This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0559 - Public Assistance Recipients May Be Asked to Take Drug Test
L.R. NO. 2173-01
BILL NO. SB 559
SUBJECT: Public Assistance Eligibility
TYPE: Corrected
DATE: February 19,1996
#Corrected a mathematical error and estimated costs in assumptions section.
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
General Revenue# $613,448 $794,531 $736,756
Total Estimated
Net Effect on All
State Funds $613,448 $794,531 $736,756
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Federal $869,347 $1,136,600 $1,052,099
Total Estimated
Net Effect on All
Federal Funds $869,347 $1,136,600 $1,052,099
*Potential loss of $1.6 billion in Title XIX funds subject to interpretation,
not included in fiscal impact.
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government $0 $0 $0
FISCAL ANALYSIS
ASSUMPTION
The Office of Prosecution Services (OPS) does not expect to be fiscally
impacted.
The Office of State Courts Administrator (CTS) indicated an unknown fiscal
impact. The CTS cannot provide a fiscal estimate because the proposal is
unclear as to how the sentencing judge is to determine if a person is
receiving public assistance or how "ineligibility" should be imposed.
Oversight assumes that an electronic match would occur between the CTS and
the Department of Social Services (DOS) in order to determine if a person is
receiving public assistance. There could be minimal costs associated with
the match, but it is assumed that existing resources could be used for this
purpose.
The Department of Social Services (DOS), Division of Family Services (DFS)
estimated costs related to the need for a Program Development Specialist
(PDS) and an evaluation contractor. The PDS would be needed to make
application for federal waivers; prepare necessary federal and state reports;
prepare necessary policies, procedures and forms; act as an on-going liaison
between DFS and the DLS, DMS, HCFA and ACF; and contract and act as liaison
with the independent contractor. These costs would be 100% General Revenue
(GR). The independent evaluation contractor would be needed under the
auspices of a Federal 1115 Demonstration Waiver. DFS assumes that the
contractor would be paid $100,000 over a two year period (FY97 and FY98).
The waiver could not be approved and implemented prior to January 1, 1997,
resulting in 6 months of costs for FY97. These costs would be split 50%
federal and 50% GR. Total costs for these components would be $75,614 in
FY97; $92,318 in FY98; and $43,394 in FY99.
DFS did not estimate any costs or savings related to the drug testing
components of this proposal. DFS did assume that "public assistance
benefits" would include three categories: Aid to Families with Dependent
Children (AFDC), General Relief (GR), and Medical Assistance (MA). However,
DFS concluded that an estimate of the exact potential client population could
not be determined because there was no way to ascertain how many public
assistance recipients might test positive for a controlled substance or how
many might lose an administrative hearing.
Oversight has estimated costs and savings using the caseload numbers and
grant amounts provided by DFS as a basis. In order to estimate the costs of
conducting drug tests, two private corporations were contacted to determine
the cost of testing their employees for illegal substances. The costs ranged
from $30 to $50 for the initial test to detect an illegal substance. For
purposes of this fiscal note, $30 was used as the cost of the initial test.
Further analysis would be needed, however, in order to determine the type of
illegal substance being used. To accomplish this, a spectrum analysis at a
cost of $75 would be required. In FY97, the entire population (91,000)
falling into the three categories would be tested at a cost of $30, while
7.7% (i.e., the percentage estimated by the National Institute of Mental
Health of the general population which may abuse drugs and/or alcohol) were
assumed to test positive and require further analysis at $75 per person.
These would be the individuals who could request an administrative hearing,
thus, resulting in costs for the Division of Legal Services (DLS). FY97 was
assumed to be six months of costs due to waiver approval. FY98 and FY99
caseloads were adjusted by the percentage increase and/or decrease in each
category and the number of recipients who tested positive during the prior
year. FY98 and FY99 were assumed to be full year costs, but all three years
were adjusted to take into account a 10% control group as required #under a
1115 Demonstration Waiver. Total costs would be $1,464,987 in FY97;
$2,629,892 in #FY98; and $2,362,814 in FY99. The split is based on a blended
rate of 42.7% general revenue and 57.3% federal since the General Relief
program is funded 100% general revenue.
A similar analysis was conducted in order to estimate potential savings
related to recipients who could be declared ineligible for assistance as a
result of the drug test. The same base numbers were used, with adjustments
being made for the percentage increase and/or decrease in the caseloads for
the three categories and number of recipients who tested positive during the
prior year. These adjustments were made in FY98 and FY99, with all three
fiscal years being adjusted by the 10% control group. According to DFS, the
annual grant amount for AFDC was $696; $960 for GR; and $0 for MA. The MA
category is not a cash grant program. Potential savings were estimated at
$2,173,803 in FY97; $3,882,496 in FY98; and $3,467,612 in FY99. A blended
match rate of 42.7% general revenue and 57.3% federal was used. FY 97
savings were prorated to six months.
In addition to savings related to the drug testing, potential savings could
be realized from the drug convictions as well. Using the base numbers
provided by DFS, it was assumed that convictions for each category would be
the same percentage as the category is to the entire state population.
According to the Office of State Courts Administrator (CTS) there were 12,
546 felony and misdemeanor convictions at the associate and circuit levels
categorized as a "drug" conviction. Multiplying the number of convictions
per category by the annual grant amount and adjusting by 10% for the control
group, FY97 (i.e., six months) savings related to this component were
estimated at $906,876. The base numbers for FY98 and FY99 were adjusted by
the percentage increase and/or decrease and the 10% control group to yield
potential savings of $864,907 and $823,954, respectively. A blended match
rate of 42.7% general revenue and 57.3% federal was used.
