Obama Unveils 2017 Budget Proposal

President Obama has released his spending proposal for the 2017 fiscal year, which marks Obama’s last Presidential budget proposal. It is unlikely to be approved as-is by Congress, but offers an outline of the president’s priorities. Significant disability-related funding proposals include investments in Part C of the Individuals with Disabilities Education Act (IDEA), the preschool program under IDEA, Head Start, Early Head Start and the Child Care and Development Block Grant, increased funding for the vocational rehabilitation program that helps jobseekers with disabilities find jobs, and proposed increases in funding for the Section 811 program at the Department of Housing and Urban Development which will increase housing options for people with disabilities. 


The President’s fiscal year (FY) 2017 Budget for the Department of Health and Human Services (HHS) includes “investments needed to support the health and well‐being of the nation and legislative proposals that taken together would save on net an estimated $242 billion over 10 years.” The Budget proposes $82.8 billion in discretionary budget authority and additional mandatory funding to further support specific initiatives in the discretionary budget.

The FY 2017 Budget estimate for the Centers for Medicare & Medicaid Services (CMS) is $1.0 trillion in mandatory and discretionary outlays, a net increase of $26 billion above the FY 2016 level. The Budget includes legislative proposals in Medicaid and CHIP which have an impact of $30.9 billion on net federal spending over 10 years.  The Budget requests $64 million to fund administrative activities to improve Medicaid and CHIP program operations, including an initiative to modernize data systems.

President Obama proposes an eight‐year pilot program that would create “a comprehensive long‐term care state plan option” for up to five states.  Participating states would be authorized to provide home and community‐based care at the nursing facility level of care, “creating equal access to home and community‐based care and nursing facility care.” This proposal is intended as a step toward “end[ing] the institutional bias in long‐term care.” The Secretary would have the discretion to make these pilots permanent at the end of the eight years.  This proposal entails $4.1 billion in costs over 10 years.

A proposal to expand eligibility for the 1915(i) Home and Community‐Based Services State Plan Option would remove the requirement that certain non‐categorically eligible individuals who meet the needs‐based criteria can only qualify for home and community‐based services through the 1915(i) state plan option if they are also eligible for home and community‐based services through a waiver program, which budget documents say “will reduce the administrative burden on states and increase access to home and community‐based services for the elderly and individuals with disabilities” and cost $374 million over 10 years. Another 1915(i) proposal provides states with the option to offer full Medicaid eligibility to medically needy individuals who access home and community‐based services through the state plan option under section 1915(i).  Currently, when a state elects to not apply the community income and resource rules for the medically needy, these individuals can only receive 1915(i) services and no other Medicaid services. Removing this restriction will cost $9 million over 10 years.

The budget also includes a proposal to expand eligibility under the Community First Choice Option. States would be given the option to make medical assistance available to individuals who would be eligible under the state plan if they were in a nursing facility.  Under the current statutory language, any state interested in the Community First Choice Option must create or maintain a section 1915(c) waiver with at least one waiver service to make the Community First Choice benefit available to the special income group.  Eliminating this requirement, which the budget documents describe as “administratively burdensome for states,” is predicted to cost $3.9 billion over 10 years.

The President’s budget does not call for further extension of the Money Follows the Person (MFP) program, set to expire this year. This eliminates the $419 in spending from last year’s budget associated with the program and with its evaluations. However, funding awarded to states in FY 2016 is available to states for expenditures through FY 2020.

The Budget includes $199 million in new investments in Medicare and Medicaid program integrity programs in FY 2017, as part of a multi‐year strategy to enable HHS and the Department of Justice (DOJ) to detect, prevent, and prosecute health care fraud.  The Budget also proposes a series of new authorities to strengthen program integrity oversight.  These investments and new authorities yield $25.7 billion in gross savings over 10 years. The budget proposal increases the Medicaid Integrity Program by $580 million over 10 years on top of the current funding level.  The additional investment starts with an additional $25 million in FY 2017 and increases gradually to an additional $100 million in FY 2026.   Thereafter, the total would be annually adjusted by the Consumer Price Index (CPI).  This funding will be used to address additional program integrity vulnerabilities, including expansion of Medicaid Financial Management program reviews of state financing practices; critical updates to Medicaid claims and oversight systems needed to enhance auditing; technical assistance to states to address improper payments, and other efforts to assist states to fight fraud, waste, and abuse. The budget also proposes to provide CMS maximum flexibility to disallow and defer individual payments or partial payments associated with contracts with managed care organizations, prepaid inpatient health plans, and prepaid ambulatory health plans, allowing deferrals and disallowances to be tailored to the severity and scope of specific violations. The Budget proposes to allow Medicaid Fraud Control Units to receive federal matching funds for the investigation or prosecution of abuse and neglect in non‐institutional settings, such as home‐based care, in which a beneficiary may be harmed in the course of receiving health care services, removing a limitation on federal matching that was established in 1978.  The Administration predicts no budget impact associated with this proposal, but does predict $72 million in non‐scorable savings over 10 years. 

