JLBC - Monthly Fiscal Highlights

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

www.azleg.gov/jlbc.htm

“August General
Fund collections
were $(30.2)
million below the
enacted May
budget
forecast.”

September 2012

Summary
In August, monthly base revenue collections
declined for only the second time since the
beginning of FY 2011. General Fund revenue
collections totaled $691.7 million. Excluding
one-time revenue adjustments, August
collections were $(3.3) million or (0.5)% below
the prior year.

The state’s fiscal health can also be measured
by the operating fund balance. The state pays
its bills out of the operating fund balance, which
consists of the General Fund and certain
dedicated funds. The mid-September 2012
balance is $1.8 billion, including $450 million in
Budget Stabilization Fund reserves.

The decline in August revenues was primarily
due to Corporate Income Tax collections. The
$22.4 million of Corporate collections was
relatively normal. Due to a large one-time
payment in August 2011, however, Corporate
collections were $(10.0) million less than the
prior year.

FY 2012 Ending Balance Update
ADOA is required to provide a preliminary FY
2012 ending balance estimate by September
15. ADOA reported a preliminary estimate of
$427 million, up from the $401 million estimate
discussed in last month’s Monthly Fiscal
Highlights. This estimate is still being reviewed
and will likely change again prior to ADOA’s
final estimate later this year.

August General Fund collections were $(30.2)
million below the enacted May budget
forecast. Year-to-date, revenues are 2.9%
higher than last year and are $(13.2) million
below the budget forecast.
In comparison to revenue of $691.7 million,
August 2012 General Fund spending was $943.7
million, or $(203.1) million below last year.
August expenditures were lower than last year
primarily due to technical timing issues related
to Medicaid spending in AHCCCS and the
Department of Health Services.
Fiscal year-to-date, General Fund revenues of
$1.4 billion have been offset by $3.1 billion in
spending.

This month’s MFH also provides information on 3
other issues of potential interest: 1) a
nationwide summary of state budgets for FY
2013; 2) an updated estimate of potential
proceeds from an internet sales tax; and 3) a
summary of AHCCCS’ $143 million information
technology project.
NCSL State Budget Update
Several times a year, the National Conference
of State Legislatures (NCSL) releases a State
Budget Update which summarizes and
compares various budget issues across states.
Among the highlights of the latest NCSL report:
•
In terms of a “Rainy Day Fund,” 47 states
reported on their FY 2013 rainy day funds
and 43 have funds available. Of these
states:

Table of Contents

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
September 20, 2012.

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

Economic Indicators.............................................. 5

• FY 2012 Ending Balance Update......................1

Summary of Recent Agency Reports

• NCSL State Budget Update ..............................1

• Arizona Department of Administration ........... 8

• NCSL Report on Internet Sales ..........................2

• Department of Economic Security.................. 8

• AHCCCS/Health Exchange IT Project .............2

• Department of Education................................. 8

• Tax Handbook .....................................................2

• Department of Environmental Quality............ 8

August Revenues ....................................................3

• School Facilities Board ....................................... 9

August Spending .................................................... 9

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2012

Summary

•
•

(Continued)

‐ Arizona ranks 15th in the total amount of Rainy Day
Funds available with $450 million. The average
amount of funds available is $880.6 million.
‐ Arizona’s Rainy Day Fund (officially the Budget
Stabilization Fund) is 5.2% of General Fund spending
in FY 2013, which is the 17th highest percentage in
the nation. The national average is 11.8%.
Of the 41 states with an increase in appropriations in
FY 2013, Arizona ranks 39th in total growth, with a 0.6%
increase. The national average increase is 2.7%.
In FY 2013, 47 states, including Arizona, project an
increase in total tax revenue. In terms of its
percentage change in revenue growth, Arizona’s
forecast ranges between 8th-12th place for 3 large tax
categories:
Tax
Individual Income
Sales
Corporate Income

Arizona
Growth
5.6%
4.7%
9.7%

Arizona
Ranking
11
12
8

Avg State
Growth
4.3%
3.7%
6.7%

NCSL Report on Internet Sales
The National Conference of State Legislatures
(NCSL) recently released a report estimating the cost of
online sales nationwide (in terms of lost sales tax revenues)
at $23 billion in 2012. This represents an increase from
previously published estimates of a nationwide cost of
$11.4 billion. Instead of only considering the impact of
online sales from business to consumer, the higher
estimate also included other consumer commerce (such
as mail and telephone orders) and deliveries across state
lines among businesses. In particular, the business-tobusiness aspect of remote sales is a significant component
of online sales which are currently not taxed.

