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

www.azleg.gov/jlbc.htm

“Year-to-date,
base revenues
are 3.8% higher
than last year. In
total, year-todate General
Fund collections
are $27.5 million
above the
January Baseline

April 2013

Summary
March General Fund revenue collections totaled
$563.4 million. Excluding one-time adjustments,
revenues were (1.7)% below the prior year.
As is typically seen, the March results are difficult
to interpret due to the continued processing of
income tax returns. A growth in Individual
Income Tax refunds contributed to the March
decline in revenues.
In addition, a technical timing issue related to
the Insurance Premium Tax (the state’s 4th largest
General Fund revenue source) further caused
base revenues to decline compared to the prior
year.
Year-to-date, base revenues are 3.8% higher
than last year. In total, year-to-date General
Fund collections are $27.5 million above the
January Baseline forecast.
Whether revenues remain above forecast
through the remainder of the budget year will
largely depend on the April revenue results. The
state processes the bulk of its Individual and
Corporate Income Tax payments and refunds
during this month and May. In particular, the
Federal fiscal cliff incentivized taxpayers to take
capital gains last December, which adds further
uncertainty to collections in April and the
remainder of FY 2013.
In comparison to revenue of $563.4 million,
March 2013 General Fund spending was $363.6
million, or $17.7 million above last year.
Fiscal year-to-date, General Fund revenues of
$6.3 billion have been offset by $6.9 billion in
General Fund spending.

forecast.”

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. As of mid-April 2013, the
operating balance is $2.0 billion.
April FAC Summary
The Finance Advisory Committee (FAC) met on
April 11, 2013 to update its 4-sector revenue
forecast. The FAC is a 15-member panel of
private and public sector economists and their
views serve as one of the 4 equal inputs into
JLBC’s Consensus Baseline revenue forecast. The
remaining 3 inputs are the JLBC Staff forecast
and 2 University of Arizona (UA) models. The
Consensus forecast provides a perspective on
base revenue, which reflects underlying
economic conditions and does not include
factors such as tax law changes and Urban
Revenue Sharing.
The FAC heard presentations on General Fund
Revenue collections, the U.S. economy, and
state cash flows. The JLBC Staff provided
members with revised FY 2013 - FY 2016 fiscal
estimates based on the updated 4-sector
revenue forecast and future spending estimates
as previously outlined in the JLBC Baseline
released in January.
The overall revenue forecast from the April FAC
meeting declined slightly from the prior January
meeting. Of the 4 inputs, 3 (JLBC, UA Base, and
FAC) showed declines compared to the January
projections, with the decreases ranging from
(0.1)% to (0.6)%. In contrast, the UA “low risk”
forecast increased by 0.5%. The final result of
these offsetting changes is that the FY 2014
Consensus forecast remained unchanged from
the January FAC meeting at a level of 4.9%.

Table of Contents
This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
April 19, 2013.

Summary

Summary of Recent Agency Reports

• April FAC Summary .............................................1

• AHCCCS – Interstate Agreement .................... 8

• Classroom Site Fund Report .............................2

• AHCCCS/DES/DHS - Capitation Increases..... 8

March Revenues .....................................................2

• DES – Report on CPS .......................................... 8

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

• DHS – Report on Arnold v. Sarn ....................... 8

JLBC Meeting ...........................................................7

March Spending..................................................... 9

JCCR Meeting..........................................................7

Tracking Arizona’s Recovery............. Appendix A

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2013

Summary

(Continued)

In general, the FAC panelists acknowledged that
while underlying economic conditions had
improved, sequestration and other federal
budget issues continue to pose challenges.
Table 1 below outlines a comparison of these
projections:
Table 1
Comparison of January and April FAC Forecasts

FY 13
“It is difficult to
interpret year-todate income tax
collections in the
middle of taxfiling season.”

FY 14

FY 15

FY 16

January 4Sector

4.0%

4.9%

5.9%

6.2%

April 4-Sector

4.0%

4.9%

6.1%

5.6%

The net result of the April forecast would be to
reduce the 4-year General Fund revenue
forecast (FY 2013 – FY 2016) by $(30) million when
compared to the January Baseline projections.

Classroom Site Fund Report
The JLBC Staff is annually required to determine
by March 30 the estimated K-12 Classroom Site
Fund (CSF) per pupil amount for the upcoming
budget year. The CSF is funded from the
Proposition 301 0.6¢ sales tax. Public schools will
receive $310 per weighted pupil from the CSF for
FY 2014 from both a cash and "budget capacity"
perspective.
The $310 per pupil amount would be
substantially higher than the $257 cash and $227
"budget capacity" FY 2013 per pupil amounts
because of projected growth in Proposition 301
sales tax revenues, higher endowment earning
distributions under Proposition 118 and lower SFB
Proposition 301 bond debt service costs due to a
recent refinancing.

