FY15 House Ways and Means Budget Briefing

HOUSE COMMITTEE ON WAYS & MEANS

FISCAL YEAR 2015

BUDGET BRIEFING

Chairman Brian S. Dempsey Wednesday

April 9, 2014

1

HWM FY 2015 Budget

The HWM FY 2015 budget includes $36.182B in direct appropriations, $1.75B (5%) higher than FY 2014 Estimated Spending, and $191M less than proposed in House 2

This budget proposal makes targeted investments in a number of key areas

$125M in local aid for Chapter 70 and UGGA, consistent with the local aid resolution reached with the Senate last month

$61M in new funds for community colleges, state universities and the University of Massachusetts system

$19.1M investment in programs for elders

$9.6M for increased childhood and adult mental health support services

$6.3M investment in substance abuse programs and services

2

FY 2014

FY 2014 GAA $34.063B

FY 2014 Total Projected Spending $34.431B

Governor’s FY 2015 Proposal (House 2) $36.373B (5.3%)

HWM FY 2015 Budget Recommendation $36.182B (5.0%)

$34.063B $34.431B

$36.373B $36.182B

$33.5

$34.5

$35.5

$36.5

$37.5

FY14 GAA FY14ProjectedSpending

FY15 House 2 FY15 HWM

3

$18.26 $18.54

$20.52 $21.12

$22.12 $23.20

$24.33

$15.0

$18.0

$21.0

$24.0

FY09 FY10 FY11 FY12 FY 13 FY14(estimated)

FY15(projection)

(In Billions)

4

Fiscal Year Tax Collections

FY 2015

Tax Revenues

FY 2015 Consensus Revenue $24.33B

Delay of FAS 109 $45.8M

Tax Settlements $240M

Statutory Transfers

Tax Dedicated to SBA ($782.4M)

Tax Dedicated to MBTA ($811.3M)

Tax Dedicated to Pensions* ($1.79B)

Workforce Training Fund Transfers to Trust ($22.2M)

Non-Tax Revenues

Federal Reimbursements $9.48B

Department Revenues $3.61B

Transfers (Lottery, Fringe Payments, Assessments) $1.84B

5

*Accelerating the timetable of fully funding our long-term pension liability by 4 years, from 2040 to 2036.

Increase the rate by 10% for FY 2015, FY 2016, and FY 2017, then back down to 7% until 2036

Closing the FY 2015 Budget Gap

The HWM budget closes an approximate $935M

budget gap by

$336M in sustainable, ongoing revenue sources

$260M in one-time revenues

Roughly half than the amount included in FY 2014 GAA

Includes a Stabilization Fund draw of $140M, the lowest

draw from the rainy day fund in four years

$339M in cuts from maintenance spending

6

Projected FY 2015 Budget Gap

$0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000

Solutions

Budget Shortfall FY 2015 Budget Gap $780M

New

Investments

$155M

One-Time Solves

$260M

Ongoing Revenues

$336M Maintenance Cuts

$339M

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Budget Solves

One Timers

Transfer from Stabilization Fund $140M

Gaming Licenses $53.5M

Delay of FAS 109 $45.8M

Interest from Stab to General Fund $10.7M

Trust Fund Sweeps $10M

Ongoing Sources

Tax Settlement Alignment $240M

OPEB Transfer $75.9M

Slot Revenue $20M

Total One Timers $260M

Total Ongoing Sources $335.9M

8

Use of One-Time Resources

$669M

$903M

$667M

$334M $295M

$0

$200

$400

$600

$800

$1,000

FY 12 FY 13 FY14 (Revised) FY15 H1 FY15 HWM

(In Millions)

9

FY 2014 Stabilization Fund Balances 10

$0 $0 $5 $9 $65 $85 $175

$619 $681 $921 $1,018 $1,306 $1,369

$1,461

$7,268

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

(In Millions)

Cost Drivers

$203M Chapter 257 Costs

$163M Annualized from FY 2014

$39.6M FY 2015 Portion

$163M Increase in Long-term Pension Liability

Accelerate funding of pension schedule, increasing the rate by 10% for FY 2015, FY 2016 and FY 2017

Fully fund pensions 4 years faster by 2036, instead of 2040

$141M Increase in Transfers to MassDOT and MBTA

$79.1M Increase in Debt Service

Ch 257 $202.6M

Debt Service $79.1M

FY 2015 Baseline Tax Growth $1.14B

11

Remainder

for Budget

$554.3M

MassDOT

$141M

Pensions

$163M

Chapter 257

Chapter 257 of the Acts of 2008 places authority for determination of reimbursement rates for human and social

services with the Secretary of EOHHS

FY 2015 HWM budget includes $163M in Ch 257 annualization

The largest being $124M for Adult Long-term Residential services for DDS

Also contains a Ch 257 $15M reserve

Assumes that Community Based Flexible Supports rates for DMH will not be implemented in FY 2015

