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,
General Fund
revenues are
4.6% above the
prior year and
are $7.6 million
above forecast.”

September 2013

Summary
August General Fund revenue collections
totaled $634.5 million. Base revenues, which
exclude one-time adjustments, were 3.7%
above August 2012. This year-over-year
change excludes the temporary 1-cent sales
tax which expired at the end of May 2013.

its bill outs of the operating fund balance,
which consists of the General Fund and certain
dedicated funds. The operating balance as of
mid-September 2013 is $2.0 billion. In addition,
the state’s Budget Stabilization Fund has a
balance of $454.5 million.

The August revenue growth was driven largely
by Sales Tax collections in the contracting
category, which have increased 18% during
the current fiscal year.

FY 2013 Ending Balance Update
The General Appropriation Act requires that
the Executive Branch provide their own initial
estimate of the FY 2013 ending balance by
September 15, 2013. The Department of
Administration has reported a preliminary
ending balance estimate of $895.5 million, an
amount which is virtually the same as JLBC's
estimate in last month’s Monthly Fiscal
Highlights.

August revenues were largely in line with the
enacted forecast, with collections falling below
the budgeted amount by $(2.8) million during
the month.
Year-to-date, General Fund revenues are 4.6%
above the prior year and are $7.6 million
above forecast.
In comparison to revenue of $634.5 million,
August 2013 spending was $779.9 million which
represents a decline of $(164.1) million from the
prior year. August 2013 spending was lower
due to the timing of deferred payments to
school districts as part of the on-going $931
million K-12 rollover.

This estimate is being reviewed and will likely
change as ADOA continues the year-end
reconciliation process. By law, the Department
of Administration is required to publish its final
FY 2013 accounting by December 1, 2013.

Fiscal year-to-date, General Fund revenues of
$1.39 billion have been offset by $3.01 billion of
expenditures.
The state’s fiscal health can also be measured
by the operating fund balance. The state pays

Table of Contents

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
September 20, 2013.

Summary

Summary of Recent Agency Reports

FY 2013 Ending Balance Update..........................1

 ABOR – Report on Graduation Rates.............. 8

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

 DEQ – Water Quality Assurance Fund ............ 8

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

 Homeland Security – Funding Report ............. 8

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

 Supreme Court – Automation Projects ........... 9

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

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

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2013

August Revenues
Table 1

August
Year-to-Date

General Fund Revenues ($ in Millions)
FY 2014
Collections
$ 634.5
$ 1,389.8

Sales Tax collections of $330.5 million were 9.2%
above August 2012 and $7.7 million above the
forecast for the month. The year-over-year
change amounts exclude the temporary 1cent sales tax which expired at the end of May
2013.

“This is the third
relatively strong
month in a row
for the retail
category, with
growth rates
exceeding 8%.”

Year-to-date, sales tax collections are 7.2%
above the prior year and are $10.9 million
above forecast.
Table 2 displays the August growth rates for the
largest sales tax categories.
Retail and contracting together account for
about 60% of all sales tax revenues. August
retail, which reflects July sales, increased by
8.2%. This is the third relatively strong month in
a row for the retail category, with growth
rates exceeding 8%.
Contracting collections have generally been
much more volatile than retail. However, the
August increase of 20.0% represents the fourth
consecutive month of double-digit increases
compared to the same month in the prior
year.
Table 2

Sales Tax Growth Rates
Compared to Prior Year
Retail
Contracting
Utilities
Use
Restaurant & Bar

August
8.2%
20.0%
3.7%
10.1%
3.0%

YTD
8.5%
18.1%
2.7%
5.0%
2.3%

Individual Income Tax net revenues were
$274.6 million in August, which was (0.1)% or
$(0.3) million less than the prior year.
Collections were $(14.9) million below the
forecast for the month. Year-to-date, revenue
has grown 3.3% over the prior year, and is
$(13.2) million below the budget forecast.
As indicated in Table 3, withholding was down
(1.4)% in August. The August decrease brings

Difference From
Budget Forecast
$ (2.8)
$ 7.6

Difference
From FY 2013
$ (57.2)
$ (50.5)

withholding tax collections for the fiscal year
to 3.3% over the prior year. This amount is
$(28.5) million below the budget forecast.
August estimated and final payments were
12.5% above last year, and were $0.9 million
above forecast. Year-to-date, payments are
$1.2 million above the forecast.
August refunds were (9.2)% below last year,
and were $8.8 million below forecast. Yearto-date, refunds are $14.1 million below
forecast.
Table 3
Individual Income Tax Growth Rates
Compared to Prior Year
Withholding
Estimated +
Final Payments
Refunds

August
(1.4)%

YTD
3.3%

12.5%
(9.2)%

19.3%
24.4%

Corporate Income Tax net collections were
$10.5 million in August, which is $(11.9) million
less than August of the prior year. Collections
were $(6.0) million below the forecast. Year-todate, collections are down (17.5)% compared
to the prior year, and are $(5.7) million below
the budget 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 $99.3
million in August were down $(1.9) million, or
(1.9)%, compared to August of last year.
Year-to-date revenues are 2.7% above
collections in the prior year, and are $3.4
million above the budget forecast.

