Fordetail on all programs where House and Senate funding proposals differ,please download this SPREADSHEET.
Fordetail on all funding increases passed during the Senate amendmentprocess, please download this SPREADSHEET.
The2015 budget proposals fromthe House and Senate have differences that will need to be resolved inconference, but in many respects they are very similar. Both makemodest, well targeted, investments — generally in the same areas:supporting substance abuse treatment and prevention; improving thecapacity of the Department of Children and Families to protectvulnerable children and support families; and investing in highereducation. Within these areas there are differences in emphasis: theSenate more comprehensively addresses substance abuse issues and theHouse provides greater funding for higher education. But theirsimilarities are much greater than their differences. Of theapproximately $39.5 billion appropriated for FY 2015, the House andSenate budgets agree on $39.2 billion of the spending — more than 99%of the budget.
It makes sense that the budgetsare similar. There is broad agreement in Massachusetts about what wewant to do together through our government: support safe, vibrantcommunities; provide high quality education for all of our youngpeople; maintain a transportation infrastructure that supports a strongeconomy; protect our families with the security of a safety net,including quality health care and help for those facing particularchallenges; keep our air and water clean; do, in general, thosethings that need to get done, that we know we can do more effectivelytogether than alone.
The House and Senate are alsooperating 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 ourability to fund essential services. Even with the modest increasesproposed by the House and Senate for FY 2015, funding for highereducation would be roughly 22 percent below where it was in FY 2001(adjusted for inflation). Local aid would be 45 percent below 2001levels. Public health would be down 19 percent. And early education andcare would be down 24 percent. Ultimately, it would require raisingadditional revenue to reverse these cuts and make the investments thatcould strengthen our capacity to build an economy that supports broadlyshared prosperity.
In the pagesthat follow, thisBudget Monitor compares the SenateandHouse budget proposals by topic and also discusses the major amendmentsadopted during the recent Senate budget debate.
The Senate provides just over $550 million for early education and careprograms, $20.1 million more than the House. This is a net difference– the Senate funds some programs at higher levels and othersat lower levels than the House. The overall proposal still comes farshort of historic levels. In FY 2001, early education and care programsreceived almost $720 million in inflation adjusted dollars, almost $175million more than the Senate proposal. For more information abouthistoric funding levels, see Declinesin Spending on Early Education& Care in Massachusetts.
One major difference between the House and Senate is a $9.7 millionrate reserve for providers approved during the Senate budget debate.The reserve, which pays for a 3 percent increase for center basedproviders, was not included in the House proposal. The reserve wouldprovide a small bump in teacher salaries, benefits and professionaldevelopment opportunities.
Another major difference between the two proposals is the amount offunding directed at the Income Eligible Child Care Wait Listforinfants, toddlers, preschool children, and school-age children. TheHouse proposed $10 million while the Senate proposed $17.5 million.Although all of these proposals provide some funding to increase thenumber of subsidies available for kids in Massachusetts, they comeshort of providing a subsidy to all of the families who need support.For more information on the resources needed to provide early educationto three and four-year-olds in Massachusetts, see Buildinga Foundationfor Success.
In the table below, the IncomeEligible Child Careaccount also seemsto have a large gap between the Senate and House proposal. This is dueto an accounting adjustment by the Senate Ways & MeansCommittee which allocates the $15.0 funding for the wait list from lastyear 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 IncomeEligible account, the main difference in funding remains the $7.5million difference between the House and Senate for thisyear’s Wait List account (3000-4040).
The Children’s Trust Fund’s Healthy Families HomeVisiting Program receives$14.5 million from the Senate, approximately$4 million more than the House. This program provides home visits forfirst-time parents under the age of 21.
The Senate proposal includes $1.0 million for the K1 Classroom GrantProgram, a program introduced in the Governor’s proposal with$2.0 million in funding. This grant would fund new pre-k classrooms incities and towns around the state with a goal of increasing schoolreadiness and improving 3rd grade reading. Gateway cities and districtswith struggling schools receive preference. The House did not providefunding.
The table below illustrates all differences which will have to bereconciled in Conference Committee.
All told, the Senate budget for K-12 education programs is about $23million above the House’s, on a base of about $5.8 billion in totaleducation spending. Both the House and Senate propose modest increasesover FY 2014 levels, but these increases are roughly in line withinflation and therefore do not reflect significant new investments. Formore information on historic funding levels, please see the Educationsections of MassBudget’s Children’sBudget and BudgetBrowser.
Much of the Senate’s greater funding is for school districtreimbursement programs, including RegionalSchool Transportation ($16.7million higher than the House proposal), the SpecialEducation CircuitBreaker ($2.9 million higher), EducationReform Reserve ($1.6 millionhigher), and Non-ResidentPupil Transportation ($1.5million higher).The Senate also creates a new $5.0 million grant program for hiringSubstanceAbuse Counselors, aimed tohelp schools better addresssubstance abuse and mental health issues.
Programs where the House proposal is significantly above the Senate’sinclude KindergartenExpansion Grants ($3.9 millionabove the Senate),ExtendedLearning Time Grants ($1.5million above), and Adult BasicEducation ($870,000 above).
Funding for the state’s largest education program, Chapter 70 educationaid, has been settled sinceMarch, as both the House and Senate passedlocal aid resolutions committing to help cities and towns better planfor their local FY 2015 budgets. The Legislature will fund Chapter 70aid at $4.40 billion, which is $99.5 million, or 2 percent, over FY2014. This modest increase is roughly in line with annual cost growth.
