JLBC - Monthly Fiscal Highlights 1716 W. Adams Phoenix, AZ 85007 Phone: (602) 926-5491 Fax: (602) 926-5416 www.azleg.gov/jlbc.htm " Year-to-date, …General Fund revenues are 3.0% above the prior year and are $38.0 million above January 2017 Summary December 2016 General Fund collections totaled $855.6 million, which is an increase of 1.4% above the prior year. When compared to the enacted budget projections, December posted a $(28.1) million forecast loss. This loss does not appear to be caused by underlying economic conditions, instead technical factors produced varied results across revenue categories. Insurance Premium Tax collections, which were inflated due to timing issues, posted a $27.8 million forecast gain for the month. This was offset by a $(51.4) million forecast loss in the Individual Income Tax category. Based on preliminary discussions with the Department of Revenue (DOR), an unusually high level of refunds occurred during December 2016, likely due to the delayed processing of income tax returns filed in October 2016. While tax returns are typically due in April, certain filers receive a 6-month extension and file their return in October and DOR processes these returns through the rest of the calendar year. In comparison to December revenue collections of $855.6 million, December 2016 spending was $616.4 million, which is an increase of $13.3 million from the prior year. the enacted forecast.” Year-to-date, excluding Urban Revenue Sharing and one-time fund transfers, General Fund revenues are 3.0% above the prior year and are $38.0 million above the enacted forecast. Fiscal year-to-date, General Fund revenues of $4.56 billion have been offset by $5.53 billion of expenditures. The operating fund balance consists of the General Fund and certain dedicated funds. The operating balance as of mid-January 2017 is $2.04 billion, while the state's Budget Stabilization Fund has a current balance $456.1 million. JLBC Baseline Summary On January 13, the JLBC released its FY 2018 Baseline budget. The Baseline reflects a consensus economic forecast and statutory funding formula requirements. In summary: • • For FY 2018, with ongoing General Fund revenues of $9.65 billion and spending of $9.60 billion, the budget has a projected FY 2018 structural balance of $46 million. The projected FY 2018 cash balance is $159 million. The ending balance projections exclude the state's $456 million Budget Stabilization Fund. In addition, the JLBC Staff has also published a comparison of the Baseline with the Executive Budget. Table of Contents Summary This report has been prepared for the Arizona Legislature by the Joint Legislative Budget Committee Staff on January 20, 2017. December Revenues ............................................. 2 • DCS – Monthly Hiring Report ............................. 8 Monthly Indicators.................................................. 4 • ACJC – State Aid Report ................................... 9 Summary of Recent Agency Reports • Education – Budget Status ................................ 9 • ADOA – Bridge Loan Report ............................. 7 • Education – Report on Data System ............... 9 • ADOA – AFIS Replacement Report ................. 7 • JLBC Staff – Public Program Eligibility ............ 10 • AHCCCS – Arnold v Sarn ................................... 7 • Ombudsman – Annual Report ....................... 10 • AHCCCS – Reconciliation Payments .............. 7 • ABOR/Comm. Colleges – Articulation .......... 11 • Attorney General – Legal Settlements ............ 8 December Spending ........................................... 11 • Attorney General – Internet Crimes Fund ...... 8 Arizona Economic Trends...................Appendix A 2 JLBC – MONTHLY FISCAL HIGHLIGHTS – JANUARY 2017 December Revenues Table 1 December Year-to-Date General Fund Revenues ($ in Millions) FY 2017 Collections $ 855.6 $ 4,556.6 Sales Tax (preliminary) collections of $364.3 million were 4.7% above December of last year and $5.7 million above the forecast for the month. Year-to-date, Sales Tax revenues have increased by 3.1% and are $4.9 million above forecast. Individual Income Tax net revenues of $411.7 million in December were $(9.1) million less than the prior year and $(51.4) million below forecast for the month. Yearto-date, revenue has grown 3.6% over the prior year and is $(5.4) million below forecast. As indicated in Table 2, withholding increased by 3.0% from last year and was $(6.2) million below the forecast. Year-to-date withholding collections are 6.0% above FY 2016. Due to technical reasons, DOR underreported withholding receipts during July – March in FY 2016. If revenues had not been underreported in the beginning of FY 2016, growth in withholding would instead equal 4.7% year-to-date in FY 2017. December estimated and final payments of $100.6 million were (14.2)% below last year and $(18.3) million below the forecast. Year to date, payments are (5.6)% below FY 2016 and $(30.6) million below the forecast. December Individual Income Tax refunds totaled $(32.6) million – this compares to $(30.2) million in December 2015 and a forecasted amount of $(5.7) million. The increase in refunds compared to last year and the forecast partly reflects timing issues for processing returns of taxpayers that received extensions on their Tax Year 2015 returns. Year-to-date refunds have led to a $(10.6) million decrease compared to the enacted forecast. Table 2 Individual Income Tax Growth Rates Compared to Prior Year December YTD Withholding 3.0% 6.0% Estimated/Final Payments (14.2)% (5.6)% Refunds 8.1% 8.6% Corporate Income Tax net collections were $64.6 million in December, which was $(3.2) million less than in the prior year and $(0.3) million