ARIZONA

MONTHLY FISCAL HIGHLIGHTS
June 2005
Summary
Preliminary June General Fund revenue collections were $947.7 million, which was an increase of 11.4% from June 2004. June
collections were $46.7 million above the recently enacted state budget forecast. Year to date, the preliminary estimates indicate
General Fund revenue was $313.8 million above the forecast for FY 2005. Year-end book closing is still occurring and these
preliminary numbers are subject to change.
For all of FY 2005, preliminary General Fund revenue collections totaled $7.94 billion, which was $1.25 billion, or 18.7%, more
than FY 2004. This was the largest percentage increase in thirty years since General fund revenue increased 33.1% in FY 1975. All
major taxes demonstrated considerable growth. Corporate income tax collections grew by 42.1%, while individual income tax
revenues increased by 28.9%. Even the most stable of the major revenue categories, the sales tax, rose by 11.1%. A brisk real estate
market, stock market capital gains, rising dividends and improved corporate and small business profitability are among the forces
believed to be driving the robust revenue growth.
While General Fund revenues are running substantially ahead of forecast, this does not mean necessarily that there will be surplus
revenues from the perspective of future budgets. The recent budget legislation assumed a FY 2005 ending balance of $329 million.
Almost all of these monies were then projected to be spent in the FY 2006 budget. With the recent surge in revenues, the FY 2005
ending balance will likely be in the range of $600 million. The final number will depend on both year-end revenue and spending
adjustments that are still being processed.
The extra FY 2005 revenues will carry over into the next fiscal year and could result in a FY 2006 ending balance of $250 million to
$300 million. Revenue collections during the course of FY 2006 could also exceed the forecast, but those monies are already
statutorily dedicated to the Budget Stabilization Fund.
In developing a FY 2007 General Fund budget, the State will first need to replace $345 million in one-time monies used to balance
the FY 2006 budget. As a result, any FY 2006 “surplus” will first go for this purpose. As FY 2006 progresses, we will need to
monitor revenue collections and possible supplementals so as to refine our FY 2007 estimates further.
(Continued)

Table of Contents
Page #
June Revenues..........................................................................2
Recent Economic Indicators ....................................................4
Summary of Recent Agency Reports
- ADOA – Report on AZNET Implementation........................6
- AHCCCS. – Semi-Annual Report on Healthcare Group .......6
- Attorney General – Quarterly Report on Crane Lawsuit ......7
- Corp. Commission – Report on Corporations. Div. Filings...7
- Corrections – Report on Transit Release Program.................7
- DES – Report on AZ Training Program at Coolidge.............7
- OSPB – Report on REVMAX Initiative ...............................8
- DHS – Report on ASH Corrective Action Plan .....................8
- Mine Ins. – Report on Reclamation Consultant Services.......9
- State Parks. – Park Operating Expenditures ..........................9
- DOR – Report on Ladewig Expenditures ..............................9
- DOR – Report on BRITS.......................................................9

Page #
June 28th JLBC Meeting Summary
- DES – Review of WIA Expenditure Plan .......................10
- DHS – Review of Beh. Health Cap Rates ........................10
- JLBC Staff – Report on Phoenix Medical Campus ..........11
- ADC – Report on Maricopa Health Costs ........................11
June 28th JCCR Meeting Summary
- DEMA – Tempe Fire Station Building Conversion .........11
- Game & Fish – Pinetop Paving and Lighting Project ......12
- DJC – Vocational Education Remodel.............................12
- ADOT – Capital Professional and Outside Services ........12
- ASDB – Capital Projects..................................................12
- DOA – Building Renewal Allocation Plan.......................12
- NAU – Lease Purchase Projects.......................................12
- ASU – New and Revised Capital Projects .......................12
- U of A – New and Revised Capital Projects ....................13
- SFB – School Construction Rpt. and Litigation Acct.......13
- SFB – New School Construction Report Highlights. .......14

This report has been prepared for the Arizona Legislature by the Joint Legislative Budget Committee Staff July 29, 2005 This report can also be
found on our Website at http://www.azleg.state.az.us/jlbc.htm
Page 1

Joint Legislative Budget Committee

Monthly Fiscal Highlights – June 2005

Summary (Continued)
The June Monthly Fiscal Highlights includes a summary of recent reports submitted to the JLBC, including:
• DOA’s quarterly report on the state’s newly privatized telecommunications program, known as AZNET. The report indicates
that the AZNET Program is on schedule with 26% of the state’s total of 39,900 users transitioned to the new network.
• The Arizona Health Care Cost Containment System’s report on the number of businesses participating in Health Care Group.
According to the report, total enrollment increased 30.4% from June 2004 to more than 14,600 members.
• An update on the Corporation Commission’s initiative to reduce the amount of time to process filings in its Corporations
Division. The time to process expedited filings fell from an average of 63 days on March 25th to 19 days on May 31st.
The JLBC and JCCR met on July 21st (see page 10). The highlights of the agenda included:
• An unfavorable review by the JLBC of the Department of Health Security’s (DHS) behavioral health capitation rate
adjustments. The unfavorable review was due to the cost of the proposed capitation rate adjustments, which is $15 million
more than budgeted for FY 2006. The increase was due mostly to an adjustment made to the Maricopa County SMI rate in an
attempt to satisfy the Arnold v. Sarn litigation.
• The JLBC received a background briefing on the Phoenix Medical Campus in advance of the statutorily required operational
and capital plan that will be presented to the Committee on September 1. As part of this process, the Committee asked a series
of questions to be addressed in the September 1 submittal. A joint subcommittee of the JLBC and JCCR will meet in midSeptember to discuss the September 1 university plan and will report its findings to the full JLBC. A formal review of the
plan as required by statute will occur at a full JLBC meeting in late September or early October.
• JCCR favorably reviewed a report submitted by the School Facilities Board on new school construction. SFB estimates that a
total of 86 projects occurred in FY 2006, at a cost of approximately $386.5 million. An additional 21 projects are expected to
start in FY 2007. Page 14 of the Monthly Fiscal Highlights delineates the number of projects by district.
JUNE REVENUES
Sales Tax revenue increased by 16.6% on a year-over-year
basis in June and was $18.2 million above the forecast for the
month.
Year-to-date collections increased 11.1% from
FY 2004. The following is based on year-to-date collections
through June:
• Retail sales tax receipts have increased by 10.6%.
• Contracting continues to exhibit the large increases begun
last year, with a year-to-date increase of 21.0%.
• Restaurants and bars collections are up 10.1%.
• Use tax receipts (all of which are retained by the state) are
up 11.8%.
Individual Income Tax collections for June were 18.0%
above last June, mostly due to continued extraordinary growth
in final payments. The June results followed May’s 60.3%
growth over the prior year. The results may be attributable to
a variety of factors, including a robust real estate market,
rising stock prices and dividends, and increased small business
profitability.
In other individual categories, withholding was up 8.2% and
refunds were 19.0% higher than June 2004. Overall, June
collections were $7.4 million over forecast.

