Colorado Legislative Council Staff

STATE and LOCAL

REVISED CONDITIONAL FISCAL NOTE

(replaces Fiscal Note dated April 1, 1998)

General Fund Expenditures Impact

Cash Funds — Old Age Pension Fund Expenditure Impact

Federal Funds Expenditure Impact

Drafting Number:

Prime Sponsor(s):

LLS 98-093

Rep. Kreutz

Sen. Coffman

Date:

Bill Status:

Fiscal Analyst:

April 23, 1998

Senate HEWI

Janis Baron (866-3523)

 

TITLE:            CONCERNING THE CREATION OF A SELF-SUFFICIENCY AND EMPLOYMENT PROGRAM FOR CERTAIN PUBLIC ASSISTANCE RECIPIENTS.


Summary of Legislation


STATE FISCAL IMPACT SUMMARY

FY 1998-99

FY 1999-00

FY 2000-01

State Revenues

   General Fund

   Other Fund



 

 

 

State Expenditures

   Old Age Pension Fund — Cash Funds

   General Fund

   Federal Funds

   Old Age Pension Health & Medical Care Fund


$ 12,700

0

0

0


$ 204,427

(45,321)

(46,833)

(4,551)


($ 398,238)

(90,643)

(93,665)

(9,102)

FTE Position Change

None

None

None

Local Government ImpactNone.


            The reengrossed bill, creates the Employment and Self-Sufficiency Pilot Program in an urban and rural setting to test a block grant concept allowing participating counties the flexibility to be innovative in design and implementation of the program for older persons, with an emphasis on assisting displaced homemakers. The provisions of the bill relative to the program include:

 

               requires the Department of Human Services (DHS), through a competitive process, to select one urban and one rural county or group of rural counties to participate in two demonstration sites, and provides that the pilot project shall begin on or after January 1, 1999, and operate in each demonstration site for three years;

               requires DHS to evaluate and select two proposals that present the best plans for placing Old Age Pension (OAP) clients in jobs, and to enter into a contract with each site (the contract shall identify how best to apply and allocate available grant moneys to meet client needs regarding employment services);

               provides that OAP applicants’ initial eligibility for benefits shall not be affected when referred for employment services;

               provides that counties selected to participate in the pilot project will receive an annual block grant to pay for contract expenses; and

               repeals the program, effective July 1, 2003


            The bill is effective upon signature of the Governor.



State Expenditures


            The bill is permissive in so far as counties may submit proposals to participate in the pilot program but are not required to do so. Counties are not required to implement an employment and self-sufficiency program. Similarly, OAP clients may volunteer to participate in the pilot but are not required to do so. Thus, the bill is assessed as having a conditional fiscal impact.


            Department of Human Services. Should counties submit proposals and be selected, and should individuals choose to participate, DHS would incur both costs and savings under HB 98-1092, (a narrative description of both is provided below). The net impact of HB 98-1092 in DHS is estimated accordingly:


            FY 1998-99 — $12,700

            FY 1999-00 — $204,427

            FY 2000-01 — ($398,238)


            Client-Oriented Information Network (COIN). DHS will require $12,700 for programming changes to its COIN system in FY 1998-99. It is estimated that it will take 254 hours at a rate of $50/hour to perform the needed program changes (referral input, file tracking, editing, agency management reports, and a state summary report). The source of funding is the OAP Fund. These changes will be required in FY 1998-99, prior to the implementation date of the pilot. The bill requires that the pilot commence on or after January 1, 1999; this fiscal note assumes it will begin on July 1, 1999.

 

            County Block Grant. DHS will require $231,492 in FY 1999-00 and $233,656 in FY 2000-01 for a block grant to the pilot counties. The total amount will come from the Old Age Pension Fund. The block grant will include funding for the following components:


County Block Grant

FY 1999-00

FY 2000-01

County Staff (Personal Services and Operating)

Posters and Brochures

Employment Costs ($3,680 per client)

Evaluation ($10,000 per site per year)

Independent Audit ($3,000 per site per year)

$ 36,780

216

173,696

16,000

4,800

$ 33,842

107

178,907

16,000

4,800

TOTAL — County Block Grant

$ 231,492

$ 233,656


            County staff will be needed to explain the self-sufficiency program and make referrals. Although FTE authorization is no longer provided for county staff, it is estimated that the urban pilot will require 0.7 FTE and the rural pilot will require 0.3 FTE. The pilot counties will develop posters and brochures to inform an estimated 1,543 potential participants in FY 1999-00; there will only be costs for brochures in FY 2000-01. Employment costs are estimated at $3,680 per client in FY 1999-00 and include: assessment, testing, counseling, literacy, English, work training, data collection, client follow-up, and a service budget for one-time expenses for items necessary for employment such as glasses, dental work, etc. (FY 2000-01 assumes a 3 percent inflationary increase). An independent contractor will be used to evaluate the program and prepare a report to the General Assembly and DHS to determine the success of the pilot and provide recommendations on statewide implementation. Additionally, an independent field audit will be conducted during a target fiscal review of each pilot site once annually.


            Program Savings in OAP Grant Payments. Savings in assistance payments may be realized in FY 1999-00 and beyond (the pilot program is repealed July 1, 2003), if participants are placed in employment. Total savings for FY 1999-00 are estimated at $27,065, and $631,894 for FY 2000-01, based on 21employed participants (factoring the case processing months). This number will be dependent, in large part, on the availability of health care benefits offered by employers. It is assumed that without medical benefits, participants may choose not to work in order to maintain those benefits.


PROGRAM SAVINGS

FY 1998-99

FY 1999-00

FY 2000-01

OAP-A

0

4,982

114,035

OAP-B

0

22,083

517,859

TOTAL OAP SAVINGS

$0

$ 27,065

$ 631,894


            Department of Health Care Policy and Financing. Using DHS numbers to estimate a reduction in DHCPF expenditures, this fiscal note assumes that 7 OAP-A, 11 OAP-B, and 3 OAP-State Only participants (21 total) will be placed in employment with medical benefits. Using the FY 1998-99 average annual costs for these client groups, DHCPF may achieve $96,705 in savings in FY 1999-00 and $193,410 in FY 2000-01.



Spending Authority


            The fiscal note indicates that for FY 1998-99, the Department of Human Services should receive an appropriation of $12,700 cash funds from the Old Age Pension Fund.



Departments Contacted


            Human Services

            Health Care Policy and Financing

            Labor and Employment