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Behind the Bills: Analyzing Major Differences Between Florida House and Senate Recommended Budgets

The Florida Senate’s increase in funding for colleges and universities and its preservation of affordable housing trust fund dollars, along with proposed criminal justice reforms, are a few silver linings in the chambers’ proposed budgets for Fiscal Year 2018-19 as lawmakers continue to underinvest in services that would lead to a strong economy. The analysis below touches on a few of the most significant aspects of the budget proposals being considered in the Senate and House.

FPI Staff
February 2018

The Florida House and Senate have released their proposed budgets for Fiscal Year (FY) 2018-19, which total $87.2 billion and $87.3 billion, respectively. As in previous years, there is a lot to unpack. Criminal justice reform, which has garnered attention over the past year and is one of the Florida Policy Institute’s top priorities, will be discussed in a separate policy brief next week. Outlined below are the major differences between the chambers’ budget proposals, as well as potential implications for Florida families.

1. Florida House raids Sadowski Housing Trust Fund: The House budget sweeps $182 million from the Department of Economic Opportunity Housing Trust Funds ($127.4 million from local governments and $54.6 million from the state) into the general revenue fund. This is out of $322.1 million, which is the total amount the Senate appropriates for affordable housing in FY 2018-19. (This is also the Senate’s housing fund revenue estimate for the upcoming fiscal year). In other words, the Senate proposed budget does not transfer state and local housing trust fund dollars into the general revenue fund.

What this means: The William E. Sadowski Act, enacted in 1992, created a dedicated affordable housing funding source with documentary stamp revenues, with a 70/30 split between the Local Government Housing Trust Fund and the State Housing Trust Fund[1]. However, the housing trust funds are not exempt from the trust fund transfer provision in Florida Statute, and therefore are not prohibited from being swept into the General Revenue Fund or the Budget Stabilization Fund.

Affordable housing is already a major problem in Florida. The share of homeowners and renters that pay more than 30 percent of their income for housing costs is higher for Florida than the average for the nation[2]. Language in the agreed-upon budget should mimic the Senate’s treatment of the Sadowski fund, and leave the affordable housing dollars for their intended purpose.

2. Senate reduces retroactive Medicaid eligibility timeframe. The Senate bill reduces retroactive Medicaid eligibility from 90 days to 30 days, which it projects will save $98.4 million ($37.5 million in General Revenue Funds and the loss of $60.6 million federal dollars).

What this means: Under current law, if someone is approved for Medicaid, coverage can go back up to three months prior to the application date, for those months when the person would have otherwise met Medicaid eligibility requirements. Reducing the retroactive time from three months to one would hurt those Floridians who have been hit with sudden, unanticipated medical costs, such as from a catastrophic illness or accident. On top of their compromised health, these Floridians will now be facing crushing medical debt and possible bankruptcy[3].

3. House and Senate budgets differ on health appropriations impacting providers, who serve vulnerable populations. Both chambers propose a total of $36.9 billion for health and human services; the largest portion, $28.9 billion, goes to the Medicaid Program. During FY 2018-2019 Florida’s Medicaid program is projected to provide health care coverage to over 4 million Medicaid beneficiaries-mainly children, as well as very low-income parents, seniors, and persons with disabilities. Over 60 percent of Medicaid costs are funded by the federal government. Substantial differences between the House and Senate proposed budgets are as follows:

  • Senate cuts managed care provider rates – This is projected to save $230.1 million, including $87.9 million in general revenue and the loss of $142.1 in federal funding. The Agency on Health Care Administration is authorized to reduce plan expanded services (those optional services plans may cover in addition to the standard Medicaid benefit package), administrative costs and payments for covered services. 
  • Senate ends enhanced payments to specific hospitals caring for low-income patients – The Senate would fold these dollars into base rates (Diagnostic Related Groups- “DRGs”) paid to all hospitals. This provides an additional $50 million in new hospital funding. Both the House and Senate include $1.5 billion for the Low-Income Pool, providing supplemental payments primarily to hospitals for charity care. The total amount is contingent upon local entities contributing matching funds of over $578,000.
  • Senate proposes $130 million increase for nursing homesThis includes $80.4 million in federal funding. This increase is not included in the House proposal.
  • Senate cuts Healthy Start by $19 million, or 29 percent – This program provides services through local coalitions to high risk pregnant women and infants through home visits and face to face services. The House does not include this cut.

What this means: Florida’s Medicaid program is already one of the leanest in the country and provider reimbursement rates are already low. More cuts threaten the neediest Floridians’ access to affordable health care.  Reduced investments in services to pregnant women and their children would generate poor outcomes across a range of areas as children grow and higher costs in the future.

4. House budget does not account for increases in local property taxes via rising property values in its Required Local Effort (RLE) calculations. The difference between the House and Senate recommended increases in per pupil spending is negligible, for the purposes of this budget brief ($7,407 per FTE in the House and $7,417 per FTE in the Senate, representing increases of $100 and $110, respectively, over current year funding levels). However, a substantial difference exists in terms of the Required Local Effort (RLE), which the House pegs at $7.71 billion[4], compared to the Senate, which calculates a RLE of $8.04 billion[5].

What this means: The House, as it did during the last budget cycle, has rejected the idea of using the increased property tax revenue from increasing property values toward school aid, instead opting for an increase in state funding, despite the fact that property tax rates would remain the same.

