JLBC - Monthly Fiscal Highlights

August 2016

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

www.azleg.gov/jlbc.htm

“July revenues
were $(15.8)
million below
the enacted
budget
forecast.”

During July 2016, General Fund collections
totaled $660.4 million, an amount which is
(6.0)% below the prior year. July revenues
were $(15.8) million below the enacted
budget forecast.

In addition, the state’s Budget Stabilization
Fund has a balance of $422.1 million. This
balance has declined from its previous FY 2016
level of approximately $460 million due to the
temporary use of BSF monies.

Forecast losses occurred mostly in the
Individual and Corporate Income Tax
categories. In particular, Corporate
collections declined from $32.3 million in July
2015 to $2.3 million during July 2016.

As noted in the July Monthly Fiscal Highlights,
the FY 2017 General Appropriation Act
authorized a bridge loan for both DCS and DES
and allowed each of these agencies to use up
to $35 million of BSF monies to provide funding
for reimbursement grants. This loan authority is
only being used by DES. The funding is required
to be paid back by September 1, 2016.

While the decline in the category was
significant, Corporate collections tend to be
very volatile in smaller collection months.
Nonetheless, the reduction in the state’s
Corporate tax rate and the national decline
in corporate profitability likely played a role in
the drop in collections.
These forecast losses were partially offset by
gains in the Sales Tax category, which saw
4.9% growth across a variety of subcategories
(such as retail and contracting).
The operating fund balance consists of the
General Fund and certain dedicated funds.
The operating balance as of mid-August 2016
is $1.4 billion, an amount which is unchanged
from August 2015.

Table of Contents

This report has been
prepared for the Arizona
Legislature by the Joint
Legislative Budget
Committee Staff on
August 22, 2016.

Summary

 ADE – Data System Report ..............................11

July Revenues ......................................................... 2

 JLBC Staff – Public Program Eligibility.............11

Monthly Indicators.................................................. 4

 DPS – Report on 3% Pay Raise .........................12

Summary of Recent Agency Reports

 ADOT – Report on Retained Fees ...................12

 AHCCCS – Report on Hospital Assessment .... 7

 ADOT – Report on MVD Wait Times ................13

 Attorney General – Legal Settlements ............ 7

 ABOR – Report on Private Leases ...................13

 DCS – Performance Benchmarks ..................... 8

 ABOR – Retention and Graduation Rates ....13

 DCS – Semi-Annual Progress Report ................ 8

 ABOR – Report on One-Time Funding ...........14

 DCS – Third-Party Consultant Report ............... 9

July Spending ........................................................15

 DCS – Monthly Report on Hiring ....................... 9

Arizona Economic Trends .................. Appendix A

 DES – DD Provider Rate Increases.................. 10
 EEC – Budget Stabilization Fund .................... 10

2

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

July Revenues
Table 1

July
Year-to-Date

General Fund Revenues ($ in Millions)
FY 2017
Collections
$ 660.4
$ 660.4

Sales Tax (preliminary) collections of $366.5 million were
4.9% above July of last year and $7.9 million above the
forecast for the month
Table 2 below provides additional information on the
major categories of the state’s sales tax, which together
account for approximately 90% of total collections.
Table 2
Sales Tax Growth Rates
Compared to Prior Year
July
YTD
Retail
5.1%
5.1%
Contracting
3.6%
3.6%
Use
5.2%
5.2%
Restaurant & Bar 8.7%
8.7%
Utilities
4.3%
4.3%
Individual Income Tax net revenues were $308.6 million
in July, which were $(5.9) million below the prior year and
$(6.5) million below the forecast for the month.
As indicated in Table 3, withholding decreased by (2.9)%
for the month. This decline was likely driven by 2 fewer
processing days during the month than in July 2015. The
July withholding collections are $(7.5) million below the
forecast.
July estimated and final payments of $20.8 million were
8.3% above last year and $0.9 million above the
forecast.
July Individual Income Tax refunds totaled $(17.5) million
– this compares to $(19.1) million in July 2015 and a
forecasted amount of $(17.6) million.
Table 3

Individual Income Tax Growth Rates
Compared to Prior Year
July
YTD
Withholding
(2.9)%
(2.9)%
Estimated/Final Payments
8.3%
8.3%
Refunds
(8.1)%
(8.1)%
Corporate Income Tax net collections were $2.3 million in
July, which was $(30.0) million less than July of the prior
year. Collections for the month were $(16.5) million
below the forecast.

Difference From
Budget Forecast
$
(15.8)
$
(15.8)

Difference
From FY 2016
$
(42.2)
$
(42.2)

Similar to the trend seen during FY 2016, the reduction in
the state’s Corporate tax rate and a decline in national
corporate profitability is probably responsible for the
forecast loss in the category during July.
Insurance Premium Tax collections of $21.1 million in July
were (51)% below the prior year and $(4.4) million below
forecast. The large decrease relative to last year was
primarily due to a delay in processing. The delay
caused about $16 million in deposits to be recorded in
August that would have otherwise been counted in July.
Highway User Revenue Fund (HURF) collections of $118.7
million in July were up $6.5 million, or 5.8% compared to
July of last year. July collections were $4.6 million above
forecast.

3
Table 4

General Fund Revenue:
Change from Previous Year and Budget Forecast
July 2016
Current Month

FY 2017 YTD (One Months)

Change From
Actual

July 2015

July 2016

Amount

Change from
Budget Forecast

Percent

Amount

Actual

Percent

July 2015

July 2016

Amount

Budget Forecast
Percent

Amount

Percent

Taxes
Sales and Use
Income - Individual
- Corporate
Property
Luxury - Tobacco
- Liquor
Insurance Premium
Other Taxes
Sub-Total Taxes

$366,476,378

$17,192,200

4.9 %

$7,946,194

2.2 %

$366,476,378

$17,192,200

4.9 %

$7,946,194

2.2 %

308,594,809

(5,920,981)

(1.9)

(6,546,573)

(2.1)

308,594,809

(5,920,981)

(1.9)

(6,546,573)

(2.1)

2,288,952

(29,992,359)

(92.9)

(16,473,014)

(87.8)

2,288,952

(29,992,359)

(92.9)

(16,473,014)

(87.8)

411,971

186,225

82.5

1,784,523

(73,112)

3,265,879

301,293

21,103,994
571,728
$704,498,233

(21,922,891)
514,862
($39,714,764)

71,688

21.1

411,971

(3.9)

0

0.0

10.2

0

0.0

(51.0)
-(5.3) %

(4,353,159)
244,688
($19,110,176)

(17.1)
74.8
(2.6) %

186,225

82.5

1,784,523

(73,112)

3,265,879

301,293

21,103,994
571,728
$704,498,233

(21,922,891)
514,862
($39,714,764)

71,688

21.1

(3.9)

0

0.0

10.2

0

(51.0)
-(5.3) %

(4,353,159)
244,688
($19,110,176)

0.0
(17.1)
74.8
(2.6) %

Other Revenue
Lottery
License, Fees and Permits
Interest

0
1,392,006
(43,222)

Sales and Services

7,147,890

Other Miscellaneous

1,918,363

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

0
286,410
$10,701,447
$715,199,680

0
(95,908)
(44,264)
6,926,715
(243,171)
0
(4,700,725)
$1,842,646
($37,872,117)

-(6.4)
--(11.2)
-(94.3)
20.8 %
(5.0) %

0
(943,432)
(44,282)
6,502,032
(56,092)
0
(2,107,246)
$3,350,979
($15,759,196)

--

0

(40.4)

1,392,006

--

(43,222)

--

7,147,890

(2.8)

