This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0932 - New Public Assistance Program to be Established
L.R. NO. 3482-02
BILL NO. SB 932
SUBJECT: Missouri Option Program
TYPE: Original
DATE: April 1, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
General Revenue ($25,614) ($747,770) $102,355
Unemployment
Insurance Trust
Fund (Unknown) (Unknown) (Unknown)
Partial Estimated
Net Effect on All
State Funds ($25,61) ($747,770) $102,355
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Federal $0 $231,549 $231,549
Total Estimated
Net Effect on All
Federal Funds $0 $231,549 $231,549
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government (Unknown) (Unknown) (Unknown)
FISCAL ANALYSIS
ASSUMPTION
The Department of Labor & Industrial Relations (DOL), Division of Employment
Security (ES) does not expect any direct fiscal impact. However, the
proposal could impact the Unemployment Insurance (UI) Trust Fund. The
proposal would create a program whereby economic incentives would be offered
to individuals to obtain employment, keep a percentage of the income earned
and to eventually end the need for public assistance. There could be a
minimal cost to the UI Trust Fund in that if these individuals were to obtain
employment, employers would be required to pay contributions allowing for UI
claims in the future. The amount of the claims would be unknown.
The Department of Economic Development (DED), Division of Job Development &
Training (DJD) assumes that it would not be directly impacted, but to the
extent that the proposal's welfare clientele would be required to find work
through the assistance of the DJD state and federally funded public and
private non-profit subcontractors and One- Stop Career Center system partner
agencies, total costs of serving these participants would increase as the
Division of Family Services' clients apply for direct job referral and
placement services. To what extent the costs would rise cannot be
determined. Additionally, federal funds for such purposes are likely to be
limited, especially if Congress passes the legislation currently being
considered.
The Department of Social Services (DOS), Division of Family Services (DFS)
would be fiscally impacted as a result of the implementation of the Missouri
Option Program (MOP). In order to implement this program, a Federal 1115
Demonstration Waiver would be required. DFS assumes it would need one FTE
(i.e., Program Development Specialist-PDS) effective January 1, 1997, to make
application for the federal waiver; prepare federal and state reports,
evaluations and state plan changes; prepare policies, procedures and forms;
act as an on-going liaison between DFS and other agencies; and contract with
and serve as a liaison with an independent evaluation contractor. Costs
would be 100% general revenue (GR) since DFS cannot assure that overall
savings would be realized as a result of this proposed eligibility change in
accordance with the cost neutrality pact associated with the waiver.
Additionally, a Federal 1115 Demonstration Waiver would require that affected
participants be divided into an experimental and control group for evaluation
purposes. It was assumed that the pilot counties would serve as the control
group and would be chosen randomly. An independent evaluation contractor
would also be required under the auspices of the waiver. DFS assumes that
the evaluation contractor would be paid $100,000 over a two year period
(i.e., FY98 and FY99).
The waiver evaluation costs would be split 50% federal and 50% GR. DFS
assumes that a waiver could be approved and implemented by July 1, 1997.
DFS assumes that pilot projects in four quadrants of the state would involve
400 Aid to Families with Dependent Children (AFDC) participants. For
purposes of this fiscal note, it was assumed that the participants household
would be comprised, on average, of one adult and two children. The base
amount for the MOP was computed at $1,028 per participant and would include
AFDC benefits, Food Stamps, Medicaid and child care. This amount was based
on the averages and maximums for the current fiscal year. It was further
assumed that the participants would go to work at minimum wage and receive
raises at 6, 12 and 24 months. The first six months of earned income would
be disregarded in accordance with the proposal. During the first six months
DFS would incur new general revenue (GR) costs in order to bring the
participant up to the base level. The current level of benefits which an
individual earning minimum wage could receive would be $688. In order to
bring the individual's level of benefits up to the base level, an additional
$340 would be required. Normally, for the AFDC program, earned income
disregard is only allowed for four months. Therefore, beginning in month
five the GR need would increase slightly to $384 and would be completely
discontinued by month seven. No additional GR funds would be needed
beginning in month seven because it was assumed that the hourly wage earned
would increase to $4.64, yielding earned income of $806 plus benefits of $624
for a total of $1,430 which exceeds the base. The average program costs for
benefits would be $2,128 per pilot household in the first year (i.e., FY98
because of the implementation date of July 1, 1997) for total costs of
$851,200.
DFS assumes no savings would be experienced as a result of sanctions being
applied to recipients who would leave the program within the first six
months. As with the earned income exemption, a recipient would have no
reason to quit a job without good cause. Furthermore, DFS does not
anticipate any long-range savings. Based on the assumed raises, it would
take over two years for the average recipient to "end the program" (i.e.,
exceed the base level), and as current reports indicate, the average
recipient receives benefits for under two years. It should be noted that
there is still the potential for some recipients to receive assistance under
MOP even after the estimated two years. The continuance of assistance would
be dependent upon the number of individuals in the household. DFS's
assumptions are based on a household size of three (i.e., one adult and two
children).
