Gov. Dunleavy cancels some planned benefit cuts for the elderly and disabled

Gov. Mike Dunleavy has suspended parts of a state plan to cut financial assistance for more than 19,000 disabled and elderly Alaskans in the new year.

Late Monday, the Department of Health and Social Services in a written statement said the amount of the remaining cut will vary. The 19,383 recipients of the Adult Public Assistance Program, which supports “needy aged, blind, and disabled Alaskans,” had been scheduled to lose up to 10% of their cash benefit starting Jan. 1.

“Some APA program recipients could still see an overall monetary reduction in their benefits compared to the previous calendar year as the state uses the new methodology to become compliant with (Medicaid) regulations. If there is a reduction in benefits, the exact amount is not known and will need to be recalculated on a case-by-case basis,” said the statement sent by department press secretary Clinton Bennett.

While some cuts were expected, the department said state budget cuts were compounded by a formula change ordered by federal Centers for Medicare and Medicaid Services officials.

“Governor Dunleavy agreed the newly calculated benefit level was unacceptable with both changes put in place,” the department’s statement said.

Rep. Ivy Spohnholz, D-Anchorage, criticized the administration for failing to address the issue further in advance.

But the department’s statement said the compounding effect was realized only after the state’s Division of Public Assistance began working on individual cases shortly before the changes were set to take place.

“Part of the problem is the formula that was put forward, and that is why it is so complex,” said the governor’s chief of staff, Ben Stevens.

As the department explained to legislators in 2016, in order to receive federal support for Medicaid, the state needs to provide a certain level of adult public assistance funding (among many other requirements). There are two ways to calculate that level of funding, and in March, Administrative Services Director Sana Efird told lawmakers that the state would be switching from one to the other as part of a plan to cut the budget.

In February, the governor’s budget proposed cutting adult public assistance by 24%, or $14.7 million. Lawmakers rejected that cut and restored the money. In June, the governor vetoed $7.5 million from the Legislature’s plan, cutting the program by about half of what he had proposed in February.

Legislators tried to restore the money, but in August, the governor again vetoed it, leaving a cut of about 12% from the previous fiscal year.

At the same time as this budget fight, Medicaid officials informed the state that the federal government had been incorrectly calculating one of those standards and that the state should use a new formula.

The state chose to implement the federal-level change and the state-level change together at the end of the calendar year, leading to its discovery now.

Spohnholz, co-chair of the House’s committee in charge of health and social services, said the back-and-forth over public assistance funding should have given the department and the governor ample time to discover the issue. It’s the governor’s job to know the effects of his own actions, she said, adding that it’s incredible to say the governor didn’t know what was going on.

“He either knew what he was doing and went ahead anyway, which was malicious,” she said. “Or he was incompetent, in which case he shouldn’t be in the job.”

Stevens said Spohnholz is wrong. It’s the interaction between the budget cut and the federal change that caused the problem, he said.

Spohnholz is a deputy treasurer of the campaign to recall Dunleavy from office.

“It’s so transparent that she’s trying to inflame the recall effort,” Stevens said.