FY%202009%20Budget%20Overview%20Presentation%20Prepared%20for%20Agency%20Commissioners%20by%20the%20Office%20of%20Policy%20and%20Management

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FY 2009 Budget OverviewPresentation Prepared
for Agency Commissioners by the Office of
Policy and Management
September 12, 2008
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INTRODUCTION

• The FY 2009 budget that was adopted during the
  June 2007 Special Session was based on revenue
  projections that exceeded expenditures by less
  than 100,000
• Since January 2008 the State has experienced a
  significant decline in revenue in both the
  General Fund and Special Transportation Fund
• Calculation of the projected 145.7 million
  General Fund FY 2009 deficit
• 214.7 million in revenue deterioration
• 10.0 million in additional expenditures with the
  passage of PA 08-51- Criminal Justice Reform
  Bill
• Offset by 115.8 million in rescissions

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INTRODUCTION

• Per C.G.S. 4-85-The Governor may modify
  allotments if estimated budget resources are
  determined to be insufficient to finance all
  appropriations
• Allotment modifications
• Cannot exceed 5.0 in any one account
• Cannot exceed 3.0 of any one fund
• Cannot reduce funds appropriated for Grants to
  Towns
• Rescissions Amount
  of Fund
• General Fund 115.8 million
  0.67
• Transportation Fund 14.1 million
  1.21
• All Other Funds 1.8 million
  0.98
• Total 131.7 million
  0.72

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FY2009 Problems
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NEGATIVE REVENUE TRENDS SEEN
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REVENUE PROJECTIONS LOWERED
FY 2009 General Fund Revenue (In Millions)

• Most revenue items are projected to bring in less
  than the originally adopted revenue forecast
• Two of the significant positive revenue items are
  one-time in nature- a timing change in the
  claiming of Federal Revenue and an anticipated
  sale of unclaimed property
• The only other significantly positive revenue
  trend is the oil companies tax and while it
  brings in additional revenue, higher oil prices
  also mean higher state energy costs and higher
  demand for energy assistance programs in the
  Dept. of Social Services

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PERSONAL INCOME GROWTH IS SLOWING
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FY2009 PROBLEMS

• Department of Correction deficiency
• 18.3 million rollout for FY2008 deficiency

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OTHER AREAS OF CONCERN
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OTHER AREAS OF CONCERN

• Department of Social Services
• The 150 million shortfall projection for FY 2009
  assumes the enacted budget is correct, yet the
  Governors mid-term budget adjustments
  anticipated that the Medicaid budget would be
  short by 62 million in FY 2009
• Major drivers behind the 62 million are cost and
  caseload related, including HUSKY A, where
  caseload is expected to grow from 296,484 in July
  2007 to 344,000 by the end of FY 2009. HUSKY
  costs are expected to increase 31 million beyond
  the enacted budget
• Costs in long-term care could escalate as DSS
  continues to assess nursing homes in financial
  distress due to court ordered receivership or
  pending bankruptcies
• Preliminary cost to bring in new providers under
  the HUSKY managed care re-bid will likely be
  higher

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OTHER AREAS OF CONCERN

• Department of Social Services-continued
• Reporting continues to be problematic as a result
  of DSSs transition to a new claims payment
  system in February 2008, impacting the ability of
  both OPM and OFA to accurately project
  expenditures
• Carry forward of 85 million for FY 2008 Medicaid
  obligations that did not get paid, including
• 36.7 million for provider rates
• 25 million in one-time payments to MCO providers
  due to payment delays as certain plans
  transitioned out of the HUSKY program and
• 18.9 million to cover obligations associated
  with the Carr dental litigation settlement.

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OTHER AREAS OF CONCERN

• Department of Education
• Section 17 of PA 08-170, will result in 7.0
  million of unfunded costs to the Magnet School
  account
• Special Education Funding had an FY 2008
  deficiency of 5.4 million because the grant was
  uncapped a potential FY 2009 deficiency of 6.5
  million will exist assuming the 8 growth in
  eligible expenditures that occurred between FY
  2007 and FY 2008 reimbursements

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FY 2009-AREAS OF CONCERN

• University of Connecticut-Health Center
• The UCONN Board approved a FY 2009 budget for the
  Health Center that forecasts an 11.5 million
  deficit involving the John Dempsey Hospital, the
  University Medical Group and Research programs
• The deficit is primarily due to projected losses
  in the Neonatal Intensive Care Unit (NICU),
  Psychiatry, High Risk Maternity and OB/Gynecology
  and Research Programs. For example, the average
  loss per case in the NICU was about 34,000 in FY
  2008
• Rescissions were not ordered for the UCHC due to
  the financial challenges that it is facing this
  year and would only exacerbate the projected
  deficit

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OTHER AREAS OF CONCERN

• Criminal Justice Reforms
• Department of Mental Health and Addiction
  Services
• Low Income Heating Assistance Program (LIHEAP)
• Special Transportation Fund

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STEPS TAKEN TO DATE
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STEPS TAKEN TO DATE

• Actions taken by the Governor to mitigate the FY
  2009 deficit
• Issued orders to implement the following
• Hiring Freeze
• Out of State Travel Ban
• Limited Purchases to Items/Services Critical to
  Agency Missions
• Implemented a Rescission Plan which globally
  reduces General Fund allotments by 137.6
  million 26.9 million or 19 is in Personal
  Services line items
• Planned PS savings that do not require layoffs,
  instead relying upon attrition to achieve savings
• Planned OE savings that do not target those
  agencies facing current service level
  deficiencies
• Planned other savings in a manner that does not
  reduce payments to private providers serving
  vulnerable clients

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STEPS TAKEN TO DATE
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FY2010 FY2011 BUDGETS
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STRUCTURAL HOLES
CREATED BY FUNDING EXPENDITURES WITH PRIOR YEAR
SURPLUSES Structural Holes in the Fiscal 2010
Budget General Fund (In Millions)

• Approximately 393.4 M of projected FY 2010
  spending will be funded with surplus dollars in
  FY 2009
• These spending commitments, without ongoing
  revenue sources to pay for them, are contributing
  to our large projected FY 2010 imbalance

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FY2008 SURPLUS SPENDING

• Summary of Appropriations from PA08-1 and PA08-2
  August Special Session

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• New legislation
• Raise the Age
• Charter Oak Health Plan

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GENERAL FUND

• According to the Office of Fiscal Analysis,
  preliminary General Fund estimates indicate large
  current services budget gaps when compared to
  current projections of revenue in the out-years

Source OFA- Connecticut State Budget 2007-2009
Revisions, August 2008
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• Johns what happens if we continue spending
  chart

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WHERE DO WE GO FROM HERE
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WHERE DO WE GO FROM HERE

• More Rescissions are essential at this time due
  to
• Continuing deterioration of economic conditions
• Significant declines in the States projected
  collection of revenues
• The lack of action by the Legislature to address
  the problem

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WHERE DO WE GO FROM HERE

• Tighter Hiring Freeze
• Reduction Options correction made on the
  spending side
• Limited new Expansion Options