JOHN OTTO SYLVESTER TURNER CHAIRMAN VICE-CHAIRMAN
TEXAS HOUSE OF REPRESENTATIVES COMMITTEE ON APPROPRIATIONS
AGENDA SUBCOMMITTEE ON ARTICLES VI, VII, & VIII
LARRY GONZALES, CHAIR Monday, February 16, 2015 07:30A.M. E1.026 I. CALL TO ORDER
II. CHAIR'S OPENING REMARKS
III. DEPARTMENT OF AGRICULTURE • Tina Beck, Budget Analyst, Legislative Budget Board • Sid Miller, Commissioner • Jason Fearneyhough, Deputy Commissioner • Diana Warner, Chief Financial Officer
IV. GENERAL LAND OFFICE & VETERANS' LAND BOARD • Tina Beck, Budget Analyst, Legislative Budget Board • Jason Thurkill, Analyst, Legislative Budget Board, Improve Oversight of Funds Related to the Deepwater Horizon Oil Spill • George P. Bush, Commissioner • Larry Laine, Deputy Land Commissioner • Jennifer Henry, Assistant Deputy Director of Budget and Planning
V. RAILROAD COMMISSION • Tina Beck, Budget Analyst, Legislative Budget Board • James Timberlake, Audit Manager, & Jennifer Lehman, Project Manager, State Auditor's Office, An Audit Report on Well-Plugging within the Railroad Commission's Oil and Gas Regulation and Cleanup Program • Christi Craddick, Chair • Milton Rister, Executive Director • Wei Wang, Chief Financial Officer
VI. TEXAS COMMISSION ON ENVIRONMENTAL QUALITY • Tom Lambert, Budget Analyst, Legislative Budget Board • Tom Lambert, Budget Analyst, Legislative Budget Board, Revenue Enhancement Options for the Water Resource Management Account • Richard Hyde, Executive Director • The Honorable Darrell Morrison, Councilman, City of Pasadena, and Chair of the Houston-Galveston Area Council Board of Directors • The Honorable Keith Self, County Judge, Collin County, and Executive Board Member of the North Central Texas Council of Governments Board of Directors
VII. TEXAS WORKFORCE COMMISSION • Julie Lindsey, Budget Analyst, Legislative Budget Board • Robert Norris, Analyst, Legislative Budget Board, Improve Accountability of Local Workforce Board and Job Training Programs • Faye Rencher, Project Manager, Sunset Advisory Commission • Andres Alcantar, Chair • Larry Temple, Executive Director
VIII. REIMBURSEMENTS TO THE UNEMPLOYMENT COMPENSATION BENEFIT ACCOUNT • Julie Lindsey, Budget Analyst, Legislative Budget Board
IX. ANIMAL HEALTH COMMISSION • Michael Wales, Budget Analyst, Legislative Budget Board • Ernie Morales, Chairman • Dee B. Ellis, DVM, MPA, Executive Director and State Veterinarian
X. LOW-LEVEL RADIOACTIVE WASTE DISPOSAL COMPACT COMMISSION • Tom Lambert, Budget Analyst, Legislative Budget Board • John M. Salsman, Vice Chair • Leigh Ing, Executive Director
XI. SOIL & WATER CONSERVATION BOARD • Michael Wales, Budget Analyst, Legislative Budget Board • Rex Isom, Executive Director • John Foster, Programs Officer • Kenny Zajicek, Fiscal Officer
XII. WATER DEVELOPMENT BOARD • Tom Lambert, Budget Analyst, Legislative Budget Board • Patrick Moore, Analyst, Legislative Budget Board, Overview of Responsibilities and State Oversight of River Authorities • Carlos Rubinstein, Chairman • Kevin Patteson, Executive Administrator • Amanda Landry, Chief Financial Officer
XIII. BOARD OF CHIROPRACTIC EXAMINERS • Trevor Whitney, Budget Analyst, Legislative Budget Board • Dr. Cynthia Tays, DC, Board President • Yvette Yarbrough, Executive Director
XIV. PUBLIC TESTIMONY
XV. ADJOURNMENT
Section 1
Department of Agriculture Summary of Recommendations - House
Page VI-1 Sid Miller, Commissioner Tina Beck, LBB Analyst RECOMMENDED FUNDING BY METHOD OF FINANCING 2014-15 2016-17 Biennial % Method of Financing Base Recommended Change Change General Revenue Other General Revenue Funds $95,111,220 $95,063,946 ($47,274) (0.0%) Funds GR 1.9% GR Dedicated Funds $5,697,098 $4,721,982 ($975,116) (17.1%) 8.6% Dedicated Funds Total GR-Related Funds $100,808,318 $99,785,928 ($1,022,390) (1.0%) 0.4%
Federal Funds $989,963,354 $981,428,190 ($8,535,164) (0.9%) Other $19,780,813 $20,786,214 $1,005,401 5.1%
All Funds $1,110,552,485 $1,102,000,332 ($8,552,153) (0.8%) Federal Funds 89.1%
FY 2015 FY 2017 Biennial % Budgeted Recommended Change Change FTEs 704.3 654.0 (50.3) (7.1%)
The bill pattern for this agency (2016-17 Recommended) represents an estimated 99.8% of the agency's estimated total available funds for the 2016-17 biennium. See Selected Fiscal and Policy Issue - House No. 1(e) for an explanation of the reduction in FTEs.
Agency 551 2/9/2015 1 Section 1 Department of Agriculture 2016-2017 BIENNIUM TOTAL= $1,102.0 MILLION IN MILLIONS
ALL FUNDS GENERAL REVENUE AND FULL-TIME-EQUIVALENT POSITIONS GENERAL REVENUE-DEDICATED FUNDS
APPROPRIATED $56.9 APPROPRIATED APPROPRIATED APPROPRIATED REQUESTED REQUESTED 704.3 704.3 704.3 704.3 704.3 APPROPRIATED REQUESTED $592.3 $52.7 APPROPRIATED APPROPRIATED APPROPRIATED REQUESTED REQUESTED $50.2 APPROPRIATED $557.8 $558.9 $554.1 $548.3 $49.3 REQUESTED $47.5
2015 2016 2017
$520.5 $549.8 $560.7 $553.6 $548.4 $45.0 $51.3 $49.5 $52.3 $47.5 580.4 600.5 704.3 654.0 654.0 EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Expended amounts were less than appropriated amounts in FY 2013 due to a lapse of $71.8 million in All Funds, which is comprised of a lapse of $40.3 million in federal funds, primarily for fewer awards of USDA food and nutrition grants based on demand from eligible grant recipients; and, a lapse of $26.4 million due to timing of awards for the Community Development Block Grant Program resulting in FY 2013 awards instead being obligated in FY 2012. In FY 2013, there was also a lapse of $5.2 million in General Revenue, primarily for revenue shortfalls in cost recovery programs and savings due to position vacancies. See Selected Fiscal and Policy Issue - House No. 1(e) for an explanation of the reduction of FTEs in 2016-17 recommendations.
Agency 551 2/9/2015 2 Section 2 Department of Agriculture Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
ECONOMIC DEVELOPMENT A.1.1 $22,501,039 $20,895,867 ($1,605,172) (7.1%) Recommendations reflect a decrease of $1.6 million in All Funds, which includes an increase in General Revenue ($12,840) and the Texas Economic Development Fund No. 183 ($0.8 million – Other Funds) in alignment with the agency’s baseline request, offset by a decrease from the General Revenue- Dedicated GO TEXAN Partner Program Account No. 5051 due to the decline of available fund balances ($1.0 million), and in one-time State Small Business Credit Initiative Federal Funds receipts ($1.3 million). See Rider Highlight - House No. 28. REGULATE PESTICIDE USE A.1.2 $10,260,938 $11,303,552 $1,042,614 10.2% Recommendations reflect an increase of $1 million in All Funds, which includes an increase in General Revenue reallocated from other strategies to cover cost recovery programs in alignment with the agency’s baseline request ($1.2 million) offset by a decrease in Federal Funds ($0.1 million). See Rider Highlight - House No. 28. INTEGRATED PEST MANAGEMENT A.1.3 $20,624,929 $19,025,160 ($1,599,769) (7.8%) Recommendations reflect a decrease of $1.6 million in All Funds, which includes a total decrease of $1.9 million in General Revenue which includes a decrease in alignment with the agency’s requested savings in the transfer to the Boll Weevil Eradication Foundation ($1 million); an agency-requested reallocation to other strategies ($0.9 million); and a decrease related to nutrition-related reductions ($41,473), offset by an increase of $0.3 million in Federal Funds. See Selected Fiscal and Policy Issue - House Nos. 1(a) and 2, and Rider Highlight - House Nos. 13 and 28. CERTIFY PRODUCE A.1.4 $336,889 $339,584 $2,695 0.8% AGRICULTURAL PRODUCTION DEVELOPMENT A.1.5 $8,353,668 $8,795,042 $441,374 5.3% Recommendations include an increase of $0.4 million in Federal Funds for specialty crop funding. Total, Goal A, MARKETS & PUBLIC HEALTH $62,077,463 $60,359,205 ($1,718,258) (2.8%)
SURVEILLANCE/BIOSECURITY EFFORTS B.1.1 $8,032,542 $8,000,552 ($31,990) (0.4%) Recommendations include decrease of $122,361 in General Revenue in alignment with the agency’s request, offset by an increase of $90,371 million in Federal Funds for fire ant pest control efforts.
Agency 551 2/9/2015 3 Section 2 Department of Agriculture Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments VERIFY SEED QUALITY B.1.2 $2,868,578 $3,122,798 $254,220 8.9% Recommendations include an increase of $0.3 million in General Revenue for cost recovery programs reallocated from other strategies in alignment with the agency’s baseline request. See Selected Fiscal and Policy Issue - House No. 1(a) and Rider Highlight - House No. 28. AGRICULTURAL COMMODITY REGULATION B.1.3 $2,603,453 $2,603,729 $276 0.0% STRUCTURAL PEST CONTROL B.1.4 $3,254,134 $3,268,184 $14,050 0.4% Total, Goal B, ENFORCE STANDARDS $16,758,707 $16,995,263 $236,556 1.4%
INSPECT MEASURING DEVICES C.1.1 $15,128,848 $15,469,912 $341,064 2.3% Recommendations include an increase of $0.1 million from General Revenue in alignment with the agency’s request, and an increase of $0.2 million in Federal Funds. Total, Goal C, ENSURE PROPER MEASUREMENT $15,128,848 $15,469,912 $341,064 2.3%
SUPPORT NUTRITION PROGRAMS D.1.1 $71,115,589 $61,196,114 ($9,919,475) (13.9%) Recommendations include an agency-anticipated decrease of $10.6 million in Federal Funds to administer child nutrition programs, offset by an increase of $0.7 million in Federal Funds for a new capital budget item, Schedule Optimization Software, in alignment with the agency’s request. While there is an overall decrease of professional services, client services, and grants in this program, the agency did budget an additional $4.3 million in salary increases for the FTEs in this strategy, which includes a 10 percent increase compared to 2015 spending levels. There is only $0.4 million in General Revenue in this strategy. See Selected Fiscal and Policy Issue – House No. 1(a)-(c). NUTRITION ASSISTANCE D.2.1 $806,663,320 $810,865,590 $4,202,270 0.5% Recommendations reflect an increase of $4.2 million in All Funds, which includes a decrease in General Revenue in alignment with the agency’s request ($0.9 million) offset by an increase of $1.4 million from General Revenue in additional funding for the ACE for Health program and an increase of $3.7 million in Federal Funds. See Selected Fiscal and Policy Issue - House No. 1(a) and 1(d). Total, Goal D, FOOD AND NUTRITION $877,778,909 $872,061,704 ($5,717,205) (0.7%)
RESEARCH AND DEVELOPMENT E.1.1 $800,000 $806,400 $6,400 0.8% Total, Goal E, FOOD AND FIBERS RESEARCH $800,000 $806,400 $6,400 0.8%
RURAL COMMUNITY AND ECO DEVELOPMENT F.1.1 $127,642,470 $126,570,388 ($1,072,082) (0.8%) Recommendations include a decrease of $1.1 million in expected Community Development Block Grants (Federal Funds).
Agency 551 2/9/2015 4 Section 2 Department of Agriculture Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments RURAL HEALTH F.1.2 $10,366,088 $9,737,460 ($628,628) (6.1%) Recommendations include an anticipated decrease of $0.6 million in Federal Funds for rural hospitals and agency administrative costs. Total, Goal F, RURAL AFFAIRS $138,008,558 $136,307,848 ($1,700,710) (1.2%) Grand Total, All Strategies $1,110,552,485 $1,102,000,332 ($8,552,153) (0.8%)
Agency 551 2/9/2015 5 Section 2 Department of Agriculture Summary of Recommendations - House, By Method of Finance -- 1 - General Revenue Fund
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
ECONOMIC DEVELOPMENT A.1.1 $1,957,197 $1,970,037 $12,840 0.7% All recommended General Revenue in this strategy is subject to cost recovery from the marketing and international trade program, along with administrative support for the program. See Selected Fiscal and Policy Issue – House Nos. 1(a), 3, and Rider Highlight – House No. 28.
REGULATE PESTICIDE USE A.1.2 $6,645,329 $7,814,480 $1,169,151 17.6% All recommended General Revenue in this strategy is subject to cost recovery from the regulation of agricultural pesticides, in alignment with the agency's baseline request. Appropriations also provide administrative support for this function. See Selected Fiscal and Policy Issue - House No. 1(a), 3, and Rider Highlight - House No. 28. INTEGRATED PEST MANAGEMENT A.1.3 $19,607,775 $17,702,186 ($1,905,589) (9.7%) Recommended General Revenue in this strategy includes a $14 million transfer to the Boll Weevil Eradication Foundation, pest management for the Mediterranean fruit fly, Mexican fruit fly and Obliqua programs ($3.3 million), and $0.4 million related to cost recovery for plant health and organic programs, along with administrative support for those programs. See Selected Fiscal and Policy Issue - House Nos. 1(a), 2 and 3, and Rider Highlight - House Nos. 14 and 29.
CERTIFY PRODUCE A.1.4 $336,889 $339,584 $2,695 0.8% AAll recommended General Revenue in this strategy is subject to cost recovery in the Texas Cooperative Inspection Program to inspect and grade fruits, vegetables peanuts and tree nuts. Appropriations also provide administrative support for this function. See Selected Fiscal and Policy Issue - House Nos. 1(a), 3 and Rider Highlight – House No. 28. AGRICULTURAL PRODUCTION DEVELOPMENT A.1.5 $5,046,556 $5,086,928 $40,372 0.8% Recommended General Revenue in this strategy includes $1.1 million related to cost recovery programs for plant health and related administrative support. Remaining General Revenue in this strategy funds oversight of commodity boards, feral hog abatement, livestock export facilities, Equine Incentive Program payments, and administrative support for those programs. See Selected Fiscal and Policy Issue - House Nos. 1(a), 3, 6, and Rider Highlight - House Nos. 14 and 29. Total, Goal A, MARKETS & PUBLIC HEALTH $33,593,746 $32,913,215 ($680,531) (2.0%)
Agency 551 2/9/2015 6 Section 2 Department of Agriculture Summary of Recommendations - House, By Method of Finance -- 1 - General Revenue Fund
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments SURVEILLANCE/BIOSECURITY EFFORTS B.1.1 $6,011,081 $5,888,720 ($122,361) (2.0%) VERIFY SEED QUALITY B.1.2 $2,868,578 $3,122,798 $254,220 8.9% All recommended General Revenue in this strategy is subject to cost recovery activities in the plant health program (verification of seed quality and seed testing) and administrative support for those activities. See Selected Fiscal and Policy Issue – House No. 1(a), 3 and Rider Highlight – House No. 28. AGRICULTURAL COMMODITY REGULATION B.1.3 $2,603,453 $2,603,729 $276 0.0% Recommended General Revenue in this strategy includes $1.7 million related to the cost recovery programs for egg quality regulation, grain warehouses, and the handling and marketing of perishable commodities, along with administrative support for those programs. The remaining General Revenue in this strategy is allocated to supplement these efforts and provide administrative support ($0.9 million). See Selected Fiscal and Policy Issue – House No. 1(a), 3 and Rider Highlight - House No. 28. STRUCTURAL PEST CONTROL B.1.4 $3,181,597 $3,123,110 ($58,487) (1.8%) All recommended General Revenue in this strategy is subject to cost recovery, in alignment with the agency's baseline request. See Selected Fiscal and Policy Issue - House No. 1(a), 3 and Rider Highlight - House No. 28.
Total, Goal B, ENFORCE STANDARDS $14,664,709 $14,738,357 $73,648 0.5%
INSPECT MEASURING DEVICES C.1.1 $13,676,824 $13,780,644 $103,820 0.8% Recommended General Revenue in this strategy includes $9.9 million related to cost recovery programs for inspection and certification of weights and measures, along with administrative support for these functions. Remaining General Revenue in this strategy is allocated to the testing of motor fuels for national quality standards, along with administrative support for that function ($3.9 million). See Selected Fiscal and Policy Issue - House No. 1(a), 3 and Rider Highlight - House No. 28. Total, Goal C, ENSURE PROPER MEASUREMENT $13,676,824 $13,780,644 $103,820 0.8%
SUPPORT NUTRITION PROGRAMS D.1.1 $465,425 $444,222 ($21,203) (4.6%)
Agency 551 2/9/2015 7 Section 2 Department of Agriculture Summary of Recommendations - House, By Method of Finance -- 1 - General Revenue Fund
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments NUTRITION ASSISTANCE D.2.1 $26,757,145 $27,215,160 $458,015 1.7% Recommended General Revenue in this strategy includes an agency-requested decrease of $0.9 million, offset by an increase of $1.4 million in additional funding for the ACE for Health program. See Selected Fiscal and Policy Issue – House No. 1(d) and Rider Highlight – House No. 27. Total, Goal D, FOOD AND NUTRITION $27,222,570 $27,659,382 $436,812 1.6% See Selected Fiscal and Policy Issue - House No. 1(a).
RESEARCH AND DEVELOPMENT E.1.1 $800,000 $806,400 $6,400 0.8% Total, Goal E, FOOD AND FIBERS RESEARCH $800,000 $806,400 $6,400 0.8%
RURAL COMMUNITY AND ECO DEVELOPMENT F.1.1 $0 $0 $0 0.0% RURAL HEALTH F.1.2 $1,572,141 $1,584,718 $12,577 0.8% Total, Goal F, RURAL AFFAIRS $1,572,141 $1,584,718 $12,577 0.8%
Grand Total, All Strategies $91,529,990 $91,482,716 ($47,274) (0.1%)
Agency 551 2/9/2015 8 Section 3
Texas Department of Agriculture Selected Fiscal and Policy Issues - House
1. House Bill 1 as Introduced
House Bill 1 as Introduced begins with the agency’s 2016-17 baseline request and incorporate the following adjustments:
a. Reduce General Revenue Reallocated from Child and Adult Nutrition Strategies: a decrease of $963,188 in General Revenue that the agency reduced in its baseline request in its two nutrition strategies and reallocated to other strategies, including several with cost recovery programs. Recommendations maintain the agency’s reductions in the nutrition strategies, because the $26.3 million from General Revenue in these strategies appropriated to the Texas Department of Agriculture (TDA) is not tied to federal maintenance of effort (MOE) requirements. Although TDA administers funds for the National School Lunch Program, and other nutrition programs, it is the Texas Education Agency (TEA) that continues to have the related MOE appropriation ($29.2 million in the 2016-17 biennium –for perspective, the FY 2014 MOE requirement was $14.3 million). The following table compares agency-requested reallocations and the recommended reduction:
Comparison of General Revenue Funding Levels 2016-17 Difference 2014-15 Requested Biennial % 2016-17 (Requested- Strategy/Goal Base Base Change Change Recommended Recommended) Economic Development (A.1.1) $1,957,197 $1,970,037 $12,840 0.7% $1,970,037 $0 Regulate Pesticide Use (A.1.2) $6,645,329 $7,814,480 $1,169,151 17.6% $7,814,480 $0 Integrated Pest Management (A.1.3) $19,607,775 $17,743,659 ($1,864,116) (9.5%) $17,702,186 ($41,473) Certify Produce (A.1.4) $336,889 $367,460 $30,571 9.1% $339,584 ($27,876) Agricultural Production Development (A.1.5) $5,046,556 $5,248,524 $201,968 4.0% $5,086,928 ($161,596) Total, Goal A, MARKETS & PUBLIC $33,593,746 $33,144,160 ($449,586) (1.3%) $32,913,215 ($230,945) HEALTH
Surveillance/Biosecurity Efforts (B.1.1) $6,011,081 $5,888,720 ($122,361) (2.0%) $5,888,720 $0 Verify Seed Quality (B.1.2) $2,868,578 $3,570,480 $701,902 24.5% $3,122,798 ($447,682) Agricultural Commodity Regulation (B.1.3) $2,603,453 $2,603,729 $276 0.0% $2,603,729 $0 Structural Pest Control (B.1.4) $3,181,597 $3,123,110 ($58,487) (1.8%) $3,123,110 $0 Total, Goal B, ENFORCE STANDARDS $14,664,709 $15,186,039 $521,330 3.6% $14,738,357 ($447,682)
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Comparison of General Revenue Funding Levels, Continued
2016-17 Difference 2014-15 Requested Biennial % 2016-17 (Requested- Strategy/Goal Base Base Change Change Recommended Recommended) Inspect Measuring Devices (C.1.1) $13,676,824 $13,780,644 $103,820 0.8% $13,780,644 $0 Total, Goal C, ENSURE PROPER $13,676,824 $13,780,644 $103,820 0.8% $13,780,644 $0 MEASUREMENT
Support Nutrition Programs (D.1.1) $465,425 $444,222 ($21,203) (4.6%) $444,222 $0 Nutrition Assistance (D.2.1) $26,757,145 $25,815,160 ($941,985) (3.5%) $25,815,160 $0 Total, Goal D, FOOD AND NUTRITION $27,222,570 $26,259,382 ($963,188) (3.5%) $26,259,382 $0
Research and Development (E.1.1) $800,000 $884,192 $84,192 10.5% $806,400 ($77,792) Total, Goal E, FOOD AND FIBERS $800,000 $884,192 $84,192 10.5% $806,400 ($77,792) RESEARCH
Rural Community and Economic Development $3,581,230 $3,581,230 $0 0.0% $3,581,230 $0 (F.1.1) Rural Health (F.1.2) $1,572,141 $1,791,487 $219,346 14.0% $1,584,718 ($206,769) Total, Goal F, RURAL AFFAIRS $5,153,371 $5,372,717 $219,346 4.3% $5,165,948 ($206,769)
Grand Total, All Strategies $95,111,220 $94,627,134 ($484,086) (0.5%) $93,663,946 ($963,188)
Notes: 1) Recommendations include a decrease of $963,188 from General Revenue that the agency had reduced in its baseline request for nutrition programs and reallocated to other strategies. See Selected Fiscal and Policy Issue - House Nos. 1(a), Rider Highlight - House No. 28. 2) General Revenue in Strategy F.1.1, Rural Community and Economic Development is from the General Revenue Match for Community Development Block Grants Account No. 8039. All other General Revenue in agency appropriations is General Revenue Fund 1.
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b. Reduction of Federal Funds in Child Nutrition Programs: Recommendations provide $844.4 million in Federal Funds in the two nutrition strategies, which includes an agency-requested reduction of $6.2 million. This amount reflects an increase of $3.7 million to biennialize child and adult food program funding, offset by a decrease of $9.9 million in nonrecurring amounts to implement the new nutrition standards established in the Healthy, Hunger-Free Kids Act of 2010. TDA contracted with the 20 regional Educational Service Centers to offer technical assistance and training to school districts implementing the new requirements. School staff received training on “meal patterns” (serving components and amounts), that must be provided to student for reimbursable breakfasts, lunches, suppers or snacks. Schools statewide are now operating under the new standards.
c. Create New Capital Budget Items in Accordance with Agency’s Request: In alignment with the agency’s original exceptional item requests, recommendations increase capital budget authority for two new information technology projects –one the agency indicated it could fund from General Revenue within baseline funding levels and another funded from an increase in Federal Funds:
Licensing and Regulation System: $600,006 from General Revenue in several strategies was allocated to a new capital budget project to replace the agency’s 11-year-old licensing system. The new system will use web-based technology to allow faster application processing and greater self-service capabilities for agency constituents. See Items not Included in Recommendations - House No. 7.
Schedule Optimization Software: an increase of $700,000 in Federal Funds in Strategy D.1.1, Support Nutrition Programs in Schools, was allocated to a new capital budget project to more efficiently schedule on-site reviews, training, and provide the technical assistance to local districts required by federal nutrition programs. The new application is expected to reduce travel costs.
d. Increase Funding for the ACE for Health Program. Recommendations include an increase of $1.4 million from General Revenue in Strategy D.2.1, Nutrition Assistance for the Access, Continuity and Education with Fruits and Vegetables for our Youth (ACE for Health) program. The program was established to increase the demand for produce and to assist families to make healthier nutrition choices by providing fresh produce and nutrition education to low income children and their families through school and after school programs. See Rider Highlight - House No. 27.
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e. Reduction in the FTE Cap to be More in Alignment with Historical Levels. Since both the transfer of non-disaster related functions of the Department of Rural Affairs to TDA and the implementation of cost recovery efforts in fiscal year 2012, TDA has consistently been under its FTE cap of 704.3 FTEs. An analysis of the historical number of employees by strategy supports a reduction of 50.3 FTEs:
Analysis of FTEs by Strategy and Fiscal Years Expended, Estimated, Budgeted, Requested and Recommended Exp Exp Bud Req Rec Strategy 2012 2013 Est 2014 2015 2017 2017 Difference Economic Development (A.1.1) 22.3 32.9 36.4 38.0 38.0 38.0 0.0 Regulate Pesticide Use (A.1.2) 62.0 69.6 70 78.3 78.3 73.0 (5.3) Integrated Pest Management (A.1.3) 11.7 26.4 25.3 34.4 34.4 28.0 (6.4) Certify Produce (A.1.4) 1.3 1.5 1.5 3.8 3.8 2.0 (1.8) Agricultural Production Development (A.1.5) 16.7 29.3 15.6 38.1 38.1 31.0 (7.1) Surveillance/Biosecurity Efforts (B.1.1) 69.8 45.7 54 54.2 54.2 54.0 (0.2) Verify Seed Quality (B.1.2) 13.0 12.2 14.1 21.5 21.5 15.0 (6.5) Agricultural Commodity Regulation (B.1.3) 15.9 16.7 18.1 24.5 24.5 19.0 (5.5) Structural Pest Control (B.1.4) 29.8 26.4 26.7 34.5 34.5 31.0 (3.5) Inspect Measuring Devices (C.1.1) 86.4 97.4 98.5 106.2 106.2 103.0 (3.2) Support Nutrition Programs (D.1.1) 139.2 140.2 149.9 157.5 157.5 156.0 (1.5) Nutrition Assistance (D.2.1) 45.0 46.0 42.1 56.6 56.6 48.0 (8.6) Research and Development (E.1.1) 1.1 1.6 0.0 0.0 0.0 0.0 0.0 Rural Community and Economic Development (F.1.1) 49.7 31.1 43.4 49.0 49.0 49.0 0.0 Rural Health (F.1.2) 7.0 3.4 4.9 7.7 7.7 7.0 (0.7) 570.9 580.4 600.5 704.3 704.3 654.0 (50.3)
Most of the 50.3 FTE positions reduced were scaled on the assumption that the highest number of FTEs in each strategy was still at least 5 percent under desired amounts, together with rounding to a whole number. To the extent TDA expects to need the services of additional FTEs for the two nutrition-related strategies (D.1.1 and D.2.1), the agency should be able to use Article IX, Sec. 6.10, Limitation on State Employment Levels, related to 100 percent federally funded FTEs. Also, Rider 8, Contingency to Increase the Full-Time-Equivalents (FTE) Cap for New Initiatives in the agency’s bill pattern provides additional FTE authority for certain invasive pest or disease eradication efforts.
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2. Maintain Reductions for Boll Weevil Eradication and the GO TEXAN Partner Program. Recommendations maintain $1,975,116 in General Revenue-Related reductions in alignment with the agency’s baseline request. The agency's 2016-2017 General Revenue-Related baseline request of $99.3 million was $1,975,116 less than the agency’s General Revenue-Related limit. The agency’s self-imposed reduction was in two items:
a. Boll Weevil Eradication: TDA indicates the Boll Weevil Eradication Foundation's efforts at active eradication in the current and previous biennia has resulted in reduced funding needs for ongoing maintenance in 2016-17, barring new outbreaks that can occur as a result of natural disasters such as hurricanes or infestations from neighboring countries ($1 million from General Revenue). After the reduction of $1 million, $14 million remains in the 2016-17 baseline for boll weevil eradication efforts. The agency expects the $14 million funding need in the 2016-17 to be the last installment for eradication purposes, unless there is a new outbreak.
b. GO TEXAN Partner Program: Also, the baseline amounts were sized to available balances of $114,884 in the General Revenue- Dedicated GO TEXAN Partner Program Account No. 5051 ($975,116). The GO TEXAN Partner Program was created by the 76th Legislature, 1999, to promote consumer awareness of Texas agricultural products. The revenue stream to Account No. 5051 was to consist of legislative appropriations, gifts, grants, donations, matching funds, interest earnings and the sale of GO TEXAN license plate accounts. The 83rd Legislature enacted HB 7, which redirected proceeds from the sale of GO TEXAN license plates from the General Revenue-Dedicated GO TEXAN Partner Program Account No. 5051 to Account No. 802 in Other Funds. With the transfer of license plate proceeds and the decline of other revenue sources, Account No. 5051 may become inactive. See Selected Fiscal and Policy Issue - House No. 5(b).
3. Status of Agency Efforts to Manage Cost Recovery Programs and New Reporting Requirement
Recommendations continue cost recovery programs for TDA’s marketing and regulatory programs. Prior to the 2012-13 biennium, the agency’s marketing and regulatory programs were largely non-self-supporting. In its efforts to close the budget gap projected for the 2012-13 biennium, the 82nd Legislature made appropriations for marketing and regulatory programs subject to collected fee revenues. In the 2014-15 biennium, $45.2 million in General Revenue for the agency’s marketing and regulatory programs was contingent on TDA generating revenue to cover the appropriations. Due to the continuation of fee amounts established prior to the 2014-15 biennium and unanticipated fluctuations in the number of constituents paying fees, the revenue target for fiscal year 2014 was not achieved and the revenue target for fiscal year 2015 is not expected to be achieved. Based upon 11 months of collections in FY 2014, a lapse of $7.8 million was made to 2014-15 appropriations in the strategies including cost recovery programs. Recommendations include the following:
Add rider language making $30.4 million in direct appropriations from General Revenue contingent on the agency’s generating enough revenues to cover both the direct and indirect costs (an additional $8.8 million) for each cost recovery program. A significant portion of the agency’s reallocation of $963,188 in General Revenue had supplemented strategies with cost recovery programs. In the same rider, require the agency to report actual and projected revenues to the Comptroller and the Legislative Budget Board for its cost recovery programs in the second, third, and fourth quarters of each fiscal year. See Selected Fiscal and Policy Issue - House No. 1(a) and Rider Highlight - House No. 29.
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Clarify that transferability provisions do not apply to amounts appropriated for cost recovery programs. See Rider Highlight No. 4.
Do not include supplemental amounts (non-fee generated funds) in revenue targets for cost recovery programs.
A portion of agency costs for indirect administration, which will include executive office functions, are embedded in each strategy with cost recovery programs. Also, based upon an analysis of amounts appropriated for nutrition strategies in 2014-15 compared to amounts budgeted, it would appear the agency used its transferability provisions to redirect $1.4 million in General Revenue away from the two nutrition strategies to other strategies, including strategies with cost recovery programs in the current biennium. General Revenue appropriations in 2014-15 for the nutrition strategies were $28.6 million, compared to the $26.2 million expended and budgeted reported in the agency’s LAR submission.
Relevant statutory provisions: Although TDA’s marketing and regulatory programs were not transitioned to cost recovery until the 2012-13 biennium, TDA has long set and collected fees for regulatory activities pursuant to statutory requirements. The 71st Legislature, 1989, enacted legislation to direct TDA to submit a proposed fee schedule in amounts that would recover all direct costs of administering each regulatory program to the Legislative Budget Board with each legislative appropriations request (Agriculture Code §12.0145). Further, the 74th Legislature, 1995 enacted legislation which expanded this requirement that the agency should collect sufficient fees to offset both direct and indirect costs of administering regulatory activities, unless those activities were exempted in the General Appropriations Act (Agriculture Code §12.0144).
4. Former General Revenue-Dedicated Young Farmer Loan Guarantee Account No. 5002.
TDA is requesting that $205,741 be transferred from General Revenue into an Other Funds account in the Texas Agriculture Fund No. 683 (Fund No. 683). The amount is related to swept balances from the dormant General Revenue-Dedicated Young Farmer Loan Guarantee Account No. 5002 (Account No. 5002). Recommendations include $993,669 each fiscal year from Fund No. 683 in the 2016-17 biennium, which does not include TDA’s request. See Items Not Included in the Recommendations - House No. 12.
The 76th Legislature abolished Account No. 5002 and redirected its revenue stream from farm truck license fees to the new Texas Agriculture Fund No. 683 (Other Funds). Because the rededication was not exempted from the funds consolidation bill, this revenue stream instead was deposited to General Revenue. Although Account No. 5002 was abolished, the Comptroller maintained records of Account No. 5002 to identify the funds moved to General Revenue.
The 77th Legislature recreated the Young Farmer Loan Guarantee Account within the Texas Agriculture Fund No. 683, along with the revenue stream from farm truck license fees. This rededication was exempted from funds consolidation. Accordingly, farm truck license fees have been a revenue stream to Fund No. 683 since fiscal year 2002.
The 81st Legislature appropriated a portion of balances from the administrative Account No. 5002 maintained by the Comptroller to TDA in the 2010- 11 biennium ($213,168 out of an estimated $564,000 available). The agency did not seek an appropriation from this source in either the 82nd or the 83rd Legislative session through its Legislative Appropriations Request.
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In February 2014, the Comptroller swept the remaining $205,741 from the dormant Account No. 5002 into regular unappropriated balances in the General Revenue Fund. The dormant Account No. 5002 was officially closed.
5. Farm and Ranch Finance Program Fund 575 and License Plate Trust Fund Account No. 802 Recommendations do not include appropriations in 2016-17 from two Other Funds accounts, in alignment with the agency’s request:
a. Farm and Ranch Finance Program Fund No. 575 (Fund 575): The fund was created by the 69th Legislature to receive proceeds from the sale of Veterans Farm and Ranch Finance Program Bonds. The agency reports expenditures of $41,725 in fiscal year 2014 depleted the remaining balances in Fund 575. The 84th Legislature should evaluate whether the fund officially can be abolished.
b. License Plate Trust Fund Account No. 802 (Account No. 802). The 83rd Legislature enacted HB 7, which redirected proceeds from the sale of GO TEXAN license plates from the General Revenue-Dedicated GO TEXAN Partner Program Account No. 5051 to Account No. 802 in Other Funds. Although the agency expects to spend $10,000 from this source in the 2014-15 biennium, it did not request license plate receipts in the 2016-17 biennium. Despite the agency not requesting these amounts, it is anticipated that under Article IX, Sec. 13.05, Appropriations of Specialty License Plate Receipts, the agency can access proceeds from plate sales for appropriate expenditures in the GO TEXAN partner program under estimated appropriation authority.
6. Equine Incentive Program
The 81st Legislature enacted HB 1881, which created an equine incentive program to provide an incentive for owners of Texas-based show horses to enter the horses as participants in horse competitions. The program authorized TDA to collect a $30 fee from owners participating in the program, upon the birth of a foal expected to compete in future years. Program receipts are not available for horse show awards until 3-7 years after the foal’s birth, when the horse is old enough to compete in events. While appropriations included estimated collections of at least $25,000 per fiscal year, actual collections at least since fiscal year 2012 have fallen short of that amount. The 82nd Legislature appropriated the $37,260 the agency said it had collected in the 2010-11 biennium, but it would appear that a portion of that amount must not have been expended and contributes toward the $40,459 in requested balances in FY 2016.
Recommendations for the Equine Incentive Program direct TDA to expend up to the $40,459 identified by the agency as available from prior year balances for incentive pay outs from amounts appropriated, and do not add any additional funding for this purpose. It is possible TDA will not expend the full $40,459 in the 2016-17 biennium, given that eligible foals will continue to need to reach an appropriate age to compete which may not occur in the 2016-17 biennium. The following table traces appropriations, collections, expended and requested amounts from the program’s inception to the 2016-17 biennium:
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Equine Incentive Program, Appropriations and Collections Expended 2010 to Requested 2017 Exp Exp Rec 2010 2011 Exp 2012 Exp 2013 Est 2014 Bud 2015 BL 2016 BL 2017 20163 Rec 2017 Appropriation Authority Estimated Collections NA NA $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 120 $ 120 $ 120 $ 120 Prior Year Balances NA NA $ 37,260 $ - $ - $ - $ - $ - $ 40,459 $ - NA NA $ 62,260 $ 25,000 $ 25,000 $ 25,000 $ 120 $ 120 $ 40,579 $ 120
Actual Collections Est. $37,260 1 $ 9,653 $ 750 $ 120 TBD NA NA NA NA Agency Expenditures2 NA NA $ 350 $ 531 $ 274 $ - NA NA NA NA
Notes 1Agency reported estimates. The Comptroller cannot independently verify these amounts. Amounts for 2012-13 were reported by the agency in the annual Non- Tax Revenue Survey or in the 2016-17 LAR submission. 2The agency lapsed a portion of appropriation authority for the Equine Incentive Program as part of its 2012-13 and 2014-15 base reconciliation cost recovery lapses.
3Although the agency submitted a budget request that was $1,975,116 in General Revenue-related amounts under its General Revenue-Related limit, the agency did not use the appropriation authority under this limit to access the $40,459 requested in agency Items not Included in the Recommendations – House No. 14.
See Items Not Included in the Recommendations – House No. 14 for agency requests related to the Equine Incentive Program, and Rider Highlight - House No. 14. Note that the agency is requesting that balances of collections for this program be provided to the agency in a dedicated account, and that collections be carried forward between biennia.
7. Budget Authority.
Recommendations limit certain budget flexibilities and remove exemptions from certain general provisions of the General Appropriations Bill to allow the legislature to consider continuation of this authority. Recommendations modify the following riders from the agency's bill pattern:
a. Rider 2, Capital Budget. Recommendations modify the rider to remove the exemption from limitations on transferability in Article IX, §14.03, Limitation on Expenditures – Capital Budget. Article IX, §14.03, Limitation on Expenditures – Capital Budget, provides the agency certain discretionary transfer and expenditure flexibility related to capital budget purposes. Formerly the agency had unlimited authority to increase expenditures, subject to a cap of 125 percent of each year’s aggregate capital budget appropriation. The agency may exceed capital budget provisions with approval of the Governor and the Legislative Budget Board. See also Rider Highlight – House No. 2 and Items not Included in the Recommendations – House No. 16. Sec 3a_Agency 551_New.docx 2/9/2015
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b. Rider 4, Transfer Authority. Article IX, §14.01, Appropriation Transfers, allows the agency to transfer up to 20 percent from one appropriation item to another appropriation item at the agency’s discretion, except for transfers to and from cost recovery programs. The agency may exceed the 20 percent discretionary transfer authority with approval of the Governor and the Legislative Budget Board. See also Selected Fiscal and Policy Issue – House No. 17.
Rider 6, Unexpended Balances Within the Biennium. Recommendations remove the rider authority previously allowing the agency to carry forward unexpended balances from the first fiscal year of the biennium to the second. Article IX, §14.05, Unexpended Balance Authority Between Fiscal Years Within the Same Biennium, provides the same authority with Legislative Budget Board approval. See also Selected Fiscal and Policy Issue – House No. 18.
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Texas Department of Agriculture Performance Measure Highlights - House
Expended Estimated Budgeted Recommended Recommended 2013 2014 2015 2016 2017 • Number of Pounds of Fruits, Vegetables, 2.94 2.86 2.67 2.67 2.67 Peanuts and Nuts Inspected (In Billions)
Measure Explanation: TDA inspects shipments of fresh produce and certify quality under USDA standards before the commodities are offered for sale. Demand for imported avocados, tomatoes, citrus and onion from Mexico coupled with a large Texas peanut harvest has contributed to the increase in pounds inspected in fiscal years 2013 and 2014.
• Number of Egg Packer, Dealer, Wholesaler, 2,025 2,036 2,100 2,100 2,100 and Retailer Inspections Conducted
Measure Explanation: TDA inspects eggs to determine if they are in compliance with state and federal standards.
• Number of Licenses Renewed (Individuals 16,512 19,219 14,100 14,100 14,100 and Businesses)
Measure Explanation: In fiscal years 2013 and 2015 more individuals and business renewed structural pest control licenses than are expected to renew such licenses in fiscal year 2015 and out years.
• Number of Compliance Reviews Conducted 52 459 430 430 430 in National School Lunch and School Breakfast Programs
Measure Explanation: Under recent federal regulation changes, beginning in fiscal year 2014 compliance reviews are to be conducted at least once in every three-year period, rather than once in every five-year period.
• Average Number of Children and Adults 377,256 1,620,956 1,550,000 1,550,000 1,550,000 Served Meals through Child and Adult Care Food Program Per Day
Measure Explanation: The agency depressed economic conditions and the broadening of federal criteria have led to increased program eligibility and participation, especially in demand for afterschool programs serving meals. Recommendations modify FY 2015 budgeted and 2016-17 targeted amounts.
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Texas Department of Agriculture FTE Highlights - House
Expended Estimated Budgeted Recommended Recommended Full-Time-Equivalent Positions 2013 2014 2015 2016 2017 Cap 704.3 704.3 704.3 654.0 654.0 Actual/Budgeted 580.4 600.5 704.3 NA NA
Schedule of Exempt Positions (Cap)
Commissioner of Agriculture $137,500 $137,500 $137,500 $137,500 $137,500
See Selected and Fiscal Policy Issue - House No. 1(e) for an explanation of recommended FTE levels.
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19 Section 3 Department of Agriculture Summary of Federal Funds (Estimated 2014) - House TOTAL = $493.1M
Community Development Block Grants State Administrative $62.6M or 13% Expenses for Summer Food Child Nutrition Service Program $27.9M or 6% National School for Children Lunch Program $47.2 or 10% $11.4M or 2%
Fresh Fruit and Vegetable Program $7.6M or 2%
Other $41.0M or 8% Emergency Food Assistance Program $6.0M or 1% School Breakfast Program Child and Adult Care $5.7M or 1% Food Program $314.4M or 64% All Others $10.4M or 2%
Note: Amounts and percentages shown may sum greater/less than actual total due to rounding.
Agency 551 20 Section 3 Department of Agriculture Significant Federal Funds Changes - House
2014-15 2016-17 Recommended CFDA No. Program Name Base Recommended Over/(Under) Base Comments
10.025.000 Plant and Animal Disease, Pest Control, $2,524,452 $2,485,362 ($39,090) 10.025.002 Plant and Animal Disease/Pest Control Fire Ant $111,702 $197,284 $85,582 10.163.000 Market Protection and Promotion $2,366,000 $2,312,000 ($54,000) 10.169.000 Specialty Crop Block Grant Program $3,275,013 $3,708,114 $433,101 10.171.000 Organic Certification Cost Share Programs $317,600 $635,200 $317,600 10.553.000 School Breakfast Program $10,895,369 $10,458,970 ($436,399) 10.555.000 National School Lunch Program $22,787,258 $22,826,000 $38,742 10.556.000 Special Milk Program for Children $46,972 $67,772 $20,800 10.558.000 Child and Adult Care Food Program $632,898,077 $636,922,402 $4,024,325 10.559.000 Summer Food Service Program for Children $94,390,433 $94,386,594 ($3,839) 10.560.000 State Administrative Expenses for Child Nutrition $55,499,046 $44,899,656 ($10,599,390) 10.565.000 Commodity Supplemental Food Program $4,745,000 $4,750,000 $5,000 10.568.000 Emergency Food Assistance Program $11,969,167 $11,975,370 $6,203 10.572.000 WIC Farmers Market Nutrition Program $2,020,122 $2,020,722 $600 10.576.000 Senior Farmers Market Nutrition Program $153,777 $242,600 $88,823 10.582.000 Fresh Fruit and Vegetable Program $15,151,118 $15,152,236 $1,118 10.601.000 Market Access Program $5,000 $0 ($5,000) 14.228.000 Community Development Block Grants $124,061,240 $122,989,158 ($1,072,082)
Agency 551 21 21.000.004 State Small Business Credit Initiative $1,303,291 $0 ($1,303,291) 59.061.000 State Trade and Export Promotion Pilot Grant Program $102,762 $0 ($102,762) 93.241.000 State Rural Hospital Flexibility Program $1,316,979 $1,344,618 $27,639 93.301.000 Small Rural Hospital Improvement Grant Program $1,844,514 $1,533,026 ($311,488) 93.913.000 Grants to States for Operation of Offices $717,356 $360,000 ($357,356)
Agency 551 22 Section 4 Texas Department of Agriculture Performance Review and Policy Report Highlights - House
Savings/ Gain/ Fund Included Reports & Recommendations (Cost) (Loss) Type in Introduced Bill Action Required During Session
NO RELATED RECOMMENDATIONS
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Texas Department of Agriculture Rider Highlights - House
2. Capital Budget. Recommendations modify the rider to remove the exemption from limitations on transferability in Article IX, §14.03, Limitation on Expenditures – Capital Budget [see Selected Fiscal and Policy Issue – House No. 7]. Recommendations also modify the rider to include two new capital budget projects: a) Licensing and Regulation, a $600,006 project the agency indicated it could fund within its baseline request from General Revenue; and b) Schedule Optimization Software, a project for nutrition programs funded by an increase of $700,000 in federal funds. (See Selected Fiscal and Policy Issue - House No. 1(c) and Items Not Included in the Recommendations - House No. 1.) Also added were line items for PC, Laptop, and Tablet purchases and Network equipment.
4. Transfer Authority. Recommendations delete provisions providing TDA with unlimited transferability of appropriations between strategy line items. Instead TDA will have transfer authority available to all agencies for its other strategies under Article IX, Sec. 14.01, Appropriation Transfers, except for the agency’s cost recovery programs. Recommendations amend the rider to exclude cost recovery programs from the unlimited transferability authority in this rider. The revision would both exclude appropriations for cost recovery programs from being transferred to other programs and exclude appropriations from other programs from being transferred to cost recovery programs. See Selected and Fiscal Policy Issues - House No. 3 and 7.
6. (former) Unexpended Balances Between Fiscal Years within the Biennium. Recommendations delete the rider. See Selected Fiscal and Policy Issue - House No. 7.
7. (former) Interagency Contract: Oyster Promotions and Education. Recommendations delete the rider. The 83rd Legislature enacted HB 1903, which removed oyster marketing and promotion provisions from the Health and Safety Code, which authorized fees for oyster marketing. Language referencing TDA’s duties related to oyster marketing was also removed from the Agriculture Code.
8. (new) Food and Nutrition Programs. Recommendations modify the rider to reflect recommended funding levels of General Revenue and Federal Funds for nutrition assistance and child nutrition programs. See Selected Fiscal and Policy Issue – House No. 1(a) and 1(b).
9. (former) Contingency to Increase the Full-Time-Equivalents (FTE) Cap for New Initiatives. Recommendations delete the rider, because it is somewhat duplicative of Article IX, Sec. 6.10(h) which authorizes new FTEs funded 100 percent from federal funds to be exempt from an agency’s FTE cap, except that the Article IX provision includes the State Auditor’s Office in the list of those agencies that must be notified (Comptroller, LBB, and Governor’s Office) if the agency employs new 100-percent federally funded FTEs, and specifies the authority is for programs related to surveying, controlling or eradicating invasive pests or disease. The deletion of the rider will clarify the agency can use Article IX provisions for all of its programs, in addition to programs for pest or plant diseases.
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13. (former) Boll Weevil Eradication. Recommendations include a decrease from $15 million to $14 million in the biennial transfer to the Boll Weevil Eradication Foundation in alignment with the agency’s baseline request. TDA reports the $14 million appropriated in 2016-17 is expected to be the final installment of active eradication efforts. In future years, smaller amounts will be needed for maintenance on monitoring against reinfestation. See Selected Fiscal and Policy Issue – House No. 2.
14. (new) Equine Incentive Program. Recommendations modify the rider to reflect estimated program collections ($120 per fiscal year) in alignment with agency-requested amounts in the baseline. Recommendations also direct the agency to expend up to $40,459 from funds appropriated for incentive payments to eligible horse owners, based upon the agency’s estimate of balances of prior year collections. See Selected and Fiscal Policy Issue - House No. 6 and Items Not Included in the Recommendations - House No. 14.
15. (former) Appropriation: Marketing: Recommendations replace the rider specific to marketing cost recovery efforts with new Rider No. 29. See also Selected Fiscal and Policy Issue - House No. 3.
16. (new) Zebra Chip Research. Recommendations remove unexpended balance authority within the biennium for this program. See Selected Fiscal and Policy Issue – House No. 7 and Rider Highlight – House No. 6.
16. (former) Appropriations Limited to Revenue Collections: Regulatory. Recommendations replace the rider specific to cost recovery efforts for certain regulatory programs with new Rider No. 29. See also Selected Fiscal and Policy Issue - House No. 3.
17. (new) Administrative Allocation: Councils of Governments. Recommendations update the rider to reflect that local officials serving the Council of Governments include officials other than elected officials.
19. (former) Additional Appropriation Authority: Selected Regulatory Programs. Recommendations replace the rider specific to cost recovery efforts for certain regulatory programs with new Rider No. 29. See also Selected Fiscal and Policy Issue - House No. 3.
27. (new) ACE for Health Programs. Recommendations update the rider to reflect recommended funding levels. See also Selected Fiscal and Policy Issue – House No. 1(d).
28. Appropriations Limited to Revenue Collections: Cost Recovery Programs. Recommendations consolidate cost recovery programs in former Riders 15, 16 and 19 into one rider and reflect recommended collection levels. Recommendations also identify cost recovery program amounts by strategy and include a new reporting requirement in which the agency reports actual and projected collections to the Comptroller and the LBB in the second, third, and fourth quarters of each fiscal year. See also Selected Fiscal and Policy Issue - House No. 3 and Rider Request No. 29 in Agency Exceptional Items.
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33. (former) Contingency for Legislation Relating to Texas Economic Development Fund at Texas Department of Agriculture. Recommendations modify the rider to reflect appropriations from the Texas Economic Development Fund No. 683 being included in the agency’s baseline request.
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26 Section 6 Department of Agriculture Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds Agency Exceptional Items - In Agency Priority Order 1. Reappropriation of Baseline Budget. $ 963,188 $ 963,188 Restore reduction of General Revenue reallocated from Child and Adult Nutrition strategies. See Selected Fiscal and Policy Issue - House No. 1(a). Includes a request to remove $400,000 from capital budget authority for a licensing and regulation software upgrade and to return this amount to operating expenses in several strategies.
2. Promotion of Texas Agriculture $ 20,920,817 $ 20,920,817 Funding to promote Texas agricultural products both in-state and abroad, and to provide marketing assistance to Texas producers and rural communities, including 30.0 FTEs (Strategy A.1.1, Economic Development). Activities would include: a) Enhancing the GO TEXAN certification program, which promotes Texas products, communities and wildlife services ($11,679,751); b) Development of agriculture ($3,241,102); c) Development of foreign markets ($3,728,566); d) Compiling and reporting of state agricultural statistics ($881,398); and, e) Administering the certification of retirement communities, under statutory provisions which require TDA to promote Texas as a retirement destination ($1,390,000). 3. Restore Mandated Marketing Services $ 4,188,020 $ 4,188,020 Funding to restore a portion of cost recovery lapses in the 2014-15 biennium with non-cost recovery General Revenue to maintain basic economic development/marketing services on behalf of Texas agricultural products (including the GO TEXAS program, in which constituent membership is voluntary) and Texas certified-retirement communities (Strategy A.1.1, Economic Development).
Agency 551 2/9/2015 27 Section 6 Department of Agriculture Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds 4. Consumer Protection - Weights, Measures and Fuel Quality $ 2,810,946 $ 3,384,324 Funding to expand licensing and inspection of fuel pumps, grocery store scales, large-capacity vehicle scales, liquefied petroleum gas meters, and precious metal scales, as well as ensuring packaged commodities are properly labeled and contain the declared amount of contents when sold, including 31.0 FTEs (Strategy C.1.1, Inspect Measuring Devices). A portion of the General Revenue requested would be collected revenue ($1.3 million).
5. GO TEXAS Partner Program (GOTEPP) Business Development Grants $ 1,000,000 $ 1,000,000 Funding from General Revenue to provide GO TEXAN small business partners and other members with matching grants for promotional activities such as website development for e-commerce, trade show participation and packaging redesign (Strategy A.1.1, Economic Development). Unexpended balance authority within the biennium is requested.
6. Fraud Investigation Team $ 1,213,514 $ 1,213,514 Funding for a new fraud investigation team to investigate and prepare court-ready cases involving fraud affecting the Texas food supply chain as it travels from farm to table. The new team would also support civil enforcement actions of the agency. Funding would provide for 6.0 FTEs in fiscal year 2015 and an additional 2.0 FTEs in fiscal year 2016 (Strategy B.1.3, Agricultural Commodity Regulation).
7. Replacement of Legacy System - Licensing and Regulatory $ 8,308,535 $ 8,308,535 Funding to develop a new licensing and regulatory system to support agency programs and constituents to replace the current legacy system, which has been in place for twelve years. Primary functions would include an online application portal for constituency access to licenses and programs, maintaining records for TDA licensees, enforcing regulatory controls, and monitoring compliance of licensees, all with enhanced security protections. See Selected Fiscal and Policy Issue - House No. 1(a) and 1(c), and Rider Highlight – House No. 2.
Agency 551 2/9/2015 28 Section 6 Department of Agriculture Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds 8. Access to Rural Healthcare $ 2,479,918 $ 2,479,918 Funding for new programs to increase rural Texan’s ability to access healthcare in their respective communities, including telemedicine, electronic health records, mobile service delivery systems, including 15.0 FTEs (Strategy F.1.2, Rural Health).
9. Information Systems Security Strategy $ 648,372 $ 648,372 Funding to implement immediate, near-term, and mid-term recommendations to improve the security of the agency’s information technology systems.
10. Water Quality $ 866,000 $ 866,000 Funding for two items related to water use and conservation (Strategy E.1.1, Research and Development): a) Agricultural Water Use Survey. The agency is requesting that $100,000 be included in the 2015 Supplemental Bill for an initial water survey, with ongoing costs to maintain the resulting data of $100,000 per fiscal year in the 2016-17 biennium, which is reflected in this request. (Should the 2015 request not be funded, a total of $287,500 is requested.)
b) Nutrient Tracking Tool for (NTT) Texas. Funds to make the NTT available in a web-based interface to farmers, crop consultants, government officials and the general public to estimate the impact of conservation practices on nutrient and sediment losses and flow from agricultural fields ($333,000 per fiscal year).
11. Consumer Protection - Structural Pest Control $ 780,606 $ 780,606 Funding for additional inspection and program support resources to establish risk-based inspection protocols and decrease the number of violations found during structural pest control inspections, including 8.0 FTEs (Strategy B.1.4, Structural Pest Control).
Agency 551 2/9/2015 29 Section 6 Department of Agriculture Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds 12. Replenishment Young Farmers Loan Program Swept Funds $ 205,741 $ 205,741 Funds from General Revenue for the Texas Agricultural Finance Authority (TAFA) to assist young farmers with low interest loans (Strategy A.1.1, Economic Development). The requested amount is related to swept balances from the dormant General Revenue-Dedicated Young Farmer Loan Guarantee Account No. 5002. See Selected Fiscal and Policy Issue - House No. 4. 13. Grazinglands Research $ 1,109,464 $ 1,109,464 Funds to research intensive rotational grazing practices to benefit Texas cattle producers with the latest alternative and efficient management of rangeland (Strategy E.1.1, Resarch and Development).
14. Texas Equine Incentive Program $ 40,459 $ 40,459 Requested appropriation of the balance of prior year collections in the Equine Incentive Program to make incentive payments to eligible horse owners (Strategy A.1.5, Agricultural Production Development). See Selected Fiscal and Policy Issue - House No. 6 and Rider Highlight - House No. 15.
15. Zebra Chip Research $ 1,600,000 $ 1,600,000 Funds to increase the Zebra Chip Grant from $0.8 million for the biennium to $2.4 million for the biennium (an increase of $1.6 million) from General Revenue to supplement ongoing research at the Texas A&M AgriLife on the Zebra Chip disease affecting potatoes in Texas (Strategy E.1.1, Research and Development).
16. Rider 2, Capital Budget
The agency requests restoration of unlimited transferability between items of appropriation, up to an aggregate $ - $ - amount of 125 percent of appropriated amounts. Also, the agency requests $400,000 in capital budget authority related to an upgrade of the agency's licensing and regulatory system be removed from the capital budget and returned to strategy-level opertating expenses. See Selected Fiscal and Policy Issue - House No. 1(c) and Items not Included in the Recommendations - House No. 7.
Agency 551 2/9/2015 30 Section 6 Department of Agriculture Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds 17. Rider 4, Transfer Authority The agency is requesting that unlilmited transferability of appropriations between strategies be restored. See $ - $ - Selected Fiscal and Policy Issue - House Nos. 3 and 7, and Rider Highlight - House No. 4.
18. Rider 6 (former), Unexpended Balances Within the Biennium. The agency requests restoration of authority to carry forward unexpended balances between fiscal years within the biennium. See Selected Fiscal and Polisy Issue - House No. 7.
19. Rider 9 (former), Contingency to Increase the Full-Time-Equivalents (FTE) Cap for New Initiatives. The agency requests retaining this rider in the agency’s bill pattern, even though Article IX, Sec. 6.01(h) provides duplicative authority, although with a reporting requirement.
20. Rider 29, Appropriations Limited to Revenue Collections: Cost Recovery Programs. $ - $ - The agency is requesting that agency marketing efforts be removed from cost recovery requirements, because marketing efforts are not a regulatory function and participation in agency programs is voluntary. The agency will continue to collect fees from program participants. See Selected Fiscal and Policy Issue – House No. 3 and Rider Highlight – House No. 29.