The Legislature’s Chapter 70 plan calculates foundation budgets usingupdated enrollment and inflation data, uncaps the number ofpre-kindergarten students who can count towards district foundationbudgets, phases-in an additional portion of the formula reforms plannedin the 2007 budget, and provides a minimum $25 per pupil increase overFY 2014 aid for all districts that wouldn’t otherwise receive anincrease of this amount.
Additionally, both the House and Senate budgets include languageallowing all districts to begin a four-year phase in of counting healthcare costs for retired teacherstowards satisfying their net schoolspending requirements. Districts that counted retiree health care costsin FY 1994, when the current Chapter 70 formula was first implemented,have been allowed to continue including them towards net schoolspending every year since. Districts that did not include retireehealth care costs in FY 1994, however, have had to count it separately.While this change will equalize district spending requirements, it willultimately allow many communities to spend less on public education.
After passing a floor amendment, the final Senate budget now includes aprovision, also included in the House budget, that will convene afoundationbudget review commission toreview the state’s approach todetermining district foundation budgets. The foundation budget wasdesigned more than twenty years ago and many of its underlyingassumptions are increasingly outof date. Further, there is newevidence on what works best in schools that ought to be considered whenreforming the foundation budget.
Both the House and Senate propose increases for higher education, withthe Senate proposing $31.6 million less than the House. Both proposalswould represent a third year of continued reinvestment in public highereducation, building on progress begun in FY 2013 and continued thisyear.
Even if the Legislature adopts the higher House amounts, however, totalspending on higher education would still be roughly 22 percent below FY2001 levels (adjusted for inflation). These long-term cuts were drivenlargely by state level income tax cuts that cost the state roughly $3.2billion annually, and by the lingering effects of the Great Recession.
The largest differences between the House and Senate are for CommunityColleges and State Universities. Both proposals fund Community Collegeand State University campus accounts at very similar levels, but theHouse includes funding for two supplemental programs not included inthe Senate budget: $13.2 million forsupplemental CommunityCollegefunding, directed through anew funding formula, and $8.0 million forStateUniversity Incentive Grantsto support projects at StateUniversities that advance goals of the CommonwealthVision Project.
Appropriations to each of the three campus types are detailed in thetable below. It is important to note that starting in FY 2012, allcampuses began retaining tuition payments from out-of-state students,rather than remitting that revenue back to the state. MassBudget addsin an estimate of these payments for FY 2012 to the present, allowingfor more accurate year to year comparisons. Additionally, MassBudgetadds collective bargaining accounts and other programs located atparticular campuses to their respective campus totals.
Both the Senate and House proposals follow through on a commitment madethrough the FY 2014 budget to increase funding for the main UMasslineitem by $40 million in FY 2015 (due to MassBudget adjustments, thistotal differs slightly from the UMass increase shown in the tableabove). In exchange for receiving this increased funding, UMass hascommitted to freezing student tuition and fee increases for FY 2015.
Additionally, the House funds the Science,Technology,Engineering andMathematics (STEM) Starter Academy,housed in community colleges, at$4.8 million. The Senate did not propose funding for this program, andthe House proposal is equal to FY 2014 levels. The Legislature hasauthorized FY 2014 money to be carried over into FY 2015.
While overall higher education funding is higher under the Houseproposal, there are a few programs with smaller difference where theSenate has proposed higher amounts. For instance, the initial SenateWays & Means budget for the StateScholarship Programwas equalto the House’s, but the Senate added an additional $2.0 million duringfloor debate, bringing the Senate proposal up to $93.6 million. CurrentFY 2014 spending is $3.0 million less, at $90.6 million.
The Senate budget for HighDemand Scholarships is also $1.5millionabove the House’s. The High Demand Scholarship program providesscholarships to students who are majoring in a field currentlyclassified as in high demand.
Youth Development programs aim to help young people find their path toa promising career. They foster engagement in the community, providetraining or employment, and prevent violence or other antisocialbehavior.
The final Senate budget proposes spending $35.8 million on youthdevelopment programs in FY 2015 which is $6.8 million more than theHouse and almost $1 million less than the FY 2014 currentbudget. A full listing of the differences between the Houseand Senate budgets for Youth Development programs are listed below. Fora full list of amendments passed by the Senate which increased fundingplease go HERE.
Over the next several weeks the House and Senate will appoint aConference Committee to reconcile differences between the two budgetsand finalize its proposal for FY 2015. The two most notabledifferences in funding between the House and Senate budgets include:
- The Senate provides $12.2million for YouthWorks which provides summer jobs for at-riskyouth. This amount is $4.2 million more than the Housebudget.
- The Senate provides $3.0million more for the Shannon Gang Prevention Grant Program than theHouse. During its budget debate the Senate approved an amendment thatincreased the Shannon Grant program by $2.5 million to $9.0 million.
The state budget funds programs that keep our air and water clean,maintain fish and wildlife habitats and support parks, beaches, poolsand other recreation facilities. The Senate budgetprovides $200.0 million for environment and recreation programs, $3.7million above the House budget and $10.8 million above the FY 2014current budget. Even with this increase, fundingfor environment and recreation programs has fallen almost 33 percent ininflation-adjusted dollars since FY 2001 when the state implementedover $3 billion in tax cuts.
