LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session February 4, 1997 TO: Honorable David Sibley, Chair IN RE: Senate Bill No. 215 Committee on Economic Development By: Nixon, Drew Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB215 ( Relating to notice and protest rights of certain reimbursing employers under the unemployment compensation system.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB215-As Introduced FN Revision 1 Implementing the provisions of the bill would result in a net impact of $0 to General Revenue Related Funds through the biennium ending August 31, 1999. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill. Fiscal Analysis This bill adds Section 205.0115 to Subchapter B, Chapter 205, Labor Code. This bill would require a reimbursing employer to have the same notice and protest rights as a taxed employer in lieu of the person for whom the claimant last worked under conditions which are set out in the bill. This bill would not give a reimbursing employer the right to protection from chargeback that taxed employers are afforded. It would, however, require the adjudication of the separation from the reimbursing employer to determine whether the claimant would be disqualified under the conditions specified in the bill. According to the agency, if this bill were to pass in its present form, the Texas Unemployment Compensation Act may no longer conform to federal standards, and the Dept of Labor would have the right to impose sanctions if the Texas Workforce Commission operated in accordance with the bill. Sanctions include employers' loss of tax credits against the federal unemployment tax and the loss of administrative grants and are not considered in the fiscal note. Methodolgy According to the agency, additional costs to modify the automated benefits system were calculated as: 52 weeks X 40 hours=2080 work hours per year. Increased costs of a grade 16, ADP Programmer II, at a cost of $2,757 in FY 1998 ($28,668/2080 hours = $13.7827 per hour. 200 hours X $13.7827) Additional staff costs to further investigate 5,554 claims: 52 weeks X 40 hours = 2080 work hours per year. Increased costs of a grade 12, Claims Examiner II, at $56,860 per year ($22,032/2080 hours=$10.5923 per hour. 5,368 hours X $10.5923). The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Salaries and Employee Change in Number Wages Probable Fringe Probable of State Savings/(Cost) Savings/(Cost) Employees from from Workforce from Workforce FY 1997 Commission Commission Federal Account - Federal Account - Federal 5026 5026 1998 ($59,617) ($15,029) 2.8 1998 (56,860) (14,334) 0.0 2000 (56,860) (14,334) 0.0 2001 (56,860) (14,334) 0.0 2002 (56,860) (14,334) 0.0 Net Impact on General Revenue Related Funds: The probable fiscal implication to General Revenue related funds during each of the first five years is estimated as follows: Fiscal Year Probable Net Postive/(Negative) General Revenue Related Funds Funds 1998 $0 1999 0 2000 0 2001 0 2002 0 No fiscal implication to units of local government is anticipated. Source: Agencies: 478 Research & Oversight Council on Worker's Compensation 453 Workers' Compensation Commission 320 Texas Workforce Commission LBB Staff: JK ,TH ,RA