JLBC - Monthly Fiscal Highlights October 2014 Summary 1716 W. Adams Phoenix, AZ 85007 Phone: (602) 926-5491 Fax: (602) 926-5416 September marked the 6th consecutive month of revenue collections falling below the enacted budget forecast. September General Fund revenues were $867.1 million, which represented an increase of 8.1% above September 2013. A high September growth rate had been anticipated due to artificially low September 2013 collections. During September 2013, the state paid a $20 million Corporate Income Tax refund. Given the one-time nature of this refund, revenues were expected to rebound from this low base in the prior fiscal year. www.azleg.gov/jlbc.htm “Year-to-date, General Fund revenues are 3.3% above the prior year and are $(64.5) million Overall, September collections were $(5.5) million below the enacted budget forecast. Slow sales tax growth of 2.6% contributed to the September shortfall. Year-to-date, General Fund revenues are 3.3% above the prior year and are $(64.5) million below the forecast. In comparison to revenue of $867.1 million, September 2014 spending was $779.3 million which is an increase of $56.2 million from the prior year. Fiscal year-to-date, General Fund revenues of $2.17 billion have been offset by $3.94 billion of expenditures. below the forecast” October FAC Summary The Finance Advisory Committee (FAC) met on October 7, 2014 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 JLBC Staff provided the FAC with a presentation on updated FY 2015 – FY 2018 budget projections. Based on a combination of slower than expected revenue growth, the state’s existing structural shortfall, and the Superior Court ruling in the K-12 inflation litigation, the state is projected to have significant shortfalls beginning in FY 2015. The projected shortfall is $(520) million in FY 2015 and $(1.0) billion in FY 2016. For more information, please see the JLBC Staff Revenue and Budget Update and the complete October FAC meeting materials. Table of Contents Summary  October FAC Summary ......................................1  Phoenix Convention Center Report ................2  Dept. of Child Safety Report .............................2  Child Safety Staff Report ....................................2  U.S. Dept. of Defense Excess Property .............2 September Revenues .............................................3 This report has been prepared for the Arizona Legislature by the Joint Legislative Budget Committee Staff on October 20, 2014. The state’s fiscal health can also be measured by the operating fund balance. The state pays its bill out of the operating fund balance, which consists of the General Fund and certain dedicated funds. The operating balance as of mid-October 2014 is $1.5 billion. In addition, the state’s Budget Stabilization Fund has a balance of $456.1 million. Monthly Indicators ..................................................5 JLBC Meeting ...........................................................8 JCCR Meeting ..........................................................9 Summary of Recent Agency Reports  AHCCCS – Immigration Verification ..............11  AHCCCS – Uncompensated Care Report ...11  DCS – Internet Crimes Against Children ....... 11  Corrections – Transition Release Program .... 11  ACJC – Anti-Racketeering Fund Report....... 11  DES – Child Care Expenditure Report ........... 12  DES – Developmentally Disabled Report ..... 12  DES – Unemployment Insurance Fund .......... 12  DEQ – Water Quality Assurance Fund .......... 12  DHS – Serious Mental Illness Report................ 13  ADOT – MVD Wait Times Annual Report ....... 13  Universities – Research Income ...................... 13 September Spending ........................................... 14 Tracking Arizona’s Recovery ............. Appendix A 2 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 Summary (Continued) Phoenix Convention Center Report The Auditor General recently released an analysis of the state revenue impact of the Phoenix Convention Center expansion. The analysis is required under the legislation authorizing the state to partially finance the expansion. The state funds 50% of the debt service for the $600 million expansion of the Phoenix Convention Center. Since completion of the project in January 2009, the state has made annual distributions of General Fund money to service this debt. In accordance with statute, the Auditor General contracted for an analysis to estimate how amounts of General Fund revenues resulting from the expansion project compare to debt service payments made by the state since the project’s 2009 completion. The study found that estimated General Fund revenues exceeded the state’s debt service payments by $56.9 million since construction began on the project (2004). The net increase, however, was largely due to the state’s low initial debt service payments and sales tax revenue from construction. In the last year of the study (2013), $8.8 million in added revenues from the project was $(11.6) million short of the $20.4 million in debt payments. Each year following the initial study, the Auditor General is required to update the study’s estimate. If the cumulative estimated revenues from the project fail to meet the state’s cumulative debt service, the state is to reduce its payments to the City of Phoenix by the shortfall amount. Department of Child Safety Report Pursuant to statutory requirements, the Department of Child Safety (DCS) has submitted its 1st quarter report on the backlog of inactive cases. A “backlog” case has had no documentation entered into the automated tracking system (“CHILDS”) for 60 days or more. DCS exceeded its 1st quarter goals for reducing the backlog. There were 13,024 backlog cases immediately after the Special Session on June 2. Of those cases, 11,911 were activated in the 1st quarter, well ahead of DCS’ benchmark of 5,210. The department reported 9,171 activated backlog cases in the investigation phase, or 7,882 cases above its 1st quarter benchmark. When benchmarks were established, DCS did not anticipate being far enough along in the process of reducing the backlog to provide services for backlog cases in the 1st quarter, but it provided in-home support services to 28 cases and out-of-home support services to 241 cases. The department also closed 2,518 backlog cases in the 1st quarter. (First quarter figures were labeled as preliminary.) As of September 20, 2014, DCS had 7,854 backlog cases, which consisted of 1,113 June 2 backlog cases and 6,741 post-June 2 backlog cases. Child Safety Staff Report DCS is to submit a hiring report by the 7th of each month. As of the Monthly Fiscal Highlights publication date, DCS had not yet released its October report. U.S. Department of Defense Excess Property Program The Federal Department of Defense Excess Property Program, also known as the 1033 Program, is a federal program under which military surplus is transferred to state and local law enforcement agencies. The program was originally created in Federal Fiscal Year (FFY) 1990 under the auspices of the National Defense Authorization Act of FFY 1990 and FFY 1991 when it was known as the 1208 Program and only allowed state and local law enforcement agencies to obtain surplus equipment for counter-drug activities. In FFY 1997, Congress passed the National Defense Authorization Act of FFY 1997 which expanded eligibility to all law enforcement purposes with preference given to counter-drug and counterterrorism requests. The Law Enforcement Support Office within the Defense Logistics Agency oversees the program with the help of a state coordinator (Payson Police Department in the case of Arizona) that keeps track of all of the items issued within their state. All items that are not put into use within a year and utilized for a minimum of 1 year must be returned and when an agency is finished with a particular item they are required to return it or scrap the item with DOD permission. As of August 18, 2014, 7 state agencies were participants in the program having received at least 15,579 items worth a total of $5.7 million since the inception of the program in 1990. Table 8 on page 17 provides a summary of this information. 