FY14 Caseload Spending Plan Fiscal Committee September 9, 2013

1. FY14 Caseload Spending PlanFiscal CommitteeSeptember 9, 2013

2. FY14 July Caseload Review • Note: The department is still in the midst of processing July caseload; therefore, we are not prepared to verify the updated caseload projections until we have fully reviewed the July reports. Below are some observations of the caseload: • DTA-Related Caseload: The FY14 Spending Plan was prepared prior to the receipt of actual FY14 spending reports; we projected at the time a deficiency in DTA of $2.4M. Preliminary numbers from July suggest that the deficiency has grown to $4.5M. The increase in deficiency (if accurate) will be supported by the Income Eligible account. • Income Eligible: The FY14 Spending Plan was prepared prior to the receipt of actual FY14 spending reports; we projected spending the full appropriation while committing to the following: • Transfer $2.4M to DTA to cover the projected deficiency in that account; and • Open access to roughly 900 children in October (exclusive of the 3000-4070 waitlist remediation item) to help backfill voucher attrition. A preliminary review of July’s figures suggest that IE cost projections for FY14 have decreased enough to support an apparent increase in the DTA deficiency and continue with the plan of backfilling voucher attrition. • Supportive Caseload: Preliminary figures suggest we are on target to spend the full appropriation, which is slightly less than FY13. We recently lifted local expansion limits so that more children can be served in areas where there is the capacity and the need.

3. FY14 Spending Plan – Supportive Care • Line Item Description: Provides early education and care and afterschool services for children referred by the Department of Children and Families (DCF). This account is intended to provide immediate access to all eligible families. • This account is funded at $76.9M in FY2014 and EEC anticipates that FY2014 expenditures will be $77M. • FY2014 expenditure projections are based on the following assumptions: • Monthly caseload is forecasted using a three year average percentage change by age group for FY2011, FY2012, and FY2013. A three average was used because a review of fiscal years 2011 thru 2013 indicates that spending levels have not fluctuated significantly as noted in the chart below.  • Cost per child was calculated using the FY2013 average cost by month and age group. • The FY2014 expenditure projection anticipates that approximately 376 open slots will be offered to children on the DCF waitlist. The current DCF waitlist is approximately 850 children   • We anticipate that the approved Infant Toddler Rate Increase at current run rates will cost approximately an additional $300K in FY2014 as more providers meet the QRIS requirements. This cost has been included in our projected FY14 expenditure of $77M.

4. FY14 Spending Plan – DTA Related • Line Item Description: This line item provides early education and care and after school services for children referred by the Department of Transitional Assistance (DTA). This account is funded at $128.1M in FY2014 which is an increase of $2.6M when compared to the FY2013 GAA appropriation. Based on the projected FY14 caseload we forecast the FY2014 DTA caseload cost to be approximately $130.5M which, at the FY14 appropriation, is a deficit of $2.4M. If realized, this can be remedied only by transferring funds from the Income Eligible account or a supplemental appropriation. • FY2014 expenditure projections are based on the following assumptions:  • Monthly caseload is forecasted using the FY2013 percentage change in caseload by age group. • DTA caseload over the past three years does not have a specific trend; therefore, caseload projections are based on FY2013 trends only. The following chart reflects inconsistent spending and caseload over the past four fiscal years. •  The cost per child was calculated using the FY2013 average cost by month and age group. •  Late billing caseload or prior period caseload adjustments are based on the FY2013 percentage caseload change by month. The cost projections for late billing are based on the average cost by month.

5. FY14 Spending Plan – Income Eligible • Line Item Description: Provides child care, early education, and afterschool financial assistance for children from low income and at-risk families through vouchers and contracts. • The total amount available under the approved budget is $222.8M ($214M appropriated and $8.5M PAC’d from FY13). Due to transferability language included in the budget, however, any analysis of the Income Eligible funding level is incomplete without factoring potential exposures in the other caseload accounts. If the projected FY14 DTA deficiency of $2.4M is realized then funds from the IE will be transferred to cover the deficit. The FY2014 Income Eligible projection $220.4M assumes the DTA transfer. • FY2014 expenditure projections are based on the following assumptions:  • Monthly caseload (voucher and contract slots) is forecasted using the FY2013 percentage change in caseload by age group with the exception of the months of May and June for voucher caseload. In April of FY2013 limited voucher access was made available to siblings and children of military families which resulted in a spike in the month to month caseload change. •  We mirrored in FY14 the FY13 month to month caseload variance because access was closed. Voucher access was closed in Feb. 2011 (FY12), the impact to caseload began in Sept. 2011 (FY12) resulting in a significant surplus (reversion).

6. FY14 Spending Plan – Income Eligible • FY14 Assumptions Continued: • The drop in contract expenditures is a direct correlation to the contract providers not filling all of their contract slots and not because access closure. Making voucher access available, through backfill attrition, will ensure compliance to the CCDF block grant which mandates parental choice. Establishing a backfilling process managed by the CCRRs and monitored by EEC should facilitate serving additional children and minimize a surplus (reversion). Please refer to the following chart which shows that contract spending has remained relatively stable while voucher spending has decreased significantly since FY12.  • Voucher cost per child was calculated using the FY2013 average cost by month and age group.  • Contract cost is based on the maximum obligation for Income Eligible, Teen and Homeless contracts, and Flex slots. The projection includes an estimated underutilization savings.  • Late voucher billing caseload or prior period caseload adjustments are based on the FY2013 percentage caseload change by month. The cost projections for late billing are based on the average cost by month.  • Recognizing that Income Eligible voucher caseload was closed for the majority of FY2013, voucher caseload projections are based on FY2013 trends.  • A formulized process to back fill attrition will be implemented. New access for approximately 800 new children, although limited, will be made available commencing October 1, 2013.  

7. FY14 Spending Plan – Waitlist • Line Item Description: This is a new account funded at $15.0M to reduce the waitlist for income-eligible early education and care programs. • As of August 22, 2013 there are over 41,000 children on the waitlist. These are children that have been placed on or have received an updated status within the past 12 months. • Using the average Income Eligible cost per child, and starting October 1, 2013, EEC estimates we can serve in FY2014 2,367 additional children. (The number of children served would increase if the plan is implemented after October.)

8. Caseload Waitlist

9. FY14 Caseload Access • EEC has appealed to ANF for permission to open access and begin the work necessary to fulfill the intent of 3000-4070 in advance of formal Spending Plan approval.  We employed the following positions in making our request: • As of August 22, 2013, there are over 41,000 children on the waitlist.  These are children that have been placed on or have received an updated status within the past twelve months.  • We need to start immediately to put all policies and procedures in place to open access effective October 1 and, according to our projections, serve 2,367 from the waitlist.  • Any delay in the process will delay implementation, and a delayed implementation means delayed access, particularly if we starting bumping against the holidays.  • In particular, we want to begin working with the CCRRs to bolster their network to prepare for this work.    • We do not want to impede in any way serving children in need.