Connecticut Seal

General Assembly

File No. 490

    February Session, 2018

House Bill No. 5034

House of Representatives, April 16, 2018

The Committee on Appropriations reported through REP. WALKER of the 93rd Dist., Chairperson of the Committee on the part of the House, that the bill ought to pass.

AN ACT MAKING DEFICIENCY APPROPRIATIONS FOR THE FISCAL YEAR ENDING JUNE 30, 2018.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (Effective from passage) The following sums are appropriated from the GENERAL FUND for the purposes herein specified for the fiscal year ending June 30, 2018:

T1

GENERAL FUND

2017-2018

T2

   

T3

DIVISION OF CRIMINAL JUSTICE

 

T4

Personal Services

400,000

T5

   

T6

DEPARTMENT OF EMERGENCY SERVICES AND PUBLIC PROTECTION

 

T7

Personal Services

3,000,000

T8

   

T9

DEPARTMENT OF ENERGY AND ENVIRONMENTAL PROTECTION

 

T10

Environmental Conservation

2,450,000

T11

   

T12

OFFICE OF THE CHIEF MEDICAL EXAMINER

 

T13

Personal Services

170,000

T14

   

T15

DEPARTMENT OF CORRECTION

 

T16

Personal Services

8,000,000

T17

Other Expenses

2,000,000

T18

   

T19

DEPARTMENT OF CHILDREN AND FAMILIES

 

T20

Personal Services

6,000,000

T21

Substance Abuse Treatment

3,700,000

T22

Board and Care for Children – Short Term and Residential

1,700,000

T23

Community Kidcare

1,000,000

T24

   

T25

PUBLIC DEFENDER SERVICES COMMISSION

 

T26

Personal Services

250,000

T27

   

T28

STATE COMPTROLLER – FRINGE BENEFITS

 

T29

Retired State Employees Health Service Cost

8,300,000

T30

   

T31

TOTAL – GENERAL FUND

36,970,000

Sec. 2. (Effective from passage) The amounts appropriated to the following agencies in section 1 of public act 17-2 of the June special session, as amended by section 16 of public act 17-4 of the June special session, are reduced by the following amounts for the fiscal year ending June 30, 2018:

T32

GENERAL FUND

2017-2018

T33

   

T34

DEPARTMENT OF SOCIAL SERVICES

 

T35

Medicaid

17,574,000

T36

   

T37

TEACHERS' RETIREMENT BOARD

 

T38

Retirement Contributions

19,396,000

T39

   

T40

TOTAL – GENERAL FUND

36,970,000

Sec. 3. (Effective from passage) The following sums are appropriated from the SPECIAL TRANSPORTATION FUND for the purposes herein specified for the fiscal year ending June 30, 2018:

T41

SPECIAL TRANSPORTATION FUND

2017-2018

T42

   

T43

DEPARTMENT OF TRANSPORTATION

 

T44

Rail Operations

24,600,000

T45

   

T46

STATE COMPTROLLER – FRINGE BENEFITS

 

T47

State Employees Health Service Cost

3,500,000

T48

   

T49

TOTAL – SPECIAL TRANSPORTATION FUND

28,100,000

Sec. 4. (Effective from passage) The amounts appropriated to the following agency in section 2 of public act 17-2 of the June special session are reduced by the following amount for the fiscal year ending June 30, 2018:

T50

SPECIAL TRANSPORTATION FUND

2017-2018

T51

   

T52

DEBT SERVICE – STATE TREASURER

 

T53

Debt Service

28,100,000

T54

   

T55

TOTAL – SPECIAL TRANSPORTATION FUND

28,100,000

This act shall take effect as follows and shall amend the following sections:

Section 1

from passage

New section

Sec. 2

from passage

New section

Sec. 3

from passage

New section

Sec. 4

from passage

New section

APP

Joint Favorable

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact: See Below

Municipal Impact: None

Explanation

This bill results in no net impact to the General Fund or the Transportation Fund. General Fund increases of $37.0 million are offset by reductions in appropriations. Transportation Fund increases of $28.1 million are offset by reductions in appropriations. See the table below for detail of the deficiency bill's appropriations and reductions.

