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Tomblin wants to tap rainy day fund interest for Medicaid

CHARLESTON, W.Va. - Gov. Earl Ray Tomblin wants to use interest earned from a portion of the state's rainy day fund to help fend off mounting Medicaid bills.

Senate President Jeff Kessler, D-Marshall, introduced a Senate Bill 191 on Tomblin's behalf Friday. It calls for all interest earned from the secondary rainy day fund to go to the federal-state Medicaid program.

If passed, it would be the first time the state has not kept all of the interest from the fund, informally called Rainy Day B, Budget Director Mike McKown said.

"Can't touch it right now," McKown said. "You've got to expend Rainy Day A right now before you touch Rainy Day B. And we're not touching A."

There was almost $914 million in the entire Rainy Day fund at the end of January. Rainy Day B accounts for $348 million of that amount, McKown said.

The secondary account was created in 2006 with money from the West Virginia Tobacco Settlement Medical Trust fund. At the time it contained $235 million, with most of its growth coming from earned interest, McKown said.

The money is in a series of long-term investments, McKown said. Those investments result in interest payments every year, but it's tough to predict what those payments may be. For fiscal year 2011, the fund earned $36 million in interest. That's much more than it earned during the 2011 calendar year ($14 million), but comparable to the amount earned last calendar year ($30.4 million).

"It just depends," McKown said.

There's about $1.5 million from a medical malpractice premium tax that goes into the fund as well, but McKown said it would essentially stop growing if the bill passes. Officials tout the state's Rainy Day fund as one of the most robust in the nation.

It helps public agencies secure better bond ratings, among other benefits.

But any interest would help the state attack looming budget caps created by bulging Medicaid expenses, McKown said.

The state had to work around a $142 million hole caused by increased Medicaid costs for the budget released last week. McKown called it the toughest balancing job he's ever had to do.

Next year the projected gap is $96 million. That's without taking into consideration the changes that could happen if Tomblin decides to expand the eligibility criteria for Medicaid benefits.

The governor is expected to decide on expansion sometime during the legislative session. A message left with a representative was not returned.

The bill would also raise the cap on how much money could go from the General Revenue budget into the Rainy Day fund. Right now code mandates 50 percent of surplus revenue go into the Rainy Day fund until the amount in the fund equals 13 percent of the General Revenue budget.

The bill proposes raising that amount to 15 percent.

Contact writer Dave Boucher at 304-348-4843 or Follow him at


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