The House and Senate Budgets: Different Priorities?

Like the Senate budget, the House budget contains deep cuts to core public investments. Much of the focus of the conversation today has been about the differences between the two. One emphasizes access to workforce training programs. The other, helping maintain a basic standard of living for people who cannot work due to disability. And so on.

But the differences in priorities are less striking than the fact that they both demonstrate one prominent priority: budget cuts over tax increases. On that, they agree.

As the graph below shows, the budgets are essentially identical in terms of the total size of the cuts, the total amount of new resources, and the size of the ending fund balance.*


So maybe the differences between the two budgets is a distraction from the real question: is either one consistent with Washington State's values? Policymakers should offer a third option, one where we agree together to sustain smart investments in education, health, community, and security.


*These graphs show the change in the near-general fund balance sheet. They do not include federal recovery funds. The two budgets use different assumptions about federal money that will have to be ironed out; more on that tomorrow.

House Budget Proposal: Comparison with Governor and Senate

Today, the House released its version of the 2009-2011 budget and supplemental budget for the current biennium.

In their press conference, House budget writers acknowledged that our state’s fiscal problems are too big to be solved with an all-cuts approach. The lasting damage to Washington families and infrastructure by deep cuts will harm our ability to recover when the economy bounces back. In doing so, they noted that they recognized the reasonable approach includes raising revenue.

We are providing this side-by-side (it is an Excel spreadsheet) comparing the three budgets that have been released so far (Governor, Senate and House). It’s not a comprehensive list, but it does point out many of the key differences.

The total level of spending is roughly the same (more on that later today), but there are different choices made within the budget areas: economic security, healthy people and the environment, thriving communities and education and opportunity. (See our budget analysis in the Progress Index). In particular, the House invests more in the area of economic security, while making much larger cuts to higher education.

Stay tuned for more analysis as the day progresses.

Education and Opportunity in the Senate Budget

Every child, teenager, and adult deserves access to a high quality education that opens doors to new opportunities and prosperity. In recent years the state has made significant investments in ensuring an equitable education system in our state. These investments can be seen in early childhood education, elementary and high schools, and in our institutions of higher learning.

In the area of Education and Opportunity, the Senate budget:

Early learning

• State pre-school program slots (Early Childhood and Assistance Program) are reduced by 2 percent where programs are co-located with Head Start, potentially achieving a no-net reduction in pre-school slots statewide by taking advantage of new federal Head Start funding.
• Other initiatives that improve the quality of care are eliminated including referral for child care, a wage ladder for child care workers, and supports for families, parents and caregivers.

K-12 education

• A 93 percent cut to the voter-approved program that funds school district class size reduction, extended learning, early learning, and professional development.
• A 75 percent cut in the funds that are used to help equalize school funding across wealthier and poorer districts.
• A reduction in instructional staff for students in grades k-4
• A suspension in voter-approved cost of living adjustment for education professionals.

Higher education and workforce development

• Community and technical colleges see a 9% reduction in funding which would require tuition increases of 10% without other revenue
• Public universities see a 19% reduction in funding which would require tuition increases of 14% without other revenue

Senate Budget Proposes Devastating Cuts to Basic Health

Basic Health is a core component of the state's commitment to ensuring affordable access to health insurance for all Washingtonians. It is more important than ever in this economy.

The Senate budget proposes reducing the number of people receiving health insurance through Basic Health from 100,000 to 60,000 (see graph).


Often, cuts in Basic Health are reached by closing enrollment; when people leave the program, the state does not open that slot for new applicants. By doing so, the state restricts the availability of public health insurance, but does not immediately kick people off the program.

Contrary to some claims, it is unlikely that limiting new enrollments and other measures will be enough to cut enrollment to 60,000. The Senate budget documents acknowledge this by giving the Health Care Authority the ability to "disenroll" members with incomes as low as $18,310 (for a family of three).

Senate Budget Impairs Economic Security

The state is facing a deep recession and state programs that provide economic security are more important than ever.

In the area of Economic Security, the Senate budget proposal:
• Creates new barriers for families that need assistance in moving into the labor market
• Significantly reduces cash assistance to adults with disabilities that are unable to work

One of the key resources for Washingtonians in poverty is the WorkFirst program. This program is intended to provide cash assistance to families while helping them find and maintain employment. However, the obstacles to finding employment are significant in the current economic climate.

