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