FY 2014 Budget Status Final Corrected

7/30/2019 FY 2014 Budget Status Final Corrected

1/74

House Financ e Committee

Dec ember 12, 2012


2/74

Sta te budgeta ry prob lems persist

Governor s FY 2014 and FY 2013 revisedbudgets due Jan 17

Foc us is on overa ll fisc a l situa tion fo r c urrentyear, budget and out-years

Economy Projections

2


3/74

Typ ic a lly sta ff b riefs Committeerega rd ing overa ll fisc a l situa tion for

c urrent yea r, budget and out-yea rsEconomy

Projections

Today s b riefing will c over those issuesand d isc uss budget p roc ess as well asoffer overview of fed era l fisc a l c liff

3


4/74

The sta te c ontinues its slow rec overyfrom severe ec onomic d istress

Current year surp lus expec ted Fac ing c ontinued budget year and

out-yea r issues growing from about$69.3 million to over $400 million

4


5/74

House Fisc a l Sta ff Estima tes

Use November revenue and c aseload

c onferenc e estima tesUse first qua rter reports from agenc ies,

Budget Offic e Q1, and sta ff estimates forFY 2013

Sta ff estimates for FY 2014 and beyond Not a ll polic y issues ac c ounted for

Estimates va ry this is HFAS perspec tive

5


6/74

The c urre nt ye a r appea rs ba lanced withexc ess but overspend ing is a p rob lem

The b u d g e t a nd o u t y e a r gaps a re afunc tion of both c yc lic a l ec onomic andc ontinued struc tura l issues

6


7/74

Ec onomic Forec ast


8/74

Revenue Estimating Conferenceadop ts a c onsensus ec onomic

forecast It takes testimony from Moodys

Economy.com

The firm builds U.S. mac roec onomicmodels from whic h they derive theirRhode Island forec asts

8


9/74

November forec ast worse than Ma y Persona l inc ome, jobs, wage & sa la ry

growth ra tes a ll lower and slower inshort term

RI rec overy c ontinues to lag U.S.

Slower jobs rec overy job lossesbegan in 2007 not rega ined until 2016 May forec ast was 2015

9


10/74

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Fore c a st D iffe re nc e s - Pe rsona l Inc om e G row th

May-09 Nov-09 May-10 Nov-10


10


11/74

400.0

420.0

440.0

460.0

480.0500.0

520.0

540.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Tho

usa

nd

s

Fore c a st Diffe re nc e s - Job s



11


12/74

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

W a g e a n d Sa la ry In c o m e G ro w th



12


13/74

0.0%2.0%

4.0%

6.0%

8.0%10.0%

12.0%

14.0%

-5.0%-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Job s Grow th Unemp loyment Ra te

13


14/74

-5.00%

-4.00%-3.00%

-2.00%

-1.00%

0.00%

1.00%2.00%

3.00%

4.00%

Jo b s G ro w th - RI C urre ntly Unde rp e rfo rm ing

US Rhode Island

14


15/74

0.0%2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2001 2003 2005 2007 2009 2011 2013 2015 2017

RI ha s C o nsiste ntly Hig he r Une m p lo ym e nt

U Rhode Island

15


16/74

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%6.0%

8.0%

10.0%

2001 2003 2005 2007 2009 2011 2013 2015 2017

Pe rsona l Inc om e G row th - RI Unde rp e rform s

U Rhode Island

16


17/74

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

2001 2003 2005 2007 2009 2011 2013 2015 2017

Persona l Inc ome Wages and Sa la ries

17


18/74

Ec onomic Forec ast assumes resolutionof the Fisc a l Cliff

Half the sequestra tion of federa l g rantswill take p lac e

Exp ira tion of Bush Tax Cuts for inc omesover $250K

Reinsta tement of full payroll ta x (2%)

