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 0976 - Establishes the "Work Pays" Program
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO. 4024-01
BILL NO. SB 976
SUBJECT: Work Pays Program
TYPE: Original
DATE: March 19, 1998
FISCAL SUMMARY
|
ESTIMATED NET EFFECT ON STATE FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| General Revenue | ($35,982,773) | ($54,594,658) | ($68,120,450) |
| Total Estimated
Net Effect on All State Funds |
($35,982,773) | ($54,594,658) | ($68,120,450) |
|
ESTIMATED NET EFFECT ON FEDERAL FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| Federal funds | ($9,429,828) | ($15,057,984) | ($18,823,248) |
| Total Estimated
Net Effect on All Federal Funds |
($9,429,828) | ($15,057,984) | ($18,823,248) |
|
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 7 pages.
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Social Services (DOS) - Division of Family Services (DFS) assume that Section 2 of the proposal calls for implementation of a conciliation process to resolve disputes related to an individual's participation in any work or training program. This is nearly identical to that currently used in the FUTURES program (13 CSR 40-2.280(1)). Section 10 of the proposal restates the penalties for a first, second and third incident of noncompliance; however, there is no mention of subsequent sanctions and the penalty for noncompliance after three incidences. This would not, incidentally, have a fiscal impact since procedure is standard practice in the current course of this (related) work.
Section 208.040.5 states that the DOS may implement policies designed to reduce a family's dependence on welfare and may increase the earned income and resource disregards and supplement wages is changed to the mandatory: "The Department of Social Services shall implement policies designed to reduce a family's dependence on welfare... These policies shall include: (1) Increasing the earned income and resource disregards... by increasing the earned income disregard to two-thirds by July 1, 1998. (2) Other policies designed to reduce a family's dependence on welfare may include supplementing wages..." [underlining added}. The proposal would require DOS to implement the earned income disregard of two-thirds for recipients of cash assistance who obtain employment but not for new applicants for cash assistance who are already working.
DOS assumes the department would not expand the earned income disregard to two-thirds by July 1, 1998 (as permitted by current law), and the existing earned income disregard of $30 plus one-third for four consecutive months continues unless it is modified by proposal.
The expanded earned income disregard in the proposal would continue indefinitely and would not limited for four consecutive months, as in current law.
The average monthly cash grant per recipient of public assistance who obtains employment (using existing earned income disregard) would equal $100.00.
The average monthly cash grant per recipient of public assistance who obtains employment (using expanded two-thirds earned income disregard) would equal $150.00.
The number of recipients of cash assistance who obtain employment per month and continue to receive cash assistance is approximately three hundred (300), and that this number would remain more or less a constant.
ASSUMPTION (continued)
MONTHLY COST PROJECTION THROUGH FY1999:
The cost to state for the first month after the expanded earned income disregard goes into effect would be $50.00 per recipient x 300 recipients = $15,000.
The cost to state for the second month after the expanded earned income disregard goes into effect would be $50.00 per recipient x 600 recipients = $30,000.
The cost to state for the third month after expanded earned income disregard goes into effect would be $50.00 per recipient x 900 recipients = $45,000.
The cost to state for the fourth month after expanded earned income disregard goes into effect would be $50.00 per recipient x 1,200 recipients = $60,000.
The cost to state for the fifth month after expanded earned income disregard goes into effect would be $50.00 per recipient x 1,500 recipients = $75,000.
The cost to state for the sixth month after expanded earned income disregard goes into effect would be $50.00 per recipient x 1,800 recipients = $90,000.
The cost to state for the seventh month after expanded earned income disregard goes into effect would be $50.00 per recipient x 2,100 recipients = $105,000.
The cost to state for the eighth month after expanded earned income disregard goes into effect would be $50.00 per recipient x 2,400 recipients = $120,000.
The cost to state for the ninth month after expanded earned income disregard goes into effect would be $50.00 per recipient x 2,700 recipients = $135,000.
The cost to state for the tenth month after expanded earned income disregard goes into effect would be $50.00 per recipient x 3,000 recipients = $150,000.
The cost to state for the eleventh month after expanded earned income disregard goes into effect would be $50.00 cost per recipient x 3,300 recipients = $165,000.
The cost to state for the twelfth month after expanded earned income disregard goes into effect would be $50.00 per recipient x 3,600 recipients = $180,000.
TOTAL $1,170,000
ASSUMPTION (continued)
This would be the yearly cost to the state when 3,600 recipients of cash assistance obtain employment and continue to receive cash assistance.
DFS assumes that cases would stabilize at the historical 12 month data level with closing equal to openings. Thus, the amount in FY2000 for the first month is (proportionately) $195,000, $210,000 for the second month and every month thereafter through FY2001.
