FR Doc 04-14580

[Federal Register: July 23, 2004 (Volume 69, Number 141)]
[Notices]
[Page 44013-44027]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23jy04-71]

-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2187-N]

State Children's Health Insurance Program (SCHIP); Extended
Availability of Unexpended SCHIP Funds From the Appropriation for
Fiscal Years 1998 Through 2001; and Provision of Authority for
Qualifying States To Use a Portion of SCHIP Funds for Medicaid
Expenditures

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This notice describes the extension of availability to the
end of Federal fiscal year (FY) 2004 of the amounts of States'
unexpended FY 1998 and FY 1999 allotment funds. Additionally, this
notice sets forth the amounts of States' unexpended FY 2000 allotments
that remained at the end of FY 2002 that will be available under a
statutory formula for each of the 50 States, the District of Columbia,
and the Commonwealths and Territories through the end of a subsequent
period of availability ending September 30, 2004. This notice also sets
forth the amounts of States' unexpended FY 2001 allotments that
remained at the end of FY 2003 that will be available under a statutory
formula for each of the 50 States, the District of Columbia, and the
Commonwealths and Territories through the end of a subsequent period of
availability ending September 30, 2005.
Finally, this notice permits ``Qualifying States'' to elect to
receive a portion of their available SCHIP allotments as increased
Federal matching funding for certain expenditures in their Medicaid
programs.

FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.

SUPPLEMENTARY INFORMATION:

I. Background

A. Extension of Availability and Redistribution of State Children's
Health Insurance Program (SCHIP) Fiscal Year 1998 Through 2001
Allotments

Title XXI of the Social Security Act (the Act) sets forth the State
Children's Health Insurance Program (SCHIP) to enable States, the
District of Columbia, and specified Commonwealths and Territories to
initiate and expand health insurance coverage to uninsured, low-income
children. In this notice, unless otherwise indicated, the terms
``State'' and ``States'' refer to any or all of the 50 States, the
District of Columbia, and the Commonwealths and Territories. States may
implement SCHIP through a separate child health program under title XXI
of the Act, an expanded program under title XIX of the Act, or a
combination of both. Under section 2104 of the Act, the SCHIP
allotments for a Federal fiscal year (FY) are available to match
expenditures under an approved State child health plan for an initial
3-fiscal year ``period of availability,'' including the fiscal year for
which the allotment was provided. After the initial period of
availability, the amount of unspent allotments is subject to a
subsequent period of availability. With the exception described below
for the allotments made in FYs 1998 through 2001, allotments unspent in
the initial 3-year period of availability would be redistributed from
States that did not fully spend these allotments to States that fully
spent their allotments for that fiscal year.
The Medicare, Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA) enacted as part of Pub. L. 106-554 on
December 21, 2000, amended title XXI of the Act, in part by
establishing new requirements for a subsequent extended period of
availability with respect to the amounts of States' FY 1998 and FY 1999
allotments that were unspent during the initial 3-year period of
availability. Under the BIPA amendments, the subsequent period of
availability for States' unspent FY 1998 and 1999 allotments was
extended to the end of FY 2002.
Section 1 of Pub. L. 108-74, enacted on August 15, 2003, amended
title XXI of the Act to establish new requirements for the subsequent
period of availability associated with the unexpended amounts of
States' FYs 1998, 1999, 2000, and 2001 allotments that were unspent
during the initial 3-year period of availability relating to those
fiscal years. Specifically, section 2104(g) of the Act extends the
subsequent period of availability associated with the allotments and
redistribution of allotments for FYs 1998 through 2000 through the end
of fiscal year 2004, and through the end of fiscal year 2005 for the
redistributed and extended FY 2001 allotments.
The requirements of section 2104(g) of the Act prescribe a
methodology and process which includes the retention of certain amounts
of unspent FY 2000 and FY 2001 allotments that would remain available
to the States that did not fully expend their FY 2000 or FY 2001

[[Page 44014]]

allotments (retained allotments), and the redistribution of unspent FY
2000 or FY 2001 allotments that would not be retained but which would
be redistributed to those other States that fully spent their FY 2000
or FY 2001 allotments (redistributed allotments).

B. Authority for Qualifying States To Use Available SCHIP Allotments
for Medicaid Expenditures

Under section 2105(a)(1)(A) through (D) of the Act and before
enactment of Pub. L. 108-74, only Federal payments for the following
Medicaid and SCHIP expenditures were applied against States' available
SCHIP allotments: (1) Medical assistance provided under title XIX
(Medicaid) at the SCHIP enhanced Federal medical assistance percentage
(FMAP) matching rate with respect to the States' Medicaid SCHIP
expansion population; (2) medical assistance provided on behalf of a
child during presumptive eligibility under section 1920A of the Act
(these funds are matched at the regular Medicaid FMAP rate); (3) child
health assistance to targeted low income children that meets minimum
benefit requirements under SCHIP; and (4) certain expenditures in the
SCHIP that are subject to the 10-Percent Limit on non-primary
expenditures (including other child health assistance for targeted low-
income children, health services initiatives, outreach, and
administrative costs).
However, section 1(b) of Pub. L. 108-74, as amended by Pub. L. 108-
127 also adds a new section 2105(g) to the Act under which ``Qualifying
States'' that meet prescribed criteria may elect to use up to 20
percent of their available FYs 1998 through 2001 SCHIP allotments as
additional Federal financial participation (FFP) in certain
expenditures under their Medicaid programs.

II. Provisions of This Notice

A. Extension of Availability and Redistribution of SCHIP Fiscal Year
1998 Through 2001 Allotments

1. Extension of Availability of FY 1998 Through 2001 SCHIP Allotments
Section 2104 of the Act provides an allotment for each fiscal year
for Federal matching payments for an initial 3-year period for the
States. Section 2104(g) of the Act, as added by BIPA, provided for a
methodology to redistribute or continue availability of all unexpended
amounts for FYs 1998 and 1999 at the end of the initial 3-year period.
Furthermore, under BIPA, the unexpended FY 1998 and 1999 reallotments
were available to States until the end of FY 2002. However, section
2104(g) of the Act, as amended by BIPA, provided for a methodology for
the redistribution and retention of unexpended allotment amounts only
for the FYs 1998 and 1999. Section 2104(g), as amended by BIPA, did not
prescribe a methodology for the redistribution or retention of the
amounts of the FY 2000 or FY 2001 allotments that were unexpended at
the end of the initial 3-year period of availability. Furthermore,
there was no provision for States that did not fully expend their FY
2000 or FY 2001 allotment to retain any portion of their unexpended FY
2000 or FY 2001 allotment amounts.
Section 2104(g), as amended by Pub. L. 108-74, extended the
subsequent period of availability for reallotted FY 1998 and FY 1999
allotments through the end of fiscal year 2004. Furthermore, section
2104(g) of the Act was amended to specify a methodology for the
redistribution and retention of the amounts of unexpended FY 2000 and
FY 2001 allotments. Section 2104 of the Act requires the Secretary to
calculate allotments for each State with an approved State child health
plan based on available appropriated funds for each fiscal year. All
States had approved plans in order to have access to their final FY
2000 and FY 2001 SCHIP allotments, which were published on May 24, 2000
and January 22, 2001, respectively, in the Federal Register (65 FR
33638) and in the Federal Register (66 FR 6630). The final rule setting
forth the methodologies and procedures to determine the allotment of
Federal funds for each fiscal year and the grant award and payment
process was also published on May 24, 2000 in the Federal Register (65
FR 33616).
Sections 2104(e) and (f) of the Act require the Secretary to
develop an appropriate procedure for the redistribution of States'
unexpended SCHIP fiscal year allotments only for those States that have
fully expended such allotments during the initial 3-year period of
availability. With respect to these provisions, in March 2003, in order
to provide States access to funding pending adoption of a final
redistribution procedure, we redistributed a portion of the unexpended
FY 2000 funds on an interim basis (subject to redistribution in
accordance with the final redistribution procedure that would be
adopted). The interim redistribution was limited to one-half of the
unexpended FY 2000 allotments and was made only to those States
(including the Commonwealths and Territories) that fully expended such
allotments by the end of FY 2002.
Pub. L. 108-74 amended section 2104(g) of the Act, in accordance
with a specified formula, to provide for the retention of certain
amounts of States' unexpended FY 2000 allotments and the redistribution
of the remaining amounts of such unexpended FY 2000 allotments to
States that fully expended their allotments in the initial 3-year
period of availability. This notice sets forth the results of the
statutory formula to the unexpended allotments for FY 2000 and FY 2001
and describes the methodology for the redistribution and retention of
unexpended SCHIP allotments.
Section 2104(e) of the Act requires that the amount of a State's
allotment for a fiscal year be available to the State for matching
allowable State expenditures for a 3-year initial period of
availability; the fiscal year for which the funds are allotted, and the
two following fiscal years. For FY 2000, the 3-year initial period of
availability was October 1, 1999 through September 30, 2002, and For FY
2001, the 3-year initial period of availability was October 1, 2000
through September 30, 2003. Section 2104(f) of the Act requires
redistribution of the entire amount of unspent allotments after the
initial period of availability has expired.
Neither BIPA nor the recently enacted Pub. L. 108-74 repealed or
deleted sections 2104(e) and (f) of the Act. Referencing sections
2104(e) and (f) of the Act, BIPA added section 2104(g) of the Act which
established a formula for redistributing and continuing the
availability of unexpended allotments for FYs 1998 and 1999. Pub. L.
108-74 further amended section 2104(g) of the Act to provide for the
redistribution and retention of unexpended FY 2000 and FY 2001
allotments under a prescribed methodology that differs from the
methodology provided under the BIPA amendments for the FY 1998 and FY
1999 unexpended allotments. The FY 2000 and FY 2001 allotment
redistribution/retention formula provided for under section 2104(g) of
the Act, as amended by Pub. L. 108-74, replaces the redistribution that
otherwise would have been required under section 2104(f) of the Act.
This FY 2000 and FY 2001 redistribution and retained allotment is
described in the next section of this notice.
Section 2104(g) of the Act, as amended by Pub. L. 108-74, requires
the Secretary to redistribute and continue availability of States'
unexpended FYs 1998, 1999, and 2000 allotments until the end of FY
2004. Before enactment of Pub. L. 108-74, section 2104(g) of the Act
provided that the redistributed and retained allotment amounts for FYs
1998 and 1999 was