Over the next several weeks a joint House-Senate Conference Committeewill meet to reconcile differences between the two budgets and finalizeits proposal for FY 2015. A full accounting of thedifferences between the House and Senate budgets for environment andrecreation programs is noted in the table below. HEREis a rundown ofamendments passed by the Senate that add funding to environment andrecreation 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 betweenthe House and Senate’s proposals for environment and recreationprograms. This provision, which was passed as an amendment during theSenate’s budget debate, directs that 50 percent of money raised throughthis expansion go into the Community Preservation Act Trust Fund andthe other 50 percent into the Brownfields Redevelopment Fund.The House budget does not include this expansion. During itsFY 2014 budget debate the Senate included a similar proposal but it wasdropped from the final budget approved by the House-Senate ConferenceCommittee.
The House and Senate budgets also include several new efforts to helpthe state address the effects of climate change. The two budgets arequite different and those differences will have to be addressed inconference. The House budget includes $1.0 million to helpthe state prepare for climate change; this proposal is not in theSenate budget. The Senate budget provides $200,000 to hire a stateclimatologist at UMass Amherst whose responsibilities include gatheringdata and conducting research on the climate. The Senatebudget also passed an amendment that provides UMass Boston with$350,000 to conduct a study on effects of rising sea levels on floodingin the Charles River Basin. These two Senate proposals arenot included in the House budget.
There are funding and language differences between the House and Senatebudget 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 Senatebudget includes funding to restore coverage for adult dentures, andspecifies that this coverage should be in place by April 1, 2015. Thisis a benefit that the Governor’s budget had proposed to cover startingin January 2015. The Senate also asks for a report to the Legislatureon the status of adult dental coverage, and how that coverage comparesto coverage in 2010. The Senate also requires that the coverage foradult dental fillings not be eliminated over the course of the fiscalyear.
Other significant differences between the Senate and House budgetproposal are in the funding provided for nursing home providers,hospitals that service primarily low-income patients (disproportionateshare 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 notinclude the House language that would increase rates for nursing homesby about $47.5 million over FY 2014 costs. The Senate budget proposaltotal is also based on assumed reductions in the Senior Care programcaseload.
Both the Senate and House include funding for rate adjustments for theso-called “DSH” hospitals that serve a disproportionate share oflow-income patients. The Senate budget also requires a supplementalpayment of $12.3 million to support behavioral and mental healthservices at these hospitals.
There are other provisions supporting behavioral and mental health. TheHouse includes $2.0 million in a new reserve to support behavioralhealth in patient-centered medical homes. The Senate includes $1.5million for this initiative. The House also creates a task forcecharged with examining barriers to the delivery of comprehensive andcost-effective behavioral health care.
The Senate adds a new provision that would allow eligible inmates orpersons awaiting trial to be enrolled in MassHealth. While in prison,their membership would be suspended, but if they then requiredinpatient medical care outside of the prison walls, the MassHealthmembership could immediately be re-instated. This would allow theCommonwealth to receive federal reimbursement for the costs of medicalcare outside of the prison. Currently, medical costs for inmates areborne by the state through the Department of Corrections. Moreover,because it would be easy to re-instate suspended coverage, this wouldeliminate gaps in coverage for people once they are released fromprison.
Both budget proposals, however, reflect the substantial changesassociated with the implementation of many of the components of thefederal Affordable Care Act (ACA). FY 2015 reflects the first full yearof implementation of the ACA.
The ACA expands Medicaid coverage with enhanced federal Medicaidreimbursement to some people previously without coverage, as well asothers who previously had less substantial subsidized coverage. The ACAalso reduces spending in the Health Care Connector as federal taxcredits and subsidies assume most of the cost of bringing privateinsurance purchased through the Connector to affordable levels forindividuals not eligible for MassHealth.
MassBudget, in conjunction with the Mass. Law Reform Institute and theMass. Medicaid Policy Institute, publishes detailed briefs aboutMassHealth and health reform finance over the course of the budgetdebate. The brief comparing the House and Senate budget proposals willbe published shortly, and will provide a fuller discussion of theseissues.
Total funding for mental health services is $2.7 million more in theSenate than the House, with total funding in the Senate at $731.8million and funding in the House at $729.1 million (see table ofdifferences below). The Department of Mental Health serves close to21,000 children and adults with severe mental illness, providinginpatient services for only about 10 percent of these people, andcommunity-based services for the remainder. It is notable, however,that both House and the Senate represent an increase in fundingcompared to the Governor’s proposal for mental health services back inJanuary. The Governor had recommended a total of $712.4 million.
The final Senate budget differ only slightly in funding totals forchildren’smental health services, with$87.4 million in the Housebudget and $87.8 million in the Senate budget. There are alsodifferences in budget language in these two proposals. In particular,the Senate budget stipulates that the Mass. Child Psychiatry AccessProject would be funded in part by an assessment on commercialinsurers, while the House only indicates that this funding “may” beassessed.
Adult mental health servicesare also funded at slightly differentamounts in the House and Senate budgets. Total funding for theseservices is $432.2 million in the House, and $433.0 million in theSenate. The primary differences are due to differences in earmarks forspecific programs. It is also notable that the Senate shifts $10.0million 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 mentalhealth facilities differslittle between the twoproposals, with the House funding them at $181.4 million, and theSenate funding them slightly higher at $182.9 million. Both budgetproposals maintain 45 continuing care inpatient beds at Taunton StateHospital. Moreover, during floor debate, the Senate added additionallanguage that would prohibit eliminating any of the inpatient beds atthat hospital over the course of the fiscal year. The Senate budgetwould increase the number of inpatient beds from 626 to a total of 671over the course of the year.