Total, Items Not Included in the Recommendations $ 47,135,580 $ 47,708,958
Agency 551 2/9/2015 31 Section 7 Department of Agriculture Summary of 10 Percent Biennial Base Reduction Options - House
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Intro Bill? Loss GR/GR-D Total
1 GO TEXAN Partner Program Reduces grant program's total funding by the instructed 10%. $11,480 $11,480 $0 10% No 2 Rural Health Capital Improvement Reduces grant program's total funding by the instructed 10%. $460,710 $460,710 $0 10% No Grant/Loan Program 3 3Es Nutrition Education Grant Program Reduces grant program's total funding by the instructed 10%. $90,000 $90,000 $0 10% No 4 ACES for Health Grant Reduces grant program's total funding by the instructed 10%. $60,000 $60,000 $0 10% No 5 Boll Weevil Eradication Reduces grant program's total funding by the instructed 10%. $1,400,000 $1,400,000 $0 10% No 6 Brighter Bites Grant Reduces grant program's total funding by the instructed 10%. $60,000 $60,000 $0 10% No 7 Feral Hog Abatement Reduces grant program's total funding by the instructed 10%. $90,000 $90,000 $0 10% No 8 Home Delivered Meals Reduces grant program's total funding by the instructed 10%. $1,800,000 $1,800,000 $0 10% No 9 Surplus Ag (Food Banks) Grant Reduces grant program's total funding by the instructed 10%. $290,000 $290,000 $0 10% No 10 Zebra Chip Research Reduces grant program's total funding by the instructed 10%. $80,000 $80,000 $0 10% No 11 TDA Agency wide cost recovery savings Reduces agency - wide cost recovery program's total funding by the instructed $2,814,180 $2,814,180 $0 10% No 10%. 12 TDA Non-cost recovery agency wide Reduces agency - wide non- cost recovery program's total funding by the $2,676,960 $2,676,960 $0 4% No savings incremented required to get to the instructed 10% 13 Boll Weevil Eradication Addl Amt Reduces grant program's total funding by the instructed additional 10%. $100,000 $100,000 $0 0.7% No 14 GO TEXAN Additional Amount Reduces grant program's total funding by the instructed additional 10%. $97,534 $97,534 $0 85% No
TOTAL, 10% Reduction Options $10,030,864 $10,030,864 $0
Agency 551 2/9/2015 32 Section 7 Department of Agriculture Summary of 10 Percent Biennial Base Reduction Options - House
Agency 10% Reduction Options by Category of Reduction
Programs - Service Reductions (Contracted) 1.6%
Administrative - Operating Expenses Programs - Service Reductions 26.7% (Other) 28.1%
Programs - Grant/Loan/Pass- through Reductions 43.7%
Agency 551 2/9/2015 33 TEXAS DEPARTMENT OF AGRICULTURE COMMISSIONER SID MILLER
House Appropriations Subcommittee (Art. VI) Budget Hearing - February 16, 2015
The mission of the Texas Department of Agriculture (TDA) is to partner with all Texans to make Texas the nation's leader in agriculture, fortify our economy, empower rural communities, promote healthy lifestyles, and cultivate winning strategies for rural, suburban and urban Texas through exceptional service. Goals at TDA include ensuring the agriculture industry plays a vital role in developing future state water plans; growing trade opportunities for farmers and ranchers; and increasing consumer protection enforcement. The agency is also focused on making sure Texans understand Texas Agriculture Matters! TEXAS DEPARTMENT OF AGRICULTURE EXECUTIVE SUMMARY
Attached are the Legislative Appropriations Request (“LAR”) - Exceptional Items (“EIR”) for the 2016-17 Biennium. We have prioritized the requests in order of criticality to our Agency in order to meet our mission to partner with all Texans to make Texas the nation’s leader in agriculture, fortify our economy, empower rural communities, promote healthy lifestyles and cultivate winning strategies for rural, suburban and urban Texas through exceptional service.
Philosophy of new administration
Agriculture touches the lives of every Texan through the clothes we wear, the fuel in our vehicles, and the nutritious foods our children need to grow. Texas agriculture matters in our personal lives. As a $115 billion industry employing one out of every seven Texans, Texas agriculture also matters to our economic prosperity. We are national leaders in wool, cotton, and beef with an international market waiting for cultivation. A robust Texas Department of Agriculture is vital to Texas’ success.
Our vision for Texas agriculture is one of sufficient and clean water resources; abundant and sustainable land for grazing and farming; new and traditional agribusinesses growing our local economies; consumer trust in the content and quality of Texas food and fuel; rural communities with quality healthcare within easy reach; and, a border secure against contamination and infestation of our crops and livestock. To reach this vision, serious issues facing the agriculture industry must be addressed.
With new management comes new ways of doing business and a new perspective on agency services. The executive team performed a high level assessment of TDA program areas, identifying gaps in service and performance. There are five key areas, four of which are the primary focus of our administration, needing immediate attention: • Marketing – five program requests that promote and protect Texas markets ($27,749,296) • Consumer Protection – three program requests that reduce risk of fraud ($5,378,444) • Water & Land Management – two program requests that protect Texas’ resources ($1,975,464) • Rural Affairs – two program requests that open access to healthcare and to young farmer funding ($2,685,659) • Technology – two programs that update and secure our electronic consumer gateways to TDA services (8,956,907).
For TDA to provide the essential services Texans need today, we need our general revenue funding restored from the recession driven cuts to the agency’s budget since 2011, including the reductions from TDA’s submitted LAR 2016-17 of $963,188. The $47,708,958 requested for the next biennium may not be the largest from a state agency this session, but it will make a large difference in TDA’s ability to perform its statutory duties.
We cannot meet legislative expectations without legislative help. Please partner with TDA in continuing to grow this vital part of our economy and our lives by funding the programs necessary to Texas’ agricultural success.
TDA - LAR 2016-17 - Budget Presentation - Page 1 of 15 TEXAS DEPARTMENT OF AGRICULTURE EXECUTIVE SUMMARY
SUMMARY OF EXCEPTIONAL ITEM REQUESTS
We have attached to the Executive Summary a brief description of each of the exceptional item requests, with cost particulars and the risks associated with not funding the initiatives (Exhibit A).
A. Marketing Marketing and economic development are closely linked in statute and in agency practice.1 As we promote, develop, study, report, and publicize Texas’ great agricultural quality and diversity, we increase opportunities for trade; citizens become savvy consumers; agricultural businesses grow; a new generation makes agriculture their career path; and Texas farms fill our tables with quality foods. Growing the Texas agricultural market is critical to Texas’ economic success. TDA’s marketing efforts have not fully recovered from prior budget reductions. We have submitted five marketing related exceptional item requests that will: • Provide funds to educate and develop domestic and foreign markets • Provide funds to continue the successful GO TEXAN product branding program • Fund research on a disease affecting the health of Texas’ potato crops • Continue a program that encourages growth in Texas horse industry.
The following are our marketing requests:
Priority Requests 2016 2017 Biennium 2 Promotion of Texas Agriculture 10,425,733 10,495,084 20,920,817 3 Restore Mandated Marketing Services 2,094,010 2,094,010 4,188,020 5 Go Texan Partner Program 500,000 500,000 1,000,000 14 Texas Equine Incentive Program 40,459 - 40,459 15 Zebra Chip Research 800,000 800,000 1,600,000 Total exceptional item requests$ 13,860,202 $ 13,889,094 $ 27,749,296
1 Sec. 12.002. DEVELOPMENT OF AGRICULTURE. The department shall encourage the proper development and promotion of agriculture, horticulture, and other industries that grow, process, or produce products in this state. Sec. 12.006. DEVELOPMENT OF DOMESTIC AND FOREIGN MARKETS. The department shall investigate and report on the question of broadening the market and increasing the demand for cotton goods and all other agricultural or horticultural products in the United States and foreign countries….
TDA - LAR 2016-17 - Budget Presentation - Page 2 of 15 TEXAS DEPARTMENT OF AGRICULTURE EXECUTIVE SUMMARY
B. Consumer Protection Another major duty of the office is protection of our food chain from farm to table. The range of TDA safety responsibilities includes licensing and regulation of pesticides, assuring seed quality, and certifying measuring devices such as fuel pumps and grocery scales. We also inspect and monitor crop and livestock movement between borders to reduce the risk of disease and infestation. We are tasked with biosecurity, ensuring our food source has not been intentionally or inadvertently contaminated.
We are asking for resources to perform these functions at a more effective level by increasing the potential for detection and prosecution of fraud, tampering, and agricultural crimes that victimize businesses, and ultimately the taxpayer. We need to substantially increase inspector staff in weights and measures and pest control. We need a fraud unit that will detect, investigate, and prepare cases for successful prosecution. Our consumer protection requests in order of priority are:
Priority Requests 2016 2017 Biennium 4 Consumer Protection-Weights/Measures/Fuel Quality 1,616,711 1,767,613 3,384,324 6 Fraud Investigation Team 536,914 676,600 1,213,514 11 Consumer Protection-Structural Pest Control 406,711 373,895 780,606 Total exceptional item requests $ 2,560,336 $ 2,818,108 $ 5,378,444
C. Water and Land Management Per Agriculture Code Sec. 2.003, Texas agricultural policy “must consider and address water availability issues, including planning for water supplies and drought preparedness and response, by ensuring that a high priority is assigned to the agricultural use of water.” The Texas drought underscores resource management issues that must have solutions sooner rather than later. TDA believes research and recommendations specific to agricultural use will help inform the discussion. TDA needs funding to contract with a research ready university to study water use and efficient grazing that does not deplete range resources.
Priority Requests 2016 2017 Biennium 10 Water Quality 433,000 433,000 866,000 13 Grazinglands Research 577,732 531,732 1,109,464 Total exceptional item requests $ 1,010,732 $ 964,732 $ 1,975,464
TDA - LAR 2016-17 - Budget Presentation - Page 3 of 15 TEXAS DEPARTMENT OF AGRICULTURE EXECUTIVE SUMMARY
D. Rural Affairs At the heart of TDA’s mission is its relationship with rural communities and businesses. The geographic diversity, distance, and population density of rural Texas creates challenges in the daily lives of those who live and work in small communities. Agriculture must attract, develop, and maintain agricultural entrepreneurs when the trend is moving to urban centers. Adding to that challenge is the lack of accessible healthcare in rural Texas. We are submitting two EIRs that address both issues. We are requesting the following rural affairs-related funding:
Priority Requests 2016 2017 Biennium 8 Access to Rural Healthcare 1,272,556 1,207,362 2,479,918 12 Replenishment-Young Farmers Loan Program 205,741 - 205,741 Total exceptional item requests $ 1,478,297 $ 1,207,362 $ 2,685,659
E. Technology Efficient service delivery is dependent on technology. As technology ages, it becomes more costly to maintain, it is at greater risk of failure with decreasing ability to repair, and it is less secure. TDA currently uses a legacy system for citizen interaction with licensing and regulatory functions. The system needs an upgrade. As part of a DIR initiative, TDA also engaged a company to review agency systems and identify areas that would benefit from additional security measures. We are submitting two EIRs that address the legacy system specifically and system security generally. We are requesting the following technology-related funding:
Priority Requests 2016 2017 Biennium 7 Replacement of Legacy System - Licensing & Regulatory 4,383,700 3,924,835 8,308,535 9 Information Systems Security Strategy 425,586 222,786 648,372 Total exceptional item requests $ 4,809,286 $ 4,147,621 $ 8,956,907
TDA - LAR 2016-17 - Budget Presentation - Page 4 of 15 TEXAS DEPARTMENT OF AGRICULTURE EXECUTIVE SUMMARY
F. Budget Restoration After TDA submitted its Legislative Appropriation Request, the LBB reviewed and prepared its submission for legislative approval. Several decisions were made in an effort to balance TDA requests within the framework of the overall budget—some of which resulted in a loss of funding. While the deletions may not seem large, TDA has made many programmatic sacrifices in the past biennia to assist Texas during its economic recovery. Programs cannot afford any additional loss as Texas has continued to grow. We are asking that our baseline budget be restored.
Priority Requests 2016 2017 Biennium 1 Reappropriation of Baseline Budget $ 520,545 $ 442,643 $ 963,188
G. Rider Changes We are respectfully requesting: • to retain our authority to transfer or UB funds. Agricultural programs are easily affected by market and environmental conditions. TDA’s budget must remain agile in order to respond at the time of need. However, TDA is making a commitment that the reporting relationship with LBB and the CPA will be robust and timely. Any changes anticipated for cost recovery programs will be discussed in advance of any change. • to delete the cost recovery rider relating to marketing. Marketing is a duty of office. Since it is not a regulatory function where participation is mandatory, it is not amenable to full cost recovery. We will continue to charge marketing program fees to the extent practical. • for regulatory program expansions that need GR. We are retaining the cost recovery functions in our regulatory programs. • to retain flexibility to increase program staff in federally funded programs notwithstanding the agency FTE cap. To the extent that these positions do not implicate state funds, we hope to be able to expand our grant programs accordingly. • for a return of $400,000 from a capital rider to the programs from which the funds were redistributed in the LBB recommendation. This is the result of TDA rescinding an exceptional item request that was part of the original LAR submission.
TDA - LAR 2016-17 - Budget Presentation - Page 5 of 15 TEXAS DEPARTMENT OF AGRICULTURE EXECUTIVE SUMMARY
H. Staffing Needs We are a service industry. Human resources are our primary assets, and necessary for delivering the programs directed in statute and requested by constituents. Many of the EIRs submitted include requests for staff necessary to successfully providing program services detailed in the requests. The exceptional item requests with requested FTEs are as follows:
Priority #2 Priority #4 Priority #6 Priority #8 Priority #11 Promote CP-Weights, Fraud Inv Rural CP-S Pest Classification Title Tx Ag Meas & Fuel Team Healthcare Control Manager III 1 - - - - Marketing Specialist (III - V) 4 - - - - Statistician II 1 - - - - Information Specialist III 1 - - - - Editor III 1 - - - - Creative Media Designer III 1 - - - - Program Specialist (I - IV) 19 4 1 10 1 Inspector III - 26 - - 6 Research Specialist V - - - 2 - Human Resources Spec VI - - - 1 - Forensic Accountant VI - - 2 - - IT security analyst I - - 2 - - Investigator - - 1 - - Captain, Public Safety - - 1 - - Attorney (II - VI) - 1 1 - 1 Administrative Asst (II - IV) 2 - - 2 -
Total FTEs requested 30 31 8 15 8
Note: As it relates to the two consumer protection exceptional item requests (#4 & #11), we are requesting FTE authorization for the total FTEs in FY16. However, it is anticipated that a six-month period will be required to hire staff, so we are requesting 50% of the total salary budget for most of the positions in FY16 and then 100% of salary budget in FY17. For the Fraud Investigation Team requests (#6), we are requesting FTE authorization and budget for 6 FTEs in FY16 and the addition of 2 new FTEs in FY17 for a total authorization and budget of 8 FTEs in FY17. For the remaining exceptional items (#2 & #8), we have assumed FTE authorization and salary budget at 100% for FY16 and FY17.
TDA - LAR 2016-17 - Budget Presentation - Page 6 of 15 TEXAS DEPARTMENT OF AGRICULTURE EXECUTIVE SUMMARY
I. Looking forward to the next biennium and beyond The future will bring both efficiencies and expenditures if these requests are funded. The supporting documentation for the Exceptional Item Requests (EIR) provided to LBB distinguishes between one-time costs and ongoing costs, and identify the impact to agency performance. The supporting information also identifies where a project may require additional staff and/or additional systems maintenance costs after the project is complete. In addition, when determining the baseline budget for the 2018-19 biennium, the exceptional item requests with staffing increases assumed to be partially funded in FY16 will need to be annualized, if budget is appropriated in the 2016-17 biennium.
The primary focus is on the costs in this biennium, but we wanted to make you are aware of what the future may hold. Be assured that the return on investment that comes from increased sales, expanding markets, a safer food chain, and reduced risk of fraud will far exceed the cost of these programs.
A detailed description and analysis was prepared for each submitted EIR. Should the Legislature need more information, please let us know.
TDA - LAR 2016-17 - Budget Presentation - Page 7 of 15
Exhibit A: The following is a brief description of each exceptional item for the Texas Department of Agriculture (TDA).
Reapropriation of Baseline Budget Item Name: Reappropriation of Baseline In 2011, several key programs at the Texas Department of Agriculture were moved from GR Budget funding to cost recovery programming. Each biennium, additional GR funding has been lost Item Priority: 1 through the inability of certain programs to recover in earned revenue, the full costs of running a Object of Expense: Operating successful program. This EIR asks for general revenue funding in the amount of $963,188 for Method of Financing: General Revenue restoration of service levels to the agricultural community. As part of the LAR 2016-17 budget FY16 Amount: $ 520,545 preparation, TDA reallocated budget savings from one program to other programs. This FY17 Amount: $ 442,643 practice allows for state agencies to realign their proposed budgets to more properly reflect projected spending patterns. LBB did not recommend TDA’s proposed reallocation of budget. This request is to reappropriate the baseline budget in the TDA budget.
Risks of not funding initiative: Existing resources are strained offering current program services and benefits. Programs have been cut over the past biennia and further cuts will strain basic services in the cost recovery and general revenue funded programs.
Promotion of Texas Agriculture Item Name: Promotion of Texas TDA is requesting funding in FY16 and FY17 in order to promote Texas agricultural products Agriculture both in-state and abroad, and provide marketing assistance to Texas producers and rural Item Priority: 2 communities. TDA is responsible for the promotion of Texas agricultural products, an industry Object of Expense: Operating which contributes an economic impact of $115 billion to the state annually, second only to the Method of Financing: General Revenue energy sector. Beginning in 2012, TDA marketing programs were required to operate under a FY16 Amount: $ 10,425,733 cost-recovery mandate; the agency has since been unable to perform key functions associated FY17 Amount: $ 10,495,084 with legislative mandates. Additionally, the agency has no funding for the general promotion of Texas agriculture and associated rural interests.
Risks of not funding initiative: Without appropriation of these funds, Texas agriculture will continue to lose market share to imported products and be ineffective when compared to states with more aggressive promotional strategies. Existing resources are strained offering current program services and benefits. The longer the program operates as cost recovery, the more ground we lose in terms of market visibility and awareness. Although staff is focusing on the highest and best use of agency resources, there is a minimum amount that can be done without the funding to promote the program in a broader sense. It is difficult to calculate the impact of lost opportunity, but figures showing the impact of dollars spent allow a conclusion that economic growth will be negatively affected.
TDA - LAR 2016-17 - Budget Presentation - Page 8 of 15
Restore Mandated Marketing Services Item Name: Restore Mandated Marketing Appropriations are requested to restore and maintain basic economic development/marketing Services services on behalf of Texas agricultural products. TDA is the only agency responsible for the Item Priority: 3 marketing and promotion of Texas agricultural products, an industry which contributes an Object of Expense: Operating economic impact of $115 billion to the Texas economy annually. Currently, this promotion is Method of Financing: General Revenue done through the state’s GO TEXAN program, a certification program promoting items made, FY16 Amount: $ 2,094,010 grown and value-added in Texas. This program was moved to cost recovery in 2011 and has FY17 Amount: $ 2,094,010 since been unable to perform key functions associated with legislative mandates. In FY14 the expenditure budget was reduced by approximately $2 million and In FY15 has been reduced by $3.7 million to match the revenue stream. TDA is requesting restoration of funds to cover this program at its current levels in order to promote Texas agricultural products both in-state and abroad, and provide marketing assistance to Texas producers and rural communities.
Risks of not funding initiative: Existing resources are strained offering current program services and benefits. The longer the program operates as cost recovery, the more ground we lose in terms of market visibility and awareness. Although staff is focusing on the highest and best use of agency resources, there is a minimum amount that can be done without the funding to promote the program.
Consumer Protection-Weights, Measures & Fuel Quality Item Name: Consumer Protection-Weights, This proposal will provide TDA with the necessary resources to meet risk-based inspection Measures & Fuel Quality demands, an increasing consumer complaint load, and an increasing number of registered Item Priority: 4 devices used commercially, as well as enhance TDA’s package inspection program, and Object of Expense: Operating & Capital strengthen TDA’s fuel quality program. TDA is the only state agency charged with regulating Method of Financing: GR; GR (CR); AR weights and measures. This responsibility promotes a fair and equitable marketplace for both FY16 Amount: $ 1,616,711 consumers and businesses. TDA ensures these devices meet strict accuracy and operational FY17 Amount: $ 1,767,613 specifications through licensing and inspection of weighing and measuring devices such as fuel pumps, grocery store scales, large- capacity vehicle scales, liquefied petroleum gas meters, and precious metal scales. In addition, TDA is the state’s regulatory agency responsible for ensuring that packaged commodities are properly labeled and contain the declared amount of net contents when sold. TDA is also responsible for ensuring motor fuel sold in Texas meets strict quality standards.
Risks of not funding initiative: If funding is not approved, it is anticipated that consumers may face risks associated with improperly weighed or measured products as well as fuel that does not meet quality standards. For example Texas citizens and visitors to our state may be subject to expensive repairs from poor quality fuel pumped into vehicles. The costs associated with achieving compliance in this area are also anticipated to increase over time if noncompliance is not deterred.
TDA - LAR 2016-17 - Budget Presentation - Page 9 of 15
GO TEXAN Partner Program Item Name: GO TEXAN Partner Program The requested funding is primarily for grants to assist GO Texan small businesses and other Item Priority: 5 members with activities such as web development for e-commerce, trade show participation, Object of Expense: Operating packaging redesign and other promotional expenses related to increasing consumer Method of Financing: General Revenue awareness and sales of Texas agricultural products. Recipients must demonstrate a FY16 Amount: $ 500,000 commitment to provide matching funds in an amount at least equal to the grant. FY17 Amount: $ 500,000
Risks of not funding initiative: If the proposal is not funded, the GO TEXAN program may see a decrease in memberships, thus decreasing revenues to that program. Further, the current positive economic impact to the state’s economy resulting from this program will not be realized. Small businesses, who are GO TEXAN members, will lose a source of funding that has allowed them the opportunity try new promotional ideas, execute demonstrations and advertising campaigns, and increase awareness of their agricultural products. There is a risk that some businesses may fail without our investment in helping them reach markets beyond their community.
Fraud Investigation Team Item Name: Fraud Investigation Team Agricultural fraud affects the state economy, as Texas’ agricultural imports and exports depend Item Priority: 6 on safe and reliable products. Program fraud affects the Texas taxpayer as experts estimate that Object of Expense: Operating & Capital as much as five percent of a business’ revenue is lost to employee fraud. This proposal will Method of Financing: General Revenue allow the TDA to implement a proactive detection, investigation, and enforcement process that FY16 Amount: $ 536,914 reduces the risk of a contaminated food chain and loss of taxpayer dollars. FY17 Amount: $ 676,600
Risks of not funding initiative: A strong enforcement tool, detection and threat of prosecution, will be a low risk factor when offenders are deciding whether to commit the crime. Another strong community deterrent, criminal prosecution will also have little effect. Taxpayers, constituents, and victims will not receive restitution for losses due to fraud and other criminal activity.
TDA - LAR 2016-17 - Budget Presentation - Page 10 of 15
Item Name: Replacement of legacy Replacement of legacy system – Licensing & Regulatory system – Licensing & Regulatory TDA is looking to develop a new licensing and regulatory system to support agency programs, Item Priority: 7 Object of Expense: Operating constituents, and staff. This system will replace the current legacy system that has been in Method of Financing: General Revenue place for twelve years. The planned system will use newer technologies which will allow TDA to FY16 Amount: $ 4,383,700 continue to maintain and provide the high level of availability, functionality and security for our FY17 Amount: $ 3,924,835 internal and external customers.
Risks of not funding initiative: If funding is not approved the agency’s overall core applications will continue age and remain significantly below expected standards for the program areas. Operational costs required to support and maintain the applications will continue to rise. The current systems are in excess of twelve-year old technology, and the platforms on which these systems run are no longer actively supported. As a result, there will be reduced confidence in TDA’s ability to (1) provide either expected or required levels of overall service, (2) provide timely, efficient future enhancements, and (3) provide the ability to deploy mobile and other new technology solutions.
Access to Rural Healthcare Item Name: Access to Rural Healthcare TDA is requesting general revenue funds for new programs that will increase rural Texan’s Item Priority: 8 ability to access healthcare in their respective communities. These programs include Object of Expense: Operating telemedicine, electronic health records, mobile service delivery systems and other potential Method of Financing: General Revenue solutions to the current access problems. FY16 Amount: $ 1,272,556 FY17 Amount: $ 1,207,362
Risks of not funding initiative: Funding cuts are a serious threat to access to healthcare in rural Texas. Rural Texans will continue to suffer regarding the lack of access to healthcare if funding is not approved. Rural residents and especially older citizens will find it increasingly difficult to access healthcare in a timely manner. Delay in care can be life threatening. Unless people visit rural communities and have a healthcare emergency, they don’t understand the detrimental effects caused by a lack of access to healthcare.
TDA - LAR 2016-17 - Budget Presentation - Page 11 of 15
Information Systems Security Strategy Item Name: Information Systems Security Strategy As part of the DIR Statewide Enterprise Security Program, TDA engaged the DIR contracted security industry expert to evaluate the TDA Information Security Program, assess its Item Priority: 9 Object of Expense: Operating effectiveness, and make recommendations on meeting industry security standards and best Method of Financing: General Revenue practices within the current operational environment. This request is for funding to implement FY16 Amount: $ 425,586 immediate, near-term, and mid-term high priority recommendations. FY17 Amount: $ 222,786
Risks of not funding initiative: If funding is not approved, the overall security program at the agency will remain significantly below minimum maturity level. As a result, there will be reduced confidence in TDA’s ability to (1) provide either expected or required levels of data protection, (2) provide the expected level of data and system protection, and (3) provide the expected level of access control and policy enforcement. Further, TDA will be severely hindered in proactively mitigating security vulnerabilities and managing residual security risk for critical infrastructure dependent on agency IT systems.
Water Quality Item Name: Water Quality TDA is requesting funding for two items related to water use and conservation: Item Priority: 10 Object of Expense: Operating & Capital • TDA is submitting a FY15 supplemental funding request for an initial water survey to Method of Financing: General Revenue obtain a current and accurate overview of actual water usage by agriculture in Texas. If FY16 Amount: $ 433,000 funds are appropriated in FY15, this exceptional item request would fund an annual FY17 Amount: $ 433,000 update of the water use survey ($100,000/yr). If FY15 supplemental funding is not available, TDA would request an additional $187,500 in funding for the initial water study to be performed in FY16 at a cost of $287,500. • TDA is also requesting funds for water conservation practices including the credit quantification tool, Nutrient Tracking Tool (NTT). NTT is an enhanced version of Nitrogen Trading Tool, a user-friendly web-based computer program originally developed by the United States Department of Agriculture (USDA). An improper balance in nutrients in water can cause health and environmental damage. Requested appropriations per year is $333,000.
Risks of not funding initiative: If the water survey proposal is not funded, the State of Texas, government officials, water authorities, cities and communities will continue to rely on out-date information as they make decisions impacting the citizens of Texas and its economy. Agricultural producers will continue to see their access restricted causing a decline in production and industry value. If the proposal for the Nutrient Tracking Tool is not funded, farmers and ranchers will not implement conservation practices, increasing the burden on downstream cities.
TDA - LAR 2016-17 - Budget Presentation - Page 12 of 15
Item Name: Consumer Protection – Consumer Protection – Structural Pest Control Structural Pest Control TDA is requesting funding for additional inspection and program support resources to establish Item Priority: 11 Object of Expense: Operating & Capital risk-based inspection protocols and decrease the number of violations found during structural Method of Financing: General Revenue pest control inspections. TDA is responsible for the licensing and regulation of persons FY16 Amount: $ 406,711 engaged in the business of structural pest control in an effort to protect Texas homeowners and FY17 Amount: $ 373,895 businesses. TDA licenses structural pest control businesses, certified applicators and technicians; develops and implements appropriate education standards for applicators; and approves continuing education courses that meet or exceed minimum standards. The program also establishes standards for the use of pesticides and other methods to control pests in school facilities and grounds. TDA is requesting to fund this expansion program with GR, with no expectation that its costs will be recovered, as the added services are necessary but are provided to groups that do not pay fees for services.
Risks of not funding initiative: If funding is not approved, it is anticipated that consumers may face risks associated with unlicensed and/or unscrupulous applicators. The costs associated with achieving compliance area are also anticipated to increase over time if noncompliance is not deterred.
Replenishment – Young Farmers Loan Program Swept Funds Item Name: Replenishment-Young Farmers Loan Program Swept Funds In FY14, funds dedicated to providing grants to young farmers were deposited in the treasury as the result of the Comptroller of Public Accounts closing the account. Since these funds were Item Priority: 12 Object of Expense: Operating originally deposited into the account by Texas farmers from fees paid on farm truck license fees Method of Financing: General Revenue for the purpose of funding the Texas Agricultural Finance Authority (TAFA), TDA is requesting FY16 Amount: $ 205,741 that the funds be replaced and budget appropriated. TAFA continues to exist today and FY17 Amount: $ 0 remains a tool for farmers.
Risks of not funding initiative: If not approved, resources to attract a new generation of farmers will be reduced, and support to help the new generation get their agricultural business off the ground will be reduced.
TDA - LAR 2016-17 - Budget Presentation - Page 13 of 15
Grazinglands Research Item Name: Grazinglands Research The request is for funding to address critical gaps in the state of our knowledge regarding Item Priority: 13 Managed Intensive Rotational Grazing (MIRG) by conducting controlled grazing experiments Object of Expense: Operating under pasture conditions. Specific research questions will include the areas of forage Method of Financing: General Revenue production, livestock performance, plant and animal community effects, and economics. FY16 Amount: $ 577,732 Funding is necessary to provide information to Texas cattle producers, helping them with FY17 Amount: $ 531,732 alternative, efficient management of rangeland and allowing them to increase supply for the ever growing Texas population.
Risks of not funding initiative: If the proposal is not funded, Managed Intensive Rotational Grazing may not be effectively implemented by Texas cattle producers; the benefits of the science behind the practices will not be realized; and, range yield may be impacted.
Texas Equine Incentive Program Item Name: Texas Equine Incentive Prgrm The Texas Equine Incentive Program was created to encourage the development of the Texas Item Priority: 14 horse industry by providing incentives for owners of Texas-bred horses to enter foals in Texas Object of Expense: Operating equine shows and race events. This request is for the appropriation of funds related to fees Method of Financing: General Revenue paid by stallion owners in previous biennia for the sole purpose of the Texas Equine Incentive FY16 Amount: $ 40,459 Program. Fees have been collected since the 2009 breeding year (recorded as FY 2010 FY17 Amount: $ 0 revenue). The program is mandated by Agriculture Code Sec. 12.044, and the use of the funds limited in statute.
Risks of not funding initiative: If the proposal is not funded, TDA may not be able to make incentive awards to the current TEIP participants for points earned at sanctioned breed association show and race events in Texas during the prior year.
Zebra Chip Research Item Name: Zebra Chip Research The purpose of the Zebra Chip (ZC) Grant is for the development of research on the Zebra Chip Item Priority: 15 Disease affecting potatoes in Texas. ZC is a disease of potatoes that causes a wide range of Object of Expense: Operating growth, foliar and tuber symptoms rendering potatoes unmarketable. Continued research is Method of Financing: General Revenue necessary to reduce control costs, develop sustainable production systems, and investigate ZC FY16 Amount: $ 800,000 tolerate or resistant varieties. FY17 Amount: $ 800,000
Risks of not funding initiative: If the proposal is not funded, potato production in Texas will continue to be vulnerable to the Zebra Chip disease and associated costs of trying to control it. Lack of results will ultimately decrease production acres and potentially eliminate potato production in Texas.
TDA - LAR 2016-17 - Budget Presentation - Page 14 of 15
SUMMARY OF EXCEPTIONAL ITEMS REQUEST 84th Regular Session, Agency Submission Agency code: 551 Agency name: Texas Department of Agriculture
2016 2017 Biennium GR and GR/GR GR and GR/GR GR and GR/GR Priority Item dedicated All Funds FTEs dedicated All Funds FTEs dedicated All Funds 1 Reappropriation of Baseline Budget 520,545 520,545 - 442,643 442,643 - 963,188 963,188 2 Promotion of Texas Agriculture 10,425,733 10,425,733 30.0 10,495,084 10,495,084 - 20,920,817 20,920,817 3 Restore of Mandated Marketing Services 2,094,010 2,094,010 - 2,094,010 2,094,010 - 4,188,020 4,188,020 4 Consumer Protection-Weights, Measures & Fuel Quality 1,418,675 1,616,711 31.0 1,392,271 1,767,613 - 2,810,946 3,384,324 5 GO TEXAN Partner Program 500,000 500,000 - 500,000 500,000 - 1,000,000 1,000,000 6 Fraud Investigation Team 536,914 536,914 6.0 676,600 676,600 2.0 1,213,514 1,213,514 7 Replacement of Legacy System - Licensing & Regulatory 4,383,700 4,383,700 - 3,924,835 3,924,835 - 8,308,535 8,308,535 8 Access to Rural Healthcare 1,272,556 1,272,556 15.0 1,207,362 1,207,362 - 2,479,918 2,479,918 9 Information Systems Security Strategy 425,586 425,586 - 222,786 222,786 - 648,372 648,372 10 Water Quality 433,000 433,000 - 433,000 433,000 - 866,000 866,000 11 Consumer Protection-Structural Pest Control 406,711 406,711 8.0 373,895 373,895 - 780,606 780,606 12 Replenishment-Young Farmers Loan Program 205,741 205,741 - - - - 205,741 205,741 13 Grazinglands Research 577,732 577,732 - 531,732 531,732 - 1,109,464 1,109,464 14 Texas Equine Incentive Program 40,459 40,459 - - - - 40,459 40,459 15 Zebra Chip Research 800,000 800,000 - 800,000 800,000 - 1,600,000 1,600,000 Total exceptional items request $ 24,041,362 $ 24,239,398 90.0 $ 23,094,218 $ 23,469,560 2.0 $ 47,135,580 $ 47,708,958
Method of financing General Revenue (GR) $ 23,490,485 $ 23,490,485 $ 22,349,115 $ 22,349,115 $ 45,839,600 $ 45,839,600 GR - Cost Recovery 550,877 550,877 745,103 745,103 1,295,980 1,295,980 Appropriated Receipts - 198,036 - 375,342 - 573,378 $ 24,041,362 $ 24,239,398 $ 23,094,218 $ 23,469,560 $ 47,135,580 $ 47,708,958
Full Time Equivalent positions 90.0 2.0
TDA - LAR 2016-17 - Budget Presentation - Page 15 of 15
Section 1
General Land Office and Veterans' Land Board Summary of Recommendations - House
Page VI - 29 George P. Bush, Commissioner Tina Beck, LBB Analyst RECOMMENDED FUNDING BY METHOD OF FINANCING 2014-15 2016-17 Biennial % General Method of Financing Base Recommended Change Change GR Revenue Dedicated General Revenue Funds $6,950,096 $6,963,332 $13,236 0.2% Funds Funds GR Dedicated Funds $30,687,531 $30,246,738 ($440,793) (1.4%) 1.1% 4.6% Total GR-Related Funds $37,637,627 $37,210,070 ($427,557) (1.1%)
Other Federal Funds $1,353,038,332 $515,257,514 ($837,780,818) (61.9%) 16.6% Other $112,832,702 $109,729,418 ($3,103,284) (2.8%)
All Funds $1,503,508,661 $662,197,002 ($841,311,659) (56.0%)
Federal Funds 77.8%
FY 2015 FY 2017 Biennial % Budgeted Recommended Change Change FTEs 658.2 658.2 0.0 0.0%
The bill pattern for this agency (2016-17 Recommended) represents an estimated 35.5% of the agency's estimated total available funds for the 2016-17 biennium.
Agency 305 2/9/2015 1 Section 1 General Land Office and Veterans' Land Board 2016-2017 BIENNIUM TOTAL= $662.2 MILLION IN MILLIONS
ALL FUNDS GENERAL REVENUE AND FULL-TIME-EQUIVALENT POSITIONS GENERAL REVENUE-DEDICATED FUNDS
APPROPRIATED APPROPRIATED 713.2 $866.7 REQUESTED APPROPRIATED APPROPRIATED REQUESTED REQUESTED $25.9 658.2 658.2 658.2 658.2
REQUESTED $21.4
APPROPRIATED APPROPRIATED $19.5 $19.5
REQUESTED $532.1 2015 APPROPRIATED $573.6 2016
APPROPRIATED 2017 $11.6
REQUESTED $141.4
APPROPRIATED $141.7
$255.7 $809.9 $693.6 $523.5 $138.7 $18.7 $18.6 $19.0 $18.6 $18.6 610.2 624.9 658.2 658.2 658.2 EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Fiscal year 2013 General Revenue-Related expended amounts exceeded appropriations primarily for Alamo gift shop receipts spent under estimated appropriation authority from the General Revenue-Dedicated Alamo Complex Account No. 5152; the receipt of $1.6 million in Earned Federal Funds (General Revenue); and $1.6 million in unexpended balances carried forward from FY 2012 to FY 2013 in Earned Federal Funds received for disaster recovery projects. Fiscal year 2013 All Funds amount exceeded appropriations primarily for the receipt of additional Community Development Block Grants ($54.9 million in Federal Funds) and Coastal Impact Assistance Program funds ($52.0 million in Federal Funds).
Fiscal Year 2015 All Funds budgeted amounts exceed appropriations primarily for 1) the receipt of additional Community Development Block Grants (CDBG - $57.2 million in Federal Funds); 2) unexpended balances of $47.4 million in CDBG grants being carried forward from fiscal year 2014 to fiscal year 2015; 3) other unexpended balances, primarily from coastal erosion capital projects ($10.2 million in Interagency Contracts, Federal Funds, and Other Funds); 4) a $2.2 million donation by the National Fish and Wildlife Foundation for a Galveston Island Bayside Marsh Renourishment project from amounts originating in Deepwater Horizon settlement funds (Appropriated Receipts – Other Funds); 5) $1 million drawn under estimated appropriation authority for veterans cemeteries and land programs; and 6) $1 million in Federal Funds and Other Funds for the statewide pay increase. Agency 305 2/9/2015 2 Section 2 General Land Office and Veterans' Land Board Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
ENERGY LEASE MANAGEMENT & REV AUDIT A.1.1 $8,935,461 $9,272,631 $337,170 3.8% Recommendations include an increase of $0.3 million in All Funds, which includes an increase of $0.1 million from General Revenue reallocated by the agency in its baseline request and an increase of $0.2 million from the Permanent School Fund No. 44 (Other Funds) to annualize the statewide pay increase.
ENERGY MARKETING A.1.2 $1,620,061 $1,446,798 ($173,263) (10.7%) Recommendations include a decrease of $0.2 million in donations to the map conservation program from Appropriated Receipts (Other Funds).
DEFENSE AND PROSECUTION A.1.3 $7,960,380 $7,666,541 ($293,839) (3.7%) COASTAL AND UPLANDS LEASING A.1.4 $7,573,759 $8,467,568 $893,809 11.8% Recommendations include an increase of $0.9 million in Other Funds, which includes an increase from the Permanent School Fund No. 44 ($0.6 million), Appropriated Receipts ($0.2 million) and Interagency Contracts ($0.1 million) to annualize the statewide pay increase and agency-requested reallocations of FTEs and other operating increases to this strategy.
ASSET MANAGEMENT A.2.1 $11,500,602 $10,743,993 ($756,609) (6.6%) Recommendations include a decrease of $0.8 million in Other Funds, which includes a decrease from the Permanent School Fund No. 44 for a completed archives and records management project and one-time legal and audit services ($0.7 million). SURVEYING AND APPRAISAL A.2.2 $1,783,061 $1,809,726 $26,665 1.5% PRESERVE & MAINTAIN ALAMO COMPLEX A.3.1 $11,062,262 $11,062,262 $0 0.0% Total, Goal A, ENHANCE STATE ASSETS $50,435,586 $50,469,519 $33,933 0.1%
COASTAL MANAGEMENT B.1.1 $28,342,106 $16,456,929 ($11,885,177) (41.9%) Recommendations include a decrease of $12 million in Federal Funds for completed coastal erosion, beach and dune restoration, and recreational amenities projects, offset by an agency-requested reallocation of Interagency Contract amounts for coastal erosion projects to this strategy.
Agency 305 2/9/2015 3 Section 2 General Land Office and Veterans' Land Board Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments COASTAL EROSION CONTROL GRANTS B.1.2 $38,915,174 $27,400,222 ($11,514,952) (29.6%) Recommendations include a decrease of $11.5 million in All Funds, which includes a decrease in Federal Funds for completed coastal erosion control grants ($8.6 million), and a decrease in Appropriated Receipts (Other Funds) for a donation by the National Fish and Wildlife Foundation for a Galveston Island Bayside Marsh Renourishment project, from amounts originating in Deepwater Horizon settlement funds ($2.2 million).
OIL SPILL RESPONSE B.2.1 $11,138,469 $9,996,021 ($1,142,448) (10.3%) Recommendations include a decrease of $1.1 million in All Funds, which includes a decrease in the General Revenue-Dedicated Coastal Protection Account No. 27 for vehicle replacement cycles ($0.2 million), a decrease in Federal Funds for one- time Port Security grants ($0.1 million) and a decrease in Appropriated Receipts (Other Funds) for one-time reimbursements from Deepwater Horizon MOEX settlement funds used to purchase boats, boat engines and trailers ($0.3 million) and from Kirby for the Texas City oil spill in April 2014 ($0.5 million).
OIL SPILL PREVENTION B.2.2 $9,355,038 $9,566,685 $211,647 2.3% Total, Goal B, PROTECT THE COASTAL ENVIRONMENT $87,750,787 $63,419,857 ($24,330,930) (27.7%)
VETERANS' LOAN PROGRAMS C.1.1 $24,618,997 $24,611,671 ($7,326) (0.0%) VETERANS' HOMES C.1.2 $7,496,797 $7,669,289 $172,492 2.3% VETERANS' CEMETERIES C.1.3 $16,053,705 $14,720,097 ($1,333,608) (8.3%) Recommendations include a decrease of $1.5 million in Federal Funds for construction and improvement projects at the veterans’ cemeteries in Killeen and Mission, offset by an agency-requested increase from the Texas Veterans Homes Administration No. 374 (Other Funds) for salaries and other operating expenses ($0.2 million).
Total, Goal C, VETERANS' LAND BOARD (VLB) $48,169,499 $47,001,057 ($1,168,442) (2.4%)
REBUILD HOUSING D.1.1 $817,880,586 $292,007,299 ($525,873,287) (64.3%) Recommendations include a decrease of $525.6 million in Federal Funds related to the decrease in Community Development Block Grants for Hurricane Ike and Wildfire -related housing grant awards.
Agency 305 2/9/2015 4 Section 2 General Land Office and Veterans' Land Board Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments REBUILD INFRASTRUCTURE D.1.2 $499,272,203 $209,299,270 ($289,972,933) (58.1%) Recommendations include a decrease of $289.9 million in Federal Funds related to the decrease in Community Development Block Grants for Hurricane Ike and Wildfire -related infrastructure grant awards. Total, Goal D, DISASTER RECOVERY $1,317,152,789 $501,306,569 ($815,846,220) (61.9%)
Grand Total, All Strategies $1,503,508,661 $662,197,002 ($841,311,659) (56.0%)
Agency 305 2/9/2015 5 Section 3
General Land Office and Veteran’s Land Board Selected Fiscal and Policy Issues - House
1. 2016-17 Recommendations
2016-17 recommendations begin with the agency’s 2016-17 baseline request and incorporate the following adjustments:
a. Reduction for Reallocated Boat Replacement Funds: a decrease of $190,500 from the General Revenue-Dedicated Coastal Protection Account No. 27, reallocated in the agency’s baseline request to purposes other than boat replacements. The Eighty-third Legislature provided $360,000 in capital budget funding for boat replacements in the 2014-15 biennium. Agency requested amounts for this purpose in the 2016-17 biennium total $169,500 ($360,000 – $190,500 = $169,500). (See Items not Included in Recommendations - House No. 5.)
b. Scale Funding to Vehicle Replacement Cycles: a decrease of $354,176 in All Funds ($220,000 from the General Revenue-Dedicated Coastal Protection Account No. 27; $121,426 from the Permanent School Fund and $12,750 from the Veterans Land Program Administration Fund No. 522) from agency-requested amounts for vehicle replacement cycles. Together with the $123,000 from the General Revenue-Dedicated Coastal Protection Account No. 27 that the agency had redirected from boat replacement (which is a subset of amounts reduced in Selected Policy Issue – House No. 1(a), above), a total of $477,176 in All Funds was removed from the capital budget for vehicle replacement. (See Items not Included in Recommendations - House No. 5.)
Recommended funding levels revert to 2014-15 appropriated levels, and provide $244,699 for the 2016-17 biennium to replace an estimated 8 vehicles. The agency indicates it intends to spend $915,352 on vehicle replacement in the 2014-15 biennium. The table below compares requested and recommended funding levels to appropriated and estimated/budgeted amounts.
Capital Budget - Transportation Items Appropriated Est/Budgeted Requested Recommended 2014-15 2014-15 2016-17 2016-17 Vehicles $ 244,699 $ 915,352 $ 721,875 $ 244,699 Boats $ 360,000 $ 266,273 $ 169,500 $ 169,500 Total $ 604,699 $ 1,181,625 $ 891,375 $ 414,199
The agency reports it begins evaluating vehicles for replacement once they reach the threshold of 100,000.
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c. Federal Funds Reductions: an agency-requested decrease of $837.8 million in the 2016-17 biennium, compared to 2014- 15 spending levels. Major components of the decrease include Community Development Block Grants for Hurricane Ike and Wildfire –related housing grant awards ($525.6 million), Hurricane Ike and Wildfire –related infrastructure rebuilding grant awards ($289.9), and $12 million for completed coastal erosion, beach and dune restoration, and recreational amenities projects.
2. Hold Harmless for Interest Earnings Swept to General Revenue from the Coastal Protection Account
The Eighty-third Legislature, Regular Session, enacted House Bill 7, which sweeps all interest earnings credited from the General Revenue-Dedicated Coastal Protection Account No. 27 to General Revenue. In order to hold the agency harmless for the result of the statutory change, recommendations include leaving amounts formerly from this source in the 2014-15 biennium ($264,000) in the agency’s baseline in the 2016-17 biennium. There are sufficient fund balances to replace interest earnings from the Coastal Protection Account in the baseline request. See also Rider Highlights - House No. 15.
3. Operation of the Alamo Complex
The Eighty-second Legislature enacted House Bill 3726, which placed the Alamo Complex under the jurisdiction of GLO, and made the agency responsible for the preservation, maintenance, and restoration of the complex and its contents. GLO assumed management duties of the site in January 2012. As directed by the legislation, GLO continues its contractual agreement with the Daughters of the Republic of Texas for the management, operation, and financial support of the Alamo. In fiscal year 2014, an estimated 1.3 million people visited the Alamo Shrine, and an additional 200,000 people for a total of 1.5 million visited the Alamo Gift Shop. Gift shop revenues were approximately $2.4 million in fiscal year 2014.
Recommendations for the 2016-17 biennium were based on estimated 2014-15 revenues to the General Revenue-Dedicated Alamo Complex Account No. 5152 ($9.6 million for the biennium in Account No. 5152), which were less than original estimates ($11.9 million), primarily because third-party gift shop expenses no longer flow through the account. The Comptroller’s Biennial Revenue Estimate (BRE) released in Januaray 2015 estimates $6.8 million will be available in Account No. 5152 for the biennium.
GLO is evaluating whether reduced revenue streams to the General Revenue-Dedicated Alamo Complex Account No. 5152 ($6.8 million), together with a General Revenue subsidy ($1.5 million) are sufficient for daily operations of the site during the 2016-17 biennium. Setting aside the issue of daily operations funding levels, the agency reports baseline funding levels are not sufficient to address deferred maintenance and major improvements. The agency is requesting $5 million from General Revenue in the 2016-17 biennium for preservation and maintenance costs at the Alamo Complex, which includes the Shrine, Alamo Research Center, Alamo Hall, Gallagher House, garden area, courtyard, gift shop, and parking lots. Major categories of the agency’s requested projects are shown in the table below.
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Alamo Complex Preservation and Maintenance Request Description 2016-17 Biennium Roof construction and repairs $ 681,550 Vault extension and remodeling $ 620,000 Replace windows, entry gates and lighting $ 1,000,650 Information Technology Upgrades $ 475,534 Sound system and electrical upgrades $ 434,300 Ongoing facility maintenance $ 350,000 Other improvements and repairs $ 1,437,966 $ 5,000,000
See also Rider Highlights - House No. 19 and Items not Included in the Recommendations - House No. 1.
4. Deepwater Horizon Oil Spill
The Deepwater Horizon Oil Spill occurred in April 2010. In fiscal years 2010 and 2011, the General Land Office was reimbursed $427,454 by BP for the costs of agency personnel, travel, and vehicles which were deployed to Gulfport Mississippi from May through October 2010 for oil spill response activities. Subsequently, GLO received additional funds related to the spill as follows:
FY 2013: A payment by MOEX Offshore (a BP subsidiary) used to purchase oil spill equipment such as trailers, radios, and buoys ($623,053); FY 2014: A payment by MOEX Offshore used to purchase boats, boat motors and trailers ($327,272); FY 2015: An award from the National Fish and Wildlife Foundation used for a Galveston Island Bayside Marsh Renourishment project ($2.2 million); a payment by MOEX Offshore used to purchase oil spill equipment ($54,675)
At this time, the agency is not expecting any additional reimbursements or awards to the agency from Deepwater Horizon settlement funding in the 2016-17 biennium.
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5. Closure of Rollover Pass on Bolivar Peninsula
The 81st Legislature appropriated $5,850,000 to the GLO to close Rollover Pass on the Bolivar Peninsula in Galveston County. It is hoped that closing the pass will reduce the severity of future storm damage to coastal properties, such as the damage caused by Hurricane Ike. The agency reports delays in the federal permitting process, including a lawsuit challenging the federal permit authorized for the closure, as well as delays in necessary land acquisition have delayed expenditure of these funds. GLO anticipates ongoing delays will prevent it from expending the balance of funds available by August 31, 2015, and requests that unexpended balances for this project be available in the 2016-17 biennium ($5,800,483 in All Funds - $4,464,352 in General Revenue and $1,336,131 in Interagency Contracts). Recommendations do not include funding for this purpose. See Items not Included in the Recommendations - House No. 2.
6. Disaster Recovery Program
GLO is requesting a contingency appropriation to be effective upon the Land Commissioner’s notification to the Office of the Governor that current federal disaster relief funding for Hurricanes Dolly/Rita/Ike and Central Texas Wildfires will have expired. See Selected Fiscal and Policy Issue - House No. 1(d). Although there is a reduction of $815.2 million in disaster-related federal funds in the 2016-17 biennium, compared to 2014-15 spending levels, GLO disaster recovery-related staff will continue to manage grant awards and service contracts through fiscal year 2017.
Once federal funds have expired, GLO requests that $2.7 million each fiscal year be available from either General Revenue or a transfer from the Disaster Recover strategy in the bill pattern for Trustee Programs within the Office of the Governor to help retain core staff with significant expertise in awarding and managing multi-million dollar awards. (For perspective, this strategy has appropriations of $33.7 million in FY 2014 and $26.6 million in FY 2015 from All Funds.) See Items not Included in Recommendations - House No. 4.
7. Budget Authority.
Recommendations limit certain budget flexibilities and remove exemptions from certain general provisions of the General Appropriations Bill to allow the legislature to consider continuation of this authority. Recommendations delete the following riders from the agency's bill pattern:
a. Rider 5, Transfer Authority. Article IX, §14.01, Appropriation Transfers, allows the agency to transfer up to 20 percent from one appropriation item to another appropriation item at the agency’s discretion. The agency may exceed the 20 percent discretionary transfer authority with approval of the Governor and the Legislative Budget Board.
b. Rider 7, Unexpended Balances Within the Biennium. Recommendations remove the rider authority previously allowing the agency to carry forward unexpended balances from the first fiscal year of the biennium to the second. Article IX, §14.05, Unexpended Balance Authority Between Fiscal Years Within the Same Biennium, provides the same authority with Legislative Budget Board approval.
Recommendations modify Rider 2, Capital Budget to remove the exemption from limitations on transferability in Article IX, §14.03, Limitation on Expenditures – Capital Budget. Article IX, §14.03, Limitation on Expenditures – Capital Budget, provides the agency
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certain discretionary transfer and expenditure flexibility related to capital budget purposes. Formerly the agency had unlimited authority to increase expenditures, subject to a cap of 125 percent of each year’s aggregate capital budget appropriation. The agency may exceed capital budget provisions with approval of the Governor and the Legislative Budget Board.
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General Land Office and Veterans' Land Board Performance Measure Highlights - House
Expended Estimated Budgeted Recommended Recommended 2013 2014 2015 2016 2017 • Annual Gross Rate of Return on RESFA 7.6% 9.7% 6.0% 6.0% 6.0% Investments
Measure Explanation: The agency achieved a rate of return of 13 percent on its Real Estate Special Fund Account (RESFA) investments in the Permanent School Fund (PSF) in fiscal year 2014. However, the agency cannot assume such a high rate of returned will continue in 2015-17; therefore, more conservative targets are recommended for those years.
• Annual Revenue from Uplands Surface 4,619,800 4,823,895 6,500,000 2,970,753 2,970,753 Leases
Measure Explanation: Measure Explanation: The reduction of revenues reflects the sale of Permanent School Fund lands that generated lease revenue.
• Percent of Receipts to Released to State 20.8% 4.5% 5.0% 6.0% 6.0% Board of Education/Texas Education Agency
Measure Explanation: FY 2013 performance reflects the School Land Board's discretionary transfer of $300 million in additional receipts from the Real Estate Special Fund Account to the Available School Fund. Typical transfers average 6 percent per year.
• Number of Alamo Shrine Visitors 1,334,366 1,352,961 1,500,000 1,400,000 1,400,000
Measure Explanation: Given trends in fiscal years 2013 and 2014, recommendations reflect a more realistic performance for 2016-17.
• Alamo Gift Shop Revenue in Dollars 2,249,308 2,473,704 2,460,000 2,310,000 2,310,000
Measure Explanation: Alamo gift shop revenues are a revenue stream to the General Revenue-Dedicated Alamo Complex Account No. 5152.
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11 Section 3 General Land Office and Veterans' Land Board Summary of Federal Funds (Estimated 2014) - House TOTAL = $747.3M
Coastal Impact Assistance Program $4.2M or 1%
Other Community Development $9.8M or 1% Block Grants $737.5M or 99% All Others $5.5 or 1%
Note: Amounts and percentages shown may sum greater/less than actual total due to rounding.
Agency 305 12 Section 3 General Land Office and Veterans' Land Board Significant Federal Funds Changes - House
2014-15 2016-17 Recommended CFDA No. Program Name Base Recommended Over/(Under) Base Comments
11.419.000 Coastal Zone Management $4,466,289 $2,593,466 ($1,872,823)
11.463.000 Habitat Conservation $102,522 $0 ($102,522)
14.228.000 Community Development Block Grants $1,313,417,322 $497,892,205 ($815,525,117)
15.000.004 Mineral Management Service $279,852 $294,948 $15,096
15.614.000 Coastal Wetlands Planning, Protection and Restoration Act $934,946 $0 ($934,946)
15.630.000 Coastal Program $79,094 $0 ($79,094)
15.668.000 Coastal Impact Assistance Program $12,483,591 $6,693,020 ($5,790,571)
64.203.000 State Cemetery Grants $4,096,086 $2,610,931 ($1,485,155)
66.472.000 Beach Program Development Grant $695,692 $498,735 ($196,957)
97.013.000 State Access to Oil Spill Liability Trust Fund $48,033 $0 ($48,033)
97.036.000 Public Assistance Grants $15,183,763 $4,674,209 ($10,509,554)
97.036.005 Appropriated FEMA Reimbursements $1,150,633 $0 ($1,150,633)
97.056.000 Port Security Grant Program $100,509 $0 ($100,509)
$1,353,038,332 $515,257,514 ($837,780,818)
Agency 305 13 Section 4 General Land Office Performance Review and Policy Report Highlights - House
Savings/ Gain/ Fund Included Reports & Recommendations (Cost) (Loss) Type in Introduced Bill Action Required During Session
NO RELATED RECOMMENDATIONS
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General Land Office and Veterans’ Land Board Rider Highlights - House
2. Capital Budget. Recommendations modify the rider to remove the exemption from limitations on transferability in Article IX, §14.03, Limitation on Expenditures – Capital Budget [see Selected Fiscal and Policy Issue – House No. 7]. Recommendations also include a modification to reflect recommended funding levels for vehicle replacements. See Selected Fiscal and Policy Issue - House No. 1(b). Also added was a line item for PC and Laptop Replacements.
5. (former) Transfer Authority. Recommendations delete the rider. See Selected Fiscal and Policy Issue - House No. 7.
7. (former) Unexpended Balances Between Fiscal Years within the Biennium. Recommendations delete the rider. See Selected Fiscal and Policy Issue - House No. 7. 11. (new) Appropriation: Receipts and Account Balances for Surface Damages. Recommendations modify the rider to incorporate statutory language which directs receipts to the Permanent School Fund No. 44 (Other Funds) for surface damages to be appropriated for allowable purposes within two years from the date the funds were collected.
15. (former) Appropriation Authority of Coastal Protection Account Funds. Recommendations delete the rider because interest earnings from the General Revenue-Dedicated Coastal Protection Account No. 27 are no longer available to the agency for expenditure due to the enactment of HB 7, Eighty-third Legislature. See Selected Fiscal and Policy Issue - House No. 1(d).
17. (current) Appropriation: Coastal Management and Coastal Erosion Control. Recommendations modify the rider for recommended funding levels.
19. (current) Preservation and Maintenance of the Alamo. Recommendations modify the rider for recommended funding levels. Appropriations for the 2016-17 biennium are based on estimated 2014-15 revenues to the General Revenue-Dedicated Alamo Complex Account No. 5152 ($9.6 million for the biennium), which are less than original estimates ($11.9 million), primarily because third-party gift shop expenses no longer flow through the account. Amounts will be modified to reflect the Comptroller’s Biennial Revenue Estimate for this account ($6.8 million). See Selected Fiscal and Policy Issue - House No. 3.
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15 Section 6 General Land Office and Veterans' Land Board Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds Agency Exceptional Items - In Agency Priority Order 1. Preservation and Maintenance of the Alamo Complex. $ 5,000,000 $ 5,000,000
Amount includes $3.7 million in capital budget funding for 21 major projects; $1.1 for minor repair projects including lighting and air-conditioning systems; and $0.2 million for utility costs including extending high- bandwidth WiFi to the entire complex.
Capital projects totaling $3.7 million include various facility repairs and upgrades ($1.6 million); a remodeling of the vault which houses Alamo artifacts ($0.6 million); roof replacement and extension projects ($0.6 million); Information Technology improvements (0.5 million), and establishment of an biennial ongoing maintenance budget ($0.4 million). See Selected and Fiscal Policy Issue - House No. 3.
2. Closure of Rollover Pass on Bolivar Peninsula. $ 4,464,352 $ 5,800,483
GLO anticipates ongoing delays will prevent it from expending the balance of funds available for this project by August 31, 2015, and requests that unexpended balances for this project be available in the 2016-17 biennium ($5,800,483 in All Funds - $4,464,352 in General Revenue and $1,336,131 in Interagency Contracts). See Selected and Fiscal Policy Issue - House No. 5.
