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MEMORANDUM
TO: Members of the Philadelphia Delegation
FROM:
Senator Vincent J. Fumo
SUBJECT:
Impact Analysis of the Enacted FY 2007-2008 Budget on the City of Philadelphia. Overview Total General Fund spending appropriated for fiscal year 2007-08 is $27.162 billion, a growth of 4.4 percent over last year when combined with $317.8 million that is now part of the dedicated funding for mass transit. This budget represents a significant accomplishment in that it provides funding for many key initiatives without increasing taxes. The most important aspect of this year’s budget for the City of Philadelphia is the enactment of historic transit funding legislation which will provide one of the largest infusions of state money for mass transit in the history of the Commonwealth. This new money along with access to new capital money will result in nearly $200 million in new funding for SEPTA. Additionally, the previous mechanisms for funding for mass transit have been overhauled and replaced with a dedicated portion of sales tax receipts. This sales tax swap will ensure that transit agencies have a dedicated and growing funding source for decades to come. This budget also provides a much needed boost to the School District of Philadelphia. As a result of this year’s budget, the school district will receive $77 million in new money for fiscal year 2007-08. Further, as a result of budget negotiations, the School District will receive $31 million more than they would have under the Governor’s February budget proposal. Details regarding specific changes in funding levels and their effects on the City of Philadelphia follow. Human Services
* Includes $12 million in additional community behavioral health money ** Includes some local matching funds The cornerstone of the Governor’s health care plan in his FY2007-08 budget was the Prescription for Pennsylvania (Rx for PA) proposal. Although the Cover All Pennsylvanians portion of the Rx for PA proposal was not enacted with the FY2007-08 budget, other important elements of the plan have been acted upon. The two main pieces of Rx for PA which have been enacted with the budget for FY2007-08 are legislation aimed at reducing hospital acquired infections and legislation that allows for increased scope of practice for nurses and other health care workers. There is $2 million included in the budget statewide for battling hospital acquired infections. It is likely that Philadelphia will receive a sizable piece of that money given the city’s status as a leading healthcare provider. The enabling legislation for Cover All Kids was passed in the fall of 2006 and $12.2 million dollars is included in the FY2007-08 budget to cover an additional 21,000 kids statewide in the coming fiscal year. The Department of Public Welfare has certified child welfare expenditures of $709 million for the City of Philadelphia for FY2007-08. This represents an increase of 2.8% over what the Department expects the city to spend in FY 06-07. Additionally, the city will receive $12 million of new MA realignment money for Community Behavioral Health. The Human Services Development Fund (HSDF) continues to be a key issue for the City of Philadelphia. This year the Governor had proposed decreasing funding for the HSDF by $2.5 million. This funding was partially restored by the legislature, as a result the city will receive approximately $250,000 more than they would have under the Governor’s proposal. The appropriation for Psychiatric Services in Eastern PA (EPPI) is funded at $3.5 million for FY 2007-08. Aging Services
In the City of Philadelphia, state funds for aging services are allocated to the Philadelphia Corporation on Aging. Services include nutrition, employment, transportation, domestic care, personal protection, long-term care assessment and both basic and intensive in-home services. In the FY 2007-08 budget, the Philadelphia Corporation on Aging should expect to receive approximately $53.2 million. The budget also provides for a 3% COLA for direct care workers. Public Library Services
The FY 2007-08 budget provides for a slight increase in the Public Library Subsidy. Given the size of the increase enacted in last year’s budget, however, the funding for libraries throughout the commonwealth remains at historically high levels. It is estimated that the Free Library of Philadelphia will receive roughly $9.4 million in public library subsidies in FY2007-08. School District of Philadelphia
* The traditional $25 million line item for the Philadelphia School District was rolled into their Basic Education Subsidy ** The additional $75 million that the governor had requested in February for competitive grants for Pre-K programs has been given its own line item in the budget.