[[Page 44015]]

available only until the end of FY 2002. Similarly, under section
2104(e) of the Act, the redistributed FY 2000 allotments would only be
available until the end of FY 2003. Finally, under section 2104(g) of
the Act, as amended by Pub. L. 108-74, the redistributed and retained
allotment amounts for FY 2001 will continue to be available to States
until the end of FY 2005.
2. Ordering of Expenditures
The availability of retained allotment funds is determined in
accordance with requirements related to the ordering of expenditures.
Specifically, a State's expenditures are applied against the State's
available fiscal year SCHIP allotment amounts in the following order:
(1) Title XIX SCHIP-related expenditures for which payment is made
at the enhanced Federal medical assistance percentage (FMAP) (section
2105(a)(1)(A) of the Act);
(2) Title XIX expenditures for medical assistance provided during a
presumptive eligibility period under section 1920A of the Act (section
2105(a)(1)(B) of the Act);
(3) Child health assistance for targeted low-income children in the
form of providing health benefits coverage that meets the requirements
of section 2103 (section 2105(a)(1)(C) of the Act);
(4) Other child health assistance for targeted low-income children
and health services initiatives under the plan for improving the health
of children (including targeted low-income children and other low-
income children) (sections 2105(a)(1)(D)(i)and (ii) of the Act);
(5) Outreach expenditures (section 2105(a)(1)(D)(iii) of the Act);
and
(6) Administration expenditures (section 2105(a)(1)(D)(iv) of the
Act).
In general, States' expenditures will be applied against the FY
2000 and FY 2001 redistribution amounts in accordance with existing
SCHIP regulations on allotments (42 CFR part 457). This notice permits
States the option to decide the order of application of expenditures
against the redistribution amounts and other available fiscal year
allotment amounts.
Ordering Election for FY 2000 Redistributed Amounts. A
redistribution State, that is, a State that has fully expended its
allotment, may have a maximum of four possible choices for the order of
the application of FY 2000 redistribution funds in FY 2003, depending
on what other fiscal year allotments are available to the State in FY
2003: (1) Before FY 2001 allotments; (2) after FY 2001 and before FY
2002 allotments; (3) after FY 2002 and before FY 2003 allotments; and
(4) after FY 2003 allotments. Furthermore, if a FY 1998 and/or FY 1999
redistribution State also has FY 1998 and/or FY 1999 redistribution
funds available in FY 2003, it can choose whether the FY 2000
redistribution funds will be used before or after the FY 1998 and/or FY
1999 redistribution funds.
In addition, with the enactment of Pub. L. 108-74, the FY 1998 and
FY 1999 redistributed amounts are extended to the end of FY 2004;
therefore, the States have the option to choose their ordering election
for the FY 1998 and FY 1999 redistribution allotment amounts.
We believe that States should be afforded the flexibility to decide
whether redistributed funds would be used before or after other
available allotment funds to allow them to optimize the use of the
funds. Therefore, during the interim and final redistribution, we
offered States that will receive FY 2000 redistributed amounts the
option of choosing the order of when the funds would be expended during
FY 2003 among the other available allotments during FY 2003.
Both the redistributed amounts and the retained amounts for FY 2000
will be available for allowable SCHIP expenditures reported for the
period of October 1, 2002 through September 30, 2004.
Ordering Election for FY 2001 Redistributed Amounts. A
redistribution State, that is, a State that has fully expended its
allotment, may have a maximum of four possible choices for the order of
the application of FY 2001 redistribution funds in FY 2004, depending
on what other fiscal year allotments are available to the State in FY
2004: (1) Before FY 2002 allotments; (2) after FY 2002 and before FY
2003 allotments; (3) after FY 2003 and before FY 2004 allotments; and
(4) after FY 2004 allotments. Furthermore, if a FY 1998, FY 1999, and/
or FY 2000 redistribution State also has FY 1998, FY 1999, and/or FY
2000 redistribution funds available in FY 2004, it can choose whether
the FY 2001 redistribution funds will be used before or after the FY
1998, FY 1999, and/or FY 2000 redistribution funds, based on their
ordering election for those funds.
Both the redistributed amounts and the retained amounts for FY 2001
will be available for allowable SCHIP expenditures reported for the
period of October 1, 2003 through September 30, 2005.
All of the redistribution States have responded to us with their
decision regarding this option for their ordering elections for the FY
2001 redistributed allotments. Under the final redistribution
methodology, once a State chooses the order of the FY 1998, FY 1999, FY
2000, and FY 2001 redistribution amounts, it cannot change that order
at a later date. We have made provisions to include the States' FY 2000
and FY 2001 redistributed amounts on Form CMS-21C (Allocation of Title
XIX and Title XXI Expenditures to the SCHIP Fiscal Year Allotment).
Form CMS-21C is used for tracking States' expenditures against their
allotments, to include the States' FY 2000 and FY 2001 redistributed
amounts. The redistributed allotment amounts will be automatically
entered on this form, and the Medicaid and SCHIP expenditure system
will automatically apply expenditures reported on the quarterly
expenditure reports for the period of October 1, 2002 through September
30, 2004 to the FY 2000 redistributed amounts available through
September 30, 2004. Similarly, the system will automatically apply
expenditures reported on the quarterly expenditure reports for the
period of October 1, 2003 through September 30, 2005 to the FY 2001
redistributed amounts available through September 30, 2005.
3. Determination of Redistribution Amounts or Continued Availability of
Unexpended FY 2000 and FY 2001 Allotments
In Table 1 and Table 2 of this notice, we set forth the amount of
States' unexpended FY 2000/2001 allotments as of November 30, 2002, or
November 30, 2003, respectively, as specified in section 2104(g) of the
Act. We also set forth the retained amounts that, under statutory
formula, are subject to continued availability by States that did not
fully expend their FY 2000/2001 allotments, and the amounts that are
redistributed for availability to States that fully expended their FY
2000/2001 allotments. The formula for determining the redistributed and
retained amounts of the FY 2000/2001 SCHIP allotments are described
below.
Establishing the Amount of Unexpended FY 2000/2001 Allotments.
Under section 2104(g)(3) of the Act, the amount of States' unexpended
FY 2000 allotments at the end of the initial 3-year period of
availability is established based on the SCHIP-related expenditures, as
reported and certified by States to us on the quarterly expenditure
reports (Form CMS-64 or CMS-21) through November 30, 2002 (for the FY
2000 allotments), or through November 30, 2003 (for the FY 2001
allotments), as approved by the

[[Page 44016]]

Secretary. These expenditures are applied and tracked against the
States' FY 2000 allotments (as published on May 24, 2000 in the Federal
Register (65 FR 33638)), and the States' FY 2001 allotments (as
published on January 22, 2001 in the Federal Register (66 FR 6630)),
and other available allotments, on Form CMS-21C, Allocation of the
Title XIX and Title XXI Expenditures to SCHIP Fiscal Year Allotment.
By November 30, 2002, all States reported and certified their FY
2002 fourth quarter expenditure reports (representing the last quarter
of the 3-year period of availability for FY 2000). Similarly, by
November 30, 2003, all States reported and certified their FY 2003
fourth quarter expenditure reports (representing the last quarter of
the 3-year period of availability for FY 2001). Expenditures reflected
in Table 1 and Table 2 below were taken from our MBES/CBES
``masterfile,'' which represents the State's official certified SCHIP
and Medicaid expenditure reporting system records related to FY 2000
and FY 2001 allotments, respectively.
Based on States' expenditure reports submitted and certified
through November 30, 2002, the total amounts of States' FY 2000 SCHIP
allotments that were unexpended at the end of the 3-year period ending
September 30, 2002, is $2,206,440,396. Based on States' expenditure
reports submitted and certified through November 30, 2003, the total
amounts of States' FY 2001 SCHIP allotments that were unexpended at the
end of the 3-year period ending September 30, 2003, is $1,749,021,146.
Application of the Maintenance of Effort Provision. The
$2,206,440,396 in unexpended FY 2000 allotments includes the amounts of
reduction to the States' FY 2000 allotments based on the application of
the ``maintenance of effort'' (MOE) provisions specified in the SCHIP
statute at section 2105(d)(2) of the Act. Under section 2105(d)(2) of
the Act, the amount of a State allotment in a fiscal year, beginning
with fiscal year 1999, is reduced if the State does not meet specified
spending levels on children's health insurance. The application of this
provision resulted in the reduction of one State's FY 2000 allotment by
$7,893,711. Because this amount was originally allotted to the State
but was not expended by the State, it is subject to redistribution.
This amount is not subject to continued availability because it is not
available to the State to which it was originally allotted. There were
no MOE reductions necessary with respect to the FY 2001 allotments.
Continued Availability of Unexpended FY 2000/2001 Allotments.
Section 2104(g)(2)(A)(iii) of the Act specifies the formula for
determining the amounts of the FY 2000 allotments that were unexpended
at the end of FY 2002 and that will remain available for each retained
allotment State. Specifically, the FY 2000 retained allotment amount is
calculated for each affected State by multiplying the State's
unexpended FY 2000 allotment amount remaining at the end of the 3-year
period of availability (that is, at the end of FY 2002) by 50 percent;
the result is the FY 2000 retained allotment amount for that State.
Similarly, section 2104(g)(2)(A)(iv) of the Act specifies the same
formula for determining the amounts of the FY 2001 allotments that were
unexpended at the end of FY 2003 and that will remain available for
each retained allotment State. Specifically, the FY 2001 retained
allotment amount is calculated for each affected State by multiplying
the State's unexpended FY 2001 allotment amount remaining at the end of
the 3-year period of availability (that is, at the end of FY 2003) by
50 percent; the result is the FY 2001 retained allotment amount for
that State.
Redistribution for the Commonwealths and Territories. Section
2104(g)(1)(A)(ii) of the Act specifies the FY 2000 and FY 2001
redistribution for the Commonwealths and Territories that have fully
expended their FY 2000 and/or FY 2001 allotments. First, under this
provision, the total Commonwealths and Territories redistribution
amount is calculated by multiplying the total amount of the unexpended
FY 2000 or FY 2001 allotments available for redistribution and
continued availability by 1.05 percent. For the FY 2000 redistribution
calculation, this amount is $23,167,624 (1.05 percent of
$2,206,440,396). For the FY 2001 redistribution calculation, this
amount is $18,364,722 (1.05 percent of $1,749,021,146). Second, only
those Commonwealths and Territories that have fully expended their FY
2000 and/or FY 2001 allotments will receive an allocation of this
amount, equal to a specified percentage of the 1.05 percent amount.
This percentage is determined by dividing the respective SCHIP fiscal
year allotment (FY 2000 or FY 2001) for each Commonwealth or Territory
that has fully expended its FY 2000 and/or FY 2001 allotment by the
total of all the FY 2000 (and/or FY 2001) allotments for those
Commonwealths and Territories that fully expended their FY 2000 and/or
FY 2001 allotments.
Redistribution for the States and the District of Columbia. As
amended by Pub. L. 108-74, section 2104(g)(1)(A)(i)(III) of the Act
specifies the formula for calculating the FY 2000 redistribution
amounts for each of those States and the District of Columbia that have
fully expended their FY 2000 allotments. Similarly, section
2104(g)(1)(A)(i)(IV) of the Act specifies the formula for calculating
the FY 2001 redistribution amounts for each of those States and the
District of Columbia that have fully expended their FY 2001 allotments.
First, the total amount available for redistribution is determined by
subtracting the total of the redistribution amounts for the
Commonwealths and Territories and the total amount needed for retention
by the States, Commonwealths, and Territories from the total available
for redistribution. Second, the allocation of this total amount
available for redistribution is determined by multiplying this amount
by a percentage specific to each State. The percentage is determined
for each redistribution State by dividing the difference between the
State's total reported applicable expenditures for the respective 3-
year period of availability, and the State's fiscal year allotment
related to that period of availability, by the total of these
differences for all States.
4. Table of SCHIP FY 2000 Redistribution or Extended Availability of
Unexpended FY 2000 Allotments
The formula used to determine the amount of the unexpended FY 2000
SCHIP allotments for redistribution or continued availability is
described in detail below. The following is a description of Table 1,
which presents each State's FY 2000 SCHIP allotment redistribution or
retained amount.
A total of $4,249,200,000 was allotted nationally for FY 2000,
representing $4,204,312,500 in allotments to the 50 States and the
District of Columbia, and $44,887,500 in allotments to the
Commonwealths and Territories. Based on the quarterly expenditure
reports, submitted and certified by November 30, 2002, 14 States fully
expended their FY 2000 allotments, 37 States and the District of
Columbia did not fully expend their FY 2000 allotments, and all 5 of
the Commonwealths and Territories fully expended their FY 2000
allotments. For the States and the District of Columbia that did not
fully expend their FY 2000 allotments, their total FY 2000 allotments
were $3,362,230,713, and the total expenditures applied against their
FY 2000 allotments were $1,163,684,028. Therefore, the total amount of