FY 2014 H1 funded 50% of the proposed 257 costs – FY 2014 GAA funded 80% of the 50%

12

Chapter 257 Investments 13

$19.8M

$127.5M

$202.6M

$0

$50

$100

$150

$200

$250

$300

$350

$400

FY15 HWM

FY14 GAA

FY13 Post 9C

$350M investment over 3 fiscal years

Local Aid

UGGA $945.8M

$25.5M above FY 2014 GAA and House 2

Regional School Transportation $53.5M

$2M above FY 2014 GAA and House 2

PILOT $26.8M

Level with FY 2014 GAA

$500K above House 2

Libraries $23.2M

$920K above FY 2014 GAA

$425K above House 2

Chapter 70 $4.4B

$100M above FY 2014 GAA

Equal to House 2

Circuit Breaker $257.5M


Fully funds 75% reimbursement, assuming 4% growth in SPED costs

Charter Schools $80M


McKinney-Vento $7.4M

Level with FY 2014 GAA and House 2

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UGGA

$936.4

$899.0

$834.0

$899.0

$920.2 $920.2

$945.8

$800

$850

$900

$950

$1,000

FY10 FY11 FY12 FY13 FY14 FY15 H2 FY15Resolution

(In Millions)

15

Chapter 70

$3,869.8 $3,851.2

$3,990.8

$4,171.1

$4,301.2

$4,400.7 $4,400.7

$3,600

$3,800

$4,000

$4,200

$4,400

$4,600

FY10 FY11 FY12 FY13 FY14 FY15 H2 FY15Resolution

(In Millions)

16

House Committee on Ways and Means

FY 2015 Budget Proposal

Targeted Spending Areas 17

Education

In addition to the education local aid reimbursements, this budget includes a number of key investments in other areas of education

$7.5M for child care waitlist remediation, creating an additional 1250 child care slots

In FY14 $15M for waitlist remediation, creating ~3000 child care slots

$15.2M for Expanded Learning Time, a $1M increase over FY 2014

$61M in new funds for community colleges, state universities and the University of Massachusetts, plus an additional $7.1M for collective bargaining agreements

$91.6M for the Scholarship Reserve, a $1M increase of FY 2014

18

UMass Funding History

$441.3M

$478.8M

$515.7M $518.8M

$400

$420

$440

$460

$480

$500

$520

$540

FY13 FY14 FY15 H2 FY15 HWM

(In Millions)

19

Higher Ed Campus Support 20

FY 2014

Base Appropriation $208.2M

CBAs $17.5M

Performance Funds $20M

Total $245.7M

FY 2015


New CBAs $1.5M

Ratified CBAs $3.4M

Performance Funds $13.2M

Total $263.7M

FY 2014


CBAs $9.8M

Performance Funding $15M

Total $229.5M

FY 2015


CBAs $5.6M

Performance Funding $7.9M

Total $243M

Community Colleges State Universities

Investing in Science, Technology,

Engineering, and Math

STEM Pipeline $1.5M

Trust fund for STEM initiatives, distributed to STEM regional networks

AP Math and Science $2M

To increase student participation in AP math and science courses in underperforming school districts

STEM Starter Academy $4.8M

Programs in higher education to improve student performance in STEM subjects and connect students with STEM fields of employment

STEM Council Codification

Makes permanent the Science, Technology, Engineering and Math Council that currently exists under the Governor’s executive order

21

Housing and Community Development

The HWM budget makes targeted investments that seek to prevent homelessness and reduce reliance on shelter

$60.5M for MRVP, $3M in new funds, plus an anticipated PAC of $12M, creating approximately 1200 new vouchers

In FY 2014 $15.5M in new funds was added and is expected to create 900 new vouchers

$26M for HomeBase, $1.6M in new resources to provide up to $6000 for families at the front door

Additional supports

$500K for RAFT, providing a total of $10.5M

$500K for a new Secure Jobs pilot

$230K for public/private housing partnerships

Provides $120.1M necessary to annualize 650 bed shelter expansion from FY 2014 supplemental budget

Provides funds for 3 hearing officers, with the goal of clearing the backlog of 203 EA appeals

22

Transportation

The HWM budget proposal funds transportation consistently with the Transportation Finance legislation and with House 2, increasing transfers to transportation by $141M over FY 2014