March Revenues
Table 2

General Fund Revenues ($ in Millions)
FY 2013
Collections

March
Year-to-Date

$ 563.4
$ 6,312.4

$ 11.8
$ 27.5

Sales Tax collections of $374.6 million were 0.6%
above March 2012 and $(11.9) million below the
Baseline forecast for the month.
Year-to-date, sales tax collections are 4.3%
above the prior year and are $5.5 million above
forecast.
Table 3 displays the March growth rates for the
largest categories.
Table 3

Sales Tax Growth Rates
Compared to Prior Year

Retail
Contracting
Utilities
Use
Restaurant & Bar

March
3.8%
5.7%
(11.6)%
(12.3)%
0.7%

Difference From
Baseline Forecast

YTD
6.1%
3.1%
1.9%
(2.5)%
5.7%

Retail and contracting together account for
almost 60% of all sales tax revenues. March

Difference
From FY 2012
$ (62.9)
$ (43.5)

retail, which reflects February sales, increased
by 3.8%.
Individual Income Tax net revenues were $65.8
million in March, which was $(6.5) million less than
the prior year. Collections were $27.7 million
greater than the Baseline forecast. Year-to-date,
revenues have grown 7.9% and are $38.3 million
above forecast. It is difficult to interpret year-todate income tax collections in the middle of taxfiling season.
As indicated in Table 4, withholding was up 4.3%
in March. The March increase brings
withholding tax collections for the fiscal year to
3.7% over the prior year. This amount is $7.0
million above the Baseline forecast.
Total estimated and final payments of $52.7
million were 12.3% above last year, and were
$0.9 million above forecast. Year-to-date,
payments are $(7.7) million below the forecast.
Refunds of $(281.6) million were $24.3 million
greater than last year’s amount. Year-to-date,
refunds are $39.0 million below forecast.

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2013

March Revenues

(Continued)
than sales in the prior year. Year-to-date ticket sales
are $505.5 million, which is 4.3% above last year’s
sales. While year-to-date sales have increased, net
General Fund revenues actually declined due to an
increase in the payment of debt service for the Lottery
Revenue Bonds issued in FY 2010.

Table 4

Individual Income Tax Growth Rates
Compared to Prior Year
March
4.3%

Withholding
Estimated +
Final Payments
Refunds

YTD
3.7%

12.3%
9.5%

Non-General Fund

3.0%
(7.5)%

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 $100.3 million in March were down $(2.8)
million, or (2.8)%, compared to March of last year.
Year-to-date revenues are (0.6)% below collections in
the prior year.

Corporate Income Tax net collections were $75.4 million in
March, which is $9.5 million greater than the prior year’s
net collections. Collections for the month were $6.3 million
above the forecast. Year- to-date, collections are down
(6.7)% and are $(3.5) million below forecast.
The Lottery Commission reports that March ticket sales
were $70.0 million, which is $(8.4) million, or (10.7)%, less
Table 5

General Fund Revenue:
Change from Previous Year and January Baseline Forecast
March 2013
Current Month

FY 2013 YTD (Nine Months)

Change From
Actual

March 2012

March 2013

Amount

Change from
Actual

Baseline Forecast

Percent

Amount

Percent

March 2012

March 2013

Amount

Baseline Forecast
Percent

Amount

Percent

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

$298,125,466

$953,629

0.3 %

$2,825,925,064

$109,868,513

76,430,417

1,211,604

1.6

1,213,733

1.6

713,351,753

37,081,462

5.5

10,789,576

1.5

65,790,079

(6,501,288)

(9.0)

27,748,861

72.9

2,318,012,286

168,739,260

7.9

38,323,491

1.7

75,400,429

9,512,205

14.4

6,319,572

9.1

615,671

(192,907)

(23.9)

($13,084,541)

(384,329)

(4.2) %

4.0 %

($5,251,868)

(0.2) %

404,476,410

(28,962,011)

(6.7)

(3,480,308)

(0.9)

(38.4)

9,082,374

(2,193,445)

(19.5)

(1,352,908)

(13.0)
(4.6)

1,891,419

(39,566)

(2.0)

0

0.0

18,384,640

(1,684,862)

(8.4)

(886,322)

2,872,322

443,518

18.3

0

0.0

23,616,518

1,633,636

7.4

(806,669)

(3.3)

(15.4)

220,585,957

(28,377,187)

(11.4)

(17,899,557)

(7.5)

0

(200,825)

(100.0)

