SUMMARY:   The massive stimulus package being developed in Congress is unprecedented.  A cursory look at draft legislation suggest that there is a huge amount of funding beyond the temporary increase in the federal share of Medicaid that could provide services to person with developmental disabilities as well as preempt cuts in the Governor’s proposed budget.  But the devil is in the details and those details have yet to be finalized. 

For now we need to do three things: 1) Understand the stimulus bill; 2) Do our part to urge Congress to pass it given stiff Republican resistence; and 3) formulate a game plan for accessing stimulus monies once the stimulus is enacted.

The following is a very brief summary of key points relating to the stimulus.  There are, no doubt, many more.  Also contained is a list, likely not comprehensive, of stimulus funds proposed in the House bill that may be of use to us.

The point of this memo is not to claim that there is massive new spending available for our programs.   That is yet to be determined.  Rather this is to tell you that from the little we do know, that the stimulus will be a major focal point over the next few weeks and possibly months.  It is imperative that we understand it and how to take advantage of it.

All information is preliminary, subject to recalculation and will be updated given the certainty of changing events.

PART I.  FEDERAL FISCAL STIMULUS: THE ELEPHANT IN THE ROOM

INTRODUCTION

The fiscal stimulus bills being developed by Congress under the name of “The American Recovery and Reinvestment Act of 2009 ” seem to have enormous, but yet not well understood, implications for the State budget now before the Legislature.  At their core, the bills recognize that states are key players in the nation’s economy.  Collectively, through the purchase of goods and services, they are an enormous source of economic activity.  Now that the vast majority of states - forty five out of fifty -  find themselves with serious deficits, many are cutting back on expenditures, leaving a huge hole in the economy.

The fiscal stimulus bill recognizes this and appears to direct approximately a third of its resources to the states.  The central premise of the stimulus bill is that for money to act as stimulus it must be spent, the sooner the better.  Therefore, funding for programs - federal and state - directed at low income persons, including those with disabilities, is one major focus of the plan. 

The stimulus bill provides resources to states well beyond the significant increase in federal Medicaid funding that NYSARC and the field have been focusing on.  It is critical to examine how our field can take advantage of the full range of resources provided by the bill even though it is still clearly a work in progress.

So far the House has released a bill draft of HR 1.  A Senate bill - S.2 - is expected shortly.  This write-up is based on the House bill.  The Senate bill should be similar in many respects.

Speed central to bill, effective stimulus

The draft legislation states the primary purpose of the stimulus is to commence “expenditures and activities as quickly as possible consistent with prudent management.”  Further “that recipients shall give preference to activities that can be started and completed expeditiously including a goal of using fifty percent of funds for projects that can be initiated within 120 days after enactment of this act.”      

There are firm and precise time-lines requiring expenditure and funds not spent by those deadlines can be “deobligated” and given to another party through formula or competitive grants.

Comments by Key State Officials

In a meeting with developmental disability provider associations, Deborah Bachrach, the head of the State Medicaid program, guessed that the stimulus would lead to as much as an 80% restoration of hospital cuts.

In another meeting, a key legislative staff characterized the stimulus package and its impact on the State budget as the “elephant in the room.”

FMAP INCREASE

Providers of services to persons with developmental disabilities have largely focused on the $87 billion for the increased federal Medicaid share to the states.

The House bill calls for a 4.9% increase in the federal share for each state with an additional amount tacked on to reflect each state’s unemployment rate.

The Senate bill’s FMAP provision is similar to the House bill except includes a 5.7% FMAP increase for all states with an add-on linked to the unemployment rate.

New York State’s FMAP increase

The Center for Budget and Policy Priorities (CBPP) projects that under the House bill additional federal Medicaid funds to New York State would total $12.451 billion for the nine quarters the FMAP provision is in effect.  On a percentage basis that works out to a state FMAP of about 60.8% or the State’s current FMAP of 50% plus the additional 4.9% for every state plus an adjustment for the State’s unemployment rate of 4.8%.  

However, CBPP notes that these projections are highly uncertain since they depend on predictions of the State’s future unemployment rate.

Impact on New York State deficit

As written, the FMAP provision is retroactive to October 2008.  CBPP projects that for the State’s FY 08-09 fiscal year, it would receive an additional $1.9 billion in FMAP.  Along with the additional $5.8 billion projected for New York in FY 09-10, the State’s projected deficit for next year would be decreased by $7.7 billion, reducing it from about $15.5 billion to $7.8 billion.

