2015 intro senate conference.html

For
detail on all programs where House and Senate funding proposals differ,
please download this SPREADSHEET.

For
detail on all funding increases passed during the Senate amendment
process, please download this SPREADSHEET.

The
2015 budget proposals from
the House and Senate have differences that will need to be resolved in
conference, but in many respects they are very similar. Both make
modest, well targeted, investments — generally in the same areas:
supporting substance abuse treatment and prevention; improving the
capacity of the Department of Children and Families to protect
vulnerable children and support families; and investing in higher
education. Within these areas there are differences in emphasis: the
Senate more comprehensively addresses substance abuse issues and the
House provides greater funding for higher education. But their
similarities are much greater than their differences. Of the
approximately $39.5 billion appropriated for FY 2015, the House and
Senate budgets agree on $39.2 billion of the spending — more than 99%
of the budget.

It makes sense that the budgets
are similar. There is broad agreement in Massachusetts about what we
want to do together through our government: support safe, vibrant
communities; provide high quality education for all of our young
people; maintain a transportation infrastructure that supports a strong
economy; protect our families with the security of a safety net,
including quality health care and help for those facing particular
challenges; keep our air and water clean; do, in general, those
things that need to get done, that we know we can do more effectively
together than alone.

The House and Senate are also
operating in the same context: a weak national economy and a legacy of
$3 billion in tax cuts from 15 years ago that continue to undermine our
ability to fund essential services. Even with the modest increases
proposed by the House and Senate for FY 2015, funding for higher
education would be roughly 22 percent below where it was in FY 2001
(adjusted for inflation). Local aid would be 45 percent below 2001
levels. Public health would be down 19 percent. And early education and
care would be down 24 percent. Ultimately, it would require raising
additional revenue to reverse these cuts and make the investments that
could strengthen our capacity to build an economy that supports broadly
shared prosperity.

In the pages
that follow, this
Budget Monitor compares the Senate
and
House budget proposals by topic and also discusses the major amendments
adopted during the recent Senate budget debate.

Early
Education
& Care

The Senate provides just over $550 million for early education and care
programs, $20.1 million more than the House. This is a net difference
– the Senate funds some programs at higher levels and others
at lower levels than the House. The overall proposal still comes far
short of historic levels. In FY 2001, early education and care programs
received almost $720 million in inflation adjusted dollars, almost $175
million more than the Senate proposal. For more information about
historic funding levels, see
Declines
in Spending on Early Education
& Care in Massachusetts
.

One major difference between the House and Senate is a $9.7 million
rate reserve for providers approved during the Senate budget debate.
The reserve, which pays for a 3 percent increase for center based
providers, was not included in the House proposal. The reserve would
provide a small bump in teacher salaries, benefits and professional
development opportunities.

Another major difference between the two proposals is the amount of
funding directed at the Income Eligible Child Care Wait List
for
infants, toddlers, preschool children, and school-age children. The
House proposed $10 million while the Senate proposed $17.5 million.
Although all of these proposals provide some funding to increase the
number of subsidies available for kids in Massachusetts, they come
short of providing a subsidy to all of the families who need support.
For more information on the resources needed to provide early education
to three and four-year-olds in Massachusetts, see Building
a Foundation
for Success
.

In the table below, the Income
Eligible Child Care
account
also seems
to have a large gap between the Senate and House proposal. This is due
to an accounting adjustment by the Senate Ways & Means
Committee which allocates the $15.0 funding for the wait list from last
year into two different line items – $14.3 million in 3000-4070 and
$700,000 in 3000-2000. After these are re-allocated back to the Income
Eligible account, the main difference in funding remains the $7.5
million difference between the House and Senate for this
year’s Wait List account (3000-4040).

The Children’s Trust Fund’s Healthy Families Home
Visiting Program
receives
$14.5 million from the Senate, approximately
$4 million more than the House. This program provides home visits for
first-time parents under the age of 21.

The Senate proposal includes $1.0 million for the K1 Classroom Grant
Program, a program introduced in the Governor’s proposal with
$2.0 million in funding. This grant would fund new pre-k classrooms in
cities and towns around the state with a goal of increasing school
readiness and improving 3rd grade reading. Gateway cities and districts
with struggling schools receive preference. The House did not provide
funding.

The table below illustrates all differences which will have to be
reconciled in Conference Committee.

Image1.jpg

K-12
Education

All told, the Senate budget for K-12 education programs is about $23
million above the House’s, on a base of about $5.8 billion in total
education spending. Both the House and Senate propose modest increases
over FY 2014 levels, but these increases are roughly in line with
inflation and therefore do not reflect significant new investments. For
more information on historic funding levels, please see the Education
sections of MassBudget’s
Children’s
Budget
and Budget
Browser
.

Much of the Senate’s greater funding is for school district
reimbursement programs, including Regional
School Transportation
($16.7
million higher than the House proposal), the Special
Education Circuit
Breaker
($2.9 million higher), Education
Reform Reserve
($1.6 million
higher), and Non-Resident
Pupil Transportation
($1.5
million higher).
The Senate also creates a new $5.0 million grant program for hiring
Substance
Abuse Counselors
, aimed to
help schools better address
substance abuse and mental health issues.

Programs where the House proposal is significantly above the Senate’s
include Kindergarten
Expansion Grants
($3.9 million
above the Senate),
Extended
Learning Time Grants
($1.5
million above), and Adult Basic
Education
($870,000 above).

Funding for the state’s largest education program, Chapter 70 education
aid
, has been settled since
March, as both the House and Senate passed
local aid resolutions committing to help cities and towns better plan
for their local FY 2015 budgets. The Legislature will fund Chapter 70
aid at $4.40 billion, which is $99.5 million, or 2 percent, over FY
2014. This modest increase is roughly in line with annual cost growth.

