D E C E M B E R 2 0 1 5

1

Oklahoma Department of Human Services

Finance and Budget Overview for Fiscal Year 2016

Budget Presentation Overview 2

Challenges

Constraints

Planning

DHS Budget Challenges

3

Entering a 3rd year where DHS must reallocate funds from essential services to replace decreasing federal funds and meet immediate needs

FY15: DHS reallocated $6 million state funds ($13 million total)

FY16: DHS absorbed a net appropriation loss of $12 million and reallocated $33 million in state funds ($61 million total)

2-year total budget impact: $74 million

DHS Budget Challenges FY16 Reductions by Impact

4

$38.9, 64%

$13.6, 22%

$5.5, 9%

$2.8, 5%

($Millions)

Internal

Contracts

Waivers

Direct Services

Total = $60.8 million

Key Points Internal reductions comprised nearly two-thirds of all reductions and will have the least short-

term impact on services Provider and client reductions were minimized by internal and contract reductions and

maximizing use of carryover funds

DHS Budget Challenges

5

Strategy for Program Reductions FY16 Minimize service impact to clients

Minimize impacts to employees who work directly with clients

Look first within the department for more reductions than the administrative proportionate share

Protect core services and functions to the greatest extent possible

DHS Budget Challenges FY16 Indirect Service Reductions

6

Reductions in response to $11.8 million reduced appropriation, increased costs in Child Welfare, and erosion of Federal Medicaid Assistance Percentages (FMAP)

Reduced 194 positions/86 filled (approx. 2.5% of positions)

Reduced conferences, travel, printers, IT, phones

Reduced budgets to historical costs

Reduced contracts, selectively

Reduced TANF programs to fund eligible Child Welfare costs

DHS Budget Challenges Direct Service Reductions - FY16

7

Waiver rate reductions

Older American’s Act service reductions

Older American Volunteer Program reductions

Low Income Home Energy Assistance Program reductions

DHS Budget Constraints 8

Vital system reforms in Child Welfare which are not part of the Pinnacle Plan, but are key to success and sustainability of a reformed child welfare system

Deterioration of federal program funding that requires increased state dollar support to maintain services

Loss of federal funds by reduced state dollar match

Large percentage of DHS appropriation required as Maintenance of Effort (MOE) for large federal grants

Deteriorating infrastructure

DHS Budget Constraints Children in Care

9

6,213 7,040

8,320 8,279 8,120 8,120

12,186 12,861 13,063

14,235

15,630

16,876

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

FY-2012 FY-2013 FY-2014 FY-2015 FY-2016 FY-2017est.

Year-end population

Children inFamilyFoster Care

ChildrenwithAdoptionSubsidy

Family Foster Care and Adoption Subsidy Annual Cost by Funding Source

10

$10.9 $10.9 $10.9 $10.9 $16.9 $10.9 $1.8 $- $1.2 $-

$0.2 $-

$32.7 $40.0 $44.9 $52.2

$63.3 $70.7 $-

$11.5 $11.5

$18.0

$25.8 $33.6

$31.6

$31.6 $31.6

$31.6

$31.6 $31.6

$-

$0.6

$4.7

$9.8

$9.7

$18.0

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

FY-2012 FY-2013 FY-2014 FY-2015 FY-2016 FY-2017 est.

Mil

lio

ns

Agency ReallocatedAppropriation

Agency BaseAppropriation

Pinnacle Plan

Federal IV-E

Adoption IncentiveAward

TANF

DHS Budget Constraints Pinnacle Plan and Child Welfare System Improvement

11

Pinnacle Plan, FY-2016

Purpose FTE Budget

CWS field workload standard employees

828 $36.8

Program staff 322 $9.7

Field and program staff raises $16.0

New employee operating costs and training

$4.5

Foster care and adoption base $6.9

Foster care and adoption rates $18.9

Foster care recruitment and specialized home contracts

$10.4

Other contracts $2.4

Oklahoma Children’s Services $3.1

Total 1,150 $108.8

Reallocations above Pinnacle Plan within agency, FY-2016

Purpose Budget CWS field workload standard employees $20.1

Program staff $0.1

Program staff raises $1.4

Foster care overruns $7.0

Adoption subsidy overruns $3.8

Adoption court mandate $4.9

Prevention programs $1.1

Backlog & case management $1.3

Group home capacity and rate increases $4.2

Other $1.8

Total $45.7

$millions

FMAP Deterioration • Federal Medical Assistance

Percentage (FMAP) determines the federal share of costs for Medicaid-funded programs such as waivers, Child Welfare programs under Title IV-E and some child care grants.

• Federal share rises when a state’s income rises more slowly than national average income.

• Oklahoma’s recent income growth has caused FMAP to fall and the state share to rise.

• Falling FMAP impact on DHS services was $18 million additional state funds in FY-2015 and 2016, which we absorbed internally.

