House Republican Caucus 2/2/2010
Speaker Dave Clark spoke on his Health System Reform Amendments Bill (which is still being written). He noted that the bill intends to:
“Increase Transparency” –
· Instructs the Utah Insurance commissioner to develop a method so that health insurer’s claims can be compared.
“Equalizes the market” –
· Bill is going to optimize health insurance choice for Utah businesses and their employees.
· Equalizing the defined benefit and defined contribution, so each market does not skew the other market unfairly.
“Allows employers coverage flexibility” –
· Employers will be able to choose either defined benefit or defined contribution plans inside the Exchange.
· Within the Exchange there will be a premium aggregator with expanded employee choice.
· The defined benefit plans in the Exchange, will not be able outside the Exchange in the regular insurance market.
“Makes health care costs controllable and predictable for Utah businesses and gives employees expanded coverage option and more control over their health care dollars” –
Expands the defined contribution market and how both employers and employees can pay for their health insurance within the Exchange.
UPEA is tracking how Health Systems Reform is being brought about in the small employer market, as Speaker Clark’s vision includes expanding the Utah Health Exchange to the large employer market in 1-2 years.
Wednesday, February 3, 2010
Monday, February 1, 2010
Appropriation Reviews
Commerce and Workforce Services Appropriations Subcommittee 1/27/2010
Budget Presentation Utah State Office of Rehabilitation
· The agency is not requesting any money. Executive Appropriations has asked for a 4% ongoing reduction. USOR is funded by the Uniform School Fund and Federal Funds.
· The Center for Public Policy presented information on the economic impact of services provided by USOR. Every $1.00 USOR spends on providing services its citizen clients the state receives back $5.64 through income taxes.
· Those who acquire services through USOR get higher wages. Since September 30, 2009 USOR has helped 3,116 people find employment and stay employed for at least 90 days.
· The public commented and asked that the subcommittee not eliminate night and weekend services provided at the Sorenson Center.
Budget Presentation Department of Financial Institutions
· This department currently regulates 109 financial institutions throughout the state – including credit unions, banks, trusts, payday lenders, etc.
· In 2009, the department eliminated 4 vacant positions.
· The agency runs on $5.9 million and is totally funded through the fees that go into the general restricted account. They do not rely on any money from the General Fund.
· 2009 was the first year that the department’s unused funds were not placed back into the general restricted account, but into the general fund, which resulted in the department to eliminate 4 vacant positions. Every year prior, the unused money always has returned to the general restricted account. If money continues to be taken out of the restricted account, the fees would have to be increased to cover their budget and that would require legislative action as the fees are in statue.
Budget Presentation Public Service Commission
This agency regulates the utility companies ensuring that they are charging reasonably priced utilities.
This agency does not receive any money from the General Fund. Their budget is entirely covered from a public utility fee of 1% of their revenues.
The Commission is not asking for any increases in their budget for the rest of FY 2010 or FY 2011, as their budget and number of employees has been the same since 1994.
Commerce and Workforce Services Appropriations Subcommittee 1/28/2010 – CANCELLED – Next Meeting will be held on Monday February 1, 2010.
The Department of Natural Resources Appropriations Committee reprioritized the budget list for FY 2010. Below is the updated budget list. The employee furloughs have already taken place.
Natural Resources Appropriations Subcommittee
Proposed 4% One‐Time Budget Reductions, FY 2010
Final
Jan. 20, 2010
Rank Agency Division Item Reduction
Running
Total
1 DNR DNR Admin One Day Furlough (8,100) (8,100) 0.0%
2 DNR Forestry One Day Furlough (8,700) (16,800) 0.0%
3 DNR Oil & Gas One Day Furlough (5,600) (22,400) 0.0%
4 DNR Wildlife One Day Furlough (32,900) (55,300) -0.1%
5 DNR Parks One Day Furlough (26,500) (81,800) -0.2%
6 DNR Geological Survey One Day Furlough (10,600) (92,400) -0.2%
7 DNR Water Resources One Day Furlough (8,900) (101,300) -0.2%
8 DNR Water Rights One Day Furlough (20,500) (121,800) -0.2%
9 PLPCO Public Lands Reductions (13,300) (135,100) -0.3%
10 Ag General Admin. Replacement with Dedicated Credits (135,000) (270,100) -0.5%
11 DNR Forestry Replacement with Restricted Funds (1,456,800) (1,726,900) -3.3%
12 Ag General Admin. Retirements (196,500) (1,923,400) -3.6%
13 Ag General Admin. Current Expense (114,600) (2,038,000) -3.9%
Office of the Legislative Fiscal Analyst 1/20/2010
14 Ag General Admin. Travel (in‐state) (50,000) (2,088,000) -3.9%
15 Ag State Fair Reductions (27,000) (2,115,000) -4.0%
(2,115,000)
Subcommittee Total General Fund Budget 52,874,800
House Democratic Caucus
On 1/28/10 the Public Employee Retirement Coalition (UPEA, UEA, USEA, and FOP) had the opportunity to present their views on the proposed retirement changes to the House Democratic Caucus. Each group highlighted the bills that are currently being presented, the effects of such bills, and that the coalition would like to see the issue reviewed in an interim study prior to taking any action.
