JLBC - Monthly Fiscal Highlights

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

Summary
August revenues showed growth as base
General Fund revenues (excluding one-time
adjustments) were 8.6% above the prior year.
General Fund revenue collections totaled
$767.2 million.
Sales tax collections increased by 6.8% over
the prior year, with significant gains seen in
the contracting and retail categories.
Individual income tax (IIT) gains were based
on withholding growth of 6.9%.

www.azleg.gov/jlbc.htm

“August
revenues
showed growth
as base General
Fund revenues
(excluding onetime
adjustments)
were 8.6%
above the prior

September 2011

Year-to-date, FY 2012 General Fund revenues
are $1.53 billion, or 8.5% above FY 2011
excluding one-time adjustments.
August General Fund collections were $44.2
million above the enacted budget forecast.
Year-to-date, revenues are $79.6 million
above the enacted forecast. The Finance
Advisory Committee (FAC) will meet October
18th to assess year-long revenue trends based
on input from JLBC Staff, the University of
Arizona Economic and Business Research
Center, and FAC panelists.
In comparison to August revenue of $767.2
million, August 2011 General Fund spending
was $1.15 billion. August expenditures were
$67.7 million higher than the prior year,
primarily due to an increase in the state’s
share of Medicaid expenses.
Fiscal year-to-date, General Fund revenues of
$1.53 billion have been offset by $2.82 billion
in spending.

Updated FY 2011 Ending Balance
Pursuant to Section 145 of the General
Appropriations Act, the General Accounting
Office (GAO) transmitted an estimate of the
FY 2011 ending balance to JLBC on
September 14th. GAO currently estimates the
FY 2011 ending balance will be $3.2 million.
This estimate should be considered
preliminary, and will be further adjusted as
GAO prepares its final ending balance report
which is due before December 1, 2011.
Proposed Federal Assistance
Earlier this month, the President proposed
legislation titled the American Jobs Act which
would allocate funding nationwide for state
and local government assistance, K-12 school
building renewal, and several other programs.
Arizona would receive the following
allocations over the next 2 years from the
proposed legislation:
•
•
•
•

$625.5 million – General state and
local government assistance
$544.4 million – K-12 school
modernization and repairs
$116.6 million – Community College
modernization and repairs
$602.7 million – Highway and transit
maintenance and construction

Because the legislation has yet to be
considered by Congress, these estimates are
preliminary and subject to change.

year.”

Table of Contents

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
September 30, 2011.

Summary .................................................................. 1

• AHCCCS – Healthcare Group........................ 10

• Updated FY 2011 Balance Projection ............. 1

• AHCCCS – Systematic Alien Verification...... 10

• Proposed Federal Assistance ........................... 1

• ADEQ – Water Quality Assurance Fund........ 10

August Revenues.................................................... 2

• DHS – Prior Year Reconciliation ...................... 10

Economic Indicators.............................................. 4

• Homeland Security – Funding......................... 10

JLBC Meeting........................................................... 8

• SPB – Reservation Surcharge Fund ................ 11

JCCR Meeting ......................................................... 9

• Secretary of State – Election Systems Fund.. 11

Summary of Recent Agency Reports

• Supreme Court – Automation Projects ......... 11

• AHCCCS – GME Residency Positions ............ 10

August Spending .................................................. 13

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011

August Revenues
Table 1

General Fund Revenues ($ in Millions)

August
Year-to-Date

“Sales Tax
collections
were $365.2
million, or 6.8%
above August
2010.”

FY 2012
Collections
$ 767.2
$ 1,532.3

Difference From
Forecast
$ 44.2
$ 79.6

Difference
From FY 2011
$ 118.7
$ 223.9

Sales Tax collections were $365.2 million, or
6.8% above August 2010. Excluding the $71.7
million from the temporary 1-cent increase,
collections were $293.5 million, or 5.7% above
August 2010. 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.

Corporate Income Tax net collections were
$32.4 million in August, which is $14.2 million
above the prior year. Collections were $19.1
million above the forecast. This large increase
was due to over $20 million in one-time audit
collections. Without these collections, revenue
would have been negative compared to the
prior year. Year-to-date, collections are $26.7
million above forecast.

Table 2 displays the August growth rates for the
largest categories.

The Lottery Commission reports that August
ticket sales were $48.2 million, which is $5.9
million, or 14.0%, above sales in the prior year.
Year-to-date ticket sales are $94.0 million,
which is 10.9% above last year’s sales.

