BUDGET COMMITTEE ON HUMAN SERVICES

The Budget Committee on Human Services was assigned responsibilities in six areas. Section 29 of House Bill No. 1196 directed a study of long-term care needs and the nursing facility payment system in North Dakota. Section 18 of House Bill No. 1012 directed a study of the senior citizen mill levy matching grant program. Section 1 of Senate Bill No. 2354 directed a study of the feasibility and desirability of establishing an alternatives-to-abortion services program that would provide information, counseling, and support services to assist women to choose childbirth and to make informed decisions regarding the choice of adopting or parenting. Senate Concurrent Resolution No. 4034 directed a study of the issues and concerns of implementing Charitable Choice, the privatization of federally funded welfare services through faith-based organizations.

North Dakota Century Code (NDCC) Section 50-09-29 provides that the Legislative Council approve revised administration of the temporary assistance for needy families (TANF) program by the Department of Human Services. Section 1 of Senate Bill No. 2307 provides that the Legislative Council receive quarterly reports from the Department of Human Services regarding the development of a recommendation, with developmental disabilities services providers, for a new statewide developmental disabilities services provider reimbursement system. These responsibilities were assigned to the committee.

Committee members were Representatives Amy Warnke (Chairman), Audrey B. Cleary, Jeff Delzer, Pat Galvin, Bob Hunskor, James Kerzman, Ralph Metcalf, Chet Pollert, Todd Porter, Clara Sue Price, Dale C. Severson, Ken Svedjan, and Wayne W. Tieman and Senators Robert S. Erbele, Thomas Fischer, Kenneth Kroeplin, Judy Lee, and Michael Polovitz.

The committee submitted this report to the Legislative Council at the biennial meeting of the Council in November 2002. The Council accepted the report for submission to the 58th Legislative Assembly.

LONG-TERM CARE STUDY

Section 29 of House Bill No. 1196 directed a study of the long-term care needs and nursing facility payment system in North Dakota.

Long-Term Care Funding

The committee reviewed funding for basic care assistance and nursing facility care under the medical assistance program as shown on the following schedules:

The following schedule details 2001-03 biennium funding initiatives relating to long-term care approved by the 2001 Legislative Assembly in House Bill No. 1196:

At each meeting, the committee received information from the Department of Human Services on the status of long-term care expenditures for the basic care and medical assistance programs. As of October 2002 the committee learned the department anticipated basic care expenditures to exceed the budgeted amount by $300,000 due to a 1.51 percent reduction in the federal Medicaid matching rate for federal fiscal year 2003 and expenditures for room and board being more than anticipated. As of October 2002 the committee learned the department projected general fund expenditures for nursing facility care to exceed budgeted amounts by $1.9 million primarily due to the reduction in federal Medicaid matching for federal fiscal year 2003 and an $850,000 general fund reduction resulting from the Governor's July 2002 budget allotment.

Health Care Trust Fund

The health care trust fund is the special fund into which money generated from the intergovernmental transfer program is deposited. The intergovernmental transfer program allows the state to claim additional federal Medicaid funds by making government nursing facility funding pool payments to government nursing facilities in the state--Dunseith and McVille. These facilities return the funding to the state, less a $50,000 transaction fee, and the federal funds are deposited in the health care trust fund. Money is spent from the fund pursuant to legislative appropriations. The health care trust fund June 30, 2003, balance is projected to be $41.4 million.

Nursing Facility Payment System

The committee reviewed North Dakota's nursing facility payment system. North Dakota's nursing facility payment system has been in place since 1990 and requires equalized rates, which means nursing facilities may not charge private pay residents a higher rate than individuals whose care is paid for by the Medicaid program. Nursing facilities are, however, allowed to charge higher rates for private occupancy rooms.

The North Dakota nursing facility payment system consists of 34 resident classifications. Classifications are based on the resident assessment instrument (MDS-minimum data set) required in all nursing facilities. The rates for each classification vary by facility, based on each facility's historical costs. Residents in higher classifications need more care and have a higher rate than residents in lower classifications at the same facility. Facility rates change annually on January 1 and may change during a year due to audits or special circumstances. Revenue received by a facility change, based on the mix of resident classifications. Each resident is reviewed within 14 days of admission or reentry from a hospital and every three months thereafter. A resident's classification may change only at the scheduled three-month interval or if hospitalization occurs. A facility is required to give 30-day notice to its residents whenever the facility's rates change. If an individual's classification changes, no notice is required, and the rate is retroactive to the effective date of the reclassification.

Consultant's Report

The 2001 Legislative Assembly appropriated $241,006 from the health care trust fund for the Department of Human Services to conduct a long-term care needs assessment and nursing facility payment system study. The committee learned the department utilized $43,385 of this appropriation and $43,385 of available federal matching funds to contract with Myers and Stauffer, L.C., of Topeka, Kansas, for a review of North Dakota's nursing facility payment system.

The consultant reviewed the following components of North Dakota's nursing facility payment system:

1. The 90 percent occupancy incentive.
2. The frequency of rebasing.
3. The policy of equalized rates.
4. The case mix payment system.