In terms of total liability (withholding, payments, refunds),
individual income tax collections increased 28.9% for the
fiscal year to date.
Corporate Income Tax revenue of $97.4 million was 7.5%
above June 2004 collections. Year-to-date corporate collections
were 42.1% more than the previous year.
The General Fund portion of Luxury Tax collections for June
was 30.1% greater than June 2004, raising the year-to-date
increase to 5.1% for the fiscal year. The tobacco tax
components increased by 4.4% in June from a year ago and
year-to-date collections are also up 4.4%.
Among the remaining categories, Insurance Premium Tax
collections also benefited from rapid economic growth, with
an 8.2% year-over-year increase in June and a year-to-date
gain of 16.1%. With the Estate Tax continuing to phase out,
total collections declined (19.5)% for all of FY 2005.
Other Miscellaneous Revenue totaled $54.3 million in June,
which was $22.5 million above the forecast for the month.
Approximately $21.3 million of the variance was related to the
Ladewig litigation settlement. Laws 2005, Chapter 333
provided that unclaimed Ladewig refund monies would revert
to the General Fund.

General Fund Revenues
Compared to Adopted Forecast and FY 2004 Collections ($ in Millions)
FY 2005
Difference From
Difference From
Difference
Collections
May 2004 Forecast 1/
May 2005 Forecast 2/
From FY 2004
June
$ 947.7
$ 86.9
$ 46.7
$ 97.0
Year-to Date
$ 7,943.7
$ 828.9
$ 313.8
$ 1,253.6
____________

Table 1

1/ Originally enacted FY 2005 budget (May 2004).
2/ May 2005 Enacted Budget.

Page 2

State of Arizona

General Fund Revenue: Change from Previous Year and May Forecast
June 2005

Current Month

FY 2005 YTD (Twelve Months)

Change From
Actual

June 2004

June 2005

Amount

Change from
Actual

Revised Forecast
Percent

Amount

Percent

June 2004

June 2005

Amount

Revised Forecast
Percent

Amount

Percent

Taxes
Sales and Use

$333,513,707

$47,485,323

Income - Individual

282,542,199

43,058,184

18.0

7,375,533

2.7

- Corporate

97,403,525

6,833,217

7.5

(6,970,813)

(6.7)

Property

3,216,111

(6,287,319)

(66.2)

957,536

Luxury

6,551,309

1,517,483

30.1

1,061,426

65,022,643

4,947,511

8.2

1,891,927

Insurance Premium
Estate
Other Taxes

1,302,368

(829,274)

47,701

1,156

$789,599,563

$96,726,281

Lottery

6,682,700

6,682,700

License, Fees and Permits

2,915,452

390,956

Interest

7,394,130

18,455,426

Sub-Total Taxes

16.6 %

$18,209,910

5.8 %

$3,661,168,686

$366,380,367

11.1 %

$34,129,386

2,973,579,101

667,402,761

28.9

232,381,801

8.5

701,859,285

207,814,416

42.1

10,440,385

1.5

42.4

25,245,622

(14,342,088)

(36.2)

2,245,622

19.3

64,446,073

3,145,055

5.1

(15,527)

0.9 %

9.8
(0.0)

3.0

358,753,827

49,785,906

16.1

1,891,927

0.5

(38.9)

(164,527)

(11.2)

31,236,066

(7,582,365)

(19.5)

(1,263,934)

(3.9)

2.5

(149,761)

(75.8)

2,579,779

(201,770)

(7.3)

(201,720)

(7.3)

14.0 %

$22,211,231

2.9 %

$7,818,868,439

$1,272,402,282

19.4 %

$279,607,940

3.7 %

Other Revenue

Sales and Services

-15.5
--

673,100

11.2

34,094,300

3,094,300

10.0

(443,700)

125,006

4.5

29,109,370

3,599,163

14.1

(231,730)

--

29,879,327

17,542,139

142.2

7,373,337

(1.3)
(0.8)

12,702,727

74.0

3,587,673

(6,207,893)

(63.4)

(4,578,987)

(56.1)

43,168,531

(9,812,205)

(18.5)

(7,983,469)

(15.6)

34,287,900

24,592,323

253.6

25,809,795

304.4

54,303,596

5,324,635

10.9

22,449,396

70.5

112,005,945

(15,111,693)

(11.9)

945

0.0

112,005,945

(20,736,880)

(15.6)

2,377,372

1,666,924

234.6

1,023,886

75.6

39,567,018

28,653,318

262.5

Sub-Total Other Revenue

169,251,172

30,468,743

22.0 %

30,427,082

21.9 %

342,128,087

27,664,470

TOTAL BASE REVENUE

$958,850,735

$127,195,024

15.3 %

$52,638,313

5.8 %

$8,160,996,526

$1,300,066,752

Other Miscellaneous
Disproportionate Share
Transfers and Reimbursements

945

0.0

13,653,318

52.7

8.8 %

40,147,487

13.3 %

18.9 %

$319,755,427

4.1 %

One-Time Revenue
Urban Revenue Sharing
Budget Balancing Transfers
VLT Transfer

(31,089,382)

(0.0)

(373,072,579)

(60.2)

0

0.0

35,234,500

(106,531,400)

174,718

--

0

0.0

118,000,000

118,000,000

0

0

--

83,000

83,000

--

19,700,000
174,718

Tax Amnesty
Judicial Enhancement
Sub-Total Transfers In
TOTAL REVENUE

(11,131,664)
$947,719,071

(667,285)
(29,800,000)

(30,209,567) -$96,985,457

2.2

1,620

0

%
11.4 %

(8,007,415)

2.2

0.0

--

0

0.0

--

0

(47,123,527)

(100.0)

(98.6)

2,579,600

(2,809,700)

(52.1)

(5,918,780)

113.5 %

$46,719,533

5.2 %

$7,943,738,047

(46,472,042)
$1,253,594,710

(0.0)

0

(5,920,400)

(217,258,479)

1,620

(75.1)

27.2 %
18.7 %

0
(5,920,400)
(5,918,780)
$313,836,647

-(69.7)
2.8 %
4.1 %

VP% = Percent change from comparable period in prior year
VF% = Variance from forecast
F% = Forecast percent change for the fiscal year.
R% = Average percent change from comparable period in prior year which must be attained over remaining months to realize the forecast for year.

Table 2

Joint Legislative Budget Committee

RECENT ECONOMIC INDICATORS
The “final” revised estimate for U.S. Gross Domestic
Product (GDP) growth in 2005’s first quarter was
significantly stronger than earlier reports indicated. GDP
advanced at a 3.8% annual rate, much stronger than the 3.1%
growth rate estimated two months ago.
Another source of encouragement was the U.S. Index of
Leading Economic Indicators, which jumped 0.9% in June.
Seven of the ten components posted increases, led by
consumer expectations, vendor performance, stock prices and
building permits.
However, the Conference Board’s
Consumer Confidence Index dipped (2.8)% in July, although
it remained at a relatively high level. Consumers’ outlook for
the next six months was marginally less bullish and
contributed to the decline in the index.

