Analyzing-the-House-Ways-&-Means-Committee-Budget-for-FY-2017











The House Ways and Means (HWM) Committee budget proposal
represents the
second step in crafting our state budget. Our state budget is how we as
a Commonwealth make decisions about issues that affect all of us:
providing quality education to all of our children; keeping our
communities vibrant and safe; maintaining our roads, bridges, and
transit systems; protecting access to health care; providing support
for those facing hard times; keeping our air and water clean, and much
more.





The HWM proposal follows the Governor’s proposal and
the
pattern of recent years. It is largely an austerity budget that reduces
spending in some accounts, essentially level funds most, and contains
only very modest new initiatives.  





Among the major ways in which this proposal differs from the
Governor’s is that the HWM proposal recommends more funding
for local public schools. The proposal both directly increases Chapter
70 funding (state aid to local school districts) by more than the
Governor recommended and funds a reserve account that can supplement
Chapter 70 aid for districts that were adversely affected by changes in
the ways the state counts low-income students (explained here
and here).





The House Ways and Means proposal largely follows the
Governor’s recommendations on the use of temporary revenue
and savings. On the positive side, both reduce the use of temporary
revenues compared to recent years. It remains troubling, however, that
this far into an economic recovery the state continues to rely on
temporary revenue to balance the budget and is not able to deposit into
the stabilization fund the full amount of capital gains tax revenue
called for by existing law.





In the pages that follow, this Budget Monitor provides
highlights of
the House Ways and Means recommendations in specific areas across the
budget. We also offer comparisons to the Governor’s proposals
and to historic spending levels.






Early Education & Care






Quality early education and care helps prepare our young children for
K-12 education and to thrive more generally. Early education and care
is also a critical work support for parents with young children,
arranging safe and reliable child care for parents while they provide
for their families.






The House Ways and Means (HWM) Committee budget for FY 2017 allocates
$573.0 million for early education and care programs, a small increase
of 0.6 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 HWM Committee FY 2017 proposal for early education
is $152.9 million (21.1 percent) less than FY 2001 levels, adjusting
for inflation (see chart below).











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














The House Ways and Means Committee budget proposes $228.4
million for
Supportive
& TANF Child Care.
This program 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). This amount is $8.5 million, or 3.9
percent, over current levels but $8.9 million less than the
Governor’s FY 2017 budget proposal. The greater amount
proposed by the Governor ($237.4 million) was projected to allow 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 part of 2015-2016.
It is unclear how many children would be able to have additional
services under the HWM Committee proposal.






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 HWM
Committee FY 2017 budget does not propose continuing specific funding
to reduce the waitlist. The HWM Committee does include $10.0 million in
additional support for salary increases to early education providers,
$5.0 million above current levels. This salary increase was not
included in the Governor’s proposal for FY 2017. Salary and
benefit increases along with professional development to early
education teachers are key mechanisms to improve the quality of
services available for young children. Recent evidence suggests that
providers across the state are facing difficulties in creating new
early education seats and classrooms in a context where they face
challenges recruiting and retaining an effective early education
workforce.






Overall, in the HWM Committee FY 2017 budget, funding for Income
Eligible Child Care, efforts to reduce the waitlist, and salary
reserves for early educators, are $10.9 million below current levels.
This calculation likely understates the funding in this area because of
consolidations and shifts of early education funding into a new line
item (see discussion below). In the Governor’s FY 2017
budget, $9.0 million in Income Eligible Child Care funds were moved
into a new line item. The HWM budget includes that new account as well,
but doesn’t detail what spending from other line items was
moved to that new item. If the HWM proposal is following the
Governor’s in this regard then the total funding for Income
Eligible and related line-items would be roughly $1.9 million below
current levels when adjusted to match the old structure.






Like the Governor’s budget proposal, the HWM Committee budget
for FY 2017 consolidates and shifts funding from several early
education and care accounts into a new Quality
Improvement
line item.
The purposes of this funding include meeting standards set in the
state’s Quality Rating and Improvement System (QRIS),
developing the early educator workforce, undertaking the accreditation
of programs, and supporting administrative personnel overseeing quality
efforts. The Department of Early Education and Care suggests this
reorganization 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.






The HWM Committee’s FY 2017 proposal would altogether provide
$31.5 million, $1.9 million (5.6 percent) less than what the Governor
proposed for the new Quality Improvement line item.











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














The merging of early education programs into Quality
Improvement in the
HWM Committee proposal appears to follow the Governor’s
approach for the upcoming year. In the Governor’s FY 2017
budget proposal, three programs were entirely consolidated into Quality
Improvement:










In the Governor’s FY 2017 budget, four programs had some
funding shifted into Quality Improvement:










Several early education accounts are reduced in the HWM Committee
proposal:









  • Grants
    to Head Start
    would be
    funded at $8.6 million, which is $500,000 (5.5 percent) below current
    levels. This funding serves as a state supplement to significant
    federal grants that support early education programs in Massachusetts.




  • Reach
    Out and Read
    which funds
    early literacy programming helps connect health providers with literacy
    efforts directed at their patients, is funded at $700,000, which is
    $300,000 (30 percent) below current levels.









K-12 Education






Education plays a central role in developing future generations in the
Commonwealth, strengthening our communities and our economy over the
long term. Overall, the House Ways and Means (HWM) Committee Fiscal
Year (FY) 2017 budget proposal for K-12 education increases state aid
to districts, but reduces several grant programs below the levels
proposed by the Governor. In total, K-12 funding for aid to districts
and grants in the HWM Committee proposal is 1.7 percent greater than
current FY 2016 levels, roughly in line with inflation. Thus, the HWM
Committee does not propose major steps in FY 2017 to address
long-standing financial challenges that have limited the educational
opportunities available to kids across Massachusetts.






This past October, the Legislature’s Foundation Budget Review
Commission recommended steps to address the long-term challenges in
funding for our local school districts. This group of education
policymakers and stakeholders found that funding for students living 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. These flaws in the Foundation Budget lead to the need for
at least $432 million in additional Chapter 70 funding (for more
detail, see the
final Commission report)
.






For FY 2017, the HWM Committee proposes increasing
Chapter 70 Education
Aid
by $95.8 million (2.0 percent over the current FY 2016
budget) to
$4.61 billion. This amount is $23.7 million greater than what the
Governor proposed for Chapter 70 aid in January, but is less than the
previous annual increase of $111.2 million from FY 2015 to FY 2016.






The difference between the HWM Committee’s and
Governor’s Chapter 70 proposals is that the HWM Committee
provides a minimum $55 per-student aid increase over FY 2016 for all
districts that would otherwise not receive increases. This is greater
than the $20 per-student increase the Governor proposed and would
direct more funding in percentage terms to predominately higher-income
districts.






The HWM Committee budget for FY 2017 proposes $10.0 million in Chapter
70 reserves to assist districts particularly affected by changes in the
way student poverty is measured and how this affects young people
supported through Chapter 70 (see below for further discussion). This
is a significant increase from the $3.1 million available in similar
reserves in FY 2016.






The HWM Committee Chapter 70 proposal, like the Governor’s,
uses a new method for calculating 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
kids’ access to school meals and reducing administrative work
for districts. One side effect of the federal changes is that the
Commonwealth must alter how low-income kids are counted. Both the
Governor’s and HWM Committee’s Chapter 70 proposals
result in significant changes to the absolute numbers of students
counted as low-income and, as a result, the additional targeted funding
to support these students. For extensive details on the process for
counting low-income kids, how it can be improved, and the impact on the
FY 2017 budget, see
Direct Certification for School Meals: Feeding
Students, Counting Kids, Funding Schools,
and Proposed
Low-Income
Student Changes Would Have Varied Chapter 70 Impact.
The
greater
Chapter 70 reserves proposed by the HWM Committee should help provide
additional funding to districts that are particularly impacted by
transition challenges between these differing methods of calculating
students in poverty. However, significant work remains to improve the
methods for counting students and addressing issues faced by local
communities in the transition.






