Funding for public schools, higher education, prisons and other state needs would be cut under a budget proposal released Monday by House Speaker Jeremy Gillam in anticipation of a possible legislative failure to reauthorize funding of the state's expanded Medicaid program in the coming fiscal session.
The speaker said the cuts would be necessary to fill a $122 million shortfall created from the state no longer accepting federal Medicaid dollars to purchase private health insurance for low-income Arkansans. Gillam, R-Judsonia, said he and Joint Budget Committee Co-chairman Rep. Lane Jean, R-Magnolia, put together the plan.
"We're all in this together. We're going to succeed as a state. We're going to fail as a state," Gillam told reporters at the state Capitol. "And any of the pain that should come about without Arkansas Works, we felt like should be shared equally in a responsible manner."
Gillam's and Gov. Asa Hutchinson's plans both would boost the states' general-revenue budget by $142.7 million to $5.33 billion in fiscal 2017, which starts July 1.
Gillam, who voted in last week's special session for legislation updating the Medicaid expansion's private option to a new form called Arkansas Works, said his plan would reallocate more than $100 million in the state's general budget largely to pay for shifting some people who are covered under the expansion to the traditional Medicaid program and pay for expected increases in uncompensated care expenses for state agencies such as the University of Arkansas for Medical Sciences.
His budget proposal would increase general-revenue funding to the state Department of Human Services by $166 million to $1.49 billion, including a $154.6 million increase to $1.13 billion for the Medicaid program. In contrast, Hutchinson proposed a $111 million general-revenue increase to $1.44 billion, including an $88 million increase for the Medicaid program to $1.06 million.
Gillam's plan includes $14.6 million in funds for increased uncompensated care costs at the University of Arkansas for Medical Sciences, where Chancellor Dan Rahn has warned that UAMS faces additional uncompensated care costs of $65 million a year if the Medicaid expansion isn't reauthorized.
Some Medicaid-expansion opponents said they didn't believe the numbers.
"We're going through budget scares," said Sen. Alan Clark, R-Lonsdale. "That's what we're going through."
Clark was one of 10 senators who voted against Arkansas Works during a special session last week. He said he would vote against the Medical Services Division appropriation, which includes funding for Arkansas Works, during the fiscal session that starts Wednesday. The division is part of the Human Services Department.
"The whole idea here is to scare folks so they'll call me and tell me that we have to take that $1.6 billion from the federal government," Clark said.
Clark said he believes that there are enough surplus funds to make up for any losses from dropping the Medicaid expansion.
Sen. Bryan King, R-Green Forest, said Gillam's projections don't affect his opposition to funding Hutchinson's revamping of the state's private option.
King said he is for trimming the size of state government and isn't afraid to go forward with some ideas of his own. He said that Gillam, Hutchinson and others have "framed" the issue in a way that doesn't reflect reality.
"They keep shouting about this 'hole in the budget,' ... this $100 million hole, and go around and saying you're going to pull the feeding tubes from poor babies; that's just politics," he said. "Let's talk about cleaning up management at DHS and get to the point where it's not costing the rest of state government."
But Jean, the Joint Budget Committee co-chairman, who voted against Arkansas Works during the special session, said lawmakers need to understand the choice they will be required to make during the fiscal session.
"We're not trying to pull anything," Jean said.
The Medicaid expansion, enacted by the Legislature in 2013, extended coverage to adults with incomes of up to 138 percent of the poverty level: $16,394 for an individual, for instance, or $33,534 for a family of four.
About 267,000 Arkansans are covered through the expansion. The state will begin paying 5 percent of the cost of the program in 2017 and its share will gradually increase to 10 percent by 2020.
Reauthorization of the funding for the program in fiscal 2017 requires a three-fourths vote in the House and Senate, and opponents in the Senate said they have enough votes to block its approval there.
Legislation enacted in last week's special session would make changes that Hutchinson has said would encourage enrollees to stay employed and take responsibility for their health care. Those changes include charging premiums of about $19 a month to participants whose incomes are above the poverty level, subsidizing some enrollees' coverage through employer plans and referring some beneficiaries to job-training programs.
Hutchinson's proposed $20 million general-revenue increase in the budget of the Children and Family Services Division, raising it to $91 million, would be cut down to a $9.5 million increase under Gillam's proposal.
