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Department of Social and Health Services

Governor's 1997-99 proposal
$5,154.6 million
$11,278.2 million
Net change from 1995-97
$602.4 million
$1,336.3 million
Percent change from 1995-97

M ANY OF THE PROGRAMS administered by the Department of Social and Health Services (DSHS) are facing significant changes as the federal government moves to redefine its role in relation to state and local governments - particularly in the area of social services. The new federal welfare law (P.L. 104-193) eliminates several major income-assistance programs that have been in existence since the New Deal of the 1930s and replaces them with a capped block grant to the states that puts new restrictions on who can qualify for aid. While providing some flexibility in how states administer those funds, the new law imposes a number of new costs and reduces federal funding for public assistance programs in Washington by an estimated $379 million in the 1997-99 Biennium.

Changes in federal funding account for $102.3 million (20.8 percent) of the $490.8 million General Fund-State (GF-S) net increase in the base ("maintenance level") budget for DSHS in the 1997-99 Biennium. Program areas affected by these changes include income assistance, children's services, juvenile rehabilitation, child support, and drug and alcohol treatment services. The cost to the state of responding to P.L. 104-193 is actually higher than $102.3 million, but additional costs are offset by a $90.4 million increase in the Federal Medical Assistance Percentage (FMAP), which is established by a federal formula unaffected by the new welfare law.

New policy initiatives recommended by the Governor will increase state funding for children's services, child care, juvenile rehabilitation, and efforts to address the problem of domestic violence. He is also proposing additional state support for food banks, commodity purchases, and food assistance for legal immigrants to help mitigate the effects of federal cutbacks in nutritional programs for low-income people.

Supplemental Security Income

Under the new welfare law, the federal government will realize significant cost savings through reductions in the Supplemental Security Income (SSI) program, which provides income assistance to low-income people who are elderly, blind, or otherwise disabled. An average SSI client currently receives $470 per month from the federal government, supplemented by $25.32 from the state. P.L. 104-193 will deny SSI eligibility to approximately 11,000 legal immigrants in Washington State, along with 987 non-immigrant children with severe behavioral problems or medical conditions that do not meet the new criteria established in the law.

Food Stamps

Under P.L. 104-193, the federal government plans to reduce its expenditures on food stamps by $23 billion over the next six years - accounting for more than 40 percent of the $54.5 billion in federal savings assumed under the new welfare law. Federal savings are achieved by denying food stamps to legal immigrants who have not received citizenship, reducing the value of food stamps to other families and individuals, and capping the allowance for shelter costs. Beginning in January 1997, able-bodied people ages 18 to 50 with no dependents can only receive food stamps for three months out of any 36-month period unless they are engaged in qualifying work activities.

Cutbacks in the federal Food Stamp Program will result in an estimated loss of $196.4 million in direct support to low-income families in Washington over the next two years. As a result of these changes, more than 200,000 low-income families in Washington will see their federal food stamps allowances reduced or cut off next year. Of that total, more than 38,000 legal immigrants - many working minimum-wage jobs to support children and elderly parents - will lose eligibility for food stamps next year. Below are the measures Governor Lowry is proposing as the state's response to these impending reductions in federal support for food purchases.

Temporary Aid for Needy Families

Under the new Temporary Aid for Needy Families (TANF) program created by the new federal law, grant recipients must find work within two years after first receiving assistance or their benefits will be terminated. States must ensure that 25 percent of all welfare recipients are engaged in work in 1997 - a requirement increasing annually to 50 percent by 2002 - or face financial penalties. In two-parent families, the minimum participation rate is 75 percent in 1997, rising to 90 percent in 1999. States may count vocational training toward meeting these requirements, but only for one year per client. Job search and readiness training is limited to four consecutive weeks, or six weeks total.

Since September 1995, Washington has required most recipients of AFDC cash assistance to participate in education or job-training programs as a condition of receiving benefits. Since then, AFDC caseloads have shown a steady decline, and are expected to drop even further in the future resulting in estimated savings of $16 million GF-S and $14.7 million GF-F in the 1997-99 Biennium. Under the TANF plan Governor Lowry will submit to the federal government in January, 1997, Washington State will be allowed to continue its mandatory education and training program. Using the state's existing Success Through Employment Program (STEP) waiver, exemptions from work requirements will be preserved for single parents with children under three and those caring for a disabled child.

Using the new flexibility provided under the TANF program, the Governor's budget proposal realizes some savings and directs additional state funding to meet new federal requirements and help those in need.

