## Abstract

In this article we summarize mental retardation/developmental disabilities (MR/DD) spending since 1977, with emphasis on spending during the period 1995–2000. The change in state economic conditions, from strong growth in recent years to fiscal constraint in 2002, is also addressed. Spending data presented here are from the seventh State of the States in Developmental Disabilities (Braddock, 2002). Selected state-by-state information is also available at the study's website: http://www.cu.edu/ColemanInstitute/stateofthestates.

## Trends in MR/DD Spending

Spending in the year 2000 for persons with MR/DD totaled $22.1 billion for a wide range of community residential settings serving 15 or fewer persons, for day programs, and for individual and family support (family support, supported employment, supported living/personal assistance). In addition,$7.2 billion financed public and private institutions serving 16 or more persons. Combined community and institutional spending totaled $29.3 billion. Four components of the financing of institutional and community services during 1995–2000 are summarized in Table 1: (a) the average annual rate of community services spending increase (or decline), (b) the spending rate for institutional services, (c) the spending rate for total MR/DD services, and (d) the proportion of total MR/DD resources in the year 2000 committed to community services versus institutional services. The states are ranked in Table 1 according to this fourth comparative dimension. Table 1 1995–2000 Trends in Mental Retardation/Developmental Disabilities Spending (in %) From 1995 to 2000, every state but the District of Columbia expanded inflation-adjusted community services spending (Column 2). Nationwide, inflation-adjusted community spending advanced 7% per year. Leaders in the expansion of community services were Oregon (20% per year); Tennessee (18%); Idaho (17%); Mississippi, New Mexico, and Utah (16%); and Alaska and Kansas (15%). The District of Columbia reduced spending during this period, with an annual decline of 4%. There were spending increases of 1% per year in New Hampshire and Wyoming, and 2% to 3% in Connecticut, Louisiana, Michigan, and Rhode Island. Institutional spending in the states during 1995–2000 is summarized in Column 3 of Table 1. Thirty-two states posted 1% to 33% declines in average annual institutional spending. Among the 32 states, spending reductions were 15% or greater in New Mexico, Hawaii, West Virginia, Maine, Minnesota, and Oregon. Four of the states—Hawaii, Minnesota, New Mexico, and West Virginia—and Alaska, the District of Columbia, New Hampshire, Rhode Island, and Vermont are the 9 states that have closed all public institutions. Alaska and Vermont have also closed their private institutions for persons with MR/DD. Conversely, 12 states expanded inflation-adjusted public/private institutional spending from 1% to 6% per year during 1995–2000. These states were Arizona, Arkansas, Connecticut, Delaware, Iowa, Kentucky, Louisiana, Mississippi, Nebraska, Nevada, North Dakota, and Tennessee. There were increases of less than 1% per year in Florida, North Carolina, and Utah; and the District of Columbia and Rhode Island financed 16+ private facilities for only part of the 1995–2000 period. The fourth column of Table 1 presents average annual rates for total MR/DD spending in the states during 1995–2000. In 43 states, total MR/DD spending advanced 1% to 9% per year. In addition, the Alaska, Idaho, Oregon, and Tennessee posted inflation-adjusted annual growth of 10% or more. In contrast, the District of Columbia and Hawaii posted reductions in spending of 4% and 1%, respectively, and there was 0% growth in Indiana and Wyoming. Public spending for community services in the United States first exceeded institutional spending in 1989 (Figure 1) and in 2000, 75% of total MR/DD resources was dedicated to community services activities. The states in Table 1 are ranked based on the proportion of total MR/DD resources dedicated to community services activities in 2000 (Column 5). Alaska and Vermont devoted 100% of their MR/DD resources to community services, and 12 states dedicated at least 90%: Arizona, Colorado, the District of Columbia, Hawaii, Maine, Michigan, Minnesota, New Hampshire, New Mexico, Oregon, Rhode Island, and West Virginia. On the other hand, Arkansas, Delaware, Illinois, Iowa, Kentucky, Louisiana, Mississippi, and New Jersey allocated less than 60% of total MR/DD resources for community services. Figure 1 Spending for mental retardation/developmental disabilities services in the United States. Source: State of the States in Developmental Disabilities, Coleman Institue for Cogntive Disability and Department of Psychiatry, University of Colorado, 2002 Figure 1 Spending for mental retardation/developmental disabilities services in the United States. Source: State of the States in Developmental Disabilities, Coleman Institue for Cogntive Disability and Department of Psychiatry, University of Colorado, 2002 As illustrated in Figure 1, the nation's public and private institutional spending grew, in inflation-adjusted terms, to$9.2 billion in 1991, then declined each year through 2000. Across the 23-year period, institutional spending grew 3%, from an inflation-adjusted $7.0 billion in 1977 to$7.2 billion in 2000—even though the number of persons residing in public and private institutions declined 60%, from 207,000 to 82,000 persons. Community services annual spending averaged 10% per year during 1977–2000.

