the minutes of the meeting of the house …of its title xx allotment for use in the health and/or...
TRANSCRIPT
THE MINUTES OF THE MEETING OF THE HOUSE APPROPRIATIONS AND SENATE FINANCE AND CLAIMS SUBCOMMITTEE - III - SPECIAL SESSION November 5, 1981
The meeting was called to order at 1:30 p.m. by Chairman Cozzens. The meeting was held in the House of Representatives Chambers. Roll call was taken and all subcommittee members were present except Senator Story.
DEPARTMENT OF SOCIAL AND REHABILITATION SERVICES (SRS)
Community Services Block Grant
GARY BLEWETT, Administrator of the Economic Assistance Division, SRS, said his presentation will cover SRS's approach to managing the Community Services Block Grant.
MR. BLEWETT said there are four major factors in the management of the grant:
1. Dealing with a 69% reduction in funds from what was available from last year. (The federal objectives remain the same as in the past.)
2. In federal fiscal year 1982, 90% of the funds available must go to the Human Resources Development Councils (HRDCs).
3. The HRDCs have been funded on varying annual cycles in the past, so some of the HRDCs have carry-over money from last year in their budgets now. Some coordination of the carry-over grants that exist in those HRDCs and the new block grant money is needed.
4. The impacts of the general economy and the new cut backs will have a negative effect on the poor.
MR. BLEWETT said those four factors set up the fra~ework in managing this grant.
MR. BLEWETT said the proposed objective in managing the grant is to allow for local initiatives to use the funds available to work out the locally determined solutions to offset effects of the cut backs on the poor. He said the reason for the objective is to give the opportunity to address circumstances that will occur in the granting of monies to the state.
MR. BLEWETT said in order to achieve the objective, SRS will be requesting proposals from each HRDC to address the objective. He passed out copies of EXHIBIT I which reviews the approaches that can be taken by each HRDC to achieve the objective described by SRS. (See EXHIBI'l' 1)
The Minutes of the Meeting of the Iiouse Appropriations and Senate Finance and Claims Subcommittee - III November 5, 1981 Special Session
Page -2-
MR. BLEWETT said SRS will receive those proposals by the HRDCs and go through an evaluation process. Some of the evaluation criteria would include:
1. Whether the proposal addresses the SRS objective.
2. Whether they include only the approaches contained in EXHIBIT 1.
3. Whether the proposals present evidence of other local delivery agencies and county commission involvement in and support of the proposal.
4. Whether they include other available funds, especially carryover community services funds from last year.
5. Whether the Community Services Block Grant costs, as SRS proposed, are within the amount available.
6. Whether the proposed costs are cost-effective relative to other known methods of delivery of services in that community.
MR. BLEWETT said the HRDC would then sign a contract with SRS to perform those services as specified in the contracts.
CHAIRMAN COZZENS then opened the meeting to public testimony.
The first witness to testify was Charlie Mahoney, from Miles City, Montana. Mr. Mahoney said there are senior citizens who need help but he stressed that the HRDC program should not be put into the Welfare Program. He said the HRDCs should be continued or something like the HRDCs should be started, as long as the funding was not put into the Welfare Program to help the elderly.
JEANETTE MAINWARING, Manhattan, Montana, also testified in favor of needs for low income people. (See EXHIBIT 2)
CARL DONOVAN, Chairperson of Montana's Power to the People, testified before the subcommittee. (See EXHIBIT 3)
LINDA CHRISTIAENS, representing the Board of Directors of Opportunities, Inc., testified before the subcommittee. (See EXHIBIT 4)
REPRESENTATIVE RICHARD MANNING, District 35, Great Falls, Montana, gave handouts to each subcommittee member which explained a bill he hopes to introduce during the 1981 Special Session of the Legislature. (See EXP.IBIT 5) Representative Manning said it is better to help the people now instead of forcing them into some
The Minutes of the Meeting of the House Appropriations and Senate Finance and Claims Subcommittee - III November 5, 1981 Special Session
other way of life. He said he feels this bill falls within
Page -3-
the scope of why the Special Session of the Legislature was called by the Governor and that is why he will attempt to introduce the bill.
CHAIRMAN COZZENS then opened the meeting to questions from subcommittee members.
REPRESENTATIVE WALDRON asked if there is a plan for geographic distribution of the grants to the HRDCs. Hr. Blewett said there used to be some geographic distribution but if the HRDCs do not distribute the funds as they should be, that HRDC will not receive the funds. Representative Waldron asked if it is SRS's intention to provide so~e guidelines in the distribution of funds. Mr. Blewett said SRS will issue some guidelines.
SENATOR AKLESTAD asked how many HRDCs are located in Montana. Mr. Blewett said there are 10 HRDCs throughout Montana.
REPRESENTATIVE QUILICI asked Linda Christiaens if her organization (Opportunities, Inc.) had contacted any of the other Community Action Program (CAP) directors of the state concerning the Community Action Act of 1981 (Representative Manning's bill). Ms. Christiaens said the legislation was written as a joint effort of the CAP directors. Representative Quilici asked if her organization had discussed the Act with the Director of SRS. She said they had discussed it with him and Governor Schwinden. Representative Quilici asked her if she thought this was the proper time to be introducing this Act when this Legislature will be looking at budget cuts for HRDC programs and trying to make sure that they will be properly funded rather than going into a special Act. Ms. Christiaens said she thinks the Act should be introduced in order to preserve the HRDCs and what they have accomplished and are now trying to accomplish.
REPRESENTATIVE QUILICI told the subcommittee he understood there were other directors in the state who are against this legislation and he would like to hear from them before making a decision on the legislation.
The subcommittee recessed at 2:45 p.m.
The subcommittee reconvened at 3:00 p.m.
Social Services Block Grant
CHAIRMAN COZZENS asked John Bebee, assistant legislative fiscal analyst, to review the issues brought forth by the LFA.
MR. BEBEE said the Social Services Block Grant is a combination
The Minutes of the Meeting of the House Appropriations and Senate Finance and Claims Subcommittee - III November 5, 1931 Special Session
Page -4-
of Title XX social services funds and Title XX training funds. The state will determine the types of social services to be provided by these funds. He said there is no matching requirement for these funds. A state may also carryover all or any portion of its allotment from one fiscal year to the next. Each state is authorized to transfer up to 10%, per fiscal year, of its Title XX allotment for use in the health and/or low income energy assistance programs.
MR. BEBEE said there are two issues with the Social Services Block Grant. The first issue deals with the estimation of Title XX funds. SRS has estimated the fiscal 1982 and fiscal 1983 Title XX block grant funds at $8,290,000 each year. The 1981 reconciliation bill indicates that national authorization for 1982 is $2.4 billion and $2.45 billion for 1983. This increase of 2.08% between the 1982 and 1983 levels should be taken into account for the state Title xx 1983 allotment. If this difference is taken into account, there would be $173,000 more Title xx funds than SRS has estimated.
MR. BEBEE said the second issue deals with Title xx funds distribution. The amount of funds authorized in the 1981 Reconciliation Act available for the 1983 biennium is $16,753,000. During the last session, Title XX funds were estimated to be $21,873,408 for the biennium. This is a difference of $5,120,408.
JUDY CARLSON, Deputy Director of the Office of Program and Planning, SRS, said the Social Services Block Grant replaces the first block grant ever made in Title XX Block Grants. She said the Social Services Block Grant is really the same program as the Title XX Block Grants. The money flows in the same way it always has. The difference in the new block grant versus the old block grant is as follows:
1. The state does not have to come up with any matching funds.
2. There are no designated target groups.
3. The new Social Services Block Grant does not require as extensive public participation.
MS. CARLSON said there are some things SRS will have to do, and have already done, in order to cope with the new cuts. Those things include:
1. Cutting down on administration costs.
2. Making greater use of private adoption agencies.
3. Requesting $6.1 million in general funds appropriations.
The Minutes of the Meeting of the House Appropriations and Senate Finance and Claims Subcommittee - III November 5, 1981 Special Session
CHAIRMAN COZZENS opened the meeting to questions from the subcommittee.
Page -5-
SENATOR AKLESTAD asked if SRS has a priority list for services if SRS does not receive the additional $6.1 million from this special legislative session. Mr. John LaFaver, Director of SRS, said they had received a request from Chairman Cozzens to make a list of those services which would be priorities. He said SRS is preparing a scenario of what will happen if the funds are not made available. That scenario will be provided to this subcommittee during the first work session of the subcommittee.
CHAIRMAN COZZENS thanked all of the people who gave testimony during this meeting.
CHAIRMAN COZZENS entertained a motion to adjourn. Representative Lory made a motion to adjourn until 9:00 a.m., November 6, 1981.
The meeting was adjourned at 3:25 p.m.
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EXHIBIT 1 11/5/81
APPROACHES THAT H.R.D.C.'s MAY USE IN THE CSBG PROPOSALS
To provide activities designed to assist low-income participants including the elderly poor;
(i) to secure and retain meaningful employment,
(ii) to attain an adequate education,
(iii) to make better use of available income,
(iv) to obtain and maintain adequate housing and a suitable living environment,
(v) to obtain emergency assistance through loans or grants to meet immediate and urgent individual and family needs, including the need for health services, nutritious food, housing and employment related assistance, .
(vi) to remoye obstacles and solve problems which block the achievement of self-sufficiency,
'.
