JLBC - Monthly Fiscal Highlights

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

Summary
February was the seventh consecutive month
of year-over-year growth in base General
Fund revenue collections. General Fund
revenues totaled $422.7 million. Excluding the
temporary 1-cent sales tax, these collections
were 26.3% above last year.
While the February results show an upward
trend in revenue collections, the 26.3% rate
likely overestimates real economic activity.
The February results were largely driven by
growth in individual income tax collections
compared to the prior year.

www.azleg.gov/jlbc.htm

“February was
the seventh
consecutive
month of yearover-year
growth in base
General Fund
revenue
collections.”

March 2011

February individual income tax collections are
usually difficult to interpret as the state begins
to process refund checks. Since refund
checks mostly offset withholding collections,
the net collection amount is usually small and
subject to significant fluctuation from the prior
February depending on the pace of refund
activity. For example, the state collected a
net of $52.0 million in individual income taxes
in February. This amount represents a 278%
increase, or $38.2 million over net collections
in February of the prior year.

increase, sales tax collections in February
were 6% above the prior year, marking the
fifth consecutive month of growth in this
category.
General Fund collections were $42.7 million
above forecast in February. Individual
income taxes accounted for $40.7 million of
that amount. For the year-to-date, revenues
are $84.1 million above forecast.
In comparison to February revenue of $422.7
million, February 2011 General Fund spending
was $405.0 million, or $(134.8) million below
last year. February expenditures were lower
than the prior year due to changes to the
ADE payment schedule from the prior year.
Fiscal year-to-date, General Fund revenues of
$5.34 billion have been offset by $6.27 billion
in spending.

The current forecast projects refunds to
increase overall in the “refund season”
(February - June) as compared to the prior
year due to overwithholding by taxpayers.
However, refunds are often distributed
differently during this period.
While the individual income tax data in
February is difficult to interpret, sales tax
collections clearly showed positive signs for
economic growth. Excluding the 1-cent

Table of Contents
Summary .................................................................. 1

• AXS – Interstate Agreement.............................. 7

February Revenues ................................................ 2

• DES – Capitation Rates ...................................... 7

Economic Indicators.............................................. 4
This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
March 31, 2011.

• DES – CPS.............................................................. 7
• ADE – Achievement Testing Costs ................... 8

Summary of Recent Agency Reports

• DHS – Capitation Rates...................................... 8

• ADOA – Performance Standards..................... 7

• State Mine Inspector – Abandoned Mines .... 9

• AXS – Systematic Alien Verification ................. 7

• ABOR – Financial Aid.......................................... 9

• AXS – Capitation Rates ...................................... 7

February Spending ............................................... 10

• AXS – Healthcare Group ................................... 7

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JLBC – MONTHLY FISCAL HIGHLIGHTS – MARCH 2011

February Revenues
Table 1

General Fund Revenues ($ in Millions)

February
Year-to-Date

FY 2011
Collections
$ 422.7
$ 5,340.2

Sales Tax collections were $338.8 million in
February. Excluding the $66.5 million from the
temporary 1-cent increase, collections were
$272.3 million, or 6.0% above February 2010.
Table 2 displays the February growth rates for
the largest categories.
Table 2

through
February,
[Corporate
Income Tax]
revenues are up
90.8%”

Retail
Contracting
Utilities
Use
Restaurant & Bar

February
10.4%
8.6%
(3.9)%
11.2%
(0.5)%

Difference
From FY 2010
$ 185.6
$ 304.7

overwithheld as a result of the change in the
rates in July. If this were the case, refunds
would be expected to grow during tax season.
In February, however, refunds were actually
(4.9)% below the prior year and $25.4 million
less than the forecast amount.
Since March and April are generally the largest
refund months, we will need additional data
before interpreting the results.

Sales Tax Growth Rates
Compared to Prior Year

“Year-to-date

Difference From
Budget Forecast
$ 42.7
$ 84.1

YTD
2.3%
(10.3)%
0.7%
0.9%
2.9%

Retail and contracting together account for
about 60% of all sales tax revenues. Retail
collections were very strong compared to
February of last year, up 10.4%, or about $12
million. Contracting was also strong compared
to February of last year; however, losses earlier
in the year continue to weigh down the yearto-date growth. While the past several months
have suggested declines in Contracting may
have reached bottom, February’s collections
of $27.2 million are 63.0% below the $73.4
million collected in February 2007.
Including the 1-cent increase, collections were
$19.6 million above the forecast year-to-date.
Individual Income Tax net revenues were $52.0
million in February, or 278.2% above the prior
year. Collections were $40.7 million above the
new forecast. Year-to-date, revenues have
grown 12.0% and are $55.5 million above
forecast through February.
As indicated in Table 3 below, withholding tax
payments increased by 9.5% in February and
7.0% year-to-date. This increase continues to
be difficult to interpret due to changes in the
state withholding rates last July. (See the
August MFH for additional information.)
Since job growth has been nearly flat, the
strong year-to-date withholding growth has led
us to believe that taxpayers were being

