JAC Index 01142016am1 Thursday January 14, 2016 Agenda: Creg Report 080 – DOC (continued from yesterday) 085 – Business Council 066 – Board of Tourism 044 – Insurance Department 008- Public Defender 1/14/2016 8:00:26 AM Chairman Harshman calls meeting to order. Schedule Change Richards: Roll Call – Excused were Greear, Nicholas, Quorum established Richards: Wyoming State Government Revenue Forecast for Fiscal Year 2016 – 2020 aka CREG dated January 2016 1/14/2016 8:06:36 AM Page 2 Background assumptions: Alex and I considered convening another meeting. Volatile environment. Capital gains are not performing. Gains on GF have been called for or appropriated. June capital gains will not help the profile on the GF side. 109M statutory reserve required by Governor to leave in reserve. Governor left that amount intact. Reduction of $32M for this fiscal year. We had a 160 M shortfall as of Oct, has now become 192 M. Modifications: 1.3 M from reversions from state agencies, cash available; included the feed bill as adopted by management council. FY 17-18 GF 46.4 M reduction in reserve account. We had a 419 M shortfall for FY 17-18 looking at Governor’s recommendation as of Dec 1. Total shortfall of 465M. School Capital Construction Fund; Coal lease bonuses added as result of a sequestered payment. Reduced for federal mineral royalties for school foundation. Wash for FY16. 53.7M reduction for FY 17-18, reduction to federal mineral royalties, assessments, recaptures. 1/14/2016 8:13:18 AM One year ago Wyoming had 38 rigs. This year we have six. We anticipate reductions in production of oil. 11 to 13% reduction over the next two years in the CREG. Lease reductions. Negative revisions: drop in price of oil per barrel. CREG production price is substantially higher than market today Perkins: Production numbers solid? Richards: Yes page 3. We believe unconventional oil will decline over the next 3 years. 7 M MCF reduction. Natural gas prices reduced by .10, .35 and .25 over next 3 years. We estimated 2.75 or 2.85. This is an annual average. Liquids portions is not included in that price. Range from .20 to .30 per MCF. Coal production reduced by 5 M ton per year for 3 years. Two sources of data run opposite. State data shows estimate is right on. EIA data, counts coal train cars, shows it is 7% low. Last 3 months of calendar year 15 were extremely poor for coal production, not showing up in state data. EIA has made multiple changes to their data. Ross: EIA Richards: Energy Information Association, federal agency puts out weekly reports. We concur it is declining. The question is by how much. Modest change on total revenue projected. What reality is CREG living in? First 5 months of this fiscal year, revenues are exceeding estimate of CREG in Oct. Explanation of revenues actual to estimate. October estimate is spot on. We recognize that there is a shift in the energy markets in the last few months, which has a ripple effect and will take time to affect the profile. Next 4 months, down by 44 Million dollars. Page 1 bolded Language – conundrum. 1/14/2016 8:23:17 AM Ross: Will you be talking about where we are with schools? Richards: yes Goldenrod page 1 Normally, I could tell you the most important line but I can’t do that because of the recommendation to expend from LSRA. Page 3 Reduction in LSRA may be best number but not full indication. Page 3 additional revenue due to 1% diversion. Policymakers. When we settle on the base line number, we will print that on the front page. LSRA number, GF number or a combination of both 1/14/2016 8:25:28 AM Richards: page 1 Difference in first and second column. $5M negative is appropriate. 2nd column is 32M worse off, 3rd line at the top (increase in GF conversions increased by 1.3 M). 32M lower in revenues Ross: how do you figure it? Harshman Richards: Calculation -36 minus 5 M plus 1.3 is net difference of approximately 32 M reduction in revenue. Greear: identifying reversions and booking them between Oct and Jan, quicker pace? Harshman: We are waiting on some reversions still. GF dollars that should have come back Perkins: Follow up list of agencies that we are still waiting on for reversions. Harshman: Reversions count to the positive of GF. Perkins: 13-14 reversions were due x months ago including DFS and a few small agencies. Nicholas: Rough estimate Richards: 15.6 M from DFS. Challenge is mix of federal and state funds. General appropriation is 50/50 but could have spent GF before federal funds. Page 1 last two columns – Executive branch may not agree with the profile. Governor budget. Not a direct correlation because the environment has changed. 29M -45M is calculation. Reduction in GF, legislature appropriation, carryover short in 16. 