BILL ANALYSIS

Senate Research Center	S.B. 1871
88R11340 KKR-F	By: Hughes
	Health & Human Services
	4/24/2023
	As Filed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Since the mid-1960s, the U.S. has spent an estimated $25 trillion (adjusted for inflation) on more than 80 federal safety-net programs�with too many disappointing results. These program have become rife with improper spending, complicated eligibility criteria, and excessive administrative bloat that ensnares recipients into dependence on government.

S.B. 1871 creates "empowerment accounts" to replace some, if not all, traditional safety-net programs whereby a recipient manages (under the supervision of a community navigator) an account with the state funds available for increased flexibility to purchase basic needs along with improvements to help recipients achieve long-term self-sufficiency.

As proposed, S.B. 1871 amends current law relating to the creation of the Texas empowerment account pilot program for assisting certain recipients of public benefits in achieving self-sufficiency.

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Comptroller of Public Accounts of the State of Texas in SECTION 1 (Section 37.020, Human Resources Code) of this bill.

Rulemaking authority is expressly granted to the executive commissioner of the Health and Human Services Commission in SECTION 1 (Section 37.020, Human Resources Code) of this bill.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subtitle C, Title 2, Human Resources Code, by adding Chapter 37, as follows:

CHAPTER 37. TEXAS EMPOWERMENT ACCOUNT PILOT PROGRAM

Sec. 37.001. DEFINITIONS. Defines "comptroller," "eligible expense," "family," "financial assistance benefits," "pilot program," "program participant," "self-sufficiency," "supplemental nutrition assistance benefits," and "work."

Sec. 37.002. PURPOSE. Provides that the purpose of the Texas empowerment account program (pilot program) is to assist low-income families in gaining permanent self-sufficiency and eliminating the need for financial assistance, supplemental nutrition assistance, and other means-tested public benefits, notwithstanding the limitations and requirements of Section 31.043 (Fill-the-Gap Budgeting).

Sec. 37.003. ESTABLISHMENT OF PILOT PROGRAM. (a) Requires the Comptroller of Public Accounts of the State of Texas (comptroller), in collaboration with the Health and Human Services Commission (HHSC), to establish and administer the pilot program to provide up to 1,000 families with funding for eligible expenses through individual empowerment accounts.

(b) Requires that the pilot program operate for at least 12 months but not more than 24 months.

Sec. 37.004. TEXAS EMPOWERMENT ACCOUNT PROGRAM FUND. (a) Requires the comptroller to establish and administer the Texas empowerment account program fund (fund) as a dedicated account in the general revenue fund.

(b) Provides that the fund consists of:

(1) money appropriated, credited, or transferred to the fund by the legislature;

(2) money appropriated to the fund from federal block grants, including the Temporary Assistance for Needy Families (TANF) block grant and the Title XX Social Services block grant;

(3) gifts, grants, and donations contributed to the fund; and

(4) any other money available for the purposes of the pilot program.

(c) Authorizes the comptroller, each quarter, to deduct an amount from the fund to cover the comptroller's costs of administering the pilot program. Prohibits the annual amount deducted from exceeding three percent of the fund for the fiscal year.

(d) Requires the comptroller, each quarter, to disburse to each family service organization participating in the pilot program an amount from the fund to cover the organization's cost of administering the pilot program. Prohibits the annual amount disbursed between all of the family service organizations from exceeding five percent of the fund for the fiscal year.

Sec. 37.005. GIFTS, GRANTS, AND DONATIONS. Authorizes the comptroller to solicit and accept gifts, grants, and donations from any public or private source for any expenses related to the administration of the pilot program, including the initial implementation of the pilot program.

Sec. 37.006. FAMILY ELIGIBILITY. (a) Provides that a family is eligible to participate in the pilot program if:

(1) at least one member of the family:

(A) is a recipient of financial assistance;

(B) is at least 18 years of age and not older than 62 years of age;

(D) except as provided by Subsection (b), works at least 20 hours per week;

(2) the family's total household income meets the eligibility requirements for supplemental nutrition assistance benefits; and

(3) the family includes at least one member who is a dependent child and is at least six years of age and not older than 18 years of age.

(b) Authorizes a program participant to maintain pilot program eligibility for a period of four weeks without meeting the work requirement in Subsection (a)(1)(D).

(c) Provides that income earned and pilot program benefits received by a program participant is included as income for purposes of determining eligibility for any other means-tested public benefits program providing financial assistance.

(d) Provides that a program participant is not eligible to receive financial assistance benefits while participating in the pilot program.

(e) Authorizes a program participant to remain enrolled in the pilot program through the conclusion of the pilot program.

Sec. 37.007. ANNUAL PROGRAM ASSISTANCE AMOUNT. (a) Provides that the annual pilot program assistance amount allocated to a program participant is equal to the amount of financial assistance benefits and supplemental nutrition assistance benefits the participant would be eligible to receive if the participant did not participate in the pilot program.

(b) Requires HHSC provide to the comptroller information on the amount of benefits described by Subsection (a) for each program participant. Requires the comptroller to use that information to calculate the annual program assistance amount for each program participant.