AHCCCS/Health Exchange IT Project
On August 22, the Information Technology Authorization
Committee (ITAC) approved an increase from $75 million
to $143 million for numerous projects to establish a state
based health insurance exchange and make upgrades to
DES and AHCCCS technology. AHCCCS estimates that
approximately $4 million of the $143 million total would be
state funding. The remainder would be funded by the
Federal government. AHCCCS states that the primary
drivers of the $68 million cost increase are as follows:
•
•
•
•

$33 million for Medicaid changes
$20 million for data warehouse and master data
management components
$10 million for exchange system modifications
$4 million for exchange staff

The Federal government requires states to have an
operational health insurance exchange by October 1,
2013. States may choose to run the health insurance
exchange, allow the Federal government to do so, or
partner with the Federal government for the operation of
the exchange. According to the Executive, no final
decisions have been made on whether Arizona will have
a state run or federally run exchange. The Executive also
states that the Request for Proposals (RFPs) includes
language which would allow the contract to be
cancelled if it is decided that the Federal government will
run the exchange.
Federal health care legislation also requires numerous
eligibility changes for AHCCCS and some DES programs,
including the way in which financial eligibility for programs
is calculated. The exchange must also have the
capability of determining whether an individual is eligible
for Medicaid.

Once all remote sales are taken into account, the total
nationwide sales tax revenue loss is estimated to be $23
billion. This estimate corresponds with a recent federal
legislative proposal, which would use this broader
definition of remote commerce.

ITAC consists of public and private business information
technology (IT) leaders. The committee meets periodically
to review IT projects and other strategic IT issues. Any IT
project valued over $1 million must be approved by ITAC.

For Arizona, JLBC Staff has estimated that in 2012 the
state’s portion of the overall sales tax revenue loss is $185
million under the more limited definition of remote sales.
Using the expanded definition, this annual loss would
increase to $354 million.

Tax Handbook
The JLBC Staff has published its annual Tax Handbook on
our website. For each state tax category, the Tax
Handbook provides information on the tax rate, who pays
the tax, how the tax proceeds are distributed and a brief
history.

In terms of both Arizona state and local sales tax
combined, the annual estimated loss would be $370
million in 2012 under the limited definition of remote sales
and $709 million using the expanded definition.

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2012

August Revenues
Table 1

August
Year-to-Date

General Fund Revenues ($ in Millions)
FY 2013
Collections
$ 691.7
$ 1,440.2

Difference From
Budget Forecast
$ (30.2)
$ (13.2)

Sales Tax collections were $378.2 million, or 3.5%
above August 2011 and $(2.0) million below the
budget forecast for the month.

“Year-to-date,
sales tax
collections are
4.4% above
the prior year
and are $7.7
million above
forecast.”

Year-to-date, sales tax collections are 4.4%
above the prior year and are $7.7 million above
forecast.
Table 2 displays the August growth rates for the
largest categories.
Table 2

Sales Tax Growth Rates
Compared to Prior Year
August
YTD
Retail
5.9%
6.4%
Contracting
7.5%
6.5%
Utilities
20.6%
11.0%
Use
(17.1)%
(9.6)%
Restaurant & Bar
1.0%
4.8%
Retail and contracting together account for
about 60% of all sales tax revenues. August
retail, which reflects July sales, increased by
5.9%. As we have noted in prior reports, the
retail category began to grow in December
2010. Retail growth continued through the first
part of last fiscal year, but slowed during the last
quarter of FY 2012 due primarily to the
exceptionally high growth rates in the last
quarter of FY 2011.
Overall, the retail category grew by 5.0% in FY
2012 compared to the prior year. Growth
through the first two months of the current fiscal
year is above that level, at 6.4%. Contracting
collections have been more volatile than retail
and increased by 7.5% this month.
Individual Income Tax net revenues were $274.9
million in August, or (1.7)% less than the prior year.
Collections were $(13.5) million below the budget
forecast. Year-to-date, revenues have grown
4.7% and are $7.1 million above forecast.
The August decline relative to the forecast was
the result of less than expected withholding tax
collections and final payments, partially offset
by lower than anticipated refunds.
As indicated in Table 3, withholding decreased
by (3.0)% in August. This comes after a 9.8%
increase in July. The August decrease may be
partially due to the timing of withholding

