Analyzing-the-Governor’s-Budget-for-FY-2017























The Governor’s budget proposal for Fiscal Year 2017
is best
described as an austerity budget. It contains small cuts and spending
reductions across government and includes few new initiatives. Many of
the reductions are due to the early retirement program implemented this
year. Perhaps the most important question this budget raises is how
those cuts will affect the quality of services provided by our
government. With fewer people working at the Department of
Environmental Protection (where the Governor proposes a 7 percent
reduction in funding), will our state’s ability to enforce
the laws that keep our air and water clean be degraded? With reductions
at the Department of Revenue (where this budget proposes 13 percent
less funding), will it be harder for honest taxpayers to get answers
from the department and will it be easier for those corporations and
other sophisticated taxpayers who seek to evade taxes to avoid paying
the taxes they owe? Similar issues will arise across state government,
and we won’t know the answers until after the budget takes
effect.












On the positive side, this budget proposal continues efforts to hire
more social workers at the Department of Children and Families so that
caseloads will decline and our front line workers can better protect
children who are at risk of abuse or neglect. The proposal also funds
new efforts to address the opioid addiction crisis, including an
additional $9.1 million for the Department of Public Health’s
Bureau of Substance Abuse Services to support increased prevention and
treatment efforts.












The budget does not provide significant new funding to address
important long-term issues like the affordability of higher education,
the availability of early education, or the need to fix our roads,
structurally deficient bridges, and deteriorating public transportation
systems. Overall funding for education in this proposal roughly keeps
pace with inflation. And funding for transportation would decline by
one percent.












The budget reduces the state’s reliance on temporary revenue
and makes a small deposit into the Stabilization Fund. But six years
into an economic recovery, the budget is still being balanced with
temporary revenue, including $150 million that existing law dedicates
to the Stabilization Fund. This continues a long-term pattern we have
seen since the state cut income taxes by over $3 billion between 1998
and 2002: deep cuts in recessions, barely balanced budgets in the best
of times, and chronic structural budget gaps. This pattern has real
world consequences: our Commonwealth has not been able to make
important investments in the education and skills of our workers and in
the integrity of our transportation infrastructure that could
strengthen our economy in the long run. This Budget Monitor
examines
the Governor’s FY 2017 budget proposal in the context of
these long-term trends.












Early Education & Care












Quality early education and care plays a major role in preparing young
children for K-12 education and helping them thrive more generally.
Early education and care is also a critical work support for parents
with young children, providing safe and reliable child care while they
provide for their families.












The Governor’s budget for FY 2017 allocates $574.3 million
for early education and care programs, a small increase of 0.8 percent
over this year, less than the expected rate of inflation. Though the
last two state budgets included modest increases for early education,
these increases are small in the context of much larger long-term cuts
in this area, after state tax cuts were implemented during the late
1990s and early 2000s. Looked at over this longer horizon, the
Governor’s FY 2017 proposal for early education is $151.6
million (21 percent) less than FY 2001 levels, adjusting for inflation
(see chart below).























Bar graph: Early education funding would be down 21 percent since 2001
































The Governor’s proposal does provide an increase of
$17.5
million (8 percent) for Supportive
& TANF Child Care
. This
funding provides child care subsidies for children in the care of the
Department of Children and Families (DCF) and those receiving
Transitional Aid to Families with Dependent Children (TAFDC). 
According to the administration, this increased level of funding should
support 1,500 new vouchers for TAFDC Families and allow a full year of
services for 600 children under DCF care who had this support for only
part of FY 2016.












The Income
Eligible Child Care
program provides subsidies for
low-income working families who do not qualify for other child care
assistance. With insufficient funding to meet demand, the waitlist for
these subsidies exceeded 27,000 children in November 2015. For the last
three years, dedicated funding supported reducing the waitlist. The
Governor’s FY 2017 budget does not propose continuing this
specific funding to reduce the waitlist. As a result, this proposal
contains $6.9 million less in total Income Eligible funding compared to
the current FY 2016 budget (see table below). This funding level could
potentially drive up the waitlist and reduce the number of kids
receiving subsidies. To allow comparison between these years, the
figure for total Income Eligible funding for FY 2017 includes funds for
the same purpose that are moved to another line-item in the
Governor’s FY 2017 budget proposal.























Table: funding for income eligible early education

































Several key grant programs in early education are level funded in this
proposal including:





















  • Access
    Management
    at $6.7
    million, which helps families obtain care for their children through
    child care resources and referral agencies; and










  • Grants
    to Head Start,
    at $9.1
    million, which supplements significant federal funding ($124 million in
    FY 2014) to support Head Start early education and care
    programs.   





















The Governor’s FY 2017 budget proposal also consolidates $1.0
million in funding for
Reach Out and Read
into a new line-item Early
Literacy Initiatives.
The amount of funding is level with
the current
FY 2016 budget, but puts the program under joint oversight of the
Department of Early Education and Care and the Department of Elementary
and Secondary Education.












Notably, several early education and care accounts are consolidated or
have funding shifted into a new Quality
Improvement
line-item. The
Department of Early Education and Care suggests that these shifts will
help align the state’s goals for early education quality,
concentrate funding towards common purposes, and identify gaps in
resources and supports for young children.












All of the Governor’s proposed FY 2017 shifts and
consolidations are represented in the table below. In our budget tools,
MassBudget moves funding transferred between accounts back to their
original place to allow for more accurate comparison with prior years.
All told, total funding for quality improvement initiatives increases
by $500,000 over current FY 2016 levels.























Table: Support for early ed quality improvement (QI) initiatives

































Three programs are entirely consolidated into Quality Improvement:





















  • Universal
    Pre-Kindergarten

    which supports Pre-K quality improvements for kids between 2 years 9
    months old and kindergarten age;










  • Commonwealth
    Preschool
    Partnership Initiative
    , which supports existing providers
    expanding
    seat capacity, particularly for 3 year olds; and










  • Early
    Childhood Mental Health
    Consultation
    – which focuses on early education
    and
    wraparound social services for kids facing great challenges. These
    services focus on prevention of school suspensions and other severe
    behavioral issues.





















Four programs have funding shifted into Quality Improvement:





















  • Early
    Education and Care
    Administration
    , which supports the statewide oversight of all
    Early
    Education services and programs, has $6.8 million (54 percent) of
    funding shift into the new Quality Improvement account.










  • Supportive and TANF Child Care
    has a negligible amount of funding ($600,000) shift into the new
    Quality Improvement account.  










  • Income Eligible Child Care has
    $9.0 million (3 percent) of its funding shift.










  • Family
    Support and Engagement
    (Services for Infants and Parents
    ), which provides outreach
    to families
    on caring for their young children, has $7.9 million (37 percent) of
    its funding shift.





















Quality Improvement funding in the Governor’s FY 2017 should
help early education providers improve the quality of services for kids
and families. However, the Governor’s proposal provides no
funding for the
Early Education and Care Provider Rate Increase
(funded
at $5.0 million in FY 2016). This program provides salary and benefit
increases along with professional development to early education
teachers, key mechanisms to improve the quality of services available
for young children.












K-12 Education












Education plays a central role in developing our next generation in the
Commonwealth, ultimately strengthening our communities and our economy.












This past October, the Legislature’s Foundation Budget Review
Commission issued a final report. The commission recommended steps to
address several long-term challenges in how we as a Commonwealth fund
our local school districts. This group of education policymakers and
stakeholders found that funding for students in poverty and English
language learners should be increased enough to support multiple
effective strategies. Such strategies include after-school, summer
learning, and wraparound social services for students facing poverty
related barriers to success. The commission also found that the current
foundation budget fails to account accurately for the actual costs of
health care and special education. Specifically, the Commission found
that schools are forced to divert resources away from important
strategies that can improve the quality of education because these
flaws in the foundation budget lead to at least $432 million less in
Chapter 70 funding than should be provided. For more detail, see
the
final commission report.












While the Governor’s FY 2017 budget proposal for Chapter 70
aid and other K-12 grant programs provides an increase of $81.0 million
(1.6 percent) over FY 2016, this increase is only roughly in line with
annual cost growth and would do little to address the many longer-term
challenges identified by the Commission.












For FY 2017, the Governor proposes increasing Chapter
70 Education Aid

by $72.1 million (1.6 percent over last year) to $4.58 billion. This
proposed increase to Chapter 70 is 35 percent less than the $111.2
million increase from FY 2015 to FY 2016.












Specifically, the Governor’s Chapter 70 proposal:





















  • Calculates districts
    foundation budgets by using updated enrollment and inflation data.
    Notably, the key inflation factor for Chapter 70 in FY 2017 was
    slightly negative (-0.22 percent) and enrollment is also down slightly
    (-0.21 percent.)  










  • Provides a minimum $20
    per-student aid increase over FY 2016 for all districts that would
    otherwise not receive increases, at a cost of $12.9 million.





















The Governor’s Chapter 70 proposal also uses a new method for
estimating the number of low-income students educated in a given
district. This change is driven by recent improvements to the federal
school meals program that are increasing access to school meals and
reducing administrative work for districts. One side effect is that
federal officials are forcing states to make changes to how low-income
kids are counted for school funding and accountability purposes. For
more detail, see FAQ:
Expanding School Meals and Implications for
School Funding Formulas.












For Chapter 70 enrollment purposes, the state has historically counted
low-income students by using the number of kids receiving free and
reduced price meals, as this was the best available data source on
family income. To enroll for free or reduced price meals, parents
filled out forms at the beginning of each school year demonstrating
that their income was below 185 percent of the federal poverty level.












Recognizing that many low-income families are already enrolled in other
public programs that use similar income criteria (e.g. MassHealth and
food stamps/SNAP), the federal government recently began allowing
districts to simplify this application process by directly enrolling
kids for free meals if they are already enrolled in one of these other
programs (a process called “Direct Certification”).
While this new process provides more kids with school meals and reduces
administrative work, it means that districts no longer uniformly
collect data on student income levels.












