Transcript Arkansas Financing Programs

FINANCING STATE
PROGRAMS
IN
Bureau of Legislative Research, 2008
A Discussion of
the Revenue
Stabilization Law
and General
Improvement
Fund.
A Presentation by
the Bureau of Legislative
Research
THE ARKANSAS BUDGET
HOW BIG IS IT?
WHERE DOES IT COME FROM ?
WHO GETS THE MONEY?
“GENERAL REVENUES” are
those funds received by the
State from fees and taxes
levied on the general population
of the state. The proceeds
are not designated to be used
for a particular purpose but
are allocated every two years
by acts of the General
Assembly. Interest earnings
are retained in the State
Treasury.
“SPECIAL REVENUES” are those taxes
and fees in the State Treasury which
are designated or earmarked by law to
be used for a particular purpose. The
State Treasury retains most of the
interest earnings.
“FEDERAL REVENUES” are those monies
in the State Treasury received from the
U.S. government either as project
grants-in-aid or as reimbursement for
eligible expenses. The Federal
government retains any interest earnings.
“TRUST FUND REVENUES” are those
funds in the State Treasury that are
received by the State in which the
State is a trustee and is acting in a
fiduciary capacity. Trust funds retain
their interest earnings.
“CASH FUND REVENUES” are those
funds received by the State which
are not required by law to be
deposited into the State Treasury.
Cash funds retain their interest
earnings.
“APPROPRIATION” is the authority,
granted by and limited by the General
Assembly, to spend money under the
control of the State of Arkansas.
SPENDING IS LIMITED BY THE
AVAILABLE APPROPRIATION OR THE
AVAILABLE MONEY, WHICHEVER IS
LESS!
Types of Revenue and Their
Distribution
ARKANSAS REVENUE COLLECTIONS
(Millions)
1996-2008 FISCAL YEARS
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2006 2008
General Revenues
Trust and Other
Special Revenues
Cash Funds
Federal Funds
To
ta
l
Fe
de
ra
l
Tr
us
t/O
th
er
as
h
C
ec
ia
l
11
8%
8%
5%
0%
13
13
%
11
77
50%
Sp
G
en
er
al
CHANGES IN COLLECTIONS
1996-2008 FY
250%
200%
150%
100%
0%
TOTAL STATE REVENUE – 2008
$18 Billion
Trust & Other
Non Revenue
General Revenue
15%
31%
Special
Federal
24%
Cash
21%
9%
Three Methods of Funding Available
•DEDICATED
SOURCE
•GENERAL
IMPROVEMENT
FUND
•REVENUE
STABILIZATION
LAW
Three Methods of Funding Available
•DEDICATED
SOURCE
DEDICATED SOURCES OF FUNDS
• State Dedicated Tax or
Fee (Special Revenue)
The Constitution says “…no moneys arising
from a tax levied for one purpose shall be
used for any other purpose.”
SPECIAL REVENUES - 2008
$ 1.7 Billion
Property Tax
Relief
14%
Game & Fish
5%
Other
35%
Highway Users
37%
Finance
6%
Natural
Resources
3%
DEDICATED SOURCES OF FUNDS
• State Dedicated Tax or
Fee (Special Revenue)
• Federal Grant-in-aid
FEDERAL FUNDS – 2008
$4.2 Billion
Transportation
10%
Health &
Human
Services
68%
Education
11%
Other
11%
DEDICATED SOURCES OF FUNDS
• State Dedicated Tax or
Fee (Special Revenue)
• Federal Grant-in-Aid
• Cash Funds
DEDICATED SOURCES OF FUNDS
• State Dedicated Tax or
Fee (Special Revenue)
• Federal Grant-in-Aid
• Cash Funds
• Trust Funds
TRUST AND OTHER NON-REVENUE FUNDS
2008
$2.7 Billion
Investments
7%
Medicaid
5%
Bonds
5%
Taxes
Collected for
Others
64%
Other
19%
DEDICATED SOURCES OF FUNDS
• State Dedicated Tax or
Fee (Special Revenue)
• Federal Grant-in-Aid
• Cash Funds
• Trust Funds
• Non-revenue Receipts
Three Methods of Funding Available
•DEDICATED
SOURCE
•GENERAL
IMPROVEMENT FUND
$500.0
General Improvement Fund
Income and Authorized Funding
Income
Authorized Funding
Millions
$400.0
$300.0
$200.0