32 M immediately and 46 M for next biennium is 78 M. Governor’s letters in next few days. 1/14/2016 8:32:31 AM Page 2. Governor left money on table for legislature by taking it out of LSRA but we reduced revenues so that is not available. Column shows Zero. Page 3: Budget reserve account. Governor left 104.55 M reserve amount on the table per statute. WE have had a 46 M revenue decrease so we only have 58 M left in the carryover. The legislature is not subject to the statutory reserve. You could take it down to zero. Reductions – severance tax diversion. Every time we reduce price the taxes decline. Decreased balance of roughly 250 M. Governor included this in his budget message. He indicated that if we received the full spending amount, receive 83M per year and restore this account substantially. That is not profiled. Last account on the page is not work discussing. Harshman: Greear: How will that be profiled and when? It will be after July 1. Lag. Richards: October 2017, bill effective date Ross: SF split between SIPA and GF Richards: The 2.5 to the GF is guaranteed. Page 5 SPRA – Governor recommended as part of budget reductions an intercept . This account will receive up to 2% of revenue in excess of the first 3% revenue, in investment income. Bill provision effective this year. Current rate of earnings not estimated to reach 3%. Connolly: Statutory Richards: yes 1/14/2016 8:39:23 AM Spending policy reserve account 50M. 2.1% estimate for interest and dividends. If transfer needs to be made, this is where the transfer will be made. 3rd account CSPLF Note on PWMTF reserve account. Maximum amount 107 M estimate for deposit to the Capitol Building Account. Receives interest and reversions on all state capital construction. 1/14/2016 8:41:54 AM Page 6 – Water Development Accounts. Account 1 has negative in 3rd column of 11M will not match Governor – discussion from AG yesterday. Governor profiled new money. Agency indicated they did not need it. Connolly- Municipal waste fund? Richard: All statutory School 1/14/2016 8:43:49 AM Matt Wilmarth – School finance analyst – page 4 – School Foundation Program, School Capital Construction Account, PLF Holding Account School foundation Program – 100M balance. Transfer amount from Perm fund increases. School Capital construction Acct. – sequestered coal lease benefit – balance of zero PLF account – transfer increases by about 7.3 M FY 17 – 18: Changes for last two columns – revenues decrease by about 28 M, in FMR’s, Property taxes and recapture payments to school districts. Revised estimates. Appropriation side; 25.4 M change in appropriations. Other change- 47M reduction . Based on governor’s recommendation. School capital construction – no changes PLF holding account – changes in appropriations do not guarantee that 100 M 1/14/2016 8:48:12 AM Stubson: on 17-18, projections would not include ECA from last year? Willmarth: it is profiled, carried forward, part of Governor’s recommendation. 6th line, 2016 Gove recommendation 59.8M dollars. In Gov. profile there was a72 M in Oct, it is now 58.9M. In 17-18 column, under appropriations, last column Richards: That is a calculation. Full amount of the ECA is included in the Governor’s profile in terms of dollars for BFY17-18 1/14/2016 8:50:20 AM Willmarth: For BFY 19-20: 52.8M balance, est. revenues of 1.39B, appropriations include Gov. recs carry forward and ECa carrys forward, est of 1.59 B – shortfall Richards: We will email estimates. UW, No cap con in excess of revenues scenario, reach 5% investment scenario. Harshman: Revenues for school cap con Willmarth: Harshman: 13 M to run the department, major maintenance is 118.5M. 131 M. Willmarth Harshman: UW study – Willmarth: 309.2 M still left out her for capital construction Harshman: 220 m per biennium estimate? Willmarth: MM is 120M per year Harshman: About a 120 M cap con Willmarth: 250 M, then dropped down, frontloaded Harshman: Do not profile the full SPA amount which is about 45 M per year on the school side Richards: 2% would be 66 per year Harshman: All in the deficit is about 390 M Willmarth: Foundation 515 M negative balance. Another 400 M in the capitol construction acct. Ross: for the 515 M, there is no revenue source, other than raising taxes Willmarth: appropriate from other source, GF or LSRA Harshman: School funding is most volatile, due to energy Willmarth: Perkins: State assessment of minerals 70% minerals? Harshman: Recapture drops from mineral rich counties Richards: It was in the 70% range but goes to about 50/50, last page of CREG. Property and railroads are state assessed . Assuming the gov. rec on capital construction, the entire PLF holding account is exhausted and the SF goes from 100 to 50 Harshman: governor’s budget – spend 600 M from savings in education accounts. Richards: Correct Ross: Goldenrod is more difficult than any other I have seen to track this. More user friendly. Richards: Bullet point. Policy issue – front page is summary of GF and budget reserve account. Used budget reserve account like a checking account. In gov budget the LSRA becomes another appropriation account, instead of a reserve account so had to add it to the front page. Implications beyond staff to make that decision but can do that. Perkins: burgeoning cash accounts, slow-down, cash management becomes more important. 