Legislature approves state budget contingency plan authorizing mid-year School Aid cuts and payment delays.
Tuesday, August 3rd, 2010 at 3:49 pm by Robert Lowry
Today the Assembly and Senate approved an “FMAP contingency plan” proposed by Governor Paterson. The plan authorizes across the board mid-year reductions in most areas of state spending — including School Aid — in anticipation of a shortfall in federal Medicaid funding.
The same bill also authorizes a delay in School Aid payments scheduled to be made on or by the first business day in September. Instead, the payments would be made on or by September 30.
FMAP is the acronym for the Federal Medical Assistance Program, commonly referred to as Medicaid.
Like most other states, New York was counting a continuation of an increase in the federal share of Medicaid costs first enacted as part of last year’s stimulus plan. There are mounting fears that Congress will not approve that extension.
The contingency plan authorizes pro-rata reductions in most areas of state spending beginning on September 16, 2010 and continuing until the state has accumulated a savings of $1.085 billion – the full amount of additional federal Medicaid help the state was counting on receiving.
Some areas of spending are exempt from the reductions: public assistance payments to individuals, debt service payments which the state is constitutionally or contractually obligated to make), state agency operations (the Governor may cut that spending without legislative action and has done so), payments required by court orders or judgments, and payments to the Metropolitan Transportation Authority related to the Mobility Tax.
School Aid is not among the exempt categories.
School Aid comprises about 25 percent of total “state funds” spending – expenditures supported by the General Fund and special revenues (e.g., fees, the Lottery, other non-tax revenues).
But when the areas exempt from reductions are excluded, School Aid’s share of the remaining spending could approach 40 percent, suggesting that schools could face current-year aid cuts totaling around $400 million.
As I read the law, STAR property tax relief reimbursement payments would also be reduced.
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