New Costs

Cost-Saving Measures

Child Care

Whether by choice or economic necessity, more than 62 percent of all mothers with children under six are in the labor force. If mothers of young children are to enter or remain in jobs, they need adequate care for their children while they work. Given the new work requirements under the federal welfare bill, it is imperative that the state increase its efforts to support child care for low-income mothers so that they can enter - or remain in - the workforce. The Governor's budget proposal directs DSHS to plan for a "seamless" state child care system that incorporates two different programs - the Employment Child Care program and the Transitional Child Care program - which serve similar clients but have different eligibility standards and co-payment rules. With the merging of these two programs, Washington State will have a more cohesive approach to providing child care assistance to low-income working families.

Children's Services Enhancements

Since taking office, Governor Lowry has made children's health and safety one of his top priorities. The supplemental budget approved by the 1996 Legislature included a total of $10.8 million ($7.5 million GF-S) for improvements recommended by the Governor, adding 109 social workers; increasing the number of licensers for child care, foster, and group homes; and providing $1.1 million to conduct a Management Improvement Project (MIP) at the Children and Family Services Division of DSHS, now known as the Children's Administration.

Besides supporting the $30 million carry-forward cost of those initiatives, the Governor's 1997-99 budget proposal includes $74.5 million ($58.7 million GF-S) to support additional improvements in children's services. It also replaces 73 percent of the $8.9 million cutback in federal funding for the Social Services Block Grant, which is used primarily to support Children's Protective Services (CPS) and other children's programs. In addition, the Governor's proposal increases funding for the Family Policy Council and the Community Public Health and Safety Networks, which have all developed plans on how their communities will respond to reduce child abuse and neglect, teen pregnancy, substance abuse, teen violence, teen suicide, domestic violence, out-of-home placement, and school dropouts.

Juvenile Justice

There are approximately 1,400 young people in state juvenile rehabilitation institutions and group homes administered by DSHS. This population is forecast to grow to 1,500 by the year 2000. The characteristics of the juvenile rehabilitation population indicate a need for treatment and rehabilitative services to address specific problems that place these youths at greater risk for delinquency and reoffense. Approximately 82 percent of juvenile offenders are chemically dependent, while 46 percent need mental health treatment. Through his Juvenile Justice Initiative, the Governor is proposing a $16.2 million GF-S package of sentencing changes and program enhancements that responds to these issues in a comprehensive fashion.

Domestic Violence

Governor Lowry's budget recommendations for the 1997-99 Biennium continue his commitment to eradicating domestic violence. Combining $1.3 million GF-S with $3.9 million in federal funds, his proposal builds on the strengths of existing programs, maximizes the use of new federal grants for domestic violence programs, and provides additional support for prevention strategies, intervention, and support services.

Drug and Alcohol Programs

Under H.R. 3136, the 104th Congress prohibits eligibility for Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) benefits for individuals whose drug addiction and/or alcoholism is material to the finding of disability. Current beneficiaries of those programs who have these addictions will lose their benefits after January 1, 1997.

Up to half of the 4,700 drug- and alcohol-dependent people currently receiving benefits through SSDI or SSI are expected to apply for benefits under the General Assistance-Unemployable (GA-U) program or under the state Alcoholism and Drug Addiction Treatment and Support Act (ADATSA). The fiscal impact of the resulting increase in GA-U benefits for these clients is estimated at $29.3 million GF-S in the 1997-99 Biennium. The Governor's budget proposal addresses these additional costs, while also expanding treatment to help these people break their addictions and lead productive lives.

Medical Assistance

Medical Assistance Administration is continuing its move towards managed care arrangements rather than fee-for-service. Virtually all clients in Aid to Families with Dependent Children, the First Steps program , and children's programs are currently in managed care arrangements for most of their medical care. Beginning in February 1997, the state will move to managed care SSI clients not receiving Medicare. Governor Lowry's Medical Assistance budget supports these initiatives in the 1997-99 Biennium.

Aging and Adult Services

Long term care services in Washington State has seen a shift away from heavy reliance on nursing homes to expansion of less costly community options. Since the passage of ESHB 1908 in 1995, DSHS has been aggressively reducing nursing homes placements in favor of community care. The Medicaid nursing home population, which stood at 16,292 at the start of the 1995-97 Biennium, is expected to drop below 15,000 by the beginning of the next biennium. This decrease in the nursing home census will save the state $33.6 million GF-S and $35.1 million GF-F. This is almost enough to cover the cost of mandatory nursing home rate increases, projected to require expenditures of $36.5 million GF-S and $38.2 million GF-F in the 1997-99 Biennium.

Most of the increase in the Governor's 1997-99 base budget for Aging and Adult Services is the $149.5 million supporting caseload growth in community-based care. Contributing to this increase is a growing population of elderly and disabled people, the expansion of long term care options, improved access to services, and a growing client preference for home and community care. In addition, the Governor's budget provides some additional funding to improve the quality of care in these residential settings.

Other Initiatives

The Governor's budget proposal also includes several initiatives designed to improve the quality of care for clients served by DSHS, protect their health and safety, and ensure that providers have adequate resources to provide these services.
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