1/14/2016 9:01:07 AM Break. 1/14/2016 9:18:13 AM Meeting called back to order Harshman: Agency 80, division 3000, page 162 Lampert and Lindly at the table. Lampert: page 162, unit 3000 Response to yesterday -Connolly concern for unit 1038, fy 15-16 series 900 report: Westcare is the Vendor 4.1M. Sex offender piece is 2.5M. They delivered substance abuse and sex offender treatment up to the middle of the biennium. New vendor for substance abuse. Did not carry 800,000 forward is because we have not negotiated that contract yet. After negotiation, will return excess. 14.22 per day at women’s center and 12.88 at WMCI. 8.xx per day for x. Spending authority carry forward. 5 to 6 M more could be removed from our GF from Fy 15-16, if pushed, to address the shortfall. 1/14/2016 9:23:08 AM Lampert: Honor Conservation Camp. 106.53 cost per day. Highest turnover rate at 26%. 2/3rd accepting other employment, housing difficulties, lack of pay raise, personal reasons Unit 3011 Buckhart: Are you not losing as many staff to the energy industry? Lampert: Our people have proven record and many laid off energy workers have left the state Vehicles, cell phones, 17 M total Pages 163-164: Offender Management. 8.3 M std. budget. Unit 3012 – offender supplies, no employees Unit 3021 – facility management 21 buildings, 1.13 M std. budget Unit 3022 – Facility Operations Unit 3031 – Administration – 2.2 M std. budget Burns: Where does the conservation camp fit? Lampert: primarily a minimum custody facility. Bootcamp portion is close custody within that. Overall rating is minimum. Burns: Would I strive to go to honor camp or boot camp? Lampert: Both- farm versus conservation Unit 3032 – Contract for preparation of food for Weston county ended – reduction of 73349 in revenue. Unit 3033 – programming – 12 FT, 1.78 M std. budget. ER on page 177 for conversion of Religious Consultant position to AWAC from contractor. AG review. Employee not contractor. Page 180 details. Burns: Salary amount Lampert: Amount in 900 series for that position. We had to supplement that amount. Moved funds from 900 to 100 series. Burns: Difference? Lampert: Not a full time position. Negotiated at a different time than remaining positions so had lower budget impact at time of budget development. Ross: Two positions Lampert: We anticipated all would be converted to provide level of service needed. Need is for FT but if we kept hours to what they are do not need ACA. Hibbard: Moved 900 series up. Did not give additional funds. ACA requirements. Agency has to manage additional costs within their budget Lampert: 5 more similar requests Unit 3034 Education unit. 4 FT. 760,190 std. budget Harshman: Why do you need one manager for 3 people? Lampert: manager is involved in classroom work as well as mgt. Stubson: cooperative work with Eastern Wyoming college. Honor camp pays for the classes or inmates pay ? Lampert: Agreements with colleges that our staff delivers class, adjunct professor, so no tuition cost Stubson: do they acquire college credit? Lampert: For welding and keyboarding. 1/14/2016 9:36:53 AM Division 4000 – Women’s center in Lusk, only women’s stand alone facility in state, including unoccupied mother, child area. 117.80 cost per inmate per day. 24 vacancies, 20% turnover rate, problem with affordable housing, vehicles, cell phones, page 184-188 Unit 4011 – Offender management, 9M std. budget ER on page for additional officers to meet staffing requirements . Governor denied. Burns: Mother Child program – what is the demand? Lampert: No demand for beds in total today. We have 6 pregnant inmates this last year deliver. We send inmates temporarily to county facilities Burns: Currently? Lampert: When they deliver the child immediately goes to relatives or foster care. Unit 4012 Unit 4021 Facility management 1.2M std. budget Unit 4022 facility operations Unit 4031 Administration Unit 4032 – Food service – 4 employees. Had a revenue stream but contract ended. ER for 16151 reduction in spending authority. Unit 4033 –Programming– ER for conversion of service contract to an AWAC position Lindly: Told by insurance that 20 hours or over, the insurance provision of ACA came into play. Yesterday, 30 hours was being used. Lampert: ER for staff increase. Governor denied. Page 206-208 Education unit. 7 positions 1.2M std. budget Page 209-210 Prison Industries, 2 FT, $375,788 std. budget Burns: Where are fish sold? Lampert: Contract with vendor who transports to Denver to sell at live fish mkt. Burns: Revenue indicated? Lampert: Shows up in unit 1041, page 143 Hastert: Mother child unit. We allocated money for refurbishing unit. You do not have staffing? Lampert: In 2009, received money to renovate the building to host a women’s child program, which was recommended as best practice, received around $1M. Cannot fully operate without addition in staff. Rather than retaining newborns for up to 18 months, we have not been able to do that. Family reunification piece we could do if we were fully staffed. Keeping child would require additional staff. Burns: page 134 – Industry- Lampert: Revenues from all of our industry programs Stubson: How much revenue from fish operation? Lampert: It is in our annual report. Will find the information. Division 5000 is Honor Farm in Riverton. Page 2121 - Governor Recommendation. 