Minister: Financial Assistance Increased By $7M+

March 14, 2014

Speaking during today’s [Mar 14] Budget Debate in the House of Assembly, Minister of Community, Culture & Sport Wayne Scott said that Financial Assistance has been allocated $46.9 million for the continued provision of services during 2014/15, an increase of over $7 million.

The Minister said, “In FY 2013/14 spending by the Department of Financial Assistance has reached unprecedented levels, averaging $11 million to $12 million per quarter.

“Seniors and persons with disabilities now account for some 59% of the overall client base, whilst the numbers of able-bodied persons and persons with low earnings account for over 40% of all persons on financial assistance. The average numbers of persons on assistance and the total expenditure level are now at historic levels of about 2,680 persons and almost $50 million, respectively.

Minister Scott added, “The current level of financial assistance expenditure is unsustainable. For the past several years, the budget allocated to the Department of Financial Assistance has not been adequate to meet the demand for financial assistance benefits.

“The Ministry is constantly having to play catch-up and has again been forced to seek supplementary funding in this Honourable House during this Budget session in order to enable us to just meet the current demand for assistance I spoke about a moment ago.

A chart extracted from the Budget Brief showing the increase in financial assistance, click to enlarge:

2014-15 Combined Budget Brief for House.30-page-001

The Minister continued, “To further encourage our able-bodied clients to shorten the length of time on assistance, the Department will continue to work with the Department of Workforce Development, other government agencies and non-governmental agencies, to increase our collaboration in empowering our clients to seek and find gainful employment with anticipation of them being able to either decrease their need for assistance or to eliminate the need all together.”

“It would be prudent to ask us all to accept that the days of overspending are gone; we cannot continue to want what we do not absolutely need and that we cannot fool ourselves into thinking – that if you can’t afford it, government can. We are all in this boat together; and we must remain afloat.

“We are on a journey of social recovery. In doing so, we must continue to support those who are truly in need of financial assistance. However, we must also strive to do things differently. It is unacceptable to continue to increase spending for financial assistance year over year.

“We must nudge people off financial assistance and make them more accountable for financial management of their affairs. We must offer help to our people, where there are underlying social issues. We must not just give fish, but teach how to fish.”

The Minister also noted that the Investigative Officers in the Department have been successful in recovering approximately $85,000 over the last 10 months.

The portion about financial assistance follows below and the full budget brief is here [PDF]:

Head 55 – Financial Assistance

Mr. Chairman, I now turn my attention to Head 55, the Department of Financial Assistance.

Mr. Chairman, the current account expenditure estimates for Head 55 the Department of Financial Assistance is found on pages B-276 to pages B-279 of the Estimates Book.

The mandate of the Department of Financial Assistance is to ensure that individuals with insufficient financial resources have access to services in order to gain, maintain, or regain a minimum standard of living while encouraging personal and economic independence.

Mr. Chairman, Head 55 has been allocated forty-six million nine hundred and forty-eight thousand dollars ($46.948M) for the continued provision of services during FY 2014/15.

This represents an increase of seven million four hundred and seventy-two thousand dollars ($7.472M) or 19% over the original budget of thirty-nine million four hundred and seventy-six thousand dollars (39.476M) in FY 2013/14 (page B-277).

Mr. Chairman, The Department of Financial Assistance (DFA) is responsible for assessing applicants for financial assistance and child day care allowance, and granting benefits and awards under the guidance of the Financial Assistance Act 2001; the Financial Assistance Regulations 2004; the Child Day Care Allowance Act 2008 and the Child Day Care Allowance Regulations 2008.

Mr. Chairman, For the benefit of Honourable Members and our listening audience, and with your indulgence, I will provide a brief synopsis of historical expenditures in the Department of Financial Assistance.

Figure 1 in my brief graphically illustrates that total actual expenditures have risen steadily over the last decade and more sharply within the last few years. Figure 1 shows that the total actual expenditure has increased dramatically from around $16 million in 2005/06 and is expected to reach almost $50 million in 2013/14.

Mr. Chairman, During 2005/07 the average number of persons on financial assistance was about 680. At that time, seniors and persons with disabilities accounted for approximately 75% of the overall financial assistance client base. Several factors contributed to the observed dramatic increases in overall expenditure.

First, the closure of the indigent clinic in 2007 caused an influx of over 400 persons, with the average number of persons on financial assistance rising to over 1,100; this is an approximate 60% increase. Second, the child day care allowance programme launched in October 2008 and increased expenditures by $3.4 million and the average number of persons on assistance to around 1,360, a 25% increase.

