LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          March 20, 1995



 TO:     Honorable Harvey Hilderbran, Chair     IN RE: Committee Substitute
         Committee on Human Services                            for House
         House of Representatives               Bill No. 1863
         Austin, Texas








FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
1863 (relating to eligibility for and the provision of services
and other assistance to needy people, including health and human
services and assistance in becoming self-dependent) this office
has determined the following:

The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.

The bill makes a number of changes to policies regarding the Aid
to Families with Dependent Children (AFDC) program which have
fiscal implications to the State and would require federal
waivers.  For the purpose of estimating the fiscal implications
of this bill, it was assumed that federal waivers would be
granted by March 1996.

Provisions which increase costs for the State include:

*  Section 1.03 requires the Department of Human Services (DHS)
to assess the needs of adult   recipients and their families.
*  Section 1.05 provides that various agencies should cooperate
to provide parenting skills training to recipients of assistance
as needed.
*  Section 1.07 requires DHS to raise the resource limits for Aid
to Families with Dependent Children (AFDC) recipients to those
allowed for Food Stamp recipients, permitting a somewhat greater
portion of potential recipients to qualify for the program.    




*  Section 2.02 provides that all applicants sign a personal
responsibility agreement, which would require a certain increase 
in time spent with applicants.  Persons already receiving
assistance would be scheduled for group orientation sessions to
sign the agreements.  
*  Section 3.02 requires DHS to provide transitional child care
to clients who become ineligible for financial assistance due to
increases in household income or having exhausted their benefits.
*  Section 4.06 provides that DHS must apply for a federal waiver
to eliminate a work history and 100 hour rule as the provisions
apply to the Aid to Families with Dependent Children - Unemployed
Parent (AFDC-UP) program.
*  Section 5.04 requires the Title IV-D agency to refer
unemployed noncustodial parents of children receiving financial
assistance for job training, literacy classes and counseling.
*  Section 5.05 provides for the suspension of drivers and
professional licenses for non-payment of child support.
*  Section 6.01 directs the Health and Human Services Commission
(HHSC) to assist recipients (of AFDC assistance, for instance)
who are eligible for federal programs (such as SSI or SSDI), to
apply for those programs.  A consultant would ensure that Texas
Rehabilitation Commission's workload did not increase due to
inappropriate referrals.
*  Section 6.03 requires the Texas Rehabilitation Commission
(TRC) to take steps to ensure the greater awareness and usage
where possible of the work incentives program, including
contracting a person to train counselors and review cases.
*  Section 6.06 and 6.07 provide that the Texas Department of
Mental Health and Mental Retardation (TxMHMR) and TCADA should
work with DHS to amend the state's emergency assistance plan to
include mental health and chemical dependency treatment services
for children and significant adults in a child's family.  Certain
costs would be assumed necessary to administer the program.
*  Sections 7.01 and 7.02 relate to adult education learning
laboratories for AFDC recipients and would imply certain
administrative costs.
*  Section 7.05 requires DHS to establish a pilot program using
"fill-the-gap budgeting" or extending transitional benefits,
which would require some administrative costs.
*  Section 7.06 requires DHS to establish an emergency assistance
pilot for families in crisis, offering them a one-time cash
assistance payment in lieu of ongoing AFDC assistance.
*  Section 8.02 relates to integrated eligibility determination,
incurring costs for staff and benefits, training, consultant
contracts, hardware and software, and infrastructure.  It should
be noted that great differences in estimates were provided by the
Comptroller of Public Accounts and by the agencies which will be
involved in implementation of this provision  should it be
enacted.  The Department of Human Services and the Health and
Human Services Commission estimate is based upon implementation
of an Eligibility Determination Strategic Initiative (EDSI)
system which is not currently in place and would require
substantial investment in the 1996-97 biennium.  Estimates
captured in the table below are based on those provided by the    




agencies.  In addition DHS assumes that savings which would 
accrue from efficiencies in staff time (cases per worker increase
by 5%) and staff reductions. DHS assumes that costs related to
fiscal sanctions and maintenance of the system would be avoided.  
Estimates for the assumed savings and decreased number of FTEs
are more conservative than those provided in the Comptroller's
Partnership for Independence.
*  Sections 8.08 and 8.09 provide that owners' social security
numbers be added to the Texas Department of Transportation's
(TxDOT) motor vehicle database and that TxDOT provide a dedicated
line to the database so that other agencies may check it to
verify ownership information as a criterion for qualification for
public assistance.
*  Section 8.10 requires DHS, in conjunction with other agencies,
to develop a program to prevent welfare fraud through fingerprint
imaging.  For the purposes of this fiscal note, it was assumed
that a test site would be implemented in the first two years
followed by statewide implementation. 

The following areas of the bill would result in savings:

*  Section 1.02, caps the Aid to Families with Dependent Children
(AFDC) assistance amount that a family may receive, independent
of whether more children are born into the family.  The maximum
amount a family may receive is capped at $184.
*  Section 2.02 provides that all applicants sign a personal
responsibility agreement, would be assumed to deter a certain
portion of applicants from applying and another portion would
fail to comply and be sanctioned.
*  Section 3.01 limits the length of time clients can receive
AFDC assistance. 
*  Section 5.05, providing for the suspension of driver's and
professional licenses for non-payment of child support, would
provide savings through decreased AFDC caseload.
*  Section 6.01 directs the Health and Human Services Commission
(HHSC) to assist recipients (of AFDC assistance, for instance)
who are eligible for federal programs (such as SSI or SSDI), to
apply for those programs, thereby decreasing the number of AFDC
recipients.
*  Section 6.06 and 6.07 provide that the Texas Department of
Mental Health and Mental Retardation (TxMHMR) and TCADA should
work with DHS to amend the state's emergency assistance plan to
include mental health and chemical dependency treatment services
for children and significant adults in a child's family.
*  Section 6.08, which permits children in the homes of relatives
to qualify for Medicaid, would then permit the state to receive
reimbursement for administrative expenses.  There is concern that
changes at the federal level could reduce or eliminate the
savings provided by the Comptroller's Office.
*  Sections 7.01 and 7.02, relating to adult education labs,
would accrue savings through the use of emergency assistance
federal matching funds or JOBS child care funds for AFDC clients.
*  Section 7.05 requires DHS to develop a pilot program using
"fill-the-gap budgeting" or extending transitional benefits,     




