Congress’ Budget Plans Call For Big Changes to Federal-State Programs

Budget proposals released by both the U.S. House of Representatives and Senate earlier this month look to make significant changes to a number of key federal and state programs, including the State Children's Health Insurance Program—or CHIP—Medicaid, the Highway Trust Fund and the Supplemental Nutrition Assistance Program.

Both budgets would make significant cuts in discretionary spending while increasing military spending. The House budget aims to cut national spending by $5.5 trillion in 10 years and balance the federal budget by 2024. The Senate budget would cut the deficit by $5.1 trillion over 10 years and reaches a balanced federal budget by 2025.

Key changes to federal and state programs in the proposed budgets include:

Medicaid and CHIP: The House budget plan combines CHIP and Medicaid into a single program, cuts Medicaid by $913 billion over the next decade and restructures the combined program into a block grant for states. By 2017, the federal government would provide states with a fixed dollar amount of federal funding known as “State Flexibility Funds.” According to the proposed plan, this would “empower state policymakers to tailor their Medicaid programs based on the unique challenges they face.”

The Senate proposal is similar, turning Medicaid into a block grant program. It aims to cut federal Medicaid funding by roughly $400 billion over the next decade.

Both budget proposals aim to repeal the Affordable Care Act. Since its introduction, 29 states have adopted Medicaid expansion under ACA, while more than 15 states are currently considering expansion.

Workforce Development: The House budget plan aims to build on last year’s Workforce Innovation and Opportunity Act. The proposed budget would continue to reduce duplicative federal programs, many of which are administered by the states, by “tracking the types of training provided, the costs per trainee, employment after training and whether the trainee secures a job in his or her preferred field.”

The Senate’s proposal asks for a deficit-neutral reserve fund to increase American jobs through international trade, which would include reauthorizing trade-related federal agencies, implementing international trade agreements and protecting American intellectual property.

Infrastructure: The House budget advocates for reforms to prevent the Highway Trust Fund from becoming insolvent by the end of fiscal year 2015, including the creation of a reserve fund to provide for creative solutions to pass sustainable, deficit neutral surface-transportation legislation. The Highway Trust Fund currently provides states with about half of their total highway and bridge spending.

The Senate proposal also calls for a reserve fund to invest in American infrastructure.

Supplemental Nutrition Assistance Program (SNAP): Like Medicaid and CHIP programs, the SNAP program also would become a block grant by 2021 under the House budget proposal. The budget would cut funding for the program by 34 percent between 2021 and 2025 by restricting eligibility to individuals making less than 60 percent of the federal poverty level. Currently, individuals making less than 130 percent are eligible for SNAP benefits.

The Senate budget proposal does not provide any details on SNAP reform.

Education: Federal education programs also face significant cuts under the House budget plan, including reductions in Pell Grant awards. Though few details are included, the House budget proposal states that it “places a strong emphasis on returning the power to make education policy decisions to state and local governments, to families, and to students.” The Senate budget does not specify changes to education policy.