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

www.azleg.gov/jlbc.htm

“With the fiscal
year ending on
June 30th, FY
2013 General
Fund collections
totaled $9.13
billion. This
amount is $155.9
million above

July 2013

Summary
June General Fund revenue collections
totaled $1.03 billion. Base revenues, which
exclude one-time adjustments, were (1.1)%
below June of the prior year. This decrease in
June collections is difficult to interpret given
technical issues relating to a change in the
threshold for making estimated sales tax
payments, and the expiration of the
temporary 1-cent sales tax.
With the fiscal year ending on June 30, FY
2013 General Fund collections totaled $9.13
billion. This amount is $155.9 million above the
enacted budget forecast. The estimated
forecast overage assumes the state will not
receive an enacted transfer of $50 million
from the National Mortgage Settlement to the
General Fund in FY 2013, as the transfer is the
subject of ongoing litigation.
At the time of publication, the Arizona
Department of Administration has not yet
released June expenditure data. As a result,
an FY 2013 ending balance estimate is not
available.
The General Appropriation Act requires that
the Executive Branch provide a preliminary
estimate of the FY 2013 ending balance by
September 15, 2013. By law, the Department
of Administration is required to publish its final
FY 2013 accounting by December 1, 2013.
The status of the FY 2014 – FY 2016 budget
projections will be updated at the next
Finance Advisory Committee meeting this fall,
which is scheduled for October 4.

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 the end
of FY 2013, the operating balance was $3.2
billion.
Charter Conversion Update
The June 2013 Monthly Fiscal Highlights (MFH)
reported that the JLBC Staff had recently
revised the FY 2014 Arizona Department of
Education (ADE) Baseline estimate upward by
$5 million in FY 2014, $22 million in FY 2015 and
$39 million in FY 2016 due to increased reports
of “charter conversions.” This process
converts existing traditional district schools
into charter schools, which entitles a school
district to approximately $1,000 in additional
funding per pupil for students in the
converted schools. The June figures assumed
the conversion of 30 schools in FY 2014.
Based on updated information, ADE now
indicates that 60 (rather than 30) schools are
expected to convert to charter status in FY
2014. ADE roughly estimates that these
schools will increase state costs by
approximately $3 million in FY 2014 and $34
million in FY 2015. While the number of schools
has doubled, the estimated cost has not, as
the average per school cost is less than
anticipated in the June estimates. The
enacted budget’s 3-year projections do not
include any charter conversion impact.

the enacted

Table of Contents

budget
forecast.”

Summary
• Charter Conversion Update..............................1

the Budget Stabilization Fund .......................... 7

June Revenues ........................................................2

• DES – Long Term Care System Fund ................ 8

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

• DES – Report on ATP-C Campus ...................... 8

Summary of Recent Agency Reports
This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
July 22, 2013.

• Economic Estimates Commissions – Report on

• ADOA - Health and Dental Plans Report ........7
• AHCCCS – Graduate Medical Education......7
• AHCCCS – Report on SNCP Distribution..........7
• AHCCCS/DHS – Reconciliation Payments ......7

• ADE – Empowerment Scholarship Accounts 8
• ADE – Federal Monies for English Learners ..... 8
• Parks – Report on Out-of-State Travel ............. 8
• Public Programs Eligibility Report ..................... 8

June Spending ........................................................ 9
Tracking Arizona’s Recovery.............Appendix A

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2013

June Revenues
Table 1

June
Year-to-Date

General Fund Revenues ($ in Millions)
FY 2013
Collections
$ 1,032.7
$ 9,129.2

Sales Tax collections of $288.4 million were
(5.3)% below June 2012 and $26.8 million
above the forecast for the month. This figure
represents the “base” collections, or the
amount excluding the effect of the 1-cent
sales tax.
The temporary 1-cent sales tax generated
$79.5 million in June, which was (0.4)% below
last year and $29.5 million above forecast. The
1-cent tax expired on May 31, 2013 and final
payments were transmitted to the state in
June.
“Total FY 2013
[Individual
Income Tax]
revenues have
grown 10.1% and
are $132.0 million
above forecast.”