The committee received the report of the consultant, which contains the following recommendations and the department's responses:

1. Evaluation of the 90 percent occupancy incentive - The consultant recommended the state continue the minimum occupancy percentage at 90 percent. The department concurs with this recommendation.
2. Evaluation of rebasing frequency - The consultant recommended the state:
   1. Establish a maximum number of years between rebasing. The department believes this is a policy decision to be made by the Legislative Assembly.
   2. Monitor and evaluate facility spending patterns during periods between rebasing.that would identify:
      • Significant changes in costs in excess of that estimated by the inflation index.
      • Changes in the allocation of costs between direct, other direct, and indirect cost categories.
      • Changes in a facility's resident acuity.
   The department concurs with the recommendation and believes additional analysis may be useful in establishing benchmarks to be used by the Legislative Assembly in determining if more frequent rebasing is necessary.
   3. Change the method of calculating limits from the percentile method to a "median plus" method. The percentile method precludes a certain number of providers above the limit from receiving payments that cover all costs. The "median plus" method potentially will allow all facilities to operate at a level below the established limit. The department concurs with the recommendation and recommends the process be changed when limits are rebased.
   4. Set limits for direct, other direct, and indirect costs at the "median plus" 20 percent, 20 percent, and 10 percent, respectively, or in proportion with these recommendations in order to achieve the greatest cost coverage for the Medicaid funding available. The consultant estimates implementation of this recommendation would cost an additional $136,694 per year, of which approximately $41,000 would be from the general fund. If the method of calculating limits is changed, the department concurs with this recommendation.
3. Evaluation of North Dakota's equalized rate policy - The consultant recommended the state:
   1. Continue the rate equalization policy of limiting rates for private pay individuals and other nongovernmental payers in semiprivate rooms to the comparable Medicaid rate.
   2. Limit the additional amount nursing facilities may charge for a private room to $10 per day. The department believes the decision to limit a nursing facility's ability to charge additional amounts for private rooms is a policy decision that should be made by the Legislative Assembly. This recommendation would not affect the payments made under the state Medicaid program.
   3. Change the current Medicaid property cost calculation to reflect the growing number of private rooms. The rate calculation should consider the square footage separately for private rooms and semiprivate rooms on a per resident basis. The consultant estimates implementation of this recommendation would reduce Medicaid program costs by $635,555 per year, of which approximately $191,000 would be from the general fund. The department is reluctant to implement this recommendation because it would create a rate differential based on the type of accommodation that was not anticipated when equalized rates were implemented and would shift Medicaid savings to private pay residents who occupy private rooms. In addition this change would add administrative complexities by requiring the department and providers to maintain 68 rather than 34 rates.
4. Review of the case mix payment system - The consultant recommended the state:
   1. Implement an MDS accuracy audit program and if errors are found, change facility payment rates and recoup overpayments. The consultant estimates annual Medicaid overpayments could be $91,000, and the savings from the audits would provide funding for an additional staff person to conduct the audits. The department concurs with the recommendation and has begun to review the accuracy of the classification process, provide technical assistance, and recoup funds as appropriate. Because staff resources are limited, the department is able to visit only a few facilities each quarter. If the reviews indicate major problems, the department will attempt, within the resources available, to increase the number of reviews.
   2. Consider adopting the next version of MDS when it becomes available from the federal government in 2004. The department plans to consider adopting the new version when it is available but will consult with the long-term care industry and the Legislative Assembly before making any major changes in the classification process.

Long-Term Care Needs Assessment

The 2001 Legislative Assembly appropriated $241,006 from the health care trust fund for the Department of Human Services to conduct a long-term care needs assessment and nursing facility payment system study. The committee learned the department used $193,900 of this appropriation to contract with the University of North Dakota and North Dakota State University for a long-term care needs assessment, which included service areas, elderly age and distribution profile, elderly needs profile, and labor components. In addition the North Dakota Long Term Care Association planned to complete a provider and facility profile component.

The committee learned the long-term care needs assessment will be completed by the end of November 2002. The committee received the following preliminary findings and recommendations of the long-term care needs assessment:

1. North Dakota's population over age 55 is generally healthier than the national average.
2. North Dakota's reservation population is generally much less healthy than the national average and less healthy than the remainder of the state's population.
3. Generally North Dakota's chronic disease rates are lower than national norms but higher among the state's elderly American Indians.
4. Sixty-nine percent of North Dakotans age 50 and over do not plan to relocate in the next 10 years.
5. North Dakotans living in rural frontier counties are the most committed to staying in their homes and communities.
6. The presence of functional limitations does not impact plans to move--even those with emerging disabilities plan to stay in their homes and local communities.
7. The number of services available declines from urban to rural to rural frontier.
8. Availability of services is a major issue.
9. Transportation to services is a major issue.
10. Nursing home insurance has been purchased by 25.9 percent of North Dakotans over age 50.
11. Affordable assisted living services are needed, especially in the rural and reservation communities.
12. Health promotion and wellness activities designed to prevent functional limitations are needed to allow individuals to remain independent.
13. Family and informal care giving should be developed and integrated into a broad plan of long-term care.
14. Formal and informal caregivers should be organized into regional alliances to provide a full range of services.
15. Rural development in North Dakota should include service sector jobs.
16. North Dakota must develop a system of service delivery for home and community-based services to serve the rural elderly.
17. "Telehealth" should be explored to offer additional support for a dispersed model of services for offsite diagnosis and evaluation.
18. A special task force should be organized to address the long-term care needs of reservation populations because the number of American Indians over the age of 65 is increasing rapidly.
19. Long-term care workers' wages should be regularly monitored, with adjustments made to maintain competitive salaries.
20. North Dakota's wages for long-term care workers are slightly less than national averages. Salaries for registered nurses are 94.1 percent of the national average, salaries for licensed practical nurses are at 94.7 percent of the national average, and certified nurse assistants are at 100 percent of the national average.
21. Providing benefits to all full-time workers, especially health insurance coverage, will assist with worker retention.

Nursing Facility Bed Reduction Incentive Program

The 2001 Legislative Assembly appropriated $4 million from the health care trust fund to the Department of Human Services to provide incentives to nursing facilities to reduce licensed bed capacity. The department was authorized to pay incentives of up to $15,000 per bed if a facility eliminates its entire licensed bed capacity, $12,000 per bed if a facility reduces at least eight beds, and $8,000 per bed if a facility reduces fewer than eight beds. The committee received reports at each committee meeting on the status of the nursing facility bed reduction incentive program. The committee learned the department accepted offers from nursing facilities each quarter to reduce licensed bed capacity, and that through September 2002 the department paid $3.2 million to nursing facilities to eliminate 270 licensed beds.

