AN ACT MAKING DEFICIENCY APPROPRIATIONS FOR THE FISCAL YEAR ENDING JUNE 30, 2006.

OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 ¯ (860) 240-0200

http: //www. cga. ct. gov/ofa

sHB-5009

AN ACT MAKING DEFICIENCY APPROPRIATIONS FOR THE FISCAL YEAR ENDING JUNE 30, 2006.

Agency Affected	Fund-Effect	FY 06
Various State Agencies	GF - Cost	$26,038,000
Department of Administrative Services - Workers' Comp. Claims	TF - Cost	920,000
Department of Agriculture	RMOF - Cost	42,000
	Total	$27,000,000

Note: GF=General Fund; TF=Transportation Fund; RMOF=Regional Market Operation Fund

Municipal Impact: None

Explanation

Section 1 of this bill increases FY 06 appropriations by $27 million in a manner which eliminates the remaining room under the spending cap and places the FY 06 budget exactly at the full amount allowed by the cap. Sections 2 through 4 also transfer $2. 8 million from potential lapses to cover anticipated FY 06 deficiencies/overruns, reducing the unidentified lapse which is part of the $661. 5 million FY 06 surplus projected by the Office of Fiscal Analysis on February 1, 2006. Section 6 carries forward $0. 3 million in FY 06 unexpended funds into FY 07.

The $27 million appropriation is for the FY 06 state agency deficiencies and cost overrun indicated on the following pages. These appropriations made in FY 06 have an impact upon the degree to which the budget is under the spending cap. Currently, FY 06 appropriations are under the spending cap by $21. 3 million after adjusting for the $3 million appropriation for emergency home heating assistance provided by PA 05-2, October 25 Special Session. Passage of this bill along with the recognition of $5. 7 million in additional federal mandates and court orders will eliminate the remaining room under the spending cap and place the FY 06 budget exactly at the full amount allowed by the cap. This magnitude of deficiency appropriations was anticipated in the calculation of the $661. 5 million FY 06 projected surplus.

Sections 7-12 carry forward funds for Legislative Management into FY 07 as follows:

• Personal Services - $404,000 for the continuation of the Security Technicians;

• Other Expenses - $1,119,000 for various purposes;

• Equipment - $400,000 for upgrade of the House Chamber Voting Board;

• Flag Restoration – the unexpended balance of funds which is estimated to be $50,000

• Minor Capital Improvement – the unexpended balance which is estimated to be $500,000.

• Carries forward up to $250,000, in funds carried forward pursuant to PA 05-251.

The deficiency bill contains a General Fund deficiency appropriation of $10. 96 million for the Office of Policy and Management (OPM) for energy costs in state agencies. OPM projects a gross General Fund and Transportation Fund deficiency of $19. 76 million in the Energy Contingency account, whereas OFA projects a net deficiency of $15. 5 million. If there is a remaining deficiency after passage of this bill, it is unknown how it will be funded at this time. The bill also carries forward the unexpended balance in OPM's Energy Contingency account from FY 06 through FY 07.

In FY 05, General Fund and Transportation expenditures for all energy related costs (electricity, natural gas, motor vehicle fuel oil) were $75. 49 million, which was above budgeted levels and necessitated an FY 05 deficiency appropriation of $10 million. In anticipation of continued volatility of energy prices in FY 06, an $8 million appropriation was made to the Energy Contingency account. OFA assumes that the additional $8 million appropriation will mitigate the OPM anticipated deficiency. The actual level of deficiency is contingent on the rate of increase of these costs, particularly among natural gas and district heating which is anticipated to increase between 30. 4% and 76. 5%.

The Division of Criminal Justice has a projected net deficiency of approximately $360,000, which represents 0. 9% of its total FY 06 General Fund appropriation of $41 million. This assumes that a Personal Services holdback of $274,875 and an Other Expenses holdback of $65,019 are not released. If the holdbacks are released, an estimated deficiency of $20,106 would result.

