A $165.5 million hole in Louisiana's budget will be patched with a mix of cuts, savings from hiring freezes and taking funds from state coffers, Gov. Bobby Jindal's commissioner of administration announced Friday. The package enacted by the governor will strip funding from health programs, including hospice care and psychiatric services for Medicaid patients. It also will cut domestic violence programs and move prisoners from more expensive parish jails to state prisons.
The cuts also mean doctors and hospitals will receive a slight cut in the amount they receive for seeing Medicaid patients, state colleges and universities will have to redirect tuition revenue to offset lower public funding, and the elimination of community-based programs for children with mental health issues.
The cuts are aimed at rebalancing the state's budget in light of lower revenue expectations and higher costs. The budget must be balanced by the time the fiscal year ends on June 30.
Mid-year reductions have become an expected part of the political calendar in Baton Rouge in recent years, with Jindal presiding over cuts in each of his five years as governor.
Commissioner of Administration Kristy Nichols, who unveiled the cuts to the Joint Legislative Committee on the Budget on Friday, said the administration had to move quickly, as delaying any reductions would mean that deeper cuts would be necessary later in the year.
The state's Revenue Estimating Conference on Thursday approved new estimates that lower the amount the state will receive from taxes, fees and other sources by about $129 million. Administration officials revealed Friday that the total deficit the state faces is about $36 million larger than that due to the need to spend more than expected on the Minimum Foundation Program, which helps fund K-12 schools and the TOPS scholarship.
Health care programs cut
Much of Friday's package focused on health care services. Overall, the Department of Health and Hospitals faces a $21 million cut after money from a lawsuit the state settled with drug companies is redirected into the department.
The elimination of hospice programs for Medicaid patients who are not in nursing homes struck lawmakers on the state's Joint Legislative Committee on the Budget particularly hard.
"We're not going to make people suffer in their last days, are we?" Sen. Francis Thompson, D-Delhi, asked.
Nichols noted that about 80 percent of hospice care occurs in nursing homes already and described the cut as a difficult decision.
Secretary of Health and Hospitals Bruce Greenstein argued later in the day that only funding Medicaid hospice care through nursing homes would not reduce the quality of care. He also noted that Medicare hospice programs for the elderly were not being touched and that non-profit and community groups also provide hospice care in other settings.
"For those in their last years or days and weeks of life, nursing homes do a very good job" of providing both spiritual support and pain management, Greenstein said.
The elimination of the hospice program is part of a package of Medicaid cuts that will also eliminate payments for dental care for pregnant women and the Communtiy Hospital Psychiatric Services. Together, the state will save $2.3 million by not paying for those programs.
The Louisiana State University public hospitals that are part of the Shreveport system will see their budget cut by $10 million. Greenstein said at a news conference Friday that those facilities were chosen because they had not been hit as hard during a round of cuts earlier this year following a change in the federal Medicaid reimbursement formula for Louisiana.
The department will also be reducing contracts for community-based services for those who are mentally ill and community-based programs for at-risk children with mental health conditions. Greenstein said people who use those programs and have "intensive needs" will be directed to the state Behavioral Health Partnership, a program that coordinates mental health services across the state.
The cuts also include outpatient programs for welfare eligible women and their children and will eliminate beds from an addictive disorder program.
Payments to Medicaid providers, such as doctors and hospitals, will also be reduced by 1 percent under the plan.
A letter from the Louisiana State Medical Society, Louisiana Hospital Association and Metropolitan Hospital Council of New Orleans decried the cuts to Medicaid providers, warning that the series of cuts enacted over recent years could threaten the program's viability.
"Hospitals and physicians continue to be cut over and over again, and the trend does not seem to be abating," according to the letter, which goes on to suggest that providers may have to raise rates on non-Medicaid patients, reduce or eliminate services or lay off workers or shut down facilities as a result of the cuts.
Package of changes also includes savings, redirected revenue
In addition to the cuts, the administration will take about $58.5 million in revenue from a variety of funds in order to plug holes elsewhere in the budget. That includes using $30.5 million from a settlement with pharmaceutical companies over drug prices to reduce cuts at the Department of Health and Hospitals, requiring state colleges and universities use $10 million in increased tuition revenue to supplement state money and taking $13 million in excess fees and revenue from the state's self-insurance fund.
The state also is using about $19.7 million in savings from previous hiring freezes to plug the budget hole. About $3.4 million in savings will come from the closure of the C. Paul Phelps Correctional Center in DeQuincy earlier this year.
"It just makes sense to use available revenue to protect critical services," Nichols said.
State funding of higher education reduced, parks?maintenance?money redirected
Higher education, which does not have a budget protected by state laws and thus is frequently a target for cuts, will have to use about $10 million in unanticipated tuition money instead of state funds that had been included in this year's budget. That comes on top of about $427 million in reductions Louisiana's colleges and universities have seen over the past five years.
Administration officials have noted that some of those cuts have been offset by tuition increases.
This round of cuts to higher education amounts to a 2.6 percent reduction in state funding, Commissioner of Higher Education Jim Purcell said. The reduction will be spread across the various colleges and university systems, he said.
"I have spoken to the system leadership and they will work with their campuses to minimize the impact these cuts will have on instruction and student services," he said.
Lt. Gov. Jay Dardenne said the administration's decision to take $4 million from a fund dedicated to park maintenance caught him by surprise.
"It seems like the administration has adopted a new policy, don't ask don't tell," Dardenne said. "They didn't ask us about the wisdom of these cuts."
Dardenne said he had expected to deal with a $1.2 million cut to his office and had prepared a plan that would spread those out through the various agencies he oversees.
The administration's plan relies on money that is not currently in the account, which is filled over the course of the year by fees from those using state parks, and taking the full amount will leave the fund empty at the end of the year, Dardenne said.
Dardenne said there are no plans to close parks or dramatically change their hours in light of the cut during this year but said depleting the fund could jeopardize their ability to stay open once the new fiscal year begins. Taking money from the fund will also delay the office's ability to come up with matching funds FEMA requires for repairs to cabins at Fontainebleau State Park in Mandeville that were damaged by Hurricane Isaac.
When presenting the cuts to lawmakers, Nichols suggested the money would be made up from state capital outlay funds. But Dardenne said that approach would be unwieldy and likely require lengthy approvals for any repairs needed at state parks.
Dardenne, who chaired the Senate Finance Committee when he was in the Legislature, said he wasn't sure what the state should do about its now-annual mid-year cuts.
"I don't know what the answer is going to be," Dardenne said. "I know the manner in which these cuts are being handled is not the way I would handle it."
Source: http://www.nola.com/politics/index.ssf/2012/12/louisiana_cuts_health_care_med.html
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