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Fiscal Year 2005-06 State Budget Impact on Philadelphia July 6, 2005 MEMORANDUM TO: Members of the Philadelphia Delegation
FROM:
Senator Vincent J. Fumo SUBJECT: Impact Analysis of the Enacted FY 2005-06 General Fund Budget on the City of Philadelphia. Overview The FY 2005-06 budget calls for $24.150 billion in General Fund expenditures, a 4.4 percent annual increase. Due to revenue constraints and ballooning Medicaid expenses, funding levels for many programs are near, or in some cases, below last year’s levels. These problems were somewhat offset by the administration’s management and productivity initiatives, which have saved Pennsylvania’s taxpayers more than $475 million to date. To address sizable increases in Medicaid costs – set against a backdrop of diminishing federal support – the budget also includes cost-cutting measures in the Department of Public Welfare. The restorations made to the Governor’s proposed cuts, however, will serve to seriously lessen the impact of these cuts on the City of Philadelphia. The School District of Philadelphia will receive more than $35 million in additional funds in FY 2005-06. In FY 2005-06 the Governor’s Growing Greener II program will begin with the first of six scheduled debt issuances. In the first year $100 million in bonds will be issued to finance environmental initiatives across the state. A portion of this money (14%) will be allocated to the counties to use at their discretion for environmental projects that meet the Growing Greener II guidelines. Details regarding specific changes in funding levels and their effects on the City of Philadelphia follow. Human Services
While the FY 2005-06 budget does make some cuts to the MA program, these cuts were mitigated by significant restorations made during budget negotiations. These restorations will be especially important for the City of Philadelphia. The proposed Prescription Drug Limit was jettisoned as well as part of the limit on hospital visits. Most if not all of the restrictions on psychiatric services will not apply to Philadelphia because they are not applicable to the Philadelphia area Medicaid managed care provider. Furthermore, the restorations made will significantly lessen the impact of the Medicaid cuts on area hospitals –specifically, the proposed limitation on Hospital Pass Throughs has been eliminated. The anticipated problem facing the city regarding the transition away from TANF funds, and its impact on children’s welfare programs has been significantly ameliorated by the city’s decision to utilize funds from Community Behavioral Health. In FY 2004-05, the state appropriation for the Human Services Development Fund (HSDF) was essentially level-funded once the 2 percent COLA was backed out. The $33.8 million in state funds was supplemented by $7.5 million in federal Intergovernmental Transfers (IGTs). The FY 2005-06 budget will carry the state HSDF appropriation forward at the FY 2004-05 level, but eliminate the federal IGTs. The result will be a $1.9 million reduction for the City of Philadelphia. The appropriation for Psychiatric Services in Eastern PA (EPPI), which was completely eliminated in the original FY 2003-04 budget proposal, is continued at the fully restored level of $3.5 million for FY 2005-06. The statewide Homeless Assistance line item was increased by approximately 4.4% bringing the total amount to $25.5 Million. This will result in a $2 million increase for the city. Aging Services
In the City of Philadelphia, state funds for aging services are allocated to the Philadelphia Corporation on Aging. Services include nutrition, employment, transportation, domestic care, personal protection, long-term care assessment and both basic and intensive in-home services. In the FY 2005-06 budget, the Philadelphia Corporation on Aging will receive approximately $48.7 million. The PennCare appropriation now includes programs to expand adult day care services, which previously fell under a separate line item. Philadelphia will also be eligible for additional funding for in-home services as an alternative to nursing home care under the Tobacco Settlement. It should be noted that when combined with available federal and state general funds, the Philadelphia Corporation on Aging should receive roughly $73.8 million in the current fiscal year. Public Library Services
In FY 2003-04, the Governor proposed a dramatic reduction in this appropriation, a portion of which was ultimately restored in that year’s final budget agreement. Additional funds were restored in last year’s budget. The Free Library of Philadelphia will receive roughly $7.64 million in public library subsidies in FY 2005-06. This represents an increase of approximately 6%. School District of Philadelphia
The FY 2005-06 budget provides for an approximate 3 percent increase in the basic education subsidy, which translates into a $17.5 million increase for the School District of Philadelphia. State appropriations for special education will increase approximately 2.5 % yielding an increase of $3.1 million for the city. This spending plan will carry forward the $25 million appropriation for the Philadelphia School District, which first appeared in the budget in FY 2002-03. The FY 2005-2006 budget also level-funds Pennsylvania Accountability Grants and School Improvement Grants, from which Philadelphia will receive a combined total of $56.4 million. Furthermore, the funds for the Education Assistance Program, increased by $28 million dollars statewide, will yield another $9.4 million for the district’s tutoring program. The additional funds slated for the Reimbursement of Charter Schools will direct about $4.2 million more to Philadelphia, as well. Combined, these major funding sources will provide an additional $35 million for city schools. Higher Education
The budget provides for modest increases in the appropriations for most state-aided colleges and universities, which includes most of those listed above. Some of the funding for Temple University has been shifted from the state to federal level. The Governor’s “Job Ready Pennsylvania” initiative provides a 10.1 percent increase in Community College funding in FY 2005-06. Based on the new Community College funding allocation formula, Community College of Philadelphia will receive approximately $33.1 million. Health Care Services
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