The $360,000 net deficiency results from an anticipated shortfall in the Forensic Sex Evidence Exams account, which is used to reimburse victims of sexual assault for the costs of certain medical examinations or treatments performed concurrent with the gathering of evidence for prosecution. The number of reimbursements and their average cost are both projected to exceed budgeted assumptions in the current fiscal year.

Note that as of January 19th the agency had spent approximately $540,000, or eighty four per cent, of its $640,000 appropriation to this account. In response to the anticipated deficit, the reimbursement level has been capped at $900 for any adult or child. During the current fiscal year adult reimbursement requests are $1,200 on average and $680 for children. The agency is on track to exceed the total number of reimbursements in any prior fiscal year for which information is available. Approximately 560 new cases were reimbursed during the first six months of the current fiscal year. If this rate were to continue, then the agency would expect to reimburse 1,120 cases in FY 06. This number is well in excess of the average annual reimbursement figure of 829 over the last five fiscal years.

The Department of Public Safety has a projected net deficiency of $4. 3 million, which represents 3. 1% of its FY 06 appropriation of $137. 8 million. This assumes that a Personal Services holdback of $730,030 will not be released but an Other Expenses holdback of $643,445 will be released.

The $4. 3 million net deficiency occurs in two areas: Other Expenses ($3. 36 million) and Workers' Compensation ($. 95 million).

The major components of the $3. 36 million OE deficiency include: operating and maintaining databases related to CJIS (Criminal Justice Information System), property management costs, operational costs associated with the AFIS and COLLECT database systems and contractual and equipment needs associated with mobile data terminals. It should be noted that an additional $1. 3 million shortfall in fuel costs has been funded through the OPM – Energy Contingency Account.

The deficiency in Workers' Compensation Claims relates to higher than budgeted expenditures in claims and payouts related to agency staff.

The Department of Public Health (DPH) has a projected net deficiency of $2. 7 million, which represents 3. 8% of its FY 06 appropriation of $72 million. This assumes that an Other Expenses holdback of $147,370 is not released, but that a Personal Services holdback of $204,930 is released and $645,000 in lapsing dollars under the AIDS Services account are utilized to support the Breast and Cervical Cancer Early Detection Program. If the Other Expense holdback is released, a deficiency of $2. 6 million would result.

A $0. 8 million Personal Services shortfall is attributable to

(a) the unbudgeted pickup with state funding of the salaries ($400,000) of five staff formerly funded from federal Centers for Disease Control and Prevention (CDC) Bioterrorism Preparedness grant dollars - these staff were transitioned onto the General Fund as of 9/1/05; and

(b) the agency's inability to maintain sufficient vacant positions to meet budgeted turnover levels. Appropriated funds assumed turnover equated to 27 vacant positions. As of March 2006, the agency had 14 vacant full-time positions.

A $600,000 shortfall is expected under the Other Expenses account. Of this, $412,000 is due to an unexpected retroactive payment to a vendor for services rendered in FY 04. The department entered into a contract with Anthem Health Plans, Inc. to provide billing functions for the Connecticut Breast and Cervical Cancer Early Detection Program beginning in FY 00. The contract terminated at the end of calendar year 2003. Final contract reconciliation, which should have taken place during FY 04, did not begin until April 2005. Due to the delay, an invoice now requires payment for which current year funds have not been budgeted.

Also contributing to the Other Expenses shortfall is $68,500 in costs incurred to retain a consultant on a one-time basis to monitor the health status of Department of Emergency Management and Homeland Security staff working in a state owned building at 25 Sigourney Street, Hartford. Funding for this purpose was not included within PA 05-251.

A $1. 4 million deficiency under various accounts (including Other Expenses) is attributable to bills incurred in FY 05 being paid in FY 06 due to an inability to process payments through the CORE-CT accounting system before the close of the fiscal year. An equivalent amount lapsed under these same accounts on June 30, 2005.

The AIDS Services lapse of $645,000 results from the identification of additional federal HIV Care Formula Grant funds that have allowed the DPH to support HIV/AIDS Medication Adherence Programs from federal dollars in the current fiscal year.

