[4alabama] Alabama Medicaid Headed for Train Wreck - Roger Bedford

[Judy R. Roy]

Wednesday, November 07, 2007
By BRIAN LYMAN
Capital Bureau
MONTGOMERY -- The revenue-starved General Fund saw income from investments
almost quadruple between 2006 and 2007, but officials say the extra money
won't necessarily make the job of funding state agencies any easier.

Interest paid into the General Fund by the Alabama Trust Fund -- which
invests revenues from the sale of oil and gas leases in the state -- grew
from $35 million to $117 million between 2006 and 2007, according to the
state finance department.

State Finance Director Jim Main attributed the jump primarily to
diversification of investments in the portfolio, which have moved over
several years from 80 percent bonds and 20 percent equities to 65 percent
bonds and 35 percent equities. Bonds are generally more stable sources of
revenue, but do not have the return potential of stocks.

State Rep. John Knight, D-Montgomery, chairman of the House Government
Appropriations Committee, which oversees the General Fund, said the growth
is in line with projections.

"We're pretty much very close in terms of the money," he said. "It's not
like we have additional money."

State Sen. Roger Bedford, D-Russellville, said extra money would be helpful,
but said a drop in interest rates could affect the future performance of the
trust fund.

"Historically, one of the biggest sources of income has been interest earned
on investments," said Bedford, chairman of the Senate's Finance and Taxation
General Fund Committee, which works on the General Fund budget.

"When interest rates drop, that's good for consumers, but bad for the
General Fund, because there's less money coming in."

Bedford was highly critical of the Alabama Medicaid Agency last week, and
said he was disappointed officials had not come up with an estimate of the
agency's needs for 2007. Medicaid will lose approximately $135 million in
federal money in Fiscal 2009.

"It's good news for the General Fund," Bedford said. "The bad news is the
train wreck coming in Medicaid."

State Medicaid Commissioner Carol Hermann-Steckel told Bedford and other
members of a legislative subcommittee that agency officials are still
calculating their needs for the next fiscal year.

Main said the budgeting process has just begun for state agencies, who
submitted their proposals last week. He said he is aware of the situation
with Medicaid.

"That is an area we know we have to make up the deficit on," he said.

Main said it is "premature" to discuss the needs of other agencies, which he
will start meeting with at the end of the month.

The Alabama Trust Fund gets its money from oil and gas leases sold in the
state. The trust fund, currently worth about $3 billion, makes one-time
interest payments into the state's General Fund each year.

The $117 million -- which amounts to roughly 6 percent of the $1.83 billion
General Fund -- won't begin to cover the rising cost of Medicaid and other
state agencies. But Main said he is pleased with the returns, and is happy
with the trust fund's investment split.

"I don't want to see major swings (in General Fund revenue)," he said. "To
use a baseball analogy, I'd rather hit singles and doubles than home runs."







© 2007 Press-Register
© 2007 al.com All Rights Reserved.

Judy R. Roy
Independent Living Resources of Greater Birmingham
206  13th Street S.
Birmingham, AL  35233-1317
Phone  205.251.2223  ext 102
Email  bhamilc1 at bellsouth.net
There are only four kinds of people in the world: those who have been
caregivers; those who are currently caregivers; those who will be
caregivers; those who will need caregivers. - Rosalynn Carter

-------------- next part --------------
Wednesday, November 07, 2007
By BRIAN LYMAN
Capital Bureau
MONTGOMERY -- The revenue-starved General Fund saw income from investments almost quadruple between 2006 and 2007, but officials say the extra money won't necessarily make the job of funding state agencies any easier.
Interest paid into the General Fund by the Alabama Trust Fund -- which invests revenues from the sale of oil and gas leases in the state -- grew from $35 million to $117 million between 2006 and 2007, according to the state finance department.
State Finance Director Jim Main attributed the jump primarily to diversification of investments in the portfolio, which have moved over several years from 80 percent bonds and 20 percent equities to 65 percent bonds and 35 percent equities. Bonds are generally more stable sources of revenue, but do not have the return potential of stocks.
State Rep. John Knight, D-Montgomery, chairman of the House Government Appropriations Committee, which oversees the General Fund, said the growth is in line with projections.
"We're pretty much very close in terms of the money," he said. "It's not like we have additional money."
State Sen. Roger Bedford, D-Russellville, said extra money would be helpful, but said a drop in interest rates could affect the future performance of the trust fund.
"Historically, one of the biggest sources of income has been interest earned on investments," said Bedford, chairman of the Senate's Finance and Taxation General Fund Committee, which works on the General Fund budget.
"When interest rates drop, that's good for consumers, but bad for the General Fund, because there's less money coming in."
Bedford was highly critical of the Alabama Medicaid Agency last week, and said he was disappointed officials had not come up with an estimate of the agency's needs for 2007. Medicaid will lose approximately $135 million in federal money in Fiscal 2009.
"It's good news for the General Fund," Bedford said. "The bad news is the train wreck coming in Medicaid."
State Medicaid Commissioner Carol Hermann-Steckel told Bedford and other members of a legislative subcommittee that agency officials are still calculating their needs for the next fiscal year.
Main said the budgeting process has just begun for state agencies, who submitted their proposals last week. He said he is aware of the situation with Medicaid.
"That is an area we know we have to make up the deficit on," he said.
Main said it is "premature" to discuss the needs of other agencies, which he will start meeting with at the end of the month.
The Alabama Trust Fund gets its money from oil and gas leases sold in the state. The trust fund, currently worth about $3 billion, makes one-time interest payments into the state's General Fund each year.
The $117 million -- which amounts to roughly 6 percent of the $1.83 billion General Fund -- won't begin to cover the rising cost of Medicaid and other state agencies. But Main said he is pleased with the returns, and is happy with the trust fund's investment split.
"I don't want to see major swings (in General Fund revenue)," he said. "To use a baseball analogy, I'd rather hit singles and doubles than home runs."
© 2007 Press-Register
© 2007 al.com All Rights Reserved.
if (window.print) window.print();
if (_pdata){ sendpdata(); }
if ( (document.cookie).indexOf('v1st')>=0 && (document.cookie).indexOf('GTC=')<0 ) { if ( (document.referrer).indexOf(document.domain)<0 ) { document.write('<img src="http://www.al.com/cgi-bin/stats/verify.cgi?Log=1&v1st=' + VSgetCookie('v1st') + '" border="0" width="1" height="1">'); } }
http://www.al.com/cgi-bin/stats/verify.cgi?Log=1&javascript=false
var tcdacmd="dt";
Judy R. Roy
Independent Living Resources of Greater Birmingham
206  13th Street S.
Birmingham, AL  35233-1317
Phone  205.251.2223  ext 102
Email  bhamilc1 at bellsouth.net
There are only four kinds of people in the world: those who have been caregivers; those who are currently caregivers; those who will be caregivers; those who will need caregivers. - Rosalynn Carter