More School Aid- Less For Rest?

March 5, 2010

LINCOLN — An unexpected $16.3 million increase in the amount Nebraska will have to give schools could force deeper cuts in state agency budgets. It will also make it tougher to pass a bill that continues prenatal care for undocumented immigrants.

The Legislature’s Appropriations Committee struggled Thursday to bring the state budget back in balance after learning of the new school aid estimate. The estimate adds to an already $12 million budget gap the committee had not resolved.

That $12 million gap resulted from a lower forecast Friday of state tax revenues, balanced against an infusion of federal dollars for the two-year budget period ending June 30, 2011.

State Sen. Lavon Heidemann of Elk Creek, the committee chairman, proposed a combination of fund transfers and spending reductions to close the gap.

His proposal called for 2 percent across-the-board cuts next year to most state agencies and aid programs. New cuts would come on top of those made during last November’s special session of the Legislature.

The State Patrol, child welfare, Medicaid, prisons, state institutions, higher education and some types of aid would be exempt from the across-the-board cuts, as they were in the special session. However, the University of Nebraska would face a separate $2 million cut.

Among the agencies that would be cut under Heidemann’s proposal: the Departments of Roads, Labor, Health and Human Services, the Governor’s Office and the Legislature.

Aid programs, such as those helping cities, counties and other local subdivisions, were included in the proposed cuts.

To balance the budget, Heidemann’s plan also assumes the $6 million savings in the state Medicaid budget from ending prenatal care to illegal immigrants.

Nebraska provided such coverage in the past based on the eligibility of the unborn child.

The state this year ended the coverage after federal officials said federal law requires the coverage to be based on the eligibility of the pregnant woman.

Some committee members vehemently objected to the inclusion of the prenatal savings, saying it presumes that a bill to continue prenatal coverage would not pass.

Sen. Danielle Conrad of Lincoln said incorporating the projected savings into the budget “pretty much sinks” the bill, which already faces opposition from Gov. Dave Heineman.

Lawmakers have stood firm so far against any measure with a cost to the state’s general fund.

Heidemann said lawmakers could find the money for prenatal care if the issue is a priority, naming the state’s cash reserve fund as a possible source.

Conrad and others also objected to the $2 million cut from the university and to a portion of the proposal that transfers money out of the affordable housing fund.

Sen. Heath Mello of Omaha offered an alternative plan that would make 5 percent across-the-board cuts but spare the university, the housing fund and the prenatal care money.

He argued that the proposal would reduce costs and give lawmakers a head start on balancing the next state budget. The committee deadlocked over Mello’s idea. Some members continued talking well after the committee meeting had ended.

Later in the afternoon, Heidemann and Mello agreed that they were making progress toward an agreement that would avoid some proposed cuts.

“We’re not quite there yet, but we’re a lot closer than we were an hour ago,” Heidemann said.

The new school aid projection was developed by legislative fiscal staff. It represents a 1.5 percent increase in aid.

The Nebraska Department of Education is to release certified state aid figures by Wednesday. Those figures are based on a complex funding formula set in state law.