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Brewer concerned lawmakers’ budget could jeopardize stimulus money

Gov. Jan Brewer said the budget package passed by the Legislature may jeopardize federal stimulus money Arizona is receiving for education and health care.

Under the terms of the American Recovery and Reinvestment Act (ARRA), the state is slated to receive nearly $900 million in stimulus funds for K-12 and higher education, and more than $700 million for the Arizona Health Care Cost Containment System. But state officials are awaiting word from the federal government on whether those funding sources would be threatened by provisions in the legislative budget plan.

Brewer on June 5 said she has not read the bills, but it is her understanding that provisions dealing with university funding could jeopardize the education stimulus money. “I haven’t seen the bill, but we have seen that situation. We have also seen a similar situation in regard to the federal stimulus dollars for AHCCCS. So there’s a lot of issues there that aren’t workable. They’re not possible to do,” she said.

The governor has not signed the budget bills, and legislative leaders have not yet sent them to her desk.

The ARRA prohibits states from dropping their university spending below 2006 levels, which university officials said will happen if Arizona adopts the legislative budget. That budget includes a provision to sweep $50 million from the three universities’ auxiliary funds, on top of $40 million in cuts.

Virgil Renzulli, a spokesman for Arizona State University President Michael Crow, said the legislative budget also twice rolls over a $100 million payment, which may count against the 2006 spending level as well.

“The university system has taken close to $200 million in cuts already. We’ll take another $40 million, we’re prepared for that. But a $50-million fund sweep is really devastating on top of everything else. Plus, it is not state money, so we question the legality of that,” Renzulli said. “For those cuts, the state could lose almost $900 million in federal stimulus money. We think that would be a mistake.”

Another part of the budget package requires people who are applying for any federal benefit administered by the state, a category that includes AHCCCS, to provide documents from a specified list to prove that they are in the United States legally. AHCCCS spokeswoman Monica Coury said the list is more restrictive than the one used by the federal government, which might violate the ARRA provisions that prohibit states from adding new eligibility restrictions for such programs.

The Legislature already approved a repeal of a 2008 bill that changed the redermination period for AHCCCS from 12 months to six, after federal officials told Brewer that the move was in violation of the ARRA.

Coury said AHCCCS has requested clarification from the Centers for Medicare and Medicaid Services on whether the budget provision violates the ARRA.

“As the stimulus has been explained to us and guidance has been provided by CMS (Centers for Medicare and Medicaid Services), the states are not permitted to make eligibility more restrictive than it was as of July 1, 2008. So we have asked CMS … to confirm our understanding of that,” she said.

Brewer spokesman Paul Senseman said those two portions of the legislative budget are especially concerning considering the ongoing federal audit the U.S. Governmental Accountability Office is conducting on Arizona.

“It was selected to be one of 16 states to be closely audited by the federal government, regarding its use of federal stimulus funds. We wouldn’t want to invite any challenges to those dollars or jeopardize that $1 billion in education funding,” he said.

Rep. John Kavanagh, chairman of the House Appropriations Committee, said the eligibility requirements will help keep illegal immigrants and others who aren’t entitled to such programs off the government benefit rolls. He said he doesn’t view it as a violation of the ARRA, nor does he believe the sweep of the university funds jeopardizes Arizona’s stimulus money. But if the federal government determines that either of those provisions violate stimulus guidelines, he said, the Legislature can simply change those sections, just as it changed the six-month redetermination period for AHCCCS back to one year.

“Just because some people say it might (violate the ARRA), it’s not a reason to back away from something which does two good things – it saves the taxpayer money, and it keeps illegal aliens from getting benefits they don’t deserve,” the Fountain Hills Republican said. “People run all kinds of scams on the government and the taxpayers. I don’t understand why anybody would object to reasonable efforts to keep things honest. But if the federal government should, just like we did in the ’09 fix, we’ll simply change it.”

Rep. Kysten Sinema, a Phoenix Democrat, railed against the new documentation list on the House floor June 4. She told the Arizona Capitol Times the federal list includes more than 40 documents that show legal residence or citizenship, and believes there is no reason why Arizonans should not be able to use those documents to prove their eligibility for programs like AHCCCS.

“To tell folks who are applying for federal benefits that they can only use this new state list of documents, that violates federal law, and also violates the terms of the stimulus act. So what they would have to do is provide some sort of exception for federal benefits,” said Sinema, the assistant House minority leader.

Sinema also said the state can only cut a total of $49 million in university spending before it drops below its 2006 level, which would violate the maintenance-of-effort requirements in the ARRA.

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