Background: Rauner Adviser Donna Arduin's Playbook

The New York Times May 8, 1995, Monday, Late Edition - Final

In New York, the Dying Days Of Expansive Government


SECTION: Section A;   Page 1;   Column 1;   Metropolitan Desk

For more than half a century, governors and mayors, Republicans and Democrats alike, built New York City's government into the nation's most expansive, sheltering municipality, one that protected its citizens from some of the harshness of the free market and provided an array of subsidized services unavailable anywhere else.

But for several years, a growing chorus of fiscal analysts and public officials has warned that New York might no longer be able to afford the government it has built. They urged gradual and planned shrinkage because, as Eugene J. Keilin, the departing chairman of the Municipal Assistance Corporation, put it, "decompression was better than the bends."

Now, however, change is coming, far faster than many people wanted or expected. All at once, three levels of government are rushing toward the same goal: a smaller, less ambitious, less expensive bureaucracy.

Congress, the Governor and the Mayor are all cutting spending and reducing or eliminating programs because each rejects the very idea of the welfare state. All see it as an anachronism that smothers private initiative.

And so, academics and economists say, no place is likely to face a greater transition than the city that built the prototype.

Indeed, while the debate about what is ahead is just beginning, and the ultimate shape of Federal, state and local legislation and budgets is still unclear, some economists are already speaking of New York City's future in phrases once reserved to describe Eastern Europe's bumpy transition from Communism to capitalism.

"In the long run, the lesson of the next few years may be that New York is simply not wealthy or economically vital enough to afford the extensive public sector that it has created over the post-Great-Depression period," the investment banking firm J. P. Morgan said in a recent report to investors in the municipal market. "But dismantling it will take time: the new financial plans share a brand of shock therapy that may not be acceptable to the public."

At Salomon Brothers, David G. Hensely, a vice president and regional economist, said that New York City needed to reduce taxes and the costs of doing business to become more competitive. But, he added, "I think the transition will be messy. There's also this big issue about the transition socially to a lower-government-service economy. People in the region are very accustomed to a high level of government service. I worry about how we make that sort of transition."


Welfare Pioneers

The City and State Created Public Aid

In many ways, it was New York, both the city and the state, that pioneered modern government regulation, and the New Deal. The Triangle Shirtwaist Company fire in 1911, which saw women factory workers leap to their deaths because of blocked fire escapes, led to a host of labor and safety measures -- from the minimum wage to laws on working conditions.

Franklin D. Roosevelt created New York's first welfare program as Governor in 1931, six years before he told the nation in his second Presidential inaugural address that "the test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have too little."

And now, 64 years later, the city's public assistance rolls are up to 1.1 million in about 300,000 families -- as compared with the 2.8 million people who are working.

Mayor Fiorello H. La Guardia, a Republican, built a vast network of public housing. Decades later, when the Federal Government stepped out of the construction of low-income housing, another Mayor, Edward I. Koch, a Democrat who liked to call himself a "liberal with sanity," stepped in, transforming acres of urban blight with 50,000 new houses and apartments.

The city that never sleeps has a 24-hour subway system, unlike those of Washington, Boston and Philadelphia. Its university system is larger than those of many states. The Health and Hospitals Corporation -- manager of 11 acute-care hospitals -- dwarfs any other municipal hospital system. New York's homeless are granted an unconditional right to shelter.

But after the Federal Government cut back aid to localities under President Ronald Reagan, and after the Wall Street and real estate boom of the 1980's ended in the stock market crash of 1987, dwindling tax revenues left the city with a structural deficit, unable to pay for the vast government it had built.

The last recession was so severe for New York that 580,000 jobs disappeared statewide, more than 300,000 of those in New York City alone. That was 10 percent of the city's job base. Since the recession ended, the state and city have lagged stubbornly behind as the nation saw a 6.2 percent growth in jobs.

City property tax collections not only stopped growing but started declining. Layoffs and shrinking bonuses on Wall Street depressed income tax levels. At the same time, city Medicaid costs have been growing at a rate of 10 percent a year, and the city's welfare population is hovering at a record high.


Equation of the 90's

Less Government Equals More Jobs

Just as Washington is considering tax cuts, Gov. George E. Pataki and Mayor Rudolph W. Giuliani have staked their economic policies on the presumption that the way to jump-start the economy is through tax reductions of their own.

"As we confront our state's fiscal crisis, let us remember a simple truth," Mr. Pataki said in his inaugural address. "More government means higher taxes and fewer jobs. Less government means lower taxes and more jobs."

Mr. Giuliani has focused primarily on reducing select taxes on businesses, Mr. Pataki on the personal income tax. To afford these tax cuts, they are shedding workers, making multimillion dollar reductions in subsidies to the city's mass transit system, cutting aid to education and higher education.

Congress, meanwhile, in a drive to cut taxes and balance the budget by 2002, will be reducing funding to the same programs. Although the battle over the Federal budget is just beginning, reaching the goal of a balanced budget would almost inevitably require millions, if not billions, of dollars in aid cuts to the Metropolitan Transportation Authority, the city hospital system, education, public housing and social programs -- just as both the Mayor and the Governor are pushing for cuts of their own.

When fully in effect in 1998, Governor Pataki's tax cuts, if not altered by the Legislature, would reduce state revenue by $6.8 billion, or 20 percent of the state's current budget.  By 1999, the city's own tax cut program would amount to nearly $1.1 billion in lost revenue, or 3.5 percent of the city's proposed budget for fiscal 1996.

The gamble is whether the tax cuts will work to expand the economic base -- or simply require even further cuts in government. A debate is already under way among academics and public officials over how much local taxes actually spur the economy, and whether New York can achieve competitive advantage when everyone's cutting taxes.


Will Plan Backfire?

Cuts May Erode Quality of Life

And there's another question: whether the cuts in city services will so erode the quality of life that employers will turn their backs on the city despite the tax cuts.

Mr. Keilin, the departing M.A.C. chairman, said, "It is not certain that lower taxes always produce a better business climate, but high taxes never do." He added, pointedly, "Good services don't always improve the economy, but poor services never help."

Mr. Giuliani's own budget, which his budget director, Marc V. Shaw, said reflected the most cautious scenario, forecasts only sluggish job growth for the rest of his term, with a net gain of 4,000 jobs in 1995 and an additional 9,000 in 1996. In 1997-99, it paints a more optimistic picture with an increase of 79,000 jobs.

Part of the reason for the low figures is that in the drive to reduce government spending, the city, state and Federal governments all are reducing their own work forces at the same time. Each of them also wants to cut poverty and health programs that have fueled specific growth areas in the city economy in recent years -- health care and social services employment -- even as they have been a rising burden to the city and state governments.

The Governor and Mayor say that New York has created a Medicaid system that is the costliest in the country, and both are trying to rein in Medicaid spending.

How this will affect health care employment in the city is under debate. The Giuliani administration projects a slowdown in the 8,000 to 10,000 jobs that would otherwise be created in the industry each year. The Greater New York Hospital Association predicts that 33,000 jobs could be lost this year if the Assembly agrees to Medicaid cuts backed by the Governor and the Republican-controlled State Senate.

Over the next five years, the association predicts that health care employment in the city would then grow by 22,400 jobs, far slower than if current programs were continued.

"Our expectation is that these cuts flatten the New York economy not only initially, but for a protracted period of time, well into the next century," said Kenneth E. Raske, the hospital association's president. He said that the job loss will get worse if Congress, trying to balance the budget by 2002, seeks deep cuts in projected spending on Medicare, the health insurance program for the elderly.

Donna Arduin, Mr. Pataki's first deputy budget director, said the administration had no projection of what would happen in the health care industry. "The first thing you can do is hope that the cut will force industries into creating efficiencies," she said. "We can only hope for the best there. Other industries have had to do it."


The Gap Widens

Rich Get Richer And the Poor Don't

Many of the people who are likely to lose their jobs hold low-paying positions with few benefits, including home care workers, nursing attendants and social service counselors. They will be looking for new employment at the same time that Federal, state and local cuts in welfare programs are being redesigned to push thousands of public assistance recipients into work.

In a variety of ways, if Mr. Pataki's proposals -- endorsed by Mr. Giuliani -- were enacted, the poor would find it harder to make it, particularly in New York City, where rents are high.

In a significant change in the state's welfare program for single adults, Mr. Pataki has proposed that recipients be allowed to collect benefits -- which average $325 a month -- for only 60 days, rather than the current unlimited time. Mr. Giuliani has said he would eventually like to see the program, under which about 240,000 people get aid in New York City, eliminated altogether.

The Governor has proposed cutting the basic welfare grant by $38 a month for a family of three. That would reduce the stipend from $577 to $539. For welfare recipients living in public housing or shelters, another $53 of the grant, which is designed for energy costs, would be cut.

Because the welfare grant is low enough to leave a family in New York City strapped for rent, the state has in the past paid a special supplement to families in the city facing eviction, to allow them to make up the difference between their welfare money and rent. The Governor has proposed ending the supplement, which averages about $250 a month for 20,000 families.

Mr. Giuliani has also started a more rigorous screening process for home relief applicants that has cut by 60 percent the number of people being accepted onto the rolls. He plans to put a similar screening process into effect in the summer for women applying for the main welfare program, Aid to Families with Dependent Children.

Further cuts in welfare programs are likely down the road, depending on the final shape of Federal welfare legislation. The House bill passed in March would give states more control of welfare policy but also cut projected spending on social programs by $69 billion over the next five years.

Will grant reductions prompt welfare recipients to work? When Michigan eliminated its general assistance program for single adults in 1991, only 38 percent of those dropped from the rolls found formal employment in the following two years, a study by the University of Michigan found.

What that could suggest is that the new government policies will accelerate the trend of the 1980's. Recent census data shows that during that decade, New York City went from 11th to 5th among cities with the biggest income gaps between rich and poor. New York State moved from fifth to third among states.

