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The Government Finance Officers Association of South Carolina

The Government Finance Officers Association of South Carolina. Fiscal Year 2010-11 Outlook Mike Shealy, Senate Finance Committee Staff. FY2010-11 Appropriations Bill.

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The Government Finance Officers Association of South Carolina

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  1. The Government Finance Officers Association of South Carolina Fiscal Year 2010-11 Outlook Mike Shealy, Senate Finance Committee Staff

  2. FY2010-11 Appropriations Bill • Part 1A General Fund appropriations are $5.086 Billion. Ten years ago we appropriated $5.303 Billion. This is an average annual decrease of 0.4% per year. • Part 1A Federal Fund appropriations are $8.268 Billion. Ten years ago we appropriated $3.954 Billion. This is an average annual increase of 7.7% per year. • Part 1A Other Fund appropriations are $7.807 Billion. Ten years ago we appropriated $4.618 Billion. This is an average annual increase of 5.4% per year.

  3. BudgetProvisos that Appropriate Funds Provisos 90.15 & 90.17 - $107M primarily from FY09-10 Surplus to repay FY08-09 Deficit. Proviso 90.16 – Increased enforcement from Department of Revenue of $100M. Proviso 90.18 – Appropriates $129M in Healthcare Maintenance of Effort Fund (Federal Stimulus). Proviso 90.21 – DHHS Funding Proviso appropriates $235M (Federal Stimulus). Part III ARRA Fiscal Stabilization Funding – Appropriates $346M (Federal Stimulus). Part IV Increased Federal Medical Assistance Percentage Extension from January 1 through June 30, 2011 appropriates $213M (Federal Stimulus).

  4. H.R. 1 Title V – State Fiscal Relief • SEC. 5000. (a) The purposes of this title are as follows: • (1) To provide fiscal relief to States in a period of economic downturn. • (2) To protect and maintain State Medicaid programs during a period of economic downturn, including by helping to avert cuts to provider payment rates and benefits or services, and to prevent constrictions of income eligibility requirements for such programs, but not to promote increases in such requirements.  • SEC. 5001. TEMPORARY INCREASE OF MEDICAID FMAP (Federal Medical Assistance Percentage)  • Approximately a 9% increase in Federal share of Medicaid reimbursements from 70% to 79%. Increased FMAP in effect for 9 quarters from July 2008 through December 2010.   • A State is not eligible for an increase in its FMAP if any amounts attributable (directly or indirectly) to such increase are deposited or credited into any reserve or rainy day fund of the State.

  5. H.R. 1 Title XIV – State Fiscal Stabilization Fund • Sec. 14002. STATE USES OF FUNDS (a) Education Fund • (1) For each fiscal year, the Governor shall use 81.8 percent of the State’s allocation for the support of elementary, secondary, and postsecondary education and, as applicable, early childhood education programs and services. (b) Other Government Services • (1) The Governor shall use 18.2 percent of the State’s allocation under section 14001 for public safety and other government services.

  6. Annualizations FY2011-12 • Because of exhausting Federal Stimulus Funds • Because of Formulas like the General Reserve Fund and the Local Government Fund • Because of using one-time money to fund Part 1A recurring appropriations in FY10-11 • The annualizations list for the Fiscal Year that begins July 1, 2011 is: $1,125,654,536 Or about 22% of the size of the FY10-11 General Fund Recurring budget.

  7. Two Provisos of Importance • Proviso 1.88 – Index of Taxpaying Ability Study Committee. 14 members will “examine the index of taxpaying ability and its relationship to the Education Finance Act … the committee shall also examine the manner in which the index is calculated and the impact of property tax measures on the calculation.” Affects $1.5B in distributions to school districts. • Proviso 70.27 – Other Funds Oversight Committee. 8 members will “review and examine the source of other funds in the State and recommend to the General Assembly the appropriate policy for the receipt, appropriation, expenditure, and reporting of other funds.”

  8. Important Legislation • H3130 – Boeing Incentives, $270M in bonds (passed, is Law) • S1054 – Extraordinary Commercial Facilities (in HW&M). • S1 & S2 – Spending Limits (S2 in HW&M, S1 on Senate Calendar). • H3395 & H3396 – General Reserve Fund Increase (H3396 on Ballot, H3395 vetoed, overridden by House 78-1). • H4343 - Air Service Incentives (3rd reading Senate Calendar). • H4887 – Charleston County School District Use of General Obligation Bonded Debt Proceeds for School Operating Purposes (on Senate Calendar). • H3272 – Assessable Transfers of Interest (failed to receive 31 votes in 3rd reading).

  9. State House Report4/30/10 • HOW SC VIEWS HIGHER ED • High college tuition for South Carolina students is endemic of the higher education funding paradigm that has dominated the state in modern history, according to former S.C. Commission of Higher Education executive director Fred Sheheen. He said South Carolina has traditionally viewed higher education as an individual benefit, while our neighbor to the north, North Carolina, has viewed it as a public benefit.              • Historically, South Carolina’s public colleges have among the highest tuition costs in the Southeast, while also having one of the lowest per capita income levels. North Carolina has roughly the opposite, according to Sheheen, with relatively low tuitions and higher per capita income levels. “I’m worried that increased tuitions could price more and more kids from our state out of higher education,” said Sheheen.   • Rep. Phil Owens (R-Easley), who chairs the Education Committee in the House, said the issue is further complicated because some in the state legislature view higher education as an economic development tool, while others view it as a “core” service of government.

  10. Outlook for FY2011-12 and Beyond • FY 11-12 will be the most difficult budget year ever experienced in the Post WWII era. • The big struggle will be whether to raise several selected taxes to close part of the $1 BILLION Gap. • South Carolina will migrate to a transactional budget where several large core services are funded with General Funds. Everything else will be a fee for service.

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