3

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2013

Table 4

General Fund Revenue:
Change from Previous Year and FY 2014 Enacted Budget Forecast
August 2013

Current Month

FY 2014 YTD (Two Months)

Change From
Actual

August 2012

August 2013

Amount

Change from
Actual

Enacted Forecast

Percent

Amount

Percent

August 2012

August 2013

Amount

Enacted Forecast
Percent

Amount

Percent

Taxes
Sales and Use

$669,672,672

$45,133,904

274,573,097

(341,339)

(0.1)

(14,946,355)

(5.2)

581,157,958

18,388,003

10,543,529

(11,863,897)

(52.9)

(6,021,841)

(36.4)

35,625,037

(7,567,941)

40,478

(18,627)

(31.5)

(59,522)

(59.5)

208,342

(49,678)

2,040,000

(296,573)

(12.7)

2,110,000

167,845

46,319,857

4,516,894

0

0

200,613

160,064

$666,281,457

$20,128,666

Lott ery

3,318,025

408,085

14.0

318,025

10.6

3,318,025

408,085

14.0

318,025

10.6

License, Fees and Permits

2,846,582

165,981

6.2

246,582

9.5

5,215,877

(290,040)

(5.3)

(184,123)

(3.4)

--

1,035

(1,728)

(62.5)

(18.2)

2,062,686

85,361

4.3

340.3

3,816,560

450,759

13.4

0

0

--

0

1,330,661

1,324,941

--

330,661

Income - Individual
- Corporat e
Propert y
Luxury - Tobacco
- Liquor
Insurance Premium
Est at e
Ot her Taxes
Sub-Total Taxes

$330,453,883

$27,804,299

9.2 %

$7,673,158

2.4 %

7.2 %
3.3

$8,305,917

1.3 %

(13,245,121)

(2.2)

(17.5)

(5,698,627)

(13.8)

(19.3)

(91,658)

(30.6)

0

0.0

3,899,472

(399,259)

(9.3)

(190,528)

(4.7)

8.6

0

0.0

5,779,985

308,780

5.6

839,985

17.0

10.8

7,964,157

20.8

82,924,464

3,612,823

4.6

6,225,364

8.1

0

0

252,217

164,095

$1,379,520,147

$59,590,727

-394.7
3.1 %

0
125,613
($5,264,790)

-167.5
(0.8) %

-186.2
4.5 %

0
102,217
($3,752,451)

-68.1
(0.3) %

Other Revenue

Int erest

7

(2,141)

(99.7)

Sales and Services

1,227,387

(223,626)

(15.4)

Ot her Miscellaneous

3,081,806

2,337,345

0

0

--

0

676,167

1,588,063

--

176,167

$11,149,974

$4,273,707

62.2 %

$2,849,974

34.3 %

$15,744,844

$1,977,378

14.4 %

$1,644,844

11.7 %

$677,431,431

$24,402,373

3.7 %

($2,414,816)

(0.4) %

$1,395,264,990

$61,568,104

4.6 %

($2,107,608)

(0.2) %

Disproport ionat e Share
Transfers and Reimbursements
Sub-Total Other Revenue
TOTAL BASE REVENUE

314.0

7
(272,613)
2,381,806

-35.2

1,035
(437,314)
1,616,560

-(17.5)
73.5
-33.1

Other Adjustments
Urban Revenue Sharing
Budget Plan Transfers
Sales Tax - 1¢ Increase
Sub-Total Other Adjustments
TOTAL GENERAL FUND REVENUE

(47,157,793)
4,245,325
0

(4,359,123)

10.2

(1,754,675)

(29.2)

(0)
0

0.9

(93,907,893)

(8,310,553)

(0.0)

85,786,473

49,786,473

9.7

(407,693)

138.3

7,541,148

(98.3)

2,611,367

0.4
9.6

--

2,611,367

(153,554,657)