"This raises the whole dual city hypothesis," said Raymond D. Horton, the president of the Citizens Budget Commission, a business-financed advocacy group on fiscal policy, "whether long term we will see a continuing trend in which a smaller and smaller share of New Yorkers receive a larger and larger share of income provided by the New York economy."

LOAD-DATE: May 8, 1995


GRAPHIC: Graphs: "AT A GLANCE: The Numbers Behind the Policy" shows working vs. welfare recipients, unemployment rates from 1990 to 1994, public assistance recipients in New York City from 1980 to 1994 and New York City's spending on Medicaid from 1982 to 1996. (Source: Human Resources Administration; Office of Management and Budget; Bureau of Labor Statistics)(pg. B6)

Copyright 1995 The New York Times Company

The New York Times

January 16, 1997, Thursday, Late Edition - Final

In the Fight Over Medicaid Cuts, Signs of a Tense Year in Albany


SECTION: Section A; Page 1; Column 1; Metropolitan Desk

LENGTH: 1020 words


Representatives of the health care industry today began a fierce attack on the deep cuts Gov. George E. Pataki has proposed for the state's Medicaid program, saying the reductions would be devastating for elderly and disabled residents of the state.

The criticism came a day after the Governor presented a $66.1 billion budget that wrings most of its cuts from the state's huge Medicaid expenditures for hospitals, nursing homes and home care providers -- particularly those in New York City and its suburbs, health experts said.

Mr. Pataki's aides said he would reduce state financing for Medicaid by $913 million in the next fiscal year, a drop of about 7.4 percent, largely by eliminating a host of reimbursement formulas that they say have encouraged waste and replacing them with set fees for recipients.

But health care providers said the Governor's plan essentially balanced the state budget on the backs of sick people.

"Our industry is being asked to do more than any other in terms of deficit reduction," said Kenneth E. Raske, the president of the Greater New York Hospital Association. "These proposals are so damaging to us that they are going to create an enormous amount of anxiety."

Joining the fray, the Democratic leader of the State Assembly, Speaker Sheldon Silver, said today that he believed the Governor's cuts would force hospitals to close and would lead to the loss 28,000 jobs in the state's health care industry.

The reactions presaged another mammoth budget fight in Albany this year involving not only lobbyists for one of New York's largest and powerful industries but also the state's leaders.

Indeed, Joseph L. Bruno, the Republican Senate majority leader, this afternoon criticized Mr. Silver's remarks, and said, "I believe this will be the most contentious year that we have had in government in a lot of years, and it's going to be because Speaker Silver is refusing to recognize that the campaigns are over and it's time for us in this state to get on with governing."

Donna Arduin, the Governor's deputy budget director, defended the proposed cuts, saying, "We want to get rid of the patchwork reimbursement system that has encouraged inefficiency and replace it with a system that rewards health care providers that operate efficiently."

The Governor called for similar cuts in the state's Medicaid program last year. But legislative leaders restored most of his proposed cuts after lobbyists for the health care industry and the industry's unions began a blistering statewide television and radio advertising campaign attacking his plan. The lobbyists spent $5 million on the effort.

Privately, lobbyists for the industry said they would hold their fire for now and give the Governor the opportunity to scale back his proposed cuts. But they added that they were prepared to spend as much as they did last year if he sticks with his current position.

"We will spend whatever resources we have to defend the health care industry," said Dennis Rivera, president of 1199, the National Health and Human Service Employees Union, which represents 120,000 health care workers in New York. "If enacted, these cuts will lead to a dramatic loss of jobs among health care workers and throw the health care industry into deep turmoil."

Because the Federal Government and localities match each dollar the state pays for Medicaid, the actual cut for hospitals, nursing homes and home care providers is $2.1 billion. Though Medicaid is often regarded as a program that pays only to tend the medical needs of the poor, such a cut would affect communities rich and poor because health care institutions have long relied on Medicaid to help cover overall expenses.

"There are no Medicaid nurses, no Medicaid doctors, no Medicaid X-ray technicians in New York State hospitals," Mr. Silver said. "When an emergency room is forced to shrink its staff because of these cuts in health care, we all lose. Whether you pay by credit card, by third-party insurance, Medicaid or Medicare, you lose as a result of these cuts."

The state's hospitals take the biggest hit under the Governor's plan. Over all, the Governor's plan would cut state, Federal and local Medicaid financing for hospitals by about $824 million, with $275 million of that involving state cuts.

Part of the reduction is accomplished by limiting to 15 the number of days the state will pay to hospitalize an elderly person who is well enough to enter a nursing home. But many experts say such limits ignore the fact that there are often waiting lists at nursing homes. The limits, they add, would force hospitals to absorb the extra costs or discharge elderly people before they have been accepted in a nursing home.

The state would also no longer pay the entire tab for nonemergency treatments that are provided to Medicaid recipients in emergency rooms. The Governor's aides contend that recipients with minor ailments should seek help at clinics or doctors' offices, not emergency rooms.

But hospital administrators say there are many instances when they must examine a person to determine whether the ailment is minor or truly serious. An example would be someone suffering chest pains that could be the result of a heart attack -- or heart burn.

The nursing home industry shoulders a large share of the cuts as well. The Governor's budget reduces state, Federal and local Medicaid expenditures for nursing homes by about $601 million. Of that, $278 million involves state reductions that are achieved by largely eliminating a formula that ties reimbursement to the relative health of patients and the kind of care they receive.

The Governor's aides say he wants to replace that formula with a flat rate that is determined by the average spent on nursing home patients in a given region. That way, they reason, nursing homes are rewarded if they are efficient and penalized if they are wasteful.

But nursing home administrators say the cuts produced by the change would discourage them from accepting patients with more serious illnesses, forcing patients to spend more time in hospitals.

LOAD-DATE: January 16, 1997


Copyright 1997 The New York Times Company

St. Petersburg Times (Florida)

February 28, 1999, Sunday, 0 South Pinellas Edition

Plans push cheaper medicines



LENGTH: 1303 words



Here's what life without Prozac is like for Barbara Lee. It starts with small overreactions: tears over a dropped glass. Then comes the morning that she can't seem to get out of bed. Finally, there's the mind-numbing depression, the kind that leaves no room for any thought beyond her suicide plan.

"If I was told I could not get Prozac, I would have to go into therapy about the anxiety that alone would cause me," said Lee, a University of South Florida psychology researcher from St. Petersburg.

But under a plan being pushed by Gov. Jeb Bush, it could become more difficult for poor Floridians and for state employees such as Lee to get expensive, name-brand drugs they use to control everything from certain mental illnesses to ulcers to heart problems.

Bush hopes to save $ 200-million next year alone by developing a list of approved drugs that doctors could readily prescribe to the state's 1.5-million Medicaid recipients. The idea is to save money by requiring doctors to get state permission before prescribing high-cost drugs if there are lower-cost alternatives. State legislators are considering a separate plan, also supported by Bush, to develop a similar list for state employees.

Neither plan has captured the attention of the public. But both have caused an uproar among the state employees union and advocates for the mentally ill, AIDS patients and the poor. Critics of the plans argue that patients' health could suffer because the cheaper alternative drugs may be outdated, ineffective or cause adverse side effects. Backed by lobbyists for powerful pharmaceutical companies, the critics say the plan could end up costing the state money in the long run.

"I just don't buy the argument that doctors are being sold a bill of goods and are prescribing drugs that people don't need," said Mark Neimeiser, a lobbyist for the state employees union. "People are going to get sicker."

Both the critics and the Bush administration insist that the evidence is on their side, pointing to studies and the experiences of other states to make their cases.

From the governor's office comes this argument: Exploding Medicaid costs make the proposed reforms necessary. Besides, the governor's aides argue, private insurers and some states have been reining in costs for years by limiting the types of drugs available.

During the past five years, Medicaid drug spending increased an average of 16 percent per year and is expected to top $ 1.1-billion next year. That's nearly 2 percent of Florida's entire state budget for 2000. Bush's budget director Donna Arduin said Florida's Medicaid program lags far behind other states, such as Texas and Illinois, when it comes to using low-cost drug substitutes.

To catch up, Florida would identify low-cost substitute drugs, particularly in a few key categories. Twenty percent of the state's Medicaid budget for pharmaceuticals is spent on just 12 drugs. The top three drug categories by cost are drugs used to treat gastrointestinal disorders, mental disorders and AIDS.

In a written presentation of her plan, Arduin envisioned that drugs such as Zantac, a drug used to treat gastrointestinal disorders, which costs $ 19 per prescription, would be substituted for the newer but more expensive Prilosec, which costs $ 117. Wellbutrin, an anti-depressant that costs $ 29 per prescription, could be substituted for Prozac, which costs $ 101.

Saving the $ 200-million in drug costs is critical to other initiatives Bush outlined in his budget proposal, such as increased funding for child welfare, the disabled and the elderly. But the protests have led Arduin to reconsider at least a few aspects of the plan. She said that AIDS drugs and a small group of psychiatric drugs used to treat schizophrenics and psychotics probably would be exempted in the final version of the proposal. But she is reluctant to be pinned down on much else.

If the Legislature goes along, the state's Agency for Health Care Administration would be assigned the task of developing a list of readily approved, lower-cost drugs for Medicaid patients. Some of those drugs will likely be chemically identical to higher-cost alternatives or generic brands. Some drugs, however, will be chemically different alternatives.

The agency's director, Ruben King-Shaw, said he will appoint a group of pharmacists, physicians and patient advocates to come up with the drug list, called a formulary. Then, if a doctor wants to write a prescription that's not on the list, they would have to first consult with a state board of physicians and pharmacists.

"Not every conversation with the prior authorization group will result in a change of medication," King-Shaw said. "But through the conversation, the physician may come to the conclusion, through education, that he might want to prescribe something else."

