LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session March 23, 1995 TO: Honorable Ken Armbrister, Chair IN RE: House BillNo. 1089, Committee on State Affairs as engrossed Senate By: Brimer, et al. Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on House Bill No. 1089 (relating to the continuation and functions of the Texas Workers' Compensation Commission; providing penalties) this office has determined the following: The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. The Texas Workers' Compensation Commission is subject to the provisions of the Texas Sunset Act, and unless continued in existence by the Legislature, will be abolished effective September 1, 1995. The amount set forth for the administration of this agency in the General Appropriations Act, as introduced, (FY 96 = $ 41,861,126; FY 97 = $ 41,902,297) would be contingent upon passage of HB 1089 or similar legislation. The appropriations would be financed from the General Revenue Fund, General Revenue Fund - Consolidated, Federal Funds, Appropriated Receipts, Interagency Contracts, and Earned Federal Funds and would provide for approximately 1,266 employees. The bill would continue the Texas Workers' Compensation Commission and make several changes to the enabling statute. The most significant change includes authorizing the risk management division to review and approve state agency risk management plans, requiring state agencies to implement and maintain health and safety programs and return-to-work programs, and defining individual state agencies as employers for workers' compensation purposes. The annual savings to the state is estimated to be $2,970,000 in fiscal year 1996 and $5,940,000 in fiscal year 1997. The bill would have an impact on special and local funds. These funds are non-general revenue funds and may include federal funds controlled by certain agencies or local funds controlled by universities. State agencies are responsible for identifying workers' compensation claims paid to employees whose salaries are funded from these funds and subsequently reimbursing the General Revenue Fund for that amount. Assuming 12 percent of the total workers' compensation claims are paid by special and local funds, it is anticipated that the savings to local and special funds would be approximately $405,000 in FY 1996 and $810,000 annually beginning in FY 1997. The bill would require employers to file a report of injury with insurance carriers and would require insurance carriers to electronically file a report of injury with TWCC. This provision would reduce the number of personnel required for data entry and would reduce the cost of storing these forms. The annual savings to the state is estimated to be $122,705. The bill would strengthen the requirements for persons to serve as agency ombudsmen. Because of expected turnover, lost productivity, and additional travel expenses associated with these new requirements, the annual cost to the state is estimated to be $77,780. The bill would also require the TWCC to monitor and evaluate the performance of doctors in the system and take enforcement action against doctors who do not meet standards set by the commission. Because of additional personnel required to perform these new responsibilities, the annual cost to the state is estimated to be $46,559 in fiscal year 1996 and $41,559 in fiscal year 1997. The bill also authorizes the commission to impose an administrative fine of up to $500 on non-covered employers with five or more employees who fail to file required reports on injuries and illnesses. The agency is also authorized to take administrative action against insurance carriers and health care providers in the system for certain violations of the Act or rules without having to establish a pattern of practice. Because the number of administrative penalties that will be levied and the amount of the penalties is not known, the fiscal implications of these provisions cannot be estimated. The bill would transfer responsibility for conducting administrative procedure hearings to the State Office of Administrative Hearings. This provision will involve a shift of resources from the TWCC to the SOAH, but it is not expected to result in any overall fiscal impact to the state. It is anticipated that TWCC will enter into interagency contracts with SOAH (as do all other agencies receiving services from SOAH) to receive the administrative procedure hearings from SOAH. The amounts of the interagency contracts that would be transferred from TWCC to SOAH have not been determined yet. The reduction in personnel at TWCC would be offset by the increase in the number of personnel at SOAH. The probable fiscal implication of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Fiscal Probable Savings Probable Savings Probable Cost Out Year to the General to the of Revenue Fund 001 General Revenue General Revenue (Workers' Fund 001 Fund 001 Compensation (Texas Workers' (Texas Workers' Payments- State Compensation Compensation Employees) Commission) Commission) 1996 $2,970,000 $122,705 $124,339 1997 5,940,000 122,705 119,339 1998 5,940,000 122,705 119,339 1999 5,940,000 122,705 119,339 2000 5,940,000 122,705 119,339 Fiscal Change in Year Number of State Employees from FY 1995 1996 (5.0) 1997 (5.0) 1998 (5.0) 1999 (5.0) 2000 (5.0) Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. No fiscal implication to units of local government is anticipated. Source: Sunset Advisory Commission, Office of the Attorney General Workers' Compensation Commission, LBB Staff: JK, KVO, DF