COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.:         1741-01

Bill No.:          HB 717

Subject:           Gambling; Veterans

Type:              Original

Date:               March 1, 2007

Bill Summary:            This proposal revises distribution of funds in the Gaming Commission Fund.

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 8 pages.

☐ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☐ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

FISCAL ANALYSIS

ASSUMPTION

Officials from the Missouri Gaming Commission assume the proposal would not impact their agency, but would, however, totally change the formula on transfers to other agencies from the Missouri Gaming Commission Fund.

Officials from the Office of Administration - Budget and Planning (BAP) state the bill proposes that BAP would perform the transfers from the Gaming Commission Fund. These transfers are currently performed by the Missouri Gaming Commission and would create additional duties for the Division of Budget and Planning. BAP could accomplish these increased duties with existing staff; therefore there should be no added cost to BAP as a result of this bill.

The bill eliminates the Early Childhood Development, Education and Care Fund (ECDEC) which would impact funding for early childhood programs. In FY 2007, approximately $32 million is appropriated from the ECDEC fund (See table below). As a result of this bill, the programs funded by ECDEC would need to be replaced with General Revenue or eliminated. We defer to the Missouri Gaming Commission for estimates of how this bill affects the transfers from the Gaming Commission Fund.

                                                ECDEC Funding

FY 2005 Actual                      FY 2006 Actual                      FY 2007 Budgeted

$33,634,954                            $30,109,701                            $32,073,334

Officials from the Missouri Veterans’ Commission assume an unknown fiscal impact from the proposal. The proposal could decrease transfers to the Veterans Commission Capital Improvement Trust Fund if less than $3 million.

Officials from the Office of the Adjutant General assume the proposal would not fiscally impact their agency.

Officials from the Department of Elementary and Secondary Education (DESE) state the proposal would change the amount of funding which normally flows from the Gaming Commission Fund to the Veterans' Commission Capital Improvement Trust Fund, the Missouri National Guard Trust Fund, the Missouri College Guarantee Fund, and the Early Childhood Development, Education and Care Fund (ECDEC).

ASSUMPTION (continued)

During FY 2006, the following amounts were received into the following funds:

Veterans’ Commission Capital Improvement Trust Fund (VCCIT)              $ 6,000,000

Missouri National Guard Trust Fund                                                             $ 4,000,000

Missouri College Guarantee Fund                                                                  $ 5,000,000

Early Childhood Development, Education and Care Fund (ECDEC)            $31,446,560

                                                                                                                        $46,446,560

Under terms of this proposal, the distribution would have been as follows:

Veterans’ Commission Capital Improvement Trust Fund (VCCIT)              $37,446,560

Missouri National Guard Trust Fund                                                             $ 4,000,000

Missouri College Guarantee Fund                                                                  $ 5,000,000

Early Childhood Development, Education and Care Fund (ECDEC)            $ 0

                                                                                                                        $46,446,560 

The difference between what was received into the funds during FY 2006 and what would have been received had this proposal been law is summarized below:

Difference                                           Per this proposal         FY 2006 Actual          Difference

VCCIT                                                $37,446,560                $6,000,000                  $ 31,446,560

Missouri National Guard                    $ 4,000,000                 $ 4,000,000                 $ 0

Missouri College Guarantee               $ 5,000,000                 $ 5,000,000                 $ 0

ECDEC                                              $ 0                 $31,446,560                ($31,446,560)

                                                            $46,446,560                $46,446,560                $ 0

Monies deposited into the ECDEC fund are appropriated to the DOSS and DESE. Of the first 60% appropriation, 20% goes to DOSS and 80% goes to DESE. DESE uses the ECDEC monies to fund First Steps and the Missouri Preschool Program (MPP). The result of this proposal is a diversion of $31,446,560 away from First Steps and the Missouri Preschool Program to the Veteran's Commission Capital Improvement Trust Fund (VCCIT). As gaming revenues increase, the annual diversion of funds from the ECDEC fund to the VCCIT will also increase. Therefore, the estimated net effect on state and local funds for FY 2009 and FY 2010 is likely significantly understated.

Officials from the Department of Higher Education state this bill could impact funding for the Missouri College Guarantee Program. This scholarship is based on financial need as well as high school and college academic achievement. The Missouri College Guarantee Fund currently receives $5 million from the Gaming Commission Fund. Any change in the distribution method

ASSUMPTION (continued)

may impact the amount, either positively or negatively, transferred to the Missouri College Guarantee Fund.

Officials from the Department of Social Services (DOSS) state this bill eliminates funding for the Early Childhood Development Education and Care Fund, i.e. all early childhood programs currently funded under this statute.

