Sources of Revenue:

General Fund,Special Fund,Other Fund federal 8792

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

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

The proposed legislation eliminates the Governor's Cabinet on Children and Families and all support functions provided by the "Cabinet Office". The legislation gives all the current powers and duties of the Governor's Cabinet on Children and Families to the Secretary of the Department of Health and Human Resources. The legislation also gives the responsibility for carrying out all functions and responsibilities currently provided by the "Cabinet Office" to the Secretary of DHHR. A portion (79.5%)of the state funds allocated to the Governor's Cabinet on Children and Families for FY05 is retained in the Governor's budget proposal for FY06 as a line item titled Family Resource Networks placed within the DHHR Bureau for Children and Families (the Bureau is designated as the "Division of Human Services" within the state budget). These funds are intended to be used to support grants to community initiatives that have previously been provided by the Cabinet Office. The state funding recommended for DHHR is $145,516 less than the amount needed to sustain community grants at current levels. The net effect of the proposed bill is to eliminate the Cabinet Office and all staff (5 state positions and 1 contract position). Nevertheless, all functions currently carried out by the Cabinet Office are transferred to Secretary of DHHR in the proposed bill. No funding is provided to the Secretary in the Governor's budget proposal to support these necessary and required functions. The functions required in the Bill include: establishing, overseeing, evaluating, and providing technical assistance to community grantees; developing a cross-agency, multi year state plan; analyzing the budgets of the departments of state government; managing the state's children's fund; and providing staff support and reimbursing travel expenses so that the Citizens Advisory Council is able to carry out their official duties. Further, The Cabinet Office is currently the recipient of an annual federal grant of $250,000 (CAPTA Title II) and the Cabinet Office also has an agreement in place that allows for $718,000 in federal funds (Medicaid administrative cost sharing)to be drawn down each year to help support the grants to local Family Resource Networks. There is no provision in the bill or plan in place to assure that these federal funds can be retained after the elimination of the Cabinet Office. In conclusion, the impact on the costs and revenues of state government is, at best, very uncertain. If all services and necessary support functions required by the bill are somehow absorbed by DHHR at no additional cost, there is a potential net reduction in state supported costs of approximately $365,000. However, all essential function required by the proposed bill cannot be carried out by the Secretary at no cost. There is also a significant risk of losing federal funding as a result of eliminating the Cabinet Office. $250,000 in annual federal grant funds is put "at risk" by the bill. Furthermore, the negotiated agreement that allows the Cabinet Office to access $718,000 in federal cost sharing through the Medicaid program may no longer be valid if there is no Cabinet on Children and Families. If these federal funds are lost, or if DHHR incurs any costs to carry out the new and expanded responsibilities under the bill, the net effect on revenues could be little or no savings of state funds and a significant loss of federal funds.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2005 Increase/Decrease (use"-")	2006 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	3,452,059	3,452,059
Personal Services	0	-90,269	-90,269
Current Expenses	0	-50,757	-50,757
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	3,247,889	3,247,889
2. Estimated Total Revenues	0	1,941,926	1,941,926

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

The Estimated Total Cost is calculated based on the estimated costs for maintaining essential functions now carried out by the Cabinet Office that are transferred by the proposed bill to the Secretary of DHHR. There is a cost savings estimated in personnel based on the assumption that DHHR will be able to carry our the administrative functions currently carried out by the Cabinet Office including the awarding of grants, contract development and compliance, fiscal management, and secretarial and support services at one half the current cost of these services. Personnel costs related to the functions that continue to be required in the bill to develop, oversee, provide technical assistance, evaluate the work of community grantees, and support the work of the Citizens Advisory Council are retained in the estimated cost for FY06. There is an assumption made in the estimates that all current expenses of the Cabinet Office are eliminated effective July 1, 2005; however, there is a lease in place for the current office space that may require some significant portion of the current expense savings to be paid out. Other costs expected for FY06 include grants to Family Resource Networks, Starting Points Centers, and Early Parent Education Programs currently funded by the Cabinet Office; a portion of the technical assistance and training currently provided; costs for evaluation; and costs to provide staff support and expense reimbursement to the Citizens Advisory Council. The current expenditures for grants and contracted services made from federal funds are included in other costs as well. The above estimates are based on the assumption that federal funds currently available to the Cabinet Office will no longer be available if Article 5 Chapter 26 of the state code is repealed and the Cabinet on Children and Families is eliminated. If these federal funds can be maintained at the current levels, the "Estimated Total Revenues" above would be increased to $2,909,926.

Memorandum

It is difficult to provide accurate estimates of fiscal impact on revenues available to the state or costs associated with the transfer of all powers, duties, responsibilities and functions of the Governor's Cabinet on Children and Families and the "Cabinet Office" to the Secretary of DHHR, due to a number of unknowns and the absence of any planning to assure that federal revenues and essential functions will not be lost. There is no funding provided in the Governor's proposed budget for the numerous functions currently carried out by the Cabinet Office yet these services and supports are expected to be provided by the Secretary of DHHR in the proposed bill. If one assumes that all the necessary functions required in the proposed bill can be absorbed by currently existing DHHR staff then the "savings" of state funds would be higher than estimated. However, this would assume that there are staff currently employed by DHHR with the necessary skills and knowledge who can be freed up from current responsibilities. Also, the effect of the bill on federal revenues is impossible to definitively evaluate. Since the federal agreement that provides for cost sharing of the expenses related to grant awards and support of Family Resource Networks was negotiated by the Cabinet Office and approved by the federal Health Care Cost Review Authority based on the mission of the Cabinet and the activities carried out by local Family Resource Networks, it is doubtful that the agreement would have any validity if there is no Cabinet on Children and Families. Also, a "lead entity" that meets the federal requirements to receive the federal grant under CAPTA Title II, has not been identified nor is there a plan in place at present to develop such an entity or estimate the costs involved in such development. Another area of vagueness that needs to be considered is the effect that the bill might have on the ability of local Family Resource Networks to contribute to the securing of private and federal discretionary funding at the local level. For the most recently completed fiscal year (FY04), FRNs assisted local communities across the state in securing 33 Million dollars in grant funding.

Person submitting Fiscal Note: Steven Heasley, Senior Assistant - GCCF
Email Address: heasley@wvnet.edu