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Budget Monitor:
The FY 2013 Budget

September 17, 2012
  • Table of Contents
    • Overview
    • Education
    • Environment & Recreation
    • Health Care
    • Human Services
    • Infrastructure, Housing & Economic Development
    • Law & Public Safety
    • Local Aid
    • Other
    • Revenue

Overview

The FY 2013 budget has been enacted and the spending blueprint for the year is now in place.

There is no revenue from new taxes in the FY 2013 budget. Of all the proposals in this budget process, only the Governor included new taxes—among them an increase in the cigarette tax and an end to the sales tax exemption for candy and soda. None of these taxes was included in the final budget.

Instead, Massachusetts fills its roughly $1.3 billion budget gap through a combination of temporary revenue, cuts, and savings. In particular, the budget calls for $615 million in temporary revenue, which will be used for FY 2013 but won't help with future budget shortfalls.

Much of the rest of the deficit is filled with cuts and savings—on top of the $3 billion in cuts and savings which have been enacted over the last four years. For example:

  • Child care subsidies have been cut by roughly $8 million.
  • Funding for Emergency Assistance family shelters is reduced by $40.8 million—though the budget provides $33.4 million in additional funds for some housing support programs.

The largest share of savings comes from Health Care. Even though MassHealth is slated to receive a 5.3 percent increase in funding for FY 2013, this is nearly $500 million less in total and $250 million less in state money than would be required for the program to continue as is. The FY 2013 budget relies on new savings initiatives to fill this gap without cutting MassHealth services.

There are a few areas which will receive increased funding in FY 2013, most notably K-12 Education. The budget raises reimbursement levels for districts with high-needs special education students by $28.8 million, which should ease pressure on school budgets. It also increases funding for Chapter 70 Education Aid by $180 million—although part of this increase is being distributed in a way that disproportionately benefits wealthier districts.

Even with this additional funding, moreover, overall spending on K-12 education is down 3.5% since FY 2009. Indeed, the big fiscal story is about more than the FY 2013 budget deficit; it's about the regular deficits that the Commonwealth has been facing for many years now—including before the recession even began.

There are two basic reasons that Massachusetts continues to find itself in a fiscal crisis.

  1. The lingering effects of the Great Recession, which has sapped state revenues even as it has increased the number of people relying on core safety net services.
  2. The structural budget problems that the state has faced since cutting taxes in the late 1990s. Those tax cuts and other declines in tax receipts over the last fifteen years cost the state over $3 billion in annual revenue.1

These are some of the broader forces that have shaped the FY 2013 budget as a whole, and with it the many, specific proposals that we analyze in our various sections (available through the Table of Contents dropdown above).

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. These changes are NOT reflected in the tables or discussion that follows—but they are noted in the text, when relevant.

Breakdown by Category

The table below shows how the FY 2013 budget compares to other recent budgets and budget proposals, including the House and Senate budget proposals, the FY 2012 budget, and the initial budget for FY 2009. We have adjusted the numbers where relevant to allow for more accurate comparisons among the budgets shown. In particular, the House had included the costs of collective bargaining agreements for state workers in special reserve (temporary holding) accounts, whereas the Senate and Legislature's final proposal included those costs in the various line items from which the affected workers would be paid. To allow more accurate comparisons, we re-allocate the reserve totals to match the final proposed budget structure. As a result, some of the totals for some subcategories are higher in this Budget Monitor than in our earlier Monitors, and the totals associated with those collective bargaining reserve accounts (usually included in the "Other Administrative" subcategory total) are less.


Note: The FY 2012 Current total includes funding in the GAA plus any supplemental budgets passed during the year. The FY 2013 budgets include adjustments to allow for accurate comparisons among the proposals and for year-to-year comparisons. All numbers use the Consumer Price Index (CPI-U) to adjust for inflation.

* In order to make an accurate comparison across fiscal years, this total includes an adjustment to account for the increased use of the Group Insurance Commission by municipalities for their employees' health benefits.

1For more detail, see footnote 2 of Massbudget's FY13 Budget Preview

Education

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. These changes are NOT reflected in the tables or discussion that follows, below.

The FY 2013 budget increases funding for a number of education programs over current FY 2012 levels. In many cases these increases are in line with inflation, and in a few cases these increases go beyond merely reflecting annual cost growth to help offset a portion of cuts made over recent years. Even with these modest increases, however, total state spending on education for FY 2013 represents an inflation-adjusted cut of around 6.4 percent from pre-fiscal crisis levels (FY 2009 GAA).

Much of the one-year increase for education programs comes in the form of revenue support for local school districts. Chapter 70 education aid is increased by $180.3 million and reimbursements through the Special Education Circuit Breaker are increased $28.8 million. Early education programs are the hardest hit category of education spending in the FY 2013 budget, with the three main child care subsidy accounts getting cut by a total of $8.1 million.

Early Education & Care

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. These changes are NOT reflected in the tables or discussion that follows, below.

Early Education and Care programs and services receive a cut of $7.2 million compared to FY 2012. This cut is much bigger when accounting for the increase in costs due to inflation. The FY 2013 budget appropriation of $499.6 million represents a cut of 20.7 percent when compared to FY 2009 GAA inflation-adjusted funding levels.

In FY 2012, more than 85 percent of early education and care funding went to three child care programs: Supportive Child Care for children in Department of Children and Families (DCF) care, Income Eligible Child Care for other children of low-income working families, and TANF Related Child Care for children of families served by or transitioning from Transitional Aid to Families with Dependent Children (TAFDC). Taken together, the FY 2013 budget appropriation for the three child care subsidies is $8.1 million lower than the current FY 2012 budget and $89.1 million lower than FY 2009 GAA inflation-adjusted funding levels.

Entry for new income eligible child care families has been closed for most of FY 2012 and the FY 2013 budget will continue to exclude new families for FY 2013. EEC is projecting a small surplus in this account for FY 2012 which would be used for siblings of children already receiving a subsidy. In April 2012 the number of families on the waitlist for income eligible child care exceeded 36,000 with an 11.8 percent increase from March to April alone. Although the state is projecting a reduction in caseload for TANF-related child care, EEC projects that the $125.5 million appropriation will be insufficient in FY 2013. DCF no longer counts the number of children waiting for supportive child care, but in FY 2010 the waitlist averaged around 1,000 children.

Reach Out and Read received $750,000, the largest percentage cut (6.3 percent) of the early education and care programs compared to FY 2012. Reach Out and Read promotes early literacy and school readiness by partnering with doctors to give out free books and encourage families to read together. This small percentage cut is dwarfed when comparing FY 2013 appropriations to FY 2009 GAA inflation-adjusted funding levels:

  • Access Management, cut 78.1 percent, funds child care resources and referral agencies (CCR&R) which help families with a subsidy attain child care.
  • Early Childhood Mental Health Consultations, cut 75.8 percent, promote the healthy social and emotional development of all children at the classroom level.
  • Universal Pre-Kindergarten, cut 42.2 percent, funds grants to improve the quality of and expand access to preschool programs and services to children from the age of two years nine months until they are kindergarten eligible.
  • Head Start, cut 25.1 percent, promotes school readiness of children ages birth to five from low-income families by enhancing their cognitive, social, and emotional development.

K-12: Chapter 70 Aid

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding provided for FY 2012 includes $2.7 million for Chapter 70 Aid, providing funding for a technical adjustment to New Bedford's aid amount. These changes are NOT reflected in the tables or discussion that follows, below.

The FY 2013 budget funds Chapter 70 Education Aid at $4.2 billion, $180.3 million over current FY 2012 funding. The vast majority of this increase, about $145 million of it, roughly funds the formula outlined in state law, using updated enrollment, inflation, and municipal revenue growth factor measures, helping school districts keep up with the rising cost of providing baseline services.1 The FY 2013 budget also partially phases in one of the reforms planned as part of the FY 2007 budget—reducing by 15 percent the gap for districts whose preliminary contribution is above their target.2

Two further provisions combine to distribute an additional $35.0 million through the Chapter 70 formula by:

  1. Distributing additional money to communities whose Chapter 70 aid allocation is below their "target aid percentage.3" The FY 2013 budget distributes this money only to those districts whose Combined Effort Yield (a uniform measure of local property wealth and incomes available to fund K-12 education) as a percent of their foundation budgets is less than or equal to 107.5.
  2. Guaranteeing each school district a minimum $40 per pupil increase over their FY 2012 aid allocation.

Combined, these two provisions have a somewhat regressive distributional effect (see graph below), although exempting the wealthiest districts from the target aid provision helps make it less regressive than it otherwise would have been. Additionally, the provision relating to target aid does have the virtue of further advancing a subset of policy reforms planned through the 2007 budget. The $40 per pupil minimum provision, by contrast, distributes additional aid without considering local need or capacity.

K-12: Non-Chapter 70 Aid

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. These changes are NOT reflected in the tables or discussion that follows, below.

In the FY 2013 budget several K-12 education grant programs see small increases over current FY 2012 levels. Two programs, in particular—the Special Education Circuit Breaker and Homeless Student Transportation—receive significant new funding and make up the lion's share of the $58.9 million increase over FY 2012.

The SPED Circuit Breaker is funded at $28.8 million above current levels, enabling the state to reimburse school districts at close to the full 75 percent statutory reimbursement rate (of costs above four times the state foundation budget per pupil) for the first time since FY 2008. This increase in circuit breaker funding was coupled with outside section language that froze the annual inflationary increase made for tuition payments to private SPED schools, but the Governor vetoed this rate freeze. Since his veto was not overridden by the legislature, the rate freeze did not make it into the final budget.

Because school districts are legally mandated to provide services that meet the needs of their special education students, a higher reimbursement rate through the circuit breaker is not likely to change dramatically the nature of services provided to these students; rather these reimbursements help free up money to fund other school services, and in that sense, circuit breaker funding serves as a form of general education aid, similar to Chapter 70 aid.

Homeless Student Transportation is a new program for FY 2013 and is funded at $11.3 million. Federal law provides that homeless students living in temporary housing outside of a city or town where the family lived prior to becoming homeless may choose to remain enrolled in the school district of origin. The federal law requires that transportation be provided so that students can continue attending the school district of origin, and this new line item will help reimburse host and sending school districts for these transportation-related costs.

The FY 2013 budget funds four other new education programs. Specifically, the budget provides:

  • $3.0 million for Programs for English Language Learners in Gateway Cities, for summer English learning camps for students who are not yet fluent in English.
  • $500,000 for Gateway Cities Career Academies, for high school support centers to help students explore career opportunities.
  • $505,000 for Data Sharing, for a cross-departmental data sharing pilot program for assigning a student identifier to children participating in early intervention programs with the goal of tracking their progress and determining cost savings associated with early intervention.
  • $250,000 for Financial Literacy Program, for competitive grants to fund high school financial literacy programs.

K-12: School Building

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. These changes are NOT reflected in the tables or discussion that follows, below.

The FY 2013 budget projects a contribution to the School Modernization and Reconstruction Trust (SMART) of $689.4 million. Each year the Commonwealth is required to contribute to this trust an amount equal to one out of every 6.25 cents brought in through the state sales tax. The FY 2013 contribution is projected to be higher than the FY 2012 contribution due to modest projected increases in total sales tax receipts.

Higher Education

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. These changes are NOT reflected in the tables or discussion that follows, below.

While total funding for public higher education in the FY 2013 budget is somewhat higher than FY 2012, FY 2013 funding still represents an inflation-adjusted cut of around 13 percent from pre-fiscal crisis levels (FY 2009 GAA). Cuts are even deeper when looked at over a longer time horizon, with FY 2013 funding proposals representing around a 30 percent cut from FY 2001.

As demonstrated in the graph below, one consequence of declining state support over the past decade has been dramatic growth in the cost of tuition and fees for students attending each of the state's three types of higher education campuses.

