Health care services delivered in schools are an opportunity to meet children where they are and deliver critical health services in a setting where they spend most of their time. School-based health services are especially important in low-income and rural communities where access to health care services is limited or difficult to access.  

The Individuals with Disabilities Education Act (IDEA) ensures that students with a disability are provided with a Free Appropriate Public Education that is tailored to their individual needs. Outside of specific local and state funding efforts to support these needs, the Medicare Catastrophic Coverage Act authorized federal funding to provide medically necessary services to students per their Individualized Education Program (IEP) or Individualized Family Services Plan (IFSP). In 1995, local education agencies (LEAs), also known as school districts, became eligible providers under the Medicaid program to receive reimbursement for services provided in the school setting. With this, school-based Medicaid became a joint federal and state program that funds certain medical and transportation services to eligible students.  

The Medicaid School-Based Claiming Program 

Access to school-based health services is critical to improving health and academic outcomes for students. In Arizona, the Medicaid School-Based Claiming (MSBC) Program is the state’s school-based Medicaid program, where the Arizona Health Care Cost Containment System (AHCCCS) reimburses LEAs for providing medical and transportation services to eligible students. There are three revenue funding streams available within the MSBC Program, which include: 

• Direct Service Claiming (DSC)- where eligible providers log and bill certain Medicaid-covered services for payment 

• Medicaid Administrative Claiming- where reimbursement is included for routine administrative outreach activities within the school setting through a quarterly cost report 

• Annual Cost Settlement- where reimbursement is included for costs associated with the medical and transportation services that are included on an annual cost report that is then reconciled with the DSC paid claims 

In 2014, the Centers for Medicare and Medicaid Services (CMS) issued a letter to State Medicaid Directors addressing the reversal of the long-standing ‘Free Care’ policy. This allowed LEAs the flexibility to claim reimbursement for services beyond those written into an IEP or IFSP. The expansion opportunity serves more Medicaid-enrolled students who have another medical plan of care, where medical necessity has been established. This program expansion opportunity, called ‘Open Care,’ was introduced by AHCCCS in 2021 and increases Medicaid reimbursement for LEAs that participate in the MSBC Program.  

Impact of Medicaid Cuts on Students with Disabilities in Arizona 

Proposed Medicaid cuts pose a significant threat to student health services, particularly affecting students with disabilities. LEAs depend on Medicaid to fund essential services such as nursing, mental health counseling, and specialized therapies. A survey¹ by the Healthy Schools Campaign revealed that: 

• 80% of LEAs anticipate staff reductions in health services 

• 70% expect cuts to mental and behavioral health programs 

• 62% foresee decreased resources for assistive technologies if these cuts proceed  

Such reductions could hinder academic performance and well-being, especially for students with disabilities who rely on these critical supports. 

For Arizona students, these proposed cuts would severely disrupt school-based health services provided under IEPs. In 2023, 51,237 students received Medicaid-covered services, and 85% of Arizona students attend schools enrolled in the MSBC Program.² Critical services at risk include nursing care, such as medication administration, as well as behavioral health support, including therapy, counseling, and psychological testing. A full list of services and provider types eligible for Medicaid reimbursement can be found here. With Medicaid funding essential for these programs, Medicaid cuts would force LEAs to shift resources or eliminate services altogether, threatening student health, academic success, and overall well-being. 

CAA Role and Next Steps 

Children’s Action Alliance (CAA) has continued efforts highlighting the importance of the MSBC Program, specifically with the Open Care expansion, by working with stakeholders and increasing program awareness. Although the program has expanded, CAA has identified a need for greater awareness about the MSBC Program, including how to participate, what types of services are eligible, and that MSBC-participating LEAs can now submit for reimbursement through Open Care. As most Arizona students are attending an LEA that participates, there is still a strong desire for increased participation and utilization throughout the state.  

AHCCCS is also adding additional changes and flexibilities through a State Plan Amendment (SPA) based on 2023 CMS guidance. Although the submission of the SPA is currently delayed following the threats at the federal level, CAA is taking this opportunity to continue to work with AHCCCS, LEAs, billers, and other stakeholders to promote the program and increase program comprehension. As we are unsure of what the changes at the federal level will bring to the MSBC Program, CAA does know that the MSBC Program is important and is a vital funding stream for many LEAs in the state.

