#1PRESENTATION TO THE LEGISLATURE ON ALABAMA'S FINANCIAL CONDITION Kirk Fulford Legislative Fiscal Officer Legislative Services Agency January 11, 2022#2ECONOMIC CONDITIONS 2#3Condition of U.S. Economy Labor market: Seasonally adjusted unemployment, January 2021 = 10.1 million (6.3% unemployment rate) Seasonally adjusted unemployment, November 2021 = 6.8 million (4.2% unemployment rate) - - Labor market participation rate January 2021 = 61.4% Labor market participation rate December 2021 = 61.9% - Participation rate well below pre-pandemic peak Real GDP increase of 2.3% at an annual rate in the third quarter of 2021, following an increase of 6.7% annual rate in the second quarter Resurgence of COVID-19 cases resulted in new restrictions and delays in some parts of the country Government assistance payments from forgivable loans to businesses, grants to states and local governments, and social benefits all decreased in the third quarter 3#4United States Annual Inflation Rates (2011 to 2021) Condition of U.S. Economy ■ U.S. economy continues to recover from disruptions spawned by pandemic ■ Supply shortages persist with large reductions of inventories for certain goods and services ■ Inflationary pressures continue to drive prices higher Annual inflation rate for U.S. was 6.8% for the 12 months ending November 2021 Highest rate since June 1982 8 6 4 3 2 1.7 1.5 0.8 0.7 2.3 21 2.1 2.1 1.9 1.4 6.8 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Data provided by U.S. Inflation Calculator 4#5Personal Income Growth, 1st Quarter 2021 State personal income increased at an annual rate of 59.7% in the first quarter of 2021, the second largest quarterly growth on record Nearly all states recorded double-digit growth in personal income - Alabama's personal income growth was 79.3% Transfer receipts increased by $2.3 trillion for the nation in the first quarter of 2021, accounting for almost all the growth in personal income The increase in transfer receipts included the new temporary pandemic relief payments provided by the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act and the American Rescue Plan Act (ARPA) Temporary payments included in these acts: - Direct economic payments Expanded unemployment benefits Paycheck Protection Program loans LO 5#6Personal Income Growth, 1st Quarter 2021, cont. Increase in transfer receipts primarily reflected increases in state unemployment insurance compensation and in all other transfer receipts. State unemployment insurance compensation was boosted by a temporary $300 increase in weekly benefits provided by ARPA. Increase in all other transfer receipts includes: $600 economic impact payments to individuals provided by the CRRSA Act $1400 economic impact payments provided by ARPA Dollar Change in Personal Current Transfer Receipts and Selected Components, United States, 2020:Q4-2021:Q1 (Billions of dollars) Medicaid Payments 12.0 Social Security Benefits 18.0 Medicare Benefits 19.5 State Unemployment Insurance Compensation All Other Transfer Receipts 247.5 SOURCE: U.S. Bureau of Economic Analysis (BEA) Transfer Receipts 10 6 1,960.90 2,237.9#7Alabama Economy Alabama's labor market recovery has been robust 3.1% seasonally adjusted November unemployment rate - Well below November 2020's rate of 4.7% Civilian labor force increased by 6,474 in November Number of those counted as employed rose by 5,661 to 2,149,935 November's rate represents 68,673 unemployed persons - 67,860 unemployed persons in October - 105,558 unemployed persons in November 2020 ■ Wage and salary employment increased by 48,300 ■ Wage and salary growth in many sectors - Leisure and hospitality wages hit new record high in November - General wages up $31.70 a week over the year ■ Total Real GDP for Alabama declined by 1.4% in 2020, but projected to increase by over 6% in 2021 7#814.