less than the forecast. Year to date, collections are $(61.9) million below prior year collections. This decrease is probably the result of the multi-year statutory decline in the Corporate Income Tax rate and a decline in corporate profits during the last year. Difference From Budget Forecast $ (28.1) $ 38.0 Difference From FY 2016 $ 11.4 $ 57.4 Insurance Premium Tax collections of $49.6 million in December were $30.5 million above the prior year and $27.8 million above the forecast. The large difference from prior year revenues and the forecast is likely driven by timing issues for processing quarterly payments form AHCCCS insurers. Year-to-date, collections are 28.2% above last year and $46.2 million above the forecast. The Lottery Commission has not yet reported December sales information. Highway User Revenue Fund (HURF) collections of $117.3 million in December were up 4.7% compared to December of last year and were $4.2 million above forecast. Year-to-date collections are 4.1% above last year. Due to delays in reporting final November revenues for various revenues sources, DOR has made technical adjustments to prior month collection figures. For December, DOR has increased the amount of prior General Fund revenue collections by $0.6 million, and the adjustment has been included in the reported yearto-date results. 3 Table 3 General Fund Revenue: Change from Previous Year and Budget Forecast December 2016 Current Month FY 2017 YTD (Six Months) Change From Actual December 2015 December 2016 Amount Change from Budget Forecast Percent Amount Actual Percent December 2015 December 2016 Amount Budget Forecast Percent Amount Percent Taxes Sales and Use Income - Individual - Corporate $364,338,000 411,697,127 $16,355,191 (9,068,531) 4.7 % (2.2) $5,702,498 (51,406,173) $2,181,768,008 $65,230,726 (11.1) 1.6 % 2,164,068,438 75,372,761 3.1 % $4,943,101 3.6 (5,425,041) 0.2 % (0.3) 64,568,762 (3,217,705) (4.7) (322,476) (0.5) 195,212,190 (61,923,137) (24.1) (24,225,545) (11.0) Property 4,928,209 (2,792,297) (36.2) (4,226,732) (46.2) 18,124,121 (2,776,073) (13.3) (4,071,530) (18.3) Luxury - Tobacco 1,727,954 (525,538) (23.3) 0 0.0 11,618,824 (547,452) (4.5) (35,606) (0.3) 2,739,139 (312,878) (10.3) 0 0.0 16,246,554 356,985 2.2 89,852 0.6 27,796,718 127.6 202,411,056 44,511,746 28.2 46,189,532 29.6 (1,404,139) (52.9) (1,823,613) (59.3) - Liquor Insurance Premium Other Taxes Sub-Total Taxes 49,584,849 36,432 $899,620,472 30,465,323 (284,161) $30,619,404 159.3 (88.6) 3.5 % (351,579) ($22,807,745) (90.6) (2.5) % 1,252,147 $4,790,701,337 $118,821,417 2.5 % $15,641,150 0.3 % 26,744,043 13,812,568 106.8 13,053,936 95.4 18,422,159 3,198,285 21.0 1,957,461 11.9 Other Revenue Lottery License, Fees and Permits Interest Sales and Services Other Miscellaneous Disproportionate Share Transfers and Reimbursements Sub-Total Other Revenue TOTAL BASE REVENUE 0 0 3,888,795 832,921 22,628 -- 171,048 160,950 (79.5) (408,180) (32.8) 11,142,128 2,473,787 28.5 3,124,545 39.0 3,614,578 (8,328,838) (69.7) (1,799,147) (33.2) 21,926,149 996,974 4.8 8,630,027 64.9 -- 0 0 (57.1) 18,134,842 4,121,667 2,899,787 (3,650,964) $11,263,526 ($14,373,161) $910,883,997 $16,246,243 -(55.7) 22,021 -22.0 (3,248,312) 0 -- 0 701,887 837,737 0 22,032 -27.3 0 (3,854,528) -- -29.4 156,777 0 (4,608,198) -- -(20.3) (56.1) % ($5,337,946) (32.2) % $96,540,369 $24,764,230 34.5 % $22,314,548 30.1 % 1.8 % ($28,145,691) (3.0) % $4,887,241,706 $143,585,648 3.0 % $37,955,698 0.8 % Other Adjustments Urban Revenue Sharing One-Time Transfers Sub-Total Other Adjustments TOTAL GENERAL FUND REVENUE (55,298,514) 0 (55,298,514) (4,828,986) 0 (4,828,986) 9.6 (0) 0.0 (331,791,084) 0.0 0 0.0 9.6 % (0) 0.0 % ($28,145,691) (3.2) % $4,556,642,170 $57,421,278 1.3 % $37,955,698 0.8 % 3.7 % $688,854,892 $27,288,746 4.1 % $20,035,088 3.0 % $11,417,257 1.4 % $117,254,715 $5,289,948 4.7 % (86,164,370) (98.0) (0) -- (330,599,536) (57,190,452) 9.6 0 $855,585,483 1,191,548 (28,973,918) -- 35.3 % (0) 0.0 % Non-General Funds Highway User Revenue Fund $4,205,208 4 JLBC – MONTHLY FISCAL HIGHLIGHTS – JANUARY 2017 Monthly Indicators NATIONAL ARIZONA 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 3.5% in the third quarter of 2016. This estimate is the highest rate of growth since the third quarter of 2014 and reflects a strong pickup from the weak growth of 1.4% in the second quarter of 2016. The acceleration relative to the prior quarter was primarily due to growth in inventory investment, exports and federal government spending. Improved performance in these categories was partly offset by a deceleration in consumption spending and an increase in imports. 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. The Conference Board’s U.S. Consumer Confidence Index increased by 3.9% in December and by 18.1% above the reading in December 2015. The index's latest reading is the highest since August 2001. The increase in December reflected improvement in consumer expectations of future economic and job circumstances. This monthly increase in expectations was partly offset by a decrease in consumers' assessment of current economic conditions. According to the U.S. Department of Commerce Bureau of Economic Analysis, the U.S. Personal Consumption Expenditure Price Index (PCEPI) was flat in November, relative to October. During the month, a 1.3% increase in energy prices was offset by decreases in prices of other products. The index's year-over-year growth remained flat at 1.4%, but had been steadily moving closer to the Federal Reserve Bank's (Fed) 2.0% annual inflation target in prior months. Citing increased inflation and an improving labor market, the Fed chose to resume increases to the federal funds interest rate in December 2016. Consumer