LEGISLATIVE BUDGET BOARD

Robert E. Johnson Bldg. 1501 N. Congress Ave. - 5th Floor Austin, TX 78701 512/463-1200 Fax: 512/475-2902 http://www.lbb.state.tx.us

MEMORANDUM
TO: John Opperman Jamie Dudensing Caasi Lamb Sarah Hicks Federal Funds Analysis Team September 26, 2013 Impact of Federal Government Shutdown Andrew Blifford Jennifer Deegan Andrea Sheridan Keith Yawn

FROM: DATE: SUBJECT:

The U.S. Senate passed a FFY 2014 Continuing Resolution (CR) without the provision that prohibits the use of federal funds to carry out the Affordable Care Act. The U.S. House will need to pass the amended Senate CR by next Tuesday to prevent a federal shutdown. We contacted select state agencies to determine what the fiscal impact of a federal government shutdown would have on federally funded programs. The responses varied depending on the time period of the federal shutdown. Health and Human Services Enterprise Short-Term Impact  The Health and Human Services Commission (HHSC) assumes federal agencies will distinguish between essential and non-essential functions, and that essential functions would likely continue. HHSC states that a federal furlough may have a significant negative impact on the enterprise if it impacts their ability to draw down federal funding or obtain federal guidance on program operations.  Agencies plan to use existing federal letters of credit or any available prior year grant funding to minimize the impact of a temporary loss of federal funding.  Health and Human Services agencies would continue partially state supported functions. For completely federally funded functions agencies would make case-by-case determinations of the impact. Agencies may implement a hiring freeze for completely federally funded positions. Fully federally funded positions include: o Department of Assistive and Rehabilitative Services: 1,034 Full-Time Equivalents (FTEs) with Disability Determination Services; o Department of State Health Services: 358 FTEs (208 with the Special Supplemental Nutrition Program for Women, Infants, and Children, 125 with
Mailing Address: P.O. Box 12666  Austin, TX 78711-2666

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Public Health Emergency Preparedness, and 25 with the National Bioterrorism Hospital Preparedness); o Department of Aging and Disability Services: 130 FTEs (113 with Guardianship Services and 17 with Foster Grandparent’s program in State Supported Living Centers); o Department of Family and Protective Services: 49 FTEs (30 with Child Abuse Prevention and Treatment Act Program, 16 in child care licensing, 2 in the Elder Care Project, and 1 in Refugee Assistance); and o HHSC: 22 FTEs (13 in Refugee Program; 4 in Home Visiting Program, 2 in Health Information Exchange, 2 in Texas Workforce Investment Council, and 1 in the Healthy Marriage Program). Long-Term Impact  State HHS agencies would likely need to make additional determinations on which functions are essential and would consider staff furloughs and reduction or elimination of certain client services. Texas Education Agency (TEA) Short-Term Impact  TEA reports is not very concerned about programs being unfunded, due to the fact that federal education programs have already been appropriated for the 2013-14 school year. Programs that receive only one appropriation (July) should not be affected. Long-Term Impact  For programs that receive two appropriations (July and October), TEA is not sure if USDE will be able to send award notices on Oct. 1. Programs affected include: Title I, Special Education, Improving Teacher Quality, and Vocational Education grants.  If TEA does not receive the notices, LEAs will be limited to the July appropriation (20 percent) for those programs.  If TEA does receive the notices but the government shuts down, LEAs will be able to spend the full appropriation. TEA, however, may be delayed or have difficulty drawing funds down from USDE.  If there is a prolonged shutdown and TEA is not able to draw down funds, it may have to reevaluate administrative fund use in order to meet payroll and vendor payments. Texas Department of Public Safety (DPS) Short-Term Impact  DPS would not furlough any federally funded employees, but would use authority given in the General Appropriations Act to arrange other funding to keep them on the payroll.  DPS is authorized for 512 Federal FTE’s in the 2014-2015 biennium (315 in Highway Patrol, 144 in Texas Department of Emergency Management, 2 in Law Enforcement

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Support, 10 in Finance, 6 in Intelligence and Counter Terrorism, and 35 in Administration). Long-Term Impact  Grants to communities and payments for certain operating costs would most likely cease until DPS can draw funds directly from the federal government for those payments. This may cause DPS’s sub recipients and contractors to furlough their employee’s based on the lack of funding for their payroll Texas Department of Transportation (TxDOT) Short-Term Impact  TxDOT does not expect the traveling public will see a reduction in service. Long-Term Impact  A shutdown of the federal government that delays federal reimbursements should have little or no impact. TxDOT was provided by the State Legislature the flexibility to manage cash flow with the issuance of short-term debt.  Project planning and execution should remain on schedule. If there are any delays it may come in the form of project reviews performed by federal agencies (e.g. environmental reviews). Texas Department of Housing and Community Affairs (TDHCA) Short-Term Impact  TDHCA may not be able to access or draw down federal funds. It is possible draws could be held without access to funds; federal data entry systems could shut down; or no federal personnel would be available to review financial matters.  Where permissible, the agency is attempting to draw down funds in advance of a shutdown. Not all programs allow this. For those that do, the agency would need to request a draw September 25 to receive funds by end of week. This may not be feasible.  In the initial 30-45 day window, agency FTEs would not be affected.  TDHCA also reported that in the last shutdown (FFY 1996) the federal agency deemed some personnel exempt and were allowed to process federal funds payments to states. Long-Term Impact  After 45 days, the agency would have to evaluate its workload and explore funding options for federally funded FTEs.  Federal funds for programs may not be available. This would not just affect the agency but sub-grantees, local providers, and other beneficiaries. The Federal Funds Team will continue to monitor Congress action on the CR for FFY 2014.

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cc:

Ursula Parks John McGeady Wayne Pulver Melitta Berger Jennifer Schiess Angela Isaack Mark Wiles HHS team Aaron Hendrickson Nora Velasco Thomas Galvan John Wielmaker Central Files

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