By Rose Hoban
Now that Gov. Roy Cooper has checked expanding Medicaid off his gubernatorial to-do list, he has shifted his health care focus to the needs of North Carolina’s most vulnerable — the young, the old and the disabled — in his proposed spending plan for the coming fiscal year.
One big-ticket item in his $34.5 billion recommendation to lawmakers is $630 million in grants for child care as federal pandemic funds used to help keep centers and preschool facilities open dry up in the coming months.
The governor also suggests setting aside more funds for people with disabilities to bolster a Medicaid program that would give them more home-based care options — so they could work and participate in community life instead of having to rely on institutionalized care.
Cooper also recommends that $445 million be used to increase pay rates for direct support caregivers who work with people with disabilities and to increase Medicaid reimbursement rates for providers.
Cooper blasted leaders of the Republican-led General Assembly, who have earmarked large amounts of public tax dollars for opportunity scholarships, or vouchers, that schoolchildren in kindergarten through high school can use to attend private schools. He also was critical of their approval of corporate and individual tax cuts that are scheduled to go into effect over the next few years.
In particular, Cooper took aim at the corporate tax, which is scheduled to be eliminated by 2028 — something that the nonpartisan legislative Fiscal Research Division has said will leave a multibillion-dollar hole in the state’s budget.
“CEOs aren’t asking us about income or corporate tax cuts,” Cooper said. “They’re asking us about getting quality educated people to work for them. They’re asking us about early childhood education and child care. They’re asking us about career training, our public schools and our community colleges. They’re worried that their employees with young children will have to quit work because they don’t have child care.”
Even with a billion-dollar surplus in state coffers, Cooper is likely to face headwinds for his spending proposal from the veto-proof Republican majorities in the state House and Senate.
Averting a child care “cliff”
Cooper could find agreement from Republicans on the need to do more for child care, given that the state Chamber of Commerce, a powerful business lobbying group, has been sounding alarms over the past year about the looming crisis that will commence once extra federal pandemic funds are no longer feeding state coffers.
Many child care centers have been receiving the support that was supposed to run out last fall, but after an extension by the U.S. Congress, the funds will last through the end of June.
Without the federal dollars or a boost from state coffers, some 1,800 centers across North Carolina are expected to close this summer, just as there is an expected pre-K population growth spurt.
“The zero to four [year-olds] will have a growth over the next few years of 7 percent,” said Cooper’s budget director Kristin Walker.
Last year, the chamber sponsored a survey of workers and child care centers that found that the lack of reliable child care “is hurting families and making it hard for businesses to hire employees and grow.”
The survey found that three-quarters of voters believe that lack of child care is a “serious problem” and support increasing state funding to address the issue.
Cooper’s budget provides $200 million in one-time stabilization grants that would allow the centers to improve worker salaries — with benefits.
Additionally, Cooper’s budget sets aside an additional $165 million in recurring dollars to cover all of the costs for waitlist slots in the state’s public schools pre-K program, and $128 million in recurring funds to increase the rates paid to subsidize child care services for low income families.
The governor’s budget also includes $24 million for a pilot matching fund program to help businesses to contribute as much as $2,500 to employee flexible spending accounts to offset child care costs.
“We know that those grants work,” Cooper said. “It also prioritizes funding to help parents afford child care, help qualified educators afford to keep teaching, and make child care more available — especially in our rural areas.”
Senate leader Phil Berger (R-Eden) signaled that there might be improvements to the child care budget, noting that in Cooper’s budget there are “some things there that we can work with.”
Supporting people with disabilities
In North Carolina, there are 16,000 people with disabilities on the waitlist for the Innovations Waiver program, which was established to help people with intellectual and developmental disabilities remain at home with wraparound supports that would help them get jobs, stay in school and participate in community life.
That program has been underfunded and failed to live up to its promise, resulting in a lawsuit filed by Disability Rights North Carolina in state court that pushed the state to promise to do more.
Providing for people with intellectual and developmental disabilities can carry a high price tag, with the most expensive beneficiaries needing more than $100,000 in support per year.
Not all participants require that level of spending. Cooper set aside $17.5 million in his proposed spending plan to be put toward 1,000 more slots for the Innovations Waiver program, an average of $17,525 per additional program participant.
A large-ticket item to help ensure that people with intellectual and developmental disabilities get the care they need will be enhancing caregivers’ wages. There is a growing shortage of direct support professionals — people who care not only for people with disabilities, but also for older residents. Cooper’s budget would bring the pay for those workers up to $18 an hour, up $4 from $14 an hour — something that would cost an additional $180 million during the next fiscal year and each year after that.
His budget also calls for $265 million in annual dollars to increase the rates for physicians, dentists and specialists who treat Medicaid patients. It does not specify what the rates would be for each profession.
Dentists have been lobbying for a Medicaid reimbursement rate increase since the expansion of Medicaid in December made 600,000 more people eligible for oral health care. The current reimbursement rate — about 34 cents on the dollar — is the same that it was in 2008. As a result, many dentists don’t accept Medicaid patients.
The governor also sets aside $9.4 million to increase funding for the Transitions to Community Living Initiative, which would move about 3,500 people with mental health and developmental disabilities from institutional living situations into the community with support services. This spending was mandated by a 2012 settlement with the federal Department of Justice after North Carolina was found to be in violation of the Americans with Disabilities Act, which requires states to provide these community supports.
Meeting the need of an aging population
Cooper noted that the aging population of North Carolina is growing, particularly in rural areas. By the end of this budget biennium, North Carolina will have about 2.1 million older adults living here, and spending by the state to support them is not keeping up with demand.
“As the Baby Boomers age, we’re going to be at a point where … one in five North Carolinians will be 65 plus,” Walker, Cooper’s budget director, told reporters. “That of course affects the demographics of the state, the services that are needed and the services that are provided.”
Last year, the governor released a whole-of-government initiative to make the state a better place to grow old. To facilitate one small part of that, Cooper’s budget calls for a one-time infusion of $10.5 million in federal dollars left over from the American Rescue Plan Act to be used for housing renovations and upgrades in about 1,500 homes in rural areas as a way to prevent older residents from having to move to institutions.
One DHHS office that has struggled with staffing is the division that handles inspections of health care facilities, which has been too understaffed to effectively enforce nursing home rules. The office would be on the receiving end of $2.8 million in annual dollars and a total of 20 new employees, including three more inspectors to monitor assisted living centers and nursing homes.
Cooper’s proposed spending plan also includes:
- An across-the-board 5 percent pay increase for all state employees — something that’s been top of the wish list for state Department of Health and Human Services Sec. Kody Kinsley, who has struggled to fill positions at state-funded facilities that care for psychiatric patients.
- $109 million for a one-time cost-of-living increase for retired state employees. DHHS is one of the largest state agencies, so this would affect tens of thousands of former agency workers.
- Almost $8 million in recurring funds for the Office of the Chief Medical Examiner to pay for toxicologists, pathologists and supplies. The OCME office has had a swelling workload over the past decade as the opioid overdose epidemic has ravaged the state.
- $4.5 million in annual funding to support capacity at the state’s vital records office. The governor’s budget document notes the vital records office has a 45 percent vacancy rate.
The state budget process will play out over the coming weeks, and perhaps months, as lawmakers in both legislative chambers draw up their own spending plans. The new fiscal year begins July 1.
Since it is an election year, lawmakers running for re-election might push to meet that deadline, unlike last year, when a budget was not approved until late September.