1,918,363

--

0

(88.0)

286,410

45.6 %

$10,701,447

(2.2) %

$715,199,680

0
(95,908)
(44,264)
6,926,715
(243,171)
0
(4,700,725)
$1,842,646
($37,872,117)

-(6.4)
--(11.2)
-(94.3)
20.8 %
(5.0) %

0
(943,432)
(44,282)
6,502,032
(56,092)
0
(2,107,246)
$3,350,979
($15,759,196)

-(40.4)
--(2.8)
-(88.0)
45.6 %
(2.2) %

Other Adjustments
Urban Revenue Sharing
One-Time Transfers
Sub-Total Other Adjustments
TOTAL GENERAL FUND REVENUE

(55,298,514)
461,600
(54,836,914)
$660,362,766

(4,828,986)
461,600

9.6
--

(4,367,386)

8.7 %

($42,239,504)

(6.0) %

5,828
0
5,828
($15,753,369)

(0.0)
0.0
(0.0) %

(55,298,514)
461,600
(54,836,914)

(2.3) %

$660,362,766

4.0 %

$118,728,363

(4,828,986)
461,600

9.6
--

(4,367,386)

8.7 %

($42,239,504)

(6.0) %

5,828
0
5,828
($15,753,369)

(0.0)
0.0
(0.0) %
(2.3) %

Non-General Funds
Highway User Revenue Fund

$118,728,363

$6,530,465

5.8 %

$4,553,650

$6,530,465

5.8 %

$4,553,650

4.0 %

4

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Monthly Indicators
NATIONAL
According to the U.S. Department of Commerce Bureau
of Economic Analysis, the U.S. Real Gross Domestic
Product (GDP) increased at an annual rate of 1.2% in the
second quarter of 2016. This estimate represents a
modest pickup from the weak growth of 0.8% in the first
quarter of 2016. The acceleration relative to the prior
quarter was primarily due to growth in consumption and
exports and a reduction in drag from low business
investment and federal spending. Improved
performance in these categories was partly offset by
decreases in business inventories, residential investment
and state and local government spending. Economists
largely agree that the low growth for the quarter is
driven by seasonal fluctuations in inventories and may
be offset by a significantly higher rate of growth in the
third quarter.
The Conference Board’s U.S. Consumer Confidence
Index decreased (0.1) points in July, following a large
month of gains in June. The monthly decrease reflected
greater pessimism by consumers in their outlook of the
economy 6 months in the future. Economists expect the
index’s slight drop in July was partly due to Britain’s vote
in late June to leave the European Union.
The Conference Board’s U.S. Leading Economic Index
increased by 0.3% in June and stands 0.5% above its
June 2015 reading. Of the index’s 10 components, 8
made positive contributions in June. The greatest
positive contributions came from a decrease in initial
claims for unemployment insurance and movement in
interest rates. Positive impacts were partly offset by a
decrease in manufacturing workers’ average workweek,
the only negative component for this month.
Consumer prices, as measured by the U.S. Consumer
Price Index (CPI), increased 0.2% in June and 1.0%
above June 2015 prices. Energy prices increased 1.3%
during the month, driven by a 3.3% rise in gasoline prices.
Core inflation (all items less food and energy) increased
by 0.2% during the month. Other monthly price
increases were broad-based, spanning medical care,
education, airlines fares, and motor vehicle insurance.
June saw decreases in the indices for used cars and
trucks, apparel, communication and household
furnishings.
According to the U.S. Department of Commerce Bureau
of Economic Analysis, the U.S. Personal Consumption
Expenditure Price Index (PCEPI) increased 0.1% in June,
relative to May. The increase was driven by a 1.5%
monthly increase in energy prices. The overall index
stands 0.9% above the June 2015 level, which is well
below the Federal Reserve Bank’s 2% annual inflation
target. The low measure is largely due to a (10.0)% year-

over-year decrease in energy prices. Annual growth in
the core index (all items except food and energy) has
grown by a steadier rate of 1.6% through June.
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 3.7% compared
to June 2015. Over the same time period, the U.S.
coincident index increased by 3.0%.
Housing
Single-family housing construction is increasing. Multifamily construction had peaked, but has recently
started to increase. Arizona’s 12-month total of singlefamily building permits is 24,233, or 24.4% more than a
year ago. The comparable single-family permit growth
rate for the entire U.S. is 10.6%. See Appendix A –
Arizona Economic Trends for historical information.
The 12-month total of multi-family building permits has
started to increase again. Arizona’s total of 10,529
multi-family building permits is 19.2% more than 2015.
Arizona’s rate of increase is now greater than the
comparable multi-family permit growth for the U.S. as a
whole, which is (5.4)% lower than 2015.
Employment
According to information released by the Arizona
Department of Revenue (ADOA), the state had a net
loss of (14,800) nonfarm jobs in July over June. The
state typically experiences job losses in July when
schools are in recess. The average job loss for July in
the prior 10 years was (26,600).
Compared to the same month in the prior year, the
state added 76,100 nonfarm jobs in July, or 3.0%. The
average net job increase for the first 7 months of
calendar year 2016 is 3.0%. This is significantly higher
than the national job growth rate of 1.8% for the same
period.
While private sector employment in Arizona has
increased by 3.7% over the last 7 months, government
sector employment has declined by (0.6)% over the
same period. The government sector’s share of total
nonfarm employment was 13.6% in July, which is the
lowest percentage since at least January 1990.
The state’s unemployment rate increased from 5.8% in
June to 6.0% in July. This was the same jobless rate as in
July 2015. The unemployment rate has increased in
each of the last 4 months. By way of comparison, the

5

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Monthly Indicators (Continued)
U.S. unemployment rate remained unchanged at 4.9%
in July. The 1.1% difference between the Arizona and
U.S. unemployment rate is the highest since February
2010.
In June, the Average Weekly Hours worked by
individuals in Arizona’s private sector was 34.4 hours.
This workload was (1.1)% below the level during the prior
month and in June 2015.
The Average Hourly Earnings received by these private
sector workers was $23.82, which is (1.4)% below the
average in the prior month. However, June earnings
were 3.8% above the average in June 2015, and
represent the fifth consecutive month of 3.0% growth or
more.
The U.S. Bureau of Labor Statistics releases estimates
quarterly for a broader measure of labor underutilization
called the total unemployment rate. Besides the
“regularly” unemployed, the measure also includes
persons who are available to work but stopped looking
for a job (“discouraged workers”), and persons who had
to settle for part-time employment (“underemployed
workers”). The Arizona rate averaged 11.3% from the
second quarter of 2015 through the second quarter of
2016. This rate is (0.4)% below the reading issued for the
prior period. The state’s 11.3% rate was the sixth highest
of any state. The national average for the measure was
9.9% during the quarter.
The Arizona Department of Administration (ADOA)
reported that 22,155 initial claims for unemployment
insurance were filed in July, a decrease of (3.7)%
compared to the same month last year. This was the
first year-over-year decrease of initial jobless claims
since March 2016.
According to ADOA, the state had a total of 35,654
claimants receiving unemployment insurance benefits
in July. This figure was 10.5% higher than in the prior
month but (4.7)% below the July 2015 level. The number
of claimants receiving jobless benefits for the month of
July was the lowest in 10 years.
Tourism
Revenue per available room was $62.08 in June, which
was 9.6% above the amount in June 2015. Year-todate, revenue per available room is 3.9% above the
2015 year-to-date amount through June. Ridership
during June through Phoenix Sky Harbor Airport was
down (0.9)% compared to June 2015.
State Agency Data
At the beginning of August 2016, the total AHCCCS
caseload was 1.8 million members. Since the federal
health care expansion in January 2014, the overall