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% Unemployment Rate Comparison 2020 vs 2021 0.00% January February March April May June 2021 July August September October November December 2020 8#9Federal COVID Grant Assistance (as of January 4, 2022) Federal Entity CARES Act Consolidated Appropriations Act American Rescue Plan Act Total USDA $80,252 $8,160 $28,078 $116,490 DOC $26,366 $4,689 $31,055 ED $557,723 $1,304,588 $2,923,403 $4,785,714 ACF $113,819 $210,862 $832,259 $1,156,940 ACL $13,883 $5,306 $22,348 CDC $20,066 $367,599 $272,221 CMS $598 $953 HRSA $24,216 $134,877 $41,537 $659,886 $1,551 $159,093 SAMHSA $42,735 $40,684 $83,419 HHS Secretary $1,585,466 $9,892 $153,232 $1,748,590 DHS $4,226 $6,224 $10,450 HUD $127,422 $64,746 $192,168 Independent Agencies $13,532 $2,565 $5,144 $21,241 DOJ $14,483 $14,483 DOL $6,838 $650 $7,293 $14,781 DOT $185,240 $209,234 $68,372 $462,846 Treasury $1,901,262 $326,359 Total $4,675,392 $2,487,950 $4,533,358 $9,097,981 $6,761,079 $16,261,323 9#10Federal COVID Non-Grant Assistance (as of January 7, 2022) Program Paycheck Protection Program (PPP) 2020 and 2021 Economic Injury Disaster Loans (EIDL) EIDL Advance SNAP Contingency Reserve Coronavirus Food Assistance Program 1 and 2 Pandemic Unemployment Assistance (PUA) Federal Pandemic Unemployment Compensation (FPUC) Amount (in thousands) $9,583,216 $3,080,413 $262,585 $408,870 $262,035 $345,536 $3,048,435 $720,714 $4,243,599 Pandemic Emergency Unemployment Compensation (PEUC) Economic Impact Payments (CARES Act) Economic Impact Payments (Consolidated Appropriations Act, 2021) Economic Impact Payments (ARP) TOTAL $2,220,979 $6,176,922 $29,753,304 10#11FY 2021 REVIEW 11#120000 General Fund Revenue Summary STATE GENERAL FUND NET RECEIPTS REVENUE SOURCE ABC Board Ad Valorem Taxes FY 2017 100,623,508 154,429,889 FY 2018 116,129,608 FY 2019 122,599,970 FY 2020 FY 2021 20 vs. 21 Difference % Difference 139,932,450 156,732,630 16,800,180 12.01% 158,296,335 164,661,076 173,618,373 182,200,777 8,582,404 4.94% Alabama Trust Fund 98,040,084 96,782,802 104,228,915 114,945,748 123,577,184 8,631,436 7.51% Cellular Telephone Tax 27,308,042 16,305,089 19,348,781 15,108,791 11,209,213 -3,899,578 -25.81% Cigarette Tax 163,313,104 154,554,657 148,920,124 148,507,163 143,374,979 -5,132,185 -3.46% Corporation Tax 75,499,764 96,063,758 95,856,519 96,428,940 98,708,994 2,280,054 2.36% Court Costs 61,860,770 59,980,037 59,708,762 54,294,712 59,644,763 5,350,051 9.85% Financial Institutions Excise Tax 27,633,823 30,925,467 39,686,474 35,261,905 90,417,436 55,155,531 156.42% Insurance Company Taxes 319,814,876 349,352,551 385,145,244 412,104,979 489,046,541 76,941,562 18.67% Interest on State Deposits 13,550,219 31,614,789 63,036,403 51,525,316 20,261,117 -31,264,199 -60.68% Leasing and Rental Tax 77,297,543 78,556,124 82,463,257 83,804,669 91,707,455 7,902,786 9.43% Lodgings Tax 49,851,286 53,633,487 58,855,436 49,980,777 63,099,773 13,118,996 26.25% Oil and Gas Taxes 33,943,405 34,108,548 32,210,824: 18,843,884 21,846,688 3,002,804 15.94% Sales Tax 102,230,664 106,979,981 111,941,527 116,094,535 143,006,190 26,911,655 23.18% Simplified Sellers Use Tax 19,635,891 29,547,077 69,877,794 138,778,497 192,743,077 53,964,580 38.89% Use Taxes 205,532,116 Other 287,165,920 