(81,628,065)

-- %

(407,693)

1.0 %

(5,510,054)

(112,078,738)

-- %

9,744,821

(63.9) %

$634,518,963

($57,225,692)

(8.3) %

($2,822,509)

(0.4) %

$1,389,754,937

($50,510,633)

(3.5) %

$7,637,214

0.6 %

$99,276,879

($1,873,805)

(1.9) %

($2,885,312)

(2.8) %

$204,075,796

2.7 %

$3,361,314

1.7 %

(42,912,468)

(75,514,267) (100.0)

(407,693)

--

Non-General Funds
Highway User Revenue Fund

$5,348,587

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2013

Recent Economic Indicators
NATIONAL

“U.S. Real Gross
Domestic
Product (GDP)
increased at an
annual rate of
2.5% … a
significant
upward revision
to the initial 1.7%
estimate.”

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 2.5% in the
second quarter of 2013. This estimate
represents a significant upward revision to the
initial 1.7% estimate. The primary reason for the
increase was improvement in export figures for
the quarter.
The Conference Board’s U.S. Consumer
Confidence Index increased 0.6% in August,
returning to growth after experiencing a
decrease in July. Year over year growth of the
index rose to 33.0%, the highest reading in 2013.
Consumers still remain cautious, evidenced by
a slight drop in the sixth month outlook of major
purchases.
The Conference Board’s U.S. Leading Economic
Index grew by 0.6% in July and by 3.1% above
the reading in July 2012. This improvement was
widespread as 8 of the index’s 10 components
grew. Financial market conditions contributed
the largest portion of growth over the prior
month.
The Semiconductor Industry Association (SIA)
reported that Semiconductor Billings (3-month
moving average) in the Americas increased
5.4% in July, to $5.02 billion. This reading was
21.5% above that in July 2012, the largest year
over year percentage increase since February
2011. Semiconductors are Arizona’s largest
international export industry.
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, 34 out of 50 states had increases in their
coincident indexes. Arizona’s coincident index
increased by 0.3% compared to the prior month.
Year-over-year, the Arizona index is 2.5% above
last year, which is the twenty-sixth highest growth
rate in the country. While this is a significant
improvement, Arizona’s index is still (10.0)%
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 3.3% over the next 6 months.
This is higher than the revised 2.9% growth
projection in June and higher than the 2.4%
projection in July 2012.
Housing
The number of Maricopa County pending
foreclosures decreased from 7,191 in July to
6,881 in August. The August 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 increased from 20,934 in August
2012 to 21,382 in August 2013, a 2.1% increase.
In the Metropolitan Phoenix area, the median
price of a single family home was $190,000 in
June. This represents a 2.7% increase from
May, and a 26.7% increase from June of last
year.
Another measure of the health of the Arizona
real estate market is permitting activity. For
the 3-month period through July, a total of
1,785 single-family building permits had been
issued statewide, an 8.9% 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 also seen
gains, with the 3-month period ending in July
resulting in a total of 580 multi-family building
permits being issued in the state. However,
this figure remains well below the peak of
activity in April 2007.

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2013

Recent Economic Indicators (Continued)
Employment

“The state’s
unemployment
rate increased
from 8.0% in July
to 8.3% in
August. This
brought the
jobless rate back
to the same level
as in August
2012.”

According to the Arizona Department of
Administration’s employment report for
August, the state added 39,800 nonfarm jobs
between July and August. This was
significantly less than the corresponding net
job gain of 59,000 in August 2012 and 55,000
in August 2011. Job gains are typical in
August when most schools start up their new
academic year. Close to 83% of August’s
employment increase (or 32,900 jobs) was
attributable to state and local education.
The private sector added 7,800 jobs between
July and August, the smallest such gain since
August 2010.

The childless adult program has not allowed
new participants since July 2011 but will allow
new participants again beginning on January
1, 2014. Since July 2011, the population has
declined (152,459) to 72,033. As a whole, the
Proposition 204 program has declined (0.1)%
compared to the prior month, and (12.3)%
from the prior year.
KidsCare I provides coverage for 6,773
children with incomes above those in the
traditional population. Its enrollment has
declined since a freeze was implemented in
January 2010. Enrollment declined (2.9)%
compared to the prior month and (25.8)%
from the prior year.

Compared to August 2012, nonfarm
employment in August 2013 was up by 2.0% or
48,100 jobs. The year-over-year growth rate
has remained around 2% for most of the last
24 months. The largest contributors to
August’s year-over-year net job gains were
the following sectors of the economy:
education and health services (+11,000),
leisure and hospitality (+10,900), and trade,
transportation and utilities (+10,000).

