MINUTES OF THE MEETING OF THE JOINT SUBCOMMITTEE ON HUMAN RESOURCES/K-12 ASSEMBLY COMMITTEE ON WAYS AND MEANS AND SENATE COMMITTEE ON FINANCE Sixty-eighth Session May 10, 1995 The meeting of the Joint Subcommittee on Human Resources/K-12 of the Assembly Committee on Ways and Means and the Senate Committee on Finance was called to order at 7:42 a.m., on Wednesday, May 10, 1995, Chairman Evans presiding, in Room 352 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. ASSEMBLY SUBCOMMITTEE MEMBERS PRESENT: Mrs. Jan Evans, Chairman Mr. Lynn Hettrick, Jr., Chairman Mr. Dennis L. Allard Mrs. Vonne Chowning Mr. Joseph E. Dini, Jr. Ms. Sandra Tiffany ASSEMBLY SUBCOMMITTEE MEMBERS ABSENT: None SENATE SUBCOMMITTEE MEMBERS PRESENT: Senator Raymond D. Rawson, Chairman Senator William J. Raggio Senator Dean A. Rhoads SENATE SUBCOMMITTEE MEMBERS ABSENT: Senator Bob Coffin (Excused) STAFF MEMBERS PRESENT: Mr. Mark Stevens, Fiscal Analyst Mr. Steve Abba, Program Analyst DEPARTMENT OF HUMAN RESOURCES - WELFARE DIVISION - CHILD SUPPORT ENFORCEMENT PROGRAM - PAGE 1199 Mr. Abba reported the closing recommendations from fiscal staff for this account revolved around three technical adjustments. He explained revenues projected in the Executive Budget from child support collections by the contract collection agency (GC Services) were $900,000 in Fiscal Year 1996 and $1.1 million in Fiscal Year 1997. The history of collections by GC Services to date were far less than those projected amounts. Fiscal staff estimated collections would actually be $500,000 in Fiscal Year 1996 and $600,000 in Fiscal Year 1997. Second, staff recommended a technical adjustment in the amount of $17,795 for Fiscal Year 1996 to appropriately cost allocate NOMADS related personnel costs which are eligible for enhanced federal child support funding. Finally, Mr. Abba noted non- assistance child support payments would be made at the district attorney level rather than by the state once NOMADS was implemented. Due to delays with NOMADS implementation, however, it was anticipated the state would continue to make the child support enforcement payments for non-assistance clients at least through the first year of the coming biennium. Therefore, adjustments had to be made to that budget category to allow for the expenditure authority. SENATOR RAWSON MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS. MS. TIFFANY SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. SENATOR RAGGIO, MR. ALLARD, AND MR. DINI WERE ABSENT FOR THE VOTE. BUDGET CLOSED. * * * * * ASSISTANCE TO THE AGED AND BLIND - PAGE 1205 Mr. Abba stated the subcommittee would have to make a policy decision regarding whether or not to approve funding to continue an amended Adult Group Care Waiver Program recommended in decision unit E-400. Currently the program attempts to relocate clients from skilled nursing facilities into adult group care facilities. The amended waiver would allow the Aging Services Division, with the Welfare Division, to target clients in the Community Home Based Initiatives Program (CHIP) and clients discharged from hospitals who are at risk of being placed in nursing home care to attempt to place them in adult group care facilities. The Executive Budget includes a recommendation for the waiver based on the premise of phasing in 75 clients in Fiscal Year 1996 and maintaining a total of 75 clients in Fiscal Year 1997. Additional supplement costs to be paid to the adult group care operators were included in decision unit E-400. Mr. Abba noted there had been a number of changes to the program since previous hearings. The estimated number of clients to be moved into adult group care was reduced from 50 to 30. The costs of additional supplements currently recommended in the Executive Budget were $199,951 in the first year of the biennium and $249,939 in the second year. A reduction in estimated caseload to 50 clients would call for a reduction in those costs of $83,313 each year. There would be an offset in the Medicaid category resulting from projected savings realized from delaying clients from entering nursing home care. The savings at the 50 client level would be approximately $200,000 in Fiscal Year 1996 and $272,000 in Fiscal Year 1997. Mr. Abba stated the latest evaluation of the potential caseload of 30 clients would call for a reduction in the cost of supplements paid by $121,000 in the first year and approximately $150,000 in the second year. Medicaid savings would be at a reduced level because of reduced number of clients. That amount would be approximately $120,000 in the first year and $164,000 in the second year. Mr. Abba said fiscal staff recommended that the subcommittee consider the transition of 30 clients into adult group care, which would allow the division greater flexibility. Ms. Myla Florence, Administrator, Welfare Division, introduced Mr. Mike Willden, Deputy Administrator of Administrative Services. She said the division concurred with closing the budget at a caseload level of 30 clients. She noted the division would continue to work toward transitioning 50 clients and the waiver would provide for 50 clients. Savings would be realized in the Medicaid budget and returned if the 50 client goal was achieved. MS. TIFFANY MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS AT A CASELOAD LEVEL OF 30 CLIENTS. MR. HETTRICK SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. SENATOR RAGGIO WAS ABSENT FOR THE VOTE. BUDGET CLOSED. * * * * * FOOD STAMP PROGRAM - PAGE 1209 Mr. Abba reported fiscal staff recommended this budget be closed as recommended by the Governor. The Food Stamp Program budget account would be merged with the Welfare Administration budget account due to the NOMADS project and the need to cost allocate staff. MS. TIFFANY MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH THE GOVERNOR'S RECOMMENDATION. MRS. CHOWNING SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. SENATOR RAGGIO WAS ABSENT FOR THE VOTE. BUDGET CLOSED. * * * * * HOMEMAKING SERVICES - PAGE 1227 Mr. Abba stated fiscal staff recommended the budget be closed as the Governor recommended. He pointed out the budget account currently reflected in the Executive Budget had a shortfall of Title XX funding of $86,689 in Fiscal Year 1996 and $98,580 in Fiscal Year 1997. He noted Title XX funding was the only revenue source to this budget. Subsequent to development of the Executive Budget the Budget Division had indicated it would fully fund this account after reviewing available Title XX monies. If there were any further modifications recommended by the Budget Division, those modifications would be made in the Purchase of Social Services budget. MRS. CHOWNING MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH THE GOVERNOR'S RECOMMENDATION. MR. HETTRICK SECONDED THE MOTION. Ms. Tiffany asked if the funds to be used to supplement the shortfall were also Title XX funds. Mr. Abba responded affirmatively. He explained the Title XX revenue flowed into the Purchase of Social Services budget account, which was a holding account. From the Purchase of Social Services account the funds are distributed to a number of agencies within the Department of Human Resources. THE MOTION CARRIED UNANIMOUSLY. SENATOR RAGGIO WAS ABSENT FOR THE VOTE. BUDGET CLOSED. * * * * * WELFARE ADMINISTRATION - PAGE 1181 Chairman Evans noted there had been extensive discussion on the subject of positions in this