2012OFA-0555

July 27, 2012

FROM:

Alan Calandro

 

Sarah Bourne

Michael Murphy

   

SUBJECT:

Text of August 19, 2009 OFA Analysis of Democratic Alternative Budget

You asked for a copy of the analysis we provided to you on August 19, 2009 of your budget proposal. The full text of the document follows:

Overview

You asked us to summarize the changes made under the Democratic Alternative (DA) Budget Plan and compare them to SB 1801. The DA Budget appropriates $ 625 million less to the General Fund than SB 1801 over the biennium. The DA Budget cuts approximately $ 2. 97 billion from current services (estimated as of May 2009) over the biennium, which is $ 495 million more than the Appropriations Committee Plan and $ 625 million more than SB 1801. See Table 1 and Table 1-A for details.

Significant Program Expenditure Changes from SB 1801

The majority of the DA Plan's reductions fall in the Human Services and Educational subcommittees. See Table 2. Following the table are descriptions of the major changes to spending that are contained in the DA Plan.

GENERAL GOVERNMENT

Reduce FY 10 appropriations by 20%, which is approximately $ 1. 3 million due to elimination of the out of state travel line items for watchdog agencies (Elections, Ethics and FOI) and reductions to most of the agencies' positions counts:

Governor's Office (3)

Secretary of the State (4)

Board of Accountancy (1)

Child Advocate (1)

Elections (5)

Ethics (3)

FOI (4)

Contracting Standards Board (9) * note: these positions have not yet been filled

REGULATION AND PROTECTION

Department of Public Safety

Reduce Other Expenses by approximately $ 2. 2 million in FY 10 and $ 2. 6 million in FY 11 to achieve a 15% reduction from estimated FY 09 funding levels.

Consolidate most weigh station operations within the Department of Motor Vehicles, resulting in an overtime savings of $ 792,000 in each year of the biennium. The DMV would be responsible for the operation of the Danbury, Middletown, Waterford, and Union weight stations; responsibility for the Greenwich weigh station would be provided by both DPS and DMV.

Insurance Department

Reduce Personal Services by approximately $ 1. 4 million in FY 10 and $ 1. 8 million in FY 11 to achieve a 10% reduction from estimated FY 09 funding levels.

Reduce Other Expenses by approximately $ 622,000 in each year of the biennium to achieve a 15% reduction from estimated FY 09 funding levels.

CONSERVATION AND DEVELOPMENT

Department of Agriculture

Eliminate funding for Dairy Farmers by $ 10. 0 million in FY 10. * note: new federal money is available.

Department of Environmental Protection

Fund Underground Storage Tank (UST) Claims Reimbursement at $ 5. 0 million in both years of the biennium.

Department of Labor

Reduce funding for Connecticut's Youth Employment Program by $ 2. 0 million in FY 11. Funding is provided at the reduced level of $ 1. 5 million in FY 11.

HEALTH AND HOSPITALS

Department of Public Health

Eliminate funding for Fetal and Infant Mortality Review by $ 315,000 in each year of the biennium.

Department of Developmental Services

Funding of $ 1 million in each fiscal year is provided to reflect elimination of non-emergency dental services for adults under Medicaid.

Funding is reduced by $ 1 million in FY 10, and another $ 1 million in FY 11 (for a cumulative reduction of $ 2 million) to reflect changing eligibility and/or establishing a sliding scale fee schedule for transportation services for individuals receiving day services from private providers.

Funding is reduced by $ 1 million in each fiscal year to reflect changing eligibility and/or establishing a sliding scale fee schedule for respite services. This doubles the reduction included in the committee budget of 7/30/09.

Funding is reduced by $ 2 million in each fiscal year to reflect restructuring Family Support payments.

Department of Mental Health and Addiction Services

The Democratic Alternative budget concurs with the Governor's proposal to reduce funding for housing supports by $ 2. 5 million in both FY 10 and FY 11.

This includes a reduction of $ 1. 2 million in FY 10 and FY 11 to reflect the delay of planned housing expansions and a reduction of $ 1. 3 million in FY 10 and FY 11 for housing subsidies.

Funding for Local Mental Heath Authorities is reduced in the amount of $ 3. 5 million in FY 10 and FY 11.

The Democratic Alternative budget concurs with the Governor's proposal to close Cedarcrest Hospital. This will result in a net savings of $ 6. 7 million in FY 10 and $ 8. 7 million in FY 11.

Funding is reduced in the amount of $ 3. 3 million in FY 10 and $ 3. 1 million in FY 11 to achieve Other Expenses savings.

Funding is provided in the amount of $ 2. 0 million in FY 11 for Overtime Costs.