The Legislature’s Chapter 70 plan calculates foundation budgets using
updated enrollment and inflation data, uncaps the number of
pre-kindergarten students who can count towards district foundation
budgets, phases-in an additional portion of the formula reforms planned
in the 2007 budget, and provides a minimum $25 per pupil increase over
FY 2014 aid for all districts that wouldn’t otherwise receive an
increase of this amount.

Additionally, both the House and Senate budgets include language
allowing all districts to begin a four-year phase in of counting health
care costs for retired teachers

towards satisfying their net school
spending requirements. Districts that counted retiree health care costs
in FY 1994, when the current Chapter 70 formula was first implemented,
have been allowed to continue including them towards net school
spending every year since. Districts that did not include retiree
health care costs in FY 1994, however, have had to count it separately.
While this change will equalize district spending requirements, it will
ultimately allow many communities to spend less on public education.

After passing a floor amendment, the final Senate budget now includes a
provision, also included in the House budget, that will convene a
foundation
budget review commission
to
review the state’s approach to
determining district foundation budgets. The foundation budget was
designed more than twenty years ago and many of its underlying
assumptions are increasingly out
of date
. Further, there is new
evidence on what works best in schools that ought to be considered when
reforming the foundation budget.

Image2.jpg

Higher
Education

Both the House and Senate propose increases for higher education, with
the Senate proposing $31.6 million less than the House. Both proposals
would represent a third year of continued reinvestment in public higher
education, building on progress begun in FY 2013 and continued this
year.

Even if the Legislature adopts the higher House amounts, however, total
spending on higher education would still be roughly 22 percent below FY
2001 levels (adjusted for inflation). These long-term cuts were driven
largely by state level income tax cuts that cost the state roughly $3.2
billion annually, and by the lingering effects of the Great Recession.

The largest differences between the House and Senate are for Community
Colleges and State Universities. Both proposals fund Community College
and State University campus accounts at very similar levels, but the
House includes funding for two supplemental programs not included in
the Senate budget: $13.2 million for
supplemental Community
College
funding
, directed through a
new funding formula, and $8.0 million for
State
University Incentive Grants

to support projects at State
Universities that advance goals of the
Commonwealth
Vision Project
.

Appropriations to each of the three campus types are detailed in the
table below. It is important to note that starting in FY 2012, all
campuses began retaining tuition payments from out-of-state students,
rather than remitting that revenue back to the state. MassBudget adds
in an estimate of these payments for FY 2012 to the present, allowing
for more accurate year to year comparisons. Additionally, MassBudget
adds collective bargaining accounts and other programs located at
particular campuses to their respective campus totals.

Image3.jpg

Both the Senate and House proposals follow through on a commitment made
through the FY 2014 budget to increase funding for the main UMass
line
item by $40 million in FY 2015 (due to MassBudget adjustments, this
total differs slightly from the UMass increase shown in the table
above). In exchange for receiving this increased funding, UMass has
committed to freezing student tuition and fee increases for FY 2015.

Additionally, the House funds the Science,
Technology,
Engineering and
Mathematics (STEM) Starter Academy
,
housed in community colleges, at
$4.8 million. The Senate did not propose funding for this program, and
the House proposal is equal to FY 2014 levels. The Legislature has
authorized FY 2014 money to be carried over into FY 2015.

While overall higher education funding is higher under the House
proposal, there are a few programs with smaller difference where the
Senate has proposed higher amounts. For instance, the initial Senate
Ways & Means budget for the State
Scholarship Program

was equal
to the House’s, but the Senate added an additional $2.0 million during
floor debate, bringing the Senate proposal up to $93.6 million. Current
FY 2014 spending is $3.0 million less, at $90.6 million.

The Senate budget for High
Demand Scholarships
is also $1.5
million
above the House’s. The High Demand Scholarship program provides
scholarships to students who are majoring in a field currently
classified as in high demand.

Image4.jpg

Youth
Development

Youth Development programs aim to help young people find their path to
a promising career. They foster engagement in the community, provide
training or employment, and prevent violence or other antisocial
behavior.

The final Senate budget proposes spending $35.8 million on youth
development programs in FY 2015 which is $6.8 million more than the
House and almost $1 million less than the FY 2014 current
budget. A full listing of the differences between the House
and Senate budgets for Youth Development programs are listed below. For
a full list of amendments passed by the Senate which increased funding
please go
HERE.

Over the next several weeks the House and Senate will appoint a
Conference Committee to reconcile differences between the two budgets
and finalize its proposal for FY 2015. The two most notable
differences in funding between the House and Senate budgets include:

  • The Senate provides $12.2
    million for YouthWorks which provides summer jobs for at-risk
    youth. This amount is $4.2 million more than the House
    budget.
  • The Senate provides $3.0
    million more for the Shannon Gang Prevention Grant Program than the
    House. During its budget debate the Senate approved an amendment that
    increased the Shannon Grant program by $2.5 million to $9.0 million.

Image5.jpg

Environment
& Recreation

The state budget funds programs that keep our air and water clean,
maintain fish and wildlife habitats and support parks, beaches, pools
and other recreation facilities. The Senate budget
provides $200.0 million for environment and recreation programs, $3.7
million above the House budget and $10.8 million above the FY 2014
current budget. Even with this increase, funding
for environment and recreation programs has fallen almost 33 percent in
inflation-adjusted dollars since FY 2001 when the state implemented
over $3 billion in tax cuts.

