Committee Meeting Information

November 2 and 3, 2009

Capitol Building, Room 204

Cheyenne, Wyoming

 

Committee Members Present

Senator Phil Nicholas, Co-Chairman

Representative Rosie Berger, Co-Chairman

Senator Mike Massie

Senator Curt Meier

Senator Ray Peterson

Senator Chuck Townsend

Representative Debbie Hammons

Representative Steve Harshman

Representative Pete Jorgensen

Representative Bryan Pedersen

Representative Jeb Steward

 

Committee Members Absent

Representative Frank Philp

 

 

Legislative Service Office Staff

Bill Mai, Budget and Fiscal Section Manager
Dawn Agar, Senior Legislative Analyst

Dean Temte, Senior Legislative Analyst

Alex Kean, Associate Fiscal Analyst

 

Others Present at Meeting

Please refer to Appendix 1 to review the Committee Sign-in Sheet
for a list of other individuals who attended the meeting.

Executive Summary

The Joint Appropriations Committee met for two days in Cheyenne.  Legislative Service Office staff presented the most recent CREG report and led a discussion of the current fiscal profile.  That presentation was followed by an update to federal stimulus funding issues by Director Lynne Boomgaarden.  Legislative Service Office staff presented background and scenarios regarding the school foundation program external cost adjustment.  That discussion was followed by a presentation of school district insurance information by LSO staff and Ralph Hayes, A&I Employees’ Group Insurance Administrator.

 

The second day began with a presentation of retirement system concerns by Steve Sommers, retirement system board member.  Legislative Service Office staff returned with more ECA scenarios. The committee voted to recommend no ECA for fiscal year 2011.  Chief Information Officer Bob von Wolffradt presented statewide current and pending information technology issues.  Bob Peck, Department of Health Chief Fiscal Officer, informed the Committee of impending Medicaid funding shortfalls.  Finally, the Committee heard suggestions from the Wyoming Association of Municipalities and the County Commissioners Association for approaches to local government funding in the next biennium. 

 

The JAC begins the budget hearing process at 9 a.m. on December 7, 2009.  Hearings are scheduled through the end of the week and resume on January 4, 2010.

 

Call To Order (November 2, 2009)

Co-Chairman Nicholas called the meeting to order at 9:00 a.m.  The following sections summarize the Committee proceedings by topic.  Please refer to Appendix 2 to review the Committee Meeting Agenda.

 

CREG Update and Fiscal Profile Discussion

LSO Budget and Fiscal Section Manager Bill Mai presented the October, 2009 CREG report and the corresponding fiscal profile (Appendix 3).  The bottom line changes from the May, 2009 report indicate increased projected funds available of $248.6 million, primarily due to the Governor’s budget reductions and agency general fund reversions.  Mr. Mai explained the CREG changes to mineral pricing and production levels and how those figured into the estimates.  Despite reductions to the estimates for General Fund/Budget Reserve Account revenues, LSO’s estimate of standard budget requirements for state government are within those revenue constraints.

 

Excluding additional external cost adjustments, and allowing the transfer of school foundations monies to the school capital constructions account under current law, the school foundation account balance is projected to be negative $37.3 million at the end of the 2011/2012 biennium.  This was discussed at length during the external cost adjustment presentation.

 

Senator Meier asked how state agencies have adjusted their staffing and standard budgets to reflect the slow down in the minerals industry; Co-Chairman Nicholas suggested that agencies be prepared to answer such questions during their budget hearings in December and January. 

 

Federal Stimulus Funding (ARRA) Update

Office of State Lands and Investments Director Lynne Boomgaarden gave an update on American Recovery and Reinvestment Act issues (Appendix 4a-f).  She reiterated that ARRA funding may augment state funds, not supplant them.  The State of Wyoming is eligible to receive $600 million; the difference between what Wyoming is eligible for and what it receives is determined through a competitive grant process.

 

The first spending and jobs reports were due to the Federal government on October 31 (Appendix 4c), and the results have been posted to the Federal ARRA website.  The Director explained that there are still some issues to be worked out as to how created jobs are reported.  She was asked if the State would be compensated for administrative expenses incurred as a result of ARRA implementation.  The Director responded that the State has elected not to seek reimbursement because it would be cost prohibitive to determine all the ARRA associated expenses.  Consequently, agencies will continue to absorb those costs.  The Director also presented a worksheet itemizing the stimulus amounts received (Appendix 4b) and suggested it be used as a resource during budget hearings, adding that the federal stimulus funding will have little impact on agency standard budgets.  Director Boomgaarden also stated that while at one time the State’s intent was to track all local government stimulus dollars, the ability of local governments to apply for and receive ARRA monies outside the State’s process has prohibited comprehensive tracking of local stimulus funding at the statewide level.

