STAND. COM. REP. NO. 1555

Honolulu, Hawaii

, 2005

RE: S.B. No. 101

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Finance, to which was referred S.B. No. 101 entitled:

"A BILL FOR AN ACT RELATING TO THE STATE BUDGET,"

begs leave to report as follows:

As received by your Committee on Finance, the purpose of this bill is to make technical amendments to the budget allotment modification law.

In order to solicit public input, your Committee heard this bill as a draft proposal. As proposed, the purpose of the bill is to:

(1) Appropriate moneys for the Temporary Assistance for Needy Families (TANF) program and all associated programs;

(2) Provide performance measures for programs funded with TANF moneys;

(3) Create a methodology for rewards and penalties for meeting or not meeting the performance measures; and

(4) Prohibit the implementation of new programs that useutilizeuse TANF funding without the prior approval of the Legislature.

The Department of the Attorney General (AG), National Association of Social Workers (NASW), and a concerned individual submitted comments. The Department of Human Services (DHS) opposed this bill.

Section 901 of Public Law 104-193, also known as the Brown Amendment, states that any funds received by a state relating to block grants for TANF moneys shall be subject to appropriation by the state legislature. The Brown Amendment was adopted in the original passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, which introduced the current TANF system.

A policy brief published by the National Conference of State Legislatures (NCSL), a bipartisan organization, stated that:

Without Brown language, distribution of federal

block grant funds would have been at the prerogative of the governor alone, circumventing the state legislative process, eluding public debate and effectively making governors administrative agents of the federal government.

Your Committee notes that while the current amount of reserves in TANF exceeds $118 million, it should be noted that only in recent years has this reserve really grown. One of the factors leading to the growth of the reserves is the fact that recipients are losing their eligibility to receive TANF assistance as a result of being in the program for the sixty-month time limit. Recipients began encountering this time limit in late 2001.

While the current level of reserve funds is approximately $118 million, your Committee notes that the Administration has initiated more than $16 million in new spending over the past two years. While these new programs may seem to be in the best interests of the taxpayers, unilaterally introducing new programs without sufficient public input may not be in the best interests of the recipients.

As an example, NASW and a concerned individual testified that DHS has a Financial Assistance Advisory Council (Council), established under section 346-14.5, Hawaii Revised Statutes. The Council is tasked with rendering advice and information to DHS on matters relating to financial assistance programs, including rendering advice and information for the determination of the amount of benefit payments under programs such as TANF, Temporary Assistance to Other Needy Families (TAONF), and general assistance to households without minor dependents.

According to their testimony, under the prior Administration, this Council met monthly. However, under the current Administration, which began in late 2002, the Council has only met once. Your Committee recommends that the conference committee examine this existing structure to further address the concerns of the AG with regard to the role of the Legislature in providing rewards or sanctions to DHS.

Your Committee notes that while this bill is a work in progress, the primary goal is to ensure that resources to needy families are distributed quickly and efficiently. At the same time, however, transparency and accountability must not be sacrificed.

This bill attempts to implement a more substantive approach to performance-based budgeting by enhancing current reporting requirements by DHS, as well as introducing a system of rewards or penalties to be determined by the success or failure of DHS in meeting its performance goals.

In appropriating funding for TANF to DHS, a more comprehensive goal-based approach was taken. Rather than appropriating funding to DHS by Program ID, the entire amount is appropriated, with an emphasis on achieving goals. This approach provides DHS the maximum flexibility to accomplish its goals. However, this additional freedom must be balanced by enhanced transparency and accountability for the benefit of the recipients as well as taxpayers.

Your Committee has amended the proposed draft according to comments and concerns expressed by the AG. As amended, this bill:

(1) Provides the mechanism by which any reward or penalty to DHS would be implemented;

(2) Includes a definition for "new program" and clarifies the means by which a "new program" would be approved by the Legislature; and

(3) Clarifies the appropriation issues and ambiguities addressed by the AG.

As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 101, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 101, H.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Finance,

 

____________________________

DWIGHT TAKAMINE, Chair