The Joint Budget Committee today voted unanimously to cut and additional $300 million from state colleges and universities. This would be on top of nearly $100 million cut earlier in the year.
If the legislature agrees with the recommendation, the budget for higher education will be cut in half. It's unlikely that the state could keep open all of the existing colleges and universities on that amount of money.
We've spent the last month scraping the state budget for things to cut and for ways to add revenue. We have not found a way to avoid this terrible decision.
Wednesday, April 1, 2009
Federal Money
Colorado's getting a lot of money from the federal government under the American Recovery and Reinvestment Act (ARRA). Just how much is hard to say, because it's coming in a variety of ways and depends on various conditions.
Figuring out how it will help us balance our state budget is a little easier. The money that helps us do that is coming in two forms:
Figuring out how it will help us balance our state budget is a little easier. The money that helps us do that is coming in two forms:
State Fiscal Stabilization Fund (Stabilization money)
Federal Medical Assistance Percentage (FMAP or "Medicaid match")
Stabilization Fund
We're getting $760 million in State Fiscal Stabilization Funding. Of that amount, 82% has to go to education. Of the 82%, some goes to K-12 and some goes to higher education; the governor decides how much goes to each. His decision is outlined in the table below.
FMAP
The increased Medicaid match gets factored into budget as a savings. Most Medicaid spending is mandatory, so when we get a higher federal match, we can spend less money from the General Fund.
We get the increased match for:
3 quarters in 2008-09
4 quarters in 2009-10
2 quarters in 2010-11
The amount of the federal match increase depends on the state's unemployment rate. For the current year it works out to a 40-60 match: for each 40 cents we put in, the feds contribute 60 cents. We won't know for a while what match we'll get for next year.
| Source/Use | Use | Fiscal Year | Amount | Who Decides |
| Stabilization |
| 2008-09 2009-10 2010-11 | $760 million | Congress/President |
|
| Education |
| $486 million | 82% of the total, by federal law |
|
| K-12 | 2009-10 | $149 million | Governor's Decision |
|
|
| 2010-11 | $337 million | Governor's Decision |
|
| Higher Ed |
| $135 million | Governor's Decision |
|
|
| 2008-09 | $30 million | Governor's Decision |
|
|
| 2009-10 | $53 million | Governor's Decision |
|
|
| 2010-11 | $53 million | Governor's Decision |
|
| Other |
| $138 million | Governor Deciding |
| FMAP | Medicaid |
|
|
|
|
|
| 2008-09 | $196 million | 3 quarters |
|
|
| 2009-10 | $304 million | 4 quarters |
|
|
| 2010-11 | $150 million | 2 quarters |
There's a lot of other federal money that's coming to Colorado through ARRA. Here's some of it. (The online version has links to more information).
| Source/Use | Use | Fiscal Year | Amount | Notes |
| Transportation |
|
| $500 million |
|
|
| CDOT |
| $329 million | |
|
| Denver Regional Council of Governments |
| $55.9 million |
|
|
| Pikes Peak Area Council of Governments |
| $13.1 million |
|
|
| North Front Range MPO |
| $5.8 million |
|
|
| Transit |
| $103 million | |
| Unemployment Benefits & Job Training |
|
| $174 million |
|
| Food Stamps & Food |
|
| $178 million |
|
| Housing Help |
|
| $68 million |
|
| Additional Money for Education |
|
| $319 million |
|
| Water Projects |
|
| $66 million |
|
| Public Safety |
|
| $35 million |
|
Thursday, March 19, 2009
Rags to Riches
It's rare, especially these days, that a Negative Supplemental turns positive. But it just happened."Negative Supplemental" isn't just the name of this blog, it's the JBC's oxymoronic term for a change to the state budget that takes money away from a department.
When we passed the Long Bill last year (2008), we noted $445.5 million in Federal Funds for the Dept. of Transportation's (CDOT) Construction, Maintenance and Operations line. (The total amount in the line, including $814 million from the HUTF, was $1.3 billion).
This year, CDOT sent over a negative supplemental to cut $88.6 million from the line. It wanted to make clear that the federal government was stiffing us for that much money. The federal highway fund was going broke and U.S. DOT was taking back earlier promises of money.
The department was just making a point. The legislature doesn't have any control how CDOT spends the money, so the line in the budget is just for information purposes. Changing it would, therefore, be just for informational purposes.
