Contract workers are being cut at North Carolina's DHHS because of budget stalemate

Feb. 5--RALEIGH -- The latest casualty of the state budget stalemate is more than 150 contract workers.

The North Carolina Department of Health and Human Services is dropping 163 contractors, citing the lack of a new state budget for the fiscal year that is more than seven months underway.

The jobs are connected to information technology. DHHS responded to a News & Observer inquiry about workers with this statement:

"Because the NC General Assembly adjourned without passing a new budget, DHHS (like all state government agencies) is funded under a continuing resolution of the [fiscal year] 2018-19 budget. As a result and due to how our IT projects are funded, there is not sufficient funding for projects that were in development.

"Fortunately, no state employees need to be laid off and contracted positions can be reassigned to other projects by their employers. DHHS is revising its contracts to reduce 163 contractors."

A DHHS spokesperson didn't respond to the N&O's questions about which projects would be affected.

Projects threatened by budget stalemate

DHHS Secretary Mandy Cohen warned state lawmakers in October that the department needed funding in the new budget to operate this year, including to implement Medicaid transformation. The transformation, a move decided in a previous legislative session, would move existing Medicaid recipients to a managed-care system in which the state contracts with private health insurance companies.

"We need to be able to sustain this work into the future, and that means stability for our department," she said then. "There is no scenario in which it won't impact services, which means it impacts safety."

Cohen said at the same October committee meeting that beyond Medicaid transformation, not having a fully funded budget destabilizes the department, making it harder for its staff to do all their work.

Medicaid recipients had already been told about the change and had started enrolling when plans were halted.

In November, DHHS announced that without a budget, Medicaid transformation would be delayed indefinitely.

Why there's no new budget

The state House and Senate both approved a Republican-written budget proposal in June, but Democratic Gov. Roy Cooper vetoed it.

The House then overrode Cooper's veto in a controversial vote on Sept. 11, but the Senate did not call for a vote. Senate Democrats said they would all vote against the override, which meant Senate Republicans would not have the supermajority needed for an override if they had taken the vote this past fall or during its one-day session in January.

Instead, according to state law, the previous year's budget rolled over into the new fiscal year. The legislature also passed several "mini budget" bills that included raises for state employees, but not teachers. The amount of teacher raises and a proposed expansion of Medicaid -- separate from the transformation effort -- are the two issues at the center of the budget standoff between Democrats and Republicans. Each side has blamed each other.

The State Employees Association of North Carolina wants the Senate to override the governor's veto.

"State employees bear the load every time there is no full state budget. This is why we are calling on the Senate to override Gov. Cooper's veto, so state employees will have the resources they need to provide vital public services," Ardis Watkins, SEANC government relations director, said in an emailed statement.

A separate mini budget bill to fund Medicaid transformation was vetoed by Cooper and has not been overridden.

If the proposed state budget becomes law, then there would be a big change to DHHS -- relocation of the headquarters from the state capital to Granville County. DHHS workers said in a town-hall meeting in July that the significantly increased commute time could mean they quit.

The General Assembly returns on April 28 for its short session.

For more North Carolina government and politics news, listen to the Domecast politics podcast from The News & Observer and the NC Insider. You can find it on Megaphone, Apple Podcasts, iHeartRadio, Stitcher or wherever you get your podcasts.

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