New Report: Medicaid Number One State Budget Cost
Wednesday, February 23, 2011
The Rhode Island Public Expenditure Council (RIPEC) yesterday released a comprehensive report on the state’s current fiscal situation with a special focus on state expenditures.
The report identified three primary areas of funding that make up the majority of the state’s expenditures: human services/grants and benefits; personnel/operations; and local/education aid. On a national scale, Rhode Island’s spending in these areas is high, and the state frequently ranks among the top ten states for government expenditures per capita.
According to the report, Medicaid costs represent the largest part of the budget and between FY 2001 and FY 2012 they will have more than doubled. The majority of medical assistance spending comes in the form of managed care, which constitutes 39.6 percent of all medical assistance spending. Only three categories of expenditures have declined since FY 2008: hospitals, pharmacy, and “other.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTIn an attempt to help balance the budget, Rhode Island was among 30 other states that recently instituted furloughs or pay cuts for some employees. Nonetheless, the report calculates that Rhode Island state workers’ pay is the second highest in New England (after Connecticut). Between FY 2001 and FY 2011, total state personal costs increased $498.1 million, or 42.5 percent. Salaries and benefits account for 80.4 percent of the total cost, with benefits being the largest cost driver in terms of overall growth—since FY 2001, benefits grew almost three times the rate of salaries, increasing by over 90 percent.
In terms of local expenditures, education represents the lion’s share of spending, increasing $194.1 million, or 30.4 percent since FY 2001, while municipal aid has declined by $85.1 million, or 58.6 percent.
The report concluded that while current fiscal situation is undoubtedly troubling, it is by no means irreparable. Immediate actions, however, will have to be taken if the state hopes to balance its budget and reduce the deficit. The report called for timely action to ensure future prosperity.
“[T]he need for Rhode Island to rectify its structural deficit is imperative if the State is to grow and attract new investment. Rhode Island will be well positioned to take full advantage of the looming recovery if it demonstrates sound fiscal management by balancing the State’s budget in the short- and long-term,” the report concluded.
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