Total funding for public health services is $11.3 million more in theSenate than the House, with funding in the Senate at $578.0 million andfunding in the House at $566.7 million. Even though both of theseproposals increase funding compared to FY 2014 for the essentialpreventative, treatment, access and regulatory programs essential formaintaining health in the Commonwealth, public health funding has beenhit hard over the years – starting with the implementation oftax cuts at the beginning of the last decade, and on through the recentrecession. Public health funding has been cut 13 percent when adjustedfor inflation since FY 2009, and close to 20 percent since FY 2001.
There are differences throughout the Senate and House public healthbudget proposals (see table below). The most significant fundingdifferences are in the level of support for substance abuse andaddiction services. Both budget proposals include increases compared tothe Governor and compared to FY 2014 funding, but the Senate recommends$9.4 million more in funding than the House. In particular, the Senateincludes two new line items to fund substance abuse treatment. TheSenate proposes $500,000 to a new program for the voluntaryaccreditation of Sober Homes, which are community-based drug- andalcohol-free transitional housing for people in recovery. There is alsolanguage in outside sections of the budget creating these homes. TheSenate also proposes $10.0 million for a new Substance Abuse ServicesFund to support expansion of substance abuse treatment. Dollarsallocated to this fund would be available for substance abuse treatmentand services.
Language in an outside section of the Senate budget creates a substanceabuse helpline within the Department of Public Health. This toll-freetelephone number would provide information for people of all ages aboutinpatient and outpatient substance abuse treatment resources. Thebudget requires the department to develop a website providingup-to-date information about treatment and transitional supportservices across the Commonwealth, particularly regularly-updatedinformation about facilities with open beds.
The House budget, on the other hand, would expand the role of the drugformulary commission to develop a drug formulary of abuse-deterrentopioids, and multiple sections expanding the regulation and monitoringof controlled substances. The House also includes outside sections tocreate an Interagency Council on Substance Abuse and Prevention toexpand and coordinate existing substance abuse programs across variousstate agencies and to create a commission to explore treatmentalternatives for nonviolent offenders with substance addictions. Thiscommission would also be charged with the exploring the options toexpand the Commonwealth’s drug specialty courts.
Some of the other funding differences between the House and Senatebudget proposals are in the area of health care access. The Housepublic health budget for these programs totals $26.1 million, while theSenate totals $25.0 million. The House budget proposes slightly morefor community health center services, dental health, and family healthservices (family planning), while the Senate budget proposal isslightly higher for teen pregnancy prevention, school-based healthprograms and pediatric palliative care.
Both the House and Senate budget proposals include less funding foryouth violence prevention programs compared to the Governor’s proposaland compared to FY 2014 current funding. The Governor had proposed $4.2million in funding for the line items supporting grants to communityagencies working to keep young people engaged, and $9.5 million for theSafe and Successful Youth Initiative. The House proposes $5.0 millionfor grants to community agencies, and $4.1 million for Safe andSuccessful Youth. The Senate proposal includes $4.8 million for thecommunity 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 DownSyndrome Clinic, which would create a patient-centered medical home atthe Univ. of Massachusetts Medical School Children’s Medical Center forchildren with Down Syndrome;
- $150,000 for a healthyrelationships grant program to combat teen dating violence.
It is importantto note that since the Governor’s proposal, legislationhas moved funding for the universal immunization program into an”off-budget” trust. For the purposes of this analysis, funding has beenadjusted so that this shift of approximately $53.8 million does notappear as a reduction in funding.
The state budget provides affordable housing assistance and supportsprograms that provide shelter to low-income homeless families andindividuals. The final Senate budget recommends spending $377.3 millionon housing programs which is $1.4 million more than the House budgetand $49.3 million less than FY 2014 current spending.1
In their respective budgets, the House and the Senate provide differentlevels of funding for many housing programs which will be reconciled bythe joint House-Senate Conference Committee. A full listing of fundingdifferences is in the table below. A listing of amendments passed bythe Senate that increased funding for housing programs is availableHERE.
A large portion of the state’s housing budget funds programs thatassist eligible low-income families who are homeless. In FY2014 the state provided $155.1 million for homeless families living instate supported shelters or hotels and motels. An additional $6.2million in supplemental funding is pending in theLegislature. As noted in Shelterand Housing for HomelessFamilies: Historical Funding and the Governor’s FY 2015 BudgetProposal funding for shelter hasincreased while the numberof vouchers available to low income renters has dropped from 20,000 inthe late 1980s to less than half that today.
In the last several years the state has increased funding for theMassachusetts Rental Voucher Program (MRVP)in part to help homelessfamilies move out of shelter, particularly hotels and motels, and intopermanent housing. While the House and Senate budgets for FY2015 both increase funding for MRVP above the FY 2014 budget, theSenate provides $70.0 million which is $9.5 million more than the House.
Both the House and Senate estimate that their budgets for MRVP willcreate 1,000 vouchers in FY 2015. While the House fundingincrease is not as large as the Senate’s, it allows any surplus in MRVPfrom FY 2014 to be used in FY 2015 to create new vouchers. If the Housefunding proposal is adopted by the Conference Committee, it is likelythat the Legislature will have to increase total funding above theHouse FY 2015 level of $60.5 million to continue to support these newvouchers in future fiscal years. The Senate budget, insteadincreases funding for MRVP to $70.0 million and assumes that the FY2014 MRVP surplus will go into the House Preservation and StabilityTrust Fund. This fund, created in FY 2014, allows the Department ofHousing and Community Development (DCHD) to retain any surplus fundsfrom affordable housing programs rather than sending those surplusesback to the General Fund at the end of the fiscal year. Thefunds can be used by DHCD to support affordable housingprograms.
