TO: Executive Board Members and Statewide Labor Management Chairs

FROM: Thomas Cetrino, Martin O’Connor, Susan Mitnick, Stephen Connolly, Michael Marinello and Amy Sisson

DATE: January 19, 2001

RE: Executive Budget SFY 2001-02 – Summary of Major Provisions

The Executive Budget proposes to maintain the overall size of the State workforce at approximately 194,500 employees. According to the Division of Budget (DOB), there are currently 194,500 employees in the State workforce, which will increase to about 195,000 employees by March 31, 2001 and then decrease back to 194,500 employees by March 31, 2002. It is important to note that last year GOER and DOB projected that the State workforce would reach 195,900 employees by March 31, 2001. The State has not provided a breakout as to which State agencies will gain or lose employees but has stated that no layoffs are anticipated under the proposed budget. Our analysis of the budget documents indicates that the State will lose 513 full-time equivalent positions (FTEs) between March 31, 2001 and March 31, 2002 (see Attachment A). The agencies with the largest changes in FTEs will be the:

• Department of Correctional Services (DOCS), loss of 614 FTEs including 126 FTEs in Program Services and 31 FTEs in Health Services. It is important to note that these decreases do not reflect the loss in FTEs that has occurred in DOCS during SFY 2000-01.

• Office of Mental Health (OMH), an overall loss of 296 FTEs including a decrease of 346 FTEs in Adult Services offset by an increase of 59 FTEs for an unspecified purpose and 3 additional FTEs for Forensic Services. We believe that most of the lost FTEs will be the result of the proposed closing of the Hutchings and Middletown Psychiatric Centers by 2003. There are currently 236 PEF members at Hutchings and 189 PEF members at Middletown.

• Office of Mental Retardation and Developmental Disabilities (OMRDD), an increase of 245 FTEs including 232 FTEs in Community Services and 38 FTEs in Institutional Services. We believe that most of the increase in Community Services positions is due to the increase in State-operated NYS-CARES beds and that the increase in Institutional Services positions is due to the new 60 new Intensive Treatment Unit and 60 new secure beds at Norwich/Valley Ridge. It should be noted that last year’s Executive Budget projected that OMRDD would have approximately 22,018 FTEs on March 31, 2001 but the proposed budget now puts that number at 21,937 FTEs. This reflects approximately 100 fewer Community Services FTEs funded in SFY 2000-01 than originally projected. The Executive Budget also proposes the consolidation of the Taconic DDSO into other district office catchment areas which we suspect include the Capital District DDSO and Hudson Valley DDSO. It is unclear what impact this consolidation will have on the 363 PEF members assigned to Taconic DDSO. Between one-third to one-half of the PEF members assigned to the Taconic DDSO work on-site at the DDSO.

• Department of Transportation, an increase of 144 FTEs in the Design and Construction program. It is expected that these will all be engineering positions. The Executive Budget states that the "$640 million engineering services appropriation represents a $50 million increase over the 2000-01 appropriation." However, the SFY 2000-01 enacted budget had a $666.4 million appropriation reflecting expected Transportation Bond Act funding that was rejected by the voters. The SFY 1999-00 engineering services appropriation was $613.8 million.

GOER provided Attachment B with its estimates of the FTE losses by State agency from 3/31/01 to 3/31/02. This attachment provides more detail as to the nature of job changes in State agencies and includes FTE information for off-budget agencies including the State Insurance Fund and the Roswell Park Cancer Institute Corporation. It is important to note that the 2,256 FTE loss associated with the hiring freeze is the number of FTEs lost because DOB does not fill a funded vacancy or fills it later in the fiscal year.

It is also important to note that GOER has informed PEF that the Governor is leaning towards not extending the current early retirement incentive program which will expire on March 31, 2001. They believe an extension is unnecessary since the State does not plan any layoffs and plans to eliminate relatively few positions.

In addition to this memo, we are forwarding to the respective Executive Board members and Statewide Labor Management Chairs our department’s line-by-line analysis of the Program Details–State Operations portion of the budget for the ten State agencies with the most significant changes in their budgets. It is important to note that most personal service appropriations have increased by at least 9.5% to reflect the contractual increases agreed to by State employee unions last year. Last years personal service appropriations did not reflect any contractual increases as they were paid out of a dedicated reserve fund. If an agency program’s personal service appropriation increase is below 9.5% it generally means there has been a cut in the number of FTEs working in that program.