Closes the MBTA and MassDOT operating gaps ($425M)

Continues to dedicate increased gas tax and other revenues to Commonwealth Transportation Fund ($390M)

Devotes additional transportation resources to debt service

23

MassHealth 24

Provides $13.45B for MassHealth

Increases the DSTI transfer to $210M

Provides funding for 345K newly eligible members under ACA

Investment for Providers $112M

$96M for capitated plans including Medicaid managed care plans

$16M for acute hospitals due to inflationary increases

Savings Assumptions $373M

Assumes savings by not implementing higher DSH Rates, pushing ICB grant payments, and freezing rates for certain rehab and chronic disease hospitals, all of which were included in House 2

Additional savings from caseload adjustments

Health & Human Services 25

Department of Developmental Services $1.65B

Increases Family Respite Services to $54.9M, serving an additional 1,447 clients

Includes language to ensure that those who wish to retain employment in sheltered workshops may do so

Creates a $1M Community Based Employment Services Pilot Program

Funds $126M in annualized Ch 257 costs

Department of Public Health $562M

Includes $1M for a feasibility study for the State Lab

Due to the Childhood Vaccine Bill, funding of $53.8M in the Universal Immunization line item is moved off budget

Elder Affairs $269.6M

Increases funding within the Department by $17M

Purchases an extra hour of homemaker services per month per elder

Eliminates waitlist for Elder Enhanced Home Care Services

Increases Supportive Senior Housing Program sites from 31 to 41

Fully restores Service Incentive Grant Program to FY 09 level

Fully funds Naturally Occurring Retirement Communities

Human Service Salary Reserve History 26

$10M

$20M

$11.5M

$10.7M

$0

$10

$20

$30

$40

$50

$60

FY14 Supp

FY14 GAA

FY13 GAA

FY12 Supp

$52.2M investment over 3 fiscal years

Judiciary 27

Trial Court $609.4M

Invests over $5M for new hires and backfilling

Invests $2.7M in Specialty Courts

Funds 8 new specialty courts: 5 drug, 2 mental health and 1 veterans’ court

District Attorneys $107.4M

Receives a 4% increase over FY 2014 GAA

In FY 2014, the DAs were level funded

$500K ADA Retention Fund

Committee for Public Council Service $167.8M

Maintain staffing ratio of 25:75

Requires board approval for increases in management compensation

Public Safety & Security 28

State Police $285.7M

Includes $600K to begin recruitment for a new class of troopers

Municipal Police Training $4.3M

Sheriffs’ Departments $556.6M

Equal funding to House 2, except for Berkshire and Worcester, who were cut in House 2

Department of Corrections $579.7M

$5M for the MA Alcohol and Substance Abuse Center

Includes an outside section requiring DOC to re-procure its food service provider

Substance Abuse

Mental & Behavioral Health

Department of Children & Families

Information Technology

Government Efficiencies & Oversight

HWM Initiatives 29

HWM Initiatives: Substance Abuse

To address the recent surge in overdoses and drug related deaths across the Commonwealth, the HWM budget proposal seeks to build upon the work we have done to combat substance abuse in the last few years

Since FY 2011, the Legislature has made a strong commitment to treating those impacted by substance abuse, continually expanding funding and services

The FY 2015 HWM budget recommendation for the Bureau of Substance Abuse represents a $15.7M (19.4%) increase over FY 2011

The recommendations in this budget attempt to both prevent abuse and treat those who require services

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$81M $81.3M $83.7M

$90.5M

$93.4M

$96.7M

$70

$75

$80

$85

$90

$95

$100

FY11 FY12 FY13 FY14 FY15 H2 FY15 HWM

Bureau of Substance Abuse Investments (In Millions)

31


Prevention

Restrict Certain Prescription Opioids

Allows the Commissioner, consistent with federal law, to limit the distribution of certain prescription opioids that have no abuse deterrent properties

Prescription Monitoring Program (PMP)

Established by Chapter 244 of the Acts 2012, The PMP tracks prescription drug products with recognized potential for abuse by establishing a provider database to monitor the frequency of the prescriptions

With only 40% of providers currently participating, the system has identified approximately 280 people who were flagged as “doctor shopping”

The $3.7M investment ensures mandatory utilization of the system with all prescribers, including midlevel prescribers

Increase the Maximum Penalty for Heroin Trafficking

To deter heroin distribution, increase the maximum incarceration for heroin trafficking from 20 to 30 years

DA Heroin Pilot Program

$500K investment for education and drug diversion programs

32


Treatment Nasal Narcan Bystander and First Responder Expansion $815K

Allows 10 additional municipalities with a demonstrated need and high incidence of overdoses to have First Responders carrying Narcan

