DHH sees cuts in order to balance state budget; higher ed spared

DHH sees cuts in order to balance state budget; higher ed spared

BATON ROUGE, LA (WAFB) - The Department of Health and Hospitals alone will see cuts in order to fill the remaining $70 million shortfall in the state budget for fiscal year 2015-2016, according to Governor John Bel Edwards. He announced the budget cuts during a press conference Thursday afternoon.

Higher education, meanwhile, was spared any further budget reduction. Edwards said the fact higher education is already covering cost of TOPS was an important consideration.

"Higher education has suffered the deepest budget cuts of any higher education system in the country over the last eight years - more than $700 million. In addition to that, we are asking them to fund $28 million for TOPS scholarships this year that will come directly out of campus budgets," Edwards said in a statement.

"Therefore, at my direction, DHH has taken a sharp pencil to its budget, scrutinized its spending patterns closely under our first full year of our new private-insurance style Medicaid program, and found ways to make some very painful cuts," Edwards said. "We are grateful, too, that our public-private safety net hospital partners came to the table, willing to work with us for the good of our Louisiana citizens during this difficult time."

More than half of the remaining shortfall will be accounted for in the form of savings. The state saved approximately $30 million from changes to the state's Medicaid program, Bayou Health.

The state also saved another $10 million though more efficient administration of the DHH since the new governor took office.

The remaining $30 million was made up of cuts, distributed in the following manner:

  • The state’s 10 public-private hospital contracts would each be reduced by 1.5 percent, amounting to $6.9 million in savings
  • DHH contracts would also be reduced to save $1.9 million
  • Hospital payments made under a better Medicaid expansion federal match rate would save $10.4 million
  • The rates paid to Bayou Health managed care companies would be reduced, saving $10.3 million
  • Pediatric Day Health Care Program services would be prioritized for children who truly need them, amounting to $500,000 in savings

The cuts to public-private hospital contracts would directly impact the Our Lady of the Lake hospital in Baton Rouge. It would see a cut of approximately $700,000.

"These cuts are not painless. We've done $170 million worth of cuts since I became governor," Edwards said. "We could better in every agency of government without those cuts."

The state's Revenue Estimating Conference projected on March 16 that the budget is still about $70 million short for the current fiscal year. They took into account all measure passed during the special legislative session, including a combination of one-time money, cuts, and tax increases. Before the special session, the shortfall was forecasted at approximately $900 million.

On Wednesday, House lawmakers decided to keep in place vetoes from the governor that added about $4 million to Louisiana's budget hole. Edwards issued line-item vetoes for some of the millions of dollars in cuts to state agencies passed in the special session.

Next year's budget still has a shortfall of approximately $750 million. The governor said today it is "likely" there will have to be another special session to fill part of that remaining shortfall. If not, some departments could see budget reductions of up to 30 percent.

The Edwards administration is expected to release a budget for next fiscal year in early April.

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