Federal, State, and Local Budgeting Matters: Takeaways from the Celebration of Human Services’ Panel of Budget Experts

As Ohio Budget Director Tim Keen began addressing a room full of Northeast Ohio human services professionals, he remarked that the drive from Columbus to Cleveland always bears reminders of the impacts of state investments. Cleveland landmarks like Progressive Field, the “Q,” and Playhouse Square all serve as tangible, brick and mortar evidence of the benefits that public dollars bring to cities and communities. But for attendees of Community Solutions’ 2017 Celebration of Human Services, the greatest impacts of public budgeting often lie below the surface, in the programs and services supported by federal, state, and local dollars that serve as a vital safety net to Northeast Ohioans.

At the “Triple Crown of Budgeting” breakout session, Director Keen was joined by Sharon Parrott, Senior Fellow at the Center on Budget and Policy Priorities, and Cuyahoga County Budget Director Maggie Keenan to speak on the relationships between the budgets of all three levels of government and their impacts on health and human services agencies. The panel was moderated by Ginger Christ, healthcare reporter at The Plain Dealer. This blog will sum up key takeaways from the panel’s conversation on topics including budget uncertainty at the various levels of government, the intersection of politics and budgeting, and the impacts of budget cuts and policy changes on agencies on the ground.

Local Priorities

Director Keenan knows better than anyone that the Cuyahoga County budget is a statement of “who we want to be” as a county, spelling out the services the county wants to provide and the services it is mandated by the state to provide. In her remarks she acknowledged that oftentimes the non-mandated services keep the costs of mandated services down. According to Director Keenan, health and human services programs are the number one priority in the county’s budget. That statement is backed up by the fact that 35 percent of the county’s $1.5 billion All Funds operating budget is dedicated to social services.

Regarding uncertainty at the state and federal level, Keenan affirmed her office is constantly monitoring changes to state and federal spending, and tries to plan for every possible scenario. One such challenge the county has had to address in recent years is the declining allocations from the Local Government Fund in the state budget, which have dropped from over $35 million a decade ago to about $18 million in the current county budget. CCS has written about this issue in a recent County Budgeting Matters.

Though Director Keenan recognizes that the budget office is often seen as the office of “no” by agencies whose missions depend on government funding, her message to the room was to get to know their budget office, because she and her staff are eager to help these agencies be successful in what they do. The more information her office has on agencies it funds, the better positioned it is to support the needs of those agencies.

State Insights

Summing up his “budget-centric” view of the world, Tim Keen, Director of the Ohio Office of Budget and Management (OBM), emphasized that the programs of government “do not go” without the allocation of state resources through the budget. To this point, he spoke heavily on the executive branch’s role in the budget process, saying that the vast majority of what the governor recommends in his budget proposal ends up being passed into law. The state budget is certainly a statement of policy priorities, but to get a sense of what these priorities are, Director Keen says one has to look in the margins.

Director Keen used Medicaid as an example underscoring how difficult it is to make anything greater than marginal changes to major government programs. He noted that although many in the legislature voice opposition to the Kasich Administration’s decision to expand Medicaid under the Affordable Care Act, the program continues to be funded by the controlling board each year despite legislative moves to restrict eligibility and freeze enrollment. When asked what the budgetary impact would be if a freeze on Medicaid expansion enrollment were to take effect, Director Keen refuted claims of “runaway costs” of expansion and insisted that an elimination of Medicaid expansion would actually cost the state money in primary budget effects, including the loss of provider tax revenue and increased costs in state prisons. Such a move, he said, would put hundreds of thousands at risk while destabilizing hospital budgets.

In contrast to Director Keenan, Keen said he does not spend much time worrying about uncertainty caused by federal policy debates, taking a “figure it out when we get there” approach to federal policy change. Rather, his chief concern is to mitigate uncertainty around state resources by continuously monitoring whether revenues come in and expenditures are made as expected.

Director Keen highlighted the importance of the 2018 gubernatorial race in the context of the state budget, pointing to the fact that the next state operating budget will be the first priority for the next governor at the start of his or her term in January 2019, on top of an already hectic time of staffing a new administration.

Federal Perspective

Sharon Parrott, who worked in the Office of Management and Budget under the Obama Administration, illustrated the role the federal government plays in state and local budgets, highlighting that federal grants make up nearly one-third of state budgets. Additional federal funds, like SNAP dollars, bypass the state and local budgets altogether by flowing directly to individuals, but still have a noticeable impact in terms of cost savings to state and local governments.

At the federal level, Parrott countered that it is not always true that budgetary priorities appear only in the margins, as Director Keen suggested is often the case in the state budget. She pointed to recent congressional healthcare proposals which would have included a major defunding of Medicaid, as well as the ongoing tax reform debates that separate the discussions of major tax cuts and how to pay for them. Parrott insisted that the federal healthcare debate is far from over, and drew attention to the fact that Congress still has not reauthorized the Children’s Health Insurance Program, and that both chambers’ budget resolutions call for major cuts to health and human services.

From a budgetary perspective, congressional gridlock does not only cause uncertainty to state and local budget officers; federal agencies are also affected. Though Parrott says most people have adjusted to the fact that congressional appropriations bills will no longer be passed in regular order, agencies are required to allocate dollars that are appropriated before the start of the new fiscal year, which can be difficult when appropriations are not made until the eleventh hour.

Toward the end of the discussion, Parrott offered some closing remarks that captured the spirit of the day’s celebration and ring true for policymakers and advocates at all levels of government. Stressing the importance of staying engaged, the former budget official and current advocate reminded us that the process works better when more smart, experienced people are involved in the process. Specifically pointing to Medicaid, she expressed how heartening it is to see governors of both parties advocating for the all the good the program does on the ground, saying “we want everyone to stay in this discussion. Don’t be shy about explaining what this really means.”