Civil Service Enforcement/

Civil Service Enforcement/Research Department

TO: Kenneth Brynien

FROM: Thomas E. Cetrino, Susan Mitnick, Steve Connolly, Kristie Sammons, Jeff Waggoner and Mike Marinello

DATE: April 9, 2007

RE: Summary of the Major Provisions and Changes in the Enacted SFY2007-08 Budget

On March 31 and April 1, 2007 the Legislature passed the legislation necessary to enact the SFY2007-08 budget. PEF achieved nearly all of its priorities in the enacted budget which are outlined in your overview memo. It is also important to note that the enacted budget contains funding for almost all the 2,468 positions proposed in the executive budget. While some new positions were not funded in the State Education Department, Office of Mental Health, and the Department of Health, they appear to be more than offset by additional funding for new positions in the Department of Corrections, the Department of Health, and the Division of Alcohol Beverage Control that were not proposed in the Executive Budget.

According to the Division of Budget (DOB) the Legislature added $1.002 billion in General Fund spending to the SFY2007-08 Executive Budget. The enacted SFY2007-08 budget will total $53.700 billion in General Fund Spending and $120.9 billion in All Funds spending. Most of the restorations made by the Legislature were for education aid (+$440 million) and in health/Medicaid (+$350 million). DOB claims that they achieved 73% of the reductions they proposed for Medicaid after accounting for the restorations made by the Legislature (the Executive Budget proposed $1.297 billion in Medicaid reductions and $941 million in Medicaid reductions were achieved).

DOB had estimated the budget gaps for the next three year fiscal years to be $13.02 billion under the Executive Budget. No estimate has yet been made by DOB on the three-year budget gaps under the enacted budget. However, DOB did estimate that the three-year budget gap would be $15.22 billion under the Assembly’s proposed budget, which also added about $1 billion in spending.

The following is an agency by agency breakdown of the major changes made by the Legislature to the Executive Budget’s proposed State Operations budgets of State agencies. If nothing is indicated for an agency it means the Legislature made no significant changes to the agency’s State Operations budget.

PUBLIC PROTECTION AND GENERAL GOVERNMENT (S2100D/A4300D & S2106C/A4306C)

Division of Alcoholic Beverage Control

Adds $700,000 to the division’s All Funds budget. All of it is in a maintenance undistributed appropriation in the Compliance program, $400,000 of which is for personal services. This additional funding is to support new investigators and the efforts of the new Problem Premises Task Force created last year.

Department of Audit and Control

Adds $2.7 million to the department’s All Funds appropriation; $2.35 million of which is for personal services. The entire increase is in a new maintenance undistributed appropriation in the Local Government Services & Economic Development program. We believe this additional funding is for additional staff to audit school districts. The exact number of new staff should be clarified at Statewide Labor-Management.

Department of Civil Service

Adds $1.36 million to the department’s All Funds budget; all of the funding was added for personal service which should restore funding for all 30 positions the Executive Budget proposed to eliminate from the testing, human resources, and information technology programs.

Adds $490,000 in a new personal service appropriation for the Administration and Information Technology program.

Adds $870,000 in a new personal service appropriation in the Personnel Management Services program.

Department of Correctional Services

Adds $9.5 million to the department’s All Funds budget including an additional $10 million for personal services which is offset by cuts in non-personal services.

Adds $7.5 million to the Program Services program including $7 million for personal services and $500,000 for supplies and equipment. The purpose of the additional funding and whether it will support additional positions is not explained in the enacted appropriation and should be clarified at Statewide Labor-Management.

Cuts $2 million from the Administration program’s non-personal services appropriation, with the largest cut in contractual services.

Adds $4 million to the Supervision of Inmates program, including $3 million for personal services and $1 million for equipment. The purpose of the additional funding and whether it will support additional positions is not explained in the enacted appropriation and should be clarified at statewide labor-management.

Rejects the proposal to create a Prison Closure Commission.

Division of Criminal Justice Services

Increases the division’s All Funds appropriation by $1 million, reflecting a maintenance undistributed appropriation in the Administration Program for the Office of Sex Offender Management. Includes $750,000 in personal service funding.

