Connecticut Mirror: The Medicare Savings Program rescue plan is fiscally irresponsible
Katie Roy, School + State Finance Project
January 08, 2018 - 4 minutes
Today, both chambers of the Connecticut General Assembly are expected to vote on a bill that would reverse new eligibility restrictions for the Medicare Savings Program, which provides financial assistance to low-income seniors and those who are disabled for medical expenses not covered by Medicare.
The new eligibility restrictions were included — despite multiple warnings from advocates and even a face-to-face conversation with legislative leaders right outside the negotiation room — as part of the bipartisan biennial budget that passed in late October; more than three months after the current fiscal year began.
That budget is now projected to run a deficit of $224 million in this fiscal year alone — a number that has continued to climb as time goes on.
To reverse the new eligibility restrictions, which could eliminate or reduce benefits for as many as 113,000 Connecticut residents, the General Assembly must find roughly $54 million. Finding $54 million in an already cash-strapped budget is no easy task. It requires disciplined leadership, difficult decisions, and a variety of policy considerations.
However, if preventing its previous decision to eliminate or reduce financial assistance for tens of thousands of Medicare recipients is a priority for the General Assembly — and it is certainly a worthy priority and an important and critical program for many in our state — then the legislature should find the funds needed in a fiscally responsible way that does not further increase the deficit and jeopardize other budgetary commitments.
Unfortunately, the bill before the General Assembly on Monday is a far cry from fiscal responsibility. Despite a growing deficit, and a projected deficit for fiscal year 2019, based on the plan expected to be put before the legislature, the General Assembly appears content to avoid making tough decisions about how to deal with the $224 million gorilla in the Capitol and instead has decided to just keep feeding it.
The plan crafted by legislative leaders would:
- Cancel the transfer of $17.8 million from the current fiscal year to the next (increasing fiscal year 2019’s already projected deficit of $147.1 million by $17.8 million).
- Obtain $17.3 million through reductions to accounts for executive appointments, miscellaneous agency expenses, and the Department of Administrative Services.
- Reduce the State’s fiscal year 2018 contribution to the Teachers’ Retirement System (TRS) by $19.4 million. However, the biennial budget passed and signed into law in October 2017 already assumed the State would cut $19.4 million from its contribution to the teacher pension system this year as a result of requiring public school teachers to pay an additional one percent of their salary toward the pension fund. As the Mirror’s Keith Phaneuf pointed out, this essentially means that $19.4 million “savings” would be counted twice – further worsening the budget deficit for the current fiscal year.
While reducing the State’s contribution to the already unfunded TRS — the pension system has accumulated more than $13.1 billion in unfunded liabilities and has a funded ratio among the worst in the nation at only 56 percent — is egregious enough, the legislature’s plan to add to the projected deficits for this fiscal year and next fiscal year means other items in the budget are at even greater risk. One of those items is the General Assembly’s plan to implement a new Education Cost Sharing (ECS) formula, as well as its plans to restore or increase funding in fiscal year 2019 to other education grants — such as magnet schools, the Connecticut Technical High School System, charter schools, Open Choice, special education Excess Cost, and Priority School Districts.
According to the biennial budget, not only is the first year of the new ECS formula’s 10-year phase-in scheduled for next fiscal year but so is an additional $88.9 million in funding for the grant that serves as the primary vehicle for state education aid to local public school districts. In addition, the fiscal year 2019 budget promises to increase other critical education grants by more than $37 million.
While the Connecticut School Finance Project has been concerned since the passage of the budget about whether this additional funding would ever become a reality and whether the new funding formula would actually be implemented, the plan before the General Assembly today only increases our skepticism and paints an even bleaker picture for the prospects of making Connecticut’s school finance system more equitable and transparent.
By choosing to resort to budget gimmicks instead of making the tough cuts needed to reverse the new Medicare Savings Program eligibility restrictions, the General Assembly is simply making the problem worse.
The plan before the General Assembly on Monday falls far short of addressing the serious fiscal challenges Connecticut and its citizens are facing, and instead continues the same type of questionable financial practices that put Connecticut in the position it is now.
All Connecticut residents — from the state’s nearly 540,000 public school students who have been without a proper school finance system for years, to the thousands of Medicare Savings Program participants who could see their benefits threatened again during the next budget debate — need for the General Assembly to consider real solutions that address our state’s longstanding fiscal challenges and keep its budgetary promises.
Increasing the biennial budget deficit and further reducing the State’s contribution to TRS is not a solution. It’s simply avoiding the difficult task of facing our state’s complex and longstanding fiscal challenges.