Hugh McQuaid file photo
OPM Secretary Ben Barnes (Hugh McQuaid file photo)

In his monthly letter to state Comptroller Kevin Lembo, Office of Policy and Management Secretary Ben Barnes said the 2014 budget the General Assembly passed in June is balanced, but he warned of future challenges.

“Two significant issues will require close monitoring over the coming months and may impact future expenditure projections,” Barnes said. “First, based on limited data year-to-date, expenditure trends in the Medicaid program appear to be on track to exceed projected levels.”

The sharp increase in enrollment for the Low-Income Adults Medicaid program surprised Malloy’s administration. Under former Gov. M. Jodi Rell’s administration, Connecticut was the first state to expand that portion of Medicaid, which previously had been solely funded by the state. In three years, enrollment in the program has doubled from 45,000 to more than 90,000. The state receives partial reimbursement now from the federal government for the program.

In order to qualify for that program an individual must be making 55 percent or less of the federal poverty level. As of May 2013 there were 90,157 individuals enrolled in the program, according to the Department of Social Services.

That number is expected to go up on Jan. 1, 2014, because the federal poverty level for the program will increase to 138 percent under the Affordable Care Act. One hundred percent of the cost of that program will be paid for with federal dollars, but in the future the state will be asked to pick up a bigger share of it. Starting in January 2017, the state contribution for the population will be capped at 10 percent.

“Second, implementation of the Affordable Care Act in January could impact health care expenditures in the Department of Social Services and in other agencies, to the extent that actual costs deviate from projections used in constructing the budget,” Barnes said.

The Department of Social Services runs 90 different programs and services and as a state agency accounts for about 30 percent of the entire state budget. In any given year, the spending the state may be mandated to do through the agency varies.

Overall, the state ended fiscal year 2013 with a $359.6 million budget surplus. The state transferred $220.8 million of it into the 2014 budget, while the remainder, about $138.8 million, was deposited in the Rainy Day fund.

In order to get around the spending cap issue in 2014, the state “net appropriated Medicaid,” which means $2.768 million was removed in 2014 from both the revenue and expenditure side of the budget. The maneuver was widely panned by Republican legislators, while Democratic legislators said it put Connecticut in line with other states that balance their budgets in this manner.

There are a total of 618,372 individuals receiving some form of Medicaid benefit in Connecticut, according to department officials. Also, the department reports that a total of 401,345 individuals are receiving food stamps under the federally funded Supplemental Nutrition Assistance Program.