Yesterday’s Announcement of Cuts Restoration: Impact on DPHHS

On August 30, the governor announced how the roughly $45 million restored to state agencies would be allocated. Funds are allocated based on the level of cut for FY2019 that each agency faced during the special session. About $30 million will go back to the Department of Public Health and Human Services, which took a disproportionate cut compared to other agencies. These cuts came on top of additional cuts that DPHHS faced in the regular 2017 session and over last summer.

This table shows how the $30 million in restorations compare with the governor’s original $49 million in general fund cuts, in each DPHHS division, made pursuant to section 17-7-140 MCA. The table includes the governor’s reduction taken immediately prior to the special session and then codified by the legislature during the special session, for each FY2018 and FY2019, as well as the federal funds associated with those state cuts. The rows in light grey show the amount being restored for each agency.

As you will see from this table, some of the funds directly restore cuts taken during special session, but a portion of the funds are being used for other obligations.

The governor had previously declared that he would use $5 million of the $30 million to restore provider rate reductions that were taken, not in the special session, but prior to that when 2017 revenue came in below previous projections. The governor also provides $3 million to restore (or in one case, increase) other Medicaid reimbursement rates for hospitals and other health providers.

The governor is using $3.2 million to meet its obligations to provide a wage increase to direct care workers. The legislature passed the wage increase during the 2017 session, but the first year’s wage increase was eliminated in SB 261 as a result of lower 2017 revenue levels. However, SB 261 made it clear that if revenue came in as the legislature projected in 2018 (which it now has), the wage increase would be implemented for the second year of the biennium. While the legislature provided an appropriation to fulfill this wage increase, it appears the governor is counting this cost toward the amount restored to DPHHS.

The announcement also includes some funding that appears entirely new, including additional funds to the Montana State Hospital and Child and Family Services Division, both of which are facing current budget constraints and the possibility of a supplemental appropriation for FY2019. While CFS did face a cut related to the special session, the restoration does not match what was originally cut.

As reported in July, the governor is putting some of the restored funds toward targeted case management. Of the nearly $10 million cut to targeted case management, the plan restores $2.5 million. Unfortunately, the announcement this week did not include details on how that restoration will play out in communities where hundreds of families are struggling to access services.

We’ll be digging into this more in the coming weeks, but we hope this table provides some clarity on how the restorations compare with the cuts.

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