Over the next several weeks a joint House-Senate Conference Committee
will meet to reconcile differences between the two budgets and finalize
its proposal for FY 2015. A full accounting of the
differences between the House and Senate budgets for environment and
recreation programs is noted in the table below.
HERE
is a rundown of
amendments passed by the Senate that add funding to environment and
recreation programs.

The Senate budget’s expansion of the bottle bill to all juice, water,
coffee and sports drinks is one of the more notable differences between
the House and Senate’s proposals for environment and recreation
programs. This provision, which was passed as an amendment during the
Senate’s budget debate, directs that 50 percent of money raised through
this expansion go into the Community Preservation Act Trust Fund and
the other 50 percent into the Brownfields Redevelopment Fund.
The House budget does not include this expansion. During its
FY 2014 budget debate the Senate included a similar proposal but it was
dropped from the final budget approved by the House-Senate Conference
Committee.

The House and Senate budgets also include several new efforts to help
the state address the effects of climate change. The two budgets are
quite different and those differences will have to be addressed in
conference. The House budget includes $1.0 million to help
the state prepare for climate change; this proposal is not in the
Senate budget. The Senate budget provides $200,000 to hire a state
climatologist at UMass Amherst whose responsibilities include gathering
data and conducting research on the climate. The Senate
budget also passed an amendment that provides UMass Boston with
$350,000 to conduct a study on effects of rising sea levels on flooding
in the Charles River Basin. These two Senate proposals are
not included in the House budget.

Image6.jpg

MassHealth
(Medicaid) & Health Reform

There are funding and language differences between the House and Senate
budget proposals for MassHealth (Medicaid) and Health Reform programs.
(See table of funding differences below.)

One of the differences is in the funding for adult dental benefits,
included in the MassHealth Fee-for-Service line item
(4000-0700). Unlike the House budget, the Senate
budget includes funding to restore coverage for adult dentures, and
specifies that this coverage should be in place by April 1, 2015. This
is a benefit that the Governor’s budget had proposed to cover starting
in January 2015. The Senate also asks for a report to the Legislature
on the status of adult dental coverage, and how that coverage compares
to coverage in 2010. The Senate also requires that the coverage for
adult dental fillings not be eliminated over the course of the fiscal
year.

Other significant differences between the Senate and House budget
proposal are in the funding provided for nursing home providers,
hospitals that service primarily low-income patients (disproportionate
share hospitals), and in rates for managed care providers.

The Senate funds the MassHealth Senior Care line item at $3.16 billion,
compared to $3.2 billion in the House. The Senate budget does not
include the House language that would increase rates for nursing homes
by about $47.5 million over FY 2014 costs. The Senate budget proposal
total is also based on assumed reductions in the Senior Care program
caseload.

Both the Senate and House include funding for rate adjustments for the
so-called “DSH” hospitals that serve a disproportionate share of
low-income patients. The Senate budget also requires a supplemental
payment of $12.3 million to support behavioral and mental health
services at these hospitals.

There are other provisions supporting behavioral and mental health. The
House includes $2.0 million in a new reserve to support behavioral
health in patient-centered medical homes. The Senate includes $1.5
million for this initiative. The House also creates a task force
charged with examining barriers to the delivery of comprehensive and
cost-effective behavioral health care.

The Senate adds a new provision that would allow eligible inmates or
persons awaiting trial to be enrolled in MassHealth. While in prison,
their membership would be suspended, but if they then required
inpatient medical care outside of the prison walls, the MassHealth
membership could immediately be re-instated. This would allow the
Commonwealth to receive federal reimbursement for the costs of medical
care outside of the prison. Currently, medical costs for inmates are
borne by the state through the Department of Corrections. Moreover,
because it would be easy to re-instate suspended coverage, this would
eliminate gaps in coverage for people once they are released from
prison.

Both budget proposals, however, reflect the substantial changes
associated with the implementation of many of the components of the
federal Affordable Care Act (ACA). FY 2015 reflects the first full year
of implementation of the ACA.

The ACA expands Medicaid coverage with enhanced federal Medicaid
reimbursement to some people previously without coverage, as well as
others who previously had less substantial subsidized coverage. The ACA
also reduces spending in the Health Care Connector as federal tax
credits and subsidies assume most of the cost of bringing private
insurance purchased through the Connector to affordable levels for
individuals not eligible for MassHealth.

MassBudget, in conjunction with the Mass. Law Reform Institute and the
Mass. Medicaid Policy Institute, publishes detailed briefs about
MassHealth and health reform finance over the course of the budget
debate. The brief comparing the House and Senate budget proposals will
be published shortly, and will provide a fuller discussion of these
issues.

Image7.jpg

Mental
Health

Total funding for mental health services is $2.7 million more in the
Senate than the House, with total funding in the Senate at $731.8
million and funding in the House at $729.1 million (see table of
differences below). The Department of Mental Health serves close to
21,000 children and adults with severe mental illness, providing
inpatient services for only about 10 percent of these people, and
community-based services for the remainder. It is notable, however,
that both House and the Senate represent an increase in funding
compared to the Governor’s proposal for mental health services back in
January. The Governor had recommended a total of $712.4 million.

The final Senate budget differ only slightly in funding totals for
children’s
mental health
services, with
$87.4 million in the House
budget and $87.8 million in the Senate budget. There are also
differences in budget language in these two proposals. In particular,
the Senate budget stipulates that the Mass. Child Psychiatry Access
Project would be funded in part by an assessment on commercial
insurers, while the House only indicates that this funding “may” be
assessed.


Adult mental health
services
are also funded at slightly different
amounts in the House and Senate budgets. Total funding for these
services is $432.2 million in the House, and $433.0 million in the
Senate. The primary differences are due to differences in earmarks for
specific programs. It is also notable that the Senate shifts $10.0
million into a new line item focusing on community-based placements,
while the House funds these placements at $7.5 million as an earmark.