UPEA provided talking points, historical information regarding contribution rates, and a recent Forbes article showing that Utah is in good shape to avoid financial failure due to pension funding.
Several of the legislators in the caucus expressed concern, stating that this issue will negatively impact the workforce. Many indicated that there is a need for public employees to be actively involved in the legislative process by contacting their legislators and educating the public.
UPEA indicated that they will update the legislators on the progress of the campaign, and again encourages all public employees to contact their legislators.
Capital Facilities and Governmental Operations Appropriations Subcommittee
On 1/28/10, UPEA attended the Capital Facilities and Governmental Operations Appropriations Subcommittee. The Legislative Auditor General’s Office presented “A Performance Audit of the Department of Technology Services” to the committee. The auditor stated that they are suggesting several efficiencies that can be found in the department and highlighted some recommendations that would help DTS better manage IT resources, develop a better strategic plan, and enhance the oversight and accountability of the department.
The DTS Executive Director, Stephen Fletcher, seemed sincerely grateful for the audit, as it helps to have another set of eyes to help them find a better way to move forward. He indicated that they have begun to implement several of the recommendations and have plans in place to continue working toward a more efficient service oriented model.
Fletcher gave a few examples of how they have been able to reach those efficiencies, including: eliminating 134 jobs through managed attrition, consolidating servers, and improving measurement of service levels. Through the positive recommendations given, DTS has been able to strengthen its processes and continues to look for new initiatives to find efficiencies.
Health and Human Services Appropriations Subcommittee
UPEA attended the Health and Human Services Appropriations Subcommittee on 1/28/10. In the meeting the Department of Health presented the changes that they have implemented through a reorganization of structure. The reorganization that took place last year consolidated 4 divisions into 3, and also looks to save the department close to $400,000 in ongoing funds, by consolidating high level positions.
The committee also discussed ways that the state could save money on Medicaid expenses. Michael Hales, Deputy Director of the Department of Health, indicated that they have implemented several changes based on an audit report that was completed last year.
Representative Dougall asked if the department could outsource some of the Medicaid administration to private companies. Hales indicated that some outsourcing has already been done through Healthy U and Molina Health. However, they are willing to look at alternatives depending on the scale of the
Budget Presentation Utah State Office of Rehabilitation
· The agency is not requesting any money. Executive Appropriations has asked for a 4% ongoing reduction. USOR is funded by the Uniform School Fund and Federal Funds.
· The Center for Public Policy presented information on the economic impact of services provided by USOR. Every $1.00 USOR spends on providing services its citizen clients the state receives back $5.64 through income taxes.
· Those who acquire services through USOR get higher wages. Since September 30, 2009 USOR has helped 3,116 people find employment and stay employed for at least 90 days.
· The public commented and asked that the subcommittee not eliminate night and weekend services provided at the Sorenson Center.
Budget Presentation Department of Financial Institutions
· This department currently regulates 109 financial institutions throughout the state – including credit unions, banks, trusts, payday lenders, etc.
· In 2009, the department eliminated 4 vacant positions.
· The agency runs on $5.9 million and is totally funded through the fees that go into the general restricted account. They do not rely on any money from the General Fund.
· 2009 was the first year that the department’s unused funds were not placed back into the general restricted account, but into the general fund, which resulted in the department to eliminate 4 vacant positions. Every year prior, the unused money always has returned to the general restricted account. If money continues to be taken out of the restricted account, the fees would have to be increased to cover their budget and that would require legislative action as the fees are in statue.
Budget Presentation Public Service Commission
This agency regulates the utility companies ensuring that they are charging reasonably priced utilities.
This agency does not receive any money from the General Fund. Their budget is entirely covered from a public utility fee of 1% of their revenues.
The Commission is not asking for any increases in their budget for the rest of FY 2010 or FY 2011, as their budget and number of employees has been the same since 1994.
Commerce and Workforce Services Appropriations Subcommittee 1/28/2010 – CANCELLED – Next Meeting will be held on Monday February 1, 2010.