[[Page 44017]]

unexpended FY 2000 allotments at the end of FY 2002 equaled
$2,198,546,685 ($3,362,230,713 minus $1,163,684,028). In addition,
$7,893,711, related to the MOE provision described above, also remained
unexpended at the end of FY 2002. Therefore, the total amount of the FY
2000 allotments unexpended at the end of FY 2002 equaled $2,206,440,396
($2,198,546,685 plus $7,893,711).
In accordance with the redistribution calculation for FY 2000
described above, $1,099,273,343 (50 percent of $2,198,546,685) is
retained by the 37 States that did not fully expend their FY 2000
allotments, $23,167,624 is redistributed to the five Commonwealths and
Territories, and $1,083,999,429 is redistributed to the 14
redistribution States. Both the $1,107,167,054 redistributed allotment
amounts and the $1,099,273,343 retained allotment amounts will remain
available through the end of FY 2004.

Key to Table 1--Calculation of The SCHIP FY 2000 Redistribution of the
Unexpended FY 2000 Allotments

Column/Description

Column A = STATE. Name of State, District of Columbia, the
Commonwealth or Territory.
Column B = FY 2000 ALLOTMENT. This column contains the FY 2000 SCHIP
allotments for all States, which were published on May 24, 2000 in
the Federal Register (65 FR 33638).
Column C = EXPENDITURES APPLIED AGAINST FY 2000 ALLOTMENT. This
column contains the cumulative expenditures applied against the FY
2000 allotments, as reported and certified by all States through
November 30, 2002.
Column D = UNEXPENDED FY 2000 ALLOTMENTS OR ``REDISTRIBUTION.'' This
column contains the amounts of unexpended FY 2000 SCHIP allotments
for States that did not fully expend the allotments during the 3-
year period of availability for FY 2000 (FYs 2000 through 2002), and
is equal to the difference between the amounts in Column B and
Column C. For States that did fully expend their FY 2000 allotments
during the period of availability, the entry in this column is
``REDISTRIBUTION.'' The amounts in each of the State lines in this
column do not include the MOE provision amount of $7,893,711; the
MOE amount is added to the total of the amounts of the States'
unexpended FY 2000 allotments in this column at the bottom of Column
D. The total amount of $2,206,440,396 ($2,198,546,685, the total
unexpended FY 2000 allotments, plus $7,893,711, the MOE provision
amounts) represents the total amount available for redistribution
and continued availability for FY 2000.
Column E = FOR REDISTRIBUTION STATES ONLY FY 2000 through 2002
EXPENDITURES. For those States that have fully expended their FY
2000 allotments, this column contains the total amounts of the
States' reported SCHIP related expenditures for each of the years FY
2000 through FY 2002, representing the FY 2000 3-year period of
availability. For those States, Commonwealths, and Territories that
did not fully expend their FY 2000 allotments during the period of
availability, the entry in Column E is ``NA.''
Column F = REDISTRIBUTION STATES ONLY FYs 2000 Through 2002
EXPENDITURES MINUS FY 2000 ALLOTMENT. This column contains the
amounts of States' reported SCHIP-related expenditures for each of
the years FY 2000 through FY 2002 (Column E), minus the FY 2000
allotment (Column B).
Column G = FOR REDISTRIBUTION STATES PERCENT OF TOTAL
REDISTRIBUTION. This column contains each State's redistribution
percentage of the total amount available for redistribution,
calculated as the entry in Column F divided by the total (for States
only) in Column F.
Column H = FY 2000 REDISTRIBUTED ALLOTMENT AMOUNTS. This column
contains the amounts of States' unexpended FY 2000 SCHIP allotments
that are being redistributed to those States that have fully
expended their FY 2000 allotments. For the States that have fully
expended their FY 2000 SCHIP allotments, the amount in Column H is
equal to the percentage in Column G multiplied by the total amount
available for redistribution ($1,083,999,429). For the 14 States
that have fully expended their FY 2000 allotments, the FY 2000
redistribution amounts total $1,083,999,429. For the Commonwealths
and Territories that have fully expended their FY 2000 allotments,
the amounts in Column H represents their respective proportionate
shares (based on their FY 2000 allotments) of $23,167,624
(representing 1.05 percent of the total amount for redistribution
and continued availability of $2,206,440,396). For those States,
Commonwealths, and Territories that did not fully expend their FY
2000 allotments during the period of availability, the entry in
Column H is ``NA.''
Column I = FY 2000 RETAINED ALLOTMENT AMOUNTS. For the States that
did not fully expend their FY 2000 allotments, this column contains
the amounts of the States' FY 2000 unexpended allotments in Column D
multiplied by 50 percent, the result is the amount of these States'
unexpended FY 2000 allotments that the States will retain. As
indicated at the bottom of Column I, the total FY 2000 retained
allotment amounts are $1,099,273,343.
Column J = UNEXPENDED FY 2000 ALLOTMENT AMOUNTS USED IN
REDISTRIBUTION. For the States that did not fully expend their FY
2000 allotments, this column reflects the amounts of such States' FY
2000 unexpended allotments (not including the MOE reduction amount)
that were used in the redistribution in Column H; these amounts are
no longer available to these States. The amount in Column J is equal
to the difference between Column D, the unexpended FY 2000
Allotments, and Column I, the FY 2000 Retained Allotment Amounts.
For States that did fully expend their FY 2000 allotments, the entry
in Column J is ``NA.''

[[Page 44018]]

