Enrolled Bill Summary

            House Bill 3343 amends the Insurance Code to enact the Texas School Employees Uniform Group Health Coverage Act and amends related school finance provisions in the Education Code and Tax Code. The act's major provisions include the following:

            Administration: The bill requires the Teacher Retirement System of Texas (TRS), as trustee, to implement and administer the uniform group coverage program and grants it the necessary rulemaking authority.

            Coverage: The bill requires TRS's plans to include at least two tiers of group coverage--a catastrophic care coverage plan comparable to that provided under the TRS-Care 2 plan and a primary care plan comparable to coverage provided state employees by the Employees Retirement System of Texas.

            Employer Participation: Effective September 1, 2002, participation is mandatory for school districts with 500 or fewer employees and regional education service centers (ESCs) and is optional for any district that had 501 but not more than 1,000 employees on January 1, 2001. Effective September 1, 2005, any district with more than 500 employees may elect to participate on application to TRS. These districts may be allowed to participate sooner if TRS determines that their participation is feasible and cost-effective. Certain districts that were members of a risk pool or were self-insured on January 1, 2001, may elect whether to participate. A charter school may participate if it agrees to an annual audit at its expense.

            Employee Participation: Eligible members include all full-time and part-time employees of participating employers who are members of TRS. Part-time employees who are not TRS members may participate if they pay the full premiums and other cost of the coverage selected.

            State Contribution: Each year the state will provide each participating district, charter school, and ESC a minimum of $900 for each covered employee for the purchase of group coverage. Each district, charter school, and ESC employee other than a TRS retiree returning to work, whether participating in the uniform program or not, will receive an annual minimum supplement of $1,000 for deposit in an employer's cafeteria plan. If the employee is not covered by a cafeteria plan, the employee must take the money as additional compensation.

            Employer Contribution: School districts, charter schools, and ESCs must maintain their 2000-2001 per-employee health insurance expenditures. Those employers also must spend at least $1,800 annually for each covered employee, and districts and charter schools may use state aid from the Foundation School Program to meet this minimum effort. A district that levies a maintenance and operation tax at the maximum rate of $1.50 per $100 valuation is entitled to state funds to make up the difference, if any, between the $1,800 per-employee minimum effort and the amount it is required to spend to maintain its previous per-employee effort, but once the $1,800 minimum is met, any excess may be spent on either additional benefits or increased compensation. The bill also provides a six-year stepped down hold-harmless provision for state fiscal years 2003 through 2008 for districts whose required maintenance of effort is less than the minimum effort.

            Employee Contribution: Participating employees pay the portion of the cost of coverage selected by the employee that exceeds the total state and district contribution.

            The bill amends school finance provisions in the Education Code and Tax Code as follows:

            Minimum Salary Schedule: The bill excludes the increase in a district's state and local funds that is attributable to an increase in the guaranteed yield level from the calculation of the minimum monthly salary for teachers and other professional school staff.

            Equalized Wealth Level: The bill increases the cap on districts' per-pupil property wealth from $295,000 to $300,000 for the 2001-2002 school year. Effective September 1, 2002, the cap is raised to $305,000.

            Additional State Aid: A temporary provision provides additional discretionary funds, budgeted at no more than $37 million for the biennium, to districts other than those whose taxable per-pupil wealth exceeds the equalized wealth level. Another provision entitles districts and charter schools participating in the uniform group coverage program to state aid in an amount needed to make up the difference between the districts' $900 per-employee contribution toward group coverage and 75 percent of the districts' increased state funding resulting from increases in the equalized wealth level, the guaranteed yield level, or the other additional state aid above.

            Tier II Guaranteed Yield: The bill raises the guaranteed level from $24.99 to $25.81 for the 2001-2002 school year. Effective September 1, 2002, the guaranteed level is raised to $27.14. For the 2001-2002 school year, districts may use additional state aid from increases to the equalized wealth level and guaranteed yield in this bill for any purpose, including a nonrecurring expense or a debt service. Effective September 1, 2002, a school district is required to use either 75 percent of additional state aid from increases in the guaranteed yield, equalized wealth level, and Tier I funding or the $900 per-employee state aid plus any state aid needed to make up the difference between the minimum effort and the required maintenance effort for health insurance.

            Rollback Tax Rate: The bill amends the Tax Code to adjust the rollback tax rates for the tax years 2003 through 2008 for districts that must raise their tax rates to comply with the minimum effort required to provide group health care coverage for district employees.