For the entire fiscal year, the regular sales tax
grew by 3.5%, which resulted in a FY 2013
forecast surplus of $28.9 million. The temporary
1-cent tax increased by 5.1% in FY 2013, which
was $37.9 million above the FY 2013 forecast.
The threshold for estimated payments
changed from $100,000 to $1 million in June
2013 due to Laws 2010, 7th Special Session,
Chapter 7. The higher June payment threshold
combined with the expiration of the 1-cent
sales tax make it difficult to evaluate the
annual reconciliation of estimated payments
this year. For these reasons, the June sales tax
numbers should also be interpreted with
caution.
Table 2 displays the June growth rates for the
largest categories.
Retail and contracting together account for
about 60% of all sales tax revenues. June
retail, which reflects May sales, increased by
10.3%, raising the year-to-date growth rate to
6.4%.
Contracting collections have been much
more volatile than retail. The June increase of
23.7% brings the year-to-date increase to
6.6%.

Difference From
Budget Forecast
$ 27.6
$ 155.9

Table 2

Difference
From FY 2012
$ (75.7)
$ 65.8

Sales Tax Growth Rates
Compared to Prior Year

Retail
Contracting
Utilities
Use
Restaurant & Bar

June
10.3%
23.7%
16.7%
4.9%
5.7%

YTD
6.4%
6.6%
4.5%
(2.2)%
5.5%

Individual Income Tax net revenues were
$330.6 million in June, which was $2.3 million
greater than the prior year. Collections were
$(13.3) million below the forecast for the
month. Total FY 2013 revenues have grown
10.1% and are $132.0 million above forecast.
As indicated in Table 3, withholding was down
(2.8)% in June. The June decrease brings
withholding tax collections for the fiscal year
to 3.5% over the prior year. This amount is
$(22.8) million below the forecast.
June estimated and final payments of $103.6
million were 18.1% above last year, and were
$5.2 million above forecast. Total FY 2013
payments are $92.4 million above the
forecast.
June refunds of $(24.5) million were $(6.3)
million greater than last year’s amount. Total
FY 2013 refunds are $62.4 million below
forecast.
Table 3
Individual Income Tax Growth Rates
Compared to Prior Year
Withholding
Estimated +
Final Payments
Refunds

June
(2.8)%

YTD
3.5%

18.1%
34.6%

16.3%
(2.5)%

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2013

June Revenues

(Continued)

Non-General Fund

Corporate Income Tax net collections were $124.6 million in
June, which is $14.5 million greater than June of the prior
year. Collections for the month were $4.0 million above the
forecast. Total FY 2013 collections are up 2.8% compared
to the prior year, and are $9.4 million above forecast.

Highway User Revenue Fund (HURF) revenues consist of
gasoline and use fuel (diesel) tax, motor carrier fees
(commercial carriers), vehicle license tax and
registration fees, and various other fees. HURF
collections of $103.1 million in June were down $(2.2)
million, or (2.1)%, compared to June of last year. Total
FY 2013 revenues are about equal to collections in the
prior year, and $(7.8) million below forecast.

Table 4

General Fund Revenue:
Change from Previous Year and Enacted Budget Forecast
June 2013
Current Month

FY 2013 YTD (Twelve Months)

Change From
June 2012

Actual
June 2013

Percent

Amount

Change from
Enacted Forecast
Percent

Amount

June 2012

Actual
June 2013

Amount

Enacted Forecast
Percent

Percent

Amount

Taxes
Sales and Use - Base*
- 1¢ Increase*
Income - Individual
- Corporate

$288,405,767

($16,001,144)

79,516,569

(349,771)

Sub-Total Taxes

$3,778,864,245

$126,698,589

962,171,976

46,336,435

3.5 %
5.1

$28,914,945
37,934,676

4.1

0.8 %
4.0

2,271,617

0.7

(13,342,174)

