2006-07 Fiscal Year
The ending balance for the current fiscal year is going to be $475 million after a transfer to the rainy day fund of $158 million. This huge surplus is due to a large revenue surplus of $649.8 million. That $475 million fund surplus will roll into the next fiscal year.
2007-08 Fiscal Year
The Governor’s certified revenue estimate for the 2007-08 fiscal year is expected to be $26.680 billion. One time revenues expected in the fiscal year will add $173 million to the revenues available. There are no tax increases in the budget as passed. The growth in revenue compared to 06-07 is $656.7 million or 2.4%. Expenditures of $27.162 billion represent 3.26% growth over the previous fiscal year.
Tax changes totaling $46 million for 2007-08 are included as part of the
final budget agreement. The table on the
next page shows the cost associated with each proposal. Below is a more detailed description of the
contents of the tax bill.
This
change would allow affected banks to deduct all goodwill from each of the 6
years that are used to average total equity capital under the bank shares
tax. Banks would not be allowed to
receive refunds for previous years in which they were required to include
goodwill. They would only be able to
reduce future tax payments.
The types of best management practices that would be eligible for the
credit are an agricultural erosion plan, a plan to reduce animal waste or other
pollution runoff plans. The bill would
establish different credit levels of 75%, 50% or 25% of the cost depending on
differing criteria of the project. A
project that cleans up sediment is the only type to which a 25% credit level
would apply. The Credit is capped at $10
million annually.
DEPARTMENT OF AGING
The budget shifts all currently general funded line items, with the
exception of the Alzheimer’s Outreach program, from the lottery fund. This would save the general fund in excess of $19.0 million.
Family Caregiver
Support Program
The Family Caregiver Support Program appropriation contains a small increase to provide for a 3 percent cost-of-living adjustment. This program is also supported by $10 million in federal funds. The program assists families who maintain frail relatives in their home. Working through AAA’s, the program provides benefits counseling and, depending on income, financial assistance including supplies, services and home adaptations and devices. It is anticipated that 5,545 families will receive these services in 2007-08.
Alzheimer’s Outreach
Services
The budget includes $250,000 for
Alzheimer’s Outreach Services. Federal
Funds used for Memory Loss programs are no longer available, however it is
anticipated that
Pre-Admission
Assessment
Funding for the Pre-Admission Assessment Program is increased by 34 percent for a total of $10.3 million in lottery funds. This increase reflects the transfer of assessment activities from PENNCARE to maximize federal earnings. This nursing home pre-admission screening program helps older Pennsylvanians and their families determine the least restrictive environment needed and assists them in securing and managing intensive in-home services tailored to their needs. It is anticipated that assessments and referrals to community services will increase in 2007-08. Referrals to nursing homes are expected to decrease.
PENNCARE
This budget includes a $15.0 million increase in the lottery funded PENNCARE appropriation to continue the current Attendant Care Program and provide services to an additional 346 recipients. Funds are also used for Older Adult Protective Services to investigate suspected elder abuse reports. The increase would also be used to provide a 3 percent cost of living adjustment for direct care workers and to provide services as a result of nursing home transition activities.
In addition, The PENNCARE appropriation includes $4.8 million to fund an initiative the Governor announced in February– Reforming the Long-Term Living System – aimed at reducing reliance on institutional long-term care and promoting growth of high quality home and community-based services.
Home and
Community-Based Services – Tobacco Settlement Fund
A total of $21.3 million in Tobacco Settlement funding is included in the budget to provide home and community-based services to older Pennsylvanians. This includes an increase of almost $2.0 million to continue current home and community-based services and expansion to additional recipients, as well as nursing home transition activities. In addition, $4.6 million is proposed to be used for the initiative -- Reforming the Long-Term Living System -- to reduce reliance on institutional care. Federal funds in the amount of $2.4 million are also provided for this initiative.
Reforming the Long-Term Living System
The budget includes a total of $12.9 million in lottery, tobacco and
federal funds for an initiative to reduce reliance on institutional long-term
care and promote growth of high quality home and community-based services. An additional 2,200 individuals over the age
of 60 will be able to remain in their homes or a community-based setting rather
than moving to a nursing home.
