LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
February 27, 2001
TO: Honorable Kim Brimer, Chair, House Committee on Business
& Industry
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1204 by Brimer (Relating to the provision of risk
management services and the administration of a workers'
compensation insurance program by the State Office of
Risk Management for certain state agencies, including
certain institutions of higher education.), As
Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1204, As Introduced: negative impact of $(164,875) through the *
* biennium ending August 31, 2003. *
* *
* 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 *
* 2002 $(89,450) *
* 2003 (75,425) *
* 2004 (120,200) *
* 2005 (71,375) *
* 2006 (40,600) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Savings/(Cost) from *
* General Revenue Fund *
* 0001 *
* 2002 $(89,450) *
* 2003 (75,425) *
* 2004 (120,200) *
* 2005 (71,375) *
* 2006 (40,600) *
*****************************************************
Fiscal Analysis
The bill would expand the State Office of Risk Management's (SORM)
current responsibilities to include risk management duties for the Texas
Tech University System, the Texas A&M University System, the University
of Texas System and the Texas Department of Transportation (TxDot).
These institutions are currently exempt from SORM's risk management
duties due to Section 412.052 of the Labor Code which HB1204 proposes to
repeal. The bill would also expand SORM's current responsibilities to
include administration of the workers' compensation insurance program
for Texas A&M, the University of Texas and the Texas Department of
Transportation. Each of these institutions currently administers its own
workers' compensation insurance program as authorized in the Labor Code.
HB1204 proposes to amend the Labor Code to transfer each of these
institution's risk management and workers' compensation insurance
program duties to SORM. The bill would also expand the Attorney
General's (AG) responsibilities to include contested case hearings for
Texas A&M (the Attorney General's office currently handles contested
case hearings for Texas Tech, the University of Texas and the Texas
Department of Transportation).
Methodology
In order to estimate the costs associated with transferring the risk
management and workers' compensation insurance programs to SORM, each
institution and TxDot provided associated expenditures, including the
number of FTEs, for each of these programs in fiscal year 2000. The
institutions and TxDot reported a total of 60 FTEs designated to the
administration of risk management and the workers' compensation insurance
programs in fiscal year 2000. The total costs associated with these
administrative positions in fiscal year 2000 was approximately $4.5
million. The institutions reported total claims expenditures to be
approximately $12 million in fiscal year 2000.
SORM operates its workers' compensation insurance program under the same
Texas Workers' Compensation Commission (TWCC) guidelines as the Texas A&M
System, the University of Texas System and the Texas Department of
Transportation. Therefore, there should be no significant variance in
claims payments as a result of this legislation.
SORM estimates it would need 60 additional FTEs to assume the risk
management and workers' compensation insurance program duties for the
institutions and TxDot. It is assumed that the current level of staff and
resources needed for administration would be gradually transferred to
SORM from the institutions and TxDot.
There would be one time costs for computer equipment and furniture
associated with the new SORM personnel, ranging from $89,450 in fiscal
year 2002 to $40,600 in fiscal year 2006.
The Attorney General's office estimates it would need seven additional
FTEs in the Tort Litigation Division at an annual cost of approximately
$240,000 over the next five years if the legislation is passed to handle
A&M's claims. According to the AG's office, this estimate is based on
the current ratio of attorneys to covered employees in the state. This
analysis assumes the necessary resources could be transferred from A&M
to the AG's office.
Source Agencies: 710 The Texas A&M University System, 768 Texas
Tech University System, 479 State Office of Risk
Management, 781 Texas Higher Education
Coordinating Board, 720 The University of Texas
System, 601 Texas Department of Transportation,
302 Office of the Attorney General
LBB Staff: JK, JO, JC