Beginning on May 1, 2012, AHCCCS began a
new program, entitled KidsCare II. The state
match is provided by voluntary payments
from political subdivisions. As of the beginning
of September, 39,303 children were enrolled
in KidsCare II. KidsCare II expires on
December 31, 2013. At that time, children in
both KidsCare I and KidsCare II up to 133% of
the Federal Poverty Level will transfer to the
traditional acute care program.

The average job growth rate for the first 8
months of CY 2013 was 2.1%. The
corresponding figure in August 2012 was
1.9%. As of August, total nonfarm
employment remained (8.3)%, or (226,000)
jobs, below peak employment in December
2007. See Appendix A – Tracking Arizona’s
Recovery.

There were 36,599 TANF recipients in the state
in July, a monthly caseload increase of 1.9%.
Year-over-year, the number of TANF recipients
has declined by (9.1)%. The statutory lifetime
limit on cash assistance is 24 months. The
appropriation for TANF cash assistance in the
FY 2014 budget funds a caseload of
approximately 34,346 recipients in FY 2014.

The state’s unemployment rate increased from
8.0% in July to 8.3% in August. This brought the
jobless rate back to the same level as in August
2012. The U.S. unemployment rate declined
from 7.4% in July to 7.3% in August. In August
2012, the national unemployment rate was
8.1%.

The Supplemental Nutrition Assistance
Program (SNAP), formerly known as Food
Stamps, provides assistance to low-income
households to purchase food. In July, there
were a total 1.1 million food stamp recipients
in the state, a 0.2% increase over the prior
month. Compared to the same month last
year, food stamp participation was down by
(0.9)%. The number of SNAP recipients began
increasing steadily in July 2007, after several
years in the 550,000 to 575,000 range.

State Agency Data
At the beginning of September, total AHCCCS
caseloads equaled 1.29 million members, a
0.7% increase from the prior month. Overall,
AHCCCS caseloads are currently (0.8)%
below September 2012 levels. The traditional
acute care AHCCCS population, which
consists primarily of lower income children
and their parents, increased by 0.7% since last
month while decreasing (0.2)% from a year
ago. The total population in this program is
almost 900,000.

The 3-month average count of the
Department of Corrections (ADC) inmate
population increased to 40,677 inmates in
August 2013. Relative to the prior 3-month
period, the population has increased by 70
inmates. Compared to a year ago, the
population has increased by 827 inmates.

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 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 I
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)

Time Period

Current Value

Change From
Prior Period

Change From
Prior Year

August
July
July
August
August
August
July
Jun-Aug
Jun-Aug

8.3%
25,052
46,248
2.49 million
154,900
125,200
41.2
$44.2 million
$160.0 million

0.3 %
13.0%
11.6%
1.6%
(1.1)%
(1.5)%
(1.4)%
4.0%
(1.5)%

0.0%
(9.1)%
(27.6)%
2.0%
(0.8)%
4.7%
0.2%
20.0%*
9.1%*

May-July
May-July

1,785
580

(1.9)%
(2.1)%

8.9%
145.8%

June
June

8,594
1,261

(12.7)%
(21.6)%

(7.1)%
(5.8)%

June
June
June

$190,000
$125,000
137.36

2.7%
2.5%
1.8%

26.7%
38.9%
19.8%

August

6,881

(4.3)%

(58.0)%

August
June
July
June

21,382
3.49 million
$45.58
$4.88

6.6%
(0.7)%
(7.1)%
6.6%

2.1%
(0.2)%
4.6%
17.9%

3rd Quarter 2013
July
May-Jul
1st Quarter 2013
July 1, 2012
September

July
July
Jun-Aug

72.5
182.15
3.3%
$238.0 billion
6.55 million
1,285,017
885,667
72,033
148,881
6,773
39,303
54,087
68,273
36,599
1,109,095
40,677

4.2%
0.3%
0.4%
(1.5)%
N/A
0.7%
0.7%
(1.5)%
(0.9)%
(2.9)%
4.1%
0.4%
0.6%
1.9%
0.2%
70 inmates

N/A
2.5%
0.9%
2.5%
1.3%
(0.8)%
(0.2)%
(28.1)%
(1.8)%
(25.8)%
106.5%
2.4%
6.3%
(9.1)%
(0.9)%
827 inmates

June
June

17,718
25,343

(30)
15

(467)
(277)

2nd Quarter 2013
(2nd Estimate)
August
July
May-July
August

$15.7 trillion

2.5%

1.6%

81.5
96.0
$5.02 billion
233.5

0.6%
0.6%
5.4%
0.1%

33.0%
3.1%
21.5%
1.5%

* Excludes the temporary 1¢ increase that expired at the end of May 2013.