In response, the Governor’s FY 2017 budget (following a
recommendation
from DESE
) proposes using a new “economically
disadvantaged” measure for counting low-income students. This measure
essentially uses the number of kids directly certified for school meals
instead of using the free and reduced price meal headcounts used to
date. However, this new “economically disadvantaged” measure identifies
many fewer low-income students than does the traditional free and
reduced price meal application process. This gap is driven by two main
factors: first, not all low-income families enroll in the public
programs that they are eligible for; and, second, technical challenges
in matching public program enrollment data with school enrollment lists
mean that even some students enrolled in public programs are not being
directly certified for free meals and thereby counted as
“economically disadvantaged.”












Statewide, the new measure for “economically
disadvantaged” students in FY 2017 is 17 percent lower than
the free and reduced price meal count used in FY 2016, so swapping in
these new estimates would lead to reduced Chapter 70 allocations for
many districts. The Governor’s Chapter 70 proposal attempts
to account for this reduction by making an upwards adjustment to the
low-income rate in the Chapter 70 formula—from an incremental
cost of $3,142 in FY 2016 to $3,775 in FY 2017, an increase of roughly
20 percent.












The size of this difference varies widely across districts, so this
uniform adjustment to the rate doesn’t solve the problem for
some districts with the largest gaps between the current and the newly
proposed low-income measures. Ultimately, improving the enrollment of
eligible families in public programs (e.g. MassHealth and food
stamps/SNAP) and improving our data matching systems would serve to
help close these gaps. This will also better ensure that the headcounts
used by the new “economically disadvantaged”
measure accurately reflect the student populations in every district.
However, it will take time to make these improvements.












In addition to making the uniform adjustment to the low-income rate,
the Governor’s budget proposes increasing to the low-income
rate for districts with concentrated poverty. This proposal follows a
similar recommendation made by the Foundation Budget Review Commission.
Specifically, the Governor’s budget breaks districts out into
deciles based on the percentage of students identified as
“economically disadvantaged.” The decile with the
lowest-poverty districts uses the $3,775 increment for each low-income
student in their district, and then this increment is increased by $40
per student for each subsequent decile. The decile with the
highest-poverty districts uses a $4,135 increment for each
“economically disadvantaged” student.












Even with both of these upwards adjustments to low-income rates, some
districts appear to be receiving less state support for their
low-income students under the Governor’s FY 2017 proposal
than they would have received if the formula had used current free and
reduced price enrollment percentages.












The Governor’s FY 2017 budget includes significant policy
changes to Charter
School Reimbursements.
When students enroll in
charter schools, the public school district they leave is required to
pay tuition to the receiving charter school on their behalf. The
Commonwealth sets charter school tuition rates each year, based roughly
on average per-pupil spending in the sending district. The Charter
School Reimbursement program provides some of this outgoing funding
back to districts in the years after students leave for a charter
school.












The current system reimburses 100 percent of outgoing student funding
in the first year and 25 percent of this amount for each of the
subsequent five years. Under current rules, reimbursements are
available to all school districts that lose new students to charter
schools. However, the present formula is not being fully funded (it is
only 63 percent funded for FY 2016).












The Governor’s FY 2017 budget would alter the reimbursement
schedule to provide school districts with 100 percent, 50 percent, and
25 percent of outgoing student tuition in reimbursements during the
three years after a student enters a charter school from a traditional
district. It would also eliminate all reimbursements in the fourth,
fifth, and sixth years after students depart. The proposal also limits
reimbursements in the second and third years to the lowest performing
districts in the state, which have a larger number of charter school
seats, and thus lose a disproportionately large share of their funding
to charter schools.












Ultimately, this proposal would shift Charter School Reimbursements
funding to the primarily urban communities with a large share of
charter school seats and away from a larger number of suburban and
rural towns with more limited charter enrollment.  












The Governor also proposes close to full funding of the revised system
compared to current 63 percent funding of the existing reimbursement
formula. These changes result in a FY 2017 proposal of $101.0 million,
$20.5 million (25 percent) above current levels. This level of funding
should allow funding of the newly proposed reimbursement formula, for
charter school seats in their first and second years, with some funding
available for those in their third year.























The Governor’s FY 2017 proposal consolidates three K-12
initiatives, Programs
for English Language Learners in Gateway Cities
,
Bay
State Reading Institute
, and Literacy
Programs
in the into a new
line-item called Early
Literacy Initiatives
. Also, one early education
and care account is merged into this program. Collectively these
accounts would receive 1.5 percent less funding than current FY 2016
levels (see table below).























Table: Governor's proposed consolidation into early literacy initiatives
































Several small grant programs, including some that serve
students of the
greatest need, are eliminated or significantly reduced in the
Governor’s proposed budget, including:





















  • MCAS
    Low Scoring Student
    Support
    would be eliminated. The program, currently funded
    at $4.3
    million, provides support to high schoolers at risk of failing to
    graduate from high school. According to recent estimates from the
    Department of Education students participating in this program
    increased their passing rates on state tests by 31 percentage points
    (see the
    department’s 2014 legislative report on MCAS
    support
    ).










  • Alternative
    Education Grants
    would be eliminated. These grants, which
    are currently funded at
    $250,000, support struggling students who have not succeeded in
    traditional school settings.










  • Statewide
    College and Career
    Readiness
    would be eliminated. Currently funded at $500,000,
    this
    program provides assessment and targeted instruction for high schoolers
    to help them be more ready for higher education and avoid remedial
    coursework in higher education, which generally reduces the chances of
    earning a degree.










  • English
    Language Acquisition,

    which provides professional development to educators to support the
    achievement of English language learners, would be reduced by $905,000
    over last year (32 percent).





















The Governor’s FY 2017 budget includes two increases to
programs designed to provide more opportunities for youth to pursue
career training, including:





















  • A $2.4 million (80 percent)
    increase to School
    to Career Connecting Activities
    . This program helps
    teens find employment through internships, career exploration
    activities, and apprenticeships. The Governor’s proposal
    might help increase business investment in youth jobs because this
    program includes a required 2:1 funding match from private sector
    employers.










  • A $1.0 million (100 percent)
    increase to Dual
    Enrollment Grants
    , which could support young people in
    high school enrolling in college course work that is related to
    vocational fields such as science, technology, engineering, and math.





















The state-level administration of K-12 schools through the Department
of Elementary and Secondary Education
is funded a $12.3
million in the
Governor’s FY 2017 budget proposal. This amount is $2.2
million (15 percent) less than current levels. This figure is
reflective of the departure of around 20 staff from the department
during the early retirement program in FY 2016. With fewer staff in
place, it is unclear how the Commonwealth will ensure the same level of
services to districts and students most in need of additional support.












Lastly, the Governor’s budget contains a proposed $5.6
million (23 percent) increase to
School and Student Assessment.
This is
intended to support the development of a new MCAS test (commonly known
as MCAS 2.0) incorporating parts of the computer-based Partnership for
Assessment of Readiness for College and Careers (PARCC) piloted by some
districts in 2014-2015.












Higher Education












Higher education helps residents of our state become active members of
their communities and gain the skills needed to succeed in a
competitive global economy. Public institutions of higher education,
including the University of Massachusetts, the state universities, and
community colleges educate a large majority of the of the high school
graduates who remain in Massachusetts for college. Public graduates are
also more likely to stay in Massachusetts after graduation,
contributing to our economy over the long term. Despite the evidence
that a highly educated workforce helps strengthen our state economy,
Massachusetts has cut state support for higher education by 20 percent
since FY 2001, adjusting for inflation. For more detail on these
long-term trends, see Debt
Free Public Higher Education: What Would it
Take?























Bar graph: Public higher education would be down 20 percent since 2001
































The Governor’s FY 2017 budget proposal continues the trend of
lower
funding that took hold after a series of tax cuts were implemented in
the early 2000s. All told, the Governor’s FY 2017 proposal
for higher education is $6.3 million (0.5 percent) lower than current
FY 2016 levels.












Appropriations to each of the three campus types are detailed in the
following table. MassBudget totals make adjustments in the following
two areas in order to help facilitate more accurate year-to-year
comparisons:





















  • Collective
    Bargaining and
    Other Campus Specific Programs
    . MassBudget adds collective
    bargaining
    accounts and initiatives located at particular campuses, funded through
    separate line-items, to their respective campus totals.










  • Tuition
    Retention.
    Starting in
    FY 2012, all campuses began retaining tuition payments from
    out-of-state students, rather than returning that revenue to the state.
    MassBudget adds in an estimate of these payments from FY 2012 to the
    present, allowing for more accurate year-to-year comparisons. Further,
    beginning in FY 2017, a provision from last year’s budget
    takes effect, allowing the University of Massachusetts to retain
    tuition revenue from in-state students that it had returned to the
    state in prior years. UMass estimates this funding to be $31.1 million
    in FY 2017. MassBudget adds this amount to the direct UMass
    appropriations to facilitate accurate comparisons.
































Table: Higher education funding to the three campus types
































The Governor’s proposal funds University of Massachusetts
line-items at $554.8 million (after accounting for tuition retention),
$3.4 million more than last year. This negligible increase (0.6
percent) to state support makes it possible that tuition and fees will
continue to rise at the University of Massachusetts. To meet a
commitment to hold the tuition rate constant in FY 2015, the system
received $40 million in additional funding over FY 2014. In contrast,
tuition and fees at UMass increased last year, when it received funding
roughly level with what the Governor proposes for FY 2017.












Several higher education grants and programs were eliminated in the
Governor’s FY 2017 budget proposal:





















  • The High
    Demand Scholarship
    Program
    would be eliminated (funded at $1.0 million in the
    current FY
    2016 budget). This program provides support for student pursuing majors
    in fields such as engineering, finance, and education that are in high
    demand in the labor market. The main State Scholarship Program may
    have
    limited capacity to offset this cut because it is only funded at
    $412,000 more than current levels in the Governor’s FY 2017
    proposal ($96.0 million).










  • Community
    College Workforce
    Grants
    would be eliminated (funded at $750,000 in the
    current FY 2016
    budget). These grants support workforce training initiatives at the 15
    community colleges and help connect campuses with local employers.
    However, this would be somewhat offset by a $250,000 appropriation for
    similar purposes to BizWorks
    Grants
    (formerly Rapid Response Grants).










  • Adult
    College Transition
    Service (Bridges to College)
    would be eliminated (funded at
    $250,000
    last year). This initiative helps people move from adult basic
    education to college level work.





