Providing services for the rapidly growing number of seniors, especially
those 85 and older, will present a major challenge for the commonwealth in the
coming years. The number of seniors
using home and community-based services has increased 70 percent since
2002-03. An additional 14 percent
increase is projected in the current year.
The problem will come to a head in the near future, as 2006 was the year
that the first wave of baby boomers, many struggling to care for elderly
parents, joined the ranks of the 60-plus year olds. By the year 2020, one in every four Pennsylvanians
will be age 60 or older.
PACE and PACENET
The Pharmaceutical Assistance Program provides help to qualified older
Pennsylvanians who are 65 years of age and over and whose cost of drugs is a
burden to them. The program is financed
by the Lottery and Tobacco Settlement Fund revenue.
The commonwealth has expanded its PACE and PACENET programs to make them
compatible with and complementary to the new Medicare prescription drug
program. PACE Plus Medicare enables
cardholders to take advantage of the features of both PACE and the new Federal
Medicare Part D benefit by filling the gaps encountered by cardholders in
Medicare Part D including deductibles, the donut hole phase of no Medicare
coverage, and co-payment differentials between the Part D plan coverage and the
PACE and PACENET copayments. PACE Plus
pays the Medicare premiums for Part D coverage PACE cardholders, while PACENET
cardholders pay the Part D premium.
With a heavier reliance on lottery funds and a reduced use of tobacco settlement
funds, the budget for 2007-08 will allow the average number of seniors covered
by PACE, PACENET or PACE Plus Medicare to rise to 357,725 which represents an
additional 32,000 seniors. This
represents a 10 percent increase over those receiving services in 2006-07 and a
60 percent increase since 2002-03. The
budget includes $276.4 million in state funds to continue these programs.
Agricultural
Promotion
To improve the economy of our state and the food industry in general,
programs have been developed. The agriculture promotion programs have been
developed to enhance the ability of
Agricultural Research
Agricultural research is the basis for continued strong, viable and
profitable agriculture. Through research
conducted by the PA Animal Diagnostic Laboratory,
State Food Purchase Program
This program provides grants to counties to purchase food to be
distributed to the indigent. Grants are
based on unemployment levels, legal immigrants, and medical assistance
recipients. The Governor recommended that $18 million be appropriated
in the 07-08 state fiscal year to the State Food Purchase Program. The 2007-2008 approved budget reflected the
same level of funding.
The Pennsylvania Diagnostic Commission is part
of a nationwide network of state and federal laboratories dedicated to
identifying and combating animal diseases.
This essential program received $6.67 million in the 07-08 budget which
will assist the Vet labs to test various animal diseases.
State spending for the Department of Corrections will reach $1.6 billion, an increase of $184.1 million, or an 11.5% increase from the 2006-2007 fiscal year. This significant increase is partially due to expansion at current SCI facilities and the re-opening of SCI Pittsburgh.
The SCI appropriation has increased $163 million over FY 06/07 to $1.31
billion. The inmate population is the single most important factor affecting costs
in the correctional system. By December
2007, the inmate population is projected to grow to 45,596, an increase of
1,500 from December 2006. When
factoring in the cost of inmate health care, education and training expenses,
the current average cost per inmate is $38,518.
Due to the inmate population increase, the Department is re-opening SCI
Pittsburgh with an initial capacity of 750 beds as of July 2007 and an
additional 750 beds after January 1, 2008.
The Medical Care appropriation is $204 million, an increase of $16
million. Following a National trend,
every year sees an increase to the cost of providing adequate healthcare to the
inmates, especially the elderly population.
The Inmate Education and Training appropriation is $46 million, which is $4 million more than in FY 2006-2007.
Probation and Parole spending will total $106 million in FY 2007/2008, which is an increase of approximately $8 million from last year.
In the enacted 07/08 budget, the General Government Operations appropriation received a decrease of approximately $7.8 million or 9% below the Governor’s FY 06/07 budget.