3. Restore Unexpended Balance and Transfer Authority. $ - $ -
The agency is requesting that provisions related to capital budget transferability (Rider 2), transfer authority between strategies (former Rider 5), and unexpended balance authority within the biennium (former Rider 7) be restored. See Selected Fiscal and Policy Issue – House No. 7 and Rider Highlights - House Nos. 2, 5 and 7.
Agency 305 2/9/2015 16 Section 6 General Land Office and Veterans' Land Board Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds 4. Contingency Appropriation for Disaster Recovery Program. $ 2,300,000 $ 2,300,000
GLO is requesting a contingency appropriation in a new rider to be effective upon the Land Commissioner’s notification to the Office of the Governor that current federal disaster relief funding for Hurricanes Dolly/Rita/Ike and Central Texas Wildfires have expired. Once federal funds have expired, GLO requests that $1.2 million each fiscal year be available from either General Revenue or a transfer from the Disaster Recover strategy in the bill pattern for Trustee Programs within the Office of the Governor. See Selected Fiscal and Policy Issue - House No. 6.
5. Restore Funds for Vehicle Replacements. $ 343,000 $ 477,176
GLO is requesting that funds reduced from the agency’s baseline request for vehicle replacement in House Bill 1 as Introduced be restored ($343,000 from the General Revenue-Dedicated Coastal Protection Account No. 27; $121,426 from the Permanent School Fund No. 44; and $12,750 from the Veterans Land Program Administration Fund No. 522). The agency’s preferred threshold for vehicle replacements is when a vehicles mileage reaches 100,000. See Selected Fiscal and Policy Issue - House No. 1(b).
Total, Items Not Included in the Recommendations $ 12,107,352 $ 13,577,659
Agency 305 2/9/2015 17 Section 7 General Land Office and Veterans' Land Board Summary of 10 Percent Biennial Base Reduction Options - House
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Intro Bill? Loss GR/GR-D Total
1 Earned Federal Funds from the Disaster These are dollars drawn from the Department of Housing and Urban Development $2,629,528 $2,629,528 $0 Recovery Program as part of the Community Development Block Grant program. The GLO is not required to spend these funds on the CDBG program and is offering up this 77% No funding source as our first priority in the event a statewide agency reduction mandate is implemented. 2 Alamo Complex Account The GLO was given responsibilty for the preservation, maintenance and $150,000 $150,000 $0 restoration of the Alamo Shrine and Complex and it's contents, and for the protection of the historical and architectural integrity of the exterior, interior, and the grounds of the Alamo Complex. Natural Resources Code Chapter 31.454 directs that the funds in the Alamo Complex Account are to be used only to administer that chapter and for the preservation, repair, renovation, improvement, expansion, purchase of equipment or to acquire a historical item appropriated to the complex. In addition to funds in the Alamo Complex Account, the 83rd legislature increased General Revenue funds dedicated to the Alamo to a total of $1.5 million. Those funds have gone a long way in making health and safety repairs to the Complex. The agency is requesting additional funds to address 3% No many more structural concerns, as well as, renovations needed immediately to accept the large collection of artifacts donated by Phil Collins. As both of these are accounts subject to reduction, the agency has identified the 10% reduction targeted associated with these accounts, however, any unspent funds must remain in the Alamo Complex Account. The loss of this appropriation authority would severely hamper the GLO's ability to fulfill the duties established by the 82nd Legislature, and prevent use of the funds dedicated to this State of Texas treasure.
Agency 305 2/9/2015 18 Section 7 General Land Office and Veterans' Land Board Summary of 10 Percent Biennial Base Reduction Options - House
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Intro Bill? Loss GR/GR-D Total
3 Oil Spill Prevention Research and The GLO contracts with state-supported universities to fund important scientific $250,000 $250,000 $0 Development and operations related research that enhances the agency's ability to preserve and protect the state's marine environment. Of particular interest is the Tidal Inlet Protection Strategy (TIPS) worked being by Texas A&M-Corpus Christi. The TIPS work will ultimately develop booming strategies that will allow spill responders to 5% No optimize the placement of containment boom to keep oil from moving offshore and through ship channels and tidal inlets into our sensitive estuarine habitats. Loss of funding would prevent the continuation of this program.
4 Coastal Mgmt & Erosion Project funding The GLO anticipates a 10% reduction in the Interagency Contract held with Texas $0 from TPWD Parks and Wildlife for coastal management and coastal erosion project funding since the funding comes from a General Revenue account. Loss of these dollars for projects will reslut in a loss of federal match dollars. During the 14-15 NA No biennium, the GLO expects to leverage nearly $.85 in federal matching funds or in- kind federal contribution for every state dollar spent, or $12.7 million.
TOTAL, 10% Reduction Options $3,029,528 $3,029,528 $0
Agency 305 2/9/2015 19 Section 7 General Land Office and Veterans' Land Board Summary of 10 Percent Biennial Base Reduction Options - House
Agency 10% Reduction Options by Category of Reduction
Programs - Service Reductions (Contracted) 29.6%
Administrative - Operating Expenses 70.4%
Agency 305 2/9/2015 20 House Appropriations General Land Office - Agency Highlights February 2015
GLO Overview The GLO is the oldest state agency, established in 1836. The GLO started as the agency that managed Texas’ land records, and has over time expanded to management of the real estate portion of the Permanent School Fund, providing benefits to Texas veterans, caring for the Texas coast, and most recently, the Alamo and long term disaster recovery.
Permanent School Fund The GLO manages the real estate portion of the Permanent School Fund, which includes over 13 million acres, as well as real estate investments. The GLO has deposited over $16B into the PSF since inception, over half of which was deposited since 2003. For the first time ever, in FY 2014, the GLO earned over a billion dollars for the PSF in one year. At September 30, 2014, GLO real assets investment portfolio was valued at approximately $4.1B and had produced a gross average annual return of 16.49% and a 5 year return of 13.67%, excluding cash. The School Land Board will distribute $150 million to the SBOE in FY2015; $175M in FY2016; and $200M in FY2017.
Transfer to the SBOE, FY12-FY17 2012 2013* 2014 2015 2016 2017 $250,000,000 $550,000,00 $130,000,00 $150,000,000 $175,000,000 $200,000,000 *This includes a $250M transfer to the PSF and a $300M transfer to the ASF
Veterans Land Board The GLO serves Texas veterans through the Veterans Land Board (VLB). The VLB has three key program areas: loans, nursing homes, and cemeteries.
Loans The current VLB loan portfolio includes 27,143 loans totaling $2.3 billion. In FY14, the VLB loan programs funded/purchased 3,398 veteran’s loans totaling $546,282,922. The VLB recently increased the land loan limit from $100,000 to $125,000. The GLO has been working to find efficiencies and has successfully decreased the processing time from 79 days in 2009 to 27 days in 2014.
Nursing Homes & Cemeteries The homes are located in Amarillo, Big Spring, Bonham, El Paso, Floresville, McAllen, Temple and Tyler and serve over 1000 Texas veterans. The homes currently have a 94% occupancy rate while the occupancy for all Texas nursing homes is generally around 70%. Additionally, the VLB manages four Veteran cemeteries that will provide burial space for 137,000 Texas veterans. The cemeteries are located in Abilene, Corpus Christi, Killeen and Mission. Over 9,100 veterans, their spouses and gold star parents have been interred.
Call Center The VLB operates the Texas Veteran Hotline call center, which is manned by the VLB, Texas Veterans Commission and the U.S. Department of Veterans Affairs. The call center processes over 47,000 inquiries per fiscal year.
Coastal Resources & Oil Spill The GLO has multiple responsibilities in monitoring activity along the 367 miles of beaches and 3,300 miles of bays and estuaries on the Texas Coast. In addition to managing multiple state and federal grant programs to protect and restore the coast, the GLO ensures the beaches stay open to the public and monitors coastal construction. Coastal grant programs continue to be in high demand, with grant requests far exceeding available funding. Over the history of the state funded Coastal Erosion Planning and Response Act (CEPRA) program, the GLO has brought in close to one dollar in matching funds for every state dollar spent and brings an economic benefit of $8 for every dollar spent.
The GLO Oil Spill Protection and Response program continues to provide 24/7 monitoring and response to coastal oil spills with 5 field offices that allow a response to any spill within 2 hours. The GLO was actively involved in the Texas City Y spill in Galveston Bay, and continues to work with other Natural Resources Damages Act (NRDA) trustees to ensure that the responsible parties for any spill pay for the damages and restoration of lost natural resources, including the Deepwater Horizon spill.
Disaster Recovery In July 2011, the Governor’s Office designated the GLO as the lead agency for long term disaster recovery. Texas received $3.1B for recovery from Hurricanes Ike and Dolly.
HOUSING (both single and multi-family and down-payment assistance)
Homes Remaining Total Funding Spent Funding Total Built to be Built Remaining HOUSING 4,385 2,862 7,247 $786,300,913 $816,319,251 $1,602,620,164
NON-HOUSING (public facilities from roads to seawalls, drainage, and energy generators)
Projects Remaining Total Funding Spent Funding Total Completed to be Built Remaining NON- 2900 2362 5262 $717,707,077 $565,843,276 $1,283,550,353 HOUSING
The State of Texas received an allocation of $36,319,686 in CDBG funds from HUD as disaster recovery assistance for the 2011 wildfires, with direction to spend these funds in Bastrop County. To date the GLO has assisted 35 families with home construction or down payment subsidies in addition to grants to the County for re-seeding projects, fire protection and a new fire station.
Alamo The Alamo currently welcomes approximately 1.5M people each year. The GLO and Alamo staff have organized four temporary special exhibits at the Alamo, including the return of the Travis Letter. Last summer the GLO secured the donation of the Phil Collins collection. GLO committed to make substantial progress on a visitors center and museum to house the collection within seven years.
Budget Overview Total budget request is $662.7M, of which $497.8M (75%) is federal funds for the long term disaster recovery program. This is a 56% decrease over the current biennium due to a large decrease in federal funds in the disaster recovery program. FTE’s are capped at 658.2.
Exceptional Items/Rider Revisions 1. Alamo - $5M The GLO’s highest priority is additional money for the Alamo. Deferred maintenance and needed upgrades on the complex is substantial.
2. Rollover Pass - $5.8M The GLO is requesting carry forward authority on a previously approved project, the closure of Rollover Pass. This project was appropriated $5,850,000 in 2009. The GLO contributed an additional $1.33M in coastal erosion funding. The GLO has secured the Corp permit needed for the closure and completed the engineering, but does not anticipate completing construction before the authority to spend the funds will lapse on August 31, 2015.
3. Restoration of UB and Transfer Authority HB 1 cut two long standing riders that are essential for efficient management of GLO programs, including Coastal, Archives and the Alamo. These riders allow the agency to transfer funding between strategies and to move funding between fiscal years within the biennium. Additionally, the GLO does not have a specific strategy for indirect support costs. The lack of such a strategy has resulted in the need to shift resources between strategies to accommodate funding cuts or new program initiatives.
4. Alamo Rider Revision The GLO requested a revision to a rider which would allow appropriation of unexpended balances for the Alamo, including donation funds. HB 1 did not include this revision. The LBB has notified the GLO that the funds appropriated to the GLO for the Alamo must not exceed the amounts projected in the Biennial Revenue Estimate, which is $1.4M per year lower than what the GLO anticipates its revenues and expenses to be and had requested in its LAR. A reduction of this size increases the need for access to prior year cash and appropriation authority due to the timing of collections which are typically higher during the spring and summer months. Without the UB authority, the GLO may have the cash in the bank, but not have the authority to spend it. The GLO requests that the rider revisions for unexpended balances be included in order to allow access to all funds necessary to maintain and preserve the Alamo Complex.
5. Disaster Recovery - $2.3M The GLO requested a contingency appropriation of up to $5.4M for the biennium in order to provide a skeleton crew for Disaster Recovery; however, the request is reduced to $2.3M for the biennium. This amount is sufficient to allow the continuation of operations for long-term disaster recovery after federal funds expire. The GLO currently receives no state funding for disaster recovery efforts.
6. Vehicles HB 1 cut the GLO's vehicle request by approximately $500,000. The GLO is requesting restoration of the funding in order to replace vehicles dedicated to appraisal and inspection of PSF lands, and oil spill prevention and response. These programs impose much wear and tear on the fleet in addition to the added corrosion from coastal elements. Reduction in the funding will put the GLO fleet further behind on the replacement schedule which was already impacted by the 100% vehicle reduction during FY12- 13.
Section 1
Railroad Commission Summary of Recommendations - House
Page VI - 52 Milton Rister, Executive Director Tina Beck, LBB Analyst RECOMMENDED FUNDING BY METHOD OF FINANCING 2014-15 2016-17 Biennial % Method of Financing Base Recommended Change Change General Federal Other Revenue General Revenue Funds $26,470,883 $23,884,554 ($2,586,329) (9.8%) Funds 2.8% Funds GR Dedicated Funds $133,169,729 $127,578,236 ($5,591,493) (4.2%) 7.8% 14.1% Total GR-Related Funds $159,640,612 $151,462,790 ($8,177,822) (5.1%)
Federal Funds $13,734,968 $13,269,410 ($465,558) (3.4%) Other $4,809,767 $4,812,914 $3,147 0.1%
All Funds $178,185,347 $169,545,114 ($8,640,233) (4.8%) GR Dedicated Funds 75.2% FY 2015 FY 2017 Biennial % Budgeted Recommended Change Change FTEs 807.1 800.1 (7.0) (0.9%)
The bill pattern for this agency (2016-17 Recommended) represents an estimated 100% of the agency's estimated total available funds for the 2016-17 biennium.
Agency 455 2/9/2015 1 Section 1 Railroad Commission 2016-2017 BIENNIUM TOTAL= $169.6 MILLION IN MILLIONS
ALL FUNDS GENERAL REVENUE AND FULL-TIME-EQUIVALENT POSITIONS GENERAL REVENUE-DEDICATED FUNDS
REQUESTED REQUESTED $156.1 $109.1 REQUESTED REQUESTED REQUESTED REQUESTED $150.3 $103.5 996.6 994.6
APPROPRIATED APPROPRIATED 807.1 807.1 APPROPRIATED 772.1
APPROPRIATED 2015 $61.7 APPROPRIATED APPROPRIATED $70.6 $70.1 2016 2017 APPROPRIATED $71.1 APPROPRIATED APPROPRIATED $79.7 $78.8
$86.5 $89.6 $88.6 $84.6 $85.0 $64.5 $80.1 $79.6 $75.5 $75.9 703.9 736.5 807.1 800.1 800.1 EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
In FY 2013 expended amounts exceeded appropriated amounts primarily because of unexpended balances carried forward from FY 2012, and various fees received in excess of Comptroller revenue estimates. In FY 2014 and FY 2015 expended amounts exceeded appropriated amounts primarily because of unexpended balances carried forward from FY 2013 for IT Modernization projects.
Agency 455 2/9/2015 2 Section 2 Railroad Commission Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
ENERGY RESOURCE DEVELOPMENT A.1.1 $33,441,400 $33,172,951 ($268,449) (0.8%) Recommendations include a net decrease of $0.3 million out of General Revenue- Related accounts, which includes a decrease of $0.6 million for one-time implementation costs of IT modernization, offset by increases to biennialize the statewide pay raise ($0.2 million) and an agency-requested reallocation for capital budget projects and other operating expenses ($0.1 million). (See Selected Fiscal and Policy Issue - House No. 1(a) and Items not Included in Recommendations - House No. 1.) PROMOTE ALTERNATIVE ENERGY RESOURCE A.2.1 $4,055,873 $2,247,000 ($1,808,873) (44.6%) Recommendations include a net decrease of $1.8 million out of General Revenue- Related accounts, including 7.0 FTEs, for the Alternative Fuels Research and Education Division. See Selected Fiscal and Policy Issue No. 3 and Summary of 10 Percent Biennial Base Reduction Options - House, Agency Option No. 1 and Items not Included in the Recommendations – House, No. 1. Total, Goal A, ENERGY RESOURCES $37,497,273 $35,419,951 ($2,077,322) (5.5%)
PIPELINE SAFETY B.1.1 $15,300,544 $15,020,575 ($279,969) (1.8%) Recommendations include a net decrease of $0.3 million from All Funds, which includes a decrease of $0.2 million in Federal Funds for completed pipeline safety projects; a decrease of $0.2 million for one-time Appropriated Receipts, offset by an increase of $0.1 million in General Revenue to biennialize the statewide pay raise. PIPELINE DAMAGE PREVENTION B.1.2 $2,473,753 $2,564,108 $90,355 3.7% REGULATE ALT ENERGY RESOURCES B.2.1 $4,126,381 $3,052,085 ($1,074,296) (26.0%) Recommendations include a net decrease of $1.1 million from General Revenue for the Alternative Energy Division Online Project (LP) and the Gas Services Online Project, both IT modernization projects that cannot be completed without supplemental funds. (See Selected Fiscal and Policy Issue – House, No. 1(a) and Items sot Included in Recommendations - House No. 1.) Total, Goal B, SAFETY PROGRAMS $21,900,678 $20,636,768 ($1,263,910) (5.8%)
Agency 455 2/9/2015 3 Section 2 Railroad Commission Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments OIL/GAS MONITOR & INSPECTIONS C.1.1 $46,320,684 $42,554,196 ($3,766,488) (8.1%) Recommendations include a net decrease of $3.8 million out of the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155, which includes a decrease of $3.5 million for one-time implementation costs of IT modernization, a one-time purchase of Infrared Cameras, and offset by an increase to biennialize the statewide pay raise ($0.3 million). (See Selected Fiscal and Policy Issue – House, No. 1(a) and 1(d) and Items not Included in Recommendations – House, No. 1.) SURFACE MINING MONITORING/INSPECT C.1.2 $7,280,182 $7,581,927 $301,745 4.1% OIL AND GAS REMEDIATION C.2.1 $11,244,724 $10,837,056 ($407,668) (3.6%) OIL AND GAS WELL PLUGGING C.2.2 $38,063,798 $37,785,113 ($278,685) (0.7%) SURFACE MINING RECLAMATION C.2.3 $6,529,560 $6,465,934 ($63,626) (1.0%) GAS UTILITY COMMERCE C.3.1 $5,368,076 $4,592,529 ($775,547) (14.4%) Recommendations include a net decrease of $0.8 million from General Revenue for the Gas Services Online Project, an IT modernization project that cannot be completed without supplemental funds. (See Selected Fiscal and Policy Issue – House, No. 1(a) and Items not Included in Recommendations - House, No. 1.) Total, Goal C, ENVIRONMENTAL & CONSUMER $114,807,024 $109,816,755 ($4,990,269) (4.3%)
PUBLIC INFORMATION AND SERVICES D.1.1 $3,980,372 $3,671,640 ($308,732) (7.8%) Total, Goal D, PUBLIC ACCESS TO INFO AND SERVICES $3,980,372 $3,671,640 ($308,732) (7.8%)
Grand Total, All Strategies $178,185,347 $169,545,114 ($8,640,233) (4.8%)
Agency 455 2/9/2015 4 Section 3
Railroad Commission Selected Fiscal and Policy Issues - House
1. IT Modernization Projects
The Eighty-third Legislature provided the Railroad Commission (RRC) $24.7 million in General Revenue-Related Funds for Information Technology (IT) Modernization Projects, including 11.0 FTEs. LBB recommendations begin with the agency’s 2016-17 baseline request for IT Modernization Projects and incorporate the following adjustments:
a. Maintain Ongoing Costs of Completed IT Modernization Projects: Recommendations maintain $9 million in the 2016-17 biennium for ongoing maintenance of the new projects, along with the 11.0 FTEs.
Projects implemented in the 2014-15 biennium and ongoing in the 2016-17 biennium include the following:
Agency Enforcement and Compliance Project: tracks compliance information and related activity resulting from field inspections and complaints. Oil and Gas Permitting and Online Filing: allows for online permitting and filing of required documentation and improves access to agency-maintained historical data Pipeline Online Permitting Project: allows operators online reporting of mandated data and allows the regulated community to check the status of current and past filings. Operator Portal Project: a portal for all agency online applications across all divisions, allows users to interface with agency systems; provides a means to communicate between the public and the agency. Geographic Information System (GIS) Technology Upgrade: a mapping system that links geographic locations of wells with agency- maintained data, including production data.
The agency determined it had insufficient funds to complete the following two other projects in 2014-15:
Alternative Energy Division (AED) Online Project: an automated system to streamline Liquid Petroleum (LP)-Gas Information System (LIS) processing and improve accuracy and data integrity for new and renewed company licenses, manager’s and employee’s certifications, exempt registrations, completion reports, Liquefied Petroleum Gas/Compressed Natural Gas/Liquefied Natural Gas (LPG/CNg/LNG) safety inspections, accident and complaint investigations, and non-compliance and cease-operation notices. Gas Services Online Project: online filings of electronic tariff, mandated reports, tax payments and communications between the public and the RRC
After spending $0.2 million in the 2014-15 biennium bidding out the projects, it was determined that total costs of $7.7 million (AED Online - $3.7 million; Gas Services Online - $4 million) would exceed the remaining $1.9 million available budget. Because the agency only had $1.6 million available for the two projects in the 2016-17 baseline request, recommendations did not include this amount which was included in reductions described in Selected Fiscal and Policy Issue – House No. 1(a). Sec 3a_Agency 455_rev1.docx 2/9/2015
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b. Maintain Current Obligations for Data Center Services (DCS): Recommendations include a reallocation of $9.3 million in General Revenue-Related Funds ($0.6 million from General Revenue and $8.7 million from the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155) and an increase in capital budget authority to reflect costs of maintaining current obligations for DCS. The source of the reallocated amounts are from what otherwise would have been savings from one-time implementation costs for the agency’s IT Modernization Projects. This amount added to the $8.4 million included in the recommendations for DCS costs that predate the modernization projects brings the total amount provided for DCS in the 2016-17 biennium to $17.7 million, and reflects a 110 percent increase in costs.
Budget Drivers Causing the Growth in DCS Costs: The agency reports when it first developed its request of $24.7 million for IT Modernization projects, it had estimated that related DCS costs would be no more than $1.6 million of this amount, with $1.2 million for ongoing maintenance in the 2016-17 biennum. Instead, DCS costs related to the IT Modernization projects were $3.4 million in the 2014-15 biennium. According to DIR, the growth in DCS costs related to the projects primarily were in the following categories:
New software, including a licensing agreement with Oracle (60 percent); New servers (17 percent); and, Cloud-based database administration services to support agency applications (16 percent)
Through the DCS contract, the agency also pays for one full-time contract Xerox employee to address all of the agency’s DCS needs.
c. Balances of IT Modernization Implementation Costs Swept. After leaving amounts for ongoing costs and DCS costs for current obligations, recommendations include a decrease of $6.4 million in General Revenue-Related Funds ($2.3 million from General Revenue and $4.2 million from the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155) to reflect the savings of one-time implementation costs of agency IT Modernization projects in the 2016-17 biennium compared to 2014-15 spending levels. (See Items Not Included in Recommendations - House No. 1.)
2. Scale Funding to Vehicle Replacement Cycles: Recommendations include a decrease of $207,340 in General Revenue-Related Funds ($77,202 from General Revenue and $130,138 from the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155) in agency-requested amounts for vehicle replacement cycles. Recommended funding levels provide $468,000 in fiscal year 2016 and $702,000 in fiscal year 2017 to replace an estimated 39 light duty trucks which will have mileage meeting or exceeding 150,000 miles as of August 31, 2017. Recommended funding levels exceed 2014-15 appropriated levels by $68,128.
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3. Reduction for One-Time Purchase of Infrared Cameras. Recommendations include a decrease of $594,650 from the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155 for one-time purchases of Infrared Cameras. In FY 2014, the agency purchased infrared cameras for inspectors of gas facilities. The cameras help an inspector identify whether there are gas leaks in a facility, or if an area is safe to enter.
4. Reduction of General Revenue-Related Funding for the Alternative Fuels Research and Education Division (AFRED). Recommendations include a decrease of $1.9 million in General Revenue-Related Funds ($0.5 million from General Revenue and $1.4 million from the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155), including 7.0 FTEs. The 16.4 FTEs remaining in recommendations for Strategy A.2.1, Promote Alternative Energy Resources, would be funded from Appropriated Receipts collected in seminar registration fees ($2.2 million). After taking into account reductions made in Selected Fiscal and Policy Issue - House No. 1(c), the recommendations eliminate General Revenue-related funding for the program as reflected in Summary of 10 Percent Biennial Base Reduction Options - House, Agency Option No. 1 (see Section 7). The division provides media outreach, organizes and staffs environmental trade shows, and informs school districts and public fleet operators about any grants and incentives available for alternative-fuel vehicles and refueling infrastructure. Because federal funds for these purposes have decreased from $1.4 million received in fiscal year 2013 to none expected in the 2016-17 biennium, grant and incentive opportunities are increasingly scarce. The agency is now requesting that a portion of this amount be restored. See Items not Included in the Recommendations – House, No. 1.
5. Fund Balances in the Oil and Gas Regulation and Cleanup Account No. 5155. The Comptroller’s Biennial Revenue Estimate (BRE) anticipates $144.5 million in 2016-17 revenues compared to $141.6 million in 2016-17 appropriations and expected benefits costs in House Bill 1 as Introduced. Agency exceptional items from Fund 5155 total $9.6 million, which does not include related benefits costs for requested FTEs. Also, the agency requests that any collections in revenues in excess of the BRE in its rider request for contingent revenue not be used to fund agency exceptional items given the unpredictability of such revenue materializing given the volatility of oil prices and production. See Agency Exceptional Items and the rider request in Items not Included in the Recommendations – House, No. 12
6. Budget Authority.
Recommendations realign certain budget flexibilities formerly provided the agency to standard budget authority available to a standard agency in Article IX provisions of the General Appropriations Bill. Recommendations delete the following riders from the agency’s bill pattern:
a. Rider 3, Transfer Authority. Article IX, §14.01, Appropriation Transfers, allows the agency to transfer up to 20 percent from one appropriation item to another appropriation item at the agency’s discretion. The agency may exceed the 20 percent discretionary transfer authority with approval of the Governor and the Legislative Budget Board.
b. Rider 4, Unexpended Balances Between Fiscal Years within the Biennium. The agency still has the standard authority to carry forward unexpended balances of appropriations for capital budget provisions pursuant to Article IX, §14.03. Also, Article
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IX, §14.05, Unexpended Balance Authority Between Fiscal Years within the Same Biennium, allows the agency to carry forward balances between fiscal years with Legislative Budget Board approval.
Recommendations modify Rider 2, Capital Budget to remove the exemption from limitations on transferability in Article IX, §14.03, Limitation on Expenditures – Capital Budget. Article IX, §14.03 provisions include limiting increases in expenditures for capital budget items of appropriation to 25 percent of each capital budget item, whereas formerly the agency had unlimited authority to increase expenditures, subject to a cap of 125 percent of each year’s aggregate capital budget appropriation. The agency may exceed capital budget provisions with approval of the Governor and the Legislative Budget Board. See Items not Included in Recommendations – House, Nos. 7, 8 and 9.
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Railroad Commssion Performance Measure Highlights - House
Expended Estimated Budgeted Recommended Recommended 2013 2014 2015 2016 2017 • Number of Wells Monitored 405,593 419,792 445,000 460,000 480,000
Measure Explanation: The continued growth in the use of fracking has contributed to the numbers of oil and gas wells statewide. The agency projects the increase to continue at a rate between 4 and 5 percent statewide.
• Number of Oil and Gas Facility Inspections 125,878 130,812 118,000 118,000 118,000 Performed
Measure Explanation: The agency exceeded its target of inspecting 116,110 facilities in both FY 2013 and FY 2014 , and reports the number of violations identified has been trending downward, indicating the agency’s inspection activity has helped the industry become more compliant with agency rules.
• Number of Orphaned Wells Plugged with 778 563 875 875 875 the Use of State-Managed Funds
Measure Explanation: The agency reports that is has been unable to meet its target of plugging 1,200 wells each fiscal year of the 2014-15 biennium because there is a shortage of available plugging contractors. In FY 2014, the agency awarded 64 contracts to 28 contractors, with 16 of the contractors receiving multiple awards. Multiple awards to the same contractors has resulted in wells taking longer to be plugged.
• Number of Documents Provided to 621,334 523,246 426,400 349,650 286,710 Customers by Information Services
Measure Explanation: The increase in the amount of oil and gas information available on the agency’s website continues to contribute to the decline in the number of hard copy documents the agency must provide.
Sec 3c Performance_Agency 455.xlsx 2/9/2015
9 Section 3 Railroad Commission Summary of Federal Funds (Estimated 2014) - House TOTAL = $7.1M
State Underground Water Source Protection Regulation of Surface Coal $0.4M or 6% Mining and Surface Effects of Underground Coal Mining $1.3M or 18% Abandoned Mine Land Reclamation (AMLR) State and Tribal $2.2M or 31% Response Program $0.1M or 2% Other $0.1M or 2%
Pipeline Safety Conservation Research $3.0M or 42% and Development <$0.1M or <1%
Note: Amounts and percentages shown may sum greater/less than actual total due to rounding.
Agency 455 2/9/2015 10 Section 3 Railroad Commission Significant Federal Funds Changes - House
2014-15 2016-17 Recommended CFDA No. Program Name Base Recommended Over/(Under) Base Comments
15.250.000 Regulation of Surface Coal Mining and Surface Effects of Underground Coal Mining $2,601,439 $2,600,000 ($1,439) 15.252.000 Abandoned Mine Land Reclamation (AMLR) $4,206,867 $3,950,000 ($256,867) 20.700.000 Pipeline Safety $5,827,045 $5,657,508 ($169,537) 81.086.000 Conservation Research and Development $37,715 $0 ($37,715)
Agency 455 2/9/2015 11 Section 4 Railroad Commission of Texas (RRC) Performance Review and Policy Report Highlights - House
Savings/ Gain/ Fund Included Reports & Recommendations (Cost) (Loss) Type in Introduced Bill Action Required During Session
NO RELATED RECOMMENDATIONS
Sec 4 - Agency 455 2/9/2015
12 Section 5
Railroad Commission Rider Highlights - House
2. Capital Budget. Recommendations modify the rider to remove the exemption from limitations on transferability in Article IX, §14.03, Limitation on Expenditures – Capital Budget [see Selected Fiscal and Policy Issue - House No. 6]. Recommendations also modify the rider to reflect recommended funding levels for Data Center Services [see Selected Fiscal and Policy Issue - House No. 1(b)] and vehicle replacements [see Selected Fiscal and Policy Issue - House No. 1(c)]. Also added was a line item for PC and Laptop Replacements. See Items not Included in the Recommendations – House No. 7.
3. (former) Transfer Authority. Recommendations delete the rider. See Selected Fiscal and Policy Issue - House No. 6. See Items not Included in the Recommendations – House No. 8.
3. (current) Appropriations Limited to Revenue Collections and Contingent Revenue: LPG/CNG/LNG Fees. Recommendations modify the rider to reflect recommended funding levels from General Revenue in Strategy B.2.1, Regulate Alternative Energy Resources ($354,618 in FY 2014 and $400,181 in FY 2015). See Items Not Included in the Recommendations – House, No. 10.
4. (former) Unexpended Balances Between Fiscal Years within the Biennium. Recommendations delete the rider. See Selected Fiscal and Policy Issue – House, No. 6 and Items not Included in Recommendations – House, No. 9.
4. (current) Liquid Propane (LP) Gas Training and Examination Renewal Fees. Recommendations modify the rider to reflect recommended funding levels.
5. (current) Appropriation Limited to Revenue Collections: Surface Mining Permits and Contingency Appropriation for Fee Increase. Recommendations modify the rider to remove language requiring the agency to provide information to the Comptroller documenting fee increases to support contingent revenue requirements. The agency complied with this requirement and the funding and related 2 FTEs are part of the agency’s baseline request.
6. (current) Appropriation for Pipeline Safety Fees. Recommendations modify the rider to remove language requiring the agency to implement new fee increases to support contingent revenue requirements and to reflect recommended funding levels. The agency complied with this requirement and the funding is part of the agency’s baseline request. The agency is still required to generate revenue sufficient to cover identified appropriations and Other Direct and Indirect Costs.
Sec 5 Riders_Agency 455.docx 2/9/2015
13 Section 5
7. (former) Appropriation: Abandoned Mine Land Funds. Recommendations delete the rider. The agency indicates there are no funds remaining in the Land Reclamation Fund Account No. 454 (Federal Funds). The last available balances ($246,545) were expended in the 2014-15 biennium.
7. (current) Capital Budget Expenditures: Federal Funds and Appropriated Receipts. Recommendations modify the rider to make notification requirements of federal funds and appropriated receipts received to purchase capital budget items in excess of Article IX limitations an annual notification, within 60 days of the close of the fiscal year, than a required notification upon receipt. (See Items Not Included in Recommendations – House, No. 11.)
12. (current) High-Cost Housing Salary Supplement. Recommendations modify the rider to clarify the salary supplement provided to employees living in those parts of the state with high costs of living due to the shale gas boom are provided the supplement based upon where the employee lives, rather than where the employee works.
13. (former) Sunset Contingency. Recommendations delete the rider. Sunset legislation (HB 1675) enacted by the Eighty-third Legislature continued operations of the Railroad Commission (RRC) in the 2014-15 biennium. The RRC is scheduled for another Sunset review during the 2016-17 biennium. (See Items Not Included in Recommendations – House, No. 6.)
16. (former) Contingent Revenue Appropriation: General Counsel Enforcement. Recommendations delete the rider. In the 2014-15 biennium, the RRC increased the Pipeline Safety Fee and Oil and Gas Regulation and Cleanup Fee Surcharge in amounts sufficient to cover the 2014-15 appropriations provided in this rider. The agency will be continuing the fee in the 2016-17 biennium. Amounts governed by the previous rider are in the 2016-17 baseline request since the rider requirements were met.
Sec 5 Riders_Agency 455.docx 2/9/2015
14 Section 6 Railroad Commission Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds Agency Exceptional Items - In Agency Priority Order 1. Restore Selected LBB Reductions. The agency requests that a portion of funding from General Revenue $ 6,085,640 $ 6,085,640 ($1,391,012) and the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155 ($4,694,628), including 7.0 FTEs that was reduced in one-time IT Modernization Implementation Costs ($6.3 million - see Selected Fiscal and Policy Issue – House No. 1(a) and in the Alternative Fuels Research and Education Division (AFRED, $1.9 million – see Selected Fiscal and Policy Issue – House No. 4 and Summary of 10 Percent Biennial Base Reduction Options – House, Agency Option No. 1) be restored for other agency priorities, including conducting safety inspections, reducing backlogs, and maintaining key information systems. A portion of this request would also restore a portion funding to AFRED programs, in alignment with revised agency priorities. a) Promote Energy Resource Development (A.1.1), $1,464,925 from the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155; b) Promote Alternative Energy Resources (A.2.1), $398,320 from General Revenue for the Alternative Fuels Research and Education Division (AFRED), including 3.0 FTEs. See Selected Fiscal and Policy Issue - Senate No. 4; c) Ensure Pipeline Safety (B.1.1), $265,953 from General Revenue; d) Pipeline Damage Prevention (B.1.2), $41,905 from General Revenue; e) Regulate Alternative Energy Resources (B.2.1), $904,479 from General Revenue, including 4.0 FTEs; f) Oil and Gas Monitoring and Inspections (C.1.1), $1,891,568 from the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155; g) Surface Mining Monitoring and Inspections (C.1.2), $152,195 from General Revenue; h) Oil and Gas Remediation (C.2.1), $409,044 from the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155; i) Oil and Gas Well Plugging (C.2.2), $468,685 from the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155;
Agency 455 2/9/2015 15 Section 6 Railroad Commission Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds j) Surface Mining Reclamation (C.2.3), $26,480 from General Revenue; and, k) Public Information Services (D.1.1), $62,086 from the General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155. 2. Enhanced Application Support - Help Desk. Funding for 11.0 FTEs to provide Information Technology (IT) $ 1,418,968 $ 1,418,968 help desk support for the issuance of drilling permits, pipeline safety inspections, and delivery of regulatory services via online systems. Additionally, these staff would reduce dependence on contractors for proprietary systems and system support. Of the amount requested, $1.1 million would be funded from the agency’s General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155, and $0.3 million would be from General Revenue. 3. Increase Staffing - Energy Resource Development. Funding for 33.8 FTEs in the technical permitting and $ 3,598,370 $ 3,598,370 administrative compliance areas of the Oil and Gas division to administer drilling permit applications which have grown from 1,800 per month to 3,000 per month since fiscal year 2011. Current backlogs are from 3 to 25 days per application, and 6 to 10 months in well completion reports. The request would be funded completely from the agency’s General Revenue-Dedicated Oil and Gas Regulation and Cleanup Account No. 5155.
4. Pipeline Safety - Specialized Inspections. Funding for 44.5 FTEs to conduct safety evaluations of pipeline $ 3,036,534 $ 5,060,890 operators. Several types of specialized safety evaluations require teams of at least two inspectors. Of the amount requested, $3 million would be funded from General Revenue, and another $2 million would be from Federal Funds.
5. Replace Microfiche Reader-Printers. Funding from the General Revenue-Dedicated Oil and Gas Regulation $ 150,000 $ 150,000 and Cleanup Account No. 5155 to replace 10 15-year-old microfilm and microfiche reader-printers in order to continue to access certain oil and gas information that is only available in micro format.
Agency 455 2/9/2015 16 Section 6 Railroad Commission Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds 6. Sunset Review – HB 1675. Funding for 2.0 FTEs and $1.5 million to implement the provisions of HB 1675, 83rd $ 1,540,552 $ 1,540,552 Legislature, which requires the RRC to pay costs incurred by the Sunset Advisory Commission (SAC) for its next review of the RRC. Of this amount, $273,294 is SAC-identified costs to reimburse 4 FTEs for a 7-month review over the biennium. In addition to this amount, the RRC is requesting $1,267,258 for 2 FTEs (an auditor and a quality control specialist) and professional services for forensic auditing services. Because the legislation specifies that the next Sunset review be a forensic audit, it is the RRC’s position that a forensic audit implies fraudulent activity and outside services would be needed to assist the agency in its response. The request would be funded completely from General Revenue. 7. Rider 2, Capital Budget. The agency requests restoring unlimited transferability provisions to the capital $ - $ - budget, subject to an aggregate cap on expenditures of 125 percent of appropriations each fiscal year. Also, The agency is asking not to have a separate appropriation item for "PC and Laptop Leasing," and instead would like to include those amounts in the "Technology Replacement and Upgrades" appropriation Item.
8. Rider 3, Transfer Authority. The agency requests restoring ulimited transferability provisions between $ - $ - strategies.
9. Rider 4, Unexpended Balances Between Fiscal Years within the Biennium. The agency requests restoring $ - $ - unexpended balance authority within the biennium.
10. Rider 5, Appropriations Limited to Revenue Collections and Contingent Revenue: LBG/CNG/LNG Fees. $ - $ - The agency is requesting a biennial target for contingent revenue above the Biennial Revenue Estimate, rather than an annual target.
11. Rider 9, Capital Budget Expenditures: Federal Funds and Appropriated Receipts. The agency requests $ - $ - retaining its current requirement to notify the Legislative Budget Board and the Governor upon receipt of federal funds and appropriated receipts received to purchase capital budget items in excess of Article IX limitations, rather than in an annual notification after the close of each fiscal year. See Rider Highlights – House No. 9.
Agency 455 2/9/2015 17 Section 6 Railroad Commission Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds 12. New Rider, Appropriations: Oil and Gas Regulation and Cleanup Account Fees. The agency has included $ - $ - a rider request for appropriation authority in Fund 5155 for collections in excess of the Comptroller's Biennial Revenue Estimate (BRE). Due to current conditions affecting oil prices and production, at this time the agency cannot estimate how much might be collected in excess of the BRE.
The agency also asks that amounts collected may be spent on capital budget items without limitation, provided any expenditures for major information resources projects have been reviewed and approved by the Legislative Budget Board and the Quality Assurance Team.
Total, Items Not Included in the Recommendations $ 15,830,064 $ 17,854,420
Agency 455 2/9/2015 18 Section 7 Railroad Commission Summary of 10 Percent Biennial Base Reduction Options - House
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Intro Bill? Loss GR/GR-D Total
1 Promote Alternative Energy Resouces This reduction would eliminate General Revenue and General Revenue Dedicated $2,040,293 $2,040,293 7.0 $0 funding for the Alternative Fuels Research & Education Division (AFRED). This division provides media outreach, organizes and staffs trade, environmental, and consumer product shows, participates in propane safety seminars and events, 100% Yes educates propane marketers, and informs school districts and public fleet operators about grants and incentives available for alternative-fueled vehicles and refueling infrastructure. 2 Pipeline Online Permitting Project This would reduced funds that were originally appropriated for the Pipeline Online $637,076 $637,076 $0 Permitting Project that were reallocated back to the program to assist in dealing 71% No with the increasing demands placed upon the Pipeline Safety Program. 3 Oil and Gas Permitting and Online Filing This reduction would eliminate funds originally appropriated to the Commission $5,213,494 $5,213,494 $0 Project from HB 1025, 83rd Legislature, R.S. 2013 that were used to develop the Oil and 92% No Gas Permitting and Online Filing System that was reallocated to assist in meeting the high demands placed on the Oil and Gas Division. 4 Pipeline Online Permitting Project This would reduced funds that were originally appropriated for the Pipeline Online $1,300,055 $1,300,055 $0 Permitting Project that were reallocated back to the program to assist in dealing 100% No with the increasing demands placed upon the Pipeline Safety Program. 5 Oil and Gas Permitting and Online Filing This reduction would eliminate funds originally appropriated to the Commission $1,428,073 $1,428,073 $0 Project from HB 1025, 83rd Legislature, R.S. 2013 that were used to develop the Oil and 100% No Gas Permitting and Online Filing System that was reallocated to assist in meeting the high demands placed on the Oil and Gas Division. 6 Agency Enforcement Project HB 1025, 83rd Legislature, R.S. 2013, provided funds to develop the Agency $2,662,735 $2,662,735 $0 Enforcement Project for the 2014-2015 biennium. This reduction would reduce 70% No the amount of funds available to the program to meet the increasing demands for monitoring and inspections for the 2016-2017 biennium. 7 GIS Upgrade Project Funds that were appropriated by HB 1025, 83rd Legislature, R.S., 2013, that were $2,500,000 $2,500,000 $0 used to develop the GIS Upgrade project in 2014-2015 biennium and relocated 85% No back to the program in 2016-2017 biennium would be reduced by this reduction.
TOTAL, 10% Reduction Options $15,781,726 $15,781,726 7.0 $0
Agency 455 2/9/2015 19 Section 7 Railroad Commission Summary of 10 Percent Biennial Base Reduction Options - House
Agency 10% Reduction Options by Category of Reduction
Programs - Service Reductions (Contracted) 34.2% Programs - Service Reductions (Other) 65.8%
Agency 455 2/9/2015 20 An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program
Background:
• To prevent pollution of the state's surface water and groundwater resources, the Railroad Commission (Commission) has an Oil and Gas Regulation and Cleanup Program that is funded, in part, by financial assurances (cash, bonds, and letters of credit) that oil and gas operators provide.
• The Commission’s Oil and Gas Division is headquartered in Austin and has nine district offices across the state.
• The district offices use a worksheet the Commission developed to determine the priority rating to assign to a well they recommend for plugging.
• The Commission was appropriated $20,106,474 in fiscal year 2012 and $20,078,082 in fiscal year 2013 for oil and gas well plugging.
Report No. 13-040; Released July 3, 2013 Page 1 of 8 An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program
Background (continued):
• The Commission establishes annual operational goals for the number of wells each district office should plug. The Commission reported that it had plugged, had contracts to plug, or had bid out the plugging of 1,162 wells (95 percent of its 1,222 goal) for fiscal year 2012.
• As of February 27, 2013, auditors’ analysis of the Commission’s operator data showed the Commission held $378,443,900 in financial assurances from operators.
• This audit focused on the process of selecting wells for plugging that the Commission performs through the Oil and Gas Regulation and Cleanup Program, and the Commission’s collection of financial assurances.
Report No. 13-040; Released July 3, 2013 Page 2 of 8 An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program
Overall Conclusion:
• The Commission complies with requirements in the Texas Natural Resources Code related to its process for prioritizing and recommending oil and gas wells for plugging with state funds.
• The Commission has effective processes and related controls to establish, maintain, and collect the financial assurances from oil and gas well operators that are required by the Texas Natural Resources Code, Chapter 91. However, the Commission has not documented its informal process to help ensure that it can collect on those financial assurances before they expire.
• The Commission has adequate information technology security policies, user access policies, use of generic user id accounts, change management policies, password controls for applications, and physical security controls for its mainframe.
Report No. 13-040; Released July 3, 2013 Page 3 of 8 An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program
Findings (Chapter 1):
• The Commission follows a process for prioritizing and recommending oil and gas wells for plugging that incorporates risk-based factors. The Commission’s policies and procedures provide the district offices with eligibility criteria for state-funded plugging and direction on how to prioritize and recommend wells for plugging.
• Auditors tested the records for 121 wells recommended for plugging and determined that the district offices had completed priority worksheets for all 121 wells.
• The Commission had documentation supporting the prioritization, recommendation, and approval for 117 (97 percent) of the 121 wells recommended for plugging that auditors tested. The Commission did not have complete documentation to support how it determined that the remaining four wells were eligible for plugging with state funds at the time of the recommendations.
Report No. 13-040; Released July 3, 2013 Page 4 of 8 An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program
Findings (Chapter 2):
• The Commission has processes and related controls to help ensure that it (1) assesses and receives the correct financial assurances from operators, (2) properly stores and accounts for financial assurances it receives in the form of bonds and letters of credit, (3) processes financial assurances accurately, and (4) accurately enters data for the organizational reports that operators submit.
• The Commission has adequate processes to help ensure that it sends demand notices to operators that do not submit required annual organizational reports.
o In 63 (98 percent) of the 64 cases that auditors tested, the Commission appropriately sent demands to collect on operators’ financial assurances. o The Commission did not send a demand before one operator’s financial assurance (a letter of credit) expired; that resulted in the Commission not being able to collect on the operator’s $25,000 letter of credit.
Report No. 13-040; Released July 3, 2013 Page 5 of 8 An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program
Findings (Chapter 2 continued):
• The Commission has an informal process to help ensure that it sends demand notices on time; however, it has not documented that process to help ensure that it standardizes its process so that it can collect on financial assurances before they expire.
Report No. 13-040; Released July 3, 2013 Page 6 of 8 An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program
Findings (Chapter 3):
• The Commission has adequate controls over its mainframe and its Oilfield Cleanup (OFCU) application in the following areas:
o Information technology security policies. o User access policies. o Use of generic user id accounts. o Change management policies. o Password controls for applications. o Physical controls over the data center that houses the Commission’s mainframe.
Report No. 13-040; Released July 3, 2013 Page 7 of 8 An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program
Findings (Chapter 3 continued):
• The Commission should strengthen certain controls for its mainframe and OFCU application in the following areas:
o Review of user access. The Commission does not periodically review user accounts for its mainframe and OFCU application as required by its policy and the Texas Administrative Code. o Segregation of programmer duties. Two programmers have the ability to develop or change code for the OFCU application and migrate that code to the production environment. o Password controls for servers. The Commission’s password controls on two of its servers do not meet industry best standards. o Physical controls over the Commission’s data center. The Commission does not regularly monitor the physical maintenance and safety inspection schedule for its data center. The Commission also does not consistently document when visitors physically access its data center.
Report No. 13-040; Released July 3, 2013 Page 8 of 8
John Keel, CPA State Auditor
An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program July 2013 Report No. 13-040
An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program
SAO Report No. 13-040 July 2013
Overall Conclusion
The Railroad Commission (Commission) follows a process for prioritizing and Background Information recommending oil and gas wells for Through its Oil and Gas Division, the Railroad plugging that incorporates risk-based Commission (Commission) regulates the factors and complies with requirements in exploration, production, and transportation of oil the Texas Natural Resources Code. As part and natural gas in Texas. To prevent pollution of the state's surface water and groundwater of its Oil and Gas Regulation and Cleanup resources, the Commission has an Oil and Gas Program, the Commission creates annual Regulation and Cleanup Program that is funded, in part, by financial assurances (cash, bonds, and plugging goals for its Oil and Gas Division’s letters of credit) that oil and gas operators district offices (see the text box for provide. This audit focused on the process of additional information). The district selecting wells for plugging that the Commission performs through that program, and its collection offices follow the Commission’s policies of financial assurances. and procedures to prioritize wells eligible The Oil and Gas Division is headquartered in Austin for plugging and recommend the specific and has nine district offices across the state (see Appendix 2). The district offices help ensure wells that should be plugged. compliance with Commission rules by performing field inspections, witnessing well-plugging and The Commission also has effective testing, and investigating complaints and processes and related controls to incidents. establish, maintain, and collect the The Commission was appropriated $20,106,474 in fiscal year 2012 and $20,078,082 in fiscal year financial assurances from oil and gas well 2013 for oil and gas well-plugging. The operators that are required by Texas Commission’s operational goals were to plug 1,222 wells in fiscal year 2012 and 815 wells 2013. At the Natural Resources Code, Chapter 91. The end of fiscal year 2012, the Commission reported financial assurances are cash, bonds, or that it had plugged, had contracts to plug, or had letters of credit that operators provide bid out the plugging of 1,162 wells. and that fund the Commission’s plugging of wells. However, the Commission should strengthen certain controls related to its financial assurance processes to help ensure that it can collect on those financial assurances before they expire. In 63 (98 percent) of the 64 cases that auditors tested, the Commission appropriately sent demands to collect on operators’ financial assurances. However, in one instance the Commission did not collect on an operator’s $25,000 letter of credit. In that instance, the letter of credit expired before the Commission determined that it should have collected on that letter of credit.
The Commission has adequate information technology security policies, user access policies, use of generic user id accounts, change management policies, password controls for applications, and physical security controls for its mainframe. However, the Commission should strengthen certain controls for its mainframe and Oilfield Cleanup (OFCU) application in the areas of review of user access,
This audit was conducted in accordance with Texas Government Code, Sections 321.0131 and 321.0132. For more information regarding this report, please contact James Timberlake, Audit Manager, or John Keel, State Auditor, at (512) 936-9500.
An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program SAO Report No. 13-040
segregation of programmer duties, password controls for servers, and physical controls over the Commission’s data center.
Auditors communicated less significant issues to Commission management separately in writing.
Key Points
The Commission follows a process for prioritizing and recommending oil and gas wells for plugging that incorporates risk-based factors.
District offices use a worksheet the Commission developed to determine the priority rating to assign to a well they recommend for plugging. Auditors tested the records for 121 wells recommended for plugging and determined that the district offices had completed priority worksheets for all 121 wells. The Commission’s central office in Austin reviews and approves the wells the district offices recommend for plugging. The Commission had documentation supporting the prioritization, recommendation, and approval for 117 (97 percent) of the 121 wells recommended for plugging that auditors tested.
The Commission establishes annual operational goals for the number of wells each district office should plug.
Factors the Commission considers when developing goals for plugging wells include the number of wells plugged in prior periods, the results of cost analysis, and the available well-plugging budget. The Commission reported that it had plugged, had contracts to plug, or had bid out the plugging of 1,162 wells (95 percent of its well-plugging goal) for fiscal year 2012. The cost associated with plugging the 764 wells the Commission plugged in fiscal year 2012 was $12,309,477.
The Commission has designed and implemented effective processes and related controls to help ensure that regulated entities establish and maintain financial assurances in amounts consistent with state law and administrative rules.
The Commission has automated controls to help ensure that it calculates the appropriate amount of financial assurance each operator must provide. All 35 operators that auditors tested provided the correct amount of financial assurances. The Commission also has a process to help ensure that (1) its processing of financial assurances is accurate and (2) data entry for the organizational reports that operators submit is accurate. The Commission properly entered all of the key data from hard-copy documentation operators submitted into its mainframe system for the 60 operators that auditors tested.
ii An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program SAO Report No. 13-040
The Commission has adequate processes and controls to help ensure that it sends demand notices to operators that do not submit required annual organizational reports.
As discussed above, in 63 (98 percent) of the 64 cases that auditors tested, the Commission appropriately sent demands to collect on operators’ financial assurances. In one instance, however, the Commission did not send a demand before that operator’s financial assurance (a letter of credit) had expired, resulting in the Commission not being able to collect on that operator’s $25,000 letter of credit. The Commission has an informal process for ensuring that it sends demand notices; however, it has not documented that process to help ensure that it standardizes its process so that it can collect on financial assurances before they expire.
Summary of Management’s Response
The Commission agreed with the recommendations in this report.
Summary of Information Technology Review
Auditors conducted a review of general controls and a review of application controls for the Commission’s mainframe system and OFCU application. As discussed above, the Commission has adequate information technology controls in certain areas, but it should strengthen information technology controls in other areas.
Summary of Objectives, Scope, and Methodology
The audit objectives were to determine whether the Commission:
Has established and adheres to a risk assessment process to prioritize the plugging of wells with state funds.
Has designed and implemented effective processes and related controls to help ensure that (1) regulated entities establish and maintain the financial assurance required by Texas Natural Resources Code, Chapter 91, in amounts consistent with state law, administrative rules, and Commission policy and (2) the Commission collects funds from those sources in accordance with Commission policies and procedures, the administrative rules, and the terms of agreements related to that financial assurance.
The audit scope included reviewing records of oil and gas wells for eligibility for plugging with state funds and the associated financial assurances for fiscal year 2012 and fiscal year 2013 through February 2013.
iii An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program SAO Report No. 13-040
The audit methodology included collecting information and documentation from the Commission; reviewing policies and procedures, statutes, and rules related to state-funded well-plugging and financial assurances; and analyzing and evaluating data and the results of tests. Specifically, auditors reviewed oil and gas well inspection records, documentation recommending wells for state-funded plugging, operators’ organizational reports, and financial assurance documentation. Auditors assessed the reliability of the operator and well data used in the audit by (1) reviewing general controls and application controls for the mainframe system and OFCU application, (2) comparing data to other sources of information, (3) analyzing key data elements for completeness and reasonableness, and (4) interviewing Commission employees knowledgeable about the data. Auditors determined that the data was sufficiently reliable for the purposes of this audit.
iv
Contents
Detailed Results
Chapter 1 The Commission Follows Its Process for Prioritizing and Recommending Oil and Gas Wells for Plugging ...... 1
Chapter 2 The Commission Ensures That Operators Provide Required Financial Assurances, But It Should Strengthen Certain Controls Related to Those Financial Assurances ...... 5
Chapter 3 The Commission Has Adequate Information Technology Systems Controls, But It Should Strengthen Controls in Certain Areas ...... 9
Appendices
Appendix 1 Objectives, Scope, and Methodology ...... 14
Appendix 2 Districts in the Railroad Commission’s Oil and Gas Division ...... 18
Appendix 3 Related State Auditor’s Office Work ...... 19
Detailed Results
Chapter 1 The Commission Follows Its Process for Prioritizing and Recommending Oil and Gas Wells for Plugging
The Railroad Commission (Commission) follows a process for prioritizing and recommending oil and gas wells for plugging that incorporates risk-based factors and complies with requirements in Texas Natural Resources Code, Section 91.1132 (see text box for additional information on those requirements). The Commission implemented its process to Texas Natural Resources Code prioritize and recommend wells for plugging with state funds at Requirements each of its Oil and Gas Division’s district offices (see Appendix 2 Texas Natural Resources Code, Section 91.1132, requires the Commission to for a map of the district offices). develop a system to: . Identify wells that pose a high risk of The Commission establishes operational annual goals for the contaminating surface water or number of wells each district office should plug. The Commission groundwater. . Periodically test high-risk wells by considers several factors when developing those goals. To meet its conducting a fluid level test or, if well-plugging goal, each district office recommends wells for necessary, a pressure test. plugging based on a risk-based prioritization and decision making . Give priority to plugging high-risk wells with compromised casings. process. The Commission’s central office in Austin then approves the district offices’ recommendations based on various factors.
Prioritizing, Recommending, and Approving Wells for Plugging with Priority Ratings State Funds The Commission’s district offices assign one of the following priority ratings to each well they recommend for plugging: The process for prioritizing wells for plugging incorporates risk- . 1 – This is the highest rating and is based factors. The Commission’s policies and procedures provide assigned to wells that are leaking. the district offices with eligibility criteria for state-funded plugging . 2H – This rating is assigned to relatively and direction on how to prioritize and recommend wells for higher risk wells, including wells in areas where usable quality water is not plugging (see text box for information on priority ratings). The protected, wells in areas where district offices are responsible for submitting well-plugging hydrogen sulfide affects a public area, and wells with fluid at the surface that recommendations to the Commission. is not of a usable quality. . 2 – This rating is assigned based on District offices use a worksheet the Commission developed to weighted scores to wells with a fluid determine the priority rating to assign to a well they recommend level that is at or above the deepest base of usable quality water. for plugging. Factors on that worksheet include: . 3 – This rating is assigned based on weighted scores. . Whether the well is capable of protecting usable quality . 4 – This is the lowest rating and is groundwater. assigned based on weighted scores. Source: The Commission. . The mechanical integrity of the well.
. The fluid level in relation to usable quality water.
. The well’s location with respect to sensitive areas.
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. Whether the well has any effect on the environment, safety, or economy of its surrounding area.
Auditors tested the records for 121 wells recommended for plugging and determined that the district offices had completed priority worksheets for all 121 wells. The Commission’s central office in Austin reviews and approves the wells the district offices recommend for plugging based on information in the priority worksheets.
The Commission had documentation supporting the prioritization, recommendation, and approval for 117 (97 percent) of the 121 wells recommended for plugging that auditors tested. For the remaining four wells, the Commission did not have complete documentation to support how it determined that the wells were eligible, in accordance with its policies, for plugging with state funds at the time of the recommendation for plugging. Specifically:
. One of the wells that a district office rated as priority 2 had production activity within 12 months of the well-plugging recommendation date. Therefore, that well was not in violation of the Commission’s statewide rule regarding inactive wells (a condition that makes wells eligible for plugging with state funds). Although the well was not eligible for plugging with state funds at the time of the recommendation, it was eligible for plugging with state funds when it was plugged.
. One of the wells that a district office rated as priority 4 had production activity within 12 months of the recommendation date. Therefore, that well was not in violation of the Commission’s statewide rule regarding inactive wells. That well was taken over by another operator after the Commission recommended it for plugging and was not plugged with state funds.
. The Commission could not provide all of the supporting documentation for two of the wells that a district office rated as priority 2H. As a result, there was not sufficient evidence regarding why those wells were eligible for plugging with state funds and why they were recommended for plugging. The Commission also did not have any documentation of its approval of those two wells for plugging. At the time of this audit, those wells had not been plugged.
The Commission’s record retention policy states that well-plugging records must be maintained permanently. Not maintaining that documentation results in the Commission not having support for its decision to recommend wells for plugging with state funds.
