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