AHCCCS population has grown by 564,800 members.
Total monthly enrollment increased by 14,900
members, or 0.8%, during July. The overall July
increase was concentrated in the Traditional
population of low income parents and children.
Enrollment in this population increased 9,400, or 0.9%,
in July. At a combined level of 1,255,800 members,
the Traditional and Proposition 204 parent populations
were 5.4% higher than a year ago.
In January 2014, the state started accepting new
enrollment to the Proposition 204 childless adults
program. In July 2016, the childless adult population
increased by 4,200, or 1.4%. At 311,300, this
population is 9.7% higher than a year ago.
The state also opted to expand adult Medicaid
coverage to 133% of FPL. Their enrollment decreased
by (300) in July and now totals 80,000 individuals.
Enrollment is 17.6% higher than a year ago. The
federal government is currently paying 100% of this
cost through the end of calendar year 2016.
There were 18,516 TANF recipients in the state in July,
representing a (8.2)% monthly caseloads decrease
from June. The year-over-year number of TANF
recipients has declined by (22.1)%. The 2015 statutory
change to limit lifetime cash assistance to 12 months
took effect in July. The prior cap was 24 months.
The Supplemental Nutrition Assistance Program
(SNAP), formerly known as Food Stamps, provides
assistance to low-income households to purchase
food. In July, 968,398 people received food stamp
assistance in the state, representing a 0.7% increase
over June caseloads. Compared to July caseloads
last year, the level of food stamp participation has
declined by (3.2)%.
On July 31, 2016, ADC reported an inmate population
of 42,854. This represents a 0.1% increase since last
year, and a (0.2)% decrease since June. Laws 2016,
Chapter 119 included a provision that ADC may open
new private beds if the male inmate count reaches
39,762 by November 2016. As of July 31, 2016, ADC
held 38,819 male prisoners, or 943 inmates below the
threshold level.
The Department of Child Safety has updated figures
for April 2016. Under the revision, reports of child
maltreatment totaled 49,307 over the last 12 months,
a reduction of (1.4)% over the prior year. The April
figure for children in out-of-home care remains the
same at 18,861, or 5.9% more than in April
2015. Compared to the prior month, the number of
out-of-home children decreased by (0.3)%.

6

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016
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
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 (2010 = 100)
- Consumer Price Index, SA (1982-84 = 100)
- Personal Consumption Price Index (2009 = 100)

Change From
Prior Period

Change From
Prior Year

Time Period

Current Value

July
2nd Q 2016
June
June
July
July
July
June
June

6.0%
11.3%
22,155
35,654
2,640,800
160,200
139,900
34.4
$23.82

0.2%
(0.4)%
4.7%
10.5%
(0.6)%
(0.6)%
1.6%
(1.1)%
(1.4)%

0.0%
(2.5)%
(3.7)%
(4.7)%
3.0%
0.5%
8.4%
(1.1)%
3.8%

May
May
May

$1.01 billion
$333.9 million
$440.2 million

(4.3)%
1.6%
3.7%

5.7%
6.1%
(0.9)%

June
June
June

24,233
10,529
6,593

1.4%
13.7%
(6.3)%

24.4%
19.2%
1.3%

June

$239,900

0.0%

6.6%

May
June
June

159.62
3,703
24,641

0.6%
(3.5)%
(4.7)%

5.4%
(26.6)%
5.6%

June
March
April
June

3,720,986
1,114,134
259,046
$62.08

(0.4)%
70.9%
(30.6)%
(12.9)%

(0.9)%
(1.3)%
(0.5)%
9.6%

3rd Q 2016
June
June
1st Q 2016
July 2015

88.4
221.45
0.6%
$274.7 billion
6,828,065

10.5%
0.0%
(0.9)%
1.1%
N/A

4.9%
3.7%
(4.5)%
4.8%
1.5%

May
May

AA / Aa2
Stable

N/A
N/A

N/A
N/A

August 1st

1,822,919
1,072,712
311,302
183,041
80,014
528
58,357
116,965

0.8%
0.9%
1.4%
0.5%
(0.3)%
(3.8)%
0.1%
0.6%

6.6%
1.5%
9.7%
35.6%
17.6%
(44.4)%
2.2%
7.0%

April 2016
April
June
July

49,307
18,861
1,366
42,854

(2.3)%
(0.3)%
11
(0.2)%

(1.4)%
5.9%
82
0.1%

June
June

18,516
968,398

(8.2%)
0.7%

(22.1)%
(3.2)%

May
May

18,525
27,689

(42)
(45)

229
856

$16.6 trillion

1.2%

1.2%

97.3
123.7
239.4
110.6

(0.1)%
0.3%
0.2%
0.1%

6.9%
0.5%
1.0%
0.9%

2nd Q, 2016
(Advance
Estimate)
July
June
June
June

7

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Summary of Recent Agency Reports
AHCCCS – Report on the FY 2016 Hospital Assessment –
Pursuant to A.R.S. § 36-2901.08, the Arizona Health
Care Cost Containment System (AHCCCS) is required
to establish an assessment on hospital revenue,
discharges, or bed days for the purpose of funding the
state match portion of the Medicaid expansion (adults
from 100%-133% of the Federal Poverty Level) and the
entire Proposition 204 population. In addition, A.R.S. §
36-2903.08 requires AHCCCS to report by August 1
annually the amount each hospital contributed to the
assessment.
The assessment is calculated by multiplying the number
of discharges reported on each hospital’s 2011
Medicare Cost Report by the hospital’s per-inpatient
discharge rate. In FY 2016, the average discharge rate
for all providers was approximately $340. From July 1,
2015 to June 30, 2016, AHCCCS collected $250.2 million
in assessments from 72 hospitals. Table 6 below lists
how much each peer hospital contributed in FY 2016.
The percentage splits for each hospital provider peer
group roughly match the splits from FY 2015.

Revolving Fund, the Consumer Protection - Consumer
Fraud (CPCF) Revolving Fund and the Consumer
Restitution and Remediation Revolving Fund
(including its 2 subaccounts), as well as deposits
made to the General Fund.
In the fourth quarter of FY 2016, the AG deposited a
total of $583,000 into various consumer accounts. Of
that amount, $342,900 was deposited into the
Antitrust Enforcement Revolving Fund, $183,300 to the
CPCF Revolving Fund, $22,300 to the Restitution
Subaccount, and $34,500 to the Remediation
Subaccount. No monies were deposited into the
General Fund this quarter. Only the $34,500 deposit
to the Remediation Subaccount requires JLBC review
prior to expenditure.

A.R.S. § 36-2903.08 additionally requires AHCCCS to
report by August 1 annually the amount of estimated
Medicaid payments each hospital received for
services provided to populations whose coverage is
funded by the assessment. Due to reporting lags
between providers and AHCCCS health plan
contractors, payments can take upwards of 3-6
months before paid claims appear in AHCCCS’
database. Because of this lag, AHCCCS will report the
FY 2016 estimated Medicaid payments each hospital
received from coverage funded by the assessment by
January 31, 2017. (Patrick Moran)

Deposits to the Antitrust Enforcement Revolving Fund
The AG deposited $342,900 in the fourth quarter of FY
2016 to the appropriated Antitrust Enforcement
Revolving Fund to pay for antitrust enforcement
expenses undertaken by the AG. The amount was
derived from a multi-state settlement that was
reached regarding allegations that Apple conspired
with 5 of the nation’s largest publishers to artificially
raise the price of e-books between 2010 and 2012.
The $342,900 award amount represents both the
reimbursement that the AG will receive for attorney’s
fees and investigative costs ($192,900) and a civil
penalty assessed against Apple ($150,000). In
addition to this amount, Arizona residents affected by
the case will receive a total of approximately $8.6
million directly from Apple as reimbursement for a
portion of the purchase price of e-books bought
during the applicable time period.