To that end, an outside section of the HWM Committee FY 2017 budget
directs the Department of Elementary and Secondary Education (DESE), in
consultation with the Executive Office of Health and Human Services, to
study the calculation of students in poverty, propose alternative ways
to better identify kids, simulate what effect these alternatives would
have, and examine available sources of data and methods to improve the
count. The proposal instructs the group to issue a report in December
2016.






The HWM Committee FY 2017 budget proposes $85.5 million for Charter
School Reimbursements
, $5.0 million over current levels. The
current
system, when fully funded, reimburses 100 percent of outgoing student
funding in the first year and 25 percent of this amount for each of the
subsequent five years. However, the formula was $47.1 million (37
percent) below the amount that would have fully funded the
reimbursement formula in FY 2016. According to projections from DESE,
the HWM proposal would underfund the reimbursement formula by $48.9
million in FY 2017, in part because charter enrollment is projected to
increase by roughly 3,000 students. The HWM Committee does not include
significant policy changes proposed by the Governor to Charter School
Reimbursements. For additional detail on charter school funding at
large, recent proposals from the Governor and the Legislature to alter
the reimbursement system, and the impact of recent underfunding, see
Charter
School Funding, Explained.






Several small grant programs, including some that serve students in the
greatest need, are eliminated or significantly reduced in the HWM
Committee proposed budget, including:









  • School
    to Career Connecting
    Activities
    is reduced by $2.0 million (66.9 percent under
    last year).
    Connecting Activities helps teens find employment through internships,
    career exploration activities, and apprenticeships. The HWM Committee
    proposal might also decrease business investment in youth jobs because
    this program includes a required 2:1 funding match from private sector
    employers. The HWM Committee proposal does not include the expansion of
    the program proposed by the Governor for FY 2017.




  • Adult
    Basic Education
    is
    reduced by $1.7 million (5.4 percent under last year). Adult Basic
    Education programs—e.g. classes in English for speakers of
    other languages, high school equivalency courses, and citizenship
    classes—help adults enhance their ability to work and advance
    further in education. According to the most recent figures, 16,000
    people are currently on waitlists for Adult Basic Education across
    Massachusetts, including over 13,000 for English language courses.




  • 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. According to recent estimates from DESE 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).




  • Chapter
    40S Payments
    , which
    provide aid to districts to account for new students arriving after
    additional housing development have been built, are eliminated (funded
    at $450,000 in FY 2016).




  • Non-Resident
    Student
    Transportation,
    which provides state support to help student
    travel to
    vocational/technical education programs that are not available in their
    home districts is eliminated (funded at $1.8 million in FY 2016).









The HWM Committee FY 2017 budget proposes to fund state-level
administration of K-12 schools through the Department of Elementary and
Secondary Education
at $12.3 million. This amount is 15.2
percent less
than the $14.5 million in the current budget. This figure reflects 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.






The HWM Committee FY 2017 budget includes several increases to other
education grants and services:










Higher Education






Higher education helps residents of our state contribute to their
communities and gain the skills needed to succeed in a competitive
economy. Public institutions of higher education, including the
University of Massachusetts, the state universities, and the community
colleges educate a large majority 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.






The House Ways and Means (HWM) Committee FY 2017 budget proposal is
relatively in line with current FY 2016 levels. The following table
details appropriations to each of the three campus types. MassBudget
totals make the following adjustments in order to facilitate more
accurate year-to-year comparisons:









  • Include
    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.




  • Subtract
    Tuition Remission
    .
    Since FY 2001, different policies have dictated when public higher
    education campuses must send different categories of tuition revenue
    they receive back to the state. When revenue must be sent to the state,
    it is not available for campus operations and has the same effect as
    reduced state funding to the campuses. To provide more accurate
    comparison of state support to campuses over time, using official
    documents from the Administration and the Legislature, MassBudget
    deducts tuition revenue sent back to the state from the direct
    appropriations to each campus. Additionally, a provision from last
    year’s budget takes effect in FY 2017, allowing the
    University of Massachusetts to stop sending tuition revenue from
    in-state students that it had been required to send in prior years.














Table: Higher education funding to the three campus types














The HWM Committee proposes to fund University of Massachusetts
line
items at $511.5 million, basically level with the Governor’s
FY 2017 proposal. Barring other measures, this amount of state support
makes it possible that tuition and fees will continue to rise at the
University of Massachusetts. For example, to meet a commitment to hold
the tuition rate constant in FY 2015, the system required $40 million
in additional funding.






The HWM Committee proposes funding
State University
line items at
$244.0 million and
Community College
line items at $272.0 million.
These levels are roughly in line with the Governor’s FY 2017
proposal.






The main State
Scholarship Program
would be funded at $96.6 million in
the HWM Committee FY 2017 proposal, a $1.0 million (1 percent) increase
above current levels.






The STEM
Starter Academies
are level funded at $4.8 million, an amount
which is $863,000 above what the Governor proposed. These programs
provide outreach, exploration, and mentorship activities to help
students who may need additional support to pursue coursework in high
growth Science, Technology, Engineering, and Math (STEM) fields.






Several higher education grants and programs, including several related
to workforce development, would be eliminated in the HWM Committee FY
2017 budget proposal:









  • The Innovation
    Commercialization Seed Fund
    would be eliminated (funded
    at $1.0 million
    in the current FY 2016 budget). This program provides competitive
    grants for researchers and students to test in the marketplace business
    ideas created at universities.




  • 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.
     




  • 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 HWM Committee FY 2017 budget proposes significant reductions to a
number of other areas in higher education:









  • National
    Guard Tuition and Fee
    Waivers
    would be funded at $5.3 million, a 64 percent
    reduction from
    current levels and a 32 percent reduction from the Governor’s
    FY 2017 proposal.




  • State
    University Incentive
    Grants
    are proposed to be funded at $2.5 million, a $3.1
    million
    reduction (55 percent) from current levels and the same amount proposed
    in the Governor’s FY 2017 budget. 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 divert funding from other programs to support some of
    these initiatives.




  • Community
    College
    Administration
    would be funded at $2.7 million, a $6.4
    million (70
    percent) reduction from current FY 2016 levels. The amount is
    consistent with what the Governor proposed in January.




  • The Department
    of Higher
    Education
    would be funded at $3.0 million, a $1.4 million
    (32 percent)
    reduction from current FY 2016 levels. This amount is $964,000 greater
    than what was proposed in the Governor’s FY 2017 budget.









Administrative cuts to higher education may have an impact on the
student experience on campus, and on the provision of student aid and
supports. These cuts may also impede the Commonwealth’s
ability to coordinate higher education initiatives with industry and
other partners. Notably, these administrative cuts cannot be fully
explained by staff reductions due to the early retirement program in FY
2016, because relatively few employees at the Department of Higher
Education (equaling $411,000 in salary and benefits) took early
retirement 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 parks and recreation facilities in Massachusetts.
Like the Governor’s FY 2017 proposal, the House Ways and
Means (HWM) Committee’s budget includes few significant
increases for environment and recreation programs, with the exception
of $500,000 for the Department of Environmental Protection (DEP) to
help municipalities provide safe drinking water to their residents. The
Committee budget further reduces funding for several programs that have
had significant cuts over the years.






The HWM Committee’s FY 2017 budget recommends $196.7 million
for environment and recreation programs, a cut of $16.1 million or 7.6
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 34.6 percent in inflation-adjusted
dollars.






As with the Governor’s FY 2017 proposal, many of the HWM
Committee’s funding reductions for environment and recreation
programs are likely related to staffing reductions as employees took
advantage of an early retirement package included in the FY 2016
budget. Because many of these retired staff will not be replaced, some
agencies may have difficulty carrying out their functions effectively.
It is also likely that apparent reductions in funding for some
environment and recreation programs are actually a shift in funding
from individual agencies to the Executive Office of Energy and
Environmental Affairs (EOEEA.) In his FY 2017 budget, the Governor
recommended consolidating human resources management, which some
agencies within EOEEA currently handle, by shifting funding from those
agencies to the executive office. Some programs affected by early
retirements and possibly the human resources consolidation include:









  • The DEP,
    which receives $25.1
    million in the HWM Committee’s proposal, a cut of $4.4
    million or 15.0 percent below the FY 2016 current budget. This amount
    is essentially the same as the Governor’s FY 2017
    recommendation. 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 in the HWM
    Committee’s budget, a cut of $2.1 million, or 14.4 percent
    below the FY 2016 current budget. This proposal is identical to the
    Governor’s FY 2017 request.




