Friday, February 6, 2009

Education, health care may be subject to budget cuts

Possible budget cuts for education $538 million
Possible budget cuts for health care: $412 million

Associated Press Writer

BATON ROUGE, La. (AP) — Louisiana's large budget shortfall could hammer public education and health care programs next year, as the Jindal administration asks for proposals that could eliminate up to $950 million in health and education spending.

Though a recent round of midyear budget reductions caused few noticeable ripples to students and health care patients, the cuts being considered for the new budget year that begins July 1 could be dramatic to cope with a drop in state general fund income pegged at $1.2 billion.

The governor's budget crafters sent out letters this month to state offices that outlined ranges of budget cuts for which they should offer proposals. The maximum numbers for health care and education were hefty: $538 million for education and $412 million for health care — of that, more than $380 million each for public colleges and the state health department.

Gov. Bobby Jindal's budget officer, Commissioner of Administration Angele Davis, said that the figures were preliminary and don't necessarily reflect what cuts will be suggested when the governor's 2009-10 budget proposal is delivered to lawmakers in mid-March.

Davis' office gave departments a range of possible cuts and asked them to prioritize their programs, describing what should be slashed first and then what should be stripped from spending as the cuts get more severe. Davis said those answers will help the administration make the decisions of which programs are expendable.

"Some of these cuts are going to be tough cuts to make, but there are no indications that I'm aware of that our revenues are going to go up," she said.

Jindal must present his budget proposal to lawmakers by March 13, and the Legislature will hammer out the final spending plan, which is expected to be significantly less than the $29 billion-plus budget for this year.

Lawmakers are considering tapping into the state's "rainy day" fund and other pots of unspent state money to fill gaps next year, but even that wouldn't fill the entire shortfall. State officials also hope that economic stimulus proposals in Congress could provide aid to Louisiana and that the economy will improve and boost state revenue collections.

But for now, the administration is working with the worst-case scenario, and state officials say the cuts being considered would force grim choices in their agencies, including significant layoffs and sharp reductions in services.

Because health care and higher education are the largest areas of state discretionary spending, they are the most vulnerable to budget cuts.

LSU Chancellor Michael Martin said he's considering a proposal to boost student tuition and fees, perhaps based on type of curriculum, as a way to help offset some cuts. But he said that won't be nearly enough.

To cope with the rest of a cut that could be as high as 14 percent of the budget for LSU's main campus, Martin said he's looking at hundreds of layoffs, major program eliminations, larger class sizes, shortened library hours and an array of other reductions.

"This is a big hole in the hull of the flagship institution, and I'm not sure the pumps can operate fast enough for us to keep the ship afloat," Martin said of the range of possible cuts.

In the Department of Health and Hospitals, a $381 million cut could multiply into an even larger hit.

The state uses its money to draw federal matching dollars for the state Medicaid program for the poor, elderly and disabled in a nearly 3-to-1 match. Medicaid is the largest portion of the health care budget, so the cut for which DHH was told to prepare could top $1 billion with the loss of federal money.

Joe Donchess, executive director of the Louisiana Nursing Home Association, said he worried that could mean large cuts to the money the state pays nursing homes to take care of Medicaid patients.

Donchess said he's hopeful about a congressional bill that would provide additional Medicaid money to states. He said if DHH is forced to take the cut that is in discussion now, it would be devastating to health care services for the most vulnerable Louisiana residents.

"This is potentially one of those death-knell types of budgets," he said.

A handful of offices weren't asked to draw up budget cut recommendations.

Davis said the governor wants to protect the state's free college tuition program, known as TOPS, and also won't seek cuts to the state ethics board or the Division of Administrative Law, which handles ethics violation cases.

Jindal made ethics a centerpiece of his campaign for office and successfully pushed for an overhaul of state ethics laws when he took office, and Davis said he wants to protect ethics enforcement despite the tight budget.

Meanwhile, the governor's budget writers also are looking at undoing some of the restrictions that lock up certain parts of the budget and keep them safe from cuts. Davis said the governor may ask lawmakers to free more areas of spending to spare the most severe reductions from falling solely on education and health care.

Copyright 2009 The Associated Press.

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