LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 5, 2001 TO: Honorable Elliott Naishtat, Chair, House Committee on Human Services FROM: John Keel, Director, Legislative Budget Board IN RE: HB43 by McClendon (Relating to the consideration of income earned by certain recipients of Temporary Assistance for Needy Families benefits for eligibility determination purposes.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB43, As Introduced: negative impact of $(25,966,348) through the * * biennium ending August 31, 2003. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2002 $(12,000,550) * * 2003 (13,965,798) * * 2004 (15,548,340) * * 2005 (15,454,969) * * 2006 (15,801,281) * **************************************************** All Funds, Five-Year Impact: ************************************************************************** *Fiscal Probable Probable Probable * * Year Savings/(Cost) from Savings/(Cost) from Savings/(Cost) from * * GR MOE for Temporary GR Match for Federal Funds - * * Assistance for Needy Medicaid Federal * * Families 0758 0555 * * 0759 * * 2002 $(11,758,895) $(241,655) $(365,519) * * 2003 (13,656,360) (309,438) (464,707) * * 2004 (15,238,688) (309,652) (465,834) * * 2005 (15,145,045) (309,924) (466,245) * * 2006 (15,491,084) (310,197) (466,656) * ************************************************************************** Given the limited availability of Temporary Assistance for Needy Families (TANF) federal funds, for the purpose of this fiscal note General Revenue is assumed as the method of financing. Should additional TANF federal funds become available, $11,758,895 in FY 2002 and $13,656,360 in FY 2003 of General Revenue costs assumed above could be financed with TANF federal funds. Technology Impact An estimated $214,500 for 1,950 hours of programming would be required by the Department of Human Services (DHS) to implement the provisions of the bill. Fiscal Analysis The bill adds a new Section 31.0038 to the Human Resources Code and repeals Section 31.043. The bill requires DHS to exclude all earned income in excess of $120 (the work-related expense deduction) for a recipient of TANF, rather than the current 90% disregard, when determining eligibility and benefits. The time period of the earned income disregard is extended from the current four months to six months. The department may not disregard earned income of a recipient who left employment voluntarily without good cause while receiving financial assistance, and the department may not exempt any recipient from participating in work or employment activities during the period of the disregard. The bill is effective September 1, 2001. Methodology The impact of increasing the earned income disregard from 90% to 100% was estimated by subtracting the average grant per case from the maximum grant. It was assumed that the number of clients receiving the earned income disregard increases 8% in FY 2002 and 25.3% in FY 2003, remaining level through FY 2006. A retention factor was applied over the period of the earned income disregard, reflecting current experience of 32.2% of clients remaining on the caseload through the fourth month. In addition to the increase for cash assistance, it was assumed that clients would receive an additional two months of child care at $16.21 per day for 43.5 days. It was also assumed that the client would receive an additional two months of CHOICES services at $178.83 per month. Extending the disregard by two months provides clients two additional months of Medicaid coverage. Medicaid costs reflect insured services, cost-reimbursed services, vendor drug and medical transportation. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 324 Texas Department of Human Services, 501 Texas Department of Health, 320 Texas Workforce Commission LBB Staff: JK, HD, KE