New twist in Kansas budget making

Legislators set for second half of two-year cycle for the first time in decades

0 | Budget, DCF, KDADS, KDHE

Twilight accentuates the new copper dome on the Kansas Statehouse, part of a nearly complete $332 million renovation and the first new copper covering since the roof was constructed in 1903. This year — for the first time since 1954, the state Legislature will be entering the second year of an existing budget. "This is a whole new experience coming up," said Duane Goossen, a former budget director for three Kansas governors.

Twilight accentuates the new copper dome on the Kansas Statehouse, part of a nearly complete $332 million renovation and the first new copper covering since the roof was constructed in 1903. This year — for the first time since 1954, the state Legislature will be entering the second year of an existing budget. "This is a whole new experience coming up," said Duane Goossen, a former budget director for three Kansas governors.

— When Kansas legislators return to Topeka in January to start the 2014 session, they’ll be dealing with the state budget in a significantly different way.

Last year, for the first time since 1954, the Legislature received from the governor and then approved a two-year budget plan, which means many important spending decisions for the coming fiscal year have already been made. Previously, the wrangling of agency budgets was a year-to-year exercise.

“The two-year budget has been in the works for as long as I’ve been in the Legislature, seven years,” said Senate Vice President Jeff King, an Independence Republican. “A lot school districts and others have come to us and said, ‘We really want the budget certainty that comes with doing multi-year budgeting because we would know what we’re getting from you and could work accordingly.’

“So I think the two-year budget cycle is a good one,” King said. “A lot of other states do it. I think it’s a positive development for Kansas. We are obviously going to be working out some of the kinks that come with working with an off-year budget.”

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Duane Goossen, KHI's Vice President for Health and Fiscal Policy and former state budget director.

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‘Whole new experience’

"This is a whole new experience coming up," said Duane Goossen, a former state legislator and budget director for three Kansas governors. He now is vice president of fiscal and health policy at the Kansas Health Institute.

"No one in the Legislature or the administration has been in the second year of an existing budget, so it's hard to predict how this session will go. The Legislature could consider substantial changes. Or they could do nothing and we would still have an approved budget for fiscal 2015.”

The last two-year budget was for fiscal years 1954-1955, according to Brian Herder of the Kansas State Library. At that point, the Legislature still met every two years, instead of gathering for an annual 90-day session. In 1954, lawmakers began holding “budget sessions” in the intervening years. Then, in 1966, the Legislature amended the state Constitution to allow annual sessions.

The state fiscal year begins July 1, so when lawmakers concluded the 2013 session they had already approved spending plans extending to July 1, 2015.

This year as in the past, state agencies have submitted budgets for the coming fiscal year to the Division of Budget, but mostly with only minor revisions to what has already been approved.

Sara Belfry, a spokesperson for Gov. Sam Brownback said the governor’s coming 2015 budget proposal "…will not be the full budget proposal that has happened every year in the past. This year the Legislature will need to go back and re-do the Department of Corrections budget, as the governor vetoed that (last year), but as they already passed the FY15 budget we don’t need to propose a new budget."

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Sen. Ty Masterson, R-Andover.

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Some power shifting

Sen. Ty Masterson, an Andover Republican who chairs the Senate Ways and Means Committee, said as a technical matter he expects the new budget process will differ but slightly from the previous process.

“It’s my understanding that this (second year of the cycle) will be real similar to what we’ve done in past years when we’re presented with a supplemental budget request for the year we’re in at the time,” he said. “So, basically, next year we’re going to be presented with a supplemental request for (FY) 2015. It’ll be handled like a supplemental. I think the processes are going to be almost identical.”

But he said the new process does shift some power from the Legislature to the executive branch.

It “does put a lot of unique power in the Governor’s Office in that in whatever worst-case scenario you may have, the Governor’s Office can always line-item veto whatever the Legislature does, and then they (legislators) are left with what’s already appropriated for 2015.”

When he proposed the idea last year, Brownback said a two-year budget cycle would increase government efficiency and improve long-term planning.

