Tuesday, July 19, 2011

State Budget Analysis from the Pennsylvania Budget and Policy Center

On June 30, the Pennsylvania General Assembly completed work on a 2011-12 state budget. The final budget spends $27.249 billion, the lowest amount since the 2008-09 enacted budget, with cuts totaling more than $960 million.

The Pennsylvania Budget and Policy Center (PBPC) has just released a detailed analysis of the budget. Some of the highlights include:
  • The budget uses only $200 million of a $786 million 2010-11 year-end surplus. The year-end surplus was 10 times the $78 million surplus projected in the Governor’s March budget proposal.
  • The budget suspends a legally required transfer of 25% of the year-end surplus to the Rainy Day Fund. Lawmakers say this was done as a condition of receiving funds through the American Recovery Act (ARRA). With 2010-11 lapses, perhaps as much as $1 billion is carried forward and unappropriated in 2011-12.
  • The budget presumes revenue growth of 1.2% in 2011-12, far less than the 4.7% assumed in the Governor’s budget proposal in March.
  • Public schools and universities bear the brunt of the cuts in the 2011-12 budget. Grants to school districts, including the basic education subsidy, reimbursements to school districts for the loss of students to charter schools and other program cuts total more than $860 million. Higher education institutions, including Penn State and the other three state-related universities, community colleges, and the 14 State System of Higher Education universities, are reduced by $245 million.
  • Several programs administrated by the Department of Public Welfare are also cut, including welfare-to-work and human services. Some of the largest percentage cuts in the DPW budget come in the funding streams for welfare-to-work programs. The final budget adds to Governor Corbett’s proposed cuts to the Temporary Assistance for Needy Families (TANF) cash grant line and New Directions, which funds employment and training programs. New Directions was cut by $16 million, or 48%, while job training programs funded out of the cash grants line are reduced by $44 million. TANF enrollment, which averaged 211,636 in 2010-11, is expected to increase slightly in 2011-12.
  • The Welfare Code bill enacted in concert with the budget gives DPW broad authority for one year to make program changes to cut costs. This includes the ability to sidestep formal rulemaking processes and to change program eligibility, modify benefits and provider payments, and to eliminate presumptive eligibility. This authority is granted with the goal of keeping DPW expenditures, including expenditures on entitlement programs, within budgeted amounts.
  • Child care assistance, which supports child care for women in welfare-to-work programs, is cut by $17.6 million, or 9%. Child care services — including direct subsidies to working families, quality improvement initiatives such as the T.E.A.C.H. Early Childhood Scholarship program, and resource and referral services for parents seeking licensed child care facilities — were cut by $17.8 million. The cuts will be implemented through increased co-payments for parents and reduced funding for professional development activities.

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