The Senate and the Governor both propose a $68 million cut to the WorkFirst program. The Governor reduces the number of families served, including punitive measures that terminate benefits. The measures the Senate is proposing to reduce funding for WorkFirst are not clear, but both proposals do not respond to the increased need for assistance and the increased difficulty of moving into the labor market. In addition, it is unclear whether this policy change will jeopardize additional federal funds that are assumed elsewhere in the budget.

General Assistance financial benefits for adults who are unable to work because of disability were eliminated in the Governor’s proposal. The Senate has a 15 percent smaller cut, and anticipates 6,000 clients will not be able to receive assistance by the end of the biennium.

As the Budget & Policy Center digs further into the Senate budget proposal we will publish short pieces on each of the following budget areas: economic security, healthy people and the environment, thriving communities and education and opportunity. (See our budget analysis in the Progress Index)

Senate Budget Does Not Take Full Advantage of Federal Funds

The Senate budget contains $2.7 billion in cuts for the Department of Social and Health Services, the primary agency responsible for health care and economic security programs in the state. These cuts are partially replaced by new federal funding. However, the Senate proposal cuts too deeply, resulting in a budget that does not fully take advantage of federal funds.

In order to keep from losing available federal recovery funds, the state must avoid deep cuts such as these by raising new revenue.


Federal increases
Of the $2.7 billion in cuts, only 63 percent is offset by increases in federal funding. This includes an increase in the federal government's share of Medicaid spending, a boost in food assistance funding, and money available to pay for caseload increases in TANF.

Lost federal money
Federal recovery funds are contingent on continued state investments in these areas. Fully 25 percent of the cuts in DSHS are associated with loss of federal money. Many of these cuts are in the Medicaid program. Some examples:

• A $33 million cut in reimbursements for providers of Medicaid and SCHIP managed care services will result in a loss of $44 million in federal money, more than doubling the total size of the cut.
• A $46 million cut in reimbursements for inpatient hospital stays results in a loss of $61 million in federal money.
• A $38 million cut in nursing home rates results in a loss of $56 million in federal funds.
  
• A $18 million cut in reimbursements for pediatric services results in a $25 million loss in federal funds.
  

Other cuts not replaced by federal funding
Aside from those mentioned above, there are $311 million cuts in funding for health care and economic security programs that will not be replaced by federal dollars and are therefore real cuts that affect the health and economic security of Washingtonians. The largest include severe restrictions on GA-U eligibility and reductions in mental health services.*

* A $69 million cut in TANF is listed in the LEAP documents as not having a direct federal impact. However, this may not fully account for limitations on federal TANF money. We'll update this as we find out more.

Source: fiscal.wa.gov

Senate Budget: Bold Action Needed

The Senate budget will be released today, three months after the Governor’s proposal. The Senate version is unlikely to offer a new vision for solving our state’s historic budget deficit in a way that is consistent with the state’s values. Rather, it is expected to be a new version of the same all-cuts strategy.

Our state’s fiscal problems are too big to be solved with an all-cuts approach. The lasting damage to Washington families and infrastructure by deep cuts will harm our ability to recover when the economy bounces back. The path to a just and equitable society is not paved by dramatic budget cuts that leave hard working Washingtonians with no health insurance, ambitious students with less access to college, and people who are unable to work with few options for financial security.

Instead, we need leadership from our policymakers that includes bold action on raising the revenue necessary to invest in education, community, health, and security. Washington’s households and businesses need these public investments in order to weather the economic storm and prosper as the economy recovers.

We'll be posting analysis on schmudget throughout the day, so stay tuned.

Food Stamp Increase Provides Boost to Washington Families and Economy

Almost 700,000 Washingtonians – mostly families with children – will get an increase in their food stamp benefits starting April 1. The increase, a key component of the American Recovery and Reinvestment Act signed into law by President Obama, will give most families an extra $20-$24 per person per month to help meet basic needs.

The increase will also help Washington’s struggling economy. Food stamps are considered to be one of the most effective means for economic stimulus because lower-income people are much more likely to spend their available resources right away. The U.S. Department of Agriculture estimates that every $1 in food stamps expands the economy by $1.84.

In Washington, roughly $90 million in additional food stamps will flow into the state between April and September of this year. This will generate an estimated $170 million in total economic stimulus during that time.*

*Source: Analysis by the Center on Budget and Policy Priorities.

