Key Elements of House Appropriations and Senate Finance Committee Budgets

February 22, 2018

As discussed in Capitol Contact earlier this week, the House Appropriations and Senate Finance Committees reported their budgets on Sunday, February 18.  The full text of the budget amendments proposed by the “money committees” was made available on Tuesday, February 20.  Below is an analysis of the key elements of the two budget proposals.

The full House and Senate will vote on these budgets on Thursday, February 22; each chamber will then reject the other’s budget and place the two versions in conference, where differences between the two bills will be reconciled.

Medicaid Expansion
House Appropriations: Provides for expansion of Medicaid coverage to individuals with incomes up to 138 percent of the federal poverty level, pursuant to the Affordable Care Act, and directs the Department of Medical Assistance Services (DMAS) to pursue a waiver allowing for the implementation of the Training, Education, Employment, and Opportunity Program (as embodied in HB 338 (Miyares), which passed the House last week), as well as cost-sharing requirements for enrollees and incentives for healthy behaviors.  The state’s share of the costs for the expansion would be funded by a provider assessment on private acute care hospitals, as proposed in the introduced budget (the House Appropriations proposal clarifies that the provider assessment will only be used to pay for the state share of coverage for newly-eligible individuals and not for other purposes).  The introduced budget assumed savings of approximately $422 million associated with Medicaid expansion; because the House Appropriations budget assumes that the coverage expansion will be effective January 1, 2019, rather than October 1, 2018, as envisioned in the introduced budget, the House Appropriations budget contains funding to backfill some of the expected savings to Community Services Boards and the Department of Corrections.

Senate Finance: No expansion.  Authorization language is removed, as is proposed provider assessment.  Expected savings to Community Services Boards and Department of Corrections are backfilled.

K-12 Education
House Appropriations

  • Provides $26 million in General Funds (GF) in FY 2019 and $36.4 million in FY 2020 to free up lottery funds; redirects $11.5 million in FY 2019 from proposed “no loss” payment in the introduced budget that would hold harmless localities that would otherwise lose state dollars due to rebenchmarking; appropriates projected increases in lottery funds; directs all of these funds into Supplemental Lottery Per Pupil Allocation to increase that allocation to 40 percent of lottery funds. (Item 136 #3h)
  • Removes proposed increase in At-Risk Add-On maximum amount (a reduction of $7.1 million GF in second year); includes language expanding options for use of funds to include hiring additional school counselors and requiring school divisions to report on use of the funds. (Item 136 #6h, Item 136 #15h)
  • Removes $7.7 million GF in FY 2020 that would fund the state’s share of costs for a full-time principal at each elementary school. (Item 136 #12h)
  • Provides $6.1 million GF in FY 2019 for small school divisions that have experienced a decline of five percent or more in Average Daily Membership between March 2013 and March 201.8 (Item 136 #14h)
  • Eliminates proposed principal recruitment and retention initiative, capturing $500,000 in FY 2019 and $500,000 in FY 2020 (Item 135 #3h)

Senate Finance

  • Provides $300,000 per year for the Commission on the Future of Elementary and Secondary Education. (Item 30.10 #1s)
  • Tasks the Joint Subcommittee on Local Government Fiscal Stress with reviewing savings opportunities associated with jointly operating or merging small school divisions; directs the Commission on the Future of Elementary and Secondary Education to recommend a framework for incentives for school divisions to collaborate or consolidate and disincentives for smaller school divisions that do not consolidate or share services with adjacent school divisions. (Item 1 #4s, Item 136 #14s)
  • Removes $7.7 million GF in FY 2020 that would fund the state’s share of costs for a full-time principal at each elementary school. (Item 136 #1s)
  • Provides $5 million GF in FY 2019 for school divisions with less than 10,000 in Average Daily Membership (ADM) that have experienced a ten percent decline in ADM between March 2008 and March 2017. (Item 136 #2s)
  • Includes language providing that teacher recruitment programs and incentives are an allowable use of At-Risk Add-On funding (retains the proposed increase to the maximum add-on amount in the introduced budget). (Item 136 #5s)
  • Removes costs associated with local school board members from the Standards of Quality cost calculation, saving the state approximately $2.5 million GF per year. (Item 136 #8s)
  • Reduces proposed principal recruitment and retention fund by $200,000 in FY 2019 and $200,000 in FY 2020. (Item 135 #9s)

