After a monthslong stalemate, the state Legislature passed a bipartisan plan to send emergency funding to a program that supports Arizonans with developmental disabilities, with just days left before the program runs out of money.
The Department of Economic Security’s Division of Developmental Disabilities needs $122 million or it could run out of money in May. The division administers the Medicaid program that pays for long-term care services for Arizonans with developmental disabilities.
Republicans and Democrats have butted heads for weeks over how to provide that money, with Republicans backing proposals that included new restrictions and guardrails on the money and Democrats advocating for a “clean” funding bill with no strings attached.
Initially, it looked like that stalemate would drag on another day.
Republicans in the Arizona Senate passed a bill on Wednesday to provide the needed funding with no Democratic support. Hours later, that bill died in the House when all Democrats and some Republicans voted against it.
But, rather than adjourn for the day, lawmakers in the House met for further negotiations and passed a bipartisan bill on Wednesday night that removed some of the more controversial portions of the stricter Senate bill.
“We didn't get everything that we would like to have seen in this bill … but I believe that there were some major accomplishments that ensure that what happened to DDD will never happen again,” Rep. Matt Gress (R-Phoenix) said.
The bill retained some guardrails long sought by Republicans, who argued those rules are necessary to avoid cost overruns in the future but removed some contentious provisions in the Senate version that were opposed by Democratic lawmakers and Gov. Katie Hobbs, who had promised to veto any legislation sent her way until the Legislature sent her a bipartisan funding bill.
One of those new rules would give the Legislature veto power over many future Medicaid waivers sought by AHCCCS, the state Medicaid program.
AHCCCS, with oversight from the governor’s office, submits those waivers to the federal government, seeking permission to provide different types of services or changing who qualifies for coverage, such as when Hobbs’ administration sought to expand access to Medicaid for children last year.
Republicans have long blamed the Hobbs administration for causing the funding crisis. They argued her decision to seek a waiver to continue a program that pays parents who act as caregivers for their children without legislative approval is the primary driver behind the current budget crisis.
Gress didn’t back off that position, but took a more congenial tone.
“While the intent of continuing PPCG was humane, bypassing the Legislature and constitutional process has placed these families and the entire Division of Developmental Disabilities at great risk,” he said. “No program, no matter how well intentioned, can sustain itself without proper authorization and funding.”
The legislation removed a section included in the Senate version that would have required AHCCCS to come back to the Legislature as soon as next year to get legislative approval to continue the parents-as-paid-caregivers program before it expires in 2027.
Parents, caregivers and advocates alike have come to the Legislature for weeks, asking lawmakers to fund the Division of Developmental Disabilities without cutting back on that parent program.
They say that when the parents program first came on line during the COVID pandemic under Republican Gov. Doug Ducey, it was a lifeline that allowed families to pay for care their children weren’t getting, or was going uncompensated, due to the shortage.
“There's a lot of parents that have kids that are 24/7 care, and they left their job. … They can't go get a job, because there's no one to take care of their kids,” parent Rachel Lack said.
The initial batch of federal funding, which had covered 100% of costs for the parent program, has expired. And now the state must come up with the money to cover approximately one-third of those costs.
Democrats praised the House bill — which will fill that gap through the end of June — as a bipartisan success.
“This is a bipartisan plan, and it will protect care and lifesaving services for our most vulnerable Arizonans with disabilities, and it does it without harmful effects to other folks or taking away from homelessness or affordable housing,” Rep. Nancy Gutierrez (D-Tucson) said.
Gutierrez was referencing a change in where the emergency funding will come from.
Earlier in the day, Hobbs issued a statement lambasting the Senate proposal for drawing $38 million from the state’s Housing Trust Fund that pays for programs like an interest rate buydown for first-time homebuyers.
“That money is readily available, pending legislative approval, and not currently serving a purpose,” Hobbs said in a statement. “While housing affordability remains one of the top issues facing our state, Republican lawmakers insist on making our housing crisis worse.”
Sen. Analise Ortiz (R-Phoenix), who has championed bills that attempt to address Arizona’s affordable housing shortage, called that “robbing Peter to pay Paul.”
Hobbs said she preferred to draw money from an existing prescription drug rebate fund.
Ultimately, Republicans in the House agreed to that change, agreeing to pull all $122 million from the prescription drug program. There is over $300 million in that fund, Gress said.
Despite the disagreements on display early in the day, the Senate bill did show evidence of some compromise after months of partisan fighting at the Capitol. And the House bill retained many of those provisions.
That includes reforms supported by families and caregivers, including preventing parents from billing for care services while a child isn’t actually there. It would also prohibit billing for activities “that would ordinarily be performed by a parent of a minor child who does not have a disability,” including laundry, meal preparation and housekeeping.
And all sides agree that putting a 40-hour-per-week limit on the parent caregiver program into law — a change already scheduled to go into effect in July — is a needed reform.
“I'm not saying the governor agrees with all of these points, but I would be surprised if the governor did not agree with almost all of these points, because many of them came from parents and providers at a stakeholders meeting that we had,” Sen. John Kavanagh (R-Fountain Hills) said on Wednesday.
The Senate passed the House version of the bill on Saturday on a 28-1 vote.
Hobbs has voiced support for the latest version of the bill, though her office did not respond to a request to comment on when she will sign it.
“This deal ensures critical services for disabled Arizonans will continue, delivers reasonable guardrails for the Parents as Paid Caregivers program, and protects funding to respond to Arizonans’ housing needs. It’s time for the Senate to get this negotiated bill on my desk to protect services for these families,” Hobbs said in a statement.
The passage is a relief for the families who have come to the Legislature for months, pressuring lawmakers to fund the program their children rely on.
“These services have helped him talk, help him thrive in the world,” said parent Shawn Cutting, who has a son with autism. “Also kept him safe, because I had to become his paid caregiver because there was no childcare for him.”
Cutting said she is happy with the compromise reached by the Legislature.
“Obviously it's not perfect, but it's better than nothing, and it's way better than what we were looking at,” she said.
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