2010-2011 Financial Plan Mid-Year Update – Executive Summary
Revisions to the 2010-11 Financial Plan
DOB has made a number of substantial revisions to the General Fund receipts and
disbursements forecasts contained in the Enacted Budget Financial Plan. The revisions
are based on a comprehensive review of operating results to date, updated economic
data, and other information. The following table summarizes the Mid-Year revisions and
displays the impact on General Fund operating projections over the forecast period. It
is followed by a discussion of the major revisions. Certain revisions displayed on the
table are reclassifications of receipts and disbursements projections that have no net
Financial Plan impact (e.g., Mental Hygiene). In other cases, revisions may affect both
receipts and disbursements and need to be considered together to understand the
Financial Plan impact. For instance, revisions related to reductions in State agency
operations included in the Enacted Budget Financial Plan and allocated to agency
budgets for the first time in this Mid-Year Update affect both receipts and
disbursements. (For example, a reduction to State agency operations funded by a
special revenue fund is displayed as a transfer of resources from the special revenue
fund, thereby increasing General Fund receipts.)
GENERAL FUND FORECAST FOR 2010-11 THROUGH 2013-14
SAVINGS/(COSTS)
(millions of dollars)
| |
2010-11 |
2011-12 |
2012-13 |
2013-14 |
| ENACTED BUDGET SURPLUS/(GAP) ESTIMATE |
0 |
(8,177) |
(13,461) |
(15,563) |
| Total Receipts Revisions |
(162) |
(750) |
(983) |
(1,069) |
| Forecast Revisions: |
(88) |
60 |
(86) |
(157) |
| Tax Forecast Revisions |
(278) |
(105) |
(339) |
(405) |
| Personal Income Tax* |
(300) |
(302) |
(322) |
(323) |
| Sales/Use Taxes* |
(94) |
80 |
(1) |
0 |
| Business Taxes |
69 |
117 |
(16) |
(82) |
| Other Taxes* |
47 |
0 |
0 |
0 |
| 18-A Assessment |
(40) |
(28) |
(28) |
(28) |
| Mental Hygiene |
73 |
139 |
226 |
240 |
| Workers Compensation Assessment Surplus |
65 |
0 |
0 |
0 |
| Debt Management |
43 |
0 |
0 |
0 |
| Allocation of Agency Operational Savings |
33 |
62 |
52 |
44 |
| All Other |
16 |
(8) |
3 |
(8) |
| Other Adjustments (No Net Financial Plan Impact) |
(74) |
(810) |
(897) |
(912) |
| Mental Hygiene Accounting Reclassifications |
(168) |
(810) |
(897) |
(912) |
| Allocation of FMAP Contingency Savings |
94 |
0 |
0 |
0 |
| Total Disbursement Revisions |
(153) |
(99) |
(200) |
(600) |
| Forecast Revisions |
(227) |
(909) |
(1,097) |
(1,512) |
| Medicaid/HCRA |
(368) |
(725) |
(859) |
(827) |
| Program Costs/Caseload Increases |
(732) |
(800) |
(841) |
(887) |
| HCRA/Other Medicaid |
(125) |
(135) |
21 |
(89) |
| Medicare Part D Clawback |
223 |
38 |
0 |
0 |
| FMAP Reestimate/State/Local Share Reconciliation |
300 |
208 |
0 |
0 |
| Federal Health Care Reform |
(34) |
(36) |
(39) |
149 |
| Human Services |
156 |
151 |
149 |
146 |
| School Aid |
12 |
(109) |
(156) |
(354) |
| Lottery Aid |
(83) |
(11) |
(63) |
(68) |
| Higher Education |
2 |
(100) |
(166) |
(169) |
| Transportation/Motor Vehicles |
74 |
64 |
94 |
115 |
| Public Safety/Criminal Justice |
(10) |
(25) |
(33) |
(71) |
| Judiciary |
0 |
132 |
13 |
(129) |
| Fringe Benefits |
8 |
(12) |
(65) |
(53) |
| Health Insurance |
(40) |
(75) |
(125) |
(125) |
| Pension |
(1) |
22 |
45 |
57 |
| All Other Fringe Benefits |
49 |
41 |
15 |
15 |
| Mental Hygiene |
(84) |
(118) |
(229) |
(309) |
| Allocation of Agency Operational Savings |
(187) |
89 |
236 |
246 |
| Timing of Outstanding Labor Agreements |
204 |
(204) |
0 |
0 |
| All Other |
49 |
(41) |
(18) |
(39) |
| Other Adjustments (No Net Financial Plan Impact) |
74 |
810 |
897 |
912 |
| Mental Hygiene Accounting Reclassifications |
168 |
810 |
897 |
912 |
| Allocation of FMAP Contingency Savings |
(94) |
0 |
0 |
0 |
| REVISED BUDGET SURPLUS/(GAP) ESTIMATE |
(315) |
(9,026) |
(14,644) |
(17,232) |
| (Increase)/Decrease From Enacted Budget |
(315) |
(849) |
(1,183) |
(1,669) |
| Proposed Across-the-Board Reductions (Requires Leg. Approval) |
375 |
0 |
0 |
0 |
| Funding for Initiatives |
(60) |
0 |
0 |
0 |
| PROPOSED BUDGET SURPLUS/(GAP) ESTIMATE |
0 |
(9,026) |
(14,644) |
(17,232) |
| |
| * Tax changes include transfers from other funds before the impact of revisions to debt service costs. |
RECEIPTS REVISIONS
General Fund receipts, including transfers from other funds, are estimated to total
$54.5 billion in 2010-11, a decrease of $162 million compared to the Enacted Budget
Financial Plan. Lower estimated tax receipts are expected to be offset in part by higher
receipts from other sources, including miscellaneous receipts and nontax transfers from
other funds.