1,409,891

(139,540)

(9.0)

67,711,409
0

(18,449,422)
0

(21.4)

(12,288,591)

--

0

(10.4)

3,660

--

$589,900,425

($13,185,801)

Lottery

5,019,040

(442,700)

(8.1)

19,040

0.4

31,628,960

(21.5)

580,760

1.9

License, Fees and Permits

2,164,740

(537,470)

(19.9)

(235,260)

(9.8)

21,813,049

908,666

4.3

756,986

3.6

(163)

(2.2) %

$9,528,365

1.6 %

$6,534,844,893

$255,765,001

4.1 %

(90,109)

--

(123,574)

Sub-Total Taxes

0.3

0

1,063,213

$19,345,326

(6.0)
0.3 %

Other Revenue

Interest

(6.0)

(7,439)

(74.4)

4,909,228

2,801,522

132.9

4,866,583

Sales and Services

2,184,002

31,098

1.4

84,002

4.0

21,342,508

832,595

4.1

571,016

2.7

Other Miscellaneous

3,890,960

1,856,230

91.2

390,960

11.2

21,692,848

(13.1)

(368,310)

(1.7)

0

0

2,473,647

1,992,082

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

2,561

(8,653,960)

$15,734,950
$605,635,375

$2,899,077
($10,286,724)

-413.7

0
1,973,647

-394.7

0
10,362,269

22.6 %

$2,224,950

16.5 %

$111,748,862

(1.7) %

$11,753,315

2.0 %

$6,646,593,755

(3,270,308)
0
(2,333,647)
($9,715,132)
$246,049,869

--

0

(18.4)

1,705,058

--

-19.7

(8.0) %

$8,112,093

7.8 %

3.8 %

$27,457,419

0.4 %

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

(42,798,670)

(7,430,050)

21.0

0

0.0

(385,188,030)

(66,870,450)

21.0

0

0.0

(45,157,392)

(98.8)

0

0.0

50,960,597

(209,801,778)

(80.5)

0

0.0

--

0

--

0

(12,867,428)

(100.0)

0

--

(52,587,442)

-- %

0

0.0 %

$563,371,375

($62,874,166)

(10.0) %

$11,753,315

2.1 %

$100,260,463

($2,836,151)

(2.8) %

(3.3) %

534,670
0
(42,264,000)

0

(334,227,433)

(289,539,656)

647.9 %

0

0.0 %

$6,312,366,322

($43,489,787)

(0.7) %

$27,457,419

0.4 %

$896,316,747

($5,614,755)

(0.6) %

($11,026,344)

(1.2) %

Non-General Funds
Highway User Revenue Fund

($3,454,731)

* Total March collections including the temporary 1¢ increase approved by the voters in May 2010 were $374.6 million. This amount is $2.2 million, or 0.6%, above March 2012 and $(11.9) million, or (3.1)%, below forecast.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2013

Recent Economic Indicators
NATIONAL
The Conference Board’s U.S. Consumer
Confidence Index shrank by (12.2)% in March,
erasing most of its February gains. The
decrease also represents the largest year-overyear percentage drop since October 2011.
Most of the index’s sub-indices decreased in
March, though fears about federal sequester
impacts and rising gas prices were thought to
be the largest drags on confidence.

“[The] U.S.
Consumer
Confidence
Index shrank by
(12.2)% in March,
erasing most of
its February
gains.”

The Conference Board’s U.S. Leading Economic
Index increased by 0.5% in February and 2.0%
above the measure in February 2012. While 8
of 10 sub-indices increased during the month,
the index’s gain was mostly the result of
increased building permits and an improved
interest rate spread. Consumer expectations
and orders of non-defense capital goods were
the only 2 components of the indicator to
worsen during February.
The Semiconductor Industry Association (SIA)
reported that Semiconductor Billings (3-month
moving average) in the Americas decreased
(6.2)% in February, to $4.48 billion. While a
monthly decrease is consistent with seasonality
of sales, this represents the largest monthly
percentage decrease since December 2008.
Semiconductors are Arizona’s largest
international export industry.
Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), decreased (0.2)%
in March though still grew 1.5% above the prior
year. Gas prices retreated by (4.4)% in March
after growth of 9.1% in the prior month. The
impact of the month’s gas price decreases was
partially offset by a 0.1% increase in core
inflation (all prices except for food and energy).
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 February, 45 out of 50 states had increases in
their coincident indexes. Arizona’s coincident
index increased by 0.2% compared to the prior
month. Year-over-year, the Arizona index is 1.9%
above last year, which is the thirty-sixth highest
growth rate in the country. While this is a