222,983,267 239,178,936 304,286,072 310,490,302 246,332,118 315,546,468 347,041,697 276,585,137 30,253,019 12.28% 31,495,229 9.98% Subtotal Transfers and Reversions 56,017,857 TOTAL 1,817,730,904 1,940,099,648 2,108,210,346 2,211,109,325 2,511,203,650 33,509,955 1,919,833,771 1,996,117,505 2,151,954,704 2,299,176,801 2,562,158,281 300,094,325 13.57% 43,744,358 88,067,476 50,954,631 -37,112,845 -42.14% 262,981,480 11.44% 12#13Growth in General Fund Total Revenues Since FY 2001 Fiscal Year Amount % Change Fiscal Year 2011 Amount $1,517,092,424 % Change 6.23% 2001 $1,163,074,891 2.92% 2012 $1,683,865,195 10.99% 2002 $1,144,312,996 -1.61% 2013 $1,725,226,280 2.46% 2003 $1,315,808,303 14.99% 2014 $1,754,572,838 1.70% 2004 $1,297,452,185 -1.40% 2015 $1,851,312,710 5.51% 2005 $1,437,229,948 10.77% 2016 $1,845,326,835 -0.32% 2006 $1,656,451,339 15.25% 2017 $1,919,833,771 4.04% 2007 $1,634,581,148 -1.32% 2018 $1,996,117,505 3.97% 2008 $1,814,312,603 11.00% 2019 $2,151,954,704 7.81% 2009 $1,602,571,656 -11.67% 2020 $2,299,176,800 6.84% 2010 $1,428,088,535 -10.89% 2021 $2,562,158,281 11.44% Average Growth 2001-2019 = 3.71% Average Growth 2011-2019 = 4.71% 13#14Beginning Balance Revenues Total Available Funds EOY Condition of the SGF Fiscal Year 2021 LESS APPROPRIATIONS AND OBLIGATIONS: Enacted Appropriations Transfer to Budget Reserve Fund Supplemental Appropriations (Act 2021-443) FY 2021 446,035,109 2,562,158,281 3,008,193,390 2,406,344,012 22,297,484 31,997,985 Conditional Appropriations Released (Act 2020-168) Reversions Reappropriated Total Appropriations and Obligations Ending Balance (before reversions and adjustments) Reversions and Adjustments Ending Balance (after reversions and adjustments) 67,931,160 111,378,193 2,639,948,834 368,244,556 -121,454,795 489,699,351 14#15Education Trust Fund Revenue Summary 0000 EDUCATION TRUST FUND NET RECEIPTS 20 vs. 21 REVENUE SOURCE Beer Tax Hydroelectric Tax FY 2017 FY 2018 FY 2019 $22,231,590 473,797 $21,871,509 411,576 $22,594,709 401,355 FY 2020* $22,313,701 508,205 FY 2021 Difference % Difference $23,444,102 $1,130,400 5.07% 1,152,768 $644,562 126.83% Income Tax 3,892,525,501 4,208,436,406 4,548,470,728 4,657,167,330 5,643,876,383 $986,709,052 21.19% Insurance Premium Tax 30,993,296 Cellular Telephone Tax 15,904,023 30,993,296 10,402,545 30,993,296 11,924,391 30,993,296 9,804,426 0 -$30,993,296 -100.00% Sales Tax 1,811,657,811 1,908,442,758 2,013,911,327 2,084,997,958 7,854,607 2,320,781,188 -$1,949,820 -19.89% $235,783,230 11.31% Simplified Sellers Use Tax 6,545,297 9,849,026 23,292,598 46,259,499 64,247,692 $17,988,193 38.89% Use Taxes 158,512,611 167,292,461: 161,699,168 183,697,298 202,198,001 $18,500,703 10.07% Utility Tax 387,966,309 395,433,475 Other 146,564 Subtotal 112,311 $6,326,922,546 $6,753,279,616 $7,214,729,459 $7,423,906,759 $8,643,287,465 401,311,662 130,226 388,005,780 159,265 379,592,951 -$8,412,829 -2.17% 139,774 -$19,491 -12.24% $1,219,380,706 16.43% Transfers and Reversions $404,672 $285,763 $546,744 $664,981 $525,598 -$139,383 -20.96% TOTAL $6,327,327,218 $6,753,565,379 $7,215,276,203 $7,424,571,740 $8,643,813,063 $1,219,241,323 16.42% *Reflects real revenues. Excludes the $301,665,743 temporary transfer from the Budget Stabilization Fund and one-time $15,000,000 transfer from Advancement and Technology Fund in FY 2020. 