The FY 2007-08 budget provides for a 3.48 percent increase in the basic education subsidy, which translates into a $30 million increase for the School District of Philadelphia. State appropriations for special education will increase by 3.1 percent, resulting in approximately $4.0 million in additional funding for the city. The Accountability Block Grant program sees an increase of $25 million. This $25 million will be allocated for the expansion of full day kindergarten programs, Philadelphia should receive approximately $9 million of this money. Additionally, $75 million has been included in the budget for the Pre-K counts program which will be disbursed on a competitive basis to fund pre-k expansion so while it is unknown exactly what share the School District would receive, it is likely to be around $16 million. The budget provides for the Reimbursement of Charter School line to be increased by $36.5 million dollars which should result in $18.5 million in additional money for the School District. The new funding in the FY2007-08 budget will result in approximately $77 million in additional money for the Philadelphia School district. Higher Education
The FY2007-08 budget provides for modest increases or level funding in the appropriations for most state-aided colleges and universities, which includes most of those listed above. The budget also calls for a 3 percent increase in Community College funding in FY 2007-08. Community College of Philadelphia’s can expect to receive roughly $35.6 million next year. Health Services
* Rounds to less than $0.1 Million The FY 2007-08 budget maintains most of the Department of Health’s appropriations for health research, preventative health, and health treatment services at current year levels. The FY 2007-08 budget provides for a modest increase in the Assistance to Drug and Alcohol Programs line which should result in approximately $200,000 in additional money for the city. The budget also increases both the state and city portion of the Aids Programs line item by $500,000. Transportation Services
* The system for funding mass transit in Pennsylvania has been completely overhauled in this year’s budget agreement. These line items have all been rolled into a new dedicated trust fund. ** This represents the total estimated operating money granted to transit agencies, not a specific item in the budget. The FY2007-08 budget provides the largest increase in mass transit funding in the history of Pennsylvania resulting in over $156 million in new formula driven operating money for SEPTA. The Pennsylvania Turnpike Commission (TPC) will enter into a Public-Public Partnership with PennDOT which will require them to make monthly lease payments over the next 50 years. In return, the TPC will be allowed to toll Interstate-80. Under this new legislation, the TPC will transfer $300 million to PennDOT to be used for mass transit funding in FY2007-08 this amount will increase to $400 million by FY2009-2010 at which point it will begin growing at 2.5% per year. $250 million of this money in FY2007-08 will be for operating of which SEPTA will receive approximately $156.4 million. $50 million of the money will be distributed by PennDOT based on need, it is likely that SEPTA will receive a sizable portion of this money as well. Further, a new Dedicated Capital Funding stream has been created which will drive out over $75 million in FY2007-08 with SEPTA receiving nearly $58 million. Additionally, and perhaps even more importantly, the entire system for funding mass transit in the commonwealth has been overhauled. The former General Fund appropriations as well as the capped $75 million share of the sales tax have been swapped for a dedicated 4.4% of sales tax receipts. This ensures that SEPTA and all the other transit agencies will have a growing and dedicated source of funding. Homeowners Emergency Mortgage Assistance Program (HEMAP)
HEMAP offers loans to homeowners who have fallen behind in monthly payments due to unemployment or family medical emergencies. Since its inception in 1983, over $45 million in HEMAP assistance has been distributed to Philadelphia homeowners. It is estimated that Philadelphians would receive approximately $2.2 million in FY 2007-08 through this appropriation, although that will ultimately depend on the quantity and the magnitude of the applications that are filed for HEMAP assistance. Housing and Redevelopment Assistance
In FY2007-08, DCED’s appropriation for Housing and Redevelopment Assistance will increase $4 million to $34 million dollars, Philadelphia will continue to receive a fifth of this money and could therefore expect an additional $800,000 in FY 2007-08. Probation and Parole Services
The FY2007-08 budget provides
level funding in the state’appropriation for the Improvement of Adult Probation
Services.
Growing Greener II
* Competitive Grant program. **Philadelphia will receive approximately $1.5 million dollars in funding between FY07-08 and FY 09-10, the disbursement of these funds will be dependant on timing of projects. The Growing Greener II initiative was new in fiscal year 2005-06. The state will issue $625 Million in bonds - $100 million in each of the first five years and $125 million in the sixth year. From this $100 million, a county environmental program block grant of $18 million dollars is budgeted for all counties for FY2007-08.
Additionally, the Growing Greener Bond Fund will remain at $10 million this
year. The money is disbursed through a competitive grant program so the money
available for Philadelphia will depend on the number and quality of applications
from the city and the rest of the state.
Port Development
The enacted FY 2006-07 budget provided $16.2 million for debt service and operating subsidies in Philadelphia. In FY2007-08 this amount available for the city will be $15.1 million. PURTA Distribution to Local Governments
Each October, the Department of Revenue distributes checks to municipalities and school districts from PURTA tax revenue collected in the previous fiscal year. In 1999, the PURTA tax was “fixed” to provide a reliable tax collection stream.Historically, PURTA has been a wildly volatile and unpredictable revenue source for the Commonwealth. Under present estimates, however, the City of Philadelphia should receive roughly $4.0 million through this appropriation in the upcoming year.Judiciary
* Rounds to less than $0.1 Million ** Funds disbursed to the counties as needed. In general, Philadelphia’s appropriations for the judiciary are level-funded under the FY2007-08 budget. There is a small increase in the Municipal Courts line.
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