98.45 cost per bed per day. 22.5% turnover rate. Reasons for turnover, vehicles, cell phones. Page 211 – unit 5011 – Offender Management – Connolly: Fired 6% of the staff? Lampert: We had a high number of terminations at the Honor Farm for violation of agency rules or employee/inmate boundaries. Some have resulted in criminal prosecution. Mr. Shannon gave actual number of 3 dismissals. Unit 2012 – offenders supplies $639,578 std. budget Unit 5021 facility management pages 215 – 32 buildings, 1.3 M std. budget Unit 5022- facility operations 827,218 std. budget Unit 5031 – administration page s 221 and 222 – std. budget Unit 5032 – food service Unit 5033 – ER request of 149,000+ for religious position. AWAC position. Move GF to 0110 object code Nicholas: Is this one who worked less than 30 hours per week? Lampert: Contracted for 20 hours per week 1.7M total budget page 228, 9 authorized positions. ER page 229. We would still ask for the AWAC position, would potentially not ask for additional funding for the medical portion Unit 5034 - Education Unit 5071 – Agriculture, Bovine, wild herd, 79 jobs for inmates. ER on page 233 for 213,000 dollars, increase in spending authority. 1.07 M total on page 234 Greear: paid for breaking horses? Lampert: yes we have contract with BLM Perkins: horse market? Lampert: adoptions vary as economy turns down and hay prices go up. Have best rate of any training programs in the state. In operation longer than anyone else. Success for BLM and us. Minimum bid of $100 per horse. If there is no bid, then goes on the internet. Perkins: Adoption rate? Lampert: Follow up with rate. I think about 1/3 Perkins: Equipment? Lampert: Replacing equipment past useful date. Burns: Bill last year -Honor Farm sale of land with proceeds to purchase other land? Lampert: Land has been appraised. Contingent sale to locate enough property to maintain operations at current level. Neighbor selling some, under negotiation. Paying for appraisal of that property. At the level of the state land board Burns: Premised on value of land for development Lampert: It is valuable but not appraised at commercial rate for sale, at agricultural use. Burns: if is for urban growth, do not know why it is not appraised for that. Lampert: defer to state board. Wasserburger; Enterprise fund of 1.6M. Why don’t you use those funds to buy that equipment? Lampert: We are asking for spending authority for that. Hastert: Inmates operate equipment. Who trains and maintains? Lampert: Maintained by farm, vocational instructor. New equipment is maintained by staff. Older equipment by inmates. Nicholas: do you buy used or new equipment? Lampert: Farm manager’s decision based on availability. Lease buy back equipment. Nicholas: how many acres farmed? Burn rate? Lampert: x acres. Nicholas: Enterprise funds is money from operations. Does it all go back into operations or are there restrictions? Lampert: spending authority restriction of $1M Nicholas: facility with leaks, etc.? Lampert: building has been abandoned, relocated equipment, built new warehouse instead of an industries building. Communication connectivity relocated to warehouse. Long term plan is to demolish the building, build space for medical, other displaced areas. Concludes division 5000 1/14/2016 10:10:52 AM Unit 6000 Penitentiary located in Rawlins 400 authorized positions 106 vacancies 91 in correctional securities rank, 18.75% turnover rate. Offering retention and recruitment bonus. Compete with RR, mineral energy, Sinclair refinery. Poor housing choices. Vehicles, cell, phones 71+M total budget Unit 6011 – offender management – Position reallocation request, second half of net to zero move. Reduction of 1 FT, x dollars. Page 238 48+M total Connolly: Where do we see overtime payments? In terms of budget sheet. Mandatory overtime? Lampert: Overtime is voluntary. We limit the amount they can use. Money for it is included in the 100 series. We track it but shown as part of salaries. Unit 6012 – supplies Unit 6021 – facility management, 19 positions, 3+M std. budget. AandI construction has absorbed costs for drainage problem. Issue with filling skilled trade positions such as plumbers, electricians, electronic. Maintenance delayed to the point of having to hire outside contractors, which is an increased costs, expend 900 series and cannot shift 100 series down to cover the costs. If we had section 308 authority that would help. Nicholas: Section 308 