Fiscal Note - SB 0013 - Public Assistance Recipients May Be Asked to Take Drug Test
L.R. NO. 0257-01
BILL NO. SB 13
SUBJECT: Public Assistance Recipients - Drug Testing
TYPE: Original
DATE: January 16, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue $507,415 to $427,257 to $363,375 to
$582,322 $508,209 $446,439
Total Estimated
Net Effect on All $507,415 to $427,257 to $363,375 to
State Funds $582,322 $508,209 $446,439
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Federal $905,774 to $798,416 to $706,487 to
$955,712 $852,385 $761,863
Total Estimated
Net Effect on All $905,774 to $798,416 to $706,487 to
Federal Funds $955,712 $852,385 $761,863
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 Office of Prosecution Services and the Office of
Administration - Administrative Hearing Commission assumed that this proposal
would have no fiscal impact to their agencies.
Officials from the Office of State Courts Administrator note that they have
no way of determining how many of the 14,424 individuals who plead guilty or
were convicted of violations of chapter 195 in FY96 were welfare recipients.
In addition, they assume that since the bill is silent as to how the judge's
sentence of ineligibility would be transferred to DOS, that it would be
included in an automated format after the statewide court automation system
becomes operational. They estimate the costs associated with adding this
provision to the case management system currently being bid would be less
than $100,000. Oversight assumes that existing resources could be used for
this purpose.
Officials from the Department of Social Services (DOS), Division of Family
Services (DFS) estimated costs related to the need for a Program Development
Specialist (PDS). The PDS would be needed to prepare necessary federal and
state reports, including evaluations and plan changes; prepare necessary
policies, procedures and forms; and act as an on-going liaison between DFS
and the DLS, DMS, HCFA and ACF. Total costs associated with this employee
would be $39,302 in FY98; $42,736 in FY99; and $43,823 in FY00. These costs
would be 100% General Revenue (GR).
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: Temporary Assistance to Needy
Families (TANF), 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.
In addition, DFS noted that the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (PWORA) bars recipients convicted of a
drug-related felony from receiving TANF or Food Stamp benefits for life,
unless the state opts out by enacting state law. Therefore, this legislation
would actually reduce the length of the ban from assistance from "life" to a
maximum of five years for recipients convicted of drug- related felonies.
(This is not the case for misdemeanor drug offenses, as the PWORA does not
provide for a ban on recipients convicted of misdemeanors.)
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 FY98, the entire population of public assistance recipients (83,900)
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). FY99 and
FY00 caseloads were adjusted by the percentage increase and/or decrease in
each category and the number of recipients who tested positive during the
previous year. Total costs would be $3,001,523 in FY98; $2,681,229 in FY99;
and $2,395,494 in FY00. For fiscal note purposes, the costs were divided 40%
general revenue and 60% federal based on the split for prior years. However,
at this time, it is unknown how funding will be appropriated from block-grant
monies.
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 FY99 and FY00. According to DFS,
the annual grant amount for AFDC was $690; $960 for GR; and $0 for MA. The
MA category is not a cash grant program. Potential savings were estimated at
$4,461,996 in FY98; $3,979,054 in FY99; and $3,549,077 in FY00. A split of
40% general revenue and 60% federal was used.
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 the percentage of public assistance
recipients convicted of a drug-related offense would be the same as that of
the entire state population. According to the Office of State Courts
Administrator (CTS) there were 14,424 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, FY98 savings related to this component were estimated at $163,413.
The base numbers for FY98 and FY99 were adjusted by the percentage increase
and/or decrease to yield potential savings of $157,439 and $151,712,
respectively. A split of 40% general revenue and 60% federal was used.
The Division of Legal Services (DLS) estimated costs for 4.5 FTE (i.e., 3
hearing officers and 1.5 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. Based on information provided by DFS,
there are approximately 83,900 public assistance recipients. Estimating that
7.7% of the population abuses drugs and/or alcohol would result in 6,460
recipients eligible for sanctioning. Generally, DLS estimates 10% of
individuals would request an administrative hearing; however, because these
individuals face sanctions of total denial of benefits for three years
without the right to reapply during that time, they estimate that 30%
(approximately 1,938 recipients) would request an administrative hearing.
DLS costs would be $148,685 in FY98; $162,090 in FY99; and $166,318 in FY00.
These costs would be split 60% general revenue and 40% federal. FY98 costs
would be for ten months.
