Governor, House leaders reject Williams plan

Today Governor Beshear issued this press release:

FRANKFORT, Ky. – Vowing to fight cuts to priority programs, including K-12 education, Governor Steve Beshear and House Democratic leaders rejected Senator David Williams’ eleventh-hour proposal on the Medicaid budget.

“Sen. Williams wants our schoolchildren, our college students, our seniors, our veterans, our state police, our prosecutors, our social workers and many others to pay for a shortfall in the Medicaid budget,” said Gov. Beshear. “I won’t stand for one penny to be hijacked from our school systems, nor one cent stolen from public safety to protect our families. My proposal fixes Medicaid within the Medicaid budget without these painful and unnecessary cuts.”

Facing a shortfall in the Medicaid budget, Gov. Beshear proposed transferring $166.5 million from the FY2012 Medicaid budget to FY2011, then capturing those savings through expanded managed care programs and other program efficiency measures. The proposal passed overwhelmingly in a bipartisan manner in the House.

Senate President David Williams’ proposal, passed by the Senate, would instead cut $148.5 million from the non-Medicaid areas of the budget, with 81 percent of the cuts coming from priority areas of education, health care and public safety. This includes:

• Education: $47.4 million from K-12 education, including $38.4 million from SEEK, the basic funding for formula for classroom teaching. These cuts to SEEK are in addition to the estimated $49 million shortfall in FY 11 and $29 million in FY 12.
• Higher Education: $28 million from higher education, including $22 million from institutions’ base budgets and $4.3 million from student financial aid.
• Health and Family Services (non-Medicaid): $19 million from non-Medicaid programs in the Cabinet for Health and Family Services, including social workers, public health departments and Meals on Wheels services.
• Justice and Public Safety programs: $17.4 million from public safety programs, including state troopers, local jail support and juvenile justice programs, as well as $12.1 million from the Corrections Department.
• Judicial Branch: $8.5 million from the Judicial Branch, which has suffered from layoffs under previous cuts.
• Rest of state government: $28.2 million from the rest of state government, including job creation programs, state parks, environmental and worker safety programs and veterans assistance programs.

This proposal ignores the cumulative impact of eight budget cuts totaling over $1 billion to agency budgets over the past three years and the enacted cuts already built into FY12. Many targeted programs have already faced 20 to 30 percent budget cuts.

“We have balanced our budget eight times in three years because of the global economic recession, and with it, a billion dollars has been cut from our state budget,” said Gov. Beshear. “Yet, every time, we have protected SEEK from cuts. I am not about to start cutting it now, especially when there is a viable alternative to balance our Medicaid budget on the table.”

House leaders pledged to reject Senate plans to cut state services across the board as legislators head into a conference committee on the Medicaid budget bill.

“The most prudent choice is to allow the Governor to continue to manage this Medicaid deficit before we take the radical option of cutting education and other essential services,’ said House Speaker Greg Stumbo. “If you look at the Governor’s track record over the last three years, he’s cut about a billion dollars from government spending without having Kentuckians suffer through the crises we see in many other states. The Governor has a proven track record, and deserves our support.”

“Other states have implemented expanded managed care contracts that have generated savings while improving health outcomes,” said Health and Family Services Cabinet Secretary Janie Miller. “We are confident that we will replicate those results. The Cabinet is poised to act quickly and aggressively to achieve contracts with managed care organizations to capture the required savings in FY 12."

Without passage of a Medicaid bill, the only alternative would be to cut health care provider rates by 30 percent, warned Sec. Miller, which would also lead to layoffs, furloughs and reductions in health care services.