HUMAN SERVICES

Department of Social Services

The DA Budget includes various reductions. Major items and associated savings by fiscal year include:

 

FY 10

FY 11

Impose cost sharing (co-payments) under fee for service Medicaid

(8,500,000)

(10,500,000)

Allow DSS to replace current medical necessity definition under Medicaid with that in place for SAGA

(4,500,000)

(9,000,000)

Eliminate Lifestar subsidy and allow Lifestar to raise their rates

(1,388,190)

(1,388,190)

Increase HUSKY B premiums for Band 2 to $ 50 for families with one child; $ 75 for those with two children, and $ 100 for families with three or more children

(1,520,000)

(1,570,000)

Cap caseload for CT Home Care Program for Elders at 6/30/09 levels

(4,790,000)

(14,540,000)

Delay HIV/AIDS home and community-based waiver until FY 12

(1,612,230)

(4,080,220)

Eliminate coverage of most over the counter (OTC) drugs under Medicaid and SAGA

(7,000,000)

(7,690,000)

Reduce pharmacy reimbursement from average wholesale price (AWP) minus 14% to AWP minus 15% under Medicaid and SAGA

(6,500,000)

(7,140,000)

Apply annual Social Security Increases to offset Supplemental Assistance costs

(872,090)

(3,012,246)

Create a Community and Social Services Block Grant, for a net reduction of approximately 25% to various non-entitlement programs

(2,538,490)

(2,538,490)

Total

(61,921,000)

(89,459,146)

Other major changes included within the Democratic Alternative budget are:

Not providing funding for a rate increase for adult day care providers. SB 1801 included $ 700,000 to increase rates by 5%.

Concurring with the Governor's original recommendation to fully eliminate state funded Medicaid for non citizens (for a savings of $ 23. 6 million in FY 10 and $ 24. 5 million in FY 11). Services will still be available through FQHC's, ER's, and charitable providers. SB 1801 had provided for continued service provision to children and pregnant women (for a lesser savings of $ 9. 3 million FY 10 and $ 9. 75 million FY 11).

Concurring with the Governor's original recommendation to eliminate funding for a statewide medical interpreting service under Medicaid. SB 1801 instead budgeted for a one year delay in this initiative. The DA budget makes a $ 5. 5 million reduction in FY 11 as compared to SB 1801.

Concurring with the Governor's original recommendation to reduce Maximum Allowable Cost (MAC) reimbursement under DSS's pharmaceutical assistance programs to average wholesale price (AWP) less 50% (for a savings of $ 2. 0 million in FY 10 and $ 2. 2 million in FY 11. ) Currently the department pays AWP minus 40% for generic and multi-source brand drugs. This doubles the savings that had been included within SB 1801, as they called for revising MAC reimbursement to AWP minus 45%.

Concurring with the Governor's original recommendation to require dually eligible clients to be responsible for paying up to $ 20 per month in Medicare co-pays for Part-D covered drugs. This results in savings of $ 3. 7 million in FY 11 and $ 4. 0 million in FY 11. SB 1801 instead called for these clients to pay up to $ 15 per month (for a savings of $ 2. 7 million in FY 10 and $ 2. 9 million in FY 11).

Reduces the fees paid to the HUSKY Managed Care Organizations (MCO's) by 6%, saving $ 50 million annually. In addition to the current MCO model, the department shall establish a separate Administrative Service Organization (ASO) model for a portion of the HUSKY population. The ASO model will allow the department to compare the relative cost structures between the MCO and ASO models, thereby helping achieve the savings noted above.

SB 1801 included savings of $ 8 million in each fiscal year due to requiring enhanced utilization review for dental services. Savings in the DA budget are adjusted downward (to $ 1 million each year) as only children's dental services are maintained.

Additionally, the DA budget proposes the following major changes that were not included in prior budgets submitted by the Governor or considered by the legislature:

Adding five positions to help DSS meet a statutory mandate to investigate potential fraud in the Child Care program by expanding the FRED system. A net savings of approximately $ 3. 4 million in FY 10 and $ 7. 0 million in FY 11 is reflected.

Savings of approximately $ 3. 2 million in FY 10 and $ 4. 6 million in FY 11 are budgeted to reflect adopting a revised method for reimbursing physician radiology services to mirror the methods used by Medicare. Resulting savings would be partially reallocated to increase reimbursement for physician evaluation and management of patients.

Eliminating interim rate adjustments for nursing homes, for a savings of $ 8. 5 million in each fiscal year.

Office of the Health Care Advocate

Reduce CON requirements and reviews to save $ 750,000 over the biennium.

