Fiscal Note - SB 0183 - Designates How MO Will Respond To Personal Responsibility & Work Opportunity Act of 1996-Welfare Reform
L.R. NO. 0400-01
BILL NO. SB 183
SUBJECT: The Personal Responsibility and Work Opportunity Reconciliation Act
of 1996
TYPE: Original
DATE: January 24, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue ($2,567,107) ($3,285,664) ($3,798,440)
Total Estimated
Net Effect on All
State Funds ($2,567,107) ($3,285,664) ($3,798,440)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Federal ($2,697,322) ($2,949,560) ($3,010,315)
Total Estimated
Net Effect on All
Federal Funds ($2,697,322) ($2,949,560) ($3,010,315)
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Economic Development (DED), Division of Job
Development and Training (DJD), indicate this proposal would not have a
fiscal impact to their agency. However, they also note that this proposal
would create two new commissions or councils. It would create a "Missouri
Work-First Commission" on a state level, and a "Community Development
Council" on a local level. DJD states that these new commissions could
duplicate many of the current capabilities in the system. The Missouri
Training and Employment Council, by statute, is a planning and approval body
for the state's workforce development system. It has a membership comprised
of all five agencies involved in workforce development (DED, DOL, DOS, DESE,
and CBH) and includes a majority representation of members from the private
sector. There is also the RTEC, which oversees the Department of Higher
Education's Technical Education planning process, the Governor's Partnership
on School-to-Work, and the Job Service Employeer Committee, which is the
advisory body for the Employment Service programs.
Officials from the Office of Administration, Division of Budget and Planning
indicate that this proposal would not have a fiscal impact on their agency.
Officials from the Department of Labor, Division of Employment Security (DES)
state that under provisions of a financial agreement, they are currently
providing assessment and placement services to the Department of Social
Services, Division of Family Services (DFS) for approximately 26,000
participants of the FUTURES program. DES assumes an additional 52,000
remaining in DFS's population will be served by DES under the proposed
legislation. DES estimates they will need an additional 121 FTE to provided
these services. Annual costs associated with these FTE, including cost of
living increases, rent, travel, supplies, and equipment, would be
approximately $5,200,000. DES also estimates a one-time software cost of
$40,000 for the computer programming and implementation needed to carry out
the responsibilities described. It is unsure how these costs would be
funded, but it may be a combination of General Revenue and Federal Block
Grant funds.
DES also currently provides a monthly food stamp report to the DFS. If the
current automated food stamp format is compatible to the monthly reporting
described in the proposal, then the current format could be used with some
adjustments. These adjustments would cost approximately $10,000. However,
if the current format is not compatible, new programming would have to be
developed at a cost of $30,000 to $40,000.
DES states that this legislation proposes a Missouri work-first commission, a
community development council, and employment assistance centers for the DFS
population only. These functions appear to duplicate the Caring Communities
governance structures, such as the Family Investment Trust as created by the
governor's executive order creating Caring Communities and the One-Stop
Career Center Team in Executive Order 95-11. These programs provide services
for not only TANF participants but for the general population as well. DES
assumes there would be a negative fiscal impact through increased costs for
staff time in the administration of planning and attending duplicative
service functions, but these costs cannot be estimated.
DES also states that this proposal describes a production bonus or incentive
to employees. They assume this would have a negative fiscal impact,
depending on the incentive rate payable and other factors. The amount of
this impact is unknown.
Based on information obtained from DES, there are currently 26,000
participants in the FUTURES program, and there are 55.25 FTEs. Based on that
ratio, there are 471 participants per FTE. With an additional 52,000 people
entering the FUTURES program, Oversight assumes DES would need an additional
110 FTE for the additional participants. Oversight also assumes DES would
need an additional 5 FTE for the additional duties assigned by this proposal.
The costs associated with these 115 FTE are $4,525,536, $4,915,934, and
$5,017,193 for FY98, FY99, and FY00, respectively, and would be funded 60%
federal and 40% general revenue.
Officials from the Department of Social Services (DOS) indicated the fiscal
impact of changing from an entitlement program with strict eligibility
guidelines to a block grant program, which gives the state flexibility, is
difficult to assess; however, they believe it will have a zero impact on
their agency. DOS anticipates that any savings achieved as a reduction in
cash benefits because of sanctions, time limits, or reductions in caseloads
would be needed to provide other types of assistance to low income
individuals, as allowed by federal law. This would include child care and
other support services to maintain individuals in the work force.
Under TANF requirements, 25% of all recipients have to participate in work
activities, rising to 50% in subsequent years. DOS notes that this is a much
higher participation rate than under the former JOBS program (FUTURES)
because in FUTURES only 20% of mandatory recipients had to participate in a
much broader range of activities for an average of 20 hours a week. Under
TANF, a person will have to work a minimum of 20 hours a week (35 hours for
AFDC-UP) to satisfy the work requirement. The number of hours worked cannot
be averaged among individuals, and a person working less than 20 hours a week
cannot be counted. In addition, TANF has fewer exemptions than FUTURES did.