  • State Parks
    and Recreation

    programs receive $37.4 million, about $9 million below the FY 2016
    current budget and in line with the Governor’s FY 2017
    proposal. The HWM Committee budget, like the Governor’s
    proposal, recommends increasing the amount of revenue that the
    Department of Conservation and Recreation (DCR) can retain from
    parking, camping, and entry fees it collects, to $19.2 million. Even
    with this $3.2 million increase, funding for state parks in the HWM
    Committee’s FY 2017 budget proposal is $6.0 million below the
    FY 2016 budget









MassHealth (Medicaid) & Health Reform






In its FY 2017 budget proposal, House Ways and Means (HWM) focuses on a
variety of strategies to control costs, with the intent of holding
spending growth to 5 percent. Like in the Governor’s budget,
the HWM budget holds down costs by holding most provider rates flat and
by managing caseload. However, HWM does not include language proposed
by the Governor to control costs by providing selected benefits only to
members in managed care plans, and language that limited member
flexibility.






The HWM budget includes $15.43 billion for MassHealth programs, and
$164.0 million for MassHealth administration and
operations—see detailed table below. (Note that the Governor
proposed shifting some funding to consolidate administrative and
information technology costs, and MassBudget adjusts that funding back
in order to allow for more accurate across-year comparisons Although
HWM totals differ from the Governor’s it is likely that if
HWM is assuming transferring funds within line items as did the
Governor, the totals would be more in line, with exceptions described
below.) The HWM budget is a 5.1 percent increase over current year
MassHealth budget totals, and just slightly above the
Governor’s proposal.











Table: Masshealth (Medicaid) and health reform














One of the notable differences between the HWM budget and the
budget
proposed by the Governor is that HWM does not include language that
would limit benefits for MassHealth members not enrolled in managed
care plans. The Governor had included such language to encourage
MassHealth members to move towards managed or coordinated health care
plans. Managed care has the potential to encourage more preventive and
better-integrated care, but its restricted networks can also limit
access to certain specialists or providers. In the Governor’s
proposal, effective January 1, 2017, “optional”
benefits such as physical therapy, vision services, or speech therapy
would no longer be available to MassHealth members enrolled in the
Primary Care Clinician (PCC) plan. These benefits would still be
available to members enrolled in Managed Care Organizations (MCOs). The
intent was that this would provide an incentive for members to move
into managed care, and would save approximately $11 million.





HWM also does not include the Governor’s language that would
have limited members’ ability to shift enrollment within
managed care plans over the course of a year. The Governor would have
“locked in” members to a single managed care plan
for a twelve-month period, regardless of whether a consumer’s
changing health care needs could no longer be met by their initial
managed care organization.





HWM increases funding for nursing home rates by $15.0 million
above the
Governor’s recommendation, for a $45.0 million increase above
FY 2016 rates. HWM includes language stating that at least $35.5
million would go to support wages for the direct care workers in the
facilities. The Governor did not include this earmark in his budget.





The HWM budget also includes language that would direct $14.8 million
in supplemental payments to pediatric hospitals that provide complex
care. This earmark was not included in the Governor’s budget.
The FY 2016 budget includes $7.4 million for a half year of
supplemental payments to two hospitals for the costs of their high
acuity payments.





The Administration is in the process of reforming health care
delivery,
and shifting MassHealth to a system of accountable care organizations
(ACOs). 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. This revenue is transferred into the Delivery System Reform
Incentive Trust. 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. Although hospitals “as a
class” will receive back the full amount of this assessment,
some hospitals will pay in more than they receive back, and others will
receive back more than they pay in. HWM adds language to the budget to
sunset this provision after five years, as this federal initiative is
intended to be transitional. The Governor’s budget noted that
the Administration would be using $73.5 million from this assessment as
a transfer into the General Fund to help balance the budget.





In addition to funding for MassHealth, the HWM 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.)











Table: Masshealth (Medicaid) and health reform














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 be closer to $79.9
million.





Unlike the Governor, HWM makes an appropriation into the Health Safety
Net (via funds from the Commonwealth Care Trust Fund) to support the
costs associated with providing care to uninsured or underinsured
individuals. The HWM proposes a transfer of $15.0 million, whereas in
previous years that transfer has been $30.0 million.





Starting June 1, 2016, coverage by the Health Safety Net will
become
more restrictive, limiting state-funded reimbursements for health care
providers who provide care to these individuals, and potentially
shifting the cost of that care on to people who are unlikely able to
afford it. 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 new changes lower the eligibility
threshold for partial coverage by the Health Safety Net from 400
percent to 300 percent of the federal poverty level.





Mental Health






The House Ways and Means FY 2017 mental health budget proposal of
$759.6 million is an increase of $11.4 million or 1.5 percent over FY
2016, and just slightly under the Governor’s proposed budget.
As in the Governor’s budget, the HWM budget includes a
notable increase in funding for residential behavioral health
treatment, an important component of the continuing 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 DMH operations is $27.4 million in the HWM proposal, a decrease of
$1.1 million, or 4.0 percent 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 $206.3 million. HWM includes budget language
noting that this will cover the costs of 45 substance use treatment
beds at Taunton State Hospital. The Governor included this provision as
well, added in part to eliminate the need to use civil commitment to
the MCI-Framingham facility for women who need substance abuse
treatment.





HWM proposes $21.5 million for statewide homeless support
services,
which is level with FY 2016, but $1.4 million less than proposed by the
Governor. HWM consolidates a new line item added by supplemental budget
legislation earlier this month funding community-based placements for
people discharged from continuing care with other funding for
community-based placements. Together, these line items receive $382.7
million, $1.3 million more than FY 2016 current funding, and level with
the Governor’s budget.





Children’s mental health is essentially level-funded
at $88.0
million, just $996,000 more than in FY 2016. HWM includes budget
language designating $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. This is
the same amount received by this program in FY 2016.






Public Health






The House Ways and Means (HWM) budget continues to direct more funding
to substance abuse services, but HWM proposes cuts to funding for other
programs. In the HWM budget total public health funding is $599.9
million. MassBudget has adjusted the Governor’s budget total
to account for the Governor’s proposed shift of funding from
the Department of Children and Families (DCF) to prevent domestic
violence. The Governor’s budget moved approximately $24
million from domestic violence services at DCF into the Department of
Public Health (DPH) in order to consolidate services to prevent
domestic violence. If we assume that both the Governor and HWM make
this $24 million transfer (see discussion below), the HWM public health
budget would be $576.0 million, $8.6 million below the
Governor’s proposal, and $4.4 million below FY 2016 current
totals.






In keeping with the commitment to addressing the opioid addiction
epidemic and combating substance abuse, the HWM budget increases
funding for various substance abuse services in the Department of
Public Health (DPH) by $8.2 million to $139.1 million. The HWM budget
includes language that would provide $2.0 million for 46 additional
transitional support services beds (for a total of 388), and $2.0
million to support case management for up to 500 families.





As does the Governor, HWM essentially proposes level funding
or cuts to
almost all other public health programs. Maternal and child health
programs are cut by $3.2 million. This includes a $1.0 million cut to
early intervention services, bringing the total to $27.4 million. The
Governor had recommended level funding 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 WIC (Women, Infants, and
Children) program state supplement receives $12.5 million in the HWM
budget, level with FY 2016 totals. 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 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 dramatic cuts in state taxes, the state budgeted close
to $90 million (in inflation-adjusted dollars) to support anti-smoking
efforts. Since then, these efforts were at first cut significantly, and
then have dwindled year by year.






