NC Budget and Tax Center

The N.C. budget stalemate, explained in GIFs

Earlier this summer, NC lawmakers passed a $24 billion conference budget that missed a number of opportunities to provide basic services and improve the lives of everyday North Carolinians. Within 24 hours, Governor Cooper vetoed the budget, calling it a “failure of common sense and common decency.”

On July 1, the Fiscal Year began and we didn’t have a budget.

No budget??!! While you might be confused about how we’re still running as a state, it’s because there’s a statute that keeps public programs funded at prior year levels.

This means that enrollment growth for schools and health care isn’t funded, pay raises and increases in retirement contributions for teachers and state employers aren’t provided, and emerging needs aren’t addressed.

A couple weeks after the start of the fiscal year, Governor Cooper released a compromise proposal that keeps nearly every major component of the conference budget — except it also includes a clean Medicaid expansion and eliminates tax cuts to corporations, using that revenue to invest in teachers and schools.

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NC Budget and Tax Center

Federal court strikes down Medicaid work requirements — this time in New Hampshire

On Monday, a federal judge overturned approval given by the U.S. Secretary of Health and Human Services that would have allowed New Hampshire to impose work-reporting requirements on Medicaid recipients. Such requirements are at odds with the objective of Medicaid to provide medical assistance, the judge stated, citing the experience in Arkansas where more than 16,000 individuals lost their Medicaid coverage.

“In short, we have all seen this movie before,” U.S. District Judge Boasberg stated in his decision. The same judge struck down similar waivers in Arkansas and Kentucky earlier this year.

Proponents of work-reporting requirements claim that they improve enrollee health and incentivize community engagement. However, the reality is that many low-income adults who need health coverage in order to enter the workforce lose coverage as a result of the requirements, thereby making it harder to manage their health needs.

Adults who meet exemption criteria are unaware that they do, or are unable to jump over the hurdles necessary to prove that they are exempt. Others don’t meet the narrow criteria for disability that would grant them an exemption. A recent study (summarized here) from Arkansas found that many of the individuals who lose coverage are actually meeting the requirements but are unable to report their hours for various reasons.

Our findings estimate that 88,000 North Carolinians could lose coverage due to work reporting requirements.

In addition to the harm they impose on Medicaid recipients, work reporting requirements are costly and complicated to administer. Modifying current systems to determine eligibility and exemption, creating and implementing ways for recipients to report work hours, and disseminating information about the new requirements as a condition of Medicaid coverage are just a few of the costly steps to administer and that require hiring additional staff.

The legal precedent supported by this latest federal court ruling should discourage states from following a similar path to Medicaid expansion with a waiver, given that they’ve been deemed illegal in three states so far. Instead, states should seek to increase access to Medicaid coverage through “clean” expansion and not by erecting barriers that create harm and unnecessary cost.

Suzy Khachaturyan is a Policy Analyst at the Budget and Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

Trump administration rejects Utah’s bid for more federal funds for “partial” Medicaid expansion

Late last week, White House officials stated that they would not approve enhanced federal funding for Utah’s partial Medicaid expansion, according to news reports, raising questions about the viability of the plan given the significant cost to the state.

This follows an earlier decision from the Centers for Medicare and Medicaid Services (CMS) that gave approval for Utah’s waiver request to expand Medicaid only up to 100 percent of the Federal Poverty Level (FPL). Medicaid expansion under the Affordable Care Act permits states to expand up to 138 percent FPL in exchange for the federal government paying 90 percent of the cost of services for those who gain new coverage, up from the current 68 percent match rate in Utah.

It turns out that Medicaid expansion up to the 138 percent level is not only best able to maximize the health and economic benefits to states, it also is the most (and only) fiscally responsible option for state policymakers.

Utah is the first state to submit a waiver for partial expansion without already having expanded Medicaid and, given the absence of additional federal funds to do so, it would seem fiscally unwise that a state would take up this option moving forward.

Wisconsin is the only state to extend coverage up to 100 percent FPL, absent Medicaid expansion, and does not receive the enhanced federal match. In fact, Utah’s funding rejection follows in the footsteps of other states, who both sought to lower their income eligibility requirements for Medicaid.

Partial Medicaid expansion is one of several mechanisms by which states have tried to restrict eligibility and coverage while expecting the federal government to provide additional financial support.

It not only compromises the integrity of Affordable Care Act, which created the option for states to expand Medicaid in the first place, but blocks the possibilities for greater health from being realized through state action.

