Sunday, November 30, 2014

Say "Yes" to Medicaid Expansion

By Duane Goossen

Click on this link. Spend a few moments watching the ticker there.

If you clicked, you saw dollars, fleeting before your eyes. Those dollars are fleeting away from Kansas because our political leaders have so far said “no” to expanding eligibility for Medicaid. Their decision has negative economic and negative moral implications.

Medicaid is a health program for low-income Americans. In Kansas, about 400,000 citizens, mostly children, receive health services through Medicaid. The federal government pays about 57 percent of the program's cost and Kansas pays 43 percent. However, if Kansas were to expand eligibility for Medicaid to more adults, the federal government will pay all of the costs for those newly eligible, until January 2017. After that, the cost split gradually goes to 90 percent federal, 10 percent state.

This new opportunity to cover more people began last January 1, and as that ticker shows, in less than a year, Kansas has already foregone more than $300 million and counting. More than half of states — 27 — so far have expanded Medicaid eligibility. Two more are actively considering doing so. Kansas is among the minority who have declined these federal funds to insure our most vulnerable citizens, but we still have the opportunity to change course.

Despite what many may think, it’s currently very difficult for an adult to receive Medicaid services in Kansas. Most childless adults do not qualify, regardless of income. Adults with children must have an annual income (family of four) below $9,063 to qualify.

Expanding eligibility would potentially allow 150,000 adults to gain access to health care, many of whom do not have any health insurance now. Uninsured Kansans often show up at hospital emergency rooms when they need care. The hospital provides the care, but in most cases receives no payment.

Why would Kansas turn away $400 million a year that the federal government would willingly spend here? Why would Kansas pass on the opportunity to have thousands of people gain health insurance coverage?

I cannot think of a good reason.

Consider a comparative example: Kansas political leaders from both parties have worked exceptionally hard to land the National Bio and Agro-defense Facility (NBAF) in Kansas. The project has the potential to bring in some hundreds of millions of federal construction dollars along with several hundred future jobs. Kansas has already issued $45 million in bonds and committed more than $100 million to attract the federal project. Great — but why not a similar effort to pull in an even greater amount of federal dollars and to give health insurance and peace of mind to fellow Kansans?

The Kansas budget is in trouble — now. The revenue stream has fallen so low that it no longer supports even a lean set of expenses. Expanding Medicaid eligibility would not add to the short-term problems. However, tragically, our self-imposed budget crisis has put our lawmakers in such a defensive posture that it’s a hard sell to agree to a future 10 percent match in order to attract $400 million now and each year going forward.

Break out of this crippling mindset, Kansas. Don't miss the opportunity to benefit our economy, Kansas hospitals, and uninsured Kansas citizens. Say "yes" to Medicaid expansion.

Sunday, November 23, 2014

Lawmakers! Put the Money in the Classroom

By Duane Goossen

If you own a car, you know there are a bunch things to pay for: taxes and tags, insurance, oil changes, tires, and probably monthly installment payments. You also have to buy gas. Even if you spend a lot of money on those other things, without gas the car won’t go far.

The same is true for public schools in Kansas.

Producing high quality education requires buildings, computers, school lunches, and a retirement program for teachers. But it also requires classroom operating funds — the gas. Over the last six years, Kansas has let up on the gas for education, and the danger of more cuts is now quite high.

The best measure for judging whether Kansas is letting up or pushing down on the education gas pedal is Base Aid Per Pupil (BAPP). The main operating budget of each school district is determined by BAPP multiplied by the number of students. That basic budget is funded by a 20 mill statewide property tax levy which raises just under $600 million in FY 2015, and by “general state aid” from the Kansas general fund. During the past six years, the amount of money for general state aid has decreased, while the number of pupils has increased, leaving the BAPP $548 — or 12 percent — lower than it was in 2009.

The chart below lists the major areas of school funding provided by Kansas and the federal government. The first line shows the General State Aid drop.
Note that some areas of school funding have gone up, which has enabled Gov. Brownback to claim that total school funding is growing, even though the critical money for “gas” has been cut.

Kansas lawmakers have little discretion on most items in the chart:
  • Last spring the Kansas Supreme Court ordered lawmakers to increase Supplemental Aid, which provides a partial match to local property taxes to help less wealthy school districts fund local option budgets. 
  • Federal rules require Special Education to be maintained at minimum levels.
  • The state pays the employer share of Retirement costs for teachers and must increase that amount each year.
  • Some school districts receive state Bond and Interest Aid to help make loan payments on buildings, a promise to those districts that cannot be easily broken. 
Lawmakers do have discretion over general state aid, and they have chosen to let it decline. The result: classroom sizes are growing and Kansas districts are less able to competitively attract and retain high-caliber teachers.

As the budget debates heat up, keep your eye on Base Aid Per Pupil — the gas that runs the education system. Simply maintaining the present level is not good enough, especially given that the BAPP has fallen for years while classroom sizes have grown.

For the future of our state, our governor and legislators should be pushing the BAPP back up.

Monday, November 17, 2014

So, What’s On The Kansas Budget Chopping Block?

By Duane Goossen

Kansas faces a very immediate budget crisis. At least $279 million of expenses must be removed from the current budget just to keep the state financially solvent.