budget at the last subcommittee meeting. At that time Chairman Rawson appointed a subcommittee comprised of Chairman Evans and Mr. Allard to meet with staff and review available information. She asked Mr. Abba to report on the findings of the subcommittee. Mr. Abba said at the last meeting there had been a discussion of caseload reductions taking place in the Aid to Families With Dependent Children (AFDC) and Food Stamp programs, which theoretically would provide for a reduction in the recommended number of new eligibility workers handling those caseloads. Decision units M-200 and M-901 included recommendations for new eligibility workers to handle projected caseloads. Based on a review of the potential to reduce staffing levels, it was determined a total of 19 eligibility worker positions could be reduced over the biennium. Mr. Abba noted there were some mitigating issues associated with staffing reductions revolving around significantly high error rates which the division is currently experiencing with the AFDC caseload. He explained the current error rate was higher than historical rates and higher than the national average. Mr. Abba said the subcommittee had also previously discussed whether or not to allow the division the flexibility to hire eligibility workers recommended in lieu of deleting positions and using decision unit M-300 funding (the merit salary pool) to implement changes in recommended staffing. He explained in the past eligibility workers' salaries had been frozen. The current recommendation was to unfreeze merit salary increases for eligibility workers, which would allow the division more flexibility in terms of filling positions throughout the biennium. Unfreezing the merit salary pool would increase the overall salary category by approximately $2 million over the biennium. Mr. Abba stated the subcommittee was charged with reviewing the potential for reducing caseloads and using funding recommended in decision unit M-300 to reduce the salary costs for positions rather than deleting positions entirely. Mr. Abba explained staffing levels could be reduced by 19 positions based strictly on caseload reductions--5 positions from decision unit M-200 and 14 positions from decision unit M-901--for a total savings of $331,600 in Fiscal Year 1996 and $545,605 in Fiscal Year 1997. The subcommittee reviewed three possible alternatives to this scenario. First, was the reduction of 7 Eligibility Certification Specialist (ECS) positions over the biennium. Next was the reduction of 9 ECS positions over the biennium. And finally, reduction of 9 ECS positions in Fiscal Year 1996 and 5 ECS positions in Fiscal Year 1997. The subcommittee determined to recommend the last scenario, which would provide for salary reduction of 9 ECS positions in Fiscal Year 1996 and 5 ECS positions in Fiscal Year 1997. That scenario was chosen because it would allow the division to handle similar caseloads--based on projected reduced caseloads--to the caseloads originally projected in the Executive Budget. The salary offset was recommended to be made in decision unit M-300 in lieu of deleting positions to allow the division the flexibility in filling positions over the biennium as the need occurs. This action would allow for savings of approximately $780,000 over the biennium, half of which would be General Fund money. Senator Rawson asked for the division's response to the subcommittee recommendation. Ms. Florence stated the division preferred the alternative of reducing merit salary increases over deleting positions in order to keep positions available. Chairman Evans reiterated the subcommittee recommendation was elimination of 9 positions in the first year of the biennium and an additional 5 positions in the second year and to unfreeze the merit salary pool. SENATOR RHOADS MOVED TO ADOPT THE SUBCOMMITTEE RECOMMENDATION. SENATOR RAWSON SECONDED THE MOTION. Mr. Dini asked how this staff reduction would affect the Quality Control error rate. Chairman Evans stated the adjustments recommended were based on reduced caseload. It was the subcommittee's contention reducing staff by 14 positions over the biennium rather than 19 positions would allow staff to adequately perform its work. Mr. Abba said the subcommittee recommendation would allow the division the flexibility to manage the salary category and hire additional staff, if necessary, to improve the error rate. THE MOTION CARRIED UNANIMOUSLY. * * * * * Chairman Evans asked Ms. Florence to testify regarding proposed Welfare reform. Ms. Florence noted during the May 3, 1995, subcommittee meeting, the division was requested to provide more detailed information regarding the Welfare reform package specifying the affected budgets. She said one of the complicating factors in the approach the division was taking with regard to Welfare reform was that three budgets were affected in the process. Ms. Florence said Welfare caseloads have risen dramatically over the past five to six years from 22 percent in 1991 and 1992, slowing to approximately 14 percent in 1995 and with 13 percent caseload growth projected in the coming biennium. Therefore, despite any reform effort, the division envisioned a rise in caseload as a function of the rising population. Unless a new approach to the Welfare system was tried, expenditures would continue to spiral. In Fiscal Year 1994 Welfare expenditures for AFDC alone were $46.8 million compared to $26.5 million in 1990. Ms. Florence reiterated it was clear change was needed. There is little incentive in the current system to seek employment. In fact, employment is not discussed with applicants at the time of the division's first contact with that individual but only after the application is approved. Ms. Florence explained the current Welfare system was a linear system, first focusing on eligibility. Federal requirements dictated taking action on an application within 45 days. Processing time was currently averaging approximately 29 days. At the time the application is approved, recipients designated as mandatory participants are referred to the Employment and Training unit and scheduled for orientation (approximately two to three weeks following approval). Of that group, approximately one-third ultimately get into Employment and Training activities. She noted those activities were not outcome oriented (i.e., placing recipients into jobs). Ms. Florence stated the recipients who participate in Employment and Training activities are parents of children over the age of three, are under the age of 24 without a high school education, or are parents whose youngest child is 16 years old and nearing the age of majority, at which time eligibility for AFDC would cease. Only 23 percent of participants actually find employment. Once an individual becomes employed, they may remain eligible for a cash grant for four months. Then they are potentially eligible for extended Medicaid benefits and child care assistance (based on a sliding scale) up to one year. Ms. Florence said this system was not working. In discussions about Welfare reform during the past biennium, the division was directed to develop a task force of interested parties connected with the Welfare Division in some fashion, either through education, health services, social services, etc. In September 1993 a task force was formed. She introduced Mr. John Sasser and Ms. May Shelton, members of the Welfare Reform Task Force. She