18


19/74

24%

76%

While M o st Sta te G ra nt

Prog ra m s a re Sub je c t

to Se q ue ste r

Exempt Covered

18%

82%

M ost Sta te G ra nt

Fund ing is Exe m p t

Covered Exempt

19


20/74

G ra nt Are a s Sub jec t to Se que ste r

Bud g e t Func tio n Fund ing C o ve re d

Agric ulture 100%

Employment and Tra ining 100%Community Development 100%

Justic e 100%

Energy, Environment, Nat. Resourc es 89%

Genera l Government 89%

Educ ation (Pell Grants Exempt) 54%

Inc ome Sec urity and Soc ia l Servic es 23%

Transporta tion 4%

Health (MA, CHP, MA Admin exempt) 3%

20


21/74

The La rg e st G ra nts a re M ostly Exe m p t

Pro g ra m FY 201 3 C R (in m illio ns)

Medic a id Vendor (E) $251,464

Food Stamp Benefits (E) 69,885Pell Grants (E) 35,992

Nationa l Highway Performanc e (C/ E) 21,752

CHIP (E) 17,406

TANF (E) 17,178

Title I Grants to LEAs (C) 14,605

Spec ia l Educ a tion (C) 11,649

Med ic a id Admin (E) 11,440

Sc hool Lunc h (E) 11,263

21


22/74

The La rg e st No ne xe m p t Gra nts M ostly Be ne fit Loc a l G ove rnm e nts

Pro g ra m FY 201 3 C R (in m illio ns)

Title I Grants to LEAs $14,605

Spec ia l Educ a tion 11,649Head Start 8,017

WIC 6,659

Pub lic Housing Opera ting Fund 3,986

LIHEAP 3,493

UI Sta te Administra tion 3,245

Voc ationa l Rehab ilita tion 3,231

Consolida ted Hea lth Centers 3,076

Community Development Bloc k Grant (CDBG) 2,967

22


23/74

No c urrent estimates of impac t on sta terevenues from ec onomic effec tsof a

d ifferent Fisc a l Cliff resolution Ma ny sta tes have tax polic y d irec tly

linked to fed era l rules

RI ta x revenues would inc rease with:

Roll bac k of EITC expa nsion and dep end ent c a retax c red its and student loan interest ded uc tion

Elimina tion of c red its for elementa ry and sec ondaryteac her expenses and qua lified tuition expenses

23


24/74

Too many va riab les a t p lay in thepotential resolution

Are g rant reduc tions extend ed toc urrently exempt p rograms? Imp ac ts on Med ica id would be a

signific ant issue to sta tes espec ia lly withACA imp lementation

Cliff is more like a slopeand federa lgovernment has tools to avert certa inimpac ts pend ing a resolution

24


25/74

Revenues


26/74

Revenue estima tes a re d riven bytrends, c ollec tions to da te, and the

ec onomic forec astsFY 2012 were more than antic ipa ted

FY 2013 c ollec tions ahead/ hold ing

FY 2014 c onsensus estimates c lose to sta ff

estimatesEc onomic forec ast is for slow rec overy

Sta ff out-year p rojec tions assume a ffec tsof gaming in Mass sta rting in FY 2015

26


27/74

$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

FY2001 FY2003 FY2005 FY2007 FY2009 FY2011 FY2013 FY2015Proj.

FY2017Proj.

PI Sa les

27


28/74

$0$50

$100

$150

$200

$250

$300

$350

$400

FY2001

FY2003

FY2005

FY2007

FY2009

FY2011

FY2013

FY2015Proj.

FY2017Proj.Lottery VL

28


29/74

Preliminary Closing


30/74

Sta te was not fac ing ma jor c urrentyea r p rob lem this time last yea r

Expend iture reduc tions and morefavorab le revenues in May a llowed forsignific ant surp lus to c lose ma jor 2013

gap

30


31/74

Enacted Current Diff.