This decrease is before adding other significant revenues from the stimulus bill.  The most notable includes New York’s share of a $79 billion “State Fiscal Stabilization Fund.” CBPP estimates that the New York share of this amount would total over $4 billion during the life of the bill or over $2 billion per year.  Payments would be made to the State in July of 2009 and 2010.

This reduces the State’s projected FY 09-10 deficit further, from about $7.7 billion to about $5.7 billion.

Interestingly, over half of Stabilization fund revenues are intended to restore education cuts.  It appears that this provision might do away with the Governor’s proposed FY 09-10 $698 million for State Aid to Education with money left over.

The balance of the Stabilization funding would go to restore other cuts.  Very roughly, using OMRDD’s proportion of the entire State budget, there could be $33 million available to restore the state-share portion of proposed OMRDD cuts for FY 09-10.  Again, this is from the Stabilization fund alone, without taking into account FMAP or the many other funding sources in the stimulus bill.

For example, the House stimulus bill contains an additional $13 billion for special education.  A guesstimate is that roughly $433 million per year for two years would go to New York State.

BEYOND FMAP

There are many more possible funding sources in the stimulus bill to reduce the State’s deficit or pay for items cut by the Governor’s proposal.

These funding sources may offer possibilities for services and programs for persons with developmental disabilities (see itemized list).   Many are described only in very general terms.  Much funding will flow through state’s and their legislative budgeting process.  Other funds will come directly out of federal agencies.

Again, the bill places a premium on the expeditious expenditure of stimulus funds and guards against uses - such as rainy day funds - which do not increase economic activity. 

It should be underscored that the stimulus package in the House bill has a life of 9 quarters, beginning in October of 2008 and ending in December of 2010.   Therefore it comes without any ongoing operational funds for new projects.

GETTING OUR SHARE

NYSUT (the New York State United Teachers Union) reports that it is hard at work in Washington fighting for the stimulus.  Indeed very substantial funds are available explicitly for education in the House bill.

NYSARC has been and will be increasingly working with The Arc US on stimulus advocacy.

For NYSARC to advocate, many questions need to be answered about how these funds will flow and how to apply for them. As noted, perhaps a third of the entire package will flow through the State Legislature.  Local governments, hospitals, State agencies and many other groups will advocate for it vigorously. 

Governor Paterson has indicated that he may use as much as $4 billion of New York State’s share to eliminate new taxes and fees in his proposed budget.  It is not clear that the bill gives him the authority to do this.  It is not clear either to what extent he can retain his tax increases because of the $275 billion in tax increases proposed in the House stimulus bill, leaving him free to divert stimulus money to restoration or program cuts throughout the State budget.

Much funding will also flow through federal agencies beyond the purview of either the Governor or the State legislature. 

In all cases, NYSARC and others must locate “pressure points” in order to advocate for stimulus funding.

But in any case it seems certain that when the stimulus is passed, it will touch off a mad scramble in Albany.

POTENTIAL FUNDING: ITEMIZED LIST

The itemized list below was taken from the House bill, HR 1.  The Senate bill is similar in many respects but not all.

A quick review of the list raises possibilities such as accessing stimulus funding by chapters for projects used to save energy costs; transportation funding being accessed to purchase vehicles; utilization of vocational rehabilitation grants; equipment, including assistive technology, purchased to help consumers; construction funds used for new buildings; new information technology, particularly in the area of health care, billing, diagnosis, tracking; building repair; and, many other ideas.

Chapters with concrete plans for “shovel ready projects” should have those proposals at the ready once the application process is known.

Our aim now is to understand how the stimulus will flow, how flexible it will be, potential uses for our consumers, chapters, families and how to advocate to receive this funding.  We want to know what pieces will flow through the State Legislature, federal agencies, local agencies and who at each level should be the target of advocacy efforts.

NOTE: If funding flows through federal agencies as slowly as prior federal funds have, i.e. HUD Section 8 Housing, economists predict that the stimulus will be a failure.  Again, there is an enormous premium, both political and statutory, placed on speed.  The new President’s reputation and perhaps career rests on doing this right.

The stimulus bill calls for a website on which all pertinent information to apply, access, monitor and spend funding will be located.

Some of the key items in the House stimulus bill - HR 1 - include:

1) $87 billion for an increase to state FMAPs beginning in October of 2008 and ending in December 2010.