(3.9)

3,397,545,129

311,407,766

10.1

131,996,029

13.1

3,989,978

3.3

662,026,399

18,254,554

2.8

9,399,599

1.4

(31.7)

13,202,508

(2,685,386)

(16.9)

(2,797,492)

(17.5)

2,501,518

Other Taxes

58.9

14,461,583

Luxury - Tobacco
Insurance Premium

10.3 %

29,462,309

124,592,981
2,026,043

Estate

$26,816,310

330,561,645

Property
- Liquor

(5.3) %
(0.4)

(351,827)

(14.8)

(634,918)

(938,675)

(20.2)

0

0.0

25,090,558

(1,340,783)

(5.1)

86,959

0.3

2,921,313

1,115,286

61.8

0

0.0

32,592,473

2,666,727

8.9

(335,828)

(1.0)

70,618,341

3,357,906

5.0

2,103,855

3.1

(242,478)

(0.1)

0

0

40,045

(85,097)

-(68.0)
0.4 %

0
(59,955)
$48,031,649

386,757,522

(7,232,978)

(1.8)

--

0

(200,825)

(100.0)

(60.0)

1,562,782

(220,331)

(12.4)

$901,184,223

$3,783,636

5.6 %

$9,259,813,592

$493,683,768

5.6 %

25,623,700

2,066,464

8.8

0

0.0

74,009,000

(7,923,196)

(9.7)

2,808,400

90,919

3.3

764,463

37.4

29,098,361

1,204,895

4.3

6,820,130

(3,357,006)

(33.0)

0
(237,218)
$204,719,192

-(13.2)
2.3 %

Other Revenue
Lottery
License, Fees and Permits

874

(5,602,665)

(100.0)

Sales and Services

Interest

10,906,448

(627,912)

(5.4)

Other Miscellaneous

41,681,010

(15,534,823)

(27.2)

(12,150,332)

Disproportionate Share

78,204,597

385,997

0.5

Transfers and Reimbursements

15,069,609

3,844,166

34.2

Sub-Total Other Revenue
TOTAL BASE REVENUE

(6,836,481)
677,940

(100.0)
6.6

36,512,189

(22.6)

76,874,600

(11,120,762)

(12.6)

(2,656,603)

(3.3)

78,204,597

(17,483,685)

(18.3)

(273,180)

(1.8)

25,000,000

$174,294,638

($15,377,854)

(8.1) %

($20,474,193)

$1,075,478,861

($11,594,218)

(1.1) %

$27,557,456

(10.5) %

$326,518,877

2.6 %

$9,586,332,469

781,275

528,633
($37,369,846)
$456,313,922

2.2

2.2

337,100

0.5

2,098,362

7.8

(79,870)

(1.2)

1,512,189

4.3

0

0.0

(2,656,603)
0

(3.3)
0.0

(10.3) %

$1,211,178

0.4 %

5.0 %

$205,930,370

2.2 %

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

(42,798,670)
0
0

(7,430,048)

21.0

0

(56,720,166)

(100.0)

0

--

(513,584,040)

(89,160,596)

21.0

56,500,000

(288,503,500)

(83.6)

(12,867,428)

(100.0)

--

0

--

(64,150,214)

-- %

0

0.0 %

$1,032,680,191

($75,744,432)

(6.8) %

$27,557,456

2.7 %

$9,129,248,429

$103,105,715

($2,244,475)

(2.1) %

(2.7) %

$1,210,024,080

(42,798,670)

0

0.0

0
(457,084,040)

(390,531,524)
$65,782,398

586.8 %
0.7 %

0
(50,000,000)
0
(50,000,000)
$155,930,370

0.0
(46.9)
-12.3 %
1.7 %

Non-General Funds
Highway User Revenue Fund

($2,876,576)

($562,367)

(0.0) %

($7,825,886)

(0.6) %

* Total June collections including the temporary 1¢ increase approved by the voters in May 2010 were $367.9 million. This amount is $(16.4) million, or (4.3)%, below June 2012 and $56.3 million, or 18.1%, above forecast.

