As a former Ohio Medicaid Director, I’ve seen firsthand how delicate the balance is between policy, budget, and the lives they affect. Right now, there’s a ticking budget time bomb embedded in the Ohio Revised Code.
In Section 131.35(E), buried under the unremarkable title “Spending Federal and Certain Nonfederal Revenue,” the language reads: “(E) The amount of any expenditure authorized under division (A)(2) or (4) or (B)(2) or (3) of this section for a specific or related purpose or item in any fiscal year shall not exceed an amount greater than one-half of one per cent of the general revenue fund appropriations for that fiscal year.”
This means that a state agency is limited in what it can spend of any federal, and certain nonfederal, funding outside of the traditional legislative appropriations process and is explicitly restricted from requesting spending authority from the Controlling Board at any amount greater than half of one percent of the total General Revenue Fund.
This provision was added to state law by the General Assembly in 2019 as a direct response to Governor John Kasich’s decision to use the Controlling Board to authorize approximately $2.56 billion in federal funds for Medicaid expansion—without prior legislative approval.
Though the move was successful in policy terms, it triggered legal and constitutional concerns about separation of powers and legislative authority, especially since the General Assembly had previously declined to authorize the expansion in the state budget. I believe the purpose of the 2019 amendment was to prevent the executive branch from initiating new or expanded programs without express legislative consent—not to restrict the ability of state government to maintain programs already approved and in operation.
Six years later, Medicaid funding is once again in the crosshairs
Both the Ohio House and Senate have significantly reduced the appropriation authority requested by Governor Mike DeWine in his introduced budget, cutting nearly $5 billion in proposed Medicaid funding over the biennium.
Some legislators have suggested that the Controlling Board could be used to restore funding if necessary. But that suggestion reflects a fundamental misunderstanding of how Section 131.35(E) now works—and why it was enacted in the first place.
The statute places a firm limit on what the Controlling Board can approve: no more than approximately $220 million in additional expenditures per fiscal year, or about four cents on the dollar compared to the current shortfall. Even if multiple requests were submitted, each would need to meet the statute’s requirement that spending be for a “specific or related purpose or item.”
That means broad-based backfilling across Medicaid services and populations is not just impractical—it’s likely unlawful.
A narrowly tailored request to restore funding for nursing facilities, for example, might qualify. But bundling together unrelated items like dental care, hospital payments, and behavioral health services almost certainly would not. And more importantly, the kind of funding required to preserve the Medicaid program at its current scale exceeds the Controlling Board’s statutory cap—regardless of intent.
Maintaining legislative authority and allowing flexibility
There is, however, a path forward—one that maintains the legislature’s authority while allowing for targeted flexibility. A temporary exception could be included in the final version of the budget bill. This provision would authorize the Controlling Board to approve additional Medicaid-related expenditures above the current cap in Section 131.35(E), but only for fiscal years 2026 and 2027.
- The authority would be narrowly limited to expenditures necessary to maintain program continuity, ensure provider reimbursement, and comply with federal Medicaid requirements.
- To maintain guardrails, spending could be restricted to existing Medicaid line items in House Bill 96 or its amendments.
- Transparency could be ensured by requiring the Ohio Department of Medicaid to report quarterly to legislative leaders on the amounts requested, the reasons for those expenditures, and how the funds are being used.
- Most importantly, the language should clarify that the exception is intended to maintain existing, previously authorized programs—not to enable new or expanded services without legislative approval.
Absent such a provision, any effort to avoid service disruptions, preserve provider rates, or maintain optional benefits will require direct action by the General Assembly.
The Controlling Board was never intended to serve as a backstop for multibillion-dollar budget gaps. In 2019, the legislature drew a line to prevent the executive branch from unilaterally expanding programs. But maintaining current commitments is a different matter—and now, it is the legislature’s responsibility to meet the fiscal realities of the programs it is posed to approve.
Having once been responsible for administering this program, I can say with certainty: Medicaid doesn’t run on promises or process—it runs on funding. And that funding begins with the legislature.