The vast majority of the increase for FY 2013—$49.1 million of it—funds collective bargaining accounts that cover labor costs at each of the campuses. While this spending shows up in separate reserve accounts, MassBudget builds these dollars into campus totals below in order to reflect more accurately the level of state budget resources being used to run these campuses ($5.7 million for line item 1599-4419 goes towards a bargaining unit covering both state universities and community colleges and cannot be broken out across these two types of campuses).4 Except for these collective bargaining increases, higher education campuses are all close to level-funded from current FY 2012 levels. The table below summarizes funding totals for each of these campus types.

Also noteworthy in the FY 2013 budget is the adoption of several reforms to how the state's fifteen community colleges are governed, calling on them to focus more specifically on job training and seeking greater standardization of the system statewide. Key reforms include:

  • Empowering the Governor to appoint the chairperson of individual community college boards.
  • Directing the Commissioner of Higher Education to develop a new community college funding formula that integrates workforce development goals and student performance metrics.
  • Expanding the Board of Higher Education's role in selecting and evaluating community college presidents.

The FY 2013 budget provides new or increased funding for a few programs in order to help advance these reforms, including:

  • $7.5 million for the Performance Management Set Aside program, an increase of $5.0 million over current FY 2012 levels. This increase is coupled with a $5.0 million earmark for community college standardization initiatives, including the creation of standard course offerings and numbering across all fifteen community college campuses.
  • $2.3 million for a new Rapid Response Grants program, enabling community colleges to set up workforce training programs within three months of a request by local businesses.
  • $400,000 for a new Office of Coordination, to coordinate all public higher education workforce training efforts. This office will be housed within the Board of Higher Education.

Additionally, the FY 2013 budget provides $3.3 million for a new High Demand Scholarship Program, targeted for Massachusetts residents attending state universities or community colleges working towards majors in in high-demand professions.

Please see the table below for more information on higher education line items. This table includes tuition retention adjustments for each of the campus line items, but separates out collective bargaining accounts.

1For more information on how the Chapter 70 formula works, see Demystifying the Chapter 70 Formula.

2For more information on the 2007 reform plan, please see the November 2006 MassBudget paper Public School Funding in Massachusetts: Where We Are, What Has Changed, and Options Ahead, available here: http://www.massbudget.org/file_storage/documents/Public_School_Funding-Where_We_Are_What_Has_Changed_-_FINAL.pdf

3This approach is similar to "down payment aid" discussed on page 6 of the above MassBudget report.

4Additionally, starting in FY 2012, all campuses of public higher education began retaining tuition payments from out-of-state students, rather than remitting that revenue back to the state, so MassBudget adjusts upwards the campus allocations by these projected amounts so that one can compare reasonably the levels or resources available at an individual campus to previous years when this tuition was remitted to the state.

Environment & Recreation

Funding for environment and recreation programs helps keep our air and water clean, supports wildlife habitats and provides for the maintenance of state parks, pools, beaches and parkways around Massachusetts. The budget for Fiscal Year (FY) 2013 provides $178.4 million for these programs, an increase of $16.0 million above the FY 2012 current budget. Much of this increase comes from new fee revenue raised by various departments that oversee state environment and recreation programs. Even with this increase, funding for environment and recreation programs has fallen 21 percent in inflation-adjusted dollars since the onset of the state fiscal crisis in 2009.

Environment

The environment budget supports programs that keep the state's air, water and land clean including cleaning up hazardous waste sites, supporting recycling and funding salaries and equipment for the state's environmental police. The FY 2013 budget provides $79.4 million for environment programs an increase of $7.3 million above the FY 2012 current budget. Since the onset of the state fiscal crisis in 2009, funding for environment programs has fallen by 17 percent in inflation-adjusted dollars.

Some increases in the FY 2013 environment budget include:

  • $2.5 million from increased permitting fees to meet costs associated with increases in inflation since 2004. These fees would allow the Department of Environmental Protection (DEP) to hire staff necessary to approve permits and assure compliance with environmental rules in a timely manner.
  • $1.7 million in additional funding to clean hazardous waste sites, to $13.6 million. Even with this increase, funding for cleaning these sites has fallen 23 percent in inflation-adjusted dollars since the onset of the state fiscal crisis in 2009.
  • $1.3 million for DEP Administration to $26.0 million. Even with this increase, funding for DEP has fallen by 33 percent in inflation-adjusted dollars since the onset of the fiscal crisis in 2009.
  • $750,000 in funding for a new class of state environmental police.
  • $200,000 in additional funding, to $350,000, for a wastewater treatment study of Cape Cod. Outside Section 199 of the FY 2013 budget gives guidance on how the study will be undertaken in order to make affordable and environmentally-appropriate improvements to wastewater treatment on the Cape.

In addition to increases in funding, the FY 2013 environment budget also includes Outside Section 209 which directs DEP to examine the feasibility of taking over responsibility of monitoring pollution runoff which is currently overseen by the federal Environmental Protection Agency (EPA). The budget requires that DEP report its findings to the Legislature no later than July 1, 2013.

Fish & Game

The state's fish and game budget funds Massachusetts fisheries, wildlife habitats and other natural sites in the state. Much of the funding that supports fish and game programs comes from the revenues the Department of Fish and Game receives through the sale of licenses for hunting, fishing, boating and other activities.

The FY 2013 budget provides $20.9 million in funding for these activities an increase of $2.1 million above the FY 2012 current budget. The funding increases include:

  • $572,000 more for the Division of Fisheries and Wildlife to $10.6 million.
  • $500,000 in additional funds to purchase wildlife habitats for a total of $1.5 million.
  • $457,000 more for the Division of Marine Fisheries to $4.8 million.

Parks & Recreation

The state's parks and recreation budget supports state parks, urban parks, beaches, pools and the employees who work at these facilities. It also funds parkways and dams managed by the Department of Conservation and Recreation (DCR).

The FY 2013 budget provides $78.1 million in funding for these activities, an increase of $6.6 million above the FY 2012 current budget. Despite this increase, funding for state parks and recreation has fallen by 28 percent in inflation-adjusted dollars since the onset of the fiscal crisis in 2009.

Some of the more notable changes to parks and recreation funding in the FY 2013 budget include:

  • An increase of $5.7 million, for a total of $14.1 million, in retained revenue that DCR can use to hire more staff for beaches, pools and recreational facilities though some of this increase is offset by a $764,000 decrease in the account that provides funding for state parks.
  • $845,000 increase in funding, to $12.5 million, for state pools, beaches and the seasonal employees that work at DCR recreation facilities.
  • $125,000 for the Metropolitan Beaches Commission. The Commission, created in the FY 2006 budget, will report to the Legislature no later than June 30, 2013 with recommendations on the maintenance, operation and infrastructure needs of the state-run beaches near Boston.

Health Care

Health care funding in the state budget provides health coverage for more than one in five residents of Massachusetts and supports critical mental and public health programs. The Fiscal Year (FY) 2013 budget includes a total of $15.17 billion for these programs, an increase of 3.5 percent compared to FY 2012. Underlying this overall increase are different rates of growth for the four different areas that comprise this category of spending. The majority of health spending goes to Medicaid and other programs that provide health coverage for low-income people; spending in this area will grow at a faster rate than the overall budget, but the increase will be lower than it otherwise would have been in the absence of savings strategies included in the budget (the state receives Federal reimbursements for roughly half this spending). Meanwhile, spending for health coverage provided to state employees will decline slightly in FY 2013, while spending on public health and mental health programs will increase slightly, but will remain well below pre-recession funding levels for these programs. [A supplemental budget approved after the Governor signed the budget added a small amount of additional funding for some MassHealth and Department of Public Health line items. Details are included in the discussion below but are not reflected in the tables.]

MassHealth (Medicaid) & Health Reform

Medicaid programs, including MassHealth (the state's Medicaid program for people under 65) provide health coverage for nearly 1.4 million people in Massachusetts, and the Commonwealth Care program provides coverage for about 180,000 more low-income people who do not meet MassHealth income and other eligibility criteria. The state also provides support to safety net hospitals, and helps reimburse hospitals and community health centers for care they provide to uninsured patients. The FY 2013 budget contains $12.66 billion for these purposes, an increase of 4.5 percent over current FY 2012 spending. The budget also contains a number of policy provisions affecting MassHealth and the Commonwealth Care Trust Fund, as well the state's Health Care Connector, which operates the Commonwealth Care program and helps small businesses and individuals purchase health insurance.

MassHealth (Medicaid)

The FY 2013 budget includes total funding of 10.98 billion for MassHealth coverage programs (excluding about $90 million for administrative costs, as well as $4.3 million in Early Intervention costs that will be transferred from the Department of Public Health in FY 2013). While this amount represents a 5.3 percent increase over current FY 2012 spending, it is substantially lower than the baseline amount of $11.47 billion that the administration had estimated would be necessary to maintain these programs with no change in FY 2013. To achieve a lower rate of growth the budget proposed by the Governor in January relied on a set of cuts, savings from payment reforms, and other strategies that totaled $544.3 million; these were offset by a proposed $28.2 million in new spending initiatives, for a reduction of about $516 million compared to the baseline total. The budget conferees adopted most of the Governor's proposals, but also included additional cuts and spending initiatives added by the House and Senate during the process of designing and debating their budgets, for a total of about $478 million in savings ($551.0 million in cuts and savings, offset by $72.8 million in spending initiatives).

Savings

The $544.3 million in savings originally proposed in the Governor's House 2 budget proposal included $49.6 million in payment reforms, 36.8 million in changes to long term care services, $82.9 million in rate restructuring and $375.0 million from a combination of program integrity activities and cash management strategies. The FY 2013 budget includes these with one exception, and also adds additional savings measures.

  • The FY 2013 budget includes language that maintains FY 2012 rates for McInnis House, a medical respite program for the homeless, instead of the savings of $3.0 million from rate adjustments assumed in House 2.
  • The budget reduces rates paid for nursing home beds that are held for patients during temporary absences, for a savings of $7.5 million. The budget also includes language that prohibits the reassignment of these beds during such absences.
  • The budget assumes savings of $3.0 million from the expansion of a public health academic detailing program that provides information about pharmaceuticals to doctors and other health providers who serve MassHealth patients in order to promote cost-efficient prescribing practices.
  • The budget requires MassHealth Basic and Essential programs to cover hospice services and assumes $1.2 million in savings from this provision.
  • Funding for the MassHealth program for people with HIV is $1.0 million lower in the budget, essentially level with FY 2012, compared to the Governor's and Senate budget proposals.
  • The budget does not include House language prohibiting limits on hospital appeals of case mix adjustments (the Governor's budget assumed these limits would save about $8.0 million), and budget conferees dropped the Senate's assumption of $15.0 million in savings from a reduction in coverage for day habilitation services.

Spending Initiatives

The FY 2013 budget includes the Governor's new spending initiatives, although it funds two of them at lower levels and one at a higher level; it also adds new initiatives, and maintains an FY 2012 rate increase for nursing homes.

  • The budget includes two new line items proposed by the Governor that would fund improvements to MassHealth enrollment and redetermination processes (4000-1602) and support activities to implement federal health reform provisions (4000-1604), but it funds them at lower levels than the Governor proposed, providing $1.0 million instead of $2.0 million for enrollment improvements, and $750,000 instead of $3.1 million for health reform implementation. Lower funding levels are likely to make it more difficult for the administration to meet deadlines for implementation of federal health reform requirements.
  • Like the Governor's budget, the FY 2013 budget includes $20.0 million for infrastructure and capacity-building activities at hospitals that are not eligible for Delivery System Transformation grants (described below) and $3.0 million for similar activities at community health centers, but it also goes beyond the Governor in including an additional $3.0 million for grants to "critical access" community hospitals.
  • The FY 2013 budget retains a Senate provision restoring coverage for limited dental services for adults (composite fillings for front teeth), at a cost of about $3 million (the full-year cost is around $6 million).
  • The budget maintains the FY 2012 funding level for supplemental rates paid to nursing homes in FY 2013—an amount that is $30.2 million higher than the Governor's proposed appropriation level. The budget also includes language earmarking $2.8 million for a joint labor-management pay-for-performance program at nursing homes.
  • The budget requires supplemental rate payments for certain pediatric hospitals and specialty units, in recognition of higher costs associated with their patient case-mix, at a cost of $14.8 million ($3.0 million of this amount was included in a separate, supplemental budget approved at the end of July).
  • The supplemental budget passed at the end of July also added $8.0 million to the MassHealth Fee-for-Serve line item (4000-0700) to pay for the FY 2013 cost of higher rates for Personal care Attendants who provide services in the home to disabled MassHealth members.