General Fund and Transportation Fund Expenditure Account Changes (in millions)

          Agency

    FY 18 $

Section 1 General Fund Increases:

Division of Criminal Justice

.4

Dept. of Emergency Services & Public Protection

3.0

Dept. of Energy & Environmental Protection

2.4

Office of the Chief Medical Examiner

.2

Dept. of Correction

10.0

Dept. of Children & Families

12.4

Public Defender Services Commission

.3

State Comptroller – Fringe Benefits

8.3

Total - General Fund Increases

37.0

 

Section 2 General Fund Reductions:

Dept. of Social Services

(17.6)

Teachers' Retirement Board

(19.4)

Total - General Fund Reductions

(37.0)

NET General Fund Impact

-

 

Section 3 Transportation Fund Increases:

Dept. of Transportation

24.6

State Comptroller – Fringe Benefits

3.5

Total – Transportation Fund Increases

28.1

 

Section 4 Transportation Fund Reductions:

Debt Service – State Treasurer

(28.1)

Total – Transportation Fund Reductions

(28.1)

NET Transportation Fund Impact

-

Please note that figures in the bill represent the Office of Policy and Management's estimates as of January 2018. OFA's current projections are below.

Section 1 of the bill appropriates a total of $36,970,000 to eight General Fund agencies. Below are details on each agency's deficiency needs, based on OFA projections.

Office of State Comptroller – Miscellaneous – $26.4 million

The agency's projected FY 18 shortfall is comprised of:

The FY 18 – FY 19 budget did not include an appropriation for the account. Approximately $16.2 million of the projected deficiency is for payments for the SEBAC v. Rowland Settlement. The balance of the projected deficiency includes installment payments for other settlements against the state.

Department of Children and Families (DCF) - $12.4 million

The agency's projected FY 18 budget shortfall is comprised of:

The projected shortfall of $6 million in Personal Services reflects 54.8% of the $10.9 million holdback in that account. Personal Services expenditures in FY 17 were $3.7 million higher than the current fiscal year projection of $268.3 million. FY 18 available funding ($262.3 million) is 3.6% less than the agency's actual Personal Services expenditures in FY 17 ($272 million).

The projected shortfall of $3.7 million in Substance Abuse Treatment is related to the Family-Based Recovery project expansion, which is intended to reduce the risk of removal for infants, or toddlers, who are at risk for abuse and/or neglect due to parental substance abuse.

The projected shortfall of $1.7 million in B&C – Res is primarily due to an approximate 3% decrease in average monthly residential placements.

The projected shortfall of $1 million in Community KidCare is primarily due to increased utilization of intensive home-based services and emergency mobile psychiatric services.

Department of Correction - $9.7 million

The agency's projected FY 18 shortfall is comprised of:

This shortfall is partially offset by $1.4 million lapsing funds in the following account

The Department of Correction (DOC) is projected to have a year-end deficiency of $11.1 million resulting in shortfalls of $9.4 million in personal services and $1.7 million in other expenses. DOC's FY 18 available personal services resources, after adjustments for holdbacks and an anticipated transfer from the Reserve for Salary Adjustment account, are 5.4% less than final FY 17 expenditures. However, year-to-date expenditures are only 1.2% lower than FY 17 levels. 

The Other Expenses account is projected to have a $1.7 million deficiency due to a reduction in available resources as a result of the holdback to this account.

An estimated lapse of approximately $1.4 million in the Workers Compensation Claims account is attributed to a reduction in the total amount of claims compared to recent historical levels.  FY 18 claims to-date are 3% lower when compared to the average claims amount from the last five fiscal years.

Department of Mental Health and Addiction Services – $5.3 million

The agency's projected FY 18 budget shortfall is comprised of:

This shortfall is partially offset by $3.3 million lapsing funds from the following accounts:

● $2.3 million in Home and Community Based Services

The $5 million projected shortfall in the Personal Services account (2.8% of the total FY 18 available appropriation), is primarily due to increased overtime expenditures and anticipated enhanced staffing at Connecticut Valley Hospital (CVH). Overall, the employee count was 4.6% lower in February 2018 than the prior year. Also, the FY 18 holdback of $8.2 million brings the available appropriation approximately $7.7 million below FY 17 total expenditures.

