LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  May 18, 1997
         
         
      TO: Honorable Judith Zaffirini, Chair            IN RE:  House Bill No. 942, Committee Report 2nd House, as amended
          Committee on Health & Human Services                              By: Hilderbran
          Senate
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on HB942 ( Relating 
to the AFDC and Medicaid benefits to children born to AFDC recipients.) 
this office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by HB942-Committee Report 2nd House, as amended
         
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 on which the 
recipient initially began receiving the assistance if the paternity 
of the dependent child has not been established for the purpose 
of enforcing child support and if the recipient already has 
two or more children. 
         
 
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) 
 data were reviewed to establish the number of cases denied 
benefits due to lack of cooperation on paternity establishment;
 
    3)  estimated the number of births based on the projected 
AFDC caseload which would correspond to the parameters established 
in the provisions;
     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 or computer adaptations will be 
needed to implement the provisions of the bill.

The 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           
            Savings/(Cost)                                                                                
            from Federal                                                                                  
            Funds:  TANF                                                                                  
            Block Grant                                                                                   
            0555                                                                                           
       1998            $2,057                                                                        
       1998            51,761                                                                        
       2000            88,558                                                                        
       2001           103,650                                                                        
       2002           109,967                                                                        
 
 
         Net Impact on General Revenue Related Funds:
 

 
              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:   324   Department of Human Services
                                         
                      LBB Staff:   JK ,BB