JLBC - Monthly Fiscal Highlights

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

www.azleg.gov/jlbc.htm

“July continued
last fiscal year’s
trend of
increasing
revenue
collections, as it
marked the
twelfth
consecutive
month of yearover-year
growth in base
General Fund
revenues.”

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
August 26, 2011.

August 2011

Summary
July continued last fiscal year’s trend of
increasing revenue collections, as it marked
the twelfth consecutive month of year-overyear growth in base General Fund revenues.
General Fund revenue collections totaled
$765.1 million. Excluding one-time revenue
adjustments, these collections were 8.4%
above last year.

to differences in the timing of several debt
service payments. Overall, July spending
tends to be relatively large compared to
overall fiscal year spending due to the
payment of part of the K-12 payment deferral
and other technical adjustments.

July collections were driven by growth in two
areas. The first was an increase in sales tax
collections, with gains occurring in every tax
category. Individual income tax (IIT)
collections, also showed gains based on
continued withholding growth. Because July
of last year was the first month the State used
new withholding tables, this continued growth
is exclusive of the effects of the withholding
changes.

In the July MFH, JLBC Staff estimated that
higher than expected FY 2011 revenue
collections would eliminate at least $300
million of the $(332) million shortfall assumed
by the FY 2011 revisions enacted in April.
Since that time, the state has finished the
"13th month," a time period where the state
continues to record FY 2011 revenues and
spending obligations.

July General Fund collections were $35.4
million above the enacted budget forecast.
As enacted in April, the budget was based on
a revenue growth rate of 5.7% throughout FY
2012. As reported last month, however, FY
2011 collections were higher than
anticipated. As a result, base revenue would
now need to grow by 1.0% to meet the
budgeted level. By excluding one time and
statutory adjustments, base revenues are
intended to reflect the natural growth in the
economy. Including statutory changes,
revenue would need to grow by 1.8% to
reach the budgeted amount
In comparison to July revenue of $765.1
million, July 2011 General Fund spending was
$1.67 billion. July expenditures were $165.0
million higher than the prior year, primarily due

Updated FY 2011 Ending Balance Projection

After making these year-end adjustments, FY
2011 revenues were $8.39 billion compared to
FY 2011 spending of $8.36 billion. This would
leave the state with an approximate ending
balance of $29 million.
However, it is important to note that it will take
several months to confirm the year-end
adjustments and calculate the state's official
fiscal year ending balance. The General
Appropriation Act requires the Executive
Branch to provide a preliminary estimate of
the FY 2011 ending balance by September
15, 2011. The Department of Administration is
required to publish its final FY 2011 accounting
by December 1, 2011.
State Impact of Federal Budget Legislation
The recent enactment of the federal debt
ceiling legislation has raised the question of its

Table of Contents
Summary .................................................................. 1
• Updated FY 2011 Balance Projection ............. 1
• State Impact of Federal Budget Legislation .. 1
• State Debt Rating ............................................... 3
July Revenues ......................................................... 4
Economic Indicators .............................................. 6
Summary of Recent Agency Reports
• Dept. of Corrections Inmate Utility Fee.......... 9

• DES Semi-Annual Report.................................... 9
• Dept. of Education Federal Monies for English

Learners ................................................................ 9

• State Parks Board – Out-of-State Travel.......... 9
• DPS Photo Enforcement Quarterly Report .. 10
• AZ Board of Regents University Retention

Rates ................................................................... 10
July Spending........................................................ 11

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JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2011

Summary

(Continued)

impact on Arizona. There has been interest in whether it
will affect the level of federal aid and the state's own
credit rating.
In terms of federal aid, the debt ceiling legislation is
unlikely to result in a substantial change to federal
assistance in the current fiscal year, although the impact
could increase in future years. The Budget Control Act
(BCA) of 2011 increased the federal debt ceiling,
established caps on discretionary spending and made
minor changes in some mandatory spending. The
legislation is estimated to reduce projected federal
deficits by a cumulative $917 billion through FY 2021.
The legislation requires the enactment of at least
another $1.2 trillion in savings over 10 years. If Congress
fails to act enact specific deficit proposals by the end of
this calendar year, the $1.2 trillion will be achieved
through across the board reductions.
Several observations about the federal legislation:

•

The BCA does not break out security and nonsecurity caps beyond FY 2013, but the overall
spending limit continues to grow each year through
FY 2021. As a result, the discretionary reductions are
achieved through slowing the rate of growth rather
than year over year reductions in the total level of
spending.

•

The BCA only sets aggregate spending caps and
does not specify the funding level for any particular
program. The specific program dollar amounts
would be determined in the regular federal
appropriations process.
Future Reductions

•

In terms of additional deficit reduction, the BCA
requires action on at least another $1.2 trillion in 10year deficit reduction proposals by the end of the
year. This reduction could occur in 1 of 2 ways.

