Preliminary Proposed Budget Reductions

Preliminary Proposed Budget Reductions

The State has released their preliminary proposed budget reductions in response to reduced state revenue caused by the COVID-19 pandemic and the economic shutdown.  The most recent estimate shows the state could face a $7 billion loss in revenue over the next four (4) years. The Office of Financial Management (OFM) sent a memo to all state agencies on May 13, 2020 requesting they submit a proposal detailing a 15% budget reduction.  For the Aging and Long-Term Services Administration (ALTSA) this means they need to detail how they would decrease state program spending by over $220M with a nearly $400M total loss in funding to programs resulting from loss of federal match.

The reductions that ALTSA has proposed are as follows:

·         Across the board percentage reduction, includes bargained rates for in‐home and AFHs. Very Rough Draft Assumes 3.0% Reduction

o   This would apply to all provider types including but not limited to nursing homes, all assisted living, adult family homes, enhanced services facilities, intermediate care facilities for individuals with intellectual disabilities, as well as many home and community-based providers.  We are working with ALTSA to better understand how this reduction would be implemented, once and assuming legislative approval has been granted.  The proposed cuts are slated to go into effect in October, 2020.  While we aren’t sure when the Legislature will be called back, we are hearing August as a possibility.  

·         Eliminate Adult Day Health and Adult Day Care programs beginning January 1, 2021.

o   Adult Day programs would remain intact through the end of this year, although many are no longer operating due to COVID. 

·         Reduce state program spending by 6.2% and use the higher federal FMAP to backfill the reduced state spending.  All enhanced FMAP funding would be retained by the state and withheld from providers.  Current assumption is that this enhanced FMAP could expire at the end of September if President Trump declares an end to the national emergency.  This cut does not require legislative action but could happen as early as July, 2020. 

o   This would eliminate the $29 add-on that nursing homes are currently receiving, as well as the $9.30 add-on that assisted living communities are receiving.  In addition, it would eliminate any retainer payments that assisted living and adult day programs are currently receiving. 

·         In addition to the above reductions, ALTSA has proposed to increase the eligibility requirements for state funded programs and services, including Medicaid.  This would reduce the number of residents that are eligible to receive services effectively reducing caseload and occupancy in nursing homes, assisted living, and many home and community based services.  Effective January 1, 2021. 

It should be noted that these cuts are a preliminary proposal and a required exercise as the Governor must put forward a balanced budget, in the upcoming legislative session, that does not rely on policy changes or new revenue sources.  These proposals are far from final.  Once the Governor’s office reviews the impact of the proposed reductions provided to them by the state agencies, they will then put forward their budget priority proposal to the Legislature.  The Legislature will then determine how it chooses to address the state’s four year projected revenue losses through spending and/or eligibility reductions and adjusting tax/revenue structures, in an effort to spare some programs while possibly deepening cuts to others.

These budget proposals, excluding enhanced FMAP savings, will only be finalized if passed by the Legislature when they convene for a Special Session sometime between now and the end of the year.  We continue to wait for the session decision to be announced by Inslee. Typically, the timing of special sessions and the development of any budget is based on the latest revenue forecast possible so budget writers have the best information at hand to guide their decisions.  This gives us a unique opportunity to advocate and make our voices heard to defend the programs and services that our clients need.  Over the coming weeks, as these proposals are discussed at each level, we will be asking for your help in advocating for these important and necessary programs.

We are also working with a broader coalition to prevent any negative impacts to all long term services and supports. There is overwhelming support from all provider and consumer organizations to preserve access to these critically important programs for our state’s seniors and persons with disabilities.





David Carter | Director, Health Care Finance & Policy

C 360.888.5702