Imagine that you’re a third-grader who needs $10 every day for breakfast, lunch and snacks at school, and that you have a generous fifth-grade friend who pays $7 of the cost each day. You “earn” the remaining $3 by taking money from your three younger siblings’ allowance.
Now, let’s pretend that one day your generous fifth-grade buddy suddenly tells you that he can’t give you $7 anymore, but he can give you $5.25. He explains that he himself is actually heavily in debt. He had been “borrowing” money from his own family members, but they’re worried he won’t be able to repay what he’s already borrowed, so they’re giving him less money. Could you come up with the missing $1.75? Would you just start eating less, maybe stop eating snacks, or skip a meal or two? Or would you ask the school to lower its prices?
Utah may soon face a similar dilemma because of its heavy dependence on federal dollars. The Utah Department of Health issued a grim outlook of what would happen if the federal funds it receives were cut 25 percent. The Social Services Appropriations Subcommittee asked the department to explain how it would handle a 5 or 25 percent reduction in federal funding during a meeting this morning in the House Building at the Utah State Capitol.
Dr. Robert Rolfs, deputy director of the Utah Department of Health, told Sutherland Institute’s Capitol Daily that the department receives 70 percent of its funding from the federal government via 107 grants and contracts. Rolfs sees three main courses of action to deal with a 25 percent cut: change state statute requirements, increase state funding, and/or cut services.
Rolfs highlighted two major programs that would require a change in state statute in order to handle a 25 percent reduction in federal funds: the Children’s Health Insurance Program (CHIP) and Medicaid. Currently, CHIP accepts any eligible child into its program, but the loss of federal dollars would necessitate a cap or stricter eligibility requirements.
Regarding Medicaid, Rolfs believes the federal government would relax its requirements that the state provide certain services if it cut funding, resulting in a large reduction of Medicaid services.
In the event of a substantial loss of federal funding, the Department of Health would also ask the state to increase state funding for what Rolfs termed essential public health safety infrastructure, such as laboratory and epidemiology services and disaster planning done at the state’s hospitals.
Finally, the Department of Health would simply stop funding several programs that rely on federal grants to operate. Rolfs specifically highlighted cancer screenings, services to children with special medical or developmental needs, and 6,000 immunization doses.
The Department of Health did not list any other alternatives for handling a loss of federal dollars. What about finding and eliminating inefficiencies in its own operations? How about working with the private sector to handle some of the programs it currently administers?
The possibility of a loss of federal funds is very real. The federal government is indeed deeply in debt and may be forced to reduce funding to states for a whole host of programs. Utah would be wise to anticipate this shortfall and should be prepared to function without the high level of federal money we have come to depend upon.