"The staff who investigate child abuse and work with those children and families are already stretched too thin," said Department of Human Services Director Cindy Gillespie said in a statement. "Their caseloads are double that of the recommended national average and they work very long hours and give up time with their own families just to get their work done."
Hutchinson also highlighted the division in a news release.
"The consequences of this cut alone is devastating and will directly impact the resources available for our foster families, our social workers and nearly 5,000 children in our state's foster care system," the governor said. "Adequate funding and handling of our state's foster care community is an important initiative of my administration. To further cut funding for DCFS is a disservice to the foster care community and to the children who so desperately need our help."
Among the state agencies that would be hit by cuts to next year's proposed budgets are elements of the state's criminal justice system. Prison and parole officials have been looking for ways to crack down on recidivism in an effort to stop historic prison crowding, but cuts to the budget could have negative effects, officials said.
Dina Tyler, the deputy director of the Arkansas Community Correction agency, said the cuts could have a "crippling" effect on operations for the agency.
"Like most agencies, most of our budget goes to salaries and personnel, especially when you consider the fact we're trying to run herd over about 56,000 offenders. So what we'd have to do right away is not fill vacant positions," Tyler said. "Then we'd have to look at cutting positions, even officer positions, which would be terrible because our officers' caseloads already run at least two times the national average. If we had fewer officers doing that, it'd go even higher."
The state's parole and probation agency would be "squeezed" on two fronts if Arkansas Works failed to be funded, Tyler said. State officials have relied on the state's private option to get parolees and probationers necessary medical services -- including mental health and rehabilitation treatment -- in an effort to stop offenders from returning to crime.
"We're anxious right now," Tyler said. "Arkansas is moving in the right direction as far as trying to provide the kinds of services to keep people from re-offending. We can't just keep locking people up only to have them go home and re-offend. ... That number [of re-offenders] won't shrink with the budget."
According to Gillam's figures, the Arkansas Department of Correction, which Hutchinson's proposed to fund at $340.7 million, would have $333.2 million in funding, which is about $3.4 million less than the agency had this year.
Bill Sadler, a spokesman for the Arkansas State Police, said agency officials are looking at potential cost savings but that the speaker's proposed $1.99 million cut to this year's $66.3 million budget would be a significant threat to public safety.
"State police can be, and often is, the front-line response, along with a sheriff's deputy who may not even be on duty when the call comes in. So the role of the state police to support local law enforcement could be in jeopardy," Sadler said. "It's going to be an impact on our ability to be able to provide search and rescue missions. ... It will hit the department hard and it will hit law enforcement agencies across the state hard because we do provide a lot of support."
Gillam's plan would cut the overall general-revenue budget for the higher-education institutions by $4.8 million to $728.7 million.
Gillam proposed cutting the state's public school fund by $7.3 million to $2.15 billion in fiscal 2016 by targeting discretionary programs for cuts. Hutchinson proposed a $23.7 million increase in the public school fund to $2.18 billion.
Under the plan, the school recognition program would be cut from $7 million to $3 million, the Arkansas Better Chance pre-kindergarten program by $5 million to $106 million, and board-certified teacher bonus funding from $9.1 million to $4.8 million.
Sen. Joyce Elliott, D-Little Rock, a former educator, was one of the opponents of a proposal to stop bonus payments to nationally board certified teachers after 10 years. Eventually, state education officials dropped the proposal.
On Monday, Elliott said it was discouraging that a once-resolved issue could come back because some of her Senate colleagues don't want to approve funds for Hutchinson's revamped private option.
"It really will have a demoralizing effect on the [teaching] profession. Not only that, [the cut] breaks faith, and I think in a very large way, in what we thought we'd settled this issue for now," she said.
On Monday, Gillam said he expected the House and Senate to vote on the Medical Services Division appropriation that includes Arkansas Works next week.
In past sessions, the House has held multiple votes to garner enough votes to continue the Medicaid expansion.
"I've told [representatives] to come in and be prepared for it to be just a one-time occurrence," Gillam said. "Let's take care of business and move on."
Likewise, Senate President Pro Tempore Jonathan Dismang, R-Searcy, said he expected a "limited number of votes" in the Senate.
Metro on 04/12/2016