Joint Legislative Budget Committee meeting notice, agenda and minutes

              STATE OF ARIZONA
Joint Legislative Budget Committee
STATE HOUSE OF
SENATE 1716 WEST ADAMS REPRESENTATIVES
PHOENIX, ARIZONA 85007
DON SHOOTER JOHN KAVANAGH
CHAIRMAN 2012 PHONE (602) 926-5491 CHAIRMAN 2011
ANDY BIGGS LELA ALSTON
OLIVIA CAJERO BEDFORD FAX (602) 926-5416 STEVE COURT
RICH CRANDALL JOHN M. FILLMORE
LORI KLEIN http://www.azleg.gov/jlbc.htm JACK W. HARPER
LINDA LOPEZ MATT HEINZ
RICK MURPHY RUSS JONES
STEVEN B. YARBROUGH ANNA TOVAR
JOINT LEGISLATIVE BUDGET COMMITTEE
Thursday, October 4, 2012
1:00 P.M.
Senate Appropriations, Room 109
MEETING NOTICE
- Call to Order
- Approval of Minutes of June 26, 2012.
- DIRECTOR'S REPORT (if necessary).
1. ARIZONA DEPARTMENT OF ADMINISTRATION
A. Review of Dental Self-Insurance Plan and Planned Contribution Strategy for State
Employee and Retiree Dental Plans.
B. Review of Automation Projects Fund FY 2013 Expenditure Plan.
2. AHCCCS/DEPARTMENT OF ECONOMIC SECURITY - Review of Proposed Capitation
Rate Changes.
3. DEPARTMENT OF HEALTH SERVICES - Review of Behavioral Health Medicaid Capitation
Rate Changes.
4. ATTORNEY GENERAL - Review of Allocation of Settlement Monies.
5. ARIZONA DEPARTMENT OF CORRECTIONS - Review of FY 2012 Bed Capacity Report.
6. ARIZONA BOARD OF REGENTS - Review of FY 2013 Tuition Revenues.
7. REVIEW OF AGENCY LEGAL SERVICES CHARGES.
The Chairman reserves the right to set the order of the agenda.
9/26/12
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People with disabilities may request accommodations such as interpreters, alternative formats, or assistance with physical accessibility.
Requests for accommodations must be made with 72 hours prior notice. If you require accommodations, please contact the JLBC Office
at (602) 926-5491.
STATE OF ARIZONA
Joint Legislative Budget Committee
STATE HOUSE OF
SENATE 1716 WEST ADAMS REPRESENTATIVES
PHOENIX, ARIZONA 85007
DON SHOOTER JOHN KAVANAGH
CHAIRMAN 2012 PHONE (602) 926-5491 CHAIRMAN 2011
ANDY BIGGS LELA ALSTON
OLIVIA CAJERO BEDFORD FAX (602) 926-5416 STEVE COURT
RICH CRANDALL JOHN M. FILLMORE
LORI KLEIN http://www.azleg.gov/jlbc.htm JACK W. HARPER
LINDA LOPEZ MATT HEINZ
RICK MURPHY RUSS JONES
STEVEN B. YARBROUGH ANNA TOVAR
REVISED
MINUTES OF THE MEETING
JOINT LEGISLATIVE BUDGET COMMITTEE
June 26, 2012
The Chairman called the meeting to order at 11:10 a.m., Tuesday, June 26, 2012, in Senate
Appropriations Room 109. The following were present:
Members: Senator Shooter, Chairman Representative Kavanagh, Vice-Chairman
Senator Biggs Representative Alston
Senator Cajero Bedford Representative Court
Senator Lopez Representative Fillmore
Senator Yarbrough Representative Jones
Absent: Senator Klein Representative Harper
Senator Murphy Representative Heinz
Representative Tovar
Excused: Senator Crandall
APPROVAL OF MINUTES
Hearing no objections from the members of the Committee to the minutes of April 3, 2012, Chairman
Don Shooter stated that the minutes would stand approved.
ARIZONA DEPARTMENT OF ADMINISTRATION
A. Review of Requested Exchange of Fund Transfers.
Mr. Steve Schimpp, JLBC Staff, stated that this item is a review of the exchange of fund transfers
required for FY 2012. He noted that the budget allowed agencies to request an exchange of which
funds they would have monies transferred from. Three agencies, the Arizona Department of Education
(ADE), the Department of Economic Security (DES), and the Department of Public Safety (DPS)
through the Arizona Department of Administration (ADOA) have requested an exchange of funds to
take the monies out of different funds for cash flow reasons. He noted that the funds appear on a table
in the agenda package.
(Continued)
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The JLBC Staff presented options to the Committee.
Representative Kavanagh moved that the Committee give a favorable review of the exchange of fund
transfers as shown in Table 1. The motion carried.
Table 1
Requested FY 2012 Fund Transfer Exchanges
Original Fund 1/ Agency Proposed Fund 2/
Proposed
Transfer
Amount
Arizona Department of Education
Internal Services Fund Special Education Fund $ 795,400
Production Revolving Fund Special Education Fund 371,200
Subtotal $1,166,600
Department of Public Safety
DPS Licensing Fund Fingerprint Clearance Card Fund $150,000
Criminal Justice Enhancement Fund Fingerprint Clearance Card Fund 350,000
Subtotal $500,000
Department of Economic Security
Industries for the Blind Fund Special Administration Fund $244,100
Subtotal $244,100
____________
1/ Fund source for transfers in budget.
2/ Funds from which agencies are requesting transfers in order to accommodate the mandated transfer.
B. Review of Automation Projects Fund FY 2013 Expenditure Plan.
Mr. Brett Searle, JLBC Staff, stated that this item is a review of the proposed FY 2013 expenditures
from the Automation Projects Fund, which requires JLBC review. The FY 2013 Government Budget
Reconciliation Bill established the Automation Projects Fund, which is administered by ADOA.
The JLBC Staff presented options to the Committee and answered questions from members.
Mr. Aaron Sandine, Chief Information Officer, Deputy Director, ADOA, responded to member questions.
ADOA will return to a future JLBC meeting after canvassing agencies regarding the status of
participation in the new Arizona Financial Information System (AFIS).
Representative Kavanagh moved that the Committee give a favorable review of the ADOA request for
$16.4 million in proposed FY 2013 expenditures from the Automation Projects Fund for both ADOA and
the Department of Revenue projects with the following provisions:
1. ADOA submit a quarterly report that provides an update on the implementation of the 23 projects
included in this expenditure plan, as well as any subsequent projects. The report is to include the
project’s deliverables, the timeline for completion, and the current status.
2. If an agency elects not to participate in the new financial accounting system, future submissions
to the Committee regarding the replacement of AFIS should outline an agency’s reasons for not
utilizing the new system.
The motion carried.
(Continued)
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ATTORNEY GENERAL - Review of Allocation of Settlement Monies.
Ms. Marge Zylla, JLBC Staff, stated that this item is a review of the allocation plans from 2 settlements
based on alleged consumer fraud violations. The first settlement with American Residential Services
(heating and air conditioning repair), requires the company to deposit $155,000 into the Attorney
General’s (AG) Consumer Fraud Revolving Fund and pay $240,000 for consumer restitution. The
second settlement with Abbot Laboratories (pharmaceuticals) includes a $1,964,200 deposit into the
Consumer Fraud Revolving Fund.
