[Federal Register Volume 69, Number 166 (Friday, August 27, 2004)]
[Notices]
[Pages 52700-52706]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-19573]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2201-N]
RIN 0938-ZA17


State Children's Health Insurance Program; Final Allotments to 
States, the District of Columbia, and U.S. Territories and 
Commonwealths for Fiscal Year 2005

AGENCY: Centers for Medicare & Medicaid Services (CMS),HHS.

ACTION: Notice.

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SUMMARY: Title XXI of the Social Security Act (the Act) authorizes 
payment of Federal matching funds to States, the District of Columbia, 
and U.S. Territories and Commonwealths to initiate and expand health 
insurance coverage to uninsured, low-income children under the State 
Children's Health Insurance Program (SCHIP). This notice sets forth the 
final allotments of Federal funding available to each State, the 
District of Columbia, and each U.S. Territory and Commonwealth for 
fiscal year 2005.
    States may implement SCHIP through a separate State program under 
title XXI of the Act, an expansion of a State Medicaid program under 
title XIX of the Act, or a combination of both.

DATES: This notice is effective on September 27, 2004. Final allotments 
are available for expenditures after October 1, 2004.

FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.

SUPPLEMENTARY INFORMATION:

I. Purpose of This Notice

    This notice sets forth the allotments available to each State, the 
District of Columbia, and each U.S. Territory and Commonwealth for 
fiscal year (FY) 2005 under title XXI of the Social Security Act (the 
Act). Final allotments for a fiscal year are available to match 
expenditures under an approved State child health plan for 3 fiscal 
years, including the year for which the final allotment was provided. 
The FY 2005 allotments will be available to States for FY 2005, and 
unexpended amounts may be carried over to 2006 and 2007. Federal funds 
appropriated for title XXI are limited, and the law specifies a formula 
to divide the total annual appropriation into individual allotments 
available for each State, the District of Columbia, and each U.S. 
Territory and Commonwealth with an approved child health plan.
    Section 2104(b) of the Act requires States, the District of 
Columbia, and U.S. Territories and Commonwealths to have an approved 
child health plan for the fiscal year in order for the Secretary to 
provide an allotment for that fiscal year. All States, the District of 
Columbia, and U.S. Territories and Commonwealths have approved plans 
for FY 2005. Therefore, the FY 2005 allotments contained in this notice 
pertain to all States, the District of Columbia, and U.S. Territories 
and Commonwealths.

II. Methodology for Determining Final Allotments for States, the 
District of Columbia, and U.S. Territories and Commonwealths

    This notice specifies, in the Table under section III, the final FY 
2005

[[Page 52701]]

allotments available to individual States, the District of Columbia, 
and U.S. Territories and Commonwealths for either child health 
assistance expenditures under approved State child health plans or for 
claiming an enhanced Federal medical assistance percentage rate for 
certain SCHIP-related Medicaid expenditures. As discussed below, the FY 
2005 final allotments have been calculated to reflect the methodology 
for determining an allotment amount for each State, the District of 
Columbia, and each U.S. Territory and Commonwealth as prescribed by 
section 2104(b) of the Act.
    Section 2104(a) of the Act provides that, for purposes of providing 
allotments to the 50 States and the District of Columbia, the following 
amounts are appropriated: $4,295,000,000 for FY 1998; $4,275,000,000 
for each FY 1999 through FY 2001; $3,150,000,000 for each FY 2002 
throughFY 2004; $4,050,000,000 for each FY 2005 through FY 2006; and 
$5,000,000,000 for FY 2007. However, under section 2104(c) of the Act, 
0.25 percent of the total amount appropriated each year is available 
for allotment to the U.S. Territories and Commonwealths of Puerto Rico, 
Guam, the Virgin Islands, American Samoa, and the Northern Mariana 
Islands. The total amounts are allotted to the U.S. Territories and 
Commonwealths according to the following percentages: Puerto Rico, 91.6 
percent; Guam, 3.5 percent; the Virgin Islands, 2.6 percent; American 
Samoa, 1.2 percent; and the Northern Mariana Islands, 1.1 percent.
    Section 2104(c)(4)(B) of the Act provides for additional amounts 
for allotment to the Territories and Commonwealths: $34,200,000 for 
each FY 2000 through FY 2001; $25,200,000 for each FY 2002 through FY 
2004; $32,400,000 for each FY 2005 through FY 2006; and $40,000,000 for 
FY 2007. Since, for FY 2005, title XXI of the Act provides an 
additional $32,400,000 for allotment to the U.S. Territories and 
Commonwealths, the total amount available for allotment to the U.S. 
Territories and Commonwealths in FY 2005 is $42,525,000; that is, 
$32,400,000 plus $10,125,000 (0.25 percent of the FY 2005 appropriation 
of $4,050,000,000).
    Therefore, the total amount available nationally for allotment for 
the 50 States and the District of Columbia for FY 2005 was determined 
in accordance with the following formula:

AT = S2104(a)-T2104(c)
AT = Total amount available for allotment to the 50 States 
and the District of Columbia for the fiscal year.
S2104(a) = Total appropriation for the fiscal year indicated 
in section 2104(a) of the Act. For FY 2005, this is $4,050,000,000.
T2104(c) = Total amount available for allotment for the U.S. 
Territories and Commonwealths; determined under section 2104(c) of the 
Act as 0.25 percent of the total appropriation for the 50 States and 
the District of Columbia. For FY 2005, this is: .0025 x $4,050,000,000 
= $10,125,000.

Therefore, for FY 2005, the total amount available for allotment to the 
50 States and the District of Columbia is $4,039,875,000. This was 
determined as follows:

AT ($4,039,875,000) = S2104(a) ($4,050,000,000)-
T2104(c) ($10,125,000)

    For purposes of the following discussion, the term ``State,'' as 
defined in section 2104(b)(1)(D)(ii) of the Act, ``means one of the 50 
States or the District of Columbia.''
    Under section 2104(b) of the Act, the States' SCHIP allotments for 
a particular fiscal year are determined based on two factors: The 
``number of children'' and the ``State cost factor.'' The number of 
children is based on the three most recent March supplements to the 
Current Population Survey (CPS) of the Bureau of the Census officially 
available before the beginning of the calendar year in which the fiscal 
year begins. The State cost factor is based on the annual average wages 
per employee in the health services industry, which is determined using 
the most recent 3 years of such wage data as reported and determined as 
final by the Bureau of Labor Statistics (BLS) of the Department of 
Labor to be officially available before the beginning of the calendar 
year in which the fiscal year begins. Since FY 2005 begins on October 
1, 2004 (that is, in calendar year 2004), in determining the FY 2005 
SCHIP allotments, we are using the most recent official data from the 
Bureau of the Census and the BLS, respectively, available before 
January 1 of calendar year 2004 (that is, through the end of December 
31, 2003).

Number of Children

    For FY 2005, as specified by section 2104(b)(2)(A)(iii) of the Act, 
the number of children is calculated as the sum of 50 percent of the 
number of low-income, uninsured children in the State, and 50 percent 
of the number of low-income children in the State. The number of 
children factor for each State is developed from data provided by the 
Bureau of the Census based on the standard methodology used to 
determine official poverty status and uninsured status in the annual 
CPS on these topics. As part of a continuing formal process between the 
Centers for Medicare & Medicaid Services (CMS) and the Bureau of the 
Census, each fiscal year we obtain the number of children data 
officially from the Bureau of the Census.
    Under section 2104(b)(2)(B) of the Act, the number of children for 
each State (provided in thousands) was determined and provided by the 
Bureau of the Census based on the arithmetic average of the number of 
low-income children and low-income children with no health insurance as 
calculated from the three most recent March supplements to the CPS 
officially available from the Bureau of the Census before the beginning 
of the 2004 calendar year. In particular, through December 31, 2003, 
the most recent official data available from the Bureau of the Census 
on the numbers of children were data from the three March CPSs 
conducted in March 2001, 2002, and 2003 (representing data for years 
2000, 2001, and 2002, respectively).

