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Appendix:
Developing the Cost Indices

This Special Financial Report made use of a large amount of expenditure and workload data reported through the state’s budget and accounting systems. The structure of program-area indices generally was dictated by the availability of data. In some cases, the review team was forced to estimate data due to the absence of documented program information. For the most part, however, this report relies on standard reported data.


Uniform Statewide Accounting System

The Comptroller’s Uniform Statewide Accounting System (USAS) provided statewide total expenditures, agency totals and figures for a large number of individual expenditure codes. These codes identify spending for items ranging from salaries and wages to interest payments to grant expenditures. Since appropriations may be spent for three years following the year of appropriation, fiscal year totals will include some expenditures originally appropriated in other years, although the amounts reported primarily represent appropriations for that year. The USAS amounts employed also provide the basis for the Comptroller’s Annual Cash Report.

When multiple expenditure codes could be grouped easily under a common category, such as grants, the amounts were combined and presented as a single item. Thus grants to cities, counties, community colleges, senior colleges and universities and councils of government are grouped as a single “Grants” expenditure index. The same approach was used for construction-related expenditures and interest payments.


Budget Data

For some agencies or programs, USAS data could not be used to track spending in the way desired for this analysis. In such cases, the review team employed actual reported amounts from available budget documents, such as:

legislative appropriations requests, which contain not only the amounts requested for agency budget strategies for the upcoming biennium, but the budgeted amount for the current fiscal year and two years of historical data as well;
operating budgets, which reflect amounts appropriated by the Legislature; often, they also include a year or two of budget history;
legislative budget estimates (LBEs), as prepared by the Legislative Budget Board (LBB) at the beginning of each legislative session. These estimates include expenditures and key performance measures for each budget strategy; amounts recommended by the LBB; budgeted amounts for the current fiscal year; and actual historical amounts for the prior two fiscal years. LBEs provided much actual expenditure and key measure data for 1993 and beyond;
annual financial reports (AFRs), which present agency financial positions in accordance with generally accepted accounting principles. AFRs for fiscal 1991 and 1992 included schedules showing actual expenditures by major program for that year; these provided valuable early data; and
annual reports produced by many agencies to provide an overview of each year’s accomplishments. Some agency annual reports detail agency operations and expenditures by program.

Budget data often are reported on an “appropriation year” (AY) basis, which counts only those expenditures based on appropriations for that fiscal year; by contrast, fiscal year data, as produced by USAS, count all expenditures in the year regardless of the date of the original appropriation. Thus, some program indices use fiscal year data while others employ appropriation year information.

For indices using appropriation year data, the review team employed AY data throughout the time period to create a consistent time series. Indices using fiscal year data were developed in the same way, to ensure that growth rate calculations provide an accurate picture. Since AY amounts tend to be slightly lower than fiscal year amounts, the total expenditures used for the statewide calculation in each year will be slightly lower than those shown for total state spending in the Comptroller’s Annual Cash Report.


Population

The population data used in this report were provided by the Comptroller’s fall 2002 economic forecast.


State Employment

State agency employment commonly is measured in terms of full-time equivalent (FTE) employees. FTEs are calculated as total hours paid divided by work hours in a fiscal quarter, and assuming an eight-hour day. An FTE count generally will not equal an agency’s actual number of state employees, as two or more part-time employees might equal one FTE. This report uses FTEs paid from appropriated funds for the quarter ending on August 31 of each fiscal year.

State FTEs were used to calculate all salary and wage indices.


“Real” Dollar Calculations

The federal Bureau of Economic Analysis produced the data used in this report to adjust for inflation. The three price indices used in the analysis measure state and local government total spending, state and local government salary and wage spending and state and local government consumption spending. All “real” dollar amounts are presented using constant 1990 dollars.


Index Calculations

Unit costs were calculated based on both actual expenditures and real dollar expenditures. The indices, however, are expressed only in real dollar expenditures per unit.

Indices for major spending areas (General Appropriations Act articles) were created by assigning each individual program index a “weight” for fiscal 2002, based on its share of total actual expenditures in that article. An aggregated article index was calculated based on these weights and the calculated program indices. Similarly, the statewide index was calculated based on weights attributed to each article from its share of total state expenditures in 2002 and using the indices calculated for each article.

For those indices that began after fiscal 1990, the review team used the first full year of operation as the base year. Overall percent change and average annual percent change amounts also were based on the first full year of data. For example, the Texas Lottery began its operations during fiscal 1992, but the lottery prize expenditure index uses fiscal 1993 as its base year since that was the first full year of operation.