MassHealth Policy Provisions

The FY 2013 budget also contains a number of policy provisions that affect the MassHealth program, although they do not change funding levels. These include:

  • Changes to language governing an advisory committee that was created in the FY 2012 budget with a directive to study the costs and benefits of various MassHealth care delivery models, such as the Primary Care Clinician (PCC) plan, managed care program, and medical home models. The changes provide more specific criteria for the committee's investigation and final report, and extend the date for reporting until October, 2012 (Section 145). A related section added by the House that required auto-assignment of MassHealth members who do not choose a plan into managed care organizations and the PCC plan on an equal basis, pending completion of the report, was held in conference.
  • Authorization for the Inspector General to expend funds from the Health Safety Net Trust Fund (which pays for uncompensated care costs) to conduct a study of the Massachusetts Medicaid program (Section 182).
  • A requirement that MassHealth report on savings strategies it will pursue in FY 2013 and any changes it plans to make to the savings plan (Section 185).
  • Language requiring the Office of Health and Human Services (HHS) to select an entity to perform a study of MassHealth children with complex care needs, including an analysis of how these needs can be met by a medical home model. The provision specifies that HHS shall not award money or other compensation with the contract (Section 210).

Commonwealth Care

The Commonwealth Care program provides coverage for about 180,000 people who are not eligible for MassHealth. Enrollment in the program is expected to grow in FY 2013, partly as a result of the reinstatement of a group of legal immigrants following a state Supreme Judicial Court decision that their exclusion from the program was unconstitutional. Members of this group had received more limited coverage under a separate plan, although that program was closed to new enrollees. The Commonwealth Care program is funded by expenditures from the Commonwealth Care Trust Fund (CCTF), which holds transfers from the General Fund and the portion of tobacco tax revenue dedicated to Commonwealth Care, as well as smaller amounts of revenue from assessments on employers who do not provide health insurance and penalties paid by individuals who do not purchase coverage that is deemed affordable.

The FY 2013 budget includes a transfer of $740.3 million from the General Fund to the CCTF, and assumes that $120.0 million of tobacco tax will be deposited in the Fund, for a total of $860.3 million. This amount represents a slight decrease from the FY 2012 level (which included $17.0 million in surplus FY 2011 revenues that were carried forward for use in FY 2012). The slight decline in funding needed to maintain Commonwealth Care coverage is due chiefly to aggressive procurement strategies that led to lower rates for the managed care organizations that provide coverage under the program. The General Fund transfer is about $1.0 million lower than the transfer proposed in the House budget, due to an expectation that the Connector can deliver a wellness program at a lower cost than the House assumed. As in the case of MassHealth, the Commonwealth Care program will provide coverage for limited dental services for some enrollees.

Other Health Financing & Health Reform Provisions

The FY 2013 budget also provides funding for the Division of Health Care Finance and Policy and for a number of other health programs that serve low-income residents of Massachusetts, and includes two sections affecting Health Connector activities.

  • Delivery System Transformation Initiatives Trust Fund and Grants
    The budget includes a transfer of $186.9 million from the General Fund to a new Delivery System Transformation Initiatives (DSTI) Trust Fund that will provide incentive payments, in accordance with the state's MassHealth waiver agreement with the Federal government. The funds will be used support activities to help seven safety net hospitals develop new payment and health delivery systems, such as better management of chronic conditions and the infrastructure to support medical home models. Creation of the fund and a similar transfer for FY 2012 were included in a supplemental budget approved in June, 2012. Hospitals not eligible for DSTI grants will be eligible for other funding for similar activities (see MassHealth discussion above).
  • Prescription Advantage
    The budget includes a decrease in funding, compared to FY 2012, for the Prescription Advantage program. The drop reflects an expectation of reduced utilization of the program due to changes made by the federal health reform law that will provide increased Medicare coverage for drug costs that are now covered by Prescription Advantage, shifting these costs from the state to the Federal government.
  • Health Connector
    In addition to managing the Commonwealth Care program, the Connector also contracts with insurers to provide non-subsidized coverage to individuals who lack access to affordable insurance, and to small businesses. Section 133 of the budget authorizes the Connector to expand this role and to procure health insurance for other state agencies and non-profit corporations. Section 134 of the budget amends state law to create an ongoing wellness pilot program that is intended to expand the use of wellness initiatives by small businesses. Under the plan, the Connector will provide subsidies of up to 15 percent of eligible employer health costs for employers who participate in the program (a similar program was included in the final FY 2012 budget).

In addition to these provisions a supplemental budget approved at the end of July allows the use in FY 2013 of $1.7 million in funds from a reserve account created in FY 2011 to support administrative and other costs associated with the design and implementation of health cost control strategies. The supplemental budget also increases by $4.0 million the amount of federal reimbursement revenue the Division of Health Care Finance and Policy may retain to support processing of claims for uncompensated care that are paid from the Health Safety Net Trust Fund. Finally, the supplemental budget increases the amount transferred from the General Fund to the Medical Assistance Trust Fund (MATF) for payments to three safety net hospitals. The increase reflects changes in the timing of these payments, which are fully reimbursed by the federal government.

Mental Health

The FY 2013 appropriation for programs operated by the Department of Mental Health (DMH) represents a slight increase over current FY 2012 current spending, but remains well below pre-recession spending levels for most of these programs. The budget contains a total of $671.4 million for DMH programs, an increase of 3.1 percent over the $651.0 million provided in FY 2012, but 8.3 percent below the FY 2009 level, after adjusting for inflation. Cuts since 2009 have affected education, employment, and clubhouse programs, and have reduced beds at DMH facilities.

The bulk of the FY 2013 increase goes to three core DMH line items—funding for child and adolescent mental health services rises by $5.0 million, while the appropriation for adult mental health and support services rises by $11.7 million and mental health hospitals and in-patient facilities will see an increase of $12.6 million. These increases are offset by the fact that the FY 2012 budget included the one-time use of resources from mental health trust funds to supplement the adult services and facilities line items in FY 2012. The availability of trust funds meant that the budget appropriations for the line items were lower in FY 2012 than they would have been if the $10.0 million in trust funds had flowed more directly through them, and conversely the FY 2013 increases for these programs appear larger. After accounting for the use of trust funds, the combined increase for these two line items is more modest. (Note that the budget also contains language allowing the use of the trust funds appropriated in FY 2012 through the end of FY 2013.)

Taunton State Hospital & Behavioral Health Study
The FY 2013 budget includes language in the DMH facilities line item (5095-0015) requiring that 45 beds be maintained at Taunton State Hospital until the completion of a study of the behavioral health system described below. The Senate budget included language requiring the maintenance of 72 beds, while the House did not include any requirement, instead assuming closure of the facility midway through FY 2013. Other line item language directs state agencies to develop a plan for the disposition of land and property when in-patient mental health facilities are closed, and sets out criteria for the discharge of DMH clients from in-patient to community-based mental health facilities.

Section 186 of the budget creates an advisory committee of legislators and stakeholders that will commission a consultant to produce an independent analysis of public and private behavioral health care services in Massachusetts, and the facilities line item includes an earmark of $100,000 for this purpose. The study will cover a broad range of issues, including the state's in-patient bed capacity, the implementation of federal and state mental health parity laws, and a review of the Massachusetts Emergency Services Program. A final report, which must contain an estimate of the appropriate number of in-patient mental health beds and description of the "anticipated impact" of the closure of Taunton State Hospital, is due at the end of December, 2012. The Governor vetoed this outside section and proposed separate study legislation with different criteria, and he also vetoed funding for the higher bed level, but the legislature overrode both these vetoes.

DMH Clubhouses
The FY 2013 budget includes an earmark of $1.0 million in additional funding over the FY 2012 level for DMH clubhouse programs within the adult mental health services line item (5046-0000). This amount is midway between the Senate and House budget proposals for earmarks of $1.5 million and $500,000, respectively. Clubhouse programs provide a variety of community-based vocational and social rehabilitation services to people with mental illness.

Forensic Services
The budget contains an appropropriation of $8.3 million for forensic mental health services, including juvenile court clinics. This funding level is identical to that proposed in the House's FY 2013 budget and slightly below the Senate appropriation, but well below the $9.2 million that the Governor recommended as the amount needed to maintain the program in FY 2013.

Stephanie Moulton Safety Symposium
Section 55 of the budget amends state law to rqeuire DMH to conduct an annual Stephanie Moulton Safety Symposium for employess that will include discussions of safety practices and risk management for community-based services. The symposium is named in honor of a mental health worker who was killed by a resident in a group home in 2011. The DMH administrative line item (5011-0100) includes an earmark of $100,000 to pay for the symposium.

Public Health

Programs operated by the Department of Public Health (DPH) protect the health of the general public in Massachusetts by responding to public health emergencies, ensuring that health professionals and facilities are properly licensed, and promoting wellness and disease prevention activities. Overall funding for these programs rises very slightly in the FY 2013 budget. This increase is the result of the Conference Committee's decision to adopt, or come part way to, the Senate appropriation level in many of the areas where the House and Senate proposals differed. The House FY 2013 budget included a decrease in overall funding for public health programs of $4.2 million compared to FY 2012, while the Senate proposed an increase of $7.7 million. The increase of $5.2 million contained in the FY 2013 budget resolution represents a rise of just 1.0 percent over FY 2012 spending and barely begins to restore the $111.0 million drop in funding for public health programs that occurred between FY 2009 and FY 2012, after adjusting for inflation.

Highlights of the FY 2013 appropriations for public health programs are provided below; for a comprehensive list of appropriations see the table at the end of this section, and for historical spending data click [here] to use the MassBudget Budget Browser. (Note that public health funding totals in this Budget Monitor have been adjusted to reflect proposed transfers of funds related to Early Intervention programs and the State Laboratory; they also include funding for a Youth Violence grant program directly administered by the Office of Heath and Human Services. A supplemental budget approved at the end of July added $200,000 to the school health services line item, which is not included in the tables in this section.

Substance Abuse Services
Funding for substance abuse services provided by the DPH is distributed mainly through the department's Division of Substance Abuse Services line item, but the budget also includes separate appropriations for some smaller programs focused on particular populations. The FY 2013 budget includes an increase of $2.9 million for these programs overall, most of which will go to the main Division of Substance Abuse Services line item. The Conference Committee's choice to adopt the House's appropriation amount for a Compulsive Behavior Treatment Program that uses unclaimed prize money in the State lottery fund to provide treatment to compulsive gamblers means that funding for this program will increase by just over half a million dollars in FY 2013. Likewise, the Conferees adopted the Senate's proposal to provide $2.0 million for a Jail Diversion program for non-violent offenders with addictions to heroin or OxyContin.

In addition to these budget line items, a separate off-budget Substance Abuse Services Fund was created in FY 2012 in order to pay for an expansion of treatment facilities and case management services for people who have been civilly committed to institutions and who have substance abuse disorders. The Fund received a transfer of $10.0 million from the General Fund in FY 2012, and statutory language allowed these dollars to be spent through the end of FY 2013, at which point the Fund will sunset. Any additional ongoing costs related to the expansion will need to be included in future budgets. The budget does not include Senate language that added new provisions governing expenditures from the Fund in FY 2013.

