Federal Government Shutdown Impacts to Florida

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1 Overview The identification of whether a program is deemed mandatory or discretionary from a federal perspective is key to determining whether the federal government shutdown will affect Florida s receipt of federal funds supporting key programs. Generally, mandatory programs will not be affected; funding for discretionary programs, dependent upon funding through the annual federal appropriations process, would be interrupted. Certain state agencies anticipated the federal shutdown and have drawn down as much cash as allowable. Globally, state agencies appear to be operating under the assumption that federal funds based expenditures will be backfilled with federal funds when the budget impasse is resolved. However, if the situation persists much past a couple of weeks, state agencies will be forced to reevaluate cost containment measures such as furloughs for federally funded and indirectly funded positions. Education Department of Education (DOE) The agency, on average, draws $10.5M in federal funds each workday. These funds are primarily associated with Title I of the No Child Left Behind Act and the Individual with Disabilities Education Act (IDEA). The following are the payments and daily averages for October 2012: Payment of Federal Funds Payee Oct 2012 Total Payments Avg. per work day School Districts $170.4M $7.7M Universities and Community Colleges $7.6M $0.3M Office of Early Learning $36M $1.6M Vocational Rehabilitation $17.7M $0.8M Blind Services $2.8M $.1M Total $234.5M $10.5M Page 1 of 9

2 The following impacts are anticipated starting after October 14, 2013, if the federal government remains shutdown: Small to medium size school districts using a bi-weekly pay period may start to have problems meeting payroll. Vocational Rehabilitation and Blind Services. It is anticipated that Vocational Rehabilitation and Blind Services will not be able to make payroll and payments to providers and clients after October 14, Vocational Rehabilitation s Fiscal Year budget is $203.1M; $159.4M; federal. Blind Service s Fiscal Year budget is $51.7M; $37M; federal. Office of Early Learning (OEL). Department of Education OEL staff anticipate that coalitions will be able to fund necessary services for all of October and possibly November out of a combination of existing federal grants and General Revenue. OEL can continue to draw down federal funds until they use up their existing funds. The total Fiscal Year budget for School Readiness is $552.5M; $415.6M is federal. As a contingency plan for an October 1, 2013 federal shutdown, DOE has drawn down additional federal cash just prior to September 30, The objective is to ensure continuity of operations from October 1, 2013 through October 14, DOE has asked our school districts to do the same. Health and Human Services Preserved Programs: Medicaid. The Medicaid program received an advanced appropriation for the first quarter of federal Fiscal Year 2014 in the federal Fiscal Year 2013 appropriations package and, will continue to operate. Children s Health Insurance Program (CHIP). CHIP received an advanced appropriation for the first quarter of federal Fiscal Year 2014 in the federal Fiscal Year 2013 appropriations package and, will continue to operate. Supplemental Security Income (SSI). The SSI program received an advanced appropriation for the first quarter of federal Fiscal Year 2014 in the federal Fiscal Year 2013 appropriations package and, will continue to operate. Title IV-E-Foster Care and Adoption Assistance. Title IV-E-Foster Care and Adoption Assistance received an advance appropriation for the first quarter of Fiscal Year 2014 in the Fiscal Year 2013 appropriations package and will continue to operate. Page 2 of 9

3 Social Services Block Grant (SSBG). SSBG is an exception, as a mandatory program operating as an appropriated entitlement and would be affected by a shutdown. Federal funds will not be available for reimbursement during the shutdown. However, Florida will retain its entitlement to such reimbursement once the government reopens. Partially Preserved: Refugee Assistance. HHS indicated that all permissible activities for the Unaccompanied Alien Children program would continue because of the exception for programs related to the safety of human life. However, discretionary programs would be affected by the shutdown. Immunization Grants. Impact to begin January 1, This program functions on a calendar year cycle, so a short-term shutdown would not affect it. Projects funded from federal Fiscal Year 2014 budget authority would not begin until January 1, The Vaccines for Children program a mandatory program, funded outside of the appropriations process will continue to operate. Impacted Programs: Temporary Assistance to Needy Families (TANF). The program s authorization expired September 30, Absent an extension, the program lacks federal authorization and funding. Florida s Annual Grant Award has been $562M. Supplemental Nutrition Assistance Program (SNAP). The program s federal authorization expired with the rest of the farm bill on September 30, The federal Food and Nutrition Service (FNS) will use its authority under the American Recovery and Reinvestment Act to continue operations and benefit payments through October 31, In addition, FNS will use the remaining $2B in contingency funding to support state administrative expenses. This funding is available through September 30, In Fiscal Year , Floridians received approximately $5.8B in benefits. Child Nutrition. The child nutrition programs School Lunch, School Breakfast, Special Milk, Summer Food Service, and Child and Adult Care Food programs are individual entitlement programs. The child nutrition programs are appropriated entitlements that do not receive advance appropriations. States submit reimbursement claims 30 days after the end of the month, drawing down funding from a letter of credit. The program operations can continue into October during a short-term shutdown. Funds are awarded for a two-year grant period and states are permitted to carryover up to 20 percent of their allocation into the second grant year, some states may have funds available to cover administrative expenses. Florida s Annual Grant Award is approximately $1.1B. Page 3 of 9

