October 10, 2025
See attached Nonprofit Benchmarking Report from BDO looking at how nonprofits are doing, and how they have adapted to the myriad economic and other changes they continue to face in light of recent federal and state policy and financial changes, as well as those coming down the road.
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Yesterday we sent you the first article we spotted regarding the annual ‘Call Letter’ DoB Director Blake Washington sends to all state agency leads each October, giving them parameters for how to construct their state agency budget proposals. Right after that email we sent you the actual ‘Call Letter’ that instructs state agency leaders to keep spending flat and find ways to save money and do away with redundant regulatory requirements. The NYS Council met with both OASAS and OMH back in mid-September to share our recommendations on both fronts.
Below please find a good article that tackles the overlay between what’s happening in DC and the coming NYS budget negotiations to begin with the release of the Governor’s executive budget proposal that will hit the streets in mid-January. Of course for us, the advocacy began in May this year (once we knew where things stood relative to the newly enacted state budget (April 2025) and the tone of the final months that are typically devoted to policy and legislation.
Below please find a good article that tackles the overlay between what’s happening in DC and the coming NYS budget negotiations to begin with the release of the Governor’s executive budget proposal that will hit the streets in mid-January. Of course for us, the advocacy began in May this year (once we knew where things stood relative to the newly enacted state budget (April 2025) and the tone of the final months that are typically devoted to policy and legislation.
N.Y. Agencies Ordered to Identify ‘Obsolete’ Regulations, Keep Funding Requests Flat in Anticipation of Tough State Budget
By Jack Arpey, State of Politics, 10/9
The New York State Division of Budget sent out their annual call letter Thursday, giving state agencies until Oct. 24 to submit annual budget requests in which they will be expected to keep funding flat and find ways to scale back regulations as the state navigates federal funding cuts stemming from the so-called big beautiful bill.
With the state facing a $34.3 billion cumulative budget gap through 2029, Budget Director Blake Washington called for discipline and poured cold water on calls to generate revenue through increased taxes on the state’s highest earners.
The full impact of federal cuts is not expected to fully hit until midway through next fiscal year, meaning mild impacts to the current fiscal year will likely give way to more severe challenges by late in 2026. The state’s fiscal year runs from April 1 through March 31.
In the letter, Washington stressed that while revenues are in good shape so far this fiscal year, forecasted growth won’t make up for the worsening of existing budget gaps, thanks in part to those federal cuts.
Many have suggested increasing taxes on wealthy New Yorkers to backfill some of the cuts. Washington implied that turning to new revenue streams won’t cut it, and said such a move would create risks as it relates to competing with neighboring states.
“With previously approved funding for critical projects and initiatives now in jeopardy, calls for new revenues to backfill unanticipated losses of federal funding fail to address how New York will finance new initiatives and also fails to address deeper retrenchment from Washington. We must remain economically competitive with our neighboring states and improve economic opportunities for all. This upcoming fiscal year, we will prioritize aligning out-year spending growth with available resources, which will lessen the need for potential reductions to critical services at a time when New Yorkers would otherwise be in most need of our support,” Washington wrote.
Washington reminded state agencies that Gov. Kathy Hochul has asked them to come up with strategies that will soften the blow for the state’s vital programs. In this letter, he went further, asking them to go through their operations with a fine-tooth comb — finding programs and policies that are outdated or obsolete, which can potentially be grounds for restructuring or outright repeal. He described the move as an effort to alleviate the regulatory burden the state places on individuals and businesses.
“Economic pressures do not only pertain to the state of New York,” Washington said. “We need to work to alleviate the regulatory burdens we impose upon individuals, businesses and nonprofits that serve to further exacerbate New York’s affordability crisis. Therefore, in addition to your budget requests, state agencies should review agency rules, regulations, or public-facing policies and propose for repeal or reform those which are outdated or obsolete. These proposals should be submitted to Counsel’s Office for review and evaluation at the same time as when you submit your budget requests.”
Agencies will have to show their work, submitting those proposed reforms with their overall budget request on Oct. 24.
