NC Senate budget allocates hefty spending for health

By Greg Barnes, Anne Blythe, Mona Dougani, Rose Hoban

In a much-delayed and much-anticipated bill, the state Senate presented their proposed biennial budget on Monday that includes billions of dollars to shift North Carolina’s Medicaid system from one run by the state to a new apparatus largely run by private managed-care insurance organizations.

“Our nonpartisan fiscal analyst told us that we had an even bigger surplus than we initially thought,” Senate leader Phil Berger, an Eden Republican, said during a press briefing Monday before releasing the spending plan. “The Senate is proposing to reduce taxes even more and advance a 10-year $12 billion cash infrastructure and capital plan that includes $3 billion in cash over the next two years for projects.”

The $25.7 billion proposal would reduce tax rates for individuals and families, as well as phase out the corporate income tax in North Carolina. State coffers are temporarily overflowing with billions in federal coronavirus relief spending, courtesy of the American Rescue Plan, a $1.9 trillion bill passed by the U.S. Congress and signed into law by President Joe Biden in March.

Despite federal incentives, the Republican-majority legislative body defied Democratic Gov. Roy Cooper once again, refusing to fund one of his long-held priorities, namely expanding the state’s Medicaid program to sweep in more than a half-million uninsured state residents who are mostly low-income workers.

“The offer from the feds is additional one-time funds,” responded Sen. Ralph Hise (R-Spruce Pine) when asked about why there was no expansion during a press conference Monday afternoon. “We’ve made the same arguments about not expanding Medicaid for a lot of years now.

“We felt very important that our real focus instead of just finding general population to expand to was to focus on those of the greatest need.”

“For no additional state tax dollars, we can expand Medicaid which would insure more than half a million working people, reduce businesses private insurance premiums, expand mental health services, help save rural hospitals and create thousands of new jobs,” retorted Mary Scott Winstead, from Cooper’s office in an email. “Republican leaders have told the Governor that Medicaid Expansion is still on the table for negotiations even though they have not included it in their own budgets.”

The Senate proposal does extend Medicaid benefits for low-income pregnant women. Currently, their Medicaid benefits expire 60 days after they’ve given birth, but the American Rescue Plan allows for states to extend those benefits for a year, with the program beginning in April 2022 and available to states for five years. According to the Kaiser Family Foundation, this could result in fewer uninsured low-income mothers.

“Many of the conditions that account for a significant share of pregnancy-related mortality and morbidity, such as cardiovascular diseases, hypertension, and depression often require care over a longer-term,” a KFF review states.

The budget also would add 1,000 slots for people with disabilities to receive enhanced community services under the Innovations Waiver, which has a current 10-year waiting list of more than 15,000 people. The spending plan also allows for people who have children in the foster care system to retain their Medicaid benefits, so long as they’re in a treatment program or “making reasonable efforts to comply with a court-ordered plan of reunification” that would eventually return them to their children.

Increased wages for direct care workers

The proposed Senate budget includes bumping wages to $15 an hour only for the state employees working in intermediate care facilities that serve individuals with mental health and intellectual disabilities.

Other direct care workers not employed by the state of North Carolina would receive a one-time bonus of $1,500 if employed by eligible providers who are enrolled in the Medicaid or North Carolina Health Choice program.

Rep. Tim Moffit (R-Hendersonville) supported HB 665, the Address Direct Sup. Staffing Crisis/Medicaid bill, and who championed HB 914, a measure to provide boosted Medicaid reimbursement for non-state agencies providing care for people with disabilities. He said he did not have any opinion on the proposed Senate budget yet.

“Their budget was released last night, and I’ve not had a chance to review their budget,” Moffit said. “I’m not sure what they’re providing for in their budget… I really don’t have any comment regarding that.”

Currently in North Carolina, the average hourly wage for direct care workers is $10.31/hour making it difficult for facilities to hire and retain staff.

In the proposed budget, senators insisted that 80 percent of the direct care worker increase be allocated to those workers’ salaries. The remaining 20 percent of funds could go to supervisor salary, pensions, health benefits, facility maintenance and more.

Some advocates worry that this could cause wage compression, resulting in supervisors and direct care workers receiving similar wages.

“If you raise the hourly wage of the worker, what about the supervisor,” said Rep. Gale Adcock (D-Cary), a nurse practitioner. “Then you lose your most experienced supervisory staff.”

“Those of us who don’t provide this, these services, and deal with this business model shouldn’t be the ones telling the people who do it, how to do it.”

A total of $17,500,000 will be used to provide the rate increase for state direct care workers for the 2022-2023 fiscal year.

Money to improve school buildings

The senate’s proposed budget would allocate $150 million in one-time funding to test and remove lead found in excessive concentrations in public schools and child care centers. Removal of asbestos from the schools and child care facilities would also be part of the appropriation.

“Right now there’s no funding for schools to do testing and mitigation for lead in drinking water. It would be an enormous support to allow schools to get the testing that they need and then also pay for mitigation,” said Jennifer Hoponick Redmon, a senior environmental health scientist and chemical risk assessment specialist with RTI International in Research Triangle Park.

