FY2019 Budget Includes Safety Net Funding, Maintains CMO and Direct Service Provider Increases

July 2, 2018

Governor Phil Murphy signed a FY2019 budget that had been agreed to with the Legislature on Saturday, narrowly avoiding a government shutdown. The budget represents a 4.2% spending increase over FY2018.

As we reported previously, sales and income taxes were major issues of contention between the Governor and Legislature. While the final budget does not include a sales tax increase, it does include a "millionaire's tax", though only on individuals who earn $5 million and more, a higher starting point than the Governor had wanted. The tax is expected to raise an additional $280 million in annual revenue. Corporate income taxes are also being raised, from 9% to 11.5%, on businesses earning more than $1 million for the next two years, after which time the tax will be lowered to 10.5%. This surcharge is expected to raise $425 million for FY2019.

While major differences existed over revenue streams, every spending item that the Legislature had added in their budget bill was maintained by Governor Murphy. Among these was the Legislature's restoration of funding to Care Management Organizations (CMO) to allow them to maintain their FY2018 per child/per month rate of $775. CMO funding stands at $116.641 million, an increase over FY2018's adjusted appropriation of $113.986 million. Both Mobile Response and Stabilization Services (MRSS) and Intensive In-Home Behavioral Assistance (IIH), which had been increased in the Governor's proposed budget, received further increases in the Legislature's final budget bill. MRSS, funded last year at $39.084 million, is now funded at $44.532 million, and IIH is funded at $135.995 million.

Also of great significance is the $500,000 safety net funding for programs that transitioned to fee-for-service (FFS). While this is clearly inadequate to cover the deficits providers are facing while waiting for the independent rate study required by the FFS oversight bill passed last year, NJAMHAA has been informed that the process has begun to draft a supplemental bill for FY2019 that would increase this budget line. NJAMHAA's message has resonated with the Legislature and Governor's office and we are pleased to have a presence in the budget that we can build upon; the FFS safety net funding represents the only increase made by the Legislature to the Division of Mental Health and Addiction Services budget. "This is exciting news as it sets a precedent for additional safety net funding in future budgets. Even more promising is that a bill for supplemental funds is being developed," said Debra L. Wentz, PhD, President and CEO of NJAMHAA.

Other Legislative increases in the budget that Gov. Murphy let stand include:
? $20 million to raise wages for direct support professionals who provide children's behavioral health services or assist children or adults with intellectual or developmental disabilities. Funds going through the Department of Human Services will be processed via rate increases; funds going to the Department of Children and Families and the Department of Labor may be allocated via contract modifications or rate increases.
- $5 million for sheltered workshops that enable people with developmental disabilities to work in supervised environments
- $5 million for Child Advocacy Centers that support victims of child abuse
- $8 million to support prisoner re-entry services that help reduce recidivism across the state
- $1 million for an autism services pilot program
- $500,000 for Camden's Housing First pilot program
- $400,000 for the New Jersey Center for Tourette Syndrome and Associated Disorders

In addition, the final budget increases charity care by $10 million to a total of $262 million and provides $1.5 million to support accountable care organizations providing intensive management of high utilization Medicaid patients.

Several other increases that had been proposed in the Governor's initial budget were not affected during the budget negotiations and remain in place. They include the Division of Disability Supports Program - Individual and Family Support Services increased to $71.103 from $54.426 million and the Supports Program - Employment and Day Services increased to $131.456 million from $100.892 million.

Also not affected were several items that had received flat funding in the Governor's budget. They include: Graduate Medical Education ($218 million) and the Delivery System Reform Incentive Payment (DSRIP) funding ($166 million) and the Substance Use Disorder Initiatives (SAI) at $23.518 million saw no change from FY2018.

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