Health Promotion and Disease Prevention
FY 2013 funding for Disease Prevention and Health Promotion programs, such as cancer screening, cardiovascular risk education, and care coordination for high risk populations, rises by 5.7 percent compared to FY 2012 (amounts are adjusted to account for a transfer of funding for an ALS registry to a separate line item). Nevertheless, at $3.3 million in FY 2013, the appropriation for these programs remains far below its FY 2009 inflation-adjusted level of $15.7 million.

Children's Public Health Programs
A number of public health programs provide services chiefly or exclusively to children. Some, although not all, of these programs receive increases in the FY 2013 budget.

  • Early Intervention
    After accounting for a transfer of some funding to the MassHealth program, the budget provides an increase of $1.1 million for Early Intervention programs that serve infants and small children who exhibit delays in cognitive, motor, language and other forms of development. This amount is somewhat less than the $1.9 million increase the Senate proposed, but well above the levels proposed by the Governor and House. The budget also includes language, added during Senate budget debate, dedicating any year-end surplus to one-time salary increases for direct care workers in Early Intervention programs.
  • WIC
    The budget includes an increase of $1.8 million, or 7.5 percent, in the amount of revenue that the Women, Infants and Children nutrition program is authorized to retain and spend from revenue it receives from infant formula rebates under federal regulations. The increase is expected to cover the costs of maintaining current services (a separate line item funded with state General Fund dollars receives level funding compared to FY 2012).
  • Violence Prevention and At-Risk Youth Grants
    The budget provides $4.0 million for a Youth Violence Prevention Grant program within the Department of Health and Human Services, midway between the Senate's proposal of $8.0 million and the House proposal to eliminate funding. These grants, which are targeted to high-risk communities, were first funded at $10.0 million in an FY 2012 supplemental budget, and the Governor proposed the same level of funding in FY 2013. The budget also includes increases of $500,000 for a separate youth violence prevent program operated by DPH, and an additional $1.0 million for matching grants to non-profit organizations that offer youth programs. When these three grant programs are combined, the total FY 2013 funding level declines by $4.5 million compared to FY 2012.
  • School-Based Health Services
    The FY 2013 budget contains level funding, compared to FY 2012, for school-based health services and health centers in schools, but a supplemental budget approved in late July provides an additional $200,000 for this program, resulting in an increase of 1.7 percent (slightly below expected inflation). Line item language requires DPH to conduct a study concerning the installation of automatic external defibrillators in all public schools in Massachusetts.
  • Universal Immunization
    The budget contains level funding for the Universal Immunization program, but does not include the Senate's proposal to codify a surcharge that has been imposed on insurers in recent years to pay for the costs of vaccines for this program and to create a trust fund to hold revenues from the surcharge, along with an advisory council to make recommendations on the purchase of vaccines. Without statutory language, surcharge language will need to be included in future budgets.

Healthcare Workforce Transformation Fund
Section 60 of the FY 2013 budget creates a Health Care Workforce Transformation Trust Fund and Section 154 requires the transfer of $20.0 million in any surplus FY 2012 tax revenue to the Fund. The budget omits language included in the Senate budget that described the purpose of the fund and set out criteria for expenditures from it. Language included in a supplemental budget approved shortly after the FY 2013 budget was signed establishes a priority order for various transfers of surplus revenue, including this one, that were authorized in the budget.

Academic Detailing
The conferees adopted a Senate proposal to provide $500,000 for an Academic Detailing program that encourages cost-effective prescribing practices among health providers who have patients in publicly funded health programs. Neither the House nor Governor proposed funding for this program, which was last funded in the FY 2009 budget and which is expected to result in savings of about $3 million within the MassHealth program.

Support Services for Homicide Victims
The budget includes a new line item (4513-1098) appropriating $125,000 in FY 2013 for Support Services for Homicide Victims and language earmarking the entire amount for the Louis Brown Peace Institute.

State Employee Health Insurance

Overall funding for the state share of health coverage provided to current and retired state employees through the Group Insurance Commission (GIC) declines in the FY 2013 budget, thanks largely to a drop in costs for health insurance premiums. As the table below shows, funding for premium and plan costs appears to fall substantially from $830.1 million in FY 2012 to $757.7 million in FY 2013. The budget includes the Governor's proposal to use $40.0 million in existing balances in a Group Insurance trust fund to pay for state employee health costs in FY 2013, but even when this one-time resource is taken into account funding for premiums still falls by nearly 4 percent, from $830.1 million in FY 2012 to $797.7 million in FY 2013. (These one-time resources come from a fund that holds federal revenue resulting from the state's participation in an early retiree reinsurance program created by the national health reform law.)

The decline in spending is largely the result of GIC efforts to hold down premium cost increases in recent years through a variety of strategies, such as encouraging state employees to choose health plans with limited networks. Last spring the GIC announced that the average premium increase for employee health coverage for next year will be 1.4 percent, the lowest since 1999. (Note that we exclude from our calculations premium costs related to insurance for municipal employees who receive health coverage through the GIC because these costs are fully reimbursed by the municipalities.)

The FY 2013 budget also includes the transfer of a portion of tobacco settlement revenue to the State Retiree Benefits Trust Fund (SRBTF). Currently the SRBTF receives an annual transfer from the General Fund, and in the FY 2013 budget it is also scheduled to receive a portion of revenue from the annual tobacco settlement payment made to the state. In recent years this revenue has been deposited in the General Fund for use in the budget, but language in last year's FY 2012 budget required that 10 percent of the tobacco settlement payment (estimated at $27.6 million) be set aside in FY 2013 in order to help fund future benefits promised to employees. This share is scheduled to increase by ten percentage points each year until 2022, when 100 percent of the payment will go into the fund.

Human Services

Human services programs form a crucial part of the Commonwealth's "safety net" for the state's most vulnerable residents. The FY 2013 budget proposal of $3.52 billion for human services is 2.6 percent higher than FY 2012, essentially level funding when accounting for inflation. Of the increase, $20 million funds a Human Services Salary Reserve for employees of private human services providers who make less than $40,000. The reserve provides wage increases to low wage workers caring for the disabled, elderly and children who have not received publicly funded permanent wage increases since FY 2009. Even with the increase over FY 2012 spending, the Human Services budget remains $229.0 million below FY 2009 GAA inflation adjusted levels.

Children, Youth & Families

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding provided for FY 2013 includes $1.4 million for Group Care Services (4800-0041). These changes are NOT reflected in the tables or discussion that follows, below.

The FY 2013 Budget for Children, Youth and Families programs is $24.6 million higher than FY 2012, but still $152.9 million (14.3 percent) lower than before the recession began to affect the state budget. The Department of Children and Families (DCF) administration receives $67.4 million, a 3.2 percent increase over FY 2012. After accounting for inflation this essentially amounts to level funding. Within administration $152,000 is earmarked for additional staff to assist in reducing the backlog of cases pending for over 180 days. Current requirements are not being met with wait times for fair hearings and subsequent decisions being much longer than what is stipulated in regulations. Under the new policy, DCF must implement new regulations reducing these wait times and will have to submit quarterly reports beginning on August 15, 2012 to the Senate and House Committees on Ways and Means and the Joint Committee on Children and Families and Persons with Disabilities showing the department's plan for eliminating the backlog and cataloging how long clients had to wait for fair hearings, appeals and decisions.

DCF Regional Administration is cut $3.3 million (35.5 percent) compared to FY 2012. Regional management funds contracts with nonprofit "lead agencies" across the state that help coordinate services. Proponents of lead agencies note the important coordination function they fill between DCF social workers, families and other professionals involved in a child's case. However, critics claim that lead agencies duplicate work done in the past by social workers and that funding should be spent on services instead of another layer of administration.

Services for Children and Families, the umbrella of direct services provided to clients, receives $248.1 million, $4.8 more than FY 2012, including earmarks of:

  • $75,000 for Julie's Family Learning Program,
  • $200,000 for the Children's Advocacy Center of Bristol,
  • $100,000 for the Plymouth County Children's Advocacy Center, and
  • $100,000 for the Children's Cove Cape and Islands Child Advocacy Center

Funding for services for children and families has been cut 26 percent compared to FY 2009 GAA inflation adjusted levels.

Family support and stabilization services receive $44.6 million, a 12.1 percent increase over FY 2012. Even though there are many more children receiving services at home or with extended family than those in out-of-home placements, family support funding has historically lagged well behind funding for group care. The Alternative Lock Up Program, a new Department of Youth Services (DYS) program is funded at $2.1 million. This program—which up until now had been funded only with limited federal dollars—is designed to provide a safe (non-police) environment for alleged juvenile offenders awaiting court appearance. Current federal law restricts police departments from holding juveniles for more than six hours, and in any case many police department facilities do not have appropriate holding areas for children. This funding will allow for the Department to manage funding for the four existing community-based secure and appropriate placements for children awaiting arraignment. Previously, these federal grants had been managed by the Executive Office of Public Safety.

The Department of Youth Services administration receives a cut of $92,000 compared to FY 2012. DYS admin has been cut 33 percent since the beginning of the fiscal crisis. The three main programs serving youth in DYS custody receive increases compared to FY 2012.

  • Non-Residential Services for Committed Population—1.3 percent
  • Residential Services for Detained Population—14.9 percent
  • Residential Services for Committed Population—4.3 percent

Many Children, Youth, and Families programs receive increases which do not cover inflation essentially resulting in level funding or even cuts to programs.

The FY 2013 budget creates a commission to study and make recommendations concerning services for unaccompanied homeless youth age 22 and under. The focus will include, but not be limited to, an analysis of: the barriers to serving unaccompanied youth who are gay, lesbian, bisexual, and transgender; the barriers serving youth under age 18; and barriers to accurately counting the population of unaccompanied youth. Serving on the commission will be commissioners from multiple state agencies, members of the Senate and House, youth advocates, direct care workers, and three youth who have experienced homelessness. A report to the Governor will be due March 2013 outlining recommendations for better serving these youth.

Disability Services

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding provided for FY 2012 includes $300,000 for Vocational Rehabilitation for the Blind (4110-3010). These changes are NOT reflected in the tables or discussion that follows, below.

Disability services receives an increase of $45.4 million (3.3 percent) compared to FY 2012. Respite Family Supports receives $49.5 million, $3.0 million over FY 2012 spending. These services offer families with disabled children flexible community-based supports that are particularly important for helping keep children with disabilities out of residential schools.

The FY 2013 budget appropriates $63.1 million, a 4 percent increase, to The Department of Developmental Disabilities adding a $100,000 earmark for the Massachusetts Down Syndrome Congress. Continuing the shift in emphasis towards community based services, the FY 2013 budget cut funding for Facilities for the Developmentally Disabled by $19.3 million (12.6 percent) while increasing funding for more community based State-Operated Residential Supports for the Developmentally Disabled $16.0 million (9.7 percent). However, with costs and the need continuing to grow, funding for developmentally disabled adults is likely insufficient to maintain current levels of services for the eligible population.

Turning 22 Services for the Developmentally Disabled receives an increase of $1.0 million (20 percent) compared to FY 2012. Even with this increase, however, funding is still 27 percent below pre-fiscal crisis funding levels. The Turning 22 line item supports the entry of young developmentally disabled adults into the adult service system from the special education system, and constraints on this funding limit the number of adults who will receive services as well as the services that they will receive in the future.

Community Transportation Services and Community Day and Work Programs also receive increases. Transportation receives an increase of $845,000 (7.3 percent) while work receives an increase of $9.3 million (7.4 percent). These services allow disabled adults to maintain employment and take part in community activities.

Employment Assistance for Adults with a Severe Disability receives a 15.2 percent cut. Compared to FY 2009 GAA inflation adjusted levels, this program has been cut over 75 percent.

Elder Services

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals.

The FY 2013 Budget funds Elder Services at $222.8 million, $4.1 million more than FY 2012 spending. This 1.9 percent increase is tantamount to a cut as it does not even cover the cost of inflation. Funding for these services remains 12.6 percent below FY 2009 GAA inflation adjusted levels.