(vii) to achieve greater participation in the affairs of the community, and
(viii) to make effective use of other programs related to the purposes of this subtitle,
To provide on an emergency basis for the provision of such supplies and services, nutritious foodstuffs, and related services, as may be necessary to counteract conditions of starvation and malnutrition among the poor;
To coordinate and establish linkages between governmental and other social services programs to assure the effective delivery of such services to low-income individuals; and
To encourage the use of entities in the private sector of the community in efforts to ameliorate poverty in the community.
i -:.~. ~ "
LOH INCOHE ENERGY ASSISTANCE PROCRAM
DEPARTMENT OF SRS
1. Variables that must be g lvcn special attention:
A. Severity of the coming winter. B. Number of recipients who will usc the program. C. Exact amount of the federal grant.
2. Method to be used to control for variables:
..
A. Haintain carryover balances in LIEAP recipient accounts with energy vendors.
B. Use the minimum estimated federal grant as the basis for program planning and subtract Indian tribe allocation and 10% for administration. ($10.3R - $2.oR - o.aH = $7.SH)
C. Separate $7.SM program funds into three funds: (1) energy bill payments (October thru March), (2) home weatherization fund (April thru September), and (3) a contingency reserve.
(1) @ 75% of program funds or $5.63M (2) @ 15% of program funds or $1.13M (3) @ 10% of program funds or $0.75M
D. Set initial eligibility to include at least those eligible last year, but eligibility for payment of bills onl~ after credit balances in vendor accounts have been used up.
E. Use an estimator of energy consumption for each recipient for the period October thru March (or later than October if the recipient applies later) that adjusts for (1) size and type of dwelling, (2) type of energy used, and (3) the typical severity of the winter in the area where the recipient lives.
F. Make payments directly to the energy vendor in periodic increments based on the estimate of energy consumption thru March.
G. If it appears that the winter is less severe than typical, adjust the estimate of energy consumption and later payments to vendors accordingly.
H. If it appears that the winter is more severe than typical or more recipients have become eligible than planned, adjust the estimate of ene~gy consumption and later payments to vendors accordingly, and in sequential order as needed:
(1) draw down the 10% contingency reserve, then (2) draw down the home weatherization fund, then (3) limit eligibility to include only the finan-
cially needy'elderly and disabled for shbsequent applicants, then
(4) cut off intake of all applicants.
(over)
LOW INCOME ENERGY ASSISTANCE PROGRAM (continued)
I. If federal grant is less than tIle idcntificd minimum, reduce the home weatherization fund accordinglY.
J. If emergencies or natural disasters occur, draw down the available contingency reserve, then the Home weatherization fund.
K. If FFY 82 federal grant surplus remains at the end of the year (September), up to 25% of the grant may be carried over to the next year.
3. Home weatherization fund:
Home weatherization (i.e. insulation and weather stripping) of low income residences will be implemented only to the extent that, within a relatively short period of time~ the weatherization investment would be offset by reduced energy payments.
SENATE FINANCE AND CLAIMS AND HOUSE APPROPRIATIONS COMMITTEE
SOCIAL WELFARE AND LABOR SUBCOMMITTEE
Nove~ber 5, 1981
EXHIBIT 2 11/5/81
Chairman Cozzens and Members of the Committee:
I am Jeanette Mainwaring from Manhattan, Montana. I am here today to talk
to you about the needs of the low-income people in my area.
Many of the people are as nervous about how the programs will be run as I
am.
I get only $100 a month from a Navy allotment to live on. I rely on food
stamps and the fuel bill program to get by.
The HRDC in my area has been very helpful to me and other low-income people
and I am very concerned about keeping it going. It provides a lifeline for many
of us.
would not like to see the HRDC programs transferred to the welfare offices
because they have enough problems to iron out already and having the HRDC programs
would only cause more problems. Also, the elderly people would not like to go
there because of their pride.
Thank you for your time to listen.
TESTIMONY Presented To:
Social, Welfare, & Labor Program Budget Committee November 5, 1981
EXHIBIT 3 11/5/81
Representative Cozzens, members of the Committee: My name is Carl Donovan. I
am speaking as the Chairman of Montana's Power to the People (MPP). MPP is an
autonomous low income group c It has helped low income people to participate in the
democratic process. We have come together to identify issues of concern to us and
we are learning to take control of our lives and to make positive contributions to
our community, One of our members was appointed to serve as Chairman of a Citizens
Advisory CommittEc.E: appointed by the Great Falls City Commission to make recommenda
tions on allocating Community Development Block Grant funds. MPP members have served
on the Economic Growth Council, the United Way Board of Directors, a Montana Power
Company Consumer Task Force and the Great Falls Housing Authority. Two MPP members
participated in Leadership Great Falls, a program sponsored by the Chamber of Commerce
to develop f.uture communi ty leaders, Many of our members came before you in the last
two legislative sessions,
We believe that community action is one of the most positive, constructive responses
to poverty 1n this country's history. I would like to provide some information on com
muni.ty action for this committee.
There are t.wo ways to help people, To use an example I heard President Reagan use
on tele\'i&lon last week, "If you give a person a fish, you feed him for a day. If you
teach the person to fish, you feed him for a lifetime."
The community action approach is more. the latter - to provide a helping hand
racher than a handout.
Specifically, the mission of CommuIlit:y Action Agencies is:
-to involv~ low income people in identifying poverty problems; -to brlng them together \\lith decision-makers in the community in order to deal with the root causes of poverty; and
-ultimately, to enable them to become self-sufficient, contributing members of theit' communi.ty.
The solution to poverty cannot be to "do for" poor people. It must be to pro
vide opportunities for poor people to do for themselves,
Montana has ten (10) community action agencies \\Ihich serve the entire state.
These agencies are also known as Human Resource Development Councils (HRDC's).
What have they accomplished in terms of attacking the causes of poverty? Since
I am from Great Falls, I am more familiar with Opportunities, Inc. the community
action agency that serves District V - Cascade, Chouteau, Glacier, Pondera, Teton,
and Toole counti~s.
I would like to review some of their accomplishments with you.
Our Community Action Agency has played a significant role in improving the
educational achievement.s of low income and minority students.
Prior to 1976, no stat.isrics were kept on dropouts or graduates by race;
but in 1966 the annual drop-out rate for Indian students in Great Falls was esti
mated to be about 21 to 22%. In 1980, the drop-out rate for Indian students was
down to 1108%. That is a significant improvement.
What happened in that fifteen (IS) year period, and what was the Community
Action Agency's role? In 1966, the Welfare Department asked Opportunities, Inc.
to initiate a tutoring program for low income students. A volunteer solicitation
provided over four hundred (400) tutors, from retired teachers to college and high
·school students, as well as retired seniors and military personnel.
The Community action agency also worked with Indian parents and school district
officials in dealing with the particular problems that Indian students were experi
encing in the public schools_ The result of those efforts is the School District's
Indian Education Program. This program has reduced the annual drop-out rate for
Indian students to 11.8% in 1980. A study conducted last year credited the District's
Indian Education program with increasing both attendance and gradepoint averages
among Indian students. I think the School District is to be commended for the pro
gress that has been made in this area, Dr. Merton McClusky, the Director of the
program was recently chosen Indian Educator of the year.
This is also a good example of how community action should ideally function in
terms of solving poverty problems, The community action agency got low income people
involved in solving their own problems (kids studying and parents involved in their
children's education), They made other people in the community aware of the problem
and promoted their contributing to the solution through the tutors and by working with
the school district officials. And then they backed out of the picture. The role of
a community action agency is co be a catalyst that helps to bring about improvements
in the institutions of the community that will last, because the institution - in
this case the education system - has assumed responsibility for solving the problem.
Trying to deal with the root causes of poverty implies trying to prevent the
problem whenever possible, This is what the Head Start Program is all about.
-2-
Tnvolv{'ml'nt of poor l)('oplr Is one or tIl!' most' Imporlill1t 8!>PC('t'!\ o( tll(' ronunlln
Ity actIon ml!;sion. Lllvolvclllelll bllLlds sclt-collltllCIlCt, lind n :;('11::,' oj' p.rldl·. Il
develops within the persoll a sense of having thr ability to take control of their
lives, to contribute - and without this kind of ,qttitllde, there crln be no self
sufficiency.
Senior Ci tizens m;lke tip il good prol'<1rt 1<111 "I the pPOI'. TII(' ""llllntlld tv action
agency wrllte the grallt ;l)pJl.cilLloll lor Lile S"ttfllr CILlY.I'I1!l Cl~lIt!'r III /!I('n! F:dIH,
and operated the progrnm for five (5) yenrs, IIntil the county Cl!'lSIIIllPli responsi
btU, ty for tIl{' propy:nll.
They also started the Retired Senior Volunteer Program and raIl the program
for one year before it was taken over by the City.
UnemploymEo'nt is probably one of the major (,.111SC.S of poverty; nnrl it Tf'ally
has to be ~Itlild<cd from th'l) dJrecL.i,olls: hcl.,dllg tltc 1'l'l'S(l1l bet'l)IllI' "IllPl()yahll"
and creating mor.e joh~:;. Community action's ilrca of experti.se has ])('('n man:'
the former - helping Iwnple to become emploYilhlC',
In 1978. an outside evaluation team conducted an eva1 uation to tletermine
the 1mpact Oppor.tunJtJ(·s, Inc. had on tit" l'Ollll1ltlllity :md I'll the pcn!'l,. they had
served. During this evaluation, the team interviewed ~4 p~ople who hild re~eived
services from Opp. Inc., and 31 public officials, educators, agency directors, and
members of the medii!.
