With yearly budget talks coming amid sluggish revenue growth, legislators showed no willingness to increase state spending — and many agencies seemed resigned to not asking for it.
That includes one agency that has sounded alarm bells in recent years about its shrinking budget. Funding for the Department of Mental Health, which received $585 million in state funds in fiscal year 2018, has long been a sore spot for many state leaders who have publicly drubbed the agency for overspending on everything from patient services to travel. But after the agency’s executive director, Diana Mikula, make her request Friday, legislators kept any comments they might have had to themselves.
“Do we have any questions for the department?” asked Lt. Gov. Tate Reeves, following Mikula’s presentation. Reeves looked at his colleagues. A few exchanged looks, but no one spoke up.
“Okay,” he said, after a pause. “Seeing none, thank you for very much for your presentation today.”
The silence from legislators on the normally contentious Department of Mental Health was peculiar. The Department of Mental Health requested level funding for fiscal year 2018, too, but during last fall’s budget hearings legislators had repeatedly grilled the agency, at times for over an hour. In addition, a federal lawsuit is looming over the agency’s use of institutions rather than community-based services.
But Speaker Philip Gunn, R-Clinton, said on Friday that he was pleased with the agency’s request this year.
“They said today that they are able to accomplish their mission with dollars that they currently have, so that’s encouraging …We’re pleased with that,” Gunn told reporters. “We think other agencies could probably accomplish the same thing if challenged to take close hard look with the way they spend their dollars.”
On the second day of legislative budget hearings held Friday in Jackson, three agencies in all presented projected budgets for fiscal year 2019, which begins next July. Two of the three agencies, the Department of Mental Health and the Division of Medicaid, requested either level funding or moderate increases over the past year’s budgets. The Public Employees Retirement System made the largest ask, percentage wise, asking for an 11 percent increase, largely for salary increases.
As the largest line item in the general fund, the Division of Medicaid often finds itself in the legislative crosshairs when it comes to appropriations. This year, however, the agency made its lowest request since fiscal year 2015, asking for $983 million. This is down $47 million from last year’s request of $1.03 billion, although it is more than the $966 million the agency ultimately received.
According to Executive Director Dr. David Dzielak the agency was able to request less this year than in previous years because the federal match rate, which determines how much funding the federal government provides for the state’s Medicaid program, is increasing.
At 74.6 percent, Mississippi already has the highest federal match rate, which means that currently the state only has to supply 25.34 percent of total state Medicaid funds. This October, that rate will increase to 75.6 percent and the following October it will increase to 76.2 percent.
According to Dzielak, this change amounts to almost $40 million in additional federal funds next year.
Sen. Willie Simmons, D-Cleveland, ran with the idea of a federal match as a way to increase agency funds without increasing state spending. Per state law, Medicaid’s two managed care companies, United Healthcare and Magnolia Health, pay a 3 percent premium tax each year, which amounts to approximately $22 million. Traditionally this money goes directly into the state general fund. But, Simmons suggested, if this money were to go into a Medicaid account, it would be matched three times over with federal funds, increasing the amount to $88 million.
Dzielak said this increase could potentially wipe out the agency’s annual shortfall and allow the agency to fund intellectual and developmental disability waivers for everyone on its waiting list. In 2017, that number was 1,427 Mississippians.
“I think it is a good spend, and it’s not asking the taxpayers for any more money or taking more money out of the general fund,” Simmons said.
Senate Appropriations Chair Buck Clarke, R-Hollandale, said the proposal could be worth considering when the Legislature rewrites Medicaid’s technical bill during the next session. The current technical bill, which outlines how the agency spends its funds, expires in 2018.
“I think we need to look at that, if it allows us to bring in more money without increasing spending,” Clarke said.
‘To the bone’
PERS executive director Pat Robertson asked the Legislature to increase its appropriation to $15.5 million, up from its fiscal year 2018 appropriation of $14 million. Robertson said the bump would largely allow the agency to increase salaries and retain employees.
“It’s becoming more and more challenging to recruit and retain staff. It’s due to an aging workforce, but it’s also due to higher salaries in the private sector,” Robertson said. “And not only am I losing staff after investing this time into training them, we’re having challenges getting staff to even apply for the jobs that we have.”
Brenda Scott, president of the Mississippi Alliance of State Employees, a workers union, noted that Robertson said although there is no plan to ask for an increase in contributions this year, employers could be ask to pay more into PERS in the future, eating into agency budgets even more.
“It’s just a gloom-and-doom day. To me the whole (Legislative Budget) hearing is a sham. How can you actually get up and talk about your agency and the needs of your agency in a 20-minute presentation?,” Scott said, adding of lawmakers: “They know where they’re going to come back and do. They’re going to come back and do as always — and cut government to the bone.”