Analysis of the Executive Budget for FY 2025

On January 16th, Governor Hochul released her 2025 Executive Budget proposal entitled, Our New York, Our Future. The FY 2025 budget proposal totals $232.7 billion (All Funds), or $1 billion more than current year projected spending. While state agencies were directed to keep spending flat, this budget continues funding for existing commitments, including increased funding for Foundation Aid in education, support for Medicaid and distressed hospitals, increases in the state’s minimum wage, and expanded access to affordable child care.

The FY 2025 Executive Budget provides only a 1.5 percent cost-of-living-adjustment, putting our providers further and further behind the “financial eight-ball” (we have been advocating for a 3.2 percent COLA just to keep up with expenses in the past year). The budget proposal does NOT include a $4,000 wage enhancement for direct support and direct care workers in the voluntary sector. This is the second year in a row that our workforce has been left behind.

To set the stage for developing the FY2025 spending plan, the Governor is projecting that FY 2024 will end with a General Fund operating surplus of $2.2 billion. With this projected surplus, the Governor has elected to use $1.7 billion to prepay 2025 expenses this year to reduce the budget deficit for FY 2025. The remaining $500 million is proposed to be used for one-time costs to assist New York City with asylum seekers.

State Operating funds spending (which does not include debt service or federal funds) in FY 2025 is projected to be $136.2 billion, an increase of $5.9 billion or 4.5 percent. The two largest components in this funding category are School Aid and Medicaid. School Aid funding will total $35.3 billion, an increase of $921 million or 2.7 percent over current year spending. Department of Health Medicaid spending will total $30.9 billion, a $3 billion or 10.9 percent increase over the current year. This level of spending also factors in $1 billion in proposed saving proposals. Within the $1 billion savings plan is $200 million in unspecified reductions to Medicaid.

Medicaid Cost Containment Proposals

The proposed budget includes a series of cost savings measures to address the long-term solvency and sustainability of the Medicaid program. Proposals include, but are not limited to: $200 million in long term care savings by eliminating wage parity for Consumer Directed Personal Assistance Programs downstate; an additional $200 million in to be determined savings outside of community-based long-term care services; a 10 percent reduction to the capital rate add-on for hospital inpatient; freezing nursing home operating rates as of January 1, 2024, as the state develops a methodology for patient acuity using the Patient Driven Payment Model (the methodology will be designed in collaboration with the provider community); and makes permanent the Special Needs Assisted Living Residence (SNALR) voucher program.

In addition to education and Medicaid, the Executive Budget provides funding to:

Expand mental health services for children and teens in schools and pediatric health care settings;
Increase pregnant and postpartum services;
Provide funding to the Department of Financial Services to hold insurers accountable for mental health coverage;
Address the opioid epidemic;
Advance a plan to improve health care delivery through the three-year, $7.5 billion 1115 Waiver;
Add funding for law enforcement activities;
Increase access to swimming initiatives; and
Fund other program enhancements and initiatives.

The Executive Budget also includes new Capital Funding to support for:

Artificial Intelligence research and innovation;
Economic Development initiatives;
Energy Affordability improvements;
Incentives to grow the housing stock; and
Storm and flood risk remediation and protection.

The state’s Five-Year Capital Plan totals $95 billion over the next five years. Major components of the plan include:

Five Year Housing Plan - the budget continues the Administration’s housing plan to create and preserve 100,000 affordable homes, including 10,000 homes with support services for vulnerable population, and to electrify an additional 50,000 homes. Funding includes: $5.7 billion in state capital resources; $8.8 billion in state and federal tax credits and other federal allocations; and $11 billion to support the operation of shelters and supportive housing units and to provide rental subsidies. The Budget looks to establish a $500 million fund to support infrastructure upgrades on state sites and properties that could repurpose and create up to 15,000 units of housing over the next two years. This provision is tied to real property owned or maintained by SUNY and the Department of Transportation.
Mental Health Capital Investments - 200 new Psychiatric Inpatient beds: 125 state-operated inpatient beds, including 15 for children and adolescents; 85 for adults; and 25 forensic beds; and 75 Transition to Home beds.
Empire AI Consortium - $250 million in state capital dollars to create an AI Consortium; $125 million from private partners; and $25 million from SUNY.
Creating Access to Swimming - $150 million for New York Statewide Investment in More Swimming (NY SWIM); $60 million to build 10 pools in underserved communities; $60 million to develop and install floating pools in natural waterways; and $30 million for “pop-up” pools for communities without access to outdoor pools.