Long-Term Care Facility Bed Moratorium

House Bill No. 1196 continued the moratorium on the expansion of nursing facility or basic care bed capacity through July 31, 2003. However, provisions were added allowing a nursing facility, once in a 12-month period, to convert licensed nursing facility bed capacity to basic care bed capacity and a basic care facility to convert basic care bed capacity that was licensed after July 2001 to nursing facility bed capacity. In addition the provisions added allow the Alzheimer's and related dementia pilot projects which were operating during the 1999-2001 biennium to be licensed as basic care and allow an applicant to receive licensure if the need for additional basic care bed capacity can be demonstrated to the State Department of Health and Department of Human Services.

The committee received information from the State Department of Health on nursing facility and basic care licensed bed capacity and requests for transfers of bed capacity between nursing facilities and basic care facilities. North Dakota had 6,902 nursing facility beds licensed as of August 1, 2001. Since that time 31 facilities decreased a net total of 269 beds providing 6,633 licensed beds as of September 2002.

North Dakota had 1,460 basic care beds licensed as of August 1, 2001, and since that time the number of beds has increased by 36 to a total of 1,496. Three conversions of nursing facility beds to basic care beds occurred during this time period. The Good Samaritan Centers in Arthur, Devils Lake, and Mott each transferred six beds from nursing care to basic care status.

Olmstead Commission

The committee learned the Governor issued an executive order in August 2001 establishing an Olmstead Commission to study North Dakota's compliance with requirements of the Olmstead decision. The Olmstead decision resulted from a Georgia lawsuit relating to providing adequate care to the elderly and disabled in the least restrictive environment. The commission received a starter grant from the federal government to fund the commission.

The Olmstead Commission conducted a series of public meetings across the state and gathered other information to determine appropriate state actions to comply with the implications of the Olmstead decision.

The committee learned the commission was awarded a $900,000 federal grant to develop the following five pilot projects:

1. Person-centered care, which is designed to broaden the local continuum of care provided by long-term care facilities. This project will involve two rural and two urban nursing facilities providing a more client-driven model of care, including less restrictive alternatives and/or home care when appropriate.
2. Financial pooling, which is designed to allow funding to follow the client. All public and private funds available for a client will be pooled and the client given the ability to purchase services as necessary. The provider must include a health system or long-term care facility.
3. Living in place, which is designed to allow individuals to live in their homes and receive necessary personal services, modifications, and assistive technology.
4. Cultural module, which is designed to build capacity for home care among American Indians by utilizing existing training available at the United Tribes Technical College enhanced with the necessary components to enable students to provide in-home care to people with disabilities on the reservations.
5. Informational access to services, which is designed to coordinate existing resources such as the senior information line, Children's Services Coordinating Committee directories, and other resources to ensure that available services throughout the state are identified and may be accessed from one contact.

Other Information and Testimony

The committee received information from representatives of the Evangelical Lutheran Good Samaritan Society regarding the future of long-term care services in North Dakota. The society, along with a number of industry and state representatives, has created a task force to study innovative ways of providing long-term care services to the elderly in their homes and ways to provide funding for this type of care.

The committee heard testimony from representatives of the Long Term Care Association regarding long-term care needs and the nursing facility payment system that included concerns regarding:

1. The consultant's recommendation to limit the amount nursing facilities may charge for private rooms. The consultant indicates that facilities are not charging too much for private rooms; therefore, the association does not believe a limit needs to be put in place. Private room revenue is the only flexibility nursing homes have to increase revenues.
2. The increase in premium rates nursing facilities are being charged for professional, general, and liability insurance policies. General liability insurance premiums have tripled in the last two years.
3. Medicare rate reductions of 10 percent on October 1, 2002, resulting in an average loss of $26.75 per resident per day for every Medicare resident in a North Dakota nursing facility.

The committee heard testimony from other interested persons that included concerns regarding:

1. Nursing facilities being allowed to charge higher rates for private rooms, circumventing the intent of the equalized rates provision.
2. Nursing facilities receiving reimbursement for residents that are temporarily hospitalized, while basic care facilities do not.

Recommendation

The committee recommends that the Department of Human Services present the final report of the long-term care needs assessment and nursing facility payment system study to the House and Senate Human Services and Appropriations Committees during the 2003 legislative session.

SENIOR CITIZEN MILL LEVY MATCHING GRANT STUDY

Section 18 of House Bill No. 1012 directed a study of the senior citizen mill levy matching grant program.

History of Program

The committee reviewed the history of the senior citizen mill levy matching grant program. The committee learned the 1971 Legislative Assembly authorized counties or cities to levy up to one mill to establish and maintain programs and activities for senior citizens. In 1979 the Legislative Assembly established the state matching program for senior citizen programs and activities. The 1999 Legislative Assembly approved legislation increasing the number of mills a county or city may levy for senior citizen programs from one to two mills. The following schedule presents the history of funding for senior citizen matching programs:

The following schedule shows the state matching as a percentage of the funding collected from senior citizen mill levies for recent years:

Matching Grant Options

The committee considered various options for distributing grants under the senior citizen mill levy matching grant program. Currently one-half of the appropriation is used each year to match the proportionate share of the local mill levy for each political subdivision. The options considered and the related estimated fiscal impact based on 2001 tax year data are to:

1. Limit county mill levies for senior citizen programs to one mill and provide matching grants based on funding appropriated by the Legislative Assembly. Based on 2001-03 appropriations of $831,473 per year and 2001 tax data, the matching grants percentage would increase by 10 percent, from 54 percent to 64 percent of the amounts collected by counties and cities up to the maximum of a one-mill levy. Counties would not be allowed to levy more than one mill.
2. Match county mill levies at 100 percent for up to the first mill levied. Based on 2001 tax data, this would require additional funding of $477,085 per year or $954,170 per biennium.
3. Limit state matching grants up to the first mill levied but maintain each city or county payment to at least the same level as the city or county received in 2001. Based on 2001 tax data, this would require additional funding of $264,707 per year or $529,414 per biennium.
4. Limit state matching grants up to the first mill levied and provide matching grants based on funding appropriated by the Legislative Assembly. Based on current appropriations of $831,473 per year and 2001 tax data, the matching grants percentage would increase by 10 percent, from 54 to 64 percent of the amounts collected by counties and cities for senior citizen programs.
5. Distribute state matching grants to counties and cities based on the proportion of each entity's assessed property value to the statewide assessed property value and based on funding appropriated by the Legislative Assembly. Under this option the mill levy of each county or city would no longer be a factor in determining the amount of state matching grants received by that county or city.

Mill Levy Changes

The committee reviewed the process used by a city or county to change its senior citizen mill levy. The committee learned that once a mill levy for senior citizen programs is authorized, a county or city may change it by one of the following methods:

1. The county commission or city governing body may adjust the annual levy based on funding needs for senior citizen programs; however, the levy may not exceed the authorized senior citizen mill levy approved by the electors of the county or city.
2. The county commission or city governing body may place the issue of increasing the mill levy on the next general election ballot.
3. A petition may be submitted, signed by at least 10 percent of the qualified electors voting in the last general election, to place the issue of increasing the mill levy on the next general election ballot.
4. The levy may be adjusted as a result of a decline in taxable valuation in the county or city to maintain the dollars levied in the base year (the highest collections of the three most recent taxable years) pursuant to NDCC Section 57-15-01.1. If the maximum mill levy authorized would result in a lesser amount being raised than the highest annual amount collected in the three most recent taxable years, this section allows a city or county to increase its mill levy above the maximum authorized by law to provide the same level of funding as raised in the highest of the three most recent taxable years.
5. The county commissioners or governing body of a city may call a special election to authorize an excess levy pursuant to NDCC Chapter 57-17, which provides for an excess levy that may not exceed 50 percent of the maximum amount authorized by Chapter 57-15 (which, for the senior citizen mill levy, would be an additional one mill, for a total of three mills). The excess levy may be authorized for no more than two years.

Senior Citizen Mill Levy Retained Funds

The committee reviewed the process used by counties and cities to approve and disburse senior citizen mill levy and matching grant funds to senior citizen programs. Each year senior citizen organizations submit proposed budgets to the board of county commissioners or the city governing body. Based on these funding requests and projected available funding, the board of county commissioners or city governing body approves funding levels for each of the organizations. Counties and cities generally distribute all the senior citizen mill levy and state matching grant fund collections to senior citizen organizations in the year the funds are received. A variety of methods are used by the counties and cities to disperse the funding to organizations, including reimbursing organizations for actual expenses, disbursing the funds to a county council on aging which distributes the funds to various senior citizen organizations, or disbursing the funds directly to the organizations either monthly, quarterly, or annually.

The majority of organizations spend all funds received during the year. Organizations that have funding left at the end of the year must include the unspent amount in their next year's budget request as carryover funds. The board of county commissioners or city governing body considers the amount of carryover funds when approving funding for the organization for the next year. Organizations may be authorized, through budgets submitted to the board of county commissioners or city governing body, to retain funds for specific purposes such as new vehicles, major repairs, improvements, or capital projects. The committee learned that statewide a total of $109,670 of senior citizen program funds remained unspent as of December 31, 2000.

Other Information and Testimony

The committee received information on the number of individuals served as a result of the funding provided by the senior citizen mill levy matching grant program. Counties and cities reported that 62,468 individuals received services in 2001 as a result of the funds generated from senior citizen mill levies and matching grants. The uses of the mill levy and matching grant funds vary by county, affecting the number of individuals served. Some counties use these funds to match federal Title III Older Americans Act funding while others do not.

The committee heard testimony from other interested persons. Major comments included:

1. Support for the current method of providing matching funds to counties and cities for senior citizen programs.
2. A request that additional funding be provided for senior citizen programs because federal funds provided by the Older Americans Act provide for only one-third of the cost of senior citizen services.
3. A request that the Legislative Assembly increase funding to match county senior citizen mill levies at 100 percent rather than 54 percent of formula.
4. Support for the mill levy funding as an important component of the continuum of care to allow the elderly to remain in their homes and local communities.

Conclusion

The committee makes no recommendation as a result of its study of the senior citizen mill levy matching grant program.

ALTERNATIVES-TO-ABORTION SERVICES STUDY

Section 1 of Senate Bill No. 2354 directed a study of the feasibility and desirability of establishing an alternatives-to-abortion services program that would provide information, counseling, and support services to assist women to choose childbirth and to make informed decisions regarding the choice of adopting or parenting.

Statistics

The following schedule presents abortion statistics in North Dakota and the United States since 1990:

Federal Title X - Family Planning Program

The committee reviewed the federal Title X family planning program. Title X of the Federal Public Health Service Act of 1970 authorizes the family planning program, which is administered by the United States Department of Health and Human Services, Office of Population Affairs. The program authorizes grants to assist in the establishment and operation of voluntary family planning projects offering a broad range of acceptable and effective family planning methods and services (including natural family planning methods, infertility services, and services for adolescents). The mission of the program is to provide individuals the information and means to exercise personal choice in determining the number and spacing of their children. Program funds may be used for providing information and counseling regarding abortion but not for abortion programs. Funding received under the program does not require any state matching funds. The program offers pregnant women the opportunity to be provided information and counseling regarding:

1. Prenatal care and delivery.
2. Infant care, foster care, or adoption.
3. Pregnancy termination.

The federal grants may be provided to either public or nonprofit private entities. In North Dakota the State Department of Health receives the federal Title X grants and administers the family planning services through contracts with nine delegate agencies across the state. The family planning grants are awarded competitively every five years. The next competitive grant award in North Dakota will be in 2005. The Title X family planning projects in North Dakota, South Dakota, Colorado, and Montana are administered by each respective state; however, in Minnesota, Utah, and Wyoming, the federal Title X funds are awarded to a nonprofit organization in each state to operate the family planning projects.