15#16-15% 2001 -5% -10% 2002 2003 2004 0% 2005 5% 2006 2007 10% 15% 20% 2008 2009 2010 Average Growth 2001-2019 = 3.14% Average Growth 2011-2019 = 3.70% 2011 % Growth in ETF Recurring Revenues Since FY 2001 FY 2009, -11.52% 2012 2013 2014 2015 2016 2017 2018 16 2019 2020 2021 FY 2021, 16.42%#17ETF Receipts FY 2020 vs. FY 2021 FY 2020 Total Net Receipts - $7.425 Billion Total Growth % -2.90% Gross Income Tax: - - - Total $5.540 Billion (2.12%) Individual $4.936 Billion (1.94%) - Withholding - $3.847 Billion (2.62%) Corporate - $604 Million (3.63%) Gross Sales Tax - $2.523 Billion (2.22%) Simplified Sellers Use - $46.26 Million (98.60%) Use Taxes - $183.7 Million (13.61%) ■ Utility Tax - $388.0 Million (-3.32%) FY 2021 Total Net Receipts - $8.644 Billion Total Growth % - 16.42% Gross Income Tax: - Total - $6.553 Billion (18.28%) - - Individual - $5.579 Billion (13.03%) ■ Withholding - $4.135 Billion (7.49%) Corporate - $974 Million (61.25%) Gross Sales Tax - $2.895 Billion (14.75%) Simplified Sellers Use - $64.25 Million (38.89%) Use Taxes - $202.2 Million (10.07%) ■ Utility Tax - $379.6 Million (-2.17%) 17#18Abnormal Growth in FY 2021 Gross sales tax receipts grew by $372.1 million (14.75%) - Average growth in FY 2011-2019 (after Great Recession and before COVID) was 3.33% Gross individual income tax receipts grew by $643.1 million (13.03%) - Average growth in FY 2011-2019 (after Great Recession and before COVID) was 4.68% Gross corporate income tax receipts grew by $369.9 million (61.25%) - Average growth in FY 2012-2019 (after Great Recession and before COVID) was 6.35% ■ Corporate revenues still reflected a decline in 2011 from Great Recession impacts 18#19Beginning Balance Revenues Total Available Funds EOY Condition of the ETF Fiscal Year 2021 FY 2021 60,536,098 8,643,813,063 8,704,349,161 LESS APPROPRIATIONS AND OBLIGATIONS: Enacted Appropriations 7,217,422,487 Transfer to Budget Stabilization Fund (Act 2021-391) 75,000,000 Transfer to Advancement and Technology Fund (Act 2021-391) 65,000,000 Other Supplemental Appropriations (Act 2021-391) 72,262,018 Reversions Reappropriated 31,542,626 7,461,227,131 Total Appropriations and Obligations Ending Balance (before reversions and adjustments) Reversions and Adjustments Ending Balance (after reversions and adjustments) 1,243,122,030 -87,661,101 1,330,783,131 19#20Alabama Economy Forecast March 2020 - COVID 19 Personal income - 2020 - (1.5%) 2021 - 4.3% Real GSP - 2020 - (4.7%) 2021 - 2.2% Unemployment Rate May 2021 (w/ Stimulus & Rescue Plan) Personal Income - 2020 - 3.7% - 2021 - 5.5% Real GSP - 2020 - (2.0%) 2021 - 5.2% ■ Unemployment Rate - 2020 - 7.4% - 2021 - 5.7% - 2020 - 6.3% 2021 - 4.0% 20 20#21APPROPRIATION OF STATE FUNDS FOR FY 2022 21#22Appropriation of all State Funds FY 2022 (As Enacted) ■General Fund = $2.48 Billion ■ Education Trust Fund = $7.67 Billion ■ Other State Funds = $4.47 Billion ■ Total State Funds = $14.63 Billion 22 22#23Appropriation of State General Fund FY 2022 (As Enacted) Total SGF: $2.48 Billion Medicaid $769.0 M. 31.01% Legislative $43.2 M 1.74% All Other $490.7 M 19.79%- Law Enforcement $71.3 M 2.88% Mental Health $166.1 M 6.70% Judicial $180.8 M 7.29% Public Health. $102.4 M 4.13% Corrections $570.6 M 23.01% Human Resources $85.9 M 3.46% 23#24Appropriation of Education Trust Fund FY 2022 (As Enacted) Total ETF: $7.67 billion The Split K-12: 72.87% Higher Education: 27.13% K-12 $5.26 B 68.50% Numbers may not add due to rounding Higher Education $1.96 B 25.51% All Other $459.56 M 5.99% 24#25FY 2022 AND FY 2023 BUDGET OUTLOOK 25 25#26Condition of the SGF FY 2022 and FY 2023 Estimated FY 2022 489,699,351 Estimated FY 2023 Difference BEGINNING BALANCE TOTAL RECEIPTS (Fiscal Division estimates) 173,978,249 (315,721,103) 2,580,502,573 2,629,244,375 48,741,802 TOTAL