3 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 September Revenues Table 1 General Fund Revenues ($ in Millions) September Year-to-Date FY 2015 Collections $ 867.1 $ 2,169.2 Sales Tax collections of $344.7 million were 2.6% above September of last year and $(8.0) million below the forecast for the month. Year-to-date, collections have grown by 2.3% and are $(26.1) million below forecast. The current trend of slow to modest growth remained essentially unchanged through September. Sales tax growth in each of the last 6 months has been below 5%. Table 2 below includes the major categories of the state’s sales tax, which together account for approximately 90% of total collections. As indicated in Table 2, the retail category, which makes up roughly half of sales tax collections, grew by 3.7% in September compared to the same month in the prior year. Collections from contracting activity and sales of utility services (electricity, natural gas, and water) continued to remain weak in September, with growth rates of 1.2% and 0.0% respectively. The only major sales tax category showing strong growth is restaurants and bars, with 14.8% growth in September bringing year-to-date growth to 8.4%. Table 2 Sales Tax Growth Rates Compared to Prior Year Retail Contracting Use Restaurant & Bar Utilities September 3.7% 1.2% (7.0)% 14.8% 0.0% YTD 3.7% 0.9% (2.7)% 8.4% (0.8)% Individual Income Tax net revenues were $391.2 million in September, which was 5.2% or $19.4 million more than the prior year. Collections were $2.0 million above the forecast for the month. Year-to-date, revenue has grown 2.4% over the prior year, and is $(14.6) million below the budget forecast. As indicated in Table 3, withholding was up 4.5% in September. The September increase brings withholding tax collections for the fiscal year to 1.4% over the prior year. This amount is $(15.5) million below the budget forecast. September estimated and final payments were 5.7% above last year, and were $3.1 million above forecast. Year-to-date, payments are $2.5 million above the forecast. Difference From Budget Forecast $ (5.5) $ (64.5) Difference From FY 2014 $ 64.4 $ (24.2) September refunds were (3.6)% below last year, but were $(0.8) million greater than the forecast. Year-to-date, refunds are $(1.6) million greater than the forecast. Table 3 Individual Income Tax Growth Rates Compared to Prior Year Withholding Estimated + Final Payments Refunds September 4.5% 5.7% (3.6)% YTD 1.4% 5.4% (7.6)% September Corporate Income Tax collections were $117.6 million, which was $19.7 million, or 20.2% more than September 2013. Collections for the month were $(5.7) million below the forecast. Year-to-date, net collections have grown 8.0% compared to the prior year, and are $(18.6) million below the budget forecast. During September of the prior year, the state paid a $20 million Corporate Income Tax refund. Given the one-time nature of refund, revenues were forecasted to post a significant growth rate from this low base in the previous year. Insurance Premium Tax collections were $44.0 million in September, which represents an increase of $15.0 million, or 51.6% compared to September 2013. Collections for September were $3.3 million above forecast. Year-todate collections are $0.9 million above the budget forecast. The significant increase in September collections was primarily due to growth in health insurance premiums since the January 2014 expansion of Medicaid coverage. Additionally, the timing of a deposit in the prior fiscal year artificially lowered the amount of September 2013 collections, which helped generate a larger growth rate during September 2014. The Lottery Commission reports that October ticket sales were $54.6 million, which is $(2.8) million, or (4.8)%, below sales in the prior year. Year-to-date ticket sales are $160.1 million, which is (6.7)% below last year’s sales. Highway User Revenue Fund (HURF) collections of $104.1 million in September were up $1.3 million, or 1.2% compared to September of last year. September collections were $(0.8) million below forecast. Year-todate collections are 2.3% above FY 2014. 4 Table 4 General Fund Revenue: Change from Previous Year and Budget Forecast September 2014 Current Month FY 2015 YTD (Three Months) Change From Actual September 2013 September 2014 Amount Change from Budget Forecast Percent Amount Actual Percent September 2013 September 2014 Amount Budget Forecast Percent Amount Percent Taxes Sales and Use Income - Individual - Corporate Property Luxury - Tobacco - Liquor Insurance Premium $344,660,465 $8,828,695 391,176,578 19,394,012 5.2 1,950,031 117,649,005 19,739,522 20.2 (5,663,115) 79,044 36,683 $23,224,367 0.5 976,207,416 23,266,892 2.4 (14,562,129) (1.5) (4.6) 144,176,856 10,642,336 8.0 (18,563,928) (11.4) 17.7 115,059 63.9 (1,340,917) (18.2) (261,508) (4.2) 2,164,538 (184,013) (7.8) (179,329) (7.7) 7,123,523 (279,946) (3.8) (180,981) (2.5) 15.3 883,471 0.7 1,157,705 285.9 $902,389,763 $61,355,066 Lottery 7,025,300 3,175,375 License, Fees and Permits 1,709,299 7.3 % 44,356 (2.5) % 6,007,083 -- 295,059 ($26,120,848) (11.8) 656,754 97.6 2.3 % (260,994) 697,242 Sub-Total Taxes $1,028,728,809 (33.5) 51.6 39,044 (2.3) % (977,773) 14,975,010 86.6 ($7,962,893) 1,945,050 44,017,841 Other Taxes 2.6 % 3,345,500 8.2 129,062,160 17,094,865 562,242 416.5 1,562,705 1,441,112 $2,293,163,610 $72,479,889 ($8,169,514) (0.9) % -3.3 % ($57,533,160) (2.4) % Other Revenue Interest Sales and Services Other Miscellaneous Disproportionate Share Transfers and Reimbursements Sub-Total Other Revenue TOTAL BASE REVENUE (345,083) 82.5 (16.8) 3,025,300 (790,701) 5,318 2,143 67.5 5,318 2,520,956 436,760 21.0 20,956 587,586 1,322,278 -- 0 0 -- 3,560,913 3,123,620 $15,409,372 $7,715,093 100.3 % $917,799,135 $69,070,159 8.1 % 714.3 (412,414) 0 810,913 75.6 7,025,300 (142,650) (2.0) (974,700) (12.2) (31.6) 6,498,202 (772,057) (10.6) (1,501,798) (18.8) -- 8,448 4,238 100.7 4,353,004 206,122 5.0 (41.2) 6,238,848 3,156,980 102.4 -- 0 0 0.8 29.5 4,185,405 (1,827,874) -(30.4) 8,448 (646,996) 238,848 0 (4,064,595) -(12.9) 4.0 -(49.3) $2,659,372 20.9 % $28,309,207 $624,759 2.3 % ($6,940,793) (19.7) % ($5,510,142) (0.6) % $2,321,472,817 $73,104,648 3.3 % ($64,473,953) (2.7) % (11,616,705) 8.3 Other Adjustments Urban Revenue Sharing (50,744,644) One-Time Transfers 0 Sales Tax - 1¢ Increase 0 Sub-Total Other Adjustments TOTAL GENERAL FUND REVENUE (50,744,644) (4,035,314) 0 8.6 0 0.0 (152,233,928) 0 0.0 -- 0 -- 0 (81,541,148) (100.0) 0 -- (647,826) (100.0) 0 -- 0 (4,160,975) (100.0) 0 -- 0 0.0 % 0 0.0 % (4,683,140) 10.2 % (152,233,928) $867,054,491 $64,387,019 8.0 % ($5,510,142) (0.6) % $2,169,238,889 $104,092,470 $1,268,107 1.2 % ($788,380) (0.8) % $313,829,122 (97,318,828) 177.2 % ($24,214,180) (1.1) % ($64,473,953) (2.9) % Non-General Funds Highway User Revenue Fund $6,928,963 2.3 % $790,961 0.3 % 5 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 Monthly Indicators NATIONAL 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 4.6% in the second quarter of 2014. This represents a 0.4% upward revision from the last second quarter estimate and a strong turnaround from a (2.1)% decrease during the first quarter of the year. Growth during