LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 1, 1997
TO: Honorable Toby Goodman, Chair IN RE: House Bill No. 3281
Committee on Juvenile Justice and Family Issues By: Goodman
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB3281 ( Relating
to streamlining local court processing for child support cases,
contracting for certain child support enforcement functions,
strengthening the license suspension program in child support
enforcement, expanding the "most wanted" program, and improving
the filing of child support liens.) this office has detemined
the following:
Biennial Net Impact to General Revenue Funds by HB3281-As Introduced
Implementing the provisions of the bill would result in a net
positive impact of $1,539,180 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 streamline local court processing
for child support cases, provide for contracting for certain
child support enforcement functions, strengthen the license
suspension program in child support enforcement, expand the
"most wanted" program, and improve the filing of child support
liens. This bill would create a Child Support Privatization
Council. This new Council would divide the state into six to
ten regions and award collection contracts to a selected attorney
in each region to enforce and collect child support on IV-D
cases that are not in compliance within 120 days from the date
an order or agreement is entered.
The bill would require
that those eligible to bid on the private contracts be attorneys
with not less than 5 years of experience in the legal enforcement
of large-scale collections. The term of the collections contracts
would be required to be for at least 4 years. The bill would
provide that a fee of 15 percent of the total collections would
be paid to the private contractor. The fee would be collectable
for 5 years or during the time an obligor remains in material
compliance with the order, whichever is shorter.
Fiscal Analysis
The bill would require the Office of the Attorney General and
the Department of Protective and Regulatory Services to develop
a pilot program which includes processes for automated court
processing systems for family law cases, including child support
and foster care cases. Preference would be given to Bexar and
Harris Counties in the awarding of grants by the Office of Court
Administration. The Comptroller of Public Accounts recommended
in "Disturbing the Peace," page 387, that $1,000,000 from Child
Support Retained Collections be appropriated to the Office of
Court Administration from the Child Support Retained Collections
Account for purposes of the pilot program.
Federal standards
for procuring private support enforcement services provide that
"all procurement transactions shall be conducted in a manner
to provide, to the maximum extent possible, open and free competition"
(45 Code of Federal Regulations 74.43). The Office of the Attorney
General (OAG) states in their assessment of fiscal implications
that "Section 233.006 of this bill likely violates federal regulations
relating to competitive procurement and therefore jeopardizes
federal financial participation in any payments going to the
private contractors."
Private contractors handling IV-D
cases are required to adhere to federal regulations that are
imposed upon the OAG as Texas's IV-D agency, including case-processing
time frames and automation requirements. To comply with federal
regulations, private collection contractors would have to use
the new child support computer system, and an automated two-way
case transfer process would need to be developed. Legal actions
filed by the private contractor must be recorded on the child
support automated system and distinguished from other legal
actions of the OAG.
Methodolgy
In order to estimate a potential impact to the state Retained
Collections Account (based on the fee structure outlined in
the legislation), the following assumptions were made:
* the OAG states that several provisions of this bill (e.g.,
length of contract, contractor eligibility, a flat 15 percent
fee) "likely will be interpreted as a violation of regulations"
because they do not meet federal competitive procurement regulations
and, therefore, federal matching funds for payments to private
contractors would not be available. However, this estimate
assumes that such funds would be available at the current 66
percent to 34 percent federal-to-state match rate;
* 75
percent of referrals would be non-Temporary Assistance to Needy
Families (not receiving public assistance) based on IV-D cases
with court orders, i.e., for every 50,000 cases referred, 37,500
would be non-TANF and 12,500 would be TANF;
* 50 percent
of all cases would average paying $200 a month for total collections
of $60,000,000 per year;
* fees to private collectors,
at 15 percent, would be $9,000,000 per year with the state paying
34 percent of that total (except in FY 1998, where a six-month
start-up time was assumed);
* the state Retained Collections
Account would receive 37.7 percent of total TANF collections;
* as collections increase on TANF referrals, recipients would
move off public assistance, decreasing TANF collections (and
the state Retained Collections account balance) each year;
* the rate of recipients moving off public assistance would
increase approximately 10 percent per year (with a six-month
start-up time in FY 1998), and reach a 40 percent total "move-off"
rate by fiscal year 2000, at which point the rate would remain
unchanged in following years;
* payments to private contractors
would be made from child support retained collections;
* the OAG estimates that additional programming to implement
the two-way case transfer process would be $539,000 for fiscal
year 1998 only.
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 Revenue Probable
Gain/(Loss) from Savings/(Cost)
General Revenue from General
Fund--Child Revenue
Support Retained Fund--Child
Collections Support Retained
Collections
0001 0001
1998 $2,974,530 ($3,069,000)
1998 4,693,650 (3,060,000)
2000 4,410,900 (3,060,000)
2001 4,410,900 (3,060,000)
2002 4,410,900 (3,060,000)
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 ($94,470)
1999 1,633,650
2000 1,350,900
2001 1,350,900
2002 1,350,900
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: 405 Department of Public Safety
501 Department of Health
530 Department of Protective and Regulatory Services
324 Department of Human Services
302 Office of the Attorney General
304 Comptroller of Public Accounts
LBB Staff: JK ,CB ,JC