FISCAL NOTE



FUND(S):

Fund 0131 Activities 363 & 969; Fund 1446; Fund 8736 Sub-orgs 4920 & 4922

Sources of Revenue:

General Fund,Special Fund,Other Fund Federal Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


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


The bill proposes a complete transfer of the Donated Foods Program from the Department of Agriculture to the Depaartment of Military Affairs, thus, it is not a new program. The Department of Agriculture's General Revenue Fund 0131's Activity numbers 363 Donated Foods Program and 969 WV Food Banks only, are dedicated to the Donated Foods Program. Only those Activity numbers could be re-designated to a different fund. The Special Revenue Fund number 1446 is dedicated to the Donated Foods Program and could be re-designated as well. The Federal Revenue Fund number 8736 is the Department of Agriculture's consolidated account and could not be re-designated. The only segment of that account that is used for the Donated Foods Program is the sub-org numbers 4920 and 4922. The passage of HB 4027 would have a detrimental impact on the Donated Foods Program for an indefinite period of time. The Department of Agriculture (WVDA) cannot forecast specific information on the financial impact that the transfer would have on the Department of Military Affairs and thus the State’s financial requirements. However, anytime a program is moved away from experienced management and administrative personnel that are intimately familiar with program specific compliance issues, processes and operations to an agency that will not have this seasoned expertise to carry it forward, there will inevitably be additional costs incurred and operational efficiency lost during the transition and for an extended period of time thereafter due to the learning curve necessary to understand and properly administer the complexities of the Donated Foods Program.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2008
Increase/Decrease
(use"-")
2009
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 -3,597,500 0
Personal Services 0 -771,024 0
Current Expenses 0 -2,639,436 0
Repairs and Alterations 0 -17,806 0
Assets 0 -112,544 0
Other 0 -56,690 0
2. Estimated Total Revenues 0 -3,575,800 0


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


The FY 2009 estimates above were developed based upon averages of FY 2006 and FY 2007. I can only project the financial impact that the transfer would have on the Department of Agriculture's revenues and expenditures associated with the program. The anticipated financial impact of HB 4027 on the Department of Agriculture will be the elimination of all program revenues and expenditures associated with the Donated Foods program. Although all program revenues are dedicated to program operations, not all program expenses are paid from program revenues. Due to a number of factors outside of WVDA's span of control, program revenues have not been sufficient to sustain operations. The Department of Agriculture considers this program to be critical to the well-being of the citizens of West Virginia and to our preparedness for emergency response. Thus, since the program was transferred to WVDA in 2001, the Department of Agriculture has absorbed the duties associated with management, financial and human resource administration, and information technology support of the program with existing personnel. These expenses are paid from accounts not supported by Donated Foods Program revenues. The Indirect Cost recovery allowed through the Federal administration process is only a small fraction of the total costs borne by other WVDA funds for the aforementioned activities.



Memorandum


1. The effective date of July 1, 2007 that is used throughout the bill will need to be corrected. 2. In accordance with the Code of Federal Regulations, the transfer of the program from the Department of Agriculture to the Department of Military Affairs would require approval by the Secretary of the United States Department of Agriculture (USDA). 3. In accordance with the Code of Federal Regulations, the Department of Military Affairs must enter into a written agreement with the USDA to operate the program before any donated foods or funds can be transferred to them. 4. In accordance with the Code of Federal Regulations, the Department of Military Affairs must enter into written agreements with the eligible recipient agencies prior to making donated foods or administrative funds available to them and must ensure that those eligible recipient agencies, in turn, enter into a written CFR compliant agreement with any eligible recipient agencies before any donated foods and/or administrative funds are transferred between them. 5. In accordance with the Code of Federal Regulations, the Department of Military Affairs must enter into contracts with vendors to continue program operations, i.e. processing vendor contracts to convert USDA donated foods into end usable food products, data management, space, etc. 6. The Donated Foods Program is made up of two distinctly different federal programs, The Emergency Food Assistance Program (TEFAP) and the Child Nutrition Program (CNP), that must be financially segregated and administered accordingly to be in compliance with the applicable Code of Federal Regulations.



    Person submitting Fiscal Note: Sandra Gillispie, Director Administrative Services
    Email Address: sgillispie@ag.state.wv.us