In order for the state to be eligible to receive the federal stimulus dollars, 81.8 percent of the funds must be used to restore funding through the state’s primary and secondary education formula by eliminating cuts imposed in recent years. The remaining 18.2 percent may be used for other education or government services.
The proposed budget utilizes federal funds to restore funding for the Education Finance Act, four-year-old kindergarten, and institutions of higher learning to required levels. Remaining federal funds are devoted to school bus fuel, education assessments needed to comply with federal No Child Left Behind requirements, items related to teacher salaries, the deficit at the Department of Juvenile Justice, and a portion of the deficit at the Department of Corrections.
As part of its economic stimulus efforts, the federal government is temporarily increasing its financial commitment within the Medicaid program that it offers in collaboration with the states. With the enhanced federal Medicaid match rates, the proposed budget allows for the restoration of Medicaid reductions made in October’s rescission bill and the avoidance of proposed reductions in Medicaid coverage that were, at one point, scheduled to take effect on February 1 of this year. Federal provisions also allow for enhanced Medicaid match rates to apply on a retroactive basis through October of 2008. The budget includes a one-time transfer of funds from the Department of Health and Human Services to allow the funds realized through the retroactively enhanced federal Medicaid match rates to be redistributed to other budget needs.
On a local note, Representative Gary Simrill (R-York) and I worked together to allocate more money to fight the water battle against North Carolina. This court case has been moved to the United States Supreme Court, and the Attorney General’s office is in need of more funding so they can continue to fight for our water rights.
Since restoring K-12 and higher education funding levels is a condition for receiving federal stimulus money and since new federal Medicaid match provisions effectively prevent reductions in Department of Health and Human Services programs, the categories of education and health, which together comprise the vast majority of the state’s budget, are shielded from significant reductions.
Remaining eligible to receive federal stimulus funds requires that the budget cuts needed to cope with current revenue shortfalls be concentrated in the relatively small portion of the budget that remains after the categories of education and health are removed.
To avoid drastic state agency budget cuts within this remaining sector, a $50 million base reduction is authorized for the Local Government Fund and these funds are redirected to other budget needs. To allow for this redistribution, a statutory requirement is temporarily suspended that guarantees the state’s counties and municipalities an annual increase of 4.5 percent in state aid to political subdivisions in order to accommodate growth.
The budget legislation also draws upon $37 million from an insurance reserve account and $35 million from Medicaid savings to contend with shortfalls. The proposed budget reduces most state agencies to fiscal year 2005-2006 funding levels, if they were not already functioning at such levels.
Many of us were unwilling to support this budget because of the cuts to local government funds (which will raise your taxes locally), the lack of willingness to expand healthcare for children and the questionable use of the economic stimulus money. A summary of the budget details will be available next week.
If you have a comment or opinion concerning the matters discussed in this report, or if I may be of assistance to you at any time, please feel free to call your legislative office in Columbia (803-212-6789), or write P. O. Box 26, Winnsboro, SC 29180. As always, feel free to email me at BoydBrown@schouse.org. Thank you for the opportunity to serve you in the House of Representatives. God Bless.
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