the current was primarily due to increases in inventory investment, exports, consumption, nonresidential fixed investment, state and local government spending, and residential fixed investment. Some of the large increase in the second quarter likely represents a rebound following a harsh winter and other temporary issues in the first quarter. The Conference Board’s U.S. Consumer Confidence Index dropped by (7.9)% in September, but remained 7.2% above a year earlier. This month’s decrease undid much of the growth streak that occurred in the index over the prior 4 months. The monthly drop was widespread, mostly strongly driven by the short term outlook on labor markets rather than the immediate economic environment. The Conference Board’s U.S. Leading Economic Index increased by 0.2% in August and 6.8% since August 2013. This month marked the sixth consecutive monthly increase in the index, albeit at a slower pace. Of the index’s 10 components, 4 improved while 6 remained the same or decreased. Movement in interest rates was the largest positive contributor to the index while initial unemployment claims was the biggest drag. According to the U.S. Department of Commerce Bureau of Economic Analysis, the U.S. Personal Consumption Expenditure Price Index (PCEPI) was unchanged in August from the prior month while growing 1.5% above August 2013 levels. While the year-over-year growth rate has dipped since reaching 1.7% in May, it is still well above the 1.0% rate in February. The PCEPI is the Federal Reserve Bank’s preferred inflation measure for determining the pace at which monetary stimulus to the economy is reduced. The Bank generally aims to maintain annual inflation of 2% over the medium term. In October, the Bank will end its purchase of bonds to stimulate the economy. The Fed continues to issue shortterm loans at nearly 0% interest rates. ARIZONA The Federal Reserve Bank of Philadelphia’s coincident index gauges current economic activity in each state. The index combines 4 indicators: employment, average hours worked in manufacturing, unemployment rate, and inflation-adjusted wages. Arizona’s coincident index increased by 2.5% compared to August 2013. Over the same time period, the U.S. coincident index increased by 3.0%. See Appendix A – Tracking Arizona’s Recovery for additional historical information. Housing The total housing inventory in the Greater Phoenix area is 12.8% larger than September of last year, suggesting a slower market. This is evidenced by homes being listed longer before selling. In September 2013, homes were on the market an average of 62 days. In September 2014, homes were on the market an average of 84 days. The median price of a single family home remained the same at $200,000 in September compared to August. The price is 9.5% higher than September of last year. Single family housing construction continues to weaken, while multi-family construction continues to expand. Arizona’s 12-month total of single-family building permits is 17,371, or (1.4)% less than a year ago. The comparable single-family permit growth rate for the entire U.S. is 2.4% above last year. See Appendix A – Tracking Arizona’s Recovery for historical information. In contrast, the 12-month total of multi-family building permits has increased significantly since last year. Arizona’s total of 9,133 multi-family building permits is 48.3% above 2013. Arizona’s rate of increase is greater than the comparable multi-family permit growth for the U.S. as a whole which is 12.8% above 2013. Employment The state’s regular unemployment rate decreased from 7.1% in August to 6.9% in September. This monthly decrease reverses some of the growth in the jobless rate during the 3 prior months. The U.S. unemployment rate decreased in September, going from 6.1% to 5.9%. According to the latest employment report released by the Department of Administration, the state added 28,800 Nonfarm jobs in September compared to the prior month. This was 4,800 jobs above the average 6 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 Monthly Indicators (Continued) increase of 24,000 jobs for September in the prior 10 years. Almost all of the monthly net gain (26,900) was due to an increase in government payrolls as more public schools continued to resume their classes in September. About 99% of August’s employment increase (or 28,400 jobs) was attributable to state and local education. The private sector added 1,900 jobs between August and September, which is slightly below the average increase of 2,200 jobs for September in the prior 10 years. The Proposition 204 childless adult category accounts for much of this growth above forecast. In January, the state started accepting new enrollment in this program. Since that time, the childless adult population has increased by 198,744 to reach a level of 266,514. This is compared to a budgeted level of 195,478 for October. The state share of the Proposition 204 cost is paid through a hospital assessment and not the General Fund. In terms of specific industries, 6 of 11 sectors gained jobs, 3 lost jobs and 2 experienced no change from August to September. The largest month-over-month gains in private industries were concentrated in Education and Health Services (+2,600), Leisure and Hospitality (+1,100), and Professional and Business Services (+1,000). The construction industry lost 2,900 jobs during the month, which was worse than the average 10-year decrease (1,200) and average post-recession decrease (-1,100) for the sector. In October the number of childless adults increased by 8,345, or 3.2% above September. The October monthly gain is the lowest of the calendar year. The state also opted to expand adult Medicaid coverage to 133% of FPL. The 100% - 133% enrollment increased by 1,537 in October and now totals 30,014 individuals enrolled since January 2014 (versus a budgeted caseload of 43,308). The federal government is currently paying 100% of this cost. Compared to the same month in the prior year, nonfarm employment in September was up 2.1%, or 53,200 jobs. September’s growth is down from a reading of 2.5% in July, but still marks the third consecutive month in which growth has exceeded 2.0%, year-over-year. The traditional acute care AHCCCS population of lower income children and their parents grew by 4,633 in October to a level of 987,424 (versus a budgeted caseload of 997,653). The October level represents an increase of 0.5% since last month and 11.2% since last year. Jobs have increased in all industries since September 2013, except in construction (-8,300). About 92% of gains since last year have come from 4 of the private serviceproviding sectors of the Arizona economy: Education and Health Services (+17,200), Professional and Business Services (+14,400), Leisure and Hospitality (+9,200), Financial Services (+8,400). In the last 12 months, there were 45,757 reports of child maltreatment which is an increase of 3.6% from the prior year, based on preliminary data from the Department of Child Safety. There were 16,636 children in out-ofhome care in July 2014, an increase of 0.5% from June. Year-over-year, the number of out-home-children has grown by 13.9%. In July, the Average Weekly Hours worked by individuals in Arizona’s private sector was 34.3 hours. This workload is (1.2)% below that seen during August 2013. The Average Hourly Earnings received by these private sector workers was $22.78, which is (1.7)% below the average in August 2013. The Arizona Department of Corrections (ADC) recorded an inmate population of 42,087 for September 2014. The population grew just under 0.1% from August. There was an increase of 1,229, or 3.0%, in prisoners since last September. State Agency Data At the beginning of October, the total AHCCCS caseload was 1.6 million members. Since the federal health care expansion in January, the overall AHCCCS population has grown by 342,394 members. The enacted budget assumed the AHCCCS population would grow by 281,150 members through October 2014. Total monthly enrollment growth increased 1.2% in October, a deceleration from growth of 1.9% in September, 2.6% in August, and 3.0% in July. New enrollment from the expansion appears to be gradually phasing down, which would continue to reduce the pace of monthly caseload increases. There were 30,389 TANF recipients in the state in August, representing a 1.9% increase in monthly caseloads over July. The year-over-year number of TANF recipients has declined by (19.4)%. The statutory lifetime limit on cash assistance is 24 months. The Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, provides assistance to low-income households to purchase food. This August, there were 1.1 million food stamp recipients in the state, representing a 0.4% increase over July caseloads. Compared to the same month last year, food stamp participation declined by (5.4)%. 