Other programs are cut or level-funded as well. There is a cut to the
department’s oral health program, for example, as Dental
Health Services receive $367,000 less than in FY 2016, for a total of
$1.7 million. As noted above, funding to prevent sexual assault and
domestic violence
likely reflects a shift of dollars previously provided to the
Department of Children and Families (see table below and in the Child
Welfare section of this
Budget Monitor.
) HWM funds the Domestic
Violence and Sexual Assault Prevention programs at $30.6 million,
almost identical to the Governor’s total. The
Governor’s budget proposed to better consolidate and
coordinate domestic violence prevention and services by shifting
approximately $24 million from DCF to DPH, and since the HWM totals are
similar, it is likely HWM is also proposing this shift. Accounting for
these likely transfers, these services in fact are essentially
level-funded with FY 2016. Unlike the Governor, however, HWM eliminates
funding for the Healthy Relationships Grant Program, which had received
$150,000 in FY 2016. Funding for the Sexual Assault Nurse Examiner
program is flat at $4.5 million.











Table: Domestic violence services and prevention














The HWM budget, unlike the Governor’s budget, does
not
provide a meaningful increase to 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. HWM proposes $6.0 million for this
program, level with FY 2016 totals, and $2.9 million less than proposed
by the Governor. Other youth engagement programs are also cut or
level-funded in the HWM budget. The Youth-at-Risk matching grants are
cut in half to $2.0 million, and the Youth Violence Prevention grants
are level-funded at $1.3 million.






State Employee Health Insurance






The House Ways and Means (HWM) budget proposal for state employee
health insurance maintains the current structure of employee
contributions to health insurance. HWM does not follow the
Governor’s recommendation to shift $30 million in costs onto
longtime employees, and $3 million onto retirees. Because the HWM
proposal does not include these provisions, the HWM budget is $32.9
million higher than the Governor’s.






MassBudget’s totals for state employee health insurance
include adjustments that allow for more accurate across-year
comparisons (see table.) MassBudget removes from budget totals the
amounts each year that are simply pass-throughs of funding for
municipal health insurance. Municipalities have the option of taking
advantage of the state’s purchasing power by using the Group
Insurance Commission (GIC) to purchase their employees’
health insurance. Municipalities reimburse the state for the costs of
this insurance, so there is no cost to the state for adding these
municipal employees to the GIC caseload.











Table: State employee health insurance with municipal pass-through adjustment















State Retiree Benefits






The state has adopted a schedule to move towards full funding of health
and other 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. Like the Governor, HWM recommends $450 million
in an operating transfer directed to the State Retiree Benefits Trust
(SRBT), and transfers an additional $72.5 million in from unexpended
debt payments (described below). This total is $48.3 million less than
the amount stated in the statute, and that underfunding constitutes a
one-time saving used to balance the budget. (See Non-Tax Revenue
section of this Budget Monitor.)






In order to fully fund the costs of future retirees’
benefits, in FY 2012 the state decided to dedicate an increasing share
of its annual Master Tobacco Settlement award to the State Retiree
Benefits Trust. By FY 2016, the intent of the statute was that 40
percent of the Settlement award would go to fund retiree benefits, and
a full 50 percent of the Settlement would be directed to the SRBT in FY
2017.






The FY 2016 budget reduced the share of the Tobacco Settlement funds
that would go to the SRBT. The budget kept the transfer to the
equivalent of only 30 percent of the Settlement award, which was
approximately $24.4 million less than the 40 percent amount directed by
the statute. Moreover, instead of using just the Tobacco Settlement
money for this transfer to the SRBT, 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 HWM 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. Even though the statute
indicates that by FY 2017 the state should be transferring 50 percent
of the Tobacco Settlement to the SRBT, HWM limits the transfer to the
equivalent of only 30 percent of the Settlement. This total proposed
transfer to support state retiree benefits is $72.5 million, which is
$48.3 million less than the amount indicated by the statute.






Housing






The state budget funds programs that create and maintain affordable
housing and provide shelter and services to homeless families and
individuals. In recent years, the state has been focused on reducing
the number of low-income families with children who are homeless. The
House Ways and Means Committee (HWM) budget provides only small new
investments in programs that increase access to permanent, affordable
housing for lower-income families.






The HWM Committee budget for FY 2017 proposes spending $442.3 million
on housing programs, which is $23.1 million less than the
Governor’s FY 2017 proposal and $46.5 million less than the
current FY 2016 budget. The Committee’s lower spending level
reflects the fact that it provides significantly less funding for the
Emergency Assistance (EA)
shelter program
for low-income, homeless
families. It is likely that this amount will not be sufficient to fully
fund EA during FY 2017 and would require the Legislature to provide
supplemental funding. In its budget, the HWM Committee also recommends
increasing funding to $100.0 million for the Massachusetts Rental
Voucher Program (MRVP) by transferring close to $15 million in unspent
MRVP funds from FY 2016 to FY
2017.      






A large portion of the state’s housing budget funds programs
that provide shelter and short-term housing assistance to low-income
families with children who are homeless or at risk of becoming
homeless. In FY 2016, the state expects to spend close to $200 million
on the EA program to shelter about 4,000 homeless families in both
family shelters and in hotels and motels because the family shelters
are full. The HWM Committee budget proposes spending $155.1 million on
EA in FY 2017, which is $40.9 million below the current FY 2016 budget
and $36.8 below the Governor’s FY 2017 proposal. Previous
years’ budgets have reduced funding for EA at the beginning
of each year, in anticipation that fewer low-income families will
become homeless and need shelter. But over the course of each year the
need for shelter has exceeded the amount provided in the original
budget and the Legislature has approved supplemental funding.  






The HWM budget for EA also provides $300,000 in HomeBASE funds to
help
low-income, homeless families move from temporary shelters or treatment
programs run by state agencies other than the Department of Housing and
Community Development (DHCD) into permanent housing. These include
families living in domestic violence shelters, shelters supported by
the Department of Children and Families or residential substance abuse
treatment programs. HomeBASE provides up to $8,000 in temporary housing
assistance over 12 months to low-income families who meet EA
eligibility guidelines (please see MassBudget’s
Children’s
Budget
for a discussion of EA eligibility). The
HWM Committee’s FY 2017 budget provides $31.9 million for
HomeBASE, which is identical to the amount proposed by the Governor and
$1.8 million less than the FY 2016 current budget.






In recent years, the state has increased funding for the Massachusetts
Rental Voucher Program (MRVP)
, which provides vouchers to
low-income
renters in Massachusetts. With this additional funding DHCD has created
new vouchers to help families move out of EA shelters and hotels and
motels into permanent apartments and to reduce the number of people who
have applied for the vouchers but are on waiting lists.






The HWM Committee proposes providing $100.0 million for MRVP in FY
2017. Of this total, the HWM Committee proposal provides $85.3 million
in new funding and transfers $14.7 million in surplus funding from FY
2016 in to FY 2017. This amount is $17.1 million above the
Governor’s proposal and is $9.1 million more than the FY 2016
budget after accounting for this transfer.











Table: Massachusetts rental voucher program















Documents provided by the HWM Committee estimate that its $100.0
million funding level will allow DHCD to create 375 new vouchers in FY
2017. There is some question, however, whether renters will be able to
use these vouchers unless their value is increased to meet high rents
in high-cost areas. The value of most MRVP vouchers is set at the 2005
HUD Fair Market Rent which means that some voucher-holders are unable
to find units they can afford to rent particularly in high cost areas
like Greater Boston.1
The Governor did include in his FY 2017
proposal language that gives DHCD discretion in increasing the value of
vouchers based on criteria including the size of the family, their
income, and the area where they are renting. The HWM
Committee’s budget does not include this language.  






Other highlights of the HWM Committee budget proposal
include:  












  • Providing $1 million more than
    the FY 2016 current budget for subsidies
    to public housing authorities
    ,
    raising the total to $65.5 million.




  • Providing $840,000 less than
    the FY 2016 current budget to $44.0 million for a program that provides
    shelter and services
    to homeless individuals
    . The HWM budget level
    funds at $1.8 million the Home
    and Healthy for Good
    program, which
    provides services to individuals who have been chronically homeless.
     




  • Eliminating funding for the
    account that provides shelter and services to unaccompanied homeless
    youth.
    Both the FY 2016 budget and the
    Governor’s FY 2017
    proposal provide $2.0 million for this program.




