Finance

North Carolina Budget Deal Includes Teacher Raises, Excludes Medicaid Overhaul

by | July 31, 2014

By John Frank

House and Senate budget writers reached agreement Tuesday on a $21.3 billion state spending plan that averts significant cuts to Medicaid but leaves unresolved a major overhaul of the health insurance program for the poor.

The budget compromise, legislative leaders said, cuts $135 million from the state's Medicaid program but makes no changes to eligibility and no shift in how the care is provided.

The Senate had previously approved a budget that called for major changes to Medicaid -- including a proposal to cut eligibility for thousands of elderly and disabled people -- but the House and Gov. Pat McCrory opposed the plan. The issue became a sticking point in the budget negotiations that stretched a month and derailed the legislative session.

The brokered deal fits more closely with the House plan, but the governor's office said McCrory remains concerned about potential Medicaid cuts. He has twice threatened to veto the budget if it cut the program too deeply.

"There are several major issues that are being worked on, including Medicaid eligibility, to hopefully avoid a veto," said spokesman Josh Ellis. "We appreciate the ongoing dialogue."

Senate President Pro Tem Phil Berger said he and House Speaker Thom Tillis discussed the budget with McCrory over dinner Sunday.

"I would say he expressed some concerns.We've tried to address those concerns," Berger said. "I think our members feel that what we have is a very positive overall package.We're optimistic that the governor will see that as well."

The Senate is poised to vote on the plan Thursday, and the House likely will follow with votes Friday and Saturday. Both chambers plan to finish the bulk of their work this week as lawmakers eye an impending adjournment.

Raises for teachers

Tillis and Berger announced the deal after budget writers worked until 4:30 a.m. Tuesday to work out the details. The final bill is expected to be made public Wednesday. In the meantime, there were few specifics about what will be cut to pay for a substantial raise for teachers and to preserve the jobs of teaching assistants.

The Republican leaders said they put $282 million toward teacher salary increases, saying it would provide an average 7 percent boost, even though a teacher's group said the number is inflated.

Berger said the plan "will make North Carolina more competitive nationally and encourage the best and brightest of our teachers to make long-term commitments to our state and our students."

Tillis said the proposal includes nearly $900 million in reserves. But neither he nor Berger mentioned the latest legislative staff estimates that last year's tax cuts will cost $680 million this year, 43 percent more than originally projected.

Rep. Nelson Dollar, a Cary Republican and the lead House budget writer, said the chambers agreed to a 1 percent cut in payments to health care providers. But he remained vague on where the other spending cuts would occur. "There were a range of reductions and changes," he told reporters.

Special session possible

The resolution of House and Senate differences on pay hikes came more easily than an agreement on how to overhaul Medicaid. House and Senate leaders are even discussing a potential special session after the November elections to return to the complicated issue.

The $13 billion program, backed by federal and state tax dollars, serves 1.7 million low-income children, parents, disabled and elderly people, but cost overruns plagued the system for the past four years. The agency that oversees the program, the Department of Health and Human Services, also has been plagued by controversies under Secretary Aldona Wos.

Both chambers approved competing legislation that overhauled how Medicaid is handled in the state in an effort to make spending more predictable.

The Senate plan would introduce commercial managed care to the Medicaid system and force health care providers to compete for enrollees. The House plan called for regional managed care networks run only by health care providers. Both plans called for the networks to be responsible for cost overruns, but their timeframes for doing so differed.

The Senate also wanted to move Medicaid to a new agency run by an appointed board, while the House proposed keeping it within the Department of Health and Human Services.

Without seeing the budget in print, Democratic lawmakers remain skeptical, and advocates for Medicaid recipients are cautiously optimistic.

"The real question will be what cuts they plan to make to Health and Human Services to pay for (teacher raises)," said Sen. Floyd McKissick, a Durham Democrat. "I don't know what it is they are proposing to do otherwise in HHS, and they haven't disclosed it."

Adam Linker, a policy analyst at the N.C. Health Access Coalition, an initiative funded by a think tank critical of the Republican legislative majority, said the Medicaid eligibility cut "would have been devastating for a lot of people."

Lou Wilson, a lobbyist for the N.C. Association, Long Term Care Facilities, said those whose coverage was in limbo and their families would be "extremely grateful" that the services weren't eliminated. Jim Morrill of The Charlotte Observer contributed.

(c)2014 The News & Observer (Raleigh, N.C.)

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