Table 1.--Calculation of the SCHIP FY 2000 Redistribution and Continued Availability of the Unexpended FY 2000 Allotments
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Unexpended FY
Expenditures Unexpended FY 2000 For redistribution Redist States only FY For redist states FY 2000 redistributed FY 2000 retained 2000 allotment
State FY 2000 Allotment applied against allotments or states only FY 2000-2002 expenditures percent of total allotment amounts (col allotment amounts amounts used in
FY 2000 allotment ``redistribution'' 2000-2002 minus FY 2000 redistribution (col F/ G x amount available (col D x retained redistribution
expenditures allotment (col E-B) sum of col F) for redistribution) %) (col D-I)
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J
----------------------------------------
Alabama................................ $77,012,259 $28,818,937 $48,193,322 NA NA NA NA $24,096,661 $24,096,661
Alaska................................. $7,730,025 $7,730,025 REDISTRIBUTION $62,676,041 $54,946,016 2.5327% $27,454,002 NA NA
Arizona................................ $130,213,077 $75,293,441 $54,919,636 NA NA NA NA $27,459,818 $27,459,818
Arkansas............................... $53,754,360 $0 $53,754,360 NA NA NA NA $26,877,180 $26,877,180
California............................. $765,547,705 $23,061,375 $742,486,330 NA NA NA NA $371,243,165 $371,243,165
Colorado............................... $46,890,416 $17,691,235 $29,199,181 NA NA NA NA $14,599,590 $14,599,591
Connecticut............................ $39,225,273 $4,426,705 $34,798,568 NA NA NA NA $17,399,284 $17,399,284
Delaware............................... $9,036,260 $0 $9,036,260 NA NA NA NA $4,518,130 $4,518,130
District of Columbia................... $10,817,074 $1,068,733 $9,748,341 NA NA NA NA $4,874,171 $4,874,171
Florida................................ $242,044,718 $215,487,253 $26,557,465 NA NA NA NA $13,278,732 $13,278,733
Georgia................................ $132,381,325 $67,636,544 $64,744,781 NA NA NA NA $32,372,390 $32,372,391
Hawaii................................. $10,036,935 $0 $10,036,935 NA NA NA NA $5,018,468 $5,018,468
Idaho.................................. $17,817,572 $12,328,159 $5,489,413 NA NA NA NA $2,744,707 $2,744,707
Illinois............................... $137,481,231 $0 $137,481,231 NA NA NA NA $68,740,615 $68,740,616
Indiana................................ $63,161,480 $50,187,036 $12,974,444 NA NA NA NA $6,487,222 $6,487,222
Iowa................................... $32,382,884 $23,937,736 $8,445,148 NA NA NA NA $4,222,574 $4,222,574
Kansas................................. $30,320,974 $30,320,974 REDISTRIBUTION $73,313,596 $42,992,622 1.9817% $21,481,440 NA NA
Kentucky............................... $56,025,995 $56,025,995 REDISTRIBUTION $200,089,782 $144,063,787 6.6404% $71,982,061 NA NA
Louisiana.............................. $91,130,730 $19,652,547 $71,478,183 NA NA NA NA $35,739,091 $35,739,092
Maine.................................. $13,978,005 $13,978,005 REDISTRIBUTION $43,339,164 $29,361,159 1.3534% $14,670,423 NA NA
Maryland............................... $56,869,698 $56,869,698 REDISTRIBUTION $304,236,730 $247,367,032 11.4020% $123,597,951 NA NA
Massachusetts.......................... $48,063,710 $48,063,710 REDISTRIBUTION $154,330,787 $106,267,077 4.8982% $53,096,780 NA NA
Michigan............................... $102,762,059 $6,288,727 $96,473,332 NA NA NA NA $48,236,666 $48,236,666
Minnesota.............................. $31,861,256 $31,861,256 REDISTRIBUTION $65,415,500 $33,554,244 1.5466% $16,765,516 NA NA
Mississippi............................ $58,036,226 $58,036,226 REDISTRIBUTION $139,819,869 $81,783,643 3.7697% $40,863,532 NA NA
Missouri............................... $57,979,004 $1,278,214 $56,700,790 NA NA NA NA $28,350,395 $28,350,395
Montana................................ $13,173,122 $11,149,994 $2,023,128 NA NA NA NA $1,011,564 $1,011,564
Nebraska............................... $16,576,269 $8,218,671 $8,357,598 NA NA NA NA $4,178,799 $4,178,799
Nevada................................. $30,526,393 $9,119,551 $21,406,842 NA NA NA NA $10,703,421 $10,703,421
New Hampshire.......................... $10,263,860 $0 $10,263,860 NA NA NA NA $5,131,930 $5,131,930
New Jersey............................. $96,858,666 $96,858,666 REDISTRIBUTION $428,241,575 $331,382,909 15.2746% $165,576,828 NA NA
New Mexico............................. $56,407,772 $0 $56,407,772 NA NA NA NA $28,203,886 $28,203,886
New York............................... $286,821,535 $286,821,535 REDISTRIBUTION $1,116,326,169 $829,504,634 38.2348% $414,465,389 NA NA
North Carolina......................... $89,211,202 $77,768,983 $11,442,219 NA NA NA NA $5,721,110 $5,721,110
North Dakota........................... $5,655,883 $1,900,044 $3,755,839 NA NA NA NA $1,877,920 $1,877,920
Ohio................................... $129,857,897 $117,814,672 $12,043,225 NA NA NA NA $6,021,613 $6,021,613
Oklahoma............................... $76,764,895 $0 $76,764,895 NA NA NA NA $38,382,447 $38,382,448
Oregon................................. $43,895,837 $1,026,305 $42,869,532 NA NA NA NA $21,434,766 $21,434,766
Pennsylvania*.......................... $121,062,524 $90,688,050 $30,374,474 NA NA NA NA $15,187,237 $15,187,237
Rhode Island........................... $9,570,566 $9,570,566 REDISTRIBUTION $63,200,408 $53,629,842 2.4720% $26,796,370 NA NA
South Carolina......................... $71,314,037 $71,314,037 REDISTRIBUTION $136,657,369 $65,343,332 3.0119% $32,649,064 NA NA
South Dakota........................... $7,951,348 $6,233,781 $1,717,567 NA NA NA NA $858,784 $858,784
Tennessee.............................. $74,226,011 $0 $74,226,011 NA NA NA NA $37,113,005 $37,113,006
Texas.................................. $502,812,459 $255,483,677 $247,328,782 NA NA NA NA $123,664,391 $123,664,391
Utah................................... $27,199,406 $24,258,592 $2,940,814 NA NA NA NA $1,470,407 $1,470,407
Vermont................................ $3,966,889 $1,630,776 $2,336,113 NA NA NA NA $1,168,057 $1,168,057
Virginia............................... $73,580,365 $11,234,290 $62,346,075 NA NA NA NA $31,173,037 $31,173,038
Washington............................. $52,355,470 $0 $52,355,470 NA NA NA NA $26,177,735 $26,177,735
West Virginia.......................... $21,145,730 $21,145,730 REDISTRIBUTION $58,780,823 $37,635,093 1.7347% $18,804,528 NA NA
Wisconsin.............................. $45,591,653 $45,591,653 REDISTRIBUTION $157,259,996 $111,668,343 5.1472% $55,795,545 NA NA
----------------------------------------
Wyoming................................ $7,068,749 $0 $7,068,749 NA NA NA NA $3,534,375 $3,534,375
Total States Only.................. $4,196,418,789 $1,997,872,104 $2,198,546,685 $3,003,687,809 $2,169,499,733 100.0000% $1,083,999,429 $1,099,273,343 $1,099,273,343
----------------------------------------
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 44019]]

Total Unexpended FY 2000 Allotments (not including MOE):
$2,198,546,685

FY 2000 MOE Amount: $7,893,711

Total Unexpended FY 2000 Allotments (including MOE): \1\
$2,206,440,396

Total Needed for Retained Allotments: \2\ $1,099,273,343 Retained allotment

Total Needed for Redistribution for Territories: \3\ percentage:
$23,167,624

Total: $1,122,440,967 50%

Total Available for Redistribution to States: \4\
$1,083,999,429
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Footnotes:
\1\ The total unexpended FY 2000 allotments are $2,206,440,396, calculated as $2,198,546,685 (the total unexpended FY 2000 allotments, not including the maintenance of effort (MOE) amount) plus $7,893,711 (the MOE amount).
\2\ $1,099,273,343 is the total needed for retained allotments, calculated as $2,198,546,685 (the total unexpended FY 2000 allotments, not including $7,893,711 (the MOE amount)), multiplied by 50 percent.
\3\ $23,167,624 is the total amount needed for redistribution to the commonwealths and territories, calculated as $2,206,440,396 (the total unexpended FY 2000 allotments, including the MOE amount) multiplied by 1.05 percent.
\4\ $1,083,999,429 is the total redistribution to the states, calculated as $2,206,440,396 (total unexpended FY 2000 allotments including the MOE amount) reduced by $1,099,273,343 (the total FY 2000 retained allotments) and
$23,167,624 (total redistribution for the commonwealths and territories).

[[Page 44020]]

5. Table of SCHIP FY 2001 Redistribution or Extended Availability of
Unexpended FY 2001 Allotments
The formula used to determine the amount of the unexpended FY 2001
SCHIP allotments for redistribution or continued availability is
described in detail below. The following is a description of Table 2,
which presents each State's FY 2001 SCHIP allotment redistribution or
retained amount.
A total of $4,249,200,000 was allotted nationally for FY 2001,
representing $4,204,312,500 in allotments to the 50 States and the
District of Columbia, and $44,887,500 in allotments to the
Commonwealths and Territories. Based on the quarterly expenditure
reports, submitted and certified by November 30, 2003, 19 States fully
expended their FY 2001 allotments, 32 States and the District of
Columbia did not fully expend their FY 2001 allotments, and all 5 of
the Commonwealths and Territories fully expended their FY 2001
allotments. For the States and the District of Columbia, that did not
fully expend their FY 2001 allotments, their total FY 2001 allotments
were $2,784,606,938, and the total expenditures applied against their
FY 2001 allotments were $1,035,585,792. Therefore, the total amount of
unexpended FY 2001 allotments at the end of FY 2003 equaled
$1,749,021,146 ($2,784,606,938 minus $1,035,585,792).
In accordance with the redistribution calculation for FY 2001
described above, $874,510,573 (50 percent of $1,749,021,146) is
retained by the 32 States that did not fully expend their FY 2001
allotments, $18,364,722 is redistributed to the five Commonwealths and
Territories, and $856,145,851 is redistributed to the 19 redistribution
States. Both the $856,145,851 redistributed allotment amounts and the
$874,510,573 retained allotment amounts will remain available through
the end of FY 2005.