Rejects the Governor’s Article VII proposal to make permanent various criminal justice programs and fees and instead extends them for 2 years.

· Rejects the Governor’s proposals to expand the use of the Criminal Justice Improvement Account to purposes other than crime victim programs and to increase the fee charged by the Office of Court Administration (OCA) for a criminal history search in order to provide additional funding for civil legal services.

Department of Law

Increases the department’s all funds budget by $4 million, all of which is in a maintenance undistributed appropriation in the Counsel for the State program related to representing the State in civil commitment proceedings. This appropriation includes $2.6 million in personal services.

Division of Military and Naval Affairs

Increases the division’s All Funds appropriation by $500,000, all of which is in a maintenance undistributed appropriation in the Special Services program for the purchase of marine security patrol boats.

Division of Parole

Increases the division’s All Funds budget by $5.1 million, all of which is for the Parole Operations program. $4.9 million of this increase is for personal service. This change reflects the rejection of the Governor’s proposal to amend the parole violation process, which would have allowed State incarceration of alleged parole violators pending a revocation hearing, with participation in revocation hearings via teleconferencing in local jails.

Accepts the Governor’s proposal to eliminate the minimum six month reincarceration for a violation of parole conditions.

Division of State Police

Reduces the division’s All Funds appropriation by $3,685,000, reflecting the denial of the Governor’s proposal to establish an automated speed photo monitoring system in work zones.

Reduces the Patrol Activities program by $3,685,000, including maintenance undistributed additions of $4.4 million for speed enforcement in highway work zones, which includes a new $2.52 million appropriation for personal service, and $1.7 million for defibrillators and related training in state police patrol vehicles, offset by a $9.8 million reduction for automated speed photo monitoring.

Office for Technology

Reduces the office’s All Funds appropriation by $3 million, reflecting a reduction of funding for contractual services in the Office for Technology program.

Eliminates the language proposed by the Senate that would have required the new consolidated data center to be located in Utica. PEF obtained a letter of clarification from the Division of Budget that stated that $5.1 million for interim data center capacity will not be used to relocate current data centers.

EDUCATION, LABOR, AND FAMILY ASSISTANCE (S2103D/A4303D & S2107C/ A4307C)

Office of Children and Family Services

Adds $1,174,000 to the agency’s All Funds budget, all in the general fund. This increase is predominantly in the Youth Facilities Program for restoration of the Great Valley and Gloversville facilities, and an additional 18 mental health positions, offset by reductions in other programs.

Adds $500,000 to the Central Administration Program for the Office of the Ombudsman to protect and promote the legal rights of youth in OCFS facilities, $425,000 is for personal service. This office is established in the Article VII bill. A director will be appointed by the Governor for a five year term. The office will visit facilities and programs, hear grievances and complaints and investigate alleged violations of the legal rights of youths. Provides that an Ombudsman shall interview staff during regular hours, where feasible. Creates an independent review board, an advisory body that reviews child advocate reports prepared by the office.

Reduces by $300,000 the maintenance undistributed appropriation in the Family and Children’s Services Program for administering activities for the Medicaid Home and Community Based Waivers, including a reduction of $189,000 in personal services. It is uncertain what impact this will have on FTEs.

Reduces by $1 million funding for contractual services in a maintenance undistributed appropriation in the Systems Support Program.

Adds $1,374,000 to the Youth Facilities Program: $543,000 for 18 additional mental health workers including but not limited to licensed social workers and licensed psychologists, and $837,000 for continued operation of the Great Valley non-secure residential center and the Gloversville group home.

Amends Article VII language to waive the 12 month notice requirement to allow closure of the Brooklyn and Mt. Vernon group homes on October 1, 2007 but not Great Valley residential center or the Gloversville group home.

Rejects the Governor’s proposal for a new Office for the Blind and instead establishes, in an Article VII bill, an executive board within the Commission for the Blind and Visually Handicapped. The board will make recommendations concerning program coordination, resolution of differences in rules and regulations, and improvements for state and locally operated services.

State Education Department

Reduces the department’s All Funds budget by $5 million; $1.995 million of this cut is in the department’s overall personal service appropriation.

