Appropriations hears contingency plans as Budget Adjustment Act stalls; officials warn of provider timing risks

Madam Chair of the House Appropriations Committee and state agency leaders discussed contingency plans on April 3 after the Budget Adjustment Act (BAA) stalled in negotiations, with officials saying a clean BAA is the preferred solution but outlining accounting maneuvers to keep core services running through fiscal year closeout.

The discussion centered on potential impacts to Medicaid, provider stabilization payments and nursing-home support if the BAA is not enacted. "Our preference is for a clean bill, that we can all agree on and pass and that we'd have the budget adjustment," said Sarah Clark, Secretary of Administration. Clark and Jenny Samuelson, Secretary of the Agency of Human Services, told representatives they are developing a plan to manage cash flow and obligations to June 30 if a budget adjustment is not available.

Committee members raised specific dollar amounts included in the BAA and asked which obligations could be delayed. The chair noted provisions on the committee's radar including about $24.5 million related to 78,000 nursing-bed days, $10 million for provider stabilization, and $21 million for emergency financial relief for nursing homes. Clark and Samuelson confirmed those items are among the most time-sensitive elements in the measure.

Officials described the tools they would likely use to bridge the shortfall until appropriation authority is available. Clark said agencies would employ routine closeout mechanisms such as excess receipts requests and internal transfers that are "used pretty routinely." Samuelson said the Agency of Human Services could, in effect, "borrow general funds between departments to be able to gross up for [Global Commitment]," but both secretaries emphasized those are temporary, complex measures that require later reconciliation.

Samuelson warned that some items could not be executed until funding is formally provided. She said extraordinary financial relief for a range of providers — beyond the rule-based process that covers skilled nursing facilities — is intended to stabilize organizations identified as going concerns, and without timely appropriation some providers could face heightened risk. "We will not be able to do the extraordinary financial relief in the time frame for some of the organizations that we had hoped, and that could put those organizations at risk," Samuelson said.

Committee members raised operational and oversight concerns, including potential audit implications and effects on the state's bond ratings. Clark said successful closeout would mitigate audit or rating impacts, but acknowledged that protracted delay could influence perceptions of financial management. She and Samuelson said the state would need to prioritize obligations if federal or other external developments reduce flexibility.

Members also discussed the Veterans' Home, which Clark said is captured within nursing-home bed-utilization funding (a figure discussed in the meeting as roughly $51 million) and separately receives about $6.9 million in general fund support in the BAA. The secretaries said they are working with the Veterans' Home to establish interim spending authority if needed and to minimize operational disruption.

On federal uncertainty, the committee signaled it will gather more information. The chair said a letter would go to agency heads asking them to inventory federal grants, assess risk (high/medium/low), note whether grants require state match and whether FTEs are tied to the grants. Clark and Samuelson warned that some federal grant reductions announced elsewhere may be subject to waiver processes and that the state needs details to prioritize services vs. outreach or education covered by those grants.

Representatives asked about timing for activating the contingency plan; Clark and Samuelson said planning is already underway and closeout work typically accelerates in early June, with accounting and reconciliation continuing into mid-July. The secretaries repeatedly emphasized the preference for legislative action to appropriate needed funds and described the alternative maneuvers as temporary, administratively complex, and not best practice.

No formal votes or motions were recorded during the session. Committee members said they will continue oversight and that staff will follow up with agencies as the committee collects federal-grant risk data and monitors the BAA's status.

The Appropriations Committee plans to continue monitoring the BAA and federal grant developments and will invite agency testimony as the situation evolves.