Opening $ 68.8 $ 68.8 $ 0.0

Revenues 3,257.4 3,270.3 12.9

Rainy Day (93.0) (93.4) (0.4)

Expenditures (3,139.3) (3,109.9) 29.4

Xfer Retirement - (12.5) (12.5)

Closing Surplus $ 93.9 $ 123.3 $ 29.4

Reapprop. - (7.7) (7.7)

Free Surplus $ 93.9 $ 115.5 $ 21.7

31


32/74

Revenues $12.9 million (0.4%) above

Taxes up $14.8 million with persona l

inc ome tax ga ins offsetting business taxes Missed business tax estimate to lesser degree

than last year

Continues to p rove d iffic ult to estimate

All other revenue down $1.9 million Departmenta l rec eip ts down $5.0 million

unpa id hosp ita l lic ense fees

Misc ellaneous (one-timers) up $3.3 million

32


33/74

Revenues $12.9 million more

Law requires fina l revenues above

estimates be transferred to theEmployees Retirement System to paydown unfunded liab ility

Tota l Transfer = $12.5 million

$12.9 million less 3% ra iny d ay c ontribution ($0.4million) lea ves $12.5 million to be transferred asexcess

33


34/74

Tota l spend ing $29.4 million (0.9%)below b udgeted amounts

$7.7 million unspent & reappropria ted

$14.5 million savings from Med ica lc aseloads and impac t of risk sha ring

$3.7 million less fo r Teac her Retirement $1.5 million DOA c entra lized utilities and

fac ilities savings $5.6 million overspent in DCYF, BHDDH

34


35/74

Tota l spend ing $29.4 million belowbudg eted amounts but a rea s of

overspending6 agenc ies overspent

Approp ria tion lines overspent even ifagenc y tota ls were not

22% of genera l revenue lines wereoverspent Unac hieved initia tives Unexpec ted expenses

35


36/74

BHDDH overtime and sta ffing in RICLAS($2.2 million) a nd a t Eleanor Sla ter Hosp ita l($0.9 million)

Deve lopmenta l Disab ilities: $1.0 million

Behaviora l Hea lthc are $3.2 million morefrom genera l revenues

fewer servic es elig ib le for enhanc ed Hea lthHom es Med ic a id ra te Ac c omplished by shifting savings from other

behaviora l hea lth prog rams

36


37/74

DCYF $1.8 million $1.9 million p ersonnel savings $1.1 million fa mily servic e reg ion

b illing overlap $2.6 million other c aseload

37


38/74

Impac t on FY 2013

Do savings or higher base expenses in FY2012 carry to FY 2013?

Will delayed purc hases requireadd itiona l funds in c urrent yea r?

Are initia tives being imp lemented?

38


39/74

Current Year


40/74

The c urrent yearhas no defic it butinc ludes unmet expend iture savings

tha t could a ffec t out-yea rsMajor shortfa ll from overspend ing

masked by revenue uptic k, add itionalc losing surp lus and other savings

40


41/74

Prelimina ry Closing Sep tember 1 Agency Q1 reports Oc t 30

Caseload estima tes November 4 Revenue estima tes November 9 Budget Offic e Q1 rep ort Nov 15 Aud ited Closing ??? Governor s Budget Jan 17 Ag enc ies Q2 Jan 30

41


42/74

Enacted Current Diff.

Opening $ 93.9 $ 123.3 * $29.4

Revenues 3,320.9 3,328.4 7.5

Rainy Day (102.4) (103.3) (0.9)

Expenditures (3,295.8) (3,284.7)* (11.1)

Xfer to Fleet/IT (16.4) (16.4) -

Total FY 2013 $ 0.1 $ 47.3 $47.2*Includes $7.7 million reappropriation

42


43/74

Revenues a re up by $7.5 million Opening free surp lus up by $47.2 million

Ad ded resourc es inc rease ra iny daytransfer by $0.9 million

Expend itures appear up by $5.4 million netof rea pprop ria tionsand Novemb er

Caseload Savings

43


44/74

Sta ff estima tes d iffer from Budget Offic e

Legislature

BHDDH, DCYFPub lic Sa fety, Correc tions

Area s that appea r to be new initia tives

Refining and revising of estima tes c ontinuesas more info is ava ilab le

Expenses $5.0 million higher if a ll Bud getOffic e a dds a re inc luded w/ HFAS

44


45/74

Reappropria tion $ 7.7

Legisla ture (3.0)

