LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session March 28, 1997 TO: Honorable Harvey Hilderbran, Chair IN RE: House Bill No. 1439 Committee on Human Services By: Hilderbran House Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB1439 ( Relating to use of financial assistance granted to persons with dependent children.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB1439-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 add Section 31.0355 to Chapter 31 of the Human Resources Code. The bill would restrict the use of financial assistance grants, requiring that recipients use the funds only to purchase goods and services that are considered essential and necessary for the welfare of the family, including food, clothing, housing, and health care services. A recipient of financial assistance who receives the assistance by electronic benefits transfer (EBT) to an account could not make a cash withdrawal from the account. An EBT operator that contracts with the Department of Human Services (DHS) would establish procedures to restrict purchases of goods and services with financial assistance in the same manner purchases of items with benefits under the food stamp program are restricted under the EBT system. The department would by rule define what constitutes essential and necessary goods and services and provide for penalties and sanctions for a recipient or operator who does not comply with this section. The bill would take effect September 1, 1997, and apply to a person who is receiving financial assistance under Chapter 31, Human Resources Code, on or after that date, regardless of the date on which eligibility for that assistance was determined. Fiscal Analysis The bill would have no impact on general revenue funds provided federal Temporary Assistance for Needy Families (TANF) block grant funds are available. Estimates of cost relate to the Department of Human Services contracts with the EBT provider. It is assumed that any increased workload on the department could be absorbed by current staff. Methodolgy 5,000 new point-of-sale (POS) devices would be installed at public utility offices, public housing locations, telephone companies, and health care clinics. 13,000 current retailers and 5,000 new retailers would be trained on the appropriate use of financial assistance under the revised EBT program. The following costs would occur in year one: $500,000 for project management $175,000 for software development /support $165,000 for retailer/client/staff training and support $1,000,000 for training materials $700,000 for postage and shipping $150,000 for additional disk drives and memory $6,000,000 for POS equipment and installation $600,000 for ongoing POS service and repair Only the POS service and repair cost would continue in subsequent years. 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 : Contract Costs 0555 1998 ($9,290,500) 1998 (600,000) 2000 (600,000) 2001 (600,000) 2002 (600,000) 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: 324 Department of Human Services LBB Staff: JK ,BB ,PP