Medicaid, foster care costs threaten to eat up much of state’s anticipated new revenue

photo by: Nick Krug

Kansas Statehouse in Topeka, February 2014.

? A significant chunk of the new revenue that Kansas expects to receive over the next year could be consumed by rising mandatory costs for Medicaid and other social service programs, according to a report released Monday.

The report, known as the “Consensus Caseload Estimates,” shows that for the rest of this fiscal year and the next fiscal year that begins July 1, the combined cost to the state for those services is expected to be $109 million higher than what the governor’s office estimated in its budget proposal submitted in January.

The biggest source of that increase is the cost of KanCare, the state’s privatized Medicaid program, where the cost is expected to grow by nearly $35 million during the current year and another $58 million next year.

Meanwhile, the cost of operating the state’s foster care program is expected to grow nearly $6 million this year, plus another $12 million next year, much of which is money that the Department for Children and Families is requesting to hire more staff and upgrade its information technology systems.

The caseload estimates come on the heels of a new, rosier estimate of state revenues, released Friday, showing the state can expect to receive $533.8 million more than previously estimated over that same period.

But a significant portion of that increased revenue is expected to go toward K-12 education, in hopes of satisfying a Kansas Supreme Court order to pass a funding formula that will meet constitutional muster.

Last week, Gov. Jeff Colyer signed a new school funding bill that phases in a $534 million increase for public schools over five years. But lawmakers will have to revisit that bill to correct a drafting error when they return to the Statehouse Thursday for the start of their wrap-up session.

Budget Director Larry Campbell said Friday that the new revenue estimates showed the state could afford the new school funding plan without a tax increase.

That projection, however, does not take into account a package of tax cuts that the Kansas Senate passed April 7, which the House is expected to consider during the wrap-up session. Nor did it include the increased cost estimate for Medicaid and foster care services.

“I think when we get back, we’ll have to look at all of those things and figure out what’s the priority,” Rep. Dan Hawkins, R-Wichita, who chairs the Legislature’s joint KanCare oversight committee, said during an interview after the panel was briefed on the new estimates Monday.

Hawkins noted that the Legislature has no choice but to pay those costs. That’s because Medicaid is an entitlement program under federal law, meaning people are entitled to receive those benefits if they meet the eligibility requirements, while taking care of children in foster care is mandatory because those children are in state custody under court orders.

Rep. Barbara Ballard, D-Lawrence, who also serves on the KanCare oversight committee, said she thought the state could still afford to pay for the higher caseloads and the school finance increase.

“I’m just really glad that we have more money than projected these days,” she said during a separate interview. “I think there’s enough money to do the education thing, and there’s enough money to deal with other things, because I don’t think the intent from the state Supreme Court was that every other unit has to go without.”