I'd like to quote briefly Fl'OIn that evaluation report: "ConsulIlers or the
(employment) progri3ms credited the community action agency with sirnificant changes
in skills, earning cap;lcity, saving money, [lnd increased sl>lf-confidcnce. Several
mentioned jobs they were uble to find, crediting the agonry fully. The agency's
role in boosting self-confidence was the most outstanding aspect to I'omp through
from (these) interviews. The general tone was one of optimism revc~ling a sort of
new lease on life."
In addition to help:lng people rtnd inbs, community action nr,('ncies hn.ve ilhr:1\'S
fell tll,lt they slwlI1.d Lit, l'vl'rythillj; they "l'llld tt' ~;llppl'rt .,tl\('I'~i' ,'j torts In I Ill'
community to develop Johs.
For example, in Great Falls, the communJty action agency hired ol per.:::on to
assist tn preparing {t fecler.nl grnnt npplic<ltloll ror .1 now nirport 1'C'rmin.11. This
hclpcd to unlry tile l'Olllll1l1lllly IH·hllld [II(' ;llrpnrt, ;lIlei 1'(':;1111'('(1 In jll" pl:IC('rnCflI:H
for some low income peop] c at tlte nelv al rporl:. ~li1ny of thf'se flt'oP 1 (' s Ul1 hold
these jobs.
Iflgh (1)(1,( COHtS 'I,IS bel'li rated a major probll'm hyJIIIoJ income p(·ople. In
grams in each coun ty tha tare run hy th (0 ] O\v income people, thcrnsf'l ves . tow
income people In Toole County organized fundraising proJl'I'LS ill order 1:0 huy a
rototiller. Three (3) other rototillers and som£' seed were donated. Land and
water have IH'PIl donatt'd for :i.l1 till' gnrdl'll I'r(\gnllll!~. COlllllltlnit)' :1(', Ion IIgl'llCll'H
work with the Extension Service to provide education in stich areaf; as: garden
ing, canning and storing food, how to prepare nutritious, low-cost meals, etc.
I,ow in('olliP people· In [ollr rULd cO\1l\ties ,In' opcr.at,lng :I Foorl Co-op tlwt
they t>stimate saves members 6-UI.: on food co~t~. TilL' CO-lIP is rtlll {lltntly by
volunteers.
The question before you now is whether activities slJch as I have been
describing will continue in Montana. Or to put it nnothpr way, 18 it more cost
effective in the long run to continue to provide funds only for dep~ndency
creating programs or is it more cost-effpctive to invest a little III pr.ogr:lms
that help move people off welfare? Welfare is necessary. Community action is
also needed.
Will Montana limit its response to the needs of low income cit J~el1S to pro
viding a safety net of essential services - or will it a180 support programs that
help people to climb out of tht' nL't?
State commitment is needed in 11 nllmhcr of ar(;!.:1s: Economic J)cvcl.opment - We
must create more jobs in Montana.
Job Tra,lning - We mllst assure that we sllpport programs thnt llI:lke 1.t plHlslhle
for all Montana citizens to earn a wage on which they can support their families
and which allows them to advance themselves.
Day Care is needed in order to Llllrl\" slll!-de> pan:'l1tR to ,,'C'rk.
~'R~()io"t~:i«eo:tJ.~~4;If!e~i o~ \if~:t~~~1!~;oe±<:rt±un has developed legislation
that commits this state to a policy of promoting the ability of its citizens to
become self-sufficient. This is also the intent of the Community S~rvices Rlock
Grant. I strongly urp,c you to ~mpport th j,s bill.
Three other states have Illre;I(.ly p::w'H'd legislation similar to t'hls. Mnntnna
has always been a leader. That is why I am proud to be a Montanan. I hope that
YOll will contInue th;lt t:rnditioll III dC'vC'lllpi.ng cl"C'lItiv(' W:lVS to rC'Hpnncl to th~
"Ne\., Federali.sm" that ,vllJ. Pllt ~1(lnLlllan8 to \'.fOrk nod that ,dll ('IW""I':1,'~e :111 citi-
hop" VOII , ... 111 ,":Ike it
possible for cornmtlnl ty IlCUOIl lIgl'IIC I ('~; to ('onl 1mit' to ilt.t;l!'k tlH' _(·.:',II~l.c.f! of poverty
rllthC'r thnn ml'rc'ly pl"()vldlng ('!lAI'IIII:1l n"rvll'('!1 t'ftnl" 1Il:1II1t:tllI till' JI,,"r :11' th.·lr
l:urr"llt levl'l of mhll~ry. COlllmunity act Inn 11:1:; n proven r('coru of :H\('C(,Hl'. It
deserves YOl1r support.
\', III ,
/ ,. r.
Carl n .. novan Chnirpcrson, Montann's rOl.,tcr l (I the T'1'''ple
.' TESTIMONY
Presented to the: Social, Welfare, & Labor Program Budget Committee
November 5, 1981
EXHIBIT 4 11/5/81
Representative Cozzens and members of the committee: My name is Linda Christiaens.
I am representing the Board of Directors of Opportunities, Inc., a community action
agency serving six (6) counties in north central Montana. I am here to urge you to
pass legislation that will commit Montana to continue the efforts of community action
agencies to help low income people help themselves to become self-sufficient.
Community action agencies were created as an alternative way to deal with poverty.
They try to avoid creating dependency by promoting self-help. They involve the entire
community in dealing with the causes of poverty.
The Economic Opportunity Act, passed in 1964, authorized the creation of private
non-profit corporations (community action agencies) that would be controlled by a
Board of Directors. One-third of the board members are public officials, 1/3 are
elected by low income people, and the remaining representatives come from the private
sector, including business, labor, private social service organizations, community
based, and religious groups.
These Boards are responsible for assessing the needs of their own communities
and for determining the local causes of poverty. They also analyze what other
resources in the community are doing to address those problems and identify where
there are service gaps. The Board is then responsible to set priorities and to
establish goals that will address the causes of poverty and promote the development
of self-sufficiency among low income people.
The Economic Opportunity Act was not reauthorized in this last Congress. How
ever, Congress did pass a Community Services Block Grant that continues community
action but that shifts responsibility for it to the states.
A committee of the Montana Community Action Directors Association has proposed
legislation that would continue the community action approach to solving poverty
problems.
Its purpose is to mobilize human and financial resources to enable low income
citizens in Montana to become self-sufficient.
It is based on the philosophy that Montana can achieve its full economic and
social potential only if every individual has the opportunity to contribute to the
full extent of his capabilities and to participate in the workings or our society.
It commits the State to a policy that will promote the ability of its citizens
to become self-sufficient by opening to everyone the opportunity to live and work
in decency and dignity.
The proposed legislation states that it is highly desirable to employ the
resources of the private sector in all efforts to promote self-sufficiency.
The legislation provides for community action agencies and programs, prescribes
the structure and describes the function of community action agencies, and authori
zes financial assistance to those agencies.
It would continue the existence of community action agencies which have been
designated under the Economic Opportunity Act. These agencies have already been
designated by the Governor, and by the "County Commissioners from the counties each
community action program serves.
It would also continue the existing structure of community action agency boards
of directors.
The proposed legislation states that, in order to carry out its overall respon
sibility for planning, coordinating, evaluating and administering a community action
program, a community action agency can receive funds from many sources: from this
act; from private sources; and from Federal or State assistance programs.
Using language taken directly from the Community Services Block Grant, the
proposed legislation states that funds available under this act shall be used in
conjunction with other financial resources to:
Provide a range of services and activities having a measurable and
potentially major impact on the causes of poverty in the community
and to
Provide activities designed to assist low income participants,
including the elderly poor:
-to remove obstacles and solve problems which block the achievement of self-sufficiency;
-to secure and retain meaningful employment; -to make better use of available income; -to attain an adequate education; -to achieve greater participation in the affairs of the community; -to obtain and maintain adequate housing and a suitable living
environment; and -to meet immediate and urgent individual and family needs, including
the need for health services, nutritious food, housing and employment-related assistance.
-2-
•
Funds shall also be used to coordinate and establish linkages between govern
mental and other social service agencies to assure effective delivery of services
to low income citizens and to eliminate duplication of services.
Finally, funds will encourage the involvement of the private sector in efforts
to develop self-sufficiency among citizens of the community.
This legislation is an alternative to merely providing essential services that
may keep a person alive, but which undermine their sense of dignity and which are
counter-productive to developing any incentive to take control of one's life.
While the community action approach may cost more that just providing essen
tial services, it is more cost effective in the long run because it interferes with
the poverty cycle.
The decisions that you make during the Special Session are critically important
to Montana and to its future,
We are facing huge budget cuts, a depressed economy, and policy changes that
have inadvertently removed most of the incentives to get off welfare that were built
into the system.
As state legislators, you have a tremendous responsibility to set the over-all
guidelines that will determine how Montana will respond to the challenge. People
are looking to you to set a direction that will benefit all citizens of Montana.
You will be making decisions that will determine whether this state will limit
its response to poverty to providing direct services that are needed by some, but
that are dependency-creating --
Or whether we will adopt a policy of promoting self-sufficiency among our citi-
zens whether we will adopt policies that will create jobs -- whether we will
provide job training opportuni.ties -- whether we will support qay care so single
parents can work -- whether we will continue community action -- which has a proven
record of success at helping people work their way out of poverty.