Funding for mental
health facilities
differs
little between the two
proposals, with the House funding them at $181.4 million, and the
Senate funding them slightly higher at $182.9 million. Both budget
proposals maintain 45 continuing care inpatient beds at Taunton State
Hospital. Moreover, during floor debate, the Senate added additional
language that would prohibit eliminating any of the inpatient beds at
that hospital over the course of the fiscal year. The Senate budget
would increase the number of inpatient beds from 626 to a total of 671
over the course of the year.

Image8.jpg

Public
Health

Total funding for public health services is $11.3 million more in the
Senate than the House, with funding in the Senate at $578.0 million and
funding in the House at $566.7 million. Even though both of these
proposals increase funding compared to FY 2014 for the essential
preventative, treatment, access and regulatory programs essential for
maintaining health in the Commonwealth, public health funding has been
hit hard over the years – starting with the implementation of
tax cuts at the beginning of the last decade, and on through the recent
recession. Public health funding has been cut 13 percent when adjusted
for inflation since FY 2009, and close to 20 percent since FY 2001.

There are differences throughout the Senate and House public health
budget proposals (see table below). The most significant funding
differences are in the level of support for substance abuse and
addiction services. Both budget proposals include increases compared to
the Governor and compared to FY 2014 funding, but the Senate recommends
$9.4 million more in funding than the House. In particular, the Senate
includes two new line items to fund substance abuse treatment. The
Senate proposes $500,000 to a new program for the voluntary
accreditation of Sober Homes, which are community-based drug- and
alcohol-free transitional housing for people in recovery. There is also
language in outside sections of the budget creating these homes. The
Senate also proposes $10.0 million for a new Substance Abuse Services
Fund to support expansion of substance abuse treatment. Dollars
allocated to this fund would be available for substance abuse treatment
and services.

Language in an outside section of the Senate budget creates a substance
abuse helpline within the Department of Public Health. This toll-free
telephone number would provide information for people of all ages about
inpatient and outpatient substance abuse treatment resources. The
budget requires the department to develop a website providing
up-to-date information about treatment and transitional support
services across the Commonwealth, particularly regularly-updated
information about facilities with open beds.

The House budget, on the other hand, would expand the role of the drug
formulary commission to develop a drug formulary of abuse-deterrent
opioids, and multiple sections expanding the regulation and monitoring
of controlled substances. The House also includes outside sections to
create an Interagency Council on Substance Abuse and Prevention to
expand and coordinate existing substance abuse programs across various
state agencies and to create a commission to explore treatment
alternatives for nonviolent offenders with substance addictions. This
commission would also be charged with the exploring the options to
expand the Commonwealth’s drug specialty courts.

Some of the other funding differences between the House and Senate
budget proposals are in the area of health care access. The House
public health budget for these programs totals $26.1 million, while the
Senate totals $25.0 million. The House budget proposes slightly more
for community health center services, dental health, and family health
services (family planning), while the Senate budget proposal is
slightly higher for teen pregnancy prevention, school-based health
programs and pediatric palliative care.

Both the House and Senate budget proposals include less funding for
youth violence prevention programs compared to the Governor’s proposal
and compared to FY 2014 current funding. The Governor had proposed $4.2
million in funding for the line items supporting grants to community
agencies working to keep young people engaged, and $9.5 million for the
Safe and Successful Youth Initiative. The House proposes $5.0 million
for grants to community agencies, and $4.1 million for Safe and
Successful Youth. The Senate proposal includes $4.8 million for the
community grants and $5.0 million for Safe and Successful Youth.

During budget debate, the Senate added funding for two new line items.
These line items are not included in the House budget:

  • $150,000 for a new Down
    Syndrome Clinic, which would create a patient-centered medical home at
    the Univ. of Massachusetts Medical School Children’s Medical Center for
    children with Down Syndrome;
  • $150,000 for a healthy
    relationships grant program to combat teen dating violence.

It is important
to note that since the Governor’s proposal, legislation
has moved funding for the universal immunization program into an
“off-budget” trust. For the purposes of this analysis, funding has been
adjusted so that this shift of approximately $53.8 million does not
appear as a reduction in funding.

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HOUSING

The state budget provides affordable housing assistance and supports
programs that provide shelter to low-income homeless families and
individuals. The final Senate budget recommends spending $377.3 million
on housing programs which is $1.4 million more than the House budget
and $49.3 million less than FY 2014 current spending.
1

In their respective budgets, the House and the Senate provide different
levels of funding for many housing programs which will be reconciled by
the joint House-Senate Conference Committee. A full listing of funding
differences is in the table below. A listing of amendments passed by
the Senate that increased funding for housing programs is available
HERE.

A large portion of the state’s housing budget funds programs that
assist eligible low-income families who are homeless. In FY
2014 the state provided $155.1 million for homeless families living in
state supported shelters or hotels and motels. An additional $6.2
million in supplemental funding is pending in the
Legislature. As noted in Shelter
and Housing for Homeless
Families: Historical Funding and the Governor’s FY 2015 Budget
Proposal
funding for shelter has
increased while the number
of vouchers available to low income renters has dropped from 20,000 in
the late 1980s to less than half that today.

In the last several years the state has increased funding for the
Massachusetts Rental Voucher Program (MRVP)
in part to help homeless
families move out of shelter, particularly hotels and motels, and into
permanent housing. While the House and Senate budgets for FY
2015 both increase funding for MRVP above the FY 2014 budget, the
Senate provides $70.0 million which is $9.5 million more than the House.