Mr. Chairman, in 2009 there was an increase in health insurance premiums due to launch of FutureCare. This caused the average number of persons on assistance to rise to almost 1,500 persons and the total expenditures approached $32 million per year.

Mr. Chairman, the impact of the economic downturn, especially with the evaporation of the much needed second job for many Bermudians, began to be felt in earnest in Bermuda in 2010/11 and the average number of persons on assistance reached 1,575 and larger numbers of able-bodied persons and persons on low earnings applied for financial assistance.

Numbers of seniors and persons with disabilities also increased, albeit at a slower rate. These trends continued throughout 2011/12, such that by 2012/13 the number of able-bodied persons and persons with disabilities had increased to 941, with the average number of persons on assistance exceeding 2,200 and the total expenditure climbing to $43 million per year. The wave was continuing to build.

Mr. Chairman, in FY 2013/14 spending by the Department of Financial Assistance has reached unprecedented levels, averaging $11 million to $12 million per quarter. Seniors and persons with disabilities now account for some 59% of the overall client base, whilst the numbers of able-bodied persons and persons with low earnings account for over 40% of all persons on financial assistance. The average numbers of persons on assistance and the total expenditure level are now at historic levels of about 2,680 persons and almost $50 million, respectively.

Mr. Chairman, these levels of assistance and expenditure are expected to remain high throughout 2014/15, even when amendments made to the Financial Assistance Regulations in 2011, 2012 and 2013 to effect cost cutting measures are taken into account. Although the previous legislative amendments resulted in reduced individual monthly financial assistance payments, the fact remains that more people than ever before are applying for and receiving financial assistance benefits. However, we will continue the trend of reduced allowances which started in 2011, during this fiscal year.

Mr. Chairman, the current level of financial assistance expenditure is unsustainable. For the past several years, the budget allocated to the Department of Financial Assistance has not been adequate to meet the demand for financial assistance benefits. The Ministry is constantly having to play catch-up and has again been forced to seek supplementary funding in this Honourable House during this Budget session in order to enable us to just meet the current demand for assistance I spoke about a moment ago.

Mr. Chairman, at present financial assistance workers are servicing a very high caseload, averaging 225 cases per worker. This number far exceeds the amount of cases in terms of best practice for similar agencies. Given the trend of increasing numbers of persons applying for financial assistance, it would not be surprising to see the average number of persons on assistance exceed 3,000 in FY 2014/15. This number of clients would mean an average caseload of 250 per worker, and would be unacceptable and unsustainable.

Mr. Chairman, returning to page B-277 of the Estimates Book, it is clear that the bulk of the financial assistance budget is placed in Cost Centre 65050 – Grant Administration, which is budgeted at slightly less than $44 million for 2014/15 (page B-277). This cost centre includes funding for the Child Day Care Allowance Programme and the Financial Assistance Programme and also includes funding for organizational grant recipients who include: the Salvation Army, Care of the Blind; Meals on Wheels, Summerhaven, Matilda Smith Williams, STAR, Teen Haven, and Packwood Rest Home.

Mr. Chairman, in addition to assistance provided for rest or nursing home care, the Department also supports family members who qualify to enable their senior relative to remain in the household. This assistance, while cost effective to Government, provides a much needed boost for seniors to spend time with their families, and to remain in the households of their loved ones. This benefit is called Home Care Allowance and is at a cost of $2,000 monthly.

Mr. Chairman, as the majority of the clients serviced through the Financial Assistance Department continue to be seniors, disabled and persons with special needs, the Department endeavours to meet the needs of these populations in particular. Currently there are approximately 773 seniors serviced by the Department; approximately 163 are in rest/nursing homes; 103 are living in Bermuda Housing Trust properties. The remaining seniors reside alone or with family members. The Department also pays for FutureCare Insurance for all senior clients. Currently this rate is $440.00 monthly, and tends to increase yearly.

Mr. Chairman, as mentioned previously, the Child Day Care Allowance Programme was officially launched in November 2008 and is guided by the Child Day Care Allowance Act 2008 and Regulations 2008. The most recent amendments passed affecting the Child Day Care Allowance Act 2008 and the Child Day Care Allowance Regulations 2008 were made in 2013 with a view to revamp current criteria and to impose additional conditions in order to increase client responsibility and accountability.

To date, the expenditure has ranged from $267,183 to $295,192 monthly, with an average monthly award of approximately $794.00 monthly, per child, per month.

