Texas public policy foundation
So Much for the Surplus
 
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Amid all the talk of Texas' unexpected budget surplus-projected this month to be about $8.8 billion-there hasn't been much talk of the "adjustments" the state must make to the 2012-13 biennium budget, the majority of which will go to the state's underfunded Medicaid program.

Every biennium, Texas lawmakers must reconcile the difference between appropriated amounts and actual expenditures by adopting a supplemental appropriations bill for the current budget. This time around, the difference between what was budgeted and what the state actually needs to meet its obligations is a whopping $16.4 billion in All Funds (state and federal combined), more than $6 billion of which are state funds.

Of that, $4.4 billion must go to fund Texas' Medicaid program (or, $10.9 billion of the $16.4 billion in All Funds).

In other words, thanks in large part to the woeful underfunding of Medicaid in 2011, the state's $8.8 billion surplus is closer to $2.8 billion, if that.

According to the State Senate's 2014-15 biennial recommendations, total state funds estimated for Medicaid in 2012-13 are about $26.3 billion, and the projected amount needed for the program in the 2014-15 biennium is about $27.2 billion. However, given the legislature's recent track record on estimating Medicaid costs, it is likely to be much more than that-perhaps even $4 or $5 billion more.

The only way to break this cycle of chronically underfunding Medicaid and then hoping for a budget surplus to backfill the shortfall is for state lawmakers to pursue fundamental reform. If not, they are likely to find that every unexpected "surplus" is accompanied by unexpected "adjustments," with Medicaid accounting for the lion's share.

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