Analyzing the House Ways & Means Budget for FY 2016



The House Ways and Means budget proposal makes targeted investments in
some important areas including early education and care, affordable
housing, and opiate abuse prevention and treatment, and it rejects some
of the cuts proposed by the Governor, including the elimination of
Kindergarten Expansion Grants. In other areas, however, the proposal
introduces new cuts to important programs including workforce training
for low income parents and youth jobs and violence prevention efforts.



Like the Governor’s proposal, the HWM budget relies heavily
on temporary strategies. Both versions spend $300 million in capital
gains tax revenue that would have gone into the Rainy Day Fund under
current law. They also both count on $100 million from a tax amnesty
and $116 million from putting off paying some of our FY 2016 MassHealth
bills into FY 2017.



Ultimately, the shortcomings of this budget proposal mirror those of
the Governor’s and reflect ongoing challenges that our
Commonwealth has faced for more than a decade: after cutting the income
tax by over $3 billion dollars between 1998 and 2002 we have
experienced deep cuts to things that strengthen our communities and our
economy. Between 2001 and 2015, for instance, funding for higher
education has been cut 21 percent, environmental protection and
recreation (parks, swimming pools, rinks) has been cut 33 percent,
local aid has been cut 44 percent, early education and care has been
cut 24 percent and funding for public health has been cut 24 percent
(all numbers adjusted for inflation).



Early Education & Care



The House Ways and Means Committee proposal of $556.4 million for
programs and services administered by the Department of Early Education
and Care (EEC) contains two important differences from the
Governor’s proposal. Overall the proposal is $12.8 million
over FY 2015 current and $11.6 million more than the
Governor’s proposal.



The HWM budget provides $5.0 million for a Rate Reserve for
center
based providers. The Governor did not fund a rate reserve for these
workers. This rate reserve would allow providers to make small quality
improvements in their centers, including providing teachers with small
salary increases or improved benefits. Early education teachers in
Massachusetts earn around $26,000 per year on average – only
$2,300 more than the federal poverty level for a family of four.



The HWM budget provides $252.9 million for Income Eligible Child Care,
level with the Governor, but gives $5.0 million to the Income Eligible
Wait List
. The Governor’s proposal did not
provide funds for
the wait list. Overall this results in a slight increase over funding
in the FY 2015 current budget. Income Eligible Child Care provides a
subsidy for eligible low-income families, but underfunding has resulted
in a waitlist for a subsidy that numbered around 25,000 children in
March 2015. For families of kids on the waitlist who cannot find
affordable and stable care for their children, it makes it harder for
parents to succeed in the workplace. See Declines
in Work Supports for
Low-Income Parents
for more information about the long term
funding
decline in early education and care.


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The proposed appropriation for TANF
Related Child Care
of $121.4
million is level with the Governor and $10.0 million less than FY 2015.
This program provides child care for children of families served by or
transitioning from Transitional Aid to Families with Dependent Children
(TAFDC). The decrease is mostly due to a projected decrease in the
TAFDC caseload next year. The Department of Early Education and Care
(EEC) also projected a decrease in the caseload, but recommended an
appropriation of $127.8 million for this account. This proposal is $6.4
million less than the EEC recommendation. The number of families and
children receiving TAFDC has decreased significantly in the last few
years. For more detailed information on caseload levels for
transitional assistance accounts, see “Research and
Statistics” on the DTA
home page
.



Supportive Child Care
, which provides early education and
care
opportunities to children in the care of the Department of Children and
Families, the primary child welfare agency serving kids who have been
abused and neglected, received an increase of $20.5 million (26
percent) to $100.2 million – identical to the
Governor’s proposal. This recommendation falls $7.8 million
below EEC’s recommended appropriation of $108.0 million to
meet the needs of these children. In the past, budget language has
stated that all children with open DCF cases receive a subsidy.
However, many children have had to wait for a subsidy even though there
has not been an official wait list. This increase would help eliminate
waiting periods for most of these children. And for those who do have
to wait, an official wait list is required in the budget language
proposed by both the Governor and the HWM.



The HWM budget provides $8.1 million for Head Start services,
the same
amount as the Governor and the FY 2015 current budget. Head Start
services were cut by $1.0 million in February – money that
has not been restored by either the Governor or the HWM.



K-12 Education



Education plays a central role in developing our next generation of
engaged citizens and strengthening our state economy – see A
Well Educated Workforce is Key to State Prosperity
.



The House Ways and Means (HWM) budget proposes increasing Chapter 70
education aid
by $108.2 million, a 2.5 percent increase
over FY 2015.
The HWM proposal is $2.9 million over the Governor’s proposal
as it provides a minimum $25 per-student aid increase over FY 2015,
whereas the Governor proposed a $20 per-student minimum increase. For
more details on FY 2016 Chapter 70 funding, see the education section
of MassBudget’s Budget
Monitor for the Governor’s
proposal
.



The HWM budget reduces total support for K-12 grant programs, some of
which support students and districts facing the greatest challenges, by
a combined $46.4 million compared to what was planned at the beginning
of FY 2015. This proposal is $82.7 million (12 percent) below 2001
levels, adjusted for inflation. For more detail, please see the table
below.


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The HWM budget does not include a proposal by the Governor to
consolidate a subset of 11 of these grants that support students in
academically struggling schools into a single Partnership Schools
Network
account overseen by the Department of Elementary
and Secondary
Education. However, the HWM budget funds these programs at $16.2
million, $2.8 million below current levels, and $1.3 million below the
Governor’s proposal. For more detail, please see the table
below.


image03



The HWM budget does not include two new education programs that were
included in the Governor’s budget. The first, Educator
Evaluation System Implementation
, was proposed by the
Governor to
support teacher effectiveness initiatives. The second, School Safety
& Supports
, was proposed by the Governor to help
districts and
schools administer safety initiatives, some of which began under the
School
Safety and Security Task Force
in FY 2015.




  • A $1.8 million cut (64
    percent) to School to Career Connecting
    Activities
    which could limit
    the ability of teens to find employment. Since this program includes a
    required 2:1 match from private sector employers, this cut is likely to
    reduce business investment in youth jobs as well.

  • A $1.5 million cut (60
    percent) to Programs for
    English Language Learners
    in Gateway Cities.
    This program supports English-learning teens and young adults, who need
    extra support to become proficient in English and succeed in school. A
    mid-year cut in February 2015 had previously eliminated these services
    for the summer of 2015.

  • Level-funding Kindergarten
    Expansion Grants
    at $18.6 million. These grants
    were funded at $23.9
    million in the original FY 2015 budget, but were reduced to $18.6
    million through a mid-year cut. The HWM budget contrasts with the
    Governor’s proposal to eliminate these grant opportunities to
    plan and support full-day Kindergarten.

  • A $13.7 million cut (20
    percent) to Regional
    School Transportation
    from the initial FY 2015
    budget. However, the HWM proposal of $56.5 million is $5.0 million
    higher than current levels.

  • A $1.2 million (4 percent) cut
    to Adult Basic Education
    from the initial FY 2015 budget.



The HWM budget does include some increases to K-12 programs,
including:



  • Homeless Student
    Transportation
    , which would be increased by $1.0
    million (14 percent)
    over the initial FY 2015 budget.

  • Special Education Circuit
    Breaker Reimbursements
    which would be increased
    by $4.1 million (2
    percent) compared to the original FY 2015 budget, $8.3 million above
    current levels.

  • YouthBuild Grants,
    which
    supports at-risk low-income youth in gaining labor skills, completing
    high school, and engaging in community service, would be increased by
    $300,000 (15 percent) over the original FY 2015 budget.


Higher Education



The House Ways and Means (HWM) budget proposal for FY 2016
does not
make significant new investments in public higher education. Higher
education helps young people and adults in Massachusetts gain the
knowledge and skills to succeed in a competitive global economy. State
universities and colleges educate many of our residents who contribute
to our state economy over the long term.  



The HWM budget proposal for FY 2016 provides roughly the same
amount of
funding for higher education as last year, $1.19 billion. This amount
is $2.2 million over the original FY 2015 budget.  The HWM
proposal is $306.1 million (20 percent) below 2001 levels (adjusted for
inflation). This long-term funding reduction is in part a result of
income tax cuts implemented by the early 2000’s that continue
to cost the state over $3 billion a year.


image04



p>The HWM proposal for UMass, state universities, and
community colleges,
is very close to what was initially budgeted for FY 2015 before each
received mid-year cuts. Appropriations to each of the three campus
types are detailed in the table below. These totals include three types
of adjustments that help facilitate more accurate year-to-year
comparisons:



  • Tuition
    Retention
    : Starting in
    FY 2012, all campuses began retaining tuition payments from
    out-of-state students, rather than remitting that revenue back to the
    state. MassBudget adds in an estimate of these payments for FY 2012 to
    the present, allowing for more accurate year-to-year comparisons.

