| TO: | Honorable Richard Pena Raymond, Chair, House Committee on Human Services |
| FROM: | John S O'Brien, Director, Legislative Budget Board |
| IN RE: | HB3070 by Veasey (Relating to the creation of a social loan program.), As Introduced |
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2012 | ($1,165,000) |
| 2013 | ($48,392,152) |
| 2014 | ($50,493,621) |
| 2015 | ($12,403,011) |
| 2016 | ($6,624,684) |
| Fiscal Year | Probable (Cost) from General Revenue Fund 1 |
Probable Revenue Gain from New General Revenue-Dedicated |
|---|---|---|
| 2012 | ($1,165,000) | $0 |
| 2013 | ($48,392,152) | $13,451,148 |
| 2014 | ($50,493,621) | $51,562,734 |
| 2015 | ($12,403,011) | $57,365,136 |
| 2016 | ($6,624,684) | $57,365,136 |
| Fiscal Year | Change in Number of State Employees from FY 2011 |
|---|---|
| 2012 | 0.0 |
| 2013 | 24.8 |
| 2014 | 24.8 |
| 2015 | 24.8 |
| 2016 | 24.8 |
The bill would require the Health and Human Services (HHSC) to establish and implement a crisis loan program for the purpose of making low-interest, short-term loans to low-income individuals under emergency circumstances. The bill would establish qualifications for loan eligibility and would direct HHSC to adopt rules regarding the use of the loan money.
The bill would establish a maximum loan amount of $400; the bill would authorize HHSC to charge interest on the loan of a rate not to exceed 15 percent per year; the bill would require the loan to be repaid within one year and authorize the payment through deductions from the assistance or benefits received by the loan recipient through the Temporary Assistance for Needy Families program, the Supplemental Nutritional Assistance Program (SNAP), or Medicaid. The loan proceeds would be distributed using the recipient's Lone Star Card.
The bill would create a General Revenue-Dedicated Account–Social Loan Fund. The GR-D Account would receive appropriations; gifts, grants and donations; matching funds; interest earned on the account principal; and money required by law to be deposited to the account. Money in the account could be used only for the program.
The bill would take effect December 1, 2011, but only if a constitutional amendment authorizing the Legislature to create a social loan program is approved by the voters. If that amendment is not approved by the voters, this bill has no effect.
The bill would do one of more of the following: create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either within or outside of the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.
For purposes of this analysis, it is assumed that this program would not be eligible for federal matching funds. All costs and savings are estimated as 100% General Revenue Funds and revenues are estimated as 100% General Revenue-Dedicated Funds for the new fund that would be created by enactment of the bill.
Based on the analysis of HHSC, it is estimated that 10% of SNAP recipient households will apply for and receive an emergency loan, which would be 150,000 households per year, or 12,500 households per month. As the loan program would not be implemented until December 1, 2012, only 9 months of loans are accounted for in fiscal year 2013. At a cost of $400 per loan, the total loan distribution in fiscal year 2013 would be $45,000,000 in General Revenue Funds, and $60,000,000 in distribution in each subsequent year.
For purposes of this analysis, it is assumed the $60,000,000 in General Revenue Funds to be distributed in fiscal year 2014; collections in 2015 and beyond would be offset by distribution from the collections in the Social Loan Fund Dedicated Account. Federal law restricts states from deducting money from SNAP benefits; Medicaid payments are made directly to providers and not beneficiaries. While TANF rules could be amended so that loan repayments could be deducted from benefits, TANF recipients represent a very small percentage who could repay their loan from their future benefits. As such, this analysis assumes that HHSC would need to collect the loan repayment directly from beneficiaries. Based on HHSC analysis, approximately 15% of loans would default. Using a 10% interest rate and assuming collection of repayments within a year of the loan issuance, HHSC estimates the loan repayment would total $13,451,148 in fiscal year 2013, $51,562,734 in fiscal year 2014, $57,365,136 in fiscal year 2015 and $57,365,136 in fiscal year 2016. It is assumed that the collected revenue in one year could be used to offset GR for the purpose of the loan distribution in the following year.
HHSC anticipates needing an additional 24.8 FTEs to process the loan applications and determine eligibility for the loans. Estimated costs for 24.8 additional FTEs, including salaries, benefits, seat management costs, supplies and travel are estimated to be $1,540,402 in fiscal year 2013, $1,457,769 in fiscal year 2014, $1,460,745 in fiscal year 2015 and $1,463,820 in fiscal year 2016.
There will be increases in eligibility contractor costs, which include the Electronic Benefits Transfer and Document Processing. This increased cost is estimated to average $16.65 per year per recipient.
| Source Agencies: | 304 Comptroller of Public Accounts, 529 Health and Human Services Commission
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| LBB Staff: | JOB, CL, MB, ES, VJC
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