7 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 Table 5 MONTHLY INDICATORS Indicator Arizona Employment - Regular Unemployment Rate - Total Unemployment Rate (discouraged/underemployed) - Initial Unemployment Insurance Claims - Unemployment Insurance Recipients - Non-Farm Employment - Total Manufacturing Construction - Average Weekly Hours, Private Sector - Average Hourly Earnings, Private Sector Sales - Retail Taxable Sales Motor Vehicles/Misc. Auto Furniture/Home Furnishings Building Material/Lawn & Garden Building - Residential Building Permits (12-month avg) Single-family Multi-family - Maricopa County/Other, Home Sales (ARMLS) Single-Family (Pending Sales) - Maricopa County/Other, Median Home Price (ARMLS) Single-Family (Pending Sales) - Phoenix S&P/C Home Price Index (2000 = 100) - Maricopa Pending Foreclosures - Greater Phoenix Total Housing Inventory, (ARMLS) Tourism - Phoenix Sky Harbor Air Passengers - National Park Visitors - State Park Visitors - Revenue Per Available Hotel Room General Measures - Arizona Consumer Confidence Index (1985 = 100) - Arizona Coincident Index (July 1992 = 100) - Arizona Leading Index -- 6 month projected growth - Arizona Personal Income - Arizona Population - State Debt Rating Standards & Poor’s/Moody’s Outlook Agency Measures - AHCCCS Recipients Acute Care Traditional Prop 204 Childless Adults Other Prop 204 Adult Expansion Kids Care I Kids Care II Long-Term Care – Elderly & DD Emergency Services - Department of Child Safety (DCS) Annual Reports of Child Maltreatment (12-month total) DCS Out-of-Home Children Filled Caseworkers (1,406 Budgeted) - ADC Inmate Growth - Department of Economic Security - TANF Recipients - SNAP (Food Stamps) Recipients - Judiciary Probation Caseload Non-Maricopa Maricopa County United States - Gross Domestic Product (Chained 2009 dollars, SAAR) - Consumer Confidence Index (1985 = 100) - Leading Indicators Index (2004 = 100) - Consumer Price Index, SA (1982-84 = 100) - Personal Consumption Price Index (2009 = 100) Change From Prior Period Time Period Current Value September 2nd Q 2014 August June September September September August August 6.9% 15.9% 18,501 42,214 2.58 million 155,500 117,600 34.3 $22.78 (0.2)% (0.2)% (26.5)% 7.3% 1.1% (0.3)% (2.4)% 0.3% (0.3)% (1.1)% 0.2% (9.8)% 1.8% 2.1% 0.3% (6.6)% (1.2)% (1.7)% July July July $851.1 million $334.5 million $311.0 million (9.0)% 16.4% (2.5)% 1.0% (3.8)% 3.5% August August 17,371 9,133 (1.0)% 5.7% (1.4)% 48.3% September 4,781 0.5% (15.9)% September $200,000 0.0% 9.5% July September September 147.35 6,190 26,379 0.3% (0.4)% (2.5)% 5.7% (31.5)% 12.8% August May July August 3.46 million 1,177,331 199,996 $49.53 (3.6)% 21.9% 16.4% (4.1)% 4.6% (4.6)% (17.8)% 8.9% 3rd Q 2014 August August nd 2 Q 2014 July 2013 71.6 189.25 3.5% $254.9 billion 6.63 million (4.7)% 0.2% (0.2)% 5.7% N/A (1.2)% 2.5% 0.8% 4.2% 1.2% Dec 09/July 10 Nov 13 AA- / Aa3 Positive Change From Prior Year N/A N/A N/A N/A October 1,600,536 987,424 266,514 168,647 30,014 1,945 0 56,071 89,921 1.2% 0.5% 3.2% 1.1% 5.4% (1.1%) 0.0% 0.3% 2.7% July 2014 July August September 45,757 16,636 1,306 42,087 0.9% 0.5% .25 0.1% 3.6% 13.9% .115 3.0% August August 30,389 1,058,463 1.9% 0.4% (19.4)% (5.4)% June June 17,692 25,568 193 556 25.6% 11.2% 276.2% 14.0% (69.7)% (100.0)% 3.4% 33.6% (26) 225 2nd Q, 2014 $16.0 trillion 2.6% 4.6% September August August August 86.0 103.8 237.4 109.1 (7.9)% 0.2% (0.2)% 0.0% 7.2% 6.8% 1.7% 1.5% 8 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 JLBC Meeting At its September 30, 2014 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: A. $3.3 million for enhancements to the state’s IT infrastructure. They include project management; enterprise architecture; E-Government; and security, privacy, and risk upgrades; B. $2.9 million for improvements to the State Data Center at the Arizona Strategic Enterprise Technology (ASET) Office in the Arizona Department of Administration; and C. $2.8 million for 6 security enhancement projects at the ASET Office. The Committee added technical provisions to its favorable review. Arizona Department of Corrections – Review of FY 2014 Bed Capacity Report – The Committee gave a favorable review of the Department of Corrections’ FY 2014 bed capacity report, which outlined the state’s prison bed surplus/shortfall by classification level under various methodologies. During FY 2014, the department increased its total operating capacity by 605 beds, from 41,810 to 41,415. Despite these additional beds, the FY 2014 operational surplus decreased by 482 beds, from 1,124 to 642 due to the growth in the inmate population. During the fiscal year, the inmate population increased by 1,087 from 40,686 to 41,773. In FY 2014 the department opened 500 permanent medium custody beds and anticipates an additional 500 permanent medium and maximum custody beds will open in FY 2015. The department also plans to add 626 close custody beds by shifting resources from the maximum security population. Attorney General – Review of FY 2013 Uncollectible Debts – The Committee gave a favorable review of the Attorney General’s (AG) FY 2013 listing of uncollectible debts referred to the AG by state agencies for collection. The uncollectible debt listings total $44.9 million for FY 2013. Attorney General – Review of Quarterly Reports on Legal Settlements – The Committee gave a favorable review of the $455,100 allocation of legal settlements for the fourth quarter of FY 2014. Of the $455,100 total, $63,900 went to the Consumer Protection – Consumer Fraud (CPCF) Revolving Fund, $227,900 to the Restitution Subaccount, $27,100 to the Remediation Subaccount, and $136,000 to the Antitrust Enforcement (AE) Revolving Fund. Monies in the CPCF Revolving Fund are used to pay for operations of the Consumer Protection Division. Monies in the Restitution Subaccount are used to compensate identifiable entities who suffer economic loss from consumer fraud. Monies in the Remediation Subaccount are deposited when there are no identifiable entities resulting from consumer fraud. Monies in the AE Revolving Fund cover the AG’s antitrust enforcement costs. AHCCCS/Department of Economic Security/Department of Health Services – Review of Proposed Capitation Rate Changes – The Committee gave a favorable review of AHCCCS’ proposed capitation rate changes for the state’s Medicaid system. In the aggregate, the proposed rates are expected to cost $4.0 million more than the budgeted amounts for rate adjustments. AHCCCS – Review of Seriously Mentally Ill Interagency Agreement with DHS– The Committee gave a favorable review of the interagency agreement with the Department of Health Services (DHS) for providing integrated acute care and behavioral health services for more than 17,000 Medicaid-eligible Seriously Mentally Ill (SMI) adults in Maricopa County. The integrated capitation rate for integrated SMI adults in contract year ending (CYE) 2015 is $2,398 per month, a decreased monthly capitation rate of (1.1)% from the prior CYE. Of that amount, approximately $527 is paid through the AHCCCS budget for acute care services and $1,872 is paid through the DHS budget for behavioral health services. In FY 2015, AHCCCS will send DHS approximately $114.1 million in total funds to fund its portion of the integrated SMI services rate. The favorable review included the following provisions: 1) AHCCCS submit findings on the integration of care or health outcomes for all Medicaid populations in the integrated pilot; and 2) DHS account for the SMI integrated acute care monies separately from all other monies it receives from AHCCCS in order to highlight the availability of funds. 