McCrory limits state spending to cover Medicaid shortfall

Posted March 8, 2013

— Gov. Pat McCrory told state agencies Friday to limit their spending in the coming months so he could shift money to cover a Medicaid shortfall of as much as $262 million.

McCrory ordered State Budget Director Art Pope to transfer available state funds to the Division of Medical Assistance to cover the cost overruns and money that the division already owed to the federal government.

“It is time to solve this mess, not kick the can down the road and manipulate the budget as was done in the past. It stops now,” McCrory said in a statement. “If we stop this practice and get a handle on the Medicaid hole, we’ll have balanced budgets that fund our priorities, including education, and avoid mid-year shortfalls.”

In a memo sent to agency directors, he said Medicaid claims will outstrip the money lawmakers set aside for the program by $70 million to $130 for the 2012-13 fiscal year, which ends in June.

Also, he said, the state must repay the federal government $132 million that the Division of Medical Assistance wrongly kept last year. A recent state audit uncovered that money was still owed.

A $262 million shortfall amounts to about 2.6 percent of the $10 billion in state and federal money North Carolina spends on Medicaid in a year.

McCrory noted in his memo that the annual budget has a $200 million reserve and an extra $213 million in unappropriated money. Also, revenue officials have projected that tax collections are $100 million above forecasts, and state agencies have saved $125 million this year.

Combined, the savings and revenue mean that the governor won't have to invoke emergency spending cuts to cover the Medicaid shortfall, he said.

Still, he asked all cabinet agencies and Council of State members to adjust spending through the end of June by eliminating raises, except for promotions, limiting purchases and travel, collecting revenue as quickly as possible and re-evaluating contracts.

“Despite positive cash balances, we need to live within our budget and make sure everything is disclosed and accounted for," Pope said in a statement. "That is why the state needs to reduce spending now, rather than waiting until the end of the fiscal year or using accounting gimmicks to pass on the costs to next year.”

Dana Cope, executive director of the State Employees Association of North Carolina, said the budget-saving measures outlined in McCrory's memo are things state employees have been living with for several years.

“From the first glance of what I’ve read, we’ve been doing all that already," Cope said.

McCrory on Thursday signed a bill blocking an expansion of the Medicaid program under the federal Affordable Care Act. He has maintained that the program is broken and needs to be fixed before people are added.


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  • junkmail5 Mar 11, 2013

    All the obama voters don't realize that the federal gov't turns over the bills to the states in 2 yrs- Danny22

    Probably because you just made that up.

    What the ACTUAL LAW says is the federal government pays 100% of costs through the end of 2016... and then 90% of the costs for the next 7.

    (and mainly it's limited to 10 years because of congressional rules that make financing anything more than 10 years out more complex- almost nothing gets budgeted past 10 years anymore despite plans for it to continue well past 10 years)

  • davidk_at_unc Mar 11, 2013

    Oh, and I almost forgot lose and loose!

  • davidk_at_unc Mar 11, 2013

    "OMG, people. The name is P-E-rdue."

    "You're talking to yourself - they can't or won't learn that it's a wom-A-n and some wom-E-n." -- Ceanothus

    Or differentiate between their, there and they're, its and it's, want, wont and won't, whose and who's, etc. He may not be talking to himself, but he might as well be because the people he IS talking to are just never going to get it.

  • Danny22 Mar 11, 2013

    All the obama voters don't realize that the federal gov't turns over the bills to the states in 2 yrs. Obamacare is the biggest national fiasco ever.

  • HeadsUp Mar 11, 2013

    If the new state Medicaid payment system blows up when it launches this summer -- the one run by CSC, the company that admitted late Friday that it has lost the confidential personal information of 50,000 doctors and hospital personnel -- the state's current shortfall could be just a drop in the bucket.

    It's amazing and alarming that Governor McCrory is going forward with it, when he could pull the plug, rightly blame the fiasco on Bev Perdue, and wisely start over.

  • IndependentAmerican Mar 11, 2013

    "go after the fraud in the Medicaid system and you'll find the money you're looking for plus more - Tunaboy"
    Add to that the fraud and waste in the DOT and you'll be able to cover all the other expenses as well.

  • Crumps Br0ther Mar 11, 2013

    When they all finally quit in disgust and go on welfare,


    Isn't that what you want? Barry does. More people depending on government, gives government more power

  • goalflinger Mar 10, 2013

    It's hard to tell who is lying from who is lying.

  • jcthai Mar 9, 2013

    Pretty amazing. The money is there, but he still is going to deny state employees raises. Atta boy McCrory. When they all finally quit in disgust and go on welfare, you can farm all the work out to your private sector cronies. Simply amazing.

  • Qwerty27807 Mar 9, 2013

    We need to stop asking "who is going to pay for healthcare" and instead ask "why does it cost so much?"