Honorable Judith Zaffirini, Chair, Senate Committee on Higher Education
FROM:
John S. O'Brien, Director, Legislative Budget Board
IN RE:
SB2243 by Zaffirini (Relating to the repayment of certain education loans for licensed physicians and dentists.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB2243, As Introduced: a negative impact of ($23,690,100) through the biennium ending August 31, 2011.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2010
($11,925,684)
2011
($11,764,416)
2012
($11,748,053)
2013
($11,750,053)
2014
($11,752,053)
Fiscal Year
Probable Savings/(Cost) from General Revenue Fund 1
2010
($11,925,684)
2011
($11,764,416)
2012
($11,748,053)
2013
($11,750,053)
2014
($11,752,053)
Fiscal Year
Change in Number of State Employees from FY 2009
2010
1.0
2011
1.0
2012
1.0
2013
1.0
2014
1.0
Fiscal Analysis
The bill would make several changes, including eligibility requirements, to the physician loan repayment program and dental loan repayment program administered by the Higher Education Coordinating Board.
Currently to be eligible to receive repayment assistance under the physician loan repayment program, a physician must apply to the Coordinating Board and have completed at least one year of medical practice: (1) in private practice in an economically depressed or rural medically underserved area of the state; (2) for one of the following state agencies: (A) Texas Department of Health; (B) Texas Department of Mental Health and Mental Retardation; (C) Texas Department of Corrections; or (D) Texas Youth Commission; or (3) for an approved family practice residency training program as a clinical faculty member and have completed training in an approved family practice residency training program on or after July 1, 1994. The bill would modify the eligibility requirements to include at the time of application an unrestricted license to practice medince, an authorization number that allows the physician to provide services under authorized medical assistance programs and enter into a written contract with the state to fulfill a four-year continuous service obligation that includes a targeted amount of services. The Higher Education Coordinating Board and Health and Human Services Comission will jointly establish target amounts for services.
Under provisions of the bill, the Higher Education Coordinating Board may provide repayment assistance for the repayment of any student loan for education at a public or accredited private institution of higher education in the United States, including loans for undergraduate, graduate and medical education received by a physician through any lender. The total amount of repayment assistance could not exceed $140,000 during the four-year service period and the Higher Education Coordinating Board will limit the target number of program participants as nearly as the board considers practicable to 300 physicians in each year.
The bill would make similar changes to the eligibility requirements under the dental loan repayment program. The total amount of repayment assistance could not exceed $140,000 during the four-year service period and the board shall limit the target number of program participants as nearly as the board considers practicable to 50 dentists in each year.
Methodology
The Higher Education Coordinating Board estimated the cost associated with the loan repayments awarded to health care providers based on the assumptions that 350 (300 physicians and 50 dentists) providers will receive loan repayment assistance for a total of $140,000 over a four-year period, at $35,000 per year per provider. Therefore, the total amount of loan repayment awarded each year will be $12,250,000. Currently both programs are funded by a 2% tuition set asides. Therefore, for purposes of this estimate, the estimated annual tuition set asides are subtracted from the amount of General Revenue needed to fund the loan repayment awards. The estimated amount of medical school tuition set asides for each year is $725,000 and the estimated amount of dental school tuition set asides for each year is $110,000, for a total of an estimated $835,000 per year in Dedicated General Revenue funds. Therefore, a total of $11,415,000 ($12,250,000 - $835,000) in General Revenue will be needed for each year to fund loan repayments to 350 physicians and dentists.
The remaining costs associated with the program include the Higher Education Coordinating Board hiring one additional FTE, an Administrative Specialist III at a cost of $68,131 for fiscal year 2010 and $56,958 per year for fiscal year 2011-2014. Additionally they estimate temporary personnel services costs totaling $3,000 in fiscal year 2011, $5,000 in fiscal year 2012, $7,000 in fiscal year 2013, and $9,000 in fiscal year 2014.
The Higher Education Coordinating Board has also indicated that there would also be the cost of administrative services provided by Department of State Health Services (DSHS) through an MOU in the amount of $422,343 in fiscal year 2010 and $286,958 in fiscal year 2011. The estimated cost to DSHS for such assistance for a similar program was $422,343 in the first year and $268,595 in each year of fiscal year 2011-14, with authority for four additional FTEs at DSHS.
Technology
Technology costs are estimated at $17,710 all in fiscal year 2010 based on the assumption that the Department of State Health Services will create a web based application for loan repayment and there will be a shared data base allowing both agencies to run data queries.
Local Government Impact
No fiscal implication to units of local government is anticipated.