BG C.S.H.B. 3234 75(R)BILL ANALYSIS PUBLIC HEALTH C.S.H.B. 3234 By: Hinojosa 4-16-97 Committee Report (Substituted) BACKGROUND Hospital Authorities are created by municipalities to ensure that the health care needs of area residents are met. The Health and Safety Code provides for the creation of Hospital Authorities and sets out their powers and functions. The authorities have bonding authority, but not taxing authority. The primary function of Hospital Authorities, as set out in the Code, is to acquire and operate hospitals. Statutory clarification is needed to allow Hospital Authorities to use funds for purposes other than for the operation of its hospitals. A problem arises, for example, when a Hospital Authority Board wants to use assets and funds for health-related programs which are not part of its hospital system. Another primary source of this dilemma is when a Hospital Authority has sold its hospital unit. Since the Hospital Authority no longer has a hospital to operate, the proceeds from the sale should be transferred to either the creating municipality or another entity which could then use the funds to serve the health care needs of the area. Under a recent Attorney General's Opinion, the Edinburg Hospital Authority was prevented from transferring the proceeds from the sale of the hospital back to the city. Under the opinion, the Attorney General stated that the Hospital Authority's only "public purpose," as provided for in the Code, was "to provide for and operate hospitals." The opinion went on further to state that even upon dissolution of the Hospital Authority, only transfers "specifically for the purpose of providing for and operating hospitals" would be valid. This narrow interpretation of the functions of Hospital Authorities hinders them from fulfilling their true purpose. The Health and Safety code must be clarified to allow Hospital Authorities to fulfill their role in providing for the health care needs of the area residents through a variety of medical programs. PURPOSE CSHB 3234 allows municipal hospital authorities to transfer assets to another governmental agency to fund or support items which are related to providing for the health care needs of those served by the authority. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 262.002, Health and Safety Code, by adding Subdivision (9) to define "health-related projects." SECTION 2. Amends Section 262.005(a), Health and Safety Code, by adding the prohibition of authority asset transferring by the authority and governing body without due compensation except to a governmental entity, as specified, to fund or support health-related projects. SECTION 3. Amends Section 262.033, Health and Safety Code, by adding Subsection (e) which allows the hospital authority to transfer proceeds from the sale of a hospital or part of a hospital to another governmental entity to fund or support health-related projects, as specified. SECTION 4. Amends Subchapter C, Chapter 262, Health and Safety Code, by adding Section 262.037 as follows: Sec. 262.037. HEALTH-RELATED PROJECTS. Allows an authority to transfer assets to a governmental entity, as specified, to fund or support health-related projects. SECTION 4: Emergency clause. Establishes that this Act takes effect upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE The changes made in CSHB 3234 were all made and drafted per recommendations of the Legislative Council. The substitute bill adds the term and definition for "health-related projects" to Sec. 262.002 of the Health and Safety Code, and then incorporates it into the added provisions of Chapter 262 as was outlined in the bill. Sec. 262.005 is amended in a slightly different way, but states essentially the same point in order to carry out the same purpose. In the substitute bill, Sec. 262.033 is amended by adding subsection (e) as opposed to the original version's addition of a new subsection (b). The intent and effect of these two paragraphs are the same, except that the substitute bill incorporates the reference to "health-related projects" as an authorized purpose of transfer and leaves the subsection designations intact in their current form. Additionally, CSHB 3234 adds Section 262.037 to the Health and Safety Code in order to clarify that a hospital authority may transfer assets to a governmental entity to fund or support healthrelated projects. This section serves the same function as SECTION 2 of the original bill which originally modified Sec. 262.022, Health and Safety Code, which is not amended by the substitute bill.