Gov. Gina Raimondo gave her first State of the State address last night, unveiling her first budget.
As she told lawmakers, the Governor faces two major challenges. She needs to close a projected $190 million deficit, but she also wants to invest in key areas to boost the state’s recovery from a long economic recession. Health care, social services and education make up more than two-thirds of the state budget. Here's a deeper look at how the governor’s spending plan will affect Rhode Islanders.
Health and human services accounts for more than a third of state spending. Of that, Medicaid is the biggest chunk, covering about a quarter of all Rhode Islanders. And it’s been growing faster than the state can afford. So the Governor’s budget proposes shaving about $90 million dollars from this health care program for the poor, elderly, and disabled. Half of that comes from cuts to health care providers… that’s payments to hospitals and nursing homes. And it reduces rates for insurers who manage some Medicaid programs for low income families. Executive Office of Health and Human Services head Elizabeth Roberts says they didn’t want to cut patients from the program.
“We didn’t look at eligibility in this circumstance because we said, you know, the people who are eligible for Medicaid need Medicaid services and supports. We discovered that a lot of what’s driving our expenses in this program are very appropriate needs. They are people with serious illness, they are elderly, they are people with disability.
And a small group of Medicaid recipients – about seven percent – drive about two-thirds of the spending, says Roberts.
“They may be in the hospital multiple times a year, they may be in an emergency room multiple times a month. How can we be providing a better coordinated system of care for them that’s also more cost effective?”
This is the holy grail of health care reform: providing more coordinated care for people with complex health needs at lower cost. Right now, Roberts says, we’re paying for services that might be redundant, for conditions that perhaps could have been prevented before getting critical – and more expensive. The thing is: lots of states, including Rhode Island, have tried –and failed - to grab this holy grail.
“One of the reasons we’ve had some failure in the past I think is Medicaid has had some good ideas, but there hasn’t really been the way to make those work in the broader community. And we’ve got a real commitment to do that. And we’re listening to the people who deliver service to get ideas from them. We’re listening to patients and advocates to get ideas from them.”
…Listening at a series of public meetings and workshops Governor Gina Raimondo has convened to quote “reinvent” Medicaid. Specifically, she’s charged this working group with finding about $45 million dollars in savings by the end of April. That’s on top of the approximately $45 million she’s proposed cutting in payments providers. Could lower pay discourage doctors from accepting Medicaid patients? Again, Elizabeth Roberts.
“We hope not. And that’s going to be very important for us to pay attention to. Because the last thing we want to do is give people access to coverage and then have them not have access to services.”
The proposed $3.8 billion dollar budget for health and human services also includes the Department of Children, Youth, and Families. Its budget will take about a four percent cut compared to spending last year. Some of that comes from services to kids and families in the community. But foster families should get a bump in pay.
The governor’s budget also proposes a plan for funding HealthSource RI, the state’s online insurance marketplace. And that’s a tax of between one and four percent on every individual and small business health insurance plan in the state, whether you bought it on the exchange or not. HealthSource RI spokeswoman Maria Tocco says that should raise more than $6 million dollars, and federal funding will make up the difference.
“So we can spend down our federal funds through this calendar year," said Tocco. "Then beginning January first 2016 we will have to transition to all state funded.”
The exchange might not cost as much to run as previously thought – only about $11 million dollars for the next fiscal year.
“The governor asked HealthSource RI to propose a budget that would be much more in line with what it would cost to run on the federal exchange," said Tocco.
Tocco says that means HealthSource RI will have to find some economies. And that’s what most health care agencies will be doing for the coming year.
Education makes up a little less than a third of Governor Raimondo's budget proposal. Most of the money goes to local school districts to pay for elementary and secondary schools, and it adds up to a big chuck of change. A little more than $821 million to be exact.
"We are incredibly grateful for the governor’s commitment to education as is reflected in this budget," said Rhode Island Education Commissioner Deborah Gist.
Gist will step down by the time this budget is enacted, but she thanked Governor Raimondo for increasing school funding by a little more than $35 million. She also thanked the governor for committing $20 million to a brand new school construction fund.
"That is deeply needed, and it matters not only because it’s an important infrastructure project, but it matters for students and teachers to have safe and healthy and workable school facilities," Gist said.
Funding for the school construction authority comes from restructuring some state debt, and the money will be administered by the Department of Education. Raimondo's staff said the plan calls for an independent review of school building needs, with money to be handed out to the most pressing projects first.
The budget also adds more than $1.4 million to bring all-day Kindergarten to seven districts that still don’t have it, including two of the state’s largest, Cranston and Warwick. This despite cuts for other social services to close a $190 million deficit.
Raimondo’s Chief of Staff Steve Neuman says it was a tough decision not to cut into school funding
"There are certainly people that suggested that might be a place to generate savings," Neuman said. "But the governor believes that investing in education, investing in workforce development not only creates opportunities for people to get ahead and get into the middle class, but also is a critical economic development initiative."
Raimondo sees education as an economic development initiative because in her view, Rhode Island needs better-skilled workers to attract new business. And new business means more jobs for Rhode Islanders.
She wants to increase funding not only for public schools, but also for state colleges and universities, by about 3.8 percent. Rhode Island Higher Education Commissioner Jim Purcell says he’s pleased by that number.
"3.8 percent to me is great," said Purcell. "I’ve been in two other states in the last five years and its all been cuts, so to me this is focusing on the things that matter."
Purcell says state colleges and universities need to get more of their students to graduate on time and increase the number of students studying things like engineering and science, because those industries are growing.
Purcell is backing a plan to change the way the state gives out scholarships for college students. And he is backing legislation that would attach performance measures to new state funding for colleges and universities starting in 2018.
"In the legislation it talks about retention and graduation rates, addressing the needs of the workforce, the number of certificates or bachelors degrees that directly address the needs of our industries," Purcell explained.
It remains to be seen whether lawmakers will approve performance measures for state colleges and universities, and whether they will leave the education funding in the governor’s budget proposal intact. But it’s clear that in a year of significant cuts to programs like Medicaid, Governor Raimondo has made education a funding priority