Let the Budget Negotiations Begin!

Apr 8, 2015, 08:48 AM by Melissa Harman

The past month has flown by for us working the Austin legislative shift. The month has been filled with subcommittee meetings related to the construction of the state’s future biennial budgets for 2016-2017. As you may recall, the House Appropriations Committee and the Senate Finance Committee are charged with developing their own versions of the state budget. Each does that by appointing subcommittees for each “Article” in the state’s adopted budget.

Articles of particular interest to UTMB include Article II (Health and Human Services), Article III (both public and higher education), and Article V (public safety, including all matters related to, prisons, probation and correctional health care services). Other Articles also may impact UTMB interests, so we monitor them all, but Articles II, III and V are our chief focus.

Each subcommittee reviews the recommendations related to their budget section from the Legislative Budget Board (LBB) and hears testimony from heads of those affected agencies, schools and/or individuals. For instance, when hearing about offender health care, the subcommittee may concern itself with historical financial information from the LBB, priorities raised by TDCJ, as well as comment from the general public.

After deliberation (which this year was open to the public in House Appropriations’ process and for the most part closed to the public in Senate Finance’s), the subcommittee formulates its own recommendations related to the allocations that they are willing to commit to the budget. Those recommendations are then presented to the entire committee for review, consideration, change and eventual adoption. The adopted budget then moves to the floor of the House or the Senate for debate, review and adoption.

On Tuesday, March 31, the House’s version of the recommended budget HB-1 was debated on the floor of the House. It was quite a prime-time event, worthy of an Emmy nomination, but it would be hard to place in one category. Drama? Comedy? Reality TV?

The debate began at noon on Tuesday and concluded at 5 a.m. Wednesday. One could feel the drama as each section of the budget and the 350 attached amendments were reviewed. (That’s right—350 amendments!) The House in many cases had to vote on the amendment to the amendment to the amendment! During one section as a member proposed moving funding from AIDS education to abstinence education, the questioning became rather personal as related to the bill sponsor’s sexual history, i.e. “Hold old were you when you first had sex?” On the other hand, there were points of levity interspersed with times of passionate speeches about health care access, the needs of our veterans, the need to protect children, and the expansion of women’s health care services.

When all was said and done, the House voted to approve a $209.8 billion budget for the state’s next biennium, with a generous allocation to education. Even in their largesse, the House left untapped over $8 billion in the Rainy Day Fund and another $11 billion in unspent resources, for a total of more than $19 billion in available funds. The House could have added in another $2 billion to improve education, shore up TRS or address a myriad of other problems. But members chose not to do so, citing fears of economic recession in the future tied to declining oil prices (and decrease in tax revenue derived from oil and gas production).

So where does the House action leave UTMB?

Based upon our original priority list, here is where we are:

  1. Formula funding has increased over prior years as requested, but not as much as any of the academic or health-related institutions would have liked. We are still not back to the requested 2001 levels of funding before the steep reductions in that decade. The House increased formula funding by 3 percent over the filed bill.
  2.  Regarding our requested financing for a new interprofessional education building, the House approved Tuition Revenue Bond payment reimbursement that would permit UTMB to acquire $67.8 million in funding for the proposed $90 million student educational building. We had great support on that issue from Representatives Greg Bonnen and Wayne Faircloth, who both proved to be effective advocates for our need, based on our 42 percent growth in enrollment.
  3. Our hospital base was maintained as requested. The House placed all three of our special item requests and our request for an additional $11.3M for the hospital into Article XI, often referred to as the “Wish List.” They sit there with $34 billion (yes, with a “B”) other requests. We will work to have at least one of the requests float to the top during the budget conference time with the Senate.

Of special concern is the legislature’s lack of interest in considering our request for a special mission-specific formula for our hospital. The two other state- funded health-related institution hospitals are funded through a mission-specific formula that is considered along with the instruction formula, making a biennial increase to their hospital’s base funding much more likely, and cuts to that funding much more unlikely.

We would like for UTMB’s hospital to be funded through a similar mechanism, since we were the first public hospital in Texas and are still a vital part of the state’s trauma, specialty, and primary care network. But when the mission-specific formula request was brought to House Appropriations by Rep. Bonnen, objections from a Dallas representative that it would be “another new formula” led to the subcommittee deciding not to even include it on the lengthy Article XI wish list. We have been told that the subcommittee hopes to study formulas in general during the interim period between legislative sessions, and our hospital formula issue could be considered then.