asked Mr. Sasser to speak about his experience on the task force. Mr. Sasser asked the subcommittee to keep in mind the diversity of views and backgrounds of the 15 task force members. The product produced by the task force was the result of hard fought compromise. He explained the task force proposal represented a modest first step toward Welfare reform and was developed with an understanding of budget and staffing constraints. The goal was not to make Welfare staff work harder, but to work smarter. He suggested if more funding was available than had been anticipated, the task force could add more costly components to its reform proposal. He said an example of how a Welfare worker could work smarter was to advise clients immediately of the services for which they would remain eligible if they found employment (e.g., medical and child care services) so clients would be encouraged to seek employment at the outset of the application process. He asked the subcommittee--in evaluating this Welfare reform package--to look at how all components fit into the whole proposal rather than to look at each component separately. Ms. Florence continued her testimony. She said the task force met over the period of a year, working as several subcommittees. The consensus of the members was there is a need to focus on employability and reward work rather than penalize those who obtain employment. The task force also addressed simplifying rules wherever possible and taking a more integrated approach to utilizing the various disciplines available within the system. Ms. Florence reported the task force's vision of the Welfare system integrated components of the programs currently existing within the Welfare Division with the programs of other agencies within the state system as well as education and the private sector. As a result of task force meetings, relationships have already been developed among those various programs. Agreements were in place with the University of Nevada, Las Vegas for the services of social work interns. Ms. Florence said the first approach of the Welfare Division would be to team the eligibility and training staff to bring Employment and Training staff into the eligibility process. In addition, a philosophical and cultural change would occur within the division, i.e., focusing on work as opposed to Welfare and assessing applicants' employability at the first interview rather than after they have been approved for benefits. She explained studies have shown that this approach has diverted people from the application process into employment without ever bringing them into the Welfare system. A mandatory job search would be required of applicants with children age five and older. Those applicants would have to verify that they are seeking employment during the application process. Ms. Florence noted the Governor had recommended enhancements to the Employment and Training budget for child care, transportation, and case management. She stated those were the supportive services which Welfare performed best. The Employment Security Department resources would be utilized for job placements and referrals. Vocational Rehabilitation resources would be utilized for vocational testing and job coaching. Job Training Partnership Act funds would be utilized for training. Budgetary provisions for training which have typically been in the Welfare Division budget have been shifted toward child care and transportation. The Welfare Division would refer applicants in need of education to school districts. The Welfare Division would continue to work with other state agencies and organizations to develop public and private partnerships to enable Welfare recipients to find employment. Ms. Florence compared the current Welfare policy and the proposed reform concept. She noted while integrity of eligibility needed to be retained, providing additional time to eligibility workers would allow them to engage applicants in discussions regarding the importance of work, the temporary nature of Welfare, and the effect of employment on Welfare benefits. During eligibility interviews workers could explain mandatory job search requirements, provide immediate job referrals or referrals to social work interns. Senator Raggio agreed there was a need to refocus on employability but he would reserve judgment on whether or not the division will be able to achieve anticipated savings. He noted the proposed system would require some affirmative effort on the part of Welfare recipients that does not presently exist, including the mandatory job search and referrals to other services. He asked what sanctions there would be for Welfare recipients who did not perform the affirmative requirements to be imposed by the reform proposal. He said the system would not work if the affirmative requirements were ignored by recipients. Ms. Florence agreed with Senator Raggio's assessment. She said the sanction to be imposed was removal of the caretaker's needs from the cash grant. That sanction is required under current rules. Senator Raggio questioned how much of an incentive that would be to someone who refused to cooperate with a mandatory job search. Ms. Florence explained the caretaker's needs represented approximately $59 of the cash grant for the family. For example, in a household of three, $59 would be subtracted from a grant of $348. Senator Raggio said his initial reaction to Ms. Florence's response was that $59 did not seem to be a great incentive to following through with the employment program. Ms. Florence suggested as the whole proposal was presented it would become evident there would be other efforts to encourage that person's cooperation. Senator Raggio asked what those efforts would be. Ms. Florence said she was referring to the interjection of the social work component as well as the attempt to instill employability into the client. Senator Rawson noted those sanctions were currently available and they were not motivating recipients toward employment and unless their utilization was increased, change could not be expected. He expressed concern about incentives versus sanctions and assuring there was an adequate driving force to encourage participation by recipients. Senator Rawson asked what caseload would be carried by the five Social Worker positions to be added in the larger district offices. Ms. Florence responded the Social Workers would also be supported by social work interns. Caseloads had not yet been determined, but generally a Social Worker could handle a caseload of 45 to 50. Senator Rawson inquired how many total recipients were enrolled in this program. Ms. Florence replied there were approximately 13,000 eligible households. She suggested she continue with her presentation to give the subcommittee a sense of the overall proposal before she attempted to answer specific questions. Ms. Tiffany said it appeared case management would be the focal point for coordination of services. She asked how existing case management procedures would be changed. Ms. Florence said case management would be designed to maximize available resources and the enhancements provided in the various budgets. Employment and Training Specialists would become part of eligibility units. The Eligibility Certification Specialist would be the frontline case manager with supplemental assistance from the Employment and Training Specialist. Ms. Tiffany inquired whether the