Table 3

Individual Income Tax Growth Rates
Compared to Prior Year

Withholding
Estimated +
Final Payments
Refunds

February
9.5%
10.1%
(4.9)%

YTD
7.0%
0.5%
(9.4)%

Corporate Income Tax net collections were
$7.0 million in February, or $11.7 million more
than the prior year. Collections were $(12.8)
million below the forecast. Year-to-date
through February, revenues are up 90.8% and
are $6.3 million above forecast.
The Lottery Commission reports that February
ticket sales were $50.7 million, which is $4.5
million, or 9.7%, above sales in the prior year.
Year-to-date, ticket sales are $374.3 million,
which is 6.9% above last year’s sales. The
General Fund share of sales has increased
significantly more than overall sales, however,
due to changes in the distribution formula.
Non-General Fund
Tobacco Tax revenues were $21.6 million in
February. Collections were down (12.4)%
compared to the prior year, and were $2.8
million above the budget estimate for the
month. Year-to-date collections are down
(1.9)% and are $1.3 million above the budget
estimate.
Less than 10% of tobacco taxes are deposited
directly into the General Fund. The remainder
primarily goes to AHCCCS and the Department
of Health Services to defray the General Fund

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JLBC – MONTHLY FISCAL HIGHLIGHTS – MARCH 2011

February Revenues

(Continued)

cost of operating those programs, along with
funding the Early Childhood Development
and Health Board.

compared to February of last year. Year-todate, revenues have grown 1.8%.

Highway User Revenue Fund (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 $103.6
million in February were up $3.2 million or 3.2%
Table 4

General Fund Revenue:
Change from Previous Year and Enacted Budget Forecast
February 2011
Current Month

FY 2011 YTD (Eight Months)

Change From
February 2010

Actual
February 2011

Percent

Amount

Change from
Forecast
Percent

Amount

February 2010

Actual
February 2011

Amount

Forecast

Percent

Percent

Amount

Taxes
Sales and Use w/o 1¢ *
Income - Individual
- Corporate
Property
Luxury - Tobacco
- Liquor
Insurance Premium
Estate
Other Taxes
Sub-Total Taxes

$272,340,889

$15,376,945

51,980,954

38,236,541

7,028,620

11,675,045

405,889

80,711

1,984,510

-24.8

$6,897,135

5,889

16.3

(2,019,997)
1,162,155

1,385,066

(344,623)

(19.9)

33,777
$336,321,860

(5,215)
$63,816,372

(13.4)
23.4 %

$27,158,825

2,008,916,653

215,767,195

12.0

55,516,487

(64.5)

273,271,928

130,069,852

90.8

6,337,906

2.4

1.5

12,182,365

(215,592)

(1.7)

148,298

1.2

(50.4)

16,598,594

(243,639)

(1.4)

(2,038,218)

(10.9)

--

18,738,004

(55,342)

(0.3)

2,474,629

15.2

(39.8)

178,827,658

3,339,800

1.9

--

437,372

52,544

13.7

(72.4)

866,004

310,196

55.8

$4,805,903,916

$376,183,839

(12,793,266)

(56.0)
--

$2,296,065,337

359.4

(1,481,876)
0

2.6 %

40,664,840

1,162,155
0

278,844

6.0 %
278.2

(914,934)
0
(88,723)
$32,913,099

10.8 %

1.2 %

8.5 %

$12,495,462

(804,198)
0
(143,969)
$73,986,398

0.5 %
2.8

(0.4)
0.0
(14.3)
1.6 %

Other Revenue
Lottery

6,405,640

6,405,640

License, Fees and Permits

2,628,897

1,291,575

Interest

(656,337)

(192,189)

-96.6
41.4

1,405,640

28.1

29,790,909

10,706,209

56.1

2,959,279

1,328,897

102.2

18,963,701

2,114,673

12.6

2,604,557

1,882,475

1,235,421

190.9

(946,337)

--

(957,526)

11.0
15.9
(33.7)

Sales and Services

8,582,916

1,492,488

21.0

6,182,916

257.6

19,932,551

(191,631)

(1.0)

3,512,884

Other Miscellaneous

3,877,588

1,772,664

84.2

1,177,588

43.6

15,973,257

(8,334,865)

(34.3)

931,094

6.2

0

0

27,146,306

27,146,306

--

0

0.0

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

584,399

(71,960)

-(11.0)

0
(2,915,601)

-(83.3)

(56.3)

(6,082,593)

21.4

14,897,480

(19,231,315)

21,423,103

10,698,218

99.8 %

6,233,103

41.0 %

128,586,679

13,444,799

11.7 %

2,967,696

(29.0)
2.4 %

$357,744,963

$74,514,590

26.3 %

$39,146,202

12.3 %

$4,934,490,595

$389,628,638

8.6 %

$76,954,094

1.6 %

Other Adjustments
(39,500,543)

12,886,509

--

0

0.0

(316,004,345)

