On State Finances and Public Health

1
On State Finances and Public Health
TODAYS TOPIC
MARY SELECKY Secretary, Washington State
Department of Health with the Washington State
Department of Social and Health Services BUDGET
DIVISION MAY 22, 2002
2
Stable Outlook?
PART 1
3
State Economic Indicators
Income Down, Unemployment Up
PART 1
February 2002 Forecast
4
Major Revenue Sources
Percent Change in Collections From Previous Year
PART 1
February 2002 Forecast Tax Base Adjusted 1978
tax base, assumes food expenditures in tax base,
excludes telephone services
SOURCE Office of the Forecast Council, Revenue
Review Meeting (Handout), February 19, 2002, p 36.
5
Losses in AerospaceJobs
Washington State Boeing Employees
PART 1
SOURCE Office of the Forecast Council,
Washington Economic and Revenue Forecast,
November 2001.
6
So What Does This Mean?
PART 2
7
The State 2001-03 Budget
DSHS as a Part of the State Budget
PART 2
All Funds 44.0 Billion
GF-State 22.8 Billion
All Other Legislative, Judicial,
Contributions to Retirement, Other Education,
Other Appropriations (and for GF-S pie also
Transportation). Dollars calculated before salary
and benefit allocations. All-Fund chart excludes
ProShare transaction, see note provided.
8
Why the State Budget Grew
2001-03 Increases from 1999-01 Biennium
PART 2
General Fund-State Net Increase 1.7 Billion
9
GF-State Spending and Revenues
PART 2
The State Budget Outlook
SOURCES Office of Financial Management, March
2002 Balance Sheet and 2003-05 Preliminary
Outlook, April 2002.
Original 2001-03 biennial appropriation
22.8 billion. OFM assumes a COLA increase
for ALL state employees in 2003-05 and continued
higher-than-I-601 inflation in health care (12
percent) in the next biennium.
10
GF-State Spending and Revenues
2001-03 2003-05
PART 2
The State Budget Outlook

• Drivers
• Health Care Inflation
• Experiencing double-digit inflation
• Salaries
• A 117 million (biennial) item if funded at 2.6
  percent, the rate of the Governors 2002 proposed
  increase
• Higher Education
• At current participation rate

I-601 Spending Limit 23.9 Billion
24.2 Billion 2003-05 Preliminary Outlook
Maintenance Level Plus
Room Available Within I-601 Limit 1.4 Billion
23.0B Revenue
22.5 Billion 2001-03 Budget Post-2002
Supplemental
0.7 B Reserves
0.8 B Additional Resources
21.0B Revenue
Scale 18.5 Billion
SOURCES Office of Financial Management, March
2002 Balance Sheet and 2003-05 Preliminary
Outlook, April 2002.
Original 2001-03 biennial appropriation
22.8 billion. OFM assumes a COLA increase
for ALL state employees in 2003-05 and continued
higher-than-I-601 inflation in health care (12
percent) in the next biennium.
11
Trend in Budget Collections
Cumulative Rate of Change Since 1991-93
PART 2

• The GF-State budget has been increasing at a
  steady rate for over a decade

• Collections took a dive beginning in FY 2001

• The 2003-05 forecast repeats the 2001-03
  experience

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Our Public Health Dollars
Most State Department of Health Dollars Go
Directly to Outside Programs Total 634.9
million
PART 2
13
DOH Funding Trend
Relying Less on GF-State Dollars, But Still
Dependent on State Funds
PART 2
14
Reliance on Federal Funds
Federal Dollars Still the Core of Public Health
Funding Department of Health 2001-03
Biennium Total 656.8 Million
PART 2
15
How Did We Get Here?
PART 3
16
Where Did All the Money Go?
Mostly Tax Rollbacks
PART 3
Repeal of 1993 BO Increases
Machinery, Manufacturing and Equipment
0.5 Billion 1.0 Billion 1.5
Billion 2.0 Billion
Referendum 47 (Motor Vehicle Excise Tax
Reduction)
General Fund-State Reductions
Referendum 49 (Tax Cut and Transfer)
I-728 (Class Size)
SOURCE Senate Ways Means, November 29, 2001.
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Spending Limits at Work
General Fund State Average Annual Growth Rate
PART 3
30 years of state spending
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The Rising Cost of Medical
Increasing Faster than Other Areas of the State
Budget
PART 3
Percent Change from 1989-91 ALL FUNDS Excludes
ProShare
SOURCE Legislative Evaluation and Program
Committee (LEAP), ProShare calculation from DSHS
Budget Division. Medical costs include the
Washington State Health Care Authority and DSHS
Medical Assistance payments.
19
Health Care Inflation
Above General Inflation Since 1998
PART 3
SOURCE Historical data William M. Mercer, Inc.
Projected data supplied by OFM
20
Washington State Population Increase
PART 3
Theres More of Us and Were Older
SOURCE Office of Financial Management,
Forecasting Division, June 2001.
21
Mirror, Mirror on the Wall
Living in a World of Silver Bullets, Budget
Gimmicks, and One-time Fixes
PART 3

• Whos the fairest of them all?
• The attempt to ratchet-down government will
  continue
• Agencies will continue to compete for funds
• The conversation will get harder
• What if the Lone Ranger doesnt come?
• Weve used Tobacco funds, the state reserve, the
  Welfare Box
• Weve benefited from a strong economy, good
  collections
• Wheres the next silver bullet?
• What are our options?
• Weve shifted to accounts unrestrained by I-601
• Weve transferred to federal funds
• Weve taken the easy cuts