Politics & Government

Rising health care costs take giant bite out of state budget

For health care reform to work, spending has to slow down.
For health care reform to work, spending has to slow down.

The proposed $8.2 billion budget the S.C. House will take up next month includes pay raises for some state workers and money to combat the growing opioid crisis.

But the budget proposal shortchanges most state employees, who will not get pay raises, and S.C. colleges and universities, looking for money to cover the cost of years of deferred maintenance and renovations, critics say.

House budget writers approved the 2018-19 proposal Thursday, sending it to House lawmakers’ desks, where it will sit for a week before debate is expected to start the week of March 12.

In contrast to the last year – when lawmakers voted to raise the S.C. gas tax and shore up the state’s pension retirement system – the 2018-19 general fund budget is tight, House budget chairman Brian White, R-Anderson, told colleagues Wednesday.

The general fund budget largely is made up of state sales and income taxes. The state also gets billions from fees and the federal government.

The Legislature has roughly $276 million in new money to spend in its fiscal year that starts July 1. Another $145 million is reserved for one-time costs that will help cover some deferred maintenance for S.C. colleges and restoration of the current statewide voting system.

But like every year, there will be a fight – extending later into the state Senate – over those dollars, and winners and losers in how the state spends its money, a reflection of its priorities.

The rise in health care, pension costs

Where are more of those dollars headed?

“It appears that it all found its way into health care,” said state Rep. Murrell Smith, the Sumter Republican who chairs the House’s budget subcommittee on health care.

House budget writers approved:

▪  Nearly $60 million in added state money to cover the costs of the 1 in 4 South Carolinians who get their health insurance through Medicaid. The majority of the 1.2 million South Carolinians covered by the joint federal-state insurance program for the poor or disabled are children.

▪  An added $56.4 million to cover higher health care costs for the more than 490,000 state workers, family members and retirees enrolled in the state health plan as of January. However, those workers will pay more in annual deductibles and outpatient, emergency room and office visit co-payments.

▪  An added $32.4 million to cover the higher cost of state workers’ pensions.

Last year, the S.C. Legislature voted to shore up the state’s woefully underfunded pension system. Those changes – requiring state, county and city workers, law enforcement officers and teachers and their employers to pay more into the S.C. retirement system – will help the state pay about $20 billion in unfunded benefits that have been promised to state workers and retirees.

Education winners and losers

The House Ways and Means Committee budgeted an added $59 million to cover a 2 percent pay raise for S.C. teachers next school year. It also agreed to raise the salary of a starting teacher to about $32,000, up from about $30,000.

The budget proposal does not include more per-student money for K-12 schools. Schools now get $2,425 per student, about $593 less than they should, according to state law.

The the budget does add:

▪  $32 million more to cover the cost of growing K-12 enrollment

▪  $13 million more to keep up with added enrollment in public charter schools

▪  $8 million more to cover the cost of replacing some of the state’s oldest and most fire-prone school buses, $26 million less than the state needs to spend annually to replace enough buses to meet its desired 15-year replacement cycle

Most workers get no pay raise, but some do

Pay raises for S.C. judges, from the Supreme Court to family courts, are not in the House’s proposed budget.

Most state workers also will not get raises, which drew some criticism. Critics note many state agencies are unable to fill their vacancies, in part due to low pay, and point to a $300,000 2016 compensation study that found the state lags in competitive salaries compared to its Southeastern neighbors.

But lawmakers did add about $42,000 in raises for attorneys and law clerks in the Administrative Law Court.

“I didn’t realize until this year that the attorneys and law clerks there made as little as they actually do,” said state Rep. Mike Pitts, R-Laurens, who chairs the budget’s committee on law enforcement and criminal justice.

The proposed budget also adds about $3.7 million to pay for raises of about $750 apiece for corrections officers. It also adds another $2 million to pay overtime costs for S.C. Highway Patrol officers.

Colleges miss out

The state’s public colleges will not get nearly the amount of money they wanted in the 2018-19 budget.

This year, only $50 million in one-time money was put in the budget to address building and maintenance costs for colleges.

For instance, the University of South Carolina asked for $50 million to start the construction of a new $200 million campus for its School of Medicine. House budget writers approved $5 million.

For other colleges, House budget writers approved:

▪  $5 million of $77 million requested by Clemson University for maintenance

▪  $3.5 million of $80 million requested by the College of Charleston for maintenance and renovations

▪  $3 million of more than $32 million requested by S.C. State University for maintenance and renovations, among other needs

Colleges also have asked the state to borrow money – via a bond bill – to cover the costs of deferred maintenance. But, with all members of the House facing fall elections, the Legislature has put the brakes on that request.

“There is a desperate need for a bond bill to address these needs,” said state Rep. Gilda Cobb-Hunter, D-Orangeburg. “Perhaps, once this election is over and everybody is back, we can find the intestinal fortitude to pass up a bond bill.”

A bond bill has some support among House Republicans.

“Anybody who does not ... look at this for political or philosophical reasons needs to look at some of these buildings around the state,” said state Rep. Bill Herbkersman, R-Beaufort.

Maayan Schechter: 803-771-8657, @MaayanSchechter

Who gets a raise?

The S.C. House’s proposed 2018-’19 budget plan does not include across-the-board pay raises for S.C. state workers, who are underpaid compared to workers in other Southeastern states. But the budget – which takes effect July 1 – does include pay raises for some:

▪  $59 million for a 2 percent raise for school teachers

▪  $3.7 million to cover raises for correctional officers

▪  $42,000 for attorneys and clerks in the S.C. Administrative Law Court

SOURCE: S.C. House Ways and Means Committee