Mr. Chairman, most parents on the Programme remain single; employed and with one to two children in a child day care environment. The average savings per household could range anywhere from between $7,305 to $9,600 yearly (per child).

Mr. Chairman, the Government of Bermuda remains committed in assisting parents with the high cost of child day care. To date, the Child Day Care Allowance Programme has paid out over $15.8 million dollars towards this worthy cause which has benefitted over 2,750 children, and continues to lessen the financial burden of their parents/guardians.

Mr. Chairman, as noted above, the Department’s Financial Assistance Programme operates under the Financial Assistance Act 2001 and Financial Assistance Regulations 2004 and subsequent amendments made in 2004, 2008, 2011, 2012 and 2013.

Mr. Chairman, the most recent amendments passed affecting the Financial Assistance Act 2001; the Financial Assistance Regulations 2004; the Child Day Care Allowance Act 2008 and the Child Day Care Allowance Regulations 2008 were made with a view to revamp current criteria and to impose additional conditions, in order to increase client responsibility and accountability.

Mr. Chairman, the Department continues to assess persons based on the formula indicated in our Regulations 2004, where eligibility for an award will be established when the amount of allowable expenses of the person exceeds the amount of qualifying household income of the person/household for that period and the value of investments (whether located in Bermuda or elsewhere) owned by the person does not exceed $500 in the case of persons under the age of 65 and $5,000 for persons over the age of 65.

Mr. Chairman, as stated previously, there continued to be an increased demand for overall financial assistance within this last fiscal year. The total number of clients serviced has continued to increase, vacillating monthly, between 2,174– 2,720. This is an increase of approximately 265 more persons over this time last year.

This influx is viewed as unsustainable, and represents the continued building of the wave that started in earnest back in 2011.

Mr. Chairman, this increase in the numbers of applicants may be directly contributed to the shrinking of financial resources in our current economic climate. It also represents the unavailability of the essential second job for some, which has historically been necessary for many in Bermuda.

Mr. Chairman, due to the continued economic climate, it has been noted that the categories of able-bodied unemployed and earnings low persons, have more than doubled over this last year and tripled over the last 2-4 years. This equates to a payout of over $1.5 million, monthly, just for these two categories of clients. It should be noted, that we are seeing for the first time, people who have been out of work for two to three years, as their ‘nest eggs” are now depleted.

Mr. Chairman, the increase in this fiscal year’s budget for Head 55 of an additional $7.6 million reflects the amount required to service these increasing numbers of persons that have applied for assistance, and who are found to be in need. Expenditure over the last two years has increased from $9.7 million per quarter in the first quarter of 2012/13 to over $12 million quarter 3 of this fiscal year.

The high ticket items for payout include:
• Rents, that have topped $1.35 million monthly,
• Rest and nursing home fees, that have a pay out of approximately $630,000 monthly;
• insurance premiums, that cost over $620,000 monthly, and
• food, with a pay out of over $395,000 monthly, to name a few.

Mr. Chairman, again, this growing expenditure is unsustainable and must be addressed!

Mr. Chairman, To further encourage our able-bodied clients to shorten the length of time on assistance, the Department will continue to work with the Department of Workforce Development, other government agencies and non-governmental agencies, to increase our collaboration in empowering our clients to seek and find gainful employment with anticipation of them being able to either decrease their need for assistance or to eliminate the need all together.

Mr. Chairman, The second cost centre for the Department of Financial Assistance is 65080 – General Administration, which provides funding for the general administration, supplies of operation for the Department and includes salaries. This year just under $3 million has been allocated for salaries and general administration (page B-277). The subjective analysis shows that, despite the very high financial assistance caseloads I just referred to a few moments ago, all workers in the Department of Financial Assistance are subject to furlough days as part of the overall reduction in Government expenditure, thus the salaries object code shows a decrease of $132K for 2014/15.

Mr. Chairman, in light of this, I want to take the opportunity to salute all staff in the Department of Financial Assistance for the tremendous work that they do on behalf of the Government and people of Bermuda.

Mr. Chairman, The Department continues to provide income maintenance to Bermuda’s neediest individuals and families and does so in the most efficient and effective manner. This continues to be achieved through the commitment and diligence of the staff of the Department of Financial Assistance.

Mr. Chairman, in the upcoming year the Department will continue to focus on internal strategies to ensure that our clients can benefit from enhanced in-house services, as well as outreach services around issues dealing with minimizing or eliminating financial strife, as well as focusing on strategies for reducing the overall expenditure of the Department.

