Implements savings adjustments to the state fiscal plan

Summary of provisions

Part A - Establish a Tax Penalty Forgiveness Program

Allow taxpayers with certain assessments or final determinations issued on or before December 31, 2006 to receive a discount of a percentage of interest and penalties due on those assessments or final determinations. This authorization is expected to increase the General Fund tax receipts by $250 million for State fiscal year 2009-10.

Part B - Authorize Savings in Education

* Delay effective date on mandates on school districts that are enacted by statute or regulation after the school budget vote date (third Tuesday of May) until the following school year. This proposal

is designed to allow school districts the ability to budget for any new mandates.

* Create a Gap Elimination Adjustment of $295 million in the 2009-10 school year by reducing the school aid formulas for adjustment by 1.58 percent for each school district. This school year reduction will reduce State aid by $206 million in the 2009-10 State fiscal year and $89 million in the 2010-11 State fiscal year. A Supplemental Deficit Reduction Assessment is created which reduces State funds by an additional $391 million for the 2009-10 school year. The Supplemental Deficit Reduction Assessment will be backfilled with Federal ARRA, Education Fund monies and will therefore not alter the overall level of funding received by school districts. This action will reduce State support for school aid by $274 million in the 2009-10 State fiscal year and $117 million in the 2010-11 State fiscal year. In aggregate these two actions will reduce State support for school aid by $480 million in the 2009-10 State fiscal year and $206 million in the 2010-11 State fiscal year.

* Require that each school district shall use, to the extent applicable, any unappropriated unreserved fund balance to mitigate the impact of the Gap Elimination Adjustment. In addition, any programmatic reductions undertaken by school districts after any unappropriated unreserved fund balance is fully allocated, as a result of the enactment of the Gap Elimination Adjustment shall, to the extent possible, not impact educational services to children. School districts are required to report to the Commissioner of the State Education Department, before July 1,2010 to specify all the budgetary actions taken by each school district due to the enactment of the Gap Elimination Adjustment.

* Allow school districts to have access to excess funds in the Employee Benefit Liability Reserve (EBLR) Fund after the Office of the State Comptroller (OSC) confirms this excess for each district. A school district however, could not withdraw funds in excess of the amount of the Gap Elimination Adjustment for that district. This provision would also require that OSC review EBLR funds held by school districts this school year, and file a report by July 1, 2010 with the Budget Director and Legislature regarding the amount of excess funds in these reserve funds. Each school district would be required to report to the State Education Department on the amount of funds withdrawn, and how the district had used the withdrawn funds from an EBLR.

* Increase the Chapter 1 advance by the value of the Gap Elimination Adjustment (GEA) for each district. The Chapter 1 advance allows school districts to take an accrual advance on the following school year's aid in order assist school districts to balance their budgets on an accrual basis. This proposal would increase the maximum amount of such an advance (which is now connected to the deficit reduction mid-year actions of the 1990-91 school year) to include the value of the GEA for each school district.

* Allow Contract for Excellence (C4E) school districts to reduce the required amount expended on contract activities in the 2009-2010 school year by the percentage reduction of their Gap Elimination

Adjustment. All 32 C4E school districts' would still remain in the program for the 2009-10 school year.

Part C - Reduce the Tuition Assistance Program

Authorize a 10% percent reduction in the Tuition Assistance Program (TAP) by reducing all TAP awards by $120 for the 2009-10 academic year.

Part D - Reduce State Supplemental Benefits for SSI Recipients Living in the Community

Authorize a reduction in State benefits to Supplemental Security Income (SSI) recipients living in the community.

Part E - Reduce State Financial Support for Timothy's Law

Authorize a reduction in the Timothy's Law General Fund payments, providing a savings of $19.7 million to the General Fund in 2009-10, and recurring savings thereafter.

Part F - Increase the Battery Park City Authority Contribution

Authorize the Battery Park City Authority (BPCA) to contribute $200 million to the General Fund. Additionally the bill authorizes BPCA bonds to cover a new $100 million Affordable Housing Program for the City of New York.

Part G - Authorize Savings in Medicaid

* Make statutory amendments necessary to increase hospital inpatient assessment from 0.35 percent to 0.75 percent for the period December 1, 2009 through March 11, 2011 and make this increase reimbursable under Medicaid.

* Modify the time frame associated with medication pre-fill for home care services from 8 to 15 days.

* Discontinue the 2010 Medicaid inflationary trend factor for Hospital Inpatient, Nursing Homes, Adult Day Health Care, Personal Care, Certified Home Health Agencies, the Long Term Home Health Care, and Assisted Living Programs.

* Reduce funding for rebasing payments to nursing homes and delay regional pricing until March 1, 2011.

* Allow for a reduction in HEAL NY spending.

* Include language suspending the timeframes of notice for the purpose of implementing these reductions.

Part H - Authorize Transfers and Miscellaneous Capital/Debt Provisions

* Authorize the transfer of $10 million from the Environmental Protection Fund transfer account (078.01) to the General Fund in the 2009-10 State fiscal year.

* Authorize a transfer of up to $90 million from the Mass Transportation Operating Assistance Fund (313), Metropolitan Mass Transit Operating Assistance Account (02), to the General Fund in the 2009-10 State fiscal year.

* Authorize a transfer of up to $5 million from the Dedicated Mass Transportation Trust Fund (073), non-MTA Capital Purpose Account (03), to the General Fund in the State fiscal year 2009-10.

* Increase the authorized amount of funds that can be transferred from unencumbered Special Revenue Funds and accounts to the General Fund by $375 million to achieve the across the board savings actions. This increases the authorized transfer from $200 million to $575 million in the 2009-10 State fiscal year.

* Direct the Dormitory Authority of the State of New York to transfer $26 million to the General Fund in the 2009-10 State fiscal year.

* Authorize a transfer of $2.8 million in savings achieved through reductions in the Insurance Department Account to the General Fund on or before March 31, 2010.

* Authorize the Energy Research and Development Authority (ERDA) to transfer $90 million to the General Fund from proceeds collected by ERDA from the auctioning of Regional Greenhouse Gas Initiative (RGGI) emissions allowances.

* Authorize the transfer of $29 million in order to implement the administrative cut to CUNY in the 2009-16 State fiscal year.

Statement in support

Enactment of these provisions is necessary to produce savings to ensure current year budget balance, guard against further revenue reductions and address the projected budget gap.

Budgetary implications

Enactment of this bill is necessary to reduce State spending and allow available cash resources to be used to achieve Financial Plan balance in State Fiscal year 2009-10.

Effective date

This bill takes effect immediately.