[MMA News Now, Dec. 6, 2012] On Dec. 5, Minnesota’s state economist released the November budget forecast for the upcoming two-year biennium. It contained both good and bad news.

The good news is that for the current fiscal year the state has a $1.3 billion surplus. Under current law this surplus will be used to partially repay the $2.4 billion the state borrowed from local school districts to help balance previous deficits. The bad news in that the state faces a projected $1.1 billion deficit for the period beginning July 1, 2013, through June 30, 2015. This is in addition to the deficits the state has amassed over the last five years. 

In the area of health and human services (HHS) programs the forecast shows HHS spending lower than earlier projections by $196 million for fiscal years 2012-2013, and by $185 million for fiscal years 2014-2015. These savings are a result of lower than average costs for care provided in the Medical Assistance (MA) family and children programs, a downward trend in nursing home caseloads and increased pharmaceutical rebates the state receives from pharmaceutical manufacturers.

The forecast has some areas of uncertainty related to the MA program. The U.S. Supreme Court’s ruling on the Affordable Care Act left the state with the decision on whether to expand MA up to 133 percent of the federal poverty level. This forecast does not include that increase and the matching federal money that would come with it. Also, it puts the federal matching money related to the earlier expansion to 75 percent of the federal poverty level at risk. 

The Centers for Medicare and Medicaid Services has not yet provided guidance to states whether they will receive the 100 percent federal money if they decide to expand to something less than the 133 percent level. 

“This is another reason why our legislature needs to adopt the 133 percent expansion soon in 2013,” said Dave Renner, MMA director of state and federal legislation.