JLBC - Monthly Fiscal Highlights

1716 W. Adams
Phoenix, AZ 85007
Phone:
(602) 926-5491
Fax:
(602) 926-5416

www.azleg.gov/jlbc.htm

Summary
General Fund spending exceeded revenues
by $644 million in October. Fiscal year-to-date,
General Fund revenues are $2.26 billion
compared to spending of $3.91 billion, for a 4month deficit of $(1.65) billion.
October was another very poor revenue
collection month. October General Fund
revenue collections were $455.5 million.
Excluding budgeted transfers and Urban
Revenue Sharing, October collections were
(23.8)% below the prior year, and $(142.4)
million below the budget forecast. (See Table
1 below and Table 5 on page 7 for more
information.)
Year-to-date, revenues are (17.9)% below the
prior year, and $(376.2) million below the
budget forecast.

“Year-to-date,
revenues are
(17.9)% below
the prior year,
and $(376.2)
million below the
budget

In comparison, October 2009 General Fund
spending was $1.1 billion. October
expenditures were inflated due to a one-time
$116 million cash balances reimbursement by
the Arizona Department of Education (ADE)
which was made in October. Year-to-date
spending is ($372.6) million less than the prior
year.
The net October shortfall weakened the state’s
cashflow and increased the level of daily
borrowing. The state pays its bills out of the
operating fund balance, which consists of
General Fund and certain dedicated funds.
To cover last year’s $480 million shortfall and

forecast”.

this year’s $1.6 billion shortfall in the General
Fund, the state has already effectively
borrowed all of the state’s approximately $1.6
billion in dedicated funds in the operating
balance. Having exhausted that source, the
state literally borrowed as much as $450
million in October from other dedicated
accounts to pay its General Fund bills. These
latter sources, known as “ Pool 3,” are
dedicated funds which retain their interest
earnings.
November cashflow has declined further from
October. For the month of November, the
highest daily borrowing was $546 million on
November 23 and the average daily balance
was $(431) million.
The Treasurer’s current capacity to borrow
against the Pool 3 interest-bearing accounts is
approximately $600 million. Since the level of
daily borrowing ($546 million) is bumping up
against capacity, the Treasurer has just
entered into an agreement to borrow
commercially for as much as $700 million.
(See page 3 for further details.) Between the
servicing bank and the use of the state’s own
dedicated funds, the state could borrow as
much as $1.3 billion daily (on top of using the
$1.6 billion in the operating fund) to pay its
bills.
In November, the state also began to reduce
the size of its shortfall by enacting a $450
million budget package in the 4th Special
Session.

Table of Contents
October Revenues ................................................. 5
Economic Indicators .............................................. 8
JCCR Meeting Summary
• Game & Fish – Building Projects ..................... 13
• ADOT – Building Renewal ................................ 13
• ASU – Review of Science Building.................. 13

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
November 30, 2009.

November 2009

Summary of Recent Agency Reports
• Office of Economic Recovery – ........................

ARRA Report ...................................................... 14
• ADOA - Custodial & Janitorial Services......... 14

•
•
•
•
•
•
•
•
•
•
•

ADOA – State Motor Vehicle Fleet ................ 14
Chiropractic Board – Fund Balance.............. 14
Comm Colleges – Annual Report.................. 15
Comm Colleges – Dual Enrollment................ 15
ADE - K-12 Aggregate Expenditure Limit ...... 15
DJC - Restitution Fund Report......................... 15
DPS - Photo Enforcement ................................ 15
DPS – GIITEM Progress Report.......................... 16
Superior Court - Adult & Juvenile Probation 16
Superior Court - Probation Services ............... 16
Universities-Research Infrastructure ............... 16

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Summary
Table 1

(continued)

General Fund Revenues
Compared to Forecast and FY 2009 Collections
($ in Millions)

October
Year-to-Date

FY 2010
Collections
$ 455.5
$ 2,258.9

Prior to the Special Session, the estimated
year-end budget shortfall was $(2.0) billion.
The Special Session has reduced the year-end
shortfall estimate to $(1.6) billion. The
continuing weakness in revenues, however,
may result in the shortfall once again
increasing.
“For the year-todate, spending…
is $(372.6) million
below 2009”.

This issue of the Monthly Fiscal Highlights also
includes:
- An update on Highway User Revenue Fund
(HURF) collections, which are down (9.1)%
compared to the first 4 months of last year (see
page 5).
- An update on Lottery sales. Lottery ticket
sales are up, however distributions to state
beneficiaries are down due to increased prize
payouts (see page 5).
- A summary of the November 19th JCCR
meeting (see page 13).
FY 2010 Revenues

•

•

•

Difference
From FY 2009
$ (144.1)
$ (624.5)

October sales tax collections were down
(17.6)% compared to October 2008, and
were $(42.3) million short of the monthly
forecast. Year-to-date, sales tax
collections are down (17.2)% from the prior
year, and are $(114.4) million below
forecast.
October individual income tax collections
were down (34.6)% compared to October
2008, and were $(91.7) million below
forecast. October has significant income
tax activity as individuals with a 6-month
extension file their returns. Replicating the
April results, the level of refunds was higher
than anticipated.
October corporate income tax collections
were $(10.3) million below the forecast for
the month. Year-to-date, corporate
collections are down (35.5)% from the prior
year, and are $(55.5) million below
forecast.

FY 2010 Spending

The (23.8)% decline in October revenues
reflects the 15th consecutive month of doubledigit declines in General Fund revenue
collections compared to the prior year.
Among the major revenue categories:
Table 2

Difference From
Budget Forecast
$ (142.4)
$ (376.2)

October 2009 spending of $1.10 billion was
($119.9) million below October 2008. For the
year-to-date, spending of $3.91 billion is
($372.6) million below 2009 (See Table 2). The
main highlights were:

General Fund Spending ($ in Millions)
Change
Year to
Oct 09
from Oct 08
Date

Agency
AHCCS
Corrections
Economic Security
Education
Health Services
Public Safety
School Facilities Board
Universities
Other
Total

114.4
90.1
80.3
509.4
120.6
(4.6)
0.9
82.7
106.0
1,099.8

(25.1)
14.7
(19.2)
135.9
(189.8)
(8.4)
(20.0)
(12.2)
4.2
(119.9)

571.3
283.0
409.0
1,592.7
273.5
38.3
82.0
403.9
312.7
3,912.4

YTD Change
from FY 09
(25.0)
(18.3)
(127.8)
96.0
(182.0)
15.2
(118.0)
35.6
(48.3)
(372.6)

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Summary
•

“Given the ongoing weakness
in receipts, the

•

$1.6 billion
General Fund
shortfall estimate
may rise again

•

by January when
the revenue
estimates are
updated.

”

(continued)

The Arizona Department of Education
(ADE) has spent $1.59 billion year-to-date
in 2010, or $96 million more than 2009. In
October, ADE spending was $135.9 million
higher than the prior year. This increase
was due to a one-time $116 million cash
balances reimbursement being paid in
October. In FY 2009 the state required
school districts to use a portion of their
cash balances in lieu of a $300 million
state aid payment. After a final
accounting, districts were able to use
$184 million in cash balances, thereby
leaving the state to backfill the remaining
$116 million. Adjusting for this issue,
federal stimulus savings of $321 million,
and an extra rollover payment of $282
million, the ADOA figures suggest that
ADE’s spending on an equivalent basis
was $19 million above FY 2009 levels.
AHCCCS spending was $(25) million
below October 2008. This is generally
consistent with the FY 2010 budget
assumption that caseload growth in
Medicaid spending would be offset by
enhanced federal match from the
federal stimulus legislation.
The Department of Health Services (DHS)
$(190) million October spending
reduction is probably misleading, and
due to a technical reporting issue in FY
2009. Prior to October , DHS spending
was slightly above the FY 2009 level.

