SB 0510 - Fiscal Note

Fiscal Note - SB 0510 - Creates the Community Partnership Program for delivering benefits from the Division of Family Services

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 2376-01

BILL NO. SB 510

SUBJECT: Community Partnership Program

TYPE: Original

DATE: December 30, 1997

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue*	($68,351)	(Unknown)	(Unknown)
Community Partnership Fund	$0	(Unknown)	(Unknown
Total Estimated Net Effect on All State Funds	($68,351)	(Unknown)	(Unknown)

* Costs expected to exceed $100,000 annually.

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Federal	$0	$0	$0
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 8 pages.

FISCAL ANALYSIS

ASSUMPTION

The Office of the Governor (GOV), Office of the Lieutenant Governor (MLG), Missouri Western State College, Central Missouri State University, Truman State University and Harris-Stowe College do not expect to be fiscally impacted.

The Office of Administration (OA), Division of Budget and Planning (BAP) indicates this proposal has no fiscal impact on their agency although they noted the proposed tax credit would potentially affect total state revenue.

The Department of Elementary and Secondary Education (DES) does not expect to be fiscally impacted and does not expect the local school districts to be fiscally impacted. However, DES noted the tax credits could affect total state revenue.

The Coordinating Board for Higher Education (CBH) does not expect to be fiscally impacted by the legislation. The CBH noted that institutions of higher education that chose to participate as community partnership organizations could be fiscally impacted. However, since participation is not mandated, the fiscal impact would be unknown.

The Secretary of State (SOS) estimates costs for additional publishing duties related to the Division of Family Services (DFS) being able to promulgate rules, forms and other controls as necessary. DFS currently has 30 regulations on the topic of income maintenance payments, comprising 26 pages in the Code of State Regulations. SOS assumes DFS will require at least and equivalent number of regulations for the administration of the new program. SOS also assumes each regulation will require four pages in the Missouri Register, which equates to 120 additional pages. The actual fiscal impact would be dependent upon the actual rulemaking authority, and may be substantially more or less. For purposes of this fiscal note, the SOS estimates costs for printing at $3,598 in FY 99. Financial impact in subsequent fiscal years would depend entirely on the number, length, and frequency of the department's rulemaking actions.

Oversight assumes SOS could increase fees to cover additional costs, per Section 535.033,

RSMo, and therefore, has not included these costs in the fiscal impact for the proposal.

The SOS also estimates costs for a partial FTE for a computer information specialist. The SOS estimates costs for an additional partial FTE for a computer information specialist to be responsible for implementing and maintaining this franchise tax credit in the SOS office's current computer system. The SOS estimates that they would need .3125 of an FTE with salary and fringe benefit costs totaling $13,255 and would require $334 for computer time and data storage at the State Data Center for FY 99.

ASSUMPTION (continued)

Oversight assumes for purposes of this fiscal note that since one FTE is not required, then the programming could be handled with existing personnel or through contracted labor. Therefore, Oversight will show zero cost for personal services.

The Department of Revenue (DOR) indicates the proposal would not fiscally impact state or local funds. DOR expects to incur costs related to both individual and corporate tax system modifications. Modifications will include edit programs, reports, tables, batch programs, online programs, additional key entry, testing and implementation which will all be handled by existing staff. The Division of Taxation anticipates that the volume of credits could be handled by existing staff; however, if the credits would exceed 1,600 they will need one Tax Processing Technician I, which would be requested through the budget process.

Oversight assumes that the first year tax credits could potentially be claimed would be FY 00. FY 99 has been shown as zero. Oversight cannot determine the costs of potential tax credits and has shown them as unknown for FY 00 and FY 01.

The Department of Social Services (DOS) did not respond to our request for fiscal impact; however, in a similar proposal from the 1997 session, the DOS reported costs for additional FTE. The following assumptions were from the response from the 1997 session. (Personnel costs were increased by 2.5% and expense and equipment items were increased 3% for each year costs were presented.)

