LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session March 28, 1997 TO: Honorable Harvey Hilderbran, Chair IN RE: House Bill No. 942 Committee on Human Services By: Hilderbran House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB942 ( Relating to AFDC and Medicaid benefits for additional children born to AFDC recipients.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB942-As Introduced Implementing the provisions of the bill would result in a net impact of $0 to General Revenue Related Funds through the biennium ending August 31, 1999. 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 would prohibit the Department of Human Services from providing financial assistance for support of a child born to a recipient of Temporary Assistance for Needy Families (TANF) at least 10 months after the date of qualification for assistance. Fiscal Analysis If an adult recipient of financial assistance becomes the parent of another child while the recipient is receiving assistance, the department must deduct the earned income disregards allowed under federal law, and increase the amount of earned income disregard for an employed recipient by 50 percent of the amount granted under Human Resources Code Section 31.003, adjusted for family size. Even though ineligible for financial assistance under the provisions of the bill, the latter born child would still be eligible to receive child care, support services, and Medicaid. Methodolgy To estimate the fiscal impact of the provisions of the bill: 1) data were reviewed on the number of children born during fiscal year 1996 to mothers on AFDC and who had been on AFDC at least 10 months prior to the birth of the child; 2) a monthly average number of births was calculated by dividing the total by 12; 3) estimated the number of births based on the projected AFDC caseload; 4) assumed a 93 percent monthly retention rate for AFDC/TANF cases and modeled cases over time; 5) calculated the average TANF grant reduction of $33.33 when the case is reduced by one child; 6) multiplied the projected case-months by the reduced cases to obtain expenditure savings; 7) calculated the clients per month by dividing the total dollars by dollars per client per month by 12 months per year. It is anticipated that there will be minimal impact to staffing, thus no salary costs or FTEs are reflected in the fiscal impact. It is assumed that Management Information Systems (MIS) will need to be altered to incorporate the policy changes. Thus, costs are included for contracting for the necessary programming on existing computer systems. The costs and savings are assumed to be from federal funds (Temporary Assistance for Needy Families block grant ) since the state is required to maintain its level of effort in general revenue spending. Savings in cash benefits are lowered in the first year because the policy does not go into effect until July 1998 (10 months after the bill would go into effect). The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Probable Savings/(Cost) Savings/(Cost) from Federal from Federal Funds: TANF Funds: TANF Block Grant Block Grant 0555 0555 1998 ($564,800) $67,391 1998 1,695,839 2000 2,901,421 2001 3,395,872 2002 3,602,847 Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 $0 1999 0 2000 0 2001 0 2002 0 Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No fiscal implication to units of local government is anticipated. Source: Agencies: 320 Texas Workforce Commission 324 Department of Human Services 501 Department of Health LBB Staff: JK ,BB ,AZ