Texas Cuts Taxes and Nonprofits for Children with Disabilities see Funding Cut

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December 21, 2016; Texas Tribune

As residents of a highly conservative state that’s incredibly resistant to increasing taxes, sometimes it falls to the most vulnerable of Texans to pick up the tab when there is a budget hole. To make up for a budget shortfall caused by tax cuts in 2015, a $350 million cut to Medicaid reimbursement for children’s therapy services went into effect late last week. The likely result of such a drastic cut will be that providers of children’s therapy services, which include speech, physical, and occupational therapies, will stop accepting Medicaid patients in their programs.

Nonprofit programs that rely heavily on Medicaid reimbursements may eventually close entirely. One program in North Texas that served 10 counties has already had to shut its doors. Additionally, after facing a $300,000 budget cut, East Texas provider Andrews Center withdrew from the Early Childhood Intervention program in September. The organization is currently working with the Texas Department of Assistive and Rehabilitative Services to transition eligible children to other service providers.

About 50,000 children under the age of three may feel the impact of these cuts, but those in rural areas are expected to fare worse than those in major cities. Childhood intervention programs, particularly for those in rural areas, typically offer home visits, as long car rides are simply not feasible for some of the children they serve. What this means is that the neediest children with the least number of provider options will receive fewer services.

While Texas legislators have already announced a supplemental budget will likely be created to ensure Early Childhood Intervention programs do not close, the situation serves to remind nonprofit organizations of the perils of relying too heavily on state funding. Those providers most at risk of closing their doors and no longer being able to serve their constituents are those that relied on Medicaid reimbursements to fund their programs. State budgets can be fickle, and may be particularly so in the coming years as the majority of state revenues are trending downward. If nonprofits can learn one time-honored lesson from the situation in Texas, it’s that diversified funding is almost always necessary to ensure long-term financial solvency.—Sheela Nimishakavi