Population (July 2003): 4.5 Million
Total State Expenditures - SFY 2002: $17,608 Million (US Total: $1,073,816 Million)
TANF Expenditures - SFY 2002 (% of total): 0.8 % (US: 1.3%)
Medicaid Expenditures - SFY 2002 (% of total): 26.8% (US: 20.8%)
(Source: U.S. Department of Commerce, Census Bureau and NASBO 2002 State Expenditure Report)
Louisiana has low fiscal capacity as measured by per capita personal income and representative tax system (43rd on both). It ranks 26th if fiscal capacity is measured by total taxable resources, which are largely based on goods and services produced in the state, and reflect the value of oil production. Louisiana holds almost 10 percent of U.S. oil reserves, making it the country's third largest producer of petroleum. It also has large reserves of natural gas, producing over one-quarter of all U.S. supplies.
Although Louisiana's poverty rate declined in the 1990s, its level has remained high. 2001's 16.7 percent poverty rate is among the highest in the nation, exceeded only by Arkansas and New Mexico. In 2000, 51.5 percent of Louisiana's children lived in households at or below 200 percent of the federal poverty rate and 13.4 percent of those children had no health insurance, placing Louisiana second highest nationwide after New Mexico. Unemployment is above average, as well, increasing 5.1 percent in 1999 to 6.6 percent in 2003.
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State Budget Development and Implementation
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In 1987, Louisiana moved from line item budgeting to program budgeting, and since 1997, it has implemented a performance-based budgeting system. The governor's office sets priorities and budget strategies. The legislature is not an independent body by practice, and is influenced by the governor, who carries line-item veto power. Political parties do not represent the major political divisions in Louisiana, and the governor's party has less impact on how the legislature reacts than in many other states. In general, Louisiana state government is more divided along policy lines.
The revenue forecast is adopted by the Revenue Estimation Conference, comprised of the governor, the president of the Senate, the Speaker of the House of Representatives (or their respective designees), and a faculty member from a public or private university in the state. The state constitution forbids the legislature from adopting a budget that exceeds the Conference's adopted revenue forecast. The budget originates in the Division of Administration (DOA), the central budget agency for the governor, which prepares the general budget guidelines for executive agencies. From August to December, the executive agencies prepare and submit budget requests to the DOA. The DOA then reviews the requests and prepares an executive budget for the legislature. Prior to the regular legislative session, the general appropriations bill is introduced, putting the governor's executive budget recommendations into a legislative proposal. This bill originates in the House, and, if passed, it is sent to the Senate. Once the bill is introduced in the Senate, it is referred to the Senate's Committee on Finance. After the Committee hearings, the Senate votes on the bill, and if passed, it is returned to the House for concurrence. The House then sends the bill to the governor for review and signature.
According to the Center on Budget and Policy Priorities, Louisiana faces a projected budget shortfall of $500 million in SFY 2005. Although Louisiana did not make any cuts after the budget was passed in SFY 2002, Louisiana reduced the SFY 2003 budget by $100 million mid-year. Louisiana has also been cutting state agency positions. Between SFYs 2001 and 2002, its full-time equivalent positions were reduced by 17.5 percent, including state administered welfare system positions.
Several areas of the state budget are considered non-discretionary and not subject to budget cuts, including natural resources programs, debt services, and the Minimum Foundation Program. Social services programs, however, are discretionary and subject to cuts. Higher education and economic development recently have been given higher priority in the budget process through efforts by the governor.
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Louisiana's Response to Federal Welfare Reform
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Louisiana's TANF and childcare programs are administered by the Office of Family Support within the Department of Social Services (DSS) and the state's child welfare, adoption, and foster care programs are administered by the Office of Community Services, also within the DSS. In 2001, the TANF Executive Office of Oversight and Evaluation was established within the Division of Administration to oversee the state's TANF initiatives.
In January 1997, Louisiana implemented two principal TANF programs: Family Independence Temporary Assistance Program (FITAP) and Family Independence Work Program (FIND Work) both administered by the DSS. FITAP provides time-limited cash grants to needy families. FIND Work (the work component of the state TANF program) provides job preparation, work, and support services to place recipients in jobs or in educational, training, and other work-related activities. In March 2000 Louisiana implemented another TANF program - Kinship Care Subsidy Program - which provides assistance to children residing with relatives other than their parents.
Louisiana's welfare caseloads fell by 66 percent from 1993 to 1999. In the same period, the poverty rate decreased 27 percent (to 19 percent). Louisiana limits cash assistance to twenty-four months in a sixty-month period. According to DSS reports, two percent of Louisiana families receive cash assistance. Seventy-seven percent of welfare recipients are children, nearly all of whom live in households headed by females, and 86 percent of welfare recipients are African-American. Louisiana's maximum TANF benefit level is low; from 1985 to 2000, the maximum benefit for a three-person family was $190. In 2001, the state increased its benefit level for a family of three to $220.
