BILL ANALYSIS

C.S.H.B. 3940

By: Villarreal

Higher Education

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Texas is losing state workers to retirement and faces serious challenges in recruiting and retaining young talent. While the state cannot compete with private sector salaries for many positions, a student loan repayment opportunity can be a powerful incentive for recent graduates that offsets some of the opportunity cost lost working in state government.

C.S.H.B. 3940 addresses both the looming talent shortage in state government and the rising cost of higher education by providing student loan repayment assistance to graduates who commit to work in the public sector.

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly granted to the Texas Higher Education Coordinating Board in SECTIONS 1 and 2 of this bill.

ANALYSIS

C.S.H.B. 3940 amends the Education Code to require the Texas Higher Education Coordinating Board to establish a program to provide, using funds appropriated for that purpose and in accordance with the bill's provisions and coordinating board rules, assistance in the repayment of student loans for full-time legislative employees who apply and qualify for the assistance. The bill requires a person, to be eligible to receive repayment assistance, to apply for the assistance in the manner prescribed by the coordinating board; to be currently employed full-time as a legislative employee; to enter in a written agreement with the coordinating board under which the person agrees to a continuous five-year employment obligation in the legislative branch and acknowledges the conditional nature of the repayment assistance; to not be receiving loan repayment assistance from another source; and to comply with any other requirements adopted by coordinating board rule under these provisions.

C.S.H.B. 3940 requires the coordinating board to excuse an otherwise eligible person from the requirement that the employment be performed in consecutive years if the break in employment is a result of the person's service on active duty as a member of the U.S. armed forces, temporary total disability for a period of not more than 36 months as established by a qualified physician's affidavit, inability to maintain the person's full-time employment for a period not to exceed 12 months because the person is caring for the person's disabled spouse or child, or satisfaction of the provisions of any other exception adopted by the coordinating board.

C.S.H.B. 3940 authorizes the coordinating board to provide repayment assistance for the repayment of any student loan for education at a public, private, or independent institution of higher education in Texas, including loans for undergraduate education, received by an eligible person through any lender. The bill prohibits the coordinating board from providing repayment assistance for a student loan that is in default at the time of the person's application and requires the coordinating board, in each state fiscal biennium, to attempt to use for loan repayment assistance all funds appropriated to the board for that purpose.

C.S.H.B. 3940 requires the coordinating board, for the first year of legislative employment for which a person is eligible to receive repayment assistance and each following consecutive year of legislative employment not to exceed a total of five years, to provide assistance for the repayment of a portion of a person's eligible loans. The bill requires the coordinating board to reduce the amount of a single assistance payment or refrain from making an assistance payment to an eligible person as necessary to avoid making total payments to the person in an amount greater than the total amount of principal and interest due on the person's eligible loans. The bill requires the coordinating board to deliver any repayment in a lump sum payable to both the legislative employee and the lender or other holder of the affected loan or delivered on the legislative employee's behalf directly to the lender or other holder of the loan. The bill authorizes a repayment under these provisions to be applied to any amount due in connection with the loan.

C.S.H.B. 3940 prohibits the total amount of repayment assistance distributed by the coordinating board from exceeding the total amounts of gifts and grants accepted by the coordinating board for repayment assistance, legislative appropriations for repayment assistance, and other funds available to the coordinating board for this purpose. The bill requires the coordinating board to adopt rules necessary to administer these provisions not later than December 1, 2009, and to distribute to the senate, the house of representatives, and any department, commission, board, office, or other agency in the legislative branch of state government copies of the rules adopted by the board and other pertinent information relating to the legislative employee loan repayment assistance program. The bill authorizes the coordinating board to solicit and accept gifts and grants from any public or private source for the purposes of these provisions.

C.S.H.B. 3940 defines "legislative employee" to mean an employee of the senate, the house of representatives, or any department, commission, board, office, or other agency in the legislative branch of state government. The bill specifies that the term includes an employee of an individual senator or representative or of a legislative committee and does not include a senator or a representative.

EFFECTIVE DATE

On passage, or, if the act does not receive the necessary vote, the act takes effect September 1, 2009.

COMPARISON OF ORIGINAL AND SUBSTITUTE

C.S.H.B. 3940 differs from the original by setting forth provisions relating to the establishment of a legislative employee loan repayment assistance program, whereas the original sets forth provisions relating to the establishment of a state employee loan repayment assistance program.

C.S.H.B. 3940 differs from the original by establishing as a condition of eligibility for student loan repayment assistance the requirement that a person be currently employed full-time as a legislative employee and commit to a period of five continuous years of employment in the legislative branch of state government, whereas the original required a person to be employed full-time by the state or a state agency and commit to five continuous years of state employment to be eligible for such assistance.

C.S.H.B. 3940 differs from the original by requiring the Texas Higher Education Coordinating Board to distribute copies of the board rules adopted under the bill's provisions and other pertinent information relating to the loan repayment assistance program to the senate, the house of representatives, and any department, commission, board, office, or other agency in the legislative branch of state government, whereas the original requires the coordinating board to distribute such materials to each state agency.

C.S.H.B. 3940 adds a provision not in the original defining "legislative employee."