The Division of Legal Services (DLS) and the Division of Data Processing
(DDP) do not expect to be fiscally impacted.
The Division of Medical Services (DMS) would realize a savings as a result of
this program. The benefit package would include the Medicaid contribution
for twelve months (FY97) following employment, but once the recipient would
reach the base level, the case would be closed. DMS assumes that 10% of the
estimated 400 cases would have been closed anyway due to employment of the
adult. Therefore, the savings for FY98 and FY99 would be for 360 cases at an
average cost of $98.91 per month. No savings would be realized for children
as it was assumed that AFDC children would qualify for Medicaid through
other eligibility categories. A 39.96% GR and 60.04% federal split was
assumed.
FISCAL IMPACT - State Government FY 1997 FY 1998 FY 1999
(10 Mo.)
GENERAL REVENUE
Savings-Department of Social Services
Division of Medical Services (DMS)
Medicaid Savings Related to MO
Option Program $0 $170,747 $170,747
Costs-Department of Social Services
Division of Family Services (DFS)
Personal Service (1 FTE) ($14,453) ($29,628) ($30,369)
Fringe Benefits ($4,443) ($9,108) ($9,335)
Expense and Equipment ($6,718) ($3,581) ($3,688)
Total Costs-DFS ($25,614) ($42,317) ($43,392)
Independent Evaluation Contractor $0 ($25,000) ($25,000)
Additional Costs to Reach the
Base Level of Benefits $0 ($851,200) $0
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND ($25,614) ($747,770) $102,355
UNEMPLOYMENT INSURANCE
TRUST FUND
Costs-Department of Labor & Industrial Relations
Division of Employment Security (ES
Unemployment Claims (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON
UNEMPLOYMENT INSURANCE
TRUST FUND (Unknown) (Unknown) (Unknown)
FEDERAL
Savings-Department of Social Services
Division of Medical Services (DMS)
Medicaid Savings Related to MO
Option Program $0 $256,549 $256,549
Costs-Department of Social Services
Division of Family Services (DFS)
Independent Evaluation Contractor $0 ($25,000) ($25,000)
ESTIMATED NET EFFECT ON
FEDERAL FUND $0 $231,546 $231,549
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
LOCAL
Costs-Public and Private Non-Profit
Subcontractors and One-Stop Career Center
Direct Job Referral & Placement Services (Unknown) (Unknown) (Unknown)
ESTIMATED NET EFFECT ON
LOCAL GOVERNMENT (Unknown) (Unknown) (Unknown)
FISCAL IMPACT - Long Range
The Department of Labor & Industrial Relations (DOL), Division of Employment
Security (ES) currently provides services to FUTURES participants through
contracts with the Department of Social Services. If services were to be
provided through the Missouri Option Program, the current contracts would
have to be modified or new contracts written. The costs associated with this
action cannot be determined.
DESCRIPTION
The proposal would require, beginning July 1, 1997, the establishment of the
Missouri Option Program by the Department of Social Services, Division of
Family Services. The program would be established in the four quadrants of
the state and other areas if the DFS determines appropriate.
DFS would enroll qualified individuals who apply for the program in the
employment pays program of Missouri, targeting Aid to Families with Dependent
Children (AFDC) households who meet at least one of the criteria outlined in
the proposal. Upon enrollment, an assessment of the family's total benefit
package would be conducted, with at least annual reviews thereafter.
Subject to appropriations and federal waivers, the first six months of job
related income would be disregarded. After six months the DFS would charge
the recipient a percentage of their private income in exchange for the entire
benefit package. The benefit package would not change until the recipient
earns an amount equal to the entire benefit package, but as income grows so
would the percentage charged. Failure to remain within the program for the
first six months would result in a recalculation of the AFDC, Food Stamp and
Medicaid benefits for the household without considering the caretaker
recipient. The suspension of the caretaker benefits would remain in effect
until the caretaker becomes employed and the caretaker would not be allowed
to rejoin the program. DFS would be required to give preference to a person
enrolled in the employment pays program and that are eligible to receive
assistance for day care services.
By January 1, 2000, the DFS would be required to submit documentation to the
Speaker of the House and the President Pro Tem of the Senate on the success
or failure of the employment pays program. The General Assembly could
recommend statewide implementation or cancellation.
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
Department of Labor & Industrial Relations
Division of Employment Security
Department of Economic Development
Division of Job Training & Development