CAA acknowledges that potential cuts to Medicaid not only impact the health and well-being of students, but also puts added financial pressure on LEAs.  

 “With Medicaid cuts, the salaries for the current related services staff would then have to be taken out of the general fund, which has a negative ripple effect on all student services.”— Director of Special Education, Arizona 

With the current fight to protect Medicaid, know that Medicaid in schools remains a CAA priority. For more information and to learn how to participate if you are at an LEA that does not currently participate, please click here. 

If you are interested in being a stakeholder and/or would like to find solutions to increase program comprehension, please e-mail CAA’s Director of Early Learning and Education, Kyrstyn Paulat, at kpaulat@azchildren.org  

¹ Health School Campaign. (March 12, 2025) New Report: How Medicaid Cuts Will Harm Students & Schools. https://healthyschoolscampaign.org/blog/report-how-medicaid-cuts-will-harm-students-schools/

² Arizona Health Cost Containment System. (2024) Medicaid School-Based Billing Fact Sheet. https://www.azahcccs.gov/PlansProviders/FeeForServiceHealthPlans/ProgramsAndPopulations/thirdpartyaccounts/SBC.html

Head Start celebrates 60 years this year as a federally funded program that works to provide comprehensive and high-quality early childhood education, health, and nutrition services to low-income children and families. Head Start serves nearly 800,000 children each year and provides significant short- and long-term benefits to the children and families it serves. In Arizona, there are many Head Start and Early Head Start (HS/EHS) Centers across the state, with over 15,000 funded slots for children 0-5.  

HS/EHS plays a critical role in supporting the healthy development of children living in poverty and helping parents seek employment and educational opportunities. HS/EHS ensures that children who are facing obstacles early on in life have the same opportunity as their peers to be ready for kindergarten. This includes those most vulnerable, like young children with disabilities, children experiencing homelessness, children in foster care, and children in families who are living in poverty. HS/EHS has proven that participation improves the likelihood of educational success, including higher high school completion rates, increased college enrollment, and higher college completion rates. It’s called Head Start for a reason! 

Since January, HS/EHS has been severely impacted. First, a federal funding freeze hit providers, then there was a reduction of Head Start federal support staff. In March, the Department of Health and Human Services announced it was cutting a further 10,000 jobs and reorganizing the Administration for Children and Families, which administers HS/EHS. These individuals ensure high-quality HS/EHS services are available to families nationwide and help administer funding. There are now funds being held for HS/EHS centers. In Arizona, that is around $18 million. These rapid changes and uncertainties are creating panic nationwide and forcing devastating closures, putting early care educators and families in difficult situations.

HS/EHS also helps parents with child care, which is essential as there is high demand and limited availability in the country, especially for people living in rural areas. Approximately 46% of all funded HS/EHS slots are in rural congressional districts. Without HS/EHS, many rural communities would have no licensed child care centers. Arizona is already going through a child care crisis, as child care is not affordable for families, and costs now are upwards of $14,000-$15,000 a year for care.  Because there is no sustainable state investment in the Department of Economic Security’s Child Care Assistance Program, there is currently a waiting list of over 4,000 children for families that make 165% or less of the federal poverty line, which can translate to a single mother with one child who makes less than $35,000. Families and children who are in HS/EHS would qualify for the state program, which would mean that around 20,000 young children and thousands of families would be on the waiting list for child care assistance.

As Members of Congress are on recess and in their districts through April 25^th, they will be holding town halls and attending events. With threats of elimination, lack of workforce support, and funding for HS/EHS, Members of Congress must know the benefits of HS/EHS and what underinvestment and elimination of HS/EHS would mean to the state. HS/EHS is represented in eight of the nine congressional districts

HS/EHS has historically had bipartisan support because both parties have come together to prioritize America’s core early learning and care programs. We must continue to support our young children and families who need it the most. We need more investment, not less, in our early care and education systems.   