As a taxpayer, I want my tax dollars to be used to help people get off welfare.
I want this state to adopt policies that counteract situations that result in people
continuing to be a drain on their communities. I want policies that encourage and
help all citizens to become contributing members of their communities. I have per
sonally seen community action do this in Great Falls. I urge you to assure that
community action is continued.
Linda Christiaens 917 Sixth Avenue South Great Falls, MT 59405
--3-
EXHIBIT 5 11/5/81
OCTOBER 8. 1981 ATTACHMENT "A"
STATE OF MONTI\NA
INTRODUCED
By
Referred to COMMITTEE ON SOCIAL. WELFARE, & LABOR PROGRAM BUDGETS
An ACT to fliODil ize human and financial resources to enable low-in::omc citizens In Montana to become self-sufficient.
1 Be it lNACTEO by the Senate and House of the State of Montand
1. a. Tids act shall be known and rnay be cited as the "Community Action Act of 1981".
b. A':> used in this act, "Oirectur" means the Dirpctor of tne Dep(~.'tment of Social & Rehabilitation Sprvices.
2. The Legislature hereby finds d"d dcclarl~s that:
Montona can achieve its full f-(onomic Clnd social potentHI only if ~very individual has the opportunity to contribute to f,lle full extent of his capabilitil" and tr ;I,wticir;;t,e in th, ~'/ork-
i(\~s of our society. It is, t!,erefore, the policy of tl:i. Stdt.e to prolllote the abl1ity of its citizens to recome selfsufficient by opening to everyone the opportunity to livf "Ind wOI'k in decency and dignity. It is th~ purpose of this ad to strengthen, supplement and coord i na te efforts in furtherdr,ce of that pol icy.
It is the sen<;e of the Le9isli:ture that it is highly de~;lable to emp loy the resources of the pr iva te ',ec tor of the p.con:~ly of thlS State in all such efforts to furthel' the po', icy of u.is act.
3. This act provides for cOITullun;ty action tlgencies dnd programs, prescribes the struct~n'e und d(·scribes the function of cnlHmunitv action agencies, and authorizes financial assistance to «("'llnuniLj action agencies and related projects and activities. Its basic purpose is to stimulate a bettrr focusing of all available local. St.ate. priV(1tp and Federal l'e5fJUrc('s upon the goal of enabling low-income fdll1i1ies and 10\,;,-i".:011l0 inuividuals pf 011 (lIJl'< in rural and urhan areas to attain the skills, knowledge and lIIotivdtions and secure the op!"ortunity needed for them to become fully self-sufficient.
Its slll'(~ific PUI'IIOSCS ilrr 1.0 Il)'Olllllff', oS Illd.hnds of ,lchirvilllJ a bettpl' focusing of resources 011 !he lJoal of illdividual I1tHI
family self-sufficic'ncy. "he follm"irHJ:
d. the strcngLiHlninq of cOllllllllllitv (jlPilhilitic'i for pl,lnnin<1 and coordinating Foderal, St,]lc tllid oLht't' l,~sourccs, so Lhill. lhese ".l'rvices ilt-C more rl'<;ponsiv(' to local needs ami conditiul)s and so Lhat duplication is eliminated wherever possihle, thnJlJqh the efforts of local officials, orQanizations and interested and affected citizens:
b. the hetter ot'tFlnization of a t'ilfl~(l of scrvices rr:lilted to the n(~('rls or till' IU(J)', ';0 lIlaL thc(',c 'J'rviu"~ IIl.ly he Illi)1lf' morf' (.(! I'Ct.
ive and efficient in helping famil ies and individuals to overcome particular problcllls in a way that takr.~; account of and supporl". their prooress in oVcrcolllinr) rclal.('d rll'oblcllls;
c. the greater use, subject to adequilLe evaluation, of new tYDes of services and innovative ilpprOac.t1es in attacking CCluses of poverty, so as to develop increasingly effective methods of (>lI1ploying available resources:
d. the development and implementation of all programs and ~lt':1jects des i gned to sel've the poor or 1 ow- i neorne (11".'(1 S \'Ii til the lTIax illllll '1
feasible participation of \'esidents of the areas and Illernber~ !,f the group served, so uS tn best stiJllllllltr' ilnd ti1ke fIll 1 arlvill1ld~e of capabil ities for seH-lIdvilnCCJ11/,nl one! assure that those pl'ofjranls and projects ar(' othr:rwi~(' I1lC'Jnin~flJl one! Ividcly llt'ilized by their intended beneficiaries; and
e. the broadening of the reSOl/rc(, bilse of llt'o<]rall1s directed tu the d (' v C 1 0 pill C n t (' f self - s II f f i c i P. n (\' ~,O ,) S to sec u r e, i n .vi d i t lt1ll
to the services und assistance of 11uhlic officials, {'rivatC', religious, charitable and neighbornood organizations, and inu:vidual citizens, a lTIore active role for business, labor and professional groups able to provide emploYllIent nnpol'tunlties and othen'lise influence the qUJntity and quality of services of concern to Il,e
poor.
4. a. A c.olillllunity llcLion agency shall tw a pll:)lic or I"'ivatr. l1on-proflt agency, or organi7aUon whicll has b(l('11 dcsi<Jnated by the ~nv(\:n()r or a pol itieal subdivision or combination of rial itical *(consti luted U-.iJt) ** subdivisions which*:
(1) has the power and authority and l'Ii11 perrOt'l1l the functions set forth in seetioi) 6 of this act., incllldilll.j the pOI'Jer to cntrr into C( 1I1tl".lctS
\vi.th public and private agencies ilnd orgil.nL~iltions to assist ill fulfilling the purpnses of this det, rlnd
(2) is determined to he capable of pldnninq, (Ilndw:t:it)(l 'l(hllillir.l~'I·:nlj ilnd evaluating a COlllllluni t.y action pro~Jr(jlll (HId is clHTl'lll.ly dpr, iIJII.d,crJ i)', a community action aqPI1CY of recirY'al l.wor Ul(' Governor.
*b k 1\ COlllllllln i ty ilC Li Oil pt'o~r<lm i '; ,I cnlllrllill i ty lid ';('<1 illid oper;l/rld l,rO(p'i111l
which:
2
(1) int:lllCles or i~ d(";iqtlclt\'d to incllHII' .1 ·;lIffir.il'nt ntllllbf'r of projects 0)' C01I\p()llcllL~, to provide, ill SUII\, ,) rallfje 01
services and activities having a measurable and potentially major impact on causes of povr.rty in the community or thO'-,e Jr/~,l· .. of LlH' r:OIl.lll1l1ity wlll'rp pl)v('dy i'; II pilY'f.inJl,wly dfllLr
pl'oblem;
(2) has been developed and which ol'ganizes tlnd cOlilbines its compunent projects ann activi! irs in a manner appropriatp to cJrry out all lhe purposes nf tilis ,lct; (J'ncl
(3) conforms to such other supplementary criteria as the director may prescribe consistent with the PlJrpose~; and provis·ion<. I)f this act.
*(b)**c'll Components of a cOllimunity ilction prograll1 may be ildlll'fl i <;
tcred by the community action ilgellCY, \,'hcl'e con',istent I'litn sound and efficient m(lnagcll1cnl and al1pl icablc 1 i1\v , or by other agencies. They Illay be l't'ojects rligib1c f()l' assi',fanee under this act or proj<:r.t·) assisted fY'OIJl other public or private sources; illlJ they Illdy br either specially de·)i'~nated to ll1eet local needs, or design(·d pursuant to the eligibility standards of a State or Federill pro9ralll providing assistil'lCe to a particular kind of activity which will help in meeting those needs.
*(c)**d* for the purpose of this all., () cOllllllunilY is defined (\s those multi-county units prcsl'lltly dl'siqnatcd (I'; Human Re~ollrce Development Uistrict·" irrespective of lJoundaries or political subdivisions, whil.h provides a suitable orgilnizationa1 base and possesses ~Ite cOlllll1onality of interest needed for a community action "ro9ralll.
5. a. L.lch cOllllllunity action agency shall administer its proqram ttll"ough a cOllllllunit'y aclion bOMeI which shall lllcd the r('(lIlircmenls of subsection' b. of thi<. section.
b. Each board to which this subsection applies shall con~ist of not more than 51 and not 1rss Uwn 9 Illpmbers and shall be so *(subdivisions which)*cnnstitllf:r'd that*;
(1) One-third of the melllbL'I's of till: LOMd (II'!; elcctl'd plII>lil.; officials currently holding office, or their designees, excppt. thtlt. if the 11t1f1lhl'I' of l,l('ct('d officitlls 1'C'asolltlbly available' and \v;lling to c,ervl' i~; le~;s thrHl In of tfH' I11clllbershilJ of the board, Illcl11bcl'sliip on the Gout'd of ilppoilltive public officials Illay be counted in I11cetin~1 ".lIch 1/3 requ; remen t;
(2) At least 1/3 of the nlclll!J(~r5 of th(~ bo.wd (we pr'I";OW; ch(l-,'>Il in accordance \Vi th dell1ocl'a tic se 1 cct i on procedures adr.ql"ne to c1~;sure thut Lhey are t'(lpresr:nl.iltive of lh(: puor in till' area served;
(3) The rcmainclrt' of the 1ll(,11l1)(~rs of t.he bO(lrd iI)'C officiill~. or llIembers of business, industry, lohor, religious, welfare, educati.on m' other major groups and interests in the corrmunity.
