The South Dakota Legislature has approved a FY 17 budget with a reduction of $37 million.

The reduction did not result in reimbursement cuts to providers. Rather, the reduction impacted the Department of Social Services budget related to program under-utilization and a lower number of anticipated eligibles for new programs in FY 17. In addition, funding for the proposed Family Physician Residency program in Pierre was postponed for one year. However, the appropriations committee expressed a commitment to restore funding next year.

Gov. Dennis Daugaard’s proposed budget included a 1 percent provider increase with additional increase for the targeted provider groups. However, sales tax revenues came in a combined $51 million short of budgeted projections for years FY 17 and FY 18, resulting in the removal of the proposed 1 percent increase to providers in FY 18. In addition, the targeted increases for provider groups will not occur as proposed in December 2017.

Also, the appropriations committee utilized a list of providers whose budgets were cut, but not fully restored, back in 2011 and have a Medicaid payer mix of 50 percent or greater to apply a 0.3 percent increase in the FY 18 budget. This is the same increase teachers and state employees received. The increase of 0.3 percent equals $1.5 million, including federal match funds as outlined in this chart.)