This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0322 - Modifies the regulation of child care facilities
SB 322 - Fiscal Note

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO.: 1287-05

BILL NO.: #HCS for SCS for SBs 322,150, & 151

SUBJECT: Regulation of Child Care Providers and Foster Care Allowances

TYPE: #Corrected

DATE: April 19, 1999

# To correct Bill Title


FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS

FUND AFFECTED FY 2000 FY 2001 FY 2002
General Revenue ($1,055,312) ($1,248,249) ($1,250,645)
Criminal Record System Fund $32,802 $32,802 $32,802
Total Estimated

Net Effect on All

State Funds

($1,022,510) ($1,215,447) ($1,217,843)



ESTIMATED NET EFFECT ON FEDERAL FUNDS

FUND AFFECTED FY 2000 FY 2001 FY 2002
Federal ($545,286) ($647,377) ($648,723)
Total Estimated

Net Effect on All

Federal Funds*

($545,286) ($647,377) ($648,723)



ESTIMATED NET EFFECT ON LOCAL FUNDS

FUND AFFECTED FY 2000 FY 2001 FY 2002
Local Government $0 $0 $0



Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 10 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Office of Administration - Administrative Hearing Commission assume this proposal would not fiscally impact their agency.

Officials from the Department of Mental Health (DMH) state that because the residential facilities or day programs licensed by DMH are exempt from licensing by the Department of Health, the proposal would not fiscally impact their agency.

Officials from the Office of Attorney General assume any costs associated with this proposal could be absorbed.

Officials from the Department of Health (DOH) state that this proposal permits child-care programs to participate in the Child and Adult Care Food Program without being licensed. According to DOH, there are currently 490 religious based, license-exempt facilities that have passed health and safety inspections. Based on the growth seen in recent years in the number of facilities regulated, DOH assumes there will be a 5% annual growth in license-exempt facilities between now and 2002. DOH further assumes that 66% of license-exempt facilities will participate in the program during FY 2000, and that 90% will participate in subsequent years. All facilities will be eligible due to their not-for-profit status and affiliation with religious organizations, but it is estimated that one-third of them will choose not to participate in FY 2000, and ten percent will choose not to participate in subsequent years.

DOH assumes that capacity in these facilities will be the same as enrollment. The calculation is based on the current average capacity of 60 children per facility. Reimbursement rates per meal per child varies based on the income level of the child's household. There is no specific data to determine what the enrolled childrens' household income in these facilities is, but it is assumed the percent of children below the 185% poverty level will be slightly higher (40%) than the breakdown of students enrolled in school (35%). This assumption is based on the likelihood that there will be more centers participating with higher enrollments of low income children than those with a lower proportion of low income children because they will gain more financially.

Average monthly claims are based on one breakfast, one lunch and one snack per day per child for 20 days of care during the month. The average monthly reimbursement rate including breakfast, lunch, and snack for 60 children for 20 days is estimated to be $1,844.54 in FY00, $1,918.33 in FY01, and $1,995.06 in FY02, assuming a 4% increase in meal reimbursements.



ASSUMPTION (continued)

If legislation is passed in 1999 to allow participation, it is expected that centers would begin enrolling October, 1999, and would participate for nine months in FY 2000. The estimates for subsequent years are provided for a full fiscal year. Based on a total of 515, 541, and 568 facilities in FY00, FY01, and FY02, respectively, DOH estimates meal costs and reimbursements to be $5,642,645 in FY00, $11,208,394 in FY01, and $12,238,489 in FY02.

DOH states that for each facility participating, it is estimated that approximately 15 hours of work per year is required of state agency staff. This time is spent to prepare application materials, mail to all eligible facilities, process and approve applications, train and orient new child care facility personnel on program requirements, provide technical assistance, monitor facilities for compliance with program requirements, and process claims received from centers. The total number of hours is calculated and divided by 1800 hours (2080 hours per year per FTE minus 160 hours leave time and 120 hours for staff training and staff meeting time) to calculate the FTE necessary.

