As we've written before, Pennsylvania could be in serious financial trouble if Congress doesn't extend increased funding for Medicaid. The state budget, passed earlier this month, anticipates about $850 million in federal funding that might not materialize. If they don't, Gov. Rendell has warned that he'll have to layoff as many as 20,000 employees. That's nearly a third of the state workforce.
Pennsylvania isn't the only place counting on FMAP money. There are about thirty states that have budgeted for the additional funding. However, as highlighted in a blog post on Governing.com, there are a small number of states that decided not to include the funds in their budget.
Minnesota, for instance, “decided to treat their $408 million in expected federal funds as a bonus, rather than a given.” That means lawmakers there aren't spending the summer worried about figuring out how to fill a massive budget gap and might actually have a nice windfall if the additional funding comes through.
Right now, the small number of states that decided not to include the funds look pretty smart. The other states -- like Pennsylvania -- could well be forced to make major cuts in the middle of year, or figure out new sources of revenue. That's bound to be unpleasant, especially for lawmakers running for reelection.
One other thought: There's another way that FMAP funding (or lack thereof) would wreak havoc: If the money doesn't come through, it will mean more cuts not just for state governments, but local governments, too. Here in Philadelphia, the Department of Human Services relies on state funding for the vast majority of programs. Mayor Nutter could be forced to cut human services or find savings in other areas.