Friday, March 25, 2011

Special Session - Day 9 Update


Action and Adjournment

A lot can happen in a day. A Senate version of House Bill 1, legislation to address a $166 million shortfall in the Medicaid budget, passed a Senate Committee, passed the full Senate, the House approved the Senate amendments, and the bill was delivered to the Governor...all on Thursday. Not to mention the House adjourned Sine Die possibly ending the Special Session.

As the 9th day of the Special Session began, we were anticipating a Senate version of HB 1 to pass the Senate today, but once the details were revealed, which included cuts to education, it seemed clear that the House would not support the Senate version and we would be heading to a conference committee to resolve differences between the House and Senate versions. After a prolonged recess this evening, the House came back into session and concurred in the Senate version of House Bill 1, with the understanding that Governor Beshear will utilize his power to line-item veto the cuts to education, veterans affairs, and other language provisions opposed by the House.

Once the bill was delivered to the Governor, the Senate adjourned until April 6 when they would return to consider overriding any vetoes issued by Governor Beshear. However, the House adjourned Sine Die, meaning that they do not intend to reconvene during this Special Session.

The net effect of these actions is not clear, but at the time of this writing it appears that the session has ended though we will have more details once the dust settles.

Senate Plan Details

The SCS to HB 1 does the following (a summary of the bill is available HERE):
  • Accounts for half ($69 million) of the savings the administration has said they can make with Medicaid managed care.
  • Reduces the amount the administration can realize through debt restructuring by $67 million.  This language reverts back to what the General Assembly passed in the budget bill last year.
  • Establishes across the board cuts of 0.355% in FY 11 and 1.74% in FY 12 with a few exceptions (which are listed in the attached document)
  • The SEEK formula (K thru12 funding formula) will have no cuts in FY 11 and .812% in FY 12
  • Postsecondary Education will have no cuts in FY 11 and 1.74% cuts in FY 12
  • The SEEK and Postsecondary cuts will not take place until January 30th.
  • If the administration is able to achieve the $69 million in savings PLUS the cost of the education cuts, then the cuts will be restored to SEEK and Postsecondary Education, assuming the General Assembly acts prior to January 30, during the 2012 session.
In addition to the funding aspects of the legislation, there were a few other items included.  The Senate Committee Substitute to HB 1 also does the following:
  • Repeals the Governor's ability to furlough with the effective date of the bill
  • Establishes no pay for legislators during the special session veto period
  • Includes an emergency clause, which means the bill takes effect immediately after being signed by the Governor.
  • Authorizes the Legislative Research Commission to enter into 2 agreements with accounting firms.  One agreement will be to work with the Consensus Forecasting Group to evaluate the estimated Medicaid savings through managed care by January 2, 2012.  The other is to assist with evaluation all expenditure reductions.
  • Requires face to face interviews to determine Medicaid eligibility.
  • Includes language that shifts funds in the Road Fund for debt service, but there is no budget impact in doing so.

We will have more details on the vetoes and how the session adjourned as they become available.

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