103,092,072

--

0

0.0

1¢ TPT Increase*

Urban Revenue Sharing

66,471,235

66,471,235

--

3,561,065

5.7

543,918,504

543,918,504

--

7,115,587

1.3

Budget Plan Transfers

37,974,543

31,717,644

0

0.0

177,798,082

0

0.0

Leaseback Proceeds

0

0

64,945,235

111,075,388

-- %

3,561,065

$422,690,198

$185,589,978

78.3 %

Highway User Revenue Fund

$103,634,000

$3,212,000

Tobacco Tax (All Funds Total)

$21,591,112

($3,052,209)

Sub-Total Other Adjustments
TOTAL GENERAL FUND REVENUE

506.9
--

0

--

3,442,801

0

(735,419,300)

5.8 %

405,712,241

(84,965,923)

$42,707,267

11.2 %

$5,340,202,836

3.2 %

$1,705,545

1.7 %

(12.4) %

$2,881,096

15.4 %

2.0
(100.0)

0

--

(17.3) %

7,115,587

1.8 %

$304,662,715

6.1 %

$84,069,681

1.6 %

$798,556,000

$13,878,000

1.8 %

$2,108,085

0.3 %

$213,907,982

($4,188,644)

(1.9) %

$1,299,055

0.6 %

Non-General Funds

__________
* Sales and Use line excludes revenue from the temporary 1¢ increase approved by the voter in May 2010. That revenue is shown under One-Time Revenues. Total February collections including the 1¢ increase
were $338.8 million. This amount is $81.8 million, or 31.9%, above February 2009 and $10.4 million, or 3.2%, above forecast. Year to date, total collections including the 1¢ increase were $2.84 billion. This amount is
$571.1 million, or 25.2%, above February 2009 and $19.6 million, or 0.7%, above forecast.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – MARCH 2011

Economic Indicators
NATIONAL

“Contrary to
what was
previously
reported, revised
employment
estimates now
indicate that the
state has just
barely started to
reverse an
unprecedented
3-year streak of
job losses.”

The Conference Board’s U.S. Consumer
Confidence Index increased by 5.6 points in
February to 70.4, the highest reading since
February 2008. While the index is up by almost
52% year-over-year, it must be noted that this
figure is inflated due to a recent change in the
methodology used by the Conference Board.
Nevertheless, the survey suggests that
consumers are becoming increasingly more
optimistic about their current and future
economic outlook. It is not clear, however, to
what extent the growing unrest in the Middle
East and the fallout of the largest earthquake
in Japan’s recorded history will influence
consumer sentiments in the coming months.
The Conference Board’s U.S. Index of Leading
Economic Indicators rose 0.8% in February,
following a 0.1% increase in January, indicating
that the economy will continue to expand
despite ongoing problems in the housing
market. A decrease in initial jobless claims,
along with rising stock prices and a favorable
interest-rate spread outweighed the negative
effects of a decrease in building permits.
Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), rose by 0.5% in
February, following a 0.4% increase in both
January and December. The recent CPI
increase is almost exclusively driven by rising
energy and food prices. The price of gasoline
and food increased by 4.7% and 0.6%,
respectively, in February. Core inflation, which
excludes energy and food, remains subdued,
although it has been inching up in each of the
last 4 months.
ARIZONA
Employment
As a result of the recent annual revision of
employment data, known as “benchmarking,”
the Arizona Department of Commerce now
reports that the state suffered considerably
higher job losses in 2010 than previous
estimates had indicated.
Prior to the March release of revised
employment data, the state’s job market was
generally believed to have turned a corner in
the fall of 2010, as monthly reports at that time
showed modest but growing job gains. The
revised data, however, shows that instead of
adding an average of 21,000 jobs per month,

year-over-year, in the last 5 months of 2010,
the state actually lost an average of (22,000)
jobs per month over the same period. For the
year as a whole, the state had on average
(27,100) fewer jobs per month than previously
reported.
The March revision indicates that the streak of
year-over-year losses did not end in August of
2010, as previously reported, but instead
continued through the remainder of the year.
January’s net job gain of 700 positions marked
the end of 35 consecutive months of yearover-year job losses. The state saw another
5,300 year-over-year job gain in February. The
revised data indicates that there were
(330,300) fewer jobs in the state last month
than at the outset of the last recession in
December 2007. Contrary to what was
previously reported, revised employment
estimates now indicate that the state has just
barely started to reverse an unprecedented
3-year streak of job losses.
The state’s unemployment rate was also
revised in March and the new estimates
indicate that the state’s job market was far
more adversely affected by the recession
than previous reports had shown. For
example, under the previous estimates, the
state’s jobless rate never exceeded 9.7%
during the recession, whereas revised data
now indicates that the unemployment rate
was 10% or higher for 12 consecutive months,
beginning in July 2009. As a result of the
revision, the state’s jobless rate during the
recession was about half a percentage point
higher than previously estimated. The March
release of revised unemployment data
indicates that the jobless rate in the state has
remained at 9.6% in each of the prior 4
months.
The state’s unemployed filed a total of 19,880
initial claims for unemployment insurance in
February, a (31.7)% decrease over the prior
month, more than twice the average decline
observed for the same month in the 10-year
period leading up to the last recession. Also,
February marked the first time since March
2008 when initial jobless were less than 20,000.
Prior to the recession, February initial claims
were typically less than 14,000. Compared to
the same month in the prior year, first-time
claims in February were down by (15.1)%, the
16th consecutive month with year-over-year
declines.