Both the House and Senate estimate that their budgets for MRVP will
create 1,000 vouchers in FY 2015. While the House funding
increase is not as large as the Senate’s, it allows any surplus in MRVP
from FY 2014 to be used in FY 2015 to create new vouchers. If the House
funding proposal is adopted by the Conference Committee, it is likely
that the Legislature will have to increase total funding above the
House FY 2015 level of $60.5 million to continue to support these new
vouchers in future fiscal years. The Senate budget, instead
increases funding for MRVP to $70.0 million and assumes that the FY
2014 MRVP surplus will go into the House Preservation and Stability
Trust Fund. This fund, created in FY 2014, allows the Department of
Housing and Community Development (DCHD) to retain any surplus funds
from affordable housing programs rather than sending those surpluses
back to the General Fund at the end of the fiscal year. The
funds can be used by DHCD to support affordable housing
programs.

Unlike the House, the Senate budget also requires that any new vouchers
created in FY 2015 be distributed through a waiting list. In
FY 2014, a funding increase for MRVP created vouchers targeted largely
to low-income homeless families living in shelter or losing their
HomeBASE
rental assistance. The Senate FY 2015 budget states that
families living in EA shelter will not receive preference over any
other eligible renter for new vouchers created in FY 2015. An amendment
passed during the Senate debate allows DHCD to use up to $2.5 million
of the new MRVP funds to create and administer a new waiting list so
that the first of the new vouchers can be issued no later than October
1, 2014. The Senate budget clarifies that the distribution of these
vouchers should consider the renter’s need for a voucher and his/her
ability to remain in permanent housing.

The House and Senate also provide different funding levels for the
Emergency Assistance (EA)
program which provides shelter to low-income
homeless families who meet strict eligibility criteria.

The House budget provides EA with $140.3 million with the bulk of the
funds in the EA shelter account and the remaining $15.1 million in a
separate account for families living in hotels and motels. The Senate
budget provides EA with $137.0 million which is $3.4 million below the
House budget. The Senate budget also recommends merging the
account for hotels and motels into the account that funds family
shelters. (Please note that the table below combines funding for the EA
family shelter account with the EA hotels and motels account to allow
for meaningful comparisons between funding proposals.)

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HUMAN
SERVICES

Human Services programs and services form a crucial part of the
Commonwealth’s “safety net” for the
state’s most vulnerable residents. Programs provide support for our
youngest and oldest residents, as well as for families and those living
alone. The Senate proposed just over $3.86 billion for these programs,
$2.4 million more than the House. This is a net difference –
the Senate funds some programs at higher levels and others at lower
levels than the House.

The Senate appropriated up to $8 million for a rate reserve increase
for human service workers making less than $40,000 annually. Budget
language also stipulates that annualized costs in FY 2016 not exceed
$8.0 million. The House did not provide any funding for a rate reserve
increase.

The Senate also included language establishing a committee to look at
the issues facing disconnected youth and improve their outcomes.
Disconnected youth are those kids between the ages of 14 and 24 not
enrolled in school, not working, and who lack family or other supports.
Issues and solutions for kids who age out of the Juvenile Justice and
Child Welfare systems in Massachusetts would be included in draft
proposals.

Also during budget debate, the Senate increased the appropriation for
the LGBTQ Commission to $300,000, matching the House proposal.

The Senate failed to fund the Massachusetts
Unaccompanied Homeless
Youth Commission
. The House
provided $150,000 through an earmark
included in the Executive Office of
Health
and Human Services
account
(4000-0300). This commission was introduced in the FY 2013 budget and
also received $150,000 in the FY 2014 budget. The commission is
continuing to try and determine the amount of need that exists and how
to deliver services to homeless youth under the age of 24.

Children,
Youth & Families

While the Majority of line items needing to be reconciled in Conference
Committee have small funding differences, one account contains a larger
variance – Regional
Administration
.
The House eliminated this
line item as it has for the last few years while the Senate provided
$6.0 million, essentially level with FY 2014. Regional Administration
funds contracts with nonprofit “lead agencies” that
help coordinate services for the Department of Children and Families
(DCF). Proponents of lead agencies note the important coordination
function they fill between DCF social workers, families and other
professionals involved in a child’s case. Critics claim that lead
agencies duplicate work done in the past by social workers and that
funding should be spent on services.

During floor debate the Senate passed an amendment providing $200,000
for an independent evaluation of the DCF family administrative hearing
system. The House required DCF to file two quarterly reports with the
legislature on the timeliness of these hearings, but did not
appropriate funding for an evaluation. Findings from the evaluation
would be due by March 15, 2015. Fair hearings allow children and
families to appeal a DCF decision regarding child placement or a
finding of neglect or abuse. The House also called for the Office of
the Child Advocate to conduct a survey assessing problems faced by
clients when dealing with DCF.

Two amendments added during debate would require background checks for
persons having contact with children being served by DCF. One mandates
background checks for all members of a foster home over the age of 14.
The other amendment requires background checks for all persons older
than 14 in a family applying to become foster, kinship, or adoptive
families.

One big difference between the Senate’s background checks
proposal and language included in the House is that the Senate allows
DCF to use some discretion based on these background checks. The House
proposal eliminated DCF’s discretion requiring DCF to reject
families as care providers if their record included any of a number of
offenses even if placement in that family was in the best interests of
the child.

The Senate does require fingerprint based checks for applicants who may
have unsupervised contact with kids being served by DCF or who
transport children involved with DCF.

During budget debate, the Senate adopted two amendments regarding
social workers at DCF. The first brings funding for Social Workers for
Case Management
to $182.6
million. This remains $2.8 million below the
House. It is likely that at this funding level DCF will not be able to
hire enough case workers to ensure caseloads of 15 or less. The second
amendment requires social workers to obtain a social worker’s
license within 6 months of employment. The House included the same
requirement, but gave social workers 1 year to obtain a license.


