Unfunded Mandate: Feds to Cut State Administrative Reimbursements, April 16, 1998

NCSL Human Services Committee Action Alert

UNFUNDED MANDATE: FEDS TO CUT STATE ADMINISTRATIVE REIMBURSEMENTS

April 16, 1998

Congress and the Administration are proposing initiatives that would restrict or reduce the federal reimbursement for administrative costs in the food stamp and Medicaid programs without a similar reduction in programmatic responsibility. These proposals first emerged last year as a result of Congressional Budget Office (CBO) assumptions that states which had allocated shared administrative costs in the food stamp, Medicaid and AFDC programs to a primary program (typically AFDC) received inflated grants under the Temporary Assistance to Needy Families (TANF) program, which replaced AFDC. Congress and the Administration have used these CBO assumptions to justify using savings in federal administrative reimbursement reductions to offset various programs, such as increased transportation funds, agricultural research and restoration of food stamp benefits for legal immigrants. Three federal proposals, including a Congressional conference agreement for S. 1150--a Senate agricultural research bill, the Administration's FY 1999 budget and the Senate budget resolution use administrative reductions to offset costs. NCSL opposes the reduction of state administrative reimbursements in the food stamp and Medicaid programs without a similar reduction in programmatic responsibility. These proposals violate the Unfunded Mandates Reform Act and reopen the welfare debate. Currently, it appears that states are swimming upstream to retain current levels of administrative funding in the food stamp and Medicaid programs.

ACTION: It is critical that state legislators contact Congressional leadership as well as members of your Congressional delegation and convey the message that taking administrative dollars from states without policy relief creates a tremendous cost-shift to states and violates the Unfunded Mandates Reform Act of 1995.

Federal Proposals

S. 1150, The Agricultural Research, Extension and Education Reform Act. Following passage of agricultural research bills in both the House and Senate, a conference committee met and agreed to a conference report that requires the Secretary of the U.S. Department of Health and Human Services to determine what portion of each state's TANF block grant represents shared administrative costs for determining eligibility for AFDC, food stamps and Medicaid. A state's food stamp administrative reimbursement would then be reduced in each year from FY 1999 through FY 2002 by the amount of the TANF grant that represents the shared food stamp administrative costs. The conference agreement does include an appeals process, but explicitly prohibits states from using TANF, the Social Services Block Grant or state maintenance-of-effort (MOE) funds to compensate for the loss of federal food stamp administrative funds. Food stamp administrative reductions would provide $1.7 billion in savings which would be used for agriculture research, crop insurance and restoration of food stamp benefits for certain legal immigrants.

The conference report obtains additional savings by reducing 100% federal food stamp employment and training (E&T) funds by $100 million in FY 1999 and $45 million in FY 2000.

Administration's Budget. The Administration's FY 1999 budget proposes cutting the administrative match rate for food stamps and Medicaid from 50 percent to 47 percent. The total estimated cost shift to states from this reduction over five years is $2.8 billion; $900 million from food stamp reductions and $1.9 billion from Medicaid. This reduction is particularly egregious as it reduces the match rate indefinitely.

Senate Budget Resolution. The Senate Budget Resolution includes administrative cost reductions in the food stamp and Medicaid programs that are similar to the President's proposal. The budget resolution assumes $3.6 billion in savings over five years; $1.7 billion in food stamps and $1.9 billion in Medicaid. Though the budget resolution does not specify exactly how these savings would be achieved, the $1.7 billion in food stamp savings matches the figure used in S. 1150. The $3.6 billion would be used to offset increased transportation funds.

For further information, please contact Sheri Steisel or Kirsten Rasmussen at (202) 624-5400.

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