Table 2

Sales Tax Growth Rates
Compared to Prior Year

Retail
Contracting
Utilities
Use
Restaurant & Bar

August
8.4%
14.5%
(9.1)%
4.8%
12.4%

YTD
7.9%
14.1%
0.2%
13.7%
10.6%

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.
Individual Income Tax net revenues were
$279.6 million in August. Collections were $15.5
million above forecast. Year-to-date, revenues
have grown 8.6% and are $27.5 million above
forecast through August.
As indicated in Table 3, withholding grew by
6.9% in August for a year-to-date increase of
5.8%
Table 3

Individual Income Tax Growth Rates
Compared to Prior Year

Withholding
Estimated +
Final Payments
Refunds

August
6.9%
16.4%
(10.3)%

YTD
5.8%
14.4%
(12.4)%

Non-General Fund
Tobacco Tax revenues were $23.8 million in
August. Collections were down (11.0)%
compared to the prior year. Year-to-date
collections are down (2.2)%.
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 $97.6
million in August were down $(1.4) million, or
(1.5)%, compared to August of last year.
Year-to-date revenues have fallen (0.4)%.

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011
Table 4

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

FY 2012 YTD (Two Months)

Change From
Actual

August 2010

August 2011

Amount

Change from
Actual

Forecast

Percent

Amount

Percent

August 2010

August 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

$293,482,631

$15,747,723

$600,411,804

$40,962,165

71,743,198

7,531,998

11.7

5.7 %

$9,047,821
3,668,538

3.2 %
5.4

147,211,229

18,390,075

14.3

7.3 %

$23,401,686
9,503,676

4.1 %
6.9

279,592,728

22,437,407

8.7

15,511,237

5.9

537,695,893

42,773,729

8.6

27,486,871

5.4

32,373,418

14,155,038

77.7

19,124,982

144.4

58,013,942

16,348,893

39.2

26,660,921

85.0

70,217

17,791

33.9

5,438

8.4

296,435

45,315

18.0

26,924

10.0

1,628,923

(71,958)

(4.2)

(80,983)

(4.7)

4,385,340

397,084

10.0

375,921

9.4

2,795,782

687,376

32.6

638,956

29.6

5,934,277

2,065,145

53.4

1,976,289

49.9

(11.1)

75,374,793

(6,036,988)

(7.4)

(9,593,277)

(11.3)

--

220,652

(216,524)

(49.5)

220,652

105,078

(26,734)

(20.3)

12,010

37,756,828

(2,656,251)

(6.6)

0

(437,176)

(100.0)

0

56,678

(23,115)

(29.0)

10,445

8.7 %

(4,701,484)

$43,224,950

22.6
6.4 %

$1,429,649,443

$114,702,160

8.7 %

-12.9

$719,500,403

$57,388,833

$80,071,673

5.9 %

Lottery

5,006,040

666,185

15.4

153,324

3.2

5,006,040

666,185

15.4

153,324

3.2

License, Fees and Permits

2,988,384

146,678

5.2

412,548

16.0

4,687,870

(135,471)

(2.8)

(61,650)

(1.3)

Other Revenue

Interest

2,548

(644,435)

(99.6)

(497,452)

(99.5)

3,319

(644,578)

(99.5)

(996,681)

(99.7)

Sales and Services

1,092,617

(336,178)

(23.5)

(620,498)

(36.2)

1,848,554

(755,889)

(29.0)

(958,541)

(34.1)

Other Miscellaneous

2,806,133

695,323

32.9

156.2

4,012,788

(77,965)

(1.9)

1,920,262

0

0

--

0

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

70,468

(187,844)

-(72.7)

1,710,924
0
(190,979)

--

0

(73.0)

2,337,214

11,966,190

339,729

2.9 %

967,867

8.8 %

17,895,785

$731,466,593

$57,728,562

8.6 %

$44,192,817

6.4 %

$1,447,545,228

0
(506,841)
(1,454,559)
$113,247,601

(17.8)
(7.5) %
8.5 %

(541,356)

91.8
-(18.8)

(484,642)
$79,587,031

(2.6) %
5.8 %

Other Adjustments
Urban Revenue Sharing
Budget Plan Transfers

(35,368,620)

4,131,923

71,100,415

56,841,334

-398.6

0

0.0

(70,737,240)

0

0.0

155,442,901

8,263,846
102,346,207

-192.8

0

0.0

0

0.0

Budget Legislation

0

0

--

0

--

0

0

--

0

--

Leaseback Proceeds

0

0

--

0

--

0

0

--

0

--

35,731,795

60,973,257

-- %

0

0.0 %

84,705,661

110,610,053

-- %

0

0.0 %

$767,198,388

$118,701,819

18.3 %

$44,192,817

6.1 %

$1,532,250,889

$223,857,654

17.1 %

$79,587,031

5.5 %

Sub-Total Other Adjustments
TOTAL GENERAL FUND REVENUE
Non-General Funds
Highway User Revenue Fund