Family Access Centers

received a $2.0 million increase in an amendment
during debate in the Senate. The increase would allow these centers to
provide emergency assistance to runaway youth. These centers currently
make it easier for children and families to access many public services
including Transitional Aid to Families with Dependent Children (TAFDC),
Supplemental Nutrition Assistance Program (SNAP), Women, Infants, and
Children’s Program (WIC), Fuel Assistance, and MassHealth.
Some of the funding for Family Access
Centers

is located in the
Services
for Children and Families

line item, the primary DCF services
account. Combining these two accounts, the Senate appropriation is
approximately $1.9 million more than the House.

The table below illustrates all differences which will have to be
reconciled in Conference Committee.

 Image11.jpg

Disability
Services

The Senate provides $1.71 billion for Disability Services, just
$219,000 above the final House proposal. Even though this net
difference is small, many of the line item appropriations vary between
the House and Senate proposals.

The House introduced a new line item supporting Community Based
Employment
(5920-2026) and
provided $1.0 million. The Senate took a
different approach creating a DDS
Employment First
Reserve
(1599-0200)
and providing $5.0 million. The reserve also supports the transition
from sheltered workshops to community-based employment and day support
programs. These two accounts fund similar services, but the amount of
funding, as well as the location of funding in the budget, will have to
be reconciled in Conference.

A Senate amendment calls for the Massachusetts Rehabilitation
Commission to establish two pilot community centers, one in Worcester
County and the other in the northeast part of Massachusetts. These
centers were not included in the House budget as they were introduced
in the Senate. The Senate amendment does not directly provide funding
for the centers.

Two amendments in the Senate regulate treatment for persons with a
disability. The first prohibits procedures which cause pain or physical
harm. The second amendment limits the use of isolation or restraints to
those individuals who have a court approved treatment plan prior to
September 2011. These amendments were introduced in the Senate and will
have to be reconciled.

The table below illustrates all differences which will have to be
reconciled in Conference Committee.

 Image12.jpg

Elder
Services

The Senate provides $248.6 million for Elder Services, $6.1 million
below the final House proposal. Elder
Home Care Purchased
Services

receives $99.8 million, $4.6 million less than the House and Supportive
Senior Housing
receives $4.2
million, $1.3 million less than the House.

The table below illustrates all differences which will have to be
reconciled in Conference Committee.

 image13.jpg

Juvenile
Justice

The Senate made no changes in appropriation to the SWM proposal for
Juvenile Justice. Most of the differences between the Senate and House
proposals are quite small. The Senate adopted one amendment which would
allow Mental Health funding for forensic services to be expended for
juvenile court clinics.

The table below illustrates all differences which will have to be
reconciled in Conference Committee.

 Image14.jpg

Transitional
Assistance

The Senate made two changes in appropriations during budget debate for
Transitional Assistance. Many of the programs still need to be
reconciled during Conference Committee. Most of the differences between
the Senate and House proposals are quite small.

One program with a larger split is the Employment
Services Program

which receives $4.8 million in the Senate. The House provided $10.8
million. This program provides Transitional Aid to Families with
Dependent Children (TAFDC) recipients with education, occupational
skills and the employment support services needed to acquire and retain
jobs. The Senate funding level amounts to a cut of 84 percent since
pre-recession levels.

The Teen
Structured Settings Program

also received additional funding
through an amendment. The Senate added $200,000 bringing total funding
to $9.4 million, $200,000 more than the House.

TAFDC
receives $253.2 million, $2.5 million below the House proposal
and $48.8 million below FY 2014. The Conference Committee will most
likely decide the final funding level based on the latest anticipated
caseload levels for FY 2015.

The table below illustrates all differences which will have to be
reconciled in Conference Committee.

 Image15.jpg

Local
Aid

The largest difference between the House and Senate budgets for local
aid programs is for the Municipal
Regionalization
and Efficiencies
Grant Program
, which the
Senate funds at $5.1 million above the House.
Even the Senate proposal would still be below current FY 2014 levels,
however. This program provides grants to help cities and towns improve
their delivery of local services.

Funding for the state’s largest local aid program, Unrestricted General
Government Aid (UGGA)
, has
been settled since March, as both the House
and Senate passed local aid resolutions committing to help cities and
towns better plan for their local FY 2015 budgets. The Legislature will
fund UGGA at $945.8 million, which is $25.5 million above FY 2014
levels.

Even with this modest increase, however, UGGA will be roughly $780
million, or 45 percent, below FY 2001 levels, adjusted for inflation.
This long-term trend is driven largely by state level income tax cuts
that cost the state roughly $3.2 billion annually and by the lingering
effects of the Great Recession. For more information on the history of
how general local aid has been distributed, please see MassBudget’s
paper
Demystifying
General Local Aid in Massachusetts
.

 Image16.jpg

Transportation

The House and Senate transportation proposals are very similar,
following the framework outlined in last year’s long-term
transportation finance law. Specifically, both continue the plan to
ramp up transportation spending from FY 2014 through FY 2018,
increasing for FY 2015 by a little more than $120 million. This new
funding will help MassDOT modernize its infrastructure, invest in
capital improvements at the MBTA and Regional Transit Authorities, and
make progress towards ending the practice of borrowing money to pay for
MBTA operating costs.

It is important to note that a significant portion of the state’s
transportation-related capital spending shows up in separate debt
service accounts, the largest of which is the Consolidated Long-Term
Debt Service
line item. For
FY 2015, the House and Senate both project
that a little more than fifty percent of this $2.07 billion account
will cover transportation-related debt.