significant improvement, Arizona’s index is still
(10.7)% below its peak, which occurred in
August 2007. See Appendix A – 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 manufacturing
delivery times, 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 2.3% over the next 6 months.
This is unchanged from the revised 2.3% growth
projection in January and lower than the 3.3%
projection in February 2012.
Housing
The number of Maricopa County pending
foreclosures decreased from 10,596 in
February to 10,189 in March. The March total
is significantly below the peak in December
2009 (51,466). See Appendix A – Tracking
Arizona’s Recovery.
The total housing inventory in the Greater
Phoenix area decreased from 21,863 in March
2012 to 20,729 in March 2013, a (5.2)%
decrease. This continues the decline in
inventory that started in January 2011.
As the supply of housing has declined, the
price has increased. In the Metropolitan
Phoenix area, the median price of a single
family home was $170,000 in February. This
represents a 4.3% increase from January and
a 36.5% increase from February of last year.
Another measure of the health of the Arizona
real estate market is permitting activity. For
the 3-month period through February, a total
of 1,174 single-family building permits had
been issued statewide, a 21.0% increase from
last year. While permitting activity has seen
gains, the current level of permitting remains
far below a more normal 3-month average of
3,000 to 4,000 permits. See Appendix A –
Tracking Arizona’s Recovery.

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2013

Recent Economic Indicators
The multi-family housing sector has also seen
gains, with the 3-month period ending in
February resulting in a total of 753 multi-family
building permits being issued in the state.
However, this figure remains well below the
peak of activity in April 2007.
Employment

“Overall,
AHCCCS
caseloads are
currently (1.9)%
below April 2012
levels.”

The state gained a total of 16,600 nonfarm jobs
between February and March. The private
sector added a net of 17,900 jobs in March
whereas the government sector lost (1,300)
jobs. The largest contributions to March’s
month-over-month net job gain came from the
following sectors: leisure and hospitality
(+7,100), professional and business services
(+2,900), construction (+2,600), and trade,
transportation and utilities (+2,400).
Compared to March 2012, nonfarm employment
was up by 1.8%, or 45,100 jobs. This is the second
month of below 2%, year-over-year nonfarm job
growth after February’s employment gain was
revised downward (2.0% to 1.9%). The largest
year-over-year net job gains came from the
following industries: leisure and hospitality
(+9,900), construction (+7,900), trade,
transportation and utilities (+5,600), and
education and health services (+5,600).
See Appendix A – Tracking Arizona’s Recovery.
State Agency Data
At the beginning of April, total AHCCCS
caseloads equaled 1.27 million members, a
0.5% increase from the prior month. Overall,
AHCCCS caseloads are currently (1.9)% below
April 2012 levels. The traditional acute care
AHCCCS population, which consists primarily of
lower income children and their parents,
increased by 0.5% since last month and
decreased (0.3)% from a year ago. The total
population in this program is almost 900,000.
The childless adult program has not allowed
new participants since July 2011. This
population has declined (145,445) since then to
79,047. As a whole, the Proposition 204
program has declined (1.0)% compared to the
prior month, and (19.9)% from the prior year.
KidsCare I provides coverage for 7,617 children
with incomes above those in the traditional
population. Its enrollment has declined since a
freeze was implemented in January 2010.

(Continued)

Enrollment declined (1.0)% compared to the
prior month and (31.6)% 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 April 30,
2012 children were enrolled in KidsCare II.
There were 37,630 TANF recipients in the state in
February, a monthly caseload decrease of
(2.5)%. Year-over-year, the number of TANF
recipients has declined by (4.6)%. The statutory
lifetime limit on cash assistance is 24 months.
The appropriation for TANF cash assistance in
the FY 2013 budget funds a caseload of
approximately 36,200 recipients in FY 2013.
The Supplemental Nutrition Assistance Program
(SNAP), formerly known as Food Stamps,
provides assistance to low-income households
to purchase food. In February, there were a
total 1.1 million food stamp recipients in the
state, a (0.7)% decrease from the prior month.
Compared to the same month last year, food
stamp participation was down by (1.5)%. The
number of SNAP 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 Corrections (ADC) inmate population
increased to 40,085 inmates in March 2013.
Relative to the prior 3-month period, the
population has increased by 40 inmates.
Compared to a year ago, the population has
increased by 168 inmates.