Outyear Gaps & Risks to the Financial Plan

The FY 2025 budget proposal reduces outyear gaps to: $5 billion in FY 2026; $5.2 billion in FY 2027; and $9.9 billion in FY 2028. Notable risks to the state’s financial plan include: the outcome of final Federal Fiscal Year 2024 appropriations negotiations in Washington, DC; expiration of the federal debt limit; cuts to Disproportionate Share Hospital programs; and unknown response to the asylum seeker and migration crisis.

Office for People With Developmental Disabilities Budget Highlights

Going into the budget preparation process for fiscal year 2025, the NY Alliance in collaboration with NYDA, advocated for two initiatives that focused on OPWDD’s #1 priority in their 5.07 Plan – the workforce crisis. To address this critical situation, the provider community advocated for: a 3.2 percent cost-of-living-adjustment (COLA) to keep pace with inflation; and a $4,000 Direct Support Wage Enhancement, which would increase Direct Support and Direct Care hourly wages by more than $2.00 an hour.

All Funds spending for OPWDD totals $7.6 billion, an increase of $161.7 million more than current year levels. State Operations is funded at $2.4 billion; Aid to Localities totals $5.13 billion; and Capital Projects is funded at $139.4 million.

Aid to Localities

The Community Services Program is funded at $5.13 billion. Significant changes include:

$2 million in additional state share Medicaid related to the development of new service opportunities for individuals with disabilities who are currently living at home and whose caregivers are unable to care for them;
$46.85 million to support a 1.5 percent cost-of-living-adjustment (COLA) effective April 1, 2024. Across the three Mental Hygiene agencies, the COLA costs $120.4 million state share ($195.8 million with the federal matching funds);
$45.14 million to support the increase in the state’s minimum wage, effective December 31, 2023.
$6.7 million investment to support the Governor’s yet to be issued Executive Order to become an “Employment First” state for people with disabilities;
$30 million ($60 million full annual/ $120 million gross) to fund OPWDD priority programs reforms and new service opportunities;
$1 million is added to support Special Olympics New York.

State Operations

$2.4 billion is proposed to support the Central Office, six State Operations offices, and five Regional Offices. This recommendation would support 19,115 FTEs for OPWDD, an increase of 173 FTEs for the Intensive Treatment Opportunity authorized in FY 2024.
$250,000 for expenses of the New York Most Integrated Setting Coordinating Council (MISCC) to prepare and issue an Olmstead Plan.
Adds one FTE to the Interagency Coordinating Council to increase outreach and advocacy for deafblind individuals.

Capital Projects

$15 million in Capital funds to develop safe and accessible residential opportunities. This initiative began in 2015 and total Capital dollars will total $140 million if approved by the Legislature.

Health & Mental Hygiene Legislative Proposals of Interest to NY Alliance Members:

Expand the Scope of Practice for dentists, dental hygienists, physician assistants, medical assistants, and certified nurse aides.
Make permanent OMH’s, OASAS’, and OPWDD’s authority to utilize flexibility to develop new methods of services through demonstration projects.
Justice Center Notifications to the OMIG – clarifying when substantial reports of abuse or neglect submitted to the Justice Center should be reported to the OMIG.
Representative Payee – makes permanent the authority of state mental hygiene facility directors to act as federally appointed representative payors.
Support Access to More Independent Living Settings – this provision would allow greater flexibility for the performance of certain nursing tasks by unlicensed employees of providers certified by OPWDD (allowing DSPs in a person’s home or apartment to perform certain nursing tasks).
Establish First-in-the-Nation Paid Prenatal Leave – this would provide eligible pregnant employees the ability to take up to 40 additional hours of leave for prenatal medical appointments in addition to the current 12 weeks of Paid Family Leave. Leave for prenatal visits could be taken in hourly increments.
Authorize the Pass-Through of any Federal SSI Cost of Living Adjustment – authorize federal SSI benefits to be increased in 2024 to account for SSI cost of living adjustment and allow benefit increases. This proposal would also update the Personal Needs Allowance for SSI recipients in congregate care.
Paid Breaks for Breast Milk Expression in the Workplace – this proposal would require paid break time of up to 20 minutes for breast milk expression.
Sunset the COVID Sick Leave Law – this would sunset this law on July 31, 2024. Employers provide ample sick leave benefits for illnesses, including COVID. Since the Public Health Emergency has expired, this law is no longer necessary.

As more details become available, we will update our analysis and share with you any and all important changes. If you have any questions, please contact Mike Lawler at [email protected].