Libraries

The state budget supports libraries by providing funding for a number
of programs including direct aid to local libraries; the regional
library network including the interlibrary loan program; and, the
talking book programs for the visually-impaired located in Worcester
and Watertown. The final Senate budget provides $26.8 million for
library programs, which is $3.5 million more than the House and $4.6
million above the current FY 2014 budget. Even with this increase,
funding for libraries has fallen by 43 percent since FY 2001 when over
$3 billion in tax cuts were being implemented by the state.

There are a number of differences between the House and Senate budgets
for libraries which will have to be reconciled in the joint
House-Senate Conference Committee. The most notable
difference is that the Senate provides $10.0 million, $2.8 million more
than the House, for direct state aid to local libraries. A
full listing of the differences is noted in the table below. During its
debate the Senate adopted an amendment which added $160,000 in funding
to the regional library network.

 Image17.jpg

REVENUE

With regard to revenues, the Senate’s final FY 2015 budget differs
little from the House budget. Both are built upon the Fiscal Year 2015
consensus revenue estimate that was agreed to back in January ($24.337
billion) – as is the Governor’s budget proposal. The Senate
and House (like the Governor) both rely on additional revenue above and
beyond this consensus figure. All three budgets draw on a combination
of new tax and non-tax revenues, with some of the new revenue coming
from ongoing sources and some from one-time sources. Like the House,
the final Senate budget excludes most of the new, ongoing tax changes
proposed by the Governor. (To read more about the Governor’s tax
package see
MassBudget’s
review of the Governor’s FY 2015 budget
.)

During floor debate, the Senate adopted a number of revenue-related
amendments that bring the Senate budget into closer alignment with the
House budget. At the same time, the two budgets continue to contain
differences that will need to be reconciled in conference.

In the sections below, we examine in closer detail tax and non-tax
revenue proposals in the Senate’s final FY 2015 budget, with
a focus on remaining differences with the House budget.

Tax
Revenue

Overall, the tax proposals in the Senate and House FY 2015 budgets are
very similar. During floor debate, the Senate adopted a number of
tax-related amendments that bring the two budgets into close agreement.
This shortens the list of differences that must be addressed during
conference. The adopted amendments include the addition of a Tax
Amnesty program, as well as a commission to study the potential effects
of creating a state tax credit for manufacturers of medical devices.
Both these proposals appear in the House budget as well. (See
discussion of these proposal in MassBudget’s 
House
Budget Monitor
.)

The Senate and House tax proposals, however, continue to differ in a
number of ways. The details of the two chambers’ respective
proposals regarding the allocation of large tax settlements between the
General Fund and the state’s “Rainy Day”
fund remain different, as described below. Additionally, the House has
proposed a commission to study the impacts of phasing out or
eliminating the corporate Inventory Tax. The Senate budget does not
contain such a proposal. The Senate, meanwhile, proposes a commission
to study the pricing and taxing of marijuana, while the House budget
does not. The Senate also directs the Department of Revenue to begin
preparing the Commonwealth for the collection of sales taxes from
remote (i.e., online) sellers should the US Congress pass the Market
Place Fairness Act. The House budget does not include this proposal.

As part of the overall budget process, the Senate and House must come
to agreement on a unified “conference budget” in
which all of these differences must be reconciled. Further discussion
of these remaining tax proposal differences follow, below.

Image18.jpg

TAX SETTLEMENT REDIRECTION

Under current law, for any tax settlement or judgment that exceeds $10
million, the amount in excess of $10 million is transferred to the
Stabilization Fund. In recent years, annual collections from these
excesses have ranged from about $140 million to more than $400 million,
thus directing significant resources to the Stabilization Fund.

Similar to the House and Governor’s budgets, the Senate budget proposes
a new structure that would redirect the typical excess amount collected
annually from these large, one time settlements and judgments to the
state’s General Fund for direct appropriation to state programs and
services. The structure proposed by the Senate would direct an
estimated $203.5 million in ongoing revenue to the state budget in FY
2015. This proposal is very similar to the Governor’s, but slightly
different than the House proposal. The House proposal uses a five-year
average
rather than five-year median
to calculate the amount to be
transferred from the Stabilization Fund to the General Fund
(the House’s approach produces a somewhat higher estimated
gain to the General Fund in FY 2015: $240 million rather than
$203.5 million). Additionally, the Senate proposal clarifies that the
calculated five-year median amount will be transferred to the General
Fund even in years when total excess collections from large
settlements/judgments falls below the calculated
median.

While the new structure(s)
may
simplify state budgeting, providing a
more predictable stream of revenue to the General Fund, it is important
to note that these proposals do not generate new
revenue. Instead, they
simply redirect to the General Fund revenue that otherwise would have
been deposited in the state’s Stabilization Fund. The proposed changes,
therefore, would reduce future growth of the Stabilization Fund.

COMISSIONS

Inventory
Tax

The House budget establishes a commission to study the impact of
phasing out or eliminating the “inventory tax.”
While the Massachusetts tax code does not have an “inventory tax” per
se, for the purposes of this commission the term “inventory
tax” would include both the local tax applied to
“tangible personal property” (which does not
include real estate, such as buildings, land,
etc.),2
and the
state
tax applied to the “tangible property measure and the net-worth
measure of the non-income portion of the corporate excise
tax.”3

In general, businesses pay either the local or the state tax on their
“inventory” – but not both – depending on how the business is legally
structured. A wide variety of exemptions apply to both the local and
state “inventory taxes.” For the 2014 Tax Year, municipalities have
levied $677.5 million in personal property taxes.[3] In 2010, the most
recent year for which data is available online from the Department of
Revenue (DOR), the state collected $341 million in non-income excise
taxes. Inventory would be a portion of what is covered by each of these
taxes. DOR, however, does not have an estimate of the amount
of this total that is attributable to corporations’ inventory.4

The Inventory Tax Commission would look at potential fiscal impacts on
state and local budgets as well as employment and other business
effects that could result from phasing out or eliminating these taxes.
The Senate proposes no such commission.