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2013

Recent Economic Indicators
NATIONAL
According to the U.S. Department of
Commerce Bureau of Economic Analysis, the
U.S. Real Gross Domestic Product (GDP)
increased at an annual rate of 1.8% in the first
quarter of 2013. This growth represented a
downward revision from an earlier 2.4%
estimate. The downward revision was mainly
due to consumption spending growing at a
lower rate than previously expected.
Consumption spending, inventory investment,
and residential fixed investment increases more
than offset decreases in government spending
and exports in the quarter.
“A 6.3% increase
in gasoline
prices
accounted for
about two-thirds
of the overall
0.5% monthly
[Consumer Price
Index] increase.”

The Conference Board’s U.S. Consumer
Confidence Index grew 9.6% in June, the third
consecutive monthly increase and the highest
reading since January 2008. Recent increases
in confidence reflect an improved outlook on
housing and job markets. Recent poor
performance in financial markets was not
factored in to the index’s June reading.
The Conference Board’s U.S. Leading Economic
Index increased by 0.1% in May, marking the 8th
increase in the past 9 months and the highest
reading since early months of the recession.
Only financial market components of the index
contributed to the improved reading, however.
Consumer prices, as measured by the U.S.
Consumer Price Index (CPI), increased 0.5% in
June and 1.8% above June 2012 prices. A 6.3%
increase in gasoline prices accounted for
about two-thirds of the overall 0.5% monthly
price increase. Core inflation (all items except
food and energy) grew by 0.2% during the
month.
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 May, 33 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 2.0% above
last year, which is the thirty-fourth highest growth
rate in the country. While this is a significant
improvement, Arizona’s index is still (10.5)%

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 1.9% over the next 6 months.
This is unchanged from the revised 1.9% growth
projection in April and lower than the 2.5%
projection in May 2012.
Housing
The number of Maricopa County pending
foreclosures decreased from 8,826 in May to
8,027 in June. The June 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 19,857 in June
2012 to 19,511 in June 2013, a (1.7)%
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 $185,000 in May. This
represents a 2.0% increase from April, and a
25.9% increase from May of last year.
Another measure of the health of the Arizona
real estate market is permitting activity. For
the 3-month period through May, a total of
1,737 single-family building permits had been
issued statewide, a 14.7% 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.
The multi-family housing sector has seen
recent gains, with the 3-month period ending
in May resulting in a total of 590 multi-family
building permits being issued in the state.
However, this figure remains well below the

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2013

Recent Economic Indicators (Continued)
peak of activity in April 2007.
State Agency Data

“There were
36,770 TANF
recipients in the
state in May, a
monthly
caseload
decrease of
(0.3)%. Yearover-year, the
number of TANF
recipients has
declined by
(7.1)%.”

At the beginning of July, total AHCCCS
caseloads equaled 1.28 million members, a
0.3% increase from the prior month. Overall,
AHCCCS caseloads are currently (0.2)%
below July 2012 levels. The traditional acute
care AHCCCS population, which consists
primarily of lower income children and their
parents, increased by 0.3% since last month
while decreasing (0.1)% 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 (149,985) since then
to 74,507. As a whole, the Proposition 204
program has declined (0.6)% compared to
the prior month, and (14.9)% from the prior
year. KidsCare I provides coverage for 7,066
children with incomes above those in the
traditional population. Its enrollment has
declined since a freeze was implemented in
January 2010. Enrollment declined (1.7)%
compared to the prior month and (28.5)%
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 July,
37,980 children were enrolled in KidsCare II.
There were 36,770 TANF recipients in the state
in May, a monthly caseload decrease of
(0.3)%. Year-over-year, the number of TANF
recipients has declined by (7.1)%. 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 May, there
were a total 1.1 million food stamp recipients
in the state, a 0.3% increase over the prior
month. Compared to the same month last
year, food stamp participation was down by
(0.8)%. 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 40,512 inmates in
June 2013. Relative to the prior 3-month
period, the population has increased by 181
inmates. Compared to a year ago, the
population has increased by 553 inmates.
Employment
According to the Arizona Department of
Administration’s employment report for June,
the state lost a total of (43,500) nonfarm jobs
between May and June. The state typically
loses jobs in June with the end of the school
year. In fact, 98% of those losses, or (42,500)
jobs, occurred in the government sector,
primarily state and local education. The
average net loss of government jobs for June
in the prior 10 years is (37,600) jobs.
The private sector shed (1,000) jobs between
May and June, which was less than the 10year average job loss of (4,000).
Year-over-year, nonfarm employment is up by
2.0%, or 49,400 net jobs. The job growth rate
has essentially been “stuck” at about 2% over
the last 12 months.
As of June, total nonfarm employment
remained (9.2)%, or (249,900) jobs, below
peak employment in December 2007. See
Appendix A – Tracking Arizona’s Recovery.
The state unemployment rate rose from 7.8% in
May to 8.0% in June. This increase brought the
state’s jobless rate to the highest level since
January 2013. The U.S. unemployment rate
remained at 7.6% in June.