And the information got interesting. Between the time CDOT submitted the supplemental and when we got to it, Congress changed from being tight-fisted to downright profligate. The feds sent CDOT a surprise gift of just over $400 million.
Our staff changed the negative number to a plus $315 million. (the new money minus the earlier cut).
Food Stamp Penalty
The JBC just approved a $2.8 million penalty payment to the U.S. Dept. of Agriculture. It's hurts, but it's also a relief.
When the state suddenly switched to a new, and unfinished, computer system in 2004, a lot of people lost benefits to which they were entitled. It led to outrage, a lawsuit, and an overcorrection.
The computer system was the infamous CBMS -- the Colorado Benefits Management System. Years in the making, years in the fixing, and years in the mopping up after all of the trouble.
Back in ought-4, Stung by the criticism, the state erred on the side of generosity and, when in doubt, handed out food stamps. That led to people getting benefits who weren't entitled to them.
When the U.S. Dept. of Agriculture later audited us, it stuck to the rules and imposed sanctions. To date, we've handed over nearly $10.5 million in repayments for overpayments and interest. The JBC today OKed another $2.8 million in repayments. It should mark the end of our penance to the USDA.
Friday, February 27, 2009
Vacancy Savings
The JBC and the Executive Branch have struggled for years over how to handle vacancy savings. That's the money that builds up over time in a department's Personal Services line. The JBC considers that excess money that should return to the budgeting process for appropriation. Departments claim it's not as much as the JBC thinks, and they wind up spending it on things that legislature should, but doesn't appropriate money for.
Usually, the JBC imposes an across-the-board cut to every department's Personal Services line to sweep out accumulated vacancy savings. The amount clawed back has ranged from 0.2% to 2.5% of the department's Personal Services line. It's step six in the mysterious Option 8 method of calculating Personal Services.
Why Vacancy Savings Accumulate
Vacancy savings are the result of unfilled jobs. Say the legislature approves a new job in a department and appropriates $30,000 money to pay for it. The state's fiscal year starts July 1st, but the department department has to write a job description, publish the job, receive applications and interview candidates before actually hiring the person. That takes three months.
The legislature appropriated $30,000 to pay a year's salary, but the new employee is only going to work nine months. The department has saved $7,500 by not paying anyone for the first three months.
The same thing can happen when someone quits or retires. Retiring can generate some big savings. Let's say a 30-year veteran employee retires. The job stays open for a couple of months, then the department hires someone new, but at the bottom of the pay scale instead of the top. The department saves money from the vacancy, then saves even more by paying a lower salary to the new employee.
Departments with a lot of employees and a lot of turnover can build up considerable sums of money in their budgets. That's money we might want to appropriate for something else.
Why They Don't
Of course the departments have a different view of the situation. Take the retiring senior employee scenario. The department will acknowledge the difference between the senior salary and the starting salary, but argue that the money doesn't accumulate.
First, they'll say, they have to pay for the retiring employees unused vacation and sick leave. That will eat up part of the savings. Then, they'll point out that losing a senior employee costs them a lot of accumulated knowledge. To minimize the effect of that, they'll hire the new employee before the existing employee actually leaves to allow time for training and mentoring. All of that, they say, is more likely to leave them in the hole rather than sitting on excess cash.
Those are the general arguments. Each department has it's own specific reasons why we shouldn't try to take back vacancy savings. The general opinion among departments is that taking back vacancy savings is an arbitrary cut imposed by the JBC to free up money for other things.
Saving the Savings - Their View
This year OSPB tried to do away with the across-the-board Personal Services reductions. It argued that after years of reclaimed "vacancy savings" departments had lost so much Personal Services money that they don't have the minimum amount they need to do their jobs.
Saving the Savings - Our View
The JBC responded by imposing a 1% across-the-board reduction and waiting to see what departments came back with requests for exemptions. Applied to every department, the 1% clawback would have brought in $12 million ($7 million GF).
Negotiations
All of them asked for exemptions, via an OSPB Personal Services comeback.
Human Services said the 1% reduction would force them to hold open 31 jobs, leaving places like the Mental Health Instiute in Pueblo and the Wheat Ridge Regional Center dangeroulsy understaffed.