Key to Table 2--CALCULATION OF THE SCHIP FY 2001 REDISTRIBUTION OF THE
UNEXPENDED FY 2001 ALLOTMENTS

Column/Description

Column A = STATE. Name of State, District of Columbia, the
Commonwealth or Territory.
Column B = FY 2001 ALLOTMENT. This column contains the FY 2001 SCHIP
allotments for all States, which were published on January 22, 2001
in the Federal Register (66 FR 6630).
Column C = EXPENDITURES APPLIED AGAINST FY 2001 ALLOTMENT. This
column contains the cumulative expenditures applied against the FY
2001 allotments, as reported and certified by all States through
November 30, 2003.
Column D = UNEXPENDED FY 2001 ALLOTMENTS OR ``REDISTRIBUTION.'' This
column contains the amounts of unexpended FY 2001 SCHIP allotments
for States that did not fully expend the allotments during the 3-
year period of availability for FY 2001 (FYs 2001 through 2003), and
is equal to the difference between the amounts in Column B and
Column C. For States that did fully expend their FY 2001 allotments
during the period of availability, the entry in this column is
``REDISTRIBUTION.'' The total amount of $1,749,021,146 represents
the total amount available for redistribution and continued
availability for FY 2001.
Column E = FOR REDISTRIBUTION STATES ONLY FY 2001 Through 2003
EXPENDITURES. For those States that have fully expended their FY
2001 allotments, this column contains the total amounts of the
States' reported SCHIP related expenditures for each of the years FY
2001 through FY 2003, representing the FY 2001 3-year period of
availability. For those States, Commonwealths, and Territories that
did not fully expend their FY 2001 allotments during the period of
availability, the entry in Column E is ``NA.''
Column F = REDISTRIBUTION STATES ONLY FYs 2001 Through 2003
EXPENDITURES MINUS FY 2001 ALLOTMENT. This column contains the
amounts of States' reported SCHIP-related expenditures for each of
the years FY 2001 through FY 2003 (Column E), minus the FY 2001
allotment (Column B).
Column G = FOR REDISTRIBUTION STATES PERCENT OF TOTAL
REDISTRIBUTION. This column contains each State's redistribution
percentage of the total amount available for redistribution,
calculated as the entry in Column F divided by the total (for States
only) in Column F.
Column H = FY 2001 REDISTRIBUTED ALLOTMENT AMOUNTS. This column
contains the amounts of States' unexpended FY 2001 SCHIP allotments
that are being redistributed to those States that have fully
expended their FY 2001 allotments. For the States that have fully
expended their FY 2001 SCHIP allotments, the amount in Column H is
equal to the percentage in Column G multiplied by the total amount
available for redistribution ($856,145,851). Therefore, for the 19
States that have fully expended their FY 2001 allotments, the FY
2001 redistribution amounts total $856,145,851. For the
Commonwealths and Territories that have fully expended their FY 2001
allotments, the amounts in Column H represents their respective
proportionate shares (based on their FY 2001 allotments) of
$18,364,722 (representing 1.05 percent of the total amount for
redistribution and continued availability of $1,749,021,146). For
those States, Commonwealths, and Territories that did not fully
expend their FY 2001 allotments during the period of availability,
the entry in Column H is ``NA.''
Column I = FY 2001 RETAINED ALLOTMENT AMOUNTS. For the States that
did not fully expend their FY 2001 allotments, this column contains
the amounts of the States' FY 2001 unexpended allotments in Column D
multiplied by 50 percent, the result is the amount of these States'
unexpended FY 2001 allotments that the States will retain. As
indicated at the bottom of Column I, the total FY 2001 retained
allotment amounts are $874,510,573.
Column J = UNEXPENDED FY 2001 ALLOTMENT AMOUNTS USED IN
REDISTRIBUTION. For the States that did not fully expend their FY
2001 allotments, this column reflects the amounts of such States' FY
2001 unexpended allotments (not including the MOE reduction amount)
that were used in the redistribution in Column H; these amounts are
no longer available to these States. The amount in Column J is equal
to the difference between Column D, the unexpended FY 2001
Allotments, and Column I, the FY 2001 Retained Allotment Amounts.
For States that did fully expend their FY 2001 allotments, the entry
in Column J is ``NA.''

[[Page 44021]]

Table 2.--Calculation of the SCHIP FY 2001 Redistribution and Continued Availability of the Unexpended FY 2001 Allotments
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Unexpended FY
Expenditures Unexpended FY 2001 For redistribution Redist States only FY For redist states FY 2001 redistributed FY 2001 retained 2001 allotment
State FY 2001 Allotment applied against allotments or states only FY 2001-2003 expenditures percent of total allotment amounts (col allotment amounts amounts used in
FY 2001 allotment ``redistribution'' 2001-FY 2003 minus FY 2001 redistribution (col F/ G x amount available (col D x retained redistribution
expenditures allotment (col E-B) sum of col F) for redistribution) %) (col D-I)
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J
----------------------------------------
Alabama................................ $69,311,033 $47,221,655 $22,089,378 NA NA NA NA $11,044,689 $11,044,689
Alaska................................. $8,987,100 $8,987,100 REDISTRIBUTION $68,549,034 $59,561,934 1.5308% $13,106,151 NA NA
Arizona................................ $124,519,004 $124,519,004 REDISTRIBUTION $361,415,726 $236,896,722 6.0886% $52,127,325 NA NA
Arkansas............................... $53,957,231 $0 $53,957,231 NA NA NA NA $26,978,616 $26,978,616
California............................. $704,930,926 $193,778,325 $511,152,601 NA NA NA NA $255,576,301 $255,576,301
Colorado............................... $44,648,559 $25,998,147 $18,650,412 NA NA NA NA $9,325,205 $9,325,206
Connecticut............................ $39,398,021 $0 $39,398,021 NA NA NA NA $19,699,011 $19,699,011
Delaware............................... $10,505,758 $0 $10,505,758 NA NA NA NA $5,252,879 $5,252,879
District of Columbia................... $11,751,544 $1,142,796 $10,608,748 NA NA NA NA $5,304,374 $5,304,374
Florida................................ $220,217,905 $220,217,905 REDISTRIBUTION $822,911,546 $602,693,641 15.4901% $132,618,160 NA NA
Georgia................................ $135,053,332 $135,053,332 REDISTRIBUTION $362,649,585 $227,596,253 5.8496% $50,080,828 NA NA
Hawaii................................. $11,669,166 $0 $11,669,166 NA NA NA NA $5,834,583 $5,834,583
Idaho.................................. $20,715,109 $9,411,471 $11,303,638 NA NA NA NA $5,651,819 $5,651,819
Illinois............................... $159,838,759 $0 $159,838,759 NA NA NA NA $79,919,379 $79,919,380
Indiana................................ $60,023,791 $0 $60,023,791 NA NA NA NA $30,011,896 $30,011,896
Iowa................................... $32,940,215 $28,662,733 $4,277,482 NA NA NA NA $2,138,741 $2,138,741
Kansas................................. $29,337,719 $29,337,719 REDISTRIBUTION $97,424,891 $68,087,172 1.7499% $14,982,065 NA NA
Kentucky............................... $55,939,972 $55,939,972 REDISTRIBUTION $209,288,363 $153,348,391 3.9413% $33,743,149 NA NA
Louisiana.............................. $82,017,657 $42,625,805 $39,391,852 NA NA NA NA $19,695,925 $19,695,926
Maine.................................. $13,444,691 $13,444,691 REDISTRIBUTION $53,010,358 $39,565,667 1.0169% $8,706,125 NA NA
Maryland............................... $51,422,315 $51,422,315 REDISTRIBUTION $349,768,834 $298,346,519 7.6680% $65,648,887 NA NA
Massachusetts.......................... $55,879,946 $55,879,946 REDISTRIBUTION $181,800,684 $125,920,738 3.2364% $27,707,902 NA NA
Michigan............................... $119,473,472 $12,588,968 $106,884,504 NA NA NA NA $53,442,252 $53,442,252
Minnesota.............................. $37,042,610 $37,042,610 REDISTRIBUTION $129,651,820 $92,609,210 2.3802% $20,377,955 NA NA
Mississippi............................ $55,987,988 $55,987,988 REDISTRIBUTION $207,438,300 $151,450,312 3.8925% $33,325,491 NA NA
Missouri............................... $65,460,374 $43,219,476 $22,240,898 NA NA NA NA $11,120,449 $11,120,449
Montana................................ $15,169,315 $11,031,111 $4,138,204 NA NA NA NA $2,069,102 $2,069,102
Nebraska............................... $19,084,374 $19,084,374 REDISTRIBUTION $46,196,710 $27,112,336 0.6968% $5,965,864 NA NA
Nevada................................. $31,344,200 $11,595,386 $19,748,814 NA NA NA NA $9,874,407 $9,874,407
New Hampshire.......................... $11,932,994 $0 $11,932,994 NA NA NA NA $5,966,497 $5,966,497
New Jersey............................. $98,823,044 $98,823,044 REDISTRIBUTION $643,980,744 $545,157,700 14.0114% $119,957,813 NA NA
New Mexico............................. $50,766,995 $0 $50,766,995 NA NA NA NA $25,383,498 $25,383,498
New York............................... $322,025,819 $322,025,819 REDISTRIBUTION $1,067,477,303 $745,451,484 19.1592% $164,030,940 NA NA
North Carolina......................... $103,718,942 $103,718,942 REDISTRIBUTION $287,610,824 $183,891,882 4.7263% $40,464,013 NA NA
North Dakota........................... $6,575,656 $3,222,774 $3,352,882 NA NA NA NA $1,676,441 $1,676,441
Ohio................................... $142,214,540 $132,497,208 $9,717,332 NA NA NA NA $4,858,666 $4,858,666
Oklahoma............................... $69,088,406 $0 $69,088,406 NA NA NA NA $34,544,202 $34,544,203
Oregon................................. $50,134,100 $0 $50,134,100 NA NA NA NA $25,067,050 $25,067,050
Pennsylvania*.......................... $138,968,854 $105,117,471 $33,851,383 NA NA NA NA $16,925,692 $16,925,692
Rhode Island........................... $9,300,803 $9,300,803 REDISTRIBUTION $91,503,795 $82,202,992 2.1127% $18,088,144 NA NA
South Carolina......................... $64,591,234 $44,893,470 $19,697,764 NA NA NA NA $9,848,882 $9,848,882
South Dakota........................... $8,177,039 $8,177,039 REDISTRIBUTION $23,025,033 $14,847,994 0.3816% $3,267,188 NA NA
Tennessee.............................. $86,296,823 $0 $86,296,823 NA NA NA NA $43,148,411 $43,148,412
Texas.................................. $452,531,213 $281,964,250 $170,566,963 NA NA NA NA $85,283,482 $85,283,482
Utah................................... $30,184,401 $18,619,845 $11,564,556 NA NA NA NA $5,782,278 $5,782,278
Vermont................................ $4,611,995 $1,915,842 $2,696,153 NA NA NA NA $1,348,077 $1,348,077
Virginia............................... $75,491,290 $20,079,059 $55,412,231 NA NA NA NA $27,706,115 $27,706,116
Washington............................. $60,869,643 $0 $60,869,643 NA NA NA NA $30,434,822 $30,434,822
West Virginia.......................... $21,144,989 $21,144,989 REDISTRIBUTION $76,049,494 $54,904,505 1.4111% $12,081,320 NA NA
Wisconsin.............................. $49,597,970 $49,597,970 REDISTRIBUTION $230,774,551 $181,176,581 4.6565% $39,866,531 NA NA
Wyoming................................ $7,193,664 $0 $7,193,664 NA NA NA NA $3,596,832 $3,596,832
---------------------
Total States Only.................. $4,204,312,500 $2,455,291,354 $1,749,021,146 $5,310,527,595 $3,890,822,033 100.0000% $856,145,851 $874,510,573 $874,510,573
----------------------------------------
Commonwealths and Territories:
Puerto Rico........................ $41,116,950 $41,116,950 REDISTRIBUTION NA NA NA $16,822,085 NA NA
Guam............................... $1,571,062 $1,571,062 REDISTRIBUTION NA NA NA $642,765 NA NA
Virgin Islands..................... $1,167,075 $1,167,075 REDISTRIBUTION NA NA NA $477,483 NA NA
American Samoa..................... $538,650 $538,650 REDISTRIBUTION NA NA NA $220,377 NA NA
N. Mariana Islands................. $493,763 $493,763 REDISTRIBUTION NA NA NA $202,012 NA NA
---------------------
Total.......................... $44,887,500 $44,887,500 $0 NA NA ....................... $18,364,722 $0 $0
----------------------------------------
(Totals to ``1.05%'' ................. .................
Amount)
----------------------------------------