OHHS Caseload & Programs* (12.6)

Sc hool Construc tion Aid (2.5)

Correc tions* 2.6

Other Pub lic Sa fety * (1.8)

Other * (1.6)* Items d ifferent tha n Budget Offic e Q1 estima tes

45


46/74

Sta tutory requirement: $6.5 million

Legisla ture = $6.3 million, revised bud getlowers by $3.0 million

Jud ic ia ry = $0.1 million

Governor discretionary: $1.3 million

Correc tions =$0.5 million

OHHS = $0.4 m illionDOA, DOR, Treasurer, Ethics, AG and PD

c ombined tota l = $0.4 million

46


47/74

Nov Ca seloa d Conferenc e:

$24.3 million in savings

Med ic a l Assistanc e - $24.3 million less Saving in managed c are, Rhod y Hea lth,

hosp ita l, pharmac y and other servic es

Inc reases in long term c are and Part D

paymentCash Assista nc e $59,761 more

47


48/74

Medic a l Assista nc e $1.5 million inunac hieved savings

Ad d bac k from genera l revenues for thehome and c ommunity based c linic a lreview utiliza tion

Saving s for last six months of fisc a l year

Enac ted budget inc ludes full yea r savings

48


49/74

BHDDH

Behaviora l Hea lth Hea lth Homes

$4.4 million Budget Office showed savings of $1.7 million tha t does

not a ppea r to b e c onsistent w ith c urrent ac tivities

ESH - $1.2 million

Developmenta l Disab ilities -$1.8 million

OHHS/ DHS

Unified Hea lth Infrastruc ture Projec t - $0.6million

49


50/74

DCYF - $6.2 million

$1.3 million to c orrec t Med ica id c la iming

Rec urring issue

$1.8 million for estimated struc tura lbudget estima ting / shortfa ll issues

$0.3 million una c hieved savings

50


51/74

Correc tions -$2.6 million moreUnac hieved savings Inc rea sed per diem c osts

Budget Offic e adds more for sta ffing

Pub lic Sa fety $1.8 million lessPersonnel saving s c onsistent with FY 2012

closingAd d itiona l Op era ting c osts

Budget Offic e inc ludes $1.2 million more forpurchases

51


52/74

Other - $1.6 million less All other p rojec ted ad justments to

agenc y expend itures IT Expenses

Utilities Savings

Turnover Savings

52


53/74

Budget Year and Out-yea rs


54/74

There a re a lso budget yearand out-yearproblems

The budget year likely has a gap of $69.3million

Tha t gap grows in the out years to $410million

Short term estimates lower than Fisc a l Sta ffestimates in June; Higher surp lus and lowerc aseload expenses

La ter year simila r size as p rior estima tes

54


55/74

55

$2,500

$2,700

$2,900

$3,100

$3,300

$3,500

$3,700$3,900

$4,100

$4,300

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Re ve nue s vs. Exp e nd iture s: C urre nt Estim a te

Current Useable Revenues Current Expenditures


56/74

These gaps c ontinue to be a func tionof bo th c yc lic a l ec onomic and

c ontinued struc tura l issues Projec ted gaming revenue losses grow

in la ter year of forec ast

56


57/74

Continued issue o f prob lematicexpend iture struc ture

Ma ny enac ted struc tura l c hangesimp lemented still others not a c hieved

Growth ra tes exc eed ing revenue g rowthrates

57


58/74

0 500 1 ,000 1 ,500 2 ,000 2 ,500Federa l

PITSales

Univ . /Col legeUI & TDI

Busine ss Ta xe sLo tte ry

Misc .D e p a r t m e n t a l

O the r Ta xe sRe stric te d

G a s Ta x

58


59/74

Gen. Govt.

