2014-15 Budget Slide Presentation

Tom Corbett, Governor Charles B. Zogby, Secretary of the Budget www.budget.state.pa.
us
2014-15 Executive Budget
Commonwealth of Pennsylvania
Tom Corbett
Governor
Charles B. Zogby
Secretary of the Budget
February 4, 2014
Tom Corbett, Governor Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us
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2014-15 Budget Highlights
Governor Corbetts 2014-15 Executive Budget provides for abalanced budget that
keeps spending in line with available revenues and does not raise taxes on
Pennsylvania families and businesses.
Spends $29.4 billion a 3.3 percent increase over 2013-14.
The budget includes the Governors Building A Stronger Pennsylvania plan making
new strategic investments to address Pennsylvanias three most urgent priorities:
Jobs: Growing family-sustaining jobs with targeted investments to spur job
creation and economic growth, expand job training programs and continue
business tax reductions.
Education: Greater support for students, educators and schools, increased
accountability and improved transparency backed by historic investments of
resources, including a $241 million Ready to Learn Block Grant.
Health Care: Implements Healthy Pennsylvania, a comprehensive plan to
increase access to quality, affordable health care for all Pennsylvanians.
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Following on three balanced budgets delivered on time, Governor Corbetts 2014-15 Executive Budget is a $29.4
billion spending plan that combines prudent fiscal management with strategic investments in jobs, education, and health
care and human services to build a stronger Pennsylvania.
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General Fund Financial Statement
(Dollars in Millions)
2013-14 2013-14
Enacted Revised
Beginning Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 541 $ 541
Beginning Balance Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 5
Revenue Estimate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,116 29,116
Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,275) (1,275)
Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,841 27,841
Lapses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 251
Funds Available. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,383 28,638
Enacted Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,376) (28,422)
Supplemental Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 (70)
Current-Year Lapses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 70
Total Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,376) (28,422)
Preliminary Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 216
Transfer to the Rainy Day Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) 0
Ending Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5 $ 216
2013-14 Supplemental Appropriations Request
A total of $69.9 million in supplemental requests:
Corrections $20 million
o Increases in Inmate Medical Care and State Correctional Institutions.
Military and Veterans Affairs $843,000
o Increase in Paralyzed Veterans Pension.
Public Welfare $53 million
o Increases in Medical Assistance (MA) Outpatient, MA Inpatient, Home and
Community-Base Services, Long-Term Care Managed Care, Autism Intervention and
Services, Services to Persons with Disabilities, MA Workers with Disabilities.
o Decreases in Payment to the Federal Government Medicare Drug Program, MA
Capitation, Long-Term Care, MA Transportation, Special Pharmaceutical Services.
Education $4 million
o Decreases in School Employees Social Security and Retirements offsetting an increase
in Early Intervention.
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2013-14 General Fund Revenues
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Estimated Actual $ Difference % Difference
Tax Revenue:
Corporation Taxes $ 1,353.0 $ 1,440.9 $ 87.9 6.5%
Consumption Taxes 6,204.1 6,169.6 -34.5 -0.6%
Sales & Use Non- Motor 4,701.1 4,688.2 -13.0 -0.3%
All Other 1,503.0 1,481.4 -21.6 -1.4%
Other Taxes 7,019.1 6,901.7 -117.4 -1.7%
PIT Withholding 5,157.5 5,082.2 -75.3 - 1.5%
PIT Non-Withholding 1,073.2 1,048.0 -25.2 -2.3%
All Other 788.4 771.5 -16.9 -2.1%
Non-Tax Revenue 111.1 133.1 22.0 19.8%
Total $ 14,687.3 $14,645.1 -$ 42.2 -0.3%
In the first seven months of 2013-14, Corporation Taxes and Non-Tax revenue are
above estimate, while Personal Income Tax and Consumption Tax revenue are below
estimates. Total revenue collections are $42.2 million under estimate.
