LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session April 4, 1995 TO: Honorable Kim Brimer, Chair IN RE: House Bill No. 1589 Committee on Business & Industry By: Jackson House of Representatives Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on House Bill No. 1589 (relating to the provision of workers' compensation benefits for certain state employees.; Relating to the provision of workers' compensation benefits for certain state employees) 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 bill would consolidate the state agency risk management program administered by the Workers' Compensation Commission and the workers' compensation payments program administered by the Office of the Attorney General into an independent Division of Risk Management which would be administratively attached to the Workers' Compensation Commission. It is assumed that if this bill were to be enacted that appropriations currently provided to the Office of the Attorney General for the administration of the workers' compensation payments function would be appropriated to the Division of Risk Management. The Division of Risk Management would experience a one-time start up cost associated with acquiring computer equipment and office equipment for Division employees. The bill would require the Division of Risk Management to develop and implement a cost allocation program for workers' compensation payments for certain agencies. Those agencies with workers' compensation claims which are in excess of the allocated amount would not be entitled to additional appropriations to pay such claims, but would be required to pay the excess claims out of funds appropriated to the agency. It is anticipated that such a cost allocation program, in conjunction with the bill's provisions requiring agencies to implement return to work programs and to maintain injured workers on the payroll for thirty days, would result in a significant reduction in the state's cost for workers' compensation payments. It is also anticipated that the bill's provisions requiring injured workers to remain on the state payroll for 30 days would result in an annual cost reduction in workers' compensation payments for state employees of approximately $2.5 million in General Revenue funds. This savings would, however, be offset by a like increase in salary costs to the affected state agencies. 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 Cost out Probable Savings Year of to the General the General Revenue Fund Revenue (Workers' Fund 001 Compensation Payments-State Employees) 1996 $1,363,184 $0 1997 0 2,300,000 1998 0 4,500,000 1999 0 6,600,000 2000 0 8,600,000 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: Office of the Attorney General, Workers' Compensation Commission LBB Staff: JK, RJ, KVO, RR