Councils on Aging grants

which receives $9.4 million increased 14.3 percent from FY 2012 with an earmark of $100,000 for the Needham Senior Center. Councils on aging offer information and direct services to seniors, their caregivers, and other people with aging issues.

The FY 2013 budget slightly increases funding for community-based long term care services for elders. These home care services, which include a wide variety of supports such as homemakers and transportation assistance, help keep the Commonwealth's frail elders in their homes as long as possible. Because of both inflation and anticipated increasing need, the Commonwealth will still need to maintain wait lists for services.

Community-based long term care services include:

  • $133.5 million for home care case management and services (level with FY12 spending)
  • $47.5 million for enhanced home care for the frailest and most vulnerable elders ($1.7 million over FY 2012). The number of seniors on the waiting list for this service in May was just shy of 1000.
  • $17.3 million for elder protective services, which investigate elder abuse and neglect, and provide money management supports to prevent financial exploitation ($1.0 million over FY 2012). A special commission is also introduced to investigate and make recommendations to enhance these services.

Naturally Occurring Retirement Communities (NORC) which received funding through the Congregate Housing Program in the FY 2012 budget are guaranteed at least level funding. Overall funding for congregate housing reaches $1.8 million, $107,000 above the FY 2012. However, even with this increase, funding for congregate housing remains 38.7 percent below FY 2009 GAA inflation adjusted levels. The Enhanced Community Options (ECOP) receives $47.5 million, $1.7 million over FY 2012. Lastly Residential Placement for Homeless Elders receives $186,000 compared to $136,000 in FY 2012. Funding for homeless elders remains 61.3 percent lower than before the recession began to affect the state budget.

Transitional Assistance

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals.

For entitlement programs like transitional assistance, funding levels are significantly affected by anticipated caseload levels. The FY 2013 budget funds Transitional Assistance for Families with Dependent Children (TAFDC) grants at $315.4 million, $8.8 million below FY 2012. The clothing allowance, a one-time payment made in September to help pay for back-to-school clothing, remains at $150 and the rent allowance at $40. However, these allowances have lost significant value over time due to inflation. One important change decreases to 60 days the amount of time the Commissioner must give the Legislature before cutting or making changes to Transitional Assistance for Families with Dependent Children (TAFDC) and Emergency Aid to Elders, Disabled and Children (EAEDC) benefits. The current FY 2012 budget requires 90 days. The advance notice can provide the Legislature with time to work with the administration before changes take effect.

The FY 2013 budget outlines new restrictions for cash assistance and the use of Electronic Benefits Transfer (EBT) cards. Products and services newly restricted by the FY 2013 budget include: firearms and ammunition, vacation services, pornographic material, tattoos or body piercings, jewelry, gambling, and the payment of state fees, fines, bail or bail bonds. Controversial restrictions forwarded by the FY 2013 House proposal that are not restricted in the FY 2013 budget include performances, cosmetics, professional services and rental goods and property. However, the budget does include restrictions on EBT transfer transactions at manicure or aesthetic shops as well as rent-to-own stores. New penalties are also added with recipients facing permanent disqualification for making a prohibited purchase three times. Businesses face fines reaching over $2,500 for accepting a prohibited EBT transaction.

In conference, the Legislature had approved the creation of a Public Benefits Fraud Unit to be housed within the Department of State Police and funded at $400,000. The unit was charged with investigating the illegal receipt and use of public benefits and was directed to work with the Attorney General and Auditor's Office, as well as other state and federal authorities as appropriate. The Governor vetoed this unit noting that both the Department of Transitional Assistance (DTA) and the state Auditor already investigate fraud. The legislature did not override the veto.

Language also allows for DTA to make direct rent and utility payments if it is determined users are not using the grant in the best interests of a child or other chronic misuse of benefits is occurring. DTA may presume misuse if the costs of rent, heat, fuel, and utilities are not being met without reasonable cause. The budget also assesses a fee for replacement cards to be deducted from an individual's benefits. DTA will provide notice to a recipient that requests a replacement card 3 or more times in a year, informing the recipient they will now be monitored.

A new commission studying the development of a fully cashless EBT system is introduced with a final report due by December 31, 2012 which includes drafts of legislation that could be used to implement recommendations. Finally, The FY 2013 budget ensures that EBT cards will be accepted at electronic fare vending machines for public transportation though the Massachusetts Bay Transit Authority by June 2013.

The state supplement to Social Security Income (SSI) receives $229.1 million. SSI also includes an $8.1 million transfer of funding for the SSI supplement for clients of the Mass. Commission for the Blind (MCB), which in past years was separately accounted for within MCB. The FY 2013 budget consolidates funding for these two groups of people, shifting the administration of the program from the Social Security Administration to the University of Massachusetts Medical Center. The University already contracts with the state to handle substantial administrative responsibilities for various health and human service programs, and the state anticipates that it will recognize some administrative savings from this consolidation. (The line item breakdown below adjusts for this type of transfer in order to allow for more accurate year-to-year comparisons.)

Most of the other transitional assistance programs and services receive small increases:

  • Department of Transitional Assistance administration at $55.1 million (3.8 percent increase)
  • Teen Structured Settings Program at $8.0 million (22.1 percent increase)
  • Caseworker Salaries at $62.8 million (5.5 percent increase)
  • Domestic Violence Specialists at $799,000 (6.7 percent increase)

The Employment Services Program receives $7.9 million, an increase of $790,000 with earmarks of:

  • $3.1 million going to the young parent program
  • $445,000 to transportation
  • $130,000 to the Massachusetts Office of Refugees and Immigrants
  • $75,000 to University of Massachusetts for learning disability assessments
  • $50,000 to the DTA Works internship program

This program provides TAFDC recipients with education, occupational skills and the employment support services needed to acquire and retain jobs. Even with the increase the employment services program has been cut by 73.3 percent compared to FY 2009 GAA inflation adjusted levels.

Unlike the TAFDC or EAEDC caseloads, the Administration anticipates that the SNAP (Food Stamp) caseload will continue to rise as it has over the past years. Growing caseloads added to an already overburdened work force will add to delays low income families and individuals in Massachusetts experience attempting to get access to these essential safety net benefits. The FY 2013 budget provides $3.1 million, an increase of 5.6 percent, for efforts to increase food stamp participation as well as $1.2 million, an increase of 33.3 percent, for a small state supplement to SNAP benefits for certain working families.

Other Human Services

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding provided for FY 2013 includes $1.0 million for the Workforce Turnover Reduction Pilot (4000-0114). These changes are NOT reflected in the tables or discussion that follows, below.

The FY 2013 budget funds Other Human Services at $162.0 million, an increase of $20.2 million over FY 2012 spending. The $20.0 million human service salary reserve accounts for approximately half of the increase. In October 2011, a salary reserve was funded at $10.0 million that gave some human services workers one-time bonuses. The $20.0 million salary reserve for FY 2013, besides being an increase of $10.0 million over the bonuses goes towards permanent wage increases.

Veterans programs and services are the beneficiaries of increases totaling $7.5 million over FY 2012 with significant increases of:

  • $204,000 (8.2 percent) for the Department of Veterans' Services Administration
  • $5.2 million (13.4 percent) for Veterans' Benefits
  • $265,000 (88.3 percent) for Veterans' Cemeteries
  • $255,000 (13.3 percent) for Veterans' Outreach Centers
  • $229,000 (10.0 percent) for Assistance to Homeless Veterans

The FY 2013 budget also adds a new commission, the Massachusetts Veteran and War Memorials Commission, which will make recommendations on an equitable method for awarding funding for the upkeep and maintenance of veteran or war memorials.

The FY 2013 budget adds $500,000 to funding for Emergency Food Assistance for a total of $13.0 million. This total includes an earmark of $1.0 million for the Temporary Emergency Food Assistance Program, formerly funded separately in line item 7051-0115. The two line items together last year totaled $12.5 million. The need for this program has increased each year since the beginning of the recession and current funding levels do not address this growing demand for emergency food assistance.

Finally, the FY 2013 budget introduces a special commission to study access to public assistance and state sponsored services in rural areas. The commission will examine barriers, including transportation and other costs, faced by low and moderate income individuals living in rural areas in obtaining services including: fuel assistance, child care subsidies, cash assistance, emergency housing services, and other health and human services.

Infrastructure, Housing & Economic Development

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding includes a $15.0 million deposit into the Massachusetts Life Sciences Investment Fund (1599-6123) and a $5.0 million deposit into the Workforce Competitiveness Trust Fund (1595-1074). These changes are NOT reflected in the tables or discussion that follows, below.

The Fiscal Year (FY) 2013 budget decreases funding for programs within the MassBudget category of Infrastructure, Housing & Economic Development by $73.6 million from current FY 2012 levels. Much of this reduction, however, is driven by a one-time deposit of $38.0 million into the Infrastructure Development Fund in FY 2012 that is not replicated for FY 2013.

The FY 2013 budget significantly cuts funding for and restricts low-income families' access to the Emergency Assistance (EA) shelter while providing some additional funding for several housing programs, including household assistance within the HomeBASE program, the Massachusetts Rental Voucher Program (MRVP), Residential Assistance to Families in Transition (RAFT) and funding for local housing authorities.

The FY 2013 budget funds transportation-related line items just slightly below FY 2012 levels, with the majority funding operations and debt service costs at the MBTA.

Economic Development

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding includes a $15.0 million deposit into the Massachusetts Life Sciences Investment Fund (1599-6123) and a $5.0 million deposit into the Workforce Competitiveness Trust Fund (1595-1074). These changes are NOT reflected in the tables or discussion that follows, below.

The FY 2013 budget funds economic development programs at $37.2 million below current FY 2012 levels. This reduction from FY 2012 is driven by a one-time deposit of $38.0 million into the Infrastructure Development Fund in FY 2012. If it weren't for this one-time increase in FY 2012, the FY 2013 budget would actually show a slight increase of $773,000 million over FY 2012. Please see the comprehensive line item table at the end of this section for specific detail.

The FY 2013 budget for Summer Jobs for At-Risk Youth is funded at $3.0 million, a reduction of $10.0 million from current FY 2012 levels. A straight comparison to FY 2012 is somewhat complicated, however, since an additional $6.0 million was added to this program in a May 2012 supplemental budget, increasing the FY 2012 current appropriation to $13.0 million. This program funds summer jobs spanning parts of two fiscal years, and it often receives additional money through supplemental budgets in the spring.

The FY 2013 budget maintains a reorganization of economic development programs that was initiated through the FY 2012 budget.<1>. A new agency, the Massachusetts Marketing Partnership (MMP), now coordinates efforts to promote the state domestically and internationally as an attractive, competitive, and innovative state in which to do businesses. The FY 2013 budget increases total funding for the MMP by $5.2 million. For detail on related line items, please see the note "MMP" in the table at the end of this subcategory.

This year's economic development reorganization also identified the Massachusetts Office of Business Development (MOBD) as the lead business development agency, and the FY 2013 budget continues this arrangement, increasing funding by $93,000.

Housing

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. These changes are NOT reflected in the tables or discussion that follows, below.

The Legislature's housing budget for FY 2013 lowers funding for and restricts low-income homeless families' access to shelter while increasing funding for programs that could help these families secure permanent housing. Families living at or below 115 percent of poverty who are homeless or at risk of becoming homeless are eligible to received shelter and support through the Emergency Assistance (EA) program. Several years ago the state adopted a Housing First policy to reduce low-income families living in shelters by expanding their access to permanent housing. While previous budgets have attempted to restrict low-income homeless families' access to EA, the FY 2013 budget specifically denies low-income families access to shelter unless they meet certain criteria. It is also questionable whether the additional housing resources included in the FY 2013 budget, some of which are limited to $4,000 of assistance for no more than 12 months, will be sufficient to help these families to remain in housing over the long term.

