For an "off day," things were very busy. The General Assembly was not in Session today but held a number of budget hearings instead. Several departments and agencies presented their respective portions of the Budget.

Budget

Hank Thomassen, the State’s Economist, spoke with the members of the Joint House and Senate Appropriations Committee about the financial situation in the State. In his remarks, he reminded the Committee that Governor Barnes was his Governor as long as he belonged to the Governor – meaning that he would serve at the pleasure of Governor Barnes. Overall, in FY 2003, Governor Barnes proposes a 3.1% increase. Revenues in the State have decreased, by an estimated 4.9%. Mr. Thomassen believes that this is a high estimation and that the actual decrease is around 2.5 to 3.5%. In June, Mr. Thomassen believes that there will be a better handle on the economic decline. The decline in revenues may be around $300 million for FY 2003. Thomassen explained that December was the sixth consecutive month of a decline; at that point, the drop was $376 million (which may go as high as $425 million). Thomassen also noted that this has been a stubborn recession in Georgia as there had been opportunities to "cure itself." Such opportunities included: 1) the federal tax refund (either $300 or $600) (Mr. Thomassen stated that it was unclear what was actually paid to Georgians; it is believed to be in the range of $1.2 to $1.4 billion. Georgians, however, chose to save the money rather than spend it. Savings have increased from ½% to 3.8%.); 2) reduction in motor fuel costs (Mr. Thomassen explained that this was discussed as a tax decrease which translated in Georgia to .3 to .4 billion dollars in purchasing power.); 3) car sales’ rebates and incentives (Mr. Thomassen explained that these rebates and incentives have caused $2 billion extra dollars to be spent on associated inducements.)

The Governor’s Revenue Estimate for FY 2003 is $14,534,000,000 with a prior year’s surplus of $696.3 million. Tobacco Settlement funds are estimated at $173 million. In total, the FY 2003 general appropriations bill is more than $16.1 billion.

Some of the departments and agencies which presented are more fully described below:

There were a number of items in the Department of Community Health’s portion of the Budget. In total, the adjusted base was $1.3 billion. A number of the items adjusted in the Supplemental FY 2002 Budget were annualized in this big Budget such as the following:

a) Eliminate funding for Medicaid program expansion for children in families with incomes up to 150% of the federal poverty level (this is a reduction of $2,126,097 in State funds; total funds are reduced by $7,496,816);

b) Eliminate funding for Medicaid program expansion for adults with Cystic Fibrosis (this is $1,631,476 in State funds; a total of $4,027,341);

c) Eliminate funding for non-emergency transportation rate increase (this is $1,357,477 in State dollars; a total of $3,350,968);

d) Eliminate funding for Medicaid buy-in for working disabled (a reduction of $500,000 State monies; a total of $1,234,263);

e) Eliminate the second year of Medicaid coverage for persons transitioning from TANF eligibility to work (this is a reduction of $4,651,943 in State monies; a total of $11,483,444);

f) Reduce direct State funding for State Health Benefit Plan (this is a reduction of $34 million);

g) Utilize intergovernmental transfers from public hospitals to support payments for DSH facilities’ intensity rate adjustments (this will be a reduction to the State in the amount of $,495,737);

h) Remove generic and preferred brand dispensing fee incentive in Medicaid and PeachCare for Kids programs (this is a reduction of $2,916,720 in State monies; a total of $7.2 million);

i) Implement an alternative pharmacy reimbursement methodology for long-term care providers (this is a reduction of $3,645,000 in State funds; a total of $9 million);

j) Require prior approval on proton pump inhibitors (a reduction of $3.1 million in State funds; a total of $7.5 million);

k) Implement quantity level limits and require prior authorization for the drug Oxycontin (this is a reduction of $2.6 million in State funds; a total of $6 million);

l) Restrict the number of drugs identified as "narrow therapeutic index" or not appropriate for generic substitution (this is a reduction of $1.4 million in State funds; a total of $3.5 million);

m) Require prior authorization on oral antifungal agents Lamisil, Sporanox and Diflucan (except 150 mg strength) as recommended by the Drug Utilization Review Board (this is a reduction in State funds of $826,960; a total of $2,041,372 million);

n) Exempt dual eligibiles (Medicaid and Medicare eligibility) from Georgia Better Health Care participation (this will be a savings of $540,789 in State funds; a total of $1,334,952);