prices, as measured by the U.S. Consumer Price Index (CPI), increased 0.2% in November and 1.7% above November 2015 prices. Continuing a 3-month trend, the monthly increase was primarily driven by a 2.7% increase in the gasoline index and also by a 0.3% increase in the shelter index. Energy prices increased 1.2% and core inflation (all items less food and energy) increased 0.2% for the month. Indexes for motor vehicle insurance, education and communication increased, while indexes for apparel, household furnishings, and airline fares decreased. The Conference Board's U.S. Leading Economic Index was unchanged in November and stands 0.7% above its November 2015 reading. Of the index's 10 components, 7 made positive contributions in November. Interest rate spread was once again the strongest positive contributor, and average weekly initial claims and stock prices made positive contributions as well. Negative contributors include building permits, average workweek of production workers and the ISM index for new orders. Arizona’s coincident index increased by 2.4% compared to November 2016. Over the same time period, the U.S. coincident index increased by 2.9%. See Appendix A – Arizona Economic Trends for additional historical information. Housing Single-family housing construction is increasing. Multifamily construction had previously peaked, but has recently started to increase again. Arizona’s 12-month total of single-family building permits is 24,211, or 9.1% more than a year ago. The comparable single-family permit growth rate for the entire U.S. is 9.0%.. The 12-month total of multi-family building permits has started to increase again. Arizona’s total of 10,735 multi-family building permits is 9.6% more than 2015. Nationwide multi-family permits are (8.4)% lower than 2015. Revenue per available room was $70.16 in November, which was 9.5% above the amount in November 2015. The Arizona Office of Tourism reports that visits to state parks during October were 14.2% above visits in October 2015. Employment According to information released by the Office of Economic Opportunity (OEO), the state added 6,300 net new nonfarm jobs in December over the prior month. This was slightly less than the average employment gain for December in the prior 5 years, which was 6,600. Year over year, the state added 32,000 net new jobs in December. This corresponds to a job growth rate of 1.2%. Employment growth has slowed significantly over the last 6 months. To provide some perspective, job growth in the first half of 2016 was 3.0% compared to 1.9% in the second half of the year. The state’s unemployment rate declined from 5.0% in November to 4.8% in December. This was the lowest jobless rate in Arizona since February 2008. The U.S. unemployment rate was 4.7% in December, an increase of 0.1% over the prior month. In November, the Average Weekly Hours worked by individuals in Arizona’s private sector was 34.1 hours. This workload was (1.7)% below the level during the prior month and (0.6)% below the level in November 2015. 5 JLBC – MONTHLY FISCAL HIGHLIGHTS – JANUARY 2017 Monthly Indicators (Continued) The Average Hourly Earnings received by private sector workers was $24.41, which is (0.4)% below the average in the prior month. Despite the monthly decrease, November earnings were 4.0% above the average in November 2015. Year-over-year growth has been at or above 4.0% in each of the last 3 months. The last time this occurred was from August to October of 2009. The U.S. Department of Commerce Bureau of Economic Analysis quarterly releases estimates of annual Personal Income received in each state. This measure includes wages and salaries, proprietors’ income, dividends, interest, rent, and various supplements to income while excluding capital gains, contributions for government social insurance, and pension benefit payments. In the third quarter of 2016, Arizona personal income increased year-over-year by 3.8%, to $279.1 billion. Overall growth of 3.8% largely reflected strong wage growth of 5.0% that was partly offset by weak growth of 1.4% in dividends, interest and rent income. All other sources of income collectively grew at 3.4% during the quarter. The Office of Economic Opportunity (OEO) reported that 15,555 initial claims for unemployment insurance were filed in December, a decrease of (2.9)% compared to the same month last year. This was the first year-over-year decrease of initial jobless claims since July 2016. According to OEO, the state had a total of 23,690 claimants receiving unemployment insurance benefits in December, a decrease of (8.2)% from November. This figure was (6.1)% below the December 2015 level, and represented the lowest number of claimants receiving jobless benefits for the month of December in 10 years. According to the U.S. Census, Arizona’s population was estimated to be 6.93 million as of July 1, 2016. This was a net increase of 1.7%, or 113,500 persons over July 1, 2015. This represented the largest population increase since 2007. An estimated 67%, or equivalently, 76,400 of the population increase was attributable to net migration. By way of comparison, OEO estimates that Arizona’s population was 6.84 million on July 1, 2016. State Agency Data At the beginning of January 2017, the total AHCCCS caseload was 1.87 million members. Since the federal health care expansion in January 2014, the overall AHCCCS population has grown by 608,600 members. Total monthly enrollment decreased by (900) members, or less than (0.1)%, during December. The overall decrease in December was spread among most enrollment populations. The Traditional population of low income parents and children decreased (1,300), or (0.1)%, in December to a level of 1.09 million