Compensation
House Appropriations 

  • Provides $37 million GF in FY 2020 to accelerate proposed two percent salary increase for state employees and state-supported local employees to June 10, 2019, and July 1, 2019, respectively (rather than November 10, 2019, and December 1, 2019, respectively, as in the introduced budget). Provides $36.3 million GF in FY 2020 to advance the proposed two percent salary increase for SOQ-recognized instructional and support positions from December 1, 2019, to July 1, 2019. (Item 474 #3h, Item 136 #8h)
  • Provides $1.1 million GF in FY 2019 and $3.4 million GF in FY 2020 for a $1000 salary increase for sworn deputy sheriffs in localities where the sheriff has primary law enforcement responsibility. (Item 66 #1h)
  • Authorizes a two percent merit bonus for state employees on December 1, 2018, contingent on FY 2018 revenue surpluses and unspent GF appropriations totaling at least $32.8 million. (Item 474 #1h)

Senate Finance

  • Does not include funding for salary increases. (Item 136 #6s removes proposed 2 percent salary increase for SOQ-recognized instructional and support positions; Item 474 #1s removes funding for two percent salary increase for state employees, state-supported local employees)
  • Includes language directing the Governor to include funding in the next introduced budget to offset any downward revenue revision; if no revenue reforecast is required after the close of FY 2018, the funds are to be used for a two percent salary increase for state employees, state-supported local employees, and SOQ-recognized instructional and support positions, effective July 1, 2019. (Item 474 #2s)

Economic Development
House Appropriations

  • Creates the position of Commonwealth Chief Broadband Advisor within the Office of the Secretary of Commerce and Trade (companion to HB 1583). (Item 102 #1h)
  • Increases funding for the Virginia Growth and Opportunity initiative (GO Virginia) by $15 million over the biennium. (Item 106 #2h)
  • Increases funding by $5 million over the biennium for VEDP for marketing and business-ready site development initiatives. (Item 122 #1h)

Senate Finance

  • Directs the Secretary of Commerce and Trade to conduct a comprehensive examination of the state’s economic development system. (Item 102 #1s)
  • Directs that localities with high fiscal stress be given priority in awarding certain economic development incentive funds. (Item 103 #3s)
  • Directs the Secretary of Commerce and Trade, in conjunction with the Center for Rural Virginia, to prepare a list of jurisdictions to be submitted to the Governor as nominees for designation as a “Qualified Opportunity Zone” under the federal Tax Cuts and Jobs Act. (Item 105 #1s in SB 29, the “caboose” budget)
  • Increases Enterprise Zone funds by $685,533 GF per year. (Item 107 #1s)
  • Reduces proposed custom workforce recruitment and training incentive program by $1.1 million GF in FY 2020. (Item 122 #2s)

Virginia Grocery Investment Fund
House Appropriations: Deletes language in the introduced budget establishing the Virginia Grocery Investment Fund and eliminates the associated funding. (Item 106 #1h)

Senate Finance: Reduces funding by $2.5 million GF per year, retaining $1.25 million GF per year. (Item 106 #1s)

Children’s Services Act (CSA)
House Appropriations

  • Includes language directing the Office of Children’s Services to work with affected state agencies to transform CSA-funded services to “emphasize community services that are evidence-based and trauma-informed.” (Item 282 #1h)