Suzy Khachaturyan is a Policy Analyst at the Budget and Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

Trump Administration aims to take food assistance away from 106,000 low-income North Carolinians

This week, the Trump administration announced a proposed rule change in the way the Supplemental Nutritional Assistance Program (SNAP, formally known as Food Stamps) is administered. This change would take food assistance away from 3.1 million people and threaten the school meals of more than 500,000 children. This includes 106,000 North Carolinians, nearly 38,000 of whom are children.[i]

The administration wants to dramatically change a provision known as “broad-based categorical eligibility” (BBCE). While a majority of SNAP qualifications are set at the federal level, BBCE provides states with more flexibility in who can apply to receive food assistance. North Carolina has been a model on how to use BBCE to reduce hunger and hardship among struggling North Carolinians. This provision has allowed our state to slightly increase the income-eligibility limits so that low-income working families with children who have difficulty paying for necessities like child care or rent can still apply for food assistance. Additionally, the provision allows the state to modify the assets limits so that families, seniors, and people with a disability can have modest savings without losing SNAP.

Broad-based categorical eligibility is so effective because it actually builds the stepping stones families need to move out of poverty. Without this tool, many families find themselves in situations where saving for a car or receiving a raise at work actually makes them worse off, financially when they lose food benefits. According to a Fact Sheet from the Budget & Tax Center:

BBCE is an important tool in reducing the “benefit cliff”
Without BBCE, families who earn a raise at work or see a small increase in income are at risk of losing their SNAP benefits. Often times, the loss in benefits may be greater than the increase in income, effectively reducing the amount of resources in the household despite working hard to earn more. BBCE allows North Carolina to “phase down” benefits as families earn more, ensuring workers aren’t punished for doing well.

BBCE encourages savings and financial planning
Under regular SNAP regulations, most households are not allowed to have assets or savings that exceed $2,250. Under BBCE, North Carolina has eliminated those limits, allowing low-income families to save money in order to avoid debt, weather financial emergencies, and save to better support themselves during retirement.

BBCE reduces the state costs of administering SNAP
In North Carolina, case workers and county DSS offices are often overwhelmed with caseloads. BBCE simplifies the SNAP application process by eliminating the need for case workers to investigate household assets and often reduces the number of documents required to confirm eligibility. Just last month, the Mississippi Department of Human Services estimated eliminating BBCE would cost the state $1.5 million to implement.

In last year’s Farm Bill debate, Congress voted, on bi-partisan lines, to keep categorical eligibility as a part of the SNAP program. Two years ago leaders in North Carolina floated the idea of eliminating BBCE, but the idea was quickly rejected by legislators and constituents. Research has shown that broad-based categorical eligibility does not significantly increase program cost or participation, but rather gives states the tools they need to better implement and deliver food assistance.

To submit public comment and to tell the Trump Administration why categorical eligibility is so important, visit www.HandsOffSNAP.org

Brian Kennedy II is a Public Policy Analyst with the Budget & Tax Center, a project of the North Carolina Justice Center.

[i] Special data request to NC Department of Health and Human Services. Data accessed June 7, 2019.

2019 Fiscal Year State Budget, Commentary, NC Budget and Tax Center

Legislative leaders refuse to engage with counteroffer on the table, risk community well-being statewide

Legislative leaders have failed to engage with the Governor’s counteroffer after his veto of a budget that continues to cut taxes for big companies while failing to invest in our children’s education, our workers’ opportunities for training, and our community’s infrastructure to protect our air and water.

Senator Berger and Speaker Moore seem to believe that inaction on a two-year spending plan for the state and even leaving town without a budget is perfectly acceptable since the state can operate under a provision in state statute that Republican leaders established a few years ago that sets out the spending rules when no agreement be reached between the legislative and executive branches.

And yet North Carolinians and communities across the state know that there is nothing acceptable about their inaction in the face of the responsibility they have been given to steward our tax dollars and support our collective well-being.

The failure to follow a budget process that seeks to negotiate priorities in the face of mounting community needs is a dangerous practice to engage in.  As has been evidenced with the use of federal shutdowns, the breakdown of the budget making process allows for problematic decision-making that is often ad-hoc, is beholden to special interests and a small segment of the legislative body, and ignores the responsibility of elected leadership to come to agreement on where to invest taxpayer dollars.

As the days and weeks drag on without engagement with the Governor’s counteroffer, legislative leaders will be forced to confront increasingly challenging budget issues. Stop-gap spending bills that have made their way through the Senate and House respectively can’t possibly address these challenges in a comprehensive and thoughtful way.

There will be no ignoring the need for a state budget as state employees receive their first paychecks without step increases, federal funds languish without the ability to deploy them, schools go back in session and there are more children than there are resources, and their policy choices like Raise the Age or Medicaid transformation require funding for implementation.  Read more