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2013

JLBC Meeting
At its August 20, 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 of expenditure plans from the
Automation Projects Fund for 3 information technology (IT)
projects:
1)
2)
3)

$3.5 million for the Arizona Strategic Enterprise
Technology (ASET) Office in the Arizona
Department of Administration;
$8.0 million to replace the Adult Inmate
Management System at the Arizona Department
of Corrections (ADC); and
$3.4 million for projects related to the Arizona
Learning and Accountability System (AELAS) at
the Arizona Department of Education (ADE).

The Committee added technical provisions to its
favorable review.
Arizona Department of Corrections – Review of FY 2013
Bed Capacity Report – The Committee gave a favorable
review of the Department of Corrections’ FY 2013 bed
capacity report, which outlined the state’s prison bed
surplus/shortfall by classification level under various
methodologies.

During FY 2013, the department reduced its total
operating capacity by (179) beds, from 41,989 to 41,810.
During the fiscal year, the inmate population increased by
809 from 39,877 to 40,686. The medium and close custody
populations represented the majority of the increased
population, and the department shifted resources from
minimum custody units to meet the needs of the medium
and close custody populations.
Attorney General – Review of FY 2011 and FY 2012
Uncollectible Debts – The Committee gave a favorable
review of the Attorney General’s (AG) FY 2011 and FY 2012
listings of uncollectible debts referred to the AG by state
agencies for collection. The uncollectible debt listings
total $17.2 million for FY 2011 and $30.4 million for FY 2012.
Arizona Board of Regents – Review of FY 2014 Tuition
Revenues – The Committee gave a favorable review of
the Arizona Board of Regents’ expenditure plan to use
tuition revenue amounts greater than the amounts
appropriated by the Legislature and all non-appropriated
tuition and fee revenue for FY 2014.
Arizona Department of Environmental Quality – Review of
Vehicle Emissions Contract Modification – The Committee
gave a favorable review to proposed technical changes
in the Department of Environmental Quality’s Vehicle
Emissions Inspection contract with a private vendor.

JCCR Meeting
At its August 20, 2013 meeting, the Joint Committee on
Capital Review considered the following issues:

security systems and replaces obsolete locking and control
systems.

Arizona Department of Administration – Review of FY 2014
Building Allocation Plan – The Committee gave a
favorable review to the Arizona Department of
Administration’s (ADOA) proposed Building Renewal
Allocation Plan totaling $9.0 million. The plan will fund a
variety of projects including fire alarm repairs, HVAC and
elevator replacements and new roofing.

Arizona State Schools for the Deaf and the Blind – Review
of FY 2014 Residential Dormitory Renovation Plan – The
Committee gave a favorable review to the $1.0 million FY
2014 plan that will fund the renovation of residential halls
on the Tucson campus.

Arizona Department of Corrections – Review of the Arizona
State Prison Complex (ASPC) – Yuma Cheyenne Building
Repair Plan – The Committee gave a favorable review to
the Arizona Department of Correction’s (ADC) proposed
$8.0 million building repair project plan for the Cheyenne
unit in Yuma
The plan will permit ADC to reopen 2 buildings that had
water damage.
Arizona Department of Corrections – Review of the FY 2014
Building Renewal Allocation Plan – The Committee gave a
favorable review to the $5.0 million FY 2014 Building
Renewal Allocation Plan, which funds perimeter electronic

Arizona State Parks Board – Review of FY 2014 States Parks
Revenue Fund and State Lake Improvement Fund Capital
Expenditures – The Committee gave a favorable review of
the $2.9 million FY 2014 Capital Expenditure Plan. Of that
amount, $1.8 million provides for new construction and
building renewal, $730,000 funds compliance measures
mandated by the Arizona Department of Environmental
Quality, and $325,000, which is designated as an
emergency contingency allocation, pays for
miscellaneous repairs and replacements at parks that
allow the use of motorized boats. The favorable review
included other technical provisions for the emergency
contingency allocation.
Northern Arizona University – Review of Housing Indirect
Financing Projects Addendum – The Committee gave a

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2013

JCCR Meeting

(Continued)

favorable review to Northern Arizona University’s (NAU)
addendum to a ground lease agreement with
American Campus Communities that the Committee
previously reviewed in 2011. The initial agreement
provided new student housing facilities on the Flagstaff
campus for a total of $68.0 million. The addendum
allows for 2 additional residence wings on the Flagstaff
campus for an extra $24.7 million. These costs are
funded by a private vendor who operates the facilities
and collects rent.