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Annual Well-plugging Goals The Commission provides annual operational goals for the number of wells its Oil and Gas Division’s district offices should plug. Factors the Commission considers when developing goals for plugging wells include the number of wells plugged in prior periods, the results of cost analysis, and the available well-plugging budget. The Commission reported that it had plugged, had contracts to plug, or had bid out the plugging of 1,162 wells (95 percent of its well-plugging goal) for fiscal year 2012. The cost associated with plugging the 764 wells the Commission plugged in fiscal year 2012 was $12,309,477. Table 1 summarizes the Commission’s well-plugging goals and the number of wells the Commission reported it plugged in fiscal year 2012.
Table 1
Well-plugging Goals and Number of Wells Plugged Fiscal Year 2012
Wells Plugged or Under Bid or Contract to Plug
Total Number of Wells Number of Plugged or Goal for Wells Under Under Bid or Number of Number of Bid or Contract Contract to Percent of Goal District Wells to Plug Wells Plugged to Plug Plug Achieved
a Districts 1 and 2 295 156 130 286 97% District 3 102 71 91 162 159% District 4 100 56 26 82 82% a Districts 5 and 6 140 95 23 118 84% District 7B 175 207 59 266 152% District 7C 45 31 53 84 187% a Districts 8 and 8A 69 15 9 24 35% District 9 291 128 7 135 46% District 10 5 5 0 5 100% Totals 1,222 764 398 1,162 95% a A single district office monitors and reports combined well-plugging activity for these districts.
Source: Unaudited information the Commission provided.
In fiscal year 2013, the Commission had a goal to plug 815 wells. As of February 28, 2013, the Commission reported that it had plugged 245 wells during fiscal year 2013.
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Recommendation
The Commission should maintain sufficient documentation showing (1) how it determines individual wells are eligible for plugging and (2) that the Commission approves each of those wells for plugging.
Management’s Response
We agree with this recommendation. We agree that all state-managed plugging files should be permanently maintained at the Commission’s headquarters in Austin. The Commission, under the records retention policy, films all state-managed plugging files as time permits for permanent storage.
Regarding the missing file mentioned in the report, a convenience copy of the file was maintained in the district office. As allowed by the record retention policy, the official record file has been re-built using the convenience copy, and is now maintained at the Austin headquarters.
Estimated implementation date: Implemented and ongoing.
Person responsible: Deputy Director of Field Operations, Oil and Gas Division
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Chapter 2 The Commission Ensures That Operators Provide Required Financial Assurances, But It Should Strengthen Certain Controls Related to Those Financial Assurances
The Commission has designed and implemented effective processes and related controls to help ensure that:
Financial Assurances . Oil and gas well operators provide the financial assurances Oil and gas well operators must provide that Texas Natural Resources Code, Chapter 91, requires in financial assurances in one of the following amounts consistent with state law and administrative rules forms: . An individual performance bond in the (see text box for more information on financial assurances). amount of $2 for each foot of total well depth for each well. . The Commission collects on those financial assurances in . A blanket performance bond covering all accordance with administrative rules and the terms of wells operated. The amount of the bond ranges from $25,000 to $250,000, agreements related to those financial assurances. depending on the number of wells operated. As of February 27, 2013, auditors’ analysis of the Commission’s . A letter of credit or cash deposit in the same amount required for an individual operator data showed that the Commission held $378,443,900 in performance bond or blanket financial assurances from operators. Those financial assurances performance bond. included: Operators of wells in a bay are required to provide additional financial assurances of at least $60,000. Operators of offshore wells . Letters of credit totaling $196,977,001. are required to provide additional financial assurances of at least $100,000. . Bonds totaling $152,721,570. Sources: Title 16, Texas Administrative Code, Section 3.78, and Texas Natural Resources Code, Section 91.103. . Cash totaling $28,745,329.
The Commission should improve certain controls to standardize its demand process to help ensure that it collects on financial assurances before they expire. In one instance, the Commission did not send a demand before that operator’s financial assurance had expired.
Landowners with domestic gas wells are responsible for plugging the gas wells on their land, and they are not required to provide financial assurances. If the Commission plugs a domestic gas well, it uses state funds to pay for it.
Financial Assurances The Commission’s controls help to ensure that the Commission assesses and receives the correct financial assurances from operators. All 35 operators that auditors tested provided the correct amount of financial assurances. The Commission has automated controls to help ensure that it calculates the appropriate amount of financial assurance each operator must provide.
The Commission properly stores and accounts for financial assurances it receives in the form of bonds and letters of credit. The Commission has controls and processes to ensure that it safeguards those financial assurances. Specifically:
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. The Commission stores financial assurance records in locked cabinets.
. The Commission requires staff to complete pull cards to document (1) the location of financial assurance records and (2) the names of the staff members responsible for financial assurance records they remove from the locked cabinets.
. The Commission physically secures the doors to the financial assurance work area and requires employees to use security badges to access that area.
Organizational Reports The Commission also has a process to help ensure that (1) its processing of financial assurances is accurate and (2) Oil and gas operators must submit annual organizational reports to the Commission, and data entry for the organizational reports that operators they cannot operate in the state without the submit is accurate (see text box for additional details on Commission’s approval of those reports. The organizational reports contain information such organizational reports). The Commission properly entered as an operator’s location, organizational all of the key data from hard-copy documentation operators structure, and officers. submitted into its mainframe system for the 60 operators The Commission identifies when an operator does not submit its annual organizational report and that auditors tested. The key data tested included the designates the operator as delinquent. The operator’s organizational status, financial assurance Commission uses this as an indicator that an operator could have abandoned a well and the amount, and address. operator’s responsibilities for maintaining that well. Ultimately, this can prompt the Commission Demand Process to collect on the operator’s financial assurance and plug the well. The Commission has adequate processes and controls to Sources: Title 16, Texas Administrative Code, Section 3.1, and information the Commission help ensure that it sends demand notices to operators that provided. do not submit required annual organizational reports. Specifically, the Commission sends a demand notice that informs the operator and the operator’s financial assurance issuer that the Commission is collecting on the operator’s financial assurance due to noncompliance with Commission requirements. As of February 27, 2013, auditors’ analysis of the Commission’s operator data showed that 2,966 operators were delinquent in submitting their required annual organizational reports.
In 63 (98 percent) of the 64 cases that auditors tested, the Commission appropriately sent demands to collect on operators’ financial assurances. In one instance, however, the Commission did not send a demand before that operator’s financial assurance (a letter of credit) had expired; that resulted in the Commission not being able to collect on that operator’s $25,000 letter of credit. The Commission must send a demand on a letter of credit within 90 days of the date an operator’s organizational report is delinquent.
The Commission has an informal process to help ensure that it sends demand notices on time; however, it has not documented that process to help ensure that it standardizes its process so that it can collect on financial assurances before they expire. That increases the risk that the State could incur well-
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plugging expenses that could have been paid for by operators’ financial assurances.
Domestic Gas Wells Landowners with domestic gas wells are not required to provide financial assurances. A domestic gas well is a gas well that an operator transfers to a landowner at the end of the gas well’s productive life, and the landowner uses the remaining gas for personal or domestic use only. When the gas wells are transferred to the landowners, the operators are released from responsibility for plugging the gas wells and from the financial assurances they previously provided to the Commission associated with those gas wells. The landowners are responsible for plugging those gas wells, and they are not required to provide financial assurances. If the Commission plugs a domestic gas well, the Commission uses state funds to pay for it.
Table 2 provides information on the estimated cost associated with plugging domestic gas wells.
Table 2
Estimated Cost to Plug Landowners’ Domestic Gas Wells (as of February 27, 2013)
Number or Dollar Category Amount
Number of domestic gas wells 222 Total aggregate depth in feet of all domestic gas wells 636,487 Estimated cost per foot to plug domestic gas wells (according to the $2.50 Commission’s financial assurance terms and conditions) Total estimated cost to plug landowners’ domestic gas wells $1,591,218 Source: Auditor analysis based on information the Commission provided.
The actual cost to plug domestic gas wells could exceed the estimated cost.
Recommendation
The Commission should develop and implement documented policies and procedures to standardize its demand process to help ensure that it collects on operators’ financial assurances, when appropriate, before they expire.
Management’s Response
We agree with this recommendation. As noted in the report, the P-5 unit has an “informal process” regarding demand procedures under which it has been operating. We memorialized this process in a written policy and procedure document effective early June 2013.
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The specific instance of non-collection referred to in the report occurred following a P-5 delinquency in July 2006. Since then, we addressed this issue by using a monthly “Collections Listing” mechanism. To ensure that all necessary demands have been issued, the P-5 manager reviews, on a monthly basis, the listing of operators for whom collection is appropriate. This quality control step will prevent similar events from happening in the future.
Estimated implementation date: Implemented.
Person responsible: Assistant Director of Administrative Compliance, Oil and Gas Division
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Chapter 3 The Commission Has Adequate Information Technology Systems Controls, But It Should Strengthen Controls in Certain Areas
The Commission has adequate controls over its mainframe and its Oilfield Cleanup (OFCU) application in the following areas:
. Information technology security policies.
. User access policies.
. Use of generic user id accounts.
. Change management policies.
. Password controls for applications.
. Physical controls over the data center that houses the Commission’s mainframe.
Auditors determined that the data in the Commission’s Oil and Gas Division Systems Audited mainframe and OFCU application was sufficiently reliable for Mainframe – The Oil and Gas Division maintains the purposes of this audit (see text box for information on the data on operators, organizational reports, wells, Commission’s mainframe and OFCU application). production, financial assurances, and enforcement actions on a mainframe that is housed in the State’s Austin Data Center. However, the Commission should strengthen certain controls Oilfield Cleanup (OFCU) Application – The Oil for its mainframe and OFCU application in the following areas: and Gas Division uses this Web-based system to maintain data on wells recommended for plugging. That data includes priority calculations, . Review of user access. high-risk well fluid test results, and the costs of plugging wells. The Oil and Gas Division also uses the OFCU application to produce reports on daily . Segregation of programmer duties. plugging activities; wells recommended for plugging but not yet plugged; and wells that have . Password controls for servers. been plugged, including estimated and actual costs. The OFCU application is housed in the Commission’s data center. . Physical controls over the Commission’s data center.
Review of User Access Privileged accounts for the Commission’s mainframe are appropriate. However, the Commission has not removed 5 user accounts for the OFCU application, 1 user account for the OFCU database, and 46 user accounts for the OFCU servers that are associated with former employees and former data center staff.
The Commission does not periodically review user accounts for its mainframe and OFCU application as required by its policy and the Texas Administrative Code. The Commission’s information security policy requires the Commission to (1) update user accounts of individuals who separate from the Commission and (2) periodically review existing user accounts for validity. In addition, Title 1, Texas Administrative Code, Section 202.25, states that a
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user’s access authorization must be appropriately modified or removed when the user’s employment or job responsibilities within an agency change. Not reviewing user access increases the risk of unauthorized access to systems and the loss or destruction of data.
Segregation of Programmer Duties The Commission has appropriately segregated duties between programming staff and the production environment for its mainframe, but not for the OFCU application. Two programmers have the ability to develop or change code for the OFCU application and migrate that code to the production environment.
The Commission asserts that staffing shortages prevent segregation of duties, but that its programmers do not have coding responsibilities for the code changes they migrate to the production environment. Auditors did not identify any instances in which the two programmers were assigned to change code for the OFCU application. However, as discussed above, those individuals still have the ability to develop or change code and migrate that code to the production environment, and those activities could potentially go undetected.
Title 1, Texas Administrative Code, Section 202.20, states that (1) changes shall be made only in an authorized manner, (2) assets shall be protected from unauthorized modifications, and (3) state agencies shall ensure adequate controls and separation of duties for tasks that are susceptible to fraudulent or other unauthorized activity. When duties are not segregated, there is a risk that unauthorized changes could be made to production systems and data, which could compromise the integrity of systems and data.
Password Controls for Servers The Commission’s password controls on two of its servers do not meet industry best practices. Although the Commission’s information technology security policy for passwords for its network meets industry best practices, the Commission’s policy does not specify those same standards for passwords for all of its systems and servers. Auditors provided additional details on the password control weaknesses to the Commission.
Title 1, Texas Administrative Code, Section 202.25, requires passwords to be based on industry best practices for password usage and documented state agency risk management decisions. Weaknesses in passwords increase the risk of unauthorized user access, which can compromise the integrity of a system and its data.
Physical Controls Over the Commission’s Data Center Physical and environmental controls over the Austin Data Center (which houses the Commission’s mainframe) are adequate. The Commission has physical controls over its data center (which houses the OFCU application); however, it should improve certain controls. The Commission does not
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regularly monitor the physical maintenance and safety inspection schedule for its data center.
Title 1, Texas Administrative Code, Section 202.23, requires agencies to protect information resources from environmental hazards and requires that designated employees be trained to monitor environmental control procedures and equipment. Not ensuring that environmental protection systems function as intended places staff, equipment, systems, and data at risk.
The Commission also does not consistently document when visitors physically access its data center. Weak physical access controls can result in unauthorized access, which can compromise the facility, equipment, systems, and data. Title 1, Texas Administrative Code, Section 202.23, requires agencies to document and manage physical access to mission-critical information resources facilities to ensure the protection of those resources from unlawful or unauthorized access, use, modification, or destruction.
Recommendations
The Commission should:
. Perform and document periodic reviews of user accounts to help ensure that users’ access to the mainframe and applications are appropriate.
. Segregate duties so that programmers cannot both develop or change code for the OFCU application and migrate that code to the production environment.
. Strengthen password controls on servers with password weaknesses to ensure that those controls meet industry best practices.
. Regularly monitor the physical maintenance and safety inspection schedule of its data center and monitor the implementation of corrective actions to address deficiencies identified during inspections.
. Consistently document the names of visitors who physically access its data center and the dates and times when they enter and exit.
Management’s Response
The Commission should:
. Perform and document periodic reviews of user accounts to help ensure that users’ access to the mainframe and applications are appropriate.
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Response: We agree with this recommendation. The Commission will implement an annual review procedure of user accounts to help ensure that users’ access to the mainframe and applications are appropriate.
The Information Security Officer will coordinate efforts with the Security Coordinator of the Oil and Gas Services Division and document the completion of the reviews with positive confirmations from the responsible program areas to ensure that reviews are completed annually.
Estimated implementation date: Implemented and ongoing annually
Person responsible: Information Security Officer and Oil and Gas Division Security Coordinator
. Segregate duties so that programmers cannot both develop or change code for the OFCU application and migrate that code to the production environment.
Response: We agree with this recommendation. The Commission will move the software release procedure from the Application Development and Maintenance Section to the Customer Service and Operations Section of the Information Technology Services Division to ensure that programmers cannot both develop or change code for the OFCU application and migrate that code to the production environment.
Estimated implementation date: September 1, 2013
Person responsible: Information Security Officer
. Strengthen password controls on servers with password weaknesses to ensure that those controls meet industry best practices.
Response: We agree with this recommendation. The Commission will continue to comply with standards set forth within TAC 202.25, Commission Security Guidelines and the Austin Data Center Password standards. The Commission will file ISEC exemption requests or comply with the DIR procedures to accommodate password strength limitations where and when necessary upon migration to the Austin Data Center.
Estimated implementation date: Ongoing
Person responsible: Information Security Officer
. Regularly monitor the physical maintenance and safety inspection schedule of its data center and monitor the implementation of corrective action to address deficiencies identified during inspections.
Response: We agree with this recommendation. The Commission will implement procedures, which allow for monitoring of the physical
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maintenance and safety inspection schedule of its data center and monitoring of the implementation of corrective action to address deficiencies identified during inspections.
Estimated implementation date: September 1, 2013
Person responsible: Information Security Officer
. Consistently document the names of visitors who physically access its data center and the dates and times when they enter and exit.
Response: We agree with this recommendation. The Commission will implement a logging procedure to document the names of visitors who physically access its data center and the dates and times when they enter and exit.
Estimated implementation date: September 1, 2013
Person(s) responsible: Information Security Officer
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Appendices
Appendix 1 Objectives, Scope, and Methodology
Objectives The audit objectives were to determine whether the Railroad Commission (Commission):
. Has established and adheres to a risk assessment process to prioritize the plugging of wells with state funds.
. Has designed and implemented effective processes and related controls to help ensure that (1) regulated entities establish and maintain the financial assurance required by Texas Natural Resources Code, Chapter 91, in amounts consistent with state law, administrative rules, and Commission policy and (2) the Commission collects funds from those sources in accordance with Commission policies and procedures, administrative rules, and the terms of agreements related to that financial assurance.
Scope The audit scope included reviewing records for oil and gas wells for eligibility for plugging with state funds and the associated financial assurances for fiscal year 2012 and fiscal year 2013 through February 2013.
Methodology The audit methodology included collecting information and documentation from the Commission; reviewing policies and procedures, statutes, and rules related to state-funded well-plugging and financial assurances; and analyzing and evaluating data and the results of tests. Specifically, auditors reviewed oil and gas well inspection records, documentation recommending wells for state- funded plugging, operators’ organizational reports, and financial assurance documentation.
Auditors assessed the reliability of the operator and well data used in the audit by (1) reviewing general controls and application controls for the Commission’s mainframe system and Oilfield Cleanup (OFCU) application, (2) comparing data to other sources of information, (3) analyzing key data elements for completeness and reasonableness, and (4) interviewing Commission employees knowledgeable about the data. Auditors determined that the data was sufficiently reliable for the purposes of this audit.
Auditors selected non-statistical samples primarily through random selection designed to be representative of the population. In those cases, results may be
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extrapolated to the population but the accuracy of the extrapolation cannot be measured. In some cases, auditors used professional judgment to select additional items for testing. Those sample items generally are not representative of the population and, therefore, it would not be appropriate to extrapolate those results to the population.
To test records for wells, auditors selected non-statistical, random samples of wells recommended for state-funded plugging based on priority data from the OFCU application. Auditors stratified the samples based on the total number of wells per priority in the population.
To test whether (1) operators provided the correct amount of financial assurances, (2) the Commission properly secured and accounted for financial assurances, and (3) the Commission sent demand notices to operators, auditors selected a non-statistical, random sample of 30 operators from the mainframe system for each of the tests performed. Auditors also selected targeted samples of operators for each test based on additional factors.
To test whether (1) the Commission accurately entered key data into its mainframe system and (2) the Commission demanded financial assurances before they expired, auditors determined that risk was high and that a sample size of more than 30 was required. As a result, auditors selected a non- statistical, random sample of 60 operators from the mainframe system for each of the tests performed. Auditors also selected targeted samples of operators to test whether the Commission demanded financial assurances before they expired based on additional factors.
Information collected and reviewed included the following:
. Commission policies and procedures.
. The Commission’s State Managed Plugging Manual.
. Title 16, Texas Administrative Code, Chapter 3.
. Title 1, Texas Administrative Code, Chapter 202.
. Texas Natural Resources Code, Chapters 52, 81, 89, and 91.
. General Appropriations Act (82nd Legislature).
. Commission operator and well data.
. Commission well-plugging records and reports.
. Commission fiscal year 2012 and 2013 operational goals for plugging wells.
. Commission financial assurance and organizational report records.
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. Commission well inspection records.
Procedures and tests conducted included the following:
. Interviewed Commission management and staff, including staff at the Oil and Gas Division district offices.
. Analyzed data pertaining to annual well-plugging goals and oil and gas wells plugged.
. Reviewed and tested compliance with Commission policies and procedures, Texas Administrative Code, and the Texas Natural Resources Code requirements for (1) plugging wells with state funds and (2) assessing and collecting financial assurances from operators.
. Reviewed general and application controls over the Commission’s mainframe system and OFCU application.
Criteria used included the following:
. Commission policies and procedures.
. The Commission’s State Managed Plugging Manual.
. Title 16, Texas Administrative Code, Chapter 3.
. Title 1, Texas Administrative Code, Chapter 202.
. Texas Natural Resources Code, Chapters 52, 81, 89, and 91.
. Financial assurance agreement terms and conditions.
Project Information Audit fieldwork was conducted from January 2013 through May 2013. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
The following members of the State Auditor’s staff performed the audit:
. Jennifer Lehman, MBA, CIA, CFE, CGAP (Project Manager)
. Lilia C. Srubar, CPA (Assistant Project Manager)
. Jason Carter
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. Cyndie Holmes, CISA
. Norman G. Holz II
. Justin Saunders
. Dennis Ray Bushnell, CPA (Quality Control Reviewer)
. James Timberlake, CIA (Audit Manager)
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Appendix 2 Districts in the Railroad Commission’s Oil and Gas Division
Figure 1 shows the districts in the Railroad Commission’s Oil and Gas Division.
Figure 1
Districts in the Railroad Commission’s Oil and Gas Division
Source: Railroad Commission.
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Appendix 3 Related State Auditor’s Office Work
Related State Auditor’s Office Work
Number Product Name Release Date
12-005 An Audit Report on Pipeline Safety at the Railroad Commission November 2011 07-046 An Audit Report on Inspection and Enforcement Activities in the Field Operations August 2007 Section of the Railroad Commission
An Audit Report on Well-plugging within the Railroad Commission’s Oil and Gas Regulation and Cleanup Program SAO Report No. 13-040 July 2013 Page 19 Copies of this report have been distributed to the following:
Legislative Audit Committee The Honorable David Dewhurst, Lieutenant Governor, Joint Chair The Honorable Joe Straus III, Speaker of the House, Joint Chair The Honorable Thomas “Tommy” Williams, Senate Finance Committee The Honorable Jim Pitts, House Appropriations Committee The Honorable Harvey Hilderbran, House Ways and Means Committee
Office of the Governor The Honorable Rick Perry, Governor
Railroad Commission Members of the Railroad Commission The Honorable Barry T. Smitherman, Chairman The Honorable Christi Craddick The Honorable David Porter Mr. Milton Rister, Executive Director
This document is not copyrighted. Readers may make additional copies of this report as needed. In addition, most State Auditor’s Office reports may be downloaded from our Web site: www.sao.state.tx.us.
In compliance with the Americans with Disabilities Act, this document may also be requested in alternative formats. To do so, contact our report request line at (512) 936-9500 (Voice), (512) 936-9400 (FAX), 1-800-RELAY-TX (TDD), or visit the Robert E. Johnson Building, 1501 North Congress Avenue, Suite 4.224, Austin, Texas 78701.
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To report waste, fraud, or abuse in state government call the SAO Hotline: 1-800-TX-AUDIT.
Section 1
Commission on Environmental Quality Summary of Recommendations - House
Page VI-17 Richard Hyde, P.E., Executive Director Tom Lambert, LBB Analyst RECOMMENDED FUNDING BY METHOD OF FINANCING 2014-15 2016-17 Biennial % General Revenue Method of Financing Base Recommended Change Change Other 2.1% Funds General Revenue Funds $18,193,923 $14,892,291 ($3,301,632) (18.1%) 2.0% GR Dedicated Funds $622,867,340 $624,675,910 $1,808,570 0.3% Federal Total GR-Related Funds $641,061,263 $639,568,201 ($1,493,062) (0.2%) Funds 10.4% Federal Funds $85,930,486 $75,846,583 ($10,083,903) (11.7%) GR Dedicated Other $32,320,021 $15,250,282 ($17,069,739) (52.8%) Funds 85.5% All Funds $759,311,770 $730,665,066 ($28,646,704) (3.8%)
FY 2015 FY 2017 Biennial % Budgeted Recommended Change Change FTEs 2,747.2 2,754.2 7.0 0.3%
The bill pattern for this agency (2016-17 Recommended) represents an estimated 100% of the agency's estimated total available funds for the 2016-17 biennium.
Agency 582 2/11/2015 1 Section 1 Commission on Environmental Quality 2016-2017 BIENNIUM TOTAL= $730.7 MILLION IN MILLIONS
ALL FUNDS GENERAL REVENUE AND FULL-TIME-EQUIVALENT POSITIONS GENERAL REVENUE-DEDICATED FUNDS
REQUESTED REQUESTED APPROPRIATED 2,772.2 2,772.2 APPROPRIATED 2,767.2 2,761.2 APPROPRIATED 2,756.2
REQUESTED APPROPRIATED $384.1 REQUESTED $372.3 APPROPRIATED $367.2 REQUESTED APPROPRIATED $337.9 $356.6 REQUESTED APPROPRIATED $327.1 $340.6 APPROPRIATED $322.5 $311.7 APPROPRIATED $292.2
$413.7 $315.4 $443.9 $369.9 $360.8 $358.6 $257.5 $383.6 $323.6 $316.0 2,593.7 2,654.7 2,747.2 2,754.2 2,754.2 EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Notes: 1. Agency Expended/Budgeted/Budgeted amounts in 2013-2015 reflect that the majority of grant funding for the Texas Emissions Reduction Plan (TERP) program is generally carried forward to the second year of each biennium so that only one round of grant applications are processed per biennium. Thus, in the first year of a biennium, appropriations exceed expenditures, while expenditures in the second year, expenditures exceed appropriations. 2. The agency reports that the large number of vacancies in 2013 was a result of higher-than-usual turnover rates due to an improved economy and job market.
Agency 582 2/11/2015 2 Section 2 Commission on Environmental Quality Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
AIR QUALITY ASSESSMENT AND PLANNING A.1.1 $250,533,349 $245,143,325 ($5,390,024) (2.2%) The recommended decrease of $5.4 million is comprised of the following: a) a decrease of $2.8 million from General Revenue and various General Revenue-Dedicated accounts, reflecting a shift in expenses to other strategies to reflect actual agency workload, including shifting information technology project costs to the Strategy F.1.2, Information Resources; b) a decrease of $0.8 million reflecting the one-time purchase of vehicle emissions analyzers for the implementation of House Bill 2305, Eighty-Third Legislature, Regular Session, during the 2014-15 biennium (see Selected Fiscal and Policy Issues - House, No. 7b); c) a decrease of $1.8 million in Federal Funds, mainly comprised of a decrease of $0.8 million in funding for surveys, studies, and research and a decrease of $0.8 million in funding from the Homeland Security Biowatch Program. WATER ASSESSMENT AND PLANNING A.1.2 $65,320,761 $54,428,717 ($10,892,044) (16.7%) The recommended decrease of $10.9 million is comprised of the following: a) a decrease of $0.2 million from General Revenue and $1.6 million from the General Revenue-Dedicated Water Resource Management Account No. 153, reflecting a shift in expenses to other strategies to reflect actual agency workload, including shifting information technology project costs to the Strategy F.1.2, Information Resources; b) a decrease of $4.0 million in Federal Funds mainly attributable to a reduction in the availability of funding for non point source grants; and c) a decrease of $5.1 million in Interagency Contracts comprised of a one-time Coastal Assistance Impact Grant from the General Land Office in 2014-15 and one-time funding for planning for the Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of Gulf Coast States (Restore) Act from the Office of the Governor from proceeds of Deepwater Horizon settlement funds. (See Selected Fiscal and Policy Issues - House, No. 9.) WASTE ASSESSMENT AND PLANNING A.1.3 $15,023,159 $13,431,017 ($1,592,142) (10.6%) The recommended decrease in General Revenue and various General Revenue- Dedicated accounts reflects a shift in expenses to other strategies to reflect actual agency workload, including shifting information technology project costs to the Strategy F.1.2, Information Resources.
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2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments AIR QUALITY PERMITTING A.2.1 $29,153,243 $29,673,895 $520,652 1.8% The recommended increase of $0.5 million out of the General Revenue-Dedicated Clean Air Account No. 151 reflects the biennialization of the 2014-15 salary increase. See Selected Fiscal and Policy Issues - House, No. 8. WATER RESOURCE PERMITTING A.2.2 $28,866,479 $29,111,481 $245,002 0.8% The recommended increase is comprised of the following: a) an increase of $1.2 million out the General Revenue-Dedicated Watermaster Administration Account No. 158 to provide for expenses and 7.0 additional FTEs for a new wastermaster office that was created for a portion of the Brazos River April 2014. (See Selected Fiscal and Policy Issues, House No. 4.); b) a decrease of $0.2 million out of the General Revenue-Dedicated Water Resource Management Account No. 153, reflecting a shift in funding for information technology projects to strategy F.1.2, Information Resources; and b) a decrease of $0.8 million in Federal Funds for a one-time Environmental Information Exchange Network project. WASTE MANAGEMENT AND PERMITTING A.2.3 $20,804,852 $19,065,211 ($1,739,641) (8.4%) Recommendations provide for a decrease in General Revenue ($0.1 million) and a decrease of $1.6 million out of the General Revenue-Dedicated Waste Management Account No. 549, reflecting a shift in expenses to other strategies to reflect actual agency workload, including shifting information technology project costs to the Strategy F.1.2, Information Resources. OCCUPATIONAL LICENSING A.2.4 $2,552,504 $2,573,492 $20,988 0.8% RADIOACTIVE MATERIALS MGMT A.3.1 $5,956,966 $6,000,620 $43,654 0.7% Total, Goal A, ASSESSMENT, PLANNING AND PERMITTING $418,211,313 $399,427,758 ($18,783,555) (4.5%)
SAFE DRINKING WATER B.1.1 $26,748,985 $24,970,138 ($1,778,847) (6.7%) The recommended decrease is comprised of the following: a) a decrease of $0.6 million out of the General Revenue-Dedicated Water Resource Management Account No. 153, reflecting a shift in expenses to other strategies to reflect actual agency workload, including shifting information technology project costs to the Strategy F.1.2, Information Resources; b) a decrease of $1.4 million in Interagency Contracts reflecting one-time funding from the Water Development Board's State Revolving Fund; and c) an anticipated increase of $0.2 million in expected Federal Funds for a Performance Partership Grant. Total, Goal B, DRINKING WATER $26,748,985 $24,970,138 ($1,778,847) (6.7%)
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2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments FIELD INSPECTIONS & COMPLAINTS C.1.1 $88,675,647 $89,950,184 $1,274,537 1.4% The recommended increase is comprised of the following: a) an increase of $3.6 million in General Revenue and various General Revenue- Dedicated Funds, including an increase of $3.1 million to reflect the shift in expenses to Strategy C.1.1, Field Inspections and Complaints, from other strategies to reflect actual agency workload and an increase of $0.5 million the purchase of agency vehicles for field inspectors (see Selected Fiscal and Policy Issues - House, No. 6a); and b) a decrease of $2.4 million in Federal Funds resulting from one-time Underground Storage Tank funding ($1.5 million) and Performance Partnership Grants ($0.9 million) in 2014-15. ENFORCEMENT & COMPLIANCE SUPPORT C.1.2 $23,142,430 $25,576,922 $2,434,492 10.5% The recommended increase of $2.4 million in various General Revenue-Dedicated accounts reflects the shift in expenses to Strategy C.1.2, Enforcement and Compliance Support, from other strategies to reflect actual agency workload and the biennialization of the 2014-15 salary increase. POLLUTION PREVENTION RECYCLING C.1.3 $4,793,527 $4,789,340 ($4,187) (0.1%)
Total, Goal C, ENFORCEMENT AND COMPLIANCE SUPPORT $116,611,604 $120,316,446 $3,704,842 3.2%
STORAGE TANK ADMIN & CLEANUP D.1.1 $40,415,874 $39,297,398 ($1,118,476) (2.8%) The recommended decrease of $1.1 million consists of the following: a) a decrease of $1.0 million out of the General Revenue-Dedicated Petroleum Storage Tank Remediation Account No. 655, reflecting a shift in expenses to other strategies to reflect actual agency workload, including shifting information technology project costs to the Strategy F.1.2, Information Resources; and b) a decrease of $0.1 million in Federal Funds due to an anticipated decrease in avaialble funding from Leaking Underground Storage Tank grants.
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2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments HAZARDOUS MATERIALS CLEANUP D.1.2 $60,136,880 $43,778,028 ($16,358,852) (27.2%) The recommended decrease consists of the following: a) a decrease of $4.5 million out of the General Revenue-Dedicated Hazardous Waste Remediation Account No. 550 including a $3.0 million decrease reflecting a shift in expenses to other strategies to reflect actual agency workload, including shifting information technology project costs to the Strategy F.1.2, Information Resources, and a $1.5 million decrease for a one-time cleanup of a battery recycling facility (See Selected Fiscal and Policy Issues - House, No. 7a); b) a decrease of $1.2 million in Federal Funds reflecting an anticipated decrease in avaiable Superfund grants for site specific and core projects; and c) a decrease of $10.6 million in Appropriated Receipts resulting from one-time Superfund cost recovery cleanup projects in 2014-15. Total, Goal D, POLLUTION CLEANUP $100,552,754 $83,075,426 ($17,477,328) (17.4%)
CANADIAN RIVER COMPACT E.1.1 $35,072 $33,300 ($1,772) (5.1%) PECOS RIVER COMPACT E.1.2 $251,510 $271,688 $20,178 8.0% RED RIVER COMPACT E.1.3 $67,400 $69,866 $2,466 3.7% RIO GRANDE RIVER COMPACT E.1.4 $5,328,680 $397,932 ($4,930,748) (92.5%) The recommended decrease of $5.0 million is attributable to one-time funding in 2014-15 for litigation expenses related to a water rights dispute with New Mexico. (See Selected Fiscal and Policy Issues - House, No. 3, and Items Not Included In Recommendations - House, No. 4). SABINE RIVER COMPACT E.1.5 $123,498 $123,374 ($124) (0.1%) Total, Goal E, RIVER COMPACT COMMISSIONS $5,806,160 $896,160 ($4,910,000) (84.6%)
CENTRAL ADMINISTRATION F.1.1 $37,173,508 $37,138,708 ($34,800) (0.1%) INFORMATION RESOURCES F.1.2 $34,197,353 $44,713,782 $10,516,429 30.8% The recommended increase consists of the following: a) an increase of $5.8 million in General Revenue and out of various General Revenue-Dedicated accounts to reflect the shift of funding for the Data Center Services Capital Budget project from various strategies throughout the agency to Strategy F.1.2, Information Resources; b) an increase of $3.3 million to reflect the shift of funding from other strategies to reflect actual agency workload and biennialize the 2014-15 salary increase; and
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2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments c) an increase of $1.4 million in General Revenue fund the Data Center Service Capital Budget project at estimated levels needed to maintain current services (see Selected Fiscal and Policy Issues - House, No. 6b). OTHER SUPPORT SERVICES F.1.3 $20,010,093 $20,126,648 $116,555 0.6% The recommended increase out of the General Revenue-Dedicated Water Resource Management Account No. 153 reflects the biennialization of the 2014-15 salary increase. Total, Goal F, INDIRECT ADMINISTRATION $91,380,954 $101,979,138 $10,598,184 11.6%
Grand Total, All Strategies $759,311,770 $730,665,066 ($28,646,704) (3.8%)
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Commission on Environmental Quality Selected Fiscal and Policy Issues - House
1. Strategic Fiscal Review—The Texas Emissions Reduction Plan (TERP) program is included in the Strategic Fiscal Review (SFR). Highlights of the review include: a) Funding for TERP in 2016-17 is out of the TERP Account No. 5071 at 2014-15 levels ($155.3 million for the biennium). b) Recommendations provide for the redirection of $3.9 million out of the TERP Account No. 5071 funds from the Light Duty Motor Vehicle Incentive Program, which expires in fiscal year 2015, to the Emissions Reduction Incentive Grant Program (ERIG). c) A recommendation is included to increase appropriations for the ERIG program if additional appropriations are made from the TERP Account No. 5071 for the TERP program because the ERIG program has been proven to be the most effective at achieving quantifiable reductions in NOx emissions. d) The Comptroller’s Revenue Estimate for 2016-17 projects a $1,066.5 balance for the TERP Account No. 5071 on August 31, 2015, and revenues of $450.0 million during 2016-17 (including $240.8 million in estimated transfers from the State Highway Fund No. 6 relating to Certificate of Title Fees. Assuming 2014-15 baseline funding to TCEQ for TERP of $155.3 million in 2016-17, and assuming $121.0 million in encumbrances in the TERP Account on August 31, 2015, the TERP fund balance is expected to grow to $1,237.2 million by the end of fiscal year 2017. e) An LBB GEER report, Reduce Reliance on General Revenue-Dedicated Accounts for Certification recommends the following measures to decrease balances in the TERP Account No. 50: ■ a one-time transfer of $447.0 million in balances in the TERP Account No. 5071 (General Revenue-Dedicated) to the State Highway Fund No. 6 (Other Funds) to reduce the overall balance in the TERP Account; ■ an increase of $81.0 million in additional appropriations out of the TERP Account No. 5071 for the 2016-17 biennium to appropriate the full amount of the transfer to the TERP Account from the State Highway Fund No. 6 related to Certificate of Title Fee revenues collected in counties designated as severe nonattainment for air quality; and ■ to reduce future transfers from the State Highway Fund to the TERP Account No. 5071 to an amount equal to the amount of amount motor vehicle certificates of title fees collected in certain nonattainment areas (those subject to Clean Air Act Section 185 penalties) and deposited to the Texas Mobility Fund. It is estimated that this would result in the redirection of $159.8 million in revenues from the TERP Account No. 5071 to the State Highway Fund No. 6 during 2016-17.
2. Low-Income Vehicle Repair, Replacement, Retrofit, and Accelerated Vehicle Retirement Program (LIRAP)—The LIRAP is funded through on-board diagnostic fees deposited to the Clean Air Account. Revenues attributable to LIRAP total an estimated $94.3 million for the 2016-17 biennium, while recommended baseline appropriations for the 2016-17 biennium total only $15.3 million, which is expected to result in as much as $79.0 million in revenue being collected for the program in excess of appropriations. In addition, the estimated fund balance in the account is expected to reach $224.9 million by August 31, 2015. Because a significant portion of the revenue being collected for the program is not being spent, Collin County has petitioned the TCEQ to discontinue participation in the program, and the agency currently developing rules which would allow for a county to opt- out of the program. If Collin County were no longer to collect the on-board diagnostic fee for the LIRAP, it is expected that there would be a biennial loss of $5.0 million to the Clean Air Account No. 151.
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3. Funding for Litigation Expenses of the Rio Grande Compact Commission—Recommendations include a reduction of $5.0 million in General Revenue funding compared to 2014-15 expenditures reflecting one-time expenditures for the Rio Grande Compact Commission for litigation relating to water rights disputes with New Mexico. The agency has requested $5.0 million in General Revenue funding for 2016-17 for anticipated litigation costs. (See Items Not Included in Recommendations – House, No. 3, and Rider Highlights – House, No. 28, former.)
4. Brazos Watermaster Funding—Recommendations include $1.2 million out of the Watermaster Administration Account No. 158 and provide for 7.0 additional FTEs for a new wastermaster office that was created for a portion of the Brazos River by the TCEQ in April 2014. Although the agency was appropriated all revenues collected from the new watermaster program for 2014-15, no revenues are expected to be assessed until fiscal year 2016. Thus, the agency lacks the funding for this program in its 2014-15 base. The recommendation includes rider language that limits appropriations to those in excess of the Comptroller's Biennial Revenue Estimate for 2016-17. (See Also Rider Highlight – House, No. 26.) Because new revenues would be collected to offset this appropriation, the item is not expected to result in a cost to the bill. Funding would come from the General Revenue-Dedicated Watermaster Administration Account No. 158. Included in the recommendations for the Brazos Watermaster is $168,000 in fiscal year 2016 in Capital Budget authority for vehicles. (See also Select Fiscal and Policy Issue No. 6a - House.)
5. Perpetual Care Account— a. Rider Language Updates--Senate Bill 347, Eighty-third Legislature, Regular Session, established a new Environmental Radiation and Perpetual Care (ERPC) Account as a distinct account separate from the pre-existing Perpetual Care Account, which is a General Revenue-Dedicated account from which both the TCEQ and the Department of State Health Services (DSHS) received appropriations prior to fiscal year 2014. Upon enactment of Senate Bill 347, only DSHS is authorized to receive funding from the Perpetual Care Account, and TCEQ is authorized to receive appropriations from the newly established ERPC Account. However, that new account was not exempted from funds consolidation by the Eighty-third Legislature, Regular Session. Thus, revenues that otherwise would go to the ERPC Account instead have been deposited to the General Revenue Fund since September 1, 2013. Recommendations include modified language in Rider 15, Environmental Radiation and Perpetual Care Account (see Rider Highlights – House, No. 15), to clarify that financial assurance funds appropriated by the rider in 2014-15 continue to be appropriated from the General Revenue Fund, and statutory references are updated to reflect passage of Senate Bill 347.
b. Re-Establish the Environmental and Perpetual Care Account--To maintain the independence of funds related to perpetual needs and unexpected spills/incidents, it is recommended that the Environmental and Perpetual Care Account be established in legislation by the Eighty-fourth legislature, and that new account should be exempted from funds consolidation. Senate Bill 347, Eighty-third Legislature, Regular Session, provided that the 20 percent surcharge collected on waste disposed from out-of-compact entities be deposited to the Environmental and Perpetual Care Account for public health and safety activities related to the disposal of radioactive substances, and it provided that funds in the account could not be used for normal agency operations. Thus, to ensure that sufficient funds are available in the event of an incident related to the disposal of radioactive substances, and to ensure that the use of the funds remains dedicated as prescribed in statute, the
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funds should remain in a separate account in the General Revenue Fund. Recommendations also include contingency language in Rider 15, Perpetual Care Account, that would provide an appropriation out of the new account instead of the General Revenue Fund if legislation is enacted creating such a separate account. (See Rider Highlights – House, No. 15.)
Capital Budget—Recommendations provide for $30.1 million in All Funds appropriations for Capital Budget Projects in 2016-17, or 6. an increase of $1.6 million over 2014-15 Expended/Budgeted Amounts. a. Vehicles and other Transportation Items--Recommendations include $2.2 million General Revenue-related funds, for vehicles (an increase of $1.2 as compared to 2014-15 Expended/Budgeted levels) to replace an aging fleet of vehicles. This amount is expected to replace agency vehicles exceeding 150,000 miles by the end of fiscal year 2017. Recommendations provide funding for vehicles in the agency’s base request ($1.5 million), as well as the agency’s exceptional item request ($0.5 million) for Field Inspections and Complaint Response vehicles, and an additional $0.2 million for vehicles for the new Brazos Watermaster program (See also Select Fiscal and Policy Issue – House, No.4).
b. Data Center Services (DCS)—Recommendations provide $23.8 million in General Revenue-Related Funds for the Data Center Consolidation Capital Budget project. This represents an increase of $1.4 million in General Revenue Funds compared to 2014-15 levels. Recommended funding levels for the DCS project reflect estimated costs to maintain current obligations as provided by the Department of Information Resources.
c. Houston Laboratory Information Management System (LIMS) Upgrade—Recommendations do not include $0.4 million in funding from the General Revenue-Dedicated Water Resource Management Account No. 153 for a new Capital Budget item that the agency requested to undertake within baseline funding amounts using savings resulting from the completion of two Information Resource Technology Projects during 2014-15: TCEQ Records Management; and the State Implementation Plan (SIP) Lifecycle Refresh project. See also, Items Not Included in Recommendations– House, No. 8.
d. Telecommunications Migration and Regional Phone Replacement—Recommendations provide funding for a new Capital Budget project to migrate the agency’s telecommunications platform to another platform based on newer technology, which will avoid increasing costs in repairing the aging infrastructure. The project totals $1.1 million for the 2016-17 biennium and will be paid for out of various General Revenue-Dedicated Accounts. Additional funding for the agency’s regional phone system was requested as an exceptional item but is not included in recommendations. See also, Items Not Included in Recommendations– House, No. 6.
e. Personal Computers and Printers Capital Budget Projects—Recommendations split the agency’s Personal Computer and Printer Replacement projects into two separate projects: Personal Computer Replacement and Printer Replacement. Recommendations provide for an increase of $0.2 million from various General Revenue-Dedicated accounts as compared to 2014-15 levels to maintain the agency’s six-year life cycle replacement schedule for personal computers.
f. Technology Operations and Security Infrastructure—Recommendations continue the project at 2014-15 funding levels.
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g. Monitoring and Analysis Equipment—Recommendations provide $650,000 for the Monitoring and Analysis Equipment Capital Budget Project, $225,000 out of the General Revenue-Dedicated Clean Air Account No. 151 and $225,000 out of the General Revenue-Dedicated Water Resource Management Account. The Monitoring and Analysis Equipment project essentially replaces two separate Capital Budget projects from the 2014-15 biennium: Water Monitoring and Analysis Equipment; and Air Monitoring and Analysis equipment. Expended/Budgeted amounts for the two projects combined in 2014- 15 totaled $1.9 million. Thus, recommendations for monitoring and analysis equipment for air and water programs provide for a net decrease of $1.3 million compared to 2014-15 levels.
h. Completed Capital Budget Projects—The following projects are not included in recommendations due to completion in 2014-15: TCEQ Records Management Project—decrease of $0.8 million State Implementation Plan (SIP)—decrease of $0.3 million.
7. One-Time Expenditure Reductions—Recommendations include reductions for the following one-time expenditures: a. Battery Recycling Facility Cleanup—Recommendations include a decrease of $1.5 million out of the General Revenue- Dedicated Hazardous Waste Remediation Account No. 550 for an agency-identified one-time battery recycling facility cleanup. (See Rider Highlights - House, Former Rider 31.) b. Vehicle Emissions Analyzers—Recommendations include a decrease of $0.8 million out of the Clean Air Account No. 151 to reflect the agency-identified one-time purchase of vehicle emissions analyzers to implement the provisions of House Bill 2305, Eighty-Third Legislature, Regular Session. The appropriation for these funds occurred through a contingency rider in Article IX, Section 18.50 of the 2016-17 GAA.
8. Biennialization of 2014-15 Salary Increase—Recommendations provide for an increase of $3.1 million in General Revenue-related funds to biennialize the 2014-15 salary increase.
9. Deepwater Horizon Oil Spill—In September 2013, TCEQ received a $1.0 million grant from the Office of the Governor from the proceeds of a $5.0 million payment BP paid to Texas in September 2010 that is not tied to or in lieu of any other settlement monies. TCEQ intends to use the funds to develop a Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act (RESTORE) plan, paying for a website, and other administrative expenses. As of December 31, 2014, the agency had expended $315,105 on a contract to develop the RESTORE plan. TCEQ expects to receive RESTORE funding for 2016-17, but the amount is currently unknown.
10. Anticipated Shortfall in the Water Resource Management Account No. 153—Based on available balances in Water Resource Management Account No. 153 and recommendations from the account for 2016-17 for TCEQ, the Public Utility Commission (PUC), and the Office of Public Utility Council (OPUC), a shortfall of $4.8 million is expected in the account by the end of fiscal year 2017. Recommendations include a rider directing the agency to increase fee rates to cover any potential shortfall, as recommended in an LBB Legislative Policy Report Revenue Enhancement Options for the General Revenue-Dedicated Water Resource Management Account (See Article IX, Section 18.01). Specifically, the recommended rider :
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a. specifies that appropriations to the TCEQ, PUC, and OPUC are contingent on available balances in revenues in the Water Resource Management Account, and in the event revenues fail to cover appropriations and FTE-related benefits costs, the agency is directed to raise fees within its authority to generate sufficient revenues to meet appropriations and other costs from the account;
b. provides that, contingent on the enactment of legislation by the Eighty-Fourth Legislature transferring the proceeds of certain fees which are deposited to the Water Resource Management Account No. 153 instead to the General Revenue, the method of financing for $1.5 million in annual appropriations to the PUC and $0.5 million in annual appropriations to OPUC would change from the Water Resource Management Account No. 153 to the General Revenue Fund; and
c. directs TCEQ to conduct a study to determine the level of agency workload as it correlates to the amount of revenue received to the Water Resource Management Account No. 153 from various fee payer groups, and based on the findings in that study, set fee rates at a level that generates revenues from those fee payers in proportion to agency workload and fee payer benefits.
11. Unexpended Balance Authority Within the Biennium—Recommendations limit certain budget flexibility for the agency by deleting Rider 17 (former), restricting the agency’s authority to carry funds forward from the first year of the biennium to the second. Article IX, Section 14.05, Unexpended Balances Authority Between Years within the Same Biennium, allows the agency to carry forward balances between fiscal years with Legislative Budget Board approval. (See Rider Highlights– House, No. 17, and Items Not Included in Recommendations, Agency Exceptional Items – House, No. 1).
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12 Section 3 Commission on Environmental Quality Summary of Federal Funds (Estimated 2014) - House TOTAL = $44.7M Water Pollution Control State and Interstate Program Support Homeland Security $3.9M or 9% Biowatch Program Nonpoint Source Implementation $3.6M or 8% Grants $5.1M or 11%
Leaking Underground Storage Tank Trust Fund $2.3M or 5%
State Underground Storage Tanks Program $2.3M or 5%
Other $10.0M or 22% Surveys, Studies, Research, Investigations, Demonstrations Relating to Clean Air Act $1.7 M or 4% Performance Partnership Grants $22.2M or 50% Awards Less Than $1,000,000 $3.6M or 8%
Note: Amounts and percentages shown may sum greater/less than actual total due to rounding.
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2014-15 2016-17 Recommended CFDA No. Program Name Base Recommended Over/(Under) Base Comments
12.113.000 State Memorandum of Agreement $727,664 $738,266 $10,602 66.034.000 Surveys, Studies, Research, Investigations, Demonstrations Relating to Clean Air Act $3,449,664 $2,662,706 ($786,958) 66.040.000 State Clean Diesel Grant Program $189,978 $0 ($189,978) 66.419.000 Water Pollution Control State and Interstate Program Support $6,858,213 $5,872,094 ($986,119) 66.454.001 Water Quality Management Planning - Stimulus $1,136,934 $1,164,678 $27,744 66.456.000 National Estuary Program $1,013,360 $898,756 ($114,604) 66.460.000 Nonpoint Source Implementation Grants $8,495,153 $5,348,441 ($3,146,712) 66.605.000 Performance Partnership Grants $44,782,855 $44,087,382 ($695,473) 66.608.000 Environmental Information Exchange Network and Related Assistance $875,881 $0 ($875,881) 66.802.000 Superfund State Site Specific $1,178,839 $435,036 ($743,803) 66.804.000 State Underground Storage Tanks Program $3,065,159 $1,561,074 ($1,504,085) 66.805.000 Leaking Underground Storage Tank Trust Fund $4,526,871 $4,391,186 ($135,685) 66.809.000 Superfund State Core Program Cooperative Agreements $787,115 $425,044 ($362,071) 66.817.000 State and Tribal Response Program $853,546 $857,044 $3,498 97.041.000 National Dam Safety Program $1,143,025 $1,151,436 $8,411 97.091.000 Homeland Security Biowatch Program $6,784,241 $5,980,064 ($804,177)
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Commission on Environmental Quality Performance Measure Highlights - House
Expended Estimated Budgeted Recommended Recommended 2013 2014 2015 2016 2017 • Nitrogen Oxides (NOx) Reduced through the 43.5 50.7 57.4 47.8 42.3 Texas Emissions Reduction Plan (TERP)
The number of tons of NOx being reduced is generally declining over the 2013 to 2017 period because funding levels for the TERP program, which were reduced significantly beginning in 2009. NOx reductions from earlier projects, which are realized over five- to seven-year period after funding commitments are made, have reached operational commitments.
• Number of Vehicles Repaired or Replaced 6,520 5,573 2,730 2,482 2,482 through LIRAP Assistance
The number of vehciles repaired or replaced in fiscal year 2013 due to replacements reported through FY 2013 are due to outstanding replacement vouchers remaining from fiscal year 2012 being redeemed during the early part of the fiscal year as well as unexpended balances from 2012 being carried forward to 2013.
• Number of Inspections/Investigations of 29,292 30,191 28,600 38,600 38,600 Water Rights Sites
The number of inspections and investigations of water rights sites is expected to increase by 10,000 per year beginning in fiscal year 2016 because of the creation of the Brazos River Watermaster Program (See Selected Fiscal and Policy Issue No 5.)
• Number of Petroleum Storage Tank 325 298 200 200 200 Cleanups Completed
The number of Petroleum Storage Tank (PST) cleanups declines beginning in fiscal year 2015 because remaining cleanup projects funded by the PST reimbursement program, which expired on September 1, 2012, were completed in fiscal years 2013 and 2014 .
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Savings/ Gain/ Fund Included in Reports & Recommendations (Cost) (Loss) Type Introduced Bill Action Required During Session Further Reduce Reliance on General Revenue-Dedicated Accounts for Certification of the State Budget This report fulfills House Bill 7, Eighty-third Legislature, 2013, requirements relating to the reduction of reliance on available dedicated revenue for certification of the General Appropriations Act. The report provides an overview of the issue and includes recommendations and options to reduce relaince on General Revenue-Dedicated Accounts, including dedicated revenue appropriated to the Texas Commission on Environmental Quality. 1. To assist the state in meeting federal air quality standards, appropriate an amount equal to the transfer from the State Highway Fund related to motor vehicle certificate of title fees collected in ($80,984,000) GR-D Appropriate Funds severe nonattainment areas to the Texas Commission on Environmental Quality for TERP authorized programs. 2. Increase appropriations for the AirCheck Texas program and local initiatives projects to levels equivalent to annual collections of the ($81,263,000) GR-D Appropriate Funds Auto Emissions Inspection On-Board Diagnostic (OBD) fee - an estimated $81.3 million for the 2016-17 biennium.
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Commission on Environmental Quality Rider Highlights – House
2. Capital Budget. Recommendations include various changes to Capital Budget items. See Selected Fiscal and Policy Issues- House, No. 6.
3. (former) Contingency Cash Flow. Recommendations delete rider that allow for the agency to expend General Revenue Funds to meet temporary cash flow needs, provided such funds are repaid to General Revenue by the end of the biennium in which the funds were used. The rider is proposed for deletion because the authority it provides has not been used in at least 15 years, and the agency does not foresee needing it in the immediate future.
8. Contract with the State Office of Administrative Hearings. Recommendations reduce the amount of the contract with the State Office of Administrative Hearings (SOAH) for TCEQ-related hearings expenses from $1,000,000 to $816,000 to reflect that the TCEQ’s utility rate regulation function was transferred to the Public Utility Commission as a result of passage of House Bill 1600, Eighty-third Legislature, Regular Session.
13. Appropriations Limited to Revenue Collections: Automobile Emissions Inspections. Recommendations add language to clarify the statutory authority for the vehicle emissions and inspection fee is created in Health and Safety Code, Section 282.202(e) and update the years listed in the rider as appropriate.
15. Appropriation: Environmental Radiation and Perpetual Care (formerly Appropriation: Perpetual Care Account). Recommendations modify rider title and rider language to reflect passage of Senate Bill 347, Eighty-third Legislature, Regular Session. Recommendations also change the name of the account referenced in the rider to the General Revenue Fund, rather than the Perpetual Care) Account. Senate Bill 347 attempted to establish the Environmental Radiation and Perpetual Care (ERPC) Account as a distinct account separate from the pre-existing Perpetual Care Account in the General Revenue Fund, but the new account was not exempted from funds consolidation by the Eighty-third Legislature, Regular Session. Thus, revenues that otherwise would go to the ERPC Account instead are deposited to the General Revenue Fund since September 1, 2013. Recommended modified language is added to clarify that funds appropriated in the rider come from the General Revenue Fund, and statutory references are updated to reflect passage of Senate Bill 347. In addition, statutory references are updated to conform to changes from Senate Bill 347, and references to the Department of State Health Services are deleted, as the two agencies no longer share the Perpetual Care Account. (See Selected Fiscal and Policy Issues – House, No. 5.)
17. (former) Unexpended Balances Authority within the Biennium. Recommendations delete the rider providing unexpended balance authority between fiscal years within the 2016-17 biennium that exists for the 2014-15 biennium. (See Selected Fiscal and Policy Issue – House, No. 11, and Items Not Included in Recommendations – House, No. 1.)
Sec 5 Rider Highlights_Agency 582_deleted UB rider.docx 2/11/2015
17 Section 5
17. Reimbursement of Advisory Committees. Recommendations delete language providing authority for the reimbursement of expenses for the Pollution Prevention Advisory Committee because the entity was abolished on October 9, 2013.
21. Aggregate Operations. (Formerly Aggregate Operations Along the San Jacinto River) Recommendations revise rider name and delete references to the San Jacinto River to provide flexibility to the agency to conduct flyovers to inspect properties for violations of aggregate operations regulations.
23. Low-Income Vehicle Repair Assistance, Retrofit, and Accelerated Vehicle Retirement Program (LIRAP). Recommendations adjust the amount listed in the rider for LIRAP administrative costs to biennialize the 2014-15 salary increase, and recommendations delete language listing specific local initiatives projects because the language is inconsistent with statute.
26. Appropriation: Fee Revenue for Brazos River Watermaster Program (Formerly Appropriation for Fee Revenue for Newly-Created Watermaster Program). Recommendations revise rider name to reflect the Brazos River Watermaster which was created in April of 2014 and revise rider language to reflect that the rider applies to that specific watermaster program. Recommendations adjust amounts included in the rider to reflect projected 2016 and 2017 recommended appropriations for the program and specify that the appropriation for the Brazos River Watermaster program is limited to revenues to the General Revenue-Dedicated Watermaster Administration Account No. 158 in excess of the Comptroller’s Biennial Revenue Estimate for 2016-17. (See Selected Fiscal and Policy Issue – House, No. 4.)
28. (former) Litigation Expenses for the Rio Grande Compact Commission. Recommendations delete rider directing the use of $5.0 million in one- time General Revenue for expenses incurred by the Rio Grande Compact Commission relating to investigations and litigation expenses relating to a water rights dispute between Texas and New Mexico. (See Selected Fiscal and Policy Issues – House No. 3, and Items Not Included in Recommendations – House, No. 4.)
31. (former) Contingency for House Bill 7: Environmental Remediation of a Closed Battery Recycling Facility. Recommendations delete rider reflecting completion of the battery recycling facility cleanup project. (See Selected Fiscal and Policy Issues – House, No. 7a.)
Sec 5 Rider Highlights_Agency 582_deleted UB rider.docx 2/11/2015
18 Section 6 Commission on Environmental Quality Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds Agency Exceptional Items 1. Unexpended Balance Authority within the Biennium--The agency requests authority to move funds forward $ - $ - from fiscal year 2016 to fiscal year 2017 for the agency's various programs. The agency currently has such unexpended balance authority between fiscal years within the 2014-15 biennium for. The agency reports that the rider allows the agency to carry funds from one fiscal year to the next within the biennium when projects are delayed for items such as rulemaking, gaining access to a site, weather, and site conditions. The agency requests the authority to support programs such as the Texas Emission Reduction Plan, Superfund, Petroleum Storage Tank, air and water grant programs. There is no cost to the bill associated with this item. (See Selected Fiscal and Policy Issues - House, No. 11, and Rider Highlights- House, No. 17).
2. Water Operational Needs--The agency is requesting additional General Revenue funding and 10.0 FTEs for $ 3,469,066 $ 3,469,066 water programs to conduct additional water availability modeling, water rights permit processing, and technical support and analysis relating to the drought. 3. Targeted Classification Increases--the agency is requesing $5.9 million in All Funds to increase pay levels for $ 5,870,346 $ 5,870,346 various specialized employees including accountants, attorneys, auditors, chemists, contract specialists, electronic technicians, engineers, engineering specialists, geoscientists, hydrologists, planners, systems analysts, and administrators. Funding would come from a mix of General Revenue and various General Revenue-Dedicated accounts.
