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No $465M COVID-19 Education Funds Clawback Justice Says

Gov. Jim Justice announced Friday that West Virginia will not face a clawback of $465 million in COVID-19 money from the U.S. Department of Education, alleviating concerns raised by state lawmakers during the final days of the legislative session in March.

The Republican governor said in a statement that federal officials approved the state’s application for a waiver for the money, which was a portion of the more than a billion dollars in federal aid the state received to help support students during the COVID-19 pandemic.

In order to receive the money, the state needed to keep funding education at the same or a higher level than before the pandemic. In other words, the federal money could supplement existing state investment in education but not replace it.

For federal spending packages passed in 2020 and 2021, that meant a dollar-for-dollar match. For 2022 and 2023, the federal government examined the percentage of each state’s total budget being spent on education.

Those regulations were waived for West Virginia in 2022. As lawmakers worked to finish the state budget in March at the close of the session, the state had not been approved for a waiver for 2023.

The question threw the state’s budget process into disarray and caused uncertainty in the days before the 60-day legislative session, with lawmakers saying they would pass a “skinny budget” and reconvene to address unfinished business in May, when the financial situation is clearer.

Justice said then that his office was negotiating with the federal government and that he expected a positive resolution, citing funds dedicated to school service and teacher pay raises each year since 2018 — when school employees went on strike over conditions in schools.

On Friday, he praised the federal government’s decision, and he said he was never concerned the waiver wouldn’t be approved.
“This announcement came as no surprise and was never a real issue,” Justice said.

He also said the state has dedicated money to building projects and putting teaching aides in classrooms to improve math and reading skills. The state said it spent $8,464 per K-12 pupil in 2024, compared with $7,510 during Justice’s first year as governor in 2017, according to documents submitted to the federal government.

But because state spending increased overall — from $4.9 billion in 2017 to $6.2 billion in 2023 — the percentage marked for education decreased. The key metric eliciting pause from the federal government was an 8% decrease in the education piece of the budget pie — from 51% in 2017 to 43% last year.

Justice said the state’s investment in education speaks for itself: State leaders also approved $150 million for the state’s School Building Authority in the state budget for the fiscal year starting in July.

State Budget Revenue Healthy, Officials Unsure About Tax Cut Trigger

State revenue is solid for the year, and over estimates, but down from last year because of personal income tax reductions and severance taxes.

West Virginia tax collections are higher than estimated, but it is unclear if another personal income tax cut will happen in 2025.

Legislators heard Monday from Mark Muchow, the deputy secretary of the state Department of Revenue, about 2024 budget revenue numbers.

“After nine months, the state has collected more than $4.07 billion. That’s $522.9 million above estimate,” Muchow said. “It’s down from last year by 11.6 percent, which is pretty good considering that we cut the income tax by 21.25 percent and some reductions occurred in the severance tax as well.”

Muchow said personal income tax collections are $184.1 million above estimate for the year. He explained that it is down 9.4 percent year to date over last year.

“Again, 9.4 percent is pretty good considering that we cut the tax rates by 21.25 and the income tax as a whole was over 40 percent of general revenue fund collections,” Muchow said.

Severance taxes on coal, gas and oil were budgeted for just $22.1 million for this fiscal year to date. So far, the state has collected $48.129 million. That sounds promising, except the previous fiscal year brought in nearly $85 million at this point in 2023 and is off more than 43 percent.

Since taking office, Gov. Jim Justice has maintained relatively flat budgets and kept budget estimates low as well. That has guaranteed annual budget surpluses. Over the last few years, they have topped $1 billion each fiscal year.

Last year, when the West Virginia Legislature passed the personal income tax cut, the bill included triggers that would further reduce those taxes. The triggers are tied to budget surpluses.

Del. Larry Rowe, D-Kanawha, asked about the trigger mechanism during Monday’s meeting.

“Are you able to project whether the August trigger is going to come into play or not?” he said.

