Medicaid is Consuming the General Fund

Examples of Programs/Services not Adequately Funded: Department of Administrative and Financial Services
Jennifer Smith, DAFS Communications Director, Jennifer.M.Smith@maine.gov 624-7397

Budgetary reductions in DAFS over the past few years that were prompted, in whole or in significant part, by funding increases to support MaineCare and General Purpose Aid include: 1. Frozen Merit Step, Cost of Living and Longevity (partial) pay increases over a four and one half year period until the modest adjustments that were allowed last year. 2. Multiple reductions in the Value of the Homestead Exemption since its high-water mark in 2005. 3. Last years elimination of the Circuit Breaker program and the replacement of a much less generous Property Tax Fairness Credit last year. 4. Annual reductions in BETR reimbursement. 5. Freezes in the level of funding for the State Employee and Retiree Health Insurance program over a four years period resulting in a visible cost-sharing shift to employees. 6. Three years (2008 2010) of sweeps of modest reserves in the Capital Construction & Improvement Fund at the same time that more than 300 public improvement projects at an estimated cost of $220+ million have gone unfunded. We compromised on a temporary response toward meeting this need by getting a one-time authorization to borrow $4.5 million in last years budget bill. 7. Recent budget curtailment activity that reduced funding for priority contracts, training and staff development and technology investments. 8. Liquor licensing and enforcement activity has been reduced by more than two-thirds in the last 10 years. 9. Lottery marketing authorizations have been flat for many years, while inflation and casino gambling has created new competition for lottery consumers and the associated revenue transfers. 10. The self-funding (from All Other budgets) approach toward covering the cost of a proliferation of position reclassifications over the past several years has had a serious limiting effect on the proper use of those funds.

Department of Labor
Julie Rabinowitz, DOL Communications Director, Julie.Rabinowitz@maine.gov 621-5009 DOL is 97% federally funded, but has been cut to the bone in most areas in which MDOL had historically received General Fund revenue. Those functions cannot be replaced with the federal funds because they are tightly restricted with no flexibility to meet the needs of workers and the unemployed.

The loss for funds include the sweeping this fiscal year of $2 million from the Competitive Skills Scholarship Fund, which is paid by taxes on businesses and designated to provide education and job training to low-income individuals for new careers in high-wage, in-demand jobs. If MDOL had more GF revenue, it could: 1. Implement structural changes to Workforce Delivery Systems, including establishing Industry partnerships and funding the State Workforce Investment Board to drive policy that support job training programs; 2. Reinstate the Maine Enterprise Option, which allows unemployment recipients to start their own small businesses; 3. Reinstate the Governors Training Initiative (with tweaks to the program), which was funded at $3.5 million in 2002 and zero dollars in 2013; 4. Conduct Job Vacancy Surveys to determine what jobs are currently in demand; 5. Expand Apprenticeship programs 6. Incorporate a subsidized wage program to wean people off unemployment and assist the long-term unemployed to get folks back into the job market quicker; 7. Implement Organizational Development initiatives that supported our Zero Based Budgeting efforts from two years ago. 8. The sweeping this fiscal year of $2 million from the Competitive Skills Scholarship Fund, paid by taxes on businesses, that are designated to provide education and job training to low-income individuals for new careers in high-wage, in-demand jobs.

Department of Economic and Community Development

Doug Ray, DECD Communications Director, Douglas.Ray@maine.gov 624-9802 The DECD Total General Fund Biennial Budget is $23.4 million; only 15% is used for Economic Development. $17.5 million of the total is passed thru DECD to other entities; Maine Technology Institute; Maine International Trade Center; Maine Small Business Development Center (SBDC); Applied Technology Development Center and Maine Economic Growth Council. More General Fund revenue would be used for Economic Development. 1. 2. 3. 4. General Fund amount available for Economic Development Biennial FY14-15 Proposed Cuts by OPM to DECD GF Budget DECD lost valuable Tourism funding in FY13 DECD lost 13 positions since 2004. $3.6 million $1.2 million $1.0 million

Maine Technology Institute: $1 million returned to the General Fund in FY14 through OPM efforts. These funds would have assisted product development and technology business enhancements in Maine. Maine International Trade Opportunities: Requests for additional funding for Maine International Trade Center were denied resulting in DECD re-assigning one of its 29 positions to the Maine International Trade Center to staff the Maine Northeastern Atlantic

Trade Office. Additional funding would have covered contractual support for MITC; DECD will now consolidate business assistance efforts in Augusta to provide support to this much-needed effort. Evaluation of Economic Development and Research and Development Initiatives: DECD is statutorily required to contract with independent, nonpartisan reviewers to evaluate the programs and functions of the department, as well as the statewide investments in economic development and research and development. Funding to accomplish these evaluations is based on assessments to existing programs. Adequate funding for the economic development incentive program evaluation has never existed until this FY, when only partial funding for the evaluation has been provided. This leaves DECD to cover the remaining costs at the detriment to other economic programs.