  • Collective
    Bargaining and
    Other Campus Specific Programs
    . MassBudget also adds
    collective
    bargaining accounts and other programs located at particular campus to
    their respective campus totals.

  • FY 2015
    Mid-Year Cuts
    . As part
    of mid-year budget cuts that were enacted in February 2015, campuses
    were required to remit additional campus-generated revenue back to the
    state. This is tantamount to a cut in state funding and MassBudget
    makes an adjustment to FY 2015 current levels to reflect this.


image05



Much like the Governor’s proposal, the HWM proposal
increases
the main line items of the campuses by roughly 4 percent on average.
This increase in support is offset by eliminating or significantly
reducing several workforce development programs and other grants that
support college students across the Commonwealth. These cuts include:




In the HWM proposal, the State
Scholarship Program
, which
helps make
higher education more affordable, is increased by $1.0 million or 1
percent, over last year. However, state support for these scholarships
is down $41.5 million (31 percent) from 2001, adjusted for inflation.


Environment &
Recreation



The state budget funds programs that keep our air and water
clean,
maintain fish and wildlife habitats and staff parks, beaches, pools and
other recreation facilities. The House Ways and Means (HWM) Committee
proposes spending $204.0 million on Environment and Recreation
Programs,  $6.6 million over FY 2015 current spending and $1.2
million more that the Governor’s FY 2016 proposal. 
Even with this increase, funding for these programs has fallen 31
percent in inflation-adjusted dollars since FY 2001 after the state
implemented more than $3 billion in cuts to the income tax.



Some highlights of the HWM’s budget proposal for
these
programs include:



  • $29.5 million for the Department
    of Environmental Protection
    (DEP) which, among other
    responsibilities, works to make sure our air, water and land are kept
    clean.  This is an increase of $460,400 above FY 2015 current
    spending and $1.6 million more than the amount recommended by the
    Governor.   Funding for DEP has been cut by more than
    30 percent since FY 2001 in inflation adjusted dollars.

  • Zeroes out funding for climate
    change adaptation
    and preparedness which was created and
    received $1
    million in the FY 2015 General Appropriations Act (GAA). The Governor
    recommended providing $300,000 for this program in his budget.
     

  • The HWM Committee budget does
    not propose funding the State
    Climatologist
    , a new position included in
    the FY 2015 GAA with $200,000 in funding.  Earlier in FY 2015,
    when revenues did not meet projections, both Governors Patrick and
    Baker made emergency 9C cuts that eliminated the program.

  • $15.8 million for beaches,
    pools and state employees who work at these facilities

    The
    total includes close to $1 million in new funding for maintenance of
    beaches in the Boston metro area. This amount is almost $1 million more
    than the Governor’s proposal.

  • $57.3 million for
    state parks
    and parkways
    overseen by the Department of Conservation
    and Recreation
    (DCR).  The state budget funds state parks through two
    accounts. One provides funding for state parks and other recreation
    facilities. The HWM Committee budget, much like the
    Governor’s, proposes reducing this account to $3 million
    below FY 2015 GAA levels.  The parks also receive funding
    through an account that allows DCR to retain a certain amount of the
    funding it collects through parking and access fees. The HWM Committee
    budget, like the Governor’s, proposes a $1.9 million increase
    above the FY 2015 budget to $16.0 million.  In early 2015,
    before the current Governor took office, DCR increased fees at some of
    its facilities. This will allow the Department to retain additional
    revenue to pay for more staff and improve maintenance of state parks
    and other recreational facilities. 1


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MassHealth (Medicaid)
& Health Reform



The House Ways and Means (HWM) budget for MassHealth and
health reform
programs does not differ significantly from the budget proposed by the
Governor, in that both of these proposals find savings to help balance
the budget without making changes to eligibility or significant changes
to benefits. The HWM proposal includes $800 million in savings once
reduced federal reimbursement is taken into account, while the Governor
stated that his budget proposal reflected $761 million in savings.



MassHealth is the single largest program in the state budget;
it helps
pay for health insurance to close to 1.7 million people in the
Commonwealth (approximately 1 in 4); and it also is one of the largest
sources of revenue for the budget, bringing in close to $8 billion each
year (see “Understanding
the Actual Cost of MassHealth to the
State
.”) The program is funded jointly by the state
and
federal governments, with federal reimbursements covering half of the
costs of MassHealth spending for much of spending, and in certain
instances significantly more than half of costs.



The biggest cost-reduction in the FY 2016 MassHealth budget
first
proposed by the Governor and matched by HWM comes from $456.8 million
in what is referred to as “cash management.” This
is a strategy that has been used in the MassHealth program over the
past decade that involves pushing program payments from one fiscal year
into the next.



Both the Governor and HWM propose savings by being as
efficient as
possible in trimming program membership, and implementing several other
operational efficiencies. One of the strategies to reduce program costs
is to ensure that the state steps up its efforts to pare down the
MassHealth rolls as quickly as possible when people become ineligible
for the program (such as when they have access to other insurance or
when they no longer meet the financial eligibility for the various
MassHealth programs.) This eligibility review, known as
“re-determination,” is required by the federal
government. Both HWM and the Governor anticipate that the
re-determinations, along with better more regular data matching to
update member eligibility information and improved use of the Premium
Assistance program could save MassHealth close to $418.9 million, or
$209.5 million in net savings. Both the Governor and HWM include $6
million for administrative supports to implement these procedures.
Re-determinations are supposed to happen annually, but had been put on
hold during the roll-out of the Affordable Care Act enrollment website.
During this period, people were enrolling in MassHealth, but less
likely to be un-enrolling. The expectation built into these savings
estimates is that MassHealth is still providing health insurance to
some percentage of its membership who are no longer eligible.



Like in the Governor’s proposal, HWM includes $137
million to
cover services for approximately 10,000 children with autism. This
benefit would bring MassHealth in line with other health insurance
providers required to cover this benefit by a recently-passed state
law, and was a priority recommendation from the recent Autism
Commission.



Like the Governor, HWM includes $16 million for a full
year’s
coverage for adult dentures and fillings for all teeth. HWM does not
follow the Governor’s proposal to eliminate chiropractic
services as a covered benefit. The Governor estimated that this cut
would have saved $600,000 from the budget.



HWM adopts the Governor’s proposal to continue the
proposed
consolidation of various functions under the Executive Office of Health
and Human Services. The Governor has already brought in the Secretary
of Health and Human Services to oversee the Health Insurance Connector,
and both HWM and the Governor recommend bringing the Center for Health
Information and Analysis under this Secretariat as well (Section 21).



HWM also expands and clarifies MassHealth coverage for
substance abuse
treatment (Section 40), reaffirming that no pre-authorization is
required for substance abuse treatment, and specifies that 
approved medications for alcohol or opioid dependence would be covered
by MassHealth, including 24 hour post-acute detoxification, relapse
prevention, and aftercare services.



ConnectorCare



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
provides
benefits similar to those previously provided by Commonwealth Care.
This program 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 (in
contradiction to the “individual mandate”) and
similarly from an assessment on employers. Because of the new
availability of federal revenue to pay for some of health care costs
previously borne by the state, the FY 2016 budget will transfer $110
million from this trust into the General Fund to help balance the
budget.


Mental Health



The House Ways and Means (HWM) budget for mental health is
$15.6
million or 2 percent higher than the Governor’s recommended
budget and just about even with what FY 2015 funding was before
mid-year budget cuts. Adult mental health services were cut by $13.8
million mid-year in FY 2015, and while the Governor’s budget
maintained that reduced level, HWM restores that funding.



The Department of Mental Health 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, and the
HWM budget restores some of the funding for the community-based
services cut in the Governor’s proposal.



HWM includes a total of $436.1 million for a variety of adult
mental
health services. However, the department estimated that it would need
$443.2 million to maintain current adult mental health services.



