This Fiscal Note is not an official copy and should not be quoted or cited.
This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0480 - Authorizes denial of public assistance to those guilty of substance abuse
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO. 2289-02
BILL NO. SB 480
SUBJECT: Public Assistance Recipients - Drug Testing
TYPE: Original
DATE: January 18, 1998
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS $589,954 $552,433 $534,272 Net Effect on All State Funds $589,954 $552,433 $534,272 * Does not include potential costs for drug rehabilitation program expected to exceed $100,000 annually. ESTIMATED NET EFFECT ON FEDERAL FUNDS $931,520 $908,901 $883,721 Net Effect on All Federal Funds $931,520 $908,901 $883,721 *Does not include potential loss of $2 billion annually in title XIX funds relating to drug testing. Does not include
costs for drug rehabilitation program expected to exceed $100,000 annually. ESTIMATED NET EFFECT ON LOCAL FUNDS Numbers within parentheses: ( ) indicate costs or losses This fiscal note contains 8 pages. FISCAL ANALYSIS ASSUMPTION Officials from the Office of Administration - Administrative Hearing Commission and Office of Prosecution Services
assume this proposal would have no fiscal impact to their agencies. Officials from the Office of State Courts Administrator (CTS) indicated there were 17,043 pleas and convictions to
violations of Chapter 195 RSMo in FY 97. The CTS has no way to determine how many of these individuals were welfare
recipients. The CTS also noted the proposal is silent as to how the judge's sentence of ineligibility for a period would be
transferred to the Department of Social Services (DOS). The CTS assumes the transfer could be made in an automated
format after a statewide court automation system becomes operational. The CTS indicated some costs would be incurred to
add this provision to the CTS Case Management System; however, the cost is estimated to be less than $100,000.
Oversight assumes 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 policies, procedures
and forms; and applying sanctions against the receipt of benefits. Total costs associated with this employee would be
$31,060 in FY 99; $53,501 in FY 00; and $54,875 in FY 01. These costs would be 100% General Revenue (GR) funded as
it is unknown if the costs would be eligible for federal matching under the block grant currently applied to assistance
programs. DFS did not estimate any savings related to the drug testing components of this proposal as it is unknown how many
recipients would be required to be tested and how many would be sanctioned. The DFS estimates that while there could be
a cost savings for denying benefits as a result of convictions for misdemeanor drug offenses, it would not be the same for
convictions of felony drug offenses. 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.) The DFS did indicate the variables that would go into estimating the cost and/or savings relating to this proposal that
precluded them from calculating costs or savings related to the proposal. The variables included: ASSUMPTION (continued) The DFS indicated that since drug use has never previously been used as an eligibility criteria, no data exists as to the extent
of drug use or drug convictions among public assistance recipients in Missouri. Therefore, it is difficult to estimate with
any degree of certainty the potential cost or savings as a result of this proposal. Oversight has estimated costs and savings using the caseload numbers and grant amounts provided by DFS and the DOS,
Division of Legal Services (DLS) and information used from a similar note from the 1997 session 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. The DLS assumes the testing will be given to the recipients that fall into the categories of Temporary Assistance to Needy
Families (TANF), General Relief (GR), and GR Medicaid. In FY 99, the entire population of public assistance recipients
(74,400) 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 DLS. Fiscal Year 2000 and FY 2001 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 $2,661,675 in FY 99; $2,373,435 in FY 00; and $2,116,800 in FY 01. For fiscal note purposes, the costs
were divided 40% general revenue funds and 60% federal funds based on the split for prior years. However, at this time,
it is unknown how funding will be appropriated from block-grant monies. The proposal also allows the DOS to require the client, who has tested positive for illegal drug use, to attend a drug
rehabilitation program. The proposal is silent as to who is to pay for the drug rehabilitation program. The DFS indicated