saving the state by enabling a certain portion of the project
clients to move off of assistance due to increased income.
*  Section 7.06  requires DHS to establish an emergency
assistance pilot for families in crisis, offering them a one-time
cash assistance payment in lieu of ongoing AFDC assistance,
resulting in some savings to the state.
*  Section 8.02 relates to integrated eligibility determination
and service delivery would provide for savings through gained
efficiency in staff time and staff reductions. 
*  Section 9.01 relates to workload standards and education,
stipulating that a high school degree is sufficient for clerical
staff who process applications under an automated system.

The following areas of the bill would have fiscal implications
which cannot be determined:

*  Savings associated with Section 5.04 requires the Title IV-D
agency to refer unemployed noncustodial parents of children
receiving financial assistance for job training, literacy classes
and counseling.
*  Section 7.07 requires DHS to develop a pilot program to create
savings accounts for AFDC recipients.
Savings associated with Section 8.07, relating to fraud
prevention measures such as publicizing fraud prosecutions and
promoting a toll-free hotline for reporting fraud.
*  Section 8.11 relates to the reduction of error rates in AFDC
and food stamps.
*  Section 9.02 and 9.03 provide the Health and Human Services
Commission with greater control over agency appropriations and
transfers and strategic plans and updates for those agencies
under its jurisdiction.

The following areas have fiscal implications for local areas of
government:

*  Section 4.05 provides for a pilot project on the use of JOBS
funds for support services for teenagers.  Comptroller estimates
show gains in federal funds to local school districts ($10
million 1996; $16 million each year thereafter).
*  Sections 8.08 and 8.09 would require counties to be involved
in processing motor vehicle title transactions which could
increase costs to these entities.  Estimates provided by TXDOT
show costs as follows:  $65,792 in 1996; $118,439 in 1997;
          $69,158 in 1998; $70,338 in 1999; $70,437 in 2000.              
          *  Section 6.06 has the potential of increasing revenue to local
          entities through Title IV-A Emergency Assistance funding:       
          $635,000 in 1996; $2,063,000 each year thereafter.              
          *  Section 7.01 would have a net gain in federal funds to local 
          governments of $5.7 million in 1996 and $11.5 million each year 
          thereafter according to the Office of the Comptroller.          
                                                                          
                                                                          
          In addition to those savings and costs captured in the table    
          below, estimates provided by the Office of the Attorney General 
                                                                          
                                                                          
                                                                          

indicate that 61 FTEs will be required to implement the sections
of the bill relevant to OAG at an estimated cost of $3,147,517 in
1996 and $2,396,453 each year thereafter.  Their estimates
indicate that 34% of the costs will be funded by retained
collections and 66% of the costs will be funded by federal funds.


The Comptroller of Public Accounts reports that the State would
gain revenue related to Child Support Collections pursuant to
this bill in the following amounts:  $6,589,000 (1996);
$9,250,000 (1997); $17,233,000 (1998); $10,644,000 (1999); and
$10,644,000 (2000).  The Comptroller adds a caution that these
estimates relate only to drivers licenses, "if revocation and
non-renewal of licenses were interpreted to include a sales tax
and mixed beverage tax permittees and other similar permittees
currently collecting and remitting state tax revenue, there could
be an indeterminate loss of state tax revenue."


The probable fiscal implication of implementing the provisions of
the bill during each of the first  five years following passage
is estimated as follows:
     



            Fiscal  Probable Cost Out   Probable Savings   Probable Cost Out 
             Year      of  General       from  General     of  Federal Funds 
                     Revenue Fund 001   Revenue Fund 001                     
                                                                             
                                                                             
          1996             $12,445,936         $6,817,100         $22,423,726
          1997              18,919,583         29,717,911          20,310,153
                                                                             
          1998              23,139,309         38,670,540          20,846,554
                                                                             
          1999              19,082,612         45,783,616          17,131,429
          2000              15,975,242         51,297,243          14,305,665
                                                                             
                                                                             
                                                                             
            Fiscal  Probable Savings       Change in   
             Year    from   Federal     Number of State
                         Funds          Employees from 
                                            FY 1995    
                                                       
          1996              $1,031,541            324.0
          1997              23,505,300            (1.9)
                                                       
          1998              35,064,185             13.7
                                                       
          1999              38,843,673            (8.1)
          2000              45,821,653           (47.9)
                                                       
                                                       
                                                       
       Similar annual fiscal implications would continue as long as the
provisions of the bill are in effect.




Source:   Comptroller of Public Accounts, Office of the Attorney
General,
                        Department of Human Services, Council on
Workforce and Economic Competitiveness,
                        Department of Public Safety, Department
of Health, Commission on Alcohol and Drug Abuse,    




                        Health and Human Services Commission,
Department of Protective and Regulatory Services,
                        Department of Transportation, Texas
Department of Mental Health and Mental Retardation
          LBB Staff: JK, AZ, KF, DF