1. Budget and Caseload Update Policy and Fiscal Committee April 4, 2011

2. Table of Contents  FY11 Caseload Overview  FY11 Projected Deficiency  ARRA Spending 2

3. FY11 Caseload Overview Supportive: The projected surplus was decreased slightly this month to $11.9M. The decrease in surplus from $12.3M incorporates historical trends in the increase in the number of children served in June 2010. DTA-Related Caseload: The deficiency has decreased approximately $1M dollars from $7.5M to $6.5M. Income Eligible: Restriction to voucher access became effective in February but total spending in February increased driving the daily cost to be the highest for the fiscal year (reference slide #5). As a result, the forecasted deficiency in IE has grown from $5.3M to $8.3M as of February billing. 3

4. 4 Fiscal Year 2011 Income Eligible (3000-4060) * Actual Figures Previous month projected a $5.4M deficiency.

5. FY11 Caseload Overview Income Eligible: There is a projected deficiency of $8.3M. This represents a significant increase compared with last month’s projected deficiency of $5.3M. The actual voucher cost in February is $1.1M higher than forecasted in February (for the March Committee Meeting). Access was severely restricted beginning on February 4, 2011. (Some access was available to continuity of care.) EEC anticipated caseload expenditures to decrease accordingly, but the spending rose. Expenses were more than January’s despite having fewer billable days and restricted access. Below is a list of the actual amounts billed (beginning in July), the number of billable days, the cost per day, and the percent change of the cost per day from the previous month: 5

6. Fiscal Year 2011 Income Eligible Caseload Projected Cost 6 FY11 Approp: $233.5M (Amount in Thousands) Blue represents actual amount billed Current projections indicate that, even with transferability, EEC will be unable to meet the cost of June billing (processed in late July)

8. 8

9. 9 Fiscal Year 2011 DTA Related (3000-4050) Previous month projected a $7.5M deficiency.

10. FY2011 DTA Caseload Projected Cost 10 FY11 Approp: $127.3M ( Amount in Thousands) Blue = Actual amount billed Green = Projection With the passage of transferability, EEC will be able to meet the deficiency.

11. 11 Fiscal Year 2011 Supportive Care (3000-3050) Previous month projected a surplus of $12.3M.

12. Fiscal Year 2011 Supportive Caseload Projected Cost 12 FY11 Approp: $85.7M (Amount in Thousands) Blue = Actual amount billed

13. FY11 Caseload Overview – Summary 13

14. FY11 Caseload Overview The following are last month’s proposed resolutions to reduce the net deficiency: Step 1 - Supplemental Language: Section 23 of House Bill #37 (Governor’s proposed Supplemental budget) allows EEC to transfer the surplus from the Supportive account to the Income Eligible and DTA-Related caseload accounts. This would partially remedy the current projected deficiencies in both accounts. STATUS: House Approval 3/30/2011 Senate Approval 3/31/2011 Step 2 – Further Caseload Closure Actions: EEC reported an overall net deficiency of $560K in last month’s caseload forecast. Actions Close sibling access through vouchers and contract slots. Close contract slots for providers that are over 5% in the use of flex pool slots. STATUS: Implemented Step 3 – Transfer of Costs: EEC will transfer TSCC costs from the Income Eligible account to the Supportive Account. Status: Incorporated into current month’s discussion. 14

15. “Above the Line” Recommendation to Reduce the Deficiency Forecasted Net Deficiency DTA $ 6,531,142 DCF $ 11,971,742 IE $ 8,313,368 Net Deficiency $2,872,769 $2.873M Recommendation Close Access for Teen and Homeless Contract Slots $402K effective 5/1/11. Adjusted Net Deficiency $2.471M 15

16. “Below the Line” Recommendation to Offset the Deficiency Forecasted Net Deficiency DTA $ 6,531,142 DCF $ 11,971,742 IE $ 8,313,368 Net Deficiency $2,872,769 $2.873M Adjusted Deficiency from Above the Line Recommendation $2.471M Commissioner Recommendation Providers receiving reimbursement for Income Eligible funded services to cover cost of services provided to children. Reduction to be applied in May or June or split between both months. Example: IE Projected no. of children in care 33,612 Blended Avg. Daily Rate $25.98 Projected number of days 3 Projected Savings $2.620M Adjusted Projection Net Surplus $ 149K Of the combined 44 billable days in May and June, the Department would require providers to support the cost of care for a certain number of days. The number of days required to cover the deficiency is subject to change based on actual spending. Each day not paying providers saves $873,393. 16

17. Family Statistics Number of families that have a child(ren) in income eligible contracted care Total number of families: 11,642 8,641 with 1 child 2,478 with 2 children 447 with 3 children 65 with 4 children 9 with 5 children 2 with 6 children Number of families that have a child(ren) in care with a current voucher Total number of families: 12,326 5,336 with 1 child 3,751 with 2 children 1,514 with 3 children 1,121 with 4 children 320 with 5 children 284 with 6 children 17