$100.0
$1991- 1993- 1995- 1997- 1999- 2001- 2003- 2005- 200793
95
97
99
01
03
05
07
09
General Revenue Collections Under or Over
Maximum Allocations
1993-2008 FY
$500
$400
"Surplus"
$300
Millions
$200
$100
$0
($100) -93
94 -95 -96 -97 -98 -99 -00 -01 -02 -03 -04 -05 -06 -07 -08
92 993 994 995 996 997 998 999 000 001 002 003 004 005 006 007
9
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
2
($200)
($300)
($400)
($500)
1/2 Interest
Earnings
$56.7 M
2006-2007
Recovered Fund
Balances
$11.2 M
Excess Old
GIF Projects
$.6 M
General
Previous GIF
Revenue
Session
Allotment Account/Balances
Reserve
Budget Reserve
Fund
Fund
$581.9 M
$155.3M
GENERAL IMPROVEMENT
Set Aside
or
Mandatory
Obligations
$489.9 M
Governor’s
Discretionary
Biennium
$187.3 M
Legislative
Biennium
$40 M
Three Methods of Funding Available
•DEDICATED
SOURCE
•GENERAL
IMPROVEMENT
FUND
•REVENUE
STABILIZATION
LAW
ACT 311 of 1945
The Revenue Stabilization
Law
“Arkansas’ Present System of Tax Allocation
and distribution is as archaic as the old
tasseled surrey - -complex, confusing,
inefficient. The system itself is a burden on
the taxpayers.” - Governor Ben Laney, 1945
Governor Ben Laney
“…I propose as our next step that our archaic and
hydra-headed system of over one hundred state
funds be forever eliminated,” – Governor Ben Laney,
1945
Governor Ben Laney
What It Did
»Removed the dedication from major
broad-based taxes
»Provided a fund distribution from a
pool to various operating funds
»Allowed the legislature to set their
funding priorities every two years
»Prevented deficit spending
»Reduced funding instability due to
changing economic conditions
»Assured agencies of even cash flow
What It Also Did
»Permitted the approval or mandate of
a program without providing funds to
implement it, raising unrealistic
expectations
»Allowed the Governor to manipulate
financing and timing of legislative
enacted initiatives
»Permitted agencies and the Governor
to determine programmatic priorities
within funds and disregard legislative
intent
»Created uncertainty in the agency
financial plan for the year
What’s this A
and B Stuff?
The Steps
The Legislature, with consultation with the Governor:
• Determines the Maximum General Revenue support
to be distributed over the next two years
• Determines the maximum amount each general
revenue fund is to receive from general revenues
for the next two years
• Determines the number of priority categories
(A,B,C…)
• Sets the minimum level of support required for
each general fund and designate it as “A”
• Sets the next level of support for each fund and
designates it as the next priority (A-1 or B)
• Continues the steps until the maximum level is
reached
Revenue Stabilization Law
Revenue Flow
Can we see an example?
General Revenues 2007-08 FY
Other
1%
Income
56%
Insurance
2%
Luxury
3%
Sales/Use
38%
$5,618 Million
Plus $4.7 M Transfers
Refunds/Claims $497.6 M
Take Out
Debt Service $26.2 M
$1,093.2 Million
Public School Desegregation $58.7 M
Educational Excellence $298.4 M
Central Services & Constitutional Officers $167 M
City/County Tourist Promo $7.2 M
Aging Transport $2.1 M
Educational Adequacy $26.4 M
Economic Development Incentive $10.3 M
$4.5 Billion Net Available
GenGov Gen Ed
Corr 4%
2%
7%
Other
3%
HiEd
16%
Public School
43%
DHHS
25%
Public
Schools
100%
Corr
22%
Other
9%
Public Schools
2%
Gen Ed
1%
Gen
Gov
9%
Hi Ed
42%
DHHS
15%
A
A1
B
$4,149,395,153
$70,000,000
$133,266,794
Reserve $176.5 M
The legislature does not
specify which programs are
in which priority.
The Governor and his agency
heads decide priorities
within the funds.