•

First, a joint congressional committee is supposed to
provide recommendations for achieving $1.5 trillion
in added deficit reduction. They have the ability to
propose any type of deficit reduction including
mandatory spending cuts and revenue increases.
In terms of mandatory spending changes, the state
would potentially be most affected by a reduction
in the share of Medicaid costs paid for by the
federal government. It is difficult to predict in
advance, however, whether Medicaid would be a
component of the congressional committee
recommendations.

•

If Congress fails to enact the joint committee's
deficit reduction plan, $1.2 trillion in savings would
occur through automatic across-the-board
reductions. These reductions would apply to most
discretionary programs except Veteran's Medical
Care and Pell Grants. These cuts, however, would
not take place until January 2013, or 3 months after
the beginning of federal FY 2013. As a result, the
Congress could modify the automatic trigger any
time during calendar year 2012.

•

The discretionary across-the-board reduction would
be approximately 9%. After some technical
adjustments to the $361 billion non-security base in
FY 2013, that reduction would equate to
approximately $25 billion to $30 billion.

•

Among the major state-related discretionary
programs, the following would be subject to the
across-the-board reduction: federal Department of
Education grants, housing assistance, homeland
security, job training and health block grants.

Agreed Upon Reductions
•

Of the $917 billion in agreed upon reductions, the
newly enacted caps on discretionary spending will
reduce the federal deficit by a cumulative $741
billion over the next 10 years. This amount is
measured from the Congressional Budget Office's
(CBO) baseline, which grows spending in the
outyears for inflation. The reduction is backloaded
toward the end of the 10 years.

•

The lower federal deficit will reduce federal debt
interest payments, thereby accounting for another
$156 billion in savings. Mandatory spending would
decline by $20 billion over the next 10 years,
primarily due to changes in higher education
financial aid.

•

Relative to the CBO Baseline, the discretionary caps
would lower nationwide discretionary spending by
$(25) billion in federal FY 2012 and $(47) billion in FY
2013. This amount includes both security (primarily
defense) and non-security programs. State
government grant funding largely comes from the
non-security budget, which represents only onethird of total discretionary spending.

•

A different picture, however, emerges once the
enacted caps are compared to federal FY 2011
spending rather than the inflation-adjusted CBO
baseline. Compared to the current year FY 2011
non-security budget of $361 billion, the BCA leaves
that spending virtually unchanged in FY 2012 ($359
billion) and FY 2013 ($361 billion again).

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JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2011

Summary
•

(Continued)

The across-the-board reduction also applies to
some mandatory programs, but numerous stateadministered programs are exempted, including:
Medicaid, Temporary Assistance to Needy Families
(TANF), Supplemental Nutrition Assistance Program
(Food Stamps), some federal Child Care funding,
Foster Care, School Lunch and School Breakfast,
Vaccines and Federal Highway Aid. Any
mandatory reductions would appear to be
effective for federal FY 2013.

In summary, the already agreed upon reductions in the
BCA would appear to have only a small impact on the
aggregate level of federal assistance in the current
fiscal year. The next round of reductions could have a
more noticeable effect, especially if the joint committee
considers the federal share of Medicaid costs as part of
mandatory cuts. There is no indication, however, that
this particular issue is currently being considered.
If Congress fails to act on a deficit reduction proposal,
the automatic across-the-board cuts would reduce
federal grants by approximately 9% starting in federal FY
2013. Numerous state-administered programs -- like
Medicaid, TANF, and Foster Care -- would be exempt
from such reductions.
State Debt Rating
The federal debt ceiling debate and the subsequent
federal downgrade by Standard and Poor's has focused
attention on the issue of credit ratings. The state
experienced its own downgrade a year ago.
On July 15th, 2010, Moody’s Investor Services lowered
Arizona’s overall credit rating to Aa3, which is the 4th
highest investment grade rating. Moody’s also took
action to lower Arizona’s credit rating specifically for
General Fund backed issuances to A1.
The rating of Aa3 from Moody’s leaves Arizona with the
3rd lowest credit rating amongst states (shared with 3
others), with only Illinois and California having a lower
credit rating.
Along with a rating, credit agencies’ also provide an
outlook in terms of the future direction of rating
changes. With the July 2010 downgrade, Moody’s
changed their outlook from negative to stable.
However, in February 2011, Moody’s again lowered
Arizona’s outlook to negative.
Standard & Poor’s (S&P) also provided feedback on
Arizona’s creditworthiness when the agency
downgraded Arizona’s rating in December 2009 to AA-.
This rating also represents the 4th highest investment
grade rating on S&P’s respective rating scale (in

comparison, the Federal government’s credit rating is
AA+). In addition, S&P lowered Arizona’s credit rating
specifically for General Fund backed issuances to A+.
Since the downgrade in December 2009, S&P has
affirmed a continued negative outlook for Arizona’s
credit rating, however, the agency noted that if the
enacted FY 2012 budget reductions remain intact and
revenues continue to improve, the state’s credit outlook
could be revised to stable.
Both agencies continue to express similar concerns
about the state's fiscal policies and economic
conditions, including:
•

Limited financial flexibility due to constitutional limits
on raising revenue and reducing spending.

