Session Deadlocks Over Budget

The 2004 session of the Minnesota Legislature ended without a budget agreement and no bonding bill for State building projects. Both the House and Senate spent considerable time fashioning budget bills to deal with the State’s deficit of $160 million for this second year of the biennium. Despite these efforts, no agreement between the House and Senate was reached before the Constitutional adjournment deadline of May 17.

The huge cuts in programs and services for persons with disabilities enacted last session when our State faced a $4.5 billion deficit continue to hurt many in Minnesota. However, the House and Senate did adopt changes to repair some of the damage done by last session’s massive cuts.

The House budget eliminated co-payments for those limited to a personal needs allowance of between $74 and $92 per month, and removed the $500 dental service cap for adults on the Medical Assistance and General Assistance Medical Care (GAMC) programs, but eliminated all dental coverage for adults on the MinnesotaCare program. The Senate budget adopted provisions to eliminate all co-payments and remove the $500 dental service cap but did not eliminate dental care for those on MinnesotaCare. Both the House and Senate passed provisions to reduce the steep increase in parent fees for parents of children with significant disabilities who need Medical Assistance services. The House provision reduced last year’s parent fee increase overall by about 24 percent, while the Senate provision reduced the fee increases overall by about 63 percent and adopted provisions to reverse changes for non-custodial parents.

The Governor had proposed cutting continuing care providers such as home and community-based waiver providers and personal care assistant (PCA) services by 1.5 percent. Neither the House nor the Senate adopted cuts to continuing care providers, and the House passed a 1/2 percent increase for providers. The Governor also proposed caseload limits for the CADI (Community Alternatives for Disabled Individuals for persons otherwise eligible for nursing facility level of care) and the TBI (Traumatic Brain Injury) waivers for the 2006/2007 biennium. The House adopted the Governor’s caseload growth limitation but the Senate did not. The Senate proposed steep cuts in state administration to offset their provisions repealing some of the worst cuts from last session. Both bodies made changes in the State Prescription Drug Program because the new Medicare drug benefit will serve some lower income enrollees with a $600 drug benefit beginning July 1, 2004.

Both the House and the Senate passed changes to last year’s severe cuts to MinnesotaCare for adults without children. The Governor proposed adding back mental health services and diabetic supplies to the $5,000 outpatient service limit. The House added back diabetic supplies and optometry services but did nothing about mental health services, whereas

the Senate restored MinnesotaCare for single adults and lifted the $5,000 outpatient service limit. The Senate restored Minnesota Family Investment Plan (MFIP) cash assistance to low-income families with a disabled member receiving Supplemental Security Income (SSI), while the House did not.

The Republican-led House and the Democrate-led Senate did not agree on any of their budget proposals so none of the harsh changes from the 2003 Session were repealed or modified. While many important changes needed by persons with disabilities were not adopted, it is also important to recognize that further cuts were also not adopted.

The Legislature did, however, pass a number of policy changes affecting persons with disabilities which have no funding attached: the Department of Human Services will be required to publish waiting list information for the CADI (nursing home level of care), TBI (traumatic brain injury) and Community Alternative Care (CAC) (hospital level of care) waiver programs each November; a stakeholder process is established for oversight of an evaluation of the Consumer-Directed Community Services (CDCS) changes to the home and community waiver programs which take affect October 1, 2004; and a disease management program is established within the Medical Assistance program to “improve patient care, health outcomes and reduce health care costs.”

The Legislature did not agree on a budget bill to deal with the $160 million deficit; therefore Governor Pawlenty had to take action to reduce state spending and eliminate the deficit. A major and very troubling cut instituted by the Governor was to shift $110 million in federal funds intended for health care for low-income persons to the General Fund to cover the State shortfall. While the Governor says the action will not result in immediate cuts in health care, it will leave a $44 million hole for the next biennium and threaten the long-term integrity of the Health Care Access Fund which is used to pay for MinnesotaCare.

Discussions among legislative leaders and the Governor about a Special Session are underway. All sides seem to agree that before a Special Session is called, the items to be considered must be agreed upon and the session must be short–

a few days. It is likely if a Special Session is called, items which would reduce the budget deficit for the next biennium would be included in any budget bill. This means that the Governor’s proposal to continue caseload limitations for the CADI and TBI waivers would likely be included in any Special Session budget bill.

There were some cuts adopted during the 2003 Session which take affect on July 1, 2004. Two changes in eligibility requirements for the Medical Assistance for Employed Persons with Disabilities (MA-EPD) will take effect July 1, 2004: 1) a new requirement that monthly earnings must be over $65 and 2) taxes must be withheld from wages or for the self-employed, estimated taxes must be paid on a quarterly basis. The Minnesota Department of Human Services (DHS) estimates that about 300 MA-EPD recipients will lose coverage because they are unable to meet these two new eligibility requirements.

The outlook for the next biennium remains grim for persons with disabilities who rely upon publicly-funded health care, community supports and education. The State is projecting a $442 million deficit which soars to over $1 billion if inflation is included. Given the persistent increases in health care spending, the Legislature required DHS to study ways to eliminate ineffective health services and reduce spending in the Medical Assistance program, especially for persons with disabilities who are not in managed care plans. Stakeholder meetings are currently underway at DHS and information about the DHS health study can be found at: www.dhs.state.mn.us/HealthCare/ServicesStudy. This is an extremely significant study which will undoubtedly affect persons with disabilities. Personal care assistant services are clearly in the cross-hairs of this effort and could well be the subject of proposals to change services and reduce funding in the next session.

Further information about what happened during the 2004 Session can be found at the legislative website: www.leg.state.mn.us. Also, it is important to remember that contact with legislators about the importance of services for persons with disabilities is very important. Every seat in the Minnesota House of Representatives is up for election in November. And while the Senate is not up for election this year, it is important that your senators as well as those running for election to represent you in the House understand the importance of services for persons with disabilities in Minnesota.