Arizona Benefits Fund. Recapping the First Nine Years

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1 Arizona Benefits Fund Recapping the First Nine Years Prepared by: Northern Arizona University Center for American Indian Economic Development N. Levi Esquerra, Program Director Gwen Cody, Program Coordinator Trena Bizardi, Student Worker January 22, 2013

2 Summary In 1998, United States Congress enacted the Federal Indian Gaming Regulatory Act, which requires states to negotiate in good faith with Federally Recognized Indian Tribes that seek to enter into Tribal-State compacts to conduct Class III gaming. In November 2002, Arizona voters approved Proposition 202, titled the Indian Gaming and Self-Reliance Act. Along with establishing the framework for the Arizona Tribal-State Gaming Compacts, the initiative established the Arizona Benefits Fund. This fund consists of tribal gaming revenues paid quarterly to the State of Arizona. The Benefits Fund is administered by the Arizona Department of Gaming. According to the Arizona Department of Gaming, the Arizona Tribal-State Gaming Compact between the State and 21 Tribes went into effect in The compact specifically sets forth the types of permitted games, establishes technical standards for the gaming machines, authorizes the state to inspect casinos, requires background investigations and licensing of casino employees and vendor companies, and requires tribes to contribute one to eight percent of their gaming revenue to state and local governments. The current compact lasts for ten years and can be renewed for another decade and one additional term of three years. It replaced compacts that were in effect from 1993 to This report will highlight the total contributions from Fiscal Year 2004 thru Fiscal Year 2012 and provide a more comprehensive breakdown of funds for Fiscal Year Arizona Department of Gaming,(2012). Tribal-State Compacts [Data file]. Retrieved from

3 Tribal Contributions As of October 29 th, 2012, Tribal contributions from gaming revenue to the state, towns, and counties were $843,403,231.95, with $749,813, being distributed to the Arizona Benefits Fund. For Fiscal Year 2012, the following annual funds were distributed from the Arizona Benefits Fund to: Problem Gambling: $ 1,698, Arizona Department of Gaming $ 8,000, Instructional Improvement Fund $42,133, Trauma & Emergency Services Fund $21,066, AZ Wildlife Conservation Fund $ 6,019, State Tourism Fund $ 6,019, For current Fiscal Year 2013, the following annual funds have been distributed from the Arizona Benefits Fund: Problem Gambling: $ 979, Arizona Department of Gaming $ 4,407, Instructional Improvement Fund $24,405, Trauma & Emergency Services Fund $12,202, AZ Wildlife Conservation Fund $ 3,486, State Tourism Fund $ 3,486, Tribal contributions to cities, towns and counties of the tribes choosing: FY 2004 $ 2,590, FY 2005 $ 7,589, FY 2006 $10,620, FY 2007 $11,375, FY 2008 $15,152, FY 2009 $11,037, FY 2010 $11,120, FY 2011 $11,695, FY 2012 $12,406, Total contributions since State Fiscal Year 2004 to Cities, Towns and Counties was $ 93,589, Arizona Department of Gaming,(2012). Tribal Contributions Fact Sheet [Data file]. Retrieved from

4 Tribal contributions are broken down into the Arizona Benefits Fund and contributions to cities, towns and counties. According to the Compact one to eight percent of the tribes Class III net wins are contributed to education, healthcare, and other programs that benefit residents of Arizona. According to Arizona Department of Gaming, 12% of a tribe s total annual contribution is distributed by the tribe to the cities, towns and counties of the tribe's choosing. The money is for government services that benefit the general public, including public safety, mitigation of impacts of gaming, and promotion of commerce and economic development. Any monies comprising the 12 % not so distributed by an Indian tribe are deposited in the commerce and economic development commission local communities fund established by Arizona Revised Statutes Section for grants to cities, towns and counties. See Compact Section 12(d) and Arizona Revised Statutes Section (H)(4). 3 Furthermore, the remaining 88% of a tribe's total annual contribution goes to the Arizona Benefits Fund and is broken into the following categories $8 million or 9% of tribal contributions to the Arizona Benefits Fund, whichever is greater, go towards the payment of ADG's regulatory and administrative costs. 2% to be used to fund programs for the prevention and treatment of, and education concerning, problem gaming ADG disburses the remaining tribal contributions in the Arizona Benefits Fund by this formula: o 56% to the Instructional Improvement Funds administered by the Department of Education. Every school district receives these funds. Disbursement is based on a district s percentage of the total per capita number of public school students in the state. o 28% to the Trauma Emergency Services Fund administered by the Arizona Health Care Cost Containment System (AHCCCS). o 8% to the Tourism Fund administered by the State Office of Tourism. o 8% to the AZ Wildlife Conservation Fund administered by the State Game and Fish Commission. 4 The remainder of this report will provide a breakdown of actual contributions to Trauma Emergency Services Fund, Instructional Improvement Fund, and the annual reports for Tourism and AZ Wildlife Conservations Funds for Fiscal Year Arizona Department of Gaming,(2012). Tribal Contributions Fact Sheet [Data file]. Retrieved from 4 Arizona Department of Gaming,(2012). Tribal Contributions Fact Sheet [Data file]. Retrieved from