Eight Point What? Your Guide to the Deficit Numbers

Senate leadership has announced that they will release their budget proposal on Monday morning. There's much confusion over the size of the deficit they will need to close. The slideshow below will hopefully make things easier.



As noted in the slideshow, the total shortfall (the difference between revenue and the maintenance budget) is about $8.1 billion. This does not include additional baseline items often included in deficit estimates.

The legislature has already made about $600 million in cuts.* Assuming they also use the Rainy Day Fund and take the necessary policy steps to access all the available federal funds, the remaining deficit that will need to be closed through spending cuts, revenue increases, or budget gimmicks is roughly $3.9 billion. This estimate does not include leaving a modest account balance.

We will update our numbers once the Senate releases the budget on Monday.

* Immediate cuts from HB 1694 were $635 million. However, federal recovery funds offset $338 million of those cuts, so those cuts are included in the $2.9 in federal funds. The reduction in baseline spending for 2009-11 is estimated to be about $300 million.

Sources: Senate Ways & Means and Office of Policy Research (in particular, see http://www.leg.wa.gov/documents/opr/2009/WAYS_BriefingBook.pdf). Many thanks to Kriss Sjoblom from the Washington Research Council for his help with these numbers.

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The State of Washington's Children

Washington Kids Count, a project of the UW's Human Services Policy Center, is releasing the new edition of The State of Washington's Children.

This year's report focuses on poverty. A particularly notable finding is that rising unemployment rates could increase the number of children living in poverty by 37,000. That assumes that the unemployment rate reaches 9 percent, a likely scenario according to the most current state projections.

The authors point out that state government can help mitigate the impact of child poverty by improving work supports and sustaining critical benefits, a timely reminder as we await the legislature's budget proposals. In a KPLU radio piece on the report, lead author Lori Pfingst points out the importance of the Working Families Rebate as a tool to help lift families with children out of poverty.

The report is currently being pre-released to legislators and reporters. If you'd like to see an early copy, contact Lori Pfingst at 206-616-1506 or pfingst@u.washington.edu.

Discussing the Budget on TV

I appeared on King 5 TV's Upfront to discuss the crisis in the state budget. The conversation focused on potential health care cuts. Joining me are Paul Guppy from the Washington Policy Center and Rebecca Kavoussi from Community Health Network. The panel discussion starts at 4:10.

There are two segments that bookend the panel discussion: one focuses on the General Assistance - Unemployable program which is slated for elimination in the Governor's budget and the other focuses on the Adult Day Health program.

Official Forecast Out, Now What?

The legislative session is halfway over and the discussion over what to do about the unprecedented deficit is not much further along than when the session started. Lawmakers have been waiting to hear the final shoe drop on the budget deficit, and today it did.

Earlier this morning, the Economic and Revenue Forecast Council released the official revenue forecast upon which budgeting decisions will be made. It includes an additional reduction in revenue of $553 million for fiscal years 2009 through 2011. Now that we have this number, the caseload forecast, and more clarity on the federal stimulus package, policymakers should have the information they need to write a budget.

That budget will most certainly include deep cuts in public programs and services. Hopefully the budget process will provide a basis for a broader public discussion about the importance of those investments and the need to have an open conversation about revenue.

One of the most striking things about the forecast released today is that the ERFC now expects general fund revenue to remain flat from 2007-09 to 2009-11. This means we will have more children to educate, more elderly to care for, and more unemployed families in need of health insurance, but no additional money to pay for that growth.

We can change that outcome by considering other ways to increase revenue. Thirty Washingtonian economists and public policy experts signed a letter last month agreeing that revenue options should be on the table. "Implementing deep cuts in government spending and declining to raise revenue through tax increases is not an effective strategy to guide Washington State out of this recession," the letter said. We have all the information we need. Now it’s time to act.

28 Percent of Lower Income Parents Uninsured in 2008

For two decades, Washington State has been a national leader in providing health insurance to those who would otherwise be uninsured. Most recently, policymakers made a commitment to provide health insurance to every child in the state by 2010, a commitment that was put into law with the "Cover All Kids" legislation passed in 2007.

While significant progress has been made in providing health insurance to children, we have not done as well providing health insurance to parents. In early 2008, more than one in four lower income parents remained uninsured, compared to just 6 percent of higher-income parents (see below). Parental health insurance promotes financial security for lower income families and increases the likelihood that more children will be enrolled in public programs and have better access to care.