The JLBC Staff recommended a favorable review of this item and answered questions from members.
Representative Kavanagh moved that the Committee give a favorable of the Attorney General allocation
of settlement monies regarding American Residential Services and Abbot Laboratories. The motion
carried.
ATTORNEY GENERAL - Review of FY 2007 and FY 2008 Uncollectible Debt.
Ms. Marge Zylla, JLBC Staff, stated that this item is a review of the AG’s uncollectible debts report.
Upon the Committee’s review, these debts can be removed from the state’s accounting books. The AG
has identified $10.2 million in FY 2007 and $15.9 million in FY 2008.
The JLBC Staff presented options to the Committee.
Representative Kavanagh moved that the Committee give a favorable review of the FY 2007 and FY 2008
Uncollectible Debt Report with the provision that the AG report back to the Committee by October 31,
2012 on its evaluation of releasing debtor information to credit reporting agencies.
The motion carried.
EXECUTIVE SESSION
Representative Kavanagh moved that the Committee go into Executive Session. The motion carried.
At 11:38 a.m. the Committee went into Executive Session.
Senator Biggs moved that the Committee reconvene into open session. The motion carried.
At 12:02 p.m. the Committee reconvened into open session.
A. Arizona Department of Administration - Review for Committee the Planned Contribution
Strategy for State Employee and Retiree Health Plans as Required under A.R.S. § 38-658A.
The Committee discussed and received the report.
B. Arizona Department of Administration, Risk Management Services - Consideration of
Proposed Settlements under Rule 14.
Representative Kavanagh moved that the Committee accept the recommended settlement proposal by the
Attorney General’s Office in the case of Hall v. State, et al.
The motion carried.
Without objection, the meeting adjourned at 12:03 p.m.
(Continued)
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Respectfully submitted:
_________________________________________
Alanna Carabott, Secretary
_________________________________________
Richard Stavneak, Director
_________________________________________
Senator Don Shooter, Chairman
NOTE: A full audio recording of this meeting is available at the JLBC Staff Office, 1716 W. Adams.
A full video recording of this meeting is available at http://www.azleg.gov/jlbc/meeting.htm.
STATE OF ARIZONA
Joint Legislative Budget Committee
STATE HOUSE OF
SENATE 1716 WEST ADAMS REPRESENTATIVES
PHOENIX, ARIZONA 85007
DON SHOOTER JOHN KAVANAGH
CHAIRMAN 2012 PHONE (602) 926-5491 CHAIRMAN 2011
ANDY BIGGS LELA ALSTON
OLIVIA CAJERO BEDFORD FAX (602) 926-5416 STEVE COURT
RICH CRANDALL JOHN M. FILLMORE
LORI KLEIN http://www.azleg.gov/jlbc.htm JACK W. HARPER
LINDA LOPEZ MATT HEINZ
RICK MURPHY RUSS JONES
STEVEN B. YARBROUGH ANNA TOVAR
DATE: September 27, 2012
TO: Senator Don Shooter, Chairman
Members, Joint Legislative Budget Committee
THRU: Richard Stavneak, Director
FROM: Amy Upston, Principal Fiscal Analyst
SUBJECT: Arizona Department of Administration – Review of Dental Self-Insurance Plan and
Planned Contribution Strategy for State Employee and Retiree Dental Plans
Request
A.R.S. § 38-658A requires that the Arizona Department of Administration (ADOA) meet with and review
for the Committee the planned contribution strategy for each dental and health plan at least 10 days prior
to entering into or renewing a contract. At its June 26, 2012 JLBC meeting, the Committee reviewed the
health insurance contribution strategy.
The dental contracts reduce employee insurance premiums for all plans, with one exception. ADOA is
also implementing some new coverage limits.
In addition, Laws 2012, Chapter 299 requires ADOA to submit a plan to the Committee for review prior
to switching to a dental self-funded plan. ADOA is implementing a new self-funded PPO dental plan
beginning on January 1, 2013. This plan would replace the current fully-insured PPO dental plan.
This item addresses both the review of the dental contribution strategy and the review of the self-funded
dental plan. The JLBC is required to review proposed contracts in Executive Session. ADOA approved
the contract on September 19, however, in order to begin open enrollment on October 22. As a result, this
meeting does not need to occur in Executive Session.
Recommendation
The Committee has at least the following options:
1. A favorable review of the dental self-funded program and the planned contribution strategy.
2. An unfavorable review of the dental self-funded program and the planned contribution strategy.
3. Take no action since ADOA has already signed vendor contracts and have publicly released the
information.
(Continued)
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Analysis
Dental Premiums
ADOA is implementing a new self-funded PPO dental plan beginning on January 1, 2013. The plan will
replace the fully-insured PPO dental plan currently administered by Delta Dental. ADOA will continue to
contract with Delta Dental as their third party administrator and will utilize Delta Dental’s network
access.
ADOA estimates $3.6 million in annual savings from changing to a self-funded plan. In switching to a
self-funded plan, ADOA seeks to reserve $15.2 million of Health Insurance Trust Fund (HITF) monies
($7.6 million for the incurred but not received expenses and $7.6 million for other unforeseen
contingencies). These reserves were already incorporated into the estimated HITF balance presented at
the last JLBC meeting.
In addition to the self-funded plan, ADOA will continue to offer the fully-insured Dental Health
Maintenance Organization (DHMO) plan. Total Dental Administrators will continue to administer the
DHMO plan.
Beginning in Plan Year (PY) 2013 (January - December 2013), dental insurance premiums will move
from a 3-tiered structure to a 4-tiered structure similar to the health insurance structure. All employer
premiums will remain at the current PY 2012 levels. Employee contributions will decrease for all plans,
except for single coverage for the PPO plan which will remain unchanged. When ADOA reviewed the
actual experience of each tier, they found that singles were paying less than their actual cost. The
discrepancy between costs and premiums results from a high number of retirees that select single dental
coverage.
Premiums for employees and employers are shown in Table 1. Retirees are responsible for paying both
the employee and employer portion of the dental premium.
Table 1
PY 2013 Monthly Dental Premiums
Employee Employer
Employee
Decrease
EE only * $ 4.03 $ 4.96 $ (0.97)
EE + Child 7.59 9.92 (1.41)
EE + Adult 8.06 9.92 (0.94)
DHMO
Family 13.27 13.70 (0.73)
EE only $ 30.98 $ 4.96 $ (0.00)
EE + Child 50.56 9.92 (20.31)
EE + Adult 65.71 9.92 (5.16)
PPO
Family 104.56 13.70 (18.56)
_________
* EE indicates employee. “EE only” is single coverage, “EE +
Child” is coverage for an employee with 1 dependent child, etc.
Dental Benefit Changes
There are 2 dental benefit changes for PY 2013. ADOA is implementing a 6-month waiting period for
major benefits (such as cast crowns, implants, bridges, and dentures) and orthodontic services if members
do not select the self-funded dental PPO when it first becomes available to them, in order to discourage
members from selecting the PPO plan only when major dental work is needed. This limit does not
(Continued)
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apply to those who switch from the DHMO plan to the PPO plan on January 1, 2013. ADOA is also
excluding routine services from the annual maximum limit. These changes would result in an estimated
combined savings of less than $1 million annually.
