Gov. Dannel Malloy delivering his 2016 budget address.
Senate Majority Leader Bob Duff and House Majority Leader Joe Aresimowicz listed to Gov. Malloy's State of the State address.
Senate Majority Leader Bob Duff and House Majority Leader Joe Aresimowicz listed to Gov. Malloy’s State of the State address. Jacqueline Rabe Thomas
Senate Majority Leader Bob Duff and House Majority Leader Joe Aresimowicz listed to Gov. Malloy’s State of the State address. Jacqueline Rabe Thomas

Gov. Dannel P. Malloy’s proposed budget calls for cutting funding for mental health and substance abuse treatment, hospitals, community health centers, school-based health clinics, asthma treatment, and respite programs for those who care for people with dementia – and counts on millions more in unspecified cuts to health care and social service systems that advocates say are already stretched thin.

“We’ve certainly been anticipating a budget that was going to be pretty tough, but this represents such significant cuts to all human services programs that it’s pretty stunning,” said Heather Gates, president and CEO of Community Health Resources, a Manchester-based mental health and substance abuse treatment provider. “You can’t take that much money out of the service system without it destabilizing organizations and seriously affecting individuals who just don’t have a lot of other choices.”

Malloy’s cuts – made to address a projected deficit of more than $500 million for the 2016-17 fiscal year – come in multiple forms: $360.8 million by requiring agencies to reduce most spending by 5.75 percent; $118.2 million in specified reductions; and carrying forward cuts made to the current budget in December and “lapses” – money agencies are expected not to spend this fiscal year.

Some of the specified cuts include proposals that legislators have rejected in the past, including slashing $15.8 million in grants provided to mental health and substance abuse treatment providers and eliminating independent living centers that serve people with disabilities.

The across-the-board cuts don’t include one of the largest parts of the budget – Medicaid, which the governor’s plan projects will cost the state $2.5 billion in the next fiscal year. But they require the leaders of state agencies to find millions of dollars of reductions in departments that legislators have historically resisted cutting deeply. The 5.75 percent cuts included in the proposal amount to $31.8 million from the Department of Developmental Services, $3.8 million from the Department of Public Health, $34.5 million from the Department of Mental Health and Addiction Services, and $18.6 million from the Department of Social Services.

Those cuts are a departure from previous budgeting practice, in which proposals have spelled out how much money specific programs would get or lose. Benjamin Barnes, Malloy’s budget director, said department heads were asked to identify core services their agencies provided so they could evaluate what spending was targeted toward those missions, and what line items weren’t core functions.

But Barnes acknowledged that in trying to match spending to projected revenues, “We’ve cut core governmental services here too.”

Jeffrey Walter, interim CEO of Connecticut Community Nonprofit Providers, said the proposal would balance the budget “by hurting Connecticut residents with the greatest need for the state’s assistance and support.”

“The governor’s proposed spending cuts and budget policy changes will devastate nonprofit programs, including some advocated by the governor himself, and will curtail or completely eliminate essential human services for thousands of individuals across the state,” he said in a statement.

The proposal also includes a shift in how certain services for people with intellectual and developmental disabilities are funded, which Barnes said could help the state generate federal matching funds to help cover the costs.

Mental health, substance abuse grants targeted

Heather Gates, executive director of the mental health agency Community Health Resources, speaking press conference about the budget last June.
Heather Gates, executive director of the mental health agency Community Health Resources, speaking press conference about the budget last June. Arielle Levin Becker /

In recent years, the Malloy administration has repeatedly called for cuts to grants that fund outpatient mental health and substance abuse treatment, arguing that those funds are no longer needed because more state residents have health care coverage and providers can recoup the lost grants by billing their clients’ coverage.

But providers have said that’s not possible because the rates paid by Medicaid – the coverage source of most newly covered clients – generally fall below the cost of providing services. Past analyses by the Department of Mental Health and Addiction Services have backed up that position. And in the past, legislators have funded more in grants than Malloy proposed.

This year’s proposal calls for a $15.8 million cut to the grants.

Gates said that would lead programs to close.

“The end result of this budget is the hospitals will be the ones inundated with people in the emergency rooms,” she said. “And funding for help in the emergency rooms was cut.”

