The Legislature is going into session Aug. 15 to consider Gov. Robert Bentley’s lottery proposal to raise money for the General Fund, but the plan is not a guaranteed quick fix for either of the state’s biggest budget dilemmas.

Medicaid and prisons together make up more than 60 percent of the state’s General Fund spending, according to budget documents. Both are in need of an infusion of cash, and the Legislature adjourned its regular session without making significant changes to funding for either the Medicaid Agency or the Department of Corrections.

The governor has said he believed his lottery proposal would raise $225 million a year for the state’s General Fund. Putting the money in the General Fund, rather than earmarking it, would let legislators determine each year where the money is most needed, he said.

Bentley has said his focus in the special session is to get funding for Medicaid. He still intends to ask the Legislature to approve funding for prison construction, although he said that will come next year, not in the special session.

But it takes time to set up a lottery system, and the money might not start coming in for a year or more.

Medicaid already has started making cuts to deal with its budget problems. As of Aug. 1, it cut the enhanced payments it had been paying for visits to primary care physicians, called the pay bump. Pediatricians and rural physicians have warned that they might have to quit taking Medicaid patients without the pay bump.

More cuts are possible, but none have been set at this time, said Robin Rawls, communications director for Alabama’s Medicaid Agency.

Medicaid also has put on hold its plans to institute regional care organizations, a system designed to cut costs and improve treatment. The idea is to provide case management services for Medicaid patients who suffer from chronic diseases in an attempt to provide better care while also cutting costs – “the right care at the right place at the right time,” as Rawls described it.

Managing an illness daily is cheaper and better for the patient than letting a situation hit a crisis point and dealing with it in an emergency room, she said.

The federal government had approved Alabama’s plan to start RCOs and agreed to give the state $748 million over five years to set up a pilot project, Rawls said. If the program proved financially worthwhile in Alabama, it might be used in other states.

But the federal funding is contingent on the state funding the program adequately, and the state doesn’t have the money to do that at this time, Rawls said.

The Medicaid Agency requested more than $840 million from the General Fund in the 2016-17 fiscal year; the governor recommended $785 million; the Legislature approved $700 million, according to budget documents.

Rawls said the Medicaid agency still would have had to make cuts if it had gotten $785 million from the General Fund, but that amount would have allowed it to get the RCO plan up and running. With $700 million, Medicaid is having to make cuts and put the RCO plan on hold.

Rawls said Medicaid officials are in talks with the governor and federal officials about how to proceed with the RCO plan. Federal officials seem supportive and invested in the idea, and they have not given the state a deadline to either institute the plan or lose the money.

How long that situation continues might depend on possibilities for raising more money to fund the program.

Bentley’s lottery proposal would have to pass the Legislature with a three-fifths majority by Aug. 24 to get it on the November ballot, where it would face a vote of the people. If that plan isn’t approved, the Legislature goes back into regular session in February.

Prisons

Prisons was the other big ticket funding item that died in the regular session.

The prisons are crowded. Built for 13,500 inmates, they currently hold almost 25,000. Conditions are questionable in some of the lockups, sparking concerns that a federal judge might force a solution before the state manages the problem on its own.

The governor this year proposed issuing $800 million in bonds to pay for building four new prisons and renovating or demolishing existing ones. Despite negotiations to scale back the plan and start out by building two new prisons, the proposal died in the waning hours of the regular session, said Sen. Cam Ward, R-Alabaster, a supporter of the plan.

Ward said he did not expect prison funding to come up in the special session, but he does expect some variation of the construction plan to be front and center when the Legislature comes back in February.

Despite dire conditions in some of the prisons, Ward said he believes the state can avoid federal intervention until legislators have a chance to act next year.

“What helps your case with the federal court is you have got to show you’re making a good faith effort,” Ward said.

The state in recent years has been taking steps to reduce and manage its inmate population, for instance reducing some sentences and approving the addition of 100 parole and probation officers in an attempt to keep inmates who are released from offending again and going back into the prisons.

Those changes are aimed at making a difference in the prison population long term. Ward said it’s too soon to see a big change in the prison population, but he expects the numbers to start ticking down because of the changes.

“I think we’re finally going in the right direction,” he said.

But the state isn’t going to be able to bring its prisons in line with federal standards by chipping away at the population, Ward said.

“No matter how many reforms, we need some construction, if only to make prisons (comply with) the Eighth Amendment,” Ward said.

Read more about the special session and funding issues here:

Bentley: No Casino Gambling in Lottery Proposal (Montgomery Advertiser)

Why a Change of Heart About an Alabama Lottery? (AP)

Physicians, Clinics Brace for Alabama Medicaid Cuts (Anniston Star)

Governor Robert Bentley Talks Lottery Proposal, Medicaid, Special Session (ABC 33/40)

Governor Bentley Says Lottery Money Not for Education (WBRC)

Bentley to Bring Back Mega-Prison Proposal (Decatur Daily)

Prison Construction Bill Dies With Legislative Session (Montgomery Advertiser)

This story was updated Aug. 5 to include information about the governor’s lottery proposal.