Marijuana Tax

The Senate, unlike the House, proposes a commission to study
“the pricing and taxing of marijuana, products containing
marijuana and supplies related to the use of
marijuana.” 5
The commission also would be tasked
with studying “how to ensure adequate access to marijuana for
medical purposes to qualifying patients.” This includes
patients that may have limited access due to financial, physical and/or
geographical constraints. The commission will make recommendations and
propose legislative language as part of their report, due back to the
Legislature within 60 days of the FY 2015 budget’s
enactment.

COMPLY WITH FEDERAL MARKETPLACE FAIRNESS ACT

The Senate budget includes a proposal that would lay the groundwork
necessary for the Commonwealth to begin collecting sales tax from
online purchases made by residents of Massachusetts. Currently, a bill
sits pending before the U.S. House and Senate – the
Marketplace Fairness Act – that would require large internet retailers
to collect and remit state sales taxes for all qualifying online
purchases. As part of this arrangement, states would be required to
simplify their sales tax laws in order to make a more uniform, national
set of taxable items (Streamlined Sales and Use Tax Agreement or
SSUTA), thus easing the collection process for online
retailers.6
Twenty-four states already have made these
adjustments.7
States that are in compliance with the SSUTA
will be authorized to begin collecting sales taxes through online
retailers as soon as the Marketplace Fairness Act is enacted. It is
estimated that, nationally, in 2012, states lost some $11 billion
annually to forgone online sales and use taxes.8

The Senate proposal instructs the Commissioner of the Department of
Revenue to make the minimum necessary administrative changes to comply
with potential federal law on this matter. The proposal also requires
the Commissioner to begin collecting this tax from online sellers
should a federal law be enacted.

Non-Tax
Revenue

The FY 2015 budget proposal from the House and Senate rely on several
sources of non-tax revenues to balance the budget.

There are three main types of non-tax revenue: federal revenues, which
are mostly reimbursements from the federal government for state
spending on the Medicaid (MassHealth) program; departmental revenues,
which are fees, assessments, fines, tuition, and similar receipts; and
other revenues, which are mostly funds that the state draws from an
assortment of non-budgeted trusts.

One of the significant differences between the House and Senate budgets
is the House proposal expanding a 5-cent bottle deposit to
non-carbonated beverages such as bottled water, flavored waters, iced
teas, coffee based drinks and sports drinks. As with beverages
currently covered by the “bottle bill,” consumers are refunded this
deposit if they return the empty bottles for recycling. This
expansion is projected to generate $24.2 million in increased
departmental revenue. There are also differences in estimated federal
revenues, largely tracking the differences in budget proposals for
MassHealth. These revenues come to the Commonwealth as a partial
reimbursement for increased spending on MassHealth and health reform
expansions with the implementation of the federal Affordable Care Act
(ACA).

The Senate and House, however, both anticipate $32.2 million in
revenues from increased federal reimbursements from the TANF program
and the soldiers’ homes, and also $13.0 million realized in FY 2015 by
delaying certain payments to hospitals into the next fiscal year.

TRANSFERS FROM TRUSTS AND OTHER SOLUTIONS TO BALANCE THE BUDGET

The Senate and House do not have significant differences in terms of
transfers from trusts and other budget-balancing solutions. Each
proposes withdrawing $140.0 million from the state’s Stabilization
(“Rainy Day”) Fund. They also both propose balancing the budget with
the continued withdrawal of interest earned by the Stabilization Fund.
All of these are one-time revenue sources.

The Senate budget changes the way in which the state funds its
liability to the State Retiree Benefits Trust ($75.9 million),
redirecting money that would otherwise go to the Stabilization Fund. In
FY 2012, the state passed a law directing that an annually increasing
share of the funds from the Master Tobacco Settlement go into the State
Retiree Benefits Trust in order to help pay these costs. The Senate
budget proposes changing this formula. The Senate’s proposal recommends
that the Commonwealth meet its obligation with 50 percent of capital
gains tax revenues that would otherwise go to the Stabilization Fund
($61 million in FY 2015). The effect of this is reducing the state’s
deposit into the Stabilization Fund. In FY 2015, Senate also proposes
the remainder of the transfer to the State Retiree Benefits Trust would
come from unused appropriations for debt service. If that is not
enough, the balance would come from the Master Tobacco Settlement funds
deposited into the General Fund.

Image19.jpg

Note: MassBudget’s budget total is higher than other
commonly-presented
budget totals. We make a number of adjustments in order to allow for
more accurate across-year comparisons of budget totals.We include
“pre-budget” transfers in our budget totals, which in FY 2015, adds
approximately $3.6 billion. We include tax revenues dedicated to the
MBTA and to school building assistance, the cigarette excise tax
dedicated to the Commonwealth Care Trust Fund, the state contribution
to the pension system, and the transfers to the Workforce Training
Trust and to the State Retiree Benefits Trust (when designated).We also
make a number of other adjustments to allow for more accurate
across-year comparisons of totals.

1
This analysis
does not include $20 million that was funded
in a supplemental budget passed earlier this winter to supplement
federal funding for the Low Income Home Energy Assistance Program
(LIHEAP.) In most cases the Legislature does not include funding for
LIHEAP in its original budget, but decides whether or not to provide
supplemental funding in the late fall or early winter of the fiscal
year.

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