The Division of Family Services (DFS) assumes that it would be fiscally impacted by this proposal and it would be necessary to hire a Program Development Specialist (PDS) to help develop a format for implementation. The PDS would monitor the implementation progress, help coordinate interactions between service centers and clients, respond to media attention, monitor hotline results, and interrelate with interested agencies as appropriate. The PDS would also be responsible for contract issues. Costs associated with this FTE would be $30,491, $43,653, and $44,761 for FY 99, FY 00, and FY 01, respectively. DFS does not know how these costs will be funded. They indicated it will probably be a split of general revenue and federal funding. However, because administrative costs are capped at 15%, anything exceeding the 15% limit will be funded solely through general revenue. For fiscal note purposes, Oversight assumes the FTE will be funded 100% from general revenue.

DFS indicates it cannot estimate costs associated with the Community Partnership Program because the number of agencies and clients who would be interested in such a program cannot be ascertained. The proposal would provide that monies be appropriated to the Community

ASSUMPTION (continued)

Partnership Program Fund to provide benefits to qualified individuals that are at least equal to the benefits the individual would otherwise receive plus an amount at least equal to 10% of the total

amount transferred or savings resulting from the implementation of the program. The proposal

also instructs that any surplus of funds should be invested by the state treasurer and money earned be credited to the program fund.

Administrative costs of managing public assistance disbursements within DFS, along with costs associated to field operations and the performance of field staff, could equate to savings as they would not be incurred by allowing another entity to handle benefit responsibilities as proposed.

Based on FY 96 expenditures and appropriations, DFS estimates these administrative costs at

approximately 4% of the benefits issued. However, DFS notes the 4% maintenance/operating costs for handling benefits compared to the 10% contribution to another organization to conduct a similar service does not appear to be a savings for DFS; and the overall impact is unknown.

For purposes of this fiscal note, Oversight has shown unknown income to the Community Partnership Program Fund from appropriations, the additional 10% and the fee which could be accessed against the participants. In addition, the provision of services has been shown as an unknown cost. It was assumed that the fund would not net to zero, but costs would more than likely exceed the income level.

The Division of Budget & Finance (DBF) assumes that the proposal would create additional audit responsibilities because the DBF would be responsible for performance and financial audits of the department's agreements with the community partnership organizations. DBF assumes that it would need one Auditor I to complete annual reviews on each of 30 contracts. It would take approximately 70 hours per audit, including travel, report preparation and review time. Depending on the number of contracts which would result from this proposal, DBF would require 1 FTE for every 30 contracts at an annual cost of approximately $36,900. Costs would be 100% GR.

Oversight assumes that since DFS was unable to estimate the number of potential contracts that the cost to DBF would be unknown as well, which is what is reported in the impact to state government section of the fiscal note.

The Division of Legal Services (DLS) assumed this proposal would require 1.5 FTE, including one attorney and .5 clerical staff. DLS states that under this proposal, community partnerships would be authorized to be established as conduits for dispensing and administering public assistance benefits to qualified recipients. Contracts would be entered into between the

Community Partnership Organizations (CPOs) and DFS. CPOs would then contract with

ASSUMPTION (continued)

qualified individuals who elect to participate in the program. The contracts between CPOs and participants would be required to provide a grievance procedure to address disputes which might

arise. The additional attorney would be involved in assisting DFS in drafting, reviewing, and

monitoring the contracts with the CPOs as well as assisting in revolving disputes under the

grievance procedures.

The part-time clerical would provide administrative support to the attorney in typing contracts, letters, and legal opinions. The costs associated with these FTE would be $48,074, $53,849, and $55,251 in FY 99, FY 00, and FY 01, respectively, and these costs would be split between general revenue and federal funds. DLS also assumes there are many unknown factors that could have long-range implications and the impact of these are currently unknown.