Senate Finance

  • Directs the workgroup examining private day placements to make recommendations by December 15, 2018. (Item 1 #7s)
  • Places a two percent per year cap on growth in rates paid by localities to private day special education providers. (Item 282 #1s)
  • Allows CSA funds to be used to support services for children transferring from a private day placement to a public school special education program in a school division within Planning District 16. (Item 282 #2s)
  • Directs the Office of Children’s Services, in coordination with the Department of Education, to facilitate a workgroup to develop outcome measures to assess students’ progress in private special education day placements. (Item 282 #3s)

Mental Health
House Appropriations

  • Provides $900,000 GF in FY 2019 and $1.8 million GF in FY 2020 to establish Crisis Intervention assessment centers in six rural communities (a recommendation of the Joint Subcommittee to Study Mental Health Services in the Commonwealth in the 21st Century). (Item 312 #1h)

Senate Finance

  • Reduces GF appropriation for mental health dockets by $250,000 per year. (Item 38 #2s)
  • Provides $2.5 million in FY 2019 and $4.5 million in FY 2020 for alternative transportation for adults and children subject to temporary detention orders, to be phased in over a three-year period (a recommendation of the Joint Subcommittee to Study Mental Health Services in the Commonwealth in the 21st Century). (Item 311 #1s)
  • Provides $658,000 GF per year for Crisis Intervention Team training in six rural communities (a recommendation of the Joint Subcommittee to Study Mental Health Services in the Commonwealth in the 21st Century). (Item 312 #3s)
  • Provides $1.1 million GF per year for the Appalachian Telemental Health Initiative (a recommendation of the Joint Subcommittee to Study Mental Health Services in the Commonwealth in the 21st Century). (Item 312 #4s)
  • Reduces $3.7 million GF per year for primary care outpatient screening at CSBs. (Item 312 #9s)
  • Directs the Department of Behavioral Health and Developmental Services and DMAS to evaluate options to develop a supportive housing program for Medicaid-eligible “super-utilizers,” pregnant women, and mothers with substance use disorder or mental illness. (Item 312 #11s)

Early Childhood
House Appropriations

  • Provides $275,000 GF per year for the Department of Education (DOE) to implement statewide assessment of kindergarten students with the Virginia Kindergarten Readiness Program instrument; results are to be used to determine how well the Virginia Preschool Initiative (VPI) promotes school readiness in key developmental areas. (Item 128 #1h)
  • Provides $75,000 GF in FY 2019 and directs DOE to develop a plan to ensure that VPI instruction is of high quality, including how VDOE will monitor the quality of teacher-child interactions and ensure the use of evidence-based curricula. (Item 136 #4h)
  • Provides $350,000 GF per year for observation and assessment of VPI classrooms. (Item 136 #5h)
  • Provides $300,000 GF in FY 2019 and $700,000 GF in FY 2020 to provide professional development to VPI teachers. (Item 136 #11h)
  • Specifies how school divisions that have used all of their allocated VPI slots may request additional slots and which criteria must be used for the reallocated slots. (Item 136 #13h)
  • Requires the Virginia Department of Social Services to develop, publish, and maintain information on curricula and professional development for child care professionals participating in the child care subsidy program (a recommendation in a recent JLARC study of early childhood programs in Virginia). (Item 340 #2h)
  • Provides $250,000 in FY 2019 and $600,000 in FY 2020 from the Temporary Assistance to Needs Families block grant for Early Impact Virginia for voluntary home visiting programs. (Item 340 #3h)
  • Appropriates $925,000 In FY 2019 and $325,000 in FY 2020 from the federal Child Care and Development Block Grant for a pilot program to improve early childhood classrooms in faith-based and private child care centers, to include assessment of participating children’s kindergarten readiness. (Item 340 #4h)

