2016 legislative update: Alabama's education budget begins to rebuild, but General Fund struggles put Medicaid at risk
The usual contrast between Alabama’s starving General Fund (GF) budget and its slightly healthier but still inadequate Education Trust Fund (ETF) budget is exceptionally stark this year. Nearly halfway through the Legislature’s 2016 regular session, both major state budgets have begun to move – in one case toward a predictable conclusion, and in the other with no settled end in sight.
State education support just now approaching return to 2008 level
The path forward looks easier for the ETF, which finally is beginning to recover from deep cuts during and after the Great Recession. The House ETF budget committee Wednesday approved an education budget that would bring K-12 funding nearly back to its 2008 peak. The committee’s budget includes a 4 percent teacher pay raise, a 3 percent increase for transportation, a 2.5 percent increase for universities, and a nearly 5 percent increase for two-year colleges.
Alabama’s K-12 cuts have been the nation’s second worst since 2008, and its higher education cuts have been the fourth worst. Even a return to 2008 funding levels would not be enough to account for the many needs that were still unmet then, especially in low-income rural schools.
The ETF has two primary sources of state revenue: income taxes (earmarked for teacher salaries) and sales taxes. Both are considered “growth taxes” because their revenues tend to increase during good economic times. As Alabama climbs slowly out of the recession, taxes that support the ETF are inching up. The Legislative Fiscal Office (LFO) projects the ETF will have $187 million more in available revenue in 2017 than in 2016.
Proposed Medicaid cuts would be disastrous for Alabama’s health care system
The picture is much bleaker and more uncertain for Alabama’s non-education services like health care, child care and public safety. All of the “big four” state agencies – Medicaid, the Department of Human Resources (DHR), mental health and corrections – would receive essentially the same amount of GF money next year as this year under the budget that the Senate passed last week. But “level funding” at the 2016 level would follow years of steady declines and failure to keep up with ordinary cost growth. Mental health and DHR, in particular, would find it difficult to serve the children, seniors, and people with disabilities who depend on their services.
For Medicaid, level funding would be a disaster. It would end the regional care organization (RCO) reforms designed to keep patients healthier by emphasizing preventive care and reducing the number of costly emergency room visits. Failure to implement the RCOs could cost Alabama more than $700 million in new federal money set aside for the changes. Without significant new revenue, Medicaid will be unable to launch the RCOs or maintain many vital services for the most vulnerable patients.
Level funding for Medicaid also would eliminate coverage of outpatient dialysis, hospice, and adult eyeglass services, and would reduce payments to physicians, Medicaid commissioner Stephanie Azar said. Advocates fear that lower Medicaid physician payments would lead many doctors, especially pediatricians, to leave the program – or possibly to leave Alabama entirely.
With no new money available and no new revenue measures on the move, Senate GF budget committee chairman Sen. Trip Pittman, R-Montrose, concentrated all GF reductions in one agency: Medicaid. Almost all other GF services would be level-funded under the plan. Public health, facing a tuberculosis outbreak and other potential infectious disease crises, is one of the rare services that, after years of cuts, would see an increase ($10 million, or 45 percent).
The GF has more than a dozen revenue sources, mostly small taxes that don’t grow with the economy. Nearly 8 percent of 2015 GF revenue was one-time money borrowed from the Alabama Trust Fund, which receives state revenues from oil and gas drilling. That money dried up for the 2016 budget year, fueling a funding crisis that took three legislative sessions to resolve.
The GF will have $95 million less available next year than it did in 2016, the LFO projects. Lost revenue includes the end of the borrowed money, lower oil and gas lease income, and lower interest on state deposits. Last year’s cigarette tax increase was not large enough to offset those revenue declines.
What lies ahead for Alabama’s 2017 budgets
Inadequate though they are, both budgets are moving forward in the Legislature. The GF budget passed the Senate last week. During the debate, Pittman said he would withdraw the budget if it returned to the Senate in the same form it passed. He predicted that “all-star” lobbyists representing health care providers would succeed in urging the House to find the revenue necessary to save Medicaid services while funding other vital functions like child protection, mental health and courts.
House action on both budgets is expected soon. The House could vote on the ETF budget as early as Tuesday. And House GF budget committee chairman Rep. Steve Clouse, R-Ozark, plans to unveil a substitute GF budget for the committee’s consideration this Wednesday.
By Carol Gundlach, policy analyst. Posted March 4, 2016.
Under the Medicaid reform plan approved by the Alabama Legislature in 2013, regional care organizations (RCOs) will manage patient care to improve efficiency, accountability and health outcomes. Federal approval of the plan in February 2016 was a huge vote of confidence in Alabama’s ability to achieve these goals. Below are short answers to basic questions about RCOs. (Click here for a PDF version of this overview of Alabama's RCO reforms.)
