Austin, Texas
                                   FISCAL NOTE
                               75th Regular Session
                                  April 15, 1997
      TO: Honorable Judith Zaffirini, Chair            IN RE:  Senate Bill No. 940
          Committee on Health & Human Services                              By: Nelson
          Austin, Texas
         FROM:  John Keel, Director    
In response to your request for a Fiscal Note on SB940 ( Relating 
to the state's mental health and mental retardation services 
system; providing penalties.) this office has detemined the 
         Biennial Net Impact to General Revenue Funds by SB940-As Introduced
Implementing the provisions of the bill would result in a net 
positive impact of $2,544,000 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 would amend the Health and Safety Code to designate 
the Department of Mental Health and Mental Retardation (TDMHMR) 
as the state's lead agency in policy and services related to 
mental health, mental retardation, and behavioral health.  Each 
state agency or local mental health and mental retardation authority 
with a responsibility related to mental health, mental retardation, 
or behavioral health policy or services would be required to 
conform to TDMHMR s policies and standards regarding that responsibility.

from implementing the provisions of this bill are estimated 
to be $1,272,000 in fiscal years 1998 and 1999, and $723,000 
in fiscal years 2000-2002.
The bill would partially implement Texas Performance Review 
(TPR) recommendation HHS19 in Disturbing the Peace:  The Challenge 
of Change in Texas Government.  The sections of the bill that 
would implement TPR recommendations having a fiscal impact to 
the state are described below.

Section 3 of the bill would 
require that TDMHMR to conform to state agency space standards. 
 The Comptroller estimates that since the release of the report, 
TDMHMR has avoided $570,000 in lease costs by eliminating all 
Central Office lease space in the Austin area and consolidating 
staff into available space at the Central Office facility and 
Austin State Hospital.  The Legislative Budget Board recommendations 
for the 1998-99 biennium include a reduction of $1,200,000 for 
the move from rent to state-owned office space.  This recommendation 
has been adopted by the House Appropriations Committee and Senate 
Finance Committee.  No additional savings from implementing 
this provision of the bill are anticipated.

Section 5 would 
provide penalties for violations of a service provider contract. 
 These sanctions could result in fines, penalties, or withholding 
of payments and would reduce provider contract violations. 

6 would require TDMHMR to establish a reimbursement system for 
local mental health and mental retardation centers designed 
to contain costs for services funded from the General Revenue 
Fund.  Standardized rates would reduce payments for various 
services provided by health professionals.  According to the 
Comptroller's estimate, general revenue savings in fiscal 1998 
and 1999 would be $1,272,000 each year, and beginning in fiscal 
year 2000, annual savings in general revenue would be reduced 
to $723,000 due to the offset effect of disproportionate share 

Section 12 would require TDMHMR to conduct a 
comprehensive review of a local mental health or mental retardation 
authority every three years.  Current law requires these audits 
each year.  More frequent reviews could be conducted if warranted. 
 This would help the department focus its audit resources where 
they would be most productive, thus utilizing the department's 
resources more efficiently.  According to HHS 19 in Disturbing 
the Peace, TDMHMR has reviewed applicable policy and practice 
issues and has written new procedures which would most effectively 
be implemented on a maximum three-year cycle.

Section 13 
would require TDMHMR to incorporate a voucher reimbursement 
system for certain programs.  Savings would result from a change 
in the reimbursement methodology for the Home and Community-based 
Services (HCS) program and other programs.  According to the 
Comptroller, the estimated savings would be $4,840,000 in fiscal 
1998, $9,680,000 in fiscal 1999, $14,520,000 in fiscal 2000, 
and would increase to $19,360,000 each year beginning in fiscal 

In response to legislative direction during the previous 
session, TDMHMR has already implemented a new HCS reimbursement 
rate methodology.  The Legislature enacted a $10.4 million general 
revenue reduction for the 1996-97 biennium based on implementing 
this new reimbursement methodology.  In January 1997, TDMHMR's 
Board of Directors approved the revised HCS reimbursement methodology. 
 TDMHMR anticipates collecting $110 million in additional federal 
funds for the 1998-99 biennium based on the new rate methodology. 
 Implementing TPR's recommendation and further reducing general 
revenue in order to incorporate the savings from Section 13 
of the bill could jeopardize the department's collection of 
the additional federal funds.  No additional savings are assumed 
from implementing this provision of the bill.  

Section 14 
would create a conservatorship program at TDMHMR to allow TDMHMR 
to assume operations of a service provider.  Implementation 
of the conservatorship program should help to ensure better 
use of TDMHMR funds and allow appropriate client services to 
continue without interruption. 
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 Probable           
            from General                                                                                  
            Revenue Fund                                                                                  
       1998        $1,272,000                                                                        
       1998         1,272,000                                                                        
       2000           723,000                                                                        
       2001           723,000                                                                        
       2002           723,000                                                                        
         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
               1998           $1,272,000
               1999            1,272,000
               2000              723,000
               2001              723,000
               2002              723,000
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:            Agencies:   
                                         302   Office of the Attorney General
                                         304   Comptroller of Public Accounts
                                         655   Texas Department of Mental Health and Mental Retardation
                      LBB Staff:   JK ,BB ,MG