When moms have quality, affordable health insurance, they can get the support and care they need to be healthy and care for their babies. Medicaid — known as AHCCCS in Arizona — is health insurance that covers a range of maternity care services that support healthy pregnancies, new moms, and thriving babies. More than 80% of pregnancy-related deaths are preventable, and Medicaid is a critical part of preventing these deaths. Medicaid covers prenatal and birth services and screenings, which means moms and babies can get diagnoses and treatment for physical and mental health conditions before they escalate.

In Arizona, one in two births are covered by AHCCCS. However, this critical lifeline is at risk as Congress considers billions of dollars in spending cuts to Medicaid. A new brief from Georgetown University’s Center for Children and Families (CCF), “How Medicaid Supports Maternal and Infant Health,”  explains how Medicaid helps to improve maternal and infant health outcomes:

• Healthier pregnancies and births for new moms. Many of the physical and mental health conditions that lead to maternal deaths — such as infections, hemorrhages, and depression — occur in the first year after pregnancy, and most are treatable. Medicaid ensures that new and expectant moms are connected to life-saving care and treatment when needed.

• Essential support for newborns. Medicaid ensures that newborns get a healthy start in life by covering necessary medical care, vaccinations, and screenings. The program also funds NICU care for babies born preterm or with low birthweight and specialized care for infants and toddlers with developmental delays and disabilities.

• Positive health, education, and economic outcomes for moms and babies. Studies show that Medicaid coverage for moms and children improves health, leads to better education, and increases financial security.

We highlight this issue as Black Maternal Health Week is recognized from April 11-17 to bring attention and action in improving Black maternal health and alarming disparities here in Arizona and in the United States. Learn more from the State of Black Arizona and the March of Dimes about the need for urgent policy solutions. Everyone can play a role in working to prevent pregnancy-related deaths and improve health outcomes for all new moms and babies.

We need our leaders to protect Arizona families, not advance billions of dollars in Medicaid cuts. Congressional cuts to Medicaid would threaten the health of moms and babies and exacerbate our nation’s maternal health crisis.

The budget process marches forward in Washington, and we continue to learn how devastating the budget cuts they’ve targeted for health care and food security would be to Arizonans and our economy.

Families are working just as hard as ever but struggling to keep up with high costs, yet Congressional leaders are proposing to strip hundreds of thousands of Arizonans of health care and food assistance. They are targeting these lifelines as they extend and expand tax cuts for the highest-income Americans and special interests.

It’s not too late. Our congressional delegation still has time to make decisions that stand with Arizonans by taking Medicaid and Supplemental Nutrition Assistance Program (SNAP) cuts off the table. Congress should not make rushed, reckless cuts that will make it even harder for families.

By working together, we can defend Medicaid/AHCCCS, and protect SNAP food assistance. It’s worth keeping a child from going to bed filled with hunger, ensuring that the 64,000 AHCCCS members who have cancer can get the care they need, and preventing the economic disruption of these cuts in our state. Let your member of Congress know how you, your family, and your community would be affected by these cuts.

Mass Layoffs Bring Instability to Programs for Children and Families – From Head Start to Utility Assistance

At the same time, as we stay engaged in the budget process, we are deeply concerned about the impact that mass layoffs across the federal government will have on services for children and families. Earlier in January, we saw interruptions to federal funding that brought unpredictability to federally funded services.   

Now, this week and over the last month, we’ve seen significant numbers of staff let go, leaving the operation of essential programs in jeopardy. HHS closed several Head Start regional offices, including the office serving Arizona. Head Start, serving more than 14,000 children in Arizona, is a critical program that is tied to better educational and health outcomes for the children served by it. Research shows that Head Start and Early Head Start yield at least $7 for every $1 invested.

These layoffs are not producing meaningful cost savings, but they do leave Head Start centers all over Arizona without critical support, which will impact children and families. Cuts in the staff who work with states to administer child care funds are also significant.

In addition, just as the deadly summer heat nears in Arizona, all staff of the office that distributes federal utility assistance support has been let go. The Low Income Home Energy Assistance Program is there for the most vulnerable Americans to keep their heat on in cold or their air conditioning in the heat. Household energy costs have already increased faster than other costs. LIHEAP utility assistance is essential for individuals and families in need.