Additional Medical Benefit Changes
ADOA is implementing 2 additional medical benefit changes which were not discussed at the last JLBC
meeting. The health plans will cover compression stockings for lymphedema treatment and wigs and
hairpieces for cancer patients and burn victims. These 2 changes would result in an estimated cost of less
than $1 million annually.
RS/AU:lm
STATE OF ARIZONA
Joint Legislative Budget Committee
STATE HOUSE OF
SENATE 1716 WEST ADAMS REPRESENTATIVES
PHOENIX, ARIZONA 85007
DON SHOOTER JOHN KAVANAGH
CHAIRMAN 2012 PHONE (602) 926-5491 CHAIRMAN 2011
ANDY BIGGS LELA ALSTON
OLIVIA CAJERO BEDFORD FAX (602) 926-5416 STEVE COURT
RICH CRANDALL JOHN M. FILLMORE
LORI KLEIN http://www.azleg.gov/jlbc.htm JACK W. HARPER
LINDA LOPEZ MATT HEINZ
RICK MURPHY RUSS JONES
STEVEN B. YARBROUGH ANNA TOVAR
DATE: September 27, 2012
TO: Senator Don Shooter, Chairman
Members, Joint Legislative Budget Committee
THRU: Richard Stavneak, Director
FROM: Brett Searle, Fiscal Analyst
SUBJECT: Arizona Department of Administration - Review of Automation Projects Fund FY 2013
Expenditure Plan
Request
Pursuant to the Laws 2012, Chapter 298, Section 1, the Arizona Department of Administration (ADOA)
has requested that the Committee review $830,000 in proposed FY 2013 expenditures from the
Automation Projects Fund for an Arizona Health Care Cost Containment System (AHCCCS) security
enhancement project. This proposal is part of a 4-year $91.1 million automation spending plan approved
by the Legislature.
Recommendation
The Committee has at least the following options:
1. A favorable review.
2. An unfavorable review.
Under either option, the JLBC Staff recommends that the AHCCCS project be subject to approval by the
Arizona Strategic Enterprise Technology Office (ASET), which is the information technology (IT)
oversight division within ADOA. ASET is required to approve all state agency IT projects over $25,000.
Analysis
Automation Projects Fund Summary
Laws 2012, Chapter 298, Section 1 created the Automation Projects Fund. The General Appropriation
Act (Laws 2012, Chapter 294, Section 124) appropriated a total of $28.1 million from the following funds
for deposit into the Automation Projects Fund in FY 2013:
(Continued)
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• $16.8 million from the General Fund
• $4.2 million from the Automation Operations Fund
• $1.5 million from the Information Technology Fund
• $5.6 million from the State Web Portal Fund
In addition to the FY 2013 funding, the General Appropriation Act appropriated the following amounts
from the General Fund in future years to the Automation Projects Fund: $20.0 million in FY 2014, $20.0
million in FY 2015, and $23.0 million in FY 2016. Over 4 years, overall project funding equals $91.1
million.
Monies in the fund are to be used to implement, upgrade, or maintain automation and IT projects for any
state agency. The primary project is the replacement of the Arizona Financial Information System
(AFIS).
This expenditure plan review is the second for FY 2013. The previous review included a $16.4 million
expenditure plan, involving projects managed by ADOA and the Department of Revenue (DOR). Of the
$16.4 million in estimated spending, $3 million was designated for planning associated with the
replacement of AFIS. With the current review of $830,000, a total of $17.2 million in expenditures from
the Automation Projects Fund are planned for FY 2013, leaving $73.9 million for the AFIS replacement.
This amount may be sufficient based on experiences in other states, however, the ultimate cost of the
project will depend on the results of the upcoming procurement process.
ADOA has indicated that there will be additional requests for review of expenditures from the
Automation Projects Fund in FY 2013.
AHCCCS Security Upgrades
AHCCCS is responsible for protecting the Personally Identifiable Information (PII) and Protected Health
Information (PHI) of the state’s 1.3 million Medicaid participants. As such, AHCCCS has requested
$830,000 from the Automation Projects Fund to enhance security related to PII/PHI. The project would
include the following components:
• $500,000 for Encryption of Network Data at Rest - This component of the project would focus on
encrypting PII/PHI that resides in databases, file systems, and other structured storage methods in
accordance with requirements of Health Insurance Portability and Accountability Act (HIPAA).
• $125,000 for Security Information and Event Management - The agency would acquire a tool to
automate the reporting functions of network devices (such as firewalls, servers, intrusion
detection, workstations, and applications), thereby assisting in monitoring and analyzing network
events.
• $80,000 for Firewalls - This component would upgrade existing firewalls. The existing firewalls
in the current AHCCCS database are nearly 11 years old and all vendor support ends in March
2013. Typical best practices suggest a replacement cycle of 5 to 7 years for firewalls.
• $50,000 for Penetration Testing - An external 3rd party is to provide a security threat and risk
assessment.
• $50,000 for Vulnerability Scanning - A vulnerability scanning tool would be implemented to
provide automated assessments of security weaknesses in AHCCCS computer systems, networks,
and applications.
(Continued)
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• $25,000 for Data Loss Prevention - Two components of a data loss toolset were purchased in
April 2011. This purchase would expand data loss prevention capabilities to cover additional
threats such as PII/PHI being transferred to USB, CD/DVD, or laptops.
These cost estimates are based on quotes for similar types of products, and as such, actual costs incurred
by AHCCCS may differ.
With the exception of the penetration testing, all components of the project would be implemented by
AHCCCS staff. Additionally, the project is subject to review by ADOA’s Arizona Strategic Enterprise
Technology Office (ASET), which reviews all state agency IT projects over $25,000.
RS/BS:ac
(Continued)
STATE OF ARIZONA
Joint Legislative Budget Committee
STATE HOUSE OF
SENATE 1716 WEST ADAMS REPRESENTATIVES
PHOENIX, ARIZONA 85007
DON SHOOTER JOHN KAVANAGH
CHAIRMAN 2012 PHONE (602) 926-5491 CHAIRMAN 2011
ANDY BIGGS LELA ALSTON
OLIVIA CAJERO BEDFORD FAX (602) 926-5416 STEVE COURT
RICH CRANDALL JOHN M. FILLMORE
LORI KLEIN http://www.azleg.gov/jlbc.htm JACK W. HARPER
LINDA LOPEZ MATT HEINZ
RICK MURPHY RUSS JONES
STEVEN B. YARBROUGH ANNA TOVAR
DATE: September 27, 2012
TO: Senator Don Shooter, Chairman
Members, Joint Legislative Budget Committee
THRU: Richard Stavneak, Director
FROM: Amy Upston, Principal Fiscal Analyst
SUBJECT: AHCCCS/DES - Review of Proposed Capitation Rate Changes
Request
Pursuant to footnotes in the FY 2013 General Appropriation Act, the Arizona Health Care Cost
Containment System (AHCCCS) and the Department of Economic Security (DES) must present its plan
to the Committee for review prior to implementing any changes in capitation rates. The General
Appropriation Act also requires JLBC review of any policy changes exceeding $500,000, not otherwise
required by federal or state law. AHCCCS submitted this item for both agencies.