Next week we will distribute any revised drafts of the major agency summaries sent this week as well as State Operations summaries for all other agencies. We have also included on PEF’s website a complete copy of Executive Budget Appendix I and all State budget legislation which contains each State agency’s specific budget information. Executive Board members and Statewide Labor Management Chairs who do not have a computer to access PEF’s website and want a copy of their agency’s budget should call the Research Department at 1-800-342-4306 ext. 280 and request that we mail you a copy.

The Executive Budget once again proposes the consolidation of the State Museum, State Library, and State Archives into a new Office of Cultural Resources (OCR) within the Council of the Arts. The Executive Budget proposes that this consolidation occur in October 2001. Funds for OCR’s operations and grant programs will be transferred from the State Education Department’s Cultural Education Program and Office of Management Services. The Executive Budget states that OCR will have a staff of 445 FTEs and that no staff reductions are anticipated. The consolidation seems to be motivated by making these cultural entities directly accountable to the Governor rather than the Board of Regents, who are appointed by the Legislature and not the Governor. Last year the Legislature rejected this proposal.

The Executive Budget forecasts a $1.4 billion surplus for SFY 2000-01. This surplus is largely due to increased State personal income tax, sales tax and miscellaneous receipts, and tax revenues from the record profits generated by Wall Street. The Assembly has stated that they believe the SFY 2000-01 surplus will be $1 billion larger than the $1.4 billion projected by the Governor. The Governor proposes to keep the entire surplus in reserve to "…remain the nation’s tax-cutting leader and safeguard existing budgetary commitments in the event of a significant slowdown in the national economy." Some critics have stated that the Governor is simply keeping as much cash as he can so he will be able to spend it next year when he is up for re-election.

• A $1.2 billion Tax Reduction Reserve to help pay for the cost of the STAR school tax reduction program. All of this reserve will be spent in SFY 2001-02 to finance a portion of the cost of the STAR program.
• $1.3 billion from the projected SFY 2000-01 surplus which will be put into a new "Fiscal Responsibility Reserve Fund."
• A $627 million "Tax Stabilization Reserve Fund," which is commonly referred to the "rainy day" fund. This amount includes $80 million that the Governor proposes to add to the fund from the SFY 2000-01 surplus.
• A $250 million Debt Reduction Reserve Fund (DRRF), all of which will be spent in SFY 2002-03 to avoid additional debt in meeting the State’s transportation Capital program.
• A $150 million Contingency Reserve Fund for litigation risks.
• A $338 million Community Projects Fund which pays for legislative initiatives.

The State’s Financial Plan forecasts that "…New York’s economic growth is expected to slow in 2001 with annual growth in total and private sector employment projected to be slower than in 2000." The Financial Plan also forecasts a modest 2.6% increase in cash receipts for All Governmental Funds, from $80.517 billion in SFY 2000-01 to $82.875 billion in SFY 2001-02. Personal Income Tax receipts are only expected to grow by 2.7% from $27.118 billion in SFY 2000-01 to $27.852 billion in SFY 2001-02. Personal income tax receipts grew by 26% between SFY1999-00 and SFY 2000-01.

2002-03 2003-04

 

Receipts 41,128 42,371

 

Disbursements (43,806) (45,294)

 

Use of Community Projects Fund Balance 188 0

 

Remaining Gap (2,490) (2,923)

 

2003-04 Gap if 2002-03 Gap is Closed

With Recurring Actions (433)

 

 

The State still faces structural budget gaps of $2.49 billion in SFY 2002-03 and $2.923 billion in SFY 2003-04. These gaps are largely due to the back loading of already enacted tax cuts and expected decreases in Personal Income Tax and business tax receipts. In SFY 2001-02, already enacted tax cuts will reduce State revenues by $13.3 billion. The annual cost of the already enacted tax cuts increases to $14.3 billion in SFY 2002-03 and to $15.4 billion in SFY 2003-04. This does not include the $530 million in new tax cuts that the Governor has proposed in the SFY 2001-02 budget. This $530 million dollar cost will occur when all the proposed new tax cuts are fully implemented. The largest of these tax cuts are $300 million in targeted tax incentives for Upstate New York businesses, particularly manufacturing businesses including the proposed elimination of the Alternative Minimum Tax which will cost $50 million when fully implemented. The Governor is also proposing a new $230 million Co-STAR program which will reduce county property and New York City personal income taxes for income-eligible senior homeowners and farmers.