The Other Expenses account shortfall of $2 million (8.6% of the total FY 18 available appropriation) is due to increased expenditures to support security and safety upgrades at CVH. A holdback of approximately $1.2 million was applied to this account in FY 18, bringing the available appropriation approximately $1.7 million below FY 17 total expenditures.

The $1.6 million shortfall in Workers' Compensation Claims represents 14% of the total FY 18 available appropriation. Expenditures through February are trending approximately 9.4% higher than expenditures during the same period in FY 17.

Lower than budgeted expenditures are leading to an estimated lapse of approximately $500,000 in both Young Adult Services and TBI Community Services, which represents 0.7% and 5.8% of the total FY 18 available appropriation, respectively. Young Adult Services expenditures through February are trending approximately 10.9% lower than last year, while expenditures under TBI Community Services are trending approximately 11.8% lower when compared to the same period in FY 17.

Lower than budgeted Home and Community Based Services expenditures are leading to an anticipated lapse of $2.3 million, which represents approximately 10.6% of the total FY 18 available appropriation. Expenditures are trending approximately 26.5% lower than expenditures through the same period in FY 17.

Department of Emergency Services & Public Protection - $4 million

The agency's projected shortfall is comprised of:

The Department of Emergency Services and Public Protection (DESPP) is projected to accumulate a shortfall of $4 million in FY 18. The agency has experienced an unusual number of retirements and personnel changes this year, which has led to a higher than expected cost in paying out employee benefits such as vacation and sick pay ($1.9 million as of January 1). The agency averages 54 retirements per year, but has already experienced 59 as of January 1st.

This change in personnel has been the driver of a 28% increase in overtime costs within the agency's Personal Services account due to the need for officers to cover shifts. These costs are not projected to decrease, as DESPP is currently not able to hire the number of employees necessary to drive down overtime.

Please note that the Office of Policy and Management is likely to transfer funds out of their Reserve for Salary Adjustments (RSA) account to DESPP to cover employee benefit payouts by the end of the fiscal year. The $4 million deficiency would decrease by an amount equal to any such transfer.

Department of Developmental Services (DDS) - $3.0 million

The agency's projected FY 18 budget shortfall is comprised of:

The projected net shortfall of $3 million is due to the delay in the conversion of ten DDS group homes from state-operated to private-provider contracted services. It should be noted that this delay also results in a projected lapse of $3 million in the Community Residential Services account in the Department of Social Services, which funds DDS private providers.

Department of Energy and Environmental Protection (DEEP) - $2,450,000

The agency's projected FY 18 budget shortfall is comprised of:

The projected shortfall of $2,450,000 million is due to the newly established Passport to Parks program functioning through DEEP's operating funds instead of the new Passport to Parks non-lapsing account. Additionally, PA 17-2, the biennial budget, reduced Environmental Conservation account appropriations for FY 18, by $1,290,336, to reflect the shift of programmatic expenses from the agency's operating budget to the Passport to Parks account. The agency's FY 18 appropriation for the Environmental Conservation account is $2,997,751, or 36.3% less than its FY 17 appropriation.

Department of Administrative Services – Workers' Compensation Claims – $1.5 million

The agency's projected FY 18 shortfall is comprised of:

The Workers' Compensation account is projected to run a deficiency of $1.5 million based on higher than anticipated claims trends. FY 18 medical related claim expenditures for the first 7 months of the fiscal year are currently 36% higher than the same period in FY 17, and 20% higher for total claim costs as compared to FY 17. In addition, trends in high cost claims are greater than FY 17. For example, total FY 17 claims expenditures for the 10 highest claims was $1.1 million, the cost of the 10 highest claims for the first 7 months of FY 18 is $1.1 million. The FY 18 appropriation reflected an increase of under 1% over FY 17 actual expenditures.

Division of Criminal Justice - $700,000

The agency's projected FY 17 budget shortfall is comprised of:

The Personal Services account is experiencing a projected deficiency of $700,000 due to accumulated leave payments for vacation and sick time for retired employees. It is anticipated that approximately 25 employees will retire throughout the agency in FY 18.

