LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 12, 2001
TO: Honorable Steven Wolens, Chair, House Committee on State
Affairs
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1269 by Dukes (Relating to grievance and complaint
resolution procedures for certain state employees.), As
Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1269, As Introduced: negative impact of $(4,823,316) 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. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(2,457,858) *
* 2003 (2,365,458) *
* 2004 (2,365,458) *
* 2005 (2,365,458) *
* 2006 (2,365,458) *
****************************************************
All Funds, Five-Year Impact:
***************************************************************************
*Fiscal Probable Probable Probable Change in *
* Year Savings/(Cost) Savings/(Cost) Savings/(Cost) Number of State *
* from General from Federal from Other Employees from *
* Revenue Fund Funds - Federal Funds FY 2001 *
* 0001 0555 0997 *
* 2002 $(2,457,858) $(454,081) $(177,358) 24.0 *
* 2003 (2,365,458) (454,081) (177,358) 24.0 *
* 2004 (2,365,458) (454,081) (177,358) 24.0 *
* 2005 (2,365,458) (454,081) (177,358) 24.0 *
* 2006 (2,365,458) (454,081) (177,358) 24.0 *
***************************************************************************
Fiscal Analysis
The bill would add Chapter 668 to Title 6 of the Government Code,
allowing a state employee, an employee of a state agency in the executive
branch or a state institution of higher education, to appeal grievances
and complaints for termination of employment, demotion, or suspension
without pay to the State Office of Administrative Hearings (SOAH). The
appeal must be based on a grievance or complaint filed by the employee
according to the internal procedures set up by the state agency or
institution of higher education and not resolved to the employee's
satisfaction by an agency's or institution's executive director.
The bill would require a state agency or institution to pay the full
costs of a hearing conducted by SOAH if the decision is favorable to the
employee. If the decision is not favorable to the employee, a state
agency or institution would pay half of the hearing's costs and the
employee would pay the other half.
If enacted, this bill would take effect on September 1, 2001 and would
apply to a grievance or complaint discovered by an employee on or after
January 1, 2002.
Methodology
SOAH estimates the fiscal impact of the bill to be approximately $3
million of General Revenue for the 2002-03 biennium. In fiscal year 2000,
there were 2,632 terminations both dismissals for cause and at will
terminations, out of 140,250 state agency employees according to the
State Auditor's Annual Report on Full-time Classified State Employees
Turnover in 2000. No records of employee demotions or suspensions without
pay are maintained by the state, but SOAH estimates that the total
number of these personnel actions would be equivalent to the number of
terminations in fiscal year 2000 based on an informal survey of several
state agencies. Of 140,250 state agency employees, it is estimated that
approximately 5,264 employees, or 3.75 percent, would be terminated,
demoted, or suspended without pay.
Applying 3.75 percent to the 264,315 employees of state agencies and
higher education institutions in fiscal year 2000 less an estimate of 315
state agency employees who would be exempt under the bill, there would
be approximately 9,900 employees of state agencies and higher education
institutions who would be eligible to file a grievance or complaint under
the bill. SOAH estimates that only one-third, or 3,300, of the employees
eligible to file a grievance or complaint would file one with the state
agency or institution of higher education where they are employed. Of
those 3,300 grievances or complaints filed, it is projected that 75
percent, or 2,475, of the grievances or complaints would be rejected by
the agency or institution.
SOAH assumes that only about one-third of the 2,475 employees eligible to
file an appeal with SOAH would do so because of the possibility of
having to pay half of the cost of the hearing if the decision is
unfavorable to the employee. Therefore, SOAH would conduct hearings for
825 appeals.
SOAH estimates that on average an Administrative Law Judge (ALJ) would
need 2.5 days to prepare for the hearing and write the final order
following the hearing, in addition to the actual day of the hearing. The
estimate of 3.5 days per case is equivalent to 28 hours of ALJ time per
case. With 825 cases per year, SOAH estimates a total of 23,100 ALJ hours
per year devoted to employee grievance or complaint appeals. An ALJ can
devote 1500 hours per year to case work, so SOAH projects it would need
15 additional ALJs to handle the additional case work from these appeals.
The agency would also need five hearings and docketing support staff,
one legal assistant, and three administrative support staff. For fiscal
year 2002, SOAH estimates costs of $92,400 for equipment and office
furniture for the additional FTEs.
Assuming that 50 percent of the appeals would result in decisions
favorable to the employee and the other 50 percent would not, the fiscal
impact of the hearing costs incurred by state agencies and institutions
of higher education is estimated to be $1.9 million of General Revenue
and General Revenue-Dedicated Funds, $908,162 of Federal Funds, and
$354,716 of Other Funds for the 2002-03 biennium. The average cost of
an appeal would be $2,520 based on SOAH's rate of $90 per hour.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 360 State Office of Administrative Hearings, 320
Texas Workforce Commission
LBB Staff: JK, RB, RT, HL