Oversight assumes that DLS staffing needs could be anywhere from 1 FTE (1
administrative hearing officer) to 4.5 FTE (3.5 administrative hearing
officers and 1 clerk typist), depending on the % increase in hearings. 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 caseloads for FY99 and FY00, Oversight
estimates the potential caseload at 6,460, 6,252, 6,052 for the three fiscal
years. Applying a range of 10 to 30% as the appeal rate yields potential
caseloads of anywhere from 605 to 1,938 additional hearings. 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. The range of
costs would be $46,550 to $171,395 in FY98; $51,934 to $186,854 in FY99; and
$53,286 to $191,727 in FY00.
The Division of Medical Services (DMS) assumes that this 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 the Title XIX federal statutes which would permit a
state to deny eligibility based on drug usage. As a result, DOS could be in
a position where it would not be able to enforce the provisions of this
legislation as long as the state accepted federal funds under Title XIX. To
the contrary, if the state did enforce the provisions of this legislation, it
may be found out of federal compliance and could lose approximately $1.6
billion in federal Title XIX funds.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
GENERAL REVENUE
Savings-Department of Social Services
Division of Family Services (DFS)
Reduction in Public Assistance
Benefits Due to Positive Drug Test $1,784,798 $1,591,622 $1,419,631
Reduction in Public Assistance
Benefits Due to Drug Conviction $65,365 $62,976 $60,685
Costs-Department of Social Services
Division of Family Services (DFS)
Personal Service (1 FTE) ($24,559) ($30,220) ($30,976)
Fringe Benefits ($7,007) ($8,622) ($8,837)
Expense and Equipment ($7,736) ($3,894) ($3,894)
Total Costs-DFS ($39,302) ($42,736) ($43,707)
Drug Testing ($1,200,609) ($1,072,492) ($958,198)
Costs-Division of Legal Services (DLS)
Personal Service (.6 to 2.7 FTE) ($15,615 to ($19,207 to ($19,687 to
$55,567) $68,348) $70,056)
Fringe Benefits ($4,455 to ($5,480 to ($5,617 to
$15,853) $19,499) $19,987)
Expense and Equipment ($7,860 to ($6,474 to ($6,668 to
$31,417) $24,266) $24,993)
Total Costs-DLS ($27,930 to ($31,161 to ($31,972 to
$102,837) $112,113) $115,036)
ESTIMATED NET EFFECT ON $507,415 to $427,257 to $363,375 to
GENERAL REVENUE FUND $582,322 $508,209 $446,439
FEDERAL FUNDS
Savings-Department of Social Services
Division of Family Services (DFS)
Reduction in Public Assistance
Benefits Due to Positive Drug Test $2,677,198 $2,387,432 $2,129,446
Reduction in Public Assistance
Benefits Due to Drug Conviction $98,048 $94,463 $91,027
Costs-Department of Social Services
Division of Family Services (DFS)
Drug Testing ($1,800,914) ($1,608,737) ($1,437,296)
Costs-Division of Legal Services (DLS)
Personal Service (.4 to 1.8 FTE) ($10,410 to ($12,804 to ($13,124 to
$37,045) $45,565) $46,704)
Fringe Benefits ($2,970 to ($3,653 to ($3,744 to
$10,569) $13,000) $13,324)
Expense and Equipment ($5,240 to ($4,316 to ($4,446 to
$20,944) $16,177) $16,662)
Total Costs-DLS ($18,620 to ($20,773 to ($21,314 to
$68,558) $74,742) $76,690)
ESTIMATED NET EFFECT ON $905,774 to 798,416 to 706,487 to
FEDERAL FUND* $955,712 $852,385 $761,863
*Does not include potential loss of $1.6 billion annually in title XIX funds
relating to Drug usage.
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
$0 $0 $0
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of
this proposal.
DESCRIPTION
This legislation provides that public assistant recipients would be required
to submit to drug testing to detect the use of controlled substances at the
request of the director of the Department of Social Services or the county
prosecuting attorney. Any recipient testing positive for a non-prescribed
controlled substance would be declared ineligible for all public assistance
benefits for a period of three years. Any public assistant recipient who has
plead guilty or has been found guilty of violating any provision of Chapter
195, drug regulations, would be declared ineligible for public assistance
benefits for a period of time as determined by the sentencing judge, 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. The proposal would not affect total state revenue.
SOURCES OF INFORMATION
Department of Social Services
Office of Prosecution Services
Office of Administration - Administrative Hearing Commission
Office of State Courts Administrator
This Fiscal Note is not an official copy and should not be quoted or cited.