Unlike the House, the Senate budget also requires that any new voucherscreated in FY 2015 be distributed through a waiting list. InFY 2014, a funding increase for MRVP created vouchers targeted largelyto low-income homeless families living in shelter or losing theirHomeBASErental assistance. The Senate FY 2015 budget states thatfamilies living in EA shelter will not receive preference over anyother eligible renter for new vouchers created in FY 2015. An amendmentpassed during the Senate debate allows DHCD to use up to $2.5 millionof the new MRVP funds to create and administer a new waiting list sothat the first of the new vouchers can be issued no later than October1, 2014. The Senate budget clarifies that the distribution of thesevouchers should consider the renter’s need for a voucher and his/herability to remain in permanent housing.
The House and Senate also provide different funding levels for theEmergency Assistance (EA)program which provides shelter to low-incomehomeless families who meet strict eligibility criteria.
The House budget provides EA with $140.3 million with the bulk of thefunds in the EA shelter account and the remaining $15.1 million in aseparate account for families living in hotels and motels. The Senatebudget provides EA with $137.0 million which is $3.4 million below theHouse budget. The Senate budget also recommends merging theaccount for hotels and motels into the account that funds familyshelters. (Please note that the table below combines funding for the EAfamily shelter account with the EA hotels and motels account to allowfor meaningful comparisons between funding proposals.)
Human Services programs and services form a crucial part of theCommonwealth’s “safety net” for thestate’s most vulnerable residents. Programs provide support for ouryoungest and oldest residents, as well as for families and those livingalone. 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 lowerlevels than the House.
The Senate appropriated up to $8 million for a rate reserve increasefor human service workers making less than $40,000 annually. Budgetlanguage also stipulates that annualized costs in FY 2016 not exceed$8.0 million. The House did not provide any funding for a rate reserveincrease.
The Senate also included language establishing a committee to look atthe issues facing disconnected youth and improve their outcomes.Disconnected youth are those kids between the ages of 14 and 24 notenrolled in school, not working, and who lack family or other supports.Issues and solutions for kids who age out of the Juvenile Justice andChild Welfare systems in Massachusetts would be included in draftproposals.
Also during budget debate, the Senate increased the appropriation forthe LGBTQ Commission to $300,000, matching the House proposal.
The Senate failed to fund the MassachusettsUnaccompanied HomelessYouth Commission. The Houseprovided $150,000 through an earmarkincluded in the Executive Office ofHealthand Human Services account(4000-0300). This commission was introduced in the FY 2013 budget andalso received $150,000 in the FY 2014 budget. The commission iscontinuing to try and determine the amount of need that exists and howto deliver services to homeless youth under the age of 24.
While the Majority of line items needing to be reconciled in ConferenceCommittee have small funding differences, one account contains a largervariance – RegionalAdministration.The House eliminated thisline item as it has for the last few years while the Senate provided$6.0 million, essentially level with FY 2014. Regional Administrationfunds contracts with nonprofit “lead agencies” thathelp coordinate services for the Department of Children and Families(DCF). Proponents of lead agencies note the important coordinationfunction they fill between DCF social workers, families and otherprofessionals involved in a child’s case. Critics claim that leadagencies duplicate work done in the past by social workers and thatfunding should be spent on services.
During floor debate the Senate passed an amendment providing $200,000for an independent evaluation of the DCF family administrative hearingsystem. The House required DCF to file two quarterly reports with thelegislature on the timeliness of these hearings, but did notappropriate funding for an evaluation. Findings from the evaluationwould be due by March 15, 2015. Fair hearings allow children andfamilies to appeal a DCF decision regarding child placement or afinding of neglect or abuse. The House also called for the Office ofthe Child Advocate to conduct a survey assessing problems faced byclients when dealing with DCF.
Two amendments added during debate would require background checks forpersons having contact with children being served by DCF. One mandatesbackground checks for all members of a foster home over the age of 14.The other amendment requires background checks for all persons olderthan 14 in a family applying to become foster, kinship, or adoptivefamilies.
One big difference between the Senate’s background checksproposal and language included in the House is that the Senate allowsDCF to use some discretion based on these background checks. The Houseproposal eliminated DCF’s discretion requiring DCF to rejectfamilies as care providers if their record included any of a number ofoffenses even if placement in that family was in the best interests ofthe child.
The Senate does require fingerprint based checks for applicants who mayhave unsupervised contact with kids being served by DCF or whotransport children involved with DCF.
During budget debate, the Senate adopted two amendments regardingsocial workers at DCF. The first brings funding for Social Workers forCase Management to $182.6million. This remains $2.8 million below theHouse. It is likely that at this funding level DCF will not be able tohire enough case workers to ensure caseloads of 15 or less. The secondamendment requires social workers to obtain a social worker’slicense within 6 months of employment. The House included the samerequirement, but gave social workers 1 year to obtain a license.