The Department of Natural Resources Appropriations Committee reprioritized the budget list for FY 2010. Below is the updated budget list. The employee furloughs have already taken place.
Natural Resources Appropriations Subcommittee
Proposed 4% One‐Time Budget Reductions, FY 2010
Final
Jan. 20, 2010
Rank Agency Division Item Reduction
Running
Total
1 DNR DNR Admin One Day Furlough (8,100) (8,100) 0.0%
2 DNR Forestry One Day Furlough (8,700) (16,800) 0.0%
3 DNR Oil & Gas One Day Furlough (5,600) (22,400) 0.0%
4 DNR Wildlife One Day Furlough (32,900) (55,300) -0.1%
5 DNR Parks One Day Furlough (26,500) (81,800) -0.2%
6 DNR Geological Survey One Day Furlough (10,600) (92,400) -0.2%
7 DNR Water Resources One Day Furlough (8,900) (101,300) -0.2%
8 DNR Water Rights One Day Furlough (20,500) (121,800) -0.2%
9 PLPCO Public Lands Reductions (13,300) (135,100) -0.3%
10 Ag General Admin. Replacement with Dedicated Credits (135,000) (270,100) -0.5%
11 DNR Forestry Replacement with Restricted Funds (1,456,800) (1,726,900) -3.3%
12 Ag General Admin. Retirements (196,500) (1,923,400) -3.6%
13 Ag General Admin. Current Expense (114,600) (2,038,000) -3.9%
Office of the Legislative Fiscal Analyst 1/20/2010
14 Ag General Admin. Travel (in‐state) (50,000) (2,088,000) -3.9%
15 Ag State Fair Reductions (27,000) (2,115,000) -4.0%
(2,115,000)
Subcommittee Total General Fund Budget 52,874,800
House Democratic Caucus
On 1/28/10 the Public Employee Retirement Coalition (UPEA, UEA, USEA, and FOP) had the opportunity to present their views on the proposed retirement changes to the House Democratic Caucus. Each group highlighted the bills that are currently being presented, the effects of such bills, and that the coalition would like to see the issue reviewed in an interim study prior to taking any action.
UPEA provided talking points, historical information regarding contribution rates, and a recent Forbes article showing that Utah is in good shape to avoid financial failure due to pension funding.
Several of the legislators in the caucus expressed concern, stating that this issue will negatively impact the workforce. Many indicated that there is a need for public employees to be actively involved in the legislative process by contacting their legislators and educating the public.
UPEA indicated that they will update the legislators on the progress of the campaign, and again encourages all public employees to contact their legislators.
Capital Facilities and Governmental Operations Appropriations Subcommittee
On 1/28/10, UPEA attended the Capital Facilities and Governmental Operations Appropriations Subcommittee. The Legislative Auditor General’s Office presented “A Performance Audit of the Department of Technology Services” to the committee. The auditor stated that they are suggesting several efficiencies that can be found in the department and highlighted some recommendations that would help DTS better manage IT resources, develop a better strategic plan, and enhance the oversight and accountability of the department.
The DTS Executive Director, Stephen Fletcher, seemed sincerely grateful for the audit, as it helps to have another set of eyes to help them find a better way to move forward. He indicated that they have begun to implement several of the recommendations and have plans in place to continue working toward a more efficient service oriented model.
Fletcher gave a few examples of how they have been able to reach those efficiencies, including: eliminating 134 jobs through managed attrition, consolidating servers, and improving measurement of service levels. Through the positive recommendations given, DTS has been able to strengthen its processes and continues to look for new initiatives to find efficiencies.
Health and Human Services Appropriations Subcommittee
UPEA attended the Health and Human Services Appropriations Subcommittee on 1/28/10. In the meeting the Department of Health presented the changes that they have implemented through a reorganization of structure. The reorganization that took place last year consolidated 4 divisions into 3, and also looks to save the department close to $400,000 in ongoing funds, by consolidating high level positions.
The committee also discussed ways that the state could save money on Medicaid expenses. Michael Hales, Deputy Director of the Department of Health, indicated that they have implemented several changes based on an audit report that was completed last year.
Representative Dougall asked if the department could outsource some of the Medicaid administration to private companies. Hales indicated that some outsourcing has already been done through Healthy U and Molina Health. However, they are willing to look at alternatives depending on the scale of the
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
1/20/10
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.