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2013

Recent 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
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

June
June
June
June
June
June
April
Apr-Jun
Apr-Jun

8.0%
22,178
41,455
2.47 million
157,300
126,300
41.7
$45.1 million
$165.1 million

0.2 %
(1.6)%
0.7%
(1.7)%
1.2%
(0.4)%
2.5%
12.5%
2.1%

(0.4)%
(5.9)%
(28.7)%
2.0%
0.8%
8.5%
2.0%
17.3%*
7.3%*

Mar-May
Mar-May

1,737
590

11.2%
46.3%

14.7%
269.5%

May
May

9,843
1,608

6.6%
2.2%

2.0%
5.1%

May
May
April

$185,000
$122,000
132.47

2.0%
1.8%
1.7%

25.9%
27.1%
21.5%

June

8,027

(9.1)%

(55.2)%

June
May
May
April

19,511
3.47 million
$57.53
$4.57

(1.1)%
1.0%
(15.0)%
(16.9)%

(1.7)%
1.7%
3.6%
40.2%

2nd Quarter 2013
May
Mar-May
1st Quarter 2013
July 1, 2012
July

May
May
Apr-June

69.6
180.66
1.9%
$238.0 billion
6.55 million
1,278,412
889,319
74,507
147,642
7,066
37,980
53,765
68,133
36,770
1,102,305
40,512

N/A
0.2%
0.0%
(1.5)%
N/A
0.3%
0.3%
(1.5)%
(0.2)%
(1.7)%
5.4%
0.3%
0.8%
(0.3)%
0.3%
181 inmates

1.5%
2.0%
(0.6)%
2.5%
1.3%
(0.2)%
(0.1)%
(32.4)%
(2.3)%
(28.5)%
N/A
2.5%
10.7%
(7.1)%
(0.8)%
553 inmates

April
April

17,722
25,279

(17)
(22)

(442)
(350)