DOH assumes three field staff, Nutritionist IIIs ($33,972) will be needed to orient, train and monitor participating programs. Tentatively, it would be planned that they would be placed in Kansas City, St. Louis and Springfield district offices. In addition, one clerk typist III ($21,552) would be needed for the central office staff. Expense and equipment for these FTE include office and communication expense, travel, rent, furniture, and data processing expense. The monitoring function could be outsourced but it would be required to have some staff available for training and oversight of the contractors. Oversight assumes additional FTE could be located using existing space and that rent expense would not be needed.

Federal funds from USDA would be anticipated to cover PSD and administrative expenses for this entitlement based program.

Officials from the Department of Social Services - Division of Family Services - Children's Services Section (CSS) stated that the current clothing allowance is $150 for children age 0 to 5, $200 for children 6 to 12 and $250 for children 13 and over. The fiscal estimate calculation is based on the number of children who were in the Division's custody at any time (and therefore eligible for a clothing allowance) by age with no anticipated increases in the population for subsequent years. An additional $1,748,800 in Foster Care appropriations would be needed to fund this proposal. The additional appropriations would need to come from both state and federal funds. The CSS stated that the remainder of this proposal would not have any fiscal impact for their section.



ASSUMPTION (continued)

Officials from the Department of Social Services - Division of Legal Services (DLS) based their assumptions on information provided by the Department of Social Services - Children's Services Section. The DLS indicated currently there are 13,934 active registered in-home providers, and 1,404 "reimburse" parents. This results in a total number of 15,338 providers that would ultimately be required to submit to background checks. With a turnover rate of 30%, the total number of providers for whom background checks will be conducted is 19,500 x 3 persons per household which results in 58,500 checks (1,404 in-home plus 13,934 registered active x 1.3 for 30 percent turnover x 3 people per household = 59,818).

Assuming approximately 6 % of the population as a whole may be expected to be involved in criminal activity, 6% will be used to determine the number of those submitting background checks to be rejected. If 6% of the total providers are rejected due to negative background checks, there will be 3,510 providers rejected. If 105 of the 3,510 requested hearings, this would result in approximately 351 hearings per year. In addition to these hearings, there would be hearings generated from the number of persons for whom there are substantiated reports of child abuse and neglect. The combination would result in more than 500 additional hearings per year and would require one hearing officer and .5 FTE clerical to support the hearing officer. These two new FTE would require the related expense and equipment items which were charged to the General Revenue and Federal Funds.

Officials from the Department of Social Services - Division of Family Services - Income Maintenance Section (IMS) stated they would be fiscally impacted by this proposal, as noted in a revised fiscal estimate for this proposal. The IMS assumes that mandatory criminal background checks will be a basic name check. They assume that the checks will be required every two years, as is the license renewal frequency for licensed childcare providers.

The IMS assumes information from all the various background checks/screenings called for can be collected in-house for making provider-care authorization determinations. Such data collecting, and then distribution of results as needed, will probably require additional FTE. There are 13,934 active in-home registered providers, and 1,404 sitters reimbursed by parents. Assuming that this average number of providers (15,338) has an average of three 'over-age fourteen' persons in the household, that equates to 46,014 (15,338 x 3) people that must be screened.

The IMS assumes that they will send mailings to current active registered in-home providers alerting that new regulations have been enacted. The IM-91 Provider Registration/Voucher Payment Information form would need a revision asking if the provider is at least 18 years of age.