o) Reduce cost of the Patient Right to Know Act implementation and operating costs for the Composite State Board of Medical Examiners (this is a savings of $130,000 in State funds);

p) Increase contributions from governmental entities participating in the Medicaid program by utilizing upper payment limit (UPL) credits to obtain federal matching funds (this is a reduction of $62,631,092);

q) Add new state funding to cover the increasing costs of the Pharmacy Benefit Manger contract (this is an add of $1,306,664 in State funds with a total of $5,076,654); and

r) Increase funding for postage as a result of higher postal rates and growth in the number of Medicaid recipients (this is an add of $680,326 in State funds).

There are also enhancements and some include:

1) Increase reimbursement rates for inpatient hospital providers using 90% of the adjusted calendar year 2000 cost data plus one year of DRI inflation of 3.2% (this is a total of $18,069,150 State funds with a total of $44,604,172);

2) Reimburse physicians and related providers and services using 90% of 2000 Resource Based Relative Value Scale (RBRVS) (this is an add of $13,377,880 in State funds; a total of $33,023,648);

3) Adjust case mix reimbursement rates for nursing home providers using 2001 cost reports plus one year of DRI inflation of 3.4% (this is $11,923,330 in State funds; a total of $29,433,054);

4) Increase the Independent Care Waiver Program rates for personal support services by 10% (this is $1,339,678 State funds; a total of $3,307,030);

5) Provide funding to implement programs and activities recommended in Code Blue: Workforce in Crisis to address the allied healthcare workforce shortages (this is $587,500 in State dollars);

6) Provide funding for Georgia Better Health Care member education (this is $315,000 in State monies); and

7) Provide funding for two positions and related operating costs for the Division of Health Planning for a Compliance Manager and Assistant Architect (this is the agency which oversees Certificate of Need) (this is a total of $149,890 in State monies).

In tobacco dollars, there are a couple of items:

1) Provide additional funding to cover increased enrollment in the tobacco-funded eligibility expansion for pregnant women and children up to age 1 with incomes between 200 and 235% of the federal poverty level (this is proposed at $808,153 with total dollars of $1,994,947); and

2) Reflect a reduction in expenditures related to professional development of cancer caregivers (this is a reduction of $2 million).

There is "yes" language in the Indigent Care Trust Fund portion for provisions of "funding for six additional RSM workers performing Medicaid eligibility determinations for children in state custody (total funds for this are $248,844)."

Under PeachCare for Kids, there are adjustments and budget reductions as well. In all, its adjusted FY 2003 Base is $50,702,775. This includes an increase in state funding for PeachCare to fund cash obligations for current year claims (a total of $20,426,282 State dollars; a total of $72,024,972). There is also a proposed $845,250 for additional state funds to cover increases in the PeachCare for Kids eligibility determination contract (this is a total of $2,980,430). There is a reduction to the marketing and outreach contract for PeachCare in the amount of $85,080. Enhancements are also proposed: 1) provide funding to reimburse physicians and related providers and services using 90% of the 2000 RBRVS (this is $2,873,915 State monies; a total of $10,133,692); 2) reflect an increase in children’s dental services by applying a 3.5% inflation to existing rates (this is $353,098 in State monies; a total of $1.2 million); and increase reimbursement rates for inpatient hospital providers using 90% of adjusted calendar year 2000 cost data plus one year of DRI inflation of 3.2% (this is $277,286 in State funds; a total of $977,736).

PeachCare also has some Tobacco funds in the amount of $433,581 to provide additional funding to cover increased enrollment in the tobacco-funded eligibility expansion for children over the age of 1 with incomes between 200 and 235% of the federal poverty level.

Commissioner Redding fielded a number of questions from the Joint Committee. Rep. Channell asked questions relating to the UPL and what the exact amount of funding would be necessary in FY 2003 – he cited that the amount would require another $340 million in State funds. He also asked the Commissioner whether it was asking for funding of "cash obligations" or if the Department was working on incurred costs. Rep. Channell expressed that there seems to be a difference from last year’s request and it would appear that the Department is looking at "cash obligations."

