OKPOLICY.ORG
“The sky is falling!” clearly would make a more compelling headline, but in the case of state agencies trying to deal with the continuing pressures of rising costs, increasing responsibilities, and flat funding, the reality is less dramatic but no less serious.
The Oklahoma State Department of Health testified of the ever-tightening budget grip to a House subcommittee last week:
Interim Health Commissioner Rocky McElvany told the House health appropriations subcommittee that rising costs for employee insurance and benefits have forced the agency not to replace nearly 200 employees since September 2007.lost about 100 county health workers during the 2008 fiscal year, he said.
Many of the employees were health-care professionals who provided services across the state, including in county health departments, who either retired or left for higher-paying jobs, McElvany said. “Realistically, these cuts are starting to hamper our ability to provide services,” he said.
OSDH, like many state agencies, is struggling with the Legislature’s ongoing failure to fund mandated increases in employee health insurance costs and retirement contributions. As the graph below shows, state employee health care costs have more than tripled this decade. According to data compiled a year ago, OSDH’s tab for health insurance rose by $9.5 million from FY ’03 to Fy ’08. Since the Legislature has provided little, if any, additional appropriations for these increases, agencies have been left to absorb rising costs out of existing budgets.
Similarly with pension benefits: to help keep the Oklahoma Public Employees Retirement System solvent, the Legislature has mandated an ongoing increase in the employer contribution rate, from 10.0 percent in FY ’04 to 14.5 percent in FY ’09 (and climbing to 16.5 percent by FY ’12), without additional funding in most years to cover the increases. OSDH’s pension contributions rose $4.5 million between FY ’04 and FY ’08.
The impact of the funding squeeze is already being felt in the Health Department, whether in a shortage of nurses to provide childhood immunizations and home visitations to at-risk first-time mothers, or in decreasing numbers of inspections of restaurants, nursing homes, and other facilities under the Department’s regulatory purview.
Let’s remember that this situation has emerged prior to any decisions being made as to next year’s budget. Agencies like the Health Department are currently being asked to draw up scenarios for budget cuts of at least 5 percent. The ultimate outcome may be less dramatic, depending on decisions regarding federal stimulus funds, but gaining additional funds to staff back up to previous levels is exceedingly unlikely.
The sky may not be falling, but the clouds on the horizon are looking mighty black.
For a more detailed look at the state’s fiscal outlook, take a look at the latest version of OK Policy’s full-length presentation.
