Thursday, January 14, 2016

Formula to Fund Social Services Pitched to Lawmakers

Legislators got a first glimpse of a formula that could be used to fund social services. The Interim Political Subdivision Taxation Committee is studying the possibility of transferring the cost of social services from counties to the state; taking over the entire 20-mill social services levy. It is this committee that will move forward any proposed legislation or recommendations to the 2017 Legislative Session. Governor Jack Dalrymple, along with Deputy Tax Director Joe Morrissette, presented the proposed formula for state reimbursement of county social service costs to the committee.

“We have been gathering a tremendous amount of data. There has never been this kind of comprehensive look at what counties pay for social services,” Governor Jack Dalrymple told committee members.

The formula is based on the caseloads for each economic assistance and social service program in each county. There are many factors included in the formula including an inflationary adjustment and adjustments for counties at the high and low end of the caseload spectrum.  The intention of the model is to make sure counties are reimbursed for all their social service costs. Program costs associated with local-option services, not mandated by the state, are also included in the base costs.

Dalrymple added, “It looks promising. The cost to transition is affordable.”

The total cost of the transfer is estimated to be $130 million. The Governor has reiterated the motivation for this action is to provide significant property tax relief. He emphasized that this would be a $130 million savings statewide to property tax payers.

The idea does have support from many committee members, many referring to the fact that property taxes are a poor funding source for social services. Social service programs and services have nothing to do with a property’s value - unlike other services funded by property taxes like roads, parks, and law enforcement. In addition, counties have very little control over social service costs due to the numerous federal and state mandates.

“Justification to do this is on the table. We just have to find the right way to do it,” said Senator Dwight Cook.

Steve Reiser provides testimony to committee
NDACo Board President and Dakota Central Social Services Director Steve Reiser, Traill County Social Service Director Kim Jacobson, Wells County Commissioner Randi Suckut and NDACo Assistant Director Terry Traynor also testified to the committee. They illustrated ways counties are already sharing numerous services and, in some cases, have found efficiencies by forming social service districts. They also addressed some of the unique services they provide in their county.

The legislature actually began the reduction in property tax by assuming $23 million in county costs during the 2015 Legislative Session.  Senate Bill 2206, which prompted the larger study, shifted certain “program” or service costs that prior to January 2016 were billed to the county by the State.  NDACo Assistant Director, Terry Traynor shared preliminary data that reflects that counties were able to reduce their social service levies by an average of 2.83 mills, or an 18% reduction. That legislation has already led to lower property taxes as intended.

“This exceeds our initial projections. It is reflective of what happens when the state cuts costs, the levies will go down,” Traynor added.

Governor Dalrymple met with Social Service Directors during a separate meeting. He provided insight into the formula and answered any questions they had related to the funding plan. He reassured them the plan is to have staff stay 100% county employees, that the county will deliver 100% of the services and that the formula is designed to allow for fluctuations in cases.

“It is our intent the funding mechanism will cover all the costs and the formula will self-adjust.” Dalrymple continued by thanking Social Service Directors for the job they do every week. “You have a difficult job that works with various technical aspects. We want to make sure you have the resources you need to do your job.”

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