Family Access Centersreceived a $2.0 million increase in an amendmentduring debate in the Senate. The increase would allow these centers toprovide emergency assistance to runaway youth. These centers currentlymake it easier for children and families to access many public servicesincluding Transitional Aid to Families with Dependent Children (TAFDC),Supplemental Nutrition Assistance Program (SNAP), Women, Infants, andChildren’s Program (WIC), Fuel Assistance, and MassHealth.Some of the funding for Family AccessCentersis located in theServicesfor Children and Familiesline item, the primary DCF servicesaccount. Combining these two accounts, the Senate appropriation isapproximately $1.9 million more than the House.
The table below illustrates all differences which will have to bereconciled in Conference Committee.
The Senate provides $1.71 billion for Disability Services, just$219,000 above the final House proposal. Even though this netdifference is small, many of the line item appropriations vary betweenthe House and Senate proposals.
The House introduced a new line item supporting Community BasedEmployment (5920-2026) andprovided $1.0 million. The Senate took adifferent approach creating a DDSEmployment FirstReserve (1599-0200)and providing $5.0 million. The reserve also supports the transitionfrom sheltered workshops to community-based employment and day supportprograms. These two accounts fund similar services, but the amount offunding, as well as the location of funding in the budget, will have tobe reconciled in Conference.
A Senate amendment calls for the Massachusetts RehabilitationCommission to establish two pilot community centers, one in WorcesterCounty and the other in the northeast part of Massachusetts. Thesecenters were not included in the House budget as they were introducedin the Senate. The Senate amendment does not directly provide fundingfor the centers.
Two amendments in the Senate regulate treatment for persons with adisability. The first prohibits procedures which cause pain or physicalharm. The second amendment limits the use of isolation or restraints tothose individuals who have a court approved treatment plan prior toSeptember 2011. These amendments were introduced in the Senate and willhave to be reconciled.
The table below illustrates all differences which will have to bereconciled in Conference Committee.
The Senate provides $248.6 million for Elder Services, $6.1 millionbelow the final House proposal. ElderHome Care PurchasedServicesreceives $99.8 million, $4.6 million less than the House and SupportiveSenior Housing receives $4.2million, $1.3 million less than the House.
The table below illustrates all differences which will have to bereconciled in Conference Committee.
The Senate made no changes in appropriation to the SWM proposal forJuvenile Justice. Most of the differences between the Senate and Houseproposals are quite small. The Senate adopted one amendment which wouldallow Mental Health funding for forensic services to be expended forjuvenile court clinics.
The table below illustrates all differences which will have to bereconciled in Conference Committee.
The Senate made two changes in appropriations during budget debate forTransitional Assistance. Many of the programs still need to bereconciled during Conference Committee. Most of the differences betweenthe Senate and House proposals are quite small.
One program with a larger split is the EmploymentServices Programwhich receives $4.8 million in the Senate. The House provided $10.8million. This program provides Transitional Aid to Families withDependent Children (TAFDC) recipients with education, occupationalskills and the employment support services needed to acquire and retainjobs. The Senate funding level amounts to a cut of 84 percent sincepre-recession levels.
The TeenStructured Settings Programalso received additional fundingthrough an amendment. The Senate added $200,000 bringing total fundingto $9.4 million, $200,000 more than the House.
TAFDCreceives $253.2 million, $2.5 million below the House proposaland $48.8 million below FY 2014. The Conference Committee will mostlikely decide the final funding level based on the latest anticipatedcaseload levels for FY 2015.
The table below illustrates all differences which will have to bereconciled in Conference Committee.
The largest difference between the House and Senate budgets for localaid programs is for the MunicipalRegionalizationand EfficienciesGrant Program, which theSenate 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 improvetheir delivery of local services.
Funding for the state’s largest local aid program, Unrestricted GeneralGovernment Aid (UGGA), hasbeen settled since March, as both the Houseand Senate passed local aid resolutions committing to help cities andtowns better plan for their local FY 2015 budgets. The Legislature willfund UGGA at $945.8 million, which is $25.5 million above FY 2014levels.
Even with this modest increase, however, UGGA will be roughly $780million, or 45 percent, below FY 2001 levels, adjusted for inflation.This long-term trend is driven largely by state level income tax cutsthat cost the state roughly $3.2 billion annually and by the lingeringeffects of the Great Recession. For more information on the history ofhow general local aid has been distributed, please see MassBudget’spaper DemystifyingGeneral Local Aid in Massachusetts.
The House and Senate transportation proposals are very similar,following the framework outlined in last year’s long-termtransportation finance law. Specifically, both continue the plan toramp up transportation spending from FY 2014 through FY 2018,increasing for FY 2015 by a little more than $120 million. This newfunding will help MassDOT modernize its infrastructure, invest incapital improvements at the MBTA and Regional Transit Authorities, andmake progress towards ending the practice of borrowing money to pay forMBTA operating costs.
It is important to note that a significant portion of the state’stransportation-related capital spending shows up in separate debtservice accounts, the largest of which is the Consolidated Long-TermDebt Service line item. ForFY 2015, the House and Senate both projectthat a little more than fifty percent of this $2.07 billion accountwill cover transportation-related debt.
The state budget supports libraries by providing funding for a numberof programs including direct aid to local libraries; the regionallibrary network including the interlibrary loan program; and, thetalking book programs for the visually-impaired located in Worcesterand Watertown. The final Senate budget provides $26.8 million forlibrary programs, which is $3.5 million more than the House and $4.6million 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 budgetsfor libraries which will have to be reconciled in the jointHouse-Senate Conference Committee. The most notabledifference is that the Senate provides $10.0 million, $2.8 million morethan the House, for direct state aid to local libraries. Afull listing of the differences is noted in the table below. During itsdebate the Senate adopted an amendment which added $160,000 in fundingto the regional library network.