•

Structural budget imbalances and a reliance on
one-time budget solutions. (S&P noted that the FY
2012 budget made significant progress towards
addressing the state’s structural shortfall).

•

Continued economic difficulties related to the
slowdown in the housing sector.

•

Significant revenue declines in the past several fiscal
years.

Given the recent federal credit rating downgrade and
deficit reduction legislation, there has been some
speculation that the recent federal activity could
negatively impact state credit ratings. Specifically,
some analysts have mentioned that states with high
proportions of Medicaid spending or economic activity
dependent on federal spending could experience
downward pressure on their credit ratings due to
reductions in federal spending. Because the impact of
the BCA on specific federal programs is partially
unknown at this point, it may take some time to see if
certain Arizona specific concerns are significantly
affected (such as Medicaid or defense spending).

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2011

July Revenues
Table 1

General Fund Revenues ($ in Millions)

July
Year-to-Date

“Sales Tax
collections
were $382.4
million, or
10.4% above
July 2010.”

FY 2012
Collections
$ 765.1
$ 765.1

Sales Tax collections were $382.4 million, or
10.4% above July 2010. Excluding the $75.5
million from the temporary 1-cent increase,
collections were $306.9 million, or 9.0% above
July 2011. The temporary 1-cent tax grew
significantly more than the base tax because
last year’s 1-cent collections reflected a 120day exemption for purchases under contract
prior to the effective date of the tax.
Table 2 displays the July growth rates for the
largest categories.
Table 2

Sales Tax Growth Rates
Compared to Prior Year

Retail
Contracting
Utilities
Use
Restaurant & Bar

July
7.5%
13.8%
11.8%
24.0%
8.9%

YTD
7.5%
13.8%
11.8%
24.0%
8.9%

Retail and contracting together account for
about 60% of all sales tax revenues. Contracting’s large gain this month follows the
trend begun in the second half of FY 2011,
which grew 7.6% over the same period in the
prior year. However, losses in the first half of FY
2011, as wells as prior years, left overall FY 2011
Contracting collections (60.5)%, below the FY
2007 peak.
Individual Income Tax net revenues were
$258.1 million in July. Collections were $12.0
million, or 8.6% above the forecast.
As indicated in Table 3, withholding grew by
4.6% in July. While somewhat lower than
previous months, due in part to July having 1
less processing day this year than last year,
withholding is still showing growth. Since July
of last year was the first month using the new
withholding tables, this continued growth is
exclusive of the effects of the withholding
changes.

Difference From
Forecast
$ 35.4
$ 35.4

Difference
From FY 2011
$ 105.2
$ 105.2

Table 3

Individual Income Tax Growth Rates
Compared to Prior Year

Withholding
Estimated +
Final Payments
Refunds

July
4.6%
4.6%
(35.8)%

YTD
4.6%
4.6%
(35.8)%

Corporate Income Tax net collections were
$25.6 million in July, or $2.2 million above the
prior year. Collections were $7.5 million above
the forecast.
The Lottery Commission reports that July ticket
sales were $45.8 million, which is $3.3 million, or
7.8%, above sales in the prior year.
Non-General Fund
Tobacco Tax revenues were $29.1 million in
July. Collections were up 6.4% compared to
the prior year.
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
cost of operating those programs, along with
funding the Early Childhood Development
and Health Board.
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 $101.0
million in July were up $0.7 million, or 0.6%,
compared to July of last year.

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2011
Table 4

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

FY 2012 YTD (One Months)

Change From
Actual

July 2010

July 2011

Amount

Change from
Actual

Forecast
Percent

Amount

Percent

July 2010

July 2011

Amount

Forecast
Percent

Amount

Percent

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

$306,929,173

$25,214,442

75,468,031

10,858,077

16.8

9.0 %

$14,353,865
5,835,138

258,103,165

20,336,322

8.6

25,640,524

2,193,855

9.4

4.9 %

$306,929,173

$25,214,442

8.4

75,468,031

10,858,077

11,975,634

4.9

258,103,165

7,535,939

41.6

25,640,524

9.0 %

$14,353,865

4.9 %

16.8

5,835,138

8.4

20,336,322

8.6

11,975,634

4.9

2,193,855

9.4

7,535,939

41.6

226,218

27,524

13.9

21,486

10.5

226,218

27,524

13.9

21,486

10.5

2,756,417

469,042

20.5

456,904

19.9

2,756,417

469,042

20.5

456,904

19.9

3,138,495

1,377,769

78.3

1,337,333

74.2

3,138,495

1,377,769

78.3

1,337,333

74.2

37,617,965

(3,380,737)

(8.2)

(4,891,793)

(11.5)