FY 2010 Status
In last month’s MFH, the size of the FY 2010
budget shortfall was estimated at $(2.0)
billion.
4th

The recently-completed
Special Session
legislation had a total fiscal impact of $452
million, of which $423 million will directly
reduce the FY 2010 shortfall. As a result of the
$(423) million in new budget savings, the 4th
Special Session actions are estimated to
reduce the $(2.0) billion shortfall to $(1.6)
billion.
For more information see
http://www.azleg.gov/jlbc/4thspecialsessionfi
scalimpact.pdf.
The $423 million in budget savings includes:
•

$130 million in revenue changes. Most of
these changes are one-time in nature,
such as an estimated $73 million from
accelerating the deposit of unclaimed

•

property into the General Fund and $28
million from additional revenues
generated from a 5-year vehicle license
tax renewal option.
$293 million in spending reductions,
including $(137) million in the Department
of Education and $(155) million in the
Department of Economic Security (DES).
Of the DES reductions, $(25) million is onetime.

In addition to these changes, the 4th Special
Session also generated $29 million of nonGeneral Fund revenue for agencies to offset
General Fund reductions their budgets.
Passage of the legislation allows the state to
avoid adding $29 million from the General
Fund to backfill the agency budgets.
Given the on-going weakness in receipts, the
$(1.6) billion General Fund shortfall estimate
may rise again by January when the revenue
estimates are updated. The current shortfall
estimate is based on a projected (8.7)%
reduction in overall FY 2010 revenues. If this
forecast is to be met, revenues can only fall
by (2.4)% in the remaining 8 months after the
(17.8)% first trimester decline.
Given that revenue began to decline
dramatically in the second half of FY 2009, we
do not anticipate that the double digit
declines will continue past January. At the
same time, however, limiting the revenue
decline to (2.4)% seems too optimistic.
Daily Operating Borrowing
On November 24, the State Treasurer’s office
signed a contract with Bank of America to
purchase up to $700 million of Treasurer’s
Warrant Notes (TWNs). This daily borrowing
facilitates the state’s cashflow issues, but does
not address the budget shortfall.
As the State’s overnight borrowing method,
TWNs are used when the operating fund
balance is negative. The operating fund is
used to pay the state’s obligations and
consists of the General Fund and non-interest
earning dedicated funds. The larger
dedicated funds include AHCCCS
interagency accounts, the state employee
health self-insurance pool, the Risk
Management Fund, the Land Department’s
clearing accounts, and University Collections
funds. The operating balance may also

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Summary

(continued)

temporarily include interest earning funds
which are divested to the operating fund for
purposes of bill paying.

“With this new
commercial
loan, the state’s
borrowing
capacity could
expand to
approximately
$1.3 billion--$700
million
commercially
and $600 million
internally”.

The level of the operating fund balance varies
daily as funds are divested and obligations
are paid. Recently, the non-General Fund
balances were typically between $1.2 billion
and $1.6 billion. At the same time, however,
General Fund spending exceeded revenues
by $(2.1) billion - $(480) million from FY 2009
and $(1.6) billion year-to-date in FY 2010. As a
result, the General Fund has effectively
“borrowed” all of the non-General Fund
portion of the operating fund obligations.
Since all these monies are combined together
in the operating fund, it does not technically
constitute a loan.
With a shortfall of $(2.1) billion and operating
balances of $1.6 billion, the Treasurer has
been using other internal funds outside the
operating fund to pay state obligations.
Prior to the bank contract, the Treasurer was
borrowing from the state's interest-bearing
dedicated accounts, which are kept in a
separate pool of funds (“Pool 3”) from the
operating fund balance. Beginning last
spring, the funds were borrowed on a daily
basis and repaid the next day to Pool 3. If
insufficient funds were deposited into the
operating fund on that following day to repay
the obligation and pay any new bills, the
state once again issued a new daily set of
TWNs. This borrowing was done at an interest
rate equal to the Securities Industry and
Financial Markets Association (SIFMA) Auction
Rate 1-Month Index, which has varied
between 0.59% and 1.53% (59 to 153 basis
points) in the current fiscal year.
The larger Pool 3 funds include the Early
Childhood Development and Health Board
balances, the Parks Board’s Land
Conservation Fund, the Heritage Fund, and
the DES Long Term Care System Fund. The
State Board of Investment limits the borrowing
from Pool 3 to 50% of the approximately $1.2
billion balance, or about $600 million. On
November 24, the state approached that
limit, issuing a $546 million TWN.
With the state approaching its internal
borrowing cap the Treasurer has sought a
new financing source. Under the new

commercial bank contract, the state will pay
a variable interest rate determined by the
current credit rating, market conditions and
how much we borrow any given day. The
TWNs can be issued as either taxable or nontaxable instruments. With the state’s current
credit rating, the taxable rate is calculated on
the 1-Month London Interbank Offer Rate
(LIBOR), which is currently at 24 basis points,
plus 50 basis points. For non-taxable notes,
the rate would be 60.5% of the 1-Month
LIBOR, plus 70 basis points.
Due to the current historically low LIBOR rate,
taxable notes now have a lower interest rate
than non-taxable notes. Based on these
terms, the TWN rate in the near term will likely
be between 75 and 104 basis points (0.75% to
1.04%). If the state’s credit rating were
downgraded 1 level, the interest rate would
increase between 10 and 15 basis points. In
addition to the interest rate on borrowed
funds, the contract charges a 25 basis point
(0.25%) interest rate on the unborrowed
portion of the $700 million to cover the bank’s
cost of reserving the capital.
The contract stipulates that TWNs must be first
offered to Bank of America, up to the $700
million limit. As a result, borrowing will shift
away from the internal Pool 3 of state funds to
the new bank contract. After reaching the
bank limit, the state could then borrow again
from Pool 3. With this new commercial loan,
the state’s borrowing capacity could expand
to approximately $1.3 billion--$700 million
commercially and $600 million internally.
The contract does allow Bank of America to
cancel the contract if the state experiences a
“Material Adverse Event,” which could
include a further deterioration of the state’s
fiscal situation. The contract runs to June 30,
2010. This means that the State will need to
have a positive cash balance in the
operating fund at the end of the fiscal year,
after paying off any TWNs sold to Bank of
America the prior day. By mutual agreement,
the contract may be renewed for FY 2011.
Even a positive cash balance would not
eliminate the state’s effective General Fund
borrowing. With a small operating fund
balance, the state would still be using near
$1.6 billion in non-interest bearing dedicated
funds to pay bills.

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

October Revenues

“The October
[sales tax]
decline marked
the 21st

Sales Tax collections were $287.8 million in
October. These revenues were down (17.6)%
compared to last October, and were $(42.3)
million below the budget forecast. The
October decline marked the 21st consecutive
month of year-over-year reductions, and the
12th consecutive month of double digit
declines compared to the previous year.
Table 3 displays the October growth rates for
the largest categories.
Table 3

consecutive
month of yearover-year
reductions, and
the 12th
consecutive
month of double
digit declines
compared to the
previous year”.