18.8%Human Svc s.

39.3%

Education28.0%

Pub lic Safety6.3%

Nat. Res.

1.3%

Transp .6.3%

59


60/74

Personnel &Operating

31.1%

Loc a l Aid13.9%

Asst., Grants,Benefits45.2%

Capital8.0%

Operating

Xfers1.8%

60


61/74

Gen. Govt.13.4%

Human Svc s.39.3%

Education33.9%

Pub lic Sa fety

12.3%

Nat. Res.1.1%

61


62/74

Personnel &Operating

29.9%

Loc a l Aid29.2%

Asst., Grants,Benefits35.0%

Capital5.8%

OperatingXfers0.2%

62


63/74

Bud get Offic e Instruc tions based on$128 million July d efic it p rojec tion Inc ludes c a lc ula tion of current servic e

revenues and expensesSome revisions based on more upda ted

data

Also inc ludes a numb er of polic y choic es Inc reasing PILOT

Resto ring FY 2013 fund ing reduc tions

63


64/74

FY 2014 Budget Offic e Current Svs. $3,444.9

FY 2014 HFAS June Estimate 3,466.9Differenc e from Budget Offic e ($ 22.0)

64

HFAS June estimates has FY 2014estimated expend itures $22 millionhigher than Budget Offic e July

estimates


65/74

65

Differenc es from earlier estima tes $30 million less for human servic es

spend ing growth:more a c c ura te da ta $8.7 million more for formula educ a tion

aid: based on upd ated data $8.4 million less by a ssuming no COLA

and grea ter benefit c ost g row th basedon more updated ra tes $8.6 million to inc rease PILOT loc a l a id


66/74

Agenc ies asked to submit budgetsthat reflec t c urrent servic e ta rgetas c a lc ula ted by Budget Offic e

Agenc y requests still exc eededc urrent servic e estima tes by $21.9millionNot a ll same items inc luded

66


67/74

FY 2013 Enac ted $ 3,295.8

Current Servic es Ad justment 149.1

FY 2014 Budget Offic e Current Svs. 3,444.9

FY 2014 Agenc y Unc onstra inedReq.

3,466.8

Differenc e from Budget Offic e $ 21.9Imp lied Current Servic e Need $ 171.0

67


68/74

Gen. Govt.13.3%

Human Svc s.40.0%

Education

33.4%

PublicSafety

12.1%

Nat. Res.1.1%

68


69/74

69

Budget Offic e a lso asked for op tionsfor reduc tions of 7%, ad justed for

c erta in exc lusions Those reduc tions rep resent $152.7

million of savings from Budget Offic ec urrent servic e estima te


70/74

70

FY 2014 Budget Office Current Svs. 3,444.9

Target Adjustment (152.7)

FY 2014 Budget Office Target 3,292.2FY 2014 Constrained Requests 3,307.3

Difference from Budget Office Target 15.1

Constrained vs. B.O. Current Svs (137.6)Constrained vs. Unconstrained Req. $ (159.4)


71/74

This design g ives adequa te op tionswhen p roposa ls a re rejec ted or

softened Array of op tions a llows for dec ision

makers to c onsider a ll c hoic es andimplications

But ma jor reduc tions to loc a l a id andother a reas limit op tions

71


72/74

Some p roposa ls may take time for fullimplementation

Proc ess should inc lude the five-yearforecast

Are solutions a lso struc tura llybalanced?Do revenue solutions grow a t the same

ra te as the expend itures they support?

72


73/74

Governor s Budget expec ted Jan 17 Current year ha s surp lus but a reas of

overspend ing tha t will limit use ofsurp lus for b ridg ing struc tura l solutions

Major budg et and out-yea r gaps

Slow growing ec onomy

Struc tura l ta x and expend iture issues

73


74/74

House Financ e Committee

Dec ember 12, 2012

FY 2014 Budget Status Final Corrected

Documents

Transcript of FY 2014 Budget Status Final Corrected