It is important to note that these budget gaps are based on economic forecasts of slower growth in the next two fiscal years. They will be significantly larger if the State experiences a sharper slowdown in the State economy that the Executive Budget forecasts. It is also important to note that last year’s Executive Budget forecasted at least a $1.226 billion structural deficit for SFY 2001-02 and a $2.642 billion structural deficit for SFY 2002-03, and that those structural deficits are now significantly lower. The difference is that the unexpected multi-billion revenue growth the State has experienced over the last six years is unlikely to continue in the next three years because the Wall Street revenue growth and the increased salaries, bonuses, and capital gains revenues it generated are unlikely to continue. Based on these assumptions, the Governor’s proposal to keep over $2 billion in reserve seems prudent in light of the fact that the projected $2.9 billion structural deficit for SFY 2003-04 is based on an assumption of only 1.1% growth in State Operations spending in SFY 2003-04. This assumes no further collective bargaining increases after current employee contracts expire on March 31, 2003.

The Governor’s budget address refers to the SFY 2001-02 Executive Budget as an $83.6 billion all funds budget, a $4.2 billion or 5.3% increase over last year’s estimated $79.43 billion all funds budget. Many press accounts have made much of the fact that the Governor spent $1.93 billion more than the enacted SFY 2000-01 budget planned. However, all but $338 million was spent out of reserve funds to pay for collective bargaining agreements and to reduce State debt payments. $250 million of the remaining $338 million in additional spending was due to lower than expected revenues from the sale of the Medical Malpractice Insurance Association. The remainder of the increase was primarily due to higher costs for litigation, State employee health insurance programs, and Medicaid.

The Executive Budget proposes an increase in General Fund (i.e. State income not earmarked for a particular program or activity) spending of $1.45 billion, or 3.6%, to $41.34 billion. However, these figures only reflect the cash spending proposed for SFY 2001-02 budget. The total recommended appropriations for all funds in the proposed SFY 2001-02 budget equal $129.737 billion, only a $430 million increase over the SFY 2000-01 all funds appropriations.

State Operations all funds cash spending for SFY 2000-01 would be $14.605 billion, an increase of $434 million, or 3.06%, from estimated SFY 2000-01 all funds cash spending. This increase is largely due to:

• annualized costs of collective bargaining agreements ($195 million);
• increased funding for technology initiatives ($43 million) and for health and mental hygiene programs ($75 million);
• a change in the accounting treatment of State University hospital revenues which directly finance hospital debt service and fringe benefit costs ($100 million); and
• a $159 million increase in spending from Special Revenue Funds.

SFY 2001-02 all funds cash spending for Local Assistance will increase by approximately $3.379 billion, or 6.17%, from SFY 2000-01 all funds cash spending.

This section highlights the major changes proposed in the Executive Budget for the major State agencies. Executive Board members and Statewide Labor-Management Chairs will receive a more detailed analysis for these agencies in a separate mailing.

The Executive Budget recommends the net reduction of 296 FTEs in SFY 2001-02. The estimated FTE workforce will be 18,243 positions on March 31, 2002. The Executive Budget also recommends:

• A reduction of 346 FTEs from Adult Services, 10 FTEs from Administration, and 2 FTEs from Children and Youth Services, offset by an increase of 59 positions in Maintenance Undistributed / Special Revenue Funds-Other, which reflect staffing for adult transitional residences on the grounds of State PCs. 150 funded vacancies that were previously temporarily assigned to various psychiatric centers to support programs during periods of significant census decreases will be eliminated. PEF believes these positions are included in the 346 identified Adult Services reductions.
• Over the next three years, 725 inpatient beds will close, including 240 psychiatric beds in 2001-02. The budget indicates that OMH will keep open an average of 150 additional beds beyond its projection of bed needs from 2001-02 through 2003-04.
• Two psychiatric centers will close:

• Hutchings PC (236 PEF members) will close on January 1, 2003 after consolidation with Mohawk Valley PC.
• Middletown PC (189 PEF members) will close on January 1, 2004 after consolidation with Rockland PC.

Details on staff impact are not yet available. However, comments by OMH indicate that transfers to OMH and other State agencies will be accomplished through voluntary transfers, without layoffs.