[[Page 44022]]

National Total......................... $4,249,200,000 $2,500,178,854 $1,749,021,146 $874,510,573 $874,510,573 $874,510,573
*FY 2001 MOE Amount.................... $0 .................. $0 Total FY 2001 Total FY 2001
Total With MOE Amount.................. $4,249,200,000 $2,500,178,854 $1,749,021,146 Redistributed Amounts Retained Amounts
---------------------

Total Unexpended FY 2001 Allotments (not including MOE):
$1,749,021,146

FY 2001 MOE Amount: $0

Total Unexpended FY 2001 Allotments (including MOE): \1\
$1,749,021,146

Total Needed for Retained Allotments: $874,510,573 Retained allotment

Total Needed for Redistribution for Territories: percentage:
$18,364,722

Total: $892,875,295 50%

Total Available for Redistribution to States: $856,145,851
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Footnotes:
\1\ The total unexpended FY 2001 allotments are $1,749,021,146, calculated as $1,749,021,146 (the total unexpended FY 2000 allotments, not including the maintenance of effort (MOE) amount) plus $0,000 (the MOE amount).
\2\ $874,510,573 is the total needed for retained allotments, calculated as $1,749,021,146 (the total unexpended FY 2001 allotments, not including $0,000 (the MOE amount)), multiplied by 50 percent.
\3\ $18,364,722 is the total amount needed for redistribution to the commonwealths and territories, calculated as $1,749,021,146 (the total unexpended FY 2001 allotments, including the MOE amount) multiplied by 1.05 percent.
\4\ $856,145,851 is the total redistribution to the states, calculated as $1,749,021,146 (total unexpended FY 2001 allotments including the MOE amount) reduced by $874,510,573 (the total FY 2001 retained allotments) and $18,364,722
(total redistribution).

[[Page 44023]]

B. Authority for Qualifying States To Elect To Receive Part of
Available FY 1998 Through 2001 SCHIP Allotments for Certain Medicaid
Expenditures

Pub. L. 108-74, as amended by Pub. L. 108-127 added a new section
2105(g) of the Act, under which a ``Qualifying State'' may elect to use
not more than 20 percent of any of the State's available SCHIP
allotments for FY 1998, 1999, 2000, or 2001 for payments under the
State's Medicaid program, instead of expenditures under the State's
SCHIP. Section 2105(g)(2) of the Act, as amended by Pub. L. 108-74 and
Pub. L. 108-127, defines a ``Qualifying State'' as:

``a State that, on and after April 15, 1997, has an income
eligibility standard that is at least 184 percent of the poverty
line with respect to any 1 or more categories of children (other
than infants) who are eligible for medical assistance under section
1902(a)(10)(A) or, in the case of a State that has a statewide
waiver in effect under section 1115 with respect to title XIX that
was first implemented on August 1, 1994, or July 1, 1995, has an
income eligibility standard under such waiver for children that is
at least 185 percent of the poverty line, or, in the case of a State
that has a statewide waiver in effect under section 1115 with
respect to title XIX that was first implemented on January 1, 1994,
has an income eligibility standard under such waiver for children
who lack health insurance that is at least 185 percent of the
poverty line, or, in the case of a State that had a statewide waiver
in effect under section 1115 with respect to title XIX that was
first implemented on October 1, 1993, had an income eligibility
standard under such waiver for children that was at least 185
percent of the poverty line and on and after July 1, 1998, has an
income eligibility standard for children under section
1902(a)(10)(A) or a statewide waiver in effect under section 1115
with respect to title XIX that is at least 185 percent of the
poverty line.''

We have determined the States that meet the definition of
``Qualifying State'' in accordance with these statutory criteria.
1. Calculation of the 20 Percent Allowance Amount
Section 2105(g)(1)(A) of the Act provides that a Qualifying State
may elect to use not more than 20 percent of any allotment under
section 2104 for fiscal year 1998, 1999, 2000, or 2001 (insofar as it
is available under sections 2104(e) and (g) of the Act). In this
regard, sections 2104(e) and (g) of the Act refer to the periods of
availability for allotments and redistributed/retained allotments,
respectively. Furthermore, section 2105(g)(1)(B)(ii) of the Act refers
to the 20 percent expenditures as ``expenditures made after the date of
the enactment of this subsection and during the period in which funds
are available to the qualifying State * * *.'' (Emphasis supplied).
In this notice, we refer to the term ``20 percent of any
allotment,'' as referenced in the statute, as the ``20 percent
allowance.'' In accordance with section 2105(g) of the Act, a 20
percent allowance for each Qualified State must be determined with
respect to each of only four fiscal year allotments, FY 1998, 1999,
2000, and 2001. Furthermore, Federal matching funds at the enhanced
FMAP rate can only be available for the applicable Medicaid
expenditures under the 20 percent allowances for the four fiscal years,
only if the related specified fiscal year allotment amounts are
``available,'' and only if there are any applicable Medicaid
expenditures after the date of enactment of Pub. L. 108-74.
The only applicable FY 1998 through 2001 allotment funds that are
available to States in FY 2003 (the year in which Pub. L. 108-74 was
enacted), for purposes of providing enhanced funding for the applicable
20 percent allowance expenditures, are the unexpended fiscal year
allotment amounts for FYs 1998 through 2001. These unexpended allotment
include allotments, redistributions, and retained allotment amounts
that would be carried forward into FY 2003 for use by a Qualified State
in FY 2003, and which have not been expended by the State through the
date of enactment of Pub. L. 108-74. By definition, the expended
amounts of these fiscal year allotment funds, through the date of
enactment of Pub. L. 108-74, are no longer available in FY 2003 for use
under the 20 percent allowance provision. That is, only the unexpended
(remaining) amounts of these fiscal year allotment funds can be
considered to be ``available'' in FY 2003, FY 2004, and FY 2005.
The amounts of the FY 1998 through 2001 allotments that will be
available during each of the applicable fiscal years (FY 2003 through
2005) are determined in accordance with the established rules for the
application of all the Federal payments for the Qualifying State's
expenditures against all of the State's available allotments. The
amounts of the relevant 20 percent fiscal year allowances that a
Qualifying State may use in FY 2003, and in the subsequent fiscal years
(that is, FY 2004 and FY 2005), will be limited by the amounts of the
related fiscal year allotments that are actually available.
The amount of the 20 percent allowances is determined, with respect
to each of the original fiscal year allotments for FYs 1998 through
2001, under section 2105(g) of the Act. That is, we determined the 20
percent allowances for the Qualifying States for each of these fiscal
years by multiplying each of the original fiscal year allotments for
these years by 20 percent. Therefore, the 20 percent fiscal year
allowances are determined and tracked individually, based on the
Qualifying State expenditures that are applied against each of the
related fiscal year 20 percent allowances and related fiscal year
allotment amounts, as available. Note, even if there is a remaining 20
percent allowance for a particular fiscal year, the actual availability
of the related fiscal year allotment amount is the ultimate determining
factor as to whether any applicable Medicaid expenditures can be
matched at the enhanced matching rate. That is, if the fiscal year
allotment amount related to a particular fiscal year 20 percent
allowance has been exhausted (is no longer available), the State would
not be able to claim any expenditures against that fiscal year 20
percent allowance.
In FY 2003, representing the fiscal year in which the Qualifying
State provision was enacted and the first fiscal year for which a
Qualifying State may claim expenditures against its 20 percent
allowances, the only fiscal year allotment amounts related to FYs 1998,
1999, and 2000 that may still be available are the redistributed and/or
retained allotment amounts for those fiscal years. Furthermore, under
section 2104(g) of the Act as amended by Pub. L. 108-74, these amounts
will only be available to States until the end of FY 2004.
In FY 2003, the unexpended amounts of a Qualifying State's original
fiscal year 2001 allotment may also be available for expenditure by the
State. Initial State FY 2001 allotments are available only until the
end of FY 2003 (the end of the 3-year period of availability for the FY
2001 fiscal year allotment). In FY 2004, there will be a reallotment of
any unexpended FY 2001 allotments similar to the reallotment in FY 2003
of the States' unexpended FY 2000 allotments, which was described
previously in this notice. The unexpended FY 2001 allotments reallotted
in FY 2004 will only be available to States until the end of FY 2005.
The discussion in the following sections describes the
determinations of the fiscal year 20 percent allowances for the
Qualifying States for each of the FYs 1998 through 2001 as would be
available during the FYs 2003 through 2005, and how they would be
tracked through FY 2005, the last year for which