Mr. Chairman, the Investigative Officers in the Department have been successful in recovering approximately $85,000 over the last 10 months.

Mr. Chairman, abuse, misuse and fraud are committed by a small margin of recipients, however one infraction is one too many. In January of this year, the Department launched an anonymous Hotline for persons to report suspected cases of abuse of the system. The Department continues to extend an invitation to those members of the general public who may be aware of anyone who may be abusing the system, to report any possible misuse of Government funds by calling 297-STOP (7867).

Mr. Chairman, year-to-date, the 297-STOP number has generated some 38 phone calls to the Department since the first week of January 2014. This averages out to be over one call per day. Of the 38 calls: 3 have been unsubstantiated; 3 have been in reference to former clients (currently inactive); 5 were for general complaints or comments made by the public; 9 relate to open and ongoing investigations; and 18 have been substantiated. In other words, these early statistics show that some 18 of 21 anonymous calls (86%) have been found to be valid, and represent misuse of the financial assistance programme. I can confirm that steps have been taken to address the abuses that were reported.

Mr. Chairman, I have to stress again that payouts of over $12 million monthly are entirely unsustainable and we ask that members of the general public, the general community and private sector alike, all take this current situation into account. It would be prudent to ask us all to accept that the days of overspending are gone; we cannot continue to WANT what we do not absolutely NEED and that we cannot fool ourselves into thinking – that if you can’t afford it, government can. We are all in this boat together; and we must remain afloat.

Mr. Chairman, We are on a journey of social recovery. In doing so, we must continue to support those who are truly in need of financial assistance. However, we must also strive to do things differently. It is unacceptable to continue to increase spending for financial assistance year over year. We must nudge people off financial assistance and make them more accountable for financial management of their affairs. We must offer help to our people, where there are underlying social issues. We must not just give fish, but teach how to fish.

Mr. Chairman, in the very near future I will be outlining a new schedule of allowable expenses for persons on financial assistance. We intend to continue to help people in need, but at the same time we have to strive to lessen the burden on the taxpayers as a whole.

Mr. Chairman, the staff of the Department of Financial Assistance should be applauded and commended for their continued commitment and for the efficient manner in which they carry out their duties and responsibilities.

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Comments (18)

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  1. Al says:

    The PLP legacy: more poverty, more struggling.

  2. fox_gap3 says:

    I wonder how often the number of people on financial services is viewed. I know people on financial assistance receiving child support ($100 per week) working and getting tips from their job and are on financial assistance! Is this right? Should individuals like these not be removed? Too many females on financial services that should not be!

  3. haha says:

    Thanks PLP….haha

  4. CommonSensenBda says:

    We need to do what the PLPbiu WANT!

    Every senior should receive $1 million a piece….but only to African/Bermudians.
    (White Bermudians received their money when Slavery was REWARDED by the British Parliament.)

    Every government worker should be given two GUARANTEES;

    No matter what they do, they will NEVER lose their jobs, bar death
    Employees will be paid 5% more than the current levels, every year.

    The Parliament should also pass a law that the first party that was formed will be the ONLY party to form the GOVERNMENT for ONE HUNDRED YEARS, or until they VOLUNTARILY allow a new party to be formed UNDER CONDITIONS they control.

    • eview says:

      The more ppl unemployed the more assistance we will need but keep blaming instead of looking for solutions PLP/OBA I just wanna work n support my family Bermuda is so divided its crazy

  5. Herman says:

    Wayne Scott? like really? He is always coming with the same rant…! He should be careful because he may be on financial assistance if things change…his pretentious british accent (and he went to school in america) and his moral laxity all befit the stature of a lilliputian not a MP. He is the mouthpiece of the conservatives who resent the black poor. They are the ones who are okay with you looking like tommy tucker or a street vagrant but don’t see the history that shaped the complexity of our poverty stricken dependent segment of the society. They are lost and Wayne is doing their bidding and he will be kicked in the backside when they are done with him too…!

  6. Coffee says:

    It will double under the OBA .

  7. one time says:

    How many people are on financial assistance? That seems like a big budget for a small population.

    • Eye of Horus says:

      This is what happens when a tiny island is GLOBALIZED.

  8. sweetheart says:

    You do know that there are white, yellow , olive and red skin colours in Africa, not only black. Why do people class themselves as African/Bermudian? Chances are they or thier parents have never been to Africa, much less born there. Bermudian is Bermudian, no matter what colour our skin is….we are BERMUDIAN. Look to who a person is inside and forget the skin colour…..then WE as A COUNRTY CAN START HEALING and working together……

    • Valirie Marcia Akinstall says:

      @Sweetheart…

      You do not need to be born in Africa to know that you are African descent, and skin colour is NOT the only criteria either.

