FY2010 and FY2011 Update Policy and Fiscal Committee September 13, 2010

1. FY2010 and FY2011 Update Policy and Fiscal CommitteeSeptember 13, 2010

2. Table of Contents • I. FY10 Budget Update • Spending • Reversions • Supplemental Budget Signed by Governor • II. FY11 Budget • Final Budget Appropriations • Impacts

3. FY10 Budget UpdateSpending and Reversions

4. FY10 Budget Update - Reversions • 3000-1000 Admin Account = $228K • This amount is artificially high for two reasons: • $72K was due to savings caused by imposed Union furloughs. ANF assumed these savings and EEC was essentially prevented from using this money; and • $28K was drawn into this account to help fund the collective bargaining increases for NAGE. EEC notified ANF that additional funding to cover this was unnecessary, but ANF thought it was better to increase the account in case EEC needed it, whether or not we reverted the money.

5. FY10 Budget Update - Reversions • DTA and Supportive Accounts: Both reversions are due to EEC transferring the maximum amount allowed from the Income Eligible account to these accounts. Though EEC felt it would not be ultimately necessary, the transfer was done in case the projections in DTA or Supportive became higher than anticipated in June. • The reversion in these accounts should be considered an Income Eligible reversion. The projected $26M surplus projected in January (after the deficiencies in the DTA and Supportive were reconciled) was whittled down to just over $8M. EEC originally projected, even with opening access and QRIS quality grants, that the Income Eligible Account would revert $6M.

6. Fiscal Year 2010Caseload – Balance Sheet

7. Fiscal Year 2011 Budget Initially, EEC had another $9M in FMAP money, but with the FMAP in doubt, the Governor vetoed any FMAP money.

8. 3000-1000 Administrative Account • Appropriation: • Appropriated: $11,305,723 • Structure Issue: Conference Committee transferred nearly $269K in IT payroll from the admin account to the EOE IT Consolidated account. • How EEC will live within a reduced budget: • 1) Resist backfilling most vacant positions (with exception of licensors and vital positions). • 2) The collective bargaining increases for NAGE and SEIU employees in FY11 will be off-set by drawing from the two reserve accounts appropriated in the budget (1599-4281 and 1599-4282); • 3) Reduce non-payroll expenses whenever possible. Reducing administrative resources (limited use of contractors and consultants, for example) is a strain on personnel. • EEC will monitor the spending in this account and refine projections to finalize if any further actions need be implemented to live within constricted means.

9. 3000-4050 DTA Related Caseload • Appropriation: • Appropriated: $127,358,313 Need: $132,275,971 • Only $127.3M is appropriated in this account. At the current level of $127M this account will run out of funds before June billing can be fully processed (July 2011). • This account is an entitlement; therefore, there are no policy decisions from EEC that can alter the deficiency. EEC will be forced in the Spring of 2011 to request a supplemental budget to remedy the deficiency. • Word of Caution: The legislature and administration must manage a statewide structural deficit that makes additional funding for accounts in FY11 nearly impossible. With this in mind, EEC may be expected to fix this deficiency through savings in the Income Eligible account. Up to 3% ($6.8M) can be transferred from the IE account. This would further exacerbate the deficiency in the Income Eligible account. • EEC will monitor the spending in this account and refine projections to finalize if any further actions need be implemented to live within constricted means.

10. FY11 Budget Impact: 3000-4060 Income Eligible • Appropriation: • Appropriated: $228,527,605 Need: $234,477,156 • The deficit is now at $5,949,551; however, this assumes the following: • 150 children a month moving from 3A vouchers (DTA-supported) to 3D vouchers. If this number increases then so will the deficiency. • Previous year’s month-to-month attrition levels. • No new placements effective January, 2011. • Potential Assistance: • PAC: Still pending before the legislature. This would bring in $5M. • FMAP: This money has been resurrected at a reduced number of under $450M. Originally projected that the state would receive nearly $700M. If allocated, this funding would support $5M in the Income Eligible account. • Enrolling New Preschool Children to ARRA: There are roughly 4,000children that may be eligible for the ARRA PSCCE program. Enrolling approximately 700 children to ARRA funding beginning in October would reduce the deficit by $3.76M.

11. Fiscal Year 2011 Supportive Care (3000-3050)

12. FY 2011 Supportive Caseload Projected Cost FY11 Approp: $85M Light blue represents actual amount billed

13. Fiscal Year 2010 DTA Related (3000-4050)

14. FY 2011 DTA Caseload Projected Cost FY11 Approp: $127.3M Light blue represents actual amounts billed

15. Fiscal Year 2010 Income Eligible (3000-4060) PAC, potential FMAP funds and enrolling preschool children with ARRA funding would eliminate the deficit in the Income Eligible account

16. FY 2011 Income Eligible Caseload Projected Cost FY11 Approp: $228.5M Light blue represents actual amount billed

19. FY11 Caseload: Waitlist * As of September, 2010

20. ARRA Spending Update