Spending on Social Welfare Programs in Rich and Poor States. Final Report.. State Budget Development and Implementation

07/01/2004

The governorship has traditionally been weak in Mississippi. The office has no line item veto power. Thus, even though the state legislature only meets 90 days per session in the early spring, the legislature has long played the dominant role in developing and enacting the budget. However, the governor has significant control over its implementation and adjustments in the budget if revenues are lower than expected.

The state budget process lasts about one year. For the SYF 2005-06 budget the Legislative and Executive budget offices solicit budget requests from agencies beginning in July 2004. These requests will be submitted to both budget offices by August 1, 2004. Beginning September 2004 the Joint Legislative Budget Committee conducts budget hearings with top agency officials to review the requests. The Governor will submit the executive budget in November of 2004. The legislative budget recommendation will be released and published in November and December 2004. The legislative session begins in January 2005 and the appropriation bills for the FY2006 budget will be finalized and passed by April 2005.

The governor and legislature adopt a consensus revenue estimate drawing on (though not constrained by) revenue estimates provided by the Revenue Estimating Committee, composed of people from the executive and legislative branches as well as institutions of higher learning. Division directors develop budget requests based on what services are mandated and what services may be funded with what remains. By statute, the legislature can only appropriate 98 percent of projected revenue.

The governor has the authority to manage the budget during the fiscal year to ensure expenditures do not exceed revenues. Should revenue come in more than two percent short of projections through the current month, the governor must adjust spending to stay within projected revenues. The governor can make selective cuts to agency budgets of up to five percent to stay within revenue projections. State statute exempts several agencies from these cuts. Cuts exceeding 5% must be administered across the board.

The Department of Human Services (DHS) administers TANF, CCDF, Social Services Block Grant (SSBG), child welfare, and most other social welfare programs. Prior to FY 2005 DHS also determined eligibility for Medicaid and SCHIP programs. However, Medicaid and SCHIP are administered by the Division of Medicaid operating within the Office of the Governor. Until 1992, the Department was largely governed by an advisory board. But the legislature disbanded the board in that year and the governor was given greater and more direct control over DHS, including appointment of its director.

Nonetheless, legislators retain significant control over the Department's actions. The budget is very specific on programs, especially those they care about, such as Medicaid. Separate appropriation bills must be passed for each agency. Legislators also limit DHS's discretion over policies. Some state officials consider Mississippi's Medicaid program to be the most codified in the U.S., with reimbursement and coverage policies detailed in law-governing, for example, how many office visits as well as prescriptions are permitted per year.

DHS and its administration of major social programs are centralized. Most programs are administered by state officials through local state offices, not through counties or other local governments.

In recent years, as needs grew due to expanded enrollments in social programs and revenue growth slowed, the budget process became quite contentious between the legislature and the governor, even though both branches were controlled by Democrats from early 2000 to early 2004. A major source of uncertainty was Medicaid. Since SFY 2002, the Medicaid budget has faced recurrent deficits. At first, the shortfalls were covered with tobacco funds, but then some cuts were made in reimbursement rates to providers. More recently, Medicaid deficits have been alleviated by increases in the federal matching rate (FMAP) and last year's one-time federal grant to states. Medicaid has generally been protected from major cuts. Along with health care programs, other programs protected from significant budget reductions include economic development programs and, most of all, education, which takes up 62 percent of state general revenues.

Compounding the budget controversies has been the tendency of the legislature and the former governor to use different revenue projections. The former governor, for example, advocated reducing the revenue estimating committee's projection of SFY 2002 revenue growth to one percent, while the legislature adopted an estimate of 3.7 percent. In the 2003 session, most observers thought that legislators knew they had padded or overstated the budget. Over-projection of revenue forced the governor to cut agencies only after the legislature enacted the budget.

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