SENATE DEMOCRATIC APPROPRIATIONS COMMITTEE

Impact Analysis of the Proposed FY 2008-2009 Budget on the City of Philadelphia. 

OVERVIEW 

            The Governor proposed a $28.3 billion General Fund spending plan, including a $1.1 billion, 4.2% budget increase and no new taxes.  Spending increases are targeted to Education, Public Welfare and Corrections programs in the proposed budget.  Significant increases include a $95 million boost in child welfare and a $291 million increase in the Basic Education Subsidy. 

            Major funding highlights for the City include an $85 million basic education subsidy increase, $26 million increase in Child Welfare, and a doubling of the local police grant in the proposed budget.  No TANF transition dollars were requested.   

            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 were enacted last year included 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 was 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 FY2008-09.  This represents an increase of 2.8% over what the Department expects the city to spend in FY 07-08.  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.  Last year the Governor 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 proposed budget seeks another reduction in HSDF funding.

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 2008-09 budget, the Philadelphia Corporation on Aging should expect to receive approximately a 2% increase, $54.3 million. 

Public Library Services

            The FY 2008-09 budget provides for a slight increase in the Public Library Subsidy.  The proposed increase is 2% or $77.26 million.   

            It is estimated that the Free Library of Philadelphia will receive roughly $9.58 million in public library subsidies in FY2008-09. 

School District of Philadelphia

            The budget provides a big boost to the School District of Philadelphia.  The school district would receive $85 million, an increase of 9.64% over last year.   Last year Act 114 of 2006 required the State Board of Education to complete a “Costing Out Study”, to determine the cost of providing an adequate public education.  The report determined the need to increase state and local support by approximately $4.6 billion.  This year’s basic subsidy proposal begins a six year commitment to implement these adequacy funding recommendations. 

            State appropriations for special education will increase by 3 percent, resulting in approximately $3.72 million in additional funding for the City. 

            This proposed budget provides for the Reimbursement of Charter School line to be increased by $36 million dollars, totaling nearly $197.6 million in the proposed budget.  This would result in more than $17 million in new dollars for the school district. 

Higher Education

            The proposed FY2008-09 budget provides for an increase in operating funds for community colleges by 3%, an additional $6.9 million.   

            The proposed state funding for the state-aided institutions, listed above, varies from some minor increases to 50% reductions for those with medical programs.  These reductions reflect the Governor’s initiative, “Federalizing Physician Practice Plans.”  This initiative would leverage $8.8 million in federal Medicaid funds for university- affiliated physician practice plans associated with Philadelphia Health and Education Corporation, the University of Pennsylvania and Thomas Jefferson University.  Federal funds will be passed on to the institutions.    

Health Services

* Rounds to less than $0.1 Million         

            The proposed budget maintains most of the Department of Health’s appropriations for health research, preventative health, and health treatment services at current year levels or with a slight increase.   

Transportation Services

 .*  For FY 2008-09 both the proposed statewide and citywide amounts have been grown by 3% in order to have an approximate amount.              

                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 (PTC) 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 was 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.  Act 44 will provide an additional $50 million in fiscal year 2008-09 for dedicated capital assistance.   

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 2008-09 through this proposed 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 the proposed budget for fiscal year 2008-09, DCED’s appropriation for Housing and Redevelopment Assistance will remain level at $34 million. Philadelphia will continue to receive a fifth of this money and can anticipate receiving the same amount of funding as in fiscal year 2007-08.
 

Probation and Parole Services

            The FY2008-09 budget provides level funding in the state’s 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 was budgeted and it has already been allocated to Philadelphia, which the City has collected.   

            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 2007-08 budget provided $15.1 million for debt service and operating subsidies in Philadelphia.  This funding will likely be restored among legislative changes to the Governor’s proposed budget.   

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 $3.5 million through this proposed 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 FY2008-09 proposed budget.