Better planning

So far, that's been the experience at the Kansas Department of Health and Environment, said Deputy Secretary Aaron Dunkel.

"I think we're going to see a pretty substantial effect from the ability to plan out (two years) moving forward. It's freed us up to do some things that we knew we wanted to do," Dunkel said.

He said the effect has been most apparent in "lower priority" programs identified as targets for elimination, if the agency’s budget were to be cut.

"There's not a lot of activity trying to make those lower priority programs better, because you know at any time they might go away. Having a budget that at least lets us go out another year really gave us the opportunity to ask: Are those programs low-priority because they are underperforming, but with the right attention they could move up that priority list?" Dunkel said, declining to cite examples of such programs.

"For those that know they're on the edge...knowing they're safer for a longer period of time — just from a psychological perspective — gives them the opportunity to be much more engaged," he said.

Here is a look at some of the budget revisions proposed by the state’s chief social service agencies:

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Kansas Department for Children and Families Secretary Phyllis Gilmore.

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Department for Children and Families

Reading initiative

The largest new spending initiative proposed by DCF would shift $9 million from the federal Temporary Assistance for Needy Families block grant to underwrite “Reading Roadmap,” a program aimed at improving the state’s fourth grade reading scores. DCF officials said the $9 million would come from the agency’s $48 million TANF reserve fund.

The Governor’s Office earlier this month announced that DCF had awarded the grant to the Rural School and Community Trust, a national group that has hired a consultant to coordinate the project, which will target kindergarten-through-third-grade students in schools known to have high poverty rates and low average reading scores.

Schools participating in the program will be announced in January. The consultant is expected to raise an additional $3 million in private sector funding.

Advocates for the poor have criticized the initiative, saying the TANF dollars would be better spent on job training or other programs that directly aid the poor.

But DCF Secretary Phyllis Gilmore has defended the expenditure, citing a 2012 University of Pennsylvania study that found pre-teen girls with below-average reading scores were twice as likely to become teen mothers, compared to their peers with average reading skills. Teen pregnancy has been linked to poverty.

Restricting eligibility for asssistance

DCF officials also have defended changes in department policies that tightened criteria for determining who’s eligible for public assistance.

“DCF believes that encouraging people to sign up for welfare benefits is not consistent with our position that welfare should be used temporarily and serve as a bridge to employment and self-sufficiency,” said Theresa Freed, a DCF spokesperson.

Little spent on job training

Karen Wulfkuhle, executive director of United Community Services of Johnson County, said she has studied DCF’s proposed budget.

“One of the big things that sort of jumps out at you is how little DCF spends on helping people on public assistance find jobs,” she said. “It’s $5.4 million in (Fiscal Year) 2014 and $5.8 million in (Fiscal Year) 2015. That’s like 4 percent of its overall budget, and yet employment services are critical when it comes to getting people off public assistance.

Wulfkuhle said recent decreases in the number of people receiving public assistance — children and young mothers, mostly — coincide with increases in the number of Kansas children living in poverty.

“Here in Johnson County, 8.5 percent of our kids are below poverty,” she said. “That’s not as high as it is in most counties, but it’s also 12,000 kids. That’s a lot of kids and only a thousand of them are on TANF. That’s not good.”

Wulfkuhle said she would like to see DCF use some of the TANF reserves to bolster benefits.

“Having $47 million in reserves should be seen as an opportunity to invest in these families,” she said. “The cash assistance benefit for a four-person family is $426 a month. That’s what it was after welfare reform in 1996. But today, a person can’t even rent an apartment for $426 a month.”

Emily Wagner, who runs the Manhattan Emergency Shelter, said most people who turn to the shelter for help are working but the wages don’t cover basic needs.

“This is a college town. There are a lot of part-time jobs,” she said. “But that’s not the problem; the problem is that the jobs don’t pay enough to cover the costs of living here.”

The shelter, she said, requires its tenants to find at least two part-time jobs.