Recommendation
The Committee has at least the following options:
1. A favorable review.
2. An unfavorable review.
The proposed rates include 1 relevant policy change of more than $500,000, which involves hepatitis C
drugs.
The proposed rates would cost $18.2 million, or 1.3%, more from the General Fund in FY 2013 than the
current rates. Due to lower than projected enrollment, however, AHCCCS will generate more than
sufficient savings to offset cost.
Analysis
Capitation rates are developed by actuaries based on information provided to them by the agency. Rates
are set for the beginning of the contract year – July 1 for the DES program and October 1 for AHCCCS
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programs. They must be approved by the Federal Centers for Medicare and Medicaid Services (CMS).
Rates for Medicaid programs are composed of adjustments for trends, experience, and program changes.
These rates would normally remain in effect for a full year, but the agencies indicate they will make
additional adjustments beginning January 1, 2013 due to a requirement in Federal health care legislation
that primary care physicians are reimbursed at 100% of the Medicare rates from January 1, 2013 to
December 31, 2014. The federal government will pay 100% of the cost of increasing rates above what
was in effect in July 2009. Since the rates for primary care physicians are now below what the state paid
in July 2009, the state will only receive the regular match rate for the cost of restoring rates to the July
2009 level. This requirement winds up increasing state costs over this 2-year period. The cost has yet to
be determined.
Capitation rates are adjusted annually for medical expense and utilization trends. Utilization refers to the
percentage of eligible individuals who use services and the amount of services each member uses. In
developing capitation rates, the actuaries also compare prior rate calculations and assumptions to actual
results for medical expenses and utilization. This is referred to as experience adjustments. The acute care
rate includes a number program changes (described below). While some of these changes are
incorporated into the other programs, rate changes to those programs are immaterial.
Adjustments by Program
AHCCCS Acute Care
This population represents members who participate in the Traditional Medicaid, Proposition 204, and
KidsCare programs. Overall, the proposed capitation rates for these programs will increase by 2.9% due
to medical cost trends and experience adjustments along with other program changes as described below.
• The approval of 2 new drug therapies for hepatitis C is expected to increase General Fund costs
by approximately $2.4 million. AHCCCS expects that these drugs will ultimately reduce the
need for liver transplants. This is the only policy change exceeding $500,000.
• Rates have been adjusted to include savings from performing certain procedures in ambulatory
surgical centers instead of hospitals. AHCCCS estimates this will generate approximately $(2.3)
million in General Fund savings.
• On April 1, 2012, AHCCCS changed the way they reimburse community health centers for
certain prescription drugs. AHCCCS estimates this will save the General Fund approximately
$(1.7) million.
• Rates for certain types of family planning services were increased beginning February 1, 2012.
AHCCCS estimates this will cost the General Fund approximately $1 million.
• The Federal government is now requiring AHCCCS to pay cost-sharing for services provided to
certain individuals who are enrolled in both Medicare and Medicaid. AHCCCS estimates this
will increase General Fund costs by approximately $1 million.
• Beginning on April 1, 2012 childless adults in Maricopa and Pima Counties are charged a $2
mandatory co-pay for taxi services each way. AHCCCS estimates a General Fund savings of
approximately $(72,000).
Overall, the change in acute care rates will result in a General Fund cost of $23.0 million based on current
caseload projections.
AHCCCS Long-Term Care (ALTCS) for the Elderly and Physically Disabled
ALTCS services are provided to the elderly and physically disabled in need of long-term care either in
nursing care facilities or in home and community-based settings. The state, counties, and federal
government share in the cost of ALTCS services. The proposed capitation rates are 1.9% above last
(Continued)
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year’s rates. This increase is the result of both increases in utilization and medical expenses due to
experience and trends. These increases are partially offset by an increase in members using home and
community based settings which are less expensive than nursing facilities. The change in rates will result
in a net General Fund cost of $0.4 million, based on current caseload projections.
Children’s Rehabilitative Services (CRS)
The CRS program is administered by AHCCCS and provides services for children with chronic and
disabling or potentially disabling conditions. Rates will go down by (12.8)% from last year, primarily the
result of rebasing medical expenses based on actual experience. Based on current caseload projections,
this will result in General Fund savings of $(4.1) million.
Long-Term Care for the Developmentally Disabled (DD)
DES administers the DD program, providing services for individuals with cognitive disabilities, cerebral
palsy, autism, or epilepsy. Rates have been reduced by (0.4)% for CYE 13, primarily from declining
institutional trends. Based on current budget projections, this will result in General Fund savings of
$(1.2) million.
Monthly Capitation Rates
The table below compares the proposed rates to the current rates for the 4 populations.
Table 1
Monthly Regular Capitation Rates
Populations
Current
Rates
Proposed
Rates % Change
AHCCCS Acute $ 226.55 $ 233.16 2.9%
AHCCCS Elderly & Physically Disabled 2,965.97 3,022.21 1.9
Children’s Rehabilitative Services 424.10 369.61 (12.8)
DES Developmentally Disabled 3,095.80 3,084.22 (0.4)
RS/AU:ac
STATE OF ARIZONA
Joint Legislative Budget Committee
STATE HOUSE OF
SENATE 1716 WEST ADAMS REPRESENTATIVES
PHOENIX, ARIZONA 85007
DON SHOOTER JOHN KAVANAGH
CHAIRMAN 2012 PHONE (602) 926-5491 CHAIRMAN 2011
ANDY BIGGS LELA ALSTON
OLIVIA CAJERO BEDFORD FAX (602) 926-5416 STEVE COURT
RICH CRANDALL JOHN M. FILLMORE
LORI KLEIN http://www.azleg.gov/jlbc.htm JACK W. HARPER
LINDA LOPEZ MATT HEINZ
RICK MURPHY RUSS JONES
STEVEN B. YARBROUGH ANNA TOVAR
DATE: September 27, 2012
TO: Senator Don Shooter, Chairman
Members, Joint Legislative Budget Committee
THRU: Richard Stavneak, Director
FROM: Art Smith, Senior Fiscal Analyst
SUBJECT: Department of Health Services - Review of Behavioral Health Medicaid Capitation Rate
Changes
Request
Pursuant to a FY 2013 General Appropriation Act footnote, the Department of Health Services (DHS)
must present its plan to the Committee for review prior to implementing any change in capitation rates for
the Medicaid Behavioral Health Program. Capitation rates are the flat monthly payments made to
managed-care health plans for each Medicaid recipient. The General Appropriation act also requires
JLBC review of any policy changes exceeding $500,000.
Recommendation
The Committee has at least the following options:
1. A favorable review.
2. An unfavorable review.
The proposed rates include 1 relevant policy change of more than $500,000, which provides expanded
behavioral health services to foster children and their parents.
At the budgeted caseload level, the proposed rates could be funded with DHS’ 2013 budget and would
likely generate savings.