5 Trauma Emergency Services Fund As previous mentioned, in November 2002, Arizona voters approved Proposition 202, which established the Arizona Benefits Fund. To help offset the readiness and costs of Level 1 Trauma Centers and the increasing volume in Emergency Departments, a portion of the Arizona Benefits Funds are transferred to AHCCCS for distribution. The Trauma & Emergency Services Fund received $23,581,126 in FY 2008, of which $21,223,013 went directly to hospitals unrecovered trauma center readiness cost. In FY 2009, The Trauma & Emergency Services Fund received $20, , of which $18,858,842 went directly to hospitals unrecovered trauma center readiness cost. In FY 2010, The Trauma & Emergency Services Fund received $19,016,404, of which $17,114,764 went directly to hospitals unrecovered trauma center readiness cost. In FY 2011, The Trauma & Emergency Services Fund received $19,818,051, of which $17,836,246 went directly to hospitals unrecovered trauma center readiness cost. 5 Trauma Centers receiving funds from the Arizona State Benefits Funds include: Banner-Good Samaritan Medical Center, Flagstaff Medical Center, John C. Lincoln-North Mountain, Maricopa Medical Center, Phoenix Children s Hospital and Medical Center, Scottsdale Healthcare-Osborn, St. Joseph s Hospital and Medical Center and University Medical Center. According to the Arizona Revised Statutes: Trauma and emergency services fund A. The trauma and emergency services fund is established consisting of monies deposited pursuant to section (H)(3)(b)(ii) and interest earned on those monies. The Arizona health care cost containment system administration shall administer the fund. The fund is not subject to appropriation, and expenditures from the fund are not subject to outside approval notwithstanding any statutory provision to the contrary. B. Monies received pursuant to section shall be deposited directly with the trauma and emergency services fund. On notice from the administration, the state treasurer shall invest and divest monies in the fund as provided by section , and monies earned from investment shall be credited to the fund. No monies in the trauma and emergency services fund shall revert to or be deposited in any other fund, including the state general fund. Monies in the trauma and emergency services fund are exempt from the provisions of section relating to the lapsing of appropriations. Monies provided from the trauma and emergency services fund shall supplement, not supplant, existing monies. 5 Arizona Health Care Cost Containment System, (2012). AHCCS Proposition 202 SFY 2008, 2009, 2010, 2011 Payments [Data file]. Retrieved from

6 C. Monies in the fund shall only be used to reimburse hospitals in Arizona for unrecovered trauma center readiness costs and unrecovered emergency services costs as provided for in this section. D. For purposes of this section: 1. "Trauma center readiness costs" means clinical, professional and operational costs that are incurred by a level I trauma center and that are necessary for the provision of level I trauma care on a twenty-four hour, seven days per week basis. Trauma center readiness costs include only those administrative and overhead costs that are directly associated with providing level I trauma care. 2. "Emergency services costs" means clinical, professional and operational costs that are necessarily incurred by a hospital in providing emergency services. 3. "Unrecovered" means the difference between the costs incurred by a hospital in providing the service and the amount that the hospital has been paid for providing the service. E. Within six months of the effective date of this section, the administration shall promulgate rules pursuant to Arizona Revised Statutes title 42, chapter 6, except that the rules shall not be subject to article 5 of that chapter. The rules shall set forth: 1. A methodology to determine Arizona hospitals' unrecovered trauma center readiness costs and unrecovered emergency services costs; 2. A procedure to distribute all monies from the trauma and emergency services fund to Arizona hospitals in proportion to those hospitals' unrecovered trauma center readiness costs and unrecovered emergency services costs. F. The administration shall distribute all monies from the trauma and emergency services fund to Arizona hospitals in accordance with the rules promulgated pursuant to this section. 6 6 Arizona State Legislature, (2012). Arizona Revised Statutes [Data file]. Retrieved from

