FISCAL NOTE

Date Requested: January 18, 2016
Time Requested: 02:36 PM
Agency: Health and Human Resources, Department of
CBD Number: Version: Bill Number: Resolution Number:
1461 Introduced SB312
CBD Subject: Human Services


FUND(S):

0403 - Division of Human Services Gen Admin Fund, 8722 - Cons Fed Funds Div Human Svcs

Sources of Revenue:

General Fund,Other Fund Federal

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The purpose of this bill , creating the Welfare Fraud Prevention Act, is to establish or improve and maintain procedures for welfare fraud prevention.
    
    Total estimated cost for the first year is $16,550,218 ($8,780,682 fed and $7,769,536 state) and subsequent years being $13,520,972 ($6,943,995 fed and $6,576,977 state), recognizing first time costs for system upgrades, establishing work stations for additional positions, and setup fees for new phone system.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 16,550,218 13,520,972
Personal Services 0 2,402,845 2,402,845
Current Expenses 0 14,147,373 11,118,127
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    Total estimated cost for the first year is $15,631,378 and subsequent years $14,165,108, recognizing first time costs system upgrades, establishing work stations for additional positions, and setup fees for new phone system.
    
    Estimated cost for 2017 related to required system changes to the Department's RAPIDS system (eligibility system) to accommodate requirements of the proposed legislation total is $1,299,870. This estimate is based on data from the Department's contractor for the RAPIDS system indicating an approximate 11,817 hours of programming time @ $110/hr = $1,299,870.
    
    Estimated call center enhancements for the first year would be $1,102,600 and subsequent years would be $977,600. The first year would consist of start up fees of $10,000 (phone, equipment, and supplies $7,500)(phone service setup fee $2,500), computers and equipment of $40,000($1,600 X 25 new positions), Pods (chairs and work stations) of $75,000 ($3,000 X 25 new positions), monthly service fees of $72,000(12 X $6,000), and personal services of $905,600 (25 additional Economic Service Worker positions at a salary + fringe of $36,224). The estimated cost for subsequent years would consist of monthly service fees of $72,000 (12 X $6,000), rent of $56,265, and personal services of $905,600 (25 additional Economic Service Worker positions at a salary + fringe of $36,224).
    
    The proposed legislation requires the Department to establish an income eligibility verification system for benefits to prevent fraud, waste and abuse in the welfare system. Currently, the Department's Office of Inspector General, Investigations and Fraud Management Unit has a small front end fraud investigations team that investigates discrepancies prior to the awarding of benefits. The front end fraud unit currently consists of six investigators who cover Kanawha, Boone, Putnam, Cabell, Mercer, and McDowell Counties and one supervisor, but the number of staff is inadequate to cover the entire state. To broaden the reach of the unit, a significant number of new positions must be created so that the investigators work together with the eligibility determination staff prior to approving benefits.
    
    It is anticipated that the OIG will need an additional 30 Investigator I FTEs (average salary and benefits is $40,225) and 5 Health and Human Resources Specialist Senior FTEs (average salary and benefits is $50,073) to expand the program from 6 counties to 42. Some investigators could cover more than one county office. In addition, one Administrative Services Assistant would be required to process reports, track activity, and manage other office functions (average salary and benefits is $40,143). Total personnel service costs for the OIG is estimated at $1,497,245. Current expense to accommodate OIG travel, training, and office supplies is estimated at $90,000 per year ($2,500 X 36 FTEs). Rent and utilities for the new OIG staff is estimated at $81,022 per year. There is a one-time cost of $41,400 for the purchase of computer equipment ($1,150 per FTE X 36) for OIG staff.
    
    Additionally, to implement this legislation, the OIG will require a more robust case management system for tracking cases through their life cycles. The estimated cost of this system is approximately $100,000. This estimate is based on the cost of a similar system that was implemented in the OIG's Medicaid Fraud Control Unit.
    
    The Department would be required to obtain a new vendor for the data exchanges. This cost is estimated to be $10,000,000 a year. This is an average paid by other states (i.e. Georgia). The actual cost is based upon the number of transactions are processed.
    
    Lastly,the above costs include estimates for the Department providing a separate photo EBT ID card for recipients. The Department estimates the initial cost for photo ID cards to be $1,462,976 (182,872 cards x $8/card) to provide new cards to the current population. Additionally, it is estimated to cost an additional $818,840 (102,355 cards x $8/card) for new client issuance and replacements for a one year period based on historical information. This estimate does not include issuing cards for all authorized users in a household. This estimate does not include cost of programming changes for card issuance.



Memorandum


    The Department currently maintains a computerized system that meets many of the provisions set forth in the bill. The current RAPIDS system utilizes multiple data exchanges to verify earned and unearned income, social security numbers, fleeing felons, vital statistics, and citizenship for various different programs available through the Department. The current system alerts workers to discrepancies and allows for notices, investigations, and corrective actions when deemed necessary.
    
    The statement "Home visits shall be scheduled as frequently as required by the circumstances of the applicant" is vague and cannot be quantified as written.
    
    Currently our federal partners of several of our programs (i.e. Medicaid, TANF, and SNAP) require and/or limit the information source from which we gather and verify information. Each program has its own policies and requirements. This bill proposes that we verify the laundry list of information from all data bases. This is very potentially in violation of the programs federal regulations.
    
    The Department would be required to obtain a new vendor for the data exchanges. The actual cost would be based on the number of transactions.
    
    Department is challenged to accurately gauge cost of this project since few states have developed a system of this scope and design.
    
    FNS published a proposed rule concerning Supplemental Nutrition Assistance Program (SNAP) Photo Electronic Benefit Transfer (EBT) Card Implementation Requirements. This proposed rule proposes to codify guidance requiring states that implement the photo EBT card to submit a comprehensive Implementation Plan to ensure that this option does not adversely impact the ability of appropriate household members to access the nutiritional assistance they need.
    
    The FNS proposed rule indicates "to ensure that a State's photo EBT card requirement will not place undue burden on vulnerable clients, the proposed rule requires States implementing a mandatory implementation to exempt, at a minimum, the elderly, the disabled, children under 18, homeless households, and victims of domestic violence."
    
    Additionally, States that have recently implemented a photo EBT policy have struggled with operational challenges during the transition from regular EBT cards to photo EBT cards.
    
    Per proposed rule, all States that implement photo EBT cards will incur certain implementation costs to include: Preparing an implementation plan, communications and training for program staff, clients, and retailers, ongoing training costs to maintain an understanding of Photo EBT policies, programming costs for mandatory policies, and costs for the post-implementation assessment, evaluation and on-going monitoring. States with mandatory photo EBT will also incur costs associated with prorating and storing benefits for noncompliant household members that choose not to be photographed. The Department (FNS) estimates the total cost to be approximately $9.8 million over five years, assuming six States choose to implement a mandatory Photo EBT policy.



    Person submitting Fiscal Note: Karen L. Bowling
    Email Address: dhhrbudgetoffice@wv.gov