After a month of preliminary budget hearings, it came as a surprise this week to see a proposal that would cut more than $20 million from the state budget for fiscal year 2013. Rep. John Burris (R – Harrison) and Sen. Michael Lamoureux (R – Russellville) have filed resolutions to consider an alternative budget proposal that would fundamentally change the Medicaid funding baseline while cutting essential services to 11 state agencies.
During the pre-session budget hearings, neither of the bill’s lead sponsors publicly discussed the possibility of a three percent spending reduction for these 11 agencies or using one-time funds to satisfy Medicaid requirements. One cannot help but question the motivation for suddenly demanding arbitrary cuts to an already tight state budget. Among the cuts proposed by Mr. Burris and Sen. Lamoureux are almost $3 million to the state Department of Health and a whopping $14 million reduction in the state’s Medicaid fund.
This afternoon, the Department of Human Services released an impact statement, detailing programs that might suffer. Based on the $14.3 million State General Revenue cut, AR stands to lose $47.7 million in total federal and state Medicaid funding. This is in addition to the $7 million state general revenue shortfall the state was already expecting (which is $23.3 million in total federal and state funding) which DHS was planning to make up for through tight controls and possible elimination of non-mandatory services. This makes for a total shortfall of $71 million – which would be realized through cutting health care provider rates by 2.5% or eliminating services to families.
DHS would have to make administrative cuts as well. To cite just one example, DHS would cut three child welfare attorney positions. According to the documents: “This loss would mean children would have to stay in foster care longer rather than returning them to their parents or having the rights of their parents terminated so that they could be adopted and placed in a permanent home. The reduction of attorneys handling foster care cases also could trigger financial penalties from the federal government for cases not being handled in a timely manner. Child welfare attorneys already have caseloads of about 120 cases each, which is twice as big as the national standard.”
You can see a complete list of proposed cuts here and here.
The bill calls for replacing the Medicaid money with a one-time payment out of the state’s expected budget surplus. By using one-time funding to finish the Medicaid budget this year, the baseline funding for Medicaid would be scaled back to a point at which essential services could not be provided in the future, jeopardizing our ability to provide the services we currently provide to low-income families and children. Gov. Mike Beebe said the proposed changes were a “huge issue.”
“Medicaid is not a one-time program,” Beebe told the Arkansas Democrat-Gazette. “All you’re doing is exacerbating [the projected Medicaid] shortfall from $270 [million] to $284 [million] a year from now. And that’s real problematic.”
Looking for cost savings should be encouraged by all, and we certainly want lawmakers to find ways to make the government run more efficiently. However, arbitrary cuts to state government agencies and reckless budget gimmicks threaten our long-term economic stability and potential growth. Worse yet, cuts could have a negative impact on the health and well-being of children and families in Arkansas. The governor and administrators at the Department of Human Services already have a plan in place for Medicaid payment reform. The prudent course of action is to allow these experienced professionals to implement their own solutions as they see fit. What’s needed is long-term, meaningful reform, not short-sighted political maneuvering.
As more details become clear about what programs face cuts based on this budget proposal, we will be sure to highlight those that impact children and low-income families. The governor has asked for impacted agencies to identify programs and services they will have to cut or eliminate. Those reports are expected early next week.