Budget panel would blow by spending cap to restore social service, education funds

Sen. Beth Bye and Rep. Toni Walker at a press conference after releasing the Appropriations Committee's budget proposal.

Jacqueline Rabe Thomas / Ctmirror.org

Sen. Beth Bye and Rep. Toni Walker at a press conference after releasing the Appropriations Committee\’s budget proposal.

The legislature’s Democrat-controlled budget-writing panel recommended adding $514 million in spending to Gov. Dannel P. Malloy’s plan — and embraced a radical new interpretation of the constitutional spending cap — primarily to bolster human services and education.

The Appropriations Committee proposal would spend $19.9 billion in the first fiscal year and $20.6 billion in 2016-17, increases of 4.6 percent and 3.3 percent, respectively, over the current year’s budget.

The committee proposal also would require significantly more in new revenue than Malloy proposed to remain in balance. The committee proposal would spend $514 million more than the governor proposed for the next two years. And with the net tax increase of $360 million over two years proposed by Malloy already raising concerns on the legislature’s Finance, Revenue and Bonding Committee, the prospect of a heated tax debate increased with Monday’s proposal.

The Appropriations Committee approved the budget late Monday afternoon in a 33-24 vote along party lines. The package effectively rejected or substantially reduced many of the health care and social service cuts in Malloy’s budget proposal.

“The main thing we wanted to do was support the families of the state of Connecticut,” said Rep. Toni Walker, D-New Haven, House chair of the panel. “…Our budget is what we believe the State of Connecticut needed.”

“I think this committee showed great restraint in spending,” Bye said, adding that lawmakers cut hundreds of millions of dollars from spending below the level needed to maintain current services. “We feel it is a balanced and thoughtful approach by our committee.”

Spending cap shattered

Malloy submitted a two-year budget back in February that exceeded the constitutional cap by more than $50 million in the first year. The governor said that was due to a data error.

But he also refused to recommend further cuts or other adjustments to bring his plan into compliance. Malloy said the adopted budget must comply with the cap, but there is no legal requirement that the governor’s proposal do so.

The Appropriations Committee stole a page from Malloy’s playbook, but elevated the stakes astronomically.

The committee recommended removing from under the cap more than $2 billion per year in contributions to pension plans and other retirement benefit programs — items that never have been exempted from the cap.

And as Republicans argued this couldn’t be done, Bye and Walker said they understood there probably would be a lengthy discussion about legal interpretations of the cap as a final budget plan is negotiated with the Malloy administration over the next seven weeks.

“The spending cap is not well defined,” said Sen. Robert Kane, R-Watertown. “I’ve been in the legislature seven years, and I’ve never heard a proper definition from either side.”

The ranking GOP senator on appropriations added he would like to see the cap studied, but in order to better impose the fiscal controls voters sought more than two decades ago.

The committee plan, which had exceeded the cap by $328 million next fiscal year under previous cap methodology, fell $1.5 billion under the limit in 2015-16 under the new interpretation.

“We thank the Appropriations Committee for its work in facing a difficult budget year,” the governor’s office wrote in a statement. “Our budget was filled with difficult decisions. But we also funded key priorities like aid to cities and towns, public education and building a strong economy and a best-in-class transportation network. When you make difficult choices, it is never going to be popular or easy to swallow, but they are necessary to put our state on a stronger, brighter path.”

Cuts to health care, social services reduced

The Appropriations Committee budget would restore funds to many of the health care and social service programs cut in Malloy’s proposal.

Under the committee’s plan, no parents or pregnant women would lose eligibility for Medicaid — Malloy’s plan would lower eligibility, affecting an estimated 34,200 people — and state funding of Medicaid payments to health care providers would be cut by $8 million over two years, compared to $90 million under the governor’s plan.

Many legislators have taken issue with Malloy’s deep cuts to services for people with intellectual and developmental disabilities, and the committee reversed many of those cuts, making significantly smaller reductions. The voluntary services program that serves those under 21 with autism or an intellectual disability as well as a mental health diagnosis, for example, would see a $3.4 million cut under the committee’s plan, compared to a $20 million cut under Malloy’s.

While the governor called for eliminating all funds that would have provided day programs for more than 600 people with intellectual and developmental disabilities who graduate from high school in the next two years, the committee would provide funding, but at 80 percent of the level needed to provide services high school graduates currently receive.

The committee’s proposal also largely reversed many of Malloy’s mental health cuts, including a $25.5 million cut in grants that mental health and substance abuse treatment providers use to make up for low Medicaid rates. The committee’s plan would provide $18 million, rather than the full $25.5 million. The Department of Mental Health and Addiction Services has projected that providers would be able to bring in about $7 million in new revenue from billing Medicaid. Republicans made a similar move in their budget proposal last week. Separately, the committee’s budget would create a $3 million per year grant for providers of acute and emergency behavioral health services for people ages 15 and up.

Another new funding item would be $1 million per year to implement legislation aimed at increasing transparency in health care costs and addressing consolidation among hospitals and physician providers. The Senate’s Democrat and Republican leaders have teamed up to propose a series of bills that aim to give the state more control over health care landscape changes, and as written, the bills could require some state agencies to hire more staff. The measures have drawn opposition from the hospital industry.

In addition, the committee’s plan includes $9 million per year for wage increases for direct care workers at long-term care facilities. Unionized workers at 27 nursing homes voted earlier this month to authorize a strike, although they called it off at Malloy’s request. The union, SEIU 1199 New England, has been seeking a $15 minimum wage, and issued a statement Monday morning calling the proposal encouraging.

“While this new budget does not offer the full funding needed to provide a living wage to caregivers and quality care to the people for whom they care, it certainly appears to be an improvement from February’s proposed budget,” spokeswoman Jennifer Schneider said, referring to Malloy’s February proposal.