The most important takeaway regarding per-pupil aid is that neither the Senate, House, nor the governor in his proposed budget come close to fully investing in public education. In order to keep pace with the rate of inflation, per pupil funding would have to increase to $8,193 to match the pre-recession level[6].

5. House links $8.3 billion in public school aid to legislation that weakens collective bargaining and creates the Hope Scholarship Program. In its General Appropriations Act (HB 5001), the Florida House states that, “Funds in Specific Appropriation 92 are contingent upon PCS [proposed committee substitute] for HB 7055 or similar legislation becoming law.”

What this means: The conforming bill referred to in the appropriations legislation includes, among other measures, creation of the Hope Scholarship Program and new renewal requirements for collective bargaining units. The Hope Scholarship Program would allow the parent of a public-school student who was subjected to an incident[7] an opportunity to transfer the student to another public school or to request a hope scholarship for the student to enroll in and attend an eligible private school. The program would be funded through a new tax credit, which would be given to Florida residents who voluntarily donate $20 when buying a car.

What this means: This provision would divert public dollars to private schools, at a time when the state is already underinvesting in public education.

House Bill 7055 also includes language regarding teachers’ unions, requiring that, during registration renewal, units with dues-paying membership of less than 50 percent of eligible employees would have to petition the Public Employees Relation Commission for recertification within one month of the renewal application date. Unions that do not comply would have certification revoked.

What this means: This legislation would not only hurt teachers’ collective bargaining ability: There is a strong relationship between higher union membership and more mobility for low-income children[8].

5. Senate increases funding for Florida colleges and universities. The Senate proposed budget increases funding for colleges and universities by $383 million, or a 6.6 percent increase. This includes a $126 million increase in student financial aid, $40 million more in community college operating funds and an additional $187.4 million in state university operation funds[9]. The Florida House budget includes a proposed budget reduction of $217 million to the state university system and nearly $64 million to Florida colleges “based on carry forward balances.”[10]

What this means:  The House reduction in funding for colleges and universities would likely drive institutions to compromise the quality of the education they provide or use their reserves in order to fill the gap.

6. Senate proposes dedicated funding stream for the Florida Forever Program – Senate legislation (SB 370) would require that at least $100 million from the Land Acquisition Trust Fund (LATF) be appropriated annually to the Florida forever Trust Fund. The House recommended budget does not include this appropriation.

What this means: The Florida Forever Program was created in 1999; Florida Forever bonds were issued to finance or refinance the cost of acquisition and improvement of land, water areas and related property interests and resources[11]. In 2014, Florida voters approved a constitutional amendment, the Florida Water and Land Conservation Initiative, which sets aside 33 percent of documentary stamp tax revenue into the Land Acquisition Trust Fund.

Florida has a spotty record on environmental conservation, along with a history of trust fund sweeps. The enacted budget for FY 2018-19 should include the Senate’s commonsense measure on protecting the Florida Forever Program.

PDF version

 

Notes

[1] Florida Senate Bill Analysis and Fiscal Impact Statement on SB 874. Prepared by the Professional Staff on the Committee on Community Affairs. January 12, 2018. Retrieved via email.

[2] Singh, Dhanraj. Despite Economic Growth, Prosperity Remains Out of Reach for Millions of Americans. Florida Policy Institute. August 2017. http://www.fpi.institute/despite-economic-growth-prosperity-remains-out-of-reach-for-millions-of-americans/

[3] Swerlick, Anne. Retroactive Medicaid Eligibility on the Chopping Block: Why Does this Matter? Florida Policy Institute. January 2018. http://www.fpi.institute/retroactive-medicaid-eligibility-on-the-chopping-block-why-does-this-matter/

[4] The Florida Education Finance Program (FEFP) Fiscal Year 2018-2019, Chairman’s Recommendations. Florida House of Representatives. January 23, 2018. http://fsba.org/wp-content/uploads/2018/01/House-PreK-12-Chair-Budget-Proposal.pdf

[5] The Florida Senate Committee Meeting Expanded Agenda. Appropriations Subcommittee on Pre K – 12 Education. January 24, 2018. http://www.flsenate.gov/PublishedContent /Committees/ 2016-2018/AED/ MeetingRecords /MeetingPacket_4165.pdf

[6] Despite Increased Funding, Despite Increased Funding, Governor’s Proposed Budget Falls Short of Meeting Florida’s Needs. Florida Policy Institute. December 2017. http://www.fpi.institute/despite-increased-funding-governors-proposed-budget-falls-short-of-meeting-floridas-needs/

[7] Incident is defined in HB 7055 as: battery; harassment; hazing; bullying; kidnapping; physical attack; robbery; sexual offenses, harassment, assault, or battery; threat or intimidation; or fighting at school.

[8] Freeman, Richard et al. Bargaining for the American Dream: What Unions do for Mobility. Center for American Progress. September 2015. p. 3

[9] Florida Senate Appropriations Subcommittee on Higher Education. Expanded Meeting Agenda. January 24, 2018. http://www.flsenate.gov/PublishedContent/Committees/2016-2018/AHE/MeetingRecords/MeetingPacket_4164.pdf

[10] Florida House of Representatives Higher Education Appropriations Subcommittee, Chair’s Budget Proposal FY 2018-19. January 23, 2018. https://www.myfloridahouse.gov/Sections /Documents/loaddoc.aspx?PublicationType=Committees&CommitteeId=2896&Session=2018&DocumentType=Meeting%20Packets&FileName=hea%201-23-18%20REVISED.pdf

[11] Chapter 99-247, Laws of Florida

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