Attorney General – Quarterly Reports on Legal
Settlements – Statute requires the Attorney General
(AG) to report quarterly to the JLBC on the receipts to
and disbursements from the Antitrust Enforcement

Deposits to the CPCF Revolving Fund
The AG deposited $183,300 in the fourth quarter of FY
2016 to the appropriated CPCF Revolving Fund,
which may be used for any purpose permitted by

Table 6

Hospital Provider Peer Group (# of hospitals) 1/
Urban Acute Providers (28)
Medium Pediatric Intensive General Acute Hospitals (6)
Non-CAH Rural Acute Providers (13)
Pediatric-Intensive General Acute Hospitals (2)
Critical Access Hospital (CAH) Providers (11)
Large Psychiatric Provider (4)
Long-Term Care Provider (8)
TOTAL
____________
1/ In FY 2016, 72 hospitals participated in the hospital assessment.

FY 2016
Contributions
$ 152,629,906
43,538,045
29,819,712
18,968,413
3,268,928
1,693,952
286,000
$ 250,204,956

% of
Total
61.0%
17.4%
11.9%
7.6%
1.3%
0.7%
0.1%
100.0%

8

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Summary of Recent Agency Reports (Continued)
statute. The amount was derived from small legal
settlements.
Deposits to the Consumer Restitution Subaccount
The AG deposited $22,300 in the fourth quarter of FY
2016 to the non-appropriated Restitution Subaccount
to compensate specific entities for economic loss
resulting from consumer fraud. Of that amount,
$21,700 came from small legal settlements and the
remainder came from interest income.
Deposits to the Consumer Remediation Subaccount
The AG deposited $34,500 in the fourth quarter of FY
2016 to the partially-appropriated Remediation
Subaccount to rectify violations of consumer
protection laws. These revenues were interest income
on the fund balance. An expenditure plan must be
reviewed by the JLBC before any funds are spent from
this account. Those reviews have not yet occurred.
(Eric Billings)
Department of Child Safety (DCS) – Report on
Performance Benchmarks – Pursuant to a footnote in
Laws 2014, 2nd Special Session, Chapter 2, the
Department of Child Safety (DCS) has submitted its
fourth quarter report on the backlog, hiring, and
expenditures.
Fourth Quarter Benchmark - Filled FTE Positions
As outlined in Table 7, DCS had 1,356 filled direct line
staff in the fourth quarter, or (50) FTE Positions below its
benchmark of 1,406, but 86 FTE Positions higher than in
March 2016.

Fourth Quarter Benchmark - Reducing the Backlog
In June 2014, DCS set benchmarks for reducing the
backlog. As shown in Table 8, DCS activated all 13,024
backlog cases, but 676 cases had relapsed into
inactivity as of June 2016. In total, DCS had 8,223
backlog cases as of June 2016 (including 7,547 postJune 2 cases). While the benchmark is 1,000 cases, DCS
did reduce the backlog by 2,528 cases since March.
Expenditures on Personal Services
DCS spent $29.0 million on salaries including overtime for
2,728 FTE Positions in the fourth quarter of FY 2016.
Fourth Quarter Benchmark - Expenditures to Reduce the
Backlog
The FY 2016 budget for backlog elimination was $12.4
million General Fund and $3.9 million from Federal
Funds, totaling $16.3 million. DCS states that the cost of
placement services for backlog cases will exceed
appropriated backlog resources by $2.4 million in FY
2016. In the fourth quarter of FY 2016, DCS estimates
expenditures of $3.1 million on backlog reduction for
support services and placements. The expenditure
figure does not include the cost of caseworker overtime
to investigate backlog cases. (Ben Beutler)
Department of Child Safety (DCS) – Semi-Annual
Progress Report – Pursuant to A.R.S. § 8-818, DCS has
submitted its semi-annual financial and program
accountability report covering the period of January
2016 through June 2016.
According to the report, out-of-home placements
decreased by (2.5)% from 18,912 in December to 18,434

Table 7

Progress in Hiring Caseworkers by Quarter
Actuals
Direct Line Staff Type
Case-Carrying Caseworkers
Caseworkers in Training
Hotline Staff
Total

Benchmark
1,190
140
76
1,406

Dec. 31, 2015
955
220
74
1,249

Mar. 31, 2016
923
273
74
1,270

June 27, 2016
1,019
263
74
1,356

Table 8

Progress Reducing the Backlog by Quarter
Remaining Backlog Cases
Total Backlog Cases
Relapsed June 2, 2014 Backlog Cases
Post-June 2, 2014 Backlog Cases

Benchmark
1,000
0
1,000

Dec. 31, 2015
14,470
1,633
12,837

Actuals
Mar. 31, 2016
10,751
1,026
9,725

June 27, 2016
8,223
676
7,547

9

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Summary of Recent Agency Reports (Continued)
Table 9
Caseworker Workload

Investigations
In-Home Cases
Out-of-Home Children
Percent Above Workload Standard
Total Case-Carrying Caseworkers
Caseworkers Required by Standard

Dec.
2008
15
28
24

Dec.
2009
15
27
23

Dec.
2010
15
30
25

Dec.
2011
15
32
27

Dec.
2012
15
33
36

Dec.
2013
16
47
25

Dec.
2014
16
42
29

Dec.
2015
25
43
30

June
2016
18
44
30

9%
818
890

9%
761
829

15%
764
879

22%
781
955

48%
750
1,107

28%
983
1,263

37%
1,019
1,397

54%
953
1,466

44%
975
1,406

in June. Caseloads are above the department’s goals
and caseworker turnover was approximately 33.8%.
Employee satisfaction increased slightly to 3.6 rating on
a 5 point scale. The contents of this report, covering
the last 6 months of FY 2016, are summarized below.









The Training Academy had 334 new caseworkers
in training as of June 2016. During the time period
from January 2016 to June 2016, 238 caseworkers
graduated from the Training Academy, or 164
more graduates than in the previous 6-month
period.
DCS reports that annualized caseworker turnover
during January - June 2016 was 33.8%, down from
a 36.2% annualized rate in the last report.
The percent of Office of Administrative Hearings
decisions affirming DCS case findings decreased
significantly from 73.2% to 52.7%. The percent of
complaints validated by the Ombudsman
decreased from 21.6% to 18.3%.
The number of congregate care placements
decreased from 2,693 to 2,684, a (0.3)% decrease.
DCS also reports that from January to June the
number of children aged 0-3 in shelter care
declined from 49 to 31, the number of children
aged 0-6 in group homes increased from 87 to
107, and the number of children in shelter care for
more than 21 days increased from 830 to 946.
As of June 2016, workload per caseworker remains
considerably higher than the revised caseload
goals established during the May 2014 Special
Session, with investigations at 18 (goal: 13), inhome cases at 44 (goal: 33), and out-of-home
children at 30 (goal: 20).