AVAILABLE (beginning balance plus total receipts) 3,070,201,924 2,803,222,624 (266,979,300) Regular Appropriations (FY 2022 as enacted, FY 2023 Estimated) 2,483,874,471 2,803,222,624 319,348,153 Reversions Reappropriated (as of 12/31/2021) 110,343,432 (110,343,432) Budget Reserve Fund Transfer 48,005,772 (48,005,772) Pardons and Paroles - Supplemental Appropriation (Act 2021-548) 19,000,000 (19,000,000) Department of Corrections - Supplemental Appropriation (Act 2021-548) 135,000,000 (135,000,000) Other Supplemental Appropriations, Estimated 100,000,000 (100,000,000) TOTAL APPROPRIATIONS AND OBLIGATIONS 2,896,223,675 2,803,222,624 (93,001,051) ESTIMATED ENDING BALANCE 173,978,249 26#27General Fund Budget Reserve Fund (Act 2020-115) Previous Balance 20% of Unanticipated Ending Balance from FY 2021 Total Balance Transfers made into fund until balance equals $100,000,000 Funds may be used to prevent proration, or appropriated through a supplemental appropriation when the balance equals $50,000,000 to: ● Offset a reduction in estimated revenue Fund state employee pay raises or bonuses Provide funding for unanticipated obligations Deposits 27,297,484 48,005,772 75,303,256 27#28ETF Rolling Reserve Act ■ Effective beginning FY 2013 ■ Caps the annual appropriations from the ETF - Tied to the percentage growth in recurring revenues to the ETF over the last 15 years, dropping the lowest year Limits ETF expenditures to the average of the estimated available revenues when such estimates are less than the ETF appropriations cap ■ Prepaid Affordable College Tuition (PACT) appropriations are added to the cap Prescribes how excess funds are distributed in fiscal years when appropriations equal the cap and actual ETF receipts exceed the cap, including: Budget Stabilization Fund: An additional reserve fund accessible only in - the event of proration or for temporary transfers to public schools/higher education due to natural disasters Advancement and Technology Fund: Funding available for supplemental appropriation to K-12 and higher education for certain allowable expenses No ETF proration since the ETF Rolling Reserve Act became effective 28#29Budget Stabilization Fund In fiscal years where ETF appropriations are equal to the fiscal year appropriation cap: - - 1 A portion of any revenues deposited into the ETF in excess of the fiscal year appropriation cap are transferred to the Budget Stabilization Fund (BSF) Up to 1% of the previous year's ETF appropriations ($71,603,334 remaining at the end of FY 2020 and transferred at the beginning of FY 2021) until the fund reaches 7.5% of the previous year's ETF appropriations In addition to the above transfer, a transfer of $75,000,000 was made in FY 2021 per Act 2021-391 Amounts in the Budget Stabilization Fund may be withdrawn only to prevent proration in the ETF (Act 2018-544 also allowed temporary transfers for damages from natural disasters) ■ Total cash/invested balance in BSF (as of October 1, 2021): $448.4 million 29#30Advancement and Technology Fund ■ Any excess funds remaining after the transfer to the Budget Stabilization Fund are transferred to the Advancement and Technology Fund The annual appropriation of these funds is divided between the public K-12 schools and institutions of higher education in accordance with the percentage split between these two sectors of education. Remaining funds at the end of FY 2020 were $242.1 million (transferred at the beginning of FY 2021) Transferred an additional $65,000,000 in FY 2021 per Act 2021-391 ■ Total funds appropriated in FY 2021 = $282.3 million (including a portion of prior balance) - - K-12 $206.0 million - Higher Education - $76.3 million Current amount available for appropriation in FY 2022 = $282.3 million 30#31Advancement and Technology Fund (cont.) ■ Funds must be appropriated through an independent supplemental appropriation bill and must be used for any of the following: - Repairs and deferred maintenance of facilities; - Classroom instructional support; - - Insuring facilities; Transportation; School security measures as a part of a system wide security plan; and Acquisition or purchase of educational technology and equipment The supplemental appropriation bill can be enacted in the next regular or a special session of the Legislature 31#32Adjustment for nonrecurring and new recurring items 1997 3,527,022,712 ETF Rolling Reserve Act Cap Background Fiscal year Total ETF receipts % Growth in Recurring Total Recurring Receipts Growth Revenue 3,527,022,712 180,475,608 5.39% 1998 3,734,614,942 3,734,614,942 207,592,230 5.89% 1999 3,911,479,690 3,911,479,690 176,864,748 4.74% 2000 4,114,571,877 4,114,571,877 203,092,187 5.19% 2001 4,015,374,184 4,015,374,184 (99,197,693) -2.41% 2002 4,133,348,664 (85,890,602) 4,047,458,062 32,083,878 0.80% 2003 4,249,955,349 (181,265,229) 4,068,690,120 21,232,058 0.52% 2004 4,456,026,869 4,456,026,869 387,336,749 9.52% 2005 4,969,255,238 4,969,255,238 513,228,369 11.52% 2006 5,498,361,937 5,498,361,937 529,106,699 10.65% 2007 5,854,027,193 (53,336) 5,853,973,857 55,611,920 6.47% 2008 6,414,630,671 (471,372,515) 5,943,258,155 89,284,298 1.53% 2009 5,679,120,475 (437,520,418) 5,241,600,057 (701,658,098) -11.81% 2010 5,217,470,126 5,217,470,126 (24,129,931) -0.46% 2011 5,337,663,842 (32,302,687) 5,305,361,155 87,891,029 1.68% 2012 5,704,207,619 (30,000,000) 5,674,207,619 368,846,464 6.95% 2013 5,683,296,432 52,000,000 5,735,296,432 61,088,813 1.08% 2014 5,802,736,486 5,802,736,486 67,440,054 1.18% 2015 6,048,341,073 81,058,000 6,129,399,073 326,662,587 5.63% 2016 6,072,936,061 33,952,000 6,106,888,061 (22,511,012) -0.37% 2017 6,327,327,215 6,327,327,215 220,439,154 3.61% 2018 6,753,565,379 6,753,565,379 426,238,164 6.74% 2019 7,215,276,203 7,215,276,203 461,710,824 6.84% 2020 7,741,237,483 (316,665,743) 7,424,571,740 209,295,537 2.90% 32#33ETF Rolling Reserve Act FY 2023 Cap Calculation FY 2021 Total ETF Receipts FY 2021 Nonrecurring Revenues Net Recurring Revenues (Base) PLUS: 8,643,813,063 -639,382,270 8,004,430,793 Average growth for the 14 highest years out of the last 15 (3.69%) 295,363,496 New recurring revenue measures PACT appropriation for FY 2023* FY 2022 ETF Appropriations Cap 8,299,794,290 627,217,715 Difference vs. Enacted FY 2022 *Assumes obligation paid off in FY 2022 33#34Condition of the ETF FY 2022 and FY 2023 Estimated FY 2022 1,330,783,131 Estimated FY 2023 Difference BEGINNING BALANCE 558,519,014 (772,264,117) TOTAL RECEIPTS (Fiscal Division estimates) 8,315,282,851 8,473,085,828 157,802,977 TOTAL AVAILABLE (beginning balance plus total receipts) 9,561,878,960 9,031,604,842 (530,373,878) Regular Appropriations (FY 2022 as enacted, FY 2023 Equals Appropriation Cap) Reversions Reappropriated (as of 12/31/2021) 7,672,576,575 8,299,794,290 627,217,715 84,187,262 Assumed supplemental appropriations 1,246,595,869 (84,187,262) (1,246,595,869) TOTAL APPROPRIATIONS AND OBLIGATIONS 9,003,359,706 8,299,794,290 ESTIMATED ENDING BALANCE 558,519,014 731,810,552 (703,565,416) 173,291,538 34#35CORONAVIRUS STATE FISCAL RECOVERY FUNDS 35#36State Fiscal Recovery Fund Status ■ The American Rescue