• The following children’s PCs will relocate to the grounds of adult PCs as separate autonomous entities with separate and secure entrances and exits, as well as separate treatment, program, educational and recreational space:

• Western NY Children’s PC (110 PEF members) will relocate to Buffalo PC on April 1, 2002.
• Sagamore Children’s PC (160 PEF members) will relocate to Pilgrim PC on January 1, 2003.
• Rockland Children’s PC (151 PEF members) will relocate to Rockland PC on January 1, 2003.
• Queens Children’s PC (163 PEF members) will relocate to Creedmoor PC on October 1, 2003.

• Kirby Forensic PC (112 PEF members) will be consolidated into buildings at Manhattan PC on July 1, 2003.
• OMH has stated that there will be no change in the number of beds because of these relocations. They have also stated that only administrative and ancillary operations will be consolidated with the adult facilities. The relocations will provide savings through administrative efficiencies (sharing administrative and support functions) and avoidance of capital renovations. $57 million in new capital appropriations are included in this budget for renovations related to consolidations and relocations, avoiding an estimated $168 million in capital costs required for those facilities at their current locations.
• Transition of shared staff funding to counties over a three-year period. According to budget documents, $3 million will be appropriated in the first year of this plan, increasing to over $12 million in the final year. The budget bill, however, shows a local assistance appropriation of $12.2 million for the transition of shared staff to local auspices pursuant to a chapter, with the funds transferred to OMH if the chapter is not passed. The proposed Article VII bill provides that as shared staff positions become vacant, appropriations will be made available to the local governmental unit in which such services were provided. Any OMH employee still providing shared staff services on March 31, 2004 will be reassigned to State–operated programs.

The Executive Budget recommends a net increase of 245 FTEs, including an increase of 232 FTEs in the Community Services program and 38 FTEs in the Institutional Services program, offset by a reduction of 25 FTEs in Central Coordination and Support. The FTE workforce will be 22,182 positions on March 31, 2002. The Executive Budget also recommends:

• Discharge of 179 clients from institutional care, with new admissions restricted to emergency situations and special treatment units.
• An increase of 60 Intensive Treatment Unit beds at undisclosed locations.
• The opening of 60 new secure beds at the Valley Ridge Center for Intensive Treatment (Norwich) in January 2002.
• Opening 24 State-operated community beds in NYC for referrals of severely disabled children from the Health and Hospitals Corporation and the Administration for Children’s Services.
• Continued funding for the development of 100 State-operated NYS-CARES beds.
• Streamlining administrative programs (centralizing certain human resources and payroll functions), which is expected to generate $17.8 million in savings.
• Providing education and training services for public and private sector employees through partnerships with voluntary not-for-profit and other agencies.
• Consolidation of Taconic DDSO into other district office catchment areas. PEF suspects that Taconic DDSO will be merged with Capital District DDSO and Hudson River DDSO. It is unclear what impact this consolidation will have on the 363 PEF members assigned to Taconic DDSO. Between one-third to one-half of the PEF members assigned to the Taconic DDSO work on-site at the DDSO.
• New capital project funding for 17 new labs at the Institute for Basic Research
• A decrease in nonpersonal services funding of $243,000 at the Institute for Basic Research. These funds may be folded into the new capital funding for IBR.

The Executive Budget recommends a net increase of 37 FTEs. The FTE workforce will be 6,259 positions on March 31, 2002. The Executive Budget also recommends:

• The net increase of 37 positions, including the following changes by program:

• a reduction of 22 FTEs in the General Fund and an increase of 40 FTEs in the Special Revenue Funds-Other in the Administration and Executive Direction program;
• a reduction of 4 FTEs in the AIDS Institute;
• a reduction of 8 FTEs in the Community Health program;
• an increase of 10 FTEs in the Office of Continuing Care (for nursing home surveillance field staff);
• a reduction of 4 positions in the Environmental Health program; and
• an increase of 25 new audit staff in the Medicaid Audit & Fraud Prevention program.

• There appear to be some inconsistencies in the personal service fund changes in programs where there are staff reductions, e.g., the budget shows a reduction of 8 positions in the Community Health Program, yet the personal services funding increases by 15.4% ($624,000), more than that required for salary increases. Similarly, the budget narrative shows a reduction of 4 positions in the Environmental Health Program but the personal services funding increases by 40% ($2.3 million).
• $55.1 million for State-operated veterans’ nursing homes including:

• $1.7 million (10.6%) in additional funding for the New York City Veterans’ Home;
• $1.87 million (12.9%) in additional funding for the Oxford Veterans’ Home;
• $757,500 (10.3%) in additional funding for the Western NY Veterans’ Home; and
• $12 million for the new 252-bed Montrose Veterans’ Nursing Home scheduled to open in 2001.