Once the governor presents her executive budget in January, state lawmakers will then conduct hearings before and offer their rebuttals in March when budget negotiations begin in earnest. The three parties are expected to come up with a deal by April 1, though budgets several weeks late are commonplace under the Hochul administration. Ahead of that process, Assemblymember Sarah Clark told Spectrum News 1 that she hopes agencies and budget officials take a close look at what programs are most useful to New Yorkers “My hope is that we take a scalpel to the budget rather than taking an axe and just start hacking things. I hope we’re really delicate in looking at where things are super critical for our families, things that check a lot of boxes and make a lot of things happen,” Clark said.
Republican state Sen. Rob Rolison expressed a similar sentiment. “What are the priorities of state government? What are the things that we need to fund first that are the essentials that have the effect of making things better for folks that then contribute to their development, their family development, the economy,” he said.
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FEDERAL BUDGET NEGOTIATIONS
POLITICO, 10/10
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Lawmakers are desperately throwing around ideas on how to end the shutdown as it heads toward its third week — and as federal workers start feeling the hole in their paychecks today. The Senate officially headed home for the long weekend and will return Tuesday to vote for an eighth time on the GOP-led CR. Senate Minority Leader Chuck Schumer can still force one more vote on the Democratic stopgap.However, Republicans are not expected to let him file cloture again on his party’s bill, Sen. Kevin Cramer told Jordain Carney. The shift in strategy to cut off more votes on the dueling funding measure is a bid to force Democrats to make a binary choice on the GOP-led bill.One off-ramp idea from Senate Republicans is to vote on Obamacare subsidies as soon as the government reopens — something Sen. Jeanne Shaheen, the lead Democratic negotiator, called “promising.” Sen. Markwayne Mullin, the White House’s unofficial Democrat whisperer, pitched a new stopgap funding plan Thursday that would push the deadline to Dec. 18 or 19, rather than Nov. 21.Those were nonstarters for Democratic leaders. Whip Dick Durbin said he is “looking for more” than a promise to vote on extending Affordable Care Act subsidies. Schumer echoed that sentiment, and also told Mia that Mullin’s plan “doesn’t make the grade.” Schumer said neither proposal guarantees a vote in the House.Any tweaks to the CR would also require the House to pass a new stopgap — and Speaker Mike Johnson is dead set on keeping the House out of session as long as it takes to pressure Senate Democrats.“Emotions are high. People are upset — I’m upset,” the speaker said Thursday. “Is it better for them, probably, to be physically separated right now? Yeah, it probably is, frankly.” Johnson’s sticking to his strategy amid growing pushback from his own members. That includes Rep. Elise Stefanik, a member of Johnson’s leadership team, who said the House should come back to pass standalone funding to pay the troops. Active-duty service members are on track to miss their first paychecks of the shutdown on Wednesday, though the White House is trying to figure out how to shift funds around to pay them.Rep. John Rutherford told Mia he wants the Senate to get rid of the filibuster to reopen the government. A few other Republicans like Rep. Marjorie Taylor Greene and Sen. Bernie Moreno have also flirted with that idea. But Senate Majority Leader John Thune on Thursday ruled out deploying the so-called nuclear option, and a number of other GOP senators worry it would come back to bite them once they’re in the minority. |
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How States Can Access New Federal Funds to Improve Care in Rural Communities, The Commonwealth Fund, 10/10
In July 2025, Congress passed H.R. 1, which cut more than $900 billion from Medicaid — the largest cuts in the program’s history — and is expected to cause more than 5 million individuals to become uninsured. For hospitals and providers, this will increase levels of uncompensated care while also decreasing overall revenue as reimbursement rates decline. The resulting budget shortages could cause hospitals and other health care facilities to close. The cuts will disproportionately affect rural areas, which have a higher proportion of Medicaid beneficiaries. Federal spending on Medicaid in rural areas is predicted to decrease by $137 billion over the next 10 years. The cuts will disproportionately impact states that expanded Medicaid as these states have larger Medicaid enrollment and thus will incur larger losses.
H.R. 1 also introduced the Rural Health Transformation Program, proposed by sponsors to help offset the impact on rural hospitals and providers. The resources available under the program favor the administration’s policy goals. This includes Make America Healthy Again priorities like instituting the President’s Physical Fitness Test, which uses competitions to encourage students’ physical condition and health; restricting the foods available under the Supplemental Nutrition Assistance Program (SNAP) by eliminating certain sugar-sweetened items; and encouraging patient engagement in health care through technology initiatives like allowing patients access to data and the use of technology wearables and health apps. The program gives the Centers for Medicare and Medicaid Services (CMS) administrator a high level of discretion in making funding decisions.The program will invest $50 billion over five years, at a rate of $10 billion per year, starting in 2026. Half will be allocated equally to all states with approved applications; the other half will be determined by CMS based on factors outlined in H.R. 1 and further detailed in the Notice of Funding Opportunity (NOFO) released in September. To be considered for funding, states must submit their applications by November 5; CMS will announce awards by December 31. The program does not require states to contribute funds to the project.
