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PO State Budgeting Will Meet Harsh Reality in 2017

PO Budgeting (2017)We wrote yesterday about the decreasing likelihood of funding for Obamacare’s Medicaid expansion in Arkansas (the private option) making it through the legislature in 2015.
A quote in the Arkansas Democrat-Gazette today from pro-private option state Sen. Jonathan Dismang suggests that he agrees.
Dismang said:

In its current form, I don’t believe there is any way it survives.

As we mentioned yesterday, Governor-elect Hutchinson and next year’s new crop of legislators will soon have to start grappling with how to pay for the state’s share of the program in 2017. (Currently, the entire tab is picked up by federal taxpayers — which apparently is known as “free money” to private option supporters.)
State Sen. Bryan King wrote recently about all the fun decisions that await legislators a few years down the road when the state has to start paying its share:

But if we are willing to assume that nothing unexpected happens in the Middle East or on Wall Street, we are looking at growth in Fiscal Year 2020 of $184 million over the previous year. This year’s freshmen legislators will be the General Assembly’s veteran leaders in the regular session of 2019, when the budget for Fiscal 2020 must be approved. Their duty will be to distribute that $184 million in projected growth to the state agencies that provide vital services.
Traditionally, growth money is distributed to public schools from kindergarten through grade 12, to colleges and universities, to prisons, to health care services and to the many smaller agencies that make up state government. Each entity gets a percentage of the total revenue, which is their traditional “piece of the pie.”
Long-standing tradition may come to an end when budgets for Fiscal Year 2020 are written because the private option is on pace to eat up almost all of the projected growth in revenue. That means schools, colleges, universities and prisons will have to live on less.
Under the provisions of the Arkansas private option, as it’s now written, in Fiscal Year 2020 almost every penny of growth money will be obligated to paying for the private option. Why? Because in Fiscal 2020 the state will have to contribute 10 percent of the total costs of the health plan. Even though 10 percent may not sound like much it will amount to $181 million.

I was always surprised when, in 2013 and 2014, I saw higher education lobbyists advocate for passage of the private option — a program that was eventually going to cut into their “piece of the pie” of the general budget. As readers will probably remember, in 2013 higher education administrators flipped out at legislators’ suggestions to use some general fund money to fund transportation projects (traditionally financed by the Highway and Transportation Fund). Transportation is a legitimate function of state government, but higher education bureaucrats opposed the use of general revenue for those programs. Health care for able-bodied, childless adults paid for by the private option isn’t a traditional function of state government, but the higher education bureaucrats were all for this program — even though it will, almost necessarily, rob the general budget of funding that could go to higher education.
Here is Shane Broadway, director of the Arkansas Department of Higher Education, on the private option in 2014:

These are really difficult decisions that they are making. Whatever your opinions are on affordable healthcare, ‘Obamacare,’ whatever you want to call it, they don’t matter because this is about more than that. It’s about math.

If he’s still around in 2017, we hope Mr. Broadway will share his esoteric mathematical knowledge with us — with a particular focus on how higher education will be funded, when Arkansas starts paying for its share of the private option program.
P.S.: Check out our pals at the Apothecary blog on Forbes, who also published a story yesterday on the future of the private option after the 2014 midterm election results.

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One thought on “PO State Budgeting Will Meet Harsh Reality in 2017

  • Bob McCartney

    Take all the illegals, let them go home. I had to D.H.S while a task for mother who is a nursing facility. I get hardly walk for latinos, tattooed bums waiting for their handouts. We the people, have had enough. The schools may have wait on their astroturf for ball fields and air conditioning for the press box. The teachers are doing the teaching, take care of them.


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