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General Fund Financial Statement
2013-14 2014-15
Revised Budget
Beginning Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 541 $ 216
Beginning Balance Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0
Revenue Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,116 30,315
Proposed Revenue Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 225
Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,275) (1,310)
Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,841 29,230
Lapses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 0
Funds Available. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,638 29,446
Enacted Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,422) (29,419)
Supplemental Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (70) 0
Current-Year Lapses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 0
Total Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,422) (29,419)
Preliminary Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 27
Transfer to the Rainy Day Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 (7)
Ending Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 216 $ 20
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Proposed Revenue Changes
2014-15
Proposed
Non-Tax Revenue: (Dollars in Thousands)
Escheats (reduce holding period from 5 years to 3 years) $ 150,000
No-Surface Impact Leasing of State Forests and Park Lands 75,000
Total $ 225,000
U.S. Economic Forecast for 2014-15
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Moderate growth continues in the U.S. as it has over the last several years. The forecast is that GDP will pick
up in 2014 and grow through 2017. The recent strength of the economy has prompted the federal government to
begin its long-anticipated tapering, although there are still concerns. Employment rose in December although it was
at the slowest pace in almost three years, and the January 2014 report for consumer confidence showed an
unexpected drop. More job opportunities, higher property values and rising equity prices are boosting household
wealth and should keep consumers spending.
Global Insights Outlook for 2014-15
Projected Growth in 2013-14 and 2014-15
2013-14 2014-15
Real GDP 2.7% 3.2%
Consumer
Expenditures
2.5% 2.7%
U.S. Wages & Salaries
2.2% 2.3%
U.S. Unemployment
Rate 6.5% 5.9%
2014-15 Total Operating Budget $71.8 Billion
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The total 2014-15
operating budget,
including all
commonwealth
funds, is $71.8
billion. The General
Fund represents 41
percent of this
amount.
2014-15 General Fund Revenue Sources
$30.5 Billion
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More than two-
thirds (72 percent)
of General Fund
revenues are
derived from the
Personal Income
Tax and the
Sales and Use
Tax.
Non-Tax Revenues, 2.6%
Gross Receipts Tax, 4.3%
2014-15 State General Fund Budget
$29.4 Billion
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All Other
$2.7 B
9.1%
4.1%
7.5%
5.5%
Spending on
Education, Human
Service programs,
Corrections and Debt
Service comprises 91
percent of total
General Fund
obligations.
Other Human
Services
$4.7 B
16.0%
Debt Service $1.2 B
Corrections/
Probation and Parole
$2.2 B
Higher Education
$1.6 B
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$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
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6
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0
6
-
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7
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0
0
7
-
0
8
2
0
0
8
-
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History of General Fund Revenues
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Illustrating the depth and length of the Great Recession, the 2012-13 fiscal year was the first time
that General Fund revenues were greater than revenues in 2007-08. Between 2007-08 and 2014-15,
spending in mandated areas of the budget is estimated to increase by $4.2 billion, while net revenues
will grow by only $2.3 billion over the same period of time. This imbalance between revenue growth
and mandated spending has the effect of crowding out spending in all other areas of the budget.
Mandated spending includes Department of Public Welfare, Corrections, School Employees Retirement and Debt Service. Revenues include tax refunds.
Mandated Spending
$15.8 Billion
(2014-15)
$29.2 Billion
Projected 2014-15 Revenues
Mandated Spending
$11.6 Billion
(2007-08)
$26.9 Billion
2007-08 Revenues
Building a Stronger Pennsylvania
~ Growing Family Sustaining Jobs ~
~ Ready to Learn Educational Excellence in Pennsylvania ~
~ Healthy Pennsylvania ~
Growing Family Sustaining Jobs
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Governor Corbetts top priority is to create an environment in which good, family-
sustaining jobs can grow. The 2014-15 budget focuses on improving Pennsylvanias
position in the global marketplace through continued strategic investments to spur job
creation and economic growth. The two core focus areas are Make It In PA and
Pennsylvanias Talented Workers.
Growing Family Sustaining Jobs
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4,912
4,940
4,950
4,966
4,990
5,007
5,006
5,016
5,027
5,034
5,044
5,052
5,050
4,600
4,650
4,700
4,750
4,800
4,850
4,900
4,950
5,000
5,050
Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Jan. Apr. Jul. Oct. Dec.
2011 2012
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Since Governor Corbett took office, Pennsylvania has increased in private sector
jobs by approximately 138,300.
2013 (Prelim.)
Economic Development Make It In PA
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Capital Stock and Franchise Tax (CSFT)
Continued phase-out of the Capital Stock and Franchise Tax. The CSFT is
eliminated beginning 2016.
Pennsylvania First
$5 million increase, including $2 million allocated to WEDnetPA J ob Training to
train an additional 10,000 employees.