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2013

Recent Economic Indicators

(Continued)

Table 6

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
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

March
March
March
March
March
March
February
Jan-Mar
Jan-Mar

7.9%
18,518
36,956
2.51 million
155,200
119,900
40.5
$33.0 million
$170.0 million

0.0 %
3.7%
(2.1)%
0.7%
0.2%
2.2%
1.8%
(3.9)%
(0.7)%

(0.5)%
(9.8)%
(29.4)%
1.8%
0.7%
7.1%
(1.9)%
2.8%*
6.8%*

Dec-Feb
Dec-Feb

1,174
753

1.9%
4.2%

21.0%
50.3%

February
February

7,353
1,216

6.0%
10.5%

(10.2)%
(14.6)%

February
February
January

$170,000
$108,000
126.69

4.3%
6.4%
1.1%

36.5%
39.4%
23.2%

March

10,189

(3.8)%

(43.5)%

March
February
February
January

20,729
3.06 million
$77.16
$4.43

(4.6)%
(5.5)%
32.7%
(7.7)%

(5.2)%
(2.7)%
8.7%
(14.0)%

4th Quarter 2012
February
Dec-Feb
4th Quarter 2012
July 1, 2012
April

February
February
Jan-Mar

71.3
181.15
2.3%
$240.2 billion
6.55 million
1,269,693
885,663
79,047
147,871
7,617
30,201
53,286
66,008
37,630
1,101,324
40,085

3.9%
0.2%
(0.1)%
2.1%
N/A
0.5%
0.5%
(3.2)%
0.2%
(1.0)%
6.8%
0.2%
3.6%
(2.5)%
(0.7)%
40 inmates

2.2%
12.7%
(4.6)%
(1.5)%
168 inmates

February
February

17,780
25,334

(92)
261

(589)
(147)

4th Quarter 2012
(3rd Estimate)
March
February
Dec-Feb
March

$13.7 trillion

0.4%

1.7%

59.7
94.8
$4.48 billion
232.3

(12.2)%
0.5%
(6.2)%
(0.2)%

(14.1)%
2.0%
1.6%
1.5%

24.0%
1.9%
(1.0)%
4.8%
1.3%
(1.9)%
(0.3)%
(39.6)%
(2.9)%
(31.6)

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2013

JLBC Meeting
At its March 26, 2013 meeting, the Joint Legislative
Budget Committee considered the following issues:
Arizona Department of Administration – Review of
Automation Projects Fund – The Committee gave a
favorable review to the department’s $70 million
expenditure plan to replace the state’s financial and
accounting system, the Arizona Financial Information
System (AFIS). The favorable review included stipulations
requiring additional reports on the quarterly progress on
the project, estimated ongoing maintenance costs, and
any expenditures of a $4.1 million contingency
allocation.

Attorney General – Review of Allocation of Settlement
Monies – State v. GlaxoSmithKline, LLC – The Committee
tabled review of the allocation plan for the $3.0 million
consent judgment against GlaxoSmithKline, LLC, until the
Attorney General develops a specific plan for the $2.4
million in remediation funds from the settlement.
Attorney General – Review of Allocation of Settlement
Monies – State v. Pfizer, Inc. – The Committee gave a
favorable review to the allocation plan from the $1.7
million consent judgment with Pfizer, Inc. The settlement
will be deposited into the Consumer Fraud Revolving
Fund.

JCCR Meeting
At its April 2, 2013 meeting, the Joint Committee on
Capital Review considered the following issues:
State Department of Corrections – Review of Revised FY
2013 Building Renewal Allocation Plan – The Committee
gave a favorable review of the Revised FY 2013 Building
Renewal Allocation Plan that reallocates $1,000,000 to
build in-patient care special use beds at the TucsonRincon unit.
State Department of Corrections – Review of Purchase of
Marana Private Prison – The Committee gave a
favorable review of ADC's proposed plan to purchase
the Arizona State Prison (ASP)-Marana at a cost of
$150,000 from its current private operator in October
2013 . In accordance with current law, JCCR requested
that ADC submit its Request for Proposals (RFP) to
operate ASP-Marana for review by the Joint
Legislative Budget Committee (JLBC).

Yavapai Community College District – Review of
Revenue Bond Project – The Committee gave a
favorable review of a $5.5 million project to fund the
renovation of 2 residence halls with a $5 million revenue
bond issuance and $550,000 in district cash reserves.
Northern Arizona University and University of Arizona –
Review of Phoenix Biomedical Campus Health Sciences
Education Building – The Committee gave a favorable
review of $17.9 million in bond issuances to build out
shell space in the Health Sciences building for medical
simulation rooms. The project’s debt service is being
funded with university lottery bond proceeds.
Northern Arizona University – Review of Science and
Health Building Bond Project – The Committee gave a
favorable review of the $72.6 million bond issuance to
fund construction of a 120,000 square foot science and
health building that would house classrooms, lecture
halls, and teaching and research laboratories on the
Flagstaff campus. The project’s debt service is being
funded from university lottery proceeds.