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – MARCH 2011

Economic Indicators
Claims peaked in April 2009 when more than
41,000 individuals filed for initial jobless
benefits. See Tracking Arizona’s Recovery, for
additional historical information.
Housing
In February, the number of new Maricopa
County foreclosure notices decreased (24.8)%
from January levels to 5,102.
The number of Maricopa County pending
foreclosures decreased in February. The
February total of 39,153 is (23.9)% below the
peak in December 2009 (51,466). See
Tracking Arizona’s Recovery, for additional
historical information.
“AHCCCS
caseloads are
currently (1.4)%
below March
2010 levels.”

While foreclosure notices and pending
foreclosures continue their decline from
recent highs, they continue to be a major
influence on existing home sales and the
respective prices. In the Metropolitan Phoenix
area in February, there were a total of 8,565
existing single-family home sales that resulted
in a median resale home price of $133,100.
Relative to the prior year, the number of sales
is up 8.1%, while prices are (8.2)% lower. Of
the existing sales, 42.6%, or 3,650 were
foreclosures.
State Agency Data
In March AHCCCS caseloads equaled 1.34
million members, a (0.4)% decrease over the
prior month. AHCCCS caseloads are currently
(1.4)% below March 2010 levels. Total
enrollment reached its peak in June 2010, and
has declined slowly since then. The FY 2011
budget funded a projected March 2011
caseload growth of 5.4% above March 2010
levels, for a total of 1.43 million members.
There were 42,336 TANF recipients in the state
in February, a monthly caseload decrease of
(3.3)%. Year-over-year, the number of TANF
recipients has declined by (47.7)%. This
decline is the result of changes to the
statutory lifetime limit a person may receive
cash assistance. Beginning in July, recipients
can only receive benefits for a maximum of
36 months in a lifetime. Previously, the
maximum had been 60 months. This change
resulted in a caseload decline of
approximately (16,000) recipients. The FY 2011
budget assumed caseloads of approximately
70,000 in FY 2011.

(Continued)

The Supplemental Nutrition Assistance
Program (SNAP), formerly known as Food
Stamps, provides assistance to low-income
households to purchase food. In February,
there were a total 1.1 million food stamp
recipients in the state, a (0.9)% decrease over
the prior month. Compared to the same
month last year, food stamp participation was
up by 2.4%. The number of food stamp
recipients began increasing steadily in July
2007, after several years in the 550,000 to
575,000 range.
The 3-month average count of the Department
of Correction’s (ADC) inmate population
declined to 40,063 inmates between October
and December 2010. Relative to the prior
period the population has decreased by (83),
and compared to a year ago the population
has declined by (413) inmates.

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – MARCH 2011

Economic Indicators

(Continued)

Table 5

ECONOMIC INDICATORS
Indicator
Arizona
- Unemployment Rate (SA)
- Initial Unemployment Insurance Claims
- Unemployment Insurance Claimants
- 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
- Foreclosure Activity, Maricopa County
Foreclosure Notices (Notice of Trustee’s Sales Recorded)
Pending Foreclosures (Active Notices)
Greater Phoenix S&P/Case-Shiller Home Price Index
(Jan. 2000 = 100)
- Arizona 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)
*Adjusted for 1¢ sales tax

Time Period

Current Value

Change From
Prior Period

Change From
Prior Year

February
February
January
February
February
February
January
Dec-Feb
Dec-Feb

9.6%
19,880
69,106
2.39 million
148,200
104,100
40.2
$30.9 million
$152.0 million

0.0%
(31.7)%
5.3%
1.0%
0.1%
(2.2)%
(1.2)%
(8.7)%
1.1%

(0.6)%
(15.1)%
(29.6)%
0.2%
0.3%
(4.5)%
2.3%
(0.6)%*
6.1%*

Nov-Feb
Nov-Feb

663
191

9.2%
30.5%

(38.3)%
(1.7)%

February
February

8,565
1,460

2.9%
10.6%

8.1%
12.3%

February
February

$133,100
$85,000

1.1%
0.0%

(8.2)%
(17.9)%

February
February
January

5,102
39.153
101.54

(24.8)%
(2.0)%
(1.5)%

(32.9)%
(22.3)%
(9.1)%

February
January
December

5.7 months
3.26 million
$6.64

1st Quarter 2011
January
4th Quarter 2010
April 1, 2010
March
February
February
Jan-Mar

62.8
178.22
$226.7 billion
6.39 million
1,338,942
42,336
1,064,128
40,063

11.5%
0.3%
1.1%
N/A
(0.4)%
(3.3)%
(0.9)%
(83) inmates

25.1%
0.3%
3.3%
N/A
(1.4)%
(47.7)%
2.4%
(413) inmates

January
January

19,527
26,112

(68)
19

(237)
(2,792)