For the 2007-2008 year the
Stabilization looks like this:
Revenue Stabilization Law
•Take all General Revenue collected
•Add $4.7 Million in Transfers
•Take out $1,050 Million for Claims,
Refunds, Desegregation Costs,
Educational Excellence and Processing
Fees
•Distribute $4.1 Billion as follows:
43% to Public Schools
25% to Health & Human Services
16% to Higher Education Institutions
7% to Corrections
4% for General Government
3% to Local Aid and Misc
2% to General & Workforce Education
THEN
•Take Next $70 Million
for Public Schools
THEN
•Take Next $133 Million and spread:
42% to Higher Education
Institutions
22% for Corrections
15% to Health/Human Services
10% for Misc. Gov’t Functions
9% for General Government
2% to Public Schools
•Then $176.5 million surplus to General
Revenue Allotment Reserve Fund
GENERAL REVENUE PROGRAMS
GENERAL REVENUE PROGRAMS
2007-2008 FISCAL YEAR
(Millions)
Gen Ed
$99.3
General Gov
2%
$164.8
Higher Ed
Other & Local Aid
4%
$709.9
$138.9
16%
3%
Public School
$1856
43%
Corrections
Health/Human Services
$339.9
$1043
8%
24%
CHANGE IN GENERAL REVENUE DISTRIBUTION
1998-2008 FISCAL YEARS
HEALTH/DHS
72%
TOTAL
50%
HIGHER EDUCATION
60%
EDUCATION
37%
JUSTICE/GENERAL
GOV
52%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
EDUCATIONAL ADEQUACY
•
•
•
•
•
In response to a Supreme Court Decision (“The Lake View Case”), several
measures were enacted in the Second Extraordinary Session of the EightyFourth General Assembly, the Eighty-Fifth General Assembly’s Regular Session,
First Extraordinary Session of 2006 and the Eighty-Sixth General Assembly’s
Regular Session of 2007.
Over $4 billion, including $696 million for public school facilities and $2.3 million
from Educational Adequacy Fund, in additional funding has been allocated for
Public Schools through FY2009 over the FY2003 funding level.
A new public school formula was enacted that provides:
– $5,719 per ADM (Average Daily Membership) in FY2008 and $5,789 per
ADM in FY2009
– National School Lunch (NSL) Student Funding:
• Greater than 90% of enrolled students in the program - $1,448/NSL
student
• 70-90% of enrolled students in the program - $992/NSL student
• Less than 70% of enrolled students in the program - $496/NSL student
– $4,063 per Alternative Learning Environment Student
– $293 per English Language Learner Student
– Professional Development Funding Equal to $50 times the school districts
previous school year ADM
$780.5 million allocated for Public School Facilities between FY2003 and
FY2009.
Additional funding for pre-kindergarten-$46.7 million in FY2008 and FY2009
•
•
•
•
•
Various student assessment, teacher incentive & other programs
New Taxes were enacted to provide additional funding as follows:
– 7/8% additional Sales & Use tax, including expanding the base to include
certain service companies or business practices ($410.5 million in actual
collections in FY2008, $423.8 million in FY2007, $404.5 million in FY2006,
$372.5 million in FY2005 and $93.4 M collected in FY2004)
– Corporate Franchise tax increase ($12.8 million in actual collections in
FY2008, $12.6 million in FY2007, $10.99 million in FY2006 and $11.2 million
in FY2005)
– Tax Amnesty Program ($3.4 million in FY2006)
Adopted the “Doomsday Clause” which provides that if the Chief Fiscal Officer of
the State determines that there are not adequate resources in the Educational
Adequacy Fund and Public School Fund, then all other general revenue funds
and fund accounts are reduced by the amount needed. Act 20 of the First
Extraordinary Session of 2006 expanded the “Doomsday Clause” to protect the
Educational Facilities Partnership Fund Account.
In addition to State Foundation Funding, the General Assembly authorized $13.4
million in FY2008 and $14.3 million in FY2009 for a 98% Actual Collection
Adjustment appropriation which insures that districts receive the full 98% of the
Uniform Rate of Tax that the State Foundation Funding formula assumes is
collected. In FY2008, the Department of Education required over $5 million
more than the authorized level to insure the 98% actual collection rate.
Beyond Adequacy, the General Assembly provided Enhanced Educational
Funding of $51 per ADM in FY2008 and $87 per ADM in FY2009.
