LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
May 28, 1997
TO: Honorable Bob Bullock Honorable James E. "Pete" Laney
Lieutenant Governor Speaker of the House
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB2777 ( Relating
to eligibility determination and service delivery of health
and human services.) this office has detemined the following:
Biennial Net Impact to General Revenue Funds by HB2777-Conference Committee Report
Implementing the provisions of the bill would result in a net
negative impact of $(3,004,598) 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.
Fiscal Analysis
The bill would require the Health and Human Services Commission
(HHSC) to develop and implement a plan for the integration of
eligibility determination functions and service delivery by
health and human services agencies, the Workforce Commission
and other agencies, subject to the approval of the Legislative
Budget Board and the Governor. The bill would create a new
legislative oversight committee to advise HHSC and monitor the
implementation of the plan. The committee would be allowed to
use staff of appropriate legislative committees and state agencies
in carrying out its responsibilities. The bill would authorize
the commission to utilize the staff and resources of agencies
whose programs are included in the plan.
The bill would authorize
HHSC to contract for implementation for part or parts of the
plan upon receipt of any necessary federal approval, subject
to the approval of the Legislative Budget Board and Governor.
The bill would require HHSC to perform a detailed cost-benefit
analysis before awarding a contract. The bill would authorize
financing through the issuance of bonds or obligations pursuant
to Article 601d, V.A.C.S. for the design, development, and operation
of an automated data processing system to support the eligibility
determination and service delivery plan. The bill would authorize
the commission to use resulting savings to further develop the
integrated system and to provide other health and human services
subject to any spending limitation in the General Appropriations
Act.
Methodolgy
1. Consultant Costs: Estimates provided by HHSC assume that
funding will be shifted from the Department of Health, Department
of Human Services and Workforce Commission during the 1998-99
biennium to fund the consultant costs related to the development
of the plan. Estimated general revenue costs of management
consultants in the 1998-99 would total $4.25 million (with an
equal amount of matching federal funds) and be funded by TDH,
DHS and TWC. HHSC assumes that these contracts will be funded
through savings related to streamlining of work processes rather
than by new funding. Consultants would be responsible for management
and process engineering, legal assistance, policy development,
and independent validation and verification.
2. Additional
HHSC Staff: HHSC would hire three new employees; an associate
commissioner, systems analyst, and attorney. Costs to the state
for these employees, which would be funded equally with state
and federal monies, would be $264,700 the first year and approximately
$245,000 in subsequent years.
3. Additional costs for plan
development would be paid through existing resources for items
such as site readiness preparation, public outreach, employee
training, lease close-outs, automation procurement development
for the Request for Proposal and system specifications. During
the 2000-01 biennium, systems development and automation would
be financed with bonds and redirected savings.
4. System
acquisition is assumed to be financed through bonds or the Master
Lease Program. The first bond issuance of $30 million would
require debt service payments of $2.75 million in fiscal year
1999. Debt service in subsequent years would be $5.5 million
annually. A second bond issuance of $40 million would require
debt service of $3.66 million beginning in fiscal year 2000
with debt service of $7.3 million annually in subsequent years.
HHSC assumes that the debt will be retired with general revenue
funds, although federal matching funds may be available for
a portion of the debt.
5. Savings: According to the HHSC,
the integration of eligibility determination and service delivery
would identify some overlap which could require closure of some
offices and some reduction in state employees. HHSC estimates
that by fiscal year 2002, the number of offices could be reduced
by 35 percent and the number of employees could be reduced by
33 percent. Further, HHSC estimates that savings could total
$125 million annually in all funds when the system is implemented
statewide.
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 Change in Number
Savings/(Cost) Savings/(Cost) of State
from General from Federal Funds Employees from
Revenue Fund FY 1997
0001 0555
1998 ($132,351) ($132,351) 3.0
1998 (2,872,247) (125,126) 3.0
2000 (9,282,697) (125,626) 3.0
2001 (12,944,526) (124,626) 3.0
2002 (12,943,526) (126,626) 3.0
Net Impact on General Revenue Related Funds:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 ($132,351)
1999 (2,872,247)
2000 (9,282,697)
2001 (12,944,526)
2002 (12,943,526)
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
No significant fiscal implication to units of local government
is anticipated.
Source: Agencies: 529 Health and Human Services Commission
324 Department of Human Services
LBB Staff: JK ,BB ,AZ