A) Inform the governor of the situation and options for addressing the shortfall.

B) Inform the legislative counsel bureau about the potential over-expenditure.

C) Impose a hiring freeze and hold all spending approvals for contracts and purchases on the affected departments.

D) Confer with the chairmen or staff directors of the House and Senate appropriations committees concerning the need to call a legislative special session. The first and most appropriate action for the state Medicaid director is to inform the governor. This ensures that executive leadership is aware of the fiscal shortfall early and can weigh in on how to proceed. The governor plays a central role in budget planning and proposing supplemental appropriations. While informing legislators or freezing spending may be necessary later, those steps should occur after executive leadership has been notified and involved in decision-making. Relevant Reference: GFOA Best Practices -- Budget Monitoring and Adjustment State Budget Procedures Manuals (varies by state, but consistent in escalation path) National Association of State Budget Officers (NASBO) Guidance Answer : A. Inform the governor of the situation and options for addressing the shortfall