Monthly Fiscal Highlights – June 2005

family home in the Greater Phoenix area soared to a record
$249,500 in June. Housing prices have risen by 43% in the
last year. The number of homes sold increased to 11,545,
which was (1.0)% below the record set in June 2004.
The number of TANF recipients decreased to 97,901 in
May, a (1.5%) decline from April and a (14.8)% drop from
May 2004. The AHCCCS caseload decreased in May.
Enrollment was 0.2% or 1,763 less than April but stood 12.2%
above the level from one year ago.
The Department of Corrections’ inmate population
increased by an average of 26 inmates per month from April
through June. The total population increased by 751 inmates
from a year ago.

U.S. semiconductor billings (three-month moving average)
dropped (0.2)% in May and stood 0.2% above the level from a
year ago.
According to the Semiconductor Industry
Association, sales volume was holding up but a sharp drop in
dynamic random access memory (DRAM) prices was a
primary source of the decline in sales.
The U.S. Consumer Price Index (CPI) was unchanged in
June as energy costs declined for the second consecutive
month. The index’s three-month moving average edged up
0.2% and was 2.9% higher than a year ago. Excluding food
and fuel costs, the core CPI increased 2.0% on a year-overyear basis in June.
Arizona’s job market continued to move forward. Statewide
non-farm employment climbed 3.8% during the last 12
months, an increase of 89,400 jobs. Manufacturing added
another 600 jobs in June, while construction employment was
growing at an 11% annual rate. Meanwhile, the state’s
seasonally adjusted unemployment rate fell to 4.4%.
The Behavior Research Center’s Arizona Consumer
Confidence Index rose to 102.8 in third quarter 2005, a solid
5.5% improvement from the second quarter. The index posted
increases across the board, although lingering pessimism
about the job market kept the index from advancing even
more.
Business leaders were not quite as confident. The University
of Arizona’s Business Leaders Confidence Index (BLCI)
decreased (5.9)% in 2005’s third quarter. While the BLCI
remained above the 50 mark, which is associated with positive
sentiment, expectations were rising for slower growth in the
nation’s economy in the months ahead.
The Arizona Business Conditions Index, derived from a
statewide survey of supply-chain managers, increased 5.6% in
June. At 66.3, the index stood well above the level (50)
associated with a growing economy.
To track the strength of the real estate market more closely,
we have added several new measure of the number of home
sales and home prices. According to the Real Estate Center at
Arizona State University, the median price of a resale singlePage 4

Joint Legislative Budget Committee

Monthly Fiscal Highlights – June 2005

Table 3
RECENT ECONOMIC INDICATORS
Indicator
Arizona
- Unemployment Rate
- Jobs
- Contracting Tax Receipts (3-month average)
- Retail Sales Tax Receipts (3-month average)
- Residential Building Permits - (3-month moving average)
Single-unit
Multi-unit
- Greater Phoenix Existing Home Sales
Single-Family
Townhouse/Condominium
- Greater Phoenix Median Home Sales Price
Single-Family
Townhouse/Condominium
- Arizona Tourism Barometer
- Phoenix Sky Harbor Air Passengers
- Arizona Average Natural Gas Price
($ per thousand cubic feet)
- Leading Indicators Index
- Business Conditions Index
(>50 signifies expansion)
- Consumer Confidence Index
- Business Leaders Confidence Index
- Arizona Personal Income
- Arizona Population
- AHCCCS Recipients
- TANF Recipients
- DOC Inmate Growth (3-month average)
United States
Gross Domestic Product
- (seasonally adjusted annual growth rate)
- Consumer Confidence Index
- Leading Indicators Index
- U.S. Semiconductor Billings -(3-month moving average)
- Consumer Price Index - (3-month moving average)

Time Period

Current Value

Change From
Prior Period

Change From
Prior Year

June
June
Apr-Jun
Apr-Jun

4.4%
2.44 million
$63.9 million
$151.9 million

(0.4)%
(1.2)%
15.2%
0.6%

(0.6)%
3.8%
26.9%
10.7%

Mar-May
Mar-May

7,018
1,035

6.3%
(14.2)%

0.9%
27.2%

June
June

11,545
2,125

10.7%
4.2%

(1.0)%
(14.2)%

June
June
February
April
April

$249,900
$145,000
100.4
3.64 million
$6.28

6.3%
1.1%
4.7%
(4.1)%
3.8%

42.8%
14.0%
2.8%
9.0%
21.7%

(0.8)%
5.6%

0.7%
1.4%

April
June

119.7
66.3

3rd Quarter 2005
3rd Quarter 2005
1st Quarter 2005
July 1, 2004
May
May
Apr-Jun

102.8
59.1
$172.5 billion
5.74 million
814,378
97,901
32,649

1st Quarter 2005

$11.1 trillion

3.8%

3.7%

July
June
Mar-May
Apr-Jun

103.2
137.7
$3.2 billion
194.5

(2.8)%
0.9%
(0.7)%
0.2%

(2.4)%
(0.2)%
0.2%
2.9%

5.5%
(5.9)%
1.4%
3.0%
(0.2)%
(1.5)%
26 inmates

1.5%
(13.5)%
8.5%
3.0%
12.2%
(14.8)%
751 inmates

Page 5

Joint Legislative Budget Committee

SUMMARY OF RECENT AGENCY REPORTS
Arizona Department of Administration/Government
Information Technology Agency - Quarterly Report on
AZNET Implementation - The Statewide Telecommunications
Management Contract, signed by the Arizona Department of
Administration (ADOA) in January 2005, created a statewide
telecommunications program now known as the Arizona
Network (AZNET). In December 2004, the Joint Committee
on Capital Review gave the contract a favorable review and
requested ADOA and the Government Information
Technology Agency (GITA) to report quarterly on AZNET
progress. ADOA and GITA have submitted the first of these
quarterly updates.
The migration of state telecommunication users to the new
contract is proceeding on schedule. As of July 1, the primary
contractor had transitioned 10,454 users in 85 agencies, or
26% of the state’s total 39,900 users, to the new network.
These 10,454 users include all the customers of the former
Arizona Telecommunications Service (ATS), which AZNET
replaced in March 2005.
The primary contractor has scheduled the Arizona Health Care
Cost Containment System, the Arizona Game and Fish
Department, and the Departments of Environmental Quality,
Health Services, and Revenue for migration to the new
network in September. Furthermore, the primary contractor
plans to transition the Department of Transportation in
October and the Department of Economic Security in
November. Upon completion of those changes, around 29,200
state telecommunication users will connect via AZNET.
While ADOA cancelled all contracts associated with ATS, it
was able to do so without incurring cancellation charges.
Meanwhile, 20 ADOA employees transitioned to the primary
contractor, 4 moved to other state positions, and 4 left state
service.
In FY 2004, the state spent an average of $2.8 million monthly
on ATS services, consisting of $2.3 million for ATS
operations and $0.5 million for carrier charges. Not all state
agencies used ATS for their telecommunication needs. Based
on 2 months of available information, the state is spending an
average $1.0 million per month on the Statewide
Telecommunications Management Contract, of which $0.7
million pays contractor service fees and $0.3 million pays
carrier expenses. These total costs will rise as additional users
join the network.
The primary contractor has begun reducing annual
telecommunications carrier costs. The contractor continues to
consolidate carrier services between large agencies, as well as
reviewing new service orders to maximize sharing among
departments.
Meanwhile, state agencies have purchased $1.0 million in new
telecommunications capital equipment through the contract.
These assets are replacing obsolete systems, outfitting new