In such instances, the individual index is calculated based on the overall article index for the first full year of operations.


Other Data Considerations

Amounts for all years were adjusted where necessary to reflect a consistent historical trend based on the agency’s fiscal 2002 program structure. Some agencies, of course, have experienced changes in program responsibilities since 1990. For example, when the Legislature created the State Office of Risk Management (SORM) in fiscal 1997, the new agency assumed some responsibilities transferred from the Office of the Attorney General (OAG) and the Texas Workers’ Compensation Commission (TWCC). In this analysis, fiscal 1990 through 2002 expenditures for these responsibilities are presented as SORM expenditures, while expenditures for these functions at OAG and TWCC were reduced accordingly.

Workload indicators used in this report are based on key performance measure data wherever possible. Such data typically are readily available from budget documents. In some cases, these data could not be tracked back to fiscal 1990 and alternative workload data were employed.

Where possible, agency expenditures that are “pass-through” in nature, such as grants, loans and interest payments, were considered separately, so that pass-through expenditures can be tracked over time and operational expenditures—those remaining after pass-through spending is deducted—can be highlighted.

Finally, calculations shown for unit costs are not intended to represent the actual average cost of providing a service. Such average costs often cannot be produced with the level of detail available. Instead, the calculations use agency totals, budget strategy totals or object of expenditure code amounts to ensure consistent time series.


Table 1
Index of Texas State Government Spending
Fiscal 1990 to Fiscal 2002

Article 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Art. I General Government 1.00 1.13 1.32 1.96 3.00 3.25 3.25 3.18 3.66 3.44 3.93 4.98 3.99
Article II Health and Human Services 1.00 1.04 1.08 1.16 1.21 1.29 1.28 1.34 1.35 1.45 1.38 1.46 1.52
Art. III Public Education 1.00 1.07 1.12 1.17 1.19 1.18 1.21 1.18 1.29 1.28 1.35 1.45 1.38
Art. III Higher Education 1.00 0.99 0.95 0.95 1.02 1.24 1.18 1.19 1.12 1.08 1.12 1.07 1.12
Art. IV Judiciary 1.00 0.95 0.98 1.00 1.02 1.00 1.06 1.08 1.16 1.38 1.69 1.60 1.78
Art. V Public Safety and Criminal Justice 1.00 1.46 1.30 1.35 1.29 1.16 1.01 1.10 1.09 1.39 1.37 1.29 1.51
Art. VI Natural Resources 1.00 1.25 1.67 2.10 1.78 2.02 2.24 2.48 2.36 3.05 5.64 5.12 3.49
Art. VII Business and Economic Development 1.00 0.94 0.87 1.01 1.01 0.98 1.12 1.02 1.10 1.14 1.30 1.25 1.30
Art. VIII Regulatory 1.00 1.11 1.03 1.02 1.05 1.06 1.10 1.02 1.06 1.16 1.19 1.25 1.22
Art. X Legislature 1.00 1.14 1.07 1.10 1.10 1.17 1.02 1.15 1.08 1.31 1.25 1.27 1.34
State Index 1.00 1.07 1.09 1.19 1.25 1.30 1.31 1.33 1.38 1.44 1.56 1.63 1.56

Also available in spreadsheet format: Table 1 (.xls, 26.6 KB)


Table 2
State Government Expenditures From Fiscal 1990 to Fiscal 2002
Amounts Used for Statewide Spending Index Calculation

Dollar amounts in millions. Totals may not add due to rounding.

Article 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Percent Change 1990-2002 Average Annual Percent Change 1990-2002
Art. I General Government $1,179 $1,368 $1,497 $1,896 $1,966 $2,083 $2,181 $2,269 $2,369 $2,140 $2,346 $2,145 $2,171 84.18% 5.22%
Art. II Health and Human Services $5,543 $6,562 $7,815 $9,376 $10,571 $11,486 $11,694 $12,317 $12,407 $13,288 $13,929 $15,163 $17,518 216.02% 10.06%
Art. III Public Education $7,095 $7,967 $8,726 $9,603 $10,127 $10,676 $11,153 $11,667 $12,832 $13,367 $14,912 $15,952 $15,635 120.36% 6.81%
Art. III Higher Education $3,479 $3,517 $3,360 $3,499 $3,751 $4,196 $4,242 $4,291 $4,698 $4,774 $5,211 $5,311 $5,864 68.55% 4.45%
Art. IV Judiciary $79 $80 $85 $89 $95 $96 $106 $112 $126 $146 $164 $168 $187 136.63% 7.44%
Art. V Public Safety and Criminal Justice $1,145 $1,851 $1,603 $2,017 $2,365 $2,562 $2,439 $2,700 $2,826 $3,198 $3,386 $3,360 $3,604 214.79% 10.03%
Art. VI Natural Resources $549 $574 $645 $843 $766 $1,144 $865 $906 $909 $967 $1,598 $1,372 $1,340 144.24% 7.73%
Art. VII Business and Economic Development $3,356 $3,337 $3,264 $4,086 $4,247 $4,462 $5,082 $4,838 $5,247 $5,674 $6,436 $6,578 $7,178 113.91% 6.54%
Art. VIII Regulatory $137 $175 $147 $156 $156 $157 $165 $163 $178 $200 $211 $223 $229 66.27% 4.33%
Art. X Legislature $63 $82 $78 $88 $85 $98 $88 $105 $98 $126 $123 $136 $141 124.47% 6.97%
State Total $22,624 $25,514 $27,218 $31,653 $34,128 $36,960 $38,015 $39,368 $41,690 $43,881 $48,317 $50,409 $53,865 138.09% 7.50%

