JLBC outlines baseline showing $935 million cash balance, flags ESA, K‑12 and Medicaid differences with executive

Richard, a JLBC staff presenter, told the Senate Appropriations Committee that "under the JLBC baseline, there's about $935,000,000 available." He said after standard set‑asides — ending balance, school facility repair and state employee health insurance — the baseline showed "about $560,000,000" of spendable resources.

The baseline projection, Richard said, uses four inputs (the Finance Advisory Committee, University of Arizona modeling, JLBC staff and an averaging process) and shows longer‑term revenue growth around 4–5 percent. He told the committee the executive budget projects $360 million more revenue across four years than JLBC does and that the two forecasts diverge notably on Medicaid and several education items.

"The executive in '26 has Medicaid at $270 million; we are at about $280 million under the JLBC baseline," Richard said, explaining JLBC grows Medicaid each year for enrollment and inflation while the executive holds it flat. He also said components excluded from the revenue comparison include a low‑income housing tax credit, a new child care corporate tax credit and a $75 million transfer from the prescription drug rebate fund to the general fund.

JLBC staff highlighted K‑12 drivers: backfilling the Prop 123 land endowment distribution if it is not extended; a 2 percent inflation adjustment (about $167 million); and ESA growth (Richard projected roughly 12,000 new pupils in FY25 and 9,000 in FY26 in the slides). Patrick Moran, JLBC staff, said the ESA formula is generally set at 90 percent of the charter formula and that whether a student switching to an ESA saves or costs the state depends on the student's prior funding. "For a charter student that has no other formula funding weights, there's gonna be about a 10% savings to the state," Moran said. He added that ADE reporting does not identify each ESA enrollee's public‑school origin, limiting exact switcher‑cost calculations.

Committee members pressed for context on ESA enrollment and private school tuition. A JLBC slide and Richard's remarks put current ESA enrollment at about 86,000 and projected enrollment under the JLBC baseline at about 98,000; the executive staff estimate discussed during the hearing included a modeled reduction of roughly 9,000 students under its income‑limit proposal, producing a lower enrollee count in the executive baseline.

JLBC also reviewed spending adjustments and one‑time items in the executive package: long‑term care pay increases phased to 6 percent over three years (first‑year cost about $30 million), childcare rate support as federal pandemic funds phase out, corrections operating cost increases, and numerous one‑time capital and program deposits totaling roughly $796 million in the executive materials. Richard flagged that some items labeled "one‑time" in prior budgets have continued as ongoing obligations and recommended caution when classifying expenditures.

Committee members and JLBC staff repeatedly noted uncertainty from federal changes to Medicaid and past use of one‑time federal funds (ARPA). Richard warned that changes at the federal level could materially affect the state baseline and that JLBC will continue to reconcile caseload assumptions with the executive in the weeks ahead.

The JLBC presentation did not include a committee vote; it served as staff analysis to inform upcoming appropriation decisions.