FISCAL NOTE

Date Requested: January 18, 2018
Time Requested: 02:47 PM
Agency: Health and Human Resources, WV Department of
CBD Number: Version: Bill Number: Resolution Number:
1636 Introduced HB4014
CBD Subject: Human Services


FUND(S):

Multiple

Sources of Revenue:

Other Fund multiple

Legislation creates:

Increases Existing Expenses, Creates New Fund:



Fiscal Note Summary


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


    The purpose of this bill is to reorganize the West Virginia Department of Health and Human Resources by creating a new Department of Healthcare Facilities and establishing the Office of Inspector General as its own department.
    Department of Healthcare Facilities
    The bill requires the Department of Health and Human Resources (DHHR) to provide administrative services to the Department of Healthcare Facilities. The bill establishes a Secretary for the Department of Healthcare Facilities.
    The bill would result in the shifting of budget and expenditures from the current DHHR to the newly created Department of Healthcare Facilities. It is estimated that approximately four additional staff will be needed for the Department of Healthcare Facilities, including the new Secretary and support staff for the new Department. The estimated cost for this additional staff is $306,379, including salary and benefits.
    Administrative and personnel expenditures for the West Virginia Children's Home utilize a blend of federal Title IV-E dollars and state general revenue funds. The public agency designated to provide a program of foster care is eligible to apply for and receive direct Tile IV-E funding. The Department of Health and Human Resources is eligible to receive Title IV-E due to an approved state plan from the US Department of Health and Human Services-Administration for Children and Families. Transferring the West Virginia Children's Home from the Title IV-E state agency will prevent direct receipt of Title IV-E funding thus causing a delay in cash flow for the West Virginia Children's Home.
    Office of Inspector General
    The bill would result in the shifting of budget and expenditures from the current DHHR to the newly created Office of Inspector General. It is assumed DHHR will not provide administrative services to the OIG. It is estimated that approximately six additional staff will be needed for the Office of the Inspector General to cover administrative functions previously supplied by DHHR. The estimated cost for this additional staff is $353,132.
    "The DHHR has established administrative support (systems and staff), i.e. payroll, accounting, budget, grants management, personnel, information technology, etc., that could continue to provide support to the new Agencies, however, the fact that agencies would be separate would create some challenges to the efficiency realized from the current structure. Losing this centralization would result in increased costs, lost efficiency and lost federal dollars.
    
    Currently small units are able to share responsibilities on behalf of the agency. However, with movement of the Office of Inspector General to a new Department would require additional positions to be added to that Department.
    "
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2018
Increase/Decrease
(use"-")
2019
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 659,511 659,511
Personal Services 0 659,511 659,511
Current Expenses 0 0 0
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):


    Personal services costs of $659,511 were calculated based on current DHHR average for classification:
    Department of Healthcare Facilities - Salary based on the addition of four staff (Cabinet Secretary - $95,000, Assistant Cabinet Secretary - $65,004, Administrative Secretary - $30,665, Secretary 2 - $28,173) totaling $218,842 plus benefits at approximately 40% ($87,537) for a total of $306,379.
    Office of Inspector General - Salary based on the addition of six staff (Accountant/Auditor Supervisor - $53,641, 2- Accountant/Auditor IV - $84,842 (2 @ $42,421 each), Database Administrator I - $49,770, Public Information Specialist II - 36,816, Maintenance Worker - 27,168) totaling $252,237 plus benefits at approximately 40% ($100,895) for a total of $353,132.
    



Memorandum


    Areas of the Office of Inspector General, such as investigation and fraud and quality control, are funded by multiple federal and state funding sources. The Federal funding sources are grants whereby DHHR is the recipient (such as TANF, SNAP, Medicaid, etc.). Administrative costs for all bureaus can’t be charged to federal agencies without a revision and federal approval to the Department’s cost allocation plan. Additionally, the separate entity would have to have cost allocation plans developed and approved prior to drawing any federal dollars to fund. Since the funding sources mentioned above are granted to the DHHR, the Office of Inspector General would be required to cover expenses and then seek reimbursement from DHHR (according to approved allocation). This could cause cash flow issues for the Office of Inspector General.
    The language in the bill excludes the Board of Review from transferring with the Office of Inspector General, therefore, this note includes the Board of Review remaining with DHHR.
    Regarding the Department of Healthcare Facilities, the language in the legislation provides for administrative services support and includes specific types of support as well as general language termed "other services". It is assumed this includes fiscal processing support. However, there is also language that states the Secretary is authorized to "formulate standard fiscal procedures". If the intent is that the new agency will not be supported by DHHR centralized fiscal staff, additional fiscal staff will be necessary.
    Although not specifically mentioned in the bill, we have included the Transitional Living Facility at Sharpe as moving to the Department of Healthcare Facilities.
    Clarification needed for §27-10A-1 (c) indicates the control of the property, records, and financial and other affairs of state hospitals and other state behavioral health facilities is transferred from DHHR to the Department of Healthcare Facilities. The DHHR assumed this statement referred to the state owned and operated psychiatric facilities, rather than state owned behavioral health properties that are operated by private entities (for example Barboursville school owned by DHHR, operated by Riverpark and the Prestera center located on Rt 60, Huntington is owned by DHHR and operated by Prestera). These facilities were assumed to remain with DHHR along with the Behavioral Health functions.
    



    Person submitting Fiscal Note: Bill J. Crouch
    Email Address: Bill.J.Crouch@wv.gov