Lembo Certifies Small Surplus, Promises to Monitor Medicaid Reimbursements
State Comptroller Kevin Lembo certified a $300,000 surplus Tuesday and promised to remain vigilant about the $249.2 million the federal government has not reimbursed the state for some of its Medicaid population.
Since Medicaid reimbursements have been moved outside of the regular budget process they no longer impact surplus and deficit projections, but a recent bond issuance by the state acknowledges it could have an impact on the state’s cash flow.
Even though the state has not received the $249.2 million payment for services provided between January and March, the state has continued to make sure providers are paid for their services to this population so the money is leaving the treasury.
The governor’s Office of Policy and Management believes it should be reimbursed at least 50 percent for each of these individuals and 100 percent for most, but the federal government deferred payment in July until the two sides reach an agreement.
“Even though the State believes that such claims are fully allowable under the various Medicaid regulations, no assurances can be given that such matter will resolve favorably for the State and will not have an impact on the final results of the operations of the State or the State’s available cash position,” the bond issuance reads. “Currently, the State’s available cash remains adequate.”
In his monthly letter to Gov. Dannel P. Malloy, Lembo said he will join with Malloy’s budget office and the state treasurer “in carefully monitoring the federal reimbursement issue and will report on any change in the current situation and the potential budgetary impact.”
In the same letter, Lembo reported that General Fund spending is expected to grow by an estimated 2 percent and revenue growth is projected to grow 2.6 percent in Fiscal Year 2015.
“These budget targets will be influenced by changes in economic conditions as the fiscal year progresses,” Lembo said. He noted that the miscellaneous tax category contains $75 million related to enhanced collection activities by the Department of Revenue Services.
In his latest monthly report, Lembo highlighted several economic indicators that will likely influence the state budget going forward, most of them positive — including a sixth consecutive month of job growth in July, growth in home sales, and a strong stock market entering the new fiscal year.
“The jobs are coming back — and the state’s economy continues to post moderate monthly growth,” Lembo said. “Our next step is focusing on the quality and income tied to those jobs, and closing the widening income gap between the nation’s highest and lowest earners.”
Lembo pointed to a recent report commissioned by the U.S. Conference of Mayors and the Council on Metro Economies released this month, which noted that the United States has regained 8.7 million jobs lost during the Great Recession, and that employment has surpassed its pre-recession peak of 138.4 million jobs in 2008, according to the report.
However, the report also finds that wages tied to these recovered jobs have declined — and that the highest earners are earning more and the lowest earners are earning less. Income for jobs tied to education and health fields have declined, while the financial services industry income has grown, the report shows.