With the onset of the Great Recession, many low-income families lost their jobs and housing and turned to the state's Emergency Assistance (EA) program for shelter and support. This rising demand increased state spending on EA and has required that the state house some of these families in hotels and motels because the state-supported shelters are full. The FY 2010 budget tried to reduce state spending on EA by lowering eligibility for families from those living at or below 130 percent of poverty to the current threshold of 115 percent. The FY 2012 budget cut funding for EA and lowered eligibility further by requiring that most EA-eligible families be denied access to shelter and instead receive help from the newly-created HomeBASE program that provides rental assistance and one-time housing supports for homeless families eligible for EA. Many of these families could no longer stay in shelters unless they were unable to find housing elsewhere.

Despite the state's efforts to reduce eligibility and cut funding for EA in FY 2012, demand for shelter continued to increase as few of the families served by EA were earning the incomes necessary to secure permanent housing. As the number of eligible families applying for EA and HomeBASE grew, the Legislature was required to increase funding above the FY 2012 General Appropriations Act (GAA) for EA by $39.7 million to $137.5 million and by $27.9 million for HomeBASE for a total of $66.5 million. Even with these increases, the Department of Housing and Community Development (DHCD) closed HomeBASE in late October 2011 to all new families seeking rental assistance and currently only provides EA shelter to low-income homeless families who are eligible for assistance.

The budget passed by the Legislature for FY 2013 restricts access even further than the previous fiscal year for low-income homeless families seeking shelter and assistance from the state (see discussion below). The FY 2013 budget provides $364.0 million for housing programs which is $34.2 million less than the current budget for FY 2012. This budget reduces funding for homeless shelters by $40.8 million below the FY 2012 current budget while increasing funding for several affordable housing programs by $33.4 million. The Legislature's budget does not include funding for the Low Income Home Energy Assistance Program (LIHEAP) which received $21.2 million in FY 2012. The initial budget at the start of each fiscal year generally does not include funding for this program. Instead, the Legislature often funds LIHEAP in a mid-year appropriation as winter approaches.

As noted above, the Legislature's budget recommends cutting funding EA, which provides shelter and services to low-income homeless families, by $40.8 million below the FY 2012 current budget and restricts those families' access to shelters. Currently most homeless families living at or below 115 percent of poverty can move into EA shelters until they find housing. Under the FY 2013 budget only those families who lose housing for specific reasons, described below, can live in shelters. Other families who are currently eligible for EA will have access to certain housing supports but if these families are unable to find housing they will no longer have shelters to turn to in order to avoid becoming homeless. The highlights of the Legislature's budget on EA include:

  • Providing $96.7 million which, as noted above, is significantly below the $137.5 the FY 2012 current budget. The FY 2013 budget adopted the House's proposal to split EA funding into two accounts. The primary EA account provides $80.0 million to fund family shelters while a new account provides $16.6 million to support families who are living in hotels and motels, because the family shelters are full.
  • Limiting shelter access to a narrow category of families including those who must leave their housing due to domestic violence, fire or other natural disaster, if they are evicted because of, among other things, foreclosure, loss of income or disability, or because the housing they are living in, for which they are not the primary leaseholder, is deemed unhealthy or unsafe. All families who do not fit into these limited categories will no longer be allowed to stay in the EA shelters. Under these new restrictions, for instance, a family who is living with another family and is asked to leave even though the living situation is neither unsafe nor unhealthy could not move into an EA shelter.
  • While the final budget for FY 2013 does not include a limit on the amount of time a family can stay in shelter, as the Governor and the House budget had recommended, it does include the Senate's restriction that families living in shelters longer than 32 weeks will be denied access to the HomeBASE program.
  • Requires the Department of Housing and Community Development (DHCD) to provide monthly reports to the Legislature noting how many families were denied shelter under the new rules who would have been eligible in FY 2012 and the types of services these families received to help them secure permanent housing.

While the FY 2013 budget cuts funding for shelter by $40.8 million, it increases funding for housing support programs by $33.4 million in an effort to help these families to secure permanent housing including:

  • $16.9 million more for HomeBASE to $83.4 million. Currently, HomeBASE provides 3 years of rental assistance or 1 year of household assistance, of $4,000 per 12 month period, to families who are eligible for EA. The FY 2013 budget only provides the multi-year rental assistance to families who enrolled in the program prior to October 2011 when DHCD closed the program to new families. In addition, the FY 2013 budget decreases the period that families receive this assistance to 2 years from 3 years in current law. New families applying for HomeBASE in FY 2013 would only receive 12 months of household assistance of up to $4,000 which could include helping these families pay rent. Any family receiving $4,000 through HomeBASE will not be eligible for assistance through Residential Assistance for Families in Transition (RAFT—see below) during the same 12 month period. As noted before, is questionable whether $4,000 in assistance limited to 12 months will be sufficient to help many of these families, who earn very little income, stay in housing over the long term.
  • $6.0 million more for MRVP, which provides low-income renters living at or below 200 percent of poverty with vouchers to subsidize their rent, to a total of $42.0 million. The FY 2013 budget requires that the increase in funding create no fewer than 500 new vouchers. While the House budget prioritized that the new vouchers be for families living in shelters so that they can move into permanent housing, the final budget does not include this directive.
  • $8.5 million increase for RAFT to $8.8 million. RAFT provides low-income families who are homeless or at risk of becoming homeless with up to $4,000 in one-time funding to help them stay in existing housing or move into new housing. The FY 2013 budget requires that 90 percent of RAFT funds be provided to families living at or below 30 percent of the area median income and that priority be given to families who qualify for EA and might otherwise become homeless without the assistance. The budget requires that agencies providing RAFT payments must find that those payments will be sufficient to prevent a family from becoming homeless.
  • $2.0 million increase for subsidies to local housing authorities to $64.5 million. The budget encourages these authorities to use some of the increased funding to repair family units to increase housing available for homeless families.

Transportation

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. These changes are NOT reflected in the tables or discussion that follows, below.

The FY 2013 budget for transportation is slightly below current FY 2012 levels. It is important to note that this seemingly modest cut is somewhat greater when considered in the context of inflation and rising costs.

The large majority of this funding, $946.8 million, goes to fund the Massachusetts Bay Transit Authority (MBTA), both for debt service costs and to help support annual operating costs (see line item details below). A much smaller amount, $18.5 million, is provided to the state's 14 Regional Transit Authorities. The remaining significant portion state transportation funding ($166.6 million) is provided to the Massachusetts Transportation Trust Fund (MTTF). The MTTF helps fund Massachusetts Department of Transportation (MassDOT) functions. These functions include maintaining and improving state roads, highways, and bridges; maintaining and improving airports and rail and transit lines; administering the Registry of Motor Vehicles (RMV); and covering specific transportation-related debt service costs. This annual transfer of funds to MassDOT through the MTTF represents only a portion of the total MassDOT budget, which receives additional funds from highway and bridge tolls, gas and sales tax revenues, RMV fees, and other sources. It is important to note that a significant portion of the state's transportation-related capital spending shows up in separate debt service accounts, the largest of which is the Consolidated Long-Term Debt Service line item. For FY 2013, 43.5 percent of this $2.01 billion account is projected to cover transportation-related debt.

Commercial Regulatory Entities

1For more detail on the FY 2012 reorganizations please see MassBudget's Budget Monitor: The Fiscal Year 2012 General Appropriations Act available online at: http://www.massbudget.org/report_window.php?loc=FY12_GAA.html

Law & Public Safety

Law and public safety programs include funding for the court system and indigent defense, prosecutors, state prisons and county sheriffs departments, probation and parole functions, as well as the military division, fire safety services and various other safety inspection services.

Overall, the FY 2013 budget provides $2.36 billion for law and public safety accounts. This total represents a small increase of $18.8 million or 0.8 percent over current FY 2012 funding levels. Given general year-to-year price inflation, this small increase likely represents a decline in real funding for these programs relative to FY 2012 levels.

Notable elements of the FY 2013 budget regarding law and public safety accounts include a substantial decrease from FY 2012 in overall funding for indigent defense, but particularly for indigent defense provided by private bar attorneys; a substantial decrease in funding for youth violence prevention Shannon Grants; modest across-the-board increases for the District Attorneys' offices; and funding to train 150 new state police recruits.

The amount provided for law and public safety programs in the FY 2013 budget falls $349.8 million or 12.9 percent below the total appropriated for these purposes in the FY 2009 General Appropriations Act (GAA, adjusted for inflation), the last budget enacted before the full fiscal effects of the Great Recession became apparent here in Massachusetts.

Courts & Legal Assistance

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding provided for FY 2013 includes $5.0 million for the Committee for Public Counsel Services (0312-1500). These changes are NOT reflected in the tables or discussion that follows, below.

The Courts and Legal Assistance subcategory includes accounts that fund the seven trial courts, the Supreme Court and the Appeals Court, and representation of indigent defendants.

The FY 2013 budget provides a total of $615.8 million to accounts funding the courts and legal assistance, an amount $9.4 million or 1.5 percent less than current FY 2012 funding levels.1 Relative to the FY 2009 GAA, the last budget enacted before the full fiscal effects of the Great Recession became apparent here in Massachusetts, the FY 2013 total for these account represents an $83.9 million or 12.0 percent decline in inflation-adjusted funding.

With regards to courts and legal assistance accounts, the most notable element of the FY 2013 budget is the approach taken to indigent defense. The FY 2013 budget maintains the effort begun in the FY 2012 budget to shift indigent defense funding toward public defenders (PDs) and away from the use of private bar attorneys (PBAs), with a goal of decreasing and controlling overall indigent defense costs. The FY 2012 GAA stipulated that 25 percent of the indigent defense caseload would be handled by PDs (the figure in FY 2011, prior to the funding shift, was just ten percent), and allocated funding for PDs and PBAs accordingly.

Line item language in the FY 2013 budget reaffirms the goal of having PDs handle at least 25 percent of indigent defense cases and provides $63.0 million for PDs through the Committee for Public Counsel Services (CPCS) and related accounts. This amount is nearly identical to current FY 2012 funding levels. The FY 2013 budget, however, reduces funding for PBAs (through the Private Counsel Services account) to $98.9 million. This amount represents a decrease of $29.6 million or 23.1 percent relative to current FY 2012 funding levels.

Historically, however, lawmakers have consistently underfunded the Private Counsel Services account at the time the budget is first enacted. It has then been necessary to return later in the fiscal year to provide substantial additional funding through one or more supplemental funding bills as it becomes apparent that indigent defense costs will overrun the amount initially appropriated. Because the Constitution requires the Commonwealth to provide an adequate legal defense for qualifying indigent defendants—and thus lawmakers are not at liberty simply to cap private counsel indigent defense funding - it is likely that this pattern will be repeated in FY 2013.

The FY 2013 budget also requires that the CPCS provide the Legislature with a report (by November 30, 2012) detailing the FY 2012progress toward and impacts of shifting to a greater reliance on PDs for indigent defense.

In addition to decreases in indigent defense funding, the FY 2013 budget provides modest funding increases for the Supreme Judicial Court (+ 7.5 percent) and the Appeals Courts (+ 9.8 percent) over current FY 2012 funding levels. The FY 2013 budget also provides $19.7 million or 10.0 percent more for the Office of the Chief Justice for Administration and Management (CJAM). The CJAM manages the seven trial courts and their employees, and oversees the Department of Probation and the Office of the Jury Commissioner.

The other notable elements in this area of the FY 2013 budget involve programs providing legal assistance to low-income and other underserved population. They include the following:

  • The FY 2013 budget increases funding for the Massachusetts Legal Assistance Corporation (MLAC) to $12.0 million. This total is $1.5 million above current FY 2012 levels. MLAC provides low-income people with legal information, advice and representation on critical, non-criminal legal problems.
  • The FY 2013 budget increases funding for Massachusetts Correctional Legal Services (MCLS) by 8.8 percent over current FY 2012 funding levels, bringing the total for that account to $982,000. MCLS provides civil legal services to people held in Massachusetts prisons and jails, particularly on matters relating to health and to prison/jail conditions.
  • The FY 2013 budget increases funding for the Mental Health Legal Advisors Committee (MHLAC) by 7.2 percent, bringing the total for that account to $838,000. MHLAC provides civil legal services to children and adults with mental disabilities in cases involving discrimination and access to appropriate services.

