Multiple budget related hearings began yesterday for both the Senate and House. In regards to the proposed budget bill, yesterday the following committees met: Senate Finance Subcommittee on Public Education Funding, the Subcommittee on Medicaid, and Senate Finance on Article III (Higher Education). Additionally, all four House Appropriation Subcommittees in regards to the various Articles in the budget also met yesterday. Below is a spotlight on those hearings.
Currently, committee listings are being updated daily. For the latest hearing postings, please visit: House Committee Meetings By Date and Senate Committee Meetings By Date. Most committee meetings are streamed on the internet if there is video capabilities in the hearing room. To watch the hearings live or archived hearings for the House and/or Senate, click on: http://www.capitol.state.tx.us/ and look for the Video link.
Senate Finance Subcommittee on Public Education Funding
Members of the Senate Finance Subcommittee on Public Education Funding met on Monday, February 14, to discuss this session’s funding challenges and to receive a information from TEA staff on school finance in the state of Texas.
During the next three weeks, state senators are going to dig into the public school finance system to see what solutions can be devised to address the funding shortfall for public education. Senators will look at how school districts can become more transparent, more productive and more efficient. State Sen. Florence Shapiro, R-Plano, began the meeting by reiterating there will be cuts.
Senator Shapiro stated that the committee will meet every morning from 9:00 am to noon for the next three weeks. Sen. Shapiro announced that tomorrow’s panel will consist of representatives from the teacher organizations, a representative from the Comptroller’s Office discussing the current franchise tax system, and Lisa Dawn-Fisher from TEA will return to discuss the formula system in more detail.
Senate Finance Subcommittee on Medicaid
On February 14, 2011 the Senate Finance Subcommittee on Medicaid, chaired by Senator Jane Nelson, met and heard a broad overview on the Texas Medicaid program from Tom Suehs, Executive Commissioner of the Health and Human Services Commission. Suehs discussed the Medicaid program in terms of eligibility, services, providers, finance and cost drivers, and also discussed difficulties presented by the Affordable Care Act. The Subcommittee did not take up discussion on SB 23 (Nelson), relating to efficiencies and cost-savings in the health and human services and other related regulatory agencies, including the state medical assistance and child health plan programs, although it was listed on the agenda. A call was issued by Nelson for Member and public input regarding Medicaid suggestions for cost savings and efficiencies to be submitted to the Senate Health and Human Services Committee staff by Thursday, February 17, 2011 for compilation and future discussion. The Subcommittee’s goal is to have a committee substitute ready in three weeks to submit to the Senate Finance Committee.
A copy of Commissioner Suehs’ presentation can be found by visiting: http://www.hhsc.state.tx.us/news/presentations/2011/sfc-medicaid-021411.pdf
House Appropriations Subcommittee – Comptroller of Public Accounts
Comptroller Susan Combs addressed the subcommittee and noted Texas taxpayers are saving approximately $69 million annually through strategic savings initiatives on purchasing and contracting, such as:
- Charge Cards for Goods, Services and Travel –Savings of $4.6 million per year; 49 percent increase over previous contract.
- Traffic Control Devices –Savings of $5.9 million annually; 22 percent better than previous contract.
- Overnight/Express Mail–Savings of $6.1 million annually; 36.8 percent better than previous contract.
- Fleet Contracts–Savings of 8.4 percent or $7.4 million annually for purchases of a wide range of vehicles, including police cruisers. The contract is currently being rebid.
Combs further highlighted accountability and transparency initiatives enacted through the Comptroller’s office before discussing their consolidating initiative.
Enterprise Resource Planning (ERP) is known as the process of consolidating “all things business.” ProjectONE is charged with implementing ERP for the state of Texas over the next several years. The resulting system, known as CAPPS (Centralized Accounting and Payroll/Personnel System), is supposed to be more cost effective over time to maintain and upgrade than current statewide accounting systems, while also offering greater accuracy and functionality. More details on ERP/CAPPS can be found in the recently published report to the 82nd Legislature, ERP in Texas: ProjectONE Report to the 82nd Legislature
Combs noted some current successes in the initiatives:
- Identified at least 19 legacy systems and numerous manual processes and desktop applications that will be retired when CAPPS is implemented at DIR and TxDOT. Once CAPPS is fully implemented, the retired systems will number in the hundreds.
- Reviewed 450 reports now used by agencies and determined that more than 50 percent of these can be eliminated by combining multiple criteria in a single CAPPS report, which marks an unprecedented step forward in accountability and efficiency for the state.
- Completed the first eight milestones on time, which is a significant achievement for a project of this size and scope.
- Proceeded ahead of schedule on the financials track. More than 80 percent of the technical specifications and 50 percent of the coding and testing are complete.
Combs was also asked about the performance of the Franchise tax. She noted the number and amount of people utilizing cost of goods sold deductions (COGS) was underestimated, some business deducted up to 84% in cost of goods sold.
For fiscal year 2010, the state’s revenue of the margin tax was $3.9 billion. However, the state’s anticipated revenue by fiscal year 2010 was $6.4 billion. Of the $2.5 billion difference, $1 billion is attributed to the recession and $1.5 billion to the underperformance of the business tax.
