Alabama has the nation’s second worst decline in state formula funding for K-12 schools since before the Great Recession, according to a report released Thursday, Oct. 20, 2016, by the Center on Budget and Policy Priorities (CBPP), a nonpartisan policy research organization based in Washington, D.C.
K-12 schools in Alabama will receive 14.2 percent less through state formula funding this year than they did in 2008, adjusted for inflation. Only Oklahoma has cut its formula funding more deeply since 2008, the CBPP finds. Alabama’s K-12 funding increase this year restored only a fraction of the support that was cut during and after the recession.
“Alabama needs to invest more in education now to enjoy broad prosperity and thriving communities in the future,” Arise Citizens’ Policy Project executive director Kimble Forrister said. “Our children and grandchildren deserve the opportunity to succeed in life and be able to compete for highly skilled jobs in a fast-paced economy.”
The erosion in support for K-12 education will have damaging economic consequences for Alabama both now and in the future, Forrister said. The cuts undermine promising education reforms such as reducing class sizes, improving teacher quality and expanding early childhood education, he said.
Greater investment in education would allow Alabama to increase learning time and hire more teachers to reduce class sizes, especially during the critical middle-school years. Those steps would help children build a stronger foundation to succeed in college and the workplace.
“At a time when the nation is trying to produce workers with the skills to master new technologies and adapt to the complexities of a global economy, states should be investing more – not less – so our kids get a strong education,” said Michael Leachman, CBPP’s director of state fiscal research and a co-author of the new report.
Alabama Medicaid is safe – for now. State lawmakers wrapped up their special session last week with a sigh of relief after approving a one-time solution to stop deep Medicaid cuts. The Legislature agreed to use BP oil spill settlement money to address Medicaid’s $85 million shortfall for 2017 and to give the program another $105 million in 2018.
HB 36, sponsored by Rep. Steve Clouse, R-Ozark, will reverse the 30 percent Medicaid payment cuts to pediatricians and other primary care doctors that had begun in August. The bill will allow Alabama to move forward with the Medicaid regional care organization (RCO) reforms that will emphasize preventive care in an effort to save the state money and keep patients healthier. The measure also will prevent Medicaid from having to cut outpatient dialysis, prescription drugs and other services next year.
The House on Sept. 7 voted 87-9 to approve the conference committee’s version of the bill. Later that day, the Senate passed it 22-8. This Associated Press story has more about the plan.
“We’re relieved that the Legislature pulled Alabama back from the brink of devastating Medicaid cuts that would have hurt more than 1 million people – mostly children, seniors, and people with disabilities,” Arise executive director Kimble Forrister said. “And we’re pleased to see lawmakers take steps to help shore up Medicaid funding for the next two years. But vulnerable Alabamians’ access to health care shouldn’t be left up to stopgaps or one-time money.”
BP bill was a short-term answer to a long-term problem
The bottom line is that HB 36 is yet another temporary solution. Lawmakers uttered the phrase “kick the can down the road” many times while debating the plan, and with good reason. The bill represents another missed opportunity for the Legislature to meet Medicaid’s need for a permanent, stable source of revenue that can meet the needs of a growing population.
Fortunately, the bill includes some modest relief for the General Fund (GF) budget. Lawmakers freed up a projected $35.2 million a year on average through 2026 for Medicaid and other GF services. That is the result of using most of the BP settlement funds to repay the Alabama Trust Fund (ATF) for money borrowed to prevent GF cuts in recent years. (The ATF receives royalties from oil and gas drilling off Alabama’s shores.) The bill also gives the state longer to repay ATF money borrowed in 2013-15, extending that deadline from 2026 to 2033. Those moves should ease pressure on the GF budget over the next decade, but they are still nowhere close to an adequate solution to Alabama’s recurring GF shortfalls.
The GF supports vital services like health care, child care, corrections and public safety in Alabama. The budget relies on a hodgepodge of revenue sources, most of which grow slowly even in good economic times. That leaves the GF with a structural deficit, meaning revenue growth is not strong enough to keep pace with ordinary cost growth. Read The Alabama Tax & Budget Handbook for more on how this deficit came to be and how Alabama can end it.
The GF’s recurring shortfalls have dire implications for Medicaid, which is the backbone of Alabama’s health care system. Medicaid provides vital health coverage for more than one in five Alabamians – mostly children, seniors, and people with disabilities – and helps many rural hospitals and clinics keep their doors open.