Arizona State University – Review of 3 Bond Projects – The
Committee gave a favorable review to Arizona State
University’s (ASU) request of $33.3 million in University
Lottery revenue bond issuances to fund the following 3
projects at all ASU campuses: building renewal and
campus infrastructure, classroom renovations, and
research laboratory renovations. The favorable review
included standard university financing provisions.

Summary of Recent Agency Reports
Arizona Board of Regents – Report on University
Retention and Graduation Rates – Pursuant to A.R.S. §
15-1626, the Arizona Board of Regents (ABOR) is required
to submit an annual report on retention and graduation
rates at each university campus. Prior to 2013, ABOR
reported retention and graduation rates based on the
federal government’s definition, which tracks the
outcomes of first-time, full-time, degree-seeking students
after 1 year for retention rates and after 6 years for
graduation rates.
ABOR reports that this methodology captures less than
half of Arizona students who are making progress
toward a degree. The federal definition excludes
outcomes of students who begin at an Arizona
university, but transfer to another in-state or out-of-state
institution to continue their education. ABOR also states
that the federal metric does not include students who
are still enrolled in a higher education institution, but
have not yet received their degree. Under the federal
definition:




Fall 2012 retention rate reflect the percentage of
first-time, full-time, degree-seeking students who
initially enrolled in fall 2011 and who re-enrolled in
the same university in fall 2012.
o Arizona State University (ASU) 80%; Northern
Arizona University (NAU) 76%; and the University
of Arizona (UA) 80%.
Six-year graduation rates reflect the percentage of
first-time, full-time, degree-seeking students who
received their degree within 6 years of their initial fall
enrollment at the same university. The 2013 report
shows the percentage of students who enrolled in
fall 2006 who graduated from the same university
within 6 years.
o ASU 57%; NAU 49%; UA 61%.

Rather than using the federal definition, ABOR utilizes a
metric entitled the Success and Progress Rate, which
shows the outcomes of the same cohort of students who
graduated at any higher education institution, in
addition to those students who are still enrolled in higher
education after 6 years. The 2013 report shows the
percentage of students who enrolled in an Arizona

University in fall 2006 who either graduated from the
same university within 6 years, graduated from another
university within 6 years, or are still enrolled in higher
education, as shown below:

ASU 83%; NAU 72%; UA 83%.
(Art Smith)
Department of Environmental Quality – Report on Water
Quality Assurance Revolving Fund for FY 2013 – 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 2013 expenditures at $11.2
million. Unexpended funds at the end of FY 2013 totaled
$9.0 million.
At the end of FY 2013, there were 34 sites on the WQARF
Registry. During FY 2013, DEQ removed its first site from
the registry after completing its remedy. The department
conducted remediation pilot studies at 2 sites, and initial
results at one site showed promise of reduced cleanup
times.
DEQ prioritized sites where treatment systems were
actively operating and curtailed other WQARF activities
(groundwater monitoring, feasibility studies, design and
construction of remediation systems). In FY 2014,
program expenditures for the 37 listed WQARF site
budgets that remain active are projected to be $8.0
million. (Micaela Larkin)
Arizona Department of Homeland Security – Report on
Homeland Security Funding – Pursuant to A.R.S. § 414255, the Arizona Department of Homeland Security has
submitted an annual report detailing grant allocations
and expenditures for Homeland Security grants from
Federal Fiscal Year (FFY) 2009 through FFY 2012. The
report indicates that 18.9% of the FFY 2012 allocation has
been expended. Information for FFY 2010 - FFY 2012 is
included in Table 6 below.

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 2013

Summary of Recent Agency Reports (Continued)
Table 6

FFY 2012 represented a decrease from the amount
received in both FFY 2010 and FFY 2011. While Arizona
received $16.6 million in FFY 2012, the state received $35.8
million in FFY 2010 and $33.2 million in FFY 2011,
respectively. Of the funds received, 97.1% have been
expended for FFY 2010, and 71.9% have been expended
for FFY 2011. (Krista MacGahan)

Awards and Expenditures by Homeland Security Grant Recipients
FFY 2010
$ 5,123,100
30,629,200