Difference
From FY 2011
$ (75.5)
$ (57.1)

payments. For the first two months of the fiscal
year, withholding is up 3.1%.
Total estimated and final payments were $17.1
million in August, compared to $16.6 million in
August of last year.
Refunds of $(13.9) million were $(3.3) million less
than last year’s amount.
Table 3
Individual Income Tax Growth Rates
Compared to Prior Year
August
YTD
Withholding
`(3.0)%
3.1%
Estimated +
Final Payments
3.2%
5.0%
Refunds
(19.2)%
(36.7)%
Corporate Income Tax net collections were $22.4
million in August, which is (30.8)% below the prior
year. Collections were down compared to the
prior year due to an extraordinarily large onetime payment in August 2011. Collections for the
month were $(10.0) million below the forecast.
Year-to-date, collections are down (25.5)% and
are $(21.8) million below forecast. July and
August are relatively small collection months for
corporate income tax, with September being the
first of four larger collection months.
The Lottery Commission reports that August
ticket sales were $54.0 million, which is $5.8
million, or 12.1%, above sales in the prior year.
Year-to-date ticket sales are $103.1 million,
which is 9.6% above last year’s sales. While sales
increased, net General Fund revenues actually
declined due to the payment of debt service
for the Lottery Revenue Bonds issued in FY 2010.
Non-General Fund
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 $101.2 million in
August were up $3.5 million, or 3.6%, compared
to August of last year. Year-to-date revenues
are 0.1% greater than the prior year.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2012
Table 4

General Fund Revenue:
Change from Previous Year and Enacted May Budget Forecast
August 2012
Current Month

FY 2013 YTD (Two Months)

Change From
August 2011

Actual
August 2012

Percent

Amount

Change from
Budget Forecast
Percent

Amount

August 2011

Actual
August 2012

Budget Forecast
Percent

Amount

Percent

Amount

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

$302,649,584

$9,166,953

75,514,267

3,771,069

274,914,436
22,407,426
59,105

3.1 %

($4,903,029)

$624,538,766

$24,126,963

4.0

156,166,024

8,954,795

(13,471,120)

(4.7)

562,769,955

25,074,062

4.7

7,130,646

1.3

(9,998,430)

(30.9)

43,192,978

(14,820,964)

(25.5)

(21,780,736)

(33.5)

(15,895)

(21.2)

(20.6)

5.3

2,889,278

(4,678,292)

(1.7)

(9,965,992)

(30.8)

(1.6) %

4.0 %

$411,355

0.1 %

6.1

7,282,263

4.9

(11,112)

(15.8)

258,020

(38,415)

(13.0)

(66,980)

2,169,748

540,825

33.2

0

0.0

4,131,906

(253,434)

(5.8)

(265,955)

(6.0)

2,018,811

(776,971)

(27.8)

0

0.0

5,547,861

(386,416)

(6.5)

995,678

21.9

1,802,963

4.5

79,311,641

5.2

(688,359)

(0.9)

41,802,963

4,046,135

0

0

40,549
$721,576,889

(16,129)
$2,076,486

10.7
-(28.5)
0.3 %

0
(19,451)
($23,715,684)

3,936,848

--

0

(200,652)

(100.0)

(32.4)

88,122

(16,956)

(16.1)

(3.2) %

$1,476,005,273

$46,375,831

3.2 %

0
(31,878)
($7,013,966)

-(26.6)
(0.5) %

Other Revenue
Lottery

2,909,940

(2,096,100)

(41.9)

(2,090,060)

(41.8)

2,909,940

License, Fees and Permits

2,680,601

(307,783)

(10.3)

(319,399)

(10.6)

5,505,917

2,148

(400)

(15.7)

(7,852)

(78.5)

2,763

Interest
Sales and Services
Other Miscellaneous
Disproportionate Share
Transfers and Reimbursements
Sub-Total Other Revenue
TOTAL BASE REVENUE

1,451,013
744,461
0
(1,238,802)

358,396
(2,061,672)
0
(1,309,270)

(2,096,100)
818,047
(556)

(41.9)

10.1

(16.8)

(17,237)

(86.2)

32.8

(1,048,987)