• Funding for Helen Hayes Hospital is reduced by $17.2 million (26.4%). No explanation is given in the budget documents for this reduction. Last year $10 million was added to Helen Hayes’ budget for "special projects."
• An interagency group on Medicaid fraud will coordinate the State’s fraud control program, including new audit measures and other fraud prevention efforts.
• Instituting a rapid response audit team to mobilize enforcement efforts quickly when criminal fraud is suspected and utilizing innovative fraud measurement technologies to better target large-scale audit and fraud reviews.
• The Medicaid Management Information System (MMIS) and the Electronic Medicaid Eligibility Verification System (EMEVS) will be replaced by an integrated claims processing system, the Replacement Medicaid System (RMS).
• $90 million in funding for the Roswell Park Cancer Institute Corporation, $60 million from HCRA and $30 million from the General Fund.
• Proposed legislation will include criminal background checks for all nursing home and home care employees providing direct care, and increased fines for noncompliant providers. Collected fines will go into a Quality of Care Incentive Account ($2 million is appropriated in the Office of Continuing Care Program) and will be reinvested in quality improvement programs for nursing homes.
• A new centralized nursing home complaint hotline will enable inspectors to better track, coordinate and respond more quickly to patient complaints. There is no appropriation for this initiative but it may be funded in the increased personal services and nonpersonal services appropriation for the Office of Continuing Care Program.
• Medicaid containment initiatives are proposed, including: eliminating inflationary payment increases for nursing homes; eliminating a supplemental payment to facilities that have more than 300 beds; eliminating the return on equity payments to proprietary homes; and updating the Medicaid nursing home rate methodology to eliminate the existing subsidy State taxpayers provide to nursing homes that serve more costly Medicare and other-payer recipients.
• The AIDS Institute is increased by $250,000 for a syringe access demonstration program.

The Executive Budget recommends a net decrease of (35) FTEs. The FTE workforce will be 3,743 positions on March 31, 2002. The Executive Budget also recommends:

• The net decrease in FTEs is primarily due to a decrease of (55) positions in the FTEs Clean Water/Clean Air Administration program (Capital Projects Other), a decrease of (6) FTEs in the Fish, Wildlife and Marine program (General Fund), a decrease of (13) FTEs in the Forest and Land Resources program (General Fund), and a decrease of (7) FTEs in the Environmental Enforcement program.
• These decreases are offset to a certain degree by increases of 24 FTEs in the Air and Water Quality Management program (General Fund), 19 FTEs in the Environment & Recreation program (Capital Projects Other), and 5 FTEs in the Solid and Hazardous Waste Management program.
• Legislation to increase fees related to pesticide certification. The $2.4 million in increased fees will provide for improved oversight and enforcement, and for the expansion of in-house laboratory services to support enhanced pesticide monitoring and response to problems such as the West Nile virus.
• Legislation to authorize the Commissioner of DEC to set fees, based on recommendation of Conservation Fund Advisory Board, for sport hunting and fishing licenses. This will ensure the solvency of the Conservation Fund and enable the Department of Environmental Conservation to continue its fish and wildlife programs at the current levels. Current projections indicate that the Fund will have a deficit of $2.5 million by the end of 2001-02, growing to $15.5 million by 2003-04.
• Legislation to authorize an estimated $138 million in annual revenue for funding of the State’s Superfund Program. This proposal is controversial because of the nature of the funding mechanisms recommended by the Governor.
• Decreasing spending for the Clean Water/Clean Air bond Act by $5.8 million.
• Transferring 43 Clean Water/Clean Air Bond Act positions to the General Fund and transferring 43 General Fund positions to other funds.
• An increase of $1.9 million for the operation and maintenance of the new headquarters.