The Sexual Offenders Assessment board remained at the Governor’s February budget proposal of $3.7 million, as did the Adult Probation services appropriation at $19.3 million.
DEPARTMENT OF
COMMUNITY AND ECONOMIC DEVELOPMENT
Economic Stimulus programs, community and business incentive spending, and other investments in education and training initiatives continue to produce an expanding state economy. Total state non-farm employment is about to rise above 5.8 million jobs, while our 4.2% unemployment rate continues to trend below the national average.
A slowing housing market and lower projected GDP growth provided a cautionary note for the 2007 state economy when the year began, making commonwealth investments for new jobs and expanded commerce even more important this year.
Commonwealth
Financing Authority
Economic Stimulus resources invested through the Commonwealth Finance Authority (CFA) have already committed $300 million in infrastructure financing to prepare new sites for business development, and $200 million for water infrastructure improvements. Other CFA programs have provided nearly $50 million for venture investments, $50 million for commercial development targeted to rebuild town centers throughout the commonwealth, and nearly $45 million for new agricultural development opportunities. CFA debt service payments to finance the bonds issued to support these investments will rise to $47 million in the new budget, an increase of $10.1 million above current year expenditures.
Business Financing
Programs
A recapitalized Machinery and Equipment Loan Fund (MELF), through a $75 million transfer from the Commonwealth Finance Authority, $45 million Opportunity Grant program, $22.5 million Infrastructure Development program, a revitalized Small Business First Fund, and revolving loan investments through the Pennsylvania Industrial Development Authority will combine to provide an estimated $400 million for business investment and job development.
Since 2000 manufacturing employment in the commonwealth has declined by 248,000 jobs. This decline has reduced the manufacturing share of our workforce from 16.3% to 11.9%. Long term stability of our state economy will depend upon strategic investments to strengthen our competitiveness. The proposed budget would have redirected 4% of annual Tobacco Settlement Fund payments ($13.4 million) to invest $6.7 million in new Health Venture Account projects, and $6.7 million for biotechnology commercialization. The final budget agreement delays these funding decisions until the Fall when the legislature will consider funding these proposals along with the Governor’s $500 million Jonas Salk Legacy Fund. The budget does fund a $5 million increase for Infrastructure & Facilities Improvement Grants, providing $20 million for the 2007-08 fiscal year.
Technology Programs
The budget increases support to the Ben Franklin Technology Development Authority Fund by $1.5 million, to total $51.7 million. The increase will support the creation of up to 6 new Keystone Innovation Zones, created to foster business, higher education and community collaboration to spur development.
Film Grant Program
The final budget agreement will fund a new $75 million film tax credit program and will continue to provide $5 million for the Film Grant Program. The grants and tax credits will be used to stimulate film production here in the commonwealth, including early project development work.
Community
Revitalization
The budget includes $34 million, a $4 million increase, for Housing & Redevelopment Assistance. New community initiatives included in the proposed budget include a $926,000 increase in Land Use Planning Assistance, and a new $1 million appropriation to the Community Action Team to support downtown development, merger, and other consolidation initiatives to improve local service delivery.
DEPARTMENT OF CONSERVATION AND NATURAL
RESOURCES
In the budget for fiscal year
2007-08, the largest increase is within the Forest Pest Management component of
the department. The funding provided for
pest management is $5.2 million. The
growing number of gypsy moths, along with other insects in the 2.1 million
acres of forest land represents the need for additional funding for forest pest
control. DCNR manages almost 2.4 million
acres total of state park and forest land.
The state park system in the Commonwealth is comprised of 116 parks and
2 conservation areas within 62 counties.
The funding levels for both State Parks and
Growing Greener II
The budget for 2007-08 also includes
funds from the Growing Greener II bond initiative. Growing Greener II was established in May
2005 and will provide the department with $218 million over the next six years
to improve state parks and forests, community park and recreation grants and
for open space conservation. Also
included in the proposed budget is an increase in the municipal waste disposal
fees. These fees, when collected, are
dedicated to the Environmental Stewardship Fund. It is anticipated that in FY 2007-08 these
fees will contribute $8.4 million and in the following years $11.2 million
annually and will contribute to the debt service cost in the amount of $625
million that was incurred by the Growing Greener II environmental bond
issue.