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2013

Summary of Recent Agency Reports
AHCCCS – Report on Interstate Agreement with Hawaii –
Pursuant to A.R.S. § 36-2925H, the Arizona Health Care
Cost Containment System (AHCCCS) has submitted its
annual report on the status of an Interstate Agreement
with the State of Hawaii. This report summarizes the
continued activities associated with the agreement
between AHCCCS and Hawaii for Medicaid data
processing. In FY 2012, Arizona received $7.2 million in
revenues from Hawaii, of which $646,100 was transferred
to the General Fund. These monies are divided
between 2 funds with a combined balance of $1.1
million. (Amy Upston)
AHCCCS, DES, & DHS – Report on Preliminary Actuarial
Estimates for FY 2014 Capitation Rate Changes –
Pursuant to FY 2013 General Appropriation Act
footnotes, AHCCCS has submitted a report on
preliminary Medicaid capitation rate increases for
contract year (CY) 2014. Their submission includes
information for AHCCCS, the Department of Economic
Security (DES), and the Department of Health Services
(DHS).
In their report, AHCCCS provided information on
components of potential CY 2014 capitation rate
changes:
•
•
•
•
•

An average increase of 3% based on medical
expense trends, utilization trends, and reinsurance
changes.
Possible provider rate adjustments to ensure network
adequacy.
An approximate 1.3% increase for a new nationwide
health insurer fee included in the Affordable Care
Act (ACA).
Potential increase for some providers who are
required to provide health insurance for full-time
employees due to ACA provisions.
Changes in behavioral health services capitation
rate development. DHS will be changing from a
contract year start date of July 1 to October 1. Also,
AHCCCS actuaries will be developing the rates
instead of an external actuarial firm.

The FY 2014 Baseline included a 2% capitation rate
increase for all 3 agencies and accounted for the new
health insurer fee. Amy Upston.
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 13,497 in June to
14,159 in December. Caseloads are above the
department’s goals and turnover for Child Protective
Services (CPS) case managers was approximately 28.6%.

Employee satisfaction has increased from a 3.4 rating
out of 5.0 in the August report to 3.6 in this the February
report. The highlights of this report, covering the first 6
months of FY 2013, are summarized below.
•

The CPS Training Academy had 280 new CPS case
managers in training as of December 2012.
•
As of December 2012, the number of filled positions
was 1,124, including those in training. Caseloads
per worker remain considerably higher than
caseload goals, with investigations at 15 (goal: 10),
in-home at 33 (goal: 19), and out-of-home at 36
(goal: 16).
•
DES reports that annualized case manager turnover
during July - December 2012 was 28.6%, down from
a 31.2% annualized rate in the last report.
•
The percent of CPS dependency cases denied or
dismissed in the last 6 months decreased to 0.0%
from 0.3% in the previous 6 months, while the
percent of Office of Administrative Hearing’s
decisions affirming CPS case findings increased
from 86.4% to 87.5%. The percent of complaints
validated by the Ombudsman increased from 1.4%
to 2.0% (4 of 205 complaints).
•
The number of children in out-of-home family
placements increased from 10,905 in June to 11,324
in December, a 3.8% increase. The number of
congregate care placements increased from 1,893
to 2,032, a 7.3% increase. DES also reports that from
June to December the number of children aged 0-3
in shelter care declined from 34 to 30, the number
of children aged 0-6 in group homes increased from
66 to 77, and the number of children in shelter care
for more than 21 days increased from 736 to 820.
•
The December numbers are labeled as preliminary.
(Ben Beutler)
Department of Health Services – Report on Arnold v. Sarn
– Pursuant to a FY 2013 General Appropriation Act
footnote, the Department of Health Services (DHS) has
submitted the second quarter report on settling the
Arnold v. Sarn lawsuit.
The state has been a longstanding defendant in the
Arnold v. Sarn litigation concerning the level of services
provided to the Seriously Mentally Ill (SMI) population.
Due to the state’s fiscal condition, the plaintiffs and the
state agreed in March 2010 to suspend the lawsuit for 2
years due to lack of funding. The latest agreement with
the plaintiffs does not contain an exit criteria or a
schedule for compliance.
The latest agreement focuses on the conditions for
admission and the length of stay for Arnold class
members at the Arizona State Hospital (ASH), as DHS
and the Regional Behavioral Health Authorities (RBHAs)

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2013

Summary of Recent Agency Reports
are coordinating discharges to provide appropriate
support and services following discharge, in addition to
ensuring that ASH has a census of 55 or fewer class
members. DHS did not exceed this limit in the second
quarter. The agreement also focuses on employment
support, family and peer support and Quality of Service

(Continued)

Reviews. DHS also states that it plans to implement an
Assertive Community Treatment (ACT) Fidelity Tool, which
will be used to evaluate the effectiveness of communitybased behavioral health support teams. The new ACT
Fidelity Tool will be implemented in the third quarter of FY
2013. (Art Smith)

March Spending
March 2013 General Fund spending of $363.6 million was
$17.7 million higher than March 2012. Year-to-date,
spending is $6.9 billion, or $172.3 million above last year.
(See Tables 7 & 8).