DOS expects to operate the TANF program in FY98 essentially using current
eligibility standards and current waivers. DOS also does not intend to
impose any Medicaid sanctions for non-participation in work activities.
Because the sources of funds to implement the TANF program will be limited to
the TANF block grant and state maintenance of effort funds and administrative
expenses will be capped, DOS assumes the fiscal impact will be zero. DOS
states that pursuant to this bill, DOS will promulgate rules and regulations
to operate the TANF program. DOS expects that the eligibility standards
incorporated in those rules and regulations will be designed such that the
program will be operated within the limits of the proposed budget for FY98;
therefore, there will be no new incremental costs to the Division of Family
Services or the support Divisions as a result of this proposal.
DOS further states that the PRWORA addresses child support issues, including
penalties for noncompliance with federal mandates. Costs associated with
those provisions, which are not specifically addressed in this legislation,
will be addressed when the legislation implementing those provisions is
introduced.
Officials from the Department of Health (DOH) anticipate additional costs as
families currently receiving government subsidies enter the work force,
creating an increase in the number of children requiring child care services.
Additional staff will be needed to inspect, license, and monitor the child
care facilities for compliance with state statutes and licensing rules. DOH
estimates the costs associated with this legislation would be $653,107,
$1,554,639, and $2,358,997 in FY98, FY99, and FY00, respectively.
According to DOH, the Division of Family Services has confirmed that
approximately 78,990 families in Missouri are receiving government subsidy in
FY97. Approximately 25% or 19,748 of those families will be required to
enter the work force in FY97. An increasing percentage will be required to
enter the workforce each successive year. There are approximately 1.5
children per household. This will create the need for child care for
approximately 29,622 additional children in FY97. However, it is estimated
that approximately 21,622 of these children will already be receiving child
care services in FY97. Therefore, it is estimated that 8,000 additional
children will need child care services in FY97. This 8,000, along with a 5%
increase each year, is used as the basis for calculating need in FY98, FY99
and FY2000, as additional families are required to enter the workforce. DFS
estimates that this legislation will create the need for child care services
for 8,400 additional children in FY98, 8,820 in FY99, and 9,261 in FY2000.
Based on the current distribution of children in child care facilities with
above and below 50 children in care, and family child care homes providing
care for ten children, it is estimated that in FY98, there will be 25% or
2,100 additional children in facilities with less than 50 children, 7% or
588 in facilities with more than 50 children, and 68% or 5,712 in care in
family child care homes. In FY99, it is estimated that 25% or 2,205
additional children will be in care in facilities with less than 50 children,
7% or 617 will be in facilities with more than 50 children, and 68% or 5,998
will be in care in family child care homes. In FY2000, it is estimated that
25% or 2,315 will be in facilities with less than 50, 7% or 648 will be in
facilities with more than 50, and 68% or 6,298 will be in family child care
homes.
Based on an average size of 30 children in child care facilities with less
than 50 children; 70 in facilities with more than 50 children; and ten in
family child care homes, this will require the addition of the following
licensed child care facilities in FY98, FY99, and FY2000:
FY98 FY99 FY2000
Child care centers with less than 50 children 70 73 77
New child care centers with more than 50 children 8 9 9
Family child care homes with ten children 571 600 630
Total new child care facilities 649 682 716
Based on a caseload size of 50 facilities per Child Care Licensing
Representative, this will require the addition of 13 new Child Care Licensing
Representatives and four Clerk Typist II's in FY98. In FY99 14 new Child
Care Licensing Representatives and 4 Clerk Typist II's will be needed. In
FY2000 14 new Child Care Licensing Representatives and 4 Clerk Typist II's
will be needed. Even though there will be a 5% increase in the number of
children requiring care in FY99, it will have no significant impact on the
total number of new child care facilities or the need for additional staff.
Based on conversations with DFS on current projections, Oversight assumes
there will be an additional 13,542, 6,948, and 6,948 children needing day
care service in FY98, FY99, and FY00, respectively. In FY97, there will be
approximately 19,748 families that must go to work as a result of federal
work participation rates. Of these families, 14,203 still have to meet the
work requirements. DFS estimates that 88% of these families have children
needing day care, and that the average family has 2 children. Based on these
assumptions, it appears there are 24,997 additional children needing day care
in federal FY97. According to DFS projections, most of these children will
be added to day care during state FY97; however, some will filter over and be
added during state FY98. DFS bases their estimates on this carry-over into
FY98 and the 5% increase in the work participation rate each year.