4 Funding for Ongoing Litigation Expenses of the Rio Grande Compact Commission. General Revenue $ 5,000,000 $ 5,000,000 funding for anticipated expenses associated with litigation relating to water rights disputes with New Mexico. The State of Texas has sued the State of New Mexico for not delivering its fair share of water under the compact to Texas, and the issue is now going before the U.S. Supreme Court. The agency reports that funding for this item is a priority for the Rio Grande Compact Commissioner and is exclusively for expenses incurred in litigating the equitable distribution of water according to the Rio Grande Compact. (See Selected Fiscal and Policy Issues - House, No. 3, and Rider Highlights - House, No. 17.)
Agency 582 2/11/2015 19 Section 6 Commission on Environmental Quality Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds 5. Air Monitoring - Revised Federal Sulfur Dioxide Standard--The agency is requesting additional funding and $ 4,724,030 $ 4,724,030 8.0 FTEs to respond to new standards for sulfur dioxide emissions promulgated by the U.S. Environmental Protection Agency (EPA). The funding would cover modeling and monitoring costs, and includes $1.6 million in Capital Budget costs in fiscal year 2016 for the procurement of trailers and instrumentation. Funding would come from the General Revenue-Dedicated Operating Permit Fees Account No. 5094.
6. Telecommunications Migration and Regional Phone Replacement--The agency requests funding for new $ 633,140 $ 633,140 servicers for its regional telecommunications system. Funding to replace the agency's system at is headquarters is contained within its baseline funding request; this exceptional item funding would be for the system at the agency's regional offices.Funding would come from a mix of General Revenue and various General Revenue- Dedicated accounts. (See also Selected Fiscal and Policy Issues - House, No. 6d.)
7 Monitoring Equipment - Field Investigators--The agency seeks to purchase Optical Gas Imaging Cameras $ 655,090 $ 655,090 (OGIC), which would allow them to detect emissions that otherwise go undetected. The equipment would assist the agency in keeping up with demand for monitoring resulting from population growth, the current drought, and increased activity in oil and gas production. Fuding would come from various General Revenue-Dedicated accounts. 8. New Capital Budget Item--Houston Laboratory Information Management System (LIMS) Upgrade)-- $ 429,000 $ 429,000 Funding out of the General Revenue-Dedicated Water Resource Management Account No. 153 to acquire hardware/software and consulting services to control and standardize laboratory processes and ensure that testes are administered efficiently, effectively, and according to approved procedures. The agency failed to provide adequate justification for adding this new project. Baseline appropriations were reduced and Capital Budget authority for the project is not included in recommendations. (See Selected Fiscal and Policy Issues - House, No. 6c.)
Total, Items Not Included in the Recommendations $ 20,780,672 $ 20,780,672
Agency 582 2/11/2015 20 Section 7 Commission on Environmental Quality Summary of 10 Percent Biennial Base Reduction Options - House
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Intro Bill Loss GR/GR-D Total 1 TERP Grants The reduction in funding would result in a reduction in the allocation of funding to $59,328,766 $59,328,766 $0 38% No. the TERP Emissions Reduction Incentive Grants (ERIG) Program. It is estimated that this funding reduction would result in 135 fewer vehicles and pieces of equipment replaced or upgraded each year under the ERIG Program, or 270 vehicles and pieces of equipment for the 2016-2017 fiscal biennium. The impact on TERP Output Measure S010101 for fiscal biennium 2014-2015 would be a reduction in the projected tons of NOx reduced from 4,571 to 3,474 per year. The projected tons per day of NOx reduced (TERP Outcome Measure G010100.02) is not expected to change for the 2016-2017 fiscal biennium due to the timing of when the grant-funded equipment is received, operations begin and the grantees start reporting. However, in 2018-2021, the outcome projections for G010100.02 are expected to decrease as a result of the reduction in funding: 2018 - reduced from 39.2 to 38.5 tons per day; 2019 - reduced from 25.5 to 24.1 tons per day; 2020 - reduced from 21.7 to 19.5 tons per day; and 2021 - 21.6 to 18.7 tons per 2 Closed Battery Recycling Pursuant to THSC 361.133 (c-1), as amended by HB 7 of the 83rd Legislature, the $1,500,000 $1,500,000 $0 100% Yes. authorization for this funding expires September 30, 2014. 3 Vehicle Emission Analyzers HB2305, appropriated through Art. IX, Sec. 18.50, required the Department of $800,000 $800,000 $0 100% Yes. Public Safety and the Department of Motor Vehicles to replace the current Texas dual inspection/registration sticker system with a single registration sticker. It also provided $800,000 for TCEQ to modify its analyzer equipment, resulting in a one- time appropriation of $800,000 in fiscal year 2014 out of the Clean Air Account #151.
Agency 582 2/11/2015 21 Section 7 Commission on Environmental Quality Summary of 10 Percent Biennial Base Reduction Options - House
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Intro Bill Loss GR/GR-D Total 4 Data Center Services To cut $905,744 for FY16 and $905,743 for FY17 we would need to drop our test $1,811,487 $1,811,487 $0 8% No. servers and give up our disaster recovery capability. In addition, the contractual response time from our DCS vendor when we have a critical problem would be extended from our current 2 hours to 6 hours.
We currently have 75 test servers for which we pay monthly server, storage and backup fees forecast to total approximately $794,787 in FY16 and $806,842 in FY17. Without these test servers we would have to run upgrades and patches in production without the benefit of testing first, and release newly developed software directly from development to production. This would increase downtime for agency operations, reduce system efficiencies, and break a commonly held best practice. Test servers are also required as disaster recovery targets in case of an Austin Data Center disaster, so our disaster recovery plans would be extended by months to accommodate the purchase and installation of new equipment.
In order to meet the target cost reductions, we would also have to lower our
TOTAL, 10% Reduction Options $63,440,253 $63,440,253 $0
Agency 582 2/11/2015 22 Section 7 Commission on Environmental Quality Summary of 10 Percent Biennial Base Reduction Options - House
Agency 10% Reduction Options by Category of Reduction
Programs - Service Reductions (Contracted) 100.0%
Agency 582 2/11/2015 23 Strategic Fiscal Review 2016-17 The staff of the Legislative Budget Board conducted House Budget Recommendations: HB 1 as Introduced the Strategic Fiscal Review in the fall of 2014. The Texas Commission on Environmental Quality--Texas Emissions Reduction Plan analysis contained in these materials reflects that staff review. The budget amounts for 2016-17 reflect budget recommendations contained in House Bill 1 Schedule 1: Agency Overview Mission Statement: The Texas Commission on Environmental Quality strives to protect the state's public health and natural resources consistent with sustainable economic development. The agency's goal is clean air, clean water, and the safe management of waste. Legal Authority: Health and Safety Code 386.051, 386.252, 386.390-394, General Appropriations Act, 2014-15 Biennium, Eighty-third Texas Legislature, Regular Session, 2013, Art. VI, Rider 21.
Total Number of Programs: 1 Overview and Significant Findings
Historical and Recommended Methods of Finance ■ The Texas Emissions Reduction Plan (TERP), was established in 2001 by the 77th $200 Legislature, to reduce nitrogen oxides (NOx) and other emissions from heavy-duty on-road vehicles and non-road equipment by providing grants and rebates for voluntary upgrades $150 and replacements, including school buses. Additional detail is discussed in the Notes
section below.
$100 ■ The General Revenue-Dedicated TERP Account No. 5071 cash balance is projected to be $1,066.5 million on August 31, 2015, according to the Comptroller's Biennial Revenue Millions $50 Estimate (BRE) for 2016-17. The account balance is expected to grow by $170.7 million to $1,237.2 million by the end of the 2016-17 biennium, assuming BRE anticipated growth of $0 $450.8 million, payments for encumbrances, and appropriations provided in the Introduced 2010-11 Expend 2012-13 Expend 2014-15 Est/Budg 2016-17 Appropriations Bill. Recommend General Revenue GR-Dedicated Federal Funds Other Funds ■ Recommendations provide $155.3 million in funding for TERP for 2016-17 out of the TERP Account No. 5071, an amount equal to the 2014-15 funding levels. This includes funding for 49.0 FTEs.
Full-Time-Equivalent Positions (FTEs) ■ The LBB report Reduce Reliance on General Revenue-Dedicated Accounts for Certification identifies a biennial increase of $81.0 million for 2016-17 out of the TERP 100.0 38.8 43.0 49.0 49.0 Account No. 5071. The funding recommendation would increase appropriations by the 0.0 amount of Certificate of Title Fee revenue collected in counties considered in severe 2011 Expended 2013 Expended 2015 Budgeted 2017 Recommended nonattainment for Federal Clean Air Act air quality standards. Along with other recommendations in the report, this would serve to reduce balances in the TERP Account No. 5071. Schedule 1: Agency Overview 1 Schedule 1: Agency Overview
TERP Incentive Programs: The Texas Emissions Reduction Plan (TERP) includes multiple incentive programs, each with its own statutorily-designated service area. The main incentive programs are listed below, along with with brief program descriptions, statutory citations, and the statutory allocation from the TERP revenue stream each program is provided in statute. Program Description Legal Authority Statutory Allocation Diesel Emissions Reduction Incentive Grants to reduce emissions of nitrogen oxides (NOX) from mobile sources in air quality Health and Safety Code, Chapter 386, Balance of funding not Grants (ERIG) Program nonattainment areas designated under the federal Clean Air Act (42 U.S.C. Section 7407) Subchapter C allocated to other and other "Affected Counties" listed under Health and Safety Code, §386.001(2). programs Texas Clean Fleet Program Grants to replace diesel vehicles with vehicles powered by alternative fuel (natural gas, Health and Safety Code, Chapter 392 5% liquefied petroleum gas, hydrogen, methonal - 85 percent by volume, and electricity) or hybrid vehicles. Applicants must own at least 75 vehicles in Texas and apply to replace at least 20 vehicles. The statute does not define a service area, but TCEQ originally aligned the eligible areas with the ERIG program areas. For future grants, the agency is aligning the program areas to those counties eligible under the Texas Natural Gas Vehicle Grant Program, in order to make those two programs more consistent. Texas Natural Gas Vehicle Incentive Grants to replace older medium- and heavy-duty vehicles with natural gas vehicles Health and Safety Code, Chapter 394 16% Grant Program operating in the counties designated under the Clean Transportation Triangle (see below). Clean Transportation Triangle Funding for natural gas fueling facilities along and between the triangular area between Health and Safety Code, Chapter 394 5% Houston, Dallas-Fort Worth, and San Antonio, as well as designated nonattainment areas and counties designated as an "Affected County" under Health and Safety Code, §386.001(2). Alternative Fueling Facilities Program Funding for facilities to provide alternative fuel (natural gas, liquefied petroleum gas, Health and Safety Code, Chapter 393 5% biodiesel, hydrogen, methanol - 85% by volume, hydrogen, and electricity) located in the state's nonattainment areas. Drayage Truck Incentive Program Grants to replace drayage trucks operating at or delivering cargo to and from seaports and Health and Safety Code, Chapter 386, 2% to 5% rail yards located in the state's nonattainment areas. In addition, at least 50 percent of Subchapter D-1 annual mileage must occur in the nonattainment areas and affected counties. Light-Duty Motor Vehicle Purchase or Rebate grants of up to $2,500 for the purchase of a light-duty vehicle powered by Health and Safety Code, Chapter 386, 5% Lease Incentive Program compressed natural gas, liquefied petroleum gas, or electricity. This is a statewide Subchapter D program that expires on August 31, 2015. Texas Clean School Bus Program Grants to install retrofit systems on school buses to reduce emissions of particular matter Health and Safety Code, Chapter 390 4% from diesel exhaust. This program is statewide. New Technology Implementation Grants to provide funding for: Advanced Clean Energy Projects as defined under Health Health and Safety Code, Chapter 391 3% Grants Program and Safety Code, §382.003; new technology projects that reduce emissions of regulated (at least $1 million set pollutants from point sources; and electricity storage projects related to renewable energy. aside for renewable These grants are available for projects statewide. energy storage)
Schedule 1: Agency Overview 2 Schedule 1: Agency Overview Regional Air Monitoring Program Funding through a regional nonprofit entity located in North Texas to establish and operate Health and Safety Code, §386.252(a)(4): $3 million additional air quality monitors in TCEQ Regions 3 and 4. In addition to these allocations, not more than $200,000 may be used for a health effects study; ($500,000 is to be deposited in the state treasury to the credit of the Clean Air Account created under Health and Safety Code, §382.0622 to supplement funding for air quality planning activities in affected counties; and at least $4 million and up to 4 percent to a maximum of $7 million, whichever is greater, is allocated to the TCEQ for administrative costs. In addition, not more than $216,000 is allocated to the agency to contract with the Energy Systems Laboratory (ESL) at the Texas Engineering Experiment Station annually for the development and annual computation of creditable statewide emissions reductions obtained through wind and other renewable energy resources for the state implementation plan, and 1.5 percent of the money in the fund is allocated for administrative costs incurred by the ESL. TERP Objectives The U.S. Environmental Protection Agency (EPA) established the National Ambient Air Quality Standards (NAAQS) for criteria pollutants under authority of the federal Clean Air Act (42 USC 7401 et. seq.). The EPA has established those standards under 40 CFR Part 50. The Clean Air Act also requires that states take responsibility for a state implementation plan for those areas determined nonattainment for one or more of the standards. The TERP incentive programs provide tools to help nonattainment areas achieve emissions reduction targets and to help other areas from exceeding a pollutant standard and being designated nonattainment. Objectives of the commission in administering the TERP through appropriated funds are listed in HSC, §386.052(b) and include: (1) achieving maximum reductions in nitrogen oxides (NOx) to demonstrate compliance with the state implementation plan; (2) preventing areas of the state from being in violation of national ambient air quality standards; (3) achieving cost-saving and multiple benefits by reducing emissions of other pollutants; (4) achieving reductions of emissions of diesel exhaust from school buses; and (5) advancing new technologies that reduce NOx and other emissions from facilities and other stationary sources. NOx combines with volatile organic compounds in the presence of sunlight to form ground-level ozone (smog). Ozone is a lung irritant and can cause respiratory problems, irritate lung tissue, reduce lung capacity, aggravate asthma and other respiratory illnesses, and impair immune systems. Populations in the areas designated for nonattainment for ground-level ozone and other areas of concern for ground-level ozone benefit from the reductions in NOX emissions achieved by the TERP programs. Reductions in emissions of other pollutants in these areas and statewide also help reduce any adverse health affects from those pollutants. The Clean School Bus Program helps reduce exposure of school children to emissions of particulate matter from diesel exhaust, which may cause health problems in certain concentrations.
The emissions reductions achieved from the TERP incentive programs directly benefit public health through reducing exposure of the population to ground-level ozone as well as to other potentially harmful pollutants. An ancillary benefit of the TERP incentives has been to enhance the market for newer vehicles and equipment in Texas. Also, the programs aimed at replacing vehicles with newer alternative fuel vehicles has helped spur the market for those vehicles in Texas and helped to increase the availability of fueling stations to provide alternative fuel.
The TERP Emissions Reduction Incentive Grants (ERIG) program includes a Third-Party grants program to provide funds to state and regional agencies to establish a pass-through grant program to fund projects that meet the ERIG requirements. The TCEQ has provided grants in the past to the Railroad Commission of Texas for an propane forklift program, which was expanded to include natural gas vehicles. The Houston-Galveston Area Council (H-GAC) and the North Central Texas Council of Governments (NCTCOG) were provided funding for regional subgrant programs. Also, the Texas General Land Office received funds for a program aimed at natural gas vehicles.
Schedule 1: Agency Overview 3 Schedule 1: Agency Overview Program Changes and Outlook Changes to the program since initial creation have included the addition of programs aimed at reducing emissions through increasing the use of alternative fuels for transportation in defined areas and statewide, including: in 2009 with the creation of the Texas Clean Fleet Program; in 2011 with the Texas Natural Gas Vehicle Grant Program, Clean Transportation Triangle Program, and Alternative Fueling Facilities Program; and in 2013 with the revised Light-Duty Motor Vehicle Purchase or Lease Incentive Program. The New Technology Implementation Grants Program and the Regional Air Monitoring Program were created by the Legislature in 2011 and the new Drayage Truck Incentive Program was established in 2013.
As older vehicles and equipment are retired and replaced with new models, the emissions from mobile sources will decrease. Revisions to the federal emissions standards for on-road engines in 2010 substantially reduced emissions from new engines. Similar revisions to standards for non-road engines went into effect in 2013 and 2014, and marine and locomotive engine standards are also becoming more stringent. As older engines are retired through normal turnover, the newer engines will emit substantially lower levels of pollutants. This means that over time, the need for incentives to encourage replacement of vehicles and equipment will become less. However, many larger vehicles and pieces of equipment operate for at least 15 years and many operate for a much longer period. Therefore, the tipping point for when the effectiveness of the TERP incentives will be substantially reduced will probably not occur for some time.
In addition, the U.S. Environmental Protection Agency (EPA) is considering reducing the National Ambient Air Quality Standard (NAAQS) for ground-level ozone to a lower level. A lower standard is likely to increase the number of areas in Texas not attaining the standards and areas near the standard. The agency reports that this is likely to increase the number of eligible vehicles and equipment, and increase the need and demand for the program.
Federal Funds At the regional level federal funding has been available under the federal Congestion Mitigation and Air Quality (CMAQ) program. The CMAQ program provides a flexible funding source to state and local governments for transportation projects and programs to help meet the requirements of the Clean Air Act. Funding is available to reduce congestion and improve air quality for areas that do not meet the NAAQS for ozone, carbon monoxide, or particulate matter (nonattainment areas) as well as former nonattainment areas that are now in compliance (maintenance areas). H-GAC and NCTCOG have received periodic CMAQ funds that have been used, in some cases, to provide subgrants for projects that may be similar to those funded under the TERP.
Federal Diesel Emissions Reduction Act (DERA) funds have also been available through the U.S. Environmental Protection Agency for projects similar to those funded under the TERP. American Recovery and Reinvestement Act (ARRA) funding was also made available by EPA for projects meeting the DERA program criteria. Both H-GAC and NCTCOG received funding for projects similar to projects that may be funded under the TERP ERIG Program.
Schedule 1: Agency Overview 4 Schedule 1: Agency Overview Measuring Program Effectiveness To determine whether the agency has been meeting the objectives of the TERP program, there are several programs for which TCEQ has been able to determine cost-effectiveness in terms cost per ton of NOx emissions removed from the air. The following provides a description of the extent to which the agency has determined the effectiveness of each of the following significant grant programs within TERP.
■ ERIG Program The agency has calculated an average cost per ton of NOx reduction of $5,628. The ERIG is the most cost effective program in terms of Nox reduced and quantifiable emissions reductions that can be used to demonstrate compliance with Clean Air Act standards to the U.S. EPA. .
■ Clean Fleet Program The agency has calculated an average cost per ton of NOx redcution of $75,037.
■ Natural Gas Vehicle Incentive Grant Program The agency has calculated an average cost per ton of NOx redcution of $32,090.
■ Drayage Truck Incentive Program The agency reports that eventually there will be cost-effectiveness calculations available for this program; however, because the program was established in fiscal year 2014, it is too early to determine calculations.
■ Alternative Fueling Facilities Program This program provides funding for entities to build infrastructure for alternative fueling facilities; as such, the agency reports that no air pollution reductions can be specifically assigned to this program.
■ Clean Transportation Triangle This program provides funding for entities to build infrastructure for alternative fueling facilities; as such, the agency reports that no air pollution reductions can be specifically assigned to this program.
■ Clean School Bus Program This program focuses mainly on the air quality and reduction of particulate matter in the passenger area of school buses, and it is not aimed at reducting ambient ozone levels; thus, no quantifiable NOx reduction can be measured.
■ New Technology Implementation Grants Projects funded through this program generally relate to the storage of power generated from alternative energy sources for which the agency does not expect to ascertain quantifiable emissions reductions.
Schedule 1: Agency Overview 5 Strategic Fiscal Review 2016-17 House Budget Recommendations: HB 1 as Introduced Texas Commission on Environmental Quality--Texas Emissions Reduction Plan
Schedule 2A: Program Listing -- Services and Administration
Agency Submission Review and Analysis Significant Agency Year State Mission Service Audit and/or Outsourced Ranking Program Name Created Authority Federal Authority Authority Centrality State Service Category Area Report Findings Services?
NA Texas Emissions Reduction Plan 2003 Statute NA Strong Moderate Natural Resources Management & Statewide Yes Yes Regulation
Program Summary Included
Note: An Audit Report on The Texas Emissions Reduction Plan Program at the Commission on Environmental Quality was released by the State Auditor's Office on December 2010. All of the audits recommendations were implemented.
Schedule 2A: Program Listing -- Services and Administration 6 Strategic Fiscal Review 2016-17 House Budget Recommendations: HB 1 as Introduced Texas Commission on Environmental Quality--Texas Emissions Reduction Plan
Schedule 2B: Program Listing -- Fiscal
Agency Submission Review, Analysis and Funding Percent Appropriate Use of Agency 2015 2017 Change FTEs Constitutional and Funding Agency 1st Year Full 2010-11 2012-13 2014-15 FTEs 2016-17 FTEs from Change Revenue GR-Dedicated Alternatives Ranking Program Name Implementation Expended Expended Est / Budg Budg HB 1 - Intro Rec. Base from Base Supported? Funds? in Recs?
NA Texas Emissions Reduction Plan $ 18,942,660 $ 161,703,719 $ 129,597,524 $ 155,279,007 49.0 $ 155,279,007 49.0 0.0% 0.0 Yes Compliant No
Total $ 18,942,660 $ 161,703,719 $ 129,597,524 $ 155,279,007 49.0 $ 155,279,007 49.0 0.0% 0.0 Program Summary Included
Schedule 2B: Program Listing -- Fiscal 7 Strategic Fiscal Review 2016-17 House Budget Recommendations: HB 1 as Introduced Texas Commission on Environmental Quality--Texas Emissions Reduction Plan
Schedule 2C: Program Listing -- Explanation of Recommendations Agency Submission Review and Analysis Funding Agency Compared Ranking Program Name to 2014-15 Explanation of 2016-17 HB 1 Introduced
NA Texas Emissions Reduction Plan Funding ■ Recommendations for Texas Emissions Reduction Plan (TERP) in the General Appropritions Bill, As Introduced, provide funding for 2016-17 at the 2014-15 expended/budgted levels.
Funding ■ Recommendations provide for the redirection of $3.9 million out of the TERP Account No. 5071 funds from the Light Duty Motor Vehicle Incentive Program, which expires in fiscal year 2015, to the Emissions Reduction Incentive Grant Program (ERIG).
Funding ■ The LBB GEER Report, Reduce Reliance on General Revenue-Dedicated Accounts for Certification, recommends an increase of $81.0 million in additional appropriations out of the TERP Account No. 5071 for the 2016-17 biennium to appropriate the full amount of the transfer to the TERP Account from the State Highway Fund No. 6 related to Certificate of Title Fee revenues collected in counties designated as severe nonattainment for air quality.
NA Statutory ■ To reduce this balance, an LBB GEER report titled Reduce Reliance on General Revenue-Dedicated Accounts for Certification presents two options for reducing reliance on TERP for certification relate to motor vehicle certificate fee revenue. Option 1 of the report would move an estimated $447.0 million in balances in the TERP Account No. 5017 to the State Highway Fund No. 6. A second option (Option 2) would amend statute to reduce future transfers from the State Highway Fund to the TERP Account No. 5071 to an amount equal to the amount of motor vehicle certificates of title fees collected in certain nonattainment areas (those subject to Clean Air Act Section 185 penalties) and deposited to the Texas Mobility Fund. It is estimated that this would result in the redirection of $159.8 million in revenues from the TERP Account No. 5071 to the State Highway Fund No. 6 during 2016-17.
NA Statutory ■ It is recommended that the ERIG program be the focus of any additional funding that may be appropriated from the TERP Account No. 5071 because the ERIG program has been proven to be the most effective at achieving quantifiable reductions in NOx emissions.
Program Summary Included
Schedule 2C: Program Listing -- Explanation of Recommendations 8 Strategic Fiscal Review 2016-17 House Budget Recommendations: HB 1 Introduced Schedule 3: Assessments of Mission Centrality and Authority
Texas Commission on Environmental Quality--Texas Emissions Reduction Plan
Mission centrality is a judgment of how directly connected a program is to the core mission and goals of the agency, as identified in statute, agency strategic plans, or other documents. Authority is an assessment of how strong and explicit the legal basis is for the existence of the program and the way in which the agency is administering it.
MISSION CENTRALITY Weak Moderate Strong
Texas Emissions Reduction Plan (1)
Strong A U T H O Moderate R I
Weak
Note: The matrix does not include Indirect Administration programs. The TERP program is characterized as being strong in terms of authority because the objectives and details of the program are laid out specifically in statute. TERP is characterized as moderate in terms of Mission Centrality because the program functions as a tool in meeting the agency's Goal A, Assessment Planning, and Permitting, as reported in the agency's Strategic Plan for 2013-17 : To plan for air quality, water quality, and waste management by: developing the State Implementation Plan for attainment of the National Ambient Air Quality Standards (NAAQS), designing and implementing specific strategies to improve water quality, and analyzing solid waste generation and management in Texas. TERP is a program that supports the agency's overall efforts to develop the State Implementation Plan for attainment of NAAQS, and it is one of many tools the agency uses to improve the state's air quality. However, the program was never designed to be permanent, and under current law the entire TERP program will expire on August 31, 2019.
Schedule 3: Assessment of Mission Centrality and Authority 9 Strategic Fiscal Review 2016-17 House Budget Recommendations: HB 1 as Introduced Texas Commission on Environmental Quality--Texas Emissions Reduction Plan
Schedule 4: Constitutional and General Revenue-Dedicated Accounts
1 Account: Texas Emissions Reduction Plan (TERP) Account No. 5071 Legal Cite(s): Health and Safety Code, §286.251; Tax Code, §§151.0515 and 152.0215; Transportation Code, §§501.138, 502.358, and 548.5055. Authorized Use: Use of the TERP fund is prescribed in Health and Safety Code, §386.252. Money in the fund may be used only to implement and administer programs established under the plan. Money appropriated to the TCEQ for programs under Health and Safety Code, §386.051(b) shall be allocated as follows: (1) not more than 4 percent may be used for the clean school bus program under Health and Safety Code, Chapter 390; (2) not more than 3 percent may be used for the new technology implementation grant program under Chapter 391, from which at least $1 million will be set aside for electricity storage projects related to renewable energy; (3) 5 percent shall be used for the clean fleet program under Health and Safety Code, Chapter 392; (4) not more than $3 million may be used by the agency to fund a regional air monitoring program in commission Regions 3 and 4 to be implemented under the TCEQ ’s oversight, including direction regarding the type, number, location, and operation of, and data validation practices for, monitors funded by the program through a regional nonprofit entity located in North Texas having representation from counties, municipalities, higher education institutions, and private sector interests across the area; (5) not less than 16 percent shall be used for the Texas natural gas vehicle grant program under Health and Safety Code, Chapter 394; (6) not more than five percent may be used to provide grants for natural gas fueling stations under the clean transportation triangle program under Health and Safety Code, §394.010; (7) not more than 5 percent may be used for the Texas alternative fueling facilities program under Chapter 393; (8) a specified amount may be used each year to support research related to air quality as provided by Chapter 387; (9) not more than $200,000 may be used for a health effects study; (10) $500,000 is to be deposited in the state treasury to the credit of the clean air account created under Health and Safety Code, §382.0622 to supplement funding for air quality planning activities in affected counties; (11) at least $4 million and up to 4 percent to a maximum of $7 million, whichever is greater, is allocated to the TCEQ for administrative costs; (12) at least 2 percent and up to five percent of the fund is to be used by the commission for the drayage truck incentive program established under Health and Safety Code, Subchapter D-1; (13) not more than 5 percent may be used for the light-duty motor vehicle purchase or lease incentive program established under Health and Safety Code, Subchapter D; 14) not more than $216,000 is allocated to the agency to contract with the Energy Systems Laboratory (ESL) at the Texas Engineering Experiment Station annually for the development and annual computation of creditable statewide emissions reductions obtained through wind and other renewable energy resources for the state implementation (15) 1.5 percent of the money in the fund is allocated for administrative costs incurred by the ESL; and (16) the balance is to be used by the commission for the diesel emissions reduction incentive program under Subchapter C as determined by the commission.
Schedule 4: Constitutional and GR-Dedicated Accounts 10 Revenue Source: The following is a list of revenues deposited to the TERP Account No. 5071, a description of each revenue, and an estimate of the revenue to be generated from each source during the 2016-17 biennium, based on the Comptroller's Biennial Revenue Estimate for 2016-17. Revenue and Authorization Description 2016-17 Estimated Revenue (In Millions) Motor Vehicle Sale and Use Tax--Health Levied on the sale, lease or use of on-road diesels: 2.5 $31.1 and Safety Code, §386.251 and Tax percent for vehicles made before 1997 and 1.0 percent on Code §152.0215 vehicles made after 1997. Motor Vehicle Certificate of Title Fee-- Fee assessed on vehicle title transfers of $15 in counties $240.8* *Comptroller's Biennial Revenue estimate for Motor Vehicle Certificates Health and Safety Code, § 386.251 and that are in attainment for air quality standards and $20 Deposited to the Texas Mobility Fund. Transportation Code, §501.138 counties in nonattainment counties. The fee is deposited to the Texas Mobility Fund, with the Department of Transportation depositing an equal amount of funds to the TERP Account No. 5071 from the undedicated portion of the State Highway Fund. Motor Vehicle Registration Fees--Health Surcharge on truck-tractor or commercial vehicle $28.6 and Safety Code, §386.251 and registration equal to 10 percent of total registration fees Transportation Code, §502.358 due. Motor Vehicle Inspection Fee, Health $10 surcharge on every commercial motor vehicle $13.9 and Safety Code, §386.251 and inspection. Transportation Code, §548.5055 Limited Saes and Use Tax--Health and 2.0 percent of sale or rental priece on the sale, lease or $136.4 Safety Code Section 386.251 and Tax use of off-road diesels. Code Section 151.0515-- Total $450.8
In Compliance with Authorized 1st Full Year 2010-11 2012-13 2014-15 2016-17 Program(s) Funded Use? Appropriated Expended Expended Est/Budg HB 1 - Intro Comments 1 Texas Emissions Reduction Plan No. 5071 Qualified $ 18,942,660 $161,703,719 $ 129,597,524 $ 155,279,007 $ 155,279,007 Revenues deposited to the Texas Emissions Reduction Plan (TERP) Account No. 5071 have significantly exceeded appropriations resulting in a large fund balance building in the account. The Comptroller estimates the TERP Account No. 5071 balance on August 31, 2015 will be $1,066.5 million, the highest amount in any General Revenue–Dedicated account. The fund balance in the acccount is expected to grow by $170.7 million to $1,237.2 million by the end of the 2016-17 biennium, assuming BRE anticipated growth of $450.8 million, payments for encumbrances, and appropriations provided in the Introduced Appropriations Bill.
Total, Texas Emissions Reduction Plan (TERP) Account No. 5071 $ 18,942,660 $ 161,703,719 $ 129,597,524 $ 155,279,007 $ 155,279,007
Total $ 18,942,660 $ 161,703,719 $ 129,597,524 $ 155,279,007 $ 155,279,007
Schedule 4: Constitutional and GR-Dedicated Accounts 11 12 Strategic Fiscal Review 2016-17 Texas Commission on Environmental Quality--Texas Emissions Reduction Plan
Schedule 5: Program Summary All 2016-17 funding recommendations reflect HB 1 as Introduced
Agency Program: Texas Emissions Reduction Plan NA Ranking The Texas Emissions Reduction Plan (TERP), was established in 2001 by the 77th Legislature, to reduce nitrogen oxides (NOx) and other emissions from heavy-duty on-road vehicles and non-road equipment by providing grants and rebates for voluntary upgrades and replacements, including school buses.
Legal Authority: Health and Safety Code 386.051, 386.252, 386.390-394, General Appropriations Act, 2014-15 Biennium, Eighty-third Texas Legislature, Regular Session, 2013, Art. VI, Rider 21.
Year Created 2003 Performance and/or Outsourced Services Yes Authority Strong Operational IssuesNo Revenue Supported Yes Centrality Moderate Use of Dedicated Funds Compliant Service Area Regional State Service Category Natural Resources Management & Regulation
Major Activities 2014-15 2015 2016-17 2017 Estimated FTEs Recommend FTEs % of Total Direct Administration $ 8,000,000 49.0 $ 8,000,000 49.0 5.2% Clean School Bus $ 6,211,161 0.0 $ 6,211,161 0.0 4.0% New Technology Implementation Grant Program $ 4,658,370 0.0 $ 4,658,370 0.0 3.0% Clean Fleet Program $ 7,763,950 0.0 $ 7,763,950 0.0 5.0% Regional Air Monitoring $ 6,000,000 0.0 $ 6,000,000 0.0 3.9% Texas Natural Gas Vehicle Grants $ 24,844,641 0.0 $ 24,844,641 0.0 16.0% Clean Transportation Triangle $ 7,763,950 0.0 $ 7,763,950 0.0 5.0% Texas Alternative Fueling Facilities $ 7,763,950 0.0 $ 7,763,950 0.0 5.0% Drayage Truck Incentive Program $ 3,105,580 0.0 $ 3,105,580 0.0 2.0% Light-duty Motor Vehicle Purchase or Lease Incentive $ 7,763,950 0.0 $ - 0.0 0.0% Program Emission Reduction Incentive Grants $ 68,571,455 0.0 $ 76,335,405 0.0 49.2% Air Quality Research $ 2,000,000 0.0 $ 2,000,000 0.0 1.3% Health Effects Study and Energy Systems Laboratory $ 832,000 0.0 $ 832,000 0.0 0.5% New Technology Research Development Grants $ - 0.0 $ - 0.0 0.0% TOTAL $ 155,279,007 0.0 $ 155,279,007 0.0 94.8%
$200 Historical and Recommended Methods of Finance
$150
$100 Millions $50
$- 2004 2010-11 Expended 2012-13 Expended 2014-15 Est / 2016-17 Budgeted Recommended General Revenue GR-Dedicated Federal Funds Other Funds
Historical and Recommended Objects of Expense
$200
$150
$100 Millions
$50
$- 2004 2010-11 2012-13 2014-15 Est / Bud 2016-17 Expended Expended Recommended
Personnel Costs Operating Costs Grants Capital Costs
Schedule 5: Program Summary 13
Agency Program: Texas Emissions Reduction Plan NA Ranking
Full-Time-Equivalent Positions (FTEs) Program Admin Compared to Services 100.0% 60.0 49.0 49.0 50.0 43.0 80.0% 38.8 60.0% 40.0 40.0% 1.44% 3.36% 4.41% 5.15% 5.14% 30.0 20.0% 20.0 0.0% 10.0 3.0 2004 2010-11 2012-13 2014-15 2016-17 Expend Expend Est/Bud Rec 0.0 2004 2011 Exp 2013 Exp 2015 Bud 2017 Rec "Direct Adm as % of Program Total"
Summary of Recommendations
1 Increase TERP appropriations in an effort to reduce the fund balance. Recommendations provide funding for TERP for 2016-17 out of the TERP Account No. 5071 at 2014-15 levels. Option 2 of the LBB GEER Report, Reduce Reliance on General Revenue-Dedicated Accounts for Certification recommends an increase of $81.0 million in additional appropriations out of the TERP Account No. 5071 for the 2016-17 biennium to appropriate the full amount of the transfer to the TERP Account from the State Highway Fund No. 6 related to Certificate of Title Fee revenues collected in counties designated as severe nonattainment for air quality. The report also recommends ending the transfer of Certificate of Title fee revenues for all other counties, resulting in a reduction of $159.8 in biennial revenues to TERP. In addition, the report recommends a one-time transfer if $447.0 million If the Statutory Change for Program Improvement below is implemented as well, the increase would be provided for the Emissions Reduction Incentive Program because that program has the greatest demonstrated performance in terms achieving quantifiable reductions in Nitorgen Oxide ( NOx) emissions that help the state in its efforts to meet federal air quality standards. 2 Redirect funds from the expiring Light Duty Motor Vehicle Incentive Program to the Emissions Reduction Incentive Grant Program. The Light Duty Motor Vehicle Incentive Program within TERP created in Health and Safety Code, Chapter 386, Subchapter D, will expire on August 31, 2015. Thus, recommendations do not include the $3.9 million in annual allocations for the program for 2016-17 but recommendations do include this amount as additional funding for the Emissions Reduction Incentive Grant (ERIG) program, because the ERIG program receives the balance of TERP funding that is not otherwise specifically allocated. This results in base level recommended funding of $38.1 million per fiscal year for 2016-17 for the program.
Performance and/or Operational Issues 1 An Audit Report on The Texas Emissions Reduction Plan Program at the Commission on Environmental Quality was released by the State Auditor's Office on December 2010. The audit contained the following findings: (1) the TCEQ should strengthen its TERP Program grantee selection process; (2) the TCEQ should strenghten its monitoring of TERP Program grants to ensure that grantees comply with program requirements; and (3) the TCEQ should improve its efforts to recover TERP Program grant funds from grantees that do not comply with program requirements. All of the audits recommendations were implemented.
Recommended Statutory Changes for Program Improvement
1 Revenues to the TERP Account No. 5071 Significantly Exceed Appropriations and a Large Fund Balance Exists in the Account. The Comptroller estimated that Texas Emissions Reduction Plan (TERP) Account No. 5071 balance available for certification for General Revenue Funds appropriations on August 31, 2015 will be $1,066.5 million, the highest amount in any General Revenue–Dedicated account. Recommended appropriations and transfers from the account are expected to result in the unencumbered balance increasing to $1,237.7 million by the end of the 1016-17 biennium. To reduce this balance, an LBB GEER report titled Reduce Reliance on General Revenue-Dedicated Accounts for Certification presents two options for reducing reliance on TERP for certification relate to motor vehicle certificate fee revenue. Option 1 of the report would move an estimated $447.0 million in balances in the TERP Account No. 5017 to the State Highway Fund No. 6. A second option (Option 2) would amend statute to reduce future transfers from the State Highway Fund to the TERP Account No. 5071 to an amount equal to the amount of amount motor vehicle certificates of title fees collected in certain nonattainment areas (those subject to Clean Air Act Section 185 penalties) and deposited to the Texas Mobility Fund. It is estimated that this would result in the redirection of $159.8 million in revenues from the TERP Account No. 5071 to the State Highway Fund No. 6 during 2016-17. This would result in the 2016-17 estimated TERP Account No. 5071 revenue being reduced from $450.8 million to an estimated $291.0 million, with the ending TERP Account No. 5071 balance being reduced to $549.4 million by the end of fiscal year 2017. 2 The Emissions Reduction Incentive Grant Program (ERIG) Program Should be the Focus of Additional TERP Funding. The various TERP grant programs target different types of projects, with varying measurable results. The ERIG program has been proven to be the most effective at achieving quantifiable reductions in NOx emissions. If the $81.0 million in additional TERP funding is appropriated or any additional amount is appropriated to TCEQ for TERP, it is recommended that the ERIG program receive the additional appropriations. Because TERP funding allocations are prescribed in statute, statute would need to be changed to allow that program to receive more than its current allocation of funding. Under current law, ERIG receives the balance of funding not allocated to other TERP purposes. Recommended funding levels for the ERIG of $76.3 million of the $155.3 million biennial TERP appropriation for TCEQ result in an effective allocation to the ERIG program of about 49 percent. If the ERIG appropriations were increased to $157.3 million of $236.3 million in total biennial appropriations, ERIG's allocation would effectively increase to 67 percent of funding. Although funding allocations percentages in statute do not match exactly with current appropriations, statutory allocations could be modified as necessary under an increased appropriations level to reflect each program's effective allocation of TERP funding.
Schedule 5: Program Summary 14
Agency Program: Texas Emissions Reduction Plan NA Ranking Although the percentage allocation levels for most programs would be reduced under this scenario, the non-ERIG programs would still continue to receive funding at the 2014-15 level (except for the Light-Duty Motor Vehicle Purchase or Lease Incentive Program, which expires on August 31, 2015). Programs for which a defined amount is prescribed (Regional Air Monitoring Program, Health Effects Study, contract amount for the Energy Systems Laboratory) would not be affected, and the amount provided for the Energy Systems Laboratory would remain the same. Because statute provides for TCEQ TERP administration costs to be set at a minimum of 4 percent of funding, it is recommended that if TERP funding were increased by $81.0 million, TCEQ's allocation for administration be increased from the current $4,000,000 each fiscal year in baseline recommendations for 2016-17 to $4,725,260 each fiscal year.
Change from Recommendations Funding Alternatives Not Included in the Recommendations GR-Related All Funds 2017 FTEs 1 Recommended Priorities for Additional Funding--152 $ 80,984,000 $ 80,984,000 0.0 percent funding level: To reduce the projected balance in the TERP Account No. 5071, which is estimated to increase to $1,237.8 million by the end of fiscal year 2017 with baseline recommended appropriations for 2016-17, an additional $81.0 million in biennial funding for the TERP program would be provided. This additional funding amount is derived as a result of recommendations contained in an LBB report titled Reduce Reliance on General Revenue-Dedicated Account for Certification. The report contains an option which would amend statute to reduce future transfers from the State Highway Fund to the TERP Account to an amount equal to the amount of motor vehicle certificates of title fees collected in certain nonattaiment areas (those subject to Clean Air Act Section 185 penalties) and deposited to the Texas Mobility Fund. It is estimated that this would result in the redirection of $159.8 million in revenues from the TERP Account to the State Highway Fund during 2016-17, and it would result in estimated revenues to the TERP Account being reduced from $450.8 million to an estimated $291.0 million.
If the option to reduce transfers to the State Highway Fund is implemented, the $81.0 million Priority for Additional Funding is appropriated, and $155.3 million baseline appropriation from the TERP Account is continued, new revenues to the TERP Account would exceed expenditures by an estimated $50.9 million during the 2016-17 biennium.
The 152 percent funding option was not requested by the agency, and the agency did not provide input as to the effect of this funding scenario, as the agency did with respect to the 50 percent and 200 percent funding level scenarios discussed below. 2 50 percent funding levels: The TERP program's focus is $ (38,816,422) $ (38,816,422) 0.0 reducing mobile emissions to help these areas meet the federal ozone standards and to help areas nearing ozone nonattainment to remain in attainment. The agency reports that a reduction in TERP funding is likely to result in higher ozone levels in ozone nonattainment areas and areas that are currently near the federal standard and trying to remain in attainment with the standard. To obtain similar emissions reductions in a timely manner without the TERP incentives or with reduced incentives, additional control strategies would need to be considered. Additional control strategies are likely to represent significant fiscal impacts to industrial sources and/or lifestyle changes to reduce emissions from mobile sources. There is a significant cost to industry and the State of Texas for not attaining federal air quality standards (increased permitting offsets, more required controls, the potential loss of federal highway funds, and less certainty on future costs due to increased/changing federal requirements).
The agency reports that a 50 percent reduction, or a reduction of $77.6 million for the biennium for TERP could result in approximately 1,400 fewer projects funded and 6,700 fewer tons of NOX reduced. It is estimated that five fewer FTEs would be needed. The agency notes that the number of projects and tons of NOX reduced based on a particular amount of money can only be generally estimated. Some TERP grant programs may fund a large number of projects, but the projects may receive relatively smaller grant amounts. Alternatively, some programs may fund a fewer number of projects, but those projects involve greater funding amounts.
Schedule 5: Program Summary 15
Agency Program: Texas Emissions Reduction Plan NA Ranking 3 200 percent funding levels: The agency reports that $ 155,279,007 $ 155,279,007 10.0 significant emission reductions remain to be gained simply by replacing 2006 or older heavy-duty vehicles with 2010 or newer heavy-duty trucks and engines. Starting in 2007 federal heavy- duty on-road engine emission standards were significantly lowered, resulting in a 90% decrease in NOX emission rates for new engines compared with the standards for previous years. An increase in funding would help the TERP program further reduce mobile emissions in ozone nonattainment areas and other areas nearing ozone nonattainment. This in turn is expected to help key areas in Texas reach attainment and/or remain in attainment with the federal ozone standard.
The agency reports that an increase in funding of $155.3 million for the biennium could result in approximately 2,800 more projects funded and 13,455 more tons of NOX reduced. An additional 10 FTEs would be needed to administer the additional applications, contracts, reimbursements, and project reports. The agency notes that the number of projects and tons of NOX reduced based on a particular amount of money can only be generally estimated. Some programs may fund a large number of projects, but the projects may represent small grant amounts. Alternatively, some programs may fund a fewer number of projects, but those projects involve greater funding.
Schedule 5: Program Summary TEXAS COMMISSION ON ENVIRONMENTAL QUALITY (TCEQ) House Appropriations Committee Hearing
BIENNIAL TOTALS – FY 16/17 AGENCY INTRODUCED DIFFERENCE REQUEST BILL General Revenue $33,181,732 $14,892,291 ($18,289,441) General Revenue-Dedicated $627,244,193 $624,675,910 (2,568,283) Federal Funds $75,573,207 $75,846,583 273,376 Appropriated Receipts & $15,250,282 $15,250,282 0 Interagency Contracts Total $751,249,414 $730,665,066 ($20,584,348) FTEs 2,772.2 2,754.2 0
TCEQ’S REVISED REQUEST
Agency’s proposed revisions include the following.
• Reinstate the Unexpended Balance Authority within the biennium rider − The rider allows the agency to carry funds from one fiscal year to the next within the biennium.
• Fund Water Operational Needs $3.5 million and 10 FTEs − Additional resources to support water availability models for 23 river basins; process water right change of ownership cases; provide drought technical analysis and support; improve permit time frames for wastewater permitting; and contract services for water right ownership changes. − Funds will also support assistance and review of innovative technologies (such as desalination and direct potable use); plans and specs reviews; drought response for public water systems, and to support compliance activities for public water systems.
1
• Fund Targeted Classification Increases $5.9 million − The agency lags state agency averages which contribute to turnover in certain classifications. − The classifications of interest are accountants, attorneys, auditors, chemists, contract specialists, electronics technicians, engineers, engineering specialists, geoscientists, hydrologists, planners, systems analysts, and web administrators.
• Fund Litigation Expenses for the Rio Grande Compact Commission $5 million − Funding requested under this item, a priority for the Rio Grande Compact Commissioner, is exclusively for expenses incurred in litigating the equitable distribution of water according to the Rio Grande Compact.
• Fund Air Monitoring for Revised Standard for Sulfur Dioxide $4.7 million and 8 FTEs − The EPA revised the primary sulfur dioxide (SO2) National Ambient Air Quality Standard (NAAQS) to a 1-hour standard of 75 parts per billion in June 2010. EPA’s proposed strategy for implementation of the standard and determining area designations relies on the use of modeling and/or monitoring. − Using EPA's proposed thresholds, TCEQ estimates the need to deploy at least 31 new SO2 monitors statewide by EPA's targeted deployment date of January 1, 2017.
• Fund Telecommunications Migration and Phone Replacement $0.6 million − The agency needs to migrate to a centralized telecommunications platform due to old and failing regional telephone systems. − In order to complete the TCEQ telecommunication upgrade, the agency is requesting funds for the remaining regional offices of Amarillo, Lubbock, Abilene, Tyler, San Angelo, Eagle Pass, Harlingen, and Laredo..
• Fund Monitoring Equipment for Field Investigations $0.7 million − The funds will be used to purchase Gas Find IR cameras. − The data can be used to determine compliance, measure health and environmental indicators, and to facilitate employee safety decisions relative to personal protection equipment during scheduled and emergency response activities, including disaster preparedness and response.
• Reinstate funding for Houston Laboratory Information Management System Upgrade $0.4 million − The laboratory will acquire hardware/software and consulting services to control and standardize laboratory processes and ensure that tests are executed efficiently, accurately, and according to approved procedures in accordance with NELAC requirements.
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Section 1
Texas Workforce Commission Summary of Recommendations - House
Page VII-34 Larry Temple, Executive Director Julie Lindsey, LBB Analyst RECOMMENDED FUNDING BY METHOD OF FINANCING 2014-15 2016-17 Biennial % Method of Financing Base Recommended Change Change General Revenue Funds $263,091,860 $275,175,919 $12,084,059 4.6% GR Dedicated Funds $14,302,552 $14,375,728 $73,176 0.5% Other Total GR-Related Funds $277,394,412 $289,551,647 $12,157,235 4.4% 4.7%
Federal Funds $1,981,841,461 $1,930,042,027 ($51,799,434) (2.6%) Federal General Other $115,092,457 $109,571,947 ($5,520,510) (4.8%) Funds Revenue 82.9% Funds 11.8% All Funds $2,374,328,330 $2,329,165,621 ($45,162,709) (1.9%) GR Dedicated Funds 0.6%
FY 2015 FY 2017 Biennial % Budgeted Recommended Change Change FTEs 2,959.8 2,786.3 (173.5) (5.9%)
The bill pattern for this agency (2016-17 Recommended) represents an estimated 99.5% of the agency's estimated total available funds for the 2016-17 biennium.
Agency 320 2/9/2015 1 Section 1 Texas Workforce Commission 2016-2017 BIENNIUM TOTAL= $2,329.1 MILLION IN MILLIONS
ALL FUNDS GENERAL REVENUE AND FULL-TIME-EQUIVALENT POSITIONS GENERAL REVENUE-DEDICATED FUNDS
REQUESTED REQUESTED APPROPRIATED $156.3 $156.3 REQUESTED 3,312.3 APPROPRIATED APPROPRIATED $1,180.7 REQUESTED $1,170.9 APPROPRIATED 3,153.1 $1,169.0 $1,171.4 APPROPRIATED 3,017.4 APPROPRIATED APPROPRIATED REQUESTED $136.2 $136.2 2,893.2 REQUESTED 2,796.8
APPROPRIATED APPROPRIATED $1,095.9 $117.4
2015 2016 2017
$1,085.2 $1,181.9 $1,192.5 $1,169.2 $1,159.9 $117.3 $137.6 $139.8 $144.8 $144.8 3,357.0 2,960.0 2,959.8 2,882.7 2,786.3 EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Agency 320 2/9/2015 2 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
WORKFORCE INVESTMENT ACT A.1.1 $247,699,057 $230,264,096 ($17,434,961) (7.0%) Recommendations decrease Federal Funds for Workforce Investment Act (WIA) as funds are not expected to be available in fiscal years 2016-17. Anticipated reductions include $5.2 million in the WIA Adult Dislocated Worker grant, $1.5 million in the Rapid Response grant, and $10.7 million in the National Emergency Grants.
WORKFORCE INVESTMENT ACT - YOUTH A.1.2 $97,029,594 $98,259,824 $1,230,230 1.3% Recommendations provide for an increase in Federal Funds due to an anticipated increase in WIA - Youth grant funding for fiscal years 2016-17.
TANF CHOICES A.1.3 $181,862,689 $174,437,670 ($7,425,019) (4.1%) Recommendations decrease Federal Funds for the TANF Choices program due to the removal of funding from the Office of the Attorney General for Non- Custodial Parents participating in the TANF program.
EMPLOYMENT AND COMMUNITY SERVICES A.1.4 $95,358,928 $97,545,991 $2,187,063 2.3% Recommendations provide for an increase in Federal Funds for Employment and Community Services due to an anticipated increase in grant funding for fiscal years 2016-17.
SNAP E & T A.1.5 $38,863,758 $39,593,947 $730,189 1.9% Recommendations provide for an increase in Federal Funds for SNAP Employment & Training due to an anticipated increase in grant funding for fiscal years 2016-17. TRADE AFFECTED WORKERS A.1.6 $36,921,086 $26,355,771 ($10,565,315) (28.6%) Recommendations decrease Federal Funds for Trade Affected Workers as funds are not expected to be available in fiscal years 2016-17 due to new federal provisions restricting the number of firms eligible for these grants.
SENIOR EMPLOYMENT SERVICES A.1.7 $9,899,984 $9,603,174 ($296,810) (3.0%) Recommendations decrease Federal Funds for Senior Employment Services as funds are not expected to be available in fiscal years 2016-17.
APPRENTICESHIP A.1.8 $6,099,175 $5,911,660 ($187,515) (3.1%)
Agency 320 2/9/2015 3 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments ADULT EDUCATION AND FAMILY LITERACY A.1.9 $162,300,556 $141,251,813 ($21,048,743) (13.0%) Recommendations decrease Federal Funds for Adult Education to account for additional one-time funding that was provided to the agency during the transfer of the program from the Texas Education Agency in fiscal year 2014.
SKILLS DEVELOPMENT A.2.1 $48,225,471 $58,591,714 $10,366,243 21.5% Recommendations include an increase in General Revenue funding for the purposes of awarding grants to public junior colleges and public technical colleges for career and technical education (see Selected Fiscal and Policy Issues #7); and to biennialize salaries at the 2015 level.
SELF SUFFICIENCY A.2.2 $5,318,959 $5,247,279 ($71,680) (1.3%)
LABOR MARKET AND CAREER INFORMATION A.2.3 $8,411,671 $8,721,811 $310,140 3.7% Recommendations provide for an increase in Federal Funds for Labor Market and Career Information due to an anticipated increase in grant funding in fiscal years 2016-17.
WORK OPPORTUNITY TAX CREDIT A.2.4 $1,792,956 $1,611,708 ($181,248) (10.1%) Recommendations decrease Federal Funds for Work Opportunity Tax Credit due to decreased staffing levels implemented in response to the agency's Rapid Process Improvement project.
FOREIGN LABOR CERTIFICATION A.2.5 $1,159,351 $1,018,874 ($140,477) (12.1%) Recommendations decrease Federal Funds for Foreign Labor Certification due to the removal of a temporary shift of FTEs into the strategy to assist in reducing the backlog of certifications in fiscal year 2014.
TANF CHOICES CHILD CARE A.3.1 $67,650,964 $72,044,749 $4,393,785 6.5% Recommendations provide for an increase in Federal Funds for TANF Child Care due to an anticipated increase in costs for child care services, based on HHSC's forecast for fiscal years 2016-17 TANF caseload.
AT-RISK & TRANSITIONAL CHILD CARE A.3.2 $949,547,889 $955,724,786 $6,176,897 0.7% Recommendations provide for an increase in Federal Funds for Child Care due to an anticipated increase in grant funding for fiscal years 2016-17.
CHILD CARE ADMINISTRATION A.3.3 $12,465,347 $12,616,430 $151,083 1.2%
CHILD CARE - DFPS FAMILIES A.3.4 $104,893,188 $104,893,188 $0 0.0%
Agency 320 2/9/2015 4 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments UNEMPLOYMENT CLAIMS A.4.1 $140,866,826 $127,400,898 ($13,465,928) (9.6%) Recommendations decrease Federal Funds for Unemployment Insurance due to an anticipated decline in unemployment claims for fiscal years 2016-17, and the ending of the Emergency Unemployment Compensation grant in fiscal year 2014.
UNEMPLOYMENT APPEALS A.4.2 $36,887,733 $34,816,074 ($2,071,659) (5.6%) Recommendations decrease Federal Funds in Unemployment Insurance due to an anticipated decline in unemployment claims for fiscal years 2016-17.
UNEMPLOYMENT TAX COLLECTION A.4.3 $50,185,833 $52,956,946 $2,771,113 5.5% Recommendations increase General Revenue funding, General Revenue- Dedicated funding, and Federal Funds for Unemployment Tax Collection to support the UI IT Improvement Tax Modernization capital budget project for fiscal year 2016. Total, Goal A, WORKFORCE DEVELOPMENT $2,303,441,015 $2,258,868,403 ($44,572,612) (1.9%)
SUBRECIPIENT MONITORING B.1.1 $5,592,348 $5,530,959 ($61,389) (1.1%)
TECHNICAL ASSISTANCE B.1.2 $10,304,038 $10,802,169 $498,131 4.8% Recommendations increase General Revenue funding, General Revenue- Dedicated funding, and Federal Funds in order to provide additional technical assistance to SNAP Employment & Training and TANF programs. LABOR LAW INSPECTIONS B.1.3 $7,925,899 $8,064,520 $138,621 1.7%
CAREER SCHOOLS & COLLEGES B.1.4 $1,953,809 $1,955,000 $1,191 0.1%
CIVIL RIGHTS B.2.1 $4,419,275 $4,582,138 $162,863 3.7%
Total, Goal B, PROGRAM ACCOUNTABILITY/ENFORCEMENT $30,195,369 $30,934,786 $739,417 2.4%
CENTRAL ADMINISTRATION C.1.1 $23,828,792 $23,914,783 $85,991 0.4%
INFORMATION RESOURCES C.1.2 $13,340,769 $11,848,331 ($1,492,438) (11.2%) Recommendations decrease General Revenue-Dedicated funding and Federal Funds due to a reduction in estimated costs associated with Daily Operations projects, including Administration Systems, Local Area Network/Wide Area Network upgrades, and PC support.
Agency 320 2/9/2015 5 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments OTHER SUPPORT SERVICES C.1.3 $3,522,385 $3,599,318 $76,933 2.2%
Total, Goal C, INDIRECT ADMINISTRATION $40,691,946 $39,362,432 ($1,329,514) (3.3%)
Grand Total, All Strategies $2,374,328,330 $2,329,165,621 ($45,162,709) (1.9%)
Agency 320 2/9/2015 6 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- GENERAL REVENUE FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
WORKFORCE INVESTMENT ACT A.1.1 $100,095 $114,760 $14,665 14.7% WORKFORCE INVESTMENT ACT - YOUTH A.1.2 $0 $0 $0 0.0% TANF CHOICES A.1.3 $13,658,704 $17,658,704 $4,000,000 29.3% Recommendations increase TANF MOE General Revenue funding due to a Method of Finance swap. $4 million of TANF Choices federal funding was replaced with TANF MOE General Revenue funding from Strategy A.1.9. Adult Education and Family Literacy (see Selected Fiscal and Policy Issues #5). EMPLOYMENT AND COMMUNITY SERVICES A.1.4 $11,897,367 $12,311,873 $414,506 3.5% SNAP E & T A.1.5 $8,314,965 $8,246,842 ($68,123) (0.8%) TRADE AFFECTED WORKERS A.1.6 $0 $0 $0 0.0% SENIOR EMPLOYMENT SERVICES A.1.7 $6,466 $9,948 $3,482 53.9% APPRENTICESHIP A.1.8 $3,343,125 $3,355,660 $12,535 0.4% ADULT EDUCATION AND FAMILY LITERACY A.1.9 $27,824,283 $23,852,485 ($3,971,798) (14.3%) Recommendations decrease TANF MOE General Revenue funding due to a Method of Finance swap. $4 million of TANF MOE General Revenue funding was replaced with TANF Choices federal funding from Strategy A.1.3. TANF Choices. Recommendations also include an increase of approximately $28,000 in General Revenue funding to biennialize salaries at the 2015 level.