The graph above likely understates the problem. The data were collected in early 2008. Since then, unemployment in the state has spiked and is expected to reach 10 percent by next year. The proposed deep cuts in public health care investments would come at a time when those investments are more needed than ever.

Children and Homelessness in Washington State

Safe, stable, and affordable housing is an important component of economic security for Washington families. According to a new report by the National Center on Family Homelessness, more than 24,000 children are homeless in Washington State.* The report ranks Washington 25th in the nation in child homelessness. (This is a composite of the number of homeless children in the state, an assessment of their well-being, the risk of children becoming homeless, and state efforts to address the problem.)

Among the homeless children in Washington State, close to 11,000 are under six years old, about 9,500 are between kindergarten and eighth grade, and over 4,000 are in high school. (See graph) Fifty-eight percent of Washington’s homeless children are white, 28 percent are Hispanic, and ten percent are black.


Food
Food security is very low for one in 26 of Washington’s households, which is comparable to national rates of food security. Households living in poverty and headed by single women are especially vulnerable to hunger.

Health
Homeless children in Washington are also more than twice as likely as middle income children to have moderate or severe health problems, such as asthma, dental problems, and emotional difficulties.

Education
Less than 25 percent of homeless high school students in Washington graduate, which has a significantly negative impact on their lifetime earning potential.

Affordable housing
In Washington, it can be especially difficult for low-wage workers to find affordable housing. A full-time worker earning minimum wage ($8.07 per hour) in Washington would need to work close to 80 hours per week for 52 weeks a year in order to afford a two-bedroom apartment at Fair Market Rent.**

For a typical homeless family, which consists of a single mother with two children, affordable housing can be even more out of reach. The average income for a single mother in Washington who receives public support is less than $550 per month, which means she could afford to pay $157 monthly in rent. The cost of a two-bedroom apartment at FMR would be $672 higher than that each month.

Shelter and transitional housing
Families in Washington seeking emergency shelter or transitional housing do have some options. The state currently supports 827 units of emergency housing or shelter for one family, 2,628 units of transitional housing, and 595 units of permanent supportive housing designated for families. In Washington, approximately 89 percent or 3,348 individuals, of the total number of people on wait lists for public housing are families with very low incomes. Washington State does give priority on the wait lists to families experiencing homelessness and to survivors of domestic violence.

Long-term investments
The state has made long-term investments in trying to address the lack of affordable housing. In 1987, the Washington State Housing Trust Fund was created as a source of capital funding to support affordable housing for lower income Washingtonians. The Fund supports the construction, acquisition or rehabilitation of over 4,500 units every two years. In 2008, the Fund was increased to $200 million for the biennium, but the need still exists for affordable housing.

*The definition of homeless children and youth used in the report is that described in Title X, Part C, Section 725 of the federal No Child Left Behind Act.

**Fair Market Rent is defined as "the maximum chargeable gross rent in an area for projects participating in the HUD Section 8 program," and is set at the 40th percentile of market rents for units at each bedroom size as determined by the Department of Housing and Urban Development. American Community Survey. (2006)

Unemployment Rate Expected to Reach 10%

An updated March forecast from the Economic and Revenue Forecast Council shows further weakening of the economy.

Since the November forecast, the projected unemployment rate for next year has risen from 8.3% to 10%. We have not had an annual unemployment rate that high since 1983.


In addition, the leap from 5.3% in 2008 to 9.2% in 2009 would be the largest one-year leap in unemployment in at least three decades.

The ERFC notes that the downward revision is largely due to lower federal infrastructure funding than was expected, and is somewhat offset by higher funding for Hanford clean-up.

What is the unemployment rate? It's the share of the labor force that are looking for, but unable to find, work. This measure does not include people who have been discouraged from actively seeking work or people who are working part-time because they cannot find fulltime work.

"The High Cost of Subprime Lending" Part 3: Future of Housing Crisis in Washington

On Monday, the Budget & Policy Center released a paper entitled, “The High Cost of Subprime Lending in Washington State.” Over the week we have posted here about the disproportionate effects of high cost lending on certain lower income neighborhoods and people of color. Today we will take a look at the future of the housing crisis in Washington State.