Within the total for these services, HWM restores $1.7 million
that the
Governor cut from Recovery Learning Centers, which would have resulted
in a 50 percent reduction for the state’s six regional
centers. Recovery Learning Centers provide a wide variety of
peer-to-peer supports including support groups, employment supports,
health and wellness programs, and assistance with accessing benefits
and services. HWM also brings funding for community placements up to
$14.9 million from the Governor’s recommendation of $13.2
million, and includes $4.0 million for expansion of community-based
placements for people in continuing care facilities who are ready for
discharge.


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(Note that certain line items have been adjusted in order to
provide
better year-to-year comparisons. These adjustments are neither cuts nor
increases but simply shifts of funding from one line item to another.)



HWM funds children’s mental health services at a
total of
$86.4 million, compared to the Governor’s proposal which
funded children’s mental health at the FY 2015 current level
of $80.4 million. HWM fully restores $6.0 million in funding cut by the
Governor from the Individual Family Flexible Supports. Neither HWM nor
the Governor includes approximately $1.6 million for a Family Partner
Pilot project, but both HWM and the Governor include $3.1 million for
the Massachusetts Child Psychiatry Access Project (MCPAP).



HWM funds state psychiatric hospitals at $192.0 million. This
funding
will support 671 inpatient beds throughout the Commonwealth, the same
as the Governor’s recommendation, and is a 5 percent increase
over FY 2015 current levels, but $2.3 million less than the amount that
the department anticipates that it needs to maintain current services.


Public Health



Funding for public health services in the House Ways and Means
(HWM)
budget proposal is not dramatically different from the
Governor’s proposal, although there are a few areas where
funding differs. In particular, HWM directs less funding to the various
grant programs targeted to reducing youth violence, and recommends more
funding for HIV prevention and treatment.



There are several line items within the state budget that
support
programming for youth engagement, including funding for afterschool
programming at community centers such as YMCAs and Boys and Girls
Clubs. Together, HWM recommends $9.1 million, $3.9 million less than
the Governor’s recommendation. Current funding for FY 2015 is
$12.2 million, so the HWM proposal represents a 25 percent reduction in
funding.



Funding for HIV prevention and treatment receives a total of
$39.4
million in the HWM budget, a $2.0 million increase over the
Governor’s proposal, but a slight cut from FY 2015 current
totals.



To support the provision of substance abuse treatment and
services
within the budget, HWM directs a total of $112.1 million, a $1.3
million increase in funding compared to the Governor’s
proposal, and almost identical to FY 2015 current totals. The primary
difference between the two FY 2016 proposals is in the allocation of
funds. The Governor’s budget had appropriated $10 million to
the Substance Abuse Trust Fund (partially-funded by tax amnesty funds),
and while HWM does not put funding in the trust, HWM instead allocates
$6.6 million more than the Governor to the Bureau of Substance Abuse
Services and $3.6 million more than the Governor to transitional
services for people in recovery.



Within this funding total, HWM recommends supporting 75 new
short-term
placements (“beds”) for people moving from acute
substance abuse treatment to longer-term residential rehabilitation
supports. These services would cost approximately $3.6 million. The HWM
total also includes $2.2 million for 75 additional residential recovery
beds, and $2.5 million for an extended release naltrexone
(“Vivitrol”) pilot program and $250,000 for a
public awareness campaign about Narcan and opioid antagonists.



HWM also creates a new reserve within the Health Policy
Commission that
would provide $500,000 to establish a pilot program for
substance-exposed newborns, and $100,000 to develop training statewide
to expand the capacity of primary care providers to prescribe Narcan in
order to prevent deaths from opioid overdose.



Moreover, the HWM budget includes language (Section 37)
requiring that
in areas where there are relatively more instances of people overdosing
on opiates, pharmacies maintain stocks of naloxone rescue kits or
opioid antagonist medications.



HWM also provides $2.4 million more than the Governor to the
public
health hospitals, for a total of $189.7 million. This is $8.7 million
more than FY 2015 current funding, and supports the maintenance of
current operations at Lemuel Shattuck Hospital, the Mass. Hospital
School, and Tewksbury Hospital.



HWM does not include funding for the Governor’s
public health
initiative for a small ($300,000) set-aside to cover women’s
preventive health services for individuals who have employer-sponsored
health insurance offered by businesses that have opted out of covering
certain women’s preventive health (for example
contraceptives.) Other important preventive care or population health
programs also do not see new investment. Smoking prevention programs
receive $3.9 million, same as in the Governor’s proposal and
as in FY 2015. The state’s award-winning anti-smoking
programs have been cut 94 percent since 2001 and 73 percent since
before the recession in 2009. Other prevention and wellness programs
receive $38.2 million – essentially the same as in the
Governor’s budget and also level with FY 2015 funding. It is
important to remember that even though inflation is not currently very
high, program costs tend to increase each year, and level funding from
year to year is – in fact – a cut in available
funding.


State Employee Health
Insurance



The House Ways and Means (HWM) budget proposal does not follow
the
Governor’s recommendation to have current state employees pay
a larger share of their health insurance coverage. The Commonwealth is
one of the largest employers in the Commonwealth and provides health
insurance to thousands of current and retired employees. The costs of
this coverage are shared, with the state paying for a portion of the
coverage and employees (or retirees) paying a portion. Although the
state’s Group Insurance Commission (that oversees the
administration of this health insurance) has historically been an
effective and aggressive negotiator with health insurance companies so
as to keep health insurance costs for the Commonwealth as low as
possible, like all employers, the Commonwealth has been confronting
rising health care costs over the years.



The Governor’s budget proposed increasing the share
of the
costs paid by the employee from 20 percent of the premium to 25
percent, an increase for longer-term employees. HWM does not include
this policy change, and the HWM budget total for employee premiums
($1.05 billion with adjustments) is $28.2 million higher than the
Governor’s totals, reflecting the savings that the Governor
had anticipated from this change.



Compared to the Governor’s proposal, HWM cuts
administration
at the Group Insurance Commission (GIC) to $4.5 million by $213,000.
This funding was proposed by the Administration to support the costs of
switching to a new system for prescription drug benefits that the GIC
expects would create cost savings and efficiencies once it is
implemented.



Funding for the Group Insurance Commission had been running at
a
deficit for all of FY 2015, as the funding appropriated during FY 2015
never matched amount the agency needed to meet its anticipated costs
for the year. Since the Governor’s budget release, the
Legislature appropriated an additional $190.8 million to cover FY 2015
state employee health insurance costs.



(In order to allow for more accurate year-to-year comparisons,
MassBudget adjusts the State Employee Health Insurance budget totals by
excluding amounts associated with municipal and retired teacher
participation in the Group Insurance Commission. This spending is
fully-funded by revenues from the municipalities, and therefore are not
included in our analysis of the state budget.)


Pensions &
Retirement



The House Ways and Means (HWM) FY 2016 budget proposal
allocates $1.97
billion to the State
Pension Fund,
in line with the revised funding
schedule adopted by the Legislature in January 2014. This represents an
increase of $179 million, or 10 percent, over FY 2015.  



The HWM budget incorporates projected savings from an early
retirement
incentive program (ERIP) for state workers, initially proposed by the
Governor. Because their proposed enrollment window is pushed back by
one month, the House bill has slightly lower savings estimates from
what was in the Governor’s budget; the HWM proposal estimates
a net savings of $172.9 million ($310.1 million in savings offset by
$137.2 million in new costs), whereas the Governor estimated a net
savings of $177.8 million.



Savings from early retirement are achieved by limiting the
re-hiring of
positions to 20 percent of the salaries of former employees. It is
important to note that achieving these savings over the long-term
depends on the ability of government agencies to perform their
essential functions at much lower staffing levels. If they are unable
to deliver the same level and quality of services while spending only
20 percent of the salaries of the newly retired employees, then
services may get cut or the state may override the 20 percent cap on
salary costs.



More recently, on April 15, 2015, the Senate passed an ERIP
plan with
several differences from the House and Governor’s plans,
including: authorizing one-time incentive payments to encourage early
retirements from employees who have already reached their maximum
pension level, capping the total number of early retirees at 4,500, and
allowing agencies to rehire retired employees for up to 90 days if
their institutional knowledge has not been fully transferred over to
existing employees. The House and Senate bills now need to be
reconciled by a conference committee.



Under each ERIP proposal, some state workers would be eligible
to
receive incentives to retire early, including gaining up to five years
of additional service to count towards their pensions. Early
retirements would be limited to workers in non-public safety roles at
executive branch agencies who have over 20 years of service or who have
reached 55 years of age.


