Federal funds will boost Ch. 70, Medicaid for FY11

The $204 million in one-time federal funds from the recently enacted Education Jobs and Medicaid Assistance Act will be used to restore Chapter 70 education aid cuts in the fiscal 2011 state budget, the administration announced today.

The federal dollars will also be used to ensure that each school district is provided a Chapter 70 increase of at least $25 per student.

This represents a significant increase in school aid for most districts above the amount expected for the year.

Revised school aid amounts and federal rules governing the use of the funds are available on the DESE website (http://finance1.doe.mass.edu/chapter70/chapter_11.html).

These funds are separate from allocations attributable to the federal Race to the Top grants announced yesterday.

The $26 billion Education Jobs and Medicaid Assistance Act will provide $16 billion to states to boost Medicaid reimbursements and $10 billion to retain or create education jobs.

Massachusetts is slated to receive an estimated $463 million in additional Medicaid reimbursements this year. The federal Medicaid funds will restore some of the revenue that had been included in budget bills initially put forth by the governor and the Legislature. Because Congress had not acted by late June, the Legislature decided to drop the Medicaid revenue from the final budget bill, and appropriations for many accounts – including local aid – were reduced.

The additional Medicaid funds for Massachusetts will take some of the pressure off the state budget due to earlier cuts and caseload growth in MassHealth and other state safety net programs.

The education jobs program was not anticipated in earlier versions of the state’s fiscal 2011 budget.