Monthly Fiscal Highlights – June 2005

facilities, and upgrading call centers. A Demand Management
Team, consisting of large agency Chief Information Officers
and
telecommunication
managers,
is
evaluating
telecommunications investment proposals.
State inventory records show that agencies had approximately
5,000 internet-based telephones prior to the commencement of
AZNET. The Statewide Telecommunications Management
Contract requires state agencies to install 22,000 new internetbased telephones over the 5-year contract term. ADOA has
established a target of 3,000 phone installations by January
2006, with additional targets for each subsequent year. These
installations will begin in fall 2005.
As required, the contractor delivered convergence, migration,
security, and disaster recovery plans, now under review by
ADOA. Furthermore, as of July 1, the contractor met all its
guaranteed service levels.
Online billing took effect in June. Laws 2005, Chapter 301
requires ADOA to submit its initial telecommunications rate
structure for Committee review. ADOA is working with
agencies to develop a transitional pricing model that will hold
each department’s telecommunication costs relatively stable
through FY 2007. This schedule should be ready for
Committee review in early fall.
GITA generally concurs with ADOA on the status of AZNET.
GITA adds that agencies have some concerns with
telecommunication rates, especially regarding the costs of
technician visits in rural areas.
AHCCCS - Semi-Annual Report on Healthcare Group Pursuant to A.R.S. § 36-2912 AHCCCS is submitting its semiannual report to the Committee on the number and types of
businesses participating in Healthcare Group (HCG),
including an update on Healthcare Group marketing activities.
AHCCCS reports that, as of June 3, 2005, total statewide HCG
enrollment was 14,626, an increase of 3,408 members, or
30.4%, from June 2004. The vast majority of the enrolled
members come from 5,218 private employers; a small
percentage come from 9 political subdivisions and 18 health
care tax credit subscribers.
The AHCCCS report discusses the responses to its new benefit
plans and deductible options. Of its members, 25% are
enrolled in the “Secure” and “Active” plans introduced in
April 2004. Thirteen percent of its members have some sort
of deductible, which AHCCCS says lowers their premiums by
8% to 24%. AHCCCS also reports that it will offer 2
Preferred Provider Organization (PPO) benefit packages,
effective September 1, 2005.
According to AHCCCS data, the average monthly premium
across all plans is currently $220. In the report, AHCCCS
states that premiums will increase by 4% to 12% in August
and September 2005 to compensate for the elimination of the
program’s $4,000,000 General Fund subsidy for FY 2006.
AHCCCS says that employers pay for 100% of the premium

Page 6

Joint Legislative Budget Committee

for approximately 58% of HCG members; in almost all other
cases, the member pays 100% of the premium.
AHCCCS reports that as part of its marketing activities, it held
employer focus group meetings in November 2004. It also
implemented a media campaign in Tucson and Casa Grande,
scheduled to run from May 2005 through October 2005. It
developed a DVD marketing tool to assist in its sales efforts.
Finally, AHCCCS reports that 30% of new groups joining in
May and June 2005 came as a result of agreements with health
benefit and insurance brokers, who receive a one-time
enrollment fee for facilitating these agreements.
Attorney General - Quarterly Report on Expenditures from
Appropriation for Crane Lawsuit - In September 2001, 7
school districts filed the Crane lawsuit, which claimed that the
current Arizona school finance system is unconstitutional
because it does not provide at-risk students with programs and
funding needed in order to meet state academic standards. In
FY 2004, the Legislature appropriated $500,000 to the
Attorney General for legal fees incurred by outside counsel in
defending the state.
Pursuant to Laws 2003, Second Special Session, Chapter 4,
the Office of the Attorney General is required to report on a
quarterly basis to the JLBC the amount expended from the
appropriation for the Crane lawsuit. As of June 30, 2005, a
total of $466,578 has been spent. Of this amount, $457,603
was spent on outside legal services, $4,525 was spent on
expert witnesses, and $4,450 was spent on external printing.
The agency spent a total of $531 since last quarter’s report.
The remaining unexpended amount is $33,422. The agency
spent a total of $430,393 in FY 2004 and $36,185 in FY 2005.
Corporation Commission - Report on Corporations Division
Filings - Pursuant to Laws 2005, Chapter 4, the Corporation
Commission was appropriated $456,206 as a FY 2005
supplemental and is required to report monthly on the total
number of filings received by the Corporations Division, the
total number of filings processed by the Corporations
Division, and the amount of time to process the filings. The
commission submitted its 3rd report on July 7, 2005.
Between March 25, 2005 and June 30, 2005, a total of 29,128
filings were received by the Corporations Division, and
34,392 were processed. In the last month , a total of 10,581
filings were received by the Corporations Division, and
11,539 were processed
For expedited filings, the amount of time required to process
the filings fell from an average of 63 days on March 25th to 19
days on May 31st (a 69.8% decrease). During the past month,
the amount of time required to process filings fell from an
average of 32 days to 19 days (a 40.6% decrease).
For regular filings in the Phoenix office, however, process
times actually increased, from 146 days on March 25th to 148
days on May 31st. Last month, the time to process regular
filings in the Phoenix office went from 145 days to 148 days.
The Corporation Commission attributed the stagnant

Monthly Fiscal Highlights – June 2005

processing times of regular filings in its Phoenix office to
increased attention to its expedited filings, where the
Commission is attempting to reduce expedited filing
processing times to 3 - 4 days.
Conversely, the Tucson office made significant progress in its
regular filings, decreasing process times from 182 days on
March 25th to 66 days on May 31st (a 64% decrease). In the
last month alone, the Tucson Office reduced process times for
regular filings by 52.2%.
Department of Corrections - Report on Transition Release
Program - Pursuant to A.R.S. § 31-285B, the Arizona
Department of Correction (ADC) is required to submit a
quarterly report that details the cost reductions to the
department from an inmate early release Transition Program.
Statute requires ADC to contract with a private or nonprofit
entity to provide eligible drug offenders with transition
services. These transition services include employment
assistance, job training, mentoring, and assistance in finding
housing, food, health insurance coverage, and medical
assistance.
Eligible offenders include inmates convicted of a drug offense,
except those also convicted of a sexual offense, arson, or an
offense involving death, physical injury, or the use of a deadly
weapon or dangerous instrument. Statute requires a savings of
at least $17 per day per inmate by releasing eligible inmates
90 days early from confinement and placing them in the
Transition Program. The cost savings are to be deposited into
the Transition Program Drug Treatment Fund and used to fund
the program.
ADC awarded a service contract in March 2004. From
January 1 through March 31, 2005, the department reports that
53 inmates, or 50% of program participants, successfully
completed the Transition Program and their term of
community supervision. As a result, there were 7,421 bed
days saved and $126,157 in savings, based on savings of $17
per day for each bed during this time period. Since its
inception, a total of 86 inmates, or 21% of program
participants, successfully completed the Transition Release
Program and their term of community supervision with
savings of 23,461 bed days and $398,837.
Department of Economic Security - Report on Arizona
Training Program at Coolidge (ATP-C) Campus and Other
Placements - Pursuant to a General Appropriation Act
footnote, the Department of Economic Security (DES) is
reporting on placements of developmentally-disabled (DD)
clients into state-owned Intermediate Care Facilities for the
Mentally Retarded (ICF-MRs) or at the ATP-C campus in FY
2005. DES reports that there were no placements of DD
clients at the ATP-C campus, but that they made two new
placements into state-owned ICF-MRs in Phoenix.
The department placed one client in a state-owned ICF-MR
because the privately-run ICF-MR had no openings and would
not accept a client with intense behavioral involvement. The
department placed a second client into a state-owned ICF-MR
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Joint Legislative Budget Committee

