State cuts spending despite windfall

FRANKFORT — Human-services programs that could have received a portion of hundreds of millions of dollars in federal stimulus money for Medicaid are instead being forced to make cuts because the dollars were diverted to other state agencies.

The Courier-Journal in Louisville reported Saturday that Gov. Steve Beshear and the General Assembly moved $383 million in windfall Medicaid money to other state agencies facing shortfalls in fiscal 2009-10, outraging advocates and some lawmakers.

While enough money was left to keep Medicaid solvent, the advocates contend the state wasted an opportunity to help other underfunded programs in the Cabinet for Health and Family Services.

"They had the perfect opportunity to take that money and shore up a lot of family-support programs that have been cut and cut and now are going to be cut again," said Cathy Allgood Murphy, an advocate with AARP of Kentucky. "It seems like the children and the elderly of this state are being left in limbo once again."

The transfer was approved during last month's special legislative session, which was called to deal with a revenue shortfall of nearly $1 billion. The move was part of the budget-balancing plan proposed by Beshear.

Rep. Jimmie Lee, D-Elizabethtown, who argued unsuccessfully to allocate $37 million in the surplus Medicaid funds for human services, said he shares the advocates' ire.

"They can't be more unhappy than I am," said Lee, chairman of the House human services budget subcommittee.

The extra funds resulted from a temporary increase in the amount of federal Medicaid money Kentucky receives. Normally, the federal government pays 70 percent, and Kentucky 30 percent, of the $5.7 billion-a-year Medicaid health plan for the poor and disabled.

But this year's Economic Recovery Act increased the federal share of Medicaid costs to nearly 80 percent through the end of next year, meaning the cabinet has to put up only about 20 percent.

That freed up money the cabinet otherwise would have needed for its share of Medicaid costs in the fiscal year that began July 1.

Recently, state budget officials used a similar technique, taking $63 million in unspent state Medicaid money from the fiscal year that just ended to balance the previous year's budget.

That brings to $446 million the extra Medicaid money being transferred to other state agencies.

Mary Lassiter, Beshear's budget director, said the administration determined that the transfer was necessary in difficult economic times to meet the state's constitutional obligation to balance the budget even though it means drawing on money that could have been used for human services.

"All the programs in the cabinet are important," she said. "It's a balancing equation between that and all of the needs of the Commonwealth in general."

But advocates say that reasoning ignores the growing demand for human services, including low-income elderly, who end up on waiting lists for services such as Meals on Wheels, a hot lunch at the local senior center or a few hours' help a week with housekeeping, personal care and trips to the doctor.

The state's Department for Aging and Independent Living has been cut three times in the past 18 months and is facing another cut within the next few weeks.

Bart Baldwin, president of Children's Alliance, a group of private, mostly non-profit agencies that provide residential centers, foster care and other services for abused and neglected children, said funding for such care already has been slashed and many services have been eliminated.

Lee said he's distressed that the cabinet's social service department, which investigates child abuse and neglect and handles adult protective services, has undergone several budget cuts and will probably be cut again.

Social workers have too many cases, he said, and some adults who are supposed to have state guardians are going without services because there's not enough staff to do the job.