With regard to revenues, the Senate’s final FY 2015 budget differslittle from the House budget. Both are built upon the Fiscal Year 2015consensus revenue estimate that was agreed to back in January ($24.337billion) – as is the Governor’s budget proposal. The Senateand House (like the Governor) both rely on additional revenue above andbeyond this consensus figure. All three budgets draw on a combinationof new tax and non-tax revenues, with some of the new revenue comingfrom ongoing sources and some from one-time sources. Like the House,the final Senate budget excludes most of the new, ongoing tax changesproposed by the Governor. (To read more about the Governor’s taxpackage see MassBudget’sreview of the Governor’s FY 2015 budget.)
During floor debate, the Senate adopted a number of revenue-relatedamendments that bring the Senate budget into closer alignment with theHouse budget. At the same time, the two budgets continue to containdifferences that will need to be reconciled in conference.
In the sections below, we examine in closer detail tax and non-taxrevenue proposals in the Senate’s final FY 2015 budget, witha focus on remaining differences with the House budget.
Overall, the tax proposals in the Senate and House FY 2015 budgets arevery similar. During floor debate, the Senate adopted a number oftax-related amendments that bring the two budgets into close agreement.This shortens the list of differences that must be addressed duringconference. The adopted amendments include the addition of a TaxAmnesty program, as well as a commission to study the potential effectsof creating a state tax credit for manufacturers of medical devices.Both these proposals appear in the House budget as well. (Seediscussion of these proposal in MassBudget’s HouseBudget Monitor.)
The Senate and House tax proposals, however, continue to differ in anumber of ways. The details of the two chambers’ respectiveproposals regarding the allocation of large tax settlements between theGeneral Fund and the state’s “Rainy Day”fund remain different, as described below. Additionally, the House hasproposed a commission to study the impacts of phasing out oreliminating the corporate Inventory Tax. The Senate budget does notcontain such a proposal. The Senate, meanwhile, proposes a commissionto study the pricing and taxing of marijuana, while the House budgetdoes not. The Senate also directs the Department of Revenue to beginpreparing the Commonwealth for the collection of sales taxes fromremote (i.e., online) sellers should the US Congress pass the MarketPlace Fairness Act. The House budget does not include this proposal.
As part of the overall budget process, the Senate and House must cometo agreement on a unified “conference budget” inwhich all of these differences must be reconciled. Further discussionof these remaining tax proposal differences follow, below.
TAX SETTLEMENT REDIRECTION
Under current law, for any tax settlement or judgment that exceeds $10million, the amount in excess of $10 million is transferred to theStabilization Fund. In recent years, annual collections from theseexcesses 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 proposesa new structure that would redirect the typical excess amount collectedannually from these large, one time settlements and judgments to thestate’s General Fund for direct appropriation to state programs andservices. The structure proposed by the Senate would direct anestimated $203.5 million in ongoing revenue to the state budget in FY2015. This proposal is very similar to the Governor’s, but slightlydifferent than the House proposal. The House proposal uses a five-yearaveragerather than five-year medianto calculate the amount to betransferred from the Stabilization Fund to the General Fund(the House’s approach produces a somewhat higher estimatedgain to the General Fund in FY 2015: $240 million rather than$203.5 million). Additionally, the Senate proposal clarifies that thecalculated five-year median amount will be transferred to the GeneralFund even in years when total excess collections from largesettlements/judgments falls below the calculatedmedian.
While the new structure(s)maysimplify state budgeting, providing amore predictable stream of revenue to the General Fund, it is importantto note that these proposals do not generate newrevenue. Instead, theysimply redirect to the General Fund revenue that otherwise would havebeen deposited in the state’s Stabilization Fund. The proposed changes,therefore, would reduce future growth of the Stabilization Fund.
The House budget establishes a commission to study the impact ofphasing out or eliminating the “inventory tax.”While the Massachusetts tax code does not have an “inventory tax” perse, for the purposes of this commission the term “inventorytax” would include both the local tax applied to“tangible personal property” (which does notinclude real estate, such as buildings, land,etc.),2and thestatetax applied to the “tangible property measure and the net-worthmeasure of the non-income portion of the corporate excisetax.”3
In general, businesses pay either the local or the state tax on their”inventory” – but not both – depending on how the business is legallystructured. A wide variety of exemptions apply to both the local andstate “inventory taxes.” For the 2014 Tax Year, municipalities havelevied $677.5 million in personal property taxes. In 2010, the mostrecent year for which data is available online from the Department ofRevenue (DOR), the state collected $341 million in non-income excisetaxes. Inventory would be a portion of what is covered by each of thesetaxes. DOR, however, does not have an estimate of the amountof this total that is attributable to corporations’ inventory.4
The Inventory Tax Commission would look at potential fiscal impacts onstate and local budgets as well as employment and other businesseffects that could result from phasing out or eliminating these taxes.The Senate proposes no such commission.
The Senate, unlike the House, proposes a commission to study“the pricing and taxing of marijuana, products containingmarijuana and supplies related to the use ofmarijuana.” 5The commission also would be taskedwith studying “how to ensure adequate access to marijuana formedical purposes to qualifying patients.” This includespatients that may have limited access due to financial, physical and/orgeographical constraints. The commission will make recommendations andpropose legislative language as part of their report, due back to theLegislature within 60 days of the FY 2015 budget’senactment.