Office of the Chief Medical Examiner (CME) - $170,000

The agency's projected FY 18 budget shortfall is comprised of:

The $170,000 shortfall in Personal Services represents 3.4% of the FY 18 appropriation of $4,969,527. The shortfall in Personal Services predominantly reflects Mortuary Operations overtime expenses. CME's overall caseload continues to rise. From 2014 to 2017, autopsies increased by 36% (1,723 to 2,349).

Auditors of Public Accounts - $160,000

The agency's projected FY 18 budget shortfall is comprised of:

The $160,000 shortfall in Personal Services represents 1.5% of the FY 18 appropriation of $10,349,151. The FY 18 and FY 19 biennial budget did not include funding for (1) the five positions the Auditors absorbed from the Office of Program Review and Investigations, and (2) the statutorily required special education audits (per PA 15-5). In the first year of this requirement (FY 17) the Auditors received grant funding from OPM for the special education positions.

Section 2 of the bill reduces appropriations to two General Fund agencies by a total of $36,970,000. Below is OFA's estimate of the amount of funding available for reduction in the Teachers' Retirement Board's Retirement Contribution account and in the Department of Social Services' Medicaid account.

Teachers' Retirement Board – Retirement Contribution - $19.4 million

Funding is available in the following account:

Funding is available in this account because the revised Teachers' Retirement System valuation, which establishes the state's annual required contribution, decreased the state's retirement contribution by $19.4 million in FY 18. The revision was required to reflect the increase in active teacher contributions from 6% to 7%, effective January 1, 2018.

Department of Social Services - Medicaid - $17.6 million

Funding is available in the following account:

Funding is available in the Medicaid account due to Medicaid expenditures trending lower than budgeted, inclusive of changes made to maintain the Medicare Savings Program , per PA 17-1 of the January 2018 Special Session.

Section 3 of the bill appropriates a total of $28.1 million in the Transportation Fund to two agencies. Below are the details on the Transportation Fund's deficiency needs, based on OFA projections.

Department of Transportation - $31.9 million

The agency's projected FY 18 budget shortfall is comprised of:

The projected shortfall of $31.9 million in the Rail Operations account is primarily due to the following factors:

PA 17-2, the biennial budget increased funding for the Rail Operations account in FY 18 by approximately $7 million to reflect increased subsidy expenses on the New Haven, Shoreline East and Hartford Rail Lines.

Office of State Comptroller – Fringe Benefits – $3.7 million

The agency's projected FY 18 shortfall is comprised of:

The State Employees' Health Service Cost account is projected to run a deficiency of $3.7 million based on claims trends being 6.2% higher than anticipated in the budget (13% higher after accounting for the $2.8 million holdback). The FY 18 appropriation is 5% (or $2.3 million) less than FY 17 actual expenditures.

Section 4 of the bill reduces Transportation Fund appropriations to the State Treasurer's Debt Service account by $28.1 million. Below is OFA's estimate of the amount of funding available for reduction.

State Treasurer Debt Service - $28.1 million

Funding is available in the following account:

The appropriation reduction is due to the results of the FY 18 STO bond issuance, which closed in February 2018. The majority of the reduced cost was the result of the timing of the issuance (February instead of the expected issuance in the Fall). The reduction in debt service was also partially the result of a decrease in the amount of bonds issued, from the $900 million that was expected in the budget to $800 million. The lower debt service payments that are the result of the FY 18 issuance also reduce the level of debt repayment necessary in future years, though the largest impact per year is realized in FY 18.

The Out Years

There is no direct impact in the out years from the changes in the FY 18 appropriations included in the bill.

OFA Bill Analysis

HB 5034

AN ACT MAKING DEFICIENCY APPROPRIATIONS FOR THE FISCAL YEAR ENDING JUNE 30, 2018.

SUMMARY:

This bill, referred to as the 'deficiency bill', is submitted every year to address agency and fund shortfalls and the corresponding savings and transfers to balance the budget for the current fiscal year.

EFFECTIVE DATE: Upon passage

COMMITTEE ACTION

Appropriations Committee

Joint Favorable

Yea

51

Nay

0

 
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