Housing



Our state budget provides affordable housing assistance
including
vouchers to help low-income renters pay for housing and shelter for
low-income families and individuals who are homeless. The House Ways
and Means (HWM) Committee budget for Fiscal Year (FY) 2016 proposes
$428.1 million for housing programs which is $2.2 million above the
Governor’s proposal and is $6.4 million below the amount the
state expects to spend in the current fiscal year.



Since the onset of the Great Recession when many low-income
parents
lost their jobs and housing, the number of homeless families living in
state-supported shelters has increased. By March 2015, over 4,500
low-income homeless families are living in shelters.2Many of
these families are living in hotels and motels because the family
shelters are full. Often hotels and motels do not have adequate
facilities, like kitchens, and are far from public transportation and
other services.



The HWM Committee recommends providing the Emergency
Assistance (EA)

program, which provides shelter to homeless families who meet certain
eligibility requirements, with $154.9 million. This amount, which is
identical to the Governor’s FY 2016 proposal, is almost $37
million less than FY 2015 current spending.  The HWM Committee
budget for EA does not include the Governor’s proposal to
prevent families who are couch surfing or living in unhealthy housing
from moving into shelters.



Both the HWM and Governor’s proposals increase
funding for
supports to help low-income to stay out of shelter and remain in more
permanent housing. Both assume that these supports will allow the state
to reduce funding for EA.  Previous budgets have tried similar
approaches and have reduced funding for EA in anticipation of reduced
need for shelter. But over the course of each year, the need for
shelter has exceeded the amount provided in the budget and the
Legislature has had to provide supplemental funding.  



In his budget, the Governor recommended providing $20 million
to create
a new account within the Executive Office of Health and Human Services
(EOHHS) to provide short-term, tailored assistance to help individual
families stay in housing and avoid having to move into EA shelters.
While the HWM budget does direct EOHHS to work with the Department of
Housing and Community Development (DHCD) in helping homeless families
it does not create a separate account proposed in the
Governor’s budget.  Instead it increases funding for
several existing programs most notably the Massachusetts Rental Voucher
Program (MRVP)
.



The HWM Committee recommends increasing funding for MRVP by
$18.7
million over the FY 2015 current budget and $7.5 million above the
Governor’s FY 2016 proposal to $82.9 million. (Please note
that this total does not include the transfer of up to $8 million of FY
2015 funding for MRVP into FY 2016 as discussed below.) In the last
several years, recognizing the importance of helping low-income
homeless families to secure housing, Massachusetts has increased
funding for MRVP to create more vouchers and until FY 2015 targeted
some of the vouchers to families living in shelters, particularly
hotels and motels.  The FY 2015 budget prohibited the state
from targeting new vouchers to help homeless families move out of
shelters. The new vouchers, instead, would go to households on the MRVP
waiting list. The HWM Committee budget for FY 2016 recommends
eliminating this restriction.  



In the language that directs how DHCD should spent MRVP fund,
the HWM
Committee budget transfers up to $8 million of unspent MRVP funds from
FY 2015 into FY 2016.  In supporting documents, the HWM
Committee notes that this funding will allow DHCD to issue more than
700  new mobile vouchers in FY 2016. It appears that this $8
million transfer is included in the $90.1 million for MRVP rather than
in addition to that appropriation.  Because this is a transfer
from one fiscal year to the next, rather than new funding, MassBudget
does not include this $8 million in its total for the HWM
Committee’s FY 2016 housing budget.  



The HWM Committee increases funding for several other programs
that
support families who are homeless or at risk of becoming homeless
including:



  • $31.1 million for the HomeBASE
    program an increase of $2.3 million above the current FY 2015 budget
    and $5 million above the amount requested in the Governor’s
    Budget.    Like the Governor’s
    budget, the HWM Committee increases the amount a family can receive
    from the current limit of $6,000 for one year to $8,000.

  • $12.0 million for Residential
    Assistance for Families in Transition
    (RAFT) an
    increase of $1 million
    above both the FY 2015 current budget and the Governor’s FY
    2016 budget proposal.  

  • Outside Section 57 of the HWM
    Committee budget recommends transferring $11.5 million into the Housing
    Preservation and Stability Trust Fund (HPSTF)
    . This trust
    provides DHCD
    with flexible funding to help support low-income families and
    individuals who are homeless or at risk of becoming homeless. 
    Of this $11.5 million, the HWM Committee budget directs the
    Comptroller’s Office to deposit $5 million and the
    Massachusetts Housing Finance Agency (MassHousing) will contribute the
    remaining $6.5 million. Because the $6.5 million comes from MassHousing
    rather than from the General Fund, MassBudget does not include this in
    its total for the HWM Committee’s FY 2016 housing budget.
     



In addition the HWM Committee budget provides:



  • $45.0 million for the two
    accounts that provide
    shelter and services to homeless individuals

    which is in line with the FY 2015 current budget and $2.4 million above
    the Governor’s request.    

  • $2.6 million for Housing
    Services and Counseling
    which helps homeowners remain
    housed. 
    This is a $500,000 increase above the current budget and almost $1
    million more than the Governor’s proposal.

  • $64.0 million in subsidies for
    public housing authorities
    which is a slight cut
    from FY 2015. Like the
    Governor, the HWM Committee proposes the addition of two new public
    housing accounts. One provides $800,000 to continue the implementation
    of the public housing reform law passed in 2014. And another $1.0
    million in planning grants that urban housing authorities can use
    develop plans for building new rental or owner housing.


Child Welfare



The Department of Children and Families (DCF) is the state’s
child welfare agency. DCF’s primary mission is protecting
children from abuse and neglect. Family preservation, though, is also
an important goal. Kids do better in life when their families receive
the services they need to be able to safely care for them. And although
many people think of foster care or group homes when they think of
children involved with DCF, around 80 percent of kids receiving
services from DCF live at home.



The number of children involved with DCF steadily increased between
1999 and 2009. Over the next 4 years, the number of children declined
significantly, but in 2013 the number of children began to increase
again. With the number of kids with open cases increasing, DCF needed
increased funding to support these kids. Over the course of FY 2015,
increased funding allowed DCF to hire more case workers and to support
more kids whether at home, in a relative’s home (also called
kinship care), in a foster home or a group facility. A recent
supplemental budget further increases funding for FY 2015 to $864.6
million allowing DCF to support kids through the remainder of the
current fiscal year. The supplement to the FY 2015 budget directed
$35.0 million to DCF – $27.4 million to supplement services for kids in
group homes (Group Care
Services
) and $7.6 million for services
primarily for kids outside of group homes (Services for Children and
Families
).



The House Ways and Means Committee proposes $898.5 million for child
welfare services, slightly below the governor, but $33.9 million (4
percent) more than FY 2015 current spending.



Programs that receive an increase over last year include:



  • Group Care
    Services
    receiving
    a $9.5 million (4 percent) increase to $253.3 million – $3.8 million
    more than the Governor. As the number of open cases has increased so
    has the number of children in group care. Even though the majority of
    children receive services at home, funding for group care continues to
    dwarf funding for family stabilization services. The HWM budget
    provides the same level of funding ($44.6 million) for Family Support
    and Stabilization as the Governor and FY 2015 current spending.

  • Services for
    Children and
    Families
    receiving an $8.3 million (3 percent) increase to
    $277.5
    million.

  • Social Workers for Case
    Management receiving a $16.0 million (9 percent) increase to $201.5
    million – $300,000 less than the Governor. This increase should allow
    DCF to maintain current staffing levels after adding a significant
    number of new caseworkers during FY 2015. Projected spending for case
    workers is actually $7.4 million more than the FY 2015 current
    appropriation levels. That difference may need to be accounted for
    before the end of the current fiscal year.

  • DCF
    Administration
    receiving a
    $3.8 million (5 percent) increase to $80.7 million – level
    with the Governor. The HWM proposal also includes language to track the
    fair hearing process although it does not require DCF to hold fair
    hearings in a timely. Fair hearings allow children and families to
    appeal a DCF decision regarding child placement or a finding of neglect
    or abuse. HWM also proposes tracking caseload levels and would require
    DCF to provide the legislature with documentation on the number of
    children in each kind of placement, including how many are in a group
    home and how many are with kin.


For more information about these child welfare programs, see
the
MassBudget Children’s Budget at
http://children.massbudget.org/child-welfare.



The Child Welfare Training Institute
, which provides
training to new
case workers, also receives an increase of $480,000 (23 percent) to
$2.6 million. Even with the significant increase in case workers last
year, the institute was level funded in FY 2015.