2)  $13 billion for IDEA/special education.  Note: The bill summary states that this is for the rising cost of special education generally and makes specific note of costs attributable to the rising incidence of autism.

3)  $20 billion for health care information technology.  Question: How can NYSARC chapters, other developmental disabilities agencies benefit from this?

4)  $20 billion to increase food stamp benefits by 13% to defray the rising cost of food.  Question: Will the State take this as an offset to rates per its initiative in the proposed budget?

5)  $6 billion to purchase buses and other public transportation.  Funds to be distributed through existing formulas.  Question: Can chapters/agencies use these funds to purchase vehicles?

6)   $20 billion for school construction.

7)   $600 million for Early Intervention. 

8)   $2 billion for child care development block grant.

9)   $3 billion to fight preventable chronic illnesses.  Question: Can these funds be used for people with developmental disabilities who are often predisposed to chronic illnesses?

10)   $1.5 billion for community health centers.

11)  $4 billion for training and employment services.  Questions: How can this be used for the massive employment issues facing persons with disabilities?  Can it fund supported employment?

12) $500 million for vocational rehabilitation grants.  Note: The bill’s summary states that this is to minimize “order of selection” procedures in various states.

13)  $13 billion for various housing initiatives.  Question: How will this help promote housing for people with disabilities?

14)  $4.2 billion to enhance payments to SSI beneficiaries.  Includes a one-time payment to all SSI recipients of $450 ($630 couple).  Questions: How will this impact rates of SSI recipients in IRAs, ICFs etc?  Will this benefit accrue to consumers or will the State take it as an offset to realize additional savings?

15)  $1 billion in community block grants.

16)  $900 million to help the Social Security Administration process the rising rate of claims stemming from disability and unemployment.

17)  $79 billion to prevent cutbacks in services and eliminate proposed increases in state taxes.  Questions: Will this preempt the Governor’s proposed tax increases?  Can it be used to restore cuts to voluntary OMRDD programs like Day Habilitation?  Can it be used to restore the State share of cuts made to critical Medicaid programs like Day Habilitation?

18) $6.5 billion for low income housing. 

19) $200 million for independent living centers.

20) $2.1 billion for Head Start/Early Start.  Note: The bill summary states that this amount will have a “particular emphasis on early intervention services to infants and toddlers under Early Head Start.”

21) $2.5 billion for Elderly, Disabled, and Section 8 Assisted Housing Energy Retrofit.  Note: Bill summary indicates that monies include funding for Housing for Persons with Disabilities (Section 811).

see:  http://appropriations.house.gov/pdf/PressSummary01-15-09.pdf

A GAME PLAN

This plan is enormous. While much more is not known than known about what it will ultimately amount to, it is imperative to have a strategy for accessing these monies.  We will be approaching OMRDD, other advocates and providers, the Governor’s Office, the New York State Congressional Delegation and anyone else who can help us determine what the exact possibilities are for us and how to realize them.

CONCLUSION

The fine print is not dry.  It’s not even written.  But we know enough about the new Administration and Congress and House bill to know which way events are headed.   We know enough to be as prepared as possible should a stimulus plan, even one remotely resembling what we have seen, be enacted.  Right now the odds appear very high that such a plan will be law and not in the very distant future.

PART II ADVOCATE FOR THE STIMULUS PACKAGE.

While the devil’s in the details and we don’t have the details, the stimulus proposal seems to have enormous potential.  We can’t take its enactment for granted.   We have been strongly advised by Arc US to press the New York Congressional Delegation for speedy passage of the measure.

WHAT CAN CHAPTERS, FAMILIES, CONSUMERS, ADVOCATES DO?

We have been strongly advised by the Arc US to advocate for a comprehensive fiscal stimulus package that addresses the needs of persons with disabilities with our federally elected officials, particularly House members.

1.  You can go to the Arc US legislative action center and click “take action” at  http://capwiz.com/thearc/home/            (Contains a form letter which you can modify)

2.  You can also call your representative by phoning the House switchboard and asking for your house member.  Call (202)-224-3121 and ask for your House member.  Tell them:

- Please pass the American Recovery and Reinvestment Act of 2009 as quickly as possible;

- Please ensure that the bill makes stimulus funding explicitly available to persons with disabilities.

To locate your House member go to http://www.house.gov/  and see zip code look-up in upper left hand corner or use the US Arc action center above.