King-Shaw said that "we will never say no at the point when the physician calls." But he could not guarantee the state board would not overrule doctors at a later date: "We will review the case and go back and say, in this case, and in cases like it, you now need to prescribe X."

The whole idea is to save money by forcing doctors to think twice about the drugs they are prescribing to Medicaid patients and state employees. But the savings might not materialize, according to opponents of the Bush plan. They point to states such as West Virginia, which considered and rejected a similar plan, and Georgia, which backed off a plan to make its list more restrictive.

Policymakers in those states were persuaded by studies, some funded by drug companies and one by the Medical Association of Georgia, that showed the money states save by restricting open access to drugs was offset by increased overall medical costs. Spending for doctors and emergency room visits went up, studies show, as drug costs went down.

The only guaranteed outcome in Florida, opponents say, will be that state employees and the poor will end up with second-rate medications.

Mark Grayson is a spokesman for Pharmaceutical Research and Manufacturers of America, the Washington D.C.-based lobbying arm for the nation's largest pharmaceutical companies, which stand to lose business to the generic drug industry under Bush's proposal.

"They are counting on the fact that doctors won't take the time to call," Grayson said. "Also, you've got the patient sitting right there, and what are you going to do, send them home with nothing?"

Even if a doctor does call, the state could ultimately turn down the request.

"I feel certain that there will be a lot of people who do not get what they need," said Anne Swerlick, a staff attorney for Florida Legal Services.

Advocates say the mentally ill could be particularly vulnerable. Rapid advances in the field have made many of the older, generic psychiatric drugs obsolete.

"If they started switching people from the new drugs to the old drugs, it would turn the clock back years," said Steve Kersker, a volunteer advocate for the mentally ill at the Agency for Health Care Administration. "People wouldn't take the drugs. Some people would die because of it."

Plus, finding the right drug to treat depression is often tricky. Wellbutrin, for instance, only works with some patients if it is taken in conjunction with Prozac.

"There's much more trial and error than people think," said Lee, the psychology researcher who suffers from depression. "They literally don't know who is going to respond to what until they try it."

In defense of the administration's plan, Arduin said the state will follow well-established protocols in determining which drugs could be substituted.

"The bottom line," said Arduin, "is that physicians are going to be determining that - they will have to believe that the drugs are substitutable."

LOAD-DATE: March 2, 1999




Copyright 1999 Times Publishing Company

St. Petersburg Times (Florida)

April 19, 1999, Monday, 0 South Pinellas Edition

Medicaid cost-cutters looking to lose Viagra



LENGTH: 1088 words



AIDS becomes an issue as lawmakers weigh whether to pay for a drug that promotes sexual activity.

From the moment the sexual potency drug Viagra hit the market, Jerry Wells was worried.

Wells, who manages the state's pharmacy program for the poor, called a meeting of the state's top AIDS health officials last year to ask this question:

Should the state pay to give HIV-positive men a drug that promotes sexual activity, even as state health officials were promoting abstinence as the best method to prevent the spread of AIDS?

"I felt like there was a public health question," Wells recalled. "They felt that it would be controversial either way we did it, and that if we denied coverage it would create an outcry."

The state did nothing.

Last year, Florida spent nearly $ 1.1-million on sexual potency drugs - most of it on Viagra - through the Medicaid program for the poor. Of that total, 14.6 percent - or about $ 159,000 - went to sexual potency drugs for 930 HIV-positive men.

At least three states have refused to cover Viagra at all - despite a federal law requiring Medicaid coverage of the drug. Now, as Florida lawmakers debate a proposal to curb spending on Medicaid prescription drugs, state officials are looking at spending on Viagra as one thing they would like to cut.

"If it were up to me, the state wouldn't pay for it at all," said Donna Arduin, the budget director for Gov. Jeb Bush and the chief architect of the new policy.

Bush and Arduin want to cut Medicaid spending for many drugs by forcing doctors to get the state's permission to prescribe them. A politically appointed panel of doctors, pharmacists and others would decide which drugs require prior authorization.

The governor's drug policy proposal is controversial enough on its own - social services advocates hate the notion - but it becomes especially dicey when it affects Viagra.

Other states have debated spending on Viagra since the drug hit the market in April 1998, but the discussion has a twist in Florida. A computer program allows the state to determine not only how much of its Medicaid budget goes to the drug, but also which patients are receiving it. That's how the state determined that 14.6 percent of Medicaid spending on Viagra and other sexual potency drugs is going to HIV-positive men.

At this point, state officials, health experts and state lawmakers have not reached a consensus on the question Wells raised last year: Should the state deny Viagra to poor men infected with HIV?

"This is an issue that needs to be addressed when we move into this," said Gary Crayton, who heads the state's Medicaid program.

To some state lawmakers, the numbers alone suggest it is worth addressing.

"Fourteen percent? That's unbelievable," said Rep. Carlos Lacasa, a Miami Republican who is part of the negotiating team trying to find a legislative compromise on Bush's drug plan.

Lacasa said he would like to talk to AIDS activists, but his initial reaction was this: "We're sort of encouraging, it seems, potentially catastrophic behavior."

Not so, says Dr. Tom Coates, the director of the AIDS Research Institute at the University of California, San Francisco.

"The initial reaction is, "Why are we paying for a drug that increases sexual activity among people with a lethal disease that's transmitted by sexual behavior?' " Coates said. "But the evidence is pretty clear. Most HIV-infected people are, in fact, pretty responsible."

The institute recently conducted a national study of 6,000 gay men infected with HIV. Coates said 75 percent to 80 percent of the men surveyed said they always use a condom.

Men with HIV can experience a drop in testosterone levels, which can cause sexual impotency. Viagra is sometimes prescribed to address that problem.

For Carl Devine, an AIDS activist from St. Petersburg, it's a quality-of-life issue. As people live longer with the disease, he said, part of his job as a counselor is to teach them they can live a full life.

"Certainly having a sex life is part of doing that," he said.

Dr. Ira Wilson, an AIDS researcher at the New England Medical Center in Boston, said the state can't know how Viagra is going to be used.

"The link between paying for Viagra and spreading the disease rests on very shaky ground," Wilson said. "It assumes that people are not having sex with themselves; it assumes that they are not having safe sex or sex with an infected partner."

David Rothman, a professor of social medicine at the Columbia College of Physicians and Surgeons in New York, said the Viagra debate is difficult because of the stigma society places on the gay community.

Rothman recently was called in to consult on a case in which an HIV-positive woman wanted surgery that would allow her to become pregnant. Doctors were reluctant to do the surgery, in part because HIV can be passed on to a baby during pregnancy.

"I said, "Suppose she had Huntington's disease, which has a 50-50 chance of being passed on to the child. Would you do the operation?' The answer was a resounding "yes,' " Rothman recalled.

"With Viagra, are we really trying to protect the public health or are we really trying to say we don't want to support a particular kind of behavior?" Rothman said.

The state now spends $ 15-million a year trying to prevent the spread of AIDS. The state's policy is to tell those with HIV that abstinence is the best, and only foolproof, method, said Tom Liberti, the chief of the Bureau of HIV-AIDS in the Florida Department of Health. Promoting condom use is the state's fall-back position.

Liberti said the department declined to address the matter last year because "our conclusion was there did not seem to be a public health consensus around the country about what to do."

Rep. Tom Feeney, a conservative Republican from Oviedo who is expected to become the next House Speaker, said the state's Viagra policy and its AIDS prevention policy certainly seem to conflict.

But, he added, "It's very difficult to devise a government policy that is discriminatory. I mean, I could also ask, "Should I provide Viagra to rapists? Or, should I provide Viagra for people with pedophilia in their past?' "

Instead, Feeney said Florida should join the ranks of other states that have bucked the federal law and refused to cover Viagra under any circumstances.

"If it means a legal battle, so be it," Feeney said. "I just think Viagra is a good example of the kind of thing I don't think the government should be funding."

LOAD-DATE: April 22, 1999



Copyright 1999 Times Publishing Company

22 of 200 DOCUMENTS

Ledger (Lakeland, Florida)

February 21, 2000, Monday


BYLINE: LLOYD DUNKELBERGER Ledger Tallahassee Bureau

SECTION: News; Pg. A1

LENGTH: 1573 words


TALLAHASSEE -- When Florida lawmakers begin debating the $ 1.2 billion state Medicaid budget for prescription drugs this spring, it will come down to people like Terence Stevens.

Stevens, a 59-year-old Lakeland man, joined the state-federal health care program for the poor while he was on dialysis for a kidney ailment and his employer went out of business. He had a kidney transplant in 1991.

Medicaid provides the seven medications that Stevens takes daily, including a critical anti-rejection drug called Neoral.

Stevens says he switched to Neoral a few years ago, replacing another cyclosporine drug. And it has made a big difference in his life.

"It's far superior and a lot less reactive to my body," he said.

Stevens says he would be worried if the state, in attempt to hold down Medicaid costs, sought to return him to the former drugs.

"If they're not as effective, you could land up back in the hospital again," he said.

Gov. Jeb Bush and other state officials are promoting measures that could limit the number of medications available to Medicaid patients. Those proposals will be considered when the Legislature convenes in its annual 60-day session beginning March 7.

Bush is looking to control prescription costs because the Medicaid drug program has jumped from $ 171 million in 1989 to an estimated $ 1.5 billion next year. Costs are expected to expand by $ 300 million alone from this year to the new budget year, which begins July 1.

Factors driving up the prescription drug prices include an aging population with more chronic diseases, the more rapid federal approval of newer but more costly drugs and more aggressive marketing by pharmaceutical companies.

To cut costs, Bush is looking at a proposal that would create a list of approved drugs, called a formulary, that doctors would be able to prescribe for the state's 1.5 million Medicaid patients. The list would also be used to encourage the greater use of generic drugs, which proponents say can be just as effective but are less costly than name-brand pharmaceuticals.