The Appropriations Committee’s plan raised concerns among advocates for seniors, who had hoped for more changes to Malloy’s proposed cuts to the Connecticut Home Care Program for Elders, which helps seniors receive services at home, rather than in nursing homes. The governor’s plan called for raising the cost to program participants, from 7 percent of the cost of care to 15 percent; on average, that was projected to raise seniors’ monthly costs from $66 to $141. The Appropriations Committee would change the cost-sharing to 9 percent of the cost of care.

The committee also maintained Malloy’s proposal to freeze admissions to a portion of the program that serves people who don’t require nursing home-level care, but who are at risk of hospitalization if they don’t receive services at home, a change that’s projected to lead to 38 fewer enrollees each month.

The Republicans’ budget proposal would not make either cut.

Claudio Gualtieri, AARP Connecticut’s associate state director for advocacy, said the committee’s plan improved on Malloy’s proposal, but still left thousands of seniors at risk of entering nursing homes, with potential long-term costs for taxpayers.

The committee also called for $36.55 million in savings from reducing overtime costs, including by $5 million in the Department of Developmental Services, $10.3 million in the Department of Correction, $7 million in the state police, and $5 million the Department of Mental Health and Addiction Services. Republicans also targeted overtime reductions in their budget proposal released last week, but called for significantly more savings.

School cuts reversed

The appropriations panel budget reverses several cuts the governor made to programs that help the state’s neediest school districts pay for things like longer school days, after-school tutoring, healthy food and juvenile justice diversion programs.

For example, $6.5 million cut from the Priority School District grant for the state’s lowest-performing districts was entirely restored. That cut would have cost Hartford Public Schools $881,000, New Haven $762,000 and 13 other districts similar amounts.

The  committee, however, did not restore a $4.7 million cut to the Commissioners’ Network, a group of the state’s 16 lowest-performing schools. They also did not restore $700,000 to help Bridgeport cover its education expenses. That funding supplements the other education aid the city receives from the state.

The committee plan would provide funding for enrollment growth in various school choice programs, including charter, magnet and J.M Wright Technical High School in Stamford. That growth would be limited to schools that are already open and not yet full, but it would ensure that students have the next grade to progress to, as promised when they enrolled. For example, this year’s fifth graders would be assured of having a sixth grade class next year at their school.

The governor’s budget proposed opening a new charter school in Stamford and another in Bridgeport.

“We did not choose to fund new charters at this time among so many difficult cuts,” added Bye.

Finding the money to expand school choice programs has been a struggle for some legislators, who worry the rapid growth of these schools comes at the expense of the neighborhood public schools.

“We have to rethink how we are sharing our education dollars throughout the state,” said Walker, calling the education funding in her budget “a balanced approach.”

The budget also would help some school districts cover the tuition they pay when their students attend a magnet school. While the funding districts receive from the state is not reduced when a student leaves to enroll in a magnet school, educators have complained for years that they do not save as much as they must pay in magnet tuition. The proposed budget would cap the tuition a local district must pay and require the state to pick up the remainder. This would help districts like East Hartford.

The budget also would put pressure on magnet school operators to start charging preschool tuition for families that can afford it. The state currently spends $3 million to cover tuition for students in magnet preschool programs.

Higher Education Cut Less

While the panel proposed boosting state funding to the University of Connecticut by $16.7 million next year to help the state’s flagship school increase enrollment in science, technology and math, they propose cutting funding to the state’s 12 community colleges and four regional Connecticut State Universities by $6.2 million.

The Board of Regents, which oversees the system, would receive $245.9 million in the upcoming fiscal year, a 1.7 percent cut to the amount the legislature provided for the current fiscal year. The governor’s budget proposed cutting funding for the Regents by $20.5 million. The legislators’ proposal would still leave the college system with a sizeable budget shortfall — $10.4 million after an already approved increase in tuition.

The increase UConn would receive is still less than the level of funding university officials have said they need to continue existing programs and staffing levels as well as implementing Next Generation, an initiative aimed at increasing enrollment. The funding level the appropriations committee recommends would leave UConn with a $12.5 million budget gap.

The appropriations leaders said they did what they could to reverse the cuts the governor recommended.

“Education is the way our children are going to get ahead,” Walker told reporters.

She said the level of funding her committee recommends will ensure that the state’s public colleges do not have to close a campus or close facilities on the weekends.

The budget proposal also restores some cuts the governor made to student scholarships. Malloy recommended eliminating state funding for scholarships for students attending private colleges, which would save the state $4.6 million. The legislators’ budget would only eliminate state-funded scholarships for students attending schools with large endowments, which include Quinnipiac and Trinity colleges, and Wesleyan and Yale universities, leaving a cut of $2.2 million in scholarships.

Municipal aid increased modestly

The committee built modestly on Malloy’s budget in terms of municipal aid. The governor recommended keeping aid to cities and towns largely flat over the next two fiscal years.

The panel proposed a new $41 million grant program in 2016-17 to encourage greater regionalization of local services. Full details on this proposal were not immediately available.

Using borrowed funds to pay off more borrowing

The committee did embrace a Malloy plan to cover $325 million in debt service costs over the next two fiscal years — a plan that state Treasurer Denise L. Nappier called “too aggressive” and warned could harm Connecticut’s reputation on Wall Street.

The committee, like the governor, recommended that the state use bond premiums — certain proceeds it receives when it borrows funds for capital program at higher interest rates — to make debt service payments.

In testimony before the Finance, Revenue and Bonding Committee last week, Nappier urged passage of a bill that would end this practice starting in 2017-18. Trying to compromise with Malloy, the treasurer said she could support using a smaller amount of bond premiums, about $178 million, to bolster the debt service account over the next two fiscal years.