Sales Tax Growth Rates
Compared to Prior Year

Retail
Contracting
Utilities
Use
Restaurant & Bar

Oct
(12.7)%
(44.2)%
2.5%
(25.6)%
(4.3)%

YTD
(12.3)%
(40.6)%
(0.3)%
(25.1)%
(4.9)%

As noted in previous months, retail and contracting together account for about 30% of all
sales tax revenues. The retail sector decreased
by (12.3)% in October, and contracting fell by
(44.2)%.
Individual Income Tax net revenues were
$170.5 million in October. Collections were
down (34.6)% compared to the prior year, and
were $(91.7) million below the budget forecast.
Year-to-date collections are down by (18.8)%
and are $(205.3) million off the forecast
amount. Table 4 displays October growth
rates for individual categories.
As indicated in the table below, withholding
tax payments declined by (10.9)% in October,
the 13th consecutive month of year-over-year
declines. The state has not suffered that many
months of year-over-year declines since at
least 1960.
Table 4

Individual Income Tax Growth Rates
Compared to Prior Year

Withholding
Estimated +
Final Payments
Refunds

October
(10.9)%
(33.0)%

YTD
(7.3)%
(34.8)%

63.1%

40.6%

As noted in Table 4 above, October payments
in the individual income tax category were
(33.0)% below last year. This amount was
$(17.6) million short of projections.

October refunds totaled $(109.7) million, which
was over 63% above the prior year. October is
the month when taxpayers who requested an
extension are required to file their tax return.
The increase in refunds in October compared
to the prior year was due to the relatively large
number of extended returns filed which were
due refunds.
Corporate Income Tax collections were $18.8
million in October, or (11.1)% below last year.
Collections were $(10.3) million below forecast
for the month. While collections are below
forecast, October is a relatively small collection
month. Year-to-date, corporate collections
are (35.2)% below last year, and $(55.5) million
below the budget forecast.
The Lottery Commission reports that ticket sales
for the month of October were $40.8 million,
which was $6.9 million above sales in October
2008, an increase of 20.7%. Year-to-date,
ticket sales of $167.2 million are 18.6% above
last year.
While ticket sales have increased $26.2 million
above last year at this time, distributions to
state beneficiaries are down $(3.8) million. It
appears that sales have increased as prize
payouts have increased. Statute requires the
Lottery Commission to deposit at least 50% of
ticket sales into the fund used for prize payouts.
Prior to FY 2009, the percentage used for
payouts was about 56%. Currently, prize
payouts represent about 60% of ticket sales.
Higher prize payouts, however, result in
reduced distributions to state beneficiaries.
The percentage of ticket sales distributed to
beneficiaries has dropped from 30% prior to FY
2009 to approximately 22% so far in FY 2010.
Highway User Revenue Fund (HURF)
While HURF revenues are not deposited into
the General Fund, the decline in HURF
collections has had significant implications for
Arizona Department of Transportation
operations.
HURF revenues consist of gasoline and use fuel
(diesel) tax, motor carrier fees (commercial
carriers), vehicle license tax and registration
fees, and various other fees.
HURF collections of $97.6 million in October
were down $(2.7) million or (2.7)% compared
to October of last year. Year-to-date, total
HURF collections of $389.2 million are down
$(39.1) million or (9.1)% compared to the prior

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

October Revenues

(Continued)

year. This amount is $(15.2) million below the
Arizona Department of Transportation (ADOT)
forecast for the first 4 months of the fiscal year.
The downward trend in HURF collections
began last fiscal year. Total FY 2009 HURF
collections of $1.25 billion were (7.1)% below
FY 2008 collections.
The downward trend in HURF collections is due
to a variety of factors related to the general
economic downturn. Even with lower fuel
prices, consumers have been driving less.
Lower population growth has also contributed
to fewer miles driven, as well as reduced
vehicle license tax and registration fee growth.
And finally, motor carrier fees are down due to
the continued trend of fewer registered
commercial vehicles.
As a result of the decline in HURF collections,
ADOT has reduced its spending. In FY 2009,
their appropriated operating budget after the
mid-year adjustment was $399 million. Actual
FY 2009 spending was $363 million.
The FY 2010 ADOT operating budget
appropriation was flat at $399 million. The
current projected spending for FY 2010 is $324
million, which is a (23)% cut from the FY 2009
appropriation. The lowered ADOT expenditure
authority reflects the expected level of
revenues available for the fiscal year.

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Table 5

State of Arizona
General Fund Revenue:

Change from Previous Year and Budget Forecast
October 2009
Current Month

FY 2010 YTD (Four Months)

Change From
October 2008

Actual
October 2009

Percent

Amount

Change from
Forecast
Percent

Amount

October 2008

Actual
October 2009

Forecast

Percent

Amount

Percent

Amount

Taxes
Sales and Use

277,910,648

($59,402,692)

Income - Individual

170,528,545

(90,112,318)

- Corporate

(17.6) %

$1,143,971,583

($237,049,521)

(34.6)

($42,318,516)
(91,669,351)

(13.2) %
(35.0)

903,429,770

(209,645,225)

(10,300,927)

(35.4)

(17.2) %

($114,367,377)

(9.1) %

(18.8)

(205,285,049)

(18.5)

(55,458,295)

(30.5)

18,811,973

(2,349,452)

(11.1)

126,255,405

(69,435,191)

(35.5)

Property

1,560,272

(483,305)

(23.6)

216,272

16.1

1,824,517

(489,729)

(21.2)

Luxury - Tobacco

2,180,424

(312,084)

(12.5)

(239,576)

(9.9)

9,506,982

(921,480)

(8.8)

(1,045,018)

(9.9)

2,351,405

52,707

2.3

(58,595)

(2.4)

8,275,840

(708,120)

(7.9)

(1,024,160)

(11.0)

2,887,171

814,056

39.3

(112,829)

(3.8)

132,715,911

5,787,544

0

0

--

0

--

294,106

289,910

--

294,106

--

2,495,330

2,440,164

--

2,442,830

--

2,619,648

2,433,540

--

2,409,648

--

- Liquor
Insurance Premium
Estate
Other Taxes
Sub-Total Taxes

$478,725,768

($149,352,924)

(23.8) %

($142,040,692)

(22.9) %

$2,328,893,762

($509,738,272)

4.6

(18.0) %

196,517

90,911

($374,188,717)

12.1

0.1

(13.8) %

Other Revenue
Lottery

3,040,700

(6,522,700)

(68.2)

(59,300)

(1.9)

9,246,900

(5,139,500)

(35.7)

(53,100)

(0.6)

License, Fees and Permits

1,995,089

(1,609,204)

(44.6)

(1,859,911)

(48.2)

8,828,246

(2,550,718)

(22.4)

(4,301,754)

(32.8)

Interest

(1,533,190)

--

(67,327)

--

1,109,148

(5,481,172)

(83.2)

1,109,148

Sales and Services

2,214,589

(1,074,979)

(32.7)

(1,155,411)

(34.3)

9,845,317

(2,270,052)

(18.7)

(3,744,683)

(27.6)

Other Miscellaneous

7,118,493

(3,683,701)

(34.1)

(4,881,507)

(40.7)

16,979,228

(2,771,533)

(14.0)

(1,020,772)

(5.7)

--

0

0

15,640,814

8,090,247

Disproportionate Share
Transfers and Reimbursements
Sub-Total Other Revenue
TOTAL BASE REVENUE