      John Kerry, the US Secretary of State wife is an African-Amercian, she is white and was born in Africa. And she points that fact out to those who know not.

      Most Africans you meet in London, if asked, they will tell you that they are Africans, then they will sate which country in Africa they were born.

      The PLP is not a black party but rather a party with a majority of Black members and it has crafted its views and policies to embrace their majority membership.

      The OBA is not a white party but rather a party that attracts the majority of white voters.

      Let any party make a major change in its rhetoric and bring economic growth and stability back to Bermuda and you will see a major shift in voting patterns. In other words, many voters will change their vote based upon the financial health of the island and sincerity of the party leadership as negative campaigning

  9. Alvin Williams says:

    One thing that the PLP failed to do when it was the government was to carry forward the idea of unemployment insurance which it briefly broached
    only to back away when it experience criticism.
    It may not have solve Bermuda’s growing unemployment situation; but it certainly would have taken a bit of the sting out of what we are experiencing now.
    If the OBA government’s plan is to arrest the growth of the need for social assistance spending by catching as many cheats as they can and thereby bounce them off the roll; than they will only trade the need for social assistance for social unrest. There was a time that some Bermudians may have looked down their noses at doing certain jobs in this country; not any more. A former UBP labour minister; the late Sir John Sharpe once stated when press on the number of non-Bermudians working in Bermuda; that these jobs were preserves for Bermudians? And there was a time that a number were sent back. Now we hear that Bermudians must wait until more workers are brought in so that they can create jobs for Bermudians? Well as a Bermudian I can put forward one good reason why we can’t wait’ the economic survival of Bermudian families.

  10. pissed says:

    May some of this go to coverage gor seniors and hip insurance,my wife has hip insurance and had a proceedure done that they don’t do here ,an angio gram,….16,000 dollars,lcca assisted were double billed to the tidy sum of 34,000 dollars…which they paid,hip (who pays that amount without enquirey?),hip pays them…again…without enquirey…twice …double the amount….bills my wife 34,000 dollars….we paid our travel and lodging food and car rental ….the proceedure is 16,000 dollar.
    My wife was the only one who questioned anything and to straighten it up a bit …it was adversarial and a great period of time lapsed with constant attempts ,to get closure and ratification…..sooooo…my wife actually ended up saving both LCCA “and”HIP 16,000 dollars of her sole volition…she contacted the hospital and told them straight they double billed ,then told LCCA…then told HIP.
    At the end of the day….of all the money we pay monthley since inception all HIP has paid onnit is 900 dollars.So now my question is …if Hip will pay 100% of this proceedure at Layhey clinic….why not Orlando regional?We saved by going to Orlando…air travel,room and board etc etc………there is no “reasonable”,reason why assistance is rendered for this one and not that!Period.Some one please straighten this out…We have tried ….and tried….and tried….and tried…and tried…and tried….so on and so on….corolate ,compare…whatever….but all law requires reason….what is reasonable…and what is unreasonable,that being said…I wish to know how many people have had angiograms,where they had them done,how much HIP paid,for a period not exeeding their issuance of charter to act and operate as an insurance agent by charter from Bermuda Monitory Athourity,forensically,look for commonality in payments ,take it right down to ethnicity if need be,who gets,and who doesn’t.How do they % their assistance in comparison to world insurance regulation.?.

  11. pissed says:

    Now…..all that being said…when the Florida hospital sent that momey back…was it wired..put back in an account belonging to HIP,or did it go to a private account…this is in fact what double billing leads to…I’m not saying it has….but considering that HIP hasn’t actually steped to the plate money wise since…it appears they have no intention to…..this is why I ask what became of the money paid back by Florida regional….can it be physically accounted for?….follow the transaction through accountant general….

  12. Any and every darn double billing incident…I call it an incident because it is a reoccuring incident…and anything over 10,000 dollars is felonius….failure to look intuit is a tort …or a waste of an AGS’wage.

  13. jiminywilikers batman….say it isn’t soooooo…

  14. yes we had this problem in my country…

  15. Prayerful says:

    I for one, would prefer if Future Care would raise the prescription allowance so that I can save my dignity and not need financial assistance. I would prefer to pay a higher premium and not need financial assistance. It is about our dignity as seniors.