LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 29, 2001
TO: Honorable Mike Moncrief, Chair, Senate Committee on
Health & Human Services
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1594 by Moncrief (Relating to the creation of a
long-term care facility liability insurance fund;
authorizing the issuance of bonds; providing
administrative penalties.), As Introduced
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1594, As Introduced: an impact of $0 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 $0 *
* 2003 0 *
* 2004 0 *
* 2005 0 *
* 2006 0 *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Savings/(Cost) from Probable Revenue Gain/(Loss) *
* Year New Insurance Fund outside from New Inurance Fund outside *
* Treasury Treasury *
* 2002 $(16,625,000) $300,000,000 *
* 2003 (33,505,388) 0 *
* 2004 (33,501,463) 0 *
* 2005 (33,505,288) 0 *
* 2006 (33,501,638) 0 *
***************************************************************************
Fiscal Analysis
The bill amends Chapter 5, Insurance Code, by adding Subchapter P. The
bill would establish a Long Term Care Liability Insurance Fund, with a
board appointed to administer the fund. Facilities covered by this fund
would be licensed nursing facilities, licensed assisted living facilities
and continuing care facilities. The fund's revenues would consist of
premiums collected, investments and investment income, money received
from the sale of bonds, and any other money received by the fund. Money
in the fund would be paid from the fund, without legislative
appropriation.
The board managing the fund would take applications, collect premiums,
see that policies were written and make and enforce rules for the
prevention of injuries to residents of policyholders. The bill requires
policyholders to obtain a safety consultation from the Department of
Human Services (DHS), the fund, or another professional source that has
been approved by DHS. DHS may investigate injuries occurring at the
facilities. A follow-up inspection must be conducted after development
of an injury prevention plan.
The bill would provide for joint cooperation among the fund, the Texas
Department of Insurance (TDI), and DHS relating to the establishment and
enforcement of accident prevention plans applicable to policyholders.
Further, it would allow DHS to assess an administrative penalty, not to
exceed $5,000 for each day a violation occurred. These administrative
penalties would be deposited to the General Revenue Fund to the credit of
DHS or to be reappropriated to DHS to offset its related administrative
costs.
Likewise, the bill would provide for joint cooperation among the fund,
DHS, and local prosecutors relating to the establishment and enforcement
of fraud prevention plans applicable to policyholders. Restitution
collected would revert to the fund, and fines collected by DHS would be
deposited to the general revenue fund to the credit of DHS for
appropriation to DHS to offset its related costs.
Although the fund would be subject to the Texas Sunset Act and, unless
continued, would be abolished September 1, 2005, it would not be
considered a state agency unless specifically defined as a state agency
in a specific statute.
The bill is effective January 1, 2002.
Methodology
It is assumed the entire $300 million allowable amount of bonds would be
issued. The debt service for a 20 year issue is shown in the table as
the costs. The provisions of the bill provide that the fund to be a
member of and is protected by the Texas Property and Casualty Insurance
Guaranty Association, which implies that the liability is guaranteed by
General Revenue in the form of insurance premium tax credits. There
could be a possible General Revenue increase through premium taxes if
there are additional policies sold.
While the bill would provide for the issuance of bonds to provide
start-up capital for the fund, the bill would make no provision for the
assessment of a maintenance tax surcharge to retire the bond debt.
Therefore, the fiscal impact would have to be borne wholly by the fund
through premium and investment income generated by the fund.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 324 Texas Department of Human Services, 454 Texas
Department of Insurance, 347 Texas Public Finance
Authority, 304 Comptroller of Public Accounts, 449
Finance Commission of Texas
LBB Staff: JK, HD, WP, DE