Each member of the board selected to represent a specific geographic area within a comnunity shall reside in the arra he represents. No person selected LInder paragraph (2) or (3) of this subsection as a member of a board shall serve on such board for Illore thall 5 cOllsecutive ycars, or 11101'(' th(lll il totill of 10 years.
c. Where a cornnunity llction agency places responsibility for Illajor policy delernlillutiolls wilh rcspl'cL to till' tHhllinisLration and operation of programs to be carried on in a particular geographic area within the cOlllmunity in a subsidiary board, council, or similar agency, such board, council, or agency shall be broadly representative of stIch area. Each COllllltlllity (ldion a~1Cncy Shilll be cl\collraq('d to make use of neighborhood based organizations composed of
/ residents of the area or l1lp.mhers of the qroups served to assist such ugency in the planning, conduct, and eVi11uation of components of the community action program.
6. il. In order to carry out its overall responsibility for planning, coordinating, evaluating tlnd (1clillinistcring il community action program, a community action agency shall have authority under its charter or applicable law to receive and administer funds received pursuant to this act, funds and contributions received from private or 10c .. l public <,(lurces which may be used in support of a COllllllllllity ilction progralll, (llld funds received under any Federal or State assistance program pursuant to \'Ill; ch a pub 1 i c or pri va te nonptofit agency, as the case may be, organized in ilccordilnr.e with this act cOllld act as grantee, contractor or spunsor of projects appropriate for inclusion in a community action program. Subject to applicable Federal law or regulation, cOllimunity action agencies are exclusively eligible to receive Federal funds contained in Federal block grants which have been previously designated as anti-poverty funds. A community action agency shall also be empowered to transfer funds so received and to delegate powers to other a~Jencies subject to the powPt'S of its gov()l'ni 11</ booni and its overa 11 pl'Og-ram respons i bi 1 i ti es. ., hi s power to tl'(lnS fet' funds and delegate po~'/ers shall include the rower to make transfers and delegations covering component projects in all cases where this will contribute to efficiency and effectiveness or otherwise further pro0rarn objr~ctive.
b. In exercising its powers and carrying out its overall respon-sibil ity for a cOllllllunity uction pn)grilfll, a cOlTllllunity action agency sh~ll have, subject to the purposes of this act, at least the following functions:
4
(1) Planning systolllatically for i1nd ('vi11uatiI10 the proqrillll, including ilCtiOlls to dcvplop infol'lilation as to the problems and CilUSCS of poverty in the community, determine how much and how effectively assistance is being provided to deal with those problems and causes, and establ ish priorities among projects, activities and areas as needed for the best and 1Il0st efficient use of resources;
(2) Encouraging agencies engaged in activities related to the cOlmlunity action program to plall fOI', secure and administer assistance available under this act or frrnn other sources on a common or cooperative basis; providing planning or technical assistance to those agencies; and generally, in cooperation vlith community agencies and officials, undertaking actions to improve existing efforts to attack poverty, such as improving day to day communications. closing the service gaps, focusing resources on the most needy, and providing additional opportunities to lowincome individuals for regular eillployment or participation in the progrilllls or activities fot' which those community action agencies and officials are responsible;
(3) Initiating and sponsoring projects responsive to nreds of the poor which are not olherwise being lIIet, witil parlicular emphasis on providing central or COllllllon services that can be drawn upon by a vJriety of related programs, developing new approaches of new types of services that can be i Ilcorpora ted i 11 to 0 thor prograllls, clnd fi 11 i ng CJ<lpS
pending the ('xpJllsioll or IIlOdir-ic.ILiol1 or lhos(~ I'I'oqrllIlIS:
(4) Establishing effective pr'-lCedures by vlhich the poor and area residents concerned vli11 be (~nilbled t.o infl"(~r1(' th(' character of programs affecting their interest, providing for their regular participat.-ion in the implementation of those pl'ograms, and providin~J technical ilnd other support needed to enable the poor and neighborhood groups to secure on their ovm behalf available assistance from public and private sources; and
( 5) J 0 i n i n 9 Iv i t han cf ell C 0 {11" il () i 11 ~I I)[J S i 'l(~ s S, 1(1 b (1 r tln dot. /l e r private yroups and organi7atiuI1s to lInde,-t<lke, to£)('thC'l' with public officials and agencies, activities in support of the cOllllllunity act"ion progr()111 which will result in the additional use of private resources and capabilities, with a view to such t.hill~lS ilS deve1opin(j new clllploYl1lr~nt oPI10i'tunities, stilJllllatill~J investment that will have a 1l1('d'.urJble impact in reducing pOlJe)'ty amOll<lI'Csidents of areas of concentrated poverty, and providin~J IIlctilods by VJhich residents of those arCilS Ci1n \'JOl'k wi til pr-iva te grours, finne; and institutions in seeking so'lutions to problems of COlllmon concern.
!. ii. The Oirector lnilY provide finc1nciill Jssistance to cOllllllunity action ~gcncirs for thr pl~nnin~. conduct. i1dmini~tration and evaluation of COlIlIllUllity deLion ~lt'ogrdll\S dnd COllll·>Ollents. funds available under this act shall be used in conjunction with other financial resources.
(1) To provide a range of services and activities hJving a measurable and potentially major impact on the causes of poverty in the comnuni ty or those areas of the conllluni ty where poverty is a particularly acute problem:
(2) To provide activities designed to assist low-income participants, including the elderly poor. - to relllove obstilclf's and ~()lv(> prohlcilis Ivhi!"!) blor.k the
achievement of self-sufficiency; to secure and retain meaningful employment, to make better use of available income; to attain an adequate education; to achieve greater participation in the affairs of the community; to obtain and maintain adequate housing and a suitable living environment; to meet imlllediate and urqrnt individual and family needs, including the need for h~alth services, nutritious food, housing and employment-related assistance; and to make more effective use of other programs related to thi s act.
(3) To coordinate and establish linkages between governmental and other social service agencies to assure effective delivery of such services to low-income citizens and to eliminate duplication of services; and
(4) To encourage the use of entities in the private sector of the community in efforts to develop self-sufficiency among citi zens of the community.
The above 1 is t docs no t precludc' ilny other ac ti vit i es that are compatible Ivith the purpose of the act: to enable low-income citizens to become self-sufficient.
8. The director is iluthori7.cd to adopt rules and regulations appropriate to the carrying out of this act and the purposes thereof.
9. There sha 11 be appropri '\t.ed to the D('pr1rtlTl(~nt of Soci a 1 and Rehabilitatiun Services such ~.IIIIl:; il~; ilr(~ nCC(~(;SiJY'y to 1)(' made available to community action agencies for the planning, conduct, adlllinistration ond evaluation of community action programs,
10. This act sholl lake eff'ect illllllcdialcly.
6
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WhaL vie are sublllittin9 is i1 "bure bones" budget.
Opportunities, Inc. is basic1111y <1 10\'/ income pel'SOl1 l S advocl1cy
organization. The budget presented here i:; dralm up vlith that
principle in mind. The P/\ 01, Conduct & /\dministration pOl'tion "is the
administrative arm for ftll the rest of our grants It/hich total 1':011
over $3,000,000.00. The pJ\ 05, Local Inilltive is pilre <1dVOCilCY, there
a\'e no services provided. This portion of the grallt has some
administrative staff included, but t.hey orr hasicillly tied to pro
grams such as planning, It/hich C(ln and is (1150 gCilred to COllll111111ity
problems, cOtllmunity drvelopll1rnf, ('lllploYIll('I1L (lnd Lrilininq, and
community monitoring of the equal emplo~ncnt act..
Although we do provide services thrOiJ~lh many of Ollr olher grants,
tha tis not the bas i c plan of OLW progl'alll. Serv i CC' pl'O~lrilll1S h,we more
or less been thrust upon us by various funding sources.
You will also note that there are "holes" in this budget, ie:
line items with -0- zero Cll110unts. As stoff persons resi~ln their
positions are analizcd.
If we canl10t justify tile position in li9hl of the ~'I'ork proql'(1I1l,
and budget considerations tlll~niL lIlay not be I'prillce!.
\~c are still beset with a highinfli1tiol1 rate factor, bul.
have not taken that int.o account, wal1t:in~J to k('cp tllis bud~lct to i1
miniulllunl. In vie\\I of the filct thllt Lhe area t.i1llt \-Ie SC:'I've \-;i11
pl'obably be incn~asing \'Jt~ clo not feel that this budget is out. of
1 inc.
'----_._------(406) 442-1911 . P. O. BOX 5119 . HELENA, MONTANA 59601
November 5, 1981
TO: MEMBERS OF THE SENATE/HOUSE COMMITTEE III
FROM: KEN RUTLEDGE, MHA VICE PRESIDENT
SUBJECT: PROPOSALS FOR STATE FINANCIAL ASSISTANCE TO COUNTY GENERAL ASSISTANCE AND MEDICAL ASSISTANCE PROGRAMS
The Montana Hospital Association has taken no position with respect to the various proposals to provide state financial assistance to counties for the costs of their general assistance and medical assistance programs. After listening to the testimony on this subject which was presented during your Wednesday, November 4 hearing, however, I would like to make Committee III members aware of a number of concerns which the membership of the Montana
'Hospital Association has regarding proposed changes in the state Medicaid program and in county medical assistance programs.
Before moving to those concerns I would like to provide you with some brief bac kground i nformat i on on the current s ituat i on faced by ~10ntana hospitals and the patients they serve.
