Multiple budget related hearings have been occurring both in the Senate and House Committees all week. Below is a spotlight on those hearings.
Currently, committee listings are being updated almost daily. For the latest hearing postings, please visit: House Committee Meetings By Date and Senate Committee Meetings By Date. Most committee meetings are streamed on the internet if the room the hearing is held in has video capabilities. For a list of video streaming or archived hearings for the House and/or Senate, click on: http://www.capitol.state.tx.us/ and look for the Video link.
Senate Finance Subcommittee on Public Education Funding
February 15th
The Senate Finance Subcommittee on Public Education Funding held its second meeting on Tuesday, February 15, to discuss teacher employment issues, target revenue, and the state’s business tax. Most of the discussion focused on the state property tax.
Senator Robert Duncan noted the state property tax could be a potential solution to the current complexities and confusion and potentially keep the state out of the courthouse on legal challenges made by school districts while cleaning up many of the issues in the current system.
Mike Reissig, Deputy Comptroller, gave a brief overview of the state’s business tax offering similar testimony given by witnesses from the Comptroller’s office in other budget committees throughout the week; the franchise tax is underperforming as it was originally estimated to raise $6.4 billion last year but only raised $3.9 billion in actual revenue. Of the $2.5 billion difference, $1 billion is attributed to the recession and $1.5 billion to the underperformance of the business tax.
February 16th
The Senate Finance Subcommittee on Public Education Funding held its third meeting on Wednesday, February 16, to discuss funding for instructional materials. Again, Senator Florence Shapiro stated her intent to move forward with testing. Senator Shapiro commented that it is only the freshman class this first year that will be under the new End-Of-Course (EOC) exams, and that the upper-class science course work will not be needed for several years. Senator Duncan stated that districts are raising concerns that there will be additional costs when it comes to administering the exams (monitoring, remediation, etc.). The districts’ concerns are being listened to, said Senator Shapiro, and some of the issues are being addressed but she did not see a reason to delay these exams. She asked the Texas Education Agency to develop estimates of what additional costs might occur due to the new testing program.
February 17th
The Senate Finance Subcommittee on Public Education Funding held their fourth meeting yesterday, February 17, 2011. The focus of the meeting was productivity and invited testimony was received by Charles Miller, Former Chairman of the Texas Educational Economics Policy Center, Tom Currah, Assistant Director, Research and Analysis, Texas Comptroller of Public Accounts, and Timothy Tauer, Chief Executive Officer of Education Resource Group. Miller proposed a new independent policy center which would focus on school finance in the state of Texas. Currah presented information from the recent FAST report and received questions from the senators concerning why the report focuses on only two subject areas and how this information is intended to be interpreted and utilized by districts. Tauer presented the benefits of the Education Resource Group (ERG) system which helps districts understand their strengths and weaknesses both financially and academically.
The remainder of the meeting focused on testimony and discussion with Legislative Budget Board presenters John McGeady and Jennifer Schiess as well as Texas Education Agency presenters Dr. Lisa Dawn-Fisher, Dr. Nora Hancock, and David Anthony. Legislators have established priorities they would like to explore in the next two weeks, which include reform (specifically tweaking the EOC exam policies), the challenges of funding student enrollment growth, maintaining our current teacher workforce, the possible removal of Target Revenue, textbooks, and modification of the Cost of Education Index.
Senate Finance Subcommittee on Medicaid
During this week and next, the Senate Finance Subcommittee on Medicaid will be reviewing various cost containment strategies as they drill down on various Health and Human Services categories. Senator Jane Nelson said on February 17 during the subcommittee hearing that they are going to be $7 billion short, in Medicaid, taking into consideration SB 1 assumptions; the committee is pulling together a list regarding Medicaid suggestions for cost savings and efficiencies to hopefully reduce that shortfall amount.