ASSUMPTION (continued)

The IMS assumes the new FTE would send mailings, receive completed applications, set up tracking files, enter data as appropriate, send and receive information from Children's Services Section, respond to questions pertaining to applications, and input completed eligibility data for worker access. The IMS assumes an average of 30 minutes total must be spent on each new application through the process of final payment authorization. There are currently 15,338 license or registered active providers that must meet the new conditions. This equates to 7,669 hours for processing. During a 8 hours workday, about 13 complete applications could be processed. This factors out to a total of 479 days needed for the applications. Thus, 590 days divided by 232 working days a year results in a need for 3 additional FTE. The IMS assumes attrition of daycare vendors will balance with new application approvals, and that number of eligible, active providers will remain fairly constant. The IMS assumes the FTE would be Clerk Typist II's ($19,260). The new FTE would require the necessary expense and equipment items. Oversight assumes that the new FTE would locate in existing space and has removed the rent costs from the fiscal estimate. The costs were split between state and federal funds.

Officials from the Department of Public Safety - Missouri Highway Patrol (MHP) state the Department of Health Bureau of Child Care Safety Licenses provided that there are 2,343 in-home child care providers in the state. Using the same information, the MHP - Criminal Records and Identification Division would be able to absorb the additional fingerprint or name checks with current personnel. Fiscal impact for this proposal is calculated based on fingerprint searches which is the intended purpose.

The MHP anticipates receiving $32,802 (2,343 x $22) in revenue for deposit into the Criminal Record System Fund for performing the fingerprint checks.

FISCAL IMPACT - State Government FY 2000 FY 2001 FY 2002
(10 Mo.)
GENERAL REVENUE FUND
Costs - Department of Social Services -
DFS - Income Maintenance Section (IMS)
Personal Service (3 FTE at 67%) ($33,054) ($40,672) ($41,689)
Fringe Benefits ($9,880) ($12,157) ($12,461)
Expense and Equipment ($17,198) ($2,391) ($2,463)
Total Costs - IMS ($60,132) ($55,220) ($56,613)
FISCAL IMPACT - State Government FY 2000 FY 2001 FY 2002
(continued) (10 Mo.)
Costs - Department of Social Services -
Division of Legal Services (DLS)
Personal Service (1.5 FTE @ 60%) ($20,238) ($24,903) ($25,526)
Fringe Benefits ($6,049) ($7,443) ($7,630)
Expense and Equipment ($7,438) ($6,474) ($6,668)
Total Costs - DLS ($33,725) ($38,821) ($39,824)
Costs - Department of Social Services -
Division of Family Services -
Children's Services Section
Increased Clothing Allowances ($961,455) ($1,154,208) ($1,154,208)

ESTIMATED NET EFFECT ON

GENERAL REVENUE FUND ($1,055,312) ($1,248,249) ($1,250,645)
CRIMINAL RECORD SYSTEM FUND
Revenue - Missouri State Highway Patrol
Name check fees $32,802 $32,802 $32,802

ESTIMATED NET EFFECT ON

CRIMINAL RECORD SYSTEM FUND $32,802 $32,802 $32,802
FEDERAL FUNDS
Costs - Department of Social Services -
DFS - Income Maintenance Section (IMS)
Personal Service (3 FTE at 33%) ($16,280) ($20,033) ($20,534)
Fringe Benefits ($4,866) ($5,988) ($6,137)
Expense and Equipment ($6,361) ($884) ($911)
Total Costs - IMS ($27,507) ($26,905) ($27,582)
FISCAL IMPACT - State Government FY 2000 FY 2001 FY 2002
(continued) (10 Mo.)
Costs - Department of Social Services -
Division of Legal Services (DLS)
Personal Service (1.5 FTE @ 40%) ($13,492) ($16,602) ($17,017)
Fringe Benefits ($4,033) ($4,962) ($5,086)
Expense and Equipment ($4,959) ($4,316) ($4,446)
Total Costs - DLS ($22,484) ($25,880) ($26,549)
Costs - Department of Social Services -
Division of Family Services -
Children's Services Section
Increased Clothing Allowances ($495,295) ($594,592) ($594,592)
Costs - Department of Health
Personal Service (4 FTE) ($105,420) ($129,718) ($132,961)
Fringe Benefits ($31,510) ($38,773) ($39,742)
Expense and Equipment ($61,870) ($50,264) ($51,773)
Total Costs - Department of Health ($198,800) ($218,755) ($224,476)
Meal Payments to Facilities ($5,642,645) ($11,208,394) ($12,238,489)
Income - Department of Health
Reimbursement for Child
and Adult Care Food Program $5,841,445 $11,427,149 $12,462,965

