Nebraska lawmaker: Medicaid FMAP drop deepens budget shortfall to about $289 million

Senator Clemens, addressing the Nebraska Legislature on the morning of March 7, announced an updated state budget shortfall after federal Medicaid matching rates changed.

Clemens said the federal medical assistance percentage (FMAP) dropped Oct. 1, 2024, reducing the federal share of Medicaid and increasing Nebraska’s state share. A January adjustment to that change was missed and was discovered by the Legislature’s fiscal office on March 6. Clemens said the January adjustment adds about $90,300,000 in additional state Medicaid costs, changing the budget ending balance from a previously reported negative $198 million to a negative $289 million.

The announcement matters because Nebraska’s constitution requires the Legislature to balance the budget. Clemens urged colleagues to work together as the session progresses to identify actions to address the new shortfall, saying, “This means it’s going to be a tougher year than we thought on balancing the budget. We all need to work together to balance the budget.”

Clemens provided three numerical points on the chamber floor: (1) an earlier line in the budget showed a negative $198,000,000 ending balance; (2) the newly discovered January FMAP adjustment is $90,300,000 in additional state costs; and (3) the updated shortfall is now negative $289,000,000. He framed the problem as a Legislature-wide responsibility, noting it is “not just the appropriation committee’s budget” but the Legislature’s budget to be balanced.

Members did not take immediate votes tied to that announcement on the floor during the recorded portion of the session. Clemens distributed a handout to senators showing the corrected financial-status figures for review.

Looking ahead, Clemens said the newly identified Medicaid cost increase will shape the budget discussions and appropriations work for the remainder of the session. He did not specify particular balancing measures in his remarks.