The Subcommittee’s goal is to have a committee substitute ready in three weeks to submit to the Senate Finance Committee. The subcommittee next week will review the following categories:
Monday – Hospitals
Tuesday – Optional Services and Managed Care
Wednesday – Physicians, other providers and co-payments
Thursday – Long Term Care and other items not yet covered
February 15th
The Subcommittee met on February 15 and heard an overview of the Prevention and Detection of Fraud, Waste and Abuse Programs from Douglas Wilson, Interim Inspector General, Office of the Inspector General (OIG), Billy Millwee, Associate Commissioner for Medicaid/CHIP and David Morales, Deputy First Assistant Attorney General, Office of the Attorney General (OAG). Medicaid fraud, waste and abuse was discussed in terms of civil and criminal prosecutions, oversight and coordination partnerships, fraud prevention programs including client, provider and service/claim focuses, and new fraud and prevention detection initiatives. Legislative Budget Board (LBB) staff wrapped up the hearing with a brief introduction of two LBB recommendations from the Government Effectiveness and Efficiency Report published to the 82nd Legislature in January 2011, regarding the use of federal data to help veterans access federal benefits and the implementation of an objective client assessment process for acute nursing services in the Texas Medicaid program.
A copy of Millwee and Wilson’s presentation can be found by visiting:
http://www.hhsc.state.tx.us/news/presentations/2011/fraud-abuse-oig-021411.pdf
A copy of Morales’ presentation can be found at:
http://www.senate.state.tx.us/75r/senate/commit/c542/handouts2011/davidmorales_20110215.pdf
And a copy of the LBB’s Government Effectiveness and Efficiency report can be accessed at:
http://www.lbb.state.tx.us/Performance%20Reporting/TX_Govt_Effective_Efficiency_Report_82nd.pdf
February 16th & February 17th
On February 16, the subcommittee reviewed Medicaid and discussed the unsustainable condition of the Medicaid program. Senator Nelson said the state will be $9.9 billion short in Medicaid without making any policy changes, and if they adopt the changes in Senate Bill 1, they are still short $7 billion.
On February 17, the subcommittee reviewed cost containment options for prescription drugs, Durable Medical Equipment (DME) and medical supplies. The summary of possible options is listed below. The complete presentation from the HHSC: http://www.hhsc.state.tx.us/news/presentations/2011/MCD-0211.pdf
|
Summary of Savings (in millions) for Medicaid Cost Reduction Proposals |
|||
|
Medicaid Cost Reduction Proposal |
TOTAL GR |
TOTAL ALL FUNDS |
Savings Assumed in SB 1 |
|
Prescription Drugs |
|||
|
Option 1 – Managed Care Pharmacy Carve-in |
$51.0 |
|
YES |
|
Option 2 – Managed Care Pharmacy Carve-in (MCO-specified Formulary) |
$72.7 |
|
NO |
|
Over the Counter Ibuprofen |
$4.5 |
$10.8 |
NO |
|
3 Prescription Limit in Managed Care |
$46.4 |
$110.2 |
*10% |
|
Durable Medical Equipment (DME) and Medical Supplies |
|||
|
Selective Contracting for DME |
$8.0 |
$18.8 |
NO |
|
Vision and Hearing Services |
|||
|
Selective Contracting for Vision Services |
$4.6 |
$10.7 |
NO* |
|
Selective Contracting for Hearing Services |
$6.8 |
$16.4 |
NO* |
|
Clinical Laboratory Services |
|||
|
Reduced Rates for Laboratory Services |
$39.8 |
$94.6 |
NO |
House Appropriations Subcommittee on Article II
The House Appropriations Subcommittee on Article II met in regards to the Health and Human Services Commission (HHSC) on February 15.
The LBB reviewed their recommendations for Article II – Health and Human Services Commission (HHSC): http://www.lbb.state.tx.us/House_Appropriations/HAC_Summary_Recs/Agency%20529.pdf
Tom Suehs, Executive Commissioner, Health and Human Services Commission delivered the following presentation to the Subcommittee: http://www.hhsc.state.tx.us/news/presentations/2011/hac-hb1-021511.pdf
Medicaid and CHIP Client Services – Issues with implementing HB 1
- Implement Savings Initiatives assumed in H.B. 1 – $3.56 billion All Funds
o Includes a 10 percent provider rate reduction, reduces $450 million GR for savings achieved through Rider 61 (e.g. payment reform), $45 million GR savings for reducing or eliminating certain optional Medicaid acute services, expands managed care for net HHS savings, and obtains federal match for children of state employees in CHIP.
- Affordable Care Act provides no flexibility to reduce caseloads through changing eligibility criteria.