9 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 JLBC Meeting (Continued) Department of Child Safety – Review of Transition Funding Expenditure Plan – The Committee gave a favorable review to an additional $2.9 million in transition funding for the Department of Child Services (DCS) in the first 6 months of FY 2015. Combined with the $3.6 million reviewed at the Committee’s June meeting, the total expenditure plan is $6.5 million. The 2nd quarter plan continues funding of 40 administration and technology staff for another quarter and allows DCS to purchase mobile field equipment and related technology services. The favorable review included the provision that DCS submit to the Committee the number of filled administrative positions and the yearto-date transition expenditures 30 days after the end of each calendar quarter. Department of Economic Security – Review of Transition Funding Expenditure Plan – The Committee gave a favorable review to $500,000 in transition funding for the Department of Economic Services (DES) in FY 2015 for the planning phase of relocating the DES Data Center. In this phase, DES will assess how to move the Data Center. The favorable review included the following provisions: 2) DCS submit more detailed information regarding the split between State and Federal funding for the Data Center by October 31, 2014 and address how equipment purchase and leasing arrangements will affect federal financial participation; and 3) The favorable review does not constitute Committee endorsement of the DES’ full $7.0 million plan. Arizona Board of Regents – Review of FY 2015 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 nonappropriated tuition and fee revenue for FY 2015. JLBC Staff – Review of Agency Legal Services Charges – The Committee gave a favorable review of the fund source reports for the Attorney General legal services charges. 1) DCS receive necessary ADOA approvals for information technology expenses before spending any amount above the $500,000 planning monies; JCCR Meeting At its September 30, 2014 meeting, the Joint Committee on Capital Review considered the following issues: University of Arizona - Review of Bioscience Partnership Building (Phoenix) - The Committee gave a favorable review to the UA’s $136.1 million University Lottery Revenue Bond issuance to fund construction of the 10story 245,000 square foot Bioscience Partnership Building, located in Phoenix, to house new research laboratories. In terms of debt service, 80% of the cost will be paid with Lottery revenues and 20% will be paid from system revenues. The favorable review includes the standard university financing provisions along with an additional provision that the UA provide the final debt service schedules for the projects as soon as they are available. University of Arizona - Review of Bioscience Research Laboratories Building Project (Tucson) - The Committee gave a favorable review to the UA’s $99.5 million revenue bond issuance to fund construction of a Bioscience Research Laboratories Building project in Tucson. The project includes new construction of a 124,200 gross square foot building to expand the research space of the BIO5 Institute along with utilities installation and the remodeling of another building. The total project cost will be $101.0 million with funding coming from $89.8 million in system revenue bonds, $9.7 million in University Lottery Bonds, and $1.5 million in Proposition 301 funds. The favorable review includes the standard university financing provisions along with an additional provision that the UA provide the final debt service schedules for the projects as soon as they are available. Arizona Board of Regents - Review of FY 2015 Building Renewal Allocation Plan - The Committee gave a favorable review to ABOR’s FY 2015 Building Renewal Allocation Plan totaling $3.0 million in which ASU was allocated $1.1 million for 2 projects, NAU was allocated $336,000 for 2 projects, and the UA was allocated $1.6 million for 4 projects. Department of Transportation - Review of FY 2015 Building Renewal Allocation Plan - The Committee gave a favorable review to ADOT’s FY 2015 Building Renewal Allocation Plan totaling $3.4 million. The plan calls for $3.2 million from the State Highway Fund for 133 projects and $204,900 from the State Aviation Fund for 25 projects, with a contingency of $2,000. The favorable review includes the provision that ADOT shall report any 10 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 JCCR Meeting (Continued) project reallocations above $100,000 to the JLBC Staff. The plan will fund a variety of projects including HVAC, electrical, plumbing, roof repairs and replacement, and remodeling. Coconino Association for Vocations, Industry and Technology - Consider Approval of Proposed JTED Lease - The Committee approved the Coconino Association for Vocations, Industry and Technology’s plan to lease a 680 square foot classroom from the Flagstaff Unified School District (FUSD) in order to establish a “leased centralized campus” in a vacant wing of FUSD’s Sinagua Middle School for the current school year. The one classroom would be used to offer a new program called Fashion Design and Merchandising where students from multiple high schools could attend. Arizona Department of Administration - Consider Recommending FY 2015 Full Rent Exemption - The Committee recommended a full rent exemption of $48,100 in FY 2015 for the Arizona Geological Survey. Arizona State Parks Board - Review of FY 2015 State Parks Revenue Fund and State Lake Improvement Fund Capital Expenditures - The Committee gave a favorable review to the Arizona State Parks Board’s $1.9 million expenditure plan for FY 2015 capital improvements. Of that amount, $1.5 million from the State Lake Improvement Fund would be used for new construction and $350,000 from the State Park Revenue Fund would be used for building renewal. The plan would fund a variety of projects including restrooms, lift stations, ramps, and roof repairs. The favorable review included the following provisions: A) The Parks Board shall report on their final operating plans for the Tonto Natural Bridge Lodge prior to public opening, including the price schedule, their projected revenue, and the use of concessionaire or internal staff. The Parks Board is to report the progress on implementing all projects to JCCR by February 27, 2015 and June 30, 2015. 