1. 11 The State Budget Update FY 2011 and FY 2012 AASBO September 8, 2010

2. 22 Where were we?

3. 33 Growing Populations – Including FY 2011 Estimates Current revenues = FY 2004  Since FY 2004, Arizona has added 121,500 K-12 students and more than $1.0 billion in annual costs to the K-12 system.  Since FY 2004, enrollment in State universities has increased enrollment by 18,100 students and annual General Fund costs of $393.5 million.  Since FY 2004, Corrections has added 10,800 prisoners and annual General Fund costs of $405.4 million.  Since FY 2004, AHCCCS has added 475,000 new members and annual costs of nearly $1.5 billion (General Fund). -- In calendar 2009, AHCCCS has grown by 203,000 members -- Enrollment Growth

4. 44 The Budget Solution

5. 55 The Budget Major Budget Reductions SavingsImpact  Medicaid Reform$380 MM310,500  Mental Health Reform$ 36 MM14,400  Welfare Reform$ 27 MM10,000  Childcare Limits$ 22 MM10,000  KidsCare$ 18 MM46,000  Education (FY 06 Levels)$422 MM  Employee Salary Reduction$ 45 MM  Increase Prison Bed Deficit $ 25 MM

6. 66 The Budget - Outcome

7. 77 Job Growth Through July 2010

8. 8 Consumer Confidence

9. 9 Enrollments Slowing

10. 10 Enrollments Slowing

11. 11 Total Unemployment Benefits

12. 12 Wage and Salary Stabilizing

13. 13 Revenue Growth

14. 14 Revenues Show Modest Growth

15. 15 Revenue TPT

16. 16 Risks to FY 11 Budget Health Care Reform$150 million Ballot Measures  Conservation Fund $124 million  First Things First$385 million Revenue$?

17. 17 FY 2011 Education Shortfall End of FY 2010 Shortfall Land Trust$44 million Formula$30 million FY 2011 Impact – Shifted $49 million in SFSF dollars forward, $30 million ongoing

18. 18 FY 2012 – Early Estimates Federal Cliff$800 million Medicaid Growth$150 million New Debt Service$100 million 27 th Payroll$80 million Education Growth$60 million New Spending Needs$1,190 million

19. 19 Budget Limits Approx. $4.1 billion Unprotected

20. 20 Major Non-Protected Programs Corrections $934 million Universities$890 million K-12 Additional State Aid$424 million Debt Payments $270 million K-12 Capital$250 million Community Colleges$141 million Children’s Services$140 million Judiciary $114 million

21. 21 Federal Action New Stimulus Education Funds $211 million  Applied for funds yesterday (September 7)  US DOE suggested a two week turnaround  Will be allocated based on the formula  Potential offset to K-12 formula shortfalls