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SENATE DEMOCRATIC APPROPRIATIONS COMMITTEE REPORT ON THE FISCAL YEAR 2006-07 STATE BUDGET 2005-06 Fiscal Year The ending balance for the current fiscal year is going to be $471 million after a transfer to the rainy day fund of $153 million. This huge surplus is due to a large revenue surplus of $864.8 million. That $471 million fund surplus will roll into the next fiscal year. 2006-07 Fiscal Year The Governor’s certified revenue estimate for the 2006-07 fiscal year is expected to be $26.680 billion. One time revenues expected in the fiscal year will add $173 million to the revenues available. Tax cuts totaling $118 million will reduce the revenue to $26.734 billion. The growth in revenue compared to 05-06 is $874.9 million or 3.27%. Expenditures are slated to grow by $1.478 billion or slightly less than 6%. At the end of June 2007 a balance of $4 million is anticipated. The tax changes in HB650 and SB 854 total $25 million. There are two other tax changes that were passed as part of the school code bill and the fiscal code bill. Taken together the reduction in commonwealth taxes is $37.6 million in 2006-07. The cost is significantly higher for the 2007-08 fiscal year, when the loss in revenue will be $200 million. Below are the items contained in the tax bills:
The tax changes are contained in other bills that are part of the budget package. They are: 1. The education improvement tax credit is increased by $10 million in the school code. 2. In the fiscal code bill, a change in the fee charged by the Insurance Department for the valuation of life insurance policies. The fee goes from 1.5 cents per $1,000 policy to 1 cent per $1,000 policy. Realty Tax Transfer (RTT) to Keystone Fund The budget changes the accounting methods of the Keystone Recreation, Park, and Conservation Fund. These changes will essentially hold harmless agency allocations from the Fund. Agencies will continue to receive allocations based solely on the revenue generation from the State Realty Transfer Tax. In the past several years, agency allocations from the Fund have grown, and in 2006-07 will increase again over the 2005-06 totals. With continued growth in realty transfer tax revenues, the new method will actually benefit agencies since the funds will be immediately available in the year the taxes are collected. Currently 15% of the State Realty Transfer Tax is dedicated to the Keystone Fund. In any year, the revenues are collected from this tax for 12 months beginning July 1 and are then are apportioned to the agencies for use in the following year. These funds are then distributed by percentage to the agencies. The original estimated total for the RTT transfer to the Keystone Fund was $79.1 million; it is now, at 2.71%, $81 million. The breakdown to agencies is as follows:
This accounting change will have the following effects: 1) It will allow revenues to be used by the agencies in year they are collected. 2) Changes the transfer rate from 15% to 2.1% beginning July 1, 2006. 3) The transfer rate returns to 15% beginning July 1, 2007. 4) A one time transfer of 12.9% of State Realty Transfer Tax payments will be earmarked for the General Fund for the period July 1, 2006--June 30, 2007. The effect of these changes allows DCNR, PHMC, and Education to have immediate access to the funds similar to what already exists in the Keystone Fund for the State System of Higher Education. To correct a windfall doubling of the revenues in 2006-07, those that would normally be collected in 2006-07 are earmarked for the General Fund. The 2.1% transfer rate is necessary to cover the SSHE allocation during 2006-07. This is necessary since SSHE would receive zero funding in 2006-07 if all the revenues for that year were deposited in the General Fund. Expenditures will grow by $44 million or 3.3%. While that is an unremarkable expenditure growth, the components of the expenditures are changing much more dramatically. The PACE expenditure will decrease from $400 million to $190 million due to the availability of the federal Medicare –part D program. The other significant change is that the Lottery Fund will once again begin paying a portion of the long term care program under medical assistance. The Lottery Fund’s commitment will be $210 million. The ending balance of the fund in 2006-07 is anticipated to be $372 million which is about $15 million higher than the estimated ending balance of the current year. The key to understanding the changes in the Lottery Fund are contained in the final version of the PACE bill which is discussed under the Aging section of this report. The budget transfers $904,000 in PACE personnel costs to the Pharmaceutical Assistance Fund, thus lessening the general fund contribution. Family Caregiver Support Program The Family Caregiver Support Program appropriation contains a small increase to provide for a 2 percent cost-of-living adjustment. This program is also supported by $10 million in federal funds. The program assists families who maintain frail relatives in their home. Working through AAA’s, the program provides benefits counseling and, depending on income, financial assistance including supplies, services and home adaptations and devices. It is anticipated that 5,055 families will receive these services in 2006-07. Alzheimer’s Outreach Services The budget includes $250,000 for Alzheimer’s Outreach Services. Federal Funds used for Memory Loss programs are no longer available, however it is anticipated that Pennsylvania will receive $350,000 in federal funds for an Alzheimer’s Demonstration Grant program. Pre-Admission Assessment Funding for the Pre-Admission Assessment Program is increased by 6 percent for a total of $7.68 million in lottery funds. This nursing home pre-admission screening program helps older Pennsylvanians and their families determine the least restrictive environment needed and assists them in securing and managing intensive in-home services tailored to their needs. It is anticipated that assessments and referrals to nursing homes and community services will increase in 2006-07. PENNCARE This budget includes a $10.0 million increase in the lottery funded PENNCARE appropriation to continue the current Attendant Care Program and provide services to an additional 240 recipients. Funds are also used for Older Adult Protective Services to investigate suspected elder abuse reports. The increase would also be used to provide a 2 percent cost of living adjustment for direct care workers and to provide services as a result of nursing home transition activities. Home and Community-Based Services A total of $18.2 million in Tobacco Settlement funding is included in the budget to provide home and community-based services to older Pennsylvanians ineligible for the Federal Medicaid Community-Based Waiver Program because they exceed the personal asset limit. Program participants are required to share in an average of 50% of the cost of services. The commonwealth has increased participation in the 60+ Waiver program by 70 percent since 2002-03 and proposes to serve an additional 2,800 people in 2006-07. Senior Center Grants Funding for Senior Centers has been included in this budget. Funded from lottery funds, $4.0 million will be available to assist the centers in the purchase of needed repairs, renovations and equipment used in the provision of senior center services and operating expenses. These grants have not been available since 2001-02. PACE and PACENET The Pharmaceutical Assistance Program provides help to qualified older Pennsylvanians who are 65 years of age and over and whose cost of drugs is a burden to them. The program is financed by the Lottery and Tobacco Settlement Fund revenue. Enacted in December 2003, the federal Medicare Prescription Drug, Improvement and Modernization Act created a new outpatient drug benefit as Part D of Medicare. Medicare Part D coverage began in January 2006.