Table 9 provides a historical view of workload by
caseworker responsibility since 2008; it also displays
how much workload exceeds the caseload standard
in the “percent above workload standard” line. (Ben
Beutler)

Department of Child Safety – Independent Third-Party
Consultant – At its June 2016 meeting, the Joint
Legislative Budget Committee favorably reviewed a
proposal to expend $300,000 from the Automation
Projects Fund to develop multiple Requests for Proposals
for the Children’s Information Library and Data Source
(CHILDS) system replacement project.
The June 2016 favorable review included a provision
requiring DCS to submit to JLBC a plan for hiring an
independent third-party consultant for the remainder of
the CHILDS replacement project. In its July report to
JLBC, DCS planned on hiring 3 different independent
verification and validation (IV&V) consultants at a cost
of $3.8 million to $5.3 million.
Because of concerns that big picture perspective may
be lost with 3 different IV&V consultants, DCS recently
changed its plan and decided to hire a vendor from the
state contract list to act as a single IV&V vendor for the
entire project.
Under the new plan, the vendor will perform the
standard IV&V function required for other large state
automation projects, but the vendor will not provide
quality management for the project as DCS had
previously proposed. Given this more limited scope of
work, the estimated cost has declined from the previous
cost range of $3.8 million to $5.3 million to a new cost
range of $400,000 to $1.6 million. (Ben Beutler)
Department of Child Safety (DCS) – Monthly Report on
Hiring – Pursuant to a FY 2017 General Appropriation Act
footnote, DCS has reported on its progress in hiring and
retaining child safety staff through July 2016. (See Table
10 on the next page).
Direct Line Child Safety Staff – Since January 2016, the
number of direct line child safety staff (caseworkers,
caseworkers in training, caseworkers awaiting training
and hotline staff) increased by 71 to 1,366. The

10

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Summary of Recent Agency Reports (Continued)
The report references the DDD provider ratebook, which
displays the changes in provider rates for each DDD
service between FY 2016 and FY 2017. The ratebook
shows that most HCBS services received a 1% rate
increase effective July 1, 2016. In accordance with the
General Appropriation Act footnote, DES did not apply
the rate increase to services that already had
reimbursement rates equal to 100% of the benchmark
rate in FY 2016. DES also did not apply the rate increase
to room and board costs. (Patrick Moran)

budgeted staffing level is 1,406. The number of staff
directly working cases increased by 40 FTE Positions to
975. The monthly turnover rate for direct line staff
increased from January to July, going from 2.8% in
January 2016 to 3.3% in July 2016. From June to July,
the number of direct line staff grew by 11.
Non-Direct Line Child Safety Staff - Since January 2016,
non-direct line child safety staff has decreased by (76)
to 1,343. The budgeted staffing level is 1,417 excluding
Attorney General positions. One of the most significant
changes in filled positions was associated with case
aides, which declined by (38) positions from January.
The turnover rate for non-direct line staff increased
from a January 2016 turnover rate of 1.9% to a July
2016 turnover rate of 3.4%. From June to July, the
number of non-direct line staff decreased by (24).

Economic Estimates Commission – Report on the Budget
Stabilization Fund – Pursuant to A.R.S. § 35-144F, the
Economic Estimates Commission (EEC) is annually
required to calculate the amount of monies that may
be deposited to or withdrawn from the Budget
Stabilization Fund (BSF). The EEC estimate is calculated
based on a formula that compares the growth rate of
real adjusted Arizona personal income in the most
recent calendar year to the average in the last 7
calendar years (hereafter referred to as the “trend”
growth rate).

Department of Economic Security – Report on Provider
Rate Increases for Developmental Disabilities Programs
– Pursuant to a footnote in the FY 2017 General
Appropriation Act (Laws 2016, Chapter 117), the
Department of Economic Security (DES) has provided
a report on its plans to distribute $9.1 million for an
across-the-board 1% increase in reimbursement rates
for home and community-based services (HCBS)
providers serving clients enrolled in the Division of
Developmental Disabilities (DDD).

Since the calendar year 2015 growth rate exceeded
the trend growth rate by 2.65%, EEC reported on May
26, 2016 that the formula recommended a BSF deposit
of $236.8 million at the end of FY 2016. EEC calculations
under the formula, however, do not result in any
automatic deposits or withdrawals, as they must be

`
Table 10
Change in the Department of Child Safety
Staff since January 2016

Direct Line Staff
Caseworkers
Hotline Staff
Staff in Training
Subtotal - Direct Line
Non-Direct Line Staff
Asst. Program Managers
Unit Superv isors
Case Aides
OCWI
Contracts and Procurement
Child Safety Support Admin.
CMDP Administration
Inspections Bureau
Other Non-Direct Line Staff
Subtotal - Non-Direct Line
Grand Total

January
2016
935
74

July
2016
975
74

Change thru
January 2016
40
0

286

317

31

1,295

1,366

71

40
217
280
75
17
54
56
35
621

38
211
242
82
16
86
75
48
545

(2)
(6)
(38)
7
(1)
32
19
13
(76)

1,395
2,690

1,343
2,709

(52)
19

11

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Summary of Recent Agency Reports (Continued)
authorized by legislative action. In practice, the
formula has served only as a general guideline and
has rarely been used to determine the actual deposit
or withdrawal. The budget enacted in May 2016 did
not provide for any deposit into the BSF in FY 2016.
The current BSF balance is $423 million. This balance
has declined from its previous levels of approximately
$460 million due to the temporary use of BSF monies.
Section 114 of the FY 2017 General Appropriation Act
authorized a bridge loan for both the Department of
Child Safety and Department of Economic Security
and allowed each agency to use up to $35 million of
BSF monies to provide funding for reimbursement
grants. This funding is required to be paid back by
September 1, 2016. (Hans Olofsson)
Department of Education – Report on Education
Learning and Accountability System – Pursuant to a
General Appropriation Act footnote, the Arizona
Department of Education (ADE) must contract with an
independent third-party vendor to provide additional
oversight on the development of ADE’s Education
Learning and Accountability System (ELAS). The
vendor is required to submit quarterly reports that
evaluate and assess the project’s feasibility, estimated
expenditures, technology approach and scope
throughout the life of the project. The vendor’s most
recent quarterly review was released on August 9,
2016.

applying downward pressure on private SIS vendors’
prices via the state SIS. However, the third-party
reviewer’s most recent site visit indicates that a small
number of districts are being served by a consortium run
out of Northern Arizona University, which is functioning
as “a quasi-competitor to the ADE SIS opt-in services” by
securing SIS services through the same vendor that
provides the state SIS.
The report echoes concerns raised in the previous
quarterly review: ADE has had to expend “extra time
and effort . . . tracking down” certain supplemental
services such as trainings from the state SIS vendor after
they were paid for. The report notes that the existing
contract with the vendor expired on July 11, 2016,
however, and that the new contract will withhold
payment for supplemental services until after those
services are rendered.
The review observes that development of data
governance protocols regarding data privacy have
moved from the IT department to the office of ADE’s
Chief of Staff, and that ADE is working to minimize the
number of copies of sensitive data in existence.
The report observes “as-yet untapped opportunities
through AzEDS to consolidate and reduce the data
collections from districts,” including career and
technical education, Title I, free and reduced price
lunch, and Empowerment Scholarship Account data.

The prior review observed that as of March, ADE had
transitioned 400 of the more than 700 school districts
and charter schools from the legacy Student
Accountability Information System (SAIS) platform to
the Arizona Education Data Standards (AzEDS).

Finally, the report notes that “strategies to leverage” the
newly-created Department of Education Intellectual
Property Fund (which allows ADE to sell or lease
intellectual property it develops) “have not been
identified.” (Matt Beienburg)

The current review notes that as of June, 111 still had
yet to transition, but that more than half of those
remaining were scheduled to transition to AzEDS by
July 6, and that districts’ concerns about the transition
to AzEDs and current year funding “are subsiding.” A
further update for the number of schools transmitting
data via AzEDS for FY 2017 is not yet available, as not
all schools have resumed classes for the fall.
Consistent with ADE’s FY 2017 expenditure plan, the
report observes that plans to overhaul the school
payment calculation portions of SAIS have again been
delayed, and that “as an interim measure, the AzEDS
data will move into SAIS [so that] ADE can continue to
use the current [school finance calculation output]
reports.”

