LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 1, 2001 TO: Honorable Mike Moncrief, Chair, Senate Committee on Health & Human Services FROM: John Keel, Director, Legislative Budget Board IN RE: SB160 by Zaffirini (Relating to incentive programs and employment services to benefit certain recipients of financial assistance.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB160, 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. * ************************************************************************** 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: *************************************************************************** *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 * *************************************************************************** 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 years 2002 and 2003 of General Revenue costs assumed above could be financed with TANF federal funding. 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 would allow 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. If enacted, the bill would take effect September 1, 2001. Methodology TWC assumes 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 The Department of Human Services (DHS) estimates there could be 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 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 in fiscal year 2003 of TANF federal funds. 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 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: 320 Texas Workforce Commission, 324 Texas Department of Human Services LBB Staff: JK, HD, HL