(67,327)

0

0

10,085,209

6,662,734

-194.7

0
7,685,209

320.2

-107.1

0
6,040,814

--

-62.9

24,386,753

(7,761,040)

(24.1) %

(338,247)

(1.4) %

61,649,653

(10,122,728)

(14.1) %

(1,970,347)

(3.1) %

$503,112,521

($157,113,964)

(23.8) %

($142,378,939)

(22.1) %

$2,390,543,415

($519,861,000)

(17.9) %

($376,159,064)

(13.6) %

Other Adjustments
Urban Revenue Sharing
Budget Plan Transfers
Sub-Total Other Adjustments
TOTAL REVENUE

(52,387,052)

8,252,731

--

0

0.0

(209,548,209)

33,010,924

--

0

4,754,117

4,754,117

--

0

0.0

77,943,077

(137,603,715)

(63.8)

0

0.0

(47,632,935)

13,006,848

-- %

0

0.0 %

(131,605,132)

(104,592,791)

387.2 %

0

0.0 %

($624,453,791)

(21.7) %

$455,479,586

($144,107,116)

(24.0) %

($142,378,939)

(23.8) %

$2,258,938,283

($376,159,064)

0.0

(14.3) %

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Economic Indicators
NATIONAL

“The updated
GDP report
suggests that the
nation’s
economic
recovery did not
start quite as
strongly as first
believed.”

According to the second estimate of the U.S.
Real Gross Domestic Product (GDP) for the 3rd
quarter of 2009, the nation’s economy grew at
an annual rate of 2.8% down from the previous
estimate of 3.5% released last month. The
downward revision was primarily due to less
consumer spending and business structures
spending than previously estimated.
Additionally, international trade detracted
more from economic growth than last month’s
figures indicated. The updated GDP report
suggests that the nation’s economic recovery
did not start quite as strongly as first believed.
In November, the Conference Board’s U.S.
Consumer Confidence Index totaled 49.5, up
0.8 points from the revised October level of
48.7. The measure is up 4.8 points from
November 2008 levels. The report cites that
present day conditions were, in essence
unchanged, and individuals’ short-term
outlook increased slightly.
The Conference Board’s U.S. Index of Leading
Economic Indicators rose for the seventh
consecutive month in October, with a monthover-month increase of 0.3%. The index, which
is designed to anticipate economic activity 3
to 6 months in advance, indicates that the
national economy has begun to recover. Six
of the 10 components that make up the index
improved in October. The largest positive
contribution came from the interest rate
spread between the yield of 10-year Treasury
Bonds and the Federal Funds rate, which is
primarily the result of the Fed’s ongoing
monetary stimulus programs.
Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), increased by 0.3%
in October. The larger-than-expected CPI
increase was primarily due to the rise in both
energy prices and new and used vehicle
prices. The CPI is now (0.2)% below last year’s
level. Excluding food and energy, core
consumer prices inched up 0.2% in October.
The core CPI has risen by 1.7% over the last 12
months.
The Semiconductor Industry Association (SIA)
reported that Semiconductor Billings (3-month
moving average) in the U.S. totaled $3.46
billion in September, the largest amount since
December 2007. September was the seventh
month in a row with monthly increases in
semiconductor sales. Additionally, September

was also a significant month for the industry in
the sense that it ended a string of 14 consecutive months of year-over-year sales declines.
The outlook for the semiconductor industry has
improved markedly over the last few months.
ARIZONA
The most recent release of economic
indicators suggests that while the state’s
economy is still contracting it is doing so at a
slower rate than in recent months. The best
real-time measure of the economy is arguably
nonfarm employment, which now appears to
be declining, year over year, at a somewhat
lower rate than what was reported in the
previous 5 months. Instead of year-over-year
declines of about (7.5)%, as reported for the
period from May to September, the
Commerce Department’s October
employment release showed a decline of
(6.8)%. More importantly, the private sector
added jobs in October for the first time since
February 2008.
Although home prices appear to have hit the
bottom and even started to slowly climb up,
there is still cause for concern. This is
highlighted by a recent report from the Realty
Studies Group at Arizona State University, which
shows that two-thirds of all existing home sales
in the Greater Phoenix area are foreclosurerelated. These are either foreclosed properties
or properties sold in the traditional market
(mainly by investors) but foreclosed on within
the previous 12 months. It is difficult to imagine
that the economy in Arizona, which has
traditionally been supported by real estate
and construction related activities, will begin to
expand in earnest until the housing market
recovers. This is unlikely to occur as long as the
housing inventory for sale is predominantly
foreclosure-related.
As reported in recent issues of Monthly Fiscal
Highlights, the Federal Reserve Bank’s
coincident index is a relatively new measure
designed to gauge current economic activity
in the nation’s 50 states, including Arizona. The
index combines four state-level indicators into
a single statistic: nonfarm payroll employment,
average hours worked in manufacturing,
unemployment rate, and inflation-adjusted
wages.
The most recent release of the state coincident
index shows that economic activity in Arizona
fell by (0.2)% in October. This was the 24th

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Economic Indicators

(Continued)

consecutive month the Arizona coincident
index declined. The index was (7.7)% below
the reading in October 2008. By way of
comparison, the national index declined by
(0.1)% in October and was (3.3)% below last
year’s level. The Fed reported that the index
increased in 15 states, decreased in 27 states,
and remained unchanged in the remaining 8
states last month.

The government sub-sector most adversely
affected by the recession is non-education
related state government employment. This
category is primarily state employment not
related to higher education. According to
data released by the Department of
Commerce, non-education related state
government employment has declined year
over year for 19 consecutive months.
Compared to the same month last year, noneducation related state government
employment was down by (10.2)% in October.

The graph below, which shows the history of
the Arizona coincident index, suggests that
economic activity in the state has not yet
reached its bottom.
Arizona Coincident Economic Activity Index
230

“This was the first

with year-overyear job losses of
less than (7.0)%.”

220
(July 1992 = 100)

month since April

210

200

190
Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

the government sector as a whole has shed
(17,300) jobs, or (3.9)% of its workforce, over the
last 12 months, federal government payrolls
have increased by 2,000 positions, or 3.6%,
during this time. Over the same period, state
government employment has decreased by
(7.1)% compared to (4.2)% for local
government employment.