Analysis
The proposed rates are based upon an actuarial study. A.R.S. § 36-2901.06 limits capitation rate
adjustments to utilization and inflation changes unless those changes are approved by the Legislature or
are specifically required by federal law or court mandate. Capitation rates must be approved by the
Federal Centers for Medicare and Medicaid Services (CMS). Rates for Medicaid programs are composed
of adjustments for trends, experience, and program changes.
(Continued)
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Capitation rates are adjusted annually for medical expense and utilization trends. Utilization refers to the
percentage of eligible individuals who use services and the amount of services each member uses. In
developing capitation rates, the actuaries also compare prior rate calculations and assumptions to actual
results for medical expenses and utilization. This is referred to as experience adjustments. The
behavioral health rates include a number of program changes, which are described below.
These rates would normally remain in effect for a full year, but DHS has indicated that they will make
additional adjustments beginning January 1, 2013 to include changes to the physician fee schedule
resulting from federal health care requirements, for Medicare Part D plans to cover additional medications
on their formularies, and coverage for dual eligible members to treat epilepsy, cancer, and chronic mental
health disorder. Furthermore, DHS states that rates will be updated to include a 2% provider rate increase
effective April 1, 2013 that was passed in the FY 2013 budget but has not been incorporated into the
agency’s current capitation rates.
Table 1 below shows the FY 2013 budgeted and proposed capitation rates for each program.
Table 1
Monthly Capitation Rate
Category
FY 2013
Budgeted
FY 2013
Proposed
Children $54.67 $59.87
SMI $78.28 $76.24
General Mental Health $41.41 $43.29
Program Adjustments
Provider Fee Schedule Reduction
On October 1, 2011, DHS implemented a 5% provider rate decrease for all provider types, excluding
pharmacy services. Annualizing this adjustment for a full fiscal year is expected to save the General Fund
$(12,941,000) in FY 2013.
Additional Behavioral Health Services for Foster Care
Beginning July 1, 2011, DHS increased services for at-risk foster children from birth to 3 years of age as
part of judicial oversight of the services that they receive. DHS expanded counseling services for both
foster children and parents. This program expansion is expected to cost the General Fund $813,000 in FY
2013.
Other Services
There are various capitation adjustments with smaller dollar amount impacts that have been described by
the agency, including reductions in respite hours and reduced prescription medication prices for health
care providers. Also incorporated into these smaller capitation adjustments are a shift of psychiatric
consultations of acute care patients from AHCCCS to DHS and a shift of emergency transportation costs
from DHS to AHCCCS. The total General Fund impact of these adjustments results in a reduction of
$(282,400).
RS/AS:ac
STATE OF ARIZONA
Joint Legislative Budget Committee
STATE HOUSE OF
SENATE 1716 WEST ADAMS REPRESENTATIVES
PHOENIX, ARIZONA 85007
DON SHOOTER JOHN KAVANAGH
CHAIRMAN 2012 PHONE (602) 926-5491 CHAIRMAN 2011
ANDY BIGGS LELA ALSTON
OLIVIA CAJERO BEDFORD FAX (602) 926-5416 STEVE COURT
RICH CRANDALL JOHN M. FILLMORE
LORI KLEIN http://www.azleg.gov/jlbc.htm JACK W. HARPER
LINDA LOPEZ MATT HEINZ
RICK MURPHY RUSS JONES
STEVEN B. YARBROUGH ANNA TOVAR
DATE: September 27, 2012
TO: Senator Don Shooter, Chairman
Members, Joint Legislative Budget Committee
THRU: Richard Stavneak, Director
FROM: Marge Zylla, Senior Fiscal Analyst
SUBJECT: Attorney General - Review of Allocation of Settlement Monies
Request
The General Appropriation Act (Laws 2011, Chapter 24) contains a footnote that requires Joint
Legislative Budget Committee (JLBC) review of the expenditure plan for settlement monies over
$100,000 received by the Office of the Attorney General (AG), or any other person on behalf of the State
of Arizona, prior to expenditure of the monies. Settlements that are deposited in the General Fund
pursuant to statute do not require JLBC review.
This request is for review of the expenditure plan for a total of $215,100 from 2 settlements: 1) a
$100,000 allocation to the AG from a consent judgment with QuinStreet, Inc., the former owner of the
website GIBill.com; and 2) a $115,100 settlement from a consent judgment with Skechers USA, Inc., a
footwear company.
Recommendation
The JLBC Staff recommends that the Committee give a favorable review of the allocation plans from the
$100,000 consent judgment with Quinstreet and the $115,100 settlement with Skechers. The allocation
plans are consistent with A.R.S. § 44-1531.01, which relates to the distribution of monies recovered as a
result of enforcing consumer protection or consumer fraud statutes.
Analysis
QuinStreet, Inc.
In June 2012, the AG and 18 other states entered into an assurance of discontinuance with QuinStreet as a
result of their consumer fraud investigation of QuinStreet’s management of websites targeting military
service members. The investigation alleged that QuinStreet engaged in violations to the Consumer Fraud
(Continued)
- 2 -
Act, which included falsely suggesting that the website GIBill.com was operated or endorsed by the U.S.
government and that the website’s list of “eligible GI Bill schools” was an exhaustive list when the list
was only comprised of QuinStreet clients.
The settlement requires ARS to pay $100,000 to the AG. This amount will be deposited into the
Consumer Fraud Revolving Fund for attorney fees, investigation costs, and to support consumer fraud
investigations, consumer education, and enforcement of the Consumer Fraud Act and AG operating
expenses. The Consumer Fraud Revolving Fund is appropriated and the AG’s ability to expend up to the
fund’s appropriation level of $3.5 million depends on the amount of settlement revenues into the fund.
QuinStreet has relinquished ownership and operation of the GIBill.com website to the U.S. Department of
Veterans Affairs, which is currently using the site to provide information about GI Bill benefits. In
addition to the payment to the AG, the settlement also requires QuinStreet’s military-related sites to
contain clear disclosures that the sites are not owned or operated by the U.S. government and that the
schools listed are advertisers or pay to appear on the sites and are not the only schools that accept GI Bill
benefits.
Skechers USA, Inc.
In May 2012, Arizona, 43 other states, and the District of Columbia entered into a consent judgment with
Skechers as a result of allegations that Skechers deceptively marketed and sold toning footwear. The
complaint alleged that Skechers claimed that wearing the footwear would have health benefits which
included promoting weight loss, burning more calories, reducing cellulite and increasing blood
circulation.
The settlement requires Skechers to pay $40 million in consumer refunds, which will be administered by
the Federal Trade Commission with additional information on the website www.skecherssettlement.com.
The settlement requires Skechers to pay $115,100 to the AG. This amount will be deposited into the
Consumer Fraud Revolving Fund for attorney fees, investigation costs, and to support consumer fraud
investigations, consumer education, and enforcement of the Consumer Fraud Act and AG operating
expenses. The Consumer Fraud Revolving Fund is appropriated and the AG’s ability to expend up to the
fund’s appropriation level of $3.5 million depends on the amount of settlement revenues into the fund.
The settlement also requires Skechers to avoid misleading claims about certain footwear including
avoiding claims of muscle strengthening, weight loss or other fitness benefits, unless they are true claims
backed by scientific evidence.