1st Quarter 2013
(3rd Estimate)
June
May
Mar-May
June

$13.7 trillion

1.8%

1.6%

81.4
95.2
$4.6 billion
232.9

9.6%
0.1%
5.6%
0.5%

29.8%
2.0%
3.0%
1.8%

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2013

Summary of Recent Agency Reports
Arizona Department of Administration - Report on
Performance Standards for Health and Dental Plans Pursuant to A.R.S. § 38-658B, the Arizona Department of
Administration (ADOA) submitted its reports on
performance standards for health and dental plans
during 2012. For 2012, health plans missed anywhere
from 2 to 10 performance measures in at least 1 month
and dental plans missed 0 to 2 performance measures.
The number of performance measures varied by
vendor. In total, vendors paid $315,000 in penalties
during 2012 for missed standards in 2011. (Amy Upston)
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 residency positions funded by local, county,
or tribal governments. The agency indicates that these
contributions in FY 2012 provided partial funding for
1,430 residency positions at the following 10 hospitals:
Maricopa Medical Center, Kingman Regional Medical
Center, Tucson Medical Center, Banner Good
Samaritan, Phoenix Children’s Hospital, St. Joseph’s,
Scottsdale Healthcare-Osborne, Scottsdale HealthcareShea, University Medical Center, and University Medical
Center-South Campus.
The positions were funded by local contributions of $51.2
million and a federal match of $103.6 million, resulting in
$154.7 million total funding. (Amy Upston)
AHCCCS – Report on Safety Net Care Pool Distribution
Notification – Pursuant to the FY 2014 General
Appropriation Act (Laws 2013, 1st Special Session,
Chapter 1), the Arizona Health Care Cost Containment
System (AHCCCS) Administration has reported that it
intends to distribute $430 million in total funds for the
Safety Net Care Pool (SNCP) program in FY 2014. The FY
2014 General Appropriation Act requires the
Administration to notify the Joint Legislative Budget
Committee if the distributions would exceed $166 million
in FY 2014.
The SNCP program uses voluntary monies from political
subdivisions to draw down Federal Funds at a 2:1 match.
The funds are then distributed to participating hospitals.
As a condition of participating in this program, some of
the monies must be used to expand KidsCare and/or
the Childless Adult program. The original program was
approved by the federal government in April 2012. The
program was expanded a year later to include a
hospital assessment passed by the city of Phoenix. The
additional $264 million distribution in FY 2014 is from the
Phoenix hospital assessment. (Amy Upston)

AHCCCS and the Department of Health Services - Report
on Reconciliation Payments - Pursuant to the FY 2013
General Appropriation Act (Laws 2012, Chapter 294,
Section 126), the Arizona Health Care Cost Containment
System (AHCCCS) and the Department of Health
Services (DHS) submitted their reports on reconciliation
payments and penalties received during FY 2013.
AHCCCS reports that during that 12-month period they
deposited $5.4 million into the General Fund and used
$14.0 million to offset Federal Medicaid Authority
expenditures from reconciliation payments and
penalties/sanctions. DHS reports that $58,800 from the
General Fund and $167,900 from Federal Medicaid
Authority in reconciliation payments were returned
during that period.
AHCCCS and DHS limit financial risks and profits for
health plans and Regional Behavioral Health Authorities
(RBHAs) for most Medicaid populations (the maximum
percentage of loss and profit varies by Medicaid
population). Reconciliation payments are made to
health plans/RBHAs or the agency if losses or profits
exceed the set level. A penalty, or sanction, may be
assessed against health plans/RBHAs for the failure to
demonstrate compliance with their contractual
responsibilities.
Previously, the agencies retained monies from
reconciliation payments and penalties.
The FY 2013 Health and Welfare Budget Reconciliation
Bill (Laws 2012, Chapter 299, Section 1) required that
AHCCCS deposit monies received for reconciliation
payments and penalties received into the General Fund
or the fund from which the appropriation was originally
made. (Amy Upston)
Economic Estimates Commissions – Report on the
Budget Stabilization Fund – Pursuant to A.R.S. § 35-144F,
the Economic Estimates Commission (EEC) is annually
required to calculate the amount of monies that may
be deposited to or withdrawn from the Budget
Stabilization Fund (BSF). The EEC estimate is calculated
based on a formula that compares the growth rate of
real adjusted Arizona personal income in the most
recent calendar year to the average in the last 7
calendar years (hereafter referred to as the “trend”
growth rate).
Since the calendar year 2012 growth rate exceeded the
trend growth rate by 1.67%, EEC reported on May 30,
2013 that the formula calls for a BSF deposit of $145.6
million at the end of FY 2013. Note, however, that EEC
calculations under the formula do not result in any
automatic deposits or withdrawals, as they must be
authorized by legislative action. In practice, the formula
has only served as a general guideline and has rarely