## MR/DD Spending and theState Economies

Spending for total MR/DD services advanced an average 5% per year during 1977–2000. However, there was stronger annual growth, 6%, in the first 12 years from 1977–1989 than was the growth of 4% during the more recent 11-year period, 1989–2000. The earlier period, however, encompassed the nation's 1981–1982 recession that temporarily slowed MR/DD spending growth. Total spending grew only 3% between 1981 and 1982, half the 6% annual growth rate in the 4 years preceding the recession. During the recession, MR/DD spending dropped between 1% and 9% in 13 states, and there was 0% growth in 4 states.

From 1981 to 1982, inflation-adjusted gross domestic product (GDP) in the United States dropped 2%, and all states' aggregate gross state products (GSP) dropped 3%. Following the recession, total MR/DD spending in the nation rebounded to 7% per year in the next 5 years through 1989, but, as noted earlier, annual growth then declined to 4% during 1989–2000. This was only a percentage point greater than the 3% growth between 1981 and 1982.

Table 2 identifies the average annual change in each state's inflation-adjusted GSP and total MR/DD spending during 1995–2000. Most state economies fared well during 1995–2000. There were 5% per year or greater GSP increases in Arizona, California, Colorado, Georgia, Massachusetts, Nevada, New Hampshire, North Carolina, Oregon, Texas, Utah, and Washington (Bureau of Economic Analysis, 2002a).

Table 2

Inflation-Adjusted Annual Change in GSP and Total MR/DD Spending, 1995–2000 (in %)

Total MR/DD spending outpaced advances in GSP in 30 states. There was especially rapid growth in MR/DD spending, 8% or more per year, in Idaho, Tennessee, Alaska, Oregon, Utah, Arizona, Maine, Nevada, Mississippi, and Nebraska. The 9.8% annual growth in Alaska is especially noteworthy—Alaska was the only state in which GSP declined during 1996 to 2000. Conversely, 17 states and the District of Columbia, with expanding GSP, did not have comparable growth in appropriations for MR/DD services. In Wyoming, Indiana, Hawaii, and the District of Columbia, MR/DD spending was flat or declined, even though GSP advanced. Nationwide, aggregate MR/DD spending advanced 3.8% per year and GSP advanced 3.7% per year during 1995–2000.

## Current Economic Conditions inthe States

The record-setting pace of economic growth during the 1990s has faltered. Annual GDP growth of 4% during 1995–2000 gave way to a 1% increase between 2000 and 2001 (Bureau of Economic Analysis, 2002b). Unemployment rates have climbed, and state and local tax revenues have declined (Zandi, 2001). State budget short falls were estimated to be \$40 billion for fiscal year 2002; most states had cut, or were planning to cut, their budgets (National Conference, 2002; National Governors Association, 2002).

Today, in the face of state economic constraints, most states have a diminished capacity to reallocate institutional funds to community services. Total MR/DD spending growth of 4% in the past 11 years consisted of 8% community services growth, against an average annual decline of 2% in institutional spending. Consequently, institutional spending now constitutes less than one third of total MR/DD resources in 39 states, thus limiting the funding that many states can reallocate to community services and supports. Nevertheless, as has been suggested (Hemp, Braddock, Parish, & Smith, 2001), many states can identify state and local funds that are available to leverage expanded federal financial support from the Home and Community Based Services Waiver and from other community Medicaid programs, including personal care and targeted case management. All states now utilize one or more community Medicaid options to finance individualized support in housing, in work, and support for families.

Note: Preparation of this manuscript was supported in part by Grant HHS90DN0076 from the Administration on Developmental Disabilities, U.S. Department of Health and Human Services, and a contract with the University of Minnesota Research and Training Center on Community Living.

Table 1

Continued

Table 2

Continued

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