Due to Pennsylvania being able to share the cost
of prescription drug coverage under the new federal prescription plan, the
commonwealth should be able to provide prescription coverage to an additional
120,000 seniors. In addition, the commonwealth will address the gaps in the
new federal Medicare Part D benefit for PACE/PACENET recipients so that
Pennsylvania’s seniors will not incur more costs than they otherwise would
have paid when their prescriptions were covered by PACE/PACENET. The 2006-07 budget creates the line item entitled, Food Safety and Inspection”. This program is projected to be funded at $300,000. The department conducts over 8,000 food inspections at food establishments across Pennsylvania. This budget saw the effective program administered by Penn State entitled, Agricultural Extension Services, being funded at $29.78 million. This is an increase over $2 million from last year’s budget. The Pennsylvania Food Purchase program within the department is funded at $18.7 million in the 2006-07 fiscal years budget; an increase of $700,000 over last year. As gas prices increase, more families are forced to choose between food and heat, and this program provides a blanket of safety to those who need food. The Animal Health Commission, within the Department, has been funded by the 2006-07 budget for $6.675 million. This was an increase of $1.42 million over the available year. This Commission will be performing many critical tasks during the new fiscal year. The funds for this program will be used to protect the quality and safety of food from animal origin. Additionally, this agency will be testing for the “Chronic Wasting Disease Monitored Herd” program as well as the “Avian Influenza Monitored Flock” program. State spending for the Department of Corrections will reach $1.4 billion, an increase of $58 million, or a 4.2% increase from the 2005-2006 fiscal year. The significant increase is due to contract negotiations and walking time issues that the Department had to fulfill. The SCI appropriation has increased $49 million over FY 05/06 to $1.2 billion. The inmate population is the single most important factor that affects cost in the correctional system. When factoring in the cost of inmate health care, education and training expenses, the current average cost per inmate is $32,000. The Medical Care appropriation is $189 million, an increase of $6.9 million. Following a National trend, every year sees an increase to the cost of providing adequate healthcare to the inmates, especially the elderly population.
The Inmate Education and Training appropriation is
$42 million, which is slightly less than the funding in FY 2005-2006. Probation and Parole spending will total $ 97 million in FY 2006/2007, which is a decrease of approximately $2.6 million from last year. In the enacted 06/07 budget, the General Government Operations appropriation received a decrease of approximately $2.6 million or 3.4% below the Governor’s FY 05/06 budget. The Board developed some cost saving measures which allowed the Board to reduce their overall GGO spending. The Sexual Offenders Assessment board remained at the Governor’s February budget proposal of $3.2 million, as did the Adult Probation services appropriation at $19.3 million. DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT The Governor’s $2 billion Economic Stimulus program has begun to produce some significant results as an expanding commonwealth economy has helped to attract more than 130,000 net new jobs during the past two years. Major stimulus commitments totaling nearly $1.25 billion have provided $927 million in infrastructure investments, $257.7 million for community revitalization efforts, and more than $61 million for other business and technology financing programs. Unfortunately, these new investments do not come without a cost. Debt service costs for Commonwealth Finance Authority debt will increase by $28.6 million in the new budget to total $36.9 million. New Initiatives A major new World Trade PA initiative will provide $15 million to enhance and promote the commonwealth’s world trade investment activities. The funds will be used to increase Pennsylvania’s share of trade in foreign markets, attract new foreign direct investment here in the commonwealth, and leverage global networks from our college and university system. The initiative includes a realignment of our current international offices, closing an underutilized office in Brussels and opening new offices to better serve far east markets. A significant $10 million increase is requested to provide a $15 million appropriation for Infrastructure & Facilities Improvement Grants. This recently created program provides multi-year grants to debt issuing authorities for the payment of debt service and related costs for economic development projects. The final budget agreement does not provide funds for the proposed Jonas Salk Legacy Fund. The funds would have been used to recruit research faculty to Pennsylvania colleges, universities, and academic medical centers, as well as funding capital investments in bioscience facilities, including laboratories, incubators, and research parks. The initiative would have been funded through a securitization of about half ($35 million) of the Tobacco Settlement proceeds currently given to medical research institutions in the commonwealth. However, the General Assembly chose not to divert funds to this proposed initiative. Business Financing Programs The budget maintains current funding levels for the major business financing programs including $49 million for the Opportunity Grant Program, $30 million for Customized Job Training, $22.5 million for Infrastructure Development and $50.2 million for transfer to the Ben Franklin Technology Development Authority Fund. Economic Stimulus Funds through the Commonwealth Financing authority are also expected to capitalize the Machinery and Equipment Loan Fund with a $75 million deposit. This new infusion of funds has enabled the program to increase maximum loan amounts from $500,000 to $5 million. Community Development Programs The budget provides $30 million for Housing and Revitalization Assistance and $18 million for New Communities programs. Shared Municipal Services will receive a $1 million increase to $2.4 million. The Growing Greener Bond Fund is expected to provide $5 million during the Current year and $15 million during the next fiscal year to supplement Main Street and Downtown Redevelopment activities. HEMAP The General Assembly had previously acted to fund the Governor’s supplemental