Washington has been relatively fortunate to avoid some of the deepest mortgage problems seen in other states as a result of the subprime lending crisis. Nationwide in the third quarter of 2008, over five percent of mortgages were seriously delinquent or in foreclosure, whereas in Washington, foreclosure rates were below 2.5 percent. (Only seven states in the country had such low foreclosure rates during this time.)

But the housing situation in Washington may take a turn for the worse in the near future. Nationwide, 77 percent of subprime loans with adjustable rates have already experienced a reset of the initial interest rate. In Washington State however, only 67 percent of loans have reset (see graph) The remainder are still at the original interest rate.


In the next 12 months, it is expected that interest rates will reset on 23 percent of subprime adjustable rate mortgages in the state, a higher share during that period than nearly every other state in the nation.

Problems for strapped homeowners can be exacerbated by prepayment penalties and large loan balances. Thirty-two percent of subprime mortgages in Washington State have prepayment penalties currently in force, a higher percentage than nearly every other state. And only 10 states have larger average subprime loan balances.

This is worrisome because the subprime mortgages that are most likely to go into delinquency or foreclosure are those with adjustable interest rates. Homeowners with these loans see sudden and significant increases in their mortgage bill from one month to the next and the additional cost can lead to late payments and eventually, foreclosure.

"The High Cost of Subprime Lending" Part Two: Loans by Neighborhood & Region

On Monday, the Budget & Policy Center released a new report on the "High Cost of Subprime Lending in Washington State." We will be blogging on the topic throughout the week. Check out the entire paper and part one of the blog series.

Statewide, mortgages in lower-income neighborhoods were almost twice as likely to be high-cost than those in higher-income neighborhoods.* (See graph.)


The effect on household finances of having a high-cost mortgage can be significant. The cost of a $230,000 mortgage can easily be $600 higher per month, or over $200,000 over the course of a 30-year loan. In the middle of the current housing crisis, having a high-cost mortgage also suggests a higher likelihood of foreclosure.

In most areas of the state, lower income neighborhoods had higher rates of high cost loans than wealthier neighborhoods (click on table below to see larger version). In Cowlitz County, for example, 45.5 percent of mortgages in the lowest income neighborhoods were high-cost, compared to 20.8 percent in the higher-income neighborhoods. Whatcom County was the only area where wealthier neighborhoods did not have significantly lower rates of high-cost mortgages than poorer neighborhoods.


The pockets of high-cost mortgages across the state raise the question of whether borrowers in lower income regions and neighborhoods have adequate access to financial education and whether they have a variety of lending options. This has an impact on all homeowners: when foreclosures concentrate within neighborhoods, it is not just the delinquent homeowner that suffers. Other owners are likely to see impacts such as property value decline and increased crime.


*The federal Home Mortgage Disclosure Act (HMDA) classifies mortgage as “high-cost” based on the loan’s annual percentage rate (APR). The APR is a better measure of the total cost than the contract interest rate alone because it includes points, fees, and other finance charges. Mortgages with APRs above designated thresholds are defined as “high-cost.”

Community Health Centers and the State Budget

Deep spending cuts, such as those considered in the Governor's proposed biennial budget, would have severe effects on essential components of the state’s health care infrastructure, such as community health centers. Altogether, it is estimated that the Governor's budget would amount to a $250 to $350 million hit to community health center system. The table below summarizes the impact of selected cuts (click on it to see a larger version).


Community Health Centers have a unique role in the state’s health infrastructure. They provide a comprehensive scope of services to Washingtonians who would otherwise have limited access to quality affordable care. And they do so without regard to their ability to pay. In fact, 32 percent of their patients in 2007 were uninsured (see graph)


The cuts described above understate the situation faced by the community health center system because it also faces the impact of the recession. As people lose their jobs and therefore access to private health insurance, they are likely to become uninsured community health center patients. The need for these centers rises while their revenue falls.

Counting up the number of people who will directly lose coverage because of budget cuts also understates the effect on individual health care consumers. As community health centers reduce their services, it will have a detrimental impact on many more Washingtonians with lower incomes and special health needs.

Maximizing Federal Funds for Health Care

I presented at a work session of the House Health & Human Services Appropriations Sub-committee this morning on the topic of maximizing federal recovery funds for health care.

You can't watch me or my presentation on TV-W, but you can hear me and watch legislators watching me. You can follow along with my slide show, available here.



Parts of my testimony were taken from previous schmudget posts like this one and this one. Others will be the subject of future posts.