Law Enforcement

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. These changes are NOT reflected in the tables or discussion that follows, below.

The Law Enforcement subcategory includes accounts funding the State Police, the State Police Crime Laboratory, the Chief Medical Examiner, the Criminal History Systems Board and Sex Offender Registry Board, as well as training for municipal officers and anti-gang and youth violence prevention programs.

The FY 2013 budget provides a total of $339.7 million for law enforcement accounts, an amount 3.5 percent higher than current FY 2012 funding levels2. This total, however, is $105.7 million or 23.7 percent less than was approved in the 2009 GAA (adjusted for inflation), the last budget enacted before the full fiscal effects of the Great Recession became apparent here in Massachusetts.

In conference, the Legislature had approved the creation of a Public Benefits Fraud Unit to be housed within the Department of State Police and funded at $400,000. The unit was charged with investigating the illegal receipt and use of public benefits and was directed to work with the Attorney General and Auditor's Office, as well as other state and federal authorities as appropriate. The Governor vetoed this line item and the Legislature did not override his veto.

Among the more notable elements of the FY 2013 budget regarding law enforcement accounts are the following:

  • Shannon Grants are funded at $6.3 million, a reduction of $1.8 million from current FY 2012 funding levels. Shannon Grants help fund anti-gang and youth violence prevention efforts undertaken by law enforcement, community-based organizations, and government agencies in communities throughout the Commonwealth.
  • The Department of State Police Operations (DSPO) and related accounts receive $274.0 million or 3.6 percent more than under current FY 2012 funding levels.3
  • Separate from the above DSPO total, the FY 2013 budget provides $596,000 for "hiring, equipping, and training 150 state police recruits." In FY 2012, $2.0 million was provided for training a new class of state police officers.
  • Funding to test drugs captured by law enforcement is consolidated from the Department of Health, the UMass Medical School and the District Attorney's Office into the State Police Crime Laboratory. Adjusting to take these changes into account, the FY 2013 budget provides an increase for the lab of $599,000 above current FY 2012 funding levels4, a 4.6 percent increase, to $13.6 million. Line item language earmarks $200,000 for the state's pre-existing requirement that all convicted felons undergo DNA testing, with results stored in a state database.

Prisons, Probation & Parole

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding provided for FY 2013 includes $375,000 in FY 2013 funding for the Essex Sheriff's Department (8910-0619) and $150,000 for the Parole Board (8950-0001). These changes are NOT reflected in the tables or discussion that follows, below.

The Prisons, Probations & Parole subcategory includes accounts funding the state prison system, the county jails and other county sheriffs' department functions, the Probation Department and the Parole Board.

The FY 2013 budget provides $1.22 billion to prisons, probations and parole accounts, an amount $9.8 million or 0.8 percent higher than current FY 2012 funding levels.5. Given general year-to-year price inflation, this likely translates into a decline in real funding for these programs relative to FY 2012. The FY 2013 total for these programs is $144.2 million or 10.6 percent less than was provided in the FY 2009 GAA (adjusted for inflation), the last budget enacted before the full fiscal effects of the Great Recession became apparent here in Massachusetts.

Among the more notable elements of the FY 2013 budget regarding prison, probation and parole accounts are the following:

  • Funding for the Department of Corrections (DOC) and related accounts is increased by $20.9 million or 3.9 percent over current FY 2012 levels to $552.8 million.6 This includes $5.0 million for the Massachusetts Alcohol and Substance Abuse Centers, an amount identical to that provided in FY 2012.
  • Total funding for the 14 County Sheriff's Departments and related accounts is decreased by $15.4 million or 3.0 percent from current FY 2012 funding levels to $496.3 million.
  • In the FY 2013 budget, the Legislature once again chooses not to adopt the Governor's call to consolidate probation and parole functions within a new Department of Re-entry and Community Supervision (the Governor made a similar proposal in his FY 2012 budget, which the Legislature also chose not to adopt). Instead, the FY 2013 budget continues to provide funding directly for each of these functions, with probation services accounts receiving $144.5 million and parole programs receiving $18.3 million. These amounts represent an increase of 4.1 percent and 0.9 percent respectively, relative to current FY12 funding levels. Compared to the FY 2009 GAA, the FY13 Budget represents a decline in funding of 19.4 percent for combined probation and parole services, adjusted for inflation.

Prosecutors

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding provided for FY 2013 includes $200,000 in FY 2013 funding for the Worcester District Attorney's Office (0340-0400), $96,900 for the Berkshire District Attorney's Office (0340-1100), and $500,000 for the Division of Gaming Enforcement (0810-1204). These changes are NOT reflected in the tables or discussion that follows, below

The Prosecutors subcategory includes accounts funding the District Attorneys' offices and the investigative support they receive from the State Police, the Attorney General's office and the various special investigative units housed within the AG's office, as well as victim and witness assistance and protection programs.

The FY 2013 budget provides a total of $142.7 million for prosecutors, $4.7 million more than current FY 2012 levels. This amount is $13.3 million or 8.5 percent les s than was appropriated in the FY 2009 GAA, the last budget enacted before the full fiscal effects of the Great Recession became apparent here in Massachusetts.

The most notable elements of the FY 2013 budget with regards to prosecutors' account are the following:

  • Funding increases of 5.0 percent are provided to most of the eleven District Attorneys' (DAs) Offices. Exceptions are the Middlesex DA (3.9 percent increase), Hampden DA (1.8 percent increase), Northwestern DA (2.9 percent increase), and Norfolk DA (3.5 percent increase).
  • Funding for the Office of the Attorney General is reduced by $672,000 or 2.9 percent to $22.3 million. This FY 2013 total represents a decline of 24.0 percent relative to the FY 2009 GAA.
  • Adopting a proposal made by the Governor, the FY 2013 budget funds a new initiative within the AG's office for Litigation and Enhanced Recoveries. According to the Governor's budget documents, this initiative would fund "existing and future litigation devoted to obtaining significant recoveries for the Commonwealth." The FY 2013 budget provides $1.2 million for this initiative, somewhat less than the $1.8 million originally proposed by the Governor.
  • The FY 2013 budget increases funding for AG's Wage Enforcement Program by $381,000 or 12.9 percent to $3.3 million.

Other Law & Public Safety

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding provided for FY 2013 includes $200,000 in FY 2013 funding for Public Safety Employees Line-of-Duty Benefits (0612-0105), and $400,000 for the state's Military Division (8700-0001). These changes are NOT reflected in the tables or discussion that follows, below.

This subcategory covers an array of departments and programs including the Executive Office of Public Safety; the Department of Fire Services; the Massachusetts Emergency Management Agency, elevator and boiler inspections; nuclear safety; and the state's Military Division.

The FY 2013 budget provides a total of $44.9 million for these functions, an amount $1.7 million greater than current FY 2012 funding levels. This FY 2013 total represents a 6.5 percent decline relative to the FY 2009 GAA (adjusted for inflation), the last budget enacted before the full fiscal effects of the Great Recession became apparent here in Massachusetts.

The most notable elements of the FY 2013 budget with regards to other law & public safety account are the following:

  • The Department of Fire Services and related accounts receives $18.5 million, an increase of $1.1 million or 6.5 percent over current FY 2012 levels.
  • The Military Division receives a 4.7 percent increase over current FY 2012 levels to $9.8 million.
  • $6.0 million is provided for Elevator Inspections (through a retained revenue account), an amount $497,000 or 9.0 percent higher than current FY 2012 funding levels.
  • The Massachusetts Emergency Management Agency and related accounts receive $2.3 million, an increase of $103,000 or 4.6 percent over current FY 2012 levels.

1These totals include MassBudget adjustments to FY 2013 funding amounts to align with FY 2012 line item structures in order to make a proper apples-to-apples comparison between the two years.

2This total includes MassBudget adjustments to FY 2013 funding amounts (including for line items 1599-4204 and 8000-0106) to align with FY 2012 line item structures in order to make a proper apples-to-apples comparison between the two years.

3This total includes line items 8100-0000, 8100-0006, 8100-0011, 8100-0012, 8100-0101, 8100-1001.

4The FY 2013 budget provides $15, 111,250 to the State Police Crime Lab account (account 8000-0106). To allow for proper apples-to-apples comparisons among years, however, MassBudget shifts $1,519,139 million (the amount identified by ANF and SWM as the actual cost shift associated with this consolidation) out of the State Police Crime Lab account and back into corresponding public health and UMass Medical School accounts. Taking these adjustments into account, the FY 2013 budget still provides an additional $599,000 to the State Police Crime Lab.

5This total includes adjustments to FY 2013 funding amounts to align with FY 2012 line item structures in order to make a proper apples-to-apples comparison between the two years.

6This total includes line items 8900-0002, 8900-0002, 8900-0006, 8900-0045, 8900-0050, and 8900-1100.

Local Aid

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding provided for FY 2013 includes $50,000 for the Municipal Regionalization and Efficiencies Grant program (1599-0026). These changes are NOT reflected in the tables or discussion that follows, below.

The Fiscal Year (FY) 2013 budget funds non-school local aid at levels just slightly higher than the current FY 2012 budget. The vast majority of this funding supports general local aid to cities and towns, helping them fund vital local services such as police and fire protection, parks, and public works. General local aid has been cut dramatically over the last several years, and while the FY 2013 budget funds general local aid at levels slightly above the FY 2011 and current FY 2012 budgets, this represents the third year in a row of not making inflation adjustments to fully adjust for the rising cost of providing local services. MassBudget treats education aid separately in our Education section, although cities and towns often use a portion of their general local aid to help fund education as well.

General Local Aid

The FY 2013 budget funds Unrestricted General Government Aid (UGGA) at $899.0 million, the same nominal level as the current FY 2012 budget. The FY 2012 GAA funded UGGA at a baseline level of $834.0 million, but FY 2012 budget language directed 50 percent of all unexpended balances from general fund spending coming out of FY 2011 (up to $65.0 million) to supplement UGGA appropriations for FY 2012. Unexpended FY 2011 fund balances proved sufficient to fund the full $65.0 million amount, meaning that cities and towns in FY 2012 will receive the same total UGGA appropriation of $899.0 million that they received in FY 2011. While FY 2013 funding will be equal to final FY 2012 levels, the FY 2013 budget does have the virtue of guaranteeing all of this money through a direct appropriation rather than having $65.0 million of it come as a contingency.

It should be noted that this FY 2013 funding level is tantamount to a cut since no inflation adjustment will have been made over the last two years to keep up with rising costs. Furthermore, general local aid has been cut dramatically since FY 2001. For more information on the history of general local aid and for historical funding levels, please see MassBudget's recent paper Demystifying General Local Aid in Massachusetts, available here.

Other Local Aid

Update Note: Prior to the end of the session, and subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 Current totals. Additional funding provided for FY 2013 includes $50,000 for the Municipal Regionalization and Efficiencies Grant program (1599-0026). These changes are NOT reflected in the tables or discussion that follows, below.