RS/MZ:ac
STATE OF ARIZONA
Joint Legislative Budget Committee
STATE HOUSE OF
SENATE 1716 WEST ADAMS REPRESENTATIVES
PHOENIX, ARIZONA 85007
DON SHOOTER JOHN KAVANAGH
CHAIRMAN 2012 PHONE (602) 926-5491 CHAIRMAN 2011
ANDY BIGGS LELA ALSTON
OLIVIA CAJERO BEDFORD FAX (602) 926-5416 STEVE COURT
RICH CRANDALL JOHN M. FILLMORE
LORI KLEIN http://www.azleg.gov/jlbc.htm JACK W. HARPER
LINDA LOPEZ MATT HEINZ
RICK MURPHY RUSS JONES
STEVEN B. YARBROUGH ANNA TOVAR
DATE: September 27, 2012
TO: Senator Don Shooter, Chairman
Members, Joint Legislative Budget Committee
THRU: Richard Stavneak, Director
FROM: Brett Searle, Fiscal Analyst
SUBJECT: Arizona Department of Corrections - Review of FY 2012 Bed Capacity Report
Request
Pursuant to a FY 2013 General Appropriation Act footnote, the Arizona Department of Corrections
(ADC) has submitted for review its FY 2012 bed capacity report. The report is to explain the reasons for
any changes in the level of bed capacity during the past year.
Recommendation
The Committee has at least the following 2 options:
1. A favorable review of the department’s bed capacity report.
2. An unfavorable review of the department’s submission.
During FY 2012, the department reduced its operating capacity by 962 beds, from 42,951 to 41,989.
Most of this reduction occurred in temporary beds. Over the same time period, the inmate population
decreased from 40,181 to 39,877.
The footnote requires the department to provide bed capacity by funded beds. The funded beds figure has
been established by JLBC Staff to evaluate the department’s need for additional beds. While ADC
reported on “rated” and “temporary” beds, they did not address “funded” beds.
Analysis
Apart from any legislative changes, ADC may alter its bed capacity during the year. The department can
establish or decommission beds and also has flexibility to shift beds between inmate classifications.
These changes would affect its bed capacity during the year, thus impacting calculation of bed surplus
and shortfall. To better track the impact of the department’s revisions, the FY 2013 General
Appropriation Act added this first time reporting requirement.
(Continued)
- 2 -
Operating Capacity
The department’s operating capacity is the sum of rated and temporary beds at both state operated and
private prisons. Rated beds are, by physical design or as defined by law, a permanent part of a unit.
Temporary beds are added to areas that were not originally intended to house inmates or double-bunked
beds in areas that were intended for single beds.
During FY 2012, the department’s operating capacity was reduced by 962 beds, from 42,951 at the
beginning of fiscal year to 41,989 at the end. Table 1 provides a summary of the adjustments. The
elimination of 912 temporary beds accounted for most of the overall reduction in operating capacity. As
the overall prison population declined, ADC was able to eliminate use of these temporary beds:
• ADC eliminated 372 minimum custody beds and 195 medium custody beds to enhance staff and
inmate safety.
• ADC closed 21 minimum beds and 324 medium security beds due to the deteriorating condition of
the units.
Along with eliminating 912 temporary beds, ADC also reduced its rated capacity by 50 beds:
• 130 minimum beds were closed at the Douglas prison, which allowed for the transfer of 47 staff
positions to the reconstructed Yuma Cibola Unit.
• 400 medium custody beds at the Winslow prison were re-designated to close custody.
• 83 close custody beds at the Phoenix and Lewis prisons have been temporarily re-designated as
maximum custody beds.
• 24 maximum custody beds were re-designated to close custody at the Perryville prison.
(Continued)
Table 1
FY 2012 Operating Capacity Adjustments
Rated Temporary Operating Capacity
June
2011
Change in
Beds
June
2012
June
2011
Change in
Beds
June
2012
June
2011
Change in
Beds
June
2012
State Prisons
Minimum 11,707 (130) 11,577 1,611 (393) 1,218 13,318 (523) 12,795
Medium 11,635 (400) 11,235 2,992 (519) 2,473 14,627 (919) 13,708
Close 4,700 341 5,041 30 0 30 4,730 341 5,071
Maximum 3,217 139 3,356 521 0 521 3,738 139 3,877
Total - State Prisons 31,259 (50) 31,209 5,154 (912) 4,242 36,413 (962) 35,451
Private Prisons
Minimum 3,450 50 3,500 300 (50) 250 3,750 0 3,750
Medium 2,400 0 2,400 388 0 388 2,788 0 2,788
Total - Private Prisons 5,850 50 5,900 688 (50) 638 6,538 0 6,538
Total
Minimum 15,157 (80) 15,077 1,911 (443) 1,468 17,068 (523) 16,545
Medium 14,035 (400) 13,635 3,380 (519) 2,861 17,415 (919) 16,496
Close 4,700 341 5,041 30 0 30 4,730 341 5,071
Maximum 3,217 139 3,356 521 0 521 3,738 139 3,877
Total - ADC System 37,109 0 37,109 5,842 (962) 4,880 42,951 (962) 41,989
- 3 -
• ADC temporarily designated 80 special use beds at the Eyman Rynning Detention building as
maximum custody rated beds. This designation is expected to be reversed once the 500 maximum
custody beds, funded in the FY 2013 and FY 2014 budgets, are activated in FY 2015.
The net effect of these rated bed changes was a reduction of (130) minimum custody and (400) medium
custody beds, which was largely offset by an increase of 341 close custody and 139 maximum custody
beds.
According to the report, only 1 of the private prisons experienced an adjustment. At the Marana prison,
50 minimum security beds shifted from temporary to rated. The adjustment was the result of an
amendment to the state’s contract with Management and Training Corporation, which consolidated 450
rated beds and 50 emergency beds.
For adjustment detail by prison, see page 1-2 of the department’s attachment.
Special Use Beds
In addition to rated and temporary beds, special use beds are used for investigative detention, disciplinary
isolation, maximum behavior control, mental health observation, or medical inpatient care. Table 2
provides a summary of the FY 2012 adjustments to special use beds for both state operated and private
prisons. Due to their short term usage, these beds are not counted as part of ADC’s operational capacity.
Table 2
FY 2012 Special Use Bed Adjustments
June 2011
Change in
Beds June 2012
State Prisons 1,365 (56) 1,309
Private Prisons 248 (2) 246
Total - ADC System 1,613 (58) 1,555
Funded Beds
The department had 38,706 funded beds in FY 2012. The funded beds calculation has been JLBC Staff’s
approach to tracking bed surpluses and shortfalls. The calculation is the number of beds, rated or
temporary, that have been funded by the Legislature. Funded beds increase as the Legislature funds
newly constructed rated beds. Also, funded beds may increase when the Legislature accepts agency
requests to fund temporary beds. Without legislative action, funded beds remain the same, regardless of
changes the department may make to bed counts. ADC indicated in the report that it does not categorize
or track funded beds.
Bed Surplus/Shortfall
Table 3 illustrates 2 different ways to evaluate whether the department is experiencing a bed surplus or
shortfall. When counting only rated beds, ADC has a shortfall of (2,768).
