Board of Directors Sheila T. Francoeur, Chair David Alukonis Michael Buckley William H. Dunlap

1. The NH State Budget Past, Present and FutureOct 17, 2012NH Center for Non-Profits Public Policy Council Board of Directors Sheila T. Francoeur, Chair David Alukonis Michael Buckley William H. Dunlap Eric Herr Richard Ober James Putnam Stephen J. Reno Stuart V. Smith, Jr. Donna Sytek Brian F. Walsh Martin L. Gross, Chair Emeritus John D. Crosier, Sr., Todd I. Selig Kimon S. Zachos Directors Emeritus “…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”

2. Major Takeaways • State spending declined over the recession. • Lion’s share of spending changes in Personnel and reductions in provider payments (with unknown impact). • Next legislative session faces same structural budgetary problems • Spending growing quicker than revenues • Low economic growth  slow revenue growth • Political will to • Cut spending? • Raise taxes? Gambling, Tobacco Tax, ???? • Additional policy issues • State business interest in long term economic development view. • Potential shortfall for 2013? • Implementation of managed care? • Revenue changes in last legislative session impacting current revenue situation • Additional expense associated with Medicaid expansions? • Stated platform by candidates to • Reinstate funding to university? • Reinstate funding to hospitals?

3. What We Did • Attempt to provide short and long term context for decisions • Analysis of Expenditure Data (2010-2012) • Analysis of HB1 and HB2 (2-13) • Meetings with Commissioners (DHHS, Environmental Services, Corrections, Administrative Services, Attorney General) • In Depth Analysis of Changes within DHHS

4. What do we actually know? Total Fund Actual Spending Spending – based on total fund state spending fell 3.7% between 2010 and 2012 4

5. 4 Major Areas of Budgetary Change • Medicaid and DSH • Pension - Retirement System • University System Funding • Personnel • Other smaller (though large in aggregate) program changes

6. Where Were the Changes Made in Spending in DHHS? Some areas in HHS saw increases (DD, Clencliff, JJ) – some saw significant reductions 6

7. Budget Reductions (10-11 to 12-13) While some of the changes reflect accounting changes (or fund reallocations), some did not: HHS elderly and Adult, NH Retirement System, and DSH changes reflected in Commissioner’s Office

8. Where Were the Changes Made in Spending in DHHS? NHCPPS Analysis of state data on expenditures and HB1 (for SFY 2013) Some increases, some decreases

9. Total DHHS ChangesIdentified in Budget Process NHCPPS Analysis of DHHS Budget Documents

10. Service Reductions Accounted for 14% of Total Changes NHCPPS Analysis of DHHS Budget Documents

11. Questions • Approximately 20% of changes in health and human services were program reductions or eliminations and eligibility changes • How many people are no longer receiving services (regardless of the source) that were receiving them before? • What is the impact of those changes short-term and long-term. • Approximately 60% of the changes involved reductions to provider payments (including DSH and other reductions). • What has been the response from the non-profit and philanthropic community to these changes?

12. What about the next biennium?

13. And What About Revenues?

14. Revenue Risk Points • Additional $26 million in potential ‘loss’ associated with other changes • NOL changes - $1m to $10 million threshold change • Loss credits for corporate taxes (BPT/BET) • Another national/international issue (Europe?) • Lawsuits  MET and Use of DSH for general fund • Long term revenue forecast models are imprecise at inflection points, often leading to conservative revenue estimates

15. Demand for Spending

16. School Age Population

18. Demand for Safety Net

19. Corrections System Growing Again?

21. Human Capital Adults with a BA or Better Per Pupil Spending 2011 8th grade NAEP Math Score 2011 8th grade NAEP Science Score Economic Creativity Patents Per Capita Venture Capital Per Capita R and D (% of GDP) Doctorates per Capita Business Base Per Capita Income High Tech Jobs as % of Total Business Birth and Death Rate Internet Usage Costs Health Care Cost Per Capita Commercial Energy Costs Per Kilowatt Housing Affordability Mature Firm Tax Burden Infrastructure State Debt per Capita Percent of bridges in trouble Transportation spending per capita Road conditions (roughness) Innovation and Costs

22. New Hampshire Scores Well

23. Translate into Public Policy

24. Questions • Questions about the role/scope/goals of state government remain. • In an era of constrained resources, have we allocated our resources in a way that maximizes the benefit to the state (as defined above)? • Economic (infrastructure, etc…) vs. Safety Net • Are there revenues on the table (e.g. gambling)? • Short term (limited, even in the case of gambling)

25. New Hampshire Center for Public Policy Studies Board of Directors Todd I. Selig, Chair David Alukonis Michael Buckley William H. Dunlap Sheila T. Francoeur Stephen Reno Stuart V. Smith, Jr. Donna Sytek Brian F. Walsh Kimon S. Zachos Martin L. Gross, Chair Emeritus John D. Crosier, Sr., Emeritus Want to learn more? • Online: nhpolicy.org • Facebook: facebook.com/nhpolicy • Twitter: @nhpublicpolicy • Our blog: policyblognh.org • (603) 226-2500 “…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.” 25