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2013

Summary of Recent Agency Reports
been used to determine the actual deposit or
withdrawal.
The FY 2014 budget does not include an appropriation
of these monies into the BSF. The BSF, however, does
have a balance of slightly more than $450 million as the
result of FY 2012 and FY 2013 deposits. As session law,
Laws 2013, Chapter 9 (HB 2009) also appropriates $1
million of BSF interest income to both the Arts Fund and
State Parks Revenue Fund in FY 2014. (Hans Olofsson)
Department of Economic Security (DES) – Report on the
Long Term Care System Fund (LTCSF) – Pursuant to a FY
2013 General Appropriation Act footnote, DES reported
$25.8 million as the amount of LTCSF monies
appropriated but not disbursed due to the receipt of
additional Temporary Assistance for Needy Families
(TANF) Block Grant monies in FY 2013.
For FY 2013, DES was appropriated an additional $44.6
million from the non-federally matched portion of the
LTCSF, as well as all available TANF Block Grant monies.
A portion of the additional LTCSF appropriation was
designated to backfill the projected loss of TANF Block
Grant funds, specifically revenues from the TANF
Contingency Fund and the TANF Population
Supplemental. After the FY 2013 General Appropriation
Act was passed, Congress reauthorized the TANF
Contingency Fund, lessening the impact of lost TANF
Block Grant revenues. Currently, the department
anticipates revenues of $26.8 million from the TANF
Contingency Fund in FY 2013. By requiring DES to revert
LTCSF monies dollar for dollar for TANF Block Grant
monies received above $22.8 million, the Legislature
preserved $25.8 million from LTCSF for use in FY 2014.
(Ben Beutler)
Department of Economic Security - Report on Arizona
Training Program at Coolidge (ATP-C) Campus and
Other Placements - A footnote in the FY 2013 General
Appropriation Act requires the Department of Economic
Security (DES) to report on placements of
developmentally-disabled (DD) clients into state-owned
Intermediate Care Facilities for Persons with Intellectual
Disabilities (ICF-ID) or at the ATP-C campus in FY 2013.
DES reports that there were no new permanent
placements at the ATP-C campus, but that there were 2
new placements into a state-operated ICF-ID in Phoenix
in FY 2013. Both experienced increased medical needs
and private facilities declined to accept placement of
individuals. (Amy Upston)
Department of Education – Report on Empowerment
Scholarship Accounts – Pursuant to A.R.S. § 15-2403F, the
Department of Education (ADE) recently submitted an
estimate of the amount required to fund empowerment
scholarship accounts (ESAs) for FY 2014. In that report,

(Continued)

ADE estimates that 1,000 students will receive ESA funding
in FY 2014 (versus 302 in FY 2013) at a total cost of
approximately $11.5 million (versus $5.2 million in FY 2013).
ESAs are funded with a portion of the Basic State Aid
monies that a school district or charter school otherwise
would have received for the student if they had remained
in public school. As a result, ESAs typically do not increase
state costs for Basic State Aid, since participants otherwise
generally would be attending public schools. (Steve
Schimpp)
Starting in FY 2015, however, Laws 2013, Chapter 250
expands the program to incoming Kindergartners
regardless of whether they previously attended public
school. As a result, the program will not automatically
generate an offsetting Basic State Aid savings in the future
for all program participants starting in FY 2015. ADE
estimates that under Chapter 250 the number of students
receiving ESAs will increase to approximately 5,500
students in FY 2015, which would greatly increase the
number of ESA applications that it will have to process
during FY 2014. (Steve Schimpp)
Department of Education – Report on Federal Monies for
English Learners – Pursuant to A.R.S. § 15-756.10,
paragraph 3, the Department of Education (ADE) recently
submitted a report that includes an itemized list of all
federal monies received by the department for English
language learners in FY 2013. ADE received $18.3 million
in federal Title III (Language Instruction for Limited English
Proficient and Immigrant Students) funding for FY 2013. Of
that amount, approximately $17.2 million was distributed
directly to school districts and charter schools. The
remaining $1.1 million was used for state administration,
technical assistance, and to meet federal set-aside
requirements for immigrant education. (Steve Schimpp)
State Parks Board – Annual Report on Out-of-State Travel Pursuant to a FY 2013 General Appropriation Act footnote,
the State Parks Board submitted a report on out-of-state
travel expenses in FY 2013. The footnote requires a report
and also stipulates that during FY 2013, out-of-state travel
expenses by State Parks Board staff shall not exceed
$5,000 from appropriated or non-appropriated monies.
The Parks Board spent $5,000 for out-of-state travel
expenses in FY 2013. (Art Smith)
Public Programs Eligibility Report - As enacted in the 2006
election, Proposition 300 limits participation in certain state
programs to citizens, legal residents, or other persons
lawfully present in the United States, and requires semiannual reports to the Joint Legislative Budget Committee.
Below is a summary of the reports:
Universities - At the 3 universities, 130,602 students
registered for the spring 2013 semester. Of the total
students registered, the universities were able to verify the

