A moment of sympathy for those who manage the money
Published 9:52 am Tuesday, April 11, 2017
When a family finds itself in a financial pickle and looks for advice, the admonition is always the same: Make a budget and stick to it.
Mississippi is an increasing financial pickle with no sign of relief. A dozen or more columns could speculate about why. This is mostly about how.
A budget is a spending plan, emphasis on plan. It’s not like there’s an already-baked pie and the only decision is how to slice it.
When families prepare a budget, they base it on money they expect to receive and past spending practices — amounts for electricity, phones, rent or mortgage, groceries are predictable.
Mississippi’s budget works much the same. Experts — who are very good at what they do — predict income based on experience and trends. The state also has a spending history. For example, if the Department of Wildlife, Fisheries and Parks spent a certain amount on vehicles, fuels and maintenance last year, it’s safe to project a like amount for the coming year. Based on rolling averages, the state can also expect to incur a certain level of emergency costs related to floods, tornadoes, hurricanes and such.
There is one variable, though, that makes state budgeting more perilous. In a word, “entitlements.”
That word sends arch-conservatives into orbit. They immediately conjure up images of lazy malingers living off the labor of others. That occurs, but freeloading is a tiny, tiny portion of the entitlement picture.
The actual picture includes all open-ended commitments created by Congress and the Legislature, and there are many.
More specifically, the state can decide how much to allocate to road construction in a set year, to public education, to state parks. But by definition, an entitlement is a program in which the state sets the criteria for funding and has no control otherwise.
Prisons are a modest example. Budgeteers can estimate, but they don’t know what the actual cost of housing and feeding inmates will be because they don’t know for certain how many people will be incarcerated.
And then there are the benefit programs, which are the biggie. The state has only a best guess at how many people might become unemployed or qualify for food or rent assistance. Almost all aid programs involve federal funds, too, and usually more federal funds than state funds, but it’s still risky.
The behemoth of entitlements is Medicaid, which pays medicine, nursing home and other health care expenses for the poor and disabled.
Like all programs, Medicaid began small. It was enacted along with Medicare, which receives no state dollars, in 1965. The idea was that the nation was wealthy enough to share in the cost of care for the elderly and those who simply could not afford treatment. It was to be a mere a blip in the budget.
Yet from 2000 to 2012, the rate of growth was 63 percent in total U.S. Medicaid spending, rising from $263.7 billion to $429.2 billion. One of five Americans is enrolled.
In Mississippi, which receives the highest match from federal funds (3:1) and has one of the highest rates of enrollment (640,000 of 3.1 million people), the rate of growth was even higher — 76 percent.
Each time Mississippi must increase the allocation for Medicaid (roughly $150 million more each year), the amount left to be allocated to fixed (sometimes thought of as discretionary) spending declines. Yes, state revenue has also increased — much as if a family budget would be boosted by a raise for the breadwinners — but not in step with entitlements.
None of this is to tarnish Medicaid, to term it a bad or unworthy program. It’s just that every time it has been expanded by Congress or the Legislature (and it has been expanded many, many times) the risk to all other state spending has been increased.
If there’s any shame, it’s that Congress and the Legislature have fully been aware of the math all along — none of these numbers is secret — yet have fed the seemingly bottomless pit with sparse attempts to manage or control the cost of care.
When families get serious they plan for contingencies, but they know better than to make open-ended commitments. This simple wisdom has not been evident in the entitlements created by federal and state governments.
So pause for a minute to pity the public employees whose job it is to do the math, to prepare the estimates and forecasts. It’s their lot to build the state budget on a shaky foundation, one that becomes less predictable every year.
Charlie Mitchell is a Mississippi journalist. Write to him at email@example.com.