The State Department of Health received base funding under federal Title X of $547,000 in federal fiscal year 2002 as well as $174,000 for special initiatives. The department anticipates receiving base funding of $807,000 as well as $118,000 of funding for special initiatives in federal fiscal year 2003 and base funding of approximately $800,000 and possibly $100,000 for special initiatives in federal fiscal year 2004.

The program, operated through the nine delegate agencies, offers family planning services at 18 clinic sites in North Dakota. In calendar year 2000, 14,494 clients made 24,062 visits to the family planning agencies. Of the 14,494 clients, 8,791 had incomes below 150 percent of the federal poverty level. Clients pay for services based on household size and income. Clients with income at or below 100 percent of the poverty level receive services at no cost.

The program provides pregnancy testing, diagnosis, counseling, and referrals. Each clinic is required to maintain a service referral list, which must be made available to clients, for women with positive pregnancy test results. Pregnant clients must be offered information and counseling regarding prenatal care and delivery, infant care, foster care, adoption, and pregnancy termination. The committee learned that based on a 1997 survey, approximately four percent of pregnant women seen at the clinics request information on abortion services.

Title X regulations as originally adopted in 1970 required family planning programs to provide pregnant women with information on prenatal care and delivery, infant care, foster care, or adoption. The requirement that information on pregnancy termination be available was added in 1976. The regulatory language requiring family planning projects to offer this information was added in January 2001.

The committee received the following information from each of the nine delegate agencies providing family planning services under federal Title X in North Dakota:

1. Upper Missouri District Health Unit, Williston - Serves the counties of Divide, McKenzie, Mountrail, and Williams. In calendar year 2000 the health unit performed 193 pregnancy tests, 59 of which were positive. For those with positive tests, information was provided on all available options, the importance of prenatal care, and referrals as appropriate.
2. First District Health Unit, Minot - Serves the counties of Bottineau, Burke, McHenry, McLean, Renville, Sheridan, and Ward. In calendar year 2000 the health unit performed 147 pregnancy tests, 69 of which were positive. The 69 clients who tested positive met with a social worker and were informed of the options available to the client. The program was unaware of how many women chose abortion.
3. Lake Region District Health Unit, Devils Lake - Serves the counties of Benson, Eddie, Pierce, Ramsey, Nelson, Cavalier, Rolette, Towner, Wells, and McHenry. In calendar year 2000 the health unit performed 50 pregnancy tests, 12 of which were positive. Of the 12 positive tests, seven planned to continue the pregnancy and keep the child, two were deciding if they would keep the child or give it up for adoption, and three were unsure of their plans.
4. Valley Health, Grand Forks - Serves the counties of Grand Forks, Nelson, Pembina, Steele, and Walsh. In calendar year 2000 the program performed 484 pregnancy tests, 99 of which were positive. Of the 99 positive tests, 65 birth outcomes were unknown, 14 continued the pregnancy, 7 miscarried, and 13 chose abortion.
5. Fargo-Cass Public Health and Family Planning Clinic, Fargo - Serves Cass County. In calendar year 2000 the clinic performed 413 pregnancy tests, 85 of which were positive. Of the 85 positive tests, 19 were planned pregnancies and 66 were unintended. Of the 66 unintended pregnancies, outcome data was available on only 16. Of the 16, seven continued the pregnancy, two miscarried, and seven chose abortion.
6. Richland County Family Planning, Wahpeton - Serves the counties of Ransom, Richland, and Sargent. In calendar year 2000 the program performed 109 pregnancy tests, 11 of which were positive. Of the positive tests, six individuals were given information on prenatal care and services available to pregnant women and five were given information on all options. Of the five clients given information on all options, three proceeded with prenatal care, one was undecided, and one chose abortion.
7. Central Valley Family Planning Program, Jamestown - Serves the counties of Barnes, Dickey, Eddy, Foster, Griggs, Kidder, LaMoure, Logan, McIntosh, Ransom, Sargent, Stutsman, and Wells. In calendar year 2000 the program performed 97 pregnancy tests, 32 of which were positive. Of the positive tests, 28 received information on prenatal care, one on adoption, and three on all options.
8. Custer Family Planning Center, Bismarck - Serves the counties of Burleigh, Emmons, Grant, Mercer, Morton, Oliver, and Sioux. During calendar year 2000 the center performed 406 pregnancy tests, 83 of which were positive. Of the positive tests, 64 received prenatal care, eight chose abortion, and 11 had unknown outcomes.
9. Community Action and Development Program, Inc., Dickinson - Serves the counties of Adams, Billings, Bowman, Dunn, Golden Valley, Hettinger, Slope, and Stark. In calendar year 2001 the program performed 184 pregnancy tests, 17 of which were positive. The individuals with positive results were provided the "Before You Decide" brochure and encouraged to read it before making a decision. These individuals were also counseled regarding the options and provided information based on their decision or referred for further counseling, as appropriate.