The Governor’s FY 2017 budget proposes significant reductions
to a number of other grants and programs:





















  • State
    University Incentive
    Grants
    are proposed to be funded at $2.5 million, a $3.1
    million cut
    (55 percent) from current levels. In prior years, this funding
    supported implementation of a Department of Higher Education strategic
    plan, called the Vision Project. This plan aimed to increase quality,
    reduce achievement gaps, and improve alignment between higher education
    and the workforce. It is possible that state university campuses could
    use other funding to support some of these initiatives.










  • STEM
    Starter Academies
    would
    be reduced to $3.9 million, an $863,000 (18 percent) cut from current
    levels. These programs provide outreach, exploration, and mentorship
    activities to help students who may need additional support pursue
    coursework in high growth Science, Technology, Engineering, and Math
    (STEM) fields.





















The Governor’s proposal also contains significant cuts to
state-level administration of public higher education:





















  • Community
    College
    Administration
    would be funded at $2.7 million, a $6.4
    million (70
    percent) cut over current FY 2016 levels.










  • The Department
    of Higher
    Education
    would be funded at $2.1 million, a $2.4 million
    (53 percent)
    cut over current FY 2016 levels.





















These administrative cuts may impede the Commonwealth’s
ability to improve student experiences on campuses, coordinate with
industry and other partners, and direct student aid and support
programs. Notably, these administrative cuts cannot be fully explained
by staff reductions due to the early retirement program in FY 2016,
because relatively few retirements (equaling $411,000 in salary and
benefits) came from the Department of Higher Education in FY 2016.












Environment & Recreation












The state’s environment and recreation budget funds programs
that keep our air and water clean, preserve fish and wildlife habitats
and maintain and staff recreation facilities in
Massachusetts.  The Governor’s Fiscal Year (FY) 2017
budget recommends $197.1 million for environment and recreation
programs, a cut of $14.9 million or 7 percent below the FY 2016 current
budget.  Since FY 2001 when the state implemented cuts to the
income tax, funding for environment and recreation programs has fallen
by 34.5 percent in inflation-adjusted dollars.  












The Governor’s FY 2017 budget cuts funding for several
environment and recreation programs that have had significant cuts over
the years.   Many of the reductions in the
Governor’s FY 2017 proposal are likely related to staffing
reductions as people took advantage of an early retirement package
included in the FY 2016 budget.  Because many of these staff
will not be replaced, these agencies may have difficulty carrying out
their functions effectively. Some agencies and programs affected by
these staffing reductions include:    





















  • The Department
    of
    Environmental Protection
    (DEP) which receives $25.1
    million in the
    Governor’s proposal, a cut of $4.4 million or 15 percent
    below the FY 2016 current budget.  DEP is responsible for
    keeping our air, water and land clean and making sure businesses and
    other entities are complying with our state’s environmental
    laws.  










  • The Hazardous
    Waste Clean-up

    program receives a proposed $12.3 million, a cut of $2.1 million, or
    14.4 percent below the FY 2016 current budget.  
     










  • State Parks
    and Recreation
    programs receive $37.4 million, a cut of
    $9.2 million.
    The
    Governor’s Budget recommends eliminating about $4 million in
    funding that was earmarked in the FY 2016 budget for specific parks and
    recreation programs.  The Governor’s budget does
    propose that the Department of Conversation and Recreation (DCR) retain
    $19.2 million that it collects from parking, camping and entry fees, an
    increase of $3.2 million. Even with this increase, however, funding for
    state parks in the Governor’s FY 2017 budget proposal is $6.0
    million below the FY 2016 budget.   
     





















MassHealth (Medicaid) & Health Reform












In his FY 2017 budget proposal, the Governor does not make any outright
cuts to member eligibility or benefits, but instead focuses on a
variety of strategies to control costs, including  freezing
rates for most providers (with the exception of behavioral health and
substance abuse), and directing members to lower-cost health care. With
these adjustments, the Administration hopes to hold growth in the
state’s Medicaid program (MassHealth) to 5 percent, and
maintain enrollment at about 1.89 million members. This is
approximately the current MassHealth caseload, meaning that the
Administration does not anticipate that MassHealth will be insuring any
additional members on net.











The Governor’s budget includes $15.41 billion for
MassHealth
programs, and $157.9 million for MassHealth administration and
operations (see detailed table. Note that the Governor has proposed
shifting some funding to consolidate administrative and information
technology costs; MassBudget adjusts this funding back in order to
allow for more accurate across-year comparisons.) This is a 5.0 percent
increase over current budget totals for MassHealth.























Table: MassHealth (Medicaid) and health reform
































The Administration has several proposals to encourage
MassHealth
members to move towards managed or coordinated health care plans.
Managed care has the potential to encourage more preventative and
better integrated care, but its restricted networks can also limit
access to certain specialists or providers.











Effective January 1, 2017, the Governor proposes eliminating
“optional” benefits for MassHealth members who are
enrolled in the Primary Care Clinician (PCC) plan. The Administration
expects that eliminating these benefits would save approximately $11
million. These optional benefits would be retained for members in the
in the Managed Care Organizations (MCO).











The Governor is also hoping to increase enrollment in managed
care by
using “passive enrollment” in the Senior Care
Options and One Care programs—the integrated programs for
members eligible for both MassHealth and Medicare. Passive enrollment
means that members are enrolled in these programs by default, unless
they explicitly choose to opt out.











The Governor hopes to align MassHealth in more ways with the
private
health insurance market and proposes other strategies to manage
enrollment. Effective October 1, 2016, the Governor proposes
implementing an annual open enrollment for MassHealth, eliminating the
current flexibility that members have to shift among MCO or PCC plans
as their health needs change. The Administration also expects that
maintaining a regular schedule for re-determining member eligibility
will help control caseload growth.











To address the growing costs of long term care, the
Administration is
also planning to immediately (as of February 1, 2016) place a
moratorium on new home health agencies. Apparently, 12 new home health
agencies have been referred to the Medicaid fraud unit within the
Attorney General’s office, and the Administration is hoping
that better regulation of that industry might help crack down on recent
cost growth in home health care.











On the other hand, in order to continue to support the persons
with
disabilities who want to live at home, the Administration is providing
a $54 million increase for personal care attendants to support both
increases in utilization and compliance with new federal overtime
guidelines.











Nursing home rates will increase from $302.9 million to $332.9
million,
but this $30.0 million increase will have no net cost to the state. An
assessment on the facilities will increase to the maximum allowed by
the federal government, which will be a $15.0 million increase for a
total of $235 million, and the federal reimbursement will also increase
by $15.0 million.











The Administration is not proposing eligibility changes for
the
MassHealth program, but the Governor’s budget proposes
restricting reimbursements to hospitals and community health centers
from the state’s Health Safety Net. The Health Safety Net
reimburses acute care hospitals and community health centers for the
costs of care provided to people who are uninsured or underinsured, and
currently provides full reimbursement for care provided to people with
incomes up to 200 percent of the federal poverty level. People with
incomes up to 400 percent of the poverty level are billed for a portion
of the costs of their care. Even with Massachusetts’
nation-leading
health coverage rates, there are still
residents of the
Commonwealth who do not have health insurance, and for whom even
emergency health costs can lead to significant medical debt. The
Administration proposes lowering the eligibility threshold for partial
coverage by the Health Safety Net from 400 percent to 300 percent of
the federal poverty level.











The Administration is in the process of reforming health care
delivery,
and shifting MassHealth to a system of accountable care organizations
(ACOs). This is a strategy to contain health care cost growth and to
provide better integrated care. The shift (described above) to the
Senior Care Options and OneCare program is part of this initiative. In
the course of moving the rest of MassHealth into ACOs, and supporting
the integration of community-based providers into the ACOs, the
Administration is expecting that FY 2017 will be a transition year. The
Administration is increasing an assessment on hospitals by $250
million, an increase from 0.8 percent to 2 percent of their private pay
revenue. According to the Administration, hospitals “as a
class” will not experience an increase in costs associated
with this assessment, as they will receive this assessment back in rate
payments. The Administration will be using $73.5 million from this
assessment as a transfer into the General Fund to help balance the
budget.























Table: MassHealth (Medicaid) and health reform
































In addition to funding for MassHealth, the
Governor’s health
care budget proposal includes funding for supplemental payments to
health safety net providers, funding for other subsidized health
programs, and other administrative and operational supports (see
table.)











Payments to health safety net providers through a variety of
trusts are
funded by a combination of operating transfer appropriations,
re-distributed assessments on providers, and federal reimbursement.
Because of the variations in the timing of these payments and revenues,
there can appear to be wide swings in the totals over the course of the
budget process. Between FY 2016 and FY 2017, there are no significant
changes anticipated in these trusts.











ConnectorCare (the “State Wrap”) is the
subsidized
program for people previously covered by the Commonwealth Care Program
who are not eligible for MassHealth coverage and have incomes at or
below 300 percent of the federal poverty level. ConnectorCare plans
have relatively low monthly premiums and out-of-pocket costs. This
program is administered by the Health Connector, and is funded through
the Commonwealth Care Trust Fund rather than by line-item
appropriations in the budget. A portion of the state’s
tobacco tax revenue is directed into the fund to help pay for this
program. There is also funding from tax assessments on individuals who
do not choose to purchase health insurance and similarly from an
assessment on employers. Because of the availability of federal revenue
to pay for some of health care costs previously borne by the state, as
in FY 2016, the FY 2017 budget allows for transferring up to $110
million from this trust into the General Fund to help balance the
budget. In FY 2016 the actual transfer will likely total $81.8 million,
and in FY 2017 will likely total $86.8 million.












Mental Health












The Governor’s FY 2017 mental health budget proposal of
$761.0 million is an increase of $12.8 million or 1.7 percent over FY
2016—just about enough to cover inflation overall. There is a
notable increase in funding for residential behavioral health
treatment, an important component of the Administration’s
commitment to treating drug addiction.











The Department of Mental Health (DMH) serves approximately
21,000
adults and children who have severe and persistent mental illness. The
vast majority of persons receiving mental health services receive those
services in the community, rather than in inpatient facilities. Funding
for the administrative offices and operations at DMH would receive
$27.4 million in the Governor’s proposal, a decrease of $1.1
million compared to FY 2016 funding, which could have an impact on the
ability of the Commonwealth to provide these essential services.