appropriation of $3 million for HEMAP assistance to provide loans to families to avoid mortgage foreclosure. The budget provides $10 million for HEMAP assistance during the next fiscal year. Current program revenues were nearly exhausted without this new commitment of commonwealth funds. The final budget agreement provides an unprecedented $720 million increase in state Education spending. The largest single component of this increase is a $265 million, 5.87% increase in the Basic Education Subsidy, including foundation funding of $64 million targeted to the lowest spending districts within the commonwealth to help them raise per pupil spending above $9,030 per student. The proposed funding for basic education programs would increase state support by $1.8 billion above spending levels when the Governor’s term began, continuing state efforts to dramatically increase our commitment to local school districts. More importantly, these investments appear to be showing results. Since 2002 the number of 5th grade students meeting state assessment standards in math has increased from 53% to 69%. Reading results have improved from 57% to 64%. Early Childhood & Tutoring Assistance Targeted initiatives to fund early education and tutoring assistance continue to be expanded significantly. These investments have already enabled 12,500 additional students to enroll in pre-kindergarten, while an additional 4,710 students are now able to participate in Head Start. The budget provides $250 million for the Accountability Grant Program, a $50 million increase, $70 million for tutoring assistance, and $40 million to supplement federal Head Start programs, a $10 million increase, to build upon these initiatives. Science & Technology Initiatives High school reform, through the Project 720 program, will receive $8 million, a $3.3 million increase above the current year. Several new initiatives will bolster science and technology programs. A $10 million program will support efforts to improve elementary science instruction through hands on learning and new curriculum training. The budget will provide $20 million to place internet-equipped laptop computers in math, science, English, and history classrooms and equip teachers with multi-media technology. The budget also provides $8 million for dual enrollment programs, a $3 million increase above the current year. Special Education Special Education programs will receive a $27.5 million, 2.9% increase. Early Intervention funding will increase $14.1 million, totaling $137.6 million. Approved Private Schools will receive nearly $86.5 million for the next fiscal year and a $1.3 million requested supplemental appropriation for the current year to meet legislated requirements to maintain total funding levels at 125% of the increase in funds for special education programs. Chartered Schools for the Deaf and Blind will receive $32.9 million, more than a $1 million increase. The budget also provides $10 million to resolve remaining prior year audits, although this unresolved liability may be as high as $30 million. Aid to Non-Public Schools & Charter School Reimbursements Aid to Nonpublic schools would be increased by 5.87%, including $83.6 million for Services to nonpublic schools and $25.58 million for Textbooks, Materials and Equipment. Charter school reimbursements to public schools will be increased by more than $34 million, to total $126.7 million. The increase reflects an attempt by the commonwealth to maintain reimbursement rates above 27% of total charter school costs. Rapidly rising charter school enrollments continue to increase these costs dramatically. Public Library Subsidy The Public Library Subsidy Program supports and improves state and local library services and ensures access to these services. The budget agreement includes a 23% increase for library services or an additional $14.1 million over the current year’s appropriation, for a total of $75.5 million. This significant increase brings the Public Library Subsidy to its highest level in history and among the three highest funding levels in the country. Other Increases Other significant funding increases include a $9.5 million increase for Teacher Professional Development, to total $23.4 million, a $17 million increase for Pupil Transportation, totaling $512.7 million, an $18.2 million increase, totaling $474.6 million for School Employees’ Social Security costs and a $368.7 million appropriation for School Employees’ Retirement costs, a $114 million increase to cover increasing employer contribution rates. Community Colleges The budget includes a 5 percent increase for community colleges, or an additional $12.6 million. Included is $42.0 million in capital funding. Funding for the community colleges is shared by sponsoring counties or school districts, the students through tuition payments and the commonwealth. Commonwealth appropriations are currently based on a formula that includes a hold harmless for Base Operating Costs; an Economic Development Stipend, increased at the same rate as the appropriation and based on community college courses that are focused on High Priority Occupations; a Base Supplement; and a Growth Supplement that recognizes enrollment increases. State System of Higher Education The State System of Higher Education would receive an additional $22.7 million, and funding for the Education and General line is increased by 5.0%. Funding is distributed through the Chancellor’s Office to individual universities in accordance with a formula that considers the enrollment and programs of the school and the cost of operating and maintaining the individual campuses. In addition, the System will receive at least $14.8million in Keystone Recreation, Park and Conservation Fund money for deferred maintenance projects. State-related Universities The budget includes 4.5% increases for Penn State, University of Pittsburgh, Temple University and Lincoln University. Combined, state support for the state-related institutions E & G line items is increased by $25.0 million. State-Aided Institutions Overall and on average, state support for the State-Aided Colleges and Universities increases by 3.0%. Articulation Agreements The School Code includes language providing for transfers of credits between institutions of higher education. The State System of Higher Education and the Community Colleges must participate in the development of equivalency standards relating to the first 30 hours of core courses by June 30, 2008. In addition, State Related Universities may elect to participate, if they so choose.