JLBC Staff – Public Programs Eligibility Report – As
enacted in the 2006 election, Proposition 300 limits
participation in certain state programs to citizens, legal
residents, or other persons lawfully present in the United
States, and requires semi-annual reports to the Joint
Legislative Budget Committee. Below is a summary of
the reports:

Regarding the state student information system (SIS)
program, the report commends ADE for successfully

Universities – At the 3 universities, 155,607 students
registered for the spring 2016 semester. Of the total
students registered, the universities were able to verify
the legal immigration status of 142,818 students.
Additionally, the universities reported that 16,198 of
these students did not require verification because they
have either not requested, or received in-state tuition or
state-supported financial aid. The universities reported
that no students were unverifiable due to their inability
to provide the requisite documentation.

12

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Summary of Recent Agency Reports (Continued)
Department of Economic Security – The department
reported that 7,571 applications were received for
child care assistance during the reporting period of
December 1, 2015 to May 31, 2016. Of this number, 12
were denied because criteria for citizenship or legal
residency were not met.
Community Colleges – Statewide, the Community
Colleges reported a total of 197,447 students classified
as in-state for the spring 2016 semester. They reported
393 students who were not entitled to be classified as
in-state because of a lack of lawful immigration status.
Additionally, 76,415 students applied for financial aid.
Of those who applied, the community colleges
reported that 44 were not entitled to any aid because
they were not lawfully present in the United States.
Department of Education – The department reported
that 9,304 people applied for instruction in Arizona
Adult Education during the reporting period of January
1, 2016 to June 1, 2016. Of this amount, 945 were
denied instruction because they failed to provide
evidence of citizenship or legal residence in the United
States. The Arizona Adult Education program is funded
with a combination of state and Federal Funds.
(Morgan Dorcheus)
Department of Public Safety – Report on 3% Pay
Adjustment – Pursuant to a footnote in the FY 2017
General Appropriation Act (Laws 2016, Chapter 117),
the Department of Public Safety (DPS) is reporting on its
FY 2017 pay adjustment plan. The FY 2017 General
Appropriation Act included $4,596,400 General Fund
and $246,700 in other appropriated fund monies for a
3% pay raise for all sworn officers in DPS and all civilian
staff within the Highway Patrol Division of DPS. Pursuant
to statute, DPS reports that the pay raises for sworn
officers were approved by the Law Enforcement Merit
System Council at their June 27, 2016 meeting. These
3% increases are included in Table 11 below.
Since the civilian pay raise is exclusive to the Highway
Patrol Division, DPS has added a 3% stipend to each
civilian employee’s pay. If the individual transfers to
another division within DPS they will lose the stipend.

There are currently 1,172 sworn officers within DPS and
74 civilian staff within the Highway Patrol Division. (Eric
Billings)
Arizona Department of Transportation – Annual Report
on Service Arizona Retained Fees – A FY 2017 General
Appropriation Act footnote requires the Arizona
Department of Transportation (ADOT) to report to the
Legislature on the state’s share of fees retained by the
Services Arizona vendor in the prior fiscal year.
Laws 2011, Chapter 190 allowed ADOT to negotiate
through a competitive bidding process with vendors for
support of ServiceArizona (the state’s registration
renewal website). Previously, compensation for the
ServiceArizona vendor was detailed in statute. ADOT is
currently in the midst of a 4.5-year contract with the
vendor that has an option for up to 5 one-year
extensions.
Under the new ServiceArizona contract, the website
vendor agreed to compensation equal to roughly half
the fees outlined in A.R.S. § 28-5101. The other half of
the fees in A.R.S. § 28-5101 belong to the state. The
state’s share of the fees are retained and managed by
the ServiceArizona vendor. The ServiceArizona vendor is
paid a 1% administrative fee for managing the state’s
share of fees and disburses funds directly to vendors on
behalf of the state, as directed by ADOT.
In FY 2016, the state’s half of the fees totaled $11.9
million. The majority of these revenues ($7.2 million)
were spent on the Motor Vehicle Modernization
automation project, which updates the Motor Vehicle
Department (MVD) computer system. The new system
will provide MVD customer service representatives with
a suite of new applications for motor vehicle
transactions. The cost of the Motor Vehicle
Modernization project is estimated to be $56.0 million.
The project began in FY 2014 and is expected to be
complete in FY 2020. Besides funding for the Motor
Vehicle Modernization project, the rest of the $11.9
million was spent as follows:

Table 11
DPS Sworn Officer Position Salary Ranges
Position
Cadet Trooper
State Trooper
Sergeant
Captain
Major

Old Salary Range
$ 39,101
45,619 – 63,913
70,304 – 79,901
102,736
114,256

New Salary Range
$ 40,275
46,988 – 65,830
72,413 – 82,298
105,818
117,684

13

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Summary of Recent Agency Reports (Continued)
$1.4 million for data conversion/cleansing and
analytics.

$908,600 for legacy system support.

$761,400 for portal enhancements.

$445,700 for ADOT network user authentication
protocol.

$328,700 for a customer flow management system.

$169,600 for a fuel tax licensing application.

$99,600 for contract administration.
(Ben Beutler)


Arizona Department of Transportation – Annual Report
on Motor Vehicle Division Wait Times – A FY 2016
General Appropriation Act footnote requires the
Arizona Department of Transportation (ADOT) 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 35.6 minutes in FY 2015 to 32.2 minutes
in FY 2016. Average customer wait times in
metropolitan areas ranged from 19.3 minutes in the
Apache Junction office to 41.1 minutes in the
Glendale office in FY 2016. These same offices were
the low and the high in FY 2015.
In non-metropolitan areas, the average customer wait
time increased from 16.4 minutes in FY 2015 to 19.1
minutes in FY 2016.
The number of customers visiting MVD field offices
declined by (10.4)% from 3.3 million customer visits in FY
2015 to 2.9 million in FY 2016, but due to a replacement
of its queueing system, FY 2016 figures are under
reported.
The average turnaround time for vehicle registration
renewal by mail decreased by (6.9)% from 3.1 days in
FY 2015 to 2.9 in FY 2016. Beginning in January 2016,
vehicle registration renewal by mail has been
performed by a private third-party partner.

As outlined in Table 12, wait times and renewal times in
FY 2016 are higher than they were in FY 2012. This
increase in wait time may be partially attributed to the
introduction of the Photo First project in FY 2013. The
Photo First project is a fraud prevention measure
requiring all driver license and identification card
customers to take a photo upon arrival to an MVD
office. (Ben Beutler)
Arizona Board of Regents – Report on Private Leases Pursuant to A.R.S. § 41-792D, the Arizona Board of
Regents (ABOR) is biennially required to submit a report
on all approved office leases that exceeded the Lease
Cost Review Board’s (LCRB) estimated average cost per
square foot for privately-owned office space during the
prior 2 years. According to the report, ABOR approved
the following new or renewed lease contracts:



12 leases in FY 2015 that exceeded the LCRB’s
$19.40 average cost per square foot in FY 2015.
7 leases in FY 2016 that exceeded the LRCB’s $19.90
average cost per square foot in FY 2016.

Including lease contracts continuing from prior years
that did not require renewal, 46 university leases
exceeded the LRCB’s average cost per square foot as
of FY 2016. (Matt Beienburg)
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, degreeseeking students after 1 year for retention rates and
after 6 years for graduation rates.
ABOR reports that this methodology has limited utility
because it 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.

