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(Parenthesis ( ) Indicate Expenditure Decreases)

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SUMMARY

Synopsis of Bill

House Bill 76 requires the Department of Health to develop and submit as part of its budget process, a cost-of-living increase for developmental disabilities services providers under contract with the department. The bill further requires the department to use the federal health care financing administration basket index inflation factor in determining the yearly cost-of-living increase. The effective date of this legislation is July 1, 2001.

Significant Issues

Recent information received from the Department of Health shows a significant financial impact of this legislation when it takes effect in FY 2001. At the inflation factor and methodology mandated by the bill, it is estimated to cost 851.0 in general funds dollars to implement the mandatory salary increases. Further, this annual cost-of-living adjustment will cost incrementally more than the 851.0 calculated for the FY 2001 implementation.

The Department of Health utilizes a number of contract service providers in order to deliver a number of different health programs to the citizens of the state. The broad categories of these providers include: primary care, behavior health, emergency medical services, public health, substance abuse, and miscellaneous individuals who contract individually such as physicians and psychologists. House bill 76 does not include these other disciplines and the effect of the bill would be to treat one class of health care provider differently than the others. In addition, with a budget approaching 100 million dollars in contract services, even a small increase to the contract services line item will have a significant effect on the overall budget of the department and will not allow the department to make it's best determinations when making budget cuts. The effect will be to favor contract providers in developmentally disabled programs over all others and at the expense of all others.

FISCAL IMPLICATIONS

Placing a mandatory cost-of-living increase requirement on the Department lessens the discretion it needs to fiscally manage the department. It is estimated that the FY 2001 cost based on present day analysis would be 851.0 in general fund dollars.

TECHNICAL ISSUES

When considering this issue, parity among all providers of health services should be considered.

POSSIBLE QUESTIONS

Why are developmentally disabled service providers the only class chosen to receive this increase?

Has a determination been made of the fiscal impact this bill would have over a one-five-and ten year time frame?

MB/njw