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Cheap Budget Trick

July 31, 2016

While the school year and legislative session were both coming to an end in May, one story of budget cuts – and not a public education story – really stuck with me. From KFOR:

The Department of Human Services is freezing a program which helps low-income Oklahoma families pay for child care.

New applications within the child care subsidy program will soon be denied in an effort to save money.

Those who are currently enrolled in the system will not be impacted.

It’s those moms who are currently pregnant or those families who will soon need the financial help who are about to have to figure out a way to do without.

Baylea Brown is a single mom in the Oklahoma City area.

She relies on the state subsidy to help pay for child care for her 9-year-old son, Gavin, who has special needs.

“Because of the subsidy, I can pay my rent. I can pay for food,” she said.

It’s a subsidy that helps low-income Oklahoma families.

But, starting June 1, 2016, the program will be frozen.

“The agency has run out of money this year,” said Sheree Powell, spokesperson for DHS.

NewsChannel 4 obtained an internal memo from DHS.

The memo was sent out earlier this week, alerting employees to the changes that are coming.

The memo states “Due to the ongoing state budget shortfall, DHS will freeze enrollment for the child care subsidy program effective June 1, 2016.”

It goes on to say “Although new applications will not be approved, applicants still have the right to apply for the program and should not be prevented from doing so. However, applicants should be informed that all new applications will be denied. Notice of denial will be mailed to all who apply after the deadline. This decision cannot be appealed. However, if a client requests a hearing on this decision the request should be accepted and forwarded to the DHS Appeals Unit. The Appeals Unit will notify the applicant that the decision cannot be appealed.”

DHS also has concerns.

“Some of the things we’re concerned about is that families won’t be able to find quality child care, or they’ll start leaving their children in unsafe situations, maybe with relatives or friends who really aren’t qualified to care for their children,” Powell said.

Brown’s glad her subsidy is safe, but she knows just how hard life will potentially be for the families who will soon be denied the help.

“That just sounds kind of impossible – to work and to pay bills and to have daycare,” she said.

This is reality for families below the poverty line. Society at-large (me included) wants parents to be able to work. Often the cost of child care is an obstacle. Freezing the subsidy will keep thousands of parents out of the workforce. Remember that the next time you stumble across a conversation in which your friends and neighbors are talking about poor people just wanting handouts. The state has just frozen a program that would help people who are trying to find a place in the workforce.

Another non-education cut from April also has stayed with me. From the Tulsa World:

A state association of health-care providers claims up to 93 percent of Oklahoma nursing homes will cease operating if a 25 percent cut in the Medicaid rate goes into effect, creating a crisis for Oklahoma families and jeopardizing 16,900 jobs.

This could place about 16,800 elderly and disabled patients at risk of being displaced from their nursing homes.

The decision by the Oklahoma Health Care Authority to slash the rate came last week as the state slips into a deepening revenue failure, estimated to reach at least $1.3 billion by next fiscal year.

In the past five years, almost $500 million has been cut from the Medicaid program, mostly by reducing rates to health-care providers and restricting services available to SoonerCare members. The past decade has seen about $1 billion in cuts.

The recent rate decrease comes from agency officials anticipating cuts of $64 million in the program needed by the end of June.

This reduces federal matching funds, which will total a loss of $164 million in total state and federal funding for Oklahoma Medicaid. The reduced rate goes into effect June 1.

It may get worse. Agency officials have stated another $100 million reduction may be in store for next fiscal year’s budget.

This story alarmed me mostly because I had no idea how reliant our nursing homes were on state funding. I knew they weren’t get rich schemes for their operators, but I didn’t realize they were functioning that close to the margin between making a small profit and having to close.

I also didn’t realize that SoonerCare had scaled back services so much. My own kids were on SoonerCare when I was a classroom teacher. We also qualified for WIC. Even though this cut is not directly an educational issue, it is probably worth noting that state programs subsidize a number of public employees – education and otherwise.

I mention all of this now because of Governor Fallin’s announcement that she’s interested in having the Legislature return to the Capitol for a special session to discuss teacher raises.