members. This drop was accompanied by an enrollment decrease of (800), or (0.4)%, in the Proposition 204 parent population. Laws 2016, Chapter 112 reopened enrollment in the KidsCare program for children with family incomes above those in the Traditional population, beginning September 1, 2016. Following the enrollment freeze in January 2010, the KidsCare caseload had dropped to 500 members by August 2016. Through January 1, enrollment in the program reached 13,400, or 3,700 more than the prior month’s enrollment. In January 2014, the state started accepting new enrollment to the Proposition 204 childless adults program. In December 2016, the childless adult population decreased by (2,200), or (0.7)%. At 316,000, this population is 3.1% higher than a year ago. The state also opted to expand adult Medicaid coverage to 133% of FPL. Their enrollment decreased by (200) in December and now totals 81,800 individuals. Enrollment is 2.8% higher than a year ago. The federal government pays 100% of this cost through the end of calendar year 2016. The federal match rate for this population drops to 95% in calendar year 2017. There were 19,728 TANF recipients in the state in December, representing a (0.1)% monthly caseloads decrease from November. The year-over-year number of TANF recipients has declined by (13.2)%. The statutory lifetime limit on cash assistance is 12 months. The Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, provides assistance to low-income households to purchase food. In December, 958,638 people received food stamp assistance in the state, representing a (0.9)% decrease over November caseloads. Compared to December caseloads last year, the level of food stamp participation has declined by (3.0)%. The inmate population was 42,297 as of December 31, 2016. This is a (1.0)% decrease since last December. The population decreased by (0.4)% since November 2016. Based on information the Department of Child Safety provided for November 2016, reports of child maltreatment totaled 48,237 over the last 12 months, a decrease of (5.7)% over the prior year. There were 17,936 children in out-of-home care as of October 2016, or (5.2)% less than in October 2015. Compared to the prior month, the number of out-of-home children decreased by (0.6)%. 6 JLBC – MONTHLY FISCAL HIGHLIGHTS – JANUARY 2017 Table 4 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 (1406 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 December 3rd Q 2016 December December December December December November November 4.8% 10.9% 15,555 23,690 2,754,700 159,700 136,300 34.1 $24.41 (0.2)% (0.4)% (3.4)% (8.2)% 0.2% 0.6% 0.4% (1.7)% (0.4)% (1.1)% (2.7)% (2.9)% (6.1)% 1.2% (0.6)% 4.8% (0.6)% 4.0% November November November $955.9 million $320.5 million $401.7 million (2.9)% (9.8)% 8.1% (2.1)% 5.7% 3.7% November November 24,211 10,735 1.0% 5.7% 9.1% 9.6% November 5,435 0.8% 3.2% November October November November $244,990 163.92 3,334 24,675 0.9% 0.4% (2.4)% (1.5)% 6.5% 5.2% (23.9)% (1.0)% November August October November 3,556,974 1,647,913 229,170 $70.16 (0.2)% (8.8)% 21.0% NA 0.5% (10.2)% 14.2% 9.5% 4th Q 2016 November November 3rd Q 2016 July 2016 91.7 222.28 3.9% $279.1 billion 6,931,071 3.7% 0.1% (0.7)% 1.0% N/A 12.9% 2.4% (0.4)% 3.8% 1.7% May May AA / Aa2 Stable N/A N/A N/A N/A January 1st 1,866,776 1,091,599 316,007 183,638 81,795 13,389 58,894 121,454 0.0% (0.1)% (0.7)% (0.4)% (0.2)% 38.0% 0.2% (0.2)% November October December December 48,237 17,936 1,340 42,297 0.3% (0.6)% (3) (0.4)% December December 19,728 958,638 (0.1)% (0.9)% September September 18,880 27,766 29 (17) 583 502 $16.7 trillion 1.7% 3.5% 113.7 124.6 242.4 111.5 3.9% 0.0% 0.2% 0.0% 18.1% 0.7% 1.7% 1.4% 3rd Q, 2016 (3rd Estimate) December November November November 3.6% 3.6% 3.1% (3.1)% 2.8% 1627.6% 2.0% 5.8% (5.7)% (5.2)% 31 (1.0)% (13.2)% (3.0)% 7 JLBC – MONTHLY FISCAL HIGHLIGHTS – JANUARY 2017 Summary of Recent Agency Reports Arizona Department of Administration – Report on Budget Stabilization Fund Loan Authority – Pursuant to a FY 2017 General Appropriation Act (Laws 2016, Chapter 117) footnote, the Arizona Department of Administration (ADOA), the Department of Economic Security (DES), and the Department of Child Safety (DCS) have reported on their plans to improve the federal reimbursement claiming process to eliminate the need for loan authority from the Budget Stabilization Fund (BSF), or "bridge loan." The FY 2017 General Appropriation Act authorized DCS and DES to each receive a bridge loan of up to $35 million from the BSF in FY 2016 to address cash flow needs, on the condition that the funding would be repaid on or before September 1, 2016. DES used the bridge loan and repaid the loan on August 11, 2016. DCS did not use the bridge loan. DES reports that it has made improvements to claiming federal reimbursements that will reduce the bridge loan need by $(10) million in FY 2017, but will still require bridge loan authority of at least $25 million in FY 2017. DES claims that the remaining $25 million is needed to comply with cost allocation plans associated with federal grants. DCS believes it will no longer need bridge loan authority in FY 2017 based on process improvements the agency made in claiming federal reimbursements. (Patrick Moran) Arizona Department of Administration – Third-Party Report on AFIS Replacement – Pursuant to A.R.S. § 18104A1(g), the Arizona Department of Administration (ADOA) has provided a quarterly update for the Arizona Financial Information System (AFIS) Replacement project. The new AFIS system went “live” on July 1, 2015. The report noted that during the implementation ADOA had issues with the integration of AFIS with the state's procurement system. While the most critical