Corrections argued that most of the employees they lost last year were in their first five years on the job. That means the new employees hired to replace them will be earning about the same salary. And while the positions are empty, someone will be earning overtime to cover the shift. The department said it's already operating at or below minimum staffing requirements and the clawback would eliminate another 87 employees.
OSPB argued that it's Budget Balancing Package of negative supplementals already took out vacancy savings, so the additional 1% was both hurting departments and discouraging them from volunteering cuts to account for open positions.
Truce
This year the JBC relented. OSPB had some good arguments -- especially since we were reclaiming a lot of Personal Services money from the hiring freeze.
The issue isn't resolved, though. The state constitution prohibits the legislature from telling the governor how many people to hire; we just control how much is in the budget. That means truing up the Personal Services budgets with the amount actually paid as salaries will alway be a cat-and- mouse game between the legislature and the executive branch.
Usually, the JBC imposes an across-the-board cut to every department's Personal Services line to sweep out accumulated vacancy savings. The amount clawed back has ranged from 0.2% to 2.5% of the department's Personal Services line. It's step six in the mysterious Option 8 method of calculating Personal Services.
Why Vacancy Savings Accumulate
Vacancy savings are the result of unfilled jobs. Say the legislature approves a new job in a department and appropriates $30,000 money to pay for it. The state's fiscal year starts July 1st, but the department department has to write a job description, publish the job, receive applications and interview candidates before actually hiring the person. That takes three months.
The legislature appropriated $30,000 to pay a year's salary, but the new employee is only going to work nine months. The department has saved $7,500 by not paying anyone for the first three months.
The same thing can happen when someone quits or retires. Retiring can generate some big savings. Let's say a 30-year veteran employee retires. The job stays open for a couple of months, then the department hires someone new, but at the bottom of the pay scale instead of the top. The department saves money from the vacancy, then saves even more by paying a lower salary to the new employee.
Departments with a lot of employees and a lot of turnover can build up considerable sums of money in their budgets. That's money we might want to appropriate for something else.
Why They Don't
Of course the departments have a different view of the situation. Take the retiring senior employee scenario. The department will acknowledge the difference between the senior salary and the starting salary, but argue that the money doesn't accumulate.
First, they'll say, they have to pay for the retiring employees unused vacation and sick leave. That will eat up part of the savings. Then, they'll point out that losing a senior employee costs them a lot of accumulated knowledge. To minimize the effect of that, they'll hire the new employee before the existing employee actually leaves to allow time for training and mentoring. All of that, they say, is more likely to leave them in the hole rather than sitting on excess cash.
Those are the general arguments. Each department has it's own specific reasons why we shouldn't try to take back vacancy savings. The general opinion among departments is that taking back vacancy savings is an arbitrary cut imposed by the JBC to free up money for other things.
Saving the Savings - Their View
This year OSPB tried to do away with the across-the-board Personal Services reductions. It argued that after years of reclaimed "vacancy savings" departments had lost so much Personal Services money that they don't have the minimum amount they need to do their jobs.
Saving the Savings - Our View
The JBC responded by imposing a 1% across-the-board reduction and waiting to see what departments came back with requests for exemptions. Applied to every department, the 1% clawback would have brought in $12 million ($7 million GF).
Negotiations
All of them asked for exemptions, via an OSPB Personal Services comeback.
Human Services said the 1% reduction would force them to hold open 31 jobs, leaving places like the Mental Health Instiute in Pueblo and the Wheat Ridge Regional Center dangeroulsy understaffed.
Corrections argued that most of the employees they lost last year were in their first five years on the job. That means the new employees hired to replace them will be earning about the same salary. And while the positions are empty, someone will be earning overtime to cover the shift. The department said it's already operating at or below minimum staffing requirements and the clawback would eliminate another 87 employees.
OSPB argued that it's Budget Balancing Package of negative supplementals already took out vacancy savings, so the additional 1% was both hurting departments and discouraging them from volunteering cuts to account for open positions.
Truce
This year the JBC relented. OSPB had some good arguments -- especially since we were reclaiming a lot of Personal Services money from the hiring freeze.
The issue isn't resolved, though. The state constitution prohibits the legislature from telling the governor how many people to hire; we just control how much is in the budget. That means truing up the Personal Services budgets with the amount actually paid as salaries will alway be a cat-and- mouse game between the legislature and the executive branch.
Subscribe to:
Posts (Atom)
Posts