Partnership for Regional Economic Performance (PREP)
$500,000 to support regional efforts to bring jobs back home through a targeted
technical assistance program aimed at manufacturers who have moved operations
overseas and want to bring them back to Pennsylvania.
.
CSFT Rates
2013 0.89
2014 0.67
2015 0.45
2016 0.00
Economic Development Make It In PA
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Agricultural Research
$1.5 million increase in the General Fund transfer to the Agricultural College
Land Scrip Fund. The increased funds will be used as matching grants to
support expanded agriculture research and extension activities.
World Trade PA
$604,000 increase to support the Governors Action Team to expand exports
from Pennsylvania businesses to key international markets and attracting
foreign investment into the commonwealth.
Marketing to Attract Business Program
$1.1 million increase to market Pennsylvania for business attraction.
Statewide Travel, Tourism and Film-Related Economic Development
$1.25 million increase to bolster statewide travel, tourism, and film-related
economic development.
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Economic Development Talented Workers
Targeted Industry Program
$1 million increase to expand access to grants for students seeking skill
certifications in high-demand job areas.
Jobs for All Initiative
$1 million increase in state funds that will leverage an additional $3.8 million
in federal funds for a total of $4.8 million to expand on-the-job-training for
young people with disabilities through the Department of Labor and
Industrys Office of Vocational Rehabilitation.
JOB Partnership Fund
A public-private partnership seeded with $10 million from the PA First
Program, the J OB Partnership Fund will be matched by $90 million in private
capital to assist in attracting job creators to locate in Pennsylvania.
Economic Development Transportation
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On November 25, 2013, the Governor signed into law HB 1060 (Act 89 of 2013). This
bi-partisan agreement will keep Pennsylvania safe and economically competitive by
investing a total of $7.4 billion in additional funds into the states roads, bridges, transit, and
multimodal transportation systems by the fifth year of the plan.
(Dollars in Thousands)
2013-14 2014-15 2015-16 2016-17 2017-18 Five- Year Total
Motor License Fund:
State Highways & Bridges $ 190,015 $ 553,127 $ 807,728 $ 1,011,252 $ 1,273,662 $ 3,835,784
Municipal Payments 27,838 105,946 148,355 176,248 207,242 665,629
Local Bridge 7,000 13,000 20,000 21,000 30,291 91,291
Pennsylvania Turnpike 12,641 43,161 61,090 71,575 86,192 274,659
Boat Fund Tax Refund 1,700 4,600 5,100 5,700 6,300 23,400
Dirt & Gravel Roads - 30,000 30,000 30,000 30,000 120,000
County/Forestry Bridges 1,806 6,166 8,727 10,225 12,313 39,237
Multimodal Fund $ 30,000 $ 97,000 $ 138,000 $ 138,000 $ 144,000 $ 547,000
Transit $ 60,000 $ 355,000 $ 441,000 $ 442,000 $ 497,000 $ 1,795,000
Total Additional Funding $ 331,000 $ 1,208,000 $ 1,660,000 $ 1,906,000 $ 2,287,000 $ 7,392,000
Ready to Learn Educational Excellence in Pennsylvania
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Governor Corbetts Ready to Learn education agenda has transformed Pennsylvanias
public education system. Ready to Learn has increased accountability and transparency in
schools, infused stronger educational resources into classrooms, and focused financial
resources on supporting students at all levels.
The Governors 2014-15 budget marks the next phase of the Ready to Learn with new
strategic investments across the entire continuum of public education. In addition to
supporting these initiatives, the budget also makes historic investments in our public schools,
setting an all-time high of $10.12 billion in direct state support for public education, a $1.55
billion increase over the past four years.
The 2014-15 budget maintains current investments in the main elements of
Governor Corbetts Ready to Learn agenda that is transforming Pennsylvanias
public education system:
Educator Evaluation System to support high-quality, effective teachers in
every classroom.
School Performance Profiles a web-based resource to parents and taxpayers
to better understand the quality of schools in Pennsylvania.
Pennsylvania Core Standards and Keystone Exams standards are aligned
with the Keystone exams to provide a clear and consistent framework to prepare
students for college and the workforce.
Standards Align System provides evidence-based resources for educators
focusing on curriculum, teaching strategies and career-bound information.
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Governor Corbetts 2014-15 budget proposal brings total direct state support of public education to a
new all-time high of $10.12 billion, a $1.55 billion increase in support for public schools since 2010-11.
The budget launches the next phase of the Ready to Learn agenda with new strategic investments
across the entire continuum of public education.