  • Eliminating funding for the End Family
    Homelessness Reserve Fund,
    housed at the Executive Office
    of
    Health and Human Services. This account, which received $1.0 million in
    FY 2016 and a proposed $1.5 million in the Governor’s
    proposal, would fund up to 5 regional consortiums to provide services
    to families at risk of becoming homeless.









Child Welfare






The Department of Children and Families (DCF) is the state’s
child welfare and child protection agency, and has a dual mission: to
protect children and to strengthen families. Although the House Ways
and Means (HWM) budget does not fund local and regional oversight
offices (discussed below), HWM essentially follows the
Governor’s child welfare funding proposal, which increases
funding to support the hiring of more caseworkers and funds additional
out-of-home foster care. Since the time of the Governor’s
proposal in January, the Legislature has added $14.9 million to the FY
2016 budget through supplemental appropriations for child welfare.
Total funding for child welfare in the HWM budget is $930.7 million,
while the Governor had proposed $938.2 million. MassBudget, however,
adjusts the Governor’s totals to reflect the
Governor’s proposed shift of $23.9 million out of DCF and
into the Department of Public Health (DPH), which would bring the
Governor’s total to $959.9 million. Because the HWM budget
seems to follow a similar structure as the Governor’s budget,
it is likely that HWM is also proposing transferring approximately $24
million into DPH. If so, this would put the HWM budget approximately $5
million below the Governor’s proposal and approximately $27
million above FY 2016 current budget totals.






Like in the Governor’s budget proposal, the HWM proposal
includes a 7.8 percent increase in support for child welfare case
workers compared to current FY 2016 appropriations, for a total of
$226.4 million. HWM proposes $223.5 million, a 9.6 percent, (or $19.6
million) increase over FY 2016 funding to fund the caseworkers who work
directly with vulnerable families. According to the Administration,
this funding level would be sufficient to bring on 281 newly hired
staff. After taking retirements into account, DCF will have 236 new
workers. Like in the Governor’s budget, funding to train
these new workers is cut slightly by $44,000 from FY 2016, for a total
of $2.5 million. 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 works directly with
vulnerable families. Although their union contract limits caseworker
caseloads to 15 cases each, neither the Governor’s nor HWM
budgets are sufficient to reach that goal. These proposals aim for a
ratio of 18:1.






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 HWM budget includes $46.9 million for family support
services, a $1.4 million increase over FY 2016 levels, and just under
the amount proposed by the Governor. These funds will essentially
support a required rate increase, not additional services. This is an
important increase, but likely not sufficient to effectively help needy
families stay safely together and prevent child neglect.






Reflecting recent increases in the removal of children to out-of-home
placements, but also reflecting the relative scarcity of foster
families, the HWM budget—like the
Governor’s—provides slight increases to foster care
and adoption services, targeting increased funding to congregate
residential care. HWM funds services for children and families at
$282.8 million (a slight decrease compared to FY 2016) and proposes
$265.1 million for group residential foster care, a 2.3 percent (or
$5.9 million) increase—even higher than proposed by the
Governor. This amount incorporates a previously planned rate increase,
as well as additional funds 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.






In the Governor’s budget, this totals also includes $2.2
million shifted from the domestic violence services line item to
support case workers specially trained to work with victims of domestic
violence. Because the HWM budget seems to follow the
Governor’s structure, it is likely that this total includes a
similar shift of funds. (See discussion and table below.)






The Governor proposes shifting funding for support services for
families at risk of domestic violence to the Department of Public
Health (formerly funded at DCF in 4800-1400), in order to consolidate
domestic violence prevention and support services. Since the HWM budget
seems to follow the Governor’s, it is likely that HWM is
proposing these shifts as well (see table below.)











Table: Domestic violence services and prevention














HWM cuts funding for family resource centers by $2.5 million.
The
Governor had proposed a slight increase for these centers. Currently,
there are centers funded through the Executive Office, and centers
funded through DCF. These centers, located throughout the Commonwealth,
help connect families to a variety of community and state services, and
are particularly important for families seeking help for a
“Child Requiring Assistance” working with the
juvenile courts. Instead, HWM eliminates funding for the centers within
the Executive Office and proposes level funding the centers at DCF at
$7.4 million (see table.)














Table: Funding for family resource centers
















Elder Services






The House Ways and Means Committee (HWM) proposes funding Elder
Services at $267.6 million, a $2.8 million increase above current FY
2016 levels. This 1.1 percent increase is likely insufficient to keep
up with rising costs associated with inflation.






The Department of Elder Affairs largely funds elder home care services,
which include case management, homemaker and chore services,
transportation, protective services, and others that enable elders to
remain at home instead of moving to a nursing home. While the HWM
Committee proposes funding these home care programs at the same level
as the Governor’s FY 2017 budget proposal, there is one major
difference. The Governor’s proposal consolidated some of the
major accounts that fund home care services, while the HWM proposal did
not propose consolidations. In aggregate, the HWM proposal, like the
Governor’s, would reduce funding for these services by
approximately $770,000 below current levels.











Table: Funding for elder home care services














The HWM proposal has some other notable differences when
compared to
the Governor’s FY 2017 proposal and current spending levels:


















  • Elder
    Congregate Housing
    Program,
    at $1.4 million, is $642,000 (31.2 percent) below
    the
    Governor’s proposal and $737,000 (34.2 percent) below current
    spending levels.




  • Elder
    Nutrition Program,
    at
    $6.5 million, is approximately $750,000 (10.3 percent) below both the
    Governor’s proposal and current levels. This would cut
    approximately 100,000 meals for older and disabled individuals in
    greatest social and economic need.




  • Elder
    Protective Services,
    at
    $28.0 million, is slightly below the Governor’s proposal and
    is approximately almost $5.0 million above current levels.




  • Grants to
    Council on Aging
    , at
    $14.1 million, is $1.3 million (9.8 percent) above the
    Governor’s proposal and $410,000 (3.0 percent) above current
    levels.




  • The HWM proposes establishing
    a 20-person permanent,
    special commission on older lesbian, gay,
    bisexual, and transgender (LGBT) adults
    to study the
    health, housing,
    financial, psychological, and long-term care needs of these groups.
     








For information about how MassHealth and the Prescription
Advantage
program supports elders, see the Health Care portion of this Budget
Monitor.






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
that more broadly assist people with disabilities and their families.
In total, the House Ways and Means (HWM) Committee FY 2017 budget
provides $1.89 billion for disability services, a 2.4 percent increase
from current FY 2016 levels, and about the same amount proposed by the
Governor’s FY 2017 budget.






At the same levels as the Governor’s budget proposal, the HWM
budget proposes increases from the current FY16 budget to some
workforce development programs for individuals with disabilities,
namely:









  • Community
    Day and Work
    Programs for the Developmentally Disabled
    would receive
    $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
    would receive
    $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.









Conversely, Community
Based Employment
would remain at the current
funding level of $3.0 million, a decrease from the $7.6 million
proposed in the Governor’s budget. This program moves
individuals with disabilities from sheltered work to competitive work
opportunities in the community.






Several other programs are close to level-funded, including Autism
Omnibus Services
and
Turning 22 Services for the
Developmentally
Disabled
. For these programs, level funding may be tantamount
to a cut
because available resources do not keep pace with inflation.






Additionally, the HWM budget proposes to fund the Respite
Family
Supports for the Developmentally Disabled
at $62.7 million, a
12.2
percent increase from current FY 2016 levels and the same amount as the
Governor’s proposal. Respite Family Supports provides
families with children with disabilities, with specialized caregiving
or other flexible community-based resources.






The HWM budget proposes $36.2 million for the legally required Chapter
257 rate
increases. This amount would be a $1.2 million
decrease from
current FY 2016 levels and a $3.4 million increase above the
Governor’s budget proposal. Chapter 257 standardizes rates
according to the services delivered by providers to make the system
more efficient and fair. 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
MassBudget’s Chapter
257 update.






Juvenile Justice






The Department of Youth Services (DYS) receives $176.5 million for
juvenile justice programs in the House Ways and Means (HWM) FY 2017
budget proposal. This is virtually identical to the
Governor’s FY 2017 proposal
and most accounts at
DYS are
either level-funded or slightly decreased from last year.





