1. Executive Office of Health and Human Services FY2012 Budget Hearings Secretary JudyAnn Bigby December 13, 2010

2. 2 AGENDA Overview of FY12 Budget  General  EOHHS Public Testimony

3. 3 National Picture Shared Experience Virtually every state is struggling to balance their budgets as federal stimulus aid ends and pensions and other liabilities add spending pressure to their annual budgets. States are managing through their fiscal challenges through reforms and efficiencies across a number of areas, including: corrections, education, employee costs, shared services, privatization and sales of assets, and tax expenditures. Massachusetts will, similarly, need to continue efforts to reform and innovate as well as control costs and spending in FY2012 and beyond in order to live at projected revenues.

4. 4 …but still remain below FY2008 levels:  FY2008 = $21.009B  FY2009 = $18.513B ($2.5B decrease)  FY2010 = $18.544B  FY2011 = $19.050B (consensus estimate) FY2011 actual tax collections through November are $514M over benchmark. Tax Revenues Recovering…

5. 5 Since the start of the crisis, the Patrick Administration has already solved for deficits totaling nearly $13 billion. Governor Patrick used a balanced approach of reforms, cuts, revenues, rainy day and stimulus funds to close several budget gaps. Over the last several years spending growth has been constrained to reflect available resources. Even though revenues started to grow in fiscal year 2011, revenue collections historically lag behind national economic growth and will remain moderate over the next two fiscal years. Since rainy day and federal stimulus funds will not be available in FY12, our challenge for next year is particularly difficult. Sound Fiscal Management

6. 6 Approximately 58% of all state expenditures are for the purchase and operation of health care and human services programs for the Commonwealth’s residents and state employees In fact, 77% of the state’s budget supports health care, human services and education alone This leaves 23% of the budget for other purposes, including public safety, housing, labor programs, environmental protection, local aid and economic development Spending Overview What do we spend state dollars on?

7. 7 EOHHS Spending Overview* see note EOHHS Spending EOHHS represents almost half of the operating budget at approximately $14.6B for FY11* MassHealth accounts for $10B, or approximately 68% of EOHHS’ budget, purchasing services from approximately 20,000 vendors. Remaining 32% of EOHHS’ budget is roughly split between: Purchase of Service (POS)- services to our clients that are purchased from approximately 2,000 outside vendors; and Non POS Spending / Agency Operations – services provided directly by state governmental entities. * If trusts, federal grants, capital and other account types are added, EOHHS spending = $15.7B

8. 8 Governing Through Fiscal Challenges: Leadership Based on Values Continued emphasis on reforms Smart investments lead to long-term stability Strong fiscal management with positive outcomes

9. 9 Governing Through Fiscal Challenges: The Reform Agenda In this crisis, we have changed the way government does the people’s business, including: Pension Reform: established new practices to prevent abuse. Transportation reform: a new consolidated agency Straightforward budgeting: significantly reduced earmarked funding in the state budget and enhanced transparency for the benefit of the public. Consolidations of services: IT consolidation to coordinate services, contracting and eliminate duplicative functions. Energy Reform: strengthened the state’s energy purchasing and procurement policies, generating savings and more sustainable practices Procurement: leveraged state buying power to lower costs of state agencies and their partners We will continue our reform agenda, including: The next phase of pension reform Further efforts to support municipalities More to come….

10. 10 Governing Through Fiscal Challenges: EOHHS Accomplishments Despite facing significant challenges, we have been focused on ways in which we can better serve our consumers. Recent achievements include: Since 2006, the number of youth “stuck” in hospitals has decreased by 40%. From 2006 to 2009, DYS has reduced the number of youth in detention by 35%. Participation in SNAP has increased by more than 90,000 individuals in the past year (an increase of 308% more households since FY02). Fernald Development Center closure almost complete with 201 outplacements to date 420 community placements from Nursing facilities to date under Rolland We have initiated two new waivers for adults with Acquired Brain Injury. Over 3,200 individuals with significant disabilities have been placed into competitive integrated employment. In the past year alone, MassHealth enrolled 20,000 more children.

11. 11 FY2012 Budget Factors Increased cost pressure in the state’s largest health care program Massachusetts, like most of the 50 states, has faced continued cost pressure in its Medicaid program (MassHealth). In addition, the economic downturn has increased the number of Mass residents in need of state-funded health care services. Enrollment in other “counter cyclical” programs have also increased.

12. 12 FY2012 Budget Factors  Across all EOHHS agencies, administrative spending as a percent of total spending has declined from 4.6% in FY01 to 2.6% in FY11 as EOHHS program spending has increased 70.1% FY01-11  Since FY01, combined EOHHS administrative/operations spending has actually decreased by a total of $18 million (or -4%), from $405 million to $386 million, while program spending has increased $4.4 billion (or 70%).

13. 13 Key Areas of the EOHHS Budget Core Populations Children / Youth Transition Age Youth Adults (general) Adults with Disabilities Adults with Behavioral Health Needs Veterans Elders General Public Service Areas  24 Hour / Residential / Inpatient Programs Emergency / Immediate Care Transitional Care Long Term Care State Operated Acute Hospital Care  Community Programs Economic Support Food & Nutrition Support Group / Day Programs Direct Client / Family Support Education and Employment Services Clinical Medical or Psychiatric Care Community Prevention, Public Health, Quality Assurance

14. 14 EOHHS Funding Priorities Community First – continue facilities closures and community placements or transfers Health Care access, quality, and cost reduction Protecting vulnerable populations during the recession  Access to food  Economic supports

15. 15 Developing Strategies for Budget Reduction Prior reductions have eliminated nearly all areas of savings that do not impact direct client services The FY12 budget challenges will not be met with small and across-the- board savings strategies Program and administrative services integration as well as agency site co- location are ongoing but yield limited savings Further facilities closures are planned but savings are a key component for community service development Maintenance of Effort (MOE) and other requirements limit options for service eligibility / other changes in certain programs

16. 16 Let’s Discuss In order to better serve clients, increase efficiencies, and achieve savings:  Are there areas where you believe EOHHS can regionalize, consolidate or streamline services, programs or offices?  Are there areas where you believe EOHHS can use technology better? Are there ways you believe EOHHS can reduce expenditures while maintaining essential and core services?

17. 17 Rules Please limit your comments and questions to no more than 3 minutes. We’re all facing the need for creative solutions. Please use your time to suggest new approaches or areas that you’d suggest we identify savings.