PUBLIC SCHOOL FUND
1992-2008 FISCAL YEARS
Gen Revenue
Educ Excellence
Desegregation
2008
Total $2,090
2006
2004
2002
2000
1998
1996
1994
1992
$0
$500
$1,000
MILLIONS
$1,500
$2,000
Average Teacher Salary
1993-2007
55
50
$50,816
$ Thousands
45
40
$44,493
National
35
30
Arkansas
25
20
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: National Education Association, Rankings of the States, various years; Estimates of School Statistics, various years
PUBLIC SCHOOLS BONDED DEBT
Statewide Fiscal Year Ending June 30, 2007
7.2%
increase
17.4%
increase
14.6%
increase
7.2%
increase
FY 2001
1,427,585,800
FY 2002
1,530,638,884
FY 2003
1,754,311,538
FY 2004
2,059,396,713
11.1%
increase
6.6%
increase
FY 2007
FY 2006
2,611,877,943
FY 2005
2,450,645,825
2,287,081,885
Public School Revenue Sources
2007
State Funds
$2,371.3M
Federal Funds
$484.4 M
53%
Local Funds
$1,382.5 M
Misc.
Funds
$265.2 M
10.2%
30.9%
5.9%
$4,503,318,463 in 245 Districts
Local School District Funding
2006
Local & Other
State
Federal
11%
9%
47%
57%
32%
44%
NATIONAL
(National Center for Education Statistics)
ARKANSAS
*For Arkansas Local & Other funding is inclusive of State
Uniform Rate of Tax (URT) Funds.
Higher Education Institutions Current Funds
2007
State Appr.
$670.9
Million
Gifts,
Grants &
Contracts
$488.5
Million
Federal
Appr.
$18.5
Million
Tuition &
Fees
$473
Million
Sales and
Services
$278
Million
Hospitals &
Clinics
$669.6
Million
Misc. Funds
$103.1
Million
17.3%
$2,701,684,356
Higher Education Institutions
On-Campus Headcount
Fall 1996 – Fall 2007
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
T
h
o
u
s
a
n
d
s
80
70
60
50
40
30
20
10
0
Four yr.
Com. Col.
Tech Col.
Independent
Higher Education Institutions
Operating Funds from State Sources - 2008
Education
Excellence
8.5% $67.6 M
Work Force
$22.4 M 2.8%
General
Revenue
88.8%
$709.9 M
$799.8 Million
Total
Higher Education Tuition and Median
Family Income Changes from 1996-2006
120
% Change
100
80
60
40
20
0
US SREB AR AL DE
FL GA KY LA MD MS NC OK SC TN TX VA WV
Tuition
SREB-Southern Regional Education Board
Income
Institutions of Higher Education
NWACC
ASU-MH
NACC
UAF
X
BRTC
X
ANC
OZTC
ASUN
UACCB
ASUJ
UAFS
UACCM
ATU TECH
X
UCA
NPCC
RMCC
ASU-B
CCCUA
EACC
X PTC
X UALR & UAMS
OTC
UAPB
XSEATC
HSU
UACCHOPE
SAU-TECH
SAU
SACC
M-SCC
UAM
PCC-UA
GENERAL REVENUE PROGRAMS
2007-08 FISCAL YEAR
Health
Human Services
24%
$1 Billion
$53.9
$25.0
$57.2
$47.0
$49.1
$73.1
$58.7
$678.8
Health
Other
Admin/County
Offices
Youth
Services
Children/
Family
Behavioral
Health
DDS
Medicaid/
Misc. Aid
MEDICAID EXPENDITURES
2002-2008 FISCAL YEARS
2500
$ Millions
2000
1500
1000
500
0
Hospital/Medical Drugs Nursing Homes
State, Federal & Tobacco
2002
2004
2006
2008
CHANGE IN MEDICAID EXPENDITURES
1998-08 FISCAL YEARS
179.11%
148.28%
143.83%
69.12%
FEDERAL MEDICAID MATCH RATES
% Federal Share
80
78
76
74
72
70
1993 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Federal % 74.4 73.8 73.6 73.3 72.8 73.0 72.9 73.0 72.6 74.3 74.7 74.8 73.7 73.7 72.9
