TO:	Honorable Angie Chen Button, Chair, House Committee on International Relations & Economic Development
FROM:	Jerry McGinty, Director, Legislative Budget Board
IN RE:	HB3771 by Johnson, Julie (Relating to the creation of the employer child-care contribution partnership program administered by the Texas Workforce Commission; authorizing a civil penalty.), As Introduced

General Revenue-Related Funds, Five- Year Impact:

All Funds, Five-Year Impact:

Fiscal Analysis

The bill would amend the Labor Code to establish and administer a child care partnership program that incentivizes eligible employers to contribute to employee child care costs. The Texas Workforce Commission (TWC) would provide a state match for eligible funds contributed to the program. The bill would establish a new General Revenue-Dedicated account to be administered by TWC and limit administrative costs to five percent of total funds in fiscal year 2024 and three percent in subsequent years. The bill would provide unexpended balance authority between fiscal years and biennia to the agency for this account. The bill would require the dedication of 25 percent of funds to employers with fewer than 50 employees. The bill would require TWC to publish and submit to the Legislature a report by September 1, 2024, detailing the plan for implementing provisions of the bill and establishing a child care partnership program; the reporting requirement would expire September 1, 2025. The bill would take effect September 1, 2023.

Methodology

This analysis assumes that the Texas Workforce Commission (TWC) must establish and administer a new program to incentivize eligible employers to contribute to eligible employee child care costs and provide a state match for the employer funds contributed. TWC would require Full-Time Equivalents (FTE) in the 2024-25 biennium to establish, operate, and maintain a new General Revenue-Dedicated (GR-D) account and a new program as required by the provisions of the bill.

Based on this assumption and the analysis of TWC, the total administrative costs to implement the provisions of this bill would be $4,213,130 from a new GR-D account in the 2024-25 biennium. The total includes salaries and wages ($1,797,786) for the FTEs listed below, all employee benefits ($572,235), and other operating costs ($1,843,109) necessary to implement all provisions of the bill in the 2024-25 biennium.

In fiscal year 2024, salaries and wages costs and the full-time equivalent (FTE) requirements for the agency to implement the provisions of this bill would be $564,351 from a new GR-D account and 7.5 FTEs. The FTEs in fiscal year 2024 include:

  - 1.0 Director I ($93,406 plus benefits at $29,731 per FTE)
         Primary function: Providing oversight to tasks related to the implementation and operation of a new child care partnership program.
  - 3.5 Information Technology Support Specialist V ($83,579 plus benefits at $26,603 per FTE)
         Primary function: Modifying the Child Care Case Management System (CCMS) to update tracking capabilities to account for program partnership agreements and reimbursements.
  - 3.0 Program Specialist IV ($59,473 plus benefits at $18,930 per FTE)
         Primary function: Program support through establishing and developing rules, policies, and procedures related to a new child care partnership program.

In fiscal year 2025, salaries and wages costs and the FTE requirements for the agency to implement the provisions of the bill would be $1,233,435 from a new GR-D account and 19.5 FTEs. The FTEs in fiscal year 2025 include:

  - 4.0 Accountant IV ($55,602 plus benefits at $17,698 per FTE)
         Primary function: Vendor setup, receiving revenue, and processing payments.
  - 1.0 Director I ($93,406 plus benefits at $29,731 per FTE)
         Primary function: Providing oversight to tasks related to the implementation and operation of the child care partnership program.
  - 1.0 Hearings Officer IV ($68,047 plus benefits at $21,659 per FTE)
         Primary function: Handling tasks related to appeals.
  - 1.5 Information Technology Support Specialist V ($85,075 plus benefits at $27079 per FTE)
         Primary function: Finalizing and enhancing the CCMS upgrades.
  - 10.0 Program Specialist IV ($59,473 plus benefits at $18,930 per FTE)
        Primary function: To process applications and determine applicants' eligibility.

The other operating costs for the 2024-25 biennium include $963,750 for an information and media outreach campaign as required by the bill, $356,859 in indirect costs, travel expenses, consumable supplies, and other personnel costs, and also include $522,500 as one-time technology upgrades to the Child Care Case Management System.

Based on this analysis of the Comptroller of Public Accounts, Office of Court Administration, and the Texas Workforce Commission, any additional duties and responsibilities associated with implementing the bill's provisions could be accomplished by utilizing existing agency resources.

The Texas Workforce Commission cannot estimate the state match funding needed for the new program based on employer match amounts, as it relates to employee participation, as the bill does not specify a mandatory minimum employer contribution for a state match. The agency also cannot estimate the income level of the employees participating in the new program. Additionally, the Comptroller of Public Accounts cannot fully determine the fiscal impact as the amounts and timing of any legislative appropriations, interest and investment earnings, civil penalties collected under the new chapter, and gifts, grants, and donations are unknown at this time.

Technology

As previously mentioned, the bill would require the Texas Workforce Commission to upgrade and enhance the Child Care Case Management System to accommodate additional tracking capabilities to account for program partnership agreements and program reimbursements, as required by the bill.

Local Government Impact

No significant fiscal implication to units of local government is anticipated.