The budget proposes increasing funding for inpatient care by $9.7
million, for a total of $205.8 million. The Administration notes that
this will cover the costs of 45 substance use treatment beds at Taunton
State Hospital, added in part to ensure that women would not need to be
civilly-committed to MCI-Framingham for substance abuse treatment.












The Governor proposes an increase of $1.8 million for statewide
homeless support services (5046-2000), bringing funding to $22.9
million in order to continue funding for initiatives begun in FY 2016.











Funding for children’s
mental health
is essentially
level-funded at $88.1 million, just $1.1 million more than in FY 2016.
The Administration has indicated that the appropriation includes $3.6
million for the Massachusetts Child Psychiatry Access Project (MCPAP),
an innovative program that improves access to treatment for children
with behavioral health needs and their families by providing quick and
ready access to psychiatric consultation for primary care providers
across Massachusetts. In past years there has been specific earmark
language for this program.












Public Health












Funding for the state’s public health programs in the
Governor’s FY 2017 budget proposal is $7.9 million more than
in FY 2016, for a total of $584.6 million. This is a slight increase
that is only enough to keep up with inflation, but it represents a
dramatic reduction in support for public health programs compared to FY
2001, after which deep tax cuts reduced available resources to support
essential government functions.












In keeping with the Administration’s commitment to addressing
the opioid addiction epidemic and combating substance abuse, the
Governor’s budget increases funding for substance abuse
services in the Department of Public Health (DPH) by $9.3 million (7.1
percent) to $140.2 million. This is level funding for most of the
department’s substance abuse programs, with a $9.1 million
increase directed to the Bureau
of Substance Abuse Services,
to support
an increased level of prevention and treatment.











Almost all other public health programs are essentially
level-funded or
cut. Maternal and child health programs are level-funded, with the
exception of a $2.0 million decrease in expected
manufacturers’ rebate
revenue
for the WIC (Women, Infants,
and Children) Program. The Governor proposes $12.5 million for the WIC
Program state supplement,
the same amount as in FY 2016. WIC
is a
nutrition program that serves low- and moderate-income pregnant women
and small children. It provides access to healthy food and nutrition
counseling during pregnancy and in the early years of life.












The
early intervention
program is also level-funded at $28.4
million.
Early intervention services are available to infants and toddlers who
are at high risk for developmental delay or who already exhibit
developmental delay. The program is designed to help give these at-risk
children a boost before they are preschool age.












The state’s anti-smoking efforts, funded in DPH through
Smoking
Prevention and Cessation
are funded at $3.9 million, the same
as in FY 2016. At one time, Massachusetts led the nation with its
successful public health campaign to reduce smoking. In FY 2001, for
example, before the state cut taxes dramatically, the state budgeted
close to $90 million to support anti-smoking efforts. Since then, these
efforts were at first cut significantly, and then have dwindled year by
year. FY 2017 funding levels are not even enough to keep up with
inflation.












Other programs are cut or level-funded as well. There is a slight cut
to the department’s oral health program, for example, as
Dental
Health Services
receive $67,000 less than in FY 2016, for a
total of $2.0 million.












Although it might seem that funding to prevent sexual assault and
domestic violence receives a dramatic boost in the Governor’s
budget, this funding is in fact simply a shift of dollars previously
provided to the Department of Children and Families (see table below
and Child Welfare section of this Budget
Monitor
.) Funding for the
Sexual
Assault Nurse Examiner
program is flat at $4.5 million, and
funding is flat at $150,000 for the Healthy Relationships grant
program. The Administration proposes to better consolidate and
coordinate domestic violence prevention and services. Adjusting for
this shift, these services in fact are essentially level-funded with FY
2016.























Table: Funding for domestic violence
































The only other notable increase in funding for public health
programs
is for the Safe
and Successful Youth Initiative,
administered through
the Executive Office of Health and Human Services. This program targets
high risk young men in communities across the Commonwealth and provides
a public health approach to reducing gun-related violence. The Governor
proposes adding $2.9 million to this program, while level-funding the
other youth violence prevention grant programs at a total of $5.3
million within the department (4590-1506
and 4590-1507.)












State Employee Health Insurance












The Governor’s proposal holds down the budget for health
insurance for state employees by proposing to shift more of the costs
onto the workers. The Governor proposes increasing the share of health
insurance premiums paid by longtime employees (hired before June 30,
2003) from 20 percent to 25 percent. The Governor anticipates that
these cost shifts would save the state approximately $30 million.
Currently, only active employees hired since July 2004 pay 25 percent
of their premiums. Retired employees now pay 20 percent of their health
insurance, but the Governor proposes that employees who retire after
June 30, 2016 would pay 25 percent. The Administration estimates that
this shift would save the state $3 million.












State Retiree Benefits












The state has adopted a schedule to move towards full funding of health
and non-pension post-employment benefits (“OPEB”)
for retirees. The Commonwealth funds the current and future OPEB
through a variety of transfers to the State Retiree Benefits Trust.












The Governor’s budget includes $450 million in an operating
transfer directed to the State Retiree Benefits Trust (1599-6152). In
order to fully fund the liability supporting future retirees’
benefits, in FY 2012 the state decided to dedicate an increasing share
of the its annual Master Tobacco Settlement award to the State Retiree
Benefits Trust. By FY 2016, the intent was to use 40 percent of the
Settlement award and 50 percent in FY 2017.












The FY 2016 budget held the transfer amount to the equivalent of only
30 percent of the Settlement award, approximately $24.4 million less
than the amount directed by the statute. Instead of the Tobacco
Settlement, in FY 2016 the state plans to use unexpended debt service
appropriations at the end of the year, with the balance made up for by
tax amnesty revenues in excess of $100 million. (The Dept. of Revenue,
however, does not expect these excess tax amnesty revenues to
materialize.)












The Governor’s FY 2017 budget proposes again to suspend the
required transfer from the tobacco settlement and to use unexpended
debt service appropriations at the end of the year to fund state
retirees’ benefits, but does not indicate where the balance
might come from if these so-called reversions are insufficient. The
Governor’s total proposed transfer to support state retiree
benefits is $72.5 million, which is $48.3 million less than the amount
stated in the statute. This reduced payment for retiree benefits
functions as a one-time saving used to balance the budget. (See Non-Tax
Revenue section of this Budget
Monitor
.)












Housing












The state’s housing budget funds programs that create and
maintain affordable housing and provide shelter and assistance to
low-income homeless families and individuals. The Governor’s
FY 2017 budget proposes providing $465.4 million to housing programs.
This amount is $20.1 million above the FY 2016 current budget but is
about $6 million lower than the amount the state expects to spend in FY
2016.  











Homelessness Assistance











A large portion of the state’s housing budget funds
shelter
and short-term housing supports for low-income families with children
who are homeless or at a risk of becoming homeless. In December 2015
the Emergency Assistance (EA) shelter program helped over 4,000
low-income homeless families of whom, almost 1,000 were living in
hotels and motels because the family shelters were
full.1











The Governor’s FY 2017 budget proposes providing EA
with
$191.9 million, an increase of $36.8 million above the FY 2016 current
budget but $6 million below the $198.0 million the state expects to
spend in FY 2016.     











In other homelessness assistance programs the
Governor’s FY
2017 budget recommends:





















  • Level-funding Residential
    Assistance for Families in Transition (RAFT)
    at $12.5
    million. RAFT
    provides one-time assistance to families who are at risk of falling
    into homelessness










  • Increasing funding by $694,000
    for HomeBASE
    to $31.9 million. HomeBASE provides up to $8,000 in
    housing assistance per calendar year to help families living in EA
    shelters to move into housing. The Governor’s budget proposal
    allows the Department of Housing and Community Development (DHCD) to
    use up to $300,000 in HomeBASE funds to help families who are eligible
    for HomeBASE, but are living in shelters run by state agencies other
    than DHCD. Under the Governor’s proposal, the HomeBASE
    program can provide housing assistance to families who are living in
    shelters overseen by the Department of Children and Families, domestic
    violence shelters, or substance abuse shelters










  • Increasing funding for the End
    Homelessness Family Reserve Fund
    by $500,000 for a total
    of $1.5
    million. This account, housed at the Executive Office of Health and
    Human Services, will fund up to 5 regional consortiums to provide
    services to families at risk of becoming homeless.










  • Level funding at $2.0 million
    a program that provides shelter and services to homeless youth and
    young adults
    who are up to 24 years old and are not in the
    care of a
    parent or guardian.










  • Reducing funding for shelter
    and services to homeless individuals
    by $840,000 to $44.0
    million. The
    Governor’s budget level funds at $1.8 million the Home and
    Healthy for Good
    program, which helps chronically homeless
    individuals.
     










  • Reducing funding for caseworkers
    working with homeless families and individuals by $1.4
    million to $4.8 million. This funding level is likely related to staff
    reductions connected with the FY 2016 early retirement program. These
    lower staffing levels could harm the ability of caseworkers to
    effectively help homeless families and individuals.





















Housing  











The Governor’s FY 2017 budget makes few investments
in
affordable housing with the exception of his proposed $5 million
increase in the yearly allocation for the Low Income Housing Tax Credit
(LIHTC) program. Once fully phased in over 5 years, this
increase will
cost the state an additional $25 million per year. Documents
accompanying the budget estimate that this increase will help to
produce an additional 1,500 new affordable units over the next five
years. The Governor’s budget proposes paying for this
increase by reducing the amount the state pays for the film tax credit
(See the Revenue section for a description of the Governor’s
recommended reform to the film tax credit.)











Under the LIHTC, private entities who invest in the creation
or
preservation of affordable housing get a credit on their taxes of $1
for every $1 in credit they purchase up to $1.3 million depending on
the type of project being built.2
To be awarded credits,
developments must set aside a certain portion of total rental units to
low- and middle-income renters who cannot afford market-rate
rents.3
Since it was created, the LIHTC
has contributed to the creation of over 45,000 affordable rental units
in Massachusetts.4











The Governor’s FY 2017 budget proposes spending
$82.9 million
for the Massachusetts
Rental Voucher Program
, which is $8.0 million
below the FY 2016 current budget. The FY 2016 budget provided MRVP with
$90.9 million of which DCHD expects to spend $77.3 million to fund
current vouchers and create 875 new vouchers. Should spending meet DHCD
projections, MRVP will have a surplus of approximately $14 million at
the end of FY 2016. DHCD will transfer this funding into FY 2017. The
FY 2017 funding level proposed by the Governor, along with the transfer
of the FY 2016 surplus, will allow DHCD to increase the value of
existing vouchers but it will not allow the Department to create any
new vouchers.