FFY 2011
$ 3,591,700
29,588,200

FFY 2012
$ 1,897,000
14,738,900

Total Awards

$35,752,300

$33,179,900

$16,635,900

State Expenditures
Local Government
Expenditures
Total Expenditures

$ 4,639,900

$ 2,424,600

$

30,071,600
$34,711,500

21,445,700
$23,870,300

2,719,000
$ 3,151,400

State Awards
Local Government Awards

Percentage of Total Awards
Currently Expended

97.1%

71.9%

432,400

Supreme Court – Report on Current and Future Automation
Projects – Pursuant to a General Appropriation Act
footnote, the Administrative Office of the Courts (AOC)
has provided its FY 2014 report to the JLBC on current and
future automation projects coordinated by the AOC. The
AOC estimates total state automation expenditures in FY
2014 will be approximately $21.7 million. Of this amount,
approximately $5.4 million, or 25%, will be spent on 5
ongoing projects; $9.8 million, or 45%, will be spent on
shared infrastructure; and $6.4 million, or 30%, will be spent
on ongoing automation support in FY 2014. Of the 5
ongoing projects, the larger projects include:

18.9%

The state was allocated and the Arizona Department of
Homeland Security awarded $16.6 million in Homeland
Security grants for FFY 2012. The department reported
total expenditures of $3.2 million, leaving $13.4 million
unexpended. State agencies were awarded $1.9 million,
of which $432,400 has been expended. Local
governments were awarded $14.7 million, of which $2.7
million has been expended. The largest local grantee
was the Pima County Sheriff’s Department ($1.2 million).
The largest state grantee was the Department of Public
Safety ($1.7 million). The largest individual grant of
$974,600 went to the Pima County Sheriff’s Department
for overtime and mileage payments while working in
support of U.S. Customs and Border Protection border
security efforts.

 Update out-dated software for electronic filing
($1,912,000)

 Streamline and standardize the case management
system utilized by judges ($1,585,000)

 Update the agencywide case management system
($1,447,500)
(Eric Billings)

August Spending
August 2013 General Fund spending of $779.9 million
was $(164.1) million lower than August 2012. Year-todate, spending is $3.0 billion, or $(90.3) million below last
year.
(See Tables 7 & 8).





The Department of Education spent $(461.0) million less
than the prior year due to the timing of deferred
payments to school districts as part of the on-going $931
million rollover.
The Department of Health Services spending increased
$278.2 million more than the prior year due to technical
timing issues related to Medicaid spending.

Table 7
General Fund Spending ($ in Millions)
August 13
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

107.6
80.4
(0.1)
211.1
294.4
1.6
0.4
44.3
0.0
40.2
779.9
0.0
779.9

Change from
August 12
2.4
14.4
(4.0)
(461.0)
278.2
0.0
0.3
7.0
0.0
(1.4)
(164.1)
0.0
(164.1)

Year-to-Date
218.4
154.5
411.8
1,369.4
398.8
10.0
152.7

YTD Change
from FY 13
2.2
10.1
20.9
82.7
(38.7)
1.2
11.9

84.3
84.1

10.2
0.0

123.1
3,007.1

9.2
109.7

0.0

(200.0)

3,007.1

(90.3)

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 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
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/Superior Court
Court of Appeals
Department of Juvenile Corrections

August 13
1,532.3
84.5
1,033.3
107,575.9
3,334.1
-

Change from
August 12
(3,424.1)
9.3
504.2
2,431.9
658.2
(4.1)

Year-to-Date
3,774.5
84,119.8
146.1
1,637.7
218,357.8
4,848.3
-

YTD Change
from FY 13
(2,401.5)
9.0
168.0
2,163.0
691.3
(4.1)

184.1
2,625.0
212.3
43.6
80,422.3
2,585.3
(86.3)
211,105.4
424.1
14.6
30.0
132.9
187.1
305.3
340.1
60.7
751.1
294,434.0
538.8
50.0
171.9
2.9
704.6

128.4
(489.6)
0.8
14,350.2
(405.9)
(3,952.0)
(460,960.1)
116.0
(7,000.0)
3.8
(14.1)
86.1
8.7
181.2
128.8
(8.1)
237.2
278,216.8
327.3
3.7
125.8
1.0
347.6

240.6
5,250.0
16,116.1
85.5
154,506.7
4,318.6
411,816.1
1,369,388.7
1,186.3
32.4
139.6
190.3
557.5
431.0
589.7
124.6
1,393.3
398,824.1
845.3
118.0
343.0
7.0
1,098.9