SKILLS DEVELOPMENT A.2.1 $48,225,471 $58,591,714 $10,366,243 21.5% Recommendations include an increase in General Revenue funding for the purposes of awarding grants to public junior colleges and public technical colleges for career and technical education (see Selected Fiscal and Policy Issues #7); and to biennialize salaries at the 2015 level. SELF SUFFICIENCY A.2.2 $0 $0 $0 0.0% LABOR MARKET AND CAREER INFORMATION A.2.3 $117,237 $169,690 $52,453 44.7% WORK OPPORTUNITY TAX CREDIT A.2.4 $0 $0 $0 0.0% FOREIGN LABOR CERTIFICATION A.2.5 $0 $0 $0 0.0% TANF CHOICES CHILD CARE A.3.1 $22,230,091 $24,744,436 $2,514,345 11.3% Recommendations increase TANF Choices Child Care General Revenue funding due to an anticipated increase in costs for child care services, based on HHSC's forecast for fiscal years 2016-17 TANF caseload. Approximately $2.5 million of General Revenue funding from Strategy A.3.2. At-Risk & Transitional Child Care was moved for this purpose.
Agency 320 2/9/2015 7 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- GENERAL REVENUE FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments AT-RISK & TRANSITIONAL CHILD CARE A.3.2 $118,387,825 $115,873,480 ($2,514,345) (2.1%) Recommendations decrease TANF At-Risk & Transitional Child Care General Revenue funding due to an anticipated increase in costs for child care services for TANF Choices, based on HHSC's forecast for fiscal years 2016-17 TANF caseload. Approximately $2.5 million of General Revenue funding was moved to Strategy A.3.1. TANF Choice Child Care for this purpose.
CHILD CARE ADMINISTRATION A.3.3 $77,759 $116,245 $38,486 49.5% Recommendations include an increase in General Revenue funding to biennialize salaries at the 2015 level. CHILD CARE - DFPS FAMILIES A.3.4 $0 $0 $0 0.0% UNEMPLOYMENT CLAIMS A.4.1 $1,563,005 $2,013,581 $450,576 28.8% Recommendations include an increase in General Revenue funding to biennialize salaries at the 2015 level.
UNEMPLOYMENT APPEALS A.4.2 $461,493 $590,065 $128,572 27.9% Recommendations include an increase in General Revenue funding to biennialize salaries at the 2015 level.
UNEMPLOYMENT TAX COLLECTION A.4.3 $690,427 $932,732 $242,305 35.1% Recommendations include an increase in General Revenue funding to biennialize salaries at the 2015 level. Total, Goal A, WORKFORCE DEVELOPMENT $256,898,313 $268,582,215 $11,683,902 4.5%
SUBRECIPIENT MONITORING B.1.1 $411,012 $398,079 ($12,933) (3.1%) TECHNICAL ASSISTANCE B.1.2 $489,428 $627,224 $137,796 28.2% Recommendations include an increase in General Revenue funding to biennialize salaries at the 2015 level. LABOR LAW INSPECTIONS B.1.3 $0 $0 $0 0.0% CAREER SCHOOLS & COLLEGES B.1.4 $1,953,809 $1,955,000 $1,191 0.1% CIVIL RIGHTS B.2.1 $1,631,056 $1,582,339 ($48,717) (3.0%) Total, Goal B, PROGRAM ACCOUNTABILITY/ENFORCEMENT $4,485,305 $4,562,642 $77,337 1.7%
CENTRAL ADMINISTRATION C.1.1 $1,063,780 $1,324,264 $260,484 24.5% Recommendations include an increase in General Revenue funding to biennialize salaries at the 2015 level. INFORMATION RESOURCES C.1.2 $495,639 $518,225 $22,586 4.6% OTHER SUPPORT SERVICES C.1.3 $148,823 $188,573 $39,750 26.7% Total, Goal C, INDIRECT ADMINISTRATION $1,708,242 $2,031,062 $322,820 18.9%
Agency 320 2/9/2015 8 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- GENERAL REVENUE FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments Grand Total, All Strategies $263,091,860 $275,175,919 $12,084,059 4.6% Recommendations increase General Revenue funding by $2,084,059 to biennialize salaries at 2015 levels.
Agency 320 2/9/2015 9 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- GR DEDICATED
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
WORKFORCE INVESTMENT ACT A.1.1 $0 $0 $0 0.0% WORKFORCE INVESTMENT ACT - YOUTH A.1.2 $0 $0 $0 0.0% TANF CHOICES A.1.3 $0 $0 $0 0.0% EMPLOYMENT AND COMMUNITY SERVICES A.1.4 $4,022,342 $4,001,737 ($20,605) (0.5%) SNAP E & T A.1.5 $0 $0 $0 0.0% TRADE AFFECTED WORKERS A.1.6 $0 $0 $0 0.0% SENIOR EMPLOYMENT SERVICES A.1.7 $0 $0 $0 0.0% APPRENTICESHIP A.1.8 $0 $0 $0 0.0% ADULT EDUCATION AND FAMILY LITERACY A.1.9 $0 $0 $0 0.0% SKILLS DEVELOPMENT A.2.1 $0 $0 $0 0.0% SELF SUFFICIENCY A.2.2 $0 $0 $0 0.0% LABOR MARKET AND CAREER INFORMATION A.2.3 $0 $0 $0 0.0% WORK OPPORTUNITY TAX CREDIT A.2.4 $0 $0 $0 0.0% FOREIGN LABOR CERTIFICATION A.2.5 $0 $0 $0 0.0% TANF CHOICES CHILD CARE A.3.1 $0 $0 $0 0.0% AT-RISK & TRANSITIONAL CHILD CARE A.3.2 $0 $0 $0 0.0% CHILD CARE ADMINISTRATION A.3.3 $0 $0 $0 0.0% CHILD CARE - DFPS FAMILIES A.3.4 $0 $0 $0 0.0% UNEMPLOYMENT CLAIMS A.4.1 $0 $0 $0 0.0% UNEMPLOYMENT APPEALS A.4.2 $0 $0 $0 0.0% UNEMPLOYMENT TAX COLLECTION A.4.3 $914,773 $920,522 $5,749 0.6% Total, Goal A, WORKFORCE DEVELOPMENT $4,937,115 $4,922,259 ($14,856) (0.3%)
SUBRECIPIENT MONITORING B.1.1 $0 $0 $0 0.0% TECHNICAL ASSISTANCE B.1.2 $32,396 $33,170 $774 2.4% LABOR LAW INSPECTIONS B.1.3 $7,925,899 $8,064,520 $138,621 1.7% CAREER SCHOOLS & COLLEGES B.1.4 $0 $0 $0 0.0% CIVIL RIGHTS B.2.1 $0 $0 $0 0.0% Total, Goal B, PROGRAM ACCOUNTABILITY/ENFORCEMENT $7,958,295 $8,097,690 $139,395 1.8%
CENTRAL ADMINISTRATION C.1.1 $901,319 $898,024 ($3,295) (0.4%)
Agency 320 2/9/2015 10 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- GR DEDICATED
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments INFORMATION RESOURCES C.1.2 $410,123 $360,787 ($49,336) (12.0%) Recommendations decrease funding due to a reduction in the estimated costs associated with Daily Operations projects, include Administration Systems, Local Area Network/Wide Area Network upgrades, and PC support. OTHER SUPPORT SERVICES C.1.3 $95,700 $96,968 $1,268 1.3% Total, Goal C, INDIRECT ADMINISTRATION $1,407,142 $1,355,779 ($51,363) (3.7%)
Grand Total, All Strategies $14,302,552 $14,375,728 $73,176 0.5% Recommendations increase General Revenue-Dedicated funding by $73,176 to biennialize salaries at 2015 levels.
Agency 320 2/9/2015 11 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- FEDERAL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
WORKFORCE INVESTMENT ACT A.1.1 $247,598,962 $230,149,336 ($17,449,626) (7.0%) WORKFORCE INVESTMENT ACT - YOUTH A.1.2 $97,029,594 $98,259,824 $1,230,230 1.3% TANF CHOICES A.1.3 $162,595,028 $156,778,966 ($5,816,062) (3.6%) EMPLOYMENT AND COMMUNITY SERVICES A.1.4 $78,602,853 $80,021,612 $1,418,759 1.8% SNAP E & T A.1.5 $30,548,793 $31,347,105 $798,312 2.6% TRADE AFFECTED WORKERS A.1.6 $36,921,086 $26,355,771 ($10,565,315) (28.6%) SENIOR EMPLOYMENT SERVICES A.1.7 $9,893,518 $9,593,226 ($300,292) (3.0%) APPRENTICESHIP A.1.8 $2,756,050 $2,556,000 ($200,050) (7.3%) ADULT EDUCATION AND FAMILY LITERACY A.1.9 $134,476,273 $117,399,328 ($17,076,945) (12.7%) SKILLS DEVELOPMENT A.2.1 $0 $0 $0 0.0% SELF SUFFICIENCY A.2.2 $5,318,959 $5,247,279 ($71,680) (1.3%) LABOR MARKET AND CAREER INFORMATION A.2.3 $7,921,194 $8,201,674 $280,480 3.5% WORK OPPORTUNITY TAX CREDIT A.2.4 $1,792,956 $1,611,708 ($181,248) (10.1%) FOREIGN LABOR CERTIFICATION A.2.5 $1,159,351 $1,018,874 ($140,477) (12.1%) TANF CHOICES CHILD CARE A.3.1 $45,420,873 $47,300,313 $1,879,440 4.1% AT-RISK & TRANSITIONAL CHILD CARE A.3.2 $828,460,064 $837,451,306 $8,991,242 1.1% CHILD CARE ADMINISTRATION A.3.3 $12,387,588 $12,500,185 $112,597 0.9% CHILD CARE - DFPS FAMILIES A.3.4 $0 $0 $0 0.0% UNEMPLOYMENT CLAIMS A.4.1 $139,192,977 $125,149,359 ($14,043,618) (10.1%) UNEMPLOYMENT APPEALS A.4.2 $36,426,230 $34,226,009 ($2,200,221) (6.0%) UNEMPLOYMENT TAX COLLECTION A.4.3 $48,580,633 $51,103,692 $2,523,059 5.2% Total, Goal A, WORKFORCE DEVELOPMENT $1,927,082,982 $1,876,271,567 ($50,811,415) (2.6%)
SUBRECIPIENT MONITORING B.1.1 $5,181,336 $5,132,880 ($48,456) (0.9%) TECHNICAL ASSISTANCE B.1.2 $9,770,304 $10,141,775 $371,471 3.8% LABOR LAW INSPECTIONS B.1.3 $0 $0 $0 0.0% CAREER SCHOOLS & COLLEGES B.1.4 $0 $0 $0 0.0% CIVIL RIGHTS B.2.1 $2,584,855 $2,798,307 $213,452 8.3% Total, Goal B, PROGRAM ACCOUNTABILITY/ENFORCEMENT $17,536,495 $18,072,962 $536,467 3.1%
CENTRAL ADMINISTRATION C.1.1 $21,821,604 $21,658,165 ($163,439) (0.7%) INFORMATION RESOURCES C.1.2 $12,415,776 $10,955,428 ($1,460,348) (11.8%) OTHER SUPPORT SERVICES C.1.3 $2,984,604 $3,083,905 $99,301 3.3%
Agency 320 2/9/2015 12 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- FEDERAL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments Total, Goal C, INDIRECT ADMINISTRATION $37,221,984 $35,697,498 ($1,524,486) (4.1%)
Grand Total, All Strategies $1,981,841,461 $1,930,042,027 ($51,799,434) (2.6%) Decrease in Federal Funds by approximately $51.8 million due to reduced federal receipts.
The recommendations reflect a decrease of $70.2 million in traditional funds that are no longer anticipated to be available: - $17,253,304 Unemployment Insurance - $305,217 Senior Community Service Employment Program - $10,501,467 Trade Adjustment Assistance Workers - $1,139,639 WIA - Adult - $23,807 Employment & Training Administration Pilots - $2,230,834 WIA Incentive Grants - $210,005 Work Opportunity Tax Credits - $154,316 Temporary Labor Certification for Foreign Workers - $8,155,549 WIA National Emergency Grants - $6,300,977 WIA Dislocated Worker Formula Grants - $343,385 WIA Dislocated Worker National Reserve Grants - $20,653,391 Adult Education State Grant Program - $2,878,505 Child Care Mandatory & Matching Funds of the CCDF
The recommendations reflect an increase of approximately $18.4 million in traditional federal funds: - $891,374 State Admin Matching Grant for SNAP - $109,809 Fair Housing Assistance Program - $279,338 Labor Force Statistics - $1,012,829 Employment Services - $1,915,508 WIA - Youth - $145,501 Employment Discrimination - $169,596 Temporary Assistance for Needy Families - $13,827,007 Child Care and Development Block Grant
Agency 320 2/9/2015 13 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- OTHER FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
WORKFORCE INVESTMENT ACT A.1.1 $0 $0 $0 0.0% WORKFORCE INVESTMENT ACT - YOUTH A.1.2 $0 $0 $0 0.0% TANF CHOICES A.1.3 $5,608,957 $0 ($5,608,957) (100.0%) EMPLOYMENT AND COMMUNITY SERVICES A.1.4 $836,366 $1,210,769 $374,403 44.8% SNAP E & T A.1.5 $0 $0 $0 0.0% TRADE AFFECTED WORKERS A.1.6 $0 $0 $0 0.0% SENIOR EMPLOYMENT SERVICES A.1.7 $0 $0 $0 0.0% APPRENTICESHIP A.1.8 $0 $0 $0 0.0% ADULT EDUCATION AND FAMILY LITERACY A.1.9 $0 $0 $0 0.0% SKILLS DEVELOPMENT A.2.1 $0 $0 $0 0.0% SELF SUFFICIENCY A.2.2 $0 $0 $0 0.0% LABOR MARKET AND CAREER INFORMATION A.2.3 $373,240 $350,447 ($22,793) (6.1%) WORK OPPORTUNITY TAX CREDIT A.2.4 $0 $0 $0 0.0% FOREIGN LABOR CERTIFICATION A.2.5 $0 $0 $0 0.0% TANF CHOICES CHILD CARE A.3.1 $0 $0 $0 0.0% AT-RISK & TRANSITIONAL CHILD CARE A.3.2 $2,700,000 $2,400,000 ($300,000) (11.1%) CHILD CARE ADMINISTRATION A.3.3 $0 $0 $0 0.0% CHILD CARE - DFPS FAMILIES A.3.4 $104,893,188 $104,893,188 $0 0.0% UNEMPLOYMENT CLAIMS A.4.1 $110,844 $237,958 $127,114 114.7% UNEMPLOYMENT APPEALS A.4.2 $10 $0 ($10) (100.0%) UNEMPLOYMENT TAX COLLECTION A.4.3 $0 $0 $0 0.0% Total, Goal A, WORKFORCE DEVELOPMENT $114,522,605 $109,092,362 ($5,430,243) (4.7%)
SUBRECIPIENT MONITORING B.1.1 $0 $0 $0 0.0% TECHNICAL ASSISTANCE B.1.2 $11,910 $0 ($11,910) (100.0%) LABOR LAW INSPECTIONS B.1.3 $0 $0 $0 0.0% CAREER SCHOOLS & COLLEGES B.1.4 $0 $0 $0 0.0% CIVIL RIGHTS B.2.1 $203,364 $201,492 ($1,872) (0.9%) Total, Goal B, PROGRAM ACCOUNTABILITY/ENFORCEMENT $215,274 $201,492 ($13,782) (6.4%)
CENTRAL ADMINISTRATION C.1.1 $42,089 $34,330 ($7,759) (18.4%) INFORMATION RESOURCES C.1.2 $19,231 $13,891 ($5,340) (27.8%) OTHER SUPPORT SERVICES C.1.3 $293,258 $229,872 ($63,386) (21.6%)
Agency 320 2/9/2015 14 Section 2 Texas Workforce Commission Summary of Recommendations - House, By Method of Finance -- OTHER FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments Total, Goal C, INDIRECT ADMINISTRATION $354,578 $278,093 ($76,485) (21.6%)
Grand Total, All Strategies $115,092,457 $109,571,947 ($5,520,510) (4.8%) Recommendations include a net decrease of approximately $5.5 million due to the following:
A decrease in Interagency Contracts by $5,691,788 due to a decrease in funding from the Office of the Attorney General (OAG) for Non-Custodial Parents participating in the TANF program not currently continuing into fiscal years 2016- 17. OAG funding is contingent on the federal Office of Child Support Enforcement's approval for the OAG to use child support performance incentive funding for this purpose. The OAG plans to submit this request in the Spring, but will not hear back until after the session is completed; and
An increase in Appropriated Receipts by $171,278 due to an anticipated increase in Third Party Reimbursements from Local Workforce Development Boards for capital budget projects associated with the repair and rehabilitation of facilities.
Agency 320 2/9/2015 15 Section 3
Texas Workforce Commission Selected Fiscal and Policy Issues - House
1. Capital Budget. Recommendations include a net increase of $274,163 in capital budget authority due to the following:
(a) Recommendations decrease capital budget authority by approximately $1.9 million in All Funds in alignment with the agency’s request. This adjustment includes a decrease of $2,365,115 in Federal Funds, offset by increases of $43,289 in General Revenue funding, $285,882 in General Revenue-Dedicated funding, and $140,100 in Appropriated Receipts funding. This agency has completed the implementation of two Information Technology projects, including the TeleCenter Telecommunications Refresh and the PeopleSoft Financial upgrade. The recommendations also provide $630,136 in All Funds for the Centralized Account and Payroll/Personnel System (CAPPS) to increase the number of PeopleSoft Licenses (see Rider Highlights #2).
(b) Recommendations increase capital budget authority by approximately $2.2 million in All Funds to reflect costs associated with the agency’s PC replacement lease shifting from daily operations to their capital budget rider. This increase in capital budget authority of approximately $2.2 million in All Funds includes $51,102 in General Revenue, $77,116 in General Revenue-Dedicated, and $2,041,789 in Federal Funds (see Rider Highlights #2).
2. Full-time Equivalent Positions (FTE). Recommendations provide for 2,882.7 FTEs in fiscal year 2016 and 2,786.3 in fiscal year 2017 in alignment with the agency’s request. The decrease of approximately 174 FTEs from the 2014-15 biennium is due to the following: 122 FTEs in the Unemployment Insurance Division expected to decrease due to the falling unemployment rates; and 52 FTEs associated with internal processes to manage long-term fluctuations in federal grants and potential reductions in funding.
3. Workforce Employment and Training Activities. In alignment with the agency’s request, recommendations include $3.0 million from the General Revenue-Dedicated Employment and Training Investment Assessment (ETIA) Holding Fund that was previously authorized through Article IX, Section 18.13 contingency for House Bill 939, 83rd Legislature, for the purposes of workforce development. According to the agency, this appropriation would continue to be used to provide grants to local community colleges to target specific workforce needs in their area (see Rider Highlights #33).
4. Child Care Performance Measures. Recommendations maintain performance measure targets related to child care for both the average number of children served and the average cost of each child served constant at fiscal year 2015 levels. The agency requested to increase targets for the average cost measures and average number of children served by TANF Choices and decrease targets for the average number of children served by At-Risk & Transitional. Child care rates are set by the Commission determining a lump sum allocation along with a performance target for number of children served for each local workforce board. With these parameters, the local boards work with child care service providers to reimburse services rendered at a rate not to exceed a set maximum rate. This maximum rate is determined by the local workforce board, in alignment with the Market Rate Survey provided by the agency. The final rates set by the local boards affect all children served, including those
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16 Section 3
children paid for by the Department of Family and Protective Services. These recommendations impact both the TANF Choices Child Care (A.3.1.) and At-Risk & Transitional Child Care (A.3.2.) strategies (see Performance Measure Highlights and Items not Included in Recommendations #5).
5. TANF MOE Funding. Recommendations include a Method of Finance (MOF) swap for TANF Maintenance of Effort (MOE) funding, in alignment with the agency’s request. The $2.0 million in TANF MOE that was previously funded in Strategy A.1.9. Adult Education and Family Literacy has been reallocated to Strategy A.1.3. TANF Choices and replaced with regular TANF funding reallocated from Strategy A.1.3. This MOF swap does not impact the overall funding level of either strategy and is allowable under federal guidelines.
6. Contingency for House Bill 5. Recommendations remove the one-time transfer of $500,000 in General Revenue each fiscal year from the Texas Workforce Commission (TWC) to the Texas Education Agency (TEA). Under provisions of House Bill 5, 83rd Legislature, Regular Session, 2013 (Article IX, Section 18.05) the TWC was required to transfer funding to TEA from Strategy A.2.1. Skills Development for subsidies for certification examinations. Recommendations do not continue this transfer in fiscal years 2016-17. Funding will remain at TWC and will be used for Skills Development grants.
7. Additional Skills Development Funding. The recommendations increase funding by $10.0 million in General Revenue over the biennium to the Skills Development program (SDP) for the purpose of awarding grants to public junior colleges and public technical colleges. Funding will be used to develop customized training programs for career and technical education courses or programs, and to finance initial costs of career and technical course or program development. The SDP is similar in purpose and statutory authorization to the Jobs and Education for Texans (JET) program at the Comptroller of Public Accounts – Fiscal Projects (CPA). To the extent the Legislature would want to administer the JET program at TWC would require a change in statute. This increase corresponds with a decrease of $10.0 million in General Revenue funds for the JET program at the CPA (see Rider Highlights #34).
8. Sunset Review. The agency is currently undergoing Sunset review. Sunset staff recommendations include realigning the Civil Rights Division to increase accountability and streamline functions, providing better career school performance information, focusing on the Child Care Program’s employment goals and quality care for children, increasing consistency and transparency in TWC’s appeals process, and gaining authority to use federal offsets to recover Unemployment Compensation. Staff recommendations also include transferring the Vocational Rehabilitation, Business Enterprises of Texas, and Disability Determination Services programs from the Department of Assistive and Rehabilitative Services to TWC (see Rider Highlights #35).
Sec3a_Agency 320.docx 2/9/2015
17 Section 3 Texas Workforce Commission Summary of Federal Funds (Estimated 2014) - House TOTAL = $986.3M
Workforce Investment Act Adult Education State Grant Dislocated Worker Formula Program Grants $61.7M or 6% $62.2M or 6% Workforce Investment Act Temporary Assistance for Needy Adult Families $51.5M or 5% $95.3M or 10% Workforce Investment Act Youth Programs $50.9M or 5% Employment Service $40.2M or 4%
Unemployment Insurance $125.5M or 13% Trade Adjustment Other $100.2M or 10% Assistance Workers $20.3M or 2% Child Care and Development Block Grant State Administrative Matching $216.2M or 22% Child Care Mandatory and Grants for Supplemental Nutrition Matching Funds of the Child Care Assistance Program Development Fund $15.2M or 2% $222.7M or 23% Workforce Investment Act National Emergency Grants $13.5M or 1%
Awards Less than $5,000,000 $11.0M or 1%
Note: Amounts shown may sum greater/less than actual total due to rounding.
Agency 320 2/9/2015 18 Section 3 Texas Workforce Commission Significant Federal Funds Changes - House
2014-15 2016-17 Recommended CFDA No. Program Name Base Recommended Over/(Under) Base Comments
10.561.000 State Admin Matching Grants for Supplemental Nutrition Assist Prog $31,360,124 $32,251,498 $891,374 14.401.000 Fair Housing Assistance Program_State and $2,118,183 $2,227,992 $109,809 17.002.000 Labor Force Statistics $5,875,036 $6,154,374 $279,338 17.207.000 Employment Service $82,311,996 $83,324,825 $1,012,829 17.225.000 Unemployment Insurance $249,700,624 $232,447,320 ($17,253,304) 17.235.000 Senior Community Service Employment Program $9,898,467 $9,593,250 ($305,217) 17.245.000 Trade Adjustment Assistance Workers $38,157,004 $27,655,537 ($10,501,467) 17.258.000 Workforce Investment Act Adult $104,332,547 $103,192,908 ($1,139,639) 17.259.000 Workforce Investment Act Youth Programs $104,109,355 $106,024,863 $1,915,508 17.261.000 Employment & Training Admin Pilots, Demonstrations & Research Projects $23,807 $0 ($23,807) 17.267.000 Workforce Investment Act Incentive Grants $2,230,834 $0 ($2,230,834) 17.271.000 Work Opportunity Tax Credit Program (WOTC) $2,029,078 $1,819,073 ($210,005) 17.273.000 Temporary Labor Certification for Foreign Workers $1,307,039 $1,152,723 ($154,316) 17.277.000 Workforce Investment Act National Emergency Grants $17,178,967 $9,023,418 ($8,155,549) 17.278.000 Workforce Investment Act Dislocated Worker Formula Grants $122,927,997 $116,627,020 ($6,300,977) 17.280.000 Workforce Investment Act Dislocated Worker National Reserve Demonstration Grants $343,385 $0 ($343,385) 30.002.000 Employment Discrimination_State and Local $815,573 $961,074 $145,501 84.002.000 Adult Education State Grant Program $127,561,157 $106,907,766 ($20,653,391) 93.558.000 Temporary Assistance for Needy Families $186,719,446 $186,889,042 $169,596 93.575.000 Child Care and Development Block Grant $446,274,079 $460,101,086 $13,827,007 93.596.000 Child Care Mandatory and Matching Funds of the Child Care and Development Fund $442,566,763 $439,688,258 ($2,878,505)
Agency 320 2/9/2015 19 Section 3
Texas Workforce Commission FTE Highlights - House
Expended Estimated Budgeted Recommended Recommended Full-Time-Equivalent Positions 2013 2014 2015 2016 2017 Cap 3,312.3 3,153.1 3,017.4 2,882.7 2,786.3 Actual/Budgeted 3,357.0 2,960.0 2,959.8 NA NA
Schedule of Exempt Positions (Cap) Commissioner, Group 6* $135,000 $150,000 $150,000 $150,000 $150,000 Commissioner (2), Group 5* $135,000 $150,000 $150,000 $150,000 $150,000 Executive Director, Group 5* $154,000 $165,919 $165,919 $165,919 $165,919
*The agency is not requesting any changes to its Exempt Positions.
Note: Recommendations provide for 2,882.7 FTEs in fiscal year 2016 and 2,786.3 in fiscal year 2017 in alignment with the agency’s request. The decrease of approximately 174 FTEs from the 2014-15 biennium is due to the following: • 122 FTEs in the Unemployment Insurance Division expected to decrease due to the falling unemployment rates; and • 52 FTEs associated with internal processes to manage long-term fluctuations in federal grants and potential reductions in funding.
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Texas Workforce Commission Performance Measure Highlights - House
Expended Estimated Budgeted Recommended Recommended 2013 2014 2015 2016 2017 • Number of Adult Education Customers NA 80,000 100,500 101,000 101,500 Served
The Adult Education and Literacy (AEL) program transitioned to the Texas Workforce Commission from the Texas Education Agency in 2014. The agency reports that they have negotiated increased customer targets with their service providers and therefore assume an increase in AEL participation as the new capacity enhancement efforts come online.
• Contracted Number of Self-Sufficiency 445 806 1,115 1,178 1,179 Trainees
The agency reports that demand for Self-Sufficiency training typically drops during a recession and as the state's economy continues to improve, the agency anticipates that demand for this program will increase to pre-recession performance levels.
• Average Number of Children Served Per 6,851 5,462 5,336 5,336 5,336 Day, TANF Choices Services • Average Cost per Child per Day for Child 21.9 22.3 23.9 23.9 23.9 Care, TANF Choices Services • Average Number of Children Served Per 95,948 96,700 93,459 93,459 93,459 Day, Transitional and At-Risk Services • Average Cost per Child per Day for Child 16.7 17.0 18.3 18.3 18.3 Care, Transitional and At-Risk Services
Recommendations for fiscal years 2016 and 2017 maintain performance targets at fiscal year 2015 levels (see Selected Fiscal and Policy Issues #4).
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Savings/ Gain/ Fund Included Reports & Recommendations (Cost) (Loss) Type in Introduced Bill Action Required During Session
NO RELATED RECOMMENDATIONS
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Texas Workforce Commission Rider Highlights - House
Deleted Riders (original number)
18. Additional Federal Funds. Provisions governing the expenditure of federal funds above amounts estimated in the agency’s bill pattern are covered under Article IX, Section 13.02, Report of Additional Funding.
Modified Riders
2. Capital Budget. Recommendations amend this rider and reflect changes to capital budget authority for the following: (1) a decrease of approximately $2.5 million in All Funds for the completion of two Information Technology projects; (2) an increase of $630,136 for the Centralized Account and Payroll/Personnel System (CAPPS); and (3) an increase of approximately $2.2 million in All Funds to reflect costs associated with the agency’s PC replacement lease shifting from daily operations to their capital budget rider (see Selected Fiscal and Policy Issues #1).
23. Local Matching Funds. Recommendations amend this rider to increase the local matching funds provided by local workforce areas used to draw down Child Care Matching Federal Funds, in alignment with the agency’s request. The agency anticipates a less favorable Federal Medicaid Assistance Percentage (FMAP) rate in the 2016-17 biennium, which results in a higher match requirement for the agency. TWC typically meets this match requirement through: 1) statewide appropriations going towards pre-kindergarten programs; 2) General Revenue; and 3) the local match funding provided through this rider. The agency currently cannot increase the match level from pre-kindergarten programs and has chosen not to allocate additional General Revenue for this purpose, and instead is asking the local workforce areas to make up the projected difference.
31. Adult Education. Senate Bill 307, 83rd Legislature, Regular Session, transferred the adult education and literacy programs from the Texas Education Agency to the Texas Workforce Commission, including funding and all applicable performance measures and riders. Recommendations amend this rider to include updates on the funding structure of Strategy A.1.9. Adult Education and Family Literacy. Recommendations do not include agency request to remove references to the Texas Labor Code that have been adopted into agency rule (see Selected Fiscal and Policy Issues #5).
New Riders
33. Workforce Employment and Training Activities. Recommendations add a rider and include $3.0 million from the General Revenue-Dedicated Employment and Training Investment Assessment (ETIA) Holding Fund that was previously authorized through Article IX, Section 18.13 contingency for House Bill 939, 83rd Legislature, for the purposes of workforce development, in alignment with the agency’s request (see Selected Fiscal and Policy Issues #3).
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34. Additional Skills Development Funding. The recommendations add a new rider and increase funding by $10.0 million in General Revenue over the biennium to the Skills Development program (SDP) for the purpose of awarding grants to public junior colleges and public technical colleges. Funding would be used to develop customized training programs for career and technical education courses or programs, and to finance initial costs of career and technical course or program development (see Selected Fiscal and Policy Issues #7).
35. Sunset Contingency. The agency is currently undergoing Sunset Review. Recommendations add a contingency provision for the agency’s upcoming Sunset Review (see Selected Fiscal and Policy Issues #8).
Sec5_Agency 320.docx 2/9/2015
24 Section 6 Texas Workforce Commission Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds Agency Exceptional Items - In Agency Priority Order 1. General Revenue funding for the agency's Apprenticeship Program. Additional funding would be used to add 0.5 $ 3,000,000 $ 3,000,000 FTEs to the program, raise the contact hour rate from $2.78 per hour to $4 per hour, and to increase the number of students served from 4,400 to 6,111. 2. General Revenue funding to add a new grant program called Recruit Texas. Request also includes an increase $ 10,000,000 $ 10,000,000 in the Full-Time Equivalent (FTE) cap by 10.0 FTEs each fiscal year. Grant program would assist employer recruitment to Texas through rapid response grants focused on targeted employee skills and training. The 10.0 FTEs include seven Program Specialists, two Administrative Assistants, and one Manager (salaries and wages equal $970,000 for the biennium). 3. General Revenue funding to expand the Adult Education and Literacy program by integrating literacy and $ 20,000,000 $ 20,000,000 numeracy education into current employment skills training. Request includes authority for a new rider to clarify that these funds are to be used for the purposes of the Accelerate TEXAS program. 4. Capital budget authority of $6 million in Federal Funds for the continuation of the agency’s Unemployment $ - $ - Insurance IT Improvement Project in fiscal year 2016. Requested authority includes $4.35 million to complete the Tax Modernization project and $1.65 million to complete the Improve Benefit User Interface project. 5. Agency requests revised Child Care performance measure targets to increase the maximum reimbursement $ - $ - rates and to respond to the provisions included in House Bill 376, 83rd Legislature, Regular Session, 2013 related to the Texas Rising Star program (see Selected Fiscal and Policy Issues #4). The requested performance measure targets are included below: HB 1 FY 2016 FY 2017 Child Care Performance Measure Introduced Request Request Avg Cost Per Day - Choices $23.89 $24.71 $25.45 Avg Children per Day - Choices 5,336 5,438 5,546 Avg Cost Per Day - At Risk & Transitional $18.29 $18.91 $19.45 Ave Children Per Day - At Risk & Transitional 93,459 89,659 87,182
Agency 320 2/9/2015 25 Section 6 Texas Workforce Commission Items not Included in Recommendations - House 2016-17 Biennial Total 6. Agency requests revision to Rider 31 Adult Education to remove references to requirements in the Texas Labor $ - $ - Code and Texas Administrative Code that have been adopted into agency rule.
Total, Items Not Included in the Recommendations $ 33,000,000 $ 33,000,000
Agency 320 2/9/2015 26 Section 7 Texas Workforce Commission Summary of 10 Percent Biennial Base Reduction Options - House
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Intro Bill? Loss GR/GR-D Total 1 Skills Development This reduction would decrease Skills Development grants for skills training $4,000,000 $4,000,000 $0 7% No projects, reducing the estimated number of Skills Development trainees by 2,222 over the biennium. 2 Child Care Matching Funds This reduction would decrease the General Revenue (GR) funding allocated to $9,623,266 $28,023,266 $0 11% No local workforce development areas for child care. Due to the Federal Child Care and Development Fund (CCDF) matching requirements, this GR reduction would also result in a corresponding reduction of federal CCDF funds of $18.4 million. The total reduction of GR and federal funding would decrease the number of At- Risk children receiving subsidized child care by approximately 2,800. 3 Skills Development This reduction would decrease Skills Development grants for skills training $4,000,000 $4,000,000 $0 7% No projects, reducing the estimated number of Skills Development trainees by 2,222 over the biennium. 4 Child Care Matching Funds This reduction would decrease the General Revenue (GR) funding allocated to $9,623,267 $28,023,266 $0 11% No local workforce development areas for child care. Due to the Federal Child Care and Development Fund (CCDF) matching requirements, this GR reduction would also result in a corresponding reduction of federal CCDF funds of $18.4 million. The total reduction of GR and federal funding would decrease the number of At- Risk children receiving subsidized child care by approximately 2,800.
TOTAL, 10% Reduction Options $27,246,533 $64,046,532 $0
Agency 320 2/9/2015 27 Section 7 Texas Workforce Commission Summary of 10 Percent Biennial Base Reduction Options - House
Agency 10% Reduction Options by Category of Reduction
Programs - Grant/Loan/Pass- through Reductions 100.0%
Agency 320 2/9/2015 28 Sunset Advisory Commission Review of the Texas Workforce Commission – Article VII
Sunset Staff Contact: Faye Rencher [email protected] (512) 305-9057
Summary The Texas Workforce Commission (TWC) oversees and provides workforce development services to employers and job seekers. TWC contracts with 28 local workforce development boards to provide a variety of services, such as job training, employment services, and child care. The agency also administers the state’s unemployment insurance (UI) system and enforces state law to prevent and reduce employment and housing discrimination.
The Sunset Commission concluded the agency's functions are needed and have benefitted from integration into a single, locally driven workforce system. The Sunset Commission furthers that concept by recommending the transfer of services to help people with disabilities in finding jobs from the Department of Assistive and Rehabilitative Services (DARS) to TWC, along with changes to improve the administration of these programs. In addition, the Sunset Commission recommends changes to several of TWC's existing programs.
Fiscal Implication Overall, the recommendations related to TWC would result in a positive fiscal impact of about $48.6 million, primarily to the UI Trust Fund, and reduction of 10 full-time employees beginning in fiscal year 2017. Recommendations with fiscal impact are summarized below. Vocational Rehabilitation Transfer. Transferring DARS’ vocational rehabilitation services and other related programs to TWC would involve moving about $428 million and 2,667 FTEs from DARS to TWC. These amounts represent about 65 percent of DARS budget and 90 percent of its staff. Sunset staff is working with the two agencies and LBB to estimate the savings tied to this transfer. In addition, the integration of two vocational rehabilitation programs currently siloed at DARS would result in savings of about $896,000 and the elimination of 10 staff beginning in fiscal year 2017. Treasury Offset. Authorizing state participation in the federal debt collection program would enable TWC to recover a significantly larger portion of outstanding unemployment compensation debt, estimated at more than $66 million in fiscal year 2017, the first year of operation. The majority of these funds, about $47.7 million, would go into the UI Trust Fund to help TWC keep the fund solvent and reduce or delay the need for future tax increases on Texas employers. Another $18.4 million would be returned to the U.S. Department of Labor as reimbursement for overpayment of federal benefits. Career School Fees. Removing the career school fees and caps currently in statute would provide TWC with greater flexibility to set fees. Although the agency would be able to increase fees, its budget would still be governed by the legislative appropriations process. Any increased revenue that might result could not be estimated.
The full text the Sunset Commission’s findings and recommendations can be found in the Staff Report with Commission Decisions on the Texas Workforce Commission (Sunset Advisory Commission, January 2015), available at http://www.sunset.texas.gov/reviews-and-reports/agencies/texas-workforce-commission-twc.
Sunset Advisory Commission Recommendations on the Texas Workforce Commission
Sunset Staff Contact: Faye Rencher 512-463-1300
Issue 1 The State Can Benefit From a More Integrated Approach to Ensuring Better Employment Outcomes for Texans with Disabilities. 1.1 Transfer responsibility for the Vocational Rehabilitation and Disability Determination Services programs from DARS to TWC, contingent on federal approval of the program transfers. 1.2 Direct TWC to work with DARS and the Health and Human Services Commission to ensure the efficient transition of the Vocational Rehabilitation and Disability Determination Services programs. (nonstatutory) 1.3 Direct TWC to integrate the newly transferred programs within the workforce system in a manner that minimizes any disruption in client services and satisfies federal requirements, so that federal funds are not jeopardized. (nonstatutory) 1.4 Require TWC, in coordination with DARS, to integrate administration, management, and oversight of DARS’ blind and general Vocational Rehabilitation programs to eliminate duplication and better serve consumers. (Modified from DARS Recommendation 1.1) 1.5 TWC, in conjunction with DARS, should develop a transition plan for the integration of the administration, management, and oversight of the blind and general Vocational Rehabilitation programs, no later than September 1, 2016. (Modified from DARS Report Recommendation 1.2) (nonstatutory) 1.6 Direct DARS to take immediate steps to ensure access to services for people with multiple disabilities, no matter which division offers the services. (Modified from DARS Report Recommendation 1.3) (nonstatutory) 1.7 TWC should create clear, validated guidelines for vocational rehabilitation case workers to ensure better decision making for successful, cost-effective outcomes. (Modified from DARS Report Recommendation 2.1) (nonstatutory) 1.8 TWC should create a robust and consistent case review system across all vocational rehabilitation services, no matter the nature of a person’s disability. (Modified from DARS Report Recommendation 2.2) (nonstatutory) 1.9 TWC should designate staff to monitor performance of vocational rehabilitation services statewide and within each local board area. (Modified from DARS Report Recommendation 2.3) (nonstatutory) 1.10 Require TWC to partner with the Texas Education Agency to develop a mechanism to target schools with the highest need for vocational rehabilitation services for students with disabilities who are transitioning from school to work. (Modified from DARS Report Recommendation 4.2) 1.11 Direct DARS and TWC to ensure employer relations staff from DARS’ blind and general Vocational Rehabilitation programs are consolidated and work in tandem with their TWC counterparts to build business partnerships. (Modified from DARS Report Recommendation 4.3) (nonstatutory)
2 1.12 Direct DARS to develop a strategy for assisting federal contractors to hire individuals with disabilities, and to task its employer relations staff with researching and anticipating similar federal or state initiatives in the future. (Modified from DARS Report Recommendation 4.4) (nonstatutory)
Issue 2 TWC Needs Authority to Use Federal Offsets to Recover Millions of Dollars in Unemployment Compensation Debt. 2.1 Authorize TWC to participate in the federal treasury offset program to recover outstanding unemployment compensation debts.
Issue 3 The Civil Rights Division Needs Clearer Accountability and Streamlined Functions to Effectively Focus on Its Core Duties. 3.1 Transfer the powers and duties of the Human Rights Commission to the Texas Workforce Commission. 3.2 Eliminate the statutory requirement for the Civil Rights Division to review fire department exams for discriminatory factors. 3.3 Require TWC, as part of the division’s annual report, to provide data on the number and type of state agency employment discrimination complaints with merit. 3.4 Require TWC to develop risk assessment criteria in rule for determining when a state agency could be subject to review more frequently than the regular six-year schedule. 3.5 Require TWC to charge state agencies a rate that covers the costs of reviewing their personnel policies and procedures, and annually reassess reimbursement rates to ensure true cost recovery. 3.6 Direct TWC to assist the division in making improvements to electronically track data from state agency personnel policy reviews and use this data to better manage the review process. (nonstatutory)
Issue 4 TWC Must Better Ensure Its Child Care Program Helps Clients Achieve Employment Goals and Obtain Quality Care for Children. 4.1 Require TWC to include more in-depth data on the effectiveness and outcomes of child care subsidies in its statutorily required report on the program. 4.2 Require TWC to establish a process in rule providing for regular review of the Texas Rising Star child care quality standards. 4.3 Require TWC to develop a policy on gathering and using stakeholder input regarding the child care program. 4.4 Direct TWC to evaluate measures of the child care program’s effectiveness in its internal monthly performance analysis. (nonstatutory) 4.5 Direct TWC to establish baseline board-level data on the Texas Rising Star program and evaluate impacts and trends as program changes progress. (nonstatutory) 4.6 Direct TWC to regularly gather feedback from boards on the quality of TWC’s assistance in managing the child care program. (nonstatutory) 4.7 Direct TWC to establish and regularly update a consolidated policies and procedures manual for the child care program. (nonstatutory)
3 4.8 Require TWC to conduct a study on potential methods of providing incentives to encourage parents to choose providers with a Texas Rising Star designation. (nonstatutory)
Issue 5 Students Need Better Career School Performance Information When Selecting Training Programs. 5.1 Direct TWC to evaluate the costs and benefits, as well as impact on employers, of collecting occupational information to verify educational outcomes, and report its findings to the Legislature. (nonstatutory) 5.2 Direct TWC to provide a link to its Reality Check tool on its career schools webpage. (nonstatutory) 5.3 Require TWC to make information on career school enforcement actions available to the public on its website. 5.4 Eliminate statutory career school fees and fee caps, and authorize TWC to set fees in rule.
Issue 6 TWC’s Appeals Process Lacks Certain Tools That Would Increase Consistency and Transparency. 6.1 Direct TWC to create a searchable and publicly accessible precedent manual for wage disputes. (nonstatutory) 6.2 Direct TWC to establish procedures and criteria for determining when policies clarified through precedents would be more appropriate for rulemaking. (nonstatutory)
Issue 7 Texas Has a Continuing Need for the Texas Workforce Commission. 7.1 Continue the Texas Workforce Commission for 12 years. 7.2 Direct TWC to provide greater public access to written materials up for discussion in its open public meetings to facilitate the public’s ability to follow and understand its deliberations. (nonstatutory)
Fiscal Implication Summary Overall, the recommendations related to TWC would result in a positive fiscal impact of almost $200 million and a reduction of 21 full-time employees over five years. Three of the seven TWC issues would have a fiscal impact, as described below. Issue 1 — The transfer of vocational rehabilitation services from DARS to TWC would result in significant savings over time, particularly from the integration of DARS’ field staff into local workforce centers, but a precise estimate was not completed at the time of this report. Integrating the blind and general Vocational Rehabilitation programs would result in estimated savings of about $896,000 in administrative costs and the elimination of 10 administrative and management staff positions for the 2016–2017 biennium. Annual savings thereafter would be $1.8 million, with the elimination of 21 total staff. Since most of the savings of both the transfer of programs to TWC and the consolidation of DARS’ blind and general Vocational Rehabilitation programs would be in federal funds, the Legislature should consider redirecting the money into services to avoid the loss of these funds.
4 Issue 2 — Authorizing TWC to participate in the treasury offset program would result in revenue gain to the State of approximately $47.7 million in fiscal year 2017, the first year that collections would start, all of which would be a gain to Texas’ UI Trust Fund. Just more than $18 million would be returned to the U.S. Department of Labor (DOL) as reimbursement for overpayment of federal benefits. TWC also plans to use its UI administrative grant to cover estimated one-time costs of $436,328 for programming of its automated systems to accommodate this new program. Overall impacts from the first four years after implementation would be about a $145.9 million gain to the UI Trust Fund and a $1.3 million gain to general revenue. Issue 5 — Removing the career school fees and caps currently in statute would provide TWC with greater flexibility to set fees and although the agency would be able to increase fees, its budget would still be governed by the legislative appropriations process. Any increased revenue that might result could not be estimated for this report.
Texas Workforce Commission
Revenue Savings Revenue Gain Gain to to the Revenue to the General the ETIA Amount Savings to General Change in Fiscal Gain to UI Revenue Holding Returned to Federal Revenue FTSs From Year Trust Fund Dedicated Fund Fund1 DOL Funds Fund 2015 2016 $0 $0 $0 $0 $0 $0 0 2017 $47,742,354 $0 $0 $18,408,582 $705,000 $191,000 -10 2018 $38,542,318 $510,376 $48,137 $12,817,454 $1,410,000 $382,000 -21 2019 $31,959,881 $427,055 $43,322 $8,944,192 $1,410,000 $382,000 -21 2020 $27,699,077 $363,109 $40,466 $6,166,150 $1,410,000 $382,000 -21
1 The Employment and Training Investment Assessment (ETIA) Holding Fund is a special trust fund outside the treasury set up to hold assessments of one-tenth of 1 percent of wages paid by employers per Texas Labor Code, Chapter 204, Section 204.121.
5 Sunset Advisory Commission Recommendations on the Texas Workforce Investment Council
Sunset Staff Contact: Faye Rencher 512-463-1300
Issue 1 Texas Has a Continuing Need for the Texas Workforce Investment Council and Would Benefit From Its Assumption of the Duties of the Texas Skill Standards Board. 1.1 Continue the Texas Workforce Investment Council for 12 years and align its Sunset review with that of the Texas Workforce Commission. 1.2 Abolish the Texas Skill Standards Board and transfer its powers and duties to the Texas Workforce Investment Council.
Fiscal Implication Summary None of the recommendations regarding the council would have a fiscal impact to the state.
1 House Committee on Appropriations Andres Alcantar, Chairman Texas Workforce Commission
February 2015
For the record, I am Andres Alcantar, Chairman of the Texas Workforce Commission (TWC). I am joined by Mr. Larry Temple, Executive Director, and Randy Townsend, Chief Financial Officer. Thank you for the opportunity to discuss the agency and our budget. Texas achieved record breaking job growth with the addition of 457,900 jobs in 2014. Every major industry added jobs over the year, benefitting from a strong business climate and a growing civilian labor force that surpassed 13 million for the first time during the year. TWC, 28 Local Workforce Development Bards, and 193 local workforce centers operate as Texas Workforce Solutions to deliver integrated services that respond to changing economic conditions and the needs of Texas employers and workers. Over the past year, TWC and its network of Local Boards and community partners held events throughout Texas to examine the workforce needs and economic priorities of each region of the state. As a result of these meetings, new industry aligned strategies were formulated and new initiatives were launched. Additionally, TWC partnered with the Texas Education Agency (TEA) and the Texas Higher Education Coordinating Board (THECB) in regional meetings with employers, education leaders, chambers, and other local stakeholders to discuss regional economic priorities, employer workforce needs and the actions needed for Texas students to be ready for success in college or a career. The three agencies have worked together on a number of key projects to develop a high quality workforce, including the development of early
college career and tech high schools and enhanced career exploration tools. TWC worked with TEA to successfully transition the Adult Education and Literacy (AEL) program and has aligned a statewide system of adult education and literacy providers with the Workforce Solutions network. AEL is helping individuals become better prepared to enter the workforce, earn a high school equivalency, and to be more successful in obtaining career training. TWC will continue to implement innovations that result in more integrated learning opportunities and jobs for program participants. In FY 2014, the agency expanded the reach of the Skills Development Fund (SDF) to better serve specific workforce needs. Through initiatives that align with industries like health care and that prioritize our veterans, the fund continues to meet the workforce needs of employers across industries. In partnership with more than 100 businesses, TWC awarded SDF grants in FY 2014 that supported the creation of 5,779 new jobs and increased the skills of more than 10,000 incumbent workers through Skills training. Recognizing the tremendous value our veterans bring to the workforce, veterans receive priority of service and continue to be a priority to the agency. In FY 2014, TWC expanded the College Credit for Heroes program, a cooperative effort with over 30 community and technical colleges and universities throughout the state, including all 13 universities from the Texas A&M System. TWC also launched the TexasWideOpenForVeterans.com, a website that provides comprehensive information about the benefits of transitioning to the civilian workforce in Texas. Through the Texas Veterans Leadership Program, TWC has
Page 2 of 4 provided services to more than 18,000 veterans since the program’s inception. TWC has implemented new initiatives to improve the quality of care in subsidized child care settings and to expand partnerships that inspire and inform our students. In order to continue and expand TWC’s ability to respond to the dynamic workforce needs of Texas employers and to equip workers with needed skills, the agency is requesting these exceptional items for the FY 2016-2017 biennium. TWC’s apprenticeship training program was highly successful in FY 2014, with a record number of 4,306 individuals trained, an increase of nearly 400 over the previous year. TWC is asking for an additional $3 million to help address the growing need for skilled workers. The additional appropriations would maintain the current contact hour rate at $4.00 per hour for the current level of apprentices, and provide increased funding to expand the number of individuals trained in high demand occupations to 6,111. Second, we are requesting $10 million to fund an initiative, Recruit Texas, to provide a targeted, intensive and rapid response service to employers looking to relocate to the state. Recruit Texas will bring employers, economic development organizations, Local Workforce Development Boards, and local community colleges together to highlight human capital advantages in the state and address employer needs to recruit and hire for higher skilled positions. Finally, the Commission is requesting $20 million to serve an estimated 5,600 students through Accelerate TEXAS. This request would fund innovative adult education models that integrate literacy and numeracy education with skills training. The program would allocate 75
Page 3 of 4 percent towards integrated occupational training certificates through Texas community colleges and technical schools and 25 percent towards the attainment of industry recognized certifications that align with high demand regional workforce needs. Thank you again for the opportunity to be here today. I appreciate the support you have shown TWC, and I will turn it over to Mr. Temple to provide additional details on the agency’s budget.
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House Committee on Appropriations Mr. Larry Temple, Executive Director Texas Workforce Commission
February 2015
For the record I’m Larry Temple, Executive Director of the Texas Workforce Commission (TWC). As Chairman Alcantar mentioned, here with me today is Randy Townsend, Chief Financial Officer. Thank you for the opportunity to discuss TWC and the agency’s fiscal year (FY) 2016- 2017 budget. Before I begin, I would like to thank the Legislative Budget Board and especially our analyst, Julie Lindsey, for her hard work on our behalf. TWC is an agency dedicated to leading a market-driven workforce system with the core focus of getting its customers into employment. In 2014, TWC served over 83,000 businesses, and 1.3 million job seekers received and completed workforce services. The Texas economy has made significant gains over the last biennium. In the last year alone, Texas has added 457,900 jobs; marking 51 straight months of employment growth. As of December 2014, the state’s unemployment rate of 4.6 percent remains well below the national average of 5.6 percent. With regard to the unemployment rate, we do understand employment in certain areas of the state may be affected by the recent drop in oil prices. TWC is closely monitoring this issue, and very recently we have seen some increase in unemployment claims related to the oil and gas industry. We will continue to monitor these trends. Overall, TWC has seen a decrease in not only the total amount of Unemployment Insurance (UI) benefit payments, but also in the number of initial and continued UI claims. Initial claims are down 8.8 percent from one
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year ago and continued claims are down 15.8 percent. The Unemployment Compensation Trust Fund is currently healthy and as of January 2015, the estimated cash balance as of October 1, 2015, is calculated to be $1.6 billion, well above the fund’s floor. Several significant changes took place for TWC during the 83rd Legislature; Chairman Alcantar mentioned the transfer of the Adult Education and Family Literacy Program (AEL) from the Texas Education Agency (TEA) to TWC. Shortly after the legislative session, TWC held stakeholder meetings across the state to gather valuable input from providers, communities, and citizens engaged in adult education. Over 100 AEL provider contracts were transferred from TEA to TWC. TWC recently conducted a competitive procurement for 35 new provider contracts, further aligning the program with local partners and the workforce development boards. Other changes included several bills and new riders that strengthened TWC’s community and educational partnerships and enhanced professional development. TWC’s new Rider 30 directs funding toward further professional development for early childhood professionals in order to increase teacher participation in training programs, programs that lead to a national credential in early childhood education, and work- study programs in child care. Additionally, new Rider 31 helps to fund community based organizations targeting residents without housing and employment in order to move them into permanent employment. With these initiatives, TWC continues to enhance our role in supporting the Texas economy through our integrated service delivery model, helping to align education and training to address the state’s current and future workforce needs. At the federal level, the Child Care Development Block Grant Act, which was signed into law in November 2014, reauthorizes the Child Care
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and Development Block Grant Program and includes measures to improve child safety and quality of care. Also, the Workforce Innovation and Opportunity Act (WIOA) was signed into law in July 2014, replacing the Workforce Investment Act (WIA). You may recall that Congress had cut the WIA Statewide Activity Fund by two-thirds, from 15 percent to five percent. Under WIOA, authority for the funds was fully restored, however, the Consolidated and Further Continuing Appropriations Act of 2015 which was signed into law in December, only restored the funds to 10 percent. Additionally, as Texas continues to add jobs and the state’s economy flourishes, we have seen steady declines in associated federal funding of the UI Administrative grant as well as WIA grant funding; the allocation formulas for which are tied to the success of the state’s economy. For example, WIA funding has declined by 44 percent from the average received during fiscal years 2005-2007. It appears unlikely that the WIA funding levels will return to those earlier funding amounts. Funding for Wagner-Peyser Employment Services, which primarily funds the employment counselors in our local one-stop offices, has also remained relatively stagnant over the last decade, despite the state’s rapidly growing population and demand for workforce services. Due in part to the decline in these and other federal funds, and most importantly to continue our commitment to efficiency and effectiveness in our operations, TWC has implemented an agency-wide Rapid Process Improvement (RPI) initiative. RPI combines the use of the Theory of Constraints, Lean and Six Sigma as a way to maximize available funding and resources, while continuing to meet public demand for services. Through the implementation of RPI, TWC has furthered its ability to be responsible stewards of taxpayer dollars by streamlining processes,
Page 3 of 6
improving production time, increasing capacity, and reducing costs without reducing quality. To TWC’s budget specifically, the agency’s funding sources are predominantly federal-- around 83 percent of the agency’s total appropriations. Federal dollars are also used to fund 91 percent of the agency’s salaries. The majority of our state General Revenue (GR) is dedicated to satisfying federal funding requirements or to maximize federal funding opportunities. Of TWC’s GR appropriations, more than 68 percent are used to match federal funds or to serve as Maintenance of Effort (MOE) requirements for Child Care and Temporary Assistance for Needy Families (TANF) Choices. To give a brief overview of TWC’s FY 2016-2017 request, the agency is requesting $140.7 million for Child Care match and MOE; $48.6 million for Skills Development; $23.9 million for the AEL program; $17.7 million for TANF Choices MOE; $8.2 million for the Supplemental Nutrition Assistance Employment and Training Program; and $12.3 million for Employment and Community Services. TWC is requesting Capital Budget authority to continue the UI Information Technology (IT) Improvement Project, the Workforce System Improvement project and for several infrastructure and upgrade projects to support existing systems and services. These projects will enhance the agency’s ability to render services using existing federal funds. The UI IT Improvement Project will continue to improve the employer interface by eliminating aging and duplicative technology. It will also streamline fraud related determinations by gathering required information through Interactive Voice Response or web-based solutions, thereby increasing the efficiency of investigations; the agency would use an estimated $5.75 million in federal funds over the biennium for the UI IT Improvement Project.
Page 4 of 6
The Workforce System Improvements Project will improve services to employers and job seekers by completing the consolidation of the agency’s two largest Workforce-IT systems. This will improve data integration, provide a common customer management tool, and create a single online entry point for customers. Additionally, the project will improve WorkInTexas.com’s job matching function, as well as implement self- service capabilities for Workforce and UI customers to obtain more services online; such as participating in job fairs, registering for child care assistance, creating resumes, writing quality job descriptions, and attending orientations and trainings. TWC would use an estimated $3.2 million in federal funds over the biennium for the Workforce System Improvement Project. Finally, in addition to the three exceptional items that Chairman Alcantar discussed, TWC is requesting an exceptional item for additional FY 2016 Capital Budget authority in in the amount of $6 million to expend available federal grant funds for the Tax Modernization and Improve Benefit User Interface projects under the UI IT Improvement Project. These projects have been delayed due to challenges with vendors, and were originally funded with FY 2013 state appropriation authority which is set to expire as of August 31, 2015. TWC is also requesting revisions to Rider 32, Adult Education. When the AEL program was transferred to TWC from TEA, the corresponding riders were transferred virtually intact. We are requesting updates to these riders with new funding amounts and revised language that tailors the program to TWC; for example removing language that references a TEA Rule. Finally, TWC is requesting adjustments for four Child Care performance measure targets. Over the past three years, Child Care market rate surveys have shown a net increase of over 15 percent in the
Page 5 of 6
cost of care. Additionally, there are now a greater number of providers with “quality” designations which are subsequently eligible for higher reimbursement rates. There were also significant legislative changes made last session through HB 376, which aimed to improve the quality of subsidized child care through revised Texas Rising Star (TRS) standards and a tiered reimbursement structure, allowing TRS certified providers to receive five, seven, or nine percent or more, than providers with no TRS certification. TWC requests adjusting the Child Care performance measures to account for these changes. Thank you-- this concludes my remarks. I appreciate the Committee’s consideration and I will be glad to answer any questions you may have.
Page 6 of 6
Section 1
Reimbursements to the Unemployment Compensation Benefit Account Summary of Recommendations - House
Page VII-46 Larry Temple, Executive Director Julie Lindsey, LBB Analyst RECOMMENDED FUNDING BY METHOD OF FINANCING 2014-15 2016-17 Biennial % Method of Financing Base Recommended Change Change GR General Revenue Funds $0 $0 $0 0.0% Dedicated GR Dedicated Funds $12,805,697 $10,465,147 ($2,340,550) (18.3%) Funds Total GR-Related Funds $12,805,697 $10,465,147 ($2,340,550) (18.3%) 27.0%
Federal Funds $0 $0 $0 0.0% Other $34,622,811 $28,294,657 ($6,328,154) (18.3%) Other 73.0% All Funds $47,428,508 $38,759,804 ($8,668,704) (18.3%)
FY 2015 FY 2017 Biennial % Budgeted Recommended Change Change FTEs 0.0 0.0%
The bill pattern for this agency (2016-17 Recommended) represents an estimated 100% of the agency's estimated total available funds for the 2016-17 biennium.
