Recession hikes state social services spending

Note from unhappygrammy-With so many children stolen from their parents in NH and placed in foster care, no wonder the state doesn't have enough money! Services to families before child removal would save a bundle. A real no-brainer, but trying telling that to the state. In order to save money, they need to fix the DCYF problem!

Tuesday, February 16, 2010 06:22AM

Recession hikes state social services spending


CONCORD MONITOR - The Department of Health and Human Services has serious money problems - and they won't go away until the department changes the way it does business, said HHS Commissioner Nicholas Toumpas.

"Short term, all we can do is cut," Toumpas told the Monitor editorial board. "Long term, we need to fundamentally change what we're doing."

The problem is that the number of people using the department's services is rising. And the department, already the state's largest, can't count on any extra money from the state.

"Our planning assumption is we won't get any additional funds," Toumpas said.

In fiscal year 2010, which ends in June, the department is predicting a $43.2 million deficit - $35.5 million due to program shortfalls and $7.7 million due to budget reductions made by the Legislature last June. In 2011, the department is predicting a $50 million deficit - $37.5 million from program shortfalls and $12.5 million from legislative budget reductions. (The department's total budget is about $2 billion.)

As a result of the budget crisis, Toumpas has started an ambitious process of restructuring the way the department delivers services. His goal, he said, is to create a system that focuses on the clients, not on the agencies providing the services.

What that could mean is that HHS would determine what batch of services it needs to provide to a group of people in a particular area - for example, to children in the North Country. The department would then contract with a single agency, and it would be up to that lead agency to work with other groups in the area to develop those services.

The lead agency could be a hospital, a Community Action Program, a county or any other entity. Ultimately, that would reduce some of the approximately 4,000 contracts that the department has with outside agencies.

Toumpas said he does not plan to go to individual agencies and force them to merge. But he does want to stop the situation where the department is paying hundreds of independent organizations - all with their own boards, directors and buildings - to perform similar services. Consolidating services through one agency, he said, could also help clients who will no longer have to visit different agencies for each service.

"It's like a contractor for a house," Toumpas said. Rather than hiring an individual plumber, builder and electrician, a person can hire a contractor who will then find the plumber, builder and electrician. Toumpas said the model would be different for each region. He hopes to discuss options with area agencies, providers, and local and county government.

Already he has met with groups in the Lakes Region, the North Country and Manchester, and he plans to begin talking to providers and governments throughout the state. He said he is still looking for people to analyze the department's data, facilitators who can work with the community organizations, and knowledgeable individuals who can find the weaknesses in his plans.

Ultimately, Toumpas said, he expects some resistance from institutions that will be affected. But he said he has little choice - only so many rate and benefit cuts can be made without threatening the system.

Demand outweighs supply

Toumpas said significant change is necessary because although the immediate crisis stems from the recession, the number of people requiring services is not expected to go down. According to an analysis done by University of New Hampshire economist Ross Gittell, Medicaid caseloads typically continue to rise for six months after a recession and then level off, but they do not drop.

According to data from HHS, the current program shortfalls are mostly due to the recession and high unemployment. The number of unemployed people in New Hampshire increased by 20,100 between December 2008 and December 2009. During that same time, the number of HHS clients increased by 15,900.


The growing number of clients came particularly in areas affected by the economy. The department saw an increase of more than 10,000 people, or 10 percent, getting Medicaid benefits - leaving a budget hole of $11.2 million in that area.

Most of the growth came as more people qualified for benefits because of poverty. The amount of financial assistance given jumped by 22.9 percent - leaving a $6.8 million hole in that budget. Again, more people qualified because of poverty. There was also 10 percent growth in child care services, leaving a $10.3 million gap.

"It's entirely due to the economic situation," Toumpas said.

So far, Toumpas has laid out plans for cutting $28 million this year. Those plans include lowering child-care subsidy rates so low-income parents have to contribute more, and reducing Medicaid reimbursement rates and capping services for a variety of medical services, which will take money from health care providers, particularly nursing homes and hospitals.

Within the department, there were 451 positions left vacant at the end of January, an amount equal to 13.5 percent of the its total authorized staff. Toumpas said the department has tried to stay away from cutting direct care personnel, which make up 65 percent of departmental jobs, so most of the vacancies are administrative.

Efficiency

Toumpas must still fill an additional $15 million hole in his budget, though he has asked the Legislature to give him until the end of 2011 to cut $8 million of that. And Gov. John Lynch recently asked all department heads to plan for an additional cut of 8 percent of their general fund money in fiscal year 2011. For HHS, that could mean close to $60 million.

Asked where that money would come from, Toumpas answered, "I don't know."

"We'll look at entire programs, entire business processes, entire functions within the department," he said.

Toumpas must submit a plan to Lynch by March 4.

Toumpas also pointed out that he has limited options of where to cut. During the budgeting process last year, the department determined that 35 percent of its budget went toward federally mandated services, such as Medicaid payments.

An additional 28 percent went toward optional federal entitlements and services - things like allowing people above a certain minimum income level to qualify for Medicaid. As long as the state is getting federal stimulus money, which is expected to be through December 2010, it cannot change the conditions for many of those programs.

The optional state services, which make up 17 percent of the budget, are often where the department looks to cut. That category includes programs like the children's health insurance program, contracts with the Brain Injury Association and screenings for newborns.

So with few good options for cutting spending, Toumpas said, he is trying to use the crisis to make the organization more efficient overall.

"It's fundamentally about how do we deliver services, what outcomes are we trying to achieve and how could we be more effective," Toumpas said.
By SHIRA SCHOENBERG
Monitor staff

http://www.nashuatelegraph.com/news/620283-196/recession-hikes-state-social-services-spending.html