NOMADS system would house the data for case management. Ms. Florence said NOMADS had the capability of integrating both the eligibility and employment and training information and would serve as the repository of all case data, including referrals to various other programs and employment. Ms. Florence stated at the previous subcommittee hearing she had discussed budgeting changes which would encourage work under the reform proposal where total gross earnings would be disregarded for the first three months and 50 percent of gross earnings would be disregarded for the following nine months and allowance of actual child care costs as a disregard. The limit on resources would be raised to $2,000 for AFDC (as it currently is in Food Stamps), totally disregarding the value of one vehicle. In the unemployment program the 100 hour rule and requirement for connection to the labor force would be eliminated. She noted these changes focused on up-front job promotion and changed the culture of the work environment of Welfare staff. As an illustration, she showed a videotape demonstrating a program developed in Riverside, California. Ms. Florence suggested the importance of work was no longer valued within the existing Welfare system, and it was necessary for the value of work to be reemphasized. Simple marketing strategies with clients could have a positive impact, even to the point of diverting applicants to employment before they enter the Welfare system. Ms. Florence said no federal waiver was required in the Welfare Administration or Employment and Training budgets to effect this cultural change. The investment in the Welfare Administration budget would be providing additional time to eligibility workers to promote the philosophy of the value of work. Six new Eligibility Certification Specialist positions were proposed to be added in the Welfare Administration budget in July 1995 and five new Social Worker positions were proposed to be added in January 1997. Ms. Florence noted as a function of current rules there were federal requirements for increased participation rates in the Employment and Training program. She explained those requirements were subject to change, depending on issues currently being debated at the federal level. There was a significant increase in resources in the budget over Fiscal Year 1994 to bring more people into the program. It is proposed 12 new staff positions be added to the budget in Fiscal Year 1996 and 4 new staff positions be added in Fiscal Year 1997. Ms. Florence stated it was anticipated proposed reform measures would result in savings of approximately $1 million in Fiscal Year 1997 from slowed caseload growth. Ms. Florence reported on projected costs of Welfare reform in the "out" years (i.e., beyond the coming biennium). It was anticipated by the year 2001 there would be a need of $87.5 for AFDC. With Welfare reform the projected need was $80 million. She said if the current system was not changed, costs would continue to escalate. The alternative was taking "draconian" measures which would ultimately cause such recipients to seek local government and community services. Ms. Florence explained the task force deliberately sought to develop reform measures which would not necessitate additional federal waivers. The federal government required demonstration and control groups as a condition of issuing waivers of federal rules. An 1115 waiver required specific experimental research methodology. For a program operating under a waiver, a percentage of the caseload must continue to operate under existing rules to serve as a control group. She added if projected cost savings were not realized the state could discontinue the waiver at any point within the five-year waiver period. Evaluation of the program would be ongoing and would include the services of an outside evaluator. Recipients in the demonstration program would be selected randomly via the NOMADS system. Ms. Florence distributed to the subcommittee copies of a handout emphasizing the value of work which would be distributed to applicants and a worksheet to demonstrate to clients the total benefit of wages and Welfare benefits over the course of a year. Ms. Tiffany asked if recipients would retain 100 percent of their Food Stamp benefits, cash grants, and child care assistance if they became employed full-time at $6.00 per hour. Ms. Florence stated a recipient working full-time at $6.00 per hour would retain Medicaid and child care assistance. Their Food Stamp allotment would probably be reduced based on Food Stamp Program budgeting rules, which were separate from AFDC rules. Ms. Tiffany inquired how the monthly cash grant would be affected. Ms. Florence explained for a mother and two children the maximum cash grant would be $348 per month if there was no household income. If the mother became employed 40 hours per week at $6.00 per hour ($1,032 per month) for the first three months, she could retain her $348 grant plus her income for a total of $1,380. Ms. Tiffany asked if these budgeting disregards would be included in a federal waiver. Ms. Florence answered affirmatively. She noted the waivers for Medicaid benefits and child care assistance were already in existence. Ms. Florence said under the same scenario, after the first three months the recipient would retain their monthly wages plus the maximum AFDC grant less one- half the monthly wages (i.e., $348 - $516 = 0). Mr. Willden pointed out this recipient would receive no cash grant after the first three months under the budgeting formula. He noted if the recipient was working and had child care expenses, those expenses would be deducted from their gross income in calculating the cash grant. After the first 12 months, all earned income (less child care expenses) would be used in calculating eligibility for benefits. Ms. Tiffany asked if the intention of the budgeting disregards was to give recipients an opportunity to save money to help pay for living expenses. Ms. Florence answered affirmatively. She also noted it was intended to demonstrate to recipients that any work was better than no work and they would be better off working even part-time. Once a recipient gains entry into the workforce there are positive implications for the rest of the family. The task force heard testimony from young women who indicated their children gained new self-esteem when their mother started working. Ms. Tiffany inquired where the state would realize savings from this new formula. Ms. Florence said ultimately the cash grants might be lowered and that was how overall savings were being projected. Ms. Tiffany questioned how cost neutrality would be attained. Ms. Florence stated the assumption associated with moving people into the workforce was that they would then leave the Welfare system. Under the current system there was no incentive to leave. Savings were projected from a slowing of caseload growth by approximately 2 percent as the result of refocusing from eligibility to employability. Mr. Sasser noted it was complicated to pinpoint costs and savings in the reform proposal. He explained child care assistance was a component of the JOBS training program and was a cost to the state, which was the reason there were so few openings in that program. If an AFDC recipient obtained a job the state would not pay for child care, but child care expense could be allowed as a deduction from gross earnings in