11 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 Summary of Recent Agency Reports AHCCCS – Report on Systematic Alien Verification for Entitlements Program – Pursuant to A.R.S. § 36-2903.03, the Arizona Health Care Cost Containment System (AHCCCS) provided its latest report on the collection and verification of documentation associated with the Systematic Alien Verification for Entitlements (SAVE) program. AHCCCS, in conjunction with the Department of Economic Security (DES), verified the immigration status of 71,453 individuals in FY 2014. During this period, AHCCCS and DES referred 25 individuals (17 citizens, 8 non-citizens) for prosecution for fraudulent schemes, prohibited acts, theft, or forgery. AHCCCS and DES did not identify any fraudulent documents utilizing the SAVE program during FY 2014. (Andrew Smith) AHCCCS – Report on Uncompensated Hospital Costs and Hospital Profitability – Pursuant to A.R.S. § 362903.08, AHCCCS is required to report on the uncompensated hospital costs and hospital profitability for Arizona hospitals for the previous fiscal year. AHCCCS used data from the 2012 and 2013 Uniform Accounting Reports (UAR), statutorily required audited financial statements. From 2012 to 2013, total uncompensated care costs grew from $745.7 million to $892.3 million (19.7% increase), but average operating profitability rose from $8.0 million to $9.6 million (19.7% increase). In 2014, uncompensated care is expected to decline with the implementation of the Medicaid expansion program. (Andrew Smith) Department of Child Safety - Report on Expenditure Plan for Internet Crimes Against Children Appropriation - Pursuant to a footnote in Laws 2014, 2nd Special Session legislation, the Department of Child Safety (DCS) has submitted an expenditure plan for the $350,000 internet crimes against children appropriation. The plan allocates the funds to the Arizona Internet Crimes Against Children Task Force (AZICAC), led by the Phoenix Police Department’s Internet Crimes Against Children Unit, for the following purposes:  Statewide mobile command vehicle ($175,000) The current command vehicle is about 20 years old. The command vehicle is a speciallyequipped motorhome with an interview room, restroom, and forensic room, which allows for onsite assessment. The SWAT teams travel in the command vehicle before they raid locations where internet crimes against children are taking place. Because of the potential for human   trafficking and child prostitution, AZICAC’s goal is to have the new command vehicle ready prior to the Super Bowl. Equipment and training ($50,000) - This cost includes computers, cell phones, external hard disks, forensic software and hardware, and GPS devices. Staffing expenses for 1 investigator ($125,000). (Ben Beutler) Department of Corrections - Report on Transition Release Program – Pursuant to A.R.S. § 31-285, the State Department of Corrections (ADC) has submitted its fixed annual report that details the cost reductions to the department from an inmate early release Transition Program and the number of participants who did not receive an early release under the Transition Program. Statute requires ADC to contract with a private or nonprofit entity to provide eligible drug offenders with transition services. The ADC Transition Release Program allows eligible inmates in the Transition Program to be released 3 months earlier than the inmate’s earliest release date. In FY 2014, the department reports that 855 participants successfully completed the Transition Program and their term of community supervision while an additional 483 participants completed the Transition Program and continued their term of community supervision. A total of 91 participants failed to complete the early transition release by violating their conditions of supervision. In total, the program is responsible for 54,768 bed days saved which translates into a savings of $931,056. (Micaela Larkin) Arizona Criminal Justice Commission - Report on AntiRacketeering Revolving Fund - Pursuant to A.R.S. § 132314.01, the Arizona Criminal Justice Commission (ACJC) is required to report by September 30 each year on the Anti-Racketeering Revolving Fund (ARRF) by compiling Attorney General, department, and agency reports into a single comprehensive report of sources and expenditures. In FY 2014, ARRF received revenues totaling $36.3 million and had expenditures totaling $25.3 million. Seizures by investigating and prosecuting agencies were highest in Maricopa County in FY 2014 at $13.1 million. Agencies participating in Maricopa County cases also accounted for the highest expenditure total for FY 2014 with $16.2 million in ARRF monies spent. ARRF consists of monies derived from seized property and assets that result from judgments pursuant to antiracketeering statutes. Once a settlement or conviction is reached, the Attorney General disperses the monies to the involved state and local investigative and prosecutorial agencies. Additionally, assets seized as 12 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 Summary of Recent Agency Reports (Continued) part of a federal investigation are deposited into the fund and used in accordance with state and federal guidelines. Monies in the ARRF are used to help fund the investigation and prosecution of any offense defined as racketeering pursuant to Arizona statutes. (Krista MacGahan) Department of Economic Security - Report on Annual Child Care Expenditures - A.R.S. § 46-810 requires the Department of Economic Security (DES) to provide an annual child care report to the Committee. The FY 2014 report shows that the average number of children served decreased to 23,761, or (7.5)% below FY 2013; the number of families served decreased by (6.9)%. Across categories, the number of children served in the Low Income Working category (including those in special circumstances) decreased (10.8)%, child welfare-related placements increased by 1.4%, the number of Temporary Assistance for Needy Families-related children decreased by (17.8)%, while the number of children receiving transitional child care decreased by (9.8)%. The amount spent by DES on child care subsidies decreased to $101.0 million, or (5.7)% below FY 2013. The average monthly subsidy paid per child increased 2.0% to $354.08. The total amount of co-payments decreased (10.9)% from FY 2013 to $5.1 million. (Tom Ritland) Department of Economic Security - Report on Reimbursement Rates for Developmental Disabilities Programs - Pursuant to A.R.S. § 36-2959, the Department of Economic Security (DES) has provided its annual study of Medicaid reimbursement rates to service providers in the Developmental Disabilities program. The study states that the provider rates in FY 2015 are generally adequate and appropriate, but also notes that there are serious rate deficiencies for some services based on a recent rate rebase study. The rebase study highlighted that 5 of the top 10 services by total funding, including Habilitation, Day Treatment, Attendant Care, Respite Care, and Group Home Room and Board, had adopted rates below 80% of the benchmark rate. However, the report concludes that the division’s rates are adequate and appropriate according to federal standards that require a sufficient number, mix, and geographic distribution of providers and services to serve enrolled members. (Tom Ritland) Department of Economic Security - Report on the Status of the Unemployment Insurance Trust Fund - Pursuant to A.R.S. § 23-665.13B, the Department of Economic Security (DES) has provided a quarterly status report on the Unemployment Insurance (UI) Trust Fund. During the 2nd quarter of calendar year (CY) 2014, DES reports that the UI Trust Fund had a beginning balance of $2.9 million, revenues of $277.1 million, and fund outlays of $93.0 million. DES also paid off $200.0 million in UI tax anticipation notes in May 2014, resulting in a negative ending balance