81(R) HB 3940 - Introduced version

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2010	($17,710)
2011	($968,131)
2012	($1,405,957)
2013	($1,906,957)
2014	($2,456,957)

Fiscal Year	Probable Savings/(Cost) from General Revenue Fund 1
2010	($17,710)
2011	($968,131)
2012	($1,405,957)
2013	($1,906,957)
2014	($2,456,957)

Fiscal Year	Change in Number of State Employees from FY 2009
2010	0.0
2011	1.0
2012	1.0
2013	1.0
2014	1.0

Fiscal Analysis

The bill would create a state employee loan repayment assistance program administered by the Higher Education Coordinating Board. The bill sets out certain criteria to receive loan repayment assistance as well as exceptions to the consecutive years of employment requirement. Under provisions of the bill, an eligible person can receive loan repayment assistance for up to five years. The board may provide repayment assistance for the repayment of any student loan for education at an institution of higher education or a private or independent institution of higher education in this state, including loans for undergraduate education, received by an eligible person through any lender. The total amount of repayment assistance distributed by the Board could not exceed the total amount of gifts and grants accepted by the board for repayment assistance, legislative appropriations for repayment assistance, and other funds available to the board for purposes of the program.

Methodology

The fiscal note will be split out between administrative costs and estimates on the loan repayment awards associated with the program.

Administrative Costs

The Higher Education Coordinating Board has indicated that the only costs in fiscal year 2010 are $17,710 in technology costs for establishing the new program. In fiscal year 2011, they have indicated that they would need to hire one FTE, an administrative specialist, to implement the loan program. The total costs for this FTE, including salaries and benefits is $68,131 in fiscal year 2011 and $56,958 in fiscal year 2012 and subsequent years.

Loan Repayment Awards

The Higher Education Coordinating Board indicates the first cohort of applicants will receive loan repayment beginning in fiscal year 2011. Their estimate is based on graduated repayment award amounts to provide an incentive to hold state positions for five years as follows: $3,000 for 1st year, $4,000 for second year, $5,000 for third year, $6,000 for fourth year, and $7,000 for fifth year. They assumed that 300 state employees will receive loan repayment awards in the amount of $3,000 in fiscal year 2011. That same cohort will receive $4,000 awards in fiscal year 2012, plus an additional 50 new state employees receiving $3,000 awards. In fiscal year 2013, 300 third-year employees will receive $5,000, 50 second-year employees will receive $4,000, and 50 new employees will receive $3,000. In fiscal year 2014, 300 fourth-year employees will receive $6,000, while 50 third-year employees will receive $5,000, 50 second-year employees will receive $4,000, and 50 new employees will receive $3,000 in loan repayments. Based on these assumptions, the cost to the state for the loan repayment awards would be $0 in fiscal year 2010, $900,000 in fiscal year 2011, $1,350,000 in fiscal year 2012, $1,850,000 in fiscal year 2013 and $2,400,000 in fiscal year 2014.

Their estimate is based on the assumption that the number of participants in the first five years of the program will be relatively small in comparison to the number of state agency positions or position vacancies. If the program proves to be successful, there may be future support for more funding that would allow for more loan repayment awards.

LEGISLATIVE BUDGET BOARD
Austin, Texas

FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION


April 20, 2009

TO:	Honorable Dan Branch, Chair, House Committee on Higher Education

FROM:	John S. O'Brien, Director, Legislative Budget Board

IN RE:	HB3940 by Villarreal (Relating to student loan repayment assistance for certain state employees.), As Introduced