Rep. Holland focused on the State Health Benefit Plan and taking out $34 million. Commissioner Redding explained that the funds appropriated to SHBP could be returned due to the positive financial condition of the Plan. Rep. Holland believes that the SHBP’s delivery of services is lessened due to the proposed restriction of drugs and requirements of prior approval. He noted that he believed that the State was coming in between the State’s employees and their physicians. Redding expressed that his Department had been "thoughtful" about pharmacy changes and even questioned changes proposed by the Drug Utilization Review Board. Rep. Holland believes these changes actually lessen the "coverage," which the State’s employees receive.

Sen. Ragan voiced opposition with the SREB items in the Budget which take away dollars being sent to schools out of Georgia for training of osteopaths and optometrists. There is no training available in Georgia for these two professionals. Commissioner Redding told Sen. Ragan that the Department was not saying that there was no need for such professionals; there was just no emphasis on such. Rep. Henson followed on this question asking the Commissioner what the impact would be if Georgia refused to accept other states’ dollars for funding veterinary school students as many states did not have such programs. She stressed that these changes to SREB were not a good precedent.

Sen. Jackson asked about participation in the State Health Benefit Plan by para-professionals. In her county, there are a number of "para-pros," with children, which are hired by the school system but are paid by the county. These para-pros are eligible for coverage for participation in the State Health Benefit Plan, but many cannot afford coverage for their children. Sen. Jackson’s concern is these children. Redding explained later, responding to a follow up question from Rep. Channell, that federal law will not allow persons eligible for participation in the State’s health plan to also participate in the PeachCare for Kids program. Thus, these children cannot get PeachCare coverage.

Rep. Henson also asked questions about the cut in funds for marketing and outreach of the PeachCare program. She cited that this was the time that such was needed due to the numbers of persons losing their jobs in the economic downturn.

Rep. Henson also raised concern about the changes proposed in the State’s pharmacy program. Much has been done to encourage the use of generics. However, she is troubled that many pharmacies are changing the generic equivalents without informing members of the changes. Commissioner Redding explained that only when a physician writes "brand necessary" would such be given.

Sen. Stokes asked Commissioner Redding what additional initiatives the Department might take, in a strategic plan, to help address the uninsured, which is one of the reasons that the Department was created. Redding noted that currently the Department was looking at grant opportunities and ways in which to use the Indigent Care Trust Fund and it was also looking at uninsured initiatives being taken in other states.

Both Reps. Parrish and Henson asked questions relating to the use of dentists. Commissioner Redding explained that the dollars previously appropriated by the General Assembly had encouraged more dentists to be providers in the Medicaid program. Additionally, credit was given to the Georgia Dental Association with getting information about the rates out to its members in an effort to increase participation.

Director Russ Toal presented his Coalition’s information to the Committee. In all, there are $20,534,970 in the Department of Human Resources’ portion of the FY 2003 Budget which includes money for public education campaign, smoking prevention and cessation, screening and early detection initiatives, cancer screening, and cancer treatment for low-income uninsured for a total of $20,534,970. In the Department of Community Health’s portion of the Budget, there is a total of $3,474,205 requested for the transfer of funding for the Cancer State Aid program from DHR to leverage federal Medicaid funding for breast and cervical cancer treatment, training for cancer caregiver dollars, and money for the Ovarian Cancer Alliance ($125,000). There is $7.7 million in the Board of Regents portion of the Budget of which $4.8 million is for the "distinguished cancer scientists and clinicians," money for the $10 million in bonds for a new Cancer Research Center at the Medical College of Georgia, and $1,295,000 for Coalition Staff, operating expenses and contracts. Finally, in the Department of Revenue, there is $150,000 for an increase in funds for an enforcement and compliance program which aims to curb underage tobacco use.

There were some questions directed to Mr. Toal.

Rep. Channell asked when the other centers of excellence would be named. Mr. Toal explained that this really had to do with the National Cancer Institute proposal and its process. Facilities will have to apply for planning grants. Once such are received, facilities will then be visited and reviewed. There is $3.5 million in the Budget for such grants. Rep. Walker also asked what Georgia had to do in order to get a nationally certified center – Mr. Toal explained that there were two levels of designation. For a comprehensive center, it must have the latest treatment, drugs, therapies, and research. Emory is the only one which has such. There are also model state program designations which are done by the Centers for Disease Control. This requires accurate data (and this is why the Cancer State Registry is so important) and accurate screening across the State (early detection). Mr. Toal explained that Georgia’s aim is for three centers – some states have more such as California and Pennsylvania. Rep. Walker asked who would be making the determinations on these centers of excellence – it appeared that Mr. Toal hedged on answering directly but it would appear that such will be done by external review with a team of individuals from the National Cancer Institute in conjunction with the Board of the Georgia Cancer Coalition.