of $(12.7) million. During the recession, Arizona was 1of 33 states to borrow from the U.S. Department of Labor to fund unemployment benefits. After borrowing the Federal Funds, the state established a UI special assessment on employers for CY 2011 and CY 2012 only. Despite the additional revenue from the special assessment, the state was unable to repay all outstanding federal loans by November 10, 2012, resulting in a 0.3% federal unemployment tax (FUTA) increase for CY 2012, which equaled an average extra charge of $21 per employee. To repay the federal loan by September 2013, DES issued $200 million in UI tax anticipation notes. By paying off the federal loan, the state avoided (1) the continuation of the 0.3% FUTA rate increase from CY 2012 and (2) an additional 0.3% FUTA rate increase in CY 2014. The Department resumed borrowing from the federal government in June 2014 in order to maintain benefits. Thus far, DES has borrowed $12.7 million with $33,100 in interest. The Department is paying down the debt as balances are available in the UI Fund and paying interest with Special Assessment funds. DES anticipates the UI Fund will have a positive ending balance of $138.4 million in the 2nd quarter of CY 2015. (Tom Ritland) Arizona Department of Environmental Quality (ADEQ) – Report on Progress of Water Quality Assurance Revolving Fund Sites – Pursuant to a FY 2015 General Appropriation Act footnote, ADEQ is required to report the progress of each site listed on the Water Quality Assurance Revolving Fund (WQARF) registry. There are 10 potential steps in the WQARF process. At the end of FY 2014, DEQ reports 34 WQARF sites. Early Response Actions were conducted at 4 sites and work will be continued on these sites in FY 2015. One site was removed from the WQARF registry in FY 2014. Twelve out of 15 of the FY 2014 Remedial Investigation sites are expected to be completed and advance to the Feasibility Study stage in FY 2015. By the end of FY 2015, DEQ anticipates 34 WQARF sites, including 1 site being added to and 1 site being removed from the registry. At least 15 sites are planned for stage completion or advancement to the next stage of the WQARF process in FY 2015. (Josh Hope) 13 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 Summary of Recent Agency Reports (Continued) Department of Health Services - Annual Report on Individuals with a Serious Mental Illness (SMI) – Pursuant to A.R.S. § 36-3415, the Arizona Department of Health Services (DHS) is required to report annually on behavioral health demographics, utilization and expenditures. DHS states that enrollment of members with a SMI diagnosis in Arizona’s public behavioral health system in FY 2014 increased by 2% to 40,381. The share of the population that resided in Maricopa County declined by 3% from the previous year, comprising only 48%, or 19,272 members, of the total SMI population. The percentage of enrolled SMI members eligible for Medicaid increased from 73% in the previous year to 78% in FY 2014. Compared to last year, FY 2014 annual per capita expenditures decreased from $10,600 to $8,000 for Medicaid-eligible members and increased from $2,900 to $3,600 for Non-Medicaid-eligible members. DHS attributes the discrepancy in expenditures between the 2 groups to the benefit package available to Non-Medicaid-eligible members, which is more limited than what is used by Medicaid-eligible members. DHS reports that the annual per capita expenditure rate outside of Maricopa County decreased from $5,700 in FY 2013 to $5,000 in FY 2014 and the rate decreased from $11,200 to $9,100 inside Maricopa County. The most widely used services by members during FY 2014 were case management, medical and treatment services. Of all members, 98% used case management services, 79% received medical services, and 62% received treatment services. Additionally, 17% of members accessed at least once during FY 2014 hospital, in-home, or mobile crisis intervention services that stabilize or prevent a sudden or potentially dangerous behavioral health episode. DHS collected a sample of income data taken from members with a SMI diagnosis who received some form of behavioral health service in FY 2014. Medicaid-eligible members had, on average, an annual income that was 52% less than Non-Medicaid-eligible members. Collection of household size and income for all members is scheduled to begin statewide in January 2015. (Matt Gress) Arizona Department of Transportation – Annual Report on Motor Vehicle Division Wait Times – A FY 2014 General Appropriation Act footnote requires the Arizona Department of Transportation to report to the Legislature annually on customer wait times in Motor Vehicle Division (MVD) field offices and vehicle registration renewal by mail turnaround times. In metropolitan areas, the average customer wait time from receiving a ticket until arriving at the counter decreased from 31.6 minutes in FY 2013 to 25.3 minutes in FY 2014. In non-metropolitan areas, the average customer wait time increased from 14.9 minutes in FY 2013 to 16.5 minutes in FY 2014. Average customer wait times in metropolitan areas ranged from 18.4 minutes in the Apache Junction office to 31.6 minutes in the Glendale office in FY 2014. These same offices were the low and the high in FY 2013. Fewer customers visited MVD field offices last year, declining by (0.8)% from 3,379,515 customer visits in FY 2013 to 3,352,705 in FY 2014. The average turnaround time for vehicle registration renewal by mail increased by 18.2% from 1.1 days in FY 2013 to 1.3 in FY 2014. (Ben Beutler) Universities – Report on University Research Infrastructure Income – Pursuant to A.R.S. § 15-1670, Arizona State University (ASU), Northern Arizona University (NAU), and the University of Arizona (UA) are required to submit an annual report on the amount of the previous year’s income from licensure and royalty payments and the sale or transfer of intellectual property developed by the university, and to deposit a portion of that income into the state General Fund. ASU, NAU and UA reported that no deposits were made in FY 2014, as they report that their income is net of expenses instead of gross income. ASU, NAU and UA reported no net income from licensure and royalty payments, or the sale or transfer of intellectual property in FY 2014. In terms of FY 2014 gross royalty revenues, ASU reported $3.4 million of licensing and royalty revenues, NAU reported $32,100 of licensing and royalty revenues and UA reported $1.1 million of licensure, royalty and assignment revenues. (Art Smith) 14 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 September Spending September 2014 General Fund spending of $779.3 million was $56.2 million more than September 2013. Year-to-date, spending is $3.94 billion, or $212.1 million above last year. (See Tables 6 & 7).  Due to the state accounting system, at this time Department of Economic Security and Department of Child Safety expenditures cannot be displayed separately.  Year-to-date, the Department of Education has spent $20.4 million more than the prior year.  