4th Quarter 2010
(Final Estimate)
February
February
Nov-Jan
February

$13.4 trillion

3.1%

2.8%

70.4
113.4
$4.70 billion
222.27

8.6%
0.8%
2.1%
0.5%

51.7%
5.8%
24.5%
2.2%

(0.9) months
(2.1)%
10.5%

(0.7) months
6.1%
(0.7)%

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – MARCH 2011

Summary of Recent Agency Reports
Arizona Department of
Administration – Semi-annual Report
on Performance Standards –
A.R.S. § 38-658 requires the Arizona
Department of Administration to
produce a semi-annual report on
the state’s self-insured employee
health plan's prior year
performance. The report for the
plan year (PY) ending September
30, 2010 shows trends in utilization of
services and pharmaceuticals, and
vendor performance standards. For
PY 2010, vendors missed 13
performance standards in at least 1
month. In total, vendors paid
$109,400 in penalties for missed
standards, with United Healthcare
paying the highest penalty
($65,900). (Ben Beutler)
AHCCCS – Report on Systematic
Alien Verification for Entitlements
Program – Pursuant to A.R.S. § 362903.03, the Arizona Health Care
Cost Containment System
(AHCCCS) provided its latest
quarterly reports on the collection
and verification of documentation
associated with the Systematic
Alien Verification for Entitlements
(SAVE) program.
AHCCCS, in conjunction with the
Department of Economic Security
(DES), verified the immigration status
of 11,003 individuals between July 1,
2010 and September 30, 2010.
During this period, AHCCCS and
DES did not identify any fraudulent
documents using the SAVE
program. (Amy Upston)
AHCCCS – Report on Preliminary
Capitation Rate Changes –
Pursuant to a FY 2011 General
Appropriation Act footnote,
AHCCCS has submitted preliminary
actuarial estimates of the
capitation rate increases for FY
2012.
On April 1, 2011, AHCCCS will
implement a (5)% rate reduction for
most provider rates. Relative to the
April 1 rates, AHCCCS has indicated
that they are working toward a goal

of 0% growth in capitation rates for
FY 2012. The Senate-approved FY
2012 budget also assumes no
capitation rate adjustment. Based
on the current configuration of the
Acute Care program, AHCCCS
anticipates a moderate increase in
utilization. AHCCCS intends to
offset the utilization increases by
holding provider rates flat with
possible reductions in some service
categories and possible benefit
limits. AHCCCS is unable to provide
preliminary estimates for the
Children’s Rehabilitative Services
(CRS) program or the Arizona Long
Term Care System (ALTCS) program
at this time since this is the first year
that AHCCCS is developing the
capitation rate for the CRS program
and the ALTCS program is currently
out for bid. (Amy Upston)
AHCCCS – Report on Healthcare
Group – Pursuant to A.R.S. § 362912AA, the Arizona Health Care
Cost Containment System
(AHCCCS) has submitted its annual
financial audit for Healthcare
Group (HCG). AHCCCS reports that
HCG had $9.0 million in unpaid prior
year obligations and other liabilities
at the end of FY 2010. This is a $(1.8)
million decrease from FY 2009.
AHCCCS reports that the decrease
is primarily attributable to a $2.0
million operating income surplus
resulting from actuarially sound
rates.
AHCCCS also reports that as of
December 2010, total statewide
HCG medical plan enrollment was
9,033, with participating members
from 3,316 private employers. Since
December 2008, enrollment has
decreased by (7,789) people.
AHCCCS attributes the enrollment
decreases to the economic
downturn. (Amy Upston)
AHCCCS – Report on Interstate
Agreement with Hawaii – Pursuant
to A.R.S. § 36-2925H, the Arizona
Health Care Cost Containment
System (AHCCCS) has submitted its
annual report on the status of an

Interstate Agreement with the State
of Hawaii. This report summarizes
the continued activities associated
with the agreement between
AHCCCS and Hawaii for data
processing. The proceeds for this
agreement are deposited into a
special fund. This fund had an
ending FY 2010 balance of
$1,249,621. A.R.S. § 36-2926 limits
these funds to technology projects
and Information Technology (IT)
staff recruitment. (Aaron Galeener)
Department of Economic Security –
Report on Preliminary Capitation
Rate Changes – Pursuant to a
FY 2011 General Appropriation Act
footnote, the Department of
Economic Security (DES) has
submitted preliminary actuarial
estimates of Medicaid Long Term
Care Developmental Disabilities
program capitation rate changes
for FY 2012.
The Senate budget plan (SB 1612)
assumes capitation rate growth of
0% for the Developmental
Disabilities Long Term Care
program. The preliminary
capitation rate review provided by
DES estimates the FY 2012
capitation rate would not change
materially from FY 2011. Unlike
AHCCCS and DHS, DES is not
implementing April 1st provider rate
reductions. (Aaron Galeener)
Department of Economic Security
(DES) – Semi-Annual Report on CPS
Financial and Program
Accountability – Pursuant to A.R.S. §
8-818, DES has submitted its semiannual financial and program
accountability report. This is the first
report DES has submitted since April
2008. The report includes 7
measures specifically identified in
statute, as well as 12 other measures
requested by the JLBC. According
to the report, out-of-home
placements increased from 10,341
in July to 10,495 in December.
Caseloads are above the
department’s goals and turnover for
Child Protective Services (CPS)