Reduces the maintenance undistributed appropriation in the Elementary, Middle, Secondary and Continuing Education program by $5 million including $1.995 million from the personal service appropriation and $3.075 million from the non-personal service appropriation (most of this cut is in the appropriation for contractual services). This appropriation was to fund a new “Enhanced Accountability Plan” which would have employed 77 new FTEs. We estimate this cut will reduce the number of new FTEs for this new program to 57. The impact of this cut should be clarified at Statewide Labor Management.

Department of Labor

· Decreases the department’s proposed All Funds Appropriation by $3.1 million.

· Cuts $3.5 million from the Employment and Training program’s maintenance undistributed contractual services appropriation. We believe this reduction is related to the unemployment insurance modernization program but this should be clarified at Statewide Labor Management.

· Adds $400,000 to the Occupational Safety and Health program in the OSHA T&E account; $150,000 of this increase is for personal service and $250,000 is for non-personal services including $200,000 for contractual services. It is possible that the additional personal service funding will support new positions; this issue should be clarified at Statewide Labor Management.

State University of New York

Adds $10.45 million to the All State University Colleges Program appropriation. This figure includes the following changes to the accounts within this program:

o $6.98 million decrease for services and expenses related to programs that support Cornell University’s agriculture and equine services, (Research and Public Service account);

o $500,000 increase for additional services and expenses of the small business development centers (Infrastructure and Technology account);

o $839,511 in additional support for the Educational Opportunity Program (Programs for the Educationally and Economically Disadvantaged account);

o $6.1 million for expenses related to the operation of the ATTAIN lab program (Advanced Technology Training and Information Network) program (Programs for the Educationally and Economically Disadvantaged account); and

o $10 million for additional financial assistance for SUNY – for services and expenses related to enrollment growth, full-time faculty, expansion of opportunity, and high need programs (Programs for the Educationally and Economically Disadvantaged account).

Makes changes to the Executive’s Article VII proposal for Graduate Medial Education (GME): reduces Medicaid spending for those hospitals whose GME current costs have decreased compared to the value in the rates; and applies an across-the-board cut of $24 million in the HCRA GME pool. It is unclear how these changes will affect the SUNY hospitals

Office of Temporary & Disability Assistance

Reduces by $3.5 million the appropriation for the Systems Support and Informational Services Program’s Federal Health and Human Services Fund (HHS Fund) which is all federal funds (SRF). The impact of this cut should be clarified at Statewide Labor Management.

HEALTH AND MENTAL HYGIENE (S2104D/A4304D & S2108C/A4308C)

State Office for the Aging

Adds $610,000 to the office’s All Funds budget, including $85,000 in personal service funding in the Administration and Grants Management Program for additional staff for oversight of the Naturally Occurring Retirement Communities (NORC) and Neighborhood Naturally Occurring Retirement Communities (NNORC).

Adds $525,000 to the maintenance undistributed appropriation in the Administration and Grants Management Program, as follows: $200,000 for a Family Caregiver Council, including $75,000 in personal service; 225,000 for the Alzheimer’s Advisory Coordinating Council, suballocated to DOH; $90,000 for services and expenses of NORCs and NNORCs; $10,000 for the Caregiving in New York study; $100,000 for the Mature Worker Taskforce; and $100,000 for developing model zoning and planning guidelines that foster age-integrated communities.

Adds Article VII language to establish a Coordinating Council for Alzheimer’s disease and other dementia, to facilitate interagency planning and policy, review agency initiatives and provide a forum for discussion related to formulation of a comprehensive statewide policy. The Director of the Office for the Aging is a member of the council.

Adds Article VII language to establish a Mature Worker Task Force to coordinate state efforts to assist older workers, to support business growth in light of increasing aging workforce and to combat ageism. The Director of the Office for the Aging is the co-chair of the task force.

Adds Article VII language for the Office, in coordination with the Department of State, to prepare or cause to be prepared model zoning and planning guidelines that foster age integrated communities and make recommendations for assisting mixed-use age-integrated housing development or redevelopment demonstration projects. Creates an advisory committee for this purpose.

Office for Mental Health

Reduces by $9,900,000 the OMH All Funds budget. This includes a personal services reduction of $10.1 million in the Adult Services program, offset by $2.9 million in additional funding for Nathan Kline and NY Psychiatric Institute.