Similar to the Governor’s FY 2017 proposal, the HWM
proposal
would increase funding for the Alternative
Lock Up Program
to $2.3
million from $2.1 million in 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 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 House Ways and Means (HWM) FY
2017 budget proposes a decrease to transitional assistance programs of
$22.2 million (3.9 percent) from current FY 2016 levels. The reductions
are deeper when looked at over a longer time horizon, as funding for
these programs has been reduced by 35.9 percent since FY 2001 in
inflation-adjusted dollars.






The bulk of this proposed decrease–$16.9 million–comes from
Transitional Assistance
for Families with Dependent Children (TAFDC).

This reduction assumes a continuation of declining caseloads. With an
improving economy, we would expect more people to find jobs and improve
their circumstances. However, current caseload reduction may partially
result from 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.) Unlike the Governor’s budget proposal, the HWM
budget would not require DTA to begin counting Supplemental Security
Income (SSI) benefits in determining TAFDC eligibility, a measure that
would reduce or eliminate TAFDC benefits to some families receiving
SSI.





The HWM budget proposes decreases to several programs for
workforce development, including:









  • Employment
    Services Program
    ,
    which would receive $5.0 million in the HWM budget proposal, an $8.0
    million (61.5 percent) decrease from current FY 2016 levels and a $7.4
    million (59.7 percent) decrease from the Governor’s FY 2017
    budget proposal. Employment Services is the primary education and
    job-training program for TAFDC clients.




  • Pathways
    to Self-Sufficiency,

    which would be reduced from $3.0 million in the current budget to $1.0
    million. The Governor proposed increasing this program to $15.0
    million. 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.









The HWM committee proposal would fund Caseworker Salaries and Benefits
at $70.8 million, a 4.7 percent decrease from current FY 2016 levels
and a 2.0 percent decrease below the Governor’s budget.






Conversely, Emergency
Aid to the Elderly, Disabled, and Children
(EAEDC)
would receive $79.2 million, the same amount as in
the
Governor’s budget and a 3.9 percent increase over current FY
2016 levels.






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 cross-agency initiatives. Total
funding for veterans’ services (including the
Soldiers’ Homes) is $146.1 million in the House Ways and
Means (HWM) budget proposal, a $4.6 million reduction from FY 2016
totals, and $1.9 million less than proposed by the Governor. Both HWM
and the Governor reduce funding by $2.3 million for operations of the
Soldiers’ Home in Holyoke, as well as a variety of other
small reductions across several line items.





The state’s Emergency Food Assistance Program
(MEFAP), which
supplements federal funding for a network of food banks, is funded in
the state budget within the Department of Agricultural Resources. Like
the Governor, HWM proposes $17.0 million for these community-based
organizations, a slight reduction from funding in FY 2016. 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.





HWM eliminates funding for the Family Resource Centers within
the
Executive Office, funded at $2.5 million in FY 2016. The Governor, on
the other hand, had proposed maintaining this funding, but
consolidating it with funding for the centers administered by the
Department of Children and Families. See also the Child Welfare section
of this Budget Monitor
for a discussion of funding.





Economic Development






The state budget supports workforce and business development programs
designed to boost the skills of working people and stimulate economic
activity. In total, the House Ways and Means (HWM) FY 2017 budget
proposes reducing these programs by $26.7 million (17.5 percent) from
current FY 2016 levels.






Specifically, the HWM budget proposes decreases to several programs in
workforce development, including the following:









  • Advanced
    Manufacturing
    Workforce Development Grants
    would receive zero funding under
    this
    proposal. The Governor’s FY 2017 budget proposed to continue
    funding the program at its current $1.5 million level.




  • Gang
    Prevention Grant Program
    (Shannon Grants)
    would receive $5.0 million, a 28.6 percent
    decrease
    from both current FY 2016 levels and the Governor’s proposal.
    As part of a comprehensive youth violence prevention strategy by law
    enforcement, this program provides funding for employment and training
    opportunities to youth in communities throughout the Commonwealth.




  • One-Stop
    Career Centers
    would
    receive $4.0 million, a decrease of $525,491 from both current FY 2016
    levels and the Governor’s FY 2017 proposal. These centers
    help job seekers improve their skills and navigate the job search
    process as well as help employers find new workers.




  • Workforce
    Competitiveness
    Trust Fund,
    which invests in training for unemployed workers,
    would
    receive no funding under this proposal. It is currently funded at $2.2
    million and the Governor’s FY 2017 budget proposal would
    increase funding to $4.0 million.




  • Workforce
    Training Fund
    would
    receive $21.4 million, a 4.5 percent decrease from current FY 2016
    levels, and the same reduction as in the Governor’s proposal.




  • YouthWorks
    (formerly Summer
    Jobs Program for At-Risk Youth) would receive $9.0 million, a 23.1
    percent decrease from current FY 2016 levels, and a 21.7 percent
    decrease from the Governor’s proposal. Funding for this
    program is often budgeted in one fiscal year to be spent in the next.
    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 fewer youth hires as compared to
    previous years.









Conversely, the HWM budget proposes renewed investment in the Big Data
Innovation and Workforce Fund
at $2.0 million. The
Administration
eliminated funding for the program during emergency budget reductions.
(To learn more about such cuts, read MassBudget’s brief, What
Are 9C Cuts?
). This fund would bring the public and private
sectors
together to prepare workers for big data careers and help identify and
solve technology-based issues in transportation, public health, energy
and other areas of public policy concern.






General Local Aid  






The House Ways & Means (HWM) Committee budget proposes the same
increase to Unrestricted General Government Aid (UGGA) as the
Governor’s proposal, an increase of $42.1 million (4.3
percent) over current FY 2016 levels to $1.02 billion.





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 1990s and 2000s. 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, adjusted for
inflation.











Bar graph: Unrestricted general local aid cut by over 40 percent 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
$5.2 million, a
51.9 percent reduction from the amount that had already been reduced by
$3.0 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?)
Like the Governor’s proposal, the HWM
FY 2017
budget proposal would provide $2.7 million for the Community Compact
program’s incentive program to support best local practices.
It would also hold the Governor’s proposed $2.0 million for
continuing a District Local Technical Assistance Fund administered by
the Division of Local Services within the Department of Revenue. The
HWM proposal eliminates provisions in last year’s budget for
a competitive public safety grants program for populous communities
with low per-capita police funding. In last year’s budget,
the program received $4.325 million in available funds and would be
capped at $1.0 million under the Governor’s FY 2017 proposal.
Unlike the Governor’s proposed budget, the HWM budget
proposes one-time grants as part of this line item to the city of
Quincy for $240,000 and Plymouth County of $350,000.





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






Transportation





The House Ways and Means (HWM) Committee’s FY 2017
budget
proposes the same amounts for transportation as the
Governor’s FY 2017 proposal, with an updated estimate of the
sales tax revenue transferred by law to the Massachusetts Bay
Transportation Authority (MBTA).





Like the Governor’s 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. This amount
is lower than previously anticipated as a result of 412 employees with
salaries totaling $28.8 million accepting early retirement incentives.





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.





While early retirement offers are intended to save money, the
HWM
budget could have proposed to reinvest those savings in other
transportation programs. Like the Governor’s proposal, the
HWM budget instead 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 HWM 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.





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 House Ways and Means Committee’s FY 2017 budget
proposal
projects receipt of $1.027 billion from an automatic transfer of sales
tax revenue to the MBTA
State and Local Contribution Trust Fund
, an
increase of $41.8 million over FY 2016. This amount is $25.9 million
more than was projected at the time of the Governor’s budget
proposal.





Like the Governor’s budget, the HMW 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.