State Department on Aging

Funding, in the amount of $ 452,965, is eliminated in FY 11 to reflect delaying establishment for two years.

Department of Children and Families

The Democratic Alternative budget concurs with the Governor's proposal to close High Meadows, effective February 2010. Savings of $ 1. 4 million in FY 10 and $ 6. 0 million in FY 11 are budgeted.

Closure of Riverview Hospital is also incorporated within the Democratic Alternative budget. Savings of approximately $ 9 million in FY 11 are budgeted.

General Fund support of the Wilderness School ($ 600,000) is eliminated in each fiscal year.

Further reductions, of $ 1 million to discretionary/flexible funding and $ 1 million in FY 11 to Other Expenses, are made.

Children's Trust Fund

Core programs of the Children's Trust Fund are transferred to the Department of Children and Families. None of the agency's positions are retained.

Funding for the Parent Trust Fund ($ 500,000), a grant to the Children's Law Center of Connecticut ($ 150,000), literacy programming ($ 100,000) and services for a Safe Harbor Respite Home ($ 190,000) are eliminated.

EDUCATION

State Department of Education

Reduce School Readiness by $ 1. 0 million in both fiscal years. This change eliminates the additional funds for professional development but does not impact the number of slots.

Reduce Sheff Settlement by $ 1. 0 million in both fiscal years.

Reduce Omnibus Education Grants by $ 1. 0 million. This will reduce the per meal reimbursement for Healthy Foods, from ten cents to five cents.

Eliminate the After School Program, which is currently only available in select towns, resulting in a savings of $ 4. 5 million.

Suspend the operation of Wright Technical School and eliminate the additional funding contained in HB 1801 for Wright Technical School. This results in a savings of $ 5. 075 million in each fiscal year.

Reduce Open Choice increase only to reflect current services needs. This results in a savings of $ 1. 37 million in FY 10 and $ 4. 12 million in FY 11.

Eliminate additional funding for Edison and Wintergreen magnet schools, which results in a $ 1. 5 million savings in each year.

Reduce funding for the American School for the Deaf, which results in a savings of $ 1. 0 million in both years.

Eliminate funding for Early Reading Success, which is available only in select towns, and which results in a savings of $ 2. 3 million in both years.

Restore the $ 13. 4 million cut by the Appropriations Committee, to the Excess Cost grant. This cut would have resulted in a 10% reduction in special education funding.

HIGHER EDUCATION

Department of Higher Education

Reduce the Connecticut Independent College Student Grant by $ 6. 8 million in both years. Private Connecticut colleges with endowments larger than $ 200 million would not receive money from the state. This would affect 6 colleges: Yale, Wesleyan, Trinity, Connecticut College, Fairfield University, and Quinnipiac.

Eliminate supplemental state funding of the AmeriCorps program, leaving intact the federal program, for a savings of $ 1. 0 million in each fiscal year.

Reduce Personal Services by $ 750,000 in FY 10 and $ 500,000 in FY 11 to account for higher than anticipated retirements and reorganization.

UCONN; Charter Oak; CT State University; Regional-Community Technical Colleges

Reduce funding to the post-rescission FY 09 level, which is the minimum level needed to meet the requirements for federal ARRA stimulus funding. Reductions are approximately $ 27 million in each fiscal year of the biennium.

Require UCONN to close the satellite campus with the least use, for a savings of approximately $ 1. 2 million in the second year of the biennium.

JUSTICE

Judicial Department

Delay implementation of “raise the age” for 16-year olds until January 1, 2011. This change reduces SB 1801 appropriations by $ 10. 9 million in FY 10 and $ 7. 5 million in FY 11.

Eliminate funding to expand Family Support Centers, with a reduction of $ 1 million in FY 10 and $ 2 million in FY 11.

Eliminate funding to increase the compensation of Temporary Assistant Clerks, with a reduction of $ 859,840 to this agency's appropriations in each year of the biennium.

Shift funding to support the Foreclosure Mediation Program to the CT Housing Finance Authority (CHFA), which has been allocated approximately $ 10 million from Banking Fund appropriations made under PA 08-176.

Decriminalize marijuana, which would result in a savings of $ 1. 3 million, and reducing the penalty to a violation punishable by a fine of $ 250 would result in a revenue gain of $ 900,000 annually.

Eliminate the death penalty for a savings of approximately $ 2. 7 million in each year ($ 4. 0 million including fringe benefits).

Department of Correction

Eliminate funding for new programs to serve children of incarcerated parents and establish distance learning for inmates through Charter Oak College. These changes reduce appropriations for this agency by $ 1 million in each year of the biennium.