Office of Children and Family Services

 

The Executive Budget recommends an FTE level of 4,534, which represents an increase of 57 FTEs. Specific program changes include an additional 80 FTEs in Child Care, an additional 18 FTEs in Systems Support, an additional 6 FTEs in Family and Children Services, and a reduction of (47) FTEs in Youth Facilities. The Executive Budget also recommends:

• An increase of $6.9 million in the Administration Program Special Revenue-Other appropriation from the OCFS Program Account. No further details were provided.
• A reduction of ($1 million) in the Administration Program Maintenance Undistributed appropriation for the Human Service Application Services Center (HSASC).
• An increase of $4 million in the Child Care program Special Revenue-Federal appropriation from the federal Day Care account.
• A reduction of ($8.5 million) in the Departmental Administrative Reimbursement program for administering federal programs.
• An increase of $6.98 million in the Systems Support program nonpersonal services appropriation. No details are available as to what this money will be used for.
• A decrease of ($5.7 million) in the Systems Support program Maintenance Undistributed appropriation for the CONNECTIONS program.
• A reduction of ($2.37 million) in the Systems Support program personal services appropriation even though the Executive Budget shows an increase of 18 positions. We believe this is due to the fact that Systems Support is down (46) positions from last year’s Executive Budget recommendation. These positions, we believe, were moved to either the Office for Technology or the HSASC. This movement would have reduced the amount of money needed to support the office and the net impact of hiring more staff would still be a reduction in the appropriated amount. This is speculation on our part and you should verify this scenario with management.
• A decrease of ($36 million) in the Training and Development program due to the elimination of federal funding for State operations.
• The reduction of (47) FTEs in the Youth Facilities program will be accomplished by:

• Changing the teacher ratio from 1:14 to 1:16;
• Closing two units at Harlem Valley;
• Eliminating 15 funded vacancies;
• Closing all State-operated group homes; and
• Transferring the most serious offenders to DOCS at age 16.

The Executive Budget recommends:

• An FTE level of 2,569, which represents a decrease of (25) from the current level.
• The Refugee and Immigrant Affairs Program is combined with the Shelter and Supported Housing Program to form the Transitional Supports and Policy Program. This combination will result in the elimination of (16) FTEs.
• An increase of $511,000 in the Administration Program Maintenance Undistributed appropriation for audit and quality control related to welfare fraud prevention and other audit activities. This could result in additional positions although none are reflected in the budget. This issue needs to be clarified with TADA management.
• A reduction of ($2,652,000) in the Systems Support and Informational Services personal service appropriation. The planned reduction of (3) FTEs does not appear to account for the size of this reduction. The excess may be attributable to a move of some staff to either the Human Services Application Services Center or the Office for Technology.
• An increase of $7,411,000 in the Systems Support and Informational Services program nonpersonal services appropriation. There is no detail as to what this increase is for.
• An additional $20 million in the Special Revenue-Federal appropriation in the Systems Support and Informational Services program for the CONNECTIONS system.
• A decrease of ($5.9) million in the Disability Determinations program Special Revenue-Federal appropriation. It is unclear what this decrease is related to; however, the staffing level remains unchanged at 1,360 FTEs. Last year this program received a $6.7 million increase in the Special Revenue-Federal appropriation.

The Executive Budget recommends:

• An FTE level of 2,787, which represents an increase of 8 positions.
• Moving the Cultural Education program to the Council on the Arts. The move is proposed for October 1, 2001 and half-year funding is provided here as well as in the Council on the Arts budget. No changes in staffing are proposed; the programs continue to fund 445 FTEs.
• Adding $15 million to the Office of the Professions to support a one-time rebate in license renewal fees for licensed professionals. The rebates will equal approximately 30% of the license renewal fee for eligible professionals and will be provided as licenses come due for renewal. Eligibility for rebates will be provided to approximately 568,000 professional practitioner in 35 professions, including accounting, dentistry, pharmacy, psychology, and registered nursing.
• An overall increase of $1,520,000 as a result of "annualization of savings and projected spending increase" according to the Executive Budget. It is unclear what programs have been cut and what programs have been increased in this calculation. We can account for $1.835 million in additions but cannot find the $315,000 in offsetting cuts. This issue needs to be clarified with SED management.
• $1 million in a Maintenance Undistributed appropriation in the Elementary, Middle, Secondary, and Continuing Education program for services and expenses related to criminal background checks of school district personnel.
• $300,000 in a Maintenance Undistributed appropriation in the Elementary, Middle, Secondary, and Continuing Education program to support additional workload associated with implementation of the new priority-based school construction aid program.
• An increase of $535,000 in the VESID program Special Revenue-Other appropriation for the special workers’ compensation program.

