DLS Recommends Restoration of Cumulative Growth for Local Health Departments

A recent budget analysis of the Infectious Disease and Environmental Health Administration (IDEHA) of the Department of Health and Mental Hygiene, indicates that funding for Local Health Departments (LHD) will increase by $6.8 million in FY 2015; $1.1 million for a formula adjustment and $5.7 million to account for the annualization of the 2014 COLA and increments. More significantly, this funding is being applied to the prior year allocation of $40 million, restoring cumulative growth in the funding formula, an approach that was abandoned during the years of cost containment.

As described in a prior post on Conduit Street:

The formula, otherwise known as Core Funding, established the minimum funding level for the program at $41 million in fiscal 1997, with subsequent increases based on inflation and population growth. These inflationary factors, which were applied to the prior year appropriation, increased funding to a high of almost $70 million in FY 2008.  However, to address State revenue challenges and close the structural deficit, funding for local health departments was reduced to $37.3 million and hovered at that level through FY 2013. At the same time, a new statutory interpretation determined that inflationary increases would only be applied to the base funding level instead of the prior year appropriation, permanently reducing and restructuring LHD funding.

Inflationary increases for LHDs were restored in fiscal 2014 and the proposed FY 2015 budget applies the inflationary increase to the FY 2014 funding level, instead of the base level of $37.3 million. However, current statute mandates that increases be applied to the $37.3 million base level.  Page 13 of the analysis describes the situation.

More specifically, statute mandates that for fiscal 2013 and each subsequent fiscal year, the formula adjustment factor be applied to the $37.3 million base level.  Given that the formula adjustment factor is applied to the base year rather than the prior fiscal year, funding for Core Public Health Services could decline when compared to the prior year. Moreover, the formula does not account for ongoing expenditures related to the annualization of COLAs.4 This additional funding is not mandated by statute and is instead budgeted at the discretion of the Administration.

To address this situation, DLS is recommending the following:

DLS recommends an amendment in the Budget Reconciliation and Financing Act of 2014 that would clarify that, beginning in fiscal 2016, the formula adjustment factor is to be applied to the prior year’s allocation.