For Immediate Release - March 03, 2010


Funds used to support Medicaid, Restore Critical Programs, Shore Up Reserves

BOSTON - Wednesday, March 3, 2010 - Governor Deval Patrick announced today that he will use an estimated $130 million in additional federal funding to support the Commonwealth's Medicaid program ("MassHealth") and other key programs, build up the state's reserves and reduce the state's use of one-time revenues in the budget.

The Obama Administration announced last month that it will grant states $4.3 billion as a result of increased Medicaid reimbursement included in the American Recovery and Reinvestment Act (ARRA). At the time ARRA was passed, the Obama Administration did not apply the increased FMAP (federal matching funds) reimbursement rate to the so-called clawback payments states are required to make to the federal government to help offset prescription drug costs for residents dually eligible for both Medicare and Medicaid. As a result, states have overpaid the federal government for their share of the program.

"This funding is welcome relief for the Commonwealth and will allow us to support the Medicaid program this year and restore some critical services next year," said Governor Patrick. "This funding will also make it possible for us to begin building our reserves, helping to ensure we have the necessary resources available to us as we continue to manage economic challenges."

For fiscal year 2010, the Governor will use an estimated $80 million in savings to support MassHealth and other important programs like Early Intervention that are running deficiencies due to increased caseload pressures. As a result of the availability of these savings for these programs, Administration and Finance Secretary Jay Gonzalez will use authority granted under existing law to reduce the Commonwealth's planned use of Rainy Day funds for fiscal year 2010 by the same amount, helping to shore up the state's reserves to protect critical programs and services in the face of continued fiscal challenges.

For fiscal year 2011, the Commonwealth is expected to save an estimated $50 million in planned clawback payments. As a result, the Governor will restore $21 million of funding for the Department of Developmental Services to avoid closing 315 community-based beds, maintaining community-based housing options in fiscal year 2011 for all individuals who currently have, or are planned to have those options.

In addition, the Governor will reduce his proposed use of Rainy Day Funds by $29 million to ensure that these one-time revenues result in a net reduction in the total amount of one-time resources used to support the fiscal year 2011 budget.

While the Administration continues to manage budget deficiencies and revenue risks through the remainder of fiscal year 2010, the availability of these additional reserves will provide a helpful resource to the extent necessary to cover costs for caseload driven programs, such as Early Intervention and Emergency Assistance shelters, and to help avoid the need for further budget cuts.

The Governor has managed an unprecedented fiscal crisis using a balanced approach of budget cuts, federal stimulus funds, reserves and modest new revenues. This approach has earned the approval of the major credit rating agencies that have cited the Governor's budget management as a top credit strength of the Commonwealth.