Rep. Sinkfield asked about the programs in existence and what would happen to them – she cited the program at Emory which funds persons treatment who are uninsured. Mr. Toal explained that many of the programs received extra funding. The Cancer State Aid program paid $10,000 to hospitals for treatment. The problem is that there are no dollars for costs incurred by the physicians and the associated drug costs.

Mr. Toal also explained to Rep. McBee, in her questioning him more about the bioinformatics concern, that recruitment of the scholars is the key for its success.

Rep. Rogers asked questions relating to hospice care. In northeast Georgia, there is no where for persons to go for such care. He also asked about persons who were uninsured. Mr. Toal explained that Medicare covers hospice services but that there is a requirement for an attestation by the physician that the patient has no longer than 6 months to live. Most persons, per Mr. Toal, are Medicare eligible as most are over age 65.

Legislators also questioned the expenditures of the smoking prevention and cessation dollars.

Superintendent Schrenko presented the Department of Education Budget. Some of the largest reductions are the reduction of staff development from 1.5% of "certificated" salaries to 1.1% (this is a reduction of $13.3 million) and the reduction of various contracts (this is in the amount of $3.5 million). There are various enhancements such as:

1) Provision of funds to continue development of the CRCT in science and social studies in grades 3-8 and in reading, English and math in grades 1-8 ($7.2 million);

2) Continue funding for the development of end of course exams for 8 core courses in high school to replace the Georgia High School Graduation Tests ($4.6 million);

3) Annualize funding to implement a revised Post Secondary Options grant ($4 million);

4) 10% salary supplement to 310 teachers who were awarded National Board Certification in November 2001 ($1,550,000);

5) 10% salary supplement based on the current annual salary of 116 teachers who were National Board Certified in November 2000 ($288,490); and

6) Additional funds for contract services for the Atlanta Area School for the Deaf ($95,691).

In some of the questioning, Ms. Schrenko was asked about the school nurses, as provided for in HB 1187. Ms. Schrenko will provide the Joint Committee a list of each county which has a nurse. There were funds of $19,000 for each nurse. These dollars were from the Tobacco Settlement Funds.

In his second appearance since taking office as Chancellor of the University System, Chancellor Meredith presented the Board of Regents portion of the FY 2003 Budget to the Joint Committee. He explained that Georgia was one of the top 10 States with college-educated individuals. Additionally, he urged the Legislators that Georgia needed to "catch the wave" as there was a second round of individuals needing college education – this is the second round of "baby boomers." His focus will center around getting African-American males and non-traditional students enrolled in school. There is an enhancement of $2,182,500 included for such enhancement for these groups to access college. In some of the questions raised, Legislators were again voicing issue with the quarter to semester conversion costs. In the FY 2003 proposal, another $27.7 million is requested. Chancellor Meredith responded that his hope was that this was near the end of the money needed in order to fully enact this transition. He stressed that the conversion to semesters was necessary in order to make Georgia more in line with the rest of the schools in the country. Rep. Walker asked pointed questions concerning these staggering conversion costs. Rep. Walker reminded Chancellor Meredith that Georgia was already a major player with the HOPE scholarship program.

Among other enhancement items recommended include:

1) Provide funds for the applying of the ICAPP Advantage model to Health Professions and fund new strategic response initiatives ($1,530,000 in State dollars);

2) Funds for phase I of a SREB Doctoral Scholars Program for minority graduate students ($160,000);

3) Enhance funds for Regents Accountability Plus II System ($150,000 in State monies);

4) Fund six months of the lease of the new Yamacraw building ($2,201,434);

5) Partial funds for a clinical nurse at the Veterinary Medicine Teaching Hospital ($12,165);

6) Funds to increase contract with Medical College of Georgia Health, Inc. ($752,633);

7) Provision of funds for program development and pre-design of a facility to house the Regional Library for the Blind and Physically Handicapped, Office of Public Library Services and the State Library Collection ($150,000); and

8) Increased funding for the Agricultural Experiment Station ($250,00).