 

Available Funding for Local Government Entities

Director Boomgaarden presented a report of FY 2009-2010 grants approved by the State Loan and Investment Board to local governments, as well as current fund balances (Appendix 5a).  She also presented an estimate of revenues to be considered for FY2011/2012 budget preparation, which she conceded to be slightly more optimistic that the October CREG projections (Appendix 5b).

 

School Foundation Program External Cost Adjustment

Legislative Service Office staff presented several worksheets outlining the effects of imposing an external cost adjustment on the school foundation program (Appendix 6).  Matt Willmarth, School Finance Analyst explained the differences between the estimates from the May CREG report to the October CREG report, noting the reduction in anticipated revenue.  There was some discussion by the Committee over use of funds between the school foundation program and the school capital construction budget.  The Committee requested various school funding scenarios of ECA and capital construction expenditures. 

 

The Committee received the Select Committee on School Facilities’ budget recommendations, which included several capital construction projects and funding for major maintenance (Appendix 7).

 

School District Health Insurance

LSO staff in conjunction with Ralph Hayes, A&I Employees’ Group Insurance Administrator, presented an analysis of current insurance funding to school districts (Appendix 8).  The analyses presented were based on expenditures reported to the Department of Education.  Co-Chairman Nicholas directed Dave Nelson, LSO School Finance Manager, to submit a request to school districts to report details of health insurance related expenditures by December 1.  This will allow LSO and A&I staff sufficient time to perform additional analyses for the December JAC meeting.  The options for school district health insurance coverage being considered are: 1) reimbursing actual district expenditures not to exceed what it would cost for state employees; 2) requiring districts to participate in the state plan; and 3) allowing districts to opt in to the state plan with the stipulation that once the option is exercised it would be irreversible.

 

Meeting Recess

The Committee recessed at 4:50 p.m.

 

Second Day – November 3, 2009

 

Retirement System Issues

Steve Sommers, Legislative liaison for the Retirement System Board, presented three retirement system issues.  The first regards Firefighter Paid Pension Plan A (Appendix 9a).  This is a closed plan, which means it no longer receives any contributions.  Because investment income is down, and due to a statutory annual 3% cost of living adjustment, previous estimates that the plan required no additional funding are no longer valid.  Mr. Sommers presented several options for how to proceed, including adding funds to the plan, changing the statute that requires the annual cost of living adjustment, a combination of the two, requiring contributions from the participants or taking no action now but continuing to monitor the fund.  Senator Meier moved that a bill be drafted that would give the retirement board the flexibility to set the COLA up to 3% depending on fund performance; Representative Hammons seconded the motion and discussion commenced.  The Committee voted and approved the motion.  Senator Nicholas will confer with the Attorney General to determine whether or not the Legislature can repeal the statute that established the 3% COLA requirement. 

 

The second issue Mr. Sommers discussed regards proposed statutory language changes to clarify issues and to make State statutes consistent with IRS requirements (Appendix 9b). The Committee instructed LSO staff to draft a bill incorporating sections one and two of the handout provided by the board. 

 

Mr. Sommers discussed with the Committee the latest actuarial report showing the condition of the State’s retirement fund (Appendix 9c).  He stated that due to the economic downturn and associated investment issues, the fund is no longer actuarially sound.  As a step to address this problem, Senator Meier moved that the Committee request a bill draft that would phase in an increased employer contribution level of 1.5% effective July 1, 2010.  The motion carried.  Co-chairman Nicholas requested that the Retirement Board present information at its December budget hearing regarding how the State of Wyoming plan compares to other states’ funds’ performance.

 

School Foundation Program External Cost Adjustment

Buck McVeigh, A&I Economic Analysis Administrator, addressed the Committee in response to questions raised in the prior day’s meeting regarding use of the employment cost index (ECI) in setting past external cost adjustments.  Mr. McVeigh stated he was not completely familiar with that particular index but speculated that a time lag existed in the actual data used to compute the index. 

 

Matt Willmarth, LSO staff, presented the additional scenarios requested by the Committee on Monday.  Representative Jorgensen moved for the adoption of 0% ECA.  The motion carried.

 

Information Technology Discussion

Chief Information Officer Bob von Wolffradt presented an overview of his division’s current and pending projects (Appendix 10).  Some projects that were slated to begin were delayed due to the Governor’s budget cuts.  These included enterprise e-mail, network management and GIS.  In the 2009/2010 budget the CIO was able to obtain efficiencies by pooling IT purchases across agencies and plans to continue to seek these efficiencies in 2011/2012.  Overall, project management in state government has improved since the CIO established centralized review.  Information security enhancements have been successful.  The CIO is working to identify similar needs across agencies and is considering the idea of pooling existing funds to accomplish common missions.