Law & Public Safety






Overall, the House Ways and Means (HWM) FY 2017 budget provides $2.66
billion in funding for Law & Public Safety (L&PS)
accounts. This total is $41.3 million (or 1.5 percent) less than
current FY 2016 levels and $37.7 million (or 1.4 percent) less than the
Governor proposed. Elements of the HWM budget, however, present
challenges in making apples-to-apples comparisons with either FY 2016
funding levels or the Governor’s proposal. In particular, the
HWM budget includes a $26.4 million reduction relative to current FY
2016 funding levels ($25.0 million less than the Governor) for Private
Counsel Compensation (PCC), an account that typically is replenished
mid-year through supplemental appropriations. Best budgeting practices
would encourage including the full, anticipated cost for all programs
as part of the annual budget, rather than assuming supplemental
mid-year appropriations. It is unlikely that HWM actually plans a 21
percent reduction in funding for the PCC account during FY 2017.






The overall decline in FY 2017 L&PS funding also includes
elimination of $18.0 million in supplemental funding provided in FY
2016 to a reserve account for sheriffs. To the extent that similar
supplemental funding is required again in FY 2017, this also would
create the appearance of a significant “funding
drop” from FY 2016 to FY 2017 that ultimately may be
inaccurate.   






Removing from consideration the decreases associated with these
accounts, overall L&PS funding in the HWM budget is close to
level-funded. When rising costs (due to inflation) then are taken into
account, however, the HWM budget provides lower levels of funding than
in FY 2016.






Apart from the accounts discussed above, some of the notable items in
L&PS accounts include the following:









  • Most trial courts are provided
    with a 1 percent increase. The Chief Justice of Administration and
    Management of the courts nevertheless has warned that the funding
    proposed by HWM for the trial courts would not fully support the cost
    of maintaining current services and therefore would require him to lay
    off approximately 300 court staff.




  • Specialty drug courts are
    provided with an additional $2.8 million, bringing the total proposed
    FY 2017 funding to $6.0 million.




  • Shannon
    Grant
    gang-prevention
    funding is reduced by $2.0 million, bringing proposed FY 2017 funding
    down to $5.0 million. Shannon Grants help fund anti-gang and youth
    violence prevention efforts undertaken by law enforcement,
    community-based organizations, and government agencies in communities
    throughout the Commonwealth.




  • The Department of State Police
    receives a $20.6 million or 7.8 percent increase. It is likely that a
    significant portion of this increase is intended to support the cost of
    adding new troopers to the department – in the FY 2016 budget, $5.9
    million was provided to train a new class of state police
    officers.   




  • A $1.0 million appropriation
    for a new grant program for district attorneys to design and implement
    youth and young-adult non-violent drug offender programs.




  • The sheriff’s
    departments see a decrease of 2.5 percent when compared to current
    spending (which includes mid-year funding provided in FY 2016 to two
    sheriff’s reserve accounts). These reserve accounts are used
    to fund a variety of costs, including one-time budget deficiencies such
    as overtime pay and other unbudgeted expenses. They also are used to
    cover initial costs associated with collective bargaining agreements.
    It is unclear if or to what extent HWM (or the Governor) incorporated
    any ongoing expenses funded in FY 2016 through these reserve accounts
    into the individual sheriff’s line-item accounts in their FY
    2017 budget recommendations.




  • The Massachusetts
    Legal
    Assistance Corporation
    – which provides support to low
    income people
    facing civil legal problems – is funded at $18.0 million, a
    $1.0 million increase.









Pensions






The House Ways and Means (HWM) FY 2017 budget, like the
Governor’s, makes the Commonwealth’s scheduled
$2.169 billion payment to the Pensions Reserves Investment Trust (PRIT)
Fund, along with an additional contribution to cover the added costs
associated with the Commonwealth’s recent early retirement
program.2






The early retirement program – in which almost 2,500
employees chose to participate – brings more retirees into
the system sooner than previously anticipated. To offset the additional
pension costs associated with the early retirement program, the annual
contributions to the PRIT will need to increase by $29 million going
forward.3
Taking this added cost into account, the total FY
2017 contribution to the PRIT – under both the HWM and
Governor’s budget proposals – is $2.198 billion.4






The specific amounts to be contributed annually by the Commonwealth to
the PRIT are stipulated in Massachusetts General Law, with a five-year
schedule included therein, currently running from FY 2012 through FY
2017.5
The schedule of annual pension contributions is updated
every three years by the Secretary of Administration and Finance,
drawing on the most recent actuarial valuation report.6 The
Secretary of Administration and Finance will update the schedule again
in early 2017.7






Assets held and managed within the PRIT are used to fund the
anticipated retirement costs of current state employees, as well as the
current and future retirement costs of now-retired former
employees.8
The funds in the PRIT come from three sources:
required pension contributions made by employees, the
Commonwealth’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”).






Revenue






The House Ways and Means (HWM) FY 2017 budget proposal relies on
additional revenues beyond those available as part of the Consensus
Revenue Estimate. Together, these additional FY 2017 revenues come from
both tax and non-tax sources. 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
).






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.9
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 HWM 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) are designated by law for
deposit into the Stabilization Fund rather than being made available
for budgetary appropriation.12
As with the Governor’s
budget, the HWM FY 2017 budget 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, HWM 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, both the
HWM’s and Governor’s plans also are expected to
result in the deposit of about $206 million into the Stabilization Fund
from this source.15






Film Tax Credit






Unlike the Governor, HWM proposes no changes to the state’s
Film Tax Credit. For more discussion of the Governor’s
proposed changes, see MassBudget’s Budget Monitor on the
Governor’s FY 2017 budget.
 






Life Sciences Cap






Like the Governor’s budget, the HWM budget limits the amount
of funding to be transferred from the state’s consolidated
net surplus to the Massachusetts Life Sciences Fund.16 This
limit on the funding available for distribution through the
Massachusetts Life Sciences Credit program is expected to save $5
million in FY 2017.17
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.18
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.19
In no recent year have
collections from this source been below $130 million. The HWM FY 2017
budget relies, conservatively, on $125 million from this
source.20
This amount is $10 million higher than the amount
relied on by the Governor, but matches the current projection from the
Executive Office of Administration and Finance for FY 2017 revenues
available from this source.21






Notably, these revenues are the direct result of the efforts of
Department of Revenue staff who identify non-compliance and other
issues that, in some cases, ultimately lead to large settlements.
Funding cuts that affect the Department of Revenue’s ability
to hire and retain staff could reduce the amount of revenue available
from this — and other — sources 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 these 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).  






Like the Governor, the HWM 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 HWM’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
Commonwealth’s early retirement program.22 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.23
Large staff
reductions can have implications for DOR’s ability to
identify and collect all the taxes owed to the Commonwealth, such as
those that lead to large tax settlements (for example). As described in
the Large Settlements & Judgments section (above), the
Commonwealth relies on such large settlements to fund both annual
operating expenses 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 as an opportunity to
reduce their tax payments through increased levels of tax evasion or
other forms of non-compliance.






Non-Tax Revenue






The House Ways and Means (HWM) budget proposal relies on many of the
same non-tax revenues that the Governor’s budget proposal
does, with a few differences. In particular, HWM balances its budget
with the additional use of one-time funds transferred into the General
Fund from other sources. 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.








HWM documents note that the HWM budget follows the
Governor’s
proposals for one-time revenues. One-time non-tax revenue highlights
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
    budgets now assume that revenues from slots will be $64.0 million in FY
    2016 and $64.0 million in FY 2017.




  • The Administration 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 and Health Reform section of this
    Budget Monitor.)




  • Both the HWM and
    Governor’s budget proposal count on transferring $12.7
    million remaining in several human services trust funds to the General
    Fund to help balance the budget. These “trust
    sweeps” are uses of surplus funds that are available only on
    a one-time basis.




  • HWM uses expected surpluses
    from FY 2016 budgeted appropriations to cover the costs of retiree
    health insurance and affordable housing supports. (See State Employee
    Health Insurance and Housing sections of this Budget Monitor.)









Overview of Temporary Revenue and Savings Used to Balance the Budget






The HWM budget, like the Governor’s budget, relies on a
number of temporary solutions to balance the budget. Temporary revenues
and savings consist of items, such as selling state assets, pulling
money out of dedicated trust funds, and postponing or delaying required
payments.






The HWM budget includes proposals totaling $406.7 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 approximately $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
    State Employee Health Insurance section of this Budget Monitor).