components have been addressed, ADOA is in the process of replacing its e-procurement system. During FY 2017, ADOA outsourced the technical operations of AFIS to the developer. As a result of this transition, some functionality such as travel management and Comprehensive Annual Financial Reporting (CAFR) were deferred. ADOA will implement these functions in FY 2017. Overall, the consultant reported that the project is making appropriate progress. (Rebecca Perrera) Arizona Health Care Cost Containment System – Report on Arnold v. Sarn – Pursuant to a FY 2017 General Appropriation Act (Laws 2016, Chapter 117) footnote, the Arizona Health Care Cost Containment System (AHCCCS) has submitted its report for the first and second quarter of FY 2017 on implementing the Arnold v. Sarn joint agreement. The state has been a longstanding defendant in the Arnold v. Sarn litigation concerning the level of services provided to the Seriously Mentally Ill (SMI) population in Maricopa County. In January 2014, a joint agreement was filed with the court to terminate the lawsuit, and the agreement received court approval in February 2014. The agreement requires expansion of certain behavioral health services for individuals with a serious mental illness in Maricopa County ("class members") by the end of FY 2016, including the establishment of 8 additional assertive community treatment teams, peer support services for 1,500 class members, supported employment for 750 class members, and supportive housing for 1,200 class members. AHCCCS has met all, and substantially exceeded most of, these service capacity requirements. AHCCCS estimates that the cost of meeting these service capacity requirements is approximately $85.4 million, including $64 million from the General Fund. The agreement also requires the state to maintain a crisis system to provide emergency services to individuals experiencing a behavioral health crisis, including a crisis hotline, mobile crisis teams, and facility-based crisis services. AHCCCS reports that in October 2016, 1,050 members used the crisis hotline in Maricopa County, 219 mobile crisis teams were deployed, and 1,207 members received crisis stabilization services. The agreement also limits the census of class members at the Arizona State Hospital (ASH) to 55 members. AHCCCS reports that there are currently 55 members receiving treatment at ASH. A wait list for ASH treatment is maintained to ensure compliance with the census limitation. (Patrick Moran) AHCCCS – Report on Reconciliation Payments – Pursuant to the FY 2017 General Appropriation Act (Laws 2016, Chapter 117), the Arizona Health Care Cost Containment System (AHCCCS) submitted a report on reconciliation payments and penalties received and deposited during the first 6 months of FY 2017. AHCCCS reports that during that 6-month period they deposited $2.0 million to the General Fund and $1.4 million into the Hospital Assessment Fund, and used $8.5 million to offset Federal Medicaid Authority expenditures from reconciliation payments and penalties/sanctions. 8 JLBC – MONTHLY FISCAL HIGHLIGHTS – JANUARY 2017 Summary of Recent Agency Reports (Continued) AHCCCS limits financial risks and profits for health plans and Regional Behavioral Health Authorities (RBHAs) for most Medicaid populations (the maximum percentage of loss and profit varies by Medicaid population). Reconciliation payments are made by health plans/RBHAs to the state if profits exceed the set level. A penalty, or sanction, may be assessed against health plans/RBHAs for the failure to demonstrate compliance with their contractual responsibilities. Pursuant to A.R.S. § 35-142.01, AHCCCS is required to deposit monies received for reconciliation payments and penalties received into the General Fund or the fund from which the appropriation was originally made. (Jon Stall) 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 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 second quarter of FY 2017, the AG deposited a total of $197,200 into various consumer accounts. Of that amount, $46,600 was deposited into the Antitrust Enforcement Revolving Fund, $77,400 into the CPCF Revolving Fund, $53,200 into the Restitution Subaccount, and $20,000 into the Remediation Subaccount. No monies were deposited into the General Fund this quarter. Only the $20,000 deposit to the Remediation Subaccount requires JLBC review prior to expenditure. Deposits to the Antitrust Enforcement Revolving Fund The AG deposited $46,600 in the second quarter of FY 2017 to the appropriated Antitrust Enforcement Revolving Fund to pay for antitrust enforcement expenses undertaken by the AG. The amount was derived from small legal settlements. Deposits to the CPCF Revolving Fund The AG deposited $77,400 in the second quarter of FY 2017 to the appropriated CPCF Revolving Fund, which may be used for any purpose permitted by statute. The amount was derived from small legal settlements. Deposits to the Consumer Restitution Subaccount The AG deposited $53,200 in the second quarter of FY 2017 to the non-appropriated Restitution Subaccount to compensate specific entities for economic loss resulting from consumer fraud. Of that amount, $52,900 came from small legal settlements and the remainder came from interest income. Deposits to the Consumer Remediation Subaccount The AG deposited $20,000 in the second quarter of FY 2017 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) Attorney General – Quarterly Report on Internet Crimes Against Children Enforcement Fund Expenditures – Statute requires the Attorney General (AG) to report quarterly on expenditures from the Internet Crimes Against Children (ICAC) Enforcement Fund and progress made towards ICAC goals. The ICAC