FRANKFORT — The state House and Senate each passed bills on education Wednesday but still have no firm agreement about how to fix the state's Medicaid budget.
House Democrats and Republicans said they will continue discussions on a possible budget compromise Thursday. Wednesday was the third day of the special legislative session, which costs taxpayers $63,500 a day.
Meanwhile, the Senate released a "road map" of possible solutions to the Medicare-budget impasse.
The Senate on Wednesday passed Senate Bill 1, which would allow schools to receive more federal money this year. The House passed House Bill 2, which would increase the high school dropout age to 18.
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House Speaker Greg Stumbo, D-Prestonsburg, said he and House Minority Leader Jeff Hoover, R-Jamestown, met Wednesday and will continue to talk about possible solutions to the Medicaid budget Thursday.
Stumbo said those solutions include some targeted cuts and other options.
The House and Senate are struggling to find middle ground after negotiations over a budget fix broke down last week. After the Senate adjourned the regular session, Gov. Steve Beshear called legislators back to Frankfort on Monday to address the Medicaid budget in a special legislative session.
During the 2011 regular session, the Democratic-controlled House passed Beshear's proposal, which included moving $166.5 million from next fiscal year to the current fiscal year to make up for a shortfall in the Medicaid budget.
Senate Republicans passed a budget that included across-the-board cuts. Republicans said they did not believe that Beshear could generate enough savings through private managed care contracts in Medicaid to make up the savings needed in the second year.
On Monday, the Senate filed Senate Bill 3, which included less-severe cuts than the Senate's original budget. Education would be spared in the first year of the budget and would receive a 0.65 percent cut in the second year of the budget.
The Senate "road map" introduced Wednesday by Senate budget Chairman Bob Leeper, I-Paducah, was largely the same as SB 3. Senate President David Williams said it outlines principles "that should be a road map for a resolution" for the Medicaid budget.
It contains "parameters which we believe should be covered by any agreement" between the Senate and the House on the budget, he said.
Copies were sent to the governor and all state legislators, Williams said.
"Today's proposal by the Senate is simply a restatement of the proposal that the House rejected in the conference committee during the regular session and one that needlessly cuts education and other critical areas of state services," Beshear said. "I will continue to work with the entire General Assembly to reach a consensus on how to address the Medicaid gap as quickly as possible."
Under the "road map," the Senate would be willing to recognize up to half of the savings Beshear says he can make through managed care programs, Williams said.
He said "reasonable across-the-board cuts" as outlined in SB 3 would save between $83 million and $91 million.
On Wednesday morning, Beshear praised Stumbo and Hoover for trying to find a compromise to fix the state's Medicaid budget.
But the governor stopped short of offering his opinion on a compromise that might involve targeted spending cuts if his plan to save money by starting privately run managed care programs for Medicaid patients does not work.
"We're in conversations with the House leadership on a number of options. I don't want to eliminate any of those options right now," Beshear said following an economic development announcement in Franklin County.
On Wednesday, the House Appropriations and Revenue Committee heard testimony from Medicaid providers who treat the severely mentally disabled and mentally ill. Beshear has said that if a budget bill is not passed, he has no other option but to cut Medicaid payments to providers by 35 percent beginning April 1. The cuts would last until July 1, the beginning of the next fiscal year.
Jim Richardson, chief executive officer of Cedar Lake Lodge, a Louisville-based non-profit that provides services to the severely mentally and physically disabled, said 95 percent of his budget comes from Medicaid. The non-profit laid off 18 people almost two years ago.
If the 35 percent Medicaid cuts were to happen, Cedar Lake would have to cut between 80 to 100 jobs, Richardson said. That means the agency would likely violate federal and state regulations regarding the treatment and care of the mentally disabled.
"If takes everyone we have (right now) to meet our regulation and service requirements," Richardson said.
House budget Chairman Rick Rand, D-Bedford, said the House budget committee will continue to hear testimony on Thursday and that the House likely won't vote on a budget bill until early next week.
Also Wednesday, the House voted 87-13 to pass HB 2, which would raise the dropout age to 17 in July 2015 and 18 in July 2016. It would also require the state Department of Education and school districts to collect information on alternative education programs and the progress of students placed in them with the ultimate goal of improving the programs. The measure now heads to the Senate, where it will likely meet resistance.
Senate Majority Leader Robert Stivers, R-Manchester, said the bill's chances of passage in the Senate are "not very good." He said some Republican members on the Senate Education Committee believe that it's not a dropout bill, "but a mandatory attendance bill with no adequate funding to implement it."