Weel In Review

State Capitol Week in Review

LITTLE ROCK – Legislators spent last week writing next year's budget for state government, a process that will require serious belt tightening in state agencies, institutions of higher education and school districts.

The week began with grim news. The governor announced a new round of budget cuts of $106 million for the current fiscal year. Those spending reductions come on the heels of $100 million in budget cuts last October. The cuts reduced general revenue spending for the current fiscal year from $4.6 billion to $4.4 billion.

With news of spending cuts as a backdrop, lawmakers held budget hearings to work on state agency spending requests for next year. The legislature will finalize next year's budgets during the fiscal session that begins February 8. Next fiscal year begins July 1. It will be Fiscal Year 2011.

The Public School Fund likely will contract or eliminate some programs because of reduced revenues, the director of the state Education Department said. However, legislators emphasized that the main source of state aid to local schools would not be affected. It will provide funding of $6,023 per pupil next school year, plus additional amounts for students with special needs and students from low-income families.

Reduction of per pupil funding would likely revive a lawsuit similar to the Lake View case. However, other programs paid for by the Public School Fund may get less state aid next year. They include grants for long distance learning, testing, preschool, programs for youths in detention facilities and some programs for children with disabilities.

Prison officials hope the legislature restores funding of the Correction Department to where it was earlier this year, before budget cuts reduced the department's spending by almost $16 million. If so, the department would get about $290 million in general revenue. There are almost 16,000 inmates in Arkansas state prisons. Ten years ago there were about 11,000.

The Correction Department had to delay opening a 300 bed prison unit in Malvern because of budget cuts. The governor has moved $8 million from a rainy day fund to the Correction Department, and some legislators are urging him to allocate more.

The Medicaid program will cause headaches because in some important respects Arkansas legislators have no control over its dramatic growth. Medicaid pays for health care for the elderly, the poor and people with disabilities.

In tough economic times more people become eligible because they lose their jobs. Also, the cost of medical care continues to skyrocket. Another factor will be the impact of federal health care reform, which may make an additional 200,000 to 250,000 Arkansans eligible for Medicaid. In the current fiscal year, 1.3 million Arkansas residents will receive some form of Medicaid services.

Medicaid is administered by the state Human Services Department. It pays for delivery of almost two thirds of the babies born in Arkansas, and for the care of 75 percent of the state's nursing home patients. The director of the Human Services Department told legislators that Medicaid would need $250 million in additional funding next year to maintain services at current levels.

Medicaid gets revenue from state and federal sources. When combined they bring the Arkansas Medicaid budget to $5.5 billion.