Monthly Fiscal Highlights – June 2005

when the client needed more medical oversight and the legal
guardian exercised rights set forth in A.R.S. § 36-554, subsection A, paragraph 8, allowing legal guardians to request
placement “in an Arizona training program facility.”
Governor’s Office of Strategic Planning and Budgeting Report on Federal Revenue Maximization Initiative - Pursuant
to a General Appropriation Act footnote, the Governor’s
Office of Strategic Planning and Budgeting (OSPB) has
submitted its quarterly report on the status of a Federal
Revenue Maximization Initiative. To date, there are 7 projects
completed, all designed to increase federal Title XIX
Medicaid reimbursement.
In addition to these projects, the summary lists 12 ongoing
projects. There is no change in the estimated savings listed.
Among the more notable items OSPB reports that 2 DES
projects with budget implications had new developments from
the prior report:
• Increased Title IV-E Administrative Claiming and
Targeted Case Management: The DCYF operating
budget was reduced by $0.9 million in FY 2006 in
anticipation of the additional IV-E revenue. DES is
submitting administrative claims, but will not be
generating TCM claims for at least 6 months.
• Title IV-E Funding for Out-of-Home Placement: The
DCYF Children Services budget was reduced by $0.5
million in FY 2006 in anticipation of the additional IV-E
revenue. DES anticipates submitting Title IV-E claims to
the federal government by July 31, 2005.
In addition to the projects with new developments, AHCCCS
has 2 new Potential Task Order Projects:
• Department of Corrections Claims: The report notes that
AHCCCS and the Department of Corrections (ADC) are
currently working through issues to see if a task order
should be issued for claiming federal matching dollars for
special tiers and rates for ADC Title XIX eligible persons.
If the task order is issued, legislation would be required as
well as CMS approval of the State Plan Amendment.
• Renal Dialysis: AHCCCS is in the process of reviewing
this proposal which identifies Medicaid End Stage Renal
Disease (ESRD) recipients who are not yet enrolled in
Medicare under a special program for ESRD patients and
who have received 3 months of continuous care for ESRD

on Medicaid. No legislation would be required for this
project.
Department of Health Services - Report on Arizona State
Hospital Corrective Action Plan - Pursuant to Laws 2005,
Chapter 5, the Department of Health Services (DHS) has
submitted a report on the status of the State Hospital’s
Corrective Action Plan. Statute requires that the agency
provide an update to the Committee on the status of its
Corrective Action Plan through June 30th, 2005. As such, this
will be the last update submitted by the agency. The
supplemental appropriation is non-lapsing. Therefore, the
$398,000 identified as not yet expended by the agency will be
available to be spent in FY 2006.
The State Hospital’s Corrective Action Plan was instituted in
order to address deficiencies cited by the federal government
in the Hospital’s operation. Supplemental funding was added
in order to assist hiring and retaining nurses and other staff, to
pay for increased drug costs as well as to make improvements
to the facility.
According to the report, the department has expended
$883,300, or 69% of the FY 2005 supplemental funding
amount of $1,281,400, as of June 30. This represents an
increase of $112,200 from last month’s expenditures.
Expenditures made in June were used to fill vacant RN and
critical positions ($54,400) and to restore the concrete mall
surface and restore maintenance contracts ($57,800).
In total, the Hospital has hired 7 Registered Nurses (but lost 1
within a few weeks) and expects to hire 3 additional
Registered Nurses that will start by July 5th. Additionally, the
Hospital had hired one Social Worker that was to start on May
31. That individual, however, ended up declining the position.
Four new Social Workers are expected to begin work in July.
Three Recreational Therapists began work in June and the
Hospital is still in the process of interviewing for a fourth
Recreational Therapist and a Psychologist II position.
Maintenance contracts for housekeeping and other facility
maintenance are in effect and the Civil Hospital Mall Concrete
resurfacing project has been completed. The table below
updates the progress of the State Hospital’s Corrective Action
Plan.

Arizona State Hospital
Status of FY 2005 Corrective Action Plan
As of June 30, 2005

Action Plan Initiative
Fill Vacant RN Positions
Critical Positions to be Funded
Fund 4 Social Workers
Restore Maintenance Contracts
Repair Mall Concrete Surface
Increased Drug Costs
Total

FY 2005 Plan
$487,400
55,900
37,600
209,200
49,800
441,500

Current
Expenditures
$231,100
4,300
-156,700
49,800
441,500

Funding Yet to be
Expended
$256,300
51,600
37,600
52,500
---

$1,281,400

$883,400

$398,000
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Joint Legislative Budget Committee

Monthly Fiscal Highlights – June 2005

State Mine Inspector - Report on Mined Land Reclamation
Consultant Services - According to A.R.S. § 27-935 the State
Mine Inspector may contract with a private consultant in
reviewing mined land reclamation plans. The state Mine
Inspector must then report to the JLBC any expenditures of
money for this purpose, the name and address of each
consultant, and the submitted plans of the consultants. There
were no contracts with private consultants during FY 2005.
Arizona State Parks Board - Report on Park Operating
Expenditures - Pursuant to Laws 2004, Chapter 275 the
Arizona State Parks Board is providing the park operating
expenditure report for the first 3 quarters of FY 2005.
Operating expenditures for the 28 state parks and 3 regional
offices totaled $8,291,000 in the 1st through 3rd quarters of FY
2005. Of this amount, $6,696,700, or 81%, was spent on
Personal Services and Employee Related Expenditures.
Kartchner Caverns State Park represented approximately 21%
of the total operating expenditures, with no other park
representing more than 6.5%. The State Parks Enhancement
Fund provided $7,171,000, or 86.5%, of the total operating
expenditures.
Department of Revenue - Report on Ladewig Expenditures DOR reports monthly on the status of the Ladewig litigation.
In June, DOR prepared to mail the second taxpayer refund
payments by July 20, 2005. DOR’s monthly status report
shows expenditures of $414,300 for Ladewig in June 2005,
including $381,300 for administrative costs and $33,000 for
plaintiff attorney’s fees. Expenditures totaled $132.9 million
for FY 2005, out of DOR’s estimated total of $134.7 million
for FY 2005. The following table summarizes these items.
DOR’s Ladewig Expenditures in FY 2005
DOR Administration
Plaintiff Attorneys
Taxpayer Payments
Total Expenditures

DOR’s Estimate 1/
$ 3,000,000 2/
6,000,000
125,700,000
$134,700,000

FY 2005
$ 2,067,900
6,249,500
124,565,700
$132,883,100

____________
1/ Reported by DOR at the August 17, 2004 JLBC meeting.
2/ JLBC favorably reviewed $3,000,000 to fully fund DOR’s estimated
administrative costs in FY 2005 at the June 29, 2004 JLBC meeting.