calculating eligibility for benefits. If the AFDC cash grant is lost due to excess earnings, child care assistance could then be provided by the state at state expense for a period of one year. Mr. Sasser said it was his assumption the new budgeting system would save the state money by encouraging people to go to work who would otherwise choose to remain unemployed. Once people became employed their Food Stamp allotments would decrease. In addition, after the initial three months, their AFDC cash grant would likely decrease, depending on their level of deductible child care expenses. In terms of overall cost neutrality, the additional cost of the earnings disregards must be compared with the effect of moving recipients into the work force over the course of the one-year period as opposed to remaining unemployed and continuing to draw full benefits. He noted savings would not come directly from grants or sanctions but rather from slowed caseload growth. Senator Rawson asked for a demonstration of budgeting alternatives. Mr. Willden stated under the current system if a recipient had gross earned income of $731 (i.e., a minimum wage income), during the first four months of eligibility that recipient would be entitled to three disregards from that income: 1) a $90 work expense disregard, 2) the first $30 plus one-third of earnings, and 3) child care deductions up to federally established maximums. Using those disregards, the recipient's net countable income would be $56 during the first four months of eligibility, which would result in a $215 AFDC grant and associated Food Stamp and Medicaid benefits. After the first four months, the recipient would lose AFDC benefits because the $30 plus one-third deduction would be reduced to a $30 deduction for the next eight months. In the fifth month the recipient would move into the transition program which provides the individual with 12 additional months of Medicaid benefits and child care assistance based on a sliding fee scale. At the end of that 12-month period no further benefits were available. Mr. Willden said under the proposed system the recipient's total gross earnings would be disregarded in determining benefits for the first three months. The recipient would receive the maximum cash grant for that period. From the fourth month through the twelfth month only 50 percent of earnings less child care expenses would be disregarded. If the cash grant was discontinued because of earnings, the recipient would move into the transitional program and receive Medicaid and child care benefits. At the end of twelve months, all income less child care expense would be counted. Mr. Willden agreed cost savings would not be realized from the difference in budgeting rules. There would actually be a cost associated with the budgeting disregards. Savings would result from diverting people from Welfare to employment or from preventing people from entering Welfare at the outset. In addition, recipients would leave the system earlier than the average 24 months they are currently in the system. Ms. Florence stated the basic assumptions of the task force were that a vehicle (regardless of value) was essential for seeking employment and that actual child care costs must be deducted from gross earnings in determining income level. The reform package was designed to redirect existing resources in a sensible and practical manner under current operational rules. Ms. Tiffany asked what would happen if recipients were unable to remain employed for a full year. Ms. Florence stated the budgeting disregards would apply only for the one-year period. She noted some recipients would need more assistance than others in becoming employable. Mr. Allard asked if there was data available on how the Riverside, California, program was working. Ms. Florence stated there was data on the program, and she had provided it to the subcommittee at previous hearings. She explained the Riverside program waiver had been in place for several years. Mr. Allard inquired whether there were demonstrated cost savings in Riverside and if people had been put to work. Ms. Florence said the number of recipients with earnings increased 49 percent and Welfare costs decreased 15 percent after three years of operation. Mr. Allard said there were three elements to finding gainful employment: 1) a willingness to work, 2) a willingness on the part of employers to hire recipients, and 3) communication between recipients and employers. He asked what steps were being taken to get employers involved in the proposed program. Ms. Florence replied an effort was being made to identify potential employers who would make a commitment to hiring low-income people who may not be job ready. She noted the Welfare Division, in conjunction with the Department of Employment, Training, and Rehabilitation, recently participated in a program in Reno with the Silver Legacy and other employers with a willingness to hire low-income individuals. Similar programs would develop as collaborative relationships were cultivated and more potential employers would be identified. Mr. Willden noted the division had previously submitted to the subcommittee a list of the private sector employers who worked with the division. Mr. Allard questioned why there was not more representation on the task force from the business community. Ms. Florence stated the task force was an ad hoc committee which was organized for the purpose of developing the reform program. She noted the advisory boards to the job training offices included representatives from the private sector. Senator Rawson noted there was a potential for people to receive Medicaid benefits for a longer period. He asked what the impact of this change would be. Ms. Florence stated it was anticipated increased Medicaid costs would be mitigated by the slowing of caseload growth. Mr. Dini asked if the reform program would be implemented statewide. Ms. Florence answered affirmatively. Mr. Dini inquired whether other states had favorable results from similar programs. Ms. Florence replied research results on Welfare reform programs were mixed. She noted in most states Welfare was administered by counties and reform programs were implemented on a county basis. Success would depend on program design and the level of commitment to the program. Approaches similar to that being proposed appeared to have good results. Mr. Dini asked if private sector employers were being encouraged to allow employees to enter health care programs earlier. He noted long waiting periods to become eligible for health care benefits were deterrents to remaining on the job. Ms. Florence noted approximately one-third of clients came onto the system due to health care needs. She said offering health care benefits was a necessary incentive to employees in the current economy. Senator Raggio asked what effort had been made to bring organized labor unions into Welfare reform discussions. Ms. Florence stated the Culinary Union participated in the Las Vegas initiative as part of Nevada Partners, Inc. Senator Raggio inquired whether unions were willing to open jobs for Welfare recipients who were not union members. Ms. Florence replied the Culinary Union provided its training center to train individuals referred from the Welfare Division for placement at the MGM. Senator Raggio pointed out the MGM was not a "closed shop." He inquired whether labor unions would open positions