Although there are several factors that contribute to the underperformance of the Franchise Tax, Mike Reissig, Associate Deputy Comptroller, stated the largest item contributing to the underperformance of the franchise tax was the COGS deduction which results in a $1 billion difference per year. Audits are ongoing – they have done about 6,000 desk audits and millions of assessments. 11:23
House Appropriations Subcommittee Comptroller of Public Accounts – Fiscal programs
Fiscal Implications of LBB Recommendations were reviewed-
- Mixed Beverage Tax – Recommendations would provide for reimbursements of mixed beverage tax receipts at a reduced rate of 8.3065 percent. Rate of reimbursement
is currently set at 10.7143 percent. Tax Code Section 183.051 provides that reimbursements to counties and incorporated municipalities, issued quarterly, may not exceed 10.7143 percent of receipts from permittees within the county or incorporated municipality. The new recommended rate (22.5% reduction) and incorporation of GEER recommendations to repeal Sunday liquor laws – which would adversely impact mixed beverage tax receipts – is estimated to provide funding to local governments near 2008-09 expended levels ($246.7 million) over the biennium for a reduction of 22.7 percent of the Comptroller’s anticipated payments for the 2012-13 biennium at current level of reimbursement ($318.2 million). - Zero-funded programs
- Lateral Road Fund Distribution – Recommendations would eliminate sum-certain appropriations for the distribution of a portion of the gasoline tax to counties for construction and maintenance, purchase of right-of-way, and payment of debt obligations for county roads. Authorization for the distribution is referenced in Article VIII, Section 7-a of the Constitution and is also governed by Tax Code Section 162.503 and Transportation Code Section 256.002 – 256.003. The Constitutional provision provides that such distributions are “subject to legislative appropriation”. Appropriations are typically provided at $7.3 million each year, which is the authorized maximum allocation of the gasoline tax specified in Tax Code Section 162.503. Elimination of funding would reduce available funding for county and road district construction, maintenance and debt service. Savings in General Revenue or credit towards certification of the appropriations bill for the recommendation to eliminate Lateral Road Fund distributions is contingent on enactment of legislation modifying Tax Code, Section 162.503 to eliminate allocation of a portion of gasoline tax revenue (up to $7.3 million each year) to the County and Road District Highway Fund (Fund 57). Fund 57 does not count towards certification of the bill.
- Tobacco Enforcement Grants – Elimination of tobacco enforcement grants are included in recommendations. Grants are authorized by Section 161.088 of the Health and Safety Code for local law enforcement activities to reduce sale or distribution of tobacco products to minors. Recommendations would reduce funding for local entities to carry out these activities.
- Local Continuing Education Grants – Recommendations eliminate local continuing education grants provided to local law enforcement for continuing education and training of officers. Grants are authorized by Section 1701.157 of the Occupations Code and are distributed according to allocation provided in statute. The program is funded through the General Revenue-Dedicated Law Enforcement Officer Standards and Education Fund 116. Recommendations would not abolish this fund and revenue from allocation of court costs (5.0034 percent) would continue to be deposited to the Fund and count towards certification of the GAA.
- Gross Weight/Axle Permit Fee – Distribution of gross weight/axle permit fees are not included in the recommendations. Per Transportation Code Section 621.353, the Comptroller is required to send $50 of each excess weight permit base fee to counties based on the ratio of the total number of miles of county roads maintained by the county to the total number of miles of county roads maintain by all of the counties throughout the state. Distributions in 2010-11 are estimated to be $13.1 million. Recommendations would reduce funding to counties for public roads and bridges.
- Jobs and Education for Texans (JET) – Recommendations eliminate $25 million in requested appropriations for the JET program. The program was authorized by House Bill 1935 from the 81st Legislature and funds grants to community colleges and nonprofits for support and development of programs preparing students for high-demand occupations.
House Appropriations Subcommittee Article II – Health Care
Special Provisions Relating to All Health and Human Services Agencies
HB 1 established limitation on rate increases or new rates was highlighted – among other issues. It was noted that last year there were approximately $300 million GR in rate increases.
House Appropriations Subcommittee Article III – Education – Texas Education Agency (TEA)
Education Commissioner Robert Scott testified before the subcommittee and fielded questions concerning a variety of programs that have been zeroed out in the House and Senate versions of the budget.
His testimony was similar to an earlier statement he made to the House Appropriations Committee on February 7, 2011. In regards to TEA recommendations, Scott suggested the proposed average funding for the FSP be scaled back from 13 percent to about 5 percent which would mean an additional $5.6 billion for schools.
He also called for restoration of $314 million for textbooks and instructional materials, and for $164 million more for the state’s merit pay program for teachers.
During the hearing on February 7, Senate Education Committee Chairwoman Florence Shapiro, R-Plano, and Scott both said that they expect to see the new State of Texas Assessments of Academic Readiness (STAAR) exams, for elementary and middle school students, administered beginning in the 2011-12 school year. Sen. Royce West, D-Dallas, at that time said that while he supports the new testing program, it must be accompanied by sufficient funds for schools to adequately prepare students.
During the Appropriations Subcommittee hearing yesterday, Scott encouraged the committee to fund public education at least at the current level (this does not account for enrollment growth), otherwise it will be very difficult for school districts to adequately implement the new STAAR and end of course exams.
While TEA, is on track to implement the exams, Scott “highly recommended” the purchase of instructional materials. He reminded the committee that it will be difficult for districts and students to meet accountability goals without these materials.