Enforcement Fund was created in FY 2015 with an annual deposit of $900,000 in revenues from lottery games that are sold from a vending machine in agerestricted areas. Monies in the fund are utilized to support the ICAC Task Force housed within the Phoenix Police Department which works with federal, state, and local law enforcement to investigate technologyfacilitated sexual exploitation of children. Through the second quarter of FY 2017, a total of $63,600 in lottery revenues were deposited into the ICAC Enforcement Fund. Additionally, a total of $21,800 was expended in the second quarter of FY 2017 to help pay for 4 new positions and other operating costs of the ICAC Task Force. No monies were expended from the fund in the first quarter. As reported by the AG, the FY 2017 expenditure plan for the ICAC Enforcement Fund allocates monies to the hiring of 4 new positions within the Phoenix Police Department; one-time equipment costs of the task force including computers, unmarked vehicles, educational materials, monitors, cameras, software, hardware, a forensic van, and a crime scene van; annual equipment costs including computers, software, and hardware; and law enforcement training. As of December 31, 2016, the ICAC Enforcement Fund had a balance of $1.8 million. (Eric Billings) Department of Child Safety – Monthly Report on Hiring – Pursuant to a FY 2017 General Appropriation Act footnote, the Department of Child Safety (DCS) has reported on its progress in hiring and retaining child safety staff through December 2016. (See Table 5 below.) 9 JLBC – MONTHLY FISCAL HIGHLIGHTS – JANUARY 2017 Summary of Recent Agency Reports (Continued) The number of direct line child safety staff (caseworkers, caseworkers in training, caseworkers awaiting training and hotline staff) was 1,340 in December 2016, or (66) fewer staff than the number of funded positions. Most of the difference between funded positions and filled positions was driven by lower-than-budgeted staffing of caseworkers, which was partly offset by higher-than-budgeted staff in training. Total direct line staff decreased by (12) since November. There were also 1,380 non-direct line child safety staff in December 2016, or (131) fewer staff than the funded staffing level. The budgeted staffing level is 1,511 excluding Attorney General positions. Total non-direct line positions increased by 12 since November. (Patrick Moran) Arizona Criminal Justice Commission – Report on State Aid to County Attorneys Fund and the State Aid to Indigent Defense Fund – Pursuant to A.R.S. § 41-2409E, the Arizona Criminal Justice Commission (ACJC) is required to report on expenditures for the prior fiscal year from the State Aid to County Attorneys Fund and State Aid to Indigent Defense Fund by January 8 of each year. In FY 2016, the State Aid to County Attorneys Fund received revenues totaling $934,500 and had an ending balance of $595,400. ACJC reports that county attorneys, out of their $973,700 appropriation, reported expenditures of $1.8 million in FY 2016 by also utilizing an existing cash balance in the State Aid to County Attorneys Fund. Of that total, $1.7 million was spent on salary and benefits, $12,000 on equipment, $3,200 for contractual services, $1,600 on operating costs and supplies, $13,100 on case management software, and $800 on other expenditures. ACJC reports that counties used the monies in 3 main areas: additional staffing, technological purchases, and training and travel expenses. Training and travel expenses funded witness travel and staff attendance at educational seminars and conferences. ACJC also states that no prosecuting agencies reported case processing times that met the Supreme Court guidelines as no agency reported adjudicating 100% of eligible felony cases within 180 days of filing. Of the 28 agencies who provided case processing statistics, 12 reported an increase in the percentage of cases adjudicated within 180 days from FY 2015 to FY 2016. ACJC did not distribute State Aid to Indigent Defense Fund revenues to counties in FY 2016, as they were appropriated for other non-Indigent Defense areas. (Josh Hope) Department of Education – Budget Status Report – Pursuant to a General Appropriation Act footnote and A.R.S. § 35-131D, the Arizona Department of Education (ADE) recently provided an update regarding its budget status for FY 2017. In that report, ADE estimates that it will experience a $(4.0) million net funding shortfall for formula programs for FY 2017. This consists of an estimated $0.9 million surplus for Basic State Aid and estimated $(4.9) million shortfall for Additional State Aid (the Homeowner’s Rebate and 1% Cap programs). ADE’s current $(4.0) million shortfall estimate is subject to revision as additional data become available. (Steve Schimpp) Department of Education – Report on Education Learning and Accountability System – Pursuant to a A.R.S. § 18-104, 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, timeline for completion, technology approach and scope Table 5 DCS Filled FTE Positions as of December 2016 Caseworkers Hotline Staff Staff in Training Subtotal - Direct Line Subtotal - Non-Direct Line Staff Grand Total 1/ ____________ 1/ Excludes 276.2 Attorney General Staff. Funded 1,190 76 140 1,406 1,511 2,917 December 1,085 66 189 1,340 1,380 2,720 Difference (105) (10) 49 (66) (131) (197) 10 JLBC – MONTHLY FISCAL HIGHLIGHTS – JANUARY 2017 Summary of Recent Agency Reports (Continued) throughout the life of the project. The vendor’s most recent quarterly review from October 2016 was released by ADE on January 13, 2017. The report observes that "all districts (with a couple small exceptions)" are now reporting student data via the new Arizona Education Data Standards (AzEDS) platform, and that "districts seem to be satisfied with the process," which "is saving districts time and providing accurate data." The report notes that ADE's school payment systems, APOR and CHAR, will be rewritten in FY 2017 and FY 2018. As part of this process, the report recommends that "ADE conduct a thorough legislative review" of the current financial calculations to determine whether they reflect legislative intent and to calculate the financial impact to districts of any necessary refinements. The review states that ADE has pursued best practices in most areas of ELAS development, including project management and the system's architecture, but that the customer support help desk services "do not reflect the commonly accepted best practices." The report suggests that ADE resolve these issues before selling any of the ELAS components (as allowed by Laws 2016, Chapter 317) and notes that ADE has begun a structural reorganization of the help desk to address the problems. The report finds that districts participating in the state information system (SIS) program "have enjoyed lowerper student costs," but that "it is arguable as to whether they receive better support and easier procurement" as intended. It notes that ADE has begun taking steps to improve these aspects of the program. The report also notes that "work is underway" to consolidate the current data silos (e.g. free and reduced price lunch, Empowerment Scholarship Accounts, etc.) into the AzEDS data collection. Finally, the report commends ADE for its work in promoting data literacy among educators and for the state's progress in developing strategic plans for the federal Every Student Succeeds Act (ESSA), which can utilize the new capabilities under ELAS. (Matt Beienburg) 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 December 31, 2016 reports: Universities – At the 3 universities, 172,177 students registered for the fall 2016 semester. Of the total students registered, the universities were able to verify the legal immigration status of 157,830 students. Additionally, the universities reported that 18,431 of these students did not require verification because they have neither requested nor 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. Department of Economic Security – The department reported that 8,247 applications were received for child care assistance during the reporting period of June 1, 2016 to November 30, 2016. Of this number, 19 were denied because criteria for citizenship or legal residency were not met. Community Colleges – Statewide, the Community Colleges reported a total of 228,505 students classified as in-state for the fall 2016 semester. They reported 363 students who were not entitled to be classified as instate because of a lack of lawful immigration status. Additionally, 91,059 students applied for financial aid. Of those who applied, the community colleges reported that 104 were not entitled to any aid because they were not lawfully present in the United States. Department of Education – The department reported that 9,907 people applied for instruction in Arizona Adult Education during the reporting period of June 1, 2016 to December 1, 2016. Of this amount, 548 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) Ombudsman-Citizens' Aide Office – Annual Report – Pursuant to A.R.S. § 41-1376, the Ombudsman-Citizens' Aide is to submit an annual written report by January 1 summarizing their activities during the previous fiscal year (FY). The FY 2016 annual report cites examples of cases in the office’s 3 focus areas: general complaints about state agencies, Department of Child Safety (DCS) cases, and public access cases. There were 5,132 total cases in FY 2016 including 3,156 involving coaching, 1,619 needing assistance, and 357 requesting investigations. Of the 357 requests for investigations, 234 were completed, 3 are ongoing, 64 were discontinued or the complaint was withdrawn, and the Ombudsman declined to investigate 56. (Steve Grunig) 11 JLBC – MONTHLY FISCAL HIGHLIGHTS – JANUARY 2017 Summary of Recent Agency Reports (Continued) Arizona Board of Regents/Arizona Community Colleges – Report on Articulation – Pursuant to A.R.S. § 15-1824, the Arizona Board of Regents (ABOR) and the community colleges are required to submit an annual report by December 15 of their progress on both articulation and meeting statewide postsecondary education needs. This year’s progress in implementing the transfer model and support systems include: • • 56.0% of transfer students completed an associate’s degree prior to transfer in 2014-2015 versus 48.8% in 2010-2011. • Minority students accounted for 43.1% of new community college transfers in 2015-2016. (Matt Beienburg) • During the 2015-2016 academic year, 10,807 community college students transferred to the public university system. This is an increase of 10.9% from the 2010-2011 academic year. 54.4% of new transfer students had 60 or more credit hours transferred to a university in 2015-2016 versus 47.2% in 2010-2011. December Spending December 2016 General Fund spending was $616.4 million, which represents an increase of $13.3 million above December 2015. (See Tables 6 & 7). Year-todate, General Fund spending is $5.53 billion, or $(264.6) million below the prior year. Table 6 General Fund Spending ($ in Millions) Change From YTD Change Dec 16 Dec 15 Year-to-Date from FY 16 AHCCCS 159.3 4.1 870.5 216.4 Corrections 80.1 2.0 520.1 (12.7) (31.2) Agency Child Safety 18.7 6.3 183.5 Economic Security (2.6) (6.2) 464.1 60.2 Education 272.8 0.5 2,506.2 34.3 Health Serv ices 5.9 (8.0) 47.1 (469.1) Public Safety 2.0 0.4 44.8 4.9 School Facilities Board 0.1 (0.0) 171.0 9.1 Univ ersities 55.0 18.4 339.4 (92.1) Leaseback