for non-union Welfare recipients. Ms. Florence stated she was not aware of union efforts beyond those she mentioned previously. She noted Senator Raggio had made an excellent suggestion and one she would follow up on. Senator Raggio suggested the division determine whether or not the unions would be an impediment to people who would otherwise be employable. Ms. Florence indicated her willingness to do so. Mr. Hettrick commented that raising resource limits was expanding eligibility. He expressed the concern that increased job placements would be the result of increased eligibility. He suggested it would take very sophisticated reporting capability to ensure accurate outcome data. Mr. Hettrick asked if a recipient who had been on the program 13 months could go off and start again, taking advantage of the earnings disregards. Ms. Florence reiterated recipients were only eligible for the disregards in the first 12 months on the program. Senator Rawson asked how less job ready recipients would be prepared for work. Ms. Florence answered those recipients would be enrolled in GED programs or adult education programs, as appropriate. She reiterated the Welfare Division was focusing its funding on child care, transportation, and case management. The Department of Employment, Training, and Rehabilitation would focus its efforts on training, vocational assessment, etc. Senator Rawson inquired whether limitations on disregards would be extended for people who required education or training to become employable. Ms. Florence stated the limitation of the earnings disregards would not apply to training or education. Senator Rawson asked how the division would deal with people who did not cooperate with training or education requirements. Ms. Florence responded existing allowable sanctions would be used to encourage cooperation. Senator Rawson inquired whether the division had any major concern about developing those sanctions. Ms. Florence said her major concern would be the elimination of needs for dependent children in a household. She expressed the opinion the existing sanctions provided appropriate measures for dealing with the uncooperative party. Mr. Sasser explained the thinking of the task force with regard to sanctions was there were currently only limited spaces in Employment and Training programs due to the cost to the state to provide child care. The current approach was to force the most resistant, most long-term recipients into job training and using sanctions as a club to make them participate in activities. He echoed Ms. Florence's earlier comment that those activities constituted busy work and were not outcome oriented. The task force proposed a new approach. It suggested marketing the limited spaces in JOBS programs to people who wanted them and viewed them as valuable. If recipients failed to participate in the program they would relinquish the opportunity to complete it. With regard to enforcing job search requirements, only current sanctions were available. Senator Rawson asked how applicants who were unemployable due to a substance problem would be handled. Ms. Florence said those applicants would be referred based on the assessment of Social Workers, as was the current procedure. Senator Rawson inquired whether there was any concern about the cost of adding Social Worker positions. Ms. Florence said she had no concern about adding Social Workers. Senator Rawson asked Ms. Florence if she had any concern about supplementing the Bureau of Alcohol and Drug Abuse budget to handle drug abuse referrals. Ms. Florence stated she was unsure it would be appropriate to defer money out of the AFDC budget. Senator Rawson pointed out there were limited openings in treatment facilities and openings should be made available for Welfare referrals. Ms. Florence said she would support additional treatment services. Ms. Florence asked Ms. May Shelton, Director, Washoe County Social Services, to address the social work component of the proposal. Ms. Shelton expressed support for the proposal but noted it was conservative. She suggested adding more Social Worker positions to the budget to help the program be successful. She cited the difficulty in having 600 people adopt the proposed new philosophy. She recommended not reducing staff levels. She noted there was a need for five Social Worker positions in Clark County alone to deal with families with significant problems, including substance abuse, domestic violence, mental health, etc., which Eligibility Certification Specialists and Employment and Training Specialists were not trained to deal with. Ms. Shelton commented the task force had discussed various possible sanctions but had chosen not to include them in the proposal due to factors such as cost. She noted recipients would be required to sign a compliance agreement to participate in the Welfare program. There would be consequences for non- compliance. Mrs. Chowning expressed concern about the 12-month earnings disregard period running out before barriers to employment such as substance abuse or lack of education were overcome. She asked about provision of child care assistance if recipients were working and participating in education or substance abuse programs. She asked how many Welfare recipients who had participated in the Nevada Partnership program had remained employed at the MGM. Ms. Florence said approximately 75 percent of recipients hired by the MGM were still employed. She noted the MGM had made an effort to work with those employees to help them retain their jobs. Ms. Florence stated the division had been working with the Director's Office to identify a pool of child care dollars which could be targeted for Welfare recipients who would not be eligible for Welfare Division child care assistance. She acknowledged the need for child care was greater than available resources. The division and the Department of Employment, Training, and Rehabilitation were attempting to maximize all available resources to support the thrust of the Welfare reform proposal. She noted it was a great accomplishment for the agencies as well as the private sector to be working together toward the overall objective of getting Welfare recipients to work. She said she had not seen this level of collaboration in many years. Ms. Florence stated clients who were working and participating in substance abuse or education programs would be eligible for available child care resources. Mrs. Chowning stated if child care needs were not viewed realistically, the program was setting people up to fail. Ms. Florence said child care needs were being examined realistically insofar as the division was attempting to identify more resources for child care, was supporting legislation for child care, and was encouraging employers to develop on-site child care facilities. Mrs. Chowning asked for clarification about the allowance for actual cost of child care. Ms. Florence explained the allowance for actual child care costs referred to budgeting calculations, not to reimbursement for child care. The child care allowance was a deduction from gross earnings of actual child care costs to determine a net earnings figure from which eligibility for benefits was determined. Child care reimbursements paid by the division would be limited to prescribed amounts based on the age of the child and the amount of income in the household. Mr. Sasser noted child care reimbursement