LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 76th Regular Session May 10, 1999 TO: Honorable Jane Nelson, Chair, Senate Committee on Health Services FROM: John Keel, Director, Legislative Budget Board IN RE: HB3504 by Solis, Jim (Relating to the long-range plan for the South Texas Hospital and the provision of tuberculosis and other health care services in the Lower Rio Grande Valley.), As Engrossed ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB3504, As Engrossed: negative impact of $(23,892,328) 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 $(16,600,000) * * 2001 (7,292,328) * * 2002 (8,292,328) * * 2003 (7,792,328) * * 2004 (7,792,328) * **************************************************** All Funds, Five-Year Impact: ************************************************************************** *Fiscal Probable Probable Revenue Change in Number of * * Year Savings/(Cost) from Gain/(Loss) from State Employees from * * General Revenue Fund General Revenue Fund FY 1999 * * 0001 0001 * * 2000 $(16,600,000) $0 0.0 * * 2001 (1,600,000) (5,692,328) (50.5) * * 2002 (2,600,000) (5,692,328) (50.5) * * 2003 (2,100,000) (5,692,328) (50.5) * * 2004 (2,100,000) (5,692,328) (50.5) * ************************************************************************** Fiscal Analysis The bill would require the Board of Health to contract for the construction of a new physical facility for outpatient health care services at the site of the current South Texas Hospital or collocated with initial site of the Regional Academic Health Center at a common site in Harlingen, Texas, and adjacent to the center. The bill would require the department to contract for renovations of the facilities at the South Texas Hospital in order to continue to provide outpatient services until construction of the new facility is completed. The department would be allowed to contract with a political subdivision to provide outpatient care. The department would be required to contract with a public or private health care provider or entity to provide inpatient health care services, including tuberculosis services, and laboratory services currently provided at the South Texas Hospital. The bill would authorize persons whose positions are eliminated due to transfers of services and contracts required by provisions in the bill certain enhanced retirement benefits, under certain circumstances. The bill would require the Department of Health to give the Texas Department of Mental Health and Mental Retardation the first option to lease the current physical facilities of the South Texas Hospital on completion of the construction of a new physical facility. Interagency support services agreements would be maintained. Methodology Costs to renovate physical facilities to provide tuberculosis and other health care services are assumed by the Department of Health to total $15 million in General Revenue in 2000. An additional $1 million would be required in 2002 for moving and transition expenses and an additional $500,000 in fiscal years 2003 and 2004 for increased operating expenses in the new facility. Additional resources required to contract for inpatient tuberculosis services is assumed to be approximately $2.6 million in General Revenue per fiscal year, beginning in 2001. The department estimates a salary savings of approximately $1 million per fiscal year in association with the reduction in Full-Time Equivalent positions due to contracting for services. Requiring the Department of Health to contract for inpatient services and no longer directly provide those services at the South Texas Hospital would result in a loss of approximately $5.7 million per year to the General Revenue Fund from the Disproportionate Share Hospital program. It is probable that implementing the provisions of the bill relating to enhanced retirement benefits for certain persons would not impact the actuarial soundness of the Employees Retirement System based on the current contribution rates for the next biennium. Therefore, no additional state contributions for retirement would be necessary. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 501 Department of Health LBB Staff: JK, TP, KF