RTI, along with the state’s Division of Public Health, have now tested nearly all of the licensed child care centers in North Carolina for lead in drinking water. Hoponick Redmon said 9 percent of the 3,000 centers and Head Start programs tested had lead levels exceeding the 15 parts per billion threshold the U.S. Environmental Protection Agency considers safe to drink.

In 2019, the Charlotte-Mecklenburg school system tested for lead in water used for drinking and cooking at its schools. The testing found that 41 of 89 schools had taps exceeding the EPA’s lead limit of 15 parts per billion.

The testing is being done largely through an EPA grant. Researchers are advising centers on how to remove the lead from their faucets, but it is up to the centers to take remedial action, Hoponick Redmon said.

The EPA has not provided funding to test for lead in public schools, but researchers know the contaminant is present in some of them, especially in schools built before a federal law approved in 1986 banned lead use in pipes and fittings.

Under the Senate’s budget proposal, $32.8 million of the $150 million would be used for lead testing and remediation. The budget bill creates a mechanism to provide funding to replace lines, pipes and fixtures found to contain the heavy metal.

Children are especially vulnerable to high lead concentrations. Exposure can damage their nervous systems and cause learning disabilities, stunted growth, hearing loss, low IQ, increased aggression, and impaired formation and function of blood cells.

Asbestos, a known carcinogen, has also become a growing concern, especially in older schools. It can be found in construction materials behind walls, above ceilings and under floors. Asbestos becomes a problem when its fibers come loose and can be inhaled.

According to the EPA, asbestos fibers can cause serious health problems. If inhaled, they can disrupt the normal functioning of the lungs. Three specific diseases – asbestosis, lung cancer, and another cancer known as mesothelioma – have been linked to asbestos exposure. A federal study in 2015 found that two-thirds of more than 5,000 schools tested contained asbestos.

The remaining $117.2 million of the appropriation would be used to fund a program for lead paint abatement and asbestos removal in the schools and child care centers.

Beyond child care pandemic woes

Child care centers were hit hard during the pandemic, highlighting an industry that’s crucial to keeping the economy churning while also exposing this necessary societal infrastructure that often lacks the support it needs from state and federal governments.

Many centers operate on very thin margins, trying to keep costs for parents as low as possible while also working to bring in enough money to attract a faithful and helpful workforce.

Such a financial model means many centers in North Carolina can only offer staff $10 to $13 an hour, a wage that can’t compete with what some fast food restaurants and other jobs offer.

The Senate spending proposal makes a nod to the issue, albeit a slight one, according to early childhood education advocates.

The plan proposes to put $1.7 million in each of the two fiscal years to increase base reimbursement rates for child care centers participating in the state Department of Health and Human Services North Carolina Prekindergarten Program by 2 percent from last year’s rates and an additional 2 percent next fiscal year.

The intent, according to the Senate bill, is for the additional funds to “be used to increase the salaries of teachers working in child care centers as a means to address disparities in teacher salaries among teachers working in child care centers versus those working in public schools or Head Start centers.”

“I think it’s a good step forward,” Michelle Rivest, senior campaign director for the North Carolina Early Education Coalition, said on Tuesday. “It’s a good step, a small step forward in recognition, that we don’t have equity in pay for public or private early childhood educators.”

She pointed out, though, that “$1.7 million won’t go far.”

The Senate plan includes some $20 million for start-up grants for NC pre-K classrooms and child care centers across the state after it was exposed recently that some 30 counties did not have the infrastructure to expand Pre-K programs.

Rivest also was happy to see that Smart Start, an early childhood education program, would receive $15 million in one-time state funds.

“It really is an important step forward for Smart Start,” Rivest added.

Many advocates for an early childhood education program relied on by more than 60 percent of North Carolina families have been pushing for a broader discussion on government subsidies.

They were optimistic that such talk might materialize after the administration of President Joe Biden announced in April that $39 billion in federal aid coming to states should be used to “address the child care crisis caused by COVID-19.” North Carolina’s share was $1.3 billion.

Some of that federal money was included in the Senate’s proposed spending plan to help stabilize the child care industry. The question is what happens after that money is not available.

Other proposed budget appropriations:

$15 million for research into PFAS and a dozen new positions at the state Department of Environmental Quality for research into emerging compounds such as GenX.
$30 million to fund the legislature’s GREAT program, as well as $700 million in federal dollars to improve rural broadband.
$1 billion in federal American Rescue Plan spending on water and sewer grants to local governments
$250,000 in the next fiscal year only for grants to schools for feminine hygiene products for students.
$30 million to the North Carolina Policy Collaboratory for COVID research grants, including up to $18 million to the Rapidly Emerging Antiviral Drug Development Initiative at the University of North Carolina at Chapel Hill.
$5.9 million over the two-year period to the residency program at the East Carolina University Brody School of Medicine.
$7 million to Wake Forest Institute for Regenerative Medicine for a research project to accelerate the development of treatment to harmful chemical and biological agents.

Read all of our joint coverage with The Charlotte Ledger here.

State Senate presents budget, with a bump up in spending for health and human services