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Lawmakers Hope To Protect OHSU, State Hospital, Medicaid In Budget Cuts

Oregon State Capitol in Salem. | RENAUDE HATSEDAKIS
July 16, 2020

Oregon’s legislative budget writers have released a framework to guide the Legislature when it goes about the bloody task of carving up the state budget.

Lawmakers still don’t know how deep the cuts will be. Gov. Kate Brown and legislative leaders have held out hope that Congress will send more federal relief to states to offset budget shortfalls in the wake of declining revenues from the pandemic. 

The framework, released Thursday, will guide the Legislature when it meets in special session later this summer to balance the budget. It prioritizes certain items to keep and targets other areas for the chopping block. Overall, the framework preserves state funding for Medicaid, Oregon State Hospital care and Oregon Health & Science University. 

The short- and long-term outlook is grim. Oregon faces a $2.7 billion revenue shortfall in the current fiscal year, which started July 1. The state faces billions more in revenue shortfalls in the next several years as Oregon recovers from the economic fallout of COVID-19. 

The three co-chairs of the Joint Ways and Means Committee, which is charged with making budget decisions, wrote the framework: Sens. Betsy Johnson, D-Scappoose, and Elizabeth Steiner Hayward, D-NW Portland/Beaverton; and Rep. Dan Rayfield, D-Corvallis. 

“Maintaining these programs will be crucial in order to protect vulnerable Oregonians, put the state on a path to recovery and work toward economic resilience,” they said in a press release. 

The framework prioritizes public education, Medicaid and health care, housing and child welfare, with an eye toward keeping those programs as intact as possible. For example, it taps the public education reserve account to avoid teacher layoffs and cuts to schools. 

In the education budget, the proposal maintains state support for the OHSU Schools of Medicine, Nursing and Dentistry. The plan also preserves funding for OHSU Child Development and Rehabilitation Center and the Oregon Poison Center.

Proposed trims to human services agencies are far less drastic than what Brown requested from them earlier this year: 17% budget cut scenarios. 

The plan from the Legislature calls for slicing 2.7% from human service budgets. That amounts to $180.3 million in state general funds from the Oregon Department of Human Services, the Oregon Health Authority, and three smaller agencies, including the Long-Term Care Ombudsman, Psychiatric Security Review Board and Commission for the Blind. 

Complete individual agency breakdowns were not immediately available. 

For the Oregon Health Authority, the big takeaway is that the Oregon Health Plan, which provides Medicaid, will continue to offer the same eligibility. Oregon State Hospital’s bed capacity will not change, although a layoff of 22 employees who are not involved in patient care is part of the proposal. 

Oregon State Hospital has about 2,300 employees, and about 76% of them are direct care staff such as nurses, social workers and psychologists, hospital spokeswoman, Rebeka Gipson-King said in an email. She had no comment on the budget proposal.

Agencies are bracing for cuts and worried about their severity. 

Dolly Matteucci, superintendent of the Oregon State Hospital, mentioned the earlier budget cut scenarios requested by Brown during a presentation Thursday to the Oregon State Hospital Advisory Board. 

“No one wants to see the reductions presented come to light,” Matteucci said. “It would devastate the behavioral health care continuum.” 

The lawmakers’ proposal said the Oregon Health Authority could save money elsewhere by holding off on new hires, for example, and adjusting Medicaid rates. 

It  would save $20.5 million by keeping positions vacant and trimming supply costs. The proposal document says this would only have a minimum impact on existing programs, if any. 

The authority saves another $36 million by lowering rates paid to coordinated care organizations, which act as Medicaid insurers. Insurance actuaries set rates based on a number of factors, including the health of people in a plan.

There are other smaller cuts, like $3.5 million from delaying until January the start of intensive in-home behavioral health treatment for youth.  

It’s unclear how much additional money the state would lose in federal matching dollars. For example, the youth program includes a federal match that Oregon will not be able to tap during the delay.

The framework anticipates a $76.1 million reduction at the Department of Human Services, with nearly half of that from keeping vacant positions open and administrative trims like cutting down on technology services, supplies and restricting travel. 

The department would scrap money for a statewide case management system for clients in the Intellectual and Developmental Disabilities division. The Aging and People with Disabilities division would end mental health classes in anxiety and depression for clients and the agency would lose half of the money that lawmakers approved in 2019 for more nursing home inspectors. 

House Speaker Tina Kotek, D-Portland, and Senate President Peter Courtney, D-Salem, have not yet commented on the proposal. Their spokespeople didn’t comment either.

In a statement, Senate Republican Leader Fred Girod, R-Stayton and co-vice chair of the Ways and Means Committee, said the Republican walkout during the short session this year to fight the cap-and-trade bill saved the state money. That session ended abruptly and lawmakers failed to set a budget or pass most bills after the walkout prevented a quorum. 

“We had to make some cuts in this state budget re-balance plan, but it wasn’t as bad as I thought it might be,” he said. “We had money saved in the Education Stability Fund, and this plan accessed $400 million of it so there’s still quite a bit left in reserves.”

Overall, the state has about $2 billion in reserves, including the Education Stability Fund. 

The Legislature hasn’t yet set dates for a special session, though it could be later this month or in August. The Joint Ways and Means subcommittees will have hearings and testimony on the plan next week in a series of meetings from Wednesday through Friday. 

You can reach Ben Botkin at [email protected] or via Twitter @BenBotkin1.