The bill transfers the $645,000 in lapsing funds under the AIDS Services account to the Breast and Cervical Cancer Detection and Treatment account to support the provision of services to an estimated additional 2,400 women. This program has experienced recent demands for service in excess of funded capacity. The bill also authorizes the carry forward into FY 07 of any unexpended balance as of 6/30/06.

The Office of the Chief Medical Examiner has a projected net deficiency of $100,000, which represents 2% of its FY 06 appropriation of $4. 95 million. This assumes that a Personal Services holdback of $30,831 and an Other Expenses holdback of $16,763 are not released. If the holdbacks were released, an estimated remaining deficiency of $52,406 would result.

The $100,000 shortfall in the Other Expenses account is due to increased costs in: body transport services (contracted); maintenance fees on software and laboratory instruments; and motor vehicle rental and fuel.

The Department of Mental Health and Addiction Services has a projected net deficiency of $3. 5 million, which represents 0. 6% of its FY 06 appropriation of $558 million. This assumes that a Personal Services holdback of $1,732,153 and an Other Expenses holdback of $818,115 are released.

The DMHAS projected deficiency is primarily in three accounts. The Personal Services account has a projected deficiency of $1. 4 million due to increased nursing costs. The Other Expenses account has a deficiency of $. 6 million due to repair and maintenance expenses, increased vehicle rental fees, and costs related to the Waterbury move. (It should be noted that $1. 1 million in increased fuel costs at state facilities is anticipated to be funded through the OPM – Energy Contingency account. ) The Behavioral Health Medications account has a projected deficiency of $1. 5 million due to the continued increasing cost and utilization of drugs. These deficiencies are partially offset by a projected lapse of $460,000 in the General Assistance Managed Care account.

The Department of Correction has a projected net deficiency of $2. 7 million, which represents 0. 5% of its FY 06 appropriation of $577. 8 million. This assumes that a Personal Services holdback of $2,786,765 and an Other Expenses holdback of $1,811,557 will be released.

The $2. 7 million deficiency occurs in two areas: Personal Services ($. 5 million) and Inmate Medical Services ($2. 2 million).

The majority of the PS deficiency is due to overtime expenses. Overtime costs in FY 06 are projected at $53 million, which although less than the $55 million spent in FY 05 are less than budgeted and significantly higher than the FY 04 amount of $43 million.

The shortfall in Inmate Medical Services is due to increased costs associated with nurse overtime ($1. 3 million) and increased pharmaceutical expenses ($. 9 million).

The Public Defender Services Commission has a net deficiency of $1. 4 million, which represents about 3. 8% of its FY 06 General Fund appropriation of $37. 1 million. This assumes that a Personal Services holdback of $207,475 and an Other Expenses holdback of $34,261 are not released. If the holdbacks are released, an estimated deficiency of $1,072,264 would result.

The $1. 4 million net deficiency results from anticipated shortfalls in the Special Public Defenders – Non-Contractual ($994,500) and Expert Witness ($447,500) accounts. A substantial portion of each deficiency is attributable to obligations incurred in FY 05 and carried forward into FY 06.

The deficiency in the Special Public Defenders – Non-Contractual account is due to greater-than-budgeted case assignments and billed hours. These Special Public Defenders represent clients in about 2,000 new felony, habeas and appellate matters each year. They are typically assigned to these cases when it is determined that a conflict of interest prohibits representation by an Assistant Public Defender employed by the state.

The deficiency in the Expert Witness account is due to increases in the rates that experts charge to provide testimony and the frequency of their use by public defenders. In particular, the agency notes the increasing volume of requests for experts from Special Public Defenders involved in Habeas and Capital cases. A portion of the projected FY 06 deficiency in this account is attributable to a death penalty racial bias study.

The Special Transportation Fund workers' compensation claims account has a projected deficiency of $920,000, which is 22% above the FY 06 appropriation of $4. 1 million. While the total number of claims is lower than last fiscal year, there has been an increase in the number of claims with significant medical and indemnity costs. There is also a 30% increase in medical costs over last fiscal year.

Regional Market Operation (RMO) Fund Deficiency