COMPLY WITH FEDERAL MARKETPLACE FAIRNESS ACT
The Senate budget includes a proposal that would lay the groundworknecessary for the Commonwealth to begin collecting sales tax fromonline purchases made by residents of Massachusetts. Currently, a billsits pending before the U.S. House and Senate – theMarketplace Fairness Act – that would require large internet retailersto collect and remit state sales taxes for all qualifying onlinepurchases. As part of this arrangement, states would be required tosimplify their sales tax laws in order to make a more uniform, nationalset of taxable items (Streamlined Sales and Use Tax Agreement orSSUTA), thus easing the collection process for onlineretailers.6Twenty-four states already have made theseadjustments.7States that are in compliance with the SSUTAwill be authorized to begin collecting sales taxes through onlineretailers as soon as the Marketplace Fairness Act is enacted. It isestimated that, nationally, in 2012, states lost some $11 billionannually to forgone online sales and use taxes.8
The Senate proposal instructs the Commissioner of the Department ofRevenue to make the minimum necessary administrative changes to complywith potential federal law on this matter. The proposal also requiresthe Commissioner to begin collecting this tax from online sellersshould a federal law be enacted.
The FY 2015 budget proposal from the House and Senate rely on severalsources of non-tax revenues to balance the budget.
There are three main types of non-tax revenue: federal revenues, whichare mostly reimbursements from the federal government for statespending on the Medicaid (MassHealth) program; departmental revenues,which are fees, assessments, fines, tuition, and similar receipts; andother revenues, which are mostly funds that the state draws from anassortment of non-budgeted trusts.
One of the significant differences between the House and Senate budgetsis the House proposal expanding a 5-cent bottle deposit tonon-carbonated beverages such as bottled water, flavored waters, icedteas, coffee based drinks and sports drinks. As with beveragescurrently covered by the “bottle bill,” consumers are refunded thisdeposit if they return the empty bottles for recycling. Thisexpansion is projected to generate $24.2 million in increaseddepartmental revenue. There are also differences in estimated federalrevenues, largely tracking the differences in budget proposals forMassHealth. These revenues come to the Commonwealth as a partialreimbursement for increased spending on MassHealth and health reformexpansions with the implementation of the federal Affordable Care Act(ACA).
The Senate and House, however, both anticipate $32.2 million inrevenues from increased federal reimbursements from the TANF programand the soldiers’ homes, and also $13.0 million realized in FY 2015 bydelaying 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 oftransfers from trusts and other budget-balancing solutions. Eachproposes withdrawing $140.0 million from the state’s Stabilization(“Rainy Day”) Fund. They also both propose balancing the budget withthe 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 itsliability to the State Retiree Benefits Trust ($75.9 million),redirecting money that would otherwise go to the Stabilization Fund. InFY 2012, the state passed a law directing that an annually increasingshare of the funds from the Master Tobacco Settlement go into the StateRetiree Benefits Trust in order to help pay these costs. The Senatebudget proposes changing this formula. The Senate’s proposal recommendsthat the Commonwealth meet its obligation with 50 percent of capitalgains tax revenues that would otherwise go to the Stabilization Fund($61 million in FY 2015). The effect of this is reducing the state’sdeposit into the Stabilization Fund. In FY 2015, Senate also proposesthe remainder of the transfer to the State Retiree Benefits Trust wouldcome from unused appropriations for debt service. If that is notenough, the balance would come from the Master Tobacco Settlement fundsdeposited into the General Fund.
Note: MassBudget’s budget total is higher than othercommonly-presentedbudget totals. We make a number of adjustments in order to allow formore accurate across-year comparisons of budget totals.We include”pre-budget” transfers in our budget totals, which in FY 2015, addsapproximately $3.6 billion. We include tax revenues dedicated to theMBTA and to school building assistance, the cigarette excise taxdedicated to the Commonwealth Care Trust Fund, the state contributionto the pension system, and the transfers to the Workforce TrainingTrust and to the State Retiree Benefits Trust (when designated).We alsomake a number of other adjustments to allow for more accurateacross-year comparisons of totals.
1This analysisdoes not include $20 million that was fundedin a supplemental budget passed earlier this winter to supplementfederal funding for the Low Income Home Energy Assistance Program(LIHEAP.) In most cases the Legislature does not include funding forLIHEAP in its original budget, but decides whether or not to providesupplemental funding in the late fall or early winter of the fiscalyear.
2Furtherdetails on Massachusetts’staxable personal propertycan be found on the DOR website(http://www.mass.gov/dor/local-officials/municipal-finance-law/frequently-asked-questions-personal-property.html#Q2) and the Lincoln Institute of Land Policy(http://www.lincolninst.edu/subcenters/significant-features-property-tax/Report_Taxable_Personal_Property_Details.aspx?ReportID=429)
3HouseFY 2015 Budget documents, Section 114:https://malegislature.gov/Budget/FY2015/House/FinalBudget
4DOR, 2010 Report on Corporate Excise Returns (Tables S1 andS2): http://www.mass.gov/dor/docs/dor/stats/corpexcise/corp10.pdf
5SenateFY 2015 budget documents:https://malegislature.gov/Bills/188/Senate/S4/Amendment/Senate/913/Text
8NationalConference of State Legislatures:http://www.ncsl.org/research/fiscal-policy/collecting-ecommerce-taxes-an-interactive-map.aspx#2