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – MARCH 2011

Summary of Recent Agency Reports
Specialists was approximately 25.6%
annually. Employee satisfaction is
stable at a 3.5 rating out of 5.0. The
highlights of this report, covering the
first 6 months of FY 2011, are
summarized below.
•
•

•

•

•

The CPS Training Academy had
120 new case managers in
training as of December 2010.
As of December 2010, the
number of filled positions was
764 of 970 authorized and
funded positions, excluding
those in training. This figure is 75
higher than last July.
Considering only filled positions,
caseloads per worker are
considerably higher than
caseload goals, with
investigations at 15 (goal: 10),
in-home at 29.7 (goal: 19), and
out-of-home at 25 (goal: 16).
DES reports that annualized
case manager turnover during
the first 6 months of FY 2011 was
25.6%, with 141 case managers
leaving the Division of Children,
Youth and Families (DCYF). The
turnover rate varies by district,
from a high of 53.8% in District 6
to a low of 14.7% in the CPS
Hotline. The report also shows
that 135 new case managers
were hired over the same time
period.
Employee satisfaction remains
steady at an average rating of
4.5 on a scale of 5, for training
in the CPS Academy and 3.5
for overall employee
satisfaction.
The percent of CPS
dependency cases denied or
dismissed in the last 6 months
remained at the same level
(0.1%) as the previous 6 months,
while the percent of Office of
Administrative Hearing’s
decisions affirming CPS case
findings decreased from 93.8%
to 90.0%. The percent of
complaints validated by the
Ombudsman increased from
4.6% to 5.0% (6 of 131
complaints).

•

•

The number of children in outof-home family placements
increased from 8,649 in June to
8,750 in December, while the
number of congregate care
placements declined from
1,251 to 1,250. DES also reports
that from June to December
the number of children aged 03 in shelter care decreased
from 14 to 12, the number of
children aged 0-6 in group
homes decreased from 12 to
11, and the number of children
in shelter care for more than 21
days decreased from 365 to
320. The December numbers
are labeled as preliminary.
At its September 28, 2005
meeting, the Committee asked
DES to report on the
participation of faith-based
organizations in providing
services. DES reports that they
expect the division’s
partnerships with faith-based
organizations to continue to
grow in FY 2011. The division
partnered with churches for the
Season of Service campaign,
which includes helping
churches to engage their
congregations in acts of
service to expose them to the
needs of their communities. In
addition, the division
participated in a Faith Summit
with the focus of providing the
community with information
about the needs of foster youth
as the age out of foster care.
(Aaron Galeener)

Department of Education – Report
on Achievement Testing Costs – The
Arizona Department of Education
(ADE) recently reported changes in
Achievement Testing costs, as
required by a footnote in the
General Appropriation Act. The
report indicates that contract costs
for the Arizona Instrument to
Measure Standards (AIMS) tests will
be $14,278,200 in FY 2012, which
would be $(722,800) less than the
original contract amount of
$15,001,000. The reduction is due

(Continued)

primarily to reduced counts and
lower scoring and program
management costs. ADE
anticipates that the revised
$14,278,200 total will be funded with
$6,190,400 in Federal Funds and
$8,087,800 in state funds. (Steve
Schimpp)
Department of Health Services –
Report on Preliminary Capitation
Rate Changes – Pursuant to a FY
2011 General Appropriation Act
footnote, the Department of Health
Services (DHS) has submitted
preliminary actuarial estimates of
Medicaid Behavioral Health
Services (BHS) capitation rate
changes for FY 2012.
On April 1, 2011, DHS will implement
a (5)% reduction in provider rates.
This reduction would not be applied
against some services, such as
prescription drugs, resulting in a net
capitation rate reduction of (3.12)%.
Relative to the April 1 rates, DHS has
indicated that they are working
toward a goal of 0% capitation
growth in FY 2012. Based on the
current configuration of the BHS
program, DHS anticipates some
increases to utilization. In addition
to maintaining the provider rate
decrease, DHS states that it is
possible that other reductions may
have to be made in order to keep
rates flat.
In addition, DHS states that the
proposed suspension of coverage
for individuals eligible for Proposition
204 services would require an
adjustment to capitation rates
effective October 1, 2011. DHS does
not know the impact of changes in
coverage, but states that a
significant increase in rates is
possible, if those individuals who
continue to receive coverage have
a high rate of utilization.
The Senate budget plan (SB 1612)
assumes BHS capitation rate
changes of 0% relative to the
capitation rates that will be
established on April 1. (Art Smith)