(42.0)

1,977,325

128,771

7.0

(1,255,539)

(62.8)

3,365,801

(646,987)

(16.1)

--

0
(1,738,802)

---

0
(948,992)

$6,549,361

($5,416,829)

(45.3) %

($6,460,639)

(49.7) %

$12,812,754

$728,126,250

($3,340,343)

(0.5) %

($30,176,323)

(4.0) %

$1,488,818,027

0
(3,286,206)
($5,083,031)
$41,292,800

(41.8)

505,917

(73.5)
--

(2,090,060)

17.5

---

(2,022,675)

(50.6)

(634,199)

(15.9)

0
(1,948,992)

---

(28.4) %

($6,207,246)

(32.6) %

2.9 %

($13,221,212)

(0.9) %

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

(42,798,670)

(7,430,050)

21.0

0

0.0

(85,597,340)

(14,860,100)

21.0

0

0.0

6,326,907

(64,773,508)

(91.1)

0

0.0

36,954,713

(83,488,188)

(69.3)

0

0.0

(36,471,763)
$691,654,487

(72,203,558)

-- %

($75,543,901)

(9.8) %

0
($30,176,323)

0.0 %

(48,642,627)

(4.2) %

$1,440,175,400

2.4 %

$198,727,209

(98,348,288)

-- %

($57,055,488)

(3.8) %

($13,221,212)

0

(0.9) %

0.0 %

0.1 %

($2,257,278)

(1.1) %

Non-General Funds
Highway User Revenue Fund

$101,150,684

$3,546,085

3.6 %

$2,374,829

$125,938

__________

* Total August collections including the temporary 1¢ increase approved by the voters in May 2010 were $378.2 million. This amount is $12.9 million, or 3.5%, above August 2011 and $(2.0) million, or (0.5)%, below forecast.

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2012

Economic Indicators
NATIONAL
Following its first increase in five months, the
Conference Board’s U.S. Consumer
Confidence Index fell (7.3)% in August to 60.6.
While the reading was still 34.1% above that in
August 2011, the prior measure was taken
against the backdrop of the debt-ceiling crisis
in 2011. The monthly decrease was the largest
since that crisis. A worsening outlook on job
prospects, the economy, and gas prices lead
to the index’s large monthly decrease.
“[The]
Conference
Board’s U.S.
Consumer
Confidence
Index fell (7.3)%
in August… The
monthly
decrease was
the largest since
[the debt-ceiling
crisis of 2011].”

The Conference Board’s U.S. Leading
Economic Index increased by 0.4% in July to a
reading of 95.8 (1.5% over July 2011). This
growth was lead by improvement in 7 of the
index’s 10 components. The greatest
improvements were from building permit gains
and reductions in unemployment insurance
claims.

August 2007. See Tracking Arizona’s Recovery
for additional historical information.
The Federal Reserve Bank of Philadelphia also
publishes a leading index for each state that
forecasts economic conditions for the next 6
months. In addition to the coincident index,
Arizona’s leading index is based on Arizona
housing permits, Arizona initial unemployment
insurance claims, national delivery times from a
manufacturing survey, and the interest rate
spread between the 3-month and 10-year
Treasury instruments.
Using a 3-month average, Arizona’s leading
index projects that state GDP will grow at an
annualized rate of 2.1% over the next 6 months.
This is lower than the revised 2.4% growth
projection in June, and higher than the 1.5%
projection in July 2011.
Housing

Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), grew by 0.6% in
August and by 1.7% above the prior year. This
sharp monthly increase is the first since March
and the largest since June 2009. The majority
of the growth was caused by a 9.0% rise in
gasoline prices. Food prices increased 0.2%
during this time.

The number of Maricopa County pending
foreclosures decreased from 16,578 in July to
16,370 in August. This represents the third
consecutive monthly decrease in this
measure. The August total is substantially
below the peak in December 2009 (51,466).
See Tracking Arizona’s Recovery for additional
historical information.

The Semiconductor Industry Association (SIA)
reported that Semiconductor Billings (3-month
moving average) in the Americas decreased
(3.9)% in July to $4.15 billion. July’s reading
was the lowest since April 2010 and marked
the 13th consecutive period of year over year
decreases.