Jan-10

According to new figures released by the
Arizona Department of Commerce, the state
added 13,200 nonfarm payroll jobs in October.
Year over year, total nonfarm employment
was down by (6.8)%. This was the first month
since April with year-over-year job losses of less
than (7.0)%. The state has shed (10.7)% of its
workforce, or (291,200) jobs, since the recession
started in December 2007.
October marked the third straight month with
monthly increases in total payroll employment,
which has not occurred since 2007. Even more
noteworthy is that private sector employment
expanded for the first time since February 2008
with a total increase of 11,400 jobs. Most of
these job gains were recorded in the following
3 industries: employment services (+4,800),
retail trade (+2,600), and food services/drinking
places (+2,600).
While private sector job losses appear to be
moderating, the opposite scenario is taking
place for government jobs. Although total
government job losses have been
accelerating over the last 4 months, it would
be erroneous to assume that these losses have
been distributed equally among different
government sectors. For example, although

The construction sector shed (2,100) jobs in
October. The industry now employs (42,600) or
(23.8)% fewer workers than a year ago. At the
height of the housing boom, the construction
sector employed 9.5% of the state’s workforce
compared to 5.7% today.
The manufacturing sector lost (100) jobs in
October. Year over year, manufacturing
employment is down by (7.6)%. The industry
has had 36 consecutive months of year-overyear job losses.
The average weekly hours of production
workers in manufacturing industries is a leading
indicator since “factory hours” tends to lead
the business cycle as employers usually adjust
work hours before increasing or decreasing
the size of their workforce. According to the
Department of Commerce, average weekly
hours in October increased from 38.1 to 38.8
hours. While this was an improvement of 1.8%
over the prior month, it was still (4.7)% below
the level recorded one year ago. Manufacturing employment is not expected to
improve until the average workweek begins
to increase.
The state’s unemployment rate in October rose
from 9.1% to 9.3%, the highest reading in more
than 26 years. The October unemploy-ment
rate varied from a low of 8.3% in Tucson to
22.8% in Yuma. The nation’s unemployment
rate increased from 9.8% in September to

10 JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Economic Indicators
10.2% in October. This monthly unemploy-ment
rate has only been exceeded 6 times in the
last 61 years.
The Department of Commerce reported that
31,279 initial claims for unemployment
insurance were filed in October. While the
number of individuals filing for initial jobless
claims still remains high by historical standards,
the year-over-year increases have
moderated considerably over the last few
months. October’s year-over-year increase of
2.0% was the lowest in 3 years. Claims for
initial unemployment insurance appear to
have peaked in April when more than 41,000
individuals filed for benefits. For the week
ending on November 7, a total of 98,785
Arizona residents filed for continued claims for
jobless benefits, the lowest level in 7 months.
According to data released by the U.S.
Census Bureau, an average of 1,166 building
permits were issued each month for the
period between August and October 2009.
This amount includes an average of 1,120
single-family residential building permits
authorized and 46 multi-family permits.
Compared to the prior 3-month period, the
number of single-family permits issued
decreased (15.0)% while the number of multifamily permits decreased (70.2)%. Compared
to the same period in the prior year, activity in
the single family segment decreased (0.9)%,
while permits in the multi-family segment is
down (90.6)%.
Based on ASU’s October real estate report,
the single-family median resale home price
was $143,115 based on 9,955 single-family
existing home sales. The median resale price
in the single family segment was 2.3% higher
than the prior month but (14.5)% below last
year. The median resale price reached a
high of $267,000 in June 2006. The 9,955
transactions were 9.8% and 21.3% above the
number of transactions in September 2009
and September 2008, respectively. Sales
activity reached a high of 11,820 in June 2009.
In the multi-family segment, the report
indicates there were 1,390 townhousecondominium median transactions with an
average sales price of $100,000. The total
number of units bought and sold represents an
increase of 18.3% above September 2009
levels, while the median resale price
decreased (2.4)%. The median resale price
reached a high of $189,990 in May 2007.

(Continued)

The S&P/Case-Shiller Home Price Index
measures housing prices based on repeat
sales. Utilizing September data, the index for
the Phoenix metropolitan area increased on a
month-over-month basis for the fourth straight
month to a level of 109.26. At its current level,
the index, increased 0.8% relative to the prior
month (August) but is down (21.8)% on a yearover-year basis. Relative to peak in June 2006
(227.42), the index is down (52.0)%.
According to seasonally adjusted MLS data,
the month’s supply of housing indicator fell by
(0.3) months between September and
October. The measure currently suggests that
it would take 5.4 months to deplete the
current inventory of unsold homes. At this
level, the supply of housing is (5.6) months less
than it was a year ago and (11.0) months
below the September 2007 high of 16.7
months.
The sharpest and longest recession in postwar
history has not only resulted in record-large
declines in tax receipts but also led to a surge
in the demand for state health and welfare
services. This explains why caseload growth is
near or has exceeded the budget estimates
for June 2010 as outlined below.
In November, AHCCCS caseloads increased to
a total of 1,354,798 members, 1.9% above the
number of recipients in the previous month.
AHCCCS caseloads are currently 19.2% above
November 2008 levels. The FY 2010 budget
funded a projected June caseload growth of
10.7%, for a total of 1,388,147 members.
There were a reported 86,450 TANF recipients
in the state in September, which represented
a monthly caseload increase of 0.8%.
September’s year-over-year increase was
5.8%. The FY 2010 budget assumed that the
June 2010 TANF caseload would be 84,287.
The Supplemental Nutrition Assistance
Program (SNAP), formerly known as Food
Stamps, provides assistance to low-income
households to purchase food. In September,
there were a total 973,207 food stamp
recipients in the state, an increase of 2.6%
over the prior month. Compared to the
same month last year, food stamp
participation was up by 37.1%. The number
of food stamp recipients began increasing
steadily in July 2007, after several years in the
550,000 to 575,000 range.

11 JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Economic Indicators
The Department of Correction’s (ADC) inmate
population increased to a 3-month average
count of 40,654 inmates between August and
October 2010. This equates to an average
monthly increase of 89 inmates and a year
over year increase of 1,353 inmates. In FY 2010,
the department was funded for growth of 151
inmates per month. Fiscal year-to-date,
monthly population growth has ranged from
an increase of 6 inmates to 165 inmates.
The state and counties throughout the state
typically share the costs of adult and juvenile
probation programs. Maricopa County,
however, assumes all costs associated with
adult and juvenile probation programs.
Based on adult and juvenile probation data
from July and September, respectively, the
non-Maricopa probation caseload was
20,021 individuals, 124 fewer probationers
than the prior month and an additional 93
probationers from a year ago. In Maricopa
County, there were 30,058 probationers
during the period, 3,637 more than the prior
month and 914 more than a year ago. The
significant month-over-month increase in
Maricopa County caseloads is attributed to
large increases in adult standard probation.

(Continued)

12 JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Economic Indicators

(Continued)

Table 6

ECONOMIC INDICATORS
Indicator
Arizona
- Unemployment Rate
- Initial Unemployment Insurance Claims
- Non-Farm Employment – Total
Manufacturing
Construction
- Average Weekly Hours, Manufacturing
- 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
S&P/Case-Shiller Home Price Index (Jan. 2000 = 100)
- Months Supply of Housing, (ARMLS)
- Phoenix Sky Harbor Air Passengers
- Arizona Average Natural Gas Price
($ per thousand cubic feet)
- Arizona Consumer Confidence Index (1985 = 100)
- Arizona Coincident Index (July 1992 = 100)
- Arizona Personal Income
- Arizona Population
- AHCCCS Recipients
- TANF Recipients
- SNAP (Food Stamps) Recipients
- ADC Inmate Growth (3-month average)
- Probation Caseload (Adult/Juvenile)
Non-Maricopa
Maricopa County
United States
- Gross Domestic Product
(Chained 2005 dollars, SAAR)
- Consumer Confidence Index (1985 = 100)
- Leading Indicators Index (2004 = 100)
- U.S. Semiconductor Billings (3-month moving average)
- Consumer Price Index, SA (1982-84 = 100)

