Executive Office of Health and Human Services

FY2012Budget Hearings

Secretary JudyAnn Bigby

December 13, 2010

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AGENDA

Overview of FY12 BudgetGeneral EOHHS

Public Testimony

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National PictureShared Experience

Virtually every state is struggling to balance their budgets as federal stimulus aid ends and pensions and other liabilities add spending pressure to their annual budgets.

States are managing through their fiscal challenges through reforms and efficiencies across a number of areas, including: corrections, education, employee costs, shared services, privatization and sales of assets, and tax expenditures.

Massachusetts will, similarly, need to continue efforts to reform and innovate as well as control costs and spending in FY2012 and beyond in order to live at projected revenues.

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…but still remain below FY2008 levels:

FY2008 = $21.009B

FY2009 = $18.513B ($2.5B decrease)

FY2010 = $18.544B

FY2011 = $19.050B (consensus estimate)

FY2011 actual tax collections through November are $514M over benchmark.

Tax Revenues Recovering…

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Since the start of the crisis, the Patrick Administration has already solved for deficits totaling nearly $13 billion.

Governor Patrick used a balanced approach of reforms, cuts, revenues, rainy day and stimulus funds to close several budget gaps.

Over the last several years spending growth has been constrained to reflect available resources.

Even though revenues started to grow in fiscal year 2011, revenue collections historically lag behind national economic growth and will remain moderate over the next two fiscal years.

Since rainy day and federal stimulus funds will not be available in FY12, our challenge for next year is particularly difficult.

Sound Fiscal Management

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Approximately 58% of all state expenditures are for the purchase and operation of health care and human services programs for the Commonwealth’s residents and state employees

In fact, 77% of the state’s budget supports health care, human services and education alone

This leaves 23% of the budget for other purposes, including public safety, housing, labor programs, environmental protection, local aid and economic development

Spending Overview What do we spend state dollars on?

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EOHHS Spending Overview*see note

EOHHS Spending

EOHHS represents almost half of the operating budget at approximately $14.6B for FY11*

MassHealth accounts for $10B, or approximately 68% of EOHHS’ budget, purchasing services from approximately 20,000 vendors.

Remaining 32% of EOHHS’ budget is roughly split between:

Purchase of Service (POS)- services to our clients that are purchased from approximately 2,000 outside vendors; and

Non POS Spending / Agency Operations – services provided directly by state governmental entities.

* If trusts, federal grants, capital and other account types are added, EOHHS spending = $15.7B

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Governing Through Fiscal Challenges:Leadership Based on Values

Continued emphasis on reforms Smart investments lead to long-term

stability Strong fiscal management with positive

outcomes

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Governing Through Fiscal Challenges: The Reform Agenda

In this crisis, we have changed the way government does the people’s business, including:

• Pension Reform: established new practices to prevent abuse.• Transportation reform: a new consolidated agency • Straightforward budgeting: significantly reduced earmarked funding in the state

budget and enhanced transparency for the benefit of the public.• Consolidations of services: IT consolidation to coordinate services, contracting

and eliminate duplicative functions.• Energy Reform: strengthened the state’s energy purchasing and procurement

policies, generating savings and more sustainable practices• Procurement: leveraged state buying power to lower costs of state agencies

and their partners

We will continue our reform agenda, including:• The next phase of pension reform• Further efforts to support municipalities• More to come….

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Governing Through Fiscal Challenges: EOHHS Accomplishments

Despite facing significant challenges, we have been focused on ways in which we can better serve our consumers. Recent achievements include:

• Since 2006, the number of youth “stuck” in hospitals has decreased by

40%.• From 2006 to 2009, DYS has reduced the number of youth in detention by

35%. • Participation in SNAP has increased by more than 90,000 individuals in the

past year (an increase of 308% more households since FY02). • Fernald Development Center closure almost complete with 201

outplacements to date • 420 community placements from Nursing facilities to date under Rolland• We have initiated two new waivers for adults with Acquired Brain Injury.• Over 3,200 individuals with significant disabilities have been placed into

competitive integrated employment.• In the past year alone, MassHealth enrolled 20,000 more children.

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FY2012 Budget Factors Increased cost pressure in the state’s largest health care program

Massachusetts, like most of the 50 states, has faced continued cost pressure in its Medicaid program (MassHealth).

In addition, the economic downturn has increased the number of Mass residents in need of state-funded health care services.

Enrollment in other “counter cyclical” programs have also increased.

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FY2012 Budget Factors

$13.04

$13.53

$14.54

$12.58

$11.71$10.84$10.13

$9.29$9.19

$8.49

$9.56

4.6%

4.2%

4.0%

3.8%

3.7% 3.7%

3.5%3.4%

3.3%

2.9%

2.6%

$0

$2

$4

$6

$8

$10

$12

$14

$16

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

Pro

gra

m S

pe

nd

ing

($

B)

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

% A

dm

in S

pe

nd

ing

Across all EOHHS agencies, administrative spending as a percent of total spending has declined from 4.6% in FY01 to 2.6% in FY11 as EOHHS program spending has increased 70.1% FY01-11

Since FY01, combined EOHHS administrative/operations spending has actually decreased by a total of $18 million (or -4%), from $405 million to $386 million, while program spending has increased $4.4 billion (or 70%).

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Key Areas of the EOHHS Budget

Core Populations Children / Youth Transition Age Youth Adults (general) Adults with Disabilities Adults with Behavioral

Health Needs Veterans Elders General Public

Service Areas 24 Hour / Residential / Inpatient Programs

Emergency / Immediate Care Transitional Care Long Term Care State Operated Acute Hospital Care

Community Programs Economic Support Food & Nutrition Support Group / Day Programs Direct Client / Family Support Education and Employment Services Clinical Medical or Psychiatric Care Community Prevention, Public Health,

Quality Assurance

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EOHHS Funding Priorities

Community First – continue facilities closures and community placements or transfers

Health Care access, quality, and cost reduction Protecting vulnerable populations during the

recessionAccess to foodEconomic supports

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Developing Strategies for Budget Reduction

Prior reductions have eliminated nearly all areas of savings that do not impact direct client services

The FY12 budget challenges will not be met with small and across-the-board savings strategies

Program and administrative services integration as well as agency site co-location are ongoing but yield limited savings

Further facilities closures are planned but savings are a key component for community service development

Maintenance of Effort (MOE) and other requirements limit options for service eligibility / other changes in certain programs

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Let’s Discuss

In order to better serve clients, increase efficiencies, and achieve savings:

Are there areas where you believe EOHHS can regionalize, consolidate or streamline services, programs or offices?

Are there areas where you believe EOHHS can use technology better?

Are there ways you believe EOHHS can reduce expenditures while maintaining essential and core services?

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Rules

Please limit your comments and questions to no more than 3 minutes.

We’re all facing the need for creative solutions. Please use your time to suggest new approaches or areas that you’d suggest we identify savings.