However, a similar measure advocated by Bush last year went nowhere in the Legislature, although lawmakers adopted nearly everything else the first-year governor had asked for.

Bush says he will try again this year.

"We are going to propose again a formulary or something similar to a formulary to curb the costs of pharmaceuticals that have exploded in the Medicaid budget," Bush said last month.

"There are great opportunities, without changing the quality of care, to work with the drug companies so that one of their largest customers gets a better deal," Bush said. "We're a big customer for these companies, and it is just unreasonable when the (state revenue estimate) comes out and says we're going to have a $ 300 million increase in the drug costs."

If the state checks the cost of Medicaid drugs, it would mean more money would be available for other social service or education programs, said Donna Arduin, the governor's budget director.

"Private insurers are paying less for drugs and are using more generics," she said. "We're trying to manage our funds better so we can use the funds for other needs, like developmental disabilities and improving student achievement."

But the governor's efforts hit another roadblock this week when a legislative study panel reaffirmed its 6-3 vote against restricting Medicaid drugs. The majority -- lead by two legislators who are physicians, Sen. Doc Myers, R-Hobe Sound, and state Rep. Durrell Peaden, R-Crestview -- recommended the increased use of patient education as a way of containing the cost rather than a formulary.

Opponents of a restricted drug list argue that providing the newest and most effective drugs keeps Medicaid patients out of nursing homes and hospitals, which can run as high as $ 1,000 a day.

"We found no credible evidence that demonstrates a cost savings when a state operates under a restrictive drug formulary," said Juanita Hernandez-Black, a member of the study panel and president of the Mental Health Association of Central Florida.

"In fact, the information has shown that the cost expenditures are more likely to shift to other areas in the Medicaid budget, such as hospitalization and institutionalization," she said.

It's an argument also supported by the politically powerful pharmaceutical industry, which contributed more than $ 135,000 to state lawmakers and political parties last year.

For example, it costs $ 3,000 to provide drugs for an osteoporosis patient, as opposed to paying $ 41,000 to treat a hip fracture, according to the Pharmaceutical Research and Manufacturers of America, the industry's trade association.

Under Bush's plan, Medicaid patients would have to get prior approval for using a drug if it wasn't on the preferred drug list. He would impose a four-prescription limit for brand-name drugs.

But the preferred list would only limit access to drugs used to treat high blood pressure, ulcers and asthma and would not affect prescriptions for the mentally ill or AIDS patients.

The initiative could save as much as $ 240 million a year.

Dr. Jeane McCarthy, a St. Petersburg physician who served on the formulary study panel, issued a minority report illustrating the potential for those savings.

Many private insurance plans, HMOs and some states have restricted drug lists, including California which uses a 600-drug list, McCarthy said. In contrast, Florida Medicaid patients have access to more than 300,000 drugs.

She also said Florida lags behind other states when it comes to using generic drugs. More than half of the Medicaid prescriptions in Texas and Illinois are for generic drugs, while Florida has a 37 percent generic rate.

And the cost difference between generic and brand-name prescriptions is substantial. On average, Florida pays $ 12 for a generic prescription compared with $ 70 for brand-name drugs.

Increasing Florida's generic rate to 50 percent or more in the Medicaid program could save $ 200 million or more each year, McCarthy said.

But others, including key lawmakers, say they remain concerned that limiting drug choices could hurt the quality of care for Medicaid patients.

"It's the chicken and the egg," said House Budget Chairman Ken Pruitt, R-Port St. Lucie. "What you don't want to do is you don't want to limit the life-sustaining drugs because it may end up costing you more in the long run."

Others say limiting drugs could have an impact on the ability of doctors to treat Medicaid patients.

"You need to have everything available when you're treating disease," said Ron Burns, an Orlando physician who served on the study panel. "And you don't want to have (the state) dictating patient care. That position belongs with the physician."

Dara Kam of the The Ledger's Tallahassee Bureau contributed to this report.


Florida spent about $ 1 billion filling 19 million Medicaid prescriptions in 1999. Some of the most common drugs are used to treat gastrointestinal disorders and schizophrenia.

An error occurred in the processing of a table at this point in the document. Please refer to the table in the online document.


antipsychotic agent

$ 35.9



growth hormone

$ 28.8



kidney transplants

$ 27.8



chemotherapy patients

$ 27.6



antipsychotic agent

$ 26.6



renal failure patients

$ 24.4



gastrointestinal disorders

$ 18.4



HIV treatment

$ 17.1



Xanti-inflammatory drug

$ 15.5




$ 15.2



HIV treatment

$ 14.2




$ 13.5



antihemophilic factor

$ 12.9




$ 12.7



HIV treatment

$ 12.2


* In millions

All figures are estimates

SOURCE: State of Florida, Agency for Health Care Administration


SUNDAY: Florida lawmakers confront the rising costs of prescription drugs.

TODAY: Gov. Jeb Bush looks to curb Medicaid prescription costs.


Prescription medicine costs have nearly doubled in the past five years.

1995-96: $.609 15.6%

1996-97: $.731 20.1%

1997-98: $.846 15.8%


1998-99: $ 1.026 21.3%

1999-2000: $ 1.197 16.7%

2000-01: $ 1.501 25.4%

SOURCE: State of Florida, Social Services Estimating Conference, Nov. 1999



On Feb. 13,14, and 15, The Ledger published a three-part series- Prescription for Error- from The Associated Press on prescrption drugs and the struggles pharmacies face from increased workloads and inexperienced technicians.

The first day examined the rise in errors and the pace of precriptions rises. The second day looked at pharmacists' workloads- and patients' worries. The final day examined pharmacy technicians- workers dispensing drugs at $ 6 to $ 1 2 an hour.

As we examine the cost of prescription drugs in Florida in this new series from The Ledger's Tallahassee Bureau, we are offering you a chance to catch up on any parts of the AP series you may have missed.

To read Prescription for Error, go to:

LOAD-DATE: February 22, 2000



Copyright 2000 Lakeland Ledger Publishing Corporation

Sacramento Bee (California)

October 19, 2003 Sunday


Budget auditor may target social services

BYLINE: Andy Furillo Bee Staff Writer


LENGTH: 1271 words

California's $38 billion in health and social service spending is about to come in for a very hard look from the budget expert Gov.-elect Arnold Schwarzenegger has borrowed from Florida.

Friends and foes of the new auditor, Donna Arduin, describe her as a tough, smart fiscal conservative, totally loyal to her boss and more than ready to recommend budget cuts that anti-tax activists will love and the poor people's lobby will hate.

Arduin flew into Sacramento last week to begin work as Schwarzenegger's unpaid budget auditor. She's on loan from Florida after helping Republican Gov. Jeb Bush find ways to cut state taxes by $8.1 billion over the past five years. In the process, however, Florida eliminated money for eyeglasses, hearing aids and dentures for poor seniors and forced 55,000 low-income children onto health insurance waiting lists.

"In any state budget in this nation, when you have to start making cuts - when you have to make big cuts - you have to look at the percentage of revenues that are allocated to social services," said Jon L. Shebel, president of Associated Industries of Florida, the state's leading pro-business lobbying group. "You're in a major crisis there in California. There's no way to not take money out of social services, and that's what Donna does."

Shebel said Arduin was "very good at minimizing the negative impact" of Florida's social service budget shaving.

Advocates for that state's poor disagree. This year, they have railed against $26 million in state Medicaid cuts that eliminated the hearing, dentures and vision programs for 235,000 people. They also have sharply criticized the 4.3 percent reduction in state money for poor children's health insurance that resulted in the waiting lists in Florida.

"Her philosophy - and it's at the direction of whoever her boss is - was pretty strict along the lines of cut and slash on budget programs, particularly in the human services area," said Karen Woodall, one of Florida's leading social service lobbyists. "There have been lots of serious cuts proposed across the board in a lot of those programs, and that's going back several years. It was always done in the name of efficiency and streamlining, and the rhetoric always followed that it was not going to hurt the delivery of services, which in fact never was true."

People who've worked with her - on both sides of the aisle - describe the 40-year-old Arduin as a selfless workaholic with a good heart who takes her boss's policy prescriptions and finds a way to make them work.

In California, poor people's advocates see social service spending as square in Schwarzenegger's cross hairs. Given Schwarzenegger's campaign promises to balance the budget while protecting education, scrapping the state's $4 billion vehicle license fee and refraining from raising taxes, the advocates view social services as the leading programs exposed to the budget ax.

The state faces a shortfall in the next year's budget of between $8 billion and $10 billion, which could jump to $20 billion if courts rule against borrowing planned for balancing this year's budget.

Assemblywoman Lois Wolk, D-Davis, who chairs the Committee on Human Services, thinks Schwarzenegger will find it difficult to reduce the state's $9.3 billion social services budget. During this year's budget battles, neither Republican nor Democratic legislators were willing to go after social services in any dramatic way, Wolk said.

"I believe if he goes after the least among us, he won't have support," Wolk said of Schwarzenegger.

The new governor, however, will have plenty of backing when it comes to slicing perceived bloat from California's social services and health spending. Jon Coupal, president of the Howard Jarvis Taxpayers Association, said an improved fraud prevention program could trim $2.5 billion off the top of Medi-Cal's $29 billion budget.

Other areas also are ripe for some rigorous review, Coupal said, citing recent news reports detailing $200 million in food stamp overpayments, $127 million in unemployment fraud and eye-popping state expenditures on individual items such as $3,000 wheelchairs.

"The other interesting thing is that since the election, I've gotten calls from public employees saying, 'You want to know where they can really cut some spending?' " Coupal said. "I think they are going to be some of the best resources for identifying waste, fraud and abuse."