“It’s too early for us to do that type of projection. There’s a lot of revenues outstanding. I do believe that the income tax is going to trend lower over the final, at least over the April, May period, [it] may bounce back in June,” Muchow said. “But there’s too many variables out there to make a good, firm analysis on the trigger.”

“When do you think you’ll comfortably be able to make that calculation?” Rowe asked.

“We will not have a complete idea till the end of June,” Muchow said. “But we’ll have a better idea for the end of April. And even better at the end of May. So by the end of May, things will be a little bit better in focus than they are today.”

“So if we were to have a special session in May, and that has been discussed, then you may have the numbers you need to calculate whether the August trigger will come into play?” Rowe asked.

“We’ll have a better idea, but not a perfect idea,” Muchow said. “Again, there’s a number of variables outstanding that we’d have to consider in that equation.”

The Legislature is expected to return to Charleston for a special session on the budget in mid-May following the election but before the end of the month.

Justice Calls On FEMA, Lawmakers To Supplement Storm Aid

After intense storms last week, Gov. Jim Justice is seeking federal aid from FEMA and the creation of an on-retainer state emergency fund by West Virginia lawmakers.

Updated on Wednesday, April 10 at 3:35 p.m.

Gov. Jim Justice is developing a disaster declaration request for the Federal Emergency Management Agency (FEMA) over severe weather events that occurred across West Virginia last week.

If approved, the request would grant federal relief funding to West Virginia residents affected by last week’s incidents, which included flooding, tornadoes, and destructive winds. The storms claimed the life of one Wood County resident and wrought structural and property damage statewide.

To qualify as a FEMA disaster, weather emergencies must reach a threshold of local damage that warrants federal intervention.

To strengthen the state’s case for a disaster declaration, Justice said during a virtual press briefing Wednesday that he would combine each of last week’s incidents into a single request.

“The problem with FEMA is they want a great number of people that are affected, or a great amount of property damage,” he said.

Justice has already declared ongoing states of emergency for 12 different counties in response to the incidents. These declarations facilitate state-level emergency response efforts, but do not secure the funding a FEMA disaster declaration provides on the federal level.

During the call, Justice also voiced disapproval of state lawmaker’s inaction on aspects of his budget proposal for the 2024 regular legislative session, which he said would have aided the state’s response to the emergencies so far.

Storms in West Virginia’s Northern Panhandle elevated the Ohio River’s water levels, causing severe flooding in nearby Wheeling last week.

*Photo Credit: Wheeling Fire Department*

Justice specifically pointed to a $50 million emergency fund that he requested to have on retainer for unexpected crises.

“The $50 million in regard to emergency funds, because of catastrophic events within our state, is something that is so important,” he said. “It’s unbelievable.”

But, in a statement following Wednesday’s briefing, Speaker of the West Virginia House of Delegates Roger Hanshaw, R-Clay, pushed back against Justice’s characterization of budget proceedings.

Hanshaw said that any funding set aside in this year’s budget would not yet have been accessible in response to last week’s storms.

Additionally, Hanshaw said that the state’s $85 million Civil Contingent Fund can be applied toward immediate disaster relief with the governor’s approval.

“If the governor wishes to respond to this tragedy in any way, he has the full capacity to do so, unfettered by the Legislature,” he said.

Justice has already declared that he will call lawmakers back to the Capitol before May 14 for a special session of the West Virginia Legislature, with expansions to the state’s budget at the top of his mind.

In pushing for these expansions, Justice said he will renew calls for the state to set aside an emergency relief fund.

“I will surely put that back on the call,” he said.

**Editor’s note: This story was updated to include a comment from Speaker of the West Virginia House of Delegates Roger Hanshaw, R-Clay.

W.Va. Grapples With IDD Waiver Program

In the final hours of the 2024 regular legislative session, lawmakers passed a budget that cut funding for IDD waivers.

The IDD Waiver Program

By connecting people with disabilities with resources like home health care workers and financial support, the Intellectual and Developmental Disabilities (IDD) Waiver program allows people with disabilities to live outside hospitals and institutions.