83.6
(180.4)
5.7
10,056.3
(223.4)
20,941.3
82,692.2
400.9
(7,000.0)
(5.4)
(12.2)
16.3
103.6
(58.1)
(190.7)
13.8
166.0
(38,717.7)
25.9
31.3
180.8
(8.4)
133.7

5,220.9
1,394.0
3,395.9

3,359.1
454.1
271.0

21,283.9
2,406.1
6,570.2

803.7
70.5
(573.8)

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – SEPTEMBER 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
Phoenix Convention Center
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
Commission on Uniform State Laws
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 - JP Salaries Distribution
Other
Total
Budget Stabilization Fund Deposit
Grand Total

August 13
1,004.6
-

Change from
August 12
963.9
(5.4)

Year-to-Date
1,769.8
-

YTD Change
from FY 13
1,709.7
(9.9)

1,705.2
857.6
184.1
376.6
574.6
157.5
9.2
44.6
44.0
1,644.6
117.8
433.9
6,969.4
387.1
698.7
49.4
157.3
0.2
47.0

505.6
130.5
31.7
(67.8)
73.1
78.6
2.6
12.0
(44.0)
(20.6)
55.7
292.2
3,174.5
292.4
(2,223.8)
32.9
(137.9)
(5.6)
47.0

3,050.5
1,827.4
333.6
1,071.3
1,217.4
253.9
17.9
20,449.0
413.0
44.0
10,049.2
1,779.5
374.3
592.3
11,534.1
152,699.2
1,406.4
67.1
322.0
0.2
47.0

354.4
344.7
47.6
33.7
166.7
0.2
(7.4)
14,854.0
(69.6)
(44.0)
1,195.2
86.6
282.2
1,574.2
11,875.7
(2,284.3)
2.0
(307.7)
(9.1)
47.0

824.3
18,480.1
7,054.2
17,920.6
431.1
795.7
85.4
63.7
779,929.2
779,929.2

638.6
2,169.2
1,080.2
3,122.2
(31.5)
126.4
5.3
(44.5)
(164,053.2)
(164,053.2)

917.1
36,868.8
13,125.0
33,382.3
895.4
1,631.7
171.3
63.7
3,007,122.6
3,007,122.6

408.2
4,518.4
1,273.4
4,016.3
15.6
264.5
2.8
(44.5)
109,677.4
(200,000.0)
(90,322.6)

Tracking Arizona’s Recovery

Total Non-Farm Employment
2,800

September 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

2003

2004

2006

2007

2008

2009

2010

2011

JUL

JAN

JULY

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

JAN

JUL

2005

JLBC

Initial Claims for Unemployment Insurance

JAN

JUL

JAN

JUL

JAN

JUL

2002

JAN

JUL

JAN

JAN

2,100

2012 2013

2

Not seasonally adjusted

State Sales Tax Collections – Retail Category
$225

$ in Millions

$200

$175

$150

2001

JLBC

2002

2003

2004

2005

2006

2007

Not seasonally adjusted

2008

2009

2010

2011

Jul-13

Jan-13

Apr-13

Jul-12

Oct-12

Jan 12

Apr 12

Oct 11

July 11

Jan 11

Oct 10

Apr 11

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

Jan 07

Apr 07

Oct 06

$100

July 06

$125

2012 2013

3

JLBC

Excludes temporary 1 ¢ sales tax

4

State Sales Tax Collections – Contracting Category

Single Family Building Permits

$100

$ in Millions

$75

$50

Jul-13

Jan-13

Apr-13

Jul-12

Oct-12

Jan 12

Apr 12

Oct 11

Jan 11

July 11

Oct 10

Apr 11

July 10

Jan 10

Apr 10

Oct 09

Jan 09

July 09

Oct 08

Apr 09

July 08

Jan 08

Apr 08

Oct 07

Jan 07

Apr 07

July 07

Oct 06

$0

July 06

$25

2001
Excludes temporary 1 ¢ sales tax

JLBC

5

2002

2003

2004

JLBC

2005

2006

2007

2008

2009

2010

2011

2012 2013

6

12-Month Moving Sum

Maricopa County Pending Foreclosures

Economic Activity Index

60,000

50,000

40,000

30,000

20,000

10,000

JLBC

2003

2006

2008

2009

2010

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

2012

JUL

JAN

JAN

2011

JULY

JUL

JUL

JAN

JAN

JUL

JAN

JUL

JUL

2007

JAN

JAN

JUL

JUL

2005

JAN

JUL

2004

JAN

JAN

JUL

JUL

2002

JAN

JAN

0

2013

7

2001

JLBC

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

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.

2013

8