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Two weeks ago, the Administration revealed its budget rescission proposal – $15 billion in rescissions, almost half of which would come from CHIP. Joan Alker wrote about the proposal and its implications, including an update after CBO weighed in later in the week to say that the rescissions “would not affect outlays or the number of individuals with insurance coverage.” Joan wrote then and I’ll echo now, rescinding CHIP funds, especially from the Contingency Fund, would undermine the bipartisan CHIP agreement reached just a few months ago. Children and states had to wait months for CHIP to be funded and Congress should not take actions now that would destabilize CHIP funding.

Thankfully, Congress hit a bump in the road before they could really get to work debating the President’s proposal. A rescission like this – coming from the President and then acted upon by the Congress – is authorized under the Impoundment Control Act and it comes with certain rules. That is, Congress must act within 45 days and only a simple majority is required in both the House and the Senate. But Senate Democrats argued that the proposal didn’t meet the requirements for the Impoundment Control Act because it would rescind money from CHIP, a mandatory program, and the Act is reserved for rescissions to discretionary spending. It was up to the Government Accountability Office (GAO) to decide the matter, and today GAO declared that the proposed CHIP rescissions are allowable.

But as my school teachers used to say – just because you can, doesn’t mean you should. Even the best and brightest among us cannot predict what will happen in the future. That’s why the Contingency Fund is there in the first place. If a state experiences higher than projected enrollment and federal funds are insufficient to cover their costs, this rainy-day fund comes to the rescue. Whether states will need it and how much need they may have is beside the point – it’s there to help in the event of the unknown and it should remain intact.

This post was originally written by Kelly Whitener of the Center for Children and Families. 

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