$97,604,599

($1,444,602)

(1.5) %

($2,930,340)

(2.9) %

$198,601,271

($793,359)

(0.4) %

($3,784,279)

(1.9) %

Tobacco Tax (All Funds Total)

$23,822,856

($2,950,366)

(11.0) %

($3,819,923)

(13.8) %

$52,934,964

($1,191,484)

(2.2) %

($3,026,771)

(5.4) %

__________
* Total August collections including the temporary 1¢ increase approved by the voters in May 2010 were $365.2 million. This amount is $23.3 million, or 6.8%, above August 2010 and $12.7 million, or 3.6%, above
forecast. Year to date, total collections including the 1¢ increase were $747.6 million. This amount is $59.3 million, or 8.6%, above August 2010 and $32.9 million above forecast.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011

Economic Indicators
NATIONAL

“Compared to
the same month
in the prior year,
consumer prices
were up by 3.8%,
the largest such
increase since
September
2008.”

The Conference Board’s U.S. Consumer
Confidence Index fell by (14.7) points, or
(25.2)%, in August to 44.5, the lowest level since
April 2009. The latest reading indicates that
consumer confidence slipped back to
recessionary levels in August, as households’
outlook on business conditions, employment,
and personal finances worsened considerably.
Econometric research has shown that large
changes in consumer sentiments (in the range
of 20% to 30%) tend to have a noticeable
impact on retail sales and consumer spending.
The Conference Board’s U.S. Index of Leading
Economic Indicators rose by 0.3% in August, to
116.2. Increases in the money supply and a
favorable interest rate spread contributed
positively to the index, while a decrease in
stock prices and a fall in consumer
expectations pulled it back. Absent the
advance of the financial components, the
index would have fallen by (0.7)% in August.
The advance of the index over the last 4
months would not have occurred without the
strong positive contributions from the financial
indicators.
Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), increased by 0.4%
in August. The CPI increase was driven by
higher energy, food, clothing, and shelter
prices. Compared to the same month in the
prior year, consumer prices were up by 3.8%,
the largest such increase since September
2008. Core inflation, which excludes energy
and food prices, increased by 0.2%. Year over
year, core inflation is up by 2.0%. While core
inflation remains contained, it should be noted
that the year-over-year rate has been trending
up since the beginning of calendar year 2011.
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 26 states for which the
coincident index increased in August. From
July to August, Arizona’s index increased by
0.4% compared to an increase of 0.1% for the
nation as a whole. July’s Arizona index was
1.7% above last year.

While Arizona's index has improved compared
to the same time period last year, the index
remains (13.0)% below its peak reading in
August 2007. Only 4 other states (Florida,
Idaho, Michigan, and Nevada) have had a
larger decline than Arizona. By way of
comparison, 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 (EPSU) of the
Department of Administration, the state
added 52,800 nonfarm jobs in August over
July. Job gains typically occur in August
when students resume their classes in public
schools. The job gain this August was
significantly larger than the average August
workforce increase of 34,900 in the prior 10
years.
Most of the monthly net job gain (almost 85%)
was attributable to state and local public
education. According to EPSU, this figure was
probably overstated due to the fact that
schools started earlier this year. This suggests
that the monthly job gains from public
education will be smaller than normal in
September.
In August, the state had 40,700, or 1.7%, more
persons on the payrolls than 1 year ago.
August marked the 8th straight month with
year-over-year gains in employment. The
1.7% gain in August was the best
performance since March 2007. However, as
noted earlier, this figure may have been
overstated due to an earlier start of the
school year than previously.
Private sector employment, which makes up
almost 85% of all nonfarm jobs, added 12,400
jobs in August over July. This was the largest
August private net job gain in 5 years. Year
over year, private sector employment has
grown by 2.0%, or 39,300 positions. Most of
these gains have occurred in the service
sector, especially the health care industry,
and to a lesser extent, the leisure and
hospitality industry.
The construction sector grew by 1,000 jobs in
August over July, twice the gain typically
reported for this month. August marked the
second straight month with a year-over-year
gain (1.3%) in construction employment after

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011

Economic Indicators
54 consecutive months with year-over-year
losses. Construction employment makes up
4.8% of nonfarm employment today
compared to 9.5% during the height of the
housing boom in July 2006.
The manufacturing industry continued to add
jobs in August and now employs 2.6%, or 3,900
more workers than one year ago. All subsectors of the industry except for aerospace
have expanded their payrolls.