An Articulation Oversight Committee will be
established and include membership from all sectors of higher education. The
Committee will participate in the development and implementation of
equivalency standards. PA HIGHER EDUCATION ASSISTANCE AGENCY Grants to Students The budget includes a 5.0% increase in funding for the Grants to Students Program or an additional $18.0 million. This is the state’s scholarship program which helps students pay tuition at an accredited college or university. In addition PHEAA will continue the commitment made under the GIFTS initiative and will provide up to $52.5 million to supplement the state appropriation, in addition to the $20 million that has been reserved from the 2005-2006 funding to hold renewal applicants harmless during the transition phase of the new formula implementation. The PHEAA Board annually determines the distribution of funds to applicants on criteria including family income, family size and the cost of the institution the student will be attending. Currently the number of grant recipients is 157,630 students, the average award amount is $2,750, and the maximum award is $3,500. It is anticipated that the budget will allow for 175,730 grant recipients. A new grant formula will be implemented in 2006-2007 and is designed to produce grant awards that cover a greater portion of college costs for needy students, regardless of whether a student is attending a community college or a high priced private college. Institutional Assistance Grants The budget includes a $1.2 million increase for the Institutional Assistance Grants Program, or a 3% increase. These funds assist independent, post-secondary institutions to stabilize education costs which benefits student grant recipients enrolled at those institutions. This funding level will slightly increase the per capita grant from $1,005 to $1,006 for an estimated 41,272 students. Matching Funds Program The Matching Funds Program, which disburses matching funds as a percentage of the federally-required match for the Federal Perkins Loan Program and the Federal Work-Study Program is level funded at $14.1 million. Agricultural Loan Forgiveness Program The budget continues the Agricultural Loan Forgiveness Program and includes an appropriation of $85,000. The program forgives up to $2,000 each year with a maximum forgiveness of $10,000 per recipient. New Economy Technology Scholarships The budget includes $6.8 million, for the New Economy Technology Scholarships, to increase the number of grant recipients by 500 and to increase the maximum grant award from $3,000 per year to $4,000 per year. Scholarships are awarded to Pennsylvania students to pursue college degrees in computers, math and science and who commit to work in Pennsylvania after graduation, thus expanding Pennsylvania’s skilled workforce. Legislation will be needed to implement these changes. Cheney University Keystone Academy An appropriation of $2 million is included for the Cheyney University Keystone Academy, to recruit gifted students to enroll at the university. DEPARTMENT OF ENVIRONMENTAL PROTECTION The funds needed for the state water project by both the Susquehanna and the Delaware River Basin Commission is restored under the budget agreement. The amounts are $500,000 and $400,000 respectively. The Agriculture consumptive use project has been funded at the full $6.1 million that was proposed. This money will be used to purchase and purify abandon mines that are capable of holding water. The purified water will be used to replace water used for agricultural purposes. When this clean water is returned to the state’s waterways it will also help clean our streams and rivers. The budget also funds the storm water management demo project at last year’s amount of $2 million. The administration’s projected 2006-07 revenue estimate of $855 million for the Pennsylvania State Gaming Fund is optimistic and is premised upon several unrealistic assumptions. Of the total $855 million revenue estimate, $610 million will be derived from the slot venue license fees ($50 million for each Category 1 and 2 license, $5 million for each Category 3 license) The primary assumption, upon which the revenue estimate is based, is the projection that all 14 slot venue licenses will be ““issued”” during the next fiscal year. Payment of the $50 million license fee is not due until such time that the slot license is“issued” by the Board. It is unlikely that all available slot licenses will be issued within the next fiscal year. A more realistic estimate would assume that 6 Category 1 licenses (only 6 applicants have applied for the 7 available Category 1 licenses) and the 2 Category 3 licenses will be issued within the next fiscal year, yielding $310 million for the State Gaming Fund. Additionally, because the balance of the $855 million revenue estimate is derived from slot machine operations (gross terminal revenue) at those venues that open, the $245 million is also not a realistic estimate. Assuming that 6 Category 1 licenses are fully operational within the next year, $112.5 million is the most revenue that is likely to be derived within fiscal year 2006-07 from slot operations. Accordingly, the Senate Democratic Appropriations Committee projects an estimated $422.5 million to be available in the Pennsylvania Gaming Fund in fiscal year 2006-07. It is anticipated that the Secretary of the Budget will borrow from the Motor License Fund an amount sufficient to fund the operations of the Board for the next fiscal year until such time as the first slot machine licenses are issued. Upon issuance, the $50 million licensing fees will be deposited into the Gaming Fund. At that time, it is anticipated that the Gaming Fund will repay the prior General Fund loans and fund the operations of the Board on an ongoing basis. On an on-going basis the Gaming Fund will transfer $25 million to the volunteer fire companies for each fiscal year. HISTORICAL AND MUSEUM COMMISSION The Historical and Museum Commission provides state and local museum assistance. Museum Maintenance Program The Commission’s Maintenance Program is $2.0 million in 2006-2007. In the prior year, funding was $1.0 million. Funds from the Keystone Recreation, Park and Conservation Fund for historic site development are $10.5 million. Funding is available to Pennsylvania non-profit