Despite Schwarzenegger's campaign trail commitments, a spokesman for the governor-elect's transition team said it is far from certain that social service and health programs are in for inordinate cuts.

For one thing, more tax revenues are coming in than previously anticipated. More to the point, Arduin just began her auditing duties last week and nobody knows what she's going to find before she finishes her job and returns to Florida by the first of the year.

"It is extremely premature," transition team spokesman H.D. Palmer said.

Others say she can be judged by her track record in finding soft spots in state spending.

As Florida's budget director, Arduin has been one of Gov. Bush's top advisers since she joined him at the beginning of his administration in January 1999. Her biography says that her efforts helped Bush maintain $2.7 billion in state reserves while cutting taxes by $8.1 billion.

Arduin, who declined interview requests placed through the transition team, had previously served for four years as acting budget director and first deputy director under Republican New York Gov. George Pataki. With Arduin playing a leading role, New York cut taxes by $10 billion while turning a $5 billion budget deficit into a $1 billion surplus, according to her biography. Arduin also presided over the trimming of 21,000 employees from state payrolls.

Before her post in New York, Arduin worked for three years as chief deputy budget director in Michigan, where the state cut taxes by $1 billion, wiped out a $700 million deficit and cut the work force 5 percent, her biography said.

The 1985 Duke University graduate also did stints in the private sector, working for Credit Bank of Japan, Bankers Trust Co. of New York and Morgan Stanley. She also worked as an intern with the federal Office of Management and Budget during the Reagan administration.

In Florida, Bush calls Arduin "a great asset." Arduin and the governor "are strong advocates of limiting government to the people's ability to pay for it," Bush spokesman Jacob DiPietre said.

"The nation has experienced some difficult economic times lately, but Florida has bucked that trend in large part due to Gov. Bush's and Donna Arduin's leadership," DiPietre said.

Florida Rep. Ron Greenstein, as House Democratic leader in budget negotiations with Gov. Bush's administration, has seen Arduin work up close.

Greenstein predicted Arduin will try to eliminate any state job that hasn't been filled for 120 days, attack administrative overhead and recommend privatizing as many programs as she can, especially in social services. He said Arduin will recommend tax cuts for business and less workers' compensation for people hurt on the job.

Greenstein said she will put in "endless" hours during her stay in California and that she will never say or do anything to upstage or undermine Schwarzenegger.

Arduin, he said, "is a good person" with "a good heart."

When it comes to the budget, however, Greenstein said his Democratic counterparts in Sacramento will find she's no pushover.

"Donna's a tough cookie," Greenstein said. "People are going to have to get used to hearing the word 'No.'"

* * *

The Bee's Andy Furillo can be reached at (916) 321-1141 or

LOAD-DATE: September 9, 2008


GRAPHIC: Donna Arduin

The auditor helped Florida's Gov. Jeb Bush cut state taxes by $8.1 billion.

Sacramento Bee / John Decker Gov.-elect Arnold Schwarzneggar, right, introduced Rep David Dreier, R-San Dimas, as the chairman of his transition team, and Donna Arduin, as his unpaid budget auditor, at a news conference in Santa Monica on Oct. 9.


Copyright 2003 McClatchy Newspapers, Inc.

All Rights Reserved

70 of 200 DOCUMENTS

The Associated Press State & Local Wire

November 24, 2003, Monday, BC cycle

Schwarzenegger seeks $1.9 billion in immediate budget cuts

BYLINE: By DON THOMPSON, Associated Press Writer

SECTION: Business News; State and Regional

LENGTH: 550 words


Transportation spending would be cut by $530 million and health and human services by $440 million this fiscal year under $1.9 billion in budget cuts proposed Monday by Gov. Arnold Schwarzenegger.

Education would absorb $160 million in cuts this year and next under the proposal Schwarzenegger presented to legislative leaders, a copy of which was obtained by The Associated Press.

The new governor's finance director, Donna Arduin, plans to outline the proposed cuts to the Assembly and Senate budget committees Tuesday, along with details of Schwarzenegger's proposals for a $15 billion borrowing and spending limit package he wants voters to consider in March.

Legislators have grown increasingly anxious as they await details of Schwarzenegger's borrowing and spending cut proposals, with a Dec. 5 deadline drawing near and a Thanksgiving break looming.

But they're likely to be unhappy as well with his proposals for nearly $2 billion in cuts, with more to follow when the Republican governor presents next year's proposed budget in January.

"I think there's some real concerns about them - the impact they have on people," said a Democratic legislative budget analyst. "There's things in here we rejected last year."

The proposals include a 10 percent reduction in Medi-Cal provider rates on top of an already approved 5 percent cut, to save nearly $152 million; eliminating state wage assistance to the staff of long-term care facilities to save $46 million; eliminating respite care and recreational activities for the developmentally disabled to save $69 million.

While health and human services programs would be cut $440 million in the second half of this fiscal year, when ends June 30, they would absorb $1.163 billion in cuts next year under Schwarzenegger's proposal.

The biggest block of cuts is $1 billion to the Business, Transportation and Housing Agency, more than half of which would be lost transportation spending to help fill the deficit in the state's general fund. That agency would take a $417 million cut next year as well.

The state also would postpone $475 million in vehicle license fee reimbursements until 2006-7, and delay $105 million in reimbursements to local governments for flood control projects.

Also Monday, Arduin named a three-member volunteer panel of experts to advise Schwarzenegger on the $15 billion in borrowing he wants voters to approve on the March ballot. Schwarzenegger wants lawmakers to put the borrowing before voters along with a measure that would limit spending, in a bid to resolve the state's current budget crisis and prevent a recurrence.

The advisory panel will be chaired by Carl E. Reichardt, retired chairman and chief executive officer of Wells Fargo & Co. and Wells Fargo Bank. He is a board member and chairs the finance committee of Ford Motor Co.

It also will include John A. Bohn, chairman and chief executive officer of GlobalNet Venture Partners LLC, an international financial advisory and consulting firm. He previously was president and CEO of Moody's Investors Service.

The third member is Robert E. Denham, a finance lawyer with the law firm of Munger, Tolles & Olson. He previously was chairman and CEO of Salomon Inc.

LOAD-DATE: November 25, 2003


Copyright 2003 Associated Press

All Rights Reserved

The New York Times

November 26, 2003 Wednesday

Late Edition - Final

Schwarzenegger Aide Offers First List of Proposed Budget Cuts 


SECTION: Section A; Column 1; National Desk; Pg. 16

LENGTH: 639 words


Gov. Arnold Schwarzenegger's finance director asked lawmakers on Tuesday to approve a stark economic bailout package that includes sharp cuts in programs for the poor and the disabled while borrowing large amounts of money from transportation projects to cover other spending.

The finance director, Donna Arduin, presented the Legislature with $3.8 billion in suggested cuts over the next year, the first specific reductions that Mr. Schwarzenegger has proposed since becoming governor on Nov. 17.

Mr. Schwarzenegger, a Republican, had promised in his recall campaign to make ferreting out waste in government spending a priority.

An analysis of the 38 proposed cuts by the California Budget Project, a research group in Sacramento, showed that 42 percent of the reduced spending would be from health and social services and nearly 25 percent from transportation.

The suggested cuts include eliminating nonmedical therapy for the mentally disabled like music, art and equestrian programs. Mr. Schwarzenegger would also limit immigrants' enrollment in programs like an AIDS drug-assistance program.

The governor would also eliminate financing for programs by the state university system to reach into poor communities and reduce rates paid to doctors who treat patients in Medi-Cal, the state's form of Medicaid.

"No one," Ms. Arduin said, "is under any illusions about how difficult this task will be in such a short time frame. But the alternative, failing to take action, is not an option and would only serve to put the state's fiscal future at an even greater level of risk."

Many Democrats, who control both houses of the Legislature, said the cuts were unimaginative and too severe. Some conservative Republicans, including State Senator Tom McClintock of Thousand Oaks, who placed third in the recall election to replace Gov. Gray Davis, said they did not go far enough.

"These are the same basic cuts that were considered last year," Assemblywoman Jenny Oropeza, the Carson Democrat who is chairwoman of the Assembly Budget Committee, told reporters after Ms. Arduin addressed her committee. "I'm looking for the waste fraud and abuse that they were going to find when they opened the books."

Mr. McClintock objected to a proposal that would divert hundreds of millions of dollars in transportation spending to the general fund.

"Those aren't cuts," he said. "They are draining the highway account to maintain a level of spending that should have been reduced long ago. It needs to be reduced now. That was what the election of Oct. 7 was all about -- cut, cut, cut, cut."

Senator James L. Brulte of Rancho Cucamonga, the Republican leader in the Senate and an ally of Mr. Schwarzenegger, said that he also took issue with some of the proposals and that he did not expect the Legislature to approve the entire list.

Even so, Mr. Brulte said, most of the complaining was from Democrats and special interest groups who favored raising taxes.

"The tax-increase candidate didn't get 35 percent of the vote in the last election," Mr. Brulte said, referring to Lt. Gov. Cruz M. Bustamante, a Democrat, who placed second in the recall election. "You have to make spending reductions. Period."

The budget cuts presented by Ms. Arduin were part of a larger bailout proposal that includes $15 billion in borrowing and a constitutional spending limit for future budgets.

An adviser to Ms. Arduin, John A. Bohn, a former president and chief executive officer of Moody's Investors Service, said state officials needed to move quickly to restore investors' confidence. The Legislature is scheduled to begin debating the budget proposals next week.

"The real issue," Mr. Bohn said, "is to convey a sense to the market that the state means business and that part of that business is the willingness to discipline itself so that it doesn't overspend."