“To return to prerecession
employment
levels, the state
would have to
add 327,000
jobs, which
would take years
to accomplish at
the current rate
of job gains.”

While nonfarm employment has grown, year
over year, in the last 8 months, the net gains
have been small compared to prior periods of
recovery. The average net gain thus far in CY
2011 is 12,000 jobs, or 0.5% over last year. To
return to pre-recession employment levels, the
state would have to add 327,000 jobs, which
would take years to accomplish at the current
rate of job gains. See Tracking Arizona’s
Recovery for additional historical information.
The state’s seasonally adjusted unemployment
rate fell from 9.4% to 9.3% in August, returning it
to the same level as in June. The jobless rate
has been largely unchanged in the previous 5
months. August marked the 30th consecutive
month with an unemployment rate of 9% or
higher. During the deep recession in the early
1980s, the state experienced 17 straight
months with a jobless rate at or above 9%. The
U.S. unemployment rate remained at 9.1% in
August.
The federal Bureau of Labor Statistics (BLS)
reported that 25,368 Arizona residents filed
initial claims for unemployment insurance in
August, a decline of (2,591), or (9.3)%, claims
over the prior month. This reduction in initial
claims was due to seasonal factors.
Historically, the month of August has an
average decline of (19.9)%.
The average number of claims for August in
the 10-year period prior to the start of the last
recession was 15,970. Initial claims in August
were (7.7)% 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 August, the number of new Maricopa
County foreclosure notices increased 26.8%
from July levels to 5,318. The number of

(Continued)

Maricopa County pending foreclosures
decreased from 24,393 in July to 23,752 in
August. The August total is (53.8)% below the
peak in December 2009 (51,466). See
Tracking Arizona’s Recovery for additional
historical information.
While 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 August, there were a total of
9,250 existing single-family home sales that
resulted in a median resale home price of
$122,400. Relative to the prior year, the
number of sales is up 5.2%, while prices are
(12.3)% lower. Of the existing sales, 30.9%, or
2,860 were foreclosures.
State Agency Data
The FY 2012 budget included significant
changes to the eligibility of several AHCCCS
populations for services. Because of these
changes, the economic indicators section will
now include an expanded report of AHCCCS
caseloads across several populations.
In September, total AHCCCS caseloads
equaled 1.38 million members, a (0.4)%
decrease over the prior month. Overall
AHCCCS caseloads are currently 2.0% above
September 2010 levels.
In terms of specific categories, the spend
down and the KidsCare populations saw
significant declines from the prior year of
(73.7)% and (42.4)%, 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 January 2010. The Proposition
204 childless adult category has declined
(4.9)% from the prior month as new enrollment
under this category stopped in early July.
Some of this decline results from members
being transferred to other Medicaid
categories. Since July 1, AHCCCS reports that
9,100 Proposition 204 childless adult members
were transferred to the SSI program.
There were 37,793 TANF recipients in the state
in August, a monthly caseload decrease of
(8.5)%. Year-over-year, the number of TANF
recipients has declined by (24.7)%. This

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011

Economic Indicators
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.
The Supplemental Nutrition Assistance
Program (SNAP), formerly known as Food
Stamps, provides assistance to low-income
households to purchase food. In August,
there were a total 1.1 million food stamp
recipients in the state, a 1.9% increase over
the prior month. Compared to the same
month last year, food stamp participation was
up by 7.2%. 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
decreased to 40,146 inmates between July
and September 2011. Relative to the prior 3month period, the population has decreased
by (34) inmates. Compared to a year ago the
population has declined by (231) inmates.

(Continued)

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 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

August
August
June
August
August
August
August
Jun-Aug
Jun-Aug

9.3%
27,959
69,087
2.39 million
151,300
113,700
40.5
$34.5 million
$142.1 million

(0.1)%
(9.3)%
2.1%
2.3%
0.1%
0.9%
2.8%
1.2%
(3.9)%

(0.6)%
(7.7)%
(21.3)%
1.7%
2.6%
1.3%
2.0%
11.2%*
9.6%*

Jun-Aug
Jun-Aug

1,004
368

3.6%
54.6%

9.7%
347.0%

August
August

9,250
1,275

7.2%
10.4%

5.2%
(12.1)%

August
August

$122,400
$78,825

(3.8)%
(1.5)%

(12.3)%
(8.2)%

August
August
July

5,318
23,752
100.54

26.8%
(2.6)%
(0.1)%

(29.6)%
(42.5)%
(8.8)%

August
July
June

26,983
3.63 million
$6.24

(2.5)%
1.7%
3.1%

(39.1)%
9.2%
5.1%

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

August
August
July-Sept

54.0
178.15
$229.9 billion
6.39 million
1,378,004
892,199
1,553
206,478
159,243
15,752
51,418
51,361
37,793
1,145,189
40,146

