C.S.H.B. 906 78(R)    BILL ANALYSIS


C.S.H.B. 906
By: Gallego
Government Reform
Committee Report (Substituted)



BACKGROUND AND PURPOSE 
State agencies have human resource personnel responsible for a number of
staffing duties, including recruitment, classification, administration of
benefits and training. In many state agencies, HR departments appear to be
overstaffed when compared to other HR departments servicing an equal or
comparable number of employees. Nationwide surveys indicate that the more
efficient and effective ratios of HR staff to total staff hover around the
1:100 ratio, meaning one HR staff person for every 100 employees. Records
show that many of Texas' largest state agencies deviate from the 1:100 by
large numbers. This bill requires large state agencies to modify their
ratios so that agency ratios meet the national standard. The bill also
requires the State Council on Competitive Government to conduct a
feasibility study relating to the cost-effectiveness of allowing
medium-sized and small state agencies to contract with private entities
for human resources functions. 


RULEMAKING AUTHORITY
It is the Committee's opinion that this bill does not expressly grant any
additional rulemaking authority to any state officer, department, agency,
or institution. 

ANALYSIS
SECTION 1.  Amend Subtitle B, Title 6, Government Code, by adding a new
Chapter 670 as follows: 

Chapter 670.  HUMAN RESOURCES STAFFING AND FUNCTIONS.

Sec. 670.001.  Definitions.  This section defines "state agency" as a
department, commission, board, office, authority, council, or any other
governmental entity in the executive branch created by the constitution or
statute of this state and has authority not limited to a specific
geographical portion of the state. 

The definition excludes university systems or institutions of higher
education as defined by Section 61.003 of the Education Code. 

Sec. 670.002.  HUMAN RESOURCES STAFFING FOR LARGE STATE AGENCIES.
Requires a state agency with 500 or more full-time equivalent employees to
adjust the human resource staff so that the ratio of human resource
employees to total staff is one for every one hundred (1:100). 

Sec. 670.003.  HUMAN RESOURCES STAFFING FOR MEDIUM-SIZED AND SMALL STATE
AGENCIES; OUTSOURCING.  Requires the State Council on Competitive
Government (Council) to determine the cost-effectiveness of consolidating
the human resources functions of or contracting with private entities to
perform these functions of state agencies that employ fewer than 500
full-time equivalent employees.    

If the Council determines that contracting with a private vendor is
cost-effective, the council must issue a request for proposal for vendors
to perform human resources functions of agencies.  The Council must
determine which functions private vendors shall perform and which
functions the agency may select to perform.  Each agency shall pay for the
contracts for human resources functions out of the agency's human
resources budget. 




 Under Subsection (e) a state agency may appeal to the Legislative Budget
Board (LBB) for a waiver from the decision of the Council to require the
state agency to consolidate the human resource functions or to contract
with a private entity to perform these functions.  The LBB may grant a
waiver if the LBB determines that it would not be cost-effective for the
agency to consolidate the human resource functions of the agency or to
contract with a private entity to perform these functions.  A state agency
that receives a waiver under this Subsection is exempt from the
requirements of this section. 

SECTION 2.  Each state agency with 500 or more full-time equivalent
employees must comply with the human resources employee to staff ratio
requirements under Section 670.002 of this Act no later than September 1,
2003. 

The Council must conduct an initial feasibility study to determine the
cost-effectiveness of consolidating the human resources functions of or
contracting with private entities to perform these functions of state
agencies under Section 670.003 of this Act no later than January 1, 2004.  

SECTION 3.  Effective Date. 


EFFECTIVE DATE
This Act takes effect September 1, 2003.



COMPARISON OF ORIGINAL TO SUBSTITUTE
The substitute changes Section 670.003 of the original by requiring both
medium sized and small state agencies to participate in the Council's
study to determine if contracting with private agencies for human
resources functions is cost effective.  The substitute allows a
medium-sized or small state agency to appeal to the LBB for a waiver from
the decision of the Council.  Standards for waivers are set forth in the
substitute. 

Section 670.004 is deleted.

The substitute requires large state agencies to comply with the ratio set
in the bill no later than September 1, 2003.  The substitute requires the
Council to conduct a feasibility study pursuant to Section 670.003 no
later than January 1, 2004.