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – MARCH 2011

Summary of Recent Agency Reports
State Mine Inspector – Report on
Abandoned Mines Safety Fund
Expenditures and Contributions –
The State Mine Inspector is required
by A.R.S. § 27-131 to establish a
program to locate, inventory,
classify, and eliminate public safety
hazards at abandoned mines.
A.R.S. § 27-131 created the
Abandoned Mines Safety Fund
(AMSF) to fund the program. The
Mine Inspector must submit an
annual report to JLBC on or before
December 1 detailing the
contributions to the AMSF, and the
expenditures by the fund during the
preceding fiscal year.
For FY 2010, the State Mine
Inspector has recently reported that
the AMSF had revenues of $600.
The State Mine Inspector secured 43
mine sites during FY 2010, at a total
cost of $2,700. The Mine Inspector
has completed preliminary planning
for an additional 46 mine sites in FY
2011, with an estimated cost of
$52,900. The Mine Inspector
financed these activities through
the fund’s carry-forward balance.
(Ted Nelson)
Arizona Board of Regents – Report
on University System’s Financial Aid
– Pursuant to A.R.S. § 15-1650, the
Arizona Board of Regents is required
to submit an annual report on
financial aid. Highlights from the FY
2010 report include:
•
•

Approximately $1.5 billion in
total financial aid was provided
to students.
Of this amount, $752.7 million
(48.8%) came from federal
sources, $524.0 million (34.1%)
came from state institutional
sources, $259.4 million (16.9%)
came from private sources, and
$2.6 million (0.2%) came from
state scholarships, grants and
loans. (The private sources
amount includes $14.1 million
Arizona Financial Aid Trust,
which is a combination of both
state and institutional sources of
aid.)

•

A total of 109,134 students
received aid, including 84,919
undergraduate students and
24,215 graduate students.
•
Of the undergraduate students
receiving aid, 20,867 received
non-need-based gift aid, 41,928
received need-based gift aid,
and 34,810 were awarded
miscellaneous types of non-gift
aid (i.e. work study). Some
students received multiple types
of aid.
•
The average aid package was
$10,488, which includes both
need and non-need-based aid.
•
52.3% of undergraduate
students and 54.2% of graduate
students have debt.
•
Upon graduation, the average
undergraduate student debt
was $19,946, while the average
graduate student debt was
$42,097.
(Leatta McLaughlin)

(Continued)

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – MARCH 2011

February Spending
FY 2011 Spending
“February 2011
spending of
$405.0 million

February 2011 spending of $405.0 million was
$(134.8) million lower than February 2010 (See
Table 6).

•

was $(134.8)
million lower
than February

•

2010.”

•

•

In February, the Arizona Department of
Education spending was $(220.5) million
lower than the prior year. February
expenditures were lower due to ADE
rolling over the monthly payment to
school districts.
University spending was $58.4 million in
February, or $(15.2) million lower than the
prior year. The decreased expenditure
amount reflects the rollover being spread
out over the course of the fiscal year.
School Facilities Board spending was
$31.3 million higher than February of the

prior year. This reflects changes to the
debt service schedule.
In February, Department of Health
Services (DHS) spending was $39.6 million,
or $30.3 million higher than the prior year.
The increased expenditure amount
reflects transfers to AHCCCS for the
Medicaid state match in the behavioral
health program.

Table 6
General Fund Spending ($ in Millions)

Feb 11
Agency
AHCCCS
Corrections
Economic
Security
Education
Health Services
Public Safety
School Facilities
Board
Universities
Leaseback Debt
Service
Other
Total

Change
from
Feb 10

Year to
Date

YTD Change
from FY 10

124.1
57.1
7.1

21.2
(1.6)
24.5

1,014.3
592.0
463.1

66.8
25.3
(43.9)

62.9
39.6
1.6
33.6

(220.5)
30.3
31.3

2,584.4
380.1
33.4
67.0

(416.3)
(22.6)
(6.6)
(36.9)

58.4
-

(15.2)
-

664.4
52.1

(44.0)
52.1

20.6
405.0

(4.8)
(134.8)

423.5
6,274.3

(48.9)
(475.0)

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – MARCH 2011

Table 7

Agency
Department of Administration
Department of Admin Sale/Leaseback D/S
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
Board of Chiropractic Examiners
Department of Commerce
Community Colleges
Corporation Commission
Department of Corrections
Board of Cosmetology
AZ Criminal Justice Commission
AZ State Schools for the Deaf & Blind
Department of Economic Security
Department of Education
DEMA
Department. of Environmental Quality
DEQ – WQARF
Office of Equal Opportunity
State Board of Equalization
Board of Executive Clemency
Department of Financial Institutions
Department of Fire, Life, Bldg Safety
Office of the State Forester
Board of Funeral Directors
Arizona Geological Survey
Government Information Tech.
Governor
Gov. - OSPB
Department of Health Services
Arizona Historical Society
Prescott Historical Society of AZ
Independent Redistricting Comm.
Commission on Indian Affairs
Department of Insurance
Judiciary
Supreme Court
Superior Court
Court of Appeals
Department of Juvenile Corrections
State Land Department
Law Enforcement Merit System