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – JULY 2013

Summary of Recent Agency Reports
legal immigration status of 123,115 students.
Additionally, the universities reported that 9,837 students
did not require verification because they have either not
requested, or received in-state tuition or state supported
financial aid. The universities reported that a total of 10
students were unverifiable due to their inability to
provide the requisite documentation.
Department of Economic Security - The department
reported that 4,524 applications were received for child
care assistance during the reporting period of
December 1, 2012 to May 31, 2013. Of this number, 2
were denied because criteria for citizenship or legal
residency were not met.
Community Colleges - Statewide, the Community
Colleges reported a total of 220,679 students classified
as in-state for the spring 2013 semester. They reported
556 students who were not entitled to be classified as instate because of a lack of lawful immigration status.
Additionally, 85,493 students applied for financial aid.
Of those who applied, the community colleges reported
that 89 were not entitled to any aid because they were
not lawfully present in the United States.

June Spending
Due to lack of expenditure data from the Department
of Administration at the time of this publication, this
month’s issue of Monthly Fiscal Highlights does not
include any information on state expenditures.

(Continued)

Department of Education – The department had
previously been required to report on the number of
people who applied for instruction in Arizona Adult
Education and how many were denied instruction
because they failed to provide evidence of citizenship
or legal residence in the United States. Arizona Adult
Education received no state funds in FY 2013 and is
currently funded with Federal Funds. Consequently, the
department is not required to report on those numbers.
(Krista MacGahan)

Tracking Arizona’
Arizona’s Recovery

Total NonNon-Farm Employment
2,800

July 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

2011

JAN

JULY

JUL

2010

JAN

JUL

2009

JAN

JUL

2008

JAN

JUL

2007

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

2008

2009

2010

2011

Jan-13

Apr-13

Jul-12

Oct-12

Jan 12

Oct 11

Apr 12

Apr 11

July 11

Jan 11

Oct 10

Apr 10

July 10

Jan 10

Oct 09

Jan 09

Apr 09

July 09

Oct 08

July 08

Jan 08

Apr 08

Oct 07

July 07

Apr 07

JAN

JULY

JUL

JAN

JUL

JAN

JUL

JAN

JUL

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

2001
Excludes temporary 1 ¢ sales tax

JLBC

5

2003

2004

JLBC

2005

2006

2007

2011

JAN

JULY

JUL

2010

JAN

JUL

2009

JAN

JUL

2008

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

2010

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

2009

2010

JAN

JULY

JUL

2011

JAN

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

2001

JAN

JAN

JAN

JAN

2011

JULY

JUL

JUL

JAN

JAN

JUL

JAN

JUL

JUL

JAN

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JUL

2002

JAN

140
JAN

0

JLBC

JAN

JUL

JAN

0
JAN

Jan-13

Apr-13

Jul-12

Oct-12

Jan 12

Oct 11

Apr 12

July 11

Jan 11

Apr 11

Oct 10

July 10

Jan 10

Apr 10

Oct 09

Jan 09

July 09

Oct 08

Apr 09

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