"A Shared Vision" Part Four: Economic Security

This post is the final installment in our four-part series on a shared vision for Washington State. The series is based on the Progress Index, a framework for analyzing the state budget that was developed by the Budget & Policy Center. The Progress Index utilizes four commonly-held values: education and opportunity, thriving communities, healthy people and environment, and economic security. Last week, I wrote about healthy people and environment.

State investments in economic security ensure that people can survive difficult financial times and take steps to improve their quality of life. Families succeed when parents are secure in their ability to provide basic necessities for their children. Workers prosper when workplaces are safe and financial protections exist in cases of injury or job loss. And everyone in state benefits when people can meet their basic needs and find meaningful employment.

Even in times of prosperity, we all face the risk of job loss, disability, or family crisis. When the economy is strained, public investments in economic security matter even more. State spending on economic security fell as a share of personal income in each biennium from 1995-97 to 2005-07. Funding increased in the 2007-09 budget due to increased reimbursement rates for child care centers and a new collective agreement with family child care providers. (See graph)


As the unemployment rate rises in Washington State due to the current economic crisis, unemployment insurance benefits play an increasingly important role in shoring up economic security in the state. Two recent stimulus efforts are directed at this benefit: the federal stimulus bill which passed last month, increases the weekly benefit amount by $25 for most claimants. The state also enacted new legislation in February increasing the weekly benefit amount by $45 and raising the weekly minimum amount for many claimants.

The combined impact will be an additional $70 per week for recipients and $480 million of additional money circulating through the state economy. Economists calculate that for every dollar of unemployment insurance issued, there is $1.64 generated in spending.

Safe and affordable housing is also an important component of economic security. Stable housing is a key variable to getting jobs, educational attainment, and health care. Research shows that quick rehousing plus supportive services can have a long-term impact on homelessness. But affordable housing is not readily available to many people living in Washington State: three-fourths of renters with incomes under $35,000 per year were paying more than 30 percent of their income in rent in 2007.

Finally, financial asset development is an important way for people with lower incomes to work towards improving their quality of life. Washington encourages lower income families to build assets through the state's Individual Development Accounts program. IDAs match the savings of lower income families to help build assets that can be used to start a business, buy a home, or pay for college.

But in other instances, the state inadvertently discourages asset building by limiting access to temporary cash benefits (TANF) based on assets the family possesses, such as a retirement account or a car used to commute to work or school. This system works against shared goals. Public programs should help people meet temporary needs without requiring them to deplete modest savings.

This post concludes our series on a shared vision for Washington State. The Budget & Policy Center will continue to use the framework outlined in the Progress Index to evaluate the state budget and analyze our long-term progress toward meeting research-based goals.

Discussing the Budget on TVW

I went on the TVW show "The Impact" yesterday to discuss the state budget. My dance partner on the show was Jason Mercier from the Washington Policy Center. This is the type of reasonable discussion we should be having about the state budget.

Enjoy.

Accounting for Medicaid Spending Growth

Medical assistance has been one of the fastest growing segments of the budget in the last decade, which prompts some in the state to argue for spending cuts in this area. But it is important to understand the reasons for this growth, particularly that our Medicaid investment has grown significantly to meet our commitment to care for Washington’s seniors and people with disabilities.

To understand Medicaid spending, I divided Medicaid beneficiaries into two groups: a) people over age 65 and/or with disabilities, and b) all other low income children and adults. The cost of serving these two groups is quite different. In 2005, seniors and people with disabilities made up 21 percent of Medicaid enrollees, but accounted for 61 percent of categorized spending (Figure 1). Other adults and children make up 79 percent of enrollees, but only 39 percent of spending.


The growth in spending on medical assistance can be understood along these same lines: people over age 65 and/or with disabilities compared to all other low income children and adults. In addition, growth can be evaluated based on changes in enrollment and per-person spending. Using expenditure and enrollment data from the federal Department of Health and Human Services, I broke down nationwide Medicaid spending growth between 1995 and 2005 into the following four categories (also see Figure 2, below):

• Enrollment of seniors and people with disabilities: Eligibility guidelines have not changed significantly for this group of people, but the population is aging, medical advancements are extending life expectancy, and economic factors have played a role. This factor explains nearly one-third of the total growth in spending.