4.0%
0.4%
1.8%
N/A
(0.4)%
0.7%
(45.3)%
(4.9)%
0.0%
(5.5)%
0.1%
3.2%
(8.5)%
1.9%
(34) inmates

10.0%
1.7%
4.3%
N/A
2.0%
5.3%
(73.7)%
(5.8)%
4.6%
(42.4)%
2.0%
6.0%
(24.7)%
7.2%
(231) inmates

May
May

18,990
26,184

(37)
(73)

(936)
(1,645)

2nd Quarter 2011
(2nd Estimate)
August
August
Mar-May
August

$13.3 trillion

1.0%

1.5%

44.5
116.2
$4.52 billion
226.27

(25.2)%
0.3%
0.9%
0.4%

(16.4)%
6.5%
3.2%
3.8%

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011

JLBC Meeting
At its September 28, 2011 meeting, the Joint
Legislative Budget Committee considered the
following issues:
AHCCCS/Department of Health Services/
Department of Economic Security - Review of
Proposed Capitation Rate Changes – The
Committee gave a favorable review of
AHCCCS’s proposed capitation rate changes
and benefit limitations for the state’s
Medicaid system.
Arizona Board of Regents - Review of FY 2012
Tuition Revenues - The Committee approved
the Arizona Board of Regents’ plans to use
tuition revenue amounts greater than the
amount appropriated by the Legislature and
all non-appropriated tuition and fee revenue
for FY 2012.
Attorney General - Review of Allocation of
Settlement Monies - The Committee gave a
favorable review of a $1.4 million settlement
resulting from a settlement with
GlaxoSmithKline related to substandard drug
manufacturing practices by a subsidiary
which has since ceased operations. The
settlement will be deposited in the Consumer
Fraud Revolving Fund.
Department of Health Services - Consider
Approval of Nursing Care Facilities Survey The Committee approved the awarding of a
contract of $400,000 for a contractor to
conduct a quality improvement study of
statewide nursing care facilities, to be paid for
from the Nursing Care Institution Resident
Protection Revolving Fund.

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011

JCCR Meeting
At its September 28, 2011 meeting, the Joint
Committee on Capital Review considered the
following issues:
Arizona Department of Administration –
Review of FY 2012 Building Renewal Allocation
Plan – The Committee gave a favorable
review of the Department of Administration’s
$6.5 million FY 2012 Building Renewal
Allocation Plan, which consists of the following
uses: $905,000 for fire and life safety projects,
$2.7 million for major building services
projects, $736,000 for building shell projects,
$1,128,000 for infrastructure projects, $28,000
for energy conservation projects, and
$400,000 for building interior projects. The
remaining $624,000 will be allocated for
project management, construction insurance,
and contingency.
Arizona Department of Administration Consider Recommending FY 2011 and FY 2012
Rent Exemptions – The Committee
recommended, upon request of the
Department of Administration, a partial rent
exemption for the Department of Economic
Security and a corresponding $1,900 increase
for AHCCCS in FY 2011. For FY 2012, the
Committee recommended 2 partial rent
exemptions for the Commission for the Deaf
and Hard of Hearing and the Department of
Insurance, totaling $45,800.
State Department of Corrections – Review of
FY 2012 Building Renewal Allocation Plan –
The Committee gave a favorable review to
the Department of Corrections’ $4.6 million FY
2012 Building Renewal Allocation Plan to be
spent as follows: $1.7 million for upgrading
locking systems, $2.3 million for perimeter
electric security systems, and $320,000 for well
and water systems. The remainder will be
allocated for preventative maintenance
projects, an emergency contingency reserve,
and risk management premiums.
Arizona Department of Transportation –
Review of the FY 2012 Building Renewal
Allocation Plan – The Committee gave a
favorable review to the Department of
Transportation’s $1.1 million FY 2012 Building
Renewal Allocation Plan, including $1.0 million
from the State Highway Fund for 68 projects
and $50,000 from the State Aviation Fund for 4
projects.

Arizona Game and Fish Department – Review
of FY 2009 Yuma Office and FY 2012 Property
and Dam Maintenance Projects – The
Committee gave a favorable review of the
department’s $954,000 Yuma Office
remodel/expansion expenditures, $500,000 of
spending on property maintenance. The
committee also gave approval to expend
partial funding of $100,000 from the FY 2012
appropriation for dam maintenance projects.
Arizona State University – Review of 6 Bond
Projects – The Committee gave a favorable
review of $99.7 million in bond issuances.
These projects would be supported with
student fees, tuition, and lottery proceeds.
The largest project is a $57.1 million expansion
of the Business School on the Main campus.