Creates 7 new Bystander sites, which distribute Narcan kits free of cost upon completion of training

Section 35 expansion $5.5M

$4.2M to maintain 280 beds under Section 35, previously funded through trust fund

$1.3M for 64 additional beds to reduce the number of people diverted to correctional facilities due to lack of beds

Sober Homes $500K

Establishes a voluntary accreditation program for alcohol and drug free housing to be utilized by state agencies and the trial courts when making referrals

Specialty Courts $2.7M

For 8 specialty courts, including 5 new drugs courts

Includes certification and training for specialty court staff

33

HWM Initiatives: Mental & Behavioral

Health Adult Community Mental Health Services

Increases funding by $7.5M, moving clients off the waitlist

Funding level also maintains services for approximately 249 clients, cut by House 2

Child and Adolescent Mental Health Services

Maintains funding for 200 clients, cut by House 2

Rental Subsidy Program for DMH

$1M increase above FY 2014 GAA and House 2

Maintains the 626 beds in DMH, including 45 beds at Taunton State Hospital

Other Increases

$8M for rate increases to Mass. Behavioral Health Partnership (MBHP) and $207M for Children’s Behavioral Health Initiative (CBHI)

Health Policy Commission

$2M to integrate behavioral health into certification for patient centered medical homes

DPH Emergency Room Reports

Requires a hospital with an emergency room to report certain information, in compliance with HIPAA, on patients who seek emergency treatment for mental health or substance abuse health problems to DPH

34

HWM Initiatives: Department of

Children & Families

Reduces social worker caseload ratios

Further caps the number of children for which one caseworker may be responsible at 28, not more than 10 of which may be in out-of-home placement

$12.6M Investment to Hire 245 FTEs

$2.8M invested in FY 2014 supp to hire 100 FTEs

$9.8M investment proposed in FY 2015 to annualize FY 2014 new hires and employ 145 additional FTEs

Background Checks $200K

Codifies and strengthens DCF background checks by requiring state and national fingerprint-based background checks and Sex Offender Registry checks for all current and future foster parents

Licensing

Within the first 3 years of employment, requires DCF social workers to obtain a certified social worker license, and increases training requirements

35

HWM Initiatives: Department of

Children & Families 36

Management Review

Directs the Office of the Child Advocate, with input from the AG and the IG, to conduct an emergency management audit of DCF to improve its administration

Disqualifications

Prohibits individuals from becoming foster parents if they or other individuals residing within the household have been convicted of child abuse or violent crimes

Medical Screening

Requires DCF to hire licensed medical professionals at each of the department’s regional offices to ensure initial medical screenings of all children entering the department’s care occur within 72 hours

Improved Information Technology

Requires upgrades to DCF communications and information technology and recordkeeping practices, including the ability of case workers to upload photos of clients on an annual basis

HWM Initiatives: Information

Technology Reform

Establishes the Massachusetts Office of Information Technology (MOIT) within the Executive Office for Administration and Finance administered by a Chief Information Officer for the Commonwealth

The CIO shall supervise all IT services of state agencies and set a minimum threshold where any proposed IT expenditure by an agency within an executive office needs to be reviewed and approved by MOIT

All contracts for IT shall require the approval of the CIO

Initiate procurements of IT resources for state agencies and enter into any agreement or contract for the procurement on behalf of a state agency or other governmental entity of the commonwealth, if so authorized

The Massachusetts Health Connector Authority will be considered a state agency for the purposes of MOIT oversight

Creating a centralized approach to Information Technology within the Commonwealth

37

HWM Initiatives: Information

Technology Reform

Consolidation of Information Technology

Agency IT budgets are consolidated under their respective

executive offices

The Secretary of each Executive Office shall, in consultation with

and approval by the CIO, appoint a Director of Information

Technology of the executive office who shall manage all IT

operations within the executive office and supervise all IT

personnel

Each director shall be responsible for evaluating the present and

future IT needs of agencies within their respective executive

offices

38

HWM Initiatives: Government

Efficiencies & Oversight

Hinton Drug Lab: Forensic Advisory Board appointments

Adopts a recommendation by the Hinton Drug Lab Task Force to expand membership of the board by adding forensic scientists and members of the bar with criminal and forensic experience

MA Gaming Commission: Employee Accountability and Internal Control System

Requires the commission to establish a system that closely aligns with the human resources division’s rules and policies on state employee expenses

The system shall include specific policies related to travel expenses and meal reimbursement

39

Documents

FY15 House Ways and Means Budget Briefing