The following chart shows the improvement project totals through July
2006 that were accomplished with Growing Greener II monies.
|
|
Amount |
Grand
Total |
|
|
$4
million |
|
|
Open Space Conservation |
$26.1
million |
|
|
State Parks & Forests Improvements |
$36.6
million |
|
|
|
|
$
66.8 million |
This
$625 million, six year Growing Greener II plan is providing:
·
A total
of $217.5 million to DCNR for the projects like above.
·
Programs
that have already received this critical funding include:
·
$40.6
million for 63 community parks, recreation and state park & forest
improvement projects.
·
$26.1
million in order to preserve 13,214 acres of open space
·
In
order to ensure continued funding to maintain expenditure levels, this budget
proposes a $0.50 per ton increase to the municipal waste disposal fee.
Through the Environmental
Stewardship Fund there are also increases in some appropriations. They are an increase in the amount of $1.2
million for Parks and Forest Facility Rehabilitation, $1.3 million in Community
Conservation Grants and $230,000 for Natural Diversity Conservation Grants.
DEPARTMENT OF
ENVIRONMENTAL PROTECTION
The passed budget for DEP could be called a return to core functions. There are hefty increases in the Environmental Program Management and Operations line items which increase by 8% and 10% respectively. But total General Fund expenditures actually decrease by 1.7%. The decreases are primarily in the grant programs administered by the Department.
The following grant programs are eliminated in the budget: Storm Water Demonstration Project, Water Contamination Remediation, Alternative Energy Initiatives and Chesapeake Bay Education. A new $300,000 expenditure for municipal climate change plans is added.
Environmental
Stewardship and Hazardous Sites Clean-up Funds
Neither of the Governor’s proposed increases in the tipping fees paid for municipal trash was implemented as part of this budget. The Governor proposed a 50 cent per ton increase to the Environmental Stewardship Fund (ESF) to help pay the fund’s share of the debt service on the Growing Greener II bonds. The fund will pay those increased costs out of existing funds.
A more substantial tipping fee increase of $2.25/ton of municipal waste had been proposed for the Hazardous Sites Clean-up Fund (HSCA). Instead the fund will receive a share of the Keystone 93 distribution worth $19 million for both 2007-08 and 08-09. This amount combined with an estimated $32 million existing in the fund will maintain the HSCA fund at a minimal operating level. The amounts going to HSCA and Keystone 93 are shown in the accompanying table.
Energy
The
Governor’s bold energy proposal was not enacted into law except for some small
changes updating the Alternative Energy Portfolio Standards to clarify the
“force majeure” requirements and placing smaller step ups to the desired
amounts of alternative energy that is to be sold in
The final budget agreement provides an unprecedented $720 million increase in state Education spending. The largest single component of this increase is a $265 million, 5.87% increase in the Basic Education Subsidy, including foundation funding of $64 million targeted to the lowest spending districts within the commonwealth to help them raise per pupil spending above $9,030 per student.
The
proposed funding for basic education programs would increase state support by
$1.8 billion above spending levels when the Governor’s term began, continuing
state efforts to dramatically increase our commitment to local school
districts. More importantly, these investments
appear to be showing results. Since 2002
the number of 5th grade students meeting state assessment standards
in math has increased from 53% to 69%.
Early Childhood &
Tutoring Assistance
Targeted initiatives to fund early education and tutoring assistance continue to be expanded significantly. These investments have already enabled 12,500 additional students to enroll in pre-kindergarten, while an additional 4,710 students are now able to participate in Head Start. The budget provides $250 million for the Accountability Grant Program, a $50 million increase, $70 million for tutoring assistance, and $40 million to supplement federal Head Start programs, a $10 million increase, to build upon these initiatives.
Science &
Technology Initiatives
High school reform, through the Project 720 program, will receive $8 million, a $3.3 million increase above the current year. Several new initiatives will bolster science and technology programs. A $10 million program will support efforts to improve elementary science instruction through hands on learning and new curriculum training. The budget will provide $20 million to place internet-equipped laptop computers in math, science, English, and history classrooms and equip teachers with multi-media technology. The budget also provides $8 million for dual enrollment programs, a $3 million increase above the current year.
