PHOENIX — Arizona’s state-run prison system will boost health-care spending and medical staffing by more than a third as it works to meet a federal judge’s orders that it vastly improve treatment of its nearly 25,000 inmates, but the move puts added pressure on a state budget already deep in the red.
State corrections director Ryan Thornell, who was appointed to the post by Democratic Gov. Katie Hobbs shortly after she took office in January, told lawmakers Thursday that he expects the boost in the contracted per-day medical care rate to satisfy the judge’s orders to improve medical, mental and other inmate treatment.
“This (contract) amendment accomplishes all of those areas we need in terms of expanded staffing, services, medications to bring us into compliance’’ with the court orders, Thornell told a legislative committee that reviews agency spending plans. U.S. District Judge Roslyn Silver issued a sweeping injunction in April that requires massive improvements in prisoner treatment, Thornell said.
But the added costs — $117 million in the coming budget year — will compound the crunch for a state budget that already has a projected $400 million shortfall in the current budget and $450 million in the next budget, which begins on July 1, 2024.
And none of that counts for the yet-to-be-determined additional cost to the state of universal vouchers of tax dollars for students to attend private and parochial schools.
Much of the shortfall is blamed on a massive income tax cut enacted in 2021 by the Republican-controlled Legislature and former Gov. Doug Ducey that got rid of graduated tax rates and replaced them with a flat rate, a move that primarily benefited the wealthy. The tax went into full effect early this year, and the Legislature’s budget analysts said last month that individual income tax collections are down by 27% since the fiscal year began on July 1.
Ryan Thornell, Arizona corrections director
Other budget busters
The new healthcare spending for prisons is just one of several items that will blow even bigger holes in the state budget, putting pressure on Hobbs and the GOP-led Legislature to make cuts elsewhere.
A far bigger budget-buster comes from Arizona’s Medicaid program for low-income residents, the Arizona Health Care Cost Containment System, commonly known as AHCCCS.
It will need an additional $600 million from the state general fund.
AHCCCS currently provides medical insurance to 2.2 million Arizonans, a drop of more than 300,000 since a federal pandemic-era ban on kicking people off the program expired on April 1. The Legislature’s budget analysts expect another 40,000 people to drop off the rolls by June.
But the decreased spending on the lower population count — the program insures 30% of the 7.25 million Arizona residents — is erased by a big cut in federal reimbursement rates, higher payments to providers due to inflation, and policy decisions by lawmakers to boost child health care. That led AHCCCCS to request the extra $600 million in next year’s budget, according to a review of state agency budget requests.
The Department of Economic Security, which oversees a host of social safety net programs, also said it needs an additional $133 million from the general fund next year. Nearly $110 million of that will pay for increased costs of caring for the developmentally disabled from boosts in caseloads, higher medical costs and a cut in federal matching fund rate.
Other state agencies are also seeking more money to account for inflation.
That leaves Republican lawmakers who need to negotiate a budget with Democrat Hobbs by June looking for ways to trim spending while adding new funding for required prison health spending.
Hobbs spokesman Christian Slate has declined to discuss next year’s prison spending.
“Grossly inadequate” care
Silver ruled that the health care provided in the system is “plainly grossly inadequate” and state officials are acting “with deliberate indifference’’ to the “substantial risk of harm to inmates.’’
In her 200-page ruling, the judge laid out facts she said show not only that top prison officials were aware of conditions that resulted in unnecessary deaths and serious physical injuries to inmates but also that they actively ignored the problems.
The Joint Legislative Budget Committee, which has members from both the Senate and the House, signed off Thursday on the increase in prison healthcare spending.
That contract revision increased payments to private health provider NaphCare in a series of steps from $32.19 per day per inmate to $42.47 a day on July 1. It requires the company to boost staffing by 382 full-time positions, bringing the total number of doctors, nurses and other health staff to nearly 1,500 by June 30, 2024.
NaphCare’s total yearly pay for the prison health contract started at $280 million when it took over inmate care in October 2022 and will sit at $388 million per year by next June, assuming 25,000 inmates. The contract with former provider Centurian, which won the contract in 2019, paid it $203 million in the 2022 budget year.
The increase will leave a $117 million shortfall in next year’s budget.
Rita Lomio, an attorney with the Prison Law Office that was involved in the decade-old inmate healthcare lawsuit, said a major part of Arizona’s problem is relying on contractors. That’s required by a law passed in the early 2010s that aimed to lower state expenses.
“They’ve now burned through three or four providers, and none of them have been able to do it,’’ Lomio said.
“For us, it just seems clear that they’re basically funneling a lot of money not into health care but into a for-profit company to provide health care,’’ she said. “And that’s inefficient, it’s wasteful, and it’s not resulted in the end of this litigation.’’
Cuts will have to be made
Sen. John Kavanagh, R-Fountain Hills, said lawmakers will have to work to trim expenses — both in already-pledged spending like $600 million in new highway appropriations in the current budget and in agency requests, so that the state has a balanced budget, as required by law.
“First of all, asking isn’t getting,’’ he said Friday of agency budget requests. “Obviously, we took the first step yesterday in authorizing the money for corrections because we’re under pressure from the lawsuit.
“But most of that (we) will probably be getting through the prison correctional officer vacancies,’’ savings that come because the Department of Corrections, Rehabilitation and Reentry, as it is more formally known, has been unable to find qualified applicants to staff all the positions for which it has funds.
Kavanagh said other areas of state government will get no new money or just limited additional new dollars, with the funds coming from what he called “possibly unnecessary programs.’’
“In addition, we can defer many of the capital projects that are in the pipeline,’’ he said. “And that’s the way we’ll do it.’’
Rep. Athena Salman, D-Tempe, also sits on the committee and pointed to the tax cuts as the big culprit for the budget squeeze.
“It is self-inflicted — the flat tax was just a huge blow to the budget,’’ she said.
“And the Republicans did it as Ducey was one foot out the door, because of the uncertainty of who would win the (2022) governor’s race,’’ Salman continued. “So they had to give that reward to pay off their friends and their buddies that fund their campaigns at the expense of every other Arizonan who relies on the public trust and public services, whether it’s from healthcare to education to housing, and so much more needs.’’
What is not on the table for either Kavanagh, who heads the Senate Appropriations Committee, nor Rep. David Livingston, his counterpart in the House, is tapping the state’s $1.5 billion “rainy day fund.’’
“The shortfall we have now is large but not monumental in a $16 billion budget, and we’ve faced worse shortfalls and survived,’’ Kavanagh said.
He defended the tax cuts.
Arizona Governor Katie Hobbs answers press questions at Pima Community College following her speech on Monday, July 10. Video by Pascal Albright / Arizona Daily Star
“Arizona has an excellent business climate and those tax cuts attract a lot of businesses which are generating revenue,’’ he said. “So using a dynamic analysis, I think the tax cuts helped us and not hurt us.’’