- If savings cannot be met, target additional reductions. Suehs said his staff is going through all cost containment areas and pulling together document to see if the necessary savings can be achieved.
o Impose Substantial Rate Reductions, e.g., reimburse hospitals at the minimum SDA per DRG.
o Maximize Client Cost Sharing (current federal law limits ability to impose cost sharing)
o Reduce or Eliminate Other Medicaid Optional Services
- Seek Funding Flexibility from CMS
- Take every effort to avoid across-the board provider reductions and try to protect access to care.
Administrative Reductions
- Co-locate and consolidate local offices to achieve lease savings
HHSC has 14 priorities totaling $5.6 billion in GR (this assumes HB 1 cost savings are realized -$2.7 million.)
John Hawkins with the Texas Hospital Association expressed concern about the 10% rate cut. Other cost containment strategies in HHSC may make the cuts even deeper, stated Hawkins. He further argued if you make cuts in some areas (ie mental health and substance abuse) they will aggregate at hospitals, where they have a federal requirement to at least stabilize and treat.
House Appropriations Subcommittee on Articles VI, VII, and VIII – TCEQ
On February 14 the LBB gave an overview of the following reductions and program suspensions in the initial budget bill. Bryan Shaw, Commissioner of the TCEQ, said his agency is committed to work within its budget while still delivering its core functions.
Program Funding Suspensions—Recommendations include a decrease of $100.3 million in General Revenue-Related Funds as a result of a 100 percent reduction in funding as compared to 2010-11 levels for the following, mainly p
ass-through programs:
a) LIRAP-A decrease of $100 million out of the General Revenue Clean Air Account No. 151 reflecting the suspension of all funding for the Low-Income Vehicle Repair Assistance, Retrofit, and Accelerated Vehicle Retirement Program (LIRAP) during 2012-13. This is expected to result in 17,000 fewer vehicles being repaired and/or replaced through LIRAP assistance. It should be noted that this could result in a loss of revenue because counties have the option of participating in the program, which results in fees being added to the Vehicle Emissions and Maintenance Inspection fee deposited to the Clean Air Account No. 151, and the lack of grant funding availability would result in various counties opting out of the program. If all counties were to opt out of the LIRAP and cease fee collections, an estimated $75 million in revenue could be lost during 2012-13. See Rider Highlights, No. 15 (former).
b) On–Site Waste Water Treatment Council Grants—Eliminate funding for the On-Site Wastewater Treatment Council grant program ($0.7 million reduction in General Revenue) which supports research, demonstration projects, and information transfer regarding on-site wastewater treatment. It is assumed that grant funding could be resumed again in 2014-15. See Rider Highlights, No. 26 (former).
Fifty-Percent Reductions—Recommendations include decreases in General Revenue-Related Funds totaling $183.0 million as a result of 50 percent funding reductions as compared to 2010-11 for the following primarily grant or pass-through programs, which is expected to result in an average one-year delay in funding projects receiving monies from these programs (see Section 3, FTE highlights for FTE reductions by Strategy):
a) Texas Emissions Reduction Plan (TERP)—A decrease of $114.3 million out of the General Revenue-Dedicated Texas Emissions Reduction Plan (TERP) Account No. 5071 reflecting a 50 percent reduction in funding as compared to 2010-11. Recommendations provide $56.0 million each fiscal year for incentive payments for the Diesel Emissions Reduction Program, of which 4 percent, or $2.2 million, is dedicated to the Clean School Bus Initiative, and 5 percent, or $2.8 million is dedicated to the Clean Fleet Program (see Rider No. 22). These amounts represent 55 percent of the amounts available for these grant programs in 2010-11. Recommendations also include $1.1 million per fiscal year for program administration, or a decrease of 50 percent as compared to 2010-11. With respect to the New Technology Research Development Program, no funding is included in the recommendations for 2012-13, whereas $10.3 million was expended in each fiscal year of the 2010-11 biennium. (See Section 4, Modify the New Technology Research and Development Program.) Because the TERP program is one of the control strategies Texas uses in the State Implementation Plan (SIP) to show that the state is making a concerted effort to meet Clean Air Act standards set by the U.S. Environmental Protection Agency, the significant cuts to the TERP program included in the recommendations could have some impact on the approval status of SIPs in Texas; however, that impact is not known.