- Tax Receipts: Projected tax receipts have been reduced in each year of the
Financial Plan, based on updated economic information and actual tax collection
results through September 2010. Excluding the impact of debt service changes
affecting the transfer of tax receipts to the General Fund, tax receipts in 2010-11
have been reduced by $278 million compared to the Enacted Budget forecast.
The annual estimate for tax receipts has been reduced by less than the year-to-date
variance due to a change in the timing of receipts from business tax audits,
which DOB had originally expected to be settled before September 2010 but now
anticipates will occur later in the fiscal year.
Personal income tax receipts have been revised downward by approximately
$300 million annually, reflecting weakness in quarterly estimated payments.
Receipts from user taxes have been reduced in the current year based on
consumer spending data and actual collections, but are expected to rebound in
2011-12 as the economy continues to slowly improve. Cigarette tax receipts
have been reduced due to the litigation over on the State’s ability to collect
certain taxes on Native American reservations, affecting receipts in both the
General Fund and HCRA. Projected receipts from business taxes and other
taxes have been increased modestly in both 2010-11 and 2011-12, reflecting
unanticipated strength in estimated payments from banks and the performance of
the real estate sector.
- Other Receipts: The reduction in estimated annual tax receipts in 2010-11 is
offset in part by higher than expected receipts from other sources. These
unplanned receipts include legal recoveries, surplus workers compensation
funds, and transfers related to reductions in statewide agency operations
financed by special revenue funds (see discussion below). In addition, the State
realized a one-time benefit of $43 million from the termination of its existing
synthetic variable rate swaps in September 2010.
- Accounting Reclassifications: The Mid-Year Update includes accounting
reclassifications related to the transfer of money to and from the General Fund.
The reclassifications have no impact on the net operating forecast (e.g., a
reduction in planned transfers from other funds is offset by a commensurate
reduction in planned transfers to other funds). The most sizeable reclassification
is related to the adjustment of spending for mental hygiene services between the
General Fund and State special revenue funds, which has the effect of reducing
transfers to and from the General Fund by an equal amount.
DISBURSEMENT REVISIONS
General Fund disbursements, including transfers to other funds, are estimated at
$55.7 billion in 2010-11, an increase of $153 million from the Enacted Budget Financial
Plan. Likewise, spending has been increased in subsequent years. The most
significant revisions are summarized below.
- Medicaid: Gross State-share spending for Medicaid has been increased by
approximately $800 million annually, due in part to actual and anticipated growth
in the number of people enrolled in the program. Based on the updated
estimates, more than 200,000 new enrollees are expected to enter Medicaid in
the current fiscal year, bringing total enrollment to 4.9 million. In addition, higher
State costs are driven by the Federal government increasing its share of rebates
from drug manufacturers pursuant to Federal Health Care Reform; reconciliation
of 2008 payments for the reimbursable portion of nursing home revenue
assessments; and the impact of revisions to the HCRA operating forecast (see
“Updated HCRA Financial Plan” herein).
In 2010-11, the gross increase in State-share Medicaid spending is offset in part
by certain non-recurring resources. Reconciliation of SFY 2009-10 local
Medicaid obligations under the Medicaid Cap forms the basis for final enhanced
FMAP shares under ARRA. The State Financial Plan is adjusted for $300 million
in State funding previously reserved for this reconciliation ($208 million in SFY
2010-11). Furthermore, the local reconciliation also informs the lower distribution
of the ARRA enhancement on the State’s “clawback” payments for certain dually
eligible (Medicare and Medicaid) recipients’ drug benefit under Medicare Part D.