Head Start and LIHEAP have long enjoyed bipartisan support in Congress. Let your members of Congress know that you care about these programs and that critical staff should be reinstated to ensure there are no interruptions to Arizona's children and families. 

On top of economic decisions that cause concern about rising prices, such as tariffs. Take a moment to educate our congressional delegation about how you, your family, and your community would be affected.

Today is a National Medicaid Day of Action. This means people all around the country are working to bring attention to why Medicaid is so important to people, the overall health care system, and our economy. 

Here are some fast facts about Medicaid in Arizona:

As we watch a flurry of actions emerge from our nation’s Capital, it is important that Medicaid is treated with the seriousness it deserves. We can help federal leaders understand how vital Medicaid is to people, the economy, and our overall health care system.   

What can you do?

• Help share these facts with your colleagues and community. You can download the PDF from the e-mail to share with your own community. 
• Write a social media post or a letter to your local paper to share how Medicaid matters to everyone, including you. 
• Let your elected federal representatives know that we are counting on them to protect Medicaid and not shift huge costs to families and providers who are already dealing with rising prices. You can reach your member of Arizona’s congressional delegation at 866-426-2631. 

Medicaid is important to our state and our lives. Let’s work together to ensure that policymakers know this.

A few notes on protecting federal funds that are vital to children and families in Arizona:

1. Over the last two days, the federal government, through Office of Budget Management (OMB) Memorandum M-25-13, directed state agencies to review all federal grants and to temporarily freeze disbursement of federal funds. This action created alarming questions and concern about what was to be included or not included. By the afternoon, OMB provided clarity on some key funding exceptions. Litigation quickly occurred, and a judge intervened to delay implementation of the memo through, at least, Monday, February 3, 2025. 
2. Today, OMB Memorandum M-25-13 is rescinded. In fact, those are the exact words used in a short memo from OMB dated today. 
3. While it is a positive development that the memo is rescinded, serious questions and concern remain about the risk to services critical to children and families that would disappear without federal funding. A full-scale review of federal grants and payments continues to proceed. CAA is collecting stories to shine a light on the impact in Arizona, and you can share the impact to you or your organization to help us to do this. 
4. There are threats to vital services for children and families that existed before this week’s memos and that continue to loom. Drastic cuts to Medicaid (the Arizona Health Care Cost Containment System or AHCCCS) that are being discussed in Congress would take away health care from hundreds of thousands of Arizonans and destabilize our state’s health care system. Similarly, cuts to the State Nutrition Assistance Program(SNAP) would increase child hunger. These are preliminary proposals for now and CAA is working every day with partners to prevent them from gaining support. 

We will continue to work to keep you informed. Our collaboration with you and all of our partners is key to policy decisions that work for children and families – not against them.

Is this pause in federal funds impacting you, your organization, or children and families in Arizona? We are collecting stories to help shine a light on the potential impacts of loss of federal funds. Please consider sharing your story with us and collaborating to protect vital services for children and families.

The federal government, through the Office of Management and Budget (OMB), has directed agencies to review federal grants and financial assistance and to temporarily pause federal financial assistance. This means a sudden halt to the disbursement of federal funds to states, tribes, local governments, non-profit organizations, private sector partners, and more. 

This directive, in OMB Memo 25-13, causes great concern and uncertainty. 

A Pause in Federal Funds Will Hurt Arizona

Arizona receives a significant amount of federal funds that are vital to the lives of Arizonans. In a 2024 state-by-state analysis of the percentage of state revenue from federal funds, Arizona was in the top ten states, ranked as the state with the third-highest share of federal funds. More recent recent data demonstrates that federal funds account for 45% of Arizona’s budget. This ranges from health care to highways to veteran’s care, child care, and services for seniors. Even a temporary pause in Arizona’s federal funds has the potential to cause harm.