The FY 2017 Budget requests $2 billion for ACL, an increase of $28 million over FY 2016. This includes $8 million for the Aging and Disability Resource Centers (ADRCs) program, an increase of $2 million over FY 2016, $5 million for the Lifespan Respite Care Program in FY 2017 (FY 2016 estimated level of funding for the program is $3.35 million, representing an increase of $1 million over the FY 2015 level). DD network activities, such as the Protection and Advocacy Network, the DD Councils, and the University Centers of Excellence, would be flat-funded.


The Budget requests a $138 million increase over the 2016 enacted level to fund the core Department of Labor (DOL) Workforce Innovation and Opportunity Act (WIOA) formula grants at their full authorized level for the first time since the law’s enactment. The Budget also provides additional resources to train disadvantaged populations with barriers to employment, including individuals with disabilities. The Office of Disability Employment Policy is essentially flat-funded.


Funding for the Preschool Grants program in the Department of Education would be increased by $35 million (for a total request of $403.2 million) to provide special education and related services to children ages 3 through 5. The Administration, therefore, is requesting additional flexibility to allow Local Educational Agencies (LEAs) to use funds reserved under IDEA to provide coordinated early intervening services to children ages 3 through 5. The Budget provides $907 million in IDEA Preschools Grants and the IDEA Infants and Families program, an increase of $80 million compared to 2016. The request includes a $45 million increase (for a total request of $503.6 million) for the Grants for Infants and Families (Part C) program to assist States in providing high-quality early intervention services to approximately 352,000 infants and toddlers with disabilities and their families. The Administration’s request would reserve $15 million to make competitive grants to partnerships of public and private entities to support community-based model demonstration projects. These model demonstration projects would focus on expanding early screening, referral, and early intervention services to infants and toddlers eligible for Part C and those who are at-risk, but not eligible for Part C, and their families. Meanwhile, however, grants to states under the Individuals with Disabilities Education Act would stay level at $11.9 billion.

WIOA requires significant improvements to the Vocational Rehabilitation system, including alignment with other federal job-training programs, and increased attention on helping individuals with disabilities enter competitive, integrated employment. To achieve this, the President’s Budget provides for $3.4 billion for the Vocational Rehabilitation (VR) State Grants program. The 2017 request also includes appropriations language that would explicitly allow the Department to use amounts under the VR State Grants program that would otherwise return to the Treasury to support innovative activities aimed at improving outcomes for individuals with disabilities, a practice the Department has engaged in for several years. The requested language also would provide authority for these funds to remain available for Federal obligation until September 30, 2018. These funds have previously been used to provide $215 million to the Promoting Readiness of Minors in SSI (PROMISE) pilot to test and evaluate interventions that successfully improve child and family outcomes and reduce the need for children and youth to remain in the SSI program. In 2015, using returned funds from 2014, ED awarded $20 million to create an Automated Personalization Computing Project that will demonstrate ways for individuals with disabilities to find and transfer accommodations across devices and networks. The Administration requests $30.5 million for the Supported Employment State Grants program, an increase of $3 million over the 2016 level, to assist State agencies in meeting the new challenges and opportunities resulting from WIOA.


The Civil Rights Division of the Department of Justice (DOJ) is requesting an additional $983,000 and seven positions to address and enforce “an expected significant increase in cases involving accessible technology, campus responses to students with mental health conditions, and the employment rights of individuals with disabilities” as part of its activities around the Americans with Disabilities Act (ADA) and the Supreme Court’s Olmstead decision. The current services for this initiative are 11 positions (5 attorneys) and $2.3 million.


The Budget for the Social Security Administration (SSA) proposes to create an Interagency Council on Workforce Attachment to better coordinate disability activities across the Federal government, including $200 million in funding to support a suite of demonstration projects aimed at improving employment outcomes for people with disabilities before individuals apply for SSDI.


The Department of Housing and Urban Development (HUD) requests $154 million for the Supportive Housing for Persons with Disabilities (“Section 811”) program in fiscal year 2017, an increase of $3.4 million above the fiscal year 2016 Enacted appropriation. The funding request for the Housing for Persons with Disabilities program includes funding for two primary activities: $152 million for Project Rental Assistance Contract (PRAC) and Project Assistance Contract (PAC) renewals and amendments to fully fund over 27,000 units across 2,350 housing properties; and $2 million for other program expenses, including property inspections. The Department also requests renewed authority to apply residual receipt collections to fund the Section 811 Project Rental Assistance (PRA) program and build on the success of previous rounds of funding. These funds will support state housing agencies that have partnered with state health care agencies to develop an integrated health care and housing approach to serving persons with disabilities.

FMI: The President’s budget proposal by department can be found at https://www.whitehouse.gov/omb/budget/agency-fact-sheets.