Reduces the Adult Services program by $12.8 million, including $10.1 million in personal service and $2.7 million in nonpersonal service. The personal service reduction includes $9.5 million in regular personal services. We assume that the impact will be a reduction of approximately 103 FTEs from the projected 335 additional FTEs in the Executive Budget. All of these positions were associated with the Sexual Offender Treatment Program, and may reflect a lower revised estimate of the number of civil commitments to OMH under the civil commitment bill enacted this session.

Adds $2.9 million to the Research in Mental Illness program, including $400,000 for 5 research scientist positions at NYS Psychiatric Institute (NYPI) for the Magnetic Resonance Imaging Facility and $500,000 for 5 research scientist positions at Nathan Kline Institute (NKI), and $2 million for grants to NYPI and NKI for development of a program at each facility promoting the development of best practices in the delivery of culturally and linguistically competent mental health services.

Adds Article VII language to provide that the 5.07 Comprehensive Plan include recommendations on the provision of state and local mental health services based on the development of best practices by programs promoting culturally and linguistically competent mental health services. Further provides that OMH provide technical and financial support to two programs promoting culturally and linguistically competent mental health services operated collaboratively with the Nathan Kline Institute and the New York State Psychiatric Institute, academia, providers, interested communities and private and public sector parties.

Office for Mental Retardation and Developmental Disabilities

Adds Article VII language to establish a mental retardation and developmental disabilities services quality improvement demonstration program. This program will allow additional funding of $5 million annually for adjustment to rates of payment or state aid to not for profit or public agencies regulated by OMRDD for projects that increase direct care staff, increase training and education of direct care staff, decrease staff turn-over through wage, benefits or other means, or other efforts related to recruitment and retention of direct care staff. This program will be in effect from April 1, 2007 through March 31, 2010.

Adds Article VII language for a review by DOH in consultation with OMRDD of Medicaid reimbursement for the provision of long term therapies and psychotherapy by licensed clinical social workers in Article 28 and Article 16 clinics.

Department of Health

Adds $102 million to the department’s All Funds appropriation; which includes a $2.4 million increase in the General Fund; and a $99.6 million increase in the Special Revenue-Other appropriations for this department.

Adds $1.4 million to the total appropriation for Personal Services.

Rejects the Executive’s proposal for the establishment of an Early Intervention Program Account within the Center for Community Health Program, and eliminates its $400,000 appropriation. $253,000 of that decrease was for personal service funding and $147,000 was for nonpersonal service funding. The impact of this cut on staff levels should be clarified at Statewide Labor Management.

Adds $2.2 million to the Health Care Standards and Surveillance Program, which included a $2 million increase in personal service funding; and a $200,000 increase in the maintenance undistributed appropriation for services and expenses of an adult home supplemental security income adequacy study. The impact of these added funds, how much additional staff they may fund, and whether the study will be conducted by state employees at DOH should be clarified at Statewide Labor Management.

Adds $200,000 to the Office of Medicaid Management’s maintenance undistributed (MU) appropriation. The MU funding change includes: a decrease of $300,000 to the MU’s personal service appropriation; and an overall $530,000 increase to the MU’s nonpersonal service appropriation. The MU’s nonpersonal service increase included decreases to the supplies and materials ($30,000), travel ($7,000), equipment ($23,000), and contractual services ($610,000), but all of these decreases were offset by an appropriation of $200,000 for a Universal Health Care Study and a $1 million appropriation that is to be suballocated to the State Office for Aging for the health insurance information, counseling and assistance program. It is unclear what the impact on staffing levels for this program will be due to the cut in its personal service appropriation. It is also unclear whether department staff or outside contractors will conduct the Universal Health Care Study. These issues should be clarified at Statewide Labor Management.

Adds $100 million to the Wadsworth Program in the newly created Empire State Stem Cell Research Account.

Accepts the Executive Article VII language proposal to create the New York False Claims Act with qui tam provisions, which will allow private persons to bring civil actions on behalf of New York State to recover funds wrongfully obtained through fraud.