Table 12
MVD Performance Information - 5-Year Review
Metro Wait Time (average minutes)
Non-Metro Wait Time(average minutes)
Renewal by Mail (average days)
Customer Visits (in millions)
MVD Staff

FY 2012
26.2
13.9
1.6
NA
NA

FY 2013
31.6
14.9
1.1
3.4
641

FY 2014
25.3
16.5
1.3
3.4
648

FY 2015
35.6
16.4
3.1
3.3
604

FY 2016
32.2
19.1
2.9
2.9
585

14

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Summary of Recent Agency Reports (Continued)




Fall 2015 retention rates reflect the percentage of
first-time, full-time, degree-seeking students who
initially enrolled in Fall 2014 and who re-enrolled in
the same university in fall 2015.
o Arizona State University (ASU) 84%; Northern
Arizona University (NAU) 74%; 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 report
shows the percentage of students who enrolled in
Fall 2009 who graduated from the same university
within 6 years.
o ASU 65%; NAU 52%; 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 percentage of
students who enrolled in an Arizona university in Fall
2009 who either graduated from the same university
within 6 years, graduated from another university within
6 years, or are still enrolled in higher education was
83% for ASU, 77% for NAU, and 88% for UA. The
systemwide average Success and Progress Rate, 84%,
was made up of the following:
Students graduating from their original institution
within 6 years: 61%

Students graduating from another postsecondary
institution within 6 years: 12%

Students still enrolled in higher education after 6
years: 11%
(Matt Beienburg)


Universities – Report on One-Time Appropriations –
Pursuant to a footnote in the FY 2017 General
Appropriation Act (Laws 2016, Chapter 117, Section
149), the universities are to report to the Joint
Legislative Budget Committee (JLBC) by August 1, 2016
on the intended use of the following one-time General
Fund appropriations in FY 2017:




Arizona State University (ASU): $7.0 million
Northern Arizona University (NAU): $4.0 million
University of Arizona (UA): $8.0 million

Additionally, Section 149 requires review by the Joint
Committee on Capital Review (JCCR) of any
expenditure of these monies for capital improvements.
ASU has reported that it intends to use its appropriation
for salaries and benefit costs for new faculty hiring.

NAU intends to use its appropriation to provide
infrastructure improvements to its underground utilities,
academic buildings, campus network wiring, and fire
life safety systems.
UA intends to use its appropriation to design, renovate,
and equip a facility in Oro Valley, AZ for a new
Veterinary Medicine program. The university was
recently denied accreditation for the Veterinary
program in July but is appealing the decision.
Our office has requested additional detail on all
university plans. (Matt Beienburg)

15

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

July Spending
July 2016 General Fund spending was $2.22 billion,
which represents a decrease of $(198.1) million below
July 2015. (See Tables 13 & 14). The decline in
spending is the result of a technical issue relating to
the timing of Medicaid spending.



In addition during July, Medicaid funding which
has been appropriated to various agencies is
transferred to AHCCCS, which is the state’s official
Medicaid agency that draws down federal
matching funds.



Typically during July, the State can see large
General Fund spending amounts and significant
fluctuations in spending for technical reasons.





In July the state typically will pay the entire K-12
rollover which has been deferred from the prior
year, as can be seen in the ADE spending level of
$1.24 billion for the month.

In FY 2017, the only agency receiving significant
Medicaid funding outside of AHCCCS is DES,
which has resulted in the agencies’ high spending
level of $416.2 million for the month due to this
Medicaid transfer.



Prior to FY 2017, DHS used to administer the state’s
Medicaid Behavioral Health program. Beginning in
FY 2017, this responsibility has been shifted to
AHCCCS. Due to this shift, DHS will no longer be
making its beginning of the year Medicaid
transfer, causing DHS spending to decline by
$(416.4) million compared to July 2015.

Table 13
General Fund Spending ($ in Millions)
Change From

YTD Change

July 16

July 15

Year-to-Date

from FY 16

AHCCCS

190.3

65.3

190.3

65.3

Corrections

93.1

23.9

93.1

23.9

Child Safety

21.0

(5.9)

21.0

(5.9)
73.2

Agency

Economic Security

416.2

73.2

416.2

1,242.5

37.0

1,242.5

37.0

Health Serv ices

6.7

(416.4)

6.7

(416.4)

Public Safety

22.3

0.8

22.3

0.8

School Facilities Board

0.1

0.1

0.1

0.1

Univ ersities

49.2

7.8

49.2

7.8

Leaseback Debt Serv ice

84.1

0.0

84.1

0.0

Other

99.3

16.1

99.3

16.1

2,224.8

(198.1)

2,224.8

(198.1)

Education

Total

16

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Table 14

General Fund Spending
($ in Thousands)
Agency
Dept. of Admin./Automation Projects Fund
ADOA – Sale/Leaseback Debt Service
Office of Administrative Hearings
Commission of African-American Affairs
Department of Agriculture
AHCCCS
Attorney General
State Board of Charter Schools
Department of Child Safety
AZ Commerce Authority
Community Colleges
Corporation Commission
Department of Corrections
AZ State Schools for the Deaf & Blind
Department of Economic Security
State Board of Education
Department of Education
DEMA
Office of Equal Opportunity
State Board of Equalization
Board of Executive Clemency
Department of Financial Institutions
Department of Fire, Bldg and Life Safety
Department of Forestry and Fire Management
Department of Gaming
Governor/OSPB
Department of Health Services
Arizona Historical Society
Prescott Historical Society of AZ
Department of Housing
Independent Redistricting Comm.
Department of Insurance
Judiciary
Supreme/Superior Court
Court of Appeals
Department of Juvenile Corrections

July 16

Change from
July 15

Year-to-Date

YTD Change
from FY 16

13,398.8
84,117.4
52.5
10.8
755.0
190,295.0
1,683.6
86.9

12,691.4
2.8
5.0
4.2
125.4
65,288.8
(34.9)
31.8

13,398.8
84,117.4
52.5
10.8
755.0
190,295.0
1,683.6
86.9

12,691.4
2.8
5.0
4.2
125.4
65,288.8
(34.9)
31.8

20,981.6

(5,911.4)

20,981.6

(5,911.4)

1,791.7
12,357.3
40.6
93,133.8
1,905.7
416,226.9
100.0
1,242,484.3
571.0
0.1
47.1
56.2
206.2
0.7
873.1
1,779.5
803.7
6,698.9
337.6
74.1
55.9
122.5
329.8

(416.6)
51.1
(3.0)
23,927.6
(560.6)
73,239.3
(54.0)
37,029.2
423.0
(9.5)
18.4
(12.7)
(0.6)
(93.9)
462.2
1,764.6
32.8
(416,369.8)
0.3
(16.3)
55.9
57.0
(3.6)

1,791.7
12,357.3
40.6
93,133.8
1,905.7
416,226.9
100.0
1,242,484.3
571.0
0.1
47.1
56.2
206.2
0.7
873.1
1,779.5
803.7
6,698.9
337.6
74.1
55.9
122.5
329.8

(416.6)
51.1
(3.0)
23,927.6
(560.6)
73,239.3
(54.0)
37,029.2
423.0
(9.5)
18.4
(12.7)
(0.6)
(93.9)
462.2
1,764.6
32.8
(416,369.8)
0.3
(16.3)
55.9
57.0
(3.6)

16,707.3
1,022.2
3,113.2

192.5
(35.6)
10.0

16,707.3
1,022.2
3,113.2

192.5
(35.6)
10.0

17

JLBC – MONTHLY FISCAL HIGHLIGHTS – AUGUST 2016

Table 14 (Continued)