37,617,965

(3,380,737)

(8.2)

(4,891,793)

(11.5)

--

220,652

220,652
48,400
$710,149,040

220,652
(3,619)
$57,313,327

--

220,652

(7.0)

1,565

8.8 %

$36,846,723

3.3
5.5 %

48,400
$710,149,040

220,652
(3,619)
$57,313,327

--

220,652

(7.0)

1,565

8.8 %

$36,846,723

-3.3
5.5 %

Other Revenue
Lottery
License, Fees and Permits
Interest
Sales and Services
Other Miscellaneous
Disproportionate Share
Transfers and Reimbursements
Sub-Total Other Revenue
TOTAL BASE REVENUE

0
1,699,486

0
(282,149)

-(14.2)

0
(474,198)

--

0

(21.8)

1,699,486

0
(282,149)

-(14.2)

0
(474,198)

-(21.8)

771

(143)

(15.6)

(499,229)

(99.8)

771

(143)

(15.6)

(499,229)

(99.8)

755,937

(419,711)

(35.7)

(338,043)

(30.9)

755,937

(419,711)

(35.7)

(338,043)

(30.9)

1,206,655

(773,288)

(39.1)

209,338

21.0

1,206,655

(773,288)

(39.1)

209,338

21.0

--

0

--

0

0
2,266,746
5,929,595
$716,078,635

0
(318,997)
(1,794,288)
$55,519,039

(12.3)
(23.2) %
8.4 %

(350,377)
(1,452,509)
$35,394,214

--

0

(13.4)

2,266,746

(19.7) %

5,929,595

5.2 %

$716,078,635

0
(318,997)
(1,794,288)
$55,519,039

(12.3)
(23.2) %
8.4 %

(350,377)
(1,452,509)
$35,394,214

-(13.4)
(19.7) %
5.2 %

Other Adjustments
Urban Revenue Sharing
Budget Plan Transfers

(35,368,620)

4,131,923

84,342,486

45,504,873

-117.2

0

0.0

(35,368,620)

4,131,923

0

0.0

84,342,486

45,504,873

-117.2

0

0.0

0

0.0

Budget Legislation

0

0

--

0

--

0

0

--

0

--

Leaseback Proceeds

0

0

--

0

--

0

0

--

0

--

48,973,866

49,636,796

-- %

0

0.0 %

48,973,866

49,636,796

-- %

0

0.0 %

$765,052,501

$105,155,835

15.9 %

$35,394,214

4.9 %

$765,052,501

$105,155,835

15.9 %

$35,394,214

4.9 %

Highway User Revenue Fund

$100,996,672

$651,243

0.6 %

(0.8) %

$100,996,672

$651,243

0.6 %

Tobacco Tax (All Funds Total)

$29,112,108

$1,758,882

6.4 %

0.0 %

$29,112,108

$1,758,882

6.4 %

Sub-Total Other Adjustments
TOTAL GENERAL FUND REVENUE
Non-General Funds

($853,939)
$0

($853,939)
$0

(0.8) %
0.0 %

__________
* Total July collections including the temporary 1¢ increase approved by the voters in May 2010 were $382.4 million. This amount is $36.1 million, or 10.4%, above July 2010 and $20.2 million, or 5.6%, above forecast.

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2011

Economic Indicators
NATIONAL

“Nonfarm
employment in
Arizona remains
(378,100), or
(13.9)%, below
the prerecession peak
of 2.72 million
jobs.”

The Conference Board’s U.S. Consumer
Confidence Index increased by 3.3% in July to
59.5. While there was a slight improvement in
confidence among consumers in July, the
latest reading indicates that consumer
sentiments remain considerably below the
levels at the beginning of the year.
Uncertainty about current and future job
prospects continues to weigh heavily on
consumers’ minds. Weak consumer
confidence typically leads to less spending on
goods and services.
The Conference Board’s U.S. Index of Leading
Economic Indicators rose by 0.5% in July, to
115.8. A large increase in the money supply
and a favorable interest rate spread
contributed positively to the index, while the
vendor performance index and a decline in
consumer expectations pulled it back.
Absent the advance of the financial
components, the index would have fallen by
(0.6)%.
Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), increased by 0.5%
in July. The CPI increase was primarily due to
rising energy prices, especially the price of
gasoline, which rose by 4.7% in July. Core
inflation, which excludes energy and food
prices, increased by 0.2%. Year over year, core
inflation is up by 1.8%. While this suggests that
inflationary pressures remain relatively muted, it
should be noted that the core inflation has
been creeping up in each of the last 7 months.
ARIZONA
The Federal Reserve Bank of Philadelphia’s
coincident index gauges current economic
activity in each state. The index combines 4
indicators: employment, average hours
worked in manufacturing, unemployment rate,
and inflation-adjusted wages.
Arizona was 1 of 33 states for which the
coincident index increased in July. From June
to July, Arizona’s index increased by 0.1%
compared to an increase of 0.2% for the
nation as a whole. July’s Arizona index was
0.9% above last year.
While Arizona's index has improved compared
to the same time period last year, the index
remains (13.6)% below its peak reading in
August 2007. In contrast, the national
coincident index has declined (4.5)% since its