DOSS currently receives funding through appropriation to operate 4 grant programs, based on the statute language impacted by this legislation. These four grant programs are:

1.          Early Head Start (a comprehensive early childhood program including child care services for families with children ages birth to 3 years of age);

2.         Start Up and/or Expansion grants for child care programs serving children birth to 3 years of age;

3.         Child Care Provider Accreditation (child care subsidy enhancement and assistance to child care providers with the cost of becoming an accredited child care program); and

4.         Stay at Home Parent (a program that assists low income families with children birth to age three in accessing early childhood supports and resources that will ultimately assist in preparing their children for school).

The current language allocates funding to the Early Childhood Development Education and Care Fund (EDECF) which is jointly administered by DOSS and DESE, Veteran's Commission Capital Improvement Trust Fund, the Missouri College Guarantee Fund, and the National Guard Trust Fund based on various percentages/amounts spelled out in statute.

After an initial allocation of $500,000 to "Cities and Communities for homes and gang-related violence and crimes", currently the appropriations from a portion of gambling boat admission fees are distributed in the amounts and in the order as follows:

Amount                                              Allocated To

$4,500,000                                          Missouri College Guarantee Fund

$3,000,000                                          Veterans' Commission Capital Improvement Fund

$3,000,000                                          Missouri National Guard Trust Fund

$28,000,000                                        Early Childhood Development Education & Care     Fund

$500,000                                             Missouri College Guarantee Fund

$3,000,000                                          Veterans' Commission Capital Improvement Fund

$1,000,000                                          Missouri National Guard Trust Fund

Remaining net proceeds                     Early Childhood Development Education and Care Fund

ASSUMPTION (continued)

Currently the Early Childhood Development Education and Care Fund (ECDECF) is distributed as follows:

Start Up/Expansion                60% (80% of the 60% to DESE, 20% of the 60% to DSS)

Early Head Start                     10% to DSS

Accreditation                          10% to DSS

Stay at Home Parent               10% to DSS

Undesignated                          10% to OA (OA appropriates to a variety of EC programs)

     In SFY 2007 of the total ECDECF, DOSS received was:

     Start Up/Expansion            $3,689,400  

     Early Head Start                 $3,074,500 (plus an additional $1,548,152 from the                                            undesignated pot administered by OA)

     Accreditation                      $3,074,500

     Stay at Home Parent           $3,074,500

            Total                     $14,461,052

     Thus the total amount in the ECDECF for SFY 2007 was:

     Start Up/Expansion $18,447,000 ($14,757,600 to DESE, $3,689,400 to DSS)

     Early Head Start $3,074,500 to DSS 

     Accreditation           $3,074,500 to DSS

     Stay at Home           $3,074,500 to DSS

     Undesignated           $3,074,500 to OA

     Total Received FY07 $30,745,000 to ECDECF 

Based on this legislation total funding lost for the ECDECF would be approximately $30,745,000 and to DSS specifically would be $14,461,052. General Revenue would have to replace these funds for the program to continue. If GR is not received, these programs and their benefits would be eliminated.

Based upon the responses from DESE and DOSS and the annual report produced by the Missouri Gaming Commission, Oversight will assume a loss to the Early Childhood Development, Education and Care Fund and an offsetting gain to the Veterans Commission Capital Improvement Trust Fund in the amount of $31.5 million annually. Oversight will assume ten months of impact for FY 2008.

Oversight will assume the loss of funding to the ECDEC Fund from this proposal will not be replaced with a General Revenue appropriation. The reduction of funding to the ECDEC Fund

ASSUMPTION (continued)

will result in a corresponding reduction of funding to local school districts; however for purposes of this fiscal note, Oversight will show the reduced funding only at the state level.

FISCAL IMPACT - Small Business

No direct fiscal impact to small businesses would be expected as a result of this proposal.

FISCAL DESCRIPTION

This proposal changes the distribution of money in the Gaming Commission Fund. In its main provisions, the bill:

(1) Repeals the provision which allows up to $31 million to be transferred to Early Childhood Development, Education, and Care Fund; and

(2) Requires all moneys remaining in the Gaming Commission Fund after all distributions and transfers have been made to be transferred to the Veterans' Commission Capital Improvement Trust Fund.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Missouri Gaming Commission

Department of Elementary and Secondary Education

Department of Social Services

Office of Administration

Department of Higher Education

Missouri Veterans Commission

Office of the Adjutant General

                                                                                                Mickey Wilson, CPA

                                                                                                Director

                                                                                                March 1, 2007