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
1/20/10
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:
Post-Retirement Employment Amendments
http://le.utah.gov/~2010/htmdoc/sbillhtm/sb0043.htm
Supplemental Benefit Amendments for Non-Contributory Public Employees
http://le.utah.gov/~2010/htmdoc/sbillhtm/sb0094.htm
Senate Retirement and Independent Entities Committee
http://www.le.state.ut.us/asp/interim/Commit.asp?Year=2010&Com=SSTRIE
House Retirement and Independent Entities Committee
http://www.le.state.ut.us/asp/interim/Commit.asp?Year=2010&Com=HSTRIE
Retirement Eligibility Modifications
http://le.utah.gov/~2010/htmdoc/sbillhtm/sb0042.htm
Post-Retirement Employment Amendments
http://le.utah.gov/~2010/htmdoc/sbillhtm/sb0043.htm
Supplemental Benefit Amendments for Non-Contributory Public Employees
http://le.utah.gov/~2010/htmdoc/sbillhtm/sb0094.htm
Senate Retirement and Independent Entities Committee
http://www.le.state.ut.us/asp/interim/Commit.asp?Year=2010&Com=SSTRIE
House Retirement and Independent Entities Committee
http://www.le.state.ut.us/asp/interim/Commit.asp?Year=2010&Com=HSTRIE
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.
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.
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.
Monday, December 14, 2009
Gov's Budget Recommendation Notes
The Governor said there is a budget gap of slightly less than $700 million; not the $850 million that was anticipated. Since the legislative session however, there has been a revenue decrease of $157 million for the FY2010 budget year, necessitating the 3% cuts discussed above.
FY2010 Budget Reductions
Agency Reductions - $39 million
Public Education - $72 million
Bonding for Roads - $25 million
Medicaid Settlement - $20 million
OPED/Termination Pool - $6 million
Reduce USTAR - $5 million
Restricted fund balance - $16 million
However, the Governor's Office of Planning and Budget anticipates that the FY2011 budget will increase or flatten, due to additional revenues from the recovering economy. The Governor’s office estimates $191 million in revenue by the end of FY2011, which is a $34 million net growth for FY2011. However, the state will continue to weather shortfalls until then:
FY2010 Shortfall
Revenue Shortfall - $157 million
Additional Shortfall – $6 million
Supplemental Shortfall - $20 million
Total Shortfall - $187 million
FY2010 Budget Reductions
Agency Reductions - $39 million
Public Education - $72 million
Bonding for Roads - $25 million
Medicaid Settlement - $20 million
OPED/Termination Pool - $6 million
Reduce USTAR - $5 million
Restricted fund balance - $16 million
However, the Governor's Office of Planning and Budget anticipates that the FY2011 budget will increase or flatten, due to additional revenues from the recovering economy. The Governor’s office estimates $191 million in revenue by the end of FY2011, which is a $34 million net growth for FY2011. However, the state will continue to weather shortfalls until then:
FY2010 Shortfall
Revenue Shortfall - $157 million
Additional Shortfall – $6 million
Supplemental Shortfall - $20 million
Total Shortfall - $187 million
FY2011 Shortfall
Public Education - $293 million
Higher Education - $66 million
Other State Agencies - $151 million
Total Shortfall - $510 million
Total Shortfall for remainder of FY2010 and FY2011 = $693 million
The Governor’s FY2011 Budget Recommendations:
· Fully funds the budget
· Protects public and higher education
· Avoids exacerbating the budget and its structural imbalance
· Covers needs in state agencies
· Preserves $253 million in the Rainy Day Fund
· No tax increases.
The Governor's FY2011 budget priorities would cost an estimated $510 in his $11 billion budget.
1. Public Education - $293 million.
2. Higher Education – $66 million.
3. Other State Agencies - $151 million.
a. Corrections - $21 million.
b. Human Services - $18 million.
c. Workforce Services - $2 million.
d. Health - $38 million.
The FY2011 recommendations also included a list of additional revenue streams to enhance revenue growth within the State:
Stop the Sales tax vendor discount (1.31%) that was implemented several years ago. This will provide the state with $20 million in on-going funds.
Begin a quarterly estimated tax filing for self-employed persons. This would provide an additional $125 million in one-time funds.
Bonding for Roads, freeing up cash in transportation. This would provide $25 million in FY2010 and $75 million in FY2011.
Tap into the Rainy Day Fund, providing $166 million in one-time funds.
Enhanced Federal Medicaid Assistance Program funding of $56 million in one-time funds.
Using the student population account for $31 million in one-time funds.
The additional revenues amount to $510 million.
When asked the question what will happen with the retirement account, Governor Herbert said his budget accounts for the contribution rate increase (2%) that URS requested this year.
Governor Herbert stated that it was important for him to live within his means, retain some money in the Rainy Day Fund, not increase taxes, and keep Public and Higher Education at the 2010 funding level, while still maintaining service in each of the state agencies.
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