State Support for Public Education
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$9,140,726
$8,680,318
$8,568,353
$9,070,060
$9,492,835
$9,750,274
$10,118,882
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
11,000,000
2008-09* 2009-10* 2010-11* 2011-12* 2012-13* 2013-14** 2014-15***
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*Actual **Available ***Proposed
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~ Pre-K & Early Childhood Education ~
Pre-K Counts
$10 million additional investment in Pre-K Counts, providing 1,670 additional
pre-school age children with access to quality learning programs. These new
dollars will build on the $46.5 million in additional early childhood funding
provided over the past three years that supports an additional 11,000 children.
Early Learning Challenge Grant
$51.7 million awarded Pennsylvania to be utilized over four years to support high-
quality early education programs. The 2014-15 budget allocates $15.8 million for
OCDEL to provide resources both to increase the number of high-quality learning
programs and to increase access in communities across Pennsylvania.
Early Intervention
$9.5 million increase to serve approximately 1,500 additional children from ages
3 to 5.
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~ Kindergarten to Grade 12 ~
Ready to Learn Block Grant
$240 million in new Ready to Learn funding to ensure that students are
reading and math ready by third grade, better train teachers to support early
literacy and STEM, and enabled schools to provide extended instructional
opportunities customized to student needs.
$100 million in continued Accountability Block Grant funding to support
pre-kindergarten, kindergarten and other proven educational programs.
$1 million for the Governors School-to-School Mentoring Grant program
to provide competitive grants to high-performing school districts to support
school-to-school mentoring designed to raise student achievement by
replicating proven best practices in all Pennsylvania schools.
The budget proposes $341 million in funding to combine the successful Accountability
Block Grant with the Ready to Learn Block Grant. School districts will receive the same
Accountability Block Grant allocations and can use those funds for expanded purposes in
the new Ready to Learn Block Grant.
Accountability Block Grant
Tier 2 School Districts
(60 to 69.9 on the SPP)
(70 to79.9 on the SPP)
(80 and above on the SPP)
The Governors Expanding
Excellence Competitive Grant
Program
(90 and above on the SPP)
(Below 60 on the SPP)
Pre-K to Grade 3 curriculum
alignment efforts
Training to support early
literacy and STEM
Pre-K to Grade 3 Extended
Learning Opportunities
Pre-K to Grade 3
curriculum alignment
Efforts
literacy and STEM
Pre-Kindergarten
Full-day Kindergarten
alignment Efforts
literacy and STEM
Pre-Kindergarten
Supplemental instruction in
Biology, English Language
Arts and Algebra 1
Implementation of State
Literacy Plan
Instructional Coaches
STEM Education
Hybrid Learning
Competency-Based Learning
alignment Efforts
Training to support early literacy
and STEM
Pre-Kindergarten
Supplemental instruction in
Biology, English Language Arts
and Algebra 1
Implementation of State Literacy
Plan
Instructional Coaches
STEM Education
Hybrid Learning
Competency-Based Learning
Ready to Learn Block Grant
School districts in Tiers 1 and 2 may submit a waiver as part of their proposal to use for purposes described in Tiers3 and 4.
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Supporting Students with Special Needs
$20 million increase distributed to school districts through a weighted student
funding formula based on the level of instructional support provided to special
education students. The funding increase marks the first increase of state
support for special education in six years.
Pennsylvania Hybrid Learning Initiative
$10 million for competitive grants to support Pennsylvania educators in
developing new educational strategies that apply technology to better
customize classroom instruction and improve student performance. The
funding will enable an additional 100 schools to utilize hybrid learning.
~ Post Secondary Education ~
Ready to Succeed Scholarships
$25 million for Ready to Succeed Scholarships provided through the
Pennsylvania Higher Education Assistance Agency to make post-secondary
educational opportunities more affordable for middle-income families.
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Governors Schools of Academic Excellence
$350,000 to support new Governors Schools of Academic Excellence in
three strategic areas of study: agricultural sciences, STEM (science,
technology, engineering and math) education and engineering.
PA Assessment
$4.6 million increase to support existing state and federally mandated
assessments.
Public Libraries
$500,000 increase to support Pennsylvania's public libraries.
Public School Employees Retirement Systems (PSERS)
$225 million transfer of private equity investments and cash reserves from
the Tobacco Settlement Fund and Health Venture Investment Account to
PSERS to support the General Fund appropriation.
