Spending Bills Would Permit Medicaid Reimbursements

By Alyson Klein — May 20, 2008 4 min read
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A provision protecting school Medicaid reimbursements was approved as part of a supplemental-spending bill by the House of Representatives last week.

Under the bill, the federal government would have to continue reimbursing schools for administrative and most student-transportation costs covered by Medicaid until at least next spring, despite a Bush administration directive that sought to halt the practice.

The Medicaid provision and some other domestic programs had been part of a broader package financing the wars in Iraq and Afghanistan. But partisan battles led to the war funding being stripped out. That funding will likely be restored.

Meanwhile, the Senate Appropriations Committee passed its own supplemental-spending measure for fiscal 2008 that includes the Medicaid language.

The Senate panel’s bill also would provide a one-year extension of the Secure Rural Schools and Community Self-Determination Act of 2000, a program that gives federal aid to make up for diminished timber revenues in counties that are home to national forests.

The Senate committee’s bill, which was approved on a voice vote, would extend the program at a cost of about $400 million. The House bill, which passed the full chamber May 15, doesn’t contain the rural schools language.

“We were incredibly disappointed that it wasn’t included” in the House bill, said Mary L. Kusler, the assistant director of governmental relations for the American Association of School Administrators, in Arlington, Va. “Thousands of communities across the country are contemplating extreme layoffs in the coming weeks.”

But supporters of the rural schools program say they are worried the funding extension wouldn’t survive a presidential veto threat. The White House Office of Management and Budget released a statement May 15 saying President Bush would reject the House bill, in part because lawmakers lawmakers sought to includes “billions of dollars” on a war-funding bill.

An aide to Rep. Peter A. DeFazio, D-Ore., who is championing the renewal of the rural schools program, said in an e-mail that the program’s supporters were pursuing other options to pass the extension.

The supplemental bills would also expand veterans’ education benefits by about $51.6 billion over 10 years.

Medicaid Moratorium

The Medicaid provisions also rankled the administration. In December, the Centers for Medicare and Medicaid Services, an arm of the Department of Health and Human Services, issued a final rule that sought to eliminate the reimbursements that school districts receive for certain administrative and transportation expenses from the Medicaid program. Districts receive such payments to cover the cost of transporting some students in special education, for instance. (“U.S. to Trim School Medicaid Payments After Freeze,” Jan. 9, 2008.)

Also in December, Congress approved legislation that keeps any school-related changes to Medicaid from taking effect until July 1. The spending bills would extend the moratorium until April 1.

By that point, lawmakers who support the moratorium hope they can negotiate potential changes with the next administration—or just leave the reimbursement program in place, lobbyists said.

It was an open question whether the Medicaid language could prompt a White House veto. The OMB statement singled out the Medicaid provision, saying that it would “block the [administration] from implementing important regulations protecting the fiscal integrity of the Medicaid program.”

Without the extension, districts will lose millions of dollars, and many will have to lay off employees such as school nurses, according to Greg Morris, the executive director of LEAnet, a Sacramento, Calif.-based organization representing some 680 school districts.

“Most people don’t see school districts as being in the health business or the health-services business, but they are,” Mr. Morris said.

Moving Slowly

Congress has been particularly sluggish this year in crafting the spending bill for the departments of Labor, Health and Human Services, and Education for fiscal 2009, which begins Oct. 1.

Secretary of Education Margaret Spellings has yet to testify on the president’s budget proposal before the Senate Appropriations subcommittee that oversees education spending, an event that typically happens in early spring.

Democratic leaders are moving slowly on education appropriations in large part to avoid another spending showdown with President Bush, who last year vetoed a bill that would have hiked the Education Department’s budget by 5.6 percent. He later agreed to a smaller increase.

In February of this year, after President Bush released a budget that proposed level funding of $59.2 billion for the Education Department, Democratic leaders in both chambers signaled that Congress would pass legislation extending funding for most programs at fiscal 2008 levels until a new president who might be more disposed to supporting their priorities takes office. (“Democrats Aim to Resist Bush Budget,” Feb. 13, 2008.)

“The key is that nobody believes that he’s going to sign anything, and therefore the appropriators are hesitant to go through the whole process,” said Bill Cunningham, a lobbyist for the 1.4 million-member American Federation of Teachers.

A version of this article appeared in the May 21, 2008 edition of Education Week as Spending Bills Would Permit Medicaid Reimbursements


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