Table 7
General Fund Spending ($ in Millions)

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

March 13

Change from
March 12

128.5
69.3
4.8
73.6
14.4
1.2
0.1

2.8
2.1
(0.4)
9.1
4.8
0.0
0.0

1,035.0
670.8
530.8
2,663.4
538.0
21.4
172.5

(154.3)
(6.5)
34.7
0.9
75.4
(18.3)
8.9

39.4
0.0

(2.1)
0.0

583.7
84.1

(13.3)
35.1

32.3
363.6

1.4
17.7

380.1
6,679.8

9.7
(27.7)

0.0

0.0

200.0

200.0

363.6

17.7

6,879.8

172.3

Year to Date

YTD Change
from FY 12

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2013

Table 8

General Fund Spending
($ in Thousands)
Agency
Department of Administration
ADOA Sale/Leaseback Debt Service
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
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
DEQ – WQARF
Office of Equal Opportunity
State Board of Equalization
Board of Executive Clemency
Department of Financial Institutions
Department of Fire, Bldg and Life Safety
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 of Indian Affairs
Department of Insurance
Judiciary
Supreme Court
Superior Court
Court of Appeals
Department of Juvenile Corrections

March 13

Change from
March 12

Year-to-Date

YTD Change
from FY 12

583.3
28.7
523.5
128,474.4
1,659.2
-

(113.6)
(32.1)
(225.9)
2,798.2
594.2
(53.9)

20,933.1
84,119.8
612.6
5,545.9
1,035,031.9
16,063.1
4.4

8,927.0
35,069.1
(4.7)
(204.3)
(154,271.3)
(10.4)
3,648.1
(459.3)

52.2
2,625.0
58.7
69,328.8
433.1
4,844.8
73,610.3
645.6
20.1
63.7
275.7
44.5
303.1
11.0
592.0
14,400.2
177.3
46.8
533.4
4.1
343.3

0.4
25.6
2,091.9
(674.7)
(392.3)
9,112.8
388.0
(13.4)
(2.1)
12.5
103.1
(3.9)
113.7
(46.5)
77.7
4,788.9
(0.2)
5.2
128.2
0.2
3.8

560.2
23,625.0
48,144.5
436.3
670,779.6
15,974.0
530,778.9
2,663,363.9
6,044.9
7,000.0
55.5
396.8
589.6
2,093.0
1,275.7
4,284.2
644.8
6,373.8
537,987.3
2,369.1
503.3
1,624.9
37.7
3,581.9

14.6
(4,041.6)
48.9
(6,489.0)
600.3
34,688.0
852.4
1,254.0
(74.4)
(34.5)
(3.1)
114.3
(13.4)
682.0
(3.6)
3.1
1,527.1
75,388.0
(33.7)
(14.5)
(1,822.4)
2.5
(268.0)

954.5
8,996.9
1,004.6
2,999.5

(121.9)
(495.4)
90.9
21.1

11,022.7
56,420.3
9,915.0
30,304.9

278.8
(437.7)
(189.2)
(4,353.1)

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – APRIL 2013

Agency
State Land Department
Law Enforcement Merit System
Legislature
Auditor General
House of Representatives
Joint Legislative Budget Comm.
Legislative Council
Senate
Mine Inspector
Nav. Streams & Adjudication
Pioneers’ Home
Comm. for Postsecondary Ed.
Department of Public Safety
Arizona Department of Racing
Radiation Regulatory Agency
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

March 13

Change from
March 12

Year-to-Date

YTD Change
from FY 12

48.4
5.8

26.6
1.2

752.2
49.4

8.3
7.0

1,362.2
1,015.8
140.5
365.4
697.9
84.1
8.3
214.2
1,179.5
3.2
49.7
214.7
2,879.3
104.9
672.1
17.7
198.0
-

67.2
11.2
(1.9)
54.1
117.8
(2.5)
1.9
205.3
(20.5)
(34.6)
5.1
77.8
406.5
41.7
112.5
5.3
198.0
(5.8)

12,689.4
8,448.3
1,393.1
5,414.7
5,771.0
814.7
88.5
871.6
1,396.7
21,402.0
1,877.3
1,070.4
1,737.0
30,075.7
172,542.8
13,494.8
193.5
3,491.9
19.5

