Yesterday, the Texas House of Representatives adopted the state budget bill for the upcoming biennium. During a nearly 18 hour-long marathon session that began at noon on Tuesday and ended after 5:00 am yesterday morning, the House debated over 350 amendments and finalized what is now the House version of the General Appropriations Act, House Bill 1.
The Texas House budget dramatically reforms state government through increased transparency, and addresses the needs of our growing state while staying below the constitutional spending cap. HB 1 invests significant resources in public schools, boosts formula funding for higher education, invests additional general revenue in transportation, and promotes border security and public safety. Additionally, HB1 accomplishes this while limiting overall spending growth to less than what is necessary to account for population and inflation increases.
This budget includes several of my own amendments, including cost containment measures, and funding increases in various state programs.
· Graduate Medical Education: the House accepted my amendment to provide for expenditure of revenues from a proposed Graduate Medical Education Trust Fund, which will provide residency positions to medical school graduates who wish to continue working in Texas. This will help our state fill critical family care and specialty shortages by keeping Texas medical students in Texas.
· Medicaid Therapy Rate Adjustments: The Health and Human Services Commission will be directed to review and revise Medicaid reimbursement rates following the most recent report on acute therapy service payment comparisons. The agency is charged with thoroughly evaluating the existing therapy rates, and adjusting them downward to achieve cost savings - while preserving the adequacy of available therapy services and ensuring accessibility to care.
· Texas Pregnancy Care Network: The Committee on Appropriations accepted one of my amendments earlier in the committee process; increasing the funding for our Alternatives to Abortion: Pregnancy Care Network by $8 million over the biennium. Two dozen amendments were filed to take this funding away from the services provided to pregnant women and new mothers, but my colleagues and I stood firm and defended the program successfully.
This budget also falls $2 billion under the state's spending cap, and leaves approximately $8 billion of revenues unspent. Our conservative approach to crafting the new budget bill leaves room for us to provide for substantial tax relief as the legislative session progresses.
My colleagues and I on the Appropriations Committee have been working since January to craft this $209 billion budget, which funds every function of state government. Now that the full House has approved, the budget bill will move to the Senate and later to the Governor's desk.
FOUNDATION SCHOOL PROGRAM
$32.1 billion in General Revenue Funds and $41.4 billion in All Funds is provided for state aid for school districts and charter schools through the Foundation School Program (FSP) system. This represents an increase of $430.8 million in General Revenue Funds and an increase of $1.8 billion, or 4.4 percent, in All Funds compared to the 2014–15 biennium. FSP funding is increased by $2.2 billion over what is estimated to be required to fund the current law FSP entitlement.
$62.9 billion in All Funds, including $25.9 billion in General Revenue Funds and $0.1 billion in General Revenue– Dedicated Funds, is provided for the Texas Medicaid program. This is an increase of $3.9 billion in All Funds, including $2.9 billion in General Revenue Funds and General Revenue–Dedicated Funds. Approximately $1.7 billion in General Revenue Funds is provided for items including projected caseload growth, including the transition of certain children from CHIP to Medicaid; maintaining fiscal year 2015 average costs for most programs, including fiscal year 2015 rate increases; replacing $0.3 billion in Interagency Contracts with General Revenue Funds; and full biennial funding of the Community First Choice program. This increase is offset by a reduction of $0.3 billion in General Revenue Funds from not continuing state funding for the non-federal portion of the Disproportionate Share Hospital (DSH) program in the 2016–17 biennium.
$24.8 billion in All Funds is provided for all functions of the Department of Transportation; this includes an increase in State Highway Funds (Other Funds) made available from the discontinuation of $1.3 billion in State Highway Fund appropriations to agencies other than the Department of Transportation; $1.5 billion in General Revenue Funds to provide additional funding for non-tolled roadway projects; and the inclusion of $2.4 billion in funding from oil and natural gas tax-related transfers to the State Highway Fund as approved by voters in November 2014 (Proposition 1, 2014). The net agency increase of $1.6 billion is the result of the increases referenced above and of declines in bond proceeds as well as in other revenue sources.
Recommendations related to behavioral health and substance abuse services in the 2016–17 biennium are $3.8 billion in All Funds, including $2.9 billion in General Revenue Funds and General Revenue–Dedicated Funds, an increase of $304.3 million. These appropriations are distributed across 18 agencies in five articles, and include funding for inpatient client services, infrastructure, and inflation-related cost increases at the state hospitals and for contracted community hospitals beds; for outpatient services for adults and children, Preadmission Screening and Resident Review, transition support for patients moving from hospitals to the community, and for crisis services provided through the local mental health authorities and NorthSTAR; substance abuse prevention, intervention, and treatment; mental health care services and substance abuse treatment for incarcerated offenders; mental health care services for veterans; and for residential treatment slots for Department of Family and Protective Services clients who are at risk of parental relinquishment.
HIGHER EDUCATION FORMULA FUNDING
Higher Education formulas are supported by $7.1 billion in General Revenue Funds and $1.3 billion in General Revenue–Dedicated Funds. Included in this amount are an increase of $371.8 million in General Revenue Funds and an increase of $53.4 million in statutory tuition in General Revenue–Dedicated Funds, and an increase of $10.0 million in General Revenue–Dedicated Account 5111. The increase in formula appropriations reflects both the funding of enrollment growth, as well as increasing rates in all of the formulas.