18. DAILY REIMBURSEMENT RATES (daily rates & 3 day example) CENTER-BASEDFAMILY CHILD CARE Infant Infant & Toddler ToddlerPre-School Providers Under 2 Years of Age Providers 2 Years of Age and Over Systems Under 2 Years of Age Systems 2 Years of Age and Over REGION 1$47.90$45.60$43.20$33.40$30.10$26.40$40.60$36.90 REGION 2$49.20$46.70$44.20$33.40$31.80$26.40$42.35$36.90 REGION 3$54.95$52.30$49.55$35.65$31.50$27.85$41.95$38.30 REGION 4$59.50$56.15$52.85$36.70$34.35$27.85$45.25$38.65 REGION 5$47.90$46.05$44.20$33.40$31.80$26.40$42.35$36.90 REGION 6$54.55$51.50$48.40$36.70$31.50$27.85$42.40$38.65 3 days REGION 1$143.70$136.80$129.60$100.20$90.30$79.20$121.80$110.70 REGION 2$147.60$140.10$132.60$100.20$95.40$79.20$127.05$110.70 REGION 3$164.85$156.90$148.65$106.95$94.50$83.55$125.85$114.90 REGION 4$178.50$168.45$158.55$110.10$103.05$83.55$135.75$115.95 REGION 5$143.70$138.15$132.60$100.20$95.40$79.20$127.05$110.70 REGION 6$163.65$154.50$145.20$110.10$94.50$83.55$127.20$115.95 18 Value of Provider Non Payment

19. DAILY REIMBURSEMENT RATES (daily rates & 3 day example) SCHOOL AGEKindergarten Before School Only After School Only Before and After School Only Full DayBlended BeforeAfter Before and After Full Day REGION 1$7.25$15.25$22.45$30.70$19.85$6.75$20.10$26.70$33.40 REGION 2$7.25$15.25$22.45$30.70$19.85$6.75$20.10$26.70$33.40 REGION 3$7.70$17.05$24.60$31.75$21.60$7.15$21.40$28.50$35.65 REGION 4$7.90$17.50$25.20$32.65$22.15$7.35$22.05$29.45$36.70 REGION 5$7.25$15.25$22.45$30.70$19.85$6.75$20.10$26.70$33.40 REGION 6$7.90$17.50$25.20$32.65$22.15$7.35$22.05$29.45$36.70 3 Days REGION 1$21.75$45.75$67.35$92.10$59.55$20.25$60.30$80.10$100.20 REGION 2$21.75$45.75$67.35$92.10$59.55$20.25$60.30$80.10$100.20 REGION 3$23.10$51.15$73.80$95.25$64.80$21.45$64.20$85.50$106.95 REGION 4$23.70$52.50$75.60$97.95$66.45$22.05$66.15$88.35$110.10 REGION 5$21.75$45.75$67.35$92.10$59.55$20.25$60.30$80.10$100.20 REGION 6$23.70$52.50$75.60$97.95$66.45$22.05$66.15$88.35$110.10 19 Value of Provider Non-Payment

20. Additional Considerations 20 The following are additional ways we considered, but rejected, to reduce or eliminate the deficiency: Postpone reassessment placements until July 1, 2011. Calculated savings is at 50% to account for timing. Effective May 1, 2011 - projected savings for 2 months: $4.4M Effective June 1, 2011 - projected savings for 1 month: $2.1M Postpone Access for Continuity of Care until July 1, 2011. Calculated savings is at 50% to account for timing. Effective May 1, 2011; projected savings fro 2 months: $557K Effective June 1, 2011; projected savings for 1 month: $226K Remove Add-on Payment from Teen and Homeless filled contract slots effective 5/1/11: $770K Reduce payment to 61 FCC systems from $10/day to $5/day for all slots effective 5/1/11: $1.462M To eliminate the deficiency of $2.873M, 2,579 children would need to be removed from care effective May 1, 2011.

21. Additional Considerations 21 The following are additional considerations to address the deficiency: Request Supplemental Funding from the Legislature. This would require notification to ANF and House and Senate Ways and Means. Transfer Eligible Expenditures: Transfer TSCC related spending from the Income Eligible to the Supportive Care Account. Apply ARRA Funds to Income Eligible funded childcare services for care that is not supplanted. Potential source is to identify the number of new preschool children in FY11 that were assigned to IE vouchers and/or contracts. Allocate unspent grant balances: 1. Income Eligible - Inclusive Classroom SPED Grant 2. Supportive – Mental Health Collaborative Grant

22. FY11 Caseload: Waitlist 22 *As of March 31, 2011. This number is an increase of 1,940 children from the February update, or a 10.8% increase.

23. FY11 Caseload: Waitlist Since 9/2010 23

24. ARRA Spending Update 24

25. ARRA Spending Update We have spent $11.226M in ARRA funds (46.82%) through March. The goal was to have spent $11.6M by the end of March. We missed our mark by $400K, but are confident we will recover this gap as caseload is beyond expectation. We are comfortable that the funds will be liquidated. 25