The Community Care Team brainstorms about care plans for some of its 208 clients.
A meeting of the Middletown-area community care team, based at Middlesex Hospital. Arielle Levin Becker /

That was a reference to another part of Malloy’s proposal, eliminating $3 million for community care teams that bring together treatment and social service providers to better address the needs of people with behavioral health issues who frequently use emergency rooms. Kathy Flaherty, executive director of the Connecticut Legal Rights Project, which provides legal services to people with mental illness, said the cut was particularly distressing because the model saves the state money.

“I just hope that some of the decisions that ultimately get made don’t end up accomplishing the short-term savings but remove an opportunity for more long-term savings,” she said.

The community care teams were supposed to receive funding under the current fiscal year’s budget, but the department chose to instead use the money to avert emergency cuts to the mental health and substance abuse treatment grants in September, when the state faced a budget deficit.

Where might the department find another $34.5 million to cut as part of the 5.75 percent reduction? In response to a request from Barnes for potential cuts last fall, Commissioner Miriam Delphin-Rittmon identified $11.9 million in potential savings, including closing the 20-bed detox unit at the state-run Connecticut Valley Hospital and cutting planned growth in the number of people who could be served by various services, including housing supports and programs for young adults and people with traumatic brain injury.

But Delphin-Rittmon warned in an October memo to Barnes that accompanied the reduction options that she hadn’t identified the 5 percent he requested, and added, “[T]he Department sought to identify initiatives that we could realistically achieve and still provide the safety net necessary to the people we serve.”

Asked Wednesday if she knew how her agency would make the $34.5 million in cuts, Delphin-Rittmon said, “We’re still unpacking it.”

Developmental disabilities: Privatizing group homes, changing funding method, and a cut

While many social service advocates say the state’s safety net has already been strained, many advocates for people with developmental disabilities have focused on another problem, saying the way existing funding is distributed creates a system of haves – fewer than 500 people with developmental disabilities living in six state-run institutions – and have-nots – more than 2,000 people waiting for residential services that the state says it can’t afford to fund.

Southbury Training School is a home for people with intellectual or developmental disabilities.
Southbury Training School is a home for people with intellectual or developmental disabilities, one of six institutions advocates have said should be closed. Connecticut Department of Developmental Services

Advocates have been calling for the state to set a date for closing Southbury Training School and the five regional centers, although families of residents have opposed the idea.

Malloy’s proposal does not call for closing institutions or funding more community residential services, but included changes that Barnes said were aimed at making it possible to ultimately fund services for people currently on the waiting list.

Those include developing an “intellectual disabilities partnership,” modeled after the state’s highly regarded behavioral health partnership. It would be assigned to develop a broader range of services, explore new options for paying for the care, expand supportive housing for people with intellectual and developmental disabilities, and develop strategies to address and fund the waiting list.

The governor’s budget also calls for privatizing 30 publicly run group homes that serve people with intellectual and developmental disabilities, forecasting a $6.2 million savings.

This is a photo of Leslie Simoes, executive director of The Arc Connecticut
Leslie Simoes Arielle Levin Becker / The CT Mirror

Malloy’s proposal would also change the way the state funds residential services, from a system that pays service providers in set grants to one that pays a fee for each service, potentially allowing the state to receive federal Medicaid reimbursement for some of the costs.

The state previously made a similar change in payment methods for services offered through the Department of Mental Health and Addiction Services.

Barnes said the change will take several years to fully implement. “But we’ve had extraordinarily positive results in the other areas where we’ve made similar changes,” he said.

Leslie Simoes, executive director of The Arc of Connecticut, which has been pushing for the closure of the state-run institutions and expansion of community-based services, said she was thrilled that Barnes had acknowledged the goal of addressing the waiting list. She said it indicated that the governor was “putting people with intellectual and developmental disabilities on his priority list, which is what we’ve wanted for years.”

But Simoes said the $31.8 million cut the Department of Developmental Services must make to achieve the 5.75 percent funding reduction raised concerns.

“Any cut right now is devastating,” she said. “This is a system that’s been chronically underfunded and starved of resources.”

Still, Simoes noted that Malloy’s proposal is just the first step in a process that will include legislative hearings and budget proposals before a final agreement is reached. And she noted that her organization has suggested the state could achieve savings by moving to close the institutions.

