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Budget-busting Medicaid, Part II

Here's a bit of clarification from Ally Isom in the governor's office regarding our post on Medicaid spending yesterday:

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You are absolutely correct in that federal funds earmarked for Medicaid cannot be spent elsewhere. However, a large portion of our state funds are also earmarked. Specifically, all the monies in our Education Fund can only be spent on education. That being the case, all Medicaid spending from state funds must come from our General Fund. When you look at Medicaid spending as a percentage only of General Fund spending, the figure illustrates even more dramatically the effect of Medicaid on the state budget: 21.5 percent. In FY 2003, Medicaid spending as a percentage of General Fund expenditures was 11.5 percent.

Having more than a fifth of unrestricted state funds obligated to Medicaid clearly seriously constrains the state's ability to fund other critical state priorities. So, whichever way you choose to account for Medicaid spending, the Governor's point still holds.

Isom highlights the complicated nature of state budgets.

Her point also underscores that while Medicaid hurts funding for state colleges and universities, it has no direct impact on public schools.

With legislation, that could change. Years ago the Legislature cut higher education out of the Education Fund (which is fed by income taxes) leaving colleges to compete with Medicaid for sales tax dollars in the General Fund.

-- Kirsten Stewart

Twitter: @kirstendstewart



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