historical peak in January 2008. See Tracking
Arizona’s Recovery for additional historical
information.
Employment
According to the Employment and
Population Statistics Unit of the Department of
Administration, the state lost (22,700) nonfarm
jobs in July over June. Job losses typically
occur in July as schools are in recess. The job
loss this July was less than the average July
workforce reduction of (29,700) in the prior 10
years.
In July, the state had 20,700, or 0.9%, more
persons on the payrolls than 1 year ago. July
marked the 7th consecutive month with yearover-year gains in employment. The 0.9%
gain in July was the best performance since
November 2007. Private sector employment,
which makes up almost 85% of all nonfarm
jobs, has grown by 1.9% over the prior year
whereas government employment has
declined by (4.5)% over the same period.
More than 80% of job losses in the public
sector have occurred in local government
education.
The construction sector added 800 jobs in
July. Year over year, construction
employment is up by 0.9%, or 1,000 jobs, the
first such gain since December 2006.
Construction employment has declined by
(54)% since the height of the housing boom in
the summer of 2006.
The manufacturing industry has been one of
the bright spots both nationally and in the
state since the start of 2011. Manufacturing
employment has expanded, year over year,
in each of the last 7 months. With 151,200
employees on the payroll in July, the
manufacturing sector employed 2.2%, or
3,300 more persons, than one year ago. It is
uncertain, however, whether this expansion
will continue in the ensuing months due to
growing concerns about the health of the
global economy.
Nonfarm employment in Arizona remains
(378,100), or (13.9)%, below the pre-recession
peak of 2.72 million jobs in December 2007.
This suggests that the state is likely several
years away from returning to pre-recession
levels. See Tracking Arizona’s Recovery for
additional historical information.

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2011

Economic Indicators
The state’s seasonally adjusted unemployment
rate rose from 9.3% to 9.4% in July, following a
0.2% increase in June. Over the same period,
the U.S. jobless rate remained essentially flat at
9.1%. While Arizona’s unemployment rate has
edged up over the last 2 months, it still remains
(0.5)% below last year.

“The July total
[number of
active
foreclosures] is
(52.6)% below
the peak in
December 2009
(51,466).”

The federal Bureau of Labor Statistics (BLS)
reported that 27,959 Arizona residents filed
initial claims for unemployment insurance in
July, essentially the same number as in the prior
month. The average number of claims for July
in the 10-year period prior to the onset of the
last recession was close to 20,000. Initial claims
in July were (9.4)% below last year’s level.
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 July, the number of new Maricopa County
foreclosure notices decreased (6.3)% from
June levels to 4,194. The number of Maricopa
County pending foreclosures decreased from
26,473 in June to 24,393 in July. The July total
is (52.6)% below the peak in December 2009
(51,466). See Tracking Arizona’s Recovery for
additional historical information.

(Continued)

populations for services. Because of these
changes, the economic indicators section will
now include an expanded report of AHCCCS
caseloads across several populations.
In terms of specific categories, the spend
down and KidsCare populations saw
significant declines from the prior year of
(30.4)% and (38.7)%, respectively. These
declines are due to enrollment freezes for the
programs, as the spend down program has
been frozen since May 2011, while the
KidsCare program has had an enrollment
freeze since March 2010. The Proposition 204
childless adult category has declined (0.3)%
from the prior month as new enrollment under
this category stopped in early July.
There were 41,284 TANF recipients in the
state in July, a monthly caseload increase
of 0.4%. Year-over-year, the number of
TANF recipients has declined by (27.9)%.
This decline is the result of changes to the
statutory lifetime limit a person may receive
cash assistance. The FY 2011 budget reduced
the lifetime limit to 36 months. The FY 2012
budget further reduces this limit to 24 months.
Previously, the maximum had been 60
months. The FY 2012 budget assumed
caseloads of approximately 36,000 in FY 2012.

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 July, there were a total of 8,625
existing single-family home sales that resulted
in a median resale home price of $127,200.
Relative to the prior year, the number of sales
is down (3.6)%, while prices are (11.7)% lower.
Of the existing sales, 29.2%, or 2,515 were
foreclosures.

The Supplemental Nutrition Assistance
Program (SNAP), formerly known as Food
Stamps, provides assistance to low-income
households to purchase food. In July, there
were a total 1.1 million food stamp
recipients in the state, a 1.8% increase
over the prior month. Compared to the
same month last year, food stamp
participation was up by 5.5%. The number
of food stamp recipients began increasing
steadily in July 2007, after several years in the
550,000 to 575,000 range.