4 Special Supplemental Food Program for Women, Infants, and Children (WIC). WIC is a discretionary grant program and without an appropriation there are no funds available. States have authority to carry over 1 percent of their grant to the following the year if available. Florida s Annual Grant Award is approximately $253M. Criminal Justice Department of Juvenile Justice (DJJ) - Currently the DJJ has $6.7 million in its Federal Grants Trust Fund, which is sufficient cash on hand to make required payments for the next 30 to 60 days. DJJ also has the ability to disinvest Juvenile Accountability Block Grant (JABG) funds from the State Treasury, if necessary, until the shutdown is resolved. Prevention and Intervention Programs (Title II, Title V, Second Chance Grant Vocational Training) - Quarterly financial reports as of September 30, 2013 must be filed with USDOJ by October 31, The state normally draws down cash after the filing of the quarterly reports. As of today, the state has sufficient cash on hand. On Monday, September 30 th, DJJ received notification that the 2013 Title II grant award, October 1, 2012 through September 30, 2015 is $1,073,507; however, these funds may be impacted by the shutdown. Juvenile Accountability Block Grant (JABG) Quarterly financial reports as of September 30, 2013 must be filed with USDOJ by October 31, The DJJ could disinvest a portion of its $4.2M cash balance from the State Treasury after filing its quarterly reports. On September 30th, DJJ received notification that the federal Fiscal Year 2013 JABG award (July 1, 2013 through June 30, 2016) is $735,237; however, these funds may be impacted by the shutdown. National School Lunch (NSL) Program DJJ reportedly filed the August 2013 report on October 1, The reimbursement request to the U.S. Department of Agriculture should be in excess of $250K. It is unclear whether this reimbursement will be impacted by the shutdown. If so, DJJ will utilize other federal funds to pay for school lunches until the NSL payment is approved. Title IV-E DJJ will be filing a reimbursement request with the Department of Children and Families the week of October 7 th for about $39K. It is anticipated that this reimbursement will be received. If not, DJJ will use other cash in its trust funds to pay bills. Social Services Block Grant (SSBG) - DJJ must file the September 2013 expenditure report by October 31, 2013; the reimbursement should be in excess of $4M. It is anticipated that this reimbursement will be received. If not, DJJ has sufficient cash in the Federal Grants Trust Fund to pay bills in the near future. Page 4 of 9

5 Transportation and Economic Development Department of Transportation (DOT) Per DOT, the Federal Highway Administration (FHWA) has contract authority under the federal transportation act, MAP-21, to continue to operate even if a federal Continuing Resolution is not passed by Congress. This means that FHWA staff will continue to report for duty. DOT will be able to continue to authorize highway and bridge projects for federal participation. DOT will also be able continue to bill FHWA and receive reimbursements for costs incurred on federal aid projects. A government shutdown would have to last for many weeks before there would begin to be any adverse impacts to Florida regarding the FHWA administered federal aid program. Department of Highway Safety and Motor Vehicles (HSMV) HSMV indicates that their federal grants are safe, and that the funds have already been allocated and are not subject to sequestration/government shutdown. The worst case scenario is that sequestration/furloughs/government shutdown would affect staffing at the Federal level, thus slowing down the administrative side of grant management and processing of Florida reimbursements. Department of Economic Opportunity (DEO) Discretionary federal grants received by DEO, such as the Low Income Home Energy Assistance Program (LIHEAP), have already drawn down the federal funds for the entire State Fiscal Year, and DEO does not anticipate the federal shutdown will impact those grant funds during the remainder of Fiscal Year Regional Workforce Boards (RWBs) expect the following impacts: o Program impact for all Workforce Investment Act (WIA) funded programs among the 24 RWBs is estimated at $10.7M per month: Over 20 percent of the RWBs will not be able to operate the Workforce Investment Act Adult and Dislocated Worker Programs past October 31, 2013; Over 50 percent of the RWBs will not be able to operate the Workforce Investment Act Adult and Dislocated Worker Programs past January 31, 2014; Over 83 percent of the RWBs will not be able to operate the WIA Adult and Dislocated Worker Programs past June 30, Page 5 of 9

