LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
February 20, 2001
TO: Honorable Jim Solis, Chair, House Committee on Economic
Development
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB476 by Naishtat (Relating to incentive programs and
employment services to benefit certain recipients of
financial assistance.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB476, As Introduced: negative impact of $(1,200,000) 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. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(600,000) *
* 2003 (600,000) *
* 2004 (600,000) *
* 2005 (600,000) *
* 2006 (600,000) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Savings/(Cost) from Probable Savings/(Cost) from *
* Year General Revenue Fund Federal Funds - Federal *
* 0001 0555 *
* 2002 $(600,000) $726,040 *
* 2003 (600,000) 752,362 *
* 2004 (600,000) 792,760 *
* 2005 (600,000) 819,223 *
* 2006 (600,000) 846,531 *
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Fiscal Analysis
The bill would amend Chapter 302 of the Labor Code to require the Texas
Workforce Commission (TWC) to develop rules for a job placement
incentive program that would provide incentives to the local workforce
development boards' employment services contractors for placing
recipients of financial assistance in higher-wage jobs. The measures
defining higher-wage jobs would be set in commission rule.
The bill allows local workforce development boards (LWDB) to provide a
monetary incentive to an employment services contractor that meets the
performance criteria of the job placement incentive program.
The bill would take effect September 1, 2001.
Methodology
The bill does not require TWC or the LWDBs to provide monetary incentives
to employment services contractors for meeting the performance criteria
of the job placement incentive program. TWC, however, assumes that it
would structure the job placement incentive program on its existing
Exemplary Performance Awards monetary incentive awards and provide
monetary awards to the top three LWDBs that meet the program criteria by
size, large and small, of the local workforce development area (LWDA).
The fiscal implications of the incentive program awards are based on
TWC's estimates of the following monetary award amounts:
First Prize for large LWDA class: $150,000
First Prize for small LWDA class: $150,000
Second Prize for large LWDA class: $ 75,000
Second Prize for small LWDA class: $ 75,000
Third Prize for large LWDA class: $ 75,000
Third Prize for small LWDA class: $ 75,000
Given the limited amount of Temporary Assistance for Needy Families
(TANF) federal funds, for the purposes of this fiscal note, General
Revenue is assumed as the method of financing for TWC's job incentive
program monetary awards. Should additional TANF federal funding be
available, the amounts of $600,000 in fiscal year 2002 and fiscal year
2003 of General Revenue costs assumed above could be financed with TANF
federal funding.
Department of Human Services (DHS) estimates that there are potential
savings to TANF cash assistance expenditures if the LWDB employment
services contractors are successful at placing TANF-recipients in
higher-wage jobs and providing postemployment case management services
that keep those TANF-recipients employed, thereby reducing the recidivism
of TANF-recipients still eligible for cash assistance. DHS estimates
that 46 percent of TANF-cash assistance recipients have been on and off
the rolls during fiscal years 1998-2000. There are approximately 85,000
adults per year receiving TANF-cash assistance, so approximately 39,100
adults return to the cash assistance rolls each year.
Assuming that the recidivism rate is reduced by three percent per year
and that all of those returning to the rolls would receive cash
assistance for 12 months, there would be 1,173 fewer adults returning to
the rolls and an estimated savings of $726,040 in fiscal year 2002 and
$752,362 of TANF federal funds in fiscal year 2003 as shown in the
second table above. The estimate is based on the TANF Unemployed Parent
monthly benefit of $51.58 per person in fiscal year 2002 and $53.45 per
person in fiscal year 2003. The savings could be greater if any of those
adults who do not return to the rolls were receiving the higher TANF
Basic monthly benefit of $56.63 per person in fiscal year 2002 and
$58.18 per person in fiscal year 2003 or have a spouse or one or more
children, who would no longer be eligible to receive TANF cash
assistance. The amount of savings would also vary by the actual number
of adults who did not return to the rolls.
Local Government Impact
No significant fiscal implication to units of local government is
anticipated.
Source Agencies: 530 Department of Protective and Regulatory
Services, 324 Texas Department of Human Services,
320 Texas Workforce Commission
LBB Staff: JK, JO, HL, RT