A Quick Look at the Final Budget Agreement for Fiscal Year 2015

Lawmakers Restore Funds for Higher Education and Economic Development Programs, While Cutting Medicaid, Pension Investments, Some Social Services

Over the weekend, budget negotiators resolved differences in the Senate and House versions of the state budget and the General Assembly adopted the conference committee plan and passed the upcoming Fiscal Year (FY) 2015 $39.5 billion operating budget, an increase of $2.3 billion from the current fiscal 2014 budget, and budget-balancing plan.  While the General Assembly made cuts to important investments, the final agreement improves upon the most recent House version.

The legislature doubled to $200 million the Governor’s proposed $100 million cut to pension reinvestment for both the current and upcoming budget.  Lawmakers also increased the transfer of special funds by $69.4 million over the Governor’s proposed transfers and cut $59 million from spending on reserves and on interest on the state’s debt. 

However, budget negotiators restored $10 million in funding to economic development cut in the Senate plan as well as $2 million cut in the House version, and undid $9 million in higher education reductions in both plans.

Source: Conference Committee Summary Report, page 9.  MDCEP staff allocated spending to these categories.  Higher education spending includes local community college aid. 


As in the Governor’s operating budget plan, Medicaid and state aid to public schools are the two largest spending items, at $7.9 billion and $6.9 billion respectively. Another $5.8 billion pays for Higher Education.  In addition to $336 million in cash pay-as-you-go (PAYGO) capital funding, $2.4 billion of transportation capital projects are funded in the operating budget.

However, the legislature added $20.7 million in cuts to state Medicaid funds, including $10.1 from Managed Care Organizations, and $2.2 million from community alternatives to long-term care.  The Governor’s budget plan included $1.5 million in Medicaid state savings related to reduced assessment rates for the Maryland Health Insurance Plan.  The legislature added $3.2 million in state Medicaid savings, or $4.7 million in total state reductions (see pages 28-29).  These cuts will reduce dollar-for-dollar federal Medicaid funds that come to the state, so total Medicaid cuts added to the Governor’s budget are $41.4 million.  These cuts may limit access to care for Medicaid recipients just as the state has expanded Medicaid eligibility to hundreds of thousands of Marylanders in need of health coverage.

In terms of social programs, the budget includes $1.3 billion in federal Supplemental Nutrition Assistance Program benefits, formerly known as Food Stamps, and $133.4 million for Temporary Cash Assistance benefits. However, the budget cuts $5 million for foster care payments, and $3.8 million from the Temporary Disability Assistance Program (TDAP), which helps low-income, disabled Marylanders while they are awaiting approval of federal disability support.  These programs and other important work supports, like child care subsidies and job training programs, help working families and are often under-funded. 

The legislature also cut $23.8 million from the Bays 2010 Trust Fund, but $17.6 million of the reduction was a technical correction due to double-budgeted funds in the Governor’s plan. The Trust Fund specifically targets the most effective pollution control initiatives.  Given the high cost of cleaning up pollution after the fact, cuts to the Trust Fund reduce an important investment.

Source: Conference Committee Summary Report, pages 5-6


While lawmakers did not heed MDCEP’s call to fully restore the cuts Medicaid, foster care and TDAP, they did undo $8.8 million in cuts to higher education and reductions to K-12 education aid.  The legislature also restored $10 million in funding for economic development programs cut in the Senate version, including $900,000 for the Employment Advancement Right Now job training program, and $2 million cut to the Biotechnology tax credit cut in the House plan, along with $1,000,000 cut from child care subsidies in the Senate version.   

Source: Conference Committee Summary Report, pages 5-6

MDCEP will be releasing a detailed review of the adopted operating and capital budget in the next few weeks.  So be sure to visit out blog for more highlights of the FY 2015 state budget