Through outside section language, the FY 2013 budget enacts a few policy changes to the Community Preservation Act (CPA). The budget provides more flexibility for how the open space portion of a community's CPA funds can be spent, allowing cities or towns to renovate existing recreational facilities rather than requiring them to use the funds only to purchase new open space. Allowing CPA money to be spent on recreational renovation projects may help more urban communities, with little passive open space, opt into the CPA for the first time. Additionally, the FY 2013 budget allows for alternative municipal revenues to be used to supplement the current CPA property tax surcharge. The FY 2013 budget couples these policy changes with a deposit of $25.0 million for the Community Preservation Trust if there is sufficient money in the FY 2013 consolidated net surplus to do so. Currently, cities and town can opt into the program and pass a property tax surcharge of up to 3 percent. When the act was first passed, the state provided a 100 percent match to the revenue raised by cities and towns through the surcharge. State matching funds come from revenue raised through the deeds recording fees, and therefore show up off-budget. As housing sales waned during the economic crisis, and as more communities joined the CPA, the state's contribution has diminished considerably, down to 22 percent for FY 2012.

Other

MassBudget's Other category includes spending for the Governor's Office, the Department of Revenue, the Executive Office of Administration and Finance, the Legislature, Constitutional Officers such as the Secretary of State as well as some independent agencies and commissions. It also includes Libraries, payments the state makes for debt service and for pensions to public employees. In addition, much of the state's one-time spending such as assistance to communities that may have been hit by ice storms, tornadoes or other natural disasters is included in this category. Finally the category includes reserves for collective bargaining agreements though when possible, MassBudget redistributes this funding into the accounts where it is expected to be spent.

Constitutional Officers

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2012 and 2013 Current totals. These changes are NOT reflected in the tables or discussion that follows, below.

This subcategory includes funding for the Secretary of State, the State Auditor, the Registries of Deeds as well as various other offices and commissions. The FY 2013 budget provides $75.7 million for these offices which is $6.0 million more than FY 2012. Much of this funding increase goes to the Secretary of State's office for the 2012 primary and general elections.

Debt Service

The Debt Service subcategory includes accounts used to repay loans made to the Commonwealth. The Commonwealth issues bonds to raise capital for investments in roads, bridges and other major infrastructure projects. Bondholders receive payment through the state's debt service accounts.

The FY 2013 budget provides $2.42 billion for debt service lines items, an increase of $160.5 million or 7.1 percent over current FY 2012 levels. The increase for debt service over FY 2012 levels is driven by a $126.6 million (6.7 percent) increase in Consolidated Long-Term debt service to $2.01 billion, a doubling of Accelerated Bridge Program Debt Service to $50.7 million, and a $19.8 million (23.0 percent) increase for Central Artery/Tunnel debt service to $106 million.

Executive and Legislative

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2013 Current totals. The Legislature provided $5.0 million for the state's efforts to expand gambling. This change is NOT reflected in the tables or discussion that follows, below.

The FY 2013 budget provides level funding for the office of the Governor and the Legislature with a few exceptions. The budget provides an increase in funding for the Office of Child Advocate. Also, now that the state has redrawn its legislative districts, the FY 2013 budget does not provide funding for redistricting costs.

Libraries

The state supports public libraries in Massachusetts through a number of programs. The two largest are the Public Libraries Local Aid account which provides direct state aid to local libraries and the Regional Libraries account which supports regional library networks including the inter-library loan and electronic references resources. The state also provides funding for the Talking Book programs which are housed in the Perkins School for the Blind serving the eastern part of the Massachusetts and the Worcester Public Library in the western part of the state.

The FY 2013 budget provides $21.8 million for libraries an increase of $353,000 above FY 2012 current budget. Despite these increases funding for Libraries has fallen by 40 percent in inflation-adjusted dollars since the onset of the fiscal crisis in 2009.

The more notable increases in the Library budget include $100,000 in additional funding in aid to regional library networks for a total of $9.2 million and $168,000 more for the Talking Book programs in Watertown and Worcester to a total of $2.8 million.

Pensions

Pension funding is governed by state law (Chapter 32§22C of the Massachusetts General Laws), which requires an annual transfer to the state Pension Liability Fund and sets out a funding schedule that is periodically updated. The most recent update was contained in a section of the FY 2012 budget that extended the timeframe for paying down the state's pension liability to 2040 and set out a schedule of specific payments through FY 2017. In accordance with that schedule, the FY 2013 budget reported by the Conference Committee assumes an off-budget transfer of 1.55 billion to the Pension Liability Fund. It also contains language specifying that the FY 2013 pension transfer is intended to cover the cost of providing retirees with a 3 percent cost-of-living adjustment (COLA) in FY 2013 (the COLA is calculated on a base of $13,000, meaning the maximum COLA increase will be $390), as well as language that allows certain social workers employed by the Department of Children and Families to retire earlier with a full pension.

Other Administrative

Update Note: Prior to the close of session, but subsequent to the enactment of the FY 2013 Budget, the Legislature approved supplemental funding for FY 2012 and FY 2013. In some cases this changes FY 2013 Current totals. Of the more notable increases in funding, the Legislature provided additional funding for disaster relief to cities and towns affected by natural storms including $15.0 million for the 2011 Tornadoes, $8.4 million for the October 2011 storm (1599-1710) and $7.1 million for damage caused by Tropical Storm Irene (1599-1711). The Legislature also included $2.0 million to counteract Eastern Equine Encephalitis, and $10.0 million to consolidate Information Technology within the Executive Branch (1599-4380). These changes are NOT reflected in the tables or discussion that follows, below.

The Other Administrative subcategory funds accounts that cover a wide range of government activities. This subcategory includes one-time funding to help communities recover from major storms or floods, provides funding for various state commissions as well as for the Department of Revenue (DOR) and the Executive Office of Administration and Finance (A&F). During FY 2012 the state provided one-time relief of $44.0 million to communities recovering from storms including the 2011 tornadoes and most recently the damage from Tropical Storm Irene. This funding is not included in the FY 2013 budget.

Some highlights of the budget for the Other Administrative subcategory include:

  • Consolidation funding for state office buildings into several accounts with $2.0 million for the Bureau of the State House and $10.5 million for the Office of Facilities Management which oversees the other state office buildings. Various sections within the outside section portion of the FY 2013 budget lay out the responsibilities of the Bureau and the Superintendent of state office buildings.
  • $30.0 million in savings through procurement reforms which is $5.0 million more than the FY 2012 current budget.
  • Additional funding for enforcement at DOR including an additional $4.0 million for auditors and $2.0 million for a new account to pay for expert witnesses that DOR may hire for tax disputes amounting to $1.0 million or more. The FY 2013 budget estimates that revenue collections will increase by $36.3 million above FY 2012 due to this increased enforcement. For more discussion of this effort please refer to the Revenue section of this Budget Monitor.
  • The House budget provided approximately $27.5 million in funding that is placed in reserve for collective bargaining agreements that the state negotiates with its workers. In order to provide apples-to-apples comparisons with the Senate budget and the FY 2013 budget which both allocated the reserves directly in to the accounts where the funding will be spent, MassBudget has also reallocated funding from the collective bargaining accounts in the House budget into the line items where they are expected to be spent.

Revenue

The FY 2013 budget does not include any major revenue initiatives; instead, the budget is balanced with cuts and savings, several small ongoing revenue initiatives, and with approximately $615.0 million in temporary revenues. The budget does not follow the Governor's proposal to include revenues from new taxes on tobacco products or from removing the sales tax exemptions for candy and soda. Without any major revenue initiatives, the budget is limited in its ability to support any major spending initiatives.

The most significant revenue initiative under contention during budget debate was how much money to withdraw from the state's Stabilization ("Rainy Day") Fund. The House had proposed a total of $409.1 million and the Senate had proposed a total of $302.5 million. The FY 2013 budget ultimately includes a direct withdrawal of $350.0 million, and the withdrawal of $9.1 million in interest earned by the fund.

As shown in the chart below, the FY 2013 budget assumes $57.1 million in new ongoing revenue (in other words, revenue that will continue beyond FY 2013), and $615.0 million in temporary or one-time revenue. Details on these initiatives follow.

Tax Revenue

The FY 2013 budget relies on the consensus revenue estimate of $21.95 billion in tax revenue. The budget also counts on two additional tax-related initiatives totaling $82.2 million. The budget includes the delay (for another year) of the "FAS 109" tax break provided to certain publically-traded companies as part of the 2008 combined reporting corporate tax reform package. Delaying this tax break provides a one-time savings of $45.9 million in FY 2013. The FY 2013 budget includes tax revenues realized with the improvement of the Department of Revenue's enforcement abilities (including the use of more powerful data-review software), projecting $36.3 million in revenue from these improvements. The expectation is that with improved tax auditing and enforcement, the Department of Revenue will be able to bring in additional revenue for the Commonwealth that is owed but that currently goes uncollected. This represents a new and ongoing revenue stream for the state.

The Legislature's FY 2013 budget proposal adopted Senate language in an outside section changing how the Commonwealth would treat revenues from tax settlements. In past years, all tax settlement revenues went to the General Fund. Starting in FY 2012, a law directed that the proceeds from tax settlements above $10 million would be deposited into the Stabilization Fund (the "Rainy Day" fund). The Legislature's FY 2013 budget proposal lowered this threshold, and directed that revenue from one-time tax settlements exceeding $1 million be deposited in the Stabilization Fund. It also directed the Commonwealth to transfer up to $30 million of these revenues back into the General Fund at the end of the fiscal year. The Governor, however, vetoed this language.

Apart from the initiatives outlined above, the FY 2013 budget includes no other sources for new or enhanced tax revenues. To bring its budget into balance, the budget relies on other non-tax revenues.

Non-Tax Revenues

The FY 2013 budget incorporates estimates of $589.9 million in additional non-tax revenues. Of this total, $569.1 million are temporary or one-time revenues, and $20.8 million are ongoing revenues, providing revenue for this and presumably subsequent years. The temporary non-tax revenues come from agency revenue initiatives, from the Stabilization Fund, and from other specific transfers.

Agency Revenue Initiatives

The FY 2013 budget adopts a Senate proposal to direct the Commonwealth's revenue from unclaimed checks into the Abandoned Property fund, resulting in an estimated $10.0 million in ongoing departmental revenue. The budget also transfers $10.0 million from a separate off-budget trust into the Abandoned Property fund, a source of one-time revenue. All told, the FY 2013 budget relies on approximately $20.0 million in new revenue from so-called abandoned property. The budget also includes a number of increases to the permitting and licensing fees charged by a various departments, changes that together would raise an estimated $10.8 million in ongoing revenue annually. Approximately half ($5 million) of the total would derive from selling advertising space on a limited number of state owned assets, such as vehicles.

Stabilization Fund

The FY 2013 budget withdraws funding from the state's Stabilization Fund, and proposes transferring into the General Fund anticipated interest earned by the Stabilization Fund. The budget transfers $350.0 million from the fund, and anticipates transferring $9.1 million in interest. The budget includes language specifying a required $100.0 million deposit into the Stabilization Fund which is the estimated amount of FY 2013 capital gains revenues in excess of $1 billion. Furthermore, the budget does not count on transferring approximately $100 million in tax revenue from the year's consolidated net surplus into the Stabilization Fund, as there is language allowing for suspending for one year this statutory transfer.

Unused Balances

The FY 2013 budget relies on the use of $6.0 million from balances in existing trust funds to pay for FY 2013 costs. This is the same amount estimated by the Senate, but lower than the House budget proposal which had estimated being able to "sweep" a total of $37.0 million in unused funds from various trusts. The FY 2013 budget also counts on $40.0 million in one-time money available from the federal Group Insurance Trust, and $44.0 million available from a surplus in the Commonwealth Care Trust Fund.

Other One-time Savings

The FY 2013 budget anticipates "saving" approximately $110.0 million by forgoing a statutory "carry forward" from FY 2013 into FY 2014 from the consolidated net surplus. By not reserving these funds for the next year's budget, they become a one-time revenue source in the current year.

The FY 2013 budget does not rely on the $27.7 million included in the Senate budget that would have come from suspending for FY 2013 the required transfer of funds from the Master Tobacco Settlement into the State Retiree Benefits Trust. In FY 2012, the Legislature passed a law stating that in FY 2013, 10 percent of the proceeds of the tobacco settlement would be deposited into this trust to help fund benefits for retired state employees.