  • Use surplus funds (reversions)
    from FY 2016 to fund state retiree benefits and affordable housing (see
    Non-Tax Revenue section above).














Table: FY 2017 Temporary revenues and savings














The HWM FY 2017 budget proposal also counts on $79.8 million
from other
strategies to balance the budget (see table below). For details on
these initiatives, see the Housing, Courts & Legal Assistance,
and Prisons, Probation & Parole sections of this Budget Monitor.











Table: Other budget-balancing strategies














Total Budget by Category and
Subcategory






In order to allow for more accurate comparisons from year to year and
to better include all appropriated spending, MassBudget makes certain
adjustments to the way budget data are presented by the Administration.
Details are below the chart.





Table: Budget by category and subcategory











footnote to table















  • MassBudget’s totals
    include the “pre-budget transfers” of funds.
    Statutes require that the Legislature transfer portions of revenue
    prior to the appropriation process to support certain functions.
    Although these transfers function no differently from appropriations,
    the Governor and Legislature do not reflect these expenditures in their
    budget totals; instead, they are shown as amounts deducted or
    transferred from revenue prior to the budgeting process. To better
    reflect total state funding, MassBudget includes these pre-budget
    transfers in appropriation totals. In FY 2017, these add $4.23 billion
    to the total: tax revenues dedicated to the MBTA and school building
    assistance, the cigarette excise dedicated to the CCTF, the state
    contribution to the pension system, a transfer to the State Retiree
    Benefits Trust, and transfers to the Workforce Training Trust.




  • MassBudget’s totals
    include annual appropriations into non-budgeted
    (“off-budget”) trusts. The transfer of funds from
    the General Fund or another budgeted fund into a non-budgeted trust is
    a form of appropriation, and should be treated as any other
    appropriation. Prior to FY 2011, the budget authorized these transfers
    in Outside Section budget language. Starting in FY 2011, a new section
    of the budget, Section 2E, systematically accounted for the transfer of
    funds into off-budgeted trusts. MassBudget’s totals include
    these operating transfers in all budget years.




  • When spending that is now
    included in the budget was previously “off-budget,”
    MassBudget’s totals include the prior years’
    “off-budget” spending totals in order to reflect
    more accurate year-to-year comparisons. For example, funding directed
    to health care providers as partial reimbursement for uncompensated
    care was previously funded by a transfer of federal revenue directly
    into the off-budget Uncompensated Care Trust Fund. This spending was
    brought on-budget in FY 2009, and incorporated into the
    state’s budgeted health care appropriations. MassBudget
    health care budget totals include the off-budget spending for these
    services in order to reflect a more accurate across-year comparison.




  • MassBudget reduces State
    Employee Health Insurance totals to exclude spending on health
    insurance for municipal employees and retired teachers for which the
    state is fully reimbursed by municipal government.




  • MassBudget reduces funding for
    the community colleges, state universities, and University of
    Massachusetts campuses by the amount of tuition that these campuses
    remit to the state treasury each year. These adjusted totals more
    accurately reflect the “net” appropriations
    available to the campuses to support operations, and allow for more
    consistent comparisons across the years, since the policies about
    tuition remission have varied from year to year and from campus to
    campus. For example, until FY 2003, all the University of Massachusetts
    (UMass) campuses were required to remit to the state treasury all
    tuition from all students. From FY 2004 – FY 2011, UMass
    Amherst (only) remitted only in-state tuition, and retained tuition
    from out-of-state students. Starting in FY 2012, the remaining UMass
    campuses were also allowed to retain tuition from out-of-state
    students. Starting in FY 2017, UMass will retain all tuition revenue,
    remitting none. The MassBudget adjustments make it possible to make
    meaningful comparisons of appropriations to these campuses even with
    these policy changes.




  • MassBudget’s totals
    include funding paid for out of prior years’ reversions. For
    example, a portion of funding for health care for retired state
    employees has in some years come from anticipated reversion of prior
    years’ funds.




  • MassBudget’s totals
    reflect legislatively approved “prior appropriation
    continued” (PAC) amounts. In most instances, MassBudget
    shifts the PAC amount from the year in which the funding was first
    appropriated into the year in which the Administration expects to spend
    the totals.









___________________________________




1
The 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









2
HWM FY 2017
budget, Section 1A: https://malegislature.gov/Budget/FY2017/House





Commonwealth Official Statement, General Obligation Bond, Consolidated
Loan of 2016 Series A, March 3, 2016 (pg. A-36):
http://www.massbondholder.com/sites/default/files/downloads/MACommonwealth01a-OS.pdf









3
Commonwealth
Actuarial Valuation Report, January 2015 (pg. 2):
http://www.massbondholder.com/sites/default/files/downloads/2015commonwealth.pdf









4HWM
FY 2017
budget, Section 1A:
https://malegislature.gov/Budget/FY2017/House






Governor’s FY 2017 budget, Section 1A: http://www.mass.gov/bb/h1/fy17h1/brec_17/hsect1a.htm 









5MGL
Ch. 32,
Section 22C, Paragraph (l):
https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIV/Chapter32/Section22C






Note: The FY 2017 $2.198 billion total includes an upward revision of
$29 million to the scheduled contribution of $2.169 billion, reflecting
estimated increased pension costs associated with the
Commonwealth’s early retirement program for some state
employees.









6Commonwealth
Official Statement, General Obligation Bond, Consolidated Loan of 2016
Series A, March 3, 2016 (pg. A-35): http://www.massbondholder.com/sites/default/files/downloads/MACommonwealth01a-OS.pdf









7
Commonwealth
Official Statement, General Obligation Bond, Consolidated Loan of 2016
Series A, March 3, 2016 (pg. A-35): http://www.massbondholder.com/sites/default/files/downloads/MACommonwealth01a-OS.pdf









8The
employees
covered by the PRIT include not only state-level workers, but also all
the teachers working in cities, towns, and regional school districts
throughout the Commonwealth.





Commonwealth Official Statement, General Obligation Bond, Consolidated
Loan of 2016 Series A, March 3, 2016 (pg. A-32 and A-33):
http://www.massbondholder.com/sites/default/files/downloads/MACommonwealth01a-OS.pdf









9Commonwealth
Official Statement, General Obligation Bond, Consolidated Loan of 2016
Series A, March 3, 2016 (pg. A-18): http://www.massbondholder.com/sites/default/files/downloads/MACommonwealth01a-OS.pdf









10Calculation:
$25.751 B + $1.430 B = $27.181 B (See MassBudget’s FY
2017 Budget Preview
for details.) 









11Commonwealth
Official Statement, General Obligation Bond, Consolidated Loan of 2016
Series A, March 3, 2016 (pg. A-15): http://www.massbondholder.com/sites/default/files/downloads/MACommonwealth01a-OS.pdf





(Calculation: $1.484 billion – $1.128 billion = $356 million for
deposit to Stabilization Fund) 









12Commonwealth
Official Statement, General Obligation Bond, Consolidated Loan of 2016
Series A, March 3, 2016 (pg. A-15): http://www.massbondholder.com/sites/default/files/downloads/MACommonwealth01a-OS.pdf 









13HWM
FY 2017
Budget, Outside Section 34:
https://malegislature.gov/Budget/FY2017/House
 









14Calculation:
$1.278 B – $1.128 B = $150 M 









15Commonwealth
Official Statement, General Obligation Bond, Consolidated Loan of 2016
Series A, March 3, 2016 (pgs. A-15 and A-18): http://www.massbondholder.com/sites/default/files/downloads/MACommonwealth01a-OS.pdf






(Calculation: $1,484 M – $1, 278 M = $206 M) 

















18Massachusetts
Life Sciences Center:
http://www.masslifesciences.com/programs/tax/
 









19Communication
with DOR, 2-2-2016 









20Governor’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 









21Commonwealth
Official Statement, General Obligation Bond, Consolidated Loan of 2016
Series A, March 3, 2016 (pg. A-20): http://www.massbondholder.com/sites/default/files/downloads/MACommonwealth01a-OS.pdf 









22Communication
with ANF, 2-2-2106 









23Communication
with ANF, 2-2-2106 










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