LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 3, 2001
TO: Honorable Teel Bivins, Chair, Senate Committee on
Education
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1021 by Armbrister (Relating to a prescription drug
benefit plan for active school employees.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1021, As Introduced: negative impact of $(643,700,000) 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. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(3,000,000) *
* 2003 (640,700,000) *
* 2004 (772,400,000) *
* 2005 (915,200,000) *
* 2006 (1,056,100,000) *
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All Funds, Five-Year Impact:
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*Fiscal Probable Probable Change in Number of *
* Year Savings/(Cost) from Savings/(Cost) from State Employees from *
* General Revenue Fund Other Funds FY 2001 *
* 0001 0997 *
* 2002 $(3,000,000) $(22,000,000) 30.0 *
* 2003 (640,700,000) 0 30.0 *
* 2004 (772,400,000) 0 30.0 *
* 2005 (915,200,000) 0 30.0 *
* 2006 (1,056,100,000) 0 30.0 *
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Fiscal Analysis
The bill creates a statewide prescription drug program for public school
employees, administered by the Teacher Retirement System (TRS). The
coverage would be comparable to the prescription drug benefits offered
through the Uniform Group Insurance Program administered by the
Employees Retirement System. The state would be required to pay for
100 percent of the cost of coverage for active employees. The bill
takes effect September 1, 2001, allowing one year for program
implementation, with program coverage beginning no later than September
1, 2002.
Methodology
Start-up costs for fiscal year 2002 are estimated to be $25,000,000, and
that 30 full-time equivalent employees will be required each year for
program administration. The total cost to the state for fiscal year 2003
would be $641 million. The annual cost per employee is projected to be
$1,123 for fiscal year 2003 for each of the projected 570,928 employees
that would be covered. The cost would increase to $1,694 by fiscal year
2006, based on projected increases in prescription drug costs ranging
from 12 to 18 percent. Total program cost for fiscal year 2006 is
estimated to be $1.056 billion. Program participation is projected to
grow to 623,640 by fiscal year 2006, based on an estimated annual growth
rate of three percent.
A portion of the implementation costs in fiscal year 2002 could be paid
for using the remaining balances from the $10 annual fee paid by active
employees from 1993 to 1996. The rest of the plan financing would come
from the General Revenue Fund.
Local Government Impact
Currently, local school districts pay for some of the cost of providing
health insurance to their employees. TRS estimates districts spent
approximately $850 million in fiscal year 2000 on health insurance. It
is not known how much of this cost is related to prescription drug
coverage.
Source Agencies: 701 Texas Education Agency, 323 Teacher
Retirement System
LBB Staff: JK, CT, SC