7 Instructional Improvement Funds The Instructional Improvement Funds are administered by the Department of Education. Every school district receives these funds. However, these funds do not apply to other agencies such as the Arizona State for Deaf and Blind, Arizona Department of Corrections or Arizona Department of Juvenile Corrections. Disbursement is based on a district s percentage of the total per capita number of public school students in the state. The following table breaks down Instructional Improvement Funds received by each county. County FY 2011 Payment 1 FY 2011 Payment 2 Apache $ 272, $ 200, Cochise $ 383, $ 282, Coconino $ 356, $ 262, Gila $ 160, $ 118, Graham $ 128, $ 95, Greenlee $ 32, $ 24, La Paz $ 49, $ 36, Maricopa $ 12,420, $ 9,155, Mohave $ 461, $ 348, Navajo $ 401, $ 295, Pima $ 2,737, $ 2,016, Pinal $ 972, $ 717, Santa Cruz $ 204, $ 150, Yavapai $ 482, $ 355, Yuma $ 721, $ 531, Additional information on the FY 2011 distributions of Instructional Improvements Funds can be found at 7 According to the Arizona Revised Statutes: Instructional Improvement Fund A. The instructional improvement fund is established consisting of monies deposited pursuant to sections (H)(3)(a)(i) and (H)(3)(b)(i), and interest earned on those monies. The department of education shall administer the fund. The fund is not subject to appropriation, and expenditures from the fund are not subject to outside approval notwithstanding any statutory provision to the contrary. B. Monies received pursuant to section shall be deposited directly with the instructional improvement fund. On notice from the department of education, the state treasurer shall invest and divest monies in the fund as provided by section , and monies earned from investment 7 Arizona Department of Education, (2011), School Finance Instructional Improvement Fund Payments [Data file]. Retrieved from

8 shall be credited to the fund. No monies in the instructional improvement fund shall revert to or be deposited in any other fund, including the state general fund. Monies in the instructional improvement fund are exempt from the provisions of section relating to the lapsing of appropriations. Monies provided from the instructional improvement fund shall supplement, not supplant, existing state and local monies. C. The department of education shall pay the monies in the fund to school districts and charter schools. The department of education shall determine the amount of monies from the fund to be paid to each school district and charter school as follows: 1. Determine the student count for each school district and charter school as provided in section Determine the student count for all school districts and charter schools as provided in section Divide the amount determined in paragraph 1 of this subsection by the total amount determined in paragraph 2 of this subsection. 4. Multiply the quotient determined in paragraph 3 of this subsection by the total amount of instructional improvement fund monies available to be distributed to school districts and charter schools under this section. D. Each school district and charter school may utilize up to fifty percent of the amount of monies determined pursuant to subsection C for teacher compensation increases and class size reduction as provided in section E. Monies that are not utilized as provided in subsection D shall be utilized for the following maintenance and operation purposes: 1. Dropout prevention programs. 2. Instructional improvement programs including programs to develop minimum reading skills for students by the end of third grade. F. School districts and charter schools that receive monies from the instructional improvement fund shall submit a report by November 15 of each year to the department of education that provides an accounting of the expenditure of monies distributed from the fund during the previous fiscal year. The department of education in conjunction with the auditor general shall prescribe the format of the report under this subsection. 8 8 Arizona State Legislature, (2012). Arizona Revised Statutes [Data file]. Retrieved from

9 Tourism Fund The Tourism Fund administered by the State Office of Tourism. In Fiscal Year 2011, the State Office of Tourism allocated Arizona Benefits Fund to following Marketing Outreach: Marketing Overview FY 2011 Traditional Advertising Target Cities Campaign $1,606,800 Online Advertising Target Cities Campaign $692,500 Instate Value AZ Campaign $150,000 Fulfillment $210,000 Research $300,000 Public Relations $231,500 Trade $692,685 Sponsorships $282,000 B-roll/Photos/Production of Advertising $36,750 Allocated Budget for Fiscal Year 2011 $4,202,235 Total Received from Arizona Benefits Fund - $5,541,074 Encumbered Budget for Fiscal Year 2012 Start-Up $1,338,839 9 According to the Arizona Revised Statutes: Tourism fund (Caution: 1998 Prop 105 applies) A. The tourism fund is established consisting of separate accounts derived from: 1. State general fund monies appropriated to the fund by the legislature. All monies in this account are continuously appropriated to the office of tourism for the purposes of operations and statewide tourism promotion. 2. Revenues deposited pursuant to section 5-835, subsection B or C. All monies in this account are continuously appropriated to the office of tourism, which, in consultation with a consortium of destination marketing organizations in the county in which the tourism and sports authority is established, shall be spent to promote tourism within that county. For fiscal years and , fifty per cent of the revenues deposited in the tourism fund pursuant to this paragraph may be expended by the office of tourism for operational and administrative purposes. 3. Revenues deposited pursuant to section The legislature shall appropriate all monies in this account to the office of tourism, which, in conjunction with the destination marketing organization in the county in which the tax revenues are collected, shall be spent only 9 Arizona Office of Tourism, (2012) Gaming Report Fiscal Year 2011.