The total housing inventory in the Greater
Phoenix area decreased from 26,983 in
August 2011 to 20,934 in August 2012, a
(22.4)% decrease. In the Metropolitan
Phoenix area, the median price of a single
family home was $149,000 in July. This
represents a decrease of (0.7)% from June,
and a 17.1% increase from July of last year.

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.
In July, 22 out of 50 states had increases in their
coincident indexes. Arizona’s coincident index
was unchanged compared to the prior month.
Year-over-year, the Arizona index is 2.5%
above last year, which is the 17th highest
growth rate in the country. While this is a
significant improvement, Arizona’s index is still
(11.8)% below its peak, which occurred in

Another measure of the health of the Arizona
real estate market is permitting activity. For
the 3-month period through July, a total of
1,639 single-family building permits had been
issued statewide, a 69.2% increase from last
year. This is the highest 3-month average
since August 2008 when there were 1,740
permits issued. Even so, this is far below a
more normal 3-month average of 3,000 to
4,000 permits. See Tracking Arizona’s Recovery
for additional historical information.
While the performance of the single-family
housing sector has continued to improve, the
multi-family housing sector is showing mixed
signals. For the 3-month period ending in July,
a total of 236 multi-family building permits

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2012

Economic Indicators

(Continued)

had been issued in the state. This figure represents a
large increase from the prior month, but is (0.8)% below
the prior year. Multi-family permitting activity still remains
(83.7)% below the peak of activity in April 2007.
See Tracking Arizona’s Recovery for additional historical
information.
State Agency Data
At the beginning of September, total AHCCCS
caseloads equaled 1.29 million members, a 0.5%
increase from the prior month. Overall AHCCCS
caseloads are currently (6.0)% below September 2011
levels. The traditional AHCCCS population, which
consists primarily of lower-income children and their
parents, increased 0.4% from August and increased 0.6%
from a year ago. The total population in this program is
almost 900,000.
The Proposition 204 childless adult program has not
allowed new participants since July 2011 and this
population has declined (124,295) since July 2011 to
100,197. Of the decline, (11,524) is attributed to
members who were transferred to the SSI program. As a
whole, the Proposition 204 program has declined (2.0)%
compared to the prior month, and (31.1)% from the prior
year.
KidsCare provides coverage for children with incomes
above those in the traditional population. Its enrollment
has declined since a freeze was implemented in
January 2010. Enrollment declined (3.2)% compared to
the prior month and (42.0)% from the prior year.
Beginning on May 1, 2012, AHCCCS began a new
program, entitled KidsCare II, which provides coverage
for children up to 175% of the Federal Poverty Level. The
state match is provided by voluntary payments from
political subdivisions. As of the beginning of September,
19,037 children were enrolled in KidsCare II.
The 3-month average count of the Department of
Correction’s (ADC) inmate population decreased to 39,850
inmates between June 2012 and August 2012. Relative to
the prior 3-month period, the population has decreased by
(28) inmates. Compared to a year ago, the population has
declined by (296) inmates.

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2012

Economic Indicators

(Continued)

Table 5

ECONOMIC INDICATORS
Indicator
Arizona
- Unemployment Rate (SA)
- Initial Unemployment Insurance Claims
- Unemployment Insurance Recipients
- 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 Home Sales
Single-Family
Townhouse/Condominium
- Greater Phoenix Median Home Price
Single-Family
Townhouse/Condominium
- Greater Phoenix S&P/Case-Shiller Home Price Index
(Jan. 2000 = 100)
- Foreclosure Activity, Maricopa County
Pending Foreclosures (Active Notices)
- Greater Phoenix Total Housing Inventory, (ARMLS)
- Phoenix Sky Harbor Air Passengers
- Revenue Per Available Hotel Room
- Arizona Average Natural Gas Price
($ per thousand cubic feet)
- Arizona Consumer Confidence Index (1985 = 100)
- Arizona Coincident Index (July 1992 = 100)
- Arizona Leading Index -- 6 month projected growth rate
- Arizona Personal Income
- Arizona Population
- AHCCCS Recipients
Acute Care Traditional
Spend Down
Prop 204 Childless Adults
Other Prop 204
Kids Care
Kids Care II
Long-Term Care – Elderly & DD
Emergency Services
- TANF Recipients
- SNAP (Food Stamps) Recipients
- ADC Inmate Growth (3-month average)
- Probation Caseload
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
July
July
July
July
July
Jun-Aug
Jun-Aug