Charter School Pension Double Payment
$62.7 million in savings from the elimination of the charter school pension
double payment.
Other Education Funding Changes
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Healthy Pennsylvania
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Governor Corbett unveiled Healthy Pennsylvania, a
comprehensive plan to increase access to quality, affordable
health care for all Pennsylvanians. Healthy Pennsylvania is
focused on three key priorities: improving access, ensuring
quality and providing affordability.
The plan was endorsed by healthcare leaders such as Dr. C. Richard Schott, a practicing physician from suburban
Philadelphia and president of the Pennsylvania Medical Society. " The Healthy Pennsylvania plan announced
today by Governor Corbett recognizes the need to take positive actions to improve the health of all
Pennsylvanians, Schott said. The Pennsylvania Medical Society applauds the governors plan and looks
forward to continue working with him and other stakeholders to improve the health of all Pennsylvanians.
Healthy Pennsylvania
Ensuring Quality
Combat Prescription Drug Abuse:
With prescription drug abuse on an
alarming rise in Pennsylvania, Healthy
Pennsylvania will work with the General
Assembly to monitor and address the
problem of prescription drug abuse.
Supporting Older & Disabled
Pennsylvanians: A core component of
Healthy Pennsylvania is developing a
more effective and coordinated long-term
care and support system for older and
disabled Pennsylvanians. Healthy
Pennsylvania will build on this years $50
million increase for older and disabled
Pennsylvanians and continue efforts to
streamline services so that additional
individuals may have access to home and
community-based care.
Promote Good Public Health: From
managing illness to promoting programs
to keep kids and adults healthy in schools
and communities, Healthy Pennsylvania
supports public health efforts that
improve the health of Pennsylvanians.
Improving Access
Get All Kids Insured: Governor Corbett has
increased funding to support enrollment and
outreach efforts for the Childrens Health
Insurance Program (CHIP), with the goal of
covering all children. The plan also eliminated
CHIPs six-month waiting period, allowing all
Pennsylvania children to have continued and
timely access to CHIP coverage.
Increase Access to Primary Health Care:
Pennsylvania will continue to increase access
and better meet the primary care needs of all
Pennsylvanians.
Recruit and Retain Healthcare
Professionals: The governor enhanced support
for loan forgiveness programs to train primary
healthcare practitioners who, in return, will
provide care in underserved areas.
Harness Health Information Technology:
Healthy Pennsylvania will continue to promote
greater use of health IT, including telemedicine
and electronic health records, to bring high
quality healthcare services to all
Pennsylvanians.
Providing
Affordability
Rebuild and Reform Pennsylvanias
Medicaid Program: The reforms include a
realignment of benefit plans for adults,
increased access to healthcare coverage, cost-
sharing for adults, work search activities, and
premium reductions for healthy behaviors/
work.
Governor Corbett will not accept a
Washington one size fits all approach for
the Commonwealth and believes that reform
is critical in order to protect and stabilizes
Pennsylvanias Medicaid program for our
neediest citizens.
Continue to Reform PAs Medical Liability
System: Last year Governor Corbett signed
into law the Apology Rule for health care
providers to allow them to express empathy
for unforeseen outcomes without fear that
their statements will be seen as an admission
of error.
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Healthy Pennsylvania Improving Access
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Community Health Centers and Health Care Clinics
The budget doubles the investment made last year to provide a total of $8 million to
the Department of Healths Community-Based Health Care program. The additional
$4 million will fund four new health care centers and clinics to increase access to
preventative primary care services for uninsured individuals in underserved areas of
the state.
Expanded Access to Primary Care Services in Rural and Underserved Areas
$4 million increase to recruit and retain health care professionals to rural and
underserved areas. The new dollars will support an additional 70 awards to
physicians, dentists and other practitioners who commit to work in rural and
underserved areas of Pennsylvania, and 12 additional residency slots for medical
school graduates to address the shortage of primary care services in these areas.
Childrens Health Insurance Program
$9 million increase to provide health insurance coverage for an additional 10,400
children.