Use of Temporary Assistance for Needy Families Funds

The committee received information on the potential use of federal temporary assistance for needy families (TANF) program funds for alternatives-to-abortion services programs. The committee learned if federal TANF funds are to be used for an alternatives-to-abortion program, any proposed legislation should indicate how the program will accomplish the purposes of federal TANF funding. Under federal law, the purpose of TANF funding is to:

1. Provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives.
2. End the dependence of needy parents on government benefits by promoting job preparation, work, and marriage.
3. Prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies.
4. Encourage the formation and maintenance of two-parent families.

Because TANF funding is a block grant to the states, any allocation by the Legislative Assembly generally will be considered appropriate. However, if the allocation is not consistent with federal law, it could be questioned by the State Auditor while conducting the state's single federal audit. The committee reviewed a letter from representatives of the federal Department of Health and Human Services indicating it may be appropriate for the state to use federal TANF funds for an alternatives-to-abortion services program.

Alternatives-to-Abortion Services

The committee heard testimony from representatives of organizations providing alternatives-to-abortion services in North Dakota.

Representatives of these organizations testified that the private sector is currently providing alternatives-to-abortion services in many parts of the state. These representatives also testified that if government program funding were made available for alternatives-to-abortion services, many of the organizations would likely not apply because of the potential negative involvement of the government in the operations and activities of the alternatives-to-abortion services programs.

The committee received information from the AAA pregnancy clinic in Fargo and learned the clinic is a nonprofit corporation that serves individuals facing a crisis pregnancy and provides community outreach educational programs focusing on abstinence education. The program began in Fargo in 1984. The clinic provides free services to women facing unplanned pregnancies. The program does not refer for abortions or provide information on abortion but provides life-affirming education and support services. Services provided by the clinic include medical services, financial support, and material aid. The program receives donations from individuals, businesses, and churches.

The committee received information from the Womens Care Clinic, Fargo. The Womens Care Clinic provides alternatives-to-abortion services and employs a full-time counselor to provide pregnancy counseling services.

Other Testimony

The committee received information from other interested persons. Comments included:

1. State involvement in alternatives-to-abortion services programs may reduce the private sector's motivation for developing these programs.
2. There is a need for more pregnancy crisis centers, but they should be financed by the private sector.
3. The state should not be involved in providing funding for birth control.

The committee received information from the North Dakota Life League. The North Dakota Life League reviewed the North Dakota family planning program in 1996 and 1997 and expressed the opinion that the program's brochures support abortion, advertise second trimester abortions at a Minnesota facility, and encourage promiscuous behavior.

The committee received recommendations from the North Dakota Life League for reducing the number of abortions. Recommendations presented included that the state:

1. Eliminate sex education in public schools.
2. No longer accept Title X funds which make contraceptives available to minors, enabling promiscuity among the state's youth, causing alarmingly high rates of related infectious diseases, and increasing the number and percentage of women who choose abortion.
3. Allow private sector programs to provide alternatives-to-abortion services without state involvement.
4. Not support abortion-related programs.

Committee Considerations

The committee reviewed a bill draft that would establish an alternatives-to-abortion marketing task force to develop and implement a statewide marketing plan to promote alternatives-to-abortion services and provide an appropriation of $100,000 from the general fund to the Department of Human Services to market the services during the 2003-05 biennium.

The committee received information from the State Department of Health regarding options for providing a toll-free telephone number for alternatives-to-abortion services referrals. The committee learned the State Department of Health is considering developing a statewide toll-free public health information line that would allow the public to gain health information, advice, and referrals. Nurses trained to assist the public using nationally recognized protocols and procedures would staff the line. The line would help detect bioterrorism, improve health, and increase efficiency. The committee learned the State Department of Health believes that nurses staffing the line could address questions relating to unexpected pregnancies and would provide information on all legal options, including alternatives-to-abortion and abortion services.

Conclusion

The committee does not make any recommendation as a result of its study of alternatives-to-abortion services.

CHARITABLE CHOICE STUDY

Senate Concurrent Resolution No. 4034 directed a study of the issues and concerns of implementing Charitable Choice.

Federal Law

Current Law

Charitable Choice is the privatization of federally funded welfare services through faith-based organizations. Charitable Choice provisions were first included in the federal welfare reform measure, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. This law allows states to administer and provide TANF services or benefits through contracts with nongovernmental entities or to provide TANF recipients with certificates or vouchers redeemable with private entities. The law allows states to contract with religious organizations to provide federally funded services under specifically named programs on the same basis as any other nongovernmental provider without impairing the religious character of the organizations or the religious freedom of the recipients. Charitable Choice does not contain new funding for faith-based organizations, and it only applies to programs designated by Congress. In addition to the TANF program, other federal programs authorizing Charitable Choice include the child care and development block grant, programs available under the community services block grant, and substance abuse treatment and prevention services programs under Titles V and XIX of the Public Health Services Act.

Under Charitable Choice rules, the government may not discriminate against an organization that applies to provide services on the basis of its religious character and may not require it to remove religious art or other symbols as a condition of participation. In addition Charitable Choice specifies that religious organizations retain control over the definition, development, practice, and expression of their religious beliefs. The rules contemplate that religious organizations will employ their faiths in publicly funded programs using their own resources. A religious organization's use of public funds is subject to audit, but if the federal funds are segregated into separate accounts, only these accounts are subject to audit.

Charitable Choice rules also require that a religious organization cannot discriminate against a beneficiary or potential beneficiary on the basis of religion or religious belief, and if a recipient objects to the religious character of the provider, the government must provide an alternate and accessible provider.

Concerns of the Charitable Choice provisions relate to the interpretations and applications of the establishment of the religion clause of the First Amendment which has generally been interpreted by the United States Supreme Court to prohibit government from sponsoring or financing religious instruction or indoctrination. Generally, programs operated by religious organizations that receive public funding in the form of grants or contracts must essentially be secular in nature. Charitable Choice attempts to move beyond these restrictions and allow faith-based organizations to participate in publicly funded social services programs while retaining their religious character.