Oversight assumes DLS would need one attorney and related expenses at a cost of $33,928, $53,284, and $55,037 in FY 99, FY 00, and FY 01, respectively. For fiscal note purposes, Oversight assumes the FTE will be funded 100% from general revenue.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(6 Mo.)
GENERAL REVENUE
Costs-Department of Revenue (DOR)
Tax Credits	$0	(Unknown)	(Unknown)
Costs-Department of Social Services
Division of Family Services (DFS)
Personal Service (1 FTE)	($15,103)	($30,976)	($31,750)
Fringe Benefits	($4,309)	($8,838)	($9,058)
Expense and Equipment	($11,079)	($3,839)	($3,953)
Total Costs-DFS	($30,491)	($43,653)	($44,761)
Costs-Department of Social Services
Division of Legal Services (DLS)
Personal Service (1 FTE)	($15,999)	($32,810)	($33,631)
Fringe Benefits	($4,564)	($9,360)	($9,959)
Expense and Equipment	($13,365)	($11,114)	($11,447)
Total Costs-DLS	($33,928)	($53,284)	($55,037)
FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
(continued)	(6 Mo.)
Costs-Department of Social Services
Division of Budget and Finance (DBF)
Personnel/Expense and Equipment	$0	(Unknown)	(Unknown)
PARTIAL ESTIMATED NET EFFECT
ON GENERAL REVENUE FUND	($64,419)*	($96,937)*	($99,798)*
* Does not include personnel and related costs for 1 FTE in the DBF to review the related contracts created by this proposal.
COMMUNITY PARTNERSHIP PROGRAM FUND
Income
Monies Appropriated to the Fund Plus 10%
of Transfer of Savings	$0	Unknown	Unknown
Fees Charged Participants	$0	Unknown	Unknown
Costs
Provision of Services	$0	(Unknown)	(Unknown)
ESTIMATED NET EFFECT ON COMMUNITY
PARTNERSHIP PROGRAM FUND	$0	(Unknown)	(Unknown)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(6 Mo.)
	$0	$0	$0

FISCAL IMPACT - Long Range

The Department of Social Services (DOS), Division of Legal Services (DLS) indicates an unknown fiscal impact given the number of unknown factors involved with the Community Partnership Program.

FISCAL IMPACT - Small Business

This proposal may affect small businesses as these businesses may be involved in providing some of the services provided.

DESCRIPTION

This proposal will create the "Community Partnership Program" to provide certain services to those persons eligible for benefits distributed by the Division of Family Services. Persons who elect to participate will enter into contractual agreements with charitable organizations for distribution of benefits and to provide services to help the recipients meet their individual living needs. Services may include education, transportation, child care, etc.

Charitable organizations must be in existence for at least one year prior to participation, establish and maintain a system to address grievances, allow audits, and are prohibited from discriminating on the basis of sex, race, religion, or national origin. Charitable organizations may impose certain conditions on the recipients as a condition for receiving these services, except they cannot force

the recipients attend a religious service or perform an illegal act. Charitable organizations may also charge a fee to those who participate to cover any overhead costs. However, the fee charged may not exceed 10% of the moneys to be distributed, which is also the minimum increase in benefits those who participate will receive.

Community Partnership Organizations may seek private donations to support and supplement a Community Partnership Program.

A taxpayer will be allowed to claim a tax credit against the taxpayer's state tax liability in the amount of fifty percent of the taxpayer's contribution to the Community Partnership Program.

A tax credit which cannot be claimed in the taxable year in which the contribution was made may be carried over to the next four succeeding taxable years until the full credit has been claimed. The tax credit will become effective January 1, 1999, and shall apply to all taxable years beginning after December 31, 1998.

This proposal would also create the Community Partnership Program Fund which consists of the moneys that would ordinarily go to those who participate in terms of benefits, and an additional sum of ten percent of the total transferred from the savings in the overhead costs.

The proposal would also create the Community Partnership Advisory Council to make recommendations on how the program can be expanded and improved. The council would consist of seven members that serve four year terms. The council would be chaired by the Lt. Governor and its members would include the Director of Social Services, the Director of the

Division of Family Services, and four other public members appointed by the Governor with the

DESCRIPTION (continued)

advice and consent of the Senate. The public members are to be active participants in a charitable

organization involved in the program, and no more than two may be of the same political party.

This legislation is not federally mandated. It may duplicate another program and may require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Social Services

Secretary of State's Office

Coordinating Board of Higher Education

Department of Elementary and Secondary Education

Department of Revenue

Office of Administration

Governor's Office

Lieutenant Governor's Office

University of Missouri - Columbia

Missouri Western State College

Truman State University

Harris-Stowe College

Southwest Missouri State University

Central Missouri State University

Northwest Missouri State University

State Fair Community College

Missouri Southern College

Southeast Missouri State University

Lincoln University

NOT RESPONDING: University of Missouri-Columbia, Northwest Missouri State University, State Fair Community College, Missouri Southern State College, Southeast Missouri State University, and Lincoln University

Jeanne Jarrett, CPA

Director

December 30, 1997