Time Period

Current Value

Change From
Prior Period

Change From
Prior Year

October
October
October
October
October
October
Aug-Oct
Aug-Oct

9.3%
31,279
2.42 million
160,100
136,300
38.8
$37.0 million
$126.4 million

0.2%
2.0%
0.5%
(0.1)%
(1.5)%
1.8%
(6.6)%
(2.1)%

3.1%
2.0%
(6.8)%
(7.6)%
(23.8)%
(4.7)%
(41.8)%
(12.4)%

Aug-Oct
Aug-Oct

1,120
46

(15.0)%
(70.2)%

(0.9)%
(90.6)%

October
October

9,955
1,390

9.8%
18.3%

21.3%
63.5%

October
October
September
October
August
August

$143,115
$100,000
109.26
5.4 months
3.17 million
$6.24

3rd Quarter 2009
October
2nd Quarter 2009
July 1, 2008
November
September
September
Aug-Oct

60.2
197.84
$217.3 billion
6.50 million
1,354,798
86,450
973,207
40,654

26.6%
(0.2)%
(0.1)%
146,759
1.9%
0.8%
2.6%
89 inmates

NA
(7.7)%
(3.3)%
2.3%
19.2%
5.8%
37.1%
1,353 inmates

July/September
July/September

20,021
30,058

(124)
3,637

93
914

3rd Quarter 2009

$13.0 trillion

2.8%

(2.5)%

November
October
Jul-Sep
October

49.5
103.8
$3.46 billion
216.38

1.6%
0.3%
6.2%
0.3%

10.7%
4.2%
7.8%
(0.2)%

2.4%
(2.4)%
0.8%
(0.3) months
(5.9)%
(0.5)%

(14.5)%
(21.6)%
(21.8)%
(4.4) months
(4.3)%
(17.1)%

13 JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

JCCR Meeting
At its November 19, 2009 meeting, the Joint
Committee on Capital Review considered the
following issues:
Arizona Department of Administration/Arizona
Department of Corrections - Review of Prison
Concession Agreement Request for Proposal This item was discussed in Executive Session
and action was deferred pending more
information.
Arizona Game and Fish Department – Building
Projects – The Committee gave a favorable
review to the department’s $473,200 FY 2010
Building Renewal Allocation Plan and
$489,300 Ben Avery Shooting Facility
infrastructure improvement plan. The
Committee also approved the appropriations
transfers for the Tri-State/Lake Havasu
Shooting Range appropriations and the
Bellemont/Flagstaff Shooting Range
appropriations.
Arizona Department of Transportation –
Review of FY 2010 Building Renewal Plan – The
Committee favorably reviewed the $1,050,000
FY 2010 Building Renewal Allocation Plan,
which included $1,000,000 from the State
Highway Fund for 97 projects and $50,000
from the State Aviation Fund for 5 projects,
with the provision that the department has to
report any project reallocations above
$100,000. In addition, the plan included
$71,200 from the FY 2009 building renewal
contingency allocation.
Arizona State University – Review of Science
Building – The Committee gave a favorable
review to Arizona State University (ASU) for its
proposal to spend $160.0 million in system
revenue bonds to construct a new 293,000
square foot, 8-level, Interdisciplinary Science
and Technology Building on its Main Campus.
The following 2 provisions were included in the
Committee review: 1. Debt service cannot be
paid from General Fund monies or tuition
collections; and 2. ASU must come back
before JCCR for review prior to beginning
construction if the total construction cost
exceeds $160.0 million. The estimated annual
debt service payments of $14.1 million
beginning in FY 2013 will be paid from ASU’s
Indirect Cost Recovery Fund.

14 JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Summary of Recent Agency Reports
Arizona Office of Economic Recovery – Report
on the Receipt of Grants from the American
Recovery and Reinvestment Act (ARRA) –
Pursuant to Laws 2009, 3rd Special Session,
Chapter 7, all agencies receiving monies from
ARRA are required to report to the JLBC
certain information about ARRA grants,
including: the amount of funds received from
each ARRA grant, how the funds were spent,
and the grants impact on state personnel and
mitigating the effect of budget reductions.
The Governor’s Office of Economic Recovery
has elected to compile this information into
one central report to the JLBC.
For the period from February 17 through
September 30, 2009 Arizona was awarded 434
grants totaling $1.9 billion. Through this
period, Arizona received $672 million of the
funding awarded to the state. A substantial
portion of the grants were awarded to three
state agencies: The Governor’s Office
disbursed grants relating to the State Fiscal
Stabilization Fund, which was used to stabilize
the state’s education funding; the Arizona
Department of Education received increased
funds through various formula-based
programs such as Title 1 and the Individuals
with Disabilities Education Act (IDEA); and the
Arizona Department of Transportation
received funds for various infrastructure
projects. (Jack Brown)

31, 2009 because they have not yet found a
way to resolve problems posed by the bill.
ADOA states that there is insufficient funding
to transfer to agencies in order for agencies
to re-hire custodial staff. For example, ADOA
says that the Acupuncture Board of Examiners
would receive $85 under this bill, which would
not be sufficient enough to hire back a former
custodian even if pooled with other tenant’s
funding.
Until the issues are resolved, ADOA plans on
continuing to provide custodial and janitorial
services for agencies occupying state
buildings through custodial contracts, ADOA
Staff, and Arizona Department of Corrections
inmate labor. (Leatta McLaughlin)
Arizona Department of Administration – Motor
Vehicle Fleet – Pursuant to A.R.S. § 41-803R,
the Arizona Department of Administration
reported on the FY 2009 year-end inventory of
state-owned alternative fuel vehicles. Of the
12,076 state vehicles, 5,006, or 41.5% are
subject to the alternative fuel vehicle
requirements.
Of the 5,006 state vehicles subject to the
alternative fuel vehicle requirements, 3,288, or
65.7% are alternative fuel vehicles. This is an
increase of 0.8% from the prior year and
exceeds the 40% target established by
statute.

Arizona Department of Administration - Report
on Custodial and Janitorial Services Transfers
(SB 1314 ) - Pursuant to Laws 2009, 1st Regular
Session, Chapter 191, the Arizona Department
of Administration (ADOA) is required to submit
a report to JLBC by the 15th of each month in
FY 2010 on the amounts transferred during the
prior month for the purpose of providing
custodial and janitorial services for stateowned and state-leased buildings.

Statute also requires 90% of the state vehicles
in Maricopa County to be capable of using
alternative fuels. The state reports that 81.6%
of its Maricopa County vehicles are
alternative fuel vehicles.

Chapter 191 requires ADOA to transfer all
custodial and janitorial services monies
received in FY 2010 to state agencies that
occupy state-owned or state-leased building
space. The bill also requires ADOA to
determine the amount of monies transferred
to be based upon the square footage of the
space occupied by each agency and
designates that the monies be used for hiring
current or former state employees to provide
custodial and janitorial services.

State Board of Chiropractic Examiners –
Report on Resources and Fund Balance –
Pursuant to Laws 2009, 1st Regular Session,
Chapter 12 (General Appropriation Act), the
State Board of Chiropractic Examiners is
required to submit a report to the Joint
Legislative Budget Committee (by November
1, 2009) detailing the Board’s ending fund
balance for FY 2009, its estimated revenues
for FY 2010, and its expenditures by month.
The Legislature’s intent was to determine if the
Board has sufficient resources to continue its
FY 2010 expenditure level through FY 2011.
The Board submitted the report and has

According to ADOA, they have not
implemented this session law as of October

Notwithstanding the quantity of vehicles
capable of using alternative fuel, only 4.0% of
the fuel budget was for alternative fuels.
(Leatta McLaughlin)

15 JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Summary of Recent Agency Reports
indicated that it will have sufficient
resources. (Steve Grunig)
Arizona Community Colleges –
Annual Report – Pursuant to A.R.S. §
15-1427, the Arizona Community
Colleges are required to report on
their progress during the previous
year. The FY 2009 report includes
the following summary information
on the state system:

• 377,093 students (headcount)

•
•

•

•

were enrolled for credit, resulting
in a Full-Time Student Equivalent
count of 123,797.
87% of enrolled students resided
within the district, while 13% did
not reside within the district.
Total number of instructors
employed was 9,836, of which
2,563 (26%) were full-time and
7,273 (74%) were part-time.
Total operating revenues were
$1.4 billion (this amount excludes
bond proceeds and fund
balance which total $411.4
million).
Total expenditures were $1.5
billion.