Debt Serv ice 0.0 0.0 84.1 0.0 Other 25.1 (4.2) 304.0 15.6 Total 616.4 13.3 5,534.8 (264.6) 12 JLBC – MONTHLY FISCAL HIGHLIGHTS – JANUARY 2017 Table 7 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 County Funding AZ State Schools for the Deaf & Blind Office of Economic Opportunity Department of Economic Security State Board of Education 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 Department of Forestry and Fire Management Department of Gaming Arizona Geological Survey 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 Dec 16 Change from Dec 15 Year-to-Date YTD Change from FY 16 2,531.3 38.4 8.2 563.1 159,318.0 1,954.2 66.2 1,834.2 (2.0) 0.7 (61.7) 4,116.3 332.1 (7.3) 22,480.0 84,117.4 429.2 58.0 4,772.4 870,500.4 11,777.6 517.7 10,941.4 2.8 3.4 4.4 472.6 216,407.1 1,401.9 (39.1) 18,700.9 1,866.7 241.4 43.2 80,077.9 1,488.5 119.5 (2,622.1) 36.9 272,828.9 863.3 9.1 23.3 142.3 202.2 463.8 717.6 5,914.2 128.8 58.7 61.0 75.0 299.4 6,306.5 (491.6) (12.1) 18.5 1,958.2 (379.6) 119.5 (6,182.8) (39.9) 506.4 373.2 (7,000.0) (9.1) (0.2) 86.8 (52.7) (128.4) 166.8 (122.4) (499.2) (8,043.6) (14.4) (5.1) 61.0 (97.7) (41.2) 183,490.9 10,900.2 26,499.0 531.5 520,148.1 14,000.5 12,742.3 119.5 464,059.4 481.9 2,506,178.4 4,666.6 2,823.6 97.2 359.3 405.5 1,449.2 (2.4) 3,348.2 1,779.5 5,029.7 47,099.1 1,634.0 405.3 452.4 634.5 2,475.7 (31,198.9) (2,083.0) 539.7 267.9 (12,666.7) 8,000.0 (1,940.8) 119.5 60,200.9 (106.9) 34,333.9 447.8 (4,176.4) 11.4 28.7 (81.4) (124.5) (1,009.2) 670.3 (14.9) (489.2) (7.9) (469,096.9) (169.2) (32.8) 452.4 15.1 (175.9) 2,344.1 998.2 (186.3) 439.7 (3.4) (1,875.4) 47,140.0 6,931.7 11,300.0 2,462.2 (185.8) (2,657.6) 13 JLBC – MONTHLY FISCAL HIGHLIGHTS – JANUARY 2017 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 Occupational Safety and Health Review 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 Department of Transportation 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 Water Infrastructure Finance Authority Department of Weights & Measures Other - JP Salaries Distribution Other Total Dec 16 Change from Dec 15 Year-to-Date YTD Change from FY 16 605.3 (46.5) 5,462.7 (253.7) 1,359.8 1,112.5 158.8 581.9 673.7 77.5 5.0 2,046.2 104.1 145.0 1,398.4 79.5 2,573.4 0.2 (1.1) (148.2) 8.7 (11.7) 12.4 83.2 5.9 (4.9) (0.9) 400.3 104.1 (11.1) 1,585.4 (5.9) 1,796.7 (17.3) (3.6) 9,786.0 6,265.9 1,154.4 3,412.3 4,260.0 584.8 66.3 20,449.0 696.3 44,813.8 6,000.0 1,028.0 1,390.3 15,284.4 170,994.4 16,298.3 134.5 4,907.0 1,500.7 29.0 (278.2) (595.0) 7.7 57.3 539.9 3.6 2.2 (2.5) (275.3) (2.1) 4,949.1 212.7 50.4 (8,765.7) 9,116.9 10,902.1 (11.2) (70.3) 1,500.7 8.9 529.0 24,676.2 8,436.3 21,311.5 369.8 777.7 616,396.6 507.0 8,048.6 2,609.4 7,231.3 (64.8) 49.9 (23.1) (4.4) (7.6) 13,342.8 12,907.0 148,057.2 50,568.7 127,869.3 2,828.0 5,245.5 500.0 378.0 70.4 5,534,775.7 636.8 (42,283.6) (14,887.5) (35,542.1) 187.5 103.4 500.0 (562.7) (130.3) (204.3) (264,558.7) JLBC Jan 11 Jul-15 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 Jul-16 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% Jan-16 Jan 09 $24.41 / Hour (November 2016) $20 $19 4.0% Y/Y Growth (November 2016) Total Monthly Claims for UI Benefits 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 $21 Jan-15 Jan 08 July 08 $22 Jul 14 Jan 14 Jul 13 Jan 13 Jul 12 Jan 12 July 11 Jan 07 July 07 $ / Hour 1 JLBC Average Hourly Earnings – Private Sector $26 3 JLBC 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 35,000 Jul 14 Jul 15 Jul 16 Jan 16 2,200 Jan 15 2,300 Jan 14 2,400 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 January 2017 Appendix A 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 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 Year Over Year Growth (%) Page: July 10 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) 2,754,700 (December 2016) 2,100 1.2% Y/Y Growth (December 2016) 2 $25 Initial Claims for Unemployment Insurance $24 $23 45,000 40,000 30,000 15,555 Claims (December 2016) 25,000 20,000 15,000 10,000 5,000 Not seasonally adjusted 4 JLBC 12-Month Moving Sum 0 7 JLBC Jul 09 Jul 16 Jan 16 Jul 15 Jan 15 Jul 14 Jan 14 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 Year Over Year Growth (%) Jul 16 Jul 14 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 Jul 16 Jan 16 Jul 15 Jan 15 $ in Millions $50 Jul 13 Jan 13 Jul 12 Jan 12 230 Jul 11 Jan 11 Jul 10 140 Jan 10 150 10,000 Jul 08 20,000 Jan 09 30,000 Jan 08 40,000 Jul 07 Single Family Unit - 24,211 Permits Multi-Family Unit - 10,735 Permits (Nov. 2016) Jul 06 70,000 Jan 07 90,000 Jul 05 100,000 Jan 06 Residential Building Permits Jul 04 80,000 JLBC Jan 05 5 Jul 03 Jul 15 Jan 16 1.8% Y/Y Growth (November 2016) 40% 30% 20% 10% 0% -10% -20% -30% -40% -50% Jan 04 Jul 14 Jan 15 * Jan 14 Jul 13 Jan 13 Jul 12 Jan 12 $100 Jan 03 Jul 13 Jan 11 July 11 $184.7 million (November 2016) Jul 02 50,000 Jan 13 Jan 10 July 10 $150 Jul 01 60,000 Jul 12 Jan 12 July 11 Jan 11 July 10 July 09 Jan 09 July 08 Jan 08 July 07 Jan 07 July 06 $ in Millions $175 Jan 02 * January 2014 estimate adjusted downward by $30 million to reflect onetime category shift. Coincident Index Value Excludes temporary 1 ¢ sales tax Jan 10 July 09 Jan 09 July 08 Jan 08 July 07 20% 15% 10% 5% 0% -5% -10% -15% -20% * Jan 14 JLBC Jan 07 July 06 Year Over Year Growth (%) $125 Jan 01 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 Building Permits State Sales Tax Collections – Retail Category State Sales Tax Collections – Contracting Category $225 $100 $200 $75 $37.2 million (November 2016) $25 $0 (0.1)% Y/Y Growth (November 2016) Excludes temporary 1 ¢ sales tax 6 Economic Activity Index 240 220 222.3 Index Value (November 2016) 210 200 190 180 170 160 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