DOR estimates that the FY 2005 refunds included
overpayments of $6.3 million to 3,000 of the 306,000
claimants due to clerical and computer matching errors. At a
May 26, 2005 hearing, the judge agreed to allow the State to
hold off mailing refunds to the 3,000 overpaid claimants, until
the overpayment issue is resolved. A September 2005 hearing
is scheduled to resolve overpayment issues, such as taxpayer
repayment of the FY 2005 overpayments and whether or not
overpayments will continue beyond FY 2005.

improve enforcement, and increase revenues to the state.
Given the importance of this issue, in April 2003 the
Appropriations Chairmen asked DOR to provide quarterly
reports on the additional revenue received from implementing
BRITS. The implementation of BRITS began in FY 2003
with the awarding of the contract to Accenture, LLP on
August 20, 2002. BRITS is expected to be completed in FY
2007, for a total cost of $133.7 million including an estimated
$11 million in interest. Accenture will finance the cost of
BRITS, and will be paid from the increased revenues
generated by BRITS.
DOR had problems with the transaction privilege tax (TPT)
conversion to BRITS in January 2004, which delayed other
BRITS conversions as shown in the following table. DOR
reports that they have addressed the major TPT conversion
issues, but that collection tasks are not fully functional and
billings are still being checked before they are sent out. DOR
reports that the withholding tax was converted in October
2004 with no significant issues. DOR and Accenture are
scheduled to meet on July 19, 2005 to discuss the Corporate
Income Tax conversion date, which might be changed to
February 2006 based on the current project schedule.
Projected Tax System Conversion Dates for BRITS
Tax System
Projected Date
Revised Date
Corporate
September 2004 September 2005
Income Tax
Individual
September 2006
Late 2006
Income Tax
The department expects the delays to have no impact on total
cost, since BRITS is a fixed price contract. However, DOR
states that any enhancements that the department may want
that are different than the original contract will be reviewed
for both impact and potential cost. DOR reports that BRITS
delays and resource reallocations for correcting BRITS
problems have adversely impacted the revenue generating
program.
Since its inception in FY 2003, BRITS has generated
additional revenue, but not as much as projected. Accenture
has been paid $35.5 million through June 30, 2005 for
increased collections. This amount is $7.8 million below the
projected payment at this point in the contract.
The
state/county/city have received $6.3 million, $1.4 million less
than projected. BRITS revenues have improved since March
31, 2005, when payments to Accenture were $12.1 million
below the projected amount and the state/county/city had
received $2.1 million less than projected. The following
tables summarize BRITS costs and additional revenues
through June 30, 2005.

Department of Revenue - Report on Business ReEngineering/Integrated Tax System (BRITS) - BRITS is the
new computer system being implemented by the Department
of Revenue (DOR) to integrate their separate tax systems,
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Joint Legislative Budget Committee

Monthly Fiscal Highlights – June 2005

Summary of BRITS Costs
Through
Total Project
6/30/05
$67,050,000
$101,250,700
Consulting Services
12,774,000
21,414,000
Hardware/Software
5,177,500
11,000,000 1/
Interest
$85,001,500
$133,664,700
Total
____________
1/ DOR estimates interest will cost from $9 million to $13 million.

General Fund
County/City
Education
Subtotal
Accenture
Total

Summary of BRITS Additional Revenues – Through 6/30/05
Projected
FY 2003
FY 2004
FY 2005
Total
Total
$ 73,600
$ 1,855,000 $ 3,183,400 $ 5,112,000
26,200
146,700
721,000
893,900
9,800
44,200
206,300
260,300
$ 109,600
$ 2,045,900 $ 4,110,700 $ 6,266,200
$ 7,634,200
620,900
11,593,700
23,294,300
35,508,900
43,260,500
$ 730,500
$13,639,600 $27,405,000 $41,775,100
$50,894,700

Over/(Under)
Projection

$(1,368,000)
(7,751,600)
$(9,119,600)

JLBC MEETING
At its July 21st meeting, the Joint Legislative Budget
Committee considered the following issues:
Department of Economic Security – Review of Expenditure
Plan for Discretionary Workforce Investment Act Monies –
The Committee gave a favorable review of the Department of
Economic Security’s expenditure plan of $2.3 million in
discretionary Workforce Investment Act (WIA) monies. The
expenditure plan represents core functions typically funded by
discretionary WIA dollars.
Department of Health Services – Review of Behavioral
Health Capitation Rate Changes – The Committee gave an
unfavorable review to the Department of Health Service’s
(DHS) behavioral health capitation rate adjustment due to its
cost. The Committee further specified that 1) The Department
of Economic Security (DES) and DHS report to the Committee
by October 1, 2005 on the savings that will accrue as a result
of shifting services from DES to DHS and 2) that the
Administrative Office of the Courts (AOC), in conjunction
with the counties, report to the Committee by October 1, 2005
on the savings that will accrue to AOC and the counties as a
result of shifting the cost of behavioral health services to DHS.
The approved rates cost $15.1 million General Fund more than
the $60 million capitation rate adjustment assumed in the FY
2006 budget. The three capitation rates affected include
Children’s Behavioral Health (10.7% increase from FY 2005),
Seriously Mentally Ill (15.4% increase from FY 2005) and
General Mental Health/Substance Abuse (5.7% increase from
FY 2005). These capitation rate adjustments are expected to
result in a shortfall for the department in FY 2006.

Capitation rates reflect a combination of utilization and
inflation adjustments as well as specific program expansions
being sought by DHS, including:
• A special $13 million General Fund adjustment to
Maricopa SMI rates as part of the Executive’s proposed
agreement to resolve the Arnold v. Sarn lawsuit;
• Transferring some of the Department of Economic
Security’s (DES) behavioral health responsibilities for
foster care children to DHS, at a cost of $3.3 million
General Fund;
• Transferring current county responsibility for behavioral
health services in juvenile detention centers to DHS, at a
cost of $1.6 million General Fund.
The Maricopa SMI special rate adjustment being sought by
the agency (a $16.19 per member per month increase to the
capitation rate paid to the Maricopa County RBHA) was
added to fulfill the requirements of the settlement agreement
and resolve the state’s lawsuit. The additional funds will be
used to provide residential, emergency, hospital and crisis,
treatment, rehabilitation and support services in compliance
with the agreement.
Transferring services from DES to DHS will enable the state
to draw down federal funds for these activities. The
Committee asked both DES and DHS to report to the
Committee by October 1, 2005 on the savings that will accrue
as a result of the shifting of services between the two
agencies.
Joint Legislative Budget Committee Staff – Report on
Phoenix Medical Campus – The Committee heard a report
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Joint Legislative Budget Committee

from JLBC on the Phoenix Medical Campus (PMC). The FY
2006 Higher Education Budget Reconciliation Bill directed the
University of Arizona (UA) to establish a medical campus at
the former site of Phoenix Union High School. The bill
appropriated $7 million from the General Fund for this
purpose. Half of this funding was made available on July 1.
The other half will be made available no later than October 5
upon a review by the Joint Legislative Budget Committee
(JLBC) of an operational and capital plan for the Phoenix
Medical campus.
The Arizona Board of Regents (ABOR) must submit a detailed
operational and capital plan for PMC by September 1, 2005.
The report is required by statute to contain the following
information:
•
•
•
•