General Fund Spending
($ in Thousands)
Change from
February 11
February 10
1,067.8
189.3
43.4
32.0
458.7
162.7
124,069.4
21,196.0
35.0
(76.8)
106.2
(908.3)
52.3
9.9

Year-to-Date
14,524.1
52,066.9
663.8
5,938.8
1,014,330.9
449.3
11,787.0
476.4

YTD Change from
FY 10
1,852.2
52,066.9
(6.1)
(393.9)
66,824.9
(114.1)
(1,777.6)
18.7

38.9
107.1
100.7
57,053.7
344.1
7,123.2
62,888.2
435.8
8.8
17.8
43.3
155.3
121.5
195.7
96.6
34.2
252.4
142.0
39,621.2
179.6
163.3
13.7
302.3

(7.3)
90.2
53.6
(1,566.9)
(815.4)
24,509.2
(220,487.9)
88.1
(342.0)
(7.6)
(9.2)
3.3
14.2
33.5
195.7
21.7
7.1
146.7
12.5
30,297.9
11.3
130.4
13.6
(8.5)

525.5
2,813.4
99,319.7
436.7
592,050.0
15,034.4
463,133.5
2,584,383.7
7,748.0
7,000.0
129.3
450.3
619.6
1,950.1
1,523.7
1,957.1
499.7
342.2
4,781.5
1,340.7
380,114.0
4,601.4
539.5
45.0
4,062.0

4.3
(148.0)
445.5
58.3
25,280.5
(252.0)
4.6
(28.2)
(43,944.5)
(416,309.0)
1,701.0
(3,796.6)
(27.7)
(6.5)
(96.4)
(410.2)
(227.1)
1,957.1
(100.0)
(97.0)
24.9
(669.8)
(84.6)
(22,567.5)
1,480.1
32.2
(26.1)
(26.2)
(128.2)

680.3
1,021.9
888.3
3,155.4
143.2
4.6

(329.8)
(8,423.7)
(19.6)
(150.5)
283.6
1.2

15,336.0
47,438.0
10,719.6
38,228.4
2,341.3
51.0

2,420.8
(14,255.2)
554.1
(9,364.1)
(9,466.1)
(3.2)

12

JLBC – MONTHLY FISCAL HIGHLIGHTS – MARCH 2011

Agency
Auditor General
House of Representatives
Joint Legislative Budget Comm.
Legislative Council
Senate
Department of Liquor Licenses
Board of Medical Student Loans
Mine Inspector
Department of Mines & Mineral Resources
Nav. Streams & Adjudication
OSHA
Arizona State Parks Board
Pioneers’ Home
Board of Psychologist Examiners
Comm. for Postsecondary Ed.
Department of Public Safety
Arizona Department of Racing
Radiation Regulatory Agency
Arizona Rangers Pension
Real Estate Department
Department of Revenue
School Facilities Board
Secretary of State
Tax Appeals Board
Office of Tourism
Department of Transportation
State Treasurer
Universities
Board of Regents
Arizona State University
Northern Arizona University
University of Arizona
Veterinary Medical Examiners Board
Department of Veteran Services
Department of Water Resources
Department of Weights & Measures
Other
Grand Total

February 11
1,139.8
800.5
147.7
327.0
612.0
57.7
14.0
4.9
167.3
1,575.0
130.0
8.9
140.0
3,330.7
33,636.4
571.8
16.9
11.4
2,299.4
25,366.2
8,551.9
22,135.0
2,181.9
189.4
80.6
293.5
404,955.8

Change from
February 10
1,063.6
(125.3)
(27.4)
40.2
(35.4)
(.6)
(34.7)
(30.7)
(9.0)
(.6)
(6.7)
167.3
(879.9)
(38.9)
(1.7)
4.5
(1.2)
(1.8)
4,568.7
31,319.5
(29.5)
8.7
(178.4)

Year-to-Date
12,277.2
8,448.1
1,490.0
3,380.1
5,977.9
3.2
343.8
798.7
807.1
101.6
20,000.0
984.5
25.0
610.4
33,438.7
3,431.3
1,031.3
8.2
2,053.9
29,480.5
67,028.3
11,308.9
184.4
36.5
-

2,271.9
(7,851.1)
(2,668.3)
(6,906.4)
886.3
(1,205.0)
5.9
515.5
(134,830.3)

15,753.9
293,750.0
98,909.0
256,009.3
9,230.1
4,786.6
772.2
2,087.2
6,274,300.4

YTD Change from
FY 10
2,009.0
(329.8)
(173.4)
(292.4)
(254.5)
(737.2)
(458.1)
(138.3)
354.6
1.8
(14.4)
(1,900.3)
984.5
(275.0)
(1,642.0)
(6,645.5)
(603.1)
(40.0)
(1.1)
(366.0)
7,191.0
(36,931.1)
4,399.4
(3.4)
(200.0)
(3.5)
(1,908.0)
(4,061.5)
(18,049.5)
(6,094.0)
(15,782.6)
(250.0)
3,040.0
(7,378.7)
(95.4)
(18,720.1)
(474,968.4)