FRANKFORT — The Senate is proposing cuts across state government — including cuts to K-12 education — to plug a multimillion-dollar hole in the state’s Medicaid budget. The proposal met immediate criticism from Gov. Steve Beshear.
Under a proposal approved by the Senate Appropriations and Revenue Committee on Tuesday night, most of state government would receive a 0.525 percent cut in the remaining months of this fiscal year, which ends June 30, and a 2.26 percent cut in fiscal year 2012.
Higher education and K-12 would not be cut in the first year. The main funding formula for K-12 schools, commonly called Support Education Excellence in Kentucky, or SEEK, would be cut in the second year, but schools would be given flexibility to use other funds to make up for those cuts. The second-year cut in SEEK would be about 1.13 percent, said Senate President David Williams, R-Burkesville.
The proposal approved Tuesday is the Senate’s version of House Bill 305, which amends the state’s current two-year budget.
The measure now goes to the full Senate for a vote. If approved as expected, it’s not clear how the Republican plan will fare in the Democratic-controlled House. House Speaker Greg Stumbo was reviewing the Senate proposal on Tuesday night and would not comment until Wednesday, Stumbo’s staff said.
But Gov. Steve Beshear, in a statement late Tuesday, blasted Williams’ proposal as “campaign rhetoric.” Williams is running for the Republican nomination for governor.
“It’s clear this proposal has been engineered to fit campaign rhetoric, not sound public policy,” Beshear said. “Sen. Williams’ version mandates further painful and unnecessary cuts across a broad spectrum of services, including K-12 education, higher education, public safety and job creation. These cuts are not necessary when a viable alternative is available.”
State government has gone through eight rounds of budget cuts over the past three years as the state’s revenues continue to shrink. Some agencies have taken cuts of more than 20 percent.
Williams told the Senate Appropriations and Revenue Committee on Tuesday night that Beshear’s budget proposal, which has already passed the Democratic-controlled House, would be irresponsible.
Beshear proposed moving $166 million from the state’s Medicaid budget from next fiscal year to the current fiscal year. Beshear has said that he could generate enough savings in the second year of the budget through a series of cost-saving moves, including expanding managed care models in the Medicaid program. But the Cabinet for Health and Family Services, which oversees Medicaid, has said those managed care contracts will likely not be signed until this summer, or the end of this fiscal year.
“There is not the likelihood that they will achieve the $166.5 million in savings,” Williams said Tuesday.
Williams and other Senate Republicans have also expressed concerns that by banking on savings in the second year of the budget, Beshear could be creating problems for future budgets if those savings do not materialize.
Kentucky’s Medicaid program for the poor, disabled and aged currently costs about $6 billion and serves more than 800,000 people.
Williams said the Senate version of House Bill 305 handles the shortfall in the Medicaid program “in a more responsible manner.”
The Senate version of House Bill 305 was not available on Tuesday night, but Williams said the bill would reinstate cost-saving targets that were in the original budget that the House and Senate passed last summer. Beshear vetoed language that called for his administration to generate specific cost-savings in such categories as cutting personal service contracts. The Senate version of House Bill 305 would reinstate those cost-saving targets in specific categories. The Beshear administration would also not be able to furlough state employees until it showed that it had generated savings in other categories, Williams told the committee.
The current state budget is built on savings of about $24 million from six furlough days of the state’s employees. Beshear has generated much of the $131 million in savings he was supposed to generate through restructuring or pushing out debt payments to future years, Williams said.
The Senate committee’s proposal would require that any future Medicaid recipients have a face-to-face meeting before going on the system. Some Democrats on the committee questioned whether that would hinder those with severe disabilities from applying.
The legislative and judicial branches would take cuts in both years, Williams said.
Democratic Sen. Walter Blevins was the only member of the committee to “pass,” or not vote on the bill. The rest of the committee voted yes.
It’s not clear when the full Senate will vote on House Bill 305, but time is running out for a final decision on the budget to be hammered out. Tuesday was the 24th day of the 30-day legislative session.