Colorado Legislative Council Staff

STATE and LOCAL

REVISED FISCAL IMPACT

(replaces fiscal impact dated February 11, 1999)

TITLE:            CONCERNING THE ESTABLISHMENT OF THE COLORADO YOUTH CHALLENGE CORPS PROGRAM.

* It is anticipated that 41.1 FTE will be paid for with federal fund sources and 15.0 contract FTE will be independently contracted using state or federal fund sources.

Rationale for Revision of Fiscal Note

            It was determined that of the 56.1 total FTE for the Colorado Youth Challenge Corps (CYCC) Program, 41.1 FTE can be considered state classified or non-classified employees and 15.0 FTE can be independent contractors. Details are discussed in the State Expenditure section on pages 3-4 of this fiscal note. Table II at the end of this fiscal note presents the personal costs of the independently contracted and state classified or non-classified employees.

Summary of Legislation

            This bill, subject to the receipt of federal moneys, authorizes the Department of Military Affairs (MA) to operate a residential program for "at-risk youth" called the Colorado Youth Challenge Corps Program. MA would provide alternative education through the use of independent contractors or civilian employees, facilities, and equipment through the national guard. "At-risk youth" would be persons 16 to 18 years of age who have been suspended or expelled, habitually truant, or habitually disruptive in school.

            This bill directs that only federal funds may be used to pay the salaries for employees in the program, but that state funds may be used for the payment of independent contractors. It requires the Adjutant General to apply for available federal moneys for the implementation and operation of the CYCC. It also establishes the "Youth Challenge Corps Fund" for the receipt of grants, gifts, or donations for the purpose of implementing the program.

Program Background

            The Challenge Program was created by Congress five years ago as a four-year pilot program for "at risk" youth (defined to be 16 to 18 years old who have dropped out or have been expelled from school). The program authorizes the use of National Guard facilities and personnel to provide military-based training for the purpose of education, life skills training, job training, and counseling that will enable youth to succeed in an employment or educational environment after graduation. The Challenge Program is in operation in 20 states. Five of those states, including Colorado, began implementation in FY 1998-99.

            The Challenge Program consists of two 22-week sessions a year, each followed by a one-year mentoring program. The first two weeks of the session are called "Pre Challenge" which is followed by a 20-week resident program. Program instruction has eight components: 1) education, 2) job skills, 3) life coping skills, 4) physical fitness, 5) community service, 6) responsible citizenship, 7) health, nutrition and sex education, and 8) leadership/"followership." The education component consists of preparation for the general education development (GED) test. Prospective volunteers must be expelled, at risk of expulsion or suspension, 16 to 18 years of age, and free from current illegal drug use. Prospective students can not be on parole, probation, awaiting sentencing for adult status offenses, or have a prior felony conviction. The four-year pilot program was implemented in 15 states with over 14,000 students. An impact study tracking students for one year after participation found the following:

            •   80% of the students that were accepted to the resident phase graduated from Challenge;

            •   80% of students were placed (in school or job) after graduation;

            •   83% achieved their GED; and

            •   less than 1% of graduates were incarcerated during the study period.

            In order to secure the necessary federal funds to begin CYCC implementation in FY 1998-99, the state needed to appropriate 25 percent of total year 1 funding, or $700,000, to MA (see Table I for state-federal cost sharing schedule). With H.B. 98-1234, the General Assembly appropriated an additional $500,000 cash funds exempt from the public school fund to the Department of Education (CDE) for the expelled student services program. In June 1998, MA received a $700,000 grant from CDE (including the $500,000 CFE and an additional $200,000 GF from the expelled student services program) to administer the first year of the program.

            As a condition of continued federal funding, state funding must increase by five percent each year until the state pays 40 percent of the annual program cost. The state is not expected to pay more than 40 percent of the program cost. Table I illustrates the expected funding from federal and state sources through FY 2002-03.

Table I: Expected Funding Sources and State/Federal Share of Total

*Actual funding

State Revenues

            The bill allows the MA to receive gifts, grants, and donations to the "Youth Challenge Corps Fund." In FY 1998-99, CDE provided a $700,000 grant from its expelled student services program. CDE may continue to provide discretionary funds from this program to support the CYCC. Other state agencies associated with the Judicial Branch may also provide grants to the Fund. MA has indicated that federal agencies such as the U.S. Department of Education may provide grants and/or funds through the free and reduced price lunch program for low-income students. Outside revenue from private and public sector sources would reduce or eliminate the need for future General Fund appropriations.

State Expenditures

            According to the current FY 1998-99 budget, there are 56.1 contractual or temporary FTE employed by CYCC at a cost of $1.45 million. In the current FY 1998-99, MA is following the expected funding source share from Table I above and uses state (cash exempt) funds for 25 percent of the personal cost and federal funds for the remaining 75 percent of the personal cost.

            For future operations, this bill directs that only federal funds may be used to pay the salaries for employees in the program but that state funds may be used for the payment of independent contractors. MA estimates that FTE requirements will remain near or at 56.1 FTE and $1.45 million for the next two fiscal years. Of that 56.1 FTE, there are 15.0 FTE that can be independent contractors. The remaining 41.1 employees are either state classified or non-classified employees. It is anticipated that, at a minimum, federal funds can pay for the 41.1 FTE classified or non-classified employees and that state or federal funds can pay for the 15.0 FTE independent contractors. Personal costs of the independently contracted and state classified or non-classified employees are provided in detail in Table II on page 5 of this fiscal note.

Local Government Impact

            Local schools will lose some per-pupil operating revenue associated with serving fewer students that are enrolled but at risk of expulsion. Because there will be fewer "at-risk" youth served in local schools, there will a corresponding program savings to schools serving fewer of those students.

State Appropriations

            This fiscal note implies that for FY 1999-00, the Department of Military Affairs will require $840,000 from the General Fund and $1,960,000 from federal funds.

Departments Contacted

                        Military Affairs                      Education

Table II: CYCC Estimated Personal Services Expenditures, FY 1999-00