State Cost Factor

    The State cost factor is based on annual average wages in the 
health services industry in the State. The State cost factor for a 
State is equal to the sum of: 0.15 and 0.85 multiplied by the ratio of 
the annual average wages in the health industry per employee for the 
State to the annual wages per employee in the health industry for the 
50 States and the District of Columbia.
    Under section 2104(b)(3)(B) of the Act, the State cost factor for 
each State for a fiscal year is calculated based on the average of the 
annual wages for employees in the health industry for each State using 
data for each of the most recent three years as reported and determined 
as final by the BLS in the Department of Labor and available before the 
beginning of the calendar year in which the fiscal year begins. 
Therefore, the State cost factor for FY 2005 is based on the most 
recent 3 years of BLS data officially available as final before January 
1, 2004 (the beginning of the calendar year in which FY 2005 begins); 
that is, the State cost factor is based on the BLS data available as 
final through December 31, 2003. In accordance with these requirements, 
we used the final State cost factor data available from BLS for 2000, 
2001, and 2002 in calculating the FY 2005 final allotments.
    The State cost factor is determined based on the calculation of the 
ratio of each State's average annual wages in the health industry to 
the national average

[[Page 52702]]

annual wages in the health care industry. Since BLS is required to 
suppress certain State-specific data in providing us with the State-
specific average wages per health services industry employee due to the 
Privacy Act, we calculated the national average wages directly from the 
State-specific data provided by BLS. As part of a continuing formal 
process between CMS and the BLS, each fiscal year, CMS obtains these 
wage data officially from the BLS.
    Section 2104(b)(3)(B) of the Act, as amended by the Medicare, 
Medicaid, and SCHIP Balanced Budget Refinement Act of 1999, refers to 
wage data as reported by BLS under the ``Standard Industrial 
Classification'' (SIC) system. However, in calendar year 2002, BLS 
phased-out the SIC wage and employment reporting system and replaced it 
with the ``North American Industry Classification System'' (NAICS). In 
accordance with section 2104(b)(3)(B) of the Act, for purposes of 
calculating the FY 2005 allotments, BLS would need to provide wage data 
for the 3 most recent years as available through December 31, 2003; in 
this case, the three years of wage data are 2000, 2001, and 2002. 
However, because of the change from the SIC system to NAICS, wage data 
for 2001 and 2002 are not available under the SIC reporting system. 
Wage data for 2000 under the SIC reporting system is available from 
BLS. Therefore, the BLS wage data used in calculating the FY 2005 SCHIP 
allotments necessarily reflect 1 year of SIC system data (2000) and 2 
years of NAICS data (2001 and 2002) to obtain the 3-year average 
required for the allotments.
    Under the SIC system, BLS provided CMS with wage data for each 
State under the SIC Code 80 for year 2000. However, the wage data codes 
under the SIC system do not map exactly to the wage data codes under 
the NAICS. As a result, for the years 2001 and 2002, BLS provided us 
with wage data using three NAICS wage data codes that represent 
approximately 98 percent of the wage data that would have been provided 
under the related SIC Code 80. Specifically, in lieu of SIC Code 80 
data, for the years 2001 and 2002, BLS provided CMS data that are based 
on the following three NAICS codes: NAICS Code 621 (Ambulatory health 
care services), Code 622 (Hospitals), and Code 623 (Nursing and 
residential care facilities).
    Under section 2104(b)(4) of the Act, each State and the District of 
Columbia is allotted a ``proportion'' of the total amount available 
nationally for allotment to the States. The term ``proportion'' is 
defined in section 2104(b)(4)(D)(i) of the Act and refers to a State's 
share of the total amount available for allotment for any given fiscal 
year. In order for the entire total amount available to be allotted to 
the States, the sum of the proportions for all States must exactly 
equal one. Under the statutory definition, a State's proportion for a 
fiscal year is equal to the State's allotment for the fiscal year 
divided by the total amount available nationally for allotment for the 
fiscal year. In general, a State's allotment for a fiscal year is 
calculated by multiplying the State's proportion for the fiscal year by 
the national total amount available for allotment for that fiscal year 
in accordance with the following formula:

SAi = Pi x AT
SAi = Allotment for a State or District of Columbia for a 
fiscal year.
Pi = Proportion for a State or District of Columbia for a 
fiscal year.
AT = Total amount available for allotment to the 50 States 
and the District of Columbia for the fiscal year. For FY 2005, this is 
$4,039,875,000.

    In accordance with the statutory formula for determining 
allotments, the State proportions are determined under two steps, which 
are described in detail below.