“Medicaid is essential to the hospitals and clinics on which we all rely,” Forrister said. “Putting our state’s health care infrastructure at risk is no way to build a stronger Alabama. Neither is lurching from one crisis to another because of a repeated failure to solve the General Fund’s long-term shortfall.”
Alabama needs a lasting funding solution for Medicaid, and there is a strong economic and financial case that the solution should include Medicaid expansion. Closing the coverage gap for working adults and college students would mean a healthier, more productive workforce. It would mean thousands of new jobs across Alabama. And it would mean big savings for the state on mental health care and other services. Click here to read Arise’s fact sheet on how Medicaid expansion would benefit Alabama’s health, economy and budgets.
Lottery proposal dies, returns to life, then dies again
Alabama’s latest Medicaid funding crisis began in April when the Legislature enacted a GF budget that left Medicaid $85 million short of the amount needed to maintain current services. That move prompted public outcry and motivated the #IamMedicaid social media campaign that Alabama Children First launched with Arise’s support in April to help show the human faces behind the Medicaid debate. Responding to pressure from the public, advocates and health care providers, Gov. Robert Bentley called the Legislature into special session in August to consider two possible solutions to the Medicaid crisis.
Bentley’s proposed long-term answer was a state lottery with proceeds dedicated to Medicaid. (Arise takes no position for or against a state lottery, but no lottery plan would have generated revenue in time to stop the 2017 Medicaid cuts.) As a short-term measure until lottery revenue became available, Bentley proposed a bond issue against the state’s BP oil spill settlement, freeing up state dollars for Medicaid in 2017. Clouse, who chairs the House GF budget committee, had proposed a similar measure during the regular session.
The two plans met drastically different fates. By the slimmest of margins, the Senate passed a proposed constitutional amendment to establish a lottery. After a rollercoaster debate, dozens of proposed amendments and reconsideration of an initial vote against the plan, the House sent the lottery back to the Senate either to approve or refer to a conference committee. Instead, the Senate effectively voted to kill the lottery after passing one only a few days earlier. Disagreement over whether to allow casino-type games at dog tracks and other facilities led to a three-way deadlock among pro-lottery, anti-lottery and pro-casino senators, losing the lottery the supermajority of votes it needed for Senate passage.
Legislature passes BP bill to stop Medicaid cuts after touch-and-go debate
With the lottery dead, the Legislature’s only remaining option was to pass short-term funding for Medicaid during the final days of the special session. The result was a complicated bond issue guaranteed by proceeds from the BP oil spill settlement. By issuing bonds instead of accepting periodic payments from BP, Alabama could pay off state debts and create savings that would help fund Medicaid in 2017 and subsequent years.
The original House-passed bill would have given Medicaid an additional $70 million in 2017. Medicaid supporters in the Senate insisted on longer-term support and full Medicaid funding for 2017. Eventually, both chambers approved a conference committee report that provided Medicaid with the $85 million needed to avoid cuts in 2017, as well as $105 million in 2018.
In addition, the BP bill will support $120 million of road projects in Mobile and Baldwin counties and repay $400 million that the state borrowed in past years from the ATF. Legislators engaged in extensive and often heated debate over how much of the state’s BP settlement money should go to the coastal areas most deeply hurt by the 2010 oil spill. The debate broke largely along regional lines, with many north Alabama lawmakers arguing for more debt repayment and many south Alabama legislators seeking more investment in the Mobile area.
What’s next for Medicaid in Alabama?
Alabama Medicaid’s imminent funding crisis is over, but much work remains to ensure a strong future for our state’s health care system. Revenue from the BP bill should help Medicaid avoid further cuts in 2017 and will reduce the program’s projected shortfall in 2018. But when the Legislature returns in February, Medicaid funding for 2019 and beyond still will be uncertain.
Arise will continue to push for Medicaid expansion and permanent, adequate and stable tax revenue to help secure health coverage for children, seniors, people with disabilities, and working families across Alabama. “Closing the coverage gap for working people and college students would keep folks healthier, create thousands of jobs, and save the state millions of dollars on mental health care and other services,” Forrister said. “Expanding Medicaid would be a victory for Alabama’s economy, budgets and families.”
By Carol Gundlach, policy analyst, and Chris Sanders, communications director. Posted Sept. 15, 2016.
More than one in five Alabama families with children lived in poverty in 2015, according to U.S. Census data released Thursday, Sept. 15, 2016. Those numbers underscore the need for Alabama to do more to help families get ahead, ACPP executive director Kimble Forrister said.