paid by the division was not associated with the 12 month period related to the budgeting disregards. Senator Raggio noted Ms. Shelton made a strong argument against reducing staffing levels due to caseload reductions. He noted augmentation to the Department of Prison budget had been portrayed as revenue neutral by the Budget Division because of savings in the social services budgets due to projected caseload decreases. At that time he questioned whether Ms. Florence was comfortable with the proposed reductions in General Fund money recommended in the Welfare Division budget, and she indicated she was comfortable with the reductions. He asked Ms. Florence if her response was still the same. Ms. Florence stated, for clarification, Ms. Shelton did not fully understand the recommendation of the subcommittee. The subcommittee did not recommend cutting 19 positions. It took actions on the merit salary module, reducing that amount by a salary value equivalent to approximately 14 positions, which allowed the division the flexibility to fill those positions if the necessary vacancy savings could be accommodated. She reiterated her previous testimony that that would be her choice of approach, rather than cutting positions. She noted caseload forecasts had been revised in conjunction with a member of the Fiscal Division staff, and she was comfortable with those projections. Chairman Evans asked if Ms. Florence had a recommendation regarding the cap on the Welfare Division budget. Ms. Florence explained the 1993 appropriations bill included language which allowed the Welfare Division some ability to come back to the Interim Finance Committee in certain instances. She suggested similar language would be desirable in the 1995 bill. She noted actions at the federal level were too uncertain to make this a finalized capped budget at this time. Senator Rawson asked if more could be done regarding the paternity issue and the issue of having more children while receiving Welfare benefits. Ms. Florence replied under the current AFDC program applicants are required to cooperate with the child support enforcement program. Senator Rawson inquired whether the division had the authority to withhold benefits if recipients did not cooperate. Ms. Florence responded benefits could be withheld if it was determined the recipient was not cooperating. Ms. Florence stated the issue of limiting family size was controversial. She expressed the opinion it would place more children in vulnerable positions and she personally did not support it. Ms. Florence stated, in summary, there were risks associated with the proposed Welfare reform program, but under the direction of the task force, the division had framed a program which had the best potential for success. She noted after initial discussions, staff had expressed support for the program and willingness to take the new direction recommended. She said the potential gains from slowing escalating expenditures was worth the risk. Chairman Evans asked Mr. Abba to explain policy decisions to be made. Mr. Abba stated decision unit E-400 included a recommendation for five additional Social Worker positions, beginning in January 1997 and six additional Eligibility Certification Specialists, beginning July 1, 1995, to enhance the marketing efforts. The decision unit also includes supporting costs and $25,000 for contract services to conduct an independent evaluation of the proposed demonstration project's success. Senator Rawson stated generally this recommendation should be approved. He suggested some refinements might have to be made legislatively, i.e., adding five more Social Workers. SENATOR RAWSON MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS, ADDING FIVE SOCIAL WORKER POSITIONS. MR. DINI SECONDED THE MOTION. Senator Raggio asked if there was a contract for social worker intern services with the University of Nevada, Reno. Ms. Florence said there was currently no agreement but one was anticipated. The UNLV pilot program had proven successful enough to interest the School of Social Work at UNR. She did not know the status of negotiations. She noted the division had limited staff and had focused its efforts on getting the Las Vegas program up and running. Senator Raggio urged Ms. Florence to follow up on the intern contract with UNR. Ms. Florence said she expected an agreement to be in place by the fall semester. Senator Raggio said he would like to see this matter expedited. Senator Raggio noted the Senate Finance Committee would be considering a senate measure dealing with Welfare reform. Approval of this recommendation would be tentative until a final determination was made on that measure. Ms. Tiffany asked for justification of the additional five Social Workers. Ms. Florence stated the original agency request was for five Social Workers to begin in July 1995 as opposed to January 1997. The division's priority was to interject Social Workers into the large urban offices at the rate of one per office. She said one Social Worker per office would not meet the entire need and the division could provide statistical data to support her statement. The request for one Social Worker per office represented an attempt to reintroduce Social Workers into the eligibility process at a conservative rate. Ms. Tiffany said, for the record, she did not agree with adding 10 Social Worker positions, but she supported the reform proposal. Mrs. Chowning asked if the additional Social Workers would allow the extra time during the initial client assessment for focus on the work component. Ms. Florence said that additional time would be provided by the additional Eligibility Certification Specialist positions, not the Social Worker positions. Social Workers would be assigned to more intensive case management services. Mr. Hettrick suggested conditioning the funding for additional Social Worker positions on the outcome of legislation pending in both the Senate and Assembly. Senator Raggio noted any action taken in the joint subcommittee was subject to final approval by the respective full committees. Mr. Allard echoed the sentiments of Senator Raggio, Ms. Tiffany, and Mr. Hettrick. He noted he did not support additional positions. THE MOTION CARRIED. SENATOR RHOADS WAS OPPOSED. BUDGET CLOSED. * * * * * AID TO DEPENDENT CHILDREN - PAGE 1195 Mr. Abba reported staff recommended adjusting the budget to reduce General Fund and federal fund appropriations as a result of reduced caseload projections. He explained the overall reduction would be slightly over $3 million in Fiscal Year 1996 and $4.6 million in Fiscal Year 1997. Mr. Abba noted the subcommittee would have to make a policy decision on decision unit E-400 dealing with the budgeting disregards issue. He noted that component of the reform program would require slight modifications to adjust for caseload reductions. He said if the subcommittee chose to approve decision unit E-400, staff encouraged the subcommittee to urge the department to develop fail safe mechanisms to review the program to determine whether projected savings are realized. He explained if those mechanisms were not put in place, the state would be liable to the federal government for any costs which were not cost neutral. He also pointed out the division would have to develop a tight methodology to determine how savings were generated and whether they were the result of the demonstration project's efforts