C.S.H.B. 2376 78(R)    BILL ANALYSIS


C.S.H.B. 2376
By: Elkins
State Affairs
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

A report by the State Auditor's Office demonstrated that purchasing surety
bonds for state officers and employees was not cost-effective.  Under the
State Employee Bonding Act and other statutes, agencies were often
required to purchase these bonds, but claims to recover on the bonds were
almost never filed.  As a result, the state was wasting approximately
$250,000 each biennium on premiums for these bonds.  In response, the 77th
Legislature passed House Bill 1203, which significantly restricts the
authority of state agencies to purchase surety bonds.  As a result of
House Bill 1203 becoming law, agencies may purchase surety bonds for their
officers and employees only if required by the state constitution, federal
law, regulation, or court order, or after obtaining the approval of the
State Office of Risk Management (SORM).  SORM may approve the purchase of
a surety bond if it finds that the surety bond is warranted by a
substantial or unusual risk of loss or the purchase of a surety bond is
otherwise necessary to protect the interests of the state.  The purpose of
C.S.H.B. 2376 is to strike what is now obsolete and possibly confusing
language that formerly required state agencies to purchase surety bonds. 

RULEMAKING AUTHORITY

It is the opinion of the committee that this bill does not expressly grant
any additional rulemaking authority to a state officer, institution,
department, or agency. 

ANALYSIS

C.S.H.B. 2376 removes obsolete language and references that require
various state agencies to purchase surety bonds for officers and
employees. 

EFFECTIVE DATE

September 1, 2003.


COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 2376 differs from the original by adding language that repeals
the requirement in Section 403.009 of the Government Code that the
attorney general's office examine bonds executed for employees of the
Office of the Comptroller since the requirement for executing those bonds
was deleted.  The substitute differs from the original in that it does not
repeal Section 31.021 of the Natural Resources Code.