LOAD-DATE: November 26, 2003



Copyright 2003 The New York Times Company

83 of 200 DOCUMENTS

The Associated Press State & Local Wire

December 1, 2003, Monday, BC cycle

Schwarzenegger proposal alarms children health advocates

BYLINE: By JENNIFER COLEMAN, Associated Press Writer

SECTION: Business News; State and Regional

LENGTH: 715 words


Gov. Arnold Schwarzenegger's proposal to freeze enrollment in the state's Healthy Families program could put tens of thousands of low-income children on a waiting list for health insurance, children health advocates said Monday.

Freezing enrollment in several government-funded health insurance programs is just one of Schwarzenegger's proposals to cut approximately $3.8 billion from the current and coming budgets. Capping the Healthy Families insurance program and several other would save the state $77 million in this and next years' budgets, Donna Arduin, Schwarzenegger's finance director estimated.

The cuts seemingly contradict Schwarzenegger's statements during the campaign, in which he criticized then-Gov. Gray Davis for not doing enough to enroll children in the low-cost health insurance program. And the proposal comes in a week in which he has to get his budget plans approved by the Legislature in time for the March 2004 ballot.

Legislative committees will meet this week to hear more details of Schwarzenegger's plan, which also includes asking voters to approve $15 billion in bonds, cuts to state programs and a spending cap.

About 650,000 children are insured through the program, which provides low-cost medical, dental and vision health coverage to children in low-income families.

But, there are about 300,000 children who are eligible but aren't yet enrolled in Healthy Families, said advocates with the 100 Percent Campaign, a coalition of three children health groups.

Advocates from Children Now, the Children Partnership and the Children's Defense Fund said they were alarmed to hear that one of the new governor's first proposals targeted the low-cost health insurance program.

"We're very disappointed because during the governor's campaign, he shared our goal of making sure that all the children in the state have health insurance," said Deena Lahn of the Children's Defense Fund.

During his only debate appearance before the Oct. 7 recall election, Schwarzenegger criticized Davis for not getting more children enrolled in Healthy Families.

The government, Schwarzenegger said during the debate, "not done a good job in reaching out and finding the people and letting them know to sign up and find easy ways for them to sign up, (so) two-thirds of the people that are eligible do not have the child care. It is really terrible.

"If I become governor I would immediately go out there ... and get it out so everyone knows about it and every one signs up because we must insure our families, the low-income families, especially the children," he said at the September debate.

Medi-Cal provides free or low-cost health services to children in low-income families. Healthy Families offers low-cost insurance to children in families that make too much to qualify for Medi-Cal, but less than 250 percent of the federal poverty level - currently approximately $38,000 for a family of three.

For every dollar California spends on Healthy Families, the federal government pays two. This year, California's share is about $294 million.

Enrollees pay a monthly premium and $5 copayments for prescriptions and doctor visits.

Sacramento resident Monica Larios said the $27 she pays each month for Healthy Families coverage for her three sons has helped her avoid costly medical bills, including dental surgery for one son.

"With children, you have to have health insurance," she said. "If we didn't have it, we wouldn't have any place else to go."

Florida, where Arduin was budget director before she was hired by Schwarzenegger, adopted caps on a similar program in July. By the end of September, the waiting list had grown to almost 60,000 children.

The advocates with the 100 Percent Campaign said the waiting list in California could be as high as 100,000 - leaving those families without the regular doctor visits that can help them avoid expensive emergency room visits.

"Kids can't be put on a waiting list. If they get sick, they need to be seen," Larios said.

For more information on the governor's proposed budget cuts, visit the Department of Finance Web site:

Healthy Families:

The 100 Percent Campaign:

LOAD-DATE: December 2, 2003



Copyright 2003 Associated Press

All Rights Reserved

San Jose Mercury News (California)

March 8, 2004 Monday MORNING FINAL EDITION



BYLINE: ANN E. MARIMOW, Mercury News Sacramento Bureau


LENGTH: 1425 words


To her boss she is a genius and a "machine." To her detractors she is a cool outsider who is out of touch with California.

But both sides agree that Gov. Arnold Schwarzenegger's budget guru, Donna Arduin, has arguably the toughest job in Sacramento -- to fix the state's budget in a Capitol that is deeply polarized over the best course to follow.

Arduin, who inherited her affinity for numbers from her accountant mother, has worked for three Republican governors and has a reputation for shrinking government and privatizing public services. Her views are revered by fiscal conservatives and feared by liberals.

How she will fare in Sacramento, where Democrats control the Legislature, is uncertain. Arduin is expected to be confirmed by the Senate this week, with minimal fuss out of courtesy to the Republican governor.

In bodybuilding and now in politics, Schwarzenegger has been known to keep his opponents off balance. Many in the Capitol consider Arduin the hard-nosed foil to the governor. They say her tough conservative line allows Schwarzenegger to play the accommodating moderate in negotiations with Democrats.

"She is the conservative conscience of the administration," Senate Republican Leader Jim Brulte said.

Or as another Republican observer put it, "Donna Arduin is Arnold's John Ashcroft."

Schwarzenegger himself says Arduin has worked "tirelessly."

"I only play the machine in my movies," he said before unveiling his budget blueprint in January. "She is a real machine."

Arduin does not apologize for the way she is perceived, although she finds it somewhat ironic.

"That's my job. We have a lot of tough fiscal decisions to be made at this time, and my job is to bring those options to the governor," she said in an interview. "I find it amusing that anyone would think that Arnold Schwarzenegger needs his director of finance to be his tough guy."

Tough stances

But while Schwarzenegger was schmoozing with Democrats and handing out cigars soon after he took office in November, it was Arduin who publicly lectured legislators about their overspending.

In early budget negotiations with Democrats, Arduin insisted on an inflexible spending cap and giving the governor more power to make budget cuts without a vote of the Legislature. That allowed Schwarzenegger to take a more moderate tack later.

"She strengthens Arnold's hand in these meetings," said Stephen Moore of the Washington, D.C.-based conservative Club for Growth who has followed Arduin's career -- from Michigan to New York to Florida -- and recommended Arduin to Schwarzenegger. "She plays a constructive role for Arnold by being the bad cop, so Arnold can be the charming, charismatic and persuasive leader that he is. The two in tandem are a great team."

Arduin, 40, had a rocky introduction to Sacramento. She stunned Democratic legislators by abruptly walking out of her first appearance before the budget committee. (She was kept waiting for more than an hour, had a sinus infection and was late to a meeting.)

Then Senate President Pro Tem John Burton, D-San Francisco, suggested on national television that Arduin was an "ogre" for ending some Medicaid payments for eyeglasses and dental work in her previous job as Florida Gov. Jeb Bush's budget director. For a time, a mock yellow street sign on Arduin's office door warned "OGRE XING" -- a joke from Brulte.

Not everyone is amused.

"Her history has been one of slashing and burning on social programs," said Assemblywoman Jenny Oropeza, D-Long Beach, the former Assembly BudgetCommittee chair. "Her aggressive cutting is not going to play so well here; her policy approach will not prevail."

Republican Assemblyman Russ Bogh of Yucaipa said, "The Democrats are trying to demagogue her and intentionally make her feel like she doesn't belong in California."

Arduin's fiscal conservatism is rooted in her early experience as an intern in President Reagan's Office of Management and Budget under David Stockman.

In high school, she excelled in advanced placement calculus classes. Her father, a basketball and football coach and sports commentator, pushed her to pursue engineering. But Arduin was inspired by a government teacher to study economics and public policy.

After graduating from Duke University, she worked as an analyst for investment banks in New York and Japan before leaving the private sector for government work. She was chief deputy budget director in Michigan and in New York under Gov. George Pataki, before joining Bush in Florida.

Schwarzenegger initially hired Arduin as part of his transition team to conduct an independent, line-by-line audit of the state budget to uncover the "waste, fraud and abuse" he promised to find on the campaign trail. She has yet to release a comprehensive report, and the administration now says the audit will be ongoing and phased in over time.

In public appearances, Arduin often comes across as uneasy and slow to smile, even though she was a cheerleader for her Jesuit prep school in Indianapolis. But one-on-one, Arduin's face brightens when she brags about tackling the slopes in Aspen and shows off snapshots of her black Labrador, Clyde, that clutter her desk.

Arduin takes her job seriously, but displays a sense of humor about herself. She has a signed copy of a political cartoon that portrayed her pulling winter hats over the eyes of children -- a reference to her recent proposal to limit or "cap" enrollment in a health insurance program for low-income kids.

Attire stands out

In a Capitol where the fashion palette for men and women consists of shades of gray and pinstripes, Arduin also stands out, with her fire-engine-red suit and occasional leather pants and fur collars.

Arduin is uncomfortable in the spotlight, preferring to tout the achievements of her bosses. But when pressed on her philosophy, she explains that government should not unduly burden business.

"People's money either stays in their hands," she said, "or goes to the government. When more money goes to the government, it leads to job erosion."

Anti-tax groups and libertarian think tanks like the Cato Institute give Arduin high marks for balancing state budgets without tax increases, but Florida Democrats criticize her for moving money around from special funds to pay for tax cuts.

Despite the perception among California Democrats that Arduin is interested only in gutting government, her colleagues say she has pushed for creative approaches, such as looking for ways to overhaul the state's costly Medi-Cal system, instead of eliminating benefits as Democratic Gov. Gray Davis proposed last year.

"She forced us to look deeper and for more thoughtful ways, instead of taking a more ham-handed approach," said her chief deputy director, Mike Genest.

At the same time, Arduin is as adamantly anti-tax as Schwarzenegger comes across in public. She has consistently spoken up against any tax increases to balance the budget, when some in the administration have privately pondered the possibility.

Of Arduin, Florida's Senate Democratic Leader Ron Klein said she "comes from the trickle-down economic theory unabashedly. She's a true believer that the lower you tax people, the less you will impede capitalism and job creation."