Using the same assumptions that the DOH used in calculating the number of new
facilities needed, Oversight assumed there would be a need for 1,047
additional child care facilities in FY98, and 537 additional facilities in
FY99, and FY00. Using a caseload size of 64 facilities per child care
representative, which is the current actual ratio, Oversight assumes DOH
would need 20 additional FTE in FY98 (16 Child Care Licensing Representatives
and 4 Clerk Typist IIs) and 10 additional FTE in FY99 and FY00 (8 Child Care
Licensing Representatives and 2 Clerk Typist IIs). Costs associated with
these FTE would be $768,893, $1,319,290, and $1,791,562 for FY98, FY99, and
FY00, respectively.
Officials from the Department of Mental Health (DMH) state that in the
absence of specific rules and regulations that will later be determined by
the Department of Social Services, the fiscal impact to their agency is
unknown. As of November 27, 1996, there were 13,719 DMH clients receiving
AFDC, including 6,479 adults who will be subject to the work requirements.
However, clients of both the Divisions of Comprehensive Psychiatric Services
and Mental Retardation and Developmental Disabilities often have special
considerations due to the nature of their disability. Many of these clients
will require extensive occupational skill training, job placement, and job
coaching. The costs associated with this could be much higher than the costs
projected for most DOS clients. DMH states that this could result in
increased costs to the state since funding for employment support and
assistance is limited in their budget.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
GENERAL REVENUE
Costs-Department of Labor
Division of Employment Security (DES)
Personal Service (46 FTE) ($1,024,820) ($1,260,529) ($1,292,042)
Fringe Benefits ($292,381) ($359,629) ($368,620)
Expense and Equipment ($481,013) ($346,216) ($346,216)
Total Costs-DES ($1,798,214) ($1,966,374) ($2,006,878)
Costs-Department of Health
Personal Service (20 FTE) ($404,999) ($747,523) ($1,021,613)
Fringe Benefits ($115,546) ($213,268) ($291,466)
Expense and Equipment ($248,348) ($358,499) ($478,483)
Total Costs-DOH ($768,893) ($1,319,290) ($1,791,562)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND ($2,567,107) ($3,285,664) ($3,798,440)
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
FEDERAL FUNDS
Division of Employment Security (DES)
Personal Service (69 FTE) ($1,537,230) ($1,890,793) ($1,938,062)
Fringe Benefits ($438,572) ($539,443) ($552,929)
Expense and Equipment ($721,520) ($519,324) ($519,324)
Total Costs-DES ($2,697,322) ($2,949,560) ($3,010,315)
ESTIMATED NET EFFECT ON
FEDERAL FUNDS ($2,697,322) ($2,949,560) ($3,010,315)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
0 0 0
FISCAL IMPACT - Small Business
This proposal may affect small businesses as it appears to require additional
paperwork and financial accountability from employers to verify participants'
eligibility for TANF benefits. In addition, small businesses may be affected
by the large number of public assistance recipients entering the work force.
DESCRIPTION
This proposal would require Missouri to comply with the provisions of the
federal act known as "The Personal Responsibility and Work Opportunity
Reconciliation Act of 1996", also known as the federal welfare reform act.
This proposal would require that adults in families receiving assistance
under the new temporary assistance to needy families block grant program
(TANF) participate in work activities; and ensures that TANF block grant
moneys will not be used to provide assistance to a family that includes an
adult who has received assistance for five years, whether the benefits were
received consecutively.
The proposal authorizes the Department of Social Services to establish
eligibility requirements for the programs funded by the federal TANF dollars
including income and asset limits. All recipients must meet the eligibility
requirements created by the federal program. The act also authorizes the
Department to deny benefits through the TANF program to specific individuals.
The proposal states that Missouri will meet the federal maintenance of effort
requirements to have access to contingency funds in the case of an economic
downturn. The maintenance of effort funds shall be used to provide services
to eliminate barriers to employment and to increase personal self-sufficiency
in the state. The Department will develop and implement a program that
provides incentives for recipients of public assistance to seek and retain
employment. The program shall be designed to allow a recipient to continue
receiving assistance until the recipient's total income is equal to the total
monetary value of the benefit packages that person is currently receiving.
The Department will also oversee the development of a streamlined and
integrated system of quality training, employment and support services.
Community development councils shall be established to act as the
facilitator between local and regional employers and applicants for and
recipients of public assistance. The Department shall also develop a program
which will require persons receiving benefits to have employment or volunteer
time to receive benefits.
Parts of this proposal are federally mandated and would change existing
programs. Some existing programs may be partially duplicated. The proposal
would require additional rental space and might require capital improvements.
The proposal would not directly affect total state revenues.
SOURCES OF INFORMATION
Department of Social Services
Department of Economic Development
Department of Labor
Department of Health
Department of Mental Health
Office of Administration
Budget and Planning
This Fiscal Note is not an official copy and should not be quoted or cited.