“Alabama’s high poverty rate shows we still have a lot of work to do to ensure everyone has an opportunity to get ahead in life,” Forrister said. “By raising the minimum wage, expanding Medicaid for working adults and investing in better housing and public transportation options, Alabama can keep workers healthier and more productive, and ensure that their hard work pays off.”
Alabama’s family poverty rate of nearly 14 percent remains higher than it was in 2007 and still exceeds the national average by 3 percentage points. Overall, 18.5 percent of Alabamians lived below the poverty line (about $24,000 for a family of four) in 2015.
The state’s overall poverty rate is down since 2014, but Alabama’s child poverty rate of 26.6 percent remains one of the highest in the nation and is still higher than it was in 2007, before the Great Recession. Alabama’s child poverty rate also varies widely by region, from a low of 13 percent in the 6th Congressional District to a shocking high of 42 percent in the 7th Congressional District, which includes much of Birmingham and many rural Black Belt counties.
More than 250 Arise members met in Montgomery last week to consider ways to reduce Alabama’s persistently high poverty rate. Forrister’s policy recommendations touch on several of the issues that Arise members identified as 2017 priorities. (Read the full list of Arise’s 2017 issue priorities here.)
“Closing the Medicaid coverage gap and investing in public transportation and affordable housing would create thousands of jobs across Alabama and make our state a better place to live and work,” Forrister said. “By combining those steps with the creation of a higher state minimum wage, we can build a thriving economy and make high poverty rates a thing of the past in Alabama.”
New U.S. Census Bureau data show one in 10 Alabamians had no health insurance coverage in 2015, an improvement from the state’s 13.6 percent uninsured rate in 2013, the last year before the Affordable Care Act took full effect. ACPP executive director Kimble Forrister issued the following statement Tuesday, Sept. 13, 2016, in response:
“Today’s good news about health coverage in Alabama would be even better if the state had expanded Medicaid. More Alabamians have coverage today than in 2013, and the Affordable Care Act deserves much of the credit for those gains. Nearly 200,000 Alabamians have signed up for health insurance through the ACA marketplace. Many of them have coverage for the first time, and all of them now have the peace of mind that comes with knowing that a medical emergency won’t lead to financial ruin.
“But Alabama still has a long way to go to ensure that all of our neighbors have the coverage they need. Medicaid expansion would close the coverage gap for more than 300,000 uninsured working adults, college students and other folks in Alabama. That would mean a more productive workforce, thousands of new jobs and big state savings on mental health care and other services.
“We’re being left out. States like Kentucky and West Virginia that have expanded Medicaid have much lower uninsured rates than those that haven’t. They’re also enjoying the job creation and cost savings that come from injecting new federal money into their budgets and economies. It’s time for Alabama to expand Medicaid and reap those same benefits.”
Medicaid expansion, consumer-friendly lending reforms and creation of a state minimum wage are among the goals on Arise’s 2017 legislative agenda. Nearly 300 Arise members picked the group’s issue priorities at its annual meeting Saturday, Sept. 10, 2016, in Montgomery. The eight goals chosen were:
“We believe in a more just and inclusive society for all Alabamians, and these proposals are a roadmap to get us there,” ACPP executive director Kimble Forrister said. “We’re excited to renew our work for policy changes to help hard-working Alabamians build a better life for their children.”
Nearly 300,000 uninsured adult Alabamians – most of them working adults and college students – would benefit from Medicaid expansion. “Closing the Medicaid coverage gap would keep workers and students healthier and more productive,” Forrister said. “It also would create thousands of new jobs and allow Alabama to save state money on mental health care and other important services.”
Alabama allows payday and title loans to carry annual interest rates of 456 percent and 300 percent, respectively. The movement for consumer-friendly reform has broad support and keeps gaining momentum, Forrister said. The state Senate voted overwhelmingly this year to reduce interest rates on payday loans, and about two dozen cities have placed moratoriums on new high-cost lenders.
As Alabama lawmakers grapple to prevent devastating Medicaid cuts, the time is right to address a related threat to our state: the health coverage gap. Nearly 200,000 Alabama workers we depend on every day – in agriculture, food service, retail, home health and other fields – have no access to regular health care. They have no health insurance because their employers don’t offer it. They earn too much to qualify for Medicaid but too little to qualify for federal tax credits to buy private plans. As a result, they often struggle to work while dealing with health problems that sap their productivity, add stress to their households and get worse without timely care.
Closing the coverage gap would not only save lives and help working families; it would stabilize the budget and boost our economy. This fact sheet by policy director Jim Carnes takes a closer look at how Medicaid expansion would benefit Alabama's health, quality of life and economy.