As with all Departments, the Board of Regents experienced cuts. Among the reductions include a couple of large items such as a 5% reduction to all institutions that receive formula funding (this is in the amount of $69.7 million) and reductions to the major repair and renovations fund (this is in the amount of $25 million). Legislators expressed concern about the delay in repairs and maintenance citing that such could only create greater expenses later in time.

In total, its FY 2003 adjusted base is $943,656,356 and with enhancements its total is $947,539,612. Some of the reductions include: reduction in personal services of $22,999,172, contracts of $700,000, travel of $300,000, regular operating expenses of $3,000,000, and payments to Central State Hospital for meals in the amount of $300,000. Also, there is a $1.3 million reduction in funding associated with the expansion of vocational programs. The enhancements do include some start-up and operating funds for 350 beds, 68 positions, and 12 vehicles for LaGrange Transitional Center, Dublin Diversion Center, and Dalton Diversion Center.

The Commissioner explained additionally that the inmate store would become self-supporting and thus another reduction to the State of $1.2 million.

Rep. Lucas asked about the Coastal State Prison facility and the intended use of the facility. This facility was supposed to be used for diagnostic purposes – currently it has 1,400 inmates.

Sen. Jackson asked about the reduction of $300,000 to Central State Hospital for the meals. Apparently, this reduction will be purely the costs of the food; it will not reduce the number of actual meals. The food costs were anticipated to rise at a greater rate.

Rep. Rogers asked various questions concerning the vocational program and the costs associated with each inmate in the system. It costs the State approximately $18,000 per inmate on an annual basis. Rep. Rogers also asked questions relating to the time necessary for picking up inmates – the Commissioner conceded that the time lapse is an issue, and such lapse is causing over-crowding. There is a backlog of between 1,600 and 1,700 inmates waiting to be picked up from various locations. The travel portion cut in the budget reflects administrative travel only.

Rep. Shaw asked about the costs associated with diversion center. This is apparently funded through the person’s work.

Sen. Ragan asked about medical costs. His local county commissioners have raised some questions pertaining to such as county is bearing the costs. Until a person is tried and convicted, the costs are borne by the county – after that, the State picks up the costs (there is a 15-day time frame after the conviction before a person is actually picked up from the county).

Rep. McBee asked about recidivism rates. In Georgia, it is 37% which is high.

Sen. Cheeks ran the math and declared that it was actually more than $18,000 per prisoner. The Commissioner explained the difference is due to the 121,000 persons which his Department oversees in the probation area. Sen. Cheeks is concerned about the almost $1 billion dollar budget even though some funds come from the federal government. He asked that the Commissioner explain more about the use of technical school training so that persons, once released, could have skills to get jobs in order to prevent them from stealing and robbing. In following up on these discussions, Rep. Heard asked about the numbers of inmates which obtained GEDs and technical degrees last year. These were 2,000 and 3,000 respectively. Additionally, Sen. Crotts asked if thought had been given to having time served reduced if a prisoner completed a vocational/technical program – in other words, "good time."

Sen. Crotts also raised the issue of "hot bed" rotation. He explained that if beds were in such short supply, that the State should do what the military does in a 24-hour period by rotating persons through the same bed. He asked the Commissioner to do a study on this.

Rep. Lucas also asked about the paperwork necessary by the Superior Courts. The Certification process for a prisoner apparently is another delay in getting prisoners picked up from counties.

Rep. Sinkfield inquired about the "boot camp business." The State is gradually getting out of the boot camp business, but there is still a need for such, according to the Commissioner. There are perhaps better ways to rehabilitate the youth offenders. There are now about 700 boot camp beds (this has been reduced, as there were more than 1,000).

Rep. Powell asked about the county work camps and their effectiveness. These have worked great. The county is paid to house the prisoners. These individuals do public works projects.

HB 1065 – Reps. Reichert and others have offered this amendment to O.C.G.A. § 9-11-4 so as to provide that a summons may be served by private detectives. This bill has been forwarded to the House Judiciary Committee.

HB 1066 – Rep. Powell and others have authored this amendment to Chapter 1 of Title 51 relating to Torts so as to provide for a limitation on the liability of certified child safety passenger technicians and sponsoring organizations. This bill has also been forwarded to the House Judiciary Committee.