Over the last several years MRVP has received funding
increases to
allow DHCD to create new vouchers. These new vouchers both help to
reduce the waiting list of families and elders who have applied for
vouchers and allow families living in EA shelter, particularly those in
hotels and motels, to move into permanent housing. However, because the
voucher’s value is set at the 2005 HUD Fair Market Rent
(FMR), voucher-holders are often unable to find units they can rent
particularly in high-cost areas like Greater
Boston.5
The Governor’s budget allows DCHD
to increase the value of the vouchers above the 2005 FMR on a
case-by-case basis.  











The Governor’s budget provides several other housing
programs
with the same level of funding in FY 2017 as they were budgeted in FY
2016. Because the cost of providing the same level of services from one
year to the next increases with the cost of inflation, agencies may
have to cut services for programs that receive level funding. Housing
programs that the Governor’s budget recommends receive level
funding in FY 2017 include:





















  • $64.5 million for subsidies to
    public housing authorities.




















  • $4.6 million for the program
    that provides rental vouchers to persons with disabilities.










  • $5.5 million for the program
    that provides rental vouchers to clients of the Department of Mental
    Health.





















Please see the Housing subcategory of MassBudget’s Budget
Browser for a full list of recommendations included in the
Governor’s Budget FY 2017 for housing
and homelessness
assistance programs
. For additional descriptions of and
funding history
for
housing programs
that help families with children please see
MassBudget’s Children’s Budget.











Child Welfare












The state supports child welfare primarily through its child protection
agency, the Department of Children and Families (DCF). The agency has a
dual mission: to protect children and strengthen families. The
Governor’s budget proposes a 5.1 percent increase over the
current FY 2016 appropriated total for child welfare services,
primarily for additional case workers and for administration and
oversight. It is worth noting, however, that the Administration
currently estimates that spending in FY 2016 for DCF will exceed
current appropriations by approximately $16.8 million, suggesting that
the Administration may need to seek a supplemental budget appropriation
during the current fiscal year to avoid a deficit. The
Governor’s proposed FY 2017 budget for child welfare programs
is $30.0 million more than FY 2016 estimated spending, a 3.2 percent
increase.











The Governor’s budget proposes $223.5 million, a
$19.6
million, or 9.6 percent increase to fund the case workers who work
directly with vulnerable families. In part due to highly-publicized
cases of tragedy involving children and families involved with DCF,
there has been broad attention to the challenges faced by DCF staff who
work directly with vulnerable families. Although their union contract
limits case worker caseloads to 15 cases each, the Governor’s
budget is not sufficient to reach that goal, but instead aims for a
ratio of 18:1. This funding would, however, be sufficient to bring on
281 newly-hired staff, for a total of 236 new workers (net of
retirements, etc.) Funding to train these new workers is cut slightly
by $44,000 from FY 2016, for a total of $2.5 million.











The vast majority of children connected to DCF are not in
foster care,
but rather live with their families with supports and services provided
by, or coordinated with, DCF. Estimates from March 2015 suggest that
close to 9 of every 10 children involved with DCF either live at home
with their families or are in foster care but awaiting return to their
homes. The DCF budget includes $47.0 million for
family support
services
, a $1.5 million increase over FY 2016 levels. This
is an
important increase, but not sufficient to provide all the services
families might need to help them stay together safely and prevent child
neglect.











Reflecting dramatic recent increases in the removal of
children to
out-of-home placements, but also reflecting the relative scarcity of
foster families, the Governor’s budget level funds
foster
care and adoption
at $280.5 million, and significantly
increases
funding for group
residential foster care
. The Governor proposes
increasing group care funding by 5.4 percent or $13.5 million, to
$263.9 million. This amount incorporates a previously-planned rate
increase, as well as $2.7 million projected to cover anticipated growth
in the number of children sent to live in group foster care. Although
fewer children live in group foster homes, that service model is
significantly more expensive than family foster care.











The Governor proposes shifting funding for support services
for
families at risk of domestic violence (formerly funded in
4800-1400
) to
the Department of Public Health, in order to consolidate domestic
violence prevention and support services. MassBudget adjusts the
Governor’s funding and shifts this amount back to DCF for the
purposes of making across-year comparisons (see table.) Accounting for
these shifts, funding increases by approximately $400,000. However, a
portion of the increase to the department’s administrative
funding would cover additional domestic violence specialists.























Table: Funding for domestic violence
































The Governor also proposes consolidating funding for the
family
resource centers
previously funded in the Executive Office
and
funded
at DCF
(see table.) These centers, located throughout the
Commonwealth,
help connect families to a variety of community and state services, and
are particularly targeted to gaining community services for a
“Child Requiring Assistance” working with the
juvenile courts. The Governor proposes a total of $10.0 million for
these centers.























Table: Funding for family resource centers
































Elder Services












The Governor’s FY 2017 budget proposes funding Elder Services
at $267.9 million, just slightly above FY 2016 current levels.












Of note, the Governor proposes combining some of the major accounts
that provide funding for elder home care services. He accomplishes this
by consolidating Elder
Enhanced Home Care Services
into the Elder Home
Care Purchased Services
and Elder Home Care Case Management
and
Administration
line-items. This shift should not affect
service
delivery as the purpose of these programs is one in the same, namely to
provide home care services for elder adults. The services provided
through this funding include case management, homemaker and chore
services, transportation, protective services, and others that help
elders remain at home instead of moving to a nursing home. When
accounting for this funding shift, elder home care services sees a
slight decrease of approximately $770,000.
































Table: Shifts in funding for elder care services








































The only Elder Services program for which the Governor
proposes a
significant increase in is Elder
Protective Services,
which
investigates elder abuse and neglect. He proposes an almost $5.0
million increase above FY 2016 levels, bringing the program to $28.1
million in FY 2017.












Lastly, Grants to Council
on Aging
, which provide grants to council on
aging centers that provide services to and advocate for elders around
the Commonwealth, see a decrease of $850,000 this year –
bringing this program to $12.8 million.












Disability Services












The state budget supports a range of programs for individuals with
disabilities. These include targeted job training programs that help
people participate in the workforce as well as community-based supports
to assist people and their families more broadly. In total, the
Governor’s FY 2017 budget provides $1.90 billion for
disability services, a 2.7 percent increase from current FY 2016 levels.












Workforce programs for individuals with disabilities that receive
notable increases under the Governor’s proposal include the
following:





















  • Community
    Based Employment

    receives $7.6 million, a $4.6 million increase from current FY 2016
    levels. This program provides funding to move individuals with
    disabilities from sheltered work to competitive work opportunities in
    the community.










  • Community
    Day and Work
    Programs
    for the Developmentally Disabled receives $192.2
    million, a
    4.9 percent increase from current FY 2016 levels. This program offers a
    wide variety of group and individual supports, helping people with
    developmental disabilities find work and build skills.










  • Community
    Transportation
    Services for the Developmentally Disabled
    receives $22.7
    million, a 3.0
    percent increase from current FY 2016 levels. These services offer
    transportation assistance from home to community-based day or work
    programs.





















In addition, Respite
Family Supports for the Developmentally Disabled

receives a 12.2 percent increase from current FY 2016 levels, a $ 6.8
million increase. Respite Family Supports provides families with
disabled children support with specialized caregiving or other flexible
community-based resources.












The Governor’s budget proposes to decrease funding or level
fund other disability programs, including:





















  • Aging with
    Developmental
    Disabilities
    is level funded at $250,000. This program
    provides direct
    support for older adults with developmental disabilities, staff
    training for identifying age-related conditions, and data collection on
    the effectiveness of support and training.










  • Autism
    Omnibus Services
    , which
    provides services to individuals with autism spectrum disorders,
    receives $12.4 million, a 1.8 percent decrease from current FY 2016
    levels.










  • Turning
    22 Services for the
    Developmentally Disabled
    receives $673,000, 10.3 percent
    below current
    FY 2016 levels. This program pays for a share of services to eligible
    young adults with disabilities during their transition year from
    services that they are no longer eligible for upon turning 22.





















The Governor’s budget proposes providing $32.8 million for
rate increases to community-based human services providers under
Chapter 257. A recent court ruling requires the state to comply with
Chapter 257 of the Acts of 2008, mandating the state to pay nonprofit
organizations for the full cost of providing essential services. This
funding increase is spread across many programs, but we do not have an
accounting of the impact on individual programs. For more information
on the rate standardization paid to contracted human and social service
providers, see this Chapter
257 update.












Juvenile Justice












The Governor’s FY 2017 budget proposes $176.6 million for
juvenile justice programs run by the Department of Youth Services
(DYS), slightly below current FY 2016 funding levels. Most accounts at
DYS are either level-funded or slightly decreased from last year.












The program that saw the largest increase was the Alternative Lock Up
Program,
which would receive $2.3 million, a 7.4 percent
increase over
the current FY 2016 budget. This program provides secure placements for
youth arrested when courts are not in session and is designed to
provide a safe (non-police) environment for youth who are awaiting a
court appearance. Learn more about the state’s
Alternative
Lock Up Program
and its funding history in our
Children’s
Budget.












Transitional Assistance












Transitional assistance programs help low-income individuals and
families meet their basic needs and improve their quality of life when
faced with an emergency. In total, the Governor’s FY 2017
budget proposes a decrease to transitional assistance programs of $18.2
million from current FY 2016 levels.
































Bar graph: Transitionla assistance wuld be down by 35% from FY 2001 levels








































For entitlement programs like transitional assistance, funding
levels
are significantly affected by anticipated caseload levels. As an
“entitlement,” any qualified person who applies
must receive the service. Funding is directly tied to how many people
are expected to qualify and apply. Transitional Assistance caseload
levels have dropped significantly in recent years. For instance,
caseloads for Transitional Assistance for Families with Dependent
Children (TAFDC) dropped from 52,659 in December 2013 to 35,716 in
December 2015—a 32 percent decrease. Some of this decline may
be due to the overall improved economy; however, it may be partially
due to new administrative changes that make it harder for clients to
maintain their benefits. (For more detailed information on caseload
levels for transitional assistance accounts, see “Research
and Statistics” on the Department
of Transition Assistance

home page.)