Rejects the Executive’s Article VII language to create the Martin Act for Health Care.
Rejects the Governor’s proposal to create a new public benefit corporation to administer the new Stem Cell Innovation Trust Fund which will instead be administered by a newly created Empire State Stem Cell Board within the Department of Health and chaired by the Commissioner of Health.

Amends the Executive’s Article VII proposal to create a Public Hospital priority pool and instead establishes a $48 million Priority Restoration Pool, of which $42 million for voluntary hospitals outside of New York City and $6 million for public hospitals not operated by the City of New York (distributions will be made on a per-Medicaid discharge basis and public hospitals must demonstrate at least a 17.5% Medicaid inpatient volume).

Makes changes to the Executive’s Article VII proposal for Graduate Medial Education (GME): reduces Medicaid spending for those hospitals whose GME current costs have decreased compared to the value in the rates; and applies an across-the-board cut of $24 million in the HCRA GME pool.

Office of Medicaid Inspector General

Accepts the Executive Budget’s State Operations appropriations for the department and rejects the Senate proposal to eliminate the 157 new staff positions.

Accepts the Executive Article VII proposal to create the New York False Claims Act with qui tam provisions, which will allow private persons to bring civil actions on behalf of New York State to recover funds wrongfully obtained through fraud.

Rejects the Executive’s Article VII proposal to create the Martin Act for Health Care.

TRANSPORTATION, ECONOMIC DEVELOPMENT, AND ENVIRONMENTAL CONSERVATION (A4305D/S2105D & A4309C/S2109C)

Department of Agriculture and Markets

Rejects the language added by the Senate that would have required the Agriculture and Markets Food Lab to be located in Geneva, New York.

Decreases the department’s All Funds appropriations by $770,000. Most of this decrease is in non-personal service appropriations in the Consumer Food Services and Agricultural Business Services Programs.

Shifts funds from Special Revenue-Other appropriations to General Fund appropriations. This shift primarily occurs in the Consumer Food Services Program which reflects the rejection of the Executive’s proposal to shift 30 FTEs in the Consumer Foods program to Special Revenue-Other funding.

· Increase the departments overall contractual services appropriation by $530,000. This includes a $350,000 increase in the Administrative Program and an $180,000 increase in Agricultural Business Services Program. The purpose of these increases should be clarified at Statewide Labor Management.

Adds $250,000 to the General Fund personal services appropriation in the Agricultural Business Services (ABS) program and reduces Special Revenue Other personal service appropriations by $250,000 within several programs within the ABS program. Reduces Special Revenue Other non-personal service appropriations within the ABS program by $518,300. None of these changes should affect staffing for this program.

Reduces the overall Consumer Food Services programs appropriation by $781,700 including:

- a $1,250,000 increase in the General Fund personal services appropriation;

- a $1,250,000 decrease in Special Revenue Other personal service appropriations;

- a $781,700 decrease in Special Revenue Other non-personal service appropriations.

- None of these changes should affect staffing for this program.

Banking Department

Decreases the department’s All Funds budget by $1.3 million. The entire decrease is in the contractual services appropriation for the Regulation Program. We believe this cut is related to the Mortgage Loan Originators Program. The impact of this cut should be clarified at Statewide Labor Management.

Department of Environmental Conservation

Adds almost $7 million to the department’s All Funds budget. The entire add is found in the Air and Water Quality Program (AWQP).

Adds $300,000 to the contractual services appropriation in AWQP. This additional funding is for services and expenses related to assessing statewide wastewater infrastructure improvement needs.

· Adds a new $6.365 million maintenance undistributed appropriation in AWQP. This additional funding is for services and expenses and activities of the Air Resources program including but not limited to: permitting and registrations, inspection of facilities, opacity readings, complaint response, public meetings and hearings, legal assistance and enforcement, assessing exposure levels of air contaminants and associate health risks, developing air concentration guidelines for toxic contaminants for use in regulating emissions of toxic chemicals, supporting the small business environmental ombudsman program, program administration, and technical assistance. A portion of funds may be suballocated to the Department of Economic Development. It is unclear whether additional staff will be hired with this appropriation. This issue should be clarified at Statewide Labor Management.