Healthy Pennsylvania Ensuring Quality
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Expanded Home and Community-Based Services for Older Pennsylvanians and
Individuals with Physical Disabilities
Builds on 2013-14s investment of $50 million with an increase investment of
$23.5 million in General and Lottery Funds to serve:
o 1,764 additional older Pennsylvanians through the Medicaid Home and
Community-Based Aging Waiver ($11.6 million)
o 800 additional individuals in the LIFE Program ($9.4 million)
o 500 additional individuals on the Options waiting list ($1.1 million)
o 204 additional individuals who transfer from the Department of Public
Welfare's Attendant Care Program at age 60($1.4 million)
$18 million to serve an additional 1,599 individuals with physical disabilities in
community settings through the Services to Persons with Disabilities Waiver and
the Attendant Care Waiver.
Healthy Pennsylvania Providing Affordability
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Reforming Pennsylvanias Medicaid Program
$125.4 million in savings from the implementation of Governor
Corbetts Healthy PA plan which includes reforms to Pennsylvanias
Medicaid program and the implementation of the Private Coverage
Option within the Healthy Pennsylvania Medicaid waiver.
The budget assumes approval of Pennsylvanias Health
Pennsylvania Medicaid waiver by the federal government.
34
The costs of the Affordable Care Act exceed savings from the Healthy Pennsylvania reforms.
FY 2014-15
State Funds
FY 2015-16
State Funds
Affordable Care Act $218,954 $331,047
Healthy PA ($125,405) ($616,397)
Administrative Costs $39,751 $38,091
Total $133,300 ($247,259)
Note: In addition to the Department of Public Welfare costs shown above, the
Affordable Care Act is also imposing additional costs on the budget through
increased costs to the Pennsylvania Public Employees Benefit Trust Fund by
$30.2 million in 2013 and $79 million in 2014.
(Dollar amounts in thousands)
ACA & Healthy Pennsylvania Fiscal Impact
Enhancing Human Services
35
Domestic Violence
$1.4 million (10%) increase for Domestic Violence programs and services.
Rape Crisis
$800,000 (10%) increase to expand Rape Crisis programs and services.
Child Care Services Waiting List Initiative
$15 million in increased federal funds to reduce the waiting list for child care
services for an additional 2,895 children of low-income families.
Child Advocacy Centers
$2 million for operational support and expansion.
Child Protective Services Enhancements
$9.8 million to provide a single access point to collect, coordinate and report
child abuse and neglect cases. This infrastructure investments supports the
Pennsylvania Task Force on Child Protection recommendations.
Enhancing Human Services & FMAP
36
Expanded Home & Community-Based Services for Individuals with Intellectual
Disabilities
$22.4 million for 1,100 individuals with intellectual disabilities, including 400
people on the waiting list and 700 students graduating from Special Education;
$1.1 million to serve 100 adults with autism spectrum disorders;
$700,000 for 50 individuals currently residing in state intellectual disabilities
centers; and
$4.7 million to serve 90 individuals currently residing in state mental hospitals.
Balancing Incentive
$75.3 million in savings through increased federal financial participation for
Balancing Incentive program.
FMAP Reduction
The budget reflects the reduction in the Federal Medical Assistance Percentage
(FMAP) for federal financial participation from 53.52 percent to 51.82 percent
(a 1.7 percent decline), increasing state costs by $340.8 million. Impacted
agencies include the Department of Public Welfare, Education, Insurance and
Military and Veterans Affairs.
Redesigning State Government
~ Pension Reform ~
~ Fiscal Discipline ~
~ Limited, Efficient Government ~
Pension Reform
38
Unsustainable Cost Increases: Absent pension reform, contributions to the pension
systems PSERS and SERS are expected to increase by more than $600 million in
2014-15 and continue to rise significantly crowding out core services and programs.
Pension Reform Goals and Objectives: Governor Corbett renews his charge to the
General Assembly to enact pension reform. Reform must:
~ Protect retirees and the benefits earned by current employees;
~ Significantly reduce future risk to taxpayers;
~ Provide near-term budget relief to the General Fund and local school districts
from steep cost increases paid for by long-term savings generated by reform;
~ Address the impact of the unfunded liability on school districts; and
~ Achieve these goals without kicking the can down the road by pushing
more debt onto future generations of Pennsylvanians.
Pension Collars: The budget assumes pension collars are reduced to 2.25 percent
and then increase by 0.5 percent per year until the collars reach 4.5 percent or the
annual required contribution. Reset the pension collars saves the commonwealth $170
million, and school districts and other local education agencies $131 million.
Fiscal Discipline in the 2014-15 Budget
39
Administrative Spending Reductions
Administrative spending down 10 percent since 2010-11.
