LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                              March 24, 1999
  
  
          TO:  Honorable Patricia Gray, Chair, House Committee on Public
               Health
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  HB2641  by Gray (Relating to the continuation and
               functions of the Health and Human Services Commission.),
               As Introduced
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB2641, As Introduced:  positive impact of $470,000 through the       *
*  biennium ending August 31, 2001.                                      *
*                                                                        *
*  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 continue the Health and Human Services Commission and
establish a new sunset date of  September 1, 2007.
  
General Revenue-Related Funds, Five-Year Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2000                            $(15,000)  *
          *       2001                              485,000  *
          *       2002                            2,385,000  *
          *       2003                            2,385,000  *
          *       2004                            2,385,000  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
***************************************************************************
*Fiscal  Probable (Cost)     Probable    Probable (Cost)     Probable     *
* Year     from General    Savings from    from Federal    Savings from   *
*          Revenue Fund  General Revenue      Funds       Federal Funds   *
*              0001            Fund            0555            0555       *
*                              0001                                       *
*  2000         $(65,000)         $50,000         $65,000         $50,000 *
*  2001          (65,000)         550,000          65,000         550,000 *
*  2002          (65,000)       2,450,000          65,000       2,450,000 *
*  2003          (65,000)       2,450,000          65,000       2,450,000 *
*  2004          (65,000)       2,450,000          65,000       2,450,000 *
***************************************************************************
  
Fiscal Analysis
  
The bill would require the Health and Human Services Commission to
directly manage business and information systems of health and human
services (HHS) agencies.  In addition, the bill would require the
consolidation of regional support services for HHS agencies.  The Sunset
Advisory Commission (SAC) reports that these efforts will reduce
duplicative efforts in existing management systems. SAC estimates that
other bill provisions would assign management control over key agency
operations and result in savings to the State.

The bill would create a local government advisory committee to assist
local entities with federal funding efforts and coordination of
services. Reimbursement for travel and other committee related expenses
must be authorized in the General Appropriations Act.
  
  
Methodology
  
Total costs of $130,000 would be required to implement the bill, as
estimated by the Sunset Advisory Commission.  The costs relate to
provisions that would require the Health and Human Services Commission to
employ a medical director.

Sunset Advisory Commission estimates savings of $100,000 in fiscal year
2000 and $500,000 each subsequent year relating to the cross-agency
coordination of on-site and desk auditing of HHS agency contractors.  The
regional consolidation of HHS agencies' support services is anticipated
by SAC to reduce expenditures by $400,000 each year beginning in fiscal
year 2001.  The consolidation of information technology planning and
management is estimated by SAC to reduce expenditures by $200,000 in
fiscal year 2001 and $1.0 million each subsequent year.

Annual savings after the 2000-01 biennium as estimated by the Sunset
Advisory Commission correspond to changes in rate setting ($1.0 million)
and Medicaid operations and contracting ($2.0 million).  The SAC projects
that $10.0 million in additional federal revenue annually will be gained
through the required management of federal funds by HHSC beginning in
fiscal year 2002.

Sunset Advisory Commission reports that staff and other resources
necessary for HHSC to perform the duties required by the bill would be
derived from existing resources and staffing within the HHS agencies.
SAC notes that consolidation of administrative functions should lead to
a net reduction in FTEs.
  
  
Local Government Impact
  
The Sunset Advisory Commission anticipates that an increase in federal
funds will be available to local entities due to the creation and
efforts of a local government advisory committee.
  
  
Source Agencies:   
LBB Staff:         JK, TP, AZ