“The ones who end up suffering the most are the single moms because taking a second job means working nights or third shift, which is when decent daycare is next to impossible to find,” Wagner said. “And then, even though you’re making minimum-wage, it’ll be too much for you to qualify for cash assistance or for child care (subsidy), and your food stamps will be next to nothing.”

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Aaron Dunkel, deputy secretary of the Kansas Department of Health and Environment and chief of its KanHIT bureau, which has regulatory authority over the digital exchange of patient health records.

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Kansas Department of Health and Environment

"Looking down my list of increases here," said KDHE deputy secretary Dunkel, "there's nothing that resulted from a state policy change or direction change. None of it's a change in philosophy or practice. It's just working with more accurate numbers than we had when we were making the (fiscal) 2014 budget."

Medicaid contract line item

The single largest line item not previously approved for KDHE's is $1.5 million to pay a consultant to craft a request for proposal (RFP) needed to renew a Medicaid-program contract.

The state's contract with Hewlett-Packard, which manages the state’s Medicaid Management Information Systems (MMIS), expires in July 2015.

To secure a new contract to run the system, which handles Medicaid reimbursement claims, a consultant is needed to map out the technical landscape, said Dunkel.

"The old systems are not viable systems...this will make it a more current repository and we'll also have the ability to run a lot more in the way of data analytics,” he said.

Environmental clean-up

The next biggest line item is a proposed adjustment for cleaning up environmental hazards.

Currently there are about a dozen remediation sites, which cost $300,000 annually taken from the State Water Plan Fund.

Once an environmental cleanup site is identified, the federal Environmental Protection Agency picks up the tab for 90 percent of the costs for 10 years. After that, the state bears the full cost.

This year, a 10-year old cleanup operation at a former chrome-plating plant near Colby will become the full responsibility of the state. Annual projections for how much that will cost Kansas were off by $411,610, KDHE officials said.

"This is something that came to our attention late in the process last year," Dunkel said. "We really didn't have a solid number until pretty close to the end of when we were doing budget development this year — end of August, first part of September. We haven't really had many instances where we had a substantial increase to operational costs like that. The Colby site is by far and away the most expensive single site we have, as far as ongoing maintenance.”

Health information exchange

Absent from KDHE's proposed budget adjustment for FY 2015 is a line item for the cost of regulating the exchange of patient data in the state.

Statewide patient health information exchange began in Kansas about a year ago, and earlier this year KDHE assumed regulatory responsibility for assuring the privacy and security of the data.

"What we're getting is a lot bigger bang for the buck. Due to the fact that (KDHE-based regulators) are folks working on staff, there's no additional state costs, there's no additional costs related to their positions...it's leveraging not only the human resources but the technology resources."

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Shawn Sullivan, secretary of the Kansas Department for Aging and Disability Services

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Kansas Department for Aging and Disability Services

KDADS officials said they were proposing little not already approved for the coming fiscal year.

They are seeking a “supplemental” appropriation of $137,694 to cover the administrative costs of a bond refinancing.

No increases for social service spending

But spending is expected to stay flat for a host of key social service programs, including Meals on Wheels and others that provide food and companionship for the elderly.

More than 36,000 Kansas seniors benefit from state programs that provide meals in their homes or at community centers. The fiscal 2014 funding of $18.6 million is expected to remain the same for fiscal 2015.

About 2,900 developmentally disabled people remain on a waiting list for home-based services. No new funding is sought to further reduce the list. About 235 additional people are expected to become eligible for the Medicaid services by the end of the current fiscal year, according to agency budget documents.

Rates paid to reimburse for the care of Medicaid-supported nursing home residents also are expected to stay mostly flat. But that’s better than cuts, according to industry representatives.

“I have assurances from the secretary that we won't be seeing any rate cuts,” said Debra Zehr, chief executive of LeadingAge Kansas, a long-term care association. “We've been told that they’ve asked for a very minor rate increase commensurate with the increase in the bed tax effective Jan. 1, but it’s going to be minute.”

The proposed increase of “1.6 percent” is so small “you can’t hardly build it into your budget,” said Cindy Luxem, chief executive of the trade group Kansas Health Care Association.



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