$59.1 million in state budget cuts coming

Wednesday, January 4, 2017

Education, transportation to be hardest hit

As a new year approaches, Missouri schools will have to adapt to cuts to the state budget, with public education, specifically school transportation, being hardest hit.

The $59.1 million in cuts, of which $24.4 million will be withheld from public education, came in September but do not go into place until 2017. Preceding the cuts, Missouri Gov. Jay Nixon warned the legislature that if several bills he had vetoed were overridden, the lost revenue would have to be made up elsewhere in the budget. Funds were also cut from local highway, river port and transportation projects, higher education and agricultural programs.

According to an article by the Jefferson City News Tribune in September, Nixon blames the Legislature for not heeding his warnings.

Public schools have two main sources of revenue: The foundation formula, which calculates how much revenue is to distributed to school districts, and property taxes, or Proposition C, a state sales tax partially earmarked for public schools.

The $24.4 million cut from public education breaks down as follows:

* $16.5 million from school transportation

* $6 million from the foundation formula

* $1.9 million from Proposition C distribution

Funding for school transportation was already low before the cuts, creating a total of $21.5 million that has been withheld from transportation for the 2016-2017 school year, leaving only $83,797,713 in the fund. The $6 million withheld from the foundation formula will make it more difficult for the legislature to fully fund the formula.

Missouri Commissioner of Education Margie Vandeven issued a statement concerning the withholds at the time of the cuts.

"We are disappointed in the budget cuts that will directly impact schools," she said. "Excellent public education is one of our greatest resources and also one of our greatest obligations."

According to State Sen. David Sater, R-Cassville, a combination of factors are to blame for the cuts, but primarily, lagging revenues and Medicaid increases in the response to the Affordable Care Act are key.

"Our revenues aren't coming in like they need to be," he said. "The economy is still stagnant in Missouri, and that's one reason we need new leadership in the governor's office to increase economics. We only have so much money coming, and we have to live within our budget. If we have shortfalls, the government has the ability to have withholds if they see them not coming in.

"I think the real reason for the budget withholds is we had some tremendous increases for Medicaid expenditures because of more people on the rolls because of Obamacare. In the last two years, we had 100,000 people put on the rolls, so it went from under 900,000 to almost 1 million in Missouri. That's a big increase in gross revenue going out to pay for the Medicaid program. And, we also have the problem of more expensive medications and procedures. It all comes with a price tag."

Sater said the pharmaceutical program also increased by nearly $300 million the past year as a result of the increased Medicaid enrollments.

"There's a pharmaceutical program for Medicaid patients, and we don't have a prescription limit in the state," he said. "We encourage pharmacists to prescribe generics and lower-priced drugs, but if there's a new drug coming out, we pay for that, and Medicaid patients deserve to have the best possible treatment. I think it's interesting that the governor wants to expand Medicaid, but [I think] the increases are why he's withheld money from our education and other needed services."

Sater said Nixon has withheld money from education more than any other governor.

"If you look at history, he has withheld more from education than any other part of the budget," Sater said. "But, it's Medicaid that's eating most of the budget."

Schools will have to adapt accordingly, Sater said.

"Schools need to live within their means," he said. "We're still spending a lot of money on our facilities. I'd like to spend more money on our teacher salaries and also for the kids. I don't see the money going there. I wish we could fully fund everything, but we cannot. We can't be like the federal government and print more money."

State Rep. Scott Fitzpatrick, R-Shell Knob, agreed with Sater on the primary reasons behind the withholdings.

"It's [Medicaid] costing us a billion dollars more than when I got to legislation four years ago, for no other reason than more people are eligible for the service and the cost of caring for those people has gone up," he said.

Fitzpatrick said the Affordable Care Act was not to completely to blame, but the mechanics of it helped create the problem.

"You can't blame the ACA for our existing eligibility requirements, but the penalties [of it] have forced people to come out of the woodwork to sign up for Medicaid," he said. "So, it makes it more difficult to fully fund everything. My observation of the state budget tells me that if Gov. Nixon doesn't do something before he leaves office, the new governor will have to make further restrictions."

When Governor-elect Eric Greitens takes office in January, he will be in a position to either reinstate the funding, or continue the cuts after Nixon's term ends.

As budget chair in the Missouri House of Representatives, Fitzpatrick said he plans to work with Greitens on the budget to address the financial burdens created from Medicaid growing faster than state revenues.

"I look forward to seeing what [Greitens] has to offer as far as policy for the state," Fitzpatrick said. "He has an impressive record outside of the government, but state government is a large enterprise and he's got a lot of things to figure out in a short amount of time, and I'm hoping to be a good resource to help him as he gets acclimated to the job."

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