The Executive Budget notes that "the SUNY hospitals have developed financially-driven strategic plans for achieving self-sufficiency over a five year period. These plans include an array of actions to achieve operational savings, and specific strategic investments to generate additional revenues." The Executive Budget goes on to say, "All hospitals’ spending will be appropriated in one account with the hospitals being responsible for directly paying their fringe benefit and debt service costs. By structuring the hospital appropriations in this manner, the SUNY hospitals will be directly accountable for operating within their available revenues, including a fixed State subsidy account."

Based on this change, the Executive Budget for the first time lined out the specific appropriations for each of the SUNY hospitals. These amounts are provided in the attached spread sheet. Since they have not been provided previously there is no basis for comparison.

The Executive Budget recommends:

• An additional appropriation of $51 million to the hospitals in recognition of "costs attributable to their State agency status."
• Payment of $15 million "as its share of the multi-year effort by the SUNY hospitals and the State to address the accumulated hospital deficit." This relates to the payments that must be made to pay down the amount owed as a result of past deficits.
• Legislation will be introduced that will "propose specific flexibility measures to promote improved hospital cost-efficiency."
• SUNY will also be "developing approaches for providing the hospitals with enhanced access to capital financing."

It is unclear what the impact of these proposals will have on SUNY Hospital employees; this issue needs to be clarified with the management of each SUNY Hospital and SUNY central. SUNY central will be briefing PEF in the next couple of weeks.

Department of Correctional Services

The Executive Budget recommends a decrease of 614 FTEs, including a reduction of 126 Program Services positions and 31 Health Services positions. The FTE workforce will be 32,272 positions on March 31, 2002. The Executive Budget also recommends:

• Medium security capacity to reflect a projected decrease in population of 6,600 inmates: 2,800 inmates in SFY 2000-01, 3,800 inmates in SFY 2001-02 ($50.8 million in savings).
• A realignment of staff and resources providing mental health services from Program Services to Health Services.
• Resources to coordinate sex offender treatment programs, aggression management programs and transitional services.
• No new funding for capacity expansion.
• The most serious 16-year-old offenders will be transferred from Office of Children and Family Services facilities to DOCS.
• A $21.8 million increase in Special Revenue-Federal funds in the Administration Program reflects additional funding for the incarceration of illegal aliens.

The Executive Budget recommends:

• A total of 5,410 FTEs, a (70) FTE reduction from last year. The Audit Program loses (27) FTEs, the Revenue and Information Management Program loses (23) FTEs, the Tax Compliance Program loses (12) FTEs, the Tax Enforcement Program loses (3) FTEs, the Taxpayer Services Program loses (2) FTEs, and the Administration, Council, and Revenue Support Services Programs each lose (1) FTE. It appears that these reductions will occur through attrition.

The Executive Budget recommends:

• A total of 710 FTEs, no change from last year.
• A $97.4 million Internal Service Fund appropriation for the operation of the consolidated State Data Center. This fund will support positions transferred primarily from State agencies and the cost of upgrading and operating the Center’s computers.
• An $11.3 million General Fund appropriation for the renovation of space to house the Data Center. No further details are provided.
• An $8.5 million in General Fund appropriations to improve the security of State computer systems, to expand technology training for users and executive staff, and to develop a Geographic Information System (GIS) in OFT.
• A $20.6 million Internal Service Fund appropriation for the New York Intranet.

The Executive Budget recommends a net increase of 144 FTEs. The FTE workforce will be 10,757 positions on March 31, 2002. The Executive Budget also recommends:

• The addition of 144 FTEs in the Design and Construction Program (Capital Projects Funds-Other). We believe these will all be new engineering positions.
• Shifting the snow and ice control, arterial maintenance and bus inspection programs from the General Fund to the Dedicated Fund. $169 million will be shifted to the Trust Fund to pay for these programs. This action is apparently necessary to improve the revenue to debt service coverage ratio of the Dedicated Highway and Bridge Trust Fund Bond Program, thereby allowing the State to continue to issue Dedicated Fund bonds to fund the transportation capital program in future years. A minimum revenue to debt service ratio of 2:1 is required as a test for authorizing the issuance of additional Dedicated Highway and Bridge Trust Fund Bonds.
• $647.5 million for the Engineering Services program, a reduction of $18.9 million from SFY 2000-01. However, the SFY 2000-01 appropriation was based on passage of the Transportation Bond Act, which did not pass. Therefore, according to the Executive Budget proposal, the $647.5 million for Engineering Services actually represents an increase of $50 million over the amount that was actually budgeted for SFY 2000-01.