What are RCOs?
How are RCOs different from traditional Medicaid?
What does this mean for Medicaid patients?
How will RCOs impact the General Fund budget?
What is the future of Medicaid in Alabama?
Posted Feb. 26, 2016.
ACPP executive director Kimble Forrister issued the following statement Thursday, Feb. 25, 2016, after the Alabama Senate passed a General Fund budget that could force deep cuts to Medicaid:
“Medicaid is the foundation of Alabama’s entire health care system, and it’s essential to protect it. Our state has gotten federal approval for promising new Medicaid reforms to save money and keep Alabamians healthier. Now we need to invest in these reforms to make them work.
“Medicaid insures many of the most vulnerable Alabamians: children, seniors, and people with disabilities. As the budget debate goes forward, we hope lawmakers will be careful not to send patients a message that their basic health care could be at risk. Considering how important Medicaid is to the health of our neighbors and our economy, we need to approach this debate with the urgency and gravity it deserves.”
2016 legislative update: Bill to pause executions, create innocence commission clears Alabama Senate committee
Executions would stop in Alabama until at least June 2017 under a bill that the state Senate Judiciary Committee approved 10-0 Wednesday. The measure also would create a special commission to evaluate innocence claims in death penalty cases. (Read The Anniston Star’s coverage for more details.)
SB 237, sponsored by Sen. Dick Brewbaker, R-Montgomery, would set up the Innocence Inquiry Commission under the state Administrative Office of Courts, and would place a moratorium on all executions until June 1, 2017, while the commission is established.
Arise policy analyst Stephen Stetson testified in favor of a commission, calling it a “recognition of human frailty” in the justice system. The Attorney General’s Office testified against the bill Wednesday, as did a member of Victims of Crime and Leniency (VOCAL), a victims’ rights group.
The bill has bipartisan co-sponsorship from Sens. Vivian Figures, D-Mobile; Bill Hightower, R-Mobile; Del Marsh, R-Anniston; Greg Reed, R-Jasper; Rodger Smitherman, D-Birmingham; Larry Stutts, R-Sheffield; Ward, R-Alabaster; and Tom Whatley, R-Auburn.
Petitioners seeking relief from Alabama’s innocence commission would face an uphill battle, but the concept has gained traction in other Southern death penalty states. Texas created an innocence commission in 2015, while North Carolina’s was created in 2006. A commission would be particularly useful in Alabama, the only state in the nation without a state-funded program to provide legal assistance to death row prisoners.
By Stephen Stetson, policy analyst. Posted Feb. 24, 2016.
ACPP executive director Kimble Forrister issued the following statement Wednesday, Feb. 24, 2016, after an Alabama Senate committee approved a 2017 General Fund budget:
“We’re disturbed to see Medicaid on the chopping block again, but it was encouraging today to hear senators acknowledge Medicaid’s fundamental role in Alabama’s health care system. There is no way to cut Medicaid without devastating consequences, and ultimately it needs new revenue. As the General Fund debate goes on, we hope lawmakers will take to heart the crucial role that Medicaid plays in the health of Alabamians and our economy.”
A bill that its sponsor describes as “a compromise” on payday loan reform emerged from an Alabama Senate committee Wednesday. SB 91, sponsored by Sen. Arthur Orr, R-Decatur, is called “Colorado-style reform,” because it models changes to consumer lending laws approved by that state in 2010.
The bill now awaits a Senate vote. No other payday or auto title lending reform legislation has been introduced so far during the 2016 regular session.
SB 91 would cap payday loan interest rates in Alabama at about 180 percent a year. The payday loan industry has continued to exist in Colorado after that state’s reforms, but it was reduced in size. The number of defaults and bounced checks also have declined.
The bill cleared the Senate Banking and Insurance Committee, with at least three senators voting against approval. Committee members opposing SB 91 were Sens. Bill Holtzclaw, R-Madison; Shay Shelnutt, R-Trussville; and Tom Whatley, R-Auburn. Whatley moved to carry the bill over, which would have delayed a vote on it, but the committee rejected that motion. No public hearing was held on SB 91, but the measure sparked considerable discussion among committee members.
Orr repeatedly described his bill as “a middle ground” between consumer advocates and the payday loan industry. Arise, Alabama Appleseed and other consumer groups long have pushed for interest rates on payday loans to be capped at 36 percent a year in Alabama. (Current state law allows rates of up to 456 percent a year.) Payday lenders oppose any such change.
By Stephen Stetson, policy analyst. Posted Feb. 17, 2016.