In addition, districts are statutorily
required to provide a listing and
description of both credit and noncredit courses. The districts also
included a description of their
major accomplishments in FY 2009.
(Marge Zylla)
Arizona Community Colleges –
Report on Dual Enrollment –
Pursuant to A.R.S. § 15-1427, the
Arizona Community Colleges are
reporting on dual enrollment
courses offered in FY 2009. Students

in a dual enrollment course can
earn both high school and
community college credit for
courses taught at their high school.
Highlights of the FY 2009 report
include:
•
22,244 students were dual
enrolled (up from 19,899 in FY
2008).
•
1,673 courses were offered, of
which 630 courses were
classified as Academic and
1,043 were Occupational (up
from 1,317 total courses in FY
2008). (Marge Zylla)
Arizona Department of Education –
Report on K-12 Aggregate
Expenditure Limit – Pursuant to A.R.S.
§ 15-911B, the State Board of
Education reported on October 30,
2009 that currently budgeted
expenditures for all school districts
collectively statewide for FY 2010
are $(337,406,000) below the
aggregate expenditure limitation
(AEL) defined in Article IX, Section
21, subsection (4) of the Constitution
of Arizona. The AEL, which was
established in the State Constitution
in 1980, limits growth in statewide K12 expenditures to the combined
rate of growth for enrollment and
inflation, with exceptions for items
like bonding and Proposition 301
monies. (The latter were exempted
from the AEL through voter
enactment of Proposition 104 in
November 2002.) (Steve Schimpp)
Department of Juvenile Corrections
– Report on Restitution Fund –
Pursuant to A.R.S. § 41-2826F, the
Department of Juvenile Corrections

(Continued)

(DJC) is required to submit an
annual report detailing all revenues
and expenditures made from the
department’s Restitution Fund. DJC
submitted its latest report on
November 17, 2009.
These monies are used to pay
restitution and monetary
assessments on behalf of youth
working in the Committed Youth
Work Program who were unable to
make these court-ordered
payments when they were originally
sentenced to DJC. As of June 30,
2009, the DJC reports that
Restitution Fund revenues and
expenditures for FY 2009 totaled
$22,867, as compared to $24,564 in
FY 2008. (Jon McAvoy)
Arizona Department of Public Safety
– Quarterly Report on Photo
Enforcement – Pursuant to a
footnote in Laws 2009, 1st Regular
Session, Chapter 12 (General
Appropriation Act), the Department
of Public Safety (DPS) is required to
report quarterly on the Photo
Enforcement program in FY 2010.
During the first quarter of FY 2010,
the Photo Enforcement Program
issued 114,789 Notices of Violation
(NOVs) and 21,642 citations from 42
mobile units and 36 stationary units.
Of these NOVs, 40,413 became
either civil or criminal citations. A
total of 22,894 NOVs were paid
within 40 days of issuance with an
additional 6,480 citations also
receiving payment.
Since the inception of the program
in September 2008, a total of

Table 7

Photo Radar Distributions
1st Quarter FY 2010
General Fund
$9,953,100
Administrative Office of Courts
841,600
Vendor Payments
607,200
Clean Elections Commission
574,000
DPS
516,200
Photo Enforcement Fund Balance
250,000
Total
$12,742,100

Program-to-Date
$22,759,000
3,372,400
4,365,200
2,045,700
3,346,000
250,000
$36,138,300

16 JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Summary of Recent Agency Reports
655,864 NOVs and citations have
been issued and 246,059, or 38%,
have been paid.
The NOVs and citations issued by
the Photo Enforcement Program
generated $12.7 million in revenue
for the first quarter of FY 2010 and
have generated $36.1 million since
the program’s inception. At the
end of each quarter, the
department is statutorily required to
revert all unused monies in excess of
$250,000 to the General Fund.
These monies were distributed to
recipients as shown in Table 8
below. (Eric Billings)
Department of Public Safety –
Quarterly Report on GIITEM –
Pursuant to Laws 2009, 1st Regular
Session, Chapter 12 (General
Appropriation Act), the Department
of Public Safety (DPS) is required to
report quarterly on the Gang and
Immigration Intelligence Team
Enforcement Mission (GIITEM). As of
the first quarter of FY 2010, DPS had
spent or encumbered $7.2 million of
the $9.4 million appropriation for the
direct DPS immigration staff. In
terms of local law enforcement
grants, DPS has not spent any of the
FY 2010 $2.6 million appropriation
but has spent $2.6 million of an
available $3.5 million in non-lapsing
FY 2009 monies. (Eric Billings)
Supreme Court – Report on Adult
Probation Services Fund and the
Juvenile Probation Fund – Pursuant
to A.R.S. § 12-262C, the
Administrative Office of the Courts
(AOC) is required to report to the
JLBC on the total receipts and
expenditures in each account of
the Adult Probation Services Fund
(A.R.S. § 12-267) and the Juvenile
Probation Fund (A.R.S. § 12-268).
The report is to present the
information by county and include
the amount of Personal Services
expended from each revenue
source of each account. AOC
submitted the report for FY 2009 on
November 2, 2009.

Adult Probation
AOC reports statewide Adult
Probation Services Fund total
expenditures of $134.8 million in
FY 2009. Of this total, county funds
represent 58.2% of all expenditures,
state funds represent 22.7%, Federal
Funds represent 1.7%, and other
sources of revenue, such as
probation fees and local fees,
represent 17.4%.
Juvenile Probation
Total FY 2009 expenditures for the
Juvenile Probation Fund were
$156.1 million. Of this total, county
funds represent 63.5% of all
expenditures, state funds represent
27.8%, Federal Funds represent 1.2%,
and other sources of revenue, such
as probation fees and local fees,
represent 7.5%. (Jon McAvoy)
Superior Court – Report on
Probation Services – Pursuant to
Laws 2009, 1st Regular Session,
Chapter 11, the Administrative
Office of the Courts (AOC) is
required to report to the JLBC on
several probation items:
Case Carrying and Non-Case
Carrying Positions
Adult Probation and Juvenile
Probation maintained 395.3 and
177.5 case carrying positions, and
463.2 and 398.9 non-case carrying
positions, respectively in FY 2009.
Between 74.0% and 95.8% of these
positions were filled.
Total Receipts and Expenditures
Total FY 2009 spending from all
funds for Adult and Juvenile
Probation Services was $290.8
million, including $74.6 million of
state funding. This represents a
decrease in total spending of (4.6)%
and in state funding of (9.1)% over
FY 2008.
Retained Funding
The AOC retained a total of $7.4
million in FY 2009 to support local
probation departments and the
state level probation staff through