Plan Act of 2021 established the Coronavirus State and Local Fiscal Recovery Funds and appropriated $350 billion in funding to state, local, territorial, and Tribal governments to respond to the COVID-19 emergency and its negative economic impacts ■ The State will receive a total of $2,120,279,000 in two tranches: 50% in 2021 and 50% 12 months after the initial payment First tranche of funds ($1,060,139,708) was received in June 2021 ■ The remaining $1,060,139,708 will be received in May/June 2022 Remaining unobligated balance of the 1st tranche = $580,139, 708 Including the remaining $136,796,346 from the initial “lost revenue" calculation 36#37Allowable Expenditure Categories + Public Health o! Negative Economic Impacts Services to Disproportionately Impacted Communities Premium Pay Infrastructure + Administrative ༣། مدا Revenue Replacement 37#38CAPITAL PROJECTS FUND 38#39Overview ■ The American Rescue Plan Act of 2021 also established the Capital Projects Fund and appropriated $10 billion to the Treasury to provide payments to states, territories, freely associated states, and Tribal Governments ■ Purpose of funds: "to carry out critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to the public health emergency with respect to the Coronavirus Disease (COVID-19)" ■ Alabama's allocation: $191,887,857 39#40Project Eligibility For a Capital Project to be an eligible use of Capital Projects Fund grant funds, it must meet ALL OF THE FOLLOWING CRITERIA: 1. The Capital Project invests in capital assets designed to jointly and directly enable work, education, and health monitoring 2. The Capital Project is designed to address a critical need that resulted from or was made apparent or exacerbated by the COVID-19 public health emergency 3. The Capital Project is designed to address a critical need of the community to be served by it 40 40#41Presumptively Eligible Projects ((p)) Broadband infrastructure projects Digital connectivity technology projects Multi-purpose community facility projects 41#42THANK YOU Kirk Fulford Legislative Fiscal Officer (334) 261-0650 [email protected] www.lsa.state.al.us 42#43Q & A 43#44EDUCATION PAY RAISE - COST ESTIMATES K-12 Local Boards - Baseline w/o divisor changes 1% State Cost State (Foundation Program) Funded Certificated Personnel 31,439,925 State (Foundation Program) Funded Support / Child Nutrition Personnel State Funded Nurses 6,400,339 488,909 State Funded Technology Coordinators 150,870 State Retirement/Health Contributions State Funded Transportation Subtotal State Funded Personnel - Other K-12 Agencies - Agency Provided Alabama School of Fine Arts 2,296,620 40,776,663 70,770 Alabama School of Math and Science 46,058 Alabama School of Cyber Technology and Engineering 24,931 Department of Youth Services School District 53,088 Alabama Institute for Deaf and Blind 505,241 700,087 Subtotal ACCS ACCS (43.75% ETF Funded) 1,763,175 Marion Military Institute 73,168 Alabama Technology Network 52,940 Subtotal 1,889,284 Early Childhood Education 1,215,101 Subtotal 1,215,101 Total - All Boards and Agencies 44,581,134 44#45State Fiscal Year Teachers Employees 2003 3.0% 3.0% 2006 6.0% 6.0% 2007 5.0% 5.0% Cost of Living 2008 3.5% 7.0% Adjustments (COLA)/ 2009 3.5% Bonuses 2014 2.0% 2015 $400 2017 2.0-4.0% 2019 3.0% 2.5% 2020 2.0% 4.0% 2022 2.0% 2.0% 45#46Estimated Cost for ERS/TRS Retiree COLA and Bonus Increase Employer Rate to Fund (Over 15 Years) State Cost to Pre-Fund Amount State State Police TRS State Police TRS COLA (1%) $45.1 M $4.0 M $199.3 M .28% .68% .25% $1 Per Month of Service $7.2 M $316,000 $29.2 M .49% .59% .40% 46#47State Retirement/Health Contributions Fiscal Year Employer Contributions Employee Contributions Net Investment Income Total Receipts TEACHERS' RETIREMENT SYSTEM 2011 755,944,319 323,195,572 357,270,473 1,436,410,364 2012 594,770,676 458,534,360 2,994,421,332 4,047,726,368 2013 605,465,496 477,586,262 2,738,418,379 3,821,470,137 2014 716,752,665 480,848,671 2,478,883,401 3,676,484,737 2015 714,884,634 477,917,619 267,873,704 1,460,675,957 2016 728,922,645 475,980,267 2,207,134,067 3,412,036,979 2017 758,780,173 489,637,845 2,644,790,659 3,893,208,677 2018 803,146,324 493,466,175 2,273,405,962 3,570,018,461 2019 843,551,360 522,908,600 623,632,167 1,990,092,127 2020 836,847,225 515,002,973 1,384,075,056 2,735,925,254 EMPLOYEES' RETIREMENT SYSTEM 2011 383,315,559 195,709,253 199,247,472 778,272,284 2012 306,435,994 216,870,614 1,430,114,298 1,953,420,906 2013 326,942,534 223,646,119 1,299,010,022 1,849,598,675 2014 379,162,867 226,014,854 1,189,295,514 1,794,473,235 2015 398,769,193 229,253,696 129,260,244 757,283,133 2016 421,734,314 238,017,020 1,055,914,678 1,715,666,012 2017 413,007,212 233,901,390 1,405,468,699 2,052,377,301 2018 412,834,311 241,741,068 1,101,807,742 1,756,383,121 2019 453,338,846 254,439,719 324,246,335 1,032,024,900 2020 504,692,875 270,946,792 727,457,310 1,503,096,977 JUDICIAL RETIREMENT FUND 2011 10,366,451 2,653,792 2,021,938 15,042,181 2012 10,327,367 3,680,513 39,011,076 53,018,956 2013 13,363,322 3,918,762 32,245,891 49,527,975 2014 15,249,507 3,764,158 31,342,778 50,356,443 2015 14,666,649 3,683,420 (855,904) 17,494,165 2016 16,984,598 3,723,276 28,321,581 49,029,455 2017 16,825,675 3,972,336 32,685,097 53,483,108 2018 16,611,990 3,867,366 27,622,721 48,102,077 2019 17,449,495 4,101,223 11,014,357 32,565,075 2020 17,483,427 4,183,789 23,155,453 44,822,669 47#48State Employer Rates ERS Fiscal Year TRS JRF State Employees State Police 2012 10.00 9.42 29.92 24.35 2013 10.08 10.12 31.61 32.06 2014 Tier I 11.71 12.02 35.81 35.24 2014 Tier II 11.08 11.96 29.52 (all judges) 2015 Tier I 11.71 13.45 38.37 35.24 2015 Tier II 11.05 13.31 32.45 (all judges) 2016 Tier I 11.94 14.57 42.61 40.98 2016 Tier II 10.84 14.09 38.98 2017 Tier I 12.01 13.89 57.25 40.65 2017 Tier II 10.82 13.25 53.55 2018 Tier I 12.24 13.94 62.48 40.09 2018 Tier II 11.01 13.29 57.33 2019 Tier I 12.41 14.51 50.08 41.40(1) 2019 Tier II 11.35 14.14 43.43 34.32(1) 2020 Tier I 12.43 15.24 52.29 40.40 2020 Tier II 11.34 14.87 45.56 35.05 2021 Tier I 12.36 14.64 51.75 40.80 2021 Tier II 11.22 14.24 42.89 35.61 2022 Tier I 12.43 14.83 52.22 42.10 2022 Tier II 11.32 14.44 42.86 37.47 (1) Act 2015-498 amended the provisions of the Fund to create two plans within the Fund for new members elected or appointed on or after November 8, 2016. 48#49State Employee Rates Employee Type Rate Tier I: 7.5% Teachers and State Employees (except below) Tier II: 6% & 6.2% State Police 10% Judges 8.5% Tier I: 8.5% Certified law enforcement, correctional officers, and firemen Tier II: 7% & 7.2% Notes Prior to October 2011, the rate was 5%. This rate was set at 7.25% on October 1, 2011 and was increased to the current rate on October 1, 2012 (Tier I). Effective October 1, 2021, the TRS Tier II member contribution rate increased by 0.20% per Act 2021-537. . Prior to October 2011, the rate was 6%. This rate was set at 8.25% on October 1, 2011 and increased to the current rate on October 1, 2012 (Tier I). Effective October 1, 2021, the TRS Tier II member contribution rate increased by 0.20% per Act 2021-537. 49