This reduction decreases the State’s expenditures by $223 million in SFY 2010-
11 ($38 million in SFY 2011-12). The combination of all 2010-11 Medicaid
revisions results in a net increase in costs of $368 million.
- Social Services: Spending projections for child welfare services have been
reduced by approximately $120 million annually based on updated claiming data
from social service districts. In addition, projected spending for other programs,
and the reconciliation of human services COLA based on statutorily defined
inflationary increases, has been lowered.
- School Aid: The September 2010 update to the school aid database resulted in
higher than projected costs beginning in the 2011-12 school year. The costs
reflect additional claims filed since the Enacted Budget, and updated wealth and
demographic information reported by school districts. The revised Financial Plan
projections also reflect the impact of a revised estimate of demographic and
enrollment factors within the Foundation Aid formula. Based on statute,
additional school year obligations from 2010-11 are to be paid in State fiscal year
2011-12. As in prior years, updated school district data and additional claims
have resulted in a cost increase to the State's multi-year Financial Plan,
subsequent to the Enacted Budget agreements.
- Lottery/VLT Aid for Education: Receipts from statewide lottery games
continue to fall below expectations, reflecting in part the impact of the economic
downturn. DOB has lowered the estimate of lottery receipts expected to be
available for School Aid across the Financial Plan forecast period.
- Higher Education: Current economic conditions, in particular high
unemployment rates, have contributed in part to the recent upward trend in
student enrollment in SUNY and CUNY community colleges. Similarly, increased
spending under the TAP grant award program is expected due to the increased
enrollment in institutions of higher education.
- Transportation/Motor Vehicles: The General Fund subsidy provided to the
DHBTF has been revised across the plan period as a result of changes in
estimated spending levels for capital projects, debt service costs, and other
receipts.
- Public Safety/Criminal Justice: General Fund spending projections have been
increased to reflect additional disaster relief aid, and a downward revision to
expected revenues from the Motor Vehicle Law Enforcement fee that is used to
support State Police costs.
- Fringe Benefits: Reflects multi-year upward revisions for health insurance costs
for State employees and retirees mainly due to three factors: delays in the
State’s progress in self-insuring parts of NYSHIP; reduced savings from the
implementation of the Medicare Part B premium sharing legislation enacted as
part of the 2010-11 budget; and projected increases due to Federal Health Care
Reform and premium rate changes. Reductions in the State’s salary base are
expected to reduce pension and social security costs, compared to the Enacted
forecast.
- Mental Hygiene: The revisions reflect two-year net savings of $10 million for
2010-11 and 2011-12, excluding the impact of the workforce reduction plan. The
major changes include reduced projected spending of approximately $40 million
for the human service COLA based on the current statutory formula (a decrease
from an annual increase of 3.5 percent to 1.2 percent in 2011-12). This is
partially offset by higher estimated costs for a recent Federal District Court
decision mandating additional supported housing and support services, such that
costs are now projected to be $4 million in 2010-11 and $45 million in 2011-12,
or $8 million more than projected previously, as well as $12 million in additional
costs based on the latest projected civil confinement caseload for the SOMTA
program.
- Timing of Outstanding Labor Settlements: The Enacted Budget Financial Plan
included estimated spending in 2010-11 to finance potential agreements with
labor unions that have not yet reached settlements for the period from 2007-08
through 2010-11. Based on the status of negotiations and the timetable for
ratification, it no longer appears likely than any spending for potential agreements
will occur in the current year.
- Allocation of Statewide Agency Operational Savings: The Enacted Budget
Financial Plan included $500 million in planned savings from statewide
reductions in agency spending. The estimated spending for each agency has
been revised to reflect its share of the reductions. Savings were anticipated
from, among other things, workforce reductions that include the early retirement
incentive plan, hiring freezes, layoffs, eliminating positions through attrition,
delaying planned hiring of staff, encouraging participation in the voluntary
reduction in work schedule program, eliminating funded vacancies and temporary
positions, and enhancing controls for reducing overtime costs. Operational
efficiencies that reduce costs in contractual services, supplies and materials,
equipment purchases and travel expenses are also expected. Total savings at a
level comparable to the Enacted Budget projections are expected by the end of
fiscal year 2011-12, with lower than expected savings in 2010-11 and higher
savings in 2011-12.
- Allocation of FMAP Contingency Reductions: The Enacted Budget mandated
uniform reductions to most local assistance payments to cover the difference
between the $1.1 billion in savings counted on in the proposed 2010-11 Financial
Plan from enhanced FMAP and the actual amount ultimately approved by the
Federal government. DOB calculated this difference at $281 million. The
payment reductions to local assistance spending began taking effect in mid-
September 2010, as provided by law, and have been allocated to agency
budgets in the Mid-Year Financial Plan.
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