Daugaard Proposes Medicaid Expansion In $4.8-Billion Budget

Dec 8, 2015

Governor Dennis Daugaard giving the annual budget address to lawmakers gathered in the state capitol on Tuesday, December 8th 2015.
Credit SDPB
We've made a structurally balanced budget the norm. -Gov. Dennis Daugaard

Governor Dennis Daugaard is proposing a total state budget of about $4.8-billion  for fiscal year 2017.   You can listen to the entire address archived here.

Daugaard says South Dakota is in good fiscal shape overall.  He says the state has balanced its budget honestly.

“We’ve made a structurally balanced budget the norm,” says Daugaard.  “We’ve used one time dollars prudently ensuring they don’t become and on-going obligation.   We’ve paid off even more debt.  We have a state pension fund that is over 100% funded, that’s a rare thing in today’s world.  We’ve memorialized financial practice improvements in statute to help guide our state for the long term even when were not here anymore.  These practices are all paying dividends,” he says.  

Daugaard says those dividends include extra one time monies and rainy day funds that have help the state meet critical needs and remain fiscally sound even through the last recession.

The major items in the Daugaard budget include a proposal for Medicaid expansion and a boost to education funding.  

Medicaid Expansion

For the first time in three years, Governor Dennis Daugaard says South Dakota’s budget may be able to handle additional Medicaid patients.  He says if things work out, he would look at including eligible state residents into Medicaid, if they make too much for traditional help, but still don’t have access to health care.

“My budget proposes $373-million in additional federal fund expenditure authority, and 55 full-time equivalencies to handle the new eligible.  No state general funds are proposed.  I also want to be clear this is not a done deal.  Our talks with the federal government have been promising, but there’s still work to be done, and there’s still the potential for this to fall through.  Expansion costs must be covered by our current general fund budget or I will not support it.  H-H-S and I-H-S must do what they need to do to make this work.  Our tribes must agree to these changes.  And, I will not support expansion unless you support it also,” says Daugard.

Democrats like State Senate Minority leader Bernie Hunhoff praised Governor Daugaard for supporting expanded Medicaid.  Hunhoff says the move will save lives and money.   But Democrats criticized Daugaard for not expanding Medicaid sooner.  

"So in the last three years by not expanding Medicaid we have seen at least 300 South Dakotans die," says Democratic State Representative Peggy Gibson.   "So by not expanding Medicaid for the last three years there's been an actual death impact in our state for South Dakotans. Plus, I feel that we would've had $1 billion injected into the states economy that would've turned over about seven times and I think our economy would've grown even more," Gibson adds.

Daugaard says the state can offset current and future costs of expanded Medicaid, if the federal government lives up to tribal treaty obligations.

So in the last three years by not expanding Medicaid we have seen at least 300 South Dakotans die - Democratic State Rep. Peggy Gibson

“If a Native American, who is Medicaid-eligible, seeks care, the Medicaid program covers that care, and if that’s provided through Indian Health Services, Medicaid is reimbursed 100 percent from the federal government.  In the most recently-completed fiscal year, IHS spent $69.2 million providing health care to Native Americans who are also Medicaid eligible--100 percent federally-reimbursed.  That’s how it’s supposed to work for Native Americans; but it doesn’t always work that way,” says Daugaard.

Daugaard says currently, reimbursement is reduced if the care is not completed at an I-H-S facility.  He says it’s a long way from being realized, but the state would be able to cover more if federal officials take care of all Native American health issues, no matter where that care takes place.

Education

After a panel spent months examining education in South Dakota, Governor Dennis Daugaard says people have to wait until January to learn more about proposals for school funding. Daugaard’s budget includes a 0.3 percent increase for education. He says he’s working on plans based on a report from the Blue Ribbon Education Task Force. The governor says he will reveal those during his State of the State address next month.
 
Republican State Representative Jaqueline Sly co-chaired the committee.
 
“A lot of what we have included in the recommendations is policy, also looking at a change in the formula, but that isn’t really a budget. There will be additional revenue requested or talked about as we work through that, but I’m fine with him mentioning it knowing that there’ll be more in the State of the State,” says Sly
 
The Blue Ribbon Task Force final report says South Dakota schools need a minimum of $75-million more to bring average teacher salaries closer to neighboring states.
 
Democratic State Senator Troy Heinert was part of the Blue Ribbon panel. He calls education funding the elephant in the room. Heinert says lawmakers need to see the governor’s plan so they can determine what works and whether it needs changes.  

The governor also addressed higher education funding.
 
College students will a tuition freeze if lawmakers approve Governor Dennis Daugaard’s budget for the next fiscal year. The governor says state leaders should pay debt for tech schools and state colleges. That way - instead of making bond payments - organizations can keep the money and avoid increasing tuition prices.
 
Daugaard says that starts with a 2.5 percent increase for the Board of Regents, plus almost $3-million  more to freeze tuition.
 
“By using one-time funds as I said to repay Board of Regent bond debts, thus eliminating the bond payments. For the technical schools, I’m proposing 2.7 percent increase and, as with the Board of Regents, using one-time funds to re pay technical institute debt so the avoided payments can be instead used to freeze tuition,” says Daugaard.

Daugaard says paying down debt saves almost enough to keep the cost of college steady. He says the state needs to add about $425-thousand  to make it even.
 
Democratic State Senator Billie Sutton says he supports a tuition freeze. He says the move helps students make higher education more affordable and attainable.

Other Expenditures

The Daugaard budget also increases salaries for state employees at just under three percent plus extra increases to move some employees to market value.  

The governor’s budget includes about $16-million for a number of miscellaneous items like maintaining state buildings, and maintaining healthcare in the Department of Corrections plus an expansion of drug and DUI courts.

Governor Daugaard stays the state has $60-million  in one time funds available for the next fiscal year.  He says much of that should go towards debt reduction.   Other one time expenditures include adding about two million dollars to the Native American student achievement fund plus another two million dollars for the need based scholarship endowment.

Daugaard also proposes adding about two million dollars to the wild fire suppression fund.

Economic Outlook

Governor Dennis Daugaard says he is basing the state’s annual budget on growth estimates from South Dakota’s economic advisors.  
 
“The moderated forecast is closer to recent trends for employment and income growth, and that moderated forecast was used to develop the revenue projections I’m going to be presenting to you today.    We expect continued economic growth but at slow and steady rates over the next two years.  Not accelerated rates,” says Daugaard.  
 
Daugaard says the state will add about 6,000 new jobs annually at a job growth rate of 1.4 percent in the coming years.
 
He believes the state will see lower farm income due to a softening in commodity prices  projected in the coming year.    Agriculture is South Dakota’s number one industry, and Daugaard says a slowdown in farm income means less spending overall.

You can view details of the governor's proposed budget here and the slides and graphs used in the governor's budget address here.

Click play below to hear an audio version of this report.