senate are business-friendly. The House Speaker and Senate President have been working collaboratively in introducing priority bills and have been involved in the Executive proposal process. That makes the job tougher. Speaker Jon Husted, with a business and Chamber of Commerce background, called the plan “as good of a starting point as we could have,” and said House members were “excited” about it.

The Governor’s proposal is simply something being proposed--a starting point that will see many changes in detail over 4 months. Since the Ohio Constitution requires a balanced budget, there will be intense debate on both the revenue side (bringing in money) and the spending side. The human costs of proposed cuts and the opportunities of various expenditures must be demonstrated to policymakers. With closely coordinated chambers of the Legislature, advocates have their work cut out for them. Nevertheless, Speaker Husted also said: “We’re going to have a hard time staying as fiscally conservative as the Governor.”

This “Update” coincides with the release of the Executive Budget proposal and the beginning of hearings. Issues important to the disability community will be updated on a regular basis. Questions or information can be directed to: Richard V. Skelley, Ph.D.: Ohio Developmental Disabilities Council, 8 E. Long, 12th Floor, Columbus, OH 43215 1-800-766-7426; 614/644-5548; richard.skelley@dmr.state.oh.us

Medicaid

Governor Taft: “We have chosen to protect all services for all children up to 200 percent of poverty. We will continue to provide all basic services to elderly and disabled adults on Medicaid, including nursing home care, health care, physician and hospital care, and prescription drugs.”

From ODJFS Communications, 2/10/05
Steps to reduce the rate of growth of Medicaid (save $832 billion)
Medicaid would still grow by $577 million over two years, cost the state about $8.1 billion, and account for about 38% of all spending

Eliminate dental and vision services for adults. There are about 800,000 adults on Ohio Medicaid. About 249,000 adults received dental services in SFY 2003, while about 147,000 received vision services. [ODDC joined others in strong input two years ago which got adult dental restored and forestalled a line item veto]. Estimated biennium savings, state share: $74.8 million

• When asked recently how 800,000 adults should obtain dental and vision care without Medicaid, Governor Taft was quoted as suggesting free clinics and asking dentists and optometrists for free care. “We will, I’m sure, create a challenge for some of these people,” he said. (Dayton Daily News)
• A Cleveland Plain Dealer article (2/11/05) stated: “House Speaker Jon Husted predicted his caucus might disagree with Taft and try to retain funding for vision, dental and basic health for the poorest--just as they did two years ago when Taft recommended similar cuts. Last time, there were a lot of House members who felt that eliminating some of those services in the end didn’t save money.”

• Akron Beacon Journal editorial [A Medicaid Proposal that Saves Now and Costs Even More Later] (2/13/05): “Most disturbing are the Medicaid proposals reflecting the misguided thought that denying care to the poorest people--restricting eligibility and eliminating dental and vision care as ‘optional services’-- will prove cost effective in the long run.”
• A spokesperson for free clinics: “The Ohio Association of Free Clinics will write a letter to the Governor explaining that while free clinics are an important part of the dental and vision safety nets, we do not have the capacity to absorb this volume of Ohioans. Volunteerism is laudable and important, but programs like free clinics and dental OPTIONS are already over-burdened and under-funded.”

Discontinue Disability Medical Assistance (DMA) program. About 15,000 adults are currently enrolled in the DMA program, which is fully funded through General Revenue Fund dollars. [This program is for the “poorest of the poor”--less than 33% of the federal poverty level ($115 per month). Recipients are medication dependent, usually for mental illnesses, but not Medicaid eligible]. Estimated biennium savings: $139.7 million

• Following legal questions, ODJFS withdrew an administrative rule on 2/16/05 that would have eventually killed the program. Its fate now lies with the budget process in the Legislature where advocates feel there will be a tough fight, but a better chance. [See Husted statement above]

Reduce nursing facility rates. Reduce nursing facility rates by an average of 3 percent in SFY 2006, then freeze in SFY 2007. Estimated biennium savings, state share: $499.2 million

• As an alternative to nursing home care, the budget increases PASSPORT funding--allowing older Ohioans to remain in their homes--to $112 million next year (8%), and $121 million the following year (another 8%).
• The budget proposal also provides funding in FY07 to initiate a new assisted living waiver that offers another option to nursing homes.

Freeze rates for Intermediate Care Facilities for the Mentally Retarded (ICF-MR). Estimated biennium savings, state share: $33.5 million

Reduce Medicaid coverage for low income adults. An estimated 25,000 adults would be affected by a reduction in eligibility for adults from 100 percent of the federal poverty level to 90 percent. [Currently the poverty level for a mother and one child is $12,490/year and for a family of three, $15,670/year. Reducing that 10 percent takes those levels to $11,241 for two and $14,103 for three].