Agency 32A 2/9/2015 1 Section 1 Reimbursements to the Unemployment Compensation Benefit Account 2016-2017 BIENNIUM TOTAL= $38.7 MILLION IN MILLIONS
ALL FUNDS GENERAL REVENUE-DEDICATED FUNDS
APPROPRIATED $8.4 APPROPRIATED $27.0
APPROPRIATED $24.3
APPROPRIATED APPROPRIATED $6.6 $22.2
REQUESTED APPROPRIATED $19.9 $6.0 REQUESTED $18.8 REQUESTED $5.4 REQUESTED $5.1 2015 2016 2017
$26.0 $25.3 $22.2 $19.9 $18.8 $6.8 $6.8 $6.0 $5.4 $5.1 EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Agency 32A 2/9/2015 2 Section 2 Reimbursements to the Unemployment Compensation Benefit Account Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
STATE'S UC REIMBURSEMENT A.1.1 $47,428,508 $38,759,804 ($8,668,704) (18.3%) Total, Goal A, STATE'S UC REIMBURSEMENT $47,428,508 $38,759,804 ($8,668,704) (18.3%)
Grand Total, All Strategies $47,428,508 $38,759,804 ($8,668,704) (18.3%) Recommendations decrease General Revenue-Dedicated funding by $2.3 million and decrease Other Funds by $6.3 million for an anticipated decrease in unemployment benefits paid to former state employees based on agency estimates of a decrease in the unemployment rate.
Agency 32A 2/9/2015 3 Section 3
Reimbursements to the Unemployment Compensation Benefit Account Selected Fiscal and Policy Issues - House
NONE
Sec3a_Agency 32A.docx 2/9/2015
4 Section 4 Reimbursement to the Unemployment Compensation Benefit Account Performance Review and Policy Report Highlights - House
Savings/ Gain/ Fund Included Reports & Recommendations (Cost) (Loss) Type in Introduced Bill Action Required During Session
NO RELATED RECOMMENDATIONS
Sec4_Agency 32A.xlsx 2/9/2015
5 Section 5
Reimbursements to the Unemployment Compensation Benefit Account Rider Highlights - House
NONE
Sec5_Agency 32A.docx 2/9/2015
6 Section 6 Reimbursements to the Unemployment Compensation Benefit Account Items not Included in Recommendations - House
NONE
Agency 32A 2/9/2015 7 Section 1
Animal Health Commission Summary of Recommendations - House
Page VI-14 Dr. Dee Ellis, Executive Director and State Veterinarian Michael Wales, LBB Analyst RECOMMENDED FUNDING BY METHOD OF FINANCING 2014-15 2016-17 Biennial % Method of Financing Base Recommended Change Change General Revenue Funds $17,237,972 $17,044,094 ($193,878) (1.1%) GR Dedicated Funds $0 $0 $0 0.0% Total GR-Related Funds $17,237,972 $17,044,094 ($193,878) (1.1%) Federal Funds Federal Funds $4,338,190 $4,464,736 $126,546 2.9% 20.8% Other $575 $0 ($575) (100.0%) General Revenue Funds All Funds $21,576,737 $21,508,830 ($67,907) (0.3%) 79.2%
FY 2015 FY 2017 Biennial % Budgeted Recommended Change Change FTEs 150.5 150.5 0.0 0.0%
The bill pattern for this agency (2016-17 Recommended) represents an estimated 100% of the agency's estimated total available funds for the 2016-17 biennium.
Agency 554 2/9/2015 1 Section 1 Animal Health Commission 2016-2017 BIENNIUM TOTAL= $21.5 MILLION IN MILLIONS
ALL FUNDS GENERAL REVENUE AND FULL-TIME-EQUIVALENT POSITIONS GENERAL REVENUE-DEDICATED FUNDS APPROPRIATED $14.9 APPROPRIATED $11.2
APPROPRIATED 205.0 REQUESTED $9.8 REQUESTED REQUESTED $12.0 REQUESTED $9.5 $11.8
APPROPRIATED APPROPRIATED REQUESTED REQUESTED APPROPRIATED APPROPRIATED $8.4 $8.5 APPROPRIATED APPROPRIATED 166.2 167.2 $10.4 $10.4 161.0 161.0
2015 2016 2017
$9.1 $10.8 $10.8 $10.7 $10.8 $7.3 $8.6 $8.7 $8.5 $8.5 130.4 142.1 150.5 150.5 150.5 EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Agency 554 2/9/2015 2 Section 2 Animal Health Commission Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments (Optional)
FIELD OPERATIONS A.1.1 $14,522,432 $13,827,154 ($695,278) (4.8%) The recommendations include the removal of one-time expenditures from 2014- 15, including $230,611 from A.1.1. The decrease is also partially due to creation of new strategy, A.1.4, which was previously reflected in A.1.1. DIAGNOSTIC/EPIDEMIOLOGICAL SUPPORT A.1.2 $2,023,230 $2,094,326 $71,096 3.5% The increase in 2016-17 primarily due to higher expenditures for salaries and wages, partially offset by removal of $32,607 for one-time expenditures in 2014- PROMOTE COMPLIANCE A.1.3 $823,371 $834,714 $11,343 1.4% 15. ANIMAL EMERGENCY MANAGEMENT A.1.4 $670,560 $670,560 $0 0.0% New strategy for 2016-17 biennium. Total, Goal A, PROTECT/ENHANCE TEXAS ANIMAL HEALTH $18,039,593 $17,426,754 ($612,839) (3.4%)
CENTRAL ADMINISTRATION B.1.1 $2,051,719 $2,128,800 $77,081 3.8% INFORMATION RESOURCES B.1.2 $968,757 $1,486,720 $517,963 53.5% Increase primarily due to 2.0 additional FTEs in this strategy moved from A.1.1. OTHER SUPPORT SERVICES B.1.3 $516,668 $466,556 ($50,112) (9.7%) Funds reallocated to other strategies to align with personnel reassignments. Total, Goal B, INDIRECT ADMINISTRATION $3,537,144 $4,082,076 $544,932 15.4%
Grand Total, All Strategies $21,576,737 $21,508,830 ($67,907) (0.3%)
Agency 554 2/9/2015 3 Section 3
Texas Animal Health Commission Selected Fiscal and Policy Issues - House
1. Fee Revenue. Recommendations include revised rider language appropriating certain fee revenues collected by the agency (see Rider Highlights - House #9). The agency currently collects 17 different fees and will collect an estimated $1,379,634, with $849,124 retained by the agency, in 2014-15. This amount ($849,124) is included in the agency’s base 2016-17 recommendation. Authority for all but two of the fees the agency collects under Agriculture Code §§ 161.0411, 161.060, and 161.0601 will sunset at the end of FY 2015 without legislative action extending the agency’s authority to assess these or similar fees. The agency estimates that the two remaining fees will generate $1,024,000 in 2016-17. (See also, Item Not Included in Recommendations – House, Item #4)
Recommendations appropriate up to $424,562 each fiscal year from the remaining fees contingent upon revenues being collected to cover these amounts each year. In addition, amounts from these fees that are collected in excess of $512,000 each fiscal year (the amount contained in the Comptroller’s 2016-17 Biennial Revenue Estimate) are also appropriated to the agency. Furthermore, the rider makes an appropriation for any newly created or recreated fee revenue under statutory changes made by the Eighty-Fourth Legislature for the same purpose.
2. Unexpended Balance Authority Within the Biennium. Recommendations remove the rider authority previously allowing the agency to carry forward unexpended balances from the first fiscal year of the biennium to the second. Article IX, §14.05, Unexpended Balance Authority Between Fiscal Years Within the Same Biennium, provides the same authority with Legislative Budget Board approval.
3. Supplemental Bill Request. The agency has requested a total of $1,152,491 from General Revenue in supplemental funding for FY 2015 for expenditures related to two disease events. The agency requested $860,659 to establish and maintain a quarantine zone in the Rio Grande Valley region for cattle fever ticks. The ticks can be spread by livestock and wildlife, including deer and nilgai, and carry parasites that can result in death rates of up to 90 percent for previously unexposed cattle populations. The agency has also requested $291,833 for costs related to cattle tuberculosis outbreaks in two large dairy cattle herds with more than 20,000 total animals in the panhandle region.
The agency’s top priority exceptional item includes $1,188,000 to continue the quarantine zone in 2016. (See also Items Not Included in Recommendations – House, Item #1)
Sec 3a_Agency 554.docx 2/9/2015
4 Section 4 Texas Animal Health Commission Performance Review and Policy Report Highlights - House
Report Savings/ Gain/ Fund Recommended for Inclusion Reports & Recommendations Page (Cost) (Loss) Type in Introduced Bill Action Required During Session
NO RELATED RECOMMENDATIONS
Sec4_Agency 554.xlsx 2/9/2015
5 Section 5
Texas Animal Health Commission Rider Highlights - House
2. Capital Budget. Recommendations continue capital budget authority from the prior biennium in the same amounts for the same purposes. The Acquisition of Information Resource Technologies category is subdivided to reflect purchases for desktop and laptop computers.
3. (Former) Unexpended Balance Authority: Within the Biennium. Recommendations delete this rider. (See also Selected Fiscal and Policy Issues – House, Item #2 and Items Not Included in Recommendations – House, Item #8)
8. (Former) Collection of Revenue from Laboratory Testing Fees Applied to Out-of-State Clients. Recommendations delete this rider. Revisions to Rider 9 will incorporate fees collected and appropriated for the purposes this rider serves should the authority to collect the fees this rider concerns be extended in 2016-17.
9. (Former) Cost Recovery for Animal Health Programs. Recommendations amend this rider to appropriate all fee revenue collected above the Comptroller’s Biennial Revenue Estimate ($512,000 each year) after appropriations of $424,562 each fiscal year are covered. The recommendation would also appropriate additional fee revenue contingent upon legislation extending authority currently set to expire at the end of the 2014-15 biennium (see Selected Fiscal and Policy Issues – House, Item #1).
Sec 5 Rider Highlights_Agency 554.docx 2/9/2015
6 Section 6 Animal Health Commission Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds Agency Exceptional Items - In Agency Priority Order
1. Border Security - Animal Health: Request would provide General Revenue Funding and 21 FTEs to establish an $ 4,037,676 $ 4,037,676 additional regional office in South Texas to improve response to cattle fever tick and other disease issues throughout the Mexican border region. Of this amount, $1,188,000 would be used to continue a fever tick quarantine zone established in 2015 which the agency has requested supplemental funding to support. (See also Selected Fiscal and Policy Issues - House, Item #3)
2. Feral Swine Disease Surveillance and Response: Request would provide General Revenue funding and 4 FTEs $ 600,140 $ 600,140 for testing of livestock and oversight of feral swine holding facilities. 3. Fleet Vehicle Replacement: Request would provide General Revenue funding to replace 34 vehicles in 2016-17. $ 843,000 $ 843,000 The agency states 25 of its 58 vehicles currently exceed 130,000 miles.
4. General Revenue (due to Fee Authority Expiration): Request would provide non-fee generated General Revenue $ 246,268 $ 246,268 funding to replace revenue from certain fees, including laboratory testing, inspection, and other services, set to sunset at the end of FY 2015. (See also Selected Fiscal and Policy Issues - House, Item #1)
5. Executive Director Salary Equity: Request for authority and General Revenue funding to move the Executive $ 112,752 $ 112,752 Director from Salary Group 4, currently set at $123,624 per year, to Group 5. The agency is requesting $56,376 each year which would fund a salary amount of $180,000 per year. 6. Digital Records Management and Archival System: Request for General Revenue funding includes purchase $ 335,000 $ 335,000 and operational costs for 2016-17. Operational costs would be ongoing after the biennium. 7. ProjectONE/Centralized Accounting and Payroll/Personnel System (CAPPS): General Revenue funding and 1 $ 82,110 $ 82,110 FTE to provide dedicated staff to transition to new CAPPS enterprise resource planning system.
Agency 554 2/9/2015 7 Section 6 Animal Health Commission Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds 8. Restoration of Unexpended Balance Authority Rider: Request to reinstate rider granting unexpended balance $ - $ - authority within the biennium. (See also Selected Fiscal and Policy Issues - House #2 and Rider Highlights - House, Item #3) 9. Restore FTE Cap to 2015 Appropriated Level: Request for 5.7 FTEs in 2016 and 6.7 FTEs in 2017 to bring $ - $ - agency totals to 156.2 in 2016 and 157.2 in 2017. The agency's FTE cap was set at the 2015 budgeted amount of 150.5 FTEs in both fiscal years.
Total, Items Not Included in the Recommendations $ 6,256,946 $ 6,256,946
Agency 554 2/9/2015 8 Section 7 Animal Health Commission Summary of 10 Percent Biennial Base Reduction Options - House
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Intro Bill? Loss GR/GR-D Total 1 Field Staff Reductions Significant adverse impact to the efficacy of the commission and to the state: $1,177,448 $1,177,448 10.0 $0 7% No Reduction in Force of 10 FTEs – one Investigator, two Veterinarians, five Inspectors, two Data Entry Operators. Reductions in force of Veterinarians, Investigator, and Inspectors will greatly increase workload on remaining Veterinarians, Investigators, and Inspectors work efficiencies and effectiveness. The TAHC will have to prioritize programs and will not be able to meet all of the demands placed upon it. 2 Epidemiology Staff Reduction Significant adverse impact to the efficacy of the commission and to the state: $237,640 $237,640 1.0 $0 1% No Reduction in Force of 1 FTEs – one Veterinarian. Reduction in force of Veterinarians will greatly increase workload on remaining Veterinarians work efficiencies and effectiveness. The TAHC will have to prioritize programs and will not be able to meet all of the demands placed upon it. 3 Indirect Administration Staff Reductions Significant adverse impact to the efficacy of the commission and to the state: $286,158 $286,158 2.0 $0 2% No Reduction in Force of 1 FTEs – one Programmer and attrition of one Executive Assistant Reductions in force of Programmer will greatly increase workload on remaining Information Resources staff work efficiencies and effectiveness. The TAHC will have to prioritize programs and will not be able to meet all of the demands placed upon it.
TOTAL, 10% Reduction Options $1,701,246 $1,701,246 13.0 $0
Agency 554 2/9/2015 9 Section 7 Animal Health Commission Summary of 10 Percent Biennial Base Reduction Options - House
Agency 10% Reduction Options by Category of Reduction
Administrative - FTEs / Layoffs 16.8%
Programs - Service Reductions (FTEs-Layoffs) 83.2%
Agency 554 2/9/2015 10 Texas Animal Health Commission
Texas Animal Health Commission
House Appropriations Subcommittee Articles VI, VII & VIII
February 16, 2015
Dee B. Ellis, DVM, MPA Executive Director & State Veterinarian Texas Animal Health Commission
“Serving Texas Animal Agriculture Since 1893” Texas Animal Health Commission Border Security and Animal Health marketability of these valuable commodities. Border Security: The porous border with Mexico continues to pose a significant Feral Swine: There are an estimated 3 million feral swine in Texas, and the threat to the health and marketability of Texas livestock and poultry. The population is growing daily. Feral swine are known to carry 30 different infectious persistence of traditional and emerging diseases such as Cattle Fever Ticks, diseases and 37 parasites, of which approximately 20 can be transmitted to Tuberculosis, Brucellosis, Avian Influenza and Equine Piroplasmosis in Mexico humans. Attempts by researchers to develop population control methods have require heightened vigilance to protect Texas animal agriculture along the been ineffective to date. Until such population control measures are created, Texas-Mexico border. the TAHC continues to attempt to control and regulate the legal movement TAHC is currently responding to the most significant Cattle Fever Tick infestation of feral swine to acceptable terminal destinations, which include feral swine in recent history in numerous south Texas counties. Cattle, horses and wildlife holding facilities, hunting preserves and slaughter facilities. The TAHC requests have all been found to be infested. In Cameron County alone, almost 250,000 funding to sufficiently monitor, control and respond to the growing feral swine acres are under a fever tick quarantine. disease risks. In the Texas panhandle, TAHC is also addressing the largest dairy to be infected with Tuberculosis in history. Two dairies with more than 22,000 total Agency Continuity & Modernization cattle have disclosed positive animals for Tuberculosis, and require ongoing Capital Budget Fleet Vehicles: Approximately 40 percent of the TAHC fleet testing and monitoring to facilitate business continuity and prevent spread of vehicles have exceeded the 130,000 mile useful life threshold, with half of the disease. Equine Piroplasmosis, a foreign animal disease, has emerged in those exceeding 200,000 miles. To ensure the continuity of services provided, recent years and continues to be a concern for south Texas horses and racing the safety of TAHC employees, and to reduce maintenance costs, the TAHC quarter horses with connections to Mexico. As a result, the TAHC created test requests funds to purchase and replace 25 vehicles that have surpassed the requirements for racing quarter horses, conducted county-wide tests in Kleberg useful life threshold. and Willacy counties, and is now testing all horses in Brooks County. Contingency General Revenue-fee authority expiration: In the event Texas The TAHC also manages numerous other eradication and control programs Agriculture Code §161.060 fee authority expires on September 1, 2015, the for diseases found in Mexico which affect cattle, cervids, equine, poultry and TAHC is seeking general revenue funding to offset the portion of the fee swine. Smuggled and diseased horses have been confiscated in far west revenue that will be lost, which is approximately 2 percent of the TAHC’s GR Texas. Border violence has affected the ability to legally import horses and budget. cattle through the five Texas-Mexico land ports, and hundreds of Mexican Executive Director Salary Equity: The executive director of the TAHC is the origin cattle are found free-ranging on the Texas side of the border each year. agency’s chief executive officer and the Texas State Veterinarian. Given the Texas national and international trade partners routinely accept the health size, diversity and economic impact of the Texas livestock and poultry industries status of the state’s livestock and poultry. The trade and marketability is based and the complexity of managing the state agency, the TAHC is requesting that in large part upon the assurances provided by TAHC within its charge to apply the executive director/state veterinarian compensation be raised to ensure that sound veterinary medical principles in the creation and implementation of an the agency can compete in hiring competent and knowledgeable veterinary effective animal health infrastructure. Attrition and reduction in force, as a staff. result of prior biennial budget constraints, have affected the ability of the TAHC Digital Records Management & Archival System: A Digital Records to continue to provide these assurances. Management and Archival system will permit digitization of health certificates For the above reasons, the TAHC is requesting additional funding and staffing and TAHC records. In responding to disease incursion, outbreak or exposure, to sufficiently monitor, contain, and eradicate foreign diseases that have and this system will provide TAHC staff with timely and efficient accessibility to data may be entering the state from the southern border. Additional funding is critical necessary to identify and locate high risk livestock or poultry. to provide the livestock, poultry, and wildlife industries with necessary health Project ONE/CAPPS: The Comptroller identified the TAHC as an agency to inspection, disease surveillance, eradication programs, outbreak response, transition to CAPPS, an upgraded financial system, during 2016-17 biennium and emergency preparedness services necessary to ensure the health and and will provide the system at no cost. The TAHC requests one FTE directly associated with the CAPPS implementation and deployment. Page 1 of 7 Texas Animal Health Commission TAHC Budget FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016* FY 2017* GR & Appropriated Receipts 10.0 M 10.1 M 5.6 M 7.2 M 8.4 M 8.4 M 8.5 M 8.5 M Federal Funds 4.7 M 3.3 M 2.8 M 1.7 M 2.2 M 2.4 M 2.2 M 2.2 M Total Funds 14.7 M 13.4 M 8.4 M 8.9 M 10.6 M 10.8 M 10.7 M 10.7 M
Additional Funding Requests 1.1 M 3.6 M 2.5 M
* Figures reflect FY TAHC 2016-17 introduced bill funding
TAHC Historical Budget
$18 $16 M
$15
$12
$9
$6 Funds in Millions
$3
$-‐
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 State Fiscal Year
GR & Appropriated Receipts (per Opera?ng Budget or LAR) Federal Funds (per Opera?ng Budget or LAR) Addi?onal Funding Requests Highest Level of Funding (per Opera?ng Budget or LAR)
Page 2 of 7 Texas Animal Health Commission Reprioritized and Revised 2016-17 LAR Exceptional Items
FTEs FY 2016 FY 2017 2016-17
1. Border Security and Animal Health: 27.0 $2,750,183 $1,897,554 $4,647,737 Texas-Mexico Border Animal Health Security Feral Swine Disease Surveillance and Response 2. Agency Continuity and Modernization: 1.0 $ 917,065 $ 702,065 $1,619,130 Capital Budget – Fleet Vehicles Contingency General Revenue (due to fee authority expiration Tx Ag Code §161.060) Exempt Position Salary Equity Adjustment Digital Records Management and Archival System ProjectONE/Centralized Accounting and Payroll/Personnel System (CAPPS) – ERP
TOTAL REPRIORITIZED & REVISED EXCEPTIONAL ITEMS 28.0 $3,667,248 $2,599,619 $6,266,867
2016-17 SUBMITTED LAR EXCEPTIONAL ITEMS
Submitted LAR Exceptional Items 2016-17 Biennium FTEs FY 2016 FY 2017 2016-17 1. Contingency General Revenue (due to fee authority expiration) 0.0 $ 123,134 $ 123,134 $ 246,268 2. Feral Swine Disease Surveillance and Response 4.0 $ 311,570 $ 288,570 $ 600,140 3. Texas-Mexico Border Animal Health Security 5.0 $ 307,273 $ 297,273 $ 604,546 4. Exempt Position Salary Equity Adjustment 0.0 $ 56,376 $ 56,376 $ 112,752 5. Digital Records Management and Archival System 0.0 $ 275,000 $ 60,000 $ 335,000 6. ProjectONE/ CAPPS - ERP 1.0 $ 41,055 $ 41,055 $ 82,110 Total 10.0 $1,114,408 $ 866,408 $1,980,816
Page 3 of 7 Texas Animal Health Commission Reprioritized and Revised 2016-17 LAR Exceptional Items Detail Continued
FTEs FY 2016 FY 2017 2016-17 Salary/FTE Salary/FTE 1. Border Security and Animal Health Field Inspectors 15.0 $ 606,810 $ 606,810 $ 1,213,620 $ 40,454 $ 40,454 Geographic Information Specialist 1.0 $ 65,003 $ 65,003 $ 130,006 $ 65,003 $ 65,003 Veterinarians 3.0 $ 294,620 $ 294,620 $ 589,240 $ 98,206 $ 98,206 Field Office Managers 2.0 $ 139,200 $ 139,200 $ 278,400 $ 69,600 $ 69,600 Compliance Investigator 1.0 $ 56,770 $ 56,770 $ 113,540 $ 56,770 $ 56,770 Regional Administrative Technicians 4.0 $ 144,000 $ 144,000 $ 288,000 $ 36,000 $ 36,000 Austin Office Staff 1.0 $ 49,590 $ 49,590 $ 99,180 $ 49,590 $ 49,590 (Information Technology Dept.) Total Direct Salaries 27.0 $1,355,993 $1,355,993 $2,711,986
Travel $ 276,550 $ 276,550 $ 553,100 Fuel $ 117,000 $ 117,000 $ 234,000 Supplies $ 10,500 $ 10,500 $ 21,000 Utilities $ 28,000 $ 28,000 $ 56,000 Rent – Building $ 74,000 $ 74,000 $ 148,000 Rent – Other $ 16,000 $ 16,000 $ 32,000 Other Operating Expenses $ 121,000 $ 19,500 $ 140,500 Capital Expenditures $ 751,130 $ - $ 751,130
Total FTE Support Costs $ 1,394,180 $ 541,550 $ 1,935,730
FTE Total Salaries and Support Costs $2,750,183 $1,897,543 $4,647,726
Page 4 of 7 Texas Animal Health Commission
Reprioritized and Revised 2016-17 LAR Exceptional Items Detail Continued
FTEs FY 2016 FY 2017 2016-17 Salary/FTE Salary/FTE 2. Agency Continuity and Modernization State Veterinarian 0.0 $ 56,376 $ 56,376 $ 112,752 $ 56,376 $ 56,376 Austin Office Staff 1.0 $ 41,055 $ 41,055 $ 82,110 $ 41,055 $ 41,055 (Financial Services Dept - ProjectONE/CAPPS) Total Direct Salaries 1.0 $ 97,431 $ 97,431 $ 194,862
Fuel $ 82,093 $ 82,093 $ 164,186 Other Operating Expenses $ 41,041 $ 101,041 $ 142,082 Capital Expenditures $ 696,500 $ 421,500 $ 1,118,000
Total FTE Support Costs $ 819,634 $ 604,634 $ 1,424,268
FTE Total Salaries and Support Costs $ 917,065 $ 702,065 $ 1,619,130
TOTAL REVISED EXCEPTIONAL ITEMS 28.0 $3,667,248 $2,599,619 $6,266,867
Page 5 of 7 Texas Animal Health Commission
Fee Authority Expiration Texas Agriculture Code §161.060 Detail
Statute Accounts Payable Cleared Received FY 2014 Estimated FY 2015 Anticipated FY 2016 Texas Ag Code §161.0601 AHP Health Certificate Fees $ 465,297 $ 462,000 $ 462,000 Texas Ag Code §161.0411 AHP Fowl Registration $ 53,395 $ 51,000 $ 50,000 Texas Ag Code §161.060 AHP Chronic Wasting Disease $ 6,450 $ 8,500 $ - Texas Ag Code §161.060 AHP Herd Certification Fee $ 26,900 $ 25,500 $ - Texas Ag Code §161.060 AHP Lab Testing Fee (in-state) $ 150,622 $ 150,000 $ - Texas Ag Code §161.060 Lab Testing Fee (out-of-state) $ 730 $ 458 $ - AHP FEES COLLECTED (for year) $ 703,394 $ 697,458 $ 512,000 AGENCY PORTION $ 438,139 $ 432,203 $ - STATE PORTION $ 265,255 $ 265,255 $ -
Percent Change by Fiscal Year -0.84% -26.59% Fee Revenue portion of Agency GR 5.19% 5.09%
Page 6 of 7 Texas Animal Health Commission
Estimated TAHC GR Cost FY 2015
Cattle Fever Tick Cattle Tuberculosis Salaries $ 269,503 $ 107,051 Travel $ 234,985 $ 58,081 Fuel $ 34,553 $ 10,439 Equipment $ 23,847 $ 1,935 Supplies $ 37,801 $ 10,865 Utilities $ 421 $ 365 Totals $ 601,110 $ 188,737
Total Request $789,847
Total FY 2015 Supplemental Bill Request Total FY 2015 Supplemental Bill Request Category Breakdown
Travel 37.1% Fuel Cattle 5.7% Fever Tick TB Equipment $601,111 $188,736 3.3% Supplies Salaries 6.2% 47.7% Utilities 0.1% Total Request Rents $789,847 0.0%
Page 7 of 7 Section 1
Low-level Radioactive Waste Disposal Compact Commission Summary of Recommendations - House
Page VI -36 Leigh Ing, Executive Director Tom Lambert, LBB Analyst RECOMMENDED FUNDING BY METHOD OF FINANCING 2014-15 2016-17 Biennial % Method of Financing Base Recommended Change Change General Revenue Funds $0 $0 $0 0.0% GR Dedicated Funds $485,252 $1,166,578 $681,326 140.4% Total GR-Related Funds $485,252 $1,166,578 $681,326 140.4%
Federal Funds $0 $0 $0 0.0% Other $0 $0 $0 0.0% GR Dedicated All Funds $485,252 $1,166,578 $681,326 140.4% Funds 100.0%
FY 2015 FY 2017 Biennial % Budgeted Recommended Change Change FTEs 2.0 2.0 0.0 0.0%
The bill pattern for this agency (2016-17 Recommended) represents an estimated 100% of the agency's estimated total available funds for the 2016-17 biennium.
Agency 535 2/9/2015 1 Section 1 Low-level Radioactive Waste Disposal Compact Commission 2016-2017 BIENNIUM TOTAL= $1,166,578
ALL FUNDS GENERAL REVENUE AND FULL-TIME-EQUIVALENT POSITIONS GENERAL REVENUE-DEDICATED FUNDS
APPROPRIATED APPROPRIATED APPROPRIATED REQUESTED REQUESTED APPROPRIATED APPROPRIATED $583,289 $583,289 $583,289 $583,289 $583,289 2.5 2.5 APPROPRIATED APPROPRIATED APPROPRIATED REQUESTED REQUESTED $583,289 $583,289 $583,289 $583,289 $583,289
$583,289 $583,289 RECOMMENDED RECOMMENDED $583,289 $583,289 RECOMMENDED RECOMMENDED 2.0 2.0 RECOMMENDED RECOMMENDED
APPROPRIATED 0.0
0.0 EXPENDED
REQUESTED REQUESTED 0.0 0.0
$192,626 $242,626 $242,626 $192,626 $242,626 $242,626 2.0 2.0 EXPENDED ESTIMATED BUDGETED EXPENDED ESTIMATED BUDGETED ESTIMATED BUDGETED
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Note: The agency had no Full Time Equivalent FTE Positions in fiscal year 2013 because in that year the agency received appropriations through a rider in the Texas Commission on Environmental Quaility's bill pattern. The agency requested 0.0 FTEs in 2016-17, but recommendations include 2.0, or an estimate of the number for 2016-17. Recommendations include a new rider exempting the Compact Commission from limitations on FTE levels, so the FTEs shown are for information purposes only. (See Selected Fiscal and Policy Issues - House, No. 1 and Rider Highlights - House, No. 2.)
Agency 535 2/9/2015 2 Section 2 Low-level Radioactive Waste Disposal Compact Commission Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
COMPACT ADMINISTRATION & OPERATIONS A.1.1 $485,252 $1,166,578 $681,326 140.4% Recommendations for 2016-17 provide for an increase of $0.7 million as compared to 2014-15 base expenditure levels, which would provide for a level of appropriations equal to 2014-15 appropriated levels. The agency reports that the additional funds would be used to perform import agreement and export order audits, document current operational policies and procedures, conduct annual fiscal auditing, and maintain a contingency in the Compact Commission's budget in case the commission is required to cover costs of services it is now receiving free of charge from the Attorney General and Board of Nursing. (See Selected Fiscal and Policy Issues - House, No. 2.) Total, Goal A, COMPACT ADMINISTATION & OPERATIONS $485,252 $1,166,578 $681,326 140.4%
Grand Total, All Strategies $485,252 $1,166,578 $681,326 140.4%
Agency 535 2/9/2015 3 Section 3
Low-Level Radioactive Waste Disposal Compact Commission Selected Fiscal and Policy Issues - House
1. Exemption from Limitations on State Employment Levels. Recommendations include a new rider that would exempt the agency from limitations on state employment levels contained in Article IX, Section 6.10 of the GAA. Because the Compact Commission is a federally established compact whose commission includes members from Texas and the State of Vermont and employs only contract workers without any actual state employees, it is recommended that the commission be exempted from Full-Time Equivalent (FTE) limitations. The rider would also require the Compact Commission to provide a report annually on the number of FTEs to the State Auditor’s Office, the Governor, and the Legislative Budget Board for information purposes. The bill pattern would continue to reflect the Number of Full-Time Equivalents listed in its bill pattern and other documents, such as the Legislative Appropriations Request, Operating Budget, and Legislative Budget Estimates for information purposes only. (See also Rider Highlights – House, No. 2.)
2. Agency Request for Additional Funding. Recommendations provide for an increase of $0.7 million in funding out of the General Revenue-Dedicated Low-Level Waste Disposal Compact Commission LLWDCC Account No. 5151 as compared to 2014-15 base expenditure levels. This provides the agency’s exceptional item funding request for funding to perform import agreement and export order audits, document current operational policies and procedures, conduct annual fiscal auditing, and maintain a contingency in the Compact Commission’s budget in case the commission is required to cover the cost of services it is now receiving free of charge from the Attorney General and Board of Nursing. The recommended appropriations level provides an amount equal to that which was appropriated in each fiscal year since 2012. Health and Safety Code, Section 403.006, the Texas Low-level Radioactive Waste Compact, Section 4.04(4) provides that the Texas Commission on Environmental Quality shall establish a fee paid by entities disposing waste at the low-level radioactive waste disposal site to cover the Compact Commission’s costs. Thus, the funding increase is expected to come from new fee revenues to the LLWDCC Account No. 5151.
Sec 3a_Agency 535.docx 2/9/2015
4 Section 3
Low-Level Radioactive Waste Disposal Compact Commission FTE Highlights, House
Expended Estimated Budgeted Recommended Recommended Full-Time-Equivalent Positions 2013 2014 2015 2016 2017 Cap 0.0 2.5 2.5 2.0 2.0 Actual/Budgeted 0.0 2.0 2.0 NA NA
Schedule of Exempt Positions (Cap) None.
For fiscal year 2013, the Compact Commission did not have an FTE cap, and FTE data was not being tracked by the State Auditor's Office. Recommendations include an FTE cap for the agency for 2016-17. However, the cap is listed for information purposes only, as recommendations provide for a new rider to be included in the agency's bill pattern exempting them from limitations on state employment levels in Article IX, Sec. 6.10. (See Select Fiscal and Policy Issues - House, No. 1 and Rider Highlights - House, No. 2.)
Sec 3b FTE_Highlights_Agency 535.xlsx 2/9/2015
5 Section 3
Low-Level Radioactive Waste Compact Comission Performance Measure Highlights, House
Expended Estimated Budgeted Recommended Recommended 2013 2014 2015 2016 2017 • The Activity Capacity in Curies Remaining 95.6% 94.7% 93.8% 93.0% 92.1% in the Texas Low-level Radiooactive Waste Disposal Compact Facility (Compact Facility) as a Percentage of the Total Available Curie Capacity at the Compact Facility
At the beginning of fiscal year 2013, 95.6 percent of the curie capacity at the low-level radioacitve waste disposals site in Andrew's County was remaining. By the end of fiscal year 2017, 92.1 percent of capacity is expected to be remaining. If any nuclear generating facilities are decomissioned in the upcoming years, and the waste is disposed of in the Andrew's County site, the available capacity could end up being significantly lower than amounts shown above.
• The Activity Capacity in Cubic Feet 99.1% 97.7% 96.2% 94.8% 93.3% Remaining in the Texas Low-level Radiooactive Waste Disposal Compact Facility (Compact Facility) as a Percentage of the Total Available Capacity at the Compact Facility
At the beginning of fiscal year 2013, 99.1 percent of the volume capacity (cubic feet) at the low-level radioacitve waste disposals site in Andrew's County was remaining. By the end of fiscal year 2017, 93.3 percent of capacity is expected to be remaining. If any nuclear generating facilities are decomissioned in the upcoming years, and the waste is disposed of in the Andrew's County site, the available capacity could end up being significantly lower than amounts shown above.
Sec 3c Performance_Agency 535.xlsx 2/9/2015
6 Section 4 Low-level Radioactive Waste Disposal Compact Commission Performance Review and Policy Report Highlights - House
Savings/ Gain/ Fund Included Reports & Recommendations (Cost) (Loss) Type in Introduced Bill Action Required During Session
NO RELATED RECOMMENDATIONS
Sec4_Agency 535.xlsx 2/9/2015
7 Section 5
Low-Level Radioactive Waste Disposal Compact Commission Rider Highlights - House
2. (new) Exemption from Limitations on State Employment Levels. Recommendations include a new rider that would exempt the agency from limitations on state employment levels contained in Article IX, Section 6.10 of the GAA and require the agency to annually report on the number of FTEs at the Compact Commission each fiscal year to the State Auditor’s Office, the Governor, and the Legislative Budget Board. Because the Compact Commission is not truly a state agency, but rather a federally established compact whose commission includes members from the State of Vermont, and the Compact Commission employs only contract workers without any actual state employees, it is recommended that the commission be exempted from FTE limitations. (See Selected Fiscal and Policy Issues - House, No. 1)
Sec 5 Rider Highlights_Agency 535.docx 2/9/2015
8 Section 6 Low-level Radioactive Waste Disposal Compact Commission Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds
Agency Exceptional Items 1. None.
Total, Items Not Included in the Recommendations $ - $ -
Agency 535 2/9/2015 9 Section 7 Low-level Radioactive Waste Disposal Compact Commission Summary of 10 Percent Biennial Base Reduction Options
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Introduced Loss GR/GR-D Total Bill? 1 Travel The number of commissioners and agency support attending conferences will be $48,525 $48,525 $0 No reduced.
TOTAL, 10% Reduction Options $48,525 $48,525 $0
Agency 535 2/9/2015 10 Section 7 Low-level Radioactive Waste Disposal Compact Commission - House Summary of 10 Percent Biennial Base Reduction Options
Agency 10% Reduction Options by Category of Reduction
Administrative - Travel 100.0%
Agency 535 2/9/2015 11
Section 1
Soil and Water Conservation Board Summary of Recommendations - House
Page VI-60 Rex Isom, Executive Director Michael Wales, LBB Analyst RECOMMENDED FUNDING BY METHOD OF FINANCING 2014-15 2016-17 Biennial % Method of Financing Base Recommended Change Change General Revenue Funds $40,674,894 $40,739,614 $64,720 0.2% GR Dedicated Funds $0 $0 $0 0.0% Total GR-Related Funds $40,674,894 $40,739,614 $64,720 0.2% Federal Funds Federal Funds $14,701,853 $23,023,725 $8,321,872 56.6% 36.1% General Other $15,365 $0 ($15,365) (100.0%) Revenue Funds All Funds $55,392,112 $63,763,339 $8,371,227 15.1% 63.9%
FY 2015 FY 2017 Biennial % Budgeted Recommended Change Change FTEs 72.1 72.1 0.0 0.0%
The bill pattern for this agency (2016-17 Recommended) represents an estimated 100% of the agency's estimated total available funds for the 2016-17 biennium.
Agency 592 2/9/2015 1 Section 1 Soil and Water Conservation Board 2016-2017 BIENNIUM TOTAL= $63.8 MILLION IN MILLIONS
ALL FUNDS GENERAL REVENUE AND FULL-TIME-EQUIVALENT POSITIONS GENERAL REVENUE-DEDICATED FUNDS
APPROPRIATED APPROPRIATED APPROPRIATED REQUESTED REQUESTED 72.1 72.1 72.1 72.1 72.1
REQUESTED REQUESTED REQUESTED REQUESTED $24.1 $24.2 $30.1 $30.2
APPROPRIATED APPROPRIATED APPROPRIATED APPROPRIATED $26.3 $26.3 $20.3 $20.3
APPROPRIATED 2015 $20.0 2016 APPROPRIATED $14.0 2017
$21.2 $27.0 $28.4 $34.9 $28.9 $15.2 $20.3 $20.4 $20.4 $20.4 67.9 69.9 72.1 72.1 72.1 EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Agency 592 2/9/2015 2 Section 2 Soil and Water Conservation Board Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments (Optional)
PROGRAM MANAGEMENT & ASSISTANCE A.1.1 $10,223,642 $9,745,524 ($478,118) (4.7%) The decrease is predominately due to a federal grant in FY 2014 associated with nonpoint source pollution abatement not available in 2016-17, partially offset by the annualization of salary increases. FLOOD CONTROL DAMS A.2.1 $16,806,230 $25,832,585 $9,026,355 53.7% An additional $13.0 million in federal funding was made available in September of 2014. The agency reports $2.0 million will be spent in FY 2015 and the remaining $11.0 million will be available in 2016-17, accounting for the increase of $9.0 million. Total, Goal A, SOIL & WATER CONSERVATION ASSIST. $27,029,872 $35,578,109 $8,548,237 31.6%
STATEWIDE MANAGEMENT PLAN B.1.1 $14,594,692 $14,594,692 $0 0.0% POLLUTION ABATEMENT PLAN B.1.2 $8,201,252 $8,014,242 ($187,010) (2.3%) The decrease is predominately due to a federal grant in FY 2014 associated with nonpoint source pollution abatement not available in 2016-17, partially offset by the annualization of salary increases. Total, Goal B, NONPOINT SOURCE POLLUTION ABATEMENT $22,795,944 $22,608,934 ($187,010) (0.8%)
WATER CONSERVATION AND ENHANCEMENT C.1.1 $4,276,826 $4,276,826 $0 0.0% Total, Goal C, WATER SUPPLY ENHANCEMENT $4,276,826 $4,276,826 $0 0.0%
INDIRECT ADMINISTRATION D.1.1 $1,289,470 $1,299,470 $10,000 0.8% Total, Goal D, INDIRECT ADMINISTRATION $1,289,470 $1,299,470 $10,000 0.8%
Grand Total, All Strategies $55,392,112 $63,763,339 $8,371,227 15.1%
Agency 592 2/9/2015 3 Section 3
Soil and Water Conservation Board Selected Fiscal and Policy Issues – House
1. Federal Funds. Recommendations include an additional $13,023,725 in federal funds in fiscal years 2015 ($2,000,000), 2016 ($8,500,000), and 2017 ($2,523,725) from the US Department of Agriculture – Natural Resources Conservation Service (NRCS) for flood control dams. This funding was not included in the agency’s request because it became available after the agency submitted its LAR. The agency will enter into contracts with local Soil and Water Conservation Districts and then request and draw down the federal funds as needed for the agreements. NRCS made these funds available around September 1, 2014 as it closed out the federal fiscal year. The funds were part of $250,000,000 in the 2014 Farm Bill, and NRCS chose to accelerate the distribution of funds to states with agencies dedicated to soil and water conservation as the end of the federal fiscal year approached. There is no expectation that funding will be available from this source in the future.
Sec3a_Agency 592.docx 2/9/2015
4 Section 4 Texas Soil and Water Conservation Board Performance Review and Policy Report Highlights - House
Savings/ Gain/ Fund Included Reports & Recommendations (Cost) (Loss) Type in Introduced Bill Action Required During Session
NO RELATED RECOMMENDATIONS
Sec4_Agency 592.xlsx 2/9/2015
5 Section 5
Soil and Water Conservation Board Rider Highlights – House
2. Capital Budget. Recommendations add capital budget rider to itemize desktop and laptop computer replacement.
10. Sunset Contingency. Recommendations add a contingency rider. The agency is under limited scope review to follow up on full Sunset review conducted in 2011.
Sec5 Rider Highlights Agency 592.docx 2/9/2015
6 Section 6 Soil and Water Conservation Board Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds Agency Exceptional Items
1. Statewide Soil and Water Conservation Implementation: Request for General Revenue to fully fund operational $ 7,579,997 $ 7,579,997 expenses for local Soil and Water Conservation Districts across the state.
Total, Items Not Included in the Recommendations $ 7,579,997 $ 7,579,997
Agency 592 2/9/2015 7 Section 7 Soil and Water Conservation Board Summary of 10 Percent Biennial Base Reduction Options - House
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Intro Bill? Loss GR/GR-D Total 1 Across the board reduction to Programs The Texas State Soil and Water Conservation Board is a small state agency with $4,054,545 $4,054,545 $0 10% No approximately 3 percent of the annual operating budget expended for Indirect Administration. Over 80 percent of the annual operating budget is expended on agency program grants and grants to soil and water conservation districts. Reductions include an approximate 16 percent across the board reduction to program grants and associated travel related costs.
TOTAL, 10% Reduction Options $4,054,545 $4,054,545 $0
Agency 592 2/9/2015 8 Section 7 Soil and Water Conservation Board Summary of 10 Percent Biennial Base Reduction Options - House
Agency 10% Reduction Options by Category of Reduction
Across the Board Reductions 100.0%
Agency 592 2/9/2015 9
Texas State Soil &Water Conservation Board PO Box 658, Temple, TX 76503 254-773-2250 www.tsswcb.texas.gov
2016/2017 Biennial Legislative Appropriations Request
Exceptional Item No. 1: Statewide Soil and Water Conservation Implementation
TOTAL EXCEPTIONAL REQUEST: $7,579,997
Local District Operations:
Texas Agriculture Code Chapter 201.026 designates the Texas State Soil and Water conservation Board (TSSWCB) as the lead agency in the state for activity relating to abating agricultural and silvicultural nonpoint source pollution. The State Board provides funding to local soil and water conservation districts (SWCDs) who through a voluntary and cooperative relationship with landowners / operators, implement land management practices for nonpoint source pollution abatement.
The practices are implemented through management plans developed jointly by landowners / operators and local soil and water conservation districts. These voluntary efforts assist the State and landowners / operators in preventing regulatory enforcement actions from federal agencies relating to nonpoint source pollution.
Soil and water conservation districts do not have taxing authority and are funded through local donations and state appropriations. Operating costs identified by the State’s 216 soil and water conservation districts statewide (primarily one in each county) exceed current state appropriations and anticipated local income from donations by $5,579,997 for the biennium.
In Exceptional Item No. 1, the TSSWCB is requesting an additional $5,579,997 for the upcoming biennium, and that it be appropriated in Strategy A.1.1 of the agency’s bill pattern, and that the TSSWCB be given the flexibility to determine how to distribute the funds among the local SWCDs for operations to be specified in administrative rule.
Water Supply Enhancement Program:
Under Texas Agriculture Code, Chapter 203, the State Board implements a Water Supply Enhancement Program through soil and water conservation districts. This program works with landowners / operators to voluntarily remove brush in all areas of the state where brush is contributing to a substantial water conservation problem and thus increasing state water yield.
In Exceptional Item No. 1, the TSSWCB is requesting an additional $2,000,000 for the upcoming biennium, and that it be appropriated in Strategy C.1.1 of the agency’s bill pattern, for ongoing and upcoming water supply enhancement projects implemented through local soil and water conservation districts.
CONTACT: Rex Isom, Executive Director, (806) 438-0577 TEXAS STATE SOIL AND WATER CONSERVATION BOARD Overall Budget Summary 2016 2017 2016 HB1/SB1 2017 HB1/SB1 Exceptional Exceptional Method of Financing: General Revenue Fund $20,369,807 $20,369,807 $3,742,861 $3,837,136 Federal Funds $14,500,000 $8,523,725 Total, Method of Financing $34,869,807 $28,893,532 $3,742,861 $3,837,136 A. Goal: SOIL & WATER CONSERVATION ASSISTANCE Strategy A.1.1 - SOIL AND WATER CONSERVATION ASSISTANCE Local Soil and Water Conservation District Operations (Matching Funds, Conservation Implementation Assistance, Mileage and Per Diem, Public Education and Information). $4,872,762 $4,872,762 $2,742,861 $2,837,136 Strategy A.2.1 - FLOOD CONTROL DAMS State General Revenue Grants to Local Soil and Water Conservation Districts and other Local Political Subdivisions for Operation, Maintenance, Repair, and Rehabilitation of Flood Control Dams. $7,404,430 $7,404,430 Federal Funds for Flood Control Dam Rehabilitation from Contracts with the USDA-Natural Resources Conservation Service. $8,500,000 $2,523,725 Total, Goal A: $20,777,192 $14,800,917 $2,742,861 $2,837,136 B. Goal: NONPOINT SOURCE POLLUTION ABATEMENT Strategy B.1.1 - STATEWIDE MANAGEMENT PLAN State General Revenue Grants to Local Soil and Water Conservation Districts, Universities, River Authorities, and Other Applicants for Water Quality - Education, Demonstration, Research, Implementation of Conservation Practices, and Monitoring Projects. $1,297,346 $1,297,346 Federal Funds from the EPA Clean Water Act, Section 319(h) Nonpoint Source Grant Program for Education, Demonstration, Implementation, and Water Quality Assessment Projects. $6,000,000 $6,000,000 Strategy B.1.2 - Water Quality Management Plan Program Development of Water Quality Management Plans on Agricultural and Silvicultural Lands to Abate Nonpoint Source Water Quality Pollution. $3,600,303 $3,600,303 Development of Water Quality Management Plans on Poultry Facilities. $406,818 $406,818 Total, Goal B: $11,304,467 $11,304,467 C. Goal: WATER SUPPLY ENHANCEMENT Strategy C.1.1 – Water Supply Enhancement Program (Brush Control) Development of Water Supply Enhancement Plans in Areas of the State Where Water Conservation has been Idenitifed as a Need. $2,138,413 $2,138,413 $1,000,000 $1,000,000 Total, Goal C: $2,138,413 $2,138,413 $1,000,000 $1,000,000 D. Goal: INDIRECT ADMINISTRATION Strategy D.1.1 – Indirect Administration $649,735 $649,735 Total, Goal D: $649,735 $649,735 Grand Total, SOIL AND WATER CONSERVATION BOARD $34,869,807 $28,893,532 $3,742,861 $3,837,136 ↓Biennium ↓↓Biennium ↓ $63,763,339 $7,579,997 TEXAS STATE SOIL & WATER CONSERVATION BOARD
AGENCY OVERVIEW
It is the mission of the Texas State Soil and Water Conservation Board, working in conjunction with local soil and water conservation districts, to encourage the wise and productive use of natural resources. It is our goal to ensure the availability of those resources for future generations so that all Texans’ present and future needs can be met in a manner that promotes a clean, healthy environment and strong economic growth.
THE STATE BOARD AGENCY RESPONSIBILITIES The agency is governed by a seven member board of directors. The agency is responsible for numerous natural resource con- Five of the board members are elected by delegates from each servation efforts, the most prominent of which is serving as of five regions of the state’s 216 local soil and water conserva- the lead state agency for the prevention, management, and tion districts. Since the conclusion of the 78th Legislative Ses- abatement of nonpoint source pollution resulting from agricul- sion, two members are to be appointed by the Governor. tural and silvicultural activities. As a result the majority of the agency’s programs and services aim to improve and protect water quality, although the TSSWCB is also responsible for assisting landowners with water conservation. Other respon- sibilities include the prevention of soil erosion, control of floods, maintaining the navigability of waterways, the preser- vation of wildlife, protection of public lands, and providing information to landowners regarding the jurisdictions of the TSSWCB and the Texas Commission on Environmental Qual- ity (TCEQ) related to nonpoint source pollution. The
TSSWCB has no regulatory functions; all of the agency’s pro-
grams and services are voluntary in nature.
AGENCY STAFF & OFFICE LOCATIONS
State Headquarters
The TSSWCB is headquartered in Temple, Texas. From this
location, the Executive Director administers the State’s overall
soil and water conservation program. Temple is home to the
agency’s accounting, human resources, inter-agency commu-
nications, special projects, public information/education, non-
point source grants, and technical nonpoint source pollution prevention functions. Area I Scott Buckles, Stratford
Area II Marty H. Graham, Rock Springs Program Offices Area III José Dodier, Jr., Zapata Seven other locations serve as program offices for the Area IV Jerry D. Nichols, Nacogdoches TSSWCB. These include Water Quality Management Plan Area V Barry Mahler, Iowa Park Program offices in Dublin, Hale Center, Harlingen, Mount Gov. Appt Larry D. Jacobs, Montgomery Pleasant, San Angelo, and Wharton. The Water Supply En- Gov. Appt Joe Ward, Telephone hancement Program Office is located in San Angelo, and an office was recently opened in Nacogdoches to specifically assist the poultry industry’s participation in the Water Quality Management Plan Program.
EXECUTIVE DIRECTOR Field Representatives Rex Isom The agency employs field representatives throughout the state P.O. Box 658, Temple TX 76503 that serve as program liaisons between the TSSWCB and the State’s 216 local soil and water conservation districts. Office (254) 773-2250
P.O. Box 658, Temple, TX, 76503 • 254-773-2250 • Fax 254-773-3311 • http://www.tsswcb.texas.gov vation, protect water quality, and manage invasive species. In WATER QUALITY MANAGEMENT PLANS (WQMPS) order to help meet the State’s critical water conservation needs The main conservation planning program the TSSWCB ad- and ensure availability of water supplies, in 2011 the 82nd ministers is the Water Quality Management Plan (WQMP) Texas Legislature established the Water Supply Enhancement Program. This program comes from Senate Bill 503 of the Program (WSEP) administered by the TSSWCB, with the 73rd Legislative Session in 1993. This program is adminis- purpose of increasing available surface and ground water tered through a partnership between the 216 soil and water through the selective control of brush species that are detri- conservation districts in Texas and the TSSWCB. It is a vol- mental to water conservation (e.g., juniper, mesquite, untary program that emphasizes implementation of the man- saltcedar). The TSSWCB collaborates with SWCDs, and oth- agement practices contained within the United States Depart- er local, regional, state, and federal agencies to identify water- ment of Agriculture – Natural Resources Conservation Ser- sheds across the state where it is feasible to implement brush vice’s (NRCS) Field Office Technical Guide. Landowners control in order to enhance water supplies. The TSSWCB uses may apply for cost-share assistance through this program. The a competitive grant process to rank feasible projects and allo- cost-share funding for this program is available through annu- cate WSEP grant funds, giving priority to projects that balance al appropriations from the Texas Legislature. In 2001 the 77th the most critical water conservation need of municipal water Texas Legislature passed Senate Bill 1339, which required user groups with the highest projected water yield from brush poultry facilities in Texas to operate in accordance with a control. WQMP certified by the TSSCWB.
SOIL & WATER CONSERVATION GRANTS TOTAL MAXIMUM DAILY LOADS Section §303(d) of the 1972 Federal Clean Water Act requires Conservation Implementation Grants all states to compile a list of water bodies that do not meet Funding is allocated from the TSSWCB to 216 soil and water their designated uses and then to develop total maximum daily conservation districts for the purpose of financing their efforts loads (TMDLs) for the particular pollutant that is causing the to provide conservation implementation assistance to agricul- impairment. Following the development of a total maximum tural producers. daily load, a state approved implementation plan is developed prescribing the measures needed to restore the polluted water Conservation Matching-Fund Grants bodies. In general, the TCEQ is the lead agency for protecting Funding is allocated from the TSSWCB to 216 soil and water Texas’ water quality. However, because the TSSWCB is the conservation districts on a dollar for dollar matching basis. To lead agency for the state's agricultural and silvicultural pro- receive funding under this program, a soil and water conserva- gram, the TCEQ shares the responsibility for developing and tion district must raise funds from sources other than the State implementing certain TMDLs with the TSSWCB. or earnings from State funds.
§319(h) NONPOINT SOURCE GRANTS FLOOD CONTROL PROGRAM In compliance with Section 319(h) of the Clean Water Act, the More than 2,000 floodwater retarding structures, or dams, United States Environmental Protection Agency provides have been built over the last 60 years within the State of Tex- funding to the TSSWCB to implement activities that result in as. The primary purpose of the structures is to protect lives progress in achieving Congress' goal of controlling and abat- and property by reducing the velocity of floodwaters, and ing nonpoint source pollution. Because the TSSWCB is the thereby releasing flows at a safer rate. These are earthen dams lead agency for the state's agricultural and silvicultural pro- that exist on private property, and were designed and con- gram, the TSSWCB administers the Section 319(h) funds un- structed by the United States Department of Agriculture - Nat- der the Texas Statewide Nonpoint Source Management Pro- ural Resources Conservation Service (USDA-NRCS). They gram. Through watershed protection plans, the TSSWCB were built with the understanding that the private property develops and implements management strategies with local owner would provide the land, the federal government would stakeholders to improve water quality across the state. provide the technical design expertise and the funding to con- struct them, and then units of local government would be re- sponsible for maintaining them into the future. The soil and WATER SUPPLY ENHANCEMENT PROGRAM water conservation district is one of the local political subdivi- sions in each case. Due to the passage of time and difficulty Scarcity and competition for water have made sound water in raising adequate funds locally, many sponsors approached planning and management increasingly important. With Tex- the Texas Legislature with their concerns over the amount of as’ population expected to grow by 82% in the next 50 years, needed operation and maintenance (O&M) and repairs. In the availability of water supplies is essential for not only the recognition that these dams will continue to serve as a critical Texans of today but also for those of tomorrow. Noxious protection for our state's infrastructure, private property, and brush, detrimental to water conservation, has invaded millions lives, the Legislature began appropriating funds to TSSWCB of acres of rangeland and riparian areas in Texas, reducing or for grants to local SWCDs to assist in conducting in 2010 for eliminating stream flow and aquifer recharge through intercep- these activities. When available, the TSSWCB uses these tion of rainfall and increased evapotranspiration. Brush control funds to leverage federal rehabilitation funds from the USDA- has the potential to enhance water yield, improve soil conser- NRCS.
P.O. Box 658, Temple, TX, 76503 • 254-773-2250 • Fax 254-773-3311 • http://www.tsswcb.texas.gov Section 1
Water Development Board Summary of Recommendations - House
Page VI-63 Kevin Patteson, Executive Administrator Tom Lambert, LBB Analyst RECOMMENDED FUNDING BY METHOD OF FINANCING 2014-15 2016-17 Biennial % Method of Financing Base Recommended Change Change General Revenue Funds $156,100,858 $137,112,758 ($18,988,100) (12.2%) GR Dedicated Funds $0 $0 $0 0.0% Total GR-Related Funds $156,100,858 $137,112,758 ($18,988,100) (12.2%)
Other General Federal Funds $15,988,237 $16,095,584 $107,347 0.7% 44.8% Revenue Other $2,126,310,309 $124,305,380 ($2,002,004,929) (94.2%) Funds 49.4% All Funds $2,298,399,404 $277,513,722 ($2,020,885,682) (87.9%)
Federal Funds 5.8% FY 2015 FY 2017 Biennial % Budgeted Recommended Change Change FTEs 325.1 325.1 0.0 0.0%
Note: Amounts represent combined totals for the Water Development Board (Agency 580) and Debt Service Payments for Non Self-Supporting G.O. Water Bonds which have previously been inlcuded in separate bill patterns. In addition, amounts shown previously as appropriations and expenditures out of the State Participation Account are not included in the amounts above. (See Selected Fiscal and Policy Issues - House, No. 3.)
The bill pattern for this agency (2016-17 Recommended) represents an estimated 6.0% of the agency's estimated total available funds for the 2016-17 biennium.
Agency 580 2/9/2015 1 Section 1 Water Development Board 2016-2017 BIENNIUM TOTAL= $277.5 MILLION IN MILLIONS
ALL FUNDS GENERAL REVENUE AND FULL-TIME-EQUIVALENT POSITIONS GENERAL REVENUE-DEDICATED FUNDS APPROPRIATED 370.4
APPROPRIATED $2,163.7 APPROPRIATED REQUESTED REQUESTED REQUESTED 325.1 325.1 325.1 $86.2 APPROPRIATED 312.8 APPROPRIATED $80.9 APPROPRIATED $76.4 REQUESTED $74.8 APPROPRIATED $68.7
2015 2016 2017
APPROPRIATED $161.7
APPROPRIATED $159.7
REQUESTED REQUESTED $155.1 $144.6
$59.8 $82.2 $73.9 $70.9 $66.2 $130.5 $2,155.7 $142.7 $140.7 $136.8 280.0 277.3 325.1 325.1 325.1 EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Note: Amounts shown previously as appropriations and expenditures out of the State Participation Bond Payment Account are not included in the amounts above. (See Selected Fiscal and Policy Issues - House, 1b.) For fiscal year 2013, All Funds Expended amounts were less than Appropriated amounts in 2013 mainly as a result of Federal Funds receipts for the National Flood Insurance Program (NFIP) being $26.1 million less than anticipated and General Revenue debt service requirements being $7.5 million less than anticipated. For fiscal years 2014 and 2015, All Funds expended/budgeted amounts are also less than appropriated amounts mainly as a result of Federal Funds receipts for NFIP being expected to be $20 million less per fiscal year than originally anticipated. The FTE vacancies in 2013 were a result of a reduction in force implemented in fical year 2012 and continued through the 2012–13 biennium. The agency then reduced its requested FTE levels for 2014-15, resulting in a significant drop in the FTE cap between 2012-13 and 2014-15.
