1-1 By: Gallegos S.B. No. 1246 1-2 (In the Senate - Filed March 7, 2001; March 12, 2001, read 1-3 first time and referred to Committee on Health and Human Services; 1-4 April 23, 2001, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 7, Nays 0; April 23, 2001, 1-6 sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1246 By: Shapleigh 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to the establishment of a community health center 1-11 revolving loan fund program. 1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-13 SECTION 1. Title 9, Human Resources Code, is amended by 1-14 adding Chapter 136 to read as follows: 1-15 CHAPTER 136. TEXAS COMMUNITY HEALTH CENTER REVOLVING LOAN FUND 1-16 Sec. 136.001. PURPOSE. The legislature finds that: 1-17 (1) community health centers play a significant role 1-18 in the delivery of medical care and related services to the 1-19 residents of this state who cannot afford health insurance; 1-20 (2) community health centers are a cost-effective way 1-21 to provide primary and preventive health care to populations 1-22 lacking quality health care by reducing hospitalizations and the 1-23 inappropriate use of emergency rooms; 1-24 (3) the financing sources available for the capital 1-25 needs of community health centers, such as buildings and equipment, 1-26 are inadequate; and 1-27 (4) increasing community health centers' access to 1-28 capital would benefit residents of this state in poor and 1-29 underserved communities and foreign-born residents who are 1-30 uninsured, by providing greater access to primary care and 1-31 preventive health services and by targeting the common health 1-32 problems of these residents. 1-33 Sec. 136.002. DEFINITIONS. In this chapter: 1-34 (1) "Community health center" means a nonprofit 1-35 corporation in this state that: 1-36 (A) provides required primary health services, 1-37 including: 1-38 (i) basic health services; 1-39 (ii) referrals to providers of medical 1-40 services; 1-41 (iii) patient case management services; 1-42 (iv) outreach; and 1-43 (v) patient education; and 1-44 (B) has a governing board that: 1-45 (i) is composed of individuals, a majority 1-46 of whom are being served by community health centers; and 1-47 (ii) represents the individuals being 1-48 served by the community health center. 1-49 (2) "Commission" means the Health and Human Services 1-50 Commission. 1-51 (3) "Development corporation" means a nonprofit 1-52 corporation that: 1-53 (A) provides revolving loan funds to community 1-54 health centers; 1-55 (B) accepts gifts and grants; 1-56 (C) seeks funding from various government and 1-57 private sources; and 1-58 (D) associates with a broad-based organization 1-59 serving community health centers. 1-60 (4) "Fund" means the community health center revolving 1-61 loan fund established by this chapter. 1-62 (5) "Program" means the loan program authorized by 1-63 this chapter. 1-64 Sec. 136.003. TRUST FUND. (a) The community health center 2-1 revolving loan fund is a trust fund outside the state treasury held 2-2 by a financial institution and administered by the commission as 2-3 trustee on behalf of community health centers in this state. 2-4 (b) The fund is composed of: 2-5 (1) money appropriated to the fund by the legislature; 2-6 (2) gifts or grants received from public or private 2-7 sources; and 2-8 (3) income from other money in the fund. 2-9 (c) The commission may accept on behalf of the fund gifts 2-10 and grants for the use and benefit of the program. 2-11 Sec. 136.004. DEVELOPMENT CORPORATION. The commission shall 2-12 contract with and award money to a development corporation to carry 2-13 out the purposes of this chapter. 2-14 Sec. 136.005. INVESTMENT COMMITTEE. (a) Before contracting 2-15 with a development corporation, the commission shall require the 2-16 development corporation to establish an investment committee to 2-17 approve loan requests of community health centers. 2-18 (b) The investment committee must consist of seven members 2-19 as follows: 2-20 (1) at least two members with lending experience; 2-21 (2) at least two members who receive health care 2-22 services from a community health center; and 2-23 (3) at least one member who represents the Texas 2-24 Association of Community Health Centers, Inc. 2-25 Sec. 136.006. LOANS TO COMMUNITY HEALTH CENTERS. (a) The 2-26 development corporation may make a loan to a community health 2-27 center only with the approval of the investment committee. 2-28 (b) The development corporation shall use at least 60 2-29 percent of the money received under the program for loans to 2-30 community health centers in existence for at least one year before 2-31 the loan date. 2-32 (c) A loan made by the development corporation may be 2-33 subordinated debt. 2-34 (d) The development corporation may make a loan under the 2-35 program through a partnership or joint investment with one or more 2-36 financial institutions or federal or state programs. 2-37 (e) Payments on community health center loans shall be made 2-38 to the development corporation. The development corporation shall 2-39 use the loan payment money received from community health centers 2-40 to make new loans as provided by this chapter. 2-41 Sec. 136.007. SELF-FUNDING. The commission shall develop 2-42 the fund as a revolving loan fund that will become self-funding 2-43 over the life of the program. 2-44 Sec. 136.008. INCOME FROM LOAN. All income received on a 2-45 loan made with money received under the program is the property of 2-46 the development corporation. Income received on a loan includes 2-47 the payment of interest by a borrower and the administrative fees 2-48 assessed by the development corporation. 2-49 Sec. 136.009. RULES. (a) The commission shall adopt rules 2-50 to administer this chapter, including rules that require: 2-51 (1) the commission to review the lending and servicing 2-52 practices of a development corporation to ensure that the practices 2-53 conform to generally accepted accounting principles; 2-54 (2) an eligible community health center to enter into 2-55 an agreement with the development corporation that states the terms 2-56 of the loan made to the center; 2-57 (3) the development corporation to provide to the 2-58 commission semiannual reports giving details of the status of each 2-59 loan made under the program; 2-60 (4) the development corporation to require annual 2-61 audits of community health centers receiving loans under the 2-62 program; and 2-63 (5) the commission to provide oversight of the 2-64 development corporation as necessary to qualify the development 2-65 corporation for loan guarantees from federal and state programs. 2-66 (b) Under rules adopted by the commission, the development 2-67 corporation may: 2-68 (1) make grants to eligible community health centers 2-69 from money other than money that is received from the fund and that 3-1 was derived from a legislative appropriation; or 3-2 (2) seek funds from state or federal agencies or 3-3 private sources to supplement and complement the funds received 3-4 under the program. 3-5 (c) The commission may adopt other rules as necessary to 3-6 accomplish the purposes of this chapter. 3-7 SECTION 2. This Act takes effect September 1, 2001. 3-8 SECTION 3. The Health and Human Services Commission shall 3-9 adopt rules to administer Chapter 136, Human Resources Code, as 3-10 added by this Act, not later than December 1, 2001. 3-11 * * * * *