(310.6)
(637.4)
(78.8)
1,514.5
(376.8)
(12.2)
(21.7)
(705.5)
(0.1)
(18,288.4)
(894.8)
(7.2)
(27.6)
(5,157.3)
8,893.3
6,490.5
0.7
3,491.9
(18.1)

176.9
17,381.2
5,924.2
15,870.7
339.8
798.6
97.2
121.6
363,610.5
363,610.5

7.7
(621.8)
(507.4)
(1,001.8)
(117.0)
402.5
17.3
93.1
17,699.3
17,699.3

31,121.9
247,006.3
83,812.6
221,766.5
3,945.7
6,826.2
995.1
2,273.3
6,679,840.7
200,000.0
6,879,840.7

15,218.6
(14,927.0)
(4,566.8)
(9,016.4)
(2,144.2)
3,101.1
205.7
245.3
(27,685.1)
200,000.0
172,314.9

Tracking Arizona’
Arizona’s Recovery

Total NonNon-Farm Employment
2,800

April 2013
Appendix A

2,700

Thousands of Jobs

Slide:
2……Total Non-Farm Employment
3……Initial Claims for Unemployment Insurance
4……State Sales Tax Collections – Retail Category
5……State Sales Tax Collections – Contracting
Category
6……Single Family Building Permits
7……Maricopa County Pending Foreclosures
8……Coincident Index

2,600

2,500

2,400

2,300

2,200

2001

1

JLBC

Initial Claims for Unemployment Insurance

2005

2006

2007

2008

2009

2010

2011

JAN

JULY

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

JAN

2004

2012

2

Not seasonally adjusted

State Sales Tax Collections – Retail Category
$225

40,000
$200
35,000

$ in Millions

30,000
25,000
20,000
15,000

$175

$150

$125

2007

Not seasonally adjusted

2009

Jan-13

Oct-12

Jul-12

Apr 12

Jan 12

Oct 11

Apr 11

July 11

Jan 11

Oct 10

Apr 10

July 10

Jan 10

Oct 09

July 09

Jan 09

Apr 09

Oct 08

July 08

Jan 08

Apr 08

Oct 07

July 07

Apr 07

JAN

JULY

JUL

2011

JAN

JUL

2010

JAN

JUL

JAN

JUL

2008

JAN

JUL

JAN

JUL

2006

JAN

JUL

2005

JAN

JUL

2004

JAN

JUL

2003

JAN

JUL

2002

JAN

JUL

JAN

JAN

2001

Jan 07

$100

5,000

Oct 06

10,000
July 06

Total Monthly Claims for UI Benefits

2003

JLBC

45,000

JLBC

2002

JAN

JUL

JAN

JAN

2,100

2012

3

JLBC

Excludes temporary 1 ¢ sales tax

4

State Sales Tax Collections – Contracting Category

Single Family Building Permits
100,000

$100

Single Family Building Permits

90,000

$ in Millions

$75

$50

$25

80,000
70,000
60,000
50,000
40,000
30,000
20,000

Jan-13

2001
Excludes temporary 1 ¢ sales tax

JLBC

5

2003

2004

JLBC

2005

2006

2007

2008

2009

2010

2011

JAN

JULY

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

2002

2012

6

12-Month Moving Sum

Maricopa County Pending Foreclosures

Economic Activity Index
210

60,000

200

Coincident Index Value

50,000

40,000

30,000

20,000

10,000

190
180
170
160
150

2003

2004

2005

2006

2007

2008

2009

2011

An initial notice of trustee sale has been recorded but final sale has not yet occurred

2012

7

JLBC

2002

2003

2004

2005

2006

2007

2008

2010

2011

JAN

JULY

JAN

JUL

JAN

JUL

JUL

2009

JAN

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

2001

JAN

JAN

JAN

JAN

JULY

JUL

JUL

2010

JAN

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

2002

JAN

140
JAN

0

JLBC

JAN

JUL

JAN

0
JAN

Jul-12

Oct-12

Jan 12

Apr 12

Oct 11

July 11

Jan 11

Apr 11

Oct 10

July 10

Jan 10

Apr 10

Oct 09

July 09

Jan 09

Apr 09

Oct 08

July 08

Jan 08

Apr 08

Oct 07

July 07

Jan 07

Apr 07

Oct 06

July 06

10,000

$0

2012

Source: Coincident Index – Federal Reserve Bank of Philadelphia. Combines four state-level
indicators (employment, average hours worked in manufacturing, the unemployment rate, and wage
and salary disbursements) to summarize current economic conditions.

8