10 to promote tourism within that county and shall not be spent for administrative or overhead expenses. 4. Revenues deposited pursuant to section (H)(3)(b)(iv). The office of tourism shall administer the account. The account is not subject to appropriation, and expenditures from the fund are not subject to outside approval notwithstanding any statutory provision to the contrary. Monies received pursuant to section shall be deposited directly with this account. On notice from the office of tourism, the state treasurer may invest and divest monies in the account as provided by section , and monies earned from investment shall be credited to the account. No monies in the account shall revert to or be deposited in any other fund, including the state general fund. Monies in this account shall supplement, not supplant, current funds in other accounts of the tourism fund. Monies in this account shall be spent only to promote tourism within the state and shall not be used for administrative or overhead expenses. B. Monies in the fund are exempt from the provisions of section relating to lapsing of appropriations Arizona State Legislature, (2012). Arizona Revised Statutes [Data file]. Retrieved from

11 AZ Wildlife Conservation Fund The Arizona Wildlife Conservation Fund is administered by the State Game and Fish Commission. For FY 2011 the Arizona Conservation Funds supported the following activities: Non-Game Subprogram (Funding FY 2011 $394,575) Non-Game International Conservation Non-Game Arizona-Mexico Borderlands Projects Arizona Important Bird Areas (IBA) Program Condor Non-lead Bullets Fisheries Subprogram (Funding FY 2011 $94,000) Apache and Gila Trout Recovery Projects Outreach Subprogram (Funding FY 2011 $474,950) Watchable Wildlife Recreation Enhancements Adobe Mountain Wildlife Center Lapsed Angler Marketing Arizona Wildlife Views Magazine AGFD Outdoor Expo Cross-Program Field Operations Projects (Funding FY 2011 $1,711,544) Wildlife Program Managers (Regions 1-6) Region 2 O&M Projects Region 4 O&M Project Region 5 O&M Projects Region 6 O&M Projects Landowner Incentive Specialist Support (Regions 1-2) Hopi Cooperative Hunting Agreement Horseshoe Ranch Management Field Operations Aviation Law Enforcement radio Systems Upgrade Cross-Program Development, Operation and Maintenance (Funding FY 2011 $2,237,298) Development Branch Projects 11 According to the Arizona Revised Statutes: Arizona wildlife conservation fund A. The Arizona wildlife conservation fund is established consisting of monies deposited pursuant to section (H)(3)(b)(iii) and interest earned on those monies. The Arizona state game and fish commission shall administer the fund. The fund is not subject to appropriation, and expenditures from the fund are not subject to outside approval notwithstanding any provision of sections or or any other statutory provisions to the contrary. 11 Arizona Game and Fish Department, (December 2011) FY 2011 Office of the Governor WCF Report- Arizona s Wildlife Conservation Fund.

12 B. Monies received pursuant to section shall be deposited directly with the Arizona wildlife conservation fund. On notice from the Arizona state game and fish commission, the state treasurer shall invest and divest monies in the fund as provided by section , and monies earned from investment shall be credited to the fund. No monies in the Arizona wildlife conservation fund shall revert to or be deposited in any other fund, including the state general fund. Monies in the Arizona wildlife conservation fund are exempt from the provisions of section relating to the lapsing of appropriations. Monies provided from the Arizona wildlife conservation fund shall supplement, not supplant, existing monies. C. All monies in the Arizona wildlife conservation fund shall be spent by the Arizona state game and fish commission to conserve, enhance, and restore Arizona's diverse wildlife resources and habitats for present and future generations, and which may include the acquisition of real property. The commission may grant monies to any agency of the state or any political subdivision, Indian tribe, or non-profit organization exempt from federal income taxation under section 501(c) of the internal revenue code for the purpose of conservation of wildlife or wildlife habitat or acquisition of real property or interest in real property that is wildlife habitat. A grant of money under this subsection to a nonprofit organization is conditioned on the organization providing reasonable public access to any land that is wholly or partly purchased with that money Arizona State Legislature, (2012). Arizona Revised Statutes [Data file]. Retrieved from

13 Appendices Arizona Department of Gaming Tribal Contributions from Gaming Revenue to the State, Towns & Counties as of October 29, 2012 AHCCS Proposition 202 SFY 2008, 2009, 2010, 2011 Payments Arizona Department of Education School Finance Memorandum Arizona Department of Education School Finance Memorandum Arizona Department of Education Instructional Improvement Fund District Payment Report FY 2011 Arizona Office of Tourism Gaming Report Fiscal Year 2011 Arizona Game and Fish Department FY 2011 Office of the Governor WCF Report

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