Among the proposals in his last state budget proposal, Gov. Jay Nixon wants lawmakers to approve a 2 percent pay raise for all state employees, starting July 1, and add more money for education, mental health services and economic development programs.
The budget also has the state absorbing a $1.5 million rate increase on state employees' health care costs, so individual employees generally won't be paying higher premiums.
Nixon's pay proposal would add $54.1 million to the state spending plan.
State Rep. Jay Barnes, R-Jefferson City, called the proposal "obviously very good news. And, hopefully we can get it across the finish line."
Rep. Mike Bernskoetter, R-Jefferson City, called the proposal "fantastic. I really appreciate him putting that in the budget."
Bernskoetter and Sen. Mike Kehoe, R-Jefferson City, noted it's harder for lawmakers to pass a state employees' raise when the governor doesn't include it in his budget.
Studies show Missouri government employees' average pay ranks last in the nation.
Bernskoetter said Nixon's proposed 2 percent pay hike likely won't "get us out of the bottom, but it's a baby step forward. We have the state salary study going right now, and that should give us a little direction on where we need to go from here."
After several years of no funding, lawmakers last year placed $300,000 in the current budget to pay for a comprehensive study that compares Missouri workers' pay and benefits with comparable jobs in other states.
That report is due later this year.
"I think what we've shown in the General Assembly is we are supportive of making sure that things are fair for state workers," Senate Appropriations Chairman Kurt Schaefer, R-Columbia, said.
Nixon's budget also proposes cutting another 48 jobs.
"State government today is 5,087 positions smaller than when I took office, and under my budget it will keep getting smaller," Nixon said in his speech.
The Social Services department would lose 83 jobs, while Mental Health would lose 20.
Acting Budget Director Dan Haug said the cuts affect currently vacant positions, not jobs where someone currently employed would be cut.
"The job cuts have been through attrition and they've been spread throughout the state. In recent years, there haven't been as many," Barnes said.
Call for Medicaid expansion
In the beginning of his final State of the State address, Nixon said he would review the "perils of inaction" of current issues facing the state.
Later, he called for lawmakers to expand Medicaid, increasing financial eligibility limits in order to receive a 90 percent funding stream from the federal government as specified in the Affordable Care Act. The state's current health care system, Nixon said, is "backwards" and promotes Missourians to not work while coming down on workers without employer-based health insurance options.
House Speaker Todd Richardson, R-Poplar Bluff, said Nixon's speech lacked acknowledgment of the "skyrocketing" Medicaid costs. He said enrollment is up 15 percent in the last 18 months, and spending has increased 26 percent since Nixon took office as governor.
Views on Medicaid expansion are "very polarized," said Sen. Jeanie Riddle, R-Mokane.
"And, in order to balance our budget and keep our credit rating, we can't put ourselves in a position to not be able to fund the programs as they are," she said. "My goal would be to help make sure that we can help those individuals get the training they need to have a successful career that supports a family, so that they're paying into the system, and therefore, those people who truly, truly have the needs, we're able to help them."
Barnes said the General Assembly's "cool reception" to Nixon's call for Medicaid expansion is a signal that it is not happening.
In terms of reform efforts, Barnes said doing away with the fee-for-service model under Medicaid and moving toward managed care was a positive move accomplished last session.
"I think it's important going forward that we give the Department of Social Services flexibility to choose a care management plan that will reduce costs for taxpayers and lead to better results," Barnes said. "What that means is allowing different models for businesses to compete to deliver Medicaid services. The prevailing model today is managed care. In the future, it may be some sort of model that involves the hospitals themselves, putting together networks, and I think we ought to let the hospitals compete for business."
Boost for education
Nixon touted education as his third priority when he took office and said it has remained his top priority.
His budget proposes an increase of $150 million to elementary and secondary education - a record funding increase, he said.
The funding increase included a bump in special education, transportation, struggling school districts and the foundation formula funding, which is the formula that determines state aid for the 518 public school districts.
Nixon suggests plumping the foundation formula to $3.4 billion - an $85 million increase.
For the first time, early childhood education will be funded through the foundation formula, giving 2,500 kids access to high quality pre-school this year, he said.
The elementary and secondary budget he presented invests $400 million more in the K-12 foundation formula than when he first entered office.
However, the foundation formula still falls short by about $425 million from being fully funded.
Bernskoetter said, at this point, he thinks it would be difficult for the formula to catch up to where it should be. Based on Missouri's sluggish economic growth rate, he doesn't envision the formula being fully funded.
In some respects, Bernskoetter said legislators have their hands tied with state financial needs that outweigh what the capacity of the budget.
"It's always nice to give more money to education if we have it in the budget," he said. "We have priorities, and we don't have an unlimited source of income. We have to figure out where to spend it."
Kehoe recalled Nixon promising to fully fund the formula three years ago, but the state has been adding more money to it each year.
"We haven't caught fully the funding formula amount - but we're way above what the Constitution requires us to spend on education, which is 25 percent," Kehoe said. "And we're up in the 30-, 34-percent range on spending. It's never going to be enough."
Kehoe was happy to hear Nixon say his increase includes transportation, which is outside the funding formula. Rural school districts depend on buses to get students to school.
He said, in the past, Nixon has withheld transportation dollars and he's glad to hear him say he supports it.
In terms of higher education, Nixon said 36 percent more people are going to college and earning degrees since he took office, and students are absorbing less debt than the national average.
Nixon said Missouri is number one in holding down tuition costs and proposed another tuition freeze for higher education in his budget.
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