Determination of Preadjusted Proportion

    Under the first step, each State's proportion is calculated by 
multiplying the State's Number of Children and the State Cost Factor to 
determine a ``product'' for each State. The products for all States are 
then summed. Finally, the product for a State is divided by the sum of 
the products for all States, thereby yielding the State's preadjusted 
proportion.

Application of Floors and Ceilings

    Under the second step, the preadjusted proportions are subject to 
the application of proportion floors, ceilings, and a reconciliation 
process, as appropriate. The SCHIP statute specifies three proportion 
floors, or minimum proportions, that apply in determining States' 
allotments. The first proportion floor is equal to $2,000,000 divided 
by the total of the amount available nationally for the fiscal year. 
This proportion ensures that a State's minimum allotment would be 
$2,000,000. For FY 2005, no State's preadjusted proportion is below 
this floor. The second proportion floor is equal to 90 percent of the 
allotment proportion for the State for the previous fiscal year; that 
is, a State's proportion for a fiscal year must not be lower than 10 
percent below the previous fiscal year's proportion. The third 
proportion floor is equal to 70 percent of the allotment proportion for 
the State for FY 1999; that is, the proportion for a fiscal year must 
not be lower than 30 percent below the FY 1999 proportion.
    Each State's allotment proportion for a fiscal year is also limited 
by a maximum ceiling amount, equal to 145 percent of the State's 
proportion for FY 1999, that is, a State's proportion for a fiscal year 
must be no higher than 45 percent above the State's proportion for FY 
1999. The floors and ceilings are intended to minimize the fluctuation 
of State allotments from year to year and over the life of the program 
as compared to FY 1999. The floors and ceilings on proportions are not 
applicable in determining the allotments of the U.S. Territories and 
Commonwealths; they receive a fixed percentage specified in the statute 
of the total allotment available to the U.S. Territories and 
Commonwealths.
    As determined under the first step for determining the States' 
preadjusted proportions, which is applied before the application of any 
floors or ceilings, the sum of the proportions for all the States and 
the District of Columbia will be equal to exactly one. However, the 
application of the floors and ceilings under the second step may change 
the proportions for certain States; that is, some States' proportions 
may need to be raised to the floors, while other States' proportions 
may need to be lowered to the maximum ceiling. If this occurs, the sum 
of the proportions for all States and the District of Columbia may not 
exactly equal one. In that case, the statute requires the proportions 
to be adjusted, under a method that is determined by whether the sum of 
the proportions is greater or less than one.
    The sum of the proportions would be greater than one if the 
application of the floors and ceilings resulted in raising the 
proportions of some States (due to the application of the floors) to a 
greater degree than the proportions of other States were lowered (due 
to the application of the ceiling). If, after application of the floors 
and ceiling, the sum of the proportions is greater than one, the 
statute requires the Secretary to determine a maximum percentage 
increase limit, which, when applied to the State proportions, would 
result in the sum of the proportions being exactly one.
    If, after the application of the floors and ceiling, the sum of the 
proportions is less than one, the statute requires the States' 
proportions to be increased in a ``pro rata'' manner so that the sum of 
the

[[Page 52703]]

proportions again equals one. Finally, it is also possible, although 
unlikely, that the sum of the proportions (after the application of the 
floors and ceiling) will be exactly one; in that case, the proportions 
would require no further adjustment.

Determination of Preadjusted Proportions

    The following is an explanation of how we applied the two State-
related factors specified in the statute to determine the States' 
``preadjusted'' proportions for FY 2005. The term ``preadjusted,'' as 
used here, refers to the States' proportions before the application of 
the floors and ceiling and adjustments, as specified in the SCHIP 
statute. The determination of each State and the District of Columbia's 
preadjusted proportion for FY 2005 is in accordance with the following 
formula:

