N.J. to decide on enhanced Medicaid funds

With just three weeks until the deadline to adopt a state budget, New Jersey awaits a decision on more than $570 million in enhanced federal Medicaid funding that is critical to the state's finances.

Congress is debating whether to grant a six-month extension of the enhanced funds, known as Federal Medical Assistance Percentages (FMAP), to help offset increased demand for Medicaid during the economic downturn. New Jersey counted on approval of the measure.

Twenty-nine other states are in the same boat, according to the National Conference of State Legislatures, which says the states planned to receive enhanced Medicaid funds ranging from $33.7 million in New Hampshire to $850 million in Pennsylvania and $1.78 billion in California. Only nine of the 30 states have contingency plans if funding is not approved.

In New Jersey, which does not have a specific fallback strategy, the loss of the Medicaid dollars would blast a gaping hole in the governor's already austere $29.3 billion proposed spending plan. The money is intended to cover the period from January to June 2011, so the state would have some time to figure out a solution.

But Gov. Christie's proposed budget assumed the money would be approved.

"If we don't get it, that'll be an issue," said David Rosen, legislative budget and finance officer for the nonpartisan Office of Legislative Services.

In May, the U.S. House of Representatives removed $24 billion in FMAP funding from its tax and spending legislation, casting doubt that it would be extended. The Senate restored the funding to its version of legislation this week, however.

Kevin Roberts, a spokesman for the governor, said Christie was hopeful the money will be approved. Roberts called the Senate's restoration of the funds a "welcome development."

The administration has not determined how it would fill the gap if the funding were not approved, he said, adding, "We'll cross that bridge if we get to it."

Gov. Rendell has said that without the money, thousands of Pennsylvania state and local government jobs would likely be cut.

Rachel Morgan, senior policy specialist with the National Conference of State Legislatures, expects Congress to take action on the legislation in the next couple of weeks.

"Everyone agrees the states need help. It's just a matter of how you reach that destination," Morgan said.

States had been led to believe the money was not in question, said Andy Pratt, spokesman for the New Jersey Treasury Department.

"The president and congressional leaders indicated they were committed to providing the funding," Pratt said. "We urge them to follow through on their commitments because New Jersey and many other states are counting on this aid to help them through a recession of unprecedented size and scope."