organizations and public agencies that operate a publicly accessible historic property listed in, or eligible for, the National Register of Historic Places, or that operates a contributing historic property in a National Register historic district. Grants are awarded on a 50-50 matching basis and support projects in the areas of redevelopment, preservation and rehabilitation and restoration. Museum Assistance Grants The budget includes $6.1 million in funding for the Museum Assistance Grant Program. The Museum Assistance and Local History Grant Program is a competitive financial assistance process available to all qualified history related institutions within Pennsylvania. It is anticipated that 213 museum assistance competitive grants and 115 general operating support grants will be awarded in the 2006-07 fiscal year, although the number of grants awarded may vary depending on the average award amount. Non-preferred Museums The budget includes a 10% for the individual Non-Preferred Museums that historically receive funding. This year’s budget will fund the AIDS program at $9.5 million; this program is to provide critical testing to at risk populations. Case management and supportive services are funded through this appropriation that assists those who are personally dealing with HIV. Last year this program was funded at $7.8 million. Found within the 2006-07 budget is a new initiative entitled, “Breast and Cervical Cancer Screenings”. This new program is funded at $1.7 million. This program tests and screens over 4, 200 women of low-income, high risk factors who have no health insurance who are between the ages of forty to forty-nine. This new program carries out the provisions of Act 74 of 2005 to provide certain women with PAP tests and exam screenings. Beside screenings and tests there will be follow-ups and case management for those women who may be at risk. The appropriation, Assistance to Drug and Alcohol programs, will be funded at $41.6 million for the 2006-07 fiscal year. This is an increase of $2.727 million from the available year. This increase will be allocated to the Single County Authorities who administer the various drug and alcohol programs in the counties they serve. A small increase of $250,000 may be used for Hepatitis C Testing. The biggest issue in the Insurance Department’s budget this year is the Governor’s new Cover All Kids initiative. There is a new Enhanced Children’s Health Insurance line item within the Insurance Department’s budget which provides $2.1 million of the approximately $4.1 million in state money for the initial year of the program. There is $14.6 million in total new money for the Cover All Kids initiative in the FY2006-07 budget, with the rest of the funding coming through the Department of Public Welfare (along with sizeable federal matches), these two departments will work together to administer this new program. This money will be used to decrease the number of uninsured children in Pennsylvania in three ways: enhanced outreach efforts; federally-approved increases in income eligibility for subsidized coverage; and new opportunities for higher income families to purchase health care coverage at-cost. The Governor expects to enroll nearly 15,000 uninsured children in FY2006-07. As of April 2006, 140,260 children were enrolled in CHIP with no waiting list. Approximately 23,000 children are in Philadelphia and 12,000 in Allegheny County. The adultBasic program has 50,756 enrollees as of June 2006, an increase of nearly 15,000 since January, with 48,680 people on the waiting list, a decrease of over 65,000 since December 2005. Of those on the waiting list, 8,300 are in Philadelphia and 4,500 are in Allegheny County. AdultBasic was traditionally funded entirely by the Tobacco Fund. In February of 2005, however, the four Blues plans entered into an agreement with the Insurance Department which made available significant new funding for the Adult Basic program. The Agreement is for six years. For the four plans the total amount created for the Insurance Department is $90 million; that amount is to be transferred by the Blues to the Department to be used to support health insurance for low income people. This $90 million brings the total funding for the adultBasic program to approximately $162.8 million. In his 2005-06 budget the Governor requested only $5 million to repay the loan to the General Fund by the Underground Storage Tank Indemnification Fund. The General Assembly, increased this amount to $7.5 million. In his budget for 2006-07, the Governor recommends only a $1 million appropriation which the General Assembly has increased to $6 million in the final agreement. DEPARTMENT OF LABOR AND INDUSTRY The largest increase in the budget for the Department of Labor and Industry is for employment services. This item received $20.9 million; this is an increase of approximately $12 million. The budget restores recommended cuts requested by the Governor including the elimination of the Self Employment Assistance program which will now receive $3 million in funding. The Centers for Independent Living, which were recommended to receive a reduction of $650,000 has also been restored. For payment to the Vocational Rehabilitation Fund, for the work of State Board of Vocational Rehabilitation, the Fund’s appropriation of $38 million contains $2.6 million for a statewide service provider association for the blind to provide specialized services. The primary reduction in funding is in the Nursing Shortage Initiative. The request of the Governor was that this program be funded at $10 million. In this budget this initiative has been cut by 25%, a $2.5 million reduction. Because of this, the Nursing Shortage Initiative will receive $7.5 million. Job Training Fund This fund, established in 2005 to facilitate advances in workforce development, will receive $3 million in the budget. This funding is for the job training programs that have been established through Job Ready PA. Job Ready PA was one of the largest initiatives of last year’s budget. In addition to this fund, this budget appropriates $17 million for training activities. For FY 2005-06 this initiative was given $91 million which was dispersed among various programs. Some of these are as follows:
The 2006-2007 budget includes $18 million for the Department’s general government operations. This appropriation received the same level of funding in FY 2005/2006. The Veteran’s Homes received an additional $3.3 million in state funds for a total of $83 million. The past fiscal year saw a consolidated appropriation for the six veteran’s homes, which allowed the Department to improve program management and enhance their operational efficiencies within the homes. The Scotland School for Veterans’ children appropriation has increased by $370,000, which will help to serve children of Commonwealth veterans who are considered to be “at risk.” The enacted budget provides the Educational Assistance program a $10 million appropriation. This program provides 100% tuition grants for National Guard members in Pennsylvania who attend approved two or four year colleges in the Commonwealth. The Disabled Veterans Transportation program was targeted for total elimination in the Governor’s 2006-2007 budget proposal, but the funds were restored to $350,000, which is $100,000 more than the prior year’s funding level of $250,000. The Civil Air Patrol was also targeted for an absolute cut of its $450,000 appropriation. However, the funds were restored to $500,000, an increase of $50,000 over FY 05/06. PENNSYLVANIA EMERGENCY MANAGEMENT AGENCY For PEMA “terrorism preparedness remains a top priority” as found in this year’s funding proposal for the 2006-07 fiscal year. Last year, the federal government appropriated $230 million to “Domestic Preparedness”; and in this budget PEMA is expected to receive from the federal government $87.7 million. Part of these funds will be to develop and maintain a statewide preparedness strategy that includes the organizations of nine regional Counter Terrorism Task Forces across the Commonwealth. This budget also contains $500,000 for PEMA and the Department of Health to coordinate the Commonwealth’s Avian Influenza and pandemic preparedness. Also found in the budget for the 2006-07 fiscal year is $25 million to be used in conjunction with the Volunteer Company Grants program to provide fire companies and first responders with funds to support its emergency services that are vital to the health of any community. The State Police in the 2006-07 budget received $172.68 million in General Fund monies and $472.47 million from the Motor License Fund. This is an increase of $13 million from the Governor’s budget using General Fund monies and an increase of $30 million from the Governor’s Executive budget using Motor License Fund revenue. The increase of $40 million out of $43 million is to provide 90 additional troopers to the 180 troopers that were added last year. Accordingly, in October, 2006 State police cadets will allow troopers to reach the legislative complement cap in July 2007, the highest level of state troopers. Additionally, the final budget provides $6.3 million for additional troopers to patrol certain interstate highways that were not patrolled heretofore. This budget also provides $6.75 million in General Fund monies and $18.25 million from the Motor License Fund to enable the State police to access critical law enforcement data, and enhanced communications. Their ability to do this will permit them to perform their duties with a higher level of safety and success. The negotiated 2006-07 budget includes $8.821 million for patrol vehicles, last fiscal year this appropriation received $10.478 million. It is anticipated that with vigilant car inspections and careful car maintenance that the loss of funds this year will not have a deleterious effect on the reliability of the cars. The 2006-07 state budget provides $3.5 million to implement the Incident Information Management System. Data systems are now being installed in patrol vehicles and bar-coding capabilities are being developed to process information collected at the scene of the incident. This system will help troopers increase their effectiveness by supplying critical information to the troopers directly in their vehicles. The State Police Department is slated to receive $8.375 million for Law Enforcement Information Technology. A portion of this money will be used for the Problem Specific Policing initiative. This initiative is an incident analysis and police management tool that utilizes case data mapping with the goal of projecting where vehicle crashes may take place and monitor criminal activity. The implementation phase of this project is being completed in the 06-07 state fiscal year. The 06-07 state budget contains $900,000 to continue the implementation of the “gun check” program. Whenever a gun is purchased there is an electronic gun identification process that takes place to provide the legitimacy of the gun and the person purchasing the gun. The appropriations for the Attorney General, Auditor General and State Treasurer are the same as that appropriated in the current fiscal year with the following exceptions: · There is a new $5.0 million appropriation in the Attorney General’s office for a Gun Violence Task Force. Along with this new line item the Local Drug Task force line has been increased by approximately $1.2 million to approximately $10.5 million, the Drug Strike Task Force line has been increased $104,000 to approximately $1.9 million, the Drug Law Enforcement line has been increase by approximately $1.3 million to approximately $25.5 million, and the Child Predator Unit line has been increased $241,000 to approximately $921,000 · There is a new line item in the Fiscal Year 2006-07 budget which provides a supplemental appropriation of approximately $5.1 million dollars to pay for the state’s share of full time district attorney’s salaries pursuant to section 1401(p) of the County Code. This money is expected to be offset by the revenue from the fines in House Bill 2328. · For the Auditor General, they will receive $ 50 million or an increase of 4.16% for the Office of the Auditor General. They will also receive $1.8 million, an $800,000 increase, for computer enhancements. · Debt service requirements will by $110 million or 19%. The increases come, in part, from the bond issuances for both Growing Greener II and the economic development programs. Although this amount is $4 million less than the Governor originally proposed. · The Treasurer will receive an additional million dollars to advertise the TAP program. The appropriation is $2 million