Proposed Changes

In 2001 President Bush recommended expanding Charitable Choice by further involving faith-based organizations in the provision of government-funded services. The President's proposal included the following initiatives:

1. A commitment to fully implement the Charitable Choice measures that have been enacted into law.
2. The establishment of private programs incorporating Charitable Choice to assist children and families of prisoners, to improve inmate rehabilitation prior to release, to establish maternity group homes, and to provide after school programs for low-income children.
3. The creation of an office of faith-based and community initiatives in the White House to enhance and promote government's partnership with faith-based and community organizations.
4. The establishment of a center for faith-based and community initiatives in each of five federal agencies--the Departments of Health and Human Services, Housing and Urban Development, Labor, Justice, and Education.
5. Encourage and assist states to create offices of faith-based and community initiatives.
6. The expansion of incentives for private giving to religious and charitable organizations.

The committee monitored federal legislation throughout the interim and learned at the end of October 2002, two bills were still being considered by Congress relating to Charitable Choice--House Resolution 7, the Community Solutions Act, which passed the House of Representatives and Senate Bill 1924, the Care Act, which was not yet reported out of committee in the Senate. The committee learned the earliest the bills would be acted on would be mid to late November 2002.

Major provisions of House Resolution 7 are:

1. Nonitemizing taxpayers would be allowed to deduct charitable donations.
2. Faith-based organizations would be allowed to compete on an equal basis to provide certain programs administered by state or local governments, including juvenile justice and delinquency programs, crime prevention programs, housing programs, Workforce Investment Act programs, Older Americans Act programs, child care development block grant programs, community development programs, domestic violence programs, and hunger relief activities.
3. Faith-based organizations would not have to alter the organizations' forms of internal government or remove religious art or symbols to be eligible to participate in a program.
4. Faith-based organizations would be allowed to require that their employees adhere to their religious practices.
5. If an individual receiving services objects to the religious character of a faith-based organization, the appropriate federal, state, or local government entity must provide the recipient, within a reasonable time, an alternative, including a nonreligious alternative.

Major provisions in Senate Bill 1924 included:

1. An "EZ Pass" program would be created. "EZ Pass" is a simplified method of allowing faith-based organizations to become a 501(c)(3) organization in order to compete on an equal basis with other private providers contracting with a state or local government to provide services.
2. Nonitemizing taxpayers would be allowed to deduct charitable donations.
3. A compassion capital fund would be established, including $100 million to be granted to states or nongovernmental organizations for providing technical assistance to community based organizations, including those that are faith-based.

State Agency Contracts With Faith-Based Organizations

The committee received information from select state agencies on contracts with faith-based organizations.

Department of Human Services

The committee received information from the Department of Human Services regarding its contracts with faith-based organizations. The committee learned that for the 1999-2001 biennium the Department of Human Services contracted with 16 faith-based organizations at a cost of $10.9 million, $3.3 million of which was from the general fund. The major contracts related to refugee assistance, medical services, mental health services, guardianship services, intensive in-home services, and adoption services.

The committee learned the Department of Human Services enters into approximately 900 contracts each biennium, the majority of which involve federal funds. The federal government establishes monitoring requirements for contracts involving federal funds. For each contract the specific program administrator is responsible to ensure that the contract service is delivered according to contract terms. The majority of contracts require reports to be submitted at various intervals, to provide service data, and to measure results. Payment requests submitted are reviewed prior to payment by both the program administrator and the designated department accountant. In addition many contracts are reviewed through onsite programmatic reviews.

State Department of Health

The committee received information from the state Department of Health on its contracts with faith-based organizations. For the 1999-2001 biennium the Department of Health entered into four contracts with faith-based organizations totaling $255,204. The contracts related to screening, assessment, and educational services in the women, infants, and children (WIC) program and sexual assault services in the stop violence against women (STOP) program.

Department of Corrections and Rehabilitation

The committee received information from the Department of Corrections and Rehabilitation regarding its contracts with faith-based organizations. The committee learned that in the department's adult services program, the only contracts with faith-based organizations are those with pastors for providing chaplaincy services at the prison facilities in Bismarck and Jamestown. At the Youth Correctional Center the department contracts with the conference of churches for pastoral services, including drug and alcohol treatment services, at a cost of $120,000 per biennium. In addition the department contracts with Lutheran Social Services at a cost of $750,000 per biennium for statewide tracking services of students transitioning from institutional to community living.

Department of Public Instruction

The committee received information from the Department of Public Instruction regarding its contracts with faith-based organizations. The Department of Public Instruction administers the United States Department of Agriculture's Child Nutrition and Food Distribution Program. For the 1999-2001 biennium the department provided $1,190,712 of federal funding to faith-based organizations under the Child Nutrition and Food Distribution Program. In addition the department provided $62,000 of federal funds to Lutheran Social Services for the Great Plains Food Bank emergency food assistance program.

The committee learned the department indirectly provides funding to faith-based organizations for special education services. For the 1999-2001 biennium the Anne Carlson Center for Children received $3,482,646 in special education funding and the Dakota Boys Ranch received $714,996. In addition the Anne Carlson Center for Children received $4,080 to conduct a self-assessment of its special education program.

The committee also learned that faith-based organizations providing nonpublic education services receive federal education funding through public school districts in the state. For the 1999-2001 biennium faith-based organizations received $1,596,638 of federal education funding.

Conclusion

The committee does not make any recommendation as a result of its study of Charitable Choice.

TEMPORARY ASSISTANCE FOR NEEDY FAMILIES

North Dakota Century Code Section 50-09-29 provides that the Legislative Council approve any revisions to the administration of the TANF program by the Department of Human Services.