Department of Human Services (DHS) Secretary Christina Mullins testified before the Joint Standing Committee on Health and Human Resources on Dec. 12, 2023 about the status of the IDD program.

Alongside her, Robert Hansen, special assistant for IDD at DHS, also testified about the program, stating West Virginia has approximately 33,000 individuals in the state who have a mental, intellectual or developmental disability.

“Six thousand of these individuals are currently being served by the IDD waiver program,” Hansen said. “And then we also have 530 individuals who are on the waitlist to enter that program. And today we have approximately 73 individuals who are IDD who are in our two state hospitals.”

Hansen also told the joint committee that workforce shortages place a burden on the IDD system.

“There’s also a lack of specialists that can work effectively with people with IDD, and that includes individuals that are trained in positive behavior support, and then people who are trained in applied behavior analysis,” Hansen said. “These are individuals that can work with patients, clients who are identifying and having serious issues and could be a support and for the direct service staff and helping to develop active treatment plans to address the behavioral issues that may be becoming more and more of a concern.”

Mullins testified that not only are workforce shortages the biggest challenge DHS faces but that those workers need development training.

“We’d like to increase the availability of training for all levels of staff,” Mullins said. “This training should include coaching and mentoring to ensure that select placement can be achieved. It’s not enough just to train, we have to also mentor.”

During the last 10 months, Mullins and Hansen have provided sworn testimony to various committees of the legislature that depict a crisis among the workforce of the IDD program largely due to low wages that cause operating losses at the state psychiatric hospitals.

Budget Cuts

In the final hours of the 2024 regular state legislative session, West Virginia lawmakers passed a budget that cut funding for IDD waivers.

In 2023, the IDD Waiver budget line item was $108,541,736. In this year’s budget, the IDD Waiver program was allotted $97,687,562 — a decrease of more than $10.8 million.

Senate Finance Chairman Eric Tarr amended the cuts into the budget on the last day of the session. He said the decrease in funds for individuals with disabilities was an effort to increase transparency on the state health department’s spending following last year’s split of the Department of Health and Human Resources into three departments.

In a statement published on March 12, Tarr explained that his committee broke down much, but not all of Human Services in subsections and restricted the ability to transfer funds outside of those subsections.

“Ultimately, we increased the aggregate level of appropriation to Health, Human Services, and Health Facilities (what would have been DHHR) by about $9 million this year,” Tarr wrote. “However, this included a $100,000,000 improvement to contract nursing. This necessary improvement (which was needed to keep the state-owned hospitals open) required reductions in other areas.”

Tarr said during this process of breaking the department up, the Legislature found out that appropriations they made to medical services in previous years had been redirected to contract nursing in facilities.

“In other words, it became clear where money was being redirected relative to the Department’s appropriation request,” Tarr wrote. “The previous secretary was using a soft target request to fund mismanagement of contracts, which now exposed, is being corrected.”

Tarr said a subsection was created in the budget this year for waiver programs. He said his committee fully funded Title XIX, the Aged and Disabled Waiver, but cut all other line items, including the IDD Waiver, by 10 percent.

“The department can now transfer between waivers, but can no longer transfer to or from other sections,” Tarr wrote. “So, in short, there was a $100 million improvement to health facilities that resulted in a collective reduction of about $91 million to Human Services and Health Services.”

Mike Folio, legal director for Disability Rights West Virginia, said the budget cut not only affects those on waivers but loses federal matching dollars.

“With a budget cut of $11 million when you factor in the match through Medicaid, it’s roughly $33 million. What that translates into is diminished services,” Folio said.

Folio said the IDD waiver program was created decades ago by Congress to provide a lifeline to those individuals who are disabled and keep them from being committed to a psychiatric hospital.

Not only are outcomes better when an individual is able to be treated in a community-based program, but according to Folio, it is a cost-saving measure.

He said the cost to place someone at Sharpe Hospital is roughly $990 per day, per person. To place someone in a community program costs approximately $390 per day.