DFS assumes the funds would be split 50.52% General Revenue Fund and 49.48% for Federal Funds for cash grant amounts.
For Child Care, DFS assumes that:
1) families have an average of two children per household.
2) the number of households eligible for care according to this proposal would increase by 25% for each succeeding year.
3) nine (9%) percent of total child care households would be transitioning from cash assistance.
4) the average monthly subsidy would remain at $205/child/month.
5) the number of children needing care would increase by 25% for each succeeding year.
6) the number of families, children, and cost would increase in the same proportion as the increase in come limits.
7) caseload standards = 250 child care cases per worker.
8) child care workers = caseworkers (pay range 16 = average $1888/month).
9) equipping office space, supplies for workers, etc. = fiscal standards (note: average office space/utilities = $14.8 x 200 sq. ft.)
10) any new child care funding dollars would be drawn from General Revenue as Federal child care monies are pre-dedicated at this point in time.
Officials from DOS - Division of Medical Services (DMS) assume that:
1) Transitional families have an average of one adult and two children per household.
2) An estimated 9.0% of total child care households are transitioning from cash assistance (DFS).
3) The number of families and cost would increase in the same proportion as the increase in income limits (225%) (DFS).
4) The number of families needing care would increase by 25% in each succeeding year (DFS).
5) The average cost of providing Medicaid for these families is $113.97 per person per month for FY 1999, $119.02 for FY 2000 and $125.59 per month for FY 2001 (1115 Waiver).
ASSUMPTION (continued)
DMS assumes the following methodology:
1) Total number of families receiving child care (R&E) = 21,017
2) Total number of transitional families = 21,017 x 0.09 = 1,892
3) Increase in number of transitional families = 1,892 x 2.25 = 4,257
4) Increase in number of Medicaid recipients = 4,257 x 3 = 12,771
5) Medicaid cost per month for FY1999 = 12,771 x $113.97 = $1,455,511
6) Annual cost for FY1999 = $1,455,511 x 10 = $14,555,110
7) Medicaid cost per month for FY2000 = 12,771 x 1.25 x $119.02 = $1,900,006
8) Annual cost for FY2000 = $1,900,006 x 12 = $22,800,072
9) Medicaid cost for FY2001 = 12,771 x 1.50 x $125.59 = $2,405,865
10) Annual cost for FY2001 = $2,405,865 x 12 = $28,870,380
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | |||
| GENERAL REVENUE FUND | |||
| Department of Social Services | |||
| Division of Family Services | |||
| Personal services (16 FTE) | ($207,370) | ($255,168) | ($261,547) |
| Fringe benefits | ($58,126) | ($71,524) | ($73,312) |
| Expense and equipment | ($125,552) | ($49,693) | ($51,184) |
| Program specific | ($29,804,613) | ($45,152,965) | ($56,255,545) |
| Total Costs - Division of Family Services | ($30,195,661) | ($45,529,349) | ($56,641,587) |
| Department of Social Services | |||
| Division of Medical Services | |||
| Program specific | ($5,787,112) | ($9,065,309) | ($11,478,863) |
|
ESTIMATED NET EFFECT ON | |||
| GENERAL REVENUE FUND | ($35,982,773) | ($54,594,658) | ($68,120,450) |
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (continued) | (10 Mo.) | ||
| FEDERAL FUNDS | |||
| Department of Social Services | |||
| Division of Family Services | |||
| Personal services (16 FTE) | ($102,138) | ($125,680) | ($128,822) |
| Fringe benefits | ($28,629) | ($35,228) | ($36,109) |
| Expense and equipment | ($48,826) | ($19,325) | ($19,905) |
| Program specific | ($482,237) | ($1,142,988) | ($1,246,896) |
| Total Costs - Division of Family Services | ($661,830) | ($1,323,221) | ($1,431,731) |
| Department of Social Services | |||
| Division of Medical Services | |||
| Program specific | ($8,767,998) | ($13,734,763) | ($17,391,517) |
|
ESTIMATED NET EFFECT ON | |||
| FEDERAL FUNDS | ($9,429,828) | ($15,057,984) | ($18,823,248) |
| FISCAL IMPACT - Local Government | FY 1999 | FY 2000 | FY 2001 |
| (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 proposal relates to the "Work Pays" Program designed through the Department of Social Services to reduce a family's dependence on welfare. The act also amends current law to ensure that Missouri will continue to guarantee child care for individuals moving from welfare to work.
The proposal provides for transitional child care benefits for up to three years for those who go to work and lose their benefits. It also provides for up to 3 years of transitional Medicaid for
individuals up to 300% of the poverty level.
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
Jeanne Jarrett, CPA
Director
March 19, 1998