Senate Finance

  • Adds several topics of study to the scope of the Joint Subcommittee on the Virginia Preschool Initiative. (Item 1 #1s)
  • Directs DOE, the Department of Health, the Virginia Department of Social Services, and the Department of Planning and Budget to convene a workgroup to examine opportunities to leverage early childhood funds, with the goal of identifying strategies for developing an integrated early childhood fund. (Item 128 #2s)
  • Provides $4.6 million GF per year to increase the VPI per-pupil amount from $6,125 to $6,500 for full-day programs and from $3,062 to $3,250 for half-day programs; also provides that each school division will receive at least nine VPI slots. The increased per-pupil amount will require a local match, which is determined in accordance with the Local Composite Index, with a cap of 0.5000. (Item 136 #10s)
  • Provides $250,000 GF per year for DOE to conduct observations in VPI classrooms. (Item 136 #11s)
  • Allows for a limited waiver of the requirement for a VPI teacher to hold a bachelor’s degree. (Item 136 #12s)
  • Provides that philanthropy or other private funds may be part of the required local match for VPI. (Item 136 #13s)
  • Requires the Virginia Department of Health to evaluate the development of a home visiting Pay-for-Success pilot program, the Department may apply and implement a pilot program if federal funding is available. (Item 297 #2s)

Water Quality
House Appropriations

  • No provisions for Stormwater Local Assistance Fund. (SLAF)
  • Appropriates $1.35 million NGF per year to the Marine Resources Commission for boating and related recreational waterway improvements, including grants to local governments to support dredging projects. (Item 370 #1h, Item 377 #2h)
  • Provides $500,000 GF in FY 2019 and $500,000 GF in FY 2020 to the Marine Resources Commission for oyster replenishment and restoration. (Item 376 #1h)

Senate Finance

  • Provides $20 million in bond proceeds for SLAF in FY 2019. (Item C-45 #1s)
  • Provides $2.6 million GF in FY 2019 and $2.6 million GF in FY 2020 to the Water Quality Improvement Fund (WQIF). This amendment increases the amount of un-refunded marine fuel sales tax revenues that are transferred to the General Fund for improvement of the Chesapeake Bay and its tributaries. (Item 362 #2s)

Environment and Natural Resources
House Appropriations

  • Removes $250,000 GF each year for two environmental education FTEs. (Item 128 #2h)
  • Provides $131,600 in FY 2019 and $131,600 in FY 2020 for Potomac Aquifer Recharge Monitoring (HB 771). (Item 295 #1h)
  • Provides $120,000 GF in FY 2019 for land acquisition for New River State Park. (Item 363 #4h)
  • Provides $125,000 GF in FY 2019 for maintenance for Breaks Interstate Park Dam. (Item 363 #5h)

Senate Finance

  • Provides $965,310 GF in FY 2019 and $590,944 GF in FY 2020 for state park management and operational costs for Phase I of the Widewater State Park in Stafford County. (Item 363 #2s)
  • Provides $167,548 GF in FY 2019 and $198,752 GF in FY 2020 for staffing and operations costs to support the limited opening of Seven Bends State Park. (Item 363 #4s)

Jails
House Appropriations 

  • Provides funding associated with implementing the recommendations of a 2017 study on streamlining eligibility determination and enrollment of incarcerated individuals in Medicaid. VACo worked with a coalition of stakeholders on this package of amendments, which will facilitate coverage of eligible inmates’ inpatient hospital stays by Medicaid. (Item 73 #1h, Item 307 #1h, Item 391 #3h, Item 413 #1h)
  • Adds the Henry County jail to the list of projects authorized for reimbursement from the state. (Item 279 #1h)
  • Includes language directing the Department of Corrections to evaluate options to reduce the number of state-responsible inmates with serious mental illness who serve the entirety of their sentences in local and regional jails. (Item 391 #2h)

Senate Finance

  • Adds the Henry County jail to the list of projects authorized for reimbursement from the state. (Item 279 #1s)
  • Provides $1.6 million GF per year for Community Services Boards to provide discharge planning at two jails with a high percentage of inmates with serious mental illness (a recommendation of the Joint Subcommittee to Study Mental Health Services in the Commonwealth in the 21st Century). (Item 312 #1s)
  • Provides $709,000 GF per year for jail diversion program in up to three rural communities (a recommendation of the Joint Subcommittee to Study Mental Health Services in the Commonwealth in the 21st Century). (Item 312 #2s)

HB 599
House Appropriations: Retains funding levels in introduced budget ($6.6 million in FY 2019 and $13.8 million in FY 2020).