8.3%
27,564
63,863
2.39 million
152,300
121,100
40.8
$36.8 million
$146.6 million

0.1 %
17.0%
9.9%
(0.9)%
0.7%
0.8%
(3.3)%
2.2%
(2.9)%

(1.3)%
(1.4)%
(11.4)%
2.4%
1.6%
7.3%
3.6%
6.8%*
3.2%*

May-Jul
May-Jul

1,639
236

1.3%
48.1%

69.2%
(0.8)%

July
July

8,753
1,365

(5.4)%
1.9%

1.5%
18.2%

July
July
July

$149,000
$82,000
114.68

(0.7)%
(8.9)%
2.5%

17.1%
2.5%
13.9%

August
August
July
July
June

16,370
20,934
3.58 million
$43.51
$3.97

(1.3)%
2.7%
0.9%
(10.9)%
10.0%

(31.1)%
(22.4)%
(1.4)%
(1.4)%
(36.4)%

2nd Quarter 2012
July
May-July
1st Quarter 2012
July 1, 2011
September

July
July
Jun - Aug

68.6
179.08
2.1%
$237.1 billion
6.48 million
1,294,756
897,636
100,197
151,683
9,133
19,037
52,835
64,235
40,266
1,138,407
39,850

(1.3)%
0.0%
(0.3)%
0.5%
N/A
0.5%
0.4%
(4.9)%
0.0%
(3.2)%
52.0%
0.5%
2.5%
1.0%
0.3%
(28) inmates

32.2%
2.5%
0.6%
3.3%
1.1%
(6.0)%
0.6%
(100.0)%
(51.5)%
(4.7)%
(42.0)%
2.8%
25.1%
(2.5)%
1.5%
(296) inmates

May
May

18,183
25,581

19
(48)

(807)
(603)

2nd Quarter 2012
(2nd Estimate)
August
July
May-July
August

$13.6 trillion

1.7%

2.3%

60.6
95.8
$4.15 billion
230.1

(7.3)%
0.4%
(3.9)%
0.6%

34.1%
1.5%
(10.4)%
1.7%

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2012

Summary of Recent Agency Reports
Arizona Department of Administration – Report on Federal
Financial Participation Repayment – Pursuant to the FY
2013 General Appropriation Act, $10.4 million is
appropriated to the Department of Administration
(ADOA) from the Risk Management Revolving Fund in FY
2012 for the settlement of debts incurred in FY 2010 and FY
2011 when monies were transferred to the General Fund
from funds containing federal monies or when federal
monies were expended on program activities beyond the
permitted amounts. The Risk Management Fund was
designated for the repayment of Federal Funds. Prior to
expending these monies, the bill requires ADOA to report
to the Joint Legislative Budget Committee regarding the
final agreement with the federal government.
In August, the state used $3 million of the $10.4 million
appropriation to repay the federal government for $2.1
million in transfers to the General Fund and $898,000 in
expenses associated with the Information Technology and
Attorney General pro rata charges. In combination with
earlier repayments, a total of $8.9 million has been sent to
the federal government. (Brett Searle)
Department of Economic Security (DES) - Semi-Annual
Report on CPS - Pursuant to A.R.S. § 8-818, DES has
submitted its semi-annual financial and program
accountability report. According to the report, out-ofhome placements increased from 11,502 in December to
13,497 in June. Caseloads are above the department’s
goals and turnover for Child Protective Services (CPS)
case managers was approximately 31.2%. Employee
satisfaction has declined from a 3.6 rating out of 5.0 in the
February report to 3.4 in this the August report. The
highlights of this report, covering the last 6 months of FY
2012, are summarized below.
•
•

•
•

The CPS Training Academy had 214 new case
managers in training as of June 2012.
As of June 2012, the number of filled positions was 856
of 1,043 authorized and funded positions, excluding
those in training. This figure is 1 higher than last
December. Considering only filled positions,
caseloads per worker remain considerably higher
than caseload goals, with investigations at 15 (goal:
10), in-home at 37 (goal: 19), and out-of-home at 32
(goal: 16).
DES reports that annualized case manager turnover
during January - June 2012 was 31.2%, up from a
26.3% annualized rate in the last report.
The percent of CPS dependency cases denied or
dismissed in the last 6 months increased to 0.3% from
0.0% in the previous 6 months, while the percent of
Office of Administrative Hearing’s decisions affirming
CPS case findings declined from 89.0% to 86.4%. The
percent of complaints validated by the Ombudsman
decreased from 2.1% to 1.4% (4 of 280 complaints).

