Senate president offers up health care fix

by Leslie Turk

Senate President Joel Chaisson filed legislation that could create a new revenue source for the state's health care budget, and Gov. Bobby Jindal announced last week that he is backing the plan.

Senate President Joel Chaisson filed legislation that could create a new revenue source for the state's health care budget, and Gov. Bobby Jindal announced last week that he is backing the plan. Chaisson wants to rearrange how money flows in and out of certain protected funds.

The Destrehan Democrat says his proposed constitutional amendment would eventually allow greater flexibility in the state's fledgling budget process and aid in protecting critical services. And that's important right now; for the fiscal year that begins July 1, the state is facing a $1 billion budget shortfall. The following fiscal year is expected to produce a similar $1.7 billion gap. "At this time we are facing unprecedented mid-year budget reductions," Chaisson says. "We need all options on the table with the opportunity to have an open discussion about the proposals and their impact on our efforts to move our state forward."

More so than any other area of the state budget, however, health care is on the rocks, which is why the governor says he is throwing his support behind Chaisson's proposal. "Our state faces a multi-billion-dollar budget shortfall over the next two fiscal years that is uniquely challenging due, in part, to the faulty federal (Federal Medical Assistance Percentages) formula causing a decrease in our Medicaid funding and federal cuts to the hospital funding formula," Jindal says.

Chaisson's Senate Bill 434 would decrease the amount of money deposited into the Millennium Trust Fund and shift those savings to the Louisiana Fund. In all, Chaisson says the change would yield about $30 million in additional cash for qualifying health and human service expenditures. Both of the funds targeted in his legislation presently get cash from the national landmark tobacco settlement agreement that Louisiana executed in 1998.

The Millennium Trust has varied purposes and actually contains three other trust funds: the Health Excellence Fund, which supports children's health initiatives and university research; the Education Excellence Fund, which supports public and private schools; and the TOPS Fund, which is the backbone of the state's collegiate scholarship program.

The Louisiana Fund, meanwhile, which Chaisson and Jindal want to inject with additional money, is used for children's health programs, health care sciences, chronic disease management services and capital improvements for state health care facilities.

Beckoning back to where the money originally came from, the Louisiana Fund also bolsters direct health care services for tobacco-related illnesses and bankrolls "initiatives to diminish tobacco-related injury and death to Louisiana's citizens through educational efforts and other requirements."

When the national tobacco settlement was finalized more than 10 years ago, many states issued stand-alone bonds to generate proceeds for budgetary or capital needs during the U.S. recession that was then raging. Only Louisiana and South Carolina executed so-called trust fund transactions, whereby the bond proceeds were invested into an account that was invested into the financial markets.

Louisiana, in particular, sold 60 percent of its revenue stream from the tobacco settlement and kept 40 percent, meaning that 60 percent of the annual tobacco settlement revenues now go toward debt service on the tobacco bonds and 40 percent is allocated directly to the state. Of that 40 percent, 25 percent around $15 million is dedicated to the Louisiana Fund and 75 percent around $45.8 million goes back into the Millennium Trust Fund. Today, the balance of the Millennium Trust Fund stands at $1.38 billion

Chaisson's proposed constitutional amendment would decreases the mandated annual deposit into the Millennium Trust Fund by 50 percent from 75 percent to 25 percent. As a result, the annual deposit into the Louisiana Fund would increase by 50 percent from 25 percent to 75 percent. If approved by the Legislature, Chaisson's constitutional amendment would face voters later this fall on Nov. 2 ballot.