that drug rehabilitation program costs range from $1,400 to $22,000 for six month programs. Without knowing how long a
client would be required to attend a drug rehabilitation program, and how much each program would cost, it ASSUMPTION (continued) cannot be determined how much the drug rehabilitation program will cost. However, it appears the cost will exceed $100,000 for the drug rehabilitation program. Therefore, Oversight will show an unknown cost, which
is expected to exceed $100,000, for the drug rehabilitation program for the purposes of this fiscal note. An 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 FY 99 and FY 00. According to DFS, the annual grant amount for TANF was
$690; $960 for GR; and $0 for MA. The MA category is not a cash grant program. Potential savings were estimated at
$4,065,330 in FY 99; $3,745,110 in FY 00; and $3,451,608 in FY 01. 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 17,043 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, FY 99 savings
related to this component were estimated at $148,879. The base numbers for FY 00 and FY 01 were adjusted by the
percentage increase and/or decrease to yield potential savings of $143,160 and $138,060, respectively. A split of 40%
general revenue and 60% federal was used. The Division of Legal Services (DLS) estimated costs for 81 FTE (i.e., 54 hearing officers and 27 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 74,400 public assistance recipients and they would be test each quarter. Estimating that 20% of the
population abuses drugs and/or alcohol (DLS cited a December 1996 Washington Post editorial for the 20% figure) would
result in 59,520 positive tests and each will require a hearing up front (74,400 clients x 4 quarters x 20% = 59,520 tests).
The DLS is assuming every client that tested positive for drug use would automatically receive a hearing. The DLS will
also hear 12,000 additional cases to recoup the overpayments because it takes 30 to 90 days to remove a client from the
system. Each hearing officer can conduct 5 hearings a day for 264 days a year. Therefore, each hearing officer could hold
1,320 hearings per year. The DLS estimates the hearing officers would require 27 additional clerical staff to handle the
increased caseload. The DLS estimates their costs would be $2,800,497 in FY 99; $3,029,703 in FY 00; and $3,108,698 ASSUMPTION (continued) in FY 01. These costs would be split 60% general revenue and 40% federal. FY 99 costs would be for ten months. Oversight assumes that DLS staffing needs could be anywhere from 0 FTE (assuming no drug tests are required) to 4 FTE
(3 administrative hearing officers and 1 clerk typist), depending on the percent increase in hearings. Oversight assumes the
drug testing will be handled as an eligibility issue, as DFS indicated in their response, and each client testing positive for
illegal drug usage will have their assistance benefits automatically terminated. If a client disagrees with the drug test or the
termination of benefits, then the client will request a hearing as is the current practice for eligibility hearings. Oversight is
not assuming each client testing positive for drug usage will automatically receive a hearing. DFS provided caseload
numbers for the TANF and GR categories for illustrative purposes. Using these caseload numbers as a base and factoring
in the percentage increase or decrease in caseloads for FY 00 and FY 01, Oversight estimated the potential hearing caseload
at 5,729, 5,099, 4,538 for the three fiscal years. Oversight assumed in a previous fiscal noted that a range of clients from 10
to 30 % would appeal their positive drug testing result. Applying a range of 10 to 30% as the appeal rate yields potential
caseloads of anywhere from 453 to 1,719 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 $0 to 137,600 in FY 99; $0 to $159,010 in FY 00;
and $0 to $163,053 in FY 01. 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 $2 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 $2 billion in federal Title XIX funds. ESTIMATED NET
EFFECT
ON ESTIMATED NET
EFFECT
ON FISCAL IMPACT - Small Business
FUND AFFECTED
FY 1999
FY 2000
FY 2001 General Revenue *
$534,914 to
$488,829 to
$469,272 to
Total Estimated
$534,914 to
$488,829 to
$469,272 to
FUND AFFECTED
FY 1999
FY 2000
FY 2001 Federal *
$848,960 to
$813,495 to
$785,889 to
Total Estimated
$848,960 to
$813,495 to
$785,889 to
FUND AFFECTED
FY 1999
FY 2000
FY 2001 Local Government
$0
$0
$0
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
$1,626,132
$1,498,044
$1,380,643 FISCAL
IMPACT -
State
Government
FY 1999
FY 2000
FY 2001 (continued)
(10 Mo.)
