Virginia 2012 budget includes cuts to education, Medicaid

RICHMOND, Va. (AP) — City and county governments face some hard choices under Gov. Bob McDonnell's new budget.

The new $85 billion two-year spending blueprint for state government strives to shore up the underfunded pension fund with a $2.2 billion boost in employer contributions. But half of that comes from local governments.

It will also present school districts in northern Virginia with some interesting choices.

It eliminates $65 million that the state provided districts in fast-growing suburban areas — mainly those near Washington — to use in retaining non-classroom staff that competing school systems are trying to hire away.

The Richmond Times-Dispatch says that a $438-billion infusion is coming to public schools in the state, but that other cuts in public education and Medicaid are included.

McDonnell's budget is modeled after a 3.3 percent budget surplus increase in 2013 and a 4.5 percent jump the following year.

Budget cuts more than $400 million from Medicaid

McDonnell's new budget doesn't account for cost increases in hospital and nursing home rates for Medicaid recipients. It also reduces indigent care at state medical school teaching hospitals.

Overall, the new budget the governor presents Monday morning to the General Assembly's money committees trims $416 million from Virginia's Department of Medical Assistance Services.

Income limits for eligibility for optional long-term care are also being reduced, meaning fewer people will qualify.

But rising use of Medicaid forced McDonnell to boost state appropriations for the federal-state entitlement program for the aged, disabled, blind and needy by more than $600 million.

Medicaid's costs have grown by 80 percent over the past 10 years and now consume one-fifth of Virginia's general fund.