Agency 580 2/9/2015 2 Section 2 Water Development Board Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
ENVIRONMENTAL IMPACT INFORMATION A.1.1 $3,755,762 $3,583,690 ($172,072) (4.6%) Recommendations include a decrease $0.2 million in All Funds resulting from: a) a $0.1 million decrease in Federal Funds attributable to a one-time Basic and Applied Scientific Resarch Grant in fiscal year 2014; and b) a $0.1 million decrease in Interagency Contracts (Other Funds) attributable to a border drainage study with the General Land Office in 2014-15 that did not continue into 2016-17. WATER RESOURCES DATA A.1.2 $5,560,600 $5,298,482 ($262,118) (4.7%) Recommendations include a decrease of $0.3 million in All Funds, mainly attributable to a decrease of $0.2 million in Appropriated Receipts (Other Funds) reflecting the one-time receipt of hydrosurvey fees, which is not expected to continue in future years. AUTO INFO COLLECT., MAINT. & DISSEM A.1.3 $4,464,116 $4,717,664 $253,548 5.7% Recommendations include an increase of $0.3 million in All Funds consisting of the following: a) a decrease of $0.1 million in General Revenue reflecting an agency reorganization in 2014 which resulted in funding shifting to other strategies in subsequent years to reflect actual operating costs; b) an increase of $0.4 million in Federal Funds reflecting additional funds being drawn down from Clean Water State Revolving Fund (CWSRF) and Drinking Water State Revolving Fund (DWSRF) grants to cover biennialized costs of the 2014-15 salary increase; c) a decrease of $0.1 million in Interagency Contracts for one-time funding received from with Department of Emergency Management in 2014, which is not expected in future years; and d) an increase of $0.1 million in Appropriated Receipts resulting from the reallocation of Texas Water Resources Finance Authority (TWRFA) funds to cover biennialized costs of the 2014-15 salary increase. TECHNICAL ASSISTANCE & MODELING A.2.1 $6,228,315 $5,639,280 ($589,035) (9.5%) Recommendations include a decrease of $0.6 million in All Funds consisting of: a) an increase of $0.7 million in General Revenue reflecting an agency reorganization in 2014 which resulted in funding shifting to this strategy in subsequent years to reflect actual operating costs;
Agency 580 2/9/2015 3 Section 2 Water Development Board Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments b) a decrease of $1.2 million out of the Water Assistance Fund No. 480 (Other Funds) reflecting actual costs for groundwater availability monitoring costs in fiscal year 2014, which are not anticipated in subsequent years; and c) a decrease of $0.1 million in Appropriated Receipts reflecting fee collections for groundwater availability modeling in the High Plains in 2014, which is not expected in subsequent years. WATER RESOURCES PLANNING A.2.2 $19,137,848 $14,542,110 ($4,595,738) (24.0%) Recommendations include a decrease of $4.6 million in All Funds consisting of the following: a) a decrease of $3.5 million out of the General Revenue Fund, including a decrease of $3.0 million for one-time funding in 2014-15 for demonstration projects for near-term water supplies that is not recommended in 2016-17 (See Selected Fiscal and Policy Issue - House, 4a and Rider Highlights -House, former Rider 22), and a decrease of $0.5 million reflecting an agency reorganization in 2014 which resulted in funding moving to other strategies in subsequent years to reflect actual operating costs; b) a decrease of $0.8 million out of the Water Assistance Fund No. 480, reflecting actual payments for regional planning and research and planning grant contracts, the 2016-17 cost for which is unknown; and c) a decrease of $0.2 million out of Appropriated Receipts, also reflecting the agency reorganization in 2014 which resulted in funding shifting to other strategies in subsequent years to reflect actual operating costs. WATER CONSERVATION EDUCATION & ASST A.3.1 $10,381,831 $3,779,892 ($6,601,939) (63.6%) Recommendations include a decrease of $6.6 million in All Funds reflecting two one-time projects in 2014-15, the funding for which is not recommended for 2016- 17: a) a decrease of $3.0 million in General Revenue for one-time funding of agricultural water conservation meter grants to groundwater conservation districts in 2014-15 (See Selected Fiscal and Policy Issues - House, 4b and Rider Highlights - House, former Rider 25); and b) a decrease of $3.6 million out of the Agricultural Water Conservation Fund No. 358 (Other Funds) for one-time grants to the Texas Alliance for Water Conservation Demonstration Project in 2014-15 (See Selected Fiscal and Policy Issue - House, No. 4d and Rider Highlights - House, former Rider 22).
Agency 580 2/9/2015 4 Section 2 Water Development Board Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments PERFORM COMM ASSIST RELATED TO NFIP A.4.1 $7,113,943 $3,792,834 ($3,321,109) (46.7%) Recommendations include an All Funds decrease of $3.3 million consisting of: a) a decrease of $0.2 million in General Revenue reflecting an agency reorganization in 2014, which resulted in funding shifting to other strategies in subsequent years to reflect actual operating costs; b) a decrease of $0.5 million in Federal Funds reflecing higher funding from the Federal Emergency Management Agency (FEMA) for community assistance grants in fiscal year 2014, which are expected to be lower in subsequent years; and c) a decrease of $2.5 million in Interagency Contracts reflecting one-time funding from the General Land Office for a border area drainage study in 2014 that is not expected in subsequent years. Total, Goal A, WATER RESOURCE PLANNING $56,642,415 $41,353,952 ($15,288,463) (27.0%)
STATE & FEDERAL FIN ASSIST PROGRAM B.1.1 $2,025,307,152 $20,175,906 ($2,005,131,246) (99.0%) Recommendations include an All Funds decrease of $2,005.1 million including: a) a decrease of $5.1 million in General Revenue Funds consisting of a decrease of $5.9 million for one-time funding for a border security/levee project during fiscal years 2013 through 2015 (See Selected Fiscal and Policy Issue - House, No. 4c), and an increase of $0.7 million to biennialize the cost of additional FTEs added in fiscal year 2015 to implement the provisions of House Bill 4, Eighty-Third Legislature, Regular Session (See Selected Fiscal and Policy Issue - House, No. b)2); a and decrease of $2.0 billion out of the Economic Stabilization Fund, reflecting a one-time appropriation to the State Water Implmentation Fund for Texas (SWIFT) in fiscal year 2014 (See Selected Fiscal and Policy Issue - House, No. 1c). ECONOMICALLY DISTRESSED AREAS B.1.2 $859,438 $811,694 ($47,744) (5.6%) Total, Goal B, WATER PROJECT FINANCING $2,026,166,590 $20,987,600 ($2,005,178,990) (99.0%)
EDAP DEBT SERVICE C.1.1 $52,926,949 $55,918,043 $2,991,094 5.7% Recommended debt service for Economically Distressed Areas Program (EDAP) bonds represents an increase of $3.0 million out of the General Revenue to accommodate two full years of payments on $50 million in EDAP bonds issued during 2014-15, as authorized by the 83rd Legislature.
Agency 580 2/9/2015 5 Section 2 Water Development Board Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments WIF DEBT SERVICE C.1.2 $145,149,248 $141,975,883 ($3,173,365) (2.2%) Recommended debt service for Water Infrastructure Fund (WIF) bonds represents a decrease of $10.4 million in General Revenue Funds resulting from a greater portions of outstanding debt becoming self-supporting; likewise, a recommended increase of $7.2 million in Water Infrastructure Fund payments reflects an increase in revenue available from borrower payments to cover debt service. Overall expenditures debt service for WIF bonds decreased by $3.2 million as a result of no recent bond issuances. (See also Fiscal and Policy Issues - House, No. 6.) Total, Goal C, NON-SELF SUPPORTING G O DEBT SVC $198,076,197 $197,893,926 ($182,271) (0.1%)
CENTRAL ADMINISTRATION D.1.1 $9,405,809 $9,491,050 $85,241 0.9% Recommendations include an increase of $0.1 million in All Funds consisting of: a) an increase of $0.2 million in Federal Funds reflecting additional funds being drawn down from Clean Water State Revolving Fund (CWSRF) and Drinking Water State Revolving Fund (DWSRF) grants to cover biennialized costs of the 2014-15 salary increase; and b) a decrease of $0.1 million in Appropriated Receipts reflecting the agency reorganization in 2014 which resulted in funding shifting to other strategies in subsequent years to reflect actual operating costs. INFORMATION RESOURCES D.1.2 $6,681,700 $6,211,474 ($470,226) (7.0%) Recommendations include a decrease of $0.5 million in All Funds consisting of: a) a decrease of $0.3 million out of the General Revenue comprised of a decrease of $0.6 million in funding for two Capital Budget projects completed in 2014-15--Water Information Integration and Dissemination Project and Texas Water Information System Expansion (TxWISE) (see also Selected Fiscal and Policy Issues - House, No. 5), and an increase of $0.3 million reflecting the agency reorganization in 2014 which resulted in funding shifting to this strategy in subsequent years to reflect actual operating costs; and b) a decrease of $0.1 million in Appropriated Receipts reflecting the agency reorganization in 2014 which resulted in funding shifting to other strategies in subsequent years to reflect actual operating costs. OTHER SUPPORT SERVICES D.1.3 $1,426,693 $1,575,720 $149,027 10.4% Recommendations include an increase of $0.1 million in Federal Funds reflecting the agency reorganization in 2014 which resulted in funding shifting to this strategy in subsequent years to reflect actual operating costs.
Agency 580 2/9/2015 6 Section 2 Water Development Board Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
Total, Goal D, INDIRECT ADMINISTRATION $17,514,202 $17,278,244 ($235,958) (1.3%)
Grand Total, All Strategies $2,298,399,404 $277,513,722 ($2,020,885,682) (87.9%)
Agency 580 2/9/2015 7 Section 3
Water Development Board Selected Fiscal and Policy Issues - House
1. State Water Implementation Fund for Texas (SWIFT) and State Water Implementation Revenue Fund for Texas (SWIRFT) Appropriations Status—The Eighty-Third Legislature, Regular Session, enacted three pieces of legislation relating to State Water Plan water infrastructure financing: a. House Bill 4—statutorily established the State Water Implementation Fund for Texas (SWIFT) and the State Water Implementation Revenue Fund for Texas (SWIRFT). b. Senate Joint Resolution 1—Approved by voters November 5, 2013—created the SWIFT and SWIRFT and constitutionally dedicated money in the funds. c. House Bill 1025—appropriated $2 billion from the Economic Stabilization Fund to the Water Development Board for SWIFT and SWIRFT. The SWIFT funds are constitutionally dedicated, and the Texas Constitution, Article III, § 49-d-12 (a) calls for the funds to be “administered, without further appropriation, by the Texas Water Development Board.” Thus, no additional appropriations to the TWDB are expected to be required in the future, except for those that relate to administrative costs of the agency. The agency intends to fund $700 million in State Water Plan projects each fiscal year of the 2016-17 biennium using SWIRFT funding. The SWIRFT funding will provide leveraging, bond enhancement, interest rate discounts, loan payment deferrals to borrowers, and/or extended loan terms. However the funding for these projects and funds for related debt service requirements are not included in 2016-17 recommended appropriations to the agency.
2. Biennialization of Funding for State Water Plan FTEs added during the 2014-15 Biennium—Recommendations provide for $0.7 million out of the General Revenue Fund for 12.3 FTE positions that were added for fiscal year 2015 only through a contingency rider for House Bill 4, Eighty- Third Legislature, Regular Session, for the implementation of the state water plan. Because funding for these FTEs was provided for only one fiscal year of the biennium, additional General Revenue is needed to continue these positions through the full 2016-17 biennium.
3. Debt Service Payments Bill Pattern Merged with Main Agency Bill Pattern. a. New Goal C within Agency Bill Pattern—Recommendations include the Economically Distressed Areas Program (EDAP) and Water Infrastructure Fund (WIF) Debt Service strategies previously located in the Debt Service Payments for G.O. Water Bonds bill pattern as strategies within the agency’s main bill pattern within a new Goal C, Non-Self-Supporting G.O. Debt Service. Current Goal C, Indirect Administration, has been re-numbered as Goal D. Recommendations also include moving all riders in the Debt Service Payments bill pattern to the main agency bill pattern, and moving all existing performance measures associated with the Debt Service Payments bill pattern into the main agency bill pattern. Having only one bill pattern for the agency is recommended to simplify the agency’s budget process and have all information relating to the agency’s budget contained in one location. b. State Participation Debt Service Strategy Deleted—Recommendations provide for the deletion of a previous Strategy A.1.2, State Participation Debt Service, that existed in the Debt Service Payments bill pattern because the State Participation Program has been self-supporting (requiring no General Revenue for debt service) and is expected to continue to be self- supporting in the future. Removing this strategy treats the repayment of the State Participation program bonds like other self- supporting bond programs the agency administers, such as the Waster Development Fund. This recommendation results the removal of appropriations out of the State Participation Bond Program Account from the General Appropriations Act. The
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8 Section 3
State Participation Bond Program Account is not a real account within the State Treasury, according to the Comptroller of Public Accounts. The account was simply used for informational purposes in the Debt Service Payments bill pattern and within agency Legislative Appropriations Requests and Operating Budgets. This recommendation also provides for the deletion of the Payment of Debt Service—State Participation Bonds rider (former Rider 2 in the former Debt Service Payments for Non-Self Supporting G.O. Water Bonds bill pattern). c. New Informational Listing Rider Relating to Self-Supporting Debt—Recommendations include adding a new rider (See Rider Highlights - House, New Rider No. 3) that lists the estimated debt service of the agency’s self-supporting bond programs for the 2016-17 biennium for the following programs: i. Water Development Fund II (DFund II) ii. State Participation Program iii. Agricultural Water Conservation Bonds iv. Water Infrastructure Fund (WIF) Bonds v. State Water Implementation Revenue Fund for Texas (SWIRFT) vi. Clean Water State Revolving Fund (CWSRF) vii. Drinking Water State Revolving Fund (DWSRF) This recommendation is intended to increase the amount of information available in the agency’s bill pattern for funds that are not appropriated to the agency in the General Appropriations Act (GAA). It also would serve to retain information for the State Participation Program, since the strategy relating to debt service for that program is recommended to be deleted, and it will provide information on the expected use of SWIRFT, a self-supporting financial assistance program created by the Eighty- Third Legislature, Regular Session, for which debt service is not recommended to be included in the GAA.
4. 2014-15 General Revenue One-Time Funding Requested by the Agency for Items Not included in 2016-17 Recommendations— Recommendations provide for a decrease of $12.0 million in General Revenue Funds and $3.6 million in Other Funds compared to 2014-15 levels. The following one-time projects included in the agency’s base request were within the agency’s Approved General Revenue/General Revenue- Dedicated Limit for 2016-17. a. Demonstration Projects for Near-Term Alternative Water Supplies—Recommendations provide for a decrease of $3.0 million out of the General Revenue Fund for demonstration projects authorized in former Rider 21 (See Rider Highlights - House). As a demonstration grant project to create new water supplies or increase water availability through innovative storage approaches, it is assumed that future funding should be determined based on the results of current demonstration projects and not by continuing to fund new demonstration projects. b. Agricultural Water Conservation Meters—Recommendations provide for a decrease of $3.0 million out of the General Revenue Fund that was provided for a grant program for agricultural water meters in certain groundwater conservation districts (See also, Rider Highlights - House, former Rider 25). c. Border Security/Levee Project Funding—Recommendations provide for a decrease of $6.0 million in General Revenue Funds because of a one-time appropriation of 2013 unexpended balances in House Bill 1025, Section 54, Eighty-Third Legislature, Regular Session, that was provided for loans or grants to political subdivisions in border counties for border security or levee projects during 2014-15. d. One-Time Funding for Texas Alliance for Water Conservation Demonstration Project—Recommendations provide for a decrease of $3.6 million in funding out of the Agricultural Water Conservation Fund No. 358 (Other Funds) for a one-time water conservation grant program (See also Rider Highlights - House, former Rider 22). The agency did not request this funding to continue for 2016-17.
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9 Section 3
5. New Capital Budget Projects Not Included In 2016-17 Recommendations—Recommendations provide for a decrease of $610,000 out of the General Revenue Fund, reflecting the completion of two Acquisition of Information Resource Technologies Capital Budget projects in 2014-15— Texas Water Information System Expansion (TxWISE) and Water Information Integration and Dissemination Project. The agency had proposed two new Acquisition of Information Resource Technologies Capital Budget projects for 2016-17 totaling $610,000 which are not included in the recommendations: a. Contract Administration Server—Web Enable—Recommendations do not provide for $195,000 out of the General Revenue Fund that the agency requested to use to replace an existing contract management system with a web-based application using new technology to increase reporting and response time because the agency failed to provide sufficient justification for the new project. b. Inspection and Field Support—Web Enable—Recommendations do not provide for $415,000 out of the General Revenue Fund that the agency requested to replace an existing database and application used by the agency to monitor projects for which the agency has provided loan assistance with a web-based application using newer technology. The agency failed to provide sufficient justification for this proposed new project.
6. Biennialization of 2014-15 Salary Increase—Recommendations provide for an increase of $276,373 in General Revenue funds to biennialize the 2014-15 salary increase.
7. Debt Service Payments for Non-Self-Supporting G.O. Water Bonds-- The agency's baseline General Revenue request for Debt Service Payments was $7.3 million less than the 2014-15 expended/budgeted amount for debt service. A decrease of $10.4 million in needed General Revenue for Water Infrastructure Fund (WIF) debt service in 2016-17, due to the increased availability of WIF repayments, more than offset the $3.1 million increase in need for General Revenue for Economically Distressed Areas (EDAP) debt service, which resulted from the issuance of $50 million in additional EDAP bonds during 2014-15.
8. Unexpended Balance Authority Within the Biennium. Recommendations limit certain budget flexibility for the Water Development Board by modifying Rider 18, Unexpended Balances Within the Biennium—Debt Service, to limit the agency’s authority to carry forward unexpended balances from the first fiscal year of the biennium to the second solely to debt service payments for Non Self-Supporting General Obligation Bonds. (See Rider Recommendations – House, No. 18.) Article IX, Section 14.05, Unexpended Balance Authority Between Fiscal Years within the Same Biennium, allows the agency to carry forward balances between fiscal years with Legislative Budget Board approval.
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10 Section 3 Water Development Board Summary of Federal Funds (Estimated 2014) - House TOTAL = $7.9M
Capitalization Grants for Drinking Water State Revolving Fund $2.7M or 34%
Cooperating Technical Partners (CTP) $1.2M or 15% Capitalization Grants for Clean Water State Revolving Fund $3.5M or 44%
Community Assistance Program State Support Services Element $0.2M or 2% Severe Loss Repetitive Program $0.1M or 2% All Others $0.2M or 3%
Agency 580 11 Section 3 Water Development Board Significant Federal Funds Changes - House
2014-15 2016-17 Recommended CFDA No. Program Name Base Recommended Over/(Under) Base Comments (Optional)
12.300.000 Basic and Applied Scientific Research $62,423 $0 ($62,423) 12.301.000 Basic and Applied Scientific Research $20,000 $0 ($20,000) 66.202.000 Congressionally Mandated Projects $155,380 $153,400 ($1,980) 66.458.000 Capitalization Grants for Clean Water State Revolving Fund $7,211,003 $7,461,986 $250,983 66.468.000 Capitalization Grants for Drinking Water State Revolving Fund $5,925,381 $6,411,840 $486,459 97.023.000 Community Assistance Program State Support Services Element $353,980 $363,586 $9,606 97.029.000 Flood Mitigation Assistance $140,190 $142,504 $2,314 97.045.000 Cooperating Technical Partners (CTP) $1,820,392 $1,226,000 ($594,392) 97.110.000 Severe Loss Repetitive Program $299,488 $336,268 $36,780
Agency 580 12 Section 3
Water Development Board Performance Measure Highlights - House
Expended Estimated Budgeted Recommended Recommended 2013 2014 2015 2016 2017 • Number of Bay and Estuary Freshwater 8.0 7.5 7.5 11.2 10.6 Inflow Studies Completed
Measure Explanation:
• Number of Responses to Requests for 178,733 186,261 150,000 150,000 150,000 TNRIS-Related Information
Measure Explanation:
• Sum of Projct Costs Receiving SWIRFT 0 0 0 $700,000,000 $700,000,000 Funding Commitments
Measure Explanation:
• Number of Communities with Active 434 512 512 476 476 Financial Assistance Agreements
The agency reports that although there will be more financial assitance made to communities during the 2016-17 biennium, reflecting the availability of funding from SWIFT/SWIRFT, the average project size is expected to be larger than in the 2014-15 biennium, resulting in a decrease in the actual number of communities receiving assistance.
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13 Section 4 Texas Water Development Board Performance Review and Policy Report Highlights - House
Savings/ Gain/ Fund Included Reports & Recommendations (Cost) (Loss) Type in Introduced Bill Action Required During Session
NO RELATED RECOMMENDATIONS
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14 Section 5
Water Development Board Rider Highlights - House
2. Capital Budget. Recommendations include: a. renaming the PC and Printer Replacement project to the PC Replacement project to reflect that the agency will only be purchasing personal computers during the 2016-17 biennium and increased biennial funding for the PC Replacement project of $167,196 in General Revenue; b. a decrease in biennial funding of $986,427 in General Revenue for the Data Center Consolidation (DCS) project, reflecting current DCS cost estimates; and c. elimination of the Office Space Retrofit, Texas Water Information Expansion (TxWISE), and Water Information Integration, and Dissemination Project, and Online Loan Application Capital Budget projects because the projects will be completed by the end of fiscal year 2015. (See also Selected Fiscal and Policy Issues – House, No. 5.)
3. (New) Informational Rider for Estimated Outstanding Debt and Debt Service Requirements for Self-Supporting Bonds. Recommendations add a new rider providing an estimate for existing outstanding debt and debt service requirements for the 2016-17 biennium for self-supporting bonds issued by the agency. The new rider is intended to increase the amount of information available in the agency’s bill pattern for funds that are not appropriated to the agency in the General Appropriations Act (GAA). It also would serve to retain information for the State Participation program, since the strategy relating to debt service for the program is recommended to be deleted, and it will provide information on the expected use of SWIRFT, a self-supporting financial assistance program created by the Eighty-third Legislature, Regular Session, for which debt service is not recommended to be included in the GAA. (See Selected and Fiscal Policy Issues – House, No. 3c.)
4. Authorized Transfers and Appropriations: Water Assistance Fund. Recommendations combine former Rider 3, Transfer Authorized, with former Rider 5, Appropriation from the Water Assistance Fund, which both pertain to the Water Assistance Fund No. 480, contain duplicative provisions, and require rider language modification to clarify the following: a. the agency has authority to transfer up to $2,268,995 in General Revenue each fiscal year to the Water Assistance Fund No. 480 for regional planning grants, as authorized in Water Code, § 15.4061, and the agency is authorized to transfer these funds to other accounts, as authorized in Water Code, § 15.011, as needed to support the regional planning process; b. the agency’s appropriations in Strategy A.2.2, Water Resources Planning, totaling $1,295,861 each fiscal year are from Water Assistance Fund No. 480 balances and shall be used for making grants to regional planning groups pursuant to Water Code, § 15.4061; and c. the agency is appropriated any additional receipts accruing to the Water Assistance Fund No. 480 during the biennium beginning on September 1, 2015, for purposes authorized in Water Code, Chapter 15.
5. (former Rider 4) Safe Drinking Water Act State Revolving Fund. Recommendations include nonsubtantive rider language modifications for clarification.
Sec 5 Rider Highlights_Agency 580.docx 2/9/2015
15 Section 5
5. (former) Appropriation: Water Assistance Fund. Recommendations delete the rider because many of its provisions were duplicative with former Rider 3, and recommendations combine both provisions in Rider 4, Authorized Transfers and Appropriations for the Water Development Board.
7. Appropriation: Agricultural Water Conservation Fund. Recommendations modify rider language and amounts to reflect the biennialization of the 2014-15 salary increase and add strategy references.
10. Use of Texas Water Resources Finance Authority (TWRFA) Funds. Recommendations modify the amount listed in rider that reflects the amounts of TWRFA funds being used in the various strategies cited in the rider. The agency reports that the amount listed in the 2014-15 General Appropriations Act, $2,368,801 for the amount of funds derived from cash flows and $5,773 for the amount reserved for operating costs were not accurate, and that the correct numbers are $4,287,678 and $1,317, respectively. This rider modification will not change the amount of TWRFA funds contained within the agency’s budget for 2016-17 from 2014-15 levels.
18. Unexpended Balances Within the Biennium—Debt Service (formerly Unexpended Balances within the Biennium). Recommendations modify rider language to remove general unexpended balance authority between fiscal years within the biennium, except for appropriations in Goal C, for Non Self-Supporting General Obligation Bond Debt Service, for which the unexpended balance authority is retained. (See Selected Fiscal and Policy Issue – House, No. 8.)
20. (Former) Financing of Water and Wastewater Connections and Plumbing Improvements in Economically Distressed Areas. Recommendations delete the rider because the provisions of the rider, which relate to political subdivisions receiving financial assistance to be able to use the funds for specific types of water and sewer connections, also exist in Water Code, § 17.9225.
21. (Moved) Payment of Debt Service for Economically Distressed Area Bonds. Recommendations move the rider from the Debt Service Payments for Non-Self Supporting G.O. Water Bonds bill pattern to the main agency bill pattern, consistent with the recommendation to merge the two bill patterns. (See Selected Fiscal and Policy Issues – House, No. 3a.)
21. (Former) Demonstration Projects for Near-Term Alternative Water Supplies. Recommendations delete the rider to reflect a decrease of $3.0 million General Revenue funding for a one-time demonstration grant project to create new water supplies or increase water availability through innovative storage approaches that occurred in 2014-15. (See Select Policy Issues – House, No. 4a.)
22. (Moved) Payment of Debt Service for Water Infrastructure Bonds. Recommendations move rider from the Debt Service Payments for Non-Self Supporting G.O. Water Bonds bill pattern to the main agency bill pattern, consistent with the recommendation to merge the two bill patterns. (See Selected Fiscal and Policy Issues – House, No. 3a.)
Sec 5 Rider Highlights_Agency 580.docx 2/9/2015
16 Section 5
22. (Former) Texas Alliance for Water Conservation Demonstration Project. Recommendations delete the rider to reflect a decrease of $3.6 million in funding out of the Agricultural Water Conservation Fund No. 358 (Other Funds) for a one-time grant program for water conservation projects that occurred in 2014-15. (See Selected Fiscal and Policy Issues – House, No. 4d.)
23. (Moved) Bond Issuance Authority by Program. Recommendations move the rider from the Debt Service Payments for Non-Self Supporting G.O. Water Bonds bill pattern to the main agency bill pattern, consistent with the recommendation to merge the two bill patterns. (See Selected Fiscal and Policy Issue – House, No. 3a.) In addition, language is added to the rider for consistency with LBB reporting requirements for automatic approval.
24. (Moved) Bond Issuance and Payment of Debt Service. Recommendations move the rider from the Debt Service Payments for Non-Self Supporting G.O. Water Bonds bill pattern to the main agency bill pattern, consistent with the recommendation to merge the two bill patterns. In addition, delete language referring to the State Participation program, consistent with the recommendation to delete the State Participation Debt Service strategy and remove self-supporting bond repayment funds in the State participation Bond Payment Account from the agency’s budget. (See Selected Fiscal and Policy Issues – House, No. 3a and 3b.) In addition, language is added to the rider for consistency with LBB reporting requirements for automatic approval.
24. (Former) Water Resources Planning. Recommendations delete the rider which directed additional funds and FTEs to consolidate reporting requirements related to the Water Use Survey, Water Loss Report, and the Water Conservation Report prepared by the agency annually. The funding and FTEs have been incorporated into the agency’s baseline budget, and the rider is no longer necessary.
25. (Former) Agricultural Water Conservation Monitoring. Recommendations delete the rider to reflect a decrease of $3.0 million in General Revenue for one-time funding that was transferred to the Agricultural Water Conservation Fund No. 358 during 2014-15 for grants for the purchase of agricultural water meters in certain groundwater conservation districts. (See Selected fiscal and Policy Issues – House, No. 4b.)
26. (Former) Contingency for Senate Joint Resolution 1 and House Bill 4. Recommendations delete the contingency rider that appropriated $2 billion out of the Economic Stabilization Fund for the implementation of House Bill 4. House Bill 4 was enacted by the Eighty-third Legislature, Regular Session, and Senate Joint Resolution 1 was approved by voters in November, 2013. The $2 billion appropriated to the agency was transferred to the SWIFT and is being managed by the Texas Treasury Safekeeping Trust.
Sec 5 Rider Highlights_Agency 580.docx 2/9/2015
17 Section 6 Water Development Board Items not Included in Recommendations - House 2016-17 Biennial Total GR & GR- Dedicated All Funds
Agency Exceptional Items--In Agency Priority Order 1. EDAP Debt Service--The request would provide funding for debt service on an additional $50 million in General $ 6,041,509 $ 6,041,509 Obligation Economically Distressed Areas (EDAP) bonds the agency is requesting to issue during the 2016-17 biennium. The bond proceeds would be used to provide financial assistance to local governments for water and wastewater projects in low-income areas of the state.
2. Secure Long Term funding for Existing Operations-- Requested General Revenue funding to replace funding $ 5,235,710 throughout the agency's strategies that currently is paid out of the Texas Water Resource Finance Authority (TWRFA). The agency reports that TWRFA proceeds, which derive from bond repayments, are a dwindling resource, and the agency expects that, if no General Revenue is provided to replace TWRFA funding, the agency will have to make significant cuts to FTEs and other operating costs by fiscal year 2020. If the exceptional item were funded, the agency's Appropriated Receipts amount would be reduced by the same amount, thus the net impact of this item to All Funds is zero.
Total, Items Not Included in the Recommendations $ 11,277,219 $ 6,041,509
Agency 580 2/9/2015 18 Section 7 Water Development Board Summary of 10 Percent Biennial Base Reduction Options - House
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Intro Bill? Loss GR/GR-D Total 1 Demonstration Projects for Near Term The primary impact of these budget reductions is that less funding will be available $1,500,000 $1,500,000 None $0 50% Yes Alternative Water Supplies to fund the construction of water reuse, aquifer storage and recovery type demonstration projects focused on the creation of new water supplies and innovative storage approaches. Such projects are targeted to deliver measurable increases in water supplies to help meet various competing demands for water. 2 Water Conservation Education Grants The primary impact of these budget reductions is that less funding will be provided $500,000 $500,000 None $0 50% No to assist water conservation groups with water education programs. The state funding also encourages local matching funds, increasing investment in conservation education. 3 Agricultural Water Conservation The primary impact of these budget reductions is that less financial assistance will $965,893 $965,893 None $0 32% Yes Monitoring Grants be provided to encourage the use of metering by Groundwater Conservation Districts across the state. Metering assists in the monitoring of agricultural water use and a tool to tracking success of water conservation efforts. 4 Demonstration Projects for Near Term The primary impact of these budget reductions is that less funding will be available $1,500,000 $1,500,000 None $0 50% Yes Alternative Water Supplies to fund the construction of water reuse, aquifer storage and recovery type demonstration projects focused on the creation of new water supplies and innovative storage approaches. Such projects are targeted to deliver measurable increases in water supplies to help meet various competing demands for water. 5 Water Conservation Education Grants The primary impact of these budget reductions is that less funding will be provided $500,000 $500,000 None $0 50% No to assist water conservation groups with water education programs. The state funding also encourages local matching funds, increasing investment in conservation education. 6 Agricultural Water Conservation The primary impact of these budget reductions is that less financial assistance will $965,894 $965,894 None $0 32% Yes Monitoring Grants be provided to encourage the use of metering by Groundwater Conservation Districts across the state. Metering assists in the monitoring of agricultural water use and a tool to tracking success of water conservation efforts.
TOTAL, 10% Reduction Options $5,931,787 $5,931,787 $0
Agency 580 2/9/2015 19 Section 7 Water Development Board Summary of 10 Percent Biennial Base Reduction Options - House
Agency 10% Reduction Options by Category of Reduction
Programs - Grant/Loan/Pass-through Programs - Service Reductions Reductions (Contracted) 50.0% 50.0%
Agency 580 2/9/2015 20 Texas Water Development Board (TWDB)
House Appropriations Committee Hearing
February 16, 2015
BIENNIAL TOTALS – FY 16-17 Agency LAR Method Of Finance Request HB 1 Difference General Revenue $ 160,950,260 $ 137,112,758 $ (23,837,502) Federal Funds $ 16,095,584 $ 16,095,584 $ - Other Funds $ 113,451,338 $ 113,451,338 $ - Appropriated Receipts $ 4,607,914 $ 9,843,624 $ 5,235,710 Interagency Contracts $ 1,010,418 $ 1,010,418 $ - Total $ 296,115,514 $ 277,513,722 $ (18,601,792)
FTEs 325.1 325.1 0
TWDB’S REVISED REQUEST
Agency’s proposed revisions maintain the amounts in HB 1 and add funding for two exceptional items.
• Fund the exceptional item for EDAP Debt Service . $6,041,509 (General Revenue) o Provide General Revenue to fund debt service to support issuance of up to $50 million in general obligation bonds for EDAP o $142 million of estimated future needs represents continuing demand for this program
• Fund the exceptional Item to Secure Long Term Funding of TWDB Operations . $5,235,710 (General Revenue) o Provide General Revenue to replace funding currently provided through annual draws on assets of the Texas Water Resources Finance Authority (TWRFA) for FTEs and reoccurring operating costs o TWRFA is currently paying costs for 25FTE, statutorily required grant programs and other ongoing costs o Depletion of TWRFA assets by 2020 if alternative funding source is not provided
APPROVE $50 MILLION IN BOND ISSUANCE AUTHORITY for EDAP and RELATED DEBT SERVICE FOR 2016-17
As a first priority, we request that funding in the amount of $6,041,509 of general revenues be provided to support the debt service on $50 million in general obligation bond issuance for the Economically Distressed Areas Program (EDAP).
2014-15 EDAP funding requests totaled over $114 million in financial assistance, more than $64 million above the $50 million authorized to be issued in 2014-15, which represented an additional eight projects. We consider this and the other long-term financial planning from the local entities estimating future costs of constructing EDAP projects of $142 million to be strong indicators of the continuing demand for this program.
We are in the process of issuing the $50 million of EDAP bonds approved for 2014-15, after which there remains slightly over $101 million in EDAP constitutional authority.
SECURE FUNDING FOR LONG TERM OPERATIONS/TWRFA Funding Swap
A stable fund source is important to us as we look to the future and the management of the SWIFT and other programs. The agency is currently relying upon a $2.6 million per year contribution from the Texas Water Resources Finance Authority or TWRFA to fund salaries of approximately 25 FTEs and other ongoing operational costs. The TWRFA contributions to TWDB are recorded in the appropriations bill as appropriated receipts.
TWRFA was created to purchase loans from the TWDB and did so in the late 1980s. Currently approximately $27 million in surplus balances exist in the TWRFA accounts that are legally available to TWDB for a variety of uses.
TWDB seeks to limit the use of TWRFA funds to statutorily required grants and research projects. Doing so would require an additional allocation of $5.2 million in general revenues across the 2016-17 biennium to replace the TWRFA funding for the 25 FTEs and other ongoing operations.
TWRFA funds are not a sustainable fund source for ongoing costs and such funds are depleting as annual draws continue. TWRFA’s assets are estimated to withstand annual draws at current levels out to approximately fiscal year 2020 at the latest.
No later than 2020, if no swap is made, TWDB would face the need for significant cuts to FTEs, grant programs, professional fees and services and other operating expenses. TWDB’s core operations and programs would suffer substantially and be challenged to continue with the loss of such resources. Section 1
Board of Chiropractic Examiners Summary of Recommendations - House
Page VIII-5 Yvette Yarbrough, Executive Director Trevor Whitney, LBB Analyst RECOMMENDED FUNDING BY METHOD OF FINANCING 2014-15 2016-17 Biennial % Method of Financing Base Recommended Change Change Other General Revenue Funds $1,470,213 $1,476,681 $6,468 0.4% 6.0% GR Dedicated Funds $0 $0 $0 0.0% Total GR-Related Funds $1,470,213 $1,476,681 $6,468 0.4%
Federal Funds $0 $0 $0 0.0% Other $95,000 $95,000 $0 0.0%
All Funds $1,565,213 $1,571,681 $6,468 0.4%
General Revenue Funds 94.0% FY 2015 FY 2017 Biennial % Budgeted Recommended Change Change FTEs 14.0 14.0 0.0 0.0%
The bill pattern for this agency (2016-17 Recommended) represents an estimated 100% of the agency's estimated total available funds for the 2016-17 biennium.
Agency 508 2/9/2015 1 Section 1 Board of Chiropractic Examiners 2016-2017 BIENNIUM TOTAL= $1.6 MILLION
ALL FUNDS GENERAL REVENUE FUNDS FULL-TIME-EQUIVALENT POSITIONS
REQUESTED REQUESTED $825,480 $823,075 APPROPRIATED APPROPRIATED APPROPRIATED REQUESTED REQUESTED $788,622 REQUESTED REQUESTED APPROPRIATED 14.0 14.0 14.0 14.0 $758,343 $777,980 $775,575 APPROPRIATED $741,122 APPROPRIATED $710,843
APPROPRIATED $611,539 APPROPRIATED APPROPRIATED 11.0 $571,539 2015 2016 2017
$623,110 $794,512 $770,701 $787,043 $784,638 $575,502 $747,012 $723,201 $739,543 $737,138 10.6 11.0 14.0 14.0 14.0 EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED EXPENDED ESTIMATED BUDGETED RECOMMENDED RECOMMENDED
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Agency 508 2/9/2015 2 Section 2 Board of Chiropractic Examiners Summary of Recommendations - House, By Method of Finance -- ALL FUNDS
2014-15 2016-17 Biennial % Strategy/Goal Base Recommended Change Change Comments
LICENSING SYSTEM A.1.1 $297,000 $271,525 ($25,475) (8.6%) TEXAS.GOV A.1.2 $59,700 $59,700 $0 0.0% ENFORCEMENT A.2.1 $711,539 $740,398 $28,859 4.1% Total, Goal A, ENSURE PUBLIC PROTECTION $1,068,239 $1,071,623 $3,384 0.3%
LICENSING INDIRECT ADMINISTRATION B.1.1 $323,650 $325,468 $1,818 0.6% ENFORCEMENT INDIRECT ADMINISTRATION B.1.2 $173,324 $174,590 $1,266 0.7% Total, Goal B, INDIRECT ADMINISTRATION $496,974 $500,058 $3,084 0.6%
Grand Total, All Strategies $1,565,213 $1,571,681 $6,468 0.4% Recommendations include an increase in General Revenue of $6,468 to biennialize salaries at the 2015 level.
Agency 508 2/9/2015 3 Section 3
Board of Chiropractic Examiners Selected Fiscal and Policy Issues - House
NONE
Sec3a_Agency 508_house.docx 2/9/2015
4 Section 4 Board of Chiropractic Examiners Performance Review and Policy Report Highlights - House
Savings/ Gain/ Fund Included Reports & Recommendations (Cost) (Loss) Type in Introduced Bill Action Required During Session
NO RELATED RECOMMENDATIONS
Sec4_Agency 508.xlsx 2/9/2015
5 Section 5
Board of Chiropractic Examiners Rider Highlights - House
3. Contingent Revenue. Recommendations delete this rider. Additional revenues were generated and appropriations were increased during the 2014-2015 biennium for the purposes of this rider. These amounts were included in the agency’s 2014-2015 base.
Sec5_Agency 508_house.docx 2/9/2015
6 Section 6 Board of Chiropractic Examiners Items not Included in Recommendations - House 2016-17 Biennial Total Agency Exceptional Items - In Agency Priority Order GR & GR- Dedicated All Funds 1. General Revenue to provide merit salary increases for select employees. $ 56,804 $ 56,804 2. General Revenue to purchase additional usage licenses for CLEAR investigation system. $ 11,880 $ 11,880 3. General Revenue to participate in the FBI Next Generation Identification program. The system also referred to $ 8,190 $ 8,190 as "rapback" will allow the agency to upgrade its background checks on licensees.
Total, Items Not Included in the Recommendations $ 76,874 $ 76,874
Agency 508 2/9/2015 7 Section 7 Board of Chiropractic Examiners Summary of 10 Percent Biennial Base Reduction Options - House
Biennial Reduction Amounts Priority Item Description/Impact GR and GR- All Funds FTEs Potential Reduction as Included in Dedicated Revenue % of Program Intro Bill? Loss GR/GR-D Total 1 Licensing- Eliminate Contract for Reductions would require the agency to discontinue the contracting of a third party $2,599 $2,599 $0 0.5% N Creating Budget Request to create the agency's biennial budget request. Enforcement- Eliminate Contract for Reductions would require the agency to discontinue the contracting of a third party $2,000 $2,000 $0 0.3% N Creating Budget Request to create the agency's biennial budget request. 2 Licensing- Eliminate Merit Salary Reductions would require the agency to eliminate all merit salary increases. $9,000 $9,000 $0 1.8% N Increases Enforcement- Eliminate Merit Salary Reductions would require the agency to eliminate all merit salary increases. $9,000 $9,000 $0 1.4% N Increases 3 Licensing- Eliminate Part-Time FTE Reductions would require the agency to eliminate 0.5 FTE in Administration. $50,000 $50,000 0.5 $0 10.0% N Position 4 Enforcement- Reduce Travel Expenses Reductions would require the agency to eliminate travel reimbursements for Board $18,598 $18,598 $0 2.9% N members and reduce investigator travel. 5 Enforcement- Reduce 0.5 FTE to Part- Reductions would require the agency to reduce 0.5 FTE investigator to part-time $27,000 $27,000 0.5 $0 4.2% N Time status. 6 Enforcement- Reduce 0.5 FTE to Part- Reductions would require the agency to reduce 0.5 FTE investigator to part-time $27,000 $27,000 0.5 $0 4.2% N Time status.
TOTAL, 10% Reduction Options $145,197 $145,197 1.5 $0
Agency 508 2/9/2015 8 Section 7 Board of Chiropractic Examiners Summary of 10 Percent Biennial Base Reduction Options - House
Agency 10% Reduction Options by Category of Reduction
Programs - Service Reductions (Contracted) 3.2%
Programs - Service Reductions (Other) 25.2%
Programs - Service Reductions (FTEs- Layoffs) 71.6%
Agency 508 2/9/2015 9
TEXAS BOARD OF CHIROPRACTIC EXAMINERS
(AGENCY 508)
WRITTEN MATERIALS
ACCOMPANYING TESTIMONY FOR
HOUSE COMMITTEE ON APPROPRIATIONS
FEBRUARY 16, 2015
Presented by:
Yvette Yarbrough, J.D. Executive Director
Dr. Cynthia Tays, D.C. President
Page 1 of 13
February 16, 2015
The Honorable John Otto, Chair The Honorable Sylvestor Turner, Vice-Chair Honorable Members of the House Appropriations Committee and Subcommittee
Mr. Chair, Mr. Vice-Chair, and Representatives:
The Texas Board of Chiropractic Examiners (“the agency”) has made many improvements during the 2014-15 biennium, especially in the areas of enforcement and agency management. Using the funding approved for the 2014-15 biennium, we stood up a field investigation program for the first time in the agency’s history and are now able to inspect chiropractic facilities as part of a complaint investigation. Also, we have made significant progress in improving the agency’s policies and procedures, due in great part to the addition of an Executive Assistant to our team.
The agency is asking for approval of three exceptional items for the 2016-17 biennium in order to continue improvements in meeting the requirements of the Chiropractic Act (Section 201 of the Occupations Code). The estimated total cost to General Revenue for all three exceptional items is $76,874 for the biennium. (See Table 1 below.)
Page 2 of 13
TBCE 2016-2017 LAR Requests
2014 2015 2016 2017
Total Total Base Exceptl Exceptl Exceptl Exceptl Exceptl Exceptl Exceptl Exceptl Approp Approp Request Item 1 Item 2 Item 3 Items Base Req Item 1 Item 2 Item 3 Items General Revenue $ 741,122 $ 710,843 $ 739,543 $ 28,402 $ 5,940 $ 4,095 $ 38,437 $ 737,138 $ 28,402 $ 5,940 $ 4,095 $ 38,437 Approp Receipts $ 47,500 $ 47,500 $ 47,500 $ 47,500
TOTAL $ 788,622 $ 758,343 $ 787,043 $ 825,480 $ 784,638 $ 823,075
TABLE 1
Exceptional Items are described in detail below (in order of priority).
• Exceptional Item 1 – Compensation of Key Personnel: The agency’s Director of Licensure, Director of Enforcement and Chief Financial Officer are three key positions within the agency’s staff that ensure a successful and efficient agency. These three individuals have been with the agency long enough to possess institutional knowledge that is invaluable to agency operations. However, their pay is not proportionate with their levels of responsibility and their job performance. Currently, none of these three key personnel earn even the midpoint salary for their position classifications. If any of these employees leave the agency, recruiting a replacement who will operate at a level commensurate with the current employee’s performance will be difficult with the current salary level.
Page 3 of 13
Current staff salaries for the agencies are as follows:
Current Proposed Position Classification Salary Minimum Midpoint Salary Increase Exec Assistant Exec Assistant B17 - 0160 $ 38,000.00 $ 36,976.00 $ 46,976.00 General Counsel General Counsel II B25 - 3521 $ 65,932.80 $ 63,104.00 $ 82,036.00 Legal Assistant Legal Assistant II B17 - 3574 $ 36,976.00 $ 36,976.00 $ 46,976.00 Director of Lic & Perm Spec Licensure IV A18 - 0173 $ 41,412.00 $ 39,521.00 $ 51,199.00 $ 51,000.00 $ 9,588.00 Licensing Assistant Admin Asst III A13 - 0153 $ 34,680.12 $ 26,332.00 $ 33,339.00 Licensing Assistant (Part Time) Admin Asst III A13 - 0153 $ 26,310.84 Director of Enforcement Investigator VI B22 - 1355 $ 51,614.04 $ 51,614.00 $ 67,017.00 $ 61,000.00 $ 9,385.96 Investigator Investigator IV B18 - 1353 $ 39,780.00 $ 39,521.00 $ 51,199.00 Investigator Investigator III B16 - 1352 $ 36,000.00 $ 34,918.00 $ 44,352.00 Investigator Investigator III B16 - 1352 $ 36,000.00 $ 34,918.00 $ 49,590.00 Enforcement Asst Admin Asst IV A15 - 0156 $ 37,342.32 $ 32,976.00 $ 41,876.00 CFO Accountant V B21 - 1020 $ 49,572.00 $ 48,278.00 $ 62,653.00 $ 59,000.00 $ 9,428.00 Programmer Programmer IV B23 - 0243 $ 58,752.00 $ 55,184.00 $ 71,686.00 TOTAL $ 28,401.96 TABLE 2
As can be seen from the data above, salaries in the agency are not extravagant.
The agency’s Director of Licensure runs a flawless licensing program. Initial licenses and facility registrations are issued within one week of the time a completed application is received by the
Page 4 of 13 agency. License and registration renewals are processed the next business day. During FY 2014 alone, she processed nearly 6,000 license renewals and nearly 4,000 facility registration renewals, in addition to issuing nearly 300 new licenses and nearly 500 new facility registrations. However, presently, she earns only $41,412, over $9,500 less than the midpoint salary for her position classification (A18).
The agency’s Director of Enforcement manages a busy enforcement section, dealing with the investigation of and resolution of over 300 complaints per year along with implementing the new field investigation program. He manages the investigation of complaints from the time they are received in the agency office, reviews all investigative reports, presents cases to the Board’s Enforcement Committee, oversees the Informal Conference program, monitors cases pending resolution and refers cases for litigation to the agency General Counsel, testifies at the State Office of Administrative Hearings, and monitors completed disciplinary actions. Currently the Director of Enforcement earns only $51,614, the absolute minimum salary for his position classification (B22) and over $15,000 less than the midpoint salary for B22.
The agency’s Chief Financial Officer is the agency’s first full-time accounting staff member since 2006, when the agency was in financial shambles. At that time, the agency was unable to pay all its bills because it had not provided justification for certain contingency appropriations to be transferred from the Comptroller’s office. The agency previously had been placed on prepayment audit status by the Comptroller, meaning that all vouchers had to be approved in advance by the Comptroller’s office before they could be paid. Finally, the agency’s payroll and those bills that were being paid were being processed by the staff of the Board of Nursing because the agency lacked the necessary expertise. A part-time accountant was hired in 2006, which helped the agency’s financial situation some. However, when the CFO was hired in 2009, the agency’s
Page 5 of 13
financial situation improved drastically. The agency now meticulously ensures that all appropriations are spent correctly and that all revenue is collected. The agency underwent an audit by the Comptroller’s Office (travel, payroll, and purchasing/procurement) in August 2012. Due to the CFO’s diligent work, only minimal findings were recorded. However, she currently earns only $49,572, over $13,000 less than the midpoint salary for her position classification (B21).
If any of these three individuals were to leave the agency for a higher-paying job, agency operations would greatly suffer. In addition, attracting competent replacements for any of these three individuals at the current salary levels will be very difficult.
The solution to this problem is for the agency to be given the funding to provide these three key personnel a merit pay increase, thereby bringing their salaries closer to the midpoint salary for their position classifications.
• Exceptional Item 2 – Investigative Tool (CLEAR) Usage: Our agency currently utilizes an investigative tool called CLEAR (a Thomson Reuters program), which is a computer-based research platform used by many state agencies’ investigators. CLEAR requires a separate account for each user, tracked by IP address. Currently, we only have funding for one CLEAR account, used by the Director of Enforcement; our current agency cost is approximately $165 per month for the one account. This exceptional item requests funding for the agency’s three other investigators to hold CLEAR accounts.
• Exceptional Item 3 – FBI Rapback Usage: Currently, all applicants for licensure are fingerprinted during their application process, and a background check is run using those fingerprints. After licensure, if a licensee who was previously fingerprinted is arrested in Texas, we
Page 6 of 13 receive notification from the Texas Department of Public Safety (DPS). Unfortunately, if a licensee is arrested in another state, we receive no notification. This leads to instances where Texas chiropractors were arrested, convicted, or incarcerated in other states without the agency’s knowledge until a reporter calls asking for a comment or asking why that doctor still has an active license in Texas.
Thankfully these instances are the exception and not the rule, but the agency would like the ability to be notified of licensee arrests in states other than Texas so that we can fully protect the citizens of Texas. The FBI offers a “rapback” program at a cost of $13.00 per applicant. With roughly 315 applicants per year, the cost of this exceptional item is approximately $4,095 per year.
Page 7 of 13
Analysis of GR Revenues & Expenditures for FY 2011 – FY 2017
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2016 FY 2017 Actual Actual Actual Actual Bud LBB Base LBB Base Incl Excp Incl Excp General Revenue Source: Licenses & Fees $1,276,059 $1,320,876 $1,509,866 $1,546,114 $1,518,969 $1,520,150 $1,520,150 $1,520,150 $1,520,150 Texas Online Fees $32,215 $33,168 $34,268 $34,733 $29,850 $29,850 $29,850 $29,850 $29,850 Sub-Total Without $200 $1,308,274 $1,354,044 $1,544,134 $1,580,847 $1,548,819 $1,550,000 $1,550,000 $1,550,000 $1,550,000 Professional Fee
$200 Professional Fee $1,076,800 $1,090,800 $1,111,000 $1,117,400 $1,111,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000
Total All General Revenue $2,385,074 $2,444,844 $2,655,134 $2,698,247 $2,659,819 $2,650,000 $2,650,000 $2,650,000 $2,650,000
Agency Expenditures from General Revenue: (Est) Operations (w/o benefits) $546,668 $540,464 $541,234 $706,389 $693,351 $709,693 $707,288 $748,130 $745,725 Texas Online Payments $32,215 $33,168 $34,268 $34,733 $29,850 $29,850 $29,850 $29,850 $29,850 Total GR Expenditures $578,883 $573,632 $575,502 $741,122 $723,201 $739,543 $737,138 $777,980 $775,575
Expenditures as a Percent of GR Generated Without the 44.25% 42.36% 37.27% 46.88% 46.69% 47.71% 47.56% 50.19% 50.04% $200 Professional Fee Expenditures as a Percent of GR Generated Including the 24.27% 23.46% 21.68% 27.47% 27.19% 27.91% 27.82% 29.36% 29.27% $200 Professional Fee
Excess Revenue to GR $729,391 $780,412 $968,632 $839,725 $825,618 $810,457 $812,862 $772,020 $774,425 Excluding $200 Prof Fee Excess Revenue to GR $1,806,191 $1,871,212 $2,079,632 $1,957,125 $1,936,618 $1,910,457 $1,912,862 $1,872,020 $1,874,425 Including $200 Prof Fee
Authorized Number of FTEs 11.0 11.0 11.0 14.0 14.0 14.0 14.0 14.0 14.0 TABLE 3
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As can be seen in Table 3, the agency has contributed around $2,000,000 to the General Revenue (GR) fund each fiscal year in excess of GR expenditures. If exceptional items were approved with no contingent revenue rider for FY 2016 and 2017, approximately $3,746,445 will still be generated for the GR fund during the biennium. Expenditures as a percentage of GR generated (with the $200 professional fee) would increase only 5% from FY 2011.
Table 3 also shows that – at the base level recommended by LBB – the agency would be allowed to spend only approximately 28% of the General Revenue it generates each year (including the $200 Professional Fee in the calculations). Funding the agency’s requested Exceptional Items would increase this percentage to only 29%.
Despite our consistent contributions to the GR fund, the agency has been required to raise licensure fees numerous times since FY 2010 in order to meet contingent revenue riders. (See Table 4.) Licensure fees for Texas chiropractors are now among the highest in the country (see Table 5), meaning that licensees cannot afford a further increase to licensure fees. The agency respectfully requests that exceptional items be funded out of GR already generated and that no contingent revenue rider be placed on the agency.
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TBCE Licensing Fee History - FY2010-present
FEE 9/8/09 - 9/11/10 9/12/10 - 10/1/12 10/2/12 - 12/25/12 12/26/12 - 12/11/13 12/12/13 - present DC initial app (incl $50 transcript $385 (incl $200 PF) $398 (incl $200 PF) No change No change $408 (incl $200 PF) verification) DC Jurisprudence Repeat Exam $335 (incl $200 PF) $348 (incl $200 PF) No change No change No change DC Initial License – Prorated $130 (incl $5 PPF) $143 (incl $5 PPF) No change No change $153 (incl $5 PPF) DC License Renewal – On Time $349 (incl $200 PF, $362 (incl $200 PF, No change No change No change $5 TX Online Fee, $1 $5 TX Online Fee, $1 PPF, $8 newsletter PPF, $8 newsletter fee) fee) DC License Renewal – Late $416.50 (incl $200 $429.50 (incl $200 No change No change No change under 90 days PF, $5 TX Online Fee, PF, $5 TX Online Fee, $1 PPF, $8 newsletter $1 PPF, $8 newsletter fee) fee) DC License Renewal – Late 90 $484 (incl $200 PF, $497 (incl $200 PF, No change No change No change days to 1 year $5 TX Online Fee, $1 $5 TX Online Fee, $1 PPF, $8 newsletter PPF, $8 newsletter fee) fee) DC License – Inactive License $0 No change No change $50 $80 Processing Fee Facility Registration – Initial $70 (incl $5 PPF) $75 (incl $5 PPF) No change No change $80 (incl $5 PPF) Registration Facility Registration Renewal – $68 (incl $2 TX $73 (incl $2 TX No change No change No change On Time Online Fee, $1 PPF) Online Fee, $1 PPF) Facility Registration Renewal – $118 (incl $2 TX $123 (incl $2 TX $125 (incl $4 TX Online No change No change Late under 90 days Online Fee, $1 PPF) Online Fee, $1 PPF) Fee, $1 PPF) Facility Registration Renewal – $168 (incl $2 TX $173 (incl $2 TX $176 (incl $5 TX Online No change No change Late 90 days to 1 year Online Fee, $1 PPF) Online Fee, $1 PPF) Fee, $1 PPF) Radiologic Technician – Initial $35 No change No change No change No change Registration Radiologic Technician Renewal $36 (incl $1 Patient No change No change No change No change Protection Fee) Continuing Education Course $165 No change No change No change $200 Approval PF = Professional Fee PPF = Patient Protection Fee TABLE 4
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Comparison of Texas Chiropractic Fees to Other State Chiropractic Boards
State License Application Fee Initial Licensure Fee License Renewal Fee TEXAS $408 – 5th Highest in US Avg $153 $362 – 3rd Highest in US Alabama $150 $50 $300 Alaska $150 $450 $450 – every two years Arizona $250 $100 $170 Arkansas $222 Incl in app fee $250 California $100 $100 $250 Colorado $300 Incl in app fee $563 – every two years Connecticut $565 n/a $565 Delaware $196 Incl in app fee $196 District of Columbia $568 Incl in app fee $300 – every two years Florida $100 $305 $355 – every two years Georgia $75 $200 $125 – every two years Hawaii $50 $318 $318 – every two years Idaho $250 Incl in app fee $100 Illinois $700 Incl in app fee $690 – every three years Indiana $100 Incl in app fee $100 – every two years Iowa $270 Incl in app fee $120 – every two years Kansas $300 Incl in app fee $330 Kentucky $350 Incl in app fee $250 Louisiana $200 $150 $200 Maine $200 $150 $100 Maryland $200 $200 $700 – every two years Massachusetts $267 Incl in app fee $135 Michigan $120 Incl in app fee $190 – every two years Minnesota $250 Incl in app fee $200 Mississippi $100 Incl in app fee $125 Missouri $200 Incl in app fee $125 – every two years Montana $300 Incl in app fee $200 Nebraska $144 Incl in app fee $144
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State License Application Fee Initial Licensure Fee License Renewal Fee Nevada $200 $225 $700 – every two years New Hampshire $300 Incl in app fee $300 – every two years New Jersey $125 $350 $350 – every two years New Mexico $350 $350 $300 New York $270 Incl in app fee $224 – every three years North Carolina $300 Incl in app fee $150 North Dakota $300 Incl in app fee $300 Ohio $250 Incl in app fee $500 – every two years Oklahoma $175 Incl in app fee $225 Oregon $197.25 $100 $350 Pennsylvania $25 $210 $210 – every two years Rhode Island $210 Incl in app fee $210 South Carolina $150 Incl in app fee $240 – every two years South Dakota $100 $200 $200 Tennessee $360 Incl in app fee $260 – every two years Utah $200 Incl in app fee $103 – every two years Vermont $200 Incl in app fee $365 – every two years Virginia $277 Incl in app fee $271 – every two years Washington $546 Incl in app fee $498 West Virginia $150 $50 $300 Wisconsin $75 $75 $170 – every two years Wyoming $500 Incl in app fee $200 TABLE 5
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End of Report
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