After an unpredictable and unprecedented 2020, Governor Bill Lee called the heads of the state agencies together over the past few weeks to talk budget for 2021. After state tax revenue fell 40% in April, fears grew on capitol hill that the state was in for some hefty belt-tightening in 2021. With this in mind, Governor Lee asked state agencies in May to construct and propose a 12% budget reduction plan for FY 2020-2021.
Fortunately, the state has outperformed early fears of a huge budget shortfall. Indeed, Tennessee has already built up a $1 Billion tax surplus as of October. This is in addition to about $4.5 Billion sitting in the state’s rainy-day fund. Agencies will likely not have to enact the entirety of their proposed 12% reduction plans for FY 2020-21.
Despite the recently rosy outlook, the state is planning to proceed with caution. Finance and Administration Commissioner Butch Eley said that these numbers have been a bit juiced by the influx of federal stimulus support, and that, with the prospect of future stimulus uncertain, agencies should still expect cuts. Governor Lee asked agency heads to identify 2% in budget cuts for the fiscal year 2021-2022 which they presented during the budget hearings this month.
We have prepared a roundup of the budget presentations from departments in state government that most closely impact Tennesseans with disabilities. We have outlined their reduction plan and spending request below. We included any commentary during the budget hearing that resonated with us.
You can watch the full budget hearing presentations for FY2021-22 online at: https://web.nowuseeit.tn.gov/Mediasite/Catalog/catalogs/mediasiteadmin-tn-budget-hearings-2021
Bureau of TennCare
As a result of the pandemic, TennCare saw an early decrease in service utilization and increased cost for providing care, followed by a major uptick in people enrolled. Commissioner Smith described that this occurred for two reasons. First, federal stimulus prohibited removing anyone from the Medicaid rolls and delayed redetermination proceedings. Second, more people were qualifying for Medicaid services as the economy struggled. Smith expects an increased level of enrollment to last as long as federal dollars continue to pour into the program, after which, redeterminations will begin again.
Smith’s budget proposal eliminates 34 vacant positions, saving the agency $1.6 Million. Of note, Smith also proposed cutting pharmacy services for people on Medicaid, to the tune of $24.7 Million. These are dollars that provide medication to people on TennCare.
After describing proposed funding increases, Commissioner Smith took questions, including some questions about the new Katie Beckett program from Governor Lee. Lee asked whether Smith had any concerns about implementing the program, to which the Commissioner replied that they were prepared to begin taking applications this month.
Finance and Administration Commissioner Butch Eley grilled Smith on his budget reduction plans. Smith said that some budget maneuvering allowed them to avoid any negative impact to providers or services delivered to people with disabilities in 2021. However, he noted, if the cuts go through, TennCare would expect them to negatively affect services in 2022.
Department of Health (DOH)
Commissioner Lisa Piercey noted that the department made a large investment with federal dollars in long-term care facilities, testing over 70,000 residents and staff per week and constructing 8 Covid-specific care centers to help protect older Covid patients and offload some capacity from hospitals.
Given the size of this department, there were a lot of proposed cuts to get to the 12% plan for FY2020-21. First, Piercey identified 100 vacant positions that would net a savings of almost $2.9 Million. Amidst other administrative cuts for 2021, the Commissioner also described an additional 2% cut proposed for 2022 that would eliminate or reduce some services to Tennesseans.
Piercey proposed cutting the Hemophilia and Renal program that supports Tennesseans who need expensive medications. She described that these patients could potentially get this service covered through enrollment in Medicaid. We are concerned that this cut may cause gaps in service and health care needs may go unmet. This would affect 165 Tennesseans with hemophilia and 1750 Tennesseans with kidney disease across the state.
Department of Intellectual and Developmental Disabilities (DIDD)
Commissioner Brad Turner described how quickly DIDD responded to the demands of the pandemic, maintaining in-home services and implementing tech-based solutions in a safe manner. Turner stated that they likewise built up telehealth both as a means to provide services, but also as a means to monitor individuals and staff people for Covid.
Turner found $36k in vacant positions to cut, but also found about $615,000 in “position abolishments.” He stated that 5 of these positions were filled and 12 were vacant, and later said that these positions could be eliminated without negative impact for individuals that DIDD served. He also saw $6.9 Million in savings due to attrition in the 1915c waiver program, either through people moving out of state, passing away or no longer needing services.
Turner requested a recurring stream of $500,000 be made available for “emerging” and “enabling” technology, including money for improving transportation and “virtual reality training” for employment. The Commissioner also requested an additional 2% raise for direct support professionals as a recurring cost. This would move the starting salary of a DSP from $10 per hour to $10.20 per hour.
Department of Education (DOE)
Commissioner Schwinn plans to cut 11 positions at the department, including 3 from Special Education. Schwinn presented that these positions were well suited to be rolled into the assessment and monitoring units. She also cited 38 cuts to schools in the state-run districts, including 7 cuts at the Tennessee School for the Blind and 4 at the West Tennessee School for the Deaf.
Later, Commissioner Schwinn, in describing lessons learned during the pandemic, cited the use of technology. She said that it could and should be used going forward to differentiate instruction and be embedded into classrooms but not as “a supplement to instruction.” She described using technology to permit small group and “modular” instruction where staffing was not previously available to do so. These comments are worth following to evaluate its use for students with disabilities in and out of the general education setting and ensuring that students with IEP’s receive adequate, in-person support and instruction.
Department of Human Services (DHS)
Commissioner Danielle Barnes represented the Department of Human Services (DHS) at the budget hearings. The agency, she said, received a lot of federal and state support as a result of the March 3rd tornado, as well as the pandemic. This allowed them to be flexible and generous with P-EBT and DTANF money. They likewise expanded efforts to protect childcare centers from closure and support then with reopening.
Governor Lee asked Barnes some questions about the backlog with Developmental Disabilities Services and whether requested funds for 11 positions would help eliminate the waitlist. Barnes responded that that was the purpose of the funding request. Lee also asked about the backlog, wondering how it compared to other states. Barnes stated that three years ago, the state had a very small backlog and was one of the highest performing states in the country, but, because of the inability to gain approval to hire for 72 positions, found themselves with one of the highest backlogs in the country this year. Further, she said that if they are unable to gain the authority to fill the positions, the money set aside for Tennessee to do so would be distributed to other states.
Department of Mental Health and Substance Abuse Services (DMHSAS)
DMHSAS was also tasked with finding and eliminating vacancies and Commissioner Williams found 18 worth $1.8 Million in savings. Though, Williams noted, DMHSAS was able to avoid cutting services in their 2021 budget request, the additional 2% cuts to the 2022 budget would reduce services. The reduction would cost peer support centers $1.5 Million in funding and eliminate some physical locations and combine others. The department presented that it would need to rely on the increased use of telehealth without these centers.
Commissioner Williams also requested increased funds for a universal K-12 student behavioral health needs assessment, citing Senator Hale as the department’s champion in this effort. This would hire a single staff member to supervise each school behavioral health liaison in collecting data that would provide a more accurate picture of local needs and need around the state. Lee later questioned the role, asking about the purpose of the new position. Williams responded by applauding the state’s recent investments in children’s mental health, and cited this position as the means to determine the efficacy of the state’s investments.