Family Resource Centers
, a combination of two accounts,
receives $7.4
million in the HWM budget. This is slightly below FY 2015 current
spending and $2.5 million less than the Governor’s proposal.
These centers connect families to needed public services. This funding
level will not allow new centers to be opened in communities around the
state.



The HWM proposal, as it has in past years, eliminates funding for
Regional Administration.
Regional Administration funds contracts with
nonprofit “lead agencies” that help coordinate
services. Proponents of lead agencies note the important coordination
function they fill between DCF social workers, families and other
professionals involved in a child’s case. Critics claim that lead
agencies duplicate work done in the past by social workers and that
funding should be spent on services.



Chapter 257, which standardizes rates according to the services
delivered by providers to make the system more efficient and fair will
continue to have an impact on this and future budget proposals for FY
2016. A recent court ruling
requires the state to fully implement
Chapter 257 rates by the beginning of FY 2016. The HWM budget provides
$30.0 million for Chapter 257 required rate increases. This increase is
spread across many programs, but we do not have an accounting of the
impact on individual programs. For more information on Chapter
257’s rate standardization paid to contracted human and
social service providers, see this Chapter
257 update
.


Elder Services



The House Ways and Means Committee (HWM) proposes a very small increase
to Elder Services programs at $2.4 million over current FY 2015
projected spending levels. This one percent increase is likely
insufficient for programs to keep up with the rising cost of providing
baseline services. The HWM proposal is similar to the
Governor’s, but with some notable differences, including
funding:



  • Elder Home
    Care Purchased
    Services
    at $103.6 million, or $3.1 million below
    projected FY 2015
    spending and the Governor’s proposal. This program also
    provides services that allow high-risk elders with multiple chronic
    illnesses to remain at home.

  • Elder
    Congregate Housing
    Program
    and the Elder
    Nutrition Program
    at $7.9 million, which
    represents a combined decrease of $1.5 million as compared to the
    Governor’s proposal and current levels. This funding cut
    could lead to a reduction of up to 140,000 home delivered meals.

  • Elder
    Enhanced Home Care
    Services
    at $70.3 million, or $5.6 million over projected
    FY 2015
    spending levels. This program allows elders who need a high level of
    services to remain at home, instead of moving into a nursing home. This
    increase would eliminate waiting lists prompted by mid-year cuts in FY
    2015 and allow seniors to age in place.

  • The Grants to
    Council on Aging

    at $11.2 million, an increase of $1.7 million over both the
    Governor’s budget and FY 2015 levels. Council on Aging
    facilities would use this increase to meet greater demand for services,
    particularly for their healthy aging and wellness programs,
    transportation, supportive day programs, and other efforts to link
    older adults to federal and state benefits.


Disability Services



Together through our state government, we support programs and services
for individuals with disabilities that promote well-being, inclusion
and meaningful participation in our local communities. These include
targeted training programs that help people participate more easily in
the workforce and community-based supports that assist people and their
families. In total, the House Way and Means (HWM) budget proposes
funding disability services at $1.84 billion, a $78.3 million increase
(4 percent) from current FY 2015 levels.



The bulk of this total increase – $35.8 million – is for
Community Residential Supports for the Developmentally Disabled, a 3
percent increase from current FY 2015 levels. This program supports
adults in various residential settings to live as comfortably and
independently as possible.



HWM proposes increases to workforce development programs for
individuals with disabilities, including:



  • Community Based Employment
    receives $3.0 million, a $2.0 million increase from current FY 2015
    levels. But this is $2.0 million lower than the Governor’s FY
    2016 proposal. This program provides funding to move individuals with
    disabilities from sheltered work to integrated work settings.

  • Community Day and Work
    Programs for the Developmentally Disabled

    receives $183.2 million, a
    $12.5 million increase (7 percent) from current FY 2015 levels. These
    programs offer a wide variety of group and individual supports, helping
    people with developmental disabilities build skills and find work.

  • Community
    Transportation
    Services
    receives $22.0 million, a $6.1 million increase
    (38 percent)
    from current FY 2015 levels. This is 16 percent higher than the
    Governor’s FY 2016 proposal. These services offer
    transportation assistance to individuals with disabilities from home to
    day employments services.



Other disability programs that receive increases or are new under the
HWM proposal include:



  • Autism
    Services
    , a new line
    item, receives $12.4 million for services to individuals with autistic
    spectrum disorders. Some of this funding supports programs which in the
    past have been funded in Respite Family Supports
    and Department of
    Developmental Disabilities Administration
    .

  • Respite Family Supports for
    the Developmentally Disabled receives $55.9 million. However, some
    additional funding for these supports is now in the Autism Services
    account above. Overall, this receives slightly more funding than in
    current FY 2015 levels. Respite Family Supports provides families with
    children who are disabled the support of specialized caregiving or
    other flexible community-based resources.

  • Turning 22 Services for the
    Developmentally Disabled
    is leveled funded and
    has been cut by 31
    percent in inflation-adjusted dollars since FY 2001. This provides
    services to young adults with disabilities who have graduated from
    special education programs during the transition year in which the
    young adult turns 22.



The HWM budget provides $30.0 million for Chapter 257 required rate
increases. Chapter 257 standardizes rates according to the services
delivered by providers to make the system more efficient and fair. As
such, this will continue to have an impact on this and future budget
proposals for FY 2016. A recent court ruling requires the state to
fully implement Chapter 257 rates by the beginning of FY 2016. The
$30.0 million increase is spread across many programs, but we do not
have an accounting of the impact on individual programs. For more
information on the rate standardization paid to contracted human and
social service providers, see this Chapter
257 update
.


Juvenile Justice



The Department of Youth Services (DYS) receives $179.8 million, $6.7
million (4 percent) more than FY 2015 current spending and $3.9 million
(2 percent) more than the Governor. The increase is relatively evenly
split with most programs receiving between a 3 and 6 percent increase
over FY 2015.



DYS Administration
receives $4.4 million, essentially
level with the
Governor and $259,000 (6 percent) more than FY 2015 current spending.
However, funding for administration is still 29 percent below the FY
2009 GAA budget.



The only program receiving funding that was noticeably different from
the Governor was Residential
Services for Committed Population
which
receives $120.2 million from HWM, $3.9 million (3 percent) more than
the Governor.


Transitional Assistance



For entitlement programs like transitional assistance, funding
levels
are significantly affected by anticipated caseload levels. The
“entitlement” part means that any qualified person
who applies must receive the service. Funding for these then is
directly tied to how many people qualify and apply. Caseload levels
have dropped significantly in the past few years, although they may be
dropping partially because of new administrative changes that are
making 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 DTA
home page
. The caseload for Transitional Assistance for
Families with
Dependent Children (TAFDC)
dropped from 52,659 in December
2012 to
46,546 in December 2013. That trend has continued with the caseload
dropping further to 38,114 in March 2015.



The FY 2015 GAA budget funded TAFDC
grants at $255.7 million. FY 2015
projected spending is $251.3 million. The Governor’s FY 2016
proposal provided $229.1 million, and the House Ways and Means
Committee proposal assumes a continuation of that trend providing
$222.2 million, 3 percent below the Governor and 11 percent less than
FY 2015 current spending. It is important to note that under this
program, grants given to qualified families have lost significant value
over time due to inflation. For a more in depth analysis of the grants
value, see TAFDC:
Declines in Support for Low-Income Children and
Families
. Instead of decreasing the appropriation, HWM could
have
proposed increasing the value of the grant to help these children and
families pay for basic necessities. The HWM proposal also could have
directed these funds to the Income Eligible Child Care subsidy so more
low-income working parents could find stable and affordable care for
their children allowing them to succeed in the workplace. The HWM
budget provides a very modest increase for Income Eligible care, only
slightly more than the Governor’s proposal. Even with the
small increase, around 25,000 kids will continue to wait for a subsidy
– a subsidy that would help these kids better prepare for
kindergarten, and help their parents stay in the workforce. For more
information on this subsidy, see the MassBudget Children’s
Budget.



For those families still receiving assistance, a clothing allowance of
$150 and a rent allowance of $40 were not included in budget language.
Both were included in the Governor’s proposal. The clothing
allowance is a one-time payment made in September to TAFDC recipients
to help pay for back-to-school clothing.