Sec. 37.008. PROGRAM PARTICIPANT ACCOUNT. (a) Requires the comptroller to establish for each program participant an account through which program assistance money will be provided to the participant. Authorizes money in a program participant's account to be used only for eligible expenses.

(b) Requires the comptroller to provide each program participant access to a web-based application that enables the participant to monitor the participant's financial activity and improve the participant's financial literacy.

Sec. 37.009. PROGRAM PAYMENT AMOUNT. (a) Requires the comptroller to allocate to a program participant the annual program assistance amount calculated under Section 37.007 in equal amounts on or before the first days of August, November, February, and May.

(b) Authorizes any funds remaining in a program participant's program account at the end of a fiscal year to be carried forward to the next fiscal year or transferred to the participant's private bank account unless another provision of this chapter mandates the closure of the account.

(c) Requires the comptroller, if a family becomes ineligible to participate in the pilot program due to the failure to meet the work requirements under Section 37.006, to close the family's program account on the date the family became ineligible and to return any money remaining in the account to this state for deposit in the Texas empowerment program account.

Sec. 37.010. FAMILY SERVICE ORGANIZATION PARTICIPATION; ELIGIBILITY; CERTIFICATION REQUIRED. (a) Requires the comptroller to certify eligible organizations as family service organizations for participation in the pilot program.

(b) Requires the comptroller to develop the form and manner for applying for certification as a family service organization and to post on the comptroller's Internet website an application form for family service organizations.

(c) Requires an organization, to be eligible for certification as a family service organization by the comptroller and participate in the pilot program, to be:

(1) exempt from federal tax under Section 501(a), Internal Revenue Code of 1986, by being recognized as an exempt organization in Section 501(c)(3) of that code;

(2) in good standing with this state;

(3) able to administer the pilot program at the participant level, including by:

(A) accepting, processing, and tracking applications for program participation;

(B) approving families for participation in the pilot program;� and

(C) providing, either directly or through referral to a partner organization, services to enable program participants to achieve self-sufficiency; and

(4) able to provide personal financial literacy education to program participants that includes information on the importance of the success sequence and how to analyze the participant's financial activity through the web-based application described by Section 37.008(b).

Sec. 37.011. PROGRAM PARTICIPANT APPLICATION. (a) Requires a certified program family service organization to:

(1) develop an application process for families interested in participating in the pilot program;

(2) make a program application form readily available to potential participants using various means, including by posting the application on the organization's Internet website;� and

(3) allow a family to submit a program application to the organization electronically.

(b) Requires a certified program family services organization to provide to each family who submits an application a document that describes the operation of the pilot program, including:

(1) eligible pilot program expenses;

(2) the organization's expense reporting requirements;

(3) a description of the responsibilities of program participants, including the responsibilities under Section 37.011; and

(4) the role and responsibilities of family service organizations in the pilot program.

Sec. 37.012. PARTICIPATION REQUIREMENTS. (a) Requires a program participant to agree to use program money only for eligible or allowed expenses and to notify the participant's family service organization if the participant is no longer eligible for the program not later than the 30th day after the date of becoming ineligible.

(b) Requires a program participant to provide to the participant's family service organization any information necessary to verify the participant's continued eligibility for the pilot program.

(c) Prohibits a program family service organization from providing services to a program participant if any person in the organization is a participant's immediate family or household member.

Sec. 37.013. FAMILY SERVICE ORGANIZATION DUTIES. (a) Requires a family service organization to enroll a family in the pilot program if the family applies to participate in the pilot program and if the organization determines the family meets the pilot program's eligibility requirements and the organization has the capacity to provide services to the family.

(b) Requires a family service organization to create a case plan for a family enrolled in the pilot program through the organization that:

(1) is developed in collaboration with the family;

(2) identifies services the organization will provide to enable the family to achieve self-sufficiency;

(3) clearly defines expectations for the family's participation in the pilot program; and

(4) outlines a pathway and timeline for the family to achieve self-sufficiency.

(c) Requires a family service organization to annually provide to each program participant the information described by Section 37.011(b). Authorizes the organization to provide the information electronically.

Sec. 37.014. FAMILY SERVICE ORGANIZATION AUTONOMY; CHALLENGE TO RULE. (a) Provides that a family service organization that receives money under the pilot program is not an agent of the state or federal government.

(b) Provides that the pilot program does not expand the regulatory authority of this state to impose any additional regulation on a family service organization participating in the pilot program except for regulations that are reasonably necessary to administer the pilot program in accordance with this chapter.

(c) Prohibits a family service organization participating in the pilot program from being required to modify its creed, practices, or operations to receive money under the pilot program.

(d) Provides that the comptroller or executive commissioner of HHSC (executive commissioner), in any proceeding challenging a rule adopted by the comptroller or the executive commissioner, has the burden of proof to establish that the rule is necessary to implement or administer the pilot program in accordance with this chapter and does not impose an undue burden on a program participant or a family service organization that receives or seeks to receive money under the pilot program.

