The Associated Press February 16, 2010, 2:43PM ET

Arkansas lawmakers fret over Medicaid budget cuts

Arkansas lawmakers on Tuesday told the state's Human Services chief they want more influence over how the state will reduce the cost of Medicaid programs by $400 million.

Arkansas Department of Human Services Director John Selig told lawmakers the department plans to keep next year's budget for the program at the same level as this year. But Selig says that means cutting $400 million in the program because of increasing costs and more clients.

That would mean a cut of $100 million in the state's share of Medicaid costs. Arkansas receives $3 from the federal government for every $1 spent in Medicaid.

"It's a serious issue," Selig told members of the Joint Budget Committee. "If we're going to cut $100 million from our projected Medicaid expenditures in general revenue, which is about $400 million total, those are going to be some significant reductions in one way or the other. We just don't know how to do it yet."

Selig says he's asked Medicaid service providers and others to offer suggestions by March 1 on where to cut. The Legislature may wrap up its roughly monthlong fiscal session by early March.

Sen. Randy Laverty on Tuesday said he's worried that the Legislature won't have a role in deciding where the cuts would be made.

"We better know what's going to happen after March 1, because we're not going to be here and we're not going to have a hand," said Laverty, D-Jasper. "We're not going to be a cook in the kitchen."

Selig said that he planned to come back to the Legislature with any proposed cuts and said the plan would likely have to be reviewed by a legislative panel on rules and regulations.

One lawmaker said he was worried that approach would not allow for any input from the Legislature.

"We know that in rules and regs, we've got absolutely zero power," said Sen. Percy Malone, D-Arkadelphia. "Various agencies and departments will come before rules and regs and will have implemented them."

About 775,000 of the state's 2.8 million residents receive some sort of Medicaid benefit over the course of a year, with 650,000 people on the rolls at any one time.

Gov. Mike Beebe said he wants lawmakers to have input in how to control the Medicaid costs.

"This growth is unsustainable and the projected increase in the Medicaid budget growth is what we don't have the money for," Beebe told reporters.

Because of a drop in state revenues, the state has already delayed indefinitely the expansion of the ARKids First insurance program for low-income children. Lawmakers last year had approved an increase in cigarette taxes to help pay for the expansion.

The Joint Budget Committee planned to meet again with Selig Wednesday to discuss the Medicaid cuts.

Also Tuesday, House Speaker Robbie Wills proposed that Arkansas delay by one year a stricter set of lottery-funded scholarship eligibility standards for students who graduate from schools identified as grade inflaters.

At those schools, 20 percent or more of students earned an A or B in math courses but scored below proficiency levels on corresponding state exams. State Sen. Joyce Elliott of Little Rock has said the stricter requirements are unfair to students who don't have control over whether their schools are accused of inflating grades.

To receive scholarships under existing law, graduates from schools tagged by the state as grade inflaters and students who don't successfully complete the Smart Core curriculum would have to earn a minimum 2.5 grade-point average and either an ACT score of 19 or score at a proficient level or better on the state's end-of-course exams.

Others must successfully complete the Smart Core curriculum and either obtain a 2.5 grade-point average or have a 19 on the ACT.

Wills said delaying the stricter standards for students from grade inflating schools would give the state more time to look at the grade inflation requirement. The proposed delay would be included in legislation setting amounts for the lottery-funded scholarships.

Beebe said he would prefer to keep the law as is, but said he would sign the legislation if it included the proposed delay.

Tuesday marked the start of the second week of the fiscal session. This year's fiscal session -- focusing primarily on the state's budget -- is the first under a constitutional amendment requiring Arkansas lawmakers to meet and budget annually.


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