State heating aid fund nearly broke

The state’s emergency heating assistance program will run out of funds next month–and possibly earlier–Gov. M. Jodi Rell’s budget director testified Monday, noting that a fiscal gamble taken by lawmakers in late September turned sour earlier than expected.

The shortfall could turn a projected $300,000 budget surplus into a $45 million deficit.

“The demand has been high and it is accelerating,” Office of Policy and Management Secretary Brenda L. Sisco told the Appropriations Committee. She was referring to the Low Income Home Energy Assistance Program, which helped a record-setting 82,956 households pay their heating and other energy bills last winter, according to administration statistics.

Sisco warned two months ago that unless lawmakers curtailed benefits or increase funding to compensate for projected $45.6 million drop in federal aid, the program would run out of funds in January.

But she said Monday that the program now likely would go broke in December–or possibly earlier–unless changes are made.

Department of Social Services Deputy Commissioner for Programs Claudette J. Beaulieu said demand has grown significantly this year, with a big jump in granted applications for heating assistance beginning in the middle of October. Even if Congress extends LIHEAP funding at its current level, she said, it would not be enough to keep up with the demand the state has seen so far.

“We’re going to have to make some very tough decisions in the next week or so,” she said.

The department typically commits to between $2 million and $3 million in energy assistance funding per week. This year, there were two weeks with $3.6 million and $4.4 million committed, Beaulieu said.

Beaulieu said some of the increased demand reflects greater need, and some likely reflects people applying earlier in case the money runs out.

It’s not clear whether the lame duck Congress will take action on LIHEAP funding. If not, the new Congress won’t be in session until January, creating a gap with no additional funding.

Though some Appropriation Committee members balked at the news, Rep. Craig A. Miner of Litchfield, ranking House Republican on the panel, defended Sisco. The Appropriations, Human Services and Energy & Technology committees rejected an administration proposal to tighten program rules–a move expected to block 18,800 families from assistance–to compensate for the projected drop in federal aid. But lawmakers also declined to authorize more state spending, opting instead for a wait-and-see approach.

“It’s not your problem, it’s the legislature’s,” Miner told Sisco. “It should be a shock to no one here.”

Rep. John Geragosian, D-New Britain, co-chairman of the Appropriations Committee, said during a break in Monday’s committee hearing that he believes majority Democrats in the state House and Senate should caucus soon to consider a December special session to allocate more state funding for the emergency heating program.

Sen. Edith G. Prague, D-Columbia, agreed that a special session may be needed

“We can’t let people freeze–that’s the bottom line,” she said.

One option to close the $46 million gap, Geragosian said, would be to increase planned borrowing for the current fiscal year.

The legislature and Rell originally approved up to $956 million in bonding, to be repaid with primarily through a new surcharge on residential and business electricity bills, to support this fiscal year’s $19.01 billion state budget.

But because of a last-minute surge in the surplus projected for the fiscal year that ended last June 30, the administration estimated over the summer that this borrowing could be reduced to about $650 million.

Geragosian said Monday that even if the state borrows closer to $700 million to maintain the heating program, the total debt still would well below the original target.

Meanwhile, Appropriation Committee members said the heating program wasn’t the issue threatening to create a new deficit in the current budget.

The Rell administration reported $233.4 million in projected cost overruns this fiscal year.

And though this potential extra spending is factored in to the current surplus estimate of $300,000, committee members noted that the administration is struggling to meet $307.3 million in mandated cost-savings targets spread across the budget.

Sisco testified that out of the $233.4 million in projected cost overruns across the entire budget, about $60 million of them were in areas where mandated savings are supposed to be found.

Rep. Patricia Dillon, D-New Haven, questioned why the administration nominated four new judges in August–even though Judicial Branch officials did not request them–when it had a challenging savings target to meet.

“Business as usual was going on,” Dillon said. “I’m confused and I’m not real thrilled with it.”

“This system is full of gimmicks,” said Prague. “I’m not voting for these judges. They are good people. Nice people. But come back in two years.”

Most of the projected over-spending, commonly referred to as a “deficiency” was tied to social services. DSS reported $182.9 million in net deficiencies–3.5 percent of its $5.1 billion budget. That figure was driven largely by a nearly $198 million cost overrun estimated for the $4 billion Medicaid program, in part because of increased caseloads. The overall deficiency is smaller because some programs have surpluses.

“One of the biggest drivers of our deficiency is the economic climate,” Beaulieu told lawmakers.

The HUSKY A Medicaid program, which serves children and parents from low-income households, saw a 7.8 percent caseload increase in the past 9 months, with 385,300 people enrolled as of last month.

Enrollment also grew beyond what was budgeted in the state’s new Medicaid for Low-Income Adults program, which replaced health benefits provided under General Assistance, the state’s welfare program for single adults without children. Unlike SAGA, Medicaid LIA is available to 19- and 20-year-olds, and does not take a person’s assets into account in determining eligibility. The state will receive federal reimbursement for 50 percent of the money spent on the program.

The department is also not expected to achieve several mandated savings this year, including $76.7 million expected to come from moving HUSKY out of managed care, which has not happened. Another $60 million was budgeted to be saved by moving people in the Medicaid Aged, Blind and Disabled program into managed care.