In 1980 Montana hospitals billed $211,856,035 for the services they provided but only received $187,536,137, or $24,319,898 less than billings. These $24,319,898 in what hospitals call "revenue deductions" were attributable to $11,832,477 in forced discounts by the Medicare program, $1,914,436 in forced discounts by the Medicaid program, $8,327,034 in bad debts, $1,305,833 in charity care and $940,118 in other deductions from revenue.
What should be of interest to this committee is the fact that the cost of these lost revenues is passed on to other patients. For example, in 1980 the average nonMedicare/Medicaid patient who was admitted to a Montana hospital had a stay of 4.22 days and received a bill for $1,120.03. Of this amount, however, only $875.69 or 78.2 percent went to cover the actual cost of care provided. The remaining $244.34, or 21.8 percent of the bill went to cover the cost of providing services to other patients which are only partially paid for (~1edicare and Medicaid) or not paid for at all (bad debts and charity care).
For a more complete analysis of this problem please see the attached sheet which shows what the $1,120.03 bill of the average nonMedicare/Medicaid patient goes to cover and also review the "Deductions From Revenue" section of the attached
• Ana lys is of Fi nancL~~j_lLtLLi_~a_tiQ!l __ ~d_Lc_~tQC~_fo~_li().!!.ta_n~_Hospj_t~_1_s_-=-J}80 beginning on page 2.
(over)
-2-
The problem, as you can see, is that the average nonMedicare/Medicaid patient is currently being assessed a substantial "tax" to cover the cost of care provided to others. What is of great concern to Montana hospitals is how much more of a "tax ll they will be forced to assess as a result of reductions in funding for federal, state, and county sponsored patients.
As noted in the attached "Deductions From Revenue" narrative, the ~1edicare and Medicaid programs reduced their average payments from 87.3% and 87.7% of billed charges respectively in 1979 to 84.1% and 83.9% of charges respectively in 1980. As a result of new changes in Medicare and Medicaid reimbursement policies we are anticipating that the percentage of charges these two programs pay will be reduced even further this year.
With this brief background information in mind I would now like to address the concerns of Montana hospitals regarding changes in the county medical assistance programs. While we understand the fears that counties have about potential increases in county medical assistance program costs, our members are concerned that state participation in those programs will eventually result in county programs being forced to pay for hospitals services on the same basis as Medicaid currently pays. This concern is, I believe, a legitimate one, particularly in the face of Mr. LaFaver's co~nent at the November 4 hearing that he had no problem with letting hospitals IIswallow" the cost of care for persons who would no longer be covered by Medicaid. With 25 of Montana's 61 hospitals operating at a loss last year there is a serious question as to just how much more in the way of lost revenues hdspitals and their nongovernment patients can swallow. [Keep in mind that neither Medicare nor Medicaid pays any of the costs attributable to bad debts or charity care; these costs are borne solely by the roughly 47% of all hospital patients who must subsidize the remaining 53% whose bills are only partially paid ( Medicare and ~1edicaid) or not paid at all (charity and bad debts).]
If yet another group of hospital patients is allowed to pay less than full hospital charges, the base of patients who must subsidize such discounts will grow even smaller and our small rural hospitals will have great difficulty in generating sufficient revenues from these patients to cover the unpaid costs of others.
We ask you, therefore, to make certain that whatever proposal for assisting counties is chosen, that the department of SRS not be given authority to force counties to pay on Medicare and tiedicaid reimbursement principles.
If members of the committee have further questions on this subject matter, I would be pleased to answer them.
~=a :Mon[~nHll Hospital Association f---~~-----------(4-0-6-)-4-4-2-.1-9--1-1-'-P-.-O-.-B-O-X--5-1-19--.-.-~E--LE-N--A-,-M-O-N-T-A-N-A--5-96-0-1-----------
OUIO~
THE AVERAGE CHARGE FOR A NONMEDICARE NONMEDICAID PATIENT'S STAY IN A MONTANA HOSPITAL*
In 1980, the average nonMedicare/Medicaid patient who was admitted to a r~ontana hospital had a stay of 4.22 days and received a bill for $1,120.03. $244.34 of the bill, or 21.8% went to cover the cost of providing services to other patients which are only partially paid for or not paid for at all. Only $875.69 or 78.2% went to cover the actual cost of care provided. The following chart shows what the average nonMedicare/Medicaid patient's bill of $1,120.03 went to cover:
Payroll Expenses Employee Benefits Professional Fees (medical) Professional Fees (legal, aUditing, consultants) Depreciation Expenses Interest Expenses All Other Expenses (purchased goods & services, util.) Medicare Subsidy Medicaid Subsidy Bad Debts Subsidy (harity Subs i dy Other Subsidies
TOTAL CHARGE
$ 445.20 55.52 40.63 13.66 40.72 23.03
256.93 118.88 19.23 83.66 13.12 9.45
$1 ,120.03
* SOURCE OF DATA: The Montana Hospital Association's Annual Financial Survey of Hospitals for 1980
.... '.
MO[]lta[]la· Hospital Assoclatio[]l (406) 442-1911· P.O.BOX5119· HELENA,MONTANA59601
ANALYSIS OF FINANCIAL AND UTILIZATION INDICATORS FOR MONTANA HOSPITALS - 1980
This report is based on the aggregated financial and utilization data of the 61 nonfederal acute care hospitals in operation in Hontana during 1980. Information' was submitted by each hospital on the 1980 Annual Survey of Hospitals which was conducted by the Montana Hospital Association in cooperation with the Montana Department of Health and Environmental Sciences. Both financial and utilization data were reported for the hospitals' fiscal years, with over 80 percent of hospitals utilizing either an October 1 through September 30 or July 1 through June 30 fiscal year.
REVENUE
Montana hospitals reported $211,856,035 in total gross patient revenues during 1980, a 21.8 percent increase over 1979. The corresponding increase from 1978 to 1979 was 12.1 percent. w~en gross patient revenue is broken-down into its two components, inpatient revenue and outpatient revenue, it becomes evident that the trend of more rapid gruwth in outpatient revenue, than in inpatient revenue, continued in 1980. While inpatient revenue increased 20.6 percent from 1979 to 1980, outpatient revenue increased 30.4 percent over the same period.
The significantly higher rate of increase in outpatient revenues as compared with inpatient revenues experienced by Montana hospitals in 1980 is consistent with a trend which has been documented back to 1975. While gross hospital inpatient revenue in Montana has increased 114 percent over the period 1975 to 1980, gross hospital outpatient revenue has experienced a 205 percent increase over the same period. The i~creasing importance of outpatient revenues is further reflect-. ed by the fact that outpatient revenue's contribution to total patient revenue has steadily grown from 1975, when it represented 9.8 percent of gross patient revenue, to 1980 where its contribution to gross patient revenue was 13.3 percent.
Gross patient revenues merely represent total patient billings. To arrive ~t actual or net patient revenues received, gross amounts must be reduced by deductions for bad debts, charity, Medicare and Medicaid discounts, etc. In 1980 these deductions amounted to $24,319,898, an incredible 55.5 percent increase over the $15,650,607 reported in 1979. (A more detailed analysis of these decuctions is presented below under Deductions from Revenue.)
Net patient revenue in 1980 increased 18.5 percent over its 1979 level, from $158,286,392 to $187,536,137 in 1980. This compares with a 12.1 percent increase in net revenue from 1978 to 1979.
,
-2-
Other operating reV8Due, which includes all operating revenues other than those directly associated with patient care experienced a 13.0 percent increase in 1980, compared with a 7.3 percEnt increase jn 1979.
The final category of revenue, nonoperating revenue, includes donations, county and hospital district appropriations and investment income. From 1979 to 1980
, ... ,
this category of hospital reVEnue increased 41.8 percent, or from $3,142,522 to $4,457,482. Of thE $4,457,482 in nonoperating revenue, $2,706,841 or 60.7 percent was attributable to donations and investment income and $1,750,641 or 39.3 percent was attributable to county and hospital district appropriations. Since a breakdown of th~se two categories of nonoperating revenue WAS not Rvailahle in 1979, it is not possible to calculate wl1ether one category experienced a greater percentage increase than the other.
Total net revenue from all sources in 1980 amounted to $196,813,309, an increase of 18.8 percent over 1979. The comparable increase from 1978 to 1979 was 12.5 percent.
DEDUCTIONS HOM REVENUE
Tn 1980, deductions from revenue continued a trend, broken only in 1979, by incrcdsi.ng <it a rate far in excess of the rate of incre<Jse in patient revenues. After increasing a moderate 11.7 percent from 1978 to 1979, deductions from levenue soared in 1980 to a level 55.5 percent higher than in 1979. The fact that the J980 level of increase in deductions from revenue was not a one time phenomenon but part of an ~larming trend, is demonstrated by comparisons of revenue increases and deductions from revenue increases for the five year period, 1975 to 1980. Over that five year period, while gross patient revenues increased 123.0 percent, dedurtions from revenue increased 342.7 percent. The average yearly increase in gross patient revenues over this period was 17.5 percent, while deductions from revenue increased an average of 35.5 percent a year.