PERSONAL: Gov. Arnold Schwarzenegger's finance director and a fiscal conservative. Arduin, 40, owns a home in Ft. Lauderdale. Her black Labrador, Clyde, lives with her longtime beau, David Ericks, a lobbyist in Tallahassee. In Sacramento, she rents a furnished apartment.

HER ROLE: She is the tough conservative foil to the more moderate Schwarzenegger and one of the administration's staunchest advocates against raising taxes and for cutting bureaucratic flab.

HER STYLE: Despite sporting a bold fashion sense in often-staid Sacramento, Arduin can come across as cool and shy in public. In private, she is funny and self-deprecating.

HER BACKGROUND: Born in Cheboygan, Mich., on April 16, 1963. Graduated from Duke University with a degree in economics and public policy. Interned in the federal Office of Management and Budget while in college. Worked for Morgan-Stanley investment bank and later the budget departments for Michigan and New York State. Most recently served as budget director for Florida Gov. Jeb Bush. Served on Schwarzenegger's transition team before becoming his budget guru.

IN HER OWN WORDS: "We have a lot of tough fiscal decisions to be made at this time and my job is to bring those options to the governor."

LOAD-DATE: August 23, 2005


GRAPHIC: Photos (2);

PHOTO: Arduin


Gov. Arnold Schwarzenegger's budget director, Donna Arduin, right, walks through the halls of the state Capitol with H.D. Palmer, director of theDepartment of Finance.

Copyright 2004 San Jose Mercury News

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Sacramento Bee (California)

May 14, 2004 Friday


Revised budget backs off cuts; 

$103 billion plan mostly spares health services

BYLINE: Alexa H. Bluth Bee Capitol Bureau


LENGTH: 1781 words

Gov. Arnold Schwarzenegger unveiled a revised $103 billion budget Thursday that abandons steep cuts to health services for the poor and fulfills his no-tax-increase pledge, but seeks to wipe out upcoming state worker raises and relies heavily on borrowing to erase $15 billion in red ink.

The Republican governor reshaped his 2004-05 spending plan to take into account more than $2 billion in higher-than-expected tax receipts and to respond to some concerns of lawmakers and interest groups who will play prominent roles in budget negotiations in coming weeks.

The budget overhaul contains a handful of significant reversals from his January plan, most notably scrapping proposals to cap enrollment in state health programs.

He also softened his call to cut money for roads, instead proposing that the state borrow from its transportation fund and pay it back with extra money he expects to collect as a result of negotiations with Indian gaming interests.

Absent from the plan are promised dramatic plans to reform Medi-Cal, close prisons and streamline state bureaucracy.

But included are roughly $6 billion in cuts and other money-saving proposals ranging from eliminating sack lunches for prisoners on weekends to raising fees at state universities and community colleges.

The cuts include a deal he struck with the state teachers' union to withhold $3 billion in school funding.

"It is a compassionate budget that spends tax dollars more effectively to support essential services," Schwarzenegger said. "It will meet our basic needs today, and it will make California stronger for the future."

State revenues, Schwarzenegger said, are expected to climb $1 billion higher than expected by year's end, and the treasury is plump with a one-time windfall of $1.2 billion from an amnesty program for users of illegal tax shelters.

Schwarzenegger's revised budget also calls for another tax amnesty program next year - this one more widespread - for people who owe back taxes.

The governor seized this year's unexpected cash to help smooth negotiations with lawmakers and, he hopes, deliver a rare on-time budget.

Members of the Democratic-controlled Legislature will review the proposal and are supposed to submit their version to the governor by June 15, a seldom-met deadline that Schwarzenegger has said he is determined to meet. Under state law, the budget is supposed to be signed by June 30.

"The budget did what all budgets do if there's a problem - try to push it forward and hoping some solution will come to pass. And that's budgeting as usual," said Senate President Pro Tem John Burton, D-San Francisco, adding that he has seen every governor from Republican Ronald Reagan to Democrat Gray Davis do the same.

Democrats acknowledged Thursday that Schwarzenegger had succeeded in removing some potential hurdles to negotiations by reversing proposals to cut or cap health and social service programs.

"It helps narrow the issues that are to be debated in the weeks ahead," said Assembly budget chairman Darrel Steinberg, D-Sacramento.

But they promised a battle over his plans to turn some students away from universities this year and make continued cuts in some transportation projects.

They also questioned some of the budget-balancing measures the governor is counting on.

"This budget continues to rely on some phony money," said state Treasurer Phil Angelides, a Democrat who has been among the most outspoken critics of Schwarzenegger's fiscal policies.

Angelides cited Schwarzenegger's request that state workers' unions reopen contract talks to save the state $464 million, including a plan to coax $300 million in concessions from the state's powerful prison guards union.

Schwarzenegger said he was seeking "responsible budget relief by asking public employee unions to renegotiate contracts that were recklessly based on the dot-com boom and now unsustainable."

But union leaders immediately called the plan "smoke and mirrors."

"It would be more fair if he would ask his super-rich corporate friends to help out with the crisis," said Jim Hard of the California State Employees Association.

Schwarzenegger's budget chief, Donna Arduin, said the budget balances in 2004-05 and the following fiscal year, but the plan still includes borrowing and some plans that are not guaranteed to materialize, including $1 billion in borrowing to help pay the state's pension obligations and $500 million in gambling revenues from talks with Indian tribes.

The governor also hopes to collect $450 million from a new proposal to change state law to require plaintiffs to give the state two-thirds of all punitive damages awarded to them by juries.

Schwarzenegger said his plans to present a massive overhaul plan for the state's health plan for the poor, also expected to prompt a fight with lawmakers, will come later.

"We couldn't do everything at the same time," Schwarzenegger said. "It's just so complex."

In previous weeks, Schwarzenegger has hammered out deals with key leaders who stand to be affected by his budget.

He persuaded executives from cities and counties, universities and K-12 schools to support his budget - including steep cuts to each of these entities - in exchange for promises of more funding and protection in future years.

The deals infuriated some Democratic lawmakers, who accused Schwarzenegger of attempting to shut them out of the budget negotiating process.

An agreement with higher education leaders drew the most criticism.

Schwarzenegger's deal with University of California and California State University leaders asks them to swallow cuts next year in exchange for modest increases starting in 2005.

His latest proposal continues to call for raising community college fees from $18 per unit to $26 despite a protest that brought thousands of students to the Capitol in March.

Most shifts came in state financial aid, where he agreed to spend an extra $34.2 million on noncompetitive Cal Grants to help recipients cover the 14 percent increase in undergraduate fees expected at UC and CSU. But Schwarzenegger will ask the Legislature to shrink the much smaller competitive Cal Grant program by nearly 6,000 students to save $5.4 million, despite high demand. Last year, there were six qualified applicants for every award offered, according to state financial aid officials.

"That one really affects community college students and students at CSU who tend to be older, going part time and working," said Diana Fuentes-Michel, executive director of the California Student Aid Commission. "We have been trying to get more of them into the pipeline, and this will hurt that."

The governor sought to reassure lawmakers angered by the recent private deals he made before presenting them in his new budget, calling them "partners."

"I will nurture this partnership because I alone cannot do it," he said.

Burton said lawmakers "can't be bypassed."

"We are the ones who take a budget, work our will up, down or sideways and send it back to the governor," he said. "So I view all of the deals that have been cut as a suggestion from the governor."

* * *

The Bee's Alexa H. Bluth can be reached at (916) 326-5542 or Margaret Talev and John Hill of The Bee Capitol Bureau and Bee staff writer Lesli A. Maxwell contributed to this report.


Here is how Gov. Arnold Schwarzenegger plans to close the state's budget gap.

Bonds (Proposition 57)..................................................................$2 billion

K-12 schools to take less than entitled................................. $3 billion

Higher education cuts......................................................................$1 billion

Local government cuts................................................................$1.3 billion

Corrections cuts......................................................................... $190 million

Pension bonds.....................................................................................$1 billion

Revenue from tax amnesty.......................................................$1.2 billion

Debt service savings.....................................................................$1.2 billion

Gas sales tax shifted from roads to general fund...........$1.1 billion

Additional federal funds..........................................................$350 million

Punitive damages recovery..................................................$450 million

Tribal gambling revenues, yet to be negotiated..........$500 million

State employees contract renegotiations, yet to be completed..................................................................$500 million

Miscellaneous...............................................................................$1.35 billion Total............................................................................................... $15.1 billion

Numbers are rounded

Source: state Department of Finance


Gov. Arnold Schwarzenegger has backed off a variety of proposals since taking office six months ago. Among them:

* He proposed suspending the Lanterman Act, which guarantees access to programs for the developmentally disabled. He withdrew his proposal after an outcry a few weeks later, saying "It was just one of those things that slip through when you make decisions very quickly."

* His January budget proposed cutting the program that pays relatives to care for housebound family members; he withdrew the plan pending receipt of a federal waiver.

* The January budget proposed a variety of health savings, including caps on program enrollment and co-payments for some recipients. All were scrapped in the revision submitted Thursday.

* A plan to limit subsidized child care to one year for mothers coming off welfare was softened.

* A prostate cancer program axed in December was restored in March after officials came up with unspent funds from previous years.

* A hiring freeze imposed last fall was relaxed to bring on 400 workers to alleviate long waits at DMV offices.

* A contract freeze was revised to reimburse some nonprofits and counties for health-related program costs.

* The January budget suspended Proposition 42, which dedicates sales taxes on gasoline to transportation projects. In the revision, the state promises to repay the money in the future. In addition, the governor agreed to restore about $350 million in road projects.

* The revised budget restores $42,000 for a state-supported telephone service that blind people use to have newspapers and periodicals read to them..


Dan Walters: Schwarzenegger crosses his fingers in offering a balanced, no-new-taxes budget. * Page A3

Activists say they will fight proposed social services cuts, despite the governor's recent reversals. * Page A20

LOAD-DATE: September 9, 2008


GRAPHIC: Sacramento Bee / John Decker

Gov. Arnold Schwarzenegger presents his revised budget as finance director Donna Arduin looks on. The process was eased by a $2 billion boost in tax receipts.