Additionally, Table 3 provides details on the bed surplus or shortfall by inmate classification level. While
there is an overall rated bed shortfall, there is actually a surplus of minimum and close beds. The
shortfalls occur in medium beds (2,922) and maximum beds (199). The FY 2013 budget addressed this
issue by adding 1,000 new private medium beds and 500 new public maximum beds.
(Continued)
- 4 -
The second method of evaluating bed status is to determine ADC's overall bed capacity, including both
rated and temporary beds. After adjusting for 4,880 temporary beds in the overall ADC system, the
(2,768) rated bed shortfall becomes a 2,112 total bed surplus. In terms of the individual bed types, there
is only a shortfall in the medium category (61 beds).
RS/BS:lm
Table 3
End of Year Bed Surplus/Shortfall
Rated
Beds
Operating
Capacity
(rated +
temporary
beds)
Total Beds
(operating
capacity +
special use
beds)
Inmate
Population
Rated Beds
Surplus /
(Shortfall)
Operating
Capacity
Surplus /
(Shortfall)
State Prisons
Minimum 11,577 12,795 13,026 11,202 375 1,593
Medium 11,235 13,708 14,308 13,760 (2,525) (52)
Close 5,041 5,071 5,329 4,987 54 84
Maximum 3,356 3,877 4,097 3,555 (199) 322
Total - State Prisons 31,209 35,451 36,760 33,504 (2,295) 1,947
Private Prisons
Minimum 3,500 3,750 3,883 3,576 (76) 174
Medium 2,400 2,788 2,901 2,797 (397) (9)
Total - Private Prisons 5,900 6,538 6,784 6,373 (473) 165
ADC System
Minimum 15,077 16,545 16,909 14,778 299 1,767
Medium 13,635 16,496 17,209 16,557 (2,922) (61)
Close 5,041 5,071 5,329 4,987 54 84
Maximum 3,356 3,877 4,097 3,555 (199) 322
Total - ADC System 37,109 41,989 43,544 39,877 (2,768) 2,112
STATE OF ARIZONA
Joint Legislative Budget Committee
STATE HOUSE OF
SENATE 1716 WEST ADAMS REPRESENTATIVES
PHOENIX, ARIZONA 85007
DON SHOOTER JOHN KAVANAGH
CHAIRMAN 2012 PHONE (602) 926-5491 CHAIRMAN 2011
ANDY BIGGS LELA ALSTON
OLIVIA CAJERO BEDFORD FAX (602) 926-5416 STEVE COURT
RICH CRANDALL JOHN M. FILLMORE
LORI KLEIN http://www.azleg.gov/jlbc.htm JACK W. HARPER
LINDA LOPEZ MATT HEINZ
RICK MURPHY RUSS JONES
STEVEN B. YARBROUGH ANNA TOVAR
DATE: September 27, 2012
TO: Senator Don Shooter, Chairman
Members, Joint Legislative Budget Committee
THRU: Richard Stavneak, Director
FROM: Leatta McLaughlin, Assistant Director
SUBJECT: Arizona Board of Regents - Review of FY 2013 Tuition Revenues
Request
The Arizona Board of Regents (ABOR) requests Committee review of its expenditure plan for tuition
revenue amounts greater than the amounts appropriated by the Legislature, and all non-appropriated
tuition and fee revenue expenditures for the current fiscal year. This review is required by the FY 2013
General Appropriation Act.
Recommendation
The Committee has at least the following 2 options:
1. A favorable review.
2. An unfavorable review.
Total FY 2013 tuition and fee collections are projected to be $1.59 billion, or $99.3 million higher than
FY 2012. These collections are divided into appropriated and non-appropriated funds.
Appropriated FY 2013 tuition collections are estimated to be $949.9 million. This amount is $14.8
million above the original FY 2013 budget and $39.8 million above FY 2012. Northern Arizona
University (NAU) and the University of Arizona (UA) plan on using almost half of the additional $14.8
million funding for enrollment growth. Almost all of the remaining additional monies will be spent on
investing in science, technology, engineering, and math (STEM) areas by UA, as well as pay raises at
NAU (and pay raises at Arizona State University to a lesser extent). UA has not yet responded to our
inquiries regarding pay raises.
Non-appropriated locally retained tuition and fees for FY 2013 are estimated at $636.7 million, $59.6
million higher than FY 2012. Of the $636.7 million amount, about $401.9 million will be spent on
financial aid, $86.0 million on debt service, $126.8 million on operating budgets, and $22.0 million on
(Continued)
- 2 -
plant funds. Statute allows the universities to retain a portion of tuition collections for expenditures, as
approved by ABOR. These “locally” retained tuition monies are considered non-appropriated. Any
remaining tuition collections are then submitted as part of each university’s operating budget request and
are available for appropriation by the Legislature.
Analysis
Appropriated Tuition
Attachment 1 shows ABOR changes to resident and non-resident undergraduate tuition from FY 2012 to
FY 2013. Prior to April 2011, ABOR policy was to set undergraduate resident tuition at the top of the
bottom one-third of all senior public universities. Their current policy is to set tuition and fees based on
certain factors, such as the cost of university attendance, tuition costs at peer universities, debt service
payments, and Arizona’s median family income levels.
Table 1 displays FY 2012 and FY 2013 General Fund and tuition/fee monies for the Arizona University
System. The FY 2013 budget includes $935.1 million in appropriated tuition monies, which reflects
tuition growth from new students but not tuition rate increases. The higher tuition rates generated $14.8
million more in appropriated monies than was budgeted, for a total of $949.9 million. The universities
have set aside $636.7 million of the $1.59 billion for non-appropriated purposes.
In total, General Fund and tuition/fee resources will increase by $100.4 million from $2,156.3 million in
FY 2012 to $2,256.7 million in FY 2013 after the tuition/fee increase.
Table 1
Arizona University System
FY 2012 and FY 2013 General Fund and Tuition/Fee Revenues
(in Millions)
FY 2012
FY 2013 Before
Tuition Increase
FY 2013 After
Tuition Increase
Appropriations
General Fund $ 669.11/ $ 670.1 $ 670.1
Tuition/Fees 910.0 935.1 949.9
Subtotal $1,579.2 $1,605.2 $1,620.0
Non-Appropriated
Tuition/Fees $ 577.1 $ 594.3 $ 636.7
TOTAL $2,156.3 $2,199.5 $2,256.7
___________
1/ Excludes costs associated with an additional pay period.
Tables 2 and 3 present FY 2013 appropriated and non-appropriated estimates of ABOR’s tuition and fee
revenues, and resulting additional revenues by campus. Table 2 shows that of the $14.8 million in
additional appropriated tuition, Arizona State University (ASU) Tempe is $(15.3) million, ASU East
$(2.3) million, ASU West $9.1 million, NAU $7.7 million, UA Main $13.5 million, and UA Health
Sciences Center $2.1 million. The decrease in appropriation tuition revenues for ASU Tempe and ASU
East is largely due to the movement of online payments from state funds to locally retained tuition
collections and is due to a lesser extent to the movement of debt service and financial aid expenditures
from state funds to locally retained tuition collections. Table 3 shows that of the $59.6 million in
additional non-appropriated tuition and fees, ASU received $38.3 million, NAU $6.3 million, and UA
$15.0 million. Table 4 provides some information on the uses of additional appropriated tuition revenues
by university. ABOR has provided further detail in Attachment 1.