TAFDC receives $181.2 million in the FY 2017 proposal, a 17.9 percent
decline from current FY 2016 levels. This reduction assumes a
continuation of declining caseloads.












The account that funds Caseworker
Salaries and Benefits
receives $72.3
million in the Governor’s budget, a 2.1 percent increase from
current FY 2016 levels. $3.5 million of the proposed increase goes to
hiring 90 new caseworkers and employment specialists in FY 2017.
Another $1 million would pay full year salaries of caseworkers hired in
FY 2016. Part of these new initiatives would be funded through savings
from Department of Transitional Assistance (DTA) employees who elected
to retire under the early retirement incentive program included in FY
2016.












Emergency Aid to the Elderly, Disabled, and Children

(EAEDC) receives
$79.2 million in the FY 2017 proposal, a 3.9 percent increase over
current FY 2016 levels.












DTA also funds some important workforce development programs.
Specifically:





















  • Employment
    Services Program
    is
    proposed to receive $12.4 million in the Governor’s budget, a
    4.3 percent decrease from current FY 2016 levels. This is the primary
    education and job training program for TAFDC clients.










  • Pathways
    to Self-Sufficiency

    is proposed to receive $15.1 million, a $12.1 million increase from
    current FY 2016 levels. This funding supports employment services for
    TAFDC clients who will no longer be exempt from the work requirement
    resulting from the 2014 welfare reform’s mandated alignment
    of state disability standards with federal SSI disability standards.





















Lastly, the Governor’s budget proposal seeks to fund a new
program, Transportation
for Supplemental Nutrition Assistance Program

(SNAP) Participants, at $2.6 million. Currently, SNAP has a work
requirement for “able-bodied” persons without
dependents. These are adults who are between the ages of 18 and 49, not
receiving SSI benefits or otherwise disabled, not living with minor
children, and not pregnant. The new program would likely support these
SNAP recipients who are participating in the work program.












Other Human Services












There are a variety of other human service programs funded in the state
budget, including supports for veterans, funding for the
Soldiers’ Homes, and a few particular cross-agency
initiatives. Total funding for veterans’ services (including
the Soldiers’ Homes) is $148.0 million, essentially
level-funded with a $2.3 million decrease in administration at the
Soldiers’ Homes.












The state’s
Emergency Food Assistance Program
(MEFAP), which
is a state supplement to the federal funding for a network of food
banks, is funded in the state budget under the Department of
Agricultural Resources. The Governor proposes $17.0 million, not even
enough to keep up with inflation. Although this state funding is just a
supplement to federal dollars, the demand at food banks has been
increasing
, and there is concern that demand will grow again
with the
impending reduction
in federal SNAP (food stamp) benefits for
thousands
of low-income people this spring.












The Governor also proposes consolidating funding for the family
resource centers previously funded in the Executive Office and funded
at DCF. See the Child Welfare section of this Budget Monitor for
a
discussion of funding.











Economic Development












Economic development programs aim to strengthen our state’s
workforce, support community investments, and stimulate economic
activity. In total, the Governor’s FY 2017 budget proposes a
decrease to economic development programs of $16.3 million (11 percent)
from current FY 2016 levels.












Under the Governor’s proposal,
YouthWorks
(formerly Summer
Jobs Program for At-Risk Youth) would receive $11.5 million, roughly
level-funded from current FY 2016 levels. This program pays for the
salaries of low-income and at-risk youth living in targeted communities
for summer and some year-round jobs. The proposed funding decrease may
cause the program to hire fewer youth as compared to previous years.












Further, the Workforce
Training Fund
receives $21.4 million, a 4.5
percent decrease from current FY 2016 levels. This trust is financed by
an additional unemployment insurance assessment paid by Massachusetts
employers. It provides grants to businesses to train current and newly
hired employees.












Most other workforce and business development programs are close to
level-funded, including One-Stop
Career Centers,
Advanced
Manufacturing
Workforce Development Grants
, and the Small
Business Development Center
at UMass
. For many programs, level funding may be equivalent
to a cut
because costs rise from year to year. For more information about
various types of support for workforce training through the
Massachusetts state budget, see MassBudget’s Jobs and
Workforce Budget tool.












Notable increases under the Governor’s proposal include:





















  • Workforce
    Competitiveness
    Trust Fund,
    which would receive an increase of $1.8
    million from
    current FY 2016 levels. This fund invests in training for unemployed
    workers, helping them build skills for high-demand industries such as
    health care, construction, and education. $2 million would be earmarked
    for a new economic opportunity fund to support individuals with chronic
    barriers to employment.










  • Demonstration
    Workforce
    Development Program,
    a new program proposed to receive $1
    million,
    would seek to expand statewide re-entry and job training opportunities
    to ex-offenders. For more information on this program, see the Prisons,
    Probation, and Parole section of this report.





















General Local Aid  












The Governor’s FY 2017 budget proposes to increase
Unrestricted General Government Aid (UGGA) by $42 million over current
FY 2016 levels to $1.02 billion, an increase of 4.3 percent.












General local aid helps cities and towns fund vital local services such
as police and fire protection, parks, and public works. For more
information on general local aid, please see Demystifying
General Local
Aid in Massachusetts.












The Commonwealth’s capacity to fund general local aid, has
been hindered by a series of significant state-level tax cuts during
the 1990’s and 2000’s combined with the Great Recession. While over the
past several years, general local aid funding has increased in step
with or slightly above inflation, it still remains 41.4 percent below
FY 2001 figures.























Bar graph: Unrestricted general local aid cut by over 40% since 2001
































Some cities and towns receive other forms of non-education
local aid,
but these categories represent much smaller total amounts and only go
to a subset of qualifying cities and towns. For example, local aid
programs for libraries were level-funded, as was payments in lieu of
taxes to communities with state-owned land that is not subject to local
property taxes.












The proposed budget would reduce funding for the Municipal
Regionalization and Efficiencies Incentive Reserve
to $5.6
million, a
48.1 percent reduction from the amount that had already been reduced by
$3 million as a result of the Governor’s 9C budget cuts (to
learn more about such cuts, read MassBudget’s brief, What
Are
9C Cuts?)
In doing so, the FY 2017 budget proposal would
increase
available funds from $2 million to $2.65 million for the Community
Compact program’s incentive program to support best local
practices. A competitive public safety grants program for populous
communities with low per-capita police funding that last year received
$4.25 million in available funds under this line-item would be capped
at $1 million under the Governor’s FY 2017 proposal. Also
under this line-item, the proposed budget provides up to $2 million for
continuing a District Local Technical Assistance Fund administered by
the Division of Local Services within the Department of Revenue.












The largest form of local aid is for K-12 education, which is discussed
separately in the K-12 Education section.












Transportation












In the Governor’s FY 2017 budget proposal, the most
significant change for transportation is a $30.9 million reduction to
the Massachusetts
Transportation Trust Fund
as compared to the current
FY 2016 budget. This fund contributes to highways, transit, intercity
rail, small airports, the Massachusetts Turnpike, and Motor Vehicle
Registry, while also receiving funds from the Commonwealth
Transportation Trust Fund, tolls, and federal transportation sources.
The proposed FY 2017 amount of $327.7 is 8.6 percent below the current
FY 2016 budget of $358.5 million, which itself had been reduced $6.5
million by the Governor’s January 9c cuts. The proposed
amount roughly matches the $328.5 million that the Department of
Transportation (MassDOT) projects it will spend from this fund in FY
2016, as a result of 412 employees with salaries totaling $28.8 million
accepting early retirement incentives.











While early retirement offers are intended to save money, the
Governor’s budget could have proposed to reinvest those
savings in other transportation programs. Instead, the budget proposes
to level fund or slightly reduce other line-items. State aid to the
MBTA would
remain at the current FY 2016 level of $187.0 million. The
Governor’s budget also proposes $80.0 million for the
state’s 15 Regional
Transit Authorities
, a 2.4 percent
reduction from the FY 2016 current budget.











Presentations by the Secretary of Transportation to the
Legislature
show that current capital funding levels are inadequate to
improve—or even maintain—the current state of
repair for highways, bridges, or the MBTA. For instance, the
state’s multi-year $3.0 billion Accelerated Bridge Program
wraps up this year without renewal. At currently proposed spending
levels for bridge repair and maintenance, the number of structurally
deficient bridges would increase from about 400 today to over 700 in
2025. MassDOT calculates that the portion of state roads with poor or
fair pavement will rise from 36 percent to 62 percent by 2020 at recent
levels of investment on pavement surfacing. At the MBTA, about $83
million in additional investment in the state of good repair would be
needed just to prevent a worsening of the current repair backlog,
according to the Fiscal and Management Control Board’s
baseline report. (For more detail and citations on these investment
projections, see Building
a Strong Economy: The Roles of Education,
Transportation, and Tax Policy).











It is not clear whether reduced staffing from early retirement
incentives will downgrade the capacity of the Department of
Transportation. Insofar as retirements are part of an
efficiency-enhancing reorganization or are voluntarily replacing
long-standing employees with less expensive, but equally qualified
workers, then agency capacity need not be compromised. But the law caps
replacements overall at 20 percent of the cost of those retiring. Lack
of personnel, such as skilled oversight of transportation contractors,
has sometimes been very costly to the Commonwealth. Among the retiring
employees are contract specialists, auditors, inspectors, accountants
and compliance officers, as well as engineers, mechanics and inspectors
of construction and safety. Employees at the MBTA have not yet been
eligible for early retirement incentives.











Most transportation funds are not allocated directly through
the budget
process. Spending on long-term capital assets are generally financed by
borrowing against dedicated transportation revenues such as the gas
tax, license fees, and federal funds. Since finances for the MBTA were
reorganized in 2000 to rely heavily on a dedicated portion of the sales
tax, these receipts have failed to keep pace with the economy due to an
economic shift in consumption toward consumer health care spending,
online transactions, and other services—all of which are
exempt from sales taxes. The Governor’s FY 2017 budget proposal
projects receipt of $1.001 billion from an automatic transfer of sales
tax revenue to the MBTA
State and Local Contribution Trust Fund
, an
increase of $15.9 million over FY 2016.