Cuts to employment and training programs over the last 15 years have
made it harder for parents receiving assistance to improve their
skills, and get and keep jobs that allow them to support their
families. The Employment
Services Program
, the primary education and
job training program for TAFDC clients received a boost in the FY 2015
budget to $11.8 million. The Governor’s proposal provided
virtually the same amount. However, the HWM Committee proposes slashing
funding for employment and training programs to $5 million, 58 percent
less than FY 2015 and 85 percent below the FY 2001 funding level. For a
more in depth analysis on funding for education and job training
programs, see Declines
in Work Supports for Low-Income Parents
. HWM
also proposes no funding for Pathways
to Self Sufficiency
, another
program offering job training to help TAFDC recipients get and keep
jobs. The Governor proposed $3.3 million for this program. This program
was funded at $11.0 million in FY 2015 GAA budget, but it received two
different 9C cuts during the year eliminating the program in FY 2015.



Emergency Aid to the Elderly, Disabled and Children (EAEDC)

receives
$81.0 million, $4.5 million below FY 2015 spending, but $2.1 million
more than the Governor. EAEDC is a cash assistance program for
individuals who are disabled, caring for someone who is disabled, 65 or
older, in a Mass. Rehab program, and children who are not able to get
TAFDC benefits.



Caseworker Salaries and Benefits
receives $70.8 million,
$5.6 million
(9 percent) more than FY 2015 current spending, but only $3.0 million
(4 percent) more than FY 2015 projected spending. Even with this
increase, the proposal does not project increasing the number of case
workers at DTA.



Department of Transitional Assistance Administration

receives $65.1
million, level with the Governor and $4.1 million more than FY 2015
current spending.


Economic Development



Together though state government, we support 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)
budget proposes reductions to these programs by $16.8 million from
current FY 2015 levels. This proposal represents an even deeper 60
percent decrease in inflation adjusted dollars since FY 2001, after the
state implemented more than $3 billion in cuts to the income tax.


image08


The HWM budget proposes decreases in funding to several key
programs in
workforce development as well as in tourism. These cuts are felt deeper
because of FY 2015 mid-year cuts.



  • One-Stop Career Centers
    receives $4.0 million, a 10 percent decrease from current FY 2015
    levels. One-Stop Career Centers were initially funded at $5.1 million
    in FY 2015 GAA, but were cut by $618,409 mid-year. These centers help
    job seekers improve their skills and navigate the job search process,
    and they help employers find new workers.

  • YouthWorks
    (formerly Summer
    Jobs Program for At-Risk Youth) receives $9.0 million, an 8 percent
    decrease from current FY 2015 levels. This is also 14 percent lower
    than the Governor’s proposal. YouthWorks was initially funded
    at $10.2 million in FY 2015 GAA, but was cut by $370,000 mid-year. This
    program provides summer, and some year-round, jobs to about 5,000
    low-income and at-risk youth living in targeted communities.

  • Gang Prevention Grant Program
    (Shannon Grants)
    receives $5.0 million, a 29
    percent decrease from
    current FY 2015 levels. This is also 29 percent lower than the
    Governor’s proposal. Shannon Grants were initially funded at
    $8.3 million in FY 2015 GAA, but were cut by $1.3 million mid-year. As
    part of a comprehensive youth violence prevention strategy led by law
    enforcement, this program provides funding for employment and training
    opportunities to youth across the Commonwealth.

  • Office of
    Travel and
    Tourism
    receives $6.2 million in funding, a 57 percent
    decrease from
    current FY 2015 levels. This office was initially funded at $18.2
    million in FY 2015 GAA, received additional appropriations of $785,000,
    but was subsequently cut by $4.8 million mid-year. Additionally, Local
    Tourist Councils Financial Assistance
    receives $4.5
    million in funding,
    a 10 percent decrease from current FY 2015 levels. This program was
    initially funded at $7.5 million in FY 2015 GAA, but was cut by $2.5
    million mid-year. But this is also $4.0 million higher than the
    Governor’s proposal. In total, the HWM proposal provides a
    $15.0 million decrease to these Commonwealth’s tourism
    programs from FY 2015 GAA levels.



The HWM budget does propose a few increases and funds a couple of new
programs within economic development.



  • Small
    Business Association
    Layoff Aversion Program
    receives $250,000, an $187,500
    increase from
    current FY 2015 levels. This program helps prevent business closures
    and employee layoffs in manufacturing companies through management and
    technical assistance from the Smaller Business Association of New
    England.

  • Small
    Business Technical
    Assistance Grants
    receives level funding of $2.0 million.
    The
    Governor’s FY 2016 proposal, by contrast, eliminated the
    grant program, which provides technical assistance and training to
    businesses with 20 employees or less.

  • Massachusetts
    Technology
    Collaborative for Technology and Innovation Entrepreneurs

    and Massachusetts
    Technology Collaborative Computer Science Education
    each
    receive $1.5 million. Both programs received mid-year appropriations
    during FY 2015, but were cut subsequently by the Baker Administration.
    These programs enable the Massachusetts Technology Collaborative to
    promote and establish a talent pipeline to technology start-ups and
    innovation companies, as well as computer science education in public
    schools.

  • Urban Agenda
    Economic
    Development Grants
    receives $2.0 million as a new grant
    program to
    assist entrepreneurs in urban communities to support jobs and workforce
    development and promote small businesses.

  • Community
    Compact Grant
    s
    receives $650,000 for a new incentive program for communities and
    municipalities that engage in the use of best practices as determined
    by the Community
    Compact Cabinet,
    created by the Baker Administration.


Local Aid



The House Ways and Means Committee (HWM) proposes a modest increase of
$34.0 million (3.6 percent) over FY 2015 for Unrestricted General
Government Aid (UGGA). This is equal to what the Governor proposed.
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 a range of vital
programs, such as general local aid, has been hindered by a series of
significant state-level tax cuts during the 1990’s and 2000’s combined
with the Great Recession. While over the past several years, funding
for general local aid has increased with or slightly above inflation,
it still remains 43 percent below FY 2001 levels, adjusted for
inflation.


image09



 


Some cities and towns receive other forms of local aid—for
example, payments in lieu of taxes to communities with state-owned land
that is not subject to local property taxes—but these
categories represent much smaller total amounts and only go to a subset
of qualifying cities and towns. Of note, the Municipal Regionalization
and Efficiencies Incentive Reserve that rewards cities and towns for
meeting selected benchmarks was decreased by $4.3 million in the HWM
proposal, a 47 percent decrease from FY 2015. The Governor’s
proposal similarly decreased this line item by 45 percent below FY 2015
levels.

Transportation



The most notable aspects of the House Ways and Means (HWM) budget as
regards Transportation are a set of provisions that would increase
scrutiny of the MBTA’s finances and that would remove
regulations requiring the MBTA to prove cost-savings before outsourcing
work to private contractors. According to documents accompanying
release of the HWM budget, an independent assessment (funded at
$250,000) of maintenance protocols at the MBTA would be conducted in
order to determine whether the T has the capacity to bring its
infrastructure into a state-of-good-repair. Another independent audit
(also funded at $250,000) would be conducted to clarify the details of
the T’s financial liabilities (including debt and pension
liabilities) and to make recommendations regarding same. Finally, the
HWM budget proposes a five-year moratorium for the MBTA on the
state’s Pacheco Law, a set of rules that requires public
agencies to establish that quality and cost benefits would be achieved
before outsourcing publically funded projects to private contractors.



The HWM budget also increases direct funding for the MBTA. While the FY
2015 GAA appropriated $136.6 million to the MBTA, Governor Baker later
reduced this amount to $122.6 million through mid-year 9C cuts. The HWM
FY 2016 budget, like the Governor’s, proposes increasing the
MBTA’s direct funding to $187 million. Whether in fact the
additional funds represent a true increase in funding for the MBTA is a
question among some transportation experts and advocates.



In either case, the recommended appropriation to this MBTA account
($187 million in FY 2016 under both the HWM and Governor’s
proposals) is only a relatively small part of the total funding
provided to the MBTA. In addition to the funding provided through this
specific line-item account, the MBTA also receives a portion of state
sales tax revenues, which in FY 2016 will total $985.2 million (a $14.6
million increase over FY 2015). Beyond state-provided funding, support
for the MBTA also comes from the communities the MBTA serves, as well
as from other sources.



Looking at transportation funding more generally, the HWM budget is
identical to that of the Governor. Both recommend an increase in
overall funding for transportation in FY 2016, relative to FY 2015
levels. In the FY 2015 GAA, all transportation accounts together
received $1.55 billion, an amount later reduced through 9C cuts to
$1.51 billion. For FY 2016, HWM and the Governor recommend total
funding of $1.63 billion, a 5 percent increase over the FY 2015 GAA and
an 8 percent increase over current FY 2015 (post-9C cuts) funding
levels.



