SCHIP Funds Are Redistributed

State Budget & Tax News

Volume 20, No. 6: April 1, 2001

Reprinted with permission from State Budget & Tax News

The State Children’s Health Insurance program (SCHIP), created by the Balanced Budget Act of 1997 (PL 105-33), provides formula grants to states to initiate and expand health assistance to uninsured, low-income children. Under the program, states receive approximately $40 billion over ten years. In federal fiscal years 1998 through 2001, states received $4.3 billion each year.

A state has three years to use its SCHIP allotment. For example, a state can use its federal fiscal year (FFY) 1998 allotment during fiscal years 1998, 1999 and 2000. If a state does not use its allotment within the three years, the U.S. Department of Health and Human Services (HHS) reallocates the funds to states that have fully spent their allotments. At the end of FFY 2000, there was approximately $2 billion in unspent FFY 1998 funds, with only 12 states spending their full allotments.

Fearing loss of SCHIP money, states sought a federal remedy to prevent the redistribution of unspent funds. They argued that many states didn’t spend their allotments because they were slow to implement programs, and states that used all of their funds didn’t necessarily need all the additional funds.

The House and Senate reached an agreement on a formula for redistributing unspent FFY 1998 and FFY 1999 funds. The compromise was included in the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (PL 106-554). It resulted in approximately a 60/40 split between states that did not expend their FFY 1998 allotments and those that did. The agreement extends the availability of FFY 1998 and FFY 1999 SCHIP funds to the end of FFY 2002. States that did not spend their total allocations are permitted to use up to 10 percent of retained funds for outreach activities.

SCHIP Redistributions and Retentions from 1998 Allocations (Dollars in thousands, federal fiscal years)
State	FFY 1998		Unexpended Allocations		Redistribution of Funds
State	Allocation	Expenditure	Amount	Percent	Funds Gained	Funds Retained	Funds Lost
Alabama	6,889	21,895	0	0.00	15,006	0	0
Alaska	116,798	38,242	78,555	67.26	0	50,733	-27,822
Arizona	47,908	2,203	45,705	95.40	0	29,518	-16,187
Arkansas	854,645	257,012	597,633	69.93	0	385,969	-211,664
California	41,791	23,943	17,848	42.71	0	11,527	-6,321
Colorado	34,959	25,063	9,897	28.31	0	6,391	-3,505
Connecticut	8,053	2,290	5,764	71.57	0	3,722	-2,041
Delaware	12,076	6,262	5,814	48.14	0	3,755	-2,059
D.C.	270,215	183,046	87,168	32.26	0	56,296	-30,872
Florida	124,660	56,178	68,482	54.94	0	44,228	-24,254
Georgia	8,945	420	8,525	95.30	0	5,506	-3,019
Hawaii	15,880	12,776	3,104	19.55	0	2,005	-1,099
Idaho	122,529	53,472	69,056	56.36	0	44,599	-24,458
Illinois	70,512	115,421	0	0.00	44,908	0	0
Indiana	32,460	26,332	6,128	18.88	0	3,958	-2,170
Iowa	30,657	21,562	9,095	29.67	0	5,874	-3,221
Kansas	49,933	77,852	0	0.00	27,919	0	0
Kentucky	101,737	35,655	66,082	64.95	0	42,678	-23,404
Louisiana	12,487	17,019	0	0.00	4,532	0	0
Maine	61,627	106,284	0	0.00	44,657	0	0
Maryland	42,836	79,551	0	0.00	36,715	0	0
Massachusetts	91,586	51,727	39,859	43.52	0	25,742	-14,117
Michigan	28,396	15	28,381	99.95	0	18,329	-10,052
Minnesota	56,017	29,178	26,839	47.91	0	17,333	-9,505
Mississippi	51,673	60,909	0	0.00	9,236	0	0
Missouri	11,740	4,887	6,853	58.37	0	4,426	-2,427
Montana	14,863	9,881	4,982	33.52	0	3,217	-1,764
Nebraska	30,407	13,064	17,343	57.04	0	11,201	-6,142
Nevada	11,458	2,539	8,919	77.84	0	5,760	-3,159
New Hampshire	88,418	70,008	18,410	20.82	0	11,889	-6,520
New Jersey	62,973	4,210	58,762	93.31	0	37,951	-20,812
New Mexico	255,626	690,517	0	0.00	434,890	0	0
New York	79,508	100,411	0	0.00	20,902	0	0
North Carolina	5,041	1,859	3,181	63.11	0	2,055	-1,127
North Dakota	115,734	97,580	18,155	15.69	0	11,725	-6,430
Ohio	85,699	51,257	34,442	40.19	0	22,244	-12,198
Oklahoma	39,122	20,148	18,974	48.50	0	12,254	-6,720
Oregon	117,457	123,046	0	0.00	5,590	0	0
Pennsylvania	10,684	12,671	0	0.00	1,987	0	0
Rhode Island	63,558	116,072	0	0.00	52,514	0	0
South Carolina	8,541	4,655	3,886	45.50	0	2,510	-1,376
South Dakota	66,153	41,705	24,448	36.96	0	15,789	-8,659
Tennessee	561,332	81,262	480,070	85.52	0	310,044	-170,026
Texas	24,241	20,836	3,405	14.05	0	2,199	-1,206
Utah	3,535	1,955	1,580	44.70	0	1,021	-560
Vermont	68,315	23,550	44,765	65.53	0	28,911	-15,854
Virginia	46,661	604	46,057	98.70	0	29,745	-16,312
Washington	23,607	10,771	12,836	54.37	0	8,290	-4,546
West Virginia	40,633	23,461	17,172	42.26	0	11,090	-6,082
Wisconsin	7,712	1,041	6,671	86.50	0	4,308	-2,363
Wyoming	9,836	75,077	0	0.00	19,558	0	0
Puerto Rico	279	898	0	0.00	555	0	0
Virgin Islands	623	6,833	0	0.00	1,238	0	0
Territories	$4,235,000	$2,972,417	$2,033,508	48.02%	$720,207	$1,313,301	-$720,207
Total
Source: HCFA administrative tables.

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Posted updated reviewed December 2003.
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