Pursuant to the section the department would need to receive Legislative Council approval to change the TANF program if there is insufficient work or opportunity to participate in work activities due to increases in the unemployment rate or if the administration of the program causes otherwise eligible individuals to become a charge upon the counties.

Federal Reauthorization

The committee learned the federal TANF block grant program is effective through September 30, 2002. At each committee meeting, the committee received information from the Department of Human Services on the status of the reauthorization of the federal TANF program by Congress. As of October 2002 Congress had not passed a bill reauthorizing the TANF program. Congress did, however, pass a continuing resolution continuing the TANF program under current rules and funding through December 31, 2002.

The committee learned in the discussions of TANF reauthorization, key issues supported by the states include:

1. Maintain funding at current levels.
2. Enhance states' flexibility.
3. Continue to require legislative appropriations of TANF funds.
4. Authorize contingency funding.
5. Remove designations on the uses of child care development block grant funds.
6. Maintain social services block grant funding and allow the flexibility to transfer funds between the TANF and social services block grants.
7. Restore TANF supplementary grants.

2001-03 Funding

For the 2001-03 biennium the Legislative Assembly appropriated $25.6 million, $4 million of which is from the general fund for the TANF program. As of October 2002 the Department of Human Services anticipates spending $28.2 million for TANF benefits, $2.6 million more than budgeted. The department anticipates the increased expenditures due to the number of TANF cases exceeding estimates by up to 460 cases per month. The committee learned the department received Emergency Commission and Budget Section approval in October 2002 to increase the appropriation authority for the TANF program by $3.1 million, of which $2.2 million is from the federal TANF block grant and $700,000 is from additional child support collections. The department anticipates carrying forward approximately $7.2 million of federal TANF block grant funds into the 2003-05 biennium, which is $1.7 million less than the $8.9 million anticipated to be carried forward during the 2001 legislative session.

60-Month Benefit Limit

The committee reviewed the number of North Dakota families that may be affected by the federally required 60-month limit on TANF benefits. The committee learned that based on January 2002 caseloads, 47 families may receive their 60th month of assistance by December 2002. Federal regulations allow exceptions for families with certain situations such as medical concerns or disabilities. The department anticipates one-half of the 47 cases to be eligible for one of the exceptions which will allow them to continue receiving assistance beyond the 60th month. In addition approximately 40 percent of these families are earning wages and would qualify for child care and other support services after reaching their 60th month. The committee learned families that become ineligible for TANF may be eligible to continue to receive food stamps, Medicaid, heating assistance, and child care assistance.

Service Referrals

The committee received information on methods used to refer TANF recipients to appropriate services. Under the TANF program, referrals to child support and the Job Opportunities and Basic Skills (JOBS) program are mandatory and done immediately when a family is determined eligible for the TANF program. Other referrals are based on individual needs which at times can be difficult to identify and if identified, acceptance of services by the TANF recipient is sometimes difficult if the individual does not believe services, such as substance abuse services, are needed.

Individual Development Accounts

The committee received information on options for state support of individual development accounts through TANF funding. Individuals are allowed to save money in an individual development accounts without reducing benefits. The committee learned that "Saving our Cents" is a program that encourages TANF eligible families to begin saving money for the future by establishing individual development accounts. The program is a partnership between three community action agencies in North Dakota--the Southeastern North Dakota Community Action Agency in Fargo, the Red River Valley Community Action Agency in Grand Forks, and the Community Action and Development Program in Dickinson.

Program Changes

The committee was not asked by the Department of Human Services to approve any changes to the TANF program during this interim.

DEVELOPMENTAL DISABILITIES SERVICES REIMBURSEMENT SYSTEM

Section 1 of Senate Bill No. 2307 provides that the Legislative Council receive quarterly reports from the Department of Human Services regarding the progress in preparing a joint recommendation with developmental disabilities services providers for consideration by the 58th Legislative Assembly regarding a new statewide developmental disabilities services provider reimbursement system.

The committee learned the Department of Human Services and the developmental disabilities services providers organized a work group to develop the recommendation. The work group included one provider representative from each of the eight human service regions, the Southeast Human Service Center director, the West Central Human Service Center's regional developmental disabilities program administrator, the director of Protection and Advocacy, two legislators, and Department of Human Services representatives from the executive office, medical assistance, developmental disabilities, and fiscal administration.

The committee received quarterly reports from the Department of Human Services regarding the work group's progress. The work group held its final meeting on October 21, 2002, and although consensus of all developmental disabilities services providers was not reached, the committee learned a strong majority expressed support for the department, in cooperation with the developmental disabilities industry, developing a bill to implement a prospective fee for service payment system in lieu of the current retrospective system. The prospective fee for service model would be based on allowable costs and be provider-specific. A prospective system will establish a reimbursement rate prior to the provision of services. Each provider's rate will be unique based on the respective provider's historic costs. The initial rate will be adjusted each year by inflationary increases until rebased as determined by the Legislative Assembly.

The Department of Human Services supports the recommendation with a targeted implementation date of July 1, 2005, with the understanding that the proposal will be budget-neutral.

The committee heard testimony from representatives of developmental disabilities providers regarding the recommendation. The committee learned the North Dakota Association of Community Facilities, which represents 26 developmental disabilities services providers in the state, supports the proposal recommended by the work group.

BUDGET TOURS

During the interim, the Budget Committee on Human Services functioned as a budget tour group of the Budget Section and visited the Northeast Human Service Center, North Dakota Vision Services - School for the Blind, Mill and Elevator, Developmental Center, Camp Grafton, Lake Region Human Service Center, and the School for the Deaf. The committee heard about facility programs, institutional needs for major improvements, and problems institutions and other facilities may be encountering during the interim. The tour group minutes are available in the Legislative Council office and will be submitted in report form to the Appropriations Committees during the 2003 legislative session.