HB 1069 – Another bill relating to child safety restraint requirements, Rep. Snelling’s bill has been sent to the House Motor Vehicle Committee as it amends O.C.G.A. § 40-8-76.

HB 1072 – Rep. Snelling’s amendment to the Garnishment Code, found at Article 2 of Chapter 4 of Title 18, has been sent to the House Judiciary Committee. This amends the service requirements on serving the summons of garnishment.

HB 1076 – A tax exemption has been proposed by Reps. Kaye, Bunn, Hudgens, Coelman, and Burmeister which would provide for an exemption with respect to any required testbook for public secondary schools. This bill would amend O.C.G.A. § 48-8-3. It has been sent to the House Ways and Means Committee.

HB 1078 – Rep. Hugley and others bill amending Chapter 26 of Title 33 pertaining to industrial life insurance in an effort to provide that policy holders age 65 and older may opt to provide for an additional contact person, has been forwarded to the House Insurance Committee.

HB 1079 – This bill is an effort to help the elderly. Rep. Jennings and others have authored this amendment to O.C.G.A. § 16-8-12 in an effort to provide that it is the prosecuting attorney’s duty in prosecutions of theft by deception matters to provide specified information and a picture of any person convicted of such offense against elderly or disabled persons. This bill has now been forwarded to the House Special Judiciary Committee.

HB 1083 – Rep. McBee’s change to Chapter 5 of Title 43, pertaining to athletic trainer licensure requirements, has now been referred to the House Industry Committee.

HB 1084 – Rep. Irvin’s bill to amend Chapter 3 of Title 6 pertaining to the local governments powers over air facilities so that if local governments own such air facilities and airports that they must transfer the management, operation, and maintenance of such to the Georgia Airport Management Authority. This bill has been forwarded to the House Transportation Committee.

HB 1086 – Concerned about food? Rep. Ray and others have offered this amendment to Article 2 of Chapter 2 of Title 26 , the Georgia Food Act, in order to provide that certain food sales establishments shall post licenses on the premises in an open and conspicuous manner to be visible by the public. This has been sent to the Committee on Agriculture and Consumer Affairs.

HB 1089 – Reps. Unterman and Squires bill amending O.C.G.A. § 13-8-2 concerning contracts contravening public policy so as to declare as contrary to public policy those contracts between a hospital, which is a provider for obstetric services, and certain insurers. This measure has been forwarded to the House Health and Ecology Committee.

HB 1090 – Rep. Bordeaux’s bill amending O.C.G.A. § 50-21-26, concerning claims against the State of Georgia which will require that a notice of claim be served and filed, has now been sent to the House Judiciary Committee.

SB 338 – Sen. Nadine Thomas’ bill amending Article 3 of Chapter 11 of Title 31 pertaining to emergency medical services in an effort to provide for grant funding in order to supply automated external defibrillators, has now been referred to the Senate Health and Human Services Committee.

SB 339 – Another bill by Sen. Thomas concerning treatment for morbidly obese persons which amends current law on such at O.C.G.A. § 33-24-59.7, is now in the Senate Insurance and Labor Committee.

SB 340 – Sen. Thomas bill to enact the "Comprehensive Patient and Provider Health Care Relief Act of 2002" has been sent to the Insurance and Labor Committee. This bill would create such act by amending Article 1 of Chapter 24 of Title 33.

SB 341 – Another piece of legislation by Sen. Nadine Thomas which proposes to amend Article 3 of Chapter 20 of Title 45 concerning voluntary deductions from wages or salaries of State employees for the benefit of charitable organizations, has been referred to the Senate Appropriations Committee.

SB 344 – Sens. Fort, Thomas and James bill, amending O.C.G.A. § 7-1-32 concerning qualifications for the Commissioner of Banking and Finance, has been forwarded to the Senate Banking and Financial Institutions Committee.

SB 346 – Sen. Harp and others bill amending O.C.G.A. § 9-11-4 of the Civil Practice Act in order that language may conform to the Federal Rules of Civil Procedure, Rule 4(f) relating to service of process in other countries with the Convention Relative to the Notification or Service Abroad of Judicial and Extrajudicial Documents, has been forwarded to the Senate Judiciary Committee.