Department of Education
Samantha Warren, DOE Communications Director, Samantha.Warren@maine.gov 624-6747 Were it not for the Medicaid program, the state would be better able to fund its share of education funding at 55 percent. It would be able to provide extra financial support to our most struggling schools. Unsustainable Medicaid costs resulted in a $12.7 million curtailment last year and a proposed $10.5 million cut ($9.5 million directly in school funding) this year through the work that OPM is doing. Since those were funds already committed to schools, the deficits that Medicaid is running are preventing the state from keeping its funding promises to Maine schools. Because theyve already budgeted those amounts, its likely theyve had to raise the difference locally or make their own cuts.

Department of Environmental Protection

Jessamine Logan, DEP Communications Director, Jessamine.Logan@maine.gov 287-5842 Over the course of the past 10 years, more than $7.3 million has been diverted away from DEP or swept by the legislature to plug holes in the General Fund budgets. Two of the funds are dedicated to support oil spill response. Tragedies like the Lac-Mgantic tragedy derailment/fires demonstrate why this funding is critical. DEP receives significant revenue from various fees. Whether from applications for permits or from fees on the sales of certain products, the revenues are specifically intended to run a number of programs at DEP. As these non-General Fund funds are taken away from the DEP, the department has less money in order to accomplish its work. In Fiscal Year 2011 alone, over $2.5 million was taken from environmental protection programs. That means contaminated properties, which need to be cleaned-up and made available for more productive use in the economy, go on a waiting list of work to be done.

Capital equipment needs are set aside for another year. Improving technology to provide for improved efficiencies by both the public and the agency are set aside for another year. These are but just a few examples. Even though Governor LePage proposed and DEP received additional General Fund revenues, they were but a tiny step in the right direction to stem the tide of money being diverted away from environmental protection and used by other agencies.

Department of Marine Resources

Jeff Nichols, DMR Communications Director, Jeff.Nichols@maine.gov 624-6569 Budget shortfalls have prevented DMR from expanding surveys for critical fisheries, such as scallops, shrimp and lobster. Zero research is being done on population assessments for scallops, shrimp, sea herring, lobster, eels, urchins and shellfish. Shortfalls have also prevented DMR from adding resources to the landings program, which provides the basis for assessing the status of fisheries and determining the economic impact of marine resources and fishing to the state. Aquaculture is a growth industry, but DMR does not have the positions to take advantage of it. With additional funding, DMR would increase the level of staff to process new aquaculture leases. The department administers the lease program in coastal waters for scientific research and for aquaculture of marine organisms, including site assessments to determine the possible effects of a lease on commercially and ecologically significant flora and fauna and conflicts with traditional uses of the area. A lack of funding challenges the DMRs ability is patrol Maines thousands of miles of coastline. Specifically, funds are not available to purchase a larger patrol vessel that can go farther out to sea or to add the manpower necessary for the Marine Patrol to more effectively enforce our states critically important Marine Resources laws.

Department of Inland Fisheries and Wildlife

Mark Latti, Landowner Relations Coordinator, Mark.Latti@maine.gov 287-5216 These efforts are or will be further impacted by Medicaid expansion and the resulting loss of General Fund revenues for IF&W: 1. 2. 3. 4. Unable to properly market IF&W. Lack of funding for Predation Control program. Lack of resources for enhanced fish stocking. Unable to make significant upgrades to MOSES online licensing system.

Department of Agriculture, Conservation and Forestry

John Bott, DACF Communications Director, John.C.Bott@maine.gov 287-3156 The natural resource infrastructure and added value to the Maine economy has lost momentum through the years of cutbacks that result from the shift in priorities to social spending. Internal technology applications to better serve clients, technical assistance to landowners and entrepreneurs that could improve productivity and product promotion assistance in the marketplace are all DACF and legislative initiatives that must survive on minimum budgets and have limited effectiveness. Maine has an immediate and positive product identification capability, but is without the publicly financed marketing partnerships that other resource groups nationally and internationally use to compete with Maine goods. Rural development through economy activity has also been impacted at the same time by similar reductions to University of Maine Extension staffing that focused on natural resources. The budgetary impacts of Medicaids drain on General Fund dollars are two-fold: 1. Traditional DACF support for Maines agriculture, conservation and forest economies has been adversely impacted. 2. Constant shifting of personnel and programs to provide the same level of service with declining dollars results in significant opportunity costs. Opportunities to further expand Maines natural resource industries to create new jobs and economic activity are forgone due to constrained budgets.