10 JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011

Summary of Recent Agency Reports
AHCCCS – Report on Graduate Medical
Education Residency Positions – Pursuant to
A.R.S. § 36-2903.01, the Arizona Health Care
Cost Containment System (AHCCCS) has
submitted its annual report on the number of
new residency positions funded by local,
county, or tribal governments. The agency
indicates that these contributions in FY 2010
provided partial funding for an additional 803
residency positions at 5 hospitals. The
positions were funded by local contributions
of $20.6 million and a federal match of $65.1
million, resulting in $85.8 million total new
funding. (Aaron Galeener)
AHCCCS - Report on Healthcare Group Pursuant to A.R.S. § 36-2912AA, the Arizona
Health Care Cost Containment System
(AHCCCS) submitted its financial report for
Healthcare Group (HCG) for the period
January 1, 2011 to March 31, 2011. The
agency reports that HCG’s net operating
income was $1.8 million for the 3rd quarter of
FY 2011. HCG began FY 2011 with total
unpaid prior year obligations and other
liabilities of $12.4 million. As of September 30,
2010, total liability was $10.5 million.
Pursuant to A.R.S. § 36-2912Z, AHCCCS reports
that, as of March 2011, total statewide HCG
medical plan enrollment was 8,564, with
participating members from 3,116 employers.
This is a decline of (1,856) participating
members (17.8% decline) and (778)
employers (20.0% decline) from the start of
the fiscal year. AHCCCS believes that the
worsening economy and discontinued
outreach has contributed to the declining
enrollment. (Aaron Galeener)
AHCCCS – Report on Systematic Alien
Verification for Entitlements Program –
Pursuant to A.R.S. § 36-2903.03, the Arizona
Health Care Cost Containment System
(AHCCCS) provided its latest report 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 10,296 individuals
between January 1, 2011 and March 30, 2011.
During this period, AHCCCS and DES referred
9 individuals for prosecution for fraudulent
schemes, theft, forgery, and selling
prescription medicines. (Aaron Galeener)

Department of Environmental Quality – Report
on Water Quality Assurance Revolving Fund
for FY 2011 – Pursuant to a General
Appropriation Act footnote, the Department
of Environmental Quality (DEQ) is required to
report annually by September 1 to the Joint
Legislative Budget Committee (JLBC) on the
progress of activities in the Water Quality
Assurance Revolving Fund (WQARF) Program.
The WQARF Program is similar to the federal
Superfund program in that it is designed to
remediate contaminated groundwater at
specified sites. Based on the report, FY 2011
expenditures were $9.0 million. Unexpended
funds at the end of FY 2011 totaled $7.2
million.
According to the report, there were 36 sites
on the WQARF Registry. Sites on the registry
have not changed since 2004. The report
contained no information regarding the
expected duration or total remediation costs
for these sites.
In response to lowered funding, DEQ issued
stop work directives to WQARF contractors on
January 30, 2009 for all site activities not
related to the operation and maintenance of
soil and groundwater treatment systems. In FY
2012, program expenditures for 26 sites that
remain active are projected to be $6.8 million.
(James Alcantar)
Department of Health Services – Report on
Prior Year Reconciliation and Penalty Monies
as State Match for Medicaid Behavioral
Health Services – Pursuant to a FY 2012
General Appropriation Act footnote, the
Department of Health Services (DHS) has
submitted a report on reconciliation
payments and penalty fees that were used to
draw down federal monies for Medicaid
behavioral health services in FY 2011. DHS
reports that revenue from reconciliation
payments and penalty fees totaled $45.3
million, which was deposited into the
agency’s IGA/ISA Fund. These monies were
used as state match for Medicaid behavioral
health services and drew down $112.2 million
in federal monies for a total of $157.6 million in
FY 2011. (Art Smith)
Arizona Department of Homeland Security –
Report on Homeland Security Funding –
Pursuant to A.R.S. § 41-4255, the Arizona
Department of Homeland Security has

