OKPOLICY.ORG
When legislative leaders and the Governor announced the FY ’10 budget deal last Friday, they stated that the agreement “protects the four core functions of government, including education, health care, corrections and transportation.” It may not be that simple. The Department of Human Services, the agency that operates programs primarily serving vulnerable children, families, seniors, and persons with disabilities, was dealt a cut of $9.4 million for FY ’10 compared to FY ’09. Even though this cut equals only 1.68 percent of agency appropriations, it is becoming apparent that DHS could be hard-pressed to continue operating existing programs. For this agency, and likely several others, we may not know what is protected, and how, for months after the Legislature heads home tomorrow.
The FY ’10 budget agreement allocates $549.7 million for FY ’10, of which $71.4 million is federal stimulus money associated with enhanced federal matching rates on the agency’s Medicaid-eligible expenditures. At its April Commission meeting, Director Howard Hendrick presented the emerging FY ’10 budget picture for the agency. He asserted that DHS required $665.8 million in state funds for FY ’10, which amounts to an increase of $106.6 million compared to FY ’09 appropriations. Based on the figures presented to the Commission, the $9.4 million funding cut means DHS could be facing a shortfall of up to $115 million in FY ’10.
At Thursday morning’s May Commission meeting, however, the tone and outlook were different. Hendrick now reckons the shortfall at closer to $50 million and believes some of this could be made up from other stimulus funds for child care, nutrition, and other programs. Still, he believes spending will be about 98 percent of current levels. When the agency is absorbing increased employee health care costs and facing greater–in some cases, record–demand for safety net services, it is hard to believe Oklahomans will not suffer service reductions as a result of this budget. Hendrick admits to having more questions than answers and indicated the Commission’s budget committee will be meeting throughout June to devise a budget strategy.
If anything, things could be worse for DHS after FY ’10. They will still be absorbing higher employee costs and could face continuing high demands for services. One-time funds account for between 15 and 20 percent of next year’s budget and the agency has less cash to carryover from FY’09 than many prior years. Hendrick rightly identifies the greatest challenge for this–and most other state agencies–as identifying a level where ongoing revenue can support ongoing expenditures and consistent service levels. This year’s budget does nothing to step in that direction and heads the opposite way in some respects. The picture for DHS and other agencies will become clearer–but probably not better–as FY’10 unfolds.