Department of Economic Development

 

The Executive Budget recommends a net increase of 20 FTEs. The FTE workforce will be 273 positions on March 31, 2002. The increase in FTEs is due to the addition of 20 FTEs in the Marketing and Advertising Program (General Fund).

The Executive Budget recommends a net decrease of (12) FTEs. The FTE workforce will be 1,661 positions on March 31, 2002. The Executive Budget also recommends:

• The net decrease in FTEs is primarily due to a decrease of (11) FTEs from the Park Operations program (General Fund).
• Transferring 18 Clean Water/Clean Air Bond Act positions to the General Fund.
• Allocating $1.5 million for operating costs of new and expanded parks.
• Reducing the General Fund by $1.5 million due to "managerial efficiencies" (achieved through streamlining of administrative oversight, business office and engineering services which will be pooled on a regional basis among park clusters) and increased fee revenues. The increased fees will:

• raise $800,000 by increasing camping fees by $1 to $2 in the Adirondacks and Catskills; and
• raise $1 million by increasing fees by between $1 and $10 for State campgrounds outside the Adirondacks and Catskills. Higher fees will be paid for prime waterfront and oceanfront sites.

The Executive Budget recommends:

• A $1 billion high technology and biotechnology plan which will fund high technology "centers of excellence" in Albany, Rochester, Buffalo, and other undisclosed locations. The Governor’s plan provides $283 million in State funds over the next five years to leverage more than $700 million in combined federal university and private resources to spur high technology and biotechnology job growth. This initiative is being coordinated through the Office of Science, Technology and Economic Research.
• Enacting a constitutional amendment to ensure that the statutory caps and other debt limitations imposed by the Debt Reform Act of 2000 are made permanent. This proposal would also:

• ban "backdoor" borrowing;
• authorize a limited amount of revenue debt by ensuring that at least one-half of all new debt is approved by the voters; and
• authorize multiple general obligation bond act proposals.

• An average of $4.8 billion in capital spending annually over the five-year Capital Plan. According to the Executive Budget, the plan ensures that on average, 60% of annual spending is financed with pay-as-you-go resources. However, the Governor admits that he has not provided adequate revenues to fund the later years of the Highway and Bridge Capital Program. According to press reports, the plan is short $600 million per year for the next four fiscal years. The Governor intends to pursue federal funding to make up this gap.
• Providing $1.4 million in new funding for the Department of Agriculture and Markets to implement expanded inspection requirements of retail food stores and the licensing and regulation of pet dealers throughout the State.
• New "Truth in Sentencing" legislation requiring that nonviolent offenders serve at least 6/7 of a fixed prison term, thereby eliminating discretionary release by the Parole Board. This legislation also provides for the supervision of these offenders following their release from prison by the Division of Parole.
• Reforming the Rockefeller Drug Laws, which would, among other reforms, allow some first-time minor nonviolent drug offenders to be placed in drug treatment programs rather than prison.

The Executive Budget’s proposed cuts of $130 million in Medicaid spending for nursing homes, which would result in a total loss of $350 million in federal, State, and local aid for nursing homes, and a $382 million increase in local school aid are not likely to be approved by the Legislature. The Assembly has already criticized the Medicaid cuts and the Assembly and Senate have both stated that more school aid will be provided. The Assembly has said that the school aid increase should be at least $1.4 billion, which is the amount the Board of Regents has requested. The school-aid debate will be made more complicated and contentious because of the recent ruling by the State Supreme Court that the State’s school financing system is unconstitutional because it under-funds urban school districts such as New York City. There is at least a $1.4 billion surplus and the Assembly has said that the surplus is really at least $2.4 billion. If some of or the entire surplus is spent there appears to be adequate funding for education aid increases, Medicaid increases and restorations for OMH, which will be a major PEF priority along with the fight to stop the closures of OMH Psychiatric Centers.

We will keep you informed as we get more details about the Executive Budget. It is important that all Labor-Management Chairs schedule meetings with their agency management as soon as possible to get more budget details. Please call the Research Department if you have any questions about or have further information to add to our budget analysis.