Medicaid Recipients for Selected Services
2008
Total Recipients
Total Expenditures
(Millions)
359,045
$411
22,225
$712
7,095
597,761
$358
$702
702,580
$1265
432,472
Hospitals
Medical
Nursing Homes
Drugs
Home Health
Other
$14
Recipients may be counted once in multiple groupings (e.g. both Medical and Drugs)
Medicaid Recipients for Selected Services
2008
Total Recipients
Total Expenditures
16.9%
1.1%
20.6%
11.8%
<1%
28.2%
10.3%
20.3%
33.1%
36.5%
20.4%
Hospitals
Nursing Homes
Home Health
<1%
Medical
Drugs
Other
Recipients may be counted once in multiple groupings (e.g. both Medical and Drugs)
GENERAL REVENUE PROGRAMS
2007-08 FISCAL YEAR
Criminal Justice
State Police
$61.8
$68.6
$3.6
$414.8M
$271.3
$9.5
$ 414.8 Million
Community
Correction
Crime
Information
Center
Department
of
Correction
County Jail
Reimbursement
ARKANSAS STATE POLICE TROOP LOCATIONS
BENTON
BOONE
CARROLL
MARION
L
WASHINGTON
I
MADISON
NEWTON
RANDOLPH
FULTON
BAXTER
IZARD
CLAY
GREENE
SHARP
LAWRENCE
SEARCY
STONE
CRAIGHEAD
INDEPENDENCE
CRAWFORD
JOHNSON
POPE
VAN BUREN
B
CLEBURNE
FRANKLIN
POINSETT
J
LOGAN
SEBASTIAN
YELL
H
CROSS
FAULKNER
WHITE
CRITTENDEN
WOODRUFF
ST. FRANCIS
PERRY
SCOTT
LEE
PULASKI
GARLAND
PIKE
K
HOT SPRING
LONOKE
PRAIRIE
A
SALINE
MONTGOMERY
HOWARD
GRANT
MONROE
JEFFERSON
ARKANSAS
CLARK
DALLAS
CLEVELAND
LINCOLN
E
DESHA
HEMPSTEAD
NEVADA
OUACHITA
DREW
BRADLEY
CALHOUN
MILLER
G
LAFAYETTE
COLUMBIA
UNION
D
PHILLIPS
SEVIER
LITTLE RIVER
C
JACKSON
CONWAY
POLK
MISSISSIPPI
F
ASHLEY
CHICOT
STATE SUPPORT FOR CORRECTIONS
FISCAL YEARS 1997-98 THROUGH 2007-08
(Millions)
$400
$300
$200
$100
$0
1998
2000
2002
2004
2006
County Jail Reimbursement
Community Correction
Inmate Care & Custody
2008
STATE INMATE POPULATION
FISCAL YEARS 1997-98 THROUGH 2007-08
20,000
17,000
14,000
11,000
8,000
5,000
1998
2000
Prisons
2002
County Jail Backup
2004
2006
2008
Community Correction
POPULATION AND PRISON CAPACITY
FISCAL YEARS 1997-98 THROUGH 2007-08
Prison & Jail Backup
Prison Capacity
16,000
14,000
12,000
10,000
8,000
6,000
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
STATE ADULT CORRECTIONAL FACILITIES
North Central Unit
Northwest AR
Work Release Center
Mississippi Co.
Work Release Center
McPherson Unit
Grimes Unit
Boot Camp
Hawkins Center for Women
Wrightsville Unit
Benton Unit
Ouachita River
Correctional UnitSpecial Needs
Texarkana Regional
Correctional Center
East AR
Regional Unit
Diagnostic Unit
Pine Bluff Unit
Randall L. Williams Correctional Facility
Maximum Security Unit
Tucker Unit
Cummins Unit
Varner Unit
Delta Regional Unit
INMATE DEMOGRAPHICS 2008
• AVERAGE AGE
• AVERAGE SENTENCE
• AVERAGE TIME SERVED
• RACE
– White
– Black
– Hispanic
– Other
• SEX
– Male
– Female
Male 36 Years
Female 35 Years
9 years 0 months 25 days
2 years 9 months 8 days
51%
46%
2.6%
0.4%
92.2%
7.8%
INMATE COST PER DAY
FY2008
•
•
•
•
•
ADC Inmate Care & Custody
DCC Residential Services
Drug Courts
Probation/Parole
County Jail Reimbursement
$57.13
$50.27
$12.75
$1.64
$28.00
FINANCING STATE
PROGRAMS
IN
Bureau of Legislative Research, 2008