for the 2006-07 year. The Tobacco Settlement Fund is expected to receive $42.8 million less than was projected at the time of the governor’s proposed budget. This is due in part to the amount of the cigarette sales in the United States and the contribution rate of those tobacco companies that were not part of the original Master Tobacco Settlement agreement. In the 2006-07 budget, the Community Health Reinvestment Agreement will generate $27 million to supplement the Tobacco Settlement Funds that will be allocated to Adult Basic Insurance. With this money for 2006-07 an additional 8,757 uninsured adults will be enrolled in the Adult Basic Insurance program. The 2006-07 budget is using all the interest earnings on the Tobacco Settlement Fund and the Endowment Account earnings to be made available for health care costs. In addition 30% of the total amount of money that Pennsylvania receives from the tobacco settlement will be allocated for Adult Health Insurance and Medical Care for Workers with Disabilities. The 2006-07 budget will not include use of one-half of the Department of Health research money which was to be used for debt service on a $500 million bond issue to create the Jonas Salk Legacy Fund. This fund would have been used to provide dollar-for-dollar support to Pennsylvania universities and research institutions in biotechnology and bioscience. The money used for Health Research – Health Priorities and Health Research – National Cancer Institute will receive approximately $64 million in the 06-07 fiscal years budget. The Home and Community Based Care program that is funded from the Tobacco Settlement Funds will receive $87.8 million in the 06-07 fiscal year budget, a slight reduction of $5.5 million because a loss of settlement funds. Highway Construction The Governor proposes appropriating $612.759 million in the 06-07 state fiscal year for six state highway and bridge construction programs. In the 05-06 fiscal year $594.217 million was appropriated for the same construction and bridge programs. Therefore, the governor proposes spending $18.5 million more for highway and bridge construction programs in the 06-07 fiscal year than in the available year. $15 million of the $18.5 million increase for the 06-07 fiscal year will be appropriated to the construction of bridges. The Governor proposed spending $5 million for security walls in the 06-07 budget but the General Assembly felt that an additional $13 million was needed. Highway Maintenance In the 06-07 state budget $1.063 billion is appropriated for six highway and bridge maintenance and repair programs. In the 05-06 fiscal year $929.163 million is appropriated for the same programs. Therefore, in the 06-07 budget $134,617 million more is being appropriated for highway and bridge maintenance programs. The maintenance program that had the highest increase from last year to this budget year is the “Smoother Roads and Priority Bridges” program. This program grew from $50 million in the 05-06 fiscal year to $150 million in the 06-07 fiscal year, a growth of 149.66%. Most of this increase will be allocated to the engineering evaluation of state bridges across the Commonwealth and the use of a portion of this money for the repair of structurally deficient bridges. Additionally, the maintenance program entitled, “Bridge Preservation” will receive a 41.66% increase in the 06-07 state fiscal year’s budget. Again, this funding will be used solely for maintenance of bridges that are in desperate need of repair. The FY 2006-07 budget provides a 2 percent ($5.9 million) increase in the Mass Transportation Assistance line item, for a total of $299.4 million. This is the primary appropriation for mass transit. New in the spending plan is a line item specifically for Rural Transit for Persons with Disabilities. In the past this money was included in the Fixed Route Transit line and was allocated at the discretion of PennDOT. In the FY2006-07 budget there is $7.2 million provided in the traditional Fixed Route Transit line as well as $4.8 million in the new line for Rural Transit for Persons with Disabilities. The budget assumes an estimate of $179.6 million to be available for grants from the Public Transportation Assistance Fund, an increase of approximately $5 million from the funds available for the current fiscal year. At present, the significant funding shortfalls for mass transit entities across the state have been temporarily mitigated by the Governor’s decision to flex over $400 million of federal highway funding in order to provide mass transit agencies with much needed relief. If funds had not been flexed many transit agencies would have faced overwhelming operating deficits and would have had to cease operation. This loss of service would have affected 1.6 million disabled and 1.2 million elderly riders. The Governor’s decision provides the necessary funds for transit agencies to remain viable through calendar year 2006 at which point a more permanent solution must be formulated. Another emerging funding issue in mass transit is the growing disparity of federal funding for the various agencies, specifically through the Small Transit Intensive City (STIC) line. Through this federal appropriation some smaller transit agencies in Pennsylvania are receiving close to $1 million in additional funding, an amount which sometimes nearly doubles their normal total appropriations. In order to accomplish the formidable task of finding a permanent, sustainable, and equitable funding solution the Governor issued an executive order forming the Transportation Funding and Reform Commission. The commission has begun meeting and will continue to do so through calendar year 2006, presenting a final report in November, at which point the administration and legislature will have to act quickly to find a permanent solution before the currently flexed money is no longer available on January 1, 2007. The Commonwealth’s General Fund total expenditures are projected to grow by $1.7 billion or 6.9%, while DPW’s General Fund spending will grow by $519 million or 5.9%, which is slightly less than the Commonwealth’s overall budget growth. Despite constrained general fund spending, the Department’s budget still contains expansion in program spending and does not include any client or service reductions in the MA service program.