 

Medicaid Shortfall

Bob Peck, Department of Health Chief Fiscal Officer, presented worksheets to the Committee indicating a projected shortfall in Medicaid funding (Appendix 11).  While he anticipates that the Federal stimulus funding the agency will receive in fiscal year 2010 will cover the shortfall in the current biennium, he cautions that these funds are not relevant for the upcoming biennium and that the federal match will decrease.  That, coupled with increased enrollment and provider costs, will create additional shortfalls.

 

Fiscal Notes

Dean Temte, Senior Legislative Fiscal Analyst, presented the new appropriation detail form that will be sent to agencies, as well as a sample of how this information will be presented in the fiscal notes prepared for the budget session (Appendix 12).  Following a brief discussion Co-chairman Berger asked if there were any questions or additions to the proposal.  Given there were none, the proposed changes will be implemented for the 2010 Budget Session.

 

Local Government Funding

Co-chairman Nicholas reported that the Select Committee on Local Government Financing determined this to be an annual issue that should be considered by the JAC.  The select committee recommended a hardship provision and capital construction funding continue to be included.  Dean Temte and Bill Mai presented documents to the JAC that had been prepared for the select committee.  These worksheets represented a synopsis of local government financing since the 2007/2008 biennium (Appendix 13a).

 

Joe Evans of the County Commissioners Association and George Parks and Mark Harris of the Wyoming Association of Municipalities presented local government revenue sharing alternatives (Appendix 13b,c).  Co-chairman Berger requested a report for the December JAC meeting of how the counties spent the money they received and the status of each county’s reserve.

 

Rob Tompkins, Office of State Lands and Investments, gave an update of local government funding distributed through the State Loan and Investment Board.  He stated that the board had many more requests for funding than was available and that the recession brought with it a low-bid climate. 

 

Meeting Adjournment

There being no further business, Co-Chairman Berger adjourned the meeting at 4:00 p.m.

 

Respectfully submitted,

 

 

 

Senator Phil Nicholas, Co-Chairman                               Representative Rosie Berger, Co-Chairman

 

 

File Storage: 

 

 

 

 

 

 

 

 

Appendix		Appendix Topic		Appendix Description		Appendix Provider
1		Committee Sign-In Sheet		Lists meeting attendees		Legislative Service Office
2		Committee Meeting Agenda		Provides an outline of the topics the Committee planned to address at meeting		Legislative Service Office
3		Wyoming  State Government Revenue Forecast		October CREG forecast and associated Fiscal Profile		Legislative Service Office
4		Federal Stimulus Funding (ARRA) Update		a) Program overview; b) Report of Funds Received; c) Programs Reportable to OMB; d) DWSRF Applications; e) CWSRF Applications; f) CWSRF/DWSRF map; g) webpage screen-print		Lynne Boomgaarden, State ARRA Coordinator
5		Local Government Funding		a) Current available grant and loan balances; b) FY10 revenue projections		Lynne Boomgaarden,  Office of State Lands and Investments Director
6		School Foundation Program External Cost Adjustment		School Foundation Account Balance; School Capital Construction Account Balance; ECA since 2006 Recalibration; School Foundation and Capital Construction Account ECA scenarios (2)		Legislative Service Office
7		Select School Facilities Committee		School Facilities Biennial Budget Recommendation		Legislative Service Office
8		School District Employee Health Insurance		School Year 2009-2010 Composite Funding Model; Health Insurance Cost Analysis; Participant Characteristics and Eligibility Counts		Legislative Service Office
9		Retirement System Issues		a) Briefing paper on Firefighter Plan A; b)  Proposed Legislative changes; c) retirement fund actuarial memo		Wyoming Retirement Board
10		Information Technology		PowerPoint printout of Wyoming information technology status		Bob von Wolffradt. Chief Information Officer
11		Medicaid Funding Shortfall		Outline of projected shortfall with supporting documentation		Bob Peck, Department of Health Chief Financial Officer
12		Fiscal Notes		Sample document of proposed changes		Legislative Service Office
13		Local Government Funding		a) Report of direct distributions to local governments; review of local government funding		Legislative Service Office
				b) Current and proposed distribution of funds to counties		Wyoming County Commissioners’ Association
				c) Considerations for Local Government Revenue Sharing		Wyoming Association of Municipalities