Denies the Executive’s proposal for a Bigger Better Bottle Bill, yet continues funding for FTEs related to program. The Legislature expects to continue discussions related to this bill through the legislative session.
Rejects DEC regulatory fee increases but did not change the special revenue other appropriations for the department which generally reflect the funds generated by DEC fees.

Creates a new Pollution Prevention Institute program in Environmental Conservation Law but appears to reject any funding for the Institute. The PPI’s mission is to promote energy saving/cost effective pollution prevention on a voluntary basis (§28-0103 of Environmental Conservation Law) through research, development, technology demonstration, technology transfer, education, outreach, recognition and training programs in a manner consistent with the principles of pollution preventing, including but not limited to green chemistry, reuse and remanufacturing. The Commissioner will award grants, on a competitive basis, within amounts appropriated, after consultation with the Pollution Prevention and Environmental Compliance Coordinating Council, to one public or private university or non-profit institution, or more as a consortium, to establish, operate and maintain a pollution prevention institute in NYS. It is possible that funding for the PPI program maybe provided when and if agreement is reached on the “Bigger Better Bottle Bill”.

Department of Motor Vehicles

Reduces the department’s All Funds budget by $1,291,000; all the reduction is in Special Revenue Other funds. This reduction is associated with the rejection of the Internet Point Insurance Reduction program and includes a $260,000 cut in personal services. The impact of this cut should be clarified at Statewide Labor Management.

Decreases by $572,000 Capital Project appropriations (DH&BTF) for contractual services.

Foundation for Science, Technology and Innovation

Accepts the Executive Budget’s State Operations appropriations for the Foundation.

Adds aid-to-localities appropriations as follows:

- Center for remanufacturing $400,000

- NYS Center for Engineering Design and Industrial Innovation $250,000

- Center for Integrated Manufacturing $800,000

- Regional Technology Workforce Development $2.1 million

- NY Loves Bio Global Marketing Program $300,000

- Regional Partnership Program $1 million

- Arts Stabilization Grants $500,000

Department of State

Adds $10.152 million to the All Funds appropriation; which includes a $26.5 million decrease in the General Fund; and a $36.65 million increase in the Special Revenue-Other appropriations for this department.
Adds $9.152 million to the nonpersonal service appropriation ($8.53 million for fringe benefits and $618,000 for indirect costs) in the Business and Licensing Services Program

and shifted funding from Special Revenue Other to the General Fund. None of these changes should affect staffing for this program

The Governor’s Executive Budget proposals to close corporate tax loopholes were originally estimated to generate $449 million in FY 2007-08, $567 million in FY 2008-09, $537 million in FY 2009-10 and $537 million in FY2010-11. Many of these proposals have been advocated by PEF, the Fiscal Policy Institute and other coalitions that PEF has worked with on State revenue issues. The Business Council and other business interests opposed closing these loopholes and claimed that that if they were closed it would raise business taxes by much more that the $450 million estimate. Despite the opposition the enacted budget closes four of these major corporate loopholes. This includes the two largest loopholes which allowed profit transfers among related corporate subsidiaries and allowed the use of real estate investment trusts (REITs) or regulated investment companies (RICs) to reduce corporate taxes. Corporations that conduct substantial inter-corporate transactions with affiliated companies will now be required to file a combined, rather than separate, corporate franchise tax return which is now estimated to generate $271 million in SFY2007-08. Shareholders of the REITs or RICs will now be required to pay tax on the income earned by the REITs or RICs, with an exception for small bank REITs, which will generate $99 million in SFY2007-08. Overall, according to the Division of Budget, the enacted corporate tax loophole closures will generate $405 million in SFY2007-08

The enacted budget did agree to an across the board cut in the corporate franchise tax rate for all corporations, which will cost $75 million in SFY2007-08, and another $75 million in targeted tax cuts for the manufacturing industry.

The Governor and Legislature are still negotiating an extra $1 billion in capital spending as well as the PEF supported Bigger Better Bottle bill. The additional capital spending includes $600 million that the Governor had sought for economic development including $300 million for a high-tech computer chip center, which many have claimed is a Sematech project in Albany, as well as legislative capital spending initiatives. We will continue to monitor with the PEF Legislative Office any changes or additions made to the SFY2007-08 enacted budget.