LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session May 11, 1999 TO: Honorable Florence Shapiro, Chair, Senate Committee on State Affairs FROM: John Keel, Director, Legislative Budget Board IN RE: HB2877 by Maxey (Relating to the lease of certain facilities and the retirement options and health coverage of certain employees in connection with implementation of integrated enrollment services for health and human services programs.), As Engrossed ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2877, As Engrossed: positive impact of $626,003 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. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2000 $305,367 * * 2001 320,636 * * 2002 (1,007,462) * * 2003 (484,966) * * 2004 (18,904) * **************************************************** All Funds, Five-Year Impact: *********************************************************************** *Fiscal Probable Probable Probable Probable Change in * * Year (Cost) from (Cost) from Savings Savings Number of * * General Federal from from State * * Revenue Funds General Federal Employees * * Fund 0555 Revenue Funds from FY 1999 * * 0001 Fund 0555 * * 0001 * * 2000 $0 $0 $305,367 $404,789 0.0 * * 2001 0 0 320,636 425,028 0.0 * * 2002 (1,344,129) (1,781,753) 336,667 446,280 (1,125.0) * * 2003 (838,467) (1,111,456) 353,501 468,594 (1,671.0) * * 2004 (390,080) (517,083) 371,176 492,023 (1,923.0) * *********************************************************************** Fiscal Analysis The bill would provide authority for health and human services (HHS) agencies to co-locate with private service providers that provide publicly funded health, human or workforce services in leased or subleased space and to share business resources under certain circumstances. HHS agencies or the Texas Workforce Commission (TWC) may assume a lease from a Texas Integrated Enrollment Services initiative contractor or subcontractor for the purpose of implementing the initiative at one development center, one mail center or 10 or more call centers. The bill would affect state employees whose positions with the TWC, Department of Health (TDH), Department of Human Services (DHS) or Department of Mental Health and Mental Retardation are eliminated before September 1, 2003 by contracts with the private sector service providers or other reductions in services of those agencies. State employees who separate from state service at that time would be offered a temporary retirement option. Such employees who would be eligible for service retirement with an additional three years of age and three years of service are eligible to retire immediately when their positions are eliminated with an additional three years of service credit. Employees not eligible for this first option who would be eligible for service retirement with an additional five years of age and five years of service are eligible to retire with no additional service credit at the point that they would have been eligible if they had continued in state employment. TDH and DHS employees who receive a cash payment (and two months of health coverage after separation from the state) under an incentive program would not be eligible for this retirement option. It is assumed that the provisions of the bill would apply to the Texas Integrated Enrollment and Services (TIES) project. The Health and Human Services Commission (HHSC) reports that most employees affected by the provisions of the bill are currently employed as eligibility workers by the Department of Human Services. In HHSC's estimation, there would be approximately 2,400 full-time equivalent positions reduced with the implementation of a TIES re-engineered business process. Methodology Based on estimates coordinated by HHSC, it is assumed that twenty percent of the identified FTEs would find state employment elsewhere, ten percent would select the early retirement option, and the remaining FTEs would opt for a bonus with two months of health coverage. Based upon Employees Retirement System (ERS) information, it is estimated that 243 employees will be eligible for (and take advantage of) the enhanced benefits based on three years added to age and service. Their estimates assume that all members to retire with three years added to age and service would do so in fiscal year 2000. HHSC estimates assume that actual FTE reductions would begin in fiscal year 2002 and continue through fiscal year 2004. HHSC also assumes that "re-engineered business processes" will be implemented which would close a number of local offices and institute call centers as the main entry point to eligibility for a number of health and human services programs. HHSC's estimates assume an average bonus cost of $3,000 and two months of health coverage. They also assume that incentives would not be provided until after individuals complete their required amount of service with their respective state agency. It is assumed in the method of financing that the federal partners will share costs and savings in current proportions. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 529 Health and Human Services Commission, 320 Texas Workforce Commission, 324 Department of Human Services, 303 General Services Commission LBB Staff: JK, SD, TP, AZ