DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland 21244-1850 
 
Center for Medicaid and State Operations 
                     
 
                SHOL #03-002 
 
November 13, 2003 
   
                 
Dear State Health Official: 
 
We are writing to alert you of the critical need for your state to submit and certify its applicable 
Medicaid and State Childrens Health Insurance Program (SCHIP) fourth quarter expenditure 
reports for federal fiscal year (FY) 2003 by November 30, 2003.  As described below, this is 
necessary to ensure that the full and correct amount of SCHIP funds are available for your state 
through the end of FY 2003, and to enable us to implement the reallotment process for the 
unexpended FY 2001 SCHIP allotments. 
 
Under the SCHIP statute (title XXI of the Social Security Act (the Act)), states are provided 
federal funds through the mechanism of federal fiscal year specific and state specific allotments, 
for the purpose of enabling them to provide health assistance for uninsured low-income children.  
Generally, each states fiscal year specific SCHIP allotment is available for expenditure by the 
state only for a 3-year period of availability, the first fiscal year in which the allotment is 
allotted to the state and the two succeeding fiscal years, after which any unexpended amounts of 
such allotment are redistributed.  The 3-year period of availability for states FY 2001 SCHIP 
allotments ended at the end of FY 2003, that is, on September 30, 2003. 
 
Under the current SCHIP statute, for the FY 2001 funds reallotment process the Centers for 
Medicare & Medicaid Services (CMS) must determine the amounts of states unexpended FY 
2001 SCHIP allotments remaining at the end of FY 2003 after application of the relevant 
expenditures through the end of FY 2003, as reported by states no later than November 30, 
2003.  Based on this determination, states that have fully expended their FY 2001 allotment by 
the end of FY 2003 will be eligible to receive a redistribution from the unexpended FY 2001 
allotments.  The remaining states (states that did not expend their FY 2001 allotments by the end 
of FY 2003) will retain a portion of their unexpended FY 2001 allotments, in accordance with a 
statutorily prescribed formula.  The November 30, 2003, report cut off date for states to submit 
their FY 2003 fourth quarter expenditure report is specified at section 2104(g)(3) of the Act, as 
amended by P.L. 108-74, which was signed into law on August 15, 2003.  Under P. L. 108-74, 
the amounts that will be realloted as redistribution or retained amounts in FY 2004 will be 
available through the end of FY 2005 (that is, September 30, 2005). 
 
 
 
  Page 2  State Health Official 
 
As described above, in order for CMS to fully consider all states applicable expenditures in 
determining states FY 2001 redistributed or retained allotment amounts, it is critical that your 
state submit and certify its FY 2003 fourth quarter Medicaid and SCHIP expenditure report(s) no 
later than November 30, 2003, through the Medicaid and State Childrens Health Insurance 
Program Budget and Expenditure System (MBES/CBES).  Failure by a state to report these  
expenditures by that date, could result in a lower amount of redistributed or retained FY 2001 
allotment funds for such state, because the amount of that states FY 2001 redistributed or 
retained allotment amounts would be based only on the (lower) expenditure amounts that were 
reported through that date. 
    
For a brief period of time after November 30, 2003, as CMS begins the FY 2001 reallotment 
process, the MBES/CBES will not be accessible to any state with respect to expenditure forms 
only.  We will notify all users by e-mail once the MBES/CBES is again accessible for 
expenditure reporting.  When the MBES/CBES reopens, the state may not make any changes to 
its fourth quarter FY 2003 or prior expenditure reports that affect SCHIP expenditures (this 
includes Medicaid SCHIP).  However, the fourth quarter FY 2003 expenditure reports will be 
accessible for a state to add or modify only its non-SCHIP Medicaid expenditures. 
 
The CMS regional office responsible for your state will be working with you to ensure timely 
submission of these expenditure reports.  If you have any questions regarding this issue, please 
contact your CMS regional office. 
 
Sincerely, 
             
            /s/ 
 
            Bill Lasowski 
            Financial Advisor 
 
cc: 
 
CMS Regional Administrators 
 
CMS Associate Regional Administrators 
   for Medicaid and State Operations 
 
Kathryn Kotula 
Director, Health Policy Unit 
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
  Page 3  State Health Official 
 
Matt Salo 
Director of Health Legislation 
National Governors Association 
 
Brent Ewig 
Senior Director, Access Policy 
Association of State and Territorial Health Officials 
 
Jim Frogue 
Director, Health and Human Services Task Force  
American Legislative Exchange Council 
 
Trudi Matthews 
Senior Health Policy Analyst 
Council of State Governments