The Division of Legal Services (DLS) estimated costs for 3 FTE (i.e., 2
hearing officers and 1 clerk typist). The hearing officers would be
responsible for holding administrative hearings and rendering decisions
regarding eligibility issues. The clerk typist would provide clerical
support for the hearing officers. Generally, DLS bases its staffing need on
caseload numbers provided by DFS. However, since DFS was unable to provide
an estimated caseload, DLS applied its 10% appeal rate to the 7.7% (7,007) of
the general population which may abuse drugs and/or alcohol.
This would result in an additional 700 hearing requests. DLS believes that
since this proposal affects eligibility the appeal rate could be even higher
than 10%, but in the absence of pertinent data, DLS is unable to provide a
better estimate of costs. DLS costs would be $76,459 in FY97; $133,408 in
FY98; and $136,866 in FY99. FY97 costs would be for six months.
Oversight assumes that DLS staffing needs would be reduced to 2 FTE (i.e.,
1.5 hearing officer and .5 clerk typist). DFS provided caseload numbers for
the AFDC, GR and MA categories for illustrative purposes. Using these
caseload numbers as a base and factoring in the percentage increase or
decrease in caseload for FY98 and FY99, Oversight estimates the potential
caseload at 7,007, 6,289 and 5,651 for the three fiscal years. Applying the
10% appeal rate yields potential caseloads of 701, 629 and 565, respectively.
It was assumed that the average caseload per hearing officer would be 500.
Some cases may be carried over from one year to the next, but the number is
not expected to be substantial since these cases involve eligibility issues.
As adjusted, total costs would be $57,282 in FY97; $94,062 in FY98; and
$96,503 in FY99. FY97 costs were assumed to be six months.
The Division of Medical Services (DMS) assumes that the proposal would not
have a direct effect on the Medicaid program; thus, the fiscal impact would
be zero. Oversight assumes that the Medicaid program could lose $1.6 billion
in federal Title XIX funds annually. According to DMS, appropriate language
cannot be identified in either the AFDC or Title XIX federal statutes which
would permit a state to deny eligibility based on drug usage. In essence,
DOS could find itself in a position of being unable to enforce state law and
continue to accept federal funds under Title XIX, or enforce state and find
itself out of federal compliance. Thus, risking the loss of approximately
$1.6 billion in federal Title XIX funds.
FISCAL IMPACT - State Government FY 1997 FY 1998 FY 1999
(6 Mo.)
GENERAL REVENUE
#Savings-Department of Social Services
Division of Family Services (DFS)
Reduction in Public Assistance
Benefits Due to Positive Drug Test $928,152 $1,657,826 $1,480,670
Reduction in Public Assistance
Benefits Due to Drug Conviction $387,236 $369,315 $351,828
Costs-Department of Social Services
Division of Family Services (DFS)
Personal Service (1 FTE) ($14,453) ($29,629) ($30,370)
Fringe Benefits ($4,443) ($9,108) ($9,336)
Expense and Equipment ($6,718) ($3,581) ($3,688)
Total Costs-DFS ($25,614) ($42,318) ($43,394)
Drug Testing ($625,549) ($1,122,964) ($1,008,922)
Independent Contract Evaluation ($25,000) ($25,000) $0
Costs-Division of Legal Services (DLS)
Personal Service (.90 FTE) ($12,803) ($26,245) ($26,901)
Fringe Benefits ($3,935) ($8,068) ($8,269)
Expense and Equipment ($9,039) ($8,015) ($8,256)
Total Costs-DLS ($25,777) ($42,328) ($43,426)
#ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND $613,448 $794,531 $736,756
FEDERAL FUNDS
Savings-Department of Social Services
Division of Family Services (DFS)
Reduction in Public Assistance
Benefits Due to Positive Drug Test $1,245,651 $2,224,670 $1,986,942
Reduction in Public Assistance
Benefits Due to Drug Conviction $519,640 $495,592 $472,126
Costs-Department of Social Services
Division of Family Services (DFS)
Drug Testing ($839,438) ($1,506,928) ($1,353,892)
Independent Contract Evaluation ($25,000) ($25,000) $0
Costs-Division of Legal Services (DLS)
Personal Service (1.10 FTE) ($15,648) ($32,077) ($32,879)
Fringe Benefits ($4,810) ($9,860) ($10,107)
Expense and Equipment ($11,048) ($9,797) ($10,091)
Total Costs-DLS ($31,506) ($51,734) ($53,077)
ESTIMATED NET EFFECT ON
FEDERAL FUND $869,347 $1,136,600 $1,052,099
*Does not include potential loss of $1.6 billion annually in title XIX funds
relating to Drug usage.
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
$0 $0 $0
DESCRIPTION
The proposal would provide that any person receiving public assistance
pursuant to chapter 208, RSMo, would be required to submit to drug testing at
the request of the director of the Department of Social Services (DOSS) or
the prosecuting attorney of the county in which the person resides or may be
found. If the individual tests positive for a controlled substance not
prescribed by a licensed physician or dentist, after an administrative
hearing, the individual would be declared ineligible to receive benefits for
three years from the date of the administrative hearing.
Any public assistance recipient who pleads guilty or who is found guilty of a
drug violation would be ineligible to receive public assistance benefits for
a period of time to be determined by the sentencing judge, but not to exceed
five years.
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 Social Services
Office of Prosecution Services
Office of State Courts Administrator