Barry Simon, president and CEO of Oak Hill, a large private provider that serves people with disabilities, said the change from grants to fee-for-service funding can be positive if done right.

“If it’s done well, being thoughtful, if they support the conversion in the service community and they set appropriate rates, it’s a very doable thing,” he said. “But they need to do all of those things in order for it to work. If the service providers aren’t supported, if it’s not done thoughtfully around particular services and if the rates aren’t adequate, it’s going to be problematic.”

Hospital cut from December carried forward

This is a photo of the outside of the emergency department at MidState Medical Center in Meriden
MidState Medical Center in Meriden Arielle Levin Becker / The CT Mirror

The governor’s plan counts on $30 million in savings by cutting “supplemental” payments made to hospitals, in line with a cut to the current-year budget made in December. The actual cut to hospitals is larger because the state spending would have generated federal matching funds.

The supplemental payments are meant to repay the hospitals for a portion of the taxes they pay the state. By redistributing the money to the industry, the state can generate federal matching funds. But since instituting the hospital tax in 2011, the state has raised the amount hospitals pay while reducing what they receive back, which also lowers the amount of federal money the scheme brings in. This fiscal year, hospitals are slated to pay $556.1 million in taxes and receive $150 million in supplemental payments, which includes both federal and state payments.

In addition, Malloy’s plan would cut $3 million in state and federal funding from a pool of money that goes to six small, independent hospitals. Some of that cut reflects the fact that one of the hospitals, Johnson Memorial, has joined a larger health system and is no longer independent.

A separate grant Connecticut Children’s Medical Center in Hartford receives would be cut by 5 percent, or $725,407, under Malloy’s plan.

Connecticut Hospital Association CEO Jennifer Jackson said that, including federal money, the budget proposal would cut more than $90 million from “core healthcare services.”

She said hospitals pay a net tax of $391 million per year to the state and called it “simply unsustainable.” If the tax money were fully returned to the industry, she said, the state could generate significantly more federal funds.

Asthma treatment, school-based clinics, local health departments cut

Under Malloy’s proposal, the state would take $700,000 in money from a settlement with tobacco companies that had been earmarked for asthma programs and redirect it to the general fund to pay for other expenses. That move would discontinue $400,000 in state funding for Easy Breathing, a program that helps primary care providers diagnose and treat asthma. It was developed in Hartford and has been shown in studies to significantly reduce hospitalization and emergency room visits for asthma. The other $300,000 would have been spent on asthma outreach and education.

School-based health centers – which provide primary care and mental health services – would face a $477,431 cut under Malloy’s proposal. Rick Calvert, CEO of Child & Family Agency of Southeastern CT, which runs 18 school-based health centers, noted that they already faced large cuts last year. “If cut further, the children who receive help in these centers will be at risk,” he said in a statement.

Other cuts include:

  • Eliminating funding for independent living centers, which provide peer counseling, advocacy, training and other services to people with disabilities, saving $497,290.
  • Reducing funding for community health centers – which largely serve people with Medicaid or who are uninsured – by more than $2.4 million.
  • Cutting the burial expenses the state pays for people who die without the ability to pay, from $1,400 to $1,000. The proposal said Connecticut currently provides one of the highest benefit levels, and that the lower amount would be in line with other states. Last year, lawmakers reduced it from $1,800 to $1,400.
  • Limiting orthodontia coverage for Medicaid clients under 21 by raising the level of teeth misalignment that would qualify. This would save $3.2 million.
  • Reducing payments to local health departments and districts by $234,000.
  • Cutting $130,830 from the statewide respite care program, which provides information, support and a chance for a break to people caring for those with dementia. The program also sustained a 5 percent cut in the current fiscal year’s budget. Last fall, the state Department on Aging warned that a 10 percent cut to the program – which would total $207,069 – could lead to an increase in nursing home placements for people with dementia and negative health outcomes for caregivers.

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Arielle Levin Becker covered health care for The Connecticut Mirror. She previously worked for The Hartford Courant, most recently as its health reporter, and has also covered small towns, courts and education in Connecticut and New Jersey. She was a finalist in 2009 for the prestigious Livingston Award for Young Journalists, a recipient of a Knight Science Journalism Fellowship and the third-place winner in 2013 for an in-depth piece on caregivers from the National Association of Health Journalists. She is a 2004 graduate of Yale University.

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