OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 ¯ (860) 240-0200

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

sHB-7076

AN ACT MAKING DEFICIENCY APPROPRIATIONS FOR THE FISCAL YEAR ENDING JUNE 30, 2007.

OFA Fiscal Note

State Impact: Cost, see explanation below

Municipal Impact: None

Explanation

Passage of this bill would appropriate $5. 6 million and transfer $19. 1 million from various state agency accounts to cover $24. 7 million in state agency deficiency needs for FY 07.

The bill reduces the Labor Department's Workforce Investment Act appropriation for FY 07 by $1. 4 million from $27. 3 million to $25. 9 million. This reduction is technical in nature and is being done to match the actual amount of federal funds that were received by the state for this program which is appropriated through the General Fund.

As a result of the adjustments indicated above, the bill eliminates the remaining room under the spending cap and places the FY 07 budget at the full amount allowed by the cap.

The Out Years

The ongoing impact of these deficiencies has been considered and amounts have been included within the 2007-2009 biennial budget as favorably reported by the Appropriations Committee on 4/12/07 in accordance with estimated needs.

Projected FY 07 General Fund Deficiencies

as of April 12, 2007

The Department of Labor has a projected net deficiency of $300,000, which represents . 5% of its FY 07 appropriation of $66. 1 million. This assumes that a Personal Services holdback of $87,390 and an Other Expenses holdback of $31,066 are not released. If the holdbacks were released, an estimated remaining deficiency of $181,544 million would result.

The projected deficiency of $300,000 is due to an increase in board fees. Mediation and Arbitration Board fees increased in accordance with Section 20 of Public Act 05-3, June Special Session. Funds to cover these fees were not included in the FY 07 budget.

The Department of Public Health has a projected net deficiency of $1 million (net of transfer of lapses identified to date from other agency accounts) resulting from higher than budgeted expenditures for Personal Services due primarily to a realignment of staff work effort from federal to state funded activities. It should be noted that the $1 million deficiency amount anticipates that that Personal Services and Other Expenses holdbacks totaling $358,275 will be released for agency use.

The Department of Mental Health and Addiction Services has a projected net deficiency of $6. 4 million, which represents 1. 3% of its FY 07 appropriation of $509. 2 million. This assumes that a Personal Services holdback of $1,720,863 and an Other Expenses holdback of $843,386 are not released. If the holdbacks were released, an estimated remaining deficiency of $3. 9 million would result.

Of the projected deficiency of $6. 4 million, the Personal Services account has a $2. 8 million projected shortfall due to overtime costs and projected staffing needs at inpatient facilities. The Workers' Compensation account has a projected shortfall of $2 million. The Behavioral Health Medications account has a projected deficiency of $0. 7 million due to the continued increases in prices for behavioral medications. The Other Expenses account has a projected $1. 8 million shortfall due to unanticipated telephone installation and repairs. In addition to these deficiencies, the Other Expenses account also has a projected deficiency of $1 million due to increased fuel and electricity costs at DMHAS facilities. It is anticipated that the energy shortfall will be funded through the OPM-Energy Contingency account. Finally, the Grants for Mental Health Services account has a projected shortfall of $0. 6 million due to the anticipated implementation of the 18% limit on A&G cost centers for private providers.

The Department of Correction has a projected net deficiency of $15. 7 million, which represents 2. 5% of its FY 07 appropriation of $617. 3 million. This assumes that a Personal Services holdback of $2,810,525 and an Other Expenses holdback of $1,854,917 are not released. If the holdbacks were released, an estimated remaining deficiency of $11 million would result.

The $15. 7 million deficiency occurs in three areas: Personal Services ($10 million), Other Expenses ($2. 3 million), and Inmate Medical Services ($3. 4 million).

The majority of the PS deficiency is due to staffing and overtime costs associated with supervising an increasing incarcerated population. The current offender population in January 2007 was 19,275, up approximately 1,155 incarcerated inmates from January 2006. Overtime costs in FY 07 are currently projected at $61. 7 million, which is $10. 1 million higher than that of FY 06. The PS deficiency assumes an anticipated transfer from the Reserve for Salary Account (RSA) for non-ERIP accruals of $2. 0 million and an anticipated transfer from RSA of $1. 9 million to cover collective bargaining costs.

The shortfall in Other Expenses is driven by operational demands on food, clothing, bedding, and other related living supplies. Additionally, an estimated $2. 9 million is related to increased energy costs. It is anticipated that the energy shortfall will be funded through the OPM-Energy Contingency Fund.

The shortfall in Inmate Medical Services is due to increased expenses related to an increasing offender population, staffing for mental health care, and collective bargaining adjustments.

The Public Defender Services Commission has a projected deficiency of $650,000, which represents 1. 3% of its FY 07 General Fund appropriation of $51 million. This assumes that an estimated lapse in Personal Services of $79,000 is not transferred to partially cover the $650,000 gross deficiency, and that the Personal Services holdback of $223,460 and the Other Expenses holdback of $33,524 are not released. If the Personal Services lapse was transferred and the holdbacks were released, an estimated deficiency of $314,016 would result.

The deficiency results from an expected shortfall in the Special Public Defenders – Non-Contractual account because the number of case assignments and billed hours are greater than budgeted. 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 Workers' Compensation Claims account has a projected net General Fund deficiency of $600,000, which represents 3. 1% of its FY 07 appropriation of $19. 1 million.

The projected deficiency is attributable to significant increases in medical and indemnity costs in the months of July and August, largely as the result of an increase in costly surgeries of prior year claims.