Regarding correctional health care, the House funded in the TDCJ budget request the entire amount of the proposed base increase request; in HB-2 (the Supplemental Appropriations Request), they funded another $50 million to pay for shortfalls in the current biennium (meaning, 2014-2015). In HB-1 Article V, the House placed the capital requests, funds for employee salary increases, and funds to expand hours of operations and the hiring of additional staff in Art. XI wish list. As noted below, we will have to wait for a House/Senate conference committee to do its work before we know the final say on these items.

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Senate Finance Committee

In the Senate, the story is quite similar regarding UTMB’s primary agenda, since the Senate and House budget processes mirror one another.

  1. The Senate chose to also increase funding for formula in its budget, so that is good! The Senate formula increase was an additional 2 percent increase over the filed bill.
  2. The Senate chose to deal with institutional improvements in a different manner, funding slightly less than the full request for each institution. For UTMB, the education building funding is at $59.325M, compared to the $67.8M full request that is funded in the House version. The hospital base was maintained also in the Senate version of the budget. Although we wanted more added to the base through a formula mechanism as discussed above, no action has been taken on that. However, the formula request, plus a request for an additional $11.3M for the hospital, were included in the Senate’s Article XI “Wish List”.
  3. Lastly, UTMB’s Emerging Infections proposal was placed on the short list produced by the subcommittee for funding from Article XI. In the end, the Senate Article XI was expanded to include all exceptional item requests and is as long as the House’s Article XI, but we take it as a hopeful sign that the Emerging Infections request had initially been selected for a short list.

Concerning the TDCJ requests, the Senate was less generous overall than the House. The Senate allocated $20 million of the requested amount for rebasing the next biennial budget, they passed over raises for the employees, but did fund capital requests and expansion of services at the fully requested amounts. So as the House and Senate go into conference on Article V (TDCJ – CMC) issues, there is work yet to be done to resolve their budget differences. (I’ll cover the conference committee process in more detail in a future installment.)

What else is going on?
As you have likely heard one of the big issues in Austin has been regarding the right to bear arms, and more specifically where that right can be exercised. Although University of Texas System Chancellor William McRaven has gone on record before the House and the Senate opposing any legislation that would welcome the carrying of firearms on university campuses, the Senate passed out that legislation. The bill has passed the House committee and is on its way to the House Calendars Committee, where a date for its House floor debate will be set.

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Chancellor McRaven with UTMB SOM Students at the Capitol

The issue is quite relevant and unique to UTMB since we not only have a prison hospital on our campus but also the Galveston National Laboratory (GNL). The right to carry would jeopardize the reauthorization of our GNL since the extensive and strict federal security requirements could not be met if guns were allowed in the facility. It could cost UTMB over $50 million in federal research funds. Our Austin team has had great support from Sen. Larry Taylor, who has worked with the bill’s Senate and House authors (Sen. Brian Birdwell and Rep. Allen Fletcher) to produce an acceptable-language addition to the bill that exempts the GNL. The bill has passed out of the House Committee with the GNL exemption in it, and we have been told that if the bill passes the full House, the Senate will accept the exclusion of GNL when the bill comes back to the Senate for concurrence. The bill already maintained the current prohibition of carrying a firearm in a hospital or prison.

What about Graduate Medical Education (GME)?
Well, that also received attention from both houses, with Sen. Jane Nelson making good on her promise to ensure increased funding on the Senate side. The House Appropriations Committee did likewise. Several new programs hosted by the Coordinating Board. The House chose to fund less in this area than did the Senate, but it is likely that a reasonable compromise will be reached in the conference committee. The message that Texas must have additional GME slots to accommodate the expanding number of graduates from Texas medical schools has clearly been heard.

So what’s next?
In a couple of weeks, the Lt. Governor and the Speaker of the House will each name members to form a conference committee to review the combined budget proposals line by line. In that process, members will seek compromises on budgets that can be accepted by both houses. Then that product will move to each body for a vote.

Although the proposed budget in the House is a good start when compared to prior budgets, some would say that it falls short in public education spending. Others would also note that Texas roads and rail need more transportation funding. The Legislature also has failed to fill a rather large ($768 million) shortfall in TRS’s health plan. The Legislature did move forward to fill a hole in the state employee retirement plan (ERS). There were also some victories for Child Protective Services with increased funding, along with a small but highly sought increase to attendant care pay for individual home care programs.

There have been no significant changes in funding in the Medicaid program on a per-unit basis other than increases driven by increases in enrollment. Specifically there is no money dedicated for Medicaid expansion.

The proposed “tax relief” package will actually decrease the revenues collected by the state and add to the likelihood of more shifting of resources among programs.

Stay tuned as the journey continues!