• FY-2017 FMAP, which is based on 2012-2014 income, is the lowest since 1986. Impact will be additional $8 million.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

196

9

197

3

197

7

198

1

198

5

198

9

199

3

199

7

20

01

20

05

20

09

20

13

20

17

State

Federal

12

DHS Budget Constraints Appropriation Changes

13

$411 $326

$146

$195

$109

$46

$0

$100

$200

$300

$400

$500

$600

$700

$800

2008 2016

Mil

lio

ns

AdditionalChild Welfare

Pinnacle Plan

Waivers

General

DHS Budget Constraints All Revenue FY16

14

$676

$925

$145

$64

$82

$110 $250

$35 $39

$millions

Appropriations

SNAP

TANF

Medicaid

CCDF

Title IV-E

Other Federal

Other Revenue

CarryoverTotal = $2.326 billion

Source: DHS Budget Work Program and budget work papers

Key Points Federal funds represent the lion’s share of agency funding SNAP is the largest item in the DHS budget All federal funding is contingent on what we spend for eligible purposes

DHS Budget Constraints State Appropriations

15

$154.8, 23%

$51.8, 8%

$8.8, 1%

$222.5, 33% $38.9, 6%

$199.4, 29%

$millions

Grant match

Grant Maintenance ofeffort

Overmatch

Medicaid match

Medicaid Maintenanceof effort

100% state

Total = $676.1 million

DHS Budget Planning Strategy for FY17 Budget

16

Continue evaluation of expenditures, programs and service priorities

Prepare for impacts to client services

Examine impacts of reducing additional positions

DHS Budget Planning Budget History

17

$1,697 $1,730 $1,778

$2,067 $2,122 $2,060

$2,238 $2,318

$2,374 $2,326

$-

$500

$1,000

$1,500

$2,000

$2,500

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Mil

lio

ns

Source: DHS Initial Filed Budget Work Programs

DHS Budget Planning FY16 Budget by Division

18

Child Welfare Services, $445

Developmental Disabilities

Services, $220

Adult and Family Services (including

SNAP), $1,269

Aging Services, $127

Administration, $90

Child Care , $23

Adult Protective Services, $12

Child Support Services, $66

Data Services, $38

Capital, $36

$millions Total=$2.326 billion

Source: FY-2016 Initial Budget Work Program

DHS Budget Planning Budget by Service

19

$-

$500

$1,000

$1,500

$2,000

$2,500

State funded Total

$thousands

Supportservices

Services toclients

Benefits

*Note: For most benefits to disabled and senior clients, only the state share is in DHS budget

Source: Monthly Financial Report, July 2015

DHS Budget Planning Benefit Eligibility by Population

20

$-

$500

$1,000

$1,500

$2,000

$2,500

State funded Total

Senior

Disability*

IncomeEligible

Child Welfare

*Note: For most benefits to disabled and senior clients, only the state share is in DHS budget

$thousands

Source: Monthly Financial Report, July 2015

DHS Budget Planning Services to Clients

21

$-

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

State funded Total

$thousands

DHS Staff

Contracted Service

Indirect Payments

*Note: For most benefits to disabled and senior clients, only the state share is in DHS budget

Source: Monthly Financial Report, July 2015

DHS Budget Planning Support Services

22

$-

$500

$1,000

$1,500

$2,000

$2,500

State funded Total

$thousands

Administration

InformationSystems

Training

Source: Monthly Financial Report, July 2015

DHS Budget Constraints Federal Grant Overmatches

23

$3,428

$970

$4,366

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

Senior Nutrition Children with SpecialHealth Care Needs

Child Care Subsidy$thousands

DHS Budget Constraints Services with no Federal Match

24

$680 $1,187 $2,016

$11,626

$1,530

$6,484

$739

$3,744 $4,403

$6,557

$1,121 $1,575

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$thousands

DHS Budget Planning Federal Revenue Loss

25

Federal grants are earned only by spending on eligible activities The impact depends on federal share of the program

Grants have varied federal shares Adoption and foster care – 50-61%

Many activities in Child Welfare and children served are not reimbursable, so only about 30% are federally funded

Child Support – 66%

Older Americans Act – 75%

Budget decisions must be made with the impact in total dollars (and level of service) in mind

DHS Planning Infrastructure

26

Lack of investment is challenging business operations

Information Systems

Primary operating systems are 20-24 years old

Physical Plants

Maintenance of state owned buildings is <25% of industry standard, and 56% of our buildings lack adequate square footage to meet business needs

Vehicles

The average DHS owned vehicle has 112,555 miles, and we are spending $8 million annually to reimburse travel to employees when using personal vehicles

DHS Budget Planning 27

FMAP deterioration - loss of $8 million

Federal funding loss - $3 million

Adoption and Child Care subsidies challenged by growth - $7 million

Child Welfare staffing demands for workload standards - $20 million

DHS Budget Planning Funding Request for Year 5 of the Pinnacle Plan

28

2017-Pinnacle Plan Year 5

($11.3M/0 FTE)

Final salary increase for Child Welfare Specialists I-IV

Final scheduled rate increase for foster and adoptive families to achieve “Hit the MARC” target