State Agency Data

The 3-month average count of the Department
of Correction’s (ADC) inmate population
decreased to 40,180 inmates between June
and August 2011. Relative to the prior 3-month
period, the population has decreased by (23)
inmates. Compared to a year ago the
population has declined by (332) inmates.

In August, total AHCCCS caseloads equaled
1.38 million members, a 1.0% increase over the
prior month. Overall AHCCCS caseloads are
currently 1.2% above August 2010 levels. The
FY 2012 budget funded a projected August
caseload decline of (0.5)% from the previous
year for a total of 1.35 million members.
The FY 2012 budget included significant
changes to the eligibility of several AHCCCS

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 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-family
Multi-unit
- Greater Phoenix Existing Home Sales
Single-Family
Townhouse/Condominium
- Greater Phoenix Median Resale Home 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)
- Greater Phoenix Total Housing Inventory, (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
Acute Care Tradtional
Spend Down
Prop 204 Childless Adults
Other Prop 204
KidsCare
Long-Term Care – Elderly & DD
Emergency Services
- 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

July
July
June
July
July
July
July
May-Jul
May-Jul

9.4%
27,959
69,087
2.34 million
151,200
113,400
39.4
$34.1 million
$147.8 million

0.1%
0.0%
2.1%
(1.0)%
(0.1)%
0.7%
(4.1)%
3.0%
(4.0)%

(0.5)%
(9.4)%
(21.3)%
0.9%
2.2%
0.9%
(1.3)%
8.1%*
10.5%*

Apr-Jun
Apr-Jun

998
47

1.8%
(42.7)%

(0.4)%
(31.1)%

July
July

8,625
1,155

(17.7)%
(21.7)%

(3.6)%
(21.4)%

July
July

$127,200
$80,000

(1.1)%
(0.6)%

(11.7)%
(15.3)%

July
July
May

4,194
24,393
100.40

(6.3)%
(7.9)%
0.0%

(48.5)%
(42.1)%
(9.5)%

July
June
May

27,663
3.51 million
$6.05

(5.3)%
0.2%
5.4%

(35.5)%
6.4%
(1.3)%

3rd Quarter 2011
July
1st Quarter 2011
April 1, 2010
August

July
July
June-Aug

54.0
176.89
$229.9 billion
6.39 million
1,383,401
885,979
2,837
217,126
159,307
16,662
51,377
49,753
41,284
1,127,728
40,180

4.0%
0.1%
1.8%
N/A
1.0%
1.5%
(31.6)%
(0.3)%
0.5%
(5.6)%
0.2%
4.0%
0.4%
1.8%
(23) inmates

10.0%
0.9%
4.3%
N/A
1.2%
2.9%
(30.4)%
0.4%
4.9%
(38.7)%
2.1%
(7.6)%
(27.9)%
5.5%
(332) inmates

May
May

18,990
26,184

(37)
(73)

(936)
(1,645)

1st Quarter 2011
(Final Estimate)
July
July
Mar-May
July

$13.4 trillion

1.9%

2.3%

59.5
115.8
$4.52 billion
224.43

3.3%
0.5%
0.9%
0.5%

16.7%
6.2%
3.2%
3.6%

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2011

Summary of Recent Agency Reports
Department of Corrections - Report on Inmate
Utility Fees - Pursuant to A.R.S. § 31-239, the
Department of Corrections (ADC) shall
annually report on monies collected from
inmates who use electrical appliances. The
report shall also include information on the
expenditure of any monies collected. Statute
requires the department to charge a fee, not
to exceed $2.00 per month, to inmates
possessing at least one electrical appliance.
For FY 2011, the department assessed a
monthly utility fee of $2.00 and collected
$488,982.41. (Stefan Shepherd)
Department of Economic Security (DES) Semi-Annual Report on CPS - Pursuant to
A.R.S. § 8-818, DES has submitted its semiannual financial and program accountability
report. According to the report, out-of-home
placements increased from 10,512 in
December to 11,082 in June. Caseloads are
above the department’s goals and turnover
for Child Protective Services (CPS) Specialists
was approximately 23.4%. Employee
satisfaction is stable at a 3.7 rating out of 5.0.
The highlights of this report, covering the last 6
months of FY 2011, are summarized below.
•
•