Where will the cuts come from? Is it possible to protect education?

The pie chart below shows how State General Fund expenses are currently allocated for fiscal year 2015.

A $279 million spending cut is roughly equal to a 4.5 percent across-the-board cut to everything in the chart.

But not everything can be cut.

Medicaid costs are going up, not down, and the state has little choice but to pay these costs in full. That’s especially true since Kansas has signed contracts with three private managed care companies to provide Medicaid services via KanCare.

So take Medicaid out of the calculation. (Note: that's 20 percent of the budget.)

Without touching Medicaid, a $279 million spending reduction would require about a 5.5 percent cut to everything else. That’s why public education advocates are very concerned. A 5.5 percent cut — implemented after more than half the school year has gone by — would be quite serious.

Now consider this: what if K-12th grade education is protected from cuts along with Medicaid?

Then, a nearly 15 percent across-the-board cut would be required on the remaining items: higher education, public safety, other human service programs, and general government. And that's just to achieve the $279 million expenditure reduction needed to stay solvent for this fiscal year. Grim, to say the least — particularly with even more tax cuts scheduled for coming years.

There’s another option legislators will likely consider: Take money from the Highway Fund. Separate from the state’s general fund, the Highway Fund receives income from fuel taxes, vehicle registration fees, a portion of state sales tax receipts, and the federal government. 

But no, there isn’t money simply sitting around in the fund that can be easily and painlessly transferred out. The Highway Fund just borrowed $250 million this past summer, and has outstanding debts of about $2 billion from previous borrowings. However, by canceling or delaying projects, and cutting back on highway maintenance, it would be possible for lawmakers to free up money to transfer to the State General Fund. However, unless lawmakers are prepared to make transfers every year into the future, moving money from the Highway Fund is simply a short-term measure that temporarily delays the required general fund cuts.

Once lawmakers figure out how to solve the $279 million problem in FY 2015, they get to determine how to cut spending by another $400 million or so, just to stay above water in FY 2016.

And what if the Kansas courts rule that school finance is inadequate? What if the recently revised revenue forecast is still too optimistic? 

Well...then the cuts will have to be even deeper still.

Tuesday, November 11, 2014

Now It’s Official: The Kansas Budget is Crashing

By Duane Goossen

It is now official: Kansas must make deep budget cuts yet this fiscal year just to stay financially solvent.

The state’s revenue estimators met Nov. 10 and significantly lowered the official outlook for the amount of income that Kansas is expected to receive.

The new forecast released yesterday shows receipts far below expenses.

First, look at fiscal year 2015.

Expected revenue — plus the beginning balance in the state bank account — total $6.148 billion.

Approved spending plus additional costs required to pay for Medicaid and school finance total $6.427 billion.

Even after completely draining the reserves in the state bank account, $279 million must still be cut from already approved spending just to keep the state solvent.

However, that's a small problem compared to the next two years.

Think about this: while the state budget is in serious trouble now, expenses will continue to grow next year. At the very least, the state will need to add $76 million for Medicaid costs in FY 2016, and another $52 million to cover commitments to the state retirement program, according to projections by the nonpartisan Kansas Legislative Research Department. (Not to mention, the state should also be planning for more students in school, higher costs for road maintenance, and salary increases for state employees.)

But what is the official forecasted revenue for FY 2016 from yesterday's report? $5.811 billion.

For FY 2017? $5.877 billion.

Remember: current expenses are $6.427 billion. Costs are growing. Revenue is falling. And even more tax cuts are scheduled to take effect.

It’s not possible to sugarcoat this. The current set of Kansas services must be dramatically downsized.

Here’s the saddest part: Everyone is now on defense. Advocates for public education, higher education, human service programs, public safety, and highways will all be working hard to defend what they have.

All of the state’s political energy will go toward figuring out how to constrict and pull back. No one will be thinking about things like offering a world-class education to Kansas students or otherwise investing in the state's future.

Saturday, November 1, 2014

Final Pre-Election Budget Report Confirms: Time To Change Course

By Duane Goossen

This is serious, Kansas!

Our state is now a third of the way through fiscal year 2015 and revenue collections are far below last year’s pace, as reported today. Mid-fiscal year budget cuts are ahead! Education and other key state services are in peril!

Do the math:

Expenses in the legislature's approved FY 2015 budget total $6.325 billion.

The state began FY 2015 with a reserve balance of $380 million.

But even after draining that reserve, the state would have to collect $5.945 billion just to stay above zero.

Is Kansas on track to collect that much? Not at all.

In all of the last fiscal year, revenue totaled only $5.653 billion — and that was a drop of $688 million from FY 2013. If FY 2015 revenue were to just stay even with FY 2014 — and that's a big 'if' — the state still would have to cut expenses $292 million before this fiscal year is over. But FY 2015 revenue is not even keeping pace with last year — it’s falling, as today's report shows. 

Meanwhile, unavoidable costs are rising: expenses for Medicaid, the retirement system, education, and other public services — yet more income tax rate reductions are scheduled for each year until 2018.

The math simply doesn’t work.

The state budget is crashing, and the Brownback administration pretends not to notice. The administration's election campaign message is to stay the course!

Don’t look away, Kansans. Take notice, and change course!

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