“I think this will actually be our hardest budget,” said Gov. Bill Haslam Tuesday as he opened department-by-department hearings on spending plans.
He’s asked each department to have a plan for cutting expenditures by 5 percent, just as he did last year. But last year, state revenue came in ahead of projections and that wasn’t necessary. Now, revenue collections have fallen below projections for the past three months.
Excerpt from the Chattanooga TFP’s report on the Department of Education and the Department of Health hearings Tuesday:
Education Commissioner Kevin Huffman.. outlined a $57.4 million state-funded increase, most of which would go to required boosts in the state’s Basic Education Program funding formula for public K-12 schools.
At the same time, Haslam has pledged to make Tennessee teachers’ salaries the fastest-growing in the nation in the next five years. Huffman put no figure on that.
Overall, education under the 5 percent cut scenario would see its estimated current budget of $5.71 billion fall to $5.45 billion, much of it in the form of federal dollars due to the end of a $501 million federal Race to the Top education grant, which by July 1 will largely have run its course.
Meanwhile, Health Commissioner John Dreyzehner outlined $3.27 million in potential cuts to his department with reductions or eliminations of contracts with federally qualified health centers and faith-based centers accounting for a recurring amount of $2.19 million.
But Dreyzehner said available one-time money should be able to carry the contracts forward for two years as officials assess the impact of the federal Affordable Care Act on indigent health care.
The department is requesting $574 million in funding, down from an estimated 593 million this year.
Meanwhile, Haslam is keeping his eye on the impacts of the Affordable Care Act on TennCare, the state’s Medicaid program. Haslam is still struggling over whether to pursue the Medicaid expansion to adults making up to 138 percent of the federal poverty level, which the federal law envisions.
But Haslam noted that even without the expansion, TennCare will grow due to increases in rolls from already eligible but not enrolled Tennesseans.
TennCare Bureau figures project 53,200 people will come on to the program next year at a cost of $137.5 million.
Haslam said he expects up to 70 percent of next year’s budget increases will be driven by TennCare.
See also The Commercial Appeal report, including this line:
As usual, increasing costs of TennCare and to a lesser degree K-12 public education are the biggest drivers of the budget, he said. Both are formula-driven, by increasing enrollment and costs.
But TennCare — Tennessee’s version of the federal- and state-funded Medicaid program — will see an extra surge in enrollment as low-income people who were eligible but not enrolled are expected to sign up as a result of the Affordable Care Act’s individual mandate for health coverage. Policy officials call that the “woodwork effect” — new enrollees coming “out of the woodwork” — and Haslam said TennCare cost increases will account for 60 to 70 cents out of every new dollar the state spends in the next fiscal year.
“Now that everyone is forced into a plan, we know it will increase our enrollments and costs,” the governor said.