The Governor’s budget also projects that funding for
the
Merit Rating Board,
which maintains driving records and reports them to
insurance companies, will remain more or less unchanged at $9.7
million. This contribution is borne by companies doing motor vehicle
insurance business with the Commonwealth.























Table: Transportation

































Prisons, Probation & Parole












The Governor’s FY 2017 budget proposes $1.36 billion for
prisons, probation, and parole services in the Commonwealth,
approximately the same as the current budget year. This includes
funding for the state prison system run by the Department of
Corrections (DOC), the House of Corrections (HOC) system overseen by 14
County Sheriffs, probation and parole services, the Correctional
Industries program (MassCor), and other related services.  












While the Governor’s proposal level funds most areas, funding
for a few programs would be significantly increased:





















  • The MassCor
    program, which
    offers inmates training and work opportunities while providing
    affordable products to state and local government agencies and
    citizens, would be funded at $14.0 million, a 36.3 percent increase
    from previous FY 2016 levels. This proposed increase and the entire
    MassCor program is funded through retained earnings collected from the
    sale of products made by inmates, rather than funded by tax revenue.










  • The Sheriffs’
    Departments in Essex, Bristol, Plymouth, and Norfolk
    would
    receive
    funding increases of between 10 to 20 percent above FY 2016 levels,
    which reflect the current and projected costs in these departments.
    Further reallocation of funding may continue as the Executive Office
    for Administration and Finance, along with the Sheriffs’
    Departments and consultants, develops a funding formula that may
    reallocate state funding to the 14 Sheriffs’ Departments.
    This process should be completed by the end of February 2016.










  • The Demonstration
    Workforce
    Development Program
    is a new program proposed to receive
    $1.0 million
    to expand statewide re-entry and job training opportunities to
    ex-offenders. This proposed funding would support the expansion of the
    Hampden County re-entry program model to one or more additional
    counties in Massachusetts. The program works with ex-offenders to
    overcome barriers to employment through connection with community and
    business partners.





















Pensions












In his FY 2017 budget proposal, the Governor recommends increasing the
state’s contribution to the Pensions Reserves Investment
Trust (PRIT) Fund by $226.1 million to a total of $2.20 billion. This
represents an increase of 11.5 percent over the $1.97 billion
contributed to the PRIT in FY 2016. This annual appropriation is in
accordance with the 1988 state law that requires the Commonwealth to
set aside money in the present in order to fund the future pension
costs of public employees.6
The specific amounts to be
contributed annually to the PRIT are stipulated in Massachusetts
General Law, with a five year schedule included therein, running from
FY 2012 through FY 2017.7
The schedule of annual pension
contributions is updated every three years by the Secretary of
Administration and Finance.8
The Governor’s FY 2017
recommended transfer to the PRIT conforms to the amount designated in
the General Laws.  












Assets held and managed within the PRIT are used to fund future state
employee retirement costs. The funds in the PRIT come from three
sources: employee pension contributions, the state’s
contributions toward employee pensions, and the investment returns
generated from the PRIT (to learn more about the Massachusetts state
pension system, see MassBudget’s report
“Demystifying
the State Pension System”)
.9












Revenue












The Governor’s FY 2017 budget proposal relies on additional revenues
beyond those available as part of the Consensus Revenue Estimate.
Together, these additional FY 2017 revenues total $473.0 million and
they come from both tax ($270.0 million) and non-tax sources ($203.0
million) (see table, below). More than half of these revenues are
one-time — in other words, they are not derived from sources that will
be replenished with new revenues beyond FY 2017. One-time revenue
sources are useful for balancing the budget only in the current fiscal
year and their use most often adds to the challenge of balancing the
budget in future years (to read more about the state’s projected FY
2017 budget gap, see MassBudget’s
FY 2017 Budget Preview
).
































Table: Governor's FY 2017 revenue proposals








































The Governor’s budget was released in tandem with a
separate
“Sustainable
Economic Development”
bill. In the
economic development bill, the Governor proposes reforms to the
state’s Film Tax Credit. It appears, however, that the
revenue savings derived from the proposed Film Tax Credit changes would
be redirected to other tax break programs rather than be used to help
balance the FY 2017 budget.  












Tax Revenue












The starting point for every state budget is the Consensus Revenue
Estimate (CRE). The Fiscal Year 2017 CRE figure agreed to by the
Administration, the House and the Senate is $26.860 billion, an amount
4.3 percent above DOR’s updated FY 2016 forecast of $25.751
billion. Baseline
revenue in FY 2017 would total $27.181 billion or 5.6
percent above the updated FY 2016 estimate (for more detail on the FY
2017 revenue adjustments see MassBudget’s FY
2017 Budget
Preview)
.10
The CRE’s lower 4.3% estimated growth
rate for actual tax collections represents the baseline tax revenue
growth figure reduced by the cost of several tax cuts.












These tax cuts include the automatic reduction in the tax rate on
personal income that occurred January 1st, 2016 (from 5.15 percent to
5.10 percent) and another automatic rate reduction that likely will
occur half way through the 2017 fiscal year, dropping the rate from
5.10 percent to 5.05 percent. The CRE also accounts for the recent
increase in the value of the state’s Earned Income Tax
Credit, as well as other smaller tax changes. Notably, the CRE assumes
collection of $1.484 billion in capital gains income taxes and assumes
further that, as prescribed by law, $356 million of this total will be
deposited automatically into the Stabilization Fund (see more
discussion of capital gains taxes, below, and MassBudget’s
FY2017
Budget Preview)
.11
More detailed discussion of
particular elements of the Governor’s FY 2017 budget that
relate to tax revenues follows, below.












Diverting Capital Gains Taxes from the Stabilization Fund to the
General Fund












Capital gains income tax collections that exceed an annually adjusted
threshold ($1.128 billion for FY 2017) must be deposited into the
Stabilization Fund rather than being made available for budgetary
appropriation.12
In his budget, the Governor proposes
transferring capital gains income taxes above $1.278 billion to the
Stabilization Fund (rather than revenues above the $1.128 billion
threshold).13
With this change, the Governor makes available an
additional $150 million to support the FY 2017 operating
budget.14
In effect, this is similar to making a draw of $150
million on the Stabilization Fund to help balance the FY 2017 budget.
While the use of these one-time revenues will help balance the FY 2017
budget, it will reduce the state’s reserves for future
emergencies and will add to the structural gap heading into FY 2018.
Because capital gains income tax revenue is expected to total $1.484
billion in FY 2017, however, the Governor’s plan also is
expected to result in the deposit of about $206 million into the
Stabilization Fund.15












Reforming the Film Tax Credit












In
proposed legislation
which the Governor released in tandem
with his
FY 2017 budget, the Governor proposes reforms to the state’s
Film Tax Credit. This credit currently costs the Commonwealth about $80
million annually in forgone tax revenue. As a tool for economic
development, annual
reports
produced by the Department of Revenue (DOR)
have shown the Film Tax Credit to be expensive relative to the number
of jobs and additional tax revenue it generates. DOR estimates the
five-year average annual cost at $119,000 per job created in
Massachusetts.16












The Governor estimates his reforms will reduce the annual cost of the
Film Tax Credit by $43 million.17
These reforms include the
following:18





















  • Reducing the
    credit’s value from 25 percent to 20 percent of eligible
    salary costs for qualifying film productions










  • Capping total credit value for
    any one production at $7 million










  • Eliminating the refundability
    of the credit  (though not the transferability of the credit
    which, in combination, in fact may increase rather than reduce program
    costs for the Commonwealth)





















Savings from the proposed changes would be used to raise the cap on
total tax credits available for the creation of low-income housing by
$5 million in each of the next five years and to fund an expansion of
the state’s Single Sales Factor tax break for multi-state
corporations.19
(To learn more about changes to the
low-income housing credit, see the Housing Section of this Budget
Monitor
. To learn more about the Governor’s SSF
proposal, see
MassBudget’s
recent factsheet on the
issue
.)    












Life Sciences Cap












The Governor’s budget limits the amount of funding to be
transferred from the state’s consolidated net surplus to the
Massachusetts Life Sciences Fund.20
This limit on the funding
available for distribution through the Massachusetts Life Sciences
Credit program is expected to save $5 million in FY 2017.21
This fund supports the cost of a corporate tax credit program that is
intended to incentivize companies involved in “life sciences
research and development, commercialization and
manufacturing” to create and retain full-time permanent jobs
within the Commonwealth.22
Companies must apply for and be
awarded these credits, but credits are available only to the extent
that funds are available.












Large Settlements & Judgments Exceeding $10 Million Each












The FY 2015 budget amended the General Laws to allow much of the
revenue derived annually from large tax-related and non-tax-related
settlements and judgments to be used for budget appropriations rather
than be deposited into the state’s Stabilization Fund, as had
been done in years prior. Under the new law, each year, the annual
average for these types of collections over the prior five years is
calculated and set as a threshold. Collections below the threshold are
available for budgetary appropriations, but once total collections
exceed the threshold, all additional such revenues are deposited into
the Stabilization Fund.












In the five years from FY 2011 through FY 2015, annual collections from
these excesses ranged considerably, from a low of $133 million in FY
2013 to more than $436 million in FY 2014. The 5-year average has
hovered around $250 million, thus directing significant resources to
the Stabilization Fund during years when collections exceeded this
threshold. For FY 2015, the threshold was calculated at $263 million
and for FY 2017 it likely will be a similar amount. Such collections in
FY 2015 totaled $226 million.23
In no recent year have
collections from this source been below $130 million. The
Governor’s FY 2017 budget relies, conservatively, on $115
million from this source.24
Funding cuts that affect the
Department of Revenue’s ability to hire and retain the staff
who identify non-compliance and other issues that lead to these large
settlements could reduce the amount of revenue available from this
source in future years (see discussion, below).  












Funding Cuts to the Department of Revenue












Among its other activities, the Department of Revenue (DOR), through
its Office of Tax Administration makes sure that taxpayers are paying
taxes they legally owe to the state.  DOR hires auditors and
collectors who identify taxes legally owed to the state that have not
yet been paid and works with taxpayers to collect unpaid taxes. These
activities are funded through two primary accounts including the DOR
administrative account (1201-0100) and the Additional Auditors Retained
Revenue account (1201-0130).  