or pure economic forces. Senator Rawson asked for a review of how eligibility determinations were made for Food Stamps, AFDC, and Medicaid. He suggested if the methods were different there might be a way to develop one method of determining eligibility for all programs. Ms. Florence stated there were differences in the methods of determining eligibility for Food Stamps and AFDC. A recommendation of the task force was to increase the AFDC resource limit to $2,000 to make it consistent with the Food Stamp resource limit. Vehicle valuation also differed between the two programs. Generally, a person was categorically eligible for Medicaid benefits if they were receiving AFDC benefits. If they were receiving Medicaid benefits because they were aged, blind, or disabled, the resource tests differed from one program to another. Senator Rawson asked if the state had the option to alter eligibility determination methods. Ms. Florence said the methods were determined by the federal government. Senator Rawson inquired whether the division had any concern about the Legislature attempting to standardize the eligibility determination methods for Food Stamps and AFDC. Ms. Florence said the division would have no concern about that, and that was an objective which the task force had attempted to address. Senator Rhoads asked if the cost over the next five years would be an additional $18 million which would be shared by both the state and federal government. Ms. Florence explained the savings from Welfare reform would be $18 million. Senator Rhoads asked if the savings projections were reasonable. Ms. Florence said the assumptions were reasonable, based on the information obtained from other states. She stated, frankly, since a number of the reform measures were proposed to be implemented prior to the second year of the biennium, it was possible the savings projections could be exceeded. Senator Rhoads noted projections could also be less than expected. Ms. Florence said Senator Rhoads was correct. Senator Rawson asked if there was any way to establish a maximum limit on earnings disregards. Mr. Willden responded the intent of the task force was to maintain the eligibility limit at 185 percent of the poverty level. People earning over that amount would be ineligible for benefits. Senator Rawson expressed concern about actually realizing projected caseload reductions. He said the Legislature should take measures to ensure that caseloads actually decrease. SENATOR RAWSON MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS, MAKING ADJUSTMENTS FOR PROJECTED CASELOAD REDUCTIONS. Chairman Evans asked Senator Rawson if he would include in his motion language regarding the cap on the AFDC budget to provide for contingencies resulting from federal actions. Senator Rawson said it would be appropriate to allow the division to approach the Interim Finance Committee if there was any disruption in the budget resulting from federal action. Mr. Stevens said the 1993 Legislature authorized the division to approach the Interim Finance Committee for additional funding for the aged, blind, and disabled program. He noted there were certain exceptions to the cap requirements, including changes in federal mandates or federal participation not anticipated by the Legislature. Senator Rawson said he would not favor generally excusing the cap, but the division needed to be able to deal with any federal disruptions. SENATOR RAWSON REVISED HIS MOTION TO ALLOW THE DIVISION TO APPROACH THE INTERIM FINANCE COMMITTEE FOR ADDITIONAL FUNDING IN THE EVENT OF DISRUPTION TO THE BUDGET RESULTING FROM FEDERAL ACTION. MR. DINI SECONDED THE MOTION. Senator Rhoads stated he was still concerned that the division was being overly optimistic about its ability to slow caseload growth and realize savings. He noted it had taken several years for other states to achieve that level of success. Ms. Florence replied the savings were projected for the second half of the second year of the biennium, assuming the resources to be provided for the first 18 months of the biennium will contribute to the caseload reduction. She agreed the projections were optimistic. Senator Rhoads indicated he would be voting against the motion. Chairman Evans suggested holding action on this budget. SENATOR RAWSON WITHDREW HIS MOTION. MR. DINI WITHDREW HIS SECOND TO THE MOTION. * * * * * EMPLOYMENT AND TRAINING - PAGE 1231 Mr. Abba noted this budget required several adjustments. He said projected caseload reductions would also impact this budget. The division reprojected the number of clients who would access Employment and Training services based on reduced caseload. A majority of the closing actions recommended by fiscal staff were based on that reprojection. He assured the subcommittee the reprojections still allowed for the Governor's goal of providing JOBS services to 6,000 clients through the biennium. Mr. Abba said another factor involved in closing recommendations was that child care assistance expenditures were overstated approximately $224,000 over the biennium. Staff recommended a budget reduction in this category. Mr. Abba noted a number of JOBS activities had associated child care assistance costs. In reviewing the assumptions in developing those child care cost projections, it was noted the hourly and daily child care rates used were the highest rates charged by all providers surveyed. Amended rates were developed for all providers as a whole, taking into consideration CPI rates. Fiscal staff recommended adjusting child care expenses pursuant to the amended rate. Mr. Abba reported fiscal staff also recommended a small reduction in funding for SIIS premiums for CWEP participants in the JOBS program. Mr. Abba noted the recommended adjustments amounted to $313,156 in the first year of the biennium and $687,185 in the second year of the biennium for caseload reductions; $76,189 in the first year and $97,316 in the second year for child care costs, and $9,444 in the first year and $12,474 in the second year for SIIS premium costs. Mr. Abba stated 16 new positions were recommended over the biennium. Based on caseload reductions, there was a possibility of reducing one position for the entire biennium and delaying hire of a second position until the second year of the biennium. SENATOR RHOADS MOVED TO CLOSE THE BUDGET IN ACCORDANCE WITH STAFF RECOMMENDATIONS. MR. ALLARD SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. SENATOR RAGGIO AND MR. DINI WERE ABSENT FOR THE VOTE. BUDGET CLOSED. * * * * * Chairman Evans asked Ms. Florence to follow up on Senator Raggio's request for a written report of the status of negotiations with the UNR School of Social Work for intern services. Ms. Florence stated she would be happy to comply with the request. She noted the division would obtain as much information as possible from other states regarding AFDC demonstration projects to provide to the subcommittee at the next meeting. Ms. Florence noted, for the subcommittee's information, trucks carrying NOMADS equipment to the Las Vegas offices were hijacked. Since the division had not yet taken delivery of the equipment it was not a liability to the state. There being no further business, the meeting was adjourned at 10:50 a.m. RESPECTFULLY SUBMITTED: Dale Gray, Committee Secretary Joint Subcommittee on Human Resources/K-12 Assembly Committee on Ways and Means and Senate Committee on Finance May 10, 1995 Page