California Returns $740M in Unused Federal CHIP Funds

California on Sept. 30 returned $740 million in unused federal funds allocated for its CHIP program, because it was unable to spend the money within the allowable time frame, the Los Angeles Times reports. By federal law, states are permitted three years to spend their annual federal CHIP allocations and at the end of the three years must relinquish any unspent money, which is then redistributed to states that have spent their entire allotments. Health experts say a "slow start" in enrolling children in California's CHIP program, Healthy Families, is to blame for the unused funds, the Times reports. The state already has given back $706 million in federal CHIP funds from fiscal years 1998 and 1999, according to the Managed Risk Medical Insurance Board, which oversees Healthy Families. Jim Keddy, director of the PICO California Project, said, "We feel that the governor and Legislature could have moved much more quickly in expanding the program and using up some of the funds. It's a misuse of funds that should be spent on California families." State Secretary of Health and Human Services Grantland Johnson defended state officials, saying that since Gov. Gray Davis (D) took office in 1999, Healthy Families enrollment has grown from 50,000 children to about 600,000. "There's no other state that has matched that effort," Johnson said. Johnson added that federal guidelines have made it "impossible" for the state to spend its share within the allotted time. The Times reports that Congress is considering extending the deadline for states to spend their CHIP funds; besides California, about 36 states have not spent their full federal CHIP allotment (Ornstein, Los Angeles Times, 10/1).