TUCSON, Ariz., Dec. 22 /PRNewswire-FirstCall/ -- The Providence Service Corporation , one of the country’s largest providers of home and community based social services, today commented on the Congressional budget for 2006, which the Senate passed by a vote of 51 to 50 on Wednesday, December 21, 2005 after months of delays. The United States Budget runs through September 30, 2006.
“Overall we are pleased with the Congressional budget for 2006, especially given the early discussions about reductions in provider payments and changes in Medicaid eligibility,” commented Fletcher McCusker, Chairman and CEO of The Providence Service Corporation. “We feel that this is a good attempt at deficit reduction without directly affecting beneficiaries. The new budget allows for state autonomy to continue, which has created an environment that has historically been a major driver of our revenue. We will continue to support state, local and federal initiatives in a bi-partisan manner and build a company that is designed to flow with Congressional initiatives.”
The Federal Budget for 2006 was set at $2.6 trillion dollars with the Medicaid budget set at approximately $192 billion dollars, a 3.4% increase over 2005. The approved Medicaid “cuts,” which are actually reductions to future spending, total approximately $4.7 billion over the next five years and amount to approximately 0.4% of the overall Medicaid budget. Savings are designed to come from changes in the pharmacy benefit, dramatic changes in how beneficiaries can spend down assets and still qualify for Medicaid and changes to how states calculate matching dollars using other federal programs. Forecast Medicaid spending is targeted to increase to approximately $260 billion dollars in 2010.
Additionally, Congress has allocated new Medicaid funding of approximately $774 million to community based programs, approximately $1.4 billion of new funds to the families of severely disabled children and approximately $2 billion to victims of Hurricane Katrina and other storms that hit the southeast earlier this year.
Further, hotly debated foster care reductions call for a reduction in foster care payments of approximately $732 million over the next five years by eliminating the funding for foster children placed into a relative’s home. Providence does not fund these types of placements so this legislation should not impact the Company’s foster care programs.
Finally, Congress passed the Fair Access to Foster Care Act (Title 4E), eliminating the restriction that federal foster care dollars be earmarked for not-for-profit agencies. For-profit organizations, such as Providence, can now contract directly with states that use federal foster care funds.
Providence Service Corporation, through its owned and managed entities, provides home and community based social services to government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections. Providence operates no beds, treatment facilities, hospitals, or group homes preferring to provide services in the client’s own home or other community setting. Through its owned and managed entities, Providence maintains 505 government contracts in 24 states and the District of Columbia as of September 30, 2005.
Certain statements herein, such as any statements about Providence’s confidence or strategies or its expectations about revenues, results of operations, profitability, earnings per share or market opportunities, constitute “forward-looking statements” within the meaning of the private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause Providence’s actual results or achievements to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, reliance on government-funded contracts, risks associated with government contracting, risks involved in managing government business, legislative or policy changes, challenges resulting from growth or acquisitions, adverse media and legal, economic and other risks detailed in Providence’s filings with the Securities and Exchange Commission. Words such as “believe,” “demonstrate,” “expect,” “estimate,” “anticipate,” “should” and “likely” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. Providence undertakes no obligation to update any forward-looking statement contained herein.
Providence Service Corporation
CONTACT: Fletcher McCusker, Chairman and CEO, or Kate Blute, Director ofInvestor and Public Relations, both of Providence Service Corporation,+1-520-747-6600; or Alison Ziegler, +1-212-554-5469, or Paul Henning,+1-212-554-5462, both of Cameron Associates, for Providence ServiceCorporation