6 o Over 90 percent of the RWBs will be unable to operate the Welfare Transition (TANF) Programs past November 30, Program impact: $5.2M per month. o RWBs will be unable to operate Emergency Unemployment Compensation Reemployment Services/Reemployment Eligibility Assessment Program past October 31, Program impact: $383K per month. o RWBs will be unable to operate Supplemental Nutrition Assistance Program (workforce services) after September 30, Program impact: $568K per month. o RWBs will be unable to operate Veterans Programs after October 31, Program impact: $758K per month. Department of State (DOS) The Department has enough cash on hand (federal grants trust fund) to cover payroll for at least 30 days in all three Divisions that receive federal funding. After 30 days, each of the programs would be impacted by a payroll deficit: o Division of Historical Resources/monthly impact $27,000; o Division of Libraries 28 FTE/monthly impact of $123,270; and o Division of Cultural Affairs 11 FTE/monthly impact of $43,099. (These amounts have not been adjusted for October 1, 2013, Salary and Benefit increases) If the shutdown lasts more than two weeks the DOS may need to request early release of general revenue to cover expense such as rent. Federal funds would be used to offset once released. Program impacts: Historical Resources - $32,000 per month; Libraries - $5,400 per month. The DOS believes they have enough cash on hand to cover payroll for at least 30 days in all three Divisions that receive federal funding. If the shutdown lasts more than two weeks DOS may need to request early release of general revenue to cover expense such as rent. Federal funds would be used to offset once released. The DOS may have sub-recipients of federal grant funding impacted if the shutdown lasts beyond October 31st. For the Division of Historical Resources (DHR), a shutdown may adversely affect the Division s ability to carry out many of its ongoing programs that require consultation with or review by federal agencies, including: o Compliance and Review of federally-funded undertakings, o National Register nominations, Page 6 of 9

7 o Certified Local Government applications, and o Federal Rehabilitation Tax Credit applications. In the case of Compliance and Review, DHR s inability to consult with federal funding and permitting agencies (Army Corps of Engineers, HUD, etc.) would lead to project delays throughout the state. In addition, DHR s statutory 30 day consultation period with federal permitting agencies would be disrupted, leading to delays for state agencies such as DEP and water management districts that rely on DOS responses to joint state/federal permitted undertakings to proceed with projects/issue permits. Similarly, delays in processing Federal Rehabilitation Tax Credit applications will impact construction and rehabilitation projects throughout the state. Division of Emergency Management (DEM) Per DEM, the impact would be more on FEMA staffing and processing of program requests. Usually, the federal government only authorizes essential staff until the budget is passed or a continuing resolution is passed by Congress. In the past DEM has been able to draw cash from Smart Link based on existing grant awards that are considered already obligated from the federal side. Cash would be impacted if staffing on the federal side were not present to process our cash draw requests. This has not happened in the past. Any new grant awards may be slowed or stopped. Department Of Military Affairs (DMA) Significant impact: 274 FTE who will be impacted due to federal cooperative agreements. The Department of Management Services has ruled that those employees could go on leave without pay. The DMA has enough cash on hand (about $524,000 in Federal funds/centralized Personnel Plan) to pay for: o 3 days for 234 filled FTEs out of the 274 FTEs that are federally funded, and o 15 additional days for 78 mission critical employees. If the shutdown continues, on Friday, October 4, 2013, 156 of the 234 filled FTE will be placed on leave without pay. The monthly payroll cost for the 234 employees is roughly $1.9M. Page 7 of 9

8 1,000 military technicians (not state employees) will be furloughed immediately. If a hurricane hits Florida during the shutdown, the response time would be increased due to the non-maintenance of vehicles and having less troops accessible. DMA could still deploy troops to disaster sites, but would need state funding to do so. General Government Preserved Programs Department of Environmental Protection (DEP) Operations are fully funded for 3 weeks contingent upon the retroactive reimbursement of up to $10M cash in the Air, Water, and Waste Regulatory Programs. The DEP annually processes a Chapter 216, Florida Statutes, trust fund loan for cash flow purposes ($10M) as these programs are billed in arrears. This loan was approved July The DEP has 252 federally funded FTE; 8 percent of its total FTE. Fish and Wildlife Conservation Commission (FWCC) Operations are fully funded for days with current cash on hand Law Enforcement Boating grants, marine research, Wildlife Management Areas. The FWCC has federally funded FTE; 10.3 percent of its total FTE. Potential refunds for federal management areas and/or Wildlife Refuges that have cancelations regarding quota hunts. Ability to issue Charter Boat and Captain Licenses could be impacted if Coast Guard stops commercial vessel inspections and/or issuing Captain Licenses. Department of Agriculture and Consumer Services (DACS) Operations are fully funded for days with current cash on hand. 134 grants in various divisions - Administration, Marketing, Plant and Animal Disease Control, Food Safety, Food, Nutrition and Wellness, Environmental Services and Aquaculture. The DACS has 223 federally funded FTE; 6.2 percent of its total FTE Long Term Impacts Department of Agriculture and Consumer Services $3M trust fund loan obtained for cash flow purposes for approximate 134 federal grants within the department may not be repaid by June 30th. Page 8 of 9

9 Office of Energy - State of Florida Energy Efficiency and Conservation Block Grant - $6.3M would not be reimbursed; state funding or termination of the program may be necessary. - State Energy Grants - $3.5M would not be reimbursed; state funding or termination of program may be necessary. Florida Commission on Human Relations (FCHR) Ability to drawdown federal Equal Employment Opportunity Commission (EEOC) and the Housing and Urban Development (HUD) funds could be delayed. These funds represent 30 percent of the FCHR s budget and are based on the number of cases investigated by FCHR. Page 9 of 9

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