Freeze rates for hospital in-patient services. Estimated biennium savings, state share: $38.7 million

Bureau for Children with Medical Handicaps (BCMH)

The Ohio Dept. of Health portion of the Governor’s proposal will cut $1 million from BCMH, or about 1/6 of its entire budget--a budget that is already down from $12 million in 1998. BCMH is an insurer of last resort for families whose children have rare, severe, and extremely expensive health conditions. According to published reports, this is the only program of 15 funded by the state proposed for such a deep cut. According to ODH, BCMH is a “priority 3 “ service, deemed low priority because it serves few people compared with AIDS and other prevention programs. Health officials decided against across the board cuts to programs. [See Department Testimony below]

BUDGET TESTIMONY

Ohio Department of Mental Retardation and Developmental Disabilities

Director Ken Ritchey’s Testimony to the House Finance and Appropriations Committee February 16, 2005

[Complete text of written testimony: www.odmr.dd.state.oh.us]

• ODMR/DD received over $65.3 million in budget cuts since FY01, though implementing Medicaid redesign, building a health and welfare infrastructure, starting the closing of two Developmental Centers, designing a waiver reimbursement methodology, and transitioning out of CAFS.
• ***In discussion of proposed changes in funding for ICF/MR, he stated that under the proposed settlement of Martin v. Taft, the funding stream for persons in ICFs/MR will shift from the facility to the individual, enabling personal choices. Individuals can remain where they are or take funding with them to a new setting.
• The federal government is not going to continue to fund CAFS health-related services in schools as currently structured. Work to find alternatives continues with schools, the administration and ODJFS.
• A study is being funded on the future role and function of Developmental Centers, to be completed by January 2006.

***“Partners for Choice and Quality Care,” an alliance of families, guardians, and advocates for persons in ICF/MR facilities and state Developmental Centers, delivered a petition with 18,000 signatures to the Governor, opposing perceived elimination of funding for ICFs/MR and new waiver possibilities. The Governor’s office replied that there has not been an intention to eliminate these services--only to offer more options.

Ohio Department of Health

Director Nick Baird’s Testimony to the House Finance and Appropriations Committee February 16, 2005

• ODH has received 26 percent in funding cuts since FY00
• It has focused on preventing widespread disease, then funding treatment
• “Because treatment-based activities are more expensive and serve fewer people than prevention-based activities, treatment programs such as Children with Medical Handicaps (BCMH) experienced the largest funding reductions. There is a critical need to pay for treatment services for children who are not eligible for Medicaid, underinsured and uninsured. Without the treatment-based portion of programs, such as BCMH, families will face bankruptcy, lack of medical care, and forego care for themselves and their families. While funding reductions to this program are devastating, it will be even more tragic if these reductions do not serve as the impetus for a comprehensive and long-term solution to funding this critical need.”
• ODH is looking at enrolling more Amish families on BCMH (25% of clients) in Medicaid, freeing up $4.8 million and reducing the BCMH service levels to those of Medicaid.
• The inclusion of $500,000/year for oral health programs responds to the proposed elimination of Medicaid adult dental. When asked if it was sufficient to cover the need, he said, “No.”

Ohio Department of Job and Family Services

Director Barbara Riley’s Testimony to the House Finance and Appropriations Committee, February 16, 2005

• Funding is included for the Access to Better Care (ABC) Initiative to provide mental health services for children. “It is untenable to require parents to relinquish custody in order to get those services for their children.”
• The Department is ceasing its efforts to phase-out the Disability Medical Assistance program through rule change, leaving it to the budget process.
• Challenges include spending $55.7 million more for prescriptions for persons eligible for both Medicare and Medicaid in FY07 through the Medicare Part D program “than if we had continued to cover them under Ohio’s Medicaid program. So much for the help of the federal government.” [Quoted by Hannah News Service]
• Addressed the MR/DD issue of replacing the CAFS funding system, characterizing the discussions “not as a conflict but as difficult conversations.” She said at issue is “how to make a system using Medicaid as a funding source have integrity. The solution may not be without cost.”
• “Currently, Medicaid provides comprehensive health coverage to one in every six Ohioans including one in every three children, and one in every four seniors age 85 and older. Medicaid pays for more than one out of every three births in Ohio and approximately 70 percent of all nursing home care provided in the state. Because of this, Medicaid represents 38 percent of Ohio’s GRF budget.

“There are three short-term methods to immediately reduce Medicaid expenditures:

--lower or freeze reimbursement rates such as nursing facilities, in-patient hospitals and ICFs/MR;

--reduce eligibility including moving low income parents from 100 percent to 90 percent of poverty, and discontinuing the Disability Medical Assistance program; and

--eliminate services including adult vision and dental.

The budget before you includes all three approaches. In addition, we have chosen to take several more strategic, long-term actions including an increase in the use of managed care; . . . “

State Legislation: Free-standing House and Senate Bills Will Be Provided in the Next Update

Return to the top of the page.

| Home | About Us | Calendar of Events | Grants and NOFAs | Links | Publications and Products | Site Map | What's New