Year-to-date, Department of Health Services spending has increased by $60.9 million compared to the prior year. This increase is in part due to the expansion of adult Medicaid coverage to 133% of FPL, which is entirely paid for with General Fund monies in the Department of Health Services. Table 6 General Fund Spending ($ in Millions) Change From YTD Change Sept 14 Sept 13 Year-to-Date from FY 14 AHCCCS 137.8 33.0 334.9 11.7 Corrections 80.7 7.2 241.1 13.2 Agency Economic Security/Chlld Safety 9.0 1.3 488.9 69.3 Education 232.3 (0.7) 1,622.8 20.4 Health Serv ices 14.9 (1.0) 475.6 60.9 Public Safety 4.1 2.2 26.6 14.7 School Facilities Board 0.2 0.1 151.2 (1.6) 255.9 9.4 346.3 15.5 Univ ersities Leaseback Debt Serv ice 0.0 0.0 84.1 0.0 Other 44.4 4.7 170.7 8.0 Total 779.3 56.2 3,942.2 212.1 15 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 Table 7 General Fund Spending ($ in Thousands) Agency Dept. of Admin./Automation Projects Fund ADOA – Sale/Leaseback Debt Service Office of Administrative Hearings Department of Agriculture AHCCCS Attorney General State Board of Charter Schools AZ Commerce Authority Community Colleges Corporation Commission Department of Corrections AZ State Schools for the Deaf & Blind Dept. of Econ. Security/Dept. of Child Safety 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 Sept 14 3,173.0 70.8 951.4 137,813.2 1,430.5 152.1 Change from Sept 13 (7,010.5) (21.9) 376.2 32,951.5 (170.8) 142.3 Year-to-Date 9,487.4 84,123.7 240.2 2,235.7 334,894.4 5,413.4 256.9 YTD Change from FY 14 (4,470.6) 3.9 1.4 22.7 11,674.9 (1,036.1) 6.6 2,625.0 679.8 44.3 80,652.0 2,021.5 9,043.0 232,332.3 377.0 7,000.0 17.2 41.8 56.5 216.8 222.5 283.6 45.4 1,247.7 14,931.2 194.5 52.6 54.8 4.5 370.6 457.4 8.9 7,249.6 934.0 1,267.9 (691.1) (73.9) 7,000.0 2.7 (9.2) 9.1 (103.8) 91.0 79.1 (11.1) 591.2 (995.5) (37.2) 2.9 (120.5) 1.2 19.0 7,875.0 17,201.3 134.5 241,101.8 6,173.7 488,917.6 1,622,824.3 1,511.2 7,000.0 43.5 186.5 271.3 781.9 625.9 906.9 145.6 2,567.1 475,617.1 1,077.3 184.5 188.2 15.3 1,199.6 862.8 13.6 13,192.6 767.6 69,326.4 20,412.1 (126.0) 7,000.0 (3.4) (4.1) 33.6 (96.2) 63.3 112.8 (35.4) 517.2 60,866.3 0.4 16.9 (330.1) 5.1 (251.0) 1,807.6 1,409.1 3,198.9 (226.2) 412.8 202.1 23,529.3 3,450.2 9,686.2 211.5 47.8 119.3 16 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 Table 7 (Continued) Agency State Land Department 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 Office of Tourism Universities Board of Regents Arizona State University Northern Arizona University University of Arizona Department of Veteran Services Department of Water Resources Water Infrastructure Finance Authority Department of Weights & Measures Other - JP Salaries Distribution Other Total Sept 14 904.6 Change from Sept 13 246.2 Year-to-Date 3,220.8 YTD Change from FY 14 792.6 1,505.3 963.0 208.1 664.6 606.5 59.7 9.4 5.5 4,095.0 58.9 393.1 5,426.8 215.9 3,107.3 50.8 1,300.0 111.9 98.1 66.0 (346.2) 32.2 (31.2) (0.2) (19.0) 2,229.6 29.2 215.9 377.0 107.9 288.5 33.1 1,136.5 4,415.4 2,789.2 542.7 2,146.9 1,851.0 330.4 55.4 20,449.0 479.5 698.4 26,594.3 1,779.5 401.9 757.9 14,151.0 151,173.7 4,684.7 85.2 4,486.3 (28.5) 96.9 67.0 64.7 59.3 (14.4) 27.9 42.0 654.4 14,679.8 (2.2) (11.7) (2,433.0) (1,633.4) 459.5 0.5 4,000.7 8,060.1 114,459.5 37,810.3 95,596.2 297.5 793.7 83.2 57.8 779,253.9 2,952.9 5,449.7 753.0 259.6 (99.2) 2.0 (24.0) 36.0 56,223.5 9,668.5 155,253.0 52,441.4 128,929.0 1,117.5 2,410.5 1,000.0 242.0 181.7 4.0 3,942,209.5 3,644.2 9,374.3 2,259.1 210.1 (174.5) (12.9) 1,000.0 (36.5) 96.1 4.0 212,056.6 17 JLBC – MONTHLY FISCAL HIGHLIGHTS – OCTOBER 2014 Table 8 Allocations of Military Surplus Items under the Federal 1033 Program as of August 18, 2014 1/ Number of Items Agency Name Arizona Department of Agricultur 22 Arizona Department of Game an 3,749 Arizona Department of Public Saf 11,531 Arizona State Univ ersity Police 70 Pima College Police 9 Univ ersity of Arizona Police 81 Western College Police 117 Total 15,579 Value of Items (in 1/ Dollars $) 7,459 2,411,838 3,180,613 34,930 1,242 6,553 105,490 $5,748,125 Description of Items Guns Vehicles, gun sights, camping gear, etc. Guns, gun sights, v ehicles, etc. Guns Guns Barrack bags Guns, v ehicle, etc. 1/ These figures do not include items that hav e been lost, are unaccounted for, hav e been returned or were scrapped. Total Non-Farm Employment Tracking Arizona’s Recovery October 2014 Appendix A 2,800 2,700 2,579,900 jobs (September 2014) Thousands of Jobs Slide: 2……Total Non-Farm Employment 3……Average Hourly Earnings – Private Sector 4……Initial Claims for Unemployment Insurance 5……State Sales Tax Collections – Retail Category 6……State Sales Tax Collections – Contracting Category 7……Residential Building Permits 8……Economic Activity Index 2,600 2,500 2,400 2,300 2,200 2001 1 JLBC 2002 2003 2004 2005 JLBC 2006 2007 2008 2009 2010 2011 2012 2013 JUL JUL JAN JAN JULY JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JAN 2,100 2014 2 Not seasonally adjusted Average Hourly Earnings – Private Sector Initial Claims for Unemployment Insurance $25 $24 45,000 $22 Total Monthly Claims for UI Benefits $22.78 / Hour (August 2014) $21 $20 JLBC Jan-14 Apr-14 Jul-14 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan 11 Apr 11 July 11 Oct 11 Jan 12 Apr 12 July 09 Oct 09 Jan 10 Apr 10 July 10 Oct 10 Oct 07 Jan 08 Apr 08 July 08 Oct 08 Jan 09 Apr 09 11% 9% 7% (1.7)% Y/Y Growth (August 2014) 5% 3% 35,000 18,501 Claims (August 2014) 30,000 25,000 20,000 15,000 10,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 JUL JAN JUL JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JAN JUL JAN JAN 5,000 1% -1% 2014 Jul-14 Jan-14 Apr-14 Jul-13 Oct-13 Apr-13 Jul-12 Jan-13 Oct-12 Jan 12 Apr 12 Oct 11 July 11 Jan 11 Oct 10 Apr 11 July 10 Apr 10 Jan 10 Oct 09 Jan 09 July 09 Oct 08 Apr 09 July 08 Jan 08 Apr 08 Oct 07 July 07 Jan 07 -3% Apr 07 Year Over Year Growth (%) Jan 07 Apr 07 July 07 $19 40,000 JUL $ / Hour $23 3 JLBC Not seasonally adjusted 4 State Sales Tax Collections – Contracting Category State Sales Tax Collections – Retail Category $100 $225 $75 $43.1 million (September 2014) $ in Millions $175 $150 $25 $162.8 million (September 2014) 5 * January 2014 collections reflect the reclassification of approximately $40 million of revenue from other tax categories to retail collections Excludes temporary 1 ¢ sales tax July 06 Oct 06 Jan 07 Apr 07 July 07 Oct 07 Jan 08 Apr 08 July 08 Oct 08 Jan 09 Apr 09 July 09 Oct 09 Jan 10 Apr 10 July 10 Oct 10 Jan 11 Apr 11 July 11 Oct 11 Jan 12 Apr 12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Jul-14 Apr-14 Jul-13 Jan-14 Oct-13 Jul-12 Jan-13 Oct-12 Jan 12 Oct 11 Apr 12 Jan 11 July 11 Oct 10 Apr 11 Jan 10 July 10 Oct 09 Apr 10 Jan 09 July 09 Apr 09 Oct 08 Jan 08 July 08 Oct 07 Apr 08 Apr-13 JLBC July 07 2.2% Y/Y Growth (September 2014) Apr 07 Jul-14 Apr-14 Jul-13 Oct-13 *Jan-14 Apr-13 Jul-12 Jan-13 Oct-12 Jan 12 Oct 11 Apr 12 Jan 11 July 11 Oct 10 Apr 11 Jan 10 July 10 Oct 09 Apr 10 Jan 09 July 09 Oct 08 Apr 09 July 08 Jan 08 Oct 07 Apr 08 July 07 Apr 07 Jan 07 JLBC 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% Jan 07 Year Over Year Growth (%) July 06 Oct 06 Jan 07 Apr 07 July 07 Oct 07 Jan 08 Apr 08 July 08 Oct 08 Jan 09 Apr 09 July 09 Oct 09 Jan 10 Apr 10 July 10 Oct 10 Jan 11 Apr 11 July 11 Oct 11 Jan 12 Apr 12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 * Jan-14 Apr-14 Jul-14 $0 3.7% Y/Y Growth (September 2014) Oct 06 20% 15% 10% 5% 0% -5% -10% -15% -20% July 06 Year Over Year Growth (%) $100 Oct 06 $125 $50 July 06 $ in Millions $200 6 Excludes temporary 1 ¢ sales tax Economic Activity Index Residential Building Permits 100,000 210 189.3 Index Value (August 2014) 200 80,000 Coincident Index Value Building Permits 90,000 70,000 60,000 Single Family Unit - 17,371 Permits Multi-Family Unit - 9,133 Permits (August 2014) 50,000 40,000 30,000 190 180 170 160 20,000 150 10,000 JLBC 2003 2005 2006 2008 12-Month Moving Sum 2012 2001 2014 7 JLBC 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 JUL JAN JUL JUL JAN JAN JUL JAN JUL JAN JUL JUL JAN JAN JUL JUL JAN JAN JUL JAN JUL JAN JUL JUL 2002 JAN JAN JAN JUL JUL 2013 JAN JAN JULY JUL 2011 JAN JUL 2010 JAN JUL 2009 JAN JAN JUL JUL 2007 JAN JAN JUL JAN JUL JUL 2004 JAN JAN JUL JUL 2002 JAN JAN JUL JAN 2001 JUL 140 0 2013 2014 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