A reduction in of $ 25 million in FY 10 and $ 45 million in FY 11 is included to reflect the implementation of various administrative and legislative correctional public policies and includes the closure of at least one prison.   This reduction is based on changes in policies and statute that will enable a reduction in the prison population.

Other

Implementing a lower Retirement Incentive Program (RIP) refill rate would result in an additional savings of $ 13. 2 million in FY 10 and $ 21 million in FY 11.

Comparison of DA Plan with Other Spending Plans

Since you asked us to compare the Democratic Alternative Budget Plan with SB 1801, the Appropriations Committee, Governor and Republicans have issued revised spending plans. For your information we provide a comparison these plans' total appropriations. See Table 3.

Revenue Details: DA Plan and SB 1801

Below is a preliminary estimate of the DA Plan's General Fund balance in addition to information regarding the revenue changes / sources in support of the Plan. See Table 4.

Table 4. Democratic Alternative Budget Plan

Estimate of General Fund Balance (8/19/09)

($ Millions)

   

FY 10

FY 11

Consensus Revenue Estimates

14,402. 1

15,003. 3

Dem Alternative Budget Approp Plan (revised to 7/31)

(17,267. 3)

(17,684. 3)

 

Balance

(2,865. 2)

(2,681. 0)

Revenue Items Related to Expenditures

   

Federal Revenue - Reflects Budget

3. 5

(94. 5)

DEP Consolidation

61. 7

61. 7

Mashantucket Pequout/Mohegan Fund - Reflects Budget

24. 5

24. 5

Fund Consolidation to the GF - Reflects Budget

110. 7

111. 0

 

Sub-total

200. 4

102. 7

 

Balance

(2,664. 8)

(2,578. 3)

Other Revenue Items

   

Federal Stimulus

878. 9

594. 8

Fund Sweeps

69. 4

73. 1

Higher Education Unit Reserves

20. 0

20. 0

Decriminalize Marijuana

0. 9

0. 9

Cell Tower Leases

-

10. 0

Plan to Sell Assets

10. 0

20. 0

DRS Enhanced Collection

75. 0

(25. 0)

       
 

Sub-total

1,054. 2

693. 8

 

Balance

(1,610. 6)

(1,884. 5)

Personal Income Tax

   
 

Increase Marginal Rates:

   
 

250K @ 5. 5% and 500K @ 6. 0%

463. 9

312. 4

 

Delay Increase in Singles Exemption

23. 9

30. 2

 

Earned Income Tax Credit

 

(30. 0)

 

1% Surcharge on Gambling Winnings (Temporary)

15. 7

10. 5

 

Sub-Total

503. 5

323. 1

Sales Tax

   
 

Increase Rate from 6. 0% to 6. 50% (Temporary)

265. 2

274. 1

 

Hotel Tax Increase 12% to 13%

6. 3

6. 5

 

Eliminate Sales Tax Free Week

-

4. 4

 

Sunday Sales of Alcohol

3. 5

3. 5

 

Sub-Total

275. 0

288. 5

Corporation Tax

   
 

15% Surcharge IY 2009, 2010, 2011

80. 0

70. 7

 

Decouple from Federal Domestic Production Deduction

53. 0

27. 5

 

Repeal the exemption for Income earned by DISCs

25. 0

25. 0

 

Repeal the Exemption for Dividends from DISCs

25. 0

25. 0

 

Sub-Total

183. 0

148. 2

Insurance Companies Tax

   
 

Modifications to Film Tax Credit

-

10. 0

Estate & Gift

   
 

Speed up Payments by 3 months

41. 5

-

 

Fix Estate Tax Cliff

-

-

Cigarette & Tobacco Taxes

   
 

Cigarettes ($ 1. 00), effective 10/1/09

99. 3

117. 6

 

Increase Other Tobacco Products Tax:

1. 1

2. 0

 

Snuff: From 40 to 55-cents/ounce

   
 

Other Tobacco: from 20% to 27. 5%

 

 

 

Sub-Total

100. 4

119. 6

Licenses, Permits, & Fees

   
 

Increase Various Fees

58. 2

51. 2

 

Tire Fee - $ 3/tire

4. 5

6. 0

 

$ 25 Fee for child support collections

0. 1

0. 2

 

Sub-Total

62. 8

57. 4

 

Total Revenue Changes

1,166. 2

946. 7

       
 

Balance

(444. 4)

(937. 8)

 

Balance over the Biennium

 

(1,382. 1)

 

Transfer from Budget Reserve Fund

 

1,381. 8

 

Balance

 

(0. 3)

 

 

 

 

See below for revenue details for SB 1801.

I hope that you find this information helpful. Please contact me if you have any questions or need further assistance.