PPi = (Ci x SCFi)/
[Sigma](Ci x SCFi)
PPi = Preadjusted proportion for a State or District of 
Columbia for a fiscal year.
Ci = Number of children in a State (section 2104(b)(1)(A)(i) 
of the Act) for a fiscal year. This number is based on the number of 
low-income children for a State for a fiscal year and the number of 
low-income uninsured children for a State for a fiscal year determined 
on the basis of the arithmetic average of the number of such children 
as reported and defined in the three most recent March supplements to 
the CPS of the Bureau of the Census, officially available before the 
beginning of the calendar year in which the fiscal year begins. (See 
section 2104(b)(2)(B) of the Act.)
     For fiscal year 2005, the number of children is equal to the sum 
of 50 percent of the number of low-income uninsured children in the 
State for the fiscal year and 50 percent of the number of low-income 
children in the State for the fiscal year. (See section 
2104(b)(2)(A)(iii) of the Act.)
SCFi = State Cost Factor for a State (section 
2104(b)(1)(A)(ii) of the Act). For a fiscal year, this is equal to: 
0.15 + 0.85 x (Wi/WN)
Wi = The annual average wages per employee for a State for 
such year (section 2104(b)(3)(A)(ii)(I) of the Act).
WN = The annual average wages per employee for the 50 States 
and the District of Columbia (section 2104(b)(3)(A)(ii)(II) of the 
Act).
     The annual average wages per employee for a State or for all 
States and the District of Columbia for a fiscal year is equal to the 
average of such wages for employees in the health services industry, as 
reported and determined as final by the BLS of the Department of Labor 
for each of the most recent 3 years officially available before the 
beginning of the calendar year in which the fiscal year begins. (See 
section 2104(b)(3)(B) of the Act).
[Sigma](Ci x SCFi) = The sum of the products of 
(Ci x SCFi) for each State (section 2104(b)(1)(B) 
of the Act).

    The resulting proportions would then be subject to the application 
of the floors and ceilings specified in the SCHIP statute and 
reconciled, as necessary, to eliminate any deficit or surplus of the 
allotments because the sum of the proportions was either greater than 
or less than one.
    Section 2104(e) of the Act requires that the amounts allotted to a 
State for a fiscal year be available to the State for a total of 3 
years; the fiscal year for which the amounts are allotted, and the 2 
following fiscal years.

III. Table of State Children's Health Insurance Program Final 
Allotments for FY 2005

Key to Table

Column/Description

    Column A = State. Name of State, District of Columbia, U.S. 
Commonwealth or Territory.
    Column B = Number of Children. The number of children for each 
State (provided in thousands) was determined and provided by the Bureau 
of the Census based on the arithmetic average of the number of low-
income children and low-income uninsured children, and is based on the 
three most recent March supplements to the CPS of the Bureau of the 
Census officially available before the beginning of the calendar year 
in which the fiscal year begins. The FY 2005 allotments were based on 
the 2001, 2002, and 2003 March supplements to the CPS. These data 
represent the number of people in each State under 19 years of age 
whose family income is at or below 200 percent of the poverty threshold 
appropriate for that family, and who are reported to be without health 
insurance coverage. The number of children for each State was developed 
by the Bureau of the Census based on the standard methodology used to 
determine official poverty status and uninsured status in its annual 
March CPS on these topics.
    For FY 2005, the number of children is equal to the sum of 50 
percent of the number of low-income uninsured children in the State and 
50 percent of the number of low-income children in the State.
    Column C = State Cost Factor. The State cost factor for a State is 
equal to the sum of: 0.15, and 0.85 multiplied by the ratio of the 
annual average wages in the health industry per employee for the State 
to the annual wages per employee in the health industry for the 50 
States and the District of Columbia. The State cost factor for each 
State was calculated based on such wage data for each State as reported 
and determined as final by the BLS in the Department of Labor for each 
of the most recent 3 years and available before the beginning of the 
calendar year in which the fiscal year begins. The FY 2005 allotments 
were based on final BLS wage data for 2000, 2001, and 2002.
    Column D = Product. The Product for each State was calculated by 
multiplying the Number of Children in Column B by the State Cost Factor 
in Column C. The sum of the Products for all 50 States and the District 
of Columbia is below the Products for each State in Column D. The 
Product for each State and the sum of the Products for all States 
provides the basis for allotment to States and the District of 
Columbia.
    Column E = Proportion of Total. This is the calculated percentage 
share for each State of the total allotment available to the 50 States 
and the District of Columbia. The Percent Share of Total is calculated 
as the ratio of the Product for each State in Column D to the sum of 
the Products for all 50 States and the District of Columbia below the 
Products for each State in Column D.
    Column F = Adjusted Proportion of Total. This is the calculated 
percentage share for each State of the total allotment available after 
the application of the floors and ceilings and after any further 
reconciliation needed to ensure that the sum of the State proportions 
is equal to one. The three floors specified in the statute are: (1) The 
percentage calculated by dividing $2,000,000 by the total of the amount 
available for all allotments for the fiscal year; (2) an annual floor 
of 90 percent of (that is, 10 percent below) the preceding fiscal 
year's allotment proportion; and (3) a cumulative floor of 70 percent 
of (that is, 30 percent below) the FY 1999 allotment proportion. There 
is also a cumulative ceiling of 145 percent of (that is, 45 percent 
above) the FY 1999 allotment proportion.
    Column G = Allotment. This is the SCHIP allotment for each State, 
Commonwealth, or Territory for the fiscal year. For each of the 50 
States and the District of Columbia, this is determined as the Adjusted 
Proportion of Total in Column F for the State multiplied by the total 
amount available