•

•

The CPS Training Academy had 121 new
case managers in training as of April
2011.
As of April 2011, the number of filled
positions was 826 of 1,043 authorized and
funded positions, excluding those in
training. This figure is 62 higher than last
December. Considering only filled
positions, caseloads per worker remain
considerably higher than caseload goals,
with investigations at 15 (goal: 10), inhome at 31 (goal: 19), and out-of-home
at 26 (goal: 16).
DES reports that annualized case
manager turnover during January - April
2011 was 23.4%, with 95 case managers
leaving the Division of Children, Youth
and Families (DCYF). The turnover rate
varies by district, from a high of 51% in
District 4, to a low of 13.2% in the CPS
Hotline. The report also shows that 90
new case managers were hired over the
same time period. The 23.4% turnover
rate is down from 25.5% annualized rate
in the last report.
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
increased from 88.0% to 89.0%. The
percent of complaints validated by the
Ombudsman decreased from 2.9% to
2.8% (8 of 279 complaints).
•
The number of children in out-of-home
family placements increased from 8,776
in December to 9,118 in June, while the
number of congregate care placements
increased from 1,284 to 1,438. DES also
reports that from December to June the
number of children aged 0-3 in shelter
care increased from 12 to 24, the number
of children aged 0-6 in group homes
stayed the same at 14 and the number
of children in shelter care for more than
21 days decreased from 433 to 400. The
June numbers are labeled as preliminary.
(Aaron Galeener)
Department of Education – Report on Federal
Monies for English Learners – Pursuant to A.R.S.
§ 15-756.10, paragraph 3, the Department of
Education (ADE) recently submitted a report
that includes an itemized list of all federal
monies received by the department for
English language learners in FY 2011. ADE
received $24.1 million in federal Title III
(Language Instruction for Limited English
Proficient and Immigrant Students) funding for
FY 2011. Of that amount, approximately $22.6
million was distributed directly to school
districts and charter schools. The remaining
$1.5 million was used for state administration,
technical assistance, and to meet federal setaside requirements for immigrant education.
(Steve Schimpp)
State Parks Board – Annual Report on Out-ofState Travel – Pursuant to a FY 2011 General
Appropriation Act footnote, the State Parks
Board submitted a report on out-of-state
travel expenses in FY 2011. The footnote
stipulates that during FY 2011, out-of-state
travel expenses by State Parks Board staff shall
not exceed $5,000 each year from
appropriated or non-appropriated monies.
The Parks Board did not have any out-of-state
travel expenses in FY 2011. (Art Smith)

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2011

Summary of Recent Agency Reports
Department of Public Safety (DPS) – Quarterly
Report on Photo Enforcement – Pursuant to a
footnote in the General Appropriation Act,
the Department of Public Safety (DPS) is
required to report quarterly on the Photo
Enforcement program in FY 2011.
Since the inception of the program in
September 2008, a total of 1,695,625 Notices
of Violation (NOVs) and citations have been
issued and 454,577, or 26.8%, have been paid.
DPS ended the Photo Radar Program
effective July 15, 2010. During the fourth
quarter of FY 2011, 990 citations that were
issued prior to the end date were paid.
The NOVs and citations issued by the Photo
Enforcement Program generated $181,500 in
revenue for the fourth quarter of FY 2011 and
$79.0 million since the program’s inception.
The General Fund received $1.3 million in the
fourth quarter, which includes balances from
revenue in prior quarters, and $48.4 million
since the program’s start. (Eric Billings)
Arizona Board of Regents – Report on
University Retention and Graduation Rates –
Pursuant to A.R.S. § 15-1626, the Arizona Board
of Regents is required to submit an annual
report on retention and graduation rates at
each university campus. Highlights from the
2011 report include:
•
Fall 2010 retention rates reflect the
percentage of first-time, full-time, degreeseeking students who initially enrolled in
Fall 2009 and who re-enrolled in the same
university in Fall 2010.
o Arizona State University 84%; Northern
Arizona University’s 71%; and the
University of Arizona’s 77%.
•
Six-year graduation rates reflect the
percent of first-time, full-time, degreeseeking students who received their
degree within 6 years of their initial Fall
enrollment at the same university. The
2011 report shows the percentage of
students who enrolled in Fall 2004 who
graduated from the same university within
6 years.
o ASU 59%; NAU 49%; and UA 77%.
(Marge Zylla)

(continued)

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2011

July Spending
“July 2011

July 2011 General Fund spending was $1.7
billion. July expenditures were higher than the
prior year in part due to differences in the
timing of debt service payment.

spending of $1.7

FY 2012 Spending

billion was $165.0

July 2011 spending of $1.7 billion was $165.0
million higher than July 2010 (See Table 6).

million higher
than July 2010.”

•

In July, University spending was $16.5
million less than the prior year. The
universities received a $198 million lump
sum reduction in FY 2012, which will be
spread out throughout the fiscal year.

•

•

•

AHCCCS spending was $160.9 million in July,
which is a decrease of $41.8 million from the
prior year. This decrease is due to two
factors. In July 2010, AHCCCS made June
2010 acute care capitation payments in
July 2010, thereby increasing the July 2010
budget by approximately $84 M. This
decrease is partially offset by a lower
federal matching rate in FY 2012
School Facilities Board spent $132.6 million in
July, or $131.7 million more than the prior
year, due to the timing of debt service
payments.
Leaseback Debt Service totaled $49.1
million this year in July, which was $49.1
million greater than last year due to the
timing of debt service payments.