During the initial years of FITAP and FIND Work, Louisiana accumulated a large surplus of unspent federal TANF block grant funds, partially due to declining welfare rolls. In addition, the state was slow to respond to the increased flexibility afforded by welfare reform. In 2001, Louisiana began using TANF funds for a variety of programs, referred to as TANF Initiatives, to focus on the broader low-income population. The TANF Initiatives included 22 different service initiatives for low-income families in 11 agencies.2 For example, the state's pre-kindergarten program was created to provide high quality early childhood services for low-income 4-year-olds, and is funded with federal TANF funds. To help oversee this broad range of diverse programs, the TANF Executive Office of Oversight and Evaluation was established in 2001 within the Division of Administration to oversee and evaluate TANF initiatives. The TANF Office is involved in (1) developing, approving, and monitoring performance measurement and accountability standards; (2) TANF budget development and approval; (3) capacity building and technical assistance; and (4) evaluation of FITAP and FIND Work services. The TANF Office also funded a number of research projects including a needs assessment of low-income families, a mapping of poverty indicators, a fragile families study, a teen pregnancy prevention study, and a welfare leavers' study. Allocations for TANF initiatives grew from $89 million in FFY 2002 to $154 million in FFY 2003, but declined to $117 million in FFY 2004. However, FFY 2004 is the last "big year" for TANF initiatives, since the unexpended funds from prior years will be exhausted in FFY 2005. According to state officials' projections, only $37 million will be available for funding TANF initiatives in FFY 2005 due to the reduction in TANF funds transferred to CCDF. Most of Louisiana's TANF expenditures during this period have been for non-assistance service initiatives to low-income populations.
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Other Federal Social Welfare Programs
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Louisiana's Medicaid and LaCHIP (Louisiana's SCHIP program) programs are administered by the Department of Health and Hospitals (DHH). The number of Medicaid enrollees including LaCHIP, increased 17 percent from 1997 to 2002. This enrollment increase was primarily for children, due to the successful outreach efforts to enroll them in LaCHIP. In SFY 2003, Louisiana's Medicaid program was further expanded for children, aged, and the disabled. Changes were also made for pregnant women by expanding the program in January 2003 to cover those under 200 percent of federal poverty level (after a 15 percent income disregard).
Louisiana also has a high disproportionate share hospital (DSH) cap. The availability of these large DSH funds allows the state, primarily through the state charity hospital system administered by the Louisiana State University Health Care Services Division, to provide medical care to approximately 800,000 uninsured citizens in Louisiana. DHH continues to explore ways to provide more primary care through DSH funding.
Health care comprises almost a third of the Louisiana's total budget. The state is projected to receive $3.6 billion in federal Medicaid funds for FY 2004. In SFY 2003, federal fiscal relief reduced the severity of originally planned long-term care and pharmacy cuts that had been proposed to reduce state Medicaid funding.
The SFY 2004 budget adopted by the legislature included a significant policy change affecting the operation of the state's charity hospitals. Louisiana State University (LSU) was granted more power to manage the public (charity) hospitals that it operates for the state. This allowed them to cut hospital spending by up to 35 percent of a previous year's actual expenses without legislative approval, as opposed to the up-to-10 percent previously allowed by law. Hospitals will be allowed to charge non-emergency patients whose incomes are at least twice the poverty level. Governor Blanco and the DHH secretary discussed several short-term improvements that involved (1) enrolling as many eligible children as possible into Children's Health Insurance Program and, (2) increasing the number of federally qualified health centers.
The programs administered by the DHH have a powerful lobby, unlike the ones administered by the DSS. The Nursing Home Association is one of the most powerful lobby groups in Louisiana. Other influential advocacy groups include the Area Health Education Consortium, groups representing Mental Retardation Developmental Disability (MR/DD), and drug industry associations.
Louisiana's Office of Family Support within the Department of Social Services is the lead agency for the Child Care and Development Fund (CCDF). According to federal administrative data, Louisiana's total CCDF expenditures decreased from $128 million in FFY 2001 to $33 million in FFY 2002, or by 74%. This decrease is largely due to an 82 percent decline in discretionary spending, from $104 million in FFY 2001 to $19 million in FFY 2002. From FFY 2001 to FFY 2002, the TANF transfer to CCDF was cut by 25.7%. In Louisiana, recent childcare policy changes include increased co-payments, restrictions on the number of eligible families, and an increase in the number of hours parents must work to qualify for childcare assistance.
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