The Governor’s FY 2017 budget proposes funding
DOR’s tax activities at $105.5 million which is $15.8 million
(or 13.0 percent) less than the FY 2016 current budget amount of $121.3
million. Notably, current FY 2016 funding levels already have been
reduced by $1.5 million from the levels approved in the FY 2016 GAA due
to mid-year emergency 9C cuts implemented by the Governor. Relative to
FY 2016 GAA funding levels, the Governor’s proposed cuts are
still more severe (a 14.1 percent reduction).























Table: Department of revenue programs
































A substantial portion of the proposed cut reflects anticipated
personnel reductions, as more than 220 DOR employees took part in the
Governor’s early retirement program.25
The combined
salaries of these retiring DOR employees totals $19.0 million. While
DOR will fill a portion of the vacated positions, a significant share
of the positions will remain unfilled.26
Large staff reductions
can have implications for DOR’s ability to identify and
collect all the taxes owed to the Commonwealth.  As an
example, DOR staff are responsible for identifying and pursuing unpaid
taxes such as those that lead to large tax settlements. As described in
the Large Settlements & Judgments section (above), the
Commonwealth relies on such large settlements to fund both annual
operating expenses (on the order of about $110 million a year) and to
build reserves in our Stabilization Fund.  












Auditors and collectors recover far more in unpaid taxes than they earn
in salaries and benefits. During debate on the FY 2014 budget, a
legislative proposal recommended a $3.6 million cut in DOR’s
budget which the Department estimated would cause the layoff of 60 full
time positions resulting in the loss of almost $50 million in
revenue.  If the Governor’s proposed FY 2017 funding
level for DOR is included in the Legislature’s final budget,
this reduction could result in the loss of tens of millions of dollars
in revenue — or more — in FY 2017 and beyond. Moreover, if these
funding cuts are not restored in future years, there is a danger that
the cuts not only could reduce permanently the Commonwealth’s
ability to collect unpaid taxes that are legally owed to the state, but
also that such cuts could engender greater levels of tax evasion. If
sophisticated, well-financed individual and corporate taxpayers come to
view DOR’s audit and collection capacities as permanently
degraded, some of these taxpayers could see this an opportunity to
reduce their tax payments through increased levels of tax evasion or
other forms of non-compliance.












Non-Tax Revenue











There are three main types of non-tax revenue that support the
state
budget: 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 what are known as
“transfer” revenues, which include lottery
receipts, revenues from the newly-licensed gambling facilities, and
funds that the state draws from an assortment of non-budgeted trusts.











Highlights in non-tax revenue include:





















  • The Administration had planned
    that the Commonwealth would sell the Sullivan Court House in East
    Cambridge this year, however, this sale is now budgeted for FY 2017,
    which would bring in approximately $30 million in one-time revenue.










  • There have been continual
    downgrades in the expectations for revenues associated with the
    expansion of slot parlors in Massachusetts. Although initially the
    projections for FY 2016 were $105.0 million, the Governor’s
    budget now assumes that revenues from slots will be $64.0 million in FY
    2016 and $64.0 million in FY 2017.










  • The Governor’s
    budget assumes that $73.5 million will be available to the General Fund
    from the health care provider assessments generated in the Delivery
    System Reform Initiative (see MassHealth (Medicaid) and Health Reform
    section of this Budget Monitor.)










  • The Governor’s
    budget proposal counts on transferring $12.7 million remaining in
    several human services trust funds to the General Fund to help balance
    the budget.




















Transfer of Revenue from
Commonwealth Care Trust












A portion of the state’s tobacco tax revenue is deposited
directly into the Commonwealth Care Trust Fund (CCTF) to help pay for
health care. As in FY 2016, there is language in the
Governor’s FY 2017 budget that allows up to $110.0 million of
this revenue in FY 2017 to be transferred out of the CCTF and into the
General Fund to help balance the budget. However, the amount actually
transferred in FY 2016 is likely to be closer to $82 million, and the
FY 2017 budget is currently counting on $86.8 million in revenue from
this transfer.












Although this transfer from a trust into the General Fund could be
considered a one-time source of revenue to balance the budget, as these
revenue sources that create the surplus in the CCTF may not be
available in the future, MassBudget accounts for these funds as an
ongoing revenue source.












Overview of Temporary Revenue and Savings Used to Balance the Budget











The Governor relies on a number of temporary solutions to
balance the
budget. Temporary revenues and savings consist of items such as taking
ongoing revenues that were initially intended for a particular use and
redirecting them to balance the budget, selling state assets, pulling
money out of dedicated trust funds, and postponing or delaying required
payments.











The Governor’s budget includes proposals totaling
$319.5
million to:





















  • Divert $150.0 million in tax
    revenue from the Stabilization Fund (see Tax Revenue section above)










  • Reduce the transfer to the
    life sciences credit program by $5.0 million (see Tax Revenue section
    above)










  • Sell the Sullivan Court House
    for $30.0 million (see Non-tax Revenue section above)










  • Transfer $12.7 million from
    dedicated human services trust funds to the General Fund (see Non-tax
    Revenue section above)










  • Transfer $73.5 million from
    the Delivery System Reform trust to the General Fund (see Non-tax
    Revenue section above)










  • Underfund the required
    contribution for “other post-employment benefits”
    (“OPEB”) for state retirees by $48.3 million (see
    Non-tax Revenue section above)
































Table: Governor's FY 2017 proposals for temporary revenues and savings
































To achieve balance, the Governor’s budget also
relies on an
additional $159.3 million that could be considered temporary revenues
or savings (see table below). Combining these would bring the total use
of temporary revenues and savings in the budget to $478.8 million.











In addition to recommending depositing less than the full
required
amount to the State Retiree Benefits Trust, the Governor’s
budget proposal would use $72.5 million in reversions to fund that
portion of this payment that the budget would make. Reversions are
unspent budgeted funds that get returned to the General Fund at the end
of the fiscal year. Funding an ongoing expense with money left over in
other accounts at the end of the year is not generally considered as
funding the ongoing expense with ongoing revenues, so this $72.5
million could be counted as an additional temporary revenue source.
However, since there are reversions each year, this funding source is
likely to be available in future years too and could also be considered
an ongoing funding source. MassBudget therefore counts this in this
separate category of proposals that could be counted as additional
temporary revenue and savings but could also be counted as ongoing.











The Governor’s FY 2017 budget proposal also counts
on $86.8
million in revenue from a transfer from the Commonwealth Care Trust
Fund (see Non-tax Revenue section above.) Because it is unclear whether
or not this trust fund will have similar surpluses that could be used
in future years, MassBudget includes these funds in this separate
category of other items that could be temporary revenues or savings.











 











Table: Other items that could be considered temporary revenues and savings























Budget by Category and
Subcategory












Table: Budget by Cateogory and Subcategory











table description










________________________________________






















1Caseload
data for December 2015 from DHCD
http://www.mass.gov/hed/docs/dhcd/hs/ea/eamonthlyreport.pdf































3DHCD’s
Draft Qualified Action Plan for LIHTC:
http://www.mass.gov/hed/docs/dhcd/hd/lihtc/2016draftqap.pdf

pages
3-4  





















4DHCD’s
Draft Qualified Action Plan for LIHTC:
http://www.mass.gov/hed/docs/dhcd/hd/lihtc/2016draftqap.pdf
page 5





















5The
HUD FMR for 2005 for a two bedroom apartment in Greater
Boston is $1,266. In 2016 the HUD Fair Market Rent for a two bedroom is
$1,567.
https://www.huduser.gov/portal/datasets/fmr/fmrs/docsys.html?data=fmr16



















































9MassBudget,
“Demystifying the State Pension
System”, March 2011 (pg. 3):
http://www.massbudget.org/report_window.php?loc=Pension_3_11.html





















10ANF
Press Release on FY 2017 Consensus Revenue Estimate,
January 14, 2016





















11Governor’s
FY 2017 Budget (H.2), Outside Section
30: http://www.mass.gov/bb/h1/fy17h1/os_17/h30.htm





















12Governor’s
FY 2017 Budget (H.2), Outside Section
30: http://www.mass.gov/bb/h1/fy17h1/os_17/h30.htm





















13Governor’s
FY 2017 Budget (H.2), Outside Section
30: http://www.mass.gov/bb/h1/fy17h1/os_17/h30.htm





















14$1.278
B – $1.128 B = $150 M





















15ANF
Press Release on FY 2017 Consensus Revenue Estimate,
January 14, 2016 ($1,484 M – $1, 278 M = $206 M)





















16Department
of Revenue, 2014 Annual Report on the Film Tax
Credit (see page 2, “Net Impact on FTEs”):
http://www.mass.gov/dor/docs/dor/news/reportcalendaryear2012.pdf





















17Governor’s
FY 2017 Budget (H.2), Highlights
section (page 16) :
http://www.mass.gov/bb/h1/fy17h1/dnld_17/fy2017h2.pdf





















18An
Act to Promote Sustainable Economic Development in
Massachusetts, (see Sections 1-5):
http://www.mass.gov/governor/legislationexecorder/legislation/an-act-to-promote-sustainable-economic-development.html





















19An
Act to Promote Sustainable Economic Development in
Massachusetts, (see Sections 1-5):
http://www.mass.gov/governor/legislationexecorder/legislation/an-act-to-promote-sustainable-economic-development.html





















20Governor’s
FY 2017 Budget (H.2), Outside Section
27: http://www.mass.gov/bb/h1/fy17h1/os_17/h27.htm





















21Governor’s
FY 2017 Budget (H.2), Section 1A (see
“House 2 Tax Initiatives and Other Tax Revenues”):
http://www.mass.gov/bb/h1/fy17h1/brec_17/hsect1a.htm





















22Massachusetts
Life Sciences Center:
http://www.masslifesciences.com/programs/tax/





















23Communication
with DOR, 2-2-2016





















24Governor’s
FY 2017 Budget (H.2), Section 1A (see
“House 2 Tax Initiatives and Other Tax Revenues”):
http://www.mass.gov/bb/h1/fy17h1/brec_17/hsect1a.htm





















25Communication
with ANF, 2-2-2106





















26Communication
with ANF, 2-2-2106


































































































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