Special Education
Special Education programs will receive a $27.5 million, 2.9% increase. Early Intervention funding will increase $14.1 million, totaling $137.6 million. Approved Private Schools will receive nearly $86.5 million for the next fiscal year and a $1.3 million requested supplemental appropriation for the current year to meet legislated requirements to maintain total funding levels at 125% of the increase in funds for special education programs. Chartered Schools for the Deaf and Blind will receive $32.9 million, more than a $1 million increase. The budget also provides $10 million to resolve remaining prior year audits, although this unresolved liability may be as high as $30 million.
Aid to
Aid to Nonpublic schools would be increased by 5.87%, including $83.6 million for Services to nonpublic schools and $25.58 million for Textbooks, Materials and Equipment. Charter school reimbursements to public schools will be increased by more than $34 million, to total $126.7 million. The increase reflects an attempt by the commonwealth to maintain reimbursement rates above 27% of total charter school costs. Rapidly rising charter school enrollments continue to increase these costs dramatically.
Public Library
Subsidy
The Public Library Subsidy Program supports and improves state and local library services and ensures access to these services. The budget agreement includes a 23% increase for library services or an additional $14.1 million over the current year’s appropriation, for a total of $75.5 million. This significant increase brings the Public Library Subsidy to its highest level in history and among the three highest funding levels in the country.
EITC
The EITC is a tax credit provided to businesses for contributions made to scholarship organizations, including pre-kindergarten scholarship programs. The budget agreement includes a $15 million increase over last year, increasing the total amount to $75 million.
Other Increases
Other significant funding increases include a $9.5 million increase for Teacher Professional Development, to total $23.4 million, a $17 million increase for Pupil Transportation, totaling $512.7 million, an $18.2 million increase, totaling $474.6 million for School Employees’ Social Security costs and a $368.7 million appropriation for School Employees’ Retirement costs, a $114 million increase to cover increasing employer contribution rates.
Community Colleges
The budget includes a 3 percent increase for operating funds for community colleges, or an additional $6.7 million. In addition, a total of $44.05 million is included for the commonwealth’s share of approved capital debt service and lease payments. Together this represents an overall 3.5 percent increase in spending on community colleges.
Funding for the community colleges is shared by sponsoring counties or school districts, the students through tuition payments and the commonwealth. State funding includes a hold harmless clause so that no institution receives less than the prior year’s funding. In addition to a base supplement of funds for a current fiscal year, there is a growth supplement designed to provide additional funding based upon full-time equivalency (a measurement of full-time enrollment in individual community colleges). Finally, there is an economic development stipend which is based upon enrollment and is designed to fund colleges with programs that focus on high-priority occupations. The state annually publishes a list that identifies these occupations.
The budget includes the Governor’s $2.0 million initiative to create new opportunities for postsecondary education and training in underserved regions in high-demand technical fields by launching the state’s first two Technical Colleges. The Technical Colleges will be located in parts of the state where students do not currently have access to affordable certificate and associate degree programs to prepare for high-skill technical occupations like engineering.
State System of Higher Education
The State System of Higher Education will receive an additional $16.4 million, or a 3.36 percent increase over the current year. Funding for the Education and General line is increased by 3.5%. Funding is distributed through the Chancellor’s Office to individual universities in accordance with a formula that considers the enrollment and programs of the school and the cost of operating and maintaining the individual campuses.
The PASSHE appropriation consists
of various line items including state universities, recruitment of the disadvantaged,
affirmative action and program initiatives, as well as the PA Center for
Environmental Education and the
In addition, PASSHE will receive $13.18 million in Keystone Recreation, Park and Conservation Fund money for deferred maintenance projects.
Currently there are more than 109,000 full and part-time students attending these universities and the current instate tuition is $5,038 per year (room, board and fees are extra and vary among the universities).
State-related
Universities*
Academic Medical
Centers