The most significant deductions from revenue in 1980, in order of magnitude, ~ere Medj~are discounts, $11,832,477, up 59.5 percent over 1979, bad debts, $8,327,034, up 46.7 percent over 1979, Medicaid discounts, $1,914,436, up 56.7 percE-nt OVEr 1979 and charity care, $1,305,833, up 72.9 percent over 1979. In tot.al, d~du(tions from revenue equaled $24,319,898, compared with a 1979 level of $J5,6 /,O,607 •
Medicare and Medicaid discounts are attrlhutable to tile Medicare and Medicaid cost based reimbursement policies which in 1980 resllited in these two programs paying Montana IJospitais an aV21age of only 84 percent of the hospitals' actual charges. COD8cquently, the $13,746,913 shortfall in Medicare and Medicaid reimbursement in 1930 had to be made up for by non Medicare/Medicaid patients. In addition, ~ledic8re und Medicaid do not recognize as "allowable costs" other revenue deductions such as bad debts and charity care. As a result, the $10,572,985 attrlbutable to these forms of revenue deductions in 1980 also had to be made up for exclusively by non Medicare/Medicaid patients.
....
-3-
The impact of Medicare and Medicaid reimbursement policies on non Medicare/Medicaid hospital inpatients is clearly illustrated when the average charge for a non Medicare/Medjcaid patient's stay in a Montana hospital is analyzed. In 1980, the average non Medicare/Medicaid patient who was admitted to a Montana hospital had a stay of 4.22 days and received a bill for $1,120.03. Of this amount, however, only $875.6~ went to cover hospital expenses incurred in providing care to the patient. The remaining $244.34, or 21.8 percent of the total, went to cover Medicare and Medicaid shortfalls and other losses of revenue attributable to patients who's bills were only partially paid, or not paid at all. The following chart indicates the average dollar amounts paid by non Medicare/Medicaid inpatients to offset each of th€ categories of deductions from revenue:
Medi~are subsidy ~led i ca i d subsi dy Bad debts subsidy Char;ty subsidy Other subsidy
Total subEidy
$118,88 19.23 83.66 13.12
9.45
$244.34
Although the signific3nt increase in utilization experienced by Montana hospitals in J980 ale partially respon~ible for the large increases in deductions from revenue, federal regulalory changes in the Medicare and Medicaid reimbursement methodologies and in mandatory charity care requirements also had a major impact on revenue deduct jon increases in 1980. The effect of Medicare and Medicaid reimbursement methodology :hanges can clearly be seen by reviewing the percentage of charges paid by Medicare and Mcdi(aid for the years 1979 and 1980. In 1979, for example, the average Montana hospital received 87.3 per~ent of its charges from Medicare &nd 87.7 percent of its charges frem Medicaid. In 1980, however, Medicare's average level of reimbursement dropped 3.2 percentage points to 84.1 percent and Medicaid's level of reimbursement dropped 3.8 percentage points to an average of 83.9 percent of charges. "The dollar impact on Montana hospitals of Medicare's reduced level of reimbursement in 1980 was a loss of $2,377,981, while Medicaid's reduced level of relmbursement cost Montana hospitals an additional $452,783. WIlen these increases in deductions attributable to changes in Medicare and Medicaid reimburselllent p01icies are c-::,;np,ued with the total i.1crea~:,cs in Medicare and Medicaid d~ductions from rEv~nue in 1980, we find that 53.9 percent of the increase in I-ledicare d(>duction~ rC~lilt('d frem changes in re.imhurscrncnt policies, while 65.4 percent of Gdditi~nal ~pdicaid reimbursement losses resulted from such policy c.hanges,
Charity rare deductions which increased 72.9 percent from 1979 to 1980 compared wjth a 192.7 p~rcent incl23se from 1978 to 1979, are primarily attributable to federal chcrlty cone require-monrs imposed on hospi.tals wl1ich have received federal BFsietance for building projects. The large increases experienced in 1979 and 1980 are the reEult of 1978 regulatory changes which significantly increased mandat0ry ch~rity care levels.
EXPENSES
Tutal expenses for Montana's 61 hospitals ~mcllnted to $187,753,328 in 1980, up 17.8 percent from the level reported by the 60 hospitals reporting in 1979. The correeponding increase from 1978 La 1979 was ]1.8 percent. Although the increase
-4-
in total expenses appears to be quite high it should be pointed out that a , significant portion of tIle 1980 jncrease was attributable to increased utiliza
tion of hospital services. For example, while Montana hospitals experienced a 1.5 percent decrease in admissions and 3.9 percent decrease in patient days in 1979, in 1980 hospitals reported a 2.9 percent increase in admissIons and a 4.7 percent increase in patient days. (For an analysis of the increase in expenses Expressed on a per diem and per admission basis see the Adjusted Indicators section of thjs report.)
An examination of expenses broken-down into payroll and nonpayroll components indicates that the forme! jncreased 17.2 percent in 1980, while the latter increased 18.4 percent. It is interesting to note that the expense category employee benefits, which though a nonpayroll expense is directly related to the level of payroll expenses, experienced a significant reduction in its rate of increase in 1980 as compared with the 1979 rate of increase. (From 19.7 percent in 1979 to 12.0 percent in 1980.) This reduction in the rate of increase is attributable to the fact that in 1979 both the FICA tax and the salary base to which it was applied increased, while in 1980 the tax remained fixed though the salary base to which it was applied did increase.
The percentage increase in professional fees (m~dical) in 1980 was more than double the increase reported for 1979, 17.4 perc~nt in 1980 compared with a 6.9 percent increase in 1979. The higher level increase in 1980 is not so much a reflectioo "of higher c1~a-::ges for professional fees (rr.edical) 8S it is a reflertieo of higher utilization of those hospital ~ervices provided by contract with physicians. SInce many such contracts are based on a percentage of the r~VenUE generated by the hospital. service, increases in utilization autom~tically ::ncrcase the dollal level uf professional iTll",dic[J] f('('s.
The largest percentage increa~e in any expense category occurred in nonmedical professional feeE, with a 48.6 percent increase from 1979 to 1980. It is inrerestjng to note that this category of expense also experienced the largest percentage increase i.n 1979 when it rose 36.9 percent cOlllpared with its 1978 level. The Ledge increas~s in such exp(~nses ale -3 t"esult of increasea utilization of outside consultants and legal services by Jlo~pltals rLquesting approval of expenditures covered by the Mnntana Certi!iLate of Need Law.
Th('re are two expen.se c<Jtegories whic.h reflect hc)spiLal capital l"}.pl:':nolture levels, depreciaticn and in(erest expenSE. In 1980 depreciation expenses rese only 8.9 per~ent ~Qmpar~d with a 15.4 percent increase between 1978 and ]979. Interest expcn~es, which experienced a 12.6 percent io~re2se in 1979 actually decreased in 1980 by 0.3 percent.
The fjna] category of expenses, all other 2xpenses, increased 22.5 percent in 1980. Included in this catEgory are supplies, purchased services and utilities, and the high rate of increase experienced in 1980 is a reflection of both increased volume and significant jncreases in the cost of supplies and utilities.
ADJLlSTED INDIC,HORS
As noted in the Expenses section of this report, increased utilIzation, measured in terms of admissions and patient days, h~d a significant impact 00 the level
'"
of increase jn hospital ex~enditures in 1980. In order to give a more accurate measurement of the inc[eas~d COEt of providIng hospital services, exp~nses should be expressed in relationship to a unit of measurement such BS admissions or patien[ days.
-5-
(It should be noted that although expenses are frequently expressed in relationship to patient days and admissions, these representations of utilization do not take into consideration the intensity or complexity of care provided.) Since our primary concern is with the cost of inpatient hospital care, and since standard measurements of outpati.ent utilization are not available, all of the indicators which follow have been adjusted to exclude outpatient expenses and revenues.
In 1980, grO$S inpatient revenue per patient day rose 15.2 percent over its 1979 level, or from $230.40 in 1979 to $265.41 in 1980. During the same period, however, inpatient revenue deductions per patient day rose 47.1 percent from their 1979 level of $20.71 per day to a 1980 level of $30.47. As a result of the large increase in revenue deductions, net inpatient revenue per patient day experienced a much smaller percentage increase than gross inpatient revenue per day, increasing only 12.0 percent above its 1979 level of $209.69 to a 1980 level of $234.94. Adjusted expenses per patient day at $235.21 continued to be slightly higher than net patient revenue per day, but the gap between the two was closed somewhat as a result of the adjusted expenses per day's 1980 increase of only 11.4 percent.
A review of revenues and expenses expressed in relationship to hospital admissions shows that in 1980 gross inpatient revenue per admission rose 17.2 percent to $1,389.40, inpatient revenue deductions per admission rose 49.6 percent to $159.49 and net inpatient revenue per admission rose 14.0 percent to $1,229.91. Adjusted expenses per admission rose 13.3 percent to $1,231.26, or $1.35 higher per admission than net revenue received.
It should be~of interest to point out that Montana's average level of adjusted expenses per admission in 1980 continued to lag for hehind the national average. Based on data from the American Hos~ital AssocLition' s (AHA) National Panel Survey, the U.S. average for the period October 1, 1979 to September 30, 1980 (AlIA's fiscal 1980) W.JS $1,771.75, $5!10./19 higher tllan the average for Montana. In 1979, Montana's average adjusted expenses per admission was $490.57 lower than the national average. With respect to adjusted expenses per patient day, Montana's average is much closer to the national average as a result of the more intensive, sfiorter length of stay experienced by Montana hospitals. In 1980, the U.S. average_was $247.56, $12.35 higher than the ~lontana average of $235.21.
