If Arizona lawmakers want to find out whether provisions of the legislative budget proposal violate the federal stimulus act, they first may have to throw caution to the wind.
The U.S. Governmental Accountability Office, which is auditing Arizona’s use of its federal stimulus money, is continuing to monitor budget developments in the state, but has not ruled on whether a proposed sweep of $50 million in university auxiliary funds would violate the terms of the American Recovery and Reinvestment Act (ARRA).
University officials and Gov. Jan Brewer have expressed concern that the sweep would drop university funding below its 2006 level, which would violate ARRA maintenance-of-effort provisions and jeopardize nearly $900 million in stimulus money for education.
Eileen Larence, of the GAO’s Arizona audit team, said the issue is not clear-cut, but the agency is “not ruling, and we are assuming it will be resolved before we would have to do more work on the issue.”
“We have been watching that, but we haven’t asked our general counsel to make a ruling on that yet, because we are anticipating maybe that they would try to resolve the budget before that time period,” Larence told the Arizona Capitol Times. “I’ll pose that question to our general counsel liaison. … It will be helpful for us to know that, too, just in case we do have to deal with that at the last minute.”
Both Brewer’s and the Legislature’s budget plans include a $40 million cut to university spending, but sweeping the additional $50 million in auxiliary funds would drop the state below its 2006 spending level on universities, the baseline figure that Arizona must maintain to be eligible for $832 million from the ARRA’s Education Stabilization Fund.
Also unclear is whether the legislative budget would violate ARRA provisions regarding the $1.7 billion Arizona is expecting to receive for the Arizona Health Care Cost Containment System. The budget narrows the list of documents the state will accept as proof of legal residency when applicants are seeking state-administered federal benefits, which includes Medicaid services. AHCCCS officials and Brewer are worried the budget provision will violate ARRA’s prohibition against enacting stricter eligibility requirements for Medicaid.
Sharon Yee, a spokeswoman for the Centers for Medicare and Medicaid Services Region 9 office in San Francisco, said the agency has yet to determine whether the budget provision would violate the stimulus act.
Virgil Renzulli, a spokesman for Arizona State University President Michael Crow, said the universities also are worried that a $100 million rollover included in the legislative budget could be counted against the state’s higher education funding, which could further drop Arizona below its 2006 funding levels.
Larence, however, said “it appears as if the $100 million rollover may not affect MOE (maintenance of effort) because these funds were already obligated and the state can use obligations in the MOE calculation.”
On June 11, Brewer announced that the U.S. Department of Education had accepted Arizona’s application for about $1 billion from the State Fiscal Stabilization Fund, which includes the $832 million dedicated to education. Nearly $700 million will become immediately available to the state, and Arizona will be eligible to apply for the remainder in the fall, following a more detailed application.
Brewer has taken aim at the Legislature’s budget on a number of issues, focusing her criticism on the portions she believes will put stimulus dollars at risk. After a daylong budget forum Brewer held on June 9, she said, “We have outside forces that drive a lot of these things, and they have to be taken into consideration. Maintenance of effort, there’s a lot of issues. And if we don’t address those issues then the state could very likely be looking at a $2.7 billion loss, in addition to the other problems.”
Commenting June 5 on the education funding issues, two days after the House approved the legislative budget package, Brewer said, “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.”
As of June 11, legislative leaders still had not sent the budget bills to the governor.
Renzulli said anything that threatens the stimulus money for education would impact funding for K-12 education and the state’s universities. The Education Stabilization Fund provides money for both.
“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.
AHCCCS spokeswoman Monica Coury said her agency is concerned that the narrowed-down list of documents 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.
Already, the Legislature has repealed a bill passed in 2008 that changed the redetermination period for AHCCCS to six months from 12 months. Lawmakers voted to overturn the 2008 legislation 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 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 of the document list. “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 on June 11. She told the Arizona Capitol Times the federal list includes more than 40 documents that show legal residen
ce or citizenship. She said there is no reason Arizonans should be restricted from producing those documents to prove their eligibility for programs such as 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.