Budget and Caseload Update Policy and Fiscal Committee February 7, 2011

Table of Contents  FY11 Caseload Overview  FY11 Projected Deficit  ARRA Spending  Governor’s FY12 Budget Recommendations 2

FY11 Caseload Overview Income Eligible: $3.8M deficiency projected deficiency. This represents an increase in last month’s projected deficiency of $3.5M. The change is driven by the combined total December actual plus residual forecast for unbilled activity for Contract spending. DTA-Related Caseload: The deficiency increased $500k from $7.5M to $8.0M. The forecast adjustment is the direct result of prior period revisions to actual number of children receiving services. The actual number of children receiving services in November increased by 654. Supportive: The projected surplus remains unchanged at $12M. Reminder: Due to the economic climate, ANF has notified agencies that there are limited resources to address deficiencies through a supplemental budget in FY11; and agencies must take action to prevent deficiencies in their accounts. This may mean that EEC is expected to address a deficiency in the DTA account by transferring funds (under the 3% allowable language) from the Income Eligible account. 3

4 Fiscal Year 2010 Income Eligible ( ) * Actual Figures Previous month projected a $5.0M deficiency.

Fiscal Year 2011 Income Eligible Caseload Projected Cost 5 FY11 Approp: $233.5M (Amount in Thousands) Blue represents actual amount billed

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8 Fiscal Year 2011 DTA Related ( ) Previous month projected a $7.5M deficiency.

FY2011 DTA Caseload Projected Cost 9 FY11 Approp: $127.3M ( Amount in Thousands) -Blue = Actual amount billed -Green = Projection

10 Fiscal Year 2011 Supportive Care ( ) Previous month projected a surplus of $12.0 M.

FY11 Caseload Overview – Last Month’s Solutions 1. Close access to the Income Eligible account effective February 15, Based on current projections this would reduce the Income Eligible Deficiency from $5M to $3.7M. STATUS: DONE. In an EMB issued January 5, 2011, EEC closed access in the Income Eligible Account to new income eligible families on February 4, EEC also closed new voucher access to siblings of children currently receiving EEC financial assistance on February 4, Request full transferability from the Supportive account to the Income Eligible and DTA-Related accounts. Currently, EEC is only allowed to transfer money to the Supportive account. STATUS: DONE. Governor Patrick included this transferability authorization language as part of the Supplemental budget he filed with the legislature on January 26,

FY11 Caseload Overview – Options Without Transferability If solution #2 (transferability) is not adopted by the legislature, EEC must consider implementing the following: DTA Account Commissioner Killins to call Commissioner Kehoe and communicate that without supplemental funding in the DTA account we will spend all available funds by mid-May. If supplemental funds are not made available, and we want to prevent a deficiency, access to the DTA account must close access in March. Income Eligible Account Prevent Vacant Contract slots from being filled effective March 1. Eliminate additional Flex Pool Spending for Contract Providers effective March 1. Review opportunity to transfer costs for DCF children moved from DCF to the IE account from July through December prior to initiation of Transitional Supportive Child Care (TSCC). 12

DTA Eligibility Requirements Childcare for families receiving TAFDC cash assistance from DTA and participating in work or the employment services program (CIES). Requires referrals from DTA case workers. Transitional Childcare (i.e., working families whose TAFDC cases have closed in past 12 months) Post- Transitional Childcare (i.e., working families for up to 1 year after transitional period) The Public Welfare Reform law, at Sec. 110 of Ch. 5 of the Acts of 1995, established a child care entitlement for TAFDC children and transitional TAFDC children only (this entitlement is also codified in DTA Regulations at 106 CMR (A)(1)(a)); post-transitional TAFDC families, though not entitled, are still funded in this item: Budget line item language at of Ch. 131 of the Acts of 2010 states that: “post-transitional early education and care benefits shall be provided to participants who are working for up to 1 year after the transitional period”. 13

FY11 Caseload Overview – Summary 14

FY11 Caseload: Waitlist 15 As of January 30, 2011

ARRA Spending Update 16

ARRA Spending by Month 17 It is anticipated that ARRA spending will average $1.7M per month for the remainder of the program.

Governor’s FY12 Recommendation On January 26, 2011 Governor Patrick released his FY12 budget recommendations (House 1) totaling $30.5B. The Governor had to make difficult cuts to craft a budget plan that had little revenue growth to support growing spending demands. This has forced cuts to nearly every part of state government. For example, local funding in the form of unrestricted local aid was cut 7%. Despite these cuts, the Governor has, yet again, demonstrated his commitment to the Department of Early Education and Care and the families we serve. Overall, the Governor has recommended for EEC a budget of $498.5M. Though the governor could not commit to all of EEC’s funding requests, we are fortunate to start the FY12 process on strong footing as the legislature begins its FY12 budget process. 18

Governor’s FY12 Recommendation 19

FY12 Proposed Budget vs. House Admin: Build and Maintain Quality Infrastructure Board Approved Action  Step 1: Support maintenance needs of admin account Value: $304,859 (Payroll Relate:$288K; Lease Spaces $38K; and ($22K Miscellaneous) This figure based on the cost of negotiated step increases, the value of collective bargaining agreement raises, the cost of lease increases in the Boston and Springfield offices, an increase in the cost of postage, and other minor costs. House 1: Did support maintenance needs. Funded the admin account at $11,683,491. Governor provided enough funding to support our Admin maintenance needs which include CBA increases, step increases, and anticipated lease increases.

FY12 Proposed Budget and House 1 Board Approved Action:  Step 2: Rebuild EEC Staffing Infrastructure Value: $379,114 (Fill 6 positions essential to EEC infrastructure). Director of Community Partnership and Outreach: ($75,000) Chief Operations Officer: ($85,000) Two (2) Fiscal Monitors: ($59,292 each for a total of $118,584) Two (2) Child Care Licensing Specialists: ($50,265 each for a total of $100,530) This is the first stage in a multi-year effort to rebuild the EEC staff to levels appropriate to provide quality management and delivery of the EEC mission. Overall admin increase would be $683,973 ($304K for maintenance and $379K for 6 additional positions). House 1: Does not support the additional positions 21

FY12 EEC Budget Recommendation vs. House 1 22 Non-Admin : Access Management Value: $150,000 (Revised: could be as low as $66,000) Annualized cost to maintain COTS Waitlist system. HOUSE 1: Does not include additional funding to support the annual maintenance cost of the COTS Waitlist. Alternative resources will have to be used to support FY12 cost : Support QRIS Activities Value: $4.0M QRIS raises the standard of care and must therefore be supported with its own annual appropriation. HOUSE 1: The Governor has proposed $3 million in new funding to coordinate efforts to close the achievement gap including support for implementation of the QRIS. We will work closely with Secretary Reville and his staff on this important program over the coming months. The inclusion of QRIS in the Governor’s funding to close the achievement gap would help ensure we successfully implement the initiative : Increase Funding for Professional Development Value: $500K The FY11 statewide implementation of a professional development network once implemented is expected to have a demand which exceeds current funding. HOUSE 1: Does not include funding for this request : Return Mental Health to FY10 Funding Level Value: $250,000 (Increases appropriation to $1M) Reduction in funding cut services and emphasis on supporting crisis assistance for children in need of services. More children with mental health issues are being served in child care. HOUSE 1: Does not recommend additional funds over FY11 levels.

FY12 Proposed Budget 23 Caseload Accounts The Board approved an FY12 budget for the caseload accounts at a total of $464M, a 4% increase over FY11. House 1 recommends consolidating the three caseload accounts into one ( ) at a total level of $446,137,347. The proposed funding level is $461,922 less than FY11.