b) Local Solid Waste Planning—A decrease of $11.0 million out of the General Revenue-Dedicated Solid Waste Disposal Account No. 5000 reflecting a 50 percent reduction in the amount of grant funds provided to local Councils of Government for municipal solid waste planning and management activities. It is expected that local government contributions could be used to offset the reductions in state grant amounts.
c) Air Quality Planning—A decrease of $3.5 million out of the General Revenue-Dedicated Clean Air Account No. 151 reflecting a 50 percent reduction in funding for grants to local governments identified in Rider 8, Appropriation for Air Quality Planning, for air quality planning activities to reduce ozone. Recommendations assume that local governments would contribute additional funds to air quality planning activities to offset this reduction in funding. (See Rider Highlights, Rider No. 8.)
d) Pollution Prevention Outreach—A decrease of $3.4 million in General Revenue-related funds reflecting a 50 percent reduction to funding for the Pollution Prevention and Recycling, the Pollution Prevention—Technical Assistance, and the Voluntary Programs, Event Coordination, and Education program areas. Of this decrease, $23,075 is out of the General Revenue Fund, with the rest being from the following General Revenue-Dedicated accounts: $37,553 out of the Clean Air Account No. 151; $2.2 million out of the Waste Management Account No. 549; and $1.1 million out of the Hazardous and Solid Waste Remediation Fee Account No. 550. This reduction is expected to result in approximately 50 percent fewer presentations and workshops on pollution prevention and minimization, 50 percent fewer entities participating in the agency voluntary pollution prevention and recycling programs, and a significant reduction in other agency outreach activities.
e) Clean Air Act Modeling—A decrease of $0.8 million out of the Clean Air Account No. 151 reflecting a 50 percent reduction in funding for the refinement and enhancement of modeling to demonstrate attainment with the Federal Clean Air Act, resulting in delays in the availability of data generated from the modeling activities. (See Rider Highlights, Rider No. 13.)
Agency’s proposed revisions maintain the amounts in HB 1 requiring a base reduction of $295 million and 235 FTEs. TCEQ requests:
- Reallocate the 235 FTE reductions – Decreases impact to field inspections, increases reductions in FTEs and funds to non-core and/or non-statutory required activities, and distributes reductions more equitably between core functions
- Restore capital funds for PARIS (Permitting & Registration Information System) by reducing funds for Dry Cleaning remediation
Riders
- New rider appropriates additional funds from Operating Permit Fees Account, contingent on increasing the fee
- Reinstates current language exempting temporary or contract workers associated with the Petroleum Storage Tank regulatory program from the agency’s FTE cap
- Amend amounts in rider #15 for the Automobile Emissions Inspection program to reflect revised request reallocating FTE reductions
The complete LBB presentation with all reductions and other budget details: http://www.lbb.state.tx.us/House_Appropriations/HAC_Summary_Recs/Agency%20582.pdf
Pension Review Board
House Appropriations and Senate Finance Committees both heard testimony this week from the LBB in regards to the Pension Review Board (PRB). The following LBB recommendation regarding mandatory fees in order to avoid a conflict of interest was summarized in both committees by analyst Demetrio Hernandez:
The Pension Review Board is currently funded with General Revenue, along with Appropriated Receipts from the annual seminar the agency holds. The recommendations would effectively shift the agency’s operating costs from General Revenue to the public retirement systems statewide. Until fiscal year 2010, the agency was also appropriated funds from State Pension Review Board Fund 662, which contained receipts from public retirement systems whose governing boards voted to make annual contributions of no more than 50 cents per active m
ember and annuitant to the fund. A 2000 Sunset Advisory Commission report recommended eliminating these voluntary contributions and fully funding the agency with General Revenue to ensure objectivity in the agency’s oversight function and stability in its funding. The recommendations would generate approximately $1.2 million annually based on total membership in Texas public retirement systems exceeding 2.3 million in active and retired members.
The fee will be based upon the number of members but it will be up to the PRB to determine further methodology and rules to enact.
LBB Summary Recommendations for the Senate: http://www.lbb.state.tx.us/Senate_Finance/SFC_Summary_Recs/Agency%20338.pdf
LBB Summary Recommendations for the House: http://www.lbb.state.tx.us/House_Appropriations/HAC_Summary_Recs/Agency%20338.pdf
