Beebe bares $5 billion budget

Fiscal ’15 plan favors schools, prisons, human services

Rep. Kim Hammer (shown seated), R-Benton, who voted against authorizing federal funding for the private option last year, said, "All I got to do is to find $89 million or find a way to get $89 million,” in an interview Tuesday.
Rep. Kim Hammer (shown seated), R-Benton, who voted against authorizing federal funding for the private option last year, said, "All I got to do is to find $89 million or find a way to get $89 million,” in an interview Tuesday.

The state’s public schools, prisons and human-services programs would get increased funding under Gov. Mike Beebe’s draft $5.03 billion general-revenue budget for the fiscal year starting July 1.


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Beebe’s proposal raises state spending by $105.8 million in fiscal 2015, the Joint Budget Committee learned during its first day of budget hearings in advance of the fiscal session starting Feb. 10. It factors in an $85.2 million reduction in general-revenue collections stemming from tax cuts enacted by the Republican-controlled Legislature earlier this year.

The Democratic governor’s fiscal 2015 budget includes up to $89.2 million in projected savings resulting from federal Affordable Care Act funding, state budget administrator Brandon Sharp said. The 2013 Legislature authorized the use of federal Medicaid dollars to purchase private health insurance through a health-insurance exchange for poor Arkansans - often referred to as the “private option.”

The projected savings are big, in part, because the state’s uncompensated health-care costs are expected to drop, he said.

Afterward, Richard Weiss, director of the state Department of Finance and Administration, said, “If they don’t continue the private option, then we are looking at probably an $89 million hole in the budget that we then have to come up with and redo a whole lot of budgets.”

Rep. Kim Hammer, R-Benton, who voted against authorizing federal funding for the private option last year, said, “There is an active effort underway by a lot of people that are trying to find ways [that] if we defund the private option, how can we meet the needs of the most needy of the population and not have to do it through the private option and not have to have the federal partnership?

“All I got to do is to find $89 million or find a way to get $89 million,” he said in an interview Tuesday.

Reauthorizing the use of federal funds for the private option requires 75 votes in the 100-member House of Representatives and 27 votes in the 35-member Senate. Last year, the legislation authorizing the funding narrowly cleared the House with 77 votes and the Senate with 28 votes.

The new budget assumes modest general-revenue growth of about 2 percent, and it boosts education spending.

Beebe proposed a $65.4 million increase in the Public School Fund to $2.111 billion in fiscal 2015.

Sharp said the governor’s proposal includes a 2 percent increase in the public school foundation funding recommended by a legislative committee last year. The foundation funding, meant to provide an adequate education for each student, is $6,393 per student in fiscal 2014 and is scheduled to increase to $6,521 in fiscal 2015.

Beebe’s proposed budget reallocates $10 million for the public school employees health-insurance plan and $7 million for the School Recognition Program, which rewards schools with high student scores on state exams and high achievement growth on the tests.

The governor has proposed a $26 million increase in the state Department of Human Services budget to $1.253 billion, including a $13.2 million increase to $903 million for the state’s Medicaid program, and a $12.3 million increase to $61.8 million for the Children and Family Services Division.

Sharp said the 2013 Legislature shifted $50 million from the Medicaid program into rainy-day funds “based on the understanding that those funds would have to be available for the Medicaid program if they were needed in fiscal 2015.”

But he said the state’s projections have changed for the Medicaid program since the 2013 regular session because the state Medicaid program has experienced only a 2.5 percent growth rate during the first six months of fiscal 2014, the lowest growth rate in more than 20 years. In addition, the federal government has increased the federal matching rate from 70.1 percent to 70.88 percent, which is estimated to generate about $75 million in unexpected federal aid for fiscal 2015.

As a result, Sharp said the governor is proposing reallocating $50 million in rainy-day funds for various programs ranging from those at the Departments of Correction and Community Correction to certain higher education institutions and the Science and Technology Authority.

Beebe has proposed a $7 million increase for county-jail reimbursement to $16.4 million and a $3.1 million increase for the state Department of Correction to $316.1 million, including funds to add 300 more prison beds, Sharp said.

In fiscal 2014, he’s proposed giving $18 million of the state’s $126 million surplus to the Department of Correction, including $10 million to pay its employees for banked holidays that they’ve already worked, $719,873 to open up 200 more prison beds, and $7.4 million for county-jail reimbursements. He also proposed giving surplus funds totaling $500,000 to the Department of Community Correction for county-jail reimbursement, and $5 million to the Economic Development Commission to attract new businesses to the state through the governor’s Quick Action Closing Fund.

The governor’s proposed fiscal 2015 budget includes $5.25 million for the merit adjustment fund to pay for a 1 percent cost-of-living raise for most state employees, and a $3.1 million increase to $40 million for the state Department of Higher Education’s scholarship and grant programs. The increase would finance grants and scholarships for current college students and also would help new students seeking graduate degrees in certain health fields not offered at Arkansas higher education institutions and would provide scholarships for military dependents and dependents of law-enforcement officers, according to department Director Shane Broadway.

Beebe’s proposal also would reduce the general-revenue budget of the state’s four-year universities by $3.9 million to $588.1 million. It would boost the general-revenue budgets of the University of Arkansas at Fayetteville by $1.1 million to $120.9 million, of Arkansas State University by $531,104 to $59 million and of University of Central Arkansas by $467,527 to $53.1 million, but it would slash the University of Arkansas for Medical Sciences’ general-revenue budget by $7.6 million to $86.4 million.

Sharp said UAMS is expected to make up that money because it will be providing services to fewer uninsured patients as a result of federal Patient Protection and Affordable Care Act.

Afterward, UAMS spokesman Leslie Taylor said the proposed cut in the UAMS appropriation “assumes the private option being maintained and the health-insurance exchange operating at full enrollment, and that is uncertain at this time.”

“We are reviewing budget projections and our options and will work with the General Assembly and the governor in determining what to do going forward,” she said.

Among other things, Beebe’s budget proposal also would increase the general-revenue budgets of the Arkansas Delta Training and Education Consortium in eastern Arkansas by $500,000 to $1.5 million, of the Northwest Arkansas Community College by $444,861 to $11.06 million and of Pulaski Technical College by $477,440 to $15.6 million

Afterward, committee Co-chairman Sen. Larry Teague, D-Nashville, said state finance officials “were rattling off numbers so fast I don’t know that any of us know exactly what they were saying.”

Sharp agreed to provide lawmakers a written version of his remarks.

Front Section, Pages 1 on 01/15/2014

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