11 JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011

Summary of Recent Agency Reports
submitted an annual report detailing grant
allocations and expenditures for Homeland
Security Grants from Federal Fiscal Year
(FFY) 2007 through FFY 2010. The report
indicates that $40.6 million of the $40.8 million
FFY 2007 allocation has been expended.
Information for FFY 2008 - FFY 2010 is included
in Table 6 below.
The state was allocated and the Arizona
Department of Homeland Security awarded
$53.3 million in homeland security grants for
FFY 2010. The department reported total
expenditures of $9.6 million, leaving $43.7
million unexpended. State agencies were
awarded $14.0 million, of which $6.4 million
has been expended. Local governments
were awarded $39.3 million, of which $3.2
million has been expended. The largest local
grantee was the City of Phoenix ($6.6 million).
The largest state grantee was the Department
of Emergency and Military Affairs (DEMA)
($6.6 million). The largest individual grant of
$6.6 million went to DEMA for the personnel
costs for those directly involved in emergency
management activities and to support
related operational costs.
FFY 2010 represented a decrease from the
amount received in FFY 2009 but an increase
from the amount received in FFY 2008. While
Arizona received $53.3 million in FFY 2010, the
state received $57.8 million in FFY 2009 and
$50.5 million in FFY 2008, respectively. Of the
funds received, 73.6% have been expended
for FFY 2009, and 88.1% have been expended
for FFY 2008. (Eric Billings)
State Parks Board – Report on Reservation
Surcharge Fund Revenue – Pursuant to a
FY 2012 General Appropriation Act footnote,

(continued)

the State Parks Board is submitting a report on
Reservation Surcharge Fund revenue in
excess of its appropriation of $206,400 and
the intended use of these additional monies.
The State Parks Board estimates that the
Reservation Surcharge Fund will generate
additional receipts of about $293,600, or
$500,000 in total revenue, due to the
implementation of a new electronic
reservation system. Since the new system is
also creating additional expenses, the Parks
Board intends to use the additional revenues
for administering and maintaining the
reservation system. The Parks Board expects
to spend $395,000 from the fund, plus transfer
$105,000 to the General Fund for a required
fund sweep. (Art Smith)
Secretary of State - Report on the Election
Systems Improvement Fund – Pursuant to 2011
and 2012 General Appropriation Act
footnotes, the Secretary of State submitted a
report on the expenditures from the Election
Systems Improvement Fund to implement the
Help America Vote Act. The expenditures in
FY 2010 were $2.3 million, and in FY 2011 were
$3.6 million and are projected to be $3.5
million in FY 2012. The Secretary of State
reports that expenditures are used as follows:
83% for voter registration, 9% for
administration, 5% on poll workers, and 3% for
telecommunications purposes. (Ben Beutler)
Supreme Court – Report on Current and
Future Automation Projects – Pursuant to a
General Appropriation Act footnote, the
Administrative Office of the Courts (AOC) has
provided its FY 2012 report to the JLBC on
current and future automation projects
coordinated by the AOC. The AOC estimates

Table 6

Awards and Expenditures by Homeland Security Grant Recipients
State Awards
Local Government Awards
Total Awards

FFY 2008
$13,530,300
37,006,000
$50,536,300

FFY 2009
$14,025,400
43,752,200
$57,777,600

FFY 2010
$13,985,100
39,268,600
$53,253,700

State Expenditures
Local Government Expenditures
Total Expenditures

$12,603,200
31,937,700
$44,540,900

$10,392,100
32,157,100
$42,549,200

$6,388,400
3,245,100
$ 9,633,500

Percentage of Total Awards Currently
Expended

88.1%

73.6%

18.1%

12 JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011

Summary of Recent Agency Reports
total state automation expenditures in FY 2012
will be approximately $19.8 million. Of this
amount, approximately $9.1 million, or 46%,
will be spent on 5 new projects, $6.0 million, or
30%, will be spent on shared infrastructure,
and $4.7 million, or 24%, will be spent on
ongoing automation support in FY 2012. Of
the 5 new projects, the larger projects
include:

• Updating the limited jurisdiction case

management system for statewide
utilization ($4.0 million)
• Further development of electronic filing
($3.6 million)
• Updating and enhancing the Juvenile OnLine Tracking System (JOLTS) ($1.2 million)
(James Alcantar)

(continued)

13 JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011

August Spending
“August 2011

August 2011 General Fund spending was
$1.15 billion. August expenditures were higher
than the prior year in part due to an increase
in the state’s share of Medicaid expenses.

spending of

FY 2012 Spending

$1.15 billion was
$67.7 million

August 2011 spending of $1.15 billion was
$67.7 million higher than August 2010 (See
Table 7).

higher than

•

August 2010.”

•

•

The Department of Health Services spent
$135.7 million in August, which is $120.0
million more than the previous year. This
increase is due to an increase in the
state’s share of Medicaid payments as
well as the timing of the Medicaid
payments.
School Facilities Board spent $0.1 million in
July, or $31.9 million less than the prior
year, due to the timing of debt service
payments.