Agency
State Land Department
Legislature
Auditor General
House of Representatives
Joint Legislative Budget Comm.
Legislative Council
Senate
Mine Inspector
Nav. Streams & Adjudication
Arizona State Parks Board
Phoenix Convention Center
Comm. for Postsecondary Ed.
Department of Public Safety
Public Safety Personnel Retirement System
Radiation Regulatory Agency
Real Estate Department
Department of Revenue
School Facilities Board
Secretary of State
Tax Appeals Board
Office of Tourism
Governor's Office on Tribal Relations
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
Total

July 16
779.5

Change from
July 15
80.5

Year-to-Date
779.5

YTD Change
from FY 16
80.5

1,460.2
891.5
180.6
647.3
642.4
93.8
9.5
20,449.0
44.0
22,315.5
6,000.0
290.9
215.4
1,856.3
109.0
4,079.6
17.1
1,777.6
7.1

1,431.9
296.5
12.7
(170.7)
(31.9)
0.3
1.9
(272.8)
(44.0)
832.6
(3.3)
60.3
(3,302.2)
89.6
3,482.2
0.5
(708.7)
6.0

1,460.2
891.5
180.6
647.3
642.4
93.8
9.5
20,449.0
44.0
22,315.5
6,000.0
290.9
215.4
1,856.3
109.0
4,079.6
17.1
1,777.6
7.1

1,431.9
296.5
12.7
(170.7)
(31.9)
0.3
1.9
(272.8)
(44.0)
832.6
(3.3)
60.3
(3,302.2)
89.6
3,482.2
0.5
(708.7)
6.0

187.5
23,743.7
5,247.0
20,049.2
486.4
845.2
124.2
2,224,770.3

(4,953.3)
8,068.3
127.9
4,569.9
169.4
209.0
(70.1)
101.1
(198,125.6)

187.5
23,743.7
5,247.0
20,049.2
486.4
845.2
124.2
2,224,770.3

(4,953.3)
8,068.3
127.9
4,569.9
169.4
209.0
(70.1)
101.1
(198,125.6)

JLBC
Jul 14

Jul-15

3

JLBC
Jul 14
Jul 15
Jul 16

Jan 16

35,000

Jan 15

8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%

Jul 13

Jul 16

Jan 16

Jul 15

Jan 15

Jul 14

Jan 14

2,200

Jul 13

Jan 13

Jul 12

Jan 12

Jul 11

Jan 11

Jul 10

Jan 10

Jul 09

Jan 09

Jul 08

Jan 08

Jul 07

Jan 07

Jul 06

Jan 06

Jul 05

Jan 05

Jul 04

Jan 04

Jul 03

Jan 03

Jul 02

Jan 02

Jul 01

Jan 01

Thousands of Jobs
2,300

Jan 14

Jan 01
Jul 01
Jan 02
Jul 02
Jan 03
Jul 03
Jan 04
Jul 04
Jan 05
Jul 05
Jan 06
Jul 06
Jan 07
Jul 07
Jan 08
Jul 08
Jan 09
Jul 09
Jan 10
Jul 10
Jan 11
Jul 11
Jan 12
Jul 12
Jan 13
Jul 13
Jan 14
Jul 14
Jan 15
Jul 15
Jan 16
Jul 16

Year Over Year Growth (%)

2,400

Jan 13

Jul 12

Jan 12

Jul 11

Jan 11

Jul 10

Jan 10

Jul 09

Jan 09

Jul 08

Jan 08

Jul 07

Jan 07

3.8% Y/Y Growth
(June 2016)

Jul 06

$19

Jan 06

$20

Jul 05

$23.82 / Hour
(June 2016)

Jan 05

$23

Jul 04

$25

Jan 04

Average Hourly Earnings – Private Sector

Jul 03

$22

Total Monthly Claims for UI Benefits

Jan-16

Jul-15

Jan-15

Jul 14

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

JLBC

Jan 03

Jan 11
July 11

1

Jul 02

Jan 10
July 10

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

Jan 02

Jan 09
July 09

August 2016
Appendix A

Jul 01

Jan 01

Jan-16

Jan 08
July 08

$21

Jan-15

12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 07
July 07

$ / Hour

Page:

Jan 10

July 09

Jan 09

July 08

Jan 08

July 07

Jan 07

Year Over Year Growth (%)

Arizona Economic Trends

Total Non-Farm Employment

2,800

2,700

2,600

2,500

$22.73 / Hour
(Octoberjobs
2014)
2,640,800
(July 2016)

2,100

3.0% Y/Y Growth
(July 2016)

2

Initial Claims for Unemployment Insurance

$24

45,000

40,000

30,000

22,155 Claims
(June 2016)

25,000

20,000

15,000

10,000

5,000

Not seasonally adjusted

4

JLBC
12-Month Moving Sum
Jul 11

0

7

JLBC
Jul 07

Jul 13

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.
Jan 16

Jul 15

Jan 15

Jul 14

Jan 14

Excludes temporary 1 ¢ sales tax

Jul 16

Jan 16

Jul 15

Jan 15

Jul 14

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Jan 09

July 08

Jan 08

July 07

Jan 07

Jul 16

Jan 16

Jul 15

Jan 15

Jul 14

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Jan 09

July 08

Jan 08

July 07

Jan 07

July 06

$ in Millions
$50

Jan 13

Jul 12

Jan 12

Jul 11

Jan 11

Jul 10

Jan 10

Jul 09

Jan 09

Jul 08

Jan 08

30,000

Jul 06

40,000

Jan 07

230

Jan 06

240

90,000

Jul 05

100,000

Jul 04

Residential Building Permits

Jan 05

Single Family Unit - 24,233 Permits
Multi-Family Unit - 10,529 Permits
(June 2016)

JLBC

Jul 03

80,000

40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%

Jan 04

5
July 06

Jul 16

$100

Jan 03

5.1% Y/Y Growth
(July 2016)
Year Over Year Growth (%)

Jul 16

Jul 15
Jan 16

$191.6 million
(July 2016)

Jul 02

Jul 15
Jan 16

Jul 14
Jan 15

$150

Jan 02

Jul 14
Jan 15

Jul 13
* Jan 14

$ in Millions
$175

Jul 01

70,000

Coincident Index Value

* January 2014 estimate adjusted downward by $30 million to reflect onetime category shift.

Jan 01

Jan 16

Jul 15

Jan 15

Jul 14

Jul 13
* Jan 14

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Jan 09

July 08

Jan 08

July 07

Jan 07

July 06

$125

Jan 14

Jul 13

Jan 13

Jan 13

Jul 12

Jan 12

July 11

Jan 11

July 10

Jan 10

July 09

Jan 09

July 08

Jan 08

July 07

Jan 07

July 06

Year Over Year Growth (%)

20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%

Jul 12

Jan 12

50,000

Jan 11

60,000

Jul 10

Excludes temporary 1 ¢ sales tax

Jan 10

Jul 05
Jan 06
Jul 06
Jan 07
Jul 07
Jan 08
Jul 08
Jan 09
Jul 09

Jan 05

Jul 04

Jan 04

Jul 03

Jan 03

Jul 02

Jan 02

JLBC

Jul 01

Jan 01

Building Permits

State Sales Tax Collections – Retail Category
State Sales Tax Collections – Contracting Category

$225
$100

$200
$75

$37.6 million
(July 2016)

$25

$0

3.6% Y/Y Growth
(July 2016)

6

Economic Activity Index

220

221.5 Index Value
(June 2016)

210

200

190

180

170

20,000
160

10,000
150

140

8