SilllHARY
Nontana hospitals in 1980 experienced a continuation of a number of trends which have been documented back to 1975: growth in the proportion of outpatient revenues's contribution to total patient revenue; large increases in deductions from revenue and a growing subsidy by non Medicare/Medicaid patients to cover the cost of providing services to other patients which are only partially paid for or not paid for at all; and a widening dollar difference in Montana hospitals' cost per stay and the U.S. average cost per stay. The one trend which was broken this year was the decline in inpatient hospital utilization. Patient admissions of 132,132 were the highest since 1975, while patient days reached their highest level since 1976.
Although total hospital expenses experienced the highest percentage increases since 1975, this was primarily the result of higher utilization levels. This is borne out by the fact that both adjusted expenses per patient day and adjusted expenses per admission increased at their lowest rates since 1975.
'.. '
-~~
REV
Et-ru
E In
pati
en
t R
even
ue
Ou
tpati
en
t R
even
ue
To
tal
Gro
ss
Pati
en
t R
even
ue
Ded
uct
ion
s F
rom
Rav
enue
T
ota
l N
et P
ati
en
t R
even
ue
Oth
er
Op
erat
ing
R
even
ue
No
no
per
atin
g
Rev
enue
T
ota
l R
even
ue
EXPE
NSE
S P
ay
roll
E
xp
ense
s E
mpl
oyee
B
en
efi
ts
Pro
fess
ion
al
Fee
s (M
edic
al)
Pro
fess
ion
al
Fee
s (A
ud
it,
Leg
al,
etc
.)
Dep
recia
tio
n
Ex
pen
se
Inte
rest
Ex
pen
se
All
O
ther
E
xp
ense
s T
ota
l N
onpa
yro1
1 E
xp
ense
s T
ota
l E
xp
ense
s -
DED
UC
TIO
NS
FROM
RE
VEN
UE
Med
icar
e D
isco
un
ts
Med
icai
d
Dis
cou
nts
B
lue
Cro
ss
Dis
cou
nts
A
ll
Oth
er
Dis
cou
nts
T
ota
l C
on
tractu
al
Ad
just
men
ts
Bad
D
ebts
C
hari
ty
Oth
er
Ded
uct
ion
s T
ota
l R
even
ue
Ded
uct
ion
s
1980
IN
DIC
ATO
RS
FOR
HONTA.~A
HO
SPIT
ALS
ST
ATE
TO
TALS
1978
1
97
9
1980
(6
0 H
osp
itals
) (6
0 H
osp
itals
) (6
1 H
osp
ital
s)
$1
37
,01
3,5
93
$
15
2,2
45
,41
3
$1
83
,58
3,6
84
$
18
,18
4,9
54
$
21
,68
1,5
86
$
28
,27
2,3
51
$
15
5,1
98
,54
7
$1
73
,92
6,9
99
$
21
1,8
56
,03
5
$ 1
4,0
02
,14
4
$ 1
5,6
40
,60
7
$ 2
4,3
19
,89
8
$1
41
,19
6,4
03
$
15
8,2
86
,39
2
$1
87
,53
6,1
37
$
3,9
76
,20
1
$ 4
,26
6,1
02
$
L 1,8
19
,69
0
$ 2
,10
4,7
62
$
3,1
42
,52
2
$ 4
,45
7,4
82
$
14
7,2
77
,36
6
$1
65
,69
5,0
16
$
19
6,8
13
,30
9
$ 7
2,7
79
,98
8
$ 8
1,4
33
,72
9
$ 9
5,4
50
,58
4
$ 8
,88
3,2
22
$
10
,62
9,5
33
$
11
,90
6,3
46
$
6,9
35
,08
9
$ 7
,41
5,0
92
S ,
8,7
02
,84
2
$ 1
,44
3,6
83
$
1,9
76
,14
0
$ 2
,93
6,3
88
$
6,9
45
,95
8
$ 8
,01
7,9
74
$
8,7
30
,12
2
$ 4
,39
4,6
82
$
4,9
47
,17
9
$ 4
,94
5,6
15
$
41
,15
9,8
05
$
44
,96
0,0
94
$
55,0
81,L
I31
$ 6
9,7
62
,43
9
$ 7
7,9
46
,61
2
$ 9
2,3
02
,74
4
$1
42
,54
2,4
27
$
15
9,3
80
,34
1
$1
87
,75
3,3
28
$ 6
,21
6,7
19
$
7,4
18
,06
4
$ 1
1,8
32
,47
7
$ 1
,31
4,7
13
$
1,2
21
,95
7
I $
1,9
14
,43
6
$ 1
03
,79
4
$ 1
37
,78
2
$ 1
96
,55
8
$ 1
14
,89
0
$ 2
80
,32
4
$ 27
5,19
0 $
7,7
50
,11
6
$ ,"
/9,0
58,1
27
$ •. I
4 ,2
18 ,6
61
$ 5
,82
3,3
26
$
5,6
75
,35
0
$ 8
,32
7,0
34
$
25
7,9
91
$
75
5,2
02
$
1,3
05
,83
3
$ 1
70
,71
1
$ 1
51
,92
8
I $
46
8,3
70
$
14
,00
2,1
44
I
$ 1
5,6
40
,60
7
$ 2
4,3
19
,89
8
% C
hang
e ~~
C
hang
e 1
97
8-1
97
9
19
79
-19
80
11.1~~
20.6
%
19.2
%
30.4
%
12.1
%
21.8
%
11.7
%
55.5
%
12.1
%
18.5
%
7.3%
!
13.0
%
49.3~~
41.8
%
12
. 5/~
I
18.8
%
I 1
1. 9
%
17.2
%
19
.n
12.0
%
6.9%
17
.4%
36.9
%
48.6
%
15.4
%
8.9%
12
.6%
(0
.03%
) 9.
2%
22 .5
%
11
. 7%
18
.4%
11
.8%
17
.8%
19.3
%
59.5
%
(7.1
%)
56.7
%
32.7
%
42.7
%
144.
0%
(1.8
%)
16
.9
57.0
%
(2.5
%)
46.7
%
192.
7%
72.9
%
(11.
0%)
208.
3%
11.7
%
55.5
%
~'"
1980
IN
DIC
ATO
RS
FOR
MON
TANA
H
OSP
ITA
LS/
PA
GE
2
!
1978
I
19
79
19
80
% C
hang
e %
Cha
nge
I (6
0 H
osp
itals
) (6
0 H
osp
itals
) (6
1 H
osp
itals
) 1
97
8-1
97
9
19
79
-19
80
OTH
ER
IND
ICA
TOR
S A
dm
issi
on
s 1
30
,30
3
12
8,3
77
1
32
,13
2
(1. 5
%)
2.9%
P
ati
en
t D
ays
68
7,5
38
6
60
,78
6
69
1,6
87
(3
.9%
) 4.
7%
Lic
ense
d
Bed
s 3
,36
8
3,3
67
3
,42
5
1.7%
L
eng
th o
f S
tay
5
.28
5
.15
5
.23
(2
.5%
) 1.
6%
Occ
up
ancy
5
6.0
5
3.8
5
5.2
(3
.9%
) 2.
6%
Med
icar
e B
illi
ng
s $
48
,51
0,8
65
$
58
,46
4,3
46
$
74
,31
1,8
93
20
.5%
27
.1%
M
edic
aid
B
illi
ng
s $
8,9
39
,57
2
$ 9
,97
1,0
72
$
11
,9l5
,33
8
11.5
%
19.5
%
Med
icar
e %
of
To
tal
Gro
ss
Rev
enu
e 3
1. 3
%
33
. 6~~
35
.1%
.0
7%
.04
i,
Med
icai
d
% o
f T
ota
l G
ross
R
even
ue
5.8%
5.
7%
5.6%
(.
02%
) (.
02%
)
Gro
ss
Inp
ati
en
t R
even
ue/
P
ati
en
t D
ay*
$ 1
99
.28
$
23
0.4
0
$ 26
5.41
15
.6%
15
.2%
In
pati
en
t R
even
ue
De-
du
cti
on
s/P
ati
en
t D
ay*
$ 1
7.9
8
$ 2
0.7
1
$ 30
.if 7
15
.2%
if
7.1
%
Net
In
pati
en
t R
even
ue/
P
ati
en
t D
ay*
$ 1
81
. 30
$ 2
09
.69
$
234.
94
15.7
%
12.0
%
Ex
pen
ses/
Pati
en
t D
ay*
$ 1
83
.07
$
21
1. 0
5 $
235.
21
15.3
%
11.4
%
Gro
ss
Inp
ati
en
t R
even
ue/
A
dm
issi
on
*
$1
,05
1. 5
0 $
1,1
85
.92
$
1,3
89
.40
1
2.8
i,
17.2
%
Inp
ati
en
t R
even
ue
De-
du
ctio
ns/
Ad
mis
sio
n*
$
94
.89
$
10
6.6
0
$ 1
59
.49
12
.3%
49
.6%
N
et
Inp
ati
en
t R
even
ue/
A
dm
issi
on
*
$ 9
56
.61
'''.
$1
,07
9.3
2
" $
1,2
29
.91
12
.8%
14
.0%
E
xp
ense
s/A
dm
issi
on
*
$ 9
65
.94
$
1,0
86
.31
$
1,2
31
. 26
12.5
%
13.3
%
* A
ll
of
these
in
dic
ato
rs
hav
e b
een
ad
just
ed
to
ex
clu
de
the
ou
tpati
en
t p
ort
ion
of
the
ind
icato
r.