While the Governor proposed establishing a “Weather
Resiliency Fund” in response to the significant operating
difficulties experienced by the MBTA and commuter rail system during
this winter’s heavy snowfalls, the HWM budget does not
include such a proposal.


Law & Public Safety



Overall, the House Ways and Means (HWM) FY 2016 budget funds Law
& Public Safety accounts at $2.60 billion, $58.1 million (2
percent) less than current FY 2015 levels and $28.2 million (1 percent)
less than the Governor has recommended. This modestly lower level of
HWM overall funding for Law & Public Safety accounts is driven
largely by lower funding for Private Counsel Compensation (legal
support for indigent defendants), an account that most often receives
additional funding during the course of the fiscal year. As such, it is
likely that the difference between HWM funding levels and that of the
Governor and FY 2015 funding will decline significantly or altogether
disappear during FY 2016. Similarly, several sheriffs’
departments receive significantly lower funding in HWM, though if past
patterns hold, some sheriffs’ departments may receive
supplemental funding during FY 2016.



At the subcategory level, the most notable element of the HWM budget is
the funding provided to the courts.  In combination, for the
major accounts that in whole or in part are used to fund judges and
clerks salaries, HWM proposes a modest increase of $4.1 million over FY
2015 GAA amounts. This increase represents a $12.2 million increase
over current FY 2015 funding and is $12.1 million more than proposed by
the Governor. Documents accompanying the release of the HWM budget
assert that this level of funding for the courts will prevent the
elimination of over 500 jobs throughout the trial court system, a round
of layoffs that the Chief Justice for the trial courts had
stated
would
be necessary under the Governor’s proposal. The reasons why
the Governor’s seemingly modest funding decrease (an overall
cut of 1-2 percent from current FY 2015 levels for the relevant
accounts) should produce such drastic results are more complex.



In 2013, the Legislature approved a series of phased increases to the
salaries of judges throughout the court system. Because court
clerks’ salaries are pegged, in General Law, at between 60
percent and 80 percent (depending on the type of clerk) of the salaries
of judges, the salaries of court clerks also increased as a result of
the Legislature’s action. Phased in over three years, the
final total annual cost of these combined salary increases was
estimated at $22.6 million.



In the FY 2014 budget, the first set of phased increases was fully paid
for through increased funding to the necessary court accounts. In FY
2015, the second phase of salary increases was paid for only in part,
with increased funding provided to the primary account supporting such
salary increases, but not to all affected court accounts. The third and
final increase will take place at the beginning of FY 16 and, as noted
above, the Governor’s budget cuts rather than increases the
most heavily impacted court accounts. Given that the salary increases
are mandated by law and thus must be implemented, in order to balance
the court budgets, other court functions (including non-judge and
non-clerk positions) would have to be cut more deeply than the
Governor’s 1-2 percent reductions would suggest.



Notably, the HWM proposal nevertheless appears to leave trial court
funding well short of the $22.6 million required to fully fund the
mandated salary increases.



Other noteworthy elements of the HWM’s budget as it pertains
to Law and Public Safety include the following:



  • A significant, combined
    increase of $4.6 million over FY 2015 GAA for various legal assistance
    accounts, including the Massachusetts Legal Assistance Corporation
    (MLAC). Funding for MLAC is increased by $2.0 million over FY 2015
    levels, to $17.0 million. MLAC provides legal assistance (including
    information, advice and representation) to low-income people with
    serious, non-criminal legal problems.

  • Most sheriffs’
    departments receive an increase of 2-3 percent over FY 2015 GAA funding
    levels

  • Most District
    Attorneys’ offices receive an increase of 1-2 percent over FY
    2015 GAA funding levels.

  • Increases of roughly 20-30
    percent for several special enforcement units, including the Gaming
    Enforcement Division, Litigation and Enhanced Recoveries, and Workers
    Compensation Fraud Investigation

  • Creation of salary reserve
    accounts to provide increases for assistant DAs and public
    defenders  (to improve staff retention)

  • An increase of $675,000 over
    FY 2015 GAA for the Office of the Chief Medical Examiner

  • Funding ($5.9 million) for
    training a new class of State Police

  • Revenue


    The House Ways and Mean (HWM) Fiscal Year (FY) 2016 budget,
    like that
    of the Governor, relies on a significant amount of temporary revenue,
    beyond the revenue available as part of the Consensus Revenue Estimate.
    Together, the additional one-time revenues included in the HWM budget
    total $726.3 million and they come from both tax and non-tax sources.
    (Note: We include the MassHealth cash management savings in this
    section because they free up revenue in FY 2016 and have a similar
    effect on the budget’s structural balance as does reliance on
    temporary revenue.)


    The HWM budget draws on a set of additional revenues
    identical to that
    of the Governor’s budget proposal. Few of these revenues can
    be described as ongoing (in other words, they are not derived from
    sources that will be replenished with new revenues beyond FY 2016).
    Instead, they primarily come from one-time or temporary sources.
    Temporary 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 2016 budget gap, see MassBudget’s
    FY 2016 Budget Preview
    ).


    image10


    The HWM revenue proposals, like that of the Governor,
    includes both tax
    ($546 million) and non-tax ($180.3 million) revenues, with the large
    majority (over 75 percent) of these revenues being one-time. 
    One of these sources of additional, one-time revenue included in the
    HWM budget – a tax amnesty program for previously non-filing
    individuals and businesses – was proposed originally by the
    Governor as part of a separate tax reform bill.  This tax
    reform bill accompanied and is integral to the Governor’s FY
    2016 budget bill. Also included in the Governor’s tax reform
    bill – which now sits before the Legislature – is a proposal
    that would raise the value of the state earned income tax credit (EITC)
    and pay for this increase by phasing out the state’s Film Tax
    Credit. In their FY 2016 budget, HWM does not address either the EITC
    or the Film Tax Credit proposals. Notably, the $100 million from
    “Large Tax Settlements”, while not part of the CRE
    (and thus considered “additional revenue”) is not
    actually new revenue, but rather revenue that Commonwealth generates
    annually, but which will be used in a different way than usual under
    the HWM and Governor’s proposals (see further discussion,
    below).


    Tax Revenue


    The starting point for every state budget is the Consensus
    Revenue
    Estimate (CRE). The Fiscal Year 2016 CRE figure agreed to by the
    Administration, the House and the Senate is $25.479 billion, an amount
    4.8 percent above DOR’s FY 2015 forecast of $24.312 billion.
    The FY 2016 CRE assumes another automatic reduction in the tax rate on
    personal income will occur half way through the fiscal year, dropping
    the rate from 5.15 percent to 5.10 percent. (For more detail on the
    effects of these automatic rate reductions, see MassBudget’s Automatic
    Income Tax Rate Cuts: FAQ
    .) The CRE likewise assumes
    collection of $1.387 billion in capital gains income taxes and, as
    prescribed by law, that $300 million of this will be deposited
    automatically into the Stabilization Fund. Like the Governor, HWM
    instead directs this $300 million to the General Fund to help balance
    their FY 2016 budget (see more discussion, below).


    Non-filer Tax Amnesty


    In the tax reform bill accompanying his FY 2016 budget, the
    Governor
    proposed instituting a tax amnesty program for people and business that
    have failed to file returns for tax years 2013 and prior. HWM adopts
    this proposal and, like the Governor, relies on $100 million in
    additional revenue from this source to balance its FY 2016
    budget.  While some of the particulars of the program would be
    defined later by DOR (including which tax types would be included and
    when the program period would start), documents accompanying the
    Governor’s budget suggest that this amnesty would be similar
    to one provided in 2002. The 2002 amnesty applied to a broad range of
    tax types and raised $176 million.


    Typically, tax amnesty programs are structured such that,
    during a
    limited period, taxpayers who have failed to file or have not paid the
    full amount of taxes due in years past are allowed to file and to pay
    their outstanding taxes without incurring penalties. Taxpayers are
    required to pay interest on the previously unpaid tax. Those taxpayers
    who already are the subject of a criminal investigation or prosecution
    related to their tax filings and/or payments are not allowed to
    participate in the program. The proposal additionally bars anyone who
    participates in this amnesty program from participating in any future
    amnesty during the next ten years.


