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Agency heads warn of possible budget impact of ballot proposal

Agency heads warn of possible budget impact of ballot proposal

Journal Record

September 25, 2009
OKLAHOMA CITY – A $42 million hit on the Oklahoma Department of Transportation budget could delete $395 million from the state’s eight-year highway project list, lawmakers were told Thursday.

Director Gary Ridley detailed the potential effect of a 20-percent cut in funding as a result of a ballot proposal that would require increasing public school funding by about $850 million. ODOT was one of several agencies that outlined possible budget-cut alternatives to the House Appropriations and Budget Committee.

Agency heads were asked to tell the committee how they would cope with budget cuts of up to 20 percent that could be necessary if $850 million had to be shifted into education, without legislative action to boost revenue.

State Question 744, which would necessitate a vote of the people, would require increasing per-pupil spending on public schools to the regional average.

Ridley said that with a $42 million cut, the agency could not sell some $150 million in bonds because it could not fund the debt service required to retire them. He said the ultimate cost could be a net $395 million loss in the highway-construction program, or about 25 percent of state construction funds, over the next eight years.

He said another way to look at the loss is that the state may not be able to build 197 needed bridges.

“The impact it would have on the agency would certainly put us back many years,” Ridley said. “It would put us in an unmanageable position.”

Ridley said ODOT is funded at about 60 percent of the regional average.

However, committee Chairman Ken Miller, R-Edmond, said it is last in the region in funding per lane-mile of highway.

Commissioner Terri White of the Department of Mental Health and Substance Abuse Services said a $40 million cut to her agency could increase the usual 600-900 person waiting list for residential substance abuse treatment services to several thousand.

White said Oklahoma ranks 46th in per capita spending on mental health.

“When we talk of cuts of $40 million, it gets very scary,” she said.

White said her department budget was cut $6.9 million last year and has been reduced by $1.6 million over the last two months as state revenue has dropped.

“We’re getting close to the end of our rope,” she said.

White outlined the possible effects of alternatives for taking $40 million out of the DMHSAS budget.

She said reducing items such as drug courts and effective, new-generation drugs would ultimately lead to more people in prison as well as increases in youth suicides and school dropouts. White said up to half of mentally ill youths do not graduate.

White said that drug court costs $5,000 per year, compared to $20,000 for a prison bed.

Eliminating the expensive mental health hospital system would affect the fewest people, White said. However, she stressed that those are the most critically ill patients in the system, people in crisis who need acute care.

White said reducing “front-end” services such as less-expensive community programs that serve more people would lead to more individuals becoming sicker and requiring hospitalization.

“These are the kinds of things that keep me awake at night,” she said.

Neville Massey, executive assistant to the director of the Department of Corrections, said her agency would have little flexibility in handling a $101.7 million reduction in its $503 million budget.

She said one alternative would be to reduce the prison population by releasing inmates. But Massey said such a sizable cut would require the release of many prisoners from security levels that would make the public uncomfortable.

When Miller asked whether this could affect public safety, Massey replied in the affirmative. She also said DOC is staffed at about 76 percent systemwide.

Other alternatives Massey mentioned were targeting the 7,200 offenders in contract beds, or closing nine facilities that now house about 8,400 offenders.

Mike Fogarty, chief operating officer of the Oklahoma Health Care Authority, the state Medicaid agency, said a 20-percent cut would cost his agency not only $196 million in state funds, but also $340 million in federal matching funds, for a total of more than $536 million.

Fogarty stresses that those figures are based on current numbers. He said the agency will actually need more than $133.5 million in additional funding just to meet federal matching requirements and maintain programs and provider payments.

As an option, Fogarty said that every 1-percent cut in overall provider rates would total $26 million in state and federal funds.

He said that every 1,000 SoonerCare adults eliminated due to changes in eligibility would amount to $6.4 million in state/federal funds; $22.4 million for every 1,000 adults in nursing homes and $2.7 million for every 1,000 children eliminated due to eligibility changes.

As another alternative, Fogarty said the state could look at eliminating certain optional services: adult dental benefits, which cover 4,022 monthly recipients at a total state/federal cost of $19 million; adult behavioral rehabilitation, 9,295 recipients, at $25.4 million; adult durable medical equipment, 31,502 recipients, at $54.9 million; and reducing paid prescriptions from six to three per month, 31,925 recipients, at $16.8 million.

Fogarty told lawmakers that changing eligibility for programs that have received federal stimulus funds is prohibited until Jan. 1, 2011. He also said the demand for many programs increases as the economy slumps.

He told the legislators that several programs administered by his agency also affect programs within DMHSAS, DOC, the Department of Human Services, Office of Juvenile Affairs and other entities.

“These services are critical,” Fogarty said.

Brandon Dutcher, vice president for policy of the Oklahoma Council on Public Affairs, said a review by the think tank determined that Oklahoma actually spends about $10,942 per pupil on common education, not the $7,600 cited by supporters of SQ 744. He said the data used to determine the lower number leave out many costs, such as teacher retirement benefits.

Certified public accountant Steve Anderson said that means some $266 million in teacher retirement funds is not counted. He also said that relying upon average daily membership, rather than average daily attendance, to calculate some funding numbers is like counting “customers who won’t show up.”

“There’s an awful lot of money that flows through the classroom that isn’t counted, too,” Anderson said.

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