Reduced Staffing Levels
Decline of more than 3,000 positions, or nearly 4 percent.
State Complement
Overall state complement increases by 140 positions largely
due to 720 new positions to implement the federal
Affordable Care Act. Excluding ACA-driven positions, the
budget eliminates nearly 600 other positions.
Improved Debt Management
The budget maintains capital funding at 2012-13 levels and
the implements reforms to the Redevelopment Assistance
Capital Program and Act 77 requirements to provide greater
transparency and limits on the growth of new debt.
Since Governor Corbett took office in January 2011, filled staffing levels have declined by
more than 3,000 positions, or nearly 4 percent. Additionally, the Corbett administration has
implemented significant reforms to the commonwealths fleet and travel programs to enhance
program accountability and reduce costs.
Reductions in Staffing Levels
N
u
m
b
e
r

o
f

P
o
s
i
t
i
o
n
s
76,663
73,634
January 2011
January 2014
40
Limited and Efficient Government
Governors Innovation Initiative
More than 200 completed initiatives producing $465 million in total savings, cost
avoidance and productivity gains and over 195 active initiatives in progress. Key
projects for 2014-15 include streamlining print, imaging, and mail operations and
electronic grants processing.
Department of General Services
Vehicle fleet efficiencies have saved an estimated $45 million since
implementation and reduced the fleet by more than 1,800 vehicles a 20 percent
decrease.
Department of Public Welfare
A telephone hotline launched to streamline administrative hearings saved $1.5
million in its first year of operation.
41
The 2014-15 budget continues to streamline government through the Governors
Innovation Initiative and the consolidation or realignment of programs and agencies for
greater synergies.
Veterans Programs and Juvenile Justice
Department of Military and Veterans Affairs
$1 million transfer to the Veterans Trust Fund to expand
services to veterans in need of assistance. The Trust Fund
is also expected to receive an estimated $330,000 from
special plate fees and registration check-offs.
Juvenile Justice Reinvestment Initiative
$4.5 million in increased funding ($2.5 million to the
J uvenile Court J udges Commission and $2 million to the
Pennsylvania Commission on Crime and Delinquency) to
expand evidenced-based violence prevention and
intervention programs targeted at reducing recidivism for
high-risk juvenile offenders.
42
Public Safety
Pennsylvania State Police
$13.7 million to fund four new cadet classes and 350 new troopers.
Department of Corrections
$72.3 million increase for contractual salary and benefit costs.
$10 million to enhance treatment of inmates with serious mental illness.
$8.1 million to fund the Corrections and Parole Total Offender
Repository (CAPTOR) information system.
$10 million in savings through the use of rebates from the Special
Pharmaceutical Benefits Program to mitigate the cost of AIDS
treatment for inmates.
Board of Probation and Parole
$2.5 million for 34 additional parole agents and staff to maintain
caseload levels and support an additional position in the Victims
Assistance program.
43
Enhance Penns Woods
44
Enhance Penns Woods Revenue Sources
2013-14 2014-15 Total
Environmental Stewardship Fund $ 705 $ 6,627 $ 7,332
Keystone Parks and Recreation Fund 17,243 18,252 35,495
Oil and Gas Lease Funds 4,925 4,925 9,850
Dirt and Gravel Roads (MLF) 1,000 7,000 8,000
Forestry Bridge Account (MLF) 5,077 7,461 12,538
Purchase of State Forest Land (Restricted Acct.) 2,680 681 3,361
Snowmobile/ATV (Restricted Acct.) 3,492 3,492 6,984
Capital Allocation 25,782 56,950 82,732
Growing Greener II Bond Fund Special Allocation 0 45,000 45,000
Total $60,904 $150,388 $211,292
The budget proposes a two-year, $211 million initiative to invest in statewide parks and forestry
infrastructure. This funding includes existing Department of Conservation and Natural Resources
revenue streams, such as Environmental Stewardship Fund, Keystone Parks and Recreations
Funds, Oil and Gas Lease Funds and the departments annual capital allocation.
In addition, the initiative includes a special allocation of $45 million from the Growing Greener II
Bond Fund. Because of premiums earned on bond issuances and accrued interest, this additional
funding is available to support this initiative.
Commonwealth of Pennsylvania
Tom Corbett
Governor
Charles B. Zogby
Secretary of the Budget
February 4, 2014

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