Testimony

October 27, 2009

Testimony of Stephen E. Freeman, LCSW, Chief Operating Officer
before the New York State Senate Finance Committee

YAI is a network of seven not-for-profit agencies serving over 20,000 people with intellectual, developmental and other disabilities through 450 community-based programs. Our 5,500 dedicated and highly trained staff provide services including early intervention, primary and specialty healthcare, day services, residential, job training, recreational, respite, home health, family support, camping, travel and many others in all five boroughs of New York City, Long Island, the Hudson River valley, northern New Jersey, Puerto Rico and the US Virgin Islands.

I would like to thank the Committee for your rapid response to the Governor’s proposed mid-year budget adjustments and for the effort that was necessary to create this opportunity to testify within the very tight time constraints under which you are operating.

We at YAI, like all New Yorkers, understand the gravity of the State’s fiscal situation. We recognize that the decisions before our elected officials are complex. We appreciate that our representatives in Albany are working together to rise to the challenge. We know that budget holes have to be closed, and we as citizens and as an industry are prepared to do our part during these extraordinary times. Indeed, not-for-profit providers of services to people with developmental disabilities have been adjusting to cuts, payment lags and other lost revenue as a result of August 2008 cuts as well as actions taken during this year’s budget negotiation.

This lost revenue has challenged us. We have had to make significant changes in order to generate the efficiencies needed to withstand these cuts while minimizing the impact on the people we serve. It has been challenging, but we have thus far been largely successful at maintaining both the level and quality of the services we provide to people with developmental disabilities and their families.

If, however, the cuts recently proposed are adopted by the legislature, services and programs for our consumers would be devastated. People would not have access to the services they need, and the services which they are able to access would not be of the quality that they deserve and that their families have come to expect. Even OMRDD Commissioner Ritter describes the damage to existing programs that would result if these cuts are approved as “unimaginable.”

New York has a developmental disabilities service system that is a model for the nation and the world. The high quality care that people with autism, mental retardation, cerebral palsy and other disabilities receive is something that all New Yorkers can be proud of. The cuts currently on the table would endanger the very foundation of this achievement.

Although the cuts only save the State $65 million, they cost the system over $150 million this year. Approximately $62 million of the proposed cuts are to Medicaid-funded programs serving people with developmental disabilities. The Federal Matching rate for Medicaid programs is currently 61% to the State’s 39%. As a result, the service system loses more than two-and-a-half times as much money as the state saves. Even worse than the $150 million impact this year is that fully annualized the cuts would cost the OMRDD system over $300 million. There is simply no way this sort of loss can be absorbed by a system which has already been hit by deep cuts twice in the last eighteen months.

And there is no need to do so. In this instance, the state has an opportunity to turn the Medicaid multiplier in our favor. Instead of focusing on cutting, where we lose money at a rate of two-and-a-half time to one, we can focus on enhancing federal revenue. By providing a Medicaid trend factor, we can protect services for people with developmental disabilities and their families while closing the hole in the state’s budget.

For every percentage point of Medicaid trend the state provides, we will draw down over $39 million federal dollars. Of that, $9 million per percentage point is revenue in excess of expense and is therefore available to offset general fund spending. Therefore, the addition of a seven percent trend during the special session would generate the savings to the OMRDD system that Governor Paterson is seeking while having a positive impact on people with disabilities instead of the unimaginable negative impact that would result from the proposed cuts. New York State can bring in literally hundreds of millions of federal dollars while maintaining services, protecting jobs and stimulating the economy. A Medicaid trend would have a significant positive impact on the lives of the 147,000 people served by the OMRDD system and their families while enhancing salaries for the 85,000 dedicated and highly trained professionals who support them. And let me be clear, the vast majority of those 147,000 consumers are served by not-for-profit providers like YAI who in total employ over 65,000 of those staff.

Over the last four decades the service system has grown enormously as a result of federal mandates and consent decrees. It is only appropriate that we should draw down as much federal funding as possible to meet these federally-driven mandates instead of using scarce state general funds to fulfill our obligations.

Sadly, New York State passed up this opportunity when the fiscal year 2009-10 budget was passed last April. It was the first time in decades that we failed to take advantage of this mechanism to increase federal revenue. In these times of fiscal crisis, it is more important than ever that we make sure that we are leaving no source of revenue untapped.

On the one hand is a proposal to make deep and devastating cuts that cost substantially more than they will save, cuts that will endanger the quality service system that we have painstakingly constructed over decades, cuts that will call into question our willingness to honor the promises we have made to people with developmental disabilities and their families.

On the other hand is a tried and true fiscal mechanism that will have a positive impact on our service system, the people who benefit from it and the direct service professionals who work in it, while drawing down federal revenue that will close the same budget hole.

The choice is yours.