Gov. Mary Fallin on Wednesday said she is considering calling a special session to ask lawmakers to use excess state funds on teacher raises.

The state recently closed out the fiscal year and had $140.8 million left. The action comes after a revenue failure that resulted in two cuts to state-appropriated agencies.

The cuts were deeper than were needed, said John Estus, a spokesman for the Office of Management and Enterprise Services.

“I’ve begun discussions with legislative leaders to consider calling lawmakers to return in special session to address the issue of teacher pay raises,” Fallin said. “I continue to support a pay raise for teachers, having called on lawmakers at the beginning of this year’s session to approve a teacher pay raise.”

In other words, state agencies received cuts that were bigger than what they needed to be. The timing of the announcement, with run-off elections around the corner, and with momentum building for State Question 779 (penny sales tax), is one thing that concerns me. That’s just one thing, though.

The Tulsa World included a graphic with their story showing the amount that would be returned to different state agencies, if the Legislature does nothing.

Agency Rebates.png

Look at that list. Yes, public education would receive $40 million back. Fallin is proposing that our legislators return to the Capitol to make that happen. She’s also asking them to give us the $23 million from health care, $20 million from higher education, $16 million from DHS, and every other penny.. I have a problem with that. Each of those entities serves our students too. Everything on this list is a core function of state government.

There is nothing prudent or conservative about trying to give teacher raises on the backs of these other agencies. Unfortunately, some of our state leaders are pathologically committed to trying to convince us that teacher salaries can increase significantly without generating new revenue.

That brings me to a third objection: this isn’t recurring revenue. In that sense, this idea is nothing more serious than Janet Barresi’s ill-fated 2K4T scheme three years ago. I’m pretty sure we can’t guarantee that the state will more or less forget to allocate $140 million next year too, can we?

Again, this isn’t new money. It’s money that OMES cut in excess of what they had to. According to CCOSA, the cuts were in fact illegal.

“We believe the director of the Office of Management and Enterprise Services did not have the legal authority to reduce allotments to state agencies based on estimates that the state general revenue fund might fail,” wrote Owens, an attorney. “We respectfully request that the allocations that were unlawfully reduced from the state general revenue fund be immediately returned to the agencies from which they were cut.”

Finance Secretary Preston Doerflinger, who oversees the Office of Management and Enterprise Services, said the allegation that the cut was illegal is “as laughable as it is totally wrong.”

“These reductions were made using the same statutory authority and procedures as all other revenue failure reductions in prior years, many of which also wound up being deeper than necessary and also resulted in excess funds being allocated either administratively by this agency or at the discretion of the Legislature,” Doerflinger said. “When this year’s midyear cuts were made, OMES pursued the only lawful avenue given that revenues and oil prices were in a freefall.”

I don’t know about you, but Doerflinger’s defense seems to be that the state budget was in a freefall and they made a guess at how much to cut. I can live with that explanation. Seriously, as someone whose leadership team made a menu of misery not knowing how deeply we needed to cut, I get it.

What I don’t get is the idea that we can somehow get a teacher raise out of this. Governor Fallin has been calling for one since her State of the State address in February, but there has been no movement on any of her revenue-generating ideas (that she somehow doesn’t think are the same thing as tax increases. Her logic pretty much boils down to:

“The Legislature is still being paid and is still on the state payroll now, even those who are term limited out,” Fallin said. “I think they should come back and do their job.”

Based on the quotes I’ve seen in articles and on social media from various legislators, most aren’t thrilled at the idea of returning to the Capitol. Even if they were, they’d have to get that bus off of them first.

Meanwhile, the Oklahoman thinks Fallin’s plan is adequate, and the Oklahoma Council for Public Affairs think teachers in Oklahoma are doing pretty well already. I’m not quoting either of them, but the links are there. Look if you want.

My gut tells me there won’t be a special session. The people running for re-election this fall probably don’t want to take money from all the other state agencies and give it to public schools right now. Meanwhile, this will be a small speed bump for the SQ 779 supporters. Unless a genuine and sustainable plan appears from the people who’ve had years to write one, the penny sales tax is still the best option available.

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