Table 6
General Fund Spending ($ in Millions)

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

July 11

Change
from
July 10

160.9
75.6
352.5

(41.8)
19.2
26.5

160.9
75.6
352.5

(41.8)
19.2
26.5

662.1
100.7
20.6
132.5

39.7
(1.2)
0.1
131.7

662.1
100.7
20.6
132.5

39.7
(1.2)
0.1
131.7

38.6
49.1

(16.5)
49.1

38.6
49.1

(16.5)
49.1

77.4
1,670.0

(41.8)
165.0

77.4
1,670.0

(41.8)
165.0

Year to
Date

YTD Change
from FY 11

12

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 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
Dept. of Comm./AZ Commerce Authority
Community Colleges
Corporation Commission
Department of Corrections
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
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
Legislature
Auditor General
House of Representatives

General Fund Spending
($ in Thousands)
Change from
July 11
July 10
3,129.2
1,242.8
49,050.7
49,050.7
73.4
(158.3)
884.7
(1,880.7)
160,878.7
(41,842.7)
(51.4)
2,616.1
1,318.1
60.9
(11.7)

Year-to-Date
3,129.2
49,050.7
73.4
884.7
160,878.7
2,616.1
60.9

YTD Change from
FY 11
1,242.8
49,050.7
(158.3)
(1,880.7)
(41,842.7)
(51.4)
1,318.1
(11.7)

125.8
2,625.0
17,144.3
53.0
75,606.9
2,523.6
352,539.3
662,112.5
1,068.7
17.4
120.0
70.6
446.4
393.7
284.7
55.6
681.8
205.5
100,679.7
352.5
66.0
230.7
4.1
834.9

(4.0)
2,443.4
(15,962.3)
6.9
19,155.2
467.2
26,454.8
39,674.1
50.3
(0.1)
0.7
70.8
17.5
(7.5)
266.7
(38.3)
6.8
(74.6)
0.6
133.8
(1,157.8)
65.9
14.2
230.7
4.1
(852.2)

125.8
2,625.0
17,144.3
53.0
75,606.9
2,523.6
352,539.3
662,112.5
1,068.7
17.4
120.0
70.6
446.4
393.7
284.7
55.6
681.8
205.5
100,679.7
352.5
66.0
230.7
4.1
834.9

(4.0)
2,443.4
(15,962.3)
6.9
19,155.2
467.2
26,454.8
39,674.1
50.3
(0.1)
0.7
70.8
17.5
(7.5)
266.7
(38.3)
6.8
(74.6)
0.6
133.8
(1,157.8)
65.9
14.2
230.7
4.1
(852.2)

2,915.4
15,991.3
1,971.0
5,884.6
131.7
3.2

1,480.9
1,087.7
(862.8)
(8,880.3)
(494.5)
(11.6)

2,915.4
15,991.3
1,971.0
5,884.6
131.7
3.2

1,480.9
1,087.7
(862.8)
(8,880.3)
(494.5)
(11.6)

2,152.9
1,292.8

(1,673.6)
185.9

2,152.9
1,292.8

(1,673.6)
185.9

13

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2011

Agency
Joint Legislative Budget Comm.
Legislative Council
Senate
Board of Medical Student Loans
Mine Inspector
Department of Mines & Mineral Resources
Nav. Streams & Adjudication
OSHA
Arizona State Parks Board
Pioneers’ Home
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
Department of Transportation
State Treasurer
Universities
Board of Regents
Arizona State University
Northern Arizona University
University of Arizona
Department of Veteran Services
Department of Water Resources
Department of Weights & Measures
Other
Grand Total

July 11
209.7
785.6
876.2
207.8
21.4
546.2
20,552.6
156.9
307.9
205.3
6,804.2
132,475.0
1,316.7
56.0
3.0
305.5
16,698.6
5,947.2
15,634.9
702.7
652.3
94.2
116.5
1,669,955.7

Change from
July 10
11.4
(305.6)
(1,080.5)
27.5
(37.4)
13.3
(20,000.0)
415.6
86.5
(290.5)
(81.5)
(1.2)
(299.0)
2,063.4
131,708.8
427.1
(11.0)
(5.8)
(132.8)

Year-to-Date
209.7
785.6
876.2
207.8
21.4
546.2
20,552.6
156.9
307.9
205.3
6,804.2
132,475.0
1,316.7
56.0
3.0
-

129.6
(7,496.2)
(2,604.7)
(6,500.1)
(520.9)
(137.4)
14.0
116.5
164,974.5

305.5
16,698.6
5,947.2
15,634.9
702.7
652.3
94.2
116.5
1,669,955.7

YTD Change from
FY 11
11.4
(305.6)
(1,080.5)
27.5
(37.4)
13.3
(20,000.0)
415.6
86.5
(290.5)
(81.5)
(1.2)
(299.0)
2,063.4
131,708.8
427.1
(11.0)
(5.8)
(132.8)
129.6
(7,496.2)
(2,604.7)
(6,500.1)
(520.9)
(137.4)
14.0
116.5
164,974.5