Department of Public Safety: State Police

Steve McCausland, DPS Communications Director, Stephen.McCausland@maine.gov 626-3811 1. The State Police continually leave 10 to 20 sworn positions vacant because there is no General Fund operation budget to support them. The number (10 to 20) is a moving figure based on other General Fund costs, like gasoline, which is never funded properly. 2. Only $2.75 has been appropriated for a gallon of gas. The average cost since July 1 has been $3.11. (DPS purchases gas tax free.) DPS has purchased 401,000 gallons since July 1. 3. The appropriations committee did not fund $200,000 for vehicles that the Governor had approved in his budget. This will keeps vehicles on the road with excessive mileage, putting Troopers in an unsafe environment. 4. The Automated Fingerprint Indexing system (AFIS) is at the end of life cycle and will require $2 million dollars to replace. With flat funding each year, asking for replacement money has not been an option. 5. DPS has a $250,000 reclassification bill from six years ago that it cannot fund, which is gaining interest every year.

6. The Capital Improvement fund is a major issue for DPS. Major pieces of equipment and laboratory devices need to be replaced. DPS does not have one penny to do that.

Department of Defense, Veterans and Emergency Management

Peter Rogers, DVEM Communications Director, Peter.J.Rogers@maine.gov 430-5761 Annual budget for DVEM is just $3 million. The state does not pay its fair share of funding for National Guard facilities. There is a $9 million total shortfall in the states share for National Guard facilities modernization. If the states share is funded, it will bring either 75% or 50% Federal matching funds. Lack of General Fund revenue prevents DVEM from: 1. Establishing one Communications Director position critical for enabling communication with the public during state emergencies, etc. 2. Getting the required state match of $350,000 for the construction of the new Joint Force Headquarters overall project is worth almost $40 million. 3. Securing $45,000 in funding to allow continuation of MEMA stream gauge program provides prediction/early warning of flooding across the state. 4. Getting $650,000 to fund state emergency response fund. 5. Receiving $2 million a year for state share of National Guard facilities sustainment brings either 75% or 50% Federal matching funds if state share is funded.

Department of Corrections
Scott Fish, DOC Communications Director, Scott.Fish@maine.gov 287-4386 The loss of General Fund revenue has resulted in a lack of funding for capital items. The DOC has had to self-fund all capital improvement/repairs/requests to all its facilities due to lack of funding. This necessitates drastic changes in program delivery. Since county jails are underfunded by $2 million, inmates are often sent to state facilities. The state must house these inmates without funding to support them.

Department of Professional and Financial Regulation

Doug Dunbar, DPFR Communications Director, Doug.Dunbar@maine.gov 624-8525 DPFR is a dedicated revenue departmentits five internal agencies and six affiliated boards operate solely on incoming license and other fees dedicated for that agency paid by individuals and entities licensed and regulated by that agency. The Departments operating accounts contain no General Fund revenue. Each DPFR agency has a separate budget and revenue account. However, the loss of General Funds at other agencies has an indirect impact on DPFR: Indirect negative impact on DPFR agencies due to insufficient support from DAFS/Service Centers in human resource and financial management servicesthe result of General Fund cuts in DAFS programs.

1. Indirect negative impact due to insufficient technology support from OIT/DAFSalso the result of General Fund reductions in the DAFS budget. 2. Indirect negative impact on DPFR agencies resulting from freezing merit and longevity pay. State employees gain expertise in a particular area, then leave for higher-paying positions in the private sector. DPFR agencies have become training facilities for financial institutions and insurance companies regulated by Department agencies.

Department of Transportation
Ted Talbot, DOT Communications Director, Ted.W.Talbot@maine.gov 215-9297 MaineDOT does not receive any General Fund appropriations. It has been zeroed out over the years.* However, from a longer-term perspective, the growth of General Fund programs most notably those at DHHS has had the effect of making transportation a lower priority in Maine over time. In 1975, Highway Fund revenues represented over 25% of revenues collected by the State (Highway Fund and General Fund). In FY 2013, this percentage is less than 10%. About two-thirds of all MaineDOT expenditures are capital-related. To preserve these capital investment levels, MaineDOT has undertaken numerous efficiency efforts. For example, over the last several years, MaineDOT has reduced its workforce by about 20%, as measured by the number of paychecks issued.
* For FY14-FY 15 biennium, MaineDOT receives its funding from the following sources: 45% from traditional Highway Fund revenues (fuel taxes, registration and title fees, etc.); 34% from federal funds; 17% from bonds proceeds; and 4% from other sources.

Department of Health and Human Services

John Martins, DHHS Communications Director, John.A.Martins@maine.gov 287-5012 Despite being the recipient of Medicaid funding, the Department of Health and Human Services continues to be challenged by the amount of General Fund dollars dedicated to the program. With additional State funding, the Department could invest more in its data systems to allow for better integration of information, which would help guide a more integrated approach to services. DHHS could also expand peer services for those with behavioral health challenges, strengthen the child welfare system and support more services for the elderly that are not currently covered by Medicaid.