Arizonans Rely on Lifesaving and Life-Changing Services Supported by Federal Funds

As the former Assistant Secretary of the Administration for Children and Families (ACF) at the U.S. Department of Health and Human Services (HHS), I know how much pain will be caused if federal investments are withheld. I know because I’ve met so many of the parents, children, and people who are impacted by what they often call “lifesaving” or “life-changing” services. At HHS, funds are disbursed for critical programming, including Medicaid and State Children’s Health Insurance Programs, substance use treatment, suicide prevention, pandemic preparedness, and much more. At ACF alone, federal funds historically support: Children in foster care, their kinship caregivers, and foster families; Child care services in every state and Head Start programs that parents and employers rely on; Services for victims of domestic violence and human trafficking; Housing and job assistance for teenagers as they exit the foster care system and young people in the runaway and homeless youth system; Utility assistance to help people keep their heat on in the cold and air conditioner in the summer; and Temporary assistance for needy families to help Americans get through tough times. Pulling the rug out from children, families, and the American people at the toughest times of their lives, and when they are already facing rising costs, will be especially painful. 

Need for Greater Clarity
Many questions remain about the scope of the directive to halt federal funds.

What is the universe of funding at risk under the directive? This requires clarity. The answer seems likely to hinge on the interpretations of federal administrators. The memo notes that the directive does not impact Social Security or Medicare payments or assistance provided directly to individuals. In addition to the memo, OMB also issued a Q&A guidance related to the memo. This Q&A states that Medicaid, Supplemental Nutrition Assistance Program (SNAP), and Head Start will continue without pause. These clarifying statements are important, especially as some federal funding payment systems have been inaccessible today. Furthermore, even with these clear exceptions, many consequential services and programs supported by federal funds remain at risk.

How Long Will Funds Be Paused? This is an open question. The memo directs federal agencies to report back to the White House based on their review by February 10. Courts and judicial actions will also have an impact on this as litigation proceeds. 

Is it Legal to Pause Congressionally Appropriated Funds? This question is already being litigated, and a court has quickly intervened to halt the effects of this directive until at least Monday. We often hear of Congress as having the “power of the purse” because the U.S. Constitution grants Congress the power to impose taxes and spend revenues. In addition, the Impoundment Control Act also created controls to prevent unilateral executive actions that delay or cancel funding passed by Congress. 

What’s Next? Children’s Action Alliance stands with our partners statewide who show up for children and families every day. We will share the potential impact of this and other federal actions with our congressional delegation and other Arizona leaders. All of us will continue to see news come out about new federal actions, litigation, and court decisions.

We will stay informed and share information so we can collectively take action to protect services for children and families. Join us in these efforts.

Is this pause in federal funds impacting you, your organization or children and families in Arizona? We are collecting stories to help shine a light on the potential impacts of loss of federal funds. Please consider sharing your story with us and collaborating to protect vital services for children and families.

School meals address child hunger in Arizona, and House Bill 2213 Appropriation, free school meals will be heard in the House Education Committee on Tuesday, January 28th at 2 PM in Room HHR1! 

This bill appropriates $3.8M  from the state general fund in fiscal year 2025-2026 to Arizona's Department of Education to provide meals to children in their own school every day and the bill explicitly states its intent that this $3.8 million allocation should be considered ongoing funding in future budget years. At a time when parents are struggling with rising costs, this investment is significant to sustaining these meal support programs beyond the initial fiscal year.   

Please show your support by:  

• Signing into Request to Speak (RTS) to indicate your support on the bill if you have an RTS account. The RTS application allows you to register your opinion and leave a comment for the committee members, which is a simple and effective way to show support.  
• Showing up at the House Education Committee hearing! Attendance and support are key, as in-person turnout demonstrates that many are enthusiastic about this investment.   
• Contacting House Education Committee members email TODAY prior to the committee meeting on Tuesday, January 28 at 2:00 PM. As advocates, the individual outreach stresses to these members that this appropriation is a top priority for our state. The House Education Committee members are (* are the bill sponsors):
  • Representative Gress, Chairman  
  • Representative Taylor, Vice-Chairman  
  • Representative Abeytia*   
  • Representative Gutierrez*   
  • Representative Peña  
  • Representative Biasiucci   
  • Representative Hernandez L*   
  • Representative Simacek*  
  • Representative Fink   
  • Representative Marshall  
  • Representative Garcia*   
  • Representative Olson  

HB2213 is a significant step to ensure that economically disadvantaged students have access to nutritious meals during the school day, which can support their health, academic performance, and overall well-being. Your support is critical!