    If enacted, this would be the third tax amnesty program
    offered in the
    Commonwealth in less than two years – most recently, a limited
    corporate tax amnesty went into effect in March of 2015 and will
    continue for 60 days, through mid-May. While tax amnesty programs can
    result in the collection of taxes that otherwise may have gone
    uncollected, if such programs are offered too regularly, they can
    become part of some filers’ approach to tax planning. This
    has the potential to negatively impact collections on an ongoing basis,
    as filers delay or avoid paying their taxes, anticipating they will
    have the opportunity to settle up at a later date with no added
    penalty. Documents accompanying the Governor’s budget,
    however, suggest the possibility that, by bringing non-filers into the
    system, future tax collections may increase as these newly compliant
    filers continue to file and pay taxes in future years.


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


    Under current law, for revenue derived from capital gains
    income taxes,
    any amount that exceeds approximately $1 billion annually must be
    deposited into the Stabilization Fund rather than being made available
    for budgetary appropriation. (The specific threshold amount for this
    deposit is adjusted annually to account for economic growth.) In its
    FY2016 budget, HMW (like the Governor) proposes removing this
    requirement for FY 2016. The FY 2016 Consensus Revenue Estimate assumes
    capital gains collections of $1.387 billion, while DOR has certified
    the Stabilization Fund threshold for capital gains deposits at $1.087
    billion. Accordingly, HWM relies on directing $300 million to the
    General Fund and away from the Stabilization Fund. While the use of
    these one-time revenues will help balance the FY 2016 budget, it will
    reduce the state’s reserves for future emergencies and will
    add to the structural gap heading into FY 2017.


    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 depositing these revenues into the state’s Stabilization
    Fund, as had been done in years prior. Under the new law, each year,
    the annual average of these type 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 2010 through FY14, annual
    collections from
    these excesses ranged from about $140 million to more than $400
    million, thus directing significant resources to the Stabilization Fund
    during these years. For FY 2015, the threshold was calculated at $263
    million and for FY2016 it likely will be a similar amount. Such
    collections in FY 2015 total $148 million to date (as of February
    2015). The HWM budget (like the Governor’s) relies,
    conservatively, on $100 million from this source.


    FAS 109


    The FAS 109 corporate tax break is a tax break that
    primarily affects
    about a dozen multi-state businesses. Delaying implementation of this
    tax break for another year (the tax break has been delayed on a
    one-year basis in prior budgets) would postpone the loss of an
    estimated $46 million in corporate income tax collections in FY 2016.
    While the details of this tax law change involve technical and complex
    interactions among a corporation’s records for tax purposes and its
    public financial accounting records, the FAS 109 provision, in essence,
    is an attempt to offset certain costs to publically-traded companies
    resulting from the 2008 combined reporting tax reform package.


    As part of that package, rule changes were enacted that
    increased the
    cost of some tax liabilities of some companies operating in the
    Commonwealth. In certain cases, these rule changes would have required
    changes to a company’s existing financial statements. The FAS 109 tax
    break would allow publically-traded companies to claim a new tax break
    that would offset the impact to their financial statements resulting
    from the effects of combined reporting on deferred tax liabilities.


    The Department of Revenue (DOR) estimated that this
    provision would
    cost the Commonwealth $535 million during the period in which it was
    originally scheduled to be in effect – tax benefits were to be
    distributed equally across seven years, 2012-2018 (see DOR
    report to
    Legislature
    ). DOR has estimated further that 88 percent (or
    $472
    million) of the total tax reductions associated with the FAS 109 tax
    break will accrue to just fourteen corporations. When this provision
    was enacted, the cost was unknown and a process was established that
    would allow an evaluation of the likely cost before the tax break would
    be implemented.


    Dept. of Revenue Tax Administration


    Among its other activities, the Department of Revenue,
    through its
    Office of Tax Administration, makes sure that taxpayers are paying
    taxes they legally owe to the state.  DOR hires auditors and
    collectors who identify taxes legally owed to the state that have not
    yet been paid and works with taxpayers to collect unpaid taxes.


    The HWM Committee’s FY 2016 budget proposes
    funding
    DOR’s tax activities at $120.8 million. While this amount is
    $5.1 million above current funding for these activities, and is $4
    million above the Governor’s FY 2016 request, it is still
    $1.3 million below the FY 2015 GAA. In FY 2015, as revenues fell short
    of the amount projected, Governors Patrick and Baker made a combined
    $6.4 million in emergency cuts to DOR’s Office of Tax
    Administration.


    DOR’s tax collection efforts are funded through
    two primary
    accounts including the Administrative Account (1201-0100) that pays the
    salaries of auditors and collectors, as well as support staff and
    lawyers, who work to make sure that DOR collects the taxes that are
    legally owed to the state but have not been paid. The Additional
    Auditors Retained Revenue account (1201-0130), which was created in FY
    2004, allows the DOR to retain a certain portion of the unpaid revenue
    it collects to help pay auditors’ salaries.


    image11


    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.3
    This
    means, on average, the DOR collects $800,000 in unpaid taxes per staff
    person who works on auditing and collection efforts. While most of the
    revenue is collected by the auditors and collectors, who bring in over
    $1 million in unpaid revenue each, they work with lawyers and support
    staff in their collection efforts.  


    Because the HWM Committee’s FY 2016 reduction of
    $1.3 million
    for DOR is significantly less than the Governor’s recommended
    reduction, this cut may not harm DOR’s ability to collect
    taxes legally owed to the state.  The Office could absorb this
    cut by reducing services such as answering taxpayers’
    questions or by not providing refunds in a timely manner.


    It is worth noting that the Legislature’s early
    retirement
    proposal could cause the loss of additional collectors and auditors
    resulting in the loss of millions of dollars in additional revenue owed
    to the state. Over 50 percent of DOR staff are eligible to take early
    retirement under the proposal pending in the Legislature. (Please see
    the section “Pensions and Retirement” for a full
    discussion of the early retirement proposals.) In addition to
    immediately reducing the amount of revenue recovered through audits,
    cuts in auditing and collection activities are also likely to lead to
    long term reductions in revenue if public awareness of the lack of
    enforcement encourages greater use of complex tax evasion schemes.


    Non-Tax Revenue


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


    HWM notes that they do not raise fees to balance the budget,
    but there
    are several non-tax revenue initiatives in place. For example, like the
    Governor, HWM proposes selling the Sullivan Court House in East
    Cambridge, and anticipates this will bring in approximately $30
    million. HWM also notably relies on $105 million in ongoing revenue
    from slot parlors, about $20 million more than included in the
    Governor’s budget.


    Budgets often rely on funds from off-budget trusts. Both HWM
    and the
    Governor take $110 million from the Commonwealth Care Trust Fund to
    help balance the budget, and transfer $6.9 million from the Community
    First Trust to help support expanded autism services. This second
    transfer is in fact a shift of existing funding, rather than a one-time
    use of off-budget trust funding.


    The state has adopted a schedule to move towards full
    funding of health
    and other post-employment benefits (“OPEB”) for
    retirees. In Fiscal Year 2012, the state decided to gradually dedicate
    an increasing share of the Master Tobacco Settlement agreement funds
    awarded to the state to the State Retiree Benefits Trust to fund this
    liability. In FY 2015, this transfer was not made, and these settlement
    funds were directed back into the General Fund in order to help balance
    the budget. In FY 2016, the amount transferred would be approximately
    $109 million. Both HWM and the Governor in FY 2016 suspend this
    required transfer. Whereas the Governor proposed an appropriation of
    $84.6 million to make up a portion of this funding, HWM instead follows
    the plan for FY 2015: a portion would come from unexpended debt service
    payment appropriations, and if that is insufficient there would be a
    transfer of revenue from the General Fund. In both instances this
    transfer is approximately $24.3 million less than the statutorily
    required amount, and is a one-time savings.


    HWM and the Governor also “save” money
    in FY 2016
    by delaying until FY 2017 $116 million in FY 2016 MassHealth payments.
    This cash management strategy is in addition to approximately $340
    million in cash management (payment delays) carried forward from
    previous budget years.


    image12


    image13












    2
    It is also worth noting that since the late 1980s as the number of
    housing vouchers has fallen from a high of 20,000 to less than half
    that today, state funding for family shelters has steadily increased.
    Please see MassBudget’s Shelter and Housing for Homeless
    Families
    :
    http://www.massbudget.org/report_window.php?loc=Shelter%20and%20Housing%20for%20Homeless%20Families.html


    3
    Letter from DOR Commissioner Amy Pitter to the State Senate from April
    2013:
    http://massbudget.org/reports/pdf/SWM_FY2014_Impact_letter-04-24-2013.pdf




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