Sec. 37.015. RANDOM AUDITING. (a) Authorizes the comptroller to contract with a private entity to randomly audit family service organizations participating in the pilot program as necessary to ensure compliance with program requirements.

(b) Authorizes the comptroller or private entity, during an audit conducted under this section, to require that a program participant or family service organization provide information and documentation regarding any payment made from the fund.

(c) Requires a private entity that conducts an audit under this section to report to the comptroller any violation of this chapter or other relevant law the entity discovers during the audit.

(d) Provides that a finding that pilot program money was used for an expense that is not eligible under the pilot program does not affect the validity of any payment made for an eligible expense.

Sec. 37.016. SUSPENSION OF ACCOUNT. (a) Requires the comptroller, if the comptroller determines that a program participant fails to comply with the program requirements or applicable law, to suspend the participant's program account.

(b) Requires the comptroller, on suspension of an account under Subsection (a), to provide written notice to the program participant and the participant's family service organization that the account has been suspended and no further payments are authorized to be made from the account. Requires that the notice specify the grounds for the suspension and state that the program participant is required to respond to the notice and take any corrective action required by the comptroller not later than the 10th business day after the date of receiving the notice.

(1) order permanent closure of the suspended account and declare the participant ineligible for the pilot program;

(2) order temporary reinstatement of the account, conditioned on the performance of a specified action by the participant; or

(3) order full reinstatement of the account.

(d) Authorizes the comptroller to recover money distributed under the pilot program that was used for ineligible expenses from the program participant or the family service organization that received the money if the participant's account is suspended or closed under this section.

Sec. 37.017. REFERRAL TO ATTORNEY GENERAL. (a) Authorizes the comptroller or a family service organization, on receipt of evidence of the fraudulent use of an account, to refer the case to the attorney general for investigation.

(b) Provides that the attorney general, with the consent of the appropriate local county or district attorney, has concurrent jurisdiction with the consenting local prosecutor to prosecute an offense referred to the attorney general under Subsection (a).

Sec. 37.018. DATA COLLECTION. (a) Requires the comptroller to collect the following information at the time the pilot program begins operating, on a quarterly basis while the pilot program is operating, and at the conclusion of the pilot program:

(1) taxpayer revenue spent per program participant;

(2) state money appropriated per pilot program;

(3) federal money received per pilot program;

(4) the number of recipients enrolled in or otherwise receiving benefits under each pilot program;

(5) aggregate demographic and socioeconomic information on recipients under each pilot program including information relating to:

(A) the age, race or ethnicity, and gender of recipients;

(B) the highest level of education completed by recipients;

(D) the average household income of recipients under each pilot program;

(E) the employment status of recipients or, if recipients are dependents, of the parents or guardians of recipients under each pilot program;

(F) the number of hours per week worked by recipients;

(G) the marital status of recipients or, if recipients are dependents, of the parents or guardians of recipients under each pilot program;

(H) the average number of dependents in recipient households under each pilot program;

(I) other safety net benefits or government provided subsidies received by recipients;

(J) duplicative services and administrative activities among pilot programs;

(K) the percentage of state money appropriated to each pilot program that is directly spent on providing benefits to recipients under the pilot program and the percentage that is spent on staff and other administrative costs;

(L) the percentage of recipients who become ineligible for each pilot program because the recipient no longer meets the income eligibility requirements; and

(M) the average length of time between an initial application for benefits and approval under each program;

(6) a cost-benefit analysis that compares the costs of providing each program with the program's effectiveness at transitioning recipients to self-sufficiency; and

(7) a statistical analysis of the data collected under Subdivisions (1) and (2).

(b) Requires the comptroller, not later than the 10th day following the last day of each calendar quarter during the pilot program's operation, to post on its Internet website outcomes for all program family service organizations during the previous calendar quarter including the information collected under Subsection (a).

Sec. 37.019. STUDY. (a) Requires the comptroller, on conclusion of the pilot program, using existing resources, to conduct a study on the outcomes of the pilot program based on the information collected under Section 37.018. Requires the comptroller, using methodological best practices, to compare the outcomes achieved by families who participated in the pilot program with similarly situated individuals who did not participate in the pilot program.

(b) Authorizes the comptroller, in conducting the study, to collect necessary information from a state agency that administers or operates a safety net program or a family service organization that participated in the pilot program. Requires a state agency or family service organization, at the request of the comptroller, to provide the requested information within a reasonable time.

Sec. 37.020. RULES; PROCEDURES. (a) Requires the comptroller and the executive commissioner to adopt rules and procedures necessary to implement, administer, and enforce this chapter.

(b) Provides that a rule adopted under Subsection (a) is binding on an organization that applies for certification as a family service organization and a state or local governmental entity, including a political subdivision of this state, as necessary to implement, administer, and enforce this chapter.

SECTION 2. Requires the comptroller and the executive commissioner, as soon as practicable after the effective date of this Act, to adopt rules necessary to implement Chapter 37, Human Resources Code, as added by this Act.

SECTION 3. Effective date: upon passage or September 1, 2023.

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