[[Page 52704]]

for allotment for the 50 States and the District of Columbia for the 
fiscal year.
    For each of the U.S. Territory and Commonwealths, the allotment is 
determined as the Proportion of Total in Column E multiplied by the 
total amount available for allotment to the U.S. Territories and 
Commonwealths. For the U.S. Territories and Commonwealths, the 
Proportion of Total in Column E is specified in section 2104(c) of the 
Act. The total amount is then allotted to the U.S. Territories and 
Commonwealths according to the percentages specified in section 2104 of 
the Act. There is no adjustment made to the allotments of the U.S. 
Territories and Commonwealths as they are not subject to the 
application of the floors and ceiling. As a result, Column F in the 
table, the Adjusted Proportion of Total, is empty for the U.S. 
Territories and Commonwealths.
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[[Page 52705]]

[GRAPHIC] [TIFF OMITTED] TN27AU04.000

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IV. Impact Statement

    We have examined the impact of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    We have examined the impact of this notice as required by Executive 
Order 12866. Executive Order 12866 directs

[[Page 52706]]

agencies to assess all costs and benefits of available regulatory 
alternatives and, when rules are necessary, to select regulatory 
approaches that maximize net benefits (including potential economic 
environments, public health and safety, other advantages, distributive 
impacts, and equity). We believe that this notice is consistent with 
the regulatory philosophy and principles identified in the Executive 
Order. The formula for the allotments is specified in the statute. 
Since the formula is specified in the statute, we have no discretion in 
determining the allotments. This notice merely announces the results of 
our application of this formula, and therefore does not reach the 
economic significance threshold of $100 million in any one year.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $6 
million to $29 million in any one year. Individuals and States are not 
included in the definition of a small entity; therefore, this 
requirement does not apply.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds.
    The Unfunded Mandates Reform Act of 1995 requires that agencies 
prepare an assessment of anticipated costs and benefits before 
publishing any notice that may result in an annual expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $110 million or more (adjusted each year for 
inflation) in any one year. Since participation in the SCHIP program on 
the part of States is voluntary, any payments and expenditures States 
make or incur on behalf of the program that are not reimbursed by the 
Federal government are made voluntarily. This notice will not create an 
unfunded mandate on States, tribal, or local governments because it 
merely notifies States of their SCHIP allotment for FY 2005. Therefore, 
we are not required to perform an assessment of the costs and benefits 
of this notice.
    Low-income children will benefit from payments under SCHIP through 
increased opportunities for health insurance coverage. We believe this 
notice will have an overall positive impact by informing States, the 
District of Columbia, and U.S. Territories and Commonwealths of the 
extent to which they are permitted to expend funds under their child 
health plans using their FY 2005 allotments.
    Under Executive Order 13132, we are required to adhere to certain 
criteria regarding Federalism. We have reviewed this notice and 
determined that it does not significantly affect States' rights, roles, 
and responsibilities because it does not set forth any new policies.
    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act because we have determined, and we 
certify, that this notice will not have a significant economic impact 
on a substantial number of small entities or a significant impact on 
the operations of a substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

(Section 1102 of the Social Security Act (42 U.S.C. 1302).)

(Catalog of Federal Domestic Assistance Program No. 93.767, State 
Children's Health Insurance Program)

    Dated: May 17, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.

    Dated: June 14, 2004.
Tommy G. Thompson,
Secretary.
[FR Doc. 04-19573 Filed 8-26-04; 8:45 am]
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