House leadership releases alternate budget without Arkansas Works; foster care would take hit

The state would increase spending in the foster care system less than anticipated, spend $54.2 million more for the Department of Human Services, and spend $7.3 million less than last year for the Public School Fund under an alternate budget that doesn’t include Gov. Asa Hutchinson’s Arkansas Works program.

The alternate budget was released to the House of Representatives Monday by Speaker Jeremy Gillam, R-Judsonia, and Rep. Lane Jean, R-Magnolia, co-chairman of the Joint Budget Committee.

The budget envisions the state would spend 3% less in many programs in a budget without Arkansas Works than was contained in Hutchinson’s budget, which included the program.

Arkansas Works is Hutchinson’s version of the private option, which is the government program where the state uses federal Medicaid dollars to purchase private health insurance for adults with incomes up to 138% of the federal poverty level. The poverty level is $11,880 in a household size of one, and more for larger families. Created in 2013, the private option expires at the end of this year. As of the end of January, 267,590 Arkansans were eligible for coverage.

Legislators passed the policy by large margins last week but fell short of the three-fourths majority that will be needed for funding in the upcoming fiscal session, which begins April 13. At least nine of the 10 senators who voted against Arkansas Works have said they will not vote to fund the Department of Human Services’ Medical Services Division, which includes that program and many others. That would be enough to block funding.

Under the governor’s proposed budget, the Division of Children and Family Services, which is in charge of the state’s foster care system, would see an increase from $71.1 million to $91.5 million, a $20.4 million increase. The alternate budget reduces that increase by $10.9 billion, but the total funding would still increase to $80.6 million.

In a press release, Hutchinson’s office emphasized the alternate budget’s $10.9 million reduction in the state’s Division of Children and Family Services, which manages the state’s foster care system. Hutchinson said that amount equals 255 positions, including 168 caseworkers and investigators, 31 supervisors and 56 program assistants. Caseloads would go from 29 to 48. Hutchinson’s office pointed out that the division was sued in the 1990s in part because of the high caseloads.

“The consequences of this cut alone is devastating and will directly impact the resources available for our foster families, our social workers and nearly 5,000 children in our state’s foster care system,” Hutchinson said in a statement released by his office. “Adequate funding and handling of our state’s foster care community is an important initiative of my administration. To further cut funding for DCFS is a disservice to the foster care community and to the children who so desperately need our help.”

New DHS Cindy Gillespie was quoted in the same release saying, “The staff who investigate child abuse and work with those children and families are already stretched too thin. Their caseloads are double that of the recommended national average and they work very long hours and give up time with their own families just to get their work done. Cuts to the Governor’s budget request would force us to reduce the current number of staff working in DCFS. If that happens, caseloads will skyrocket and, frankly, that puts children at risk.”

Sen. Bart Hester, R-Cave Springs, one of the 10 senators who voted against Arkansas Works, was not convinced. “We have a $100 million surplus from ’16 and seemingly unlimited (money) for corporate welfare,” he wrote in an email. “I would say using our foster kids as a talking point to protect corporate welfare is a little desperate. I would ask for the debate to be a little more responsible as we move forward.”

Another Arkansas Works opponent, Sen. Bryan King, R-Green Forest, said there are “documented hundreds of millions of dollars in mismanagement at DHS.”

“And then these people want to come back and say, ‘I’m going to throw foster kids out?’” he said in an interview. “I mean, is this what we’re paying (Gillespie) a hundred-something thousand dollars to do? My god, anybody can do that and take those talking points and use that. Is that a new way to have a rational discussion about money spent at the state of Arkansas and prioritizing?”

Gillespie’s salary is $280,000.

In the alternate budget, the state would spend $54.2 million more for the Department of Human Services than was projected without Arkansas Works, with Department of Human Services grants increasing by $66.6 million. That amount would pay for the increased number of Arkansans who would move from the private option to Medicaid, where the state receives a smaller federal match. The state was projected to spend $1.45 billion in DHS in fiscal year 2017 with Arkansas Works, an increase of $112 million over 2016. Without Arkansas Works, it will spend $166 million more.

The University of Arkansas for Medical Sciences would take a 3% cut and then would receive an additional $17.2 million for the additional uncompensated care it would provide uninsured patients.

The Public School fund would take a $31 million hit, from $2.188 billion with Arkansas Works to $2.157 billion without it, a cut of $7.3 million from 2016. Funding for school facilities would not be reduced.

The state’s institutions of higher education combined would see $4.8 million less than projected, going from $733.6 million in Hutchinson’s budget to $728.8 million. Because Hutchinson’s budget did not increase higher education funding, that $4.8 million would represent a cut from 2016.

Other state agencies also would take hits. The Department of Correction’s projected funding would go from $340.7 million with Arkansas Works to $333.3 million without it, a cut of $3.4 million from 2016. The Arkansas Economic Development Commission would see $365,000 less than projected, but still see $1.1 million more than in 2016.