[[Page 44024]]

any of the related fiscal year allotment amounts are available.
Determination and Tracking of the Fiscal Year 20 Percent Allowances
in FY 2003. In FY 2003, the 20 percent allowances for each Qualifying
State would be calculated as 20 percent of each of the Qualifying
State's original SCHIP allotments for FYs 1998, 1999, 2000, and 2001.
Since Pub. L. 108-74 was enacted on August 15, 2003, only expenditures
from August 16, 2003 on may be claimed against the related fiscal year
allotment amounts that are available as of August 16. The actual
availability of each Qualifying State's fiscal year allotment amounts
for FYs 1998 through 2001 will be determined in accordance with the
applicable requirements for the application of expenditures against the
States' available allotments, which in FY 2003, include the extended
availability of States' unexpended FY 1998 and 1999 allotment amounts
and the redistribution and extended availability of States' unexpended
FY 2000 allotments available beginning October 1, 2002. Therefore, as
limited by the 20 percent allowances for each fiscal year, only to the
extent that the fiscal year allotment amounts related to each of the 20
percent allowances are available to the Qualifying States can such
allotment amounts be used for matching the States' applicable
expenditures.
Example. A Qualifying State's original FY 1998 allotment was $50
million; therefore, the FY 1998 20 percent allowance would be $10
million (20 percent of $50 million). However, through the application
of expenditures through the years of the SCHIP, at the end of FY 2002
there was only $16 million remaining in the State's FY 1998
``retained'' allotment. Under the provisions of Pub. L. 108-74, the
availability of this amount was extended until the end of FY 2004; this
is the amount considered as initially available at the beginning of FY
2003. However, throughout FY 2003, the State's expenditures would be
applied according to the established rules for that application; this
would further limit the final availability of the FY 1998 retained
allotment funds for enhanced payment in FY 2003. Although the 20
percent allowance was determined to be $10 million, any ultimate
payments to be applied and tracked against this amount would be limited
by the actual availability of the FY 1998 retained allotment. In this
example, if the actual application of the State's expenditures in FY
2003 resulted in only $3 million of the FY 1998 retained allotment
remaining in the fourth quarter of FY 2003, then that $3 million amount
would be the most the Qualifying State could claim against the FY 1998
20 percent allowance of $10 million.
Continued Tracking of the Fiscal Year 20 Percent Allowances in FY
2004. The amounts of each Qualifying State's fiscal year 20 percent
allowances, and the related fiscal year allotment amounts remaining at
the end of FY 2003, will be carried over to FY 2004. However, the
availability of the FY 2001 allotment amounts will differ from the
availability of the FY 1998 through 2000 allotment amounts. In
particular, the Qualifying States' fiscal year 20 percent allowances in
FY 2004 that are carried over from FY 2003 will be limited by the
actual available related fiscal year allotment amounts that are carried
over from FY 2003. In FY 2003, the available fiscal years 1998, 1999,
and 2000 allotment amounts are the retained allotments and/or the
redistributed allotments for those fiscal years that were carried over
from or reallotted in FY 2003.
In FY 2004, however, the FY 2001 reallotment process will occur.
Similar to the FY 2000 reallotment process, as discussed earlier in
this notice, the FY 2001 ``retained allotment States'' will carry-over
from FY 2003 into FY 2004 only 50 percent of their unexpended FY 2001
allotments remaining at the end of FY 2003. Furthermore, the FY 2001
``redistribution States'' by definition have fully expended their FY
2001 allotments by the end of FY 2003. Therefore, the FY 2001
redistribution States will not carry-over any of their own FY 2001
allotments; however, they will receive a redistribution of about 50
percent of the FY 2001 retained allotment States' unexpended FY 2001
allotments remaining at the end of FY 2003. In summary, the amounts of
the available FY 2001 allotments in FY 2004 will be determined by the
amounts of the FY 2001 retained or redistributed allotments a
Qualifying State will receive in FY 2004.
Example 1. At the end of FY 2003, Qualifying State A's remaining FY
2001 20 percent allowance is $20 million, and the State's remaining
unexpended FY 2001 allotment is $30 million. The State will carry over
its FY 2001 20 percent allowance balance of $20 million into FY 2004.
However, because Qualifying State A has not fully expended its FY 2001
allotment, it will be a FY 2001 retained allotment State in FY 2004,
and in that regard, would only retain $15 million of its unexpended FY
2001 allotment (50 percent of $30 million) in FY 2004. Although the FY
2001 20 percent allowance carried into FY 2004 is $20 million, the
State would only have available $15 million of its FY 2001 allotment
amount for matching any of the State's applicable 20 percent allowance
expenditures in FY 2004.
Example 2. At the end of FY 2003, Qualifying State B's remaining FY
2001 20 percent allowance is $20 million, and the State has fully
expended its FY 2001 allotment. The State will carry over its FY 2001
20 percent allowance balance of $20 million into FY 2004. However,
because the State has fully expended its FY 2001 allotment by the end
of FY 2003, it will be a FY 2001 redistribution State in FY 2004. The
State receives a FY 2001 redistribution of $25 million in FY 2004, and
accordingly, it will be considered to have $25 million available in FY
2004 related to the FY 2001 allotment. Furthermore, in FY 2004 the
States' remaining FY 2001 20 percent allowance is $20 million; this
would be the limit on the States' claims for the applicable 20 percent
expenditures in FY 2004.
Continued Tracking of the Fiscal Year 20 Percent Allowances in FY
2005. The availability of fiscal year (re)allotted amounts for FYs 1998
through 2000 was only extended until the end of FY 2004. Therefore, the
only applicable fiscal year allotment amounts related to the 20 percent
allowances that will be available in FY 2005 are the amounts of the
unexpended FY 2001 retained or redistributed allotments that were
carried over from FY 2004 into FY 2005. Furthermore, the only 20
percent allowances that will be available in FY 2005 are the amounts of
the related FY 2001 20 percent allowances that remain at the end of FY
2004 and carried over into FY 2005. Therefore, in FY 2005, Qualifying
States' claims for 20 percent allowance expenditures would be limited
by such States' actual available FY 2001 redistributed or retained
allotment amounts that remained at the end of FY 2004 and were carried
over to FY 2005.
2. Amounts Applied Against the 20 Percent Allowance Amounts
Additional Amount Applied Against 20 Percent Allowance Amount.
Under section 2105(g)(1)(B)(i) of the Act, as amended by Pub. L. 108-
74, ``subject to the availability of funds * * * the Secretary shall
pay the State an amount each quarter equal to the additional amount
that would have been paid to the State under title XIX'' with respect
to the 20 percent allowance expenditures, if the enhanced FMAP had been
substituted for the FMAP. This provisions does not authorize the State
to ``double-bill'' the SCHIP and/or the Medicaid program; rather, it
allows the State with respect to an allowable

[[Page 44025]]

expenditure, to receive in total, a Federal share amount equal to the
enhanced FMAP rate under title XXI instead of the (lower) FMAP rate
that would otherwise have been applied under title XIX. However, only a
portion of this total Federal share at the enhanced FMAP rate, equal to
the difference between the enhanced FMAP rate under title XXI and the
``regular'' FMAP rate under title XIX, will be applied against the
Qualifying States' available 20 percent allowance SCHIP fiscal year
allotments. As indicated in the next paragraph and following example,
for purposes of this calculation, the regular FMAP rate is equal to the
``increased FMAP.''
Relationship to the ``Increased FMAP''. With the passage of the
Jobs and Growth Tax Relief Reconciliation Act of 2003 (TRRA (Pub. L.
108-27)) on May 28, 2003, there are five Federal fiscal year quarters
for which States' Medicaid expenditures are matched at an increased
FMAP rate: The last two quarters of FY 2003 and the first three
quarters of FY 2004. In implementing the Qualifying State provisions of
Pub. L. 108-74, and in determining the additional amount that would be
paid to States under section 2105(g)(1)(B)(i) of the Act, we will use
the actual increased FMAP that is being used each quarter in a State
for matching a State's Medicaid expenditures.
Example. The Qualifying State's enhanced FMAP is 65 percent, and
its ``increased FMAP'' under TRRA is 52.95 percent. If the State has a
$10,000 allowable expenditure, the total Federal share it could claim
would be $6,500 (65 percent of $10,000). However, only $1,205,
representing 12.05 percent (65 percent (the enhanced FMAP rate) minus
52.95 percent (the regular FMAP rate)) of the $10,000 expenditure,
would be applied against the Qualifying State's available 20 percent
allowance(s) under title XXI. $5,295 of the total $6,500 Federal share
(52.95 percent of $10,000) would be charged against the title XIX
appropriation.
Subject to the Availability of the FY 20 Percent Allowance. Section
2105(g)(1)(A) of the Act provides for States to elect to use up to 20
percent of the available allotments for FYs 1998 through 2001. The
discussion above describes the determination of the amounts of the 20
percent allowances for each fiscal year. The calculated 20 percent
allowances serve as an overall limit, against which the 20 percent
allowance expenditures would be applied, and claims in excess of those
amounts would not be payable. However, operationally, a Qualifying
State's actual claims for expenditures (including both the 20 percent
allowance expenditures and all the other SCHIP expenditures that a
State may claim) will be applied against all the various allotments
that would be available to the Qualifying State during the quarter for
which the State is making the claim (including both the allotments upon
which the 20 percent allowances are based and all the other SCHIP
allotments). In the application of the State's various expenditures
against all the available allotments, it is possible that any or all of
the allotments upon which the 20 percent allowance is based may be
reduced below the determined 20 percent allowance, for any or all of
the 20 percent allotment(s). In that case, the payments to the States
for the 20 percent allowance expenditures may be additionally limited.
Example. The Qualifying State's original FY 1998, 1999, 2000, and
2001 allotments were $10 million, $10 million, $12 million, and $12
million, respectively. At the beginning of FY 2003, the Qualifying
State has the following unexpended allotments carried over from FY
2002: $0 in FY 1998 retained allotments; $2 million in FY 1999 retained
allotments; $12 million in FY 2001 allotments; and finally, in FY 2003
the State retains $6 million of its unexpended FY 2000 allotments that
remained at the end of FY 2002.
In FY 2003 the State's total 20 percent allowances are:
FY 1998: $2 million (20 percent of the $10 million
original allotment)
FY 1999: $2 million (20 percent of the $10 million
original allotment)
FY 2001: $2.4 million (20 percent of the $12 million
original allotment)
FY 2000: $2.4 million (20 percent of the $12 million
original allotment)
In this example, the four calculated 20 percent allowances total to
$8.8 million ($2 million + $2 million + $2.4 million + $2.4 million).
Therefore, the Qualifying State could potentially use up to $8.8
million from the four related fiscal year allotment amounts for
matching the eligible 20 percent allowance expenditures, if those funds
were available. As indicated, at the beginning of FY 2003 the State had
$20 million ($0 + $2 million + $6 million + $12 million) in FY 1998
through 2001 allotment funds. However, with the submission of $6
million in other expenditures through the end of the third quarter of
FY 2003 (June 30, 2003), there would be the following remaining
allotment funds available at the beginning of the fourth quarter FY
2003: $0 in FY 1998 retained allotment; $0 in FY 1999 retained
allotment; $2 million in FY 2000 retained allotments, and $12 million
in FY 2001 allotments. Therefore, in the fourth quarter FY 2003 the
States could potentially claim up to the following amounts as 20
percent allowance expenditures:
FY 1998: $0. Although the FY 1998 20 percent allowance is
$2 million, in the fourth quarter of FY 2003 there is $0 in FY 1998
retained allotment remaining.
FY 1999: $0. Although the FY 1999 20 percent allowance is
$2 million, in the fourth quarter of FY 2003 there is $0 in FY 1999
retained allotment remaining.
FY 2000: $2 million. Although the FY 2000 20 percent
allowance is $2.4 million, in the fourth quarter of FY 2003 there is
only $2 million in FY 2000 retained allotment remaining.
FY 2001: $2.4 million. The FY 2001 20 percent allowance is
$2.4 million, and there is $12 million in FY 2001 allotment remaining.
In this example, through the end of the third quarter FY 2003, $6
million in SCHIP matching funds related to other expenditures were
applied against the available four 20 percent allotment funds before
any 20 percent allowance expenditures were submitted. Therefore, at the
beginning of the fourth quarter FY 2003 only $4.4 million related to
the available allotments and 20 percent allowances for FY 2000 and FY
2001 could potentially be claimed as 20 percent allowance expenditures.
3. Ordering of Allotments and Expenditures
In the SCHIP, the application of payments for a State's
expenditures against the State's available SCHIP allotments follows an
order specified by statute and regulation. In general, payments for
expenditures are applied against a State's available allotments in the
following priority order prescribed in section 2105(a) of the Act:
Medicaid SCHIP expansion expenditures paid at the enhanced
FMAP rate;
Medicaid presumptive eligibility expenditures under
section 1920A of the Act;
SCHIP program expenditures; and
SCHIP ``10 percent fiscal year limit'' expenditures
(representing four categories of expenditures that are subject to the
State's annual fiscal year 10 percent limit on those expenditures).
Furthermore, as specified by regulation, States' fiscal year
allotments are also ordered in a certain priority. Typically, payments
for expenditures are first applied against the oldest fiscal year
allotment and the most recent fiscal year allotment is ordered last. A