Reduction in Public Assistance Benefits Due
to Drug
Conviction
$59,552
$57,264
$55,224 Costs-Department of Social Services Division of Family Services (DFS) Personal
Service (1
FTE)
($17,577)
($36,033)
($36,934) Fringe
Benefits
($4,927)
($10,100)
($10,353) Expense
and
Equipment
($8,556)
($7,368)
($7,588) Total Costs-DFS
($31,060)
($53,501)
($54,875) Costs-Department of Social Services Division of Family Services (DFS) Drug
Testing
($1,064,670)
($949,374)
($846,720) Drug
Rehabilitation Program
(Unknown)
(Unknown)
(Unknown) Costs-Department of Social Services Division of Legal Services (DLS) Personal
Service (0 to
1.6 FTE)
($0 to
($0 to
($0 to
$37,011)
$45,523)
$46,662) Fringe
Benefits
($0 to
($0 to
($0 to
$10,374)
$12,760)
$13,079) Expense
and
Equipment
($0 to
($0 to
($0 to
$7,655)
$5,321)
$5,480) Total Costs-DLS
($0 to
($0 to
($0 to
$55,040)
$63,604)
$65,221)
$534,914 to
$488,829 to
$469,272 to GENERAL
REVENUE
FUND*
$589,954
$552,433
$534,272 * Total does not include potential costs for drug rehabilitation program expected to exceed $100,000 annually. FEDERAL FUNDS Savings-DOS-Division of Family Services (DFS) Reduction in Public Assistance Benefits Due
to Positive
Drug Test
$2,439,198
$2,247,066
$2,070,965 FISCAL
IMPACT -
State
Government
FY 1999
FY 2000
FY 2001 (continued)
(10 Mo.)
Reduction in Public Assistance Benefits Due
to Drug
Conviction
$89,327
$85,896
$82,836 Costs-DOS-Division of Family Services (DFS) Drug
Testing
($1,597,005)
($1,424,061)
($1,270,080) Drug
Rehabilitation Program
(Unknown)
(Unknown)
(Unknown) Costs-Department of Social Services Division of Legal Services (DLS) Personal
Service (0 to
2.4 FTE)
($0 to
($0 to
($0 to
$55,516)
$68,285)
$69,992) Fringe
Benefits
($0 to
($0 to
($0 to
$15,562)
$19,140)
$19,619) Expense and
Equipment
($0 to
($0 to
($0 to
$11,482)
$7,981)
$8,221) Total Costs-DLS
($0 to
($0 to
($0 to
$82,560)
$95,406)
$97,832)
$848,960 to
$813,495 to
$785,889 to FEDERAL
FUND*
$931,520
$908,901
$883,721 *Does not include potential loss of $2 billion annually in title XIX funds relating to drug testing. Does not include
costs for drug rehabilitation program expected to exceed $100,000 annually. FISCAL
IMPACT -
Local
Government
FY 1998
FY 1999
FY 2000
(10 Mo.)
$0
$0
$0
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
This legislation requires public assistant recipients 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 DESCRIPTION (continued)
county prosecuting attorney. After an administrative hearing is conducted, any recipient testing positive for a non-prescribed controlled substance may be placed on probation, required to attend a drug rehabilitation program, or declared ineligible for all public assistance benefits for a period
of three years. Any public assistance recipient who has plead guilty or has been found guilty of violating any provision of Chapter 195, drug regulations, may be placed on probation as to eligibility or declared ineligible for public assistance benefits for a period of time as determined by the sentencing judge, not to exceed five years in addition to any other remedy available pursuant to state law.
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 State Courts Administrator
Office of Administration - Administrative Hearing Commission
Jeanne Jarrett, CPA
Director
January 18, 1998