• Per-person spending on seniors and people with disabilities: The cost of health care and changing benefits have risen significantly for this population, contributing nearly one-third of the national growth in spending. (In Washington State, a shift from institutional care to home and community based care has controlled spending growth.)


• Enrollment of other low income children and adults: A growing state and national commitment to expanding access to health care as well as an economic downturn led to enrollment growth, which accounted for 27 percent of total spending growth.


• Per-person spending on other low income children and adults: The significant growth in enrollment was offset by the relatively low per-person cost. Growth in per-person spending on this group was lower than health care spending growth in the economy as a whole and only contributed 9 percent of the total spending growth.

Altogether, nearly two-thirds of spending growth is attributable to the 21 percent of Medicaid recipients who are over age 65 and/or have disabilities. A key factor is the high cost of long-term care (including nursing homes and home health services), which accounted for one-third of total medical assistance spending in 2006.

For many people needing long-term care, options are limited. Private long-term care insurance is often prohibitively expensive. Medicare, a social insurance program that all workers pay into in order to receive health benefits upon retirement, does not provide long-term care benefits. Medicaid becomes the only option for many, although because it is only available to the poor, people have to “spend down” their resources in order to become eligible.

This problem is not limited to the current deficit. The overall population is aging, medical advancements are extending life expectancy, and the cost of health care continues to grow. In addition, the state will bear much of the responsibility for long-term care because the federal government has shifted the costs from Medicare (a federally-funded program) to Medicaid (a program in which the state must pay approximately half the cost). This affects Medicaid’s ability to meet its core mission of providing health care to the poorest Americans.

Long-term care must be comprehensively addressed. A federal modernization of Medicare is required as is a long-term financing model to ensure the affordability of long-term care for middle-income families. In the meantime, Washington policymakers must be cautious about reducing the benefits provided to these vulnerable populations.

Debunking Myths About GA-U

In these difficult economic times, the General Assistance-Unemployable (GA-U) program is under threat of elimination, when it is needed more than ever. Many people who receive help through GA-U were previously employed until their lives were changed by an accident or illness. It benefits everyone in the state to know that assistance is available if the same were to happen to them or someone they loved.

Leading lawmakers have insisted that Washington State is unique in providing these state-funded benefits and therefore, we can not afford the luxury of continuing the program.

They are wrong on two counts.

First, Washington is not alone in providing general assistance to disabled adults. Our analysis of national data shows that 31 states in the nation provide similar financial and medical assistance. Benefits differ among states and some provide assistance in certain counties only, but the notion that Washington stands alone in helping disabled adults is simply not true.

But what if it were? It used to be that Washington State took pride in its innovative approaches to health care and social services. We stood out as a leader on health care reform years before the nation began addressing the issue of uninsured adults and children. We continued to make strides in this arena when the Legislature passed a bill in 2007 with the impressive goal of ensuring that all children in the state have health insurance by 2010. These are the kinds of public investments that Washingtonians take pride in.

Second, the general assistance program plays a vital role in supporting the economic security and health of Washingtonians. Contrary to some opinions, not all recipients of GA-U will qualify for federal Supplemental Social Insurance (SSI). A 2006 Department of Social and Human Services report found that half of GA-U clients transitioned to SSI between 2003 and 2004. It is not adequate to assume that the federal system will absorb the needs of this population if we dismantle the state program. In addition, there is a significant backlog of applications to the SSI program that renders wait times of up to two years. If there are no state general assistance benefits available, the costs of which are eventually reimbursed to the state, low income people who have very serious health problems will likely deteriorate.

Cutting GA-U out of the state budget will not ultimately save costs to the state. It will simply divert costs to other parts of the budget that cover such areas as emergency rooms visits and public safety. A smarter approach would be to streamline our investments in the program. Our in-depth analysis of GA-U found that the state is likely to save money by providing comprehensive mental health and substance abuse treatment to GA-U clients. The state should also consider a managed care or “medical home” model of health care for everyone in the program and better screening of clients who may qualify for veteran’s benefits.

Clearly the economic crisis at hand is very serious and will require thoughtful consideration of all our options. State leaders should urge Congress to support President Obama’s plan (contained in his budget proposal) to to speed up federal administration of SSI claims, which will help move eligible Washingtonians into permanent disability benefits. But not all GA-U clients will be able to make that transition and the results would be harmful to them and costly to the state. Maintaining the GA-U program aligns us with the majority of states in the country.