(Continued)

training, certification, and research.
(Jon McAvoy)
University Research Infrastructure –
Report on General Fund Deposits –
Laws 2003, Chapter 267 appropriated a total of $34,625,000 from
the General Fund to the state
university system from FY 2008
through FY 2031 to finance leasepurchase payments for research
infrastructure project agreements
entered into before July 1, 2006.
Beginning in FY 2008, Chapter 267
(A.R.S. § 15-1670) requires the
universities to deposit into the state
General Fund a portion of the
income from licensure and royalty
payments or the sale and transfer of
intellectual property developed by
the university. All 3 universities have
recently reported that no deposits
were made in FY 2009.
As a result of the research infrastructure projects, the University of
Arizona reports $687,100 in
revenues; Northern Arizona
University reports no revenues; and
Arizona State University did not
provide revenue information, as
required by statute. While the
University of Arizona reported
revenues, they believe that their
income is net of expenses. After
accounting for that factor, they
report no net income available for
transfer. (Kim Cordes-Sween)

17 JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009
Table 8

General Fund Spending ($ in Thousands)
Year-to-Date

YTD Change
from FY 09

(719.0)
(2.5)
992.1
(25,111.1)
(24.6)
(421.2)
(36.7)

7,578.4
465.4
4,365.8
517,271.6
153.7
9,003.7
226.3

(7,329.7)
(154.3)
427.2
(24,971.5)
(269.8)
(3,520.8)
(84.8)

113.4
187.7
33,106.6
45.2
90,062.9
4,069.8
80,296.4
509,415.0
1,356.7
960.6
35.2
110.4
63.0
628.2
671.8
105.2
9.9
1,305.6
120,590.2
322.5
71.1
3.3
338.0

67.2
(164.6)
(2,952.4)
(372.6)
14,719.0
1,677.5
(19,216.3)
135,936.4
48.4
261.1
(5.7)
35.4
2.7
308.0
254.5
54.2
(51.0)
(528.7)
(189,839.2)
17.6
(116.1)
(15.3)
(18.4)
(234.3)

342.3
148.0
535.0
66,213.2
190.5
283,049.3
(4.6)
9,259.5
408,968.8
1,592,661.3
3,310.1
2,209.0
7,000.0
83.2
290.2
502.8
1,567.7
1,195.4
100.0
353.8
187.4
3,412.5
273,536.1
2,226.0
232.1
24.8
11.5
2,742.8

(52.5)
148.0
(1,341.3)
(6,404.8)
(1,927.4)
(18,289.4)
(721.7)
(1,174.8)
(127,792.0)
95,986.5
(534.9)
(1,117.8)
(6,000.0)
(25.9)
(89.1)
(28.9)
(123.2)
(275.1)
100.0
27.1
(167.1)
(707.9)
(181,973.3)
(403.6)
(97.8)
(55.0)
(62.8)
(473.7)

20,264.9
1,442.+
13,617.7
1,678.1
11.1

1,683.9
(100.0)
7,306.5
(578.5)
5.6

47,597.2
5,037.3
29,754.1
6,438.3
31.7

(3,181.7)
(441.5)
(762.0)
(1,934.2)
2.1

Agency

Oct 09

Department of Administration
Office of Administrative Hearings
Department of Agriculture
AHCCCS
Arizona Commission on the Arts
Attorney General
AZ Capital Post Conviction Public
Defender
State Board of Charter Schools
State Bd. of Chiropractic Exam.
Department of Commerce
Community Colleges
Corporation Commission
Department of Corrections
AZ Criminal Justice Commission
AZ St. Schools for the Deaf & Blind
Dept. of Economic Security
Department of Education
DEMA
Dept. of Environmental Quality
DEQ-WQARF
Office of Equal Opportunity
State Board of Equalization
Board of Executive Clemency
Dept. of Financial Institutions
Department of Fire, Life, Bldg Safety
State Board of Funeral Directors
Arizona Geological Survey
Government Information Tech.
Governor
Department of Health Services
Arizona Historical Society
Prescott Historical Society of AZ
Independent Redistricting Comm.
AZ Commission of Indian Affairs
Department of Insurance
Judiciary
Supreme Court
Court of Appeals
Dept. of Juvenile Corrections
State Land Department
Law Enforcement Merit System

1,538.6
188.6
1,639.9
114,401.2
116.1
1,506.1
20.1

Change from
Oct 08

18 JLBC – MONTHLY FISCAL HIGHLIGHTS – NOVEMBER 2009

Agency

Oct 09

Legislature
Auditor General
1,203.5
House of Representatives
973.3
Joint Legislative Budget Comm.
187.6
Legislative Council
709.6
AZ Library, Archives
508.4
Senate
544.7
Dpt. of Liquor Licenses
122.1
Board of Medical Student Loans
Mine Inspector
103.8
Dpt. of Mines & Mineral Resources
165.3
Nav. Streams & Adjudication
20.4
State Board of Nursing
Board of Osteopathic Examiners
Arizona State Parks Board
Personnel Board
Arizona State Board of Pharmacy
Arizona Pioneers Home
Comm. for Postsecondary Ed.
223.7
Board of Psychologist Examiners
Department of Public Safety
(4,610.7)
Department of Racing
424.1
Radiation Regulatory Agency
385.1
Rangers Pension
1.2
Real Estate Department
986.0
Department of Revenue
6,563.5
School Facilities Board
93.4
Secretary of State
205.1
Tax Appeals Board
32.3
Office of Tourism
Department of Transportation
22.1
State Treasurer *
638.4
Universities
Board of Regents
5,586.1
Arizona State University
36,851.7
Northern Arizona University
11,181.4
University of Arizona
28,950.8
Department of Veteran Services
574.4
Veterinary Medical Examining Board
Department of Water Resources
2,812.4
Dept. of Weights & Measures
233.2
Other
Grand Total
1,099,790.7
* Includes items not related to Treasurer’s operating budget.

Change from
Oct 08

Year-to-Date

YTD Change
from FY 09

(1,414.8)
242.9
(8.4)
(1,131.0)
(146.7)
21.6
(227.8)
(327.1)
0.7
130.8
(9.1)
(9.1)
(576.8)
(39.8)
200.0
(4.0)
(1,302.5)
(8,356.7)
48.5
131.9
229.3
1,392.0
(20,004.6)
(558.7)
15.9
15.3
284.6

6,218.7
5,089.8
974.5
2,395.1
2,251.1
3,607.3
659.9
383.1
561.7
335.8
74.7
100.0
21,900.3
200.0
806.1
300.0
38,314.6
3,133.8
798.7
4.6
1,671.2
17,057.6
82,018.9
889.2
115.8
200.0
32.7
1,399.8

(930.1)
255.0
(67.6)
(4,303.0)
(1,052.7)
226.7
(1,408.0)
(207.6)
(77.0)
155.3
(29.2)
(51.9)
100.0
(1,634.8)
(157.6)
200.0
(4.0)
(2,549.1)
300.0
15,170.4
2,018.1
(167.0)
0.1
(278.9)
(12,476.0)
(118,008.5)
(981.8)
(7.5)
200.0
2.1
(449.6)

1344.4
(1,958.8)
(3,774.2)
(7,686.8)
(147.7)
1,738.6
133.1
(119,870.7)

10,423.1
178,233.3
59,966.2
155,263.9
2,410.0
250.0
6,755.4
542.5
14,835.1
3,912,386.7

(2,374.7)
22,991.4
6,112.9
8,850.6
(714.3)
250.0
2,223.1
(84.0)
11,535.9
(372,629.6)