[[Page 44026]]

retained allotment for a fiscal year is ordered in the same priority as
the original allotment for that fiscal year. However, redistributed
allotments for a fiscal year are ordered in the priority chosen by the
redistribution States.
ORDERING OF ALLOTMENTS--Reopening of States' Elections for Ordering
FY 1998 and FY 1999 Redistributed Allotments Ordering Elections. Before
the passage of Pub. L. 108-74, the FY 1998 and FY 1999 reallotment
amounts (referring to both redistributed and retained allotments)
expired at the end of FY 2002. However, with the enactment of Pub. L.
108-74, the availability of these allotments was extended to the end of
FY 2004. As indicated in the discussion above on the extension of the
FYs 1998 through 2000 allotments, States with redistributed allotments
have the option to reopen their ordering elections for FY 1998 and FY
1999 redistribution funds during FY 2003 (the first fiscal year in
which these funds are restored).
ORDERING OF EXPENDITURES--Ordering of 20 Percent Allowance
Expenditures. Section 2105(g)(1)(B)(ii) of the Act establishes a new
expenditure under the Medicaid program for which certain amounts of
payments would be applied against a State's available SCHIP allotments.
However, Pub. L. 108-74 did not amend section 2105(a) of the Act to add
these new 20 percent allowance expenditures to the list of recognized
expenditures that are applied against the title XXI SCHIP allotments.
The 20 percent allowance expenditures can only be applied against the
allotment funds on which the 20 percent allowance amounts are based
(that is, the available FY 1998, 1999, 2000, and 2001 allotment funds);
they cannot be applied against any other available fiscal year
allotment funds. Since the 20 percent allowance expenditures can only
be applied against the FY 1998 through 2001 allotment funds, if a
Qualifying State submits 20 percent allowance expenditures in a
particular quarter, those expenditures must skip over other available
fiscal year allotments in the otherwise required fiscal year allotment
priority order.
If a Qualified State submits both 20 percent allowance expenditures
and other ``regular'' SCHIP expenditures at the same time in a quarter
(based on the allotment priority order, they both must apply against an
available fiscal year allotment), the 20 percent allowance expenditures
will be applied first.
This ordering of expenditures provides states with flexibility and
administrative ease. Although the priority order of funding allows
states to claim the 20 percent allowance expenditures first, this order
does not negatively affect health coverage for children, which is the
first priority in SCHIP, and was a primary consideration in determining
the ordering of expenditures. CMS' analysis indicated that health
coverage for children would not be affected by this ordering of
expenditures. CMS would have revisited the priority order if the
analysis had been different.
10 Percent Limit Calculation--Under the SCHIP program, Federal
matching funds for certain expenditures (including but not limited to
administrative expenditures), listed in section 2105(a)(1)(D) of the
Act, is only available up to the ``10 percent limit'' referenced in
section 2105(b)(2) of the Act. Under section 2105(b)(2) of the Act (and
related regulations), the amount of the 10 percent limit, a dollar
amount, is calculated based only on the following expenditures listed
in section 2105(a)(1)(A) through (a)(1)(C) of the Act: Medicaid SCHIP
expansion group expenditures, Medicaid section 1920A presumptive
eligibility expenditures, and SCHIP title XXI program expenditures.
Since the dollar amount of the 10 percent limit is calculated by taking
a percentage of the total of these expenditures, the greater the amount
of these expenditures, the higher a State's calculated 10 percent limit
dollar amount would be.
Though Pub. L. 108-74 recognizes a new Medicaid 20 percent
allowance expenditure, for which Qualifying States' specified SCHIP
fiscal year allotment funds could be used, this legislation did not
amend title XXI with respect to the calculation of the 10 percent
limit. The new 20 percent allowance expenditures under title XIX were
not added to the list of expenditures in section 2105(a)(1) of the Act
upon which the 10 percent limit calculation is based. Therefore, the 20
percent allowance expenditures will not be used in calculating the 10
percent limit.
4. 20 Percent Allowance Expenditures Described
Section 2105(g)(1)(B)(ii) of the Act indicates that the 20 percent
allowance ``Expenditures Described'' are those that are made after the
date of enactment of Pub. L. 108-74 for ``medical assistance under
title XIX to individuals who have not attained age 19 and whose family
income exceeds 150 percent of the poverty line.'' The date of enactment
for Pub. L. 108-74 was August 15, 2003. Federal regulations at 45 CFR
part 95 contain the rules on the timing of expenditures.
Generally, a Qualifying State can choose any eligible Medicaid
program expenditures or subset of those expenditures. For example, the
State can submit expenditures by category of medical assistance (for
example, by physician services, hospital services, public agency
services). Similarly, as long as the age and income criteria are met,
the Qualifying State could submit expenditures by eligibility category
(for example, medically needy children, disabled children).
In general, a Qualifying State may claim any category of Medicaid
expenditures against their 20 percent allowance. However, the following
expenditures are precluded from being applied against the 20 percent
allowance expenditures:
Medicaid Expansion Population Expenditures. The 20 percent
allowance expenditures do not include medical assistance expenditures
for individuals covered in a State's Medicaid program as the SCHIP
Medicaid expansion population. Under the Medicaid statute, expenditures
for the Medicaid expansion population are already claimed at the
enhanced FMAP. Further, the full Federal share amount for those
expenditures must be applied against the SCHIP allotments (not just the
additional amount above the regular FMAP rate). Therefore, expenditures
for the Medicaid expansion population would not be claimable under the
20 percent allowance provision.

III. Regulatory Impact Statement

We have examined the impact of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 16, 1980 Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more annually). We have determined
that this rule is not a major rule for the reasons discussed below.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and

[[Page 44027]]

government agencies. Most hospitals and most other providers and
suppliers are small entities, either by nonprofit status or by having
revenues of $6 to $29 million or less annually. For purposes of the
RFA, all hospices are considered to be small entities. Individuals and
States are not included in the definition of a small entity. This
notice is the result of a statutory formula that does not involve any
agency discretion or policy. Therefore, we do not believe further
regulatory analysis is necessary because there are no regulatory
options to be considered.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditure in any one year by
State, local, or tribal governments, in the aggregate, or by the
private sector, of $110 million. Because participation in the SCHIP
program on the part of States is voluntary, any payments and
expenditures States make or incur on behalf of the program that are not
reimbursed by the Federal Government are made voluntarily. This notice
will not create an unfunded mandate on States, tribal, or local
governments. Therefore, we are not required to perform an assessment of
the costs and benefits of these regulations.
Executive Order 13132 establishes certain requirements that an
agency must meet when it publishes a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. We have reviewed this notice and have determined that it
does not significantly affect States' rights, roles, and
responsibilities.
Low-income children will benefit from payments under this program
through increased opportunities for health insurance coverage. We
believe this notice will have an overall positive impact by informing
States, the District of Columbia, and Commonwealths and Territories of
the extent to which they are permitted to expend funds under their
child health plans using the FY 2000 and FY 2001 allotment's
redistribution and retained amounts.
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.

(Section 1102 of the Social Security Act (42 U.S.C. 1302))

(Catalog of Federal Domestic Assistance Program No. 93.767, State
Children's Health Insurance Program)

Dated: March 5, 2004.
Dennis G. Smith,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: March 25, 2004.
Tommy G. Thompson,
Secretary.
[FR Doc. 04-14580 Filed 7-22-04; 8:45 am]

BILLING CODE 4120-01-P