Also available in spreadsheet format: Table 2 (.xls, 21.0 KB)


Table 3
Percent of Total State Spending by Appropriations Bill Article
Fiscal 1990 to Fiscal 2002

Article 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Art. I General Government 5.21% 5.36% 5.50% 5.99% 5.76% 5.64% 5.74% 5.76% 5.68% 4.88% 4.86% 4.25% 4.03%
Art. II Health and Human Services 24.50% 25.72% 28.71% 29.62% 30.98% 31.08% 30.76% 31.29% 29.76% 30.28% 28.83% 30.08% 32.52%
Art. III Public Education 31.36% 31.23% 32.06% 30.34% 29.67% 28.88% 29.34% 29.64% 30.78% 30.46% 30.86% 31.64% 29.03%
Art. III Higher Education 15.38% 13.78% 12.34% 11.05% 10.99% 11.35% 11.16% 10.90% 11.27% 10.88% 10.79% 10.54% 10.89%
Art. IV Judiciary 0.35% 0.31% 0.31% 0.28% 0.28% 0.26% 0.28% 0.28% 0.30% 0.33% 0.34% 0.33% 0.35%
Art. V Public Safety and Criminal Justice 5.06% 7.26% 5.89% 6.37% 6.93% 6.93% 6.42% 6.86% 6.78% 7.29% 7.01% 6.67% 6.69%
Art. VI Natural Resources 2.42% 2.25% 2.37% 2.66% 2.24% 3.10% 2.28% 2.30% 2.18% 2.20% 3.31% 2.72% 2.49%
Art. VII Business and Economic Development 14.83% 13.08% 11.99% 12.91% 12.44% 12.07% 13.37% 12.29% 12.59% 12.93% 13.32% 13.05% 13.33%
Art. VIII Regulatory 0.61% 0.69% 0.54% 0.49% 0.46% 0.42% 0.43% 0.41% 0.43% 0.46% 0.44% 0.44% 0.42%
Art. X Legislature 0.28% 0.32% 0.29% 0.28% 0.25% 0.26% 0.23% 0.27% 0.24% 0.29% 0.25% 0.27% 0.26%
State Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Also available in spreadsheet format: Table 3 (.xls, 20.5 KB)


Index and Detail Data Tables

The following tables (.xls format) show the data used to calculate the index for each article of the General Appropriations Act.

Article I General Government
Index (.xls format, 38.4 KB)
Detail (.xls format, 145.4 KB)
Article II Health and Human Services
Index (.xls format, 45.6 KB)
Detail (.xls format, 216.1 KB)
Article III Public Education
Index (.xls format, 46.6 KB)
Detail (.xls format, 263.7 KB)
Article III Higher Education
Index (.xls format, 19.5 KB)
Detail (.xls format, 53.2 KB)
Article IV Judiciary
Index (.xls format, 32.8 KB)
Detail (.xls format, 91.6 KB)
Article V Public Safety and Criminal Justice
Index (.xls format, 25.6 KB)
Detail (.xls format, 81.4 KB)
Article VI Natural Resources
Index (.xls format, 28.7 KB)
Detail (.xls format, 90.6 KB)
Article VII Business and Economic Development
Index (.xls format, 23.6 KB)
Detail (.xls format, 76.3 KB)
Article VIII Regulatory
Index (.xls format, 31.2 KB)
Detail (.xls format, 153.6 KB)
Article X Legislature
Index (.xls format, 20.0 KB)
Detail (.xls format, 46.1 KB)