(Continued)
- 3 -
Table 2
Arizona University System
FY 2013 Appropriated Tuition/Fee Revenues by Campus
Campus
FY 2013
Appropriation Additional Tuition
FY 2013 After
Tuition Increase
ASU-Tempe/DPC $468,010,300 $(15,325,300) $452,685,000
ASU-East 37,924,800 (2,333,900) 35,590,900
ASU-West 31,330,800 9,059,400 40,390,200
NAU 99,660,700 7,748,400 107,409,100
UofA-Main 256,404,000 13,514,000 269,918,000
UofA-Health Sciences Center 41,786,200 2,134,200 43,920,400
Total $935,116,800 $14,796,800 $949,913,600
Table 3
Arizona University System
FY 2012 & FY 2013 Non-Appropriated Tuition/Fee Revenues by Campus
Campus
FY 2012 Non-
Appropriated Additional Tuition
FY 2013 After
Tuition Increase
ASU-Tempe/DPC $255,630,000 $29,972,900 $285,602,900
ASU-East 13,365,500 9,340,900 22,706,400
ASU-West 24,236,500 (1,147,400) 23,089,100
NAU 73,758,900 6,348,700 80,107,600
UofA-Main 207,231,700 13,353,700 220,585,400
UofA-Health Sciences Center 2,904,400 1,686,500 4,590,900
Total $577,127,000 $59,555,300 $636,682,300
RS/LMc:ac
Attachment
Table 4
Arizona University System
Use of Additional Appropriated Tuition/Fee Revenues by Campus
$ in Millions
ASU Movement of online payments from state funds to locally retained
tuition collections
$(8.5)
NAU Faculty Enterprise Investment $ 3.5
Undergraduate Enrollment Growth & Course Support 1.7
Health Care Program Continuation/Expansion 1.5
Utility Cost Increases 0.6
Employee Related Expenditures 0.4
Subtotal $ 7.7
UA Investment in STEM Areas $ 4.4
Enrollment Growth & General Education Support 4.3
College of Medicine in Tucson & Phoenix 2.5
Support to Colleges from Differential Tuition Revenue 2.0
Backfill State Appropriation Reduction 1.7
Unfunded ASRS Actuarial Requirement 0.7
Subtotal $15.6
TOTAL $14.8
- 4 -
Attachment 1
Arizona University System
FY 2012 to FY 2013 Undergraduate Tuition and Fees Changes 1/
Resident 2/ Non-Resident 2/
FY 2012 FY 2013 $ Change % Change FY 2012 FY 2013 $ Change % Change
ASU $8,736 to
$9,716
$8,740 to
$9,720 $4 0.0004% $22,315 $22,973 $658 2.9%
ASU-Distance Ed. N/A $6,490 N/A N/A N/A $9,490 N/A N/A
NAU $5,960 to
$8,824
$6,909 to
$9,271
$447 to
$949
5.1% to
15.9%
$17,058 to
$21,179
$18,136 to
$21,626
$447 to
$1,078
2.1% to
6.3%
NAU-Distance Ed. $4,803 to
$6,317
$4,948 to
$6,508
$145 to
$191 3.0% $14,283 to
$17,650
$14,715 to
$18,190
$432 to
$540 3.0%
UofA-Main/HSC $10,035 $10,035 $0 0% $25,494 $26,231 $737 2.9%
UofA-South $7,941 $7,941 $0 0% $25,071 $25,808 $737 2.9%
____________
1/ The amounts represent combined full-time tuition for fall and spring semesters, as well as mandatory fees. Undergraduates must take at least 12 credit
hours to qualify for full-time status. Mandatory fees include AFAT and student recreation charges, but do not include special class or program fees.
2/ NAU provides a guaranteed tuition rate for each incoming class. ASU previously had a tuition commitment rate for each incoming class, however,
both ASU and UA currently do not have tuition guarantees.
(Continued)
STATE OF ARIZONA
Joint Legislative Budget Committee
STATE HOUSE OF
SENATE 1716 WEST ADAMS REPRESENTATIVES
PHOENIX, ARIZONA 85007
DON SHOOTER JOHN KAVANAGH
CHAIRMAN 2012 PHONE (602) 926-5491 CHAIRMAN 2011
ANDY BIGGS LELA ALSTON
OLIVIA CAJERO BEDFORD FAX (602) 926-5416 STEVE COURT
RICH CRANDALL JOHN M. FILLMORE
LORI KLEIN http://www.azleg.gov/jlbc.htm JACK W. HARPER
LINDA LOPEZ MATT HEINZ
RICK MURPHY RUSS JONES
STEVEN B. YARBROUGH ANNA TOVAR
DATE: September 27, 2012
TO: Senator Don Shooter, Chairman
Members, Joint Legislative Budget Committee
THRU: Richard Stavneak, Director
FROM: Marge Zylla, Senior Fiscal Analyst
SUBJECT: Review of Agency Legal Services Charges
Request
The FY 2013 Criminal Justice Budget Reconciliation Bill (BRB) requires the Joint Legislative Budget
Committee (JLBC) to review agencies’ identified funding sources for the Attorney General (AG) legal
services charges for general agency counsel.
The Criminal Justice BRB eliminated the 0.675% Pro Rata Personal Services charge and replaced the Pro
Rata charge with a flat dollar amount charge. The flat charge amounts were provided by the Executive
and are specified in the FY 2013 General Appropriation Act. Agencies are required to pay this charge
from non-General Fund sources and cannot include funding sources that are Federal Funds or other funds
that are legally restricted from making the legal services payment.
Recommendation
The JLBC Staff recommends that the Committee give a favorable review of the fund source reports for
the AG legal services charges with the recommendation that the following 4 agencies be exempt from the
charge: Office of Tourism, School Facilities Board, Governor’s Office of Equal Opportunity, and the
State Mine Inspector. These agencies do not have relevant fund sources to pay the charge. The payment
ability of a 5th agency, the Department of Emergency and Military Affairs (DEMA), has yet to be
resolved.
Analysis
The FY 2013 General Appropriation Act specifies the required payments from state agencies, which total
$1,906,600. The attachment shows the fund source detail for specific agencies.
Four agencies (Office of Tourism, School Facilities Board, Governor’s Office of Equal Opportunity, and
the State Mine Inspector) do not have fund sources that would allow payment of the charges from non-
- 2 -
General Fund sources that do not include Federal Funds or other funds that are legally restricted from
making the legal services payment. The elimination of the payments from the 4 agencies would result in
a total reduction of $(11,800) to the overall payment to the AG, which would result in a total AG payment
of $1,894,800.
DEMA has a legal services charge of $115,300. Discussions with the Governor’s Office of Strategic
Planning and Budgeting are ongoing to assess if DEMA has any or sufficient applicable fund sources to
make the legal services payments. If DEMA does not pay the charge, the AG payment would be
decreased by $(115,300) and would total $1,779,500.
RS/MZ:ts
Attachment