How Can States Use the Funding?
States can use funds to implement new and enhance existing activities, but not to replace or duplicate activities that are already funded. The program will support five strategic goals outlined by CMS:
- Make Rural America Healthy Again
- sustainable access
- workforce development
- innovative care
- tech innovation.
Projects are expected to advance Health and Human Services Secretary Robert F. Kennedy, Jr.’s Make America Healthy Again agenda by expanding preventive services and chronic and behavioral health care to target the root causes of disease. The NOFO outlines 10 ways states can utilize the funds to pursue the program’s goals and requires them to integrate at least three of these “permissible uses” in their applications.
Required Collaboration
States must certify that their applications were developed in collaboration with a range of required partners including the state health agency or department of health, state Medicaid agency, state office of rural health, state tribal affairs office or tribal liaison, and Indian health care providers. Applications also must be endorsed by the governor of the state. States must also describe how they are involving rural health stakeholders in planning and implementation; provide proof of stakeholder involvement, like letters of support; and describe how the project governance structure reflects the patients and providers in their area.
How Will CMS Assess State Applications?
As described earlier, half of the available funding will be distributed to all approved states equally. The other half will be distributed by CMS based on the state’s “total point score.” The total point score is determined by two components: rural factors data and the technical score, which includes application information, data, and current state policy, such as policies aligned with the Make America Health Again agenda. Each state will have its technical score reevaluated at the start of every budget period, and the reevaluation will consider whether the state is making progress in achieving its goals and objectives. State budgets can be adjusted accordingly.
CMS will use detailed scoring criteria to determine total state funding. The three categories of scores that will determine workload funding are initiative-based factors evaluating the transformative possibilities of proposed projects and activities; state policy action factors for states that have an existing aligned policy or commit to make policy changes by the end of 2027; and data-driven factors based on metrics in comparison to other states.
Conclusion
The Rural Health Transformation Program is one of the only sources of new funding included in H.R. 1., and while the $50 billion cannot offset $900 billion in cuts, the funds do present an opportunity for states to invest in new collaborations, technologies, payment models, and other initiatives that could improve health care delivery for rural patients and systems. This may be especially impactful for non-expansion states that will experience significantly lower cuts to Medicaid, and can therefore focus more fully on rural health transformation efforts.With each state developing plans to meet its own needs, we are likely to see a range of activities and programs — as well as a range of success. This allows policymakers the opportunity to learn from other states, and to determine what is effective, adopt successful methods, and improve.Once the awards are made, efforts to monitor and measure program implementation, outcomes, and findings will be vital to ensure that rural delivery programs and residents benefit from the investment.
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OIG Publishes Report on Limited and Inaccurate Behavioral Health Networks in MA and Medicaid
This week the federal Office of the Inspector General (OIG) published a report on behavioral health networks for Medicaid Advantage and Medicaid managed care enrollees. OIG’s investigation found that most provider networks were highly limited, and many directories included inactive providers. MA plans on average included 16 percent of the counties’ behavioral health workforce in their networks, while Medicaid plans included an average of 31 percent. Of these, a significant percentage were “ghost” providers who did not see any patients from the plan during the year. OIG recommends monitoring of provider networks and additional steps to improve the accuracy of network directories in Medicare Advantage, working with states to improve the accuracy of network directories in Medicaid managed care, and exploring how a nationwide directory could reduce inaccuracies and increase administrative efficiencies for providers and patients.
As you may recall, in December 2023 Attorney General Tish James and the AG’s Office published a report as to its findings after conducting extensive research (to include ‘secret shopping’ results) as to the accuracy of NYS Health Plan Provider Directories and found that 86% of most health plan directories included information that was in some way inaccurate to include entries of practitioners that were unreachable, not ‘in network’ or that were not accepting new clients.
Here’s an archived article from the Times Union discussing the findings:
The (federal) OIG Report is available here: https://oig.