ESTIMATED NET EFFECT

ON FEDERAL FUNDS ($545,286) ($647,377) ($648,723)
FISCAL IMPACT - Local Government FY 2000 FY 2001 FY 2002
(10 Mo.)
$0 $0 $0
FISCAL IMPACT - Small Business
Small businesses who choose to participate in the program will be reimbursed for costs associated with the Child and Adult Care Food Program. In addition, in-home care providers would be required to get various background checks, health tests, etc, as required by this proposal.



DESCRIPTION

This proposal makes several changes to the law regarding licensure of child care facilities. In its main provisions, the proposal:

(1) Authorizes the Department of Health to deny an applicant a license to operate a child care facility when the applicant fails to meet the statutory requirements for such operation, or to revoke or suspend a license when the licensee fails to renew or surrender the license;

(2) Requires the Department of Health to notify an applicant or licensee of any proposed action regarding the license. The applicant or licensee then has the right to request a hearing before the Administrative Hearing Commission;

(3) Authorizes the Department of Health to suspend a license simultaneously with the notice if it finds there is a threat of imminent bodily harm to the children in care. The licensee has the right to appeal the suspension;

(4) Expands the availability of federal child and adult food dollars to inspected but license-exempt facilities;

(5) Requires the notice of parental responsibility that child care facilities operated by religious organizations must provide to the parents or guardians of children enrolled in the facility to include notification that background checks have been completed on all personnel;

(6) Limits the fee for the criminal record review to the actual costs incurred by the Missouri Highway Patrol in conducting the review, not to exceed $10; and,

(7) Authorizes the Department of Health to seek an injunction through the Attorney General's office preventing the operation of a child care facility in violation of the licensure laws when

a county prosecutor refuses to act.



DESCRIPTION (continued)

In addition, under this proposal, owners and operators of child placing agencies or residential care facilities licensed pursuant to sections 210.481 to 210.536 can be held civilly liable for personal injury and property damage incidents occurring outside of the facility caused by juveniles in their care. The civil liability will be determined in the same manner and amounts as provided for parents in section 211.185, RSMo. The state and other political subdivisions are immune from civil liability regarding such matters.

The proposal also requires applicants for state or federal funds for providing child care in the home, either through direct payment or through reimbursement to a child care beneficiary, and anyone over the age of 14 in the home, to pass a criminal background and child abuse or neglect check, unless mitigating circumstances are demonstrated. A denial of state or federal child care funds based upon the checks can be appealed.

The proposal also authorizes the Department of Social Services to revoke the registration of a registered provider for due cause; to require providers to be at least age 18; to require providers to install and maintain smoke detectors in the residence, unless there are local ordinances or regulations regarding smoke detectors; to require providers to be tested for tuberculosis; and to make providers aware of local opportunities for first aid and child care training. The Department of Health is authorized to promulgate rules and regulations to implement the provisions of the proposal.

The proposal also requires the Department of Social Services to allocate certain amounts from its general appropriation fund for foster children clothing allowances. The amount required to

be spent is to be no less than: $200 per year for children ages 0 to 5; $300 per year for children ages 6 to 12; and $400 per year for children ages 13 and older.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.











SOURCES OF INFORMATION

Department of Health

Department of Social Services

Office of Attorney General

Office of Administration - Administrative Hearing Commission

Department of Public Safety - Missouri Highway Patrol

Department of Mental Health









Jeanne Jarrett, CPA

Director

April 19, 1999