“They failed to do the required financial analysis to determine the impact of cutting the IDD waiver budget,” Folio said. “Had they done this and had they actually looked at the cost differential between institutional costs compared to community integration, they would realize that they would save $600 a day, get better outcomes, and actually comply with the law,” Folio said. “Certain members of the Legislature ignored those three accepted realities, and instead slashed the equivalent of $33 million out of the budget for individuals with developmental disabilities.”

During a press briefing, Gov. Jim Justice said he will call a special session for lawmakers to make adjustments to the health and human services budget.

“We have hundreds of thousands of people in West Virginia that are going to be affected — can you imagine, can you imagine the good work that we did and now we could possibly hurt those folks?” Justice said.

Appalachia Health News is a project of West Virginia Public Broadcasting with support from Marshall Health.

State Revenue Down, But Still Ahead Of Estimates

West Virginia’s state revenue is down from last fiscal year by 12 percent. Despite the decrease in income, the state is exceeding revenue estimates by more than $522 million.

West Virginia’s state revenue is down from last fiscal year by 12 percent — a difference of more than $500 million.

In March 2024, the state collected about $487.4 million. That is nearly $95 million over revenue estimates, but 6 percent lower than what it collected in March 2023.

Sean O’Leary, senior policy analyst with the West Virginia Center on Budget and Policy, attributed the change to personal income tax cuts passed last year.

In 2023, Gov. Jim Justice cut personal income tax in the state by more than 20 percent, the largest tax cut in the state’s history.

Proponents of the cuts saw it as a way for residents to keep more money from their paychecks. But others worried decreasing state funding would make it harder to keep up with infrastructure needs.

O’Leary said that the decrease in state funds has reduced Medicaid and higher education resources in the state.

He also said that a collapse in natural gas prices has further reduced taxable revenue sources for the state.

Still, despite the decrease in income, the state is exceeding revenue estimates by more than $522 million.

Budget estimates are set by the State Budget Office, a staff agency for the governor.

Justice has expressed optimism over the surplus, despite the decrease in revenue and a dip below state estimates in February.

“We’ve shown time and time again that when we put West Virginians first, and prioritize their needs and wants, it propels our rocket ship higher,” Justice said in a Monday press release.

Legislators Respond To Justice Budget Blowback

Lawmakers are responding to Gov. Jim Justice’s recent statement that the lack of health and human services funding in the recently passed budget is “a dog’s mess.”

Even though Justice signed the nearly $5 billion budget bill, he said in a Thursday media briefing that he blames the gaps in health care and human services allocations on legislative leaders not listening to experts and setting their own agendas.

He’s considering calling the House and Senate back for an April special session to rework the budget. Some of the issues involved are childcare, disability and foster care initiatives not addressed.

Del. John Williams, D-Monongalia, and a House Finance Committee member, said he’s concerned that the fear of a $465 million federal claw back on the use of COVID-19 emergency education funding may be a smokescreen for mismanaged revenue collections and tax cuts.

“With inflation, in reality, we know that a flat budget is not a flat budget,” Williams said. “You’re seeing essentially reductions every year, and so we need to do a better job of investing in our people.”

Several lawmakers say the passed budget was simply a starting place.

House Health and Human Resources Committee Chair Amy Summers, R-Taylor, is also a House Finance Committee member. She said she pushed for the health care and human services allocations, and continues to seek further support for those with intellectual and developmental disabilities.

“I have requested that the Finance committees really look into the waiver programs, maybe a deep dive from the Department of Human Services,” Summers said. “Sen. Tarr has a different idea about those programs than perhaps what the House does. So we need to understand that better, and find ways that we can ensure we’re taking care of our most vulnerable people.”

Summers said the state is also waiting on a federal follow-through to enhance child day center funding.

“We’re waiting on the federal government to tell us if they’re going to start providing enrollment versus attendance,” Summers said. ”If that comes from the federal government, then part of those monies will probably come from them as well. But we do realize how important childcare is to get people back in the workforce. So it’s something that we are interested in looking deeper into.”