Thursday, January 28, 2010

Appropriation Subcommittee

HHS Appropriation Subcommittee 1/27/10

The Health and Human Services Appropriation Subcommittee met on 1/27/10. In the meeting they briefly discussed the Base Budget bills that will be submitted in both the House and Senate. There were a couple of changes that were recognized and added to the Base Budget priority list for the subcommittee. The committee added 3 items to the list for the Department of Health. The 3 items are related to the FY2011 budget recommendations listed last on the following link.
FY 2011 Base Budget Recommendations

The committee was also presented with the following reports that were specific to the Department of Health.

Health Care Financing
SB 87 Follow Up
Federal Disallowance
Children’s Health Insurance Program
Medicaid Mandatory Services
Medicaid Optional Services
Medicaid Providers: A Snapshot
UPEA is committed to tracking the State Budget and will continue to provide critical updates as they are received.

Health and Human Services Appropriations Subcommittee

The Health and Human Services Appropriations Subcommittee met to discuss the FY10 budget on 20 January, 2010. The Legislative Analysts Office put forward their proposals, using the 3% cut that the Departments of Health and Human Services have already implemented in accordance with Governor Herbert’s Executive Order. The recommendations that Legislative staff put forward can be found online, including the “Reductions Already Made”, “Base Budget Recommendations – Staff Proposal”, and “Optional Reductions”.

Legislative staff is proposing that DHS extend the hiring freeze to save more money, target all programs to take a 0.75% budget reduction – so as to spread the cuts equally across the board, and tap into the Disabilities Trust Fund to make up the $10 million reduction that is needed to amount to the required 4%. Representative Powell, suggested using more money from the Disability Trust Fund to remove DSPD services from the 0.75% cut – keeping their funding in tact. The committee agreed to those changes and removed DSPD from the backfill prioritization list.

The Analysts Office is recommending cuts that the Department of Health agrees with. However, prioritization was the difference in the recommendations given. Dr. Sundwall indicated that the reorganization is a large contributor to the savings found in DOH. He also stated that the Medicaid Restricted Fund account may be a reasonable option to plug the gaps that are found in the FY2010 budget, as the committee is requesting cutting one-time funds. Despite the recommendations made by Dr. Sundwall, the HHS Appropriations Committee decided to implement the recommendations made by the Legislative Analysts office.

The overwhelming hope of the committee was that the Executive Appropriations Committee would backfill many of the recommended reductions to the departments, rather than having to rely on such drastic cuts to critical programs and services.

Tuesday, January 26, 2010

Very Important Links

Here are links to the retirement bills and links to the committees that should be hearing the bills:

Retirement Eligibility Modifications

Post-Retirement Employment Amendments

Supplemental Benefit Amendments for Non-Contributory Public Employees

Senate Retirement and Independent Entities Committee

House Retirement and Independent Entities Committee

Saturday, January 16, 2010

Executive Appropriations Subcommittee Reports

The Department of Natural Resources and the Department of Agriculture introduced their budget proposal to the legislature to meet the 4% cut. Agriculture will use attrition and current expense reductions to meet the 4%. Natural Resources is having employees do a one day furlough and will use restricted funds for the rest of the cuts. The information below has a detailed outline of what the two departments are doing to meet the 4%.

Natural Resources ($2,115,000)
Ag ‐ Current Expense Reductions ($114,600)
Ag ‐ Replacement with Dedicated Credits ($135,000)
Ag ‐ Retirements ($196,500)
Ag ‐ State Fair Reductions ($27,000)
Ag ‐ Travel Reductions ($50,000)
DNR ‐ Admin One Day Furlough ($8,100)
DNR ‐ DWR One Day Furlough ($32,900)
DNR ‐ FFSL One Day Furlough ($8,700)
DNR ‐ FFSL Replacement with Restricted Funds ($1,456,800)
DNR ‐ OGM One Day Furlough ($5,600)
DNR ‐ Parks One Day Furlough ($26,500)
DNR ‐ UGS One Day Furlough ($10,600)
DNR ‐ Water Resources One Day Furlough ($8,900)
DNR ‐ Water Rights One Day Furlough ($20,500)
PLPCO ‐ Public Lands Current Expense ($13,300)

Health and Human Services Sub Appropriations Committee
Department of Health

Executive Director, Dr. David Sundwall updated the Health and Human Services Sub Appropriations Committee regarding the cuts that the Department of Health has made in light of Governor Herbert’s executive order to reduce each agency’s personal budget by 3%. Dr. Sundwall reported that they were able to find efficiencies and approximately $100,000 savings through a reorganization that recently occurred – resulting in ongoing savings of $400,000. In addition, the mandatory day of furlough will save $120,000. The department has offered an early retirement incentive that is projected to save $300,000. Also, they will now begin charging for UTA passes, only buying computers when they break down, and implementing a hiring freeze.