AHCCCS spending was $147.1 million in
August, which is an increase of $41.1
million from the prior year. Federal
Medicaid monies decreased, which
caused the state’s share of Medicaid
services to increase.

Table 7
General Fund Spending ($ in Millions)

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

Change
from
August 10

Year-toDate
308.0
180.4
356.2

YTD Change
from FY 11

147.1
104.8
3.7

41.1
6.3
11.5

(0.7)
25.5
37.9

665.9
135.7
2.1
0.1

(4.2)
120.0
0.6
(31.9)

1,328.0
236.4
22.7
132.6

47.9
0.0

(12.3)
0.0

86.5
52.1

(28.8)
52.1

39.5
1,146.8

(63.4)
67.7

113.9
2,816.8

(108.7)
232.4

35.5
118.9
0.7
100.0

14 JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011
Table 8

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
Joint Legislative Budget Comm.

General Fund Spending
($ in Thousands)
Change from
August 11
August 10
2,022.9
(56,617.9)
68.1
27.6
966.1
464.7
147,101.3
41,052.5
(36.7)
2,131.8
903.7
38.2
(6.7)

Year-to-Date
2,135.9
52,066.9
141.5
1,850.8
307,980.0
4,747.9
99.1

49.7
2,625.0
35.9
104,773.7
2,451.4
3,710.0
665,908.4
1,440.1
10.8
31.6
59.7
165.8
114.0
336.5
52.9
428.3
133.2
135,684.8
221.9
43.7
385.5
4.6
337.5
-313.5
1,481.8
924.1
4,120.8
26.3
4.3

0.0
2,555.9
(61.1)
6,305.9
969.4
11,467.5
(4,174.9)
309.4
(23.0)
(6.7)
(233.2)
15.2
17.3
14.8
21.8
(46.9)
(936.9)
12.8
120,035.8
(2,615.1)
8.6
385.5
(5.9)
(2.7)
(10,000.9)
(203.6)
(1,165.8)
1,386.7
(113.3)
1.4

175.5
5,250.0
17,144.3
88.9
180,380.6
4,975.0
356,249.4
1,328,020.9
2,508.8
28.2
151.6
130.3
612.1
507.7
621.2
108.5
1,110.1
338.7
236,364.4
574.3
109.7
616.1
8.7
1,172.4
3,235.4
17,466.6
2,895.1
10,005.4
158.0
7.6

(3.9)
4,999.3
(15,962.3)
(54.2)
25,461.1
1,436.6
37,922.3
35,499.3
359.6
(22.2)
64.1
(215.8)
7.7
284.1
(23.5)
28.6
(121.5)
(816.0)
26.3
118,878.0
(2,549.1)
22.7
616.1
(1.8)
(854.9)
(8,086.6)
450.7
(2,028.6)
(7,493.6)
(607.8)
(10.3)

1,180.5
838.8
184.9

(24.1)
133.6
(258.7)

3,333.4
2,131.6
394.6

(1,697.7)
319.5
(247.3)

YTD Change from
FY 11
(58,391.4)
52,066.9
(130.6)
(1,416.0)
(790.2)
(88.1)
2,221.7
(18.5)

15 JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2011

Agency
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

August 11
784.0
551.5
80.2
27.4
109.6
2,143.2
262.1
83.1
452.2
5,141.1
76.4
858.5
16.7
4.3
7,036.1
4,596.7
19,228.1
5,947.3
18,110.2
307.1
493.2
97.2
1,146,814.3

Change from
August 10
273.4
71.0
(128.0)
(110.0)
(73.7)
22.5
33.9
633.3
30.2
75.7
(1.2)
(215.7)
(333.5)
(31,918.3)
(3,076.7)
5.8
1.4
7,117.5

Year-to-Date
1,569.6
1,427.7
288.0
48.8
655.8
22,695.9
419.1
391.0
657.5
11,945.2
132,551.3
2,175.1
72.7
7.2
7,036.1

(716.4)
(4,966.8)
(2,604.7)
(4,024.8)
(2,066.4)
48.9
28.8
67,662.1

4,902.2
35,926.7
11,894.5
33,745.1
1,009.8
1,145.5
191.4
116.5
2,816,770.2

YTD Change from
FY 11
(32.2)
(1,009.5)
(128.0)
(82.5)
(111.1)
35.8
(20,000.0)
449.5
719.9
(260.3)
(5.9)
(2.4)
(514.8)
1,729.9
99,790.5
(2,649.5)
(5.1)
(4.3)
6,984.6
(586.8)
(12,463.1)
(5,209.4)
(10,524.9)
(2,587.3)
(88.5)
42.8
116.5
232,385.9