ADULT INCARCERATION AND CRIMINAL JUSTICE
$6.5 billion in All Funds and $6.3 billion in General Revenue Funds and General Revenue–Dedicated Funds is provided for the incarceration, probation, and parole of adult offenders in the Texas Department of Criminal Justice which includes housing, security, classification, food and necessities, healthcare, and treatment services. General Revenue Funds are increased by $111.8 million for the 2016–17 biennium and include an $18.1 million increase for Contract Prisons and Private State Jails for contract per diem increases and an increase of $84.9 million for Correctional Managed Health Care. Funding for Correctional Managed Health Care for the 2016–17 biennium totals $1.0 billion.
$619.4 million in All Funds and $572.8 million in General Revenue Funds is provided to the Juvenile Justice Department (TJJD) for juvenile justice services. In lieu of appropriations across the current goals, objectives, and strategies of the agency, the Committee Substitute for House Bill 1 provides a block funding rider appropriation for the administration and operations of TJJD. Funding levels represent an All Funds reduction of $29.8 million from the 2014–15 biennium, primarily the result of General Revenue Fund reductions related to declining juvenile populations. Juvenile populations are expected to continue to decline, but at a slower rate than in the previous two biennia.
$565.2 million in All Funds is provided for border security purposes at the Department of Public Safety (DPS), the Trusteed Programs within the Office of the Governor, the Texas Parks and Wildlife Department, and the Department of Criminal Justice. DPS is provided the majority of this funding ($551.0 million), $320.4 million in All Funds of which is in the agency’s Goal B, Secure Border Region. Other strategies in the DPS budget contain additional funding for border security related functions and activities ($230.6 million). The statewide biennial All Funds increase of $93.9 million is primarily include $105.0 million for 300 additional troopers at DPS offset by decreases at the Military Department and the Parks and Wildlife Department.
TEACHER RETIREMENT AND HEALTH BENEFITS
$3.6 billion in All Funds is provided for the state contribution to retirement benefits of the Teacher Retirement System (TRS), including $3.5 billion in General Revenue Funds, $94.2 million in General Revenue–Dedicated Funds, and $6.8 million in Other Funds (Teacher Retirement System Pension Trust Fund Account No. 960). Funding reflects a state contribution rate of 6.8 percent of employee payroll in each year of the 2016–17 biennium. Based on payroll trend data, an assumed annual payroll growth is included in each year of the biennium at a rate of 2.0 percent for public education and 4.0 percent for higher education. Retiree health insurance funding includes $562.2 million in General Revenue Funds, which provides a statutorily required state contribution to TRS-Care of 1.0 percent of public education payroll.
TRS also received over $700 million in House Bill 2, the supplemental appropriations bill, which funds the projected shortfall and makes the system actuarially sound.
STATE EMPLOYEE RETIREMENT
Funding for state contributions to the Employees Retirement System retirement program reflects an increase of $265.3 million in All Funds ($234.5 million in General Revenue Funds and General Revenue–Dedicated Funds) for state employees’ retirement benefits. Funding provides for a 9.5 percent state contribution rate each fiscal year of the 2016–17 biennium. Funding also provides for biennialization of the fiscal year 2015 statewide salary increase, 0.5 percent annual payroll growth for state employees as well as FTE increases at certain state agencies.
Recommendations also continue the additional retirement contribution from all general state agencies of 0.5 percent of the total base wages and salaries for each eligible employee for a total combined state contribution rate of 10.0 percent.
CORRECTIONAL OFFICER PAY INCREASE
Article IX, General Provisions, of the General Appropriations Bill includes $235.0 million in General Revenue to provide a 10 percent pay increase and related benefits to Correctional Officers at the Texas Department of Criminal Justice. Funding also provides $41.5 million in General Revenue for related benefits at the Employees Retirement System and the employer Social Security contribution at the Comptroller of Public Accounts.
$3.6 billion in All Funds ($2.6 billion in General Revenue Funds and General Revenue–Dedicated Funds) is provided for the state contribution for group insurance benefits for general state employees, retirees, and their dependents. The funding reflects an increase of $592.5 million in All Funds ($590.9 million in General Revenue Funds and General Revenue–Dedicated Funds), which provides for a 7.19 percent increase in the state contribution for fiscal year 2016 and a 7.17 percent increase in the state contribution for fiscal year 2017. These increases fund an annual benefit cost trend of 7.0 percent, when combined with spend down of approximately $231.0 million from the contingency reserve fund, leaving an estimated $100.0 million in the fund for the 2016–17 biennium. Amounts also reflect an annual state employee retirement rate of 5.0 percent and FTE changes at certain state agencies.
The 2016–17 biennium fully funds debt service and totals $4.0 billion in All Funds. This increase of $340.1 million, or 9.4 percent from the 2014–15 biennium consists of $2.0 billion for fiscal year 2016 and $2.0 billion for fiscal year 2017. Funding provides for debt service for General Obligation and revenue debt issued or expected to be issued by the Texas Public Finance Authority, the Water Development Board, and the Department of Transportation. Funding also provides for reimbursement of debt service payments for tuition revenue bonds issued by various institutions.
ECONOMIC STABILIZATION FUND
No appropriations from the Economic Stabilization Fund (ESF) are included in the 2016–17 biennium. The balance of the fund is estimated to be $11.1 billion at the end of fiscal year 2017.