Senate Finance: Reduces funding in FY 2020 by $7.2 million relative to introduced budget (resulting in $6.6 million per year). (Item 397 #1s)

Juvenile Justice
House Appropriations: Rescinds authorization for construction of new juvenile correctional center in Chesapeake (approved in 2016) and provides instead for a 156-bed facility in Powhatan County.  Language makes implementation of juvenile justice transformation plan, which is aimed at using data-based decision-making to improve outcomes for juveniles and reduce the number of youth housed in juvenile correctional centers, contingent upon passage of authorization for Powhatan County capital project. (Item C-47 #1h, Item 412 #1h)

Senate Finance: Authorizes construction of new 96-bed juvenile correctional center on current Bon Air campus and revises authorization for juvenile correctional facility in Chesapeake to reflect authorization for a 60-bed facility in Isle of Wight County.  Language provides that this project will only move to construction if Isle of Wight County provides the land and pays for the water and sewer connections at the site. (Item C-45 #1s, Item C-47 #1s)

Body-Worn Cameras
House Appropriations: Includes language requiring localities that opt for local law enforcement officers to use body-worn cameras to provide the local Commonwealth’s Attorney with additional staff using local funds to accommodate the workload.  Affected Commonwealth’s Attorneys are to provide information to the State Compensation Board on the additional staffing and funding provided by localities. (Item 70 #2h)

Senate Finance:  Includes language requiring localities that opt for local law enforcement officers to use body-worn cameras to fund positions in Commonwealth’s Attorneys’ offices with local funds at a rate of one Assistant Commonwealth’s Attorney per 50 body-worn cameras. (Item 70 #1s)

Transportation
House Appropriations
Eliminates a proposed $110 million bond authorization for transit capital improvements from the introduced budget and directs DRPT to investigate options to establish a Master Equipment Leasing Program (MELP) program which could serve as a revolving fund for the same purpose. (Item 445 #2h)

Senate Finance
Eliminates a proposed $110 million bond authorization for transit capital improvements from the introduced budget. (Item 445 #1s)

Revenue Cash Reserve
The introduced budget provides for a total of $427.1 million deposited by the end of biennium, including a deposit in FY 2018. ($121.4 million in FY 2018, $50 million in FY 2019, $221 million in FY 2020)

House Appropriations: Reduces proposed deposit to $45.5 million GF per year, for a total deposit of $247.4 million by the end of the biennium; sets out a plan to have deposits reach two percent of GF revenues by FY 2024. (Item 266 #1h)

Senate Finance: Reduces proposed deposit to $45 million in FY 2019 and $135 million in FY 2020, for a total deposit of $336.4 million by the end of the biennium. (Item 266 #1s)

Communications Sales and Use Tax
House Appropriations: No proposed changes to Communications Sales and Use Tax Trust Fund allocation.

Senate Finance: Diverts $2 million per year in expected savings from the telecommunications relay contract (which is funded by Communications Sales and Use Tax Trust Fund revenues) to the General Fund. (Item 3-1.01 #1s)

Tobacco Taxes
House Appropriations: No provisions.

Senate Finance:  Directs the Joint Subcommittee to Evaluate Tax Preferences to study options for modernizing tobacco taxes to account for non-combustible tobacco products as well as tobacco tax reforms that will “provide fairness and equity for all local governments.” (Item 3-5.16 #3s)

VACo Contacts: Katie Boyle, Joe Lerch, AICP, Chris McDonald, Esq. and Khaki LaRiviere

 

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