•
•
•

Detail on expenditures to date by the Arizona Board of
Regents, its institutions, and its partners.
Detailed 5-year operational and capital budgets, including
information on the expected sources of all funds.
A 5-year description of enrollment, capacity growth, and
graduation expectations by practice area.
A 20-year financing plan detailing each funding source,
including options to maximize resources and partnerships
with the Maricopa Health Care District and other health
care entities. Funding sources may include federal grants
monies, private donations and contributions from other
public entities.
The programs and areas of practice offered.
All partners involved in the Phoenix Medical Campus
project, their roles, and an organizational chart.
The contributions and financing arrangements of all
partners contributing to the capital plant, as well as the
legal and financial relationship of the Arizona Board of
Regents and its institutions to these partners.

Given the importance of this issue, and because operational
and capital plan information is not yet available, the Chairmen
of both the JLBC and JCCR asked JLBC Staff to provide
background on this issue.
In mid-September, a joint subcommittee of the JLBC and
JCCR will meet to discuss the September 1 plan. The
subcommittee will report its findings to the full JLBC. The
formal review as required by statute will then occur at a full
JLBC meeting in late September or early October.
In advance of the ABOR submittal, JLBC Staff provided
highlights on the PMC plan, including:
• Chapter 330 limited PMC to one class of 24 students, at an
annual operating expense of $7 million.
• The first class will begin in fall 2006, housed in 90,000
square feet of 3 renovated buildings on a 4.8 acre campus.
• The City of Phoenix has supplied the property for a
nominal annual fee, but UA and ABOR are responsible for
renovating the 3 existing buildings, as well as possibly
constructing 3 additional facilities.

Monthly Fiscal Highlights – June 2005

• UA will finance the $19 million of renovations through
lease payments of $16.25 per square foot, or $1.5 million
per year, of which the Chapter 330 General Fund
appropriation will pay $1.0 million.
• The original UA plan for PMC called for 196 students in 4
classes within 5 years, at an annual operating expense of
$24 million. Furthermore, UA hoped to expand PMC
enrollment to as many as 700 students, with possible
annual operational costs upwards of $44 million, at an
unidentified future date.
• PMC resides in the larger 15.8 acre Phoenix Bioscience
Center, which the city owns and envisions could hold 1
million square feet, including: the existing TGen building;
a joint university research facility, scheduled to begin
construction later this summer; and two additional ABOR
buildings not yet scheduled for construction.
• The Phoenix Bioscience Center plan includes a treatment
facility. Options for patient services range from an
outpatient clinic to a full teaching and research hospital,
but no firm plan exists.
The Committee also provided ABOR with additional
questions to be addressed at its September 1 submission. The
requests included:
• The level of UA support for the cumulative operating
expenses for the hospital.
• The amount of private and federal funding that is
anticipated to be received for the project.
• The status of efforts to ensure open access to clinical
rotations.
• The current status of efforts to build a hospital near the
medical school and if building another hospital would be
detrimental to existing hospitals in the area.
• The relationship between ASU’s $1 million for a new
bioinformation department and TGEN.
• Concerns that the medical school will be too geared
toward research and will not add to the number of
practicing doctors and how those concerns will be
addressed.
• Why the start up date for classes has been delayed from
July 2006 to July 2007.
• What will be done with the two years of $7 million in
annual funding before any students arrive.
• How space at the current site will be addressed.
Arizona Department of Corrections – Update on Maricopa
Health Care Costs – The Committee heard testimony on the
current status of the Department of Corrections health care
contract with Maricopa Integrated Health Systems (MIHS).
The Department of Corrections (ADC) contracts with outside
providers for major medical treatment that cannot be provided
to inmates on-site at correctional facilities. MIHS is one of
these providers and the department’s 5-year contract with
MIHS was scheduled to expire on June 30th, 2005. The
department issued a Request for Proposals (RFP) and MIHS
was the only bidder for the Phoenix area; however the
Department of Corrections did not accept the bid.

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Joint Legislative Budget Committee

ADC reported that they had rescinded the bid due to the fact
that MIHS had not completed the new per diem cost worksheet
provided in the RFP. Within the past year, the department
began utilizing AHCCCS billing processing for health care
contracts and the RFP process therefore has new cost
requirements. MIHS plans to complete the new pricing format
when the department reissues the RFP at the end of July. In
the meantime, the MIHS contract has been extended by 90
days to ensure no break in service.

JCCR MEETING
At its July 21 meeting, the Joint Committee on Capital Review
considered the following issues:
DEMA Building Conversion – The Committee approved the
use of up to $1,366,000 from the State Armory Property Fund
to renovate a Tempe fire station DEMA will acquire from the
City of Tempe through an exchange for the current Tempe
armory, with the provision that the department return for
approval after defining the scope and estimated cost of
converting the fire station to an armory.
Game and Fish Department Paving and Lighting – The
Committee approved the transfer of $48,500 from the Deer
Valley Headquarters paving project to the Pinetop regional
office paving project. Work on the Deer Valley Headquarters
was halted when the Department began considering a move to
a new location. This transfer will complete paving needs at the
Pinetop office.
The Committee also gave a favorable review to the reallocation of $146,000 from the Ben Avery safety berm project
to the Ben Avery electrical/lighting project. Materials to
construct the safety berm were donated by developers from a
nearby project, leaving excess funding.
DJC Vocational Education Remodel – The Committee gave
a favorable review to the use of $489,000 for converting a
Black Canyon housing unit to a vocational education unit with
the provision that future audit-related capital projects include a
comprehensive plan of prioritized projects. DJC is authorized
to use up to $6.7 million of its FY 2006 operating budget to
address federal audit requirements.
ADOT Capital Professional & Outside Services – The
Committee gave a favorable review to the $97 million
consulting services expenditure plan for FY 2006. This
allocation is made from the capital appropriation to ADOT for
highway construction and is in line with prior year allocations.
ADOT was requested to provide information on whether there
are any requirements to use in-state firms for these
expenditures. The Committee also adopted the highway
congestion performance measures with the stipulation that
ADOT report on these performance measures as part of next
year’s review.