Medicaid
The most significant issues in the department relates to Medical Assistance. This is part of a NATIONAL TREND. Caseloads are increasing due to a growing elderly population. Pennsylvania has the 2nd highest elderly population and the largest number of persons over 85. In addition, there is a growing trend by employers to cut back on employer sponsored health insurance, particularly for low wage workers.
Medical Assistance Appropriations FY 05/06 FY 06/07 Difference Outpatient $756,334 $714,650 ($41,684) Inpatient $442,693 $488,879 $46,186 Capitation $2,500,992 $2,578,507 $77,515 LTC $755,890 $749,556 ($6,334) Medicare Part D $141,616 $338,500 $196,884
Total
$4,597,525 $4,870,092 $272,567
The Administration has a new initiative called Cover All Kids. This initiative provides $2 million in MA funds for health care insurance for 3,190 additional children projected to enroll in MA. These funds will be spent in conjunction with funds in the Department of Insurance in a major expansion in healthcare coverage for children. Another initiative in MA is the 35 county expansion in Behavioral Health Healthchoices. This expansion will provide behavioral health services to 200,000 additional individuals in the Commonwealth at a cost of $43.9 million. All 35 counties are set to enroll in the expansion by July 2007. Services for Children Child Welfare funding will increase from $838 million in 2005-06 to $881 million 2006-07. The primary reason for the $48 million increase is due to approved costs in the county needs-based budgets and the loss of available federal TANF funds. In 2006-07, the TANF Child Welfare Transition appropriation will be restored to $45 million, which is the amount received during FY 05/06. The phase-out of the TANF Transition funds was part of an initiative the Administration proposed in the 2005-06 budget. However, due to the problems surrounding the Title IV-E issue and the counties facing a $50 million shortfall, the Legislature restored this appropriation to provide some relief to the counties. In addition, the Early Education and Care Initiative contains more state funds for Child Care Services. The appropriation will increase from $80.2 million to $107.6 million. Approximately one-half of the increase will be used to provide subsidized child care services to 1,861 low – income children and to improve accountability of early learning experiences of children in Keystone Stars. Mental Health and Mental Retardation The Mental Health program will receive a slight increase of $3.5million over FY 05/06. The Mental Retardation program will receive substantial increases under the Governor’s budget: $60 million or 8% for Community Mental Retardation Services and nearly $14 million or 15.1% more for Early Intervention. Early Intervention appropriation supports expanded services for 2,827 additional children, birth through age three. The Administration has proposed a $17 million initiative to provide home and community based mental retardation services for 805 additional individuals on the waiting list. Other Social Programs The budget provides substantial increases in appropriations for Services to Persons with Disabilities (15.1 million)and Attendant Care ($15.2 million)in the General Fund as well as Home and Community Based Services in the Tobacco Fund. $6.3 million has been provided in the Persons with Disabilities appropriation to provide services to an additional 748 persons.
$5.4 million is recommended to provide Attendant Care to an additional 752 individuals.
COLAS
The Governor’s budget provides for a 2% COLA for the following program’s direct care staff: 1) MH/MR 2) Early Intervention 3) Services to persons with Disabilities 4) Attendant Care
The Governor’s budget provides for a 2% COLA for the following programs: 1) Women’s Services 2) Counties other than Philadelphia for extraordinary costs incurred from the closure of Pennhurst State Center 3) Residential services for the mentally retarded in Lansdowne area 4) Services purchased by counties for children and youth programs and for the care of delinquent and dependent services 5) Childcare services, including cash grants childcare services 6) Domestic Violence 7) Rape Crisis 8) Breast Cancer screening 9) Legal Services 10) Homeless Assistance
Income Maintenance When compared to 2005-06, the amount requested for Cash Grants in 2006-07 will be a significant increase over the current year. The $53.9 million increase is due to the Early Education and Care Initiative. This initiative will provide childcare services to an additional 15,000 children in TANF families receiving public assistance and those former TANF families who are working to gain economic independence. In addition, there is a 2% cola for childcare services. However, the Department’s 2006/07 budget does not reflect the Federal changes to TANF reauthorization. It is assumed that DPW will need to come back to the Legislature for a supplemental request in order to support the work requirement changes in TANF. The appropriation for Supplemental Grants for the Aged, Blind and Disabled will increase by $10.4 million, reflecting the savings from directly issuing SSI supplement checks as an alternative to paying the federal government to issue the checks.
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