The number of children in out-of-home family
placements increased from 9,262 in December to
10,798 in June, while the number of congregate
care placements increased from 1,592 to 1,876. DES
also reports that from December to June the
number of children aged 0-3 in shelter care
increased from 20 to 36, the number of children
aged 0-6 in group homes increased from 27 to 66,
and the number of children in shelter care for more
than 21 days declined from 747 to 736. The June
numbers are labeled as preliminary.
(Ben Beutler)
•

Department of Education - Report on Short-Term Capital
Items Purchased with Unencumbered Public School
Contributions – Laws 2011, Chapter 195 allows public
schools to purchase “short term capital items” with up to
50% of unencumbered extracurricular “tax credit”
contributions received prior to FY 2011. Chapter 195
requires public schools to report such expenditures to the
JLBC at the end of each fiscal year. In response to this
requirement, 45 school districts and charter schools have
reported $1.6 million in short-term capital expenditures
under Chapter 195 for FY 2012. The total includes
$752,600 for technology (47%), $462,400 for furniture and
equipment (29%), $211,800 for instructional aids (13%),
$143,700 for textbooks (9%) and $42,700 for library
resources (3%). Reporting districts and charters also
indicate that they collectively had approximately $7.1
million in total unencumbered pre-FY 2011 “tax credit”
contributions available as of July 1, 2011, which was the
first day of the reporting period. (Steve Schimpp)
Department of Environmental Quality – Report on Water
Quality Assurance Revolving Fund for FY 2012 – 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 and is designed to remediate
contaminated groundwater at specified sites. The report
lists FY 2012 expenditures at $11.0 million, including a fund
sweep of $536,300. Unexpended funds at the end of FY
2012 totaled $8.3 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.

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2012

Summary of Recent Agency Reports
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 2013, program expenditures for 26 sites that remain
active are projected to be $6.8 million. (Art Smith)
School Facilities Board - Report on Costs for Building
Renewal and New Construction at the Arizona State
Schools for the Deaf and the Blind - The School Facilities
Board (SFB) is required to biennially report on the resources
needed to fulfill the building renewal and new
construction requirements for the Arizona State Schools for

(Continued)

the Deaf and the Blind (ASDB). ASDB operates 2
campuses, a campus in Phoenix and a campus in Tucson.
According to SFB, the total cost for building renewal for
ASDB is projected to be $1.0 million FY 2014 and $1.1
million in FY 2015. SFB also estimates new construction
costs totaling $19.1 million for ASDB to meet minimum
space requirements through FY 2015. The latter cost
pertains to a space deficiency at the ASDB Phoenix
campus, which has capacity for 169 students and a
current enrollment of 317 students. The ASDB Tucson
campus does not have a space deficiency, as it has
capacity for 397 students and a current enrollment of 184
students. (Steve Schimpp)

August Spending
August 2012 General Fund spending was $943.7 million.
August expenditures were $(203.1) million lower than the
prior year due to technical timing differences.

•

FY 2013 Spending

•

August 2012 spending of $943.7 million was $(203.1) million
lower than August 2011 (See Tables 6 and 7).

The Medicaid agencies of AHCCCS and the
Department of Health Services spent $(42.0) million
and $(119.5) million less than August 2011,
respectively.
Department of Corrections spending in August was
$(38.7) million less than the prior year. This difference
is due to technical timing issues regarding the
payment of lease purchase and risk management
obligations.

Table 6
General Fund Spending ($ in Millions)

Change
from
August 11

Year to
Date

105.1
66.1
3.9
672.1
16.2
1.7
0.1

(42.0)
(38.7)
0.2
6.2
(119.5)
(0.5)
0.0

216.2
144.5
390.9
1,286.7
437.5
8.9
140.8

(91.8)
(35.9)
34.6
(41.3)
201.2
(13.8)
8.3

37.3
0.0

(10.6)
0.0

74.1
84.1

(12.4)
35.1

108.2
943.7

72.1
(203.1)

108.2
2,891.6

188.5
74.8

200.0

200.0

3,091.6

274.8

August 12
Agency
AHCCCS
Corrections
Economic Security
Education
Health Services
Public Safety
School Facilities
Board
Universities
Leaseback Debt
Service
Other
Total
Budget Stabilization
Fund Deposit
Grand Total