authority. Can we give you a limited amount of dollars? Do you have estimates? Lampert: We have dollar amount expended in 900 series and can provide that. Recruitment, retention and out of state placement Nicholas: For next biennium, what amount will you need to do with what you can’t do with your in house maintenance. Greear: Type of employees, unit located and how much. Lampert: $300,000 over expended right now Greear: If we consider flex authority, what unit are those employees located, job descriptions and how much money for that authority. Lampert: Will provide Connolly: 21 employees. Decrease to 19. Lampert: moved positions, Mr. Shannon said they were electrician positions, reflected elsewhere in the budget documents. Connolly: Does it take an ER? Lampert: Within the division, I don’t believe so but tracked in Chapter 17 in the ER. 1/14/2016 10:24:01 AM Page 245 -246 Facility Operations Stubson: What is the $30,000? Lampert: Money we did not spend. Instead of reverting, removed from std. budget Unit 6031 administration, ER on page 248 – Conversion of AWAC position to a full time. Governor rec. is to retain as AWAC. Nicholas: Weekly hours? Lampert: Full time Burns: Salary of 135,000+ so annually about 62,000. Other benefits? Lampert: None at this time but will have to start paying benefits. Burns; page 238 Lampert: Reflects what it would have cost to convert. Lampert: page 252 – food service Unit 6033 – programming, move funding between object costs, 3.7+ M std. budget. Unit 6034 – education, Unit 6061 – prison industries, 3 FT, 460125 std. budget Completes division Lampert: 58% adoption rate for horses, gross revenue for fish was 139000 1/14/2016 10:29:20 AM Lampert: page 264 – Wyoming medium Correctional Institution, Division 9000 720 beds available, 669 normal operating. Explanation of type of beds and numbers. 149.05 bed cost per day. 51 vacancies 22% of employees reside in Nebraska, lowest turnover rate. Stubson: How many female inmates? Lampert: Depends on needs, usually have 2. We have had as many as 12. 9 are there as of today. Unit 9011- offender management – 35+ M std. budget Unit 9012 – supplies- 1.3+M std. budget Unit 9021 – facility maintenance – 3.6+M Unit 9022 – no positions, no ER, 3.1+M std. budget Unit 9031- administration, employees, 250,000 std. budget reduction. Nicholas: reason? Expenditures not as high? Lampert: Correct Budget reduction for administration 5.1M Unit 9032 food service Unit 9033 – Programming – ER for religious coordinator. Unit 9034 – Education – 10 staff 1.6M+ std. budget Unit 9054 – transition unit – 64 bed; Due to population demands could not get unit operational as planned, returned money, topic of discussion for joint judiciary. Tobacco settlement dollars reduction of 486,785, which will zero out the funding for this unit. Joint Judiciary has committee sponsored legislation. We would no longer have the tobacco settlement dollars to support that so it would be GF. Unit 9061 – prison industries 788,022 std. budget Burns: Braille transcription? Lampert: Books, music Burns: machines Lampert: certification necessary, 1/14/2016 10:41:40 AM Capital Construction Lampert: 4 requests, $46.7M Page 113, CapCon book, $13.5M for 144 additional beds are Wyoming Medium Correctional Institution, governor approved using other funds. May or may not be able to postpone. 12-15 months completion. Delays may be increase construction costs. $6M annually to operate those additional beds. Stubson: Some pen inmates could be transferred? Lampert: 160 high custody inmates could not be transferred to Torrington; however, approximately 450 could be moved to Torrington from Rawlins. Could build these additional beds to ease displacement numbers at state pen to out-of-state when repairs are made to the penitentiary. Easier to recruit working force in Torrington. Also, Torrington a treatment facility. Hastert: Could more inmates use a lesser degree of incarceration than high custody? Lampert: Number of states have used experts to study data and help establish prison policy. Page 115-118, $25M Wyoming State Penitentiary Building Stabilization. Elevation shifting in south facility. Governor denied. Expansive soils or settling soils are causing floor slabs to shift and causing building to crack. Stubson: address no security concern with possibility of 5 year deferment? Lampert: Yes, but need to mitigate issues as soon as possible due to continued movement. Selvage high custody area and another. Greear: still working on mitigation plan and how long extend life of facility? Lampert: If take mitigation steps, another 30 years. Pages 119-122: Honor Camp and Women’s Center flooring, $929,947. Governor approved using other funds. Pages 123-127: Investment Grade Energy Audit of Women’s Center and Training Academy. $7.3M. Governor and State Building Commission denial. Connolly: Priority for $7.3M projects? Lampert: Women’s Center and Torrington facility. 1/14/2016 11:33:28 AM Lunch