Copyright 2004 McClatchy Newspapers, Inc.

All Rights Reserved

Los Angeles Times

October 14, 2004 Thursday

Home Edition

Arduin to Leave Finance Position; 

The conservative's departure is seen as a realigning of the governor's budget team.

BYLINE: Peter Nicholas, Times Staff Writer

SECTION: CALIFORNIA; Metro; Metro Desk; Part B; Pg. 1

LENGTH: 1135 words


Donna Arduin, Gov. Arnold Schwarzenegger's lead budget advisor and an early conservative voice in the administration, has resigned and will leave office as soon as Friday, the governor's office said.

Arduin is stepping down after 11 months as state finance director, where she helped shepherd through the initial budget of Schwarzenegger's tenure. She is the first major political appointee to leave Schwarzenegger's government and is one of few aides with a public profile in an administration dominated by the governor's celebrity. Schwarzenegger has called her his resident "genius" and praised her "machine"-like work habits.

Arduin's departure means the administration's inner circle will lose one of its true conservatives as it is about to make crucial decisions on the governor's 2005-06 budget.

With a multibillion-dollar shortfall facing California again next year, Schwarzenegger's team is likely to face stark choices between raising taxes or cutting deeply into spending -- a reckoning that the governor has postponed to date.

Republicans have already expressed discomfort with some of Schwarzenegger's budget practices, including his reliance on borrowing and reluctance to slash spending. With Arduin out -- and with speculation that she might be replaced by an aide to one of the Senate's most liberal members -- the administration's more conservative ambitions could be blunted as Schwarzenegger heads into a tough budget season.

"It's broader than just a disagreement over fiscal policy. It's a realigning of Schwarzenegger's management team to more reflect his own priorities and issues," said Barbara O'Connor, director of the Institute for the Study of Politics and Media at Cal State Sacramento. "She came to do what she did, and she did it, and she left. And he may be taking a different tack in the next year -- more bipartisan and issue-centered than partisan."

The governor's staff did not reveal what Arduin would do next, though people familiar with her plans said she may become a private consultant on government finance matters. Administration officials said her resignation was not a surprise. She had committed to staying for about a year, they said, though there was no mention of that when Arduin's appointment was announced publicly.

"When she first joined, she said she'd only make a one-year commitment because of family considerations, and we're grateful she was able to see us through this first budget season," said Margita Thompson, a Schwarzenegger spokeswoman. "And now we wish her all the best as she goes on to new endeavors."

The Cabinet position will be temporarily filled by Arduin's deputy, Michael Genest. The governor is looking for a permanent replacement. One person being mentioned as a possible successor is Diane Cummins, the chief financial aide to Senate President Pro Tem John Burton (D-San Francisco) and a top official in the Finance Department under former Republican Gov. Pete Wilson.

Arduin, 41, joined Schwarzenegger's team during the transition last year, scouring the state's finances as a volunteer from Florida Gov. Jeb Bush's budget office. She had accepted the Cabinet position only after a bit of prodding from Schwarzenegger.

It was a rocky adjustment. Arduin was to preside over what Schwarzenegger pledged would be a line-by-line audit of the state's finances. No such audit was ever released.

During Schwarzenegger's first week in office, Arduin abruptly walked out of an Assembly committee meeting as she was being asked a question. A spokesman later explained that she was running late for an appointment with the governor and had been kept waiting by the committee.

"You're leaving us?" a surprised Assemblywoman Jackie Goldberg (D-Los Angeles) had asked.

At times, Arduin appeared uncomfortable with the public parts of the job. In February, she attended a meeting at the Ritz-Carlton Hotel in New York with the governor, billionaire investor Warren E. Buffett and Wall Street investors to talk about a future California bond sale. Approached by reporters afterward and asked what happened, Arduin declined to comment, referring questions to a junior press aide. After a few awkward moments, the governor's political advisor, Mike Murphy, who did not attend the meeting but was standing nearby, began answering questions in her stead.

The initial budget plans rolled out by Schwarzenegger included some embarrassing snags. Eager to close a budget shortfall, Schwarzenegger in December proposed $274 million in cuts to programs that serve the developmentally disabled population. He dropped the plan amid furious protests.

As the budget season wore on through the year, Schwarzenegger made more and more concessions to Democratic lawmakers in an attempt to forge a compromise, yielding a budget that many Republicans and conservative critics said resembled the spending plans that took shape under former Gov. Gray Davis.

The budget relied on billions of dollars in borrowing. Because the governor did not raise taxes or cut deeply into spending, the state has yet to fix the fundamental imbalance between what the state spends and what it takes in. State financial analysts project a shortfall of at least $6 billion next year. Schwarzenegger aides are not ruling out the possibility of a tax increase.

Had Arduin stayed, she would have faced tough choices. Still, she had the confidence of the governor's conservative base.

"I'm pretty close to Donna, and I think she always took the job with the idea she would do it for a year or 18 months, and then move on," said Stephen Moore, president of Club for Growth, a Washington-based anti-tax group. "So I think that her attitude is, I've come and rescued California, and pretty soon it's time to pass the baton to someone else and go back to Florida or privatize herself in some way."

Few of Schwarzenegger's staff members entered the Capitol after the 2003 recall with the fanfare that Arduin received, in part because Schwarzenegger had ridiculed Davis' stewardship of state finances.

Arduin's work in finance departments in Michigan, New York and Florida showed she specialized in deep cuts to social programs and privatizing government services. She also promoted performance-based budgeting, forcing agencies to reach goals in order to receive funding.

But in Florida, she endured criticism for allowing tax cuts that left some programs without proper funding. In a previous interview with The Times, Florida state Sen. Tom Lee, a Republican, said she "created a game of hot potato for future elected officials."

After she arrived in Sacramento, Burton called her an "ogre" because she had called for ending some Medicaid payments for eyeglasses and dental work in Florida.

So Arduin put up a sign on her Capitol office door: "Ogre X-ing."

Times staff writer Robert Salladay contributed to this report.

LOAD-DATE: October 14, 2004


GRAPHIC: PHOTO: Arduin, called a "genius" by Schwarzenegger.  PHOTOGRAPHER: Los Angeles Times PHOTO: (OC)Donna Arduin has been called a "genius" by Schwarzenegger.  PHOTOGRAPHER: Los Angeles Times


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The San Francisco Chronicle



Governor's budget chief leaving post;

A Florida transplant, Arduin was on job for less than a year

SOURCE: Chronicle Sacramento Bureau

BYLINE: Lynda Gledhill


LENGTH: 627 words

DATELINE: Sacramento

Donna Arduin, the government finance expert who Gov. Arnold Schwarzenegger lured to California from Florida, is leaving the administration after less than a year on the job, a spokeswoman for the governor confirmed Wednesday.

Arduin, who was first brought in during the transition to perform an audit of the state's budget, stayed on in the new administration as the chief fiscal officer to help the governor solve the state's $15 billion budget shortfall.

To close that gap, Arduin crafted a budget full of deep cuts to higher education and health and human service programs, including services for developmentally disabled children, which Schwarzenegger later backtracked on under pressure from lawmakers and the public.

It is the first high-profile departure for the Schwarzenegger administration, but it may not be the last as it approaches next month's one-year anniversary of his taking office, a time when turnover often occurs.

Schwarzenegger's spokeswoman, Margita Thompson, confirmed Arduin's departure, saying that she had always said she might not stay more than a year.

"The governor wishes her well," Thompson said. "Under his leadership and with her help, this budget did not raise taxes and put the state budget back on track. The governor is pleased with the work so far and is looking toward next year and finding a director to help lead the state into the future."

Arduin, who had been the finance director for Florida Gov. Jeb Bush before moving west, continued to travel frequently to Florida to see her family. Thompson said Arduin made the decision that, given her personal situation, she could not continue to stay on in California.

The chief deputy of the Department of Finance, Mike Genest, will take over the department on an interim basis, Thompson said, and a search is under way for a permanent replacement.

Arduin, who had a reputation as someone not afraid to slash budgets, never seemed to gel with the administration or lawmakers.

"She clearly represented the conservative wing," said Assemblyman Darrell Steinberg, D-Sacramento, who was the chair of the Assembly budget committee this year. "I didn't agree with her philosophies, but she was a nice person."

Unlike previous finance directors, who sometimes relished the spotlight, Arduin had avoided talking to the media or appearing at legislative hearings.

Before coming to California, Arduin spent 11 years working in state budget offices in Michigan, New York and Florida for Republican governors who had pledged to balance the books by cutting spending and not raising taxes.

Arduin got off to a rocky start with lawmakers as she appeared shaken at her first hearing last December, unable to answer their pointed questions about proposed midyear cuts to the Healthy Families program, which provides health insurance to poor kids.

Schwarzenegger later reversed himself on this and several other proposed cuts that received sharp criticism from Democrats and some public outrage.

One budget proposal included cutting a $10 million program that shortened the length of time dogs and cats are kept alive at shelters. Animal lovers, including Schwarzenegger's children, were outraged by the plan, and the governor reversed himself at a hastily arranged press conference.

Arduin had been the first finance director to come from outside the state in recent memory, something that may have worked against her.

"It's difficult to come into a new state like California, with all its history and complicated budget rules and initiatives, and get with it right away," Steinberg said. "If they can find someone who can understand the big picture in California, that would be a good thing."E-mail Lynda Gledhill at

LOAD-DATE: October 14, 2004


GRAPHIC: PHOTO, Donna Arduin, shown here in May, was the former finance director in Florida and returned there frequently to see her family. / Kim Komenich / The Chronicle

Copyright 2004 The Chronicle Publishing Co.