0.0
943.7

0.0
(203.1)

YTD
Change
from FY 12

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2012

Table 7

…

Agency
Department of Administration
Department of Admin Sale/Leaseback D/S
Office of Administrative Hearings
Department of Agriculture
AHCCCS
Arts, AZ Commission on the
Attorney General
AZ Capital Post Conviction Public
Defender
State Board of Charter Schools
Department of Commerce/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/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/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.
Legislative Council
Senate

General Fund Spending
($ in Thousands)
Change from
August 12
August 11

Year-to-Date

YTD Change
from FY 12

4,956.3
75.2
529.1
105,144.1
2,676.0
4.1

2,933.5
7.1
(437.0)
(41,957.3)
(10.5)
544.2
(34.1)

6,176.1
84,119.8
137.2
1,469.7
216,194.7
4,157.0
4.1

1,024.0
35,069.1
(4.3)
(381.1)
(91,785.3)
(10.5)
(590.9)
(95.0)

55.7
2,625.0

6.0
-

157.0
5,250.0

(18.6)
-

453.5
42.8
66,072.1
2,991.2
3,865.7
672,065.5
308.1
7,000.0
10.8
44.0
46.7
178.4
124.1
211.3
68.8
513.9
16,217.2
211.5
46.3
46.2
1.9
356.9
1,861.8
939.9
3,124.9
40.8
5.4
1,199.6
727.1
152.4
444.3
501.5

453.5
6.9
(38,701.6)
539.8
155.7
6,157.1
(1,131.9)
0.1
12.4
(13.0)
12.6
10.1
(125.2)
15.9
(47.6)
(119,467.6)
(10.3)
2.6
(339.3)
(2.7)
19.4
66.4
15.8
(995.9)
14.5
1.0
19.1
(111.7)
(32.5)
(339.7)
(50.0)

16,048.2
79.8
144,450.4
4,541.9
390,874.8
1,286,696.6
785.4
7,000.0
37.8
151.8
174.1
454.0
489.1
780.4
110.7
1,227.4
437,541.8
819.4
86.7
162.2
15.3
965.2
20,480.2
2,335.6
7,143.9
60.1
9.9
2,696.2
1,482.7
286.0
1,037.7
1,050.8

(1,329.1)
(9.1)
(35,930.2)
(433.1)
34,625.5
(41,324.4)
(1,723.3)
9.6
0.2
43.7
(158.2)
(18.5)
159.2
2.3
(221.4)
201,177.3
245.1
(23.0)
(453.9)
6.6
(207.2)
(221.7)
(559.5)
(2,861.4)
(97.8)
2.4
(637.2)
(648.9)
(108.6)
(532.0)
(377.0)

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2012

Agency

….

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
OOffice of Tourism
Department of Transportation
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
Total
Budget Stabilization Fund Deposit
Grand Total

August 12
78.9
6.5
32.7
88.0
1,665.2
62.1
141.7
3,794.9
94.7
2,922.6
16.4
295.1
5.8
185.7
16,310.9
5,974.0
14,798.4
462.5
669.3
80.1
108.2
943,734.0
943,734.0

Change from
August 11
(1.3)
(20.9)
(77.0)
88.0
(478.0)
(262.1)
(20.9)
(310.5)
(1,346.2)
18.3
2,064.1
(0.2)
295.1
1.5
(4,411.1)
(2,917.1)
26.7
(3,311.8)
155.5
176.0
(17.0)
72.1
(203,090.7)
(203,090.7)

Year-to-Date
253.8
25.4
482.6
88.0
8,853.9
1,779.5
287.7
310.1
9,959.9
140,823.5
3,690.7
65.1
629.7
9.3
508.9
32,350.4
11,851.7
29,366.0
879.8
1,367.2
168.5
108.2
2,891,601.7
200,000.0
3,091,601.7

YTD Change
from FY 12
(34.3)
(23.4)
(173.2)
88.0
(13,841.9)
1,360.4
(103.3)
(347.4)
(1,985.3)
8,272.1
1,515.6
(7.6)
629.7
2.0
(4,393.3)
(3,576.3)
(42.8)
(4,379.1)
(130.0)
221.7
(22.9)
188.5
74,821.0
200,000.0
274,821.0