State Aid Bill

By Libby Casey

President Obama has signed into law a bill that sends states more than $26-Billion for teacher salaries and Medicaid.  Alaska’s Governor requested the Medicaid money, but now says he doesn’t like the bill.

Alaska will gain an estimated $80-million for teacher salaries and Medicaid bills.   Governor Sean Parnell signed on to a letter with 46 other governors calling for the Medicaid matching funds.  But now he says what would be better than this legislation is getting control of the federal deficit.

The director of Parnell’s DC office, John Katz:

We were hoping that any attention to Medicaid would be accompanied by some effort to address the federal deficit generally.

Katz says state agencies are still crunching the numbers to see exactly how much Alaska will get but at first blush it looks like $57-million to extend enhanced Medicaid for six months, and $23-million in education funds that would primarily go to local districts.  Katz admits that will help Alaska, even if the governor’s not embracing the legislation.

The states can make good use of the Medicaid and education funds in the bill. However we don’t think this should be the end of the inquiry.  Congress has yet to get control of the federal deficit.  Also while the current legislation purports to be revenue-neutral, there are offsets in the bill that will be problematic to some states.

Senator Lisa Murkowski agrees that the debt should be tackled – and voted with most Republicans against the bill, accusing Democrats of “continuing to embrace huge spending bills at a time of record high federal deficits.”  She says it does a disservice to states because it postpones the day of reckoning when they’ll have to make tough budget decisions.

But her Democratic colleague, Senator Mark Begich, says he voted for the bill because it does exactly what the Governor’s office asked –it gives the state some breathing room.

In respect to the governor’s desires and requests I felt it was a good vote, but also making sure it was offset.  And that’s what we did.  Almost every governor in the country asked for us to do something here.

Begich says he also wants to reign in the debt.  And despite Republican protests, he says the key to this bill is that it has those offsets – that is, instead of adding to the deficit, Democrats say the bill is paid for.  Begich says that earned his support.

You know I have mixed views on the offsets.  But most important to me there had to be offsets.  Because early on if you recall there were some amendments that I voted No on those because they weren’t offset.  When we first had this debate early on about bringing teachers forward there were no offsets, it was going to be a deficit driver.  And I was not supportive of that.

The bill is being paid for by cutting nearly $12-Billion in stimulus money from the food stamp program, which is raising concerns in some quarters, especially among liberals.  It also closes a loophole that U-S companies take advantage of to operate tax-free abroad, and it trims other programs.  The non-partisan Congressional Budget Office found it would save the feds $1.37-Billion over the coming decade.

In Alaska, Alison Elgee, an assistant commissioner for the Department of Health and Social Services which deals with Medicaid, says the federal money coming north is significant:

It’s a big chunk of change.

Elgee points out that Alaska isn’t in the dire straights of some other states.  But when state officials put together the Fiscal Year 2011 budget, they assumed Congress would extend some of the stimulus funding.  This infusion of cash isn’t as much as the state was expecting, but Elgee says they’ll make up that difference by tapping the general fund.  And she says if no money came through, they’d still manage.

The state of Alaska is fortunate in that we have available general funds that could’ve been used in place of the federal funds.

The Education money is supposed to go toward reinstating laid-off teachers, or hiring teachers and aides.  While the state education department says it doesn’t yet know how the money will be used, Anchorage School District Superintendent Carol Comeau says the national group, the Education Commission of the States, came out with numbers for Alaska:

They estimated teaching positions saved would be about 267.  I believe we’d probably get the bulk of that because the way it looks to be allocated is through Title 1 type formula allocation or just per pupil distribution.  And if that’s true we would get enough to hire some teachers, no doubt about that.  And that would give us enough to hire some teachers, and lower class size probably closer to what we had last year.

Comeau says she hopes the state quickly takes the money, and passes it along to districts, just in time for the start of school.


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