Brownback signs Kansas budget and orders $97 million in allotment cuts, slashing KU funding

Kansas Gov. Sam Brownback signs a budget bill that makes significant cuts to the highway fund, Medicaid and higher education, Wednesday, May 18, 2016.

? Gov. Sam Brownback signed a budget bill into law Wednesday while at the same time ordering $97 million in allotment cuts, mostly through cuts to higher education and Medicaid funding.

Those cuts amount to an average 4 percent reduction for most state agencies, except K-12 education and public safety services.

But the governor accepted a proviso that lawmakers put into the budget that will force Kansas University and Kansas State University to shoulder a larger share of those cuts.

“Our economy continues to face challenges with declines in oil and gas production, agriculture and aviation, our three major industries,” Brownback said in a statement released to news outlets. “This budget recognizes those challenges while protecting K-12 education and public safety and finding government efficiencies that put more money back in the hands of working Kansans.”

For the Lawrence campus of KU, that means a $7 million cut from what had previously been approved for the upcoming fiscal year. K-State will take a $5.2 million cut. Those are both about 5.1 percent lower than what lawmakers had initially approved when they adopted a two-year budget during the 2015 legislative session.

The KU Medical Center was also targeted for a $3.7 million cut, bringing the total cut for the KU system to $10.7 million.

Brownback also ordered a 4 percent cut in state funding, or $7 million, for community colleges, technical schools and Board of Regents operations, bringing the total cut for the entire higher education system to $30.7 million

“We have advocated all year for stable funding for higher education,” KU spokesman Tim Caboni said. “Unfortunately, this $30.7 million allotment represents another cut to higher education and disproportionately affects KU and K-State, despite the tremendous role they play in growing the Kansas economy. Given the magnitude of the $10.7 million reduction to KU, we will need a few days to carefully analyze its effects, which will be significant.”

The Board of Regents issued a statement after the governor’s announcement, noting that with the cuts announced Wednesday, state funding for higher education will be $100 million, or 8.6 percent less, than it was in the 2007-2008 academic year, the last year before the onset of the Great Recession.

Those cuts were announced on the same day KU officials asked the Board of Regents to approve a 4 percent increase in tuition rates. It was unclear Wednesday afternoon whether Brownback’s cuts would affect that request.

The Regents said that given the additional state funding cuts announced Wednesday, more adjustments will need to be made to the tuition requests made by KU and other universities before the board votes to approve them next month.

Senate Democratic Leader Anthony Hensley, of Topeka, said the higher education cuts “smack of political favoritism” because the language requiring KU and K-State to shoulder a larger share of the cuts was inserted at the request of Sen. Jacob LaTurner, R-Pittsburg, whose district includes Pittsburg State University.

“LaTurner and other Republicans are trying to protect their Regents institutions at the expense of KU and K-State, which as we know are represented by Democrats,” Hensley said.

Lawmakers assumed at the time they passed the budget bill that Brownback would need to find about $92 million in spending reductions, efficiencies or new revenues in order to leave the state with a positive balance at the end of the fiscal year.

But they also inserted a proviso shielding K-12 education from any of those cuts, knowing the adequacy of school funding is currently being litigated before the Kansas Supreme Court.

Brownback chose not to use his line-item veto authority on that proviso, and so focused most of the allotment cuts on the next two largest areas of state spending, higher education and Medicaid.

The Medicaid cuts will include a 4 percent reduction in reimbursement rates paid to doctors, clinics and other health care providers, but they will not apply to more than 90 hospitals designated as “critical access” facilities, which are smaller hospitals in rural areas that provide 24-hour emergency care services.

The Medicaid cuts also include a 4 percent reduction, or $7.2 million, in the profit margin of the three private insurance companies that operate the state’s managed care Medicaid program known as KanCare.

Budget Director Shawn Sullivan said the administration does not believe the lower reimbursement rates will result in Medicaid patients losing access to health care providers.

He said the three insurance companies will continue to maintain a network of providers that accept Medicaid payments so those patients will still have access to health care services within or near their communities.

Hensley, however, predicted the Medicaid cuts will cut off access to health care services for people enrolled in that program, which could put the state out of compliance with federal rules that say reimbursement rates have to be sufficient to give Medicaid patients reasonable access to services in or near their communities.

“The consequence of this will be that we’ll see a lawsuit which the state, no question in my mind, will lose,” he said.

Brownback did use his line-item veto authority to strike two other provisos lawmakers inserted into the budget.

One of those called for using about $16 million in tobacco settlement funds the state will receive next year to help repay, with interest, a $92.6 million payment into the state pension system that was delayed in April due to previous revenue shortfalls.

He also vetoed a proviso that would have required Medicaid patients seeking mental health treatment to undergo screening before they could be admitted to an inpatient psychiatric bed at a community hospital or residential treatment facility.

Sullivan said that provision could have violated federal regulations requiring equal treatment for mental health patients, and could have jeopardized federal Medicaid matching funds.

The governor accepted other provisos that prohibit him from taking action to privatize or outsource the operations of state mental hospitals in Osawatomie and Larned, or from contracting to demolish the Docking State Office Building, without full legislative approval.

Brownback noted the budget also provides increased funding in certain areas, including $5.6 million for the Osawatomie and Larned hospitals, mostly for pay increases for registered nurses and mental health technicians, and $1.1 million for the Department for Children and Families to fund pay increases for social workers.