The legislature has asked for a 4% cut that is problematic for the Department of Health. Although, the department has been able to identify $2.6 million, Dr. Sundwall cautioned the committee to try to avoid digging deeper into the budget coffers, due to reductions in services resulting in the potential for AARA fund pay back of $160 million. Sundwall indicated that he was willing to make accommodations where possible and work with the legislature in finding the means to effectively serve the state of Utah.

Department of Human Services

Department of Human Services Executive Director, Lisa Michelle Church, provided the committee with the changes that she intends to make with the Governor’s requested budget cuts through the remainder of FY2010. DHS will need to cut $2.9 million to cover the 3% budget gap. Church stated that she intends to do this through 4 means:
1. Fund Balances: DHS estimates that it can use $56,300 from the DCFS fund balance and $50,000 from the Division of Substance Abuse and Mental Health fund balance.
2. Personnel Expenses: DHS has cut more than 300 positions over the past year. Church stated that, “DHS has analyzed the potential for employee furloughs but finds that they would more deeply reduce services to the public and potentially pose health and safety risks for Utahns.” As a result of the analysis, it was determined that DHS would not implement furloughs at this juncture. The department has also implemented a hiring freeze that is estimated to save $570,000 for the remainder of FY2010.
3. Restricted Accounts: DHS is planning on using $1.6 million in restricted accounts- $1.1 million will be coming from the Domestic Violence Services Account, and another $500,000 will be coming from the Children’s Trust Account.
4. Operating Expenses: Church indicated that the department will delay purchasing computers and use other small sources to help with the control of operating costs. DHS estimates that $570,000 can be saved in this category.
Based on the legislature’s request to reduce the total budget by 4%, the department would need to cut $10.5 million. This would come at a great cost, including disturbances in service, eliminating positions, and furloughing employees. In addition, Church stated that deep program cuts would result.

Church was very concerned with each of these issues as she shared a day-in-the-life of an average employee. She discussed how workload is increasing, citizens are becoming more impatient, benefits are decreasing, co-workers are leaving without a replacement, training has been cut down substantially, and problems are continually increasing with the rise in population.
The committee members kept referring back to the fact that they have been given a directive to recommend 4% adjustments, while identifying the impacts on the cuts.

Thursday, January 7, 2010

Retirement Update

The UPEA State Board arranged a meeting with Senator Liljenquist and retirement system stakeholders, including the Utah School Employees Association, Utah Education Association, and Cops United for Retirement Equity. Liljenquist discussed potential legislation at the January 4th meeting and answered questions about changes to the retirement system. His proposed legislation should amount to four bills.

His first bill would allow employees hired after July 1st, 2011 to select either a) a defined contribution plan administered by URS wherein 8% will be deposited into a 401(a) plan; or b) a hybrid defined benefit/defined contribution plan. The hybrid option would include a 5% DB plan and 3% DC contribution. As rates fluctuate, the 3% would either increase or decrease to compensate for the changes in rates. Various components of the new system would include: retirement withdrawals to begin at age 59, 1% service credit per year, and a 5 year final average salary calculation. Both programs would require a 4-year vesting. This also combines all retirement systems into one system.

His second bill would eliminate the 1.5% salary contribution into current employees 401(k) and put that money into the pension system to help address the current 2.1% contribution rate increase.

His third bill would increase the years of service for retirement for current employees using the following schedule:
Employees in the big retirement system
24-30 years of service would see no change
20-24 years of service would be eligible for retirement after 31 years
16-20 years of service would be eligible for retirement after 32 years
10-16 years of service would be eligible for retirement after 33 years
4-10 years of service would be eligible for retirement after 34 years
Less than 4 years of service would be eligible to retire after 35 years

For Public Safety/Firefighters/Judges would also increase the retirement service.
18-20 years would see no changes
15-18 years of service would be eligible to retire after 21 years
12-15 years of service would be eligible to retire after 22 years
9-12 years of service would be eligible to retire after 23 years
6-9 years of service would be eligible to retire after 24 years
Less than 6 years would be eligible to retire after 25 years

His fourth bill would change the benefits for retired/rehired employees. For rehires after July 1, 2010, this bill would require suspension of the pension payments upon rehire, but allow rehired employees to earn additional service credit and also require the employer to pay the full URS contribution rate into the retirement system. This would also remove the service cap for public safety, which is currently 30 years. For rehires prior to July 1, 2010, the bill suspends the 401K contribution to the employee and requires agencies to pay the contribution rate to URS.

As soon as the bills are made available for viewing, we will inform our members. This is just an overview of what is expected to be contained in the bills and may change prior to finalization.

UPEA is working toward a better solution that will keep retirement whole for all employees.
UPEA has also called for an independent actuarial analysis and more time to educate stakeholders on the issue.