Monthly Fiscal Highlights – June 2005

ASDB Capital Projects – The Committee gave a favorable
review to the $2 million capital expenditure plan for 7
building renewal projects at the Phoenix and Tucson
campuses, with the provision that ASDB submit a plan by
January 1, 2006 that includes different options for the use of
the Phoenix Campus as well as the use of satellite programs,
Co-Op programs, and any alternative strategies. There has
been interest in determining whether other sites or facilities,
such as closed schools, are available as an alternative to
investing in upgrades at the Phoenix Campus. Additional
information was requested on how SFB determined the 875
square feet per student space requirement for ASDB.
ADOA Building Renewal Allocation Plan – The Committee
gave a favorable review to $975,000 of the department’s FY
2006 Building Renewal Allocation Plan. The review included
7 projects and an emergency contingency. JLBC Staff is
working with the Department of Administration to get more
detail and develop a recommendation for the remaining
$2,425,000 building renewal appropriation.
NAU Lease-Purchase Projects – The Committee gave a
favorable review to the new Laboratory Facility and Campus
Research Infrastructure projects which will be financed with a
$44 million Certificates of Participation (COP) issuance to
repaid over a 25-year period. Annual debt service of $3.3
million is to be paid from the research infrastructure General
Fund appropriation that begins in FY 2008 and local
university funds. The review included the standard university
provisions noting that a favorable review did not constitute
endorsement of General Fund appropriations for debt service
or operating costs and requiring reporting on the use of
contingency allocations.
The Committee also included a new provision requiring NAU
to report on a comparison between compliance costs of
meeting the Governor’s executive order on energy efficiency
and any operating savings generated through those
efficiencies. JLBC Staff is working with the Arizona Board
of Regents to have these comparisons included in as part of
the original submissions for university projects.
ASU New and Revised Capital Projects – The Committee
gave a favorable review to Infrastructure and Sewer System
projects which will be financed with $20 million in revenue
bond issuances. Annual debt service of $1.6 million will be
paid from tuition collections and auxiliary fund revenues.
The review included the university provisions noting that a
favorable review did not constitute endorsement of General
Fund appropriations for debt service or operating costs,
requiring reporting on the use of contingency allocations, and
requiring reporting on a cost comparison between energy
efficiency capital costs and operating savings.
The Committee gave an unfavorable review to the $3 million
elevator code compliance component of the scope revisions to
the Academic Renovations and Deferred Maintenance project.
The Committee wanted to receive more information on the
Industrial Commission’s level of concern with the elevators

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Joint Legislative Budget Committee

relative to the projected cost of compliance. A letter has been
sent to the Industrial Commission seeking their input.
The Committee gave a favorable review to the scope and cost
revisions for the remaining Academic Renovations and
Deferred Maintenance project, the Biodesign Institute, and the
Instructional/Research Laboratory Renovations Phases I and II,
with the standard university financing provisions and one
special provision requiring ASU to submit an allocation plan
for the remaining $1.8 million associated with Academic
Renovations and Deferred Maintenance project.

Monthly Fiscal Highlights – June 2005

litigation expenses related to recovery of damages for design
and construction defects. There are no monies in the account
and there has been no account activity since its creation. SFB
was requested to provide an estimate of potential future
recoveries.

The Committee also requested that ASU provide its analysis
supporting that the Construction Manager at Risk procurement
method has generated cost and construction time savings for
the university.
U of A New and Revised Capital Projects – The Committee
gave a favorable review to the new Poetry Center, new
Architecture Building Expansion, second phase of Residence
Life Building Renewal, and Deferred Renovations projects
which will be financed with a $40.4 million bond issuance and
$2.3 million in donations. Annual debt service of $3.2 million
will be paid from a combination of tuition collections,
auxiliary revenues, and donations. The review included the
university provisions noting that a favorable review did not
constitute endorsement of General Fund appropriations for
debt service or operating costs, requiring reporting on the use
of contingency allocations, and requiring reporting on a cost
comparison between energy efficiency capital costs and
operating savings.
The Committee received a report on the reallocation of $0.2
million of the Chemistry Building Expansion’s remaining $1.1
million contingency fund, $2.0 million of the Medical
Research Building’s remaining $2.2 million contingency fund,
and $1.4 million of the Thomas W. Keating Bioresearch
Building’s remaining $3.6 million contingency fund. The
report detailed contingency adjustments to reflect faculty
research needs and equipment purchases that could not be
included in the original project bids.
SFB School Construction Report and Litigation Account –
The Committee gave a favorable review of the board report on
New School Construction with the provisions that (1) the board
report to the Committee on actual FY 2006 expenditures for
emergency deficiencies, and (2) the board report to the
Committee after determining how it will allocate $4 million in
funding for Full-Day Kindergarten capital grants. SFB will
oversee between 84-105 projects in FY 2006 and spend
approximately $386.5 million for new school construction
related expenses. SFB was requested to provide information
related to recent building renewal projects that were not
included in the original Deficiencies Correction program and
whether there are any requirements to use in-state firms for
school construction projects.
The Committee also gave a favorable review of the board
report on the Litigation account, which is intended to fund

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Joint Legislative Budget Committee

Monthly Fiscal Highlights – June 2005

School Facilities Board New Construction Report Highlights
Demographic Projections
•
•

For FY 2006, SFB projects enrollment growth of 6.6%.
High growth areas include the cities of Chandler and Gilbert, districts outlying the western edge of Phoenix, and northwest Pinal
County.

Construction Schedule
•
•
•

SFB estimates overseeing approximately 84 projects in FY 2006.
Includes 65 continuing projects and approximately 19 projects that will begin construction in FY 2006.
SFB has approved another 21 projects that probably won’t start until FY 2007.

Cost Estimates
•
•

Total FY 2006 projected spending equals $386.5 million.
Leaves SFB with $71.6 million in FY 2007.
Expenditures
Construction
Land
A&E
Emergency Deficiencies
Full-Day Kindergarten
TOTAL

$331.1 M
30.0 M
15.0 M
6.5 M
4.0 M
$386.5 M

Financing
Prior Bond Proceeds
Fund Balances
Cash
TOTAL

$94.2 M
42.3 M
250.0 M
$386.5 M

District Projects
District
Dysart Unified
Cartwright Elementary
Chandler Unified
Yuma Union High School
Avondale Elementary
Buckeye Union High School
Crane Elementary
Florence Unified
Higley Unified
JO Combs Elementary
Laveen Elementary
Liberty Elementary
Litchfield Elementary
Littleton Elementary
Queen Creek Unified
Sahuarita Unified
Agua Fria Union High
Casa Grande Elementary

# of
Projects
6
5
4
4
3
3
3
3
3
3
3
3
3
3
3
3
2
2

District
Deer Valley Unified
Fowler Elementary
Gilbert Unified
Isaac Elementary
Maricopa County Regional
Maricopa Unified
Pendergast Elementary
Peoria Unified
Riverside Elementary
Vail Unified
Buckeye Elementary
Cave Creek Unified
Cedar Unified
Coconino Accommodation
Coolidge Unified
Cottonwood-Oak Creek Elementary
Gadsden Elementary
Glendale Elementary

# of
Projects
2
2
2
2
2
2
2
2
2
2
1
1
1
1
1
1
1
1

District
Humboldt Unified
Littlefield Elementary
Nadaburg Elementary
Patagonia Union High School
Rainbow Accommodation
Ray Unified
Roosevelt Elementary
Saddle Mountain Unified
Santa Cruz County Accommodation
Santa Cruz Valley Unified
Somerton Elementary
Stanfield Elementary
Sunnyside Unified
Tolleson Elementary
Tolleson Union High School
Tombstone Unified
Union Elementary
Yavapai Accommodation
TOTAL - 54 Districts

# of
Projects
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
105

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