DALLAS — Spending on schools, healthcare and prisons would increase under the $5 billion budget proposal that Gov. Mike Beebe will submit to the Arkansas Legislature next month.

The proposal calls for a $105.8 million increase in state funding, with the lion's share going to public education. Increased prison spending would include Beebe $7 million more to reimburse county jails for holding state inmates.

Beebe's budget was outlined by the Department of Finance and Administration at a meeting of the Arkansas Legislature's Joint Budget Committee on Jan. 14. The committee is holding hearings in advance of the fiscal session that begins Feb. 10.

The budget includes $89 million of savings from the state's "private option" alternative to Medicaid expansion under the federal Affordable Care Act.

Under the private option plan, Arkansas is using federal Medicaid money to purchase private insurance for low-income workers. The program was approved as an alternative to expanding Medicaid's enrollment under the federal health overhaul.

Republicans who control the Legislature were divided over the health plan in last year's session. Opponents of providing Medicaid coverage to the working poor have said they'll push for defunding during next month's session.

Arkansas carries general obligation bond ratings of AA from Standard & Poor's and Aa1 from Moody's Investors Service with stable outlooks.

The state ended fiscal 2013 with a $300 million surplus. The state collected $5.027 billion in the fiscal year that ended June 30. The total was $299.5 million more than budgeted for the year.

Lawmakers approved a package of tax cuts this year that will cut state revenues by $140 million a year. The state ended fiscal 2012 with a $146 million surplus.

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