LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 3, 2001
TO: Honorable Kim Brimer, Chair, House Committee on Business
& Industry
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2976 by Dukes (Relating to the funding of the State
Office of Risk Management.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2976, As Introduced: positive impact of $1,700,000 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 *
* 2003 $1,700,000 *
* 2004 3,800,000 *
* 2005 6,800,000 *
* 2006 9,400,000 *
* 2007 12,800,000 *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Savings/(Cost) from *
* General Revenue Fund *
* 0001 *
* 2003 $1,700,000 *
* 2004 3,800,000 *
* 2005 6,800,000 *
* 2006 9,400,000 *
* 2007 12,800,000 *
*****************************************************
Fiscal Analysis
House Bill 2976 would amend the method of funding to the State Office of
Risk Management (SORM) by requiring the agency to establish an allocation
program for payment of workers' compensation claims incurred by agencies
subject to Chapter 501 of the Labor Code. The bill would require SORM to
establish a formula for allocating workers' compensation costs among
agencies based on claims experience of each agency, current and projected
size of each agency's workforce, agency payroll, related costs incurred
in administering agency claims, and any other factors SORM determines to
be relevant in determining workers' compensation claims costs.
The bill would allow SORM to provide modifiers to the allocation formula
to promote risk management programs by state agencies. SORM's board
would have final authority to determine the assessments to be paid by
the covered agencies. The bill would require SORM to charge agencies for
risk management services in the same proportion and determined in the
same manner as the allocation program.
Methodology
SORM's cost estimate assumes savings of approximately $34.5 million to
the General Revenue Fund in the first six years (2002-2007) of
implementation. According to the agency, the first year of implementation
(2002) would not see significant savings because most costs of an injury
are not realized until the second and third year of the life of the
injury. Therefore, loss prevention efforts by agencies in 2002 would not
be seen until the second and third years of the program's implementation.
The agency based the estimate on actual savings seen after the 76th
Legislature implemented the rider in the appropriations act that held
agencies liable for 25 percent of the cost of workers' compensation
claims paid to their employees. According to SORM, passage of the rider
reduced the Injury Frequency Rate (number of injuries per 100 employees)
from 5.91 to 4.73 and saved the state approximately $34.5 million from
1996-2000 in workers' compensation claim payments. SORM anticipates
savings to be equal to those experienced when agencies became liable for
25 percent of employees' injuries, should the bill pass.
SORM anticipates no additional administrative costs should the bill pass.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 453 Texas Workers' Compensation Commission, 479
State Office of Risk Management, 478 Research and
Oversight Council on Workers' Compensation
LBB Staff: JK, JO, MF, JC