Surplus funds used to ‘balance’ budget

• By MARSHA SHULER
• Advocate Capitol News Bureau
• Published: Jan 6, 2009 - Page: 1A - UPDATED: 12:05 a.m.

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The state health agency used excess cash — much of it one-time money — to avoid most of the $118 million in spending reductions required under a Jindal administration budget-balancing plan.

The state Department of Health and Hospitals used $56.6 million in nonrecurring surplus dollars from the Medicaid insurance program for the poor and uninsured. Another $17.5 million of the excess cash came from a special funding pool.

One-time money comes from sources that cannot be relied upon in the future. Recurring monies are those from sources, such as taxes, that are available year after year.

Gov. Bobby Jindal opposes use of one-time money for recurring expenditures.

However, he approved use of one-time money by DHH as part of a plan to “save” $341 million between now and June 30 to keep the state’s $31 billion budget in balance.

“We were trying to use all available dollars we already have before having to make cuts,” state Department of Health and Hospitals Secretary Alan Levine said.

The Jindal administration claims a $118 million “savings” from the state’s $2.17 billion share of DHH’s $8.5 billion budget. Sixty-four percent of DHH’s revenue comes from the federal government.

Levine noted that state funding cuts translate into the loss of three times what federal authorities send to help fund Medicaid.

The effort to use excess cash was to reduce the loss of federal funds, Levine said.

“Why give up $180 million in federal money?” asked Levine. “Now, next year it becomes a lot harder to do.”

Louisiana is facing a $2 billion state budget shortfall in the fiscal year that begins July 1. Health care and higher education are the two major areas of state spending that are not protected from the budget ax.

The use of the excess cash took care of all but $43.9 million of the state health agency’s $118 million budget-balancing target without Levine having to cut a dime.

There are few cuts in the agency’s proposal to close the budget gap that affect health-care providers or their patients. Some patients won’t be able to get as many prescriptions filled and hospitals and a handful of other medical enterprises will see a 3.5 percent cut in Medicaid reimbursement rates, saving $7.5 million and $5.1 million, respectively.